<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
DIGIMARC CORPORATION
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed per Exchange Act Rules 14a-6(i)(4) and 0-11.
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
<PAGE>
DIGIMARC CORPORATION
19801 SW 72ND AVENUE, SUITE 250
TUALATIN, OREGON 97062
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
-----------------------
To the Stockholders of Digimarc Corporation:
Notice is hereby given that the 2000 Annual Meeting of Stockholders (Annual
Meeting) of Digimarc Corporation, a Delaware corporation (Company) will be held
on Thursday, May 11, 2000 at the RiverPlace Hotel, 1510 SW Harbor Way, Portland,
Oregon 97201, at 2:00 p.m., local time. The purposes of the Annual Meeting will
be:
1. ELECTION OF DIRECTORS. To elect one director, to hold office until
the 2003 Annual Meeting of Stockholders or until his successor is elected
and qualified (Proposal No. 1);
2. AMENDMENT OF THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION.
To authorize the Board of Directors to amend Section 4.1 of the Company's
Amended and Restated Certificate of Incorporation to increase the number
shares of Common Stock authorized for issuance by the Company from
30,000,000 to 100,000,000 (Proposal No. 2);
3. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS. To ratify the
appointment of KPMG LLP as the Company's independent auditors for the year
ending December 31, 2000 (Proposal No. 3); and
4. OTHER BUSINESS. To transact such other business as may properly
come before the Annual Meeting or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice. The Board of Directors has fixed the close
of business on March 17, 2000 as the record date for determining the
stockholders entitled to notice of and to vote at the Annual Meeting or any
adjournment or postponement thereof.
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON, WE URGE
YOU TO MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS
POSSIBLE IN THE POSTAGE-PREPAID ENVELOPE PROVIDED TO ENSURE YOUR REPRESENTATION
AND THE PRESENCE OF A QUORUM AT THE ANNUAL MEETING. IF YOU SEND IN YOUR PROXY
CARD AND THEN DECIDE TO ATTEND THE ANNUAL MEETING TO VOTE YOUR SHARES IN PERSON,
YOU MAY STILL DO SO. YOUR PROXY IS REVOCABLE IN ACCORDANCE WITH THE PROCEDURES
SET FORTH IN THE PROXY STATEMENT.
By Order of the Board of Directors,
Bruce Davis
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Tualatin, Oregon
April 7, 2000
<PAGE>
DIGIMARC CORPORATION
PROXY STATEMENT FOR 2000 ANNUAL MEETING OF STOCKHOLDERS
GENERAL INFORMATION
This Proxy Statement is being furnished to the stockholders of Digimarc
Corporation (Company), a Delaware corporation, on or about April 7, 2000, in
connection with the solicitation by the Company's Board of Directors (Board of
Directors) of proxies for use in voting at the Annual Meeting of Stockholders of
the Company (Annual Meeting) to be held on Thursday, May 11, 2000, at 2:00 p.m.,
local time, at the RiverPlace Hotel, 1510 SW Harbor Way, Portland, Oregon 97201,
and any adjournment or postponement thereof. The shares represented by the
proxies received, properly marked, dated, executed and not revoked will be voted
at the Annual Meeting.
The close of business on March 17, 2000 has been fixed as the record date
(Record Date) for determining the holders of shares of the Company's common
stock (Common Stock) entitled to notice of and to vote at the Annual Meeting. As
of the close of business on the Record Date, there were 12,764,145 shares of
Common Stock outstanding and entitled to vote at the Annual Meeting.
Each outstanding share of Common Stock on the Record Date is entitled to
one vote on all matters. The required quorum for the Annual Meeting is a
majority of the shares outstanding on the Record Date. There must be a quorum
for the Annual Meeting to be held. Our transfer agent will tabulate votes cast
in person at the Annual Meeting.
REVOCABILITY OF PROXY
You may revoke your proxy and change your vote an any time prior to voting
at the Annual Meeting by:
- delivering to the Company (to the attention of E.K. Ranjit, the
Company's Secretary) a written notice of revocation or a duly executed
proxy bearing a later date, or
- attending the Annual Meeting and voting in person.
SOLICITATION
This solicitation of proxies is being made by and paid for by the Company.
Besides this solicitation by mail, our directors, officers and other employees
may solicit proxies. Such persons will not receive any additional compensation
for assisting in the solicitation. We will also request brokerage firms,
nominees, custodians and fiduciaries to forward proxy materials to the
beneficial owners. We will reimburse such persons and our transfer agent for
their reasonable out-of-pocket expenses in forwarding such material. We may also
retain the services of proxy solicitation, information agent and /or mailing
service to perform the broker nominee search and to distribute proxy materials
to banks, brokers, nominees and intermediaries, for which the Company would not
pay more than $5,000.
VOTING PROCEDURES
- Directors are elected by a plurality of the votes cast.
- The approval of the amendment of the Amended and Restated Certificate
of Incorporation will require the affirmative vote of a majority of
the shares of the outstanding Common Stock. The approval of the
ratification of the independent auditors of the Company for the fiscal
year ending December 31, 2000 will require the affirmative vote of a
majority of the shares of Common Stock present or represented and
entitled to vote at the Annual Meeting.
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- Abstentions are shares which abstain from voting on a particular
matter. Abstentions effectively count as votes against Proposal No. 2,
but have no effect on Proposal No. 3.
- Broker non-votes are shares held in "street name" by brokers or
nominees who indicate on their proxies that they do not have
discretionary authority to vote such shares as to a particular matter.
Broker non-votes effectively count as votes against Proposal No. 2,
but have no effect on Proposal No. 3.
ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
At the Annual Meeting, one director is to be elected to serve for a term of
three years and until his successor is elected and qualified, or until the
death, resignation or removal of such director. Proxies will be voted for the
election of the nominee named below as director unless the authority to vote for
the nominee is withheld. Mr. Taysom has indicated that he is able and willing to
serve if elected. If Mr. Taysom should become unavailable prior to the election,
the Board of Directors may recommend another person and Mr. Davis and Mr.
Ranjit, as your representatives, will vote for such person.
Our Bylaws authorize the number of directors to be not less than five. The
number of directors is currently fixed at five. Our Board of Directors is
divided into three classes. Beginning this year, one class of directors will be
elected each year for a three-year term and until their successors are selected
and qualified or until their earlier resignation or removal. Mr. Taysom is up
for election at this Annual Meeting; Messrs. Monego and Rhoads will serve until
the Company's 2001 annual meeting of stockholders; and Messrs. Davis and Grossi
will serve until the Company's 2002 annual meeting of stockholders.
