INTERDIGITAL COMMUNICATIONS CORPORATION
1995 STOCK OPTION PLAN FOR EMPLOYEES AND OUTSIDE DIRECTORS
Section 1. Purposes.
The purposes of the Plan are (a) to recognize and compensate selected
Employees and Outside Directors of the Company and its Subsidiaries who
contribute to the development and success of the Company and/or its
Subsidiaries; (b) to maintain the competitive position of the Company and its
Subsidiaries by attracting and retaining qualified Employees and Outside
Directors of the Company; and (c) to provide inventive compensation to Employees
based upon the Company's performance as measured by the appreciation in Common
Stock. The Options granted pursuant to the Plan are intended to constitute
either Incentive Stock Options within the meaning of Section 422 of the Code on
Non-Qualified Stock Options except that no Incentive Stock Option will be
granted to persons other than Employees as that term is specifically defined
with respect to Incentive Stock Options. The terms of this Plan shall be
incorporated in any Option Agreement to be executed by an Optionee and the type
of Options granted will be specified in the Agreement.
Section 2. Definitions.
(a) "Board" shall mean the Board of Directors of the Company, as
constituted from time to time.
(b) "Change of Control" shall mean the occurrence of any of the following
events:
(i) the acquisition in one or more transactions by any "Person" (as
the term person is used for purposes of Sections 13(d) or 14(d) of the
Exchange Act) of "Beneficial Ownership" (as the term beneficial ownership
is used for purposes of Rule 13d-3 promulgated under the Exchange Act) of
fifty percent (50%) or more of the combined voting power of the Company's
then outstanding voting securities (the "Voting Securities"), provided that
for purposes of this Section 2(b)(i), the Voting Securities acquired
directly from the Company by any Person shall be excluded from the
determination of such Person's Beneficial Ownership of Voting Securities
(but such Voting Securities shall be included in the calculation of the
total number of Voting Securities then outstanding); or
(ii) approval by shareholders of the Company of (A) a merger,
reorganization or consolidation involving the Company if the shareholders
of the Company immediately before such merger, reorganization or
consolidation do not or will not own directly or indirectly immediately
following such merger, reorganization or consolidation, more than fifty
percent (50%) of the combined voting power of the outstanding voting
securities of the corporation resulting from or surviving such merger,
reorganization or consolidation in substantially the same proportion as
their ownership of the Voting Securities immediately before such merger,
reorganization or consolidation, or (B)(1) a complete liquidation or
dissolution of the Company or (2) an agreement for the sale or other
disposition of all or substantially all of the assets of the Company; or
(iii) acceptance by shareholders of the Company of shares in a share
exchange if the shareholders of the Company immediately before such share
exchange do not or will not own directly or indirectly immediately
following such share exchange more than fifty percent (50%) of the combined
voting power of the outstanding voting securities of the corporation
resulting from or surviving such share exchange in substantially the same
proportion as the ownership of the Voting Securities outstanding
immediately before such share exchange.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(d) "Committee" shall mean the Compensation and Stock Option Committee of
the Board, or any committee of the Board performing similar functions, as
appointed from time to time by the Board, or the Board acting in place of the
Committee, as the case may be. The Committee shall be constituted so as to
permit the Plan to comply with Rule 16b-3
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promulgated under the Exchange Act, as the same may be amended from time to
time, to the extent such Rule and compliance therewith relates to this Plan or
Section 16 of the Exchange Act's effect with respect thereto.
(e) "Company" shall mean InterDigital Communications Corporation, a
Pennsylvania corporation.
(f) "Common Stock" shall mean common stock of the Company, $.01 par value
per share.
(g) "Disability" or "Disabled" shall mean the inability of an Optionee to
render his or her normal services to the Company resulting from a mental or
physical illness, impairment or any other similar occurrence which can be
expected to result in death or which has lasted or can be expected to last for a
period of twelve (12) consecutive months, as determined by the Board of
Directors.
(h) "Employee" shall mean (i) any person (including directors and officers)
who is employed by the Company or a Subsidiary and is compensated for such
employment by a regular salary and (ii) any consultant or advisor engaged by the
Company or a Subsidiary (other than officers or directors), provided that bona
fide services shall be rendered by consultants or advisors and such services
must not be in connection with the offer or sale of securities in a
capital-raising transaction; except that an Employee for purposes of a Option
that is an Incentive Stock Option shall mean only a person (including officers
and directors) who is employed by the Company or a Subsidiary and is compensated
for such employment by a regular salary.
