**Exhibit 3.2**

 

**MACKIE DESIGNS INC.**

 

**RESTATED BYLAWS**

 

 

SECTION 1

 

SHAREHOLDERS AND SHAREHOLDERS’ MEETINGS

 

1.1           Annual Meeting.  The annual meeting of theshareholders of this corporation (the “Corporation”) for the election ofdirectors and for the transaction of such other business as may properly comebefore the meeting shall be held each year at the principal office of theCorporation, or at some other place either within or without the State ofWashington as designated by the Board of Directors, on the second Tuesday ofApril each year at 10:00 a.m. or on such other day and time as may be set bythe Board of Directors.  If thespecified day is a Sunday or a legal holiday, then the meeting will take placeon the next business day at the same time or on such other day and time as maybe set by the Board of Directors.

 

1.2           Special Meetings.  Specialmeetings of the shareholders for any purpose or purposes may be called at anytime by the President or Board of Directors. Further, a special meeting of the shareholders shall be held if theholders of not less than 25% of all votes entitled to be cast on the issueproposed to be considered at such special meeting have dated, signed anddelivered to the Secretary one or more written demands for such meeting, describingthe purpose or purposes for which it is to be held; provided, however, thatupon qualification of the Corporation as a “public company” under Title 23BRCW, the percentage of votes required to call a special meeting shall be 30%.  The meetings shall be held at such time andplace as the Board of Directors prescribe, or, if not held upon the request ofthe Board of Directors, at such time and place may be established by thePresident or by the Secretary in the President’s absence.

 

1.3           Notice of Meetings.  Writtennotice of the place, date and time of the annual shareholders’ meeting andwritten notice of the place, date, time and purpose or purposes of specialshareholders’ meetings shall be delivered not less than 10 or more than 60 daysbefore the date of meeting, either personally, by facsimile, or by mail, or inany other manner approved by law, by or at the direction of the President orthe Secretary, to each shareholder of record entitled to notice of suchmeeting.  Mailed notices shall be deemedto be delivered when deposited in the mail, first-class postage prepaid,correctly addressed to the shareholder’s address shown in the Corporation’scurrent record of shareholders.  Noticegiven in any other manner shall be deemed effective when dispatched to theshareholder’s address, telephone number or other number appearing on therecords of the Corporation.

 

1.4           Waiver of Notice.  Exceptwhere expressly prohibited by law or the Articles of Incorporation, notice ofthe place, date, time and purpose or purposes of any shareholders’ meeting maybe waived in a signed writing delivered to the Corporation by any shareholderat any time, either before or after the meeting.  Attendance at the meeting in person or by proxy waives

 

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objectionto lack of notice or defective notice of the meeting unless the shareholder atthe beginning of the meeting objects to holding the meeting or transactingbusiness at the meeting.  A shareholderwaives objection to consideration of a particular matter at a meeting that isnot within the purpose or purposes described in the meeting notice, unless theshareholder objects to considering the matter when it is presented.

 

1.5           Shareholders’ Action Without a Meeting.  Theshareholders may take any action without a meeting that they could properlytake at a meeting, if one or more written consents setting forth the action sotaken are signed by all of the shareholders entitled to vote with respect tothe subject matter and are delivered to the Corporation for inclusion in theminutes or filing with the corporate records. If required by Washington law, all nonvoting shareholders must be givenwritten notice of the proposed action at least 10 days before the action istaken, unless such notice is waived in a manner consistent with these Bylaws.  Actions taken under this section areeffective when all consents are in the possession of the Corporation, unlessotherwise specified in the consent.  Ashareholder may withdraw consent only by delivering  a written notice of withdrawal to the Corporation prior to thetime that all consents are in the possession of the Corporation.

 

1.6           Telephone Meetings. Shareholders may participate in a meeting of shareholders by means of aconference telephone or any similar communication equipment that enables allpersons participating in the meeting to hear each other during themeeting.  Participation by such meansshall constitute presence in person at a meeting.

 

1.7           List of Shareholders.  Atleast 10 days before any shareholders’ meeting, the Secretary of theCorporation or the agent having charge of the stock transfer books of theCorporation shall have prepared an alphabetical list of the names of theshareholders on the record date who are entitled to notice of a shareholders’meeting, arranged by voting group, and within each voting group, by class orseries of shares, and showing the address of and number of shares held by eachshareholder.

 

1.8           Quorum and Voting.  Thepresence in person or by proxy of the holders of a majority of the votesentitled to be cast on a matter at a meeting shall constitute a quorum ofshareholders for that matter.  If aquorum exists, action on a matter shall be approved by a voting group if thevotes case within a voting group favoring the action exceed the votes castwithin the voting group opposing the action, unless a greater number ofaffirmative votes is required by the Articles of Incorporation or by law.  If the Articles of Incorporation orWashington law provide for voting by two or more voting groups on a matter, actionon a matter is taken only when voted upon by each of those voting group countedseparately.  Action may be taken by onevoting group on a matter even though no action is taken by another votinggroup.

 

1.9           Adjourned Meetings.  If ashareholders’ meeting is adjourned to a different place, date or time, whetherfor failure to achieve a quorum or otherwise, notice need not be given of thenew place, date or time if the new place, date or time is announced at themeeting before adjournment.  When adetermination of shareholders entitled to vote at any meeting of shareholdershas been made as provided in these Bylaws, that determination shall apply toany adjournment thereof, unless Washington law requires fixing a new recorddate.  If Washington law requires that anew record date be set for the adjourned meeting, notice of the adjournedmeeting must be given to shareholders

 

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as of thenew record date.  Any business may betransacted at an adjourned meeting that could have been transacted at themeeting as originally called.

 

1.10         Proxies.  A shareholder may appoint aproxy to vote or otherwise act for the shareholder by signing an appointmentform, either personally or by an agent. No appointment shall be valid after 11 months from the date of itsexecution unless the appointment form expressly so provides.  An appointment of a proxy is revocableunless the appointment is coupled with an interest.  No revocation shall be effective until written notice thereof hasactually been received by the Secretary of the Corporation or any other officeror agent authorized to tabulate votes.

 

1.11         Business for Shareholders’ Meetings.

 

1.11.1      Businessat Annual Meetings.

 

(a)           In addition to the election of directors, other proper business may betransacted at an annual meeting of shareholders, provided that such business isproperly brought before such meeting. To be properly brought before an annual meeting business must be (i)brought by or at the direction of the Board or (ii) brought before the meetingby a shareholder by inclusion in the Corporation’s proxy statement pursuant tothe provisions of Rule 14a-8 under Section 14 of the Securities Exchange Act of1934, as amended, or any successor provision, when and if such Rule isapplicable thereto, or if such business is not so included in the Corporation’sproxy statement, only pursuant to written notice thereof in accordance withsubsection 1.12 hereof, and received by the Secretary not fewer than 60 normore than 90 days prior to the date of such annual meeting (or, if less than 60days’ notice or prior public disclosure of the date of the annual meeting isgiven or made to the shareholders, not later than the close of business on thetenth business day following the day on which such notice of the date of theannual meeting was mailed or such public disclosure was made, whichever firstoccurs).

