Document:

pcti-ex42_6.htm

Exhibit 4.2

DESCRIPTION OF SECURITIES 

REGISTERED PURSUANT TO SECTION 12 OF THE 

SECURITIES EXCHANGE ACT OF 1934 

 

PCTEL, Inc. (“PCTEL,” the “Company,” “we,” “us,” and “our”) has one class of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”): our common stock, par value $0.001 per share (the “Common Stock”). 

 

DESCRIPTION OF COMMON STOCK 

 

The following description of our Common Stock is a summary and does not purport to be complete. It is subject to and qualified in its entirety by reference to our Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) and our Bylaws, as amended (the “Bylaws”), each of which are incorporated by reference as an exhibit to our most recent Annual Report on Form 10-K, of which this exhibit is a part. We encourage you to read our Certificate of Incorporation, our Bylaws and the applicable provisions of the General Corporation Law of the State of Delaware (the “DGCL”) for additional information. 

 

Authorized Capital

 

Our Certificate of Incorporation currently authorizes the issuance of one-hundred million (100,000,000) shares of Common Stock, and five million (5,000,000) shares of preferred stock, with a par value of $0.001 (the “Preferred Stock”). Subject to our stockholders’ approval, the number of authorized shares of Common Stock will be reduced to 50,000,000 shares.  Our Common Stock is listed and principally traded on The Nasdaq Global Select Market under the symbol “PCTI.”  

There are currently no shares of Preferred Stock outstanding.  However, our Board of Directors is authorized to approve the issuance of one or more series of Preferred Stock without further authorization of our stockholders and to fix the number of shares, the designations, the relative rights and the limitations of any series of Preferred Stock. As a result, our Board of Directors, without stockholder approval, could authorize the issuance of Preferred Stock with voting, conversion and other rights that could proportionately reduce, minimize or otherwise adversely affect the voting power and other rights of holders of Common Stock or other series of Preferred Stock.  

 

Dividend Rights 

 

The holders of Common Stock are entitled to receive their proportionate share of the dividends, if any, as may be declared from time to time by the Board of Directors out of funds legally available for that purpose.  Dividends may be paid in cash, in property, or in shares of the Company’s capital stock.  Holders of Common Stock may not receive dividends until we have satisfied our obligations to the holders of outstanding Preferred Stock, if any.

 

Voting Rights 

 

Holders of Common Stock have the exclusive power to vote on all matters presented to our stockholders, unless the DGCL or the certificate of designation for an outstanding series of Preferred Stock gives the holders of that series of Preferred Stock the right to vote on certain matters.  Holders of Common Stock are entitled to one vote for each share on all matters voted on by stockholders, including the election of directors. 

 

Our Board of Directors is divided into three classes. Each year, one class of directors stands for election for a three-year term.  When a quorum is present or represented at any meeting, each director is elected by a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors.   The vote of the holders of a majority of the shares having voting power present in person or represented by proxy decides any other question brought before such meeting, unless the question is one upon which, by express provisions of the statutes, Certificate of Incorporation, or Bylaws, a different vote is required.  See “Anti-takeover Provisions Contained in Our Certificate of Incorporation and Bylaws”.

 

If, at the time of filling any vacancy or any newly created directorship, the directors then in office constitute less than a majority of the whole Board (as constituted immediately prior to any such increase), then the Delaware Court of Chancery may, upon application of any stockholder or stockholders holding at least 10% of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office as aforesaid, which election shall be governed by the provisions of Section 211 of the DGCL as far as applicable.

 

Liquidation Rights 

 

In the event of a liquidation, dissolution or winding up of PCTEL, the holders of Common Stock are entitled to their proportionate share of all assets remaining after payment of liabilities, after taking into consideration the prior distribution rights of Preferred Stock, if any, then outstanding.

 

Fully Paid and Nonassessable

 

All outstanding shares of our Common Stock are fully paid and nonassessable. This means the full purchase price for the outstanding shares of Common Stock has been paid and the holders of such shares will not be assessed any additional amounts for such shares. Any additional Common Stock that we may issue in the future will also be fully paid and nonassessable.

