Add new clause 1.2.9 as follows:

Recitals

1.0 DESCRIPTION OF PHASE [**] WORK

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

3.0 Representations and Warranties.

AMENDMENT NUMBER THREE TO THE COUNTERFEIT DETERRENCE SYSTEM

BANK FOR INTERNATIONAL SETTLEMENTS

DIGIMARC CORPORATION

1.1 [] Of The Phase [] Deliverables

1.2 Acceptance Procedures

2.1 [**]

2.2 [**]

2.3 [**]

1.2.1 [**]

1.2.2 [**]

2.1.1 [**] requirements

2.3.1 Implementation of [**]

2.3.2 Support for [**]

2.3.3 [**]

2.3.4 [] and [] research

2.3.5 [**]

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As filed with the Securities and Exchange Commission on October 14, 2008

Registration No. 001-34108

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Amendment No. 6
to
FORM 10

GENERAL FORM FOR REGISTRATION OF SECURITIES
Pursuant to Section 12(b) or (g) of The Securities Exchange Act of 1934

Digimarc Corporation
(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)		26-2828185 (I.R.S. Employer Identification No.)
9405 SW Gemini Drive Beaverton, Oregon (Address of principal executive offices)		97008 (Zip Code)

Registrant's telephone number, including area code:
(503) 469-4800

Securities to be registered pursuant to Section 12(b) of the Act:

Title of Each Class to be so Registered		Name of Each Exchange on Which Each Class is to be Registered
Common Stock, par value $0.001 per share		The Nasdaq Stock Market LLC

Securities to be registered pursuant to Section 12(g) of the Act:
None.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definition of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer o

Accelerated filer o

Non-accelerated filer o
(Do not check if a smaller reporting company)

Smaller reporting company ý

Information Required in Registration Statement

Cross-Reference Sheet Between the Information Statement and Items of Form 10

Our information statement is filed on Exhibit 99.1 to this Form 10. For your convenience, we have provided below a cross-reference sheet identifying where the items required by Form 10 can be found in the information statement.

Item 1. Business

The information required by this item is contained under the sections "Summary," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business of Digimarc Corporation" of the information statement, which sections are incorporated herein by reference.

Item 1A. Risk Factors

The information required by this item is contained under the section "Risk Factors" of the information statement, which section is incorporated herein by reference.

Item 2. Financial Information

The information required by this item is contained under the sections "Selected Historical Financial Information" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" of the information statement, which sections are incorporated herein by reference.

Item 3. Properties

The information required by this item is contained under the section "Business of Digimarc Corporation—Properties and Facilities" of the information statement, which section is incorporated herein by reference.

Item 4. Security Ownership of Certain Beneficial Owners and Management

The information required by this item is contained under the section "Security Ownership of Certain Beneficial Owners and Management" of the information statement, which section is incorporated herein by reference.

Item 5. Directors and Executive Officers

The information required by this item is contained under the section "Management" of the information statement, which section is incorporated herein by reference.

Item 6. Executive Compensation

The information required by this item is contained under the section "Executive Compensation" of the information statement, which section is incorporated herein by reference.

Item 7. Certain Relationships and Related Transactions, and Director Independence

The information required by this item is contained under the sections "Our Relationship with Old Digimarc after the Spin-Off" and "Management" of the information statement, which sections are incorporated herein by reference.

Item 8. Legal Proceedings

The information required by this item is contained under the section "Business of Digimarc Corporation—Legal Proceedings" of the information statement, which section is incorporated herein by reference.

Item 9. Market Price of and Dividends on the Registrant's Common Equity and Related Stockholder Matters

The information required by this item is contained under the sections "Summary," "The Spin-Off," "Dividend Policy," "Capitalization," "Management" and "Description of Our Capital Stock" of the information statement, which sections are incorporated herein by reference.

Item 10. Recent Sales of Unregistered Securities

Not applicable.

Item 11. Description of Registrant's Securities to be Registered

The information required by this item is contained under the section "Description of Our Capital Stock" of the information statement, which section is incorporated herein by reference.

Item 12. Indemnification of Officers and Directors

The information required by this item is contained under the section "Limitation of Liability and Indemnification of Directors and Officers" of the information statement, which section is incorporated herein by reference.

Item 13. Financial Statements and Supplementary Data

The information required by this item is contained under the sections "Summary," "Pro Forma Financial Information," "Selected Historical Financial Information" and "Financial Statements" of the information statement, which sections are incorporated herein by reference.

Item 14. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 15. Financial Statements and Exhibits

(a) Financial Statements. The information required by this item is contained under the section "Index to Financial Statements" beginning on page F-1 of the information statement, which section is incorporated herein by reference.

(b) Exhibits. The following documents are filed as exhibits hereto:

Exhibit Number		Exhibit Description
2.1		Separation Agreement among DMRC Corporation, DMRC LLC, Digimarc Corporation and, with respect to certain sections, L-1 Identity Solutions, Inc.(2)†
3.1		Restated Certificate of Incorporation of Digimarc Corporation(2)
3.2		Amended and Restated Bylaws of Digimarc Corporation(2)
4.1		Specimen common stock certificate of DMRC Corporation(2)
4.2		Rights Agreement, dated July 31, 2008, between DMRC Corporation and Computershare Trust Company, N.A. as Rights Agent(2)
4.3		Form of Certificate of Designation of Series R Preferred Stock (attached as an exhibit to the Rights Agreement filed as Exhibit 4.2 hereto)(2)
4.4		Form of Rights Certificate (attached as an exhibit to the Rights Agreement filed as Exhibit 4.2 hereto)(2)
10.1		Transition Services Agreement between DMRC Corporation and Digimarc Corporation(1)(3)
10.2		License Agreement between DMRC Corporation and L-1 Identity Solutions Operating Company(2)(3)
10.3		Agreement, dated as of October 1, 2007, between Digimarc Corporation and The Nielsen Company(1)(3)
10.4		Counterfeit Deterrence System Development and License Agreement, dated as of January 1, 1999, between Digimarc Corporation and the Bank for International Settlements(1)(3)
*10.5		Form of Indemnification Agreement between DMRC Corporation and each of its executive officers and directors(2)
*10.6		Form of Indemnification Agreement between Digimarc Corporation and each of its executive officers and directors (incorporated by reference to Exhibit 10.19 to Digimarc Corporation's Annual Report on Form 10-K, as filed by Digimarc Corporation with the Securities and Exchange Commission on March 13, 2006 (File No. 000-28317))
*10.7		Employment Agreement, dated as of July 16, 2001, between Digimarc Corporation and Bruce Davis (incorporated by reference to Exhibit 10.1 to Digimarc Corporation's Quarterly Report on Form 10-Q, as filed by Digimarc Corporation with the Securities and Exchange Commission on May 15, 2003 (File No. 000-28317))
*10.8		Form of Change of Control Retention Agreement entered into by and between Digimarc Corporation and each of Messrs. McConnell, Chamness and Stager (incorporated by reference to Exhibit 10.1 to Digimarc Corporation's Current Report on Form 8-K, as filed by Digimarc Corporation with the Securities and Exchange Commission on January 4, 2007 (File No. 000-28317))
*10.9		DMRC Corporation 2008 Incentive Plan(2)
*10.10		Equity Compensation Program for Nonemployee Directors Under the DMRC Corporation 2008 Incentive Plan(2)
99.1		Information Statement of Digimarc Corporation(1)

*: Management contract or compensatory plan or arrangement.
†: The Separation Agreement contains a brief list identifying all schedules and exhibits thereto. Such schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The

Registrant agrees to furnish supplementally a copy of the omitted schedules and exhibits to the Securities and Exchange Commission upon request.

(1): Filed herewith.
(2): Previously filed.
(3): Confidential treatment has been requested for certain portions omitted from this exhibit pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. Confidential portions of this exhibit have been separately filed with the Securities and Exchange Commission.

SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this amendment to the registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: October 14, 2008

		DIGIMARC CORPORATION
		By:	/s/ BRUCE DAVIS Bruce Davis Chairman and Chief Executive Officer

EXHIBIT INDEX

Exhibit Number		Exhibit Description
2.1		Separation Agreement among DMRC Corporation, DMRC LLC, Digimarc Corporation and, with respect to certain sections, L-1 Identity Solutions, Inc.(2)†
3.1		Restated Certificate of Incorporation of Digimarc Corporation(2)
3.2		Amended and Restated Bylaws of Digimarc Corporation(2)
4.1		Specimen common stock certificate of DMRC Corporation(2)
4.2		Rights Agreement, dated July 31, 2008, between DMRC Corporation and Computershare Trust Company, N.A. as Rights Agent(2)
4.3		Form of Certificate of Designation of Series R Preferred Stock (attached as an exhibit to the Rights Agreement filed as Exhibit 4.2 hereto)(2)
4.4		Form of Rights Certificate (attached as an exhibit to the Rights Agreement filed as Exhibit 4.2 hereto)(2)
10.1		Transition Services Agreement between DMRC Corporation and Digimarc Corporation(1)(3)
10.2		License Agreement between DMRC Corporation and L-1 Identity Solutions Operating Company(2)(3)
10.3		Agreement, dated as of October 1, 2007, between Digimarc Corporation and The Nielsen Company(1)(3)
10.4		Counterfeit Deterrence System Development and License Agreement, dated as of January 1, 1999, between Digimarc Corporation and the Bank for International Settlements(1)(3)
*10.5		Form of Indemnification Agreement between DMRC Corporation and each of its executive officers and directors(2)
*10.6		Form of Indemnification Agreement between Digimarc Corporation and each of its executive officers and directors (incorporated by reference to Exhibit 10.19 to Digimarc Corporation's Annual Report on Form 10-K, as filed by Digimarc Corporation with the Securities and Exchange Commission on March 13, 2006 (File No. 000-28317))
*10.7		Employment Agreement, dated as of July 16, 2001, between Digimarc Corporation and Bruce Davis (incorporated by reference to Exhibit 10.1 to Digimarc Corporation's Quarterly Report on Form 10-Q, as filed by Digimarc Corporation with the Securities and Exchange Commission on May 15, 2003 (File No. 000-28317))
*10.8		Form of Change of Control Retention Agreement entered into by and between Digimarc Corporation and each of Messrs. McConnell, Chamness and Stager (incorporated by reference to Exhibit 10.1 to Digimarc Corporation's Current Report on Form 8-K, as filed by Digimarc Corporation with the Securities and Exchange Commission on January 4, 2007 (File No. 000-28317))
*10.9		DMRC Corporation 2008 Incentive Plan(2)
*10.10		Equity Compensation Program for Nonemployee Directors Under the DMRC Corporation 2008 Incentive Plan(2)
99.1		Information Statement of Digimarc Corporation(1)

*: Management contract or compensatory plan or arrangement.
†: The Separation Agreement contains a brief list identifying all schedules and exhibits thereto. Such schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The

Registrant agrees to furnish supplementally a copy of the omitted schedules and exhibits to the Securities and Exchange Commission upon request.

(1): Filed herewith.
(2): Previously filed.
(3): Confidential treatment has been requested for certain portions omitted from this exhibit pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. Confidential portions of this exhibit have been separately filed with the Securities and Exchange Commission.

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Information Required in Registration Statement Cross-Reference Sheet Between the Information Statement and Items of Form 10

Item 1. Business

Item 1A. Risk Factors

Item 2. Financial Information

Item 3. Properties

Item 4. Security Ownership of Certain Beneficial Owners and Management

Item 5. Directors and Executive Officers

Item 6. Executive Compensation

Item 7. Certain Relationships and Related Transactions, and Director Independence

Item 8. Legal Proceedings

Item 9. Market Price of and Dividends on the Registrant's Common Equity and Related Stockholder Matters

Item 10. Recent Sales of Unregistered Securities

Item 11. Description of Registrant's Securities to be Registered

Item 12. Indemnification of Officers and Directors

Item 13. Financial Statements and Supplementary Data

Item 14. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Item 15. Financial Statements and Exhibits

SIGNATURES
EXHIBIT INDEX

EXHIBIT 10.1

CONFIDENTIAL PORTIONS OMITTED

TRANSITION SERVICES AGREEMENT

THIS TRANSITION SERVICES AGREEMENT, dated as of August 1, 2008, but effective pursuant to Article VII (this “ Agreement ”), is by and between Digimarc Corporation, a Delaware corporation (“ Digimarc ”), and DMRC Corporation (“ DMRC ”), a Delaware corporation and wholly owned subsidiary of DMRC LLC, a Delaware limited liability company (“ DMRC LLC ”). Digimarc and DMRC are individually referred to herein as a “ Party ” and collectively as the “ Parties .” Capitalized terms used but not otherwise defined herein shall have the meanings given to such terms in the Separation Agreement (as defined below).

