================================================================================
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ x ] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended June 30, 1997.
OR
[ ] Transition report pursuant to Section 13(d) or 15(d) of the Securities
Exchange Act of 1934 for the transition period from __________ to __________.
Commission file number: 0-23296
CIDCO INCORPORATED
(Exact Name of Registrant as Specified in its Charter)
Delaware 13-3500734
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
220 Cochrane Circle
Morgan Hill, CA 95037
(Address of principal executive offices and zip code)
(408) 779-1162
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
----- -----
The number of shares outstanding of the Registrant's Common Stock on August 12,
1997 was 14,418,632.
================================================================================
<PAGE>
CIDCO INCORPORATED
Form 10-Q
INDEX
PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements:
Balance sheet at June 30, 1997
and December 31, 1996 ..................................3
Income statement for the three and
six months ended June 30, 1997 and 1996 ................4
Statement of cash flows for the
six months ended June 30, 1997 and 1996 ................5
Notes to financial statements ..............................6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations...........7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings..........................................11
Item 2. Changes in Securities......................................11
Item 3. Defaults upon Senior Securities............................11
Item 4. Submission of Matters to a Vote of Security Holders........11
Item 5. Other Information..........................................12
Item 6. Exhibits and Reports on Form 8-K ..........................12
SIGNATURES ..................................................................13
<PAGE>
<TABLE>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
<CAPTION>
CIDCO INCORPORATED
BALANCE SHEET
(in thousands, except per share data)
June 30, December 31,
1997 1996
---------- ---------
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents .............................. $ 38,733 $ 26,509
Short-term investments ................................. 40,964 38,560
Accounts receivable, net of allowances
for doubtful accounts of $3,097 and $2,966............ 38,137 48,242
Inventories ............................................ 8,085 14,555
Deferred tax asset ..................................... 5,086 5,086
Other current assets ................................... 829 1,284
----------- -----------
Total current assets ................................. 131,834 134,236
Property and equipment, net ............................... 12,603 14,118
Other assets .............................................. 3,134 4,259
----------- -----------
$ 147,571 $ 152,613
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ....................................... $ 14,034 $ 16,880
Accrued liabilities .................................... 9,348 6,211
Accrued taxes payable .................................. - 676
----------- -----------
Total current liabilities ............................ 23,382 23,767
----------- -----------
Stockholders' equity:
Common stock, $.01 par value; 35,000 sharesauthorized,
14,311 and 14,033 shares issued and outstanding ..... 144 144
Additional paid-in capital ............................. 88,587 87,725
Treasury stock.......................................... (12,942) -
Retained earnings ...................................... 48,400 40,977
----------- -----------
Total stockholder's equity ........................... 124,189 128,846
----------- -----------
$ 147,571 $ 152,613
=========== ===========
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
CIDCO INCORPORATED
INCOME STATEMENT
(in thousands, except per share data; unaudited)
<CAPTION>
Three months ended Six months ended
June 30, June 30,
------------------------ ------------------------
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Sales ......................... $ 58,288 $ 60,446 $ 135,318 $ 112,132
Cost of sales ................. 31,239 33,920 74,022 62,983
--------- --------- --------- ---------
Gross margin .................. 27,049 26,526 61,296 49,149
--------- --------- --------- ---------
Operating expenses:
Research and development .. 4,464 3,371 8,524 6,495
Selling and marketing ..... 16,020 10,971 36,448 18,234
General and administrative 2,355 2,133 5,245 3,819
--------- --------- --------- ---------
22,839 16,475 50,217 28,548
--------- --------- --------- ---------
Income from operations ........ 4,210 10,051 11,079 20,601
Other income, net ............. 691 557 1,150 957
--------- --------- --------- ---------
Income before income taxes..... 4,901 10,608 12,229 21,558
Provision for income taxes .... 1,860 4,243 4,791 8,623
--------- --------- --------- ---------
Net income .................... $ 3,041 $ 6,365 $ 7,438 $ 12,935
========= ========= ========= =========
Earnings per share ............ $ 0.22 $ 0.42 $ 0.52 $ 0.86
========= ========= ========= =========
Weighted average shares........ 13,999 15,196 14,339 15,106
========= ========= ========= =========
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<PAGE>
CIDCO INCORPORATED
STATEMENT OF CASH FLOWS
(in thousands, unaudited)
Six months ended
June 30,
1997 1996
--------- --------
Cash flows provided by operating activities:
Net income ......................................... $ 7,438 $ 12,935
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization..................... 3,153 2,514
Loss on sale or disposal of equipment............. 242 -
Equity in losses of affiliate .................... 1,237 -
Changes in assets and liabilities:
Accounts receivable ............................ 10,105 (239)
Inventories .................................... 6,470 4,217
Other current assets ........................... 455 (899)
Other assets ................................... (112) (5,176)
Accounts payable ............................... (2,846) 5,090
Accrued liabilities ............................ 3,137 1,524
Accrued taxes payable .......................... (676) 499
--------- ---------
Net cash provided by operating activities .. 28,603 20,465
--------- ---------
Cash flows used in investing activities:
Acquisition of property and equipment .............. (1,880) (2,209)
Purchase of short-term investments, net ............ (2,419) (19,900)
--------- ---------
Net cash used in investing activities ...... (4,299) (22,109)
--------- ---------
Cash flows provided by (used in) financing activities:
Issuance of common stock ........................... 862 1,929
Treasury stock purchases............................ (12,942) -
Long-term debt ..................................... - 150,000
--------- ---------
Net cash provided by (used in) financing activities. (12,080) 151,929
--------- ---------
Net increase in cash and cash equivalents ............. 12,224 150,285
Cash and cash equivalents at beginning of period ...... 26,509 19,290
--------- ---------
Cash and cash equivalents at end of period ............ $ 38,733 $ 169,575
========= =========
Supplemental disclosure of cash flow information:
Cash paid for income taxes ......................... $ 5,660 $ 8,124
========== =========
Supplemental disclosure of non-cash investing and
financing activities:
Unrealized gain (loss) on investments .............. $ (15) $ 167
========== =========
The accompanying notes are an integral part of these financial statements.
<PAGE>
CIDCO INCORPORATED
NOTES TO FINANCIAL STATEMENTS
NOTE 1-- BASIS OF PRESENTATION
The accompanying financial information is unaudited, but, in the
opinion of management, reflects all adjustments (which include only normally
recurring adjustments) necessary for a fair presentation of the Company's
financial position, operating results and cash flows for those periods
presented. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to the rules and regulations
of the Securities and Exchange Commission. The financial information should be
read in conjunction with the audited financial statements and notes thereto for
the year ended December 31, 1996 included in the Company's Annual Report on Form
10-K filed with the Securities and Exchange Commission. Results for the interim
periods are not necessarily indicative of results for the entire year.
NOTE 2--RECENT ACCOUNTING PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128 ("FAS 128"), "Earnings Per Share." This
statement is effective for the Company's quarter ending December 31, 1997. The
Statement redefines earnings per share under generally accepted accounting
principles. Under the new standard, primary earnings per share is replaced by
basic earnings per share and fully diluted earnings per share is replaced by
diluted earnings per share.
The unaudited pro forma basic and diluted earnings per share for the periods
ended June 30, 1997 and 1996 computed in accordance with FAS 128 are as follows:
Three months ended Six months ended
June 30, June 30,
------------------- -------------------
1997 1996 1997 1996
-------- ------- -------- ------
Basic earnings per share........ $ 0.22 $ 0.45 $ 0.52 $ 0.91
Diluted earnings per share...... 0.22 0.42 0.52 0.86
In June 1997, the FASB issued Statement No. 130, "Reporting Comprehensive
Income" ("FAS 130"). FAS 130 establishes standards for reporting comprehensive
income and its components in a financial statement that is displayed with the
same prominence as other financial statements. Comprehensive income as defined
includes all changes in equity (net assets) during a period from nonowner
sources. Examples of items to be included in comprehensive income, which are
excluded from net income, include foreign currency translation adjustments and
unrealized gain/loss on available-for-sale securities. The disclosure prescribed
by FAS 130 must be made beginning with the first quarter of calendar 1998.
In June 1997, the FASB issued Statement No. 131, "Disclosures about Segments of
an Enterprise and Related Information" ("FAS 131"). This statement establishes
standards for the way companies report information about operating segments in
annual financial statements. It also establishes standards for related
disclosures about products and services, geographic areas, and major customers.
The company has not yet determined the impact, if any, of adopting this new
standard. The disclosures prescribed by FAS 131 are effective for calendar 1998.
<PAGE>
NOTE 3--COMMON STOCK
On January 27, 1997, the Company announced its plans to purchase up to 1 million
shares of its outstanding Common Stock. As of June 30, 1997, the Company had
repurchased 1 million shares at an aggregate price of $12.9 million. The Company
does not intend to repurchase additional shares in the foreseeable future.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following information should be read in conjunction with the interim
financial statements and the notes thereto in Part I, Item 1 of this Quarterly
Report.
Background
The Company's sales and distribution channels include direct marketing
fulfillment programs, standard fulfillment of telephone company orders, and
wholesale shipments directly to telephone companies ("Direct to Telco"),
international accounts, retail stores ("Retail"), and OEM customers. Direct
marketing fulfillment programs are sales campaigns run by the Company involving
the use of television and radio advertising, consumer mailings and telemarketing
to sell services which utilize the Company's products and are offered as an
agent for the Regional Bell Operating Companies (each an "RBOC") and independent
telephone operating companies (each an "Independent Telco"). Fulfillment sales,
excluding the direct marketing programs, occur when the Company receives an
order either electronically or through an on-line transfer of the customer by
the RBOC or Independent Telco, and the Company ships the requested product
directly to the customer. In the case of standard fulfillment sales, the RBOC or
Independent Telco generates the order by performing the marketing activities
themselves. Standard fulfillment sales accounted for 43%, 68% and 50% of sales
in 1996, 1995 and 1994, respectively. Direct marketing fulfillment sales totaled
25%, 2% and 0% of sales in 1996, 1995 and 1994, respectively. In the second
quarter of 1997, standard fulfillment sales accounted for 33% of sales and
direct marketing fulfillment sales totaled 48% of sales. In the first half of
1997, standard fulfillment sales accounted for 36% of sales and direct marketing
fulfillment sales totaled 49% of sales.
This Management's Discussion and Analysis of Financial Condition and Results of
Operations contains forward-looking statements which reflect the Company's
current views with respect to future events which may impact the Company's
results of operations and financial condition. In this report, the words
"anticipates," "believes," "expects," "intends," "future" and similar
expressions identify forward-looking statements. These forward-looking
statements are subject to risks and uncertainties and other factors, including
those set forth below under the caption "Factors Which May Affect Future
Results," which could cause the actual future results to differ materially from
historical results or those described in the forward-looking statements. The
forward-looking statements contained in this Management's Discussion and
Analysis of Financial Condition and Results of Operations and made elsewhere by
the Company should be considered in light of these factors. Readers are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date hereof.
