                                 CODE OF VIRGINIA

DIRECTOR CONFLICT OF INTERESTS (§ 13.1-871)

A. A conflict of interests transaction is a transaction with the corporation in
which a director of the corporation has an interest that precludes him 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 members 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
votes entitled to be counted under this subsection. The votes controlled by a
director who is not disinterested may not be counted in a vote of members to
determine whether to authorize, approve, or ratify a conflict of interests
transaction under subdivision A 2. The director&#8217;s votes, however, may be
counted in determining whether the transaction is approved under other sections
of this Act. A majority of the members, 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, § 13.1-223; 1956, c. 428; 1985, c. 522; 2007, c. 925.