EXHIBIT 10.63
InterDigital
Long-Term Compensation Program
Terms and Conditions
The Company implemented the Long-Term Compensation Program (the “Program”) to
encourage management and executive level employees to exercise their best
efforts toward ensuring the success of the Company. All regular full-time and
regular part-time employees (as defined in the Employee Handbook), at or above a
manager or technical equivalent level, are eligible to participate in the
Program.
Compensation Components. As further described below, the Program consists of two
compensation components: (1) a Long-Term Incentive providing performance-based
cash bonuses (the “LTI”), and (2) an award of restricted stock units (“RSUs”).
The LTI component of the Program rewards grantees based on the Company’s
achievement of performance goals established/approved by the Compensation
Committee of the Board of Directors.
The RSU awards provide recipients with an opportunity to share in the growth of
the Company’s value in the marketplace and rewards participants based on the
achievement of performance goals established by the Compensation Committee. An
RSU is a contractual right to receive a share(s) of InterDigital Common Stock
after completion of a specified time period and, in the case of the
performance-based RSUs, the achievement of certain goals within a specified
period.
Program Cycle. The Program consists of overlapping RSU and LTI cycles, each of
which are generally three years in length and recur every other year (a “Program
cycle”).
LTI Cash Bonuses. Each participant’s LTI cash bonus target is established as a
percentage of the participant’s annual base salary. Any payout under the LTI is
determined by the Compensation Committee based on the Company’s achievement of
certain performance goals, as established at the start of each Program cycle and
measured at the end of each Program cycle. The cash LTI payout may exceed or be
less than the targeted amount, depending on the level of achievement of the
performance goals. No payout may be made if the Company fails to meet the
minimum performance criteria established for the goals during the Program cycle.
To be eligible for a cash payout, an employee must remain continuously employed
by the Company (or an Affiliate of the Company) through the end of the Program
cycle and must continue to be employed at least until the time the LTI payout is
made. For purposes of this Program, an Affiliate means any other individual,
corporation, partnership, association, trust or other entity that, directly or
indirectly, is in control of or is controlled by or is under common control with
the Company. Payout of the LTI cash bonus will be made no later than March 15 of
the year following the end of each Program cycle.
For executive level participants, the Compensation Committee may, in its
discretion, pay up to 100% of the LTI in restricted common stock pursuant to the
2009 Stock Incentive Plan, as amended (the “Plan”). If restricted common stock
is to be paid in lieu of cash, the number of shares to be granted will be
calculated as follows:

          Number of Shares =  
Up to 100% of Bonus
 
       
Closing Common Stock Price on the
       
Date Prior to the Grant as Reported in
       
the Wall Street Journal
   

The stock will be registered. The Company will not impose any other material
restrictions (other than those set out in the Plan or required by law) or
forfeiture provisions, including no forfeiture provisions applicable to
termination of employment.
RSU Terms. For all non-executives, 25% of the total equity award will be in the
form of performance based RSUs (“performance shares”) and 75% will be in the
form of time-based RSUs. For all executive level participants, 50% of the total
equity award will be in the form of performance shares and 50% will be in the
form of time-based RSUs. Participants will receive an RSU Award Agreement
setting forth the terms of each RSU grant along with a copy of the prospectus
for the Plan. In the event of any conflict between this summary and the RSU
award agreement, the RSU award agreement will govern.
Time-based RSU awards
For all non-executives, the time-based RSUs granted in connection with each
three-year Program cycle will vest in equal increments on each successive
January 1 over the three-year period. For example, RSUs granted at the beginning
of the Program cycle that began in January 2009

