UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
March 14, 2001
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Universe2U Inc.
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(Exact name of registrant as specified in its chapter)
Nevada
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(State or other jurisdiction of incorporation)
333-86331
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(Commission File Number)
88-0433489
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(IRS Employer Identification No.)
30 West Beaver Creek Rd. - Suite 109
Richmond Hill, Ontario, Canada
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(Address of principal executive offices)
L4B 3K1
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(Zip Code)
(905) 881-3284
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(Registrant's telephone number, including area code)
Item 5. Other Events.
On March 13, 2001, Universe2U Inc. (the "Company") executed a private equity
line term sheet (the "Term Sheet") with Dominion Fixed Income Plus Investments
Limited, a British Virgin Islands corporation (the "Investor") for the purchase
of the Company's common stock up to $35 million dollars (the "Commitment
Value"). The Company and Investor have agreed to execute an irrevocable
Investment Agreement in accordance with the following terms and conditions (the
"Equity Line").
The securities to be purchased under the equity line shall be issued pursuant to
the exemption from registration provided by Regulation S promulgated under the
Securities Act. Such securities may not be re-sold by the Investor absent the
effectiveness of a registration statement or an applicable exemption from
registration requirements. The Investor commits to purchase securities under the
Equity Line and shall only re-sell the securities under a qualified prospectus.
The Company shall put Common Stock (each, a "Put") to the Investor, subject to
an effective Registration Statement, ending twenty four (24) months from the
effective date of the Registration Statement. The date of each Put is referred
to as the "Put Date." The Investor shall purchase the Company's Common Stock for
each Put at a purchase price of 90% of the Market Price (the "Purchase Price").
The "Market Price" shall equal the lower of: (a) the average closing price of
the Company's Common Stock during the five (5) business days following each Put
Date ("Pricing Period") or (b) the price of the Company's Common Stock as of the
date immediately preceding the date of execution of each Put period hereof, but
(c) shall in no event at any time be greater than 110% of the closing price of
the Company's Common Stock as of the Put Date. If the Market Price is less than
25% of the closing price of the Company's Common Stock on the Put Date (a
"Market Out Put"), the Company may, at its sole discretion, cancel such Put by
prompt notice to the Investor. The Company shall have no obligation to sell such
Market Out Put shares to the Investor after a Market Out cancellation. Any such
Market Out cancellation shall be effective solely with respect to the referenced
Market Out Put shares and shall have no effect on any other terms or conditions
of the Equity Line. The amount of Common Shares sold to the Investor in each Put
shall not exceed a share Volume Limitation equal to 15% of the aggregate trading
volume of the Common Stock traded on the Company's primary exchange during any
Pricing Period for such Put ("Volume Limitation").
The Company has agreed to pay a Commitment Fee to the Investor in cash, or cash
equivalent, equal to one percent (1%) of Commitment Value, payable upon receipt
of the funds from the first Put. The Company may, at its sole discretion, pay
such fee in Common Stock as to which the number of shares shall be determined
using a stock price equal to the Market Price for the first Put. In addition,
for each Put, the Investor shall receive a warrant exercisable for an amount of
shares equal to 25% of the number of shares purchased under such Put. The
exercise price for each such warrant shall be the same as the Purchase Price of
the shares purchased under such Put.
The Equity Line Agreement is subject to customary due diligence and execution of
mutually acceptable definitive documentation on the part of the Investor. In the
event that the Investor notifies the Company in writing during, or upon
completion of, such initial diligence that the Investor elects not to proceed
with the obligations under the Term Sheet (a "Due Diligence Notice"), the Equity
Line shall terminate with no further obligation on the part of the Investor.
Upon completion of the Initial Diligence, Investor's Counsel shall prepare all
legal documentation required to close the Equity Line transaction (the "Closing
Documents"). During the three (3) business day period following the date of
receipt of the Closing Documents by the Company (the "Document Review Period"),
Company and its legal counsel shall review the Closing Documents and negotiate
any necessary modifications with the Investor's legal counsel. Should the
Company wish to reject the Closing Documents (as modified by mutual agreement),
the Company shall provide to the Investor written notice of such rejection (an
"Unacceptable Document Notice") prior to the close of business on the last day
of the Document Review Period, in which case the Equity Line Commitment by the
Investor shall be terminated. If the Company does not deliver an Unacceptable
Document Notice to the Investor prior to the expiration of the Document Review
Period, the Closing Documents shall be deemed accepted by the Company.
