CONTESSA CORP /DE, 10QSB, 2000-05-12

CONTESSA CORP /DE
10QSB, 2000-05-12
EATING PLACES

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

---------------

FORM 10-QSB

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2000
Commission File No. 0-25007

CONTESSA CORPORATION
----------------------------------------------------------------
(Exact Name of Small Business Issuer as Specified in Its Charter)

Delaware 65-0655628
- -------------------------------- -------------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)

11 Chambers Street, Princeton, New Jersey 08542
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)

(609) 252-0657
- --------------------------------------------------------------------------------
(Issuer's Telephone Number, Including Area Code)

Check whether the Issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.

Yes: X No:
----- -----

State the number of shares outstanding of each of the Issuer's classes
of common stock, as of May 1, 2000:

Class Number of Shares
----- ----------------

Common Stock, $.0001 par value 8,367,624

Transitional Small Business Disclosure Format (check one):

Yes: No: X
----- -----

<PAGE>

CONTESSA CORPORATION AND SUBSIDIARY
-----------------------------------

TABLE OF CONTENTS
-----------------

Page
----

PART I FINANCIAL INFORMATION

Item 1. Financial Statements....................................... 1

CONDENSED CONSOLIDATED BALANCE SHEET
as of March 31, 2000 (unaudited), and December 31, 1999......... 2

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Three Months Ended March 31, 2000, From Inception on
January 15, 1999 through March 31, 1999, and From Inception on
January 15, 1999 through March 31, 2000 (unaudited)............. 3

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(DEFICIT) From Inception on January 15, 1999 through
March 31, 2000 (unaudited)...................................... 4

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the Three Months Ended March 31, 2000, From Inception on
January 15, 1999 through March 31, 1999, and From Inception on
January 15, 1999 through March 31, 2000 (unaudited)............. 5

NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (unaudited).......................................... 6

Item 2. Management's Discussion and Analysis of Financial
Condition and Plan of Operation............................ 8

Liquidity and Capital Resources................................. 10

Results of Operations........................................... 12

PART II OTHER INFORMATION

Item 2. Changes in Securities and Use of Proceeds.................. 13

Item 5. Other Information.......................................... 14

Item 6. Exhibits and Reports on Form 8-K........................... 15

SIGNATURES................................................................ 16

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<PAGE>

PART I. FINANCIAL INFORMATION.
------------------------------

Item 1. Financial Statements.

Certain information and footnote disclosures required under generally
accepted accounting principles have been condensed or omitted from the following
consolidated financial statements pursuant to the rules and regulations of the
Securities and Exchange Commission, although Contessa Corporation (the
"Company") and its subsidiary, Fullcomm, Inc., a Delaware corporation
("Fullcomm") believe that the disclosures are adequate to assure that the
information presented is not misleading in any material respect.

The results of operations for the interim periods presented herein are not
necessarily indicative of the results to be expected for the entire year.

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<PAGE>

CONTESSA CORPORATION AND SUBSIDIARY
-----------------------------------
(A DEVELOPMENT STAGE COMPANY)
-----------------------------
CONDENSED CONSOLIDATED BALANCE SHEET
------------------------------------

<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
----------- ------------
(unaudited)
ASSETS
------
<S> <C> <C>
Cash............................................................ $ 796,108 $ 1,439
Furniture and equipment, net of accumulated depreciation
of $2,548 and $1,622, respectively............................ 17,238 14,594
Other........................................................... 6,666 1,917
----------- -----------
TOTAL ASSETS................................................ $ 820,012 $ 17,950
=========== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
----------------------------------------------

CURRENT LIABILITIES:

Accounts payable................................................ $ 31,819 $ 57,168
Accrued expenses................................................ 1,640 --
Note payable.................................................... 100,000 --
Loan from shareholder........................................... 25,869 25,315
----------- -----------
Total Current Liabilities................................... 159,328 82,483
----------- -----------

STOCKHOLDERS' EQUITY (DEFICIT):

Preferred stock, 5,000,000 shares, $0.001 par value, authorized;
no shares issued and outstanding.............................. -- --

Common stock, 20,000,000 shares, $0.0001 par value,
authorized; 8,367,624 and 4,584,250 shares issued
and outstanding, respectively................................. 837 458
Capital in excess of par........................................ 2,024,399 249,778
Deficit accumulated during the development stage................ (526,010) (314,769)
Deferred compensation........................................... (838,542) --
----------- -----------
Total Stockholders' Equity (Deficit).......................... 660,684 (64,533)
----------- -----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT).......... $ 820,012 $ 17,950
=========== ===========
</TABLE>

See Notes to Condensed Consolidated Financial Statements.

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<PAGE>

<TABLE>
<CAPTION>
From Inception on From Inception on
For the Three January 15, 1999 January 15, 1999
Months Ended through through
March 31, 2000 March 31, 1999 March 31, 2000
-------------- -------------- --------------

<S> <C> <C> <C>
Revenue................................ $ -- $ -- $ --

Operating expenses:
General and administrative........... 162,478 7,070 459,263
Research and development............. 46,998 5,000 64,998
----------- ---------- ------------
Total operating expenses............... 209,476 12,070 524,261

Other income and expense:
Interest income........................ 498 346 1,060
Interest expense....................... (2,263) -- (2,809)

Net loss............................... $ (211,241) $ (11,724) $ (526,010)
=========== ========== ============

Basic net loss per share............... $ (0.04) $ --
=========== ==========

Basic weighted average

Number of shares outstanding........ 5,743,370 4,500,000
=========== ==========
</TABLE>

See Notes to Condensed Consolidated Financial Statements.

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<PAGE>

CONTESSA CORPORATION AND SUBSIDIARY
-----------------------------------
(A DEVELOPMENT STAGE COMPANY)
-----------------------------
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
------------------------------------------------------------------
FROM INCEPTION ON JANUARY 15, 1999 THROUGH MARCH 31, 2000 (unaudited)
---------------------------------------------------------------------

<TABLE>
<CAPTION>
Capital in Excess Accumulated Deferred
Common Stock of Par Value Deficit Compensation Total
------------ ----------------- ----------- ------------ -----
Shares Amount
------ ------

<S> <C> <C> <C> <C> <C> <C>
Issuance of common stock...... 4,500,000 $ 450 $ 59,550 $ -- $ -- $ 60,000

Issuance of common stock for
cash.......................... 517,624 52 1,090,184 -- -- 1,090,236

Issuance of common stock in
reverse merger................ 3,000,000 300 (300) -- -- --

Issuance of common stock for
consulting services........... 350,000 35 874,965 -- (838,542) 36,458

Net loss...................... -- -- -- (526,010) -- (526,010)
--------- -------- ----------- ---------- --------- ----------

Balance at March 31, 2000..... 8,367,624 $ 837 $ 2,024,399 $ (526,010) $(838,542) $ 660,684
========= ======== =========== ========== ========= ==========
</TABLE>

See Notes to Condensed Consolidated Financial Statements.

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<PAGE>

<TABLE>
<CAPTION>
From Inception From Inception
For the Three on January 15, 1999 on January 15, 1999
Months Ended through through
March 31, 2000 March 31, 1999 March 31, 2000
-------------- ------------------- -------------------

Cash flows used in operating activities:
<S> <C> <C> <C>
Net loss........................................ $ (211,241) $ (11,724) $ (526,010)
Adjustments to reconcile net loss
to net cash used in operating activities:
Deferred compensation........................... 36,458 -- 36,458
Depreciation.................................... 926 45 2,548
Increase in operating assets:
Other........................................... (4,749) -- (6,666)
Increase (decrease) in operating liabilities:
Accounts payable................................ (25,349) -- 31,819
Accrued expenses................................ 1,640 -- 1,640
---------- ---------- -----------
Net cash used in operating activities........... (202,315) (11,679) (460,211)
---------- ---------- -----------

Cash flows from investing activity:

Purchase of furniture and equipment............. 3,570 1,961 19,786
---------- ---------- -----------

Cash flows provided by financing activity:

Proceeds from issuance of common stock.......... 900,000 60,000 1,150,236
Proceeds from note payable...................... 100,000 -- 100,000
Proceeds from loan from shareholder............. 554 -- 25,869
---------- ---------- -----------
Cash flows provided by financing activities:.... 1,000,554 60,000 1,276,105
---------- ---------- -----------

Net increase in cash............................ 794,669 46,360 796,108

Cash at beginning of period..................... 1,439 -- --
---------- ---------- -----------

Cash at end of period........................... 796,108 46,360 796,108
========== ========== ===========
</TABLE>

See Notes to Condensed Consolidated Financial Statements.

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<PAGE>

CONTESSA CORPORATION AND SUBSIDIARY
-----------------------------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------
(unaudited)

NOTE 1 - BASIS OF PRESENTATION

The financial statements included herein have been prepared by the Company,
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations.

In the opinion of the Company's management, the accompanying unaudited
consolidated financial statements contain all adjustments, consisting solely of
those which are of a normal recurring nature, necessary to present fairly its
financial position as of March 31, 2000, the results of its operations and cash
flows for the three months ended March 31, 2000 and for the period from
inception on January 15, 1999 through March 31, 1999 and its operations and cash
flows for the period from inception on January 15, 1999 through March 31, 2000.

Interim results are not necessarily indicative of results for the full
fiscal year.

Fullcomm, a wholly-owned subsidiary of the Company, was incorporated on May
13, 1999 and is the successor entity to Fullcomm, L.L.C., a New Jersey limited
liability company, which was formed on January 15, 1999. This transfer was
accounted for at historical cost in a manner similar to a pooling of interest
with the recording of net assets acquired at their historical book value.

The Company is a development stage company that was organized to
commercially exploit technology developed in connection with the secure
transmission of digital media and other data on the Internet.

NOTE 2 - 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. During
the period from January 15, 1999 through March 31, 1999, there were no dilutive
securities outstanding. During the quarter ending March 31, 2000, shares to be
issued upon the exercise of options and warrants are not included in the
computation of loss per share as their effect is anti-dilutive.

NOTE 3 - SIGNIFICANT EVENTS

On January 21, 2000, Fullcomm entered into a loan agreement with South Edge
International Limited providing for a loan in the aggregate amount of $100,000.
The loan is evidenced by a promissory note bearing interest at the rate of 10.5%
per annum. This loan is due on January 21, 2001.

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<PAGE>

On January 28, 2000, Contessa consummated a merger with Fullcomm, Inc.
Contessa issued 4,601,100 shares of Common Stock for all of the outstanding
capital of Fullcomm. Pursuant to the merger, the shareholders of Fullcomm
acquired majority control of Contessa. For accounting purposes, the merger has
been treated as a recapitalization of Contessa with Fullcomm, Inc. as the
acquirer (reverse acquisition). The merger was completed on March 1, 2000.

In connection with the merger, the Company entered into two separate
advisory agreements. Pursuant to the agreements, the Company issued 350,000
restricted shares of its Common Stock.

On March 28, 2000, the Company consummated a private placement with twelve
investors pursuant to which such investors purchased an aggregate of 416,000
restricted shares of the Company's Common Stock, at a price per share of $2.50,
for an aggregate purchase price of $1,040,000. The Company paid placement fees
totaling $140,000 and received net proceeds from the placement of $900,000. In
connection with such private placement, the Company became obligated to
compensate RK Grace & Company, as its placement agent ("RK Grace"), and Grace
Securities, Inc., as its consultant ("Grace"). On April 28, 2000, RK Grace and
Grace agreed to reduce certain aspects of their respective fees relating to such
private placement and Merger. Accordingly, the Company will issue to (i) RK
Grace an aggregate of 41,600 common stock purchase warrants at an exercise price
of $2.75 per share and an aggregate of 118,433 restricted shares of its Common
Stock and (ii) Grace an aggregate of 58,333 common stock purchase warrants at an
exercise price of $2.75 per share and a cash payment of $5,000.

-7-
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN
OF OPERATION.

OVERVIEW

History and Organization

Contessa Corporation (the "Company") was formed on March 7, 1996 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 that of a holding company and subsequently
changed the name of the Company to "Contessa Corporation." During September
1997, the Company acquired all of the issued and outstanding shares of capital
stock of Gastronnomia Bocca Di Rosa, Inc. ("GBDR"), a Florida corporation, in
order to make GBDR the basis of its restaurant operations. After the development
of the Company's restaurant business proceeded behind schedule, the Company
decided to abandon its restaurant development efforts. Thereafter, on February
23, 2000, after several contingencies and conditions were satisfied, the Company
disposed of its interest in GBDR and redeemed its shares of common stock which
were issued as consideration for GBDR.

On January 28, 2000, the Company entered into an Agreement and Plan of
Merger that was amended and restated by an Amended and Restated Agreement and
Plan of Merger (the "Merger Agreement") by and among Fullcomm, Inc., a New
Jersey corporation and the successor entity to Fullcomm, L.L.C., a New Jersey
limited liability company ("Old Fullcomm"), Fullcomm Acquisition Corp.
("Fullcomm"), a Delaware corporation and wholly-owned subsidiary of the Company
and the principal stockholders of the Company and Old Fullcomm (the "Merger").
Pursuant to the Merger Agreement, Old Fullcomm was merged with and into Fullcomm
with Fullcomm continuing as the surviving entity under the name "Fullcomm, Inc."
and remaining a wholly-owned subsidiary of the Company. The Merger was completed
on March 1, 2000.

Business of the Company

The business of the Company is currently operated through Fullcomm. The
primary business of the Company is to commercially exploit technology developed
in connection with the secure transmission of digital media and other data on
the Internet. The Company's technology combines client-side security hardware,
server-side security software and authentication party software in order to
facilitate the secure transmission of any and all digital data via the Internet.

The Company is a development stage enterprise. The Company has devoted the
majority of its efforts to research and development, prototype development,
production scheduling, sourcing inventory and its marketing program, acquiring
additional equipment, hiring management talent, inventory and working capital.
These activities have been funded by the Company's management and through the
private placements of its common stock. The Company has not yet generated any
revenues to fund its ongoing operating expenses, repay outstanding indebtedness
or entirely fund its research and product development activities. There can be
no assurance that development of the Company's products will be completed and
fully tested in a timely manner and within the budget constraints of management.
In addition, there can be no

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<PAGE>

assurance that the Company's marketing research will provide a profitable path
to utilize the Company's marketing plans. The Company believes that further
investments into its technology and marketing research will reduce the cost of
development, preparation and processing of purchases and orders by enabling the
Company to effectively compete in the electronic market place.

The Company has completed a detailed schematic of its hardware device. The
device, in conjunction with proprietary server-side software, client-side
software and authentication party software is expected to achieve data
protection while in transit and data protection from duplication at the
consumers' personal computer. The device will have two distinct modes of
operational security. The first mode will feature security in which copyright
protection is the major concern. In this mode, a user would be able to view
data, but would be barred from duplicating such data. The second mode supports
information sharing over public and private networks and allows authorized users
to access and manipulate data files which have been decrypted at the hardware
device.