<PAGE>
Results of Operations
The following table sets forth for the periods indicated the percentage of sales
represented by certain line items in the Company's income statement:
Three months ended Six months ended
June 30, June 30,
------------------- -------------------
1997 1996 1997 1996
-------- -------- -------- ------
Sales ......................... 100.0% 100.0% 100.0% 100.0%
Cost of sales ................. 53.6 56.1 54.7 56.2
------- ------- ------- -------
Gross margin .................. 46.4 43.9 45.3 43.8
------- ------- ------- -------
Operating expenses:
Research and development ... 7.7 5.6 6.3 5.8
Selling and marketing ...... 27.5 18.2 26.9 16.3
General and administrative . 4.0 3.5 3.9 3.4
------- ------- ------- -------
39.2 27.3 37.1 25.5
------- ------- ------- -------
Income from operations ........ 7.2 16.6 8.2 18.3
Other income, net.............. 1.2 0.9 0.8 0.9
------- ------- ------- -------
Income before income taxes .... 8.4 17.5 9.0 19.2
Provision for income taxes .... 3.2 7.0 3.5 7.7
------- ------- ------- -------
Net income .................... 5.2% 10.5% 5.5% 11.5%
======= ======= ======= =======
Sales
Sales are recognized upon shipment of the product to the customer less reserves
for anticipated returns or retention of certain services provided by the RBOCs
and customer credit worthiness. Sales decreased 4% to $58.3 million in the
second quarter of 1997 from $60.4 million in the second quarter of 1996. This
decrease was primarily due to a decrease in unit sales of phones sold to
Ameritech and Southwestern Bell customers and a decline in sales to the
Company's retail channel. These declines were partially offset by increased unit
sales of adjunct products through the Company's direct marketing programs for
Caller ID services on behalf of GTE as well as standard fulfillment sales to
NYNEX customers. In the first half of 1997, sales were $135.3 million, a 21%
increase over sales of $112.1 million for the same period in 1996. This increase
was primarily due to strong first quarter results from increased unit sales of
adjunct products through the Company's direct marketing programs for Caller ID
services on behalf of Southwestern Bell and GTE as well as strong standard
fulfillment sales to US West and NYNEX customers. Ameritech, the Company's
second largest customer in 1996, discontinued selling the Company's products in
the second quarter of 1997. The Company believes that Ameritech will not be
making any significant purchases for the remainder of 1997. The overall average
sales price was $35 per unit both in the second quarter and in the first six
months of 1997 versus $40 per unit and $42 per unit in the respective periods in
1996. This reduction in average sales prices during the second quarter and first
half of 1997 as compared to the same periods in 1996 resulted from changes in
the overall mix of unit sales during these periods. During the second quarter
and first half of 1996 sales of the Company's phone products (which generally
carry a higher average selling price than the Company's adjunct products)
decreased from 19% and 30%, respectively, of sales to 4% of sales during both
the second quarter and first half of 1997.
<PAGE>
Gross margin
Cost of sales includes primarily the cost of finished goods purchased from the
Company's offshore contract manufacturers, costs associated with procuring and
warehousing the Company's inventory and royalties payable on licensed technology
used in the Company's products. Gross margin as a percentage of sales increased
to 46.4% in the second quarter of 1997 from 43.9% in the same quarter of 1996.
Gross margin as a percentage of sales increased to 45.3% in the first six months
of 1997 from 43.8% for the same period in 1996. These increases primarily
resulted from increased sales through the Company's direct marketing programs,
which typically have higher gross margins. The Company expects gross margins to
vary in the future due to changes in sales mix by distribution channel and
product mix. In addition, the Company anticipates that gross margins may decline
over time as a result of competitive pricing pressures.
Research and development expenses
Research and development expenses represent primarily salaries for personnel,
associated benefits and tooling and supplies for research and development
activities. The Company's policy is to expense all research and development
expenditures as incurred except for certain investments for tooling. Research
and development expenses increased to $4.5 million in the quarter ended June 30,
1997 from $3.4 million in the same quarter of 1996. Research and development
expenses in the six month periods ended June 30, 1997 and 1996 were $8.5 million
and $6.5 million, respectively. These increases primarily resulted from
increased spending on development projects, such as ADSI phones, cordless
telephones and advanced screen phones which provide access to the Internet.
Specifically, the Company recognized $1.2 million of expense in the first half
of 1997 related to the Company's equity in losses of InfoGear, which is
developing the software for the Company's initial Internet product. The Company
expects equity in losses of Infogear to continue at this level for the remainder
of 1997. Research and development expenses as a percentage of sales increased to
7.7% in the quarter ended June 30, 1997 from 5.6% in the like period of 1996 and
to 6.3% in the six months ended June 30, 1997 from 5.8% in the like period of
1996. The Company expects that research and development spending will increase
slightly during the remainder of 1997.
Selling and marketing expenses
Selling and marketing expenses represent primarily personnel costs, telephone
and electronic data exchange expenses, promotional costs and travel expenses.
Selling and marketing expenses increased to $16 million in the quarter ended
June 30, 1997 from $10.9 million in the comparable period of 1996. As a
percentage of sales, selling and marketing expenses increased to 27.5% in the
quarter ended June 30, 1997 from 18.2% in the like period of 1996. In the six
months ended June 30, 1997, selling and marketing expenses were $36.4 million or
26.9% of sales versus $18.2 million or 16.3% of sales in the same period of
1996. These increases were due principally to the Company's increased promotion
of intelligent network services through several direct mail, direct response
television and telemarketing campaigns, resulting in increased advertising and
telemarketing agency costs. The Company expects that selling and marketing
expenses as a percentage of sales will remain at these higher levels due to the
anticipated continued reliance on direct marketing activities during the
remainder of 1997.
General and administrative expenses
General and administrative expenses represent primarily salaries, benefits and
other expenses associated with the finance and administrative functions of the
Company. General and administrative expenses increased to $2.4 million in the
quarter ended June 30, 1997 from $2.1 million in the comparable period of 1996.
As a percentage of sales, general and administrative expenses increased to 4.0%
in the quarter ended June 30, 1997 from 3.5% in the comparable period of 1996.
These increases reflect increased legal and recruiting costs. In the six months
ended June 30, 1997, general and administrative expenses were $5.2 million or
3.9% of sales versus $3.8 million or 3.4% of sales in the same period of 1996.
In addition to the second quarter increases year to date numbers reflect a one
time charge on contractually obligated expenses incurred as part of the
relinquishment of day-to-day duties of certain executives which occurred in the
first quarter of 1997. The Company believes that general and administrative
expenditures will remain approximately the same as a percentage of sales during
the remainder of 1997.
<PAGE>
Provisions for income taxes
The provisions for income taxes in the quarters ended June 30, 1997 and 1996
reflect rates of 38% and 40%, respectively. The provisions for income taxes in
the six months ended June 30, 1997 and 1996 reflect rates of 39% and 40%,
respectively.
Liquidity and capital resources
The Company's cash, cash equivalents and short-term investments increased $14.6
million during the six months ended June 30, 1997 primarily due to cash
generated by operating activities of $28.6 million, offset by the Company's
repurchase of one million shares of its Common Stock for an aggregate purchase
price of $12.9 million and acquisitions of property and equipment of $1.9
million. Cash generated by operations of $28.6 million resulted primarily from
net income of $7.4 million, decreases in accounts receivable of $10.1 million
and inventories of $6.5 million and an increase in accrued liabilities of $3.1
million. The Company had working capital of $108.5 million as of June 30, 1996
as compared to $110.5 million at December 31, 1996. The Company's current ratio
was 5.6 to 1 both at June 30, 1997 and December 31, 1996. The Company believes
that cash, cash equivalents and short term investments will remain at the same
levels for the remainder of 1997.
The Company has a credit line of $25 million which is secured by the Company's
assets. The interest rate on the line is the bank's prime rate less 0.25%. The
Company had not borrowed any funds under the line as of June 30, 1997.
Capital expenditures in 1997 (which are budgeted to be approximately $5 million
during the remaining six months of 1997) are expected to be funded from working
capital currently available. The Company believes its current cash, cash
equivalents, short-term investments and line of credit will satisfy the
Company's working capital and capital expenditure requirements for the next
twelve months.
Factors That May Affect Future Results
The Company has experienced and may in the future experience significant
fluctuations in sales and operating results from quarter to quarter due to a
variety of factors. These factors include: the timing of the adoption and/or
initiation of Caller ID, Caller ID on Call Waiting, ADSI and other services
(collectively, "Services") by RBOCs, Independent Telco's and other service
providers on a system-wide or regional basis; the timing of significant orders
for the Company's products; the extent to which RBOCs and Independent Telcos
promote Services and fluctuations in such promotional activities; the success of
the Company's own direct marketing programs, in particular, deriving adequate
sales volumes and control of related costs; the addition or loss of distribution
channels or outlets; changes in service charges for Services; new product
introductions by the Company or its competitors; technical difficulties with
RBOC and Independent Telco networks; changes in the Company's product mix or
sales mix by distribution channel that may affect sales prices, margins or both;
future expansion of the Company's marketing and services operations;
technological difficulties and resource constraints encountered in developing
and introducing new products; disruption in sources of supply, manufacturing and
product delivery; changes in material costs; regulatory changes; general
economic conditions, competitive pressures and other factors. The Company's
operating expenses are based on anticipated sales levels, and a high percentage
of such expenses are relatively fixed. Because the Company has minimal backlog
and its sales in each quarter results primarily from orders received in that
quarter, variations in the timing of major orders for the Company's products can
cause significant fluctuations in operating result from quarter to quarter.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Not Applicable
Item 2. Changes in Securities
Not Applicable
Item 3. Defaults Upon Senior Securities
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
(a) The Company held its 1997 Annual Meeting of Stockholders on
May 29, 1997. Proxies for the meeting were solicited pursuant
to Regulation 14A. At the close of business on the record date
for the meeting (which was April 29, 1997), there were
13,987,086 shares of the Company's common stock issued and
outstanding and entitled to vote at the meeting. Holders of
12,811,501 shares of the Company's common stock (representing
a like number of votes) were present at the meeting, either in
person or by proxy.
(b) The Company's Board of Directors is divided into three
classes, with Directors in each class serving for three-year
terms. Accordingly, not all Directors are elected at each
Annual Meeting of Stockholders. Paul G. Locklin and Joseph A.
Graziano were re-elected as Directors at the 1997 Annual
Meeting of Stockholders. The other Directors whose terms of
office continued after the meeting are Daniel L. Eilers, Scott
C. McDonald, Richard M. Moley and Ernest K. Jacquet.
(c) The matters described below were voted on at the 1997 Annual
Meeting of Stockholders, and the number of votes cast with
respect to each matter and, with respect to the election of
Directors, for each nominee, were as indicated.
