<PAGE> 1
SCHEDULE 14-A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange
Act of l934
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
( ) Confidential, For Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
COLONIAL COMMERCIAL CORP.
(Name of Registrant as Specified In Its Charter)
James W. Stewart, Executive Vice President
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
(X) $125 per Exchange Act Rules 0-11(c)(l)(ii), 14a-6(i)(l), or
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
( ) $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
l) Title of each class of securities to which transaction
applies:
.......................................................
2) Aggregate number of securities to which transaction
applies:
........................................................
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth
the amount on which the filing fee is calculated and
state how it was determined):
........................................................
4) Proposed maximum aggregate value of transaction:
........................................................
5) Total fee paid:
........................................................
<PAGE> 2
( ) Fee paid previously with preliminary materials.
( ) Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date of its
filing.
l) Amount Previously Paid:
........................
2) Form, Schedule or Registration Statement No.:
........................
3) Filing Party:
........................
4) Date Filed:
........................
<PAGE> 3
COLONIAL COMMERCIAL CORP.
360l HEMPSTEAD TURNPIKE, SUITE 121-I
LEVITTOWN, NEW YORK 11756-1315
-----------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
JUNE 12, 1996
-----------------------------------
To the holders of Common Stock and
Convertible Preferred Stock:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Colonial
Commercial Corp. will be held at the Holiday Inn, Rockville Centre, New York on
June 12, l996 at l0:30 A.M., local time, for the following purposes:
l. To elect five Common Stock directors to serve for the term set
forth in the accompanying proxy statement.
2. To elect four Preferred Stock directors to serve for the term
set forth in the accompanying proxy statement.
3. To consider and act upon a proposal to ratify the selection by the
Company's Board of Directors of KPMG Peat Marwick LLP as the independent
public accountants of the Company for the fiscal year ending December 3l,
l996.
4. To consider and act upon a proposal to adopt the Company's l996 Stock
Option Plan, as recommended by the Board of Directors as set forth in
Exhibit A to the Proxy Statement.
5. To transact such other business as may properly come before the
meeting or any adjournments thereof.
Only holders of record of shares of Common Stock and Convertible Preferred
Stock at the close of business on April 24, l996 are entitled to notice of and
to vote at the meeting. Only holders of shares of Common Stock will be entitled
to vote for the election of Common Stock directors, and only holders of
Convertible Preferred Stock will be entitled to vote for the election of
Preferred Stock directors.
A proxy statement and proxy form are enclosed herewith. A copy of the
Company's Annual Report, including consolidated financial statements, has been
mailed to all shareholders with this Notice of Annual Meeting.
By Order of the Board of Directors,
James W. Stewart,
Secretary
Levittown, New York
April 24, l996
IMPORTANT
You are cordially invited to attend the Annual Meeting. Whether or not you are
planning to attend, please sign, date and return the accompanying proxy as soon
as possible. A postage-paid, self-addressed envelope is enclosed for your
convenience.
<PAGE> 4
COLONIAL COMMERCIAL CORP.
3601 HEMPSTEAD TURNPIKE, SUITE 121-I
LEVITTOWN, NEW YORK 11756-1315
------------------------------------
ANNUAL MEETING OF SHAREHOLDERS
To Be Held On June 12, l996
------------------------------------
PROXY STATEMENT
---------------
This proxy statement is furnished in connection with the solicitation of
proxies, in the form enclosed herewith by the Board of Directors of Colonial
Commercial Corp., for use at the Annual Meeting of Shareholders to be held on
June 12, l996 at the Holiday Inn, Rockville Centre, New York at l0:30 A.M., or
any adjournments thereof. This proxy statement and the enclosed form of proxy
have been mailed to shareholders on or about April 29, l996.
All shares represented by a properly executed, unrevoked proxy received in
time for the meeting will be voted in accordance with the directions specified
thereon and, as to any other matter properly coming before the meeting (none of
which is presently known to the Board of Directors), in accordance with the
judgment of the persons designated as proxies. Each proxy given by a shareholder
may be revoked by him at any time prior to exercise by written notice to the
Secretary of the Company.
Only holders of Common Stock may vote with respect to the election of Common
Stock directors. Any proxy received from a holder of Common Stock on which no
direction is specified will be voted in favor of the nominees for election as
Common Stock directors listed in this proxy statement.
Only holders of Convertible Preferred Stock may vote with respect to the
election of Preferred Stock directors. Any proxy received from a holder of
Convertible Preferred Stock on which no direction is specified will be voted in
favor of the nominees for election as Preferred Stock directors listed in this
proxy statement.
Holders of Common Stock and Convertible Preferred Stock both may vote on the
ratification of the selection of KPMG Peat Marwick LLP as the Company's
independent public accountants and the adoption of the Company's 1996 Stock
Option Plan. Any proxy received from a holder of Common Stock and Convertible
Preferred Stock on which no direction is specified will be voted in favor of the
ratification of the selection of KPMG Peat Marwick LLP as the Company's
independent public accountants and the adoption of the Company's 1996 Stock
Option Plan.
The cost of solicitation of proxies will be borne by the Company. Proxies will
be solicited personally by the officers, directors or regular employees of the
Company, who will not be compensated for such services.
A copy of the Company's Annual Report, including consolidated financial
statements for the fiscal year ended December 3l, l995 has been mailed with this
proxy statement to each holder of shares of Common Stock and Convertible
Preferred Stock of record at the close of business on April 24, l996, the record
date fixed by the Board of Directors for the determination of the shareholders
entitled to notice of and to vote at the Annual Meeting.
