INTERDIGITAL COMMUNICATIONS CORP
EMPLOYMENT AGREEMENT
<DOCUMENT>
<TYPE>EX-10.26
<SEQUENCE>2
<FILENAME>0002.txt
<DESCRIPTION>EMPLOYMENT AGREEMENT
<TEXT>


                              EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT is made as of this 17th day of April, 2000, by
and between MARK GERCENSTEIN, (the "Employee"), and InterDigital Communications
Corporation, a corporation organized and existing under the laws of the
Commonwealth of Pennsylvania (the "Company").

     WHEREAS, the Company is engaged in the business of development and
marketing digital wireless telecommunications technologies and components
technologies for advanced wireless applications, including voice and high data
rate applications, and the licensing of wireless digital telephone technology
and patents, as such business may be redefined from time to time and described
as such in the Company's then current Annual Report on Form 10-K (the
"Business").

     WHEREAS, the Company has offered Employee employment as the Chief Executive
Officer of the Company and an appointment to the Company's Board of Directors,
and Employee is willing to accept such offer, as set forth in this Agreement.

     NOW, THEREFORE, in consideration of the mutual covenants and obligations
contained herein, and intending to be legally bound, the parties, subject to the
terms and conditions set forth herein, agree as follows:

1. Employment and Term. The Company hereby employs Employee and Employee hereby
accepts employment with the Company, as Chief Executive Officer of the Company,
(such position, Employee's "Position") for a period commencing on April 17, 2000
and continuing until employment hereunder is terminated pursuant to the
provisions of Section 10 hereof (the "Term").

2. Duties. During the term of his employment, Employee shall serve the Company
faithfully and to the best of his ability and shall devote his full time,
attention, skill and efforts to the performance of the duties required by or
appropriate for his Position. Employee agrees to assume such duties and
responsibilities as may be customarily incident to such position, and as may be
reasonably assigned to Employee from time to time by the Board of Directors of
the Company. Employee shall report to the Chairman of the Board and the Board of
Directors of the Company. Only the Board of Directors shall have the authority
to terminate Employee's employment.

3. Director Position. Executive shall be appointed a director of the Company
promptly after Executive's commencement of employment with the Company as CEO,
and shall be nominated for election as a director at the 2000 Annual Meeting of
the Company's Shareholders. Executive agrees that, without further action or
acknowledgment by Executive or the Company, his position as a director shall
terminate upon Executive's termination of employment as set forth in Section 10
hereto.

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4. Other Business Activities. During the Term, Employee will not, without the
prior written consent of the Company, directly or indirectly engage in any other
business activities or pursuits whatsoever, except activities in connection with
any charitable or civic activities, personal investments and serving as an
executor, trustee or in other similar fiduciary capacity; provided, however,
that such activities do not interfere with his performance of his
responsibilities and obligations pursuant to this Agreement.

5. Compensation.

     A) Base Salary. The Company shall pay Employee, and Employee hereby agrees
to accept, as compensation for all services rendered hereunder and for
Employee's covenant not to compete as provided for in Section 9 hereof, a base
salary at the annual rate of Three Hundred Fifty Thousand Dollars (subject to
any increase from time to time in accordance with Company compensation policies,
the "Base Salary"). The Base Salary shall be inclusive of all applicable income,
social security and other taxes and charges which are required by law to be
withheld by the Company or which are requested to be withheld by Employee, and
which shall be withheld and paid in accordance with the Company's normal payroll
practice for its similarly situated employees from time to time in effect.

     B) Annual Incentive Bonus. Employee shall be eligible to participate in the
Company's Employee Incentive Bonus Plan, as amended from time to time (the "
Bonus Plan"), on the terms and conditions no less favorable than those provided
to the other Company senior and executive officers. For the Year 2000, Executive
shall have a target bonus level of $100,000 under the Bonus Plan, based on the
achievement of business and personal goals to be set by the Board of Directors.
For the Year 2001 and thereafter, Executive shall have a target bonus of 57% of
Executive's Base Salary under the Bonus Plan. The goals shall be consistent with
the goals set for other senior and executive officers. For all years, the
Company may pay up to 30% of the actual bonus achieved in restricted stock or
restricted stock units, with the remainder to be paid in cash. The bonus shall
be subject to the terms of the Bonus Plan, as amended from time to time. The
restricted stock (or restricted stock units (RSUs)) (i) shall be subject to the
terms and conditions of the Company's applicable restricted stock plan, as
amended from time to time, (ii) shall vest upon grant but shall be subject to a
two year holding period, and (iii) shall be grossed-up for income tax purposes.

