Exhibit 10.47
INDEMNITY AGREEMENT
This Indemnity Agreement, dated as of March 19, 2003, is made by and
between InterDigital Communications Corporation, a Pennsylvania corporation (the
"Company"), and XXXXXX X. XXXXXXXX (the "Indemnitee").
RECITALS
1. The Company is aware that competent and experienced persons are
increasingly reluctant to serve as directors, officers or agents of corporations
unless they are protected by comprehensive liability insurance and
indemnification, due to increased exposure to litigation costs and risks
resulting from their service to such corporations, and due to the fact that the
exposure frequently bears no reasonable relationship to the compensation of such
directors, officers and other agents.
2. The statutes and judicial decisions regarding the duties of directors
and officers are often difficult to apply, ambiguous, or conflicting, and
therefore fail to provide such directors, officers and agents with adequate,
reliable knowledge of legal risks to which they are exposed or information
regarding the proper course of action to take.
3. Plaintiffs often seek damages in such large amounts and the costs of
litigation may be so enormous (whether or not the case is meritorious), that the
defense and/or settlement of such litigation is often beyond the personal
resources of directors, officers and other agents.
4. The Company believes that it is unfair for its directors, officers and
agents and the directors, officers and agents of its subsidiaries to assume the
risk of huge judgments and other expenses which may occur in cases in which the
director, officer or agent received no personal profit and in cases where the
director, officer or agent was not culpable.
5. The Company recognizes that the issues in controversy in litigation
against a director, officer or agent of a corporation such as the Company or its
subsidiaries are often related to the knowledge, motives and intent of such
director, officer or agent, that he is usually the only witness with knowledge
of the essential facts and exculpating circumstances regarding such matters, and
that the long period of time which usually elapses before the trial or other
disposition of such litigation often extends beyond the time that the director,
officer or agent can reasonably recall such matters; and may extend beyond the
normal time for retirement for such director, officer or agent with the result
that he, after retirement or in the event of his death, his spouse, heirs,
executors or administrators, may be faced with limited ability and undue
hardship in maintaining an adequate defense, which may discourage such a
director, officer or agent from serving in that position.
6. Based upon their experience as business managers, the Board of Directors
of the Company (the "Board") has concluded that, to retain and attract talented
and experienced individuals to serve as directors, officers and agents of the
Company and its subsidiaries and to encourage such individuals to make the
business decisions necessary for the success of the Company and its
subsidiaries, it is necessary for the Company to contractually indemnify its
directors, officers and agents and the directors, officers and agents of its
subsidiaries, and to
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assume for itself maximum liability for expenses and damages in connection with
claims against such directors, officers and agents in connection with their
service to the Company and its subsidiaries, and has further concluded that the
failure to provide such contractual indemnification could result in great harm
to the Company and its subsidiaries and the Company's shareholders.
7. Section 1746 ("Section 1746") of the Pennsylvania Business Corporation
Law (the "PABCL"), under which the Company is organized, permits the Company to
indemnify its representatives (such as directors, officers, employees and
agents) by agreement and to indemnify persons who serve, at the request of the
Company, as the representatives of other corporations or enterprises, and
expressly provides that the indemnification provided by the PABCL is not
exclusive.
8. The Company desires and has requested the Indemnitee to serve or
continue to serve as a director, officer or agent of the Company and/or one or
more subsidiaries of the Company free from undue concern for claims for damages
arising out of or related to such services to the Company and/or one or more
subsidiaries of the Company.
9. Indemnitee is willing to serve, or to continue to serve, the Company
and/or one or more subsidiaries of the Company, provided that he is furnished
the indemnity provided for herein.
