                                 CODE OF VIRGINIA

ELECTION TO PURCHASE IN LIEU OF DISSOLUTION (§ 13.1-749.1)

A. Unless otherwise provided in the articles of incorporation, in a proceeding
under subdivision A 1 of &#xA7; 13.1-747 to dissolve a corporation, the
corporation may elect or, if it fails to elect, one or more shareholders may
elect to purchase all shares owned by the petitioning shareholder at the fair
value of the shares. An election pursuant to this section shall be irrevocable
unless the court determines that it is equitable to set aside or modify the
election.

B. An election to purchase pursuant to this section may be filed with the court
at any time within 90 days after the filing of the petition under subdivision A
1 of &#xA7; 13.1-747 or at such later time as the court in its discretion may
allow. If the election to purchase is filed by one or more shareholders, the
corporation shall, within 10 days thereafter, give written notice to all
shareholders, other than the petitioner. The notice shall state the name and
number of shares owned by the petitioner and the name and number of shares owned
by each electing shareholder and shall advise the recipients of their right to
join in the election to purchase shares in accordance with this section.
Shareholders who wish to participate shall file notice of their intention to
join in the purchase no later than 30 days after the effectiveness of the notice
to them. All shareholders who have filed an election or notice of their
intention to participate in the election to purchase thereby become parties to
the proceeding and shall participate in the purchase in proportion to their
ownership of outstanding shares as of the date the first election was filed,
unless they otherwise agree or the court otherwise directs. After an election
has been filed by the corporation or one or more shareholders, the proceeding
under subdivision A 1 of &#xA7; 13.1-747 may not be discontinued or settled, nor
may the petitioning shareholder sell or otherwise dispose of the
petitioner&#8217;s shares, unless the court determines that it would be
equitable to the corporation and the shareholders, other than the petitioner, to
permit such discontinuance, settlement, sale, or other disposition.

C. If, within 60 days of the filing of the first election, the parties reach
agreement as to the fair value and terms of purchase of the petitioner&#8217;s
shares, the court shall enter an order directing the purchase of
petitioner&#8217;s shares upon the terms and conditions agreed to by the
parties.

D. If the parties are unable to reach an agreement as provided for in subsection
C, the court, upon application of any party, shall stay the proceedings under
subdivision A 1 of &#xA7; 13.1-747 and determine the fair value of the
petitioner&#8217;s shares as of the day before the date on which the petition
under subdivision A 1 of &#xA7; 13.1-747 was filed or as of such other date as
the court deems appropriate under the circumstances. The determination of fair
value shall include consideration of all relevant facts and circumstances,
including, unless the court determines it would be unjust or inequitable to do
so, (i) the petitioner&#8217;s minority status, (ii) the marketability of the
petitioner&#8217;s shares, (iii) the relevant terms of any shareholders&#8217;
agreement, and (iv) if the court finds that the value of the corporation has
been diminished by the wrongful conduct of controlling shareholders, the
petitioner&#8217;s proportionate claim for any compensable corporate injury. In
determining the fair value, the court may, in its discretion, select an
appraiser to appraise the fair value of the petitioner&#8217;s shares and shall
assess the cost of any such appraisal to the parties, to the corporation, or
both, as the equities may appear to the court.

E. Upon determining the fair value of the shares, the court shall enter an order
directing the purchase upon such terms and conditions as the court deems
appropriate, which may include payment of the purchase price in installments,
where necessary in the interests of equity, provision for security to assure
payment of the purchase price and any additional costs, fees and expenses as may
have been awarded, and, if the shares are to be purchased by shareholders, the
allocation of shares among them. In allocating petitioner&#8217;s shares among
holders of different classes of shares, the court should attempt to preserve the
existing distribution of voting rights among holders of different classes
insofar as practicable and may direct that holders of a specific class or
classes shall not participate in the purchase. Interest may be allowed at the
rate and from the date determined by the court to be equitable, but if the court
finds that the refusal of the petitioning shareholder to accept an offer of
payment was arbitrary or otherwise not in good faith, no interest shall be
allowed. If the court finds that the petitioning shareholder had probable
grounds for relief under subdivision A 1 b or d of &#xA7; 13.1-747, it may award
expenses to the petitioning shareholder.

F. Upon entry of an order under subsection C or E, the court shall dismiss the
petition to dissolve the corporation under subdivision A 1 of &#xA7; 13.1-747
and the petitioning shareholder shall no longer have any rights or status as a
shareholder of the corporation, except the right to receive the amounts awarded
to him by the order of the court, which shall be enforceable in the same manner
as any other judgment.

G. The purchase ordered pursuant to subsection E shall be made within 10 days
after the date the order becomes final.

H. Any payment by the corporation pursuant to an order under subsection C or E,
other than an award of expenses pursuant to subsection E, is subject to the
provisions of &#xA7; 13.1-653.

HISTORY: 2005, c. 765; 2007, c. 165; 2012, c. 706; 2015, c. 611; 2019, c. 734.