(1) To elect two Class C Directors of the Company to
serve for a three-year term.
PAUL G. LOCKLIN
For: 12,329,189; Withheld: 482,315
JOSEPH A. GRAZIANO
For: 12,328,736; Withheld: 482,765
(2) To approve an amendment increasing the number of
shares of the Company's common stock available for
issuance under the Company's Amended and Restated
1993 Stock Option Plan by 750,000 shares.
For: 6,537,288; Against: 2,957,644; Abstain:
42,856; Broker Non-Votes: 3,273,713.
(3) To approve amendments to the Company's 1994
Directors' Stock Option Plan increasing the number of
shares of the Company's common stock available for
issuance under the Plan by 150,000 shares and
providing for the automatic acceleration of the
vesting of all options granted under the Plan in the
event of a change of control of the Company.
For: 8,955,757; Against: 745,824; Abstain: 45,258;
Broker Non-Votes: 3,064,662.
(4) To ratify the appointment of Price Waterhouse LLP as
independent auditors of the Company for the fiscal
year ending December 31, 1997. For: 12,762,569;
Against: 26,528; Abstain: 22,404.
<PAGE>
Item 5. Other Information
Not Applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
See Index to Exhibits at page 12 below.
(b) Reports on Form 8-K.
The Company filed no reports on Form 8-K during the three
months ended June 30, 1997.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
CIDCO INCORPORATED
August 14, 1997 By:/s/Daniel L. Eilers
- --------------- ------------------
Date Daniel L. Eilers
President and Chief Executive Officer
August 14, 1997 /s/Richard D. Kent
- --------------- ------------------
Date Richard D. Kent
Vice President, Finance
and Chief Financial Officer
<PAGE>
<TABLE>
CIDCO INCORPORATED
INDEX TO EXHIBITS
<CAPTION>
Exhibits Page
-------- ----
<S> <C> <C>
3.1 Amended and Restated Certificate of Incorporation. (1) --
3.2 Amended and Restated By-Laws. 16
4.1 Second Amendment to Revolving Credit Loan Agreement dated
October 13, 1995 between Registrant and Comerica Bank. (4) --
10.4 Patent License Agreement dated as of May 1, 1989 between the
Registrant and American Telephone and Telegraph Company. (1) --
10.5 Form of Indemnification Agreement. (1) --
10.13 Agreement effective as of December 21, 1992 between the
Registrant and SBC Communications. (1), (2) --
10.14 Lease dated August 15, 1993 between Thoits Bros., Inc.
and the Registrant for 220 Cochrane Circle. (1) --
10.16 Lease dated May 31, 1994, between Thoits Bros., Inc. and the
Registrant for 225 Cochrane Circle, Units A, B, C, D, and E.(4) --
10.17 Sublease dated November 18, 1994, between Thoits Bros.
and the Registrant for 180 Cochrane Circle.(3) --
10.18 Lease dated November 1, 1994, between Thoits Bros., Inc. for
105 and the RegistrantCochrane Circle, Units A, B, C, D, and E.(3) --
10.19 Registrant's Amended and Restated 1993 Stock Option Plan. (1) --
10.20 Registrant's 1994 Directors' Stock Option Plan, as amended. 22
10.21 Registrant's 1994 Employee Stock Purchase Plan. (1) --
10.22 Agreement dated January 1, 1995 between the Registrant and
Ameritech Services, Inc. (5) --
10.23 Standard Form of Office Lease between Registrant and 400
Columbus Avenue, LCC dated May 19, 1995. (5) --
10.24 Employment Agreement dated June 28, 1996 between Registrant
and Ian Laing. (6) --
10.25 Employment Agreement dated July 29, 1996 between Registrant
and Marv Tseu. (6) --
10.26 Employment Agreement dated December 16, 1996 between Registrant
and Richard D. Kent. (6) --
10.27 Employment Agreement dated March 17, 1997 between Registrant and
Daniel L. Eilers. (6) --
10.28 Option Agreement dated March 12, 1997 between Registrant and
Daniel L. Eilers. (6) --
10.29 1997 Annual Executive Incentive Plan. 34
11.1 Computation of Earnings Per Share. 38
</TABLE>
<PAGE>
(1) Incorporated herein by reference to the Company's registration statement
on Form S-1, Registration File No.33-74114.
(2) Confidential treatment has been granted with respect to certain portions
of this document.
(3) Incorporated herein by reference to the Company's Form 10-K for the year
ended December 31, 1994.
(4) Incorporated herein by reference to the Company's Form 10-Q for the
quarter ended September 30, 1995.
(5) Incorporated herein by reference to the Company's Form 10-Q for the
quarter ended June 30, 1996
(6) Incorporated herein by reference to the Company's Form 10-Q for the
quarter ended March 31, 1997.
<PAGE>
CIDCO INCORPORATED
1994 DIRECTORS' STOCK OPTION PLAN
(as amended effective as of May 29, 1997)
1. Purposes of the Plan. The purposes of this Directors' Stock
Option Plan are to attract and retain the best available
personnel for service as Directors of CIDCO Incorporated (the
"Company"), to provide additional incentive to the outside
Directors of the Company to serve as Directors, and to
encourage their continued service on the Board. All options
granted hereunder shall be "nonstatutory stock options."
2. Definitions.As used herein, the following definitions shall
apply:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(c) "Common Stock" shall mean the Common Stock, par value
$.01 per share, of the Company.
(d) "Company" shall mean CIDCO Incorporated, a Delaware
corporation.
(e) "Continuous Status as a Director" Shall mean the absence
of any interruption or termination of service as a
Director.
(f) "Director" shall mean a member of the Board.
(g) "Effective Date" shall mean the date on which the Plan
is approved by the stockholders of the Company.
(h) "Employee" shall mean any person, including officers and
Directors, employed by the Company or any Parent or
Subsidiary of the Company. The payment of a director's
fee by the Company shall not be sufficient in and of
itself to constitute "employment" by the Company.
(i) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(j) "Option" shall mean a stock option granted pursuant to
the Plan.
(k) "Optioned Stock" shall mean the Common Stock subject to
an Option.
(l) "Optionee" shall mean an Outside Director who receives
an option.
(m) "Outside Director" shall mean a Director who is not an
Employee.
<PAGE>
(n) "Parent" shall mean a "parent corporation", whether now
or hereafter existing, as defined in Section 424(e) of
the Code.
(o) "Plan" shall mean this 1994 Directors' Stock Option Plan.
(p) "Share" shall mean a share of the Common Stock, as
adjusted in accordance with Section 11 of the Plan.
(q) "Subsidiary" shall mean a "subsidiary corporation",
whether now or hereafter existing, as defined in Section
424(f)of the Code.
3. Stock Subject to the Plan. Subject to the provisions of
Section 11 of the Plan, the maximum aggregate number of
Shares which may be optioned and sold under the Plan is
250,000 Shares (the "Pool"). The Shares may be authorized,
but unissued, or reacquired Common Stock.
If an Option should expire or become unexercisable for any
reason without having been exercised in full, the unpurchased
Shares which were subject thereto shall, unless the Plan
shall have been terminated, become available for future grant
under the Plan. If Shares which were acquired upon exercise
of an Option are subsequently repurchased by the Company,
such Shares shall not in any event be returned to the Plan
and shall not become available for future grant under the
Plan.
4. Administration of and Grants of Options under the Plan.
(a) Administrator. Except as otherwise required herein, the
Plan shall be administered by the Board.
(b) Powers of the Board. Subject to the provisions and
restrictions of the Plan, the Board (with any interested
director being excluded from participating in the
consideration of the grant of options to such interested
director) shall have the authority, in its discretion:
(i) to determine which Outside Directors shall be
granted Options and to determine the number of Shares to
be covered by Options granted to Outside Directors; (ii)
to determine, upon review of relevant information and in
accordance with Section 8(b) of the Plan, the fair
market value of the Common Stock; (iii) to determine the
exercise price per share of Options to be granted, which
exercise price shall be determined in accordance with
Section 8(a) of the Plan; (iv) to determine the vesting
schedule and other terms of Options to be granted; (v)
to interpret the Plan; (vi) to prescribe, amend and
rescind rules and regulations relating to the Plan;
(vii) to authorize any person to execute on behalf of
the Company any instrument required to effectuate the
grant of an Option previously granted hereunder; and
(viii) to make all other determinations deemed necessary
or advisable for the administration of the Plan.
(c) Effect of Board's Decision. All decisions,
determinations and interpretations of the Board shall be
final and binding on all Optionees and any other holders
of any Options granted under the Plan.
<PAGE>
(d) Suspension or Termination of Option. If the President of
the Company (the "President") or his or her designee
reasonably believes that an Optionee has committed an
act of misconduct, the President may suspend the
Optionee's right to exercise any option pending a
determination by the Board of Directors (excluding, if
relevant, the Outside Director accused of such
misconduct). If the Board of Directors (excluding, if
relevant, the Outside Director accused of such
misconduct) determines an Optionee has committed an act
of embezzlement, fraud, dishonesty, nonpayment of an
obligation owed to the Company, breach of fiduciary duty
or deliberate disregard of Company rules resulting in
loss, damage or injury to the Company, or if an Optionee
makes an unauthorized disclosure of any Company trade
secret or confidential information, engages in any
conduct constituting unfair competition, induces any
Company customer to breach a contract with the Company
or induces any principal for whom the Company acts as
agent to terminate such agency relationship, neither the
Optionee nor his or her estate shall be entitled to
exercise any option whatsoever. In making such
determination, the Board of Directors (excluding, if
relevant, the Outside Director accused of such
misconduct) shall act fairly and shall give the Optionee
an opportunity to appear and present evidence on
Optionee's behalf at a hearing before the Board or a
committee of the Board.
5. Eligibility. Options may be granted only to Outside Directors.
An Outside Director who has been granted an Option may, if he
or she is otherwise eligible, thereafter be granted an
additional Option or Options in accordance with the Plan.
The Plan shall not confer upon any Optionee any right with
respect to continuation of service as a Director or nomination
to serve as a Director, nor shall it interfere in any way with
any rights which the Director or the Company may have to
terminate his or her directorship at any time.
6. The Term of Plan; Effective Date. The Plan shall become
effective on the Effective Date and shall continue in effect
for a term of ten (10) years unless sooner terminated under
Section 13 of the Plan, subject to the limitations set forth
in the Plan.
7. Term of Option. The term of each Option shall be five years
from the date of grant thereof.
8. Exercise Price and Consideration.
(a) Exercise Price. The per Share exercise price for the
Shares to be issued pursuant to exercise of an Option
shall be 100% of the fair market value per Share on the
date of grant of the Option.