 

(b)           Any such shareholder notice shall set forth (i) the name and address ofthe shareholder proposing such business; (ii) a representation that theshareholder is entitled to vote at such meeting; (iii) a statement of thenumber of shares of the Corporation which are beneficially owned by theshareholder and the date upon which such shares were acquired; (iv) arepresentation that the shareholder intends to appear in person or by proxy atthe meeting to propose such business; and (v) as to each matter the shareholderproposes to bring before the meeting, a brief description of the businessdesired to be brought before the meeting, the reasons for conducting suchbusiness at the meeting, the language of the proposal (if appropriate), and anymaterial interest of the shareholder in such business.

 

(c)           No business shall be conducted at any annual meeting of shareholdersexcept in accordance with this subsection 1.11.1.  If the facts warrant, the Board, or the chairman of an annualmeeting of shareholders, may determine and declare that (i) a proposal does notconstitute proper business to be transacted at the

 

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meeting or (ii) the business was not properly brought before themeeting in accordance with the provisions of this subsection 1.11.1 and, if, ineither case, it is so determined, any such business shall not be transacted.

 

1.11.2      Businessat Special Meetings.  At any special meeting of the shareholders,only business within the purpose or purposes described in the meeting noticerequired by Section 1.3 may be conducted.

 

1.12         Notice to Corporation.  Anywritten notice required to be delivered by a shareholder to the Corporationpursuant to Section 1.2 or Section 1.11 hereof must be given, either bypersonal delivery or by registered or certified mail, postage prepaid, to theSecretary at the Corporation’s principal office.

 

SECTION 2

 

BOARD OF DIRECTORS

 

2.1           Number and Qualification.  Thebusiness affairs and property of the Corporation shall be managed under thedirection of a Board of Directors, the number of members of which shall be nofewer than 3 and no more than 10, as established from time to time by the Boardof Directors.  The Board of Directorsmay increase or decrease this number or this range by resolution.  A member of the Board of Directors does notneed to be a shareholder of the Corporation or a Washington resident.

 

2.2           Election—Terms of Office.

 

2.2.1        Thedirectors shall be elected by the shareholders at each annual shareholders’meeting or at a special shareholders’ meeting called for such purpose.

 

2.2.2        The Boardof Directors shall be divided into three classes if the authorized number ofdirectors is four or more, with said classes to be as equal in number as may bepossible.  Any director or directors inexcess of the number divisible by three shall be first assigned to Class 1 andany additional director shall be assigned to Class 2, as the case may be.  (For example, if there are five directors,the fourth director shall be in Class 1 and the fifth director in Class2.)  At the first election of directorsto such classified Board of Directors, each Class 1 Director shall be electedto serve until the next ensuing annual meeting of shareholders, each Class 2Director shall be elected to serve until the second ensuing annual meeting ofshareholders and each Class 3 Director, shall be elected to serve until thethird ensuing annual meeting of shareholders. At each annual meeting of shareholders following the meeting at whichthe Board of Directors is initially classified, the number of directors equalto the number of directors in the class whose term expires at the time of suchmeeting shall be elected to serve until the third ensuing annual meeting.Notwithstanding any of the foregoing provisions of this Section 2, directorsshall serve until their successors are elected and qualified or until theirearlier death, resignation or removal from office, or until there is

 

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a decrease in the number of directors; provided, however, that nodecrease in the number of directors shall have the effect of shortening the termof any incumbent director.

 

2.2.3        The term ofoffice of a director shall commence effective immediately upon election, unlessotherwise specified in a resolution approved by the shareholders in connectionwith the election of such director. Directors shall serve until their successors are elected and qualifiedor until their earlier death, resignation or removal from office, or untilthere is a decrease in the authorized number of directors; provided, however,that no decrease in the number of directors shall have the effect of shorteningthe term of any incumbent director.

 

2.3           Nominations.

 

2.3.1        Onlypersons who are nominated in accordance with the following procedures shall beeligible for election as directors. Nominations for the election of directors may be made (a) by or at thedirection of the Board or (b) by any shareholder of record entitled to vote forthe election of directors at such meeting; provided, however, that ashareholder may nominate persons for election as directors only if writtennotice (in accordance with Section 1.12 hereof) of such shareholder’s intentionto make such nominations is received by the Secretary not later than (i) withrespect to an election to be held at an annual meeting of the shareholders, notfewer than 60 nor more than 90 days prior to the date of such annual meeting(or, if less than 60 days’ notice or prior public disclosure of the date of theannual meeting is given or made to the shareholders, not later than the closeof business on the tenth business day following the day on which such notice ofthe date of the annual meeting was mailed or such public disclosure was made,whichever first occurs) and (ii) with respect to an election  to be held at a special meeting of theshareholders for the election of directors, the close of business on the tenthbusiness day following the date on which notice of such meeting is first mailedto shareholders.

 

2.3.2        Any suchshareholder’s notice shall set forth (a) the name and address of theshareholder who intends to make a nomination; (b) a representation that theshareholder is entitled to vote at such meeting; (c) a statement of the numberof shares of the Corporation which are beneficially owned by the shareholderand the dates upon which such shares were acquired; (d) a representation thatthe shareholder intends to appear in person or by proxy at the meeting tonominate the person or persons specified in the notice; (e) as to each personthe shareholder proposes to nominate for election or reelection as a director,the name and address of such person and such other information regarding suchnominee as would be required in a proxy statement filed pursuant to the proxyrules of the Securities and Exchanges Commission had such nominee beennominated by the Board, and a description of any arrangements or understandingsbetween the shareholder and such nominee and any other persons (including theirnames) pursuant to which the nomination is to be made; and (f) the consent ofeach such nominee to serve as a director if elected.

 

2.3.3        If thefacts warrant, the Board, or the chairman of a shareholders’ meeting at whichdirectors are to be elected, shall determine and declare that a nomination wasnot made in

 

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accordance with the foregoing procedure and, if it is so determined,the defective nomination shall be disregarded. The right of shareholders to make nominations pursuant to the foregoingprocedure is subject to the rights of the holders of any class or series ofstock having a preference over the Common Stock as to dividends or uponliquidation.  The procedures set forthin this Section 2.3 for nomination for the election of directors byshareholders are in addition to, and not in limitation of, any procedures nowin effect or hereafter adopted by or at the direction of the Board or anycommittee thereof.

 

2.4           Removal.

 

2.4.1        Anydirector or the entire Board may be removed for cause by the holders of notless than two-thirds of the shares entitled to elect the director or directorswhose removal is sought.  Such actionmay only be taken at a special meeting of the shareholders called expressly forthat purpose, provided that notice of the proposed removal, which shall includea statement of the charges alleged against the director, shall have been dulygiven to the shareholders together with or as a part of the notice of themeeting.

