U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1997.
[ ] TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 0-16376
TIMBERLINE SOFTWARE CORPORATION
(Name of small business issuer in its charter)
Oregon 93-0748489
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9600 S.W. Nimbus Avenue, Beaverton, Oregon 97008
(Address of principal executive offices) (Zip code)
(503) 626-6775
Issuer's telephone number
Check whether the issuer (1) 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 [ ]
At May 9, 1997, approximately 5,547,651 shares of common stock of
the registrant were outstanding.
Transitional Small Business Disclosure Format (Check one):
Yes [ ] No [x]
<PAGE>
TIMBERLINE SOFTWARE CORPORATION
FORM 10-QSB FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997
TABLE OF CONTENTS
- ---------------------------------------------------------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed balance sheets, March 31, 1997
and December 31, 1996 3
Condensed statements of operations for the
three months ended March 31, 1997 and 1996 4
Condensed statements of cash flows for the
three months ended March 31, 1997 and 1996 5
Notes to condensed financial statements 6
Item 2. Management's Discussion and Analysis or
Plan of Operation 7
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURES 12
EXHIBIT INDEX 13
<PAGE>
PART I. Financial Information
Item 1. Financial Statements
TIMBERLINE SOFTWARE CORPORATION
CONDENSED BALANCE SHEETS
MARCH 31, 1997 AND DECEMBER 31, 1996
- ----------------------------------------------------------------
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
----------- -----------
<S> <C> <C>
ASSETS
- ------
Current assets:
Cash and cash equivalents $ 4,604,905 $ 3,128,703
Temporary investments 749,908 1,447,521
Accounts receivable, less allowance
for doubtful accounts
(March 31, 1997, $176,407;
December 31, 1996, $178,674) 3,383,988 3,693,679
Other receivables 166,816 156,839
Inventories 275,148 308,751
Other current assets 1,149,021 905,545
----------- -----------
Total current assets 10,329,786 9,641,038
----------- -----------
Property and equipment 7,561,739 7,236,600
Less accumulated depreciation
and amortization 4,222,332 3,969,984
------------ -----------
Property and equipment - net 3,339,407 3,266,616
----------- -----------
Capitalized software costs - net 1,144,980 1,110,023
Purchased software - net 681,648 602,774
Investments 2,814,333 3,319,147
Other assets 101,727 102,629
----------- -----------
Total $18,411,881 $18,042,227
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Accounts payable $ 656,464 $ 763,645
Accrued commissions/royalties 141,278 193,915
Deferred revenues 6,689,005 5,962,047
Accrued employee expenses 679,607 1,143,052
Other current liabilities 275,822 253,627
----------- -----------
Total current liabilities 8,442,176 8,316,286
----------- -----------
Accrued rent expense 60,243 65,124
Deferred income taxes 780,000 746,000
Shareholders' equity:
Common stock, without par value
authorized, 8,000,000 shares;
issued - March 31, 1997,5,473,926
shares; December 31, 1996,
5,465,526 shares 364,928 364,368
Additional paid in capital 2,328,465 2,282,129
Retained earnings 6,436,069 6,268,320
----------- -----------
Total shareholders' equity 9,129,462 8,914,817
----------- -----------
Total $18,411,881 $18,042,227
=========== ===========
See notes to condensed financial statements.
</TABLE>
<PAGE>
TIMBERLINE SOFTWARE CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
- ----------------------------------------------------------------
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Net revenue $7,507,695 $6,678,197
---------- ----------
Cost and expenses:
Cost of revenue 923,556 807,885
Customer support 1,576,225 1,447,107
Product development 1,824,539 1,274,447
Sales and marketing 1,636,032 1,544,529
General and administrative 1,140,714 960,449
---------- ----------
Total cost and expenses 7,101,066 6,034,417
---------- ----------
Income from operations 406,629 643,780
Other income 103,266 97,078
---------- ----------
Income before income taxes 509,895 740,858
Provision for income taxes 178,000 288,000
---------- ----------
Net income $ 331,895 $ 452,858
========== ==========
Earnings per share $ .06 $ .08
========== ==========
Weighted average common shares
outstanding 5,711,547 5,519,558
========== ==========
See notes to condensed financial statements.
</TABLE>
<PAGE>
TIMBERLINE SOFTWARE CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
- ----------------------------------------------------------------
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Net cash provided by
operating activities $ 953,715 $1,227,185
---------- ----------
Cash flows from investing
activities:
Payments for property,
equipment and purchased software (437,809) (239,828)
Capitalized software costs (124,880) (247,379)
Proceeds from investments 1,202,426 1,000,000
Purchase of investments -- (1,023,194)
---------- ----------
Net cash provided by (used in)
investing activities 639,737 (510,401)
---------- ----------
Cash flows from financing
activities:
Proceeds from issuance of
common stock 46,896 --
Dividends paid (164,146) (138,362)
---------- ----------
Net cash used in
financing activities (117,250) (138,362)
---------- ----------
Net increase in cash
and cash equivalents 1,476,202 578,422
Cash and cash equivalents,
beginning of the year 3,128,703 3,856,533
---------- ----------
Cash and cash equivalents,
end of period $4,604,905 $4,434,955
========== ==========
Supplemental information:
Cash paid during the period for
income taxes $ 181,288 $ 250,012
========== ==========
See notes to condensed financial statements.
</TABLE>
<PAGE>
TIMBERLINE SOFTWARE CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
- ----------------------------------------------------------------
1. Condensed financial statements
Certain information and note disclosures normally included
in financial statements prepared in accordance with
generally accepted accounting principles have been omitted
from these condensed financial statements. These condensed
financial statements should be read in conjunction with the
financial statements and notes thereto included in the
Company's Form 10-KSB for the year ended December 31, 1996.
The balance sheet at December 31, 1996 has been condensed
from the audited balance sheet as of that date. The results
of operations for the three months ended March 31, 1997 and
1996 are not necessarily indicative of the operating results
for the full year.
In the opinion of management, all adjustments, consisting of
normal recurring adjustments, have been made to present
fairly the Company's financial position at March 31, 1997
and the results of its operations and its cash flows for the
three months ended March 31, 1997 and 1996.
2. Accounting pronouncement
In February 1997, the Financial Accounting Standards Board
issued SFAS No. 128, Earnings per Share, which establishes
new standards for computing and presenting earnings per
share (EPS) to entities having publicly held common stock or
potential common stock. SFAS No. 128 replaces the
presentation of primary EPS with basic EPS, requires dual
presentation of basic and diluted EPS on the face of the
income statement for entities with complex capital
structures, and requires additional disclosures regarding
the computation of EPS.
SFAS No. 128 will require changes in the computation and
presentation of the Company's EPS commencing with the
financial statements for the year ending December 31, 1997.
Earlier application of this Statement is not permitted. If
the Company computed its EPS for the three months ended
March 31, 1997 and 1996 in a manner consistent with SFAS No.
128, the pro forma amounts would not be materially different
from the EPS presently reported.
3. Reclassifications
Certain reclassifications have been made in the 1996
financial statements to conform to the 1997 presentation.
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of
Operation
TIMBERLINE SOFTWARE CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
- ----------------------------------------------------------------
Results of Operations
- ---------------------
NET REVENUE. Net revenue increased 12 percent to $7,508,000 for
the three months ended March 31, 1997 compared to $6,678,000 for
the comparable period in 1996. The major component of net
revenue, software sales, increased 11 percent to $3,769,000 in
the 1997 period compared to $3,384,000 in the 1996 period
primarily due to increased sales of Construction Gold Extended
and sales of Construction Gold Standard and Precision Estimating
Standard, which were initially released in June 1996.