AGREEMENT
NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Definitions.
a. For the purposes of this Agreement, "agent" of the Company means
any person who is or was a director, officer, employee or other representative
of the Company or a subsidiary of the Company; or is or was serving at the
request of, for the convenience of, or to represent the interests of the Company
or a subsidiary of the Company as a director, officer, employee or
representative of another foreign or domestic corporation, partnership, joint
venture, trust or other enterprise; or was a director, officer, employee or
representative of a foreign or domestic corporation which was a predecessor
corporation of the Company or a subsidiary of the Company, or was a director,
officer, employee or representative of another enterprise at the request of, for
the convenience of, or to represent the interests of such predecessor
corporation.
b. For the purposes of this Agreement, "expenses" include all
out-of-pocket costs of any type or nature whatsoever (including, without
limitation, all attorneys' fees and related disbursements, punitive and other
damages, judgments, fines, penalties, excise taxes assessed with respect to an
employee benefit plan, and amounts paid or to be paid in settlement), actually
and reasonably incurred by the Indemnitee in connection with either the
investigation, defense or appeal of a proceeding or establishing or enforcing a
right to indemnification under this Agreement or PABCL or otherwise.
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c. For the purposes of this Agreement, "proceeding" means any
threatened, pending, or completed action, suit or other proceeding, whether
civil, criminal, arbitrational, administrative, or investigative.
d. For the purposes of this Agreement, "subsidiary" means any
corporation of which more than 10% of the outstanding voting securities is owned
directly or indirectly by the Company, by the Company and one or more of its
other subsidiaries, or by one or more of its other subsidiaries.
2. Agreement to Serve. The Indemnitee agrees to serve and/or continue to
serve as agent of the Company, at its will (or under separate agreement, if such
agreement exists), in the capacity Indemnitee currently serves as an agent of
the Company, so long as he is duly appointed or elected and qualified in
accordance with the applicable provisions of the Bylaws of the Company or any
subsidiary of the Company or until such time as he tenders his resignation in
writing; provided, however, that nothing contained in this Agreement is intended
to create any right to continued employment by Indemnitee.
3. Liability Insurance.
a. The Company hereby covenants and agrees that, so long as the
Indemnitee continues to serve as an agent of the Company and thereafter so long
as the Indemnitee could be subject to any possible proceeding by reason of the
fact that the Indemnitee was an agent of the Company, the Company, subject to
Section 3(c), shall promptly obtain and maintain in full force and effect
directors' and officers' liability insurance ("D&O Insurance") in reasonable
amounts from established and reputable insurers.
b. In all policies of D&O Insurance, the Indemnitee shall be named as
an insured in such a manner as to provide the Indemnitee the same rights and
benefits as are accorded to the most favorably insured of the Company's
directors, if the Indemnitee is a director; or of the Company's officers, if the
Indemnitee is not a director of the Company but is an officer; or of the
Company's employees, if the Indemnitee is not a director or officer but is a
employee.
c. Notwithstanding the foregoing, the Company shall have no
obligation to obtain or maintain D&O Insurance if the Company determines in good
faith that such insurance is not reasonably available, the premium costs for
such insurance are disproportionate to the amount of coverage provided, the
coverage provided by such insurance is limited by exclusions so as to provide an
insufficient benefit, or the Indemnitee is covered by similar insurance
maintained by a subsidiary of the Company.
4. Mandatory Indemnification. Subject to Section 8 below, the Company
shall indemnify the Indemnitee as follows:
a. To the extent the Indemnitee has been successful on the merits or
otherwise in defense of any proceeding (including, without limitation, an action
by or in the right of the Company) to which the Indemnitee was a party by reason
of the fact that he is or was an agent of the Company, or by reason of anything
done or not done by him in any such capacity, at any time in the past, present
or future, against all expenses relating to such proceeding;
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b. If the Indemnitee is a person who was or is a party or is
threatened to be made a party to any proceeding (other than an action by or in
the right of the Company) by reason of the fact that he is or was an agent of
the Company, or by reason of anything done or not done by him in any such
capacity, at any time in the past, present or future, the Company shall
indemnify the Indemnitee against any and all expenses and liabilities of any
type whatsoever relating to such proceeding, provided the Indemnitee acted in
good faith and in a manner he reasonably believed to be in, or not opposed to,
the best interests of the Company, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful;
c. If the Indemnitee is a person who was or is a party or is
threatened to be made a party to any proceeding by or in the right of the
Company by reason of the fact that he is or was an agent of the Company, or by
reason of anything done or not done by him in any such capacity, at any time in
the past, present or future, the Company shall indemnify the Indemnitee against
all expenses and liabilities related to such proceeding, provided the Indemnitee
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company; except that no indemnification
under this subsection 4(c) shall be made in respect to any claim, issue or
matter as to which such person shall have been finally adjudged to be liable to
the Company by a court of competent jurisdiction unless and only to the extent
that the court in which such proceeding was brought shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such amounts which the court shall deem proper; and
d. If the Indemnitee is a person who was or is a party or is
threatened to be made a party to any proceeding by reason of the fact that he is
or was an agent of the Company, or by reason of anything done or not done by him
in any such capacity, at any time in the past, present or future, and if prior
to, during the pendency or after completion of such proceeding Indemnitee
becomes deceased, the Company shall indemnify the Indemnitee's heirs, executors
and administrators against any and all expenses and liabilities of any type
whatsoever actually and reasonably incurred to the extent Indemnitee would have
been entitled to indemnification pursuant to Sections 4(a), 4(b), or 4(c) above
were Indemnitee still alive.
