Section 10A-3A-8.60 Interested Directors; Quorum.

As used in this chapter, unless otherwise specified or unless the context otherwise requires, the following terms shall mean: (a) CONFLICTING INTEREST TRANSACTION means an act or transaction effected or proposed to be effected by the nonprofit corporation (or by an entity controlled by the nonprofit corporation): (1) to which, at the relevant time, a director or officer is a party; (2) respecting which, at the relevant time, the director or officer had knowledge and a material financial interest known to the director or officer; or (3) respecting which, at the relevant time, the director or officer knew that a related person was a party or had a material financial interest. (b) CONTROL or CONTROLLED BY means (i) having the power, directly or indirectly, to elect or remove a majority of the members of the board of directors or other governing authority of an entity, whether through the ownership of voting shares or interests, by contract, or otherwise or (ii) being subject to a majority of the risk of loss from the entity’s activities or entitled to receive a majority of the entity’s residual returns. (c) CONTROL GROUP means two or more persons that, by virtue of an agreement, arrangement, or understanding between or among those persons, constitute a controlling person. (d) CONTROLLING PERSON means any person that, together with (i) any related person; and (ii) any person that controls, is controlled by, or is under common control with that person: (1) With respect to a membership nonprofit corporation: (i) owns or controls a majority in voting power of the outstanding membership interests entitled to vote generally in the election of directors or in the election of directors who have a majority in voting power of the votes of all directors on the board of directors; (ii) has the right, by contract or otherwise, to cause the election of nominees who are selected at the discretion of that person and who constitute either a majority of the members of the board of directors of a membership nonprofit corporation or directors entitled to cast a majority in voting power of the votes of all directors on the board of directors of a membership nonprofit corporation; (iii) has the power functionally equivalent to that of a member that owns or controls a majority in voting power of the outstanding membership interests entitled to vote generally in the election of directors by virtue of ownership or control of at least one-third in voting power of the outstanding membership interests entitled to vote generally in the election of directors or in the election of directors who have a majority in voting power of the votes of all directors on the board of directors and the power to exercise managerial authority over the business and affairs of the membership nonprofit corporation; or (iv) either (A) has the power and authority to exercise and perform certain corporate powers, activities and affairs pursuant to a provision in the certificate of incorporation permitted by Section 10A-3A-8.01 or (B) has the right to approve certain matters as permitted by Section 10A-3A-2.02(b)(2)(ix). (2) With respect to a nonmembership nonprofit corporation: (i) has the right, by contract or otherwise, to cause the election of nominees who are selected at the discretion of that person and who constitute either a majority of the members of the board of directors of a nonmembership nonprofit corporation or directors entitled to cast a majority in voting power of the votes of all directors on the board of directors of a nonmembership nonprofit corporation; or (ii) either (A) has the power and authority to exercise and perform certain corporate powers, activities, and affairs pursuant to a provision in the certificate of incorporation permitted by Section 10A-3A-8.01 or (B) has the right to approve certain matters as permitted by Section 10A-3A-2.02(b)(2)(ix). (e) CONTROLLING PERSON TRANSACTION means an act or transaction between the nonprofit corporation or one or more of its subsidiaries, on the one hand, and a controlling person or a control group, on the other hand, or an act or transaction from which a controlling person or a control group receives a material financial interest. (f) DISINTERESTED PERSON means any member or other person that does not have a material financial interest in the act or transaction at issue or, if applicable, a material relationship with the controlling person or other member of the control group, or any other person that has a material financial interest in the act or transaction. (g) FAIR TO THE NONPROFIT CORPORATION means the act or transaction at issue, as a whole, is beneficial to the nonprofit corporation or its members, if any, in their capacity as members, given the consideration paid to or received by the nonprofit corporation or its members or other benefit conferred on the nonprofit corporation or its members, if any, and taking into appropriate account whether the act or transaction meets both of the following: (i) it is fair in terms of the director’s, officer’s, controlling person’s, or control group’s dealings with the nonprofit corporation, as the case may be; and (ii) it is comparable to what might have been obtainable in an arm’s length transaction available to the nonprofit corporation. (h) MATERIAL FINANCIAL INTEREST means a nonspeculative financial interest in an act or transaction, other than one that would devolve on the nonprofit corporation or the members generally, that would reasonably be expected to impair the objectivity of the director’s or officer’s judgment when participating in the negotiation, authorization, or approval of the act or transaction at issue. (i) MATERIAL RELATIONSHIP has the meaning set forth in Section 10A-3A-1.60. (j) QUALIFIED DIRECTOR has the meaning set forth in Section 10A-3A-1.60. (k) RELATED PERSON has the meaning set forth in Section 10A-3A-2.02. (l) RELEVANT TIME means (i) the time at which directors’ action respecting the act or transaction is taken in compliance with Sections 10A-3A-8.61(c) or 10A-3A-8.62(c) or (ii) if the act or transaction is not brought before the board of directors (or a committee) for action under Section 10A-3A-8.61(d), at the time the nonprofit corporation (or an entity controlled by the nonprofit corporation) becomes legally obligated to consummate the act or transaction. (m) REQUIRED DISCLOSURE means disclosure of (i) the existence and nature of the director’s or officer’s conflicting interest and (ii) all facts known to the director or officer respecting the subject matter of the act or transaction that a qualified director would reasonably believe to be material in deciding whether to proceed with the act or transaction.