On May 11, 2009, 2020 ChinaCap Acquirco, Inc. has announced that along with its wholly-owned British Virgin Islands-registered subsidiary Exceed Company Limited (Newco) it has entered into a definitive share purchase agreement with Windrace International Company Limited (WHL). WHL is one of the largest branded sportswear companies in China, engaged in the design, manufacturing, trading and distribution of sporting goods in the country. 2020 is a public acquisition company formed in Delaware in 2006, to effeect a business combination with an operating business with operations in PRC.
After completion of the transaction, WHL will become a wholly owned subsidiary of Newco. Current management of the company will continue to run the business following consummation of the acquisition. George Lu, Chairman and CEO of 2020, stated that over the last years WHL managed to build one of the top five sporting goods companies in its market segment, and they are confident that its current transformational strategy 'will give the way to a stronger leadership position for WHL in China.'
Pursuant to the Share Purchase Agreement dated May 8, 2009, Newco will acquire all of the ordinary shares of WHL, and the last one will become a wholly owned subsidiary of Newco, which will merge with 2020, Newco being as the surviving company. Newco will acquire WHL in an all-stock transaction which includes 17,008,633 ordinary shares of Newco stock, excluding additional contingent shares. Pursuant to the agreement, 2,750,000 shares will be issued to WHL shareholders upon closing. Up to 14, 258,633 shares of these 17,008,633 shares noted will be released to WHL shareholders when, on a consolidated basis, the surviving company achieves or exceeds after-tax net profits in the fiscal years of 2009, 2010 and 2011.
Furthermore, WHL shareholders and their designees will be issued an additional 2,212,789 ordinary shares of Newco, when the surviving company achieves or exceeds after-tax net profits in the fiscal year ended December 31, 2011, in the amount of $64,333,821.
