Counterfeit Deterrence System Development and License Agreement - Digimarc Corp.
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
[*]
Recitals
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Digimarc has expertise in, and owns extensive intellectual property,
including patents, patent applications, copyrights and trade secrets, [*].
[*] 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 couterfeiting.
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 [*]
[*]
[*] In return, [*] will acquire the exclusive right, as more particularly
detailed herein, to grant and direct Digimarc to [*] to [*] the CDS [*] and [*].
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
<PAGE>
[*] 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.
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
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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;
"[*]" has the meaning assigned to it by clause 5.1;
"[*]" 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 [*], [*] 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 [*] and Digimarc are open for
business at their respective addresses noted above;
"CDS Technology" collectively, means whatever of the [*], 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
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
<PAGE>
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 [*], 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;
"Designated Country" means a country, the [*] of which is designated in
writing by [*] effective on the Effective Date, and any additional
country as may be designated by [*] in writing to Digimarc from time to
time;
"[*]" means those portions of the Project Technology and the Digimarc
Technology which relate to [*] of [*] 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
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
<PAGE>
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 [*]
in writing to Digimarc from time to time;
"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 [*];
[*];
[*];
[*];
"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 ([*]);
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
<PAGE>
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;
"Improvement" means any change in the CDS Technology or the Technical
Information made by or at the direction of Digimarc after [*] which
enhances, whether by improvement, enhancement, correction, addition or
otherwise, the properties, characteristics or manufacture of the CDS
including, for greater certainty, [*];
"Integration Support" means the consulting and programming services to be
provided by Digimarc to a [*] on the terms described in Schedule P
attached to assist the [*] to ensure that the [*];
"Intellectual Property Rights" means all intellectual property rights
existing now and in the future including, without limitation, trade
secrets, copyright, database rights, know-how, topographies, patents and
patent applications;
"[*]" means an entity responsible for the [*];
"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 [*] Technology" means any of the technology described in Schedule
F which is not [*] 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;
[*];
[*];
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
<PAGE>
[*];
[*];
[*] 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 [*];
[*] 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 [*] Technology or to the Other
[*] 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 [*] under this Agreement;
[*];
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
<PAGE>
"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 comprising
or relating to the development of the [*] Technology, or any part
thereof, or the application of the CDS Technology, or any part thereof,
in the [*];
"Term" means the period commencing on the Effective Date and ending on
[*];
"Training" means the training in the use and operation of the [*]
described in Schedule Q;
"Verification Test" means a test or tests developed by Digimarc as part
of the [*] to determine if [*]; and
"Work" means the Work that is required to be performed by Digimarc in
order to complete the tasks and deliver the Deliverables and otherwise
comply with its obligations under this Agreement.
1.2 Interpretation - In this Agreement:
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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;
1.2.2 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
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
<PAGE>
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.
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
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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
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integral part of this Agreement:
Schedule Description
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Schedule "A" System Description
Schedule "B" [*]
Schedule "C" [*]
Schedule "D" [*]
Schedule "E" Arbitration Agreement
Schedule "F" [*] [*]
Schedule "G" Digimarc Technology
Schedule "H" Project Technology
Schedule "I" [*]
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
<PAGE>
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
2. SCOPE OF THE WORK
2.1 Digimarc shall perform [*] in accordance with the [*] and, subject to
[*]' 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 [*] 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 [*] to enable Digimarc to perform the Work as proposed [*]
including, for greater certainty, the assistance reasonably required from
[*].
2.3 The Proposal for [*] when delivered by Digimarc to [*] 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 [*]' 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
[*].
2.4 The Offer (i) for [*] shall remain open until [*] and (ii) for the [*]
shall remain open until
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
<PAGE>
[*] for written acceptance by [*] 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 [*] will have ten (10) days from receipt of the
revised Offer to accept it.
2.5 Effective immediately on [*]' 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 [*].
2.6 The Term will continue notwithstanding that [*] elects not to accept the
Offer for [*].
2.7 Pending acceptance, or express or implied rejection by [*] 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 [*] accepts the Offer for [*], all such authorized Work will be
deemed to form part of the Work [*] to which the Offer relates. In any event,
[*] 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 the [*] to which the Offer is addressed,
to grant to an [*] a [*] to [*] in connection with [*] 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 [*] 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
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
<PAGE>
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 [*]s 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.
2.13 At any time during the Term following [*] which [*] 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 [*]. 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 [*] and
other licensees.
2.16 Digimarc acknowledges and confirms [*]' 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, [*] shall
pay Digimarc
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
<PAGE>
[*] for the [*] to the Digimarc Technology granted to [*] under clause 8 of this
Agreement by the later of (a) five (5) Business Days after the date that the
Escrow Agent notifies [*] 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, [*] shall [*] Digimarc for all the [*] reasonably and
properly incurred by Digimarc during each calendar month to perform [*], and any
other Work authorized by [*] in writing, plus a [*] on the [*] (the "[*]").
Digimarc shall invoice [*] 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 [*] is required to pay Digimarc for the [*] incurred in
performing [*] and [*] in calendar year 1999 will not be greater than [*]. The
amount which [*] is required to reimburse Digimarc for the [*] incurred in
performing [*], respectively, will not be greater than the estimates for that
Work accepted by [*] pursuant to the provisions of clause 2.4. 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 [*]
will be liable to pay Digimarc for or in connection with the [*] and [*] for the
[*] will not be greater than [*] and, assuming that (i) [*] has accepted
Digimarc's Offer for [*] and, (ii) [*] 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 [*] elects not to proceed with [*] as described in clause 2.4 above,
and at the time of such election [*] has not served notice of breach, or
termination for Digimarc's default, under clause 15, [*] 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 [*] shall pay Digimarc each amount which [*] owes Digimarc under this
Agreement no later than thirty (30) days after the later of the payment due date
and the date on which [*] 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 [*] for [*],
Digimarc shall maintain proper, up-to-date, accurate and complete books, records
and other documentation substantiating the [*] invoiced under this Agreement
including, without limitation, time sheets showing the hours spent
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
<PAGE>
on each task which forms part of the Work and receipts for all disbursements.
Digimarc shall produce such books, records and documentation to [*] 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, [*] 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 [*] to Digimarc under this
Agreement. Such payments by [*] shall be in addition to those set forth in
clause 3.4.
3.9 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 Work by Digimarc. 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.
3.10 [*] may set off against any amount which [*] owes Digimarc under or in
connection with this Agreement any amount which Digimarc owes [*] under or in
connection with this Agreement.
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 [*].
4.2 The DLA Project Manager shall be responsible for coordinating fulfilment
by [*] 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 [*], all of which actions
shall be within the exclusive authority of [*].
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.
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
<PAGE>
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 [*] 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 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 [*]
5.1 [*] shall perform all tasks assigned to it in the Statement of Work [*]
(herein sometimes referred to as the [*] Tasks).
[*] Omitted pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
<PAGE>
5.2 Unless otherwise expressly set out in this Agreement, [*] 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 [*] 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 [*] 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 [*] 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 [*] and Digimarc, and shall be in addition
to the [*]. This clause 5.3 sets forth Digimarc's only remedy for a delay by [*]
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, if any, which Digimarc intends to invoice [*] 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 [*], notify Digimarc
whether or not [*] 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 [*].
6.6 Pending receipt of a written authorization from the DLA Contract Authority,
on behalf of [*], Digimarc shall proceed with the Work in accordance with the
Agreement.
[*] Omitted pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
<PAGE>
7. APPROVAL OF DELIVERABLES
7.1 If Digimarc fails to produce a Deliverable acceptable to [*] 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
[*] 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.
[*] Omitted pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
<PAGE>
8. INTELLECTUAL PROPERTY MATTERS
8.1 [*] acknowledges that Digimarc does not have sufficient basis on which to
determine whether [*] is the owner of the [*] Technology or the Other [*]
Technology.
8.2 [*] shall grant to Digimarc following Digimarc's written acceptance of an
offer by [*] to obtain a licence for any [*] Technology a [*] such [*]
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 [*] 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 [*] 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 [*], 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, [*], 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 [*]. 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 [*] 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 [*] 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
[*] Omitted pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
<PAGE>
(d) the effective date of termination of this Agreement by [*] in accordance
with the provisions of clauses 15.2(c), 15.2 (f), 15.2(g) or 15.3.
8.6 Digimarc hereby grants to [*], 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 [*] pays Digimarc [*].
8.7 Upon the date on which this Agreement is last signed by them, [*] 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 [*], 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 [*] exercises the right granted by this
provision 8.8, [*] 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.
[*] Omitted pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
<PAGE>
8.11 From and after the date on which [*] gets access to the Escrowed Materials
pursuant to the Escrow Agreement, [*] 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,
[*], 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 [*] 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, [*] shall provide to
Digimarc within a reasonable period of time following request, the Technical
Information for those improvements requested by Digimarc in writing.
8.12 [*] hereby grants to Digimarc a [*].
8.13 The license referred to in clause 8.12 shall continue until this Agreement
expires or is terminated, or until [*] 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 [*] can demonstrate would have
been made irrespective of access to the Escrowed Materials or Digimarc
Confidential Information.
8.15 [*] 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,
[*]' 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 [*] 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) [*]
[*] Omitted pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
<PAGE>
(b) the [*] Technology or the Other [*] 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 [*]
Technology, the Other [*] Technology and the [*], and any Improvements, and the
Technical Information pertaining to the [*] Technology, the Other [*] Technology
and the [*] and such Improvements, to [*] to a Security Client for a Security
Purpose. Such use may continue so long as:
(a) [*]; and
(b) [*].
9.3 Digimarc may, at any time, make a proposal to the DLA Contract Authority
to use the [*] Technology, the Other [*] 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 [*] 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
[*] Omitted pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
<PAGE>
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 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 [*] any right of action which Digimarc may have in respect
of any such further use, or transfer to [*] the control and conduct of legal
proceedings and claims in relation to such use. Following such assignment or
transfer, Digimarc shall cooperate with [*] to achieve the successful
prosecution or, if directed by [*], 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 [*] 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;
[*] Omitted pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
<PAGE>
(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;
(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 [*] 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
[*] Omitted pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
<PAGE>
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
(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 [*] that:
(a) [*] accepted by [*] will meet the Specifications for that version from the
date that it is accepted by [*] until the earlier of the date on which the
next version is accepted by [*] 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 [*] 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 [*], and such
failure could not have been discovered by [*] 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 [*].
[*] Omitted pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
<PAGE>
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 [*], and such failure could not have been
discovered by [*] 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 [*]
11.1 [*] represents and warrants to Digimarc that:
(a) [*] has full power and authority to enter into this Agreement;
(b) this Agreement when executed and delivered by [*] shall constitute a
valid, binding and enforceable obligation of [*];
(c) [*] will at all material times have the right to grant the licenses
required by this Agreement to the [*] Technology and the Technical
Information pertaining to the [*] Technology;
(d) from and after the date on which [*] 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 [*] 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 [*] possessed on the Release Date on
which [*] gets access to the Escrowed Materials.
11.2 [*] makes no representations, warranties or undertakings that [*] has any
right to grant any license in respect of any Other [*] 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 [*] 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 [*] 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 [*] Technology.
12. CONFIDENTIALITY
[*] Omitted pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
<PAGE>
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 favour
of the Discloser on terms materially similar to the provisions of this clause
12. For greater certainty, [*]' 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
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
<PAGE>
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 [*] Technology, the Other [*] Technology, and solely for the purposes
of clause 12 the [*] insofar as it pertains to [*], and the Technical
Information which pertains solely to the [*] Technology and the Other [*]
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 [*]. Digimarc may disclose such Confidential Information to a person to whom
Digimarc has granted a license pursuant to clause 9.2 or 9.3 but only if:
(a) Digimarc can demonstrate to the reasonable satisfaction of [*] 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 [*] on terms materially similar to
the provisions of this clause 12.
12.8 Nothing in this Agreement shall be construed to require [*] or any
representative of [*] 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 [*] 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 [*] to exercise its licence rights under clauses 8.4 and 8.6
of this Agreement or [*]' right to do so may not be contractually restricted
under applicable law), and shall contractually ensure that any other Person to
whom [*] 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
[*] notwithstanding the circumstances that give rise to such possession.
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
<PAGE>
12.11 General attributes of the CDS may be [*] in connection with promotion of
the CDS to the [*], and to customers or prospects in related markets;
information relating to the [*] may be [*] to [*] vendors of [*] subject to a
nondisclosure agreement but in all such cases Digimarc shall not disclose any
information relating to the [*]. [*]
13. AUDIT AND INSPECTION
13.1 [*], 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 [*]. [*] shall
promptly advise Digimarc in writing of the results of any audit. If [*]
exercises this right more frequently than twice in each calendar year, [*] 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.
13.2 If, as a result of any such audit, [*] 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 [*], 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, [*] may at its sole discretion instruct Digimarc
to
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
<PAGE>
continue the performance of that Work, and Digimarc shall act in accordance
with those instructions, subject to payment in accordance with clause 3.2.
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
<PAGE>
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 [*] may in its sole discretion terminate this Agreement effective
immediately on notice to Digimarc if:
(a) Digimarc makes a general assignment or any other arrangement for the
benefit of its creditors;
(b) a proposal or arrangement under applicable bankruptcy or insolvency
legislation, or a petition is filed by or against Digimarc under
applicable bankruptcy or insolvency legislation and is not discontinued
within thirty (30) days;
(c) Digimarc is declared or adjudicated bankrupt or goes into liquidation;
(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 [*] 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, [*] 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
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
<PAGE>
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 [*] 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 [*] 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.
16. INTELLECTUAL PROPERTY INDEMNIFICATION
16.1 [*] shall provide Digimarc with prompt written notice of any claim, demand
or action against [*] 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"). [*] 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 [*]
in connection with the defence of the Claim.
16.2 Notwithstanding any other provision of this Agreement to the contrary,
Digimarc shall indemnify [*] against and save [*] 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 [*] 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 [*] the right to continue using the allegedly infringing
materials; or
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
<PAGE>
(b) replace or modify the materials to the reasonable satisfaction of [*] so
that they are no longer infringing but remain functionally equivalent;
Failing either of which result [*] may, at its option, terminate this Agreement
without prejudice to [*]' other rights and remedies available in law, at equity
or otherwise.
16.4 Digimarc shall provide [*] with prompt written notice of any claim, demand
or action against Digimarc based on an allegation that the [*] Technology or any
part thereof, infringes any Intellectual Property Right of any person (referred
to below as a "[*] Technology Claim"). Digimarc shall, at [*] expense, comply
with all reasonable requests for assistance from [*] in connection with the
settlement or defence of any [*] Technology Claim.
16.5 Notwithstanding any other provision of this Agreement to the contrary, [*]
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 [*] 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 [*].
16.6 If the [*] Technology or any part thereof is held to infringe, or if [*]
believes that it is likely to be held to infringe, any of the Intellectual
Property Rights described in clause 16.4, [*] 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
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
<PAGE>
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 Mr. William Y. Conwell
President and CEO Klarquist, Sparkman, Campbell,
Digimarc Corporation Leigh & Whinston
One Centerpointe Drive 121 SW Salmon Street
Suite 500 Suite 1600
Lake Oswego, Oregon 97035 USA Portland, Oregon 97204 USA
FAX: (503) 968-0219 FAX: (503) 228-9446
18.3 Any notice to [*] shall be sent to both of, and any notice from [*] shall
be sent by either:
[*] [*]
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.
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
<PAGE>
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.
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 [*],
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. [*] 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 [*], provided that such notice is accompanied
by a Deed Of Adherence duly executed by the Substitute in the form attached as
Schedule T:
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
<PAGE>
(a) any wholly owned subsidiary of [*];
(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 [*] under this Agreement,
and [*] 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 [*], the [*] 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 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 communique
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
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
<PAGE>
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.
[*] DIGIMARC CORPORATION
Signature Signature
Name: Name: Bruce Davis
Title: Title: President & CEO
Date: Date:
Signature
Name:
Title:
Date:
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
<PAGE>
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 [*]
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 [*]
________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
-1-
<PAGE>
2.1 [*]
2.1.1 [*]
1. [*]
2. [*]
3. [*]
4. [*]
2.1.2 [*]
1. [*]
2. [*]
3. [*]
4. [*]
5. [*]
________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
-2-
<PAGE>
2.1.3 [*]
1. [*]
2.2 [*]
1. [*]
2. [*]
3. [*]
4. [*]
(a) [*]
(b) [*]
(c) [*]
5. [*]
6. [*]
7. [*]
________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
-3-
<PAGE>
SCHEDULE "B"
[*]
1.0 DESCRIPTION OF [*]
Digimarc shall perform the following Work [*]. (The specific
responsibilities to be discharged by [*] 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 [*] 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 [*], 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 [*]. [*] 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 [*].
________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
1
<PAGE>
4. [*].
