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) February 23, 2000
-------------------------------
Contessa Corporation
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 65-0656268
- ---------------------------- ----------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
2700 West Cypress Creek Rd., Suite C103
Fort Lauderdale, Florida 33309
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(Address of Principal Executive Offices) (Zip Code)
(954) 973-7779
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Registrant's telephone number, including area code
Not Applicable
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(Former Name or Former Address, if Changed since Last Report)
<PAGE>
Item 5. Disposition of Assets
On April 9, 1999, the Registrant entered into a definitive Stock Purchase
Agreement with Mr. Pietro Bortolatti, the chief executive of Gastronnomia Bocca
di Rosa, Inc ("GBR"), the Registrant's wholly-owned subsidiary, under which Mr.
Bortolatti was to transfer his entire share ownership in the Registrant,
consisting of 562,500 shares, to the Registrant and in return would receive the
Registrant's entire stock ownership in GBR. The Stock Purchase Agreement
contained a number of conditions precedent which needed to be satisfied before
the sale could be consummated. In addition, by letter amendment dated April 23,
1999, any closing would be deferred until such time as Registrant had prepared
appropriate SEC filings. The consummation of the Stock Purchase Agreement was
completed on February 23, 2000 upon the satisfaction of these conditions.
The effect of this transaction will be to transfer the Registrant's
restaurant-related assets to Mr. Bortolatti in exchange for his ownership stake
in the Registrant. GBR had formerly been a wholly owned subsidiary in an entity
controlled by Mr. Bortolatti. GBR was acquired by the Registrant in 1997 at
which time Mr. Bortolatti, through his affiliated entity, received 562,500
shares in the Registrant. The Registrant has invested approximately $195,000
consisting primarily of leasehold improvements, restaurant equipment and other
items in attempting to develop a casual restaurant operation in the Coconut
Grove section of Miami. The leasehold on which the restaurant was to be
developed was originally held by an affiliate of Mr. Bortolatti. Development
efforts have met with delays and fallen behind schedule. Mr. Bortolatti has
indicated that approximately $200,000 in funds would be needed in order to make
the restaurant project operational and the Registrant's management has decided
to abandon the development effort.
Item 7. Financial Statements, Pro Forma Financial Statements and Exhibits.
a. The required pro forma financial statements are appended hereto.
b. The following Exhibits are attached hereto:
10.1 Stock Purchase Agreement dated as April 9, 1999 between
Contessa Corporation and Mr. Pietro Bortolatti.
10.2 letter amendment to Stock Purchase Agreement dated April 23,
1999
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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.
CONTESSA CORPORATION
(Registrant)
Date: March 13, 2000 By: /s/ Anthony Markofsky
----------------------------------
(Vice President)
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CONTESSA CORPORATION
PROFORMA CONSOLIDATED BALANCE SHEET
February 23, 2000
<TABLE>
<CAPTION>
Contessa Contessa
Corporation Corporation
December 31, February 26,
1999 Adjustments 2000
---- ----------- ----
Assets
<S> <C> <C> <C>
Current assets
Cash and cash equivalents $1 $1
-------- --------
Total current assets 1 1
Property and equipment-net 132,148 (132,148)
Other assets
Excess of purchase paid over book value 196,644 (196,644)
Security deposits 10,533 (10,533)
-------- --------
Total other assets 207,177 (207,177)
-------- --------
Total assets $339,326 $(339,325) $1
======== ========= ========
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable and accrued expenses $176,656 $176,656
Loan payable 10,150 10,150
-------- --------
Total current liabilities 186,806 186,806
Stockholders' equity
Preferred Stock-authorized 5,000,000,
$.001 par value each. At December 31, 1999
and February 26, 2000, the number of shares
outstanding was -0- and -0- respectively
Common Stock authorized 20,000,000 shares, 287 56 231
$.0001 par value each. At December 31, 1999
and February 26, 2000, there are 2,866,506
and 2,304,006 shares outstanding respectively.
