0001193125-13-098476.txt : 20130308 0001193125-13-098476.hdr.sgml : 20130308 20130308155253 ACCESSION NUMBER: 0001193125-13-098476 CONFORMED SUBMISSION TYPE: SC 13E3 PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 20130308 DATE AS OF CHANGE: 20130308 GROUP MEMBERS: ALLIED MERIT INTERNATIONAL INVESTMENT INC. GROUP MEMBERS: FAITH ORIGINS LTD GROUP MEMBERS: FUER MERGER NEWCO LTD. GROUP MEMBERS: GUOBIN TAN GROUP MEMBERS: HAILONG CAO GROUP MEMBERS: HEPING GAO GROUP MEMBERS: HOUYUN YANG GROUP MEMBERS: JINQUAN SHI GROUP MEMBERS: ORIENTAL AGRICULTURE CO., LTD. GROUP MEMBERS: PINGFANG HAN GROUP MEMBERS: QIULI ZHAO GROUP MEMBERS: SHUNXIANG XUN GROUP MEMBERS: SHUXIAN LIU GROUP MEMBERS: TRADE EVER HOLDINGS LTD GROUP MEMBERS: VIRTUE WORLD LTD GROUP MEMBERS: XIAOLING YU GROUP MEMBERS: XIULI HE GROUP MEMBERS: XIXIAN DONG GROUP MEMBERS: YUHUA LIU FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: Zhang Li CENTRAL INDEX KEY: 0001569578 FILING VALUES: FORM TYPE: SC 13E3 MAIL ADDRESS: STREET 1: NEIWEI ROAD STREET 2: FULAERJI DISTRICT, QIQIHAR CITY: HEILONGJIANG STATE: F4 ZIP: 161041 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: Fuer International Inc. CENTRAL INDEX KEY: 0001445229 STANDARD INDUSTRIAL CLASSIFICATION: BLANK CHECKS [6770] IRS NUMBER: 850290243 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13E3 SEC ACT: 1934 Act SEC FILE NUMBER: 005-84285 FILM NUMBER: 13677409 BUSINESS ADDRESS: STREET 1: 190 LAKEVIEW WAY CITY: VERO BEACH STATE: FL ZIP: 32963 BUSINESS PHONE: 772-231-7544 MAIL ADDRESS: STREET 1: 190 LAKEVIEW WAY CITY: VERO BEACH STATE: FL ZIP: 32963 FORMER COMPANY: FORMER CONFORMED NAME: Forex365, Inc. DATE OF NAME CHANGE: 20080915 SC 13E3 1 d498495dsc13e3.htm SC 13E3 SC 13E3
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 13E-3

(Rule 13e-100)

Transaction Statement under Section 13(e)

of the Securities Exchange Act of 1934 and Rule 13e-3 thereunder

Rule 13e-3 Transaction Statement under Section 13(e)

of the Exchange Act of 1934

 

 

Fuer International, Inc.

(Name of Issuer)

 

 

Li Zhang

Fuer Merger Newco Ltd.

Oriental Agriculture Co., Ltd.

Trade Ever Holdings Limited

Faith Origins Limited

Allied Merit International Investment Inc.

Virtue World Limited

Yuhua Liu

Qiuli Zhao

Shuxian Liu

Heping Gao

Pingfang Han

Guobin Tan

Hailong Cao

Jinquan Shi

Xixian Dong

Houyun Yang

Shunxiang Xun

Xiuli He

Xiaoling Yu

(Name of Persons Filing Statement)

Common Stock, par value $0.001 per share

(Title of Class of Securities)

35953T109

(CUSIP Number of Class of Securities)

 

Li Zhang

c/o Fuer International, Inc.

Neiwei Road,

Fulaerji District, Qiqihar,

Heilongjiang, China 161041

86-452-6919150

 

J. Brett Pritchard, Esq.

Charles Wu, Esq.

Locke Lord LLP

111 S. Wacker Drive

Chicago, Illinois 60606

Tel: (312) 443-1700

Fax: (312) 443-0336

(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of Filing Persons)

 

 

This statement is filed in connection with (check the appropriate box):

 

¨    a.    The filing of solicitation materials or an information statement subject to Regulation 14A, Regulation 14-C or Rule 13e-3(c) under the Securities Exchange Act of 1934.
¨    b.    The filing of a registration statement under the Securities Act of 1933.
¨    c.    A tender offer.
x    d.    None of the above.

Check the following box if the soliciting materials or information statement referred to in checking box (a) are preliminary copies: ¨

Check the following box if the filing is a final amendment reporting the results of the transaction: ¨

CALCULATION OF FILING FEE

 

Transaction Valuation*   Amount of Filing Fee**

$501,515.88

 

  $68.41
* The transaction valuation is estimated solely for purposes of calculating the filing fee pursuant to Rule 0-11(b) under the Securities Exchange Act of 1934, as amended. The calculation assumes the purchase of all outstanding shares of common stock of the Issuer (other than 12,569,259 shares of common stock already beneficially owned by the Filing Persons) at a purchase price of $1.29 in cash per share. There were 388,772 shares of Common Stock of outstanding that were not beneficially owned by the Filing Persons as of March 8, 2013.
** The amount of the filing fee is calculated in accordance with Regulation 240.0-11 of the Securities Exchange Act of 1934, as amended. The fee is calculated by multiplying the transaction valuation by 0.0001364.

 

¨ Check the box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

Amount Previously Paid: N/A    Filing Party: N/A
Form or Registration No.: N/A    Date Filed: N/A

NEITHER THE SECURITIES EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS: APPROVED OR DISAPPROVED OF THE TRANSACTION, PASSED UPON THE MERITS OR FAIRNESS OF THE TRANSACTION OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE DISCLOSURE IN THE DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

 

 

 


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TABLE OF CONTENTS

 

     Page  

SUMMARY TERM SHEET

     1   

Purposes of the Merger

     1   

Principal Terms of the Merger

     1   

Parties to the Merger

     3   

The Filing Persons’ Position on the Fairness of the Merger

     6   

Interests of Fuer’s Executive Officers and Directors in the Merger

     7   

Consequences of the Merger

     8   

Dissenter’s Rights

     9   

Where You Can Find More Information

     9   

INTRODUCTION

     10   

SPECIAL FACTORS

     11   

PURPOSES, ALTERNATIVES, REASONS, AND EFFECTS OF THE MERGER

     11   

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUNCES

     18   

MATERIAL PRC TAX CONSEQUENCES

     22   

FAIRNESS OF THE MERGER

     23   

REPORTS, OPINIONS, APPRAISALS, AND NEGOTIATIONS

     27   

TRANSACTION STATEMENT

     29   

Item 1. Summary Term Sheet

     29   

Item 2. Subject Company Information

     29   

Item 3. Identity and Background of Filing Persons

     30   

Item 4. Terms of the Transaction

     37   

Item 5. Past Contacts, Transactions, Negotiations and Agreements

     42   

Item 6. Purposes of the Transaction and Plans or Proposals

     44   

Item 7. Purposes, Alternatives, Reasons, and Effects of the merger

     45   

Item 8. Fairness of the Transaction

     45   

Item 9. Reports, Opinions, Appraisals, and Negotiations

     45   

Item 10. Source and Amount of Funds or Other Consideration

     45   

Item 11. Interest in Securities of the Subject Company

     46   

Item 12. The Solicitation or Recommendation

     47   

Item 13. Financial Statements

     47   

Item 14. Personal/Assets, Retained, Employed, Compensated or Used

     47   

Item 15. Additional Information

     47   

Item 16. Exhibits

     48   


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SUMMARY TERM SHEET

This “Summary Term Sheet” summarizes the material information with respect to the proposed short form merger involving Fuer International, Inc., referred to herein as “Fuer”, as a result of which the common stock of Fuer will cease to be quoted on the OTCQB Tier of the OTC Markets (“OTCQB”) and Fuer (as the surviving entity of the merger) will be eligible to suspend its public reporting obligations under the Securities Exchange Act of 1934, as amended, or “Exchange Act”. It does not contain all of the information that may be important to you. You should read this entire Schedule 13E-3 and the other documents to which this Schedule 13E-3 refers for a more complete understanding of the transactions being contemplated, how it affects you, what your rights are with respect to the merger as a stockholder of Fuer and the position of the “Filing Persons” (described below) on the fairness of the merger to you. The Filing Persons are required to file this Schedule 13E-3 pursuant to Section 13(e) of the Exchange Act and Rule 13e-3 thereunder. References to “Dollars” or “$” in this Schedule 13E-3 are to United States Dollars.

Purposes of the Merger (Page 12)

Li Zhang, Oriental Agriculture Co., Ltd., Trade Ever Holdings Limited, Faith Origins Limited, Allied Merit International Investment Inc., Virtue World Limited, Yuhua Liu, Qiuli Zhao, Shuxian Liu, Heping Gao, Pingfang Han, Guobin Tan, Hailong Cao, Jinquan Shi, Xixian Dong, Houyun Yang, Shunxiang Xun, Xiuli He and Xiaoling Yu, collectively referred to herein as “Contributing Stockholders”, are currently the direct holders of approximately 97% of the outstanding shares of common stock of Fuer, par value $0.001 per share (the “Shares”). Immediately prior to the merger discussed below, the Contributing Stockholders will contribute all of the shares of Fuer common stock held by them to Fuer Merger Newco Ltd., referred to herein as “Newco”, a newly formed Nevada corporation formed by the Contributing Stockholders for the purpose of effecting the merger. The Contributing Stockholders intend to cause Newco to merge with and into Fuer, with Fuer continuing as the surviving corporation, as a means of acquiring all of the other shares of Fuer common stock not owned directly or indirectly by Contributing Stockholders and providing a source of immediate liquidity to the holders of such shares of Fuer common stock. Following the merger, Contributing Stockholders will own 100% of the capital stock of Fuer (as the surviving entity of the merger).

Principal Terms of the Merger (Page 36)

The Merger

Newco is a Nevada corporation newly formed for the purpose of effecting a merger with Fuer. Upon the contribution by Contributing Stockholders of their shares of Fuer common stock to Newco, Newco will hold approximately 97% of the outstanding shares of Fuer common stock. At any time beginning at least 20 days following the date of the mailing of this Schedule 13E-3, or such later time as may be required to comply with Rule 13e-3 under the Exchange Act, and all other applicable laws, the Contributing Stockholders will cause Newco to merge with and into Fuer in a “short form” merger under Section 92A.180 of the Nevada Revised Statutes, referred to herein as the “NRS”. Under the NRS, no action is required by Fuer or the stockholders of Fuer (other than Newco) for the merger to become effective. Contributing Stockholders and Newco do


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not intend, nor are they required under the NRS, to enter into a merger agreement with Fuer. Holders of Fuer common stock will not be entitled to vote their shares of Fuer common stock with respect to the merger, but will be entitled to certain dissenter’s rights under and in accordance with NRS Chapter 92A (Sections 92A.300 through 92A.500 inclusive) (the “Dissenters’ Rights Provisions”). Fuer will be the surviving corporation in the merger. Pursuant to NRS 92A.180(2), Newco may merge into Fuer so that Fuer will be the surviving corporation in the merger without approval of the stockholders of Fuer. Pursuant to NRS 92A.180(3), the sole director of Newco adopted a plan of merger on March 8, 2013, and such plan of merger will become effective upon the closing of the Contribution Agreement. Pursuant to the Contribution Agreement, the Contributing Stockholders agreed that following the closing of the Contribution Agreement and the issuance of Newco shares they will vote their Newco shares in favor of the merger.

Merger Consideration

Upon the effective date of the merger, each share of Fuer common stock (other than shares held by Newco, shares held in treasury and shares with respect to which dissenter’s rights have been properly exercised and not withdrawn or lost) will be cancelled and automatically converted into the right to receive $1.29 in cash, without interest (the “Merger Price”).

Fuer Shares Outstanding; Ownership by the Contributing Stockholders

As of March 8, 2013, a total of 12,958,031 shares of Fuer common stock were outstanding. As of March 8, 2013, the Filing Persons were, in the aggregate, the deemed beneficial owners of 12,569,259 shares of Fuer common stock or approximately 97% of the outstanding shares of Fuer common stock. In addition, as of March 8, 2013, Allied Merit International Investment Inc. (“Allied”) holds currently exercisable warrants (the “Warrants”) to purchase 873,315 shares of Fuer common stock at the exercise price of $2.58 per share. Taking into account the 873,315 shares of Fuer common stock issuable upon the exercise of the Warrants, Allied would be deemed to beneficially own approximately 14.0% of Fuer common stock. Pursuant to the Contribution Agreement described on page 11 below, as of the effectiveness of the merger, the Warrants will be automatically cancelled and terminated.

Payment for Shares

Newco will pay you for your shares of Fuer common stock as soon as practicable following the effective date of the merger. Instructions for surrendering your stock certificates will be set forth in a Notice of Merger and Dissenter’s Rights and a Letter of Transmittal that will be mailed pursuant to NRS 92A.430 to stockholders of record of Fuer as of the effective date of the merger within 10 calendar days after the effective date of the merger. Those documents should be read carefully. Please do not submit your stock certificates before you have received these documents. Sending the “Paying Agent” identified in the Notice of Merger and Dissenter’s Rights your stock certificates with a properly signed Letter of Transmittal will waive your dissenter’s rights described below. See Item 4 “Material Terms” beginning on page 36 of this Schedule 13E-3.

 

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Source and Amount of Funds

The total amount of funds expected to be required by Newco to pay the aggregate merger consideration for the outstanding shares of Fuer common stock (other than shares held by Newco, shares held in treasury and shares with respect to which dissenter’s rights have been properly exercised and not withdrawn or lost), and to pay related fees and expenses, is estimated to be approximately $660,000. Because Mr. Li Zhang, one of the the Filing Persons, has agreed to provide the necessary funding for the merger to Newco from cash on hand pursuant to the Contribution Agreement, Newco has not arranged for any alternative financing arrangements. The merger will not be subject to any financing conditions.

Parties to the Merger (Page 30)

“Filing Persons” refers to the following entities and individuals, each of whom is described in more detail in Item 3 “Identity and Background of Filing Persons” beginning on page 30 of this Schedule 13E-3:

 

   

Newco,

 

   

Li Zhang,

 

   

Oriental Agriculture Co., Ltd.,

 

   

Trade Ever Holdings Limited,

 

   

Faith Origin Limited,

 

   

Allied Merit International Investment Inc.,

 

   

Virtue World Limited,

 

   

Yuhua Liu,

 

   

Qiuli Zhao,

 

   

Shuxian Liu,

 

   

Heping Gao,

 

   

Pingfang Han,

 

   

Guobin Tan,

 

   

Hailong Cao,

 

   

Jinquan Shi,

 

   

Xixian Dong,

 

   

Houyun Yang,

 

   

Shunxiang Xun,

 

   

Xiuli He, and

 

   

Xiaoling Yu

Newco is a Nevada corporation newly formed by Contributing Stockholders solely for the purpose of effecting the merger. Upon contribution of the shares of Fuer common stock by Contributing Stockholders pursuant to the Contribution Agreement, (i) Contributing Stockholders will become all of the stockholders of Newco, and (ii) Newco will directly hold 12,569,259 shares of Fuer’s common stock, or approximately 97% of the outstanding shares of Fuer common stock. Following the merger, Contributing Stockholders will own 100% of the capital stock of Fuer as the surviving entity of the merger. Mr. Li Zhang is the sole director and officer of Newco.

 

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Li Zhang indirectly holds 7,32,749 shares of Fuer common stock, or approximately 56.6% of the outstanding shares of Fuer common stock as of March 8, 2013 through Oriental Agriculture. In addition, Mr. Zhang may be deemed to beneficially own 555,582 shares of Fuer common stock (or approximately 4.3% of the outstanding Shares) held by Yuhua Liu, his wife, although Mr. Li Zhang disclaims beneficial ownership of the Shares held directly by Ms. Yuhua Liu. Mr. Li Zhang’s principal occupation is serving as the Chairman and Chief Executive Officer of Fuer.

Oriental Agriculture Co., Ltd. (“Oriental Agriculture”) is a British Virgin Islands company, and it directly holds 7,327,749 shares of Fuer common stock, or approximately 56.6% of the outstanding shares of Fuer common stock as of March 8, 2013. Oriental Agriculture was formed for the purpose of holding such Shares and has not conducted any other business. Mr. Li Zhang is the sole director and shareholder of Oriental Agriculture.

Trade Ever Holdings Limited (“Trade Ever”) is a British Virgin Islands company, and it directly holds 1,269,884 shares of Fuer common stock, or approximately 9.8% of the outstanding shares of Fuer common stock as of March 8, 2013. Trade Ever was formed for the purpose of holding such Shares and has not conducted any other business. Xi Liu, an employee of Fuer, is the sole director and shareholder of Trade Ever.

Faith Origin Limited (“Faith Origin”) is a British Virgin Islands company, and it directly holds 1,243,968 shares of Fuer common stock, or approximately 9.6% of the outstanding shares of Fuer common stock as of March 8, 2013. Faith Origin was formed for the purpose of holding such Shares and has not conducted any other business. Li Guo Li, a personal friend of Li Zhang, is the sole director and shareholder of Faith Origin.

Allied Merit International Investment Inc. (“Allied”) is a British Virgin Islands company, and it directly holds 1,018,868 shares of Fuer common stock, or approximately 7.9% of the outstanding shares of Fuer common stock as of March 8, 2013. In addition, as of March 8, 2013, Allied holds currently exercisable Warrants to purchase 873,315 shares of Fuer common stock at the exercise price of $2.58 per share. Taking into account the 873,315 shares of Fuer common stock issuable upon the exercise of the Warrants, Allied would be deemed to beneficially own approximately 14.0% of Fuer common stock. Allied is a financial services company and it holds the Warrants and is a party to a series of agreements with Fuer or its affiliates (the “Allied Agreements”). Pursuant to the Contribution Agreement, as of the effectiveness of the merger the Warrants and the Allied Agreements will be automatically cancelled and terminated. See the form of Contribution Agreement attached hereto as Exhibit (d).

Virtue World Limited (“Virtue World”) is a British Virgin Islands company, and it directly holds 763,922 shares of Fuer common stock, or approximately 5.9% of the outstanding shares of Fuer common stock as of March 8, 2013. Virtue World was formed for the purpose of holding such Shares and has not conducted any other business. Liping Zhang is the sole director and shareholder of Virtue World.

 

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Yuhua Liu directly holds 555,582 shares of Fuer common stock, or approximately 4.3% of the outstanding shares of Fuer common stock as of March 8, 2013. Yuhua Liu’s principal occupation is serving as a director and officer of Fuer. Yuhua Liu is the wife of Li Zhang, the Chairman and the CEO of Fuer.

Qiuli Zhao directly holds 50,000 shares of Fuer common stock, or approximately 0.4% of the outstanding shares of Fuer common stock as of March 8, 2013. Qiuli Zhao’s principal occupation is serving as an employee in the seeds production department of Fuer.

Shuxian Liu directly holds 50,000 shares of Fuer common stock, or approximately 0.4% of the outstanding shares of Fuer common stock as of March 8, 2013. Shuxian Liu’s principal occupation is serving as the director of human resources of Fuer.

Heping Gao directly holds 40,000 shares of Fuer common stock, or approximately 0.3% of the outstanding shares of Fuer common stock as of March 8, 2013. Heping Gao’s principal occupation is serving as an employee in the seeds production department of Fuer.

Pingfang Han directly holds 10,000 shares of Fuer common stock, or approximately 0.1% of the outstanding shares of Fuer common stock as of March 8, 2013. Pingfang Han’s principal occupation is serving as an employee in the logistics department of Fuer.

Guobin Tan directly holds 50,000 shares of Fuer common stock, or approximately 0.4% of the outstanding shares of Fuer common stock as of March 8, 2013. Guobin Tan’s principal occupation is serving as an employee in the soybean production department of Fuer.

Hailong Cao directly holds 16,149 shares of Fuer common stock, or approximately 0.1% of the outstanding shares of Fuer common stock as of March 8, 2013. Hailong Cao’s principal occupation is serving as the director of the procurement department of Fuer.

Jinquan Shi directly holds 30,000 shares of Fuer common stock, or approximately 0.2% of the outstanding shares of Fuer common stock as of March 8, 2013. Jinquan Shi’s principal occupation is serving as the director of corporate staff of Fuer.

Xixian Dong directly holds 60,074 shares of Fuer common stock, or approximately 0.5% of the outstanding shares of Fuer common stock as of March 8, 2013. Xixian Dong is retired.

Houyun Yang directly holds 54,063 shares of Fuer common stock, or approximately 0.4% of the outstanding shares of Fuer common stock as of March 8, 2013. Houyun Yang’s principal occupation is serving as an employee of Allied.

Shunxiang Xun directly holds 20,000 shares of Fuer common stock, or approximately 0.2% of the outstanding shares of Fuer common stock as of March 8, 2013. Shunxiang Xun’s principal occupation is serving as an employee of Allied.

Xiuli He directly holds 6,000 shares of Fuer common stock, or approximately 0.1% of the outstanding shares of Fuer common stock as of March 8, 2013. Xiuli He’s principal occupation is serving as an employee of Allied.

 

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Xiaoling Yu directly holds 3,000 shares of Fuer common stock, or approximately 0.02% of the outstanding shares of Fuer common stock as of March 8, 2013. Xiaoling Yu’s principal occupation is serving as an employee of Allied.

Li Zhang, Oriental Agriculture Co., Ltd., Trade Ever Holdings Limited, Faith Origins Limited, Allied Merit International Investment Inc., Virtue World Limited, Yuhua Liu, Qiuli Zhao, Shuxian Liu, Heping Gao, Pingfang Han, Guobin Tan, Hailong Cao, Jinquan Shi, Xixian Dong, Houyun Yang, Shunxiang Xun, Xiuli He and Xiaoling Yu are collectively referred to as “Contributing Stockholders”.

The Filing Persons’ Position on the Fairness of the Merger (Page 23)

Rule 13e-3 under the Exchange Act requires each of the Filing Persons to make certain statements regarding, among other things, their belief as to the fairness of the merger to the “unaffiliated stockholders” of Fuer (that is, any Fuer stockholder other than the Filing Persons or any other affiliate of Fuer). The Filing Persons are making these statements solely for the purpose of complying with the requirements of Rule 13e-3 and related rules under the Exchange Act.

As described more fully below, each Filing Person believes that the proposed merger is both substantively and procedurally fair to the unaffiliated stockholders of Fuer, based on the following factors:

 

   

The Merger Price is the result of arm’s length negotiations between the Filing Persons and Capital Soldier Limited, an unaffiliated stockholder of Fuer owning approximately 95.6% of all Shares held by unaffiliated stockholders.

 

   

The Filing Persons considered the fact that there has been virtually no trading of the Shares since the Share Exchange, as relevant to their belief that the merger is fair to the unaffiliated stockholders of Fuer. Other than 1,300 shares on August 5, 2010, 600 shares on August 9, 2010 and 1,100 shares on March 3, 2011, there has been no trading of the shares of Fuer common stock since June 16, 2010 when the Share Exchange (as defined below in Item 2 of the Schedule 13E-3) was completed. The merger consideration, at $1.29 per share, provides immediate liquidity to the unaffiliated stockholders.

 

   

The merger will enable the unaffiliated stockholders of Fuer to immediately receive cash for their shares of Fuer common stock, without the payment of any brokerage fees or commissions typically associated with market sales.