<TABLE>
<CAPTION>
DIRECTOR EXPIRATION
AGE SINCE OF TERM
--- -------- ----------
<S> <C> <C> <C>
NOMINEE:
John Taysom 45 1997 2000
CONTINUING DIRECTORS:
Phillip J. Monego, Sr. 52 1996 2001
Geoffrey Rhoads 37 1995 2001
Bruce Davis 47 1997 2002
Brian J. Grossi 49 1996 2002
</TABLE>
NOMINEE FOR DIRECTOR
JOHN TAYSOM has served as one of our directors since December 1997. Mr.
Taysom has been employed by Reuters, a worldwide television and news agency,
since 1982 and is currently the Managing Director of the Reuters Greenhouse
Fund. Mr. Taysom also serves on the Board of Directors of TIBCO Software Inc.
and Fantastic Corporation, a Swiss company. Mr. Taysom received a B.Sc. in
economics from Bath University.
CONTINUING DIRECTORS
PHILIP J. MONEGO, SR. has been chairman of our Board of Directors since
1996. Mr. Monego has served as chief executive officer and chairman of the Board
of Directors of Voquette, Inc., an Internet media portal company, since May
1999. Prior to that, Mr. Monego was co-founder, president and chief executive
officer of NetChannel, Inc., an Internet information delivery service, from May
1996 to June 1998. Prior to that, Mr. Monego was interim president and chief
executive officer of Yahoo! Corporation from April 1995 to September 1995. He is
an early investor in several new media startups and also currently a venture
partner in the Media Technology Venture fund. Mr. Monego received a B.A. in
management from LaSalle University.
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GEOFFREY RHOADS founded Digimarc in 1995 and now serves as chief technology
officer and director. Previously, Mr. Rhoads served as our interim president
from September to November 1995, and as chairman of the Board of Directors from
January 1995 to March 1996. Prior to that, Mr. Rhoads was the founder and
president of Pinecone Imaging Corporation, a company which develops imaging
systems for telescopes, since 1992. Mr. Rhoads received his B.A. in physics from
the University of Oregon.
BRUCE DAVIS has served as our president, chief executive officer and
director since December 1997. Prior to joining us, Mr. Davis served as president
of Titan Broadband Communications, a provider of information technology and
satellite communications systems and services, from April 1997 to December 1997.
Prior to that, Mr. Davis served as president of Prevue Networks, Inc., a
supplier of electronic program guides and program promotion services for the
cable and satellite television markets, from July 1996 to February 1997. Prior
to that, Mr. Davis founded and served as president of TV Guide On Screen, a
joint venture of News Corporation and TCI which supplied electronic program
guides and navigational software for the cable television market, from January
1993 to July 1996. Mr. Davis received a B.S. in accounting and psychology and an
M.A. in criminal justice from the State University of New York at Albany, and a
J.D. from Columbia University.
BRIAN J. GROSSI has served as one of our directors since July 1996. Mr.
Grossi co-founded AVI Capital, a venture capital firm specializing in
high-technology companies, in 1994. Prior to that, Mr. Grossi was a general
partner with Alpha Partners, a venture capital firm, from 1982 to 1992. Prior to
that, he worked at the Stanford Research Institute as a research engineer and
project leader from 1976 to 1982. Currently, Mr. Grossi serves as a director of
Apptitude, Inc., Aptia, Inc., Intraspect Software, Inc., InVisio, Inc.,
nCommand, Inc., Vivant! Corporation and Pointbase, Inc. Mr. Grossi received a
B.S. and an M.S. in mechanical engineering from Stanford University.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEE
NAMED ABOVE.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During 1999, the Board of Directors met six times. Each director attended
at least 75% of the aggregate of (a) the total number of Board of Directors
meetings held during the period which he was a director and (b) the total number
of committee meetings of the Board of Directors on which he served during the
period which he was a director.
The Board of Directors has a compensation committee and an audit committee.
The Board of Directors does not have a nominating committee.
The compensation committee, consisting of Messrs. Monego and Grossi,
exercises the authority of the Board of Directors on all compensation matters,
including both cash and equity incentive compensation, and administers our
employee benefit plans. The compensation committee met six times during 1999.
The audit committee, consisting of Messrs. Monego and Grossi, recommends
the selection of independent public accountants to the Board of Directors,
reviews the scope and results of the audit and other services provided by our
independent accountants and reviews our accounting practices and systems of
internal accounting controls. The audit committee met one time during 1999.
3
<PAGE>
DIRECTOR COMPENSATION
Directors who are also employees of the Company receive no additional
compensation for their services as directors. Directors who are not employees of
the Company do not receive a fee for attendance in person at meetings of the
Board of Directors or committees of the Board of Directors, but they are
reimbursed for travel expenses and other out-of-pocket costs incurred in
connection with their attendance of meetings.
We have a 1999 Non-Employee Director Option Program, which was approved by
our Board of Directors in October 1999 and became effective in December 1999.
The 1999 Non-Employee Director Option Program establishes an automatic option
grant program for the grant of awards to non-employee directors. Under this
program, existing non-employee directors and non-employee directors first
elected to our Board of Directors are automatically granted an option to acquire
10,000 shares of Common Stock at an exercise price per share equal to fair
market value of the Common Stock at the date of grant. These options vest and
become exercisable in four equal installments on each anniversary of the grant
date. Upon the date of each annual stockholders meeting, each non-employee
director who has been a member of our Board of Directors for at least six months
prior to the date of the stockholders meeting will receive an automatic grant of
options to acquire 2,500 shares of our Common Stock at an exercise price per
share equal to fair market value of the Common Stock at the date of grant. These
options will become fully exercisable on the first anniversary of the grant
date. On December 1, 1999, options to purchase 10,000 shares of Common Stock, at
an exercise price of $20.00 each, were granted to each of Mr. Monego, Mr. Grossi
and Mr. Taysom.
Additionally, in 1999 options to purchase 162,500 shares of Common Stock at
an exercise price of $1.50 per share, and options to purchase 100,000 shares of
Common Stock at an exercise price of $2.50 per share were granted to Mr. Davis,
and options to purchase 50,000 shares of Common Stock at an exercise price of
$1.65 per share were granted to Mr. Rhoads.
RELATIONSHIPS AMONG DIRECTORS OR EXECUTIVE OFFICERS
There are no family relationships among any of the directors or executive
officers of the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of our compensation committee was at any time during the fiscal
year ended December 31, 1999 an officer or employee of the Company. No member of
our compensation committee serves as a member of the Board of Directors or
compensation committee of any entity that has any executive officer serving as a
member of our Board of Directors or compensation committee.
