Document:

exv10w1

Exhibit 10.1

InterDigital

Long-Term Compensation Program

The Long-Term Compensation Program (the “Program”) of InterDigital (the “Company”) is designed to
encourage 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 Company’s Employee Handbook)
are eligible to participate in one or more components of the Program, based on their level within
the organization.

Program Participation Levels and Payout Targets. Each participant’s level of participation in the
Program is established as a target percentage of their annual base salary, based on their level
within the organization pursuant to the chart set forth below:

	 	 	 
	Organizational Level	 	Target Payout (% of Annual Base Salary)
	Chief Executive Officer
	 	120%
	Chief Financial Officer; President, Patent Licensing
	 	100%
	Other Executive
	 	80-90%*
	Vice President (or functional equivalent)
	 	50%
	Senior Director (or functional equivalent)
	 	45%
	Director (or functional equivalent)
	 	40%
	Senior Manager (or functional equivalent)
	 	35%
	Manager (or functional equivalent)
	 	30%
	Non-Manager (or functional equivalent):
	 	 
	Band 1
	 	9%
	Band 2
	 	7%
	Band 3
	 	5%

 

			
	*	 	Other Executives’ participation is 80% until they have completed three years in an
executive-level position, at which time it increases to 90%.

Compensation Components. The Program consists of two compensation components: (1) an Employee
Stock Ownership Plan (“ESOP”) consisting of awards of time-based restricted stock units and (2) a
Long-Term Incentive Plan (the “LTIP”) providing performance-based awards in the form of cash or
equity (or a combination thereof). For all Program participants at or below the
Non-Manager/functional equivalent level, 100% of their Program participation will be in the form of
time-based RSUs granted pursuant to the ESOP. For all Program participants at or above the
Manager/functional equivalent level, 25% of their total Program participation will be in the form
of time-based RSUs granted pursuant to the ESOP and 75% of their total Program participation will
be awarded pursuant to the LTIP.

Program Cycles. The Program consists of cycles (each a “Cycle”) that are each generally three
years in length, normally commencing on January 1st of each year.

Employee Stock Ownership Plan. The ESOP provides all Program participants with an opportunity to
share in the growth of the Company’s value in the marketplace and rewards participants based on the
performance of the Company’s stock over time through awards of time-based restricted stock units
(“RSUs”). A time-based RSU is a contractual right to receive a share of InterDigital common stock,
par value $0.01 per share, after completion of a specified time period. Pursuant to the ESOP, each
Program participant will receive an award of time-based RSUs on the first day of each Cycle, and
each such award shall generally have a three-year vesting period, with the vesting schedule to be
determined by the Compensation Committee (the “Compensation Committee”) of the Board of Directors
of the Company in its sole discretion. The default vesting schedule will provide for the
time-based RSUs to vest at the end of the three-year Cycle. Each time-based RSU recipient will
receive an award agreement setting

 

 

forth the terms and conditions of each RSU grant. In the event of any conflict between these
Program terms and conditions and an RSU award agreement, the RSU award agreement will govern.

Long-Term Incentive Plan. The Long-Term Incentive Plan (the “LTIP”) provides Program participants
at or above the Manager/functional equivalent level with performance-based awards that may be paid
out, as determined by the Compensation Committee, in its sole discretion, in the form of cash or
InterDigital common stock or stock options or any combination thereof. However, the “default”
allocation will be 25% cash and 75% stock. The allocation of the awards may be determined either
at the start or the end of each Cycle. Any payout under the LTIP is determined by the Compensation
Committee in its sole discretion based on the Company’s achievement of one or more performance
goals during the Cycle period, as established and approved by the Compensation Committee. Payouts
under the LTIP may exceed or be less than target, depending on the level of achievement of the
performance goal(s). Unless the Compensation Committee, in its sole discretion, authorizes an
exception, no payout may be made if the Company fails to achieve at least 80% of the performance
goal(s) for the applicable Cycle, and the Company’s achievement of the performance
goal(s) for any particular Cycle that exceeds the target is capped at 140%. Each 1-point variation
in performance achievement results in a 2.5-point variation in payout. Accordingly, the minimum
performance achievement that qualifies for a payout results in a payout amount equal to 50% of
target and the maximum payout performance achievement results in a payout amount of no more than
200% of target.