 

2.4.2        The vacancycreated by the removal of a director under this Section 2.4. shall be filledonly by a vote of the holders of two-thirds of the shares then entitled toelect the director removed.  Such votemay be taken at the same meeting at which the removal of such director wasaccomplished, or at such later meeting, annual or special, as the shareholdersmay decide.

 

2.5           Vacancies.  Subject to the provisions ofSection 2.4 hereof and unless the Articles of Incorporation provide otherwise,vacancies in the Board of Directors, whether caused by resignation, death,retirement, disqualification, increase in the number of directors, or otherwise,may be filled for the remainder of the term by the Board of Directors only or,if the directors in office constitute less than a quorum of the Board ofDirectors, by an affirmative vote of a majority of the remaining directors,unless there are no directors remaining in which case the vacancies shall befilled by the shareholders.  The term ofa director elected to fill a vacancy expires at the next shareholders’ meetingat which the term of the directors in such class expires.  A vacancy that will occur at a specificlater date may be filled before the vacancy occurs, but the new director maynot take office until the vacancy occurs.

 

2.6           Quorum and Voting.  At anymeeting of the Board of Directors, the presence in person (including presenceby electronic means such as a telephone conference call) of 50% of the numberof directors presently in office shall constitute a quorum for the transactionof business.  Notwithstanding theforegoing, in no case shall a quorum be less than one-third of the authorizednumber of directors.  If a quorum  is present at the time of a vote, theaffirmative vote of a majority of the directors present at the time of the voteshall be the act of the Board of Directors and of the Corporation except as maybe otherwise specifically provided by the Articles of Incorporation, by theseBylaws, or by law.  A director who ispresent at a meeting of the Board of Directors when action is taken is deemedto have assented to the action taken unless: (a) the director objects at thebeginning of the meeting, or promptly upon his or her arrival, to holding it orto transacting business at the meeting; (b) the director’s dissent orabstention from the action taken is entered in the minutes

 

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of themeeting; or (c) the director delivers written notice of his or her dissent orabstention to the presiding officer of the meeting before its adjournment or tothe Corporation within a reasonable time after adjournment of the meeting.  The right of dissent or abstention is notavailable to a director who votes in favor of the action taken.

 

2.7           Regular Meetings.  Regularmeetings of the Board of Directors shall be held at such place, date and timeas shall from time to time be fixed by resolution of the Board.

 

2.8           Special Meetings.  SpecialMeetings of the Board of Directors may be held at any place and at any time andmay be called by the President, Vice President, Secretary or Treasurer, or anytwo or more directors.

 

2.9           Notice of Meeting.

 

2.9.1        Unless theArticles of Incorporation provide otherwise, any regular meeting of the Boardof Directors may be held without notice of the date, time, place, or purpose ofthe meeting.  Any special meeting of theBoard of Directors must be preceded by at least two days’ notice of the date,time, and place of the meeting, but not of its purpose, unless the Articles ofIncorporation or these Bylaws require otherwise.  Each director shall have a mailing address, telephone number andfacsimile number on record with the Corporation for purposes of receivingnotice.

 

2.9.2        Notice maybe given personally, by facsimile, by mail, or in any other manner allowed bylaw.  Oral notice shall be sufficientonly if a written record of such notice is included in the Corporation’s minutebook.  Notice shall be deemed effectiveat the earliest of: (a) receipt; (b) delivery to the proper address ortelephone number of the director as shown in the Corporation’s records: or (c)three days after its deposit in the United States mail, as evidenced by thepostmark, if correctly addressed and mailed with first-class postage prepaid.

 

2.9.3        Notice ofany meeting of the Board of Directors may be waived by any director at anytime, by a signed writing, delivered to the Corporation for inclusion in theminutes, either before or after the meeting. Attendance or participation by a director at a meeting shall constitutea waiver of any required  notice ofmeeting unless the director promptly objects to holding the meeting or to thetransaction of any business on the grounds that the meeting was not lawfullyconvened and the director does not thereafter vote for or assent to actiontaken at the meeting.

 

2.10         Directors’ Action Without A Meeting.  TheBoard of Directors or a committee thereof may take any action without a meetingthat it could properly take at a meeting if one or more written consentssetting forth the action are signed by all of the directors, or all of themembers of the committee, as the case may be, either before or after the actionis taken, and if the consents are delivered to the Corporation for inclusion inthe minutes or filing with the corporate records.  Such action shall be effective upon the signing of a consent bythe last director to sign, unless the consent specifies a later effective date.

 

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2.11         Committees of the Board of Directors.  TheBoard of Directors, by resolutions adopted by a majority of the members of theBoard of Directors in office, may create from among its members one or morecommittees and shall appoint the members thereof.  Each such committee must have two or more members, who shall bedirectors and who shall serve at the pleasure of the Board of Directors.  Each committee of the Board of Directors mayexercise the authority of the Board of Directors to the extent provided in itsenabling resolution and any pertinent subsequent resolutions adopted in likemanner, provided that the authority of each such committee shall be subject toapplicable law.  Each committee of theBoard of Directors shall keep regular minutes of its proceedings and shallreport to the Board of Directors when requested to do so.

 

2.12         Telephone Meetings.  Membersof the Board of Directors or of any committee appointed by the Board ofDirectors may participate in a meeting of the Board of Directors or committeeby means of a conference telephone or similar communications equipment thatenables all persons participating in the meeting to hear each other during themeeting.  Participation by such meansshall constitute presence in person at a meeting.

 

2.13         Compensation of Directors.  TheBoard of Directors may fix the compensation of directors as such and mayauthorize the reimbursement of their expenses.

 

SECTION 3

 

OFFICERS

 

3.1           OfficersEnumerated—Appointment.  The officers of the Corporation shallconsist of such officers and assistant officers as may be designated byresolution of the Board of Directors. The officers may include a Chairman of the Board, a President, one ormore Vice Presidents, a Secretary, a Treasurer, and any assistantofficers.  The officers shall holdoffice at the pleasure of the Board of Directors.  Unless otherwise restricted by the Board of Directors, thePresident may appoint any assistant officer, the Secretary may appoint one ormore Assistant Secretaries, and the Treasurer may appoint one or more AssistantTreasurers; provided that any such appointments shall be recorded in writing inthe corporate records.

 

3.2           Qualifications.  None of the officers of theCorporation needs to be a director.  Anytwo or more corporate offices may be held by the same person.

 

3.3           Duties of the Officers.  Unlessotherwise prescribed by the Board of Directors, the duties of the officersshall be as follows:

 

3.3.1        Chairmanof the Board.  The Chairman of the Board, if one iselected, shall preside at meetings of the Board of Directors and of theshareholders, shall be responsible for carrying out the plans and directives ofthe Board of Directors, shall report to and consult with the Board of Directorsand, if the Board so resolves, shall have such other powers and duties as theBoard of Directors may from time to time prescribe.

 

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3.3.2        President.  ThePresident shall exercise the usual executive powers pertaining to the office ofPresident.  In the absence of a Chairmanof the Board, the President shall preside at meetings of the Board of Directorsand of the shareholders, perform the other duties of the Chairman of the Boardprescribed in this section, and perform such other duties as the Board ofDirectors may from time to time designate. In addition, if there is no Secretary in office, the President shallperform the duties of the Secretary.

