As Filed with the Securities and Exchange Commission on October 2, 1997
Registration No. 333-_____
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM S-8
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
COLONIAL COMMERCIAL CORP.
-------------------------
(Exact name of registrant as specified in its charter)
NEW YORK 11-2037182
(State or other jurisdiction of (IRS Employer I.D. Number)
incorporation or organization)
3601 HEMPSTEAD TURNPIKE, LEVITTOWN, NEW YORK 11756-1315
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(Address of principal executive offices)
1986 STOCK OPTION PLAN
1996 STOCK OPTION PLAN
----------------------
(Full Title of Plans)
Bernard Korn, President
3601 Hempstead Turnpike, Levittown, New York 11756-1315
(Name and address of agent for service)
(516)-796-8400
--------------
(Telephone number, including area code, of agent for service)
Copies of all Oscar D. Folger, Esq.
communications to: 521 Fifth Avenue
New York, New York 10175
CALCULATION OF REGISTRATION FEE
Proposed Proposed Proposed
Maximum Maximum Maximum
Title of Amount Offering Aggregate Amount of
Securities to to be Price Per Offering Registration
BE REGISTERED REGISTERED SHARE(1) PRICE(1) FEE
- --------------------------------------------------------------------------------
Common Stock,
$.01 par value 1,727,500 $.50 $863,750 $ 261.75
(1) Estimated for purposes of computing the registration fee pursuant to Rule
457(c) at $.50 share based upon the average of the high and low prices on
September 25, 1997.
<PAGE>
PROSPECTUS
- ----------
COLONIAL COMMERCIAL CORP.
--------------------------------
1,727,500 Shares of Common Stock
--------------------------------
This Prospectus relates to 1,727,500 shares of Common Stock, $.01 par
value, of which 1,000,000 shares are issuable pursuant to the 1996 Stock Option
Plan (the "1996 Plan") and 727,500 shares are issuable pursuant to the 1986
Stock Option Plan (the "1986 Plan") of Colonial Commercial Corp. (the "Company")
(the "Shares"). Any Shares which are offered will be offered for the respective
accounts of the Selling Shareholders. This Prospectus does not relate to the
sale or issuance by the Company of any securities. The Company will not receive
any proceeds from the sale of the Shares by the Selling Shareholders. The
Company will receive exercise prices upon exercise of the stock options.
The Company has been advised by the Selling Shareholders that there are no
underwriting arrangements with respect to the sale of the Shares, that the
Shares will be sold from time to time in the National Association of Securities
Dealers Automated Quotation System Small-Cap Market ("Nasdaq") at then
prevailing prices and/or in private transactions at negotiated prices, and that
usual and customary brokerage fees will be paid by the Selling Shareholders in
connection therewith. See "Plan of Distribution."
The Company's Common Stock is traded on Nasdaq under the symbol CCOM. As
of September 25, 1997 the last sale price for the Company's Common Stock as
reported by Nasdaq was $0.50 per share. ---------------------
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 3.
---------------------
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.
================================================================================
PROCEEDS TO
PRICE TO UNDERWRITING DISCOUNTS SELLING
PUBLIC (1) AND COMMISSIONS SHAREHOLDERS(1)
----------------------------------------------
PER SHARE.. -0-
----------------------------------------------
Total ......... -0-
================================================================================
(1) Not determinable at present time.
THE DATE OF THIS PROSPECTUS IS OCTOBER 2, 1997.
<PAGE>
AVAILABLE INFORMATION
---------------------
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 and in accordance therewith files reports and other
information with the Securities and Exchange Commission (the "Commission").
Reports, registration statements, proxy statements and other information filed
by the Company with the Commission can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's Regional Offices:
Suite 1400, Northwestern Atrium Center, 500 West Madison Street, Chicago,
Illinois 60661-2511; Suite 1300, 7 World Trade Center, New York, New York 10048;
and Suite 500, 5757 Wilshire Boulevard, Los Angeles, California 90036; and, with
respect to registration statements, Suite 788, 1375 Peachtree Street, Atlanta,
Georgia. Copies of such materials can be obtained from the Public Reference
Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates, and can also be accessed electronically through the
Commission's Web site at http://www.sec.gov.