For purposes of this Section 4, the Indemnitee shall be deemed to
have acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company so long as the act or failure to
act of said Indemnitee is not finally adjudged by a court or other body of
competent jurisdiction to have constituted willful misconduct or recklessness.
For purposes of the preceding sentence, a finding by a court or other body of
competent jurisdiction that an act or failure to act of the Indemnitee or some
other agent of the Company constitutes "misconduct" or words of like import
shall not, of itself, create a presumption that the Indemnitee has engaged in
willful misconduct or recklessness under this Agreement, the Company's Articles
of Incorporation, the Company's bylaws or under the PABCL.
For purposes of this Section 4, the termination of any action, suit
or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
the Indemnitee did not act in good faith
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and in a manner that he reasonably believed to be in or not opposed to the best
interests of the Company, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
Notwithstanding the foregoing, the Company shall not be obligated to
indemnify the Indemnitee for expenses or liabilities of any type whatsoever for
which payment is actually made to or on behalf of Indemnitee and not
subsequently contested or returned under a valid and collectible insurance
policy of D&O Insurance, or a valid and enforceable indemnity clause, bylaw or
agreement.
5. Partial Indemnification. If the Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of any expenses or liabilities of any type whatsoever incurred by him
related to a proceeding, but not entitled, however, to indemnification for the
total amount of such expenses and liabilities, the Company shall nevertheless
indemnify the Indemnitee for such total amount except as to the portion to which
the Indemnitee is not entitled.
6. Mandatory Advancement of Expenses. Subject to Section 8(a) below, the
Company shall advance all expenses incurred by the Indemnitee in connection with
the investigation, defense, settlement or appeal of any proceeding to which the
Indemnitee is a party or is threatened to be made a party by reason of the fact
that the Indemnitee is or was an agent of the Company, or by reason of anything
done or not done by him in any such capacity, at any time in the past, present
or future. Indemnitee hereby undertakes to repay such amounts advanced only if,
and to the extent that, it shall be determined ultimately that the Indemnitee is
not entitled to be indemnified by the Company as authorized hereby. The advances
to be made hereunder shall be paid by the Company to the Indemnitee within
twenty (20) days following delivery of a written request therefor by the
Indemnitee to the Company, accompanied by evidence in reasonable detail of the
expenses that the Indemnitee has incurred.
7. Notice and Other Indemnification Procedures.
a. Promptly after receipt by the Indemnitee of notice of the
commencement of or the threat of commencement of any proceeding, the Indemnitee
shall, if the Indemnitee believes that indemnification with respect thereto may
be sought from the Company under this Agreement, notify the Company of the
commencement or threat of commencement of any proceeding.
b. If, at the time of the receipt of a notice of the commencement of
a proceeding pursuant to Section 7(a) hereof, the Company has D&O insurance in
effect, the Company shall give prompt notice of the commencement of such
proceeding to the insurers in accordance with the procedures set forth in the
respective policies. The Company shall thereafter take all necessary or
desirable action to cause such insurers to pay, on behalf of the Indemnitee, all
amounts payable as a result of such proceeding in accordance with the terms of
such policies.
