EX-10.39 3 c78775exv10w39.txt EXHIBIT 10.39 Exhibit 10.39 PCTEL, INC. BOARD OF DIRECTORS DEFERRED COMPENSATION PLAN EFFECTIVE AS OF JANUARY 1, 2004
TABLE OF CONTENTS ARTICLE 1 DEFINITIONS ...................................... 1 ARTICLE 2 ELIGIBILITY AND PARTICIPATION .................... 4 ARTICLE 3 CONTRIBUTIONS TO DEFERRAL ACCOUNTS ............... 5 ARTICLE 4 ACCOUNTS AND ALLOCATION OF FUNDS ................. 5 ARTICLE 5 ENTITLEMENT TO BENEFITS .......................... 7 ARTICLE 6 DISTRIBUTION OF BENEFITS ......................... 11 ARTICLE 7 BENEFICIARIES; PARTICIPANT DATA .................. 11 ARTICLE 8 PLAN ADMINISTRATION .............................. 12 ARTICLE 9 AMENDMENT OR TERMINATION ......................... 15 ARTICLE 10 MISCELLANEOUS .................................... 16
EXHIBIT A PARTICIPANT ENROLLMENT AND ELECTION FORM EXHIBIT B DEEMED INVESTMENT ELECTIONS EXHIBIT C DESIGNATION OF BENEFICIARY EXHIBIT D DEATH BENEFIT EXHIBIT E DEEMED INVESTMENT OPTION CHANGE FORM i PCTEL, INC. BOARD OF DIRECTORS DEFERRED COMPENSATION PLAN THIS PLAN is adopted as of the __ day of _________, 200_, by PCTEL, Inc., a Delaware corporation (the "Corporation"), as follows: RECITALS WHEREAS, the Corporation wishes to establish the PCTEL, Inc. "Board of Directors Deferred Compensation Plan" (the "Plan") to provide additional retirement benefits and income tax deferral opportunities for its non-employee members of the Board of Directors; and WHEREAS, the Corporation intends that the Plan shall at all times be administered and interpreted in such a manner as to constitute an unfunded nonqualified deferred compensation plan for a select group of management or highly compensated employees and to qualify for all available exemptions from the provisions of ERISA; NOW, THEREFORE, the Corporation hereby adopts the following Board of Directors Deferred Compensation Plan. ARTICLE 1 DEFINITIONS DEFINITION OF TERMS. Certain words and phrases are defined when first used in later sections of this Plan. Whenever any words are used in the masculine, they shall be construed as though they were in the feminine in all cases where they would so apply; and whenever any words are used in the singular or in the plural, they shall be construed as though they were used in the plural or the singular, as the case may be, in all cases where they would so apply. In addition, the following words and phrases when used, unless the context clearly requires otherwise, shall have the following respective meanings: 1.1. ACCOUNT. A Participant's Deferral Account. 1.2. BENEFICIARY. The Beneficiary(ies) designated by a Participant under Article 7, or, if the Participant has not designated a Beneficiary under Article 7, the person or persons entitled to receive distributions of benefits under Article 5. 1.3. BOARD MEMBER. Any member of the Board of Directors of the Corporation. 1.4. CALENDAR YEAR. January 1 to December 31. 1.5. CAUSE. For purposes of this Plan "Cause" shall mean any of the following acts or circumstances: (i) willful destruction by the Participant of property of the Corporation having a material value to the Corporation; (ii) fraud, embezzlement, theft, or comparable dishonest activity committed by the Participant (excluding acts involving a de minimis dollar value and not related to the Corporation); (iii) the Participant's conviction of or entering a plea of guilty or nolo contendere to any crime constituting a felony or any 1 misdemeanor involving fraud, dishonesty or moral turpitude (excluding acts involving a de minimis dollar value and not related to the Corporation); (iv) the Participant's breach, neglect, refusal, or failure to materially discharge the Participant's duties (other than due to physical or mental illness); (v) any willful misconduct by the Participant which may cause substantial economic or reputational injury to the Corporation, including, but not limited to, sexual harassment, or (vi) a willful and knowing material misrepresentation to the Board or the Chief Executive Officer of the Corporation. 1.6. CHANGE IN CONTROL shall mean the occurrence of any of the following: (i) Any "Person" or "Group", as such terms are defined in Section 13(d) of the Securities Exchange Act of 1934 (the "Exchange Act") and the rules and regulations promulgated thereunder, excluding any excluded stockholder, who is or becomes the "Beneficial Owner" (within the meaning of Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Corporation, or of any entity resulting from a merger or consolidation involving the Corporation, representing more than thirty percent (30%) of the combined voting power of the then outstanding securities of the Corporation or such entity. (ii) A change in the composition of the Board occurring within any two year period commencing with the Effective Date, as a result of which fewer than a majority of the directors are Incumbent Directors. "Incumbent Directors" shall mean directors who either (A) are directors of the Corporation as of the Effective Date, or (B) are elected, or nominated for election, to the Board with the affirmative votes of at least a majority of those directors whose election or nomination was not in connection with any transaction described in subsections (i) or (iii) hereof, or in connection with an actual or threatened proxy contest relating to the election of directors to the Corporation. (iii) The consummation of (x) a merger, consolidation or reorganization to which the Corporation is a party, whether or not the Corporation is the Person surviving or resulting therefrom, or (y) a sale, assignment, lease, conveyance or other disposition of all or substantially all of the assets of the Corporation, in one transaction or a series of related transactions, to any Person other than the Corporation, where any such transaction or series of related transactions as is referred to in clause (x) or clause (y) above in this subparagraph (iii) (singly or collectively, a "Transaction") does not otherwise result in a "Change in Control" pursuant to subparagraph (i) of this definition of "Change in Control"; provided, however, that no such Transaction shall constitute a "Change in Control" under this subparagraph (iii) if the Persons who were the stockholders of the Corporation immediately before the consummation of such Transaction are the Beneficial Owners, immediately following the consummation of such Transaction, of thirty percent (30%) or more of the combined voting power of the then outstanding voting securities of the Person surviving or resulting from any merger, consolidation or reorganization referred to in clause (x) above in this subparagraph (iii) or 2 the Person to whom the assets of the Corporation are sold, assigned, leased, conveyed or disposed of in any transaction or series of related transactions referred in clause (y) above in this subparagraph (iii), in substantially the same proportions in which such Beneficial Owners held voting stock in the Corporation immediately before such Transaction. 