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NEVADA REVISED STATUTES ("NRS")
CHAPTER 92A
MERGERS AND EXCHANGES OF INTEREST

[These were revised in 1997 and should remain effective at least until fall 1999. - staff]

CHAPTER 92A
MERGERS AND EXCHANGES OF INTEREST

GENERAL PROVISIONS

NRS 92A.005  Definitions.CH. 92A
NRS 92A.007  "Approval" and "vote" defined.
NRS 92A.010  "Constituent document" defined.
NRS 92A.015  "Constituent entity" defined.
NRS 92A.020  "Domestic" defined.
NRS 92A.025  "Domestic corporation" defined.
NRS 92A.030  "Domestic limited-liability company" defined.
NRS 92A.035  "Domestic limited partnership" defined.
NRS 92A.040  "Domestic nonprofit corporation" defined.
NRS 92A.045  "Entity" defined.
NRS 92A.050  "Exchange" defined.
NRS 92A.055  "Foreign" defined.
NRS 92A.060  "Limited partner" defined.
NRS 92A.065  "Majority in interest" defined. [Repealed.]
NRS 92A.070  "Member" defined.
NRS 92A.075  "Owner" defined.
NRS 92A.080  "Owner's interest" defined.

AUTHORITY, PROCEDURE AND EFFECT

NRS 92A.100  Authority for merger; approval, contents and form of plan of merger.
NRS 92A.110  Authority for exchange; approval, contents and form of plan of exchange.
NRS 92A.120  Approval of plan of merger or exchange for domestic corporation.
NRS 92A.130  Approval of plan of merger for domestic corporation: Conditions under which action by stockholders of surviving corporation is not required.
NRS 92A.140  Approval of plan of merger or exchange for domestic limited partnership; "majority in interest of the partnership" defined.
NRS 92A.150  Approval of plan of merger or exchange for domestic limited-liability company.
NRS 92A.160  Approval of plan of merger or exchange for domestic nonprofit corporation.
NRS 92A.170  Abandonment of planned merger or exchange.
NRS 92A.180  Merger of subsidiary into parent.
NRS 92A.190  Merger or exchange with foreign entity.
NRS 92A.200  Articles of merger or exchange: Filing and contents.
NRS 92A.210  Articles of merger or exchange: Fee for filing.
NRS 92A.220  Articles of merger or exchange: Duty when entire plan of merger or exchange is not set forth.
NRS 92A.230  Articles of merger or exchange: Execution and acknowledgment.
NRS 92A.240  Effective date of merger or exchange.
NRS 92A.250  Effect of merger or exchange.
NRS 92A.260  Liability of owner.

RIGHTS OF DISSENTING OWNERS

NRS 92A.300  Definitions.
NRS 92A.305  "Beneficial stockholder" defined.
NRS 92A.310  "Corporate action" defined.
NRS 92A.315  "Dissenter" defined.
NRS 92A.320  "Fair value" defined.
NRS 92A.325  "Stockholder" defined.
NRS 92A.330  "Stockholder of record" defined.
NRS 92A.335  "Subject corporation" defined.
NRS 92A.340  Computation of interest.
NRS 92A.350  Rights of dissenting partner of domestic limited partnership.
NRS 92A.360  Rights of dissenting member of domestic limited-liability company.
NRS 92A.370  Rights of dissenting member of domestic nonprofit corporation.
NRS 92A.380  Right of stockholder to dissent from certain corporate actions and to obtain payment for shares.
NRS 92A.390  Limitations on right of dissent: Stockholders of certain classes or series; action of stockholders not required for plan of merger.
NRS 92A.400  Limitations on right of dissent: Assertion as to portions only to shares registered to stockholder; assertion by beneficial stockholder.
NRS 92A.410  Notification of stockholders regarding right of dissent.
NRS 92A.420  Prerequisites to demand for payment for shares.
NRS 92A.430  Dissenter's notice: Delivery to stockholders entitled to assert rights; contents.
NRS 92A.440  Demand for payment and deposit of certificates; retention of rights of stockholder.
NRS 92A.450  Uncertificated shares: Authority to restrict transfer after demand for payment; retention of rights of stockholder.
NRS 92A.460  Payment for shares: General requirements.
NRS 92A.470  Payment for shares: Shares acquired on or after date of dissenter's notice.
NRS 92A.480  Dissenter's estimate of fair value: Notification of subject corporation; demand for payment of estimate.
NRS 92A.490  Legal proceeding to determine fair value: Duties of subject corporation; powers of court; rights of dissenter.
NRS 92A.500  Legal proceeding to determine fair value: Assessment of costs and fees.

GENERAL PROVISIONS

NRS 92A.005  Definitions.  As used in this chapter, unless the context otherwise requires, the words and terms defined in NRS 92A.007 to 92A.080, inclusive, have the meanings ascribed to them in those sections.  (Added to NRS by 1995, 2079; A 1997, 726)

NRS 92A.007  "Approval" and "vote" defined.  "Approval" and "vote" as describing action by directors or stockholders mean the vote by directors in person or by written consent, or action of stockholders in person, by proxy or by written consent.  (Added to NRS by 1997, 726)

NRS 92A.010  "Constituent document" defined.  "Constituent document" means the articles of incorporation or bylaws of a corporation, whether or not for profit, the articles of organization or operating agreement of a limited-liability company or the certificate of limited partnership or partnership agreement of a limited partnership.  (Added to NRS by 1995, 2079)

NRS 92A.015  "Constituent entity" defined.  "Constituent entity" means, with respect to a merger, each merging or surviving entity and, with respect to an exchange, each entity whose owner's interests will be acquired or each entity acquiring those interests.  (Added to NRS by 1995, 2079)

NRS 92A.020  "Domestic" defined.  "Domestic" as applied to an entity means one organized and existing under the laws of this state.  (Added to NRS by 1995, 2079)

NRS 92A.025  "Domestic corporation" defined.  "Domestic corporation" means a corporation organized and existing under chapter 78, 78A or 89 of NRS, or a nonprofit cooperative corporation organized pursuant to NRS 81.010 to 81.160, inclusive.  (Added to NRS by 1995, 2079; A 1997, 726)

