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Form SC 13D Mecox Lane Ltd Filed by: ChinaEquity USD Fund I L.P.

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November 2, 2015 5:25 PM EST

  

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

SCHEDULE 13D

 

Under the Securities Exchange Act of 1934

 

(Amendment No.   )*

 

MECOX LANE LIMITED

 

(Name of Issuer)

 

Ordinary shares, par value US$0.0001 per share

 

(Title of Class of Securities)

 

58403M201**

 

(CUSIP Number)

 

Fang Xue
Gibson, Dunn & Crutcher LLP
Unit 1301, Tower 1, China Central Place, No. 81 Jianguo Road

Beijing, 100025
Tel +86 10 6502 8500

 

(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)

 

October 26, 2015

 

(Date of Event Which Requires Filing of this Statement)

 

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. ¨

 

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See §240.13d-7 for other parties to whom copies are to be sent.

 

* The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

 

** The CUSIP number applies to American Depositary Shares, each representing thirty-five Ordinary Shares of the Issuer, par value US$0.0001 per share.

 

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

 

 

 

CUSIP No. 58403M201
  1.

Names of Reporting Persons.

ChinaEquity USD Fortune Co., Ltd.

  2. Check the Appropriate Box if a Member of a Group (See Instructions)
    (a) ¨
    (b) ¨
  3. SEC Use Only
  4.

Source of Funds (See Instructions)

OO

  5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)     ¨
Number of
Shares		 6.

Citizenship or Place of Organization

British Virgin Islands

Beneficially Owned by
Each		 7. Sole Voting Power
Reporting
Person With:		 8.

Shared Voting Power

36,464,575 Ordinary Shares1

  9. Sole Dispositive Power
  10.

Shared Dispositive Power

36,464,575 Ordinary Shares

  11.

Aggregate Amount Beneficially Owned by Each Reporting Person

36,464,575 Ordinary Shares2

  12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)  ¨
  13.

Percent of Class Represented by Amount in Row (11)

8.01%3

  14.

Type of Reporting Person (See Instructions)

CO

 

 

1Includes 1,041,845 ADSs (representing 36,464,575 Ordinary Shares), held directly by ChinaEquity USD Fortune Co., Ltd.

 

2The Reporting Person could be deemed to be part of a “group” (as discussed in Item 2) with certain other beneficial owners of the Issuer’s Ordinary Shares (not included in this Statement (as defined below)). Any beneficial ownership of such other owners’ Ordinary Shares is expressly disclaimed. See Items 2 and 5.

 

3Percentage calculated based on 455,227,428 ordinary shares outstanding as of March 31, 2015, as disclosed in the Issuer’s Form 20-F (as defined below).

 

2 

 

 

CUSIP No. 58403M201
  1.

Names of Reporting Persons.

ChinaEquity USD Fund I L.P.

  2. Check the Appropriate Box if a Member of a Group (See Instructions)
    (a) ¨
    (b) ¨
  3. SEC Use Only
  4.

Source of Funds (See Instructions)

OO

  5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)     ¨
Number of
Shares		 6.

Citizenship or Place of Organization

Cayman Islands

Beneficially Owned by
Each		 7. Sole Voting Power
Reporting
Person With:		 8.

Shared Voting Power

36,464,575 Ordinary Shares4

  9. Sole Dispositive Power
  10.

Shared Dispositive Power

36,464,575 Ordinary Shares

  11.

Aggregate Amount Beneficially Owned by Each Reporting Person

36,464,575 Ordinary Shares5

  12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)  ¨
  13.

Percent of Class Represented by Amount in Row (11)

8.01%6

  14.

Type of Reporting Person (See Instructions)

PN

  

 

4Includes 1,041,845 ADSs (representing 36,464,575 Ordinary Shares), held through ChinaEquity USD Fortune Co., Ltd.

 

5The Reporting Person could be deemed to be part of a “group” (as discussed in Item 2) with certain other beneficial owners of the Issuer’s ordinary shares (not included in this Statement (as defined below)). Any beneficial ownership of such other owners’ ordinary shares is expressly disclaimed. See Items 2 and 5.

 

6Percentage calculated based on 455,227,428 ordinary shares outstanding as of March 31, 2015, as disclosed in the Issuer’s Form 20-F (as defined below).

 

 

3 

 

  

CUSIP No. 58403M201
  1.

Names of Reporting Persons.

ChinaEquity USD Investment GP L.P.

  2. Check the Appropriate Box if a Member of a Group (See Instructions)
    (a) ¨
    (b) ¨
  3. SEC Use Only
  4.

Source of Funds (See Instructions)

OO

  5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)     ¨
Number of
Shares		 6.

Citizenship or Place of Organization

Cayman Islands

Beneficially Owned by
Each		 7. Sole Voting Power
Reporting
Person With:		 8.

Shared Voting Power

36,464,575 Ordinary Shares7

  9. Sole Dispositive Power
  10.

Shared Dispositive Power

36,464,575 Ordinary Shares

  11.

Aggregate Amount Beneficially Owned by Each Reporting Person

36,464,575 Ordinary Shares8

  12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)  ¨
  13.

Percent of Class Represented by Amount in Row (11)

8.01%9

  14.

Type of Reporting Person (See Instructions)

PN

 

 

7By virtue of being the general partner of ChinaEquity USD Fund I L.P. or the persons controlling such general partner, each of ChinaEquity USD Investment GP L.P., ChinaEquity USD Investment Management Co., ChinaEquity Global Holding Co., Ltd. and Mr. Chaoyong Wang may be deemed to have shared voting and dispositive power with respect to these securities.

 

8The Reporting Person could be deemed to be part of a “group” (as discussed in Item 2) with certain other beneficial owners of the Issuer’s ordinary shares (not included in this Statement (as defined below)). Any beneficial ownership of such other owners’ ordinary shares is expressly disclaimed. See Items 2 and 5.

 

9Percentage calculated based on 455,227,428 ordinary shares outstanding as of March 31, 2015, as disclosed in the Issuer’s Form 20-F (as defined below).

 

4 

 

  

CUSIP No. 58403M201
  1.

Names of Reporting Persons.

ChinaEquity USD Investment Management Co.

  2. Check the Appropriate Box if a Member of a Group (See Instructions)
    (a) ¨
    (b) ¨
  3. SEC Use Only
  4.

Source of Funds (See Instructions)

OO

  5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)     ¨
Number of
Shares		 6.

Citizenship or Place of Organization

Cayman Islands

Beneficially Owned by
Each		 7. Sole Voting Power
Reporting
Person With:		 8.

Shared Voting Power

36,464,575 Ordinary Shares10

  9. Sole Dispositive Power
  10.

Shared Dispositive Power

36,464,575 Ordinary Shares

  11.

Aggregate Amount Beneficially Owned by Each Reporting Person

36,464,575 Ordinary Shares11

  12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)  ¨
  13.

Percent of Class Represented by Amount in Row (11)

8.01%12

  14.

Type of Reporting Person (See Instructions)

CO

  

 

10By virtue of being the general partner of ChinaEquity USD Fund I L.P. or the persons controlling such general partner, each of ChinaEquity USD Investment GP L.P., ChinaEquity USD Investment Management Co., ChinaEquity Global Holding Co., Ltd. and Mr. Chaoyong Wang may be deemed to have shared voting and dispositive power with respect to these securities.

 

11The Reporting Person could be deemed to be part of a “group” (as discussed in Item 2) with certain other beneficial owners of the Issuer’s ordinary shares (not included in this Statement (as defined below)). Any beneficial ownership of such other owners’ ordinary shares is expressly disclaimed. See Items 2 and 5.