Additional paid in capital 507,450 196,644 310,806
Retained earnings deficit (355,217) (44,181) (311,036)
-------- -------- --------
Total stockholders' equity 152,520 152,519 1
-------- -------- --------
Total liabilities and stockholders' equity $339,326 $339,325 $1
======== ========= ========
</TABLE>
See accompanying notes to proforma financial statements.
F1
<PAGE>
CONTESSA CORPORATION
PROFORMA CONSOLIDATED STATEMENT OF OPERATIONS
February 23, 2000
<TABLE>
<CAPTION>
Contessa Contessa
Corporation Corporation
December 31, February 26,
1999 Adjustments 2000
---- ----------- ----
<S> <C> <C> <C>
Revenue $-0- $-0-
Costs of goods sold -0- -0-
--------- ---------
Gross profit -0- -0-
Operations:
General and administrative -0- -0- -0-
Depreciation and amortization -0- -0- -0-
--------- --------- ---------
Total expense -0- -0- -0-
Loss from operations -0- -0- -0-
Discontinued operations
Disposal of subsidiary (63,691) 44,181 (19,510)
Net income (loss) $(63,691) $44,181 $(19,510)
========= ========= =========
Net income (loss) per share - basic $(0.03) $0.02 $(0.01)
========= ========= =========
Number of shares outstanding - basic 2,304,006 2,304,006 2,304,006
========= ========= =========
</TABLE>
See accompanying notes to financial statements.
F1
<PAGE>
CONTESSA CORPORATION
PROFORMA CONSOLIDATED STATEMENT OF CASH FLOWS
February 23, 2000
<TABLE>
<CAPTION>
Contessa Contessa
Corporation Corporation
December 31, February 26,
1999 Adjustments 2000
---- ----------- ----
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $(63,691) 63,691 $-0-
Adjustments to reconcile net loss to cash
used in operating activities
Non cash adjustment (4,318)
Depreciation -0-
---------
TOTAL CASH FLOWS FROM OPERATIONS (63,691) 59,374
CASH FLOWS FROM FINANCING ACTIVITIES
Loan payable 10,150 (10,150)
Loan payable-affiliated parties 49,224 (49,224)
--------- ---------
TOTAL CASH FLOWS FROM FINANCING ACTIVITIES 59,374 (59,374)
NET INCREASE (DECREASE) IN CASH (4,317) -0- (4,317)
CASH BALANCE BEGINNING OF PERIOD 4,318 4,318
--------- ---------
CASH BALANCE END OF PERIOD $1 $1
========= =========
</TABLE>
See accompanying notes to financial statements
F1
<PAGE>
CONTESSA CORPORATION
PROFORMA CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
<TABLE>
<CAPTION>
Deficit
Common Common Additional paid accumulated during
Date Stock Stock in capital development stage Total
- ---- ----- ----- ---------- ----------------- -----
<S> <C> <C> <C> <C> <C>
Balances 12-31-1999 2,866,506 $287 $507,450 $(355,217) $152,520
return of shares for sale of (562,500) (56) (196,644) 44,181 (152,519)
--------- ---- -------- ---------- --------
subsidiary to former owner
Balances 2-26-2000 2,304,006 $231 $310,806 $311,036 $1
========= ==== ======== ========== ========
</TABLE>
See accompanying notes to financial statements
F1
<PAGE>
CONTESSA CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO PROFORMA CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 23, 2000
Note 1. Organization of Company and Issuance of Common Stock
a. Creation of the Company
Contessa Corporation (the "Company") was first formed under the laws of
Delaware on March 7, 1996 under the name United Health Management, Inc. with an
initial capitalization of 20,000,000 shares of common stock, $.0001 par value
each and 1,000,000 shares of blank check preferred stock, .001 par value each.
On March 26, 1996, the Company amended its certificate of incorporation to
change its name to United Health Partners, Inc. On September 17, 1997, the
Company amended its certificate to change its name to Contessa Corporation and
increase the authorized number of shares of preferred shares to 5,000,000, $.001
par value each.
b. Description of the Company
Contessa Corporation was formed under the name United Health Management,
Inc. to operate as a managed health care provider. On September 16, 1997, the
board of directors of the Company changed the business of the Company to
Contessa Corporation. On September 26, 1997, the Company entered into an
acquisition agreement, whereby the Company acquired all of the issued and
outstanding shares of Gastronnomia Bocca Di Rosa, Inc., a Florida corporation
formed on June 12, 1997 ("GBDR") in exchange for 562,500 shares of the common
stock. The Company became the parent company of GBDR, a wholly-owned subsidiary.