Construction accounting software sales and estimating software
sales increased 20 percent and 21 percent, respectively, over the
same period in 1996. Property management software sales declined
slightly in 1997 over the same period in 1996. The Company
released its Windows-based property management software product,
Property Management Gold, at the end of March 1997. Because its
release occurred at the end of the three months ended March 31,
1997, software sales for that period were not significantly
impacted by its release. However, the Company expects the
release of Property Management Gold to have a significant effect
on property management software sales in 1997. Total software
sales represented 50 percent of net revenue in the three months
ended March 31, 1997 compared to 51 percent for the same period
in 1996. The Company believes that software sales, as a percent
of net revenue, will continue at about that level throughout
1997.
Service fees from maintenance, support and training, which
represented 46 and 47 percent of net revenue for the three months
ended March 31, 1997 and 1996, respectively, increased 11 percent
to $3,468,000 in the 1997 period from $3,133,000 for the
comparable period in 1996. The increase in service fees was
principally due to a significant increase in maintenance and
support fees as a result of increased software sales of
Construction Gold Extended and Construction Gold Standard.
Maintenance and support fees also increased significantly as a
result of the Company's larger user base. The Company
anticipates that service fees will continue to represent a
significant, but not necessarily an increasing, percentage of net
revenue.
COST OF REVENUE. Cost of revenue, as a percentage of net
revenue, remained constant at 12 percent for the three months
ended March 31, 1997 and 1996. The Company believes that cost of
revenue, as a percentage of net revenue, will remain at
approximately that same level throughout 1997.
<PAGE>
OPERATING EXPENSES. Operating expenses increased 18 percent to
$6,178,000 for the three months ended March 31, 1997 from
$5,227,000 for the comparable period in 1996.
Customer support expenses increased nine percent to $1,576,000
for the three months ended March 31, 1997 from $1,447,000 for the
comparable period in 1996. The increase was primarily due to
additional personnel costs required to handle the increased
demand for support and consulting services resulting from the
increased sales of Construction Gold Extended and Construction
Gold Standard. The Company anticipates increases in customer
support expenses in order to meet the demands of its customers
and to maintain a high quality level of service.
Product development expenses increased 43 percent to $1,824,000
for the three months ended March 31, 1997 from $1,274,000 for the
comparable period in 1996. The increase was primarily due to
additional personnel required to design, develop, and test new
Windows-based software and to maintain the Company's growing
number of software products. Additional personnel were also
required to develop on-line help and training materials for the
new software products. Additionally, capitalized software
development costs, which reduce the amount of product development
expenses recognized, amounted to $125,000 for the three months
ended March 31, 1997 compared to $247,000 for the same period in
1996. With many new Windows-based software projects in progress,
additional product development expenses will be capitalized in
1997 once these projects meet the capitalization stage around
mid-year.
Sales and marketing expenses increased six percent to $1,636,000
in the three months ended March 31, 1997 from $1,545,000 for the
comparable period in 1996. As a percentage of next revenue, sales
and marketing expenses decreased to 22 percent in 1997 from 23
percent in 1996.
General and administrative expenses increased 19 percent to
$1,141,000 for the three months ended March 31, 1997 from
$960,000 for the comparable period in 1996. As a percentage of
net revenue, these expenses increased to 15 percent in 1997 from
14 percent in 1996. The increase was primarily due to increased
personnel and equipment costs related to the Company's management
information systems and an increase in professional services.
PROVISION FOR INCOME TAXES. As a percentage of income before
income taxes, the provision for income taxes was 35 percent and
39 percent, respectively, for the three months ended March 31,
1997 and 1996. The lower rate in 1997 was primarily due to the
effect on the provision of estimated research and development tax
credits for 1997. The income tax provision for the three months
ended March 31, 1996 did not take into effect any such tax
credits as there was no legislation enacted at that time for any
research and development tax credit for that year.
<PAGE>
Capital Resources and Liquidity
- -------------------------------
During the three months ended March 31, 1997, net cash provided
by operations was $954,000 compared to $1,227,000 for the same
period in 1996. Working capital has increased to $1,888,000 at
March 31, 1997 from $1,325,000 at December 31, 1996, primarily
due to the increase in cash and cash equivalents. Cash, cash
equivalents, and temporary investments, which represented 29
percent of total assets at March 31, 1997, increased $779,000
since December 31, 1996, principally due to cash provided by
operations and funds received from an investment classified as
non-current which was called by the issuer. Net accounts
receivable at March 31, 1997 decreased $310,000 since December
31, 1996, reflecting a seasonal decline in sales in March 1997
from December 1996. Other current assets increased $243,000
since December 31, 1996 primarily due to an increase in prepaid
insurance costs. Net capitalized software costs increased
$35,000 since December 31, 1996. Although the increase was not
significant, the Company anticipates releasing other Windows-
based software applications in 1997 for which additional software
development costs will be capitalized, commencing in the second
quarter of this year.
Accounts payable decreased $107,000 since December 31, 1996
primarily due to a decline in the amount owed to outside software
developers at March 31, 1997. Deferred revenues increased
$727,000 in the same period primarily due to increased billings
for annual maintenance and support services. Revenue from annual
maintenance and support service billings are recognized monthly
over the terms of the contracts. Accrued employee expenses
decreased $463,000 since December 31, 1997 primarily as a result
of the payment of the Company's 1996 contribution to its 401(k)
plan.
In January 1997, the Company declared a regular cash dividend of
$.03 per share amounting to $164,000. The Company anticipates
continuing to pay quarterly cash dividends.
As of March 31, 1997, the Company had expended $438,000 for
capital expenditures, of which $88,000 is related to initial
costs for acquisition of a building site and construction of new
corporate offices. For 1997, the Company has a capital
expenditure budget for equipment and software totaling
$1,500,000. These expenditures are expected to be funded through
current cash balances and cash provided by operations. The
building site and construction of the new corporate offices is
expected to be funded through a combination of existing cash and
investment balances,and construction loans.
<PAGE>
Forward-Looking Statements
- --------------------------
From time to time, the Company or its representatives have made
or may make forward-looking statements, orally or in writing,
including in this Report. Such forward-looking statements may be
included in, without limitation, press releases, oral statements
made with the approval of an authorized executive officer of the
Company and filings with the Securities and Exchange Commission.
The words or phrases "anticipates," " believes," "expects," "will
continue," "estimates," "projects," or similar expressions are
intended to identify "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995.
The Company's forward-looking statements are subject to certain
risks, trends, and uncertainties that could cause actual results
to vary materially from anticipated results, including, without
limitation, the following: delays in new product releases, delays
in acceptance of the Company's products in the marketplace,
failures by the Company's outside vendors to perform as promised,
changes in the software operating systems for which the Company's
products are written or increased competition and changes in
general market conditions.
<PAGE>
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
3.(ii) Amended and Restated Bylaws
(27) Financial Data Schedule
(b) Reports on Form 8-K
No Form 8-K was filed during the three months ended
March 31, 1997.