 

Other Rights and Preferences 

 

The holders of Common Stock do not have any conversion rights or any preemptive rights to subscribe for stock or any other securities of the Company. There are no redemption or sinking fund provisions applicable to our Common Stock. 

 

Anti-takeover Provisions Contained in Our Certificate of Incorporation and Bylaws 

 

Certain provisions of our Certificate of Incorporation and Bylaws may make it less likely that our management would be changed or someone would acquire control of the Company without the Board’s consent. These provisions may delay, defer or prevent a change in control or takeover attempts that stockholder may believe are in their best interests, including tender offers or attempts that might allow stockholders to receive premiums over the market price of their Common Stock. 

 

	
 
	
•
	
Effect of Preferred  Stock. Our Board of Directors may at any time, under our Certificate of Incorporation and without stockholder approval, issue one or more new series of Preferred Stock. In some cases, the issuance of Preferred Stock without stockholder approval could discourage or make more difficult attempts to take control of the Company through a merger, tender offer, proxy contest or otherwise. Preferred Stock with special voting rights or other features issued to persons favoring our management could stop a takeover by preventing the person trying to take control of the Company from acquiring enough voting shares necessary to take control.

	
 
	
•
	
Certain Effects of Authorized but Unissued Stock.  Authorized but unissued shares of Common Stock and Preferred Stock are available for future issuance without stockholder approval. These additional shares may be utilized for a variety of corporate purposes, including future public or private offerings to raise additional capital and for corporate acquisitions. The Company could also use additional shares to dilute the stock ownership of persons seeking to obtain control of the Company. 

	
 
	
•
	
Supermajority Approval of Amendments to Certificate of Incorporation and Bylaws. Stockholders must approve certain amendments to our organizational documents by a supermajority vote, which can delay, defer or prevent a change in control.  The affirmative vote of 66 2/3% of the voting power of the then outstanding shares voting as a single class, shall be required for the adoption, amendment, or repeal of the following sections of the Bylaws by the stockholders of the Company: Section 2.2 (Annual Meeting) and Section 2.3 (Special Meeting) and the following sections of the Certificate of Incorporation: Article Seventh (Staggered Board of Directors) and Article Ninth (Amendment of Article Seventh).  

	
 
	
•
	
Director Nomination, Election Procedures, and Classified Board. In order to nominate candidates for the Board of Directors, a stockholder must follow the advance notice procedures described in our Bylaws. In general, a stockholder must submit a written notice containing certain information not less than 120 days prior to the date of our proxy statement for the previous year’s annual meeting of stockholders.  Directors are elected by a plurality of the votes, meaning that the candidates receiving the greatest number of votes are elected, regardless of whether or not they receive a majority of the votes cast.  As a result, “vote no” campaigns to unseat incumbent directors may be ineffective in uncontested elections. Further, the Company has three classes of directors elected to serve staggered three-year terms, which means stockholders can only elect, or remove, a limited number of directors in a given year. 

	
 
	
•
	
Stockholder Proposal Procedures. Stockholders can propose director nominations or other business to the Board of Directors to be considered at an annual meeting of stockholders, only if the stockholder follows the advance notice procedures described in our Bylaws. In general, a stockholder must submit a written notice containing certain information not less than 120 days prior to the date of our proxy statement for the previous year’s annual meeting of stockholders. 

	
 
	
•
	
Right to Call Special Meeting and Action by Written Consent.  The Certificate of Incorporation and Bylaws require that any action required or permitted to be taken by our stockholders must be effected at a duly called annual or special meeting of the stockholders and may not be effected by a consent in writing. In addition, special meetings of our stockholders may be called only by the Board of Directors or some of our officers.pcti-ex1015_230.htm

EXHIBIT 10.15

 

 

 

 

PCTEL, INC.

 

SALES COMPENSATION PLAN

 

Prepared specifically for:

 

Arnt Arvik

 

Plan Year 2021

 

PCTEL, Inc.

2021 Sales Compensation Plan

EXHIBIT 10.15

	
I.
	