Prior to the Acquisition, GBDR was a wholly owned subsidiary of Giuditta
Investments, Inc., a corporation organized under the laws of Florida.
On February 23, 2000, the Company agreed to transfer to Pietro Bortolatti,
project manager the stock of GBDR in consideration for his assumption of all
related liabilities and return of the 562,500 shares of common stock used to
purchase GBDR.
c. Return of Capital Stock
On February 23, 2000, the Company cancelled 562,500 shares of common stock
originally issued to GBDR in connection with the purchase of the assets of GBDR
valued at $196,644 or $0.35.
Note 2 - Summary of Significant Accounting Policies
a. Basis of Financial Statement Presentation
The accompanying financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. The Company incurred net losses
of $355,217 for the period from inception March 7, 1996 to December 31, 1999.
These factors indicate that the Company's continuation as a
<PAGE>
CONTESSA CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO PROFORMA CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 23, 2000
going concern is dependent upon its ability to obtain adequate financing.
Subsequent to the date of the financial statements and after much delay in
opening the restaurant, the management of the Company concluded that the Company
may be best served by selling the assets related to the Company to Pietro
Bortolatti, who was the manager of the project and the original principle owner
of GBDR, in consideration for the assumption of all related liabilities and the
return of 562,500 shares of common stock.
The proforma consolidated financial statements presented consist of the
consolidated balance sheet of the Company as at December 31, 1999 and the
related consolidated statements of operations, stockholders equity and cash
flows for the year ended December 31, 1999 and gives effect to the sale of the
assets and the assumption of liabilities by Pietro Bortolatti and the return of
the shares of common stock.
b. Cash and cash equivalents
The Company treats temporary investments with a maturity of less than
three months as cash when purchased with cash.
c. Loss per share
Basic loss per common share is computed by dividing the loss by the
weighted average number of common shares outstanding during the period. For the
year ended December 31, 1999, there were no dilutive securities outstanding. The
calculation of the shares used in computing basic and diluted EPS include the
shares of common stock issued for the sale of GBDR, the stock dividend and the
shares issued for the reverse merger.
Shares used in calculating basic and diluted net income per share were as
follows:
Year ended
December 31,
1999
----
Total number common
shares outstanding 2,304,006
---------
Shares used in calculating
per share amounts - Diluted 2,304,006
=========
d. Use of Estimates
<PAGE>
CONTESSA CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO PROFORMA CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 23, 2000
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that effect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
e. Significant Concentration of Credit Risk
At December 31, 1999, the Company has concentrated its credit risk by
maintaining deposits in several banks. The maximum loss that could have resulted
from this risk totaled $-0- which represents the excess of the deposit
liabilities reported by the banks over the amounts that would have been covered
by the federal insurance.
Note 3 - Discontinued Operations
On February 23, 2000, the management of the Company agreed to transfer to
Pietro Bortolatti, project manager the assets related to GBDR in consideration
for his assumption of all related liabilities and return of the 562,500 shares
of common stock used to purchase GBDR. The transaction was treated as a sale of
assets net of related liabilities with the gain on the transfer accounted for as
discontinued operations.
Note 4 - Preferred Stock
The Board of Directors of the Company has the authority to establish and
designate any shares of stock in series or classes and to fix any variations in
the designations, relative rights, preferences and limitations between series as
it deems appropriate, by a majority vote.
The preferred stock may be issued in series, each of which may vary, as
determined by the board of directors, as to the designation and number of shares
in such series, voting power of the holders thereof, dividend rate, redemption
terms and prices, voluntary and involuntary liquidation preferences, and
conversion rights and sinking fund requirements, if any, of such series.
The number of shares of preferred stock outstanding at December 31, 1999
is -0-.