WHEREAS, Digimarc entered into an Agreement and Plan of Merger, dated as of March 23, 2008 (the “ Original Merger Agreement ”), by and among Digimarc, L-1 Identity Solutions, Inc., a Delaware corporation (“ L-1 ”), and Dolomite Acquisition Co., a Delaware corporation and wholly owned subsidiary of L-1 (“ Merger Sub ”), pursuant to which Digimarc would merge with and into Merger Sub, with Digimarc continuing as a wholly owned subsidiary of L-1;

WHEREAS, Digimarc, L-1 and Merger Sub have entered into an Amended and Restated Agreement and Plan of Merger, dated as of June 29, 2008, as amended (the “ Merger Agreement ”), which provides, among other things, for the Offer and the Merger;

WHEREAS, the Parties have entered into a Separation Agreement, dated as of the date hereof (the “ Separation Agreement ”), pursuant to which (i) Digimarc will transfer or cause to be transferred to DMRC LLC, all of the DMRC Assets, which represent all assets used primarily in the operation of the Digital Watermarking Business, and all of the DMRC Liabilities, (ii) pursuant to Section 3.04 of the Separation Agreement, the Distribution or the Trust Transfer will occur prior to the completion of the Offer, and (iii) immediately following the Distribution or Trust Transfer, as applicable, DMRC LLC will merge with and into DMRC, with DMRC continuing as the surviving corporation (the “ DMRC Merger ”);

WHEREAS, this Agreement, the Separation Agreement, and the License Agreement between DMRC and L-1 Identity Solutions Operating Company, dated as of the date hereof (collectively, the “ Transaction Agreements ”) set forth certain transactions that are conditions to the completion of the Offer and the Merger; and

WHEREAS, Digimarc and one or more of the Digimarc Subsidiaries or Affiliates (collectively, the “ Digimarc Group ”), on the one hand, and DMRC and one or more of the DMRC Subsidiaries (collectively, the “ DMRC Group ”), on the other hand, will provide certain services (the “ Services ”) to each other in accordance with the terms and subject to the conditions set forth herein for a period described herein on and after the Distribution Date, or Trust Transfer Date, as applicable, in order to assist in the separation and transition of the Digital Watermarking Business and the continued operation and transition of the Secure ID Business.

NOW, THEREFORE, in consideration of the covenants and agreements set forth in this

Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound hereby, agree as follows:

ARTICLE I

SERVICES

Section 1.1. Services Provided by the Parties . In order to continue the operation of the Secure ID Business and to facilitate the orderly and effective transition of the Digital Watermarking Business from Digimarc to DMRC and to assist in the continued operation and transition of the Secure ID Business, the DMRC Group and the Digimarc Group each shall provide to the other the Services set forth in Sections 1.2 and 1.3 , respectively (collectively, the “ Services ”).

Section 1.2. Services Provided by the DMRC Group to the Digimarc Group . The DMRC Group shall provide the Digimarc Group, to the extent such Services may be requested by the Digimarc Group from time to time for the term of this Agreement, the following Services set forth in this Section 1.2 (“ DMRC Services ”). Any additional services to be provided by the DMRC Group but not specifically detailed in the schedules to this Section 1.2 (collectively, the “ DMRC Services Schedules ”), or any change in the fees to be charged from those set forth on any DMRC Services Schedule, shall be mutually agreed upon by the Parties as an amendment to the applicable schedule.

1.2.1 Accounting and Tax Services . The DMRC Group shall provide each of the accounting and tax services specified in Schedule 1.2.1 (the “ DMRC Accounting and Tax Services ”) to the Digimarc Group, in accordance with the terms and conditions for such DMRC Accounting and Tax Services, and at the applicable rates, fees and charges associated with such DMRC Accounting and Tax Services, as set forth on Schedule 1.2.1 .

1.2.2 Information Technology Services . The DMRC Group shall provide each of the information technology services specified in Schedule 1.2.2 (the “ DMRC IT Services ”) to the Digimarc Group, in accordance with the terms and conditions for such DMRC IT Services, and at the applicable rates, fees and charges associated with such DMRC IT Services, as set forth on Schedule 1.2.2 .

1.2.3 Legal Services . The DMRC Group shall provide each of the legal services specified in Schedule 1.2.3 (the “ DMRC Legal Services ”) to the Digimarc Group, in accordance with the terms and conditions for such DMRC Legal Services, and at the applicable rates, fees and charges associated with such DMRC Legal Services, as set forth on Schedule 1.2.3 .

1.2.4 Human Resources Services . The DMRC Group shall provide each of the human resources services specified in Schedule 1.2.4 (the “ DMRC Human Resources Services ”) to the Digimarc Group, in accordance with the terms and conditions for such DMRC Human Resources Services, and at the applicable rates, fees and charges associated with such DMRC Human Resources Services, as set forth on Schedule 1.2.4 .

1.2.5 Other Services . To the extent fees for a specific DMRC Service to be provided to the Digimarc Group are not set forth in Schedule 1.2.1 through Schedule 1.2.4 , then the DMRC Group shall provide such additional Service in accordance with the terms and conditions listed on Schedule 1.2.5 .

Section 1.3. Services Provided by Digimarc Group to the DMRC Group . The Digimarc Group shall provide the DMRC Group, to the extent such Services may be requested by the DMRC Group from time to time for the term of this Agreement, the following Services set forth in this Section 1.3 (“ Digimarc Services ”). Any additional services to be provided by the Digimarc Group but not specifically detailed in the schedules to this Section 1.3 (collectively, the “ Digimarc Services Schedules ”), or any change in the fees to be charged from those set forth on any Digimarc Services Schedule, shall be mutually agreed upon by the Parties as an amendment to the applicable schedule.

1.3.1 Accounting and Tax Services . The Digimarc Group shall provide each of the accounting and tax services specified in Schedule 1.3.1 (the “ Digimarc Accounting and Tax Services ”) to the DMRC Group, in accordance with the terms and conditions for such Digimarc Accounting and Tax Services, and at the applicable rates, fees and charges associated with such Digimarc Accounting and Tax Services, as set forth on Schedule 1.3.1 .

1.3.2 Information Technology Services . The Digimarc Group shall provide each of the information technology services specified in Schedule 1.3.2 (the “ Digimarc IT Services ”) to the DMRC Group, in accordance with the terms and conditions for such Digimarc IT Services, and at the applicable rates, fees and charges associated with such Digimarc IT Services, as set forth on Schedule 1.3.2 .

1.3.3 Legal Services . The Digimarc Group shall provide each of the legal services specified in Schedule 1.3.3 (the “ Digimarc Legal Services ”) to the DMRC Group, in accordance with the terms and conditions for such Digimarc Legal Services, and at the applicable rates, fees and charges associated with such Digimarc Legal Services, as set forth on Schedule 1.3.3 .

1.3.4 Human Resources Services . The Digimarc Group shall provide each of the human resources services specified in Schedule 1.3.4 (the “ Digimarc Human Resources Services ”) to the DMRC Group, in accordance with the terms and conditions for such Digimarc Human Resources Services, and at the applicable rates, fees and charges associated with such Digimarc Human Resources Services, as set forth on Schedule 1.3.4 .

1.3.5 Other Services . To the extent fees for a specific Digimarc Service to be provided to the DMRC Group are not set forth in Schedule 1.3.1 through Schedule 1.3.4 , then the Digimarc Group shall provide such additional Service in accordance with the terms and conditions listed on Schedule 1.3.5 .

ARTICLE II

PERFORMANCE OF SERVICES

Section 2.1. Manner of Performance . Each of the Parties agrees that it shall provide the Services being requested herein with the degree of care, skill, confidentiality and diligence consistent with its current practices, but in no event less than in conformance with industry standards. Each Party shall ensure that its personnel providing services hereunder, shall devote sufficient time and effort as reasonably required to perform the Services. If a dispute arises over the nature or quality of the Services, the prior practice of Digimarc with respect to the Services shall be conclusive as to the nature and quality of the Services.

Section 2.2. Provision of Information . Any data, information, equipment or general directions necessary for the Digimarc Group or DMRC Group to perform the Services shall be provided to the Party performing the Services in a timely manner.

Section 2.3. Termination of any Service . The termination of any one or more of the specific Services shall have no impact on the Digimarc Group’s or the DMRC Group’s obligation to continue to provide any other Services.

Section 2.4. Laws and Regulations . The Parties agree that they will provide and use the Services contemplated hereunder only in accordance with all applicable federal, state and local laws and regulations, and in accordance with the conditions, rules, regulations and specifications which may be set forth in any manuals, materials, documents or instructions provided to the Party performing such Services on or prior to the date of this Agreement.

Section 2.5. Modification of Service Levels . Prior to the end of the first calendar month following the Distribution Date, or Trust Transfer Date, as applicable, and prior to the end of each calendar month thereafter, the Parties will review the Services provided to discuss whether the Services will continue during, or terminate, the next immediately succeeding month. Each Party will notify the other in writing of the termination of any Services pursuant to Article VIII .

Section 2.6. No Representations or Warranties .

2.6.1. THE PARTIES MAKE NO EXPRESS REPRESENTATIONS OR WARRANTIES EXCEPT THOSE EXPRESSLY STATED IN THIS AGREEMENT OR THE SCHEDULES HERETO.

2.6.2. EXCEPT FOR THOSE EXPRESSLY STATED IN THIS AGREEMENT OR THE SCHEDULES HERETO, EACH PARTY EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES, REPRESENTATIONS AND CONDITIONS OF ANY KIND, WHETHER EXPRESS OR IMPLIED, TO THE FULL EXTENT PERMISSIBLE, INCLUDING, BUT NOT LIMITED TO, AVAILABILITY, ACCURACY, COMPLETENESS, CORRECTNESS, RELIABILITY, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE OR NON-INFRINGEMENT WITH RESPECT TO THE SERVICES, GOODS OR PRODUCTS FURNISHED IN CONNECTION HEREWITH.

Section 2.7. Employees; Use of Subcontractors . The Parties shall employ and retain the employees necessary to enable the provider to perform the Services under the terms of this Agreement. If either Party is unable to retain one or more employees necessary to provide or perform the Services for which the Party is obligated under this Agreement, each of the Parties may hire or engage one or more subcontractors to perform one or more of its Services; provided , that each of the Parties will in all cases remain responsible for its respective obligations under this Agreement, including, without limitation, with respect to the scope of the Services, the standard for Services and the content of the Services provided. Under no circumstances will DMRC be responsible for making any payments directly to any subcontractor engaged by Digimarc, nor will Digimarc be responsible for making any payments directly to any subcontractor engaged by DMRC.

ARTICLE III

CHARGES FOR SERVICES

From and after the date of this Agreement and throughout the term of this Agreement, DMRC agrees to pay to Digimarc on a monthly basis the service fees set forth on the Digimarc Services Schedules, and Digimarc agrees to pay DMRC on a monthly basis the service fees set forth on the DMRC Services Schedules. The Parties agree that, unless otherwise set forth in the DMRC Services Schedules or the Digimarc Services Schedules, the amounts to be paid for Services rendered hereunder are intended to reasonably cover each of the Digimarc Group’s and the DMRC Group’s costs in providing the Services.

ARTICLE IV

PAYMENT OF CHARGES AND REIMBURSEMENTS

On or before the thirtieth (30 ^th ) day of each month during the term of this Agreement, each Party (or its designee) shall submit to the other Party an invoice for the Services provided hereunder during the immediately preceding calendar month representing amounts determined in accordance with Article III above, if any. Subject to Section 5.2 , each Party shall remit payment to the other Party within thirty (30) days after its receipt of such invoice. Unless otherwise agreed to in writing, each Party shall remit all funds due under this Agreement to the other Party (or its designee) by wire transfer in immediately available funds based on the instructions set forth in Exhibit A , a copy of which is attached to and made a part of this Agreement.