1.7. CODE. The Internal Revenue Code of 1986, as amended from time to time. 1.8. COMPENSATION. The amount(s) to which a Participant is entitled during a Calendar Year. 1.9. DEFERRAL ACCOUNT. The account maintained on the books by the Plan Administrator for the Participant including (i) the Participant Annual Deferral and (ii) deemed investment earnings, gains and losses credited to the Participant; provided, however, that the existence of such book entries and the Deferral Account shall not create, and shall not be deemed to create, a trust of any kind, or a fiduciary relationship between the Corporation and the Participant, his or her designated beneficiaries, or other beneficiaries under this Plan. 1.10. DEFERRAL PERIOD. The period after which payment of the Deferral Account is to be made or begun to be made. 1.11. DISABILITY. Disability shall mean the total and permanent incapacity of the Participant, due to physical impairment or legally established mental incompetence, to perform the usual duties of his service as a Board Member with the Corporation. 1.12. EFFECTIVE DATE. January 1, 2004. 1.13. ELECTION OF DEFERRAL. A written notice filed by the Participant with the Plan Administrator of the Corporation in substantially the form attached hereto as Exhibit A, and referred herein as the "ELECTION FORM," specifying the amount (if any) of Compensation to be deferred. 1.14. ERISA. The Employee Retirement Income Security Act of 1974, as amended from time to time. 1.15. GOOD REASON means the reduction by the Corporation, on or after the occurrence of a Change in Control, of the Participant's Compensation, except in the context of a general reduction for all Board Members of up to ten per cent (10%). 1.16. PARTICIPANT. Any member of the Board of Directors who has completed and submitted an Election Form, substantially in the form of Exhibit A attached hereto. 1.17. PARTICIPANT ANNUAL DEFERRAL. The portion of a Participant's Compensation, which he or she elects to defer for the Calendar Year in question. 1.18. PLAN. This Plan, together with any and all amendments or supplements thereto. 1.19 PLAN ADMINISTRATOR. A duly authorized officer of the Corporation designated by the Board of Directors. 3 1.20 PLAN RETIREMENT DATE. The date selected by a Participant, however, no earlier than the date he or she attains 55 years of age. 1.21 PLAN YEAR. The Calendar Year. 1.22 RETIREMENT. The termination of a Participant's service on the Board of Directors of the Corporation on or after the Participant has reached his or her Plan Retirement Date. 1.23 VALUATION DATE. The last day of each quarter during a Plan Year, or such other dates as the Plan Administrator may establish in its discretion. 1.24 YEAR OF PARTICIPATION. Twelve months of continuous service on the Board of Directors of the Corporation measured from the Participant's date of entry into this Plan. ARTICLE 2 ELIGIBILITY AND PARTICIPATION 2.1 ELIGIBILITY. (a) A Board Member shall become a Participant in the Plan following submittal of a completed Participant Election Form, substantially in the form of Exhibit A attached hereto. The initial Election of Deferral must be filed on or before December 15, 2003 for any Board Member wishing to become a Participant. The Plan Administrator shall be notified by the Corporation as new Participants participate in the Plan. (b) Once a Board Member becomes a Participant, he or she shall remain a Participant until his or her termination of service on the Board of Directors of Corporation, and thereafter, until all benefits to which he or she (or his or her Beneficiaries) is entitled under the Plan have been paid. 2.2 PARTICIPATION. (a) Each Participant Annual Deferral shall be effective for Compensation that would otherwise be paid in the Calendar Year to which the Election of Deferral applies, and shall be irrevocable during such Calendar Year. Any subsequent Election of Deferral, to be effective, must be filed at least 10 days prior to the beginning of the Calendar Year for which deferral is sought. Any newly elected Board Member who chooses to participate and commence deferrals shall file an Election of Deferral within 30 days following his/her election to the Board. (b) AUTOMATIC ELECTION RENEWAL OF THE PARTICIPANT ANNUAL DEFERRAL. If a Participant fails to make a timely election to defer pursuant to the above, the Participant shall be deemed to have made the same election as is then currently in effect. 4 ARTICLE 3 CONTRIBUTIONS TO DEFERRAL ACCOUNTS 3.1 DEFERRAL ELECTION. (a) Commencing on the Effective Date, and continuing through the date on which the Participant's service as a Board Member terminates because of his or her death, Retirement, Disability, or any other cause, each Participant shall be entitled to elect to defer into his or her Deferral Account, by filing with the Plan Administrator an Election of Deferral prior to the beginning of the Plan Year, a portion of the Compensation that the Participant would be entitled to receive from the Corporation during the Plan Year. (b) In the Election of Deferral, the Participant shall specify the amount to be deferred, that may be expressed as a percentage, where applicable, or as a fixed dollar amount. ARTICLE 4 ACCOUNTS AND ALLOCATION OF FUNDS 4.1. DEFERRAL ACCOUNT ALLOCATIONS. (a) Compensation that is deferred under Section 3.1 shall be credited to the Deferral Account on or about the date the Compensation would otherwise have been paid. (b) All amounts paid from a Deferral Account are assumed to be paid on the first day of the month. (c) Based on the Deemed Investment Elections (as that term is defined in Section 4.2 (a) below) of a Participant made under Section 4.2, the Participant's Deferral Account shall be credited with deemed investment earnings, gains, losses or changes in value effective at the end of each calendar quarter during the Plan Year, except as otherwise provided in this Plan. (d) The Plan Administrator may, at any time, change the timing or methods for crediting or debiting earnings, gains, losses, and changes in value of deemed investment options, deferrals of Compensation, and payments of benefits and withdrawals under this Plan; provided, however, that the times and methods for crediting or debiting such items in effect at any particular time shall be uniform among all Participants and Beneficiaries. 4.2 DEEMED INVESTMENT ELECTION AND DECLARED RATES. (a) Deemed investment elections may be made from any of the various deemed investment alternatives selected by a Participant ("Deemed Investment Elections") from among those made available by the Corporation from time to time, which are outlined in Exhibit B. 5 (b) A Participant (or, in the event of the Participant's death, the Participant's Beneficiary) shall make Deemed Investment Elections for the Participant's Deferral Account by filing a form substantially in the form of Exhibit B (or another form acceptable to the Plan Administrator) with the Plan Administrator. A Participant may elect to have his or her Deferral Account deemed to be invested in up to ten (10) deemed investment alternatives, provided, however, that each deemed investment alternative must be applied to at least 10% of the total balance in his or her Deferral Account and must be in a whole percentage amount. Deemed Investment Elections shall remain in effect until changed and may be changed not more than once a month, such change to be effective on the 1st day of the succeeding month, by completing a Deemed Investment Option Change Form, a copy of which is attached as Exhibit E. (c) At the end of each calendar quarter (or such shorter period