(i) "Exchange Act" shall mean the Securities Exchange Act of 1934, as in
effect from time to time.
(j) "Fair Market Value" shall mean the fair market value of a share of
Common Stock, as determined pursuant to Section 9 hereof.
(k) "Grant Date" shall mean July 1 of each year during the term of this
Plan commencing 1995.
(l) "Incentive Stock Option" shall mean any option intended to be and
designated as an incentive stock option within the meaning of Section 422 of the
Code.
(m) "Non-Qualified Stock Option" shall mean an Option which does not
qualify as an Incentive Stock Option.
(n) "Option" shall mean an Incentive Stock Option or a Non-Qualified Stock
Option.
(o) "Option Agreement" shall mean a written agreement in such form or forms
as the Committee (subject to the terms and conditions of this Plan) may from
time to time approve evidencing and reflecting the terms of an Option.
(p) "Optionee" shall mean any Participant to whom an Option has been
granted under the Plan.
(q) "Outside Director" shall mean any member of the Board who, on the date
of the granting of an Option hereunder, is not an officer or employee of the
Company.
(r) "Participant" shall mean each Employee and Outside Director who is
eligible to participate in the Plan.
(s) "Plan" shall mean this 1995 Stock Option Plan for Employees and Outside
Directors, as amended from time to time.
(t) "Proprietary Information" shall mean any and all confidential
proprietary, business and technical information or trade secrets of the Company
or of any Subsidiary or affiliate of the Company revealed, obtained or developed
in the course of Optionee's employment with the Company or in the course of
Optionee's performance of services for the Company in any other capacity. Such
Proprietary Information shall include but shall not be limited to, methods of
production and manufacture, research, marketing and development plans and
efforts, cost information, pricing information,
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marketing methods and plans, identities of customers and suppliers, the
Company's relationship with actual or potential customers and the needs and
requirements of any such actual or potential customers, and any other
confidential information relating to the business of the Company. Proprietary
Information shall not include (i) such information as may be necessary or
appropriate for an Optionee to disclose in the course of his employment for the
effective discharge of his duties as an Employee of the Company or as may be
required by law to be disclosed; and (ii) such information as is readily
available to the general public so long as such information did not become
available to the general public as a direct or indirect result of Optionee's
breach of his obligation to maintain confidentiality.
(u) "Securities Act" shall mean the Securities Act of 1933, as in effect
from time to time. Participants who are Outside Directors, consultants or
advisors shall be eligible only to receive Non-Qualified Stock Options.
Participants who are Employees shall be eligible to receive either Non-Qualified
Stock Options or Incentive Stock Options.
(v) "Shares" shall mean shares of Common Stock.
(w) "Stock Purchase Agreement" shall mean an agreement in such form as the
Committee may from time to time approve (subject to the terms and conditions of
this Plan), which an Optionee may be required to execute as a condition of
purchasing Shares upon exercise of an Option.
(x) "Subsidiary" shall mean a subsidiary corporation of the Company,
whether now or hereafter existing, and whether direct or indirect, as defined in
Sections 424(f) and (g) of the Code.
Section 3. Participation.
Options shall be granted to such Participants as may be selected from
time to time by either the Committee or the Board as set forth herein, each in
its sole discretion. Participants who are Outside Directors, consultants or
advisors shall be eligible only to receive Non-Qualified Stock Options.
Participants who are Employees employed by the Company or a Subsidiary (as set
forth in Section 2(h)(i)) shall be eligible to receive either Non-Qualified
Stock Options or Incentive Stock Options.
Section 4. Administration.