 

   

The Contributing Stockholders’ collective beneficial ownership of approximately 97% of the outstanding Shares (1) will result in an extremely small public float that limits the amount of trading in the Shares even if Fuer common stock starts trading in the future and (2) eliminates the possibility that a proposal to acquire the Shares by an independent entity could succeed without the consent of the Filing Persons.

 

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The Filing Persons are not aware of any firm offer that has been made in the last two years for: (1) the merger or consolidation of Fuer with or into another company, or vice versa; (2) the sale or other transfer of all or any substantial part of the assets of Fuer; or (3) a purchase of Fuer’s securities that would enable the holder to exercise control of Fuer. The Contributing Stockholders intend to retain their majority holdings in Fuer, and did not seek a buyer for Fuer. This fact foreclosed the opportunity to consider an alternative transaction with a third party purchaser of Fuer or otherwise provide liquidity in the form of a third party offer to the unaffiliated stockholders of Fuer. Accordingly, it is unlikely that finding a third party buyer for Fuer was a realistic option for the unaffiliated stockholders of Fuer.

 

   

The merger would shift the risk of the future financial performance of Fuer from the unaffiliated stockholders, who do not have the power to control decisions made regarding Fuer’s business, entirely to the Filing Persons who have the power to control Fuer’s business.

 

   

Fuer has never declared or paid any dividends since its inception, and based on Fuer’s disclosure in its Annual Report on Form 10-K for the fiscal year ended December 31, 2011, it has no intention to pay dividends in the foreseeable future.

 

   

After the merger, Fuer will no longer be subject to the costly reporting and other disclosure requirements of the Exchange Act, including those instituted under the Sarbanes-Oxley Act of 2002.

 

   

The unaffiliated stockholders of Fuer are entitled to exercise dissenter’s rights and demand fair value for their shares of Fuer common stock as determined by a Nevada state district court, which may be determined to be more or less than the cash amount offered in the merger.

 

   

Because the merger is being effected as a short-form merger under Section 92A.180 of the NRS, it does not require approval by the stockholders or the board of directors of Fuer.

See “Special Factors — Fairness of the Merger,” beginning on page 23 of this Schedule 13E-3.

Interests of Fuer’s Executive Officers and Directors in the Merger (Pages 15-18 and 22)

Fuer’s stockholders should be aware that certain of Fuer’s directors and executive officers have interests in the transaction that are different from, and/or in addition to, the interests of Fuer’s stockholders generally. These interests include, among others:

 

   

Mr. Li Zhang and Ms. Yuhua Liu currently hold approximately 56.6% and 4.3% respectively of the outstanding Shares of Fuer. Mr. Li Zhang and Ms. Yuhua Liu will continue to hold equity interests in the surviving corporation and their ownership interests will be increased to approximately 58.3% and 4.4%, respectively, in the surviving corporation after the merger.

 

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Fuer’s executive officers and directors will continue to manage the business operation of Fuer in positions substantially similar to their current positions after the merger.

 

   

The short-form merger is expected to be tax-free to Mr. Li Zhang and Ms. Yuhua Liu. See “Material U.S. Federal Income Tax Consequences” on page 18 of this Schedule 13E-3.

Consequences of the Merger (Page 15)

Completion of the merger will have the following effects:

 

   

Newco will be merged into Fuer with Fuer being the surviving entity of the merger and wholly-owned by the Contributing Stockholders.

 

   

Subject to the exercise of statutory dissenter’s rights, each of your shares of Fuer common stock will be converted into the right to receive $1.29 per share in cash, without interest.

 

   

Only Contributing Stockholders will have the opportunity to participate in the future earnings and growth, if any, of Fuer (as the surviving entity of the merger). Similarly, only Contributing Stockholders will face the risk of losses generated by Fuer’ operations or the decline in value of Fuer after the merger.

 

   

The shares of the common stock of Fuer will no longer be publicly traded. In addition, Fuer and its affiliates will no longer be subject to the reporting and other disclosure requirements of the Exchange Act, including requirements to file annual and other periodic reports or to provide the type of disclosure contained in this Schedule 13E-3. After completion of the merger, the stockholders of Fuer will lose the rights and protections that the U.S. federal securities laws provide to security holders of public companies, the substantive disclosure requirements that the U.S. federal securities laws, including the Sarbanes-Oxley Act, require of public companies, and the reporting obligations for directors, officers and principal security holders of public companies. For example, after completion of the merger, Fuer will no longer be subject to the provisions of the Sarbanes-Oxley Act and certain of the liability provisions of the Exchange Act. Fuer’s executive officers, directors and 10% stockholders will no longer be required to file reports relating to their transactions in Fuer’s common stock with the SEC. In addition, Fuer’s executive officers, directors and 10% stockholders will no longer be subject to the insider trading provisions of the Exchange Act, and persons acquiring 5% or more of Fuer’s common stock will no longer be required to report their beneficial ownership under the Exchange Act.

 

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Dissenter’s Rights (Page 38)

You have a statutory right to dissent from the merger and demand payment of the fair value of your shares of Fuer common stock as determined in a judicial appraisal proceeding in accordance with Section 92A.300 through Section 92A.500 inclusive of the NRS, or the “Dissenters’ Rights Provisions,” plus interest, if any, from the effective date of the merger. This value may be more or less than the Merger Price. In order to qualify for these rights, you must make a written demand for dissent within 30 days after the date of mailing of the Notice of Merger and Dissenter’s Rights and a Letter of Transmittal and otherwise comply with the procedures for exercising dissenter’s rights in the NRS. A copy of the Dissenters’ Rights Provisions is attached as Exhibit (f) hereto. Any failure to comply with its terms will result in an irrevocable loss of such right. Stockholders seeking to exercise their statutory right to dissent are encouraged to seek advice from legal counsel.

Where You Can Find More Information (Page 28)

More information regarding Fuer is available from its public filings with the Securities and Exchange Commission. See also Item 2 “Subject Company Information” and Item 3 “Identity and Background of Filing Persons” beginning on pages 29 and 30, respectively, of this Schedule 13E-3.

 

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INTRODUCTION

This Transaction Statement on Schedule 13E-3 is being filed by the following entities and individuals, collectively referred to as the “Filing Persons”:

 

   

Fuer Merger Newco Ltd.,

 

   

Li Zhang,

 

   

Oriental Agriculture Co., Ltd.,

 

   

Trade Ever Holdings Limited,

 

   

Faith Origin Limited,

 

   

Allied Merit International Investment Inc.,

 

   

Virtue World Limited,

 

   

Yuhua Liu,

 

   

Qiuli Zhao,

 

   

Shuxian Liu,

 

   

Heping Gao,

 

   

Pingfang Han,

 

   

Guobin Tan,

 

   

Hailong Cao,

 

   

Jinquan Shi,

 

   

Xixian Dong,

 

   

Houyun Yang,

 

   

Shunxiang Xun,

 

   

Xiuli He, and

 

   

Xiaoling Yu

The Filing Persons are required to file this Schedule 13E-3 pursuant to Section 13(e) of the Exchange Act and Rule 13e-3 thereunder.

This Schedule 13E-3 is being filed in connection with the proposed short-form merger between Newco and Fuer pursuant to Section 92A.180 of the NRS, as a result of which Fuer and its affiliates will no longer be required to file reports with the SEC. The effective date of the merger is expected to occur 20 days following the date of the mailing of this Schedule 13E-3, or such later date as may be required to comply with Rule 13e-3 under the Exchange Act and all other applicable laws.

 

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As of March 8, 2013, there were issued and outstanding 12,958,031 shares of common stock of Fuer, $0.001 par value per share, referred herein as “Shares”, and approximately 554 stockholders of record.

Contributing Stockholders have agreed to contribute immediately prior to the merger an aggregate of 12,569,259 Shares, or approximately 97% of the total shares outstanding, to Newco, pursuant to the terms of the Contribution Agreement dated March 8, 2013 between Contributing Stockholders and Newco (the “Contribution Agreement”). The Contribution Agreement has been filed as Exhibit (d) to this Schedule 13E-3.

Upon the consummation of the merger and pursuant to the plan of merger attached as Exhibit C to the Contribution Agreement, each outstanding share (other than shares held by Newco, any shares held in treasury, and shares with respect to which statutory dissenter’s rights have been properly exercised and not withdrawn or lost) will be cancelled and automatically converted into the right to receive $1.29 per share in cash, referred to herein as the “Merger Price”, without interest, upon surrender of the certificate for such share to the “Paying Agent” identified in the Notice of Merger and Dissenter’s Rights and a Letter of Transmittal. Such notice will be mailed to stockholders of record of Fuer as of the effective date of the merger within 10 calendar days following the effective date of the merger. The notice will include, among other things, instructions with regard to the surrender of stock certificates, together with a description of statutory dissenter’s rights. These documents should be read carefully.

Under the NRS, no action is required by the board of directors of Fuer or by the stockholders of Fuer (other than Newco), for the merger to become effective. Fuer will be the surviving corporation in the merger. As a result of the merger, and pursuant to the terms of the Contribution Agreement, Contributing Stockholders will own all of the issued and outstanding capital stock of Fuer.

As of March 8, 2013, Allied holds warrants to purchase 873,315 common shares of Fuer as the exercise price of $2.58 per share, and pursuant to the Contribution Agreement, such warrants will be cancelled in full immediately prior to the effective time of the merger. Other than such warrants, there are no issued and outstanding options or warrants to acquire any capital stock of Fuer.

SPECIAL FACTORS

PURPOSES, ALTERNATIVES, REASONS, AND EFFECTS OF THE MERGER

Background of the Transaction

Beginning in early 2012, from time to time, Mr. Li Zhang (“Mr. Zhang”), the Chairman and CEO of Fuer and the majority stockholder of Fuer, and certain other stockholders of Fuer have informally discussed their respective investments in Fuer as well as its status as a public company, including the possibility of taking Fuer private. As part of these discussions, Mr. Zhang and certain other stockholders considered that (i) Fuer has incurred significant costs but has derived only minimal benefits from being a public company, (ii) the Shares have failed to attract interest from retail investors, institutional investors or market analysts and as a result an

 

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active and liquid market for the Shares has not developed and (iii) the lack of a trading market for the Shares and the low market capitalization of Fuer have deprived Fuer’s stockholders of the traditional liquidity benefits of being stockholder of a public reporting company. In addition to the costs of keeping Fuer as a public company, Mr. Zhang and certain other stockholders also considered the significant difficulty that Fuer would have in raising capital in the market for working capital needs given the lack of liquidity of its Shares and the recent negative market outlook on PRC companies that have gone public in the U.S. through a “reverse takeover” process.

In January 2013, Mr. Zhang and certain other stockholders concluded that the costs of keeping Fuer a public reporting company exceeded the benefits and therefore decided to pursue the possibility of a short-form merger in order to realize the cost savings and efficiencies of being a private company.

In January 2013, a representative of Capital Soldier Limited (“CSI”), a BVI company that holds approximately 2.87% of Fuer outstanding common stock, told representatives of Mr. Zhang that CSI would be interested in participating in the going private transaction through a short-form merger if it could retain its percentage interest in Fuer. However, Mr. Zhang preferred a transaction in which CSI would be cashed out in connection with the short-form merger, and asked if CSI would exercise its dissenters’ rights in the event Mr. Zhang and other stockholders pursued the going private transaction through a short-form merger. In February 2013, after several rounds of negotiations, CSI agreed that it would not exercise its dissenters’ rights in connection with the merger upon receipt of the Notice of Merger and Dissenter’s Right and that it would surrender its shares of Fuer common stock at a price of $1.29 per share.

On March 8, 2013, Mr. Zhang, the other Contributing Stockholders and Newco executed the Contribution Agreement, and Mr. Zhang, as the sole director of Newco, adopted a plan of merger to be effective upon the closing of the Contribution Agreement and approval by the Newco stockholders.

Later on the same day, the Filing Persons filed this Schedule 13E-3 and a Schedule 13D with the SEC announcing the intention of the Contributing Stockholders to cause Newco to effect the merger with and into Fuer. Also on the same day, the Filing Persons notified the directors of Fuer (other than Mr. Zhang) of the launching of the going private transaction and the filing of this Schedule 13E-3.

Purposes

The purpose of the merger is for Contributing Stockholders to acquire the minority public interest in Fuer through Newco and to provide the unaffiliated stockholders of Fuer (that is, any Fuer stockholder other than the Filing Persons or any other affiliate of Fuer) with a source of immediate liquidity for their shares. The Filing Persons believe that the extremely limited trading volume in the Shares makes ownership of the Shares unattractive to the unaffiliated holders of the Shares because the Shares are not readily saleable in the public market. The Filing Persons also believes that, given the lack of any trading in the Shares, the costs of maintaining Fuer’s status as a public company are not justified.

 

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Alternatives

The Filing Persons considered the advantages and disadvantages of certain alternatives to acquiring the minority interests of the unaffiliated stockholders of Fuer, including leaving Fuer as a majority-owned, public company in the US capital markets. In the view of the Filing Persons, the principal advantage of leaving Fuer as a majority-owned, public company in the US capital markets would be for the potential investment liquidity of owning securities of a public company and for the possibility of using Fuer’s securities to raise capital or make acquisitions. However, the Filing Persons do not expect Fuer to do so in the foreseeable future. The Filing Persons also noted that companies of similar size and public float to Fuer do not typically receive the necessary attention from stock analysts and the investment community to create substantial liquidity. Therefore, the Filing Persons concluded that the advantages of leaving Fuer as a more-than-90% owned, public subsidiary were outweighed by the disadvantages of doing so, and accordingly that alternative was rejected.

The Filing Persons believe that effecting the transaction by way of a short-form merger under Section 92A.180 of the NRS is also the quickest and most cost-effective way for Newco to acquire the outstanding minority equity interest in Fuer, as well as an equitable and fair way to provide liquidity, in the form of cash merger consideration, to the unaffiliated stockholders of Fuer for their shares of Fuer common stock. As a consequence, the Filing Persons rejected such transactions as a long-form merger, tender offer or reverse stock split because it would cause additional costs and delay. The short-form merger allows the unaffiliated stockholders of Fuer to receive cash for their shares of Fuer common stock quickly. The Filing Persons identified the short-form merger as the most viable vehicle for maximizing value to its unaffiliated stockholders. There are no alternative means that would provide the Company adequate assurance to allow the Company to cease to be a public company in a cost-effective way.

Reasons

In determining whether to acquire the outstanding public minority equity interest in Fuer and to effect the merger, the Filing Persons considered the following factors to be the principal benefits of taking Fuer private:

 

   

To decrease costs associated with being a public company. For example, as a privately-held company, Fuer (as the surviving entity of the merger) would not be required to file quarterly, annual, or other periodic reports with the SEC, publish and distribute to its stockholders annual reports and proxy statements, or comply with certain provisions of the Sarbanes-Oxley Act of 2002, or SOX. These cost savings include approximately $120,000 for expenses associated with audit and SOX compliance, $40,000 for expenses associated with personnel and public company management, $120,000 for expenses associated with public company legal representation, and $20,000 for general public company compliance expenses (such as stock transfer agent services, and printing, mailing and preparation of proxy statements, annual reports and other SEC reports). Certain individuals of Fuer’s management spend approximately 40% of their time involved with activities related to active public company management. The Filing Persons therefore anticipate that going private would result in cost savings of approximately $300,000 per year.

 

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To eliminate additional burdens on management associated with public reporting and other tasks resulting from Fuer’s public company status, including, for example, the dedication of time and resources to stockholder inquiries and investor and public relations.

 

   

To provide greater flexibility for Fuer’s management would have to focus on the business and the long-term business goals of Fuer (as opposed to quarterly earnings), without the diversion of the significant time required to comply with the reporting obligations of a public company.

 

   

To reduce the amount of public information available to competitors about Fuer’s businesses that would result from the termination of Fuer (and its affiliates)’s obligations under the reporting requirements of the Exchange Act, and the rules and regulations promulgated thereunder and any other requirements of the SEC.

 

   

To provide increased and immediate liquidity for unaffiliated stockholders of Fuer. There was virtually no trading of the shares since the Share Exchange (as defined on page 30 of this Schedule 13E-3). Investors essentially have no public market in which to efficiently sell their shares. The merger would result in immediate, enhanced liquidity for the unaffiliated stockholders of Fuer. The Filing Persons believe that the market for the shares is so illiquid that all of unaffiliated stockholders of Fuer would not be able to sell their shares within a short period of time at or above the Merger Price.

 

   

The fact that the merger offers the stockholders of Fuer the opportunity to sell their shares for one price at the same time, without the payment of any brokerage fee or commission (or, in the alternative, to seek an dissent of the fair value), and thereby directly benefits such stockholders.

 

   

The lack of interest by institutional investors in companies with a significantly limited public float.

The Filing Persons also weighed a variety of risks and other potentially negative factors for the unaffiliated stockholders of Fuer and the Filing Persons concerning the merger, including the fact that:

 

   

Following the merger, the unaffiliated stockholders of Fuer will not participate in any future earnings of or benefit from any increases in the value of Fuer (as the surviving entity of the merger); only the Filing Persons would benefit by an increase in the value of Fuer;

 

   

For U.S. federal income tax purposes generally, the cash payments made to the unaffiliated stockholders of Fuer pursuant to the merger will be taxable to stockholders that are “U.S. Holders” as defined in “Material U.S. Federal Income Tax Consequences” on page 18 of this Schedule 13E-3;

 

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Neither the board of directors nor the stockholders of Fuer are required under Nevada law to take any action in connection with the short-form merger. Because no corporate action on the part of Fuer is required by law to approve the short-form merger, the board of directors of Fuer did not appoint an independent committee to consider the proposed effect of the merger on the unaffiliated stockholders;

 

   

The unaffiliated stockholders of Fuer will be required to surrender their shares involuntarily in exchange for a cash price determined by the Filing Persons;

 

   

The unaffiliated stockholders of Fuer will not have the right as a result of the merger to liquidate their shares at a time and for a price of their choice;

 

   

Under NRS 92A.380(2), a stockholder who is entitled to dissent and obtain payment pursuant to the Dissenters’ Rights Provisions may not challenge the merger unless it is unlawful or fraudulent with respect to the stockholder or Fuer;

 

   

The Filing Persons will be the sole beneficiaries of the cost savings that result from going private; and

 

   

Fuer will no longer be subject to the provisions of SOX or the liability provisions of the Exchange Act.

Many of the factors in favor of taking Fuer private have been present in Fuer’s history for some time. Although the Filing Persons could have effectuated a short-form merger at other times prior to the current proposed merger, the Filing Persons only recently considered a potential going private transaction after beginning to more critically assess and evaluate the business performance and operations of Fuer and the ongoing costs of keeping Fuer a public company. In addition to the costs of keeping Fuer a public company, the Filing Persons also considered the significant difficulty that Fuer would have in raising capital in the market for working capital needs given the limited liquidity of its shares and the recent negative market outlook on PRC companies that have listed in the U.S. through a “reverse takeover” process. In January 2013, the Filing Persons concluded their analysis and determined that the costs of keeping Fuer a public company (as discussed above) exceeded the benefits and therefore decided to pursue the possibility of a short-form merger without delay in order to realize the benefit of taking Fuer private. On March 8, Contributing Stockholders and Newco executed the Contribution Agreement and the Filing Persons filed a Schedule 13D with the SEC announcing the intention of Contributing Stockholders to cause Newco to effect the merger with Fuer.

 

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Effects

Effect of the Merger on the Contributing Stockholders

The beneficial ownership of the Contributing Stockholders in the outstanding shares of Fuer common stock immediately prior to the consummation of the merger amounts to approximately 97% in the aggregate.

Upon completion of the merger, the Contributing Stockholders will have complete control over the conduct of Fuer’s business. The table below sets out the indirect interest in Fuer’s net book value and net income for the Contributing Stockholders before and after the merger, based on the historical net book value and net income of Fuer as of December 31, 2011.

 

     Prior to Merger      After the Merger  
   Ownership     Interest in
Book Value
     Interest in
Net Income
     Ownership     Interest in
Book Value
     Interest in
Net Income
 
   %     $      $      %     $      $  

Oriental Agriculture Co., Ltd.

     56.55        15,818,246         3,272,808         58.30        16,307,510         3,374,037   

Trade Ever Holdings Limited

     9.80        2,741,270         567,171         10.10        2,826,058         584,714   

Faith Origins Limited

     9.60        2,685,326         555,596         9.90        2,768,384         572,781   

Allied Merit International

     7.86        2,199,407         455,059         8.11        2,267,436         469,134   

Virtue World Limited

     5.90        1,649,061         341,192         6.08        1,700,067         351,745   

Liu Yuhua

     4.29        1,199,322         248,141         4.42        1,236,418         255,816   

Dong Xixian

     0.46        129,680         26,831         0.48        133,691         27,661   

Yang Houyun

     0.42        116,705         24,146         0.43        120,314         24,893   

Tan Guobin

     0.39        107,934         22,332         0.40        111,272         23,022   

Zhao QiuLi

     0.39        107,934         22,332         0.40        111,272         23,022   

Liu Shuxian

     0.39        107,934         22,332         0.40        111,272         23,022   

Gao Heping

     0.31        86,347         17,865         0.32        89,018         18,418   

Shi Jinquan

     0.23        64,760         13,399         0.24        66,763         13,813   

Xun Shunxiang

     0.15        43,174         8,933         0.16        44,509         9,209   

Cao Hailong

     0.12        34,860         7,213         0.13        35,939         7,436   

Han Pingfang

     0.08        21,587         4,466         0.08        22,254         4,604   

He Xiuli

     0.05        12,952         2,680         0.05        13,353         2,763   

Yu Xiaoling

     0.02        6,476         1,340         0.02        6,676         1,381   

Total

     97.01   $ 27,132,975       $ 5,613,836         100   $ 27,972,208       $ 5,787,472   

In addition, the Filing Persons will no longer be subject to reporting requirements regarding their ownership of Shares under Section 13 of the Exchange Act or to the requirement under Section 16 of the Exchange Act to disgorge certain profits from the purchase and sale of Shares. The Contributing Stockholders will also indirectly realize all of the benefits in the estimated savings of approximately $300,000 per year in costs related to being a public company. However, after completion of the merger, the Contributing Stockholders will bear all the risks associated with the operations of Fuer, including the risk of any loss incurred in its operations and any decrease in value of Fuer.

 

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For U.S. federal income tax purposes, the merger will not be a taxable transaction to the Contributing Stockholders. Accordingly, none of the Contributing Stockholders will recognize gain or loss for U.S. federal income tax purposes as a result of the merger. See “Material U.S. Federal Income Tax Consequences – Contributing Stockholders, Newco and Fuer,” beginning on page 22 of this Schedule 13E-3.