<PAGE>
(b) Fair Market Value. The fair market value per Share shall
be the mean of the bid and asked prices of the Common
Stock in the over-the-counter market on the date of
grant, as reported in The Wall Street Journal (or, if
not so reported, as otherwise reported by the National
Association of Securities Dealers Automated Quotation
("NASDAQ") System) or, in the event that the Common
Stock is traded on the NASDAQ National Market System or
listed on a stock exchange, the fair market value per
Share shall be the closing price on the largest such
system or exchange on the date of grant of the Option,
as reported in The Wall Street Journal, provided,
however, that if such market or exchange is closed on
the date of the grant of the Option then the fair market
value per Share shall be based on the most recent date
on which such trading occurred immediately prior to the
date of the grant of the Option; provided, further, that
if the fair market value cannot be determined in
accordance with the forgoing, it shall be determined in
good faith by the Board.
(c) Form of Consideration. Options granted under the Plan
may provide for the payment of the exercise price by
delivery of (i) cash or a check payable to the order of
the Company in an amount equal to the exercise price of
such options, (ii) a promissory note in an amount equal
to the exercise price of such options, (iii) shares of
Common Stock of the Company owned by the optionee having
a fair market value equal in amount to the exercise
price of the options being exercised, or (iv) any
combination of (i), (ii) and (iii), provided, however,
that payment of the exercise price by delivery of a
promissory note or shares of Common Stock of the Company
owned by such optionee may be made only under such
circumstances, if any, and on such terms as may from
time to time be established by the Board. The fair
market value of any shares of the Company's Common Stock
which may be delivered upon exercise of an option shall
be determined by the Board in accordance with Section
8(b) hereof.
9. Exercise of Option.
(a) Procedure for Exercise; Rights as a Shareholder. Any
Option granted hereunder shall be exercisable at such
times as are determined by the Board at the time of
grant and set forth in an option agreement as
contemplated by Section 16 hereof.
An Option may not be exercised for a fraction of a Share.
<PAGE>
An Option shall be deemed to be exercised when written notice
of such exercise has been given to the Company in accordance
with the terms of the Option by the person entitled to
exercise the Option and full payment for the Shares with
respect to which the Option is exercised has been received by
the Company. Full payment may consist of any consideration and
method of payment allowable under Section 8(c) of the Plan.
Until the issuance (as evidenced by the appropriate entry on
the books of the Company or of a duly authorized transfer
agent of the Company) of the stock certificate evidencing such
Shares, no right to vote or receive dividends or any other
rights as a shareholder shall exist with respect to the
Optioned Stock, notwithstanding the exercise of the Option. A
share certificate for the number of Shares so acquired shall
be issued to the Optionee as soon as practicable after
exercise of the Option. No adjustment will be made for a
dividend or other right for which the record date is prior to
the date the stock certificate is issued, except as provided
in Section 11 of the Plan.
Exercise of an Option in any manner shall result in a decrease
in the number of Shares which thereafter may be available,
both for purposes of the Plan and for sale under the Option,
by the number of Shares as to which the Option is exercised.
(b) Termination of Status as a Director. If an outside
Director ceases to serve as a Director, he or she may,
but only within 30 days (or such other period of time
not exceeding six (6) months as is determined by the
Board) after the date he or she ceases to be a Director
of the Company, exercise his or her Option to the extent
that he or she was entitled to exercise it at the date
of such termination. Notwithstanding the foregoing, in
no event may the Option be exercised after its term set
forth in Section 7 has expired. To the extent that such
Outside Director was not entitled to exercise an Option
at the date of such termination, or does not exercise
such Option (which he or she was entitled to exercise)
within the time specified herein, the Option shall
terminate unless otherwise provided in this Section
9(b).
Notwithstanding the foregoing, in the event that, following a
Hostile Change of Control (as defined herein), an Outside
Director optionee is removed as a Director prior to the
completion of his then current term, all outstanding options
held by such Outside Director shall be subject to immediate
acceleration, and any shares which are not vested at the time
of such removal shall immediately vest in full and he or she
may exercise his or her option within six (6) months after the
date he or she ceases to be a Director of the Company.
<PAGE>
(c) Disability of Optionee. Notwithstanding the provisions
of Section 9(b) above, in the event a Director is unable
to continue his or her service as a Director with the
Company as a result of his or her total and permanent
disability (as defined in Section 22(e)(3) of the Code),
he or she may, but only within six (6) months (or such
lesser period of time as is determined by the Board)
from the date of such termination, exercise his or her
Option to the extent he or she was entitled to exercise
it at the date of such termination. Notwithstanding the
foregoing, in no event may the Option be exercised after
its term set forth in Section 7 has expired. To the
extent that he or she was not entitled to exercise the
Option at the date of termination, or if he or she does
not exercise such Option (which he or she was entitled
to exercise) within the time specified herein, the
Option shall terminate.
(d) Death of Optionee. In the event of the death of an
Optionee:
(i) during the term of the Option who is, at the
time of his or her death, a Director of the
Company and who shall have been in Continuous
Status as a Director since the date of grant of
the Option, the Option may be exercised, at any
time within six (6) months (or such lesser
period of time as is determined by the Board)
following the date of death, by the Optionee's
estate or by a person who acquired the right to
exercise the Option by bequest or inheritance,
but only to the extent of the right to exercise
that would have accrued had the Optionee
continued living and remained in Continuous
Status as a Director for six (6) months (or
such lesser period of time as is determined by
the Board) after the date of death.
Notwithstanding the foregoing, in no event may
the Option be exercised after its term set
forth in Section 7 has expired.
(ii) within 30 days after the termination of
Continuous Status as a Director, the Option may
be exercised, at any time within six (6) months
(or such lesser period of time as is determined
by the Board) following the date of death, by
the Optionee's estate or by a person who
acquired the right to exercise the Option by
bequest or inheritance, but only to the extent
of the right to exercise that had accrued at
the date of termination. Notwithstanding the
foregoing, in no event may the option be
exercised after its term set forth in Section 7
has expired.
<PAGE>
10. Nontransferability of Options. The Option may not be sold,
pledged, assigned, hypothecated, transferred, or disposed of in
any manner other than by will or by the laws of descent or
distribution. The designation of a beneficiary by an Optionee does
not constitute a transfer. An Option may be exercised during the
lifetime of an Optionee only by the Optionee or a transferee
permitted by this Section.
11. Adjustments Upon Changes in Capitalization or Merger. Subject to
any required action by the shareholders of the Company, the number
of shares of Common Stock covered by each outstanding Option, and
the number of shares of Common Stock which have been authorized
for issuance under the Plan but as to which no Options have yet
been granted or which have been returned to the Plan upon
cancellation or expiration of an Option, as well as the price per
share of Common Stock covered by each such outstanding Option,
shall be proportionately adjusted for any increase or decrease in
the number of issued shares of Common Stock resulting from a stock
split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected
without receipt of consideration by the Company; provided,
however, that conversion of any convertible securities of the
Company shall not be deemed to have been "effected without receipt
of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and
conclusive. Except as expressly provided herein, no issuance by
the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and
no adjustment by reason thereof shall be made with respect to, the
number or price of shares of Common Stock subject to an Option.
In the event of the proposed dissolution or liquidation of the
Company, the Option will terminate immediately prior to the
consummation of such proposed action, unless otherwise provided by
the Board. The Board may, in the exercise of its sole discretion
in such instances, declare that any Option shall terminate as of a
date fixed by the Board and give each Optionee the right to
exercise his or her Option as to all or any part of the Optioned
Stock, included Shares as to which the Option would not otherwise
be exercisable. In the event of a proposed sale or conveyance of
all or substantially all of the assets of the Company, or the
merger or consolidation of the Company with or into another
corporation, each outstanding Option shall be assumed or an
equivalent option shall be substituted by the successor
corporation or a Parent or Subsidiary of the successor
corporation. In the event that such successor corporation refuses
to assume such Option or to substitute an equivalent option, such
Option may, at the discretion of the Board, accelerate in full
upon the consummation of the merger or sale of assets. The Board
shall also have the power and right, but not the obligation, to
accelerate the exercisability of any options, notwithstanding any
limitations in this Plan upon a Change in Control (as defined
herein). In the event of a Change in Control of the Company, each
outstanding option under this Plan shall automatically accelerate
in full and unvested shares shall vest in full immediately. For
purposes of this Plan, a "Change in Control" shall be deemed to
have occurred if any person, or any two or more persons acting as
a group, and all affiliates of such person or persons, who prior
to such time owned less than fifty percent (50%) of the then
outstanding Common Stock of the Company, shall acquire such
additional shares of the Company's Common Stock in one or more
transactions, or series of transactions, such that following such
transaction or transactions, such person or group and affiliates
beneficially own more than fifty percent (50%) of the Company's
Common Stock outstanding.
<PAGE>
12. Time of Granting Options. The date of grant of an Option
shall, for all purposes, be the date when the Board approves the
grant of such Option. Notice of the grant of an Option shall be
given to each Outside Director to whom an Option is so granted
within a reasonable time after the date of such grant.
13. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may amend or
terminate the Plan from time to time in such respects as
the Board may deem advisable; provided that, to the
extent necessary and desirable to comply with Rule 16b-3
under the Exchange Act (or any other applicable law or
regulation), the Company shall obtain approval of the
shareholders of the Company to Plan amendments to the
extent and in the manner required by such law or
regulation.
(b)Effect of Amendment or Termination. Any such amendment or
termination of the Plan that would impair the rights of
any Optionee shall not affect Options already granted to
such Optionee and such Options shall remain in full force
and effect as if this Plan had not been amended or
terminated, unless mutually agreed otherwise between the
Optionee and the Board, which agreement must be in
writing and signed by the Optionee and the Company.
14. Conditions Upon Issuance of Shares. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such
Option and the issuance and delivery of such Shares pursuant
thereto shall comply with all relevant provisions of law,
including, without limitation, the Securities Act of 1933, as
amended, the Exchange Act, the rules and regulations promulgated
thereunder, state securities laws, and the requirements of any
stock exchange upon which the Shares may then be listed, and shall
be further subject to the approval of counsel for the Company with
respect to such compliance.
As a condition to the exercise of an Option, the Company may
require the person exercising such Option to represent and warrant
at the time of any such exercise that the Shares are being
purchased only for investment and without any present intention to
sell or distribute such Shares, if, in the opinion of counsel for
the Company, such a representation is required by any of the
aforementioned relevant provisions of law.
Inability of the Company to obtain authority from any regulatory
body having jurisdiction, which authority is deemed by the
Company's counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, shall relieve the Company of any
liability in respect of the failure to issue or sell such Shares
as to which such requisite authority shall not have been obtained.
<PAGE>
15. Reservation of Shares. The Company, during the term of this
Plan, will at all times reserve and keep available such number
of Shares as shall be sufficient to satisfy the requirements
of the Plan.
16. Option Agreement. Options shall be evidenced by written option
agreements in such form as the Board shall approve.