(a) Powers of the Committee. All decisions, determinations and
interpretations of the Committee or the Board, as the case may be, shall be
final and binding on the respective Optionees and any other holders of any
Options granted under the Plan. Subject to the provisions of the Plan, the
Committee shall have the authority, in its discretion; (i) to grant Options;
(ii) to determine the Fair Market Value per Share in accordance with Section 8
of the Plan; (iii) to determine the exercise price of the Options to be granted
in accordance with Sections 6 and 8 of the Plan; (iv) to determine the
Participants to whom, and the time or times at which Options shall be granted,
and the number of Shares to be subject to each such Option as described in
greater detail in Section 6 hereof; (v) to prescribe, amend and rescind rules
and regulations relating to the Plan; (vi) to determine the terms and provisions
of each Option granted under the Plan, each Option Agreement and each Stock
Purchase Agreement, if any (which need not be identical with the terms of other
Options, Option Agreements and Stock Purchase Agreements) and, with the consent
of the Optionee, to modify or amend an outstanding Option, Option Agreement or
Stock Purchase Agreement provided that no Incentive Stock Option may be modified
if such action would cause it to cease to be an "Incentive Stock Option", unless
the Optionee specifically acknowledges and consents to the tax consequences of
such action; (vii) to accelerate the exercise date of any Option; (viii) to
determine whether any Employee will be required to execute a stock repurchase
agreement or other agreement as a condition to the exercise of an Option, and to
determine the terms and provisions of any such agreement (which need not be
identical with the terms of any other such agreement) and with the consent of
the Optionee, to amend any such agreement; (ix) to interpret the Plan or any
agreement entered into with respect to the grant or exercise of Options; (x) to
authorize any person to execute on behalf of the Company any instrument required
to effectuate the grant of a Option previously granted by the Committee or to
take such other actions as may be necessary or appropriate with respect to the
Company's rights pursuant to Options or agreements relating to the grant or
exercise thereof; and (xi) to make such other determinations and establish such
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other procedures as it deems necessary or advisable for the administration of
the Plan, including without limitation any early termination or extension of the
Plan.
(b) Criteria for Award of Options. In determining the Participants to whom
Options may be granted, the Committee may condition the grant of Options upon
the fulfillment of performance goals applicable to the individual, a business
unit, or the Company as a whole, including, for example, stock price, market
share or penetration, sales, earnings per share, return on equity, decrease in
costs, operating cash flow or any other performance criteria.
(c) Limitation of Liability. Notwithstanding anything herein to the
contrary, no member of the Board or the Committee shall be liable for any good
faith determination, act or failure to act in connection with the Plan or any
Option granted hereunder.
Section 5. Stock Subject to the Plan.
Subject to this Section 5 and to the provisions of Section 8 of the Plan,
the maximum aggregate number of Shares which may be subject to Options under the
Plan is Four Million (4,000,000). If an Option expires or becomes unexercisable
for any reason without having been exercised in full, the Shares subject to such
Option shall, unless the Plan shall have been terminated, return to the Plan and
become available for future grant under the Plan. The maximum number of shares
that shall be awarded to any Optionee over the term of the Plan shall be One
Hundred Fifty Thousand (150,000).
Section 6. Terms and Conditions of Options.
Each Option granted pursuant to the Plan shall be authorized by the
Committee and shall be evidenced by an Option Agreement. Each Option Agreement
shall incorporate by reference all other terms and conditions of the Plan, and
shall contain the following terms and conditions:
(a) Number of Shares. The number of Shares subject to the Option.
(b) Option Price. Except as hereinafter provided, the price per Share
payable on the exercise of any Option shall be stated in the Option Agreement
and shall be no less than the Fair Market Value per share of Common Stock on the
date such Option is granted, as determined by the Committee, except that Options
that are Non-Qualified Stock Options granted to consultants and advisors, and to
any other Employee who shall be rewarded for unusual and special achievements,
shall be at any price determined by the Committee equal to or exceeding $.01 per
share of the Common Stock.
With respect to any Option which is an Incentive Stock Option granted to
any Employee who, at the time of grant, owns stock possessing more than ten
percent of the total combined voting power of the Common Stock, the price per
share payable upon exercise shall be at an option price determined by the
Committee which at least equals 110% of the Fair Market Value of the Common
Stock on the date the Option is granted and such Option, by its terms, may not
be exercisable more than five years after the date of grant.
(c) Consideration. The consideration to be paid for the Shares to be issued
upon exercise of an Option may be paid to the Company; (i) in cash or certified
funds, (ii) by delivery of Shares having a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised, (iii) by means of a brokers' cashless exercise
procedure or (iv) any combinations of such methods of payment.
Where payment of the option price is to be made with Shares acquired under
any compensation plan of the Company, such Shares will not be accepted as
payment unless the Optionee has acquired such shares at least six months prior
to such payment.
