FORM 8-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES ACT OF 1934
Date of Report (Date of earliest event reported): August 22, 1997
Nona Morelli's II, Inc.
(Exact name of registrant as specified in its charter.)
Colorado
(State of incorporation or organization)
0-18377
(Commission File Number)
84-1126818
(I.R.S. Employee Identification No.)
2 Park Plaza, Suite 470, Irvine, California
(Address of principal executive offices)
92614
(Zip Code)
Registrant's telephone number, including area code: (714) 833-5381
(Former name or former address, if changed since last report)
[NM\8K:NPC897.8K]
<PAGE>
Item 1. Changes in Control of Registrant
N/A
Item 2. Acquisition or Disposition of Assets
On August 22, 1997, the Registrant sold to Joseph Monterosso
("Monterosso"), as the President of Group V Corporation (formerly NuOasis Gaming
Inc., "Group V"), 12,020,000 Series D Warrants to Purchase Common Stock of Group
V (the "Warrants") owned by the Registrant.
Simultaneously with the execution of the Warrant Purchase
Agreement, and as part of such transaction, the Registrant entered into a
Put/Option Agreement with Monterosso to sell 7.8 million shares of Group V
common stock.
The purchase price for the Warrants was $1.8 million,
evidenced by a promissory note due June 1998. The Put Option Agreement requires
Monterosso to make monthly payments to the Registrant beginning November 1,
1997, totaling $1.2 million.
Item 3. Bankruptcy or Receivership
N/A
Item 4. Changes in Registrant's Certifying Accountant
N/A
Item 5. Other Events
N/A
Item 6. Change in Registrant's Directors
N/A
Item 7. Financial Statements and Exhibits
(a) N/A
(b) N/A
(c) Exhibits
1. Warrant Purchase Agreement dated August 22, 1997
2. Put/Option Agreement dated August 22, 1997
Item 8. Change in Registrant's Fiscal Year
N/A
[NM\8K:NPC897.8K]
2
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Nona Morelli's II, Inc.
(Registrant)
Dated: October 16, 1997 By: /s/ Fred G. Luke, CEO and Director
-----------------------------------
Fred G. Luke, CEO and Director
[NM\8K:NPC897.8K]
3
WARRANT PURCHASE AGREEMENT
THIS WARRANT PURCHASE AGREEMENT (the "Agreement") is made this 22nd day
of August 1997, by and between Nona Morelli's II Inc., a corporation organized
under the laws of Colorado ("Nona") and Joseph Monterosso, an individual with an
office in San Francisco, California ("Monterosso").
WHEREAS, on January 13, 1994, E.N. Phillips Company, a Delaware
corporation, now known as Group V Corporation ("Group V"), entered into that
certain Stock Purchase Agreement with Nona pursuant to which Nona was granted
New Series D Warrants to Purchase Common Stock ("Warrants") giving it the right
to purchase up to 12,000,000 shares of common stock of Group V, as more fully
described in the Warrant Agreement annexed hereto as Exhibit "A" (the "Warrant
Agreement"); and,
WHEREAS, Monterosso wishes to acquire Nona's rights under the Warrant
Agreement.
IN CONSIDERATION of the mutual promises contained herein, the benefits
to be derived by each party hereunder and other good and valuable consideration,
the receipt and sufficiency of which are hereby expressly acknowledged, Nona and
Monterosso agree as follows:
1. Purchase and Sale
On the basis of the representations and warranties herein contained,
subject to the terms and conditions set forth herein, and for the
Purchase Price (as defined herein), Nona agrees to sell its rights and
interest in the Warrant Agreement, and Monterosso agrees to purchase
the Warrant Agreement.
2. Purchase Price
The Purchase Price for the Warrant Agreement shall be One Million Eight
Hundred Thousand Dollars ($1,800,000) consisting of a Secured
Promissory Note issued by Monterosso, a copy of which is annexed hereto
as Exhibit "B" (the "Note"), to be issued in one or more series at the
election of Nona. The Note is to be secured by the Warrants pursuant to
the Security Agreement, a copy of which is attached hereto as Exhibit
"C" ("Security Agreement").
3. Effective Date and Closing
The closing of the purchase and sale contemplated by this Agreement
(the "Closing") shall occur upon such date that the parties have
satisfied their respective obligations and covenants contained herein,
but shall not be later than August 15, 1997. At the Closing, Monterosso
shall deliver the Note to Nona and Nona shall assign the Warrant
Agreement subject to Nona's rights to retain its rights to the Warrants
pursuant to its security interest in the Warrant Agreement.
Notwithstanding the date of Closing, the Effective Date shall be August
8, 1997.
<PAGE>
4. Representations and Warranties of Nona
Nona hereby represents and warrants to Monterosso that:
A. Organization. Nona is a corporation validly existing and in good
standing under the laws of Colorado, with the power and authority
to carry on its business as now being conducted. The execution
and delivery of this Agreement and the consummation of the
transaction contemplated in this Agreement have been, or will be
prior to Closing, duly authorized by all requisite corporate
action on the part of Nona. This Agreement has been duly executed
and delivered by Nona and constitutes a binding, and enforceable
obligation of Nona.
