To Become Effective Upon Filing
Pursuant to Rule 462
As filed with the U.S. Securities and Exchange Commission
Registration No.
- --------------------------------------------------------------------------------
Securities and Exchange Commission
Washington D.C. 20549
Form S-8
Registration Statement
Under
The Securities Act of 1933
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USA BRIDGE CONSTRUCTION OF N.Y., INC.
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(Exact name of issuer as specified in its charter)
New York 11-3032277
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State of Incorporation (I.R.S. Employer Identification No)
53-09 97th Place, Corona N.Y. 11368
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(Address of Principal Executive Offices) (Zip Code)
1994 SENIOR MANAGEMENT INCENTIVE PLAN
-------------------------------------
(Full Title of the Plan)
c/o Joseph Polito - USA Bridge Construction of N.Y., Inc.
53-09 97th Place,
Corona, N.Y. 11368
(Name and Address of Agent for Service)
(718) 699-0100
(Telephone Number including area code of
agent of service)
- --------------------------------------------------------------------------------
Approximate Date of Commencement of Proposed sales under the Plan: as soon as
practicable after this Registration Statement becomes effective
Total number of Pages: 61
Exhibit Index begins sequentially on numbered page: 14
<PAGE>
Calculation of the Registration Fees
Title of Securities Amount to Proposed Proposed Amount of
to be Registered be Registered Maximum Maximum Registra-
- ---------------- ------------- Offering Aggregate tion Fee
Price Per Offering ---------
Share Price
--------- --------
Shares of
Common Stock
.001 par value
per share 290,000* $2.125 $616,250 $181.79
------- -------- -------
Total = 290,000 $616,250 $181.79
*The issuance of the 290,000 shares of Common Stock being registered hereby was
authorized by the Company on December 5, 1997. The shares were issued in March,
1998. They were held in escrow, pending vesting to certain executive employees
of the Company pursuant to the Company's 1994 Senior Management Incentive
Plan.
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PART I INFORMATION REQUIRED IN THE SECTION 10 (A) PROSPECTUS
Item 1. Plan Information
(See attached Exhibit Four)
Item 2. Registrant Information and Employee Plan Annual
Information
All employee participants are entitled to, without charge,
upon written or oral request, a copy of all documents
referenced below which are incorporated by reference in Item 3
of Part II of the registration statement (the "Registration
Statement"). Such documents are incorporated by reference in
the Section 10(a) prospectus and shall be provided without
charge. Any such other documents required to be provided to
employee participants pursuant to Rule 428(b) of the
Securities Act of 1933 (the "Act") shall likewise be provided
without charge, upon written or oral request made to Ronald J.
Polito, Secretary, 53-09 97th Place, Corona, New York 11368,
(718) 699-0100.
PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
There are incorporated herein by reference the following
documents:
a. The Company's Post Effective Amendment No. 2 to Form SB- 2, as
filed with the Securities and Exchange Commission (the
"Commission") on April 13, 1998, which contains certified
financial statements for the Company's latest fiscal year
ended June 30, 1997.
b. The Company's Forms 10-QSB filed with the Commission for the
quarters ended December 31, 1997 and March 31, 1998.
c. The description of the Company's Common Stock as
contained in the Company's Post Effective Amendment No.
2 to Form SB-2, as filed with the Commission on
April 13, 1998.
d. All reports subsequently filed by the Company pursuant
to Sections 13(a), 13(c), 14, and 15(d) of the Securities
Exchange Act of 1934 (the "Exchange Act"), prior to the
filing of a post-effective amendment which indicates
that all securities offered have been sold or which
deregisters all securities then remaining unsold, shall
be deemed to be incorporated herein by reference and
to be part hereof from the date of filing of such
documents.
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Item 4. Description of Securities
USA Bridge Construction of N.Y., Inc. (the "Company") has
authorized 10,000,000 shares of common stock, par value $.001
per share ("Common Stock"), and 500,000 shares of Preferred
Stock, par value $.01 per share.
A maximum of 1,000,000 shares of common stock (the "Common
Stock"), par value $.001 per share, may be issued pursuant to
the Company's 1994 Senior Management Incentive Plan (the
"Plan"). This Registration Statement serves also to reflect
and memorialize the amendment to the Plan which occurred at
the Company's annual meeting held on January 9, 1997 at which
time the number of shares issuable under the Plan was
increased from 150,000 to 1,000,000 shares.
The Company registers herein 290,000 shares of Common Stock
only, issued in March 1998 and held in escrow pending vesting,
pursuant to the Plan to certain executive employees of the
Company. On February 24, 1997, the Company filed a Form S-8
whereby it registered 125,000 shares underlying an option
granted pursuant to the Plan on December 2, 1996 to Joseph M.
Polito. Mr. Polito exercised the option in full in March 1997;
in April 1997 he sold 60,000 shares.
Key management employees, including Executive Officers, key
employees, consultants, and directors (who are also employees)
of the Company, who are deemed to have the potential to have a
significant effect on the future success of the Company are
eligible to participate in the Plan.
Pursuant to the Plan (which terminates ten years from the date
of the Plan's adoption by the Board of Directors) and Joseph
M. Polito's Option Agreement, dated December 2, 1996, Mr.
Polito exercised the option in full and purchased an aggregate
of 125,000 shares of Common Stock at $1.10 per share,
representing 110% of the bid price of said shares on November
27, 1996.
Common Stock
Each share of Common Stock entitles its holder to one non-cumulative vote per
share, and subject to the preferential rights of the Preferred Stockholders, the
holders of more than fifty percent (50%) of the shares voting for the election
of Directors can elect all the Directors if they choose to do so. In such event,
the holders of the remaining shares will not be able to elect a single Director.
Holders of shares of Common Stock are entitled to receive such dividends as the
Board of Directors may, from time to time, declare out of Company funds legally
available for the payment of dividends.
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The Company has not paid cash dividends on its common stock and intends to
retain earnings, if any, for use in its activities. Payment of cash dividends in
the future will be wholly dependent upon the Company's earnings, financial
condition, capital requirements, and other factors deemed relevant by the Board
of Directors. It is not likely that cash dividends will be paid in the
foreseeable future. Upon any liquidation, dissolution, or winding up of the
Company, holders of shares of Common Stock are entitled to receive pro rata all
of the assets of the Company available for distribution to shareholders after
the satisfaction of the liquidation preference of the preferred stockholders.
See "Dividend Policy".
Shareholders do not have any preemptive rights to subscribe for or purchase any
stock, warrants or other Securities of the Company. The Common Stock is not
convertible or redeemable. Neither the Company's Certificate or Incorporation
nor its By-Laws provides for preemptive rights.
Preferred Stock
The Preferred Stock may be issued in one or more series to be determined and to
bear such title or designation as may be fixed by resolution of the Board of
Directors prior to the issuance of any shares thereof. Each series of the
Preferred Stock will have such voting powers (including, if determined by the
Board of Directors, no voting rights), preferences, and other rights as
determined by the Board of Directors, with such qualifications, limitations, or
restrictions as may be stated in the resolutions of the Board of Directors
adopted prior to the issuance of any shares of such series of Preferred Stock.
Purchasers of the Securities offered hereby should be aware that the holders of
any series of the Preferred Stock which may be issued in the future could have
voting rights, rights to receive dividends, or rights to distribution in
liquidation superior to those of holders of the Common Stock, thereby diluting
or negating the voting rights, dividend rights, or liquidation rights of the
holders of the Common Stock. Except for the Series A Preferred Stock, the
Company has no present intention to issue any shares of Preferred Stock.
Pursuant to the terms of the underwriting agreement with the Underwriter, the
Company cannot issue any shares of Preferred Stock, except for the Series A
Preferred Stock, without the consent of the Underwriter. See "--Series A
Preferred Stock".
Because the terms of each series of Preferred Stock may be fixed by the
Company's Board of Directors without shareholder action, the Preferred Stock
could be issued
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with terms calculated to defeat a proposed takeover of the Company or to make
the removal of the Company's management more difficult. Under certain
circumstances, this could have the effect of decreasing the market price of the
Common Stock. Management of the Company is not aware of any such threatened
transaction to obtain control of the Company.
Series A Preferred Stock
The Company has designated 400,000 shares as "Series A Preferred Stock". On
consummation of the Offering, the Company agreed to issue to Corp. one share of
its series A Preferred Stock for every share of Common Stock issued pursuant to
the exercise of the Warrants. Each share of Series A Preferred Stock has the
right to ten votes on all matters submitted to a vote of the shareholders. No
shares of Series A Preferred Stock have been issued.
The shares of the Series A Preferred Stock shall have the right to vote with the
shares of Common Stock at all meetings of the shareholders of the Company, or
consent in writing in lieu of voting, or otherwise, in respect to any matter
upon which the vote, or consent in lieu of voting of the shareholders is
required, including without limitation the election of Directors. Each share of
Series A Preferred Stock shall be entitled to ten (10) votes.
At such times as there are shares of Series A Preferred Stock outstanding, the
Board of Directors shall be comprised of such odd number of Directors as shall
be fixed by the Board of Directors or as stated in the Company's Certificate of
Incorporation; provided, however, that such number of Directors shall not be
less than three (3) nor more than fifteen (15).
The shares of Series A Preferred Stock shall not be entitled to receive or earn
any dividends or preference upon liquidation. The shares of Series A Preferred
Stock then issued and outstanding shall be deemed canceled and no longer
designated, issued, or outstanding upon the happening of the expiration of the
Warrants. The shares of Series A Preferred Stock are not redeemable by the
Company.
Warrants
In April 1998, the Company's Board of Directors adopted a resolution decreasing
the exercise price of the outstanding Warrants from $3.00 to $2.50. No other
terms of the Warrants were amended. In addition, the Board authorized the
Company to prepare and file a Post-Effective Amendment to its registration
statement to update the information therein enabling the Warrants to become
exercisable. Each Warrant entitles the holder
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thereof to purchase one share of the Company's Common Stock, at an exercise
price of $2.50 per share, until August 8, 2000. The Warrants and the Common
Stock underlying same are in registered form pursuant to the terms of a Warrant
Agreement executed by and between the Company and North American Transfer Co.,
as warrant agent, so that the holders of the Warrants will receive unrestricted
shares of Common Stock upon their exercise thereof and payment therefor. No
value was attributed to the Warrants as of the date of the decrease in exercise
price to $2.50 per share as the market price of the Common Stock for a
substantial period of time prior to the decrease was less than $2.50 per share.
Each warrant gives the holder the right to purchase one share of the Company's
Common Stock, subject to adjustment in certain events at an initial price of
$2.50 per share until August 8, 2000. The Warrants are redeemable by the company
at any time upon thirty (30) days' notice at a redemption price of $.05 per
Warrant, provided that the closing bid quotation of the Common Stock for each of
the twenty (20) trading days ending on the third day prior to the day on which
the Company gives notice has been at least 150% of the then effective exercise
price of the Warrants. The Company may elect to redeem the Warrants at such time
as the Company requires additional capital. Redemption of the Warrants could
force the holders to exercise the Warrants and pay the exercise price at a time
when it may be disadvantageous for the holders to do so, to sell the Warrants at
the then current market price when they might otherwise wish to hold the
Warrants, or to accept the redemption price, which is likely to be substantially
less than the market value of the Warrants at the time of redemption. The
Company will not redeem the Warrants at any time in which its registration
statement is not current, so that investors will be able to exercise their
Warrants during the 30 day notice period in the event of a warrant redemption by
the Company.
The exercise price and the number of shares of Common Stock purchasable upon the
exercise of each Warrant are subject to adjustment in certain events, including
the issuance of a stock dividend to holders of Common Stock, or a combination,
subdivision, or reclassification of Common Stock. No fractional shares will be
issued upon exercise of the Warrants; however, the Company shall pay the cash
value of the fractional shares otherwise issuable.
Notwithstanding the foregoing, in case of any consolidation, merger, sale, or
conveyance of the property of the Company as an entirety or substantialy as an
entirety, the holder of each outstanding Warrant shall
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continue to have the right to exercise the Warrant for the kind and amount of
shares and other securities and property (including cash) receivable by a holder
of the number of shares of Common Stock for which such Warrants were exercisable
immediately prior thereto.
Holders of Warrants are not entitled, by virtue of being such holders, to
receive dividends or to consent or to receive notice as shareholders in respect
of any meeting of shareholders for the election of Directors of the Company or
any other matter, or to vote at any such meeting, or to exercise any rights
whatsoever as shareholders of the Company.
The Warrants may not be exercisable at any time this Prospectus shall not be
deemed to be current. If this Prospectus is deemed not current, prior to the
exercise of any Warrants, the Company must file a Post-Effective Amendment to
the registration statement of which this Prospectus forms a part, and such
Post-Effective Amendment must be declared effective by the Commission. The
Company will notify all Warrantholders and its transfer agent that the Warrants
may not be exercised in the event that a Post-Effective Amendment has not been
declared effective on or before such date so as to prevent the Warrants from
being exercised in the absence of a current, effective Registration Statement.
In the event the Company reduces the exercise price or extends the period of the
Warrants, the Company will undertake the notification filing provisions herein
referred to with respect to notification of Warrantholders and the filing of a
Post-Effective Amendment. No such changes are currently contemplated by the
Company.
Special Warrant
The "Special Warrant" is a warrant which was issued by the Company to Corp. on
consummation of the Company's Offering of Securities. The Special Warrant is not
transferrable by Corp., and neither the Special Warrant nor the underlying
shares of Common Stock upon exercise thereof were in registered form. The
following statements are summaries of certain provisions of the "Special Warrant
Agreement".
The Special Warrant entitles Corp. to purchase shares of Common Stock at an
exercise price of $2.50 per share, during the term when the Warrants are
exercisable. Initially, the Special Warrant could be exercised by Corp. if (i)
that Corp.'s ownership of the Company's Common Stock fell below 50%, due to (a)
the exercise of the Corp. Warrants (which have expired), (b) the exercise of the
Warrants, or (c) the exercise of the Underwriter's
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over-allotment option (which has terminated); or (ii) the Company earned, after
taxes, in excess of $1,000,000 in each of fiscal 1995, 1996, and 1997 (which
time period has expried). Now, Corp. is entitled to exercise the Special Warrant
if exercise of the Company's Warrants decreases Corp.'s ownership of Common
Stock to a percentage below 50.1%. In such event, Corp. will be able to exercise
the Special Warrant and purchase shares of Common Stock for $2.50 per share
until the number of shares of Common Stock acquired upon exercise shall increase
its ownership of the Company's Common Stock to a maximum of 50.1% of the issued
and outstanding shares of Common Stock on the date of exercise. In addition to
the Special Warrant, the Company agreed to issue to Corp. one share of its
Series A Preferred Stock for every ten shares of Common Stock issued pursuant to
the exercise of the Warrants. Each share of Series A Preferred Stock has the
right to ten votes on all matters submitted to a vote of the shareholders. See
"--Series A Preferred Stock".