Introduction

 

This PCTEL Sales Compensation Plan (the “Plan”) has been designed by the Company (as hereinafter defined) to:

 

	
 
	
▪
	
Align sales compensation with corporate profitability;

	
 
	
▪
	
Motivate, incent and reward sales behavior in order to achieve PCTEL’s corporate and financial objectives; and

	
 
	
▪
	
Provide a compensation plan that is equitable and consistent across regions and product lines.

 

This Plan supersedes all prior sales compensation plans and any discussions or verbal agreements between Participant and the Company.

 

	
II.
	
Definitions

 

Adjusted EBITDA – Adjusted EBITDA is GAAP operating profit excluding stock compensation expenses, amortization of intangible assets, depreciation, restructuring charges, impairment charges, gain/loss on sale of product lines, and expenses included in GAAP operating profit to the extent their recovery is recorded below operating profit.

 

Base Salary – Base Salary is the amount payable to Participant as non-variable compensation for services rendered to the Company.  It is determined by Company management on an annual basis.  

 

CEO – Chief Executive Officer

 

CFO – Chief Financial Officer

 

Commission – Commission is a portion of the variable compensation payable to Participant and is related to sales to customers.  It is calculated in accordance with Section V below.

 

Commission Payout Factor – Commission Payout Factor has the meaning set forth in Section V(a)(1).

 

Commissionable Revenue – Revenue earned by the Company (determined in accordance with GAAP) from sales of products, services, NRE, maintenance charges, royalties and training charges, excluding freight, loans, interest charges, and other similar charges.  

 

Company – PCTEL, Inc. and its subsidiaries

 

EBITDA Goal – EBITDA Goal has the meaning set forth in Section V(b).

 

EBITDA Payout Factor – EBITDA Payout Factor has the meaning set forth in Section V(b).

 

GAAP – Generally Accepted Accounting Principles in the United States of America

 

Individual Quota – Company management assigns an Individual Quota that represents the total anticipated Commissionable Revenue that management expects the Sales Team to generate for the Plan Year.  Your Individual Quota is set forth on Attachment A.

 

Participant – The sales professional for whom this Plan is prepared and whose name is found on the cover page of this Plan.

 

Plan – Plan has the meaning assigned in Section I.

PCTEL, Inc.

2021 Sales Compensation Plan

EXHIBIT 10.15

 

Plan Administrators – The Plan Administrators are the CEO, CFO and Vice President-Corporate Resources.  

 

Plan Year – The Plan Year is January 1, 2021 through December 31, 2021.

 

Quota Assignment Statement – The Quota Assignment Statement is the statement in the form of Attachment A signed by the Company and Participant defining the amount of the Individual Quota, Target Commission, Target Adjusted EBITDA and target total variable compensation.

 

Sales Team – The Sales Team refers to all sales personnel who report directly or indirectly to Participant.

 

Target Commission – The Target Commission, as identified in Attachment A, is the percentage of Base Salary that Participant is anticipated to earn as Commission if Participant achieves his Individual Quota.

 

	
III.
	
General

 

(a) Plan Administration.  The Plan Administrators will manage the Plan.  Any provision of this Plan may be amended, revised or modified upon the written agreement of the Participant and the Plan Administrators. In addition, during the Plan Year the Plan Administrators have full discretion, without the consent of the Participant, to (i) construe and interpret the terms of the Plan, (ii) determine eligibility of company employees to participate in the Plan, and (iii) determine whether Commission is payable under the Plan; provided, however, that the Plan Administrators will not unilaterally (1) increase the Individual Quota as set forth on the executed version of Attachment A, or (2) reduce the Commission Payout Factor, except to address situations that were unforeseen at the time the Plan was established, for example as set forth in Section IV(b), or as necessary to address the economic situation associated with COVID-19. The determination of the Plan Administrators regarding any matter specified in clause (i) through (iii) above is final and binding.

 

	

	
(b) Termination of Employment.  The final amount of Commission and Adjusted EBITDA payment due to Participant upon termination of employment is the Commission earned, as provided in this Plan, up to and including the termination date.  Subject to applicable law, the final payment of Commission will be made at the times set forth in Section VI.

 

(c) Participation. Participant is not eligible for the short-term incentive program offered by the Company, but is eligible for the long-term incentive program.

