                                 CODE OF VIRGINIA

PURCHASE OF DISSOCIATED PARTNER&#8217;S INTEREST (§ 50-73.112)

A. If a partner is dissociated from a partnership without resulting in a
dissolution and winding up of the partnership business under &#xA7; 50-73.117,
the partnership shall cause the dissociated partner&#8217;s interest in the
partnership to be purchased for a buyout price determined pursuant to subsection
B.

B. The buyout price of a dissociated partner&#8217;s interest is the amount that
would have been distributable to the dissociating partner under subsection B of
&#xA7; 50-73.123 if, on the date of dissociation, the assets of the partnership
were sold at a price equal to the greater of the liquidation value or the value
based on a sale of the entire business as a going concern without the
dissociated partner and the partnership were wound up as of that date. Interest
shall be paid from the date of dissociation to the date of payment.

C. Damages for wrongful dissociation under subsection B of &#xA7; 50-73.110, and
all other amounts owing, whether or not presently due, from the dissociated
partner to the partnership, shall be offset against the buyout price. Interest
shall be paid from the date the amount owed becomes due to the date of payment.

D. A partnership shall indemnify a dissociated partner whose interest is being
purchased against all partnership liabilities, whether incurred before or after
the dissociation, except liabilities incurred by an act of the dissociated
partner under &#xA7; 50-73.113.

E. If no agreement for the purchase of a dissociated partner&#8217;s interest is
reached within 120 days after a written demand for payment, the partnership
shall pay, or cause to be paid, in cash to the dissociated partner the amount
the partnership estimates to be the buyout price and accrued interest, reduced
by any offsets and accrued interest under subsection C.

F. If a deferred payment is authorized under subsection H, the partnership may
tender a written offer to pay the amount it estimates to be the buyout price and
accrued interest, reduced by any offsets under subsection C, stating the time of
payment, the amount and type of security for payment, and the other terms and
conditions of the obligation.

G. The payment or tender required by subsection E or subsection F shall be
accompanied by the following:

   1. A statement of partnership assets and liabilities as of the date of
   dissociation;

   2. The latest available partnership balance sheet and income statement, if
   any;

   3. An explanation of how the estimated amount of the payment was calculated;
   and

   4. Written notice that the payment is in full satisfaction of the obligation
   to purchase unless, within 120 days after the written notice, the dissociated
   partner commences an action to determine the buyout price, any offsets under
   subsection C, or other terms of the obligation to purchase.

H. A partner who wrongfully dissociates before the expiration of a definite term
or the completion of a particular undertaking is not entitled to payment of any
portion of the buyout price until the expiration of the term or completion of
the undertaking, unless the partner establishes to the satisfaction of the court
that earlier payment will not cause undue hardship to the business of the
partnership. A deferred payment shall bear interest and, to the extent it would
not cause undue hardship to the partnership, be adequately secured.

I. A dissociated partner may maintain an action against the partnership,
pursuant to subdivision B 2 a of &#xA7; 50-73.103, to determine the buyout price
of that partner&#8217;s interest, any offsets under subsection C, or other terms
of the obligation to purchase. The action shall be commenced within 120 days
after the partnership has tendered payment or an offer to pay or within one year
after written demand for payment if no payment or offer to pay is tendered. The
court shall determine the buyout price of the dissociated partner&#8217;s
interest, any offset due under subsection C, and accrued interest, and enter
judgment for any additional payment or refund. If deferred payment is authorized
under subsection H, the court shall also determine the security for payment and
other terms of the obligation to purchase. The court may assess reasonable
attorney&#8217;s fees and the fees and expenses of appraisers or other experts
for a party to the action, in amounts the court finds equitable, against a party
that the court finds acted arbitrarily, vexatiously, or not in good faith. The
finding may be based on the partnership&#8217;s failure to tender payment or an
offer to pay or to comply with subsection G.

HISTORY: 1996, c. 292.