The Company undertakes to provide without charge to each person to whom this
Prospectus is delivered, upon the written or oral request of such person, a copy
of any and all of the information that has been incorporated by reference in the
Prospectus (not including exhibits to the information that is incorporated by
reference unless such exhibits are specifically incorporated by reference into
the information that the Prospectus incorporates). Such request should be
directed to the Secretary, Colonial Commercial Corp., 3601 Hempstead Turnpike,
Levittown, New York 11756-1315.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING DESCRIBED HEREIN AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY
JURISDICTION TO ANY PERSON TO WHOM SUCH OFFER WOULD BE UNLAWFUL OR AN
OFFERING OF ANY SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH
IT RELATES. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY OFFER OR SALE
MADE HEREUNDER AT ANY TIME SHALL IMPLY THAT THE INFORMATION PROVIDED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
2
<PAGE>
THE COMPANY
Colonial Commercial Corp. (the "Company") is a New York corporation which
was incorporated on October 28, 1964. Since 1993 the Company has been offering
consulting and advisory services to financial institutions while it was in the
process of evaluating investment opportunities.
On May 19, 1995, the Company purchased the capital stock of Atlantic
Hardware and Supply Corporation ("Atlantic") a distributor of door hardware
doors and frames used in new building construction, rehabilitated, interior
tenant buildouts and building maintenance for approximately $3.8 million. Since
acquisition of Atlantic, the Company's principal business activity is the
distribution of builders' hardware. The Company also owns 7.2% of Monroc Inc.
("Monroc"), a publicly-traded concrete products company headquartered in Salt
Lake City, Utah. Both Monroc and the Company have several parcels of land in
Utah which the Company believes have significant development potential. The
Company continues to seek acquisitions of going concerns and to offer consulting
services to lenders.
The Company's principal executive offices are located at 3601 Hempstead
Turnpike, Levittown, New York 11756-1315 and its telephone number is
(516)-796-8400.
RISK FACTORS
An investment in the Common Stock involves a high degree of risk.
Prospective investors should consider carefully the following risk factors,
among others, relating to the Company.
COMPETITION AND DIFFICULTY IN ENTERING NEW MARKETS
Atlantic competes primarily with other hardware distributors who are
selected by architects, owners, and/or construction managers. Atlantic's
competition varies from region to region, primarily because builders' hardware
distributors are generally local single market firms. Competition is usually
based on pricing and reputation. Atlantic also competes with firms that supply
the complete door package, which includes doors and frames as well as hardware.
Many of its competitors have more capital resources than Atlantic or the
Company. Increased competition may result in downward pressure on the Company's
gross margins and could have a materially adverse effect on the Company's
business financial condition, liquidity, and results of operations.
Hardware distributors are generally selected by architects, owners,
and/or construction managers. Entry into new markets is
3
<PAGE>
difficult due to the time required to establish a reputation with local
contractors and architects. There is also limited availability of competent
local management and staff. CYCLICALITY OF CONSTRUCTION INDUSTRY
Atlantic's customers are in the construction industry, which can be
sensitive to fluctuations in broad economic trends such as regional growth
rates, vacancy rates, overbuilding, interest rates, and national and local
taxation. Construction activity can also be affected by weather patterns, with a
tendency to reduced activity during winter months. There can be no assurances
that economic or weather conditions beyond the control of the Company will not
have a material adverse effect on the Company's financial condition, liquidity,
and results of operations.