Note 5 - Income Taxes
The Company provides for the tax effects of transactions reported in the
financial statements. The provision if any, consists of taxes currently due plus
deferred taxes related primarily to differences between the basis of assets and
liabilities for financial and income tax reporting. The deferred tax assets and
liabilities, if any represent the future tax return consequences of those
differences, which will either be taxable or deductible when the assets and
<PAGE>
CONTESSA CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO PROFORMA CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 23, 2000
liabilities are recovered or settled. As of December 31, 1999, the Company had
no material current tax liability, deferred tax assets, or liabilities to impact
on the Company's financial position because the deferred tax asset related to
the Company's net operating loss carryforward and was fully offset by a
valuation allowance.
At December 31, 1999, the Company has net operating loss carry forwards
for income tax purposes of $311,036. This carryforward is available to offset
future taxable income, if any, and expires in the year 2010. The Company's
utilization of this carryforward against future taxable income may become
subject to an annual limitation due to a cumulative change in ownership of the
Company of more than 50 percent.
The proforma components of the net deferred tax asset as of December 31,
1999 are as follows:
Deferred tax asset:
Net operating loss carry forward $ 105,752
Valuation allowance $(105,752)
---------
Net deferred tax asset $ -0-
The Company recognized no income tax benefit for the loss generated in the
period from inception, March 7, 1996, to December 31, 1999.
SFAS No. 109 requires that a valuation allowance be provided if it is more
likely than not that some portion or all of a deferred tax asset will not be
realized. The Company's ability to realize benefit of its deferred tax asset
will depend on the generation of future taxable income. Because the Company has
yet to recognize significant revenue from the sale of its products, the Company
believes that a full valuation allowance should be provided.
The Company is considered to be a development stage company with little
operating history. The Company is dependent upon the financial resources of the
Company's management for its continued existence. The Company will also be
dependent upon its ability to raise additional capital to complete the
construction of the restaurant and complete its marketing program, acquire
additional equipment, management talent, inventory and working capital to engage
in profitable business activity. Since its organization, the Company's
activities have been limited to the acquisition of the restaurant location,
construction, hiring personnel, and the preparation of documentation and the
sale of a private placement offering.
STOCK PURCHASE AGREEMENT
AGREEMENT made as of the 9th day of April, 1999 by and between Contessa
Corporation ("Contessa") and Mr. Pietro Bortolatti (the "Project Manager").
W I T N E S S E T H :
WHEREAS, Contessa is the sole owner of Five Hundred (500) shares (the "GBR
Shares") of Common Stock, par value $1.00 per share of Gastronnomia Bocca di
Roso, Inc. , a Florida corporation ("GBR") and desires to sell the GBR Shares to
the Project Manager; and
WHEREAS, the Project Manager is an experienced owner/operator of
restaurants and has been the primary individual involved with Contessa's
efforts, through its subsidiary ownership in GBR, to develop a casual dining
restaurant in the Coconut Grove section of Miami, Florida (the "Project"); and
WHEREAS, Contessa has previously provided financing and assistance in the
business development effort of GBR relating to the Project; and
WHEREAS, the efforts to develop the Project have fallen behind the
contemplated schedule and the Project Manager continues to operate an existing
restaurant located across the street from the Project; and
WHEREAS, Contessa wishes to focus its resources on other business
opportunities and to exit from the Project since it would take estimated
expenditures of more than $200,000 to make the Project into an operating
restaurant; and
WHEREAS, the Project Manager knows more about the status of the Project
than anyone else and is the person best prepared to realize whatever value, if
any, there may be in the Project; and
WHEREAS, the Project Manager wishes to buy the GBR Shares from Contessa,
and Contessa wishes to dispose of the Project through the sale of the GBR
Shares; and
WHEREAS, Contessa is willing to relinquish its ownership interest in the
GBR Shares in return for the Project Manager transferring the 562,500 shares of
Contessa common stock he currently owns (the "Contessa Shares") back to
Contessa.