If the consideration for the exercise of an Option is the surrender of
previously acquired and owned Shares, the Optionee will be required to make
representations and warranties satisfactory to the Company regarding his title
to the
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Shares used to effect the purchase (the "Payment Shares"), including without
limitation, representations and warranties that the Optionee has good and
marketable title to such Payment Shares free and clear of any and all liens,
encumbrances, charges, equities, claims, security interests, options or
restrictions, and has full power to deliver such Payment Shares without
obtaining the consent or approval of any person or governmental authority other
than those which have already given consent or approval in a manner satisfactory
to the Company. The value of the Payment Shares shall be the Fair Market Value
of such Payment Shares on the date of exercise as determined by the Board in its
sole discretion, exercised in good faith. If such Payment Shares were acquired
upon previous exercise of incentive stock options granted within two years prior
to the exercise of the Option or acquired by the Optionee within one year prior
to the exercise of the Option, such Optionee shall be required, as a condition
to using the Payment Shares in payment of the exercise price of the Option, to
acknowledge the tax consequences of doing so, in that such previously exercised
incentive stock options may have, by such action, lost their status as incentive
stock options, and the Optionee may have to recognize ordinary income for tax
purposes as a result.
(d) Form of Option. The Option Agreement shall state whether the Option
granted is an Incentive Stock Option or a Non-Qualified Stock Option, and will
constitute a binding determination as to the form of the Option granted.
(e) Exercise of Options. Any Option granted hereunder shall be exercisable
at such times and under such conditions as shall be set forth in the Option
Agreement (as may be determined by the Committee and as shall be permissible
under the terms of the Plan), which may include performance criteria with
respect to the Company and/or the Optionee. In the event that a holder of an
Option is indebted to the Company on account of an advance, loan or any other
reason, as a condition to being permitted to exercise the Option, the holder
will be required to satisfy the debt in a manner satisfactory to the Committee,
including being required to sell the Shares received upon exercise of the
Option. An Option may be exercised in accordance with the provision of this Plan
as to all or any portion of the Shares then exercisable under an Option from
time to time during the term of the Option. An Option may not be exercised for a
fraction of a Share.
(f) Term and Vesting of Options.
(i) Notwithstanding any other provision of this Plan, no Option shall
be (A) granted under this Plan and after ten (10) years from the date on
which this Plan is adopted by the Board of Directors, or (B) exercisable
more than ten (10) years from the date of grant; provided however, that
with respect to any Incentive Stock Option granted under this Plan to any
person who, at the time of the grant of such Option, owns stock possessing
more than 10% of the total combined voting power for all classes of the
Company's stock, the foregoing clause (B) shall be read by substituting
"five (5) years" for the term "ten (10) years" that appears therein.
(ii) No Option granted to any Optionee shall be treated as an
Incentive Stock Option to the extent such Option would cause the aggregate
Fair Market Value (determined as of the date of grant of each such Option)
of the Shares with respect to which Incentive Stock Options are exercisable
by such Optionee for the first time during any calendar year to exceed
$100,000. For purposes of determining whether an Incentive Stock Option
would cause the aggregate Fair Market Value of the stock to exceed the
$100,000 limitation, Incentive Stock Options shall be taken into account in
the order granted. For purposes of this subsection, Incentive Stock Options
include all Incentive Stock Options under all plans of the Company that are
Incentive Stock Option plans within the meaning of Section 422 of the Code.
(iii) Except as otherwise provided herein, Options granted hereunder
shall mature and become exercisable in whole or in part, in accordance with
such vesting schedule as the Committee shall determine, which schedule
shall be stated in the Option Agreement. Options may be exercised in any
order elected by the Optionee whether or not the Optionee holds any
unexercised Options under this Plan or any other plan of the Company.
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(g) Termination of Options.
(i) Unless sooner terminated as provided in this Plan, each Option
shall be exercisable for the period of time as shall be determined by the
Committee and set forth in the Option Agreement, and shall be void and
unexercisable thereafter.