The Company's Board of Directors has authority, without action by the Company's
stockholders, to issue all or any portion of the authorized but unissued shares
of Common Stock, which if done would reduce the existing stockholder's
percentage ownership of the Company and may dilute the book value of the Common
Stock.
Item 5. Interests of Named Experts and Counsel
Not applicable.
Item 6. Indemnification of Directors and Officers
The Company's Certificate of Incorporation, By-Laws and the
New York Business Corporation Law permit the Company to
indemnify all persons so identified as being covered,
including officers, directors, and employees from personal
liability as described below:
a. The Company's Certificate of Incorporation provides that the
corporation shall, to the fullest extent permitted by Article
7 of the Business Corporation Law, as the same may be amended
and supplemented, indemnify any and all persons whom it shall
have power to indemnify under said Article from and against
any and all of the expenses, liabilities, or other matters
referred to in or covered by said article, and the
indemnification provided for herein shall not be deemed
exclusive of any other rights to which any person may be
entitled under any By-Law, resolution of shareholders,
resolution of directors, agreement, or otherwise, as permitted
by said Article, as to action in any capacity in which he
served at the request of
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the corporation and that the personal liability of the
directors of the corporation is eliminated to the fullest
extent permitted by the provisions of paragraph (b) of Section
402 of the Business Corporation Law, as the same may be
amended and supplemented.
b. Except to the extent expressly prohibited by the New York
Corporation Law, the corporation shall indemnify each person
made or threatened to be made a party to any action or
proceeding, whether civil or criminal, by reason of the fact
that such person or such person's testator or intestate is or
was a director, officer or employee of the corporation, or
serves or served at the request of the corporation, any other
corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise in any capacity, against
judgment, fines, penalties, amounts paid in settlement and
reasonable expenses, including attorneys' fees, incurred in
connection with such action or proceeding, or any appeal
therein, provided that no such indemnification shall be made
if a judgment or other final adjudication adverse to such
person establishes that his or her acts were committed in bad
faith or were the result of active and deliberate dishonesty
and were material to the cause of action so adjudicated, or
that he or she personally gained in fact a financial profit or
other advantage to which he or she was not legally entitled,
and provided further that no such indemnification shall be
required with respect to any settlement or other
nonadjudicated disposition of any threatened or pending action
or proceeding unless the corporation has given its prior
consent to such settlement or other disposition.
The corporation may advance or promptly reimburse upon request
any person entitled to indemnification hereunder for all
expenses, including attorneys' fees, reasonably incurred in
defending any action or proceeding in advance of the final
disposition thereof upon receipt of an undertaking by or on
behalf of such person to repay such amount if such person is
ultimately found not to be entitled to indemnification or,
where indemnification is granted, to the extent the expenses
so advanced or reimbursed exceed the amount to which such
person is entitled, provided, however, that such person shall
cooperate in good faith with any request by the corporation
that common counsel be utilized by the parties to an action or
proceeding who are similarly situated unless to do so would be
inappropriate due to actual or potential differing interests
between or among such parties.
Nothing herein shall limit or affect any right of any person
otherwise than hereunder to indemnification
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or expenses, including attorneys' fees, under any statute,
rule, regulation, certificate of incorporation, by-law,
insurance policy, contract or otherwise.
Anything in these by-laws to the contrary notwithstanding no
elimination of this by-law, and no amendment of this by-law
adversely affecting the right of any person to indemnification
or advancement of expenses hereunder shall be effective until
the 60th day following notice to such person or such action,
and no elimination of or amendment to this by-law shall
deprive any person of his or her rights hereunder arising out
of alleged or actual occurrences, acts or failures to act
prior to such 60th day.
The corporation shall not, except by elimination or amendment
of this by-law in a manner consistent with the preceding
paragraph, take any corporate action or enter into any
agreement which prohibits, or otherwise limits the rights of
any person to, indemnification in accordance with the
provisions of this by-law. The indemnification of any person
provided by this by-law shall continue after such person has
ceased to be a director, officer or employee of the
corporation and shall inure to the benefit of such person's
heirs, executors, administrators and legal representatives.
The corporation is authorized to enter into agreements with
any of its directors, officers or employees extending rights
to indemnification and advancement of expenses to such person
to the fullest extent permitted by applicable law, but the
failure to enter into any such agreement shall not affect or
limit the rights of such person pursuant to this by-law, it
being expressly recognized hereby that all directors, officers
and employees of the corporation, by serving as such after the
adoption hereof, are acting in reliance hereon and that the
corporation is estopped to contend otherwise.
In case any provision in this by-law shall be determined at
any time to be unenforceable in any respect, the other
provisions shall not in any way be affected or impaired
thereby, and the affected provision shall be given the fullest
possible enforcement in the circumstances, it being the
intention of the corporation to afford indemnification and
advancement of expenses to its directors, officers and
employees, acting in such capacities or in the other
capacities mentioned herein, to the fullest extent permitted
by law.
For purposes of this by-law, the corporation shall be deemed
to have requested a person to serve an employee benefit plan
where the performance by such person or
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his or her duties to the corporation also imposes duties on,
or otherwise involves services by, such person to the plan or
participants or beneficiaries of the plan, and excise taxes
assessed on a person with respect to an employee benefit plan
pursuant to applicable law shall be considered indemnifiable
expenses. For purposes of this by-law, the term "corporation"
shall include any legal successor to the corporation,
including any corporation which acquires all or substantially
all of the assets of the corporation in one or more
transactions.
INSOFAR AS INDEMNIFICATION FOR LIABILITIES ARISING UNDER THE
SECURITIES ACT OF 1933 MAY BE PERMITTED TO DIRECTORS, OFFICERS
OR PERSONS CONTROLLING THE COMPANY PURSUANT TO THE FOREGOING
PROVISIONS, THE COMPANY HAS BEEN INFORMED THAT IN THE OPINION
OF THE SECURITIES AND EXCHANGE COMMISSION, SUCH
INDEMNIFICATION IS AGAINST PUBLIC POLICY AS EXPRESSED IN THE
ACT IS THEREFORE UNENFORCEABLE.
IN THE EVENT THAT A CLAIM FOR INDEMNIFICATION AGAINST SUCH
LIABILITIES (OTHER THAN THE PAYMENT BY THE COMPANY OF EXPENSES
INCURRED OR PAID BY A DIRECTOR, OFFICER, OR CONTROLLING PERSON
OF THE COMPANY IN THE SUCCESSFUL DEFENSE OF ANY SUCH ACTION,
SUIT, OR PROCEEDING) IS ASSERTED BY SUCH DIRECTOR, OFFICER OR
CONTROLLING PERSON OF THE COMPANY IN CONNECTION WITH THE
SECURITIES BEING REGISTERED, THE COMPANY WILL, UNLESS IN THE
OPINION OF ITS COUNSEL THE MATTER HAS BEEN SETTLED BY
CONTROLLING PRECEDENT SUBMIT TO A COURT OF APPROPRIATE
JURISDICTION THE QUESTION WHETHER SUCH INDEMNIFICATION BY IT
IS AGAINST PUBLIC POLICY AS EXPRESSED IN THE ACT AND WILL BE
GOVERNED BY THE FINAL ADJUDICATION OF SUCH ISSUE.
Item 7. Exemption from Registration Claimed
Not Applicable.
Item 8. Exhibits
Exhibit 4. 1994 Senior Management Incentive Plan
Exhibit 5. Opinion of Sol Freedman, Esq.
Exhibit 23. Consent of Sol Freedman, Esq.*
Exhibit 23.1 Consent of Scarano & Tomaro, P.C.
* Contained in opinion of Sol Freedman, Esq.
Item 9. Undertakings
a. The undersigned registrant hereby undertakes:
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i. To file, during any period in which offers or sales
are being made, a post-effective amendment to this
Registration Statement;
(1) To include any prospectus required by
Section 10(a)(3) of the Securities Act of
1933 (the "Securities Act");
(2) To reflect in the prospectus any facts or
events which, individually or together,
represent a fundamental change in the
information in the Registration Statement;
(3) To include any additional or changed
material information on the plan of
distribution.
Provided, however, that Paragraphs a.i. (1) and a.i. (2) do
not apply if the Registration Statement is on Form S- 8, and
the information required to be included in a post-effective
amendment is incorporated by reference from periodic reports
filed by the small business issuer under the Exchange Act.
ii. That, for determining liability under the Securities
Act, treat each post-effective amendment as a new
registration statement of the securities offered, and
the offering of the securities at that time to be the
initial bona fide offering.
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EXHIBIT INDEX
EXHIBIT NUMBERS ITEM
- --------------- ----
4 1994 Senior Management Incentive Plan
5 Opinion of Sol Freedman, Esq.
23 Consent of Sol Freedman, Esq. *
23.1 Consent of Scarano & Tomaro, P.C.
* Contained in opinion of Sol Freedman, Esq.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on From S-8 and has duly caused this Registration
statement to be signed on it's behalf by the undersigned, thereunto duly
authorized in New York, NY on this _14_ day of ____July__, 1998.
/S/ Joseph Polito
By: -----------------
JOSEPH POLITO
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement of USA Bridge Construction of N.Y., Inc. has been signed by the
following persons in the capacities and on the dates indicated.
Signatures Title Date
- ---------- ----- ----
/S/ Joseph Polito President/Director July 14, 1998
- ----------------- (Chief Executive Officer)
JOSEPH POLITO
/S/ Ronald Polito Secretary and Director July 14, 1998
- -----------------
RONALD POLITO
/S/ Steven Polito Treasurer and Director July 14, 1998
- -----------------
STEVEN POLITO
- ---------------- Director
MARVIN WEINSTEIN
/S/ Ronald Murphy Director July 14, 1998
- -----------------
RONALD MURPHY
15
EXHIBIT 4
SENIOR MANAGEMENT INCENTIVE PLAN
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SENIOR MANAGEMENT INCENTIVE PLAN OF U.S. BRIDGE OF N.Y., INC.
1. PURPOSE OF THE PLAN
The purpose of the Senior Management Incentive Plan ("the Management
Plan") of U.S. Bridge of N.Y., Inc. ("the Corporation") is to provide an
incentive to key management employees whose present and potential contributions
to the Corporation and/or its Subsidiaries (as such term is defined in Section 2
below) are, or will be, important to the success of the Corporation by affording
said employees an opportunity to acquire a proprietary interest in the
Corporation. It is intended that this purpose will be effected through the
issuance of (i) incentive stock rights; (ii) stock options; (iii) stock
appreciation rights; (iv) limited stock appreciation rights; and (v) shares of
Common Stock, $.001 par value per share, of the Corporation ("Common Stock")
subject to restrictions on disposition ("restricted shares") (collectively, such
options, rights and restricted shares are referred to herein as "Awards"). Stock
options which qualify as "Incentive Stock Options" under Section 422A of the
Internal Revenue Code of 1986, as it hereafter may be amended (the "Code"), may
be granted under the Management Plan. Such options are sometimes referred to
collectively as "ISOs". Options which do not qualify as ISOs ("non-ISOs") may
also be granted under the Plan.
2. ELIGIBILITY
Awards may be made or granted to those key management employees of the
Corporation and/or its Subsidiaries who are deemed to have the potential to have
a significant effect on the future success of the Corporation (such eligible
persons being referred to herein as "Eligible Participants"). The term
"management employees" shall include executive officers, key employees, and
consultants of the Corporation and/or its Subsidiaries. A Director of the
Corporation, and/or any of its Subsidiaries, who is not also an employee of the
Corporation, and/or of one of its Subsidiaries, will not be eligible to receive
any Awards under the Management Plan. No ISO shall be granted to an employee
who, at the time the option is granted, owns stock possessing more than 10% of
the total combined voting power of all classes of capital stock of the employer
Corporation (as such term is used in the Code) or any Parent or Subsidiary of
the employer Corporation, provided, however, that an ISO may be granted to such
an employee if at the time such ISO is granted, the option price is at least one
hundred ten percent (110%) of the fair market value of stock subject to the ISO
on the date of grant (as determined pursuant to Subsection 8(a) hereof) and such
ISO is by its terms not exercisable after the expiration of five (5) years from
the date such option is granted. The exercise price of the non-ISOs may not be
less than 85% of the fair market value of the Common Stock on the date of grant.
The terms "Subsidiary" and "Parent") as used herein shall have the meanings
given them in Section 425 of the Code. Awards may be made to executive personnel
who hold, or have held, options, rights, or shares under the Management Plan or
under any other plans of the Corporation.
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3. STOCK SUBJECT TO THE PLAN
The shares that may be issued upon exercise of options and rights and
which may be issued as restricted shares under the Management Plan shall not
exceed in the aggregate 1,000,000 shares of the Common Stock, as adjusted to
give effect to the anti-dilution provisions contained in Section 12 hereof. Such
shares may be authorized and unissued shares, or shares purchased by the
Corporation and reserved for issuance under the Management Plan. If a stock
option or incentive stock right for any reason expires or is terminated without
having been exercised in full, or if shares restricted are repurchased by the
Corporation in accordance with the terms thereof, those shares relating to an
unexercised stock option or incentive stock rights or shares which have been
repurchased shall again become available for grant and/or sale under the
Management Plan.
4. AWARDS UNDER THE PLAN
Awards under the Management Plan may be of five types: "Incentive stock
rights," "stock options," "stock appreciation rights." "limited stock
appreciation rights," and "restricted shares." "Incentive stock rights" are
composed of incentive stock units which give the holder the right to receive,
without payment of cash or property to the Corporation, shares of Common Stock,
subject to the terms, conditions, and restrictions described in Section 7
hereof. An option, including as ISO, is a right to purchase Common Stock in
accordance with Section 8 hereof. A "stock appreciation right" is a right given
to the holder of a stock option to receive, upon surrender of all or a portion
of his stock option without payment of cash or property to the Corporation, a
number of shares of Common stock and/or cash determined pursuant to a formula in
accordance with Section 9 hereof. A "limited stock appreciation right" is a
right given to a holder of a stock option to receive, upon the occurrence of
certain events generally constituting a change in control of the Corporation, a
number of shares of Common Stock and/or cash upon surrender of all or a portion
of his stock option without the payment of cash or property to the Corporation,
in accordance with Section 10 hereof. "Restricted shares" are shares of Common
Stock which, following issuance, are nontransferable and subject to substantial
risk of forfeiture until specific conditions based on continuing employment or
achievement or preestablished performance objectives are met, in accordance with
Section 11 hereof. All references to "cash" herein shall mean "cash or certified
check."
5. ADMINISTRATION
(a) Procedure. The Management Plan shall be administered by the Board
of Directors or by a Committee of the Board of Directors (the "Committee"), if
one is appointed for this purpose. Committee members shall serve for such term
as the Board of Directors may in each case determine and shall be subject to
removal at any time by the Board of Directors. Members of the Board of Directors
who are either eligible for Awards or have been granted Awards may not vote on
any matters affecting the administration of the Management Plan or the grant of
any Award pursuant to the Management Plan.