ARTICLE V

RECORDS AND AUDITS

Section 5.1. Records Maintenance and Audits . The Parties shall, for two (2) years after the termination of this Agreement, maintain records and other evidence sufficient to accurately and properly calculate any amounts due pursuant to Article III hereof. Each of the Parties, or their respective Representatives (as defined below), shall have reasonable access, after requesting such access in writing, during normal business hours to such records for the purpose

of auditing and verifying the accuracy of the invoices submitted regarding such amounts due. Any such audits performed by or on behalf of Digimarc or DMRC shall be at the requesting Party’s sole cost and expense , unless the results of such audit reveals a five percent (5%) or more discrepancy in favor of the requesting Party, in which case the audited Party shall pay all reasonable costs and expenses directly associated with such audit. The Party being audited shall reasonably cooperate with the auditing Party’s Representatives to accomplish the audit. Each Party shall have the right to audit the other Party’s books for a period of one (1) year after the month in which the Services were rendered.

Section 5.2. Disputed Amounts . In the event of a good faith dispute as to the amount or propriety of any invoice or any portions thereof submitted pursuant to Articles III and IV , the Party receiving the Services shall pay all charges on such invoice other than disputed amounts and shall promptly notify the other Party in writing of such disputed amounts. So long as the Parties are attempting in good faith and in accordance with the terms of Section 9.1 , to resolve the dispute, neither Party shall be entitled to terminate the Services related to, or that are the cause of, the disputed amounts. If it is determined, pursuant to Section 9.1 , that the Party receiving Services is required to pay all or a portion of the disputed amounts to the Party providing Services, the Party receiving the Services shall pay such amounts promptly and in no case more than five (5) days after such determination is made.

Section 5.3. Undisputed Amounts . Any statement or payment not disputed in writing by DMRC or Digimarc within six (6) months after the month in which the Services were rendered shall be considered final and no longer subject to adjustment.

ARTICLE VI

CONFIDENTIALITY

Section 6.1. Confidential Information . Each Party acknowledges that in connection with its performance under this Agreement, it may gain access to confidential material and information that is of a proprietary, technical or business nature to the other Party with respect to the Services being performed hereunder. Therefore, each Party agrees that it shall not, and shall cause each of its respective officers, directors, employees, and other agents and representatives, including attorneys, agents, customers, suppliers, contractors and consultants (collectively, such Party’s “ Representatives ”), not to disclose, reveal, divulge or communicate to any person (other than Representatives of such Party who reasonably need to know such information in providing Services hereunder) or use or otherwise exploit for its own benefit or for the benefit of any third Party, any of the other Party’s Confidential Information (as defined below). If any Confidential Information is disclosed by a Party to its Representatives in connection with the Services hereunder, then the Confidential Information so disclosed shall be used only as required to perform the Services. Such Party shall use the same degree of care to prevent and restrain the unauthorized use or disclosure of the other Party’s Confidential Information by any of its Representatives as they currently use for their own confidential information of a like nature, but in no event less than a reasonable standard of care. If a Party is required to disclose Confidential Information of the other Party due to a provision of applicable law, a compulsory disclosure notice of a court or governmental agency or the rules and regulations of the New York Stock

Exchange or Nasdaq Global Market, the Party required to make such disclosure shall promptly notify the other Party and shall assist the other Party in obtaining confidential treatment of such Confidential Information. “ Confidential Information ” of a Party means any information, material or documents relating to the business of such Party currently or formerly conducted, or proposed to be conducted, by such Party furnished to or in possession of the other Party, irrespective of the form of communication, and all notes, analyses, compilations, forecasts, data, translations, studies, memoranda or other documents prepared by or on behalf of the other Party that contain or otherwise reflect such information, material or documents. Confidential Information does not include, and there shall be no obligation hereunder with respect to, information that (a) is or becomes generally available to the public, other than as a result of a disclosure by any member of the other Party or any of its Representatives not otherwise permissible hereunder, (b) the other Party can demonstrate was or became available to such other Party from a source other than the first Party, or (c) is developed independently by the other Party without reference to the Confidential Information; provided , however , that, in the case of clause (b) above, the source of such information was not known by the other Party to be bound by a confidentiality agreement with, or other contractual, legal or fiduciary obligation of confidentiality to, the first Party with respect to such information.

Section 6.2. Return of Confidential Information . Following termination of the Services hereunder, upon written request at any time by either Party, the Parties shall use commercially reasonable efforts to account for and return or destroy all papers, books, records and electronic records containing any Confidential Information.

Section 6.3 Injunctive Relief. The Parties acknowledge that a breach of this Article VI, will give rise to irreparable injury to a Party that is inadequately compensable in damages. Accordingly, in the event that either Party breaches this Article VI, the non-breaching Party may seek injunctive relief against the breach or threatened breach of the foregoing undertakings, in addition to any other legal remedies that may be available. The Parties acknowledge and agree that the covenants contained herein are necessary for the protection of the legitimate business interests of the Parties and are reasonable in scope and content.

ARTICLE VII

TERM OF AGREEMENT

Unless sooner terminated pursuant to Article VIII hereof, this Agreement shall become effective for a term commencing on the Distribution Date, or the Trust Transfer Date, as applicable, and ending upon the completion, or termination in accordance with Article VIII , of all Services pursuant to the terms set forth on the Digimarc Services Schedules and the DMRC Services Schedules, as may be amended from time to time.

ARTICLE VIII

TERMINATION

Section 8.1. Termination of Agreement .

8.1.1. This Agreement may be terminated after the Distribution Date, or Trust Transfer Date, as applicable:

(a) at the election of a non-breaching Party if the other Party fails to perform or violates any material obligation of this Agreement and fails to cure such breach within thirty (30) days after the receipt of written notice of such breach from the non-breaching Party, in which case, the non-breaching party shall have no liability for such termination;

(b) immediately (i) upon the filing by a Party of a voluntary petition in bankruptcy or insolvency or petitions for reorganization under any bankruptcy law, (ii) if a Party consents to involuntary petition in bankruptcy or if a receiving order is given against the Party under the United States Bankruptcy Code; or (iii) if an order, judgment or decree by a court of competent jurisdiction, upon the application of a creditor, is entered approving a petition seeking reorganization or appointing a receiver, trustee or liquidator of all or substantially all of such Party’s assets and such order, judgment or decree continues in effect for a period of thirty (30) consecutive days; or

8.1.2. Notwithstanding any other provision of this Agreement, this Agreement may be terminated at any time prior to the Distribution Date, or Trust Transfer Date, as applicable, by the Board of Directors of Digimarc in the event the Merger Agreement is terminated in accordance with its terms. In the event of such termination, no Party hereto shall have any liability to the other Party hereto by reason of this Agreement.

Section 8.2. Termination of Services . At any time or from time to time, either Party may terminate any one or more of the specific Services provided hereunder by giving the other Party at least thirty (30) days’ prior written notice to that effect.

ARTICLE IX

MISCELLANEOUS

Section 9.1. Dispute Resolution . The procedures for discussion and negotiation set forth in this Section 9.1 shall apply to all disputes, controversies or claims (whether arising in contract, tort or otherwise) that may arise out of or relate to, or arise under or in connection with this Agreement or the transactions contemplated hereby.

9.1.1. Primary Points of Contact . It is the intent of the Parties hereto to use their respective reasonable efforts to resolve expeditiously any dispute, controversy or claim between them with respect to the matters covered hereby that may arise from time to time on a mutually acceptable negotiated basis. In furtherance of the foregoing, each of Digimarc and DMRC shall appoint one or more employees to serve as the primary contact to address questions and consider issues that arise under this Agreement. Such Digimarc employee or employees shall be designated the “ Digimarc Contract Committee ” and such DMRC employee or employees shall

be designated the “ DMRC Contract Committee .” If a dispute arises, the Digimarc Contract Committee and the DMRC Contract Committee shall consider the dispute for up to seven (7) Business Days (as defined in Section 9.7 ) following receipt of a notice from either Party hereto specifying the nature of the dispute, during which time the Digimarc Contract Committee and the DMRC Contract Committee shall meet in person at least once, and attempt to resolve the dispute.

9.1.2. Senior Management . If the dispute is not resolved by the end of the seven (7) Business Day period referred to in Section 9.1.1 , or if the Digimarc Contract Committee and the DMRC Contract Committee agree that the dispute cannot be resolved by them, either Party hereto may deliver a notice (an “ Escalation Notice ”) demanding an in person meeting involving appropriate representatives of the Parties hereto at a senior level of management of the Parties hereto (or if the Parties agree, of the appropriate strategic business unit or division within such entity) (collectively, “ Senior Executives ”). Thereupon, each of the Digimarc Contract Committee and the DMRC Contract Committee shall promptly prepare a memorandum stating (a)the issues in dispute and each Party’s position thereon, (b) a summary of the evidence and arguments supporting each Party’s positions (attaching all relevant documents), (c a summary of the negotiations that have taken place to date, and (d) the name and title of the Senior Executive or Senior Executives who shall represent each Party. The Digimarc Contract Committee and the DMRC Contract Committee shall deliver such memorandum to its respective Senior Executive or Senior Executives promptly upon receipt of such memorandum from the Digimarc Contract Committee and the DMRC Contract Committee, respectively. The Senior Executives shall meet for negotiations (which may be held telephonically) at a mutually agreed time and place within ten (10) days of receipt of the Escalation Notice, and thereafter as often as the Senior Executives deem reasonably necessary to resolve the dispute.

9.1.3. Court Actions . In the event that any Party, after complying with the provisions set forth in Sections 9.1.1 and 9.1.2 , desires to commence an action, such Party may submit the dispute, controversy or claim (or such series of related disputes, controversies or claims), to the Chancery Court of the State of Delaware or any federal court sitting in the State of Delaware. Unless otherwise agreed in writing, the Parties hereto shall continue to provide service and honor all other commitments under this Agreement during the course of dispute resolution pursuant to the provisions of this Section 9.1 with respect to all matters not subject to such dispute, controversy or claim.

Section 9.2. Force Majeure . Neither Party shall have any obligation to perform any specific Service hereunder if its failure to do so is caused by or results from any act of God, governmental action, natural disaster, strike, terrorism, war, insurrection or other cause or circumstances beyond its control, which acts or occurrences make it impossible for such Party to carry out its obligations under this Agreement. During the term of the force majeure event, the Party receiving the Service shall have no obligation to pay for the specific Service that the other Party does not provide as a result of the force majeure event; provided , that the Party performing the Service, shall, unless instructed otherwise by the Party receiving the Service, use commercially reasonable efforts to remove or eliminate such cause of delay or default.

Section 9.3. Limitation of Liability . EXCEPT IN THE CASE OF FRAUD, NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY INCIDENTAL, INDIRECT, SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL LOSSES OR DAMAGES OF ANY KIND OR NATURE WHATSOEVER, INCLUDING LOST PROFITS AND GOODWILL, WITH RESPECT TO THE SERVICES PROVIDED UNDER THIS AGREEMENT.

Section 9.4. Indemnification . Subject to the limitations set forth in Section 9.3 , each Party shall release, defend (upon the other Party’s request), protect, indemnify and save the other Party and its Affiliates harmless from and against all liability, claims, costs, expenses, demands, suits and causes of action of every kind and character which the first Party or any of its Affiliates may sustain or incur, arising, resulting from or related to the gross negligence, bad faith or willful misconduct of the other Party, its employees, contractors, agents or representatives in the provision of any Service.

Section 9.5. Independent Contractor . The Parties hereto agree that the Services rendered by the Digimarc Group and the DMRC Group in fulfillment of the terms and obligations of this Agreement shall be as an independent contractor and not as an employee, and with respect thereto, the Digimarc Group, the DMRC Group and their respective employees, contractors or agents are not entitled to the compensation or benefits provided by the other Party to its employees, including, without limitation, group insurance and participation in any employee benefit and pension plans. Nothing stated in this Agreement shall be construed to create an agency relationship, partnership, association or joint venture between DMRC Group and Digimarc Group. No employee, contractor or agent of either the Digimarc Group or the DMRC Group shall represent to any third-Party to be anything other than an independent contractor of the other Party. Nothing in this Agreement shall permit the Digimarc Group or DMRC Group to create or assume any obligations or commitments in the name of such Party or for such Party without the prior consent and authorization of such Party.

Section 9.6. Complete Agreement . This Agreement and the schedules and exhibits hereto, the other Transaction Agreements and other documents referred to herein and therein shall constitute the entire agreement between the Parties hereto with respect to the subject matter hereof and shall supersede all previous negotiations, commitments and writings with respect to such subject matter.

Section 9.7. Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without reference to its conflicts of laws principles.

Section 9.8. Notices . All notices, requests and other communications to any Party hereunder shall be in writing and shall be deemed given if delivered personally, facsimiled (which is confirmed), sent by e-mail (with a return receipt) or sent by overnight courier (providing proof of delivery) to the Parties to the following addresses:

If to Digimarc or any member of the Digimarc Group subsequent to the Distribution Date, or Trust Transfer Date, as applicable, to:

L-1 Identity Solutions, Inc.