1.3 Design, Development and Production of the CDS [*]
Digimarc shall design, develop and produce for acceptance by [*] 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 [*] 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 [*]
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 [*] and redeliver them to [*] 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 [*] 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 [*] 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
________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
2
<PAGE>
the final release to [*] 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 [*].
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 [*] 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
________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
3
<PAGE>
2.1 [*]
[*]:
2.1.1 [*]
1. [*].
2. [*].
3. [*].
4. [*].
5. [*].
6. [*].
2.1.2 [*]
1. [*].
2. [*].
2.1.3 [*]
1. [*].
2. [*].
3. [*]
4. [*].
5. [*].
6. [*].
2.2 [*]
________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
4
<PAGE>
2.2.1 [*]:
1. [*].
2. [*]:
(a) [*].
(b) [*].
3. [*].
4. [*].
5. [*].
6. [*]
7. [*]:
(a) [*].
(b) [*] CDS [*].
(c) [*].
________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
5
<PAGE>
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 [*]
________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
1
<PAGE>
2.2 [*]
2.2.1 [*]
2.2.2 [*]
2.2.3 [*]
2.2.4 [*]
3.0 [*]
3.1 [*]
3.2 [*]
3.2.1 [*]
3.2.2 [*]
3.2.3 [*]
________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
2
<PAGE>
Attachment 2
CDS PHASE 1 DELIVERY SCHEDULE
[*]
[*]
________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
1
<PAGE>
Attachment 3
DEVICE VENDORS
[*] [*] [*]
--- --- ---
[*] [*] [*]
________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
1
<PAGE>
SCHEDULE "C"
[*] STATEMENT OF WORK
Subject to the agreement to the contrary as part of the process defined in
the Agreement for determining the [*], Digimarc shall deliver the following
deliverables [*]:
1.0 [*]
1.1 [*] will meet the following requirements:
1.1.1 be capable of being integrated into [*]
1.1.2 meets all the specifications [*].
1.1.3 [*].
1.1.4 [*].
1.1.5 [*] may, at its option, evaluate the production version of each [*] into
which the [*] has been implemented. The DLA Project Manager shall identify to
Digimarc any concerns which [*] may have relating to [*] resistance or
performance. Digimarc shall make a proposal to the DLA Project Manager to
address those concerns for approval by the DLA Project Manager.
2.0 [*] Prototype
This deliverable is a prototype of the system that records [*]. The
system prototype includes prototype tools intended for use [*].
3.0 [*] Prototype
This deliverable is a prototype of [*] module that integrates [*]. The
specific [*] to be supported will be agreed to between Digimarc and the [*].
4.0 [*] Study
This is [*] that attempts to characterise the relationship between [*].
The study is intended to be expanded [*] to characterise the strength
relationship between [*].
____________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
1
<PAGE>
5.0 [*]
5.1 Digimarc shall integrate [*].
5.2 Digimarc shall provide [*].
5.3 Digimarc shall implement an [*].
5.4 Digimarc shall license the [*] to at least [*] in addition to those
required by [*] and [*], all of which vendors shall be selected from the list in
Schedule B or otherwise agreed between the parties' respective Project Managers.
6.0 Outreach / Market Research
6.1 Digimarc shall continue to build CDS program awareness and [*] adoption
across the [*], with a focus on [*].
6.2 Digimarc shall support any [*] initiatives, if any, to expand use of the
CDS [*].
6.3 Digimarc shall track and summarize computer technology and product trends
that affect the CDS [*] and development strategy.
7.0 [*] Study
7.1 Digimarc shall investigate the feasibility of [*]. The study will
investigate methods including [*].
7.2 [*] shall assist in the conduct of the study by [*] from files supplied
by Digimarc [*].
8.0 Certification Program
8.1 Digimarc shall develop and implement a certification program acceptable
to [*] for the ongoing review and certification of Devices that include [*] will
be required to submit their products for certification prior to shipment.
Digimarc will use an appropriate test suite to confirm operation and compliance
of the [*]. Certification will test that vendors' [*]; vendors' [*] meets
minimum [*] performance criteria for false positive and false negative
characteristics; and vendors' [*] of the [*] follows agreed to security
guidelines to help guard against code-centric attacks.
____________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
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9.0 Verification Tests
Digimarc shall develop for approval by the DLA Project Manager a series
of tests to be used by Digimarc to determine if a [*].
____________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
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SCHEDULE "D"
[*]
Subject to the agreement to the contrary as part of the process defined in
the Agreement for determining [*], Digimarc shall deliver the following
deliverables [*]:
1.0 [*]
1.1 [*]
2.0 [*]
2.1 completion of the [*] and integration of this system with [*].
3.0 [*]
[*] will meet the following requirements:
3.1 Meets all the specifications for v 2.0.
3.2 Includes a [*] module to be integrated into [*].
3.3 Includes [*] and [*].
4.0 [*]
4.1 Digimarc shall integrate [*].
4.2 Digimarc shall provide [*] support to [*].
4.3 Digimarc shall continue [*] certification program, expanding it to include
[*].
4.4 Digimarc shall license the [*] to at least [*] in addition to those
required by [*] and [*] in addition to those required by [*], all of which
vendors shall be selected from the list in Schedule B or as otherwise agreed
with the DLA Project Manager.
5.0 [*].
__________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
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5.1 [*].
6.0 Outreach / Market Research
6.1 Digimarc shall [*] the CDS [*].
6.2 Digimarc shall [*] the CDS [*].
__________________
[*] Omitted pursuant to a confidential treatment requested. The material has
been filed separately with the Securities and Exchange Commission.
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SCHEDULE "E"
ARBITRATION AGREEMENT
An Agreement dated June 21, 1999, 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 Oregon, USA, is developing, in conjunction with [*], technology to [*]
(the "Counterfeit Deterrence System" or "CDS" as defined in the Development and
License Agreement identified below);
WHEREAS, the [*], 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 Licensing Agreement (the "DLA") effective from [*];
WHEREAS, in performance of the DLA, the [*] 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 [*] 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;
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 [*] on the terms described in Schedule P
to the DLA to assist [*];
WHEREAS, the [*] have, pursuant to an Indemnity Agreement of or of
approximately the same date as this Arbitration Agreement (the "Indemnity
Agreement"), agreed to compensate and to indemnify and hold harmless the [*] in
respect of any liability in connection with the project;
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
________________
[*] Omitted pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
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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 [*], 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 [*] and Digimarc
as described in clause 6.4 of the Escrow Agreement as to the occurrence of
a Release Event as defined
________________
[*] Omitted pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
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in clause 6.1 of the Escrow Agreement. Any such dispute shall be referred
to an expert 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 [*], Digimarc, [*] 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 as listed in Schedule A and any entity which in accordance with
Articles 6 and 7 of this Arbitration Agreement also becomes a signatory to
this Arbitration Agreement.
(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 [*].
________________
[*] Omitted pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
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5. Arbitration pursuant to this Arbitration Agreement shall be the sole and
exclusive means for resolving any Dispute.
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 relating to the
performance of an Agreement or which alters or amends in any material respect
any of the rights or obligations of any Party under any Agreement, except as
follows: (a) the contract or agreement shall contain the clause set out in
Schedule D and (b) the parties to the contract or agreement shall sign
counterparts to the Arbitration Agreement, thereby expressly consenting to be
added to the list of Parties at Schedule A and to the addition of the contract
or agreement to Schedule B, said signed counterparts and notice of these
additions being sent to all Parties. Each Party to this Arbitration Agreement
hereby expressly accepts the addition of said parties to Schedule A and of said
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.
________________
[*] Omitted pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
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(e) The [*], Digimarc, [*], 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
[*], Digimarc, [*], 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 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.
________________
[*] Omitted pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
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(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 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 [*] 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 [*], any provision of the [*] notwithstanding.
Nothing in this Arbitration Agreement shall operate or be regarded as a waiver,
renunciation or other modification of the privileges, immunities and exemptions
enjoyed by the
________________
[*] Omitted pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
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[*] for itself or in respect of its assets, 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 [*], 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.
(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 [*], Digimarc,
[*] 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
[*] in effect at the time any arbitration is commenced.
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.
________________
[*] Omitted pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
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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 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]
________________
[*] Omitted pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
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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.
________________
[*] Omitted pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
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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
________________
[*] Omitted pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
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Schedule C to Arbitration Agreement
In accordance with Article 1.1 of the [*], in addition to such other
modifications of the [*] as are contained in this Arbitration Agreement, the
Parties to this Arbitration Agreement and to the Agreements modify the [*] as
follows:
(a) Notwithstanding Article 3.1 of the [*], 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 [*], 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
[*], 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 [*], 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 [*], 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 [*], 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 [*], no interim measures shall be sought
or applied against the [*] in connection with any Dispute by either an
arbitral tribunal established pursuant to this Arbitration Agreement or
any judicial authority.
________________
[*] Omitted pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
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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
dated [ ], a copy of which is attached as Appendix [ ] to this
[Agreement] (the "Arbitration Agreement") [or, alternatively, "entered
into between the parties and others effective 1 January 1999 "].
"[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."
________________
[*] Omitted pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
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SCHEDULE "F"
OTHER [*] 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: [*]
[*]
[*]
[*]
[*]
______________
[*] Omitted pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
<PAGE>
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 5850481
US 5841978
US 5841886
US 5832119
US 5822436
US 5809160
US 5768426
US 5765152
US 5748783
US 5748763
US 5745604
US 5721788
US 5710834
US 5636292
US 5862260
_____________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
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SCHEDULE "H"
PROJECT TECHNOLOGY
The Project Technology will include:
1. The modification of techniques for using the Digimarc and [*] Technologies
in the [*].
2. The effects and behaviours [*].
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. [*].
__________
[*] Omitted pursuant to confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
<PAGE>
SCHEDULE "I"
ALLOWABLE COSTS
1. For the purposes of this Schedule I:
[*]
__________
[*] Omitted pursuant to confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
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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.
_____________________
[*] Omitted pursuant to a confidential treatment request. The material has
been filed separately with the Securities Exchange Commission.
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2. Within sixty (60) days after the Agreement is last signed, [*] 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 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 [*] accordingly.
Digimarc has budgeted [*]. Costs required in excess of this amount may require
an adjustment to [*] and/or Statement of Work.
____________________
[*] Omitted pursuant to a confidential treatment request. The material has
been filed separately with the Securities Exchange Commission.
-2-
<PAGE>
SCHEDULE"K-1"
[*] LICENSE AGREEMENT - [*]
This [*] LICENSE AGREEMENT (the "Agreement") is made
BETWEEN
(name and address of [*]) ("[*]")
- AND -
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")
RECITALS
--------
Digimarc has expertise in, and owns extensive intellectual property,
including patents, patent applications, copyrights and trade secrets related to
digital watermarks, counterfeit deterrence, copyright protection, and device
control (the "Digimarc IPR");
[*] possesses or will possess intellectual property rights related to the
application of such intellectual property [*];
Digimarc and [*] have cooperated in the development of means, using
such intellectual property, [*] (the "Counterfeit Deterrence System" or "CDS");
and
[*] desires to obtain a license to certain components of the CDS so it
can [*] which include the CDS [*].
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:
_______________
[*] Omitted Pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
1
<PAGE>
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;
"Attachment" means a document specified as being attached to this Agreement;
[*]
[*]
[*]
[*] the CDS;
[*]
"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 [*];
[*]
"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;
_______________
[*] Omitted Pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
2
<PAGE>
"Digital Watermark" refers to markings (including texturing) that are detectable
from data produced by visible light scanning of documents, which convey multiple
bits of digital data and yet do not significantly detract from the aesthetics of
the item or image marked thereby. Examples include, but are not limited to:
1. generally imperceptible changes to line density or placement in line art
imagery;
2. texturing of a substrate, where the texturing feels substantially uniform
to human touch;
3. slight localized changes to optical density or reflectance of a printed
document;
4. slight changes to sampled data; or
5. visible background patterns of substantially uniform character.
"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 [*]
License;
[*]
[*]
[*]
[*]
"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 [*] under clause 2.14 of the [*]
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;
[*]
[*]
_______________
[*] Omitted Pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
3
<PAGE>
"[*] License" means Schedule L-1 to the [*] 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 [*];
and
"Verification Test" means a test or tests developed under the [*] License to
determine [*]
1.2 Interpretation - In this Agreement:
1.2.1 unless otherwise specified, all references to money amounts are to the
currency of the United States of America;
1.2.2 the use of words in the singular or plural, or with a particular gender,
shall not limit the scope or exclude the application of any provision of this
Agreement to such person or persons or circumstances as the context otherwise
permits;
1.2.3 whenever a provision of this Agreement requires an approval or consent by
a party to this Agreement and notice of such approval or consent is not
delivered within the applicable time, then the party shall be conclusively
deemed to have withheld the consent or approval;
1.2.4 unless otherwise specified, the number of days within or following which
any payment is to be made or act is to be done shall be interpreted to be
continuous and shall be calculated by excluding the day on which the period
commences and including the day which ends the period and by extending the
period to the next Business Day if the last day of the period is not a Business
Day;
1.2.5 unless otherwise specified, the order of precedence for interpreting this
Agreement shall be:
(a) this Agreement, excluding Attachments, and
_______________
[*] Omitted Pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
4
<PAGE>
(b) the Attachments;
1.2.6 for greater certainty, a party or representative to which this Agreement
grants the right to make a decision or determination in the sole discretion of
the party or representative is not required to act reasonably in making the
decision or determination and no such decision or determination may be
challenged by the other party under the Arbitration Agreement or otherwise;
1.2.7 the words "includes" or "including" will be construed as meaning
"included without limitation" and "including without limitation" as the case may
be; and
1.2.8 a clause or Attachment, unless the context requires otherwise, is a
reference to a clause to, an Attachment of, or a paragraph of an Attachment to,
this Agreement, as amended from time to time in accordance with this Agreement.
1.3 Applicable Law - This Agreement shall be construed in accordance with
the laws of England to the exclusion of its rules of conflicts of laws.
1.4 Attachments - The attachments to this Agreement, listed below, are an
integral part of this Agreement:
Attachment Description
-------------------------------------------
Attachment "1" [*]
Attachment "2" Problem Report
Attachment "3" Payment for Services
Attachment "4" [*]
Attachment "5" [*]
2. GRANT OF RIGHTS AND SERVICES
2.1 Subject to the terms of this Agreement, Digimarc hereby grants to [*], a
no charge, non-exclusive, non-transferable license under the Digimarc IPR and
the [*] 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 with [*], is the property of
Digimarc and that [*] has no right to sublicense it. [*] acknowledges that [*]
may not [*]
2.3 [*] acknowledges and agrees that the [*] IPR is the property of its owner
and that [*] has
_______________
[*] Omitted Pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
5
<PAGE>
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 [*], and grant the foregoing license to [*].
_______________
[*] Omitted Pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
6
<PAGE>
3. SERVICE FEES
3.1 [*] shall pay to Digimarc a fee for the Services as detailed below. The
fee for Services provided:
(a) [*], is as set out in Attachment 3;
(b) [*], will be no greater than the fee then paid to Digimarc for similar
services by Digimarc's most favoured customer.
3.2 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 [*]'s 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.
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 [*] IPR
or the Digimarc IPR, or permit or suffer the [*] 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 [*] 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
_______________
[*] Omitted Pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
7
<PAGE>
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) [*]
(ii) [*]
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 [*], and (iii) the technology for [*]
and (iv) any other part of the CDS, which improvements [*] has made, or caused
or permitted to be made, as a result of access to and use of the Digimarc
Confidential Information. The first such information shall be provided to
Digimarc within thirty (30) days after the first calendar quarter following said
access, and shall cover improvements made from the date [*] first learned of the
Digimarc Confidential Information. Following the provision of the information
under this clause 5.4, [*] shall provide to Digimarc within a reasonable period
of time following request, the Technical Information for those improvements
requested by Digimarc in writing.
5.5 [*] hereby grants to Digimarc a royalty-free, non-exclusive, sub-
licensable, worldwide license to use the improvements described in clause 5.4
and in any patents thereon owned or otherwise licenseable by [*].
5.6 Such license shall continue until this Agreement expires or is terminated,
or until [*] has no further rights to Digimarc IPR, whichever occurs last.
5.7 For greater certainty, the obligations set out in clauses 5.4, 5.5 and 5.6
shall not apply to any such improvement which the [*] can demonstrate would have
been made irrespective of access to the Digimarc Confidential Information.
5.8 Not less frequently than twice in each calendar year of the Term, [*] (or
Digimarc if [*] so designates), shall conduct Verification Tests on
representative samples of [*]. A report detailing the results of the Tests
shall be prepared and promptly provided to [*].
5.9 If [*] designates Digimarc to conduct the tests:
(i) [*], [*] shall pay Digimarc the fees set out in Attachment 3;
(ii) [*], [*] shall pay Digimarc the fees then paid to Digimarc for similar
services by Digimarc's most favoured customer .