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(b) Powers of the Board or Committee. As used herein, except as the
Committee's powers are specifically limited in Sections 5, 6, 20, and 21 hereof,
reference to the Board of Directors shall mean such Board or the Committee,
whichever is then acting with respect to the Management Plan. Subject to the
provisions of the Management Plan, the Board of Directors shall have the
authority in its discretion: (i) to determine, upon review of the relevant
information, the fair market value of the Common Stock; (ii) to determine the
exercise price per share of stock options to be granted; (iii) to determine the
Eligible Participants to whom, and time or times at which, Awards shall be
granted and the number of shares to be issuable upon exercise of each stock
option or right sold pursuant to restricted stock purchase agreements; (iv) to
construe and interpret the Management Plan; (v) to prescribe, amend, and rescind
rules and regulations relating to the Management Plan; (vi) to determine the
terms and provisions of each Award (which need not be identical); and (vii) to
make all other determinations necessary to or advisable for the administration
of the Management Plan. Notwithstanding the foregoing, in the event any employee
of the Corporation or of any of its Subsidiaries granted an Award under the
Management Plan is, at the time of such grant, a member of the Board of
Directors of the Corporation, the grant of such Award shall, in the event the
Board of Directors at the time such Award is granted is not deemed to satisfy
the requirement of Rule 16(b)-3(b)(2)(i) or (ii) promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), be subject to
the approval of an auxiliary committee consisting of not less than three persons
all of whom qualify as "disinterested persons" within the meaning of Rule
16(b)-3(d)(3) promulgated under the Exchange Act. In the event the Board of
Directors deems it impractical to form a committee of disinterested persons, the
Board of Directors is authorized to approve any award under the Management Plan.
6. DURATION OF THE PLAN
The Management Plan shall become effective upon the approval of the
requisite vote of the stockholders of the Corporation, and upon the approvals,
if required, of any other public authorities. The Management Plan shall remain
in effect for a term of ten (10) years from the date of adoption by the Board
unless sooner terminated under Section 20 hereof. Notwithstanding any of the
foregoing to the contrary, the Board of Directors (but not the Committee) shall
have the authority to amend the Management Plan pursuant to Section 20 hereof;
provided, however, that Awards already made shall remain in full force and
effect as if the Management Plan had not been amended or terminated.
7. INCENTIVE STOCK RIGHTS
The Board of Directors, in its discretion, may grant to Eligible
Participants incentive stock rights composed of incentive stock units. Incentive
stock rights shall be granted pursuant to incentive stock rights agreements in
such form, and not inconsistent with the Management Plan, as the Board of
Directors shall approve from time to time and shall include substantially the
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following terms and conditions as determined by the Board of Directors:
(a) Incentive Stock Units. An incentive stock rights agreement shall specify the
number of incentive stock units to which it pertains. Each incentive stock unit
shall be equivalent to one share of Common Stock. Each incentive stock unit
shall entitle the holder thereof to receive, subject to the lapse of the
incentive periods (as hereinafter defined), without payment of cash or property
to the Corporation, one share of Common Stock in consideration for services
performed by the Eligible Participant for the Corporation or for any one of its
Subsidiaries.
(b) Incentive Period. The holder of incentive stock rights shall be entitled to
receive shares of Common Stock only after the lapse of such incentive periods
and in such manner, as shall be fixed in the discretion of the Board of
Directors at the time of grant of such incentive stock rights. (Such period so
fixed is herein referred to as an "incentive period"). To the extent the holder
of incentive stock rights receives shares of Common Stock on the lapse of an
incentive period, an equivalent number of incentive stock units subject to such
rights shall be deemed to have been discharged.
(c) Termination by Reason of Death or Disability. In the event that the
recipient of incentive stock rights ceases to be employed by the Corporation
and/or by any of its Subsidiaries during an incentive period, due to death or
permanent disability (as determined by the Board of Directors), the holder of
incentive stock rights or, in the case of the death of the holder, the personal
representatives, heirs, or legatees of such holder shall be entitled to receive
a number of shares equal to an amount determined by multiplying the total number
of incentive stock units applicable to such incentive period by a fraction, the
numerator of which shall be the number of full calendar months between the date
of grant of the incentive stock rights and the date of such termination and the
denominator of which shall be the number of full calendar months between the
date of grant and the date such incentive period for such units would, but for
such termination, have lapsed. For purposes of this Subsection 7(c), this shall
constitute a lapse of the incentive period with respect to the number of
incentive stock units equal to the number of shares issued. Units upon which the
incentive period do not lapse pursuant to the foregoing sentence shall terminate
and be null and void on the date on which the recipient ceases to be employed by
the Corporation and/or by any of its Subsidiaries.
(d) Termination for Any Other Reason. In the event that the employment, by the
Corporation or by any of its Subsidiaries, of the recipient to whom incentive
stock rights have been issued under the Management Plan terminates for any
reason (including dismissal by the Corporation or by any of its Subsidiaries,
with or without cause) other than death or permanent disability, such rights as
to which the incentive period has not lapsed shall terminate and be
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null and void on termination of the relationship.
(e) Issuance of Shares. Upon the lapse of an incentive period, the Corporation
shall deliver to the holder of the related incentive stock unit a certificate or
certificates representing the number of shares of Common Stock equal to the
number of incentive stock units with respect to which an incentive period has
lapsed. The Corporation shall pay all applicable transfer or issue taxes.
8. OPTIONS
Options shall be evidenced by stock option agreements in such form, and
not inconsistent with the Management Plan, as the Board of Directors shall
approve from time to time, which agreements shall contain in substance the
following terms and conditions:
(a) Option Price; Number of Shares. The option price, which shall be approved by
the Board of Directors, shall in no event be less than one hundred percent
(100%) in the case of ISOs, except with respect to 10% stockholders whereby the
price shall be 110%, and in the case of non-ISOs, eight-five percent (85%) of
the fair market value of the Corporation's Common Stock at the time the option
is granted. The fair market value of the Common Stock, for the purposes of the
Management Plan, shall mean: (i) if the Common Stock is traded on a national
securities exchange or on the NASDAQ National Market System ("NMS"), the per
share closing price of the Common Stock on the principal securities exchange on
which it is listed or on NMS, as the case may be, on the date of grant (or if
there is no closing price for such date of grant, then the last preceding
business day on which there was a closing price); or (ii) if the Common Stock is
traded in the over-the-counter market and quotations are published on the NASDAQ
quotation system (but not on NMS), the closing bid price of the Common Stock on
the date of grant as reported by NASDAQ (or if there are no closing bid prices
for such date of grant, then the last preceding business day on which there was
a closing bid price); or (iii) if the Common Stock is traded in the
over-the-counter market but bid quotations are not published by NASDAQ, the
closing bid price per share for the Common Stock as furnished by a broker-dealer
which regularly furnishes price quotations for the Common Stock.
The option agreement shall specify the total number of shares to which it
pertains and whether such options are ISOs or are not ISOs. With respect to ISOs
granted under the Management Plan, the aggregate fair market value (determined
at the time an ISO is granted) of the shares of Common Stock with respect to
which ISOs are exercisable for the first time by such employee during any
calendar year shall not exceed $100,000 under all plans of the employer
Corporation or its Parent or Subsidiaries.
(b) Waiting Period and Exercise Dates. At the time an option is granted, the
Board of Directors will determine the terms and conditions to be satisfied
before shares may be purchased, including the dates on which shares subject to
the option may first be purchased. (The period from the date of grant of an
option
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until the date on which such option may first be exercised is referred to herein
as the "waiting period".) At the time an option is granted, the Board of
Directors shall fix the period within which it may be exercised which shall not
be less than one (1) year nor, for an ISO, more than ten (10) years (not more
than 5 years for 10% stockholders) from the date of grant or, for a non-ISO, for
more than thirteen (13) years from the date of grant. (Any of such periods is
referred to herein as the "exercise period.")
(c) Form and Time of Payment. Stock purchased pursuant to an option agreement
shall be paid for at the time of purchase either in (i) cash or by certified
check or, in the discretion of the Board of Directors, as set forth in the stock
option agreement; (ii) through the delivery of shares of Common Stock; or (iii)
in a combination of the methods described above. Upon receipt of payment, the
Corporation shall, without transfer or issue tax to the option holder or other
person entitled to exercise the option, delivered to the option holder (or such
other person) a certificate or certificates for the shares so purchased.
(d) Effect of Termination or Death. In the event that an option holder ceases to
be an employee of the Corporation or of any of its Subsidiaries for any reason
other than permanent disability (as determined by the Board of Directors) or
death, any option, including any unexercised portion thereof, which was
otherwise exercisable on the date of termination, shall expire unless exercised
within a period of three months from the date on which the option holder ceases
to be so employed, but in no event after the expiration of the exercise period,
provided, however, that if the Board of Directors shall determine that an option
holder shall have been discharged for cause, options granted and not yet
exercised shall terminate immediately and be null and void as of the date of
discharge. In the event of the death of an option holder during this three month
period, the option shall be exercisable by his or her personal representatives,
heirs, or legatees to the same extent that the option holder could have
exercised the option if he had not died, for the three months from the date of
death, but in no event after the expiration of the exercise period. In the event
of the permanent disability of an option holder while an employee of the
Corporation or of any of its Subsidiaries, any option granted to such employee
shall be exercisable for twelve (12) months after the date of permanent
disability, but in no event after the expiration of the exercise period. In the
event of the death of an option holder while an employee of the Corporation or
of any of its Subsidiaries, or during the twelve (12) month period after the
date of permanent disability of the option holder, that portion of the option
which had become exercisable on the date of death shall be exercisable by his or
her personal representatives, heirs, or legatees at any time prior to the
expiration of one (1) year from the date of the death of the option holder, but
in no event after the expiration of the exercise period. Except as the Board of
Directors shall provide otherwise, in the event an option holder ceases to be an
employee of the Corporation or of any of its Subsidiaries for any reason,
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including death, prior to the lapse of the waiting period, his option shall
terminate and be null and void.
(e) Other Provisions. Each option granted under the Management Plan may contain
such other terms, provisions, and conditions not inconsistent with the
Management Plan as may be determined by the Board of Directors.
9. STOCK APPRECIATION RIGHTS
The Board of Directors may grant, in its discretion, stock appreciation
rights to the holder of any stock option under the Management Plan. Such rights
shall be granted pursuant to a stock appreciation rights agreement in such form,
and not inconsistent with the Management Plan, as the Board of Directors shall
approve from time to time (and which may be incorporated in the stock option
agreement governing the terms of the related option) and shall include
substantially the following terms and conditions as the Board of Directors shall
determine:
(a) Grant. Each right shall relate to a specific option granted under the
Management Plan and shall be granted to the option holder either concurrently
with the grant of such option or at such later time as determined by the Board
of Directors.
(b) Exercise. A stock appreciation right shall entitle an option holder to
receive, without payment of cash or property to the Corporation, a number of
shares of Common Stock, cash, or a combination thereof in the amount determined
pursuant to Subsection 9(c) below. The Board of Directors shall determine
whether such payment shall be made in Common Stock, cash, or a combination
thereof. Unless otherwise determined by the Board of Directors, a right shall be
exercisable to no greater extent nor upon any more favorable conditions than its
related option is exercisable under Subsection 8(b) hereof. An option holder
wishing to exercise a right in accordance with this Subsection 9(b) shall give
written notice of such exercise to the Corporation, which notice shall state
that the holder of the right elects to exercise the right and the number of
shares in respect of which the right is being exercised. The effective date of
exercise of a right shall be the date on which the Corporation shall have
received such notice. Upon receipt of such notice, the Corporation shall (i)
deliver to the option holder or other person entitled to exercise the right, a
certificate or certificates representing such shares; and /or (ii) pay cash to
the option holder or other person entitled to exercise the right. The
Corporation shall pay all applicable transfer or issue taxes. Notwithstanding
the provisions of this section, no stock appreciation right may be exercised
within a period of six months on the date of grant of such stock appreciation
right and no stock appreciation right granted with respect to an ISO may be
exercised unless the fair market value of the Common Stock on the date of
exercise exceeds the exercise price of the ISO.
(c) Number of Shares or Amount of Cash. The number of shares
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which shall be issued pursuant to the exercise of a stock appreciation right
shall be determined by dividing (i) that portion, as elected by the option
holder, of the total number of shares which the option holder is eligible to
purchase pursuant to Subsection 8(b) hereof (and as adjusted pursuant to Section
12 hereof), multiplied by the amount (if any) by which the fair market value (as
determined in accordance with Subsection 8(a) hereof) of a share of Common Stock
on the exercise date exceeds the option exercise price of the related option; by
(ii) the fair market value of a share of Common stock on the exercise date. In
lieu of issuing shares of Common Stock on the exercise of a right, the Board of
Directors may elect to pay the cash equivalent of the fair market value on the
exercise date of any or all of the shares which would otherwise be issuable on
exercise of the right. No fractional shares shall be issued under this
Subsection 9(c). In lieu of fractional shares, the option holder shall be
entitled to receive a cash adjustment equal to the same fraction of the fair
market value per share of Common Stock on the date of exercise.
(d) Effect of Exercise. Upon the exercise of stock appreciation rights, the
related option shall be considered to have been exercised to the extent of the
number of shares of Common Stock with respect to which such stock appreciation
rights are exercised and shall be considered to have been exercised to that
extent for purposes of determining the number of shares of Common Stock
available for the grant of options under the Management Plan. Upon the exercise
or termination of the related option, the stock appreciation rights with respect
to such related option shall be considered to have been exercised or terminated
to the extent of the number of shares of Common Stock with respect to which the
related option was so exercised or terminated.
(e) Effect of Termination or Death. In the event that an option holder ceases to
be an employee or consultant of the Corporation or of any of its Subsidiaries
for any reason, his stock appreciation rights shall be exercisable only to the
extent and upon the conditions that their related options are exercisable under
Subsection 8(d).
10. LIMITED STOCK APPRECIATION RIGHTS
The Board of Directors may grant, in its discretion, limited stock
appreciation rights ("Limited Rights") to the holder of any option with respect
to all or a portion of the shares subject to such option. Such Limited Rights
shall be granted pursuant to an agreement in such form, and not inconsistent
with the Management Plan, as the Board of Directors shall approve from time to
time (and which may be incorporated in the stock option agreement governing the
terms of the related option) and shall include substantially the following terms
and conditions as the Board shall determine:
(a) Grants. A Limited Right may be granted concurrently with the grant of the
related option or at such later time as determined by the Board of Directors.