 

	
IV.
	
Quota

 

(a) Individual Quota. At the beginning of each fiscal year, the Plan Administrators will specify on a Quota Assignment Statement for each member of the Sales Team, including Participant, the applicable Individual Quota and Target Commission.  The Plan Administrators have assigned Participant, as Chief Sales Officer, an Individual Quota equal to the total target revenue of the Company, as approved by the Board of Directors in the Company’s 2021 financial plan.  

 

(b) Modifications due to Product Discontinuation.  During the Plan Year, Company may discontinue products previously sold by the Sales Team, which may impact Participant’s ability to reach his Individual Quota.  For example, this can occur when a product is discontinued as a result of insufficient sales, lack of component parts, or the sale of the business segment offering the product.  If, based upon sales by the Sales Team of such discontinued product in the current and/or prior fiscal year, the discontinuation of the product could have a material effect on Participant’s ability to meet 

PCTEL, Inc.

2021 Sales Compensation Plan

EXHIBIT 10.15

the Individual Quota, the Plan Administrators will determine in good faith whether Participant’s Individual Quota should be adjusted accordingly.

 

	
 
	
V.
	
Variable Compensation; Commission 

 

Variable Compensation: Participant’s variable compensation for 2021 will be comprised of two components: (i) Commission, and (ii) 2021 Adjusted EBITDA. 

 

(a) Commission Earned:  Commission is calculated based upon the amount of Commissionable Revenue generated by the Sales Team during the 2021 Plan Year.  

 

(1) Commission Calculation - Commissionable Revenue will be calculated on a year-to-date basis from invoices issued to the Sales Team’s customers and will determine the percentage of Individual Quota attained.  The “Commission Payout Factor” is determined by locating the percentage of Individual Quota attained year-to-date in the table below and identifying the corresponding Commission Payout Factor.  If the Individual Quota attained falls between the listed percentages in the Commission Table, the Commission Payout Factor will be extrapolated (e.g., 77% Individual Quota attainment would be a 61.67% Commission Payout Factor).  The Commission earned is calculated as follows: 

 

COMMISSION PAYOUT FACTOR x TARGET COMMISSION x BASE SALARY.

 

Commission Table:

		
	
% Individual Quota Attained
	
Commission

Payout Factor

	
0%
	
0%

	
10%
	
6%

	
20%
	
12%

	
30%
	
18%

	
40%
	
24%

	
50%
	
30%

	
60%
	
36%

	
70%
	
42%

	
75%
	
60%

	
80%
	
64%

	
90%
	
81%

	
100%
	
100%

	
110%
	
121%

	
120%
	
144%

	
130%
	
169%

	
140%
	
196%

	
150%
	
205%

	
160%
	
214%

	
170%
	
223%

	
180%
	
232%

	
190%
	
241%

	
≥ 200%
	
250%

 

PCTEL, Inc.

2021 Sales Compensation Plan

EXHIBIT 10.15

 

(2) Cap on Commission - There is a “cap” or upper limit on the amount of Commission the Company will pay Participant for the 2021 Plan Year.  If Participant were to achieve Commissionable Revenue in excess of 200% of Individual Quota, which equates to a 250% Commission Payout Factor, the excess Commissionable Revenue will not result in additional Commission for Participant.

 

(3) Returns and Credits - In the event that a product for which the Sales Team received credit as Commissionable Revenue is returned (or the Company credited the customer’s account as though the product was returned), the corresponding amount of Commissionable Revenue related to the returned or credited product shall be subtracted from the Commissionable Revenue otherwise credited to the Sales Team.  The amount of Commissionable Revenue will be subtracted in the quarter the product return or product credit is processed.  Further, if one or more assigned accounts are greater than 90 days past the due date established by the applicable payment terms, the corresponding amount of Commissionable Revenue previously credited to the Sales Team shall be subtracted and the next quarterly Commission payment shall be adjusted accordingly.  Such Commissionable Revenue will be added back in the quarter in which the payment is received from the customer and will be included in the next succeeding Commission payment.  No Commission will be payable for any amounts written down or written off in accordance with GAAP.

