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SEPARATION AND CONFIDENTIALITY AGREEMENT
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THIS SEPARATION AND CONFIDENTIALITY AGREEMENT is made effective as of the
23rd day of September 1999 by and between XXXXXXX X. XXXXX, an individual
("Executive"), and INTERDIGITAL COMMUNICATIONS CORPORATION, a business
corporation existing under the laws of the Commonwealth of Pennsylvania,
together with each and every one of its predecessors, successors (by merger or
otherwise), parents, subsidiaries, successors, assigns, directors, officers and
employees (hereinafter collectively referred to as the "Company").
W I T N E S S E T H:
WHEREAS, Executive has been employed by the Company in the capacity of
President, is a member of the Board of Directors of the Company, and holds
various positions in executive management and on the boards of the Company's
subsidiaries; and
WHEREAS, during his tenure as President of the Company, Executive and
Company entered into an Employment Agreement dated November 20, 1996 (the
"Employment Agreement") which provided for certain obligations and benefits upon
the termination of Executive's employment; and
WHEREAS, Executive intends to submit his resignation from his positions as
a director, officer and employee of the Company, and the Company intends to
accept such resignation; and
WHEREAS, Executive and the Company also desire to settle fully and finally
all differences between them, including, but in no way limited to, any
differences arising out of any aspect of Executive's employment with the Company
and/or out of his separation from that employment.
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth, Executive and the Company acting of their own free will and intending to
be legally and irrevocably bound hereby, agree as follows:
1. Prior Agreements. All agreements and understandings between Executive
and the Company, whether oral or written, which were in effect at any time prior
to the execution and delivery of this Agreement excluding (i) any agreement or
obligation of the Company to indemnify Executive as an officer or director of
the Company, (ii) the obligation of Company to reimburse Executive for
reasonable Company business expenses incurred prior to September 23, 1999, (iii)
any agreement under which Executive holds options, and (iv) Sections 6, 7, 8c,
and 8d of the Employment Agreement (all such agreements and understandings other
than those
described in clause (i), (ii), (iii) and (iv) of this Section 1 being
herein referred to as "Prior Agreements") are hereby terminated and of no
further force and effect. Neither Executive nor the Company shall have any
further rights or obligations under any such Prior Agreements.
2. Employment Termination. Executive acknowledges and agrees that,
effective as of September 23, 1999, he shall not render any further services to
the Company in the capacity of employee, officer or director of the Company, and
that, as of this date, has effectively resigned from any and all positions that
he heretofore held with the Company, its subsidiaries and affiliates.
Contemporaneously with the execution and delivery of this Agreement, Executive
shall execute and deliver to the Company a formal resignation from his positions
as President and member of the Board of Directors and similar resignations with
respect to each and every subsidiary of the Corporation for which he served as
an officer and/or director. Executive further acknowledges and agrees that,
effective as of September 23, 1999, he shall no longer be authorized to
represent, to incur any expenses or liabilities or to take any other action on
behalf of the Company. In addition, Executive acknowledges and agrees that the
Company shall not have any obligation, contractual or otherwise, to rehire,
reemploy or recall him in the future and/or to pay or to make available to him
any additional compensation or benefits after that date except as required by
law or as specifically provided herein.
3. Employment Agreement. Company waives its rights under Sections 8a and 8b
of the Employment Agreement. Executive and Company waive any prior notice
requirements applicable to Executive's resignation. Executive reaffirms his
obligations under Sections 6 and 7 of the Employment Agreement.
4. Consideration. In consideration for the general release described in
Section 8 hereunder and for all other agreements by Executive contained in this
Agreement, the Company shall provide Executive with the following benefits and
compensation provided Executive does not revoke this Agreement pursuant to
Section 8 herein:
(a) Salary Continuation. Company shall pay to Executive all accrued but
unpaid (as of September 23, 1999) base salary and vacation. In addition, Company
shall pay to Executive severance in an amount equal to Executive's current base
salary (i.e., $275,000 per annum) for the period of thirteen (13) months. All
such amounts shall be payable in accordance with Company's normal payroll
practices.