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(b) Exercise. Unless otherwise determined by the Board of Directors, a Limited
Right may be exercised only during the period (a) beginning on the first day
following any one of (i) the date of approval by the stockholders of the
Corporation of an Approved Transaction (as defined in Subsection 10(e) below),
(ii) the date of a Control Purchase (as defined in Subsection 10(e) below) or
(iii) the date of a Board Change (as defined in Subsection 10(e) below); and (b)
ending on the thirtieth day (or such other date specified in the stock option
agreement) following such date (such period herein referred to as the "Limited
Right Exercise Period"). Each Limited Right shall be exercisable during the
Limited Right Exercise Period only to the extent the related option is then
exercisable and in no event after the termination of the related option. Limited
Rights granted under the Management Plan shall be exercisable in whole or in
part by notice to the Corporation. Such notice shall state that the holder of
the Limited Rights elects to exercise the Limited Rights and the number of
shares in respect of which the Limited Rights are being exercised. The effective
date of exercise of a Limited Right shall be deemed to be the date on which the
Corporation shall have received such notice.
(c) Amount Paid Upon Exercise. Upon the exercise of Limited Rights, the holder
shall receive in cash an amount equal to the excess of (i) the fair market value
(as determined pursuant to Subsection 8(a) above), on the date of exercise of
such Limited Rights, of each share of Common Stock with respect to which such
Limited Right shall have been exercised; over (ii) the exercise price per share
of Common Stock subject to the related option.
(d) Effect of Exercise. Upon the exercise of Limited Rights, the related option
shall be considered to have been exercised to the extent of the number of shares
of Common Stock with respect to which such Limited Rights are exercised and
shall be considered to have been exercised to that extent for purposes of
determining the number of shares of Common Stock available for the grant of
options under the Management Plan. Upon the exercise or termination of the
related option, the Limited Rights with respect to such related option shall be
considered to have been exercised or terminated to the extent of the number of
shares of Common Stock with respect to which the related option was so exercised
or terminated.
(e) Definitions. For purposes of this Section 10:
(i) An "Approved Transaction" shall mean (A) any consolidation or
merger of the Corporation in which the Corporation is not the continuing or
surviving corporation or pursuant to which shares of Common Stock would be
converted into cash, securities, or other property, other than a merger of the
Corporation in which the holders of Common Stock immediately prior to the merger
have the same proportionate ownership of common stock of the surviving
corporation immediately after the merger; or (B) any sale, lease, exchange, or
other transfer (in one transaction or a series of related transactions) of all,
or substantially all, of the assets of the Corporation; or (C) the adoption of
any plan or proposal for
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the liquidation or dissolution of the Corporation.
(ii) A "Control Purchase" shall mean circumstances in which any person
(as such term is defined in Sections 13(d)(2) and 14(d)(2) of the Exchange Act),
corporation, or other entity (other than the Corporation or any employee benefit
plan sponsored by the Corporation or any of its Subsidiaries) (A) shall purchase
any common Stock of the Corporation (or securities convertible into the
Corporation's Common Stock) for cash, securities, or any other consideration
pursuant to a tender offer or exchange offer, without the prior consent of the
Board of Directors; or (B) shall become the "beneficial owner" (as such term is
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Corporation representing twenty-five percent (25%) or more of
the combined voting power of the then outstanding securities of the Corporation
ordinarily (and apart from rights accruing under special circumstances) having
the right to vote in the election of Directors (calculated as provided in
paragraph (d) of such Rule 13d-3 in the case of rights to acquire the
Corporation's securities).
(iii) A "Board Change" shall mean circumstances in which, during any
period of two consecutive years or less, individuals, who at the beginning of
such period constitute the entire Board, shall cease for any reason to
constitute a majority thereof unless the election, or the nomination for
election by the Corporation's stockholders, of each new director was approved by
a vote of at least a majority of the Directors then still in office.
11. RESTRICTED SHARES
The Board of Directors may authorize, in its discretion, the issuance
of restricted shares of Common Stock to Eligible Participants pursuant to
restricted share agreements in such form, and not inconsistent with the
Management Plan, as the Board of Directors shall approve from time to time. Any
amount of restricted shares issued shall be subject to the following terms:
(a) Restricted Period and Price. The Board of Directors shall prescribe
restrictions, terms, and conditions, including but not limited to the period
("restricted period") during which the holder must continue to render services
to the Corporation in order to retain the restricted shares, in addition to
those provided in the Management Plan. The Board shall determine the price, if
any, to be paid by the holder for the restricted shares. Upon forfeiture of any
restricted shares, any amount paid by the holder shall be repaid in full by the
Corporation.
(b) Issuance of Restricted Shares. Restricted shares, when issued, will
be represented by a stock certificate or certificates registered in the name of
the holder to whom such restricted shares shall have been awarded. During the
restricted period, certificates representing the restricted shares and any
securities constituting retained distributions (as defined below in Subsection
11(c)) shall bear a restrictive legend to the effect that ownership of the
restricted shares, and the enjoyment of all rights appurtenant thereto, are
subject to the restrictions, terms, and
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conditions provided in the Management Plan and the applicable restricted shares
agreement. Such certificates shall be deposited by such holder with the
Corporation, together with stock powers or other instruments of assignment, each
endorsed in blank, which will permit transfer to the Corporation of all or any
portion of the restricted shares and any retained distributions that shall be
forfeited or that shall not become vested in accordance with the Management Plan
and the applicable restricted shares agreement.
(c) Rights With Respect to Restricted Shares. Restricted shares shall
constitute issued and outstanding shares of Common Stock for all corporate
purposes. The holder will have the right to vote such restricted shares, to
receive and retain all regular cash dividends and such other distributions as
the Board may in its sole discretion designate, pay, or distribute on such
restricted shares, and to exercise all other rights, powers, and privileges of a
holder of Common Stock with respect to such restricted shares, with the
exception that (i) the holder will not be entitled to delivery of the stock
certificate or certificates representing such restricted shares until the
restricted period shall have expired and unless all other vesting requirements
with respect thereto shall have been fulfilled; (ii) the Corporation will retain
custody of the stock certificates representing the restricted shares during the
restricted period; (iii) other than regular cash dividends and such other
distributions as the Board may in its sole discretion designate, the Corporation
will retain custody of all distributions ("retained distributions") made or
declared with respect to the restricted shares (and such retained distributions
will be subject to the same restrictions, terms, and conditions as are
applicable to the restricted shares) until such time, if ever, as the restricted
shares with respect to which such retained distributions shall have been made,
paid, or declared shall have become vested, and such retained distributions
shall not bear interest or be segregated in separate accounts; (iv) the holder
may not sell, assign, transfer, pledge, exchange, encumber, or dispose of the
restricted shares or any retained distributions during the restricted period;
and (v) a breach of any restrictions, terms, or conditions provided in the
Management Plan or established by the Board with respect to any restricted
shares or retained distributions will cause a forfeiture of such restricted
shares and any retained distributions with respect thereto.
(d) Completion of Restricted Period. On the last day of the restricted
period with respect to each Award of restricted shares, and upon the
satisfaction of any other applicable restrictions, terms, and conditions, all or
part of such restricted shares shall become vested, and any retained
distributions with respect to such restricted shares shall become vested. Unless
the Administrator determines otherwise, any such restricted shares and retained
distributions that shall not have become vested upon the termination of
employment of the holder shall be forfeited to the Corporation, and the holder
shall not thereafter have any rights (including dividend and voting rights) with
respect to such restricted shares and retained distributions that shall have
been
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so forfeited, provided, however, that if a holder shall die, become totally
disabled, or be terminated by the Corporation without cause during a restricted
period with respect to any restricted shares, then, unless the restricted share
agreement relating to such shares provides otherwise, the restricted period
applicable to each Award of restricted shares to such holder shall be deemed to
have expired and all such restricted shares and retained distributions shall
become vested.
12. RECAPITALIZATION
In the event that dividends are payable in Common Stock or in the event
there are splits, subdivisions or combinations of shares of Common Stock, the
number of shares available under the Management Plan shall be increased or
decreased proportionately, as the case may be, and the number of shares
delivered upon the exercise hereafter of any stock option or stock appreciation
right, upon distribution pursuant to incentive stock rights theretofore granted
or issued pursuant to restricted share agreements theretofore entered into,
shall be increased or decreased proportionately, as the case may be, without
change in the aggregate purchase price (where applicable).
13. ACCELERATION
Notwithstanding any contrary waiting period in any stock option
agreement, any incentive period in any incentive stock rights agreement, or any
restricted period with respect to any restricted shares issued pursuant to any
restricted shares agreement or in the Management Plan, but subject to any
determination by the Board of Directors to provide otherwise at the time such
Award is granted or subsequent thereto, each outstanding option granted under
the Management Plan shall, except as otherwise provided in the stock option
agreement, become exercisable in full for the aggregate number of shares covered
thereby, and each share issuable upon lapse of an incentive period or each share
issued pursuant to a restricted share agreement, except as otherwise provided in
the incentive stock rights agreement or restricted share agreement, as the case
may be, shall vest unconditionally on the first day following the occurrence of
any of the following: (a) the approval by the stockholders of the Corporation of
an Approved Transaction; (b) a Control Purchase; or (c) a Board Change.
14. CONTINUATION OF RELATIONSHIP; LEAVE OF ABSENCE (a) Nothing in the
Management Plan or any Award made
hereunder shall interfere with, or limit in any way, the right of the
Corporation or of any of its Subsidiaries to terminate any Eligible
Participant's employment at any time, nor confer upon any Eligible Participant
any right to continue any such relationship with the Corporation or any of its
Subsidiaries.
(b) For purposes of the Management Plan, (i) a transfer of a recipient
of options, rights, or restricted shares hereunder from the Corporation to one
of its Subsidiaries or vice versa, or from one Subsidiary to another; or (ii) a
leave of absence duly
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authorized by the Corporation shall not be deemed a termination of employment or
a break in the incentive, waiting, exercise, or restricted period, as the case
may be. In the case of any employee on an approved leave of absence, the Board
of Directors may make such provisions with respect to continuance of stock
rights, options, or restricted shares previously granted while on leave from the
employ of the Corporation or one of its Subsidiaries as it may deem equitable.
15. GENERAL RESTRICTION
Each Award made under the Management Plan shall be subject to the
requirement that, if at any time the Board of Directors shall determine, in it
sole and subjective discretion, that (i) the registration, qualification, or
listing of the shares subject to such Award upon a securities exchange or under
any state or federal law; or (ii) the consent or approval of any governmental
regulatory body is necessary or desirable as a condition of, or in connection
with, the granting or exercise of such Award, the Corporation shall not be
required to issue such shares unless such registration, qualification, listing,
consent, or approval shall have been effected or obtained free of any conditions
not acceptable to the Board of Directors. Nothing in the Management Plan or any
agreement or grant hereunder shall obligate the Corporation to effect any such
registration, qualification or listing.
16. RIGHTS AS A STOCKHOLDER
The holder of a stock option, incentive stock right, or limited stock
appreciation right shall have no rights as a stockholder with respect to any
shares covered by the stock option, incentive stock right, stock appreciation
right, or limited stock appreciation right, as the case may be, until the date
of issuance of a stock certificate to him for such shares related to the
exercise or discharge thereof. No adjustment shall be made for the dividends or
other rights for which the record date is prior to the date such stock
certificate is issued.
17. NONASSIGNABILITY OF AWARDS
No incentive stock right, stock option, stock appreciation right, or
limited stock appreciation right shall be assignable or transferable by an
Eligible Participant except by will or by the laws of descent and distribution,
and during the lifetime of an Eligible Participant, such incentive stock rights,
stock options, stock appreciation rights, or limited stock appreciation rights
may only be exercised by him.
18. WITHHOLDING TAXES
Whenever under the Management Plan shares are to be issued in
satisfaction of stock options, incentive stock rights, stock appreciation
rights, or limited stock appreciation rights granted thereunder, or pursuant to
restricted share agreements, the Corporation shall have the right to require the
Eligible Participant to remit to the Corporation an amount sufficient to satisfy
federal, state, and local withholding tax requirements prior to the delivery of
any certificate or certificates for such
29
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shares or at such later time as when the Corporation may determine that such
taxes are due. Whenever under the Management Plan payments are to be made in
cash, such payments shall be net of an amount sufficient to satisfy federal,
state, and local withholding tax requirements.
19. NONEXCLUSIVITY OF THE PLAN
Neither the adoption of the Management Plan by the Board of Directors
nor any provision of the Management Plan shall be construed as creating any
limitations on the power of the Board (but not the Committee) to adopt such
additional compensation agreements as it may deem desirable, including, without
limitation, the granting of stock options otherwise than under the Management
Plan, and such arrangements may be either generally applicable or applicable
only in specific cases.
20. AMENDMENT, SUSPENSION, OR TERMINATION OF THE PLAN The Board of
Directors (but not the Committee) may at any time
amend, alter, suspend, or discontinue the Management Plan, but no amendment,
alteration, suspension, or discontinuation which would impair the rights of any
recipient of a stock option, incentive stock right, limited stock appreciations
right, or restricted share under any agreement theretofore entered into
hereunder, shall be made without such recipient's consent. No amendment,
alteration, suspension, or discontinuation shall be made which, without the
requisite vote of the stockholders of the Corporation approving such action,
would:
(a) except as is provided in Section 12 of the Management Plan,
increase the total number of shares of stock reserved for the purposes of the
Management Plan; or
(b) extend the duration of the Management Plan; or
(c) materially increase the benefits accruing to participants under the
Management Plan; or
(d) change the category of persons who can be Eligible Participants
under the Management Plan. Without limiting the foregoing, the Board of
Directors may, any time or from time to time, authorize the Corporation, without
the consent of the respective recipients, to issue new options or rights in
exchange for the surrender and cancellation of any or all outstanding options or
rights.
21. LIMITATIONS ON EXERCISE
Notwithstanding anything to the contrary contained in the Management
Plan, any agreement evidencing any Award hereunder may contain such provisions
as the Board deems appropriate to ensure that the penalty provisions of Section
4999 of the Code, or any successor thereto, will not apply to any stock or cash
received by the holder from the Corporation.
22. GOVERNING LAW
The management Plan shall be governed by, and construed in accordance
with, the laws of the State of New York.
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<PAGE>
ADOPTION OF CORPORATE RESOLUTIONS
UPON UNANIMOUS WRITTEN CONSENT
OF THE BOARD OF DIRECTORS
OF U.S. BRIDGE OF N.Y., INC.
The undersigned, being all of the Directors of U.S. Bridge of N.Y.,
Inc. (the "Company"), a New York corporation, do hereby adopt, pursuant to the
New York Business Corporation Law and the Company's By-laws, the following
resolutions with the same force and effect as if same had been adopted at a
meeting of the Board of Directors duly called therefor:
RESOLVED, that the Company be, and same hereby is, authorized to issue
340,000 shares of Common Stock (the "Common Stock") in the third quarter of its
1998 fiscal year, as follows:
Pursuant to its Senior Management Incentive Plan (the "Plan"),
the Company shall issue 150,000 shares to Joseph M. Polito,
70,000 shares to Ronald J. Polito, and 70,000 shares to Steven
J. Polito.
The Company shall also issue 25,000 shares to Klarman &
Associates, 15,000 to Richard Miller, and 10,000 shares to
certain employees of the Company as indicated on the schedule
annexed hereto as Appendix A and it was further
RESOLVED, that the Company is authorized, pursuant to approval of its
majority shareholder, USABG Corp ("Corp."), to prepare and file a Post-Effective
Amendment to the Form S-8 initially filed with the SEC on February 24, 1997
wherein the Company shall register the sale of the aforementioned shares of
Common Stock; and it was further
RESOLVED, that the Officers of the Company be, and same hereby are,
authorized and directed to take such steps and to execute and deliver for and on
behalf of the Company such documents as are necessary to consummate the
foregoing resolution.