17. Information to Optionees. The Company shall provide to each
Optionee, during the period for which such Optionee has one or
more Options outstanding, copies of all annual reports to
shareholders, proxy statements and other information provided
to all shareholders of the Company.
<PAGE>
AMENDED AND RESTATED
BY-LAWS
OF
CIDCO INCORPORATED
a Delaware corporation
(the "Company")
(as amended through April 16, 1997)
TABLE OF CONTENTS
Page
ARTICLE I. STOCKHOLDERS
Section 1.1 Annual Meeting............................. 1
Section 1.2 Special Meetings........................... 1
Section 1.3 Notice of Meetings......................... 1
Section 1.4 Quorum..................................... 2
Section 1.5 Voting..................................... 2
Section 1.6 Presiding Officer and Secretary............ 2
Section 1.7 Proxies.................................... 2
Section 1.8 List of Stockholders....................... 3
Section 1.9 Actions Without a Meeting.................. 3
ARTICLE II. DIRECTORS
Section 2.1 Number of Directors........................ 4
Section 2.2 Election and Term of Directors............. 4
Section 2.3 Vacancies and Newly Created
Directorships.............................. 4
Section 2.4 Resignation................................ 5
Section 2.5 Meetings................................... 5
Section 2.6 Quorum and Voting.......................... 5
Section 2.7 Written Consents and Meetings by
Telephone.................................. 6
Section 2.8 Compensation............................... 6
Section 2.9 The "Whole Board".......................... 6
Section 2.10 Chairman of the Board...................... 6
ARTICLE III. COMMITTEES OF THE BOARD
Section 3.1 Appointment and Powers..................... 6
<PAGE>
ARTICLE IV. OFFICERS, AGENTS AND EMPLOYEES
Section 4.1 Appointment and Qualification.............. 7
Section 4.2 Removal of Officers, Agents or
Employees.................................. 7
Section 4.3 Compensation and Bond...................... 8
Section 4.4 President.................................. 8
Section 4.5 Vice President - Finance and
Administration.......................... 8
Section 4.6 Other Vice Presidents...................... 9
Section 4.7 Treasurer.................................. 9
Section 4.8 Secretary.................................. 9
Section 4.9 Assistant Treasurers....................... 9
Section 4.10 Assistant Secretaries...................... 10
Section 4.11 Delegation of Duties....................... 10
ARTICLE V. CAPITAL STOCK
Section 5.1 Certificates .............................. 10
Section 5.2 Transfers of Stock......................... 10
Section 5.3 Lost, Stolen or Destroyed
Certificates............................... 11
Section 5.4 Stockholder Record Date.................... 11
ARTICLE VI. SEAL
Section 6.1 Seal...................................... 12
ARTICLE VII. WAIVER OF NOTICE
Section 7.1 Waiver of Notice.......................... 12
ARTICLE VIII. INDEMNIFICATION
Section 8.1 Indemnification........................... 12
Section 8.2 Determinations ........................... 13
Section 8.3 Business Combinations..................... 14
Section 8.4 Advances of Expenses...................... 14
Section 8.5 Employee Benefit Plans.................... 14
ARTICLE IX. AMENDMENTS
Section 9.1 Amendments................................ 14
<PAGE>
AMENDED AND RESTATED
(as amended through April 16, 1997)
BY-LAWS
OF
CIDCO INCORPORATED
a Delaware corporation
(the "Company")
Article I. Stockholders
Section 1.1. Annual Meeting. The annual meeting of
stockholders of the Company, for the election of directors and for the
transaction of any other business which may properly be transacted at the annual
meeting, shall be held at such hour on such day and at such place within or with
out the State of Delaware as may be fixed by the Board of Directors.
Section 1.2. Special Meetings. A special meeting of the
stockholders of the Company entitled to vote on any business to be considered at
any such meeting may be called by the President, any Vice President or the
Secretary when directed to do so by resolution of the Board of Directors or at
the written request of directors representing a majority of the Whole Board or
at the written request of the holders of stock representing a majority of the
voting power of the Company entitled to vote at such meeting. Any such request
shall state the purpose or purposes of the proposed meeting.
Section 1.3. Notice of Meetings. (a) Whenever stockholders
are required or permitted to take any action at a meeting, a written notice of
the meeting shall be given which shall state the place, date and hour of the
meeting, and, in the case of a special meeting, the purpose or purposes for
which the meeting is called.
(b) Unless otherwise provided by law, and except as to any
stockholder duly waiving notice, the written notice of any meeting shall be
given personally or by mail, not less than ten nor more than 60 days before the
date of the meeting to each stockholder entitled to vote at such meeting. If
mailed, notice shall be deemed given when deposited in the United States mail,
postage prepaid, directed to the stockholder at such stockholder's address as it
appears on the stock records of the Company.
(c) When a meeting is adjourned to another time or place,
notice need not be given of the adjourned meeting if the time and place thereof
are announced at the meeting at which the adjournment is taken. At the adjourned
meeting the Company may transact any business which might have been transacted
at the original meeting. If, however, the adjournment is for more than 30 days,
or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote at the meeting.
Section 1.4. Quorum. Except as otherwise provided by law in
respect of the vote of holders of stock that shall be required for a specified
action, at any meeting of stockholders the holders of stock representing a
majority of the voting power of the Company entitled to vote thereat, either
present or represented by proxy, shall constitute a quorum for the transaction
of any business, but the stockholders present, although less than a quorum, may
adjourn the meeting to another time or place and, except as provided in Section
1.3(c) of these By-Laws, notice need not be given of the adjourned meeting.
Section 1.5. Voting. (a) Whenever directors are to be elected
at a meeting, they shall be elected by a plurality of the votes cast at the
meeting by the holders of stock entitled to vote thereat. Whenever any corporate
action, other than the election of directors, is to be taken by vote of
stockholders at a meeting, it shall, except as otherwise required by law or by
the certificate of incorporation or by these By-Laws, be authorized by a
majority of the votes cast at the meeting by the holders of stock entitled to
vote thereat.
<PAGE>
(b) Except as otherwise provided by law or by the certificate
of incorporation, each holder of record of stock of the Company entitled to vote
on any matter shall be entitled to one vote for each share of capital stock
standing in the name of such holder on the stock ledger of the Company on the
record date for the determination of the stockholders entitled to vote on such
matter.
Section 1.6. Presiding Officer and Secretary. At every
meeting of stockholders the President, or, in the President's absence, any Vice
President, or, if none be present, the appointee of the meeting, shall preside.
The Secretary, or in the Secretary's absence an Assistant Secretary, or if none
be present, the appointee of the presiding officer of the meeting, shall act as
secretary of the meeting.
Section 1.7. Proxies. Each stockholder entitled to vote at a
meeting of stockholders or to express consent or dissent to corporate action in
writing without a meeting may authorize another person or persons to act for
such stockholder by proxy, but no such proxy shall be voted or acted upon after
three years from its date, unless the proxy provides for a longer period. Every
proxy shall be signed by the stockholder or by such stockholder's duly
authorized attorney. A proxy that does not bear a date shall be deemed to be
dated the date it was first delivered to one or more of the persons named to act
under such proxy.
Section 1.8. List of Stockholders. (a) The officer who has
charge of the stock ledger of the Company shall prepare and make, at least ten
days before every meeting of stockholders, a complete list of the stockholders
entitled to vote at the meeting, arranged in alphabetical order and showing the
address of each stockholder and the number of shares registered in such
stockholder's name. Such list shall be open to the examination of any
stockholder entitled to vote at the meeting, for any purpose germane to the
meeting, during ordinary business hours, for a period of at least ten days prior
to the meeting, either at a place within the city where the meeting is to be
held, which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder entitled to vote at the meeting
who is present.
(b) The stock ledger shall be the only evidence as to who are
the stockholders entitled to examine the stock ledger, the list required by this
Section 1.8 or the books of the Company, or to vote in person or by proxy at any
meeting of stockholders.
Section 1.9. Actions Without a Meeting. Until the closing of
a firm commitment or underwritten public offering of the Company's Common Stock
(a "Public Offering"), any action required or permitted to be taken at any
annual or special meeting of the holders of Common Stock of the Company may be
taken without a meeting, without prior notice and without a vote, if consent in
writing, setting forth the action so taken, is signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote on such action were present and voted. Prompt notice of the
taking of corporate action without a meeting by less than unanimous written
consent shall be given to those stockholders who have not consented to such
action in writing. Effective upon and after the closing of a Public Offering,
corporate action required to be taken at any annual or special meeting of the
holders of Common Stock of the Company may not be taken by written instrument in
lieu of such a meeting. Any such attempted corporate action by written consent
of the holders of Common Stock of the Company in lieu of a meeting after the
closing of a Public Offering is prohibited and shall be null and void.
<PAGE>
Article II. Directors
Section 2.1. Number of Directors. The Board of Directors
shall consist of such number of persons, not less than five nor more than nine,
and the exact number of directors shall be six until changed, within the limits
specified above, by the affirmative vote at a meeting of the holders of stock
representing a majority of the voting power of the Company or by resolution of
the Board of Directors, adopted by a majority of the Whole Board; provided that
the number of directors shall not be reduced so as to shorten the term of any
director in office at the time. The indefinite number of directors specified
above may be changed, or a definite number may be fixed without provision for an
indefinite number, by the affirmative vote at a meeting of the holders of stock
representing a majority of the voting power of the Company, provided, however,
that no amendment or amendments adopted in any year may change the stated
maximum number of authorized directors to a number greater than two times the
stated minimum number of directors at the beginning of such year minus one and,
provided, further, that the number of directors shall not be reduced so as to
shorten the term of any director in office at the time. The Board of Directors
of the Company shall be divided into three classes, designated Class A, Class B
and Class C. Each class shall consist, as nearly as is reasonably possible, of
one-third of the total number of directors constituting the Whole Board. If the
number of directors is changed, any increase or decrease shall be apportioned
among the classes so as to maintain the number of directors in each class as
nearly equal as possible.
Section 2.2. Election and Term of Directors. Directors shall
be elected annually at the annual meeting of stockholders. Each director shall
hold office until such director's successor is elected and qualified or until
such director's earlier resignation or death. If the annual election of
directors is not held on the date designated therefor, the directors shall cause
such election to be held as soon thereafter as convenient. At the 1994 annual
meeting of stockholders, Class A directors shall be elected for a 1-year term,
Class B directors for a 2-year term and Class C directors for a 3-year term. At
each succeeding annual meeting of stockholders beginning in 1995, successors to
the class of directors whose term expires at that annual meeting shall be
elected for a 3-year term.
Section 2.3. Vacancies and Newly Created Directorships.
