**Exhibit 3.3**

 

AMENDED ANDRESTATED

BYLAWS OF

SCHLOTZSKY’S, INC.

 

1.  Offices

 

1.1                                 PrincipalOffice.  The principal office of theCorporation shall be located in Austin, Texas.

 

1.2                                 OtherOffice.  The Corporation may alsohave offices at such other places within or without the State of Texas as theboard of directors may from time to time determine or the business of theCorporation may require.

 

2.  Meetings of Shareholders

 

2.1                                 AnnualMeeting.  The annual meeting ofshareholders for the election of directors and such other business as mayproperly be brought before the meeting shall be held at such place within orwithout the State of Texas and at such date and time as shall be designated bythe board of directors and stated in the notice of the meeting or in a dulyexecuted waiver of notice thereof.

 

2.2                                 SpecialMeetings.  Special meetings of theshareholders may be called (a) by the president or the board of directors, or(b) by the holders of at least 10% of all the shares entitled to vote at theproposed meeting; provided that when a meeting is to be called by theholders of at least one-tenth (1/10th) of all shares entitled to vote at themeeting for a purpose other than the removal of one or more directors inaccordance with these Bylaws, prior notice of such meeting and the purposestherefor must be set forth in writing to, and timely filed with, the secretaryof the Corporation.  To be consideredtimely, such prior notice must be delivered either in person or by UnitedStates Certified Mail, postage prepaid, and received at the principal executiveoffices of the Corporation not less than 120 days nor more than 150 days beforethe proposed date of the special meeting of shareholders.  Business transacted at any special meetingshall be confined to the purposes stated in the prior notice provided to thesecretary of the Corporation and in the notice of the meeting provided toshareholders.  A meeting called by theholders of at least one-tenth (1/10th) of all shares entitled to vote at themeeting for a purpose other than the removal of one or more directors, may becanceled or rescheduled by the board of directors if such a meeting would occurwithin 60 days of the Corporation’s annual meeting.  The record date for determining shareholders entitled to call aspecial meeting shall be determined by the Board of Directors.

 

2.3                                 Noticeand Waivers of Notice.

 

(a)                                  Writtennotice stating the place, date and hour of the meeting and, in the case of aspecial meeting, the purpose or purposes for which the meeting is called, shallbe delivered not less than 10 nor more than 60 days before the date of themeeting, either personally or by mail, by or at the direction of the president,the secretary, or the officer or persons calling the meeting, to

 

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each shareholder entitledto vote at such meeting.  If mailed,such notice shall be deemed to be delivered when deposited in the United Statesmail addressed to the shareholder at his address as it appears on the sharetransfer records of the Corporation.

 

(b)                                 Noticemay be waived in writing signed by the person or persons entitled to suchnotice.  Such waiver may be executed atany time before or after the holding of such meeting.  Attendance at a meeting shall constitute a waiver of notice,except where the person attends for the express purpose of objecting to thetransaction of any business on the ground that the meeting is not lawfullycalled.

 

(c)                                  Anynotice required to be given to any shareholder, under any provision of theTexas Business Corporation Act, as amended (the “Act”), the Articles ofIncorporation or these Bylaws, need not be given to the shareholder if (1)notice of two consecutive annual meetings and all notices of meetings heldduring the period between those annual meetings, if any, or (2) all (but in noevent less than two) payments (if sent by first class mail) of distributions orinterest on securities during a 12-month period have been mailed to thatperson, addressed at his address as shown on the records of the Corporation,and have been returned undeliverable. Any action or meeting taken or held without notice to such a personshall have the same force and effect as if the notice had been duly given and,if the action taken by the Corporation is reflected in any articles or documentfiled with the Secretary of State, those articles or that document may statethat notice was duly given to all persons to whom notice was required to begiven.  If such a person delivers to theCorporation a written notice setting forth his then current address, the requirementthat notice be given to that person shall be reinstated.

 

2.4                                 RecordDate.  For the purpose ofdetermining shareholders entitled to notice of or to vote at any meeting ofshareholders or any adjournment thereof, or entitled to receive payment of anydividend, the board of directors may in advance establish a record date whichmust be at least 10 but not more than 60 days prior to such meeting.  If the board of directors fail to establisha record date, the record date shall be the date on which notice of the meetingis mailed.

 

2.5                                 VotingList.

 

(a)                                  Theofficer or agent having charge of the stock transfer books for shares of theCorporation shall make, at least ten days before each meeting of shareholders,a complete list of the shareholders entitled to vote at such meeting or anyadjournment thereof, arranged in alphabetical order, with the address of andthe number of shares held by each, which list, for a period of ten days priorto such meeting, shall be kept on file at the registered office of theCorporation and shall be subject to inspection by any shareholder at any timeduring usual business hours.  Such listshall also be produced and kept open at the time and place of the meeting andshall be subject to the inspection of any shareholder during the whole time ofthe meeting.  The original stocktransfer book shall be prima facie evidence as to who are the shareholdersentitled to examine such list or transfer books or vote at any meeting ofshareholders.

 

(b)                                 Failureto comply with the requirements of this section shall not affect the validityof any action taken at such meeting.

 

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(c)                                  Anofficer or agent having charge of the stock transfer books who shall fail toprepare the list of shareholders or keep the same on file for a period of tendays, or produce and keep it open for inspection as provided in this section,shall be liable to any shareholder suffering damage on account of such failure,to the extent of such damage.  In theevent that such officer or agent does not receive notice of a meeting ofshareholders sufficiently in advance of the date of such meeting reasonably toenable him to comply with the duties prescribed by these Bylaws, theCorporation, but not such officer or agent shall be liable to any shareholdersuffering damage on account of such failure, to the extent of such damage.