<PAGE> 5
On such record date, the Company had 6,774,819 outstanding shares of Common
Stock and 8,711,566 shares of Convertible Preferred Stock. Each share of Common
Stock is entitled to one vote for the election of Common Stock directors, and
each share of Convertible Preferred Stock is entitled to one vote for the
election of Convertible Preferred Stock directors. Each share of Common Stock
and each share of Convertible Preferred Stock is entitled to one vote on the
ratification of the selection of KPMG Peat Marwick LLP as the Company's
independent public accountants, the adoption of the Company's 1996 Stock Option
Plan and on any other matter which may be properly presented at the meeting. No
other securities of the Company are entitled to vote at the meeting. The
presence of the meeting in person or proxy, of the holders of one-third of the
outstanding shares of Common Stock and one-third of the outstanding shares of
Convertible Preferred Stock is necessary to constitute a quorum.
The current members of the Company's Board of Directors, who have indicated
that they intend to vote in favor of all of the Company's proposals, own
1,292,782 shares (17.38%) of Common Stock and 946,298 shares (10.86%) of
Convertible Preferred Stock. (See Security Ownership of Certain Beneficial
Owners and Management.)
<PAGE> 6
ELECTIONS OF DIRECTORS
----------------------
The Company's Restated Certificate of Incorporation provides for the Board of
Directors to be composed of two classes. One class of four directors is to be
elected only by the holders of the Company's Convertible Preferred Stock and the
other class of five directors is to be elected only by the holders of the
Company's Common Stock. All directors will hold office for one year until the
Annual Meeting next following their election and until their respective
successors shall be elected and shall qualify.
Unless authority to vote for the proposed slate of directors or any individual
director is withheld, all shares represented by the accompanying proxy received
from a holder of Common Stock will be voted for the election of Messrs. Raphael
M. Brackman, Gerald S. Deutsch, Bernard Korn, Carl L. Sussman and James W.
Stewart and all shares represented by the accompanying proxy received from a
holder of Convertible Preferred Stock will be voted for the election of Messrs.
Jack Rose, Ronald Miller, William Koon and Donald K. MacNeill. The Company has
no reason to believe that any of the nominees will become unavailable to serve
as a director for any reason before the Annual Meeting. However, in the event
that any of them shall become unavailable, the persons designated as proxies
reserve the right to substitute another person of their choice when voting at
the Annual Meeting.
There are no family relationships among the directors, nominees or executive
officers nor any arrangement or understanding between any such director or
nominee and any other person pursuant to which any director or nominee was
selected as such.
The following table contains certain information with respect to each nominee
for election as a member of the Board. The information as to principal
occupation is in each instance based upon information furnished by each person.
The term of each director elected at the meeting will expire at the l997 Annual
Meeting of Shareholders.
<TABLE>
<CAPTION>
Year First
Principal Elected As
Name Age Occupation Director
<S> <C> <C> <C>
Nominees for
Election as Common
Stock Directors:
Raphael M. Brackman 70 Retired Corporate l970
Executive
Gerald S. Deutsch 59 Certified Public l988
Accountant and
Attorney
Bernard Korn 71 Chairman of the l964
Board, President
and Chief Executive
Officer of Company
</TABLE>
<PAGE> 7
<TABLE>
<CAPTION>
Nominees for Year First
Election as Common Principal Elected As
Stock Directors: Age Occupation Director
<S> <C> <C> <C>
Carl L. Sussman 71 Private Investor l964
James W. Stewart 49 Executive Vice l982
President,Treasurer
and Secretary of
the Company
Nominees for
Election as Convertible
Preferred Stock Directors:
Jack Rose 77 Private Investor l983
Ronald Miller 52 Partner, Miller l983
& Hearn, Attorneys
William Koon 66 President, Lord's l983
Enterprises, Grain
Merchants
Donald K. MacNeill 74 Retired Corporate l988
Executive
</TABLE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of April 24, l996, information with respect
to equity ownership by directors of the Company, holders of over 5% of a class
stock and of directors and officers of the Company as a group.
<TABLE>
<CAPTION>
Common Stock** Convertible Preferred Stock
---------------------- ---------------------------
Amount and Amount and
Nature of Nature of
Name of Beneficial Beneficial Percent Beneficial Percent
Owner Ownership* of Class Ownership of Class
- -------------------- ----------- --------- ----------- --------
<S> <C> <C> <C> <C>
Bernard Korn........ 552,805(1)(6) 7.43 % 587,472 6.74%
Carl L. Sussman..... 259,087(2)(6) 3.48 % - -
Raphael M. Brackman. 48,000(6) (5) - (5)
Gerald S.Deutsch.... 27,500(6) (5) - (5)
Jack Rose........... 113,480(6) 1.53 % 266,089 3.05%
James W.Stewart..... 120,000(6) 1.61 % - -
Ronald Miller....... 27,500(3)(6) (5) 27,939 (5)
William Koon........ 74,410(4)(6) 1.00 % 64,798 -
Donald K. MacNeill.. 70,000 (5) - (5)
Estate of Jack Farber 497,670(1) 6.69 % 758,915(1) 8.71%
All directors and
officers as a group 1,292,782 17.38 % 946,298 10.86%
</TABLE>
<PAGE> 8
*For the purposes of this table, "Beneficial Ownership" is defined as set
forth in rule l3d-3 under the Securities Exchange Act of l934, as amended.
Except as set forth in the following notes, each person listed in the table has
sole voting and sole investment power with respect to the shares of Common Stock
listed in the table.
**The shares of Common Stock listed in the table do not reflect the conversion
of the Company's Convertible Preferred Stock. If all of such Convertible
Preferred Stock were to be converted, the percentage of ownership of Mr. Korn,
the Estate of Jack Farber and all directors and officers as a group would be
7.06%, 7.78% and 13.87%, respectively.
(1) If only the Farber Estate were to convert its Convertible Preferred Stock
into Common Stock, its percentage of ownership of Common Stock would be
15.33%. If only Mr. Korn were to convert his Convertible Preferred Stock,
his percentage of ownership of Common Stock would be 14.21%.