B. Third Party Consent No authorization, consent, or approval of, or
registration or filing with, any governmental authority or any
other person is required to be obtained or made by Nona in
connection with the execution, delivery, or performance of this
Agreement, or if required, Nona has or will obtain same prior to
Closing.
C. Litigation. Nona is not a defendant or a plaintiff against whom a
counterclaim has been made or reduced to judgement, in any
litigation or proceedings before any local, state or U.S.
government, or any department, board, body or agency thereof,
which could result in a claim against the Warrants; and,
D. Status of Warrant Agreement. The Warrant Agreement is a valid and
binding derivative security issued by GRPV and Nona has not
created any option, security interest or encumbrance involving
the Warrant Agreement or the underlying Warrants that would give
rise to any claims by third parties or otherwise conflict with or
preclude the sale as contemplated herein.
E. Authority. This Agreement has been duly executed by Nona, and the
execution and performance of this Agreement will not violate, or
result in a breach of, or constitute a default in any agreement,
instrument, judgement, order or decree to which Nona is a party
or to which Nona is subject; and,
5. Conditions Precedent to Obligations of Nona and Monterosso
All obligations of Nona under this Agreement are subject to the
fulfillment, prior to or as of the Closing Date, of each of the
following conditions:
A. Issuance of Note. Monterosso shall have taken all action
necessary to issue and shall have executed the Note and Security
Agreement and delivered same to Nona pursuant to this Agreement.
B. Assignment of Warrant Agreement. Nona shall have taken all action
necessary to assign the Warrant Agreement, subject to the
Security Agreement, to Monterosso.
C. Acceptance of Documents. All instruments and documents delivered
to Nona pursuant to the provisions of this Agreement shall be
satisfactory to Nona and its legal counsel.
<PAGE>
6. Availability of Information
Nona and Monterosso each represent that, by virtue of their respective
business activities and economic bargaining power or otherwise, they
have been able to conduct their own due diligence and have had access
to or have been furnished with, prior to or concurrently with the
execution hereof, the information which they consider to be adequate to
make a decision to exchange the Warrant Agreement for the Note.
7. Private Transaction
A. Private Offering. Monterosso understands that the Warrant
Agreement and the underlying Warrants are being transferred to
him in reliance on specific exemptions from the registration
requirements of the United States federal and state securities
rules and regulations, and that Nona is relying upon the truth
and accuracy of the representations, warranties, agreements,
acknowledgments and understandings of Monterosso set forth herein
in order to determine the applicability of such exemptions to
this transaction.
B. No Registration; No Public Market. The Warrant Agreement and the
underlying Warrants have not been registered under the United
States Securities Act of 1933, as amended (the "Act"), nor
qualified under applicable state securities laws. There is no
present public market for the Warrants. The Warrants and the
common stock into which the Warrants may be converted may be
acquired for investment purposes only and not with a view to
distribution or resale, and may not be sold, mortgaged, pledged,
hypothecated or otherwise transferred or offered to be so sold
without an effective registration statement under the Act and the
regulations promulgated pursuant thereto.
C. Purchase for Own Account. Monterosso is not an underwriter of, or
dealer in, the Warrants and Monterosso is not acting as such or
participating, pursuant to a contractual agreement, in the
distribution of the Warrants.
D. Investment Risk. Because of Monterosso's financial position and
other factors, the exchange contemplated by this Agreement may
involve a high degree of financial risk, including the risk that
Monterosso may lose his entire investment.
E. Access to Information. Monterosso and his advisors have been
afforded the opportunity to discuss the transaction with legal
and accounting professionals and, as the President and Control
Person of GRPV, to examine and evaluate the financial condition
of GRPV.
8. Termination
This Agreement may be terminated at anytime prior to the date of
Closing by either party if (a) there shall be any actual or threatened
action or proceeding by or before any court or any other governmental
body which shall seek to restrain, prohibit, or invalidate the
transaction contemplated by this Agreement, and which, in the judgment
of such party giving notice to terminate and based upon the advice of
legal counsel, makes it inadvisable to proceed with the transaction
contemplated by this Agreement, or (b) if the transaction contemplated
herein has not closed by August 15, 1997.
<PAGE>
9. Miscellaneous
A. Authority. Monterosso and the officers of Nona executing this
Agreement are duly authorized to do so and each party has taken
all action required by law or otherwise to properly and legally
execute this Agreement.
B. Notices. Any notice under this Agreement shall be deemed to have
been sufficiently given if sent by registered or certified mail,
postage prepaid, addressed as follows:
To Monterosso: Joseph J. Monterosso
550 15th Street, 3rd Floor
San Francisco, California 94103
Telephone: (415) 575-0222
Facsimile: (415) 861-4177
To Nona: Nona Morelli's II Inc.