 

2.6                                 Quorumof Shareholders.  With respect toany matter, a quorum shall be present at a meeting of shareholders if theholders of a majority of the shares entitled to vote on that matter arerepresented at the meeting, in person or by proxy, unless otherwise provided inthe Articles of Incorporation in accordance with the Act.  Unless otherwise provided in the Articles ofIncorporation, the shareholders represented in person or by proxy at a meetingof shareholders at which a quorum is not present may adjourn the meeting untilsuch time and to such place as may be determined by a vote of the holders of amajority of the shares represented in person or by proxy at that meeting.

 

2.7                                 Withdrawalof Quorum.  Unless otherwiseprovided in the Articles of Incorporation, once a quorum is present at ameeting of shareholders, the shareholders represented in person or by proxy atthe meeting may conduct such business as may properly be brought before themeeting until it is adjourned, and the subsequent withdrawal from the meetingof any shareholder or the refusal of any shareholder represented in person orby proxy to vote shall not effect the presence of a quorum at the meeting.

 

2.8                                 Votingon Matters Other Than the Election of Directors.  With respect to any matter, other than the election of directorsor a matter for which the affirmative vote of the holders of a specifiedportion of the shares entitled to vote is required by the Act, the affirmativevote of the holders of a majority of the shares entitled to vote on that matterand represented in person or by proxy at a meeting of shareholders at which aquorum is present shall be the act of the shareholders, unless otherwiseprovided in the Articles of Incorporation.

 

2.9                                 Votingin the Election of Directors. Directors shall be elected in the manner provided in the Articles ofIncorporation.

 

2.10                           Methodof Voting.  The holders ofoutstanding shares of capital stock of the Corporation shall be entitled tovote on matters submitted to a vote of shareholders as provided in the Articlesof Incorporation.  Any shareholder mayvote either in person or by proxy executed in writing by the shareholder.  No proxy shall be valid after 11 months fromthe date of its execution, unless otherwise provided in the proxy.

 

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2.11                           ActionWithout Meetings.

 

(a)                                  Anyaction that may be taken at any shareholders’ meeting may be taken without ameeting if consents in writing setting forth the action to be taken are signedby the holders of outstanding shares having not less than the number of votesthat would be necessary to authorize such action at a meeting at which allshares entitled to vote thereon were present and voted are delivered to theCorporation.  Any party desiring topresent a matter to the shareholders for written consent shall give notice tothe Secretary of the Corporation not less than 60 days prior to the date the consentsolicitation is to be initiated.  TheBoard may fix the record date for determining the shareholders who shall beentitled to vote on the matter presented for written consent at any time priorto the date such consent solicitation is to be initiated.  The Board may also fix the expiration dateof the consent solicitation period.  Inthe event that the Board does not set a record date, the record date will bethe date of the first consent.  Uponreceipt of a written consent from any shareholder, the Corporation shalldetermine the validity of such consent. Any shareholder’s written consent that cannot be validated within 10days of the expiration of the consent solicitation period shall be deemedinvalid, and shall not be counted in determining whether the requisite numberof votes for the matter presented for consent have been obtained.

 

(b)           A telegram, telex, cablegram, orsimilar transmission by a shareholder, or a photographic, photostatic, facsimile, or similar reproduction of awriting signed by a shareholder, shall be regarded as signed by the shareholderfor purposes of this section.

 

(c)                                  Promptnotice of the taking of any action by shareholders without a meeting by lessthan unanimous written consent shall be given to those shareholders who did notconsent in writing to the action.

 

2.12                           Conductof Meeting.  The Chairman of theBoard, if such office has been filled, and, if not or if the Chairman of theBoard is absent or otherwise unable to act, the President shall preside at allmeetings of shareholders.  The Secretaryshall keep the records of each meeting of shareholders.  In the absence or inability to act of anysuch officer, such officer’s duties shall be performed by the officer given theauthority to act for such absent or non-acting officer under these by-laws orby a person appointed by the meeting.

 

2.13                           ShareholderProposals at Annual Meetings.  At anannual meeting of the shareholders, only such business shall be conducted asshall have been properly brought before the meeting.  To be properly brought before an annual meeting, business must bespecified in the notice of meeting (or any supplement thereto) given by or atthe direction of the board of directors, otherwise properly brought before themeeting by or at the direction of the board of directors or otherwise properlybrought before the meeting by a shareholder. In addition to any other applicable requirements, for business to beproperly brought before an annual meeting by a shareholder, the shareholdermust have given timely notice thereof in writing to the Secretary of theCorporation.  To be considered timely, ashareholder’s notice must be delivered either in person or by United Statescertified mail, postage prepaid, and received at the principal executiveoffices of the corporation (a) not less than one hundred twenty (120) days normore than one hundred fifty (150) days before the first anniversary date of thecorporation’s proxy statement in connection with the last annual meeting ofshareholders, or (b) if no annual meeting has been called after the expirationof more than thirty (30) days from the date for such meeting contemplated atthe time of the previous year’s proxy statement, not less than a reasonabletime,

 

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as determined by theboard of directors, prior to the date of the applicable annual meeting.  A shareholder’s notice to the Secretaryshall set forth as to each matter the shareholder proposes to bring before theannual meeting, (i) a brief description of the business desired to be broughtbefore the annual meeting and the reasons for conducting such business at theannual meeting, (ii) the name and record address of the shareholder proposingsuch business, (iii) the class and number of shares of the Corporation that arebeneficially owned by the shareholder, and (iv) any material interest of theshareholder in such business. Notwithstanding anything in these by-laws to the contrary, no businessshall be conducted at the annual meeting except in accordance with theprocedures set forth in this section 2.13, provided, however, that nothing inthis section 2.13 shall be deemed to preclude discussion by any shareholder ofany business properly brought before the annual meeting in accordance with saidprocedure.