 

12Percentage calculated based on 455,227,428 ordinary shares outstanding as of March 31, 2015, as disclosed in the Issuer’s Form 20-F (as defined below).

 

5 

 

  

CUSIP No. 58403M201
  1.

Names of Reporting Persons.

ChinaEquity Global Holding Co., Ltd.

  2. Check the Appropriate Box if a Member of a Group (See Instructions)
    (a) ¨
    (b) ¨
  3. SEC Use Only
  4.

Source of Funds (See Instructions)

OO

  5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)     ¨
Number of
Shares		 6.

Citizenship or Place of Organization

British Virgin Islands

Beneficially Owned by
Each		 7. Sole Voting Power
Reporting
Person With:		 8.

Shared Voting Power

36,464,575 Ordinary Shares13

  9. Sole Dispositive Power
  10.

Shared Dispositive Power

36,464,575 Ordinary Shares

  11.

Aggregate Amount Beneficially Owned by Each Reporting Person

36,464,575 Ordinary Shares14

  12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)  ¨
  13.

Percent of Class Represented by Amount in Row (11)

8.01%15

  14.

Type of Reporting Person (See Instructions)

CO

  

 

13By virtue of being the general partner of ChinaEquity USD Fund I L.P. or the persons controlling such general partner, each of ChinaEquity USD Investment GP L.P., ChinaEquity USD Investment Management Co., ChinaEquity Global Holding Co., Ltd. and Mr. Chaoyong Wang may be deemed to have shared voting and dispositive power with respect to these securities.

 

14The Reporting Person could be deemed to be part of a “group” (as discussed in Item 2) with certain other beneficial owners of the Issuer’s ordinary shares (not included in this Statement (as defined below)). Any beneficial ownership of such other owners’ ordinary shares is expressly disclaimed. See Items 2 and 5.

 

15Percentage calculated based on 455,227,428 ordinary shares outstanding as of March 31, 2015, as disclosed in the Issuer’s Form 20-F (as defined below)

 

6 

 

  

CUSIP No. 58403M201
  1.

Names of Reporting Persons.

Chaoyong Wang

  2. Check the Appropriate Box if a Member of a Group (See Instructions)
    (a) ¨
    (b) ¨
  3. SEC Use Only
  4.

Source of Funds (See Instructions)

OO

  5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)     ¨
Number of
Shares		 6.

Citizenship or Place of Organization

People’s Republic of China

Beneficially Owned by
Each		 7. Sole Voting Power
Reporting
Person With:		 8.

Shared Voting Power

36,464,575 Ordinary Shares16

  9. Sole Dispositive Power
  10.

Shared Dispositive Power

36,464,575 Ordinary Shares

  11.

Aggregate Amount Beneficially Owned by Each Reporting Person

36,464,575 Ordinary Shares17

  12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)  ¨
  13.

Percent of Class Represented by Amount in Row (11)

8.01%18

  14.

Type of Reporting Person (See Instructions)

IN

  

 

16By virtue of being the general partner of ChinaEquity USD Fund I L.P. or the persons controlling such general partner, each of ChinaEquity USD Investment GP L.P., ChinaEquity USD Investment Management Co., ChinaEquity Global Holding Co., Ltd. and Mr. Chaoyong Wang may be deemed to have shared voting and dispositive power with respect to these securities.

 

17The Reporting Person could be deemed to be part of a “group” (as discussed in Item 2) with certain other beneficial owners of the Issuer’s ordinary shares (not included in this Statement (as defined below)). Any beneficial ownership of such other owners’ ordinary shares is expressly disclaimed. See Items 2 and 5.

 

18Percentage calculated based on 455,227,428 ordinary shares outstanding as of March 31, 2015, as disclosed in the Issuer’s Form 20-F (as defined below)

 

7 

 

  

CUSIP No. 58403M201
  1.

Names of Reporting Persons.

Xu Wang

  2. Check the Appropriate Box if a Member of a Group (See Instructions)
    (a) ¨
    (b) ¨
  3. SEC Use Only
  4.

Source of Funds (See Instructions)

OO

  5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)     ¨
Number of
Shares		 6.

Citizenship or Place of Organization

People’s Republic of China

Beneficially Owned by
Each		 7. Sole Voting Power
Reporting
Person With:		 8.

Shared Voting Power

36,464,575 Ordinary Shares19

  9. Sole Dispositive Power
  10.

Shared Dispositive Power

36,464,575 Ordinary Shares

  11.

Aggregate Amount Beneficially Owned by Each Reporting Person

36,464,575 Ordinary Shares20

  12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)  ¨
  13.

Percent of Class Represented by Amount in Row (11)

8.01%21

  14.

Type of Reporting Person (See Instructions)

IN

  

 

19By virtue of being the sole shareholder and sole director of ChinaEquity Global Holding Co., Ltd., Mr Xu Wang may be deemed to have shared voting and dispositive power with respect to these securities.

 

20The Reporting Person could be deemed to be part of a “group” (as discussed in Item 2) with certain other beneficial owners of the Issuer’s Ordinary Shares (not included in this Statement (as defined below)). Any beneficial ownership of such other owners’ Ordinary Shares is expressly disclaimed. See Items 2 and 5.

 

21Percentage calculated based on 455,227,428 ordinary shares outstanding as of March 31, 2015, as disclosed in the Issuer’s Form 20-F (as defined below).

 

8 

 

  

This Schedule 13D (the “Statement”) represents the initial statement on Schedule 13D jointly filed by (1) ChinaEquity USD Fortune Co., Ltd. (“ChinaEquity Holdco”), (2) ChinaEquity USD Fund I L.P., (3) ChinaEquity USD Investment GP L.P., (4) ChinaEquity USD Investment Management Co., (5) ChinaEquity Global Holding Co., Ltd. ((1) through (5), collectively, the “ChinaEquity Reporting Persons”), (6) Mr. Chaoyong Wang, and (7) Mr. Xu Wang (collectively with the ChinaEquity Reporting Persons and Mr. Chaoyong Wang, the “Reporting Persons”). The Reporting Persons previously reported their beneficial ownership of the Issuer’s securities on Schedule 13G.

 

Item 1. Security and Issuer

 

This Statement relates to the ordinary Shares, par value $0.0001 per share (the “Ordinary Shares”) of Mecox Lane Limited, a Cayman Islands corporation (the “Issuer”). The address of the Issuer is 22nd Floor, Gems Tower, Building 20, No. 487, Tianlin Road, Shanghai 200233, People’s Republic of China.

 

American depositary shares of the Issuer (the “ADSs”), each representing thirty-five Ordinary Shares, are listed on the NASDAQ Global Select Market.

 

Item 2.  Identity and Background.

 

(a)  – (c) and (f) This Statement is filed jointly by the Reporting Persons pursuant to Rule 13d-1(k) promulgated by the Securities and Exchange Commission (the “Commission”) under Section 13 of the Securities Exchange Act of 1934, as amended (the “Act”).

 

ChinaEquity Holdco, a company organized under the laws of British Virgin Islands, is the record shareholder of the securities subject to this filing.

 

ChinaEquity USD Fund I L.P., a limited partnership organized under the laws of Cayman Islands, is the sole shareholder of ChinaEquity Holdco.

 

ChinaEquity USD Investment GP L.P., a limited partnership organized under the laws of Cayman Islands, is the general partner of ChinaEquity USD Fund I L.P.

