Form
8-K for NOVORI INC.
31-Jan-2007
Unregistered Sale of Equity Securities
Item 3.02 Unregistered Sales of Equity Securities
Novori Inc.
("Novori") has recently entered into three material agreements.
Convertible Promissory
Note
On January 23, 2007 Novori
entered into a 5% convertible promissory note due February 1, 2009 (the
"Note") with Focus Capital Investments Ltd. ("Focus")
pursuant to which Focus loaned $100,000 to Novori. The loan is to be used for
accounts payable as of the date of the Note; payment of Novori's legal,
accounting and auditing fees; services for the development of the Company's
website at www.novori.com; and services or printing fees for the preparation of
investor relations material (the "Authorized Uses").
The material terms of the
Note are as follows:
Payment Terms
Novori agrees to repay
Focus the balance of $100,000 ("Principal") plus interest at 5% per
annum on February
1, 2009. Novori may reduce the amount of Principal payable by
paying down all or a portion of the Principal back to Focus
at any time prior to February
1, 2009.
Conversion of Note
At any time before February 1, 2009,
Focus has the right to convert all, or a portion of, the principal amount of
the Note into common stock of Novori at a conversion price which shall be the
lesser of i) $0.50 or ii) a 25% discount to the five
day value weighted average stock price of Novori's common stock as of the date
of conversion.
Acceleration
Focus has the right to
declare the entire unpaid principal and interest under the Note as due
immediately for any of the following reasons:
º If Novori fails to keep
any promise made in the Note within thirty days after written notice from
Focus;
º If Novori uses the Principal as payment for anything other than the
Authorized Uses;
º If judgment is entered into against Novori in excess of $100,000 which
remains outstanding for thirty days;
º If bankruptcy, receivership, or insolvency proceedings are started by or
against Novori, or if Novori dissolves, liquidates or otherwise winds up its
business;
º If Novori ceases to be quoted on the OTCBB; or
º If there is a change of control of Novori.
Registration
Novori has agreed to
register the Note on a registration statement with the US Securities
and Exchange Commission (the "SEC"), covering the resale of all of
the common stock of Novori underlying the Note.
Standby Equity Distribution
Agreement
On January 24, 2007 Novori
entered into a standby equity distribution agreement (the "Distribution
Agreement") with 0775270 B.C. Ltd., a corporation incorporated in British
Columbia, Canada ("Investor") pursuant to which Novori has agreed to
issue and sell to the Investor from time to time and the Investor has agreed to
purchase from Novori, Novori's common stock.
The material terms of the
Distribution Agreement are as follows:
Commitment Amount
The Investor has agreed to
purchase up to an aggregate amount of $1,260,000 worth of Novori's common stock
pursuant to the terms of the Distribution Agreement (the "Commitment
Amount").
Novori shall request an
advance of a portion of the Commitment Amount by sending a notice to the
Investor which will specify the advance amount that Novori requests from the
Investor and the date that the advance is to be made. On the date that the
advance is to be made, the Investor shall deliver the requested funds to
Novori, and Novori shall deliver the equivalent amount of shares to the
Investor. The number of shares of common stock of Novori that the Investor
shall receive for each advance shall be determined by dividing the amount of
the advance by the purchase price which shall be 60% of the value weighted
average stock price during the five consecutive trading days after the date
that the notice requesting an advance was made. There will be a minimum of 28
days between each advance of funds and the corresponding delivery of free
trading shares.
Registration
Novori has agreed to file
with the SEC a Registration Statement with respect to the resale of all of the
common stock of Novori underlying the Distribution Agreement. The Registration
Statement must be effective before Novori is allowed to send a notice to the
Investor requesting an advance of a portion of the Commitment Amount.
Termination
i) The obligation of the Investor to
make advances of funds to Novori shall terminate permanently in the event that:
º Any stop order or
suspension of the effectiveness of the registration statement for 50 days;
º Novori shall at any time fail materially to comply any of its covenants under
the Distribution Agreement.
ii) After twelve months
from the date on which the SEC first declares effective a registration
statement of Novori, registering the resale of the Novori shares to be issued
under the Distribution Agreement (the "Effective Date"), the
Distribution agreement may be terminated at any time by either party, upon
thirty days written notice to the other party.
iii) Unless terminated
earlier, the Distribution Agreement shall terminate 24 months after the
Effective Date.
Consulting Agreement
On January 24, 2007, Novori
entered into a consulting agreement with the Investor pursuant to which Novori
has retained the Investor to provide consulting services.
Under the terms of the
consulting agreement, the consulting services include the following:
º Provision of strategic
and business consulting services;
º Provision of one or more business plans and help in executing the agreed upon
plans;
º Advice on various investor and public relations plans.
Novori is
obligated to pay the Investor a consulting fee of $15,000 per month as
compensation for the provision of these consulting services. Novori is only
obligated to pay the $15,000 consulting fees for any month when an advance of
funds is requested by Novori and made by the Investor, pursuant to the
Distribution Agreement described above.
Novori shall not be liable
to pay the consulting fee where:
º Novori has not requested
an advance of funds from the Investor for a particular month, pursuant to the
Distribution Agreement described above; or
º A notice requesting an advance of funds has been sent to the Investor,
pursuant to the Distribution Agreement described above, but the Investor has
failed to pay the portion of the Commitment Amount requested by Novori in the
notice.
The Investor has the right
to deduct the $15,000 consulting fess from any advance of funds paid to Novori
under the Distribution Agreement, as described above.
The consulting agreement
will be effective on January
24, 2007 and will continue for a period of 24 months subject to the
terms of the Distribution Agreement.
