DMRC Digimarc Corporation

On August 10, 2020 (the “Effective Date”), the Company entered into a three-year employment agreement (the “Employment Agreement”) with Bruce Davis, its Chairman of the Board and Chief Executive Officer, which supersedes Mr. Davis’ previous employment agreement, dated September 1, 2017, which would otherwise have expired by its terms on August 31, 2020. The new Employment Agreement provides a significant focus on performance-based compensation, including an annual incentive bonus for meeting performance goals, stock option equity awards, and restricted stock units tied to stock-price targets. Under the new Employment Agreement, Mr. Davis will receive an annual base salary at its current level of $785,000 until December 31, 2021, with base salary for the remainder of the term to be determined annually by the Board. Under the terms of the Employment Agreement, beginning on January 1, 2021, Mr. Davis will be eligible to receive an annual cash bonus (an “Annual Bonus”) each fiscal year based upon the achievement of certain performance goals determined by the Compensation Committee of the Board (the “Compensation Committee”). In addition, the Compensation Committee granted to Mr. Davis 45,000 restricted stock units (“RSUs”) and stock options to purchase 105,000 shares that will vest in three equal annual installments on each anniversary of the Effective Date. In accordance with and subject to the terms of the Employment Agreement, within thirty days of the Effective Date, the Compensation Committee will also grant to Mr. Davis approximately $1,250,000 of additional restricted stock units that will vest based on the achievement of stock-price performance goals of $25, $30 and $35, respectively, over a three-year period (“PSUs”).  The stock options and PSUs together constitute approximately 75% of the value of the equity incentive provided under the Employment Agreement.

If, other than in connection with a Change of Control, the Company terminates employment with Mr. Davis other than for Cause, or Mr. Davis terminates employment with the Company for Good Reason, as each of these terms is defined in the Employment Agreement, then, under the terms of the Employment Agreement, Mr. Davis is eligible to receive: (i): accelerated vesting of unvested stock options and RSUs, including any PSUs earned and subject to time-based vesting, that would have vested or become exercisable within twenty-four months from the date of termination; (ii) continuation of salary for two years from the date of termination; (iii) payment of any earned but unpaid Annual Bonus; and (iv) continuation of coverage under the Company’s health care plans for the shorter of two years or Mr. Davis’ eligibility for continuation coverage under the Company’s health plans. If, within 18 months following a Change of Control, the Company terminates employment with Mr. Davis other than for Cause, or Mr. Davis terminates employment with the Company for Good Reason, then, under the terms of the Employment Agreement, Mr. Davis is eligible to receive: (i) accelerated vesting of all of his unvested stock options and RSUs, including PSUs deemed earned and subject to time-based vesting; (ii) continuation of salary for two years from the date of termination; (iii) payment of any earned but unpaid Annual Bonus; and (iv) continuation of coverage under the Company’s health care plans for the shorter of two years or Mr. Davis’ eligibility for continuation coverage under the Company’s health plans. Receipt of the specified termination benefits are conditioned upon compliance with various noncompetition and non-solicitation provisions provided for in the Employment Agreement and the execution by Mr. Davis of a general waiver and release in the form provided by the Company.

The foregoing description of the Employment Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Employment Agreement, which is filed as Exhibit 10.1 hereto and incorporated by reference herein.