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will vest as follows: 25% (one-third) of the total time-vested RSUs on
January 1, 2010, 25% on January 1, 2011 and 25% on January 1, 2012. For all
executive level participants, the time-based RSUs granted in connection with
each Program cycle will vest 100% at the end of each Program cycle. Settlement
for time-vested RSUs will occur on the first business day following the
applicable vest date.
Performance based RSU awards
For all Program participants, the performance shares will vest following the end
of the three-year Program cycle in conjunction with a determination by the
Compensation Committee that at least minimum level of performance was achieved
relative to the performance goals associated with that cycle. Settlement will
occur for any such performance based RSUs as soon as practicable following
vesting as described above, but in no event later than March 15 of the year in
which the relevant cycle ends. To be entitled to the shares underlying the
performance based RSUs, the participant must remain employed through the end of
the Program cycle and also through the date settlement occurs, based on the
Compensation Committee’s determination that at least a minimum level of
performance was achieved.
New Program Participants. An employee promoted to a level which qualifies for
participation in the Program for the first time or an employee that is newly
hired within the first two years of a three-year Program cycle, will be eligible
to receive a pro-rata LTI cash bonus and RSU award. The pro-rata target LTI cash
bonus and RSU award will be determined based on the amount of time (number of
pay periods) remaining in each cycle. For example, a non-executive employee
hired October 1st of the first year of a three year Program cycle, would be
eligible to receive 3/12 of that year’s Program eligibility plus full-year
eligibility for the second and third years of the Program cycle. The LTI
(cash) and RSU awards will be paid out and vest respectively, as described under
the sections entitled “LTI Cash Bonuses” and “RSU Terms.”
Promotion during Program Cycle. If an employee is promoted within the first six
months of the start of a Program cycle and such promotion results in an
accompanying increase in the Program payout target (LTI target and RSU award),
the benefit of the Program target increase will be realized retroactive to the
beginning of such Program cycle. If an employee is promoted at any other time
during a Program cycle and such promotion results in an accompanying increase in
the Program payout target (LTI target and RSU award), the benefit of the Program
target increase will be realized at the beginning of the next applicable Program
cycle unless the Compensation Committee, in its sole discretion, authorizes an
adjustment at a different time.
Effect of Termination of Employment. In general, any benefits from the Program
are forfeited upon termination of employment by the participant (i.e., the
participant voluntarily resigns from employment). Benefits may be vested to some
degree, as explained below, where the participant’s employment terminates due to
his or her death, “disability,” “retirement,” or as a result of the termination
of employment by the Company other than for “cause” (each as defined below).
Partial vesting of time-based RSUs: If a participant’s employment terminates
during a year due to death, disability, or retirement, or is terminated by the
Company without cause, time-based RSUs that would have become vested at the end
of that year become vested on a pro-rata basis based on the portion of the year
the participant was employed. Time-based RSUs that would have become vested at
the end of subsequent years are forfeited entirely. The settlement of a
participant’s time-based RSUs that become vested as described above will occur
as soon as administratively practical after termination of employment.
Partial vesting of performance based RSUs and LTI Cash Bonus: If a participant’s
employment terminates for any reason during the first year of a three year
Program cycle, the participant forfeits eligibility to receive any LTI cash
bonus and all performance based RSUs associated with that Program cycle. If,
however, during the second or third year of a Program cycle, a participant’s
employment with the Company terminates due to his or her death, disability, or
retirement, or is terminated by the Company without cause, the participant will
be eligible to earn a pro-rata portion of the LTI cash bonus and
performance-based RSUs. The pro-rata portion will be determined by multiplying
both the amount of the LTI cash bonus and the number of performance based RSUs
awarded under the Program by a fraction equal to the portion of the Program
cycle that has transpired prior to the cessation of employment over the entire
Program cycle. The conditions for vesting of both the performance based RSUs and
the LTI cash bonus in such event will be the same as set forth above except with
respect to the condition of continuous employment. Any pro-rata cash payment or
vesting of performance based RSUs will be made to the employee (or, if
applicable, the employee’s estate) at the same time the cash bonus payments and
settlement of the RSUs would have taken place if the participant had remained
employed, as described above.
NOTE: To the extent an LTI payment or settlement of performance based RSUs is
determined to be a form of nonqualified deferred compensation subject to
Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”),
payment may be delayed to a date that is at least six months following the
participant’s termination of employment to the extent it is determined to be
necessary to avoid the detrimental tax treatment applicable to deferred
compensation benefits that are not fully compliant with the distribution rules
of Code Section 409A. This will only be applicable to participants who are
determined to be “specified employees” as that term is defined for purposes of
Code Section 409A.
For purposes of the Program:
*      “cause” means: (a) willful and repeated failure of an employee to perform
substantially his or her duties (other than any such failure resulting from
incapacity due to physical or mental illness); (b) an employee’s conviction of,
or plea of guilty or nolo contendere to, a felony which is materially and
demonstrably injurious to the Company or an Affiliate; (c) willful misconduct or
gross negligence by an employee in connection with his or her employment; or
(d) an employee’s breach of any material obligation or duty owed to the Company
or an Affiliate.