 

3.3.3        VicePresident.  Each Vice President shall perform suchduties as the Board of Directors may from time to time designate.  In addition, in the absence or disability ofthe President, the Vice President (or if there is more than one Vice President,then in the order designated by the Board of Directors) shall perform theduties of the President, and when so acting, shall have all the powers of andbe subject to all restrictions upon the President.

 

3.3.4        Secretary.  TheSecretary shall be responsible for and shall keep, personally or with theassistance of others, records of the proceedings of the directors andshareholders; authenticate records of the Corporation; attest all certificatesof stock in the name of the Corporation; keep the corporate seal, if any, andaffix the same to certificates of stock and other proper documents; keep arecord of the issuance of certificates of stock and the transfers of the same;and perform such other duties as the Board of Directors may from time to timedesignate.

 

3.3.5        Treasurer.  TheTreasurer shall have the care and custody of, and be responsible for, all fundsand securities of the Corporation and shall cause to be kept regular books ofaccount.  The Treasurer shall cause tobe deposited all funds and other valuable effects in the name of theCorporation in such depositories as may be designated by the Board ofDirectors.  In general, the Treasurershall perform all of the duties incident to the office of Treasurer, and suchother duties as from time to time may be assigned by the Board of Directors.

 

3.3.6        AssistantOfficers.  Assistant officers may consist of one ormore Vice Presidents, one or more Assistant Secretaries, one or more AssistantTreasurers and such other titles as may be designated from time to time.  Each assistant officer shall perform thoseduties assigned to him or her from time to time by the Board of Directors, thePresident, or the officer who appointed him or her.

 

3.4           Vacancies.  Vacancies in any officearising from any cause may be filled by the Board of Directors at any regularor special meeting.

 

3.5           Removal.  Any officer or agent may beremoved by action of the Board of Directors with or without cause, but anyremoval shall be without prejudice to the contract rights, if any, of theperson removed.  Election or appointmentof an officer or agent shall not itself create any contract rights.

 

3.6           Compensation.  The compensation of allofficers of the Corporation shall be fixed by the Board of Directors.

 

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SECTION 4

 

SHARES AND CERTIFICATES OF SHARES

 

4.1           Share Certificates.  Sharecertificates shall be issued in numerical order, and each shareholder shall beentitled to a certificate signed by the Chairman of the Board, President or aVice President, and signed by the Secretary or an Assistant Secretary.  Share certificates may be sealed with thecorporate seal, if any.  Facsimiles ofthe signatures and seal may be used as permitted by law.  Every share certificate shall state:

 

(a)           the nameof the Corporation;

 

(b)           that theCorporation is organized under the laws of the State of Washington;

 

(c)           the nameof the person to whom the share certificate is issued;

 

(d)           thenumber, class and series (if any) of shares that the certificate represents;and

 

(e)           if theCorporation is authorized to issue shares of more than one class or series,that upon written request and without charge, the Corporation will furnish anyshareholder with a full statement of the designations, preferences, limitationsand relative rights of the shares of each class or series, and the authority ofthe Board of Directors to determine variations for future series.

 

4.2           Consideration for Shares.  Sharesof the Corporation may be issued for such consideration as shall be determinedby the Board of Directors to be adequate. The consideration for the issuance of shares may be paid in whole or inpart in cash, or in any tangible or intangible property or benefit to theCorporation, including but not limited to promissory notes, service performed,contracts for services to be performed, or other securities of theCorporation.  Establishment by the Boardof Directors of the amount of consideration received or to be received forshares of the Corporation shall be deemed to be a determination that theconsideration so established is adequate.

 

4.3           Transfers.  Shares may be transferred bydelivery of the certificate, accompanied either by an assignment in writing onthe back of the certificate, or by a written power of attorney to sell, assignand transfer the same, signed by the record holder of the certificate.  Except as otherwise specifically provided inthese Bylaws, no shares of stock shall be transferred on the books of theCorporation until the outstanding certificate thereof has been surrendered tothe Corporation.

 

4.4           Loss or Destruction of Certificates.  In theevent of the loss or destruction of any certificate, a new certificate may beissued in lieu thereof upon satisfactory proof of such loss or destruction,

 

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and uponthe giving of security against loss to the Corporation by bond, indemnity orotherwise, to the extent deemed necessary by the Board of Directors, theSecretary, or the Treasurer.

 

4.5           Fixing Record Date.  TheBoard of Directors may fix in advance a date as the record date for determiningshareholders entitled: (a) to notice of or to vote at any shareholders’ meetingor any adjournment thereof; (b) to receive payment of any share dividend; or(c) to receive payment of any distribution. The Board of Directors may in addition fix record dates with respect toany allotment or rights of conversion or exchange of any securities by theirterms, or for any other proper purpose, as determined by the Board of Directorsand by law.  The record date shall benot more than 70 days and, in case of a meeting of shareholders, not less than10 days (or such longer period as may be required by Washington law) prior tothe date on which the particular action requiring determination of shareholdersis to be taken.  If no record date isfixed for determining the shareholders entitled to notice of or to vote at ameeting of shareholders, the record date shall be the date before the day onwhich notice of the meeting is mailed. If no record date is fixed for the determination of shareholdersentitled to a distribution (other than one involving a purchase, redemption, orother acquisition of the Corporation’s own shares), the record date shall bethe date on which the Board adopted the resolution declaring the distribution.  If no record date is fixed for determiningshareholders entitled to a share dividend, the record date shall be the date onwhich the Board of Directors authorized the dividend.

 

SECTION 5

 

BOOKS, RECORDS AND RECORDS

 

5.1           Records of Corporate Meetings, Accounting Recordsand Share Registers.

 

5.1.1        TheCorporation shall keep, as permanent records, minutes of all meetings of theBoard of Directors and shareholders, and all actions taken without a meeting,and all actions taken by a committee exercising the authority of the Board ofDirectors.  The Corporation or itsagents shall maintain, in a form that permits preparation of a list, a list ofthe names and addresses of its shareholders, in alphabetical order by class ofshares, showing the number, class, and series, if any, of shares held by each.

 

5.1.2        TheCorporation shall also maintain appropriate accounting records, and at itsprincipal place of business shall keep copies of: (a) its Articles ofIncorporation or restated Articles of Incorporation and all amendments ineffect; (b) its Bylaws or restated Bylaws and all amendments in effect; (c)minutes of all shareholders’ meetings and records of all actions taken withoutmeetings for the past three years; (d) the year-end balance sheets and incomestatements for the past three fiscal years, prepared as required by Washingtonlaw; (e) all written communications to shareholders generally in the past threeyears; (f) a list of the names and business addresses of its current officersand directors; and (g) its most recent annual report to the Secretary of State.

 

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5.2           Copies of Corporate Records.  Anyperson dealing with the Corporation may rely upon a copy of any of the recordsof the proceedings, resolutions, or votes of the Board of Directors orshareholders, when certified by the President, Vice President, Secretary orAssistant Secretary.