IN WITNESS WHEREOF, the undersigned, being all of the members of the
Board of Directors, do hereby execute this consent as of the 5th day of
December, 1997.
/S/Joseph M. Polito /S/ Ronald J. Polito /S/ Steven J. Polito
- ------------------- -------------------- --------------------
Joseph M. Polito Ronald J. Polito Steven J. Polito
/S/ Philip Nielson
- ------------------ ----------------
Philip Nielson Marvin Weinstein
31
<PAGE>
ADOPTION OF CORPORATE RESOLUTIONS
UPON UNANIMOUS WRITTEN CONSENT
OF THE BOARD OF DIRECTORS
OF U.S. BRIDGE OF N.Y., INC.
The undersigned, being all of the Directors of U.S. Bridge of N.Y.,
Inc. (the "Company"), a New York corporation, do hereby adopt, pursuant to the
New York Business Corporation Law and the Company's By-laws, the following
resolutions with the same force and effect as if same had been adopted at a
meeting of the Board of Directors duly called therefor:
RESOLVED, that the Company be, and same hereby is, authorized to issue
340,000 shares of Common Stock (the "Common Stock") in the third quarter of its
1998 fiscal year, as follows:
Pursuant to its Senior Management Incentive Plan (the "Plan"),
the Company shall issue 150,000 shares to Joseph M. Polito,
70,000 shares to Ronald J. Polito, and 70,000 shares to Steven
J. Polito.
The Company shall also issue 25,000 shares to Klarman &
Associates, 15,000 to Richard Miller, and 10,000 shares to
certain employees of the Company as indicated on the schedule
annexed hereto as Appendix A and it was further
RESOLVED, that the Company is authorized, pursuant to approval of its
majority shareholder, USABG Corp ("Corp."), to prepare and file a Post-Effective
Amendment to the Form S-8 initially filed with the SEC on February 24, 1997
wherein the Company shall register the sale of the aforementioned shares of
Common Stock; and it was further
RESOLVED, that the Officers of the Company be, and same hereby are,
authorized and directed to take such steps and to execute and deliver for and on
behalf of the Company such documents as are necessary to consummate the
foregoing resolution.
IN WITNESS WHEREOF, the undersigned, being all of the members of the
Board of Directors, do hereby execute this consent as of the 5th day of
December, 1997.
/S/ Joseph M. Polito /S/ Ronald J. Polito /S/ Steven J. Polito
- -------------------- -------------------- --------------------
Joseph M. Polito Ronald J. Polito Steven J. Polito
/S/ Marvin Weinstein
- -------------- --------------------
Philip Nielson Marvin Weinstein
32
EXHIBIT 5
OPINION OF SOL FREEDMAN, ESQ.
33
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LAW OFFICES OF SOL FREEDMAN 100 Merrick Road (East Building)
Rockville Centre, NY 11570
(516) 763-3200 FAX (516) 763-3243
Of Counsel
Herbert Cooks
July 17, 1998
USA Bridge Construction of N.Y., Inc.
53-09 97th Place
Corona, New York 11368
Att: Mr. Joseph Polito, President
Re: Form S-8 Registration Statement
290,000 Shares of Common Stock
$.001 par value per share
Gentlemen:
I have acted as counsel in connection with the filing by USA Bridge Construction
of N.Y., Inc. (the "Company") with the Securities and Exchange Commission, of a
Registration Statement on Form S-8, under the Securities Act of 1933, as
amended, with respect to the registration of an aggregate of 290,000 shares of
the Common Stock of the Company, $.001 par value per share (the "Shares"),
issued by the Company pursuant to its 1994 Senior Management Incentive Plan
namely 290,000 shares at $2.125 per share.
I have examined such originals or certified, conformed or photostatic copies,
the authenticity of which we have assumed, of certificates of public officials
and your corporate directors and other documents, certificates, records,
authorizations and proceedings as I have deemed relevant and necessary as the
basis for the opinion expressed herein. In all such examinations, I have assumed
the genuineness of all signatures on all original and certified documents and
all copies submitted to me as conformed or photostatic copies.
I render no opinion as to the laws of any jurisdiction other than the internal
laws, and, in particular, the internal corporate law of the State of New York.
34
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Page 2
July 17, 1998
Based on the foregoing, I am of the opinion that the Shares referred to herein,
when sold as set forth in the Registration Statement, will be legally issued,
fully paid and non-assessable.
I hereby consent to the filing of my opinion as an exhibit to the Registration
Statement.
Very truly yours,
/S/ Sol Freedman
----------------
SOL FREEDMAN
SF:j
le.co3
34
EXHIBIT 23.1
CONSENT OF SCARANO & TOMARO, P.C.
36
<PAGE>
SCARANO & TOMARO, P.C. 125 Michael Drive, Suite 101
Certified Public Accountants & Syosset, New York 11791
Consultants 516 364-0300 FAX: 516 364-3003
Member of the SEC Practice Section
AICPA Division for CPA Firms
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
USA Bridge Construction of N.Y., Inc.
53-09 97th Place
Corona, NY 11368
As independent certified public accountants, we hereby consent to the
incorporation by reference in this Form S-8 registration statement of our report
dated October 4, 1997, for USA Bridge Construction of N.Y., Inc. for the year
ended June 30, 1997.
/S/ Scarano & Tomaro, P.C.
- --------------------------
Scarano & Tomaro, P.C.
Syosset, New York
July 17, 1998
37
<PAGE>
PROSPECTUS
290,000 SHARES
USA BRIDGE CONSTRUCTION OF N.Y., INC.
COMMON STOCK
($.001 Par Value)
USA BRIDGE CONSTRUCTION OF N.Y., INC. (the "Company" or the
"Registrant") is registering an aggregate 290,000 shares of Common Stock (the
"Shares") which Shares were issued in March, 1998 in escrow, pending vesting
(see "Selling Shareholders") pursuant to the Company's 1994 Senior Management
Incentive Plan (the "Management Plan") as follows: 150,000 were issued to Joseph
M. Polito, the Company's President and Director, 70,000 were issued to Ronald J.
Polito, the Company's Secretary and Director, and 70,000 were issued to Steven
J. Polito, the Company's Treasurer. These Officers are hereinafter referred to
as the "Selling Shareholders". The Selling Shareholders may offer the Shares for
sale as principals for their own account at any time and from time to time on
the NASDAQ National Stock Market ("NASDAQ") or otherwise at prices prevailing at
the time of sale or in private sales at prices to be negotiated. The Selling
Shareholders, upon sale of the Shares of Common Stock offered hereby will
receive the entire proceeds from such sale (see "Selling Shareholders"). Such
Selling Shareholders may be deemed to be affiliates of the Company, as that term
is defined under Rule 405 of the Securities Act of 1933, as amended.
-------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS".
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO
MAKE ANY REPRESENTATIONS OTHER THAN AS CONTAINED HEREIN IN CONNECTION WITH THE
OFFER CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR ANY PERSON. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS
PROSPECTUS DOES NOT CONSTITUTE ANY OFFER OR SOLICITATION BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION MAY NOT BE LAWFULLY MADE.
The date of this Prospectus is ______________, 1998
38
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange
Commission (the "Commission") a Registration Statement on Form S-8 under the
Securities Act, with respect to the shares of Common Stock to which this
Prospectus relates. As permitted by the rules and regulations of the Commission,
this Prospectus does not contain all of the information set forth in the
Registration Statement. For further information with respect to the Company and
the Securities offered hereby, reference is made to the Registration Statement,
including the exhibits thereto, which may be copied and inspected at the Public
Reference Section of the Commission at its principal office at 450 Fifth Street,
N.W., Washington, D.C. 20549. The Commission maintains a Web site that contains
reports, proxy and information statements, and other information which is filed
electronically through the Commission's Edgar system, all of which information
may be viewed through accessing the Commission's Web site located at
http://www.sec.gov.
The Company's fiscal year end is June 30. The Company is
subject to the informational reporting requirements of the Exchange Act and in
accordance therewith, files periodic reports, proxy statements, and other
information with the Commission. In the event the Company's obligation to file
such periodic reports, proxy statements, and other information is suspended, the
Company will voluntarily continue to file such information with the Commission.
The Company will distribute to its stockholders annual reports containing
audited financial statements together with an opinion by its auditing
accountants. In addition, the Company may, in its discretion, furnish quarterly
reports to stockholders containing unaudited financial information for the first
three quarters of each year.
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<PAGE>
USA BRIDGE CONSTRUCTION OF N.Y., INC.
CROSS REFERENCE SHEET
Pursuant to Item 501(b) of Regulation S-K
Registration Statement Caption or
Item Number and Caption Location in Prospectus
1. Forepart of the Registration State- Cover Page of Prospectus
ment and Outside Front Cover Page of
Prospectus
2. Inside Front and Outside Back Cover Inside Front and Outside
Pages of Prospectus Back Cover Pages of
Prospectus
3. Summary Information, Risk Factors Prospectus Summary, Risk
and Ratio of Earnings to Fixed Charges Factors, Description of
Plan
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price Not Applicable
6. Dilution Not Applicable
7. Selling Security Holders Selling Shareholders
8. Plan of Distribution Selling Shareholders
9. Description of Securities to be Description of Plan
Registered
10. Interests of Named Experts and Legal Opinion
Counsel.
11. Material Changes Not Applicable
12. Incorporation of Certain Informa- Incorporation of
tion by Reference Documents by Reference
13. Disclosure of Commission Position Indemnification of
on Indemnification for Securities Act Directors and Officers;
Liabilities Undertakings
14. Indemnification of Directors and Indemnification of
Officers Directors and Officers
15. Exemption from Registration Claimed Exemption from
Registration Claimed
16. Exhibits Exhibits
17. Undertakings Undertakings
40
<PAGE>
PROSPECTUS SUMMARY
The following summary is intended to set forth certain pertinent facts and
highlights from material contained in the body of this Prospectus. The summary
is qualified in its entirety by, and should be read in conjunction with, the
detailed information and financial statements appearing elsewhere in this
Prospectus. Statements contained in this Prospectus which are not historical
facts are forward looking statements as defined under the Private Securities
Litigation Reform Act of 1995. These forward looking statements include
statements with respect to plans, projections, or future performance of the
Company and are subject to risks and uncertainties which could cause actual
results to differ materially from those projected.
USA Bridge Construction of N.Y., Inc. (the "Company") was incorporated
in the State of New York, on September 4, 1990, as Metro Steel Structures, Ltd.
The Company's current name was established via the filing, in January 1998, of
an amendment to its Certificate of Incorporation.
The Company commenced operations in or about June 1993 to serve
primarily as a general contractor for construction projects sponsored by
federal, state, and local government authorities in the New York State and
Metropolitan areas. Though formed to operate as a general contractor, the
Company operated initially only as a subcontractor. The Company's goals were to
become a general contractor for municipal projects; however, since the Company
has been unable to obtain bonding from a New York licensed bond company, it has
been unable to undertake general contracting projects for New York State and
City agencies. However, the Company has provided steel erection for building,
roadway, and bridge repair projects for general contractors who had been engaged
by private and municipal/governmental customers. In May 1998, the Company's bid
on a project to build a medical building in Queens, New York was accepted by the
developer thereof, 47-01 Queens Blvd., Realty Corp. The Company shall act as
general contractor for the project as well as a subcontractor providing
structural steel fabrication and erection therefor. The project is valued at
approximately $2.4 million. In addition, the Company has been given the
exclusive right to perform the interior tenant work on the medical building
which is valued at approximately $3 million. The Company expects to have
executed all relevant contracts with respect to this project and to commence
work on same by the middle of August 1998.
As of March 31, 1998, the Company completed in excess of twenty-one
(21) projects with an aggregate project value of approximately $40,000,000 and
was engaged in two (2) projects with an aggregate value of approximately
$10,790,000. The Company plans to maintain its subcontractor presence in the
steel industry; however, it intends also to focus on obtaining projects as a
general contractor. During fiscal year ended June 30, 1998, the Company did not
act as a general contractor for any of its projects and, hence, did not generate
any revenues as such.
In recent years there has been a resurgence in the construction
industry in the New York Metropolitan Area. Major transportation arteries in New
York are under extensive
41
<PAGE>
construction to increase their ability to handle the ever increasing volumes of
traffic they carry. Work is in progress on the major thruways, expressways, and
parkways across New York State. The Company is preparing subcontracting and
general contracting bids for some of the roadway projects in the Metropolitan
area and is continuing to submit bids on private projects as well.
The Company obtains its projects primarily through the process of
competitive bidding. In response to bid requests, the Company submits to the
soliciting entity a proposal detailing its qualifications, the services to be
provided, and the cost of its services. Based on an evaluation of the proposals
submitted, the soliciting entity awards the contract to the bidder it deems
appropriate.
The Company shall continue to bid on both private and public sector
projects as a general contractor and a subcontractor. Most of the steel
fabrication projects, both public and private sector, require Bid Bonds and
Payment and Performance Bonds. Rarely do the steel erection projects require
such bonds, and when the Company performs erection and fabrication services
together on a project, typically only the fabrication portion of the job is
bonded. The Company's ability to obtain bonding and its bonding capacity are
primarily determined by its net worth, liquid working capital (consisting of
cash and accounts receivable), past performance, management expertise, the
number and size of projects under construction, and various other factors.
In December 1996, for its general contracting projects, the Company
obtained a commitment for a Surety Bond Line of Credit ($10,000,000 single
project limit) from United American Guarantee Company, Ltd. ("UAGC"). This
commitment allows the Company to pursue those general contracting projects in
the public and private sectors which require Performance Bonds. To date, it has
also allowed the Company to obtain Performance Bonds and Labor and Material
Bonds for the three projects which have required same: the EklecCo. prime
contracting project which terminated in November 1997, the Grand Central
terminal subcontracting project, and the Korean Mission subcontracting project
which terminated in January 1998. Since New York State and City agencies require
bonds from bonding companies licensed by the State of New York, however, and
UAGC is not a New York licensed bonding company, the Company is as yet unable to
bid as a general contractor on projects for New York State and City Agencies.
The Company's executive offices are located at 53-09 97th Place,
Corona, New York 11368. The Company's telephone number at its principal office
is (718) 699-0100.
42
<PAGE>
RISK FACTORS
The Securities offered hereby are speculative and involve a high degree
of risk. The purchase of Securities should not be considered by anyone who
cannot afford the risk of loss of his entire investment. The statements
contained in this Prospectus which are not historical facts contain forward
looking information with respect to plans, projections, or future performances
of the Company, the occurrences of which involve certain risks and uncertainties
as detailed herein.