2 Park Plaza, Suite 470
Irvine, California 92614
Telephone: (714) 833-5381
Facsimile: (714) 833-7854
or to any other address which may hereafter be designated by
either party by notice given in such manner. All notices shall be
deemed to have been given as of the date of receipt.
C. Entire Agreement. This Agreement sets forth the entire
understanding between the parties hereto and no other prior
written or oral statement or agreement shall be recognized or
enforced.
D. Severability. If a court of competent jurisdiction determines
that any clause or provision of this Agreement is invalid,
illegal or unenforceable, the other clauses and provisions of the
Agreement shall remain in full force and effect and the clauses
and provision which are determined to be void, illegal or
unenforceable shall be limited so that they shall remain in
effect to the extent permissible by law.
E. Assignment. None of the parties hereto may assign this Agreement
without the express written consent of the other parties and any
approved assignment shall be binding on and inure to the benefit
of such successor or, in the event of death or incapacity, on
assignor's heirs, executors, administrators and successors.
F. Applicable Law. This Agreement has been negotiated and is being
contracted for in Orange County, California, it shall be governed
by the laws of California, notwithstanding any conflict-of-law
provision to the contrary.
G. Attorney's Fees. If any legal action or other preceding
(non-exclusively including arbitration) is brought for the
enforcement of or to declare any right or obligation under this
Agreement or as a result of a breach, default or
misrepresentation in connection with any of the provisions of
this Agreement, or otherwise because of a dispute among the
parties hereto, the prevailing party will be entitled to recover
actual attorney's fees
<PAGE>
(including for appeals and collection) and other expenses
incurred in such action or proceeding, in addition to any other
relief to which such party may be entitled.
H. No Third Party Beneficiary. Nothing in this Agreement, expressed
or implied, is intended to confer upon any person, other than the
parties hereto and their successors, any rights or remedies under
or by reason of this Agreement, unless this Agreement
specifically states such intent.
I. Counterparts. It is understood and agreed that this Agreement may
be executed in any number of identical counterparts, each of
which may be deemed an original for all purposes.
J. Further Assurances. At any time, and from time to time after the
Closing, each party hereto will execute such additional
instruments and take such action as may be reasonably requested
by the other party to confirm or perfect title to the Warrants to
be transferred hereunder, or otherwise to carry out the intent
and purposes of this Agreement.
K. Broker's or Finder's Fee; Expenses. Monterosso and Nona each
warrant that they have not incurred any liability, contingent or
otherwise, for brokers' or finders' fees or commissions relating
to this Agreement for which the other party shall have
responsibility. Except as otherwise provided herein, all fees,
costs and expenses incurred by either party relating to this
Agreement shall be paid by the party incurring same.
L. Amendment or Waiver. Every right and remedy provided herein shall
be cumulative with every other right and remedy, whether
conferred herein, at law, or in equity, and may be enforced
concurrently herewith, and no waiver by any party of the
performance of any obligation by the other shall be construed as
a waiver of the same or any other default then, theretofore, or
thereafter occurring or existing. At any time prior to Closing,
this Agreement may be amended by a writing signed by all parties
hereto.
M. Headings. The section and subsection headings in this Agreement
are inserted for convenience only and shall not affect in any way
the meaning or interpretation of this Agreement.
N. Facsimile. A facsimile, telecopy or other reproduction of this
instrument may be executed by one or more parties hereto and such
executed copy may be delivered by facsimile or similar
instantaneous electronic transmission device pursuant to which
the signature of or on behalf of such party can be seen, and such
execution and delivery shall be considered valid, binding and
effective for all purposes. At the request of any party hereto,
all parties agree to execute an original of this instrument as
well as any facsimile, telecopy or other reproduction hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed the day and year first above written.
"Nona"
Nona Morelli's II Inc.
By: /s/ Fred G. Luke
----------------------------------
Name: Fred G. Luke
Title: CEO
"Monterosso"
/s/ Joseph Monterosso
---------------------------------------
Joseph Monterosso
<PAGE>
EXHIBIT "A"
to the
Warrant Purchase Agreement
dated August 22, 1997
THE WARRANT AGREEMENT
<PAGE>
EXHIBIT "B"
to the
Warrant Purchase Agreement
dated August 22, 1997
SECURED PROMISSORY NOTE
<PAGE>
SECURED PROMISSORY NOTE
U.S. $1,800,000 August 22, 1997
Irvine, California
FOR VALUE RECEIVED, Joseph Monterosso, an individual residing in the
United States, State of California ("Maker"), hereby promises to pay to Nona
Morelli's II Inc., a Colorado corporation ("Payee"or "Holder") the principal sum
of One Million Eight Hundred Thousand Dollars ($1,800,000), payable in
installments as set forth herein, with interest at the rate of six percent (6%)
per annum payable on the Due Date. This Secured Promissory Note (the "Note") is
issued by Maker pursuant to the Warrant Purchase Agreement of even date (the
"Purchase Agreement"). This Note shall be secured by the rights to the
12,000,000 New Series D Warrants to Purchase Common Stock (the "Warrants")
conferred to Payee pursuant to the Warrant Agreement dated March 30, 1994,
between E.N. Phillips Company, a Delaware corporation, now known as Group V
Corporation (the "Company") and Payee, a copy of which is attached hereto as
Exhibit "A" (the "Warrant Agreement"). The Warrant Agreement and the underlying
Warrants are referred to herein as the"Collateral".