177 Broad Street

Stamford, CT 06901

Attention: Mark Molina

Facsimile: (203)504-1104

E-mail: mmolina@L1ID.com

with a copy (which shall not constitute notice) to:

Weil, Gotshal & Manges LLP

767 Fifth Avenue

New York, NY 10153

Attention: Marita A. Makinen

Facsimile: (212)310-8007

E-mail: Marita.Makinen@weil.com

and

Weil, Gotshal & Manges LLP

201 Redwood Shores Parkway

Redwood Shores, CA 94065

Attention: Kyle C. Krpata

Facsimile: (650) 802-3100

E-mail: Kyle.Krpata@weil.com

If to DMRC or any member of the DMRC Group, to:

DMRC Corporation

9405 SW Gemini Drive

Beaverton, OR 97008

Attention: Robert Chamness

Facsimile: (503)469-4771

E-mail: Robert.Chamness@digimarc.com

with a copy (which shall not constitute notice) to:

Perkins Coie LLP

1120 NW Couch Street

Tenth Floor

Portland, OR 97209

Attention: Roy W. Tucker and John R. Thomas

Facsimile: (503)727-2222

E-mail: rtucker@perkinscoie.com

jrthomas@perkinscoie.com

or such other addresses or facsimile number as such Party may hereafter specify by like notice to the other Parties hereto. All such notices, requests and other communications shall be deemed received on the date of receipt by the recipient thereof if received prior to 5:00 p.m. in the place of receipt and such day is a Business Day (as defined below) in the place of receipt. Otherwise, any such notice, request or communication shall be deemed not to have been received until the next succeeding Business Day in the place of receipt. “ Business Day ” means a day except a Saturday, a Sunday or other day on which the Securities and Exchange Commission or banks in the City of New York are authorized or required by law to be closed.

Section 9.9. Amendment and Modification . This Agreement may be amended, modified or supplemented only by a written agreement signed by all of the Parties hereto.

Section 9.10. Successors and Assigns; No Third-Party Beneficiaries . This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the Parties hereto and their successors and permitted assigns, but neither this Agreement nor any of the rights, interests and obligations hereunder shall be assigned by any Party hereto without the prior written consent of the other Party. Except for the provisions of Section 9.3 , which are also for the benefit of the indemnitees, this Agreement is solely for the benefit of Digimarc and DMRC and their respective affiliates, successors and assigns, and is not intended to confer upon any other persons any rights or remedies hereunder

Section 9.11. Counterparts . This Agreement may be executed in counterparts (each of which shall be deemed an original but all of which taken together shall constitute one and the same instrument) and shall become effective when one or more counterparts have been signed by each of the Parties and delivered to the other Party.

Section 9.12. Interpretation . The Section headings contained in this Agreement are solely for the purpose of reference, are not part of the agreement of the Parties hereto and shall not in any way affect the meaning or interpretation of this Agreement.

Section 9.13. Severability . If any provision of this Agreement or the application thereof to any person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof, or the application of such provision to persons or circumstances other than those as to which it has been held invalid or unenforceable, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby, so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any Party.

Section 9.14. References; Construction . References to any “Schedule,” “Exhibit” or “Section,” without more, are to Schedules, Exhibits and Sections to or of this Agreement. Unless otherwise expressly stated, clauses beginning with the term “including” or similar words set forth examples only and in no way limit the generality of the matters thus exemplified.

Section 9.15. Waivers . Except as provided in this Agreement, no action taken pursuant to this Agreement, including, without limitation, any investigation by or on behalf of any Party, shall be deemed to constitute a waiver by the Party taking such action of compliance with any representations, warranties, covenants or agreements contained in this Agreement. The waiver

by any Party hereto of a breach of any provision hereunder shall not operate or be construed as a waiver of any prior or subsequent breach of the same or any other provision hereunder.

Section 9.16. Specific Performance . The Parties hereto agree that irreparable damage would occur in the event any provision of this Agreement was not performed in accordance with the terms hereof and that the Parties shall be entitled to seek specific performance of the terms hereof, in addition to any other remedy at law or in equity.

Section 9.17. Waiver of Jury Trial . EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY LITIGATION, CLAIM, ACTION, SUIT, ARBITRATION, INQUIRY, PROCEEDING, INVESTIGATION OR COUNTERCLAIM (WHETHER BASED IN CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF THE PARTIES HERETO IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF.

Section 9.18. Further Assurances . Each of the Parties shall execute and deliver, or cause to be executed and delivered, all such instruments and shall take all such action as may reasonably be requested by the other Party in order to effectuate the intent and purposes of, and to carry out the terms of, this Agreement.

Section 9.19 Survival . The provisions of Articles IV , V , VI , and IX (other than Section 9.16 ), shall survive the expiration or termination of this Agreement.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

The Parties hereto have executed this Agreement on the date first written above, to be effective on the Distribution Date, or Trust Transfer Date, as applicable.

	DIGIMARC CORPORATION

	By:	/s/ Robert Chamness
	Name:	Robert Chamness
	Title:	Chief Legal Officer and Secretary


	DMRC CORPORATION

	By:	/s/ Robert Chamness
	Name:	Robert Chamness
	Title:	Chief Legal Officer and Secretary

Exhibit A

Wire Instructions

Digimarc

DMRC

Wells Fargo Bank

Portland, Oregon

[**]

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

SCHEDULE 1.2.1

DMRC ACCOUNTING AND TAX SERVICES

(a) Services to be Provided :

DMRC will provide to Digimarc, from the current shared services group located in Beaverton, Oregon, the following accounting and tax services:

1. Transaction Processing

· payroll processing

· accounts payable processing

· travel coordination and management

· credit card program,

· IT capital leases, of which there are two,

· performance bonds,

· stock administration,

· insurance administration (Property and Casualty, or P&C, and Directors and Officers, or D&O) and treasury.

2. Regulatory Reporting for tax services

· income taxes

· property

· VAT taxes

· sales and use taxes

· business and occupation taxes

· state and nations’ annual corporation reporting

· other domestic and foreign reporting

· payroll tax and vendor 10099 reporting

3. Consulting Services

· In connection with transaction services and regulatory services

(b) Duration of Services : 45 days for accounts payable, accounting, tax and payroll services, with periodic extensions thereafter, provided that employees or contractors are available to perform the requested services.

(c) Fees for Services :

DMRC will make offers of employment to the individuals in the following table, and anticipates that they will be available to provide services and support in the transition. Digimarc shall pay for such services at the following rates:

Job Function	Employee	Rate Per Hour*

CFO	Mike McConnell	$	515
Controller	John Foy	$	135
Senior Accountant	Kimberly Anderson	$	85
Administration Manager – stock, treasury, autos, credit cards, insurance	Jeanne Biermann	$	110
Financial Reporting Manager	Kelvin Wong	$	115
Executive Assistant to CFO and CIO	Sue Taylor	$	80
AP/Accounting Specialist	Beverly Foster	$	60

DMRC will not make offers of employment to the individuals in the following table, but to the extent Digimarc makes a request for such services prior to the Spin-off, DMRC will offer these individuals temporary positions as contractors. Once these individuals are severed from employment, DMRC cannot commit that they will be available to provide services and support in the transition.

Digimarc shall pay for such services at the following rates:

Job Function	Contractor**	Rate Per Hour*

Lead AP	Joanne Black	$	65
AP/Accounting Specialist	Suzanne Farmer	$	60
AP/Tax Compliance Support Specialist	Elizabeth Robles	$	65
Tax Director	Jeff Miller	$	150
Payroll Specialist	Lori Venneberg	$	75
Internal Controls Specialist	Heather Laws	$	100
Systems Support Specialist	Deina Chen-Vu	$	75
Accounting Manager	Sharon Birrel	$	100
Process Control Specialist	Renee Halpern	$	105

* The rates provided are estimates and fees will be billed at fully loaded cost. See Appendix 1 for rate detail.

** Upon an indication of interest from Digimarc, the individuals listed in this table will be offered the opportunity to continue working through the transition as contractors. The individuals may or may not be available to render services to DMRC and/or Digimarc at any time following the Spin-off

SCHEDULE 1.2.2

DMRC INFORMATION TECHNOLOGY SERVICES

(a) Services to be Provided :

1. The following basic computer operations services will be performed by DMRC:

a. Monitoring of systems, hardware and networks

b. Back up tape rotation

c. Facility cooling and electrical

2. Network usage to be charged based on actual usage

3. Personal services related to the data center transition and other IT related activities will be provided upon receipt of request in reasonable detail, at rates to be agreed upon by L-1 and DMRC at the time of such request

(b) Duration of Services :

For a period of 34 days following the Effective Time, L-1 and DMRC will be sharing L-1 computer equipment and operating system software within the DMRC facility. DMRC personnel will supply computer operations and maintenance for the L-1 hardware and software during this time.

(c) Fees for Services :

Job Function	Employee	Rate Per Hour*

Manager Infrastructure Services	Josh Bickel	$	115
Network Administrator	Rick Ly	$	85
System Administrator/Support	Adam Smith	$	60

* The rates provided are estimates and fees will be billed at fully loaded cost. See Appendix 1 for rate detail.

(d) Temporary Computer Room :

In consideration of DMRC providing the continuing data center space and infrastructure on DMRC’s premises as requested by Digimarc, DMRC was required to build a temporary space to house its separate data center for the Digital Watermarking Business. This is an expense that DMRC would not have been required to incur but for the request that DMRC continue to house Digimarc’s data center, which service will be provided pursuant to an appropriate agreement and will be managed and operated only by Digimarc employees or contractors. Digimarc understands and agrees that DMRC employees and contracts will not manage or operate the Digimarc data center. Digimarc agrees to reimburse DMRC for the reasonable costs for the build-out, maintenance and relocation of this center, at actual cost not to exceed $100,000 .

SCHEDULE 1.2.3

DMRC LEGAL SERVICES

(a) Services to be Provided :

· Litigation support

· Intellectual property protection

· Paralegal support

· Such legal services as may be required to assist in the transfer of Delayed Transfer Assets and Delayed Transfer Liabilities

Digimarc shall request such services in writing in reasonable detail.

(b) Duration of Services : Six months

(c) Fees for Services :

Job Function	Employee	Rate Per Hour*

Attorney	Robert Chamness	$	465
Attorney	Joel Meyer	$	240
Attorney	Tom Horgan	$	225
Attorney	Steve Stewart	$	190
Attorney	Bill Conwell	$	275
Paralegal	Megan Warner	$	85
Paralegal	Lisa Parkinson	$	85

* The rates provided are estimates and fees will be billed at fully loaded cost. See Appendix 1 for rate detail.

SCHEDULE 1.2.4

DMRC HUMAN RESOURCES SERVICES

(a) Services to be Provided :

1. Support and training in maintaining the HR Systems

a. HR Perspective – HR-B HRIS

b. PilotWorks – Goal Management

c. SonicRecruit – Applicant Tracking System

d. Comply – Policy Management System

e. Intellum – Learning Management System

2. Health Plan administration support

a. 5500 filing for the 2007 and 2008 plan years

(b) Duration of Services :

1. HR Systems: For a period of up to 90 days following the Effective Time.

2. Health Plans: For a period up to 90 days following the Effective Time, for administration support and for the specific time periods for the 5500 filings for the 2007 and 2008 plan years.

(c) Fees for Services :

DMRC will make an offer of employment to the individual in the following table, and anticipates that they will be available to provide services and support in the transition. Digimarc shall pay for such services at the following rates:

* The rates provided are estimates and fees will be billed at fully loaded cost. See Appendix 1 for rate detail.

Digimarc shall pay for such services at the following rates:

Job Function	Contractor**	Rate Per Hour*

HR VP	Mike Cooney	$	360
HR Director	Carol Ward	$	280
Benefits	Amanda Ihle	$	115

SCHEDULE 1.2.5

DMRC OTHER SERVICES

(a) Office Space to be Provided :

Cubical and Related Work Space : DMRC will provide cubicle and attendant office space (the “ DMRC Office Space ”) to Digimarc employees. Each cubicle will include the equipment and related amenities normally and customarily provided in the facility. L-1 personnel shall have access to conference rooms and phone rooms in accordance with the normal and customary access rules, including scheduling, applicable to DMRC Employees.