The Company is currently looking for a design team that will be able to
commence construction of the Company's hardware device. The Company expects to
find such a design team and begin building the hardware device during the second
quarter of 2000. The initial prototype development is comprised of three
concurrent stages: (i) prototype specifications and device development; (ii)
device software development; and (iii) server software development. The
construction of an initial prototype of such device is expected to take
approximately four to six months. The Company believes that the flexibility of
its design architecture will allow it to choose a modular development format in
which stages of development have concurrent timetables. Accordingly, the Company
intends to develop the necessary software concurrently with the building of the
hardware device.

The Company has entered into a letter of intent with Creative Web
Solutions, Inc. ("CWS"), a subsidiary of Bradmark, Inc., a Houston, Texas-based
Internet/Network Security Applications distributor that provides technically
advanced security solutions to Fortune 500 and 1000 companies. Under the letter
of intent, CWS will market the Company's initial product for the
business-to-business applications sector.

The Company anticipates revenues to be generated from licensed technology
products, transaction fees and information services delivered over the Internet,
private Intranets or other networks. The Company expects that its online
security system will be used to facilitate the distribution of information over
the Internet, including music, movies and television programming, books,
newspapers and periodicals, software, voice communication and other areas of
e-commerce, including financial transactions. The Company also expects that its
technology will be used to secure wireless voice and data transmission.

The Company expects to license its technology to future business partners
in order to build digital commerce services and applications. The Company also
intends to leverage such business partners' activities as they bring in their
business partners and customers. While the Company expects to receive initial
license fees from such business partners, the Company believes that its revenues
will eventually be derived primarily from transaction fees resulting

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<PAGE>

from such partners' and their customers' commercial deployment of the Company's
applications and services.

Employees

The Company currently has five employees and does not expect any
significant change in such number in the near future.

Safe Harbor Statement

Certain statements included in this Form 10-QSB, including, without
limitation, statements regarding the anticipated growth in the markets for the
Company's services, the continued development of the Company's technology, the
anticipated longer term growth of the Company's business, and the timing of the
projects and trends in future operating performance, are forward-looking
statements within the meaning of Section 21E of the Securities Exchange Act of
1934, as amended. Such forward looking statements may be identified by, and
among other things, the use of forward-looking terminology such as "believes,"
"expects," "may," "will," "should," or "anticipates" or the negative thereof or
other variations thereon or comparable terminology, or by discussions of
strategy that involve risks and uncertainties. The factors discussed herein and
others expressed from time to time in the Company's filings with the Securities
and Exchange Commission could cause actual results and developments to be
materially different from those expressed in or implied by such statements.

LIQUIDITY AND CAPITAL RESOURCES

Overview

The Company's cash balance was $796,108 and working capital was $636,780 at
March 31, 2000.

As of March 31, 2000, the Company had a tax loss carry-forward of $526,010
to off-set future taxable income. There can be no assurance, however, that the
Company will be able to take advantage of any or all of such tax loss
carry-forward, if at all, in future fiscal years.

Financing Needs

To date, the Company has not generated any revenues. The Company has not
been profitable since inception, may incur additional operating losses in the
future, and may require additional financing to continue the development and
commercialization of its technology. While the Company does not expect to
generate significant revenues from the sale of products in the near future, the
Company may enter into licensing or other agreements with marketing and
distribution partners that may result in license fees or other related revenue.

The Company expects its capital requirements to increase significantly over
the next several years as it commences new research and development efforts,
undertakes new product developments, increases its sales and administration
infrastructure and embarks on developing in-house business capabilities and
facilities. The Company's future liquidity and capital funding

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<PAGE>

requirements will depend on numerous factors, including, but not limited to, the
levels and costs of the Company's research and development initiatives and the
cost and timing of the expansion of the Company's sales and marketing efforts.

On March 28, 2000, the Company consummated a private placement of its
common stock with twelve investors pursuant to which such investors purchased an
aggregate of 416,000 restricted shares of the Company's common stock, $0.0001
par value ("Common Stock"), at a price per share of $2.50, for an aggregate
purchase price of $1,040,000. The Company paid placement fees totaling $140,000
and received net proceeds from the placement of $900,000. In connection with
such private placement, the Company became obligated to compensate R.K. Grace &
Company, as its placement agent ("RK Grace") and Grace Securities, Inc. as its
consultant ("Grace"). On April 28, 2000, RK Grace and Grace agreed to reduce
certain aspects of their respective fees relating to such private placement and
Merger. Accordingly, the Company will issue to (i) RK Grace an aggregate of
41,600 common stock purchase warrants at an exercise price of $2.75 per share
and an aggregate of 118,433 restricted shares of its Common Stock and (ii) Grace
an aggregate of 58,333 common stock purchase warrants at an exercise price of
$2.75 per share and a cash payment of $5,000.

The Company anticipates that it will be able to fund operations through
December 31, 2000. However, in order to fund its research and development and
commercialization efforts, including hiring of additional employees, it will be
necessary for the Company to seek to raise additional capital through the
issuance of securities of the Company during calendar year 2000. The Company
currently does not have any formal agreement or understanding with any third
party regarding any such offering of securities, and there can be no assurance
that any such offering will, in fact, occur or be consummated. It is likely that
the current stockholders will experience significant and immediate dilution in
their current ownership due to the issuance of such securities. Additional
financing will be required thereafter which may, if and when consummated by the
Company, cause further dilution of ownership.

Year 2000 Compliance

The Company did not experience any significant computer or systems problems
relating to the Year 2000. Upon review of the Company's internal and external
systems during 1999, the Company determined that it did not have any material
exposure to such computer problems and that the software and systems required to
operate its business and provide its services were Year 2000 compliant. As a
result, the Company did not incur, and does not expect to incur, any material
expenditures relating to Year 2000 systems issues.

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<PAGE>

RESULTS OF OPERATIONS

Three Months Ended March 31, 2000 and 1999
- ------------------------------------------

The Company is a development stage company and revenues for the each of the
quarters ended March 31, 2000 and March 31, 1999 was zero. Operating expenses
consist of general and administrative expenses and research and development
expenses. Operating expenses during the three months ended March 31, 2000 and
the period from inception on January 15, 1999 through March 31, 1999 were
$209,476 and $12,070, respectively, an increase of $197,406, or 1635.5%.

General and administrative expenses consist primarily of professional
salaries and benefits, depreciation and amortization, professional and
consulting services, office rent and corporate insurance. General and
administrative expenses during the three months ended March 31, 2000 and the
period from inception on January 15, 1999 through March 31, 1999 were $162,478
and $7,070, respectively, an increase of $155,408, or 2198.1%. The increase in
general and administrative expenses, resulted primarily from a significant
increase in operating activities.

Research and development expenses consist of professional salaries and
benefits and allocated overhead charged to research and development projects.
Research and development expenses during the three months ended March 31, 2000
and the period from inception on January 15, 1999 through March 31, 1999 were
$46,998 and $5,000, respectively, an increase of $41,998, or 840.0%. The
increase in research and development expenses resulted primarily from a
significant increase in operating activities.

Period From Inception on January 15, 1999 through March 31, 2000
- ----------------------------------------------------------------

The Company is a development stage company. From inception through March
31, 2000, the Company had no revenues.

The Company has incurred losses each year since inception and has an
accumulated deficit of $526,010 at March 31, 2000. The Company expects to
continue to incur losses over, approximately, the next two to three years from
expenditures on research, product development, marketing and administrative
activities.

The Company does not expect to generate significant revenues from product
sales for, approximately, the next two to three years during which the Company
will engage in significant research and development efforts. However, the
Company may enter into licensing or other agreements with marketing and
distribution partners that may result in license fees and other related
revenues. No assurance can be given, however, that such research and development
efforts will result in any commercially viable products, or that any licensing
or other agreements with marketing and distribution partners will be entered
into and result in revenues. The Company's future success will depend on its
ability to transform its research and development activities into
commercializable products.

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<PAGE>

PART II. OTHER INFORMATION.
---------------------------

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.

On January 28, 2000, the Company entered into Merger Agreement by and among
Old Fullcomm, Fullcomm and the principal stockholders of the Company and Old
Fullcomm. Pursuant to the Merger Agreement, Old Fullcomm was merged with and
into Fullcomm with Fullcomm continuing as the surviving entity under the name
"Fullcomm, Inc." and remaining a wholly-owned subsidiary of the Company. The
Merger was completed on March 1, 2000.

In connection with the Merger, the Company issued an aggregate of 4,601,100
restricted shares of its Common Stock to the shareholders of Old Fullcomm in
consideration for the outstanding shares of Old Fullcomm. Additionally, the
Company issued a stock dividend of 695,994 restricted shares of its Common Stock
to its then current stockholders as consideration for the Merger. The Company
also issued an aggregate of 175,000 restricted shares of its Common Stock to
Brad Tashenberg and an aggregate of 175,000 restricted shares of its Common
Stock to Gregory Creekmore pursuant to their respective advisory agreements with
the Company.

On January 28, 2000, the Company granted to Richard T. Case, options to
purchase an aggregate of 175,000 shares of the Company's Common Stock at an
exercise price of $0.10 per share.

On March 28, 2000, the Company consummated a private placement of its
common stock with twelve investors pursuant to which such investors purchased an
aggregate of 416,000 restricted shares of the Company's Common Stock, at a price
per share of $2.50, for an aggregate purchase price of $1,040,000. The Company
paid placement fees totaling $140,000 and received net proceeds from the
placement of $900,000. In connection with such private placement, the Company
became obligated to compensate RK Grace, as its placement agent, and Grace, as
its consultant. On April 28, 2000, RK Grace and Grace agreed to reduce certain
aspects of their respective fees relating to such private placement and Merger.
Accordingly, the Company will issue to (i) RK Grace an aggregate of 41,600
common stock purchase warrants at an exercise price of $2.75 per share and an
aggregate of 118,433 restricted shares of its Common Stock and (ii) Grace an
aggregate of 58,333 common stock purchase warrants at an exercise price of $2.75
per share and a cash payment of $5,000.

No underwriter was employed by the Company in connection with the issuance
of the securities described above. The Company believes that the issuance of the
foregoing securities was exempt from registration under either (i) Section 4(2)
of the Securities Act of 1933, as amended (the "Act"), as transactions not
involving a public offering and such securities having been acquired for
investment and not with a view to distribution, or (ii) Rule 701 under the Act
as transactions made pursuant to a written compensatory benefit plan or pursuant
to a written contract relating to compensation. All recipients had adequate
access to information about the Company.

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<PAGE>

ITEM 5. OTHER INFORMATION.

On April 9, 1999, the Company entered into a definitive Stock Purchase
Agreement with Mr. Pietro Bortolatti, the Chief Executive Officer of
Gastronnomia Bocca Di Rosa, Inc. ("GBDR"), the Company's wholly-owned
subsidiary, pursuant to which Mr. Bortolatti was to transfer his entire share
ownership in the Company, consisting of an aggregate of 562,000 shares of the
Company's common stock, $0.0001 par value ("Common Stock"), to the Company and
in return would receive the Company's entire stock ownership in GBDR. 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 the
Company had prepared appropriate filings with the Securities and Exchange
Commission. The consummation of the Stock Purchase Agreement was completed on
February 23, 2000 upon the satisfaction of such conditions.

The effect of such transaction was to transfer the Company's
restaurant-related assets to Mr. Bortolatti in exchange for his ownership stake
in the Company. GBDR had formerly been a wholly-owned subsidiary in an entity
controlled by Mr. Bortolatti. GBDR was acquired by the Company in 1997 at which
time Mr. Borolatti, through his affiliated entity, received 562,000 shares of
Common Stock of the Company. The Company 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 met with delays and had fallen behind schedule. Mr. Bortolatti indicated
that approximately $200,000 in funds would be needed in order to make the
restaurant project operational and the Company's management decided to abandon
the development effort.

On April 28, 2000, Richard T. Case notified the Company that, effective May
22, 2000, he will resign from his position as the Company's Chief Executive
Officer. He had served in such capacity since January 2000.

On April 28, 2000, Howard M. Weinstein was appointed to serve as the
Company's new Chief Executive Officer commencing on May 22, 2000. From 1989 to
April 2000, Mr. Weinstein, 36, was employed by GE Industrial Systems, a division
of General Electric, where he held multiple roles in control engineering,
engineering management, project management and product and strategic marketing.
Prior to that, Mr. Weinstein was employed by Newport News Shipbuilding where he
worked on instrumentation and controls for nuclear propulsion systems for
aircraft carriers and fast attack submarines. Mr. Weinstein graduated from
Virginia Tech in 1986 with a BS degree in electrical engineering.

-14-
<PAGE>

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

(a) Exhibits.

10.1 Memorandum of Understanding re: Placement Agent.
(Incorporated by reference to the Company's Annual Report on
Form 10-KSB for the year ended December 31, 1999).

10.2 Tashenberg Consulting Agreement (Incorporated by reference
to the Company's Annual Report on Form 10-KSB for the year
ended December 31, 1999).

10.3 Creekmore Consulting Agreement (Incorporated by reference to
the Company's Annual Report on Form 10-KSB for the year
ended December 31, 1999).

10.4 Letter Agreement re: Master Distribution (Incorporated by
reference to the Company's Annual Report on Form 10-KSB for
the year ended December 31, 1999).

10.5 Consulting Agreement (Incorporated by reference to the
Company's Annual Report on Form 10-KSB for the year ended
December 31, 1999).

10.6 Form of Indemnification Agreement entered into between the
Company and each of its officers and directors.

10.7 Employment Agreement dated January 28, 2000 between the
Company and Richard T. Case.

10.8 Employment Agreement dated February 28, 2000 between the
Company and Brendan G. Elliott.

10.9 Employment Agreement dated April 28, 2000 between the
Company and Howard M. Weinstein.

27 Financial Data Schedule for the period ended March 31, 2000.

(b) Reports on Form 8-K.

On March 14, 2000, the Company filed a report on Form 8-K relating
to the transfer of the Company's restaurant-related assets to
Mr. Pietro Bortolatti in exchange for Mr. Bortolatti's entire share
ownership in the Company.

