UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1996
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-15512.
ALPNET, INC.
(Exact name of registrant as specified in its charter)
Utah 87-0356708
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4460 South Highland Drive Suite #100
Salt Lake City, Utah 84124-3543
(Address of principal executive offices) (Zip Code)
(801) 273-6600
(Registrant's telephone number, including area code)
4444 South 700 East Suite #204 Salt Lake City, UT 84107-3075
(Former name, former address and former fiscal year,
if changed since last report)
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 no par value Common Stock
as of August 12, 1996, was 16,647,169.
ALPNET, INC. AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION
<TABLE>
<S> <C>
Item 1. Consolidated Financial Statements (Unaudited):
Consolidated Statements of Operations--Three months ended June 30, 1996
and 1995, and Six months ended June 30, 1996 and 1995
Consolidated Balance Sheets--June 30, 1996 and December 31, 1995
Consolidated Statements of Cash Flows--Six months ended June 30, 1996
and 1995
Notes to Consolidated Financial Statements--June 30, 1996
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
</TABLE>
ITEM 1: CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
<TABLE>
ALPNET, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
Thousands of dollars and shares 1996 1995 1996 1995
<S> <C> <C> <C> <C>
SALES OF SERVICES $9,025 $6,459 $15,513 $12,365
OPERATING EXPENSES:
Cost of services sold 6,728 5,284 11,891 10,057
Selling, general and administrative
expenses 1,374 945 2,460 1,855
Development costs 32 39 82 82
Amortization of goodwill 89 94 179 186
Total operating expenses 8,223 6,362 14,612 12,180
OPERATING INCOME 802 97 901 185
Interest expense, net 28 59 61 105
Income before income taxes 774 38 840 80
Income taxes 112 32 148 60
NET INCOME $ 662 $ 6 $ 692 $ 20
NET INCOME PER SHARE $ .026 $ -- $ .027 $ .001
Weighted average shares of Common
Stock and Common Stock equivalents
outstanding 25,679 22,199 25,611 22,199
See accompanying notes.
</TABLE>
<TABLE>
ALPNET, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<CAPTION>
June 30 December 31
Thousands of dollars 1996 1995
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 944 $ 1,033
Trade accounts receivable, less allowance of
$213 in 1996 and $156 in 1995 6,586 4,978
Work-in-process 364 340
Prepaid expenses and other 807 792
Total current assets 8,701 7,143
PROPERTY, EQUIPMENT AND LEASEHOLD
IMPROVEMENTS:
Office facilities and leasehold improvements 139 144
Equipment 3,928 3,833
4,067 3,977
Less accumulated depreciation and
amortization 2,930 2,997
Net property, equipment and leasehold
improvements 1,137 980
OTHER ASSETS:
Goodwill, less accumulated amortization
of $3,041 in 1996 and $2,924 in 1995 5,933 6,250
Other 90 76
Total other assets 6,023 6,326
TOTAL ASSETS $15,861 $14,449
See accompanying notes.
</TABLE>
<TABLE>
ALPNET, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)--continued
<CAPTION>
June 30 December 31
Thousands of dollars and shares 1996 1995
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES:
Notes payable to banks $ 1,425 $ 1,156
Accounts payable 2,231 1,636
Accrued payroll and related benefits 741 665
Other accrued expenses 930 813
Deferred revenue 66 254
Income taxes payable 49 18
Current portion of long-term debt 100 94
Current portion of long-term debt to affiliates 39 42
Guarantee liability (Note 3) 220
Total current liabilities 5,581 4,898
Long-term debt, less current portion 95 115
Long-term debt to affiliates, less current portion 79 105
Commitments (Note 3)
SHAREHOLDERS' EQUITY:
Convertible Preferred Stock, no par value;
authorized 2,000 shares; issued and
outstanding 1,131 shares in 1996 and 1995 3,127 3,127
Common Stock, no par value; authorized
40,000 shares; issued and outstanding
16,647 shares in 1996 and 16,199 shares
in 1995 39,195 38,954
Accumulated deficit (30,637) (31,329)
Equity adjustment from foreign currency
translation (1,579) (1,421)
Total shareholders' equity 10,106 9,331
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $15,861 $14,449
See accompanying notes.
</TABLE>
<TABLE>
ALPNET, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<CAPTION>
Six Months Ended June 30
Thousands of dollars 1996 1995
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 692 $ 20
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization of property, equipment and
leasehold improvements 194 175
Amortization of goodwill 179 186
Other 24 (23)
Changes in operating assets and liabilities:
Trade accounts receivable (1,674) 152
Accounts payable and accrued expenses 853 (204)
Other (219) 46
Net cash provided by operating activities 49 352
INVESTING ACTIVITIES:
Purchase of property, equipment and leasehold improvements (398) (162)
FINANCING ACTIVITIES:
Proceeds from notes payable to banks 330 110
Principal payments on notes payable to banks (54) (206)
Proceeds from long-term debt and debt to affiliates 20
Principal payments on long-term debt and debt to affiliates (52) (62)
Proceeds from exercise of stock options 21
Net cash provided by (used in) financing activities 265 (158)
Effect of exchange rate changes on cash (5) 14
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (89) 46
Cash and cash equivalents at beginning of period 1,033 344
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 944 $ 390
CASH PAID DURING THE PERIOD FOR:
Interest $ 62 $110
Income taxes 128 52
See accompanying notes
</TABLE>
ALPNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 1996
1. BASIS OF PRESENTATION
ALPNET, Inc. and its subsidiaries (the "Company"), together with its
independent affiliates, form a worldwide network dedicated to providing
specialized language services for businesses engaged in international trade.
The Company has combined computer translation technology with experienced
human translators and other language and technical professionals in its
worldwide network to provide a full spectrum of services to fulfill the
language needs of customers in international business.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the rules and regulations of the Securities and
Exchange Commission. Accordingly, they do not include all of the information
and footnote disclosures required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting only of normal recurring adjustments) considered
necessary for a fair presentation have been included. Operating results for
the periods presented are not necessarily indicative of the results that may
be expected for the respective complete years. For further information,
refer to the Consolidated Financial Statements and notes thereto included in
the Company's Annual Report on Form 10-K for the year ended December 31,
1995.
The preparation of financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from those estimates.
Certain amounts for the six-month period ended June 30, 1995 have been
reclassified to conform to the 1996 presentation.
2. INCOME TAXES
The Company files a consolidated U.S. Federal income tax return which
includes all domestic operations. Tax returns for states within the U.S. and
for foreign subsidiaries are filed in accordance with applicable laws.
Fluctuations in the amount of income taxes arise primarily from the varying
combinations of taxable income and losses of the Company's subsidiaries in
the various domestic and foreign tax jurisdictions, including the utilization
of net operating loss carryforwards in many of these jurisdictions.
3. ACQUISITION GUARANTEE LIABILITY
In 1988, the Company acquired its German subsidiary for a combination of cash
and shares of the Company's Common Stock. The acquisition agreement required
the Company to give additional consideration if the value of the shares of
Common Stock did not reach an agreed-upon level within a specified period
following the acquisition, and remain at that level until the former owner
was able to sell the shares of the Company's Common Stock for an amount equal
to the purchase price stipulated in the acquisition agreement. As a result
of this requirement, the Company issued additional shares to the former owner
in 1990.
In 1993, the Company and the former owner entered into an agreement which
amended the original acquisition agreement. This agreement waived the
requirement to pay any additional consideration if the value of all shares of
Common Stock previously issued reached the stipulated purchase price on or
before September 30, 1994 (which date was subsequently extended to September
30, 1996). Had the stock value never reached such amount, the Company would
have been required to pay interest on the stock value deficiency beginning on
September 30, 1996.
As a result of this waiver agreement, the Company recorded a guarantee
liability for the stock value deficiency, calculated based on the trading
value per share of the Company's Common Stock as compared to the guaranteed
value at the balance sheet dates. An adjustment to shareholders' equity was
also recorded for the same amounts.
In May 1996, an increase in the market price of ALPNET Common Stock allowed
this liability to be fully satisfied without any additional cash payment or
issuance of stock by the Company.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following Management's Discussion and Analysis should be read in conjunction
with the Consolidated Financial Statements and notes thereto.
FOREIGN OPERATIONS
The Company serves its customers from 30 wholly-owned offices in 14 countries
and through various non-owned independent affiliates. The operations of the
Company are predominantly located outside the U.S. Accordingly, the Company is
subject to the effects of foreign currency exchange rate fluctuations among U.S.
dollars, Canadian dollars, British pounds sterling, German marks and other
European and Asian currencies. For all of the Company's foreign subsidiaries,
the functional currency has been determined to be the local currency.
Accordingly, assets and liabilities are translated at year-end exchange rates,
and operating statement items are translated at average exchange rates
prevailing during the year. The resultant cumulative foreign currency
adjustments to the assets and liabilities are recorded as a separate component
of shareholders' equity. For the first six months of 1996, the foreign currency
equity adjustment was negative $160,000 compared to a positive adjustment of
$400,000 for the first half of 1995. When the U.S. dollar strengthens against
foreign currencies, the shareholders' equity adjustment for the Company normally
is negative since the net assets denominated in foreign currencies are
translated into a lower amount in U.S. dollars. This is what has occurred in
1996, whereas in 1995, the major foreign currencies affecting the Company
strengthened as compared to the U.S. dollar. As of June 30, 1996, the
cumulative net effect to the Company of the equity adjustment from movements in
foreign currency exchange rates was a reduction of $1.6 million in shareholders'
equity. A significant portion of the cumulative foreign currency adjustment
relates to changes in the recorded amount of goodwill.
Because most of the Company's operations are located outside the U.S. and its
foreign operations' financial results must be translated into U.S. dollars, the
Company's actual and reported financial results and financial condition are
susceptible to movements in foreign currency exchange rates. Furthermore, since
the Company has relatively few long-term monetary assets and liabilities
denominated in currencies other than the U.S. dollar, it does not have any
ongoing hedging programs in place to manage currency risk.
RESULTS OF OPERATIONS
The following paragraphs discuss results of operations for the three- and six-
month periods ended June 30, 1996 as compared with the three- and six- month
periods ended June 30, 1995, including the significant effects of fluctuating
foreign currency exchange rates.
The Company reported net income of $662,000 for the three months ended June 30,
1996 compared to net income of $6,000 for the three months ended June 30, 1995.
If foreign currency exchange rates for 1996 had remained unchanged from 1995,
the Company would have reported net income of $738,000 instead of $662,000 and
therefore currency exchange rate fluctuations had a $76,000 negative effect on
net income in the second quarter of 1996.
The Company reported net income of $692,000 for the six months ended June 30,
1996 compared to $20,000 for the six months ended June 30, 1995. If foreign
currency exchange rates for 1996 had remained unchanged from 1995, the Company
would have reported net income of $777,000 instead of $692,000.
Sales of services were $9.0 million for the three months ended June 30, 1996
compared to $6.5 million for the three months ended June 30, 1995. The $2.5
million increase in reported sales for 1996 consisted of an increase in sales
volume of approximately $2.9 million and a $400,000 decrease due to currency
exchange rate variances.
Sales of services were $15.5 million for the six months ended June 30, 1996
compared to $12.4 million for the six months ended June 30, 1995. The $3.1
million increase in reported sales from the first half of 1995 to the first half
of 1996 consisted of an increase in sales volume of $3.6 million and a decrease
of $500,000 due to currency exchange rate variances. The increases in sales
volume in 1996 over 1995 are due to increases in sales in nearly all markets in
which the Company has a presence, but most particularly in the Company's UK
offices, as well as in the U.S. and in Asia.