     C) Special Bonus. Executive shall be entitled to a special bonus of
$100,000 to be paid on or about December 31, 2000, provided that Executive is
still employed by the Company as of such date.

     D) Signing Bonus. Executive shall be paid a signing bonus of $100,000, such
amount to be paid no later than April 27, 2000. Such amount includes all
reimbursements for tax and financial planning assistance.

     E) Stock Options. No later than April 17, 2000, Executive will be granted
options to purchase 150,000 shares of the Company's common stock at an exercise
price equal to the closing market price on the American Stock Exchange of the
Company's common stock on the date of grant as reported in the Wall Street
Journal ("FMV"). Such options shall be granted

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pursuant to, and shall be governed by, the terms and conditions of the Company
stock option plans ("Option Plans") under which such options are granted.
Subject to such terms and conditions of the Option Plans, the stock options
shall vest as follows:

                     June 30, 2000              25,000 shares
                     December 31, 2000          25,000 shares
                     June 30, 2001              25,000 shares
                     December 31, 2001          25,000 shares
                     June 30, 2001              25,000 shares
                     December 31, 2001          25,000 shares

As part of such grant, Incentive Stock Options (ISO) will be used to the fullest
extent permitted by law, with the balance granted as Non-Qualified Options
(NQs). (For example, at $32 per share, 9,375 incentive stock options with
three-year step vesting (i.e., ISO rules limit face value to $100,000 vesting in
any year) and 140,625 non-qualified options will be granted). Executive will
also be eligible to receive future stock option grants from the Company on terms
and conditions no less favorable than the Company's other executive officers,
with the grant price of such additional options to be the FMV as of the grant
date.

     F) Restricted Stock Grant. Upon execution of this Agreement by Executive
and the Company, Executive will be granted 30,000 RSUs. Such RSUs (i) shall be
subject to the terms and conditions of the Company's 1999 Restricted Stock Plan,
as amended from time to time, and (ii) shall vest (in a single traunch) three
years after the grant date. Executive shall not be entitled to any gross-up,
loan or other payments for income tax liabilities associated with such grant.
Executive may elect to defer delivery of the RSUs for up to one year after the
scheduled vesting date. Notwithstanding the forgoing, if Executive is terminated
without "Cause" (as defined herein), Executive's RSUs shall be deemed to have
vested according to the following schedule but shall bear a three year
restriction on transfer:

                     June 30, 2000              5,000 shares
                     December 31, 2000          5,000 shares
                     June 30, 2001              5,000 shares
                     December 31, 2001          5,000 shares
                     June 30, 2001              5,000 shares
                     December 31, 2001          5,000 shares

6. Benefits and Expenses.

     A) Company Plan Participation. Employee and his dependants shall be
entitled to receive those employee benefits (including without limitation
medical plan, dental plan, optional 401K participation and expense
reimbursement) as shall be provided to similarly situated executive employees of
the Company ("Benefits"). In addition, prior to the time that Employee relocates
within a reasonable commuting distance to King of Prussia, Pennsylvania,
Employee shall be entitled to receive up to $3,250 as reimbursement for (i)
costs incurred relating to Executive's temporary residence located in the King
of Prussia, PA vicinity, and (ii) automobile expenses (including insurance). In
the event of Executive's relocation to the King of Prussia, PA

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vicinity, Executive will be eligible to receive an automobile allowance in an
amount to be agreed to but not less than $750 per month.

     B) Vacation. Employee will be entitled to four weeks vacation with the
ability to carry over any unused vacation earned in a given year to the
following year. Employee will require Board approval to he extent that Employee
desires to take vacation in excess of four weeks in any given year.

     C) Retirement Plans. A senior executive retirement plan is unavailable at
this time, but the Company is currently reviewing the feasibility of such an
arrangement with an outside compensation consultant. In the event that the
Company institutes such a plan, Employee shall be entitled to participate on
terms no less favorable than the Company's other senior executives.

