Court Opinion

ID: 5136348
Source: CourtListenerOpinion
Date Created: 2021-12-20 09:08:25.993312+00
Date Added: 2024-06-11T08:23:55.007617
License: Public Domain

137 Nev., Advance Opinion   71,
                     IN THE SUPREME COURT OF THE STATE OF NEVADA

                AEROGROW INTERNATIONAL, INC.,             No. 82895
                Petitioner,
                vs.
                THE EIGHTH JUDICIAL DISTRICT
                COURT OF THE STATE OF NEVADA,
                IN AND FOR THE COUNTY OF
                CLARK; AND THE HONORABLE                    FILE
                ELIZABETH GONZALEZ, DISTRICT
                JUDGE,
                Respondents,
                   and
                BRADLEY LOUIS RADOFF; FRED M.
                ADAMCYZK; THOMAS C. ALBANESE;
                WILLIAM A. ALMOND, III; MICHAEL
                S. BARISH; GEORGE C. BETKE, JR.
                2019 TRUST; DIANA BOYD; ANNE
                CAROL DECKER; THOMAS H.
                DECKER; THE DEUTSCH FAMILY
                TRUST; JOHN C. FISCHER; ALFREDO
                GOMEZ; ALFREDO GOMEZ FMT CO
                CUST IRA ROLLOVER; LAWRENCE
                GREENBERG; PATRICIA
                GREENBERG; KAREN HARDING; H.L.
                SEVERANCE, INC. PROFIT SHARING
                PLAN & TRUST; H.L. SEVERANCE,
                INC. PENSION PLAN & TRUST;
                DANIEL G. HOFSTEIN; KEVIN
                JOHNSON; CANDACE KAYE; LAURA
                J. KOBY; CAROLE L. MCLAUGHLIN;
                BRIAN PEIERLS; JOSEPH E. PETER;
                ALEXANDER PERELBERG; AMY
                PERELBERG; DANA PERELBERG;
                GARY PERELBERG; LINDA
                PERELBERG; THE REALLY COOL
                GROUP; RICHARD ALAN RUDY
                REVOCABLE LIVING TRUST; JAMES
                D. RICKMAN, JR.; JAMES D.
                RICKMAN, JR. IRREVOCABLE TRUST;
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                      PATRICIA D. RICKMAN
                      IRREVOCABLE TRUST; ANDREW
                      REESE RICKMAN TRUST; SCOTT
                      JOSEPH RICKMAN IRREVOCABLE
                      TRUST; MARLON DEAN
                      ALESSANDRA TRUST; BRYAN
                      ROBSON; WAYNE SICZ IRA; WAYNE
                      SICZ ROTH IRA; THE CAROL W.
                      SMITH REVOCABLE TRUST; THOMAS
                      K. SMITH; SURAJ VASANTH; CATHAY
                      C. WANG; LISA DAWN WANG; DARCY
                      J. WEISSENBORN; THE MARGARET S.
                      WEISSENBORN REVOCABLE TRUST;
                      THE STANTON F. WEISSENBORN
                      IRA; THE STANTON F.
                      WEISSENBORN REVOCABLE TRUST;
                      THE STANTON F. WEISSENBORN
                      IRREVOCABLE TRUST; THE NATALIE
                      WOLMAN LIVING TRUST; ALAN
                      BUDD ZUCKERMAN; JACK WALKER;
                      STEPHEN KAYE; THE MICHAEL S.
                      BARISH IRA; AND THE ALEXANDER
                      PERELBERG IRA,
                      Real Parties in Interest.

                                 Original petition for a writ of mandamus challenging a district
                     court order directing compliance with Nevada's Dissenter's Rights Statutes.
                                Petition granted.

                     Brownstein Hyatt Farber Schreck, LLP, and Kirk B. Lenhard, Maximilien
                     D. Fetaz, and Travis F. Chance, Las Vegas; Jones Day and Ashley F. Heintz,
                     Atlanta, Georgia; Jones Day and Marjorie P. Duffy, Columbus, Ohio,
                     for Petitioner.