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Exchange
Act of 1934, the registrant caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
TIMBERLINE SOFTWARE CORPORATION
-------------------------------
(Registrant)
/s/ Thomas P. Cox
Date May 13, 1997 -----------------------------
Thomas P. Cox, Senior Vice
President-Finance (Chief Financial Officer)
<PAGE>
FORM 10-QSB
Exhibit Index
Exhibit Page
- ------- ----
3.(ii) Amended and Restated Bylaws 14
(27) Financial Data Schedule 42
<PAGE>
AMENDED AND RESTATED
BYLAWS
OF
TIMBERLINE SOFTWARE CORPORATION
Originally Adopted on: April 24, 1990
Amendments are listed on Page i
<PAGE>
AMENDMENTS
SECTION DATE OF AMENDMENT
3.2 By vote of Board of Directors March 18, 1997
2.1 By vote of Board of Directors March 18, 1997
Page i - BYLAWS
<PAGE>
TABLE OF CONTENTS
PAGE
SECTION 1. OFFICES 1
SECTION 2 SHAREHOLDERS 1
2.1 Annual Meeting 1
2.2 Special Meeting 1
2.3 Place of Meeting 1
2.4 Notice of Meeting 1
2.5 Waiver of Notice 2
2.6 Fixing of Record Date for Determination of
Shareholders 2
2.7 Shareholder's List 3
2.7.1 The List 3
2.7.2 Copying 3
2.8 Quorum 3
2.9 Manner of Acting 3
2.9.1 Generally 3
2.9.2 Single Voting Group 4
2.10 Proxies 4
2.11 Voting of Shares 4
2.12 Voting for Directors 4
2.13 Action by Shareholder Without a Meeting 4
2.14 Voting of Shares by Certain Holders 4
2.14.1 Shares Held by Another Corporation 4
2.14.2 Shares Held by Personal Representative,
Guardian, Conservator or Trustee 5
2.14.3 Shares Held by Receiver 5
2.14.4 Pledged Shares 5
2.14.5 Treasury Shares 5
SECTION 3. BOARD OF DIRECTORS 5
3.1 General Powers 5
3.2 Number and Tenure 5
3.3 Annual and Regular Meetings 6
3.4 Special Meetings 6
3.5 Meetings by Telephone 6
3.6 Notice of Special Meetings 6
3.6.1 Personal Delivery 6
3.6.2 Delivery by Mail 6
3.6.3 Delivery by Electronic Means 6
3.6.4 Oral Notice 7
3.7 Waiver of Notice 7
3.7.1 Written Waiver 7
3.7.2 Waiver by Attendance 7
Page ii - BYLAWS
<PAGE>
PAGE
3.8 Quorum 7
3.9 Manner of Acting 7
3.10 Presumption of Assent 7
3.11 Action by Board of Committees Without a
Meeting 8
3.12 Resignation 8
3.13 Removal 8
3.14 Vacancies 8
3.15 Executive and Other Committees 9
3.15.1 Creation of Committees 9
3.15.2 Authority of Committees 9
3.15.3 Quorum and Manner of Acting 9
3.15.4 Minutes of Meetings 10
3.15.5 Resignation 10
3.15.6 Removal 10
3.16 Compensation 10
3.17 Transactions with Directors 10
SECTION 4. OFFICERS 11
4.1 Number 11
4.2 Election and Term of Office 11
4.3 Resignation 11
4.4 Removal 11
4.5 Vacancies 12
4.6 Chairman of the Board 12
4.7 President 12
4.8 Vice President 12
4.9 Secretary 12
4.10 Treasurer 13
4.11 Salaries 13
SECTION 5. CONTRACTS, LOANS, CHECKS, DEPOSITS 13
5.1 Contracts 13
5.2 Loans to the Corporation 13
5.3 Loans to Directors 13
5.4 Checks, Drafts, Etc. 14
5.5 Deposits 14
SECTION 6. CERTIFICATES FOR SHARES AND THEIR
TRANSFER 14
6.1 Issuance of Shares 14
6.2 Certificates for Shares 14
Page iii - BYLAWS
<PAGE>
PAGE
6.3 Stock Records 14
6.4 Restriction on Transfer 14
6.5 Transfer of Shares 15
6.6 Lost or Destroyed Certificates 15
6.7 Transfer Agent and Registrar 15
6.8 Officer Ceasing to Act 15
6.9 Fractional Shares 15
SECTION 7. BOOKS AND RECORDS 15
SECTION 8. FISCAL YEAR 16
SECTION 9. SEAL 16
SECTION 10. INDEMNIFICATION 16
10.1 Definition 16
10.2 Right to Indemnification 17
10.3 No Indemnification 17
10.4 Limitation on Indemnification 17
10.5 Determination and Authorization of
Indemnification 17
10.5.1 Permissible 17
10.5.2 Authorization 18
10.6 Advance for Expenses 18
10.7 Indemnification of Officers, Employees,
and Agents 18
10.8 Insurance 19
10.9 Additional Indemnification;
Nonexclusivity of Rights 19
SECTION 11. AMENDMENTS 20
Page iv - BYLAWS
<PAGE>
AMENDED AND RESTATED
BYLAWS OF
TIMBERLINE SOFTWARE CORPORATION
SECTION 1. OFFICES
The principal office of the corporation shall be located at the
principal place of business or such other place as the Board of
Directors (the "Board") may designate. The corporation may have
such other offices, either within or without the State of Oregon,
as the Board may designate or as the business of the corporation
may require from time to time.
SECTION 2. SHAREHOLDERS
2.1 ANNUAL SHAREHOLDERS' MEETING. The annual meeting of the
shareholders shall be held each year on a date
established by the Board of Directors falling within the
period of One Hundred Fifty (150) days after the close of
the Corporation's fiscal year, at such time and place as
may be prescribed by the Board of Directors and specified
in the notice of the meeting.
2.2 SPECIAL MEETINGS. The Chairman of the Board, the
President, or the Board may call special meetings of the
shareholders for any purpose and the holders of not less
than one-tenth (1/10th) of all the outstanding shares of
the corporation entitled to vote on any issue proposed to
be considered at the proposed special meeting, if they
date, sign and deliver to the corporation's Secretary
demand for a special meeting describing the purpose(s)
for which it is to be held, may call a special meeting of
the shareholders for such stated purpose(s).
2.3 PLACE OF MEETING. All meetings shall be held at the
principal office of the corporation or at such other
place within or without the State of Oregon designated by
the Board, by any persons entitled to call a meeting
hereunder or by a waiver of notice signed by all of the
shareholders entitled to vote at the meeting.
2.4 NOTICE OF MEETING. The Chairman of the Board, the
President, the Secretary, the Board, or shareholders
calling an annual or special meeting of shareholders, as
provided for herein, shall cause to be delivered to each
shareholder entitled to notice of or to vote at the
meeting either personally or by mail, not less than ten
(10) nor more than sixty (60) days before the meeting,
written notice stating the place, day and hour of the
meeting, and in the case of a special meeting, the
purpose(s) for which the meeting is called. At any time,
upon properly executed written demand of the
<PAGE>
holders of not less than one-tenth(1/10th) of all of the
outstanding shares of the corporation entitled to vote on
any issue proposed to be considered at the proposed
meeting, it shall be the duty of the Secretary to give
notice of such special meeting of shareholders to be held
on such date and at such place and hour as the Secretary
may fix, not less than ten (10) nor more than sixty (60)
days after receipt of said request, and if the Secretary
shall neglect or refuse to issue such notice, the
person(s) making the request may do so and may so fix the
date for such meeting. If such notice is mailed, it
shall be deemed delivered when deposited in the official
government mail properly addressed to the shareholder at
his or her address as it appears on the stock transfer
books of the corporation with postage prepaid If the
notice is telegraphed, it shall be deemed delivered when
the content of the telegram is delivered to the telegraph
company.
2.5 WAIVER OF NOTICE.
2.5.1 Whenever any notice is required to be given to
any shareholder under the provisions of these
Bylaws, the Articles of Incorporation or the
Oregon Business Corporation Act, a waiver
thereof in writing, signed by the person or
persons entitled to such notice, whether
before or after the time stated therein, and
delivered to the corporation for inclusion in
the minutes for filing with the corporate
records shall be deemed equivalent to the
giving of such notice.
2.5.2 The attendance of a shareholder at a meeting
waives objection to lack of, or defective
notice of such meeting or consideration of a
particular matter at the meeting, except when
a shareholder at the beginning of the meeting
or consideration of such matter objects to
holding the meeting, transacting business at
the meeting or considering the matter when
presented at the meeting.