(b) Executive Bonuses. Company shall pay Executive on the earlier of
March 31, 2000 or the date the Company pays bonuses to executives and employees
for 1999, Executive's full bonus applicable to the 1999 calendar year as if
Executive had fully served during such term as President. Such bonus shall be
determined in accordance with the 1999 Employee Bonus Plan to be adopted by the
Company's Board of Directors. In determining such bonus, Executive shall (i) be
assigned an annual target incentive bonus of no less than ten percentage points
above the annual incentive target bonus for Executive Vice Presidents, (ii) be
deemed to have achieved an individual performance appraisal rating of no less
than "3" (equating to an achievement of 80% of the target bonus associated with
the individual goal) and (iii) to have a base salary of $275,000. With regard to
the Executive, the entire bonus shall be
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paid in cash notwithstanding the option of the Company under the Plan to
pay a portion of such bonus in non-cash consideration. Notwithstanding the
foregoing, Executive's minimum bonus shall be $90,000.
(c) Medical Benefit Continuation.
(i) It is the intention of the parties hereto that Executive's status
as an active participant under the Company's basic group medical and dental
insurance will continue insofar as permitted by the contracts with the
Company's group insurance providers and by applicable law through September
22, 2000. Any required employee contribution to the medical or dental plan
premium will be deducted from Executive's salary continuation payments.
(ii) In the event that the Company determines that the continued
inclusion of Executive as an active participant in its basic group insurance
plans is not permitted by its providers, the Company shall so advise
Executive by written notice. Furthermore, in such event, as part of the
severance package made available to Executive hereunder, the Company agrees
to bear the cost of continuing Executive's group medical benefits under COBRA
(except for amounts which would be contributory by Executive if he were still
employed by the Company) through September 22, 2000 provided that Executive
elects COBRA coverage and that he satisfies the statutory eligibility
criteria.
(iii) The Company's obligation to continue medical and dental
coverage will cease if Executive is eligible to participate in a comparable
medical plan with a new employer. In this case, Executive agrees immediately
to notify the Company by written notice to Xxxx Xxxxxx, Vice President of
Human Resources of the Company.
(d) Stock Options. As of the date hereof, Executive holds the options
set forth on the table below. Notwithstanding any vesting schedules
applicable to such options, all such options shall be fully vested. In
addition, notwithstanding termination of Executive's employment with the
Company, the Company represents and agrees that the termination dates of
these options shall be extended, as reflected on the table below, subject to
the change of control provisions in the applicable stock option plan under
which the stock options were granted.
Options Option Exercise Current Expiration Early New
Outstanding Price Date Termination Termination
Date Date
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30,000 $4.0000 12/31/2000 12/31/2000 12/31/2000
60,000 $5.2500 8/24/2002 8/24/2002 8/24/2002
5,000 $9.2500 12/27/2002 12/27/2002 12/27/2002
20,000 $4.3750 3/22/2004 3/22/2004 3/22/2004
200,000 $5.4375 9/21/2007 9/21/2007 9/21/2007
10,000 $5.8750 2/20/2001 12/23/1999 2/20/2001
33,334 $3.0000 12/10/2004 3/23/2000 9/22/2001
40,000 $7.6875 10/5/2006 3/23/2000 9/22/2001
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(e) Computer Equipment. Executive may retain, and the Company hereby
conveys all right and title to Executive, for the laptop computer at his home
and the Palm Pilot previously provided to him by the Company.
(f) Subscription. Company shall maintain Executive's Wall Street
Journal subscription on his behalf through the end of the subscription
period. Company shall arrange for delivery of this subscription to
Executive's home address.
(g) Voice Mail, Email, Cell Phone and Card Access. Xxxxxxx Xxxxxxx,
General Counsel to the Company, will screen Executive's email and forward to
him any personal messages through the end of 1999. In addition, the Company
will maintain an active voice mail for Executive through the end of 1999.
Executive may retain, and the Company hereby conveys all right and title to
the cellular phone provided to Executive by Company, and Company agrees to
reimburse Executive for all termination or early cancellation charges
incurred by Executive as a result of any change to or cancellation of the
AT&T cellular plan in which the Executive is currently subscribed. Executive
shall retain his office keys and Executive's card access to the building will
be maintained so that Executive can retrieve his personal belongings until
September 27, 1999.