 

2.14                           Nominationsof Persons for Election to the Board of Directors.  In addition to any other applicablerequirements, only persons who are nominated in accordance with the followingprocedures shall be eligible for election as directors.  Nominations of persons for election to theboard of directors of the Corporation may be made at a meeting of shareholdersby or at the direction of the board of directors, by any nominating committeeor person appointed by the board of directors or by any shareholder of theCorporation entitled to vote for the election of directors at the meeting whocomplies with the notice procedures set forth in this section 2.14.  Such nominations, other than those made byor at the direction of the board of directors, shall be made pursuant to timelynotice in writing to the Secretary of the Corporation. To be considered timely,a shareholder’s notice must be delivered either in person or by United Statescertified mail, postage prepaid, and received at the principal executive officesof the Corporation (a) not less than one hundred twenty (120) days nor morethan one hundred fifty (150) days before the first anniversary date of theCorporation’s proxy statement in connection with the last annual meeting ofshareholders, or (b) if no annual meeting has been called after the expirationof more than thirty (30) days from the date for such meeting contemplated atthe time of the previous year’s proxy statement, not less than a reasonabletime, as determined by the board of directors, prior to the date of theapplicable annual meeting.  Suchshareholder’s notice shall set forth (a) as to each person whom the shareholderproposes to nominate for election or re-election as a director, (i) the name,age, business address and residence address of the person, (ii) the principaloccupation or employment of the person, (iii) the class and number of shares ofthe Corporation beneficially owned by the person, and (iv) any otherinformation relating to the person that is required to be disclosed in solicitationsfor proxies for election of directors pursuant to Regulation 14A under theSecurities Exchange Act of 1934, as amended; and (b) as to the shareholdergiving the notice, (i) the name and record address of the shareholder, and (ii)the class and number of shares of the Corporation beneficially owned by theshareholder.  The Corporation mayrequire any proposed nominee to furnish such other information as mayreasonably be required by the Corporation to determine the eligibility of suchproposed nominee to serve as a director of the Corporation.  No person shall be eligible for election asa director of the Corporation unless nominated in accordance with theprocedures set forth herein.  Theseprovisions shall not apply to nomination of any persons entitled to beseparately elected by holders of preferred stock.

 

2.15                           Inspectors.  The board of directors may, in advance ofany meeting of shareholders, appoint one or more inspectors to act at suchmeeting or any adjournment thereof.  Ifany of the inspectors so appointed shall fail to appear or act, the chairman ofthe meeting shall, or if inspectors shall not have been appointed, the chairmanof the meeting may, appoint one or

 

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more inspectors.  Each inspector, before entering upon thedischarge of his duties, shall take and sign an oath faithfully to execute theduties of inspector at such meeting with strict impartiality and according tothe best of his ability.  The inspectorsshall determine the number of shares of capital stock of the Corporationoutstanding and the voting power of each, the number of shares represented atthe meeting, the existence of a quorum, and the validity and effect of proxiesand shall receive votes, ballots, or consents, hear and determine allchallenges and questions arising in connection with the right to vote, countand tabulate all votes, ballots, or consents, determine the results, and dosuch acts as are proper to conduct the election or vote with fairness to allshareholders after consultation with counsel to the Corporation as to anyissues of law.  On request of thechairman of the meeting, the inspectors shall make a report in writing of anychallenge, request, or matter determined by them and shall execute a certificateof any fact found by them.  No directoror candidate for the office of director shall act as an inspector of anelection of directors.  Inspectors neednot be shareholders.

 

3.  Directors

 

3.1                                 Powers.  The business andaffairs of the Corporation shall be managed by or under the direction of theBoard of Directors, except as otherwise provided by applicable law or theArticles of Incorporation, which may exercise all powers of the Corporation andperform all such lawful acts and do all such lawful things that are not, byapplicable law or the Articles of Incorporation, directed or required to beexercised, performed, or done by the shareholders of the Corporation.

 

3.2                                 Number.  Except as otherwise providedby or fixed pursuant to the provisions of Article IV, Section 8 (Class CPreferred Stock) of the Articles of Incorporation with respect to theright(s) of holders of any Preferred Stock or series of Preferred Stock toelect any additional director(s), the number of directors which shallconstitute the “whole” (as defined below) Board of Directors shall be not lessthan three (3) and shall be fixed from time to time exclusively by the Board ofDirectors pursuant to a resolution adopted by the Board of Directors.  For purposes of this Section 3.2 (Number),“whole” shall mean the totalnumber of authorized directors, whether or not there exist any vacancies on theBoard of Directors or unfilled previously authorized directorships, at the timesuch resolution is presented to the Board of Directors for adoption.