The increase in sales volume is a result of generally expanding needs for
language related services in an increasingly global marketplace where more and
more businesses are entering foreign markets and becoming involved in worldwide
trade. An example of this is the software industry which has significant and
increasing needs for product localization services such as those provided by the
Company. Also having a beneficial effect on sales levels is the Company's
increasing emphasis on online services (including the Internet) both as a
marketing tool and as a means to communicate with and interact with clients.
Management believes that international trade agreements such as the North
American Free Trade Agreement (NAFTA) and the General Agreement on Tariffs and
Trade (GATT) have also had a positive effect on demand for the language services
provided by the Company.
The Company competes on the basis of quality, service and geographical proximity
to clients and potential clients, and has opened several new offices in recent
years -- including a new office in Tokyo in 1996 -- in order to increase its
market share in what management believes has been and will continue to be an
expanding industry. The intense price competition which the Company encountered
throughout 1994 and 1995 continues to limit the prices the Company can charge in
the marketplace, and the industry pricing situation appears to have improved
only marginally in 1996 compared to early 1995.
The following table shows a comparison of sales of services in each of the
Company's significant geographic areas for the six months ended June 30, 1996
and 1995, along with the effect of foreign currency exchange rate fluctuations
on the sales between periods. Intercompany sales are normally billed on a
margin-sharing basis. All intercompany sales are eliminated in determining the
totals.
<TABLE>
<CAPTION>
Thousands of dollars
Increase (Decrease) in
Six Months Sales of Services due to Total
Ended June 30 Sales Currency Increase
1996 1995 Volume Fluctuations (Decrease)
<S> <C> <C> <C> <C> <C>
United States $ 2,062 $ 1,336 $ 726 $ 0 $ 726
Canada 2,055 1,852 175 28 203
Europe 12,928 10,195 3,256 (523) 2,733
Asia 1,904 1,038 867 (1) 866
Eliminations (3,436) (2,056) (1,420) 40 (1,380)
Total Sales $15,513 $12,365 $3,604 $(456) $3,148
</TABLE>
As shown in the above table, every major geographical region reported increased
sales in 1996 over 1995.
In the U.S., sales often fluctuate widely from period to period due to industry
conditions which are often less predictable and stable than those found in many
of the Company's foreign markets. Such conditions are characterized by the
relative inexperience of many U.S. companies in translation and localization of
language, as it relates to international business, and clients which may not be
sophisticated in the nuances of marketing to foreign countries and the
importance of related language issues. These factors, along with the
unpredictable timing and the nonrecurring nature of many large translation
projects for U.S. companies, contribute to a deficiency of customers who reorder
on a regular basis. In addition, the entrance into the U.S. market of European
competitors trying to expand their revenues, has had a tendency to depress the
profitability of work performed by the Company for U.S. clients. Despite these
factors, U.S. sales increased significantly from 1995 to 1996, due largely to a
rise in the number and size of projects for existing and new clients, especially
software localization services for computer hardware and software development
companies. Much of this increase is due to aggressive sales and marketing
efforts initiated late in 1995 and which have continued into 1996.
The increase in sales in Canada was due primarily to increased international
trading, as well as ongoing aggressive marketing and sales efforts and the
procurement of new large long-term contracts. These increases in sales have
occurred despite ongoing economic and political challenges in Canada, which are
still present and which could eventually depress sales if the economy and the
strength of the Canadian dollar decline or if the political situation
deteriorates in the future.
In 1996, sales in Europe of $12.9 million represented approximately 70% of the
Company's total worldwide sales and grew by $2.7 million over 1995 sales levels,
or by 26% year over year. Sales increased in every European country in which
the Company has offices, except France and Spain. These are smaller offices
which reported nominal decreases from the prior year. Most of the increase in
Europe was a result of growth in the U.K. (49% growth rate, which would have
been 56% absent the negative effect of foreign currency exchange rate
variances). Together, the U.K. and Germany accounted for over 85% of Europe's
total sales in both 1996 and 1995, but in contrast with the significant sales
growth in the U.K., Germany's growth rate was only a few percentage points in
1996 compared to 1995 (just over 5% absent the effect of foreign currency
exchange rate variances).
The high rate of growth in sales in the U.K. is due to several factors,
including a healthy local economy; the Company's growing reputation for
providing quality service; expansion of sales efforts in all offices, including
the smaller regional offices in the central and northern areas of Great Britain;
an experienced and dedicated management and production team which has been in
place for several years; the growing revenues of the London sales office which
was opened in early 1995; and the expansion of the Glasgow office in late 1995
when the Company acquired a local translation company to supplement the sales of
the existing office in that city. Management does not expect sales in the U.K.
to continue to grow at the very high rate experienced thus far in 1996, and the
actual rate of growth will depend on many factors which are subject to constant
change.
In Germany, the overall economy grew at a mild pace during most of 1995, but
slowed considerably late in 1995. This slowdown continued into the first half
of 1996. The first quarter of 1996 was particularly poor in terms of economic
strength, evidenced by the unemployment rate which increased to post WWII highs
as many companies and industries have reduced employment. Due to the effects of
the overall economic slowdown, the Company's sales in Germany decreased from
levels reported in the first quarter of 1995, but the second quarter sales
growth more than compensated for the lower first quarter sales, so that
Germany's sales for the first six months of 1996 are somewhat higher than in
1995. The uncertain economic conditions in Germany will undoubtedly have some
effect on the Company's ability to grow sales in this market in the foreseeable
future.
In addition to the new London office and the expansion of the Glasgow office in
1995, the Company opened offices in the Netherlands and in Ireland in late 1995.
These new offices, along with the investments made in human and equipment
resources in existing offices in recent years, are expected to help the Company
grow its revenues in Europe as demand for language services in this region
continues to expand.
Sales in Asia of $1.9 million in 1996 grew by 83% over 1995 levels, with
substantially all of this increase due to actual volume increases and very
little due to currency exchange rate fluctuations. The Company expanded its
Asian presence in 1995 by adding an office in The People's Republic of China.
Since its opening, the China office has functioned only as a production
facility, but China is expected to begin to sell to local companies later in
1996 or early 1997 and contribute to the growth of sales in Asia in coming
years. While Hong Kong's sales decreased substantially as an indirect result of
the uncertainty over the impending political changes in 1997, sales in 1996 in
Singapore and Korea increased significantly over 1995 levels.
The Company opened an office in Tokyo in early 1996 which has helped other
offices sell to new and existing clients which have needs for Japanese language
services, and which is expected to help accelerate sales growth in Asia in 1997.
Management expects the increased demand for Asian language services to continue
and accelerate during 1996 as many Asian countries are experiencing very high
economic growth rates and the interest in Asia from the business communities in
the U.S., Europe and elsewhere remains high.
The Company's business can be impacted dramatically by changes in the strength
of the economies of the countries in which it has a presence and results of
operations are highly influenced by general economic trends.
Cost of services sold as a percentage of sales of services has fluctuated
primarily as a result of competition in the marketplace and the volume and
nature of direct production costs of project sales in each year, especially
large projects covering several accounting periods. While some relief from
severe price competition has been observed recently, management expects
competitive pricing pressures to continue during 1996. Based on current trends,
pricing pressures are not expected to intensify significantly beyond current
levels. The Company is continuing its efforts to contain costs to offset the
effects of these pricing pressures. These efforts include more effective
utilization of the Company's proprietary software on medium- to smaller-sized
projects to improve the productivity of translators.
Selling, general and administrative expenses increased 32% for the first six
months of 1996 over the first six months of 1995. There was an even higher
increase for the second quarter of 1996 compared to the second quarter of 1995
(45%). These increases were due to several factors, including the overall
growth of existing offices and the opening of new offices, including the Tokyo
office which incurred a high level of start up costs related to the high cost of
doing business in Japan and the large size of this new office; increased
marketing and sales efforts in all of the Company's markets, including the
hiring of a new corporate vice president of sales and marketing in late 1995;
certain costs related to reorganizing some of the Company's underperforming
offices; and to a lesser extent, the effect of increased corporate overhead
costs related to the Company's growth.
Development costs are related to the upgrading and expansion of the Company's
proprietary language translation software developed in the early years of the
Company's existence as well as efforts related to the development and expansion
of the Company's online language service product offering. For the first half
of both 1996 and 1995, development costs were $82,000, and these costs were not
materially different for the second quarter of 1996 versus 1995. For the
balance of 1996, the Company expects development costs to increase somewhat (as
compared to 1995 levels), most notably because of the requirements related to
online services, including the Internet.
Fluctuations in the amount of goodwill amortization resulted from foreign
currency exchange rate fluctuations from year to year.
Net interest expense for the first six months of 1996 was $61,000, which was
$44,000 less than for the same period in 1995, and there was a similar reduction
of interest expense for the second quarter of 1996 as compared to the second
quarter of 1995 ($28,000 compared to $59,000). The decrease was due to
reductions in the Company's overall debt levels, including the conversion of
$243,000 of debt to an affiliate to convertible Preferred Stock in August 1995.
The U.S. parent company and each of its subsidiaries are separate legal and
taxable entities subject to the domestic or foreign taxes pertaining to
operations in their respective jurisdictions. For tax purposes, the U.S. parent
company and most of its subsidiaries have unused net operating losses from prior
years which can be utilized to reduce future years taxable income of the
respective entities. The availability of these net operating losses is governed
by applicable domestic and foreign tax rules and regulations, some of which
limit the utilization of such losses due to minimum tax requirements and other
provisions. Income tax expense as presented in the Consolidated Financial
Statements represents the combined income tax expense and income tax credits of
each of the entities of the Company.
After consideration of the effect of the utilization of net operating loss
carryforwards, income tax expense was $148,000 for the first six months of 1996
($112,000 for the second quarter), compared to $60,000 for the first six months
of 1995 ($32,000 for the second quarter). Fluctuations in the amount of income
taxes arise primarily from the varying combinations of income and losses of the
Company's subsidiaries in the various domestic and foreign tax jurisdictions,
including the utilization of net operating loss carryforwards in many of these
jurisdictions.
LIQUIDITY AND SOURCES OF CAPITAL
For the first six months of 1996, the Company had a net positive cash flow from
operations of approximately $50,000 compared with a positive cash flow from
operations in the first half of 1995 of $350,000. In 1996 and 1995, the
Company's investing activities consisted primarily of the acquisition of
equipment needed to maintain or upgrade production capability. Financing
activities for both periods consisted primarily of fluctuations in the amounts
utilized under bank lines of credit used to finance the Company's working
capital needs.
As of June 30, 1996, the Company's cash and cash equivalents were approximately
$940,000 representing a decrease of approximately $90,000 during the first six
months of 1996. At June 30, 1996, the Company had working capital of
approximately $3.1 million, compared to working capital of approximately $2.2
million at December 31, 1995.
The Company's primary working capital requirements relate to the funding of
accounts receivable. The Company funds its working capital needs with various
lines of credit with banks in Canada, the U.K., Germany and Spain. Most of the
lines of credit are secured by accounts receivable and other assets of the
respective subsidiaries. As of June 30, 1996, the Company had unused amounts
under these lines of credit of approximately $600,000. The Company believes
that the available amounts under these lines of credit, along with current
working capital, are sufficient to fund the Company's operations at current
levels as well as enable the Company to grow at a modest level without seeking
significant new sources of capital. Most of the Company's credit facilities are
subject to annual renewals and the Company expects them to be renewed on
substantially the same terms as those which currently exist. Some of the banks
which have loaned funds to the Company's subsidiaries under the credit
facilities noted above, have placed certain limits on the flow of cash outside
the respective countries. Such limitations have not been an undue burden to the
Company in the past, nor are they expected to be unduly burdensome in the
foreseeable future.
