Corporations Rules 4

Set by bylaws

One or more directors. May be varied according to bylaws adopted by shareholders

Must be at least 18 years old

By laws and cert. of incorporations prescribes qualifications.

Initial directors elected by incorporators

Directors are thereafter elected on yearly basis by shareholders at annual shareholders' meeting.

Elected each year at annual shareholder meeting

May have staggered voting, divided in up to 4 classes of directors

Director may resign at any time with written notice

May be removed by shareholders without cause. May only be removed by class of stock that voted him in.

Directors only entitled to notice of special meetings. May waive notice to meetings.

Not required to be physically present at meetings, but may only vote if he is in some other way present (via conference call, but not via proxy)

May act without meeting via unanimous written consent.

Quorum: majority of all directors in office, unless otherwise required in cert. of incorporation or bylaws. Must be present at time vote is taken to be counted for quorum.

Passage by majority, unless higher required.

No proxy voting

Agreement btwn directors as to voting is unenforceable. (must use independent judgment)

Consist of two or more directors

May not: declare distributions, recommend actions requiing shareholder approval, fill vaacancies on the board or its committees, change or repeal bylaws.

Sarbanes-Oxley requires corporation to have audit, compensation, and nominating committees. Members of audit committee must be independent and not otherwise employed or compensated by the corporation.

Duty of care: may reasonably rely on information from officers and employees of corp., outside attorneys and accountants, and a board committee. Must exercise business judgment. Decisions made using business judgment are protected from shareholder disapproval under business judgment rule, absent any bad faith.

Duty of loyalty: no self-dealing (includes transactions between corporation and those related to director), unless approved by board or shareholders or if transaction passes "total fairness" test. No usurping of corporate opportunity (one in which corporation has an existing interest or that is in the corporation's line of business). No competition with the corporation.

Indemnification and Insurance: may seek indemnification from corporation. Corp must indemnify where director is successful in defense against derivative suit. MAY indemnify om insuccessful defense where director acted in good faith or had no reason to believe conduct was lawful. MAY NOT indemnify where in other circumstances.

Entitled to inspect corporate books and record in his performance of duty.