 

3.3                                 Staggered Board and Election.  Exceptas otherwise provided by or fixed pursuant to the provisions of Article IV,Section 8 (Class C Preferred Stock) of the Articles of Incorporationwith respect to the right(s) of holders of any Preferred Stock or series ofPreferred Stock to elect any additional director(s), the directors shall bedivided into three (3) classes, designated as Class A, Class B, and Class C(which at all times shall be as nearly equal in number as possible), with theterm of office of Class A directors to expire at the 2005 Annual Meeting ofShareholders, the term of office of Class B directors to expire at the 2003Annual Meeting of Shareholders, and the term of office of Class C directors toexpire at the 2004 Annual Meeting of Shareholders, upon election andqualification of their successors.  Ateach annual meeting of shareholders after such classification, qualification,and election, directors elected to succeed those directors whose terms shallhave expired shall be elected for a full term of office, as applicable, toexpire at the third ensuing annual meeting of shareholders after theirelection, upon election and qualification of their successors.  The directors of the Corporation, except forany director(s) who may be elected as otherwise provided by or fixed pursuantto the provisions

 

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of Article IV, Section 8 (Class C PreferredStock) of the Articles of Incorporation with respect to the right(s) ofholders of any Preferred Stock or series of Preferred Stock to elect anyadditional director(s), shall be elected in accordance with this Section 3.3 (StaggeredBoard and Election) by the shareholders of the Corporation entitled to votethereon at each annual meeting of shareholders.  Each director shall beat least 21 years of age.  Directors need not be shareholders ofthe Corporation.  In any election of directors,the persons receiving a plurality of thevotes cast, up to the number of directors to be elected in such election, shallbe deemed elected.

 

3.4                                 Resignation or Removal. Directors may resign at any time by giving notice to the Corporation inwriting or by electronic transmission. “Electronic transmission” means a form of communication that:(a)  does not directly involve thephysical transmission of paper; (b) creates a record that may be retained, retrieved, and reviewed by therecipient; and (c)  may be directlyreproduced in paper form by the recipient through an automated process.  Subjectto the right of the holders of any Preferred Stock or series of Preferred Stockthen outstanding, any director, or the entire Board of Directors, may beremoved from office at any time, but only for “cause” (as defined below) andonly by the affirmative vote of the holders of at least sixty-six andtwo-thirds percent (66 2/3%) of the voting power of the Voting Stock (asdefined below), voting together as a single class.  Except as may otherwise be provided by law, “cause” for removal shall exist only ifany director whose removal has been proposed:

 

(a)                                  has been convicted of a felony by a court ofcompetent jurisdiction and such conviction is no longer subject to directappeal,

 

(b)                                 has been adjudged by a court of competentjurisdiction to be liable for gross negligence or misconduct in the performanceof the duties of such director to the Corporation in connection with a matterof substantial importance to the Corporation, and such adjudication has becomefinal and non-appealable, or

 

(c)                                  has missed three (3) consecutive meetings of theBoard of Directors.

 

For purposes of these Bylaws,the term “Voting Stock” shallmean all issued and outstanding shares of stock of the Corporation entitled tovote generally in the election of directors or that otherwise are entitled tovote with such stock on the specific matter in question.

 

3.5                                 Vacancies.  Subject to the rights of theholders of any Preferred Stock or series of Preferred Stock then outstanding, anyvacancy occurring in the Board of Directors by reason of resignation or removalor any directorship to be filled by reason of an increase in the number ofdirectors may be filled by election at an annual or special meeting ofshareholders called for that purpose or may be filled by the affirmative voteof a majority of the remaining directors though less than a quorum of the boardof directors; provided, however, that a directorship to be filledby reason of an increase in the number of directors may be filled by the Boardof Directors for a term of office continuing only until the next election ofone or more directors by the shareholders and the Board of Directors may notfill more than two such directorships during the period between any twosuccessive annual meetings of shareholders. A director elected to fill a vacancy, other than a vacancy filled by theBoard of Directors by reason of an increase in the number of directors, shallbe elected for the unexpired term of his predecessor in office.

 

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3.6                                 Nominations, Ballots, and Cumulative Voting. Advance notice of nominations for the election of directors of theCorporation shall be given in accordance with Section 2.14 of these Bylaws.Election of directors need not be by written ballot unless these Bylaws shallso provide.  No holders of shares ofstock of the Corporation shall have any right(s) to cumulate votes in theelection of directors of the Corporation.

 

3.7                                 Preferred Stock Directors. Notwithstanding the foregoing, whenever the holders of any PreferredStock or series of Preferred Stock shall be entitled to elect any additionaldirector(s) at an annual or special meeting of shareholders, the election, termof office, filling of vacancies, and other terms and features of suchdirectorship(s) shall be governed by the terms and features of the Articles ofIncorporation, and any resolution(s) adopted pursuant thereto, and thedirector(s) so elected shall not be divided into classes pursuant to thisSection 3 (Board of Directors) unless expressly provided by such termsand features.

 

4.  Meetings of the Board of Directors

 

4.1                                 Place.  Meetings of the board of directors, regularor special, may be held either within or without the State of Texas.

 

4.2                                 RegularMeetings.  Regular meetings of theboard of directors shall be held at such dates and times and at such places asshall from time to time be determined by the board of directors.  Regular meetings may be held with or withoutnotice, as determined by the board of directors.

 

4.3                                 SpecialMeetings.  Special meetings of theboard of directors may be called by the chairman of the board of directors orthe president and shall be called by the secretary on the written request ofany two directors.  Notice of eachspecial meeting of the board of directors shall be given to each director at least48 hours before the meeting is scheduled to convene.