 

(4) Commission Payments - The amount of Commission payable to Participant will be calculated after the Company’s books are closed for the first fiscal quarter and after each calendar month thereafter.   

 

(b) 2021 Adjusted EBITDA Payment –The Company has assigned an Adjusted EBITDA goal equal to the Company’s target total Adjusted EBITDA, as approved by the Board of Directors in the Company’s 2021 financial plan (“EBITDA Goal”).  

 

(1) Adjusted EBITDA Calculation. The Company’s Finance Department will calculate the year-to-date Adjusted EBITDA in accordance with its established non-GAAP procedures.  The “EBITDA Payout Factor” is determined by locating the percentage of the EBITDA Goal attained in the table below and identifying the corresponding EBITDA Payout Factor.  If the percentage of EBITDA Goal attained falls between the listed percentages in the Adjusted EBITDA Table, the Finance Department will extrapolate to identify the EBITDA Payout Factor (e.g., 77% attainment would be a 61.67% EBITDA Payout Factor).  The Adjusted EBITDA component of Variable Compensation is calculated as follows: 

 

EBITDA PAYOUT FACTOR x TARGET ADJUSTED EBITDA (on Attachment A) 

x BASE SALARY.

PCTEL, Inc.

2021 Sales Compensation Plan

EXHIBIT 10.15

 

Adjusted EBITDA Table:

		
	
% EBITDA Goal Attained
	
EBITDA Payout Factor

	
0%
	
0%

	
10%
	
6%

	
20%
	
12%

	
30%
	
18%

	
40%
	
24%

	
50%
	
30%

	
60%
	
36%

	
70%
	
42%

	
75%
	
60%

	
80%
	
64%

	
90%
	
81%

	
100%
	
100%

	
110%
	
121%

	
120%
	
144%

	
130%
	
169%

	
140%
	
196%

	
150%
	
205%

	
160%
	
214%

	
170%
	
223%

	
180%
	
232%

	
190%
	
241%

	
≥ 200%
	
250%

 

(2) Limits on Adjusted EBITDA Payment - There is a “cap” or upper limit on the amount of the Adjusted EBITDA payment the Company will pay Participant for the 2021 Plan Year.  If Participant were to achieve Adjusted EBITDA in excess of 200% of the EBITDA Goal, which equates to a 250% EBITDA Payout Factor, the excess Adjusted EBITDA will not result in a higher EBITDA Payout Factor than 250%.  In addition, regardless of actual results, if the percentage of Individual Quota attained is less than 100%, then the percentage of EBITDA Goal attained will also be deemed to be capped at 100%.

 

(3) Adjusted EBITDA Payments - The amount payable to Participant as a result of attaining the EBITDA Goal will be calculated after the Company’s books are closed for each fiscal quarter.

 

	
VI.
	
Payment Timing 

 

All payments of Variable Compensation to Participant will be paid forty-five (45) days after the close of the applicable period.  

PCTEL, Inc.

2021 Sales Compensation Plan

EXHIBIT 10.15

 

ATTACHMENT A

 

PCTEL, INC.

 

QUOTA ASSIGNMENT STATEMENT

 

 

Name:  Arnt Arvik

 

Sales Accounts:  All accounts of the Sales Team

 

Individual Quota assigned: as stated in Section IV(a)

 

Target Commission is:  47% of your Base Salary

 

Target Adjusted EBITDA is: 20% of your Base Salary

 

Target Total Variable Compensation is:  67% of Base Salary 

 

 

 

 

 

 

 

 

 

I acknowledge, as of this 22nd day of January, 2021, that I have read, understand and agree to the terms and conditions of this specifically prepared PCTEL, INC. Sales Compensation Plan for Plan Year 2021.

 

/s/ Arnt Arvik

 

Employee/Participant

 

/s/ David Neumann

 

Chief Executive Officer

 

/s/ Les Sgnilek

 

Vice President-Corporate Resources & Chief Risk Officer

 

/s/ Kevin McGowan

 

Chief Financial Officer

 

 

 

PCTEL, Inc.

2021 Sales Compensation Plan

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