2.6 FIXING OF RECORD DATE FOR DETERMINING SHAREHOLDERS. For
purposes of determining shareholders entitled to notice
of, or vote at any meeting of shareholders or any
adjournment thereof, or shareholders entitled to demand
a special meeting, or shareholders entitled to receive
payment of any dividend, or in order to make a
determination of shareholders for any other purpose, the
Board may fix in advance a date as the record date for
any such determination. Such record date shall be not
more than seventy (70) days, and in case of a
<PAGE>
meeting of shareholders, not less than ten (10) days,
prior to the date on which the particular action
requiring such determination is to be taken. If no
record date is fixed for the determination of
shareholders entitled to notice of or to vote at a
meeting, or to demand a special meeting or to receive
payment of a dividend, the date on which the notice of
meeting is mailed or on which the resolution of the Board
declaring such dividend is adopted, as the case may be,
shall be the record date for such determination Such
determination shall apply to any adjournment of the
meeting.
2.7 SHAREHOLDERS' LIST.
2.7.1 THE LIST. Beginning two (2) business days after
notice of a meeting of shareholders is given, a
complete alphabetical list of the shareholders
entitled to vote at such meeting, or any
adjournment thereof, shall be made, arranged by
voting group, and within each voting group by class
or series, with the address of and number of shares
held by each shareholder. This record shall be
kept on file at the corporation's principal office
or at a place identified in the meeting notice in
the city where the meeting will be held and on
written demand shall be subject to inspection by
any shareholder at any time during normal business
hours. Such record shall also be kept open at such
meeting for inspection by any shareholder.
2.7.2 COPYING. A shareholder may, on written demand,
copy the shareholders' list at such shareholder's
expense during regular business hours provided:
a. Such shareholder's demand is made in good
faith and for a proper purpose;
b. Such shareholder has described with reasonable
particularity his/her/its purpose in the
written demand; and
c. The shareholders' list is directly connected
with such shareholder's purpose.
2.8 QUORUM. A majority of the votes entitled to be cast on a
matter at a meeting by a voting group, represented in person
or by proxy, shall constitute a quorum of that voting group
for action on that matter at a meeting of the shareholders.
If the presiding officer at a meeting of the shareholders
determines that a quorum is not present, he shall not call the
meeting to order If a quorum is present or represented
<PAGE>
at a reconvened meeting following an adjournment, any business
may be transacted that might have been transacted at the
meeting as originally called. The shareholders present at a
duly organized meeting may continue to transact business until
adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum.
2.9 MANNER OF ACTING.
2.9.1 GENERALLY. If a quorum exists, action on a
matter, other than the election of directors,
by a voting group is approved if the votes
cast within the voting group favoring the
action exceed the votes cast opposing the
action, unless the affirmative vote of a
greater number is required by these Bylaws,
the Articles of Incorporation or the Oregon
Business Corporation Act.
2.9.2 SINGLE VOTING GROUP. If a matter is to be
voted on by a single group, action on that
matter is taken when voted upon by that voting
group; if a matter is to be voted on by two
(2) or more voting groups, action on that
matter is taken only when voted upon by each
of those voting groups counted separately.
Action may be taken by one (1) voting group on
a matter even though no action is taken by
another voting group entitled to vote on such
matter.
2.10 PROXIES. A shareholder may vote by proxy executed in
writing by the shareholder or by his or her
attorney-in-fact. Such proxy shall be filed with the
Secretary of the corporation before or at the time of the
meeting. A proxy shall become invalid eleven (11) months
after the date of its execution, unless otherwise
expressly provided in the proxy. A proxy with respect to
a specified meeting shall entitle the holder thereof to
vote at any adjournment of such meeting but shall not be
valid after the final adjournment thereof.
2.11 VOTING OF SHARES. Each outstanding share entitled to
vote shall be entitled to one voted upon each matter
submitted to a vote at a meeting of shareholders.
2.12 VOTING FOR DIRECTORS. Each shareholder entitled to vote
at an election of Directors may vote, in person or by
proxy, the number of shares owned by such shareholder for
as many persons as there are Directors to be elected and
for whose election such shareholder has a right to vote
Unless otherwise provided in the
<PAGE>
Articles of Incorporation, Directors are elected by a
plurality of the votes cast by shares entitled to vote in
the election at a meeting at which a quorum is present.
2.13 ACTION BY SHAREHOLDERS WITHOUT A MEETING. Any action
which could be taken at a meeting of the shareholders may
be taken without a meeting if a written consent setting
forth the action so taken is signed by all shareholders
entitled to vote with respect to the subject matter
thereof The action shall be effective on the date on
which the last signature is placed on the consent, or at
such earlier or later time as is set forth therein. Such
written consent, which shall have the same force and
effect as a unanimous vote of the shareholders, shall be
inserted in the minute book as if it were the minutes of
a meeting of the shareholders.
2.14 VOTING OF SHARES BY CERTAIN HOLDERS.
2.14.1 SHARES HELD BY ANOTHER CORPORATION. Shares
standing in the name of another corporation
may be voted by such officer, agent or proxy
as the bylaws of such other corporation may
prescribe, or, in the absence of such
provision, as the Board of Directors of such
corporation may determine; provided, however,
such shares are not entitled to vote if the
corporation owns, directly or indirectly, a
majority of the shares entitled to vote for
Directors of such other corporation.
2.14.2 SHARES HELD BY PERSONAL REPRESENTATIVE,
GUARDIAN, CONSERVATOR OR TRUSTEE. Shares
held by a personal representative,
administrator, executor, guardian or
conservator may be voted by the holder, either
in person or by proxy, without a transfer of
such shares into the holder's name. Shares
standing in the name of a trustee may be voted
by that trustee either in person or by proxy,
but no trustee shall be entitled to vote
shares without a transfer of such shares into
the trustee's name.
2.14.3 SHARES HELD BY RECEIVER OR TRUSTEE IN
BANKRUPTCY. Shares standing in the name of a
receiver or trustee in bankruptcy may be voted
by such receiver or trustee in bankruptcy, and
shares held by or under the control of a
receiver or trustee in bankruptcy may be voted
by such receiver or trustee in bankruptcy
without the transfer thereof into the name of
such receiver or trustee if authority to do so
<PAGE>
is contained in an appropriate order of the
court by which such receiver or trustee in
bankruptcy was appointed.
2.14.4 PLEDGED SHARES. A shareholder whose shares
are pledged shall be entitled to vote such
shares until the shares have been transferred
into the name of the pledgee, and thereafter
the pledgee shall be entitled to vote the
shares so transferred.
2.14.5 TREASURY SHARES; FIDUCIARY STOCK. Treasury
shares shall not be voted or counted for
determining whether a quorum exists at any
meeting or counted in determining the total
number of outstanding shares at any given
time; shares of its own stock held by the
corporation in a fiduciary capacity may be
voted by the corporation.
SECTION 3. BOARD OF DIRECTORS
3.1 GENERAL POWERS. The business affairs of the corporation
shall be managed by the Board, except as may be otherwise
provided in these Bylaws, the Articles of Incorporation,
or the Oregon Business Corporation Act.
3.2 NUMBER, TENURE, AND QUALIFICATIONS OF DIRECTORS. The
Board of Directors shall consist of not less than two (2)
nor more than nine (9) members, with the number of
directors within such range to be determined from time to
time by action of the Board of Directors Each director
shall hold office until the next annual meeting of
shareholders or until removed. However, if the
director's term expires, the director shall continue to
serve until the director's successor shall have been
elected and qualified or until there is a decrease in the
number of directors. Directors need not be residents of
the state of Oregon or shareholders of the corporation
unless so required by the articles of incorporation.
3.3 ANNUAL AND REGULAR MEETINGS. An annual Board meeting
shall be held without notice immediately after and at the
same place as the annual meeting of shareholders. By
resolution the Board, or any committee thereof, may
specify the time and place either within or without the
State of Oregon for holding regular meetings thereof
without other notice than such resolution.
3.4 SPECIAL MEETINGS. Special meetings of the Board or any
committee designated by the Board may be called by or at
the request of the Chairman of the Board, the President,
the Secretary or any two (2) Directors and, in the case
<PAGE>
of any special meeting of any committee designated by the
Board, by the Chairman thereof. The person or persons
authorized to call special meetings may fix any place
either within or without the State of Oregon as the place
for holding any special Board or committee meeting called
by them.