     D) Parachute Payments. In the event any amount or benefit payable to the
Employee under this Agreement or under any other plan, agreement or arrangement
applicable to the Employee, is subject to an excise tax imposed under Section
4999 of the Internal Revenue Code of 1986, as amended (the "Code") (or imposed
under any successor provision of the Code imposing a tax liability on "excess
parachute payments" as that term is defined in Code Section 280G), Employee
shall be entitled, in addition to any other amounts payable under the terms of
this Agreement or under any other plan, agreement or arrangement applicable to
the Employee, to a cash payment in an amount sufficient to indemnify the
Employee (or such other person as may be liable for the payment of such excise
tax) for the amount of any such excise tax, and leaving Grantee with an amount,
net after all federal, state and local taxes, equal to the amount Grantee would
have had if no portion of his benefit under the Plan constituted an "excess
parachute payment. Notwithstanding the foregoing, the determination of the
amount necessary to indemnify the Employee shall be made taking into account all
other payments made to the Employee under any plans, agreements or arrangements
aside from this Agreement that are intended to indemnify the Employee with
respect to excise taxes on "excess parachute payments. Any disputes as to
calculations to be made under this paragraph shall be resolved by the Company's
independent auditors, whose determinations shall be final and binding.

7. Confidentiality. Employee recognizes and acknowledges that the Proprietary
Information (as hereinafter defined) is a valuable, special and unique asset of
the Business of the Company. As a result, both during the Term and thereafter,
Employee shall not, without the prior written consent of the Company, for any
reason either directly or indirectly divulge to any third-party or use for his
own benefit, or for any purpose other than the exclusive benefit of the Company,
any confidential, proprietary, business and technical information or trade
secrets of the Company or of any subsidiary or affiliate of the Company
("Proprietary Information") revealed, obtained or developed in the course of his
employment with the Company. Such Proprietary Information shall include, but
shall not be limited to, the intangible personal property described in Section
8(B) hereof, any information relating to methods of production and manufacture,
research, computer codes or instructions (including source and object code
listings, program logic algorithms, subroutines, modules or other subparts of
computer programs and related documentation, including program notation),
computer processing systems and techniques, concepts, layouts, flowcharts,
specifications, know-how, any associated user or service manuals or other like
textual materials (including any other data and materials used in performing the

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Employee's duties), all computer inputs and outputs (regardless of the media on
which stored or located), hardware and software configurations, designs,
architecture, interfaces, plans, sketches, blueprints, and any other materials
prepared by the Employee in the course of, relating to or arising out of his
employment by the Company, or prepared by any other Company employee,
representative, or contractor for the Company, or its customers, costs, business
studies, business procedures, finances, marketing data, methods, plans and
efforts, the identities of licensees, strategic partners, customers, contractors
and suppliers and prospective licensees, strategic partners, customers,
contractors and suppliers, the terms of contracts and agreements with licensees,
strategic partners, customers, contractors and suppliers, the Company's
relationship with actual and prospective licensees, strategic partners,
customers, contractors and suppliers and the needs and requirements of, and the
Company's course of dealing with, any such actual or prospective licensees,
strategic partners, customers, contractors and suppliers, personnel information,
customer and vendor credit information, and any other materials that have not
been made available to the general public, provided, that nothing herein
contained shall restrict Employee's ability to make such disclosures during the
course of his employment as may be necessary or appropriate to the effective and
efficient discharge of the duties required by or appropriate for his Position or
as such disclosures may be required by law; and further provided, that nothing
herein contained shall restrict Employee from divulging or using for his own
benefit or for any other purpose any Proprietary Information that is readily
available to the general public so long as such information did not become
available to the general public as a direct or indirect result of Employee's
breach of this Section 7. Failure by the Company to mark any of the Proprietary
Information as confidential or proprietary shall not affect its status as
Proprietary Information under the terms of this Agreement.

8.  Property.

     A) Ownership. All right, title and interest in and to Proprietary
Information shall be and remain the sole and exclusive property of the Company
(or its partners, customers, vendors, etc., as the case may be). During the
Term, Employee shall not remove from the Company's offices or premises any
documents, records, notebooks, files, correspondence, reports, memoranda or
similar materials of or containing Proprietary Information, or other materials
or property of any kind belonging to the Company unless necessary or appropriate
in accordance with the duties and responsibilities required by or appropriate
for his Position and, in the event that such materials or property are removed,
all of the foregoing shall be returned to their proper files or places of
safekeeping as promptly as possible after the removal shall serve its specific
purpose. Employee shall not make, retain, remove and/or distribute any copies of
any of the foregoing for any reason whatsoever except as may be necessary in the
discharge of his assigned duties and shall not divulge to any third person the
nature of and/or contents of any of the foregoing or of any other oral or
written information to which he may have access or with which for any reason he
may become familiar, except as disclosure shall be necessary in the performance
of his duties; and upon the termination of his employment with the Company, he
shall leave with or return to the Company all originals and copies of the
foregoing then in his possession, whether prepared by Employee or by others.

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     B) Assignment.