c. In the event the Company shall be obligated to pay the expenses of
any proceeding against the Indemnitee, the Company, if appropriate, shall be
entitled to assume the defense of such proceeding, with counsel approved by the
Indemnitee (such approval not to
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be unreasonably withheld), upon the delivery to the Indemnitee of written notice
of its election so to do. After delivery of such notice, approval of such
counsel by the Indemnitee and the retention of such counsel by the Company, the
Company will not be liable to the Indemnitee under this Agreement for any fees
of counsel subsequently incurred by the Indemnitee with respect to the same
proceeding but the Indemnitee shall have the right to employ his own counsel in
any such proceeding at the Indemnitee's expense. If the Company has assumed the
defense of any proceeding and the Indemnitee reasonably concludes at any time
thereafter that there might be a conflict of interest between the Company and
the Indemnitee in the conduct of any such defense, or if the Company shall not,
in fact, have continuously employed counsel to assume the defense of such
proceeding, then the Indemnitee shall have the right to retain his own counsel
and the fees and expenses of Indemnitee's counsel shall be at the expense of the
Company.
8. Exceptions. Any other provision herein to the contrary
notwithstanding, the Company shall not be obligated pursuant to the terms of
this Agreement:
a. To indemnify or advance expenses to the Indemnitee with respect to
proceedings or claims initiated or brought voluntarily by the Indemnitee and not
by way of defense, unless (i) such indemnification or advancement is expressly
required to be made by law, (ii) the proceeding was authorized by the Board,
(iii) such indemnification or advancement is provided by the Company, in its
sole discretion, pursuant to the powers vested in the Company under the PABCL or
(iv) the proceeding is brought to establish or enforce a right to
indemnification or advancement under this Agreement or any other statute or law
or otherwise as required under the PABCL;
b. To indemnify the Indemnitee for any liabilities or expenses
incurred by the Indemnitee with respect to any proceeding instituted by the
Indemnitee to enforce or interpret this Agreement, if a court of competent
jurisdiction determines that each of the material assertions made by the
Indemnitee in such proceeding was not made in good faith or was frivolous;
c. To indemnify the Indemnitee under this Agreement for any amounts
paid in settlement of a proceeding unless the Company consents to such
settlement or the Company unreasonably withholds such consent;
d. To indemnify the Indemnitee under this Agreement for any expenses
incurred on account of any act of failure to act of the Indemnitee which is
finally adjudged by a court or other body of competent jurisdiction to have
constituted willful misconduct or recklessness. For purposes of the preceding
sentence, a finding by a court or other body of competent jurisdiction that an
act or failure to act of the Indemnitee or some other agent of the Company
constitutes "misconduct" or words of like import shall not, of itself, create a
presumption that the Indemnitee has engaged in willful misconduct or
recklessness under this Agreement, the Company's Articles of Incorporation, the
Company's bylaws or under the PABCL;
e. To indemnify the Indemnitee under this Agreement if a court of
competent jurisdiction finally adjudges that such indemnification is illegal,
including, without
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limitation, by virtue of such indemnification being in violation of public
policy or any provision of law.
9. Non-Exclusivity. The provisions for indemnification and advancement
of expenses set forth in this Agreement shall not be deemed exclusive of any
other rights which the Indemnitee may have under any provision of law, the
Company's Articles of Incorporation or Bylaws, the vote of the Company's
shareholders or disinterested directors, other agreements, or otherwise, both as
to action in his official capacity and to action in another capacity while
occupying his position as an agent of the Company, and the Indemnitee's rights
hereunder shall continue after the Indemnitee has ceased acting as an agent of
the Company and shall inure to the benefit of the heirs, executors and
administrators of the Indemnitee.