(ii) Except as otherwise herein or in the Option Agreement, (1) upon
the termination of the Optionee's employment with the Company or a
Subsidiary for any reason, Options exercisable on the date of said
termination shall be exercisable by the Optionee (or in the case of the
Optionee's death subsequent to termination, by the Optionee's executor(s)
or administrator(s) in the case of Incentive Stock Options, for a period of
three (3) months from the date of the Optionee's termination of employment,
and in the case of Non-Qualified Stock Options, for a period of six (6)
months from the date of the Optionee's termination of employment, and (2)
the termination provisions set forth in clause (1) above shall not apply to
Options granted to consultants or advisors (other than officers or
directors of the Company).
(iii) Except as otherwise provided herein or in the Option Agreement,
upon the Disability or death of an Optionee while employed or engaged by
the Company or a Subsidiary, Options held by such Optionee which are
exercisable on the date of Disability or death shall be exercisable for a
period of twelve (12) months commencing on the date of the Optionee's
Disability or death, by the Optionee or his legal guardian or, in the case
of death, by his executor(s) or administrator(s); provided, however, that
if such Disabled Optionee shall commence any employment during such one (1)
year period with a competitor of the Company (including, but not limited
to, full or part-time employment or independent consulting work), as
determined solely in the judgment of the Board, all Options held by such
Optionee which have not yet been exercised shall terminate immediately upon
the commencement thereof.
(iv) Options may be terminated at any time by agreement between the
Company and the Optionee.
(h) Forfeiture. Notwithstanding any other provision of this Plan, if the
Optionee's employment or engagement is terminated by the Company and the Board
makes a determination that the Optionee (i) has engaged in any type of
disloyalty to the Company, including without limitation, insubordination, fraud,
embezzlement, theft, or dishonesty in the course of his employment or
engagement, or (ii) has been convicted of a felony or (iii) has disclosed any
Proprietary Information without the consent of the Company or (iv) has breached
the terms of any written confidentiality agreement or any non-competition
agreement with the Company in any material respect, all unexercised Options held
by such Optionee shall terminate upon the earlier of the date of termination of
employment or engagement for "cause" or the date of such a finding.
Section 7. Stock Appreciation Rights.
(a) The Committee may grant Stock Appreciation Rights ("SAR"s) in
conjunction with Options under the Plan such that, upon exercise of the SAR by
an Optionee, the Company shall pay, in cash, stock or both as determined by the
Committee in its sole discretion, an amount equal to the excess of the Fair
Market Value of a share of Common Stock on the date of exercise over the
exercise price, multiplied by the number of shares covered by the SAR.
(b) Exercise of an SAR for a certain number of shares shall reduce by such
number the number of shares exercisable under the Option, and exercise of the
Option shall correspondingly reduce the number of shares exercisable under the
SAR. Except as otherwise provided herein, any exercise of an SAR for cash in
full or partial settlement thereof may be made only from the third business day
until the twelfth business day following the public release of the Company's
quarterly or annual sales and earnings.
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Section 8. Determination of Fair Market Value of Common Stock.
(a) Except to the extent otherwise provided in this Section 8, the Fair
Market Value of a share of Common Stock shall be determined by the Committee in
its sole discretion.
(b) In the event that Shares are traded in the over-the-counter market, the
Fair Market Value of a share of Common Stock shall be the mean of the bid and
asked prices for a share of Common Stock on the relevant valuation date as
reported in The Wall Street Journal (or, if not so reported, as otherwise
reported by the National Quotation Bureau, Inc.) as applicable or, if there is
no trading on such date, on the next preceding trading date. In the event Shares
are listed on a national or regional securities exchange or traded on the Nasdaq
Stock Market ("Nasdaq"), the Fair Market Value of a share of Common Stock shall
be the closing price of share of Common Stock on the exchange or on Nasdaq, as
reported in The Wall Street Journal on the relevant valuation date, or if there
is no trading on that date, on the next preceding trading date.
(c) "Adjusted Fair Market Value" shall mean in the event of a Change of
Control, the greater of (A) the highest price per share of Common Stock paid or
payable to holders of the Common Stock in any transaction (or series of
transactions) constituting or resulting (or as to which approval by shareholders
of the Company constitutes or results) in the Change of Control or (B) the
highest Fair Market Value of a share of Common Stock on any business day during
the ninety (90) day period ending on the date of the Change of Control.
Section 9. Adjustments.