     (i) Employee agrees that all right, title and interest in and to any
innovations, designs, systems, analyses, ideas for marketing programs, and all
copyrights, patents, trademarks and trade names, or similar intangible personal
property which have been or are developed or created in whole or in part by
Employee (1) at any time and at any place while the Employee is employed by
Company and which, in the case of any or all of the foregoing, are related to
and used in connection with the Business of the Company, (2) as a result of
tasks assigned to Employee by the Company, or (3) from the use of premises or
personal property (whether tangible or intangible) owned, leased or contracted
for by the Company (collectively, the "Intellectual Property"), shall be and
remain forever the sole and exclusive property of the Company. The Employee
shall promptly disclose to the Company all Intellectual Property, and the
Employee shall have no claim for additional compensation for the Intellectual
Property.

     (ii) Employee acknowledges that all the Intellectual Property that is
copyrightable shall be considered a work made for hire under United States
Copyright Law. To the extent that any copyrightable Intellectual Property may
not be considered a work made for hire under the applicable provisions of the
United States Copyright Law, or to the extent that, notwithstanding the
foregoing provisions, the Employee may retain an interest in any Intellectual
Property that is not copyrightable, the Employee hereby irrevocably assigns and
transfers to the Company any and all right, title, or interest that the Employee
may have in the Intellectual Property under copyright, patent, trade secret and
trademark law, in perpetuity or for the longest period otherwise permitted by
law, without the necessity of further consideration. The Company shall be
entitled to obtain and hold in its own name all copyrights, patents, trade
secrets, and trademarks with respect thereto.

     (iii) Employee further agrees to reveal promptly all information relating
to the same to an appropriate officer of the Company and to cooperate with the
Company and execute such documents as may be necessary or appropriate (1) in the
event that the Company desires to seek copyright, patent or trademark
protection, or other analogous protection, thereafter relating to the
Intellectual Property, and when such protection is obtained, to renew and
restore the same, or (2) to defend any opposition proceedings in respect of
obtaining and maintaining such copyright, patent or trademark protection, or
other analogous protection.

     (iv) In the event the Company is unable after reasonable effort to secure
Employee's signature on any of the documents referenced in Section 8.1(iii)
hereof, whether because of Employee's physical or mental incapacity or for any
other reason whatsoever, Employee hereby irrevocably designates and appoints the
Company and its duly authorized officers and agents as Employee's agent and
attorney-in-fact, to act for and in his behalf and stead to execute and file any
such documents and to do all other lawfully permitted acts to further the
prosecution and issuance of any such copyright, patent or trademark protection,
or other analogous protection, with the same legal force and effect as if
executed by Employee.

9. Covenant Not to Compete. The Employee shall not, during the Term and
thereafter for the Restricted Period (as defined below), do any of the
following, directly or indirectly, without the prior written consent of the
Company:

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     A) engage or participate in any business activity competitive with the
Company's Business, or the business of any of the Company's subsidiaries or
affiliates, as same are conducted during the Term with respect to any period
during the Term, or upon the termination of Employee's employment hereunder with
respect to any period thereafter;

     B) become interested in (as owner, stockholder, lender, partner,
co-venturer, director, officer, employee, agent, consultant or otherwise) any
person, firm, corporation, association or other entity engaged in any business
that is competitive with the Business of the Company or of any subsidiary or
affiliate of the Company as conducted during the Term with respect to any period
during the Term, or upon the termination of Employee's employment hereunder with
respect to any period thereafter, or become interested in (as owner,
stockholder, lender, partner, co-venturer, director, officer, employee, agent,
consultant or otherwise) any portion of the business of any person, firm,
corporation, association or other entity where such portion of such business is
competitive with the business of the Company or of any subsidiary or affiliate
of the Company as conducted during the Term with respect to any period during
the Term, or upon termination of Employee's employment hereunder with respect to
any period thereafter. Notwithstanding the foregoing, Employee may hold not more
than one percent (1%) of the outstanding securities of any class of any
publicly-traded securities of a company that is engaged in activities referenced
in Section 8(a) hereof;

     C) influence or attempt to influence any licensee, strategic partner,
supplier, or customer of the Company or potential licensee, strategic partner,
supplier or customer of the Company to terminate or modify any written or oral
agreement or course of dealing with the Company; or

     D) influence or attempt to influence any person to either (i) terminate or
modify his employment, consulting, agency, distributorship or other arrangement
with the Company, or (ii) employ or retain, or arrange to have any other person
or entity employ or retain, any person who has been employed or retained by the
Company as an employee, consultant, agent or distributor of the Company at any
time during the twelve (12) month period immediately preceding the termination
of Employee's employment hereunder.