Payments of principal under this Note shall be made as follows:
Installment
- ---------------------------------------------
Due Date Amount
- ------------------- ------------------
October 1, 1997 $ 23,100
November 1, 1997 46,200
December 1, 1997 69,000
January 1, 1998 184,600
February 1, 1998 184,600
March 1, 1998 184,600
April 1, 1998 184,600
May 1, 1998 184,600
June 1, 1998 184,600
July 1, 1998 184,600
August 1, 1998 184,600
September 1, 1998 184,900
$ 1,800,000
All documents and instruments now or hereafter evidencing and/or
securing the indebtedness evidenced hereby or any part thereof, including but
not limited to this Note and the Security Agreement of even date, are sometimes
collectively referred to herein as the "Security Documents."
[NM\PNO:JM1-8MIL.PNO]
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<PAGE>
All agreements in this Note and all other Security Documents are
expressly limited so that in no contingency or event whatsoever, whether by
reason of acceleration of maturity of the indebtedness evidenced hereby or
otherwise, shall the amount agreed to be paid hereunder for the use, forbearance
or detention of money exceed the highest lawful rate permitted under applicable
usury laws. If, for any circumstance whatsoever, fulfillment of any provision of
this Note or any other Security Document at the time performance of such
provision shall be due shall involve exceeding any usury limit prescribed by law
which a court of competent jurisdiction may deem applicable hereto, then, ipso
facto, the obligations to be fulfilled shall be reduced to allow compliance with
such limit, and if, from any circumstance whatsoever, Payee shall ever receive
as interest an amount which would exceed the highest lawful rate, the receipt of
such excess shall be deemed a mistake and shall be canceled automatically or, if
theretofore paid, such excess shall be credited against the principal amount of
the indebtedness evidenced hereby to which the same may lawfully be credited,
and any portion of such excess not capable of being so credited shall be
refunded immediately to Maker.
Maker and Payee affirm that the indebtedness evidenced represents the
total consideration for the Warrants being acquired by Maker pursuant to the
Purchase Agreement.
To secure the payment of this Note, Maker hereby grants to the Holder
pursuant to a Security Agreement dated of even date between Maker and Holder a
security interest in the Collateral.
Upon default, the Holder may resort to any remedy, including immediate
sale of the Collateral, available to a secured party under the Uniform
Commercial Code.
Each of the following events or occurrences shall constitute an "Event
of Default" hereunder: (a) if default is made in the payment of any installment
hereunder, or of any monetary amount payable hereunder, under the terms of any
Security Document, or under the terms of any other obligation of Maker to Payee
hereunder, within ten (10) days following the date the same is due; (b) if
default is made in the performance of any other promise or obligation described
herein, in any Security Document, or in any other document evidencing or
securing any indebtedness of Maker to Payee following ten (10) days prior notice
to Maker of such default and the failure of Maker to cure such default within
said ten (10) day period; (c) if Maker shall execute an assignment of any of his
property for the benefit of creditors, fail to meet any obligations herein
described, be unable to meet his debts as they mature, or be declared insolvent
by any court, suffer any judgment or decree to be rendered against him in an
amount greater than US$10,000, suffer a receiver to be appointed for any of his
property, or voluntarily seek relief or have involuntary proceedings brought
against him under any provision now in force or hereinafter enacted of any law
relating to bankruptcy; (d) if any writ of attachment, garnishment or execution
shall be issued against Maker; (e) if any tax lien be assessed or filed against
Maker; (f) if any warranty, representation or statement made or furnished to
Payee by or on behalf of Maker, including but not limited to any information
provided to Payee in conjunction with the Purchase Agreement.
Upon the occurrence of any Event of Default, which is not cured within
ten (10) days after notice of such default is given by Payee or at any time
thereafter when any Event of Default may continue, Payee may, at its option and
in its sole discretion, declare the entire balance of this Note to be
immediately due and payable, and upon such declaration all sums outstanding and
unpaid under this Note shall become and be in default, matured and immediately
due and payable, without presentment, demand, protest or notice of any kind to
Maker or any other person, all of which are hereby expressly waived, anything in
this Note or any other Security Document to the contrary notwithstanding.
[NM\PNO:JM1-8MIL.PNO]
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<PAGE>
Maker shall pay to Payee all reasonable costs, expenses, charges,
disbursements and attorneys' fees incurred by Payee following an Event of
Default in collecting, enforcing or protecting this Note or any other Security
Document or protecting the Collateral, whether incurred in or out of court,
including appeals and bankruptcy proceedings.