(a) Subject to required action by the shareholders, if any, the number of
Shares of Common Stock as to which Options may be granted under this Plan and
the number of Shares subject to outstanding Options and the option prices
thereof shall be adjusted proportionately for any increase or decrease in the
number of outstanding Shares of Common Stock of the Company resulting from stock
splits, reverse stock splits, stock dividends, reclassifications and
recapitalizations.
(b) No fractional shares of Common Stock shall be issuable on account of
any action mentioned in Section 8(a) above, and the aggregate number of shares
into which Shares then covered by the Option, when changed as the result of such
action, shall be reduced to the number of whole shares resulting from such
action, unless the Board, in its sole discretion, shall determine to issue scrip
certificates with respect to any fractional shares, which scrip certificates, in
such event, shall be in a form and have such terms and conditions as the Board
in its discretion shall prescribe.
Section 10. Rights as a Shareholder.
The Optionee shall have no rights as a shareholder of the Company and shall
have neither the right to vote nor receive dividends with respect to any Shares
subject to an Option until such Option has been exercised.
Section 11. Time of Granting Options.
The date of grant of an Option shall, for all purposes, be the date on
which the Committee authorizes the granting of such Option. Notice of the grant
shall be given to each Participant to whom an Option is so granted within a
reasonable time after the date of such grant.
Section 12. Procedure for Exercise of an Option.
An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company as its principal executive office in
accordance with the terms of any Option Agreement by the person entitled to
exercise the Option and full payment for the Shares with respect to the Option
which is exercised has been received by the Company, accompanied by any
agreement required by the Company, including an executed Stock Purchase
Agreement. No adjustment shall be made for a dividend or other right for which
the record date is prior to the date the Option is exercised, except as provided
in Section 9 of the Plan.
As soon as practicable after any proper exercise of an Option in
accordance with the provisions of the Plan, the Company shall without transfer
or issue tax to the Optionee, deliver to the Optionee at the principal executive
office of the
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Company or such other place as shall be mutually agreed upon between the Company
and the Optionee, a certificate or certificates representing the Shares for
which the Option shall have been exercised. The time of issuance and delivery of
the certificate(s) representing the Shares for which the Option shall have been
exercised may be postponed by the Company for such period as may be required by
the Company, with reasonable diligence, to comply with any applicable listing
requirements of any national or regional securities exchange or any law or
regulation applicable to the issuance or delivery of such Shares.
Exercise of an Option in any manner shall result in a decrease in the
number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
Section 13. Conditions to Issuance of Shares Upon Exercise.
(a) The obligation of the Company to issue and sell Shares to an Optionee
upon the exercise of an Option granted under the Plan is conditioned upon (i)
the Company obtaining any required permit or order from appropriate governmental
agencies, authorizing the Company to issue and sell such Shares, and (ii) such
issuance and sale complying with all relevant provisions of law, including,
without limitation, the Securities Act, the Exchange Act, the rules and
regulations promulgated thereunder, and the requirements of any stock exchange
upon which the Shares may then be listed.
(b) At the option of the Board, the obligation of the Company to issue and
sell Shares to an Optionee upon the exercise of an Option granted under the Plan
may be conditioned upon obtaining appropriate representations, warranties and
agreements of the Optionee set forth in the Stock Purchase Agreement. Among
other representations, warranties, restrictions and agreements, the Optionee may
be required to represent and agree that the purchase of Shares of Common Stock
under the Option Agreement shall be for investment, and not with a view to the
public resale or distribution thereof, unless the Shares subject to the Option
are registered under the Securities Act and the issuance and sale of the Shares
complies with all other laws, rules and regulations applicable thereto. Unless
the issuance of such Shares is registered under the Securities Act, the Optionee
shall acknowledge that the Shares purchased on exercise of the Option are not
registered under the Securities Act and may not be sold or otherwise transferred
unless such Shares have been registered under the Securities Act in connection
with the sale or other transfer, or counsel satisfactory to the Company has
issued an opinion satisfactory to the Company that the sale or other transfer is
exempt from registration under the Securities Act, and unless said sale or other
transfer is in compliance with any other applicable laws, rules and regulations
including all applicable federal and state securities laws, rules and
regulations. Unless the Shares subject to an Option are registered under the
Securities Act, the certificates representing all Shares issued upon exercise of
such Option shall contain the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED OR ANY APPLICABLE STATE SECURITIES
LAWS. THESE SHARES HAVE NOT BEEN ACQUIRED WITH A VIEW TO DISTRIBUTION OR
RESALE, AND MAY NOT BE SOLD, ASSIGNED, EXCHANGED, MORTGAGED, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED OR DISPOSED OF, BY GIFT OR OTHERWISE,
OR IN ANY WAY ENCUMBERED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR
SUCH SHARES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY
APPLICABLE STATE SECURITIES LAWS, OR A SATISFACTORY OPINION OF COUNSEL
SATISFACTORY TO INTERDIGITAL COMMUNICATIONS CORPORATION THAT REGISTRATION
IS NOT REQUIRED UNDER SUCH ACT AND UNDER APPLICABLE STATE SECURITIES LAWS.