NRS 92A.030  "Domestic limited-liability company" defined.  "Domestic limited-liability company" means a limited-liability company organized and existing under chapter 86 of NRS.  (Added to NRS by 1995, 2079)

NRS 92A.035  "Domestic limited partnership" defined.  "Domestic limited partnership" means a limited partnership organized and existing under chapter 88 of NRS.  (Added to NRS by 1995, 2079)

NRS 92A.040  "Domestic nonprofit corporation" defined.  "Domestic nonprofit corporation" means a corporation organized or existing under chapter 82 of NRS, including those listed in NRS 82.051.  (Added to NRS by 1995, 2079)

NRS 92A.045  "Entity" defined.  "Entity" means a foreign or domestic corporation, whether or not for profit, limited-liability company or limited partnership.  (Added to NRS by 1995, 2079)

NRS 92A.050  "Exchange" defined.  "Exchange" means the acquisition by one or more foreign or domestic entities of all an owner's interests or one or more classes or series of an owner's interests of one or more foreign or domestic entities.  (Added to NRS by 1995, 2079)

NRS 92A.055  "Foreign" defined.  "Foreign" as applied to an entity means one not organized or existing under the laws of this state.  (Added to NRS by 1995, 2079)

NRS 92A.060  "Limited partner" defined.  "Limited partner" means a person who has been admitted to a limited partnership as a limited partner in accordance with the partnership agreement.  (Added to NRS by 1995, 2079)

NRS 92A.065  "Majority in interest" defined.  Repealed. (See chapter 208, Statutes of Nevada 1997, at page 732.)

NRS 92A.070 "Member" defined. "Member" means:

1.  A person who owns an interest in, and has the right to participate in the management of the business and affairs of a domestic limited-liability company; or
2.  A member of a nonprofit corporation which has members.  (Added to NRS by 1995, 2080)

NRS 92A.075  "Owner" defined.  "Owner" means the holder of an interest described in NRS 92A.080.  (Added to NRS by 1995, 2080)

NRS 92A.080  "Owner's interest" defined.  "Owner's interest" means shares of stock in a corporation, membership in a nonprofit corporation, the interest of a member of a limited-liability company or the partnership interest of a general or limited partner of a limited partnership.  (Added to NRS by 1995, 2080)

AUTHORITY, PROCEDURE AND EFFECT

NRS 92A.100  Authority for merger; approval, contents and form of plan of merger.

1.  Except as limited by NRS 78.411 to 78.444, inclusive, one or more domestic entities may merge into another entity if the plan of merger is approved pursuant to the provisions of this chapter.
2.  The plan of merger must set forth:

(a) The name, address and jurisdiction of organization and governing law of each constituent entity;
(b) The name, jurisdiction of organization and kind of entity or entities that will survive the merger;
(c) The terms and conditions of the merger; and
(d) The manner and basis of converting the owner's interests of each constituent entity into owner's interests, rights to purchase owner's interests, or other securities of the surviving or other entity or into cash or other property in whole or in part.

3.  The plan of merger may set forth:

(a) Amendments to the constituent documents of the surviving entity; and
(b) Other provisions relating to the merger.

4.  The plan of merger must be in writing.  (Added to NRS by 1995, 2080; A 1997, 726)

NRS 92A.110  Authority for exchange; approval, contents and form of plan of exchange.

1.  Except as a corporation is limited by NRS 78.411 to 78.444, inclusive, one or more domestic entities may acquire all of the outstanding owner's interests of one or more classes or series of another entity not already owned by the acquiring entity or an affiliate thereof if the plan of exchange is approved pursuant to the provisions of this chapter.
2.  The plan of exchange must set forth:

(a) The name, address and jurisdiction of organization and governing law of each constituent entity;
(b) The name, jurisdiction of organization and kind of each entity whose owner's interests will be acquired by one or more other entities;
(c) The terms and conditions of the exchange; and
(d) The manner and basis of exchanging the owner's interests to be acquired for owner's interests, rights to purchase owner's interests, or other securities of the acquiring or any other entity or for cash or other property in whole or in part.

3.  The plan of exchange may set forth other provisions relating to the exchange.
4.  This section does not limit the power of a domestic entity to acquire all or part of the owner's interests or one or more class or series of owner's interests of another person through a voluntary exchange or otherwise.
5.  The plan of exchange must be in writing.  (Added to NRS by 1995, 2080; A 1997, 726)

NRS 92A.120  Approval of plan of merger or exchange for domestic corporation.

1.  After adopting a plan of merger or exchange, the board of directors of each domestic corporation that is a constituent entity in the merger, or the board of directors of the domestic corporation whose shares will be acquired in the exchange, must submit the plan of merger, except as otherwise provided in NRS 92A.130, or the plan of exchange for approval by its stockholders.
2.  For a plan of merger or exchange to be approved:

(a) The board of directors must recommend the plan of merger or exchange to the stockholders, unless the board of directors determines that because of a conflict of interest or other special circumstances it should make no recommendation and it communicates the basis for its determination to the stockholders with the plan; and
(b) The stockholders entitled to vote must approve the plan.

3.  The board of directors may condition its submission of the proposed merger or exchange on any basis.
4.  The domestic corporation must notify each stockholder, whether or not he is entitled to vote, of the proposed stockholders' meeting in accordance with NRS 78.370. The notice must also state that the purpose, or one of the purposes, of the meeting is to consider the plan of merger or exchange and must contain or be accompanied by a copy or summary of the plan.
5.  Unless this chapter, the articles of incorporation or the board of directors acting pursuant to subsection 3 require a greater vote or a vote by classes of stockholders, the plan of merger or exchange to be authorized must be approved by a majority of the voting power unless stockholders of a class of shares are entitled to vote thereon as a class. If stockholders of a class of shares are so entitled, the plan must be approved by a majority of all votes entitled to be cast on the plan by each class and representing a majority of all votes entitled to be voted.
6.  Separate voting by a class of stockholders is required:

(a) On a plan of merger if the plan contains a provision that, if contained in the proposed amendment to the articles of incorporation, would entitle particular stockholders to vote as a class on the proposed amendment; and
(b) On a plan of exchange by each class or series of shares included in the exchange, with each class or series constituting a separate voting class.