Payee and Maker hereby agree to trial by court and irrevocably agree to
waive jury trial in any action or proceeding (including but not limited to any
counterclaim) arising out of or in any way related to or connected with this
Note or any other Security Document, the relationship created thereby, or the
origination, administration or enforcement of the indebtedness evidenced and/or
secured by this Note or any other Security Document.
This Note has been delivered to Payee and accepted by Payee in the
State of California, county of Orange and shall be governed and construed
generally according to the laws of said State and county except to the extent
that creation, validity, perfection or enforcement of any liens or security
interests securing this Note are governed by the laws of another jurisdiction.
Venue of any action brought pursuant to this Note or any other Security
Document, or relating to the indebtedness evidenced hereby or the relationships
created by or under the Security Documents shall, at the election of the party
bringing the action, be brought in a State or United States federal court in
Orange County, California. Maker and Payee each waives any objection to the
jurisdiction of or venue in such court and to the service of process issued by
such court and agrees that each may be served by any method of process described
in the State of California or United States Federal Rules of Civil Procedure.
Maker and Payee each waives the right to claim that such court is an
inconvenient forum or any similar defense.
If, in any jurisdiction, any provision of this Note shall, for any
reason, be held to be invalid, illegal, or unenforceable in any respect, such
holding shall not affect any other provisions of this Note, and this Note shall
be construed, to the extent of such invalidity, illegality or unenforceability
(and only to such extent) as if any such provision had never been contained
herein. Any such holding of invalidity, illegality or unenforceability in one
jurisdiction shall not prevent valid enforcement of any affected provision if
allowed under the laws of another relevant jurisdiction.
No waiver by the holder of any payment or other right under this Note
shall operate as a waiver of any other payment or right.
As used in this Note, the term "person" shall include, but is not
limited to, natural persons, corporations, partnerships, trusts, joint ventures
and other legal entities, and all combinations of the foregoing natural persons
or entities, and the term "obligation" shall include any requirement to pay any
indebtedness and/or perform any promise, term, provision, covenant or agreement
included or provided for in this Note or any other Security Document.
A facsimile, telecopy or other reproduction of this instrument may be
executed by one or more parties hereto and such executed copy may be delivered
by facsimile or similar instantaneous electronic transmission device pursuant to
which the signature of or on behalf of such party can be seen, and such
execution and delivery shall be considered valid, binding and effective for all
purposes. At the request of any party hereto, all parties agree to execute an
original of this instrument as well as any facsimile, telecopy or other
reproduction hereof.
Executed by the undersigned the year and day first above written.
/s/ Joseph Monterosso
---------------------------------------
Joseph Monterosso
[NM\PNO:JM1-8MIL.PNO]
5
<PAGE>
EXHIBIT "C"
to the
Warrant Purchase Agreement
dated August 22, 1997
THE SECURITY AGREEMENT
<PAGE>
SECURITY AGREEMENT
THIS SECURITY AGREEMENT ("Agreement") is executed as of this 22nd day
of August, 1997 by Joseph Monterosso (hereinafter referred to as the "Debtor"),
in favor of Nona Morelli's II Inc., its successors and assigns (hereinafter
referred to as the "Secured Party").
WHEREAS, the following recitals of fact are a material part of this
Agreement; and,
WHEREAS, simultaneously with the execution and delivery of this
Agreement, Debtor is executing a Purchase Agreement and, in connection
therewith, a Secured Promissory Note in the amount of $1,800,000 (the "Note"),
both of even date, pursuant to which Debtor is purchasing Secured party's
rights, title and interest in the Warrant Agreement dated March 30, 1994 between
Secured Party and E.N. Phillips Company now known as Group V Corporation
("GRPV"); and,
WHEREAS, Secured Party is granting credit to Debtor pursuant to the
Note which is required to be secured by the Warrant Agreement and the rights
thereunder to purchase 12,000,000 shares of GRPV common stock (the "Warrants").
The Warrant Agreement and all other documents and instruments evidencing and/or
securing indebtedness of Debtor to Secured Party are collectively referred to
herein, along with this Agreement, as the "Security Documents"; and,
WHEREAS, Secured Party is unwilling to grant credit to Debtor unless
Debtor grants to Secured Party the security interest granted herein according to
the terms and conditions hereof.
1. Pledge of Collateral
In consideration of the granting of credit to Debtor by Secured Party,
Debtor hereby grants to Secured Party a security interest (hereinafter
referred to as the "Security Interest") in the Warrant Agreement and
the underlying Warrants described in Exhibit "A" attached hereto,
including all proceeds, derivative rights and products thereof and
additions and accessions thereto (hereinafter referred to as the
"Collateral").