 

4.4                                 Noticeand Waiver of Notice.  On writtenconsent of a member of the board of directors, notice of the date, time, placeor purpose of a regular or special meeting of the board of directors may begiven to the director by “electronic transmission” (as defined in Section 3.4above).  Such director may revoke thisconsent by written notice to the Corporation. The director’s consent is deemed to be revoked if the Corporation isunable to deliver by electronic transmission two consecutive notices, and thesecretary of the Corporation or other person responsible for delivering thenotice on behalf of the Corporation knows that the delivery of these twoelectronic transmissions was unsuccessful. The inadvertent failure to treat the unsuccessful transmissions as arevocation of the director’s consent does not invalidate a meeting or otheraction.  An affidavit of the secretaryor other agent of the Corporation that notice has been given by electronic transmissionis, in the absence of fraud, prima facie evidence that notice was given.  Attendance of a director at any meetingshall constitute a waiver of notice of such meeting, except where a directorattends for the express purpose of objecting to the transaction of any businesson the ground that the meeting is not lawfully called or convened.  Except as may be otherwise provided by lawor by the Articles of Incorporation or by these Bylaws, neither the business tobe transacted at, nor the purpose of, any regular or special meeting of theboard of directors need be specified in the notice or waiver of notice of suchmeeting.

 

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4.5                                 Quorumof Directors; Vote Required.  At allmeetings of the Board of Directors a majority of the Directors shall constitutea quorum for the transaction of business and the act of a majority of theDirectors present at any meeting at which there is a quorum shall be the act ofthe Board of Directors.  If a quorumshall not be present at any meeting of Directors, the Directors present thereatmay adjourn the meeting from time to time, without notice other thanannouncement at the meeting, until a quorum shall be present.

 

4.6                                 ActionWithout Meetings.  Any actionrequired or permitted to be taken at a meeting of the board of directors or anycommittee may be taken without a meeting if a consent in writing, setting forththe action so taken, is signed by all the members of the board of directors orcommittee, as the case may be.

 

4.7                                 Committees.

 

(a)                                  Theboard of directors, by resolution adopted by a majority of the directorspresent at a meeting called specifically for such purpose, may designate fromamong its members one or more committees, each of which shall be comprised ofone or more of its members, and may designate one or more of its members asalternate members of any committee, who may, subject to any limitations imposedby the board of directors, replace absent or disqualified members at anymeeting of that committee.  Any suchcommittee, to the extent provided in such resolution shall have and mayexercise all of the authority of the board of directors, subject to thelimitations set forth below and in the Act.

 

(b)                                 Nocommittee of the board of directors shall have the authority of the board ofdirectors in reference to:

 

1.                                       amendingthe Articles of Incorporation, except that a committee may, to the extentprovided in the resolution designating that committee or in the Articles ofIncorporation or the Bylaws, exercise the authority of the board of directorsvested in it in accordance with Article 2.13 of the Act;

 

2.                                       proposinga reduction of the stated capital of the Corporation in the manner permitted byArticle 4.12 of the Act;

 

3.                                       approvinga plan of merger or share exchange of the Corporation;

 

4.                                       recommendingto the shareholders the sale, lease, or exchange of all or substantially all ofthe property and assets of the Corporation otherwise than in the usual andregular course of its business;

 

5.                                       recommendingto the shareholders a voluntary dissolution of the Corporation or a revocationthereof;

 

6.                                       amending,altering, or repealing these Bylaws of the Corporation or adopting new Bylawsof the Corporation;

 

7.                                       fillingvacancies in the board of directors;

 

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8.                                       fillingvacancies in or designating alternate members of any such committee;

 

9.                                       fillingany directorship to be filled by reason of an increase in the number ofdirectors;

 

10.                                 electingor removing officers of the Corporation or members or alternate members of anysuch committee;

 

11.                                 fixingthe compensation of any member or alternate members of such committee; or

 

12.                                 alteringor repealing any resolution of the board of directors that by its termsprovides that it shall not be so amendable or repealable.

 

(c)                                  Unlessthe resolution designating a particular committee, the Articles ofIncorporation, or these Bylaws expressly so provide, no committee of the boardof directors shall have the authority to authorize a distribution or toauthorize the issuance of shares of the Corporation.

 

(d)                                 Thedesignation of a committee of the board of directors and the delegation theretoof authority shall not operate to relieve the board of directors, or any memberthereof, of any responsibility imposed by law.

 

4.8                                 Compensation.  The Directors shall receive suchcompensation for their services as directors as may be determined by resolutionof the board of directors.  EachDirector shall be reimbursed for travel and other reasonable out-of-pocketexpenses incurred by such Director in attending regular and special meetings ofthe board of directors or any committee. The receipt of compensation or reimbursement of expenses shall notpreclude any director from serving the Corporation in any other capacity andreceiving compensation therefor.

 

5.  Officers

 

5.1                                 Election,Number, Qualification, Term, Compensation. The officers of the Corporationshall be elected by the board of directors and shall consist of a president, avice-president, a secretary and a treasurer. The board of directors may also elect a chairman of the board,additional vice-presidents, one or more assistant secretaries and assistanttreasurers and such other officers and assistant officers and agents as itshall deem necessary, who shall hold their offices for such terms and shallhave such authority and exercise such powers and perform such duties as shallbe determined from time to time by the board by resolution not inconsistentwith these Bylaws.  Two or more officesmay be held by the same person.  None ofthe officers need be directors except the president.  The board of directors shall have the power to enter intocontracts for the employment and compensation of officers for such terms as theboard deems advisable.  The salaries ofall officers of the Corporation shall be fixed by the board of directors.

 

5.2                                 Removal.  The officers of the Corporation shall holdoffice until their successors are elected or appointed and qualify, or untiltheir death or until their resignation or removal from office.  Any officer elected or appointed by theboard of directors may be removed at any time by

 

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the board, with or without cause. Such removal shall be without prejudice to the contract rights, if any,of the person so removed.  Election orappointment of an officer shall not of itself create contract rights.