7.  Unless otherwise provided in the articles of incorporation or the bylaws of the domestic corporation, the plan of merger may be approved by written consent as provided in NRS 78.320.  (Added to NRS by 1995, 2081)

NRS 92A.130  Approval of plan of merger for domestic corporation: Conditions under which action by stockholders of surviving corporation is not required.

1.  Action by the stockholders of a surviving domestic corporation on a plan of merger is not required if:

(a) The articles of incorporation of the surviving domestic corporation will not differ from its articles before the merger;
(b) Each stockholder of the surviving domestic corporation whose shares were outstanding immediately before the effective date of the merger will hold the same number of shares, with identical designations, preferences, limitations and relative rights immediately after the merger;
(c) The number of voting shares outstanding immediately after the merger, plus the number of voting shares issued as a result of the merger, either by the conversion of securities issued pursuant to the merger or the exercise of rights and warrants issued pursuant to the merger, will not exceed by more than 20 percent the total number of voting shares of the surviving domestic corporation outstanding immediately before the merger; and
(d) The number of participating shares outstanding immediately after the merger, plus the number of participating shares issuable as a result of the merger, either by the conversion of securities issued pursuant to the merger or the exercise of rights and warrants issued pursuant to the merger, will not exceed by more than 20 percent the total number of participating shares outstanding immediately before the merger.

2.  As used in this section:

(a) "Participating shares" means shares that entitle their holders to participate without limitation in distributions.
(b) "Voting shares" means shares that entitle their holders to vote unconditionally in elections of directors.

 (Added to NRS by 1995, 2082)

NRS 92A.140  Approval of plan of merger or exchange for domestic limited partnership; "majority in interest of the partnership" defined.

1.  Unless otherwise provided in the partnership agreement or the certificate of limited partnership, a plan of merger or exchange involving a domestic limited partnership must be approved by all general partners and by limited partners who own a majority in interest of the partnership then owned by all the limited partners. If the partnership has more than one class of limited partners, the plan of merger must be approved by those limited partners who own a majority in interest of the partnership then owned by the limited partners in each class.
2.  For the purposes of this section, "majority in interest of the partnership" means a majority of the interests in capital and profits of the limited partners of a domestic limited partnership which:

(a) In the case of capital, is determined as of the date of the approval of the plan of merger or exchange.
(b) In the case of profits, is based on any reasonable estimate of profits for the period beginning on the date of the approval of the plan of merger or exchange and ending on the anticipated date of the termination of the domestic limited partnership, including any present or future division of profits distributed pursuant to the partnership agreement.

 (Added to NRS by 1995, 2082; A 1997, 727)

NRS 92A.150  Approval of plan of merger or exchange for domestic limited-liability company.  Unless otherwise provided in the articles of organization or an operating agreement, a plan of merger or exchange involving a domestic limited-liability company must be approved by members who own a majority of the interests in the current profits of the company then owned by all of the members. If the company has more than one class of members, the plan of merger must be approved by those members who own a majority of the interests in the current profits of the company then owned by the members in each class.  (Added to NRS by 1995, 2082; A 1997, 727)

NRS 92A.160  Approval of plan of merger or exchange for domestic nonprofit corporation.

1.  A plan of merger or exchange involving a domestic nonprofit corporation must be adopted by the board of directors. The plan must also be approved by each public officer or other person whose approval of a plan of merger or exchange is required by the articles of incorporation of the domestic nonprofit corporation.
2.  If the domestic nonprofit corporation has members entitled to vote on plans of merger or exchange, the board of directors of the domestic nonprofit corporation must recommend the plan of merger or exchange to the members, unless the board of directors determines that because of a conflict of interest or other special circumstances it should make no recommendation and it communicates the basis for its determination to the members with the plan.
3.  The board of directors may condition its submission of the proposed merger or exchange on any basis.
4.  The members entitled to vote on a plan of merger or exchange must approve the plan at a meeting of members called for that purpose, by written consent pursuant to NRS 82.276, or by a vote by written ballot pursuant to NRS 82.326.
5.  The corporation must notify, in the manner required by NRS 82.336, each nonprofit member of the time and place of the meeting of members at which the plan of merger or exchange will be submitted for a vote.
6.  Unless the articles of incorporation of the domestic nonprofit corporation or the board of directors acting pursuant to subsection 3 require a greater vote or a vote by classes of members, the plan of merger or exchange to be authorized must be approved by a majority of a quorum of the members unless a class of members is entitled to vote thereon as a class. If a class of members is so entitled, the plan must be approved by a majority of a quorum of the votes entitled to be cast on the plan by each class.
7.  Separate voting by a class of members is required:

(a) On a plan of merger if the plan contains a provision that, if contained in the proposed amendment to articles of incorporation, would entitle particular members to vote as a class on the proposed amendment; and
(b) On a plan of exchange by each class or series of memberships included in the exchange, with each class or series constituting a separate voting class.

 (Added to NRS by 1995, 2082)

NRS 92A.170  Abandonment of planned merger or exchange.  After a merger or exchange is approved, and at any time before the articles of merger or exchange are filed, the planned merger or exchange may be abandoned, subject to any contractual rights, without further action, in accordance with the procedure set forth in the plan of merger or exchange or, if none is set forth, in the case of:

1.  A domestic corporation, whether or not for profit, by the board of directors;
2.  A domestic limited partnership, unless otherwise provided in the partnership agreement or certificate of limited partnership, by all general partners; and
3.  A domestic limited-liability company, unless otherwise provided in the articles of organization or an operating agreement, by members who own a majority in interest of the company then owned by all of the members or, if the company has more than one class of members, by members who own a majority in interest of the company then owned by the members in each class.  (Added to NRS by 1995, 2083)

NRS 92A.180  Merger of subsidiary into parent.

