S.F. _____ Section 1. Section 490.140, Code 2011, is amended by adding 1 the following new subsection: 2 NEW SUBSECTION . 21A. “Public corporation” means a 3 corporation that has a class of voting stock that is listed on 4 a national securities exchange or held of record by more than 5 two thousand shareholders. 6 Sec. 2. Section 490.702, subsection 5, unnumbered paragraph 7 1, Code 2011, is amended to read as follows: 8 Notwithstanding subsections 1 through 4, a public 9 corporation which has a class of voting stock that is listed on 10 a national securities exchange, authorized for quotation on the 11 national association of securities dealers automated quotations 12 – national market system, or held of record by more than two 13 thousand shareholders, is required to hold a special meeting 14 only upon the occurrence of either of the following: 15 Sec. 3. Section 490.803, subsections 2 and 3, Code 2011, are 16 amended to read as follows: 17 2. a. The number of directors may be increased or decreased 18 from time to time by amendment to, or in the manner provided 19 in, the articles of incorporation or the bylaws. 20 b. Notwithstanding paragraph “a” , the number of directors of 21 a public corporation subject to section 490.806A, subsection 1, 22 shall be increased or decreased only by the affirmative vote of 23 a majority of its board of directors. 24 3. Directors are elected at the first annual shareholders’ 25 meeting and at each annual meeting thereafter unless their 26 terms are staggered under section 490.806 or 490.806A . 27 Sec. 4. Section 490.805, subsections 2 and 4, Code 2011, are 28 amended to read as follows: 29 2. The terms of all other directors expire at the next 30 annual shareholders’ meeting following their election unless 31 their terms are staggered under section 490.806 or 490.806A . 32 4. The term of a director elected to fill a vacancy expires 33 at the next shareholders’ meeting at which directors are 34 elected , except as provided in section 490.806A . 35 -1- LSB 1496SC (1) 84 da/nh 1/ 7

S.F. _____ Sec. 5. Section 490.806, Code 2011, is amended to read as 1 follows: 2 490.806 Staggered terms for directors. 3 The Except as otherwise provided in section 490.806A, 4 a corporation’s articles of incorporation may provide for 5 staggering the terms of its directors by dividing the total 6 number of directors into two or three groups, with each group 7 containing one-half or one-third of the total, as near as may 8 be. In that event, the terms of directors in the first group 9 expire at the first annual shareholders’ meeting after their 10 election, the terms of the second group expire at the second 11 annual shareholders’ meeting after their election, and the 12 terms of the third group, if any, expire at the third annual 13 shareholders’ meeting after their election. At each annual 14 shareholders’ meeting held thereafter, directors shall be 15 chosen for a term of two years or three years, as the case may 16 be, to succeed those whose terms expire. 17 Sec. 6. NEW SECTION . 490.806A Public corporations —— 18 staggered terms. 19 1. Except as provided in subsection 2, and notwithstanding 20 anything to the contrary in the articles of incorporation or 21 bylaws of a public corporation, the terms of directors of a 22 public corporation shall be staggered by dividing the number 23 of directors into three groups, as nearly equal in number as 24 possible. The first group shall be referred to as “class I 25 directors”, the second group shall be referred to as “class II 26 directors”, and the third group shall be referred to as “class 27 III directors”. 28 a. On or before the date on which a public corporation first 29 convenes an annual shareholders’ meeting following the time 30 the public corporation becomes subject to this subsection, the 31 board of directors of the public corporation shall by majority 32 vote designate from among its members directors to serve as 33 class I directors, class II directors, and class III directors. 34 b. The terms of directors serving in office on the date that 35 -2- LSB 1496SC (1) 84 da/nh 2/ 7