(h) Outplacement. Company will pay for Executive to receive six (6)
months of outplacement service, such outplacement service to be commensurate
with the type of position held by the Executive in the Company. Further,
Executive may extend the outplacement, at his option and at Company's
expense, on a month to month basis for an additional three (3) months and for
such further time as may be mutually agreed to (Company's agreement not to be
unreasonably withheld).
(h) Miscellaneous Benefits. (i) Executive's (but not Company's)
contributions to the 401(k) Savings Plan will continue if Company is
permitted to do so by law and under the terms of the Plan. Otherwise,
Executives payroll deductions will cease effective September 23, 1999.
(ii) If Executive is a participant in Flexible Reimbursement Account,
he has the option to continue participation in the plan through deductions
from salary continuation or cancel his deductions effective September 23,
1999. If Executive wishes to cancel this deduction, he should complete a
Flexible Reimbursement Account change form and return to Xx. Xxxxxx, Vice
President of Human Resources to effect this change.
(iii) Executives life and disability insurance shall terminate on
September 23, 1999. Executive should contact Xx. Xxxxxx for information about
converting insurance policies to an individual policy.
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(iv) Executive may be eligible to file for unemployment benefits
immediately. Executive's salary continuance and vacation day pay should not
reduce the unemployment compensation. There is a one week waiting period for
eligibility. Executive should contact his state unemployment office and sign
up as soon as possible.
5. Confidentiality.
(a) Executive agrees that he will not disclose or use for his direct
or indirect benefit or the direct or indirect benefit of any third party, any
Confidential Information (as hereinafter defined) of the Company. In general,
"Confidential Information" means any and all confidential or confidential and
proprietary information of the Company, whether any information relating to
computer codes or instructions (including source and object code listings,
logic algorithms, subroutines, modules or other subparts of computer programs
and related documentation, including program notation); computer processing
systems and techniques; layouts; flowcharts; specifications; know-how; any
associated user or other manuals or other like textual materials (including
any other data and materials used in performing Executive's duties); all
computer inputs and outputs (regardless of the media on which stored or
located); hardware and software configurations; designs; interfaces;
research; processes; inventions; products; methods; marketing sales and
distribution data, methods, plans and efforts; the Company's relationship
with actual and prospective customers, contractors and suppliers; sales,
business, alliance and strategic plans; alliance agreements; license
agreements; budgets; any other materials prepared by Executive or other
employees in the course of, relating to or arising out of their employment,
or prepared by any other contractor for the Company or its customers. For
purposes hereof, the term "Confidential Information" shall not include
materials or information that (i) were possessed by Executive before his
employment by the Company, (ii) have been disclosed or made available to the
general public by the Company or by a third party who is not bound by a
confidentiality agreement with the Company and who is not otherwise
prohibited from disclosing the materials or information to the general
public, or (iii) are generally available or known within the Company's
industry.
(b) Executive agrees that he will, effective the date of his
employment termination: (i) discontinue all use of Confidential Information;
(ii) return to the Company all material furnished by the Company that
contains Confidential Information; (iii) erase or destroy any Confidential
Information contained in computer memory or data storage apparatus under the
ownership or control of Executive; and (iv) remove Confidential Information
from any software under the ownership or control of Executive that
incorporates or uses Confidential Information in whole or in part.
(c) Executive agrees to return to the Company on the effective date
of his employment termination, any documents, records, notebooks, files,
correspondence, reports, memorandum, personal property owned by the Company,
or any other documents and material containing Confidential Information.
Executive represents that he has returned all door and file
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keys, card key passes, computer access cards, software, credit cards
and other physical property of any kind owned by the Company that Executive
received in connection with his employment, except as otherwise provided by
4(e) and 4(g) herein. Executive further agrees that he will not make, retain,
remove or distribute any copies of any of the foregoing.
6. Confidentiality of Terms. Executive agrees that the terms of this
Agreement shall remain completely confidential, and he will not hereafter
disclose any information concerning this Agreement to anyone except: (a) his
spouse and family; (b) his personal attorneys, if any; (c) his personal
financial and/or tax advisors; (d) taxing authorities; (e) as may be
appropriate to prosecute or defend legal proceedings to enforce this
Agreement; and (f) as otherwise may be required by law or court order.