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*      “disability” means: (a) a disability entitling the employee to long-term
disability benefits under the applicable long-term disability plan of the
Company (or an Affiliate if employee is employed by such Affiliate); or (b) if
the employee is not covered by such a plan, a physical or mental condition or
illness that renders the employee incapable of performing his or her duties for
a total of 180 days or more during any consecutive 12-month period.
*      “retirement” means resignation after attaining a combination of age plus
years of service at the Company (and Affiliates) equal to 70.
Effect of a Terminating Event. If a Terminating Event (meaning either a Change
of Control, as defined below, or a liquidation of the Company) occurs during a
Program cycle and while an employee is actively employed by the Company, then:
*      immediately prior to (but contingent on the occurrence of) that
Terminating Event, all time-based RSUs will become fully vested and a
distribution of InterDigital shares with respect to those RSUs will be made;
*      at the same time, performance-based RSUs will become fully vested to an
extent that is equal to the greater of (i) the portion of the employee’s
performance-based RSUs that would become vested at the target level, or (ii) the
level of performance achieved at the time of the Terminating Event; and
*      an early payment of the employee’s LTI cash bonus will be made in an
amount equal to the greater of (i) the employee’s target LTI cash bonus, or
(ii) the level of performance achieved at the time of the Terminating Event.
Payment of this amount will be made not later than 30 days after the Terminating
Event.

  For purposes of the Program:

  •   “Change of Control” means the first to occur of any of the following
events:         (a) Any “person,” as such term is used in Section 13(d) and
14(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) (other than
the Company, any trustee or other fiduciary holding securities under an employee
benefit plan of the Company, or any company owned, directly or indirectly, by
the shareholders of the Company in substantially the same proportions as their
ownership of stock of the Company), acquires voting securities of the Company
and immediately thereafter is a “50% Beneficial Owner.” For purposes of this
provision, a “50% Beneficial Owner” shall mean a person who is the “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 50% or more of the
combined voting power of the Company’s then-outstanding voting securities;      
  (b) During any period of two consecutive years commencing on or after the
Effective Date, individuals who at the beginning of such period constitute the
Board, and any new director (other than a director designated by a person (as
defined above) who has entered into an agreement with the Company to effect a
transaction described in subsections (a), (c), (d) or (e) of this definition)
whose election by the Board or nomination for election by the Company’s
shareholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so approved
(the “Continuing Directors”) cease for any reason to constitute at least a
majority thereof;         (c) The shareholders of the Company have approved a
merger, consolidation, recapitalization, or reorganization of the Company, or a
reverse stock split of any class of voting securities of the Company, or the
consummation of any such transaction if shareholder approval is not obtained,
other than any such transaction which would result in at least 50% of the
combined voting power of the voting securities of the Company or the surviving
entity outstanding immediately after such transaction being beneficially owned
by the persons who were shareholders of the Company immediately prior to the
transaction in substantially the same proportion as their ownership of the
voting power immediately prior to the transaction; provided that, for purposes
of this Section 3.7(c), such continuity of ownership (and preservation of
relative voting power) shall be deemed to be satisfied if the failure to meet
such 50% threshold (or to substantially preserve such relative ownership of the
voting securities) is due solely to the acquisition of voting securities by an
employee benefit plan of the Company, such surviving entity or a subsidiary
thereof; and provided further, that, if consummation of the corporate
transaction referred to in this Section 3.7(c) is subject, at the time of such
approval by shareholders, to the consent of any government or governmental
agency or approval of the shareholders of another entity or other material
contingency, no Change in Control shall occur until such time as such consent
and approval has been obtained and any other material contingency has been
satisfied;         (d) The shareholders of the Company accept shares in a share
exchange in which 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 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;

