AMENDMENT NO. 2
Exhibit
99.1
AMENDMENT
NO. 2
Amendment
(this “Amendment”)
dated
as of this 8th
day of
June, 2007 to a certain Securities Purchase Agreement dated as of May 8, 2007
by
and among China
Education Alliance, Inc.,
a North
Carolina corporation, and Xxxxxx
Partners LP, and
other
Investors, as amended by an amendment dated as of May 23, 2006, which agreement,
as so amended, is referred to as the “Agreement.”
1. All
terms
defined in the Agreement and used in this Amendment shall have the same meaning
in this Amendment as in the Agreement.
2. The
Investors agree to reduce by 2,206,897 shares the number of shares of Common
Stock issuable upon exercise of warrants with an exercise price of $1.00 per
share (the “$1.00 Warrants”), in consideration for which the Company will reduce
the exercise price to $.50 with respect to an equal number of shares issuable
upon Warrants having an exercise price of $.80 per share ($.80 Warrants”). The
$.80 Warrants with respect to which the exercise price is reduced to $.50 are
referred to as the “$.50 Warrants.”
3. Set
forth
in Exhibit A is a table setting forth the the current number of shares of Series
A Preferred Stock and Warrants issuable upon conversion of the Notes and New
Note (with the number of shares issuable to Xxxxxx with respect to its
$1,000,000 New Note being corrected) and the number of shares of Series A
Preferred Stock and Warrants issuable upon conversion of the Notes and New
Note
being adjusted to reflect the changes provided for in Section 2 of this
Agreement.
4. Schedules
A and B of the Notes and the New Note are hereby amended to reflect the
adjustment set forth under “Adjusted Numbers” in Exhibit A to this Agreement.
The number of shares of Common Stock issuable as provided in Schedule B is
the
same as the number of shares of Series A Preferred Stock. The number of shares
of Common Stock issuable pursuant to Schedule C of each Investor’s Note is the
sum of the numbers set forth in columns E through I with respect to such
Investor.
5. The
$.50
Warrants will be identical to the $.80 Warrants except that the exercise price
will be $.50.
6. All
of
the Warrants are hereby modified to change the definition of Target Volume
, so
that the definition of Target Volume is one thousand (1,000)
shares.
7. Section
6.15.4 is hereby amended to read as follows:
“6.15.4
If the percentage shortfall is less than thirty three and one-third percent
(33
1/3%), then the adjustment percentage shall be determined. The adjustment
percentage shall mean the percentage that the percentage shortfall bears to
thirty three and one-third percent (33 1/3%). The Escrow Agent shall (a) deliver
to the Investors in the ratio of their initial purchase of Securities the such
number of shares of Series A Preferred Stock as is determined by multiplying
the
adjustment percentage by 2,833,333 shares, (b) deliver to the Company the
balance of the 2,833,333 shares of Series A Preferred Stock that were not
transferred to the Investors, and the Company shall cancel such shares, (c)
deliver to the Company such number of shares of Common Stock as is determined
by
multiplying the adjustment percentage by 2,833,333 shares, and the Company
shall
cancel such shares, and (d) deliver to Xiqun
Yu
the
balance of the 2,833,333 shares that were not transferred to the Company. For
example, if the percentage shortfall is 16 2/3%, the adjustment percentage
would
be 50%, and (i) half of the 2,833,333 shares of Series A Preferred Stock, or
1,416,667 shares would be delivered to the Investors, with the balance being
delivered to the Company, and (ii) half of the 2,833,333 shares of Common Stock,
or 1,416,667 shares, would be delivered to Company with the balance being
returned to Xx. Xx.”
8. Section
6.19 of the Agreement is amended to provide that the Proxy Statement shall
be
filed with the SEC not later than June 15, 2007.
9. Except
as
amended by this Amendment, the Agreement shall remain in full force and
effect.
[Signatures
on Following Page]
IN
WITNESS WHEREOF,
the
Investors and the Company have as of the date first written above executed
this
Amendment.
THE
COMPANY:
CHINA
EDUCATION ALLIANCE, INC.
By:_/s/
Xiqun Yu _______
Name:
Xiqun Yu, CEO
/s/
Xiqun Yu _______
Xiqun
Yu
INVESTORS:
XXXXXX
PARTNERS LP
By:
Xxxxxx Capital Advisors, LLC, its General Partner
/s/
Xxxxxx Xxxxxx Xxxxxx
__________
Xxxxxx
Xxxxxx Xxxxxx, President
EOS
HOLDINGS
By:
/s/
Xxx X. Xxxxxx
Xxx
X.Xxxxxx, President
HUA-MEI
21ST CENTURY PARTNERS, LP
By:/s/
Xxxxx Xxxxx
Xxxxx
Xxxxx, CEO
2
|
Exhibit
A
|
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|
China
Education Alliance -- Investment Information
|
||||||||||||||||||||||
|
Initial
Investment
|
||||||||||||||||||||||
|
|
|
|
|
Preferred
|
|
$0.69
|
|
$0.80
|
|
$1.00
|
|
$0.50
|
|
|||||||||
|
Name
|
|
Investment
|
|
Note
|
|
Stock
|
|
Warrants
|
|
Warrants
|
|
Warrants
|
|
Warrants
|
||||||||
|
Xxxxxx
|
$
|
2,175,000
|
$
|
2,175,000
|
5,878,378
|
5,437,500
|
2,718,750
|
2,718,750
|
||||||||||||||
|
EOS
|
$
|
125,000
|
$
|
125,000
|
337,838
|
312,500
|
156,250
|
156,250
|
||||||||||||||
|
Hua-Mei
|
$
|
100,000
|
$
|
100,000
|
270,270
|
250,000
|
125,000
|
125,000
|
||||||||||||||
|
Xxxxxx
|
$
|
1,000,000
|
$
|
1,000,000
|
2,702,703
|
2,500,000
|
1,250,000
|
|||||||||||||||
|
Total
|
$
|
3,400,000
|
$
|
3,400,000
|
9,189,189
|
8,500,000
|
4,250,000
|
3,000,000
|
||||||||||||||
|
Total
Warrants
|
15,750,000
|
|||||||||||||||||||||
|
Adjusted
Numbers
|
||||||||||||||||||||||
|
Xxxxxx
|
$
|
2,175,000
|
$
|
2,175,000
|
5,878,378
|
5,437,500
|
718,750
|
718,750
|
2,000,000
|
|||||||||||||
|
EOS
|
$
|
125,000
|
$
|
125,000
|
337,838
|
312,500
|
41,307
|
41,307
|
114,943
|
|||||||||||||
|
Hua-Mei
|
$
|
100,000
|
$
|
100,000
|
270,270
|
250,000
|
33,046
|
33,046
|
91,954
|
|||||||||||||
|
Xxxxxx
|
$
|
1,000,000
|
$
|
1,000,000
|
2,702,703
|
2,500,000
|
1,250,000
|
|||||||||||||||
|
Total
|
$
|
3,400,000
|
$
|
3,400,000
|
9,189,189
|
8,500,000
|
2,043,103
|
793,103
|
2,206,897
|
|||||||||||||
|
Total
Warrants
|
13,543,103
|
|||||||||||||||||||||
|
Percentage
reduction in $1.00 warrants
|
0.735632
|
|||||||||||||||||||||