(b) Duration of Office Space Availability :

The parties will enter into an agreement wherein DMRC will provide workspace to employees of L1/Digimarc within the Beaverton facility. DMRC Office Space will be provided for a period of up to one year after the Effective Time, with periodic extensions thereafter if excess capacity remains.

(c) Rent for Office Space :

DMRC will charge Digimarc for the use of DMRC Office Space at DMRC’s cost, which will be calculated using the following equation:

Rent = TBFC x L1 Employees / Total Employees

“ Total Beaverton Facility Cost” (TBFC). The total facilities cost will include all costs for rent, utilities, pass-through expenses, taxes and related amounts incurred in operating the Beaverton facility.

“L1 Employees”. The total number of persons located at the Beaverton facility as employees or contractors who are on the L1 or Digimarc payroll

“Total Employees”. The total number of persons located at the Beaverton facility as employees or contractors

(d) Reimbursement of Direct Expense :

Any direct expenses incurred by DMRC on behalf of L1/Digimarc, such as long distance expenses, copying and office supplies, and any moving or similar expenses actually incurred, will be itemized and billed regularly. If L-1 desires to partition the space by constructing a wall, the costs of construction will be billed to L-1.

Employee Specific

General Overhead

Per hour
with 1656
Hours per

Classification

Name

Base Pay

100% Bonus

On Target
Earnings

Individual
Payrol Load
Based on OTE

Facilities
Cost (Note 1)

IT Cost (Note 2)

Executive
Cost (Note 3)

Board of
Directors
(Note 4)

Non-Labor
General
Counsel
(Note 5)

Finanace
(Note 6)

Actual 2008
Stock Comp
(Note 7)

Hr Cost
(Note 8)

Fully burdened
Cost

year of
billable
time
(Note 9)

Classification

Rounded to
nearest $5

Finance:

Kimberly Anderson

[**]

Accontant

Finance:

Jeanne Biermann

[**]

Treasury

110

Finance:

Joanne Black

[**]

Lead AP

Finance:

Suzanne Farmer

[**]

Clerical

Finance:

Beverly Foster

[**]

Clerical

Finance:

John Foy

[**]

Controller

135

Finance:

Sharon Birrel

[**]

Accounting Manager

100

Finance:

Renee Halpern

[**]

Project

105

Finance:

Heather Laws

[**]

Process

100

Finance:

Michael McConnell

[**]

CFO

515

Finance:

Jeffrey Miller

[**]

TAX

150

Finance:

Elizabeth Robles

[**]

Clerical

Finance:

Susan Taylor

[**]

Exec Assistamt

Finance:

Lori Venneberg

[**]

Payroll

Finance:

Kelvin Wong

[**]

F&A

115

Mike Cooney

[**]

VP HR

360

Carol Ward

[**]

HR Director

280

Amanda Ihle

[**]

Benfits Specialist

115

Cindy Smith

[**]

HR Manager

165

General Counsel

Jacob Carroll

[**]

Lawyer

105

General Counsel

Robert Chamness

[**]

CLO

465

General Counsel

Barbara Gilberti

[**]

Lawyer

180

General Counsel

Thomas Horgan

[**]

Lawyer

225

General Counsel

Megan Warner

[**]

Paralegal

IP Legal

William Conwell

[**]

Lawyer

275

IP Legal

Joel Meyer

[**]

Lawyer

240

IP Legal

Lisa Parkinson

[**]

Paralegal

IP Legal

Steven Stewart

[**]

Lawyer

190

Josh Bickel

[**]

IT Manger/ Security

115

Ricky Ly

[**]

Network

Adam Smith

[**]

Help Desk

Deina Chen-Vu

[**]

Business Support

John May

[**]

CIO

225

Mark Fleming

[**]

Network

Tim Putney

[**]

Help Desk

Alan Carr

[**]

Network

130

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

Note 1		Beaverton Facilities Cost of $[**] allocated to 107 FTE heads located in Beaverton.
Note 2		IT Costs net of allocations to Programs of $[] allocated to 463.25 FTE - (w/o Salaries, $[] allocated to 463.25)
Note 3		Executive Costs of $[**] allocated to 463.25 FTE
Note 4		Board of Director costs of $[**] allocated to 463.25 FTE
Note 5		General Counsel costs of $[] allocated to 463.25 FTE - (w/o Salaries, [] allocated to 463.25)
Note 6		Finance Costs of $[] allocated to 463.25 FTE -(w/o Salaries, $[] allocated to 463.25)
Note 7		Actual Stock Comp to be expensed in 2008
Note 8		HR cost of $[] allocated to 463.25 FTE ($[] allocated to 463.25)
Note 9		2080 is the total number hours in one year, less 10 Holidays and 20 FTO days, 1 week a year for sabbatical would be 1800 Hours available, assumed 10% administrative time so that would be 1620 billable hours

		** Please Note: All Stay Bonus/Severance costs to be billed directly

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

SCHEDULE 1.3.2

DIGIMARC INFORMATION TECHNOLOGY SERVICES

(a) Services to be Provided :

1. Network Charges based on usage

2. Email

3. Dynamics Great Plains (5 licenses)

4. Share Point environments

(b) Duration of Services :

For a period of up to 34 days following the Effective Time, DMRC will use the shared systems listed above.

(c) Fees for Services :

DMRC will use without any usage fee or cost the shared systems listed above.

The following individuals will be either employees or contractors of Digimarc following the Spin-off. Upon request for services, DMRC shall pay for such services at the following rates:

Job Function	Employee	Rate Per Hour*

CIO	John May	$	225
Director Delivery Services	Alan Carr	$	130
Systems Administrator	Mark Fleming	$	90
Help Desk and Cell Phone Support	Tim Putney	$	65

* The rates provided are estimates and fees will be billed at fully loaded cost.

SCHEDULE 1.3.3

DIGIMARC LEGAL SERVICES

(a) Services to be Provided :

Digimarc shall provide to DMRC such legal services as DMRC may reasonably request to assist in the continued operation and transition of the Digital Watermarking Business, including Delayed Transfer Assets and Delayed Transfer Liabilities. These services may involve certain current Digimarc Legal employees (identified below with an asterisk) if they remain employees of surviving Digimarc, either as permanent employees or as transition employees.

DMRC shall request such services in writing in reasonable detail

(b) Duration of Services : Six months.

(c) Fees for Services :

DMRC shall pay for such services at the following rates:

Job Function	Employee	Rate Per Hour*

Attorney	Barbara Giliberti	$	180
Attorney	Jacob Carroll	$	105
Attorney	Mark Molina	$	610
Attorney	Alan Roth	$	180
Attorney	Charles Taylor	$	140

* The rates provided are estimates and fees will be billed at fully loaded cost.

EXHIBIT 10.3

CONFIDENTIAL PORTIONS OMITTED

AGREEMENT

This is an agreement (the “Agreement”) between Digimarc Corporation, a Delaware Corporation, having a place of business at 9405 SW Gemini Drive, Beaverton, Oregon 97008, and its subsidiaries (“Digimarc”), and The Nielsen Company (US), Inc., a New York Corporation, having a place of business at 770 Broadway, New York, New York 10003, its Su bsidiaries and Affiliates (“Nielsen”) .

Nielsen “Affiliates” are The Nielsen Company, B.V., a Netherlands corporation, and any of the Subsidiaries of The Nielsen Company, B.V. that are not also a Subsidiary of Nielsen (US). Nielsen “Subsidiaries” include any corporation, partnership or other entity in which a party holds, directly or indirectly, ownership of, or the right to vote on behalf of, more than forty percent (40%) of its voting stock or other voting equity interests, for so long as such ownership or right to vote exists. An entity in which Nielsen owns more than forty percent (40%) of its voting stock or other voting equity interests but less than a majority of the voting stock or other voting equity interests, is not considered a Subsidiary under this definition unless that entity agrees in writing to be bound to all applicable provisions of this Agreement.

The effective date of this Agreement is October 1, 2007 (“Effective Date”) and the parties hereby further agree:

1. IP Ownership and License Grants.

1.1. Digimarc Patents . “Digimarc Patents” means all patents and patent applications owned by Digimarc that Digimarc has the right to license, and any reissues, continuations, continuations-in-part, divisionals, extensions, re-examinations, substitutions and renewals of any such patents and patent applications and any and all foreign counterparts and equivalents of the foregoing; excluding U.S. Patent Nos. [**], and any reissues, continuations, continuations-in-part, divisionals, extensions, re-examinations, substitutions, renewals and foreign counterparts and equivalents of those patents.

1.2. Current Nielsen Products and Services . Subject to the terms and conditions of this Agreement, as of January 1, 2008 (the “License Initiation Date”), Digimarc hereby grants to Nielsen a worldwide[**] (except as set forth in Section 6.4) license under the Digimarc Patents to make, have made, use, import, Sell and Offer to Sell Current Nielsen Products and Services. “Current Nielsen Products and Services” means [**] .

1.3. CIMR Products and Services . Subject to the terms and conditions of this Agreement, as of the License Initiation Date, Digimarc hereby grants to Nielsen a worldwide[**] (except as set forth in Section 6.4) license under the Digimarc Patents to make, have made, use, import, Sell and Offer to Sell the CIMR Products and Services. “CIMR Products and Services ” means products and

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services that are made or offered by and/or for Nielsen and that are provided to customers by Nielsen and described in Appendix D, and any improvements and other modifications, that are developed and marketed as a result of this Agreement, using [**].

1.4. Technology and Patents Developed Pursuant to Services Agreement . All (a) technology and patents arising from Services performed by Digimarc for Nielsen and paid for by Nielsen and (b) technology and patents that are jointly developed by Nielsen and Digimarc arising from Digimarc Services (collectively, the “[**] Technology”) shall be [**] owned by [**]. For so long as both the Current Nielsen Products and Services and CIMR Products and Services licenses are in effect and subject to Digimarc’s pre-existing agreements (as of the Effective Date, and as may be amended and/or extended from time to time in ways consistent with the relevant terms as they exist as of the Effective Date), Digimarc covenants that it shall [**] right, license or permission in or to any [**] Technology [**] the fields of CIMR Products and Services and [**]in which Nielsen conducts such activities as of the Effective Date (“[**]”).

1.5. License Limitations and Exclusions .

1.5.1. Pre-existing License . The licenses for Current Nielsen Products and Services and CIMR Products and Services do not cover products and services covered by the license from Digimarc to [**], later [**] to Nielsen [**].

1.5.2. Excluded Applications . Neither Current Nielsen Products and Services nor CIMR Products and Services shall include: [**] .

1.5.3. Sell and Offer to Sell Defined . The terms “Sell” and “Offer to Sell” and other forms of such terms, with respect to software products, mean the granting of licenses to use such software products in accordance with this Agreement.

1.5.4. No implied licenses . Nothing contained in this Agreement will be construed as conferring by implication, estoppel or otherwise, any license or other right under any patent rights or other industrial or intellectual property rights of either party except for the licenses expressly granted herein. For the avoidance of doubt, the licenses for Current Nielsen Products and Services and CIMR Products and Services do not authorize Nielsen to grant any license concerning any Digimarc Patents that is not in connection with the use of CIMR Products and Services or Current Nielsen Products and Services.

2. Royalties and Other Consideration for Licenses.

2.1. Consideration Exchanged. The minimum royalty payments and ongoing royalties and fees for Digimarc Services set forth in this Agreement provide

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partial consideration for several elements of value provided by Digimarc including: (i) licenses for both Current Nielsen Products and Services and CIMR Products and Services; (ii) use of Digimarc’s technology and market development work prior to the Effective Date; (iii) [**]; (iv) [**]; and (v) foregoing potential claims against alleged use of Digimarc Patents by Nielsen in Current Nielsen Products and Services while that license is in place.

2.2. Current Nielsen Products and Services . The license for Current Nielsen Products and Services shall remain in effect for so long as Nielsen is in compliance with payments of CIMR Royalties and Digimarc Service Fees, the Nielsen Commitment of Resources, and all other material terms of this Agreement. The license will become permanent once Nielsen has paid [**]. The fully paid up license to Current Nielsen Products and Services will [**], and will continue in effect prospectively and perpetually without further fees or royalties to Digimarc, and will not be thereafter terminable. [**].

2.3. CIMR Products and Services. The license for CIMR Products and Services shall be royalty bearing:

2.3.1. Royalties . Nielsen will pay to Digimarc royalties on CIMR Net Revenues for each year (a “Royalty Year”), as follows:

In Royalty Year One (Jan.1-Sept. 30, 2008)		[**]%
In Royalty Year Two (Oct. 1, 2008-Sept. 30, 2009)		[**]%
In Royalty Year Three		[**]%
In Royalty Year Four		[**]%
In Royalty Year Five; and each year thereafter		[**]%.