 

ChinaEquity USD Investment Management Co., a company organized under the laws of Cayman Islands, is the general partner of ChinaEquity USD Investment GP L.P.

 

ChinaEquity Global Holding Co., Ltd., a company organized under the laws of the British Virgin Islands, is the sole shareholder of ChinaEquity USD Investment Management Co.

 

The sole director and officer of each ChinaEquity Reporting Person (other than ChinaEquity Global Holding Co., Ltd.) is Mr. Chaoyong Wang. Mr. Chaoyong Wang is a citizen of the People’s Republic of China.

 

The sole shareholder, so director and officer of ChinaEquity Global Holding Co., Ltd. is Mr. Xu Wang. Mr. Xu Wang is a citizen of the People’s Republic of China.

 

The business address of each Reporting Person is Suite 05-07, 10th Floor, Block A, Office Park, No.10, Jintong West Road, Chaoyang District, Beijing 100020, China.

 

The ChinaEquity Reporting Persons are China-focused venture capital and private equity investors.  The ChinaEquity Reporting Persons mainly invest in China-related companies, focusing on companies in the information technology, media, telecommunication, retail and consumer goods, culture and education, financial services, new energy, new materials, green technology, high-end equipment manufacturing, healthcare and modern agriculture industries. The principal occupation of Mr. Chaoyong Wang is venture capital and private equity investment and portfolio management. The principal occupation of Mr. Xu Wang is venture capital and private equity investment and portfolio management.

 

9 

 

  

The Reporting Persons are making this joint filing because they may be deemed to constitute a “group” within the meaning of Rule 13d-5(b) under the Act. In addition, by reason of the Proposal (as defined below) and the Amended and Restated Consortium Agreement (as defined below), as described in Item 4 below, the Reporting Persons may be deemed to constitute a “group” within the meaning of Rule 13d-5(b) under the Act with CNshangquan Limited (“CNshangquan”).

 

Each Reporting Person hereby expressly disclaims beneficial ownership of any Ordinary Shares held by CNshangquan, and expressly disclaims membership in a “group” (within the meaning of Rule 13d-5(b) under the Act) with CNshangquan, and this Statement shall not be construed as acknowledging that any of the Reporting Persons beneficially owns any Ordinary Shares held by CNshangquan.

 

The agreement among the Reporting Persons relating to the joint filing of this Statement is attached hereto as Exhibit 1.

 

(d) – (e) During the five years preceding the date of this filing, none of the Reporting Persons has been (i) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

 

Item 3.Source and Amount of Funds or Other Considerations.

 

The information set forth in or incorporated by reference in Items 4 and 5 of this statement is incorporated by reference in its entirety into this Item 3.

 

The Reporting Persons, Leading Capital Co. Ltd. and its affiliates (“Leading Capital”), and CNshangquan anticipate that, at the price per Share set forth in the Proposal, approximately US$14,614,573 would be expended in acquiring 128,198,011 Ordinary Shares owned by shareholders of the Issuer other than the Reporting Persons and CNshangquan (the “Publicly Held Shares”).

 

It is anticipated that the funding for the acquisition of the Publicly Held Shares will be provided by equity financing only in the form of cash from the Consortium (as defined below).

 

Item 4.Purpose of Transaction

 

The ADSs currently beneficially owned by the Reporting Persons were originally acquired for investment purposes.

 

On July 21, 2015, CNshangquan and Leading Capital entered into a consortium agreement (the “Original Consortium Agreement”) and submitted a non-binding proposal (the “Proposal”) to the Issuer’s board of directors relating to acquisition of all outstanding unaffiliated shares of the Issuer (the “Transaction”). Under the Proposal, CNshangquan and Leading Capital propose to acquire, through an acquisition vehicle to be formed thereby, all of the Ordinary Shares owned by shareholders of the Issuer other than CNshangquan for US$4.00 per ADS, or approximately US$0.114 per Ordinary Share in cash, representing a premium of 17.6% to the closing price of the ADSs on July 20, 2015. The Reporting Persons expect the Transaction will be financed by members of the Consortium (as defined below) making equity investments in the acquisition vehicle to provide the cash needed for the Transaction.

 

10 

 

  

On October 26, 2015, CNshangquan, Leading Capital, and ChinaEquity Holdco (collectively, the “Consortium”) entered into an amended and restated consortium agreement (the “Amended and Restated Consortium Agreement”), pursuant to which ChinaEquity Holdco joins the consortium to participate in the Transaction with CNshangquan and Leading Capital. The Amended and Restated Consortium Agreement supersedes the Original Consortium Agreement in its entirety. Pursuant to the Amended and Restated Consortium Agreement, the Consortium will cooperate in good faith in connection with the Transaction. The Amended and Restated Consortium Agreement provides, among other things, for: cooperation in arranging financing; engaging advisors; cooperation in obtaining applicable governmental, statutory, regulatory or other approvals, licenses, waivers or exemptions for the consummation of the Transaction; and cooperation in preparing definitive documentation with respect to the Transaction. During the period beginning on the date of the Amended and Restated Consortium Agreement and ending on the earlier of (i) the 12-month anniversary of the date of the Amended and Restated Consortium Agreement, or (ii) the occurrence of termination events as specified therein, members of the Consortium have agreed to work exclusively with each other with respect to the Transaction.

 

If the Transaction is consummated as currently contemplated, the Ordinary Shares would become eligible for termination of registration pursuant to Section 12(g)(4) of the Securities Act and would be delisted from the NASDAQ Global Select Market.

 

The description of the Proposal and the Amended and Restated Consortium Agreement in this Statement is qualified in its entirety by reference to the Proposal and the Amended and Restated Consortium Agreement, copies of which are attached hereto as Exhibits 2 and 3 and incorporated herein by reference in their entirety.

 

Except as indicated above, the Reporting Persons currently do not have any plans or proposals that relate to or would result in any matters listed in Items 4(a)-(j) of Schedule 13D. Consummation of the Transaction could result in one or more of the actions specified in Items 4(a)-(j) of Schedule 13D, including the acquisition or disposition of securities of the Issuer, a merger or other extraordinary transaction involving the Issuer, a change to the board of directors of the Issuer to consist solely of persons designated by the acquisition vehicle formed by the Consortium, a change in the Issuer’s memorandum and articles of association to reflect that the Issuer would become a privately held company, delisting of securities of the Issuer from the NASDAQ Global Select Market, securities of the Issuer becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Act, and termination of the Issuer’s reporting obligations pursuant to Rule 12h-3(b)(1)(i) of the Act. In addition, subject to compliance with the terms of the Amended and Restated Consortium Agreement, the Reporting Persons reserve their right to change their plans and intentions in connection with any of the actions discussed in this item 4, including, among others, the purchase price and the financing arrangement for the transactions contemplated under the Proposal and/or the Amended and Restated Consortium Agreement.

 

Item 5Interest in Securities of the Issuer

 

The information contained on each of the cover pages of this Statement and the information set forth or incorporated in Items 2, 3, 4, and 6 are hereby incorporated herein by reference.

 

(a) — (b) The Issuer reported on its annual report on Form 20-F (for the year ended December 31, 2014) filed with the Commission on April 29, 2015 (the “Form 20-F”), that as of March 31, 2015, a total of 455,227,428 of its Ordinary Shares were outstanding.