Effect of the Merger on the Unaffiliated Stockholders

Upon completion of the merger, the unaffiliated stockholders of Fuer will no longer have an interest in, and will not be stockholders of, Fuer and therefore will not be able to participate in any future earnings and potential growth of Fuer (as the surviving entity of the merger), but will also no longer bear the risk of any decreases in the value of Fuer. In addition, the unaffiliated stockholders of Fuer will not share in any distribution of proceeds after future sales of businesses of Fuer, if any. See Item 6, “Purposes of the Transaction and Plans or Proposals—Plans,” beginning on page 44 of this Schedule 13E-3. All other incidents of stock ownership with respect to such unaffiliated stockholders, such as the rights to vote on certain corporate decisions, to elect directors, to receive distributions upon the liquidation of Fuer and to receive dissenter’s rights upon certain mergers or consolidations of Fuer (except for dissenter’s rights perfected in connection with the merger), will be extinguished upon completion of the merger. After completion of the merger, the unaffiliated stockholders will lose the rights and protections that the U.S. federal securities laws provide to security holders of public companies, the substantive disclosure requirements that the U.S. federal securities laws, including the Sarbanes-Oxley Act, require of public companies, and the reporting obligations for directors, officers and principal security holders of public companies. For example, after completion of the merger, Fuer will no longer be subject to the provisions of the Sarbanes-Oxley Act and certain of the liability provisions of the Exchange Act. Fuer’s executive officers, directors and 10% stockholders will no longer be required to file reports relating to their transactions in Fuer’s common stock with the SEC. In addition, Fuer’s executive officers, directors and 10% stockholders will no longer be subject to the insider trading provisions of the Exchange Act, and persons acquiring 5% of Fuer’s common stock will no longer be required to report their beneficial ownership under the Exchange Act. Further, the receipt of the payment for their Shares will be a taxable transaction for U.S. federal income tax purposes for unaffiliated stockholders that are “U.S. Holders” as defined under “Material U.S. Federal Income Tax Consequences”. See “Material U.S. Federal Income Tax Consequences – Unaffiliated Stockholders”, beginning on page 19 of this Schedule 13E-3.

Upon completion of the merger, the unaffiliated stockholders of Fuer will have liquidity, in the form of the Merger Price, in place of an ongoing equity interest in Fuer.

Effect of the Merger on Fuer

Once the merger is effective, public trading in Fuer common stock on the OTCQB will cease. There will no longer be price quotations for Fuer common stock and the registration of Fuer common stock under the Exchange Act will be terminated. The Filing Persons intend to deregister the shares of common stock of Fuer under the Exchange Act. As a result, Fuer will no longer be required to file annual, quarterly, and other periodic reports with the SEC under Section 13(a) of the Exchange Act and will no longer be subject to the proxy rules under Section 14 of the Exchange Act. Fuer will no longer be subject to the provisions of the Sarbanes-Oxley Act or the liability provisions of the Exchange Act. Completion of the merger will enable Fuer to save approximately $300,000 per year for costs related to being a public company.

 

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Plans after the Merger

After the completion of the merger, the Contributing Stockholders will constitute all the record holders of Fuer (as the surviving entity of the merger), entitling Fuer to suspend its reporting obligations under Section 12(g) of the Exchange Act of 1934 by filing a Form 15 with the SEC. As a result, Fuer’s common stock will no longer be quoted on the OTCQB, and there will be no public market for Fuer’s common stock.

In addition, following the consummation of the merger, the Filing Persons intend to enter into a shareholders agreement governing their respective rights and interests in Fuer and its subsidiaries. Following the consummation of the merger, the Filing Persons plan to reorganize the corporate structure of Fuer so as to terminate the variable interest entity (“VIE’) status of Qiqihar Fuer Agronomy Inc. (“Qiqihar Fuer”). In connection with this reorganization, and in consideration for the termination of the Allied Agreements and the cancellation of the Warrants, Mr. Zhang plans to transfer approximately 15% equity ownership in Qiqihar Fuer to Allied.

Except as otherwise described in this Schedule 13E-3, the Filing Persons do not currently have any commitment or agreement and are not currently negotiating for the sale of any of Fuer’s businesses. Except as otherwise described in this Schedule 13E-3, the Filing Persons have not, as of the date of this Schedule 13E-3, approved any specific plans or proposals for:

 

   

any extraordinary corporate transaction involving Fuer after the completion of the merger;

 

   

any sale or transfer of a material amount of assets currently held by Fuer after the completion of the merger;

 

   

any material change in Fuer’s dividend rate or policy, or indebtedness or capitalization; or

 

   

any other material change in Fuer’s corporate structure or business.

However, the Filing Persons reserve the right to continue to evaluate the business and operations of Fuer with a view to maximizing Fuer’s potential, and they will take such actions as they deem appropriate under the circumstances and market conditions then existing.

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES

The following is a discussion of the material U.S. federal income tax consequences of the merger to beneficial owners of the Shares that are or hold their shares through unaffiliated stockholders, Contributing Stockholders, Newco and Fuer. This discussion is based upon the provisions of the Internal Revenue Code of 1986, as amended, referred to herein as the “Code”, and the laws, regulations, rulings, and decisions in effect on the date of this Schedule 13E-3, all of which are subject to change (possibly with retroactive effect) and to differing

 

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interpretations. In addition, this discussion only applies to holders of Shares that own Shares as capital assets, and does not address tax consequences that may be relevant to holders of the Shares that may be subject to special tax treatment under the Code, such as holders who are brokers, dealers or traders in securities or foreign currency, traders in securities that elect to apply a mark-to-market method of accounting, insurance companies, tax-exempt organizations, banks, financial institutions, broker-dealers, real estate investment trusts, regulated investment companies, grantor trusts, holders who hold the Shares as part of a hedge, straddle, conversion, or other risk reduction transaction or holders who acquired Shares pursuant to the exercise of options or otherwise as compensation. Finally, the following discussion does not address the U.S. federal income tax consequences applicable to directly or indirectly holding an ownership interest in Fuer after the merger or the tax consequences of the merger under U.S. federal estate and gift tax laws, state, local or non-U.S. tax laws, or the tax consequences of any transactions occurring prior to, concurrently with or after the merger (whether or not such transactions are in connection with the merger).

Unaffiliated Stockholders

U.S. Holders

For purposes of this discussion, a ‘‘U.S. Holder” is a beneficial owner of Shares that is an unaffiliated stockholder or that directly or indirectly holds its shares through an unaffiliated stockholder and is:

 

   

a citizen or individual resident of the United States, as determined for U.S. federal income tax purposes;

 

   

a corporation, or other entity treated as a corporation for U.S. federal income tax purposes, created or organized under the laws of the United States any state thereof or the District of Columbia;

 

   

an estate the income of which is subject to U.S. federal income tax regardless of its source; or

 

   

a trust if either (i) the trust is subject to the primary supervision of a court within the United States and one or more U.S. persons as described in Section 7701(a)(30) of the Code have the authority to control all substantial decisions of the trust or (ii) the trust has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.

If a partnership (or other entity treated as a partnership for U.S. federal income tax purposes) holds Shares, the tax treatment of a partner in such partnership will generally depend on the status of the partner and the activities of the partnership. A partnership holding Shares or a partner in such partnership should consult its tax advisors as to the particular U.S. federal income tax consequences of the merger.

 

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The receipt of cash by a U.S. Holder pursuant to the merger or pursuant to the exercise of statutory dissenters’ rights will be a taxable transaction for U.S. federal income tax purposes. A U.S. Holder generally will recognize gain or loss for U.S. federal income tax purposes equal to the difference between the amount of cash that the U.S. Holder receives in the merger and that U.S. Holder’s adjusted tax basis in that U.S. Holder’s Shares. Such gain or loss will generally be capital gain or loss and generally will be long-term capital gain or loss if, at the effective date of the merger, the U.S. Holder has held the Shares for more than one year. Long term capital gains recognized by a non-corporate U.S. Holder (including an individual) currently are eligible for a reduced rate of U.S. federal income tax. If a U.S. Holder acquired different blocks of Shares at different times and different prices, such U.S. Holder must determine the adjusted tax basis and holding period separately with respect to each such block of Shares. In the event that a U.S. Holder exercises dissenters’ rights, any cash received that is attributable to interest generally will be treated as ordinary income for U.S. federal income tax purposes.

Any gain or loss recognized by a U.S. Holder generally should be treated as U.S. source gain or loss for U.S. foreign tax credit limitation purposes. However, in the event that Fuer is deemed to be a “resident enterprise” of the People’s Republic of China (the “PRC”) under the PRC Enterprise Income Tax Law (the “EIT Law”) and gain from the disposition of the Shares is subject to tax in the PRC, a U.S. Holder may be eligible to treat such gain as PRC-source gain under the income tax treaty between the United States and the PRC (the Agreement Between the Government of the United States of America and the Government of the People’s Republic of China for the Avoidance of Double Taxation and the Prevention of Tax Evasion With Respect to Taxes on Income, referred to as the “Treaty”) and the U.S. Holder must report the gain as such on IRS Form 8833. If Fuer is not eligible for the benefits of the Treaty, then such U.S. Holder may not be able to use the foreign tax credit arising from any PRC tax imposed on the exchange of Shares pursuant to the merger unless such credit can be applied (subject to applicable limitations) against tax due on other income treated as derived from foreign sources. U.S. Holders are urged to consult their tax advisors regarding the tax consequences if PRC tax is imposed on gain on a disposition of Shares, including the availability of the foreign tax credit under their particular circumstances.

The cash payments made to a U.S. Holder pursuant to the merger or pursuant to the exercise of statutory dissenters’ rights will be subject to information reporting and backup withholding unless the U.S. Holder provides Fuer with a taxpayer identification number and certifies that such number is correct, or unless an exemption from backup withholding applies. Backup withholding is not an additional tax and the amount of any backup withholding from a payment to a U.S. Holder holding Shares will be allowed as a credit against such U.S. Holder’s U.S. federal income tax liability and may entitle such U.S. Holder to a refund, provided that the required information is timely furnished to the IRS. Holders of Shares should consult their tax advisors regarding their qualification for exemption from backup withholding and the procedure for obtaining such an exemption.

Under legislation passed by Congress in January of 2013, the Bush Tax Cuts of 2001 and 2003 have been extended for individuals with income under a specific threshold ($450,000 for married individuals filing jointly; $425,000 for heads of household; $225,000 for married individuals filing separately and $400,000 for other individuals). For individuals with income in excess of the applicable threshold, such excess will be taxed at a rate of 39.6% for ordinary income and a rate of 20% for capital gains and qualified dividends. In addition, Section 1411 of the Code now imposes a 3.8% Medicare tax on certain net investment income earned by

 

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individuals, estates and trusts for taxable years beginning after December 31, 2012. For these purposes, net investment income generally includes, among other things, net gains (to the extent taken into account in computing taxable income) on the disposition of property other than property held in an active trade or business. The cash payments made to a U.S. Holder pursuant to the merger or pursuant to the exercise of statutory dissenters’ rights may be classified as net investment income. In the case of an individual, the tax will be imposed on the lesser of (i) the beneficial owner’s net investment income or (ii) the amount by which the beneficial owner’s modified adjusted gross income exceeds a specific threshold ($250,000 for married individuals filing jointly; $125,000 for married individuals filing separately and $200,000 for other individuals). In the case of an estate or trust, the tax will be imposed on the lesser of (i) undistributed net investment income, or (ii) the excess adjusted gross income over the United States dollar amount at which the highest income tax bracket applicable to an estate or trust begins.

Non-U.S. Holders

The following is a discussion of the material U.S. federal income tax consequences applicable to Non-U.S. Holders holding Shares. The term “Non-U.S. Holder” means a beneficial owner of Shares that is an unaffiliated stockholder or holds its Shares directly or indirectly through an unaffiliated stockholder and, for U.S. federal income tax purposes, is not a U.S. Holder and is not a partnership or other entity treated as a partnership for U.S. federal income tax purposes.

The receipt of cash by a Non-U.S. Holder pursuant to the merger or pursuant to the exercise of statutory dissenters’ rights generally will be exempt from U.S. federal income tax, unless: (a) the gain on the Shares, if any, is effectively connected with the conduct by the Non-U.S. Holder of a trade or business in the United States (and, if required by an applicable U.S. income tax treaty, is attributable to the Non-U.S. Holder’s permanent establishment in the United States), (b) the Non-U.S. Holder is an individual who was present in the United States for 183 days or more in the taxable year in which the merger occurs and certain other conditions are met or (c) the Non-U.S. Holder owned (actually or constructively) more than five percent of Fuer’s common stock at any time during the five years preceding the merger, and Fuer is or has been a “United States real property holding corporation” for U.S. federal income tax purposes during such time.

A Non-U.S. Holder whose gain is described in (a) above will generally be subject to tax on its net gain in the same manner as if it were a U.S. Holder. In addition, such a Non-U.S. Holder that is a corporation may be subject to a branch profits tax equal to 30% of its effectively connected earnings and profits (including such gain) or such lower rate as may be specified by an applicable income tax treaty. An individual Non-U.S. Holder described in (b) above will be required to pay a flat 30% tax on the gain derived from the sale, which gain may be offset by U.S. source capital losses (even though such Non-U.S. Holder is not considered a resident of the United States). Fuer does not believe that it currently is a United States real property holding corporation or that it has been a United States real property holding corporation during the past five years.

 

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In general, a Non-U.S. Holder will not be subject to backup withholding and information reporting with respect to cash payments made pursuant to the merger or the exercise of statutory dissenters’ rights if the Non-U.S. Holder has provided an IRS Form W-8BEN (or an IRS Form W-8ECI if the Non-U.S. Holder’s gain is effectively connected with the conduct of a U.S. trade or business). If Shares are held through a foreign partnership or other flow-through entity, certain documentation requirements also apply to the partnership or other flow-through entity. Backup withholding is not an additional tax and the amount of any backup withholding from a payment to a Non-U.S. Holder holding Shares will be allowed as a credit against such Non-U.S. Holder’s U.S. federal income tax liability, if any, and may entitle such holder to a refund, provided that the required information is timely furnished to the IRS.

Contributing Stockholders, Newco and Fuer

For U.S. federal income tax purposes, the merger will not be a taxable transaction to the Contributing Stockholders, Newco or Fuer. Accordingly, none of the Contributing Stockholders, Newco or Fuer will recognize gain or loss for U.S. federal income tax purposes as a result of the merger.

THE U.S. FEDERAL INCOME TAX CONSEQUENCES SET FORTH ABOVE ARE INCLUDED FOR GENERAL INFORMATION PURPOSES ONLY AND ARE BASED UPON CURRENT LAW. BECAUSE INDIVIDUAL CIRCUMSTANCES MAY BE DIFFERENT, EACH BENEFICIAL OWNER OF SHARES IS URGED TO CONSULT SUCH BENEFICIAL OWNER’S TAX ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES TO EACH SUCH BENEFICIAL OWNER OF THE MERGER, INCLUDING THE APPLICATION OF STATE, LOCAL, FOREIGN AND OTHER TAX LAWS.

MATERIAL PRC TAX CONSEQUENCES

Under the EIT Law, which took effect on January 1, 2008, enterprises established outside of China whose “de facto management bodies” are located in the PRC are considered “resident enterprises”. The implementation rules for the EIT Law define the “de facto management body” as an establishment that has substantial management and control over the business, personnel, accounts and properties of an enterprise. Although there has not been a definitive determination of Fuer’s status by the PRC tax authorities, Fuer does not believe that it should be considered a resident enterprise under the EIT Law or that the gain recognized on the receipt of cash for the Shares should otherwise be subject to PRC tax to holders of such Shares that are not PRC residents. If, however, the PRC tax authorities were to determine that Fuer should be considered a resident enterprise or that the receipt of cash for these securities should otherwise be subject to PRC tax, then gain recognized on the receipt of cash for Shares pursuant to the merger by holders of such securities who are not PRC residents could be treated as PRC-sourced income that would be subject to PRC tax at a rate of 10% for the enterprises or 20% for the individuals, unless otherwise specified by the applicable tax conventions and treaties. YOU SHOULD CONSULT YOUR OWN TAX ADVISOR FOR A FULL UNDERSTANDING OF THE TAX CONSEQUENCES OF THE MERGER TO YOU, INCLUDING ANY PRC TAX CONSEQUENCES.

 

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FAIRNESS OF THE MERGER

Position of the Filing Persons as to the Fairness of the merger

Under SEC rules, the Filing Persons are deemed to be engaged in a “going private” transaction, which, if consummated, will result in the suspension of SEC reporting obligations of Fuer and its affiliates. Rule 13e-3 of the Exchange Act requires the Filing Persons to provide certain information regarding their position as to the substantive and procedural fairness of the proposed merger to the unaffiliated stockholders. The Filing Persons are making the statements included in this section solely for the purpose of complying with the requirements of Rule 13e-3 and related rules under the Exchange Act.

As used in this Schedule 13E-3, the term “unaffiliated stockholders of Fuer” means any stockholder of Fuer other than the Filing Persons or any other affiliate of Fuer. To the knowledge of the Filing Persons, other than the Filing Persons, no director or executive officer of Fuer is holder of Fuer common stock. To the extent there are any directors or executive officers of Fuer, other than the Filing Persons, who hold Fuer common stock, such persons will participate in the merger in the same manner and to the same extent as the unaffiliated stockholders of Fuer.

Factors Considered In Determining Fairness

Each of the Filing Persons believes that the proposed merger is both substantively fair to the unaffiliated stockholders of Fuer based on the following factors:

 

   

Arms-length Negotiation with Capital Soldier Limited. Beginning in early 2012, from time to time, Mr. Yanzeng Xing (“Mr. Xing”), representative of Mr. Zhang, has discussed with representatives of CSI the possibility of taking Fuer private through a short-form merger. In January 2013, a representative of CSI told representatives of Mr. Zhang that CSI would be interested in participating in the transaction if it could retain its percentage interest in Fuer. However, Mr. Zhang preferred a transaction in which CSI would be cashed out in connection with the short-form merger, and asked if CSI would exercise its dissenters’ rights in the event Mr. Zhang and other stockholders pursued the going private transaction through a short-form merger. After several rounds of negotiations, CSI agreed in February 2013 that it would not exercise its dissenters’ rights in connection with the merger upon receipt of the Notice of Merger and Dissenter’s Right and that it would surrender its shares of Fuer common stock at a price of $1.29 per share.

 

   

Current Lack of Liquidity for Stockholders. The Filing Persons considered the fact that there has been virtually no trading of the Shares since the Share Exchange, as relevant to their belief that the merger is fair to the unaffiliated stockholders of Fuer. Other than 1,300 shares on August 5, 2010, 600 shares on August 9, 2010 and 1,100 shares on March 3, 2011, there has been no trading of the shares of Fuer common stock since June 16, 2010 when the Share Exchange (as defined below in Item 2 of the Schedule 13E-3) was completed. The merger consideration, at $1.29 per share, provides immediately liquidity to the unaffiliated stockholders.

 

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No Brokerage Fees or Commissions. The merger will enable the unaffiliated stockholders of Fuer to immediately receive cash for their shares of Fuer common stock, without the payment of any brokerage fees or commissions typically associated with market sales.

 

   

Control Position of the Filing Persons. The Contributing Stockholders’ collective beneficial ownership of approximately 97% of the outstanding Shares (1) will result in an extremely small public float that limits the amount of trading in the Shares even if Fuer common stock starts trading in the future and (2) eliminates the possibility that a proposal to acquire the Shares by an independent entity could succeed without the consent of the Filing Persons.

 

   

Current and Historical Market Prices and Market Price Trend. The Filing Persons considered the current and historical market prices and the trend of the market prices for the Shares as relevant to their belief that the merger is fair. To the Filing Persons’ knowledge, the last public trade of Fuer shares took place on March 3, 2011, at which time 1,100 shares were sold at $1.01 per share. Prior to that transaction, there were only two trades of Fuer shares that took place subsequent to the Share Exchange that involved the sales of 1,300 and 600 shares respectively for a price of $5 per share. The Filing Persons believe these transactions are not indicative of the fair value of the Shares because these transactions occurred at least 24 months ago. In addition, on June 17, 2010, one day after the Share Exchange, Fuer issued to Allied Merit International Investment Inc., one of the Contributing Stockholders, 1,018,868 restricted shares of common stock of Fuer and warrants to purchase 873,315 shares of common stock of Fuer at $2.58 per share in exchange for a total consideration of $2,500,000. The Filing Persons believe this transaction is not indicative of the fair value of the shares as the restricted shares and warrants were issued in a private placement and partly in consideration of certain services provided by Allied. Furthermore, this transaction occurred about 33 months ago. In sum, there is neither current market price data nor meaningful historical market price data for the shares. The Filing Persons believe that the Merger Price constitutes fair value to the unaffiliated stockholders as the payment of Merger Price provides immediate cash to the unaffiliated stockholders that would not be otherwise available.

 

   

No Firm Offers. The Filing Persons considered the absence of any third party buyer for Fuer during the past two years to support the fairness of the merger to the unaffiliated stockholders of Fuer because the absence of a third party buyer demonstrated that the proposed merger with Newco was the only likely source of prompt liquidity for the shares that was simultaneously available to all of the unaffiliated stockholders of Fuer. In support of this factor, the Filing Persons considered the fact that no firm offer has been made in the last two years for: (1) the merger or consolidation of Fuer with or into another company, or vice versa; (2) the sale or other transfer of all or any substantial part of the assets of Fuer; or (3) a purchase of Fuer’s securities that would enable the holder to exercise control of Fuer. The Contributing Stockholders intend to retain their majority holdings in

 

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Fuer, and did not seek a buyer for Fuer. The Filings Persons believe that “shopping” Fuer would not only entail substantial time delays and detract from the amount of time and energy by management of Fuer focused on Fuer’s business, but would also disrupt and discourage Fuer’s employees and create uncertainty among Fuer’s end customers without any benefit to the unaffiliated stockholders. The fact that the Filing Persons did not seek a buyer foreclosed the opportunity to consider an alternative transaction with a third party purchaser of Fuer or otherwise provide liquidity in the form of a third party offer to the unaffiliated stockholders of Fuer. Accordingly, it is unlikely that finding a third party buyer for Fuer was a realistic option for the unaffiliated stockholders of Fuer.

 

   

Elimination of Future Financial Performance Risks of Fuer. The merger would shift the risk of the future financial performance of Fuer from the unaffiliated stockholders, who do not have the power to control decisions made regarding Fuer’s business, entirely to the Filing Persons who have the power to control Fuer’s business.

 

   

No Dividends. Fuer has never declared or paid any dividends since its inception, and based on Fuer’s disclosure in its Annual Report on Form 10-K for the fiscal year ended December 31, 2011, it has no intention to pay dividends in the foreseeable future.

 

   

No Reporting Obligations. After the merger, Fuer will no longer be subject to the costly reporting and other disclosure requirements of the Exchange Act, including those instituted under the Sarbanes-Oxley Act of 2002.

 

   

Dissenter’s Rights. The unaffiliated stockholders of Fuer are entitled to exercise dissenter’s rights and demand fair value for their shares of Fuer common stock as determined by a Nevada state district court, which may be determined to be more or less than the cash amount offered in the merger.

The Filing Persons did not consider any implied liquidation value when determining the Merger Price because it was not contemplated that Fuer be liquidated whether or not the merger was completed. Moreover, a liquidation value analysis does not take into account any value that may be attributed to a company’s ability to attract new business. The Filing Persons did not consider net book value, which is an accounting concept, as a factor because they believed that net book value is not a material indicator of the value of Fuer as a going concern but rather is indicative of historical costs (and does not, for example, take into account the future prospects of Fuer, market trends and conditions or business risks inherent in a competitive market) and therefore, in their view, is not a relevant measure in the determination as to the fairness of the merger. The net book value of Fuer as of September 30, 2012 and December 31, 2011 was $2.52 per share and $2.16 per share respectively.