The Company has no present significant commitments for capital expenditures,
which generally consist almost entirely of computer equipment and related
peripheral hardware and software. Such equipment purchases in future periods
are expected to vary according to the overall growth of the Company. In
addition, the Company plans to acquire and place additional translation services
workstations in its offices worldwide in connection with future orders from
customers, as such orders are received. The Company expects to finance a
certain portion of future equipment costs through bank and/or leasing sources.
Additionally, while there are no material current commitments, the Company may
open additional offices in strategic locations worldwide, as customer demands
dictate and opportunities arise. The costs of opening offices in recent years
have generally not been substantial and have been almost exclusively related to
the procurement of computers and other translation-related equipment and, in
certain instances, the procurement of office premises. The costs of any
additional offices are not expected to require significant amounts of cash
beyond what can be generated through operations.
The Company believes it has the ability to issue additional equity securities if
necessary, but does not currently have any firm plans to do so. In past years,
the Company has relied on major shareholders of the Company to fund certain
obligations, but the Company does not anticipate using this source of capital in
the foreseeable future.
Management believes that current working capital and available lines of credit,
together with management s expectations of increased revenues and ongoing plans
to control expenses, will enable the Company to meet its financial obligations
during 1996. It is more difficult to assess cash flows beyond 1996 and the
ability of the Company to meet its commitments without additional sources of
capital is directly related to the Company's operations providing a positive
cash flow. Should the Company's operations fail to provide adequate funds to
enable it to meet its future financial obligations, management has the option,
because of the Company's organizational structure, to cut costs by selectively
eliminating operations which are not contributing to the Company financially.
Inflation has not been a significant factor in the Company s operations;
competition, however, has been and is expected to remain a major factor. To the
extent permitted by competition and general economic and market conditions, the
Company will pass on increased costs from inflation and operations to customers
by increasing prices.
Due to prior years' operating losses, the Company and many of its subsidiaries
have net operating loss carryforwards available to offset future taxable income
in the various countries in which the Company operates. As a result, the
Company historically has not had significant income tax liabilities requiring
the expenditure of cash. Due to currently available net operating loss
carryforwards, the Company expects this general trend to continue through 1996
and beyond. Substantially all of the Company's deferred tax assets at June 30,
1996 were comprised of net operating loss carryforwards for which the Company
has provided allowances. The ability of the Company to utilize these loss
carryforwards in the future is dependent on profitable operations in the various
countries in which loss carryforwards exist and the specific rules and
regulations governing the utilization of such losses, including the dates by
which the losses must be used.
CAUTIONARY STATEMENT
The statements in this Management's Discussion and Analysis that are forward
looking, including for example, information about future sales growth in various
countries in future periods, are based on current expectations and actual
results may differ materially. Forward looking statements contained in this
Management's Discussion and Analysis involve numerous risks and uncertainties
that could cause actual results to be materially different from estimated
results. Such risks and uncertainties include, among many others, fluctuating
foreign currency exchange rates, changing levels of demand for the Company's
services, the effect of changing general economic and political conditions in
all of the various countries in which the Company has operations, and the impact
of competitive services and pricing. As a result, no assurance can be given as
to future results.
PART II: OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are included herein:
(3) By-Laws
(11) Statement Re: Computation of Per Share Earnings
(27) Financial Data Schedule
(b) The Company has filed the following reports on Form 8-K during the
three months ended June 30, 1996.
Date of
Report Item Reported
04/25/96 ALPNET Announces First Quarter 1996 Results
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.
ALPNET, INC.
Registrant
Date: August 12, 1996 \s\ Thomas F. Seal
Thomas F. Seal
President and Chief Executive Officer
Date: August 12, 1996 \s\ D. Kerry Stubbs
D. Kerry Stubbs
Chief Financial Officer
E X H I B I T 3
RESTATED BYLAWS
OF
ALPNET, INC.
A Utah Corporation
Pursuant to the
Utah Revised Business
Corporation Act
PREPARED BY:
LAURIE S. HART, ESQ.
CALLISTER NEBEKER & MCCULLOUGH
SUITE 900 KENNECOTT BUILDING
SALT LAKE CITY, UTAH 84133
(801) 530-7300
<TABLE>
INDEX TO BYLAWS
OF
ALPNET, INC.
Page
<S> <C>
ARTICLE I - Offices
Section 1.01 Business Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02 Principal Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.03 Registered Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II - Shareholders
Section 2.01 Annual Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2.02 Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.03 Place of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.04 Notice of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.05 Fixing of Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.06 Shareholder List for Meetings . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.07 Shareholder Quorum and Voting
Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.08 Increasing Quorum or Voting
Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.09 Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.10 Voting of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.11 Corporation's Accepting of Votes . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.12 Action Without a Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.13 Meetings by Telecommunication . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.14 Voting Trusts and Agreements . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.15 Voting for Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.16 Maintenance of Records and Shareholder
Inspection Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.17 Financial Statements and Share
Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2.18 Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2.19 Shares Held by Nominees . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE III - Board of Directors
Section 3.01 General Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.02 Number, Tenure and Qualifications . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.03 Resignation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.04 Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.05 Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.06 Regular Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.07 Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.08 Place of Meetings -- Meetings by
Telephone . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.09 Notice of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.10 Waiver of Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.11 Quorum and Manner of Acting . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.12 Action Without a Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.13 Altering Quorum or Voting
Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.14 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 3.15 Committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 3.16 Standards of Conduct . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 3.17 Limitation of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 3.18 Liability for Unlawful Distributions . . . . . . . . . . . . . . . . . . . . 17
Section 3.19 Conflicting Interest Transactions . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE IV - Officers
Section 4.01 Number and Qualifications . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.02 Appointment and Term of Office . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.03 Removal and Resignation of Officers . . . . . . . . . . . . . . . . . . . . . 19
Section 4.04 Authority and Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.05 Surety Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.06 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE V - Standards of Conduct for Officers and Directors
Section 5.01 Standards of Conduct . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 5.02 Reliance on Information and Reports . . . . . . . . . . . . . . . . . . . . . 21
Section 5.03 Limitation on Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE VI - Indemnification
Section 6.01 Indemnification of Directors . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 6.02 Advance Expenses for Directors . . . . . . . . . . . . . . . . . . . . . . . 23
Section 6.03 Indemnification of Officers, Employees,
Fiduciaries, and Agents . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 6.04 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 6.05 Scope of Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 6.06 Other Rights and Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 6.07 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE VII - Stock
Section 7.01 Issuance of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 7.02 Certificates for Shares; Shares
Without Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 7.03 Restrictions on Transfer of Shares
Permitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 7.04 Acquisition of Shares by the
Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE VIII - Amendments to Bylaws
Section 8.01 Authority to Amend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 8.02 Bylaw Changing Quorum or Voting
Requirement for Shareholders . . . . . . . . . . . . . . . . . . . . . . . 28
Section 8.03 Bylaw Changing Quorum or Voting
Requirement for Directors . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE IX - Miscellaneous
Section 9.01 Corporate Seal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 9.02 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
</TABLE>
BYLAWS
OF
ALPNET, INC.
Approved by Resolution of the Board of Directors
dated 23 May 1996
ARTICLE I
OFFICES
Section 1.01 Business Offices. The corporation may have such
offices, either within or outside Utah, as the Board of Directors may from time
to time determine or as the business of the corporation may from time to time
require.
Section 1.02 Principal Office. The principal office of the
corporation shall be located at any place either within or outside Utah as may
be designated in the most recent document on file with the Utah Department of
Commerce, Division of Corporations and Commercial Code (the "DIVISION")
providing information regarding the principal office of the corporation. The
corporation shall maintain at its principal office a copy of such corporate
records as may be required by Section 16-10a-1601 of the Utah Revised Business
Corporation Act (the "ACT") and Section 2.16 of these bylaws.
Section 1.03 Registered Office. The registered office of the
corporation required by Section 16-10a-501 of the Act to be maintained in Utah
shall be the registered office as originally so designated in the corporation's
articles of incorporation or subsequently designated as the corporation's
registered office in the most recent document on file with the Division
providing such information. The corporation shall maintain a registered agent
at the registered office, as required by Section 16-10a-501 of the Act. The
registered office and registered agent may be changed from time to time as
provided in Sections 16-10a-502 and 16-10a-503 of the Act.
ARTICLE II
SHAREHOLDERS
Section 2.01 Annual Meeting. The annual meeting of the shareholders
shall be held each year on a date and at a time designated by the Board of
Directors. In the absence of such designation, the annual meeting of
shareholders shall be held on the fourth Thursday of May in each year at 1 p.m.
However, if the day fixed for the annual meeting is a legal holiday in Utah,
then the meeting shall be held at the same time and place on the next succeeding
business day. At the meeting, directors shall be elected and any other proper
business may be transacted. If the election of directors shall not be held on
the day designated herein for any annual meeting of the shareholders, or at any
adjournment thereof, the Board of Directors shall cause the election to be held
at a meeting of the shareholders as soon thereafter as may be convenient.
Failure to hold an annual meeting as required by these bylaws shall not affect
the validity of any corporate action or work a forfeiture or dissolution of the
corporation. (Section 16-10a-701 of the Act.)
Section 2.02 Special Meetings. Special meetings of the shareholders
may be called at any time by the Board of Directors, by such officers or persons
as may be authorized by the bylaws to call a special meeting, or by the holders
of shares representing at least thirty percent (30%) of all the votes entitled
to be cast on any issue proposed to be considered at the meeting, all in
accordance with Section 16-10a-702 of the Act.
Section 2.03 Place of Meetings. Each annual or special meeting of
the shareholders shall be held at such place, either within or outside Utah, as
may be designated by the Board of Directors. In the absence of any such
designation, meetings shall be held at the principal office of the corporation.
(Sections 16-10a-701 and 702 of the Act.)
Section 2.04 Notice of Meetings.
(a) Required Notice. The corporation shall give notice to
shareholders of the date, time, and place of each annual and special meeting of
the shareholders no fewer than ten (10) nor more than sixty (60) days before the
meeting date, in accordance with the requirements of Sections 16-10a-103 and 16-
10a-705 of the Act. Unless otherwise required by law or the articles of
incorporation, the corporation is required to give the notice only to
shareholders entitled to vote at the meeting. The notice requirement will be
excused under certain circumstances with respect to shareholders whose
whereabouts are unknown, as provided in Section 16-10a-705(5) of the Act.
If the proposed corporate action creates dissenters' rights, the
notice must be sent to all shareholders of the corporations as of the applicable
record date, whether or not they are entitled to vote at the meeting. (Section
16-10a-1320(1) of the Act.)
(b) Contents of Notice. The notice of each special meeting must
include a description of the purpose or purposes for which the meeting is called
(see Section 16-10a-702(4) of the Act). Except as provided in this Section
2.04(b), or as otherwise required by the Act, other applicable law, or the
articles of incorporation, notice of an annual meeting need not include a
description of the purpose or purposes for which the meeting is called.
If a purpose of any shareholder meeting is to consider: (1) a
proposed amendment to the articles of incorporation (Section 16-10a-1003(4) of
the Act); (2) a plan of merger or share exchange (Section 16-10a-1103(4) of the
Act); (3) the sale, lease, exchange or other disposition of all, or
substantially all, of the corporation's property (Section 16-10a-1202(5) of the
Act); (4) the dissolution of the corporation (Section 16-10a-1402(4) of the
Act); or (5) the removal of a director (Section 16-10a-808(4) of the Act), the
notice must so state and be accompanied by a copy or summary of the transaction
documents, as set forth in the above-referenced sections of the Act.
