UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A NO. 1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) SEPTEMBER 29, 2006
CHINA EDUCATION ALLIANCE, INC.
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(Exact name of registrant as specified in its charter)
North Carolina 333-101167 56-2012361
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(State or other jurisdiction of (Commission (IRS Employer
incorporation) File Number) Identification No.)
80 Heng Shan Road, Kun Lun Shopping Mall, Harbin, P.R. China 150090
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 011-86-451-8233-5794
N/A
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(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER
AN OFF-BALANCE SHEET ARRANGEMENT
ITEM 2.04 TRIGGERING EVENTS THAT ACCELERATE OR INCREASE A DIRECT FINANCIAL
OBLIGATION OR AN OBLIGATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT
ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES
On September 29, 2006 China Education Alliance, Inc., a North Carolina
corporation (the "REGISTRANT"), consummated a bridge financing pursuant to which
the Registrant issued $1,530,000 aggregate principal amount of secured
promissory notes (each, a "NOTE" and collectively, the "NOTES") and warrants to
acquire an aggregate number of shares of common stock of the registrant equal to
the highest dollar amount of the Principal prior to the Maturity Date for an
exercise price per share of $ 0.50. The Notes were issued in favor of each of
the following: (i) Hong Kong League Central Credit Union, a Hong Kong Credit
Union and SBI Advisors, LLC, in its capacity as agent for lender (the "AGENT")
for an aggregate principal amount of US$530,000, (ii) HIT Credit Union, a Hong
Kong Credit Union and the Agent for an aggregate principal amount of US$470,000,
(iii) Sean Wallace and the Agent for an aggregate principal amount of
US$100,000, (iv) R. Ralph Parks and the Agent for an aggregate principal amount
of US$100,000, (v) Cambria Fund Investment, L.P., a California limited
partnership, and the Agent for an aggregate principal amount of US$200,000, (vi)
The Angeloff Family L.P., a California limited partnership and the Agent for an
aggregate principal amount of US$100,000, and (vii) The Angeloff Family, LLC, a
California limited liability company and the Agent for an aggregate principal
amount of US$30,000.
Each Note accrues interest at the rate of 6% per annum from September
29, 2006 to March 29, 2007, with interest payable each month commencing from
November 1, 2006 and terminating on March 1, 2007, as well as March 29, 2007,
which is the maturity date for each Note.
The Notes constitute senior indebtedness of the Registrant. The Notes
are guaranteed by Harbin Zhong He Li Da Jiao Yu Ke Ji You Xian Gong Si,
Heilonghiang Zhonge Education Training Center and Harbin Zhonghelida Educational
Technology Company Limited, (collectively, the "SUBSIDIARY GUARANTORS"), and
Xinqun Yu (together with the Subsidiary Guarantors, the "GUARANTORS"), the chief
executive officer and principal stockholder of the Registrant. The guarantee of
Xinqun Yu is secured by his pledge of a number of shares of common stock of the
Registrant to be determined from time to time as provided therein, with a value
of $3,060,000. The number of shares initially pledged is 7,859,598.
Under each Note, if one or more of the following events ("EVENTS OF
DEFAULT") shall have occurred and be continuing: (a) the Registrant's failure to
pay any amount due under each Note within five (5) days of the due date of such
payment, (b) the Registrant's failure to observe or perform any covenant or
agreement of each Note, (c) any representation, warranty, certification or
statement made by the Registrant or any Guarantor (as defined below) in any the
documents issued in connection with the Note shall prove to have been incorrect
in any material respect when made (or deemed made), (d) a judgment or order for
the payment of money shall be rendered against the Registrant or any subsidiary
and such judgment or order shall continue unsatisfied and unstayed for
a period of ten (10) days, (e) the Registrant or any Guarantor shall commence a
voluntary case or other proceeding seeking liquidation, reorganization or other
relief or seeks the appointment of a trustee, receiver, liquidator, custodian or
other similar official of it or any substantial part of its property, or shall
consent to any such relief or to the appointment of or taking possession by any
such official in an involuntary case or other proceeding commenced against it,
or shall make a general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due, or shall take any corporate
action to authorize any of the foregoing, (f) an involuntary case or other
proceeding shall be commenced against the Registrant or any Guarantor seeking
liquidation, reorganization or other relief with respect to it or its debts
under any bankruptcy, insolvency or other similar law now or hereafter in effect
or seeking the appointment of a trustee, receiver, liquidator, custodian or
other similar official of it or any substantial part of its property, and such
involuntary case or other proceeding shall remain undismissed for a period of 60
days, or an order for relief shall be entered against the Registrant or any
subsidiary, as applicable, under the federal bankruptcy laws, (g) the security
interest shall, for any reason (other than the holder's failure to renew the