(2) Includes 32,650 shares of Common Stock owned by Mr. Sussman's wife, of
which shares Mr. Sussman disclaims beneficial ownership.
(3) Includes 24,015 shares of Convertible Preferred Stock owned by Mr. Miller's
wife, of which shares Mr. Miller disclaims beneficial ownership.
(4) Includes 44,500 shares of Common Stock and 33,500 shares of Convertible
Preferred Stock owned by Mr. Koon's wife, of which shares Mr. Koon
disclaims beneficial ownership.
(5) Messrs. Brackman, Deutsch, Miller and MacNeill each are the beneficial
owners of less than one percent of the Company's outstanding securities,
excluding securities held by, or for the account of, the Company or its
subsidiaries, plus securities deemed outstanding pursuant to Rule
l3d-(3)-(d)(l) of the Exchange Act. As a result, their respective
percentages of ownership have not been disclosed.
(6) Includes 310,000, 100,000, 45,000, 70,000 and 27,500 common shares subject
to options which are exercisable within 60 days held by Messrs. Korn,
Stewart, Brackman, MacNeill and Deutsch, respectively, and 27,500 common
shares, subject to options, which are exercisable within 60 days held by
each of Messrs. Sussman, Koon, Rose and Miller and 662,500 common shares
subject to options, which are exercisable within 60 days held by all
directors and officers as a group.
<PAGE> 9
Additional Information Concerning Members of the Board of Directors
Certain Company officers and directors also serve as officers and directors
of certain subsidiaries of the Company.
In l99l, Mr. Korn paid approximately $l20,000 in disgorgement of profit,
interest and penalties, and agreed to the entry against him of a permanent
injunction which enjoins him from violating Sections l0(b) and l4(e) of the
Securities Exchange Act of l934 (the " '34 Act") to settle allegations which
were brought against him by the Securities and Exchange Commission ("SEC") and
which Mr. Korn did not admit or deny. The SEC alleged that Mr. Korn had violated
the federal securities laws in relation to trading in securities of an unrelated
company which the SEC claimed that Mr. Korn had reason to know was the subject
of a tender offer. Mr. Korn was not a director or officer of this company. In
l992, Mr. Korn pleaded guilty on the same facts to one count of violating
Section l4(e) of the '34 Act and Rule l4e-3 thereunder. Section l4(e) of the '34
Act and Rule l4e-3 thereunder in essence prohibit a person from trading in
securities of a company which he has reason to know is subject to a tender
offer, even if the person has no duty to the company to keep its information
confidential.
Information Concerning Operation of the Board of Directors
During the year ended December 3l, l995, the Board of Directors had four
meetings. All of the directors were present at all of such meetings during the
period they served as directors.
Colonial Commercial Corp. has an Audit Committee, a Convertible
Preferred Stock Directors Nominating Committee and Common Stock
Directors Nominating Committee.
The members of the Audit Committee are Messrs. Ronald Miller (Chairman), Jack
Rose, William Koon and Carl L. Sussman. This committee, which met once during
l995, is responsible for meeting with Colonial Commercial Corp.'s independent
accountants to review the proposed scope of the annual audit of Colonial
Commercial Corp.'s books and records, reviewing the findings of the independent
accountants upon completion of the annual audit,and reporting to the Board of
Directors with respect to its meeting with the independent accountants.
The members of the Convertible Preferred Stock Directors Nominating Committee
are Messrs. Jack Rose (Chairman), Ronald Miller and William Koon. This committee
met once during l995 and is responsible for recommending to the Board of
Directors, the names of qualified persons to be nominated for election as
directors of Colonial Commercial Corp. who are to be elected by the holders of
the Convertible Preferred Stock.
The members of the Common Stock Directors Nominating Committee are
Messrs. Korn, Sussman and Stewart. This committee met once during l995
and is responsible for recommending to the Board of Directors, the names
of qualified persons to be nominated for election as directors of
Colonial Commercial Corp. who are to be elected by the holders of the
Common Stock.
<PAGE> 10
Executive Officers of the Company
The names, ages and positions of the Company's executive officers are listed
below, along with a brief account of their business experience during the last
five years. Officers are appointed annually by the Board of Directors at its
first meeting following the Annual Meeting of Shareholders and from time to time
at the pleasure of the Board. There are no family relationships among these
officers, nor any arrangement or understanding between any such officers and any
other person pursuant to which any of such officers were selected as executive
officers.
<TABLE>
<CAPTION>
Business Experience During
Name, Age and Position Past Five Years
<S> <C>
Bernard Korn, 71 From prior to January l990 to
Chairman of the Board, President, present, President, Chairman
Chief Executive Officer of the Board and Chief Exec-
utive Officer of the Company
James W. Stewart, 49 From prior to January l990,
Executive Vice President, Executive Vice President and
Treasurer, Secretary Treasurer of the Company.
Since December 31, 1993,
Secretary of the Company.
</TABLE>
Executive Compensation
The following table sets forth information about compensation paid or accrued
by the Company during the fiscal years ended December 3l, l995, l994 and l993 to
the Company's Chief Executive Officer, James W. Stewart and Paul Selden, the
only officers of the Company and its subsidiaries whose compensation exceeded
$100,000.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term
Annual Compensation Compensation
<S> <C> <C> <C> <C>
Stock
Name and Principal Salary Bonus Options
Position Year ($) ($) #
Bernard Korn
Chairman of the Board, l995 228,846 - -
President, Chief Executive l994 200,000 - 200,000
Officer and Director l993 200,000 - ll0,000
James W. Stewart
Executive Vice President, l995 135,192 - -
Treasurer, Secretary l994 ll5,000 - 35,000
and Director l993 ll5,000 - 65,000
Paul Selden
President 1995 124,000 61,900 50,000
Atlantic Hardware and
Supply Corporation
</TABLE>
<PAGE> 11
Aggregated Option Exercises in Last Fiscal Year and
Fiscal Year-End Option Values
The following table sets forth information concerning the value of
unexercised stock options at the end of the l995 fiscal year for the persons
named in the Summary Compensation Table.
