                                 CODE OF VIRGINIA

DIRECTOR CONFLICT OF INTERESTS (§ 13.1-691)

A. A conflict of interests transaction is a transaction with the corporation in
which a director of the corporation has an interest that precludes the director
from being a disinterested director. A conflict of interests transaction is not
voidable by the corporation solely because of the director&#8217;s interest in
the transaction if any one of the following is true:

   1. The material facts of the transaction and the director&#8217;s interest
   were disclosed or known to the board of directors or a committee of the board
   of directors and the board of directors or committee authorized, approved, or
   ratified the transaction;

   2. The material facts of the transaction and the director&#8217;s interest
   were disclosed to the shareholders entitled to vote and they authorized,
   approved, or ratified the transaction; or

   3. The transaction was fair to the corporation.

B. For purposes of subdivision A 1, a conflict of interests transaction is
authorized, approved, or ratified if it receives the affirmative vote of a
majority of the disinterested directors on the board of directors, or on the
committee. A transaction shall not be authorized, approved, or ratified under
this section by a single director. If a majority of the disinterested directors
vote to authorize, approve or ratify the transaction, a quorum is present for
the purpose of taking action under this section. The presence of, or a vote cast
by, a director who is not disinterested does not affect the validity of any
action taken under subdivision A 1 if the transaction is otherwise authorized,
approved or ratified as provided in that subsection.

C. For purposes of subdivision A 2, a conflict of interests transaction is
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 is not disinterested may not be counted in a
vote of shareholders to determine whether to authorize, approve, or ratify a
conflict of interests transaction under subdivision A 2. 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, whether
or not present, that are entitled to be counted in a vote on the transaction
under this subsection constitutes a quorum for the purpose of taking action
under this section.

HISTORY: Code 1950, § 13.1-39.1; 1975, c. 500; 1980, c. 341; 1985, c. 522;
2005, c. 765.