2.3.2 CIMR Net Revenues . “CIMR Net Revenues” means all revenues recognized by Nielsen that are received from, attributable to, or derived from, the CIMR Products and Services, such as revenue from [**] fees, from [**], from [**] fees, from [**] fees, from [**] fees and from [**], less: (i) any [**]. All CIMR Net Revenues, including Other Non-Interest Income, shall be calculated in good faith by Nielsen in accordance with United States generally accepted accounting principles (“GAAP”).

2.3.3 Minimum Royalties. Regardless of the level of CIMR Net Revenues, Nielsen shall pay to Digimarc, on an equal quarterly basis, annual minimum royalties as follows:

In Royalty Year One -		$[**];
In Royalty Year Two -		$[**];
In Royalty Year Three -		$[**];
In Royalty Year Four -		$[**]; and
In Royalty Year Five -		$[**].

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2.3.4 Royalty Payments. With the exception of the Royalty Year One payments, quarterly payments of the annual minimum royalties shall be due on the first day of the quarter, e.g., the first quarterly payment for Royalty Year Two shall be due on October 1, 2008. The three quarterly payments (of $[**]) for Royalty Year One shall be due on January 1, 2008, April 1, 2008, and July 1, 2008.

2.3.5 Reports. Within sixty (60) days after the end of each quarter in each Royalty Year, Nielsen will submit to Digimarc a statement in writing, in the form attached as Appendix B (the “Quarterly License Reporting Statement”), including with respect to that quarter: (a) all CIMR Net Revenues; (b) the royalties owed to Digimarc under this Agreement based on such CIMR Net Revenues; and (c) such other information reasonably necessary to enable Digimarc to verify Nielsen’s calculation of royalties payable .

2.3.6 Payment of Royalties in Excess of Minimums. Within sixty (60) days after the end of each quarter of each Royalty Year, Nielsen shall pay to Digimarc the amount of the royalties owed for that quarter if earned royalties for that Royalty Year to date exceed the annual Minimum Royalties owed for that Royalty Year. Royalty payments (including annual Minimum Royalties) are nonrefundable and any unused portions of annual Minimum Royalties do not carry forward into future Royalty Years.

2.3.7 Credits. If Nielsen has to reverse previously recognized CIMR Net Revenues reported under a previous Quarterly License Reporting Statement submitted to Digimarc in any Royalty Year in which Nielsen paid royalties exceeding the minimum annual royalty, Nielsen can claim a credit on a subsequent Quarterly License Reporting Statement in the same quarter it reverses this revenue on its income statement to the extent that it did actually pay royalties exceeding the minimum annual royalty for that Royalty Year. Such credit will not exceed the amount of royalties to be paid in the then-current quarter, but the unused credit may be carried over to succeeding quarters until exhausted.

2.3.8 Books and Records. Nielsen will maintain documents with respect to the CIMR Net Revenues in accordance with United States generally accepted accounting principles (GAAP) and will make complete and accurate entries concerning all transactions relevant to this Agreement. All such documents will be kept available by Nielsen for no less than three (3) years after the end of each Royalty Year or until the resolution of any dispute between the parties concerning the payment of royalties that arises within that three-year period.

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2.3.9 Audit. For a period of three (3) years following the end of any Royalty Year, or until the resolution of any dispute concerning the accuracy of any Quarterly License Reporting Statement submitted during that Royalty Year and arising within that three-year period, Digimarc (and its designated agents) shall have the right to inspect and examine relevant Nielsen documents relating to the calculation of royalties, provided, however, that Nielsen may redact such documents to preserve the confidentiality of Nielsen proprietary information that is not necessary to verify the calculation of royalties. Any such inspection and examination will take place upon reasonable prior written notice to Nielsen, during Nielsen’s regular business hours and no more than once a year. The cost of such inspection and examination will be borne by Digimarc unless there is an actual underpayment of more than five percent (5%) by Nielsen in that Royalty Year, in which case Nielsen will pay the reasonable out-of-pocket cost of the inspection and examination.

2.3.10 Overdue Amounts. Digimarc will be entitled to charge, and Nielsen will pay, interest on any overdue amounts or underpayments under this Agreement at the rate of one percent (1%) per month (or part thereof), or at such lower rate as may be the maximum rate allowed under applicable law.

3. Digimarc Services.

3.1. Authorized Services. Digimarc will perform services for Nielsen relating to the CIMR Products and Services (the “Digimarc Services”), including research, development, engineering, quality assurance, market research and development, strategic planning, strategy development, business development, preparing, obtaining and maintaining patents, project management, reporting, and such other services or activities as the parties may mutually agree. Digimarc will perform the Digimarc Services in good faith and with a reasonable standard of quality, but in no event with a standard of quality less than that Digimarc employs for services Digimarc performs for itself . The Digimarc Services shall not include any time or labor spent by Digimarc in its own strategic planning or the management of its own organization, outside of the management of the specific activities to be conducted as part of such Services.

3.2 Annual Plan. The particular services to be performed and expenditures to be made by Digimarc shall be set forth in an annual plan and budget (the “Annual Plan”). The parties shall mutually agree upon a process for determining the Annual Plan, which shall state reasonable and specific objectives to be met by Digimarc, and which shall take into account Nielsen’s strategic goals and operational experience, Digimarc’s resources and capabilities to assist Nielsen in achieving those goals, and the market conditions then prevailing. The parties shall also mutually agree upon an informal process for change management and for resolving disputes concerning determination of the Annual Plan. In all events,

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Digimarc shall make resources available in each year covered by a timely submitted and reasonable Annual Plan (a “Plan Year”) sufficient to perform the Services identified in the Annual Plan. The first Plan Year will begin on October 1, 2007, prior to completion of the Annual Plan, based upon a short statement of work to be agreed upon by the parties. The first Annual Plan will be determined as soon as practicable thereafter, and no later than December 15, 2007. Successive Annual Plans shall be determined no later than ninety (90) days prior to the beginning of each subsequent Plan Year. If Digimarc reasonably believes that any requested changes to the Annual Plan will result in additional expenditures exceeding those approved by Nielsen in the Annual Plan, it shall so inform Nielsen. If Nielsen and Digimarc agree to the requested changes and such additional expenditures, they shall amend the Annual Plan to reflect such changes. Unless Nielsen authorizes such additional expenditures in writing, Nielsen shall not be obligated to pay for Services in excess of the larger of (a) the amount set forth in the Annual Plan (including as amended pursuant to the preceding sentence) or (b) the Service Minimum Fee (as defined below).

3.3 Quarterly Reporting and Review. Within thirty (30) days following the end of each quarter during each Plan Year, Digimarc shall provide reports stating its progress in achieving the objectives set forth in the Annual Plan, and describing in detail the Services performed and expenditures made in that quarter. The parties shall mutually agree upon a process for a joint quarterly review of Digimarc’s progress in achieving the objectives set forth in the Annual Plan, and for considering any changes that either Nielsen or Digimarc may propose to the Annual Plan.

3.4 Minimum Service Fees. Subject to any termination of its obligation to engage Digimarc to perform Services, Nielsen shall pay, in equal quarterly payments as set forth below, the following minimum annual amounts for Services in each Plan Year (the “Minimum Service Fees”):

Annual Plan Period	Plan Year 1		Plan Year 2		Plan Years 3-5 (per year)

Minimum Fees	$	[**]	$	[**]	$	[**]

Quarterly payments of such fees, including Minimum Service Fees, will be due and payable to Digimarc only for those quarters in which Digimarc performs Services in accordance with a timely submitted and reasonable Annual Plan, at such levels as would be sufficient to generate the Minimum Service Fees as set forth above; or if Nielsen fails to timely submit a reasonable Annual Plan, in which Digimarc was ready, willing and able to perform such level of Services. Quarterly Minimum Service Fee payments are due and payable to Digimarc on the first day of each quarter in which the Services are to be provided. There will be no Minimum Service Fee for the first quarter (beginning October 1, 2007) of the first Plan Year. The Plan Year 1 Minimum Service Fees, less actual fees earned in that first quarter, will be spread evenly over the remaining quarters of that Year.

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3.5 Labor Rates. Labor rates charged for Services will be as shown in Appendix A. The labor rates will be increased by five percent per year, reflecting an estimate of average rates of wage and benefits cost inflation, and may otherwise be adjusted by mutual agreement of the parties.

3.6 Services Payment Schedule and Invoice. Digimarc shall furnish an invoice to Nielsen following each quarter of any Plan Year. The invoice shall be accompanied by an itemization of the Services actually performed in that quarter, including an identification of individual timekeepers, their respective hours and rates, and the nature of the work performed by them with reference to the objectives of the Annual Plan. The invoice shall also be accompanied by an itemization of those out-of-pocket expenditures reasonably incurred by Digimarc in performing the Services, reimbursement of which shall be included in the Minimum Service Fees. Within thirty (30) days of receipt of such invoice, Nielsen shall pay for Services actually performed by Digimarc in accordance with the then-current Annual Plan in that quarter to the extent that the Services actually performed by Digimarc within that Plan Year to date, as reflected in the cumulative quarterly invoices for that Plan Year, exceed the Minimum Service Fees owed for that Plan Year cumulatively to date. If the amount of Services actually performed and invoiced in that quarter, when added to the amount of Services actually performed and invoiced in prior quarters of that Plan Year, is less than the Minimum Service Fees owed for that Plan Year cumulatively to date, Nielsen shall [**].

3.7 Audit Rights. For a period of three (3) years following the end of any Plan Year, or until resolution of a dispute concerning the accuracy of the invoices or quarterly reports for a particular Plan Year arising within that three-year period, Nielsen (and its designated agents) shall have the right to inspect and examine Digimarc’s books and records relating to the Digimarc Services, including time records and activity logs, for the purpose of determining whether Digimarc’s invoices and quarterly reports for that Plan Year are accurate; provided, however, that Digimarc may redact such documents to preserve the confidentiality of Digimarc proprietary information that is not necessary to verify the accuracy of the invoices or quarterly reports . Any such inspection and examination will take place upon reasonable prior written notice to Digimarc, during regular business hours and no more than once a year. Digimarc shall promptly refund to Nielsen any amount that the audit shows was overpaid by Nielsen in that Plan Year per the Agreement and, if the overpayment is greater than 5% of the total payment for that Plan Year, Digimarc shall also pay the reasonable out-of-pocket costs of the inspection and examination.

3.8 Nielsen Commitment of Resources. For so long as the CIMR Products and Services license remains in effect, Nielsen shall use its reasonable best efforts to develop and support the CIMR Products and Services, including the commitment of a reasonable amount of marketing, financial and organizational resources. In furtherance of those efforts, Nielsen shall prepare an annual plan for the development and support of the CIMR Products and Services business, shall invite Digimarc to

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advise and contribute to the formation of such plan, and shall share such plan with Digimarc.

3.9 Digimarc Opportunity [**] . For so long as [**], Nielsen shall provide Digimarc with a reasonable opportunity to [**].

3.10 Limitations on Digimarc Services [**] . For as long as Nielsen is timely paying Digimarc for Digimarc Services, Digimarc shall not [**].

3.11 Patent Prosecution . The parties shall endeavor to identify potentially patentable inventions arising from the Digimarc Services relating to the [**] Technology. As such inventions are identified and the filing of patent applications is agreed upon, [**] will have primary responsibility to manage the process of applying for and maintaining patents relating to the [**] Technology. The parties shall agree upon a process enabling [**] to have substantial prior review and participation in the preparation of patent applications relating to [**] Technology. [**] and [**] shall [**] the reasonable expenses incurred by [**] in the prosecution and maintenance of such patents on [**] basis, including expenses incurred after the termination of the Services. Notwithstanding the foregoing, either party may decide, at any time, that it does not wish to pay its share of the costs of applying for or maintaining patents relating to [**] Technology, which decision can be made on a jurisdiction by jurisdiction basis. In that event, the other party has the option either to abandon the application or patent, or to proceed on its own to pay the remaining costs of applying for or maintaining the patent. If either elects not to pay its share of the costs of applying for or maintaining such patent, notwithstanding that the other party may elect to apply for and maintain such patent, the parties’ respective ownership and rights in that patent shall otherwise remain unchanged. For so long as the Services portion of this Agreement shall be in effect, all reasonable costs reasonably incurred by [**] that are to be paid by [**] pursuant to this provision shall be invoiced by [**] and included in [**] .