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Unexercised In-The-Money
Options at Options at
Shares Fiscal Fiscal
Acquired On Value Year-End Year-End
Exercise Realized Exercisable/ Exercisable/
(#) ($) Unexercisable Unexercisable
<S> <C> <C> <C> <C>
Bernard Korn -0- -0- 310,000/0 $13,875/0
James W.Stewart -0- -0- l00,000/0 $ 3,000/0
Paul Selden -0- -0- 50,000/0 $ 0/0
</TABLE>
Mr. Korn is employed pursuant to an employment agreement (the "Agreement"),
expiring December 31, 1998 at a compensation of $444,528 annually for the period
ending June 30, l996 and increasing annually thereafter in accordance with cost
of living increases. Mr. Korn has voluntarily waived $215,682 of compensation in
l995 and has agreed to limit his total annual compensation to $250,000 for
fiscal years l996, 1997 and 1998. In the event of Mr. Korn's death, the
agreement provides for continued compensation payments for a period of one year,
as well as a widow's benefit of $5,000. In the event of Mr. Korn's disability,
he will receive compensation for the balance of the term of the agreement at the
rate of compensation then in effect.
Mr. Stewart is employed pursuant to an employment agreement expiring
December 3l, l998 at a compensation of $l50,000 annually.
Since the Company's acquisition of Atlantic Hardware and Supply Corporation on
May 19, 1995, Mr. Selden has been employed pursuant to an employment agreement
(the "Agreement") expiring December 31, 1997 at a compensation of $200,000
annually. The agreement also provides for additional incentive compensation
based upon a percentage of the earnings, as defined, of Atlantic Hardware and
Supply Corporation.
The Company paid Mr. Deutsch an aggregate of $35,000 for fees for
professional services rendered to the Company and its subsidiaries
during l995.
Since October 25, l995, members of the Board of Directors, other than those
employed by the Company or its subsidiaries, receive a fee of $1,000 for each
meeting of the Board attended, limited to $4,000 per annum, in addition to an
annual retainer of $8,000.
BOARD OF DIRECTORS PROPOSAL RELATING TO THE 1996 STOCK OPTION PLAN
On March 22, l996, the Board determined that it was in order for the
Company to adopt a new Stock Option Plan, in order to make options available to
additional key employees and others who render services to the Company.
Accordingly, the Board adopted the l996 Stock Option Plan (the "l996 Plan") and
the Board recommends to the shareholders that the l996 Plan be approved.
<PAGE> 12
Summary of the l996 Plan
The Company may grant to its officers, key employees and others who render
services to the Company, options to purchase ("Options") up to l,000,000 of the
Company's Common Shares at a price which may not be less than the fair market
value per share in the case of incentive stock options or 85% of fair market
value in the case of non-statutory options for such stock on the date of the
granting of the Option. Payment of this price shall be made in cash, with the
consent of the Board, in whole or in part, in Common Shares or with a full
recourse interest bearing promissory note of the Optionee secured by a pledge of
the shares received upon exercise of such option. (The market value of a Common
Share on April 19, 1996, was $.41.) If an option granted under the l996 Plan
shall expire, terminate or be cancelled for any reason without being exercised
in full, the corresponding number of unpurchased shares shall again be available
for the purposes of the l996 Plan. Options may be granted in the form of
incentive stock options or options which do not qualify for treatment as
incentive stock options.
The l996 Plan will be administered by the Board of Directors ("Board"). The
Board determines the persons who are to be granted Options based upon the
contribution of such persons to the management and growth of the Company. No
option may be exercised after the expiration of ten years from the date of
grant. No option may be granted under the l996 Plan after December 3l, 2005.
Incentive stock options are also subject to the following limitations: (i)
the aggregate fair market value of Common Shares, with respect to which
incentive stock options are exercisable for the first time by the Optionee
during any calendar year, may not exceed $l00,000 and any excess shall be
considered a non-statutory option (ii) if the individual to whom the incentive
stock options were granted is considered as owning stock possessing more than
l0% of the total combined voting power of all classes of stock of the Company,
then (A) the option price at the time of grant may not be less than ll0% of the
fair market value per share for such stock and (B) the option period must be no
more than five years from the date of grant.
The Board, upon the granting of any Option, will determine how such Option
will be exercisable.
An individual whose employment terminates by reason other than death may
generally exercise an Option within a period determined by the Board (within 89
days of termination, if an incentive stock option), or if termination is by
reason of death, within the twelve month period after such termination, and only
if, and to the extent that, such Option was exercisable at the date of
termination of employment.
The Board may, at any time, alter, suspend or terminate the l996 Plan,
except that the Board may not, without further approval of the shareholders (l)
increase the maximum number of shares for which Options may be granted under the
l996 Plan or which may be acquired by the individual employee (2) decrease the
minimum purchase price for Common Shares to be issued upon exercise of Options
or (3) change the class of
<PAGE> 13
persons eligible to receive Options. Except in limited circumstances, the Board
may not make any change which would have a material adverse effect upon any
Option previously granted unless the consent of the Optionee is obtained.
However, no person may be divested of ownership of shares already issued under
the l996 Plan.
The foregoing summary of the l996 Plan is qualified in its entirety by and
reference is hereby made to the l996 Plan, a copy of which is attached hereto as
Exhibit A to this Proxy Statement.
Federal Income Tax Consequences of the l996 Plan
The grant or exercise of an incentive stock option will not generally cause
recognition of income by the Optionee; however, the amount by which the fair
market value of a Common Share at the time of exercise of an incentive stock
option exceeds the option price, is a "tax preference item" for purposes of the
alternative minimum tax. In the event of a sale of the shares received upon
exercise of an incentive stock option more than two years from the date of grant
and more than one year from the date of exercise, any appreciation of the shares
received above the exercise price should qualify as long-term capital gain.