4
<PAGE>
AMENDMENT TO THE COMPANY'S
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
(PROPOSAL NO. 2)
The Board of Directors has approved an amendment of the Amended and
Restated Certificate of Incorporation, subject to stockholder approval, to
authorize the Board of Directors to amend, at any time prior to our next annual
meeting of stockholders, Section 4.1 of the Company's Amended and Restated
Certificate of Incorporation to increase the number of authorized shares of
Common Stock from 30,000,000 to 100,000,000. The Board of Directors directed
that this proposal be submitted to the Company's stockholders for consideration
and action. Each additional share of Common Stock authorized by the amendment to
the Amended and Restated Certificate of Incorporation described in this proposal
would have the same rights and privileges as each share of Common Stock
currently authorized or outstanding.
We believe that the availability of the additional shares will provide the
flexibility to meet business needs as they arise, to take advantage of favorable
opportunities and to respond to a changing corporate environment. For example,
shares of stock may be required to effect financings, corporate mergers or
acquisitions, an increase in the number of shares reserved under any of our
stock option or stock purchase plans, stock dividends, stock splits or other
corporate purposes. No further action or authorization by the stockholders would
be necessary prior to the issuance of additional shares unless applicable laws
or regulations require such approval.
Stockholders should note that certain disadvantages may result from the
adoption of this proposal. After the proposed amendment is effected, there would
be a greater number of shares of Common Stock available for issuance by the
Company, and stockholders could therefore experience a significant reduction in
their interest in the Company with respect to earnings per share, voting,
liquidation value and book and market value per share if the additional
authorized shares are issued. The availability for issuance of additional shares
of our Common Stock would also enable the Board of Directors to make more
difficult or discourage an attempt to obtain control of the Company. For
example, the issuance of shares in a public or private sale, merger or similar
transaction would increase the number of outstanding shares, thereby possibly
diluting the interest of a party attempting to obtain control of the Company. We
are not aware of any pending or threatened efforts to obtain control of the
Company.
The following is the text of Section 4.1 of the Company's Amended and
Restated Certificate of Incorporation, as proposed to be amended, with proposed
changes in boldface type:
"The aggregate number of shares of Capital Stock which the Corporation
shall have authority to issue is 105,000,000, consisting of 100,000,000
shares of common stock, $.001 par value ("Common Stock"), and 5,000,000
shares of preferred stock ("Preferred Stock"), $.001 par VALUE."
If this proposal is approved by the stockholders of the Company, the
amendment to Section 4.1 of the Amended and Restated Certificate of
Incorporation would be effected on any date (the "Effective Date") selected by
the Board of Directors on or prior to our next annual meeting of stockholders,
which the Board of Directors anticipates will be held in May 2001. If this
proposal is approved, the Company will file a Certificate of Amendment of its
Amended and Restated Certificate of Incorporation with the Secretary of State of
the State of Delaware reflecting the increase in authorized shares. If the
amendment is not approved, the Company will take action to abandon the amendment
pursuant to Section 242(c) of the Delaware General Corporation Law.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL
OF THE PROPOSED AMENDMENT TO
THE COMPANY'S AMENDED AND RESTATED CERTIFICATE OF INCORPORATION.
5
<PAGE>
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(PROPOSAL NO. 3)
The Board of Directors has appointed KPMG LLP as the Company's independent
auditors to audit the Company's financial statements for the year ending
December 31, 2000. If the stockholders do not ratify the selection of KPMG LLP
as the Company's independent auditors, the Board of Directors will reconsider
the appointment. A representative of KPMG LLP, which served as the Company's
auditors in 1999, is expected to be present at the Annual Meeting to be
available to respond to appropriate questions from stockholders and to make a
statement if he or she desires to do so.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF KPMG LLP AS
INDEPENDENT AUDITORS.
MANAGEMENT
OFFICERS
The following table sets forth certain information regarding our executive
officers and corporate officers.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
EXECUTIVE OFFICERS
Bruce Davis 47 President, Chief Executive Officer and Director
Geoffrey Rhoads 37 Chief Technology Officer and Director
E. K. Ranjit 50 Chief Financial Officer and Secretary
J. Scott Carr 37 Vice President and General Manager, Secure Documents
Indraneel Paul 43 Vice President and General Manager, MediaBridge
CORPORATE OFFICERS
Burt W. Perry 45 Vice President of Engineering
Kathy S. Brogdon 47 Vice President of Finance and Operations
William Y. Conwell 41 Vice President of Intellectual Property
</TABLE>
Information concerning Mr. Davis and Mr. Rhoads is included under "Election of
Directors."
EXECUTIVE OFFICERS
E. K. RANJIT has served as our chief financial officer since August 1999
and as our Secretary since November 1999. Prior to that, he served as vice
president of finance and treasurer of TriQuint Semiconductor, Inc., a supplier
of integrated circuits for the wireless communications, telecommunications, data
communications and aerospace markets from July 1996 to August 1999, and as its
corporate controller from May 1991 to June 1996. Mr. Ranjit received a B.S. from
the University of Texas at Dallas and an M.B.A. from Pepperdine University.
J. SCOTT CARR has served as our vice president and general manager of
secure documents since June 1999. Prior to that, he served as our vice president
of marketing and business development from January 1998 to May 1999, and
director of business development from May 1996 to December 1997. Prior to
joining us, Mr. Carr served as vice president of marketing at nCUBE Corporation,
a manufacturer of video servers, from July 1995 to May 1996. Prior to that, Mr.
Carr worked as a staff architect at Sequent Computer Systems, Inc., a computer
equipment manufacturer, from August 1992 to July 1995. Mr. Carr received his
B.S. in computer science from Oregon State University.
6
<PAGE>
INDRANEEL PAUL has served as our vice president and general manager of
MediaBridge since November 1999. From January 1995 through October 1999, Mr.
Paul held various positions with TV Guide Networks, a provider of electronic
television program guides for the cable television industry. His most recent
position at TV Guide Networks was executive vice president of operations. Prior
to that, he served as vice president of engineering and operations at Vyvx, a
provider of fiber optic transmission services for the broadcast television
industry. Mr. Paul received a B.Tech. in electrical engineering from the Indian
Institute of Technology and an M.S. in electrical engineering from Rensselaer
Polytechnic Institute.
CORPORATE OFFICERS
BURT W. PERRY has served as our vice president of engineering since July
1996 and served as interim co-president from August through December 1997. Prior
to that, Mr. Perry worked as an engineering manager at Intel, designing and
managing technology and software development, from June 1993 to July 1996. Mr.