If the proposed corporate action creates dissenters' rights, the
notice must state that shareholders are, or may be, entitled to assert
dissenters' rights, and must be accompanied by a copy of Part 13 of the Act (see
Section 16-10a-1320(1) of the Act).
(c) Adjourned Meeting. If any annual or special meeting of
shareholders is adjourned to a different date, time or place, then, subject to
the requirements of the following sentence, notice need not be given of the new
date, time and place if the new date, time and place are announced at the
meeting before adjournment. If the adjournment is for more than thirty (30)
days, or if after the adjournment a new record date for the adjourned meeting is
or must be fixed under Section 16-10a-707 of the Act and Section 2.05 of these
bylaws, notice of the adjourned meeting must be given pursuant to the
requirements of paragraph 2.04(a) of these bylaws to shareholders of record
entitled to vote at the meeting, as provided in Section 16-10a-705(4)(b) of the
Act.
(d) Waiver of Notice. A shareholder may waive notice of any meeting
(or any other notice required by the Act, the articles of incorporation or these
bylaws) by a writing signed by the shareholder entitled to the notice, which is
delivered to the corporation (either before or after the date and time stated in
the notice as the date and time when any action will occur), for inclusion in
the minutes or filing with the corporation records. A shareholder's attendance
at a meeting: (1) waives objection to lack of notice or defective notice of the
meeting, unless the shareholder at the beginning of the meeting objects to
holding the meeting or transacting business at the meeting because of lack of
notice or defective notice; and (2) waives objection to consideration of a
particular matter at the meeting that is not within the purpose or purposes
described in the meeting notice, unless the shareholder objects to considering
the matter when it is presented. (Section 16-10a-706 of the Act.)
Section 2.05 Fixing of Record Date. For the purpose of determining
shareholders of any voting group entitled to: (i) notice of or to vote at any
meeting of shareholders or any adjournment thereof; (ii) take action without a
meeting; (iii) demand a special meeting; (iv) receive payment of any
distribution or share dividend; or (v) take any other action, the board of
directors may fix in advance a date as the record date (as defined in Section
16-10a-102(28) of the Act) for one or more voting groups. As provided in
Section 16-10a-707(3) of the Act, a record date fixed pursuant to such section
may not be more than seventy (70) days prior to the date on which the particular
action requiring such determination of shareholders is to be taken. If no
record date is otherwise fixed by the board as provided herein, then the record
date for the purposes set forth below shall be the close of business on the
dates indicated:
(a) With respect to a determination of shareholders entitled to
notice of and to vote at an annual or special meeting of shareholders, the day
before the first notice is delivered to shareholders (see Section 16-10a-707(2)
of the Act);
(b) With respect to a determination of shareholders entitled to
demand a special meeting of shareholders pursuant to Section 16-10a-702(1)(b) of
the Act, the later of (i) the earliest date of any of the demands pursuant to
which the meeting is called, and (ii) the date that is sixty (60) days prior to
the date the first of the written demands pursuant to which the meeting is
called is received by the corporation (see Section 16-10a-702(2) of the Act);
(c) With respect to a determination of shareholders entitled to a
share dividend, the date the board authorizes the share dividend (see Section
16-10a-623(3) of the Act);
(d) With respect to a determination of shareholders entitled to take
action without a meeting (pursuant to Section 2.12 of these bylaws and Section
16-10a-704 of the Act) or entitled to be given notice of an action so taken, the
date the first shareholder delivers to the corporation a writing upon which the
action is taken (see Section 16-10a-704(6) of the Act); and
(e) With respect to a determination of shareholders entitled to a
distribution (other than one involving a purchase or reacquisition of shares for
which no record date is necessary), the date the board of directors authorizes
the distribution (see Section 16-10a-640(2) of the Act).
A determination of shareholders entitled to notice of or to vote at
any meeting of shareholders is effective for any adjournment of the meeting
unless the board of directors fixes a new record date, which it must do if the
meeting is adjourned to a date more than one hundred twenty (120) days after the
date fixed for the original meeting (see Section 16-10a-707(4) of the Act).
Section 2.06 Shareholder List for Meetings. The officer or agent
having charge of the stock transfer books for shares of the corporation shall
prepare a list of the names of all shareholders entitled to be given notice of,
and to vote at, each meeting of shareholders, in compliance with the
requirements of Section 16-10a-720 of the Act. The list must be arranged by
voting group and within each voting group by class or series of shares. The
list must be in alphabetical order within each class or series of shares and
must show the address of, and the number of shares held by, each shareholder.
The shareholder list must be available for inspection by any shareholder,
beginning on the earlier of (i) ten (10) days before the meeting for which the
list was prepared, or (ii) two (2) business days after notice of the meeting is
given, and continuing through the meeting and any adjournments thereof. The
list must be available at the corporation's principal office or at a place
identified in the meeting notice in the city where the meeting is to be held. A
shareholder or a shareholder's agent or attorney is entitled, on written demand
to the corporation and subject to the provisions of Sections 16-10a-720, 602 and
1603 of the Act, to inspect and copy the list during regular business hours
during the period it is available for inspection. The list is to be available
at the meeting for which it was prepared, and any shareholder or any
shareholder's agent or attorney is entitled to inspect the list at any time
during the meeting for any purpose germane to the meeting. The shareholder list
is to be maintained in written form or in another form capable of conversion
into written form within a reasonable time (see Section 16-10a-1601(4) of the
Act).
Section 2.07 Shareholder Quorum and Voting Requirements. If the
articles of incorporation or the Act provides for voting by a single voting
group on a matter, action on that matter is taken when voted upon by that voting
group.
Shares entitled to vote as a separate voting group may take action on
a matter at a meeting only if a quorum of such shares exists with respect to
that matter. Unless the articles of incorporation, a bylaw adopted pursuant to
Section 2.08 hereof, or the Act provide otherwise, a majority of the votes
entitled to be cast on the matter by the voting group constitutes a quorum of
that group for action on that matter.
If the articles of incorporation or the Act provides for voting by two
or more voting groups on a matter, action on that matter is taken only when
voted upon by each of those voting groups counted separately. One voting group
may vote on a matter even though another voting group entitled to vote on the
matter has not voted.
Once a share is represented for any purpose at a meeting, including
the purpose of determining that a quorum exists, it is deemed present for quorum
purposes for the remainder of the meeting and for any adjournment of the
meeting, unless a new record date is or must be set for the adjourned meeting.
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 within the voting group opposing
the action, unless the articles of incorporation, a bylaw adopted pursuant to
Section 2.08 hereof, or the Act requires a greater number of affirmative votes.
(See Sections 16-10a-725 and 726 of the Act.) Those matters as to which the Act
provides for a special voting requirement, typically requiring the vote of a
majority of all votes entitled to be cast, or a majority of all voting shares
within each voting group which is entitled to vote separately, include certain
amendments to the articles of incorporation, mergers, sales of substantially all
corporate assets, and dissolution of the corporation.
Section 2.08 Increasing Quorum or Voting Requirements. As specified
in Section 16-10a-727 of the Act, the articles of incorporation may provide for
a greater quorum or voting requirement for shareholders, or voting groups of
shareholder, than is provided for by the Act. An amendment to the articles of
incorporation that changes or deletes a greater quorum or voting requirement
must meet the same quorum requirement and be adopted by the same vote and voting
groups required to take action under the quorum and voting requirements then in
effect. Pursuant to Section 16-10a-1021 of the Act, if authorized by the
articles of incorporation, the shareholders may adopt, amend, or repeal a bylaw
that fixes a greater quorum or voting requirement for shareholders, or voting
groups of shareholders, than is required by the Act. Any such action is subject
to the provisions of Part 7 of the Act. A bylaw that fixes a greater quorum or
voting requirement for shareholders as set forth in the preceding sentence may
not be adopted, amended, or repealed by the board of directors.
Section 2.09 Proxies. At all meetings of shareholders, a shareholder
may vote in person or by proxy. A shareholder may appoint a proxy by signing an
appointment form, either personally or by the shareholder's attorney-in-fact, or
by any of the other means set forth in Section 16-10a-722 of the Act. A proxy
appointment is valid for eleven (11) months unless a longer period is expressly
provided in the appointment form. The effectiveness and revocability of proxy
appointments are governed by Section 16-10a-722 of the Act.
Section 2.10 Voting of Shares. Unless otherwise provided in the
articles of incorporation, in Section 16-10a-721 of the Act, or other applicable
law, each outstanding share, regardless of class, is entitled to one vote, and
each fractional share is entitled to a corresponding fractional vote, on each
matter voted on at a shareholders' meeting. Only shares are entitled to vote.
Except as otherwise provided by specific court order as contemplated
by Section 16-10a-721(2) of the Act, shares of this corporation are not entitled
to be voted or to be counted in determining the total number of outstanding
shares eligible to be voted if they are owned, directly or indirectly, by a
second corporation, domestic or foreign, and this corporation owns, directly or
indirectly, a majority of the shares entitled to vote for directors of the
second corporation. The prior sentence shall not limit the power of the
corporation to vote any shares, including its own shares, held by it in a
fiduciary capacity. Redeemable shares are not entitled to be voted after notice
of redemption is mailed to the holders and a sum sufficient to redeem the shares
has been deposited with a bank, trust company, or other financial institution
under an irrevocable obligation to pay the holders the redemption price on
surrender of the shares.
Section 2.11 Corporation's Acceptance of Votes. If the name signed
on a vote, consent, waiver, proxy appointment, or proxy appointment revocation
corresponds to the name of a shareholder, the corporation, if acting in good
faith, is entitled to accept the vote, consent, waiver, proxy appointment, or
proxy appointment revocation and give it effect as the act of the shareholder,
as provided in Section 16-10a-724 of the Act.
If the name signed on a vote, consent, waiver, proxy appointment, or
proxy appointment revocation does not correspond to the name of a shareholder,
the corporation, if acting in good faith, is nevertheless entitled to accept the
vote, consent, waiver, proxy appointment, or proxy appointment revocation and
give it effect as the act of the shareholder if:
(a) the shareholder is an entity and the name signed purports to be
that of an officer or agent of the entity;
(b) the name signed purports to be that of an administrator,
executor, guardian, or conservator representing the shareholder and, if the
corporation requests, evidence of fiduciary status acceptable to the corporation
has been presented with respect to the vote, consent, waiver, proxy appointment,
or proxy appointment revocation;
(c) the name signed purports to be that of a receiver or trustee in
bankruptcy of the shareholder and, if the corporation requests, evidence of this
status acceptable to the corporation has been presented with respect to the
vote, consent, waiver, proxy appointment, or proxy appointment revocation;
(d) the name signed purports to be that of a pledgee, beneficial
owner, or attorney-in-fact of the shareholder and, if the corporation requests,
evidence acceptable to the corporation of the signatory's authority to sign for
the shareholder has been presented with respect to the vote, consent, waiver,
proxy appointment, or proxy appointment revocation;
(e) two or more persons are the shareholder as co-tenants or
fiduciaries and the name signed purports to be the name of at least one of the
co-tenants or fiduciaries and the person signing appears to be acting on behalf
of all co-tenants or fiduciaries; or
(f) the acceptance of the vote, consent, waiver, proxy appointment,
or proxy appointment revocation is otherwise proper under rules established by
the corporation that are not inconsistent with the provisions of Section 16-10a-
724 of the Act.