NOW THEREFORE, in consideration of the foregoing and of the promises,
covenants and conditions contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which the Project Manager and
Contessa hereby acknowledge, the Project Manager and Contessa hereby agree as
follows:
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1. Agreement to Buy and Sell.
Subject to the terms and conditions of this Agreement, (i) Contessa agrees
to sell to the Project Manager, and the Project Manager agrees to purchase from
Contessa, the GBR Shares, and in consideration therefore, (ii) the Project
Manager agrees to sell to Contessa and Contessa agrees to buy from the Project
Manager the Contessa Shares. The GBR Shares and the Contessa Shares shall be
delivered in accordance with the provisions contained below.
2. Actions to Be Completed at or Prior to Closing
The closing of the purchase and sale of the GBR Shares and the Contessa
Shares shall occur on or before April 22, 1999 at the offices of Kaplan
Gottbetter & Levenson, LLP ("KGL"), 630 Third Avenue, New York, NY 10017, or
such other place as Contessa and the Project Manager shall mutually agree ( the
"Closing"). In order to effectuate the purchase and sale of the GBR Shares and
the Contessa Shares, the following events shall occur at the Closing:
(a) Contessa shall deliver to the Project Manager, the GBR Shares, as well
as a duly executed stock power related thereto.
(b) The Project Manager shall deliver to Contessa the Contessa Shares, as
well as a duly executed stock power related thereto.
(c) The Project Manager and Contessa shall execute and deliver this
Agreement.
(d) The parties may choose to enter into an escrow agreement with KGL
pursuant to which KGL would serve as escrow agent for the Contessa and the
Project Manager to assist in effectuating the Closing. In the event the parties
elect to do so, (1) all documents shall be delivered to KGL, as escrow agent and
(2) all payments shall be made by check made out to "Kaplan Gottbetter &
Levenson, LLP, as Escrow Agent" or by wire transfer to :
Bank of New York
100 East 42nd Street
New York, NY 10017
ABA# 021000018
Kaplan Gottbetter & Levenson, LLP.
Acct# 6300584649
Reference: EVCL
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In the event the parties elect to use the services of KGL as Escrow Agent, the
procedures regarding Closing shall be set out in a separate Escrow Agreement.
3. Representations and Warranties of Contessa.
Contessa hereby represents and warrants to the Project Manager as follows:
(a) Contessa is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, has the legal capacity and all
necessary corporate authority to carry on its business, to own its properties
and assets, and to enter into and perform this Agreement and to consummate the
transactions contemplated hereby;
(b) This Agreement has been duly authorized, executed and delivered by
Contessa and constitutes a legal, valid and binding obligation of Contessa,
enforceable against Contessa in accordance with its terms;
(c) The execution and delivery of this Agreement and the performance of
the obligations imposed hereunder will not conflict with, or result in a breach
by Contessa of, any of the terms or provisions of, or constitute a default under
any indenture, mortgage, deed of trust, or other material agreement or
instrument to which Contessa is a party, or by which it or any of its properties
or assets are bound, or result in a violation of any order, decree, or judgment
of any court or governmental agency having jurisdiction over Contessa or
Contessa's properties, will not conflict with, constitute a default under, or
result in the breach of, any contract, agreement, or other instrument to which
Contessa is a party or is otherwise bound and no consent, authorization,
registration with or order of, or, except as may be required by the Act, filing
with, any court, governmental, or regulatory authority is required in connection
with the execution and delivery of this Agreement and any related agreements or
the performance by Contessa of its obligations hereunder;
(d) There is no litigation or proceeding pending or, to the best knowledge
of Contessa, threatened, against Contessa which would have any effect on the
validity or performance of this Agreement;
(e) There are no restrictions on the transfer of the GBR Shares to the
Project Manager other than the applicable restrictions contained in the
Securities Act of 1993, as amended, and the applicable regulations thereunder
(the "Act"), and any applicable "Blue Sky" laws, and the Project Manager is
entitled to have the GBR Shares registered in its name on the share register
maintained therefor;
(f) Contessa owns the GBR Shares free and clear of all liens, claims,
charges, preemptive rights, and any other encumbrances and upon receipt of the
Contessa Shares together with the stock power relating thereto, Contessa shall
deliver the GBR Shares to the Project Manager free and clear of all liens,
claims, charges, preemptive rights, and any other encumbrances;
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(g) Contessa has not commenced a voluntary case in bankruptcy, consented
to the entry of an order for relief against it in an involuntary bankruptcy
case, consented to the appointment of a custodian of it for all or substantially
all of its property or made a general assignment for the benefit of its
creditors. No court of competent jurisdiction has entered an order or decree
under applicable bankruptcy laws that is for relief against Issuer, or any
direct or indirect affiliate in an involuntary bankruptcy case, that appoints a
custodian of Issuer or any direct or indirect affiliate for all or substantially
all of its properties or that orders the liquidation of Issuer, or any direct or
indirect affiliate.