Perry received a B.S. in computer science from the University of Delaware.
KATHY S. BROGDON has served as our vice president of finance and operations
since October 1996 and served as interim co-president from August through
December 1997. Prior to joining us, Ms. Brogdon served as vice president of
finance and operations at Active Arts, Inc., a multimedia company, from December
1995 to October 1996. Ms. Brogdon worked as the controller and a partner at Nova
Northwest, Inc., a lending, leasing and financial advisory company, from
September 1990 to December 1995. Ms. Brogdon received a B.A. in accounting and
quantitative methods from the University of Oregon and became a Certified Public
Accountant in Oregon in 1978.
WILLIAM Y. CONWELL has served as our vice president of intellectual
property since July 1999. Prior to joining us, Mr. Conwell was a patent attorney
at Klarquist Sparkman Campbell Leigh & Whinston, LLP since 1984, and became a
partner in January 1990. Mr. Conwell received a bachelor's degree in Electrical
Engineering from Georgia Institute of Technology and a J.D. from Emory
University School of Law.
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<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table contains information in summary form concerning the
compensation paid to our chief executive officer and each of our most highly
compensated executive officers (Named Executive Officer), whose total salary and
bonus exceeded $100,000 during the year ended December 31, 1999.
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION COMPENSATION
------------------- ------------
SECURITIES (1)
UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS (#) COMPENSATION($)
- --------------------------- ---- --------- -------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Bruce Davis (2) 1999 250,000 133,500 262,500 3,632
President and Chief Executive Officer 1998 208,124 75,000 -- 76,369
1997 2,596 -- 400,000 --
Geoffrey Rhoads 1999 125,000 81,250 50,000 --
Chief Technology Officer 1998 123,542 75,000 -- --
1997 90,101 -- -- --
J. Scott Carr 1999 125,000 78,750 87,500 --
Vice President and General Manager-- 1998 109,167 45,000 -- --
Secure Documents 1997 90,000 -- 50,000 --
</TABLE>
- ----------
(1) In accordance with the rules of the Securities and Exchange Commission, the
compensation described in this table does not include medical, group life
insurance or other benefits received by the Named Executive Officers that
are available generally to all salaried employees of the Company.
(2) The salary information shown for Mr. Davis reflects compensation paid to
him in his principal position commencing on December 1997, and $3,632 of
other compensation in 1999 and $76,369 of other compensation in 1998
which represents reimbursement for relocation expenses.
EMPLOYMENT ARRANGEMENTS
In July 1999, we adopted a policy regarding the vesting of stock options,
including prior grants, for all existing officers at such date. All shares
subject to their options that have not vested will immediately vest if the
following two conditions are met:
- we merge with another company and there is a change of control of our
company or we sell substantially all of our assets to another company;
and
- any officer's employment is terminated, or constructively terminated,
within twelve months thereafter.
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STOCK OPTIONS
The following table sets forth certain information with respect to stock
options granted during 1999 to each of the Named Executive Officers. In
accordance with the rules of the Securities and Exchange Commission, also shown
below is the potential realizable value over the term of the options (the period
from the grant date to the expiration date) based on assumed rates of stock
appreciation of 5% and 10%, compounded annually. These amounts are based on
certain assumed rates of appreciation and do not represent the Company's
estimate of future stock price. Actual gains, if any, on stock option exercises
will be dependent on the future performance of the Company's Common Stock.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
----------------------------------------------------------
POTENTIAL REALIZABLE
PERCENT OF VALUE AT ASSUMED ANNUAL
TOTAL OPTIONS RATES OF STOCK PRICE
GRANTED TO EXERCISE APPRECIATION FOR
OPTIONS EMPLOYEES PRICE EXPIRATION OPTION TERM($)
NAME GRANTED(1) IN 1999 (%) ($/SH) DATE 5% 10%
- ---- ---------- ----------- ------ ---- -- ---
<S> <C> <C> <C> <C> <C> <C> <C>
Bruce Davis 162,500 10.9 1.50 5/11/09 153,293 388,474
100,000 6.7 2.50 8/31/09 157,224 398,435
---------- ------ ---------- ---------
262,500 17.6 310,517 786,909
Geoffrey Rhoads 50,000 3.4 1.65 5/11/04 22,793 50,367
J. Scott Carr 75,000 5.0 1.50 5/11/09 70,751 179,296
12,500 .8 2.50 8/31/09 19,653 49,804
---------- ------ ---------- ---------
87,500 5.8 90,404 229,100
</TABLE>
- ----------
(1) Stock options are granted at an exercise price equal to the fair market
value of our Common Stock on the date of grant. Options granted generally
vest ratably over a 48 month period and have a ten year term.
The following table provides summary information, as to the Named Executive
Officers, concerning stock options exercised during 1999 and the number of
shares subject to both exercisable and unexercisable stock options as of
December 31, 1999.
<TABLE>
<CAPTION>
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END VALUES
SHARES NUMBER OF SECURITIES VALUE OF UNEXERCISED
ACQUIRED ON VALUE UNDERLYING OPTIONS AT IN-THE-MONEY OPTIONS AT
NAME EXERCISE(#) REALIZED($)(1) FISCAL YEAR-END (#) FISCAL YEAR-END($)(2)
- ---- ------------ --------------- ------------------- ----------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Bruce Davis 40,400 $40,300 159,600 462,500 7,900,200 22,531,250
Geoffrey Rhoads -- -- 0 50,000 0 2,417,500
J. Scott Carr -- -- 88,555 108,945 4,404,473 5,292,777
</TABLE>
- ----------
(1) Value realized is equal to the fair market value of the purchased shares on
the option exercise date less the exercise price paid for those shares.
Fair market value prior to December 2, 1999 (the date our stock began
trading on the Nasdaq National Market), was determined by the Board of
Directors, and was based upon its assessment of our overall business
prospects and financial condition.
(2) The value of unexercised in-the-money options is calculated based on the
closing price of our Common Stock on December 31, 1999, $50.00 per share.
Amounts reflected are based on the assumed value minus the exercise price
and do not necessarily indicate that the optionee sold such stock.
9
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY'S
PREVIOUS FILINGS UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE EXCHANGE
ACT, THAT MIGHT INCORPORATE FUTURE FILINGS, INCLUDING THIS PROXY STATEMENT, IN
WHOLE OR IN PART, THE FOLLOWING REPORT AND THE PERFORMANCE GRAPH WHICH FOLLOWS
SHALL NOT BE DEEMED TO BE INCORPORATED BY REFERENCE INTO ANY SUCH FILINGS.