1.  A parent domestic corporation, whether or not for profit, parent domestic limited-liability company or parent domestic limited partnership owning at least 90 percent of the outstanding shares of each class of a subsidiary corporation, 90 percent of the percentage or other interest in the capital and profits of a subsidiary limited partnership then owned by both the general and each class of limited partners or 90 percent of the percentage or other interest in the capital and profits of a domestic subsidiary limited-liability company then owned by each class of members may merge the subsidiary into itself without approval of the owners of the owner's interests of the parent domestic corporation, domestic limited-liability company or domestic limited partnership or the owners of the owner's interests of a subsidiary domestic corporation, subsidiary domestic limited-liability company or subsidiary domestic limited partnership.
2.  The board of directors of the parent domestic corporation, the managers of a parent domestic limited-liability company with managers unless otherwise provided in the operating agreement, all the members of a parent domestic limited-liability company without managers unless otherwise provided in the operating agreement, or all the general partners of the parent domestic limited partnership shall adopt a plan of merger that sets forth:

(a) The names of the parent and subsidiary; and
(b) The manner and basis of converting the owner's interests of the subsidiary into the owner's interests, obligations or other securities of the parent or any other entity or into cash or other property in whole or in part.

3.  The parent shall mail a copy or summary of the plan of merger to each owner of the subsidiary who does not waive the mailing requirement in writing.
4.  The parent may not deliver articles of merger to the secretary of state for filing until at least 30 days after the date the parent mailed a copy of the plan of merger to each owner of the subsidiary who did not waive the requirement of mailing.
5.  Articles of merger under this section may not contain amendments to the constituent documents of the parent entity.  (Added to NRS by 1995, 2083; A 1997, 727)

NRS 92A.190  Merger or exchange with foreign entity.

1.  One or more foreign entities may merge or enter into an exchange of owner's interests with one or more domestic entities if:

(a) In a merger, the merger is permitted by the law of the jurisdiction under whose law each foreign entity is organized and governed and each foreign entity complies with that law in effecting the merger;
(b) In an exchange, the entity whose owner's interests will be acquired is a domestic entity, whether or not an exchange of owner's interests is permitted by the law of the jurisdiction under whose law the acquiring entity is organized;
(c) The foreign entity complies with NRS 92A.200 to 92A.240, inclusive, if it is the surviving entity in the merger or acquiring entity in the exchange and sets forth in the articles of merger or exchange its address where copies of process may be sent by the secretary of state, but the execution, and acknowledgment if applicable, of the articles of merger or exchange by the foreign entity are subject to the laws governing it rather than to NRS 92A.200 to 92A.240, inclusive; and
(d) Each domestic entity complies with the applicable provisions of NRS 92A.100 to 92A.180, inclusive, and, if it is the surviving entity in the merger or acquiring entity in the exchange, with NRS 92A.200 to 92A.240, inclusive.

2.  When the merger or exchange takes effect, the surviving foreign entity in a merger and the acquiring foreign entity in an exchange shall be deemed:

(a) To appoint the secretary of state as its agent for service of process in a proceeding to enforce any obligation or the rights of dissenting owners of each domestic entity that was a party to the merger or exchange. Service of such process must be made by personally delivering to and leaving with the secretary of state duplicate copies of the process and the payment of a fee of $25 for accepting and transmitting the process. The secretary of state shall forthwith send by registered or certified mail one of the copies to the surviving or acquiring entity at its specified address, unless the surviving or acquiring entity has designated in writing to the secretary of state a different address for that purpose, in which case it must be mailed to the last address so designated.
(b) To agree that it will promptly pay to the dissenting owners of each domestic entity that is a party to the merger or exchange the amount, if any, to which they are entitled under or created pursuant to NRS 92A.300 to 92A.500, inclusive.

3.  This section does not limit the power of a foreign entity to acquire all or part of the owner's interests of one or more classes or series of a domestic entity through a voluntary exchange or otherwise.  (Added to NRS by 1995, 2086; A 1997, 728)

NRS 92A.200 Articles of merger or exchange: Filing and contents. After a plan of merger or exchange is approved as required by this chapter, the surviving or acquiring entity shall deliver to the secretary of state for filing articles of merger or exchange setting forth:

1.  The name and jurisdiction of organization of each constituent entity;
2.  That a plan of merger or exchange has been adopted by each constituent entity;
3.  If approval of the owners of the parent was not required, a statement to that effect;
4.  If approval of owners of one or more constituent entities was required, a statement that:

(a) The plan was approved by the unanimous consent of the owners; or
(b) A plan was submitted to the owners pursuant to this chapter including:

(1) The designation, percentage of total vote or number of votes entitled to be cast by each class of owner's interests entitled to vote separately on the plan; and
(2) Either the total number of votes or percentage of owner's interests cast for and against the plan by the owners of each class of interests entitled to vote separately on the plan or the total number of undisputed votes or undisputed total percentage of owner's interests cast for the plan separately by the owners of each class, and the number of votes or percentage of owner's interests cast for the plan by the owners of each class of interests was sufficient for approval by the owners of that class;

5.  In the case of a merger, the amendment to the articles of incorporation, articles of organization or certificate of limited partnership of the surviving entity; and
6.  If the entire plan of merger or exchange is not set forth, a statement that the complete executed plan of merger or plan of exchange is on file at the registered office if a corporation or limited-liability company, office described in paragraph (a) of subsection 1 of NRS 88.330 if a limited partnership, principal place of business if a general partnership, or other place of business of the surviving entity or the acquiring entity, respectively.  (Added to NRS by 1995, 2084; A 1997, 729)

NRS 92A.210 Articles of merger or exchange: Fee for filing. The fee for filing articles of merger or articles of exchange is $125. (Added to NRS by 1995, 2085)

NRS 92A.220 Articles of merger or exchange: Duty when entire plan of merger or exchange is not set forth. If the entire plan of merger or exchange is not set forth, a copy of the plan of merger or exchange must be furnished by the surviving or acquiring entity, on request and without cost, to any owner of any entity which is a party to the merger or exchange. (Added to NRS by 1995, 2085)

NRS 92A.230  Articles of merger or exchange: Execution and acknowledgment.

1.  Articles of merger or exchange must be signed and acknowledged by each domestic constituent entity as follows:

(a) By the president or a vice president of a domestic corporation, whether or not for profit;
(b) By all the general partners of a domestic limited partnership; and
(c) By a manager of a domestic limited-liability company with managers or by all the members of a domestic limited-liability company without managers.