The Filing Persons did not establish, and did not consider, a going concern value for the shares to determine the fairness of the Merger Price to Fuer’s unaffiliated stockholders due to the significant expense associated with such a valuation.

 

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Each of the Filing Persons has individually considered all of the foregoing factors to support their belief that the merger is substantively and procedurally fair to the unaffiliated stockholders.

The Filing Persons considered engaging a financial advisor to provide valuation analysis for the purpose of determining the fairness of the merger but determined not to pursue this option. In reaching such a conclusion, the Filing Persons considered the statutory right of a holder of 90% or more of the outstanding stock of a corporation under Section 92A.180 of the NRS. Section 92A.180 provides that a stockholder of 90% or more of the outstanding shares of a corporation has an affirmative right to eliminate minority stockholders’ participation in the controlled corporation without any action by the controlled corporation or its other stockholders, and without the requirement that the parent corporation appoint a special committee to determine the fairness of the merger. The Filing Persons determined that by disclosing to the unaffiliated security holders all information that is reasonably necessary in order to enable them to decide, on a fully informed basis, whether to exercise their dissenter’s rights, their obligation, if any, to the unaffiliated stockholders of Fuer is satisfied. In addition, the Filing Persons believed that the cost of obtaining such a valuation analysis, and the diversion of management resources to assist the financial advisor, would be a drain on the resources of Fuer.

In addition to the foregoing factors and analyses that support the Filing Persons’ belief that the merger is procedurally and substantively fair to the unaffiliated stockholders of Fuer, the Filing Persons, acting individually, have also weighed the following negative factors:

 

   

No Future Participation in the Prospects of Fuer. Following the consummation of the merger, the unaffiliated stockholders will cease to participate in the future earnings or growth, if any, of Fuer, or benefit from an increase, if any, in the value of their holdings in Fuer.

 

   

Actual or Potential Conflicts of Interest. The Filing Persons currently own (or are deemed to own) approximately 97% of the outstanding common stock of Fuer and following the merger, will own 100% of Fuer. Accordingly, and as disclosed herein, the interests of the Filing Persons in determining the Merger Price are adverse to the interests of the unaffiliated Stockholders.

 

   

No Opportunity for the Unaffiliated Stockholders or the Board to Vote on the Merger. Because the merger is being effected as a short-form merger under Section 92A.180 of the NRS, it does not require approval by the stockholders or the board of directors of Fuer. No such approval has been or will be sought.

 

   

No Special Committee Representing the Interests of Unaffiliated Stockholders. There is no special committee or other representative to act on behalf of the unaffiliated stockholders of Fuer because no approval of the unaffiliated Fuer stockholders is required for the merger.

 

   

No Approval of Independent Directors. There are currently two independent directors on the Board of Fuer: Mr. Huabang Chen and Mr. Zeyu Li. However, the merger does not require approval by the Board of Fuer pursuant to the NRS. Therefore, there is no approval of the merger by independent directors.

 

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No Fairness Opinion. The Filing Persons did not engage any third parties to perform any financial analysis of, or prepare any reports, opinions, or appraisals concerning the merger or value of the Shares.

After weighing these negative factors and giving them due consideration, the Filing Persons (each acting individually) have concluded that none of these factors, alone or in the aggregate, is significant enough to outweigh the factors and analyses that the Filing Persons have considered to support their belief that the merger is substantively and procedurally fair to the unaffiliated stockholders of Fuer.

Specifically with respect to procedural fairness, the Filing Persons did not consider it necessary to explicitly require adoption of the merger by at least a majority of the unaffiliated stockholders of Fuer nor did they consider it necessary to establish a special committee or otherwise retain an unaffiliated representative to act solely on behalf of the unaffiliated stockholders of Fuer for purposes of negotiating the terms of the merger, because both procedural safeguards would delay and increase the costs of the merger to the detriment of Fuer and the unaffiliated stockholders of Fuer. Further, the Filing Persons believe the merger is procedurally fair because the unaffiliated stockholders of Fuer will be entitled to exercise dissenter’s rights under the Dissenters’ Rights Provisions.

In view of the number and wide variety of factors considered in connection with making a determination as to the fairness of the merger to the unaffiliated stockholders of Fuer, and the complexity of these matters, the Filing Persons did not find it practicable to, nor did they attempt to, quantify, rank, or otherwise assign relative weights to the specific factors they considered. Moreover, the Filing Persons have not undertaken to make any specific determination or assign any particular weight to any single factor, but have conducted an overall analysis of the factors described above.

The Filing Persons have not considered any factors, other than as stated above, regarding the fairness of the merger to the unaffiliated stockholders, as it is their view that the factors they considered provided a reasonable basis to form their belief.

REPORTS, OPINIONS, APPRAISALS, AND NEGOTIATIONS

Neither the Board of Fuer nor any of the Filing Persons obtained any fairness opinion, valuation analysis or appraisals from any independent source in connection with the merger. Please see “Special Factors – Purposes, Alternatives, Reasons and Effects of the Merger – Background of the Transaction” beginning on page 11 of this Schedule 13E-3 for a description of arm’s length negotiations concerning the merger price between the Filing Persons and Capital Soldier Limited, an unaffiliated stockholder of Fuer owning approximately 95.6% of all Shares held by unaffiliated stockholders.

 

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Schedule 13E-3 and the documents incorporated by reference in this Schedule 13E-3 include certain forward-looking statements. These statements appear throughout this Schedule 13E-3 and include statements regarding the intent, belief, or current expectations of the Filing Persons, including statements concerning the Filing Persons’ strategies following completion of the merger. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Actual results may differ materially from those described in such forward-looking statements as a result of various factors, such as positions and strategies of competitors; cash availability/liquidity; the risks inherent with predicting cash flows, revenue and earnings outcomes as well as all other risk factors identified in (i) Fuer’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011 filed with the SEC, on March 30, 2012, (ii) Fuer’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2012 filed with the SEC on May 14, 2012, (iii) Fuer’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2012 filed with the SEC on August 13, 2012 and amended on November 9, 2012, (iv) Fuer’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2012 filed with the SEC on November 14, 2012 and (iv) as otherwise described in Fuer’s filings with the SEC from time to time.

 

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TRANSACTION STATEMENT

Item 1. Summary Term Sheet

See the Section above captioned “Summary Term Sheet” beginning on page 1 of this Schedule 13E-3.

Item 2. Subject Company Information

Name and Address

The name of the subject company is Fuer International, Inc., a Nevada corporation (“Fuer”). The principal executive offices of Fuer are located at Neiwei Road, Fulaerji District, Qiqihar, Heilongjiang Province, China 161041 and its telephone number is 86-452-6919150.

Fuer is subject to the informational reporting requirements of the Exchange Act and in accordance therewith is required to file reports, proxy statements, and other information with the SEC relating to its business, financial condition, and other matters. Such reports, proxy statements and other information are available for inspection and copying at the SEC’s public reference room located at 100 F. Street, N.E., Room 1580, Washington, D.C. 20549. Copies may be obtained from the SEC’s principal office at 450 Fifth Street, N.W., Washington, D.C. 20549. The SEC also maintains a web site that contains reports, proxy, and information statements, and other information regarding registrants that file electronically with the SEC at http://www.sec.gov.

Securities

The exact title of the class of equity securities subject to the merger is common stock, par value $0.001 per share, of Fuer. As reported in Fuer’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012, there were 12,958,032 Shares outstanding as of November 12, 2012. As of March 8, 2013, Allied holds warrants to purchase 873,315 common shares of Fuer at the exercise price of $2.58 per share, and pursuant to the Contribution Agreement, such warrants will be cancelled in full immediately prior to the effective time of the merger. Other than such warrants held by Allied, there are no issued and outstanding options or warrants to acquire any capital stock of Fuer.

Trading Market and Price

Fuer common stock is quoted on the OTCQB under the trading symbol “FRXT”. There is no established trading market for Fuer common stock, and there have been no trades reported since January 1, 2011 other than for 1,100 shares that traded on March 3, 2011 at a price of $1.01 per share, the last date on which Fuer common stock traded prior to the filing date of this Schedule 13E-3.

 

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Dividends

To the knowledge of the Filing Persons, Fuer has never declared or paid any dividends in respect of its capital stock. According to Fuer’s Annual Report on Form 10-K for its fiscal year ended December 31, 2011, Fuer states that it does not intend to pay dividends on the shares of common stock in the foreseeable future and that, if Fuer ever determines to pay a dividend, Fuer may experience difficulties in completing the administrative procedures necessary to obtain and remit foreign currency for the payment of such dividends from the profits of its operating subsidiaries in the People’s Republic of China.

Prior Public Offerings

None of the Filing Persons or, to the knowledge of the Filing Persons, Fuer, has made any underwritten public offering of any capital stock of Fuer for cash during the past two years that was registered under the Securities Act of 1933, as amended, or exempt from registration thereunder pursuant to Regulation A.

Prior Stock Purchases

None of the Filing Persons, nor any affiliate of any of the Filing Persons, has purchased any shares during the past two years other than disclosed herein.

On June 15, 2010, Fuer (f/k/a Forex 365, Inc.) entered into a Share Exchange Agreement (the “Share Exchange Agreement”) with China Golden and its shareholders (which included the Contributing Stockholders). Pursuant to the Share Exchange Agreement, Fuer issued 11,550,392 newly issued common shares to the shareholders of China Golden in exchange for all the issued and outstanding shares of China Golden (the “Share Exchange”). The shares Fuer issued to the shareholders of China Golden constitute 96.74% of issued and outstanding capital stock of Fuer on a fully-diluted basis as of and immediately after the consummation of the transactions contemplated by the Share Exchange Agreement.

Immediately following consummation of the transactions contemplated by the Share Exchange Agreement, Fuer entered into a Securities Purchase Agreement with Allied pursuant to which Allied agreed to purchase (i) 1,018,868 shares of Fuer common stock, and (ii) warrants to purchase 877,315 shares of the common stock of Fuer in exchange for $2,500,000. The Fuer common shares issued to Allied constituted approximately 7.86% of the issued and outstanding shares of Fuer immediately after the closing of the transactions contemplated therein. Please refer to details of the transaction with Allied and the Share Exchange in Current Report on Form 8-K filed on June 22, 2010.

Item 3. Identity and Background of Filing Persons

Fuer Merger Newco Ltd. (“Newco”)

Name and Address. Newco was recently formed by the Filing Persons for the purpose of effecting the merger. Newco’s principal business address is Neiwei Road, Fulaerji District, Qiqihar, Heilongjiang Province, China 161041 and its telephone number is 86-452-6919150. Mr. Li Zhang is President, Treasurer, Secretary and sole director of Newco.

Business and Background of Entity. Newco was formed for the sole purpose of acquiring all of the shares held by Contributing Stockholders, and following such acquisition, merging with Fuer pursuant to Section 92A.180 of the NRS. Contributing Stockholders have agreed to contribute to Newco the shares of Fuer common stock held by them immediately prior to the consummation of the merger. Newco is a Nevada corporation.

 

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Business and Background of Natural Persons. The name, business address, position with Newco, principal occupation, five-year employment history and citizenship of each of the directors and executive officers of Newco, together with the names, principal businesses and addresses of any corporations or other organizations in which such principal occupations are conducted, are set forth on Schedule I attached hereto.

Newco has not (i) been convicted in a criminal proceeding during the past five years (excluding traffic violations or similar demeanors) or (ii) been a party to any judicial or administrative proceeding during the past five years that resulted in a judgment, decree or final order enjoining Newco from future violations of, or prohibiting activities subject to, federal or state securities laws or finding any violation of such laws.

Contributing Stockholders

None of the following Contributing Stockholders has (i) been convicted in a criminal proceeding during the past five years (excluding traffic violations or similar demeanors) or (ii) been a party to any judicial or administrative proceeding during the past five years that resulted in a judgment, decree or final order enjoining such Contributing Stockholder from future violations of, or prohibiting activities subject to, federal or state securities laws or finding any violation of such laws.

Li Zhang (“Mr. Zhang”)

Name and Address. Mr. Zhang’s principal business address is Neiwei Road, Fulaerji District, Qiqihar, Heilongjiang Province, China 161041 and its telephone number is 86-452-6919150.

Business and Background of Entity. Not applicable.

Business and Background of Natural Persons. Mr. Zhang has been Chairman of the Board of Fuer since December 2010. Mr. Zhang has been the Chief Executive Officer of Fuer since June 2010. Since 2003, Mr. Zhang has been the Chairman of the Board and CEO of Qiqihar Fuer Agronomy Inc., the variable interest entity controlled by the Company through a series of agreements. From 1995 to 2003, Mr. Zhang was engaged in the private business of agricultural product distributions. Mr. Zhang has over 15 years of experience in business management and the operation of seeds breading and retailing businesses and was the founder of Qiqihar Fuer Agronomy Inc. Since 2006, Mr. Zhang has served as a member of the provincial People’s Congress of Heilongjiang. Mr. Zhang is a citizen of the PRC.

Oriental Agriculture Co., Ltd. (“Oriental Agriculture”)

Name and Address. The principal business address of Oriental Agriculture Co., Ltd. is P.O. Box 957, Offshore Incorporations Center, Road Town, Tortola, British Virgin Islands and its telephone number is +86-451-89255555.

 

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Business and Background of Entity. Oriental Agriculture, a British Virgin Islands company duly incorporated under the International Business Companies Act on November 30, 2009, owns approximately 56.6% of the Shares. Oriental Agriculture was formed for the purpose of holding such Shares and has not conducted any other business. Oriental Agriculture has not (i) been convicted in a criminal proceeding during the past five years (excluding traffic violations or similar demeanors) or (ii) been a party to any judicial or administrative proceeding during the past five years that resulted in a judgment, decree or final order enjoining Oriental Agriculture from future violations of, or prohibiting activities subject to, federal or state securities laws or finding any violation of such laws.

Business and Background of Natural Persons. The name, business address, position with Oriental Agriculture, principal occupation, five-year employment history and citizenship of each of the directors and executive officers of Oriental Agriculture, together with the names, principal businesses and addresses of any corporations or other organizations in which such principal occupations are conducted, are set forth on Schedule I attached hereto.

Trade Ever Holdings Limited (“Trade Ever”)

Name and Address. The principal business address of Trade Ever is P.O. Box 957, Offshore Incorporations Center, Road Town, Tortola, British Virgin Islands and its telephone number is +86-452-6728655.

Business and Background of Entity. Trade Ever, a British Virgin Islands company duly incorporated under the International Business Companies Act on March 26, 2010, owns approximately 9.8% of the Shares. Trade Ever was formed for the purpose of holding such Shares and has not conducted any other business. Trade Ever has not (i) been convicted in a criminal proceeding during the past five years (excluding traffic violations or similar demeanors) or (ii) been a party to any judicial or administrative proceeding during the past five years that resulted in a judgment, decree or final order enjoining Trade Ever from future violations of, or prohibiting activities subject to, federal or state securities laws or finding any violation of such laws.

Business and Background of Natural Persons. The name, business address, position with Trade Ever, principal occupation, five-year employment history and citizenship of each of the directors and executive officers of Trade Ever, together with the names, principal businesses and addresses of any corporations or other organizations in which such principal occupations are conducted, are set forth on Schedule I attached hereto.

Faith Origin Limited (“Faith Origin”)

Name and Address. The principal business address of Faith Origin is Quastisky Building, P.O. Box 4389, Road Town, Tortola, British Virgin Islands and its telephone number is +86-451-89800000.

Business and Background of Entity. Faith Origin, a British Virgin Islands company duly incorporated under the International Business Companies Act on March 18, 2010, owns approximately 9.6% of the Shares. Faith Origin was formed for the purpose of holding such Shares and has not conducted any other business. Faith Origin has not (i) been convicted in a

 

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criminal proceeding during the past five years (excluding traffic violations or similar demeanors) or (ii) been a party to any judicial or administrative proceeding during the past five years that resulted in a judgment, decree or final order enjoining Faith Origin from future violations of, or prohibiting activities subject to, federal or state securities laws or finding any violation of such laws.

Business and Background of Natural Persons. The name, business address, position with Faith Origin, principal occupation, five-year employment history and citizenship of each of the directors and executive officers of Faith Origin, together with the names, principal businesses and addresses of any corporations or other organizations in which such principal occupations are conducted, are set forth on Schedule I attached hereto.

Allied Merit International Investment Inc. (“Allied”)

Name and Address. The principal business address of Allied is 802, 8/F Eton Tower, Hysan Ave., Causeway Bay, Hong Kong and its telephone number is +86-10-84938811.

Business and Background of Entity. Allied, a British Virgin Islands company duly incorporated under the International Business Companies Act on February 16, 2006, owns approximately 7.9% of the outstanding shares of Fuer common stock as of March 8, 2013. In addition, as of March 8, 2013, Allied holds currently exercisable Warrants to purchase 873,315 shares of Fuer common stock at the exercise price of $2.58 per share. Taking into account the 873,315 shares of Fuer common stock issuable upon the exercise of the Warrants, Allied would be deemed to beneficially own approximately 14.0% of Fuer common stock. Pursuant to the Contribution Agreement, as of the effectiveness of the merger, the Warrants will be automatically cancelled and terminated. Allied’s principal business is to provide banking and financial services to companies based in Asia. Allied has not (i) been convicted in a criminal proceeding during the past five years (excluding traffic violations or similar demeanors) or (ii) been a party to any judicial or administrative proceeding during the past five years that resulted in a judgment, decree or final order enjoining Allied from future violations of, or prohibiting activities subject to, federal or state securities laws or finding any violation of such laws.

Business and Background of Natural Persons. The name, business address, position with Allied, principal occupation, five-year employment history and citizenship of each of the directors and executive officers of Allied, together with the names, principal businesses and addresses of any corporations or other organizations in which such principal occupations are conducted, are set forth on Schedule I attached hereto.

Virtue World Limited (“Virtue World”)

Name and Address. The principal business address of Virtue World is Quastisky Building, P.O. Box 4389, Road Town, Tortola, British Virgin Islands and its telephone number is +86-10-52521717.

Business and Background of Entity. Virtue World, a British Virgin Islands company duly incorporated under the International Business Companies Act on February 18, 2010, owns approximately 5.9% of the Shares. Virtue World was formed for the purpose of holding such Shares and has not conducted any other business. Allied has not (i) been convicted in a criminal proceeding during the past five years (excluding traffic violations or similar demeanors) or (ii) been a party to any judicial or administrative proceeding during the past five years that resulted in a judgment, decree or final order enjoining Virtue World from future violations of, or prohibiting activities subject to, federal or state securities laws or finding any violation of such laws.

 

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Business and Background of Natural Persons. The name, business address, position with Virtue World, principal occupation, five-year employment history and citizenship of each of the directors and executive officers of Virtue World, together with the names, principal businesses and addresses of any corporations or other organizations in which such principal occupations are conducted, are set forth on Schedule I attached hereto.

Yuhua Liu (“Ms. Liu”)

Name and Address. Ms. Liu’s principal business address is Neiwei Road, Fulaerji District, Qiqihar, Heilongjiang Province, China 161041 and her telephone number is 86-452-6919150.

Business and Background of Entity. Not applicable.

Business and Background of Natural Persons. Ms. Liu has been a Director of Fuer since December 2010. Ms. Liu served as Finance Supervisor of Fuer Agronomy Inc. from 2008, and as the Administrative Supervisor of Fuer Agronomy Inc. from 1995 to 2008. From 1992 to 1995, Ms. Liu served as Financial Supervisor of Fulaerji Science & Technology Co., Ltd. From 1989 to 1992, Ms. Liu served as the Head of the Human Resources Department of Fulaerji Science & Technology Research Institute. Ms. Liu has 18 years of experience in financial management. Ms. Liu is a citizen of the PRC and is the wife of Mr. Zhang.

Qiuli Zhao (“Mr. Zhao”)

Name and Address. The principal business address of Mr. Zhao is Group 3, Beixing Street Yuanyi Wei, Fula Er’ji District, Qiqi Ha’er City, Heilongjiang Province, China. His telephone number is +86-189-4522-2655.

Business and Background of Entity. Not applicable.

Business and Background of Natural Persons. Mr. Zhao has served as a seed breeding specialist of Fuer for the past 5 years. Fuer is a leading manufacturer and supplier of seeds and fertilizer products in northeastern China. Mr. Zhao is a citizen of the PRC.

Shuxian Liu (“Ms. Liu”)

Name and Address. The principal business address of Ms. Liu is Group 252, Hongwei Street Fanhua Wei, Fula Er’ji District, Qiqi Ha’er City, Heilongjiang Province, China. Ms. Liu’s telephone number is +86-186-1842-5655.

Business and Background of Entity. Not applicable.

Business and Background of Natural Persons. Ms. Liu has served as the director of human resources department of Fuer for the past 5 years. Fuer is a leading manufacturer and supplier of seeds and fertilizer products in northeastern China. Ms. Liu is a citizen of PRC.

Heping Gao (“Mr. Gao”)

Name and Address. The principal business address of Mr. Gao is Group 250, Dongfeng Wei, Fula Er’ji District, Qiqi Ha’er City, Heilongjiang Province, China. His telephone number is +86-186-8697-4655.

 

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Business and Background of Entity. Not applicable.

Business and Background of Natural Persons. Mr. Gao has served as the manager of the seed processing plant of Fuer for the past 5 years. Fuer is a leading manufacturer and supplier of seeds and fertilizer products in northeastern China. Mr. Gao is a citizen of the PRC.

Pingfang Han (“Mr. Han”)

Name and Address. The principal business address of Mr. Han is Group 6, Zhonghe Cun, Xihe Zhen, Keshan County, Heilongjiang Province, China. His telephone number is +86-189-4520-8655.

Business and Background of Entity. Not applicable.

Business and Background of Natural Persons. Mr. Han has served as the manager of the logistics department of Fuer for the past 5 years. Fuer is a leading manufacturer and supplier of seeds and fertilizer products in northeastern China. Mr. Han is a citizen of the PRC.

Guobin Tan (“Mr. Tan”)

Name and Address. The principal business address of Mr. Tan is No. 11-2-6-1, Hong’an Wei, Fula Er’ji District, Qiqi Ha’er City, Heilongjiang Province, China. His telephone number is +86-189-4520-6655.

Business and Background of Entity. Not applicable.

Business and Background of Natural Persons. Mr. Tan has served as a soybean breeding specialist of Fuer for the past 5 years. Fuer is a leading manufacturer and supplier of seeds and fertilizer products in northeastern China. Mr. Tan is a citizen of the PRC.

Hailong Cao (“Mr. Chao”)

Name and Address. The principal business address of Mr. Cao is Group 3, Dawopu Cun, Dashuangmiao Xiang, Ningcheng County, Chifeng City, Neimenggu Auto-governance Region, China. His telephone number is +86-133-5975-6388.

Business and Background of Entity. Not applicable.

Business and Background of Natural Persons. Mr. Cao has served as the director of the procurement department of Fuer for the past 5 years. Fuer is a leading manufacturer and supplier of seeds and fertilizer products in northeastern China. Mr. Cao is a citizen of the PRC.

Jinquan Shi (“Mr. Shi”)

Name and Address. The principal business address of Mr. Shi is Group 2, Yikenzhong Cun, Dashuangmiao Xiang, Ningcheng County, Chifeng City, Neimenggu Auto-governance Region, China. His telephone number is +86-189-4520-2567.

Business and Background of Entity. Not applicable.

