EX-10.3
GUARANTEE AGREEMENT, dated as of September 29, 2006, among ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇ DA JIAO YU KE JI YOU ▇▇▇▇ ▇▇▇▇ SI, HEILONGHIANG ZHONGE EDUCATION TRAINING
CENTER and HARBIN ZHONGHELIDA EDUCATIONAL TECHNOLOGY COMPANY LIMITED,
(collectively, the "SUBSIDIARY GUARANTORS"), and ▇▇▇▇▇▇ ▇▇, an individual
residing at [1601 ▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ (the
"INDIVIDUAL GUARANTOR", and collectively with the Subsidiary Guarantors, the
"GUARANTORS"); and SBI ADVISORS, LLC, a California limited liability company, as
agent (together with its successors and assigns in that capacity, "AGENT") for
the Investors (as defined below).
INTRODUCTION
Hong Kong League Central Credit Union, HIT Credit Union, ▇▇▇▇ ▇▇▇▇▇▇▇,
R. ▇▇▇▇▇ ▇▇▇▇▇, Cambria Investment Fund, LP, The ▇▇▇▇▇▇▇▇ Family L.P., and The
▇▇▇▇▇▇▇▇ Family, LLC (collectively, the "INVESTORS") have purchased from China
Education Alliance, Inc., a North Carolina corporation (the "COMPANY"),
$1,530,000 aggregate principal amount of secured promissory notes (the "NOTES"),
each dated as of the date hereof, and delivered respectively to the Investors.
In order to induce the Investors to purchase such Notes, the Guarantors, jointly
and severally, subject to the limitations set forth herein, have agreed to
guarantee the timely performance, payment, and collectibility of all obligations
of the Company pursuant to the Notes. Each Subsidiary Guarantor is a
wholly-owned subsidiary of the Company. The Individual Guarantor is the chief
executive officer and principal stockholder of the Company.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, each of the Guarantors hereby agrees as follows:
I. GUARANTEE
SECTION 1.01 GUARANTEE BY GUARANTORS.
Subject to Section 1.07 hereof, the Guarantors, jointly and severally,
hereby unconditionally, irrevocably, and absolutely guarantee to the Investors
(i) the due and punctual payment and collectibility of the principal of, and the
premium, if any, and interest (including interest accruing on or after the
filing of any petition in bankruptcy or reorganization, whether or not a claim
for post-filing interest is allowed in such proceeding) on, all obligations of
the Company under the Notes, when and as the same shall become due and payable,
whether at maturity of such obligations, by acceleration, or otherwise, (ii) the
due and punctual payment and collectibility of interest on the overdue principal
of, and premium and interest, if any, on, all obligations of Company under the
Notes, to the extent lawful, (iii) the due and punctual performance of all of
the
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covenants, agreements, and other obligations of Company to the Investors in
accordance with the terms of the Notes, and (iv) in the case of any extension of
time of payment or renewal of any of the obligations of Company under the Notes,
that the same will be promptly paid in full when due or performed in accordance
with the terms of such extension or renewal, at stated maturity, by
acceleration, or otherwise.
SECTION 1.02 ABSOLUTE, IRREVOCABLE, AND UNCONDITIONAL OBLIGATION. The
Guarantors, jointly and severally, hereby agree that their obligations hereunder
shall be absolute, irrevocable, and unconditional, irrespective of, and shall be
unaffected by, the identity of Company, the nature of the obligation of Company
to the Investors (whether as obligor, guarantor, or otherwise), any invalidity,
irregularity, or unenforceability of any such obligation or this Guarantee, any
failure to enforce any of the provisions of the Notes or this Guarantee, any
waiver, modification, or indulgence granted to any of the Guarantors or Company
with respect thereto by Investors, or any other circumstances which may
otherwise constitute a legal or equitable discharge or defense of surety or
guarantor. The Guarantors hereby waive diligence, presentment, demand of
payment, filing of claims with a court in the event of merger, insolvency, or
bankruptcy of Company, any right to require a proceeding first against Company,
the benefit of discussion, protest, or notice with respect to such obligations,
and all demands whatsoever, and covenants that this Guarantee will not be
discharged as to any obligation of Company under the Notes or to Investors,
except by payment in full of the principal amount due under the Notes, premium,
if any, and interest thereon, and by the complete performance of the obligations
contained in the Notes and this Guarantee.
SECTION 1.03 ACCELERATION OF OBLIGATIONS. The Guarantors, jointly and
severally, hereby agree, to the fullest extent they may lawfully do so, that, as
between the Guarantors, on the one hand, and Investors, on the other, (a) the
maturity of the obligations guaranteed hereby may be accelerated as provided in
the Notes for the purposes of this Guarantee, notwithstanding any stay,
injunction, or other prohibition preventing such acceleration in respect of the
obligations guaranteed hereby and (b) in the event of any declaration of
acceleration of such obligations, such obligations (whether or not due or
payable) shall forthwith become immediately due and payable by the Guarantors
for the purposes of this Guarantee.