 

5.3           Examination of Records.

 

5.3.1        Ashareholder shall have the right to inspect and copy, during regular businesshours at the principal office of the Corporation, in person or by his or herattorney or agent, the corporate records referred to in subsection 5.1.2 hereofif the shareholder gives the Corporation written notice of the demand at leastfive business days before the date on which the shareholder wishes to make suchinspection.

 

5.3.2        Inaddition, if a shareholder’s demand is made in good faith and for a properpurpose, a shareholder may inspect and copy, during regular business hours at areasonable location specified by the Corporation, excerpts from minutes of anymeeting of the Board of Directors, records of any action of a committee of theBoard of Directors, minutes of any meeting of the shareholders, and records ofactions taken by the shareholders or the Board of Directors without a meeting,to the extent not subject to inspection under subsection 5.3.1, accountingrecords of the Corporation, or the record of shareholders; provided that theshareholder shall have made a demand describing with reasonable particularitythe shareholder’s purpose and the records the shareholder desires to inspect,and provided further that the records are directly connected to theshareholder’s purpose.

 

5.3.3        Thissection shall not affect any right of shareholders to inspect records of theCorporation that may be otherwise granted to the shareholders by law.

 

5.4           Financial Statements.  Notlater than four months after the end of each fiscal year, or in any event priorto its annual meeting of shareholders, the Corporation shall prepare a balancesheet and income statement in accordance with Washington law.  The Corporation shall furnish a copy of eachto any shareholder upon written request.

 

SECTION 6

 

FISCAL YEAR

 

Thefiscal year-end of the Corporation shall be December 31.

 

SECTION 7

 

CORPORATE SEAL

 

Thecorporate seal of the Corporation, if any, shall be in the form shown here.

 

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SECTION 8

 

MISCELLANEOUS PROCEDURAL PROVISIONS

 

The Boardof Directors may adopt rules of procedure to govern any meetings ofshareholders or directors to the extent not inconsistent with law, the Articlesof Incorporation, or these Bylaws, as they are in effect from time totime.  In the absence of any rules ofprocedure adopted by the Board of Directors, the chairman of the meeting shallmake all decisions regarding the procedures for any meeting.

 

SECTION 9

 

AMENDMENT OF BYLAWS

 

The Board of Directors is expressly authorized to adopt, amend andrepeal the Bylaws of the Corporation, subject to approval by a majority of theContinuing Directors (as defined in the Articles of Incorporation); provided,however, the Board of Directors may not repeal or amend any bylaws that theshareholders have expressly provided may not be amended or repealed by theBoard of Directors.  The shareholders ofthe Corporation also have the power to adopt, amend or repeal the Bylaws of theCorporation by the affirmative vote of the holders of not less than two-thirdsof the outstanding shares and, to the extent, if any, provided by resolutionadopted by the Board of Directors authorizing the issuance of a class or seriesof Preferred Stock, by the affirmative vote of the holders of not less thantwo-thirds of the outstanding shares of Common Stock and/or of such class orseries of Preferred Stock, voting  asseparate voting groups.

 

SECTION 10

 

INDEMNIFICATION OF DIRECTORS AND OTHERS

 

10.1         Definitions.   As used in this Section:

 

(a)           “Advancement ofExpenses” means a payment of Expenses incurred by an Indemnitee in advance ofthe final disposition of a Proceeding, which payment was authorized pursuant tothe provisions of Section 10.5(c).

 

(b)           “Agent” means anindividual who is or was an agent of the Corporation, or an individual who,while an Agent, is or was serving at the Corporation’s request as a director,officer, partner, trustee, employee, or agent of another foreign or domesticcorporation, limited liability company, limited partnership, partnership, jointventure, trust, employee benefit plan, or other enterprise.  “Agent” includes, unless the contextrequires otherwise, the spouse, heirs, estate and personal representative of anAgent.

 

(c)           “Corporation” means theCorporation, and any domestic or foreign predecessor entity which, in a mergeror other transaction, ceased to exist.

 

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(d)           “Defense Notice” hasthe meaning set forth in Section 10.5(a).

 

(e)           “Director” means anindividual who is or was a director of the Corporation, or an individual who,while a Director, is or was serving at the Corporation’s request as a director,officer, partner, trustee, employee, or agent of another foreign or domesticcorporation, limited liability company, limited partnership, partnership, jointventure, trust, employee benefit plan or other enterprise.  “Director” includes, unless the contextrequires otherwise, the spouse, heirs, estate and personal representative of aDirector.

 

(f)            “DisinterestedDirector” means a Director of the Corporation who is not, or was not, a Partyto any Proceeding in respect of which indemnification is being sought by anIndemnitee.

 

(g)           “Employee” means anindividual who is or was an employee of the Corporation, or an individual who,while an Employee, is or was serving at the Corporation’s request as adirector, officer, partner, trustee, employee, or agent of another foreign ordomestic corporation, limited liability company, limited partnership,partnership, joint venture, trust, employee benefit plan, or other enterprise.  “Employee” includes, unless the contextrequires otherwise, the spouse, heirs, estate and personal representative of anEmployee.

 

(h)           “Expenses” means all reasonable attorneys’ fees, retainers, courtcosts, transcript costs, fees of experts, travel expenses, duplicating costs,printing and binding costs, telephone charges, postage, delivery service fees,and all other disbursements or expenses of the types customarily incurred inconnection with prosecuting, defending, preparing to prosecute or defend orinvestigating a Proceeding, and any attorneys fees and other expensesreasonably incurred by the Indemnitee in enforcing the Indemnitee’s rightshereunder, but shall not include the amount of judgments, fines or penaltiesagainst the Indemnitee.  The term“Expenses” specifically includes any of the above-listed Expenses which areincurred by an Indemnitee who employs personal counsel in connection with thefollowing (collectively, “Insurance Coverage Expenses”):

 

(i)            thedetermination or adjudication of insurance coverage issues under any policy ofinsurance which may provide coverage for the matters which are the subject of agiven Proceeding for which indemnification is sought, including, but notlimited to, Expenses incurred in a separate action (such as a declaratory judgmentaction) brought for such purpose if the Corporation does not elect to bringsuch an action; or,

 

(ii)           the useof personal counsel to protect an Indemnitee’s insurable interests in aProceeding where insurance coverage is provided by an insurer who has issued awritten reservation of rights which makes final insurance coverage dependentupon factual or legal determinations to be made in the course of suchProceeding, but only to the extent of reasonable Expenses incurred by theIndemnitee in connection with the insurance coverage matters at issue.

 

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(i)            “IndemnificationStatement” shall have the meaning set forth in Section 10.5(b).

 

(j)            “Indemnitee” means anindividual made a Party to a Proceeding because the individual is or was aDirector, Officer, Employee, or Agent, and who possesses indemnification rightspursuant to these Bylaws or other corporate action.  “Indemnitee” includes, unless the context requires otherwise, thespouse, heirs, estate, and personal representative of such individuals.