2.  If the entity is a corporation, the articles must also be signed by the secretary or an assistant secretary, but the signature need not be acknowledged.  (Added to NRS by 1995, 2085; A 1997, 730)

NRS 92A.240  Effective date of merger or exchange.  If articles of merger or exchange must be filed, a merger or exchange takes effect upon filing the articles of merger or upon a later date as specified in the articles of merger, which must not be more than 90 days after the articles are filed. If no articles of merger need be filed, the merger or exchange takes effect as specified in the plan of merger or exchange.  (Added to NRS by 1995, 2085)

FEDERAL AND OTHER CASES.

Market value on date merger agreement filed controls for recovery of insider profit. Pursuant to former NRS 78.495 (cf. NRS 92A.240), in determining value of publicly traded stock of Nevada corporation which merged into surviving Nevada corporation, for recovery of insider profit from merger, market value on date of filing of merger agreement with secretary of state controlled, rather than market value on date of actual exchange of securities. Newmark v. RKO General, Inc., 305 F. Supp. 310 (1969)

NRS 92A.250  Effect of merger or exchange.

1.  When a merger takes effect:

(a) Every other entity that is a constituent entity merges into the surviving entity and the separate existence of every entity except the surviving entity ceases;
(b) The title to all real estate and other property owned by each merging constituent entity is vested in the surviving entity without reversion or impairment;
(c) The surviving entity has all of the liabilities of each other constituent entity;
(d) A proceeding pending against any constituent entity may be continued as if the merger had not occurred or the surviving entity may be substituted in the proceeding for the entity whose existence has ceased;
(e) The articles of incorporation, articles of organization or certificate of limited partnership of the surviving entity are amended to the extent provided in the plan of merger; and
(f) The owner's interests of each constituent entity that are to be converted into owner's interests, obligations or other securities of the surviving or any other entity or into cash or other property are converted, and the former holders of the owner's interests are entitled only to the rights provided in the articles of merger or any created pursuant to NRS 92A.300 to 92A.500, inclusive.

2.  When an exchange takes effect, the owner's interests of each acquired entity are exchanged as provided in the plan, and the former holders of the owner's interests are entitled only to the rights provided in the articles of exchange or any rights created pursuant to NRS 92A.300 to 92A.500, inclusive.  (Added to NRS by 1995, 2085)

NEVADA CASES.

Sale of assets not merger de facto. Where (1) two corporations considered merger, (2) stockholders of debtor corporation approved but second corporation refused merger, and (3) subsequently, same corporations signed agreement whereby debtor corporation agreed to sell its assets to second corporation in exchange for stock, court held that de facto merger did not occur and second corporation was not liable for debts of debtor corporation. Consummated agreement of merger or consolidation imposes upon surviving corporation all liabilities of merged corporation but not when transaction is bona fide sale of assets. (See former NRS 78.470 and 78.495; cf. NRS 92A.250.) Lamb v. Leroy Corp., 85 Nev. 276, 454 P.2d 24 (1969)

Exchange of stock for assets not fraud on creditors. In action by creditor of debtor corporation against second corporation for money due from debtor corporation, where debtor corporation sold assets to second corporation in exchange for stock of second corporation, which was issued directly to debtor corporation, then later reissued at request of debtor corporation to stockholders of debtor corporation, constructive fraud on creditor did not occur and creditor was not entitled to recover from second corporation because consideration for stock of second corporation was adequate and because it was not part of original agreement for sale of assets that debtor's shareholders be issued stock. Transfer of stock to debtor's shareholders was separate transaction. (See former NRS 78.470 and 78.495; cf. NRS 92A.250.) Lamb v. Leroy Corp., 85 Nev. 276, 454 P.2d 24 (1969)

ATTORNEY GENERAL'S OPINIONS.

Merger agreement amends articles only as plainly stated. Merger agreement amends articles of incorporation only to extent that it plainly states that which is to continue in force and that which is substituted. Thus where agreement provides only for common stock and is silent as to preferred, original article providing for preferred stock continues in force. AGO 116 (3-2-1944)

NRS 92A.260  Liability of owner.  An owner that is not personally liable for the debts, liabilities or obligations of the entity pursuant to the laws and constituent documents under which the entity was organized does not become personally liable for the debts, liabilities or obligations of the surviving entity or entities of the merger or exchange unless the owner consents to becoming personally liable by action taken in connection with the plan of merger or exchange.  (Added to NRS by 1995, 2081)

RIGHTS OF DISSENTING OWNERS

NRS 92A.300  Definitions.  As used in NRS 92A.300 to 92A.500, inclusive, unless the context otherwise requires, the words and terms defined in NRS 92A.305 to 92A.335, inclusive, have the meanings ascribed to them in those sections.  (Added to NRS by 1995, 2086)

NRS 92A.305  "Beneficial stockholder" defined.  "Beneficial stockholder" means a person who is a beneficial owner of shares held in a voting trust or by a nominee as the stockholder of record.  (Added to NRS by 1995, 2087)

NRS 92A.310  "Corporate action" defined.  "Corporate action" means the action of a domestic corporation.  (Added to NRS by 1995, 2087)

NRS 92A.315  "Dissenter" defined.  "Dissenter" means a stockholder who is entitled to dissent from a domestic corporation's action under NRS 92A.380 and who exercises that right when and in the manner required by NRS 92A.410 to 92A.480, inclusive.  (Added to NRS by 1995, 2087)

NRS 92A.320  "Fair value" defined.  "Fair value," with respect to a dissenter's shares, means the value of the shares immediately before the effectuation of the corporate action to which he objects, excluding any appreciation or depreciation in anticipation of the corporate action unless exclusion would be inequitable.  (Added to NRS by 1995, 2087)

NEVADA CASES.