SECTION 1.04 REINSTATEMENT OF GUARANTEE. If any Investors are required
by any court or otherwise to return to Company or any Guarantor, or any
custodian, receiver, liquidator, trustee, sequestrator, or other similar
official acting in relation to Company, any amount paid to any Investor in
respect of the Notes, this Guarantee, to the extent of such amount so returned,
shall be reinstated in full force and effect.
SECTION 1.05 SUBROGATION. The Guarantors hereby irrevocably waive any
claim or other rights which it may now have or hereafter acquire against
performance or enforcement of her or its obligations under this Guarantee,
including, without limitation, any right of subrogation, reimbursement,
exoneration, contribution, or indemnification, any right to participate in any
claim or remedy of any Investor against Company or any collateral which any
Investor hereafter acquires, whether or not such claim, remedy, or
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right arises in equity, or under contract, statute, or common law, including,
without limitation, the right to take or receive from Company directly or
indirectly, in cash or other property or by set-off or in any other manner,
payment or security on account of such claim or other rights. If any amount
shall be paid to any Guarantor in violation of the preceding sentence at any
time prior to the payment in full of all obligations and all other amounts
payable under this Guarantee, such amount shall be deemed to have been paid to
such Guarantor for the benefit of, and held in trust for the benefit of, the
Investors and shall forthwith be paid to the Investors to be credited and
applied upon such guaranteed obligations, whether matured or unmatured, in
accordance with the terms of the Notes.
SECTION 1.06 OTHER REMEDIES. Nothing contained in this Article I or
elsewhere herein is intended to or shall impair, as between the Guarantors and
Investors, the obligation of Guarantors, which is absolute and unconditional,
joint and several, to pay to the Investors the obligations of Company under the
Notes as and when the same shall become due and payable in accordance with the
provisions thereof, or the performance of the covenants, agreements, or other
obligations of Company to the Investors in accordance with the terms of the
Notes, nor shall anything herein prevent any Investor from exercising all
remedies otherwise permitted by applicable law upon default under the Notes.
SECTION 1.07 LIMITATION OF LIABILITY FO INDIVIDUAL GUARANTOR.
Notwithstanding anything herein to the contrary, the guarantee provided herein
by the Individual Guarantor shall be limited to the shares (the "PLEDGED
SHARES") pledged by the Individual Guarantor (and any affiliates or associates
thereof) pursuant to the Pledge Agreement (as hereinafter defined). Other than
the Pledged Shares and any other Collateral (as defined in the Pledge Agreement)
of the Individual Guarantor, Investor expressly acknowledges that the Indivdual
Guarantor shall have no obligations or liability to Investor or to any other
entity with respect to the Note or the obligations of Borrower thereunder, and
Investor expressly waives all other causes of action against the Individual
Guarantor with respect to the Note and the obligations of Borrower thereunder.
II. PLEDGE AGREEMENT
Simultaneously with the execution hereof, the Individual Guarantor is
executing and delivering to the Agent the Stock Pledge Agreement, dated of as
September 29, 2006 (the "PLEDGE AGREEMENT"), between the Individual Guarantor
and the Agent, to provide securities for the obligations of the Guarantors set
forth herein.
III. REPRESENTATIONS AND WARRANTIES
The Guarantors, jointly and severally, make the following
representations and warranties, each and all of which shall survive the
execution and delivery of this Agreement:
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SECTION 3.01 RESIDENCE OF GUARANTOR. The principal office (in the case
of the Subsidiary Guarantors) or place of residence (in the case Individual
Guarantor) is located at the address first specified above for such Guarantor.
SECTION 3.02 AUTHORITY. Each Guarantor has all requisite power and
authority to execute, deliver, and perform its obligations under this Agreement.
This Agreement has been duly authorized, executed, and delivered by each
Guarantor and constitutes the legal, valid, and binding obligation of each
Guarantor, enforceable against each Guarantor in accordance with its terms. No
consent of any party to any contract, arrangement, or understanding to which any
Guarantor is a party, or to which he or it or any of his or its respective
assets are subject, is required in connection with the execution or delivery of,
or the performance of its obligations under, this Agreement. The execution and
delivery of, and the performance by each Guarantor of his or its obligations
under, this Agreement will not violate, result in a breach of, or conflict with,
any term of any such contract, arrangement, or understanding, or violate or
result in a breach of, or conflict with any order, judgment, or decree, or, to
the best knowledge of any Guarantor, any law, rule, or regulation binding upon
any Guarantor or to which he or it or any of his or its respective businesses,
properties, or assets are subject. No authorization, approval, or other action
by, and no notice to or filing with, any governmental authority or regulatory
body is required either (i) for the grant by any Guarantor of the Guarantee or
the security interest granted hereby, or for the execution, delivery, or
performance of this Agreement by any Guarantor or (ii) for the perfection of, or
the exercise by any Investor of, his, her, or its rights and remedies hereunder.