For purposes of this Section 9, the Restricted Period shall constitute a period
ending one (1) year after Employee's termination date, regardless of the reason
for termination.

10. Termination. Employee's employment hereunder may be terminated during the
Term upon the occurrence of any one of the events described in this Section 10.
Upon termination, Employee shall be entitled only to such compensation and
benefits as described in this Section 10.

     10.1 Termination by Employee. Employee may terminate Employee's employment
hereunder at any time, for Good Reason or without Good Reason, effective upon
the date designated by Employee in written notice of the termination of his
employment hereunder pursuant to this Section 1. For purposes of this Agreement,
Good Reason shall mean the failure by the Company to pay in a timely manner base
salary or any other material form of

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compensation or material Benefit to be paid or provided to Employee which
failure is not cured within ten (10) business days after notice to Company. In
the event of a termination of Employee's employment hereunder pursuant to this
Section 10.1, this Agreement shall terminate effective upon receipt by Company
of Employee's notice of termination. In such event, Employee's rights to
compensation and benefits hereunder shall terminate as of the date of
termination, except that Employee shall be entitled to the accrued and unpaid
base salary, employee benefits (including expense reimbursement) as provided
herein ("Benefits") and other forms of compensation and bonus payable herein
("Other Compensation") up through the date of termination. In addition, solely
if such termination is for Good Reason and provided Employee signs Company's
standard form termination letter as provided for in Section 11 below, Employee
shall be entitled to receive (i) severance in an amount equal to the Employee's
base salary, and (ii) medical and dental coverage on terms and conditions
comparable to those most recently provided to the Employee pursuant to this
Agreement, both (i) and (ii) for the period of eighteen (18) months commencing
upon the date of such termination. Employee shall also be entitled to receive
severance in an amount equal to fifty percent (50%) of Employee's target bonus
(plus special bonus if terminated prior to December 31, 2000) for the year in
which Employee was terminated, payable over a period of eighteen (18) months
commencing upon the date of such termination Such severance shall be inclusive
of all applicable income, social security and other taxes and charges which are
required by law to be withheld by the Company and shall be withheld and paid in
accordance with the Company's normal payroll practice for its employees from
time to time in effect. Except as specifically set forth in this Section 10.1,
all base salary, Benefits and Other Compensation shall cease at the time of such
termination, subject to the terms of any benefit or compensation plan then in
force and applicable to Employee. Except as specifically set forth in this
Section 10.1, the Company shall have no liability or obligation to Employee or
any other person claiming under or through him by reason of such termination.

     10.2 Termination for Cause. If Company terminates Employee's employment for
Cause, then this Agreement shall terminate immediately and Employee's rights to
compensation and benefits hereunder shall terminate as of the date of
termination, except that Employee shall be entitled to the accrued and unpaid
portion of his base salary, Benefits and Other Compensation up through the date
of termination. For purposes of this Agreement, the term "Cause" shall mean (i)
any material breach of Employee's employment obligations, which breach remains
uncured thirty (30) days after written notice of such breach from the Company,
or (ii) an act by Employee involving any type of willful misconduct with respect
to the Company, including without limitation fraud, embezzlement, theft or
proven dishonesty in the course of his employment; or (iii) during the term of
Employee's employment, Employee's conviction of a felony. Except as specifically
set forth in this Section 10.2, the Company shall have no liability or
obligation to Employee or any other person claiming under or through him by
reason of such termination.

     10.3 Termination on Death. If Employee dies, then this Agreement shall
terminate immediately and Employee's rights to compensation and benefits
hereunder shall terminate as of the date of death, except that Employee's
executors, legal representatives or administrators shall be entitled to the
accrued and unpaid portion of his base salary, Benefits and Other Compensation
up through the date of death. Except as specifically set forth in this Section
10.3, the Company shall have no liability or obligation hereunder to Employee's
executors, legal

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representatives, administrators, heirs or assigns or any other person claiming
under or through him by reason of Employee's death, except that Employee's
executors, legal representatives, administrators, or beneficiaries will be
entitled to receive the payment prescribed under any life, death or disability
benefits plan in which he is a participant as an employee of the Company, and to
exercise any rights afforded under any compensation or benefit plan then in
effect.