Business and Background of Natural Persons. Mr. Shi has served as the manager of corporate staff of Fuer for the past 5 years. Fuer is a leading manufacturer and supplier of seeds and fertilizer products in northeastern China. Mr. Shi is a citizen of the PRC.

Xixian Dong (“Mr. Dong”)

Name and Address. The principal business address of Mr. Dong is Fuli Qu, Chinese No. 10 Metallurgy Construction Company, Huayin City, Shanxi Province, China. His telephone number is +86-133-0928-6132.

 

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Business and Background of Entity. Not applicable.

Business and Background of Natural Persons. Mr. Dong is retired for the past 5 years. Mr. Dong is a citizen of the PRC.

Houyun Yang (“Mr. Yang”)

Name and Address. The principal business address of Mr. Yang is Ji Ti No. 12, Xiao Ying East Road, Qing He, Haidian District, Beijing, China. His telephone number is +86-136-5124-0329.

Business and Background of Entity. Not applicable.

Business and Background of Natural Persons. Mr. Yang has been an employee of Allied for the past 5 years. The principal business of Allied is providing financial advisory services. Mr. Yang is a citizen of the PRC.

Shunxiang Xun (“Mr. Xun”)

Name and Address. The principal business address of Mr. Xun is 255 Zu, Fansheng Wei, Fulaerji District, Qiqihar City, Heilongjiang Province, China. His telephone number is +86-151-2007-1912.

Business and Background of Entity. Not applicable.

Business and Background of Natural Persons. Mr. Xun has been an employee of Allied for the past 5 years. The principal business of Allied is providing financial advisory services. Mr. Xun is a citizen of the PRC.

Xiuli He (“Ms. He”)

Name and Address. The principal business address of Ms. He is No. 9-2, 2 Danyuan,1 Zhuang, 3 Hao, Baiguo Road, Fuling District, Chongqing, China. Her telephone number is +86-138-1051-6833.

Business and Background of Entity. Not applicable.

Business and Background of Natural Persons. Ms. He has been an employee of Allied for the past 5 years. The principal business of Allied is providing financial advisory services. Ms. He is a citizen of the PRC.

Xiaoling Yu (“Ms. Yu”)

Name and Address. The principal business address of Ms. Yu is C21, Kinglong International Building, No.9, Fulin Rd. Chaoyang District Beijing, China. Her telephone number is +86-138-1170-4367.

Business and Background of Entity. Not applicable.

Business and Background of Natural Persons. Mr. Yu has been an employee of Allied for the past 5 years. The principal business of Allied is providing financial advisory services. Ms. Yu is a citizen of the PRC.

 

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Item 4. Terms of the Transaction

Material Terms

Pursuant to the Contribution Agreement, Contributing Stockholders have agreed to contribute an aggregate of 12,569,259 shares to Newco immediately prior to the consummation of the merger. Such shares represent, in the aggregate, approximately 97% of Fuer’s total shares outstanding. On the effective date of the merger, Newco will merge with Fuer pursuant to Section 92A.180 of the NRS, with Fuer being the surviving corporation. To so merge, the board of directors of Newco and Contributing Stockholders, constituting all the stockholders of Newco, will approve the merger. Fuer as the surviving entity in the merger will file Articles of Merger with the Secretary of State of Nevada pursuant to NRS 92A.200(1). On the effective date of the merger:

 

   

Each Share (other than Shares held by Newco and Shares with respect to which dissenter’s rights have been properly exercised and not withdrawn or lost) issed and outstanding immediately prior to the merger will be converted into the right to receive the Merger Price in cash, without interest;

 

   

Each Share held by Newco immediately prior to the merger will be cancelled;

 

   

Each share of Newco’s common stock, par value $0.0001 per share, issued and outstanding immediately prior to the merger will be converted into one validly issued, fully paid and nonassessable share of common stock of Fuer as the surviving corporation of the merger;

 

   

The merger will have the effects provided in Section 92A.180 of the NRS, including, among other things, that:

 

   

The title to all real estate and other property owned by each of Fuer and Newco is vested in the surviving corporation without reversion or impairment;

 

   

The surviving corporation has all of the liabilities of each of Fuer and Newco;

 

   

A proceeding pending against Fuer or Newco may be continued as if the merger had not occurred or the surviving corporation may be substituted in such proceeding;

 

   

The Articles of Association and the Bylaws of Fuer as in effect immediately prior to the merger shall be the Articles of Association and the Bylaws of the surviving corporation after the merger until the same shall be duly altered or amended as provided therein or by applicable law; and

 

   

Following the merger, the Contributing Stockholders will own all outstanding capital stock of Fuer (as the surviving entity of the merger).

Under Section 92A.180 of the NRS, because Newco will hold approximately 97% of the outstanding Shares prior to the merger, Newco will have the power to effect the merger without a vote of Fuer’s board of directors or the stockholders of Fuer. The Filing Persons intend to take all necessary and appropriate actions to cause the merger to become effective on the effective date, without a meeting or consent of the stockholders of Fuer. The Merger Price is $1.29 per share in cash, without interest.

 

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Upon completion of the merger, in order to receive the Merger Price of $1.29 per share, without interest, each stockholder or a duly authorized representative must (1) deliver an executed Letter of Transmittal, appropriately completed and executed, to the Paying Agent, and (2) surrender such shares by delivering to the Paying Agent the stock certificate or certificates that, prior to the merger, had evidenced such shares, as set forth in a Notice of Merger and Dissenter’s Rights and Letter of Transmittal. Such notice will be mailed to stockholders of record within 10 calendar days of the effective date. Stockholders are encouraged to read the Notice of Merger and Dissenter’s Rights and Letter of Transmittal carefully when received. Delivery of an executed Letter of Transmittal shall constitute a waiver of statutory dissenter’s rights.

For U.S. federal income tax purposes generally, the receipt of the cash consideration by U.S. Holders of the shares pursuant to the merger will be a taxable sale of the U.S. Holders’ Shares. See “Material U.S. Federal Income Tax Consequences” on page 18 of this Schedule 13E-3.

Different Terms

Stockholders of Fuer will be treated as described in this Item 4 under “Material Terms” above.

Dissenter’s rights

Pursuant to Chapter 92A (Section 300 through 500 inclusive) of the NRS, or the “Dissenters’ Rights Provisions”, any unaffiliated stockholder of Fuer is entitled to dissent to the merger, and obtain payment of the fair value of the shares. In the context of the merger, the Dissenters’ Rights Provisions provide that the unaffiliated stockholders may elect to have Fuer purchase the shares held by the unaffiliated stockholders for a cash price that is equal to the “fair value” of such shares, as determined in a judicial proceeding in accordance with the Dissenters’ Rights Provisions. The fair value of the Shares of any unaffiliated stockholder means the value of such Shares immediately before the effectuation of the merger, excluding any appreciation or depreciation in anticipation of the merger, unless exclusion of any appreciation or depreciation would be inequitable.

A copy of the Dissenters’ Rights Provisions is attached as Exhibit (f) hereto. If you wish to exercise your dissenters’ rights or preserve the right to do so, you should carefully review Exhibit (f) hereto. If you fail to comply with the procedures specified in the Dissenters’ Rights Provisions in a timely manner, you may lose your dissenters’ rights. Because of the complexity of those procedures, you should seek the advice of counsel if you are considering exercising your dissenters’ rights.

Unaffiliated stockholders who perfect their dissenters’ rights by complying with the procedures set forth in the Dissenters’ Rights Provisions will have the fair value of their Shares determined by a Nevada state district court and will be entitled to receive a cash payment equal to such fair value. Any such judicial determination of the fair value of such Shares could be based upon any valuation method or combination of methods the court deems appropriate. The value so determined could be more or less than the Merger Price to be paid in connection with the merger. In addition, unaffiliated stockholders who invoke dissenters’ rights may be entitled to receive payment of a fair rate of interest from the effective time of the merger on the amount determined to be the fair value of their Shares.

 

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Within 10 days after the effectuation of the merger, Fuer will send a written notice (the “Notice of Merger and Dissenter’s Rights”) to all the record stockholders of Fuer entitled to dissenters’ rights. Pursuant to NRS 92A.430, the Notice of Merger and Dissenter’s Rights will be accompanied by information that will: (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 the person 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 state that the stockholder shall be deemed to have waived the right to demand payment with respect to the shares unless the form is received by the subject corporation by such specified date; and (e) be accompanied by a copy of NRS 92A.300 to 92A.500, inclusive.

Under NRS 92A.440, a stockholder wishing to exercise dissenter’s rights must:

 

   

demand payment;

 

   

certify whether the stockholder acquired beneficial ownership of the common stock before the date specified in the Notice of Merger and Dissenter’s Rights; and

 

   

deposit its certificates, if any, in accordance with the terms of the Notice of Merger and Dissenter’s Rights.

Under NRS 92A.440(5), stockholders who fail to demand payment or deposit their certificates where required by the dates set forth in the Notice of Merger and Dissenter’s Rights will not be entitled to demand payment or receive the fair market value for their shares of capital stock as provided under Nevada law. Instead, such stockholders will receive the same consideration as the stockholders who do not exercise rights of a dissenting owner.

Pursuant to NRS 92A.460, within 30 days after receipt of a demand for payment, Fuer must pay each dissenter who complied with the provisions of the Dissenters’ Rights Provisions the amount Fuer estimates to be the fair value of such shares, plus interest from the effective date of the merger. The payment must be accompanied by the following: (a) Fuer’s balance sheet as of the end of 2011, a statement of income for 2011, a statement of changes in the stockholders’ equity for 2011 or, where such financial statements are not reasonably available, then such reasonably equivalent financial information and the latest available quarterly financial statements, if any; (b) a statement of Fuer’s estimate of the fair value of the shares; and (c) a statement of the dissenter’s rights to demand payment under NRS 92A.480 and that if any such stockholder does not do so within the period specified, such stockholder shall be deemed to have accepted such payment in full satisfaction of Fuer’s obligations under Chapter 92A of the NRS.

 

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Under NRS 92A.470(1), Fuer is entitled to withhold payment from a dissenter unless the dissenter was the beneficial owner before the date set forth in the dissenters’ notice as the first date of any announcement to the news media or to the stockholders of the terms of the proposed corporate action. If Fuer chooses to withhold payment, it is required, within 30 days after receiving demand for payment, to notify the dissenter: (a) of Fuer’s balance sheet as of the end of a fiscal year ending not more than 16 months before the date of the notice, a statement of earnings for that year, and a statement of changes in stockholders’ equity for that year, or, where such financial statements are not reasonably available, then such reasonably equivalent financial information, as well as the latest available financial statements, if any; (b) of Fuer’s estimate of the fair value of the shares; (c) that the dissenter may accept Fuer’s estimate of the fair value, plus interest, in full satisfaction of her demand or demand appraisal; (d) that if the dissenter wishes to accept the offer, the dissenter must notify Fuer of acceptance within 30 days after receiving of the offer; and (e) that if the dissenter does not satisfy the requirements for demanding appraisal, the dissenter shall be deemed to have accepted Fuer’s offer.

NRS 92A.480(1) provides that a dissenter who believes that the amount paid or offered is less than the full value of his or her shares of capital stock, or that the interest due is incorrectly calculated, may, within 30 days after Fuer made or offered payment for the shares, either (i) notify Fuer in writing of his or her own estimate of the fair value of the shares of capital stock and the amount of interest due and demand payment of difference between this estimate and any payments made, or (ii) reject the offer for payment made by Fuer and demand payment of the fair value of his or her shares and interest due.

If Fuer does not deliver payment within 30 days of receipt of the demand for payment, the dissenting stockholder may enforce under NRS 92A.460(1) the dissenter’s rights by commencing an action in Clark County, Nevada or if the dissenting stockholder resides or has its registered office in Nevada, in the county where the dissenter resides or has its registered office.

If a dissenting stockholder disagrees with the amount of Fuer’s payment, then the dissenting stockholder may, pursuant to NRS 92A.480, within 30 days of such payment, (i) notify Fuer in writing of the dissenting stockholder’s own estimate of the fair value of the dissenting shares and the amount of interest due, and demand payment of such estimate, less any payments made by Fuer, or (ii) reject the offer by Fuer if the dissenting stockholder believes that the amount offered by Fuer is less than the fair value of the dissenting shares or that the interest due is incorrectly calculated. If a dissenting stockholder submits a written demand as set forth above and Fuer accepts the offer to purchase the Shares at the offer price, then such dissenting stockholder will be sent a check for the full purchase price of the Shares within 30 days of acceptance.

If a demand for payment remains unsettled, Fuer must commence a proceeding in the Clark County, Nevada district court within 60 days after receiving the demand. Each dissenter who is made a party to the proceeding shall be entitled to a judgment in the amount, if any, by which the court finds the fair value of the dissenting shares, plus interest, exceeds the amount paid by Fuer. If a proceeding is commenced to determine the fair value of the Shares, the costs of

 

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such proceeding, including the reasonable compensation and expenses of any appraisers appointed by the court, shall be assessed against Fuer, unless the court finds the dissenters acted arbitrarily, vexatiously or not in good faith in demanding payment. The court may also assess the fees and expenses of the counsel and experts for the respective parties, in amounts the court finds equitable against Fuer if the court finds that (i) Fuer did not comply with the Dissenters’ Rights Provisions or (ii) against either Fuer or a dissenting stockholder, if the court finds that such party acted arbitrarily, vexatiously or not in good faith with respect to the rights provided by the Dissenters’ Rights Provisions.

If Fuer fails to commence such a proceeding, it would be required by NRS 92A.490(1) to pay the amount demanded to each dissenter whose demand remains unsettled. Dissenters would be entitled to a judgment for the amount, if any, by which the court finds the fair value of his shares, plus accrued interest, exceeds the amount paid by Fuer; or the fair value, plus accrued interest, of his after-acquired shares for which Fuer elected to withhold payment pursuant to Section 92.470 of the NRS.

Under Section 92A.490(4) of the NRS, the district 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 in any amendment to such order. In any such court proceeding, the dissenters are entitled to the same discovery rights as parties in other civil proceedings.

Under Section 92A.500 of the NRS, the district court will assess the costs of the proceedings against Fuer, unless the court finds that all or some of the dissenters acted arbitrarily, vexatiously or not in good faith in demanding payment. The district court may also assess against Fuer or the dissenters the fees and expenses of counsel and experts for the respective parties, in the amount the court finds equitable.

A person having a beneficial interest in Shares that are held of record in the name of another person, such as a broker, fiduciary, depository or other nominee, must act to cause the record holder to follow the requisite steps properly and in a timely manner to perfect dissenters’ rights of appraisal. If the Shares are owned of record by a person other than the beneficial owner, including a broker, fiduciary (such as a trustee, guardian or custodian), depositary or other nominee, the written demand for dissenters’ rights of appraisal must be executed by or for the record owner. If Shares are owned of record by more than one person, as in joint tenancy or tenancy in common, the demand must be executed by or for all joint owners. An authorized agent, including an agent for two or more joint owners, may execute a demand for appraisal for a stockholder of record, provided that the agent identifies the record owner and expressly discloses, when the demand is made, that the agent is acting as agent for the record owner. If a stockholder owns Shares through a broker who in turn holds the shares through a central securities depository nominee such as CEDE & Co., a demand for appraisal of such Shares must be made by or on behalf of the depository nominee and must identify the depository nominee as the record holder of such Shares.

A record holder, such as a broker, fiduciary, depository or other nominee, who holds Shares as a nominee for others, will be able to exercise dissenters’ rights of appraisal with respect to the Shares held for all or less than all of the beneficial owners of those Shares as to which such person is the record owner. In such case, the written demand must set forth the number of Shares covered by the demand. Where the number of Shares is not expressly stated, the demand will be presumed to cover all Shares outstanding in the name of such record owner.

 

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Under NRS 92A.380(2), a stockholder who is entitled to dissent and obtain payment pursuant to NRS 92A.300 to 92A.500, inclusive, may not challenge the merger unless it is unlawful or fraudulent with respect to the stockholder or Fuer. Because the merger is being effected as a short-form merger under Section 92A.180 of the NRS, it does not require approval by the stockholders or the board of directors of Fuer. No such approval has been or will be sought.

The foregoing summary does not purport to be a complete statement of the procedures to be followed by stockholders desiring to exercise their dissenter’s rights and is qualified in its entirety by express reference to Section 92A.300 to 500 of the NRS, the full text of which is attached hereto as Exhibit (f).

STOCKHOLDERS ARE URGED TO READ EXHIBIT (f) IN ITS ENTIRETY SINCE FAILURE TO COMPLY WITH THE PROCEDURES SET FORTH THEREIN WILL RESULT IN THE LOSS OF DISSENTER’S RIGHTS.

Provisions for Unaffiliated Stockholders

None of the Filing Persons intend to grant the unaffiliated stockholders of Fuer special access to any of the Filing Persons’ records in connection with the merger. None of the Filing Persons intend to obtain counsel or appraisal services for the unaffiliated stockholders of Fuer.

Eligibility for Listing or Trading

Not applicable.

Item 5. Past Contacts, Transactions, Negotiations and Agreements

(a) Transactions.

Fuer is a Nevada company that controls directly and indirectly several subsidiaries in the BVI and China. Fuer owns all of the issued and outstanding capital stock of China Golden Holdings, Ltd. (“China Golden”), a BVI company. China Golden is a holding company that owns 100% of the outstanding capital stock of Qiqihar Deli Enterprise Management Consulting Co., Ltd. (“Deli”), a company incorporated under the laws of the PRC and a wholly-owned indirect subsidiary of Fuer. Fuer’s affiliated companies include Qingdao Fuer Agronomy Biochemical Co., Ltd., a PRC company that sells pesticides, germicides, and herbicides to customers across China and is controlled by Mr. Zhang.

In order to comply with certain foreign ownership restrictions under PRC laws, Fuer conducts its operations in China through its variable interest entity, Qiqihar Fuer Agronomy Inc. (“Qiqihar Fuer”), a limited liability company organized under the laws of the PRC. On March 25, 2010, Deli entered into a series of contractual agreements with Qiqihar Fuer and its two shareholders (Mr. Li Zhang and Ms. Yuhua Liu), in which Deli effectively assumed management

 

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of the business activities of Qiqihar Fuer and has the right to appoint all executives and senior management and the members of the board of directors of Qiqihar Fuer. The contractual arrangements are comprised of a series of agreements, including a Consulting Services Agreement, an Exclusive Business Operation Agreement, a Proxy Agreement, and an Exclusive Option Agreement, through which Deli has the right to advise, control, manage and operate Qiqihar Fuer for an annual fee in the amount of Qiqihar Fuer’s yearly net profits after tax. Additionally, Qiqihar Fuer’s shareholders have pledged their rights, title and equity interest in Qiqihar Fuer as security for Deli to collect consulting and services fees provided to Qiqihar Fuer through an Equity Pledge Agreement between such shareholders and Deli (the aforementioned contractual agreements and the Share Pledge Agreement to be collectively referred to as “Contractual Agreements”). In order to further reinforce Deli’s rights to control and operate Qiqihar Fuer, Qiqihar Fuer’s shareholders have granted Deli the exclusive right and option to acquire all of their equity interests in Qiqihar Fuer through the Exclusive Option Agreement mentioned above. The Contractual Arrangements are such that Deli, and ultimately Fuer, has the ability to substantially influence the daily operations and financial affairs of Qiqihar Fuer, in addition to being able to appoint Qiqihar Fuer’s senior executives and approve all matters requiring stockholder approval. The structure of the Contractual Agreements is such that Qiqihar Fuer is effectively a variable interest entity (“VIE”) of Deli. Accordingly, Fuer, through its wholly-owned subsidiaries consolidates Qiqihar Fuer’s results of operation, assets and liabilities in their financial statements.

Ms. Yuhua Liu, a 4.21% equity holder of Qiqihar Fuer, is a director of Fuer and directly holds approximately 4.29% of Fuer common stock as of the date of this Schedule 13E-3. Mr. Li Zhang, the Chairman and CEO of Fuer, directly holds 95.79% of the equity interest of Qiqihar Fuer and holds executive positions in Qiqihar Fuer. Mr. Li Zhang directly holds approximately 56.6% of Fuer common stock as of the date of this Schedule 13E-3.

Other than as described in this Schedule 13E-3, there have been no transactions that occurred during the past two years between the Filing Persons (including their respective executive officers, directors and controlling persons) and Fuer or any of its affiliates.

(b) Significant Corporate Events.

Other than as described in this Schedule 13E-3, there have been no negotiations, transactions or material contacts that occurred during the past two years between (i) any of the Filing Persons or, to the knowledge of any of the Filing Persons, any of the persons listed on Schedule I hereto and (ii) Fuer or its affiliates concerning any merger, consolidation, acquisition, tender offer for or other acquisition of any class of Fuer’s securities, election of Fuer’s directors or sale or other transfer of a material amount of assets of Fuer.

(c) Negotiations or Contacts.

Other than as described in this Schedule 13E-3, there have been no negotiations or material contacts that occurred during the past two years concerning the matters referred to in paragraph (b) of this Item between (i) any affiliates of Fuer or (ii) Fuer or any of its affiliates and any person not affiliated with Fuer who would have a direct interest in such matters.

 

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(d) Conflicts of Interest.

Not applicable.

(e) Agreements Involving the Subject Company’s Securities.

Except as described in this Schedule 13E-3, there are no agreements, arrangements or understandings, whether or not legally enforceable, between any of the Filing Persons or, to the knowledge of any of the Filing Persons, any other person with respect to any securities of Fuer.

Item 6. Purposes of the Transaction and Plans or Proposals

Use of Securities Acquired.

The shares acquired in the merger from the unaffiliated stockholders of Fuer will be cancelled.

Plans.

It is currently expected that, following the consummation of the merger, the business and operations of Fuer will, except as set forth in this Schedule 13E-3, be conducted by Fuer (as the surviving entity of the merger) and/or its subsidiaries substantially as they currently are being conducted. The Filing Persons intend to continue to evaluate the business and operations of Fuer with a view to maximizing Fuer’s potential, and they will take such actions as they deem appropriate under the circumstances and market conditions then existing. Following the consummation of the merger, the Filing Persons intend to cause Fuer to terminate the registration of the Shares under Section 12(g)(4) of the Exchange Act following the merger, which would result in the suspension of Fuer’s duty to file reports pursuant to the Exchange Act. For additional information see “Special Factors — Purposes, Alternatives, Reasons, and Effects of the Merger—Effects” and Item 4 “Terms of the Transaction” beginning on pages 11 and 36, respectively, of this Schedule 13E-3.

In addition, following the consummation of the merger, the Filing Persons intend to enter into a shareholders agreement governing their respective rights and interests in Fuer and its subsidiaries. As discussed above under Item 5 — “Past Contracts, Transactions, Negotiations and Agreements”, Fuer currently conducts its operations in China through a VIE structure. Following the consummation of the merger, the Filing Persons plan to reorganize the corporate structure of Fuer so as to terminate the VIE status of Qiqihar Fuer, its operating subsidiary in the PRC. In connection with this reorganization, and in consideration for the termination of the Allied Agreements and the cancellation of the Warrants, Mr. Zhang plans to transfer approximately 15% equity ownership in Qiqihar Fuer to Allied.