 

5.3                                 Vacancies.  Any vacancy occurring in any office of theCorporation by death, resignation, removal or otherwise shall be filled by theboard of directors.

 

5.4                                 Authority.  Officers and agents shall have suchauthority and perform such duties in the management of the Corporation as maybe provided in these Bylaws.

 

5.5                                 Chairmanof the Board.  The chairman of theboard, if one is elected, shall preside at all meetings of the board ofdirectors and of the shareholders and shall have such other powers and dutiesas may from time to time be prescribed by the board of directors upon writtendirections given to him pursuant to resolutions duly adopted by the board ofdirectors.

 

5.6                                 President.  The president shall be the chief executiveofficer of the Corporation, shall have general and active management of thebusiness and affairs of the Corporation and shall see that all orders andresolutions of the board of directors are carried into effect.  He shall preside at all meetings of theshareholders and of the board of directors, unless a chairman of the board hasbeen elected, in which event the president shall preside at meetings of theshareholders and of the board of directors in the absence or disability of thechairman of the board.

 

5.7                                 Vice-President.  Vice-presidents, including executivevice-presidents and senior vice-presidents, in the order of their seniority,unless otherwise determined by the board of directors, shall, in the absence ordisability of the president, perform the duties and have the authority andexercise the powers of the president. They shall perform such other duties and have such other authority andpowers as the board of directors may from time to time prescribe or as thepresident may from time to time delegate.

 

5.8                                 Secretary.  The secretary shall attend all meetings ofthe board of directors and all meetings of shareholders and record all of theproceedings of the meetings of the board of directors and of the shareholdersin a minute book to be kept for that purpose and shall perform like duties forthe standing committees when required. He shall give, or cause to be given, notice of all meetings of theshareholders and special meetings of the board of directors, and shall performsuch other duties as may be prescribed by the board of directors or president,under whose supervision he shall be.  Heshall keep in safe custody the seal of the Corporation and, when authorized bythe board of directors, shall affix the same to any instrument requiring itand, when so affixed, it shall be attested by his signature or by the signatureof an assistant secretary or of the treasurer.

 

5.9                                 Treasurer.

 

(a)                                  Thetreasurer shall have custody of the corporate funds and securities and shallkeep full and accurate accounts and records of receipts, disbursements andother transactions in books belonging to the Corporation, and shall deposit allmoneys and other valuable effects in the name and to the credit of theCorporation in such depositories as may be designated by the board ofdirectors.

 

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(b)                                 Thetreasurer shall disburse the funds of the Corporation as may be ordered by theboard of directors, taking proper vouchers for such disbursements, and shallrender to the president and the board of directors, at its regular meetings, orwhen the president or board of directors so requires, an account of all histransactions as treasurer and of the financial condition of the Corporation.

 

(c)                                  Ifrequired by the board of directors, the treasurer shall give the Corporation abond of such type, character and amount as the board of directors may require.

 

5.10                           AssistantSecretary and Assistant Treasurer. In the absence of the secretary or treasurer, an assistant secretary orassistant treasurer, respectively shall perform the duties of the secretary ortreasurer.  Assistant treasurers may berequired to give bond as provided in section 5.9(c).  The assistant secretaries and assistanttreasurers, in general shall have such powers and perform such duties as thetreasurer or secretary, respectively, or the board of directors or president mayprescribe.

 

6.  Certificates Representing Shares

 

6.1                                 Certificates.  The shares of the Corporation shall berepresented by certificates signed by the president or a vice-president and thesecretary or an assistant secretary of the Corporation, and may be sealed withthe seal of the Corporation or a facsimile thereof.  The signatures of the president or vice-president and thesecretary or assistant secretary upon a certificate may be facsimiles if thecertificate is countersigned by a transfer agent, or registered by a registrar,other than the Corporation itself or an employee of the Corporation.  The certificates shall be consecutivelynumbered and shall be entered in the books of the Corporation as they areissued.  Each certificate shall state onthe face thereof the holder’s name, the number and class of shares, and the parvalue of such shares or a statement that such shares are without par value.

 

6.2                                 Payment,Issuance.  Shares may be issued forsuch consideration, not less than the par value thereof, as may be fixed fromtime to time by the board of directors. The consideration for the payment of shares shall consist of money paid,labor done or property actually received. Shares may not be issued until the full amount of the considerationfixed therefor has been paid.

 

6.3                                 Lost,Stolen or Destroyed Certificates. The board of directors may direct a new certificate to be issued inplace of any certificate theretofore issued by the Corporation alleged to havebeen lost, stolen or destroyed upon the making of an affidavit of that fact bythe person claiming the certificate to be lost, stolen or destroyed.  When authorizing such issue of a newcertificate, the board of directors may, in its discretion and as a conditionprecedent to the issuance thereof, prescribe such terms and conditions as it deemsexpedient and may require such indemnities as it deems adequate to protect theCorporation from any claim that may be made against it with respect to any suchcertificate alleged to have been lost or destroyed.

 

6.4                                 Registrationof Transfer.  Shares of stock shallbe transferable only on the books of the Corporation by the holder thereof inperson or by his duly authorized attorney. Upon surrender to the Corporation or the transfer agent of theCorporation of a certificate for shares duly endorsed or accompanied by properevidence of succession, assignment or authority to

 

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transfer, a new certificate shall be issued to the person entitledthereto and the old certificate canceled and the transaction recorded upon thebooks of the Corporation.

