UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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):  11/19/2008
 
UNIVERSAL ENERGY CORP.
(Exact name of registrant as specified in its charter)
 
Commission File Number:  000-50284
 
Delaware
  
80-0025175
(State or other jurisdiction of
  
(IRS Employer
incorporation)
  
Identification No.)
 
30 Skyline Drive
Lake Mary, FL 32746
(Address of principal executive offices, including zip code)
 
(800) 975-2076
(Registrant’s telephone number, including area code)
 
(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:

[  ]   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
 
On November 19, 2008, Universal Energy Corp. (the "Company"), consummated the offer and sale of an aggregate of $777,0000 principal amount of its unsecured convertible 8% debentures and associated warrants (the "October Financing"), dated as of October 31, 2008, between the Company and the purchasers of the debentures and warrants (collectively, the "Purchasers"). The Company received aggregate proceeds of $605,000 reflecting a 20% original issue discount to the Purchasers. The Securities Purchase Agreement, although dated as of October 31, 2008 contemplated a simultaneous signing and closing which occurred on November 19, 2008.

The debentures will be due and payable on September 30, 2010. The debentures bear interest at a rate of 8 percent per annum.

At any time from the closing date until the maturity date of the debentures, the Purchasers have the right to convert the debentures, in whole or in part, into common stock of the Company at a price equal to the lower of $0.25, or 80 percent of the average of the three lowest closing bid prices over the twenty trading days immediately preceding conversion.. The conversion price may be adjusted downward under circumstances set forth in the debentures. If so adjusted, the aggregate number of shares issuable, upon conversion in full, will increase.

The Purchasers also received "J" warrants to purchase 3,108,824 additional shares of common stock at a price of $0.25 per share exercisable for five (5) years.

The Securities Purchase Agreement, debentures and warrants contain covenants that will limit the ability of the Company to, among other things: incur or guarantee additional indebtedness; incur or create liens; amend its certificate of incorporation, bylaws or other charter documents so as to adversely affect any rights of the holders of the debentures; and repay or repurchase more than a de minimis number of shares of common stock other than as permitted in the debentures and other documents executed with the Purchasers. The debentures include customary default provisions and an event of default includes, among other things, a change of control of the Company, the sale of all or substantially all of the Company's assets, which results in such indebtedness being accelerated. Upon the occurrence of an event of default, each debenture may become immediately due and payable, either automatically or by declaration of the holder of such debenture. The aggregate amount payable upon an acceleration by reason of an event of default shall be equal to the greater of 125% of the principal amount of the debentures to be prepaid or the principal amount of the debentures to be prepaid, divided by the conversion price on the date specified in the debenture, multiplied by the closing price on the date set forth in the debenture.

In connection with this transaction, each Purchaser has contractually agreed to restrict its ability to convert the debentures, exercise the warrants and additional investment rights and receive shares of the Company's common stock such that the number of shares of the Company's common stock held by them and their affiliates after such conversion or exercise does not exceed 4.99 percent of the number of shares of the Company's common stock outstanding immediately after giving effect to such conversion or exercise.

Certain officers of the Company have entered into a limited standstill agreement that restricts their right on the disposition of any shares of common stock of the Company from the date of the Securities Purchase Agreement until the Debentures issued there under are no longer outstanding.

The representations and warranties set forth in the Securities Purchase Agreement is the result of negotiations between the parties to such agreement and are solely for the benefit of such parties. These representations and warranties speak only as of the date of the agreement, are prepared in the context of the transaction contemplated by the agreement, and are intended in part to allocate risk between the parties. Therefore, such representations and warranties are not necessarily true, complete and accurate statements of fact about the matters addressed therein. As a result, prospective investors are cautioned to read such representations and warranties in light of this context.

 
 
Item 2.03.    Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
 
(a) The information included under Item 1.01 with respect to the issuance of the Debentures and Warrants is incorporated under this Item 2.03.
 
 
Item 3.02.    Unregistered Sales of Equity Securities
 
(a) The information included under Item 1.01 with respect to the issuance of the Secured Debentures and Warrants is incorporated under this Item 3.02.

The Company sold the Secured Debentures and the Warrants in reliance upon the exemption from securities registration afforded by Rule 506 under Regulation D as promulgated by the SEC under the Securities Act of 1933, as amended (the "Securities Act"), based upon the following: (i) each of the Investors provided information to the Company confirming that such Investor is an "accredited investor," as defined in Rule 501 of Regulation D promulgated under the Securities Act and that such Investor has such knowledge and expertise in financial and business matters that it is capable of evaluating the merits and risks of the investment in the securities; (ii) all Investors were solicited through direct contact and no means of general solicitation was employed in connection with the offering; (iii) the Investors acknowledged that all securities being purchased were "restricted securities" for purposes of the Securities Act, and agreed to transfer or sell such securities only in a transaction registered under the Securities Act, exempt from registration under the Securities Act, or to an "affiliate" (as defined in Rule 144 promulgated under the Securities Act) of the Investor who is an accredited investor, and (iv) legends were placed on each of the Warrants and Secured Debentures setting forth the restrictions on transfer applicable to such securities.

 
 
Item 9.01.    Financial Statements and Exhibits
 
The following exhibits are filed as part of this current report.

Exhibit 10.1 Form of Securities Purchase Agreement

Exhibit 10.2 Form of Convertible Debenture
Exhibit 10.3 Form of "J" Warrant to Purchase Common Stock
Exhibit 10.4 Form of Limited Standstill Agreement
 

 

Signature(s)
 
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.
 
     
 
UNIVERSAL ENERGY CORP.
 
 
Date: November 20, 2008
     
By:
 
/s/    Dyron M. Watford
               
Dyron M. Watford
               
Chief Financial Officer
 
 

 

Exhibit Index
 
Exhibit No.
  
Description
EX-10.1
  
Form of Securities Purchase Agreement
EX-10.2
  
Form of Convertible Debenture
EX-10.3
  
Form of "J" Warrant to Purchase Common Stock
EX-10.4
  
Form of Limited Standstill Agreement
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