3.5 MEETINGS BY TELEPHONE. Members of the Board or any
committee designated by the Board may participate in a
meeting of such Board or committee by means of a
conference telephone or similar communications equipment
by means of which all persons participating in the
meeting can hear each other.Participation by such means
shall constitute presence in person at a meeting.
3.6 NOTICE OF SPECIAL MEETINGS. Notice of a special Board or
committee meeting stating the place, day and hour of the
meeting shall be given to a Director in writing or orally
by telephone or in person. Neither the business to be
transacted at, nor the purpose of, any special meeting
need be specified in the notice of such meeting.
3.6.1 PERSONAL DELIVERY. If delivery is by personal
service, the notice shall be effective if
delivered at such address at least two (2)
days before the meeting.
3.6.2 DELIVERY BY MAIL. If notice is delivered by
mail, the notice shall be deemed effective if
deposited in the official government mail at
least five (5) days before the meeting
properly addressed to a Director at his or her
address shown on the records of the
corporation with postage prepaid.
3.6.3 DELIVERY BY ELECTRONIC MEANS. If notice is
delivered by any electronic means including,
but not limited to, telegraph or facsimile,
the notice shall be deemed effective if the
content thereof is delivered to the telegraph
company for delivery to a Director at his or
her address shown on the records of the
corporation, or transmitted by facsimile
machine to a facsimile number for the Director
shown on the records of the corporation, at
least three (3) days before the meeting.
3.6.4 ORAL NOTICE. If notice is delivered orally,
by telephone or in person, the notice shall be
effective if personally given to a Director at
least two (2) days before the meeting.
<PAGE>
3.7 WAIVER OF NOTICE.
3.7.1 WRITTEN WAIVER. Whenever any notice is
required to be given to any Director under the
provisions of these Bylaws, the Articles of
Incorporation or the Oregon Business
Corporation Act, a waiver thereof in writing
specifying the meeting for which notice is
waived, signed by the person or persons
entitled to such notice, whether before or
after the time stated therein, shall be deemed
equivalent to the giving of such notice
Neither the business to be transacted at, nor
the purpose of, any regular or special meeting
of the Board or any committee appointed by the
Board need be specified in the waiver of
notice of such meeting.
3.7.2 WAIVER BY ATTENDANCE. The attendance of a
Director at a Board or committee meeting shall
constitute a waiver of notice of such meeting,
except when a Director, at the beginning of
the meeting, or promptly upon such Director's
arrival, objects to holding the meeting or
transacting any business and does not
thereafter vote for or assent to action taken
at the meeting.
3.8 QUORUM. A majority of the number of Directors fixed by
or in the manner provided by these Bylaws shall
constitute a quorum for the transaction of business at
any Board meeting If the Chairman of the Board
determines that less than a quorum is present he shall
not call the meeting to order.
3.9 MANNER OF ACTING. The act of the majority of the
Directors present at a Board meeting at which there is a
quorum shall be the act of the Board, unless <PAGE> the
vote of a greater number is required by these Bylaws, the
Articles of Incorporation or the Oregon Business
Corporation Act.
3.10 PRESUMPTION OF ASSENT. A Director of the corporation
present at a Board or committee meeting at which action
on any corporate matter is taken shall be deemed to have
assented to the action taken unless such Director objects
at the beginning of the meeting, or promptly upon such
Director's arrival, to holding the meeting or transacting
business at the meeting, and his or her dissent is
entered in the minutes of the meeting, or unless such
Director delivers a written notice of dissent or
abstention to such action with the presiding officer of
the meeting before the adjournment thereof, or forwards
<PAGE>
such notice by registered mail to the Secretary of the
corporation immediately after the adjournment of the
meeting A Director who voted in favor of such action may
not thereafter dissent or abstain.
3.11 ACTION BY BOARD OR COMMITTEES WITHOUT A MEETING. Any
action which could be taken at a meeting of the Board or
of any committee appointed by the Board may be taken
without a meeting if a written consent setting forth the
action so taken is signed by each of the Directors or by
each committee member. The action shall be effective on
the date on which the last signature is placed on the
consent, or at such earlier time as is set forth therein.
Such written consent, which shall have the same effect as
a unanimous vote of the Directors or such committee,
shall be inserted in the minute book as if it were the
minutes of a Board or committee meeting.
3.12 RESIGNATION. Any Director may resign at any time by
delivering written notice to the Chairman of the Board,
the Board, or to the registered office of the
corporation. Any such resignation shall take effect at
the time specified therein, or if the time is not
specified therein, upon delivery thereof and, unless
otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
Once delivered, a notice of resignation is irrevocable
unless revocation is permitted by the Board.
3.13 REMOVAL. At a meeting of shareholders called expressly
for that purpose, one (1) or more members of the Board
(including the entire Board) may be removed, with or
without cause, unless the Articles of Incorporation
permit removal for cause only, by a vote of the holders
of a majority of the shares then entitled to vote on the
election of the Director(s) A Director may be removed
only if the number of votes cast to remove the Director
exceeds the number of votes cast to not remove the
Director If a Director is elected by a voting group of
shareholders, only the shareholders of that voting group
may participate in the vote to remove such Director.
3.14 VACANCIES. Any vacancy occurring on the Board, including
a vacancy resulting from an increase in the number of
Directors, may be filled by the shareholders, the Board
or the affirmative vote of a majority of the remaining
Directors though less than a quorum of the Board, or by
a sole remaining Director. A Director elected to fill a
vacancy shall be elected for the unexpired term of his
or her predecessor in office Any directorship to be
filled by reason of an increase in the number of
Directors may be filled by the affirmative vote of a
majority of the number of Directors fixed by the Bylaws
<PAGE>
prior to such increase for a term of office continuing
only until the next election of Directors by the
shareholders. Any directorship not so filled by the
Directors shall be filled by election at the next
annual meeting of shareholders or at a special meeting of
shareholders called for that purpose. If the vacant
directorship is filled by the shareholders and was held
by a Director elected by a voting group of shareholders,
then only the holders of shares of that voting group are
entitled to vote to fill such vacancy. A vacancy that
will occur at a specific later date by reason of a
resignation effective at such later date or otherwise may
be filled before the vacancy occurs, but the new Director
may not take office until the vacancy occurs.
3.15 EXECUTIVE AND OTHER COMMITTEES.
3.15.1 CREATION OF COMMITTEES. The Board, by
resolution adopted in the manner provided by
these Bylaws by a majority of the number of
Directors in office when such action is taken,
may appoint standing or temporary committees,
including an Executive Committee, from its own
number and consisting of no less than two (2)
Directors and invest such committee(s) with
such powers as it may see fit, subject to such
conditions as may be prescribed by the Board,
these Bylaws, the Articles of Incorporation
and the Oregon Business Corporation Act.
3.15.2 AUTHORITY OF COMMITTEES. Each committee shall
have and may exercise all of the authority of
the Board to the extent provided in the
resolution of the Board designating the
committee and any subsequent resolutions
pertaining thereto and adopted in like manner,
except that no such committee shall have the
authority to: (a) authorize distributions; (b)
approve or propose to shareholders actions
required by the Oregon Business Corporation
Act to be approved by shareholders; (c) fill
vacancies on the Board or any committee
thereof; (d) adopt, amend or repeal these
Bylaws; (e) amend the Articles of
Incorporation pursuant to the Oregon Business
Corporation Act; (f) approve a plan of merger
not requiring shareholder approval; (g)
authorize or approve reacquisition of shares,
except according to a formula or method
prescribed by the Board; or (h) authorize or
approve the issuance or sale or contract for
sale of shares, or determine the designation
of relative rights, preferences and
<PAGE>
limitations of a class or series of shares,
except that the Board may authorize a
committee or a senior executive officer of the
corporation to do so within limits
specifically prescribed by the Board.