4. Representations and Warranties of the Project Manager
The Project Manager hereby represents and warrants to Contessa as follows:
(a) The Project Manager is an individual with the legal competence and
capacity to enter into and perform this Agreement and to consummate the
transactions contemplated hereby;
(b) The Project Manager is purchasing the GBR Shares for his own account
and not for the account or benefit of any other person;
(c) This Agreement has been duly authorized, executed and delivered by the
Project Manager and constitutes a legal, valid and binding obligation of the
Project Manager, enforceable against him in accordance with its terms;
(d) The execution and delivery of this Agreement and the performance of
the obligations imposed hereunder will not conflict with, or result in a breach
by the Project Manager of, any of the terms or provisions of, or constitute a
default under any indenture, mortgage, deed of trust, or other material
agreement or instrument to which the Project Manager is a party, or by which it
or any of its properties or assets are bound, or result in a violation of any
order, decree, or judgment of any court or governmental agency having
jurisdiction over the Project Manager or the Project Manager's properties, will
not conflict with, constitute a default under, or result in the breach of, any
contract, agreement, or other instrument to which the Project Manager is a party
or is otherwise bound and no consent, authorization or order of, or filing or
registration with, any court, governmental, or regulatory authority is required
in connection with the execution and delivery of this Agreement and any related
agreements or the performance by the Project Manager of its obligations
hereunder;
(e) There is no litigation or proceeding pending or, to the best knowledge
of the Project Manager, threatened, against the Project Manager which would have
any effect on the validity or performance of this Agreement;
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(f) The Project Manager:
i) is aware of the circumstances under which he is required to take
and hold the GBR Shares pursuant to the requirements of the Act, and any
applicable state securities or "Blue Sky" law or laws;
ii) is aware that the GBR Shares have not been registered under the
Act and may not be transferred or otherwise disposed of unless they are
subsequently registered under the Act or an exemption from such
registration is available;
iii) is aware that Contessa was under no obligation to cause the GBR
Shares to be registered under the Act;
iv) has such knowledge and experience in financial and business
matters that he is capable of evaluating the merits and risks of the
purchase of the GBR Shares and is making an informed investment decision
with respect thereto, has evaluated the merits and risks of the purchase
of the GBR Shares, and is able to bear the economic risk of purchasing the
GBR Shares and can afford the complete loss of the Purchase Price;
v) is purchasing the GBR Shares for his own account for investment
purposes and not with a view to "distribute" the GBR Shares or the as that
term is defined in the Act;
vi) has sufficient and satisfactory access to all written or other
information and materials concerning Issuer and its business, is
acquainted with management of the Issuer, has had the ability to ask
questions of management of the Issuer and has received satisfactory
answers to all questions and has received all materials it has requested
regarding the business and operations and the condition, financial and
otherwise of the Issuer and its prospects; and acknowledges that Contessa
makes no representation regarding the Issuer or the conditions upon which
the GBR Shares may be exercised.
vii) acknowledges that Contessa is relying upon the truth and
accuracy of the representations, warranties, agreements, acknowledgments,
and understandings of the Project Manager as set forth in this Agreement
in order to permit the transfer of the GBR Shares in accordance with the
provisions of the Act, including without limitation Sections 4(1) and 4(2)
thereunder.