Except as otherwise described in this Schedule 13E-3, the Filing Persons do not currently have any commitment or agreement and are not currently negotiating for the sale of any of Fuer’s businesses. Except as otherwise described in this Schedule 13E-3, Fuer has not, and the Filing Persons have not, as of the date of this Schedule 13E-3, approved any specific plans or proposals for:

 

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any extraordinary corporate transaction involving Fuer after the completion of the merger;

 

   

any sale or transfer of a material amount of assets currently held by Fuer after the completion of the merger;

 

   

any material change in Fuer’s dividend rate or policy, or indebtedness or capitalization; or

 

   

any other material change in Fuer’s corporate structure or business.

However, the Filing Persons reserve the right to continue to evaluate the business and operations of Fuer with a view to maximizing Fuer’s potential, and they will take such actions as they deem appropriate under the circumstances and market conditions then existing.

Item 7. Purposes, Alternatives, Reasons, and Effects of the merger

See “Special Factors—Purposes, Alternatives, Reasons, and Effects of the Merger” beginning on page 11 of this Schedule 13E-3.

Item 8. Fairness of the Transaction

See “Special Factors—Fairness of the Merger” beginning on page 23 of this Schedule 13E-3.

Item 9. Reports, Opinions, Appraisals, and Negotiations

See “Special Factors—Reports, Opinions, Appraisals, and Negotiations” beginning on page 27 of this Schedule 13E-3.

Item 10. Source and Amount of Funds or Other Consideration

Source of Funds

The total amount of funds required by Newco to pay the Merger Price to all unaffiliated stockholders of Fuer and to pay related fees and expenses, is estimated to be approximately $660,000. Pursuant to the Contribution Agreement, Mr. Li Zhang will provide the necessary funding to Newco from cash on hand. Mr. Li Zhang will also finance the funds required to pay transaction fees and expenses from cash on hand. Because Mr. Li Zhang intends to provide the necessary funding for the merger, Newco has not arranged for any alternative financing.

Conditions

There are no conditions to the merger or the financing of the merger, however the Filing Persons are not under any obligation to consummate the merger and could decide to withdraw the transaction at any time prior to the effective date of the merger, although they do not have a present intention to do so.

 

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Expenses

The Paying Agent will receive reasonable and customary compensation for its services and will be reimbursed for certain reasonable out-of-pocket expenses and will be indemnified against certain liabilities and expenses in connection with the merger, including certain liabilities under U.S. federal securities laws.

None of the Filing Persons will pay any fees or commissions to any broker or dealer in connection with the merger. Brokers, dealers, commercial banks, and trust companies will, upon request, be reimbursed by the Filing Persons for customary mailing and handling expenses incurred by them in forwarding materials to their customers.

The following is an estimate of fees and expenses to be incurred by the Filing Persons in connection with the merger:

 

     Fees  

Legal Fees and Expenses

   $ 130,000   

Paying Agent (including filing, printing and mailing)

   $ 20,000   

Miscellaneous fees and expenses

   $ 10,000   
  

 

 

 

Total

   $ 160,000   
  

 

 

 

Borrowed Funds

No part of the funds required to pay the Merger Price or expenses is expected to be borrowed.

Item 11. Interest in Securities of the Subject Company

Securities Ownership

Prior to the consummation of the merger, Newco will be the holder of an aggregate of 12,569,259 shares, representing approximately 97% of the outstanding shares of Fuer. The Filing Persons are the deemed beneficial owners, the aggregate, of 100% of the equity interest of Newco.

Securities Transactions

Contributing Stockholders have agreed to contribute a total of 12,569,259 shares to Newco prior to the consummation of the merger pursuant to the terms of the Contribution Agreement. The Contribution Agreement is attached as an exhibit to this Schedule 13E-3. There were no transactions in the Shares effected during the past 60 days by the Filing Persons or, to the knowledge of the Filing Persons, the directors and executive officers of any of the Filing Persons.

 

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Item 12. The Solicitation or Recommendation

Not Applicable.

Item 13. Financial Statements

Financial Information

The audited consolidated financial statements of Fuer for the year ended December 31, 2011 and the year ended December 31, 2010 are incorporated herein by reference to the Consolidated Financial Statements included in Fuer’s Annual Report on Form 10-K for its fiscal years ended December 31, 2011 and 2010 (the “Form 10-K”). The unaudited consolidated financial statements of Fuer for the nine-month period ended September 30, 2012 are also incorporated herein by reference to the Consolidated Financial Statements included in Fuer’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 (the “Form 10-Q”).

The Form 10-K and Form 10-Q, and Fuer’s other SEC filings, are available for inspection and copying at the SEC’s public reference room located at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. The Form 10-K and Form 10-Q are also available to the public from the SEC’s website at http://www.sec.gov.

Pro Forma Information

Not Applicable.

Item 14. Personal/Assets, Retained, Employed, Compensated or Used

Solicitations or Recommendations

There are no persons or classes of persons who are directly or indirectly employed, retained, or to be compensated to make solicitations or recommendations in connection with the merger.

Employees and Corporate Assets

Other than as described in this Schedule 13E-3, no officers, class of employees, or corporate assets of Fuer has been or will be employed by or used by the Filing Persons in connection with the merger.

Item 15. Additional Information

None.

 

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Item 16. Exhibits

 

Exhibit Number   Description
(a)(1)   Letter from Fuer Merger Newco to Stockholders of Fuer International, Inc.
(a)(2)   Form of Notice of Merger and Dissenter’s Rights
(b)   None
(c)   None
(d)   Contribution Agreement by and between the Contributing Stockholders and Fuer Merger Newco dated March 8, 2013
(e)   None
(f)   Nevada Revised Statutes Section 92A.300 to Section 92A.500 — Dissenters’ Rights Provisions
(g)   None

 

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SIGNATURES

After due inquiry and to the best of its knowledge and belief, each of the undersigned certifies that the information set forth in this Schedule 13E-3 is true, complete and correct.

Dated: March 8, 2013

 

FUER MERGER NEWCO LTD.
By:  

/s/ Li Zhang

Name:   Li Zhang
Title:   Sole Director
LI ZHANG

/s/ Li Zhang

Li Zhang
YUHUA LIU

/s/ Yuhua Liu

Yuhua Liu
ORIENTAL AGRICULTURE CO., LTD.
By:  

/s/ Li Zhang

Name:   Li Zhang
Title:   Sole Director
TRADE EVER HOLDINGS LIMITED
By:  

/s/ Xi Liu

Name:   Xi Liu
Title:   Sole Director
FAITH ORIGINS LIMITED
By:  

/s/ Li Guo Li

Name:   Li Guo Li
Title:   Sole Director

 

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QIULI ZHAO

/s/ Qiuli Zhao

Qiuli Zhao
SHUXIAN LIU

/s/ Shuxian Liu

Shuxian Liu
HEPING GAO

/s/ Heping Gao

Heping Gao
PINGFANG HAN

/s/ Pingfang Han

Pingfang Han
GUOBIN TAN

/s/ Guobin Tan

Guobin Tan
HAILONG CAO

/s/ Hailong Cao

Hailong Cao
JINQUAN SHI

/s/ Jinquan Shi

Jinquan Shi

 

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ALLIED MERIT INTERNATIONAL INVESTMENT INC.
By:  

/s/ Gang Liu

Name:   Gang Liu
Title:   Sole Director
VIRTUE WORLD LIMITED
By:  

/s/ Liping Zhang

Name:   Liping Zhang
Title:   Sole Director
XIXIAN DONG

/s/ Xixian Dong

Xixian Dong
HOUYUN YANG

/s/ Houyun Yang

Houyun Yang
SHUNXIANG XUN

/s/ Shunxiang Xun

Shunxiang Xun
XIULI HE

/s/ Xiuli He

Xiuli He
XIAOLING YU

/s/ Xiaoling Yu

Xiaoling Yu

 

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SCHEDULE I

DIRECTORS AND EXECUTIVE OFFICERS OF THE FILING PERSONS

The name, business address, position with entity, present principal occupation or employment, and five-year employment history and citizenship of the directors and executive officers of the relevant company, together with the names, principal businesses and addresses of any corporations or other organizations in which such principal occupation is conducted, are set forth below.

1. Fuer Merger Newco Ltd. (“Newco”)

The sole director and officer of Newco is Mr. Li Zhang. Please see “Item 3 – Identity and Background of Filing Persons” on page 30 of this Schedule 13E-3 for the relevant information of Mr. Li Zhang.

2. Oriental Agriculture Co. Ltd. (“Oriental Agriculture”)

The sole director and officer of Newco is Mr. Li Zhang. Please see “Item 3 – Identity and Background of Filing Persons” on page 30 of this Schedule 13E-3 for the relevant information of Mr. Li Zhang.

3. Trade Ever Holdings Limited (“Trade Ever”)

The sole director and officer of Trade Ever is Mr. Xi Liu (“Mr. Liu”).

Name and Address. The principal business address of Mr. Liu is Group 6, Qianhaige Cun, Changqing Xiang, Fula Er’ji District, Qiqi Ha’er City, Heilongjiang Province, China. His telephone number is +86-133-5952-8655.

Business and Background of Entity. Not applicable.

Business and Background of Natural Persons. Mr. Liu has served as the chief agronomist of Fuer for the past 5 years. Fuer is a leading manufacturer and supplier of seeds and fertilizer products in northeastern China. Mr. Liu is a citizen of the PRC.

4. Faith Origin Limited (“Faith Origin”)

The sole director and officer of Faith Origin is Mr. Li Guo Li (“Mr. Li”).

Name and Address. The principal business address of Mr. Li is #5, Jianhua N. Street, Jianhua District, Qiqi Ha’er City, Heilongjiang Province, China. His telephone number is +86- 13303620655.

Business and Background of Entity. Not applicable.

Business and Background of Natural Persons. Mr. Li has served as the chief executive officer of Xinganxian Logistics Company for the past 5 years. Xinganxian Logistics Company is a logistics company based in Qiqi Ha’er City, Heilongjiang Province, China. Mr. Li is a citizen of the PRC.

 

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5. Allied Merit International Investment Inc. (“Allied”)

The sole director and officer of Allied is Mr. Gang Liu (“Mr. Liu”).

Name and Address. The principal business address of Mr. Liu is C 21, Kinglong International Building, No. 9, Fulin Rd. Chaoyang District, Beijing, China. His telephone number is +86-139-1182-7781.

Business and Background of Entity. Not applicable.

Business and Background of Natural Persons. Mr. Liu has been the Chief Executive Officer of Allied for the past 5 years. The principal business of Allied is providing financial advisory services. Mr. Liu is a citizen of the PRC.

6. Virtue World Limited (“Virtue World”)

The sole director and officer of Virtue World is Ms. Liping Zhang (“Ms. Zhang”).

Name and Address. The principal business address of Ms. Zhang is C 21, Kinglong International Building, No. 9, Fulin Rd. Chaoyang District Beijing, China. Her telephone number is +86-138-1171-7781.

Business and Background of Entity. Not applicable.

Business and Background of Natural Persons. Ms. Zhang has been a housewife for the past 5 years. Ms. Zhang is a citizen of the PRC.

ADDITIONAL INFORMATION

To the knowledge of the Filing Persons, no person for whom information is provided in Schedule I was convicted in a criminal proceeding during the past five years (excluding traffic violations or similar demeanors) or was party to any judicial or administrative proceeding during the past five years that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws or finding any violation of such laws.

 

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EX-99.A.1 2 d498495dex99a1.htm EX-99.A.1 EX-99.A.1

Exhibit (a)(1)

LETTER FROM FUER INTERNATIONAL, INC.

Dear Stockholders of Fuer International, Inc.

On March 8, 2013, stockholders holding greater than ninety percent (90%) of the issued and outstanding common stock of Fuer International, Inc. (“Fuer”) intend to take Fuer private through a “short-form” merger with Fuer Merger Newco (“Newco”). The purposes of this letter and the Schedule 13E-3 Transaction Statement that accompanies this letter are to:

 

   

tell you more about the merger,

 

   

explain why we believe that the $1.29 per share in cash, without interest, that you will receive in the merger is fair consideration for your shares, and

 

   

let you know about your dissenter’s rights under Nevada law.

Neither you nor the Board of Directors of Fuer is being asked to approve the merger. Immediately prior to the effective date of the “short-form” merger, under Nevada law, Newco will own a sufficient number of shares to cause the merger to occur. After the merger, Fuer will be merged with Newco with Fuer being the surviving entity. In the merger, which we expect will occur on [•], 2013 or as soon thereafter as possible, you will receive $1.29 in cash, without interest, for each share of Fuer common stock that you own as of that date. If you do not believe that $1.29 is a fair price for your shares, you can follow the procedures described in the Schedule 13E-3 Transaction Statement and exercise dissenter’s rights under Nevada law. YOU SHOULD READ THE SCHEDULE 13E-3 TRANSACTION STATEMENT CAREFULLY BEFORE DECIDING WHETHER TO ACCEPT $1.29 PER SHARE OR TO EXERCISE YOUR DISSENTER’S RIGHTS. The price per share that you receive after exercising your dissenter’s rights may be greater or less than $1.29 per share.

Stockholders of record on the date the merger becomes effective will be mailed a Notice of Merger and Dissenter’s Rights and a Letter of Transmittal. Stockholders receiving such documents should carefully read them. Detailed instructions for surrendering your stock certificates, together with a detailed description of statutory dissenter’s rights, will be set forth in the Notice of Merger and Dissenter’s Rights and the Letter of Transmittal. Please do not submit your stock certificates before you have received these documents.

After the merger, the Fuer common stock will not be publicly traded. Fuer will also suspend its public reporting obligations with the Securities and Exchange Commission. In addition, the merger may have federal income tax consequences for you, and you should consult with your tax adviser in order to understand fully how the merger will affect you.

Sincerely,

 

FUER INTERNATIONAL, INC.
By:   /s/ Li Zhang
Name:   Li Zhang
Title:   Chief Executive Officer
EX-99.A.2 3 d498495dex99a2.htm EX-99.A.2 EX-99.A.2

Exhibit (a)(2)

FORM OF NOTICE OF MERGER AND DISSENTER’S RIGHTS

[•], 2013

To the Former Holders of Common Stock of Fuer International, Inc.:

NOTICE IS HEREBY GIVEN, pursuant to Chapter 92A (Section 300 through 500 inclusive) of the Nevada Revised Statute (the “NRS”) (the “Dissenters’ Rights Provisions”), that the short-form merger (the “Merger”) of Fuer Merger Newco, a Nevada corporation (“Newco”), with and into Fuer International, Inc. (“Fuer”), became effective on [] (the “Effective Date”). Immediately prior to the Effective Date, Newco owned more than 90% of the outstanding shares of common stock, par value $0.001 per share (“Shares”), of Fuer. Accordingly, under applicable Nevada law, no action was required by the stockholders of Fuer (other than Newco) for the Merger to become effective.

Pursuant to the terms of the Merger, each outstanding Share, other than Shares owned by Newco, and other than Shares as to which dissenters’ rights are exercised (as described in the Transaction Statement on Schedule 13E-3, as amended (the “Schedule 13E-3”)) held immediately prior to the Effective Date now represents only the right to receive $1.29 per share in cash, without interest (the “Merger Price”). The Merger Price will be paid upon surrender of the certificates for each Share. As a result of the Merger, Newco will be merged into Fuer, with Fuer being the surviving entity and wholly owned by the Contributing Stockholders.

To obtain payment for your Shares, the certificate(s) representing such Shares, together with the enclosed Letter of Transmittal, must be mailed or delivered by hand or overnight courier to the Paying Agent of the merger, [] (the “Paying Agent”), at the address set forth in the enclosed Letter of Transmittal. Please read and follow carefully the instructions set forth in the enclosed Letter of Transmittal to obtain payment for your Shares.

Former stockholders of Fuer who do not wish to accept the Merger Price have the right under Nevada law to seek an appraisal of the fair cash value of their Shares, exclusive of any element of value arising from the accomplishment or expectation of the Merger, in Clark County, Nevada.

Pursuant to the Dissenters’ Rights Provisions, any former stockholder of Fuer is entitled to dissent to the Merger, and obtain payment of the fair value of the shares. In the context of the Merger, the Dissenters’ Rights Provisions provides that the former stockholders may elect to have Fuer purchase the Shares held by the former stockholders for a cash price that is equal to the “fair value” of such Shares, as determined in a judicial proceeding in accordance with the Dissenters’ Rights Provisions. The fair value of the Shares of any former stockholder means the value of such Shares immediately before the effectuation of the Merger, excluding any appreciation or depreciation in anticipation of the Merger, unless exclusion of any appreciation or depreciation would be inequitable.

A copy of the Dissenters’ Rights Provisions is attached as Appendix A hereto. If you wish to exercise your dissenters’ rights or preserve the right to do so, you should carefully review Appendix A hereto. IF YOU FAIL TO COMPLY WITH THE PROCEDURES SPECIFIED IN THE DISSENTERS’ RIGHTS PROVISIONS IN A TIMELY MANNER, YOU MAY LOSE YOUR DISSENTERS’ RIGHTS. BECAUSE OF THE COMPLEXITY OF THOSE PROCEDURES, YOU SHOULD SEEK THE ADVICE OF COUNSEL IF YOU ARE CONSIDERING EXERCISING YOUR DISSENTERS’ RIGHTS.


Former stockholders who perfect their dissenters’ rights by complying with the procedures set forth in the Dissenters’ Rights Provisions will have the fair value of their Shares determined by a Nevada state district court and will be entitled to receive a cash payment equal to such fair value. Any such judicial determination of the fair value of shares could be based upon any valuation method or combination of methods the court deems appropriate. The value so determined could be more or less than the Merger Price to be paid in connection with the Merger. In addition, former stockholders who invoke dissenters’ rights may be entitled to receive payment of a fair rate of interest from the effective time of the Merger on the amount determined to be the fair value of their Shares.

If you do NOT plan to seek an appraisal of all of your Shares, please execute (or, if you are not the record holder of such shares, to arrange for such record holder or such holder’s duly authorized representative to execute) and mail postage paid the enclosed Letter of Transmittal to the Paying Agent at the address set forth in the Letter of Transmittal. You should note that surrendering to Fuer certificates for your Shares will constitute a waiver of your appraisal rights under the NRS.

You should note that the method of delivery of the Letter of Transmittal and/or any other required documentation is at the election and risk of the former stockholder. If the decision is made to send the Letter of Transmittal by mail, it is recommended that such Letter of Transmittal be sent by registered mail, properly insured, with return receipt requested.

This Notice of Merger and Dissenters’ Rights affords you the notice required by NRS 92A.440. The right to appraisal will be lost unless it is perfected by full and precise satisfaction of the requirements of the Dissenters’ Rights Provisions, the text of which is set forth in full in Appendix A attached to this Notice of Merger and Dissenters’ Rights. Mere failure to execute and return the enclosed stock power or lost stock affidavit along with your stock certificate(s) does NOT satisfy the requirements of the Dissenters’ Rights Provisions; rather, a separate written demand for appraisal must be properly executed and delivered to Fuer as described below.

You have the right, on or prior to [], 2013 (i.e., within 30 days after the date of this Notice of Merger and Dissenters’ Rights written above), to demand in writing from Fuer an appraisal of your shares of Shares. Such demand will be sufficient if it reasonably informs Fuer of the identity of the stockholder making the demand and that the stockholder intends thereby to demand an appraisal of the fair value of his or her Shares. Failure to make such a timely demand will foreclose your right to appraisal. All written demands for appraisal of Shares should be sent or delivered to Fuer at the following address: [].

Under NRS 92A.440(3), stockholders who fail to demand payment or deposit their certificates where required by the dates set forth in this Notice of Merger and Dissenter’s Rights will not be entitled to demand payment or receive the fair market value for their shares of capital stock as provided under Nevada law. Instead, such stockholders will receive the same consideration as the stockholders of who do not exercise rights of a dissenting owner.

 

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Pursuant to NRS 92A.460, within 30 days after receipt of a demand for payment (form of which is attached hereto as Schedule A), Fuer must pay each dissenter who complied with the provisions of the Dissenters’ Rights Provisions the amount Fuer estimates to be the fair value of such shares, plus interest from the effective date of the Merger. The payment must be accompanied by the following: (a) Fuer’s balance sheet as of the end of 2011, a statement of income for 2011, a statement of changes in the stockholders’ equity for 2011 or, where such financial statements are not reasonably available, then such reasonably equivalent financial information and the latest available quarterly financial statements, if any; (b) A statement of Fuer’s estimate of the fair value of the shares; (c) An explanation of how interest was calculated, and (d) A statement of the dissenter’s rights to demand payment under NRS 92A.480 and that if any such stockholder does not do so within the period specified, such stockholder shall be deemed to have accepted such payment in full satisfaction of the corporation’s obligations under Chapter 92A of the NRS.

Under NRS 92A.470(1), Fuer is entitled to withhold payment from a dissenter unless the dissenter was the beneficial owner before the date set forth in the dissenters’ notice as the first date of any announcement to the news media or to the stockholders of the terms of the proposed corporate action. If Fuer chooses to withhold payment, it is required, within 30 days after receiving demand for payment, to notify the dissenter: (a) of Fuer’s balance sheet as of the end of 2011, a statement of income for 2011, a statement of changes in the stockholders’ equity for 2011 or, where such financial statements are not reasonably available, then such reasonably equivalent financial information and the latest available quarterly financial statements, if any; (b) of Fuer’s estimate of the fair value of the shares; (c) that the dissenter may accept Fuer’s estimate of the fair value, plus interest, in full satisfaction of her demand or demand appraisal; (d) that if the dissenter wishes to accept the offer, the dissenter must notify Fuer of acceptance within 30 days after receiving of the offer; and (e) that if the dissenter does not satisfy the requirements for demanding appraisal, the dissenter shall be deemed to have accepted Fuer’s offer.

If Fuer does not deliver payment within 30 days of receipt of the demand for payment, the dissenting stockholder may enforce under NRS 92A.460(1) the dissenter’s rights by commencing an action in Clark County, Nevada.

If a dissenting stockholder disagrees with the amount of Fuer’s payment, then the dissenting stockholder may, pursuant to NRS 92A.480, within 30 days of such payment, (i) notify Fuer in writing of the dissenting stockholder’s own estimate of the fair value of the dissenting shares and the amount of interest due, and demand payment of such estimate, less any payments made by Fuer, or (ii) reject the offer by Fuer if the dissenting stockholder believes that the amount offered by Fuer is less than the fair value of the dissenting shares or that the interest due is incorrectly calculated. If a dissenting stockholder submits a written demand as set forth above and Fuer accepts the offer to purchase the Shares at the offer price, then such dissenting stockholder will be sent a check for the full purchase price of the Shares within 30 days of acceptance.

If a demand for payment remains unsettled, Fuer must commence a proceeding in the Clark County, Nevada district court within 60 days after receiving the demand. Each dissenter who is made a party to the proceeding shall be entitled to a judgment in the amount, if any, by which the court finds the fair value of the dissenting shares, plus interest, exceeds the amount paid by Fuer. If a proceeding is commenced to determine the fair value of the Shares, the costs of such

 

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proceeding, including the reasonable compensation and expenses of any appraisers appointed by the court, shall be assessed against Fuer, unless the court finds the dissenters acted arbitrarily, vexatiously or not in good faith in demanding payment. The court may also assess the fees and expenses of the counsel and experts for the respective parties, in amounts the court finds equitable against Fuer if the court finds that (i) Fuer did not comply with the Dissenters’ Rights Provisions or (ii) against either Fuer or a dissenting stockholder, if the court finds that such party acted arbitrarily, vexatiously or not in good faith with respect to the rights provided by the Dissenters’ Rights Provisions.