3.12 Patent Enforcement . Unless limited by the covenant of Section 1.4, each party shall have the right to defend or prosecute its rights in and to the [**] Technology, in its own name, on its own behalf, and at its own expense. Each party shall be entitled to retain all revenue obtained by it from third parties (without accounting to the other) as a result of any revenue generating activities.

3.13 Nielsen Data Rights Retention . Nielsen retains the sole right to use or grant to any third party the right to use, any [**], as well as [**]. Digimarc will have no right to use or grant any rights of usage of any [**].

3.14 Assertion and Defense of Patents. Except as provided in this section, all defense and litigation of Digimarc Patents will remain the sole responsibility of Digimarc. Digimarc has no duty to enforce any patents. All defense and litigation of patents owned or controlled by Nielsen independent of Digimarc (the “Nielsen Patents”), will remain the sole responsibility of Nielsen. Nielsen has no duty to

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Digimarc to enforce any Nielsen Patents. For so long as Nielsen enjoys a covenant concerning certain [**] Technology, Nielsen has the right, as between Digimarc and Nielsen, to bring suit against third parties for infringement of those patents within those fields and may, if it deems it necessary, join Digimarc as a party to such lawsuits. In such event, Nielsen shall be solely responsible for all costs of such litigations and shall be entitled to retain the proceeds from any such case to the extent they relate to infringement occurring within the [**] fields. Any proceeds relating to infringement occurring outside the [**] field shall be shared with Digimarc on [**] basis, after the deduction of [**].

4. Remedies for Breach .

4.1. Responsibility for Performance . Nielsen (US) shall be solely responsible for its performance under this Agreement. A breach by a Subsidiary or by an Affiliate shall be deemed to be a breach by Nielsen (US).

4.2. Remedies for Breach . If either party materially breaches this Agreement, the non-breaching party may, in addition to other remedies at law and in equity, terminate this Agreement. Prior to terminating this Agreement for breach, the non-breaching party must first give the breaching party written notice specifying in detail the alleged breach. The breaching party shall then have sixty (60) days to cure such breach.

5. Termination .

5.1 Nielsen Option to Terminate After Two Years. Within thirty days after the second anniversary of the Effective Date, Nielsen may terminate this Agreement if, in its reasonable judgment, the market opportunity for CIMR Products and Services has not been realized. Notwithstanding the foregoing, the parties agree that the market opportunity will be considered to have been realized if the CIMR Products and Services generate CIMR Net Revenues of at least $3.75 million in the third calendar quarter of 2009.

5.2 Nielsen Option to Terminate After Five Years. Nielsen may terminate this Agreement at any time after the f ifth anniversary of the Effective Date for any reason or no reason.

5.3 Termination by Digimarc Due to Patent Challenges by Nielsen. If Nielsen files an action challenging the validity or enforceability of any Digimarc Patents (except as a defense or counterclaim to an action for infringement brought by Digimarc or its assignee), Digimarc can: (i) before the Current Nielsen Products and Services license becomes permanent under Section 2.2, terminate either or both of the Current Nielsen Products and Services license and/or the CIMR Products and Services license; and (ii) after that time, terminate the CIMR Products and Services license.

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5.4 Termination of CIMR License Due to Failure to Meet Working Requirements. Following any Royalty Year after Royalty Year Five of this Agreement, Digimarc may terminate the CIMR Products and Services license, with prospective effect only, if Nielsen does not pay Digimarc: (a) at least $[**] in royalties for a Royalty Year within sixty (60) days following the end of that Royalty Year; or (b) if royalties for a Royalty Year are less than $[**], a lump sum payment equal to the difference, to be made within sixty (60) days following the end of that Royalty Year.

5.5 Notice of Termination. Any termination of this Agreement by either party for any reason other than the material breach of the other party shall be made on no less than ninety (90) days’ notice to the other party.

5.6 Effects of Termination . Termination of this Agreement by either party prior to the fifth anniversary of the Effective Date will automatically terminate the licenses for CIMR Products and Services and for Current Nielsen Products and Services, unless Nielsen agrees to pay, and does pay, [**], in that latter case, only the license for CIMR Products and Services will automatically terminate. Thereafter, if Nielsen elects to terminate after five years pursuant to Section 5.2, the license for CIMR Products and Services will automatically terminate. In the event of termination of either or both licenses for any reason, [**]. In other words, [**]. Digimarc will not be barred from [**]. If either, or both, of the Current Nielsen Products and Services or the CIMR Products and Services licenses are terminated, the covenant in Section 1.4 with respect to [**] Technology shall automatically terminate. After termination of the CIMR Products and Services license, Nielsen shall have no right to use trade secrets or other information and plans of Digimarc in the CIMR Products and Services. [**].

6. Other Provisions.

6.1. Press Release . The parties will issue a mutually agreeable press release, similar to the one in Appendix C, relating to the subject matter of this Agreement no later than four days after execution of this Agreement. Except as expressly permitted herein, neither party will make public announcements or issue press releases relating to this Agreement without the prior written consent of the other party, which consent or refusal will not be unreasonably withheld.

6.2. Confidentiality . Each party agrees that it will treat this Agreement as confidential and will handle confidential information of the other party in a manner consistent with the policies and practices of that party for handling its own confidential information. Notwithstanding the foregoing, either party may provide a copy of this Agreement to a third party considering in good faith a bona fide transaction as contemplated in Section 6.4, provided that such third party agrees in writing to be bound to a confidentiality agreement customary to such transactions and prohibiting use of its knowledge of this Agreement or its

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provisions for any competitive purpose. Upon request by the disclosing party with respect to specifically identified information, the receiving party will return to the disclosing party or destroy all of the confidential information in the receiving party’s possession or control furnished to it by the disclosing party which the receiving party does not need to retain in order to perform any obligations imposed, or exercise any rights (including rights of ownership) acquired, by this Agreement, and shall certify in writing its return or destruction of such confidential information. If the receiving party is subject to judicial or governmental proceedings or is subject to government regulations requiring disclosure of confidential information of the disclosing party, then prior to disclosing such information, the receiving party will provide the disclosing party with reasonable prior notice for the disclosing party to seek a protective order for confidential treatment of the confidential information and will only disclose that information that is necessary and required. If the entire Agreement is terminated, the obligations set out in this Section will extend for a period of [**] years from this termination date, except that the confidential information of the disclosing party that is specifically identified by it as a trade secret will be protected for a period of [**] years.

6.3. Non-solicitation . Neither party will, directly or through a third party, during the period of the Digimarc Services and for a period of [**] after the end of such Services, solicit or entice away those key employees of the other party specifically identified to it by name in Appendix E hereto (as may be amended from time to time at the sole discretion of either party), provided that the foregoing will not prohibit either party from hiring or soliciting to hire any person (a) responding to general advertising or general solicitations (including solicitations by recruiting firms retained by a party and not directed at the employees of the other party), or (b) who has been terminated by another party, or (c) has not been employed by the other party during the [**] preceding any such action.

6.4. Assignment . Neither party may assign any of its rights or obligations under this Agreement to any person without the prior written consent of the other, and any such purported assignment shall be null and void from inception; provided, however, that (a) either party may assign all its rights and delegate all its obligations hereunder to a single person without such approval in connection with: (i) a merger, consolidation, reorganization, statutory conversion, amalgamation or similar corporate transaction, or (ii) a sale or other disposition of all or substantially all of its assets in the businesses relating to this Agreement, and (b) Nielsen may assign all its rights and delegate all its responsibilities to an Affiliate in connection with a restructuring or reorganization of Nielsen. In the event that Digimarc assigns this Agreement to [**] (an “Assignee”) pursuant to this provision, the Digimarc Patents subject to the licenses granted in this Agreement shall include [**].

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6.5. Bankruptcy . Any intellectual property licenses and rights granted to either party hereunder or pursuant hereto are, and will be deemed to be, for purposes of Section 365(n) of the United States Bankruptcy Code (“Code”) licenses of “intellectual property”, as defined under the Code. Notwithstanding any provision contained herein to the contrary, if a party is under any proceeding under the Code and the trustee in bankruptcy of that party, or that party as a debtor in possession, rightfully elects to reject this Agreement, then the other party pursuant to the relevant portions of Section 365(n) of the Code may retain any and all of such other party’s licenses and rights hereunder to the maximum extent permitted by law.

6.6. Tolling. Nielsen agrees to toll any statute of limitations and any time limitation on damages under [**] relative to [**]. In return for this tolling agreement, Digimarc will not [**].

6.7. Limitations on Damages. NEITHER DIGIMARC NOR NIELSEN WILL BE LIABLE UNDER ANY CIRCUMSTANCES OR ANY LEGAL OR EQUITABLE THEORY, WHETHER IN CONTRACT, TORT, STRICT LIABILITY OR OTHERWISE FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL, EXEMPLARY, RELIANCE, PUNITIVE OR SPECIAL DAMAGES ARISING OUT OF THIS AGREEMENT, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

6.8. Infringement Remedies. Nothing in this Agreement prevents either party from seeking any available remedies under patent law for any patent infringement by the other party in periods when the party does not have a license to that activity including any remedies available under 35 U.S.C. 281, 283, 284 and 285.

6.9. Governing Law, Jurisdiction and Venue. This Agreement shall be governed by New York law. Effective as of the termination date of either license in this Agreement, Digimarc may seek judgment and remedies for alleged infringement of its patents in any forum where jurisdiction and venue are proper, including the United States International Trade Commission or Government Customs Service proceedings, for alleged infringement occurring before the License Initiation Date or after any such license termination date. All other matters concerning the interpretation of, or performance under, this Agreement will be resolved in the state or federal courts in New York applying New York law and jurisdiction and venue will be proper in such New York courts.

6.10. No Waiver. Each and all of the various rights, powers and remedies of the parties will be considered to be cumulative with and in addition to any other rights, powers and remedies which such parties may have at law or in equity in the event of breach of any of the terms of this Agreement. The exercise or partial exercises of any rights, powers or remedies will neither constitute the exclusive election thereof nor the waiver of any other right, power or remedy available to such party. In no event will any waiver of any rights hereunder constitute the

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waiver of such rights in any future instance unless the waiver so specifies in writing.

6.11. Notices . All notices of breach or early termination must be made in writing. Any written notice under this Agreement will be sent by email with a hard copy sent via certified mail, return receipt requested, or by recognized courier service with tracking capabilities. The notice will be deemed effective as of the earlier of (i) the date of delivery, as evidenced by a delivery receipt or the addressee’s registry, or (ii) five business days after sending notice to the correct address in the authorized manner. The addresses of the parties, as set forth above, will be used for any such notice unless either party hereafter designates a substitute address in writing in accordance with this provision.

The contacts to address the notices to are:

For Digimarc: Reed Stager, Executive Vice President; with a co-copy to: General Counsel; and

For Nielsen: James M. O’Hara, President, Media Product Leadership; with a co-copy to: General Counsel.

6.12. Integration . This Agreement embodies the entire agreement of the parties hereto regarding the subject matter herein, and supersedes and cancels any and all previous negotiations, agreements or commitments with respect to them.

6.13. Severability . If any provision of this Agreement is held to be void or unenforceable, the parties agree that such determination will not result in the nullity or unenforceability of the remaining portions of this Agreement. The parties further agree to replace such void or unenforceable provisions of this Agreement with valid and enforceable provisions that will achieve, to the extent legally permissible, the economic, business and other purposes of the void or unenforceable provisions and that reflect the intent of the parties when entering into this Agreement.

6.14. Amendments . This Agreement may not be modified in any manner except by an instrument in writing duly signed by each of the parties hereto.

6.15. Construction . 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 will not apply in interpreting this Agreement.

6.16. No Agency. Nothing in this Agreement will be construed as creating any agency, partnership or other form of joint enterprise between Digimarc and Nielsen. The relationship between Digimarc and Nielsen will at all times be that

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of independent contractors. Neither party will have authority to contract for or bind the other in any manner whatsoever.

6.17. Other Documents. Each party hereto will execute any documents which may be necessary or advisable to carry out or effectuate the foregoing.

6.18. Survival. Upon expiration or termination of this Agreement, rights to payment under this Agreement and the provisions set out in Sections 2.3.5-2.3.10, 3.11-3.14, 4, 5.6 and 6.2-6.19 will remain in effect.

6.19. 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.

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DIGIMARC CORPORATION		THE NIELSEN COMPANY (US),
		INC.