1. Unanticipated Costs, Expenses, and Difficulties in Commencing
Projects as a General Contractor. Although the Company and Mr. Polito have
experience as subcontractors in the erection and fabrication of steel
structures, neither has experience as a general contractor. The Company is
expanding its operations and is seeking projects in its capacity as a general
contractor, however. There can be no assurances that the Company will be able to
implement this aspect of its business plan successfully or that unanticipated
expenses, problems, or difficulties will not result in material delays in the
implementation or ability of the Company to implement such plan.
As general contractor, the Company will contract directly with
the owner to perform an entire project at a set value. The Company will be
responsible for all aspects of the project and will be required to hire and
oversee the work of subcontractors. In addition to the unanticipated costs or
problems that may be incurred as a general contractor, many contracts are also
subject to completion requirements with liquidated damages assessed against the
Company if schedules are not met. The Company has not been materially adversely
affected by these provisions in the past as a subcontractor. The Company has
submitted general contracting bids on several public and private sector
projects, one of which such bids has been accepted. Work on the project is
expected to commence in July 1998.
The Company has also commenced two projects as a prime
contractor. A prime contractor is a contractor which performs a specific
category of work on a project. Unlike the general contractor, the prime
contractor is responsible for performance of that category alone, not the entire
project. Like the general contractor, the prime contractor typically contracts
directly with the owner or via the owner's construction manager acting as agent
therefor; thus, unlike the subcontractor, the prime contractor is responsible
exclusively to the owner.
2. Dependence on Bonding; Bonding Requirements. As a general
contractor, and to some extent as a subcontractor, the Company anticipates being
required to provide bonding in the form of Bid and/or Performance Bonds. Most
government contracts require bonding. Bids are submitted to the company
accepting the bids together with Bid Bonds. A Bid Bond is a bond issued by a
bonding company which is usually in an amount equal to 10% of the bid price and
which guarantees that the contractor will be able to produce such other
additional documents and information required in order to commence the project
including the issuance of a Performance Bond. A Performance Bond is a guarantee
by a
43
<PAGE>
surety, customarily 100% of the value of the contract amount, that the
contractor will complete the project pursuant to the terms and conditions of the
contract.
In determining whether to issue a bond, surety companies
perform credit checks and other due diligence and investigate the Company's
capitalization, working capital, past performance, management's expertise, and
other factors. The surety companies require companies receiving bonding to
maintain certain amounts of capital and liquid assets and base the amount of
bonding they will issue on a formula, which is usually based on certain industry
standards which take into account such factors. The surety companies also
require that the bonds be personally guaranteed by Mr. Polito.
3. Inability to Obtain New York State and City Agency Projects as a
General Contractor. New York State and City agencies require bonds from bonding
companies they have approved. The Company has received bonding from a company
which is not approved for state and city projects; therefore, the Company is
unable to bid as a general contractor on projects for New York State and City
agencies. The Company has approached several New York approved bonding
companies; however, as of the date hereof, it has not been approved by any such
company to receive bonding.
There can be no assurance that the Company will be able to
obtain bonding from a New York licensed bonding company. In addition, new or
proposed legislation in various jurisdictions may require the posting of
substantial additional bonds or require other financial assurances for
particular projects. Therefore, there can be no assurances that the Company will
be able to implement its proposed business plan to obtain projects as a general
contractor. See "Business - The Company," "-- The Contract Process; Bidding" and
"-- Insurance and Bonding."
4. Risk Associated with Type of Bid. There are two types of bid
requests made by a soliciting entity: a unit cost bid and a lump-sum bid. The
unit cost bid is based upon a cost per unit basis; a lump-sum bid obligates the
Company to complete the project at a fixed price. With a lump-sum bid, the risk
of estimating the quantity of units required for a particular project is on the
Company, while with a unit cost bid, the Company must estimate the per unit
cost, not the number of units needed. Any increase in the Company's unit cost
over its unit bid price or cost over its lump-sum bid, whether due to
inefficiency, faulty estimates, weather, inflation, or other factors, must be
borne by the Company and may adversely affect its results of operations. See
"Business - The Contract Process; Bidding."
5. Amount and Concentration of Construction Projects and Receivables.
For the year ended June 30, 1997, the Company had three unrelated customers,
which accounted for approximately 86% of total revenues. For the nine months
ended March 31, 1998, the Company had three unrelated customers, which accounted
for approximately 84% of total revenues. At June 30, 1997 and March 31, 1998,
approximately 83% and 72% of contracts receivables are due from four and two
customers, respectively. The discontinuance of any of these projects, or a
general economic downturn in the State of New York, in which the projects are
located, could have a material adverse effect on the Company's results of
44
<PAGE>
operations. See "Business - Work in Progress; Backlog and Concentration of
Customers."
6. Competition. All aspects of the Company's business are and will
continue to be highly competitive. Many subcontractors and general contractors
have substantially greater personnel and financial resources and sales than
those of the Company. When general contractors seek construction contracts, they
request bids from numerous subcontractors based on the various requirements of
the project. These subcontractors compete primarily as to price, name
recognition, and prior performance. Given Joseph Polito's (and many of his
employees') thirty plus year presence in the construction industry, the Company
believes its name is readily recognized by virtue of association therewith. As
for the Company's prior performance, while the Company has operated only since
1993, Atlas Gem Erectors Co. Inc. ("Atlas Gem") - a former steel erector
subcontractor or prime contractor for private and governmental construction
projects - was incorporated in 1986 and operated as such until the Company
purchased from it, in 1993, six then existing contracts (Stillwell Avenue, 39th
Street Bridge Rehabilitation, Honeywell Street Bridge, New England Throughway,
Lemon Creek and Kosciuszko Bridge projects) for steel erection services. Mr.
Polito was the President, Director, and sole shareholder of Atlas Gem; thus, his
prior performance is identifiable.
In steel erection, the Company competes with the following
construction companies, all of which are of the approximate same size as (or
larger than) the Company: American Bridge Co.; Empire City Iron Works; Falcon
Steel Co., Inc.; Grow Tunneling Corp.; Karl Koch Erecting Co., Inc.; A.J.
McNulty & Co., Inc.; Metro Steel Company, Inc.; Midlantic Erectors, Inc.;
Midwest Steel, Inc./Canron; Rice Mohawk U.S. Construction Co.; Steel Services
Corporation; and Thunderbird Constructors, Inc. In general contracting, the
Company competes with AFC Enterprises, Inc.; Felix Industries; Frontier Kemper
Construction; Halmar Contracting; John P. Picone, Inc.; Judlau Contracting,
Inc.; Keystone Construction; Kiska Construction Corp.; R.A. Gottlieb, Inc;
Seacrest Construction Co.; Schiavone Construction; Silverite Construction Co.;
Yonkers Contracting Co., Inc.; and Zollo Construction Corp.
Thus, the Company will be competing with many larger and more
experienced (and thus more established) contractors whose names are more readily
recognized and whose relationships with federal and state municipalities and
agencies - and those private companies who solicit bids for bridge and roadway
repair and replacement projects and furnishment and erection of steel structure
for buildings projects - have been established. The Company's competitors are
numerous, and many have substantially greater research and development,
marketing, financial, and human resources than the Company. There can be no
assurance that the Company will be able to compete successfully. See Risk Factor
13. - "Dependence on Management; Ailing Health of Joseph Polito" and "Business -
Competition."
7. Dependence on Suppliers; Subcontractors; Union Employees. The
Company receives approximately 60% of the steel it requires from Hirschfeld
Steel Co., Inc. ("Hirschfeld"). The Company currently depends upon various
vendors to supply spare parts,
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cranes, and other heavy equipment, and its ability to hire skilled workers
depends upon its ability to comply with certain union agreements and contracts.
The Company does not depend on any one vendor to provide it with spare parts,
cranes, and other heavy equipment. The Company rents an immaterial amount of
cranes from Crown Crane, Inc. ("Crown"), a company of which Joseph Polito is a
50% shareholder, and an immaterial amount of generators and other equipment from
Atlas Gem Leasing Inc. ("AGLI"), a company which is wholly owned by Joseph
Polito. The Company believes that there are a sufficient number of vendors so
that in the event any individual or group of vendors can no longer service the
Company's needs, the Company will be able to find other vendors at competitive
prices.
The Company hires skilled steel workers represented by the
International Union of Structural Ironworkers, Locals 40, 361, & 417 and
International Operating Engineers Locals 14, 14B, 15, 15A, 15C, 15D, and 825 and
Cement Masons Local 472 (collectively referred to as the "Unions"). The Company
must comply with agreements with the unions, which agreements regulate all
employment issues - including pay, overtime, working conditions, vacations,
benefits, etc. - between the Company and the union employees. These agreements
expire on June 30, 1999. No assurance can be given that the Company will
continue to be in compliance with the Unions or successfully negotiate
extensions to the Company's agreements with such Unions. In the event problems
or conflicts with the Unions arise or there is a loss of skilled steel and
operating engineers, this would have a detrimental effect on the Company's
operations.
The Company's success as a general contractor, in part, will
be dependent upon its ability to hire workers and comply with union contracts
and agreements and to oversee and retain qualified subcontractors to perform
certain work for projects the Company receives as general contractor. Although
the Company believes that it will be able to attract subcontractors to bid on
projects it bids as general contractor, there can be no assurances that the
Company will in fact be able to attract such subcontractors. As a general
contractor, the Company will be responsible for performance of the entire
contract, including the work to be performed by subcontractors. Accordingly, the
Company may be subject to substantial liability if a subcontractor fails to
perform as required. In addition, unanticipated difficulties may arise in hiring
and overseeing subcontractors. See "Business - Suppliers and Subcontractors" and
"-- The Contract Process."
8. Government Regulation; Potential Liability for Environmental Damages
and Personal Injuries. The Company must comply with the Occupational Safety and
Health Administration ("OSHA"), a federal agency which regulates and enforces
the safety rules and standards for the construction industry. It also must
comply with (i) the New York City Department of Buildings, which regulates the
placement and testing of cranes; and (ii) the New York Department of
Transportation which regulates the location of the cranes, vehicular traffic,
and the routing of pedestrian traffic. In addition, the Company must comply with
a wide range of other state and local rules and regulations applicable to its
business, including regulations covering labor relations, safety standards,
affirmative action, and the protection of the environment including requirements
in connection with water discharge,
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air emissions, and hazardous and toxic substance discharge. Continued compliance
with OSHA and the broad federal, state, and local regulatory network is
essential and costly, and the failure to comply with such regulations may have
an adverse effect on the Company's operations.
The construction industry is subject to significant risks of
statutory, contractual, and common law liability for environmental damages and
personal injury. The Company, and in certain instances, its Officers, Directors,
and employees, may be liable for claims arising from its on-site or off-site
services, including mishandling of hazardous or nonhazardous waste materials or
environmental contamination caused by the Company or its subcontractors, the
costs of which could be substantial, even if the Company exercises due care and
complies with all relevant laws and regulations. The Company is also subject to
worker and third party claims for personal injury, resulting in substantial
liability for which it may be uninsured. The Company carries insurance which it
considers sufficient to meet regulatory and customer requirements and to protect
the Company's assets and operations. Nevertheless, an uninsured claim against
the Company could have a material adverse effect on the Company's financial
condition and results of operations. Moreover, any inability to obtain insurance
of the type and in the amounts required in connection with specific projects
could impair the Company's ability to bid on or complete such projects. See
"Business Government Regulations" and " --Litigation."
9. Payroll Taxes. As of March 31, 1998, the Company owed withholding
taxes, including estimated penalties and interest, in the approximate aggregate
amount of $2,056,351, to the Internal Revenue Service and New York State. If
such amounts are not paid by the Company, the state and city agencies can levy
on the accounts, assets, and future earnings of the Company which levy could
potentially force the Company to cease operations. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations - Liquidity and
Capital Resources for Plan of Payment."
10. Seasonality; Weather Conditions. Though the Company does not
believe its business is seasonal, its operations slow during the winter months
due to the decreased productivity of the workers caused by the inability to work
in severe weather conditions. As a result of the foregoing, the Company's costs
are increased.
11. Control by Management, USABG Corp., and Joseph Polito. Joseph
Polito, President and a Director, owns approximately 66.3% of the common stock
of the Company's parent, USABG Corp. ("Corp."). Accordingly, Mr. Polito, through
his ownership of Corp., will continue to be able to elect the entire Board of
Directors of the Company and to direct the affairs of the Company.
On consummation of the Offering, a Special Warrant was issued
by the Company to Corp. The Special Warrant entitles Corp. to purchase shares of
Common Stock at an exercise price of $2.50, during the term when any of the
Warrants are exercisable, if exercise of the Company's Warrants decreases
Corp.'s ownership of Common Stock to a percentage below 50.1%. In such event,
Corp. will be able to exercise the Special Warrant
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and purchase shares of Common stock for $2.50 per share until the number of
shares of Common Stock acquired upon exercise shall increase its ownership of
the Company's Common Stock to a maximum of 50.1% of the issued and outstanding
shares of Common Stock on the date of exercise. In addition to the Special
Warrant, the Company agreed to issue to Corp. one share of its Series A
Preferred Stock for every ten shares of Common Stock issued pursuant to the
exercise of the Warrants. Each share of Series A Preferred Stock has the right
to ten votes on all matters submitted to a vote of the shareholders. See
"Description of Securities - Series A Preferred Stock" and "--Special Warrant."
12. Conflicts of Interest. Joseph Polito estimates that he devotes 80%
of his business time to the operations of the Company and a combined 20% to all
of the other companies he owns and operates. Because Mr. Polito is an Officer,
Director, and principal shareholder in other companies, some of which transact
business with the Company, certain issues may pose conflicts of interest, and
decisions made by Mr. Polito with respect to such issues may compromise Mr.
Polito's fiduciary duty to the Company. Any remedy under state law, in the event
such circumstances arise, most likely would be prohibitively expensive and time
consuming.
In June 1995, the Board of Directors formed an audit
committee which comprises two outside Directors and one inside Director, Ronald
Polito. The audit committee reviews the Company's audited financial statements
and any potential conflicts of interest between any of the Company's Officers,
Directors, employees, affiliates, or associates. In addition to the audit
committee reviewing and resolving any conflicts of interest, the Officers and
Directors of the Company have a fiduciary obligation to deal fairly and in good
faith with the Company. See "Management," "Certain Relationships and Related
Transactions," "Business - History" and "Description of Securities."
13. Dependence on Management; Ailing Health of Joseph Polito. The
Company is dependent upon the personal efforts and abilities of Joseph Polito,
the Company's President and the majority shareholder of Corp. (the Company's
parent). Mr. Polito has been active in the construction industry for in excess
of thirty years and it is through his name and personal and professional
relationships with general contractors that the Company is widely recognized in
the industry. In April 1995, Mr. Polito entered into a three year employment
agreement with the Company: the agreement expires in June 1998. Pursuant to the
terms of the agreement, he is restricted from competing with the Company. Mr.