This Agreement and the rights hereby granted herein shall secure the
following (hereinafter collectively referred to as the "Obligations"):
A. Principal and Interest. The principal amount of Debtor's
Indebtedness to Secured Party, as evidenced by the Note and the
Security Documents, with interest thereon as specified in such
documents, and any other sums due and any renewals, extensions or
modifications thereof; and
B. Expenses. The expense of all legal proceedings, including
attorneys' fees, brought by the Secured Party to enforce any
Security Documents executed by Debtor or this Agreement, and all
other costs and expenses paid or incurred by the Secured Party in
respect of or in connection with the protection, maintenance or
sale of the Collateral; and
<PAGE>
C. Performance. The observance and performance by the Debtor of all
of the terms, provisions, covenants and obligations on its part
to be observed or performed under any Security Documents, this
Agreement; and
D. Other. Any and all indebtedness, obligations and liabilities of
any kind and nature of the Debtor to Secured Party, direct or
indirect, absolute or contingent, due or to become due, now
existing or hereafter arising.
2. Debtor's Warranties, Covenants and Agreements
Debtor hereby warrants, covenants and agrees that:
A. Purpose. The Collateral covered by this Agreement is pledged by
Debtor to secure Debtor's promise to pay the Purchase Price (as
defined in the Purchase Agreement) and to induce Secured Party to
enter into the Purchase Agreement with Debtor.
B. Third Party Claims. Debtor at its cost and expense will protect
and defend this Agreement, all of the rights of Secured Party
hereunder and the Collateral against the claims and demands of
all other parties. Debtor will promptly notify Secured Party of
any attempt to levy, distraint, lay claim, disavow, repudiate or
otherwise diminish the derivative rights, or seize by legal
process or otherwise of any part of the Collateral, and of any
threatened claims or proceedings that might in any way affect or
impair any of the terms of this Agreement or the Purchase
Agreement.
C. Notices. Debtor will give Secured Party immediate written notice
of any change in location of Debtor's last known residence
address.
3. Events of Default
The occurrence of any of the following events shall constitute and is
hereby defined to be an "Event of Default":
A. Breach of Note or Security Agreement Any failure or neglect to
observe or perform any of the terms, provisions, promises,
agreements or covenants of the Note or this Agreement and the
continuance of such failure or neglect after notice thereof by
Secured Party to the Debtor; or
B. Failure to Pay. Any failure of the Debtor to pay any installment
of principal and/or interest, or any other sum due under any
Security Documents in accordance with their terms; or
C. Breach of Purchase Agreement or False Statements. Failure or
neglect to observe or perform any of the terms or covenants in
the Purchase Agreement, or any warranty, representation or
statement contained in this Agreement or otherwise made or
furnished to the Secured Party by or on behalf of the Debtor in
the Purchase Agreement, the Put/Option Agreement or any Security
Documents shall be or shall prove to have been false when made or
furnished; or
<PAGE>
D. Destruction or Demise of Collateral. Any loss, theft,
substantial damage, destruction of, or the attachment of an
encumbrance to any of the Collateral, the cancellation of the
Collateral by GRPV or its successor(s) in interest (and said
Collateral is not immediately replaced, restored or returned)
Debtor's assignment or attempted transfer of the Collateral to
anyone, or the sale, creation of a security interest, lien,
attachment, levy, garnishment, distraint, or other process of,
in or upon any of the Collateral, and if such attachment or
other similar process is not bonded or released within thirty
(30) days after such action is taken.
4. Secured Party's Remedies
Upon the occurrence of any Event of Default hereunder, Secured Party
shall have the following rights and remedies:
A. Acceleration and Sale. Secured Party may, at its option, declare
all or any part of the Note immediately due and payable. Secured
Party may, without further notice or demand and without legal
process, negotiate for the sale of the Collateral.
B. All Remedies Available. Secured Party may pursue any legal remedy
available to collect all sums due under the Note and/or secured
hereby and to enforce its title in and right to possession and
sale of the Collateral, and to enforce any and all other rights
or remedies available to it, and no such action shall operate as
a waiver of any other right or remedy of the Secured Party under
the terms hereof or under applicable law.
C. Waiver of Defenses. Debtor waives any requirements of
presentment, protest, notices of protest, notices of dishonor,
and all other formalities. Debtor waives all rights and/or
privileges it might otherwise have to require Secured Party to
proceed against sell or otherwise transfer the Collateral
encumbered hereby or by any Security Documents or to proceed
against Maker personally or to pursue any other remedy available
to Secured Party in any particular manner or order under the
legal or equitable doctrine or principle of marshaling and/or
suretyship Debtor acknowledges that he has signed this Agreement
and in doing so has subjected his property to this Agreement to
secure any deficiency in the subject indebtedness and hereby
expressly waives the benefits of the provisions of any laws which
could delay, defeat or render more costly Secured Party's
realization upon the Collateral, and waives any defense arising
by reason of any disability or other defense of Debtor, and
waives the benefit of any statutes of limitation affecting the
enforcement hereof.