Vacancies and newly created directorships resulting from any increase in the
authorized number of directors may be filled by election at a meeting of
stockholders. Vacancies and such newly created directorships may also be filled
by a majority of the directors then in office, although less than a quorum, or
by a sole remaining director. Any additional director of any class elected to
fill a vacancy resulting from an increase in such class shall hold office for a
term that shall coincide with the remaining term of that class, but in no case
will a decrease in the number of directors shorten the term of any director in
office at the time. Any vacancy on the Board of Directors that results from an
increase in the number of directors may be filled by a majority of the Board of
Directors then in office, and any other vacancy occurring in the Board of
Directors may be filled by a majority of the directors then in office, although
less than a quorum, or by a sole remaining director. Any director elected to
fill a vacancy not resulting from an increase in the number of directors shall
have the same remaining term as that of his predecessor.
Section 2.4. Resignation. Any director may resign from office
at any time either by oral tender of resignation at any meeting of the Board or
by oral tender to the President, any Vice President or by giving written notice
to the Secretary of the Company. Any such resignation shall take effect at the
time it specifies or, if the time be not specified, upon receipt, and the
acceptance of such resignation, unless required by its terms, shall not be
necessary to make such resignation effective.
<PAGE>
Section 2.5. Meetings. Meetings of the Board, regular or
special, may be held at any place within or without the State of Delaware. An
annual meeting of the Board for the appointment of officers and the transaction
of any other business shall be held immediately following the annual meeting of
stockholders at the same place at which such meeting shall have been held, and
no notice thereof need be given. If the meeting is not so held, the annual
meeting of the Board shall take place as soon thereafter as is practicable,
either at the next regular meeting of the Board or at a special meeting. The
Board may fix times and places for regular meetings of the Board and no notice
of such meetings need be given. A special meeting of the Board shall be held
whenever called by the Chairman of the Board, the President, any Vice President
or by any two directors (except that if more than one meeting be called by
directors in any period of 180 days or less, each such meeting so called may be
called only by a majority of the directors then in office) at such time and
place as shall be specified in the notice or waiver thereof. Notice of each
special meeting shall be given by the Secretary or by a person calling the
meeting to each director by mailing the same, first class postage prepaid, not
later than the second day before the meeting, or personally or by telegraphing,
sending by telephone facsimile or telephoning the same not later than the day
before the meeting.
Section 2.6. Quorum and Voting. A majority of the Whole Board
of Directors shall constitute a quorum for the transaction of business (except
as otherwise provided by Section 2.3 hereof), but in no event shall a quorum
consist of less than two directors. If there be less than a quorum at any
meeting of the Board, a majority of the directors present may adjourn the
meeting from time to time, and no further notice thereof need be given other
than announcement at the meeting which shall be so adjourned. Except as
otherwise provided by law or by these By-Laws, the act of a majority of the
directors present at a meeting at which a quorum is present shall be the act of
the Board of Directors.
Section 2.7. Written Consents and Meetings by Telephone. Any
action required or permitted to be taken at any meeting of the Board of
Directors or any committee thereof may be taken without a meeting if all members
of the Board or of such committee, as the case may be, consent thereto in
writing and the writing or writings are filed with the minutes of proceedings of
the Board or committee. Members of the Board of Directors or any committee
designated by the Board may participate in a meeting of such Board or committee
by means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other, and
participation in a meeting pursuant to this sentence shall constitute presence
in person at such meeting.
Section 2.8. Compensation. Directors may receive compensation
for services to the Company in their capacities as directors or otherwise in
such manner and in such amounts as may be fixed from time to time by the Board.
Section 2.9. The "Whole Board". As used in these By-Laws the
term "the Whole Board" or "the Whole Board of Directors" means the total number
of directors which the Company would have if there were no vacancies.
Section 2.10. Chairman of the Board. The Board may from time
to time designate from among its members a Chairman of the Board, who shall
preside at all meetings of the Board at which the Chairman is present (unless
the Chairman shall delegate such duties to the President or another director
with respect to a particular meeting of the Board). The Chairman of the Board
shall have such further powers and perform such other duties as may be
prescribed by the Board. The Chairman of the Board shall not, by virtue of
designation as such, be considered an officer of the Company.
Article III. Committees of the Board
Section 3.1. Appointment and Powers. The Board of Directors
may from time to time, by resolution passed by a majority of the Whole Board,
designate an executive committee or such other committee or committees as it may
determine, each committee to consist of one or more directors of the Company.
Any such committee, to the extent provided in the resolution, shall have and may
exercise any of the powers and authority of the Board of Directors in the
management of the business and affairs of the Company, and may authorize the
seal of the Company to be affixed to all papers which may require it, all
subject to the exceptions set forth in the General Corporation Law of the State
of Delaware. The Board may designate one or more directors as alternate members
of any committee, who may replace any absent or disqualified member at any
meeting of the committee. In the absence or disqualification of any member of
any committee and of any alternate member designated by the Board, the member or
members thereof present at any meeting and not disqualified from voting, whether
or not such member or members constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in place of any
such absent or disqualified member. Any such committee may adopt rules governing
the method of calling and time and place of holding its meetings. Unless
otherwise provided by the Board of Directors, a majority of any such committee
shall constitute a quorum for the transaction of business, and the act of a
majority of the members of such committee present at a meeting at which a quorum
is present shall be the act of such committee. Each such committee shall keep a
record of its acts and proceedings and shall report thereon to the Board of
Directors whenever requested so to do. Any or all members of any such committees
may be removed, with or without cause, by resolution of the Board of Directors,
adopted by a majority of the Whole Board.
<PAGE>
Article IV. Officers, Agents and Employees
Section 4.1. Appointment and Qualification. The Board of
Directors may elect or appoint a President, a Treasurer, a Secretary, one or
more Vice Presidents, one or more Assistant Treasurers and one or more Assistant
Secretaries. Any number of offices may be held by the same person. Each officer
shall hold office until such officer's successor is elected and qualified or
until such officer's earlier resignation or removal. The Board may appoint, and
may delegate power to appoint, such other officers, agents and employees as it
may deem necessary or proper, who shall hold office for such period, have such
authority and perform such duties as may from time to time be prescribed by the
Board.
Section 4.2. Removal of Officers, Agents or Employees. Any
officer, agent or employee of the Company may be removed by the Board of
Directors with or without cause at any time, and the Board may delegate such
power of removal as to officers, agents and employees not appointed by the Board
of Directors. Such removal shall be without prejudice to such person's contract
rights, if any, but the appointment of any person as an officer, agent or
employee of the Company shall not of itself create contract rights.
Section 4.3. Compensation and Bond. The compensation of the
officers of the Company shall be fixed by the Board of Directors, but this power
may be delegated to any officer in respect of other officers under such
officer's direction or control. The Company may secure the fidelity of any or
all of its officers, agents or employees by bond or otherwise.
Section 4.4. President. The President shall preside at all
meetings of the stockholders at which the President is present and shall preside
at meetings of the Board in the absence of the Chairman or if the Chairman shall
delegate such duties to the President with respect to a particular meeting of
the Board. The President shall be the chief executive officer and, unless the
Board shall designate another officer as such, shall be the principal operating
officer of the Company. Subject to the control of the Board, the President shall
have general charge of the business and affairs of the Company and shall keep
the Board fully advised. The President shall employ and discharge employees and
agents of the Company, except such as shall be appointed by the Board, and the
President may delegate these powers to the Vice Presidents or other officers.
The President may vote the shares or other securities of any other domestic or
foreign company of any type or kind which may at any time be owned by the
Company, may execute any stockholder or other consent in respect thereof and may
in the President's discretion delegate such powers by executing proxies, or
otherwise, on behalf of the Company. In the absence or inability to act of the
Chairman of the Board, unless the Board shall otherwise provide, the President
shall perform all the duties and may exercise any of the powers of the Chairman
of the Board, subject to the control of the Board of Directors. The President
shall have such other powers and perform such duties as the Board of Directors
may from time to time prescribe. The Board, by resolution from time to time, may
confer other like powers upon any other person or persons.
Section 4.5. Vice President - Finance and Administration. The
Vice President - Finance and Administration shall be the chief financial officer
of the Company and shall have charge of all funds and securities of the Company,
shall endorse the same for deposit or collection when necessary and deposit the
same to the credit of the Company in such banks or depositories as the Board of
Directors may authorize. The Vice President - Finance and Administration may
endorse all commercial documents requiring endorsements for or on behalf of the
Company and may sign all receipts and vouchers for payments made to the Company.
The Vice President - Finance and Administration shall have all such further
powers and duties as generally are incident to the position of chief financial
officer or as may be assigned to the Vice President - Finance and Administration
by the President or the Board of Directors. The performance of any such duty
shall, in respect of any person dealing with the Company, be conclusive evidence
of the Vice President - Finance and Administration's power to act.
Section 4.6. Other Vice Presidents. Each other Vice President
shall have such powers and perform such duties as the Board of Directors or the
President may from time to time prescribe. In the absence or inability to act of
the President, unless the Board of Directors shall otherwise provide, the Vice
President who has served in that capacity for the longest time and who shall be
present and able to act, shall perform all the duties and may exercise any of
the powers of the President. The performance of any duty by a Vice President
shall, in respect of any other person dealing with the Company, be conclusive
evidence of such Vice President's power to act.
<PAGE>
Section 4.7. Treasurer. The Treasurer shall have such powers
and perform such duties as the Board of Directors, the President or the Vice
President - Finance and Administration may from time to time prescribe. In the
absence or inability to act of the Vice President - Finance and Administration,
the Treasurer may perform all the duties and exercise all the powers of the
chief financial officer. The performance of any such duty shall, in respect of
any other person dealing with the Company, be conclusive evidence of the
Treasurer's power to act.
Section 4.8. Secretary. The Secretary shall record all
proceedings of meetings of the stockholders and directors in a book kept for
that purpose and shall file in such book all written consents of directors to
any action taken without a meeting. The Secretary shall attend to the giving and
serving of all notices of the Company. The Secretary shall have custody of the
seal of the Company and shall attest the same by signature whenever required.
The Secretary shall have charge of the stock ledger and such other books and
papers as the Board of Directors may direct, but may delegate responsibility for
maintaining the stock ledger to any transfer agent appointed by the Board. The
performance of any such duty shall, in respect of any other person dealing with
the Company, be conclusive evidence of the Secretary's power to act. The
Secretary shall have all such further powers and duties as generally are
incident to the position of Secretary or as may be assigned to the Secretary by
the President, any Vice President or the Board of Directors.
Section 4.9. Assistant Treasurers. In the absence or
inability to act of the Vice President - Finance and Administration and the
Treasurer, any Assistant Treasurer may perform all the duties and exercise all
the powers of the Vice President - Finance and Administration and the Treasurer.
The performance of any such duty shall, in respect of any other person dealing
with the Company, be conclusive evidence of such Assistant Treasurer's power to
act. An Assistant Treasurer shall also perform such other duties as the Vice
President Finance and Administration, the Treasurer or the Board of Directors
may assign to such person.