as the Plan Administrator may determine), the Corporation shall compute the total return for the quarter (or such shorter period) as to each Participant's Deemed Investment Elections. (d) From time to time, and at its sole discretion, the Corporation may change the deemed investment alternatives that it makes available to the Participant. However, notwithstanding the provisions of this Section 4.2, the Corporation may invest contributions in investments other than the investments selected by such Participant but the Participant's return will solely be based on the results of his or her Deemed Investment Elections. (e) The Corporation shall be under no obligation to purchase or maintain any life insurance policy, annuity contract, or any other asset, or in any manner provide funding for its obligations under this Plan. Nothing contained in this Plan and no action taken pursuant to the provisions of this Plan shall create or be construed to create a trust of any kind, or a fiduciary relationship between the Corporation and the Participant, or his designated beneficiary(ies) or any other person. (f) If the Corporation chooses to obtain insurance on the life of a Participant in connection with its obligations under this Plan, the Participant hereby agrees to take such physical examinations and to truthfully and completely supply such information as may be required by the Corporation or the insurance company(ies) designated by the Corporation. If a Participant submits information to any such insurance company(ies) and if the Participant makes a material misrepresentation in an application for any insurance that may be used to insure any of the Corporation's obligations under this Plan, and if as a result of that material misrepresentation an insurance company is not required to pay all or any part of the benefit provided under that insurance, the Participant's right to a benefit under this Plan will be reduced by the amount of the benefit that is not paid by the insurance company because of such material misrepresentation. 4.3 DETERMINATION OF ACCOUNTS. A Participant's benefit as of each Valuation Date shall consist of the balance of deferrals of Compensation and deemed investment earnings, gains, losses, and changes in value in his or her Deferral Account determined in accordance with this Section. 6 ARTICLE 5 ENTITLEMENT TO BENEFITS 5.1 VESTING OF BENEFITS. The portion of a Participant's Deferral Account that is attributable to his or her Participant Annual Deferral and deemed investment earnings, gains, losses and changes in value credited thereon shall be immediately fully vested. 5.2 RETIREMENT BENEFIT. (a) From and after the Retirement of the Participant, the Corporation shall thereafter pay to the Participant his or her Accounts. Such benefits shall be payable in the manner elected by the Participant as follows: 1. Lump Sum; or 2. Annual over 15 years; or 3. Lifetime of the Participant with 20 annual payments guaranteed Such election may be changed by the Participant by giving written notice to the Corporation not later than one year before Retirement, or promptly following a Disability. Such payments shall commence on or about the first day of the first month following the Participant's Retirement or Disability. The amount of each installment to be paid during the Calendar Year in which payment begins shall be equal to one-twelfth (1/12th) of (i) the total amount payable to the Participant as of his or her Plan Retirement Date, divided by (ii) the total number of installment payments to be made. Expected payments under the "Lifetime" option will be based on life expectancy under the 1980 CSO Mortality Table, but in no event less than 20 payments. (b) As of January 1 of each subsequent Calendar Year during the benefit payment period, the amount of each installment to be paid during such Calendar Year for elections 2 and 3 above, shall be recalculated and shall be equal to: (i) the remaining balance in the Participant's Accounts as of January 1; divided by (ii) the number of installment payments to be made in or after such subsequent Calendar Year. (c) The final installment payment for elections 2 and 3 above shall be equal to the remaining amount payable to the Participant. In no event shall the amount of any installment payment exceed the remaining amount payable to the Participant. (d) Notwithstanding the foregoing, the Corporation reserves the right to distribute a Participant's retirement benefit in one lump sum rather than in installments if the balance in the Participant's Accounts as of his Plan Retirement Date and/or as of January 1 of any subsequent Calendar Year during the benefit payment period, is less than $25,000.00. 7 5.3 FIXED PAYMENT DATE BENEFIT FOR IN-SERVICE DISTRIBUTION PRIOR TO RETIREMENT. (a) A Participant may select a fixed payment date for the payment of his or her vested Account. Payments made under this election will be payable in a lump sum. A Participant may extend a fixed payment date by written notice to the Plan Administrator, provided that the Participant gives such written notice at least one (1) year prior to the fixed payment date before such extension. Such fixed payment dates may not be accelerated. (b) Any fixed payment date elected by a Participant as provided under Section 5.3(a) above must be no earlier than the January 1 of the third Calendar Year after the Calendar Year in which the election is made, or in which the Participant gives a written notice of extension. 5.4 DISABILITY RETIREMENT BENEFIT. The Participant shall be entitled to receive payments prior to his or her Plan Retirement Date if he or she is disabled. If the Participant's service as a Board Member is terminated due to Disability, the benefit payable hereunder shall be the same amount as would have been payable as a Retirement Benefit under Section 5.2 above had the Participant attained his or her Plan Retirement Date on the date of the Disability. If the total amount of benefits payable is less than $25,000.00 the Plan Administrator will be required to pay the benefit in a lump sum rather than in installments. 5.5 DEATH BENEFITS. (a) DEATH BENEFIT PRIOR TO COMMENCEMENT OF BENEFITS. In the event of the Participant's death while in the service as a Board Member of the Corporation and prior to commencement of benefit payments, the Corporation shall pay a death benefit equal to the greater of either: (i) the Deferral Account as of the date of his or her death, or (ii) the amount, if any, the Corporation from time to time elects for such Participant in substantially the form attached hereto as Exhibit D. The death benefit payable under this Section shall be distributed to the Participant's Beneficiary in a lump sum on or about the first day of the fourth month following the Participant's death. The distribution shall be made in accordance with the last beneficiary designation received by the Plan Administrator from the Participant prior to his or her death. If no such designation has been received by the Corporation, such payments shall be made to the Participant's surviving legal spouse. If the Participant is not survived by a legal spouse, or if such spouse shall fail to so appoint, the said payments shall be made to the then living children of the Participant, if any, in equal shares. If there are no