The Company shall file a Registration Statement within 30 days of the Closing,
providing for resale of the Common Stock to be issued under the Equity Line and
the Common Stock underlying the Purchase Warrants. Such Registration Statement
shall be effective 45 days after the Closing. If the Registration Statement is
not filed or not effective within the foregoing respective time periods, the
principal value registered thereunder shall be
subject to interest payment to Investor at a rate of 0.1% per day which shall
accrue and be payable to the Investor for each calendar day on which the Company
is in default of such filing and/or effectiveness of Registration. The Company
shall maintain the effectiveness of such Registration Statement for such time as
any shares of Common Stock issued to the Investor under the Equity Line remain
outstanding that cannot be sold by Investor under Rule 144(k). The shares
underlying the Warrants shall (i) be included in the Registration Statement by
the Company, (ii) include anti-dilution provisions due to dilutive stock
issuances and (iii) shall have a 5-year term.
In the event the Company fails to Put to the Investor 15% of the Commitment
Value during each twelve-month period of the Equity Line term, the Company shall
pay to the Investor a Non Usage Fee equal to $100,000, less 10% of the dollar
amount Put to Investor during the twelve-month period. If the average closing
price of the Company's Common Stock over any twelve-month period during the term
of the Equity Line is less than 50% of the closing price of the Company's Common
Stock as of the date of execution hereof, the Non-Usage Fee shall be waived and
shall not apply for such twelve-month period. The Company may cancel the Equity
Line at any time. In the event the Company fails to have sold to the Investor a
minimum of $2,000,000 at any time prior to cancellation, the Company shall pay
to the Investor a Non Usage Fee equal to $200,000, less 10% of the dollar amount
sold to the Investor during the period prior to cancellation. If the average
closing price of the Company's Common Stock for the period from the date of the
Company's execution of the Term Sheet until the cancellation date is less than
50% of the closing price of the Company's Common Stock as of date of execution
hereof, the cancellation fee shall be reduced to $100,000, less 10% of the
dollar amount sold to the Investor during the period prior to cancellation.
The Company shall cover all reasonable fees, costs and expenses of the
Investor's counsel in connection with the Investor's due diligence, drafting of
definitive documentation, coordination of each Put and review of the
Registration Statement and any amendments.
The following conditions must be met on the closing of each Put, unless
otherwise mutually agreed between the Investor and the Company: the Common
Stock shall be trading on the New York Stock Exchange, American Stock Exchange,
or NASDAQ Market System (including NASDAQ National and/or Small cap) or OTC
Bulletin Board System; at least 20 business days shall have passed since the
last Pricing Period End Date of the prior Put (unless waived by Investor); the
Company shall have given to the Investor a minimum of 20 business days' notice
prior to each Put (unless waived by the Investor) specifying the approximate
amount of Common Shares for such prospective Put; a Registration Statement is
effective for the resale of the Common Stock; and, no material changes shall
have occurred with respect to the Company's operations, financial condition,
corporate existence, capitalization, stock trading price, trading volume,
regulatory authorization to trade Company stock; or material changes in capital
market conditions generally.
Prior to providing notice to each Put, the Company shall advise the Investor of
material changes that have occurred with respect to the Company's operations,
financial condition, corporate existence, capitalization and regulatory
authorization to trade the Company's stock. With respect to all of the
foregoing and during the effectiveness of the Registration Statement referenced
above, the Company shall permit reasonable continuing due diligence and
monitoring by the Investor, and in connection thereof the Investor may, at its
sole discretion, require the Company and its counsel to deliver officers'
certificates and legal opinions to the Investor's sole satisfaction.
The Company and the Investor have supplementally agreed that from the date of
inception of the Equity Line, the sale or issuance by the Company of Common
Stock and warrants under the Equity Line that are issued at a price less than
the greater of book or market value together with sales by officers, directors,
or substantial shareholders of the Company shall not exceed (a) 20% or more of
the Common Stock or 20% or more of the voting power outstanding before inception
of the Equity Line or (b) 20% or more of the Common Stock or 20% or more of the
voting power outstanding before an issuance under the Equity Line for less than
the greater of book or market value of the Common Stock.
Under the terms agreed upon with the Investor, all draws on the Equity Line may
be made at the sole discretion of the Company. The Company intends to use the
proceeds from the Equity Line for general corporate and operating purposes.
SIGNATURES
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.
UNIVERSE2U INC.
Date: March 14, 2001 By: /s/ Kim Allen
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Kim Allen
Chief Executive Officer