We have a compensation committee of the Board of Directors (Compensation
Committee) which has the authority and responsibility to approve the overall
compensation strategy, administer our annual and long-term compensation plans,
and review and make recommendations to the Board of Directors with respect to
executive compensation. The Compensation Committee is comprised of independent,
non-employee board of director members.
GENERAL COMPENSATION POLICY
The Compensation Committee's overall policy is to offer our executive
officers competitive compensation opportunities. The Compensation Committee
utilizes competitive data and summaries provided by Radford Associates and the
American Electronics Association to develop compensation recommendations
competitive with other companies in the communications industry. The
Compensation Committee's objectives are to
- create a performance oriented environment with variable compensation
based upon the achievement of annual and longer-term business results;
- focus management on maximizing stockholder value through stock-based
compensation aligned to stockholders' return; and
- provide compensation opportunities dependent upon the Company's
performance relative to its competitors and changes in its own
performance over time.
The Compensation Committee is authorized to establish and maintain
compensation guidelines for salaries and merit pay increases throughout the
Company. The compensation committee also makes specific recommendations to the
Board of Directors concerning the compensation of our executive officers,
including the Chief Executive Officer. The Compensation Committee also
administers our 1995 Stock Incentive Plan, our 1999 Stock Incentive Plan and our
1999 Employee Stock Purchase Plan.
FACTORS
The primary factors considered in establishing the components of each
executive officer's compensation package for the year ended December 31, 1999
are summarized below. The Compensation Committee may in its discretion apply
entirely different factors, such as different measures of financial performance,
for future fiscal years.
BASE SALARY. The base salary for each officer is set on the basis of
personal performance, the salary levels in effect for comparable positions with
other companies in the industry, and internal comparability considerations.
Generally, Company performance and profitability are not taken into account in
establishing base salary. Salaries paid to the our executive officers for the
year ended December 31, 1999 ranged from the 50th percentile at the low end to
the 75th percentile at the high end of the compensation data surveyed for the
industry. A number of adjustments were made to the surveyed compensation data
for the industry to reflect differences in management style, organizational
structure and corporate culture, geographic location, product development stage
and market capitalization between us and the surveyed entities. As a result of
these adjustments, there is not a meaningful correlation between the companies
in the industry which were taken into account for comparative compensation
purposes and the companies included in the industry group index which appears
later in this Proxy Statement for purposes of evaluating the price performance
of the Company's Common Stock. See "Stock Performance Graph."
ANNUAL INCENTIVE COMPENSATION. For the year ended December 31, 1999,
specific financial and organizational objectives, including revenue and orders
targets, were established as the basis for the incentive bonuses to be paid to
the executive officers of the Company.
10
<PAGE>
Specific bonus awards, set as a target percentage of salary, were
established for each officer's position and were to be earned on the basis of
achieving the specified corporate goals and the accomplishment of specific
individual objectives. The corporate goals for 1999 were met, and incentive
bonuses were paid to officers for 1999 based on this plan.
LONG-TERM STOCK-BASED INCENTIVE COMPENSATION. Generally, the Compensation
Committee awards stock options to each of our executive officers following the
initial hiring and from time to time thereafter. The option grants are designed
to align the interests of the executive officer with those of the stockholders
and to provide each individual with a significant incentive to manage the
Company from the perspective of an owner with an equity stake in the business.
Generally, the size of the option grant made to each executive officer is
set at a level which the Compensation Committee deems appropriate to create a
meaningful opportunity for stock ownership based upon the individual's current
position with the Company, but the Compensation Committee also takes into
account comparable awards to individuals in similar positions in the industry,
as reflected in external surveys, the individual's potential for future
responsibility and promotion, the individual's performance in recent periods and
the number of unvested options held by the individual at the time of the grant.
The relative weight given to each of these factors will vary from individual to
individual in the Compensation Committee's discretion. Each of Mr. Davis, Mr.
Rhoads and Mr. Carr received stock option grants in 1999.
Each grant allows the executive officer to acquire shares of the Company's
Common Stock at a fixed price per share (the market price on the grant date)
over a specified period of time (up to 10 years). The option will generally
become exercisable in installments over a 48 month period, contingent upon the
executive officer's continued employment with the Company. Accordingly, the
option will provide a return to the executive officer only if he remains in the
Company's employ, and then only if the market price of the Company's Common
Stock appreciates over the option term.
CEO COMPENSATION
The Compensation Committee established Mr. Davis' base salary with the
objective of maintaining the competitiveness of Mr. Davis' base salary with
salaries paid to similarly situated chief executive officers. With respect to
Mr. Davis' base salary, it was the Compensation Committee's intent to provide
him with a level of stability and certainty each year and not have this
particular component of compensation affected to any significant degree by
Company performance factors. Mr. Davis' base salary for the 1999 fiscal year was
set at the 75th percentile of the salary data surveyed for other chief executive
officers in the industry. In addition, Mr. Davis received a bonus of $133,500
and stock options to purchase 262,500 shares of Common Stock in 1999.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(m)
Section 162(m) of the Internal Revenue Code, enacted in 1993, generally
disallows a tax deduction to publicly held companies for compensation exceeding
$1 million paid to certain executive officers. The limitation applies only to
compensation which is not considered to be performance-based. The
non-performance-based compensation paid to our executive officers in 1999 did
not exceed the $1 million limit per officer.
The Compensation Committee is aware of the limitations imposed by Section
162(m), and its exemptions, and will address the issue of deductibility when and
if circumstances warrant.
Submitted by the Compensation Committee of the Company's Board of
Directors:
PHILLIP J. MONEGO, SR.
BRIAN J. GROSSI
11
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph compares the performance of our Common Stock with the
performance of the Nasdaq US Index and the companies included in SIC Code 7373 -
Computer Integrated Systems Design (our peer group) for the period ended
December 31, 1999. We registered our Common Stock under the Securities Act of
1933, as amended, effective December 2, 1999. Accordingly, the following graph
includes the required information from December 2, 1999 through December 31,
1999. The comparison assumes $100 was invested on December 2, 1999 in our Common
Stock and in each of the other two indices and assumes reinvestment of any
dividends.