                     Marquis Aurbach Coifing and Alexander K. Calaway and Terry A. Coffmg,
                     Las Vegas,
                     for Real Party in Interest Bradley Louis Radoff.

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Simons Hall Johnston PC and Kendra J. Jepsen and J. Robert Smith,
Reno,
for Real Parties in Interest Fred M. Adamcyzk; Thomas C. Albanese;
William A. Almond, III; Michael S. Barish; George C. Betke, Jr. 2019 Trust;
Diana Boyd; Anne Carol Decker; Thomas H. Decker; the Deutsch Family
Trust; John C. Fischer; Alfredo Gomez; Alfredo Gomez FMT Co Cust IRA
Rollover; Lawrence Greenberg; Patricia Greenberg; Karen Harding; H.L.
Severance, Inc. Profit Sharing Plan & Trust; H.L. Severance, Inc. Pension
Plan & Trust; Daniel G. Hofstein; Kevin Johnson; Candace Kaye; Laura J.
Koby; Carole L. McLaughlin; Brian Peierls; Joseph E. Peter; Alexander
Perelberg; Amy Perelberg; Dana Perelberg; Gary Perelberg; Linda
Perelberg; the Really Cool Group; Richard Alan Rudy Revocable Living
Trust; James D. Rickman, Jr.; James D. Rickman, Jr. Irrevocable Trust;
Patricia D. Rickman Irrevocable Trust; Andrew Reese Rickman Trust; Scott
Joseph Rickman Irrevocable Trust; Marlon Dean Alessandra Trust; Bryan
Robson; Wayne Sicz IRA; Wayne Sicz Roth IRA; the Carol W. Smith
Revocable Trust; Thomas K. Smith; Suraj Vasanth; Cathay C. Wang; Lisa
Dawn Wang; Darcy J. Weissenborn; the Margaret S. Weissenborn
Revocable Trust; The Stanton F. Weissenborn IRA, the Stanton F.
Weissenborn Revocable Trust; the Stanton F. Weissenborn Irrevocable
Trust; the Natalie Wolman Living Trust; Alan Budd Zuckerman; Jack
Walker; Stephen Kaye; the Michael S. Barish IRA; and the Alexander
Perelberg IRA.

BEFORE THE SUPREME COURT, PARRAGUIRRE, STIGLICH, and
SILVER, JJ.

                                OPINION
By the Court, PARRAGUIRRE, J.:
           NRS 92A.300 through .500 are colloquially referred to as
Nevada's "Dissenter's Rights Statutes." They provide the framework by
which stockholders of a corporation may dissent from certain actions the
corporation plans to undertake, such as when the corporation plans to
merge with another corporation. As relevant here, NRS 92A.410, .420, .430,

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                  and .440 generally set forth a four-step process by which a stockholder who
                  objects to a proposed merger may seek the fair value of the stockholder's
                  shares from the corporation if the stockholder believes the proposed price
                  for those shares, as set forth in the corporation's proposed merger, is
                  inadequate. In the event that a stockholder (the beneficial stockholder)
                  owns his or her shares indirectly, such as through a brokerage firm (the
                  stockholder of record),1 a fifth statute, NRS 92A.400(2)(a), requires the
                  beneficial stockholder to obtain the stockholder of record's consent before
                  the beneficial stockholder may dissent from the merger.
                              At issue in this matter is when, in the four-step process, a
                  beneficial stockholder must obtain the consent of the stockholder of record.
                  The issue is governed by NRS 92A.400(2)(a), which provides that "[a]
                  beneficial stockholder may assert dissenter's rights as to shares held on his
                  or her behalf only if the beneficial stockholder . . [s] ubmits to the subject
                  corporation the written consent of the stockholder of record to the dissent
                  not later than the time the beneficial stockholder asserts dissenter's rights."
                  (Emphasis added.) As explained below, we conclude that NRS
                  92A.400(2)(a), when read in conjunction with the four-step process outlined
                  in NRS 92A.410-.440, unambiguously requires a beneficial holder to obtain
                  the record holder's consent at step two, which is before the vote on the
                  merger is held. Consequently, the district court in the underlying litigation
                  erred in concluding that the real party in interest stockholders (RPIs) did
                  not need to obtain the stockholders of record's consents until step four and