surviving children, the payments will be made to the estate of the later to die of the Participant and his or her legal spouse, if any. (b) DEATH BENEFITS AFTER COMMENCEMENT OF RETIREMENT BENEFITS. In the event of the Participant's death after the commencement of benefit payments, but prior to the completion of such payments due and owing hereunder, the Corporation shall continue to make such payments in installments over the remainder of the period specified in Sections 5.2 or 5.3 hereof that would have been applicable to the Participant had he or she survived. Such continuing payments shall be made to the 8 Participant's designated Beneficiary in accordance with the last such designation received by the Corporation from the Participant prior to his death. If no such designation has been received by the Corporation, such payments shall be made to the Participant's surviving legal spouse. If such spouse dies before receiving all payments to which he or she is entitled hereunder, then the balance of the Deferral Account shall be paid to the spouse's estate. If the Participant is not survived by a legal spouse, then the said payments shall be made to the then living children of the Participant, if any, in equal shares. If there are no surviving children, the balance of the Accounts shall be paid to the estate of the Participant. 5.6 TERMINATION OF BENEFITS. (a) In the event of the Participant's termination of service as a Board Member with the Corporation for any reason other than for Cause, Disability, Retirement or death, the Corporation shall pay to the Participant a termination benefit based on the vested value of the Participant's Deferral Account. Such termination benefit shall be payable in a lump sum on or about the first day of the third month following the date of termination. (b) In the event the Participant's service as a Board Member is terminated for Cause, Participant will be entitled to receive the value of the Participant's Annual Deferral(s), any cumulative earnings, gains, and changes in value thereof. 5.7 HARDSHIP DISTRIBUTION. (a) HARDSHIP WITHDRAWAL. In the event that the Plan Administrator, under written request of a Participant, determines, in its sole discretion, that a Participant has suffered an unforeseeable financial emergency, the Corporation shall pay to the Participant, as soon as practicable following such determination, an amount necessary to meet the emergency (the "Hardship Withdrawal"), but not exceeding the vested balance of such Participant's Deferral Account as of the date of such payment. For purposes of Section 5.7(a), an "unforeseeable financial emergency" shall mean an event that the Plan Administrator determines to give rise to an unexpected need for cash arising from an illness, casualty loss, sudden financial reversal or other such unforeseeable occurrence. Amounts of Hardship Withdrawal may not exceed the amount the Plan Administrator reasonably determines to be necessary to meet such emergency needs (including taxes incurred by reason of a taxable distribution). The amount of the deferral benefit otherwise payable under the Plan to such Participant shall be adjusted to reflect the early payment of the Hardship Withdrawal. (b) RULES ADOPTED BY PLAN ADMINISTRATOR. The Plan Administrator shall have the authority to adopt additional rules relating to Hardship Withdrawals. In administering these rules, the Plan Administrator shall act in accordance with the principle that the primary purpose of this Plan is to provide additional retirement income, not additional funds for current consumption. (c) LIMIT ON NUMBER OF HARDSHIP WITHDRAWALS. No Participant may receive more than one Hardship Withdrawal in any Calendar Year. 9 (d) PROHIBITION OF FURTHER DEFERRALS. A Participant who receives a Hardship Withdrawal and who is still a member of the Board of Directors of the Corporation, shall be prohibited from making deferrals under Section 3.1 for the remainder of the Calendar Year in which the Hardship Withdrawal is made. 5.8 TERMINATION BASED ON CORPORATE PERFORMANCE. If the amount of the Corporation's net worth, as reported on any of its quarterly filed financial statements, at any time declines below $50,000,000.00, this Plan shall terminate and each Participant shall receive a termination benefit as provided for under Section 5.6 (a) above. 5.9 ADVERSE ACTION ON PARTICIPANT OR PLAN. (a) Notwithstanding any other provision hereof, in the event there is a determination by the U.S. Internal Revenue Service ("IRS"), or in the event of a final determination by a court of competent jurisdiction, that amounts credited to Participants' Deferral Account hereunder are includable in the gross income of such Participants or their respective Beneficiaries, the Plan Administrator may, in its sole discretion, distribute the entire amount credited to the Participants Deferral Account to the Participant or their respective Beneficiaries and cause the termination of future deferrals of Compensation by the Participant. (b) In the event that there is a determination by the U.S. Department of Labor, or a final determination of a court of competent jurisdiction, that the Plan is subject to Part 2, 3 or 4 of Title I of ERISA, the Plan Administrator may, in its sole discretion, distribute the entire amount credited to the Participants' Deferral Accounts to the Participants or their respective Beneficiaries and cause the termination of future deferrals of Compensation by the Participants. 5.10 BENEFITS NOT TRANSFERABLE. No Participant or Beneficiary under this Plan shall have any power or right to transfer, assign, anticipate, hypothecate or otherwise encumber all or any part of the amounts payable hereunder. No part of the amounts payable shall, prior to actual payment, be subject to seizure or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, nor be transferable by operation of law in the event of a Participant's or any other person's bankruptcy or insolvency, or dissolution of marriage. Any such attempted assignment shall be void. 5.11 NO TRUST CREATED. Nothing contained in this Plan, and no action taken pursuant to its provisions by any person shall create, or be construed to create, a trust of any kind, or a fiduciary relationship between the Corporation and any other person. 5.12 UNCLAIMED BENEFITS. In the case of a benefit payable on behalf of a Participant, if the Plan Administrator is unable to locate the Participant or Beneficiary to whom such benefit is payable, such Plan benefit may be forfeited to the Corporation upon the Plan Administrator's determination. Notwithstanding the foregoing, if, subsequent to any such forfeiture, the Participant or Beneficiary to whom such Plan benefit is payable makes a valid claim for such Plan benefit, such forfeited Plan benefit shall be paid by the Plan Administrator to the Participant or Beneficiary, without interest on the Accounts from the date it would have otherwise been paid. 10 ARTICLE 6 DISTRIBUTION OF BENEFITS 6.1 BENEFITS PAYABLE ONLY FROM GENERAL CORPORATE ASSETS: UNSECURED GENERAL CREDITOR STATUS OF PARTICIPANT. (a) Payment to a Participant or any Beneficiary hereunder shall be made from assets which shall continue, for all purposes, to be part of the general, unrestricted assets of the Corporation; no person shall have any interest in any such asset by virtue of any provision of this Plan. The Corporation's obligation hereunder shall be an unfunded and unsecured promise to pay money in the future. To the extent that any person acquires a right to receive payments from the Corporation under the provisions hereof, such right shall be no greater than the right of any unsecured general creditor of the Corporation; no such person shall have or acquire any legal or equitable right, interest or claim in or to any property or assets of the Corporation. (b) In the event that the Corporation elects to purchase an insurance policy or policies insuring the life of a Participant, to allow the Corporation to recover or meet the cost of providing benefits in whole or in part, hereunder, no Participant or Beneficiary shall have any rights whatsoever therein or in said policy or the proceeds therefrom. The Corporation shall be the sole owner and beneficiary of any such insurance policy or property and shall possess and may exercise all incidents of ownership therein. 