S.F. _____ the public corporation becomes subject to this subsection shall 1 be as follows: 2 (1) Class I directors shall continue in office until the 3 first annual shareholders’ meeting following the date that the 4 public corporation becomes subject to this subsection, and 5 until their successors are elected. The shareholders’ meeting 6 shall be conducted not less than eleven months following the 7 last annual shareholders’ meeting conducted before the public 8 corporation became subject to this subsection. 9 (2) Class II directors shall continue in office until one 10 year following the first annual shareholders’ meeting described 11 in subparagraph (1), and until their successors are elected. 12 (3) Class III directors shall continue in office until 13 two years following the first annual shareholders’ meeting 14 described in subparagraph (1), and until their successors are 15 elected. 16 c. At each annual shareholders’ meeting of a public 17 corporation subject to this subsection, the successors to the 18 class of directors whose term expires at that meeting shall be 19 elected to hold office for a term of three years following such 20 meeting and until their successors are elected. 21 d. The board of directors of a public corporation subject 22 to this subsection shall adopt an amendment to its articles of 23 incorporation as provided in section 490.1005A. 24 e. Notwithstanding this subsection, the articles of 25 incorporation of a public corporation may confer upon the 26 holders of preferred shares the right to elect one or more 27 directors pursuant to section 490.804, who shall serve for such 28 term, and have such voting powers, as shall be stated in the 29 articles of incorporation. 30 2. Every public corporation shall be subject to subsection 31 1, unless it is exempt pursuant to this subsection. 32 a. (1) (a) In order for a public corporation in existence 33 on the effective date of this Act to be exempt from subsection 34 1, its board of directors must adopt a resolution or take 35 -3- LSB 1496SC (1) 84 da/nh 3/ 7

S.F. _____ action under section 490.821 expressly making an election to be 1 exempt from the provisions of subsection 1. Such resolution 2 or action must be adopted or taken within forty days after the 3 effective date of this Act. 4 (b) In order for a corporation which becomes a public 5 corporation after the effective date of this Act to be 6 exempt from subsection 1, its board of directors must adopt 7 a resolution or take action under section 490.821 expressly 8 making an election to be exempt from the provisions of 9 subsection 1. Such resolution or action must be adopted or 10 taken within forty days after the date when the corporation 11 became a public corporation. 12 (2) Upon adopting the resolution or taking board action 13 under section 490.821, the public corporation is no longer 14 subject to subsection 1, effective immediately unless otherwise 15 provided for in the resolution or by the board action. 16 b. If on the effective date of this Act the articles of 17 incorporation of the public corporation already provide for 18 staggering the terms of its directors under section 490.806, 19 the public corporation shall be exempt from the provisions of 20 subsection 1. In such event, no further corporate action is 21 required, and the public corporation is not required to amend 22 or modify any provision of its articles of incorporation or 23 bylaws in order to be exempt from subsection 1. 24 3. A public corporation that is exempt pursuant to 25 subsection 2 may elect to become subject to subsection 1 at any 26 time. To do so, its board of directors must adopt a resolution 27 or take action under section 490.821 expressly making the 28 election. On that date the corporation shall become subject to 29 subsection 1, unless another date is expressly provided in the 30 resolution or by the board action. 31 Sec. 7. Section 490.808, subsection 1, Code 2011, is amended 32 to read as follows: 33 1. a. The Except as provided in paragraph “b” , the 34 shareholders may remove one or more directors with or without 35 -4- LSB 1496SC (1) 84 da/nh 4/ 7