Section 4.10. Assistant Secretaries. In the absence or
inability to act of the Secretary, any Assistant Secretary may perform all the
duties and exercise all the powers of the Secretary. The performance of any such
duty shall, in respect of any other person dealing with the Company, be
conclusive evidence of such Assistant Secretary's power to act. An Assistant
Secretary shall also perform such other duties as the Secretary or the Board of
Directors may assign to such person.
Section 4.11. Delegation of Duties. In case of the absence of
any officer of the Company, or for any other reason that the Board may deem
sufficient, the Board may confer for the time being the powers or duties, or any
of them, of such officer upon any other officer or upon any director or other
person designated by the Board.
Article V. Capital Stock
Section 5.1. Certificates. Certificates for stock of the
Company shall be in such forms as shall be approved by the Board of Directors
and shall be signed in the name of the Company by the President or any Vice
President and by the Treasurer or an Assistant Treasurer or the Secretary or an
Assistant Secretary. Such certificates may be sealed with the seal of the
Company or a facsimile thereof, and shall contain such information as is
required by law to be stated thereon. Any of or all of the signatures on the
certificate may be a facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Company with the same effect as
if such person were such officer, transfer agent or registrar at the date of
issue.
<PAGE>
Section 5.2. Transfers of Stock. Transfers of stock shall be
made only upon the books of the Company by the holder, in person or by duly
authorized attorney, and on the surrender of the certificate or certificates for
such stock properly endorsed. The Board of Directors shall have the power to
make all such rules and regulations, not inconsistent with the certificate of
incorporation and these By-Laws, as the Board may deem appropriate concerning
the issue, transfer and registration of certificates for stock of the Company.
The Board may appoint one or more transfer agents or registrars of transfers, or
both, and may require all stock certificates to bear the signature of either or
both, which signature or signatures may be in facsimile form if the Board by
resolution authorizes such procedure.
Section 5.3. Lost, Stolen or Destroyed Certificates. The
Company may issue a new stock certificate in the place of any certificate
theretofore issued by it, alleged to have been lost, stolen or destroyed, and
the Company may require the owner of the lost, stolen or destroyed certificate
or such owner's legal representative to give the Company a bond sufficient to
indemnify it against any claim that may be made against it on account of the
alleged loss, theft or destruction of any such certificate or the issuance of
any such new certificate. The Board may require such owner to satisfy other
reasonable requirements.
Section 5.4. Stockholder Record Date. (a) In order that the
Company may determine the stockholders entitled to notice of or to vote at any
meeting of stockholders or any adjournment thereof, or entitled to express
consent to corporate action in writing without a meeting, or entitled to receive
payment of any dividend or other distribution or allotment of any rights, or
entitled to exercise any rights in respect of any change, conversion or exchange
of stock, or for the purpose of any other lawful action, the Board of Directors
may fix, in advance, a record date, which shall not be more than 60 nor less
than ten days before the date of such meeting, nor more than 60 days prior to
any other action. Only such stockholders as shall be stockholders of record on
the date so fixed shall be entitled to notice of, and to vote at, such meeting
and any adjournment thereof, or to express consent or dissent to corporate
action in writing without a meeting, or to receive payment of such dividend or
other distribution, or to exercise such rights in respect of any such change,
conversion or exchange of stock, or to participate in such action, as the case
may be, not withstanding any transfer of any stock on the books of the Company
after any record date so fixed.
(b) If no record date is fixed by the Board of Directors, (i)
the record date for determining stockholders entitled to notice of or to vote at
a meeting of stock holders shall be at the close of business on the day next
preceding the date on which notice is given, (ii) the record date for
determining stockholders entitled to express consent to corporate action in
writing without a meeting, when no prior action by the Board of Directors is
necessary, shall be the day on which the first written consent is expressed, and
(iii) the record date for determining stockholders for any other purpose shall
be at the close of business on the day on which the Board of Directors adopts
the resolution relating thereto.
(c) A determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders shall apply to any adjournment
of the meeting; provided, that the Board of Directors may fix a new record date
for the adjourned meeting.
Article VI. Seal
Section 6.1. Seal. The seal of the Company shall consist of a
flat-faced circular die with the name of the Company in a circle and the word
"Delaware" and the year of its incorporation in the center. Such seal may be
used by causing it or a facsimile thereof to be impressed or affixed or in any
other manner reproduced.
<PAGE>
Article VII. Waiver of Notice
Section 7.1. Waiver of Notice. Whenever notice is required to
be given by statute, or under any provision of the certificate of incorporation
or these By-Laws, a written waiver thereof, signed by the person entitled to
notice, whether before or after the time stated therein, shall be deemed
equivalent to notice. In the case of a stockholder, such waiver of notice may be
signed by such stockholder's attorney or a proxy duly appointed in writing.
Attendance of a stockholder at a meeting of stockholders, or attendance of a
director at a meeting of the Board of Directors or any committee thereof, shall
constitute a waiver of notice of such meeting, except when such stockholder or
director, as the case may be, attends a meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened. Neither the business to
be transacted at, nor the purpose of, any regular or special meeting of the
stockholders, directors or members of a committee of directors need be specified
in any written waiver of notice.
Article VIII. Indemnification
Section 8.1. Indemnification. The Company shall indemnify
each director, officer, employee and agent (provided, that, in the case of
agents, the Company shall indemnify only those agents to whom the Board of
Directors shall determine, before or after their engagement, shall be afforded
the protection of these indemnification provisions) of the Company who is a
natural person, such person's heirs, executors and administrators (whether or
not natural persons) and all other natural persons whom the Company is
authorized to indemnify under the provisions of the General Corporation Law of
the State of Delaware to whom the Board of Directors shall determine shall be
afforded the protection of these indemnification provisions (including but not
limited to a person who is or was serving at the request of the Company as a
director, officer, partner, trustee, employee or agent (or in a like capacity)
of another corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise), to the fullest extent permitted by law, (i) against all
expenses (including but not limited to attorneys' and other experts' fees and
disbursements), judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with any actual or threatened
action, suit or other proceeding, whether civil, criminal, administrative,
investigative or an arbitration, or in connection with any appeal therein, or
otherwise, and (ii) against all expenses (including but not limited to
attorneys' and other experts' fees and disbursements) actually and reasonably
incurred by such person in connection with the defense or settlement of any
action, suit or other proceeding by or in the right of the Company, or in
connection with any appeal therein, or otherwise; and no provision of these
By-Laws is intended to be construed as limiting, prohibiting, denying or
abrogating any of the general or specific powers or rights conferred under the
General Corporation Law of the State of Delaware or by the certificate of
incorporation of the Company, as may be amended from time to time, upon the
Company to furnish, or upon any court to award, such indemnification, or such
other indemnification as may otherwise be authorized pursuant to the General
Corporation Law of the State of Delaware or any other law now or hereafter in
effect, including but not limited to indemnification of any employees or agents
of the Company or of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise. The term "proceeding" shall be
understood to include any inquiry or investigation that could lead to a
proceeding. The indemnification provided for herein shall not be deemed
exclusive of any other rights to which a person seeking indemnification may be
entitled and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of such person's
heirs, executors and administrators.
Section 8.2. Determinations. If and to the extent such
indemnification shall require a determination whether or not the relevant person
met the applicable standard of conduct set forth in the General Corporation Law
of the State of Delaware, such determination shall be made expeditiously at the
cost of the Company after a request for the same from the person seeking
indemnification. If indemnification is to be given or an advance of expenses is
to be made upon a determination by independent legal counsel, such counsel may
be the regular counsel to the Company. In rendering such opinion, such counsel
shall be entitled to rely upon statements of fact furnished to them by persons
reasonably believed by them to be credible, and such counsel shall have no
liability or responsibility for the accuracy of the facts so relied upon, nor
shall such counsel have any liability for the exercise of their own judgment as
to matters of fact or law forming a part of the process of providing such
opinion. The fees and disbursements of counsel engaged to render such opinion
shall be paid by the Company whether or not such counsel ultimately are able to
render the opinion that is the subject of their engagement.
<PAGE>
Section 8.3. Business Combinations. Unless the Board of
Directors shall determine otherwise with reference to a particular merger or
consolidation or other business combination, for purposes of this Article VIII
references to "the Company" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a merger or consolidation or other business combination
which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, employees or agents, so that any
person who is or was a director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such constituent corporation
as a director, officer, partner, trustee, employee, agent (or in a like
capacity) of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise, shall stand in the same position under the
provisions of this Article VIII with respect to the resulting or surviving
corporation as such person would have with respect to such constituent
corporation if its separate existence had continued.
Section 8.4. Advances of Expenses. If a person who may be
entitled to indemnification hereunder shall request that such person's expenses
actually and reasonably incurred in connection with any action, suit,
proceeding, arbitration or investigation or appeal therein be paid by the
Company in advance of the final disposition thereof, such request shall not be
unreasonably refused, and a response to such request shall not be unreasonably
delayed, by the Company.
Section 8.5. Employee Benefit Plans. References herein to
"fines" shall include any excise taxes assessed on a person with respect to an
employee benefit plan; and references to "serving at the request of the Company"
shall include any service as a corporate agent which imposes duties on, or
involves services by, the corporate agent with respect to an employee benefit
plan, its participants, or beneficiaries. A person who acted in good faith and
in a manner such person reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan shall be deemed to
have acted in a manner not opposed to the best interests of the Company.
Article IX. Amendments
Section 9.1. Amendments. These By-Laws or any of them may be
altered, amended or repealed, and new By-Laws may be adopted, at any annual
meeting of the stockholders, or at any special meeting of the stockholders
called for that purpose, by a vote of a majority of the voting power of the
shares represented and entitled to vote thereat. The Board of Directors shall
also have the power, by a majority vote of the Whole Board, to alter or amend or
repeal the By-Laws or any of them, and to adopt new By-Laws; provided that (i)
any such action of the Board of Directors may be amended or repealed by the
stockholders at any annual meeting or any special meeting called for that
purpose, (ii) the Board of Directors shall not have the power to alter or amend
or repeal a specified By-Law if such By-Law is adopted by the stockholders and
contains an express provision that such By-Law may be altered or amended or
repealed only by action of the stockholders, (iii) the Board of Directors shall
not have the power to alter, amend or repeal a By-Law to change the authorized
number of directors (except to fix the authorized number of directors pursuant
to a By-Law providing for a variable number of directors), and (iv) Article VIII
hereof may be altered or amended by the Board of Directors to increase the
indemnification of the persons referred to therein to the extent permitted by
law, but such Article may be otherwise altered, amended or repealed only by
action of the stockholders as provided above and, in that connection, any
repeal, amendment or alteration which reduces or limits the indemnification of
the persons referred to therein shall apply prospectively only and shall not be
given retroactive effect. This Article IX may be altered, amended or repealed
only by action of the stockholders.