Executive further understands that such information may be disclosed to the
aforementioned individuals only on the condition that such individuals in
turn agree to keep such information completely confidential, and not disclose
it to others, except as may otherwise be required by law or court order.
After his resignation and in response to any inquiries by employees of the
Company or third parties concerning any of the terms of this Agreement,
Executive agrees (i) to state only that he resigned his employment or to
state information publicly disclosed by the Company, whether in press
releases, public filings or otherwise, or (ii) if information publicly
disclosed by the Company, whether in press releases, public filings or
otherwise, concerning this Agreement is inaccurate in any material respect,
Executive may respond to the inquiry with accurate corrective information so
long as Executive has previously notified the Company of the material
inaccuracy and requested the Company to issue a corrective disclosure and the
Company has failed to issue such a corrective disclosure within five days of
Executive's notification and request. Nothing herein shall prohibit Executive
from disclosing to third parties the provisions of Sections 5 and 6 of this
Agreement.
7. Nondisparagement. Neither Executive nor the Company will make to
any person outside the employment of that party any tortiously defamatory or
disparaging statement with regard to the other party or the other party's
business.
8. Waiver and Release of Claims. (a) In consideration of the
foregoing, except as set forth in Section 8(c) hereof, Executive completely
releases, relinquishes, waives and discharges the Company from all claims,
liabilities, demands and causes of action, known or unknown, filed or
contingent, which he may have or claim to have against the Company as of the
date of the signing of this Agreement arising out of or in any way related to
his employment with the Company or the termination of that employment.
Executive agrees that he has executed this Agreement and this release on his
own behalf, and also on behalf of his heirs, agents, representatives,
successors and assigns. This release includes, but is not limited to, a
release of any rights or claims he may have under:
(i) the Age Discrimination in Employment Act, which prohibits age
discrimination in employment;
(ii) Title VII of the Civil Rights Act of 1964, as amended by the
Civil Rights Act of 1991, which prohibits discrimination in employment based
on race, color, national
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origin, religion or sex;
(iii) the Americans with Disabilities Act which prohibits
discrimination on the basis of a covered disability;
(iv) the Employer Retirement and Income Security Act, which prohibits
discrimination on the basis of entitlement to certain benefits;
(v) any other federal, state or local laws or regulations prohibiting
employment discrimination;
(vi) breach of any express or implied contract claims;
(vii) wrongful termination or any other tort claims, including claims
for attorney's fees, whether based on common law, or otherwise.
(viii) all claims to acquire any other rights or entitlements of
stock, warrants, options, or other securities of the Company or any related
entity, other than pursuant to the exercise of stock options currently held
by Executive or acquired or to be acquired by Executive otherwise than from
the Company, subject to the limitations set out in Paragraph 4(d) of this
Agreement.
(b) In executing this Agreement and the general release contained in
this Section 8 above, Executive acknowledges the following:
(i) Executive has read all of the terms of this Agreement, and has
had an opportunity to discuss it with individuals of his own choice who are
not associated with the Company. Executive has been advised by the Company to
consult with an attorney of his own choosing.
(ii) Executive has been given the opportunity to take a period of at
least twenty-one (21) days within which to consider this Agreement. If
Executive chooses to sign this Agreement before that date, he has done so
knowingly and voluntarily.
(iii) Executive understands that he has the right to change his mind
and cancel this Agreement within seven (7) days following the date that he
signed it. This Agreement will not be effective until the end of this period,
without revocation.
(iv) Executive understands the terms of this Agreement, including the
fact that he has permanently and irrevocably severed his employment
relationship with the Company and that this Agreement releases forever the
Company from any legal action rising from his employment relationship and the
termination of his employment relationship with the Company. Executive signs
this Agreement of his own free will in exchange for the consideration
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to be given to him, as listed above, which he acknowledges as adequate and
satisfactory. Neither the Company, nor its agents, representatives or
employees, have made any representations to Executive concerning the terms of
effects for this Agreement, other than those contained in this Agreement.
Executive also acknowledges that the parties have complied with the
requirements of the Older Workers Benefit Protection Act of 1990.