-15-
<PAGE>

SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934,
the registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

CONTESSA CORPORATION

DATE: May 12, 2000 By: /s/ Richard T. Case
------------------------------------
Richard T. Case,
Chief Executive Officer
(Principal Executive Officer)

DATE: May 12, 2000 By: /s/ Wayne H. Lee
------------------------------------
Wayne H. Lee
Executive Vice President
(Principal Financial and Accounting Officer)

-16-

CONTESSA CORPORATION

INDEMNIFICATION AGREEMENT

This Indemnification Agreement ("Agreement") is made as of ,
--------------
2000 by and between Contessa Corporation, a Delaware corporation (the
"Company"), and ("Indemnitee").
---------------------

WHEREAS, Indemnitee is a director of the Company and performs valuable
services in such capacities for the Company;

WHEREAS, the Company and Indemnitee recognize the substantial increase in
corporate litigation in general, subjecting directors, officers, employees,
agents and fiduciaries to expensive litigation risks at the same time as the
availability and coverage of liability insurance may be limited;

WHEREAS, the Company and Indemnitee further recognize the difficulty in
obtaining liability insurance for its directors, officers, employees, agents and
fiduciaries, the significant increases in the cost of such insurance and the
general reductions in the coverage of such insurance;

WHEREAS, Indemnitee does not regard the current protection available as
adequate under the present circumstances, and the Indemnitee and other
directors, officers, employees, agents and fiduciaries of the Company may not be
willing to continue to serve in such capacities without additional protection;
and

WHEREAS, the Company desires to attract and retain the services of highly
qualified individuals, such as Indemnitee, to serve the Company and, in part, in
order to induce Indemnitee to continue to provide services to the Company as a
director, the Company wishes to provide for the indemnification and advancing of
expenses to Indemnitee to the maximum extent permitted by law.

NOW, THEREFORE, the Company and Indemnitee hereby agree as follows:

1. Indemnification.
---------------

(a) Indemnification of Expenses. The Company shall indemnify
------------------------------
Indemnitee to the fullest extent permitted by law if Indemnitee was or is or
becomes a party to or witness or other participant in, or is threatened to be
made a party to or witness or other participant in, any threatened, pending or
completed action, suit, proceeding or alternative dispute resolution mechanism,
or any hearing, inquiry or investigation that Indemnitee in good faith believes
might lead to the institution of any such action, suit, proceeding or
alternative dispute resolution mechanism, whether civil, criminal,
administrative, investigative or other (hereinafter a "Claim") by reason of (or
arising in part out of) any event or occurrence related to the fact that
Indemnitee is

<PAGE>

or was a director, officer, employee, agent or fiduciary of the Company, or any
subsidiary of the Company, or is or was serving at the request of the Company as
a director, officer, employee, agent or fiduciary of another corporation,
partnership, joint venture, trust or other enterprise, or by reason of any
action or inaction on the part of Indemnitee while serving in such capacity
(hereinafter an "Indemnifiable Event") against any and all expenses (including
attorneys' fees and all other costs, expenses and obligations incurred in
connection with investigating, defending, being a witness in or participating in
(including on appeal), or preparing to defend, be a witness in or participate
in, any such action, suit, proceeding, alternative dispute resolution mechanism,
hearing, inquiry or investigation), judgments, fines, penalties and amounts paid
in settlement (if such settlement is approved in advance by the Company, which
approval shall not be unreasonably withheld) of such Claim and any federal,
state, local or foreign taxes imposed on the Indemnitee as a result of the
actual or deemed receipt of any payments under this Agreement (collectively,
hereinafter "Expenses"), including all interest, assessments and other charges
paid or payable in connection with or in respect of such Expenses. Such payment
of Expenses shall be made by the Company as soon as practicable but in any event
no later than thirty (30) days after written demand by Indemnitee therefor is
presented to the Company.

(b) Reviewing Party. Notwithstanding the foregoing, (i) the
----------------
obligations of the Company under Section l(a) shall be subject to the condition
that the Reviewing Party (as described in Section 10(e) hereof) shall not have
determined (in a written opinion, in any case in which the Independent Legal
Counsel referred to in Section 1(c) hereof is involved) that Indemnitee would
not be permitted to be indemnified under applicable law, and (ii) the obligation
of the Company to make an advance payment of Expenses to Indemnitee pursuant to
Section 2(a) (an "Expense Advance") shall be subject to the condition that, if,
when and to the extent that the Reviewing Party determines that Indemnitee would
not be permitted to be so indemnified under applicable law, the Company shall be
entitled to be reimbursed by Indemnitee (who hereby agrees to reimburse the
Company) for all such amounts theretofore paid; provided, however, that if
Indemnitee has commenced or thereafter commences legal proceedings in a court of
competent jurisdiction to secure a determination that Indemnitee should be
indemnified under applicable law, any determination made by the Reviewing Party
that Indemnitee would not be permitted to be indemnified under applicable law
shall not be binding and Indemnitee shall not be required to reimburse the
Company for any Expense Advance until a final judicial determination is made
with respect thereto (as to which all rights of appeal therefrom have been
exhausted or lapsed). Indemnitee's obligation to reimburse the Company for any
Expense Advance shall be unsecured and no interest shall be charged thereon. If
there has not been a Change in Control (as defined in Section 10(c) hereof), the
Reviewing Party shall be selected by the Board of Directors, and if there has
been such a Change in Control (other than a Change in Control which has been
approved by a majority of the Company's Board of Directors who were directors
immediately prior to such Change in Control), the Reviewing Party shall be the
Independent Legal Counsel referred to in Section l(c) hereof. If there has been
no determination by the Reviewing Party or if the Reviewing Party determines
that Indemnitee substantively would not be permitted to be indemnified in whole
or in part under applicable law, Indemnitee shall have the right to commence
litigation seeking an initial determination by the court or challenging any such
determination by the Reviewing Party or any aspect thereof, including the legal
or factual bases therefor, and the Company hereby consents

-2-
<PAGE>

to service of process and to appear in any such proceeding. Any determination by
the Reviewing Party otherwise shall be conclusive and binding on the Company and
Indemnitee.

(c) Change in Control. The Company agrees that if there is a Change
-----------------
in Control of the Company (other than a Change in Control which has been
approved by a majority of the Company's Board of Directors who were directors
immediately prior to such Change in Control) then with respect to all matters
thereafter arising concerning the rights of Indemnitee to payments of Expenses
and Expense Advances under this Agreement or any other agreement or under the
Company's Certificate of Incorporation or By-laws as now or hereafter in effect,
the Company shall seek legal advice only from Independent Legal Counsel (as
defined in Section 10(d) hereof) selected by Indemnitee and approved by the
Company (which approval shall not be unreasonably withheld). Such counsel, among
other things, shall render its written opinion to the Company and Indemnitee as
to whether and to what extent Indemnitee would be permitted to be indemnified
under applicable law. The Company agrees to pay the reasonable fees of the
Independent Legal Counsel referred to above and to fully indemnify such counsel
against any and all expenses (including attorneys' fees), claims, liabilities
and damages arising out of or relating to this Agreement or its engagement
pursuant hereto.

(d) Mandatory Payment of Expenses. Notwithstanding any other
--------------------------------
provision of this Agreement other than Section 9 hereof, to the extent that
Indemnitee has been successful on the merits or otherwise, including, without
limitation, the dismissal of an action without prejudice, in defense of any
action, suit, proceeding, inquiry or investigation referred to in Section (1)(a)
hereof or in the defense of any claim, issue or matter therein, Indemnitee shall
be indemnified against all Expenses incurred by Indemnitee in connection
therewith.

2. Expenses; Indemnification Procedure.
-----------------------------------

(a) Advancement of Expenses. The Company shall advance all Expenses
-----------------------
incurred by Indemnitee. The advances to be made hereunder shall be paid by the
Company to Indemnitee as soon as practicable but in any event no later than five
(5) days after written demand by Indemnitee therefor to the Company.

(b) Notice/Cooperation by Indemnitee. Indemnitee shall, as a
----------------------------------
condition precedent to Indemnitee's right to be indemnified under this
Agreement, give the Company notice in writing as soon as practicable of any
Claim made against Indemnitee for which indemnification will or could be sought
under this Agreement. Notice to the Company shall be directed to the Chief
Executive Officer of the Company at the address shown on the signature page of
this Agreement (or such other address as the Company shall designate in writing
to Indemnitee). In addition, Indemnitee shall give the Company such information
and cooperation as it may reasonably require and as shall be within Indemnitee's
power.

(c) No Presumptions; Burden of Proof. For purposes of this
-------------------------------------
Agreement, the termination of any claim, action, suit or proceeding, by
judgment, order, settlement (whether with or without court approval) or
conviction, or upon a plea of nolo contendere, or its equivalent, shall
---- ----------

-3-
<PAGE>

not create a presumption that Indemnitee did not meet any particular standard of
conduct or have any particular belief or that a court has determined that
indemnification is not permitted by applicable law. In addition, neither the
failure of the Reviewing Party to have made a determination as to whether
Indemnitee has met any particular standard of conduct or had any particular
belief, nor an actual determination by the Reviewing Party that Indemnitee has
not met such standard of conduct or did not have such belief, prior to the
commencement of legal proceedings by Indemnitee to secure a judicial
determination that Indemnitee should be indemnified under applicable law, shall
be a defense to Indemnitee's claim or create a presumption that Indemnitee has
not met any particular standard of conduct or did not have any particular
belief. In connection with any determination by the Reviewing Party or otherwise
as to whether the Indemnitee is entitled to be indemnified hereunder, the burden
of proof shall be on the Company to establish that Indemnitee is not so
entitled.

(d) Notice to Insurers. If, at the time of the receipt by the Company
------------------
of a notice of a Claim pursuant to Section 2(b) hereof, the Company has
liability insurance in effect which may cover such Claim, the Company shall give
prompt notice of the commencement of such Claim to the insurers in accordance
with the procedures set forth in the respective policies. The Company shall
thereafter take all necessary or desirable action to cause such insurers to pay,
on behalf of the Indemnitee, all amounts payable as a result of such action,
suit, proceeding, inquiry or investigation in accordance with the terms of such
policies. Nothing in this Section 2(d) shall limit the Company's obligations as
otherwise provided for herein, including the Company's obligation to pay
Expenses under Section 1(b) or to advance Expenses under Section 2(a).

(e) Selection of Counsel. In the event the Company shall be obligated
--------------------
hereunder to pay the Expenses of any action, suit, proceeding, inquiry or
investigation, the Company, if appropriate, shall be entitled to assume the
defense of such action, suit, proceeding, inquiry or investigation with counsel
approved by Indemnitee, upon the delivery to Indemnitee of written notice of its
election so to do. After delivery of such notice, approval of such counsel by
Indemnitee and the retention of such counsel by the Company, the Company will
not be liable to Indemnitee under this Agreement for any fees of counsel
subsequently incurred by Indemnitee with respect to the same action, suit,
proceeding, inquiry or investigation; provided that, (i) Indemnitee shall have
the right to employ Indemnitee's counsel in any such action, suit, proceeding,
inquiry or investigation at Indemnitee's expense and (ii) if (A) the employment
of counsel by Indemnitee has been previously authorized by the Company, (B)
Indemnitee shall have reasonably concluded that there may be a conflict of
interest between the Company and Indemnitee in the conduct of any such defense,
or (C) the Company shall not continue to retain such counsel to defend such
action, suit, proceeding, inquiry or investigation, then the fees and expenses
of Indemnitee's counsel shall be at the expense of the Company.

-4-
<PAGE>

3. Additional Indemnification Rights; Nonexclusivity.
-------------------------------------------------

(a) Scope. The Company hereby agrees to indemnify the Indemnitee to
-----
the fullest extent permitted by law, notwithstanding that such indemnification
is not specifically authorized by the other provisions of this Agreement, the
Company's Certificate of Incorporation, the Company's By-laws or by statute. In
the event of any change after the date of this Agreement in any applicable law,
statute or rule which expands the rights of the corporation to indemnify a
member of its board of directors or an officer, employee, agent or fiduciary, it
is the intent of the parties hereto that Indemnitee shall enjoy by this
Agreement the greater benefits afforded by such change. In the event of any
change in any applicable law, statute or rule which narrows the rights of this
Company to indemnify a member of its board of directors or an officer, employee,
agent or fiduciary, such change, to the extent not otherwise required by such
law, statute or rule to be applied to this Agreement, shall have no effect on
this Agreement or the parties' rights and obligations hereunder.

(b) Nonexclusivity. The indemnification provided by this Agreement
--------------
shall be in addition to any rights to which Indemnitee may be entitled under the
Company's Certificate of Incorporation, its By-laws, any agreement, any vote of
shareholders or disinterested directors, the relevant business corporation law
of the Company's state of incorporation, or otherwise. The indemnification
provided under this Agreement shall continue as to Indemnitee for any action
taken or not taken while serving in an indemnified capacity even though
Indemnitee may have ceased to serve in such capacity.

4. No Duplication of Payments. The Company shall not be liable under
---------------------------
this Agreement to make any payment in connection with any action, suit,
proceeding, inquiry or investigation made against Indemnitee to the extent
Indemnitee has otherwise actually received payment (under any insurance policy,
Certificate of Incorporation, By-laws or otherwise) of the amounts otherwise
indemnifiable hereunder.

5. Partial Indemnification. If Indemnitee is entitled under any provision
-----------------------
of this Agreement to indemnification by the Company for some or a portion of
Expenses in the investigation, defense, appeal or settlement of any civil or
criminal action, suit, proceeding, inquiry or investigation, but not, however,
for all of the total amount thereof, the Company shall nevertheless indemnify
Indemnitee for the portion of such Expenses to which Indemnitee is entitled.

6. Mutual Acknowledgment. Both the Company and Indemnitee acknowledge
---------------------
that in certain instances, Federal law or applicable public policy may prohibit
the Company from indemnifying its directors, officers, employees, agents or
fiduciaries under this Agreement or otherwise. Indemnitee understands and
acknowledges that the Company has undertaken or may be required in the future to
undertake with the Securities and Exchange Commission to submit the question of
indemnification to a court in certain circumstances for a determination of the
Company's right under public policy to indemnify Indemnitee.

-5-
<PAGE>

7. Liability Insurance. To the extent the Company maintains liability
-------------------
insurance applicable to directors, officers, employees, agents or fiduciaries,
Indemnitee shall be covered by such policies in such a manner as to provide
Indemnitee the same rights and benefits as are accorded to the most favorably
insured of the Company's directors, if Indemnitee is a director; or of the
Company's officers, if Indemnitee is not a director of the Company but is an
officer; or of the Company's key employees, agents or fiduciaries, if Indemnitee
is not an officer or director but is a key employee, agent or fiduciary.

8. Exceptions. Any other provision herein to the contrary notwithstanding,
----------
the Company shall not be obligated pursuant to the terms of this Agreement:

(a) Excluded Action or Omissions. To indemnify Indemnitee for acts,
----------------------------
omissions or transactions from which Indemnitee may not be relieved of liability
under applicable law.

(b) Claims Initiated by Indemnitee. To indemnify or advance expenses
------------------------------
to Indemnitee with respect to proceedings or claims initiated or brought
voluntarily by Indemnitee and not by way of defense, except (i) with respect to
proceedings brought to establish or enforce a right to indemnification under
this Agreement or any other agreement or insurance policy or under the Company's
Certificate of Incorporation or By-laws now or hereafter in effect relating to
Claims for Indemnifiable Events, (ii) in specific cases if the Board of
Directors has approved the initiation or bringing of such suit, or (iii) as
otherwise required under the applicable provisions of the business corporation
law of the Company's state of incorporation, regardless of whether Indemnitee
ultimately is determined to be entitled to such indemnification, advance expense
payment or insurance recovery, as the case may be.