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Section 14. Transferability.
No Option shall be assignable or transferable otherwise than by will or by
the laws of descent and distribution or pursuant to a domestic relations order
as defined by the Code.
Section 15. Other Provisions.
The Option Agreement and Stock Purchase Agreement may contain such other
provisions as the Committee in its discretion deems advisable and which are not
inconsistent with the provisions of this Plan.
Section 16. Change of Control.
(a) For purpose of the Plan, "Option Cancellation Date" shall mean, as to
each Option, the later of: (i) the first business day after the expiration of a
period of six (6) months from the date of grant of the Option; (ii) in the event
of a Change of Control as defined in Section 2(b)(ii)(A) or 2(b)(ii)(B)(2), the
date on which the transaction approved by shareholders of the Company (as
provided in Section 2(b)(ii)) is consummated; and (iii) in the event of the
Change of Control as defined in Section 2(b)(i) or 2(b)(iii), the first business
day after the expiration of a period of sixty (60) days after the occurrence of
such event.
(b) Upon a Change of Control, all Options (whenever granted) outstanding on
the date of such Change of Control shall be or become immediately and fully
exercisable.
(c) In the event of the Change of Control as defined in Section 2(b)(i),
2(b)(ii)(A), 2(b)(ii)(B)(2) or 2(b)(iii), all Options (whenever granted)
outstanding on the Option Cancellation Date which are not exercised on or before
the Option Cancellation Date shall be canceled on such date by the Company, and
the Company shall on such date pay to each holder of each such canceled Option a
cash amount equal to the excess, if any, in respect of each Option canceled, of
(i) the greater of (A) the Fair Market Value of the shares of Common Stock
subject to the Option on the business day immediately preceding the Option
Cancellation Date or (B) the Adjusted Fair Market Value of the Common Stock
subject to the Option over (ii) the aggregate purchase price for such shares of
Common Stock.
Section 17. Amendment of the Plan.
The Board is authorized to make such changes in the Plan as it may deem to
be in the best interests of the Company; subject, however, to the prior approval
of the stockholders of the Company if such alteration would: (a) materially
increase benefits to Participants, (b) materially increase the number of Shares
issuable under the Plan, or (c) materially modify the requirements as to
eligibility for participation in the Plan. No termination or amendment of the
Plan, however, shall adversely affect any Option theretofore granted under the
Plan without the consent of the Optionee.
Section 18. Application of Funds.
The proceeds received by the Company from the sale of Shares pursuant to
the exercise of Options shall be used for general corporate purposes or such
other purpose as may be determined by the Company.
Section 19. No Obligation to Exercise Option.
The granting of an Option shall impose no obligation upon the Optionee to
exercise such Option.
Section 20. Reservation of Shares.
The Company, during the term of this Plan, shall at all times reserve and
keep available such number of Shares as shall be sufficient to satisfy the
requirements of the Plan.
The Company, during the term of this Plan, shall use its best efforts to
seek to obtain from appropriate regulatory agencies any requisite authorization
in order to issue and sell such number of Shares as shall be sufficient to
satisfy the
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requirements of the Plan. The inability of the Company to obtain from any such
regulatory agency having jurisdiction the requisite authorization(s) deemed by
the Company's counsel to be necessary for the lawful issuance and sale of any
Shares hereunder, or the inability of the Company to confirm to its satisfaction
that any issuance and sale of any Shares hereunder will meet applicable legal
requirements, shall relieve the Company of any liability in respect of the
failure to issue or sell such Shares as to which such requisite authorization
shall not have been obtained.
Section 21. Taxes, Fees, Expenses and Withholding or Taxes.