6.2 FACILITY OF PAYMENT. If a distribution is to be made to a minor, or to a person who is otherwise incompetent, then the Plan Administrator may, in its discretion, make such distribution (i) to the legal guardian, or if none, to a parent of a minor payee with whom the payee maintains his or her residence, or (ii) to the conservator or committee or, if none, to the person having custody of an incompetent payee. Any such distribution shall fully discharge the Plan Administrator, the Corporation and Plan from further liability on account thereof. 6.4 WITHHOLDING. Any and all payments to be made to a Participant or a Participant's Beneficiaries pursuant to this Plan shall be subject to all applicable federal, state and local income taxes, if any, and such taxes may be withheld, accordingly, by the Corporation, from benefits under this Plan or from Compensation due to the Participant, as determined by the Plan Administrator. ARTICLE 7 BENEFICIARIES; PARTICIPANT DATA 7.1 BENEFICIARY DESIGNATION. The Participant shall have the right, at any time, to submit in substantially the form attached hereto as Exhibit C, a written designation of primary and secondary Beneficiaries to whom payment under this Plan shall be made in the event of his or her death prior to complete distribution of the benefits payable hereunder. Each 11 beneficiary designation shall become effective only when receipt thereof is acknowledged in writing by the Corporation. The Corporation shall have the right, in its sole discretion, to reject any beneficiary designation that is not in substantially the form attached hereto as Exhibit C. Any attempt to designate a Beneficiary, otherwise than as provided in this Section 7.1, shall be ineffective. 7.2 SPOUSE'S INTEREST. A Participant's beneficiary designation shall be deemed automatically revoked if the Participant names a spouse as Beneficiary and the marriage is later dissolved or the spouse dies. Without limiting the generality of the foregoing, the interest in the benefits hereunder of a spouse of a Participant who has predeceased the Participant or whose marriage with the Participant has been dissolved shall automatically pass to the Participant and shall not be transferable by such spouse in any manner, including but not limited to such spouse's will, nor shall such interest pass under the laws of intestate succession. ARTICLE 8 PLAN ADMINISTRATION 8.1 RESPONSIBILITY OF ADMINISTRATION OF THE PLAN. (a) The Plan Administrator shall be responsible for the management, operation and administration of the Plan. The Plan Administrator may employ others to render advice with regard to its responsibilities under this Plan. It may also allocate its responsibilities to others and may exercise any other powers necessary for the discharge of its duties. The Plan Administrator shall be entitled to rely conclusively upon all tables, valuations, certifications, opinions and reports furnished by any actuary, accountant, controller, counsel or other person employed or engaged by the Plan Administrator with respect to the Plan. (b) The primary responsibility of the Plan Administrator is to administer the Plan for the benefit of the Participants and their respective Beneficiaries, subject to the specific terms of the Plan. The Plan Administrator shall administer the Plan in accordance with its terms and shall have the power to determine all questions arising in connection with the administration, interpretation, and application of the Plan. Any such determination shall be conclusive and binding upon all persons and their heirs, executors, beneficiaries, successors and assigns. The Plan Administrator shall have all powers necessary or appropriate to accomplish its duties under the Plan. The Plan Administrator shall also have the discretion and authority to make, amend, interpret, and enforce all appropriate rules and regulations for the administration of this Plan and decide or resolve any and all questions, including but not limited to, interpretations of this Plan and entitlement to or amount of benefits under this Plan, as may arise in connection with the Plan. 8.2 CLAIMS PROCEDURE. (a) CLAIM. A person who believes that he or she is being denied a benefit to which he or she is entitled under the Plan (hereinafter referred to as a "Claimant") may file a written request for such benefit with the Plan Administrator, setting forth his 12 or her claim. The request must be addressed to the Plan Administrator at its then principal place of business. Notwithstanding anything to the contrary, pending a determination under this Section 8.2, the undisputed portion of a benefit due to Claimant shall be timely distributed pursuant to the terms of the Plan. (b) CLAIM DECISION. Upon receipt of a claim, the Plan Administrator shall advise the Claimant that a reply will be forthcoming within 45 days. The Plan Administrator may, however, extend the reply period for an additional 30 days for reasonable cause. If the claim is denied in whole or in part, the Plan Administrator shall adopt a written opinion setting forth to the extent applicable: (i) The specific reasons for such denial; (ii) Specific reference to pertinent provisions of this Plan on which such denial is based; (i) A description of any additional material or information necessary for the Claimant to perfect his or her claim and an explanation why such material or such information is necessary; (ii) Appropriate information as to the steps to be taken if the Claimant wishes to submit the claim for review, and (iii) The time limits for requesting a review under subsection (c) hereof. (c) REQUEST FOR REVIEW. Within 60 days after receipt by the Claimant of the written opinion described above, the Claimant may request in writing that the Corporation, through its Chief Executive Officer, review the Plan Administrator's determination. Such request must be addressed to the Plan Administrator of the Corporation at its then principal place of business. The Claimant or his or her duly authorized representative may, but need not, review the pertinent documents and submit issues and comments in writing for consideration by the Corporation. If the Claimant does not request a review of the determination within such 60 day period, he or she shall be barred and estopped from challenging the determination. (d) REVIEW OF DECISION. Within 30 days after the Corporation's receipt of a request for review by a Claimant pursuant to 8.2 (c) above, the Corporation will review the Plan Administrator's determination. After considering all materials presented by the Claimant, the Corporation, through its Chief Executive Officer, will render a written opinion setting forth the specific reasons for the decision and containing specific references to the pertinent provisions of this Plan on which the decision is based. If special circumstances require that the 30 day time period be extended, the Corporation will so notify the Claimant and will render the decision as soon as possible, but in no event later than 60 days after receipt of the request for review. 