 

As of the date hereof, ChinaEquity Holdco directly owns 1,041,845 ADSs representing 36,464,575 Ordinary Shares, which represent 8.01% of the total outstanding Ordinary Shares22, and has shared voting power and shared dispositive power with respect to such shares. ChinaEquity USD Fund I L.P., as the sole shareholder of ChinaEquity Holdco, may be deemed to have beneficial ownership of 1,041,845 ADSs representing 36,464,575 Ordinary Shares, which represent 8.01% of the total outstanding Ordinary Shares23, and have shared voting power and shared dispositive power with respect to such shares. ChinaEquity USD Investment Management Co., as the general partner of ChinaEquity USD Investment GP L.P., and ChinaEquity USD Investment GP L.P., which in turn acts as the general partner of ChinaEquity USD Fund I L.P., may each be deemed to have beneficial ownership of 1,041,845 ADSs representing 36,464,575 Ordinary Shares, which represent 8.01% of the total outstanding Ordinary Shares24, and have shared voting power and shared dispositive power with respect to such shares. Mr. Xu Wang, as the sole shareholder and sole director of ChinaEquity Global Holding Co., Ltd., and ChinaEquity Global Holding Co., Ltd., which in turn is the sole shareholder of ChinaEquity USD Investment Management Co., may each be deemed to have beneficial ownership of 1,041,845 ADSs representing 36,464,575 Ordinary Shares, which represent 8.01% of the total outstanding Ordinary Shares25, and have shared voting power and shared dispositive power with respect to such shares. Mr. Chaoyong Wang, as the sole director of each ChinaEquity Reporting Person (other than ChinaEquity Global Holding Co., Ltd.) may be deemed to have beneficial ownership of 1,041,845 ADSs representing 36,464,575 Ordinary Shares, which represent 8.01% of the total outstanding Ordinary Shares26, and have shared voting power and shared dispositive power with respect to such shares.

  

 

22Percentage calculated based on 455,227,428 ordinary shares outstanding as of March 31, 2015, as disclosed in the Issuer’s Form 20-F.

 

23Percentage calculated based on 455,227,428 ordinary shares outstanding as of March 31, 2015, as disclosed in the Issuer’s Form 20-F.

 

24Percentage calculated based on 455,227,428 ordinary shares outstanding as of March 31, 2015, as disclosed in the Issuer’s Form 20-F.

 

25Percentage calculated based on 455,227,428 ordinary shares outstanding as of March 31, 2015, as disclosed in the Issuer’s Form 20-F.

 

26Percentage calculated based on 455,227,428 ordinary shares outstanding as of March 31, 2015, as disclosed in the Issuer’s Form 20-F.

 

11 

 

  

To the extent that the Reporting Persons may be deemed to have formed a “group” with CNshangquan, the beneficial ownership of the Ordinary Shares by the “group” would include the beneficial ownership of the Ordinary Shares by CNshangquan. As reported by CNshangquan in its Schedule 13D/A filed with the Commission on July 22, 2015, CNshangquan beneficially owns 290,564,842 Ordinary Shares, representing 63.8% of the total outstanding Ordinary Shares as of March 31, 201527. Each Reporting Person hereby expressly disclaims beneficial ownership of any Ordinary Shares held by CNshangquan, and expressly disclaims membership in any Section 13(d) “group” with CNshangquan, and this Statement shall not be construed as acknowledging that any of the Reporting Persons beneficially owns any Ordinary Shares held by CNshangquan.

 

(c)    The Reporting Persons have not effected any transactions in the Ordinary Shares of the Issuer during the 60 days preceding the filing of this Statement.

 

(d) — (e)    Not applicable.

 

Item 6.  Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer.

 

The information regarding the Proposal and the Amended and Restated Consortium Agreement under Item 4 is incorporated herein by reference in their entirety.

 

Item 7.Materials to be Filed as Exhibits

 

Exhibit 1:Joint Filing Agreement by and among the Reporting Persons, dated as of October 31, 2015.

 

Exhibit 2:Proposal by CNshangquan and Leading Capital to the Issuer dated July 21, 2015.

 

Exhibit 3:Amended and Restated Consortium Agreement dated October 26, 2015 by and among CNshangquan, Leading Capital and ChinaEquity Holdco.

 

 

27Percentage calculated based on 455,227,428 ordinary shares outstanding as of March 31, 2015, as disclosed in the Issuer’s Form 20-F.

 

12 

 

  

Signatures

 

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

 

  October 31, 2015
  Date
   
ChinaEquity USD Fortune Co., Ltd. By: /s/ Chaoyong Wang
  Name:  Chaoyong Wang
  Title:  Director 
     
ChinaEquity USD Fund I L.P. By: /s/ Chaoyong Wang
  Name:  Chaoyong Wang
  Title:  Duly authorized signatory under Power of Attorney  effective as of October 15, 2013 
     
ChinaEquity USD Investment GP L.P. By: /s/ Chaoyong Wang
  Name:  Chaoyong Wang
  Title:

 Duly authorized signatory under Power of Attorney

 effective as of October 15, 2013 

     
ChinaEquity USD Investment Management Co. By: /s/ Chaoyong Wang
  Name:  Chaoyong Wang
  Title:  Director
     
ChinaEquity Global Holding Co., Ltd. By: /s/ Xu Wang
  Name:  Xu Wang
  Title:  Director
     
Chaoyong Wang By: /s/ Chaoyong Wang
     
Xu Wang By: /s/ Xu Wang

 

13 

  

 

Exhibit 1

  

JOINT FILING AGREEMENT

 

We, the undersigned, hereby agree that the Statement on Schedule 13D in connection with the securities of Mecox Lane Limited to which this Agreement is an Exhibit, and any amendment thereafter signed by each of the undersigned, may be filed on behalf of each of the undersigned pursuant to and in accordance with the provisions of 13d-1(k) under the Securities Exchange Act of 1934, as amended.  This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

Dated:  October 31, 2015

 

ChinaEquity USD Fortune Co., Ltd. By: /s/ Chaoyong Wang
  Name: Chaoyong Wang
  Title: Director
   
ChinaEquity USD Fund I L.P. By: /s/ Chaoyong Wang
  Name: Chaoyong Wang
  Title: Duly authorized signatory under Power of Attorney effective as of October 15, 2013
   
ChinaEquity USD Investment GP L.P. By: /s/ Chaoyong Wang
  Name: Chaoyong Wang
  Title: Duly authorized signatory under Power of Attorney effective as of October 15, 2013
   
ChinaEquity USD Investment Management Co. By: /s/ Chaoyong Wang
  Name: Chaoyong Wang
  Title: Director
   
ChinaEquity Global Holding Co., Ltd. By: /s/ Xu Wang
  Name: Xu Wang
  Title: Director
   
Chaoyong Wang By: /s/ Chaoyong Wang
   
Xu Wang By: /s/ Xu Wang

 

 

  

 

Exhibit 2

 

 

July 21, 2015

 

The Board of Directors
Mecox Lane Limited (the “Company”)
Room 302, Qilai Building, No. 889 Yishan Road
Shanghai 200233
People’s Republic of China

  

Dear Sirs and Madams:

 

We, CNshangquan Limited (“CNshangquan”), together with Leading Capital Co. Ltd. (“Leading Capital”, collectively with CNshangquan, the “Consortium Members”) are pleased to submit this preliminary non-binding proposal to acquire all of the outstanding ordinary shares of the Company not already owned by us in a going private transaction (the “Transaction”) described below.

 

We believe our proposal provides a very attractive opportunity to the Company’s shareholders. Our proposal represents a premium of approximately 17.6% to the Company’s closing price on July 20, 2015. We are confident that the Transaction can be closed on a highly expedited basis as outlined in this letter.