If shares are registered in the names of two or more persons, whether
fiduciaries, members of a partnership, co-tenants, husband and wife as community
property, voting trustees, persons entitled to vote under a shareholder voting
agreement or otherwise, or if two or more persons, including proxyholders, have
the same fiduciary relationship respecting the same shares, then unless the
secretary of the corporation or other officer or agent entitled to tabulate
votes is given written notice to the contrary and is furnished with a copy of
the instrument or order appointing them or creating the relationship wherein it
is so provided, their acts with respect to voting shall have the effects set
forth in Section 16-10a-724(3) of the Act.
The corporation is entitled to reject a vote, consent, waiver, proxy
appointment, or proxy appointment revocation if the secretary or other officer
or agent authorized to tabulate votes, acting in good faith, has reasonable
basis for doubt about the validity of the signature on it or about the
signatory's authority to sign for the shareholder.
The corporation and its officer or agent who accepts or rejects a
vote, consent, waiver, proxy appointment, or proxy appointment revocation in
good faith and in accordance with the standards of Section 16-10a-724 of the Act
are not liable in damages to the shareholder for the consequences of the
acceptance or rejection.
Corporate action based on the acceptance or rejection of a vote,
consent, waiver, proxy appointment, or proxy appointment revocation under this
section and Section 16-10a-724 of the Act is valid unless a court of competent
jurisdiction determines otherwise.
Section 2.12 Action Without a Meeting. Unless otherwise provided in
the articles of incorporation, and subject to the provisions of Section 16-10a-
704 of the Act, any action required or permitted to be taken at a meeting of the
shareholders may be taken without a meeting and without prior notice, if one or
more consents in writing, setting forth the action so taken, shall be signed by
the holders of outstanding shares having no less than the minimum number of
votes that would be necessary to authorize or take the action at a meeting at
which all shares entitled to vote thereon were present and voted. Unless the
written consents of all shareholders entitled to vote have been obtained, notice
of any shareholder approval without a meeting shall be given at least ten (10)
days before the consummation of the action authorized by the approval. Such
notice shall meet the requirements of, and be delivered to all shareholders
identified in, Section 16-10a-704(2) of the Act.
Any shareholder giving a written consent, or the shareholder's
proxyholder, personal representative or transferee, may revoke a consent by a
signed writing describing the action and stating that the shareholder's prior
consent is revoked, if the writing is received by the corporation prior to the
effectiveness of the action, as provided in Section 16-10a-704(3) of the Act.
An action taken by written consent of the shareholders as provided
herein is not effective unless all written consents on which the corporation
relies for the taking of the action are received by the corporation within a
sixty-day period. An action so taken is effective as of the date the last
written consent necessary to effect the action is received by the corporation,
unless all of the written consents necessary to effect the action specify a
later date as the effective date of the action, in which case the later date
shall be the effective date of the action.
Unless otherwise provided in these bylaws, the written consents may be
received by the corporation by electronically transmitted facsimile or other
form of communication providing the corporation with a complete copy thereof,
including a copy of the signature thereto.
Notwithstanding the other provisions of this bylaw, directors may not
be elected by written consent except by unanimous written consent of all shares
entitled to vote for the election of directors.
As set forth in Section 2.05(d) above, if not otherwise determined as
permitted by the Act and these bylaws, the record date for determining
shareholders entitled to take action without a meeting or entitled to be given
notice of any action so taken is the date the first shareholder delivers to the
corporation a writing upon which the action is taken.
An action taken by written consent of the shareholders as provided
herein has the same effect as an action taken at a meeting of shareholders, and
may be so described in any document.
Section 2.13 Meetings by Telecommunication. As permitted by Section
16-10a-708 of the Act, unless otherwise provided in these bylaws, any or all of
the shareholders may participate in an annual or special meeting of shareholders
by, or the meeting may be conducted through the use of, any means of
communication by which all persons participating in the meeting can hear each
other during the meeting. A shareholder participating in a meeting by this
means is considered to be present in person at the meeting.
Section 2.14 Voting Trusts and Agreements. Voting trusts and
agreements may be entered into among the shareholders in compliance with the
requirements of Sections 16-10a-730, 731 and 732 of the Act.
Section 2.15 Voting for Directors. Unless otherwise provided in the
articles of incorporation or the Act, directors are elected by a plurality of
the votes cast by the shares entitled to vote in the election at a meeting at
which a quorum is present, in accordance with the requirements and procedures
set forth in Section 16-10a-728 of the Act. Cumulative voting is permitted only
if specifically provided for in the articles of incorporation.
Section 2.16 Maintenance of Records and Shareholder Inspection
Rights.
(a) Corporate Records. As required by Section 16-10a-1601 of the
Act, the corporation shall keep as permanent records minutes of all meetings of
its shareholders and board of directors, a record of all actions taken by the
shareholders or board of directors without a meeting, a record of all actions
taken on behalf of the corporation by a committee of the board of directors in
place of the board of directors, and a record of all waivers of notices of
meetings of shareholders, meetings of the board of directors, or any meetings of
committees of the board of directors. The corporation shall also maintain
appropriate accounting and shareholder records as required by the statute. The
corporation shall keep at its principal office those corporate records and
documents identified in Section 16-10a-1601(5) of the Act and listed in the
following paragraph.
(b) Inspection Rights of Records Required at Principal Office.
Pursuant to Section 16-10a-1602(1) of the Act, a shareholder or director of the
corporation (or such person's agent or attorney) who gives the corporation
written notice of the demand at least five (5) business days before the proposed
inspection date, has the right to inspect and copy, during regular business
hours, any of the following records, all of which the corporation is required to
keep at its principal office:
(i) its articles of incorporation as then in effect;
(ii) its bylaws as then in effect;
(iii) the minutes of all shareholders' meetings, and records of
all actions taken by shareholders without a meeting, for the past three years;
(iv) all written communications within the past three years to
shareholders as a group or to the holders of any class or series of shares as a
group;
(v) a list of the names and addresses of its current officers
and directors;
(vi) its most recent annual report delivered to the Division;
and
(vii) all financial statements prepared for periods ending
during the last three years which a shareholder could request under Section 16-
10a-1605 of the Act.
(c) Conditional Inspection Rights. In addition to the inspection
rights set forth in paragraph (b) above, as provided in Section 16-10a-1602(2)
of the Act, a shareholder or director of the corporation (or such person's agent
or attorney) who gives the corporation a written demand in good faith and for a
proper purpose at least five (5) business days before the requested inspection
date, and describes in the demand with reasonable particularity the records
proposed to be inspected and the purpose of the inspection, is entitled to
inspect and copy, during regular business hours at a reasonable location
specified by the corporation, any of the following records of the corporation:
(i) excerpts from minutes of meetings of, and from actions taken
by, the shareholders, the board of directors, or any committees of the board of
directors, to the extent not subject to inspection under paragraph (b) of this
Section 2.16;
(ii) accounting records of the corporation; and
(iii) the record of shareholders (compiled no earlier than the
date of the demand for inspection).
For the purposes of paragraph (c), a proper purpose means a purpose
reasonably related to the demanding party's interest as a shareholder or
director. A party may not use any information obtained through the inspection
or copying of records permitted by this paragraph (c) for any purposes other
than those set forth in a proper demand as described above, and the officers of
the corporation are authorized to take appropriate steps to ensure compliance
with this limitation.
Section 2.17 Financial Statements and Share Information. Upon the
written request of any shareholder, the corporation shall mail to the requesting
shareholder:
(i) its most recent annual or quarterly financial statements
showing in reasonable detail its assets and liabilities and the results of its
operations, as required by Section 16-10a-1605 of the Act; and
(ii) the information specified by Section 16-10a-625(3) of the
Act, regarding the designations, preferences, limitations, and relative rights
applicable to each class and series of shares of the corporation, and the
authority of the board of directors to determine variations for any existing or
future class or series, as required by Section 16-10a-1606 of the Act.
Section 2.18 Dissenters' Rights. Each shareholder of the
corporation shall have the right to dissent from, and obtain payment of the fair
value of shares held by such shareholder in the event of, any of the corporate
actions identified in Section 16-10a-1302 of the Act or otherwise designated in
the articles of incorporation, these bylaws, or in a resolution of the board of
directors.
Section 2.19 Shares Held by Nominees. As provided in Section 16-
10a-723 of the Act, the board of directors is authorized to establish for the
corporation from time to time such procedures as the directors may determine to
be appropriate, by which the beneficial owner of shares that are registered by a
nominee is recognized by the corporation as a shareholder.
ARTICLE III
BOARD OF DIRECTORS
Section 3.01 General Powers. As provided in Section 16-10a-801 of
the Act, all corporate powers shall be exercised by or under the authority of,
and the business and affairs of the corporation shall be managed under the
direction of, the board of directors, subject to any limitation set forth in the
articles of incorporation or in a shareholder agreement permitted by Section 16-
10a-732 of the Act.
Section 3.02 Number, Tenure and Qualifications. Unless otherwise
specifically provided in the articles of incorporation, and subject to the
provisions of Section 16-10a-803 of the Act, the number of directors of the
corporation shall be as fixed from time to time by resolution of the board of
directors or shareholders, but in no instance shall there be fewer directors
than the minimum number required by Section 16-10a-803 of the Act.
Each director shall hold office until the next annual meeting of
shareholders (unless the articles of incorporation provide for staggering the
terms of directors as permitted by Section 16-10a-806 of the Act) or until
removed. However, a director whose term expires shall continue to serve until
such director's successor shall have been elected and qualified or until there
is a decrease in the authorized number of directors. No decrease in the
authorized number of directors shall have the effect of shortening the term of
any incumbent director. Unless required by the articles of incorporation,
directors do not need to be residents of Utah or shareholders of the
corporation.
If the articles of incorporation authorize dividing the shares into
classes or series, the articles of incorporation may also authorize the election
of all or a specified number or portion of directors by the holders of one or
more authorized classes or series of shares, as provided in Section 16-10a-804
of the Act. A class or series of shares entitled to elect one or more directors
is a separate voting group for purposes of the election of directors.
Section 3.03 Resignation. Any director may resign at any time by
giving a written notice of resignation to the corporation. A director's
resignation is effective when the notice is received by the corporation, or on
such later date as may be specified in the notice of resignation. (Section 16-
10a-807 of the Act.)
Section 3.04 Removal. The shareholders may remove one or more
directors at a meeting called for that purpose, as contemplated by Section 16-
10a-808 of the Act, if the meeting notice states that a purpose of the meeting
is such removal. The removal may be with or without cause unless the articles
of incorporation provide that directors may be removed only for cause. 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 the director. If the
articles of incorporation provide for cumulative voting for the election of
directors, a director may not be removed if a number of votes sufficient to
elect the director under such cumulative voting is voted against removal. If
cumulative voting is not in effect, a director may be removed only if the number
of votes cast to remove the director exceeds the number of votes cast against
removal.
Section 3.05 Vacancies. Unless the articles of incorporation
provide otherwise, if a vacancy occurs on the board of directors, including a
vacancy resulting from an increase in the number of directors, the vacancy may
be filled by the shareholders or the board of directors (as provided in Section
16-10a-810 of the Act). If the directors remaining in office constitute fewer
than a quorum of the board, they may fill the vacancy by the affirmative vote of
a majority of all the directors remaining in office.
If the vacant office was held by a director elected by a voting group
of shareholders, only the holders of the shares of that voting group are
entitled to vote to fill the vacancy if it is filled by the shareholders.
A vacancy that will occur at a specific later date (by reason of a
resignation effective at a later date or otherwise) may be filled before the
vacancy occurs, but the new director may not take office until the vacancy
occurs.