_______________
[*] Omitted Pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
8
<PAGE>
5.10 In the event that said Tests do not indicate, to [*]'s 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 authorized subcontractors provided that such employee
or subcontractor shall have entered into a non-disclosure agreement in respect
of such Confidential Information in favour of the Discloser on terms materially
similar to the provisions of this clause 6.
6.5 The obligations set out in this clause 6 will not apply to any
Confidential Information that:
(a) is or becomes publicly available other than through the fault of the
Recipient;
(b) was known to the Recipient prior to disclosure as shown by documentation
sufficient to establish such knowledge;
(c) was or is lawfully disclosed to the Recipient by a third party who did not
breach any.
_______________
[*] Omitted Pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
9
<PAGE>
obligation of confidence by such disclosure and who made the disclosure
without restriction on further disclosure all of which is shown by
documentation sufficient to establish same; or
(d) is required by law to be disclosed provided, however, that the Recipient
shall first give written notice to the Discloser before the disclosure so
that the Discloser may seek an appropriate protective order.
Notwithstanding the foregoing, the fact that Confidential Information, or any
part thereof, can be linked together by a search of publications and other
information, followed by a selection of a series of such items of knowledge from
unconnected sources, and fitting together those items of knowledge so as to
duplicate or recreate any item of Confidential Information, shall not be deemed
to cause the Confidential Information, or any part thereof, to be included
within exceptions (a), (b) or (c), above.
6.6 [*] shall not make any disclosure of Digimarc Confidential Information to
[*] which is not licensed by Digimarc, except as expressly and previously
authorized in writing by Digimarc. Disclosure to [*]shall only be made if and
to the extent reasonably necessary for [*] to fulfill its obligations to [*].
6.7 The obligations of the parties under this clause 6 will survive the Term or
sooner termination of this Agreement and will remain in full force and effect
regardless of the cause of any termination.
6.8 Nothing in this Agreement shall be construed to require [*] to disclose any
information which is confidential to a third party including for greater
certainty [*].
7. INTELLECTUAL PROPERTY INDEMNIFICATION
7.1 [*] shall provide Digimarc with prompt written notice of any claim, demand
or action against [*] based on an allegation that the Digimarc IPR or any part
thereof, infringes any Intellectual Property Right of any person (referred to
below as a "Claim").
7.2 Subject to the limitations set out in clauses 7.3 to 7.7 inclusive Digimarc
shall, at its own expense:
(a) negotiate the resolution of any such Claim;
(b) pay all costs associated with the Claim; and
_______________
[*] Omitted Pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
10
<PAGE>
(c) defend any action based on the Claim.
7.3 [*] shall, at Digimarc's expense, comply with all reasonable requests 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 [*] against and save [*] and all the [*] 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 [*]. 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 The liability of Digimarc under clause 7.4 of this Agreement and under the
equivalent clause of every other licence agreement entered into between Digimarc
and [*] pursuant to the provisions of the [*] 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.
8. REPRESENTATIONS AND WARRANTIES OF DIGIMARC
8.1 General - 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 Oregon, U.S.A. or some other state in the United
States with full corporate power and authority to enter into this
Agreement;
_______________
[*] Omitted Pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
11
<PAGE>
(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) [*] 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
_______________
[*] Omitted Pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
12
<PAGE>
enforceable obligation of [*].
9.2 [*] makes no representations, warranties or undertakings that [*] has any
right to grant the licenses required to be granted by clause 5.5 and Digimarc
shall be solely responsible for determining that such improvements are suitable
for the intended use and for the consequences of any use of the same whether by
Digimarc or others, and [*] hereby disclaims all liability in connection
therewith.
10. TERM AND TERMINATION
10.1 This Agreement will take effect on the Effective Date and will remain in
force throughout the Term unless sooner terminated as provided herein.
10.2 Either party may terminate this Agreement if the other party breaches any
of its obligations under this Agreement and fails to remedy such breach within
thirty (30) days after receiving written notice of such breach from the other
party.
10.3 Upon termination of this Agreement:
(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 [*] License by Digimarc for cause, the rights of
the [*] hereunder to use the Digimarc IPR shall be deemed to be restricted [*]
as of the date of such termination.
___________________
[*] Omitted pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
13
<PAGE>
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, Licensee may in its sole
discretion instruct Digimarc to continue to perform services which are the
subject matter of the proceedings and Digimarc shall act in accordance with
those instructions, subject to payment under clause 3.1.
12. MISCELLANEOUS PROVISIONS
12.1 Remedies Cumulative - Except as otherwise expressly set out in this
Agreement:
(a) each and every right, power and remedy of a party will be considered to be
cumulative with and in addition to any other right, power and remedy which
such party may have at law or in equity in the event of breach of any of
the terms of this Agreement;
(b) the exercise or partial exercise of any right, power or remedy will
neither constitute the exclusive election thereof nor the waiver of any
other right, power or remedy available to such party; and
(c) a party terminating this Agreement in accordance with the provisions of
the Termination clause will have no liability or obligation to the other
as a result of or with respect to the termination.
12.2 Notices. All notices under this Agreement shall be delivered by fax or
recognized international courier service. The notice shall be deemed effective
as of the date of delivery to the address of the party specified below, as
evidenced by a delivery receipt or the addressee's registry of incoming
correspondence. Unless otherwise expressly set out in this Agreement, all
notices to a party will be sent to the party's authorized representative
identified below and all notices from a party will be sent by the party's
authorized representative identified below.
12.3 Any notice to [*] shall be sent to both of, and any notice from [*] shall
be sent by either:
Name1 Name2
___________________
[*] Omitted pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
14
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Address1 Address2
12.4 Any notice to Digimarc shall be sent to both of, and any notice from
Digimarc shall be sent by either:
___________________
[*] Omitted pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
15
<PAGE>
Mr. Bruce Davis Mr. William Y. Conwell
President and CEO Klarquist, Sparkman, Campbell,
Digimarc Corporation Leigh & Whinston
One Centerpointe Drive 121 SW Salmon Street
Suite 500 Suite 1600
Lake Oswego, Oregon 97035 USA Portland, Oregon 97204 USA
FAX: (503) 968-0219 FAX: (503) 228-9446
12.5 A copy of every notice sent by either party shall be sent to: [*].
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. This Agreement is intended by the parties to be the
final expression of their agreement and constitutes and embodies the entire
agreement and understanding between the parties hereto and constitutes a
complete and exclusive statement of the terms and conditions thereof, and will
supersede any and all prior correspondence, conversations, negotiations,
agreements or understandings relating to the same subject matter.
12.10 Amendments. No change in, modification of or addition to the terms and
conditions contained herein will be valid as between the parties unless set
forth in a writing that is signed by an authorized representative of each of the
parties and which specifically states that it constitutes an amendment to this
Agreement.
12.11 Waiver. No waiver of any term, provision, or condition of this Agreement
will be effective unless in a written document signed by the waiving party and
no such waiver in any one
___________________
[*] Omitted pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
16
<PAGE>
or more instances, will be deemed to be, or be construed as, a further or
continuing waiver of that term, provision or condition or any other term,
provision or condition of this Agreement.
12.12 Assignment and Successors. This Agreement may not be assigned by [*]
without Digimarc's consent, which consent shall not be unreasonably withheld or
delayed. This Agreement and all of its terms, conditions and covenants are
intended to be fully effective and binding, to the extent permitted by law, on
the successors and permitted assigns of the parties hereto.
12.13 Captions. Captions are provided in this Agreement for convenience only
and they form no part, and are not to serve as a basis for interpretation or
construction, of this Agreement, nor as evidence of the intention of the parties
hereto.
12.14 Disclaimer of Agency. Nothing contained in this Agreement is intended or
will be construed so as to constitute the parties to this Agreement as partners
or joint venturers or as agents of each other. Neither party will have any
express or implied right or authority to assume or create any obligations on
behalf of or in the name of any other party or to bind any other party in any
contract, agreement or undertaking with any third party. No employee of a party
shall be deemed or considered to be an employee of the other party or of both
parties.
12.15 Publicity. The parties agree that from time-to-time it will be beneficial
to both parties to issue press releases and other public announcements
concerning benefits arising from the 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
___________________
[*] Omitted pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
2
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hereto as of the Effective Date.
DIGIMARC CORPORATION ([*])
By: ________________ By: ________________
Name: ________________ Name: ________________
Title: ________________ Title: ________________
Date: ________________ Date: ________________
___________________
[*] Omitted pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
3
<PAGE>
ATTACHMENT 1
[*]
[*] will cause the following [*] to take place:
(a) [*]
(b) [*] CDS [*]
(c) [*]
___________________
[*] Omitted pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
4
<PAGE>
ATTACHMENT 2
PROBLEM REPORT
Each problem report will contain all information necessary to reproduce or
demonstrate the occurrence of the problem. Problem reports will be in English
and will be delivered electronically in a format to be provided by Digimarc.
Problem reports will contain:
. Date problem was encountered
. Detailed description of the problem, including the frequency with which the
problem occurs
. Name and version number of the program / system component that exhibits the
problem
. Step by step instructions to reproduce the problem
. All data files required to reproduce the problem
. [*]
. Manufacturer and Model
. CPU type and speed
. Amount of memory
. Operating System and Version
. Disk Configuration (number of drives, total space per drive, free space per
drive)
. Display Adapter Model, Resolution, Number of colors
. Peripheral configuration (where applicable)
. [*]
. TWAIN driver and version number
. [*]
. Severity of problem
. Contact information for person to contact for further information (name,
phone number, FAX number, email address)
Licensee agrees to work with Digimarc to provide reasonable additional
information and perform reasonable additional tests, as requested by Digimarc,
to assist Digimarc in resolution of the problem.
___________________
[*] Omitted pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
1
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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.
___________________
[*] Omitted pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
<PAGE>
ATTACHMENT 4
IDENTIFICATION OF [*]
ATTACHMENT 5
[*]
___________________
[*] Omitted pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
<PAGE>
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
Oregon and having its head office at One Centerpointe Drive, Suite
500, Lake Oswego, Oregon. U.S.A. 97035-8615 ("Digimarc")
RECITALS
--------
Digimarc has expertise in, and owns extensive intellectual property,
including patents, patent applications, copyrights and trade secrets related to
digital watermarks, counterfeit deterrence, copyright protection, and device
control (the "Digimarc IPR");
[*] possesses or will possess intellectual property rights related to
the application of such intellectual property to [*];
Digimarc and [*] have cooperated in the development of means, using
such intellectual property, to [*] (the "Counterfeit Deterrence System"
or "CDS");
and
[*] desires to obtain a license to certain components of the CDS so it
can [*] which include the CDS [*].
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:
__________________
[*] Omitted pursuant to confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
1
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1. DEFINITIONS AND PRINCIPLES OF INTERPRETATION
1.1 Definitions
"Agreement" means these articles of agreement, including the Attachments, and
those documents as specified or referenced in this Agreement as forming part of
the Agreement, all as may be amended from time to time;
"Arbitration Agreement" means the Arbitration Agreement entered into between the
parties and others effective 1 January 1999;
"Attachment" means a document specified as being attached to this Agreement;
[*];
[*];
[*];
[*] the CDS;
[*]
"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;
_____________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
2
<PAGE>
"Digital Watermark" refers to markings (including texturing) that are detectable
from data produced by visible light scanning of documents, which convey multiple
bits of digital data and yet do not significantly detract from the aesthetics of
the item or image marked thereby. Examples include, but are not limited to:
1. generally imperceptible changes to line density or placement in line art
imagery;
2. texturing of a substrate, where the texturing feels substantially uniform
to human touch;
3. slight localized changes to optical density or reflectance of a printed
document;
4. slight changes to sampled data; or
5. visible background patterns of substantially uniform character.
"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 [*]
License;
[*]
[*]
[*]
[*]
"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 [*] under clause 2.14 of the [*]
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;
[*]
[*]
____________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
3
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"[*] License" means Schedule L-2 to the [*] 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 [*];
and
"Verification Test" means a test or tests developed under the [*] License to
determine if [*].
1.2 Interpretation - In this Agreement:
1.2.1 unless otherwise specified, all references to money amounts are to the
currency of the United States of America;
1.2.2 the use of words in the singular or plural, or with a particular gender,
shall not limit the scope or exclude the application of any provision of this
Agreement to such person or persons or circumstances as the context otherwise
permits;
1.2.3 whenever a provision of this Agreement requires an approval or consent by
a party to this Agreement and notice of such approval or consent is not
delivered within the applicable time, then the party shall be conclusively
deemed to have withheld the consent or approval;
1.2.4 unless otherwise specified, the number of days within or following which
any payment is to be made or act is to be done shall be interpreted to be
continuous and shall be calculated by excluding the day on which the period
commences and including the day which ends the period and by extending the
period to the next Business Day if the last day of the period is not a Business
Day;
1.2.5 unless otherwise specified, the order of precedence for interpreting this
Agreement shall be:
(a) this Agreement, excluding Attachments, and
_______________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
4
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(b) the Attachments;
1.2.6 for greater certainty, a party or representative to which this Agreement
grants the right to make a decision or determination in the sole discretion of
the party or representative is not required to act reasonably in making the
decision or determination and no such decision or determination may be
challenged by the other party under the Arbitration Agreement or otherwise;
1.2.7 the words "includes" or "including" will be construed as meaning
"included without limitation" and "including without limitation" as the case may
be; and
1.2.8 a clause or Attachment, unless the context requires otherwise, is a
reference to a clause to, an Attachment of, or a paragraph of an Attachment to,
this Agreement, as amended from time to time in accordance with this Agreement.
1.3 Applicable Law - This Agreement shall be construed in accordance with the
laws of England to the exclusion of its rules of conflicts of laws.
1.4 Attachments - The attachments to this Agreement, listed below, are an
integral part of this Agreement:
Attachment Description
---------- -----------
Attachment "1" [*]
Attachment "2" Opinion of Counsel
Attachment "3" Problem Report
Attachment "4" Payment for Services
Attachment "5" [*]
Attachment "6" [*]
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 [*] IPR, in the Field of Use only, to [*].
2.2 [*] acknowledges and agrees that the Digimarc IPR, and any technology
developed by Digimarc during the course of its work with [*], is the property of
Digimarc and that [*] has no right to sublicense it. [*] acknowledges that [*]
may not [*].
___________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
5
<PAGE>
2.3 [*] acknowledges and agrees that the [*] 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 by [*].
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 [*], and grant the foregoing license to [*].
3. SERVICE FEES
3.1 [*] shall pay to Digimarc a fee for the Services as detailed below. The fee
for Services provided:
(a) [*], is as set out in Attachment 4;
(b) [*], will be no greater than the fee then paid to Digimarc for similar
services by Digimarc's most favoured customer.
3.2 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 [*]'s 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
________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
6
<PAGE>
relating to or arising out of the performance of the Services. If required by
law, [*] shall deduct all such taxes and amounts from the amounts otherwise
payable to Digimarc and remit them to the appropriate authorities.
4. OPINION OF COUNSEL
4.1 Before introducing [*], [*] shall obtain and forward to Digimarc a written
opinion of counsel substantially in the form attached as Attachment 2 that
confirms:
(a) the validity and enforceability of the terms of this Agreement, under the
laws of the jurisdiction where [*] resides; and
(b) the legality of each [*] under the laws of the jurisdiction where [*]
resides.
4.2 Digimarc shall not unreasonably withhold its consent to any qualifications
which [*]'s counsel may require to be made to such opinion.
5. [*] RESPONSIBILITIES
5.1 [*] shall make every reasonable effort, including obtaining a legally
binding commitment from all [*], to ensure that the [*] do not use the [*] IPR
or the Digimarc IPR, or permit or suffer the [*] 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 [*] 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) [*]
(ii) [*]
_________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
7
<PAGE>
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 [*], and (iii) the technology for [*]
and (iv) any other part of the CDS which improvements [*] has made, or caused or
permitted to be made, as a result of access to and use of the Digimarc
Confidential Information. The first such information shall be provided to
Digimarc within thirty (30) days after the first calendar quarter following said
access, and shall cover improvements made from the date [*] first learned of the
Digimarc Confidential Information. Following the provision of the information
under this clause 5.4, [*] shall provide to Digimarc within a reasonable period
of time following request, the Technical Information for those improvements
requested by Digimarc in writing.
5.5 [*] hereby grants to Digimarc a royalty-free, non-exclusive,
sub-licensable, worldwide license to use the improvements described in clause
5.4 and in any patents thereon owned or otherwise licenseable by [*].
5.6 Such license shall continue until this Agreement expires or is terminated,
or until [*] has no further rights to Digimarc IPR, whichever occurs last.
5.7 For greater certainty, the obligations set out in clauses 5.4, 5.5 and 5.6
shall not apply to any such improvement which the [*] can demonstrate would have
been made irrespective of access to the Digimarc Confidential Information.
5.8 Not less frequently than twice in each calendar year of the Term, [*] (or
Digimarc if [*] so designates), shall conduct Verification Tests on
representative samples [*]. A report detailing the results of the Tests shall
be prepared and promptly provided to [*].