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      (e) The shareholders of the Company have approved a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company’s assets (or any transaction
having a similar effect); provided that, if consummation of the transaction
referred to in this Section 3.7(e) is subject, at the time of such approval by
shareholders, to the consent of any government or governmental agency or
approval of the shareholders of another entity or other material contingency, no
Change in Control shall occur until such time as such consent and approval has
been obtained and any other material contingency has been satisfied; and        
(f) Any other event which the Board determines shall constitute a Change in
Control for purposes of this Plan.

Taxation of Awards. The following is a brief description of the federal income
and employment tax treatment of Program awards. The rules governing these awards
are complex and their application may vary depending upon individual
circumstances. Moreover, statutory and regulatory provisions and their
interpretations are subject to change. Employees are, therefore, encouraged to
consult with a personal tax advisor regarding the tax consequences of
participation in the Program.
For federal income and employment tax purposes, the full amount of any LTI cash
bonus or payment of restricted common stock in lieu of cash will be taxable at
the time the cash or stock is paid, and will be subject to applicable income and
wage tax withholding requirements.
For federal income tax purposes, the value of shares distributed in respect of
RSUs will be recognized as ordinary income at the time the shares are
distributed based on the value of those shares at that time. If LTI payment or
settlement of RSUs is delayed (e.g., in the case of later payments for certain
mid-Program cycle employment terminations), the value of the shares subject to
RSUs may be taxed at the time the RSUs vest, based on the value of those shares
at that time. Further information regarding the taxation of RSUs is contained in
the Plan prospectus.
Future Program Cycles. While the Company reserves the right to alter or
discontinue the Program at any time, its present intent is to continue the
Program for future cycles. The Company expects future Program cycles to include
both an LTI component and an RSU component. If an employee is eligible to
participate in a future Program cycle, additional information will be
distributed at the start of that cycle.
Administration. The Program is administered by the Compensation Committee. The
Compensation Committee has the right to terminate or amend the Program and its
components at any time for any reason. The Compensation Committee also has the
authority to select employees to receive awards, to create, amend and rescind
rules regarding the operation of the Program, to determine whether LTI and/or
performance share goals have been achieved, to reconcile inconsistencies, to
supply omissions and to otherwise make all determinations necessary or desirable
for the operation of the Program. The Compensation Committee may delegate the
authority to amend the Program to one or more officers of the Company, provided,
however, that any amendment of the Program that is a “material amendment” (as
determined pursuant to NASDAQ Stock Market Rule 5635(c) and the interpretive
material thereunder) must be approved by the Compensation Committee or by a
majority of the Company’s independent directors, as defined for purposes of such
rule.
Election to Defer Settlement of RSUs. Participants who are eligible to defer
settlement of their RSUs must make such election in the calendar year preceding
the date of grant of the RSUs to be deferred. All determinations regarding
eligibility to defer settlement of RSUs shall be made by the Company, in its
sole discretion. Where deferral of settlement of RSUs is linked to payment
following termination of employment of the participant, settlement of the RSUs
may be delayed until at least six months following the participant’s termination
of employment if that is necessary to avoid tax penalties under Code
Section 409A. This will only be applicable to participants who are determined to
be “specified employees” as defined for purposes of Code Section 409A.
No Assignment. An employee may not assign, pledge or otherwise transfer any
right relating to a cash or RSU award under the Program and any attempt to do so
will be void.
No Right to Continued Employment. Participation in the Program does not give any
employee any right to continue in employment or limit in any way the right of
the Company to terminate employment at any time, for any reason.
Questions. Please contact Gary Isaacs, Chief Administrative Officer, at
610-878-5721 with any questions regarding the Program.
December 2009

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