By:	/s/ Robert P. Chamness	By:	/s/ James O’Hara
(Signature)		(Signature)

Robert P. Chamness		Name: James O’Hara
		(Please print)

CLO and Secretary		Title: President-Media Product Leadership

Date: November 27, 2007		Date: November 27, 2007

EXHIBIT 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.

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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;

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“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;

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“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;

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“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 [**];

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“[**]” 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

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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 31 December 2014;

“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.

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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

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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

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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.

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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.

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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.

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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

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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,

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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.

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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.

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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.

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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:

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(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

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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;

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(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

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(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;

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(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

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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:

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(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.

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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;

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(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.

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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.

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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

Centralbahnplatz 2

CH-4002 Basle, Switzerland

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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.

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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

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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

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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 72 ^nd 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.

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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 14 ^TH [**] 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

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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 72 ^nd 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.”

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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.”

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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

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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 72 ^nd 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 [**];

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“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;

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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.

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

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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.

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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

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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

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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

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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

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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

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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, [**].

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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.

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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:

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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 [**].

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.

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13. AUDIT AND INSPECTION

Clause 13.1 shall be replaced as follows:

14. DISPUTE RESOLUTION

Clause 14.2 shall be replaced as follows:

15. TERM AND TERMINATION

Clauses 15.6 and 15.7 shall be replaced as follows:

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.

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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 72 ^nd 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

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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”)

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;

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“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

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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;

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“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.

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(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:

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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

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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.

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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

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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.

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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

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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

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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-

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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.

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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.

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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.

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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

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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 [**]

[**]

Centralbahnplatz 2

CH-4002 Basel, Switzerland

[**]

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.

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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, [**].

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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.

Signature:			Signature:

Name:			Name:

Title:			Title:

Date:			Date:

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By:

Name:	J. Scott Carr

Title:	President, Digimarc Watermarking Solutions

Date:

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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. [**].

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2. [**]

3. [**]

4. [**]

5. [**]

2.1.3 [**]

1. [**]

2.2 [**]

1. [**]

2. [**]

3. [**]

4. [**]

(a) [**]

(b) [**]

5. [**]

6. [**] BIS [**]

7. [**]

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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. [**] .

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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 [**].

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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. [**].

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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. [**].

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4. [**].

5. [**].

6. [**].

7. [**]:

(a) [**].

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

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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 [**]

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3.0 [**]

3.1 [**]

3.2 [**]

3.2.1 [**]

3.2.2 [**]

3.2.3 [**]

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Attachment 2

CDS PHASE 1 DELIVERY SCHEDULE

[**]

[**]

BIS [**]

[**]

BIS [**]

[**]

[**]

[**]

BIS [**]

[**]

BIS [**]

[**]

[**]

[**]

BIS [**]

[**]

BIS [**]

[**]

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[**]

[**]

BIS [**]

[**]

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Attachment 3

DEVICE VENDORS

[**]

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SCHEDULE “B,” AMENDED ATTACHMENT 3

[**]

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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.

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:

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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:

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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.

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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:

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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.

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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 [**].

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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

9 Mar [**]

[**]-3

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

[**]

1.1

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

13 Apr [**]

[**]-4

[**] specification signoff

[**]

1.2

[**]-3

18 Apr [**]

[**]-5

[**] Approved

[**]

2.3.1.4

[**]-2

1 Jun [**]

[**]-6

[**] Test Set change
deadline

[**]
[**]

1 Jun [**]

[**]-7

Delivery [**]

[**]

1.4

[**]-4

8 Sep [**]

[**]-8

[**] acceptance of [**]

[**]

1.5

[**]-5

5 Oct [**]

[**]-9

Delivery of the [**]

[**]

1.6

[**]-6

1 Dec [**]

[**]-10

[**] acceptance of final [**]

[**]

1.7

[**]-7

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

28 Mar [**]

[**]-3

[**] determined

[**]

2.4

[**]-2

—

28 Mar [**]

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[**]

Num.

Deliverable

Owner

Sec/Para Ref.

Depends
On

Days

Completion Date

[**]-1

[**]

2.5.1.1

—

17 Jan [**]

[**]-2

[**].

[**]

2.5.1.2

[**]-1

8 Feb [**]

[**]-3

[**]

2.5.1.3

[**]-2

15 Mar [**]

[**]-4

[**] reported and Phase
[**]

[**]
[**]

[**]-3

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

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

6 Oct [**]

[**]-4

Final report delivered

[**]

—

[**]-3

4 Dec [**]

[**]-5

[**] evaluation of the
final report

[**]

—

[**]-4

29 Dec [**]

[**]-1

[**] Study draft report
delivered

[**]

[**]-2

1 Aug [**]

[**]-2

[**] evaluation of draft
report

[**]

—

[**]-1

29 Aug [**]

[**]-3

Final report delivered

[**]

—

[**]-2

25 Oct [**]

[**]-4

[**] evaluation of the final
report

[**]

—

[**]-3

21 Nov [**]

[**]-1

[**] Study draft report
delivered

[**]

[**]-2

30 May [**]

[**]-2

[**] evaluation of draft
report

[**]

—

[**]-1

25 Jul [**]

[**]-3

Final report delivered

[**]

—

[**]-2

20 Sep [**]

[**]-4

[**] evaluation of the final
report

[**]

—

[**]-3

17 Oct [**]

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Verification Test ([**])

Num.

Deliverable

Owner

Sec/Para Ref.

Depends
On

Days

Completion Date

[**]-1

Proposed [**] program

[**]

—

28 Jul [**]

[**]-2

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

[**]

[**]-1

24 Aug [**]

[**]-3

Final verification test [**] signoff

[**]

[**]-2

7 Sep [**]

[**]-4

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

[**]

[**]-3

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

25 May [**]

[**]-3

Final [**] test program signoff

[**]

[**]-2

8 Jun [**]

[**]-4

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

[**]

[**]-3

22 Jun [**]

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AMENDED SCHEDULE “D”

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.)

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

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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.

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 [**].

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 [**].

Digimarc shall develop the [**] according to the following 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 [**].

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

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.

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.

Digimarc shall support [**] that [**] as follows:

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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.

Digimarc shall operate, maintain and improve the [**] as follows:

1. Digimarc shall operate the [**] making it available at [**].

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 [**].

1. Digimarc shall [**] the [**] to [**] and their [**], including administration of [**].

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Job Function

Employee

Rate Per Hour*

HR Operations Mgr

Cindy Smith

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.

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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

31 Jan [**]

[**]-3

[**] Approved

[**]

2.1

[**]-2

1 Mar [**]

[**]-4

[**] of the [**] evaluation release

[**]

1.1.4

[**]-2

161

7 Sept [**]

[**]-5

[**] acceptance of [**]

[**]

1.1.5

[**]-4

19 Oct [**]

[**]-6

[**] of the [**]

[**]

1.1.6

[**]-5

3 Dec [**]

[**]-7

[**] acceptance of [**]

[**]

1.1.7

[**]-6

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

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

31 Dec [**]

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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;

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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

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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.

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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

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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

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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.

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(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

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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]

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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,

[**]

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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

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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.

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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]

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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: [**]

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SCHEDULE “G”

DIGIMARC TECHNOLOGY

The Digimarc Technology includes techniques and system applications for [**].

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

[**]

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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:

[**]

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SCHEDULE “I”

ALLOWABLE COSTS

1. For the purposes of this Schedule I:

	[**]
		[**]
	[**]

	[**]	[**]
	[**]	[**]
	[**]	[**]
	[**]	[**]
	[**]	[**]
	[**]	[**]
	[**]	[**]
	[**]	[**]
	[**]	[**]
	[**]	[**]
	[**]	[**]
	[**]	[**]
[] BIS [] BIS []. []

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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

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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 .

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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:

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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;

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;

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[**]

“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 2014 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;

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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;

1.2.7 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 [**]

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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.

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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 [**].

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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

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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;

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 [**].

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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

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;

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(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

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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.

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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:

(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

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12.5 A copy of every notice sent by either party shall be sent to: [**] Bank for International Settlements, Centralbahnplatz 2, CH-4002 Basle, Switzerland, [**].

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.

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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:

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ATTACHMENT 1

[**]

[**] will cause the following [**] to take place:

(a) [**]

[**](b) [**]

[**](c) [**]

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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.

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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.

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ATTACHMENT 4

IDENTIFICATION OF [**]

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ATTACHMENT 5

[**]

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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

[**] desires to obtain a license to certain components of the CDS so it can have [**] which include the CDS counterfeit deterring [**].

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I. DEFINITIONS AND PRINCIPLES OF INTERPRETATION

1.1 Definitions

“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;

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;

[**]

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[**]

“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;

[**]

“[**] 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 2014 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;

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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;

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

1.3 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”		[**]

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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.

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.

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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

5.3 [**] 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

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(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.

5.6 Such license shall continue until this Agreement expires or is terminated, or until [**] has no further rights to Digimarc IPR, whichever occurs last.

5.8 [**] (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.

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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

6.2 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.

6.4 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;

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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 [**].

6.8 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

7.2 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

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.

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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 [**];

(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:

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(a) incorporated as part of [**];

(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 [**];

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.

10.3 Upon termination of this Agreement:

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(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

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:

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(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.

12.3 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, Centralbahnplatz 2, CH-4002 Basle, Switzerland, [**].

12.6 A party may change its address for notice by notice to the other party in accordance with the foregoing provisions.

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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.

12.15 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

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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.

12.18 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:

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ATTACHMENT 1

[**]

The [**] will cause the following [**] to take place:

(a) [**]

(b) [**]

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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,

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ATTACHMENT 3

PROBLEM REPORT

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.

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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	[**]

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ATTACHMENT 5

IDENTIFICATION OF [**]

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ATTACHMENT 6

[**]

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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 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:

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1. DEFINITIONS AND PRINCIPLES OF INTERPRETATION

In this Agreement:

“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 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;

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 [**];

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“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 2014 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:

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

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;

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

(a) this Agreement, excluding Attachments, and

(b) the Attachments;

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

1.3 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:

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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) [**];

(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.

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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

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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) [**]

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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:

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(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.

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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

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restriction on further disclosure all of which is shown by documentation sufficient to establish same; or

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

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

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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

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.

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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:

(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:

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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, Centralbahnplatz 2, CH-4002 Basle, Switzerland, [**] .

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.

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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.

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DIGIMARC CORPORATION		<Licensee>

By:	By:
Name:	Name:
Title:	Title:
Date:	Date:

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ATTACHMENT 1

[**]

[**] will cause the following [**] to take place:

(a) [**]

(b) [**]

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ATTACHMENT 2

PROBLEM REPORT

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.

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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.

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ATTACHMENT 4

[**]

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ATTACHMENT 5

IDENTIFICATION OF [**]

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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.

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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 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 [**].

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1. DEFINITIONS AND PRINCIPLES OF INTERPRETATION

In this Agreement:

“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 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” )[**]

“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;

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

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

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

[**]

“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 [**];

“[**]” 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 2014 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 [**].

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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;

1.2.3 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;

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

(a) this Agreement, excluding Attachments, and

(b) the Attachments;

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

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

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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) [**]

(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.

2.5 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.

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3. SERVICES

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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.

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.

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

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(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.

6.4 Such license shall continue until this Agreement expires or is terminated, or until Licensee has no further rights to Digimarc IPR, whichever occurs last.

6.6 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.

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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 [**];

(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:

(b) until the last day of the Term, [**]; and

(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:

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(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.

9. CONFIDENTIALITY

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

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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.

9.5 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;

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 [**].

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10. INTELLECTUAL PROPERTY INDEMNIFICATION

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

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.

10.6 The Indemnity Limit shall be [**], or such higher amount as notified by Digimarc from time to time.

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.

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11.3 Upon termination of this Agreement:

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.

13. MISCELLANEOUS PROVISIONS

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

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(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.

13.3 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, Centralbahnplatz 2, CH-4002 Basle, Switzerland, [**]

13.6 A party may change its address for notice by notice to the other party in accordance with the foregoing provisions.

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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.

13.9 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.

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13.16 Effectiveness. This Agreement shall not be effective until it is signed by both of the parties.

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:

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ATTACHMENT 1

[**]

The [**] will cause the following [**] to take place:

(a) [**]

(b) [**].

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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

[**]

Yours truly,

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ATTACHMENT 3

PROBLEM REPORT

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.

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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		[**]

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ATTACHMENT 5

[**]

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ATTACHMENT 6

IDENTIFICATION OF [**]

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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.

2.4 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.

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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.

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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.

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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.

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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

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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 [**].

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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

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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

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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.

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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)

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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.

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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