[GRAPH]
<TABLE>
<CAPTION>
INDEXED DATA
-------------------------
DEC. 2, DEC. 31,
1999 1999
----------- ----------
<S> <C> <C>
Digimarc Corporation $100 $ 88.30
Nasdaq US Index $100 $117.27
Peer Group $100 $101.46
</TABLE>
12
<PAGE>
COMPANIES INCLUDED IN THE PEER GROUP INDEX OF THE STOCK PERFORMANCE GRAPH
ARE AS FOLLOWS:
<TABLE>
<S> <C> <C>
1MAGE SOFTWARE INC ELTRAX SYS INC NETZEE INC
3SI HOLDINGS INC ENSTAR INC NHANCEMENT TECH.INC
4FRONT TECHNOLOGIES INC ENTEX INFORMATION SVCS INC NICOLLET PROCESS ENG.
A C S ELECTRONICS LTD ESHARE TECHNOLOGIES INC OSAGE SYSTEMS GROUP INC
ACE COMM CORP ESOFT INC PACE HEALTH MGMT SYS INC
ALADDIN KNOWLEDGE SYS LTD EXIGENT INTL INC PAMET SYSTEMS INC
ALLIN CORP F5 NETWORKS INC PATHWAYS GROUP INC
ALTRIS SOFTWARE INC FAIR ISAAC & COMPANY INC PATIENT INFOSYSTEMS INC
AMERICAN MILLENIUM CORP FEDERAL DATA CORP PEROT SYSTEMS CORP
APACHE MEDICAL SYSTEMS INC FIRST CONSULTING GROUP INC PREMIS CORP
AREL COMMUNICATIONS & SFTWRE FONIX CORP PRINTRAK INT'L INC
ASA INTL LTD FORMULA SYS 1985 LTD -ADR PROPHET 21 INC
AUTO-TROL TECHNOLOGY CORP FUJITSU LTD -SPON ADR QUALITY SYSTEMS INC
AW COMPUTER SYSTEMS -CL A FUNDTECH LTD RADIANT SYSTEMS INC
AWARE INC GENERAL AUTOMATION RAMP NETWORKS INC
AZTEC TECHNOLOGY PRTNRS INC GENERAL MAGIC INC RARE MEDIUM GROUP INC
AZUL HOLDINGS INC GLOBALDIGITALCOMMERCE.COM RAVISENT TECHNOLOGIES INC
BALTIMORE TECHNOL PLC -ADR GREATE BAY CASINO CORP REDBACK NETWORKS INC
BE FREE INC H T E INC ROBOCOM SYSTEMS INTL INC
BELL INDUSTRIES INC HALIFAX CORP RWD TECHNOLOGIES INC
BITWISE DESIGNS INC HALIS INC S1 CORPORATION
BREAKAWAY SOLUTIONS INC HENRY (JACK) & ASSOCIATES SABRE HLDGS CORP -CL A
BRISTOL RETAIL SOLUTIONS INC HYBRID NETWORKS INC SAFELINK CORPORATION
BROADVISION INC I B S INTERACTIVE INC SAP AG -ADR
BTG INC IDENTIX INC SEACHANGE INT'L INC
CACI INTL INC -CL A IKOS SYSTEMS INC SENTO CORP
CAM DATA SYSTEMS INC IMAGEMATRIX CORP SHARED MEDICAL SYS. CORP
CAVION TECHNOLOGIES INC IMAGEMAX INC SOCRATES TECH. CORP
CELERITY SOLUTIONS INC IMATEC LTD SOFTECH INC
CELERITY SYSTEMS INC INET TECHNOLOGIES INC SONIC SOLUTIONS
CELLULAR TECHNICAL SERVICES INSCI-STATEMENTS.COM CORP STRAT. SOLUTIONS GRP INC
CERNER CORP INTEGRAL SYSTEMS INC/MD SUNQUEST INFO. SYS INC
CITATION COMPUTER SYS INC INTEGRATED SPATIAL INFO SOL SYSCOMM INT'L CORP
CLARENT CORP INTELLIGROUP INC TALX CORP
COBALT NETWORKS INC INTERFACE SYSTEMS INC TANNING TECHNOLOGY CORP
COMMAND SYSTEMS INC INTERGRAPH CORP TECHNOLOGY SOLUTIONS CO
COMPU-DAWN INC INTERNET COMMERCE CP -CL A TEKINSIGHT.COM INC
COMPUTRAC INC INTL SPORTS WAGERING INC TELESCIENCES INC
CONVERGENT COMMUNICATIONS INTRANET SOLUTIONS INC TELOS CORP/MD -CL A
COOPERATIVE COMPUTING INC JENKON INTL INC TELTRONICS INC
CORSAIR COMMUNICATIONS INC LANVISION SYSTEMS INC TENET INFO. SVCS INC
CPS SYSTEMS INC LATITUDE COMM. INC TIBCO SOFTWARE INC
CREATIVE COMPUTER APPL LITTON INDUSTRIES INC TITAN CORP
CREDIT MGMT SOLUTIONS INC LORONIX INFORMATION SYS INC TOWNE SERVICES INC
CSP INC MAI SYSTEMS CORP TREEV INC
CYSIVE INC MANATRON INC TRIPLE P NV
DASSAULT SYSTEMES S A -ADR MANHATTAN ASSOCIATES INC TROY GROUP INC
DATA RESEARCH ASSOC INC MARINE MGMT SYSTEMS INC TTI TEAM TELECOM INTL LTD
DATA RETURN CORP MDSI MOBILE DATA SOLUTIONS TVG TECHNOLOGIES LTD
DATA SYSTEMS NETWORK CORP MEDCOM USA INC UNICOMP INC
DATALINK CORP MEDIWARE INFO. SYSTEMS UNISYS CORP
DATATEC SYSTEMS INC MENTOR GRAPHICS CORP UNITRONIX CORP
DIGITAL DESCRIPTOR SYS INC MERCURY COMPUTER SYS. INC USWEB CORP
DYNAMIC HEALTHCARE TECH INC MERGE TECHNOLOGIES INC VA LINUX SYSTEMS INC
DYNAMICS RESEARCH CORP MICRO-INTEGRATION CORP VERONEX TECHNOLOGIES INC
EBIX.COM INC MICROS SYSTEMS INC VIALINK CO
ECLIPSYS CORP NAT'L TRANSACTION NETWORK VIISAGE TECHNOLOGY INC
ECSOFT GROUP PLC -ADR NAVIDEC INC VISUAL DATA CORP
EFAX.COM INC NEOMEDIA TECHNOLOGIES INC VISUAL NETWORKS INC
ELBIT SYSTEMS LTD NETGATEWAY INC VITALCOM INC
ELBIT VISION SYSTEMS LTD NETSCOUT SYSTEMS INC WAVETECH INT'L INC
ELECTRONIC DATA SYSTEMS CORP NETSMART TECHNOLOGIES INC ZAPME CORP
ELITE INFORMATION GROUP INC NETWORK SIX INC
</TABLE>
13
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of our Common Stock
as of March 17, 2000 by:
- each person or entity known by us to own beneficially more than five
percent of our Common Stock;
- our chief executive officer, each of the other Named Executive
Officers and each of our directors; and
- all of our executive officers and directors as a group.