Payouts under the LTIP will be made no later than March 15th of the year following the
end of each Cycle.

New Program Participants. An employee that is newly hired within the first two years of a
three-year Cycle will be eligible to pro-rata participation in the current and any subsequent
Cycles, so long as they remain eligible. Participation in any ongoing Cycles will be determined
based on the amount of time (number of pay periods) remaining in each Cycle. For example, an
employee hired October 1st of the first year of a three-year 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 Cycle.

Promotion during Program Cycle. If an employee is promoted within the first six months of the
start of a LTCP Cycle and such promotion results in (i) an accompanying increase in his or her LTCP
participation target or (ii) his or her participation in the LTIP for the first time, the benefit
of the Program target increase or initial participation in the LTIP will be realized effective as of the date of the promotion for
the Cycle that began on January 1st of the promotion year. If an employee is promoted
at any other time during a Cycle, any change to their participation in the LTCP will be realized at
the beginning of the next applicable Cycle, unless the Compensation Committee, in its sole
discretion, authorizes an exception.

Effect of Termination of Employment. To be eligible for a payout, a Program participant must
remain continuously employed by the Company or an Affiliate (as defined below) through the end of
the Cycle and must continue to be employed at least until the time the Program 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. 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 Stock Ownership Program Awards. If a participant’s employment
terminates due to death, disability or retirement, or the participant’s employment with
InterDigital is terminated by the Company without cause, vesting of any time-based RSUs will occur
immediately and on a pro-rata basis based on the portion of the Stock Ownership Cycle during which
the participant was employed. The settlement of any time-based RSUs that become vested as
described above will occur as soon as administratively practical after termination of employment.

Partial Vesting of LTIP Award. If a participant’s employment terminates for any reason
during the first year of a Cycle and/or the participant’s total length of employment is less than
six (6) months, the participant forfeits eligibility to receive any payout associated with that
LTIP Cycle. If, however, during the second or third year of a Cycle, a participant’s employment
with the Company terminates due to his or her death, disability or retirement, or the participant
is terminated by the Company without cause, and the participant has been employed by the Company
for at least six (6) months, the participant will be eligible to earn a pro-rata portion of the
LTIP payout. The conditions for vesting of any performance-based RSUs granted pursuant to the LTIP
under such circumstances of employment termination will be the same as set forth above except with
respect to the condition of continuous

 

 

employment. Any pro-rata cash payout or shares vesting resulting from the LTIP cycle will be
delivered to the employee (or, if applicable, the employee’s estate) as soon as administratively
practicable after any payout would have taken place if the participant had remained employed, as
described above, but in any event no later than March 15 after the year of termination.

NOTE: To the extent any LTIP payout 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; (d) unsatisfactory job performance; or (e) an employee’s breach of any material
obligation or duty owed to the Company or an Affiliate.

* “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 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, any performance-based RSUs, if awarded as part of any LTIP, 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 LTIP will be made in an amount equal to the greater of
(i) the employee’s target LTIP, 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;

(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 cash-based LTIP payout will
be taxable at the time the cash 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 or any
share-based LTIP payout will be recognized as ordinary income at the time the shares are
distributed based on the value of those shares at that time. If LTIP payment or settlement of RSUs
is delayed (e.g., in the case of later payments for certain mid-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. If an employee is
eligible to participate in a future 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 set/approve
specific cycle goals, to determine whether LTIP 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 delegates the authority to
amend the Program to the Chief Executive Officer, Chief Financial Officer, Chief Administrative
Officer, General Counsel or one or more of these employees as part of a committee of employees
and/or directors 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 vest 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 any
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.