S.F. _____ cause unless the articles of incorporation provide that 1 directors may be removed only for cause. 2 b. Notwithstanding its articles of incorporation or bylaws, 3 the shareholders of a public corporation subject to section 4 490.806A, subsection 1, shall not remove a director without 5 cause. 6 Sec. 8. Section 490.810, Code 2011, is amended by adding the 7 following new subsection: 8 NEW SUBSECTION . 1A. For a public corporation subject 9 to section 490.806A, subsection 1, a vacancy on the board of 10 directors, including but not limited to a vacancy resulting 11 from an increase in the number of directors, shall be filled 12 solely by the affirmative vote of a majority of the remaining 13 directors, even though less than a quorum of the board. 14 Sec. 9. NEW SECTION . 490.1005A Public corporation —— 15 amendment by board of directors. 16 1. The board of directors of a public corporation subject to 17 section 490.806A, subsection 1, shall adopt an amendment to its 18 articles of incorporation which includes all of the following: 19 a. A statement that the public corporation is subject to 20 section 490.806A, subsection 1. 21 b. Any necessary changes to the articles of incorporation 22 required to implement the requirements of section 490.806A, 23 subsection 1, including by staggering the terms of the board of 24 directors as described in that subsection. 25 2. Any amendment to the articles of incorporation as 26 provided in subsection 1 of this section shall be made without 27 shareholder approval. 28 3. Any amendment to the articles of incorporation as 29 provided in subsection 1 shall not be subsequently amended, 30 modified, superseded, or rescinded in a manner that is 31 inconsistent with the requirements of section 490.806A, 32 subsection 1. 33 Sec. 10. EFFECTIVE UPON ENACTMENT. This Act, being deemed 34 of immediate importance, takes effect upon enactment. 35 -5- LSB 1496SC (1) 84 da/nh 5/ 7

S.F. _____ EXPLANATION 1 GENERAL. This bill makes special provision for the 2 management of a public corporation by its board of directors. 3 PUBLIC CORPORATION DEFINED. The bill defines a public 4 corporation as either (1) having a class of voting stock listed 5 on a national trading exchange or (2) comprised of more than 6 2,000 shareholders. It deletes a provision referencing the 7 national association of securities dealers automated quotations 8 – national market system to reflect that such system is now a 9 national securities exchange. 10 STAGGERED TERMS FOR BOARD OF DIRECTORS. Currently, the 11 terms of directors for all corporations are for one year 12 (Code section 490.805), unless the terms are staggered by 13 dividing the total number of directors into two groups with 14 the directors serving either one or two years depending upon 15 the group or by dividing directors into three groups with the 16 directors serving one, two, or three years depending upon the 17 group (Code section 490.806). The bill requires that all 18 public corporations divide their number of directors into three 19 equal groups (referred to as “classes”) serving staggered 20 three-year terms as designated by the current board. The 21 staggered term requirements apply to directors elected by 22 the public corporation’s holders of common shares and not to 23 directors elected by holders of preferred shares (generally 24 a class of ownership enjoying a higher status when claiming 25 assets or earnings). 26 EXEMPTIONS. A public corporation may be exempted from the 27 new staggered term requirements, regardless of whether it is 28 subject to the one-term requirements in Code section 490.805 29 or the staggered term requirements in Code section 490.806. 30 The exemption applies only if its board makes an election to 31 opt out of the new staggered term requirements in Code section 32 490.806A by a date certain. The opt-out provision applies to a 33 public corporation that existed on the bill’s effective date or 34 existed at any time as a private corporation and later became a 35 -6- LSB 1496SC (1) 84 da/nh 6/ 7

S.F. _____ public corporation after the bill’s effective date. A public 1 corporation is automatically exempted from the new staggered 2 term requirements if it is already subject to the staggered 3 term requirements in Code section 490.806. It is not required 4 to amend its articles of incorporation or bylaws. 5 OPT-IN REQUIREMENTS. For a public corporation that is 6 exempt from the new staggered term requirements either because 7 of an opt-out election or automatically, its board may at 8 any time elect to become subject to the new staggered term 9 requirements in Code section 490.806A. 10 LIMITATION ON FUTURE AMENDMENTS TO ARTICLES OF 11 INCORPORATION. A public corporation that is subject to the 12 new staggered term requirements in Code section 490.806A must 13 amend its articles of incorporation. The amendment cannot be 14 revised in the future in a manner that is inconsistent with the 15 requirements. 16 OTHER PROVISIONS. Once a public corporation becomes subject 17 to the staggered term requirements in Code section 490.806A, 18 its directors cannot be removed by the shareholders without 19 cause. A vacancy on the board is to be filled only by the 20 affirmative vote of a majority of the remaining directors. 21 EFFECTIVE DATE. The bill takes effect upon enactment. 22 -7- LSB 1496SC (1) 84 da/nh 7/ 7