However, if shares acquired pursuant to the exercise of an incentive stock
option are sold by the Optionee before the completion of such holding periods so
much of the gain as does not exceed the difference between the option price and
the lesser of the fair market value of the shares at the date of exercise or the
fair market value at the date of disposition will be taxable as ordinary income
for the taxable year in which the sale occurs. Any additional gain realized on
the sale should qualify as a capital gain.
The grant of an Option that is not an incentive stock option (a
"non-statutory option") should not result in recognition of income by the
Optionee. Upon exercise of a non-statutory option by an employee, the excess of
the fair market value of the shares on the exercise date over the option price
should be considered compensation taxable as ordinary income to the employee. If
the optionee is subject to the restrictions of Section l6(b), income will be
recognized at the time the restrictions lapse and should be measured by the
excess of the fair market value of the shares at such time over the option price
unless the optionee elects to be taxed at the time of exercise. In the event of
a sale of the shares, any appreciation after the date of exercise or lapse of
the restrictions of Section l6(b), as the case may be, should qualify as capital
gain.
The Company will be entitled to a deduction for Federal income tax purposes
at the same time and in the same amount as the ordinary income recognized by the
employee. If the holding period requirements outlined above in connection with
an incentive stock option are satisfied, no deduction will be available to the
Company.
<PAGE> 14
Adoption of the l996 Plan requires the affirmative vote of the holders of
not less than a majority of the votes of the Common Shares and the Convertible
Preferred Shares outstanding and entitled to vote at the annual meeting, voting
together as a single class.
The Board of Directors recommends a vote FOR the approval of the Company's
l996 Stock Option Plan.
RATIFICATION OF SELECTION OF ACCOUNTANTS
There will be presented to the meeting for ratification the selection by the
Company's Board of Directors of KPMG Peat Marwick LLP, One Jericho Plaza,
Jericho, New York 11753 as independent public accountants for the Company for
the fiscal year ending December 31, 1996. That firm, which has served the
Company in such capacity since the Company's inception in 1964, has no other
relationship with the Company or its subsidiaries. Representatives of KPMG Peat
Marwick LLP will be present at the Annual Meeting and will be provided an
opportunity to make a statement if they desire to do so. Such representatives
are also expected to be available to respond to appropriate questions raised at
the Annual Meeting.
The affirmative vote of the holders of a majority of the shares of Common
Stock and Convertible Preferred Stock of the Company, voting together in person
or by proxy, as one class, is required to ratify such selection.
Services rendered by KPMG Peat Marwick LLP during the year ended December 31,
1995 related mainly to the audit function (which function included the
examination of the annual consolidated financial statements and consultation in
connection with the Company's filing of reports with the Securities and Exchange
Commission).
The Board of Directors recommends a vote FOR the ratification of the
appointment of KPMG Peat Marwick LLP as the Company's independent public
accountants for the fiscal year ending December 31, 1996.
SHAREHOLDERS PROPOSALS FOR 1997 ANNUAL MEETING
Any shareholder proposal intended to be presented at the Company's l997 Annual
Meeting must be received by the Secretary of the Company, 360l Hempstead
Turnpike, Suite l2l-I, Levittown, New York ll756-l3l5, no later than January 5,
l997 in order to be considered for inclusion in the proxy statement and form of
proxy for such meeting.
OTHER MATTERS
Management of the Company knows of no matters to be presented at the Annual
Meeting other than the matters set forth in this proxy statement. However, if
any other matters properly come before the meeting, the persons designated as
proxies intend to vote such proxies in accordance with their best judgement.
By Order of the Board of Directors,
James W. Stewart,
Secretary
Levittown, New York
April 24, l996
<PAGE> 15
EXHIBIT A
COLONIAL COMMERCIAL CORP.
1996 STOCK OPTION PLAN
There is hereby established a l996 Stock Option Plan (the "Plan"). The Plan
provides for the grant to certain employees and others who render services to
Colonial Commercial Corp., or of a subsidiary thereof, of options to purchase
shares ("Options") of Common Stock of Colonial Commercial Corp.
The term "Company", as used in the Plan, shall include Colonial Commercial
Corp. and any present or future subsidiary thereof.
It is intended that certain of the Options will constitute Incentive Stock
Options within the meaning of Section 422 of the Internal Revenue Code ("ISOs"),
and the remainder of the Options will constitute Nonstatutory options ("NSOs").
The Board of Directors ("Board") shall determine which Options are to be ISOs
and which are to be NSOs and shall enter into option agreements with the
recipients accordingly.
l. Purpose: The purpose of the Plan is to provide additional incentive to
the officers, employees and others who render services to the Company, who are
primarily responsible for the management and growth of the Company, or otherwise
materially contribute to the conduct and direction of its business, operations
and affairs, in order to strengthen their desire to remain in the employ of the
Company, stimulate their efforts on behalf of the Company and to retain and
attract persons of competence, and, by encouraging ownership of a stock interest
in Colonial Commercial Corp., to gain for the organization the advantages
inherent in employees and others who render services to the Company having a
sense of proprietorship.
2. The Stock: The aggregate number of shares of stock which may be issued,
transferred or sold upon the exercise of Options granted under the Plan shall
not, except as such number may be adjusted in accordance with paragraph (f) of
Article 5 hereof, exceed 1,000,000 shares of Common Stock of Colonial Commercial
Corp. ("Common Stock") which may be either authorized and unissued shares or
issued shares reacquired by Colonial Commercial Corp. Notwithstanding the above
limitation, if any Option granted under the Plan shall expire, terminate or be
cancelled for any reason without having been exercised in full, the
corresponding number of unpurchased shares shall again be available for the
purposes of the Plan.