(c) Lack of Good Faith. To indemnify Indemnitee for any expenses
------------------
incurred by the Indemnitee with respect to any proceeding instituted by
Indemnitee to enforce or interpret this Agreement, if a court of competent
jurisdiction determines that each of the material assertions made by the
Indemnitee in such proceeding was not made in good faith or was frivolous; or

(d) Claims Under Section 16(b). To indemnify Indemnitee for expenses
--------------------------
and the payment of profits arising from the purchase and sale by Indemnitee of
securities in violation of Section 16(b) of the Securities Exchange Act of 1934,
as amended, or any similar successor statute.

9. Period of Limitations. No legal action shall be brought and no cause of
---------------------
action shall be asserted by or in the right of the Company against Indemnitee,
Indemnitee's estate, spouse, heirs, executors or personal or legal
representatives after the expiration of two years from the date of accrual of
such cause of action, and any claim or cause of action of the Company shall be
extinguished and deemed released unless asserted by the timely filing of a legal
action within such two-year period; provided, however, that if any shorter
-------- -------
period of limitations is otherwise applicable to any such cause of action, such
shorter period shall govern.

-6-
<PAGE>

10. Construction of Certain Phrases.
-------------------------------

(a) For purposes of this Agreement, references to the "Company" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, employees, agents or
fiduciaries, so that if Indemnitee is or was a director, officer, employee,
agent or fiduciary of such constituent corporation, or is or was serving at the
request of such constituent corporation as a director, officer, employee, agent
or fiduciary of another corporation, partnership, joint venture, employee
benefit plan, trust or other enterprise, Indemnitee shall stand in the same
position under the provisions of this Agreement with respect to the resulting or
surviving corporation as Indemnitee would have with respect to such constituent
corporation if its separate existence had continued.

(b) For purposes of this Agreement, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on Indemnitee with respect to an employee benefit plan;
and references to "serving at the request of the Company" shall include any
service as a director, officer, employee, agent or fiduciary of the Company
which imposes duties on, or involves services by, such director, officer,
employee, agent or fiduciary with respect to an employee benefit plan, its
participants or its beneficiaries; and if Indemnitee acted in good faith and in
a manner Indemnitee reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan, Indemnitee shall be
deemed to have acted in a manner "not opposed to the best interests of the
Company" as referred to in this Agreement.

(c) For purposes of this Agreement a "Change in Control" shall be
deemed to have occurred if (i) any "person" (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), other than
a trustee or other fiduciary holding securities under an employee benefit plan
of the Company or a corporation owned directly or indirectly by the shareholders
of the Company in substantially the same proportions as their ownership of stock
of the Company, is or becomes the "beneficial owner" (as determined in
accordance with Rule 13d-3 under said Act), directly or indirectly, of
securities of the Company representing more than 20% of the total voting power
represented by the Company's then outstanding Voting Securities, (ii) during any
period of two consecutive years, individuals who at the beginning of such period
constitute the Board of Directors of the Company and any new director whose
election by the Board of Directors or nomination for election by the Company's
shareholders was approved by a vote of at least two thirds (2/3) of the
directors then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so approved,
cease for any reason to constitute a majority thereof, or (iii) the shareholders
of the Company approve a merger or consolidation of the Company with any other
corporation other than a merger or consolidation which would result in the
Voting Securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into Voting Securities of the surviving entity) at least 80% of the total voting
power

-7-
<PAGE>

represented by the Voting Securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or the shareholders
of the Company approve a plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of (in one transaction or a
series of transactions) all or substantially all of the Company's assets.

(d) For purposes of this Agreement, "Independent Legal Counsel" shall
mean an attorney or firm of attorneys, selected in accordance with the
provisions of Section 1(c) hereof, who shall not have otherwise performed
services for the Company or Indemnitee within the last three years (other than
with respect to matters concerning the rights of Indemnitee under this
Agreement, or of other indemnitees under similar indemnity agreements).

(e) For purposes of this Agreement, a "Reviewing Party" shall mean any
appropriate person or body consisting of a member or members of the Company's
Board of Directors or any other person or body appointed by the Board of
Directors who is not a party to the particular Claim for which Indemnitee is
seeking indemnification, or Independent Legal Counsel.

(f) For purposes of this Agreement, "Voting Securities" shall mean any
securities of the Company that vote generally in the election of directors.

11. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall constitute an original.

12. Binding Effect; Successors and Assigns. This Agreement shall be
------------------------------------------
binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective successors and assigns, including any direct or
indirect successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business and/or assets of the Company, spouses, heirs,
and personal and legal representatives. The Company shall require and cause any
successor (whether direct or indirect by purchase, merger, consolidation or
otherwise) to all, substantially all, or a substantial part, of the business
and/or assets of the Company, by written agreement in form and substance
satisfactory to Indemnitee, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform if no such succession had taken place. This Agreement shall
continue in effect regardless of whether Indemnitee continues to serve as a
director of the Company or of any other enterprise at the Company's request.

13. Attorneys' Fees. In the event that any action is instituted by
----------------
Indemnitee under this Agreement or under any liability insurance policies
maintained by the Company to enforce or interpret any of the terms hereof or
thereof, Indemnitee shall be entitled to be paid all Expenses incurred by
Indemnitee with respect to such action, regardless of whether Indemnitee is
ultimately successful in such action, and shall be entitled to the advancement
of Expenses with respect to such action, unless as a part of such action the
court of competent jurisdiction over such action determines that each of the
material assertions made by Indemnitee as a basis for such action were not made
in good faith or were frivolous. In the event of an action instituted by or in
the name of

-8-
<PAGE>

the Company under this Agreement to enforce or interpret any of the terms of
this Agreement, Indemnitee shall be entitled to be paid all Expenses incurred by
Indemnitee in defense of such action (including costs and expenses incurred with
respect to Indemnitee's counterclaims and cross-claims made in such action), and
shall be entitled to the advancement Expenses with respect to such action,
unless as a part of such action the court having jurisdiction over such action
determines that each of Indemnitee's material defenses to such action were made
in bad faith or were frivolous.

14. Notice. All notices, requests, demands and other communications under
------
this Agreement shall be in writing and shall be deemed duly given (i) if
delivered by hand and receipted for by the party addressee, on the date of such
receipt, or (ii) if mailed by domestic certified or registered mail with postage
prepaid, on the third business day after the date postmarked. Addresses for
notice to either party are as shown on the signature page of this Agreement, or
as subsequently modified by written notice.

15. Consent to Jurisdiction. The Company and Indemnitee each hereby
------------------------
irrevocably consent to the jurisdiction of the courts of the State of New Jersey
for all purposes in connection with any action or proceeding which arises out of
or relates to this Agreement and agree that any action instituted under this
Agreement shall be commenced, prosecuted and continued only in the Superior
Court of the State of New Jersey in and for Mercer County, which shall be the
exclusive and only proper forum for adjudicating such a claim.

16. Severability. The provisions of this Agreement shall be severable in
------------
the event that any of the provisions hereof (including any provision within a
single section, paragraph or sentence) are held by a court of competent
jurisdiction to be invalid, void or otherwise unenforceable, and the remaining
provisions shall remain enforceable to the fullest extent permitted by law.
Furthermore, to the fullest extent possible, the provisions of this Agreement
(including, without limitations, each portion of this Agreement containing any
provision held to be invalid, void or otherwise unenforceable, that is not
itself invalid, void or unenforceable) shall be construed so as to give effect
to the intent manifested by the provision held invalid, illegal or
unenforceable.

17. Choice of Law. This Agreement shall be governed by and its provisions
-------------
construed and enforced in accordance with the laws of the State of New Jersey,
as applied to contracts between New Jersey residents, entered into and to be
performed entirely within the State of New Jersey, without regard to the
conflict of laws principles thereof.

18. Subrogation. In the event of payment under this Agreement, the Company
-----------
shall be subrogated to the extent of such payment to all of the rights of
recovery of Indemnitee, who shall execute all documents required and shall do
all acts that may be necessary to secure such rights and to enable the Company
effectively to bring suit to enforce such rights.

19. Amendment and Termination. No amendment, modification, termination or
-------------------------
cancellation of this Agreement shall be effective unless it is in writing signed
by both the parties

-9-
<PAGE>

hereto. No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provisions hereof (whether or not
similar) nor shall such waiver constitute a continuing waiver.

20. Integration and Entire Agreement. This Agreement sets forth the entire
--------------------------------
understanding between the parties hereto and supersedes and merges all previous
written and oral negotiations, commitments, understandings and agreements
relating to the subject matter hereof between the parties hereto.

21. No Construction as Employment Agreement. Nothing contained in this
-----------------------------------------
Agreement shall be construed as giving Indemnitee any right to be retained in
the employ of the Company or any of its subsidiaries.

**********

-10-
<PAGE>

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.

CONTESSA CORPORATION

----------------------------------------
By:
Title:

AGREED TO AND ACCEPTED:

INDEMNITEE:

- ----------------------------------
(signature)

- ----------------------------------
(print name)

- ----------------------------------
(address)

EMPLOYMENT AGREEMENT
--------------------

THIS EMPLOYMENT AGREEMENT (the "Agreement") is dated as of the 28th day of
January, 2000, and is by and between Fullcomm, Inc., a New Jersey corporation
with an office for purposes of this Agreement at 11 Chambers Street, Princeton,
New Jersey 08542 (hereinafter the "Company" or "Employer"), and Richard T. Case
with an address at 3317 Klondike Place, Castle Rock, Colorado 80104 (hereinafter
the "Employee").

W I T N E S S E T H:
- - - - - - - - - -

WHEREAS, Company wishes to retain the services of Employee to act as Chief
Executive Officer for and on its behalf in accordance with the following terms,
conditions and provisions; and

WHEREAS, Employee wishes to perform such services for and on behalf of the
Company, in accordance with the following terms, conditions and provisions.

NOW, THEREFORE, in consideration of the mutual covenants and conditions
herein contained the parties hereto intending to be legally bound hereby agree
as follows:

1. EMPLOYMENT. Company hereby employs Employee and Employee accepts such
----------
employment and shall perform his duties and the responsibilities provided for
herein in accordance with the terms and conditions of this Agreement.

2. EMPLOYMENT STATUS. (a) Employee shall at all times be Company's employee
-----------------
subject to the terms and conditions of this Agreement subject, however, to the
Consulting Contingency referred to below.

(b) The parties acknowledge that the Company may, at any time, hire a
full-time Chief Executive Officer in which case Employee's status as an employee
shall cease upon the date when such full-time Chief Executive assumes his duties
and thereupon Richard T. Case shall become a consultant to the Company for the
shorter of (i) one year or (ii) the expiry of the original term of employment
provided hereunder (the "Consulting Contingency"). During the term of his
consultancy, Richard T. Case shall be entitled to receive a Consultant's fee of
$10,000 per month which shall be subject, however, to the same requirement of
$1,000,000 minimum financing referred to in Section 5.5 applicable to his
receipt of Base Salary with a similar accrual until such funds have been
received.

<PAGE>

3. TERM. Unless earlier terminated pursuant to terms and provisions of this
----
Agreement, this Agreement shall have a term (the "Term") of two (2) years
following the date hereof.

4. POSITION AND PHYSICAL PRESENCE.
------------------------------

4.1. During Employee's employment hereunder, Employee shall serve as Chief
Executive Officer of the Company. In such position, Employee shall have the
customary powers, responsibilities and authorities of such position in
corporations of the size, type and nature of the Company including being
generally responsible for the day-to-day operations of Employer's business.
Employee shall perform such duties and exercise such powers commensurate with
his positions and responsibilities as shall be determined from time to time by
the Board of Directors of the Company (the "Board"). Neither Employee's title
nor any of his functions shall be changed, diminished or adversely affected
during the Term without his written consent. Employee shall be provided with an
office, staff and other working facilities at the executive offices of the
Company consistent with his position and as required for the performance of his
duties.

4.2. The Company acknowledges that Employee currently resides in Castle
Rock, Colorado whereas the Company will be headquartered in Princeton, New
Jersey. Employee shall be required to spend at least five (5) days per calendar
month present at the Company's Princeton site, and Employee's reimbursement
right for travel expense shall be subject to the overall limitation on expense
reimbursement set forth in Section 6.3. Employee agrees to devote all time
reasonably necessary to fulfill his duties hereunder, which in no event shall be
less than sixty (60) hours per month. During the continuance of his consultancy,
Richard T. Case as consultant shall make himself available for consultation but
shall not be responsible for day to clay operations of the Company.

5. COMPENSATION. For the performance of all of Employee's services to be
------------
rendered pursuant to the terms of this Agreement, Company will pay and Employee
will accept the following compensation:

5.1. (a) During the Term, Company shall pay the Employee an initial base
monthly salary of $10,000 (the "Base Salary") payable in bi-monthly
installments, and such Base Salary shall not be decreased during the Term.
Employee's Base Salary, as in effect from time to time, is hereinafter referred
to as the "Employee's Base Salary."

(b) Employee shall, immediately upon effectiveness of the Merger,
under the Merger Agreement and Plan of Merger below receive 175,000 options to
purchase common stock of the Company at $0.10 per share which shall be
exercisable with respect to Contessa Corporation common stock post-merger as if
such option had been exercised prior to the Merger. Such option shall also
provide for (i) "piggyback" registration rights from the date of the Merger to
the date one (1) year following the last issuance under the Grace Private
Placement (as such

2
<PAGE>

term is defined in the Merger Agreement and Plan of Merger dated the date hereof
among Contessa Corporation, the Company, and Fullcomm Acquisition Corp.) and a
"pro rata" right of participation for shareholders other than Messrs. Elliott,
Lee and Escaravage and (ii) demand registration rights with usual and customary
terms and conditions which shall be effective from the expiration of the
"piggyback" rights referred to above and continue for a period of one year.

5.2. Employee shall be eligible to participate in any Incentive Stock
Option Plan as may be established by the Board on the terms and conditions
generally applicable to such ISO plan participants.

5.3 At the sole discretion of the Board, Employee shall be entitled to
participate in any bonus programs established by the Board for employees of the
Company.

5.4. Company shall deduct and withhold from Employee's compensation all
necessary or required taxes, including but not limited to Social Security,
withholding and otherwise, and any other applicable amounts required by law or
any taxing authority.

5.5. Employee acknowledges and agrees that the Company is currently a
development stage company without actual products or revenues, and accordingly,
it is in the mutual interest of both parties to defer receipt of Base Salary
until such time as the Company shall have received not less than $1,000,000 in
gross proceeds from the private placement to be undertaken by R.K Grace and
Company. Any amounts so deferred shall accrue until the Company's receipt of
such funds.