10. Enforcement. Any right to indemnification or advancement of expenses
granted by this Agreement to Indemnitee shall be enforceable by or on behalf of
Indemnitee in any court of competent jurisdiction if (i) the claim for
indemnification or advancement of expenses is denied, in whole or in part, or
(ii) no disposition of such claim is made within ninety (90) days of request
therefor. Indemnitee, in such enforcement action, if successful in whole or in
part, shall be entitled to be paid also the expense of prosecuting his claim. It
shall be a defense to any action for which a claim for indemnification is made
under this Agreement (other than an action brought to enforce a claim for
expenses pursuant to Section 6 hereof, provided that the required undertaking
has been tendered to the Company) that Indemnitee is not entitled to
indemnification because of the limitations set forth in Sections 4 and 8 hereof.
Neither the failure of the Company (including its Board or its shareholders) to
have made a determination prior to the commencement of such enforcement action
that indemnification of Indemnitee is proper in the circumstances, nor an actual
determination by the Company (including its Board or its shareholders) that such
indemnification is improper, shall be a defense to the action or create a
presumption that Indemnitee is not entitled to indemnification under this
Agreement or otherwise.
11. Subrogation. In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee, who shall execute all documents required and shall do
all acts that may be necessary to secure such rights and to enable the Company
effectively to bring suit to enforce such rights.
12. Survival of Rights.
a. All agreements and obligations of the Company contained herein
shall continue during the period Indemnitee is an agent of the Company and shall
continue thereafter so long as Indemnitee could be subject to any possible
proceeding by reason of the fact that Indemnitee was serving in the capacity
referred to herein.
b. The Company shall require any successor to the Company (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company, expressly to assume
and agree to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform if no such succession had taken
place.
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13. Interpretation of Agreement. It is understood that the parties
hereto intend this Agreement to be interpreted and enforced so as to provide
indemnification and advancement of expenses to the Indemnitee to the fullest
extent permitted by law including those circumstances in which indemnification
and advancement of expenses would otherwise be discretionary.
14. Severability. If any provision or provisions of this Agreement shall
be held to be invalid, illegal or unenforceable for any reason whatsoever, (i)
the validity, legality and enforceability of the remaining provisions of the
Agreement (including without limitation, all portions of any paragraphs of this
Agreement containing any such provision held to be invalid, illegal or
unenforceable, that are not themselves invalid, illegal or unenforceable) shall
not in any way be affected or impaired thereby, and (ii) to the fullest extent
possible, the provisions of this Agreement (including, without limitation, all
portions of any paragraph of this Agreement containing any such provision held
to be invalid, illegal or unenforceable, that are not themselves invalid,
illegal or unenforceable) shall be construed so as to give effect to the intent
manifested by the provision held invalid, illegal or unenforceable and to give
effect to Section 13 hereof.
15. Modification and Waiver. No supplement, modification or amendment of
this Agreement shall be binding unless executed in writing by both of the
parties hereto. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provisions hereof (whether or
not similar) nor shall such waiver constitute a continuing waiver.
16. Notice. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed duly given (i) if
delivered by hand and receipted for by the party addressee or (ii) if mailed by
certified or registered mail with postage prepaid, on the third business day
after the mailing date. Addresses for notice to either party are as shown on the
signature page of this Agreement, or as subsequently modified by written notice.
17. Governing Law. This Agreement shall be governed exclusively by and
construed according to the laws of the Commonwealth of Pennsylvania as applied
to contracts entered into and to be performed entirely within Pennsylvania.
18. Counterparts. This Agreement may be executed in any number of
counterparts (including by facsimile), all of which, taken together, shall
constitute one instrument.
19. Gender; Number. Words of gender may be read as masculine, feminine
or neuter, as required in context. Words of number may be read as singular or
plural, as required by context.
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The parties hereto have entered into this Indemnity Agreement effective
as of the date first above written.
INTERDIGITAL COMMUNICATIONS
CORPORATION
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Name: Xxxxxxxx X. Xxxx
Title: Vice-President & General
Counsel
Address of Company:
000 Xxxxx Xxxxxx,
Xxxx xx Xxxxxxx, XX 00000
INDEMNITEE:
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Name: Xxxxxx X. Xxxxxxxx
Title: President, CEO and
Director
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