3. Employees. The term "employees" as used in the Plan, shall mean officers
and other employees of the Company (including officers and other employees who
are also directors) within the classes referred to in Article 1 hereof.
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4. Eligibility:
(a) Options may be granted to such employees of (or, in the case of
NSOs only, to others who render services to) the Company or its subsidiaries or
parent as the Board shall select from time to time (the "Optionees"),. The terms
"subsidiary" and "parent" as used in the Plan shall have the respective meanings
set forth in sections 424 (f) and (e) of the Internal Revenue Code.
(b) An Optionee may hold more than one Option.
5. General Terms of Options:
(a) Option Price. The price or prices per share of Common Stock to be
sold pursuant to an Option (the "exercise price") shall be such as shall be
fixed by the Board but shall in any case not be less than:
(i) the fair market value per share for such Common Stock on the
date of grant in the case of ISOs other than to a 10% Shareholder,
(ii) 110% of the fair market value per share for such Common Stock
on the date of grant in the case of ISOs to a 10% Shareholder, and
(iii) 85% of the fair market value on the date of grant
in the case of NSOs.
A "10% Shareholder" means an individual who within the meaning of
Section 422(b)(6) of the Internal Revenue Code of 1986, as amended, ("the Code")
owns stock possessing more than 10 percent of the total combined voting power of
all classes of stock of the Company or of its parent or any subsidiary
corporation.
(b) Number of Options which may be Granted to, and Number of Shares
which may be Acquired by Employees. The Board may grant more than one Option to
an individual during the life of the Plan and, subject to the requirements of
Section 422 of the Code, with respect to incentive stock options, such Option
may be in addition to, in tandem with, or in substitution for, Options
previously granted under the Plan or of another corporation and assumed by
Colonial Commercial Corp.
The Board may permit the voluntary surrender of all or a portion
of any Option granted under the Plan to be conditioned upon the granting to the
employee of a new Option for the same or a different number of shares as the
Option surrendered, or may require such voluntary surrender as a condition
precedent to a grant of a new Option to such employee. Such new Option shall be
exercisable at the price, during the period, and in accordance with any other
terms or conditions specified by the Board at the time the new Option is
granted, all determined in accordance with the provisions of the Plan without
regard to the price, period of exercise, or any other terms or conditions of the
Option surrendered.
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(c) Period of Grant of Options. Options under the Plan may be granted
at any time after the Plan has been approved by the shareholders of Colonial
Commercial Corp. However, no Option shall be granted under the Plan after
December 31, 2005.
(d) Option Agreement. The Company shall effect the grant of Options
under the Plan, in accordance with determination made by the Board, by execution
of instruments in writing in a form approved by the Board. Each Option shall
contain such terms and conditions (which need not be the same for all Options,
whether granted at the time or at different times) as the Board shall deem to be
appropriate and not inconsistent with the provisions of the Plan, and such terms
and conditions shall be agreed to in writing by the Optionee.
(e) Non-Transferability of Option. No Option granted under the Plan to
an Optionee shall be transferable by the Optionee or otherwise than by will or
by the laws of descent and distribution and during the Optionee's lifetime, such
Option shall be exercisable only by such Optionee.
(f) Effect of Change in Common Stock. In the event of a reorganization,
recapitalization, liquidation, stock split, stock dividend, combination of
shares, merger or consolidation, or the sale, conveyance, lease or other
transfer by Colonial Commercial Corp. of all or substantially all of its
property, or any other change in the corporate structure or shares of Colonial
Commercial Corp. pursuant to any of which events the then outstanding shares of
the Common Stock are split up or combined or changed into, become exchangeable
at the holder's election for, or entitle the holder thereof to other shares of
stock, or in the case of any other transaction described in Section 24(a) of the
Code, the Board may change the number and kind of shares available under the
Plan and any outstanding Option (including substitution of shares of another
corporation) and the price of any Option and the fair market value determined
under paragraph (h) of this Article 5 hereof in such manner as it shall deem
equitable. Options granted under the Plan shall contain such provisions as are
consistent with the foregoing with respect to adjustments to be made in the
number and kind of shares covered thereby and in the option price per share in
the event of any such change.
(g) Optionees not Shareholders. An Optionee or a legal representative
thereof shall have none of the rights of a shareholder with respect to shares
subject to Options until such shares shall be issued upon exercise of the
Option.
(h) Not an Employment Contract. Nothing in the Plan or in any Option or
stock option agreement shall confer on any Optionee any right to continue in the
service of the Company or any parent or subsidiary of the Company or interfere
with the right of the Company to terminate such Optionee's employment or other
services at any time.
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(i) Fair Market Value. As used in the Plan, the term "fair
market value" shall mean as of any date:
(i) if the Common Stock is not traded on any over-the-counter
market or on a national securities exchange, the value determined by the Board
using the best available facts and circumstances,
(ii) if the Common Stock is traded in the over-the-counter market,
based on most recent closing prices for the Common Stock on the date the
calculation thereof shall be made, or
(iii) if the Common Stock is listed on a national securities
exchange, based on the most recent closing prices for the Common Stock of the
Company on such exchange.
(j) Types of Options. Options granted under the Plan shall be in the
form of (i) incentive stock options as defined in Section 422 of the Code, or
(ii) options not qualifying under such Section, or both, in the discretion of
the Board. The status of each option shall be identified in the Option
Agreement.
6. Other:
(a) Option Exercises. Options shall be exercised by submitting to the
Company a signed copy of the notice of exercise in a form to be supplied by the
Company. The exercise of an Option shall be effective on the date on which the
Company receives such notice at its principal corporation offices. The Company
may cancel such exercise in the event that payment is not effected in full,
subject to the terms of Section 6(e) below.