Definition. Term "fair cash value" (now "fair value") as used in former NRS 78.510 (cf. NRS 92A.320 and 92A.380), relating to payment to dissident former shareholders of merged corporation, meant intrinsic value of dissenting shareholders' interests determined from assets and liabilities of corporation considered in light of every factor bearing on value. Southdown, Inc. v. McGinnis, 89 Nev. 184, 510 P.2d 636 (1973)

NRS 92A.325  "Stockholder" defined.  "Stockholder" means a stockholder of record or a beneficial stockholder of a domestic corporation.  (Added to NRS by 1995, 2087)

NRS 92A.330  "Stockholder of record" defined.  "Stockholder of record" means the person in whose name shares are registered in the records of a domestic corporation or the beneficial owner of shares to the extent of the rights granted by a nominee's certificate on file with the domestic corporation.  (Added to NRS by 1995, 2087)

NRS 92A.335  "Subject corporation" defined.  "Subject corporation" means the domestic corporation which is the issuer of the shares held by a dissenter before the corporate action creating the dissenter's rights becomes effective or the surviving or acquiring entity of that issuer after the corporate action becomes effective.  (Added to NRS by 1995, 2087)

NRS 92A.340  Computation of interest.  Interest payable pursuant to NRS 92A.300 to 92A.500, inclusive, must be computed from the effective date of the action until the date of payment, at the average rate currently paid by the entity on its principal bank loans or, if it has no bank loans, at a rate that is fair and equitable under all of the circumstances.  (Added to NRS by 1995, 2087)

NRS 92A.350  Rights of dissenting partner of domestic limited partnership.  A partnership agreement of a domestic limited partnership or, unless otherwise provided in the partnership agreement, an agreement of merger or exchange, may provide that contractual rights with respect to the partnership interest of a dissenting general or limited partner of a domestic limited partnership are available for any class or group of partnership interests in connection with any merger or exchange in which the domestic limited partnership is a constituent entity.  (Added to NRS by 1995, 2088)

NRS 92A.360  Rights of dissenting member of domestic limited-liability company.  The articles of organization or operating agreement of a domestic limited-liability company or, unless otherwise provided in the articles of organization or operating agreement, an agreement of merger or exchange, may provide that contractual rights with respect to the interest of a dissenting member are available in connection with any merger or exchange in which the domestic limited-liability company is a constituent entity.  (Added to NRS by 1995, 2088)

NRS 92A.370  Rights of dissenting member of domestic nonprofit corporation.

1.  Except as otherwise provided in subsection 2, and unless otherwise provided in the articles or bylaws, any member of any constituent domestic nonprofit corporation who voted against the merger may, without prior notice, but within 30 days after the effective date of the merger, resign from membership and is thereby excused from all contractual obligations to the constituent or surviving corporations which did not occur before his resignation and is thereby entitled to those rights, if any, which would have existed if there had been no merger and the membership had been terminated or the member had been expelled.
2.  Unless otherwise provided in its articles of incorporation or bylaws, no member of a domestic nonprofit corporation, including, but not limited to, a cooperative corporation, which supplies services described in chapter 704 of NRS to its members only, and no person who is a member of a domestic nonprofit corporation as a condition of or by reason of the ownership of an interest in real property, may resign and dissent pursuant to subsection 1.  (Added to NRS by 1995, 2088)

NRS 92A.380  Right of stockholder to dissent from certain corporate actions and to obtain payment for shares.

1.  Except as otherwise provided in NRS 92A.370 and 92A.390, a stockholder is entitled to dissent from, and obtain payment of the fair value of his shares in the event of any of the following corporate actions:

(a) Consummation of a plan of merger to which the domestic corporation is a party:

(1) If approval by the stockholders is required for the merger by NRS 92A.120 to 92A.160, inclusive, or the articles of incorporation and he is entitled to vote on the merger; or
(2) If the domestic corporation is a subsidiary and is merged with its parent under NRS 92A.180.

(b) Consummation of a plan of exchange to which the domestic corporation is a party as the corporation whose subject owner's interests will be acquired, if he is entitled to vote on the plan.
(c) Any corporate action taken pursuant to a vote of the stockholders to the event that the articles of incorporation, bylaws or a resolution of the board of directors provides that voting or nonvoting stockholders are entitled to dissent and obtain payment for their shares.

2.  A stockholder who is entitled to dissent and obtain payment under NRS 92A.300 to 92A.500, inclusive, may not challenge the corporate action creating his entitlement unless the action is unlawful or fraudulent with respect to him or the domestic corporation.  (Added to NRS by 1995, 2087)

NEVADA CASES.

Definition. Term "fair cash value" (now "fair value") as used in former NRS 78.510 (cf. NRS 92A.320 and 92A.380), relating to payment to dissident former shareholders of merged corporation, meant intrinsic value of dissenting shareholders' interests determined from assets and liabilities of corporation considered in light of every factor bearing on value. Southdown, Inc. v. McGinnis, 89 Nev. 184, 510 P.2d 636 (1973)

FEDERAL AND OTHER CASES.

Adequate remedy at law for dissenting stockholders. Stockholders in Nevada corporation who opposed merger with another corporation could not invoke equity powers of federal courts to block merger, in absence of fraud, because they had adequate remedy at law under NCL 1640 (cf. NRS 92A.380) which provides that dissenting stockholder may demand and receive "the fair cash value of his shares." Skelly v. Dockweiler, 75 F. Supp. 11 (S.D. Cal. 1947)

NRS 92A.390  Limitations on right of dissent: Stockholders of certain classes or series; action of stockholders not required for plan of merger.

1.  There is no right of dissent with respect to a plan of merger or exchange in favor of stockholders of any class or series which, at the record date fixed to determine the stockholders entitled to receive notice of and to vote at the meeting at which the plan of merger or exchange is to be acted on, were either listed on a national securities exchange, included in the national market system by the National Association of Securities Dealers, Inc., or held by at least 2,000 stockholders of record, unless:

(a) The articles of incorporation of the corporation issuing the shares provide otherwise; or
(b) The holders of the class or series are required under the plan of merger or exchange to accept for the shares anything except:

(1) Cash, owner's interests or owner's interests and cash in lieu of fractional owner's interests of:

(I) The surviving or acquiring entity; or
(II) Any other entity which, at the effective date of the plan of merger or exchange, were either listed on a national securities exchange, included in the national market system by the National Association of Securities Dealers, Inc., or held of record by a least 2,000 holders of owner's interests of record; or

(2) A combination of cash and owner's interests of the kind described in sub-subparagraphs (I) and (II) of subparagraph (1) of paragraph (b).

2.  There is no right of dissent for any holders of stock of the surviving domestic corporation if the plan of merger does not require action of the stockholders of the surviving domestic corporation under NRS 92A.130.  (Added to NRS by 1995, 2088)

NRS 92A.400  Limitations on right of dissent: Assertion as to portions only to shares registered to stockholder; assertion by beneficial stockholder.

