Section 50A: Directors; staggered terms; election for exemption; vacancies
Section 50A. (a) Except as provided in paragraph (b) of this section and notwithstanding anything to the contrary in this chapter or in the articles of organization or by-laws of any registered corporation, the directors of a registered corporation shall be classified, with respect to the time for which they severally hold office, into three classes, as nearly equal in number as possible; the term of office of those of the first class (''Class I Directors'') to continue until the first annual meeting following the date such registered corporation becomes subject to this paragraph (a) and until their successors are duly elected and qualified; the term of office of those of the second class (''Class II Directors'') to continue until the second annual meeting following the date such registered corporation becomes subject to this paragraph (a) and until their successors are duly elected and qualified; and the term of office of those of the third class (''Class III Directors'') to continue until the third annual meeting following the date such registered corporation becomes subject to this paragraph (a) and until their successors are duly elected and qualified. At each annual meeting of a registered corporation subject to this section, the successors to the class of directors whose term expires at that meeting shall be elected to hold office for a term continuing until the annual meeting held in the third year following the year of their election and until their successors are duly elected and qualified. On or prior to the date on which a registered corporation first convenes an annual meeting following the time at which such registered corporation becomes subject to paragraph (a), the board of directors of such registered corporation shall adopt a vote designating, from among its members, directors to serve as Class I Directors, Class II Directors and Class III Directors. Notwithstanding this paragraph (a), the articles of organization may confer upon holders of any class or series of preference or preferred stock the right to elect one or more directors who shall serve for such term, and have such voting powers, as shall be stated in the articles of organization; provided, however, that no such provision of the articles of organization which confers upon such holders any such right and which is filed with the state secretary after the effective date of this paragraph (a) shall become effective unless prior to its adoption it was approved by a vote of a majority in number of the directors of such registered corporation.
(b)(i) The provisions of this section shall apply to every registered corporation (whether or not notice of an annual meeting of such registered corporation has been given on or prior to the effective date of this section), unless the board of directors of such registered corporation, or the stockholders of such registered corporation by a vote of two-thirds of each class of stock outstanding at a meeting duly called for the purpose of such vote which meeting occurs after January 1, 1992, shall adopt a vote providing that such corporation elects to be exempt from the provisions of paragraph (a) of this section. Upon adoption of any such vote, the provisions of paragraph (a) of this section shall, unless otherwise provided in such vote, become immediately ineffective with respect to such registered corporation and the provisions of section 50 of this chapter shall become immediately effective with respect to such registered corporation as soon as the provisions of paragraph (a) of this section are no longer effective.
(ii) In the event that any registered corporation shall so elect by vote of the board of directors to be exempt pursuant to clause (i) of this paragraph (b) such registered corporation may at any time thereafter adopt a vote of its board of directors electing to be subject to the provisions of paragraph (a) of this section. In the event that any registered corporation shall so elect by vote of 2/3 of the shareholders adopted after January 1, 1992 to be exempt pursuant to clause (i) of this paragraph (b) such registered corporation may at any time thereafter adopt a vote of 2/3 of the shareholders electing to be subject to the provisions of paragraph (a) of this section. Upon adoption of any such vote, the provisions of this section shall, unless otherwise provided in such vote, immediately become effective.
(c) Notwithstanding anything to the contrary in this chapter or in the articles of organization or by-laws of any registered corporation, in the case of directors of a registered corporation who are classified with respect to the time for which they severally hold office pursuant to paragraph (a) of this section, stockholders may effect, by the affirmative vote of a majority of the shares outstanding and entitled to vote in the election of directors, the removal of any director or directors or the entire board of directors only for cause.
(d) Notwithstanding anything to the contrary in this chapter or in the articles of organization or by-laws of any registered corporation, in the case of directors of a registered corporation who are classified with respect to the time for which they severally hold office pursuant to paragraph (a) of this section, (i) vacancies and newly created directorships, whether resulting from an increase in the size of the board of directors, from the death, resignation, disqualification or removal of a director or otherwise, shall be filled solely by the affirmative vote of a majority of the remaining directors then in office, even though less than a quorum of the board of directors, (ii) any director elected in accordance with clause (i) of this paragraph (d) shall hold office for the remainder of the full term of the class of directors in which the vacancy occurred or the new directorship was created and until such director's successor shall have been elected and qualified, (iii) no decrease in the number of directors constituting the board of directors shall shorten the term of any incumbent director, and (iv) the number of directors of a registered corporation subject to paragraph (a) of this section shall be fixed only by vote of its board of directors.
(e) As used in this section, the following words shall have the following meanings:—
(1) ''Annual meeting'', any annual meeting of stockholders and any special meeting of stockholders in lieu of an annual meeting provided for by law, the articles of organization, by-laws or otherwise.
(2) ''Cause'', with respect to the removal of any director of a registered corporation, only (i) conviction of a felony, (ii) declaration of unsound mind by order of court, (iii) gross dereliction of duty, (iv) commission of an action involving moral turpitude, or (v) commission of an action which constitutes intentional misconduct or a knowing violation of law if such action in either event results both in an improper substantial personal benefit and a material injury to the registered corporation.
(3) ''Registered corporation'', any corporation to which the provisions of paragraph (a) of section three of this chapter apply, and which has a class of voting stock registered under the Securities Exchange Act of 1934, as amended; provided, that if a corporation is subject to paragraph (a) of this section at the time it ceases to have any class of voting stock so registered, such corporation shall nonetheless be deemed to be a registered corporation for a period of twelve months following the date it ceased to have such stock registered.
(f) Nothing in this section shall be deemed to amend, modify or otherwise effect the validity of any provision of the articles of organization or by-laws of any corporation during any period that it elects not to be subject to paragraph (a) of this section, whether or not currently in effect, providing for the division of directors into classes as contemplated by section fifty of this chapter. No provision of the articles of organization or by-laws of any registered corporation that is subject to paragraph (a) of this section, whether or not currently in effect, shall render inapplicable any provision of this section or require the board of directors of such corporation to adopt any vote pursuant to paragraph (b) of this section. No vote adopted by a board of directors electing not to be subject to paragraph (a) of this section shall render invalid, or prevent adoption of, any amendment to such corporation's articles of organization as contemplated by section fifty of this chapter.