KRS 355.3-106: Unconditional promise or order.

(1) Except as provided in this section, for the purposes of KRS 355.3-104(1), a promise

or order is unconditional unless it states:

(a) An express condition to payment;

(b) That the promise or order is subject to or governed by another record; or

(c) That righ ts or obligations with respect to the promise or order are stated in

another record. A reference to another record does not of itself make the

promise or order conditional.

(2) A promise or order is not made conditional:

(a) By a reference to another recor d for a statement of rights with respect to

collateral, prepayment, or acceleration; or

(b) Because payment is limited to resort to a particular fund or source.

(3) If a promise or order requires, as a condition to payment, a countersignature by a

person w hose specimen signature appears on the promise or order, the condition

does not make the promise or order conditional for the purposes of KRS 355.3 -

104(1). If the person whose specimen signature appears on an instrument fails to

countersign the instrument, the failure to countersign is a defense to the obligation

of the issuer, but the failure does not prevent a transferee of the instrument from

becoming a holder of the instrument.

(4) If a promise or order at the time it is issued or first comes into posse ssion of a

holder contains a statement, required by applicable statutory or administrative law,

to the effect that the rights of a holder or transferee are subject to claims or defenses

that the issuer could assert against the original payee, the promise o r order is not

thereby made conditional for the purposes of KRS 355.3 -104(1); but if the promise

or order is an instrument, there cannot be a holder in due course of the instrument.