     10.4 Termination on Disability. In the event of a long-term disability of
the Employee (as such term is defined in the Company's Long-Term Disability
Plan) such that the Employee is not otherwise qualified to perform the essential
functions of the job with or without reasonable accommodation ("Disability"),
Employee's employment hereunder may be terminated by the Company. In such event,
this Agreement shall terminate on the date of termination and Employee will be
entitled to receive all accrued and unpaid base salary and Benefits and Other
Compensation, including payments prescribed under any disability insurance plan
or arrangement in which Employee is a participant. Except as specifically set
forth in this Section 10.4, the Company shall have no liability or obligation to
Employee or any other person claiming under or through him by reason of
Employee's disability or such termination.

     10.5 Termination Without "Cause". The Company may terminate Employee's
employment hereunder at any time, for any reason, without cause, effective upon
the date designated by the Company. In the event Company terminates Employee's
employment without Cause or Disability, as set forth above, this Agreement shall
terminate on the date of termination and Employee shall be entitled to receive
all accrued but unpaid base salary, Benefits and Other Compensation up to the
date of termination. In addition, provided Employee signs Company's standard
form termination letter as provided for in Section 8 below, Employee shall be
entitled to receive (i) severance in an amount equal to the Employee's base
salary, and (ii) medical and dental coverage on terms and conditions comparable
to those most recently provided to the Employee pursuant to this Agreement, both
(i) and (ii) for the period of eighteen (18) months commencing upon the date of
such termination. Employee shall also be entitled to receive severance in an
amount equal to fifty percent (50%) of Employee's target bonus (plus special
bonus if terminated prior to December 31, 2000) for the year in which Employee
was terminated, payable over a period of eighteen (18) months commencing upon
the date of such termination. Such severance shall be inclusive of all
applicable income, social security and other taxes and charges which are
required by law to be withheld by the Company and shall be withheld and paid in
accordance with the Company's normal payroll practice for its employees from
time to time in effect. Except as specifically set forth in this Section 10.5,
the Company shall have no liability or obligation to Employee or any other
person claiming under or through him by reason of such termination.

     10.6 Termination for Absenteeism

     (A) Regular attendance at work or in conducting work is an essential
element of Employee's job. Without limiting the Company's right to terminate
Employee pursuant to Section 10.2 or 10.4 herein, in the event that Employee is
absent for more than one hundred and fifty (150) days within any twelve (12)
month period, Employee's employment hereunder may be terminated by Company.

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     (B) In the event of a termination of Employee's employment hereunder
pursuant to Section 10.6(a), Employee will be entitled to receive all accrued
and unpaid (as of the date of such termination) base salary and Benefits and
Other Compensation, including payments prescribed under any disability or life
insurance plan or arrangement in which Employee is a participant or to which
Employee is a party as an employee of the Company. In addition, provided
Employee signs Company's standard form termination letter as provided for in
Section 11 below, Employee shall be entitled to receive (i) severance in an
amount equal to the Employee's base salary, and (ii) medical and dental coverage
on terms and conditions comparable to those most recently provided to the
Employee pursuant to this Agreement (to the extent such coverage is not provided
under other Company policies, plans or programs relating to Disability), both
(i) and (ii) for the period of eighteen (18) months commencing upon the date of
such termination. Employee shall also be entitled to receive severance in an
amount equal to fifty percent (50%) of Employee's target bonus (plus special
bonus if terminated prior to December 31, 2000) for the year in which Employee
was terminated, payable over a period of eighteen (18) months commencing upon
the date of such termination Such severance amounts shall be reduced by the
amount of payments received by the Employee with respect to this period pursuant
to any Social Security entitlement or any long term disability or any other
employee benefit plan, policy or program maintained to provide benefits in the
event of disability in which the Employee was entitled to participate at the
time of termination under Section 10.6(a). Except as specifically set forth in
this Section 10.6(b), the Company shall have no liability or obligation to
Employee for compensation or benefits hereunder by reason of such termination.

     10.7 Change of Control.

     (A) If there is a Change of Control during the Term, and Employee's
employment with the Company hereunder is terminated within one (1) year
following such Change of Control by the Company (except for cause) or by
Employee (whether or not for Good Reason) and provided Employee signs Company's
standard form termination letter as provided for in Section 11 below, Employee
shall be entitled to receive all accrued but unpaid (as of the effective date of
such termination) base salary, Benefits and Other Compensation. In addition, (i)
Employee shall be entitled to receive, on the date of such termination, an
amount equal to (a) two (2) years' worth of Employee's base salary, (b) 100% of
the special bonus if the Change of Control occurs prior to December 31, 2000,
and (c) 100% of the target annual bonus; and (ii) all stock options granted to
Employee by Company which pursuant to the terms of the applicable Option Plan
vest upon a Change in Control (e.g., Section 17(b) of the 1995 Stock Option Plan
for Employees and Outside Directors) shall vest, and (iii) all restrictions on
restricted stock and RSUs which pursuant to the terms of the applicable
restricted stock plan lift (including as to vesting) shall be lifted. Except as
specifically set forth in this Section 10.7, all base salary, Benefits and Other
Compensation shall cease at the time of such termination, subject to the terms
of any benefit or compensation plans then in force and applicable to Employee,
and the Company shall have no liability or obligation hereunder by reason of
such termination.