 

Set forth below are the key terms of our proposal.

 

1.Consortium. The Consortium Members have entered into a consortium agreement, pursuant to which we will form an acquisition vehicle for the purpose of implementing the Transaction, and have agreed to work with each other exclusively pursuing the completion of the Transaction. The Consortium Members are interested only in pursuing the Transaction and are not interested in selling their shares in any other transaction involving the Company.

 

2.Purchase Price. The purchase price payable will be US$4.00 per American Depositary Share (“ADSs,” each ADS representing thirty-five ordinary shares of the Company) or approximately US$0.114 per ordinary share in cash, in each case other than for the ADSs or ordinary shares held by directly or indirectly by us.

 

3.Financing. We intend to finance the Transaction with equity capital. Equity financing will be provided by the Consortium Members, in the form of cash and rollover equity in the Company, and from any additional equity investor who may be admitted as a consortium member. We are confident that we can timely secure adequate financing to consummate the Transaction.

 

4.Due Diligence. We believe that we will be in a position to complete customary legal, financial and accounting due diligence for the Transaction in a timely manner and in parallel with negotiation of transaction agreements.

 

5.Definitive Agreements. We have engaged Gibson Dunn & Crutcher LLP as our international legal counsel and are prepared to promptly negotiate and finalize definitive agreements (the “Definitive Agreements”) in respect of the Transaction. These agreements will provide for representations, warranties, covenants and conditions which are typical, customary and appropriate for transaction of this type.

 

 

 

  

July 21, 2015

Page 2

 

6.Process. Given CNshangquan’s involvement in the Transaction, we believe it is prudent and in the best interests of the Company for the Company’s Board of Directors to establish a special committee of independent directors to consider the Transaction (the “Special Committee”). We also expect that the Special Committee would retain independent advisors, to assist it in its work. In considering our offer, you should be aware that we are interested only in acquiring the outstanding shares of the Company that we do not already beneficially own, and that we do not intend to sell our stake in the Company to a third party.

 

7.Confidentiality. The Consortium Members will, as required by law, promptly file a Schedule 13D and/or amendment thereof with the Securities and Exchange Commission to disclose this letter. We are sure you will agree, however, that it is in all of our interests to ensure that we otherwise proceed in a strictly confidential manner, unless otherwise required by law, until we have executed Definitive Agreements or terminated our discussions. Until a confidentiality agreement is signed, any written news releases by the Company or us pertaining to the Transaction shall be reviewed and approved by the Company and ourselves prior to their release, subject to any requirements of law.

 

8.About Leading Capital. Leading Capital is a leading China-focused asset fund manager with US$1.5 billion of assets under management. Leading Capital’s investments target high growth companies in China in the consumer, environmental, electronic information, healthcare, modern agriculture, and high-end manufacturing sectors.

 

9.No Binding Commitment. This proposal is not a binding offer, agreement or agreement to make a binding offer or agreement at any point in the future. This letter is a preliminary indication of interest by the Consortium Members and does not contain all matters upon which agreement must be reached in order to consummate the proposed Transaction, nor does it create any binding rights or obligations in favor of any person. The parties will be bound only upon the execution of the Definitive Agreements.

 

10.Governing Law. This letter shall be governed by, and construed in accordance with, the internal laws of the State of New York.

 

In closing, we would like to express our commitment to working with you to bring this Transaction to a successful and timely conclusion. Should you have any questions regarding this proposal, please do not hesitate to contact us. We look forward to hearing from you.

 

Sincerely,

 

 

 

  

July 21, 2015

Page 3

 

CNshangquan Limited

 

By: /s/ Wei Zhu  
Name: Wei Zhu  
Title: Authorized Signatory  

 

Leading Capital Co. Ltd.

 

By: /s/ Chaoyang Wu  
Name: Chaoyang Wu  
Title: Authorized Signatory  

 

 

 

 

Exhibit 3

 

AMENDED AND RESTATED CONSORTIUM AGREEMENT

 

THIS AMENDED AND RESTATED CONSORTIUM AGREEMENT is made on October 26, 2015 (the “Agreement”), by and between CNshangquan Limited (“CNshangquan”), Leading Capital Co. Ltd. (“Leading Capital”), and ChinaEquity USD Fortune Co., Ltd. (“ChinaEquity”). Each of CNshangquan, Leading Capital and ChinaEquity is referred to herein as a “Party”, and collectively, the “Parties”. Unless otherwise defined herein, capitalized terms used herein shall have the meanings assigned to them in Section 10.1 hereof.

 

WHEREAS, on July 21, 2015, CNshangquan and Leading Capital have entered into a Consortium Agreement (the “Original Consortium Agreement”) and submitted a joint, non-binding proposal, a copy of which is attached to the Original Consortium Agreement as Schedule A (the “Proposal”), to the board of directors (the “Target Board”) of Mecox Lane Limited, a company incorporated under the laws of the Cayman Islands and listed on the NASDAQ Global Select Market (the “Target”) in connection with an acquisition transaction of the Target (the “Transaction”), pursuant to which the Target would be delisted from NASDAQ Global Select Market and deregistered under the United States Securities Exchange Act of 1934, as amended (the “Exchange Act”);

 

WHEREAS, ChinaEquity intended to participate in the Transaction with CNshangquan and Leading Capital, and the Parties have agreed to enter into this Agreement, which upon execution shall amend and restate the Original Consortium Agreement in all respects;

 

WHEREAS, (a) in connection with the Transaction, the Parties propose to form a new company (“Holdco”) under the laws of the Cayman Islands, and to cause Holdco to form a direct, wholly owned subsidiary (“Merger Sub”) under the laws of the Cayman Islands, and (b) at the closing of the Transaction (the “Closing”), the Parties intend that Merger Sub will be merged with and into the Target, with the Target being the surviving company and becoming a direct, wholly owned subsidiary of Holdco (the “Surviving Company”);

 

WHEREAS, in accordance with the terms of this Agreement, the Parties will cooperate and participate in (a) the evaluation of the Target, including if necessary, conducting due diligence of the Target and its business, (b) discussions regarding the Proposal with the Target, and (c) the negotiation of the terms of definitive documentation in connection with the Transaction with a special committee of independent and disinterested directors of the Target Board (the “Special Committee”), including an agreement and plan of merger among Holdco, Merger Sub and the Target in form and substance to be agreed by the Parties (the “Merger Agreement”), which shall be subject to the approval of the shareholders of the Target.

 

NOW, THEREFORE, in consideration of the foregoing recitals and of the mutual agreements and covenants set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows:

 

 

 

 

1.          Proposal; Debt Financing; Holdco Ownership

 

1.1           Participation in Transaction. The Parties agree to participate in the Transaction on the terms set forth in this Agreement.

 

1.2           Proposal. On the date hereof, the Parties shall submit the Proposal to the Target Board. Thereafter, the Parties shall collectively: (a) if necessary, undertake further due diligence with respect to the Target and its business; (b) engage in discussions with the Target regarding the Proposal; and (c) negotiate in good faith the terms of definitive documentation in respect of the Transaction, including without limitation the Merger Agreement and the terms of agreements between the Parties required to support the Proposal or to regulate the relationship between the Parties. The Parties further agree to negotiate in good faith to reach agreement on a shareholders agreement that would, among other things, govern the relationship of the shareholders in Holdco following the Closing, and contain provisions customary for transactions of this type.