(b) Period of Option Vesting. The Committee shall determine for each
Option the period during which such Option shall be exercisable in whole or in
part, provided that no ISO to a 10% Shareholder shall be exercisable more than
five years after the date of grant.
(c) Special Rule for ISOs. The aggregate fair market value (determined
at the time the ISO is granted) of the stock with respect to which ISOs are
exercisable for the first time by the optionee ("Optionee") during any calendar
year (under all such plans of the Company, its parent or subsidiary) shall not
exceed $100,000, and any excess shall be considered an NSO.
(d) Effect of Termination of Employment.
(i) The Committee shall determine for each Option the extent, if
any, to which such Option shall be exercisable in the event of the termination
of the Optionee's employment with or rendering of other Services to the Company.
(ii) However, any such Option which is an ISO shall in all events
lapse unless exercised by the Optionee:
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<PAGE> 19
(A) prior to the 89th day after the date on which employment
terminated, if termination was other than by reason of death; and
(B) within a twelve-month period next succeeding the death of
the Optionee, if termination is by reason of death.
(iii) The Board shall have the right, at any time, and from time to
time, with the consent of the Optionee, to modify the lapse date of an Option
and to convert an ISO into an NSO to the extent that such modification in lapse
date increases the life of the ISO beyond the dates set forth above or beyond
dates otherwise permissible for an ISO.
(e) Payment for Shares of Common Stock. Upon exercise of
an Option, the Optionee shall make full payment of the Option Price:
(i) in cash or,
(ii) with the consent of the Board and to the extent
permitted by it:
(A) with Common Stock of the Company valued at fair market
value on date of exercise, but only if held by the Optionee for a period of time
sufficient to prevent a pyramid exercise that would create a charge to the
Company's earnings,
(B) with a full recourse interest bearing promissory note of
the Optionee, secured by a pledge of the shares of Common Stock received upon
exercise of such Option, and having such other terms and conditions as
determined by the Committee,
(C) by delivering a properly executed exercise notice
together with irrevocable instructions to a broker to sell shares acquired upon
exercise of the Option and promptly to deliver to the Company a portion of the
proceeds thereof equal to the exercise price, or
(D) any combination or any of the foregoing.
7. Withholding Taxes:
(a) In the case of shares that an Optionee receives pursuant to his
exercise of an Option, the Company shall have the right to withhold from any
salary, wages, or other compensation for services payable by the Company to such
Optionee amounts sufficient to satisfy any withholding tax liability
attributable to such Optionee's receipt of such shares. The Company shall have
the right to require the Optionee to remit to the Company an amount sufficient
to satisfy any Federal, state and/or local withholding tax requirements prior to
the delivery of any certificate or certificates for such shares. Alternatively,
the Company may, in its sole discretion from time to time, issue or transfer
such shares of Common Stock net of the number of shares sufficient to satisfy
the
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<PAGE> 20
withholding tax requirements. For withholding tax purposes, the shares of Common
Stock shall be valued on the date the withholding obligation is incurred.
(b) In the case of shares that an Optionee receives pursuant to his
exercise of an ISO, if such Optionee disposes of such shares within two years
from the date of the granting of the ISO or within one year after the transfer
of such shares to him, the Company shall have the right to withhold from any
salary, wages, or other compensation for services payable by the Company to such
Optionee amounts sufficient to satisfy any withholding tax liability
attributable to such disposition.
(c) In the case of a disposition described in section 7(b) above, the
Optionee shall give written notice to the Company of such disposition within 30
days following the disposition, which notice shall include such information as
the Company may reasonably request to effectuate the provisions hereof.
8. Agreements and Representations of Optionees: As a condition to the
exercise of an Option, unless counsel to the Company opines that it is not
necessary under the Securities Act of l933, as amended, and the pertinent rules
thereunder, as the same are then in effect, the Optionee shall represent in
writing that the shares being purchased are being purchased only for investment
and without any present intent at the time of the acquisition of such shares to
sell or otherwise dispose of the same.
9. Administration of the Plan: The Plan shall be administered
by the Board of Directors of Colonial Commercial Corp.
In addition to the Board's discretionary authority set forth in other
Articles hereof, the Board is authorized to establish such rules and regulations
for the proper administration of the Plan as it may deem advisable and not
inconsistent with the provisions of the Plan. Unless otherwise determined by the
Board, all questions arising under the Plan or under any rule or regulation with
respect to the Plan adopted by the Board, whether such questions involve an
interpretation of the Plan or otherwise, shall be decided by the Board, and its
decisions shall be conclusive and binding in all cases.
The Board shall determine the persons to whom Options under the Plan
are to be granted and the number of shares to be covered by each Option granted.
In selecting the individuals to whom Options shall be granted, as well as in
determining the number of shares subject to each Option, the Board shall
consider the positions and responsibilities of the persons being considered, the
nature of the services and accomplishments of each, the value to the Company of
their services, their present and potential contribution to the success of the
Company, the anticipated number of years of service remaining, and such other
factors as the Board may deem relevant.
A-6
<PAGE> 21
10. Amendment and Discontinuance of the Plan:
(a) The Board of Directors of Colonial Commercial Corp. may at any
time alter, suspend or terminate the Plan, but, except in accordance with the
provisions of paragraph (f) of Article 5 and Article 11 hereof, no change shall
be made which will have a material adverse effect upon any Option previously
granted, unless the consent of the Optionee is obtained; provided, however, that
except in the case of adjustment made pursuant to paragraph (f) of Article 5
hereof, the Board may not, without further approval of the stockholders, (i)
increase the maximum number of shares for which Options may be granted under the
Plan or which may be purchased by any individual Optionee (ii) decrease the
minimum Option Price provided in the Plan, or (iii) change the class of persons
eligible to receive Options.
(b) Notwithstanding the foregoing provisions of this Article 10,
except as may otherwise be provided herein, no person may be divested of the
ownership of Common Stock previously issued, sold or transferred under the Plan.