If Fuer fails to commence such a proceeding, it would be required by NRS 92A.490(1) to pay the amount demanded to each dissenter whose demand remains unsettled. Dissenters would be entitled to a judgment for the amount, if any, by which the court finds the fair value of his shares, plus accrued interest, exceeds the amount paid by Fuer; or the fair value, plus accrued interest, of his after-acquired shares for which Fuer elected to withhold payment pursuant to Section 92.470 of the NRS.

Under Section 92A.490(4) of the NRS, the district 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 in any amendment to such order. In any such court proceeding, the dissenters are entitled to the same discovery rights as parties in other civil proceedings.

Under Section 92A.500 of the NRS, the district court will assess the costs of the proceedings against Fuer, unless the court finds that all or some of the dissenters acted arbitrarily, vexatiously or not in good faith in demanding payment. The district court may also assess against Fuer or the dissenters the fees and expenses of counsel and experts for the respective parties, in the amount the court finds equitable.

A person having a beneficial interest in Shares that are held of record in the name of another person, such as a broker, fiduciary, depository or other nominee, must act to cause the record holder to follow the requisite steps properly and in a timely manner to perfect dissenters’ rights of appraisal. If the Shares are owned of record by a person other than the beneficial owner, including a broker, fiduciary (such as a trustee, guardian or custodian), depositary or other nominee, the written demand for dissenters’ rights of appraisal must be executed by or for the record owner. If Shares are owned of record by more than one person, as in joint tenancy or tenancy in common, the demand must be executed by or for all joint owners. An authorized agent, including an agent for two or more joint owners, may execute a demand for appraisal for a stockholder of record, provided that the agent identifies the record owner and expressly discloses, when the demand is made, that the agent is acting as agent for the record owner. If a stockholder owns Shares through a broker who in turn holds the shares through a central securities depository nominee such as CEDE & Co., a demand for appraisal of such Shares must be made by or on behalf of the depository nominee and must identify the depository nominee as the record holder of such Shares.

A record holder, such as a broker, fiduciary, depository or other nominee, who holds Shares as a nominee for others, will be able to exercise dissenters’ rights of appraisal with respect to the Shares held for all or less than all of the beneficial owners of those Shares as to which such person is the record owner. In such case, the written demand must set forth the number of Shares covered by the demand. Where the number of Shares is not expressly stated, the demand will be presumed to cover all Shares outstanding in the name of such record owner.

 

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Under NRS 92A.380(2), a stockholder who is entitled to dissent and obtain payment pursuant to NRS 92A.300 to 92A.500, inclusive, may not challenge the Merger unless it is unlawful or fraudulent with respect to the stockholder or Fuer. The board of directors of Fuer was not required under NRS 78.138(5) to consider the proposed effect of the Merger upon any particular group having an interest in the corporation as a dominant factor, such as the unaffiliated stockholders, and the board of directors of Fuer did not appoint an independent committee to consider the proposed effect of the Merger on the stockholders of Fuer other than Newco.

The foregoing summary of the rights of dissenting stockholders under the Dissenters’ Rights Provisions does not purport to be a complete statement of the procedures to be followed by stockholders desiring to exercise any dissenters’ rights of appraisal rights available under NRS. The preservation and exercise of dissenters’ rights of appraisal require strict adherence to the applicable provisions of NRS, and the foregoing summary is qualified in its entirety by reference to Appendix A hereto. You should carefully read Chapter 92A (Sections 300 through 500 inclusive) of the NRS, particularly the procedural steps required to perfect appraisal rights, because failure to strictly comply with the procedural requirements set forth in Chapter 92A (Sections 300 through 500 inclusive) of the NRS will result in a loss of appraisal rights. YOU ARE URGED TO CONSULT WITH YOUR OWN ATTORNEY REGARDING THE DISSENTERS’ RIGHTS AVAILABLE TO YOU, AND THE PROCESS TO PERFECT YOUR DISSENTERS’ RIGHTS UNDER CHAPTER 92A (SECTIONS 300 THROUGH 500 INCLUSIVE) OF THE NRS.

Additional Information

In connection with the merger, Newco and certain affiliates of Fuer filed with the U.S. Securities and Exchange Commission (the “SEC”) a Schedule 13E-3, which was mailed to the stockholders of Fuer along with this Notice of Merger and Dissenter’s Rights on or about [•], 2013.

In making your decision as to the exercise of dissenter’s rights, you are urged to review the Schedule 13E-3 and all related materials. A copy of the Schedule 13E-3 is enclosed herewith. In addition, copies of the Schedule 13E-3, including all amendments and supplements thereto, can be obtained at Fuer’ expense from Fuer if you are a bank or a broker. Finally, the Schedule 13E-3 is also available free of charge on the SEC’s website at http://www.sec.gov.

Fuer in the past has been subject to the informational and reporting requirements of the Securities Exchange Act of 1934, as amended, and in accordance therewith filed and furnished periodic and current reports, proxy statements and other information with the SEC relating to its business, financial condition and other matters. Such periodic and current reports, proxy statements and other information may be read and copied at the SEC’s Public Reference Room located at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Please call the SEC at 1- 800-SEC-0330 for further information on the public reference room. Fuer’ filings with the SEC are also available to the public from commercial document-retrieval services and on the website maintained by the SEC at http://www.sec.gov.

Very truly yours,

Fuer International, Inc.

 

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SCHEDULE A

DEMAND FOR PAYMENT BY A DISSENTING STOCKHOLDER

The undersigned is the owner of the following number of shares of capital stock of Fuer International, Inc. and hereby demands payment for the same:

Common Stock:            

The undersigned represents and warrants that the foregoing shares are all of the shares of capital stock of Fuer International, Inc. beneficially owned by the undersigned, except that if the undersigned is a nominee holder this Form for Demanding Payment by a Dissenting Stockholder is accompanied by a certification by each beneficial stockholder that both the beneficial owner and the record holders of all shares of common stock owned beneficially by the beneficial owner have asserted, or will timely assert, dissenter’s rights as to all the shares beneficially owned by the beneficial owner.

 

By initialing in the box to the right of this statement, the undersigned, or the person on whose behalf the undersigned is asserting dissenters’ rights, hereby certifies that the undersigned acquired ownership of the foregoing shares before March 8, 2013, the date of the first announcement of the terms of the proposed action to the public through the filing of the initial Schedule 13e-3 with the SEC (Any failure to so initial will be interpreted as a failure to provide this certification).    LOGO   

Dissenters’ rights payments with respect to the shares identified above should be sent to the following address:

 

  

 

  
  

 

  
  

 

  
  

 

  

Signature:            

Name of Record Holder:            

Name of Beneficial Holder:        

Date:        

NOTE: THIS DEMAND MUST BE RECEIVED BY                    AT             , ON OR BEFORE                    . FAILURE TO DELIVER THE DEMAND BY THE DATE INDICATED WILL WAIVE ALL RIGHTS THAT THE STOCKHOLDER HAS TO DISSENT. THIS DEMAND MUST BE ACCOMPANIED BY THE CERTIFICATES WITH RESPECT TO WHICH DISSENT AND PAYMENT DEMAND IS BEING MADE.

 

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APPENDIX A

DISSENTERS’ RIGHTS PROVISIONS

Please see Exhibit (f) to the Schedule 13e-3.

 

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EX-99.D 4 d498495dex99d.htm EX-99.D EX-99.D

Exhibit (d)

EXECUTION COPY

CONTRIBUTION AGREEMENT

THIS CONTRIBUTION AGREEMENT (this “Agreement”) is made as of March 8, 2013, by and among Mr. Li Zhang, an individual whose Chinese identification card number is 230206196306301914 (“Mr. Zhang”), Fuer Merger Newco Ltd., a newly formed Nevada company (“Newco”) and certain stockholders (the “Contributing Stockholders”) of Fuer International, Inc., a Nevada company (“Fuer”) set forth on Exhibit A attached hereto.

RECITALS

WHEREAS, each Contributing Stockholder owns beneficially and of record certain shares of common stock of Fuer, par value $0.001 per share (the “Fuer Common Stock”) as set forth under the heading “Fuer Shares Held of Record” under such Contributing Stockholder’s name on Exhibit A (the “Contributed Shares”).

WHEREAS, Mr. Zhang is the Chairman and CEO of Fuer, and he controls Oriental Agriculture Co., Ltd., which owns beneficially and of record approximately 56.6% of the total issued and outstanding shares of Fuer Common Stock.

WHEREAS, Allied Merit International Investment Inc., a company incorporated in the British Virgin Islands (“Allied”) is also a Contributing Stockholder, and it owns beneficially and of record certain warrants to acquire 873,315 shares of Fuer Common Stock (the “Warrants”) in addition to the Contributed Shares listed under its name on Exhibit A. In addition Allied is a party to a series of agreements with Fuer and/or its affiliates, which are listed on Exhibit B attached hereto (the “Allied Agreements”).

WHEREAS, the Contributing Stockholders propose to undertake a going private transaction (the “Transaction”) with respect to Fuer, and in connection therewith cause a statement on Schedule 13e-3 (the “Schedule 13e-3”) to be filed with the United States Securities and Exchange Commission (the “SEC”).

WHEREAS, Newco was formed for the sole purpose of effecting the Transaction through the Contribution and Merger (each as defined below).

WHEREAS, to effect the Transaction, the Contributing Stockholders desire to contribute at the Closing all of their respective Contributed Shares to Newco (the “Contribution”), and immediately after the completion of the Contribution, Newco will own beneficially and of record more than 90% of the total issued and outstanding shares of Fuer Common Stock.

WHEREAS, after the completion of the Contribution, the Contributing Stockholders desire to cause Newco to effect a “short-form” merger (the “Merger”) with and into Fuer under Section 92A.180 of the Nevada Revised Statutes, with Fuer being the surviving corporation, pursuant to which (i) the shares of Fuer Common Stock held by the stockholders of Fuer who are not Contributing Stockholders (the “Minority Stockholders”) will be converted into the right to

 

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receive cash (the “Merger Consideration”), and (ii) the Newco Shares owned by each Contributing Stockholder will be converted into the same number of shares of Fuer Common Stock, after which the Contributing Stockholders will own all of the outstanding shares of Fuer as the surviving corporation in the Merger.

WHEREAS, it is intended that for U.S. federal income tax purposes, the Contribution and Merger will be disregarded and treated as a redemption by Fuer of all of the shares of Fuer Common Stock of the Minority Stockholders in exchange for the Merger Consideration (as defined below).

AGREEMENT

NOW THEREFORE, in consideration of the respective representations, warranties and covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

1. Defined Terms. As used in this Agreement, the following terms shall have the meanings set forth below:

Agreement” means this Contribution Agreement and all exhibits and schedules hereto, as amended, modified or supplemented from time to time.

Allied” shall have the meaning given to it in the recitals of this Agreement.

Allied Agreements” shall have the meaning given to it in the recitals of this Agreement.

Contributing Stockholders” shall have the meaning given to it in the preamble of this Agreement.

Contributed Shares” shall have the meaning given to it in the recitals of this Agreement.

Contribution” shall have the meaning given to it in the recitals of this Agreement.

Closing” shall have the meaning given to it in Section 3(a) of this Agreement.

Exclusivity Period” shall have the meaning given to it in Section 5(a) of this Agreement.

Fuer” shall have the meaning given to it in the recitals of this Agreement.

Fuer Common Stock” shall have the meaning given to it in the recitals of this Agreement.

 

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Merger” shall have the meaning given to it in the recitals of this Agreement.

Merger Consideration” shall have the meaning given to it in the recitals of this Agreement.

Minority Stockholders” shall have the meaning given to it in the recitals of this Agreement.

Mr. Zhang” shall have the meaning given to it in the preamble of this Agreement.

Newco” shall have the meaning given to it in the preamble of this Agreement.

Newco Shares” shall have the meaning given to it in Section 3(b) of this Agreement.

Schedule 13e-3” shall have the meaning given to it in the recitals of this Agreement.

Schedule 13D” shall have the meaning given to it in Section 6(a) of this Agreement.

SEC” shall have the meaning given to it in the recitals of this Agreement.

Securities Act” means the Securities Act of 1933, as amended.

Third Party Claim” means any claim by a third party against any one or more parties hereto arising from or relating to any transactions contemplated hereby.

Transaction” shall have the meaning given to it in the recitals of this Agreement.

Warrants” shall have the meaning given to it in the recitals of this Agreement.

2. Federal Income Tax Treatment.

(a) The parties hereto agree to treat Newco as a transitory and disregarded entity for U.S. federal income tax purposes.

(b) The parties hereto agree to treat the Contribution and Merger as disregarded transactions for U.S. federal income tax purposes and to treat the Transaction as a redemption by Fuer of all of the shares of Fuer Common Stock of the Minority Stockholders in exchange for the Merger Consideration.

 

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3. Contribution.

(a) Contribution of Fuer Common Stock. Subject to the satisfaction or waiver of the closing conditions set forth in Section 9, at the Closing each Contributing Stockholder shall contribute, assign and transfer to Newco, and Newco shall accept, all Contributed Shares held by such Contributing Stockholders, free and clear of all liens, claims, encumbrances and restrictions of any kind whatsoever.

(b) Issuance of Newco Shares. In consideration for each Contributing Stockholder’ contribution of the Contributed Shares to Newco pursuant to Section 3(a), at the Closing, Newco shall issue such number of shares of common stock of Newco (the “Newco Shares”) to such Contributing Stockholder as set forth under the heading “Newco Shares to be Issued” under its name on Exhibit A, free and clear of all liens, claims, encumbrances and restrictions of any kind whatsoever (following the completion of the Merger, the Newco Shares shall mean the shares of Fuer Common Stock issued to the Contributing Stockholders in the Merger). The Contributing Stockholders hereby acknowledge and agree that the Newco Shares are allocated to the Contributing Stockholders in consideration of the Contribution and Mr. Zhang providing the Merger Consideration necessary to be paid to the Minority Stockholders in the Merger.

4. Closing of Contribution. Unless otherwise mutually agreed by Mr. Zhang and Allied, the closing of the Contribution (the “Closing”) shall take place at the Beijing Office of Troutman Sanders LLP located at China World Office 2, 1 JianguomenwaiDajie, Beijing, China 100004, within three (3) business days after all the closing conditions in Section 9 have been satisfied or waived. At the Closing, each Contributing Stockholder shall deliver or cause to be delivered to Newco, (i) original share certificates of such Contributing Stockholder’s Contributed Shares duly endorsed in favor of Newco or accompanied by stock powers duly endorsed in blank, and (ii) such other documents reasonably requested by Newco. In addition, at the Closing Allied shall deliver or cause to be delivered to Newco a duly executed copy of the Termination and Release Letter substantially in the form attached hereto as Exhibit B, pursuant to which the Warrants and the Allied Agreements shall be cancelled and terminated as of the effectiveness of the Merger.

5. Exclusivity.

(a) From the date hereof and until the Closing or the termination of this Agreement in accordance with Section 10 hereof (the “Exclusivity Period”), the parties hereto agree to deal exclusively with each other with respect to the Contribution and Transaction, and each of the parties hereto will not, and will cause their respective representatives not to, without the written consent of the other parties hereto, directly or indirectly, do or omits to do anything which is inconsistent with the Contribution and Transaction.

(b) Each Contributing Stockholder agrees that, within the Exclusivity Period, it will not, and will not permit any of its representatives to, directly or indirectly: (i) sell, offer to sell, give, pledge, encumber, assign, grant any option for the sale of or otherwise transfer or dispose

 

4


of, or enter into any agreement, arrangement or understanding to sell, any Contributed Shares, (ii) deposit any Contributed Shares into a voting trust or grant any proxies or enter into a voting agreement, power of attorney or voting trust with respect to any Contributed Shares, (iii) take any action that would have the effect of preventing, disabling or delaying such Contributing Stockholder from performing its obligations under this Agreement or (iv) agree (whether or not in writing) to take any of the actions referred to in the foregoing clauses (i), (ii) or (iii) of this Section 5(b).

6. Certain Process Matters.

(a) Schedule 13D. The parties hereto agree that in connection with the execution and delivery of this Agreement, the parties hereto will be required to file a statement of beneficial ownership on Schedule 13D (the “Schedule 13D”) with the SEC. The parties hereto further agree that in the Schedule 13D the parties hereto will acknowledge that by virtue of entering into this Agreement, the parties hereto may be deemed to have formed a “group” under Section 13(d) of the Securities Exchange Act of 1934, as amended.

(b) Legal Advisors. The parties hereto agree that upon the execution and delivery of this Agreement, Locke Lord LLP shall be engaged by Newco as its U.S. legal counsel in relation to the transactions contemplated hereby. The appointment of Locke Lord LLP to represent Newco does not limit the right of each Contributing Stockholder to appoint its own legal advisors in connection with the transactions contemplated hereby. If a Contributing Stockholder desires separate legal representation in connection with the transactions contemplated hereby, it may retain a separate legal advisor, provided that such Contributing Stockholder shall be solely responsible for the fees and expenses of such advisor.

(c) Cooperation. Each party hereto expressly represents and warrants to the other parties hereto that it will cooperate and act in good faith to carry out the transactions contemplated by this Agreement, including, without limitation, promptly providing information necessary for the preparation and filing of the Schedule 13D, the Schedule 13e-3 and any other documents required to be filed with the SEC and the preparation and distribution of necessary documents to the stockholders of Fuer.

(d) Newco Shares. Each Contributing Stockholder agrees and acknowledges that the Newco Shares (i) have not been registered under the Securities Act, (ii) may not be offered or sold in the U.S. or to U.S. persons for a period of one year following the Closing, and thereafter resales may only be made in the U.S. or to U.S. persons pursuant to registration under the Securities Act or an exemption therefrom, and hedging transactions involving the Newco Shares may not be conducted unless in compliance with the Securities Act, (iii) shall bear a legend stating that the securities have not been registered under the Securities Act and may not be offered or sold in the U.S. or to U.S. persons without registration or pursuant to an exemption and (d) if sold prior to the expiration of one year following the Closing other than to a U.S. person or for the account or benefit of a U.S. person (other than a distributor), shall be made in compliance with Regulation S under the Securities Act.

7. Representations and Warranties of Contributing Stockholders. Each Contributing Stockholder hereby represents, warrants, agrees and acknowledges, in respect of itself only, to the other parties hereto, as an inducement to such other parties to enter into this Agreement, that:

(a) it has necessary power and authority or, in the case of an individual, the capacity, to execute and deliver this Agreement and to perform and carry out the transactions contemplated hereby;

 

5


(b) the execution, delivery and performance of this Agreement has been duly and validly authorized by all required actions of such party;

(c) no authorization or approval from any governmental authority of any jurisdiction is necessary for the due execution and delivery of this Agreement and the performance of the transactions contemplated hereby;

(d) the execution, delivery and performance of this Agreement will not (x) violate the provisions of the charter, bylaws, memorandum or articles of association or other constitutional document of such party, (y) violate any order, writ, injunction, decree, rule or regulation, applicable to such party or (z) conflict with or constitute a breach of or default under any agreement to which it is a party or by which any of its assets or property is bound;

(e) this Agreement constitutes a legal, valid and binding obligation of such party, enforceable against such party in accordance with its terms;

(f) there is no action, suit, proceeding, claim or investigation pending or threatened against or affecting the transactions contemplated by this Agreement;

(g) it owns beneficially and of record (free and clear of any liens, claims, encumbrances or restrictions) the number of Contributed Shares set forth under the heading “Fuer Shares Held of Record” under such party’s name on Exhibit A; and

(h) it (i) is not and has not been in the U.S. at any time during the negotiation of this Agreement or at any time at which an offer of the Newco Shares was made, (ii) will not be in the U.S. at the time of the Closing under this Agreement, and (iii) is not (and is not buying for the account of) a U.S. person.

8. Representations and Warranties of Newco. Newco hereby represents, warrants, agrees and acknowledges, in respect of itself only, to the other parties hereto, as an inducement to such other parties to enter into this Agreement, that:

(a) it has necessary power and authority to execute and deliver this Agreement and to perform and carry out the transactions contemplated hereby;

(b) the execution, delivery and performance of this Agreement has been duly and validly authorized by all required actions of such party;

(c) no authorization or approval from any governmental authority of any jurisdiction is necessary for the due execution and delivery of this Agreement and the performance of the transactions contemplated hereby;

 

6


(d) the execution, delivery and performance of this Agreement will not (x) violate the provisions of the charter, bylaws, memorandum or articles of association or other constitutional document of such party, (y) violate any order, writ, injunction, decree, rule or regulation, applicable to such party or (z) conflict with or constitute a breach of or default under any agreement to which it is a party or by which any of its assets or property is bound;

(e) this Agreement constitutes a legal, valid and binding obligation of such party, enforceable against such party in accordance with its terms;

(f) there is no action, suit, proceeding, claim or investigation pending or threatened against or affecting the transactions contemplated by this Agreement; and

(g) it has not undertaken any activity for the purpose of, or that could be reasonably expected to result in, conditioning the U.S. market for the issuance of the Newco Shares.

9. Conditions. The obligation of each party hereto to consummate the Contribution is subject to the satisfaction or waiver of the following conditions as of immediately prior to the Closing:

(a) The Schedule 13e-3 shall have been cleared by the SEC;

(b) No law, injunction or other order (temporary, preliminary or permanent) shall have been enacted, entered, promulgated or enforced by any governmental authority with jurisdiction over the transactions contemplated by this Agreement which prohibits or seeks to prohibit the consummation of any of the transactions contemplated by this Agreement.

(c) Newco shall have received sufficient funds from Mr. Zhang to pay the Merger Consideration at the closing of the Merger; and

(d) No event or breach of this Agreement by the other parties hereto shall have occurred that would reasonably be expected to prevent or materially delay the performance by such party of any of its obligations under this Agreement or the consummation of the transactions contemplated hereby.

10. Termination.

(a) This Agreement shall terminate upon: the earliest of (i) the mutual written consent of Mr. Zhang and Allied, (ii) the completion of the transactions contemplated by this Agreement, including, without limitation, the Merger, or (iii) the one-year anniversary of the date hereof.

(b) In the event that this Agreement is validly terminated as provided in Section 10(a), each party hereto shall be relieved of its duties and obligations arising under this Agreement after the date of such termination (other than this Section 10(b) and Sections 11 through 20, which shall remain in full force and effect).

 

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11. Fees and Expenses. Each party hereto shall be responsible for its own expenses relating to the preparation and negotiation of this Agreement and the transactions contemplated by this Agreement, provided that Mr. Zhang shall be solely responsible for the legal fees of Locke Lord LLP and the Merger Consideration. Following the closing of the Merger, Fuer shall reimburse each party hereto (excluding New Co) for all reasonable and documented fees and out-of-pocket expenses incurred by such party in connection with this Agreement and the closing of the transactions contemplated hereby.

12. Limitation of Liability. The obligations of the Contributing Stockholders under this Agreement are several (and not joint or joint and several). The Contributing Stockholders shall share any liabilities in respect of any Third Party Claim in proportion to their ownership percentages in Newco set forth in Exhibit A, provided that if the Third Party Claim has arisen as a result of any fraud, willful misconduct or breach of this Agreement by a Contributing Stockholder, the liabilities in respect of such Third Party Claim shall rest solely with such Contributing Stockholder who has committed the act of fraud, willful misconduct or the breach.