                        1In the event of such an ownership arrangement, Nevada's
                  Dissenter's Rights Statutes refer to the actual stockholder as the
                      eneficial stockholder" and the brokerage firm as the " [s]tockholder of
                  record." See NRS 92A.305 (defining "Beneficial stockholder"); NRS 92A.330
                  (defining "Stockholder of recorcr).
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                     after the petitioner corporation's merger vote was held. We therefore issue
                     a writ of mandamus directing the district court to vacate its order, wherein
                     it: (1) waived RPIs obligation to provide consents from their stockholders of
                     record; (2) required petitioner to comply with the step-three notification
                     process; and (3) permitted RPIs to exercise their step-four dissenter's rights.
                                              STATUTORY OVERVIEW
                                 For context, a brief description of the above-mentioned four-
                     step process is warranted. Under step one, NRS 92A.410(1) requires the
                     corporation to provide stockholders of record with notice of the meeting at
                     which the merger vote will take place and to notify the stockholders of
                     record that they "may be entitled to assert dissenter's rights." Under step
                     two, NRS 92A.420(1) requires a stockholder who "wishes to assert
                     dissenter's rights" to notify the corporation before the merger vote is taken
                     that the stockholder "inten[ds] to demand payment for his or her shares if
                     the proposed action is effectuated." At step three, and within ten days after
                     the vote is taken and the merger has been approved, NRS 92A.430 requires
                     the corporation to notify stockholders of record and "any beneficial
                     stockholder who has previously asserted dissenter's righte that the
                     stockholder must demand payment for the stockholder's shares within a set
                     amount of time. Finally, at step four, NRS 92A.440(1) provides additional
                     procedures that a stockholder who has received the step-three notice "and
                     who wishes to exercise dissenter's rights" must follow in order to demand
                     payment for the stockholder's shares.
                                      FACTS AND PROCEDURAL HISTORY
                                 Nonparty SMG Growing Media, Inc. (SMG) owned
                     approximately 80-percent of the common stock in petitioner AeroGrow
                     International, Inc. (AeroGrow). SMG, in turn, is wholly owned by nonparty
                     Scotts Miracle-Gro Company (Scotts). In 2020, Scotts and SMG decided to
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                     merge AeroGrow with SMG, by SMG buying the roughly 20-percent
                     remaining shares of stock from AeroGrow's minority shareholders for $3 per
                     share. In January 2021, AeroGrow notified its shareholders under NRS
                     92A.410s step one that a vote on the proposed merger agreement would
                     take place in February 2021.
                                 Before that vote took place, AeroGrow received dozens of notices
                     from minority shareholders, including RPIs, indicating that under the
                     second step set forth in NRS 92A.420, they intended to dissent from the
                     merger and demand payment in excess of the proposed $3-per-share buyout
                     price. Some of the notices AeroGrow received were accompanied by written
                     consents from the stockholders of record, but the notices submitted by RPIs
                     were not.
                                 Thereafter, the shareholders voted to approve the merger
                     between AeroGrow and SMG, and AeroGrow promptly tendered to RPIs
                     their respective $3-per-share payments. AeroGrow then sent NRS
                     92A.430s step-three notices to the dissenting shareholders who had
                     previously provided written consents, but because AeroGrow had given
                     RPIs their $3-per-share payments, it did not send the step-three notices to
                     RPIs.
                                 Thereafter, RPIs filed lawsuits against AeroGrow and its
                     directors. The suits, which were eventually consolidated, generally alleged
                     that AeroGrow and its directors had breached their fiduciary duties in
                     connection with the merger. Following the consolidation, RPIs filed an
                     amended complaint that asserted a claim for declaratory relief alleging that
                     AeroGrow violated the Dissenter's Rights Statutes. RPIs then filed a "Joint
                     Motion to Compel/Determine Compliance with NRS Chapter 92A, or
                     Alternatively, Injunctive Relief?' In their motion, RPIs sought an order
                     from the district court (1) declaring that AeroGrow violated the Dissenter's
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                     Rights Statutes by not sending RPIs the NRS 92A.430 step-three notices,
                     (2) waiving RPIs obligation to obtain consents from their stockholders of
                     record, and (3) compelling AeroGrow to send RPIs the notices so that they
                     could exercise their dissenter's rights under NRS 92A.440s step four.
                     AeroGrow opposed the motion, arguing generally that it did not violate the
                     Dissenter's Rights Statutes because RPIs failed to provide consents from
                     their stockholders of record at step two and that, consequently, AeroGrow
                     did not need to send RPIs the step-three notices. The district court granted
                     RPIs' motion in its entirety. In its order, the court (1) found that AeroGrow