1.  A stockholder of record may assert dissenter's rights as to fewer than all of the shares registered in his name only if he dissents with respect to all shares beneficially owned by any one person and notifies the subject corporation in writing of the name and address of each person on whose behalf he asserts dissenter's rights. The rights of a partial dissenter under this subsection are determined as if the shares as to which he dissents and his other shares were registered in the names of different stockholders.
2.  A beneficial stockholder may assert dissenter's rights as to shares held on his behalf only if:

(a) He submits 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; and
(b) He does so with respect to all shares of which he is the beneficial stockholder or over which he has power to direct the vote.

 (Added to NRS by 1995, 2089)

NRS 92A.410  Notification of stockholders regarding right of dissent.

1.  If a proposed corporate action creating dissenters' rights is submitted to a vote at a stockholders' meeting, the notice of the meeting must state that stockholders are or may be entitled to assert dissenters' rights under NRS 92A.300 to 92A.500, inclusive, and be accompanied by a copy of those sections.
2.  If the corporate action creating dissenters' rights is taken by written consent of the stockholders or without a vote of the stockholders, the domestic corporation shall notify in writing all stockholders entitled to assert dissenters' rights that the action was taken and send them the dissenter's notice described in NRS 92A.430.  (Added to NRS by 1995, 2089; A 1997, 730)

NRS 92A.420  Prerequisites to demand for payment for shares.

1.  If a proposed corporate action creating dissenters' rights is submitted to a vote at a stockholders' meeting, a stockholder who wishes to assert dissenter's rights:

(a) Must deliver to the subject corporation, before the vote is taken, written notice of his intent to demand payment for his shares if the proposed action is effectuated; and
(b) Must not vote his shares in favor of the proposed action.

2.  A stockholder who does not satisfy the requirements of subsection 1 is not entitled to payment for his shares under this chapter.  (Added to NRS by 1995, 2089)

NRS 92A.430  Dissenter's notice: Delivery to stockholders entitled to assert rights; contents.

1.  If a proposed corporate action creating dissenters' rights is authorized at a stockholders' meeting, the subject corporation shall deliver a written dissenter's notice to all stockholders who satisfied the requirements to assert those rights.
2.  The dissenter's notice must be sent no later than 10 days after the effectuation of the corporate action, and must:

(a) State where the demand for payment must be sent and where and when certificates, if any, for shares must be deposited;
(b) Inform the holders of shares not represented by certificates to what extent the transfer of the shares will be restricted after the demand for payment is received;
(c) Supply a form for demanding payment that includes the date of the first announcement to the news media or to the stockholders of the terms of the proposed action and requires that the person asserting dissenter's rights certify whether or not he acquired beneficial ownership of the shares before that date;
(d) Set a date by which the subject corporation must receive the demand for payment, which may not be less than 30 nor more than 60 days after the date the notice is delivered; and
(e) Be accompanied by a copy of NRS 92A.300 to 92A.500, inclusive.

 (Added to NRS by 1995, 2089)

NRS 92A.440  Demand for payment and deposit of certificates; retention of rights of stockholder.

1.  A stockholder to whom a dissenter's notice is sent must:

(a) Demand payment;
(b) Certify whether he acquired beneficial ownership of the shares before the date required to be set forth in the dissenter's notice for this certification; and
(c) Deposit his certificates, if any, in accordance with the terms of the notice.

2.  The stockholder who demands payment and deposits his certificates, if any, before the proposed corporate action is taken retains all other rights of a stockholder until those rights are canceled or modified by the taking of the proposed corporate action.
3.  The stockholder who does not demand payment or deposit his certificates where required, each by the date set forth in the dissenter's notice, is not entitled to payment for his shares under this chapter.  (Added to NRS by 1995, 2090; A 1997, 730)

NEVADA CASES.

Dissident stockholders entitled to prejudgment interest from date of demand. In proceeding pursuant to former NRS 78.510 (cf. NRS 92A.490) by dissident former shareholders of merged Nevada corporation to recover fair cash value of their shares, former shareholders were entitled to recover prejudgment interest on fair cash value from date of demand for payment because, under former NRS 78.515 (cf. NRS 92A.440), they ceased to be shareholders and became creditors on date of demand and, as creditors, were entitled to interest under NRS 99.040. Fact that amount due had not yet been judicially determined was immaterial. Southdown, Inc. v. McGinnis, 89 Nev. 184, 510 P.2d 636 (1973), cited, Tolotti v. Eikelberger, 90 Nev. 466, at 468, 530 P.2d 106 (1974), Lake Tahoe Sailboat Sales & Charter, Inc. v. Douglas County, 562 F. Supp. 523 (D. Nev. 1983)

NRS 92A.450  Uncertificated shares: Authority to restrict transfer after demand for payment; retention of rights of stockholder.

1.  The subject corporation may restrict the transfer of shares not represented by a certificate from the date the demand for their payment is received.
2.  The person for whom dissenter's rights are asserted as to shares not represented by a certificate retains all other rights of a stockholder until those rights are canceled or modified by the taking of the proposed corporate action.  (Added to NRS by 1995, 2090)

NRS 92A.460  Payment for shares: General requirements.

1.  Except as otherwise provided in NRS 92A.470, within 30 days after receipt of a demand for payment, the subject corporation shall pay each dissenter who complied with NRS 92A.440 the amount the subject corporation estimates to be the fair value of his shares, plus accrued interest. The obligation of the subject corporation under this subsection may be enforced by the district court:

(a) Of the county where the corporation's registered office is located; or
(b) At the election of any dissenter residing or having its registered office in this state, of the county where the dissenter resides or has its registered office. The court shall dispose of the complaint promptly.

2.  The payment must be accompanied by:

(a) The subject corporation's balance sheet as of the end of a fiscal year ending not more than 16 months before the date of payment, a statement of income for that year, a statement of changes in the stockholders' equity for that year and the latest available interim financial statements, if any;
(b) A statement of the subject corporation's estimate of the fair value of the shares;
(c) An explanation of how the interest was calculated;
(d) A statement of the dissenter's rights to demand payment under NRS 92A.480; and
(e) A copy of NRS 92A.300 to 92A.500, inclusive.

 (Added to NRS by 1995, 2090)

NRS 92A.470  Payment for shares: Shares acquired on or after date of dissenter's notice.