Polito has agreed to devote 80% of his business time to the operations of the
Company.
Mr. Polito's cardiologist and neurologist have diagnosed him
with (i) coronary artery disease, severe angina, significant hypertension, and
(ii) cerebrovascular compromise and recurrent TIA, respectively. These diagnoses
are indicative of a high probability of acute heart attack, stroke, and possibly
sudden death given high levels of stress and anxiety. The threat of such
occurrences has prevented and shall continue to prevent Mr. Polito from
performing certain functions, such as completing full work weeks or working
excessive hours, which would exert too great a physical strain on his health.
Because the relationships forged by Mr. Polito throughout the years in the
industry are a significant factor in the Company's
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obtaining projects from general contractors, the loss of the services of Mr.
Polito would adversely affect the business of the Company. Neither the Company
nor Corp. has key-man insurance on the lives of Mr. Polito or any other Officer
or Director. See "Management - Employment Agreements."
14. Indemnification of Officers and Directors. As permitted under the
New York Business Corporation Law, the Company's Certificate of Incorporation
provides for the indemnification and elimination of the personal liability of
the Directors to the Company or any of its shareholders for damages for breaches
of their fiduciary duty as Directors. As a result of the inclusion of such
provision, shareholders may be unable to recover damages against Directors for
actions taken by them which constitute negligence or gross negligence or that
are in violation of their fiduciary duties. The inclusion of this provision in
the Company's Certificate of Incorporation may reduce the likelihood of
derivative litigation against Directors and other types of shareholder
litigation. Insofar as indemnification for liabilities arising under the Act may
be permitted to Directors, Officers, and controlling persons of the Company,
pursuant to the foregoing provisions, or otherwise, the Company has been advised
that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. See "Business - Recent Developments" and "Management."
15. Limited Public Market for Securities. At present, there is a
limited public market for the Company's Securities which are traded on the
Nasdaq National Stock Market under the symbol "USBR." There is no assurance that
a continued regular trading market will develop, or that if one does develop, it
will be sustained for any period of time; therefore, purchasers of the Company's
Securities may be unable to resell same at or near their original offering price
or at any price. Furthermore, it is unlikely that a lending institution will
accept the Company's Securities as pledged collateral for loans even if a
regular trading market does develop. The underwriter of the Company's Offering
was a dominant influence in the market for the Company's Securities until August
1996. In August 1996, the underwriter ceased operations. The market for the
Company's Securities has been significantly affected and may continue to be
affected by the loss of this market maker's participation in the market,
including decreasing significantly the liquidity of an investment in such
Securities.
16. No Dividends and None Anticipated. The Company has not paid any
dividends; nor, because of its present financial status and its contemplated
financial requirements, does it contemplate or anticipate paying any dividends
upon its Common Stock in the foreseeable future. See "Dividend Policy."
17. Increase Public Float Through Shares Available for Resale. A total
of 2,749,182 shares of Common Stock have been issued by the Company. 1,225,665
of such Shares may be deemed "restricted securities" (as such term is defined in
Rule 144 issued under the Act) and, in the future, may be publicly sold only if
registered under the Act or pursuant to an exemption from registration. Any such
sales under Rule 144 would, in all likelihood, have a depressive effect on the
market price for the Company's Common Stock
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and Warrants. See "Shares Eligible for Future Sale."
18. Possible Future Dilution. The Company has authorized capital stock
of 10,000,000 shares of Common Stock, par value $.001 per share. Inasmuch as the
Company may use authorized but unissued shares of Common Stock without
stockholder approval in order to acquire businesses, to obtain additional
financing, or for other corporate purposes, there may be further dilution of the
stockholders' interests.
19. Restrictions on Exercise of Warrants; Necessity for Updating
Registration Statement. The Warrants are not exercisable unless, at the time of
their exercise, the Company has a current prospectus covering the shares of
Common Stock issuable upon exercise of the Warrants, and such shares have been
registered, qualified, or deemed to be exempt under the securities laws of the
states of residence of the exercising holders of the Warrants. The Company is
filing this Post-Effective Amendment and must have same declared effective
before the Warrants may be exercised. The Company has undertaken to use its best
efforts to have all of the shares of Common Stock issuable upon exercise of the
Warrants registered or qualified on or before the exercise date and to maintain
a current prospectus relating thereto until the expiration of the Warrants;
however, there is no assurance that it will be able to do so. The Company will
notify all Warrantholders and its transfer agent that the Warrants may not be
exercised in the event there is no current prospectus.
Although the Warrants will not knowingly be sold to purchasers
in jurisdictions in which the Warrants are not registered or otherwise qualified
for sale, purchasers may buy Warrants in the after-market or may move to
jurisdictions in which the shares underlying the Warrants are not so registered
or qualified during the period that the Warrants are exercisable. In this event,
the Company would be unable to issue shares to those persons desiring to
exercise their Warrants unless and until (i) the shares could be qualified for
sale in the jurisdictions in which such purchasers reside, or (ii) an exemption
from such qualification exists in such jurisdictions, and Warrantholders would
have no choice but to attempt to sell the Warrants in a jurisdiction where such
sale is permissible or allow them to expire unexercised. See "Description of
Securities - Warrants."
20. Possible delisting of Securities from NASDAQ System; Risks of Low
Price Stocks. In August 1997, Nasdaq increased its maintenance requirements
whereby in order to continue to be listed on Nasdaq, the Company is required to
maintain (i) net tangible assets of at least $4,000,000, (ii) a minimum bid
price of $1.00, (iii) two market makers, (iv) 400 stockholders, (v) at least
750,000 shares in the public float, and (vi) a minimum market value for the
public float of $5,000,000. In the event the Company's Securities are delisted
from Nasdaq, trading, if any, in the Securities will thereafter be conducted on
either the Nasdaq SmallCap Stock Market or in the over-the-counter market on the
OTC Bulletin Board. As a consequence of delisting, an investor may find it more
difficult to dispose of or to obtain accurate quotations as to the price of the
Company's Securities. In February 1998, the Company was notified by Nasdaq that
it did not meet criteria (vi) above and, therefore, that its securities would be
delisted if said criteria was not met within a 90 day
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compliance period expiring May 28, 1998. On May 29, 1998, the Company was
notified that it still was not in compliance with the requirements and that it
thus had two options: appeal the delisting determination or request transfer of
its securities to the Nasdaq SmallCap Stock Market. The Company determined that
it was in the shareholders' best interests to request transfer of the Company's
securities to the SmallCap Market. In order to list its securities on the Nasdaq
SmallCap Stock Market, the Company must maintain the following: (i) net tangible
assets of at least $2,000,000; (ii) at least 500,000 shares in the public float;
(iii) a minimum market value for the public float of $1,000,000; (iv) a minimum
bid price of $1.00; (v) two market makers; and (vi) at least 300 stockholders.
Quotation on Nasdaq does not imply that a meaningful, sustained market for the
Company's Securities will develop or that if one does develop, it will be
sustained for any period of time.
21. Penny Stock Regulation. Broker-dealer practices in connection with
transactions in "penny stocks" are regulated by certain penny stock rules
adopted by the Securities and Exchange Commission. Penny stocks generally are
equity securities with a price of less than $5.00 (other than securities
registered on certain national securities exchanges or quoted on Nasdaq provided
that current price and volume information with respect to transactions in such
securities is provided by the exchange or system). The penny stock rules require
a broker-dealer, prior to a transactions in a penny stock not otherwise exempt
from the rules, to deliver a standardized risk disclosure document that provides
information about penny stocks and the risks in the penny stock market. The
broker-dealer also must provide the customer with current bid and offer
quotations for the penny stock, the compensation of the broker-dealer and its
salesperson in connection with the transaction, and monthly account statements
showing the market value of each penny stock held in the customer's account. In
addition, the penny stock rules generally require that prior to a transaction in
a penny stock, the broker-dealer must make a special written determination that
the penny stock is a suitable investment for the purchasers and receive the
purchaser's written agreement to the transaction. These disclosure requirements
may have the effect of reducing the level of trading activity in the secondary
market for a stock that becomes subject to the penny stock rules. If the
Company's Securities become subject to the penny stock rules, investors in this
Offering may find it more difficult to sell their Securities.
22. Potential Adverse Effect of Redemption of Warrants. The Warrants
may be redeemed by the Company at any time during the period they are
exercisable upon notice of not less than 30 days, at a price of $.05 per
Warrant, provided the closing bid quotation of the Common Stock for at least 20
consecutive trading days ending on the third day prior to the day on which the
Company gives notice has been at least 150% of the then effective exercise price
of the Warrants. Redemption of the Warrants could cause the holders to exercise
the Warrants and pay the exercise price at a time when it may be disadvantageous
for the holders to do so, to sell the Warrants at the then current market price
when they might otherwise wish to continue to hold the Warrants, or to accept
the redemption price, which is likely to be substantially less that the market
value of the Warrants at the time of redemption. The Company will not redeem the
Warrants at any time in which its registration statement is not current, so that
investors will be able to exercise their Warrants
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during the 30-day notice period in the event of a Warrant redemption by the
Company. See "Description of Securities -Warrants".
23. Mechanic's Liens. Three actions to foreclose upon mechanic's liens,
in the aggregate amount of $3,323,837, were commenced by the Company in fiscal
year 1997. In fiscal year 1998, the Company commenced suit to foreclose a
mechanic's lien in the amount of $13,640,767: this lien was discharged on the
posting by the lien-debtor of a $14,254,730 bond. The amounts of the mechanic's
liens filed by the Company in the Perini, Kiska, and EklecCo actions were
determined by final requisitions remitted by the Company to the lien-debtors who
failed to render payment for same. Such amounts may include claims which have
not been recorded in accordance with the Company's revenue recognition
accounting policy and SOP 81-1, paragraph 66 as such amounts have not been
received or awarded. The actions to foreclose the liens, which are typically
resolved within two to four years form commencement (via trial on the merits or
settlement), are based on filed mechanic's liens and general contract law and,
specifically, seek payment for labor performed and materials supplied pursuant
to and outside the respective contracts.
While the Company expects to proceed with the aforesaid
actions through trial, there can be no assurance that judgment will be rendered
in its favor, or that if judgment is rendered in its favor, that the Company
will recover the entire amount due and owing it under the liens plus attorney's
fees, interest, and additional costs of litigation. See "Business - Legal
Proceedings."
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DESCRIPTION OF PLAN
In December 1994, the Board of Directors adopted the Senior Management Incentive
Plan (the "Management Plan") which was thereafter approved by shareholder
consent. The Management Plan provides for the issuance of up to 1,000,000 shares
of the Company's Common Stock in connection with the issuance of stock options
and other stock purchase rights to Executive Officers and other key employees.
The adoption of the Management Plan was prompted by the Company's desire (i) to
attract and retain qualified personnel, whose performance is expected to have a
substantial impact on the Company's long-term profit and growth potential, by
encouraging those persons to acquire equity in the Company; and (ii) to provide
the Board with sufficient flexibility regarding the forms of incentive
compensation which the Company will have at its disposal in rewarding Executive
Officers without unnecessarily depleting the Company's cash reserves. The
Management Plan is designed to augment the Company's existing compensation
programs and is intended to enable the Company to offer Executive Officers a
personal interest in the Company's growth and success through the grant of stock
options and/or other rights pursuant to the Management Plan. It is contemplated
that only those executive management employees (generally the Chairman of the
Board, Vice-Chairman, Chief Executive Officer, Chief Operating Officer,
President, and Vice Presidents of the Company) who perform services of special
importance to the Company will be eligible to receive compensation under the
Management Plan. As of the date of this Prospectus, the Company's Officers and
Directors are Joseph Polito, Ronald Polito, Steven Polito and Marvin Weinstein,
though the Management Plan also includes Messrs. Bauer, Panayi and Kubilus. A
total of 1,000,000 shares of Common Stock are reserved for issuance under the
Management Plan.
Unless otherwise indicated, the Management Plan is to be administered by the
Board of Directors or a committee of the Board, if such a committee is appointed
for this purpose (the Board or such committee, as the case may be, shall be
referred to in the following description as the "Administrator"). Subject to the
specific provisions of the Management Plan, the Administrator will have the
discretion to determine (i) the recipients of the awards; (ii) the nature of the
awards to be granted; (iii) the dates such awards will be granted; (iv) the
terms and conditions of the awards; and (v) the interpretation of the Management
Plan, except that any award granted to any employee of the Company who is also a
Director of the Company shall also be subject - in the event the persons serving
as members of the Administrator of the Management Plan at the time such award is
proposed to be granted do not satisfy the requirements regarding the
participation of "disinterested persons" set forth in Rule 16b-3 ("Rule 16b-3"
promulgated under the Exchange Act - to the approval of an auxiliary committee
consisting of not less than two individuals who are considered "disinterested
persons" as defined under Rule 16b-3.
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As of the date hereof, the Company has not yet determined who will serve on such
auxiliary committee, if one is required.
The Management Plan generally provides that, unless the Administrator determines
otherwise, each option or right granted shall become exercisable in full upon
certain "change of control" events as described in the Management Plan, or
subject to any right or option granted under the Management Plan (through
merger, consolidation, reorganization, recapitalization, stock dividend,
dividend in property other than cash, stock split, liquidating dividend,
combination of shares, exchange of shares, change in corporate structure or
otherwise), the Administrator will make appropriate adjustments to such plans
and the classes, number of shares, and price per share of stock subject to
outstanding rights or options. Generally, the Management Plan may be amended by
action of the Board of Directors, except that any amendment which (i) would
increase the total number of shares subject to such plan; (ii) extend the
duration of such plan; (iii) materially increase the benefits accruing to
participants under such plan; or (iv) change the category of persons who can be
eligible for awards under such plan, must be approved by the affirmative vote of
a majority of the shareholders entitled to vote. The Management Plan permits
awards to be made thereunder until November 2004.
Directors who are not otherwise employed by the Company will not be eligible for
participation in the Management Plan. The Management Plan provides for five
types of awards: stock options, incentive stock rights, stock appreciation
rights (including limited stock appreciation rights), restricted stock purchase
agreements (as described below), and restricted stock.
STOCK OPTIONS
Options granted under the Management Plan may be either incentive stock options
("ISOs) or options which do not qualify as ISOs ("non-ISOs"). ISOs may be
granted at an option price of not less than 100% of the fair market value of the
Common Stock on the date of grant, except that an ISO granted to any person who
owns capital stock representing more than 10% of the total combined voting power
of all classes of Common Stock of the Company ("10% stockholder") must be
granted at an exercise price of at least 110% for the fair market value of the
Common Stock on the date of the grant. The exercise price of the non-ISOs may
not be less than 85% of the fair market value of the Common Stock on the date of
grant. Unless the Administrator determines otherwise, no ISO or non-ISO may be
exercisable earlier than one year from the date of grant. ISOs may not be
granted to persons who are not employees of the Company. ISOs granted to persons
other than 10% stockholders may be exercisable for a period of up to ten (10)
years from the date of grant; ISOs granted to 10% stockholders may be
exercisable for a period of up to five years from the date of grant. No
individual may be granted ISOs that become exercisable in any calendar year for
Common Stock having a fair market value at the time of grant in excess of
$100,000. Non-ISOs may be exercisable for a period of up
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to thirteen (13) years from the date of grant.