13. Remedies. It is understood and agreed that money damages may not be a sufficient remedy for a breach of this Agreement by any party hereto and that each party hereto shall be entitled to seek equitable relief, including injunction and specific performance, as a remedy for any such breach by any other party. Such remedies shall not be deemed to be the exclusive remedies for a breach by a party of this Agreement but shall be in addition to all other remedies available at law or equity to the other party hereto.

14. Severability. If any one or more covenants or agreements provided in this Agreement should be contrary to law, then such covenant or covenants, agreement or agreements shall be null and void and shall in no way affect the validity of the other provisions of this Agreement.

15. Entire Agreement. This Agreement and the Exhibits attached hereto represent the entire agreement between the parties and supersede all prior written or oral agreements relating to the transactions contemplated hereby.

16. Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and each of which shall be deemed an original.

17. Successors and Assigns. This Agreement may not be assigned (by operation of law or otherwise) without the written consent of both Mr. Zhang and Allied. This Agreement shall insure to the benefit of, and be binding upon, the successors of each party hereto. This Agreement shall be for the sole benefit of the parties hereto and their respective heirs, successors, assigns and legal representatives and is not intended, nor shall be construed, to give any person, other than the parties hereto and their respective heirs, successors, assigns and legal representatives, any legal or equitable right, remedy or claim hereunder.

18. Choice of Law; Jurisdiction. This Agreement shall be construed and enforced in accordance with the laws and decisions of the State of New York without giving effect to the principles of conflicts of laws thereof. The State Courts of New York and the United States District Court for the Southern District of New York shall have the exclusive jurisdiction over

 

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any and all claims, lawsuits and litigation relating to or arising out of this Agreement, the subject matter hereof or thereof or the transactions contemplated hereby. Each party hereto hereby irrevocably (a) submits to the personal jurisdiction of such courts over such party in connection with any litigation, proceeding or other legal action arising out of or in connection with this Agreement, and (b) waives to the fullest extent permitted by law any objection to the venue of any such litigation, proceeding or action which is brought in any such court. If there is any inconsistency between the English version and the Chinese version of this Agreement, the English version shall prevail.

19. Amendments and Waivers. This Agreement may not be amended except by an instrument in writing signed on behalf of each of Mr. Zhang and Allied. Any agreement on the part of a party hereto to any extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party.

20. Acknowledgement Regarding Locke Lord Representation. All of the parties to this Agreement acknowledge that they have had the opportunity to seek counsel to review this Agreement and all other documents relating to the transactions contemplated by this Agreement, including, without limitation, the Schedule 13E-3 and the Schedule 13D (collectively, the “Related Documents”) and to obtain the advice of counsel relating thereto. Each party hereto acknowledges and agrees that prior to the execution of this Agreement Locke Lord LLP represented only Mr. Zhang, and does not advise, has not advised and will not advise, any other party hereto regarding the substance or merit or any other aspect of this Agreement or any Related Document.

[Signature page follows]

 

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IN WITNESS WHEREOF, intending to be legally bound hereby, each of the undersigned has duly executed and delivered this Agreement as of the day and year first above written.

 

FUER MERGER NEWCO LTD.
By:  

/s/ Li Zhang

Name:   Li Zhang
Title:   Sole Director
LI ZHANG

/s/ Li Zhang

Li Zhang
YUHUA LIU

/s/ Yuhua Liu

Yuhua Liu
ORIENTAL AGRICULTURE CO., LTD.
By:  

/s/ Li Zhang

Name:   Li Zhang
Title:   Sole Director
TRADE EVER HOLDINGS LIMITED
By:  

/s/ Xi Liu

Name:   Xi Liu
Title:   Sole Director
FAITH ORIGINS LIMITED
By:  

/s/ Li Guo Li

Name:   Li Guo Li
Title:   Sole Director

 

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QIULI ZHAO

/s/ Qiuli Zhao

Qiuli Zhao
SHUXIAN LIU

/s/ Shuxian Liu

Shuxian Liu
HEPING GAO

/s/ Heping Gao

Heping Gao
PINGFANG HAN

/s/ Pingfang Han

Pingfang Han
GUOBIN TAN

/s/ Guobin Tan

Guobin Tan
HAILONG CAO

/s/ Hailong Cao

Hailong Cao
JINQUAN SHI

/s/ Jinquan Shi

Jinquan Shi

 

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ALLIED MERIT INTERNATIONAL INVESTMENT INC.
By:  

/s/ Gang Liu

Name:   Gang Liu
Title:   Sole Director
VIRTUE WORLD LIMITED
By:  

/s/ Liping Zhang

Name:   Liping Zhang
Title:   Sole Director
XIXIAN DONG

/s/ Xixian Dong

Xixian Dong
HOUYUN YANG

/s/ Houyun Yang

Houyun Yang
SHUNXIANG XUN

/s/ Shunxiang Xun

Shunxiang Xun
XIULI HE

/s/ Xiuli He

Xiuli He
XIAOLING YU

/s/ Xiaoling Yu

Xiaoling Yu

 

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EXHIBIT A

CONTRIBUTING STOCKHOLDERS AND CONTRIBUTED SHARES

 

CONTRIBUTING STOCKHOLDERS

   FUER SHARES
HELD OF
RECORD
     OWNERSHIP
PERCENTAGE
OF FUER
    NEWCO
SHARES TO
BE ISSUED
     OWNERSHIP
PERCENTAGE
OF NEWCO
 

Oriental Agriculture Co., Ltd.

     7,327,749         56.55     7,327,749         58.30

Trade Ever Holdings Limited

     1,269,884         9.80     1,269,884         10.10

Faith Origins Limited

     1,243,968         9.60     1,243,968         9.90

Allied Merit International

     1,018,868         7.86     1,018,868         8.11

Virtue World Limited

     763,922         5.90     763,922         6.08

Liu Yuhua

     555,582         4.29     555,582         4.42

Dong Xixian

     60,074         0.46     60,074         0.48

Yang Houyun

     54,063         0.42     54,063         0.43

Tan Guobin

     50,000         0.39     50,000         0.40

Zhao QiuLi

     50,000         0.39     50,000         0.40

Liu Shuxian

     50,000         0.39     50,000         0.40

GaoHeping

     40,000         0.31     40,000         0.32

Shi Jinquan

     30,000         0.23     30,000         0.24

XunShunxiang

     20,000         0.15     20,000         0.16

Cao Hailong

     16,149         0.12     16,149         0.13

Han Pingfang

     10,000         0.08     10,000         0.08

He Xiuli

     6,000         0.05     6,000         0.05

Yu Xiaoling

     3,000         0.02     3,000         0.02
  

 

 

    

 

 

   

 

 

    

 

 

 

Total

     12,569,259         97.01     12,569,259         100
  

 

 

    

 

 

   

 

 

    

 

 

 

 

13


EXHIBIT B

ALLIED TERMINATION AND RELEASE LETTER

            , 2013

[ADDRESS OF FUER]

Ladies and Gentlemen:

Reference is made to the Contribution Agreement (the “Agreement”), dated as of March 8, 2013, by and among the undersigned and other parties thereto. Capitalized terms used herein but are not defined shall have the meanings ascribed to them in the Agreement.

For purposes of the Agreement and this letter, “Warrants” shall mean that certain warrants held by the undersigned to purchase 873,315 shares of the common stock of Fuer at the exercise price of $2.58 per share; “Allied Agreements” shall mean (i) the Qiqihar Fuer Agronomy Inc. United States Listing and Fund Raising Services Agreement, dated as of October 19, 2009, by and between the undersigned and Qiqihar Fuer Agronomy Inc., (ii) the Confidentiality Agreement, dated October 19, 2009, by and between the undersigned and Qiqihar Fuer Agronomy Inc., (iii) the Warrant Agreement, dated as of June 17, 2010, by and between the undersigned and Fuer, (iv) the Registration Rights Agreement, dated as of June 17, 2010, by and between the undersigned and Fuer, and (v) any other agreements, written or oral, between the undersigned and Fuer or any of its affiliates that is still effective as of the date hereof, other than the Agreement.

The undersigned hereby agrees and acknowledges that as of the effectiveness of the Merger, the Warrants and the Allied Agreements shall automatically be cancelled and terminated in full and shall have not further force or effect. In addition, upon such termination and cancellation, the undersigned agrees to irrevocably release, discharge, waive and dismiss, and shall cause its affiliates to release, discharge, waive and dismiss, any and all claims, rights, remedies, causes of action, suits, obligations, debts, demands, agreements, promises, liabilities, losses, costs, expenses, fees or damages of any kind, whether known or unknown, accrued or not accrued, foreseen or unforeseen or matured or not matured, in each case arising out of or related to the Warrants and/or any Allied Agreement, that they may have as of such termination or cancellation or thereafter, against Fuer, any of its affiliates or any of their respective directors, officers, employees, agents, representatives and stockholders.

[Signature page follows]

 

14


Sincerely,
ALLIED MERIT INTERNATIONAL INVESTMENT INC.
By:  

 

Name:   Gang Liu
Title:   Sole Director

 

15


EXHIBIT C

PLAN OF MERGER

This Plan of Merger is made on             , 2013 by Fuer Merger Newco Ltd. (“Newco”), a corporation organized and existing under the laws of the State of Nevada, in connection with the short-form merger (the “Merger”) of Newco with and into Fuer International, Inc., a corporation organized and existing under the laws of the State of Nevada (“Fuer”), with Fuer being the surviving corporation of the merger, pursuant to the provisions of Section 92A.180 of the Nevada Revised Statutes (the “NRS”).

The terms of this Plan of Merger are as follows:

Section 1. The constituent companies to the Merger are Newco (as the parent entity) and Fuer (as the subsidiary entity). The parent entity owns approximately 97% of the outstanding shares of the subsidiary entity.

Section 2. Fuer is the surviving company of the Merger (the “Surviving Company”).

Section 3. The Merger shall be effective at the time when a Certificate of Merger setting forth the information required by Section 92A.200 of the NRS has been duly filed by the Surviving Company with the Secretary of State of the State of Nevada.

Section 4. The Merger shall have the effects provided in Section 92A.250 of the NRS.

Section 5. Upon the effectiveness of the Merger, the manner and basis of converting the shares of the constituent companies shall be as follows:

5.1 Each share of common stock of Fuer, par value $0.001 per share (the “Fuer Shares”), other than Fuer Shares held by Newco and Fuer Shares with respect to which dissenter’s rights have been properly exercised and not withdrawn or lost, issued and outstanding immediately prior to the Merger shall be converted into a right to receive $1.29 per share in cash, without interest.

5.2 Each Fuer Share held by Newco immediately prior to the Merger shall be cancelled.

 

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5.3 Each share of common stock of Newco, par value $0.0001 per share, issued and outstanding immediately prior to the Merger shall be converted into one (1) validly issued, fully paid and nonassessable share of common stock of the Surviving Company.

5.4 The Articles of Association and the Bylaws of Fuer as in effect immediately prior to the Merger shall be the Articles of Association and the Bylaws of the Surviving Company after the Merger until the same shall be duly altered or amended as provided therein or by applicable law.

 

FUER MERGER NEWCO LTD.
By:  

/s/ Li Zhang

Name:   Li Zhang
Title:   Sole Director

 

17

EX-99.F 5 d498495dex99f.htm EX-99.F EX-99.F

Exhibit (f)

Nevada Revised Statutes § 92A.300 to § 92A.500

(“Dissenters’ Rights Provisions”)

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.

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.

92A.310. “Corporate action” defined.

“Corporate action” means the action of a domestic corporation. 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.400 to 92A.480, inclusive.

92A.320. “Fair value” defined.

“Fair value,” with respect to a dissenter’s shares, means the value of the shares determined:

 

  1. Immediately before the effectuation of the corporate action to which the dissenter objects, excluding any appreciation or depreciation in anticipation of the corporate action unless exclusion would be inequitable;

 

  2. Using customary and current valuation concepts and techniques generally employed for similar businesses in the context of the transaction requiring appraisal; and

 

  3. Without discounting for lack of marketability or minority status.

92A.325. “Stockholder” defined.

“Stockholder” means a stockholder of record or a beneficial stockholder of a domestic corporation. 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.

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.

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 rate of interest most recently established pursuant to NRS 99.040.

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.

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.

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 the member’s 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.

 

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  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.

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

Except as otherwise provided in NRS 92A.370 and 92A.390, any stockholder is entitled to dissent from, and obtain payment of the fair value of the stockholder’s 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 constituent entity:

 

  (1) If approval by the stockholders is required for the merger by NRS 92A.120 to 92A.160, inclusive, or the articles of incorporation, regardless of whether the stockholder is entitled to vote on the plan of merger; or

 

  (2) If the domestic corporation is a subsidiary and is merged with its parent pursuant to NRS 92A.180.

 

  (b) Consummation of a plan of conversion to which the domestic corporation is a constituent entity as the corporation whose subject owner’s interests will be converted.

 

  (c) Consummation of a plan of exchange to which the domestic corporation is a constituent entity as the corporation whose subject owner’s interests will be acquired, if the stockholder’s shares are to be acquired in the plan of exchange.

 

  (d) Any corporate action taken pursuant to a vote of the stockholders to the extent 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.

 

  (e) Accordance of full voting rights to control shares, as defined in NRS 78.3784, only to the extent provided for pursuant to NRS 78.3793.

 

  (f) Any corporate action not described in this subsection that will result in the stockholder receiving money or scrip instead of fractional shares except where the stockholder would not be entitled to receive such payment pursuant to NRS 78.205, 78.2055 or 78.207.

 

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  2. A stockholder who is entitled to dissent and obtain payment pursuant to NRS 92A.300 to 92A.500, inclusive, may not challenge the corporate action creating the entitlement unless the action is unlawful or fraudulent with respect to the stockholder or the domestic corporation.

 

  3. From and after the effective date of any corporate action described in subsection 1, no stockholder who has exercised the right to dissent pursuant to NRS 92A.300 to 92A.500, inclusive, is entitled to vote his or her shares for any purpose or to receive payment of dividends or any other distributions on shares. This subsection does not apply to dividends or other distributions payable to stockholders on a date before the effective date of any corporate action from which the stockholder has dissented.

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, conversion or exchange in favor of stockholders of any class or series which is:

 

  (a) A covered security under section 18(b)(1)(A) or (B) of the Securities Act of 1933, 15 U.S.C. 77r(b) (1)(A) or (B), as amended;

 

  (b) Traded in an organized market and has at least 2,000 stockholders and a market value of at least $20,000,000, exclusive of the value of such shares held by the corporation’s subsidiaries, senior executives, directors and beneficial stockholders owning more than 10 percent of such shares; or

 

  (c) Issued by an open end management investment company registered with the Securities and Exchange Commission under the Investment Company Act of 1940 and which may be redeemed at the option of the holder at net asset value, unless the articles of incorporation of the corporation issuing the class or series provide otherwise.

 

  2. The applicability of subsection 1 must be determined as of:

 

  (a) The record date fixed to determine the stockholders entitled to receive notice of and to vote at the meeting of stockholders to act upon the corporate action requiring dissenter’s rights; or

 

  (b) The day before the effective date of such corporate action if there is no meeting of stockholders.

 

  3. Subsection 1 is not applicable and dissenter’s rights are available pursuant to NRS 92A.380 for the holders of any class or series of shares who are required by the terms of the corporate action requiring dissenter’s rights to accept for such shares anything other than cash or shares of any class or any series of shares of any corporation, or any other proprietary interest of any other entity, that satisfies the standards set forth in subsection 1 at the time the corporate action becomes effective.

 

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  4. 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.

 

  5. There is no right of dissent for any holders of stock of the parent domestic corporation if the plan of merger does not require action of the stockholders of the parent domestic corporation under NRS 92A.180.

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 or her name only if the stockholder of record dissents with respect to all shares of the class or series beneficially owned by any one person and notifies the subject corporation in writing of the name and address of each person on whose behalf the stockholder of record asserts dissenter’s rights. The rights of a partial dissenter under this subsection are determined as if the shares as to which the partial dissenter dissents and his or her 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 the beneficial stockholder:

 

  (a) 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) Does so with respect to all shares of which he or she is the beneficial stockholder or over which he or she has power to direct the vote.

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, are not or may be entitled to assert dissenters’ rights under NRS 92A.300 to 92A.500, inclusive. If the domestic corporation concludes that dissenter’s rights are or may be available, a copy of NRS 92A.300 to 92A.500, inclusive, must accompany the meeting notice sent to those record stockholders entitled to exercise dissenter’s rights.

 

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  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.

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 with respect to any class or series of shares:

 

  (a) 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; and

 

  (b) Must not vote, or cause or permit to be voted, any of his or her shares of such class or series in favor of the proposed action.

 

  2. If a proposed corporate action creating dissenters’ rights is taken by written consent of the stockholders, a stockholder who wishes to assert dissenters’ rights with respect to any class or series of shares must not consent to or approve the proposed corporate action with respect to such class or series.

 

  3. A stockholder who does not satisfy the requirements of subsection 1 or 2 and NRS 92A.400 is not entitled to payment for his or her shares under this chapter.

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

 

  1. The subject corporation shall deliver a written dissenter’s notice to all stockholders entitled to assert dissenters’ rights.

 

  2. The dissenter’s notice must be sent no later than 10 days after the effective date of the corporate action specified in NRS 92A.380, 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 the person acquired beneficial ownership of the shares before that date;

 

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  (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 state that the stockholder shall be deemed to have waived the right to demand payment with respect to the shares unless the form is received by the subject corporation by such specified date; and

 

  (e) Be accompanied by a copy of NRS 92A.300 to 92A.500, inclusive.

92A.440. Demand for payment and deposit of certificates; loss of rights of stockholder; withdrawal from appraisal process.

 

  1. A stockholder who receives a dissenter’s notice pursuant to NRS 92A.430 and who wishes to exercise dissenter’s rights must:

 

  (a) Demand payment;

 

  (b) Certify whether the stockholder or the 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

 

  (c) Deposit the stockholder’s certificates, if any, in accordance with the terms of the notice.

 

  2. If a stockholder fails to make the certification required by paragraph (b) of subsection 1, the subject corporation may elect to treat the stockholder’s shares as after-acquired shares under NRS 92A.470.

 

  3. Once a stockholder deposits that stockholder’s certificates or, in the case of uncertified shares makes demand for payment, that stockholder loses all rights as a stockholder, unless the stockholder withdraws pursuant to subsection 4.

 

  4. A stockholder who has complied with subsection 1 may nevertheless decline to exercise dissenter’s rights and withdraw from the appraisal process by so notifying the subject corporation in writing by the date set forth in the dissenter’s notice pursuant to NRS 92A.430. A stockholder who fails to so withdraw from the appraisal process may not thereafter withdraw without the subject corporation’s written consent.

 

  5. The stockholder who does not demand payment or deposit his or her certificates where required, each by the date set forth in the dissenter’s notice, is not entitled to payment for his or her shares under this chapter.

 

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92A.450. Uncertificated shares: Authority to restrict transfer after demand for payment.

The subject corporation may restrict the transfer of shares not represented by a certificate from the date the demand for their payment is received.

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 in cash to each dissenter who complied with NRS 92A.440 the amount the subject corporation estimates to be the fair value of the dissenter’s 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 subject corporation’s principal office is located;

 

  (b) If the subject corporation’s principal office is not located in this State, in the county in which the corporation’s registered office is located; or

 

  (c) At the election of any dissenter residing or having its principal or registered office in this State, of the county where the dissenter resides or has its principal or 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 or, where such financial statements are not reasonably available, then such reasonably equivalent financial information and the latest available quarterly financial statements, if any;

 

  (b) A statement of the subject corporation’s estimate of the fair value of the shares; and

 

  (c) A statement of the dissenter’s rights to demand payment under NRS 92A.480 and that if any such stockholder does not do so within the period specified, such stockholder shall be deemed to have accepted such payment in full satisfaction of the corporation’s obligations under this chapter.

 

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92A.470. Withholding payment for shares acquired on or after date of dissenter’s notice: General requirements.

 

  1. A subject corporation may elect to withhold payment from a dissenter unless the dissenter was the beneficial owner of the shares before the date set forth in the dissenter’s notice as the first date of any 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, within 30 days after receipt of a demand for payment, the subject corporation shall notify the dissenters described in subsection 1:

 

  (a) Of the information required by paragraph (a) of subsection 2 of NRS 92A.460;

 

  (b) Of the subject corporation’s estimate of fair value pursuant to paragraph (b) of subsection 2 of NRS 92A.460;

 

  (c) That they may accept the subject corporation’s estimate of fair value, plus interest, in full satisfaction of their demands or demand appraisal under NRS 92A.480;

 

  (d) That those stockholders who wish to accept such an offer must so notify the subject corporation of their acceptance of the offer within 30 days after receipt of such offer; and

 

  (e) That those stockholders who do not satisfy the requirements for demanding appraisal under NRS 92A.480 shall be deemed to have accepted the subject corporation’s offer.

 

  3. Within 10 days after receiving the stockholder’s acceptance pursuant to subsection 2, the subject corporation shall pay in cash the amount offered under paragraph (b) of subsection 2 to each stockholder who agreed to accept the subject corporation’s offer in full satisfaction of the stockholder’s demand.

 

  4. Within 40 days after sending the notice described in subsection 2, the subject corporation shall pay in cash the amount offered under paragraph (b) of subsection 2 to each stockholder described in paragraph (e) of subsection 2.

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

 

  1. A dissenter paid pursuant to NRS 92A.460 who is dissatisfied with the amount of the payment may notify the subject corporation in writing of the dissenter’s own estimate of the fair value of his or her shares and the amount of interest due, and demand payment of such estimate, less any payment pursuant to NRS 92A.460. A dissenter offered payment pursuant to NRS 92A.470 who is dissatisfied with the offer may reject the offer pursuant to NRS 92A.470 and demand payment of the fair value of his or her shares and interest due.

 

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  2. A dissenter waives the right to demand payment pursuant to this section unless the dissenter notifies the subject corporation of his or her demand to be paid the dissenter’s stated estimate of fair value plus interest under subsection 1 in writing within 30 days after receiving the subject corporation’s payment or offer of payment under NRS 92A.460 or 92A.470 and is entitled only to the payment made or offered.

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 by each dissenter pursuant to NRS 92A.480 plus interest.

 

  2. A subject corporation shall commence the proceeding in the district court of the county where its principal office is located in this State. If the principal office of the subject corporation is not located in the State, it shall commence the proceeding in the county where the principal office of the domestic corporation merged with or whose shares were acquired by the foreign entity was located. If the principal office of the subject corporation and the domestic corporation merged with or whose shares were acquired is not located in this State, the subject corporation shall commence the proceeding in the district court in the county in which the corporation’s registered office is 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 the dissenter’s shares, plus interest, exceeds the amount paid by the subject corporation; or

 

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  (b) For the fair value, plus accrued interest, of the dissenter’s after-acquired shares for which the subject corporation elected to withhold payment pursuant to NRS 92A.470.

92A.500. Assessment of costs and fees in certain legal proceedings.

 

  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. To the extent the subject corporation fails to make a required payment pursuant to NRS 92A.460, 92A.470 or 92A.480, the dissenter may bring a cause of action directly for the amount owed and, to the extent the dissenter prevails, is entitled to recover all expenses of the suit.

 

  6. 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.

 

F-11

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