The terms of directors elected to fill vacancies generally expire at
the next annual shareholders' meeting. If a new director is elected to fill a
vacancy in a position having a term extending beyond the date of the next annual
meeting of shareholders, the term of such new director is governed by Section
16-10a-805(4) of the Act.
Section 3.06 Regular Meetings. Regular meetings of the board of
directors may be held without notice of the date, time, place or purposes of the
meetings, if the times of such meetings are fixed by resolution of the board of
directors. (Section 16-10a-820 of the Act.)
Section 3.07 Special Meetings. Special meetings of the board of
directors may be called by or at the request of the president or any one
director. The person or persons authorized to call special meetings of the
board of directors may fix the time and place of the meetings so called.
(Section 16-10a-820 of the Act.)
Section 3.08 Place of Meetings -- Meetings by Telephone. The board
of directors may hold regular or special meetings in or out of the State of
Utah. Unless the articles of incorporation or bylaws provide otherwise, the
board of directors may permit any or all directors to participate in a regular
or special meeting by, or conduct the meeting through the use of, any means of
communication by which all directors participating may hear each other during
the meeting. (Section 16-10a-820(2) of the Act).
Section 3.09 Notice of Meetings. Unless the articles of
incorporation, bylaws, or the Act provide otherwise, regular meetings of the
board may be held without notice of the date, time, place, or purposes of the
meeting. Unless the articles of incorporation or bylaws provide for a longer or
shorter period, special meetings of the board of directors must be preceded by
at least two (2) days' notice of the date, time, and place of the meeting. The
notice need not describe the purpose of the special meeting unless required by
the articles of incorporation, bylaws, or the Act. (Section 16-10a-822 of the
Act.)
The giving of notice of any meeting shall be governed by the rules set
forth in Section 16-10a-103 of the Act.
Section 3.10 Waiver of Notice. Any director may waive notice of any
meeting before or after the date of the meeting, as provided in Section 16-10a-
823 of the Act. Except as provided in the next sentence, the waiver must be in
writing, signed by the director entitled to the notice, and delivered to the
corporation for filing with the corporate records (but delivery and filing are
not conditions to its effectiveness). A director's attendance at or
participation in a meeting waives any required notice to the director of the
meeting unless the director at the beginning of the meeting, or promptly upon
the director's arrival, objects to holding the meeting or transacting business
at the meeting because of lack of notice or defective notice, and does not
thereafter vote for or assent to action taken at the meeting.
Section 3.11 Quorum and Manner of Acting. As set forth in Section
16-10a-824 of the Act, unless the articles of incorporation or these bylaws
establish a different quorum requirement, a quorum of the board of directors
consists of a majority of the number of directors fixed or prescribed in
accordance with these bylaws, except that if a variable-range board is permitted
by these bylaws and no resolution prescribing the exact number within the
permitted range is in effect, then a quorum consists of a majority of the number
of directors in office immediately before the meeting. The articles of
incorporation or bylaws may authorize a quorum of the board of directors to
consist of no fewer than one-third of the fixed or prescribed number of
directors. Any adjustment of the then applicable quorum requirement is subject
to the provisions of Section 16-10a-1022 of the Act and Section 3.13 of these
bylaws.
The affirmative vote of a majority of directors present at a meeting
at which a quorum is present when the vote is taken shall be the act of the
board of directors, unless the articles of incorporation, bylaws, or the Act
require the vote of a greater number of directors. Any action to change the
percentage of directors needed to take action is subject to the provisions of
Section 16-10a-1022 of the Act and Section 3.13 of these bylaws.
As set forth in Section 16-10a-824(4) of the Act, a director who is
present at a meeting of the board of directors when corporate action is taken is
considered to have assented to the action taken at the meeting unless:
(i) the director objects at the beginning of the meeting (or
promptly upon arrival) to holding the meeting or transacting business at the
meeting and does not thereafter vote for or assent to any action taken at the
meeting;
(ii) the director contemporaneously requests that such
director's dissent or abstention as to any specific action be entered into the
minutes of the meeting; or
(iii) the director causes written notice of a dissent or
abstention as to any specific action to be received by the presiding officer of
the meeting before adjournment of the meeting or by the corporation promptly
after adjournment of the meeting. The right of dissent or abstention as to a
specific action is not available to a director who votes in favor of the action
taken.
Section 3.12 Action Without a Meeting. Unless the articles of
incorporation, these bylaws or the Act provide otherwise, any action required or
permitted to be taken by the board of directors at a meeting may be taken
without a meeting if all the directors consent in writing to the action as
permitted by Section 16-10a-821 of the Act. Action is considered to have been
taken by such written consents when the last director signs a writing describing
the action taken, unless prior to that time any director has revoked a consent
by a writing signed by the director and received by an authorized officer of the
corporation. An action so taken is effective at the time it is taken, unless
the board of directors establishes a different effective date. An action taken
by written consent of the directors as described in this section has the same
effect as action taken at a meeting of directors and may be described as such in
any document.
Section 3.13 Altering Quorum or Voting Requirements. As provided in
Section 16-10a-1022 of the Act, a bylaw that fixes a greater quorum or voting
requirement for the board of directors than is required by the Act may be
amended or repealed:
(i) if originally adopted by the shareholders, only by the
shareholders, unless the bylaw specifically provided that it could be amended by
a vote of either the shareholders or the board of directors; or
(ii) if originally adopted by the board of directors, by the
shareholders or, unless otherwise provided in the articles of incorporation or
bylaws, by the board of directors.
Action by the board of directors to amend or repeal a bylaw that
changes the quorum or voting requirement for the board of directors must meet
the same quorum requirement and be adopted by the same vote required to take
action under the quorum and voting requirement then in effect or proposed to be
adopted, whichever is greater.
Section 3.14 Compensation. Unless otherwise provided in the
articles of incorporation or these bylaws, the board of directors may fix the
compensation of directors, as permitted by Section 16-10a-811 of the Act.
Pursuant to this authority, the directors may, by resolution, provide for
directors to be paid their expenses, if any, of attendance at each meeting of
the board of directors, and may be paid a stated salary as director or a fixed
sum for attendance at each meeting of the board of directors or both. No such
payment shall preclude any director from serving the corporation in any capacity
and receiving compensation therefor.
Section 3.15 Committees.
(a) Creation of Committees. Unless the articles of incorporation or
these bylaws provide otherwise, the board of directors may create one or more
committees and appoint members of the board of directors to serve on them. Each
committee must have two or more members, who serve at the pleasure of the board
of directors. (Section 16-10a-825 of the Act.)
(b) Selection of Committee Members. The creation of a committee and
appointment of members to it must be approved by the greater of:
(i) a majority of all the directors in office when the action is
taken; or
(ii) the number of directors required by the articles of
incorporation or bylaws to take action under Section 16-10a-824 of the Act and
Section 3.11 of these bylaws.
(c) Required Procedures. Sections 16-10a-820 and 824 of the Act, and
Sections 3.06 through 3.11 of these bylaws, which govern meetings, action
without meeting, notice, waiver of notice, and quorum and voting requirements of
the board of directors, apply to committees and their members as well.
(d) Authority. Unless limited by the articles of incorporation or
these bylaws, each committee may exercise those aspects of the authority of the
board of directors (as set forth in Section 16-10a-801 of the Act and Section
3.01 of these bylaws) which the board of directors confers upon such committee
in the resolution creating the committee.
(e) Impact on Duty of Directors. The creation of, delegation of
authority to, or action by a committee does not alone constitute compliance by a
director with the standards of conduct described in Section 16-10a-840 of the
Act and referenced in Section 3.16 of these bylaws.
Section 3.16 Standards of Conduct. Each director is to discharge
such director's duties as a director, including duties as a member of a
committee, in compliance with the standards of conduct set forth in Section 16-
10a-840 of the Act and described in Article V of these bylaws.
Section 3.17 Limitation of Liability. If not already so provided in
the articles of incorporation of this corporation, the corporation, as provided
in Section 16-10a-841 of the Act, may eliminate or limit the liability of
directors to the corporation or to its shareholders for monetary damages for any
action taken or any failure to take action as a director, by an amendment to its
articles of incorporation, or by the adoption of a bylaw or resolution approved
by the same percentage of shareholders as would be required to approve an
amendment to the articles of incorporation to include such provision. No such
provision may eliminate or limit the liability of a director for:
(i) the amount of a financial benefit received by a director to
which the director is not entitled;
(ii) an intentional infliction of harm on the corporation or the
shareholders;
(iii) an unlawful distribution in violation of the standards set
forth in Section 16-10a-824 of the Act as referenced in Section 3.18 of these
bylaws;
(iv) an intentional violation of criminal law; or
(v) liability for any act or omission occurring prior to the
date such a provision becomes effective.
Section 3.18 Liability for Unlawful Distributions. A director who
votes for or assents to a distribution made in violation of the requirements of
Section 16-10a-640 of the Act or the articles of incorporation, and who does not
discharge such duties in compliance with the standards of conduct set forth in
Section 16-10a-840 of the Act and referenced in Section 3.16 and 5.01 of these
bylaws, is personally liable to the corporation for the amount by which the
distribution exceeds the amount that could been properly distributed, as
provided in Section 16-10a-842 of the Act.
Section 3.19 Conflicting Interest Transactions. Transactions in
which a director has a conflicting interest will be handled in accordance with
Sections 16-10a-850 to 853 of the Act. In accordance with such sections, each
"DIRECTOR'S CONFLICTING INTEREST TRANSACTION" as defined therein, which has not
otherwise been established to be fair to the corporation, is to be presented to
the shareholders for approval in accordance with Section 16-10a-853 of the Act,
or approved by the directors in compliance with the requirements of Section 16-
10a-822 of the Act.
Directors may take action with respect to a director's conflicting
interest transaction by the affirmative vote of a majority of those "QUALIFIED
DIRECTORS" (defined in Section 16-10a-850 of the Act as essentially those
directors without conflicting interests with respect to the transaction) on the
board of directors or on a duly empowered and constituted committee of the board
who voted on the transaction after receipt of the "REQUIRED DISCLOSURE" (as
defined in Sections 16-10a-850 and 852(2) of the Act). For purposes of such
action, a majority of the qualified directors on the board or on the committee,
as the case may be, constitutes a quorum. Such action is not affected by the
presence or vote of a director who is not a qualified director.
ARTICLE IV
OFFICERS
Section 4.01 Number and Qualifications. The officers of the
corporation shall be a president, a secretary, a treasurer, each of whom shall
be appointed by the board of directors. The corporation may also have such
other officers and assistant officers as the board of directors in its
discretion may determine, by resolution, to be appropriate, including a chairman
of the board, one or more vice-presidents, a controller, assistant secretaries
and assistant treasurers. All such officers shall be appointed by the board of
directors, except that if specifically authorized by the board of directors, an
officer may appoint one or more officers or assistant officers (see Section 16-
10a-830 of the Act). The same individual may simultaneously hold more than one
office in the corporation.
Section 4.02 Appointment and Term of Office. The officers of the
corporation shall be appointed by the board of directors (or, to the extent
permitted by Section 4.01 above, by an officer specifically authorized by the
board to make such appointments), for such terms as may be determined by the
board of directors. Neither the appointment of an officer nor the designation
of a specified term creates or grants to the officer any contract rights, and
the board can remove the officer at any time prior to the termination of any
term for which the officer may be appointed. If no other term is specified,
officers shall hold office until they resign, die, or until they are removed or
replaced in the manner provided in Section 4.03 below, or Section 16-10a-832 of
the Act.
Section 4.03 Removal and Resignation of Officers. Any officer or
agent of the corporation may be removed or replaced by the board of directors at
any time with or without cause, as permitted by Section 16-10a-832 of the Act.