3.15.3 QUORUM AND MANNER OF ACTING. A majority of
the number of Directors composing any
committee of the Board, as established and
fixed by resolution of the Board, shall
constitute a quorum for the transaction of
business at any meeting of such committee.If
the presiding officer determines that less
than a quorum is present, he shall not call
the meeting to order. Except as may be
otherwise provided in the Oregon Business
Corporation Act, the Articles of
Incorporation, or these Bylaws, the act of a
majority of the members of a committee present
shall be the act of the committee.
3.15.4 MINUTES OF MEETINGS.All committees so
appointed shall keep regular minutes of their
meetings and shall cause them to be recorded
in books kept for that purpose.
3.15.5 RESIGNATION.Any member of any committee may
resign at any time by delivering written
notice thereof to the Board, the Chairman of
the Board or the corporation Any such
resignation shall take effect at the time
specified therein, or if the time is not
specified, upon delivery thereof and the
acceptance of such resignation shall not be
necessary to make it effective Once
delivered, a notice of resignation is
irrevocable unless revocation is permitted by
the Board.
3.15.6 REMOVAL. The Board may remove from office any
member of any committee elected or appointed
by it, but only by the affirmative vote of not
less than a majority of the number of
Directors fixed by or in the manner provided
by these Bylaws.
3.16 COMPENSATION. By Board resolution, Directors and
committee members may be paid their expenses, if any, of
attendance at each Board or committee meeting, or a fixed
sum for attendance at each Board or committee meeting, or
a stated salary as Director or a committee member, or a
combination of the foregoing. No such payment shall
<PAGE>
preclude any Director or committee member from serving
the corporation in any other capacity and receiving
compensation therefor.
3.17 TRANSACTIONS WITH DIRECTORS.
3.17.1 Any contract or other transaction or
determination between the corporation and one
or more of its Directors, or between the
corporation and another party in which one or
more of its Directors are interested, shall be
valid notwithstanding the relationship or
interest or the presence or participation of
such Director(s) in a meeting of the Board or
a committee thereof which acts upon or in
reference to such contract, transaction, or
determination, if:(a) the material facts of
the transaction and the Directors' interest(s)
were disclosed or known to the Board or a
committee of the Board and the Board or
committee authorized, approved, or ratified
the transactions; (b) the material facts of
the transaction and the Directors or
Directors' interest(s) were disclosed or known
to the shareholders entitled to vote and they
authorized, approved or ratified the
transaction; or (c) the transaction was fair
to the corporation.
3.17.2 Common or interested Directors may be counted
in determining the presence of a quorum at a
meeting of the Board or committee which
authorizes or ratifies such contract,
transaction or determination. A transaction
may not be authorized, approved or ratified by
a single Director The interested Director(s)
shall not be disqualified from voting as
shareholders for ratification or approval of
such contract, transaction or determination.
3.17.3 None of the provisions of this section shall
invalidate any contract, transaction or
determination which would otherwise be valid
under applicable law.
SECTION 4. OFFICERS
4.1 NUMBER. The officers of the corporation shall be a
President and a Secretary, each of whom shall be elected
by the Board. One or more Vice Presidents, a Treasurer
and such other officers and assistant officers, including
a Chairman of the Board, may be elected or appointed by
the Board; such officers and assistant officers to hold
<PAGE>
office for such period, have such authority and perform
such duties as are provided in these Bylaws or as may be
provided by resolution of the Board. Any officer may be
assigned by the Board any additional title that the Board
deems appropriate.The Board may delegate to any officer
or agent the power to appoint any such subordinate
officers or agents and to prescribe their respective
terms of office, authority and duties Any two (2) or
more offices may be held by the same person.
4.2 ELECTION AND TERM OF OFFICE. The officers of the
corporation shall be elected annually by the Board at the
Board meeting held after the annual meeting of the
shareholders. If the election of officers is not held at
such meeting, such election shall be held as soon
thereafter as a Board meeting conveniently may be
held.Unless an officer dies, resigns, or is removed from
office, he or she shall hold office until the next annual
meeting of the Board or until his or her successor is
elected.
4.3 RESIGNATION. Any officer may resign at any time by
delivering written notice to the corporation Any such
resignation shall take effect at the time specified
therein, or if the time is not specified, upon delivery
thereof and, unless otherwise specified therein The
acceptance of such resignation shall not be necessary to
make it effective. Once delivered, a notice of
resignation is irrevocable unless revocation is permitted
by the Board.
4.4 REMOVAL. Any officer or agent elected or appointed by
the Board may be removed by the Board whenever in its
judgment the best interests of the corporation would be
served thereby, but such removal shall be without
prejudice to the contract rights, if any, of the person
so removed Election or appointment of an officer or
agent shall not of itself create contract rights.
4.5 VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification, creation of a new
office or any other cause may be filled by the Board for
the unexpired portion of the term, or for a new term
established by the Board.
4.6 CHAIRMAN OF THE BOARD. If elected, the Chairman of the
Board shall perform such duties as shall be assigned to
him by the Board from time to time and shall preside over
meetings of the Board and shareholders unless another
officer is appointed or designated by the Board as
Chairman of such meeting.
<PAGE>
4.7 PRESIDENT. The President shall be the chief executive
officer of the corporation unless some other officer is
so designated by the Board, shall preside over meetings
of the Board and shareholders in the absence of a
Chairman of the Board and, subject to the Board's
control, shall supervise and control all of the assets,
business and affairs of the corporation The President
may sign certificates for shares of the corporation,
deeds, mortgages, bonds, contracts, or other instruments,
except when the signing and execution thereof have been
expressly delegated by the Board or by these Bylaws to
some other officer or agent of the corporation, or are
required by law to be otherwise signed or executed by
some other officer or in some other manner In general,
the President shall perform all duties incident to the
office of President and such other duties as are
prescribed by the Board from time to time.
4.8 VICE PRESIDENT. In the event of the death of the
President or his or her inability to act, the Vice
President (or if there is more than one (1) Vice
President, the Vice President who was designated by the
Board as the successor to the President, or if no Vice
President is so designated, the Vice President first
elected to such office) shall perform the duties of the
President, except as may be limited by resolution of the
Board, with all the powers of and subject to all the
restrictions upon the President Any Vice President may
sign, with the Secretary or Assistant Secretary,
certificates for shares of the corporation. Vice
Presidents shall have, to the extent authorized by the
President or the Board, the same powers as the President
to sign deeds, mortgages, bonds, contracts or other
instruments Vice Presidents shall perform such other
duties as from time to time may be assigned to them by
the President or the Board.
4.9 SECRETARY. The Secretary shall: (a) keep the minutes of
meetings of the shareholders and the Board in one (1) or
more books provided for that purpose; (b) see that all
notices are duly given in accordance with the provisions
of these Bylaws or as required by law; (c) be custodian
of the corporate records and seal of the corporation; (d)
keep registers of the post office address of each
shareholder and Director; (e) sign, with the President or
a Vice President, certificates for shares of the
corporation; (f) have general charge of the stock
transfer books of the corporation; (g) sign, with the
President or other officer authorized by the President or
the Board, deeds, mortgages, bonds, contracts or other
instruments; and (h) in general perform all duties
incident to the office of Secretary and such other duties
as from time to time may be assigned to him or her by the
<PAGE>
President or by the Board In the absence of the
Secretary, an Assistant Secretary may perform the duties
of the Secretary.
4.10 TREASURER. If required by the Board, the Treasurer shall
give a bond for the faithful discharge of his or her
duties in such amount and with such surety or sureties as
the Board shall determine The Treasurer shall have
charge and custody of and be responsible for all funds
and securities of the corporation; receive and give
receipts for moneys due and payable to the corporation
from any source whatsoever, and deposit all such moneys
in the name of the corporation in banks, trust companies
or other depositories selected in accordance with the
provisions of these Bylaws; and in general perform all of
the duties incident to the office of Treasurer and such
other duties as from time to time may be assigned to him
or her by the President or by the Board In the absence
of the Treasurer, an Assistant Treasurer may perform the
duties of the Treasurer.