     (B) For purposes of this Section 10.7, a "Change of Control" means the
acquisition (including by merger or consolidation, or by the issuance by the
Company of its securities) by one or more persons in one transaction or a series
of related transactions, of more than fifty percent (50%) of the voting power
represented by the outstanding stock of the

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Company on the date hereof or a sale of substantially all of the assets of the
Company. For these purposes, "Person" means an individual, partnership,
corporation, joint venture, association, trust, unincorporated association,
other entity or association.

11. Termination Letter. As a condition precedent to the Company's payment of
severance and continuation of medical and dental insurance coverage pursuant to
Sections 10.1, 10.5, 10.6 and 10.7 above, Employee must sign and deliver to
Company termination letter, without revocation, which includes a broad-based
employment release (containing, without limitation, a release of claims for age
discrimination), an obligation to return Company property and a reiteration of
Employee's confidentiality obligations, within the time frame specified in the
termination letter.

12. Company Understanding. The Company does not want to benefit from any
proprietary or other information, in any form, that Employee is under a duty not
to use or divulge, whether it be from Employee's current employer or any other
person or entity. Accordingly and as a condition of employment hereunder,
Employee is instructed not to violate the terms of any such restriction or
otherwise breach said duty. In furtherance thereof, and without limiting other
action, Employee represents and warrants to the Company that:

     A) There are no restrictions, agreements or understandings whatsoever to
which Employee is a party which would prevent or make unlawful Employee's
execution of this Agreement or Employee's employment hereunder, or which are or
would be inconsistent or in conflict with this Agreement or Employee's
employment hereunder, or would prevent, limit or impair in any way the
performance by Employee of his obligations hereunder,

     B) Employee's execution of this Agreement and Employee's employment
hereunder shall not constitute a breach of any contract, agreement or
understanding, oral or written, to which Employee is a party or by which
Employee is bound, and

     C) Employee is free to execute this Agreement and to enter into the employ
of the Company pursuant to the provisions set forth herein.

13. Survival of Provisions. Notwithstanding anything in this Agreement to the
contrary, all representations, warranties, obligations of performance,
statements, responsibilities, indemnities, terms or conditions impliedly or
expressly involving performance subsequent to the expiration or termination of
this Agreement, or which cannot be determined to have been fully performed until
after such time, or which by a fair reading of their nature are intended to
survive shall be deemed to survive. If for any reason Employee shall continue to
be employed by the Company following the termination of Employee's employment
under this Agreement, Employee shall have no right to receive any severance or
other payments hereunder until Employee ceases to be employed by the Company,
whereupon Employee's right to severance or other payments, if any, shall be
governed by the provisions of Section 10 hereof with respect to the particular
circumstances involved in the Employee's termination of employment.

14. Successors and Assigns. This Agreement shall inure to the benefit of and be
binding upon the Company and Employee and their respective successors,
executors, administrators,

                                       11
<PAGE>

heirs and/or permitted assigns; provided, however, that neither Employee nor the
Company may make any assignments of this Agreement or any interest herein, by
operation of law or otherwise, without the prior written consent of the other
parties hereto.

15. Employee Benefits. This Agreement shall not be construed to be in lieu or to
the exclusion of any other rights, benefits and privileges to which Employee may
be entitled as an employee of the Company under any retirement, pension,
profit-sharing, insurance, hospital or other plans or benefits which may now be
in effect or which may hereafter be adopted.

16. Notice. Any notice or communication required or permitted under this
Agreement shall be made in writing and sent by certified or registered mail,
return receipt requested, by hand delivery, or by recognized overnight courier,
addressed as follows:

                  If to Employee:

                           Mark Gercenstein
                           c/o InterDigital Communications Corporation
                           781 Third Avenue
                           King of Prussia, Pennsylvania  19406

                  If to Company:

                           InterDigital Communications Corporation
                           781 Third Avenue
                           King of Prussia, Pennsylvania  19406
                           Attn: Harry Campagna, Chairman

                  with a copy to:

                           InterDigital Communications Corporation
                           781 Third Avenue
                           King of Prussia, Pennsylvania  19406
                           Attn: Harry Campagna, Chairman

                  or to such other address as either party may from time to time
                  duly specify by notice given to the other party n the manner
                  specified above.