5.9 If [*] designates Digimarc to conduct the tests:
(i) [*], [*] shall pay Digimarc the fees set out in Attachment 4 ;
(ii) [*], [*] 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 [*]'s 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 5 and 6.
_________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
8
<PAGE>
6. CONFIDENTIALITY
6.1 Except as otherwise expressly permitted by this Agreement, a Recipient
shall not use, reproduce or disclose the Confidential Information of the
Discloser for any purpose other than as reasonably necessary to comply with its
obligations under this Agreement or to exercise any rights or licenses granted
to it under or pursuant to this Agreement.
6.2 The Recipient shall protect the Confidential Information of the Discloser
from disclosure by using the same degree of care, which shall be no less than a
reasonable degree of care, as the Recipient uses to protect its own confidential
information.
6.3 On written request from the Discloser, the Recipient shall return, or
certify the destruction of, all originals and copies of the Discloser's
Confidential Information in the Recipient's possession or control which the
Recipient does not need to retain in order to perform any obligations imposed,
or exercise any rights acquired, by this Agreement.
6.4 A Recipient may, on a need to know basis, and only for the purposes
described in clause 6.1, give the other party's Confidential Information to the
Recipient's employees or authorized subcontractors provided that such employee
or subcontractor shall have entered into a non-disclosure agreement in respect
of such Confidential Information in favour of the Discloser on terms materially
similar to the provisions of this clause 6.
6.5 The obligations set out in this clause 6 will not apply to any Confidential
Information that:
(a) is or becomes publicly available other than through the fault of the
Recipient;
(b) was known to the Recipient prior to disclosure as shown by documentation
sufficient to establish such knowledge;
(c) was or is lawfully disclosed to the Recipient by a third party who did not
breach any obligation of confidence by such disclosure and who made the
disclosure without restriction on further disclosure all of which is shown
by documentation sufficient to establish same; or
(d) is required by law to be disclosed provided, however, that the Recipient
shall first give written notice to the Discloser before the disclosure so
that the Discloser may seek an appropriate protective order.
Notwithstanding the foregoing, the fact that Confidential Information, or any
part thereof, can be
_______________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
9
<PAGE>
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 [*] 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 a [*].
7. INTELLECTUAL PROPERTY INDEMNIFICATION
NOTE - THIS PROTECTION IS AVAILABLE UPON PAYMENT OF A FEE BY [*] TO BE
NEGOTIATED BETWEEN [*] AND DIGIMARC
7.1 [*] shall provide Digimarc with prompt written notice of any claim, demand
or action against [*] based on an allegation that the Digimarc IPR or any part
thereof, infringes any Intellectual Property Right of any person (referred to
below as a "Claim").
7.2 Subject to the limitations set out in clauses 7.3 to 7.7 inclusive Digimarc
shall, at its own expense:
(a) negotiate the resolution of any such Claim;
(b) pay all costs associated with the Claim; and
(c) defend any action based on the Claim.
7.3 [*] shall, at Digimarc's expense, comply with all reasonable requests for
assistance from [*] in connection with the settlement or defence of the Claim.
________________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
10
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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 [*] 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 [*]. 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 The liability of Digimarc under clause 7.4 of this Agreement and under the
equivalent clause of every other licence agreement entered into between Digimarc
and [*] pursuant to the provisions of the [*] 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.
8. REPRESENTATIONS AND WARRANTIES OF DIGIMARC
8.1 General - 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 Oregon, U.S.A. or some other state in the United
States with full corporate power and authority to enter into this
Agreement;
(c) to the best of its knowledge, neither this Agreement nor the Services will
contravene, breach, or result in any default under any agreement, permit,
by-law, or law or regulation to which Digimarc is subject or by which it is
bound including, for greater certainty any laws or regulations in effect in
the United States governing export;
_________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
11
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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.
8.2 Digimarc represents, warrants and undertakes to [*] that:
(a) incorporated as part of [*];
(b) [*] shall contain no lock, clock, timer, counter, copy protection feature,
replication device or intentional defects (including but not limited to
"viruses" or "worms" as such terms are commonly used in the computer
industry), CPU serial number reference, or other device which might:
(i) lock, disable or erase [*] or any data which is loaded on the [*] so
as to prevent full use of the [*] by authorized persons; or
(ii) require action or intervention by Digimarc or any other person to
allow properly trained and authorized persons to use the [*];
(c) the source code for the [*] will support the year 2000 and neither
performance nor functionality will be affected by dates prior to, during
and after the year 2000, and for greater certainty, the [*] will switch to
1 January 2000 on 1 January 2000, and the year 2000 will be recognized as a
leap year.
9. REPRESENTATIONS AND WARRANTIES OF [*]
9.1 [*] represents and warrants to Digimarc that:
(a) [*] has full power and authority to enter into this Agreement; and
(b) this Agreement when executed and delivered by [*] shall constitute a valid,
binding and enforceable obligation of [*].
9.2 [*] makes no representations, warranties or undertakings that [*] has any
right to grant the licenses required to be granted by clause 5.5 and Digimarc
shall be solely responsible for determining that such improvements are suitable
for the intended use and for the consequences of
_________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
12
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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 [*] License by Digimarc for cause, the rights of
the [*] hereunder to use the Digimarc IPR shall be deemed to be restricted to
[*] as of the date of such termination.
11. DISPUTE RESOLUTION
11.1 Any Dispute (as defined in the Arbitration Agreement) shall be finally
settled by arbitration in accordance with the Arbitration Agreement.
11.2 Unless otherwise agreed between the parties or unless the subject matter
of the dispute resolution proceedings is a party's right to terminate this
Agreement, the Services shall continue
_________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
13
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during the dispute resolution proceedings and payments due to Digimarc shall not
be withheld on account of such proceedings unless that particular services or
payment is the subject matter of the proceedings. Notwithstanding the foregoing,
[*] may in its sole discretion instruct Digimarc to continue to perform services
which are the subject matter of the proceedings and Digimarc shall act in
accordance with those instructions, subject to payment under clause 3.1.
12. MISCELLANEOUS PROVISIONS
12.1 Remedies Cumulative - Except as otherwise expressly set out in this
Agreement:
(a) each and every right, power and remedy of a party will be considered to be
cumulative with and in addition to any other right, power and remedy which
such party may have at law or in equity in the event of breach of any of
the terms of this Agreement;
(b) the exercise or partial exercise of any right, power or remedy will neither
constitute the exclusive election thereof nor the waiver of any other
right, power or remedy available to such party; and
(c) a party terminating this Agreement in accordance with the provisions of the
Termination clause will have no liability or obligation to the other as a
result of or with respect to the termination.
12.2 Notices. All notices under this Agreement shall be delivered by fax or
recognized international courier service. The notice shall be deemed effective
as of the date of delivery to the address of the party specified below, as
evidenced by a delivery receipt or the addressee's registry of incoming
correspondence. Unless otherwise expressly set out in this Agreement, all
notices to a party will be sent to the party's authorized representative
identified below and all notices from a party will be sent by the party's
authorized representative identified below.
12.3 Any notice to [*] shall be sent to both of, and any notice from [*] shall
be sent by either:
Name1 Name2
Address1 Address2
12.4 Any notice to Digimarc shall be sent to both of, and any notice from
Digimarc shall be sent by either:
Mr. Bruce Davis President and CEO
_________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
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Digimarc Corporation Mr. William Y. Conwell
One Centerpointe Drive Klarquist, Sparkman, Campbell,
Suite 500 Leigh & Whinston
Lake Oswego, Oregon 97035 USA 121 SW Salmon Street
FAX: (503) 968-0219 Suite 1600
Portland, Oregon 97204 USA
FAX: (503) 228-9446
12.5 A copy of every notice sent by either party shall be sent to: [*]
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. This Agreement is intended by the parties to be the
final expression of their agreement and constitutes and embodies the entire
agreement and understanding between the parties hereto and constitutes a
complete and exclusive statement of the terms and conditions thereof, and will
supersede any and all prior correspondence, conversations, negotiations,
agreements or understandings relating to the same subject matter.
12.10 Amendments. No change in, modification of or addition to the terms and
conditions contained herein will be valid as between the parties unless set
forth in a writing that is signed by an authorized representative of each of the
parties and which specifically states that it constitutes an amendment to this
Agreement.
12.11 Waiver. No waiver of any term, provision, or condition of this
Agreement will be effective unless in a written document signed by the waiving
party and no such waiver in any one or more instances, will be deemed to be, or
be construed as, a further or continuing waiver of that term, provision or
condition or any other term, provision or condition of this Agreement.
Schedule K2 June 28, 1999
<PAGE>
12.12 Assignment and Successors. This Agreement may not be assigned by [*]
without Digimarc's consent, which consent shall not be unreasonably withheld or
delayed. This Agreement and all of its terms, conditions and covenants are
intended to be fully effective and binding, to the extent permitted by law, on
the successors and permitted assigns of the parties hereto.
12.13 Captions. Captions are provided in this Agreement for convenience only and
they form no part, and are not to serve as a basis for interpretation or
construction, of this Agreement, nor as evidence of the intention of the parties
hereto.
12.14 Disclaimer of Agency. Nothing contained in this Agreement is intended or
will be construed so as to constitute the parties to this Agreement as partners
or joint venturers or as agents of each other. Neither party will have any
express or implied right or authority to assume or create any obligations on
behalf of or in the name of any other party or to bind any other party in any
contract, agreement or undertaking with any third party. No employee of a party
shall be deemed or considered to be an employee of the other party or of both
parties.
12.15 Publicity. The parties agree that from time-to-time it will be beneficial
to both parties to issue press releases and other public announcements
concerning benefits arising from the 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.
2.18 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.
_________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
<PAGE>
DIGIMARC CORPORATION ([*])
By: ___________________________ By: _________________________
Name: ___________________________ Name: _________________________
Title: ___________________________ Title: _________________________
Date: ___________________________ Date: _________________________
_________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
<PAGE>
ATTACHMENT 1
[*]
[*] will cause the following [*] to take place:
(a) [*]
(b) [*] CDS [*].
(c) [*]
_________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
1
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ATTACHMENT 2
DRAFT OPINION OF COUNSEL
Digimarc Corporation
One Centerpointe Drive
Suite 500
Lake Oswego, Oregon,
U.S.A. 97035-8615
Attention: Mr. Bruce Davis
President and CEO
Dear Mr. Davis:
In connection with your proposal to grant a license to (name of [*]) to use
the Counterfeit Deterrence System and for no other purpose, we confirm that:
(b) each provision of this Agreement is valid and enforceable against (name of
[*]) under the laws of (name of jurisdiction); and
(b) none of the [*] described below, at the time of writing, contravenes any
law, regulation, policy, principle, or doctrine in effect in the
jurisdiction of the (principal place of business/head office) of (name of
[*]).
[*]
Yours truly,
_________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
1
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ATTACHMENT 3
PROBLEM REPORT
Each problem report will contain all information necessary to reproduce or
demonstrate the occurrence of the problem. Problem reports will be in English
and will be delivered electronically in a format to be provided by Digimarc.
Problem reports will contain:
[_] Date problem was encountered
[_] Detailed description of the problem, including the frequency with which the
problem occurs
" Name and version number of the program / system component that exhibits the
problem
" Step by step instructions to reproduce the problem
" All data files required to reproduce the problem
" [*]
" Manufacturer and Model
" CPU type and speed
" Amount of memory
" Operating System and Version
" Disk Configuration (number of drives, total space per drive, free space per
drive)
" Display Adapter Model, Resolution, Number of colors
" Peripheral configuration (where applicable)
" [*]
" TWAIN driver and version number
" [*]
" Severity of problem
" Contact information for person to contact for further information (name,
phone number, FAX number, email address)
Licensee agrees to work with Digimarc to provide reasonable additional
information and perform reasonable additional tests, as requested by Digimarc,
to assist Digimarc in resolution of the problem.
_________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
<PAGE>
ATTACHMENT 4
PAYMENT FOR SERVICES
Digimarc shall bill [*] for services in one hour increments at the
following hourly rates:
Technical/Design Consultant [*]
Senior Engineer [*]
R&D/Engineering Executive [*]
Project Manager [*]
Administrator/Scheduler [*]
Fees for services will be invoiced on the earlier of 1) the last day of the
month or 2) the completion of the Services. Invoices are due thirty (30) days
from the date of receipt of a correct invoice. A late charge of 1.5% per month
will be charged on any late payments. All fees are due and payable in US funds.
[*] will reimburse Digimarc for all out-of-pocket expenses reasonably and
necessarily incurred in providing the Verification Tests and other services.
Expenses will be itemized and reported by category. Out-of-pocket expenses will
not be "marked up" by Digimarc. Costs include, but are not limited to,
reasonable travel and lodging expenses, telephone and fax charges, postage and
overnight deliveries, and charges for rental equipment or materials purchased
specifically to be used in providing the Verification Tests and other services.
All invoices for out-of-pocket expenses will be issued monthly in arrears and
are due thirty (30) days from the date of receipt of a correct invoice.
Supporting receipts and vouchers will be available for review at Digimarc's
offices. A late charge of 1.5% per month will be charged on any late payments.
Payments will additionally include Value Added taxes and other tariffs and fees
that may be imposed by any governments other than the United States of America.
_________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
1
<PAGE>
ATTACHMENT 5
IDENTIFICATION OF [*]
ATTACHMENT 6
[*]
_________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
1
<PAGE>
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 Oregon and having its head office at One Centerpointe Drive, Suite
500, Lake Oswego, Oregon. U.S.A. 97035-8615 ("Digimarc")
"[*]" ...........
...........
RECITALS
Digimarc has expertise in, and owns extensive intellectual property,
including patents, patent applications, copyrights and trade secrets related to
digital watermarks, counterfeit deterrence, copyright protection, and device
control;
[*] possesses or will possess intellectual property rights related to the
application of such intellectual property [*] and
Digimarc and [*] have cooperated in the development of means, using such
intellectual property, [*] and [*] (the "Counterfeit Deterrence System" or
"CDS"); [*]
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 [*] and
______________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
1
<PAGE>
In consideration of these premises, the covenants set out in this Agreement
and for other good and valuable consideration, the receipt and adequacy of which
are acknowledged by each of the parties, the parties agree as follows:
1. DEFINITIONS AND PRINCIPLES OF INTERPRETATION
In this Agreement:
"Agreement" means these articles of agreement, including the Attachments, and
those documents as specified or referenced in this Agreement as forming part of
the Agreement, all as may be amended from time to time;
"Arbitration Agreement" means the Arbitration Agreement entered into between the
parties and others effective 1 January 1999;
"Attachment" means a document specified as being attached to this Agreement;
[*]
[*]
[*]
[*] 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 [*];
[*]
"Counterfeit Deterrence System" ("CDS" or "System") [*];
"Consulting Services" means the Integration Support and all other services that
Digimarc
______________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
2
<PAGE>
provides to Licensee regarding [*] and such other matters as Licensee
may request and Digimarc agrees to provide, pursuant to this Agreement;
"Digimarc IPR" means Intellectual Property Rights owned by Digimarc, now or
during the Term of this Agreement, to the extent that same specifically relates
to or forms part of the CDS;
"Digital Watermark" refers to markings (including texturing) that are detectable
from data produced by visible light scanning of documents, which convey multiple
bits of digital data and yet do not significantly detract from the aesthetics of
the item or image marked thereby. Examples include, but are not limited to:
1. generally imperceptible changes to line density or placement in line art
imagery;
2. texturing of a substrate where the texturing feels substantially uniform to
human touch;
3. slight localized changes to optical density or reflectance of a printed
document;
4. slight changes to sampled data; or
5. visible background patterns of substantially uniform character;
"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 [*];
[*]
[*]
"Field of Use" means the field of [*]
"Improvement" means an improvement provided to [*] under clause 2.14 of the [*]
Agreement;
"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,
______________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
3
<PAGE>
topographies, patents and patent applications;
"[*]" means the [*] named above;
[*]
"Recipient" means the party to which the Confidential Information of the other
party has been disclosed or otherwise made available;
"Services" means the Verification Tests, the Training, and the Consulting
Services, or any of them;
"Term" means the period commencing on the Effective Date and ending on [*]
"Training" means the training in the use of the [*] described in Attachment 6;
and
"Verification Test" means a test or tests developed under the [*] Agreement to
[*]
1.2 Interpretation - In this Agreement:
1.2.1 unless otherwise specified, all references to money amounts are to the
currency of the United States of America;
1.2.2 the use of words in the singular or plural, or with a particular gender,
shall not limit the scope or exclude the application of any provision of this
Agreement to such person or persons or circumstances as the context otherwise
permits;
1.2.3 whenever a provision of this Agreement requires an approval or consent by
a party to this Agreement and notice of such approval or consent is not
delivered within the applicable time, then, the party shall be conclusively
deemed to have withheld the consent or approval;
1.2.4 unless otherwise specified, the number of days within or following which
any payment is to be made or act is to be done shall be interpreted to be
continuous and shall be calculated by excluding the day on which the period
commences and including the day which ends the period and by extending the
period to the next Business Day if the last day of the period is not a Business
Day;
1.2.5 unless otherwise specified, the order of precedence for interpreting this
Agreement shall be:
______________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
4
<PAGE>
(a) this Agreement, excluding Attachments, and
(b) the Attachments;
1.2.6 for greater certainty, a party or representative to which this Agreement
grants the right to make a decision or determination in the sole discretion of
the party or representative is not required to act reasonably in making the
decision or determination and no such decision or determination may be
challenged by the other party under the Arbitration Agreement or otherwise;
1.2.7 the words "includes" or "including" will be construed as meaning
"included without limitation" and "including without limitation" as the case may
be; and
1.2.8 a clause or Attachment, unless the context requires otherwise, is a
reference to a clause to, an Attachment of, or a paragraph of an Attachment to,
this Agreement, as amended from time to time in accordance with this Agreement.