8.3 ARBITRATION. Any claim or controversy between the parties which the parties are unable to resolve themselves, and which is not resolved through the claims procedure set forth in Section 8.2, including any claim arising out of, connected with, or related to the interpretation, performance or breach of any provision of this Plan, and any claim or dispute as to whether a claim is subject to arbitration, shall be submitted to and resolved 13 exclusively by expedited arbitration by a single arbitrator in accordance with the following procedures: (a) In the event of a claim or controversy subject to this arbitration provision, the complaining party shall promptly send written notice to the other party identifying the matter in dispute and the proposed remedy. Following such notice, the parties shall meet and attempt in good faith to resolve the matter. In the event the parties are unable to resolve the matter within 21 days, the parties shall meet and attempt in good faith to select a single arbitrator acceptable to both parties. If a single arbitrator is not selected by mutual consent within 10 business days following the expiration of the 21 day period, an arbitrator shall be selected from a list of nine persons each of whom shall be an attorney who is either engaged in the active practice of law or a recognized arbitrator who is experienced in serving as an arbitrator in such disputes, which list shall be provided by the office of the American Arbitration Association ("AAA") or of the Federal Mediation and Conciliation Service. If, within three business days of the parties' receipt of such list, the parties are unable to agree upon an arbitrator from the list, then the parties shall each strike names alternatively from the list, with the first to strike being determined by the flip of a coin. After each party has had four strikes, the remaining name on the list shall be the arbitrator. If such person is unable to serve for any reason, the parties shall repeat this process until an arbitrator is selected. (b) Unless the parties agree otherwise, within 60 days of the selection of the arbitrator, a hearing shall be conducted before such arbitrator at a time and a place agreed upon by the parties. In the event the parties are unable to agree upon the time or place of the arbitration, the time and place shall be designated by the arbitrator after consultation with the parties. Within 30 days of the conclusion of the arbitration hearing, the arbitrator shall issue an award, accompanied by a written decision explaining the basis for the arbitrator's award. The arbitrator's award may not include a provision for punitive damages. (c) In any arbitration hereunder, the Corporation shall pay all administrative fees of the arbitration, all fees of the arbitrator and each party's reasonable attorneys' fees, costs, and expenses. The arbitrator shall have no authority to add to or to modify the Plan, shall apply all applicable law, and shall have no lesser and no greater remedial authority than would a court of law resolving the same claim or controversy. The arbitrator shall, upon an appropriate motion, dismiss any claim without an evidentiary hearing if the party bringing the motion establishes that it would be entitled to summary judgment if the matter had been pursued in court litigation. The parties shall be entitled to reasonable discovery subject to the discretion of the arbitrator. (d) The decision of the arbitrator shall be final, binding, and non-appealable, and may be enforced as a final judgment in any court of competent jurisdiction. (e) This Section 8.3 shall extend to claims against any officer, director, shareholder, Participant, Beneficiary, or agent of each party, or of any of the above, and shall 14 apply as well to claims arising out of state and federal statutes and local ordinances as well as to claims arising under the common law or under this Plan. (f) Notwithstanding the foregoing, and unless otherwise agreed between the parties, either party may, in an appropriate manner, apply to a court for provisional relief, including a temporary restraining order or preliminary injunction, on the ground that the arbitration award to which the applicant may be entitled may be rendered ineffectual without provisional relief. (g) Any arbitration hereunder shall be conducted in accordance with the rules and procedures of the AAA then in effect; provided, however, that, (i) all evidence presented to the arbitrator shall be in strict conformity with the legal rules of evidence, and (ii) in the event of any inconsistency between the board member benefit plan claims rules and procedures of the AAA and the terms of this Plan, the terms of this Plan shall prevail. (h) If any of the provisions of this Section 8.3 are determined to be unlawful or otherwise unenforceable, in whole or in part, such determination shall not affect the validity of the remainder of this Section 8.3, and this Section 8.3 shall be reformed to the extent necessary to carry out its provisions to the greatest extent possible and to insure that the resolution of all conflicts between the parties, including those arising out of statutory claims, shall be resolved by neutral, binding arbitration. If a court should find that the provisions of this Section 8.3 are not absolutely binding, then the parties intend any arbitration decision and award to be fully admissible in evidence in any subsequent action, given great weight by any finder of fact, and treated as determinative to the maximum extent permitted by law. 8.4 NOTICE. Any notice, consent or demand required or permitted to be given under the provisions of this Plan shall be in writing and shall be signed by the party giving or making the same. If such notice, consent or demand is mailed, it shall be sent by United States certified mail, postage prepaid, return receipt requested, addressed to the addressee's last known address as shown on the records of the Corporation. The date of receipt, or the date of refusal by addressee upon presentation, shall be deemed the date of such notice, consent or demand. Any person may change the address to which notice is to be sent by giving written notice of the change of address in the manner aforesaid. ARTICLE 9 AMENDMENT OR TERMINATION 9.1 AMENDMENT OR TERMINATION. (a) This Plan may be amended or terminated by the Corporation at any time, without notice to or consent of any person, pursuant to resolutions adopted by its Board of Directors. Any such amendment or termination shall take effect as of the date