6. Employee Benefits.
-----------------

During the Term hereof and so long as Employee is not terminated nor
operating under the Consulting Contingency:

6.1 Employee shall receive and be provided health, dental and life
insurance, and during Employee's employment hereunder, in the sole and absolute
discretion of the Board, such other employee benefits including, without
limitation, fringe benefits, vacation, automobile, retirement plan participation
and life, health, accident and disability insurance, etc. (collectively,
"Employee Benefits"). The parties acknowledge that the benefits to be provided
pursuant to this Section shall commence as soon as practicable following the
date hereof, but in any case within six months following the date hereof.

6.2. Employee shall be entitled to receive four (4) weeks paid vacation per
year. If such vacation time is not taken by Employee in the then current year,
Employee at his option may accrue vacation or receive compensation in lieu
thereof at one-half the then current level of Employee's Base Salary.

3
<PAGE>

6.3. Reasonable travel, entertainment and other business expenses actually
incurred by Employee in the performance of his duties hereunder shall be
reimbursed upon the submission of supporting documentation by Employee to the
Company. It is understood and agreed that the Board shall be required to approve
the reimbursement of all expenses incurred by Employee in excess of $5,000 in
the aggregate for any year.

7. Termination.
-----------

7.1. For Cause or Without Cause by the Company. Employee's employment
--------------------------------------------
hereunder, or the consultancy referred to herein, may be terminated by the
Company at any time with or without cause upon thirty (30) days prior written
notice. Any termination of Employee's employment pursuant to this Section 7.1
shall be made by the Board. If Employee is terminated, he shall be entitled to
receive Employee's Base Salary from Company through the date of termination.
Employee shall be entitled to no other payments of Employee's Base Salary under
this Agreement. All other benefits, if any, due Employee following Employee's
termination of employment shall be determined in accordance with the plans,
policies and practices of the Company.

7.2. Disability or Death. (i) Employee's employment, or consultancy,
--------------------
hereunder shall terminate upon his death or if Employee becomes physically or
mentally incapacitated and is therefore unable (or will, as a result thereof, be
unable) to perform his duties for a period of nine (9) consecutive months or for
an aggregate of fifteen (15) months in any twenty-four (24) consecutive month
period (such incapacity is hereinafter referred to as "Disability"). If Company
terminates Employee's employment under the terms of this Agreement and Employee
does not receive disability insurance payments under the terms hereof in an
amount at least equal to the then effective Employee's Base Salary pursuant to a
policy maintained and paid for by the Company, Company shall be responsible to
continue to pay Employee's Base Salary during the then remaining Term to the
extent required to bring the Employee's annual compensation (together with
disability payments) up to the amount equal to the Employee's Base Salary
immediately prior to the termination for disability. Any question as to the
existence of the Disability of Employee as to which Employee and the Company
cannot agree shall be determined in writing by a qualified independent physician
mutually acceptable to Employee and the Company. If Employee and the Company
cannot agree as to a qualified independent physician, each shall appoint such a
physician and those two physicians shall select a third who shall make such
determination in writing. The determination of Disability made in writing to the
Company and Employee shall be final and conclusive for all purposes of the
Agreement.

7.2.1. Upon termination of Employee's employment hereunder during
the Term as a result of death, Employee's estate or named
beneficiary(ies) shall receive from the Company (x) Employee's Base
Salary at the rate in effect at the time of Employee's death through the
end of the month in which his death and (y) the proceeds of any life
insurance policy maintained for his benefit by the Company pursuant to
this Agreement (or the Plans and Policies of the Company generally).

4
<PAGE>

7.2.2. All other benefits, if any, due Employee following
Employee's termination of employment pursuant to this Subsection 7.2.2
shall be determined in accordance with the plans, policies and practices
of the Company.

7.3. Change in Control Payment.
-------------------------

7.3.1. If there is a Change of Control of the Company, Employee shall be
entitled to receive the difference between those monies he actually received
upon such termination and 2.99 times Employee's base amount as defined in
Section 280G(b)(3) of the Internal Revenue code of 1986, as amended (the "Code")
(the "Employee Base Amount").

7.3.2. Subject to Section 7.6, if Employee's employment is terminated by
the Company and coincident with or following a Change of Control, Employee
shall, but Richard T. Case as consultant shall not, be entitled to a lump sum
---
payment, payable within ten (10) days after such termination of employment,
equal to the product of (x) 2.99 times (y) the Employee Base Amount.

7.4. Termination by Employee. If Employee terminates his employment with
-----------------------
the Company for any reason during the term, Employee shall be entitled to the
same payments he would have received if his employment had terminated by the
Company.

7.5 Change of Control defined. For purposes of this Agreement, "Change of
-------------------------
Control" shall mean (i) any transaction or series of transactions (including,
without limitation, a tender offer, merger or consolidation) the result of which
is that any "person" or "group" (within the meaning of Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), becomes the "beneficial" owners (as defined in Rule 13(d)(3) under the
Securities Exchange Act of 1934) of more than 50 percent (50%) of the total
aggregate voting power of all classes of the voting stock of the Company and/or
warrants or options to acquire such voting stock, calculated on a fully diluted
basis, (ii) during any period of two consecutive calendar years, individuals who
at the beginning of such period constituted the Board of Directors (together
with any new directors whose election by the Board of Directors or whose
nomination for election by the Company's stockholders was approved by a vote of
at least two-thirds of the directors then still in office who either were
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the directors then in office, or (iii) a sale of assets constituting
all or substantially all of the assets of the Company (determined on a
consolidated basis). In the event of such Change of Control, the new entity
shall be obligated to assume the terms and conditions of this Agreement.

7.6. Limitation on Certain Payments.
------------------------------

7.6.1. In the event it is determined pursuant to Section 7.6.2 below, that
part or all of the consideration, compensation or benefits to be paid to
Employee under this Agreement

5
<PAGE>

in connection with Employee's termination of employment following a Change of
Control or under any other plan, arrangement or agreement in connection
therewith, constitutes a "parachute payment" (or payments) under Section
280G(b)(2) of the Code, then, of the aggregate present value of such parachute
payments (the "Parachute Amount") exceeds 2.99 times the Employee Base Amount,
the amounts constituting "parachute payments" which would otherwise be payable
to or for the benefit of Employee shall be reduced to the extent necessary such
that the Parachute Amount is equal to 2.99 times the Employee Base Amount.
Employee shall have the right to choose which amounts that would otherwise be
due him but for the limitations described in this paragraph shall be subject to
reduction. Notwithstanding the foregoing, if it is determined that stockholder
approval of the payment of such compensation and benefits will reduce the
applicability of Section 280G of the Code to such payment, promptly after
request by Employee, Company will undertake reasonable efforts to hold such a
meeting to obtain such approval or to solicit such approval by written consent,
and to obtain such approval.

7.6.2. Any determination that a payment constitutes a parachute payment and
any calculation described in this Section 7.6 ("determination") shall be made by
the independent public accountants for the Company, and may, at Company's
election, be made prior to termination of Employee's employment where Company
determines that a Change in Control, as provided in this Section 7, is imminent.
Such determination shall be furnished in writing no later than thirty (30) days
following the date of the Change in Control by the accountants to Employee. If
Employee does not agree with such determination from the accountants and within
Fifteen (15) days thereafter, accountants of Employee's choice must deliver to
the Company their determination that in their judgment complies with the Code.
If the two accountants cannot agree upon the amount to be paid to Employee
pursuant to this Section 7 within ten (10) days of the delivery of the statement
of Employee's accountants to the Company, the two accountants shall choose a
third accountant who shall deliver their determination of the appropriate amount
to be paid to Employee pursuant to this Section 7.6, which determination shall
be final. If the final determination provides for the payment of a greater
amount than that proposed by the accountants of the Company, then the Company
shall pay all of Employee's costs incurred in contesting such determination and
all other costs incurred by the Company with respect to such determination.

7.6.3. If the final determination made pursuant to Subsection 7.6.2 of this
Section 7.6 results in a reduction of the payments that would otherwise be paid
to Employee except for the application of Section 7.6.1 of this Section 7.6,
Employee may then elect, in his sole discretion, which and how much of any
particular entitlement shall be eliminated or reduced and shall advise the
Company in writing of his election within ten (10) days of the final
determination of the reduction in payments. If no such election is made by
Employee within such 10-day period, the Company may elect which and how much of
any entitlement shall be eliminated or reduced and shall notify Employee
promptly of such election. Within ten (10) days following such determination and
the elections hereunder, the Company shall pay to or distribute to or for the
benefit of Employee such amounts as become due to Employee under this agreement.

6
<PAGE>

7.6.4. As a result of the uncertainty in the application of Section 280G of
the Code at the time of a determination hereunder, it is possible that payments
will be made by the Company which should not have been made under Subsection
7.6.1 of this Section 7.6 ("Overpayment") or that additional payments which are
not made by the Company pursuant to Subsection 7.6.1 of this Section 7.6 should
have been made ("Underpayment"). In the event that there is a final
determination by the Internal Revenue Service, or a final determination by a
court of competent jurisdiction, that an Overpayment has been made, any such
Overpayment shall be treated for all purposes as a loan to Employee which
Employee shall repay to the Company together with interest at the applicable
Federal rate provided for in Section 7872(f)(2) of the Code. In the event that
there is a final determination by the Internal Revenue Service, a final
determination by a court of competent jurisdiction or a change in the provisions
of the Code or regulations pursuant to which an Underpayment arises under this
Agreement, any such Underpayment shall be promptly paid by the Company to or for
the benefit of Employee, together with interest at the applicable Federal rate
provided for in Section 7872(f)(2) of the code.

8. NON-DISCLOSURE OF INFORMATION.
-----------------------------

8.1. Employee acknowledges that by virtue of his position he will be privy
to the Company's confidential information and trade secrets, as they may exist
from time to time, and that such confidential information and trade secrets may
constitute valuable, special, and unique assets of the Company (hereinafter
collectively "Confidential Information"). Accordingly, Employee shall not,
during the Term and for a period of five (5) years thereafter, intentionally
disclose all or any part of the Confidential Information to any person, firm,
corporation, association or any other entity for any reason or purpose
whatsoever, nor shall Employee and any other person by, through or with
Employee, during the term and for a period of five (5) years thereafter,
intentionally make use of any of the Confidential Information for any purpose or
for the benefit of any other person or entity, other than Company, under any
circumstances.

8.2. Company and Employee agree that a violation of the foregoing covenants
will cause irreparable injury to the Company, and that in the event of a breach
or threatened breach by Employee of the provisions of this Section 8, Company
shall be entitled to an injunction restraining Employee from disclosing, in
whole or in part, any Confidential Information, or from rendering any services
to any person, firm, corporation, association or other entity to whom any such
information, in whole or in part, has been disclosed or is threatened to be
disclosed in violation of this Agreement. Nothing herein stated shall be
construed as prohibiting the Company from pursuing any other rights and
remedies, at law or in equity, available to the Company for such breach or
threatened breach, including the recovery of damages from the Employee. In
connection with this paragraph's provisions, Employee hereby (i) submits to the
jurisdiction of any federal court in New Jersey or any New Jersey state court of
general jurisdiction in the county in which Princeton is located, (ii) waives
any and all defenses based on inconvenient forum, and (iii) agrees to pay the
reasonable fees and disbursements of the Company's legal counsel in connection
with obtaining any such injunctive relief.

7
<PAGE>

8.3. Notwithstanding anything contained in this Section 8 to the contrary,
"Confidential Information" shall not include (i) information in the public
domain as of the date hereof, (ii) information which enters the public domain
hereafter through no fault of the Employee, (iii) information created,
discovered or developed by the Employee independent of his association with the
Company, provided that such information is supported by accompanying
documentation of such independent development. Nothing contained in this Section
8 shall be deemed to preclude the proper use by the Employee of Confidential
Information in the exercise of his duties hereunder or the disclosure of
Confidential Information required by law. The provisions of Section 8.1, 8.2 and
8.3 shall also apply to Richard T. Case, as consultant.

9. RESTRICTIVE COVENANT.
--------------------

9.1. During the term hereof and for a period of one (1) year after the
termination of this Agreement, Employee, and Richard T. Case as consultant,
covenants and agrees that he shall not own, manage, operate, control, be
employed by, participate in, or be connected in any manner with the ownership,
management, operation, or control, whether directly or indirectly, as an
individual on his own account, or as a partner, member, joint venturer, officer,
director or shareholder of a corporation or other entity, of any business which
competes with the business conducted by Company at the time of the termination
or expiration of this Agreement. Notwithstanding the foregoing, (i) nothing in
this Section 9 shall prohibit Employee, and Richard T. Case as consultant, from
owning up to 5% of the outstanding voting capital stock of any corporation or
other entity listed on Nasdaq or traded on any national securities exchange, and
(ii) in the event of a termination by the Company, such restriction shall apply
only if the Company has paid to the Employee all amounts required and is
otherwise in compliance with Section 7 hereof. The foregoing shall not preclude
the Employee or any affiliate thereof from any consulting arrangement which may
be entered into from time to time with the Company, or any of its affiliates.

9.2. Employee, and Richard T. Case as consultant, acknowledges that the
restrictions contained in this Section 9 are reasonable. In that regard, it is
the intention of the parties to this Agreement that the provisions of this
Section 9 shall be enforced to the fullest extent permissible under the law and
public policy applied in each jurisdiction in which enforcement is sought.
Accordingly, if any portion of this Section 9 shall be adjudicated or deemed to
be invalid or unenforceable, the remaining portions shall remain in full force
and effect, and such invalid or unenforceable portion shall be limited to the
particular jurisdiction in which such adjudication is made.

8
<PAGE>

prohibit Company or Employee, as the case may be, from pursuing and obtaining
any other available remedies which Company or Employee, as the case may be, may
have for such breach or threatened breach, whether at law or in equity,
including the recovery of damages from the other. The foregoing provisions of
this Section shall also apply to Richard T. Case as consultant.

11. DISCLOSURE OF INNOVATIONS. The Employee hereby agrees to disclose in
--------------------------
writing to the Company all inventions, improvements and other innovations of any
kind that the Employee makes, conceives, develops or reduces to practice, alone
or jointly with others, during the Term, to the extent they are related to the
Employee's work for the Company and whether or not they are eligible for patent,
copyright, trademark, trade secret or other legal protection ("Innovations").
Examples of Innovations shall include, but are not limited to, discoveries,
research, inventions, formulas, techniques, processes, tools, know-how,
marketing plans, new product plans, production processes, advertising, packaging
and marketing techniques. The foregoing provisions of this Section shall also
apply to Richard T. Case as consultant.