October 2010*

 

			
	*	 	Effective November 1, 2010, except with respect to the participants’ target payouts
(expressed as a percentage of annual base salary), which are effective January 1, 2011.exv10w2

Exhibit 10.2

InterDigital

Short-Term Incentive Plan

Purpose

This Short-Term Incentive Plan (this “Plan”) is designed to provide an effective means to motivate
and compensate eligible employees, on an annual basis, through cash and/or stock award bonuses
based on the achievement of business and individual performance objectives during each calendar
year (“Plan Year”). The Plan is intended to be the Company’s primary vehicle for the granting of
annual bonuses. However, the Company may, in certain limited circumstances, grant bonuses outside
of this Plan, in the sole discretion of the Company.

The compensation contemplated under this Plan is considered “pay for performance,” in that any
payout under the Plan is subject to the achievement of specific performance goals by the Company
and by each individual during the Plan Year. The Company believes that such compensation can be a
highly effective form of compensation that can enhance the employer-employee “stakeholder”
relationship. In addition, the Company hopes that by providing short-term incentive compensation,
the Company will motivate and increase the retention rate among its employees, which, in turn, will
enhance the Company’s long-term value.

Who Is Eligible?

All regular full-time or part-time employees1 will be eligible to receive a bonus payout
under the Plan, unless an employee: (i) is not working actively at the time of the payout of the
bonus or at least as of March 15th of the year following the end of the Plan Year (unless such
person was involuntarily terminated other than for intentional wrongdoing after the end of the Plan
Year, but before the bonus was paid), (ii) was working actively for the Company for less than
ninety (90) days during the Plan Year, (iii) is determined not to have performed minimally at a
“Meets Job Requirements” level during the Plan Year, or (iv) was involuntarily terminated for
unsatisfactory performance or misconduct, such determination to be made in the C.E.O.’s sole
discretion (or the Compensation Committee in the case of Section 16 Officers) based upon documented
or other objective substantiation.

The Compensation Committee may grant exceptions to the above eligibility criteria in its sole
discretion. The Chief Administrative Officer may grant exceptions to the above eligibility criteria
for non-executive employees who have worked through the end of the third quarter of a Plan Year,
provided, however, that any bonus so awarded may not exceed $25,000. In addition, employees who
meet the eligibility requirements set out above but were not regular full-time or part-time
employees for the full Plan Year will be paid any bonus on a pro rata basis.2 The pro
rata amount will be calculated based on the employee’s income, i.e., base salary / regular pay and
other eligible earned income, if applicable, paid during the Plan Year.

How Does the Plan Work?

Each employee is assigned a Plan target based on their level in the organization. The target bonus
is a percentage of the employee’s annual base salary in effect as of the end of the Plan Year.
Based on the Company’s or Department’s level of achievement of certain annual
corporate/departmental objectives and the employee’s individual contributions toward the
Company’s/Department’s goal achievement, the employee will receive the appropriate

 

			
	1	 	“Regular full-time” and “regular part-time”
employees are defined in the Company’s employee handbook and
specifically exclude “seasonal/casual employees” (which are also
defined in the Company’s employee handbook).
	 
	2	 	Employees who do not work a full Plan Year
because they were out of work on an approved leave of absence for part of the
plan year will be paid any bonus on a pro rata basis by calculating the bonus
based on the actual amount of eligible base income earned during the Plan Year.
If the Employee is paid for part of the leave through PTO or other eligible
accrued form of income (not including STD or worker’s compensation payments),
this income will be included in the base salary calculation.

 

 

payout under the Plan. Corporate annual goals and performance results will be approved and measured by the
Compensation Committee for the C.E.O., C.F.O., President of the Company’s patent holding
subsidiaries and other Senior Officers. Departmental annual goals and performance results will be
approved by each Department Head and the C.E.O. for all other employees. The corporate and
departmental goals will be communicated to employees, normally in the first quarter of each Plan Year.
The corporate and departmental performance goals are designed to be reasonable “stretch” goals.