1.  A subject corporation may elect to withhold payment from a dissenter unless he was the beneficial owner of the shares before the date set forth in the dissenter's notice as the date of the first announcement to the news media or to the stockholders of the terms of the proposed action.
2.  To the extent the subject corporation elects to withhold payment, after taking the proposed action, it shall estimate the fair value of the shares, plus accrued interest, and shall offer to pay this amount to each dissenter who agrees to accept it in full satisfaction of his demand. The subject corporation shall send with its offer a statement of its estimate of the fair value of the shares, an explanation of how the interest was calculated, and a statement of the dissenters' right to demand payment pursuant to NRS 92A.480.  (Added to NRS by 1995, 2091)

NRS 92A.480  Dissenter's estimate of fair value: Notification of subject corporation; demand for payment of estimate.

1.  A dissenter may notify the subject corporation in writing of his own estimate of the fair value of his shares and the amount of interest due, and demand payment of his estimate, less any payment pursuant to NRS 92A.460, or reject the offer pursuant to NRS 92A.470 and demand payment of the fair value of his shares and interest due, if he believes that the amount paid pursuant to NRS 92A.460 or offered pursuant to NRS 92A.470 is less than the fair value of his shares or that the interest due is incorrectly calculated.
2.  A dissenter waives his right to demand payment pursuant to this section unless he notifies the subject corporation of his demand in writing within 30 days after the subject corporation made or offered payment for his shares.  (Added to NRS by 1995, 2091)

NRS 92A.490  Legal proceeding to determine fair value: Duties of subject corporation; powers of court; rights of dissenter.

1.  If a demand for payment remains unsettled, the subject corporation shall commence a proceeding within 60 days after receiving the demand and petition the court to determine the fair value of the shares and accrued interest. If the subject corporation does not commence the proceeding within the 60-day period, it shall pay each dissenter whose demand remains unsettled the amount demanded.
2.  A subject corporation shall commence the proceeding in the district court of the county where its registered office is located. If the subject corporation is a foreign entity without a resident agent in the state, it shall commence the proceeding in the county where the registered office of the domestic corporation merged with or whose shares were acquired by the foreign entity was located.
3.  The subject corporation shall make all dissenters, whether or not residents of Nevada, whose demands remain unsettled, parties to the proceeding as in an action against their shares. All parties must be served with a copy of the petition. Nonresidents may be served by registered or certified mail or by publication as provided by law.
4.  The jurisdiction of the court in which the proceeding is commenced under subsection 2 is plenary and exclusive. The court may appoint one or more persons as appraisers to receive evidence and recommend a decision on the question of fair value. The appraisers have the powers described in the order appointing them, or any amendment thereto. The dissenters are entitled to the same discovery rights as parties in other civil proceedings.
5.  Each dissenter who is made a party to the proceeding is entitled to a judgment:

(a) For the amount, if any, by which the court finds the fair value of his shares, plus interest, exceeds the amount paid by the subject corporation; or
(b) For the fair value, plus accrued interest, of his after-acquired shares for which the subject corporation elected to withhold payment pursuant to NRS 92A.470.

 (Added to NRS by 1995, 2091)

NEVADA CASES.

Findings of appraisers not disturbed unless clearly wrong. On appeal from judgment confirming appraisal of stock of merged corporation in proceeding under former NRS 78.510 (cf. NRS 92A.490) by dissident former shareholders to recover value of their shares, findings of appraisers would not be disturbed unless clearly wrong. Southdown, Inc. v. McGinnis, 89 Nev. 184, 510 P.2d 636 (1973)

Dissident stockholders entitled to prejudgment interest from date of demand. In proceeding pursuant to former NRS 78.510 (cf. NRS 92A.490) by dissident former shareholders of merged Nevada corporation to recover fair cash value of their shares, former shareholders were entitled to recover prejudgment interest on fair cash value from date of demand for payment because, under former NRS 78.515 (cf. NRS 92A.440), they ceased to be shareholders and became creditors on date of demand and, as creditors, were entitled to interest under NRS 99.040. Fact that amount due had not yet been judicially determined was immaterial. Southdown, Inc. v. McGinnis, 89 Nev. 184, 510 P.2d 636 (1973), cited, Tolotti v. Eikelberger, 90 Nev. 466, at 468, 530 P.2d 106 (1974), Lake Tahoe Sailboat Sales & Charter, Inc. v. Douglas County, 562 F. Supp. 523 (D. Nev. 1983)

NRS 92A.500  Legal proceeding to determine fair value: Assessment of costs and fees.

1.  The court in a proceeding to determine fair value shall determine all of the costs of the proceeding, including the reasonable compensation and expenses of any appraisers appointed by the court. The court shall assess the costs against the subject corporation, except that the court may assess costs against all or some of the dissenters, in amounts the court finds equitable, to the extent the court finds the dissenters acted arbitrarily, vexatiously or not in good faith in demanding payment.
2.  The court may also assess the fees and expenses of the counsel and experts for the respective parties, in amounts the court finds equitable:

(a) Against the subject corporation and in favor of all dissenters if the court finds the subject corporation did not substantially comply with the requirements of NRS 92A.300 to 92A.500, inclusive; or
(b) Against either the subject corporation or a dissenter in favor of any other party, if the court finds that the party against whom the fees and expenses are assessed acted arbitrarily, vexatiously or not in good faith with respect to the rights provided by NRS 92A.300 to 92A.500, inclusive.

3.  If the court finds that the services of counsel for any dissenter were of substantial benefit to other dissenters similarly situated, and that the fees for those services should not be assessed against the subject corporation, the court may award to those counsel reasonable fees to be paid out of the amounts awarded to the dissenters who were benefited.
4.  In a proceeding commenced pursuant to NRS 92A.460, the court may assess the costs against the subject corporation, except that the court may assess costs against all or some of the dissenters who are parties to the proceeding, in amounts the court finds equitable, to the extent the court finds that such parties did not act in good faith in instituting the proceeding.
5.  This section does not preclude any party in a proceeding commenced pursuant to NRS 92A.460 or 92A.490 from applying the provisions of N.R.C.P. 68 or NRS 17.115.  (Added to NRS by 1995, 2092)

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