12. ASSIGNMENT OF OWNERSHIP OF INNOVATIONS. The Employee hereby agrees that
--------------------------------------
all Innovations will be the sole and exclusive property of the Company and the
Employee hereby assigns all of his rights, title or interest in the Innovations
and in all related patents, copyrights, trademarks, trade secrets, rights of
priority and other proprietary rights to the Company to the extent they are
related to the Employee's work for the Company. At the Company's request and
expense, during and after the Term, the Employee will assist and cooperate with
the Company in all respects and will execute documents, and, subject to his
reasonable availability, give testimony and take further acts requested by the
Company to obtain, maintain, perfect and enforce for the Company patent,
copyright, trademark, trade secret and other legal protection for the
Innovations. The Employee hereby appoints the President of the Company as his
attorney-in-fact to execute documents on his behalf for this purpose. The
foregoing provisions of this Section shall also apply to Richard T. Case as
consultant.

13. REPRESENTATIONS AND WARRANTIES BY EMPLOYEE. Employee hereby warrants
-------------------------------------------
and represents that he is not subject to or a party to any restrictive covenants
or other agreements that in any way preclude, restrict, restrain or limit him
(a) from being an Employee of Company, (b) from engaging in the business of
Company in any capacity, directly or indirectly, and (c) from competing with any
other persons, companies, businesses or entities engaged in the business of
Company. The foregoing representation and warranty shall also be deemed to have
been made by Richard T. Case during the continuance of the his consultancy.

9
<PAGE>

the defendants, i.e. the costs borne by defendant side in the arbitration,
whether single or multiple, shall equal the costs borne by the plaintiff side in
the arbitration, whether single or multiple. Judgment upon any arbitration award
rendered may be entered and enforced in any court of competent jurisdiction. In
no event may the arbitration determination change Employee's compensation,
title, duties or responsibilities, the entity to whom Employee reports or the
principal place where Employee is to render his services.

15. NOTICES. Any notice required, permitted or desired to be given under
-------
this Agreement shall be sufficient if it is in writing and (a) personally
delivered to Employee or an authorized member of Company, (b) sent by overnight
delivery or (c) sent by registered or certified mail, return receipt requested,
to Employer's or Employee's address as provided in this Agreement or to a
different address designated in writing by either party. In all instances of
notices to be given to Company, a copy by like means shall be delivered to
Company's counsel care of Buchanan Ingersoll Professional Corporation, 650
College Road East, Princeton, New Jersey 08540, Attention: David J. Sorin, Esq.
In all instances of notices to be given to Employee, a copy by like means shall
be delivered to Employee's counsel at the address supplied by the Employee.
Notice is deemed given on the day it is delivered personally or by overnight
delivery, or five (5) business days after it is mailed, if transmitted by the
United States Post Office.

16. ASSIGNMENT. Employee acknowledges that his services are unique and
----------
personal. Accordingly, Employee may not assign his rights or delegate his duties
or obligations under this Agreement. Company's rights and obligations under this
Agreement shall inure to the benefit of and shall be binding upon the Company's
successors and assigns. Company has the absolute right to assign its rights and
benefits under the terms of this Agreement.

17. WAIVER OF BREACH. Any waiver of a breach of a provision of this
------------------
Agreement, or any delay or failure to exercise a right under a provision of this
Agreement, by either party, shall not operate or be construed as a waiver of
that or any other subsequent breach or right.

18. ENTIRE AGREEMENT. This Agreement contains the entire agreement of the
----------------
parties. It may not be changed orally but only by an agreement in writing which
is signed by the parties. The parties hereto agree that any existing employment
agreement between them shall terminate as of the date of this Agreement.

19. GOVERNING LAW. This Agreement shall be construed in accordance with and
-------------
governed by the internal laws of the State of New Jersey.

20. SEVERABILITY. The invalidity or non-enforceability of any provision of
------------
this Agreement or application thereof shall not affect the remaining valid and
enforceable provisions of this Agreement or application thereof.

10
<PAGE>

21. CAPTIONS. Captions in this Agreement are inserted only as a matter of
--------
convenience and reference and shall not be used to interpret or construe any
provisions of this Agreement.

22. GRAMMATICAL USAGE. In construing or interpreting this Agreement,
------------------
masculine usage shall be substituted for those feminine in form and vice versa,
and plural usage shall be substituted or singular and vice versa, in any place
in which the context so requires.

23. CAPACITY. Employee has read and is familiar with all of the terms and
--------
conditions of this Agreement and has the capacity to understand such terms and
conditions hereof. By executing this Agreement, Employee, Richard T. Case as
consultant, agrees to be bound by this Agreement and the terms and conditions
hereof.

24. COUNTERPARTS. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same Agreement. Delivery of signed
counterparts via facsimile transmission shall be effective as manual delivery
thereof.

25. CONFLICT OF INTEREST. In any matter requiring a Board determination
--------------------
hereunder, Employee, who, it is contemplated, will be a Director, shall be
counted for purposes of determining a quorum but shall recuse himself from the
Board vote on the matter being determined. Employee may be present in order to
give a presentation on the matter being determined, but shall otherwise be
absent during the course of the Board's deliberation. The foregoing provision
shall, if applicable, be given effect should Richard T. Case continue his
directorship during his consultancy.

[SIGNATURE PAGE FOLLOWS]

11
<PAGE>

IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement
as of the date first herein above written.

FULLCOMM, INC.

By: /s/ Brendan Elliot
--------------------------
Brendan Elliott, President

EMPLOYEE

/s/ Richard T. Case
- -------------------
Richard T. Case

ELLIOTT EMPLOYMENT AGREEMENT
----------------------------

THIS EMPLOYMENT AGREEMENT (the "Agreement") is dated as of the 28th day of
February, 2000, and is by and between Fullcomm, Inc., a New Jersey corporation
with an office for purposes of this Agreement at 11 Chambers Street, Princeton,
New Jersey 08542 (hereinafter the "Company" or "Employer"), and Brendan Elliott
(hereinafter the "Employee").

W I T N E S S E T H:
- - - - - - - - - -

WHEREAS, Company wishes to retain the services of Employee to act as
President for and on its behalf in accordance with the following terms,
conditions and provisions; and

WHEREAS, Employee wishes to perform such services for and on behalf of the
Company, in accordance with the following terms, conditions and provisions.

NOW, THEREFORE, in consideration of the mutual covenants and conditions
herein contained the parties hereto intending to be legally bound hereby agree
as follows:

2. EMPLOYMENT STATUS. Employee shall at all times be Company's employee
------------------
subject to the terms and conditions of this Agreement.

3. TERMS. Unless earlier terminated pursuant to terms and provisions of
-----
this Agreement, this Agreement shall have a term (the "Term") of two (2) years
following the date hereof. The Term shall automatically renew for successive
one-year terms thereafter unless either party delivers written notice of
termination to the other at least 60 days prior to the end of the initial
two-year Term or any succeeding one-year Term.

4. POSITION. During Employee's employment hereunder, Employee shall serve
--------
as President of the Company. In such position, Employee shall have the customary
powers, responsibilities and authorities of such position in corporations of the
size, type and nature of the Company including being generally responsible for
the day-to-day operations of Employer's business. Employee shall perform such
duties and exercise such powers commensurate with his positions and
responsibilities as shall be determined from time to time by the Board of
Directors of the Company (the "Board") and the Chief Executive Officer of the
Company. Neither Employee's title nor any of his functions shall be changed,
diminished or adversely affected during the Term without his written consent.
Employee shall be provided with an office, staff and other working

<PAGE>

facilities at the executive offices of the Company consistent with his position
and as required for the performance of his duties.

5.1. During the Term, Company shall pay the Employee an initial base
monthly salary of $5,000 (the "Base Salary") payable in bi-monthly installments,
and such Base Salary shall not be decreased during the Term. Employee's Base
Salary, as in effect from time to time, is hereinafter referred to as the
"Employee's Base Salary."

5.2 Employee shall be eligible to participate in (i) the Incentive Stock
Option Plan as may be established by the Board on the terms and conditions
generally applicable to such ISO plan participants and (ii) the Company's Senior
Management Bonus Plan.

5.3. Company shall deduct and withhold from Employee's compensation all
necessary or required taxes, including but not limited to Social Security,
withholding and otherwise, and any other applicable amounts required by law or
any taxing authority.

6. Employee Benefits.
-----------------

6.1. During the Term hereof and so long as Employee is not terminated for
cause (as such term is defined herein): Employee shall receive and be provided
health, dental and life insurance, and during Employee's employment hereunder,
in the sole and absolute discretion of the Board, such other employee benefits
including, without limitation, fringe benefits, vacation, automobile, retirement
plan participation and life, health, accident and disability insurance, etc.
(collectively, "Employee Benefits"). The parties acknowledge that the benefits
to be provided pursuant to this Section shall commence as soon as practicable
following the date hereof, but in any case within six months following the date
hereof.

6.2. Employee shall be entitled to receive rotor (4) weeks paid vacation
per year. If such vacation time is not taken by Employee in the then current
year, Employee at his option may accrue vacation or receive compensation in lieu
thereof at one-half the then current level of Employee's Base Salary.

6.3. Reasonable travel, entertainment and other business expenses actually
incurred by Employee in the performance of his duties hereunder shall be
reimbursed by the Company upon the approval of the Chief Executive Officer who
shall be entitled to request supporting documentation (receipts, invoices, etc.)
with respect to such expenses.

7. Termination.
-----------

2
<PAGE>

7.1. For Cause by the Company. Employee's employment hereunder may be
-------------------------
terminated by the Company at any time with or without cause upon thirty (30)
days prior written notice. Any termination of Employee's employment pursuant to
this Section 7.1 shall be made by the Board.

7.1.1. If Employee is terminated for cause, he shall be entitled to
receive Employee's Base Salary from Company only through the date of termination
and Employee shall be entitled to no other payments of Employee's Base Salary
under this Agreement. If Employee is terminated without cause, he shall be
entitled to receive Employee's Base Salary for the shorter of (i) one year or
(ii) the remaining term of his employment, immediately prior to the date of
termination. All other benefits, if any, due Employee following Employee's
termination of employment pursuant to this Subsection 7.1.1 shall be determined
in accordance with the plans, policies and practices of the Company.

7.1.2 For the purposes of this Agreement, "cause" shall include, without
limitation, the following conduct of the Employee:

(i) neglect or refusal to perform the duties assigned to the Employee under
or pursuant to this Employment Agreement or material breach of any
provision of this Employment Agreement by the Employee after due notice
thereof and a 15 day opportunity to cure such breach;

(ii) willful misconduct as an Employee, including but not limited to,
misappropriating funds or property of the Company; any attempt to obtain any
personal profit from any transaction in which the Employee has an interest that
is adverse to the Company or any breach of the duty of loyalty and fidelity to
the Company; or any other act or omission of the Employee which substantially
impairs the Company's ability to conduct its ordinary business in its usual
manner;

(iii) conviction of a felony or plea of guilty or nolo contendere to a
felony;

(iv) acts of dishonesty or moral turpitude by the Employee that are
detrimental to the Company or any other act or omission which subjects the
Company or any of its affiliates to public disrespect, scandal, or ridicule, or
that causes the Company to be in violation of governmental regulations that
subjects the Company either to sanctions by governmental authority or to civil
liability to its Employees or third parties; and

(v) disclosure or use of confidential information of the Company, other
than as specifically authorized and required in the performance of Employee's
duties.

3
<PAGE>

incapacity is hereinafter referred to as "Disability"). If Company terminates
Employee's employment under the terms of this Agreement and Employee does not
receive disability insurance payments under the terms hereof in an amount at
least equal to the then effective Employee's Base Salary pursuant to a policy
maintained and paid for by the Company, Company shall be responsible to continue
to pay Employee's Base Salary during the then remaining Term to the extent
required to bring the Employee's annual compensation (together with disability
payments) up to the amount equal to the Employee's Base Salary immediately prior
to the termination for disability. Any question as to the existence of the
Disability of Employee as to which Employee and the Company cannot agree shall
be determined in writing by a qualified independent physician mutually
acceptable to Employee and the Company. If Employee and the Company cannot agree
as to a qualified independent physician, each shall appoint such a physician and
those two physicians shall select a third who shall make such determination in
writing. The determination of Disability made in writing to the Company and
Employee shall be final and conclusive for all purposes of the Agreement.

7.2.1. Upon termination of Employee's employment hereunder during the
Term as a result of death, Employee's estate or named beneficiary(ies)
shall receive from the Company (x) Employee's Base Salary at the rate in
effect at the time of Employee's death through the end of the month in
which his death and (y) the proceeds of any life insurance policy
maintained for his benefit by the Company pursuant to this Agreement (or
the Plans and Policies of the Company generally).

7.2.2. All other benefits, if any, due Employee following Employee's
termination of employment pursuant to this Section 7.2 shall be determined
in accordance with the plans, policies and practices of the Company.

7.3. Change in Control Payment.
-------------------------

7.3.1. If there is a Change of Control within one (1) year of the
termination of this Agreement without cause by the Company, Employee shall be
entitled to receive the difference between those monies he actually received
upon such termination and 2.99 times Employee's base amount as defined in
Section 280G(b)(3) of the Internal Revenue code of 1986, as amended (the "Code")
(the "Employee Base Amount").

7.3.2. Subject to Section 7.6, if Employee's employment is terminated by
the Company and coincident with or following a Change of Control, Employee shall
be entitled to a lump sum payment, payable within ten (10) days after such
termination of employment, equal to the product of (x) 2.99 times (y) the
Employee Base Amount.

4
<PAGE>

7.5 Change of Control defined: For purposes of this Agreement, "Change of
-------------------------
Control" shall mean (i) any transaction or series of transactions(including,
without limitation, a tender offer, merger or consolidation) the result of which
is that any "person" or "group" (within the meaning of Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), becomes the "beneficial" owner (as defined in rule 13(d)(3) under the
Securities Exchange Act of 1934) of more than 50 percent (50%) of the total
aggregate voting power of all classes of the voting stock of the Company and/or
warrants or options to acquire such voting stock, calculated on a fully diluted
basis, (ii) during any period of two consecutive calendar years, individuals who
at the beginning of such period constituted the Board of Directors (together
with any new directors whose election by the Board of Directors or whose
nomination for election by the Company's stockholders was approved by a vote of
at least two-thirds of the directors then still in office who either were
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the directors then in office, or (iii) a sale of assets constituting
all or substantially all of the assets of the Company (determined on a
consolidated basis). In the event of such Change of Control, the new entity
shall be obligated to assume the terms and conditions of this Agreement.