17. Entire Agreement; Amendments. This Agreement contains the entire agreement
and understanding of the parties hereto relating to the subject matter hereof,
and merges and supersedes all prior and contemporaneous discussions, agreements
and understandings of every nature between the parties hereto relating to the
employment of Employee with the Company excepting the non-disclosure agreement
and the Statement of Ethics signed by Employee at the commencement of Employee's
employment with the Company, various forms related to the commencement of
Employee's employment with the Company and Employee's participation in employee
benefit plans offered by the Company (including, without limitation, option and
restricted stock agreements), and agreements to be bound by Company policies to
the extent that

                                       12
<PAGE>

these other agreements do not conflict with the terms of this Agreement. This
Agreement may not be changed or modified, except by an Agreement in writing
signed by each of the parties hereto.

18. Waiver. The waiver of the breach of any term or provision of this Agreement
shall not operate as or be construed to be a waiver of any other or subsequent
breach of this Agreement.

19. Governing Law. This Agreement shall be construed and enforced in accordance
with the laws of the Commonwealth of Pennsylvania.

20. Invalidity. In case any one or more of the provisions contained in this
Agreement shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
the validity of any other provision of this Agreement, and such provision(s)
shall be deemed modified to the extent necessary to make it enforceable.

21. Section Headings. The section headings in this Agreement are for convenience
only; they form no part of this Agreement and shall not affect its
interpretation.

22. Number of Days. In computing the number of days for purposes of this
Agreement, all days shall be counted, including Saturdays, Sundays and legal
holidays; provided, however, that if the final day of any time period falls on a
Saturday, Sunday or day which is a holiday in the Commonwealth of Pennsylvania,
then such final day shall be deemed to be the next day which is not a Saturday,
Sunday or legal holiday.

23. Specific Enforcement; Extension of Period.

     A) Employee acknowledges that the restrictions contained in Sections 7,
8 and 9 hereof are reasonable and necessary to protect the legitimate interests
of the Company and its affiliates and that the Company would not have entered
into this Agreement in the absence of such restrictions. Employee also
acknowledges that any breach by him of Sections 7, 8 or 9 hereof will cause
continuing and irreparable injury to the Company for which monetary damages
would not be an adequate remedy. The Employee shall not, in any action or
proceeding to enforce any of the provisions of this Agreement, assert the claim
or defense that an adequate remedy at law exists. In the event of such breach by
Employee, the Company shall have the right to enforce the provisions of Sections
7, 8 and 9 of this Agreement by seeking injunctive or other relief in any court,
and this Agreement shall not in any way limit remedies of law or in equity
otherwise available to the Company. If an action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to recover, in addition to any other relief, reasonable
attorneys' fees, costs and disbursements. In the event that the provisions of
Sections 7, 8 or 9 hereof should ever be adjudicated to exceed the time,
geographic, or other limitations permitted by applicable law in any applicable
jurisdiction, then such provisions shall be deemed reformed in such jurisdiction
to the maximum time, geographic, or other limitations permitted by applicable
law.

                                       13
<PAGE>


     B) In the event that Employee shall be in breach of any of the restrictions
contained in Section 9 hereof, then the Restricted Period shall be extended for
a period of time equal to the period of time that Employee is in breach of such
restriction.

24. Consent to Suit. Any legal proceeding arising out of or relating to this
Agreement shall be instituted in the District Court of the Eastern District of
Pennsylvania, or if such court does not have jurisdiction or will not accept
jurisdiction, in any court of general jurisdiction in the Commonwealth of
Pennsylvania, and the Employee hereby consents to the personal and exclusive
jurisdiction of such court and hereby waives any objection that the Employee may
have to the laying of venue of any such proceeding and any claim or defense of
inconvenient forum.

25. Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, and all of which together shall be
deemed to be one and the same instrument.

     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
the day and year first written above.


ATTEST:                                INTERDIGITAL COMMUNICATIONS CORPORATION



By: /s/ Jane Schultz                   By: /s/ Harry G. Campagna
    --------------------------             ------------------------------------
Title: Assistant Secretary                  Title: Chairman



                                           /s/ Mark Gercenstein
                                           ------------------------------------
                                           MARK GERCENSTEIN

                                       14
</TEXT>
</DOCUMENT>