The beneficial ownership is calculated based on 12,764,145 shares of our
Common Stock outstanding as of March 17, 2000. Beneficial ownership is
determined in accordance with the rules of the Securities and Exchange
Commission and generally includes voting or investment power with respect to
securities. Unless otherwise indicated, each person or entity named in the table
has sole voting power and investment power, or shares voting and investment
power with his or her spouse, with respect to all shares of capital stock listed
as owned by that person. Shares issuable upon the exercise of options that are
currently exercisable or become exercisable within sixty days of March 17, 2000
are considered outstanding for the purpose of calculating the percentage of
outstanding shares of our Common Stock held by the individual, but not for the
purpose of calculating the percentage of outstanding shares of our Common Stock
held by any other individual. The address of each of the executive officers and
directors is c/o Digimarc Corporation, 19801 S.W. 72nd Avenue, Tualatin, Oregon
97062.
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE OF
SHARES BENEFICIALLY SHARES BENEFICIALLY
NAME AND ADDRESS OWNED OWNED
- ---------------- -------------------- -------------------
<S> <C> <C>
5% STOCKHOLDERS
Macrovision Corporation 924,475 7.2%
1341 Orleans Drive
Sunnyvale, California 94089
Reuters Group PLC (1) 899,300 7.0%
c/o Reuters Ltd.
85 Fleet Street
London, EC4P 4AJ
England
AVI Capital Management L.P. and affiliates (2) 887,549 7.0%
One First Street
Los Altos, California 94022
Adobe Systems Incorporated (3) 719,688 5.6%
c/o Adobe Incentive Partners
345 Park Avenue
San Jose, California 95110
NAMED EXECUTIVE OFFICERS AND DIRECTORS
Philip J. Monego, Sr. (4) 257,215 2.0%
Bruce Davis (5) 192,255 1.5%
Geoffrey Rhoads (6) 695,171 5.4%
J. Scott Carr (7) 96,556 *
Brian J. Grossi (8) 893,549 7.0%
John Taysom (9) 916,700 7.2%
All executive officers and directors as a group (6 persons)(10) 3,051,446 23.5%
</TABLE>
- ----------
* Less than 1%.
14
<PAGE>
(1) Represents 699,300 shares held by Reuters, Ltd. and 200,000 shares held by
Reuters Holdings Switzerland, S.A., affiliates of Reuters Group PLC.
(2) Brian Grossi is a partner of AVI Capital Management, L.P. and of AVI
Management Partners III, L.P. The shares listed represent 754,531 shares
held by AVI Capital, L.P., 104,325 shares held by Associated Venture
Investors III, L.P., 21,452 shares held by AVI Partners Growth Fund II,
L.P. and 7,241 shares held by AVI Silicon Valley Partners, L.P. AVI Capital
Management, L.P. is the general partner of AVI Capital, L.P., and AVI
Management Partners III, L.P. is the general partner of Associated Ventures
Investors III, L.P., AVI Partners Growth Fund II, L.P. and AVI Silicon
Valley Partners, L.P. In such capacity, AVI Capital Management L.P. and AVI
Management Partners III, L.P., through a committee comprised of all of
their partners, exercises sole voting and investment power with respect to
all shares held of record by the respective named investment partnerships;
individually, no partner of AVI Capital Management, L.P. or of AVI
Management Partners III, L.P., is deemed to have or share such voting or
investment power.
(3) Represents 719,688 shares held by Adobe Incentive Partners. Adobe Systems
Incorporated is the general partner of Adobe Incentive Partners.
(4) Includes options for 90,000 shares of Common Stock exercisable within 60
days of March 17, 2000 and 10,250 shares owned by Mr. Monego's spouse.
(5) Includes options for 51,855 shares exercisable within 60 days of March 17,
2000.
(6) Includes options for 5,441 shares of Common Stock exercisable within 60
days of March 17, 2000. Includes 13,000 shares owned by Amanda Rhoads
Trust, 13,000 shares owned by Hudson Rhoads Trust, 100 shares owned by
Nicole Rhoads--Trustee for the Children of Geoffrey and Nicole Rhoads, and
13,000 shares owned by Trevor Rhoads Trust. Mr. Rhoads disclaims beneficial
ownership of these shares owned by his relatives.
(7) Represents options for 96,556 shares of Common Stock exercisable within 60
days of March 17, 2000.
(8) Includes 887,549 shares held by AVI Capital L.P. and affiliates of which
Mr. Grossi is a general partner. Mr. Grossi disclaims beneficial ownership
of these shares except to the extent of his pecuniary interest as a general
partner.
(9) Includes 899,300 shares held by Reuters Group. Mr. Taysom disclaims
beneficial ownership of the shares held by Reuters Group.
(10) Includes options for 243,852 shares of Common Stock exercisable within 60
days of March 17, 2000.
15
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
PRIVATE PLACEMENT TRANSACTIONS
During 1999 we issued in private placement transactions shares of preferred
stock, which were converted into shares of Common Stock in connection with our
initial public offering as follows:
- an aggregate of 1,266,000 shares of Series D preferred stock at $5.00
per share in June 1999 to 14 investors, including Philip Monego, Sr.,
Adobe Ventures L.P., AVI Capital L.P. and affiliates, Macrovision
Corporation and Reuters Holdings Switzerland, S.A.; and
- an aggregate of 160,000 shares of Series D-X preferred stock at $5.00
per share in August 1999 to three investors, including Philip Monego,
Sr.
INVESTORS' RIGHTS AGREEMENT
On November 2, 1999, the Company entered into an Amended and Restated
Investor Rights Agreement with certain holders of its Common Stock (Holders)
including Philip Monego, Sr., Adobe Ventures L.P., AVI Capital L.P. and its
affiliates, Macrovision Corporation and Reuters Group PLC.