 

1.3           Holdco Ownership.

 

(a)          Prior to the execution of the Merger Agreement, the Parties shall (a) incorporate Holdco and shall cause Holdco to incorporate Merger Sub, and (b) agree to in good faith the memorandum and articles of association of Holdco and Merger Sub and the memorandum and articles of association of Merger Sub shall become the memorandum and articles of association of the Surviving Company at the Closing.

 

(b)          Each Party’s ownership percentage in Holdco shall be based on the amount of cash paid, and the agreed-upon value of any other consideration contributed, by such Party to Holdco relative to the aggregate amount of cash paid, and the aggregate agreed-upon value of any other consideration contributed, by the Parties to Holdco in connection with the Transaction. Specifically, each of CNshangquan and ChinaEquity agrees to contribute to Holdco at the Closing, in exchange for newly issued equity interests in Holdco, all of the Target Ordinary Shares (including American Depositary Shares of the Target (the “ADSs”), each representing thirty-five Target Ordinary Shares) then held thereby based on the same per share consideration as provided in the Merger Agreement, except as may otherwise be agreed by the Parties. For the avoidance of doubt, the Parties agree that the obligation of the Parties to purchase and pay for any Holdco shares shall be subject to the satisfaction or waiver of the various conditions to the obligations of Holdco and Merger Sub to be set forth in the Merger Agreement.

 

2.          Participation in Transaction; Advisors; Approvals

 

2.1           Information Sharing and Roles. Each Party shall cooperate in good faith in connection with the Proposal and the Transaction, including by (a) complying with any information delivery or other requirements entered into by Holdco and shall not, and shall direct its Representatives not to, whether by their action or omission, breach such arrangements or obligations, (b) participating in meetings and negotiations with the Special Committee and its advisors, (c) executing and complying with any confidentiality agreements reasonably required by the Target, (d) sharing all information reasonably necessary to evaluate the Target, including technical, operational, legal, accounting and financial materials and relevant consulting reports and studies, (e) providing each other or Holdco with all information reasonably required concerning such Party or any other matter relating to such Party in connection with the Transaction and any other information a Party may reasonably require in respect of any other Party and its Affiliates for inclusion in the definitive documentation, (f) applying the level of resources and expertise that such Party reasonably considers to be necessary and appropriate to meet its obligations under this Agreement, and (g) consulting with the other Party and otherwise cooperating in good faith on any public statements regarding the Parties’ intentions with respect to the Target, any issuance of which shall be subject to Section 6.1. Unless the Parties otherwise agree, none of the Parties shall commission a report, opinion or appraisal (within the meaning of Item 1015 of Regulation M-A of the Exchange Act). Notwithstanding the foregoing, no Party is required to make available to the other Party any of their internal investment committee materials or analyses or any information which it considers to be commercially sensitive information or which is otherwise held subject to an obligation of confidentiality.

 

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2.2           Appointment of Advisors.

 

(a)          The Parties shall agree to the scope and engagement terms of all joint Advisors to Holdco and/or the Parties in connection with the Transaction. Gibson Dunn & Crutcher LLP has been jointly selected by the Parties to represent the consortium in connection with the Transaction as international counsel.

 

(b)          If a Party requires separate representation in connection with specific issues arising out of the Proposal or the Transaction, such Party may retain other Advisors to advise it. Each Party that engages separate Advisors shall (i) provide prior notice to the other Party of such engagement, and (ii) be solely responsible for the fees and expenses of such separate Advisors.

 

2.3           Approvals. Each Party shall use reasonable best efforts and provide all cooperation as may be reasonably requested by each other Party to obtain all applicable governmental, statutory, regulatory or other approvals, licenses, waivers or exemptions required or, in the reasonable opinion of the Parties, desirable for the consummation of the Transaction.

 

3.          Transaction Costs

 

3.1           Expenses and Fee Sharing.

 

(a)          Upon consummation of the Transaction, the Surviving Company shall reimburse the Parties for, or pay on behalf of the Parties, as the case may be, all of their out-of-pocket costs and expenses incurred in connection with the Transaction, including, without limitation, the reasonable fees, expenses and disbursements of Advisors retained by the Parties (other than fees and costs of any separate Advisors who were retained by the Parties in accordance with Section 2.2(b) unless and only to the extent such appointment and expenses are agreed to in advance by the Parties).

 

(b)          If the Transaction is not consummated (and Section 3.1(c) below does not apply), the Parties shall pay (allocated as may be agreed among the Parties) the out-of-pocket costs and expenses payable by them in connection with the Transaction incurred prior to the termination of the Transaction, including any fees and expenses payable to Advisors retained by the Parties (other than fees and costs of any separate Advisors who were retained by the Parties in accordance with Section 2.2(b) unless and only to the extent such appointment and expenses are agreed to in advance by the Parties).

 

 3 

 

  

(c)          If the Transaction is not consummated due to the unilateral breach of this Agreement by one or more Parties, then such breaching Parties shall reimburse any non-breaching Party for all out-of-pocket costs and expenses, including any fees and expenses of Advisors retained by the Parties (including the fees and costs of any separate Advisors who were retained by the Parties in accordance with Section 2.2(b)), incurred by such non-breaching Party in connection with the Transaction, without prejudice to any rights and remedies otherwise available to such non-breaching Party.

 

(d)          The Parties shall be entitled to receive any termination, break-up or other fees or amounts payable to Holdco or Merger Sub by the Target pursuant to the Merger Agreement, to be allocated as may be agreed among the Parties, net of the costs and expenses incurred in connection with the Transaction, including, without limitation, the reasonable fees, expenses and disbursements of Advisors retained by the Parties (other than fees and costs of any separate Advisors who were retained by the Parties in accordance with Section 2.2(b) unless and only to the extent such appointment and expenses are agreed to in advance by the Parties).

 

4.          Exclusivity

 

4.1           Exclusivity Period. During the period beginning on the date hereof and ending on the earlier of (i) the 12-month anniversary of the date hereof and (ii) the termination of this Agreement pursuant to Section 5.1 (the “Exclusivity Period”), each Party shall:

 

(a)          work exclusively with the other Party to implement the Transaction, including to (i) evaluate the Target and its business, (ii) prepare, negotiate and finalize the definitive documentation in connection with the Transaction, and (iii) vote, or cause to be voted, at every shareholder or stakeholder meeting (whether by written consent or otherwise) all Securities against any Competing Proposal or matter that would facilitate a Competing Proposal and in favor of the Transaction;

 

(b)          not, directly or indirectly, either alone or with or through any Representatives authorized to act on such Party’s behalf (i) make a Competing Proposal, or solicit, encourage, facilitate or join with any other person in the making of, any Competing Proposal, (ii) provide any information to any third party with a view to the third party or any other person pursuing or considering to pursue a Competing Proposal, (iii) finance or offer to finance any Competing Proposal, including by offering any equity or debt finance, or contribution of Securities or provision of a voting agreement, in support of any Competing Proposal, (iv) enter into any written or oral agreement, arrangement or understanding (whether legally binding or not) regarding, or do, anything that is directly inconsistent with the provisions of this Agreement or the Transaction as contemplated under this Agreement, (v) acquire or dispose of any Securities, and in the case of CNshangquan and ChinaEquity, directly or indirectly (A) sell, offer to sell, give, pledge, encumber, assign, grant any option for the sale of or otherwise transfer or dispose of, or enter into any agreement, arrangement or understanding to sell or otherwise transfer or dispose of, an interest in any Securities (“Transfer”) or permit the Transfer by any of its Affiliates of an interest in any Securities, in each case, except as expressly contemplated under this Agreement and the definitive documentation, (B) enter into any contract, option or other arrangement or understanding with respect to a Transfer or limitation on voting rights of any of the Securities, or any right, title or interest thereto or therein, or (C) deposit any Securities into a voting trust or grant any proxies or enter into a voting agreement, power of attorney or voting trust with respect to any Securities, (vi) take any action that would reasonably be expected to have the effect of preventing, disabling or delaying such Party from performing its obligations under this Agreement, or (vii) solicit, encourage, facilitate, induce or enter into any negotiation, discussion, agreement or understanding (whether or not in writing and whether or not legally binding) with any other person regarding the matters described in Sections 4.1(b)(i) to 4.1(b)(vi);

 

 4 

 

 

(c)          immediately cease and terminate, and cause to be ceased and terminated, all existing activities, discussions, conversations, negotiations and other communications with all persons conducted heretofore with respect to a Competing Proposal; and

 

(d)          promptly notify the other Party if it or, to its knowledge, any of its Representatives receives any approach or communication with respect to any Competing Proposal, including in such notice the identity of the other persons involved and the nature and content of the approach or communication, and provide the other Party with copies of any written communication.