D. Sale of Collateral. Secured Party may immediately sell all or any
part of the Collateral at public or private sale either with or
without having such Collateral at the place of sale, and with
notice to Debtor as provided herein. The proceeds of such sale,
after deducting therefrom all expenses of Secured Party in
taking, storing, validating and selling the Collateral (including
attorneys' fees and court costs) shall be applied to the payment
of any part or all of the Obligations and any other indebtedness
or liability of Debtor to Secured Party, and any surplus
thereafter remaining shall be paid to any person that may be
legally entitled thereto notwithstanding anything to the contrary
contained in any of the Security Documents. In the event of a
deficiency between such net proceeds from the sale of Collateral
and the total amount of Obligations owing by Debtor, Debtor will
promptly upon demand pay the amount of such deficiency to Secured
Party.
<PAGE>
E. Secured Party as Purchaser. At any sale, public or private, of
the Collateral or any part thereof, made in the enforcement of
the rights and remedies of Secured Party, Secured Party may
purchase any part or parts of the Collateral or all thereof
offered at such sale.
F. Notice of Sale. Secured Party shall give Debtor reasonable notice
of any sale or other disposition of the Collateral or any part
thereof. Debtor agrees that notice shall be conclusively deemed
to be reasonable and effective if such notice is mailed by
registered or certified mail postage prepaid, to Debtor at
Debtor's last known residence address at least ten (10) days
prior to such sale or other dispositions.
G. Applicable Law Remedies. Secured Party shall have all the rights
and remedies afforded a Secured Party under applicable law.
5. Miscellaneous Provisions
A. Waivers and Cumulative Remedies. No Event of Default hereunder by
Debtor shall be deemed to have been waived by Secured Party
except by a writing to that effect signed by Secured Party and no
waiver of any such Event of Default shall operate as a waiver of
any other Event of Default on a future occasion, or as a waiver
of that Event of Default after written notice thereof and demand
by Secured Party for strict performance of this Agreement. All
rights, remedies and privileges of Secured Party hereunder shall
be cumulative and not alternative, and shall, whether or not
specifically so expressed, inure to the benefit of the Secured
Party, its successors and assigns, and all obligations of the
Debtor shall bind its successors and legal representatives.
B. Waiver of Jury Trial. Secured Party and Debtor hereby agree to
trial by court and irrevocably waive jury trial in any action or
proceeding (including but not limited to any counterclaim)
arising out of or in any way related to or connected with this
agreement or any other Security Documents, the relationship
created thereby, or the origination, administration or
enforcement of the indebtedness evidenced and/or secured by the
Purchase Agreement or any Security Documents.
C. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement
shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition
or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
D. Written Amendment Required. No modification, rescission, waiver,
release or amendment of any provision of this Agreement shall be
made except by a written agreement subscribed by Debtor and
Secured Party.
E. Full Force and Effect. This Agreement shall remain in full force
and effect until all of the obligations and the indebtedness
evidenced on the Note, and any extensions or renewals thereof,
shall be paid in full.
<PAGE>
F. Successors and Assigns. Secured Party and Debtor as used herein
shall include the heirs, executors or administrators, or
successors or assigns of those parties. The provisions of this
Agreement shall apply to the parties according to the context
hereof and without regard to the number or gender of words and
expressions used herein.
G. Financing Statements. A carbon, photographic or other reproduced
copy of this Agreement and/or any financing statement relating
hereto shall be sufficient for filing and/or recording as a
financing statements. Notwithstanding the foregoing, Debtor shall
provide, shall execute and shall cooperate with Secured Party in
the execution and filing of such financing statements, documents
and instruments as Secured Party may reasonably request in order
to perfect the security interest granted to Secured Party
hereunder or otherwise to carry out the purposes of this
Agreement.
H. Governing Law. This Security Agreement and the transaction
evidenced hereby shall be construed under the laws of the State
of California, as the same may from time to time be in effect.
I. Facsimile. A facsimile, telecopy or other reproduction of this
instrument may be executed by one or more parties hereto and such
executed copy may be delivered by facsimile or similar
instantaneous electronic transmission device pursuant to which
the signature of or on behalf of such party can be seen, and such
execution and delivery shall be considered valid, binding and
effective for all purposes. At the request of any party hereto,
all parties agree to execute an original of this instrument as
well as any facsimile, telecopy or other reproduction hereof.
IN WITNESS WHEREOF, this Agreement has been executed and delivered on
behalf of and in the name of Debtor on the date indicated above.
"Debtor"
/s/ Joseph Monterosso
---------------------------------------
Joseph Monterosso
"Secured Party"
Nona Morelli's II Inc.,
a Colorado corporation
By: /s/ Fred G. Luke
----------------------------------
Name: Fred G. Luke
Title: CEO
<PAGE>
PUT/OPTION AGREEMENT
THIS PUT/OPTION AGREEMENT ("Agreement") is entered into this 22nd day
of August, 1997, by and between Nona Morelli's II Inc., a Colorado corporation
("Nona"), and Joseph Monterosso ("Monterosso").