(g) Neither Contessa, nor any person acting on behalf of Contessa, has
offered, offered to sell, offered for sale or sold the GBR Shares to the Project
Manager by means of any form of general public solicitation or advertising.
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(h) The Project Manager is an "accredited investor" as the term is defined
in the Act, and is sufficiently sophisticated to make informed and educated
investment decisions, including the transaction contemplated hereby.
(i) The Project Manager is not a corporation or other entity formed for
the sole purpose of investing in the Shares, and has other substantial business
and investments.
(j) The Project Manager owns the Contessa Shares free and clear of all
liens, claims, charges, preemptive rights, and any other encumbrances, and upon
receipt of the GBR Shares together with the stock power relating thereto,
Contessa shall deliver the Contessa Shares to the Project Manager free and clear
of all liens, claims, charges, preemptive rights, and any other encumbrances.
(k) The Project is in full compliance with all terms and conditions of the
required permits, licenses and authorizations, and are also in full compliance
with all other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in those laws or
contained in any regulation, code, plan, order, decree, judgment, notice or
demand letter issued, entered, promulgated or approved thereunder. The Project
Manager is not aware of, nor has GBR received notice of, any past, present or
future events, conditions, circumstances, activities, practices, incidents,
actions or plans which may interfere with or prevent continued compliance, or
which may give rise to any common law or legal liability, or otherwise form the
basis of any claim, action, suit, proceeding, hearing or investigation, based on
or related to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, or handling, or the emission, discharge, release
or threatened release into the environment, of any pollutant, contaminant, or
hazardous or toxic material or waste material either individually or in the
aggregate.
(l) Neither GBR nor the Project has any liabilities or obligations of any
nature (absolute, accrued, contingent or otherwise) which were not fully
reflected or reserved against in the balance sheet or the notes thereto dated as
of December 31, 1998. The reserves reflected in the Balance Sheet are adequate,
appropriate and reasonable. There are no amounts due to any contractor,
supplier, materialmen, laborers, workers or other individuals with respect to
work done, or materials supplied, or services performed, on or with respect to
the Project. Neither the Project Manager nor any individual connected with the
Project has made any representation to any third party regarding Contessa's
financial support for GBR or the Project. The Project Manager and GBR shall have
no ability to look to Contessa, or to any officer, director, or affiliate
thereof for any financial support or accomodation after the sale of the GBR
Shares, and acknowledges and agrees that any existing or prior claim for such
support or accomodation shall be void after the sale of the GBR Shares.
(m) GBR has made all payroll deductions and withholdings required by law
in respect of employees, consultants or any other individual arising under
federal, state, and/or local requirements in connection with income taxes,
unemployment compensation withholdings, workers compensation withholding, social
security , and/or disability, or any other program under which withholding is
required.
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5. Condition of Contessa's Obligations Hereunder
It shall be a condition to the obligations of Contessa to complete the
transaction described herein that the representations and warranties of the
Project Manager shall have been and continue to be true and correct on the date
hereof and as of the Closing as if made on and as of such date.
6. Conditions of The Project Manager's Obligations Hereunder
The obligations of the Project Manager to complete the transaction
described herein are subject to the satisfaction or written waiver of the
following conditions at or before the Closing:
(a) The representations and warranties of Contessa shall have been
and continue to be true and correct on the date hereof and as of the
Closing as if made on and as of such date;
(b) Neither Contessa, nor any of its direct or indirect affiliates
(within the meaning of Rule 12b-2 under the Securities Exchange Act of
1934) shall have commenced a voluntary case in bankruptcy, consented to
the entry of an order for relief against it in an involuntary bankruptcy
case, consented to the appointment of a custodian of it for all or
substantially all of its property or made a general assignment for the
benefit of its creditors. No court of competent jurisdiction shall have
entered an order or decree under applicable bankruptcy laws that is for
relief against Contessa, or any direct or indirect affiliate in an
involuntary bankruptcy case, that appoints a custodian of Contessa or any
direct or indirect affiliate for all or substantially all of its
properties or that orders the liquidation of Contessa, or any direct or
indirect affiliate.