7.6. Limitation on Certain Payments.
------------------------------

7.6.1. In the event it is determined pursuant to Section 7.6.2 below,
that part or all of the consideration, compensation or benefits to be paid to
Employee under this Agreement in connection with Employee's termination of
employment following a Change of Control or under any other plan, arrangement or
agreement in connection therewith, constitutes a "parachute payment" (or
payments) under Section 280G(b)(2) of the Code, then, of the aggregate present
value of such parachute payments (the "Parachute Amount") exceeds 2.99 times the
Employee Base Amount, the amounts constituting "parachute payments" which would
otherwise be payable to or for the benefit of Employee shall be reduced to the
extent necessary such that the Parachute Amount is equal to 2.99 times the
Employee Base Amount. Employee shall have the right to choose which amounts that
would otherwise be due him but for the limitations described in this paragraph
shall be subject to reduction. Notwithstanding the foregoing, if it is
determined that stockholder approval of the payment of such compensation and
benefits will reduce the applicability of Section 280G of the Code to such
payment, promptly after request by Employee, Company will undertake reasonable
efforts to hold such a meeting to obtain such approval or to solicit such
approval by written consent, and to obtain such approval.

5
<PAGE>

judgment complies with the Code. If the two accountants cannot agree upon the
amount to be paid to Employee pursuant to this Section 7 within ten (10) days of
delivery of the statement of Employee's accountants to the Company, the two
accountants shall choose a third accountant who shall deliver their
determination of the appropriate amount to be paid to Employee pursuant to this
Section 7.6, which determination shall be final. If the final determination
provides for the payment of a greater amount than that proposed by the
accountants of the Company, then the Company shall pay all of Employee's costs
incurred in contesting such determination and all other costs incurred by the
Company with respect to such determination.

7.6.4. As a result of the uncertainty in the application of Section 280G of
the Code at the time of a determination hereunder, it is possible that payments
will be made by the Company which should not have been made under Subsection
7.6.1 of this Section 7.6 ("Overpayment") or that additional payments which are
not made by the Company pursuant to Subsection 7.6.1. of this Section 7.6 should
have been made ("Underpayment"). In the event that there is a final
determination by the internal Revenue Service, or a final determination by a
court of competent jurisdiction, that an Overpayment has been made, any such
Overpayment shall be treated for all purposes as a loan to Employee which
Employee shall repay to the Company together with interest at the applicable
Federal rate provided for in Section 7872(f)(2) of the Code. In the event that
there is a final determination by the Internal Revenue Service, a final
determination by a court of competent jurisdiction or a change in the provisions
of the Code or regulations pursuant to which an Underpayment arises under this
Agreement, any such Underpayment shall be promptly paid by the Company to or for
the benefit of Employee, together with interest at the applicable Federal rate
provided for in Section 7872(f)(2) of the code.

8. NON-DISCLOSURE OF INFORMATION.
-----------------------------

6
<PAGE>

any reason or purpose whatsoever, nor shall Employee and any other person by,
through or with Employee, during the term and for a period of five (5) years
thereafter, intentionally make use of any of the Confidential Information for
any purpose or for the benefit of any other person or entity, other than
Company, under any circumstances.

8.3. Notwithstanding anything contained in this Section 8 to the contrary
"Confidential Information" shall not include (i) information in the public
domain as of the date hereof, (ii) information which enters the public domain
hereafter through no fault of the Employee, and (iii) information created,
discovered or developed by the Employee independent of his association with the
Company, provided that such information is supported by accompanying
documentation of such independent development. Nothing contained in this
Section 8 shall be deemed to preclude the proper use by the Employee of
Confidential Information in the exercise of his duties hereunder or the
disclosure of Confidential Information required by law.

9. RESTRICTIVE COVENANT.
--------------------

9.1 During the term hereof and for a period of one (1) year after the
termination of this Agreement, Employee covenants and agrees that he shall not
own, manage, operate, control, be employed by, participate in, or be connected
in any manner with the ownership, management, operation, or control, whether
directly or indirectly, as an individual on his own account, or as a partner,
member, joint venture, officer, director or shareholder of a corporation or
other entity, of any business which competes with the Company's business of
embedded digital media security. Notwithstanding the foregoing, (i) nothing in
this Section 9 shall prohibit Employee from owning up to 5% of the outstanding
voting capital stock of any corporation or other entity listed on Nasdaq or
traded on any national securities exchange, and (ii) in the event of a
termination by the Company, such restriction shall apply only if the Company has
paid to the Employee all amounts owed to the Employee and is otherwise in
compliance with Section 7 hereof. The foregoing shall not preclude

7
<PAGE>

the Employee or any affiliate thereof from any consulting arrangement which may
be entered into from time to time with the Company, or its affiliate.

9.2. Employee acknowledges that the restrictions contained in this Section
9 are reasonable. In that regard, it is the intention of the parties to this
Agreement that the provisions of this Section 9 shall be enforced to the fullest
extent permissible under the law and public policy applied in each jurisdiction
in which enforcement is sought. Accordingly, if any portion of this Section 9
shall be adjudicated or deemed to be invalid or unenforceable, the remaining
portions shall remain in full force and effect, and such invalid or
unenforceable portion shall be limited to the particular jurisdiction in which
such adjudication is made.

10. BREACH OR THREATENED BREACH OF COVENANTS. In the event of Employee's
-----------------------------------------
actual or threatened breach of his obligations under either Paragraph 8 or 9, or
both, of this Agreement, or Company's breach or threatened breach of its
obligations under this Agreement, in addition to any other remedies either
party may have, such party shall be entitled to obtain a temporary restraining
order and a preliminary and/or permanent injunction restraining the other from
violating these provisions. Nothing in this Agreement shall be construed to
prohibit Company or Employee, as the case may be, from pursuing and obtaining
any other available remedies which Company or Employee, as the case may be, may
have for such breach or threatened breach, whether at law or in equity,
including the recovery of damages from the other.

l1. DISCLOSURE OF INNOVATIONS. The Employee hereby agrees to disclose in
--------------------------
writing to the Company all inventions, improvements and other innovations of any
kind that the Employee makes, conceives, develops or reduces to practice, alone
or jointly with others, during the Term, to the extent they are related to the
Employee's work for the Company and whether or not they are eligible for patent,
copyright, trademark, trade secret or other legal protection ("Innovations").
Examples of Innovations shall include, but are not limited to, discoveries,
research, inventions, formulas, techniques, processes, tools, know-how,
marketing plans, new product plans, production processes, advertising, packaging
and marketing techniques.

8
<PAGE>

14. ARBITRATION. Other than with respect to a proceeding for injunctive
-----------
relief referred to herein, any controversy or claim arising out of or relating
to this Agreement, the performance thereof or its breach or threatened breach
shall be settled by arbitration in Princeton, New Jersey or other mutually
acceptable place in accordance with the then governing rules of the American
Arbitration Association. The finding of the arbitration panel or arbitrator
shall be final and binding upon the parties with the costs of arbitration to be
equally borne by the plaintiffs and the defendants, i.e. the costs borne by
defendant side in the arbitration, whether single or multiple, shall equal the
costs borne by the plaintiff side in the arbitration, whether single or
multiple. Judgement upon any arbitration award rendered may be entered and
enforced in any court of competent jurisdiction. In no event may the
arbitration determination change Employee's compensation, title, duties or
responsibilities, the entity to whom Employee reports or the principal place
where Employee is to render his services.

17. WAIVER OF BREACH. Any waiver of a breach of a provision of this
------------------
Agreement, or any delay or failure to exercise a rider under a provision of this
Agreement, by either party, shall not operate or be construed as a waiver of
that or any other subsequent breach or right.

9
<PAGE>

19. GOVERNING LAW. This Agreement shall be construed in accordance with and
-------------
governed by the internal laws of the State of New Jersey.

21. CAPTIONS. Captions in this Agreement are inserted only as a matter of
--------
convenience and reference and shall not be used to interpret or construe any
provisions of this Agreement.

25. CONFLICT OF INTEREST. In any matter requiring a Board determination
--------------------
hereunder, Employee, who, it is contemplated, will be a Director, shall be
counted for purposes of determining a quorum but shall recuse himself from the
Board vote, on the matter being determined. Employee may be present in order to
give a presentation on the matter being determined, but shall otherwise be
absent during the course of the Board's deliberation.

[SIGNATURE PAGE FOLLOWS]

10
<PAGE>

IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement
as of the date first herein above written.

FULLCOMM, INC.

By: /s/ Richard T. Case
----------------------------------------
Richard T. Case, Chief Executive Officer

EMPLOYEE

/s/ Brendan Elliot
----------------------------------------
Brendan Elliott

EMPLOYMENT AGREEMENT
--------------------

THIS EMPLOYMENT AGREEMENT (this "Agreement") is dated as of the 28th day of
April, 2000, and is by and between Fullcomm, Inc., a Delaware corporation with
an office for purposes of this Agreement at 11 Chambers Street, Princeton, New
Jersey 08542 (hereinafter the "Company" or "Employer"), and Howard M. Weinstein
(hereinafter the "Employee").

W I T N E S S E T H:
- - - - - - - - - -

WHEREAS, Company wishes to retain the services of Employee to act as Chief
Executive Officer for and on its behalf in accordance with the following terms,
conditions and provisions; and

WHEREAS, Employee wishes to perform such services for and on behalf of the
Company, in accordance with the following terms, conditions and provisions.

NOW, THEREFORE, in consideration of the mutual covenants and conditions
herein contained the parties hereto intending to be legally bound hereby agree
as follows:

1. EMPLOYMENT. Company hereby employs Employee and Employee accepts such
----------
employment, and each party shall perform its or his respective duties and the
responsibilities provided for herein in accordance with the terms and conditions
of this Agreement.

2. EMPLOYMENT STATUS. Employee shall at all times be Company's employee
------------------
subject to the terms and conditions of this Agreement and entitled to such
benefits as provided herein.

3. TERM. Unless earlier terminated pursuant to terms and provisions of this
----
Agreement, this Agreement shall have a term (the "Term") of two (2) years
commencing May 22, 2000. The Term shall automatically renew for successive
two-year terms thereafter unless either party delivers written notice of
termination to the other at least 60 days prior to the end of the initial
two-year Term or any succeeding two-year Term.

4. POSITION. During Employee's employment hereunder, Employee shall serve
--------
as Chief Executive Officer of the Company. In such position, Employee shall have
the customary powers, responsibilities and authorities of such position in
corporations of the size, type and nature of the Company including being
generally responsible for the day-to-day operations of Employer's business.
Employee shall perform such duties and exercise such powers commensurate with
his positions and responsibilities as shall be determined from time to time by
the Board of Directors of the Company (the "Board"). Neither Employee's title
nor any of his functions shall be changed, diminished or adversely affected
during the Term without his written consent. Employee shall be provided with an
office, staff and other working facilities at the executive offices of the
Company consistent with his position and as required for the

<PAGE>

performance of his duties. In addition, Employer shall use its best efforts to
have Employee elected to the Board of Directors of Employer's parent company,
Contessa Corporation, at each of Contessa Corporation's Annual Meeting of
Stockholders.

5.1.(a) During the Term, Company shall pay the Employee an initial base
annual salary of $130,000 (the "Base Salary") payable in bi-monthly
installments, and such Base Salary shall not be decreased during the Term.
Employee's Base Salary, as in effect from time to time, is hereinafter referred
to as the "Employee's Base Salary." Employee's Base Salary shall be reviewed
annually by the Board, who, in its sole discretion, may increase Employee's Base
Salary based upon Employee's performance.

(b) For each of the following key milestones that are obtained by the
Employer over the first twelve (12) months of Employee's employment with the
Employer, Employee shall be entitled to a bonus of $30,000: (i) a working
prototype which has been completed and successfully tested by the third-party
design team, (ii) successful beta test with a reputable company (where test
parameters have been established prior to the beta test and the results of such
beta test meet the test parameters established by management), and (iii)
completion of a letter of intent describing a joint marketing agreement with an
acceptable market leader, as determined by management.

(c) Upon the execution of this Agreement, Employee shall receive
options to purchase 625,074 shares of the common stock of Contessa Corporation.
Such options shall have an exercise price equal to the fair market value of such
common stock on the date of grant. Such options shall vest as follows: (i)
223,241 of such options granted shall vest on the first anniversary of the grant
date, (ii) 223,241 of such options granted shall vest on the second anniversary
of the grant date, and (iii) 178,592 of such options granted shall vest upon the
earlier of (x) the market capitalization of Contessa Corporation reaching the
sum of an average of $100 million for a period of one month during the initial
term of this Agreement, or (y) the seventh anniversary of the grant date.

5.2. Employee shall be eligible to participate in (i) the Incentive Stock
Option Plan as may be established by the Board on the terms and conditions
generally applicable to such ISO plan participants and (ii) the Company's Senior
Management Bonus Plan.

<PAGE>

6. Employee Benefits.
-----------------

6.1. During the Term hereof and so long as Employee is not terminated for
cause (as such term is defined herein), Employee shall receive and be provided
health and dental insurance, and during Employee's employment hereunder, in the
sole and absolute discretion of the Board, such other employee benefits
including, without limitation, fringe benefits, vacation, automobile, retirement
plan participation and life, health, accident and disability insurance, etc.
(collectively, "Employee Benefits"). The parties acknowledge that the benefits
to be provided pursuant to this Section shall commence as soon as practicable
following the date hereof, but in any case within thirty days following the date
hereof.

6.2. Employee shall be entitled to receive four (4) weeks paid vacation per
calendar year. If such vacation time is not taken by Employee in the then
current year, Employee at his option may accrue vacation or receive compensation
in lieu thereof at one-half the then current level of Employee's Base Salary.

6.4. Employee agrees to temporarily move, for a period not to exceed six
(6) months, to a site where the Employer's prototype design team is located.
During such time period, Employer shall reimburse Employee for temporary living
expenses not to exceed $1,350 per month. Upon the earlier of (i) Board approval
of a permanent site or (ii) the expiration of 180 days from the date of
execution of this Agreement, Employer shall pay to Employee a lump sum in the
amount of $30,000 to cover the relocation expense for Employee to move to a
permanent site, as approved by the Board. Employee shall then be responsible for
all of his transition and moving costs, as well as any and all federal and/or
state taxes that may be incurred by Employee in connection with such $30,000
payment.

7. Termination.
-----------

7.1. For Cause by the Company. Employee's employment hereunder may be
-------------------------
terminated by the Company at any time with or without cause upon sixty (60) days
prior written notice. Any termination of Employee's employment pursuant to this
Section 7.1 shall be made by the Board.

7.1.1. If Employee is terminated for cause, he shall be entitled to
receive Employee's Base Salary from Company only through the date of
termination and Employee shall be entitled to no other payments of
Employee's Base Salary under this Agreement. If Employee is terminated
without cause, he shall be entitled to receive Employee's Base Salary for a
period of six (6) months immediately following the termination date and all
previously granted options shall be accelerated and vest immediately. All
other benefits, if any, due Employee following Employee's termination of
employment pursuant to this Subsection 7.1.1 shall be determined in
accordance with

<PAGE>

law and with the plans, policies and practices of the Company as in general
effect on the date of termination.