 

5.          Termination

 

5.1           Failure to Agree. Subject to Section 5.2,

 

(a)          if the Parties are unable to agree either as between themselves or with the Special Committee regarding the material terms of the Transaction, within 180 days following the date hereof, any Party may cease its participation in the Transaction by delivery of a written notice to the other Party and this Agreement shall terminate with respect to such Party;

 

(b)          if a Party materially breaches the terms of this Agreement and to the extent such breach is remediable, fails to remedy such breach within 20 days following the written request by the non-breaching Party, such non-breaching Party may cease its participation in the Transaction by delivery of a written notice to the other Party and this Agreement shall terminate with respect to such non-breaching Party; or

 

(c)          this Agreement shall terminate with respect to all Parties upon the earliest to occur of (i) a written agreement between the Parties to terminate this Agreement, and (ii) the Closing.

 

5.2           Effect of Termination. Upon termination of this Agreement with respect to a Party pursuant to Section 5.1, Article 3 (Transaction Costs), Article 5 (Termination), Section 6.2 (Confidentiality), Article 7 (Notices) and Article 9 (Miscellaneous) shall continue to bind such Party.

 

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6.          Announcements and Confidentiality

 

6.1           Announcements. No announcements regarding the subject matter of this Agreement shall be issued by any Party without the prior written consent of the other Party, which consent shall not be unreasonably withheld, delayed or conditioned, except to the extent that any such announcements are required by law, a court of competent jurisdiction, a regulatory body or international stock exchange, and then only after the form and terms of such disclosure have been notified to the other Party and the other Party have had a reasonable opportunity to comment thereon, in each case to the extent reasonably practicable. Any announcement to be made by the Parties or their Affiliates (including Holdco) in connection with the Transaction shall be jointly coordinated and agreed by the Parties.

 

6.2           Confidentiality.

 

(a)          Except as permitted under Section 6.3, each Party shall not, and shall direct its Affiliates and Representatives not to, without the prior written consent of the other Party, disclose any Confidential Information received by it (the “Recipient”) from any other Party (the “Discloser”). Each Party shall not and shall direct its Affiliates and Representatives not to, use any Confidential Information for any purpose other than for the purposes of this Agreement or the Transaction.

 

(b)          Subject to Section 6.2(c), the Recipient shall safeguard and return to the Discloser, on demand, any Confidential Information which falls within clause (a) of the definition of Confidential Information, and in the case of electronic data that constitutes Confidential Information, to return or destroy such Confidential Information (other than any electronic data stored on the back-up tapes of the Recipient’s hardware) at the option of the Recipient.

 

(c)          Each Party acknowledges that, in relation to Confidential Information received from the other Party, the obligations contained in this Section 6.2 shall continue to apply for a period of 12 months following termination of this Agreement pursuant to Section 5.1, unless otherwise agreed in writing.

 

6.3           Permitted Disclosures. A Party may make disclosures (a) to those of its Affiliates and Representatives as such Party reasonably deems necessary to give effect to or enforce this Agreement, but only on a confidential basis; (b) if required by law or a court of competent jurisdiction, the United States Securities and Exchange Commission or another regulatory body or international stock exchange having jurisdiction over a Party or pursuant to whose rules and regulations such disclosure is required to be made, but only after the form and terms of such disclosure have been notified to the other Party and the other Party have had a reasonable opportunity to comment thereon, in each case to the extent reasonably practicable; or (c) if the information is publicly available other than through a breach of this Agreement by such Party or its Affiliates or Representatives.

 

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7.          Notices

 

7.1           Any notice, request, instruction or other document to be provided hereunder by any Party to the other Party shall be in writing and delivered personally or sent by registered or certified mail, postage prepaid, or by facsimile, overnight courier or electronic mail, to the address provided under such other Party’s signature page hereto, or to such other address or facsimile number or electronic mail address as such Party may hereafter specify for the purpose by notice to the other Party. All such notices, requests and other communications shall be deemed received on the date of receipt by the recipient thereof if received prior to 5:00 p.m. on a Business Day in the place of receipt. Otherwise, any such notice, request or communication shall be deemed to have been received on the next succeeding Business Day in the place of receipt.

 

8.          Representations and Warranties

 

8.1           Representations and Warranties. Each Party hereby represents and warrants, on behalf of such Party only, to the other Party that (a) it has the requisite power and authority to execute, deliver and perform this Agreement; (b) the execution, delivery and performance of this Agreement by it have been duly authorized by all necessary action on the part of such Party and no additional proceedings are necessary to approve this Agreement; (c) this Agreement has been duly executed and delivered by it and constitutes a valid and binding agreement of such Party enforceable against it in accordance with the terms hereof; (d) its execution, delivery and performance (including the provision and exchange of information) of this Agreement will not (i) conflict with, require a consent, waiver or approval under, or result in a breach of or default under, any of the terms of any material contract or agreement to which such Party is a party or by which such Party is bound, or any office such Party holds, (ii) violate any order, writ, injunction, decree or statute, or any rule or regulation, applicable to such Party or any of its properties and assets, or (iii) result in the creation of, or impose any obligation on such Party to create, any lien, charge or other encumbrance of any nature whatsoever upon such Party’s properties or assets; and (e) no broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the Transaction based upon arrangements made by or on behalf of such Party.

 

8.2           Target Shares. As of the date of this Agreement, CNshangquan holds of record 290,564,842 Target Ordinary Shares, and ChinaEquity holds of record 1,041,845 ADSs, in each case, free and clear of any encumbrances or restrictions, except for those as required by applicable laws or set forth under the constitutional documents of the Target.

 

8.3           Reliance. Each Party acknowledges that the other Party has entered into this Agreement on the basis of and reliance upon (among other things) the representations and warranties in Sections 8.1 and 8.2 and has been induced by them to enter into this Agreement.

 

9.          Miscellaneous

 

9.1           Entire Agreement. This Agreement constitutes the entire agreement between the Parties and supersedes any previous oral or written agreements or arrangements between them relating to its subject matter. Without limitation of the foregoing, this Agreement supersedes, in its entirety, the Original Consortium Agreement, which shall be null and void and have no further force or effect whatsoever upon execution of this Agreement.

 

9.2           Further Assurances. Each Party shall use all reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other Party in doing, all things necessary, proper or advisable to carry out the intent and purposes of this Agreement.

