KRS 271B.8-310: Director conflict of interest.

(1) A conflict of interest transaction shall be a transaction with the corporation in which

a director of the corporation has a direct or indirect interest. A conflict of interest

transaction shall not be voidable by the corporation solely because of the direc tor's

interest in the transaction if any one (1) of the following is true:

(a) The material facts of the transaction and the director's interest were disclosed

or known to the board of directors or a committee of the board of directors

and the board of dir ectors or committee authorized, approved, or ratified the

transaction;

(b) The material facts of the transaction and the director's interest were disclosed

or known to the shareholders entitled to vote and they authorized, approved,

or ratified the transaction; or

(c) The transaction was fair to the corporation.

(2) For purposes of this section, a director of the corporation shall have an indirect

interest in a transaction if:

(a) Another entity in which he has a material financial interest or in which he i s a

general partner is a party to the transaction; or

(b) Another entity of which he is a director, officer, or trustee is a party to the

transaction and the transaction is or should be considered by the board of

directors of the corporation.

(3) For purposes of subsection (1)(a) of this section, a conflict of interest transaction

shall be considered authorized, approved, or ratified if it receives the affirmative

vote of a majority of the directors on the board of directors (or on the committee)

who have no direct or indirect interest in the transaction, but a transaction shall not

be authorized, approved, or ratified under this section by a single director. If a

majority of the directors who have no direct or indirect interest in the transaction

vote to au thorize, approve, or ratify the transaction, a quorum shall be present for

the purpose of taking action under this section. The presence of, or a vote cast by, a

director with a direct or indirect interest in the transaction shall not affect the

validity of any action taken under subsection (1)(a) of this section if the transaction

is otherwise authorized, approved, or ratified as provided in that subsection.

(4) For purposes of subsection (1)(b) of this section, a conflict of interest transaction

shall be considered authorized, approved, or ratified if it receives the vote of a

majority of the shares entitled to be counted under this subsection. Shares owned by

or voted under the control of a director who has a direct or indirect interest in the

transaction, and shares owned by or voted under the control of an entity described in

subsection (2)(a) of this section, may not be counted in a vote of shareholders to

determine whether to authorize, approve, or ratify a conflict of interest transaction

under subsection (1)(b) of this section. The vote of those shares, however, shall be

counted in determining whether the transaction is approved under other sections of

this chapter. A majority of the shares that are entitled to be counted in a vote on the

transaction under this subsection shall constitute a quorum for the purpose of taking

action under this section.