(v) Executive understands, however, that by signing this release, he
does not waive rights to: (i) claims arising under any applicable worker's
compensation laws; (ii) any claims which the law states may not be waived;
and (iii) his vested rights under the regular employment benefit plans of the
Company, in effect as of the date this Agreement; (iv) his vested rights
under the Company's stock option plans and agreements; and (v) his rights to
obtain indemnification under the Company's Articles of Incorporation,
By-laws, and applicable Pennsylvania law.
(b) In consideration of the foregoing, except as set forth in Section
8(c) hereof, the Company in turn completely releases, relinquishes, waives
and discharges Executive and Executive's agents, representatives and heirs
from all claims, liabilities, demands and causes of action, known or unknown,
filed or contingent, which it may have or claim to have against Executive as
of the date of the signing of this Agreement arising out of or in any way
related to Executive's employment or directorship with the Company or the
termination of that employment or directorship. The Company agrees that it
has executed this Agreement and this release on its own behalf, and on behalf
of its subsidiaries, successors and assigns.
(c) Executive and the Company specifically acknowledge and hereby
agree that the provisions of this general release extend to all of the
aforementioned actions, whether presently matured or not matured, known or
unknown, suspected or unsuspected by Executive and by the Company, and
further agree that this constitutes an essential, material term of this
Agreement. Notwithstanding the foregoing, Executive and the Company expressly
agree that the releases set forth in this Section 8 shall not apply to any
and all suits, causes of action, claims, demands, charges, complaints,
obligations or any actions of any sort whatsoever, whether in law or equity,
directly or indirectly, relating to or in any way arising out of any aspect
of this Agreement and any other agreements and instruments related to the
transactions contemplated herein.
9. No Admission. This Agreement shall not in any way be construed as
an admission by either Executive or the Company that either has acted
wrongfully with respect to the other party or that any action taken by
Executive or the Company with respect to the other at any time prior to the
execution of this Agreement has been unwarranted, unjustified,
discriminatory, or otherwise unlawful. Rather, it is understood and agreed
that this Agreement constitutes a good faith settlement of any and all claims
between the parties, and, except as set forth in Section 8(c) hereof,
Executive and the Company hereby specifically disclaim any liability to or
wrongful acts against the other party on the part of itself, its directors,
officers, employees, agents and/or other representatives including legal
counsel of any kind.
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10. Indemnification. To the extent permitted by law, the Company
agrees to defend, indemnify and hold Executive harmless against any
threatened or pending actions or proceedings, whether brought by a third
party or as a derivative action, by reason of the fact that Executive was an
officer or representative of the Company acting within the scope of his
employment.
11. Cooperation. (a) Executive agrees to cooperate and provide
assistance to Company as reasonably necessary in connection with his
resignation and the change-over resulting therefrom.
(b) Executive understands that he will not in the future voluntarily
assist any individual or entity in preparing, commencing or prosecuting any
action or proceeding against the Company, its directors, officers, employees,
or affiliates, including but not limited to, any administrative agency
claims, charges or complaints and/or lawsuits against the Company, its
directors, officers, employees or affiliates, or to voluntarily participate
or cooperate in any such action or proceeding, except as such waiver is
specifically prohibited by statute. Executive also agrees that he will
cooperate with and assist (including by testifying if requested by the
Company) the Company in its defense of any such action or proceeding, as well
as any other actions or proceedings currently pending or threatened against
the Company or hereafter initiated against the Company. In this regard,
Company shall reimburse Executive for lost work time. In addition, assist
time (other than time spent testifying) shall not exceed one and one-half
(1-1/2) days for each day of anticipated testimony time. This Agreement shall
not preclude Executive from testifying in such an action or proceeding if he
is compelled to do so pursuant to a subpoena or other court order. However,
Executive expressly agrees that he will provide written notice addressed to
the attention of Xxxxxxx Xxxxxxx, Senior Vice President, General Counsel &
Secretary, InterDigital Communications Corporation, 000 Xxxxx Xxxxxx, Xxxx xx
Xxxxxxx, Xxxxxxxxxxxx 00000-0000 (Fax No. 000-000-0000) if he should receive,
by service or otherwise, a notice, subpoena or other court order or any other
written request seeking or requiring him to testify or otherwise participate
in or assist in any action or proceeding against the Company, such notice to
be so provided within twenty-four (24) hours of Executive becoming personally
aware of the delivery to Executive or anyone acting on his behalf of such
notice, subpoena, order or request.