                     had violated the Dissenter's Rights Statutes by failing to provide RPIs with
                     the step-three notices, (2) waived Rine obligation to obtain consents from
                     their stockholders of record, and (3) compelled AeroGrow to provide RPIs
                     with the step-three notices within ten days from entry of the order. In
                     essence, the order enjoined AeroGrow from proceeding with NRS 92A.440s
                     step-four demand-for-payment process until AeroGrow afforded RPIs the
                     opportunity to participate in that process.
                                 Shortly thereafter, AeroGrow filed the instant petition for a
                     writ of mandamus. AeroGrow contemporaneously filed a motion to stay
                     enforcement of the district court's order. This court granted AeroGrow's
                     stay motion and directed RPIs to file an answer.
                                                    DISCUSSION
                                 "This court may issue a writ of mandamus to compel the
                     performance of an act which the law requires as a duty resulting from an
                     office or where discretion has been manifestly abused or exercised
                     arbitrarily or capriciously." Scarbo v. Eighth Judicial Dist. Court, 125 Nev.
                     118, 121, 206 P.3d 975, 977 (2009); see NRS 34.160. We have previously
                     equated a "manifest abuse of discretion" with la] clearly erroneous
                     interpretation of the law or a clearly erroneous application of a law or rule."
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                      State v. Eighth Judicial Dist. Court (Armstrong), 127 Nev. 927, 932, 267
                      P.3d 777, 780 (2011) (alteration in original) (quoting Steward v. McDonald,
                      958 S.W.2d 297, 300 (Ark. 1997)). Thus, while it is entirely within this
                      court's discretion whether to entertain a writ petition, Smith v. Eighth
                      Judicial Dist. Court, 107 Nev. 674, 677, 818 P.2d 849, 851 (1991), and while
                      an appeal from a final judgment is generally an adequate legal remedy
                      precluding writ relief, Pan v. Eighth Judicial Dist. Court, 120 Nev. 222, 224,
                      88 P.3d 840, 841 (2004), writ relief may nevertheless be warranted when
                      there is "a clear error.. . . that unless immediately corrected will wreak
                      irreparable harm," Archon Corp. v. Eighth Judicial Dist. Court, 133 Nev.
                      816, 820, 407 P.3d 702, 706 (2017) (quoting In re Linee Aeree Italiane
                      (Alitalia), 469 F.3d 638, 640 (7th Cir. 2006)).
                                  We conclude that this standard is met here. Although
                      AeroGrow may eventually be able to challenge RPIs ability to participate
                      in the dissenter's rights process in the context of a final judgment, allowing
                      RPIs to participate in this protracted process if they are not authorized to
                      do so would cause AeroGrow irreparable harm. Namely, AeroGrow
                      observes (and RPIs do not dispute) that without writ relief, AeroGrow will
                      be required to "allow an additional 57 stockholders [i.e., RPIs], holding more
                      than 1.7 million shares, to proceed through the dissenter's process," which
                      is "more than double the total number of current dissenting shares." In
                      other words, it may be impossible for AeroGrow to adequately complete the
                      dissenter's rights process with the non-RPI dissenting shareholders, who
                      followed the appropriate procedures, if RPIs are erroneously permitted to
                      participate in the process. Accordingly, we elect to entertain AeroGrow's
                      writ petition.
                                  AeroGrow's petition presents an issue regarding the
                      construction of NRS 92A.400-.440, which is an issue we review de novo.
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Cote H. v. Eighth Judicial Dist. Court, 124 Nev. 36, 40, 175 P.3d 906, 908
(2008) ("Even when raised in a writ petition, this court reviews questions of
statutory interpretation de novo."). This court interprets statutes by their
plain meaning unless there is ambiguity, the plain meaning would provide
an absurd result, or the plain meaning "clearly was not intended." Young
v. Nev. Gaming Control Bd., 136 Nev. 584, 586, 473 P.3d 1034, 1036 (2020)
(internal quotation marks omitted); see also Leven v. Frey, 123 Nev. 399,
403, 168 P.3d 712, 715 (2007) ("[W]hen a statutes language is plain and its
meaning clear, the court will apply that plain language.").
            As indicated, NRS 92A.400(2)(a) provides that "[a] beneficial
stockholder may assert dissenter's rights as to shares held on his or her
behalf only if the beneficial stockholder . . . [s]ubmits to the subject
corporation the written consent of the stockholder of record to the dissent
not later than the time the beneficial stockholder asserts dissenter's rights."
(Emphasis added.) The issue here is when in the four-step process a
beneficial stockholder "assert[sl" his or her dissenter's rights and,
consequently, when the beneficial stockholder must obtain the consent of
the stockholder of record to assert his or her dissenter's rights. AeroGrow
contends that a beneficial stockholder "assert(s}" dissenter's rights at NRS
92A.420s step two. NRS 92A.420 provides, in relevant part, that
            RN a proposed corporate action creating dissenter's
            rights is submitted to a vote at a stockholders'
            meeting, a stockholder who wishes to assert
            dissenter's rights with respect to any class or
            series of shares . . . must deliver to the subject
            corporation, before the vote is taken, written notice
            of the stockholder's intent to demand payment
            for his or her shares if the proposed action is
            effectuated.

