Yuhe International, Inc.

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Yuhe International, Inc. Securities Settlement

The lawsuit was settled for $2.7 million on January 6, 2014. The following is a summary of the proceedings in the lawsuit: ‘The Action is a class action alleging violations of federal securities laws by Defendants. On July 1, 2011 a shareholder class action was filed in the United States District Court for the Central District of California, entitled, Jeff Feyko v. Yuhe International, Inc., et al., Case No. 11-cv-05511- DDP (PJWx) (the Feyko Action). The shareholder class action alleged violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the Exchange Act), and Rule 10b-5 promulgated thereunder based on allegedly false and misleading statements issued by Yuhe and certain of its officers and directors in the period from December 31, 2009 through June 17, 2011. On August 23, 2011, aAd Partners LP moved to be appointed lead plaintiff pursuant to the Private Securities Litigation Reform Act of 1995, 15 U.S.C. §78u-4 et seq. On March 2, 2012, the Court appointed aAd Partners LP as Lead Plaintiff and approved the law firm of Gold Bennett Cera & Sidener LLP as Lead Plaintiff Counsel. Lead Plaintiff Counsel conducted an investigation that included, among other things, a review of Yuhe filings with the SEC, analyst research reports, news articles concerning Yuhe and other public data, and legal analysis of the claims against Defendants and their potential defenses. On May 10, 2012, Lead Plaintiff filed a Consolidated Amended Class Action Complaint For Violations of the Federal Securities Laws against Yuhe, Zhentao Gao, Hu Gang, Jiang Yingjun, Roth and CVB. In addition to the Sections 10(b) and 20(a) claims of the Exchange Act brought in the initial complaint, claims for alleged violations of Sections 11, 15 and 12(a)(2) of the Securities Act of 1933 (the Securities Act) were included based on allegedly false and misleading statements contained in a stock offering Yuhe made on or about October 20, 2010. On June 11, 2012, Lead Plaintiff filed a class action captioned aAd Partners LP v. Rodman & Renshaw, LLC et al., Case No. SACV 12-928 (the Partners Action) against Rodman & Renshaw, LLC (Rodman), Brean Murray and Global Hunter for alleged violations of Sections 11 and 12(a)(2) of the Securities Act. On July 27, 2012, the Court consolidated the Feyko Action and the aAd Partners Action for all purposes pursuant to Rule 42(a) of the Federal Rules of Civil Procedure under the Feyko Action caption, Case No. 11-cv-05511-DDP (PJWx). On August 3, 2012, Lead Plaintiff filed a Supplemental Consolidated Amended Class Action Complaint (the Complaint) that incorporated the defendants named in the aAd Partners Action. The Complaint asserted claims on behalf a class of investors who purchased or otherwise acquired thecommon stock of Yuhe between December 31, 2009 and June 17, 2011, and a subclass of investors who purchased or otherwise acquired common stock of Yuhe pursuant to or traceable to the October 20, 2010 Registration Statement and Prospectus for the public offering of 4,140,000 shares of the Company at the offering price of $7.00 per share (the Offering). The Complaint alleged that some or all of the Defendants issued materially false and misleading statements in violation of Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder, Section 20(a) of the Exchange Act, and violation of Sections 11, 15 and 12(a)(2) of the Securities Act. Among other things, the Complaint alleged that numerous documents filed by Yuhe with the Securities and Exchange Commission, including the Offering and financial reports on Forms 10-K and 10-Q, falsely reported a material acquisition of thirteen breeder farms in December 2009 and the subsequent implementation and operation of the breeder farms by Yuhe in mid-2010. On September 7, 2012, Defendants2 and Rodman moved to dismiss the claims asserted against them. On January 18, 2013, defendant Rodman filed notice in the Action that on January 11, 2013 it filed a voluntary petition for bankruptcy under chapter 7 of title 11 of the United States Code in the Southern District of New York, Case No. 13-bk-10087-reg, thereby staying the Action against it. On March 5, 2013, the Court denied the Defendants motions, with the exception of granting dismissal of the Section 11 claim against the Underwriter Defendants, granting dismissal of the Section 10(b) claim against Gang, and granting dismissal of the Section 12(a)(2) and Section 11 claims of all subclass members whose Yuhe shares were only traceable to the Offering. Dismissal was without prejudice, except as to the Section 12(a)(2) claims. On March 8, 2013, the Parties participated in a mediation conducted by the Honorable William J. Cahill (Ret.) of JAMS, but were not able to reach a resolution at that mediation. On April 4, 2013, Lead Plaintiff filed its Second Consolidated Amended Class Action Complaint (the Second Amended Complaint) which added additional factual allegations in support of the Sections 10(b) and 11 claims dismissed in part in the Court March 5, 2013 Order. On April 25, 2013, the Underwriter Defendants moved to dismiss the Section 11 claim in the Second Amended Complaint, including the claims of subclass members whose shares were not traceable to the Offering. On July 10, 2013, the Court denied the Underwriter Defendants motion to dismiss the Section 11 claim against them and upheld the Section 11 claim for all subclass members who purchased or otherwise acquired newly issued Yuhe shares pursuant to and traceable to the Offering at $7.00 per share prior to March 23, 2011. Only the Section 11 allegations related to the statement in the prospectus supplement that five breeder farms from the purported December 2009 acquisition were operational were upheld, with the remaining Section 11 allegations against the Underwriter Defendants dismissed with prejudice. On July 17, 2013, Lead Plaintiff moved for leave to authorize service on the Individual Defendants located abroad by serving Yuhe U.S. Counsel of Record Pursuant to Federal Rule of Civil Procedure 4(f)(3). On July 31, 2013, the Underwriter Defendants answered the Second Amended Complaint and filed a cross-claim against CVB, Yuhe, Zhentao Gao, Jiang Yingjun and Hu Gang (the Cross-Claim). On August 20, 2013, CVB answered the Second Amended Complaint and the Cross-Claim. On September 4, 2013, Yuhe answered the Second Amended Complaint. On September 12, 2013, the Court granted Lead Plaintiff motion to serve the summons and Second Amended Complaint on Zhentao Gao and Jiang Yingjun by serving Yuhe U.S. counsel of record, and denied Lead Plaintiff motion as to Hu Gang, who had resigned from Yuhe in July 2012. Service on Gao and Yingjun through Yuhe U.S. counsel of record was completed on September 20, 2013. Hu Gang has not been served with the summons and complaint in this Action. xperienced mediator. The Parties submitted detailed mediation statements and participated in an all-day mediation. Lead Plaintiff engaged in these discussions with a view to exploring the possibility of resolution of the issues in dispute consistent with achieving the best relief possible in the interests of the Class. The Parties reached an agreement in principle to settle at the conclusion of the November 7, 2013 mediation. Lead Plaintiff Counsel has conducted an extensive investigation of the facts; successfully opposed Defendants multiple motions to dismiss; and retained and consulted with experts. It has also researched the applicable law with respect to the claims of Lead Plaintiff and other Class Members (as defined herein) against the Defendants and the potential defenses thereto. Additionally, the mediation statements prepared and exchanged as well as the Parties respective presentations concerning damages have provided Plaintiffs with a detailed basis upon with to assess the relative strengths and weaknesses of their position and Defendants position. 36. On March 10, 2014, the Court preliminarily approved the Settlement, certified the Class for purposes of the Settlement, authorized this Notice to be sent to potential Class Members, and scheduled the Settlement Hearing to consider whether to grant final approval to the Settlement.

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