11. Other Conditions: If at any time counsel to Colonial Commercial Corp.
shall be of the opinion that any sale or delivery of shares of Common Stock
pursuant to an Option granted under the Plan is or may in the circumstances be
unlawful under the statutes, rules or regulations of any applicable
jurisdiction, Colonial Commercial Corp. shall have no obligation to make such
sale or delivery, and Colonial Commercial Corp. shall not be required to make
any application or to effect or to maintain any qualification or registration
under the Securities Act of 1933 or otherwise with respect to shares of stock or
Options under the Plan. The right to exercise any such Option shall be suspended
until, in the opinion of said counsel, such sale or delivery shall be lawful.
Upon termination of any period of suspension under this Article 11,
any Option affected by such suspension which shall not then have expired or
terminated shall be reinstated as to all shares available upon exercise of the
option before such suspension and as to shares which would otherwise have become
available for purchase during the period of such suspension, but no suspension
shall extend any Option Period.
At the time of any grant or exercise of any Option, Colonial
Commercial Corp. may, if it shall deem it necessary or desirable for any reason
connected with any law or regulation of any governmental authority relative to
the regulation of securities, condition the grant and/or exercise of such Option
upon the Optionee making certain representations to Colonial Commercial Corp.
and the satisfaction of Colonial Commercial corp. with the correctness of such
representations.
12. Approval; Effective Date: The Plan shall become
effective upon the approval by the shareholders of Colonial
Commercial Corp. at the Annual Meeting of shareholders to be held on
June 12, 1996.
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<PAGE> 22
Front Side of Common Stock Proxy Card
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COLONIAL COMMERCIAL CORP
COMMON STOCK
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Bernard Korn, James W. Stewart and Donald
K. MacNeill, and each of them jointly and severally, proxies, with full power of
substitution and revocation, to vote on behalf of the undersigned all shares of
Common Stock of Colonial Commercial Corp. which the undersigned is entitled to
vote at the Annual Meeting of Shareholders to be held on June 12, l996 or any
adjournments thereof.
(To be Signed on Reverse Side)
See
Reverse
Side
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<PAGE> 23
Back Side of Common Stock Proxy Card
- ----------------------------------------------------------------------
2.Proposal to ratify the
Please mark your selection of KPMG Peat
X votes as in this Marwick as independent
- -- example. public accountants of
the Company for the
Nominees fiscal year ending
For December 31, 1996.
Common
Stock FOR AGAINST ABSTAIN
FOR WITHHELD Directors:
l.Election Raphael M.Brackman ---- ---- ------
of --- ---- Gerald S. Deutsch 3.Proposal to adopt the
Directors: Bernard Korn Company's 1996 Stock
James W. Stewart Option Plan.
For,except vote withheld Carl L. Sussman
from the following FOR AGAINST ABSTAIN
nominee(s):
---- ----- -----
- --------------
4.In their discretion, the proxies
are authorized to vote upon such
other business as may properly
come before the meeting.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
THE ELECTION AS DIRECTORS OF MESSRS. BRACKMAN, DEUTSCH, KORN, STEWART AND
SUSSMAN AND THE RATIFICATION OF THE SELECTION OF KPMG PEAT MARWICK, AND TO ADOPT
THE COMPANY'S 1996 STOCK OPTION PLAN.
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY IN THE ENCLOSED ENVELOPE.
SIGNATURES DATE SIGNATURES DATE
------------ ------- ------------ -----
Note: Please sign exactly as ownership appears on this proxy. When signing as
attorney, executor, administrator, trustee or guardian, please give full
title as such. If a corporation, please sign in full corporate name by
President or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
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<PAGE> 24
Front Side of Convertible Preferred Stock Proxy Card
- -------------------------------------------------------------------------------
COLONIAL COMMERCIAL CORP.
PREFERRED STOCK
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Bernard Korn, James W. Stewart and Donald
K. MacNeill, and each of them, jointly and severally, proxies, with full power
of substitution and revocation, to vote on behalf of the undersigned all shares
of Convertible Preferred Stock of Colonial Commercial Corp. which the
undersigned is entitled to vote at the Annual Meeting of Shareholders to be held
on June 12, l996 or any adjournments thereof.
(To be Signed on Reverse Side)
See
Reverse
Side
- ---------------------------------------------------------------------------
<PAGE> 25
Back Side of Preferred Stock Proxy Card
- ---------------------------------------------------------------------------
2.Proposal to ratify the
Please mark your selection of KPMG Peat
X votes as in this Marwick as independent
- -- example. public accountants of
the Company for the
Nominees fiscal year ending
For December 31, 1996.
Preferred
Stock FOR AGAINST ABSTAIN
FOR WITHHELD Directors:
l.Election William Koon ---- ----- -----
of --- ---- Ronald Miller 3.Proposal to adopt the
Directors: Jack Rose Company's 1996 Stock
Donald K.MacNeill Option Plan.
For,except vote withheld
from the following FOR AGAINST ABSTAIN
nominee(s):
- ------------------------- ---- ----- -----
4.In their discretion, the proxies
are authorized to vote upon such
other business as may properly
come before the meeting.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
THE ELECTION AS DIRECTORS OF MESSRS. KOON, MILLER, ROSE AND MACNEILL AND THE
RATIFICATION OF THE SELECTION OF KPMG PEAT MARWICK, AND TO ADOPT THE COMPANY'S
1996 STOCK OPTION PLAN.
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY IN THE ENCLOSED ENVELOPE.
SIGNATURES DATE SIGNATURES DATE
----------- ------ ------------ -------
Note: Please sign exactly as ownership appears on this proxy. When signing as
attorney, executor, administrator, trustee or guardian, please give full
title as such. If a corporation, please sign in full corporate name by
President or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
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