Payment for shares of Common Stock purchases pursuant to exercise of stock
options shall be paid in full in (i) cash, (ii) by certified check, or, (iii) at
the discretion of the Administrator by shares of Common Stock having a fair
market value equal to the total exercise price or (iv) by a combination of the
above. The provisions that permit the delivery of already owned shares of stock
as payment for the exercise of an option may permit "pyramiding". In general,
pyramiding enables a holder to start with as little as one share of common stock
and, by using the shares of common stock acquired in successive, simultaneous
exercises of the option, to exercise the entire option, regardless of the number
of shares covered thereby, with no additional cash investment other than the
original share of common stock used to exercise the option.
Upon termination of employment or consulting services, an optionee will be
entitled to exercise the vested portion of an option for a period of up to three
months after the date of termination, except that if the reason for termination
was a discharge for cause, the option shall expire immediately, and if the
reason for termination was for death or permanent disability of the optionee,
the vested portion of the option shall remain exercisable for a period of twelve
(12) months thereafter.
On December 2, 1996, the Company granted to Joseph Polito, the Company's
President, an option to purchase 125,000 shares at an exercise price of $1.10
per share (110% of the then market price) in accordance with the Management
Plan. The shares were registered for resale pursuant to a Form S-8 registration
statement filed in February, 1997. On March 25, 1997, Mr. Polito exercised the
option. On April 11, 1997, Mr. Polito re-sold 60,000 of these shares.
In December, 1997, the Company authorized the issuance, in its third fiscal
quarter, of 340,000 shares of Common Stock to management and certain employees
and consultants of the Company. 290,000 of such shares were issued pursuant to
the Company's Management Plan as follows: 150,000 were issued to Joseph M.
Polito, the Company's President and Director, 70,000 shares were issued to
Ronald J. Polito, the Company's Secretary and Director and 70,000 shares were
issued to Steven J. Polito, the Company's Treasurer. These Shares were issued in
escrow pending the vesting thereof; one half on June 1, 1998 and the balance on
January 1, 1999. The remaining 50,000 shares were issued to employees and
consultants. The three (3) Executive Officers whose 290,000 shares are being
registered for sale herein are hereinafter, where appropriate, referred to
collectively as the "Selling Shareholders".
INCENTIVE STOCK RIGHTS
Incentive stock rights consist of incentive stock units equivalent
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to one share of Common Stock in consideration for services performed for the
Company. Each incentive stock unit shall entitle the holder thereof to receive,
without payment of cash or property to the Company, one share of Common Stock in
consideration for services performed for the company or any subsidiary by the
employee, subject to the lapse of the incentive periods, whereby the Company
shall issue such number of shares upon the completion of each specified period.
If the employment or consulting services of the holder with the Company
terminate prior to the end of the incentive period relating to the units
awarded, the rights shall thereupon be null and void, except that if termination
is caused by death or permanent disability, the holder or his/her heirs, as the
case may be, shall be entitled to receive a pro rata portion of the shares
represented by the units, based upon that portion of the incentive period which
shall have elapsed prior to the holder's death or disability.
STOCK APPRECIATION RIGHTS (SARs)
SARs may be granted to recipients of options under the Management Plan. SARs may
be granted simultaneously with, or subsequent to, the grant of a related option
and may be exercised to the extent that the related option is exercisable,
except that no general SAR (as hereinafter defined) may be exercised within a
period of six months of the date of grant of such SAR, and no SAR granted with
respect to an ISO may be exercised unless the fair market value of the Common
Stock on the date of exercise exceeds the exercise price of the ISO. A holder
may be granted general SARs ("General SARs") or limited SARs ("Limited SARs"),
or both. General SARs permit the holder thereof to receive an amount (in cash,
shares of Common Stock, or a combination of both) equal to the number of SARs
exercised multiplied by the excess of the fair market value of the Common Stock
on the exercise date over the exercise price of the related option. Limited SARs
are similar to General SARs, except that, unless the Administrator determines
otherwise, they may be exercised only during a prescribed period following the
occurrence of one or more of the following "Change of Control" transactions: (i)
the approval of the Board of Directors of consolidation or merger in which the
Company is not the surviving corporation, the sale of all or substantially all
the assets of the Company, or the liquidation or dissolution of the Company;
(ii) the commencement of a tender or exchange offer for the Company's Common
Stock (or securities convertible into Common Stock) without the prior consent of
the Board; (iii) the acquisition of beneficial ownership by any person or other
entity (other than the Company or any employee benefit plan sponsored by the
Company) of securities of the Company representing 25% or more of the voting
power of the Company's outstanding Securities; or (iv) if during any period of
two years or less, individuals who at the beginning of such period constitute
the entire Board cease to constitute a majority of the Board, unless the
election, or the nomination for election, of each new Director is approved by at
least a majority of the Directors then still in office. The exercise of any
portion of either the related option or the
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tandem SARs will cause a corresponding reduction in the number of shares
remaining subject to the option or the tandem SARs, thus maintaining a balance
between outstanding options and SARs.
RESTRICTED STOCK PURCHASE AGREEMENTS
Restricted stock purchase agreements provide for the sale by the Company of
shares of Common Stock at prices to be determined by the Board, which shares
shall be subject to restrictions on disposition for a stated period during which
the purchaser must continue employment with the Company in order to retain the
shares. Payment must be made in cash. If termination of employment occurs for
any reason within six months after the date of purchase, or for any reason other
than death or by retirement with the consent of the Company after the six-month
period but prior to the time that the restrictions on disposition lapse, the
Company shall have the option to reacquire the shares at the original purchase
price.
RESTRICTED STOCK
Restricted shares awarded under the Management Plan will be subject to a period
of time designated by the Administrator (the "restricted period") during which
the recipient must continue to render services to the Company before the
restricted shares will become vested. The Administrator may also impose other
restrictions, terms and conditions that must be fulfilled before the restricted
shares may vest.
Upon the grant of restricted shares, stock certificates registered in the name
of the recipient will be issued and such shares will constitute issued and
outstanding shares of Common Stock for all corporate purposes. The holder will
have the right to vote the restricted shares and to receive all regular cash
dividends (and such other distributions as the Administrator may designate), if
any, which are paid or distributed on the restricted shares, and generally to
exercise all other rights as a holder of Common Stock, except that, until the
end of the restricted period: (i) the holder will not be entitled to take
possession of the stock certificates representing the restricted shares and (ii)
the holder will not be entitled to sell, transfer or otherwise dispose of the
restricted shares. A breach of any restrictions, terms or conditions established
by the Administrator with respect to any restricted shares will cause a
forfeiture of such restricted shares.
Upon expiration of the applicable restriction period and the satisfaction of any
other applicable conditions, all or part of the restricted shares and any
dividends or other distributions not distributed to the holder (the "retained
distributions") thereon will become vested. Any restricted shares and any
retained distributions thereon which do not so vest will be forfeited to the
Company. If prior to the expiration of the restricted period a holder is
terminated without cause or because of a total disability (in each case as
defined in the Management Plan), or dies, then, unless otherwise determined by
the Administrator at the time of the
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grant, the restricted period applicable to each award of restricted shares will
thereupon be deemed to have expired. Unless the Administrator determines
otherwise, if a holder's employment terminates prior to the expiration of the
applicable restricted period for any reason other than as set forth above, all
restricted shares and any retained distributions thereon will be forfeited.
Accelerating of the vesting of the restricted shares shall occur, under the
provisions of the Management Plan, on the first day following the occurrence of
any of the following: (a) the approval by the stockholders of the Company of an
"Approved Transaction"; (b) a "Control Purchase"; or (c) a "Board Change".
An "Approved Transaction" is defined as (A) any consolidation or merger of the
Company in which the Company is not the continuing or surviving corporation or
pursuant to which shares of Common Stock would be converted into cash,
securities or other property other than a merger of the Company in which the
holders of the Common Stock immediately prior to the merger have the same
proportionate ownership of Common Stock of the surviving corporation immediately
after the merger, or (B) any sale, lease, exchange, or other transfer (in one
transaction or a series of related transactions) of all, or substantially all,
of the assets of the Company, or (C) the adoption of any plan or proposal for
the liquidation or dissolution of the Company.
A "Control Purchase" is defined as circumstances in which any person (as such
term is defined in Sections 13(d)(3) and 14(d)(2) of the Exchange Act),
corporation or other entity (other than the Company or any employee benefit plan
sponsored by the Company). (A) Shall purchase any Common Stock of the Company
(or securities convertible into the Company's Common Stock) for cash, securities
or any other consideration pursuant to a tender offer or exchange offer, without
the prior consent of the Board of Directors, or (B) shall become the "beneficial
owner" (as such term is defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of Securities of the Company representing twenty-five percent
(25%) or more of the combined voting power of the then outstanding Securities of
the Company ordinarily (and apart from rights accruing under special
circumstances) having the right to vote in the election of Directors (calculated
as provided in paragraph (d) of such Rule 13d-3 in the case of rights to acquire
the Company's Securities).
A "Board Change" is defined as circumstances in which, during any period of two
consecutive years or less, individuals who at the beginning of such period
constitute the entire Board shall cease for any reason to constitute a majority
thereof unless the election, or the nomination for election by the Company's
stockholders, of each new Director was approved by a vote of at least a majority
of the Directors then still in office.
USE OF PROCEEDS
The Company will not realize any proceeds upon the sale of the
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Shares of Common Stock of the Selling Shareholders being registered hereunder.
SELLING SHAREHOLDERS
The following table lists the Selling Shareholders with respect to the Share of
Common Stock being registered hereunder; the number of Shares of Common Stock
known to the Company to be held by such Selling Shareholders as of March 25,
1998; the number of shares to be sold; and the number and percentage of
outstanding shares of Commons Stock to be owned after the sale of the shares
hereunder.
The Selling Shareholders intend to offer the shares for sale as a principal for
their own account at any time and from time to time on the NASDAQ or otherwise,
at prices prevailing at the time of sale, or in private sales and at prices to
be negotiated. Joseph M. Polito is the Chairman of the Board, President and
Chief Executive Officer of the Company. Ronald J. Polito and Steven J. Polito
are the Secretary and a Director and Treasurer of the Company, respectively.
<TABLE>
<CAPTION>
Selling Total Number Number Number Percentage
Shareholder number of of shares of shares of shares of shares of
- ----------- shares of issued of common of common common stock
common pursuant stock to stock owned owned
stock to the be sold* after Before After
owned Plan* offering Offering(3) Offering(3)
----- ----- --------- -------- -----------------------
<S> <C> <C> <C> <C> <C> <C>
Joseph M. 230,000(1) 150,000 150,000 80,000 56.3% 51.4%
Polito 1,332,332(2) 1,332,332
--------- ---------
1,562,332 1,412,332
Ronald J. 70,000 70,000 70,000 -0- 2.5% -0-
Polito
Steven J. 70,000 70,000 70,000 -0- 2.5%(3) -0-
Polito
</TABLE>
- --------
(1 )Includes (i) 205,000 shares of Common Stock owned directly by Joseph M.
Polito, as President of the Company, 55,000 of which shares were issued
pursuant to the exercise of an option granted pursuant to the Management
Plan and 150,000 of which shares were issued pursuant to the Management
Plan; and (ii) 25,000 shares issuable to Mr. Polito upon exercise of a
vested option.
(2) Joseph Polito owns approximately 66.3% of the outstanding shares of USABG
Corp. ("Corp.") which, as of March 25, 1998, owned directly 1,332,332
shares of Common Stock or 48.5% of the outstanding Common Stock of the
Company. Joseph M. Polito may be considered the beneficial owner of the
shares of the Company owned by Corp.
(3) Based upon 2,749,182 Shares of Common Stock outstanding as of March 31,
1998.
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INCORPORATION OF DOCUMENTS BY REFERENCE
The documents listed in (a) through (d) below are hereby incorporated
by reference to this Registration Statement on Form S- 8; and all documents
subsequently filed by the Registrant pursuant to Sections 13(a), 13(c), 14 and
15(d) of the Securities Exchange Act of 1934, prior to the filing of a
post-effective amendment which indicates that all securities offered have been
sold or which deregisters all securities then remaining unsold, shall be deemed
to be incorporated herein by reference in this Registration Statement on Form
S-8, and shall be a part hereof from the date of the filing of such documents.
a. The Company's Post Effective Amendment No. 2 to Form SB-2, as filed with the
Securities and Exchange Commission (the "Commission") on April 13, 1998, which
contains certified financial statements for the Company's latest fiscal year
ended June 30, 1997.
b. The Company's Forms 10-QSB filed with the Commission for the quarters ended
December 31, 1997 and March 31, 1998.
c. The description of the Company's Common Stock as contained in the Company's
Post Effective Amendment No. 2 to Form SB-2, as filed with the Commission on
April 13, 1998.
d. All reports subsequently filed by the Company pursuant to Sections 13(a),
13(c), 14, and 15(d) of the Securities Exchange Act of 1934 (the "Exchange
Act"), prior to the filing of a post-effective amendment which indicates that
all securities offered have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated herein by reference and to
be part hereof from the date of filing of such documents.
LEGAL OPINION
The legality of the securities being offered hereby is being passed upon by Sol
Freedman, Esq., special counsel to the Registrant.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
As permitted under the New York Business Corporation Law, the Company's
Certificate of Incorporation and By-laws provide for indemnification of a
director or officer under certain circumstances against reasonable expenses,
including attorneys fees, actually and necessarily incurred in connection with
the defense of any action brought against him by reason of his being a director
or officer. In addition, the Company's charter documents provide for the
elimination of directors' liability to the Company
- -----------
*These shares were issued in escrow in March 1998 subject to vesting which shall
occur on June 1, 1998 (one-half of the shares) and January 1, 1999 (the
remaining one-half thereof).
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or its shareholders for monetary damages except in certain instances of bad
faith, intentional misconduct, a knowing violation of law or illegal personal
gain.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Company pursuant to any charter, provision, by-law, contract, arrangement,
statute or otherwise, the Company has been advised that in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or paid
by a director, officer or controlling person of the Company in the successful
defense of any such action, suit or proceeding) is asserted by such director,
officer or controlling person of the Company in connection with the securities
being registered, the Company will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
EXEMPTION FROM REGISTRATION CLAIMED
The Shares of Common Stock issued to the Selling Shareholders pursuant to the
Management Plan were issued without registration under the Securities Act of
1933, as amended, in accordance with an exemption from registration provided by
Section 4(2) of such Act.
61