 

(k)           “Insurance CoverageExpense” has the meaning set forth in Section 10.1(h).

 

(l)            “Liability” means theobligation to pay a judgment, loss, settlement, penalty, or fine, including anexcise tax with respect to an employee benefit plan, and reasonable Expensesincurred with respect to a Proceeding.

 

(m)          “Officer” means anindividual who is or was an officer of the Corporation (regardless of whetheror not such individual was also a Director), or an individual who, while anOfficer, is or was serving at the Corporation’s request as a director, officer,partner, trustee, employee, or agent of another foreign or domesticcorporation, limited liability company, limited partnership, partnership, jointventure, trust, employee benefit plan, or other enterprise.  “Officer” includes, unless the contextrequires otherwise, the spouse, heirs, estate and personal representative of anOfficer.

 

(n)           “Party” includes anindividual who was, is, or is threatened to be named a defendant, respondent orwitness in a Proceeding.

 

(o)           “Proceeding” means anythreatened, pending, or completed action, suit, arbitration, or proceeding,whether civil, derivative, criminal, administrative, or investigative, andwhether formal or informal.

 

(p)           “Special Counsel” means a law firm, or a member of a law firm, thatis experienced in matters of corporation law and neither presently is, nor inthe past five years has been, retained to represent the Corporation orIndemnitee in any matter material to either party.  Notwithstanding the foregoing, the term “Special Counsel” shallnot include any person who, under the applicable standards of professionalconduct then prevailing, would have a conflict of interest in representingeither the Corporation or Indemnitee in a Proceeding to determine anIndemnitee’s rights under this Section.

 

10.2         Indemnification Rightsof Directors and Officers.   TheCorporation shall  indemnify itsDirectors and Officers to the full extent allowed by applicable law, whether nowor hereafter in force, against Liability arising out of a Proceeding to whichsuch Director or Officer is a Party because he or she is, or was, a Director oran Officer and may make an Advancement of Expenses in connection therewith.  However, such indemnity shall not apply onaccount of:

 

(a)           Acts or omissions of aDirector or Officer finally adjudged to be intentional misconduct or a knowingviolation of law;

 

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(b)           Conduct of a Directoror Officer finally adjudged to be in violation of Section 23B.08.310 of the Actrelating to distributions by the Corporation; or,

 

(c)           Any transaction withrespect to which it is finally adjudged that such Director or Officerpersonally received a benefit in money, property, or services to which theDirector or Officer was not legally entitled.

 

Subject to the foregoing, it isspecifically intended that Proceedings covered by indemnification shall includeProceedings brought by the Corporation (including derivative actions),Proceedings brought by governmental entities and officials, or other thirdparty actions.

 

10.3         Indemnification ofEmployees and Agents of the Corporation. The Corporation may, by action of its Board of Directors from time totime, indemnify its Employees or Agents against Liability and make anAdvancement of Expenses in the same manner and to the same extent as it wouldon behalf of a Director or Officer (or to such lesser extent as may bedetermined by the Board of Directors in any individual circumstance).  No Employee or Agent shall have anycontractual right to indemnification or to an Advancement of Expenses untilsuch time, if any, as the Board of Directors has determined that suchindemnification is appropriate.  In theevent of any discrepancy between the provisions of this Section and a specificagreement of indemnification entered into between an Employee or Agent and theCorporation, the specific agreement shall control and establish the respectiverights and liabilities of the parties; provided, however, that no specificagreement may provide indemnification rights or rights to an Advancement ofExpenses beyond those granted by this Section.

 

10.4         PartialIndemnification.   If an Indemniteeis entitled to  indemnification by theCorporation for some or a portion of Expenses or Liabilities actually andreasonably incurred by the Indemnitee in an investigation, defense, appeal orsettlement of a Proceeding but not, however, for the total amount thereof, theCorporation shall nevertheless indemnify Indemnitee for the portion of suchExpenses or Liabilities to which Indemnitee is entitled.

 

10.5         Procedure for SeekingIndemnification and/or Advancement of Expenses.   The following procedures shall apply in the absence of specificprocedures otherwise applicable to an Indemnitee pursuant to a contract, trustagreement, or general or specific action of the Board of Directors:

 

(a)           Notification andDefense of Claim.   Indemnitee shallpromptly notify the Corporation in writing of any Proceeding for whichindemnification could be sought under this Section.  In addition, Indemnitee shall give the Corporation suchinformation and cooperation as the Corporation may reasonably require and asshall be within Indemnitee’s power.

 

With respectto any such Proceeding as to which Indemnitee has notified the Corporation:

 

(i)            The Corporation willbe entitled to participate therein at its own expense;

 

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and,

 

(ii)           Except as otherwiseprovided below, to the extent that it may wish, the Corporation, jointly withany other indemnifying party similarly notified, will be entitled to assume thedefense thereof, with counsel satisfactory to Indemnitee.  Indemnitee’s consent to such counsel may notbe unreasonably withheld.

 

Followingnotice from the Corporation to Indemnitee of the Corporation’s election toassume the defense of a Proceeding (“Defense Notice”), the Corporation will notbe liable to Indemnitee under this Section for any legal or other Expensessubsequently incurred by Indemnitee in connection with such defense; provided,that Indemnitee shall continue to have the right to employ personal counsel insuch Proceeding at Indemnitee’s sole expense. Notwithstanding the foregoing, anIndemnitee shall continue to be indemnified against legal and other Expensesfollowing the giving of a Defense Notice, if:

 

(i)            The employment ofcounsel by Indemnitee for the period following the giving of the Defense Noticewas authorized by the Corporation;

 

(ii)           Indemnitee shall havereasonably concluded that there may be a conflict of interest between theCorporation and Indemnitee in the conduct of such defense;

 

(iii)          Indemnitee incursInsurance Coverage Expenses following the giving of the Defense Notice, but insuch case indemnification shall only be to the extent of the Insurance CoverageExpenses;

 

(iv)          The Corporation shallnot in fact have employed counsel to assume the defense of such Proceeding.

 

Notwithstandingthe foregoing, the Corporation shall not be entitled to assume the defense ofany Proceeding (1) brought by or on behalf of the Corporation, or (2) as towhich Indemnitee shall reasonably have made the conclusion that a conflict ofinterest may exist between the Corporation and the Indemnitee in the conduct ofthe defense.

 

(b)           Information to beSubmitted and Method of Determination and Authorization of Indemnification.   For the purpose of pursuing rights toindemnification under this Section, the Indemnitee shall submit to the Board asigned statement requesting indemnification and reasonable evidence required bythe Board of all amounts for which such indemnification is requested (together,the sworn statement and the evidence constitute an “IndemnificationStatement”).