1.3 Applicable Law - This Agreement shall be construed in accordance with the
laws of England to the exclusion of its rules of conflicts of laws.
1.4 Attachments - The attachments to this Agreement, listed below, are an
integral part of this Agreement:
Attachment Description
Attachment "1" [*]
Attachment "2" Problem Report
Attachment "3" Payment for Services
Attachment "4" [*]
Attachment "5" [*]
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 [*] IPR at the Facilities to:
______________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
5
<PAGE>
(a) [*]
(b) [*]
(c) [*] and
(d) [*] to [*].
2.2 For greater certainty, the foregoing license applies [*]
2.3 Licensee shall not use [*] the Digimarc IPR or the [*] IPR at, or transfer
the Digimarc IPR or [*] 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 therefor by Digimarc.
2.5 Licensee acknowledges and agrees that the [*] IPR is the property of its
owner and that Licensee has no right to sublicense it.
2.6 Nothing in this Agreement shall be construed to grant, by implication or
otherwise, any broader rights than those specifically granted herein.
2.7 Digimarc shall obtain at its own expense all licenses or permits required
to be obtained from the Government of the United States in order for Digimarc to
comply with its obligations under this Agreement including, without limitation,
to deliver [*] and grant the associated licenses to Licensee.
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
______________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
6
<PAGE>
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 provide the Training to Licensee within ten (10) days after
the Effective Date or at such other time as the parties may agree.
3.2 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 provided that in 1999 the sixty (60) Business Day limit
shall apply only [*] licensed by Digimarc to use the CDS which require such
Integration Support.
3.3 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.
3.4 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 shall commence not less than thirty (30) Business Days
after the written request or at such other time agreed between Digimarc and
Licensee.
3.5 Digimarc shall periodically apprise Licensee of improvements which Digimarc
makes to [*]. 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) [*], is as set out in Attachment 3;
______________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
7
<PAGE>
(b) [*] 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 [*] Agreement in
the form of the Problem Report attached as Attachment 2;
(ii) unauthorised access to [*] 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) [*], (iii) [*] 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.
__________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
8
<PAGE>
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 [*] to confirm that they pass the Verification Tests.
7. REPRESENTATIONS AND WARRANTIES OF DIGIMARC.
7.1 General - Digimarc represents, warrants and undertakes to Licensee that
from and after the Effective Date:
(a) the Services provided under this Agreement will be of professional quality
conforming to generally accepted practices for like services and will be
performed at all times in a timely and cost effective manner and, for
greater certainty Digimarc shall employ the standard of care in performing
the Services that would be expected of an expert [*] of the same or similar
type as the [*] which comprises the [*];
(b) Digimarc is duly incorporated and organized and is validly subsisting under
the laws of the State of Oregon, U.S.A. or some other state in the United
States with full corporate power and authority to enter into this
Agreement;
(c) to the best of its knowledge, neither this Agreement nor the Services will
contravene, breach, or result in any default under any agreement, permit,
by-law, or law or regulation to which Digimarc is subject or by which it is
bound including, for greater certainty any laws or regulations in effect in
the United States governing export;
(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
__________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
9
<PAGE>
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 [*];
(b) until the last day of the Term, [*] and
(c) incorporated as part of its installation and integration practices and
procedures are those measures and security procedures commercially and
reasonably available on the date for delivery of a component of [*] to
search for, detect and eliminate software viruses in [*] that could
interfere with the use of [*] or corrupt, interfere with or damage any
data;
(d) [*] shall contain no lock, clock, timer, counter, copy protection feature,
replication device or intentional defects (including but not limited to
"viruses" or "worms" as such terms are commonly used in the computer
industry), CPU serial number reference, or other device which might:
(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, [*] 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.
8. REPRESENTATIONS AND WARRANTIES OF LICENSEE
8.1 Licensee represents and warrants to Digimarc that:
__________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
10
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(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
__________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
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establish such knowledge;
(c) was or is lawfully disclosed to the Recipient by a third party who did not
breach any obligation of confidence by such disclosure and who made the
disclosure without restriction on further disclosure all of which is shown
by documentation sufficient to establish same; or
(d) is required by law to be disclosed provided, however, that the Recipient
shall first give written notice to the Discloser before the disclosure so
that the Discloser may seek an appropriate protective order.
Notwithstanding the foregoing, the fact that Confidential Information, or any
part thereof, can be linked together by a search of publications and other
information, followed by a selection of a series of such items of knowledge from
unconnected sources, and fitting together those items of knowledge so as to
duplicate or recreate any item of Confidential Information, shall not be deemed
to cause the Confidential Information, or any part thereof, to be included
within exceptions (a), (b) or (c), above.
9.6 The obligations of the parties under this clause 9 will survive the Term or
sooner termination of this Agreement and will remain in full force and effect
regardless of the cause of any termination.
9.7 Nothing in this Agreement shall be construed to require Licensee to
disclose any information which is confidential to a third party including for
greater certainty a Licensed [*]
10. INTELLECTUAL PROPERTY INDEMNIFICATION
10.1 Licensee 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").
10.2 Subject to the limitations set out in clauses 10.3 to 10.7 inclusive,
Digimarc shall, at its own expense:
(a) negotiate the resolution of any such Claim;
(b) pay all costs associated with the Claim; and
(c) defend any action based on the Claim.
__________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
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10.3 Licensee shall, at Digimarc's expense, comply with all reasonable requests
for assistance from [*] 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 [*]. The obligation set out in this clause
10 shall not apply in respect of any settlement made by Licensee without the
consent of Digimarc.
10.5 The liability of Digimarc under clause 10.4 of this Agreement and under the
equivalent clause of every other licence agreement entered into between Digimarc
and [*] pursuant to the provisions of the [*] 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.
10. 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, [*] 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
__________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
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which the party does not need to retain in order to exercise any rights
acquired by this Agreement.
11.4 No termination of this Agreement will in any manner release, or be
construed as releasing, any party from any liability arising out of or in
connection with that party's breach of or failure to perform any covenant, duty
or obligation contained herein prior to the date of such termination.
11.5 Upon termination of the [*] Agreement by Digimarc for cause, the rights of
Licensee hereunder to use the Digimarc IPR shall be deemed to be restricted to
[*] as of the date of such termination.
11.6 Termination of the license between Digimarc and [*] shall automatically act
to terminate this Agreement.
12. DISPUTE RESOLUTION
12.1 Any Dispute (as defined in the Arbitration Agreement) shall be finally
settled by arbitration in accordance with the Arbitration Agreement.
12.2 Unless otherwise agreed between the parties or unless the subject matter of
the dispute resolution proceedings is a party's right to terminate this
Agreement, the Services shall continue during the dispute resolution proceedings
and payments due to Digimarc shall not be withheld on account of such
proceedings unless that particular services or payment is the subject matter of
the proceedings. Notwithstanding the foregoing, Licensee may in its sole
discretion instruct Digimarc to continue to perform such services which are the
subject matter of the proceedings and Digimarc shall act in accordance with
those instructions, subject to payment under clause 4.1.
13. MISCELLANEOUS PROVISIONS
13.1 Remedies Cumulative - Except as otherwise expressly set out in this
Agreement:
(a) each and every right, power and remedy of a party will be considered to be
cumulative with and in addition to any other right, power and remedy which
such party may have at law or in equity in the event of breach of any of
the terms of this Agreement;
(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
__________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
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such party; and
(c) a party terminating this Agreement in accordance with the provisions of the
Termination clause will have no liability or obligation to the other as a
result of or with respect to the termination.
13.2 All notices under this Agreement shall be delivered by fax, or recognized
international courier service. The notice shall be deemed effective as of the
date of delivery to the address of the party specified below as evidenced by a
delivery receipt or the addressee's registry of incoming correspondence. Unless
otherwise expressly set out in this Agreement, all notices to a party will be
sent to the party's authorized representative identified below and all notices
from a party will be sent by the party's authorized representative identified
below.
13.3 Any notice to Licensee shall be sent to both of, and any notice from
Licensee shall be sent by either:
Name1 Name2
Address1 Address2
13.4 Any notice to Digimarc shall be sent to both of, and any notice from
Digimarc shall be sent by either:
Mr. Bruce Davis and Mr. William Y. Conwell
President and CEO Klarquist, Sparkman, Campbell
Digimarc Corporation Leigh & Whinston
One Centrepoint Drive 121 SW Salmon Street
Suite 500 Suite 1600
Lake Oswego, Oregon 97035 USA Portland, Oregon 97204 USA
Fax: (503)968-0219 Fax: (503)228-9446
13.5 A copy of every notice sent by either party shall be sent to: [*].
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
__________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
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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.
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
__________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
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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 4.2, 4.3, 6.1, 6.3, 6.4, 7.2(b), 9, 10, 12
and 13 of this Agreement shall survive termination of this Agreement by either
party for any reason.
IN WITNESS WHEREOF, this Agreement has been executed and delivered by the
parties hereto as of the Effective Date.
DIGIMARC CORPORATION (Licensee)
By: ____________________________ By:____________________________
Name: ____________________________ Name:__________________________
Title: ____________________________ Title:_________________________
Date: ____________________________ Date:__________________________
__________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
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ATTACHMENT 1
[*]
[*] will cause the following [*] to take place:
(a) [*]
(b) [*] CDS [*]
(c) [*]
__________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
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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)
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.
__________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
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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.
__________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
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ATTACHMENT 4
[*]
ATTACHMENT 5
IDENTIFICATION OF [*]
__________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
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ATTACHMENT 6
TRAINING
1.0 As part of [*], Digimarc shall develop a program of training acceptable to
the DLA Project Manager 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.
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.
__________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
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SCHEDULE "L-2"
[*] 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 Oregon and having its head office at One Centerpointe Drive, Suite
500, Lake Oswego, Oregon. U.S.A. 97035-8615 ("Digimarc")
"[*]" ..................
..................
RECITALS
Digimarc has expertise in, and owns extensive intellectual property,
including patents, patent applications, copyrights and trade secrets related to
digital watermarks, counterfeit deterrence, copyright protection, and device
control;
[*] possesses or will possess intellectual property rights related to the
application of such intellectual property to [*] and
Digimarc and [*] have cooperated in the development of means, using such
intellectual property, [*] (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 [*] and
In consideration of these premises, the covenants set out in this Agreement
and for
______________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
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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
In this Agreement:
"Agreement" means these articles of agreement, including the Attachments, and
those documents as specified or referenced in this Agreement as forming part of
the Agreement, all as may be amended from time to time;
"Arbitration Agreement" means the Arbitration Agreement entered into between the
parties and others effective 1 January 1999;
"Attachment" means a document specified as being attached to this Agreement;
[*]
[*]
[*]
[*] 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 [*];
"Counterfeit Deterrence System" ("CDS" or "System") [*];
"Consulting Services" means the Integration Support and all other services that
Digimarc
______________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
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provides to Licensee regarding [*] and such other matters as Licensee may
request and Digimarc agrees to provide, pursuant to this Agreement;
"Digimarc IPR" means Intellectual Property Rights owned by Digimarc, now or
during the Term of this Agreement, to the extent that same specifically relates
to or forms part of the CDS;
"Digital Watermark" refers to markings (including texturing) that are detectable
from data produced by visible light scanning of documents, which convey multiple
bits of digital data and yet do not significantly detract from the aesthetics of
the item or image marked thereby. Examples include, but are not limited to:
1. generally imperceptible changes to line density or placement in line art
imagery;
2. texturing of a substrate where the texturing feels substantially uniform to
human touch;
3. slight localized changes to optical density or reflectance of a printed
document;
4. slight changes to sampled data; or
5. visible background patterns of substantially uniform character;
"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 [*];
[*]
"Field of Use" means the field of [*];
"Improvement" means an improvement provided to [*] under clause 2.14 of the [*]
Agreement;
"Integration Support" means the consulting and programming services to be
provided by Digimarc to Licensee to assist Licensee [*];
"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,
______________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
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topographies, patents and patent applications;
"[*]" means the [*] named above;
[*]
"Recipient" means the party to which the Confidential Information of the other
party has been disclosed or otherwise made available;
"Services" means the Verification Tests, the Training, and the Consulting
Services, or any of them;
"Term" means the period commencing on the Effective Date and ending on [*];
"Training" means the training in the use of [*] described in Attachment 7; and
"Verification Test" means a test or tests developed under the [*] Agreement to
[*].
1.2 Interpretation - In this Agreement:
1.2.1 unless otherwise specified, all references to money amounts are to the
currency of the United States of America;
1.2.2 the use of words in the singular or plural, or with a particular gender,
shall not limit the scope or exclude the application of any provision of this
Agreement to such person or persons or circumstances as the context otherwise
permits;
1.2.3 whenever a provision of this Agreement requires an approval or consent by
a party to this Agreement and notice of such approval or consent is not
delivered within the applicable time, then, the party shall be conclusively
deemed to have withheld the consent or approval;
1.2.4 unless otherwise specified, the number of days within or following which
any payment is to be made or act is to be done shall be interpreted to be
continuous and shall be calculated by excluding the day on which the period
commences and including the day which ends the period and by extending the
period to the next Business Day if the last day of the period is not a Business
Day;
______________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
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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;
1.2.6 for greater certainty, a party or representative to which this Agreement
grants the right to make a decision or determination in the sole discretion of
the party or representative is not required to act reasonably in making the
decision or determination and no such decision or determination may be
challenged by the other party under the Arbitration Agreement or otherwise;
1.2.7 the words "includes" or "including" will be construed as meaning
"included without limitation" and "including without limitation" as the case may
be; and
1.2.8 a clause or Attachment, unless the context requires otherwise, is a
reference to a clause to, an Attachment of, or a paragraph of an Attachment to,
this Agreement, as amended from time to time in accordance with this Agreement.
1.3 Applicable Law - This Agreement shall be construed in accordance with the
laws of England to the exclusion of its rules of conflicts of laws.
1.4 Attachments - The attachments to this Agreement, listed below, are an
integral part of this Agreement:
Attachment Description
Attachment "1" [*]
Attachment "2" Opinion of Counsel
Attachment "3" Problem Report
Attachment "4" Payment for Services
Attachment "5" [*]
Attachment "6" [*]
Attachment "7" Training
2. GRANT OF RIGHTS
______________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
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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 Digimarc IPR and the [*] IPR at the Facilities to:
(a) [*]
(b) [*]
(c) [*] and
(d) [*] to [*].
2.2 For greater certainty, the foregoing license applies [*]
2.3 Licensee shall not use [*], the Digimarc IPR or the [*] IPR at, or transfer
the Digimarc IPR or [*] 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 therefor by Digimarc.
2.5 Licensee acknowledges and agrees that the [*] IPR is the property of its
owner and that Licensee has no right to sublicense it.
2.6 Nothing in this Agreement shall be construed to grant, by implication or
otherwise, any broader rights than those specifically granted herein.
2.7 Digimarc shall obtain at its own expense all licenses or permits required
to be obtained from the Government of the United States in order for Digimarc to
comply with its obligations under this Agreement including, without limitation,
to deliver [*], and grant the foregoing licenses to Licensee.
2.8 Digimarc shall inform Licensee within thirty (30) days after the end of
each calendar quarter during the Term of all improvements relating to [*] which
improvements Digimarc has made, or caused or permitted to be made, during the
course of its work with Licensee under this
______________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
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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 provide the Training to Licensee within ten (10) days after
the Effective Date or at such other time as the parties may agree.
3.2 No later than sixty (60) Business Days after every written request made by
Licensee during the Term, Digimarc shall provide Integration Support to Licensee
on a date or dates agreed between Digimarc and Licensee for the fees described
in clause 4 provided that in 1999 the sixty (60) Business Day limit shall apply
[*] licensed by Digimarc to use the CDS which require such Integration Support.
3.3 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.
3.4 Commencing no later than five (5) Business Days after every written request
made by Licensee during the Term, Digimarc shall schedule Consulting Services,
which Services shall commence not less than thirty (30) Business Days after the
written request or at such other time agreed between Digimarc and Licensee.