4.11 SALARIES. The salaries of the officers shall be fixed
from time to time by the Board or by any person or
persons to whom the Board has delegated such authority.
No officer shall be prevented from receiving such salary
by reason of the fact that he or she is also a Director
of the corporation.
SECTION 5. CONTRACTS, LOANS, CHECKS, AND DEPOSITS
5.1 CONTRACTS. The Board may authorize any officer or
officers, or agent or agents, to enter into any contract
or execute and deliver any instrument in the name of and
on behalf of the corporation. Such authority may be
general or confined to specific instances.
5.2 LOANS TO THE CORPORATION. No loans shall be contracted
on behalf of the corporation and no evidences of
indebtedness shall be issued in its name unless
authorized by a resolution of the Board. Such authority
may be general or confined to specific instances.
5.3 LOANS TO DIRECTORS.The corporation shall not lend money
to or guarantee the obligation of a Director unless:(a)
the particular loan or guarantee is approved by a
majority of the votes represented by the outstanding
voting shares of all classes, voting as a single voting
group, excluding the votes of the shares owned by or
voted under the control of the benefitted Director; or
(b) the Board determines that the loan or guarantee
benefits the corporation and either approves the specific
loan or guarantee or a general plan authorizing the loans
and guarantees.
<PAGE>
5.4 CHECKS, DRAFTS, ETC. All checks, drafts, or other orders
for the payment of money, notes or other evidences of
indebtedness issued in the name of the corporation shall
be signed by such officer or officers, or agent or
agents, of the corporation and in such manner as is from
time to time determined by resolution of the Board.
5.5 DEPOSITS. All funds of the corporation not otherwise
employed shall be deposited from time to time to the
credit of the corporation in such banks, trust companies
or other depositories as the Board may select.
SECTION 6. CERTIFICATES FOR SHARES AND THEIR TRANSFER
6.1 ISSUANCE OF SHARES. No shares of the corporation shall
be issued unless authorized by the Board, which
authorization shall include the maximum number of shares
to be issued and the consideration to be received for
each share.
6.2 CERTIFICATES FOR SHARES. Certificates representing
shares of the corporation shall be in such form as shall
be determined by the Board. Such certificates shall be
signed by the Chairman or Vice Chairman of the Board, or
the President or a Vice President, and by the Secretary
or an Assistant Secretary Any or all of the signatures
on a certificate may be a facsimile if the certificate is
manually signed on behalf of a transfer agent or a
registrar other than the corporation itself or an
employee of the corporation All certificates shall
include on their face written notice of any restrictions
which may be imposed on the transferability of such
shares All certificates shall be consecutively numbered
or otherwise identified.
6.3 STOCK RECORDS. The stock transfer books shall be kept at
the registered office or principal place of business of
the corporation or at the office of the corporation's
transfer agent or registrar The name and address of each
person to whom certificates for shares are issued,
together with the class and number of shares represented
by each such certificate and the date of issue thereof,
shall be entered on the stock transfer books of the
corporation The person in whose name shares stand on the
books of the corporation shall be deemed by the
corporation to be the owner thereof for all purposes.
6.4 RESTRICTION ON TRANSFER. Except to the extent that the
corporation has obtained an opinion of counsel acceptable
to the corporation that transfer restrictions are not
required under applicable securities laws, or has
otherwise satisfied itself that such transfer
restrictions are not required, all certificates
<PAGE>
representing shares of the corporation shall bear the
following legend on the face of the certificate or on the
reverse of the certificate if a reference to the legend
is contained on the face, which reads substantially as
follows:
The securities evidenced by this certificate have
not been registered under the Securities Act of
1933 (the 'Act') or any applicable state securities
law, and no interest therein may be sold,
distributed, assigned, offered, pledged, or
otherwise transferred unless (a) there is an
effective registration statement under the Act and
applicable state securities laws covering any such
transaction involving said securities or (b) this
corporation receives an opinion of legal counsel
for the holder of these securities (concurred in by
legal counsel for this corporation)stating that
such transaction is exempt from registration or
this corporation otherwise satisfies itself that
such transaction is exempt from registration.
6.5 TRANSFER OF SHARES. Transfer of shares of the
corporation shall be made only on the stock transfer
books of the corporation pursuant to authorization or
document of transfer made by the holder of record thereof
or by his or her legal representative, who shall furnish
proper evidence of authority to transfer, or by his or
her attorney-in-fact authorized by power of attorney duly
executed and filed with the Secretary of the corporation
All certificates surrendered to the corporation for
transfer shall be cancelled and no new certificate shall
be issued until the former certificates for like number
of shares shall have been surrendered and cancelled.
6.6 LOST OR DESTROYED CERTIFICATES. In the case of a lost,
destroyed or mutilated certificate, a new certificate may
be issued therefore upon such terms and indemnity to the
corporation as the Board may prescribe.
6.7 TRANSFER AGENT AND REGISTRAR. The Board may from time to
time appoint one (1) or more Transfer Agents and one (1)
or more Registrars for the shares of the corporation,
with such powers and duties as the Board shall determine
by resolution.
6.8 OFFICER CEASING TO ACT. In case any officer who has
signed or whose facsimile signature has been placed upon
a stock certificate shall have ceased to be such officer
before such certificate is issued, it may be issued by
the corporation with the same effect as if the signer
were such officer at the date of its issuance.
<PAGE>
6.9 FRACTIONAL SHARES. The corporation shall not issue
certificates for fractional shares.
SECTION 7. BOOKS AND RECORDS
The corporation shall keep correct and complete books and records
of account, stock transfer books, minutes of the proceedings of its
shareholders and Board and such other records as may be necessary
or advisable.
SECTION 8.FISCAL YEAR
The fiscal year of the corporation shall be the calendar year,
provided that if a different fiscal year is at any time selected
for purposes of federal income taxes, the fiscal year shall be the
year so selected.
SECTION 9. SEAL
The seal of the corporation shall consist of the name of the
corporation, the year of its incorporation and the state of its
incorporation.
SECTION 10.INDEMNIFICATION
10.1 DEFINITION. As used in this Section 10:
10.1.1 "Director" means an individual who is or was a
Director of the corporation or an individual
who, while a Director of the corporation, is
or was serving at the corporation's request as
a Director, officer, partner, trustee,
employee, or agent of another foreign or
domestic corporation, partnership, joint
venture, trust, employee benefit plan or other
enterprise A Director is considered to be
serving an employee benefit plan at the
corporation's request if the Director's duties
to the corporation also impose duties on or
otherwise involve services by the Director to
the plan or to participants in or
beneficiaries of the plan "Director"
includes, unless the context requires
otherwise, the estate or personal
representative of a Director.
10.1.2 "Expenses" include counsel fees.
10.1.3 "Liability" means the obligation to pay a
judgment, settlement, penalty, fine, including
an excise tax assessed with respect to an
employee benefit plan, or reasonable expenses
incurred with respect to a proceeding.
<PAGE>
10.1.4 "Officer" means an individual who is or was an
officer of the corporation or an individual
who, while an officer of the corporation, is
or was serving at the corporation's request as
a director, officer, partner, trustee,
employee or agent of another foreign or
domestic corporation, partnership, joint
venture, trust, employee benefit plan or other
enterprise An officer is considered to be
serving an employee benefit plan at the
corporation's request if the officer's duties
to the corporation also impose duties on or
include services by the officer to the
employee benefit plan or to participants in or
beneficiaries of the plan "Officer" includes,
unless the context requires otherwise, the
estate or personal representative of an
officer.
10.1.5 "Party" includes an individual who was, is or
is threatened to be made a named defendant or
respondent in a proceeding.
10.1.6 "Proceeding" means any threatened, pending or
completed action, suit, or proceeding, whether
civil, criminal, administrative, or
investigative and whether formal or informal.