 

Submission ofan Indemnification Statement to the Board shall create a presumption that theIndemnitee is entitled to indemnification hereunder. The Corporation shall,within sixty (60) calendar days following the date of its receipt of a fullycompleted Indemnification Statement, make the payments requested in theIndemnification

 

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Statement toor for the benefit of the Indemnitee, unless within such sixty (60) calendarday period, (i) the Corporation shall determine that the Indemnitee is notentitled to indemnification under this Section; (ii) which determination isbased upon clear and convincing evidence (sufficient to rebut the foregoingpresumption); and, (iii) the Indemnitee shall have received notice in writingof such determination, which notice shall disclose with particularity theevidence upon which the Corporation’s determination is based.

 

The foregoingdetermination of non-indemnification may be made at the election of the Board:(1) by the Board of Directors by majority vote of a quorum of the Boardconsisting of the Disinterested Directors; (2) if a quorum cannot be obtained,by majority vote of a committee duly designated by the Board of Directors (inwhich designation the Directors who are Parties may participate) consistingsolely of two (2) or more Disinterested Directors; (3) by Special Counsel; or(4) by the shareholders as provided by Section 23B.08.550 of the Act.

 

In the event the determination of entitlement to indemnification is tobe made by Special Counsel, the Special Counsel shall be selected asfollows:  Special Counsel shall beselected by the Indemnitee (unless Indemnitee shall request that such selectionbe made by the Board of Directors, in which event the Special Counsel shall beselected by the Board of Directors).  Ineither event, the party making the selection shall give written notice to theother advising of the identity of the Special Counsel so selected, and thenon-selecting party may, within seven (7) days after such written notice ofselection shall have been given, deliver to the selecting party a writtenobjection to such selection.  Suchobjection may be asserted only on the ground that the Special Counsel soselected does not meet the requirements of “Special Counsel” as defined inSection 10.1(p), and the objection shall set forth with particularity thefactual basis of such assertion.  Ifsuch written objection is made, the Special Counsel so selected may not serveas Special Counsel unless and until a court has determined that such objectionis without merit. If, within twenty (20) days after submission by theIndemnitee of a written request for indemnification, no Special Counsel shallhave been selected or, if selected, shall have been objected to in accordancewith this paragraph, either the Corporation or the Indemnitee may petition acourt of competent jurisdiction for resolution of any such objection and/or forthe appointment as Special Counsel of a person selected by the Court, and theperson with respect to whom an objection is favorably resolved or the person soappointed shall act as Special Counsel.

 

Anydetermination that the Indemnitee is not entitled to indemnification, and anyfailure to make the payments requested in the Indemnification Statement, shallbe subject to judicial review by a court of competent jurisdiction.  The prevailing party in such judicial reviewshall be entitled to recover the reasonable Expenses incurred therein.

 

(c)           Special ProcedureRegarding Advancement of Expenses.  An Indemnitee seeking an Advancement of Expenses must furnish to theCorporation, as part of the Indemnification Statement:

 

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(i)            A written affirmationof the potential Indemnitee’s belief that he or she acted in good faith and (A)if the Proceeding involves conduct in the potential Indemnitee’s officialcapacity with the Corporation, that he or she acted in a manner which he or shereasonably believed to be in the best interests of the Corporation, or (B) inall other cases, that the potential Indemnitee’s conduct was at least notopposed to the best interests of the Corporation.  In addition to the matters in the first sentence of thissubsection (c)(i), with respect to any criminal Proceeding, the potential Indemniteemust submit a further written affirmation that he or she had no reasonablecause to believe that his or her conduct was unlawful;  and,

 

(ii)           A written undertaking,constituting an unlimited general obligation of the Indemnitee, to repay theadvance if it is ultimately determined that the Indemnitee did not meet therequired standard of conduct.  Inaccepting such an undertaking, the Corporation need not require security andmay do so without reference to financial ability to make repayment.

 

Uponsatisfaction of the foregoing, the Indemnitee shall have a contractual right tothe payment of such Expenses in advance of the final adjudication of theProceeding to which such Expenses relate.

 

(d)           Settlement.   The Corporation is not liable to indemnifyIndemnitee for any amounts paid in settlement of any Proceeding without theCorporation’s prior written consent. The Corporation shall not settle any Proceeding in any manner whichwould impose any penalty or limitation on Indemnitee without Indemnitee’s priorwritten consent.  Neither the Corporationnor Indemnitee may unreasonably withhold any consent contemplated by thisSection.

 

10.6         Contract and relatedrights.

 

(a)           Contract Rights.   The right of an Indemnitee toindemnification and an Advancement of Expenses is a contract right upon whichthe Indemnitee shall be presumed to have relied in determining to serve or tocontinue to serve in his or her capacity with the Corporation; provided, thatas to an Employee or Agent, this right does not arise until such time, if ever,as the Board of Directors elects to grant indemnification pursuant to Section10.3, and then only to the extent of such grant.  Such right shall continue as long as the Indemnitee shall besubject to any possible Proceeding.  Anyamendment to or repeal of this Section shall not adversely affect any right orprotection of an Indemnitee with respect to any acts or omissions of suchIndemnitee which relate to the Proceeding in question and which occur prior tosuch amendment or repeal.

 

(b)           Optional Insurance,Contracts, and Funding.   TheCorporation may:

 

(i)            Maintain insurance, atits expense, to protect itself and any Indemnitee against any Liability,whether or not the Corporation would have power to

 

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indemnify theindividual against the same Liability under Section 23B.08.510 or .520 of theAct;

 

(ii)           Enter into contractswith any Indemnitee in furtherance of this Section and consistent with the Act;and,

 

(iii)          Create a trust fund,grant a security interest, or use other means (including without limitation aletter of credit) to ensure the payment of such amounts as may be necessary toeffect indemnification as provided in this Section.

 

(c)           Severability.   If any provision or application of thisSection shall be invalid or unenforceable, the remainder of this Section andits remaining applications shall not be affected thereby and shall continue infull force and effect.

 

(d)           Right of Indemniteeto Bring Suit.   If:

 

(i)            a claim under thisSection for indemnification is not paid in full by the Corporation within sixty(60) days after a written claim has been received by the Corporation; or,

 

(ii)           a claim under thisSection for advancement of Expenses is not paid in full by the Corporationwithin sixty (60) days after a written claim has been received by theCorporation,

 

then theIndemnitee may, but need not, at any time thereafter bring suit against theCorporation to recover the unpaid amount of the claim.  To the extent successful in whole or inpart, the Indemnitee shall be entitled to also be paid the Expenses (to beproportionately prorated if the Indemnitee is only partially successful) ofprosecuting such claim.  Neither (1) thefailure of the Corporation (including its Board of Directors, its shareholders,or Special Counsel) to have made a determination prior to the commencement ofsuch Proceeding that indemnification or reimbursement or advancement ofExpenses to the Indemnitee is proper in the circumstances, nor (2) an actualdetermination by the Corporation (including its Board of Directors, itsshareholders, or Special Counsel) that the Indemnitee is not entitled toindemnification or to the reimbursement or advancement of Expenses, shall be adefense to any Proceeding or create a presumption that the Indemnitee is not soentitled.

