DIY Legal Forms

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Transactions With Interested Directors

1. Validity of Contracts and Transactions. No contract or other transaction between the corporation (Corporation) and any corporation, association, or firm in which any Director of Corporation is a Director or officer or in which the Director has a pecuniary or other interest is, per se, either void or voidable. Any such contract or transaction is binding on Corporation if any of the following conditions are satisfied:

a. The material facts as to (i) the Director's interest or position and (ii) the contract or transaction are disclosed to or known by the Board of Directors of Corporation or a majority thereof, and the Board authorizes, approves, or ratifies the contract or transaction by a majority vote of the disinterested Directors, even though the disinterested Directors are less than a quorum;

b. The material facts as to (i) the Director's interest or position and (ii) the contract or transaction are disclosed to or known by the shareholders of Corporation or a majority thereof, and the shareholders authorize, approve, or ratify such contract or transaction by a vote sufficient for that purpose; or

c. The contract or transaction is fair or commercially reasonable to Corporation at the time it is executed, or at the time it is authorized, approved, or ratified.

2. Quorum. Any interested Directors may be counted in determining the presence of a quorum at any meeting of the Board of Directors of Corporation that authorizes, approves, or ratifies any contract or transaction.