12. Entire Agreement. This Agreement constitutes the entire
understanding between Executive and the Company and supersede all other
agreements, whether written or oral, with respect to the transactions
contemplated herein. This Agreement may not be amended or modified by either
party unless such amendment or modification is memorialized in a writing
signed by each of the parties hereto.
13. Waiver. Any waiver by either party of any breach of any term or
condition of this Agreement shall not operate as a waiver of any other breach
of such term or condition or of any other term or condition, nor shall any
failure to enforce any provision hereof operate as a waiver of such provision
or of any other provision hereof or constitute or be deemed a waiver or
release of any other rights, in law or in equity.
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14. Governing Law. All issues concerning this Agreement will be
governed by and construed in accordance with the laws of the Commonwealth of
Pennsylvania, without giving effect to any choice of law or conflict of law
provision or rule (whether of the Commonwealth of Pennsylvania or any other
jurisdiction) that would cause the application of the law of any jurisdiction
other than the Commonwealth of Pennsylvania. The parties hereto agree that
any action to enforce this Agreement may be properly brought in any court
within the Commonwealth of Pennsylvania or in the United States District
Court for the Eastern District of Pennsylvania, and the parties hereto agree
that the courts of the Commonwealth of Pennsylvania and the United States
District Court for the Eastern District of Pennsylvania shall have
jurisdiction with respect to the subject matter hereof and the person of the
parties hereto.
15. Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in
any jurisdiction, such invalidity, illegality or unenforceability will not
affect any other provision or the effectiveness or validity of any provision
in any other jurisdiction, and this Agreement will be reformed, construed and
enforced in such jurisdiction as if such invalid, illegal or unenforceable
provision had never been contained herein.
16. Further Assurances. From time to time after the execution of this
Agreement, each of the parties hereto hereby agrees to use all reasonable
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper and advisable under applicable laws, rules
and regulations to consummate and make effective the transactions
contemplated by this Agreement, including using its best efforts to obtain
all necessary waivers, consents and approvals. In case at any time after the
execution of this Agreement further action is necessary or desirable to carry
out the purposes of this Agreement, the proper officers and directors of each
of the parties shall take all such necessary action.
17. Assignment. This Agreement may not be assigned by Executive or
the Company without the express written consent of the other; except, that
this Agreement may be assigned by the Company to the purchaser of substantially
all of the Company's assets or by operation of law (including, without
limitation, pursuant to a merger or consolidation of the Company) without
consent.
18. Enforcement. All remedies at law and equity shall be available
for the enforcement of this Agreement.
19. Opportunity to Review and Right to Revoke. Executive hereby
acknowledges that he is acting of his own free will, that he has been
afforded a reasonable time to read and review the terms of this Agreement,
that he has had an opportunity to seek the advice of counsel and that he is
voluntarily entering into this Agreement with full knowledge of its
respective provisions and effects.
20. Contractual Effect. The parties understand and acknowledge that the
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terms of this Agreement are contractual and not a mere recital. Consequently,
they expressly consent that this Agreement shall be given full force and effect
according to each and all of its express terms and provisions, and that it
shall be binding upon the respective parties as well as their heirs, executors,
successors, administrators and assigns.
21. Tax Withholding. Executive and the Company acknowledge and agree that
the Company will withhold all applicable withholding taxes as required in
accordance with applicable law in respect of amounts being paid or otherwise
provided by the Company to Executive hereunder.
IN WITNESS WHEREOF, Executive and the Company each acknowledge that they
are acting of their own free will, that they have had a sufficient opportunity
to read and review the terms of this Agreement, they have each received the
advice of their respective counsel with respect hereto, and that they have
voluntarily caused the execution of this Agreement and by reference herein as of
the day and year set forth below.
Witness:
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XXXXXXX X. XXXXX
Date:
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INTERDIGITAL COMMUNICATIONS CORPORATION:
By: Attest:
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Title:
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Date:
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