Individual annual goals and performance results will be approved and measured by the Compensation
Committee for the C.E.O., by the C.E.O. for other Senior Officers and by each respective Department
Head for all other employees. The individual performance goals are designed to be reasonable
“stretch” goals.

The Plan target for each employee position band, and the associated weighting factors, are as
follows:

	 	 	 	 	 	 	 	 	 	 	 
	Band	 	 	 	Percentage of Bonus	 	 
	(In the event a Participant changes bands during the	 	 	 	Related to Business	 	Percentage of Annual
	Plan Year, the Annual Target	 	Annual Target	 	Performance	 	Target Bonus
	Bonus will be calculated based on the Participant’s	 	Bonus	 	(either Corporate	 	Related to Individual
	actual band at year-end)	 	(% of base salary)	 	or Departmental)	 	Performance
	C.E.O.

	 	80%
	 	 	75	%	 	 	25	%
	C.F.O. / President of patent holding subs

	 	55%
	 	 	75	%	 	 	25	%
	Other Senior Officer

	 	45%
	 	 	75	%	 	 	25	%
	Vice President (or functional equivalent)

	 	40%
	 	 	75	%	 	 	25	%
	Senior Director (or functional equivalent)

	 	30%
	 	 	75	%	 	 	25	%
	Director (or functional equivalent)

	 	25%
	 	 	75	%	 	 	25	%
	Senior Manager (or functional equivalent)

	 	20%
	 	 	75	%	 	 	25	%
	Manager (or functional equivalent)

	 	15%
	 	 	75	%	 	 	25	%
	Non-Manager

	 	9%/11%/13% 

(based on position 

band)
	 	 	75	%	 	 	25	%

In each Plan Year, the portion of the Plan target related to business performance may be allocated
among a number of corporate/departmental goals.

How Do Actual Business and Individual Performance Affect the Bonus to Be Paid?

As described above, the bonus payout consists of two components: the portion attributable to
corporate/departmental performance and the portion attributable to individual performance. If the
Company’s or a Department’s actual goal results and/or the employee’s individual performance for
the year exceed or fall short of the established targets, then the bonus payout will be adjusted up
or down relative to the level of overachievement or underachievement. The impact of actual results
as compared to corporate/departmental and individual goals on any bonus to be paid is described
below.

Corporate Goals. The calculation of the portion of the bonus payout associated with the
business performance will be based upon either the Company’s actual business results measured
against the goals set by the Compensation Committee (for the C.E.O., C.F.O, President of the
Company’s patent holding subsidiaries and other Sr. Officers) or the Department’s actual business
results measured against the goals set by the Department (for all other bands). If the Company or
Department achieves a specified goal, then 100% of the portion of the bonus related to that
business goal will be awarded. If actual results deviate from established business goals, then the
bonus payout amounts will be determined as follows.

 

 

Results above the goal: If the Company/Department performance exceeds an established
business goal by a certain percentage, then the payout of that portion of the annual target bonus
associated with that business goal will be increased by the same percentage point(s) representing
the overachievement (see below):

	 	 	 	 	 
	Results	 	Percentage Payout
	101%

	 	 	101	%
	   ò

	 	ò

	200%

	 	 	200	%

Results below the goal: If the Company/Department performance falls short of an established
goal by a certain percentage, then the payout of that portion of the annual target bonus associated
with that business goal will be decreased by the same percentage point(s) representing the
shortfall, with no bonus being payable for a particular goal if the result is less than 80% of the
target (see below):

	 	 	 	 	 
	 	 	Percentage
	Results	 	Payout
	100%

	 	 	100	%
	    ò

	 	ò

	80%

	 	 	80	%
	< 79%

	 	 	0	%

The Compensation Committee, in its sole discretion, may determine that a business goal has been
substantially met or has been met to a degree warranting a higher payout than would otherwise be
calculable under this Plan. For example, the Compensation Committee may determine that one-time
charges should be disregarded in determining the payout under an earnings performance goal.
Similarly, the C.E.O. in conjunction with the Department Head can determine that a departmental
goal has been substantially met to a degree warranting a higher payout than would otherwise be
calculable under this Plan.