 

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9.3           Severability. If any provision of this Agreement is held to be invalid or unenforceable for any reason, it shall be adjusted rather than voided, if possible, in order to achieve the intent of the Parties to the maximum extent possible. In any event, the invalidity or unenforceability of any provision of this Agreement in any jurisdiction shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of this Agreement, including that provision, in any other jurisdiction.

 

9.4           Amendments; Waivers. Neither this Agreement nor any term hereof may be amended or otherwise modified other than by an instrument in writing signed by each of the Parties. No provision of this Agreement may be waived, discharged or terminated other than by an instrument in writing signed by the Party against whom the enforcement of such waiver, discharge or termination is sought. No failure or delay by any Party in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.

 

9.5           Assignment; No Third Party Beneficiaries. Other than as provided herein, the rights and obligations of each Party shall not be assigned without the prior consent of the other Party; provided, however, Leading Capital may assign its rights and obligations under this Agreement, in whole or in part, to any of its affiliated investment funds or investment vehicles. This Agreement shall be binding upon the respective heirs, successors, legal representatives and permitted assigns of the Parties. Nothing in this Agreement shall be construed as giving any person, other than the Parties and their heirs, successors, legal representatives and permitted assigns any right, remedy or claim under or in respect of this Agreement or any provision hereof.

 

9.6           No Partnership or Agency. The Parties are independent and nothing in this Agreement constitutes a Party as the trustee, fiduciary, agent, employee, partner or joint venturer of the other Party.

 

9.7           Counterparts. This Agreement may be executed in counterparts and all counterparts taken together shall constitute one document.

 

9.8           Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, the United States of America, without giving effect to any choice of law or conflict of law rules or provisions that would cause the application of the laws of any jurisdiction other than the State of New York, the United States of America.

 

9.9           Hong Kong Arbitration.

 

(a)          Any dispute, controversy or claim (each, a “Dispute”) arising out of or relating to this Agreement, or the interpretation, breach, termination, validity or invalidity thereof, shall be referred to arbitration upon the demand of either Party to the dispute with notice (the “Arbitration Notice”) to the other.

 

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(b)          The Dispute shall be settled by arbitration in Hong Kong by the Hong Kong International Arbitration Centre (the “HKIAC”) in accordance with the Hong Kong International Arbitration Centre Administered Arbitration Rules (the “HKIAC Rules”) in force when the Arbitration Notice is submitted in accordance with the HKIAC Rules. There shall be three arbitrators, who shall be qualified to practice law in the State of New York, the United States of America. Each party in the Dispute shall appoint one arbitrator, and the HKIAC Council shall select the third arbitrator.

 

(c)          The arbitral proceedings shall be conducted in English. To the extent that the HKIAC Rules are in conflict with the provisions of this Section, including the provisions concerning the appointment of the arbitrators, the provisions of this Section shall prevail.

 

(d)          Each party to the arbitration shall cooperate with each other party to the arbitration in making full disclosure of and providing complete access to all information and documents requested by such other party in connection with such arbitral proceedings, subject only to any confidentiality obligations binding on such party.

 

(e)          The award of the arbitral tribunal shall be final and binding upon the parties thereto, and the prevailing party may apply to a court of competent jurisdiction for enforcement of such award.

 

(f)          The arbitral tribunal shall decide any Dispute submitted by the Parties to the arbitration strictly in accordance with the substantive Laws of the State of New York, the United States of America (without regard to principles of conflict of Laws thereunder) and shall not apply any other substantive Law.

 

(g)          Any party to the Dispute shall be entitled to seek preliminary injunctive relief, if possible, from any court of competent jurisdiction pending the constitution of the arbitral tribunal.

 

(h)          During the course of the arbitral tribunal’s adjudication of the Dispute, this Agreement shall continue to be performed except with respect to the part in dispute and under adjudication.

 

9.10         Specific Performance. Each Party acknowledges and agrees that the other Party would be irreparably injured by a breach of this Agreement by it and that money damages alone are an inadequate remedy for actual or threatened breach of this Agreement. Accordingly, each Party shall be entitled to bring an action for specific performance and/or injunctive or other equitable relief (without posting a bond or other security) to enforce or prevent any violations of any provision of this Agreement, in addition to all other rights and remedies available at law or in equity to such Party, including the right to claim money damages for breach of any provision of this Agreement.

 

10.         Definitions and Interpretations

 

10.1         Definitions. In this Agreement, unless the context requires otherwise:

 

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“Advisors” means the advisors and/or consultants of Holdco, Merger Sub, and the Parties, in each case appointed in connection with the Transaction.

 

“Affiliate” means, with respect to any person, any other person that, directly or indirectly, Controls, is Controlled by or is under common Control with such specified person and “Affiliates” shall be construed accordingly.

 

“Business Day” means any day (other than a Saturday or a Sunday) on which banks generally are open in the People’s Republic of China, Hong Kong and in New York, New York, for the transaction of normal banking business.

 

“Competing Proposal” means a proposal, offer or invitation to the Target, any Party or any of their respective Affiliates (other than the Proposal), that involves the direct or indirect acquisition of 10% or more of the total outstanding Target Ordinary Shares, a sale of all or any significant amount of the assets of the Target, a restructuring or recapitalization of the Target, or some other transaction that could adversely affect, prevent or materially reduce the likelihood of the consummation of the Transaction with the Parties.

 

“Confidential Information” includes (a) all written, oral or other information obtained in confidence by one Party from the other Party in connection with this Agreement or the Transaction, unless such information (x) is already known to such Party or to others not known by such Party to be bound by a duty of confidentiality, or (y) is or becomes publicly available other than through a breach of this Agreement by such Party, and (b) the existence or terms of, and any negotiations or discussions relating to, this Agreement, the Proposal and any definitive documentation, including the Merger Agreement.

 

“Control” means the possession, directly or indirectly, of the power to direct the management and policies of a person, whether through the ownership of voting securities, by contract or otherwise.

 

“Representative” of a Party means such Party’s employees, directors, officers, partners, members, nominees, agents, advisors (including, but not limited to legal counsel, accountants, consultants and financial advisors), potential sources of equity or debt financing, and any representatives of the foregoing. The Representatives shall include the Advisors.

 

“Securities” means shares, warrants, options and any other securities which are convertible into or exercisable for shares in the Target.

 

“Target Ordinary Shares” means the issued and outstanding ordinary shares, par value US$0.0001 per share, of the Target.

 

10.2         Headings. Section and paragraph headings are inserted for ease of reference only and shall not affect construction.

 

[Below Intentionally Left in Blank]

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed and delivered as of the date first written above.

 

  CNshangquan Limited
   
  By: /s/ Wei Zhu
  Name: Wei Zhu
  Title: Authorized Signatory
   
  Address:
   
  Unit 8, 3/F.
  Qwomar Trading Complex
  Blackburne Road, Port Purcell
  Road Town, Tortola
  BVI, VG1110

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed and delivered as of the date first written above.

 

  Leading Capital Co. Ltd.
   
  By: /s/ Chaoyang Wu
  Name: Chaoyang Wu
  Title: Authorized Signatory
     
  Address:
   
  WanDu Center 910-913
  No. 8 XingYi Road
  ChangNing District, Shanghai 200036

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed and delivered as of the date first written above.

 

  ChinaEquity USD Fortune Co., Ltd.
   
  By: /s/ Chaoyong Wang
  Name: Chaoyong Wang
  Title: Chairman
   
  Address:
   
  Suite 05-07, Level 10, Block A, Office Park
  10 Jintong West Road, Chaoyang District
  Beijing 100020

 

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