filing of any Uniform Commercial Code financing statement), cease to be a first
priority, perfected security interest in and to any collateral and such event is
not remedied within five (5) days of such failure, (h) any Guarantor shall fail
to observe or perform any covenant or agreement in the Guarantee Agreement (as
defined below) or Xinqun Yu shall fail to observe or perform any covenant or
agreement in the Stock Pledge Agreement (as defined below), (i) any
representation, warranty, certification or statement made by any Guarantor in
the Guarantee Agreement or the Stock Pledge Agreement, or in any document
delivered pursuant to these transactions shall prove to have been incorrect in
any material respect when made (or deemed made), (j) a judgment or order for the
payment of money shall be rendered against any the Registrant or any Guarantor
and such judgment or order shall continue unsatisfied and unstayed for a period
of ten (10) days, (k) any Guarantor shall commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property, or shall consent to any such relief or to the appointment of or
taking possession by any such official in an involuntary case or other
proceeding commenced against it, or shall make a general assignment for the
benefit of creditors, or shall fail generally to pay its debts as they become
due, or shall take any corporate action to authorize any of the foregoing, or
(l) an involuntary case or other proceeding shall be commenced against any
Guarantor seeking liquidation, reorganization or other relief with respect to it
or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property, and such involuntary case or other proceeding shall remain
undismissed for a period of 60 days; or an order for relief shall be entered
against any Guarantor, as applicable, under the federal bankruptcy laws as now
or hereafter in effect, or (m) there shall have occurred any change in control,
then, and in every such event, the principal, accrued interest thereon and all
other amounts owing hereunder shall thereupon become, immediately due and
payable without presentment, demand, protest or other notice of any kind, all of
which are hereby waived by the Registrant. In the case of any of the Events of
Default specified in clause (e), (f), (k), or (l) above, without any notice to
the Registrant or any other act by the holder, the principal, accrued interest
thereon and all other amounts owing hereunder shall become immediately due and
payable without presentment, demand, protest or other notice of any kind, all of
which are hereby waived by the Registrant.
The Warrants are exerciable at the exercise price per share of $0.50
for a period of two years.
The Notes and the Warrants have been issued and sold in reliance upon
exemption under Section 4(2) of the Securities Act of 1933, as amended.
On September 29, 2006, each of Harbin Zhong He Li Da Jiao Yu Ke Ji You
Xian Gong Si, Heilonghiang Zhonge Education Training Center, Harbin Zhonghelida
Educational Technology Company Limited, which is a wholly-owned subsidiary of
the Registrant and Xinqun Yu, Chief Executive Officer and principal stockholder
of the Registrant (each, a "GUARANTOR" and collectively, the "GUARANTORS"),
entered into a Guarantee Agreement (the "GUARANTEE AGREEMENT"), pursuant to
which the Guarantors, jointly and severally, subject to limitations set forth in
the Guarantee Agreement, have agreed to guarantee the timely performance,
payment, and collectability of all the obligations of the Registrant pursuant to
the Notes. The maturity of the obligations guaranteed under the Guarantee
Agreement may be accelerated as provided in the Notes, notwithstanding any stay,
injunction, or other prohibition preventing such acceleration in respect of the
obligations guaranteed. In the event of such acceleration, such obligations such
forthwith become immediately due and payable by the Guarantors.
On September 29, 2006, Xinqun Yu, who is the record and beneficial
owner of 38,050,000 shares of the Registrant entered into a Stock Pledge
Agreement with the Agent, pursuant to which he has granted a first priority
security interest in favor of the Agent for the equal and ratable benefit of
each holder of the Note, in the shares of Common Stock (initially 7,859,589
shares), cash dividends and other payments thereon. The number of pledged shares
shall equal the quotient of (A) divided by (B), where (A) equals 3,060,000 and
where (B) equals the average closing price for the Common Stock on the principal
United States market on which it is quoted or trades for the 30 day period prior
to the date of determination.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired.
Not Applicable
(b) Pro Forma Financial Information
Not Applicable
(c) Exhibits.
EXHIBIT NO. DOCUMENT
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10.1* Form of Promissory Note, dated September 29, 2006, by the
Registrant
10.2* Stock Pledge Agreement, dated September 29, 2006, between
Xinqun Yu and the Agent
10.3* Guarantee Agreement, dated as of September 29, 2006, among
Harbin Zhong He Li Da Jiao Yu Ke Ji You Xian Gong Si,
Heilonghiang Zhonge Education Training Center, Harbin
Zhonghelida Educational Technology Company Limited, Xinqun
Yu, and the Agent
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*Previously filed.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: November 1, 2006
CHINA EDUCATION ALLIANCE, INC.
By: /s/ Xinqun Yu
Name: Xinqun Yu
Title: Chief Executive Officer