(a) The Company shall pay all original issue and transfer taxes (but not
income taxes, if any) with respect to the grant of Options and/or the issue and
transfer of Shares pursuant to the exercise thereof, and all other fees and
expenses necessarily incurred by the Company in connection therewith, and will
from time to time use its best efforts to comply with all laws and regulations
which, in the opinion of counsel for the Company, shall be applicable thereto.
(b) The grant of Options hereunder and the issuance of Shares pursuant to
the exercise thereof is conditioned upon the Company's reservation of the right
to withhold in accordance with any applicable law, from any compensation or
other amounts payable to the Optionee, any taxes required to be withheld under
federal, state or local law as a result of the grant or exercise of such Option
or the sale of the Shares issued upon exercise thereof. To the extent that
compensation or other amounts, if any, payable to the Optionee is insufficient
to pay any taxes required to be so withheld, the Company may, in its sole
discretion, require the Optionee, as a condition of the exercise of an Option,
to pay in cash to the Company an amount sufficient to cover such tax liability
or otherwise to make adequate provision for the Company's satisfaction of its
withholding obligations under federal, state and local law.
Section 22. Notices.
Any notice to be given to the Company pursuant to the provisions of this
Plan shall be addressed to the Company in care of its Secretary (or such other
person as the Company may designate from time to time) at its principal
executive office, and any notice to be given to an Optionee shall be delivered
personally or addressed to him or her at the address given beneath his or her
signature on his or her Option Agreement, or at such other address as such
Participant or his or her transferee (upon the transfer of the Shares purchased
upon exercise) may hereafter designate in writing to the Company. Any such
notice shall be deemed duly given when enclosed in a properly sealed envelope or
wrapper addressed as aforesaid, registered or certified, and deposited, postage
and registry or certification fee prepaid, in a post office or branch post
office regularly maintained by the United States Postal Service. It shall be the
obligation of each Optionee and each transferee holding Shares purchased upon
exercise of an Option to provide the Secretary of the Company, by letter mailed
as provided herein, with written notice of his or her direct mailing address.
Section 23. No Enlargement of Optionee Rights.
This Plan is purely voluntary on the part of the Company, and the
continuance of the Plan shall not be deemed to constitute a contract between the
Company and any Optionee, or to be consideration for a condition of the
employment or service of any Optionee. Nothing contained in this Plan shall be
deemed to give any Optionee the right to be retained in the employ or service of
the Company or any Subsidiary, or in the case of Outside Directors, obligate the
Company to nominate any Participant for election as a director, or to interfere
with the right of the Company or any Subsidiary to discharge or retire any
Optionee thereof at any time, subject to applicable law. No Optionee shall have
any right to or interest in Options authorized hereunder prior to the grant
thereof to such Optionee, and upon such grant he shall have only such rights and
interests as are expressly provided herein, subject, however, to all applicable
provisions of the Company's Certificate of Incorporation, as the same may be
amended from time to time.
Section 24. Invalid Provisions.
With the respect to persons subject to Section 16 of the Exchange Act,
transactions under this Plan are intended to comply with all applicable
condition of Rule 16b-3 or its successors under the Exchange Act. To the extent
any provision
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of the Plan or action by the Committee or Board fails to so comply, it shall be
deemed null and void, to the extent permitted by law and deemed advisable by the
Board.
In the event that any provision of this Plan is found to be invalid or
otherwise unenforceable under any applicable law, such invalidity or
unenforceability shall not be construed as rendering any other provisions
contained herein as invalid or unenforceable, and all such other provisions
shall be given full force and effect to the same extent as though the invalid or
unenforceable provision was not contained herein.
Section 25. Applicable Law.
This Plan shall be governed by and construed in accordance with the laws of
the Commonwealth of Pennsylvania.
Section 26. Plan Adoption and Term.
(a) This Plan shall become effective upon the later to occur of (i) its
adoption by the Board and (ii) its approval by the Company's stockholders at an
Annual Meeting of Stockholders.
(b) Subject to the provisions herein relating to amendment or
discontinuance, this Plan shall terminate ten (10) years from its effective date
as determined by subsection (a) above.
Adopted by the Board April 6, 1995
Approved by the Shareholders May 31, 1996
Amended initially effective June 24, 1996
Amended again effected September 4, 1997
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