NEED TO MAINTAIN WORKING CAPITAL
Collections of accounts receivable in the construction industry are
generally slow and subject to retainage. In order to keep Atlantic's vendors
current, the Company and Atlantic must maintain adequate working capital to pay
suppliers and support Atlantic's operations. Failure to remain sufficiently
current in its accounts payable could result in limitations in Atlantic's
ability to obtain materials or the imposition of onerous credit and payment
terms by vendors. The inability to maintain sufficient working capital could
have a material adverse effect on the Company's financial condition, liquidity,
and results of operations. There can be no assurances that the Company will be
able to maintain sufficient working capital to pay suppliers and support
Atlantic's operations.
DEPENDENCE ON KEY PERSONNEL
The Company's success depends to a significant extent upon the
continued service of Bernard Korn, its President, and James W. Stewart, its
Executive Vice President and Chief Financial Officer. The Company has employment
agreements with Messrs. Korn and Stewart which expire in December 1998. The
Company does not have key person life insurance. Neither of these individuals
have signed agreements binding them not to compete with the Company following
termination of his employment with the Company. The Company also will continue
to depend on other members of its senior staff as well as on its ability to
continue to attract, retain and motivate additional qualified personnel. The
competition for experienced personnel is intense, and the loss of the services
of one or more of the Company's key employees could have a material adverse
effect on the Company's business operations and prospects. There can be no
assurance that the Company will be successful in retaining its existing key
employees or in attracting and retaining any additional personnel
4
<PAGE>
it requires.
POTENTIAL FUTURE NEED FOR ADDITIONAL FUNDS
The Company anticipates that its current working capital will be
sufficient to fund its currently planned activities for the next 12 months from
the date of this Prospectus. No assurance can be given, however, that the
Company will not encounter unforeseen difficulties that may deplete its capital
resources more rapidly than anticipated, which could require it to seek
additional financing sooner than currently anticipated. The timing and amount of
any additional financing that is required to continue the acquisition of new
businesses and the development of the Company's current business and for other
purposes will depend on the ability of the Company to improve its operating
results and other factors. In its financial planning, the Company has not
assumed that it will receive any proceeds from the exercise of stock options.
There can be no assurance that any additional financing will be available to the
Company, if and when required, on terms acceptable to the Company or that such
additional financing, if available, would not result in substantial dilution of
the equity interests of existing stockholders.
MAINTENANCE CRITERIA FOR NASDAQ SECURITIES; PENNY STOCK RULES
The Common Stock is quoted on Nasdaq. In order to maintain such listing
the Company must continue to be registered under Section 12(g) of the Securities
Exchange Act of 1934 (the "Exchange Act") and have either net tangible assets of
at least $2,000,000, a market capitalization of at least $35,000,000, or net
income of at least $500,000 in two of the last three fiscal years. In addition,
there must be at least 500,000 shares outstanding not held by affiliates of the
Company with a market value of at least $1,000,000, at least 300 shareholders, a
minimum bid price of $1.00 per share, and at least two market makers. The
Company believes that it complies with all of the requirements for continued
listing except the minimum bid price of $1.00 per share. If the price of the
Company's Common Stock does not rise to over $1.00 in the near future, it may be
necessary for the Company to effect a reverse stock split in order to satisfy
the requirements. In general, there can be no assurance that in the future the
Company will continue to meet the requirements for continued listing on Nasdaq.
If the Company's securities fail to maintain a Nasdaq listing, the market value
of the Common Stock would likely decline and purchasers thereof would likely
find it more difficult to dispose of, or to obtain accurate quotations as to the
market value of, the Common Stock.
In addition, if the Company fails to maintain a Nasdaq
5
<PAGE>
listing for its securities, and no other exclusion from the definition of a
"penny stock" under the Exchange Act is available, then any broker engaging in a
transaction in the Company's securities would be required to provide any
customer with a risk disclosure document, disclosure of market quotations, if
any, disclosure of the compensation of the broker-dealer and its salesperson in
the transaction and monthly account statements showing the market values of the
Company's securities held in the customer's accounts. The bid and offer
quotation and compensation information must be provided prior to effecting the
transaction and must be contained on the customer's confirmation. If brokers
become subject to the "penny stock" rules when engaging in transactions in the
Company's securities, they would become less willing to engage in such
transactions, thereby making it more difficult for purchasers of the Common
Stock to dispose of their shares.