3.5 Digimarc shall periodically apprise Licensee of improvements which Digimarc
makes to [*]. Rights to employ such improvements shall automatically be granted
to Licensee pursuant to the terms of clause 2 at no additional charge to
Licensee.
______________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
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4. FEES
4.1 Licensee shall pay to Digimarc a fee for the Services as detailed below.
The fee for Services provided:
(a) [*] is as set out in Attachment 4;
(b) [*] will be no greater than the fee then paid to Digimarc for similar
services by Digimarc's most favoured customer.
4.2 Except as otherwise expressly provided in this Agreement, Licensee shall
pay Digimarc all sales, use, goods and services or other similar taxes levied by
any government in the United States or the country of the Licensee's principal
place of business which Digimarc is obliged to collect and remit to such
government(s) in connection with any amount paid by Licensee to Digimarc under
this Agreement.
4.3 Digimarc is responsible for, and shall indemnify Licensee against, and hold
Licensee harmless from, the payment of all taxes levied by any government on or
in respect of Digimarc's income and any amounts required by law to be paid in
respect of social benefits for Digimarc's employees relating to or arising out
of the performance of the Services. If required by law, Licensee shall deduct
all such taxes and amounts from the amounts otherwise payable to Digimarc and
remit them to the appropriate authorities.
5. OPINION OF COUNSEL
5.1 [*] 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
(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.
______________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
8
<PAGE>
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 [*] Agreement
in the [*] 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) [*], (iii) [*] 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 [*] to confirm that they pass the Verification Tests.
______________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
9
<PAGE>
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 [*] 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 Oregon, U.S.A. or some other state in the United
States with full corporate power and authority to enter into this
Agreement;
(c) to the best of its knowledge, neither this Agreement nor the Services will
contravene, breach, or result in any default under any agreement, permit,
by-law, or law or regulation to which Digimarc is subject or by which it is
bound including, for greater certainty any laws or regulations in effect in
the United States governing export;
(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 [*] first
commences, meet the Specifications for that version of [*] accepted by [*];
(b) until the last day of the Term, [*]
(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
______________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
10
<PAGE>
delivery of a component of [*] to search for, detect and eliminate software
viruses in [*] that could interfere with the use of [*] or corrupt,
interfere with or damage any data;
(d) [*] shall contain no lock, clock, timer, counter, copy protection feature,
replication device or intentional defects (including but not limited to
"viruses" or "worms" as such terms are commonly used in the computer
industry), CPU serial number reference, or other device which might:
(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, [*] 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 corrected [*] to Licensee.
8. REPRESENTATIONS AND WARRANTIES OF LICENSEE
8.1 Licensee represents and warrants to Digimarc that:
(a) Licensee has full power and authority to enter into this Agreement; and
(b) this Agreement when executed and delivered by Licensee shall constitute a
valid, binding and enforceable obligation of Licensee.
8.2 Licensee makes no representations, warranties or undertakings that Licensee
has any right to grant the licenses required to be granted by clause 6.3 and
Digimarc shall be solely responsible for determining that such improvements are
suitable for the intended use and for the consequences of any use of the same
whether by Digimarc or others, and Licensee and hereby disclaims all liability
in connection therewith.
______________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
11
<PAGE>
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 restriction on further disclosure all of which is shown
by documentation sufficient to establish same; or
______________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
12
<PAGE>
(d) is required by law to be disclosed provided, however, that the Recipient
shall first give written notice to the Discloser before the disclosure so
that the Discloser may seek an appropriate protective order.
Notwithstanding the foregoing, the fact that Confidential Information, or any
part thereof, can be linked together by a search of publications and other
information, followed by a selection of a series of such items of knowledge from
unconnected sources, and fitting together those items of knowledge so as to
duplicate or recreate any item of Confidential Information, shall not be deemed
to cause the Confidential Information, or any part thereof, to be included
within exceptions (a), (b) or (c), above.
9.6 The obligations of the parties under this clause 9 will survive the Term
or sooner termination of this Agreement and will remain in full force and effect
regardless of the cause of any termination.
9.7 Nothing in this Agreement shall be construed to require Licensee to
disclose any information which is confidential to a third party including for
greater certainty a Licensed [*].
10. INTELLECTUAL PROPERTY INDEMNIFICATION
NOTE - THIS PROTECTION IS AVAILABLE UPON PAYMENT OF A FEE BY LICENSEE TO BE
NEGOTIATED BETWEEN [*] AND DIGIMARC
10.1 Licensee 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").
10.2 Subject to the limitations set out in clauses 10.3 to 10.7 inclusive,
Digimarc shall, at its own expense:
(a) negotiate the resolution of any such Claim;
(b) pay all costs associated with the Claim; and
(c) defend any action based on the Claim.
10.3 Licensee shall, at Digimarc's expense, comply with all reasonable
requests for assistance
______________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
13
<PAGE>
from [*] 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 [*]. The obligation set out in
this clause 10 shall not apply in respect of any settlement made by Licensee
without the consent of Digimarc.
10.5 The liability of Digimarc under clause 10.4 of this Agreement and under
the equivalent clause of every other licence agreement entered into between
Digimarc and [*] pursuant to the provisions of the [*] 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.
10. 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, [*]; 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
______________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
14
<PAGE>
which the party does not need to retain in order to exercise any rights
acquired by this Agreement.
11.4 No termination of this Agreement will in any manner release, or be
construed as releasing, any party from any liability arising out of or in
connection with that party's breach of or failure to perform any covenant, duty
or obligation contained herein prior to the date of such termination.
11.5 Upon termination of the [*] Agreement by Digimarc for cause, the rights
of Licensee hereunder to use the Digimarc IPR shall be deemed to be restricted
to [*] as of the date of such termination.
11.6 Termination of the license between Digimarc and [*] shall automatically
act to terminate this Agreement.
12. DISPUTE RESOLUTION
12.1 Any Dispute (as defined in the Arbitration Agreement) shall be finally
settled by arbitration in accordance with the Arbitration Agreement.
12.2 Unless otherwise agreed between the parties or unless the subject matter
of the dispute resolution proceedings is a party's right to terminate this
Agreement, the Services shall continue during the dispute resolution proceedings
and payments due to Digimarc shall not be withheld on account of such
proceedings unless that particular services or payment is the subject matter of
the proceedings. Notwithstanding the foregoing, Licensee may in its sole
discretion instruct Digimarc to continue to perform such services which are the
subject matter of the proceedings and Digimarc shall act in accordance with
those instructions, subject to payment under clause 4.1.
13. MISCELLANEOUS PROVISIONS
13.1 Remedies Cumulative - Except as otherwise expressly set out in this
Agreement:
(a) each and every right, power and remedy of a party will be considered to
be cumulative with and in addition to any other right, power and remedy
which such party may have at law or in equity in the event of breach of
any of the terms of this Agreement;
______________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
15
<PAGE>
(b) the exercise or partial exercise of any right, power or remedy will
neither constitute the exclusive election thereof nor the waiver of any
other right, power or remedy available to such party; and
(c) a party terminating this Agreement in accordance with the provisions of
the Termination clause will have no liability or obligation to the other
as a result of or with respect to the termination.
13.2 All notices under this Agreement shall be delivered by fax, or recognized
international courier service. The notice shall be deemed effective as of the
date of delivery to the address of the party specified below as evidenced by a
delivery receipt or the addressee's registry of incoming correspondence. Unless
otherwise expressly set out in this Agreement, all notices to a party will be
sent to the party's authorized representative identified below and all notices
from a party will be sent by the party's authorized representative identified
below.
13.3 Any notice to Licensee shall be sent to both of, and any notice from
Licensee shall be sent by either:
Name1 Name2
Address1 Address2
13.4 Any notice to Digimarc shall be sent to both of, and any notice from
Digimarc shall be sent by either:
Mr. Bruce Davis and Mr. William Y. Conwell
President and CEO Klarquist, Sparkman, Campbell
Digimarc Corporation Leigh & Whinston
One Centrepoint Drive 121 SW Salmon Street
Suite 500 Suite 1600
Lake Oswego, Oregon 97035 USA Portland, Oregon 97204 USA
Fax: (503)968-0219 Fax: (503)228-9446
13.5 A copy of every notice sent by either party shall be sent to: [*].
13.6 A party may change its address for notice by notice to the other party in
accordance with the foregoing provisions.
______________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
16
<PAGE>
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.
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
______________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
17
<PAGE>
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 4.2, 4.3, 6.1, 6.3, 6.4, 7.2(b), 9, 10, 12
and 13 of this Agreement shall survive termination of this Agreement by either
party for any reason.
IN WITNESS WHEREOF, this Agreement has been executed and delivered by the
parties hereto as of the Effective Date.
DIGIMARC CORPORATION <Licensee>
By: ______________________ By: ______________________
Name: ______________________ Name: ______________________
Title: ______________________ Title: ______________________
Date: ______________________ Date: ______________________
______________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
18
<PAGE>
______________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
19
<PAGE>
ATTACHMENT 1
[*]
[*] will cause the following [*] to take place:
(a) [*]
(b) [*] CDS [*].
(c) [*]
ATTACHMENT 2
DRAFT OPINION OF COUNSEL
Digimarc Corporation
One Centerpointe Drive
Suite 500
Lake Oswego, Oregon,
U.S.A. 97035-8615
Attention: Mr. Bruce Davis
President and CEO
Dear Mr. Davis:
In connection with your proposal to grant a license to (name of Licensee)
to use the Counterfeit Deterrence System and for no other purpose, we confirm
that:
(a) each provision of this Agreement is valid and enforceable against (name of
Licensee) under the laws of (name of jurisdiction); and
(b) none of the [*] described below, at the time of writing, contravenes any
law, regulation, policy, principle, or doctrine in effect in the
jurisdiction of the (principal place of business/head office) of (name of
Licensee ).
______________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
1
<PAGE>
[*]
Yours truly,
______________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
2
<PAGE>
ATTACHMENT 3
PROBLEM REPORT
Each problem report will contain all information necessary to reproduce or
demonstrate the occurrence of the problem. Problem reports will be in English
and will be delivered electronically in a format to be provided by Digimarc.
Problem reports will contain:
" Date problem was encountered
" Detailed description of the problem, including the frequency with which
the problem occurs
" Name and version number of the program / system component that exhibits
the problem
" Step by step instructions to reproduce the problem
" All data files required to reproduce the problem
" [*]
" Manufacturer and Model
" CPU type and speed
" Amount of memory
" Operating System and Version
" Disk Configuration (number of drives, total space per drive, free space
per drive)
" Display Adapter Model, Resolution, Number of colors
" Peripheral configuration (where applicable)
" [*]
" TWAIN driver and version number
" [*]
" Severity of problem
" Contact information for person to contact for further information (name,
phone number, FAX number, email address)
Licensee agrees to work with Digimarc to provide reasonable additional
information and perform reasonable additional tests, as requested by Digimarc,
to assist Digimarc in resolution of the problem.
______________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
3
<PAGE>
ATTACHMENT 4
PAYMENT FOR SERVICES
Digimarc shall bill Licensee for Services in one hour increments at the
following hourly rates:
Technical/Design Consultant $[*]
Senior Engineer $[*]
R&D/Engineering Executive $[*]
Project Manager $[*]
Administrator/Scheduler $[*]
Fees for Services will be invoiced on the earlier of 1) the last day of
the month or 2) the completion of the Services. Invoices are due thirty (30)
days from the date of receipt of a correct invoice. A late charge of 1.5% per
month will be charged on any late payments. All fees are due and payable in US
funds.
Licensee will reimburse Digimarc for all out-of-pocket expenses
reasonably and necessarily incurred in providing the Services. Expenses will be
itemized and reported by category. Out-of-pocket expenses will not be "marked
up" by Digimarc. Costs include, but are not limited to, reasonable travel and
lodging expenses, telephone and fax charges, postage and overnight deliveries,
and charges for rental equipment or materials purchased specifically to be used
in providing the Service. All invoices for out-of-pocket expenses will be issued
monthly in arrears and are due thirty (30) days from the date of receipt of a
correct invoice. Supporting receipts and vouchers will be available for review
at Digimarc's offices. A late charge of 1.5% per month will be charged on any
late payments. Payments will additionally include Value Added taxes and other
tariffs and fees that may be imposed by any government other than the United
States of America.
______________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
1
<PAGE>
ATTACHMENT 5
[*]
ATTACHMENT 6
IDENTIFICATION OF [*]
______________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
1
<PAGE>
ATTACHMENT 7
TRAINING
1.0 As part of [*], Digimarc shall develop a program of training acceptable
to the DLA Project Manager 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.
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.
______________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
1
<PAGE>
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) [*]
(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 [*], 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 [*], effective 1 January
1999.
1.5 "Material" means the "Escrowed Materials" as that term is defined in the
Licence Agreement; and
_________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
-1-
<PAGE>
1.6 "Technology" means the CDS Technology as defined in the Licence Agreement.
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. [*] Responsibilities
It shall be the responsibility of [*] 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 [*] 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 [*] 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;
_________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
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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.
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 [*] must notify [*] of the occurrence of a Release Event by delivering to
[*] a statutory or notarized declaration ("the Declaration") made by an officer
of [*] 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 [*] 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
_________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
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Release Event has occurred
then [*] will release the Material to an authorized officer of [*] 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 [*] 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 [*] except in the case of manifest error.
6.5 If the expert's decision is that a Release Event has occurred, [*] shall
immediately release the Material to an authorized officer of [*] 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 [*], [*] 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 [*]
or its employees, from the obligations of confidentiality contained in this
Clause 7.
8. Intellectual Property Rights
The release of the Material to [*] 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
_________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
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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 [*]
and Digimarc. Additionally, at [*]' 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 [*]'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
[*] directory lists and/or tables of contents of computer media, manuals, and
other materials comprising the Material. Digimarc and [*] 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 [*] 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 ((Pounds)500,000).
10.2 [*] shall in no circumstances be liable to Digimarc or [*] 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.
_________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
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11. Termination
11.1 [*] may terminate this Agreement after failure by [*] 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 [*]. In that event Digimarc and [*] 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 [*] 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 [*] may terminate this Agreement at any time by giving written notice to
Digimarc and [*].
11.6 Digimarc may only terminate this Agreement with the written consent of
[*].
11.7 This Agreement shall terminate upon release of the Material to [*] 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
_________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
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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
[*]
Signature
Name:
Title: (Authorized Signatory)
Date
Signature
Name:
Title: (Authorized Signatory)
Date
DIGIMARC CORPORATION
Signature
_________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
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Name: Bruce Davis
Title: President & CEO (Authorized Signatory)
Date:
[*] ESCROW INTERNATIONAL LIMITED
Signature
Name:
Title: (Authorized Signatory)
Date:
_________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
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SCHEDULE 1
[*]'s Fees (St(Pounds))
DESCRIPTION FEE DIGIMARC [*]
----------- --- -------- ---
1 Initial Fee (Pounds)700 NIL 100%
2 Annual Fee
(payable on completion of this
Agreement and on each
anniversary thereafter) (Pounds)385 NIL 100%
3 Update Fee
(per update after the first 4 updates
per annum) (Pounds)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
((Pounds)100 per (Pounds)500,000 of liability
exceeding (Pounds)500,000, per annum) Not Applicable NIL Not Applicable
6 Release Fee
(plus [*]'s reasonable expenses) (Pounds)500 NIL 100%
7. Verification Fee (Pounds)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.
_________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
1
<PAGE>
SCHEDULE "N"
PROGRESS REPORTS AND PROJECT REVIEWS
1. TASK STATUS
Within ten (10) Business Days after the end of every calendar month [*],
Digimarc shall deliver a report to the DLA Project Manager describing progress
to date. The report will be formatted according to major task and will reference
the status provided in the previous report. The report will declare whether a
major task or Deliverable is ahead of, behind, or on schedule as of the
reporting date. The report will also forecast whether the task will complete on
time.
2. SCHEDULE UPDATE
Included with the report will be an updated Gantt schedule prepared
according to Digimarc's format.
3. PROBLEM REPORT
Digimarc shall report to the DLA Project Manager on problems that impact
technical or schedule performance in the report. Each problem will be reported
in a Problem List that includes the following information:
Problem title
Date reported
Tasks affected
Task impact
Proposed corrective action
Current status
Date closed
Red Flag reports (see paragraph 8) will be included on the problem list. A
problem will remain on the list until closed or otherwise resolved.
4. PROGRESS REVIEWS
[*] and Digimarc shall hold progress review meetings once every three (3)
months on
_______________________
[*] Omitted pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
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average throughout the period [*] are being performed at a mutually agreeable
date and location. At least half of the reviews will be held at Digimarc's
facilities.
The objective of each meeting is to review the: Status of each major task;
Status of deliverable items; 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 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
Managers or suitable designees. To ensure meeting effectiveness, [*] will be
limited to ten (10) or fewer persons including any outside vendors or
consultants deemed necessary by agreement of the parties' respective Project
Managers to be necessary to ensure an effective meeting.