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NRS 92A.420(1)(a) (emphases added). NRS 92A.420(3) further provides
that "[a] stockholder who does not satisfy the requirements of . . . NRS
92A.400 [i.e., the statute requiring consent from the stockholder of record]
is not entitled to payment for his or her shares under this chapter." In
essence, AeroGrow contends that NRS 92A.420s reference to "assert[ing]
dissenter's rights . . . before the vote is taken" means that "assert[ion]"
takes place at step two. And because RPIs failed to submit consents from
the shareholders of record when they notified AeroGrow of their intent to
dissent from the proposed merger, AeroGrow contends that RPIs
necessarily failed to comply with NRS 92A.400(2)(a).
            In contrast, RPIs contend that NRS 92A.420s references to
"wishes to assert" and "intent to demand payment" necessarily mean that
actually "assert[ind" comes at a later point in time, i.e., at NRS 92A.440s
step four when the dissenting stockholder actually demands payment. NRS
92A.440 provides, in relevant part, that
           [a] stockholder who receives a dissenter's notice
           pursuant to NRS 92A.430 [i.e., step three] and
           who tvishes to exercise dissenter's rights
           must . . . [d]emand payment; . . . [c]ertify whether
           the stockholder or beneficial owner on whose behalf
           he or she is dissenting, as the case may be, acquired
           beneficial ownership of the shares before the
           date required to be set forth in the dissenter's
           notice for this certification; and . . . [d]eposit the
           stockholder's certificates, if any, in accordance with
           the terms of the notice.
NRS 92A.440(I) (emphasis added). In essence, RPIs contend that a
stockholder "assert[s] dissenter's rights when he or she "demand[s]
payment" at step four.