specified therein and, to the extent permitted by law. However, no such amendment or termination shall reduce the amount then credited to a Participant's 15 Deferral Account. If the Plan is terminated, benefits will be distributed in one lump sum. (b) Any other provision of this Plan to the contrary notwithstanding, the Plan may be amended by the Corporation at any time, to the extent that, in the opinion of the Corporation, such amendment shall be necessary in order to ensure that the Plan will be characterized as a plan maintained for a select group of management or highly compensated employees, as described in sections 201(2), 301(a)(3) and 401(a)(1) of ERISA, or to conform the Plan to the requirements of any applicable law, including ERISA and the Code. No such amendment shall be considered prejudicial to any interest of a Participant or Beneficiary hereunder. ARTICLE 10 MISCELLANEOUS 10.1 ENTIRE AGREEMENT. The Plan and the executed Election Forms, Deemed Investment Election Form, and Beneficiary Designation Form, and other administrative forms shall constitute the total understanding between the Corporation and the Participant. No oral statement regarding the Plan may be relied upon by the Participant. In the event that there is a discrepancy between forms, this Plan will control. 10.2 INVALIDITY OF PROVISIONS. If any provision of this Plan shall, for any reason, be held to be invalid or unenforceable, the remaining provisions shall nevertheless be carried into effect. 10.3 GOVERNING LAW. The Plan and the rights and obligations of all persons hereunder shall be governed by and construed in accordance with the laws of the State of Illinois, other than its laws regarding choice of law, to the extent that such state law is not preempted by federal law. IN WITNESS WHEREOF, the Corporation has executed this Plan as of the day and year above first written. ATTEST: PCTEL, INC. By: ____________________________ ____________________, Secretary Title: Chief Executive Officer 16 PCTEL, INC. BOARD OF DIRECTORS DEFERRED COMPENSATION PLAN PARTICIPATION AGREEMENT ELECTION FORM EXHIBIT A THIS PARTICIPATION AGREEMENT is entered into this ____day of ___________, 20___ between PCTEL, INC., hereinafter referred to as the "Corporation", and _______________________, hereinafter referred to as the "Participant". PART I. ELECTION TO DEFER (Please check all that apply) I understand and acknowledge that this Election of Deferral will be effective for the following Plan Year. If I wish to change my deferral election in subsequent Plan Year(s), I realize that I must deliver a new Election Form to the Plan Administrator of the Corporation at least 10 days prior to the beginning of the Plan Year for which the deferral is sought. If I fail to timely make an election, I shall be deemed to have made the same election as is then currently in effect. [ ] I WILL participate in the Corporation's Board of Directors Deferred Compensation Plan for the forthcoming Plan Year and duly authorize the Corporation to make the appropriate withdrawals from my Compensation. I hereby elect to defer receipt of board fees and committee fees for the forthcoming Plan Year as set forth below: [ ] ____% or $________ of my board fees to be withdrawn from my Compensation for each board meeting during the Plan Year. [ ] ____% or $________ of my Committee Fees to be withdrawn from my Compensation for each Committee Fee during the Plan Year. OR; [ ] I will NOT participate in the Corporation's Board of Directors Deferred Compensation Plan for the forthcoming Plan Year. NOTE: THIS ELECTION IS IRREVOCABLE FOR THE FORTHCOMING PLAN YEAR. PART II. DISTRIBUTION OF BENEFITS ELECTION (ARTICLE 5 OF THE PLAN): Please select A (and the choices under A) or B. [ ] A. RETIREMENT BENEFITS. I hereby elect to have my Retirement or Disability benefits distributed to me in the following manner: Distribution to be paid (check one): [ ] Lump Sum [ ] Annually over 15 years [ ] Lifetime of the Participant with 20 annual payments guaranteed NOTE: THIS ELECTION MAY BE CHANGED BY THE PARTICIPANT BY GIVING WRITTEN NOTICE TO THE CORPORATION NOT LATER THAN ONE YEAR BEFORE RETIREMENT, OR PROMPTLY FOLLOWING A DISABILITY. BY THE TERMS OF THE PLAN, THE RETIREMENT AGE IS AGE 55 OR LATER. [ ] B. FIXED PAYMENT DATE BENEFITS. This Section applies if you wish to elect an in-service distribution prior to retirement age. All distributions under this section are made in a lump sum. I hereby elect to have my fixed payment date benefits distributed to me at the following date: Date for fixed payments to commence_____________________________ (This date may be no earlier than the January 1 of the third Calendar Year after the Calendar Year in which this election is made. NOTE: THIS ELECTION MAY BE CHANGED TO EXTEND THE FIXED PAYMENT DATE TO A LATER DATE SO LONG AS (a) THE ELECTION TO SO EXTEND THE DATE IS AT LEAST ONE YEAR BEFORE THE ORIGINAL DATE, AND (b) THE EXTENDED DATE IS NO EARLIER THAN JANUARY 1 OF THE THIRD CALENDAR YEAR AFTER ISSUING THE ELECTION TO EXTEND. SUCH DATES MAY NOT BE ACCELERATED. PCTEL, INC. PARTICIPANT ____________________________________ ____________________________________ Signature 2 PCTEL, INC. BOARD OF DIRECTORS DEFERRED COMPENSATION PLAN ---DEEMED INVESTMENT ELECTIONS--- EXHIBIT B THIS ELECTION is submitted by ____________________ ("Participant") to PCTEL, Inc. this _____ day of ________, 20___. DEEMED INVESTMENT ELECTIONS: I elect to have my Deferral Account credited with a rate of return based on the following Deemed Investment Elections. These Deemed Investment Elections shall supersede any prior elections that I have made and shall continue until such time as I make a new Deemed Investment Election in accordance with the terms of the Plan. I acknowledge that Deemed Investment Elections may be changed by a Participant not more than once a month and each investment option must have at least a 10% allocation of the Participant's deferral. (I further acknowledge that materials and a prospectus have been made available to me containing detailed explanations of Deemed Investment options.)
DEEMED INVESTMENT OPTIONS % DEEMED INVESTMENT OPTIONS % Money Market Fidelity VIP Mid Cap SC2 Mortgage Securities Index 400 Mid-Cap Bond Small Company Value Global Bond Capital Appreciation Asset Allocation Janus Aspen International Growth Fund CL2 Real Estate Securities International Stock Macro Cap Value Small Company Growth Fidelity VIP Equity-Income SC2 Franklin Small Cap Fund CL2 Value Stock Micro Cap Growth Templeton Asset Strategy Fund CL2 Janus Aspen Cap Appreciation - Srv Sh Index 500 CSWP Global Post Venture Cap Fidelity VIP Contrafund SC2 Templeton Developing Markets Fund CL2 Growth