7.1.2 For the purposes of this Agreement, "cause" shall include,
without limitation, the following conduct of the Employee:

(i) neglect or refusal to perform the duties assigned to
the Employee under or pursuant to this Employment Agreement or
material breach of any provision of this Employment Agreement by the
Employee after due notice thereof and a 15 day opportunity to cure
such breach;

(ii) willful misconduct as an Employee, including but not
limited to, misappropriating funds or property of the Company; any
attempt to obtain any personal profit from any transaction in which
the Employee has an interest that is adverse to the Company or any
breach of the duty of loyalty and fidelity to the Company; or any
other act or omission of the Employee which substantially impairs the
Company's ability to conduct its ordinary business in its usual
manner;

(iii) conviction of a felony or plea of guilty or nolo
contendere to a felony;

(iv) acts of dishonesty or moral turpitude by the Employee
that are detrimental to the Company or any other act or omission which
subjects the Company or any of its affiliates to public disrespect,
scandal, or ridicule, or that causes the Company to be in violation of
governmental regulations that subjects the Company either to sanctions
by governmental authority or to civil liability to its employees or
third parties; and

(v) disclosure or use of confidential information of the
Company, other than as specifically authorized and required in the
performance of Employee's duties.

7.2. Disability or Death. (i) Employee's employment hereunder shall
---------------------
terminate upon his death or if Employee becomes physically or mentally
incapacitated and is therefore unable (or will, as a result thereof, be unable)
to perform his duties for a period of nine (9) consecutive months or for an
aggregate of fifteen (15) months in any twenty-four (24) consecutive month
period (such incapacity is hereinafter referred to as "Disability"). If Company
terminates Employee's employment under the terms of this Agreement and Employee
does not receive disability insurance payments under the terms hereof in an
amount at least equal to the then effective Employee's Base Salary pursuant to a
policy maintained and paid for by the Company, Company shall be responsible to
continue to pay Employee's Base Salary during the then remaining Term to the
extent required to bring the Employee's annual compensation (together with
disability payments) up to the amount equal to the Employee's Base Salary
immediately prior to the termination for disability. Any question as to the
existence of the Disability of Employee as to which Employee and the Company
cannot agree shall be determined in writing

<PAGE>

by a qualified independent physician mutually acceptable to Employee and the
Company. If Employee and the Company cannot agree as to a qualified independent
physician, each shall appoint such a physician and those two physicians shall
select a third who shall make such determination in writing. The determination
of Disability made in writing to the Company and Employee shall be final and
conclusive for all purposes of the Agreement.

7.2.1. Upon termination of Employee's employment hereunder
during the Term as a result of death, Employee's estate or named
beneficiary(ies) shall receive from the Company (x) Employee's Base
Salary at the rate in effect at the time of Employee's death through
the end of the month in which his death and (y) the proceeds of any
life insurance policy maintained for his benefit by the Company
pursuant to this Agreement (or the Plans and Policies of the Company
generally).

7.2.2. All other benefits, if any, due Employee following
Employee's termination of employment pursuant to this Section 7.2
shall be determined in accordance with the plans, policies and
practices of the Company in general effect at the date of death.

7.3. Change in Control Payment.
-------------------------

7.3.2. Subject to Section 7.6, if Employee's employment is terminated
by the Company and coincident with or following a Change of Control, Employee
shall be entitled to a lump sum payment, payable within ten (10) days after such
termination of employment, equal to the product of (x) 2.99 times (y) the
Employee Base Amount.

7.4. Termination by Employee. If Employee, upon ninety (90) days
-------------------------
notice to the Employer, terminates his employment with the Company for any
reason during the term, Employee shall be entitled to continued benefits and
compensation, as set forth in Paragraph 5 herein, during the ninety (90) days
following such notice. Employee shall continue to perform his duties during the
ninety (90) days following such notice, unless less otherwise notified by the
Employer.

7.5 Change of Control defined: For purposes of this Agreement, "Change
-------------------------
of Control" shall mean (i) any transaction or series of transactions (including,
without limitation, a tender offer, merger or consolidation) the result of which
is that any "person" or "group" (within the meaning of Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), becomes the "beneficial" owner (as defined in rule 13(d)(3) under the
Securities Exchange Act of 1934) of more than 50 percent (50%) of the total
aggregate voting power of all classes of the voting stock of the Company and/or
warrants or options to acquire such voting stock, calculated on a fully diluted
basis, (ii) during any period of two consecutive calendar years, individuals who
at the beginning of such period constituted the Board of

<PAGE>

Directors (together with any new directors whose election by the Board of
Directors or whose nomination for election by the Company's stockholders was
approved by a vote of at least two-thirds of the directors then still in office
who either were directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the directors then in office, or (iii) a sale of assets
constituting all or substantially all of the assets of the Company (determined
on a consolidated basis). In the event of such Change of Control, the new entity
shall be obligated to assume the terms and conditions of this Agreement.

7.6. Limitation on Certain Payments.
------------------------------

7.6.1. In the event it is determined pursuant to Section 7.6.2 below,
that part or all of the consideration, compensation or benefits to be paid to
Employee under this Agreement in connection with Employee's termination of
employment following a Change of Control or under any other plan, arrangement or
agreement in connection therewith, constitutes a "parachute payment" (or
payments) under Section 280G(b)(2) of the Code, then, of the aggregate present
value of such parachute payments (the "Parachute Amount") exceeds 2.99 times the
Employee Base Amount, the amounts constituting "parachute payments" which would
otherwise be payable to or for the benefit of Employee shall be reduced to the
extent necessary such that the Parachute Amount is equal to 2.99 times the
Employee Base Amount. Employee shall have the right to choose which amounts that
would otherwise be due him but for the limitations described in this paragraph
shall be subject to reduction. Notwithstanding the foregoing, if it is
determined that stockholder approval of the payment of such compensation and
benefits will reduce the applicability of Section 280G of the Code to such
payment, promptly after request by Employee, Company will undertake reasonable
efforts to hold such a stockholder meeting to obtain such approval or to solicit
such approval by written consent, and to obtain such approval.

7.6.2. Any determination that a payment constitutes a parachute
payment and any calculation described in this Section 7.6 ("determination")
shall be made by the independent public accountants for the Company, and may, at
Company's election, be made prior to termination of Employee's employment where
Company determines that a Change in Control, as provided in this Section 7, is
imminent. Such determination shall be furnished in writing no later than thirty
(30) days following the date of the Change in Control by the accountants to
Employee. If Employee does not agree with such determination from the
accountants and within Fifteen (15) days thereafter, accountants of Employee's
choice must deliver to the Company their determination that in their judgment
complies with the Code. If the two accountants cannot agree upon the amount to
be paid to Employee pursuant to this Section 7 within ten (10) days of the
delivery of the statement of Employee's accountants to the Company, the two
accountants shall choose a third accountant who shall deliver their
determination of the appropriate amount to be paid to Employee pursuant to this
Section 7.6, which determination shall be final. If the final determination
provides for the payment of a greater amount than that proposed by the
accountants of the Company, then the Company shall pay all of Employee's costs
incurred in contesting such determination and all other costs incurred by the
Company with respect to such determination.

<PAGE>

7.6.3. If the final determination made pursuant to Subsection 7.6.2 of
this Section 7.6 results in a reduction of the payments that would otherwise be
paid to Employee except for the application of Section 7.6.1 of this Section
7.6, Employee may then elect, in his sole discretion, which and how much of any
particular entitlement shall be eliminated or reduced and shall advise the
Company in writing of his election within ten (10) days of the final
determination of the reduction in payments. If no such election is made by
Employee within such 10-day period, the Company may elect which and how much of
any entitlement shall be eliminated or reduced and shall notify Employee
promptly of such election. Within ten (10) days following such determination and
the elections hereunder, the Company shall pay to or distribute to or for the
benefit of Employee such amounts as become due to Employee under this agreement.

7.6.4. As a result of the uncertainty in the application of Section
280G of the Code at the time of a determination hereunder, it is possible that
payments will be made by the Company which should not have been made under
Subsection 7.6.1 of this Section 7.6 ("Overpayment") or that additional payments
which are not made by the Company pursuant to Subsection 7.6.1 of this Section
7.6 should have been made ("Underpayment"). In the event that there is a final
determination by the Internal Revenue Service, or a final determination by a
court of competent jurisdiction, that an Overpayment has been made, any such
Overpayment shall be treated for all purposes as a loan to Employee which
Employee shall repay to the Company together with interest at the applicable
Federal rate provided for in Section 7872(f)(2) of the Code. In the event that
there is a final determination by the Internal Revenue Service, a final
determination by a court of competent jurisdiction or a change in the provisions
of the Code or regulations pursuant to which an Underpayment arises under this
Agreement, any such Underpayment shall be promptly paid by the Company to or for
the benefit of Employee, together with interest at the applicable Federal rate
provided for in Section 7872(f)(2) of the code.

8. NON-DISCLOSURE OF INFORMATION.
-----------------------------

<PAGE>

such information, in whole or in part, has been disclosed in violation of this
Agreement. Nothing herein stated shall be construed as prohibiting the Company
from pursuing any other rights and remedies, at law or in equity, available to
the Company for such breach or threatened breach, including the recovery of
damages from the Employee. In connection with this paragraph's provisions,
Employee hereby (i) submits to the jurisdiction of any federal court in New
Jersey or any New Jersey state court of general jurisdiction in the county in
which Princeton is located, (ii) waives any and all defenses based on
inconvenient forum, and (iii) agrees to pay the reasonable fees and
disbursements of the Company's legal counsel in connection with obtaining any
such injunctive relief.

8.3. Notwithstanding anything contained in this Section 8 to the
contrary"Confidential Information" shall not include (i) information in the
public domain as of the date hereof, (ii) information which enters the public
domain hereafter through no fault of the Employee, and (iii) information
created, discovered or developed by the Employee independent of his association
with the Company, provided that such information is supported by accompanying
documentation of such independent development. Nothing contained in this Section
8 shall be deemed to preclude the proper use by the Employee of Confidential
Information in the exercise of his duties hereunder or the disclosure of
Confidential Information required by law.

9. RESTRICTIVE COVENANT.
--------------------

9.1. During the term hereof and for a period of one (1) year after the
termination of this Agreement, Employee covenants and agrees that he shall not
own, manage, operate, control, be employed by, participate in, or be connected
in any manner with the ownership, management, operation, or control, whether
directly or indirectly, as an individual on his own account, or as a partner,
member, joint venturer, officer, director or shareholder of a corporation or
other entity, of any business which competes with the Company's business of
embedded digital media security. Notwithstanding the foregoing, (i) nothing in
this Section 9 shall prohibit Employee from owning up to 5% of the outstanding
voting capital stock of any corporation or other entity listed on Nasdaq or
traded on any national securities exchange, and (ii) in the event of a
termination by the Company, such restriction shall apply only if the Company has
paid to the Employee all amounts owed to the Employee and is otherwise in
compliance with Section 7 hereof. The foregoing shall not preclude the Employee
from any consulting arrangement which may be entered into from time to time with
the Company, or its affiliate.

<PAGE>

Agreement, in addition to any other remedies either party may have, such party
shall be entitled to obtain a temporary restraining order and a preliminary
and/or permanent injunction restraining the other from violating these
provisions. Nothing in this Agreement shall be construed to prohibit Company or
Employee, as the case may be, from pursuing and obtaining any other available
remedies which Company or Employee, as the case may be, may have for such breach
or threatened breach, whether at law or in equity, including the recovery of
damages from the other.

14. ARBITRATION. Other than with respect to a proceeding for injunctive
-----------
relief referred to herein, any controversy or claim arising out of or relating
to this Agreement, the performance thereof or its breach or threatened breach
shall be settled by arbitration in Princeton, New Jersey or other mutually
acceptable place in accordance with the then governing rules of the American
Arbitration Association. The finding of the arbitration panel or arbitrator
shall be final and binding upon the parties with the costs of arbitration to be
equally borne by the plaintiffs and the defendants, i.e. the costs borne by
defendant side in the arbitration, whether single or multiple, shall equal the
costs borne by the plaintiff side in the arbitration, whether single or
multiple. Judgment upon any arbitration award rendered may be entered and
enforced in any

<PAGE>

court of competent jurisdiction. In no event may the arbitration determination
change Employee's compensation, title, duties or responsibilities, the entity to
whom Employee reports or the principal place where Employee is to render his
services.

15. NOTICES. Any notice required, permitted or desired to be given under
-------
this Agreement shall be sufficient if it is in writing and (a) personally
delivered to Employee or any officer of the Company other than Employee, (b)
sent by overnight delivery or (c) sent by registered or certified mail, return
receipt requested, to Employer's or Employee's address as provided in this
Agreement or to a different address designated in writing by either party. In
all instances of notices to be given to Company, a copy by like means shall be
delivered to Company's counsel care of Buchanan Ingersoll Professional
Corporation, 650 College Road East, Princeton, New Jersey 08540, Attention:
David J. Sorin, Esq. In all instances of notices to be given to Employee, a copy
by like means shall be delivered to Employee's counsel at the address supplied
by the Employee. Notice is deemed given on the day it is delivered personally or
by overnight delivery, or five (5) business days after it is mailed, if
transmitted by the United States Post Office.

19. GOVERNING LAW. This Agreement shall be construed in accordance with and
-------------
governed by the internal laws of the State of New Jersey.

21. CAPTIONS. Captions in this Agreement are inserted only as a matter of
--------
convenience and reference and shall not be used to interpret or construe any
provisions of this Agreement.

<PAGE>

23. CAPACITY. Employee has read and is familiar with all of the terms and
--------
conditions of this Agreement and has the capacity to understand such terms and
conditions hereof. By executing this Agreement, Employee agrees to be bound by
this Agreement and the terms and conditions hereof. Employer represents that
this Agreement has been duly authorized by the Company and the Company agrees to
be bound by this Agreement and terms and conditions thereof.

[SIGNATURE PAGE FOLLOWS]

<PAGE>

IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement
as of the date first herein above written.

FULLCOMM, INC.

By: /s/ Brendan G. Elliott
-----------------------------
Brendan G. Elliott, President

EMPLOYEE

/s/ Howard M. Weinstein
- --------------------------------
Howard M. Weinstein

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS AT MARCH 31, 2000 WHICH ARE INCLUDED
IN THE REGISTRANT'S FORM 10-QSB AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001072816
<NAME> Contessa Corporation
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars

<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<EXCHANGE-RATE> 1
<CASH> 796,108
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 796,108
<PP&E> 19,786
<DEPRECIATION> 2,548
<TOTAL-ASSETS> 820,012
<CURRENT-LIABILITIES> 159,328
<BONDS> 0
0
0
<COMMON> 837
<OTHER-SE> 659,847
<TOTAL-LIABILITY-AND-EQUITY> 820,012
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 209,476
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,263
<INCOME-PRETAX> (211,241)
<INCOME-TAX> 0
<INCOME-CONTINUING> (211,241)
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<EXTRAORDINARY> 0
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<NET-INCOME> (211,241)
<EPS-BASIC> (0.04)
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