In between the quarterly meetings described above, the technical
representatives of Digimarc and [*] shall meet every six (6) weeks on average to
review technical 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.
5. AGENDA
An agenda will be prepared by Digimarc and sent to [*] fifteen (15) days in
advance of each meeting for review and comment or approval.
6. MEETING MATERIALS
Meeting materials will consist of viewgraph presentations, technical data,
marketing white papers, studies, technical specifications analyses and other
reports.
7. REPORT
Within five (5) Business Days after the review meeting, Digimarc shall
prepare and deliver to [*] a report summarizing the essential topics discussed
including the action items assigned during the meeting. Meeting Materials will
be appended to the report.
8. RED FLAG REPORT
_______________________
[*] Omitted pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
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Digimarc shall prepare and deliver to the DLA Project Manager a "Red Flag"
report when a problem requiring the immediate attention of [*] is required. The
report will contain a description of the problem and the proposed action to
correct the problem. Red Flag reports may be informative; e.g., a report about a
vendor 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.
_______________________
[*] Omitted pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
3
<PAGE>
SCHEDULE "O"
THIS SYSTEM SUPPORT SERVICES AGREEMENT (the "Agreement") is made
BETWEEN
(name and address of licensee) ("Licensee")
- AND -
DIGIMARC CORPORATION, a corporation incorporated under the laws of
Oregon and having its head office at One Centerpointe, Suite 500 Drive,
Lake Oswego, Oregon. U.S.A. 97035-8615 ("Digimarc")
Licensee entered into one or more license agreements with Digimarc for
the license of the [*] a counterfeit deterrence system (the "CDS");
Licensee now wishes to engage Digimarc to maintain and support [*];
In consideration of these premises, the covenants set out in this
Agreement and for other good and valuable consideration, the receipt and
adequacy of which are acknowledged by each of the parties, the parties agree as
follows:
1. DEFINITIONS AND PRINCIPLES OF INTERPRETATION
1.1 Definitions - Whenever used in this Agreement, the following words and
-----------
terms shall have the meanings set out below:
"Arbitration Agreement" means the Arbitration Agreement entered into
between the parties and others effective 1 January 1999;
"Agreement" means these articles of agreement, including the Attachments,
and those documents as specified or referenced in this Agreement as forming
part of the Agreement, all as may be amended from time to time;
"[*] Agreement" means Counterfeit Deterrence System Development and License
Agreement entered into between [*] and Digimarc effective 1 January 1999;
"Business Day" means a day on which both Licensee and Digimarc are open for
________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
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business at their respective addresses noted above;
"Confidential Information" means information disclosed during the Term
of this Agreement in any form which, if disclosed in tangible form, is
labelled "Confidential", "Proprietary" or with a similar legend, or if
disclosed orally is information that by its nature would be understood to
be confidential to the Discloser;
"Core Hours" means 7:00 a.m. to 7:00 p.m. Monday through Friday,
United States Pacific time zone, excluding statutory holidays observed by
Licensee at its Site;
"Discloser" means a party which has disclosed or otherwise made
available its Confidential Information to the other party;
"Effective Date" means the date on which this Agreement is last signed, or
the Effective Date of the License Agreement, whichever is later;
[*]
"Hot-line" means a single dedicated telephone line provided by Digimarc to
Licensee for the reporting of problems with [*];
"License Agreement" means, collectively, all license agreements entered
into between the parties pursuant to which Licensee acquired a license to
use [*];
"Person" means any individual or other legal entity, including without
limitation sole proprietorship, partnership, unincorporated association,
unincorporated syndicate, unincorporated organization, trust, body
corporate, or a natural person in the capacity of trustee, executor,
administrator or other legal representative;
"Recipient" means a party to which the Confidential Information of the
other party has been disclosed or otherwise made available;
"Services" means the services described in clauses 2 and 3 below, or
any of them;
"Severity Level One Software Problem" means a Software Problem which causes
the [*] to cease operating or which causes the computer system running [*]
to crash;
"Severity Level Two Software Problem" means a Software Problem which causes
the [*] to cease operation in accordance with its Specifications or which
produces substantially incorrect data;
________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
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"Severity Level Three Software Problem" means a Software Problem which
is not a Severity Level Two Problem or a Severity Level One Problem;
"Site" means the [*] of Licensee at which a Software Problem is
encountered;
"Software Problem" means a circumstance where [*] does not function in
accordance with its Specifications, produces substantially incorrect data,
or causes a computer running [*] to crash, or other problem with [*] and
which can be reproduced by Digimarc, at Digimarc's facility, based on
information provided to Digimarc by Licensee in a Software Problem Report;
"Software Problem Report" means a written report in the form attached as
Attachment 1;
"Specifications" has the meaning given to it by the [*] Agreement;
"System Documentation" means the documentation for [*] provided by
Digimarc to Licensee under a License Agreement;
"Training Manual" means the training manual which relates to the use of [*]
provided by Digimarc to Licensee under a License Agreement; and
"Work" means the tasks that are required to be performed by Digimarc in
order to comply with its obligations under this Agreement.
1.2 Interpretation - In this Agreement:
--------------
1.2.1 unless otherwise specified, all references to money amounts are
to the currency of the United States of America;
1.2.2 the use of words in the singular or plural, or with a particular
gender, shall not limit the scope or exclude the application of any
provision of this Agreement to such Person or Persons or circumstances as
the context otherwise permits;
1.2.3 whenever a provision of this Agreement requires an approval or
consent by a party to this Agreement and notice of such approval or consent
is not delivered within the applicable time, then the party shall be
conclusively deemed to have withheld the consent or approval;
________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
3
<PAGE>
1.2.4 unless otherwise specified, the number of days within or following
which any payment is to be made or act is to be done shall be interpreted
to be continuous and shall be calculated by excluding the day on which the
period commences and including the day which ends the period and by
extending the period to the next Business Day if the last day of the period
is not a Business Day;
1.2.5 unless otherwise specified, the order of precedence for interpreting
this Agreement shall be:
(a) this Agreement, excluding the Attachments,
(b) the Attachments;
If this Agreement conflicts in substance with a License Agreement entered
into between the parties, the License Agreement shall control;
1.2.6 for greater certainty, a party or representative to which this
Agreement grants the right to make a decision or determination in the sole
discretion of the party or representative is not required to act reasonably
in making the decision or determination and no such decision or
determination may be challenged by the other party under the Arbitration
Agreement or otherwise;
1.2.7 the words "includes" or "including" will be construed without
limitation to the generality of the preceding words;
1.2.8 a clause, Schedule or Attachment unless the context requires
otherwise, is a reference to a clause, a Schedule or Attachment of, or a
paragraph of a Schedule or Attachment of, this Agreement, as amended from
time to time in accordance with this Agreement; and
1.2.9 any due date or time period prescribed by this Agreement may be
changed by written agreement between the parties' respective
representatives identified in clauses 5.1 and 5.2.
1.3 Applicable Law - This Agreement shall be construed in accordance with the
--------------
laws of England to the exclusion of its rules of conflicts of laws.
1.4 Attachments - The attachment to this Agreement, listed below, is an
-----------
integral part of this Agreement:
________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
4
<PAGE>
Attachment 1 Software Problem Report
2. SCOPE OF THE WORK
2.1 Digimarc shall provide the Services described in this clause 2 as required
to ensure that [*] will conform to and operate in accordance with the
Specifications.
2.2 Problem Resolution. Digimarc shall resolve every Software Problem in [*]
-------------------
reported by Licensee as follows:
2.2.1 Digimarc shall provide and maintain in effect throughout the Term:
(a) a Hot-line which Licensee representative shall use to report
Software Problems, and;
(b) a paging service by which Licensee can communicate with Digimarc
when Licensee is unable to communicate with Digimarc using the
Hot-line.
Licensee will follow-up each such communication with a Software Problem
Report.
2.2.2 Both Digimarc and Licensee shall log each Software Problem reported
by Licensee.
2.2.3 Upon receipt by Digimarc of a report from Licensee of a Software
Problem, Digimarc shall respond as provided below in accordance with the
level of severity of the Software Problem identified by Licensee. Digimarc
may respond to the report of a Software Problem by telephone or in writing.
2.2.4 Digimarc shall file a "Resolution Report" with Licensee for each
Software Problem reported by Licensee which will include a description of
the cause of the Software Problem and the means by which the Software
Problem was resolved.
2.2.5 Digimarc shall use its best efforts to respond to a Software Problem
Report of a Severity Level One Software Problem made during Core Hours and
resolve the identified Software Problem within two (2) Business Days of
receipt of the Software Problem Report. The resolution of the Software
Problem may include a work-around to the Software Problem acceptable to
Licensee in the form of an amendment to [*] on an interim basis if a
permanent resolution is provided within a further twenty (20) Business
Days. If:
________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
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(a) Digimarc fails to provide a permanent resolution of the
Software Problem within twenty (20) Business Days after Digimarc
provides the work-around, or
(b) Digimarc fails to provide a work-around to the Software Problem
within two (2) Business Days after receipt of a report from
Licensee of the Software Problem, Licensee may, at its option,
reduce the monthly charge for the Services by [*] for each Business
Day after the first Business Day which elapses until Digimarc
provides the required temporary or permanent resolution to that
Software Problem.
2.2.6 Digimarc shall use commercially reasonable efforts to respond to a
Software Problem Report of a Severity Level Two Software Problem within ten
(10) Business Days of receipt and resolve the identified Software Problem
within a further ten (10) Business Days of receipt. If Digimarc fails to
resolve the Software Problem within the twenty (20) Business Day period,
Licensee may, at its option, designate the Software Problem as a Severity
Level One Software Problem.
2.2.7 Digimarc will accept reports for Severity Level Three Software
Problems and will consider them for resolution in a future release.
2.2.8 The period for resolution of any Software Problem identified under
Clause 2.2.5 and 2.2.6 shall commence with the receipt by Digimarc of the
information necessary to reproduce the reported Software Problem if the
resolution of that Problem requires such reproduction.
2.3 Application Support. Digimarc shall, using the Hotline, answer questions
-------------------
from Licensee related to the use of [*] and resolve problems with [*] which do
not require changes to [*].
2.4 Documentation Updating. Digimarc shall update both the hard copy and the
----------------------
electronic versions of the Training Manuals as required to reflect changes in
[*] which result from the provision by Digimarc of the Services.
2.5 Digimarc shall provide the Services during the Core Hours. If Licensee
notifies Digimarc that the provision of the Services during Core Hours will have
a noticeable impact on Licensee's normal operations, Digimarc shall provide the
Services outside of Core Hours at a time or times and for the charges to be
agreed with Licensee.
2.6 Changes to [*] other than changes to redress a Software Problem shall be
made by Digimarc only at the direction of the DLA Contracting Authority,
pursuant to the terms of the [*]
________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
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Agreement.
2.7 All Services required to be provided as a result of:
(a) use by Licensee of [*] other than in accordance with the Training Manual
supplied by Digimarc under a License Agreement; or
(b) failure of the computer system on which [*] is installed to operate in
accordance with the applicable manufacturer's specifications;
will be for the account of Licensee.
3. [*] UPDATES
3.1 No Licensee shall be compelled to incorporate [*].
3.2 Digimarc shall continue to provide the Services to Licensee for the two (2)
versions of [*] which immediately preceded the then current version of [*] or
for all versions of [*] released within twenty-four (24) months of the date of
issue of the [*], whichever is the greater, at no additional cost to Licensee.
4. PURCHASE PRICE AND PAYMENT
4.1 The fee for the Services is [*] for each year during the Term. Licensee
shall pay the fee in equal monthly installments on or before the first day of
the calendar month.
4.2 Except as otherwise expressly provided in this Agreement, Licensee shall
pay Digimarc all sales, use, goods and services or other similar taxes levied by
any government in the United States or the country of Licensee's principal place
of business which Digimarc is obliged to collect and remit to such government(s)
in connection with any amount paid by Licensee to Digimarc under this Agreement.
4.3 Digimarc is responsible for, and shall indemnify Licensee against, and hold
Licensee harmless from, the payment of all taxes levied by any government on or
in respect of Digimarc's income and any amounts required by law to be paid in
respect of social benefits for Digimarc's employees relating to or arising out
of the services performed under this Agreement by Digimarc. If required by law,
Licensee shall deduct all such taxes and amounts from the amounts otherwise
payable to Digimarc and remit them to the appropriate authorities.
4.4 Licensee may set off against any amount which Licensee owes Digimarc under
or in
________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
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connection with this Agreement any amount which Digimarc owes Licensee under or
in connection with this Agreement, and vice versa.
5. SERVICES COORDINATION
5.1 Digimarc shall designate a responsible individual with adequate authority
and competence as a services representative whose responsibilities, in addition
to those expressly set out in this Agreement, shall be to serve as primary
interface with Licensee.
5.2 Licensee shall designate a responsible individual with adequate authority
and competence to serve as primary interface with Digimarc.
5.3 Either party's representative may from time to time appoint one or more
Persons to represent him or her on prior written notice to the other party's
representative.
5.4 Digimarc shall replace within a reasonable time under the circumstances any
of its employees or authorized subcontractors engaged in fulfilling its
obligations under this Agreement, including its services representative, whose
removal is required by Licensee, provided that Licensee specifies reasonable
cause for such removal in writing.
5.5 Digimarc represents that all personnel assigned to do the Work will be
employees of Digimarc. Digimarc shall not engage any subcontractor to do any
part of the work without first obtaining the prior written consent of Licensee,
which consent will not unreasonably be withheld.
6. LICENSEE'S RESPONSIBILITIES
6.1 Unless otherwise expressly set out in this Agreement, Licensee shall
respond in writing within ten (10) Business Days to every written request for
consent required by this Agreement received from Digimarc.
6.2 If Licensee is delayed in complying with any of its obligations under
clause 6.1 for any reason not attributable to Digimarc, and such delay is the
cause of a delay in the compliance by Digimarc with any of its obligations
under this Agreement, then the time for completion and the deadlines dependent
thereon will be extended automatically by one day for each day of delay by
Licensee or such other period as may be agreed in writing between the parties'
respective representatives. If Digimarc reasonably incurs any costs as a result
of the delay, other than a delay due to a force majeure event, such costs will,
at Digimarc's option, be borne by Licensee. If the delay is due to a force
majeure event, such costs shall be borne equally by Licensee and Digimarc. This
clause 6.2 sets forth Digimarc's only remedy for a delay by Licensee in
________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
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complying with such obligation.
7. INTELLECTUAL PROPERTY MATTERS
7.1 Licensee acknowledges that Digimarc is the owner of all changes to [*] made
by Digimarc under this Agreement and all such changes shall be considered for
all purposes of a License Agreement as forming part of [*] licensed thereunder.
8. REPRESENTATIONS AND WARRANTIES OF DIGIMARC
8.1 General - Digimarc represents, warrants and undertakes to Licensee that
-------
from and after the Effective Date:
(a) the Services will be of professional quality conforming to generally
accepted software product development practices and will be performed at
all times in a timely and cost effective manner and, for greater certainty
Digimarc shall employ the standard of care in performing the work that
would be expected of [*] 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 Services will
contravene, breach, or result in any default under any agreement, permit,
by-law, or law or regulation to which Digimarc is subject or by which it is
bound including, for greater certainty any laws or regulations in effect in
the United States governing export; and
(d) this Agreement when executed and delivered by Digimarc shall constitute a
valid and binding agreement with Digimarc enforceable against Digimarc
according to its terms.
9. REPRESENTATIONS AND WARRANTIES OF LICENSEE
9.1 Licensee represents and warrants to Digimarc that:
(a) Licensee has full power and authority to enter into this
Agreement; and
(b) this Agreement when executed and delivered by Licensee shall
constitute a valid, binding and enforceable obligation of Licensee.
________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
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10. CONFIDENTIALITY
10.1 Except as otherwise expressly permitted by this Agreement, a Recipient
shall not use, reproduce or disclose the Confidential Information of the
Discloser for any purpose other than as reasonably necessary to comply with its
obligations under this Agreement or to exercise any rights or licenses granted
to it under or pursuant to this Agreement.
10.2 The Recipient shall protect the Confidential Information of the Discloser
from disclosure by using the same degree of care, which shall be no less than a
reasonable degree of care, as the Recipient uses to protect its own confidential
information.
10.3 On written request from the Discloser, the Recipient shall return, or
certify the destruction of, all originals and copies of the Discloser's
Confidential Information in the Recipient's possession or control which the
Recipient does not need to retain in order to perform any obligations imposed,
or exercise any rights acquired, by this Agreement.
10.4 A Recipient may, on a need to know basis, and only for the purposes
described in clause 10.1, give the other party's Confidential Information to the
Recipient's employees, authorized subcontractors or representatives provided
that such employee, subcontractor or representative shall have entered into a
non-disclosure agreement in respect of such Confidential Information in favour
of the Discloser on terms materially similar to the provisions of this clause
10.