The election of a replacement officer shall constitute the removal of the person
previously holding such office. An officer may resign at any time by giving
written notice of the resignation to the corporation. Resignations shall become
effective as provided in Section 16-10a-832 of the Act. An officer's
resignation or removal does not affect the contract rights of the parties, if
any (See Section 16-10a-833 of the Act).
Section 4.04 Authority and Duties. The officers of the corporation
shall have the authority and perform the duties specified below and as may be
additionally specified by the president, the board of directors or these bylaws
(and in all cases where the duties of any officer are not prescribed by the
bylaws or by the board of directors, such officer shall follow the orders and
instructions of the president), except that in any event each officer shall
exercise such powers and perform such duties as may be required by law:
(a) President. The president shall, subject to the direction
and supervision of the board of directors, (i) be the chief executive officer of
the corporation and have general and active control of its affairs and business
and general supervision of its officers, agents and employees; (ii) unless there
is a chairman of the board, preside at all meetings of the shareholders and the
board of directors; (iii) see that all orders and resolutions of the board of
directors are carried into effect; and (iv) perform all other duties incident to
the office of president and as from time to time may be assigned to the
president by the board of directors. The president may sign, with the secretary
or any other proper officer of the corporation authorized to take such action,
certificates for shares of the corporation. The president may also sign,
subject to such restrictions and limitations as may be imposed from time to time
by the board of directors, deeds, mortgages, bonds, contracts or other
instruments which have been duly approved for execution.
(b) Vice-Presidents. The vice-president, if any (or if there is
more than one then each vice-president), shall assist the president and shall
perform such duties as may be assigned by the president or by the board of
directors. The vice-president, if there is one (or if there is more than one
then the vice-president designated by the board of directors, or if there be no
such designation then the vice-presidents in order of their election), shall, at
the request of the president, or in the event of the president's absence or
inability or refusal to act, perform the duties of the president and when so
acting shall have all the powers of and be subject to all the restrictions upon
the president. Any vice-president may sign, with the secretary or an assistant
secretary, certificates for shares of the corporation the issuance of which have
been authorized by resolution of the board of directors. Vice-presidents shall
perform such other duties as from time to time may be assigned to them by the
president or by the board of directors. Assistant vice-presidents, if any,
shall have such powers and perform such duties as may be assigned to them by the
president or by the board of directors.
(c) Secretary. The secretary shall: (i) have responsibility
for the preparation and maintenance of minutes of the proceedings of the
shareholders and of the board of directors; (ii) have responsibility for the
preparation and maintenance of the other records and information required to be
kept by the corporation under Section 16-10a-1601 of the Act and Section 2.17 of
these bylaws; (iii) see that all notices are duly given in accordance with the
provisions of these bylaws or as required by the Act or other applicable law;
(iv) be custodian of the corporate records and of any seal of the corporation;
(v) when requested or required, authenticate any records of the corporation;
(vi) keep a register of the post office address of each shareholder which shall
be furnished to the secretary by such shareholder; (vii) sign with the
president, or a vice-president, certificates for shares of the corporation, the
issuance of which shall have been authorized by resolution of the board of
directors; (viii) have general charge of the stock transfer books of the
corporation, unless the corporation has a transfer agent; and (ix) in general
perform all duties incident to the office of secretary, including those
identified in the Act, and such other duties as from time to time may be
assigned to the secretary by the president or the board of directors. Assistant
secretaries, if any, shall have the same duties and powers, subject to
supervision by the secretary.
(d) Treasurer. The treasurer shall: (i) be the principal
financial officer of the corporation and have responsibility for the care and
custody of all its funds, securities, evidences of indebtedness and other
personal property, and deposit and handle the same in accordance with
instructions of the board of directors; (ii) receive and give receipts and
acquittances for monies paid in on account of the corporation, and pay out of
funds on hand all bills, payrolls and other just debts of the corporation of
whatever nature upon maturity; (iii) unless there is a controller, be the
principal accounting officer of the corporation and as such prescribe and
maintain the methods and systems of accounting to be followed, keep complete
books and records of account, prepare and file all local, state and federal tax
returns, prescribe and maintain an adequate system of internal audit, and
prepare and furnish to the president and the board of directors statements of
account showing the financial position of the corporation and the results of its
operations; (iv) upon request of the board, make such reports to it as may be
required at any time; and (v) perform all other duties incident to the office of
treasurer and such other duties as from time to time may be assigned by the
board of directors or the president. Assistant treasurers, if any, shall have
the same powers and duties, subject to supervision by the treasurer.
Section 4.05 Surety Bonds. The board of directors may require any
officer or agent of the corporation to provide to the corporation a bond, in
such sums and with such sureties as may be satisfactory to the board,
conditioned upon the faithful performance of such individual's duties and for
the restoration to the corporation of all books, papers, vouchers, money,
securities and other property of whatever kind in such officer's possession or
under such officer's control belonging to the corporation.
Section 4.06 Compensation. Officers shall receive such compensation
for their services as may be authorized or ratified by the board of directors
and no officer shall be prevented from receiving compensation by reason of the
fact that such officer is also a director of the corporation. Appointment as an
officer shall not of itself create a contract or other right to compensation for
services performed as such officer.
ARTICLE V
STANDARDS OF CONDUCT FOR OFFICERS AND DIRECTORS
Section 5.01 Standards of Conduct. As provided in Section 16-10a-
840 of the Act, each director is required to discharge his or her duties as a
director, including duties as a member of a committee, and each officer with
discretionary authority is required to discharge his or her duties under that
authority, in a manner consistent with the following standards of conduct:
(i) in good faith;
(ii) with the care an ordinarily prudent person in a like
position would exercise under similar circumstances; and
(iii) in a manner the director or officer reasonably believes is
in the best interests of the corporation.
Section 5.02 Reliance on Information and Reports. In discharging
his or her duties, a director or officer is entitled to rely on information,
opinions, reports, or statements, including financial statements and other
financial data, if prepared or presented by:
(i) one or more officers or employees of the corporation whom
the director or officer reasonably believes to be reliable and competent in the
matters presented;
(ii) legal counsel, public accountants, or other persons as to
matters the director or officer reasonably believes are within the person's
professional or expert competence; or
(iii) in the case of a director, a committee of the board of
directors of which such director is not a member, if the director reasonably
believes the committee merits confidence.
A director or officer is not acting in good faith in relying on any
such information, opinions, reports or statements if such director or officer
has knowledge concerning the matter in question that makes reliance otherwise
permitted as set forth above unwarranted.
Section 5.03 Limitation on Liability. A director or officer is not
liable for any action taken, or any failure to take any action as an officer or
director, as the case may be, if the duties of the office have been performed in
compliance with the provisions of this Article 5, and Section 16-10a-840 of the
Act.
ARTICLE VI
INDEMNIFICATION
Section 6.01 Indemnification of Directors.
(a) Permitted Indemnification. Pursuant to Section 16-10a-902 of the
Act, unless otherwise provided in the articles of incorporation as permitted by
Section 16-10a-909 of the Act, the corporation may indemnify any individual,
made a party to a proceeding because such individual is or was a director of the
corporation, against liability incurred in the proceeding if the corporation has
authorized the payment in accordance with Section 16-10a-906 of the Act and a
determination has been made in accordance with the procedures set forth in
Section 16-10a-906(2) of the Act that the director has met the applicable
standards of conduct as set forth below and in Section 16-10a-902 of the Act:
(i) the individual's conduct was in good faith;
(ii) the individual reasonably believed that his or her conduct
was in, or not opposed to, the corporation's best interests; and
(iii) in the case of any criminal proceeding, the individual had
no reasonable cause to believe his or her conduct was unlawful.
(b) Limitation on Permitted Indemnification. As provided in Section
16-10a-902(4) of the Act, the corporation shall not indemnify a director under
Section 6.01(a) above:
(i) in connection with a proceeding by or in the right of the
corporation in which the director was adjudged liable to the corporation; or
(ii) in connection with any other proceeding charging that the
director derived an improper personal benefit, whether or not involving action
in the director's official capacity, in which proceeding the director was
adjudged liable on the basis that the director derived an improper personal
benefit.
(c) Indemnification in Derivative Actions Limited. Indemnification
permitted under Section 6.01(a) and Section 16-10a-902 of the Act in connection
with a proceeding by or in the right of the corporation is limited to reasonable
expenses incurred in connection with the proceeding.
(d) Mandatory Indemnification. As set forth in Section 16-10a-903 of
the Act, unless limited by the articles of incorporation, the corporation shall
indemnify a director who was successful, on the merits or otherwise, in the
defense of any proceeding, or in the defense of any claim, issue, or matter in
the proceeding, to which the director was a party because the director is or was
a director of the corporation, against reasonable expenses incurred by the
director in connection with the proceeding or claim with respect to which the
director has been successful.
Section 6.02 Advance Expenses for Directors. Pursuant to the
provisions of Section 16-10a-904 of the Act, if a determination is made,
following the procedures of Section 16-10a-906(b) of the Act, that a director
has met the following requirements, and if an authorization of payment is made,
following the procedures and standards set forth in Section 16-10a-906 of the
Act, then unless otherwise provided in the articles of incorporation, the
corporation may pay for or reimburse the reasonable expenses incurred by a
director who is a party to a proceeding in advance of final disposition of the
proceeding, if:
(i) the director furnishes the corporation a written affirmation
of the director's good faith belief that the director has met the applicable
standard of conduct described in Section 5.01 of these bylaws and Section 16-
10a-902 of the Act;
(ii) the director furnishes to the corporation a written
undertaking, executed personally or on such director's behalf, to repay the
advance if it is ultimately determined that the director did not meet the
standard of conduct; and
(iii) a determination is made that the facts then known to those
making the determination would not preclude indemnification under Sections 16-
10a-901 through 909 of the Act.
Section 6.03 Indemnification of Officers, Employees, Fiduciaries,
and Agents. Unless otherwise provided in the articles of incorporation, and
pursuant to Section 16-10a-907 of the Act:
(i) an officer of the corporation is entitled to mandatory
indemnification under Section 16-10a-903 of the Act, and is entitled to apply
for court-ordered indemnification under Section 16-10a-905 of the Act, in each
case to the same extent as a director;
(ii) the corporation may indemnify and advance expenses to an
officer, employee, fiduciary, or agent of the corporation to the same extent as
to a director; and
(iii) the corporation may also indemnify and advance expenses to
an officer, employee, fiduciary, or agent who is not a director to a greater
extent, if not inconsistent with public policy, and if provided for by the
articles of incorporation, these bylaws, action of the board of directors, or
contract.
Section 6.04 Insurance. As provided in Section 16-10a-908 of the
Act, the corporation may purchase and maintain liability insurance on behalf of
a person who is or was a director, officer, employee, fiduciary, or agent of the
corporation, or who, while serving as a director, officer, employee, fiduciary,
or agent of the corporation, is or was serving at the request of the corporation
as a director, officer, partner, trustee, employee, fiduciary, or agent of
another foreign or domestic corporation or other person, or of an employee
benefit plan, against liability asserted against or incurred by such person in
that capacity or arising from such person's status as a director, officer,
employee, fiduciary, or agent, whether or not the corporation would have power
to indemnify such person against the same liability under Article VI of these
bylaws or Sections 16-10a-902, 903 or 907 of the Act. Insurance may be procured
from any insurance company designated by the board of directors, whether the
insurance company is formed under the laws of this state or any other
jurisdiction, including any insurance company in which the corporation has an
equity or any other interest through stock ownership or otherwise.