IV. FURTHER ASSURANCES
Each Guarantor hereby agrees, jointly and severally, that from time to
time, at his sole expense, he or it will promptly execute and deliver all
further instruments and documents, and take all further action, that may be
necessary or desirable, or that any Investor may request, in order to protect
the guarantee set forth in Article I to this Agreement and to perfect and
protect any security interest granted or purported to be granted hereby or to
enable the Investors to exercise and enforce their respective rights and
remedies hereunder with respect to the Guarantee and any of the Collateral.
V. ATTORNEY-IN-FACT; INVESTOR MAY PERFORM
SECTION 5.01 ATTORNEY-IN-FACT.
Each Guarantor hereby irrevocably appoints any Investor Agent as such
Guarantor's attorney-in-fact, with full authority in the place and stead of such
Guarantor and in the name of such Guarantor or otherwise, from time to time in
such Investor Agent's discretion to take any action and to execute any
instrument which such Investor Agent may deem necessary or advisable to
accomplish the purposes of this Agreement, including, without limitation, to
receive, endorse, and collect all instruments made payable to such Guarantor
representing any dividend, interest payment, or other
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distribution in respect of the Collateral or any part thereof and to give full
discharge for the same. This power, being coupled with an interest, is
irrevocable. Nothing in this Article VII shall be construed as providing any
Investor or any Investor Agent with any remedies with respect to the Collateral
not otherwise provided for in this Agreement or under applicable law.
SECTION 5.02 INVESTOR MAY PERFORM. If any Guarantor fails to perform
any agreement contained herein, the Investors may (or may cause the Agent to),
but shall not be obligated to, itself perform, or cause performance of, such
agreement, and the expenses of the Investors incurred in connection therewith
shall be payable by the Guarantors pursuant to the terms of this Agreement.
VI. MISCELLANEOUS
SECTION 6.01 AMENDMENTS, ETC. No amendment or waiver of any provision
of this Agreement, nor consent to any departure by any Guarantor herefrom, shall
in any event be effective unless the same shall be in writing and signed by the
Investors, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
SECTION 6.02 NOTICE. All notices and other communications provided for
hereunder shall be in writing (including telegraphic communication) and, if to
the Guarantor, mailed or telegraphed or delivered to it, addressed to it at the
address specified in the introductory paragraph hereof, if to Investor, mailed
or delivered to it at the address of Investor specified in Annex A hereto, or as
to any party hereto at such other address as shall be designated by such party
in a written notice to each other party complying as to delivery with the terms
of this Section. All such notices and other communications shall, when mailed or
telegraphed, respectively, be effective when deposited in the mails or delivered
to the telegraph company, respectively, addressed as aforesaid.
SECTION 6.03 WAIVER. No failure on the part of any Investor to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right.
SECTION 6.04 SEVERABILITY. The illegality or unenforceability of any
provision of this Agreement or any instrument or document required pursuant
hereto shall not in any way affect or impair the legality or enforceability of
the remaining provisions of this Agreement or any instrument or document
required pursuant hereto.
SECTION 6.05 GOVERNING LAW; TERMS. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of California, without
giving effect to principles of conflicts of laws. Any action, suit, or
proceeding arising out of, based on, or in connection with this Agreement or the
transactions contemplated hereby may be brought in the state courts or the
United States District Court, in each case located in Los Angeles county or
Orange county, California, and each party covenants and agrees
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not to assert, by way of motion, as a defense, or otherwise, in any such action,
suit, or proceeding, any claim that it or he is not subject personally to the
jurisdiction of such court, that its or his property is exempt or immune from
attachment or execution, that the action, suit, or proceeding is brought in an
inconvenient forum, that the venue of the action, suit, or proceeding is
improper, or that this Agreement or the subject matter hereof may not be
enforced in or by such court.
SECTION 6.06 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, all of which, when taken together shall constitute one
original.
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IN WITNESS WHERE OF, the parties hereto have executed and delivered
this Agreement as of the date first above written.
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇ DA JIAO YU KE JI
YOU ▇▇▇▇ ▇▇▇▇ SI
BY: /s/ [Illegible signature]
-------------------------------
NAME:
TITLE:
HEILONGHIANG ZHONGE EDUCATION
TRAINING CENTER
BY: /s/ [Illegible signature]
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NAME:
TITLE:
HARBIN ZHONGHELIDA EDUCATIONAL
TECHNOLOGY COMPANY LIMITED
BY: /s/ [Illegible signature]
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NAME:
TITLE:
/s/ ▇▇▇▇▇▇ ▇▇
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▇▇▇▇▇▇ ▇▇
SBI ADVISORS LLC, AS AGENT
BY: /s/ [Illegible signature]
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NAME:
TITLE:
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