 

6.5                                 RegisteredOwner.  The Corporation shall beentitled to recognize the exclusive right of a person registered on its booksas of the record date as the owner of shares to receive dividends or otherdistributions, and to vote as such owner, and shall not be bound to recognizeany equitable or other claim to or interest in such share or shares on the partof any other person, whether or not it shall have express or other noticethereof, except as otherwise provided by the laws of the State of Texas.  The person in whose name the shares are orwere registered in the stock transfer books of the Corporation as of the recorddate shall be deemed to be the owner of the shares registered in his name atthat time.  Neither the Corporation norany of its officers, directors, or agents shall be under any liability formaking such a distribution to a person in whose name shares were registered inthe stock transfer books as of the record date or to the heirs, successors, or assignsof the person, even though the person, or his heirs, successors, or assigns,may not possess a certificate for shares.

 

7.  Dividends

 

7.1                                 Declarationand Payment.  Subject to the Act andthe Articles of Incorporation, dividends may be declared by the board ofdirectors, in its discretion, at any regular or special meeting, pursuant tolaw and may be paid in cash, in property or in the Corporation’s own shares.

 

7.2                                 Reserves.  Before payment of any dividend, the board ofdirectors, by resolution, may create a reserve or reserves out of theCorporation’s surplus or designate or allocate any part or all of such surplusin any manner for any proper purpose or purposes, and may increase, create, orabolish any such reserve, designation, or allocation in the same manner.

 

8.  Protection of Officers, Directors andEmployees

 

8.1                                 Indemnification.  The Corporation shall indemnify any personwho was, is, or is threatened to be made a named defendant or respondent in aproceeding (which term shall mean any threatened or pending, or completedaction, suit, or proceeding, whether civil, criminal, administrative,arbitrative, or investigative, any appeal in such an action, suit, orproceeding, and any inquiry or investigation that could lead to such an action,suit, or proceeding) because the person is or was a director of theCorporation, or who, while a director of the Corporation, is or was serving atthe request of the Corporation as a director, officer, employee or agent ofanother foreign or domestic corporation, partnership, joint venture, soleproprietorship, trust, employee benefit plan or other enterprise (such personbeing referred to in this part 8 as an indemnified person) as follows:

 

(a)                                  Anindemnified person shall be indemnified against judgments, penalties (includingexcise and similar taxes), fines, settlements and reasonable expenses(including, without limitation, court costs and attorneys fees) actuallyincurred by the indemnified person in connection with the proceeding; but if anindemnified person (i) is found liable to the Corporation or (ii) is foundliable on the basis that personal benefit was improperly received by him,whether or not the benefit resulted from an action taken in his officialcapacity (as such term is defined in Art. 2.02-1.A of the Act), theindemnification (x) shall be limited to reasonable

 

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expenses actually incurred by the director in connection with theproceeding and (y) shall not be made in respect of any proceeding in which theindemnified person shall have been found liable for willful or intentionalmisconduct in the performance of his duty to the Corporation.

 

(b)                                 Anindemnified person shall be indemnified against obligations resulting from theproceedings referred to in paragraph (a) above only if it is determined inaccordance with paragraph (c) below that he conducted himself in good faith andreasonably believed, in the case of conduct in his official capacity, that hisconduct was in the Corporation’s best interest, and in all other cases that hisconduct was at least not opposed to the Corporation’s best interests.  In the case of any criminal proceeding, anadditional determination must be made that such indemnified person had noreasonable cause to believe his conduct was unlawful.

 

(c)                                  Adetermination of indemnification under paragraph (b) above must be made:

 

(i)                                     bya majority vote of a quorum consisting of directors who at the time of the voteare not named defendants or respondents in the proceeding;

 

(ii)                                  ifsuch a quorum cannot be obtained, by a majority vote of a committee of theBoard of Directors, designated to act in the matter by a majority vote of alldirectors, consisting solely of two or more directors who at the time of thevote are not named defendants or respondents in the proceeding;

 

(iii)                               byspecial legal counsel selected by the Board of Directors or a committee of theBoard by vote as set forth in (i) or (ii) above, or, if such quorum cannot beobtained and such a committee cannot be established, by a majority vote of alldirectors, or

 

(iv)                              bythe shareholders in a vote that excludes the shares held by directors who arenamed defendants or respondents in the proceeding.

 

(d)                                 Authorizationof indemnification and determination as to reasonableness of expenses must bemade in the same manner as is the determination that indemnification ispermissible, as set forth in paragraph (c) above, except that if thedetermination that indemnification is permissible is made by special legalcounsel, authorization of indemnification and determination as to thereasonableness of expenses must be made in the manner specified in clause (iii)of paragraph (c) above for the selection of special counsel.

 

(e)                                  Theindemnification permitted under this section 8.1 shall be mandatory and thisparagraph (e) shall be deemed, in accordance with Article 2.02-1.G. of the Act,to constitute authorization of indemnification in the manner required by thissection 8.01 and by Article 2.02-1.G. of the Act.

 

8.2                                 Indemnificationfor Reasonable Expenses.  TheCorporation shall indemnify an indemnified person against reasonable expenses(including, without limitation, court costs and attorneys fees) incurred by himin connection with a proceeding in which he is named defendant or respondentbecause he is or was an indemnified person if he has been wholly successful, onthe merits or otherwise, in the defense of the proceeding.