10.2 RIGHT TO INDEMNIFICATION. Except as hereinafter
provided, the corporation shall indemnify an individual
made a party to a proceeding because the individual is or
was a Director against liability incurred in the
proceeding if, as determined below:
10.2.1 The conduct of the individual was in good
faith;
10.2.2 The individual reasonably believed that the
individual's conduct was in the best interest
of the corporation, or at least not opposed to
its best interests; and
10.2.3 In the case of any criminal proceeding, the
individual had no reasonable cause to believe
the individual's conduct was unlawful.
10.3 NO INDEMNIFICATION. The corporation shall not indemnify
a Director under Section 10.2 in connection with a
proceeding by or in the right of the corporation in which
the Director is adjudged liable to the corporation, or in
connection with any other proceeding charging improper
personal benefit to the Director in which the Director
was adjudged liable on the basis that personal benefit
<PAGE>
was improperly received by the Director However, the
corporation may so indemnify a Director pursuant to
Section 10.9 hereof.
10.4 LIMITATION ON INDEMNIFICATION. Indemnification required
under Section 10.2 in connection with a proceeding by or
in the right of the corporation is limited to reasonable
expenses actually incurred in connection with the
proceeding.
10.5 DETERMINATION AND AUTHORIZATION OF INDEMNIFICATION. The
corporation shall not indemnify a Director under Section
10.2 unless authorized in the specific case after a
determination has been made that the indemnification of
the Director is permissible in the circumstances because
the Director has met the standard of conduct set forth in
Section 10.2.
10.5.1 PERMISSIBLE. A determination that
indemnification of a Director is permissible
shall be made:
(a) By the Board of Directors by majority
vote of a quorum consisting of Directors
not at the time parties to the
proceeding;
(b) If a quorum cannot be obtained under
Section 10.5.1(a), by a majority vote of
a committee duly designated by the Board
of Directors consisting solely or two (2)
or more Directors not at the time parties
to the proceeding.However, Directors who
are parties to the proceeding may
participate in designation of the
committee;
(c) By special legal counsel selected by the
Board of Directors or its committee in
the manner prescribed in Section
10.5.1(a) or (b) if a quorum of the Board
of Directors cannot be obtained under
Section 10.5.1(a) and a committee cannot
be designated under Section 10.5.1(b),
the special legal counsel shall be
selected by majority vote of the full
Board of Directors, including Directors
who are parties to the proceeding; or
(d) By the shareholders.
10.5.2 AUTHORIZATION. Authorization of
indemnification and evaluation as to
<PAGE>
reasonableness of expenses shall be made in
the same manner as the determination that
indemnification is permissible, except that if
the determination is made by special legal
counsel, authorization of indemnification and
evaluation as to reasonableness of expenses
shall be made by those entitled under Section
10.5.1(c) to select counsel.
10.6 ADVANCE FOR EXPENSES. The corporation shall pay for or
reimburse the reasonable expenses actually incurred by a
Director who is a party to a proceeding in advance of
final disposition of the proceeding if:
10.6.1 The Director furnishes the corporation a
written affirmation of the Director's good
faith belief that he/she has met the standard
of conduct described in Section 10.2; and
10.6.2 The Director furnishes the corporation a
written undertaking, executed personally or on
his/her behalf, to repay the advance if it is
ultimately determined that he/she did not meet
the required standard of conduct Such an
undertaking must be an unlimited general
obligation of the Director, but need not be
secured and shall be accepted without
reference to financial ability to make
repayment.
10.7 INDEMNIFICATION OF OFFICERS, EMPLOYEES AND AGENTS. The
corporation may, by action of its Board of Directors from
time to time, provide indemnification and pay expenses in
advance of the final disposition of a proceeding to
Officers, employees and agents of the corporation to the
same extent and effect as provided in this Section with
respect to the indemnification and advancement of
expenses of Directors of the corporation or pursuant to
rights granted pursuant to, or provided by, the Oregon
Business Corporation Act or otherwise.
10.8 INSURANCE. The corporation may, by action of its Board
of Directors from time to time, purchase and maintain
insurance, even if the corporation has no power to
indemnify the individual against the same liability under
the Act, on behalf of an individual against liability
asserted against or incurred by the individual who is or
was a Director, Officer, employee or agent of the
corporation or who while a Director, Officer, employee or
agent of the corporation, is or was serving at the
request of the corporation as a Director, officer,
partner, trustee, employee or agent of another foreign or
<PAGE>
domestic corporation, partnership, joint venture, trust
employee benefit plan or other enterprise.
10.9 ADDITIONAL INDEMNIFICATION; NONEXCLUSIVITY OF RIGHTS.
The right to indemnification and the payment of expenses
with respect to a proceeding conferred in this Section
shall not be exclusive of any other right which any
person may be entitled or hereafter acquire under any
statute, provision of the Articles of Incorporation,
Bylaws, agreement, general or specific action of the
Board of Directors, vote of the shareholders or
otherwise, 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 the heirs, executors, and
administrators of such a person.
The corporation may, upon action by the Board of
Directors, make or agree to make any further
indemnification, including advancement of expenses, or
any Director, Officer, employee, or agent by general or
specific action of the Board of Directors, in the Bylaws
or by contract or otherwise; provided, however, that (i)
to the extent such further indemnification applies to any
Director, no such further indemnification shall indemnify
any Director from or on account of acts or omissions for
which liability is not eliminated under Article 8 of the
Articles of Incorporation, and (ii) to the extent such
further indemnification applies to any Officer, employee
or agent, any determination as to any indemnity in excess
of that provided Directors pursuant to Section 10.2 under
this Section 10.9 shall be made in accordance with
Section 10.5 hereof The Corporation may enter into a
contract with any Director, Officer, employee or agent of
the corporation in furtherance of the provisions of this
Section and may create a trust fund, grant a security
interest or use other means including, without
limitation, a letter of credit, to ensure the payment of
such amounts as may be necessary to effect
indemnification as provided in this Section or otherwise.
SECTION 11.AMENDMENTS
These Bylaws may be altered, amended or repealed and new Bylaws may
be adopted by the Board at any regular or special meeting of the
Board The shareholders may also make, alter, amend and repeal the
Bylaws of the corporation at any annual meeting or at a special
meeting called for that purpose All Bylaws made by the Board may
be amended, repealed, altered or modified by the shareholders at
any regular or special meeting called for that purpose The
foregoing Bylaws were adopted by the shareholders of the
<PAGE>
corporation effective April 24, 1990. Section 2.1 and 3.2 were
amended by the Board of Directors effective March 18, 1997.
/s/ Thomas P. Cox
-----------------
Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM TIMBERLINE SOFTWARE CORPORATION'S CONDENSED FINANCIAL
STATEMENTS CONTAINED IN ITS QUARTERLY REPORT ON FORM 10-QSB FOR
THE PERIOD ENDED MARCH 31, 1997 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 4,604,905
<SECURITIES> 749,908
<RECEIVABLES> 3,560,395
<ALLOWANCES> 176,407
<INVENTORY> 275,148
<CURRENT-ASSETS> 10,329,786
<PP&E> 7,561,739
<DEPRECIATION> 4,222,332
<TOTAL-ASSETS> 18,411,881
<CURRENT-LIABILITIES> 8,442,176
<BONDS> 0
<COMMON> 364,928
0
0
<OTHER-SE> 8,764,534
<TOTAL-LIABILITY-AND-EQUITY> 18,411,881
<SALES> 7,507,695 <F1>
<TOTAL-REVENUES> 7,507,695
<CGS> 923,556
<TOTAL-COSTS> 4,324,320
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 509,895
<INCOME-TAX> 178,000
<INCOME-CONTINUING> 331,895
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 331,895
<EPS-PRIMARY> .06
<EPS-DILUTED> .06
<FN>
<F1> Amount includes revenue from services which is not
separately presented for interim reports
</FN>
</TABLE>