<PAGE>
CIDCO Incorporated
Annual Executive Incentive Plan
-----
This document sets forth the CIDCO Incorporated Annual Executive
Incentive Plan as adopted effective January 1, 1997.
1. Purpose
The purpose of the Plan is to provide designated officers and other key
employees of CIDCO Incorporated (the "Company") with incentive to maximize the
Company's profitability by basing a significant portion of their total
compensation on the achievement of corporate and individual performance goals.
2. Definitions
As used herein, the following terms shall have the following meanings:
"Award" shall mean an amount earned by the Participant in accordance
with the provisions of the Plan.
"Board of Directors" shall mean the Board of Directors of the Company.
"Committee" shall mean the Compensation Committee of the Board of
Directors.
"Net Income" shall mean, with respect to any Performance Period, the
Company's net income before tax expense, as reported in the Company's financial
statements for such Performance Period as filed with the Securities Exchange
Commission with the Form 10K or Form 10Q filing related to such Performance
Period.
"Participant" shall mean, with respect to any Plan Year, any individual
who has been designated by the Committee as eligible for participation in the
Plan for such year in accordance with Section 3.
"Performance Period" shall mean, with respect to any Plan Year, the
calendar year corresponding to such year and, if the Committee so determines,
any one or more calendar quarters within such year.
"Plan" shall mean the CIDCO Incorporated Annual Executive Incentive Plan, as
set forth herein and as amended from time to time.
"Plan Year" shall mean the calendar year.
3. Eligibility
Any officer or other employee of the Company shall be eligible for
participation in the Plan for a Plan Year if he or she has been designated by
the Committee to be a Participant for such year. Each person so designated shall
be notified in writing as soon as practicable after the Committee has made such
designation.
<PAGE>
4. Awards
Awards for any Plan Year shall be made in accordance with the following
provisions:
(a) By no later than January 31st of the Plan Year, the Committee shall
take the following actions with respect to determining the Awards that may be
payable to Participants for such year:
(i) The Committee shall determine the Performance Period or
Performance Periods that shall apply for the year.
(ii) The Committee shall establish the Corporate Performance
Goal that will apply in determining the Awards that may be payable to
Participants for each Performance Period within the year. The
"Corporate Performance Goal" shall be the Company's achievement of such
level of Net Income as the Committee shall determine. The Committee
shall have the authority at any time to adjust the Corporate
Performance Goal, or the standards for measuring the achievement of the
Corporate Performance Goal, established for any Performance Period as
it deems equitable in recognition of (A) changes in applicable
accounting rules or principles or changes in the Company's methods of
accounting during such Performance Period, (B) the occurrence during
such Performance Period of any acquisition, divestiture, discontinuance
of business operations, restructuring or any other extraordinary or
nonrecurring event, or (C) such other events, changes, occurrences,
conditions or circumstances as in the Committee's judgment, shall
warrant such adjustment.
(iii) For each Performance Period within the year, the Committee
shall establish for each Participant an amount that may be awarded to
the Participant if the Corporate Performance Goal for such Performance
Period is met (the "Participant's Target Award"). Each Participant's
Target Award shall be an amount equal to such percentage of the base
salary paid to the Participant for such Performance Period as the
Committee shall determine.
(iv) The Committee shall establish percentages ("Performance
Factors") that will be applied to Participants' Target Awards, for
purposes of determining the amount of their actual Awards for each
Performance Period within the year, if the Company's Net Income
exceeds, or is less than, the Corporate Performance Goal for such
Performance Period by specified amounts determined by the Committee.
The potentially applicable Performance Factors for each Performance
Period within the year shall be such percentages greater than 100% as
the Committee determines, if the Corporate Performance Goal for such
Performance Period is exceeded, and shall be such percentages less than
100% as the Committee determines, if the Corporate Performance Goal for
such Performance Period is not fully achieved; provided, however, that
the Performance Factor for any Performance Period shall be zero if the
Company does not achieve a level of Net Income that is at least equal
to such minimum percentage of the Corporate Performance Goal for such
Performance Period as the Committee, in its discretion, may determine.
<PAGE>
(v) The notice to be furnished under Section 3 to each person
whom the Committee has designated as a Participant for the year shall
set forth the Corporate Performance Goal, the Participant's Target
Award, and the potentially applicable Performance Factors, that the
Committee has established for each Performance Period within the year.
(b) As soon as practicable after the close of each Performance Period
within the Plan Year, the Committee shall determine the extent to which the
Performance Goal for such Performance Period has been met and, based thereon,
the applicable Performance Factor for such Performance Period. Subject to (c)
below, each Participant shall be entitled to receive an Award in an amount equal
to his or her Target Award for such Performance Period, multiplied by the
applicable Performance Factor for such Performance Period.
(c) The Committee may, in its discretion, reduce the amount of the
Award payable to any Participant for any Performance Period as determined
pursuant to (b) above, or determine that no Award shall be payable to the
Participant for such Performance Period, based upon the Committee's evaluation
of the Participant's job performance for such Performance Period or upon
consideration of such other factors or circumstances as the Committee deems
appropriate.
(d) In addition to Awards based on corporate performance, the
Committee, in its discretion, may provide for an Award to be made hereunder to
any Participant for the year, in such amount as the Committee determines, based
on the Participant's achievement of such individual performance goal or goals as
the Committee establishes for the Participant as of the beginning of such year.
The notice to be furnished pursuant to Section 3 to any Participant who the
Committee has determined to be eligible for an individual performance award
shall specify the amount of the Participant's potential Award and the
performance goal or goals that he or she must meet to earn such Award.
(e) Any officer or other employee who commences employment with the
Company after the start of a Plan Year shall be eligible to receive an Award for
any Performance Period within such year ending after such officer's or
employee's date of hire if he or she is designated by the Committee as a
Participant for such year in accordance with Section 3. If a Participant's
employment with the Company terminates for any reason prior to the end of a Plan
Year, no Award shall be payable to the Participant (or in the event of his or
her death to any beneficiary of a Participant) for any Performance Period within
such year ending after such officer's or employee's termination of employment
except as the Committee, in its discretion, may otherwise determine.
5. Payment of Awards
The amount payable with respect to an Award earned by a Participant
under the Plan for any Performance Period shall be paid to the Participant as
soon as practicable after the end of such Performance Period. Payment shall be
made in the form a single lump sum cash payment.
The Company shall deduct from all amounts otherwise payable to a
Participant under the Plan all federal, state, local and other taxes required by
law to be withheld with respect to such amounts.
<PAGE>
6. Rights of Participants
A Participant's rights and interests under the Plan shall be subject to
the following provisions:
(a) A Participant's rights to payments under the Plan shall not be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, attachment, or garnishment by creditors of the Participant
or any beneficiary of the Participant.
(b) Neither the Plan nor any action taken hereunder shall be construed
as giving any Participant any right to be retained in the employment of the
Company.
(c) No Employee shall have the right, by virtue of being a Participant
in the Plan for any Plan Year, to be automatically entitled to receive an Award
for any Performance Period within such year, or to be treated as a Participant
for any later Plan Year.
(d) No Award shall be considered as compensation under any employee
benefit plan of the Company, except as specifically provided in such plan or as
otherwise determined by the Board of Directors.
7. Administration
The Plan shall be administered by the Committee. A majority of the
members of the Committee shall constitute a quorum. The Committee may act at a
meeting, including a telephone meeting, by action of a majority of the members
present, or without a meeting by unanimous written consent. In addition to the
responsibilities and powers assigned to the Committee elsewhere in the Plan, the
Committee shall have the authority to establish from time to time guidelines or
regulations for the administration of the Plan, interpret the Plan, and make all
determinations considered necessary or advisable for the administration of the
Plan. The Committee may delegate any ministerial or nondiscretionary function
pertaining to the administration of the Plan to any one or more officers of the
Company.
All decisions, actions or interpretations of the Committee under the
Plan shall be final, conclusive and binding upon all parties.
No member of the Committee shall be personally liable by reason of any
action taken by such member in good faith in his or her capacity as a member of
the Committee nor for any mistake of judgment made in good faith, and the
Company shall indemnify and hold harmless each member of the Committee, and each
employee, officer or director of the Company to whom any duty or power relating
to the administration or interpretation of the Plan may be delegated, against
any cost or expense (including counsel fees) or liability (including any sum
paid in settlement of a claim with the approval of the Board of Directors)
arising out of any act or omission to act in connection with the Plan unless
arising out of such person's own fraud or bad faith.
<PAGE>
8. Amendment or Termination
The Board of Directors may, with prospective or retroactive effect,
amend, suspend or terminate the Plan or any portion thereof at any time,
provided, however, that no amendment, suspension or termination of the Plan
shall deprive any Participant of any rights to Awards previously made under the
Plan without his or her written consent. Any amendment that the Board of
Directors would be permitted to make pursuant to the preceding sentence may also
be made by the Committee where appropriate to facilitate the administration of
the Plan or to comply with applicable law or any applicable rules and
regulations of government authorities, provided that the cost of the Plan to the
Company is not materially increased thereby.
9. Governing Law
The Plan shall be governed by and construed in accordance with the laws
of the State of Delaware.
<PAGE>
EXHIBIT 11.1
<TABLE>
CIDCO INCORPORATED
COMPUTATION OF EARNINGS PER SHARE
(in thousands, except per share amounts)
<CAPTION>
Three months ended June 30, Six months ended June 30,
-------------------------- --------------------------
1997 1996 1997 1996
--------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Net income............................. $ 3,041 $ 6,365 $ 7,438 $ 12,935
========= ========= ========== ==========
Weighted average shares outstanding.... 13,826 14,377 13,943 14,277
Shares issuable on exercise of options. 173 819 396 829
--------- --------- ---------- ----------
Weighted average shares outstanding.... 13,999 15,196 14,339 15,106
========= ========= ========== ==========
Earnings per share..................... $ 0.22 $ 0.42 $ 0.52 $ 0.86
========= ========= ========== ==========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(In thousands, except per share data; unaudited)
</LEGEND>
<CIK> 0000917639
<NAME> CIDCO Incorporated
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-START> Apr-01-1997
<PERIOD-END> Jun-30-1997
<CASH> 38,733
<SECURITIES> 40,964
<RECEIVABLES> 41,234
<ALLOWANCES> 3,097
<INVENTORY> 8,085
<CURRENT-ASSETS> 131,834
<PP&E> 12,603
<DEPRECIATION> 0
<TOTAL-ASSETS> 147,571
<CURRENT-LIABILITIES> 23,382
<BONDS> 0
0
0
<COMMON> 144
<OTHER-SE> 124,045
<TOTAL-LIABILITY-AND-EQUITY> 147,571
<SALES> 58,288
<TOTAL-REVENUES> 58,288
<CGS> 31,239
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 22,839
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 4,901
<INCOME-TAX> 1,860
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,041
<EPS-PRIMARY> 0.22
<EPS-DILUTED> 0.22
</TABLE>