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                              Considering both interpretations, we agree with AeroGrow that
                  a beneficial stockholder "assert[s] his or her dissenter's rights at step two
                  and that, consequently, the stockholder must submit his or her consent from
                  the stockholder of record at that point. While RPIs proffered construction
                  is not wholly unreasonable, we are not persuaded by it, as it treats "asserr
                  as being synonymous with "exercise," even though NRS 92A.400-.440 use
                  those terms distinctly.2 See Labastida v. State, 115 Nev. 298, 302-03, 986
                  P.2d 443, 446 (1999) (recognizing that a statutes use of two different terms
                  "evinces the legislatures intent that different meanings apply to the two
                  terms"). This distinction is most prevalent in NRS 92A.430s step three,
                  which requires the corporation to "deliver a written dissenter's notice
                  to . . . any beneficial stockholder who has previously asserted dissenter's
                  rights pursuant to NRS 92A.400." (Emphasis added.) In other words, the
                  Legislature expressly provided that at step three, a corporation must only
                  send dissenter's notices to beneficial stockholders who have already
                  asserted their dissenter's rights, which makes it impossible for a beneficial
                  stockholder to first assert dissenter's rights at step four.3

                        2We   agree with RPIs that "wishes to assert," as it is used in NRS
                  92A.420, could connote actually "assert fine at a later point in time.
                  However, NRS 92A.440 also uses the term "wishes te in outlining the
                  actions to be taken by a stockholder who "wishes to exercise dissenter's
                  rights." Because the Dissenter's Rights Statutes do not expressly set forth
                  a subsequent point in time when a stockholder actually "exercise[s]" his or
                  her dissenter's rights, RPIs' proffered construction of "wishes to" would
                  render it impossible for a stockholder ever to "exercise" his or her dissenter's
                  rights. Thus, the most sensible reading of "wishes te connotes present, not
                  future, action.

                        3RPIs  contend that despite the Legislatures express distinction
                  between "assert" and "exercise," we should construe IsalS 92A.400-.440
                  consistently with the 1984 Model Business Corporation Act, which provides
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            Further reinforcing our conclusion that "assertion" occurs at
step two is NRS 92A.420(3), which provides that "[a] stockholder who does
not satisfy the requirements of . . . NRS 92A.400 [i.e., the statute requiring
consent from the stockholder of record] is not entitled to payment for his or
her shares under this chapter." If the Legislature had intended for the
stockholder of record's consent to be obtained at NRS 92A.440s step four, it
stands to reason that the Legislature would not have clarified in NRS
92A.420s step two that the failure to obtain such consent would preclude
the stockholder from being paid for his or her shares.
            Accordingly, we conclude that NRS 92A.400-.440
unambiguously provide that a beneficial stockholder "asserts" dissenter's
rights at step two and that the stockholder must provide the consent from
his or her stockholder of record at that point.4 Leven, 123 Nev. at 403, 168
P.3d at 715 ("When a statutes language is plain and its meaning clear,
the court will apply that plain language."). The district court therefore
erred in construing the statutes as permitting RPIs to submit their consents
after the merger vote was taken and in waiving RPIs statutory obligation
to obtain those consents. Accordingly, the district court's order constituted

that a beneficial stockholder need not submit the stockholder of record's
consent until step four. Model Bus. Corp. Act Ann., § 13.03, (Am. Bar Ass'n,
amended 2016). We are not persuaded by this contention. See Norman
Singer & Shambie Singer, 2B Sutherland Statutory Construction § 52:5 (7th
ed. 2016) (observing that "when a legislature models a statute after a
uniform act, but does not adopt particular language, courts conclude the
omission was 'deliberate,' or intentionan.

      4We are not persuaded by RPIs' arguments that this result is absurd
or "clearly was not intended," Young, 136 Nev. at 586, 473 P.3d at 1036
(internal quotation marks omitted), such that we should ignore the statutes'
plain meaning.

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a manifest abuse of discretion, Armstrong , 127 Nev. at 932, 267 P.3d at 780,
which, without immediate correction, will cause AeroGrow immediate
harm, thereby entitling AeroGrow to extraordinary relief, Archon Corp., 133
Nev. at 820, 407 P.3d at 706. We therefore grant the petition and direct the
clerk of this court to issue a writ of mandamus directing the district court
to vacate its May 5, 2021, Order Granting Plaintiff's and Plaintiff-
Intervenors Joint Motion to Compel/Determine Compliance with NRS 92A,
and to proceed with the underlying litigation consistent with the above
analysis.

                                                                   J.
                                     Parraguirre

We concur:

     41..Se4.4              , J.
Stiglich

                            ,   J.
Silver

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