10.5 The obligations set out in this clause 10 will not apply to any
Confidential Information that:
(a) is or becomes publicly available other than through the fault of the
Recipient;
(b) was known to the Recipient prior to disclosure as shown by documentation
sufficient to establish such knowledge;
(c) was or is lawfully disclosed to the Recipient by a third party who did
not breach any obligation of confidence by such disclosure and who made
the disclosure without restriction on further disclosure all of which is
shown by documentation sufficient to establish same; or
(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
________________
[*] Omitted pursuant to a confidential treatment request. The material has been
filed separately with the Securities and Exchange Commission.
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publications and other information, followed by a selection of a series of such
items of knowledge from unconnected sources, and fitting together those items of
knowledge so as to duplicate or recreate any item of Confidential Information,
shall not be deemed to cause the Confidential Information, or any part thereof,
to be included within exceptions (a), (b) or (c), above.
10.6 Each party hereby consents to any court order sought by the other party to
enjoin non-compliance, or to require compliance, by the party with any of the
party's obligations under this clause 10.
10.7 Nothing in this Agreement shall be construed to require Licensee or any
representative of Licensee to disclose any information which is confidential to
a third party including for greater certainty an [*].
11. DISPUTE RESOLUTION
11.1 Any Dispute as the term is defined in the Arbitration Agreement shall be
finally settled by Arbitration in accordance with the Arbitration Agreement.
11.2 Unless otherwise agreed between the parties or unless the subject matter of
the dispute resolution proceedings is a party's right to terminate this
Agreement, the Services shall continue during the dispute resolution proceedings
and payments due to Digimarc shall not be withheld on account of such
proceedings unless that particular Services or payment is the subject matter of
the proceedings. In the latter case, Digimarc may suspend continued provision of
the disputed Services until the dispute resolution proceeding is concluded
unless Licensee instructs Digimarc to continue the provision of the disputed
Services, in which case Digimarc shall act in accordance with such instructions,
subject to payment of the fees due for such Services.
12. TERM
12.1 This Agreement shall take effect on the Effective Date and shall remain in
force for one (1) year thereafter (the "Term") unless sooner terminated as
provided herein. [*], Licensee may in its sole discretion renew the Agreement
for one (1) or more successive one (1) year Terms on no less than sixty (60)
days notice prior to the last day of a Term.
12.2 Either party may terminate this Agreement if the other party breaches any
of its obligations under this Agreement and fails to remedy such breach within
thirty (30) days after receiving written notice of such breach from the other
party.
12.3 Upon termination of this Agreement each party shall return or certify the
destruction of,
___________________
[*] Omitted pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
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to the Discloser, all originals and copies of the Discloser's Confidential
Information in the party's possession or control which the party does not need
to retain in order to exercise any rights acquired by this Agreement.
12.4 No termination of this Agreement will in any manner release, or be
construed as releasing, any party from any liability arising out of or in
connection with that party's breach of or failure to perform any covenant, duty
or obligation contained herein prior to the date of such termination.
13. FORCE MAJEURE
13.1 If the performance by either party of any of its obligations under this
Agreement is prevented or delayed by any circumstance of force majeure (which
shall mean fire, flood, earthquakes, war, riots, or insurrection) the party
shall immediately notify the other party.
13.2 The time period within which the party delayed is obliged to perform its
obligations will be delayed during the period such circumstance exists. During
the period of delay the party delayed shall use its best efforts to make
alternate arrangements satisfactory to the other party to avoid delay or resume
performance.
14. NOTICES
14.1 All notices under this Agreement shall be delivered by fax, certified mail,
return receipt requested, or recognized international courier service. The
notice shall be deemed effective as of the date of delivery to the address of
the party specified below as evidenced by a delivery receipt or the addressee's
registry of incoming correspondence. Unless otherwise expressly set out in this
Agreement, all notices to a party will be sent to the party's authorized
representative identified below and all notices from a party will be sent by the
party's authorized representative identified below.
14.2 Any notice to DIGIMARC shall be sent to both of, and any notice from
Digimarc shall be sent by either:
Mr. Bruce Davis
President and CEO
Digimarc Corporation
One Centerpointe Drive
Suite 500
Lake Oswego, Oregon 97035 USA
FAX: (503) 968-0219
___________________
[*] Omitted pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
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<PAGE>
Mr. William Y. Conwell
Klarquist, Sparkman, Campbell,
Leigh & Whinston
121 SW Salmon Street
Suite 1600
Portland, Oregon 97204 USA
FAX: (503) 228-9446
14.3 Any notice to Licensee shall be sent to both of, and any notice from
Licensee shall be sent by:
TBD
TBD
14.4 A party may change its address for notice by notice to the other party in
accordance with the provisions of this clause 14.
14.5 A copy of every notice sent by either party shall be sent to: [*].
15. MISCELLANEOUS PROVISIONS
15.1 Remedies Cumulative - Except as otherwise expressly set out in this
Agreement:
(a) each and every right, power and remedy of a party will be considered to be
cumulative with and in addition to any other right, power and remedy which
such party may have at law or in equity in the event of breach of any of
the terms of this Agreement;
(b) the exercise or partial exercise of any right, power or remedy will neither
constitute the exclusive election thereof nor the waiver of any other
right, power or remedy available to such party; and
(c) a party terminating this Agreement in accordance with the provisions of the
Termination clause will have no liability or obligation to the other as a
result of or with respect to the termination.
15.2 Severability - If any part of this Agreement is held by an arbitral
tribunal appointed pursuant to the Arbitration Agreement or by any other
competent authority to be void or unenforceable, the parties agree that such
determination will not result in the nullity or
___________________
[*] Omitted pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
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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.
15.3 Counterparts. This Agreement may be executed in separate counterparts, and
by facsimile, each of which will be deemed an original, and when executed,
separately or together, will constitute a single original instrument, effective
in the same manner as if the parties had executed one and the same instrument.
15.4 Entire Agreement. This Agreement is intended by the parties to be the
final expression of their agreement and constitutes and embodies the entire
agreement and understanding between the parties hereto and constitutes a
complete and exclusive statement of the terms and conditions thereof, and will
supersede any and all prior correspondence, conversations, negotiations,
agreements or understandings between the parties relating to the same subject
matter.
15.5 Amendments. No change in, modification of or addition to the terms and
conditions contained herein will be valid as between the parties unless set
forth in a writing that is signed by an authorized representative of each party
and which specifically states that it constitutes an amendment to this
Agreement.
15.6 Waiver. No waiver of any term, provision, or condition of this Agreement
will be effective unless in a written document signed by the waiving party and
no such waiver in any one or more instances will be deemed to be, or be
construed as, a further or continuing waiver of that term, provision or
condition or any other term, provision or condition of this Agreement.
15.7 Assignment and Successors. This Agreement may not be assigned by Licensee
without the prior written consent of the Digimarc, which consent may be withheld
or given, with or without conditions at Digimarc's sole discretion. This
Agreement and all of its terms, conditions, and covenants are intended to be
fully effective and binding, to the extent permitted by law, on the successors
and permitted assigns of the parties hereto.
15.8 Captions. Captions are provided in this Agreement for convenience only and
they form no part, and are not to serve as a basis for interpretation, of this
Agreement, nor as evidence of the intention of the parties.
15.9 Disclaimer of Agency. Nothing contained in this Agreement is intended or
will be interpreted so as to constitute the parties to this Agreement as
partners or joint venturers or as agents of each other. Neither party will have
any express or implied right or authority to assume or create any obligations on
behalf of or in the name of any other party or to bind any other party in any
contract, agreement or undertaking with any third party. No employee of a party
shall be
___________________
[*] Omitted pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
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deemed or considered to be an employee of the other party or of both parties.
15.10 Effectiveness. This Agreement shall be effective only after it is signed
by both of the parties.
15.11 Ambiguities. Each party and its counsel have participated fully in the
review and revision of this Agreement. Any rule or construction to the effect
that ambiguities are to be resolved against the drafting party shall not apply
in interpreting this Agreement.
___________________
[*] Omitted pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
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15.12 Survival. All clauses of this Agreement which expressly or by
implication are intended to survive the termination of this Agreement will do so
and, for greater certainty and notwithstanding any provision in this Agreement
to the contrary, the provisions of clauses 4.2, 4.3, 4.4, 10, 11, 14 and 15 of
this Agreement shall survive termination of this Agreement by either party for
any reason.
IN WITNESS WHEREOF, this Agreement has been executed and delivered by the
parties hereto as of the Effective Date.
TBD
Signature
Name:
Title:
Date
DIGIMARC CORPORATION
Signature
Name:
Title:
Date:
___________________
[*] Omitted pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
16
<PAGE>
ATTACHMENT 1
SOFTWARE PROBLEM REPORT
Each problem report will contain all information necessary to reproduce or
demonstrate the occurrence of the problem. Problem reports will be in English
and will be delivered electronically in a format to be provided by Digimarc.
Problem reports will contain:
Date problem was encountered
Detailed description of the problem, including the frequency with which the
problem occurs
Name and version number of the program / system component that exhibits the
problem
Step by step instructions to reproduce the problem
All data files required to reproduce the problem
[*]
Manufacturer and Model
CPU type and speed
Amount of memory
Operating System and Version
Disk Configuration (number of drives, total space per drive, free space per
drive)
Display Adapter Model, Resolution, Number of colors
Peripheral configuration (where applicable)
[*]
TWAIN driver and version number
[*]
Severity of problem
Contact information for person to contact for further information (name,
phone number, FAX number, email address)
Licensee agrees to work with Digimarc to provide reasonable additional
information and perform reasonable additional tests, as requested by Digimarc,
to assist Digimarc in resolution of the problem.
___________________
[*] Omitted pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
1
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SCHEDULE "P"
FEES FOR INTEGRATION SUPPORT AND VERIFICATION TESTING
Digimarc shall bill [*] for Services in one hour increments at the
following hourly rates:
Technical/Design Consultant $[*]
Senior Engineer $[*]
R&D/Engineering Executive $[*]
Project Manager $[*]
Administrator/Scheduler $[*]
Fees for Services will be invoiced on the earlier of 1) the last day
of the month or 2) the completion of the Service. Invoices are due thirty (30)
days from the date of receipt of a correct invoice. A late charge of 1.5% per
month will be charged on any late payments. All fees are due and payable in US
funds.
The [*] will reimburse Digimarc for all out-of-pocket expenses
reasonably and necessarily incurred in providing the Services. Expenses will be
itemized and reported by category. Out-of-pocket expenses will not be "marked
up" by Digimarc. Costs include, but are not limited to, reasonable travel and
lodging expenses, telephone and fax charges, postage and overnight deliveries,
and charges for rental equipment or materials purchased specifically to be used
in providing the Services. All invoices for out-of-pocket expenses will be
issued monthly in arrears and are due thirty (30) days from the date of receipt
of a correct invoice. Supporting receipts and vouchers shall be available for
review at Digimarc's offices. A late charge of 1.5% per month will be charged on
any late payments. All out-of-pocket expenses will be billed and payable in US
funds. Payments will additionally include Value Added taxes and other tariffs
and fees that may be imposed by any government other than the United States.
___________________
[*] Omitted pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
<PAGE>
SCHEDULE "Q"
TRAINING
1.0 As part of [*], Digimarc shall develop a program of training acceptable to
the DLA Project Manager in [*].
2.0 Digimarc shall deliver the Training as follows:
2.1 Digimarc shall provide the Training to up to two (2) people simultaneously.
The trainees will be experienced in digital design system operation.
2.2 Digimarc shall conduct the Training at the facilities of [*] or, at the
request of the [*], at Digimarc's facilities or at some other place agreed
between Digimarc and the [*].
2.3 Digimarc shall give the [*] reasonable notice concerning the equipment
which Digimarc will require in order to conduct the Training. The [*] shall
provide all such equipment at its own expense. If the parties are unable to
agree on the equipment to be provided either party may refer the matter for
decision to the DLA Contract Authority.
2.4 Digimarc shall conduct the Training using the [*].
2.5 Digimarc shall provide a training manual in English to every trainee. Any
translation or interpretation which the trainees may require will be provided by
[*] at its own expense.
2.6 Digimarc shall provide each trainee with a certificate of training at the
completion of the Training session.
2.7 Digimarc shall conduct the training in English.
__________________
[*] Omitted pursuant to a confidential treatment request. The material has
been filled separately with the Securities and Exchange Commission.
<PAGE>
SCHEDULE "R"
SOFTWARE PROBLEM REPORT
Each problem report will contain all information necessary to reproduce or
demonstrate the occurrence of the problem. Problem reports will be in English
and will be delivered electronically in a format to be provided by Digimarc.
Problem reports will contain:
. Date problem was encountered
. Detailed description of the problem, including the frequency with which the
problem occurs
. Name and version number of the program / system component that exhibits the
problem
. Step by step instructions to reproduce the problem
. All data files required to reproduce the problem
. PC configuration
. Manufacturer and Model
. CPU type and speed
. Amount of memory
. Operating System and Version
. Disk Configuration (number of drives, total space per drive, free
space per drive)
. Display Adapter Model, Resolution, Number of colors
. Peripheral configuration (where applicable)
. Scanner Manufacturer and Model
. TWAIN driver and version number
. Scanning resolution
. Severity of problem
. Contact information for person to contact for further information (name,
phone number, FAX number, email address)
[*] 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.
______________________
[*] Omitted pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
<PAGE>
SCHEDULE "S"
PROFORMA INVOICE
MONTH, YEAR
COUNTERFEIT DETERRENT SYSTEM
DIRECT COSTS
Hours
$ -
CDS Development:
Salaries
(Name of Deliverables [*]
Program Management -
Travel time -
Payroll Taxes and benefits -
Recruitment -
Business travel and external liaisons -
Outside consultants
[*] development -
Specification development -
Administrative costs -
Security improvements -
Legal counsel costs -
Total CDS Development Costs -
ALLOCATED INDIRECT COSTS
Month
Salaries -
Payroll Taxes and benefits -
Employee training/education -
Business travel and external liaisons -
Recruitment -
Facilities -
Office administrative costs -
_____________________
[*] Omitted pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
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Promotional activities -
Marketing materials -
Depreciation and amortization -
Insurance -
Outside professional services:
Legal counsel costs -
Accounting costs -
Taxes and licenses -
Interest expense -
Total Indirect Costs -
Total Direct Costs - All business -
Total Direct Costs - CDS Development
Allocation Factor 0.00%
Allocable Indirect Costs -
Total Allowable Costs - Month, Year
Markup on Total Costs [*]%-
Total Due -
BALANCE DUE $-
Wiring Instructions: [*], Payable to Digimarc Corporation, General Account
NOTE: Expense categories listed above are not intended to be all inclusive.
Certain allowable expenses could be incurred outside of these categories.
_____________________
[*] Omitted pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
2
<PAGE>
SCHEDULE "T"
AGREED FORM DEED OF ADHERENCE
THIS DEED is made on [ ]
BY [NAME OF SUBSTITUTE] ("Substitute") of [INSERT ADDRESS]
WHEREAS
(A) At the request of [*], the Substitute is willing to become a party to the
Counterfeit Deterrence System Development and License Agreement of
[ ],1999 ("DLA") between the [*] and Digimarc Corporation
("Digimarc") in substitution for and to the exclusion of the [*].
(B) The Substitute is permitted so to become a party to the DLA pursuant to
clause 19.8 of the DLA.
NOW THIS DEED WITNESSES that with effect from (and including) the date of this
Deed, the Substitute agrees with Digimarc to become a party to the DLA in
substitution for and to the exclusion of the [*] so that the Substitute, and not
the [*], shall have the benefit of, and be subject to the obligations of, the
[*] under the DLA, whether arising before, on or after the date of this Deed.
Executed as a deed and delivered on the date written at the start of this Deed
by
[Substitute]
acting by
[duly authorized signatory]
[second duly authorised signatory (where necessary)]
___________________
[*] Omitted pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission.
1
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SCHEDULE "U"
COMFORT LETTER
From: [*]
To: Digimarc Corporation
Dear Sirs:
We refer to the Development and License Agreement ("DLA") entered into
between us on ................................................, 1999.
We hereby exercise our right of substitution under clause 19.8(a) of the
DLA in favour of [Substitute]; and attach a Deed of Adherence in the form of
Schedule "T" to the DLA duly executed by the Substitute.
We are writing to confirm that [Substitute]:
1. Is lawfully organized and existing;
2. Is fully qualified, legally and otherwise, to assume the rights and
obligations of [*] under the DLA, pursuant to the Deed of Adherence; and
under the Escrow Agreement; and
3. Has access to and the benefit of all the facilities previously available
to [*] for the exercise of its obligations under the DLA and the Escrow
Agreement.
Yours faithfully,
[*]
______________________
[*] Omitted pursuant to a confidential treatment request. The material has
been filed separately with the Securities and Exchange Commission
-1-