 

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8.3                                 ExpensesAdvanced.  The Corporation may payor reimburse in advance of the final disposition of a proceeding any reasonableexpenses (including, without limitation, court costs and attorneys fees)incurred by an indemnified person who was, is, or is threatened to be made anamed defendant or respondent in a proceeding, and without the necessity ofmaking any of the determinations specified in section 8.1(c) and 8.1(d) hereof,after the Corporation receives a written affirmation by the indemnified personof his good faith belief that he has met the standard of conduct necessary forindemnification as set forth herein and a written undertaking by or on behalfof the indemnified person containing the unlimited general obligation of theindemnified person to repay the amount paid or reimbursed if it is ultimatelydetermined that he has not met those requirements.  Notwithstanding any other provision of this part 8, theCorporation may pay or reimburse expenses incurred by an indemnified person inconnection with his appearance as a witness or other participation in aproceeding at a time when he is not a named defendant or respondent in theproceeding.

 

8.4                                 Insurance.  The Corporation may purchase and maintaininsurance or another arrangement on behalf of any person who is or was adirector or an officer, employee, agent of the Corporation or who is or wasserving at the request of the Corporation as a director, officer, employee,agent or similar functionary of another foreign or domestic corporation,partnership, joint venture, sole proprietorship, trust, employee benefit plan,or other enterprise, against any liability asserted against him and incurred byhim in such a capacity or arising out of his status as such a person, whetheror not the Corporation would have the power to indemnify such person against thatliability under these Bylaws or the Act.

 

8.5                                 Officers,Employees and Agents.  An officer ofthe Corporation shall be indemnified to the same extent as a director, and isentitled to seek indemnification under this part 8 to the same extent as adirector.  The Corporation may indemnifyand advance expenses to an employee or agent of the Corporation, and personswho are not or were not officers, employees, or agents of the Corporation butwho are or were serving at the request of the Corporation as a director,officer, partner, venturer, proprietor, trustee, employee, agent or similarfunctionary of another foreign or domestic corporation, partnership, jointventure, sole proprietorship, trust, employee benefit plan, or otherenterprise, to the same extent that it may indemnify and advance expenses todirectors under this part 8 or to such further extent as may be permitted orrequired by law.

 

8.6                                 OtherProtection and Indemnification.  Theprotection and indemnification provided hereunder shall not be deemed exclusiveof any other rights to which such person may be entitled under any agreement,insurance policy, vote of shareholders, law, or otherwise.

 

8.7                                 Noticeof Indemnification of or Advance of Expenses. Any indemnification of oradvance of expenses to a person in accordance with this part 8 shall bereported in writing to the shareholders with or before the notice or waiver ofnotice of the next shareholders’ meeting or with or before the next submissionto shareholders of a consent to action without a meeting pursuant to Article9.10.A, of the Act, and, in any case, within the 12-month period immediatelyfollowing the date of the indemnification or advance.

 

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9.  General Provisions

 

9.1                                 FiscalYear.  The fiscal year of theCorporation shall be fixed by resolution of the board of directors.

 

9.2                                 Seal.  The corporate seal shall be in such form asmay be prescribed by the board of directors. The seal may be used by causing it or a facsimile thereof to be impressedor affixed or in any manner reproduced.

 

9.3                                 Minutes.  The Corporation shall keep correct andcomplete books and records of account and shall keep minutes of the proceedingsof its shareholders and board of directors, and shall keep at its registeredoffice or principal place of business, or at the office of its transfer agentor registrar, a record of its shareholders, giving names and addresses of allshareholders and the number and class of the shares held by each.

 

9.4                                 Amendment.  Unless otherwise provided by the Articles ofIncorporation or unless the shareholders in amending, adopting or repealing aparticular Bylaw provision expressly provide that the directors may not amendor repeal such provision, these Bylaws may be altered, amended or repealed andnew Bylaws may be adopted, at any meeting of the Board of Directors at which aquorum is present, by the affirmative vote of at least two-thirds (2/3) of theentire Board of Directors, provided notice of the proposed alteration,amendment, or repeal is contained in the notice of the meeting.  Unless otherwise provided in the Articles ofIncorporation or by a Bylaw adopted by the shareholders as to all or someportion of these Bylaws, the shareholders may amend, repeal, or adopt Bylaws ofthe Corporation by the affirmative vote of the holders of a majority of theshares outstanding and entitled to vote thereon at any meeting of theshareholders, provided that notice of the proposed Bylaw action is contained inthe provided notice of the meeting, even though the Bylaws may also be amended,repealed, or adopted by the Board of Directors.  Any action not permitted under these Bylaws as in effect on thedate of the giving of notice of a meeting of shareholders regarding a proposalto alter, amend, repeal or adopt new bylaws in a manner to permit such action,may not be submitted for a vote by the shareholders at, nor may it be thesubject of a prior notice of a special meeting to the Secretary of theCorporation pursuant to these Bylaws prior to, the meeting at which the Bylawsare altered, amended or repealed or new bylaws are adopted.

 

9.5                                 Notice.  Except as provided in Section 4.4 above, anynotice to directors or shareholders shall be in writing and shall be deliveredpersonally or mailed to the directors or shareholders at their respectiveaddresses appearing on the books of the Corporation.  Notice by mail shall be deemed to be given at the time when thesame shall be deposited in the United States mail, postage prepaid.  Notice to directors may also be given byfacsimile transmittal.  Whenever anynotice is required to be given under the provisions of applicable statutes orof the Articles of Incorporation or of these Bylaws, a waiver thereof inwriting signed by the person or persons entitled to such notice, whether beforeor after the time stated therein, shall be deemed equivalent to the giving ofsuch notice.

 

 
| Dated: July 14, 2003 | /s/ JEFFREY J. WOOLEY         |
|----------------------|-------------------------------|
|                 | Jeffrey J. Wooley,  Secretary |

 

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