Section 6.05 Scope of Indemnification. The indemnification and
advancement of expenses authorized by this Article VI is intended to permit the
corporation to indemnify to the fullest extent permitted by the laws of the
State of Utah any and all persons whom it shall have power to indemnify under
such laws from and against any and all of the expenses, disabilities, or other
matters referred to in or covered by such laws. Any indemnification or
advancement of expenses hereunder, unless otherwise provided when the
indemnification or advancement of expenses is authorized or ratified, is
intended to be applicable to acts or omissions that occurred prior to the
adoption of this Article, shall continue as to any party during the period such
party serves in any one or more of the capacities covered by this Article, shall
continue thereafter so long as the party may be subject to any possible
proceeding by reason of the fact that such party served in any one or more of
the capacities covered by this Article, and shall inure to the benefit of the
estate and personal representatives of such person. Any repeal or modification
of this Article or of any Section or provision hereof shall not affect any right
or obligations then existing. All rights to indemnification under this Article
shall be deemed to be provided by a contract between the corporation and each
party covered hereby.
Section 6.06 Other Rights and Remedies. The rights to
indemnification and advancement of expenses provided in this Article VI shall be
in addition to any other rights which a party may have or hereafter acquire
under any applicable law, contract, order, or otherwise.
Section 6.07 Severability. If any provision of this Article shall
be held to be invalid, illegal or unenforceable for any reason, the remaining
provisions of this Article shall not be affected or impaired thereby, but shall,
to the fullest extent possible, be construed so as to give effect to the intent
of this Article that each party covered hereby is entitled to the fullest
protection permitted by law.
ARTICLE VII
STOCK
Section 7.01 Issuance of Shares. Except to the extent any such
powers may be reserved to the shareholders by the articles of incorporation, as
provided in Section 16-10a-621 of the Act, the board of directors may authorize
the issuance of shares for consideration consisting of any tangible or
intangible property or benefit to the corporation, including cash, promissory
notes, services performed, contracts or arrangements for services to be
performed, or other securities of the corporation. The terms and conditions of
any tangible or intangible property or benefit to be provided in the future to
the corporation, including contracts or arrangements for services to be
performed, are to be set forth in writing.
Before the corporation issues shares, the board of directors must
determine that the consideration received or to be received for the shares to be
issued is adequate.
The board of directors may authorize a committee of the board of
directors, or an officer of the corporation, to authorize or approve the
issuance or sale, or contract for sale of shares, within limits specifically
prescribed by the board of directors.
Section 7.02 Certificates for Shares; Shares Without Certificates.
(a) Use of Certificates. As provided in Section 16-10a-625 of the
Act, shares of the corporation may, but need not be, represented by
certificates. Unless the Act or another applicable statute expressly provides
otherwise, the rights and obligations of shareholders are not affected by
whether or not their shares are represented by certificates.
(b) Content of Certificates. Certificates representing shares of the
corporation must, at a minimum, state on their face:
(i) the name of the corporation, and that it is organized under
the laws of Utah;
(ii) the name of the person to whom the certificate is issued;
and
(iii) the number and class of shares and the designation of the
series, if any, the certificate represents.
If the corporation is authorized to issue different classes of shares
or different series within a class, the designations, preferences, limitations,
and relative rights applicable to each class, the variations in preferences,
limitations, and relative rights determined for each series, and the authority
of the board of directors to determine variations for any existing or future
class or series, must be summarized on the front or back of each certificate.
Alternatively, each certificate may state conspicuously on its front or back
that the corporation will furnish the shareholder such information on request in
writing and without charge.
Each share certificate must be signed (either manually or by
facsimile) by the president or a vice-president and by the secretary or an
assistant secretary, or by any two other officers as may be designated in these
bylaws or by the board of directors. Each certificate for shares is to be
consecutively numbered or otherwise identified.
(c) Shares Without Certificates. As provided in Section 16-10a-626
of the Act, unless the articles of incorporation or these bylaws provide
otherwise, the board of directors may authorize the issuance of some or all of
the shares of any or all of its classes or series without certificates. Such an
authorization will not affect shares already represented by certificates until
they are surrendered to the corporation.
Within a reasonable time after the issuance or transfer of shares
without certificates, the corporation shall send the shareholder a written
statement of the information required on certificates by Subsections 625(2) and
(3) of the Act, as summarized in Section 7.02(b) above.
(d) Shareholder List. The corporation shall maintain a record of the
names and addresses of the persons to whom shares are issued, in a form meeting
the requirements of Section 16-10a-1601(3) of the Act.
(e) Transferring Certificated Shares. All certificates surrendered
to the corporation for transfer shall be canceled and no new certificate shall
be issued until the former certificate for a like number of shares shall have
been surrendered and canceled, except that in case of a lost, destroyed, or
mutilated certificate a new one may be issued therefor upon such terms and
indemnity to the corporation as the board of directors may prescribe.
(f) Registration of the Transfer of Shares. Registration of the
transfer of shares of the corporation shall be made only on the stock transfer
books of the corporation. In order to register a transfer, the record owner
shall surrender the shares to the corporation for cancellation, properly
endorsed by the appropriate person or persons with reasonable assurances that
the endorsements are genuine and effective. Unless the corporation has
established a procedure by which a beneficial owner of shares held by a nominee
is to be recognized by the corporation as the owner, 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.
Section 7.03 Restrictions on Transfer of Shares Permitted. As
contemplated by Section 16-10a-627 of the Act, the articles of incorporation,
and these bylaws, an agreement among shareholders, or an agreement between one
or more shareholders and the corporation may impose restrictions on the transfer
or registration of transfer of shares of the corporation. A restriction does
not affect shares issued before the restriction was adopted unless the holders
of the shares are parties to the restriction agreement or voted in favor of the
restriction or otherwise consented to the restriction.
A restriction on the transfer or registration of transfer of shares
may be authorized for any of the purposes set forth in Section 16-10a-627(3) of
the Act. A restriction on the transfer or registration of transfer of shares is
valid and enforceable against the holder or a transferee of the holder if the
restriction is authorized by this section and its existence is noted
conspicuously on the front or back of the certificate, or is contained in the
information statement required by Section 7.02(c) of these bylaws with regard to
shares issued without certificates. Unless so noted, a restriction is not
enforceable against a person without knowledge of the restriction.
Section 7.04 Acquisition of Shares by the Corporation. Subject to
the limitations on distributions set forth in Section 16-10a-640 of the Act and
any other restrictions imposed by applicable law, the corporation may acquire
its own shares, as authorized by Section 16-10a-631 of the Act, and shares so
acquired constitute authorized but unissued shares.
If the articles of incorporation prohibit the reissuance of acquired
shares, the number of authorized shares is reduced by the number of shares
acquired by the corporation, effective upon amendment of the articles of
incorporation, which amendment may be adopted by the board of directors without
shareholder action, as provided in Sections 16-10a-632(b) and 1002 of the Act.
Articles of amendment affecting such an amendment must meet the requirements of
Section 16-10a-631(3) of the Act.
ARTICLE VIII
AMENDMENTS TO BYLAWS
Section 8.01 Authority to Amend. As provided in Section 16-10a-1020
of the Act, the corporation's board of directors may amend these bylaws at any
time, except to the extent that the articles of incorporation, these bylaws, or
the Act reserve such power exclusively to the shareholders, in whole or part.
The directors may not adopt, amend or repeal a bylaw that fixes a greater quorum
or voting requirement for shareholders. Any such bylaw may be adopted, amended
or repealed only by the shareholders as provided in Section 8.02 below.
The corporation's shareholders may amend these bylaws at any time.
Section 8.02 Bylaw Changing Quorum or Voting Requirement for
Shareholders. If authorized by the articles of incorporation, the shareholders
may adopt, amend, or repeal a bylaw that fixes a greater quorum or voting
requirement for shareholders, or voting groups of shareholders, than is required
by the Act. Such action is subject to the provisions of Part 7 of the Act and
Section 2.08 of these bylaws.
Section 8.03 Bylaw Changing Quorum or Voting Requirement for
Directors.
(a) Amendment. A bylaw that fixes a greater quorum or voting
requirements for the board of directors than is required by the Act may be
amended or repealed as permitted by Section 16-10a-1022 of the Act and Section
3.13 of these bylaws:
(i) if originally adopted by the shareholders, only by the
shareholders, unless otherwise permitted as contemplated by Subsection (b)
below; or
(ii) if originally adopted by the board of directors, by the
shareholders or unless otherwise provided in the articles of incorporation or
these bylaws, by the board of directors.
(b) Restriction on Amendment. A bylaw adopted or amended by the
shareholders that fixes a greater quorum or voting requirement for the board of
directors may provide that it may be amended or repealed only by a specified
vote of either the shareholders or the board of directors.
(c) Required Vote to Amend. Action by the board of directors under
Subsection (a)(ii) above to amend or repeal a bylaw that changes the quorum or
voting requirement for the board of directors must meet the same quorum
requirement and be adopted by the same vote required to take action under the
quorum and voting requirement then in effect or proposed to be adopted,
whichever is greater.
ARTICLE IX
MISCELLANEOUS
Section 9.01 Corporate Seal. The board of directors may provide for
a corporate seal, to be in such a form as the directors may determine to be
appropriate, and any officer of the corporation may, when and as required or as
determined to be appropriate, affix or impress the seal, or a facsimile thereof,
to or on any instrument or document of the corporation.
Section 9.02 Fiscal Year. The fiscal year of the corporation shall
be as established by the board of directors.
(END)
CERTIFICATE OF ADOPTION OF BYLAWS
OF
ALPNET, INC.
The undersigned hereby certifies that he is the duly appointed and
acting Secretary of ALPNET, INC., a Utah corporation, and that the foregoing
Bylaws were approved and adopted by a vote of the directors of the corporation,
effective as of 23 August 1996, and a record of such action is maintained in the
minute book of the corporation.
Executed this 23rd day of May 1996.
\s\ D. Kerry Stubbs
D. Kerry Stubbs, Secretary
<TABLE>
E X H I B I T 1 1
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
<CAPTION>
Three Months Ended June 30 Six Months Ended June 30
(Thousands of dollars and shares) 1996 1995 1996 1995
<S> <C> <C> <C> <C>
Net income $662 $6 $692 $20
Weighted average shares of Common
Stock outstanding 16,387 15,562 16,293 15,562
Shares of Common Stock issuable upon
conversion of Convertible Preferred Stock 7,423 6,637 7,423 6,637
Shares of Common Stock issuable upon
exercise of employee stock options 1,869 1,895
Total shares of Common Stock and
Common Stock equivalents 25,679 22,199 25,611 22,199
Net income per share $.026 $-- $.027 $.001
<FN>
(1) Primary and fully diluted per share earnings are substantially the same for each period presented.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 944
<SECURITIES> 0
<RECEIVABLES> 6,799
<ALLOWANCES> 213
<INVENTORY> 0
<CURRENT-ASSETS> 8,701
<PP&E> 4,067
<DEPRECIATION> 2,930
<TOTAL-ASSETS> 15,861
<CURRENT-LIABILITIES> 5,581
<BONDS> 174
0
3,127
<COMMON> 39,195
<OTHER-SE> (32,216)
<TOTAL-LIABILITY-AND-EQUITY> 15,861
<SALES> 15,513
<TOTAL-REVENUES> 15,513
<CGS> 11,891
<TOTAL-COSTS> 11,891
<OTHER-EXPENSES> 261
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 61
<INCOME-PRETAX> 840
<INCOME-TAX> 148
<INCOME-CONTINUING> 692
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 692
<EPS-PRIMARY> .027
<EPS-DILUTED> .027
</TABLE>
