KRS 271B.8-550: Determination and authorization of indemnification.

(1) A corporation shall not indemnify a director under KRS 271B.8-510 unless

authorized in the specific case after a determination has been made that

indemnification of the director is permissible in the circumstances because he

has met the standard of conduct set forth in KRS 271B.8-510.

(2) The determination shall be made:

(a) By the board of directors by majority vote of a quorum consisting of

directors not at the time parties to the proceeding;

(b) If a quorum cannot be obtained under subsection (2)(a) of this section, by

majority vote of a committee duly designated by the board of directors (in

which designation directors who are parties may participate), consisting

solely of two (2) or more directors not at the time parties to the

proceeding;

(c) By special legal counsel:

1. Selected by the board of directors or its committee in the manner

prescribed in subsection (2)(a) and (b) of this section; or

2. If a quorum of the board of directors cannot be obtained under

subsection (2)(a) of this section and a committee cannot be

designated under subsection (2)(b) of this section, selected by

majority vote of the full board of directors (in which selection

directors who are parties may participate); or

(d) By the shareholders, but shares owned by or voted under the control of

directors or shareholders who are at the time parties to the proceeding

shall not be voted on the determination.

(3) Authorization of indemnification and evaluation as to reasonableness of

expenses shall be made in the same manner as the determination that

indemnification is permissible, except that if the determination is made by

special legal counsel, authorization of indemnification and evaluation as to

reasonableness of expenses shall be made by those entitled under subsection

(2)(c) of this section to select counsel.