Under the terms of this agreement, if we propose to register any of our
securities under the Securities Act, we must give the Holders 30 days' prior
notice of registration and include a portion of their shares of common stock in
the registration. Additionally, upon written demand of Holders, we will use our
best efforts to promptly register the securities that the Holders request to be
registered, provided, among other limitations, that the aggregate offering price
to the public exceeds $10 million. We are not required to register securities
more than twice under the Holders' rights to demand these registrations. We will
be required to file a registration statement on form S-3 or any similar
short-form registration statement if requested to do so by any of these Holders,
provided that the aggregate offering price for the securities to be sold is more
than $1,000,000. Furthermore, we are only required to effect one demand
registration on form S-3 within any 12-month period. The Holders cannot demand
that we file a registration statement prior to the date 180 days following the
effective date of any registration statement filed by us.
All expenses in effecting these registrations will be borne by us,
excluding underwriting discounts, selling commissions and stock transfer taxes,
which shall be borne proportionately by the Holders of the securities that have
been registered. These registration rights are subject to conditions and
limitations, among them the right of the underwriters of an offering to limit
the number of shares included in the registration. We have agreed to indemnify
the Holders of these registration rights, and each Holder has agreed to
indemnify us, against liabilities under the Securities Act, the Securities
Exchange Act or other applicable federal or state law.
TRANSACTIONS WITH DIRECTORS AND EXECUTIVE OFFICERS
The Company has entered into indemnification agreements with each of its
directors and executive officers. Such agreements require the Company to
indemnify such individuals to the fullest extent permitted by Delaware law.
All future transaction between the Company and its officers, directors,
principal stockholders and affiliates will be approved by a majority of the
Board of Directors, including a majority of the disinterested non-employee
directors on the Board of Directors, and will be on terms no less favorable to
the Company than could be obtained from unaffiliated third parties.
16
<PAGE>
OTHER MATTERS
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (Exchange
Act) requires our directors and executive officers, and persons who own more
than ten percent of a registered class of our equity securities (Reporting
Persons), to file initial reports of ownership and changes in beneficial
ownership of Common Stock and other equity securities of the Company with the
Securities and Exchange Commission and the Nasdaq Stock Market, Inc. Copies of
these reports are also required to be delivered to the Company.
To our knowledge, based solely on review of the copies of such reports
furnished to the Company and written representations from certain Reporting
Persons, during the year ended December 31, 1999, all of the Reporting Persons
complied with applicable Section 16(a) filing requirements, except as follows:
(1) Mr. Paul inadvertently failed to file his initial statement of beneficial
ownership on Form 3 in connection with the registration of the Company's Common
Stock under the Exchange Act; such Form 3 was subsequently filed. (2) Mr.
Monego, Mr. Taysom and Mr. Grossi each inadvertently failed to include options
to purchase 10,000 shares of Common Stock, which were automatically granted
under the 1999 Non-Employee Director Option Program in December 1999. These
option grants were subsequently reported on amended Form 3's for each of these
individuals.
STOCKHOLDER PROPOSALS
The deadline for stockholder proposals intended to be considered for
inclusion in our Proxy Statement for next year's Annual Meeting of Stockholders
is expected to be December 6, 2000. Such proposals may be included in next
year's Proxy Statement if they comply with certain rules and regulations
promulgated by the Securities and Exchange Commission.
FORM 10-K
A copy of our Annual Report to Stockholders for the year ended December 31,
1999 accompanies this Proxy Statement. We will provide, without charge upon the
written request of any beneficial owner of shares of our Common Stock entitled
to vote at the Annual Meeting, a copy of our Annual Report on Form 10-K as filed
with the SEC for the year ended December 31, 1999. Written requests should be
mailed to the Secretary, Digimarc Corporation, 19801 SW 72nd Avenue, Suite 250,
Tualatin, Oregon 97062.
OTHER BUSINESS
The Board of Directors is not aware of any other matter which may be
presented for action at the Annual Meeting. Should any other matter requiring a
vote of the stockholders arise, the enclosed proxy card gives authority to the
persons listed on the card to vote at their discretion in the best interest of
the Company.
It is important that your shares be represented at the Annual Meeting,
regardless of the number of shares you hold. We urge you to promptly execute and
return the accompanying proxy in the envelope, which has been enclosed for your
convenience. Stockholders who are present at the Annual Meeting may revoke their
proxies and vote in person or, if they prefer, may abstain from voting in person
and allow their proxies to be voted.
By Order of the Board of Directors,
Bruce Davis
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Tualatin, Oregon
April 7, 2000
17
<PAGE>
ON BEHALF OF THE BOARD OF DIRECTORS OF DIGIMARC CORPORATION
The undersigned hereby constitutes and appoints Bruce Davis and E.K.
Ranjit, and each of them, his true and lawful attorneys-in-fact and agents and
proxies with full power of substitution in each, to represent the undersigned at
the Annual Meeting of Stockholders of Digimarc Corporation to be held at the
RiverPlace Hotel, 1510 SW Harbor Way, Portland, Oregon 97201 on Thursday, May
11, 2000 at 2:00 p.m. local time, and at any adjournment or postponement
thereof, and to vote all shares of common stock that the undersigned would be
entitled to vote if then and there personally present on the matters set forth
below.
This Proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, this Proxy will
be voted for the nominee to the board of directors named in Proposal No. 1, for
Proposals No. 2 and 3 and as the proxy holder may determine in his discretion
with regard to any other matter properly brought before the Annual Meeting.
1. ELECTION OF A DIRECTOR:
__ FOR the nominee listed below __ WITHHOLD AUTHORITY to vote for the
(except as indicated) nominee listed below
JOHN TAYSOM
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEE NAMED ABOVE. IF YOU
WISH TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE, STRIKE A LINE THROUGH SUCH
NOMINEE'S NAME LISTED ABOVE.
2. PROPOSAL TO AUTHORIZE THE BOARD OF DIRECTORS TO AMEND THE RESTATED
CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK
AUTHORIZED FOR ISSUANCE BY THE COMPANY FROM 30,000,000 TO 100,000,000:
_____ FOR _____ AGAINST _____ ABSTAIN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL NO. 2.
3. PROPOSAL TO RATIFY THE APPOINTMENT OF KPMG LLP AS THE INDEPENDENT AUDITORS OF
DIGIMARC CORPORATION FOR THE YEAR ENDING DECEMBER 31, 2000:
_____ FOR _____ AGAINST _____ ABSTAIN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL NO. 3.
DATED: ______________________________________, 2000
____________________________________________________
(Signature)
____________________________________________________
(Signature)
This Proxy should be marked, dated and signed by the
shareholder(s) exactly as his or her name appears hereon,
and returned promptly in the enclosed envelope. Persons
signing in a fiduciary capacity should so indicate. If
shares are held by joint tenants or as community property,
both should sign.