Individual Performance. As described above, the evaluation of individual performance
portion of the bonus payout is the responsibility of the Department Head (with input from the
employee’s direct supervisor, as appropriate) based on the employee’s performance during the Plan
Year and their relative level of contributions to the Departmental goals.

When Will the Bonus Be Paid?

Bonuses will normally be paid under the Plan on or before March 15 of the year following each Plan
Year.

An Example of How the Bonus Is Calculated

     Assume an entry-level management employee is earning a base salary of $50,000 and is employed
for the full Plan Year. The employee has an annual target bonus of 15% of base salary ($7,500). The
Department established two goals of equal weight for the Plan Year. The actual results for the
first goal were 4% below the target; the actual results for the second goal were 2% above the
target. The Department Head determines the employee’s individual performance to be 95%. The
employee’s bonus would be calculated as follows:

	 	 	 	 	 	 	 	 	 
	 	 	A	 	 	 	 	 	 
	 	 	Percentage of	 	B	 	 	 	 
	 	 	Bonus Relating to	 	Result as a	 	C	 	 
	 	 	Performance	 	Percentage	 	Percentage	 	A x C
	Performance Factor	 	Factor	 	of Goal	 	Payout	 	Weighted Result
	Goal One
	 	40%	 	96%	 	96% 
 (1 to 1 ratio)	 	38.40% 
 (96% x 40%)
	Goal Two
	 	35%	 	102%	 	102% 
 (1 to 1 ratio)	 	35.70% 
 (102% x 35%)
	Individual Performance
	 	25%	 	95%	 	95%	 	23.75% 
 (25% x 95%)
	Total
	 	100%	 	N/A	 	N/A	 	97.85%
	Bonus Calculation	 	Base Salary x Weighted Result x Annual Target 
 Bonus = Bonus to be paid 
 $50,000 x 97.85% x 15% = $7,338.75

 

 

Who May Receive Bonus Payments in Common Stock?

For the C.E.O., C.F.O., President of the Company’s patent holding subsidiaries, other Senior
Officer and Vice President bands or functional equivalent positions, the Compensation Committee
may, in its discretion, pay up to 100% of the bonus in common or restricted stock pursuant to the
2009 Stock Incentive Plan, as amended. If common or restricted 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 2009 Stock Incentive Plan or required by law) or forfeiture provisions,
including no forfeiture provisions applicable to termination of employment.

Miscellaneous

The establishment of this Plan, any provisions of this Plan, and/or any action of the Compensation
Committee or any Company officer with respect to this Plan, does not confer upon any employee the
right to continued employment with the Company. The Company reserves the right to dismiss any
employee at will (at any time, with or without prior notice, with or without cause), or otherwise
deal with an employee to the same extent as though the Plan had not been adopted.

The Company may, at its discretion, provide for any federal, state or local income tax withholding
requirements and Social Security or other tax requirements applicable to the accrual of payment of
benefits under the Plan, and all such determinations shall be final and conclusive.

Payment of bonuses awarded under this Plan shall be made no later than March 15 of the year
following the Plan Year in which the services relating to such bonus award were rendered. The
resolution of any questions with respect to payments and entitlements pursuant to the provisions of
this Plan shall be determined by the Compensation Committee, in its sole discretion, and all such
determinations shall be final and conclusive.

This Plan may be terminated or revoked by the Compensation Committee, at its sole discretion, at
any time and amended by the Compensation Committee, at its sole discretion, from time to time
without the approval of any employee, provided that such action does not reduce the amount of any
Bonus payment below an amount equal to the amount that would have been payable to the eligible
employee with respect to the Plan Year in which the termination, revocation or amendment of the
Plan occurs under the terms of the Plan as in effect immediately prior to such termination,
revocation or amendment, applied on a pro rata basis.

October 2010 (effective beginning 2011 Plan Year)

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