WHEREAS, Monterosso desires to acquire from Nona an option to purchase
up to 7,800,000 shares of common stock (the "Shares") of Group V Corporation, a
Delaware corporation ("GRPV") which Nona owns or will acquire as a result of its
election to convert 100,000 shares of Series B Preferred Stock of GRPV (the
"Series B Shares"); and,
WHEREAS, Nona desires to grant Monterosso an option to purchase the
Shares subject to the terms and conditions set forth below.
NOW, THEREFORE, for and in consideration of the mutual promises herein,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and subject to the terms and conditions set forth
below, Nona and Monterosso agree as follows:
1. Nona hereby grants to Monterosso an option (the "Option") to acquire
the Shares at a purchase price of $.15 per share, increased or
decreased proratably, as the case may be, to give effect to any reverse
or forward stock splits, respectively ("Option Price").
2. It shall be a condition precedent to the exercise of the Option created
by this Agreement that neither the Board of Directors nor the
shareholders of GRPV shall effect a reverse split of GRPV's capital
stock prior to April 1, 1998. In the event of a stock split by GRPV
Nona may, at its election, require Monterosso to purchase within five
(5) days all Shares not previously purchased by Monterosso pursuant to
the Option, or the Put (as defined below), at a price of $.15 per
share.
3. This Option may be exercised in whole or in part and from time to time,
provided that no exercise of this Option shall be effective until this
Option has been exercised with respect to a least One Hundred Thousand
(100,000) of the Shares. Any subsequent exercise of this Option shall
be for a minimum of One Hundred Thousand (100,000) of such Shares.
4. Monterosso shall have until August 1, 1998 to exercise this Option as
to all or any portion of the Shares.
5. In consideration of the Option, which is currently in the money,
Monterosso hereby grants Nona the right to require Monterosso to
purchase ("Put") the Shares not previously purchased by Monterosso, and
Monterosso hereby agrees to purchase the Shares tendered, at a price of
$.15 per share ("Put Price"). This right to Put Shares to Monterosso
shall begin on the date hereof and continue for a period of one (1)
year immediately following the date hereof, with written notice within
five (5) days of the first day of each month (the "Tender Date"), in
accordance with the following schedule:
<PAGE>
Number of Shares Which
Monterosso is Required to After the Tender
Purchase if Tendered Date of:
------------------------- -----------------
102,667 October 1, 1997
205,333 November 1, 1997
306,667 December 1, 1997
798,222 January 1, 1998
798,222 February 1, 1998
798,222 March 1, 1998
798,222 April 1, 1998
798,222 May 1, 1998
798,222 June 1, 1998
798,222 July 1, 1998
798,222 August 1, 1998
799,557 September 1, 1998
Monterosso shall have five (5) days to remit the Put Price for Shares
tendered, in good funds, to Nona or the custodian, as directed in
writing by Nona.
6. Exercise of the Option granted herein shall be accomplished by written
notice to Nona at the address set forth below specifying the number of
the Shares being purchased, accompanied by the Option Price per share,
in good funds. The exercise of the Put granted herein shall be
accompanied by written notice to Monterosso in accordance with the
terms hereof at the address set forth below specifying the number of
Shares being tendered with a copy of irrevocable instructions to the
custodian of the Shares to deliver such Shares upon receipt of good
funds.
7. In the event Nona fails to deliver the certificates or order via DTC
the transfer of Shares purchased by Monterosso pursuant to the Option,
or if Monterosso fails to tender in good funds the Put Price of any of
the Shares tendered by Nona in accordance with the terms hereof (a
"Default"), the respective rights granted to the defaulting party
hereunder shall automatically terminate. However, any failure resulting
from a Stop Transfer order by GRPV or GRPV's refusal to issue the
Shares upon request for conversion of the Series B Shares shall not
constitute a Default and the terms hereof and Tender Dates shall be
tolled until such time as the Shares are issued or such Stop Transfer
rescinded.
This Agreement and the rights hereunder shall not be assigned by either
party hereto.
<PAGE>
8. A facsimile, telecopy or other reproduction of this instrument may be
executed by one or more parties hereto and such executed copy may be
delivered by facsimile or similar instantaneous electronic transmission
device pursuant to which the signature of or on behalf of such party
can be seen, and such execution and delivery shall be considered valid,
binding and effective for all purposes. At the request of any party
hereto, all parties agree to execute an original of this instrument as
well as any facsimile, telecopy or other reproduction hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement the day
and year first written above.
"Nona"
Nona Morelli's II Inc.
By: /s/ Fred G. Luke
----------------------------------
Name: Fred G. Luke
Title: CEO
Address: 2 Park Plaza, Suite 470
Irvine, CA 92614
"Monterosso"
/s/ Joseph Monterosso
----------------------------------
Joseph Monterosso, an individual
Address: 550 15th Street
San Francisco, CA 94103