 

(e)           Nonexclusivity ofRights.   The right toindemnification and the payment of Expenses incurred in defending a Proceedingin advance of its  final dispositiongranted in this Section shall not be exclusive of any other right which anyIndemnitee may have or hereafter acquire under any statute, provision of theBylaws or Articles of Incorporation, agreement, vote of shareholders orDisinterested Directors, or otherwise. The Corporation shall have the express right to grant additionalindemnity without seeking further approval or satisfaction by theshareholders.  All applicable indemnityprovisions and any applicable law shall be interpreted and applied so as toprovide an

 

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Indemniteewith the broadest but nonduplicative indemnity to which he or she is entitled.

 

10.7         Contribution.   If the indemnification is not available tobe paid to Indemnitee for any reason other than those set forth in subsections10.2(a), 10.2(b), and 10.2(c) (for example, because indemnification is held tobe against public policy even though otherwise permitted under Section 10.2),then in respect of any Proceeding in which the Corporation is jointly liablewith Indemnitee (or would be, if joined in such Proceeding), the Corporationshall contribute to the amount of Liability paid or payable by Indemnitee insuch proportion as is appropriate to reflect:

 

(a)           Relative benefitsreceived by the Corporation, on the one hand, and of the Indemnitee, on theother, from the transaction from which such Proceeding arose; and,

 

(b)           The relative fault ofthe Corporation, on the one hand, and of the Indemnitee, on the other, inconnection with the events which resulted in such Liability, as well as anyother relevant equitable consideration.

 

The relative benefits receivedby, and the relative fault of, the Corporation and the Indemnitee shall bedetermined by a court of appropriate jurisdiction (which may be the same court in which the Proceeding took place)with reference to, among other things, the parties’ relative intent, knowledge,access to information, and opportunity to correct or prevent the circumstancesresulting in such loss.  The Corporationagrees that it would not be just and equitable if a contribution pursuant tothis Section was determined by pro rata allocation or any other method ofallocation which does not take account of the foregoing equitableconsiderations.

 

10.8         Exceptions.   Any other provision herein to the contrarynotwithstanding, the Corporation shall not be obligated pursuant to the termsof this Section to indemnify or advance Expenses to any Indemnitee with respectto any Proceeding:

 

(a)           Claims Initiated byIndemnitee.   Initiated or broughtvoluntarily by Indemnitee and not by way of defense, but such indemnificationor advancement of Expenses may be provided by the Corporation in specific casesif the Board of Directors finds it to be appropriate; provided, that InsuranceCoverage Expenses incurred pursuant to Section 10.1(h)(i) are excepted fromthis provision.  Notwithstanding theforegoing, the Corporation shall provide indemnification and Advancements ofExpenses with respect to Proceedings brought to establish or enforce a right toindemnification under this Section or any other statute or law or as otherwiserequired under the statute;

 

(b)           Lack of Good Faith.   Instituted by Indemnitee to enforce or      interpret this Section, if a court ofcompetent jurisdiction determines that each of the material assertions made byIndemnitee in such Proceeding was not made in good faith or was frivolous;

 

(c)           Insured Claims.   For which any of the Expenses orliabilities for indemnification is being sought have been paid directly toIndemnitee by an insurance carrier under a

 

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policy ofofficers’ and directors’ liability insurance maintained by the Corporation; or,

 

(d)           Prohibited by Law.   If the Corporation is prohibited by the Actor other applicable law as then in effect from paying such indemnificationand/or advancement of Expenses.  Forexample, the Corporation and Indemnitee acknowledge that the Securities andExchange Commission (“SEC”) has taken the position that indemnification is notpossible for liabilities arising under certain federal securities laws.  Indemnitee understands and acknowledges thatthe  Corporation has undertaken or maybe required in the future to undertake with the SEC to submit the question ofindemnification to a court in certain circumstances for a determination of theCorporation’s right to indemnify Indemnitee.

 

10.9         Qualifications UponIndemnification.   Allindemnification rights hereunder shall be subject to the following:

 

(a)           Only reasonableExpenses shall be reimbursed under any indemnification;

 

(b)           In the event of any payment under this Agreement, the Corporation shallbe subrogated to the extent of such payment to all of the Indemnitee’s rightsof recovery, and the Indemnitee shall execute all papers required and take allaction necessary to secure such rights, including execution of such documentsas are necessary to enable the Corporation to bring suit to enforce suchrights; and,

 

(c)           TheCorporation shall not be liable to make any payment of amounts otherwiseindemnifiable hereunder if and to the extent that Indemnitee has otherwiseactually received such payment under any insurance policy, contract, agreementor otherwise.

 

10.10       Effect of Termination ofProceedings for Specified Reasons.  The termination of any Proceeding orof any claim, issue or matter therein by judgment, order, settlement orconviction, or upon a plea of *nolo contendere* or its equivalent, shallnot (except as otherwise expressly provided in this Section), of itself,adversely affect the right of the Indemnitee to indemnification or create apresumption that the Indemnitee did not act in good faith and in a manner whichhe or she reasonably believed to be in, or not opposed to, the best interestsof the Corporation or, with respect to any criminal Proceeding, that theIndemnitee had reasonable cause to believe that his conduct was unlawful.

 

10.11       Successors and Assigns.   All obligations of the Corporation toindemnify any Director or Officer shall be binding upon all successors andassigns of the Corporation (including any transferee of all or substantiallyall of its assets and any successor by merger or other-wise by operation oflaw).  The Corporation shall not effectany sale of substantially all of its assets, merger, consolidation, or otherreorganization, in which it is not the surviving entity, unless the survivingentity agrees in writing to assume all such obligations of the Corporation.

 

10.12  Amendment orModification.  This Section 10 maybe altered or amended at any time as provided in these Bylaws, but no suchamendment shall have the effect of diminishing the rights of

 

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any person who is or was an officer or director as to any acts oromissions taken or omitted to be taken prior to the effective date of suchamendment.

 

10.13       Effect ofSection.  The rights conferred by this section shallbe deemed to be contract rights between the Corporation and each person who isor was a director or officer.  TheCorporation expressly intends each such person to rely on the rights conferredhereby in performing his or her respective duties on behalf of the Corporation.

 

SECTION 11

 

REPRESENTATION OF SHARES OF OTHERCORPORATIONS

 

Unless otherwise restricted by the Board of Directors, the Presidentand any Vice President of the Corporation are each authorized to vote,represent and exercise on behalf of the Corporation all rights incident to anyand all shares of other corporations standing in the name of theCorporation.  This authority may be exercisedby such officers either in person or by a duly executed proxy or power ofattorney.

 

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I hereby certify that the foregoing bylaws consisting of twenty-three(23) pages, are the Restated Bylaws of the Corporation adopted by the directorsand approved by all of the shareholders of the Corporation on June 14, 1995,and revised by the directors on August 30, 2002, and that they are the wholethereof exactly as adopted, and that I make this certificate to identify thesame pursuant to instructions of the Board of Directors.

 

 
|   |   |   | /s/ William A. Garrard         |
|--------|--------|--------|--------------------------------|
|   |   |   | William A.  Garrard, Secretary |

 

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