PARTICIPANT ___________________________________ Signature PCTEL, INC. BOARD OF DIRECTORS DEFERRED COMPENSATION PLAN DESIGNATION OF BENEFICIARY EXHIBIT C TO: PCTEL, INC. (hereinafter referred to as the "Corporation"), In accordance with the rights granted to me as a Participant in the PCTEL, Inc. Board of Directors Deferred Compensation Plan, I hereby designate the following as primary and 1st contingent Beneficiary(ies) thereunder to receive payments in the event of my death: PRIMARY Beneficiary: _________________________________________________ Relationship: ___________________________________ 1ST CONTINGENT Beneficiary: __________________________________________ Relationship: ___________________________________ I further reserve the privilege of changing the Beneficiary(ies) herein named at any time or times without the consent of any such Beneficiary(ies). This designation is made upon the following terms and conditions: 1. The word "Beneficiary" as used herein shall include the plural, Beneficiaries, wherever the Plan permits. 2. For purposes of this Beneficiary Designation, no person shall be deemed to have survived the Participant if that person dies within thirty (30) days of the Participant's death. 3. Beneficiary shall mean the Primary Beneficiary if such Primary Beneficiary survives the Participant by at least thirty (30) days, and shall mean the 1st Contingent Beneficiary if the Primary Beneficiary does not survive the Participant by at least thirty (30) days. 4. If the Primary Beneficiary shall be deceased on any annual payment date provided in said Plan, any and all remaining annual payments shall be payable to the 1st Contingent Beneficiary unless the executors or administrators of said deceased Beneficiary are named as Primary Beneficiary hereinabove. 5. If more than one Beneficiary is named within the same class (i.e., Primary or 1st Contingent), then annual payments shall be made equally to such Beneficiaries unless otherwise provided hereinabove. If any such Beneficiary dies while receiving annual payments under said Agreement, any and all remaining payments shall continue to be made to the surviving Beneficiaries of such class and to the legal heirs of the deceased Beneficiary, which legal heirs shall receive the amount that was being received by said deceased Beneficiary. If all of the Beneficiaries of a class shall die, any and all remaining payments shall be made to the next class of Beneficiaries, as provided under Paragraph 4 above. 6. If none of the Beneficiaries named hereinabove are living on any said annual payment date, any and all remaining payments shall be made to my executors or administrators, or upon their written request, to any person or persons so designated by them. 7. If any such annual payments shall be payable to any trust, the Corporation shall not be liable to see to the application by the Trustee of any payment hereunder at any time, and may rely upon the sole signature of the Trustee to any receipt, release or waiver, or to any transfer or other instrument to whomsoever made purporting to affect this nomination or any right hereunder. 8. A Participant's Beneficiary designation shall be deemed automatically revoked if the Participant names a spouse as Beneficiary and the marriage is later dissolved or the spouse dies. Without limiting the generality of the foregoing, the interest in the benefits hereunder of a spouse of a Participant who has predeceased the Participant or whose marriage with the Participant has been dissolved shall automatically pass to the Participant and shall not be transferable by such spouse in any manner, including but not limited to such spouse's will, nor shall such interest pass under the laws of intestate succession. THIS DESIGNATION CANCELS AND SUPERSEDES ANY DESIGNATION OF BENEFICIARY HERETOFORE MADE BY ME WITH RESPECT TO SAID PLAN AND THE RIGHT TO RECEIVE PAYMENTS THEREUNDER. Dated: ___________________ Participant/Board Member: ____________________ I am the spouse of the Participant/Board Member named above. I have read and understood the foregoing Designation of Beneficiary, and especially paragraph 8 thereof. I understand that the Plan does not permit the assignment of the Participant/Board Member's benefits to me in the event of the dissolution of my marriage. I also understand that, even if I am named as a Beneficiary, my rights may be impaired in the event of the dissolution of my marriage or my death before the Participant/Board Member. Dated: _____________________ _____________________________________ Spouse Acknowledgment of receipt this __day of ___________, 20__ By:_________________ 2 PCTEL, INC. BOARD OF DIRECTORS DEFERRED COMPENSATION PLAN DEATH BENEFIT EXHIBIT D Section 5.5(a) of the PCTEL, Inc. Board of Directors Deferred Compensation Plan provides that the death benefit attributable to a Participant's Deferral Account shall equal the Participant's Deferral Account or the amount stated in this Exhibit D, whichever is greater. The death benefit for _______________________________________________ (Name of Participant ) is $_______________________. This Exhibit D supersedes and replaces all prior Exhibit's D executed by PCTEL, Inc. with respect to the above named Participant. Dated this __________ day of __________________________, 20______. PCTEL, Inc. By: _____________________________ Its: _____________________________ DEEMED INVESTMENT OPTION CHANGE FORM FOR THE PCTEL, INC. BOARD OF DIRECTORS DEFERRED COMPENSATION PLAN EXHIBIT E ____________________________ _____________________________ Participant's Name Social Security Number I hereby request that my existing account balances and future contributions be allocated as follows: (Minimum allocation is 10% - total must equal 100%). If no change is desired in your current account, do NOT complete Column A. Complete both Columns A and B, if you want your existing balances and future contributions changed.
COLUMN A COLUMN B -------- -------- Change Existing Future Payroll Account Balances Contributions Only DEEMED INVESTMENT OPTIONS Money Market __________% __________% Mortgage Securities __________% __________% Bond __________% __________% Global Bond __________% __________% Asset Allocation __________% __________% Real Estate Securities __________% __________% Macro Cap Value __________% __________% Fidelity VIP Equity-Income SC2 __________% __________% Value Stock __________% __________% Templeton Asset Strategy Fund CL2 __________% __________% Index 500 __________% __________% Fidelity VIP Contrafund SC2 __________% __________% Growth __________% __________% Fidelity VIP Mid Cap SC2 __________% __________% Index 400 Mid-Cap __________% __________% Small Company Value __________% __________% Capital Appreciation __________% __________% Janus Aspen International Growth Fund CL2 __________% __________% International Stock __________% __________% Small Company Growth __________% __________% Franklin Small Cap Fund CL2 __________% __________% Micro Cap Growth __________% __________% Janus Aspen Cap Appreciation - Srv Sh __________% __________% CSWP Global Post Venture Cap __________% __________% Templeton Developing Markets Fund CL2 __________% __________% TOTAL MUST EQUAL 100% FOR EACH COLUMN USED 100% 100%
IMPORTANT: The Participant acknowledges that he/she has received information regarding each of the above Deemed Investment Options, including a copy of the prospectus. The Participant further acknowledges that the Plan Administrator has discretion as to whether his/her deferrals are actually invested in the funds selected above; the Corporation is not obligated to acquire or hold any of the investments selected above. AGREED AND ACCEPTED BY THE PARTICIPANT ________________________________________ ________________________ Signature of Participant Date AGREED AND ACCEPTED BY THE CORPORATION ________________________________________ ________________________ Signature of Corporation Officer Date 2