7. Indemnification Provisions
(a) Contessa hereby agrees to indemnify and hold free and harmless the
Project Manager from any and all losses, expenses, liabilities and damages
(including but not limited to reasonable attorney's fees, and amounts paid in
settlement) resulting the breach of any representations and warranties of
Contessa under this Agreement.
(b) The Project Manager hereby agrees to indemnify and hold free and
harmless Contessa from any and all losses, expenses, liabilities and damages
(including but not limited to reasonable attorney's fees, and amounts paid in
settlement) resulting the breach of any representations and warranties of
Contessa under this Agreement.
(c) The indemnities given by each party in subsections (a) and (b) above
shall survive the closing contemplated hereunder and the delivery of the GBR
Shares and the Contessa Shares.
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8. Miscellaneous
(a) Each of Contessa and the Project Manager agrees to take such actions
and execute and deliver any documents as are reasonably necessary to carry out
the intentions of the parties under this Agreement;
(b) All costs and expenses incurred in connection with this Agreement and
the transaction contemplated hereby shall be paid by the party incurring such
costs or expenses, unless otherwise agreed;
(c) This Agreement shall be governed by and construed in accordance with
the laws of the State of New York, without regard to conflicts of laws of
principles and each party hereby agrees that all performances due and
transactions undertaken pursuant to this Agreement shall be deemed to be due or
have occurred in New York, the exclusive venue and place of jurisdiction for any
litigation arising from or related to this Agreement shall be the State and
County of New York;
(d) The headings used in this Agreement are for convenience only, do not
form a part of this Agreement, and shall not affect in any way the meaning or
interpretation of this Agreement;
(e) This Agreement may be executed in one or more counterparts which when
taken together shall constitute one agreement;
(f) This Agreement is intended for the benefit of the parties hereto and
is not for the benefit of, nor may any provisions hereof be enforced by any
other person, firm or entity;
(g) This Agreement may be amended, modified and supplemented in writing
only by the mutual consent of the parties hereto and any waiver of any provision
of this Agreement must be in writing signed by the party effecting such waiver;
(h) This Agreement and all of the provisions hereof shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns, but neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto without the prior written consent of the other party, and any attempts to
do so without the consent of the other party shall be void and of no effect.
9. Further Assurances
The Project Manager agrees that he shall make himself reasonably available
to Contessa and shall cooperate with Contessa to the extent necessary so that
Contessa (i) is able to file a consolidated tax return and (ii) file all
reports, etc. which may be required, or advisable, under federal or state
securities laws.
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10. Independent Status of GBR; No Further Investment in Contessa
The Project Manager acknowledges, agrees, and understands that neither
GBR, nor any of its assets, including the Project, shall have any business
relationship with Contessa, or any of its affiliates, officers, or directors
after the closing, and sale of the GBR Shares. The Project Manager also
acknowledges, agrees, and understands that he will have no further investment in
Contessa after the sale of the Contessa Shares and will have no further ability
to share in any increase in value, rights, dividends, or capital appreciation of
such shares.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement of nine (9) pages as of the date first written above.
CONTESSA CORPORATION
By:
----------------------------------
Ian Markofsky
President
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Pietro Bortolatti, The Project Manager
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Mr. Pietro Bordolatti
Via facsimile 305-467-6462
April 23, 1999
Dear Pietro:
I received back your signed copy by fax of the Stock Purchase Agreement
today. Please note that Contessa will probably need to file a document with the
SEC which describes this transaction as Contessa is a public company. As a
result, the timetable for closing set out in the document is probably too
ambitious as a closing will be delayed pending the SEC's processing of our
filing. I would therefore like to amend Section 2 of the document you signed so
that the first sentence reads as follows:
"The closing of the purchase and sale of the GBR Shares and the Contessa
Shares shall be deferred until compliance with all SEC rules and regulations has
occurred."
Please sign below and fax back to me that you understand that closing will
be delayed.
Very truly yours,
Peter F. Wojnar
I understand that the closing of the stock sales shall be delayed as described
above and agree to such extension of the closing date.
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Pietro Bortolatti