SHARES ELIGIBLE FOR FUTURE SALE
Sales of substantial amounts of Common Stock of the Company in the
public market following this offering could adversely affect prevailing market
prices. Of the 15,486,385 shares of Common Stock and Convertible Preferred Stock
outstanding as of the date of this prospectus, 15,486,385 shares are eligible
for resale in the public market, subject to compliance with Rule 144 under the
Securities Act of 1933, as amended (the "Securities Act").
CONTROL BY CURRENT DIRECTORS
The current directors own approximately 10.1% of the issued and
outstanding shares of Common Stock and voting Convertible Preferred Stock
(assuming no exercise of any outstanding options or warrants). Accordingly, the
current directors will be able to substantially influence the election of the
Company's directors, to cause an increase in the authorized capital or the
dissolution, merger, or sale of the assets of the Company and generally to
control the affairs of the Company.
DIVIDENDS NOT LIKELY
The Company has never paid dividends on its Preferred or Common Stock
and does not anticipate that it will pay dividends in the foreseeable future.
Any earnings that may be generated will be used to finance the growth of the
Company's business.
PROCEEDS NOT ALLOCATED TO SPECIFIC USES
There can be no assurances that the Company will receive any proceeds
from the exercise of the stock options. Not all stock options may be exercised,
which could result in the proceeds to
6
<PAGE>
the Company being minimal. Any proceeds received from the exercise of the stock
options would be added to working capital. The Company has no definite plans for
the use of any proceeds from the exercise of the stock options nor has the
Company made any specific allocations as to the use of any such proceeds.
USE OF PROCEEDS
Should all the options currently owned by the Selling Shareholders be
exercised, the net proceeds to the Company would be approximately $328,000 after
deducting expenses of the offering estimated at $10,000. All such proceeds will
be added to the Company's working capital. The Company has not made any specific
allocations as to the use of any such proceeds. Prior to expenditure, the
proceeds will be invested in short-term interest-bearing securities or money
market funds. Any income from such investments will also be added to working
capital.
The Company will not be entitled to the proceeds of any shares of
Common Stock which are sold by the Selling Shareholders.
7
<PAGE>
SELLING SHAREHOLDERS
The securities covered by the 1996 Plan and the 1986 Plan are being
offered on behalf of the following current directors and officers of the
Company.
<TABLE>
<CAPTION>
SECURITIES SECURITIES
OWNED BEFORE SECURITIES OWNED AFTER
NAME AND ADDRESS OFFERING (1) TO BE SOLD OFFERING(1)
------------ ---------- -----------
<S> <C> <C> <C>
Raphael M. Brackman (2) 48,000 45,000 3,000
Gerald Deutsch (3) 37,500 27,500 10,000
William Koon (4) 74,410 27,500 46,910
Bernard Korn (5) 552,805 310,000 242,805
Donald K. MacNeill (6) 70,000 70,000 0
Ronald Miller (7) 27,500 27,500 0
Jack Rose (8) 85,980 27,500 58,480
Paul Selden (9) 100,000 100,000 0
James W. Stewart (10) 120,000 100,000 20,000
Carl L. Sussman (11) 255,787 27,500 228,287
<FN>
(1) Excludes shares of the Company's voting Convertible Preferred Stock.
(2) Mr. Brackman is a director of the Company. His address is 1353 Long Beach
Road, Rockville Centre, NY.
(3) Mr. Deutsch is a director of the Company. His address is 6 Harbor Park
Drive, Port Washington, NY.
(4) Mr. Koon is a director of the Company. His address is 7200 Slabtown Road,
Columbus Grove, OH.
(5) Assuming the exercise and sale of all options registered hereunder, after
this offering Mr. Korn would hold approximately 2.7% of the Company's
outstanding Common Stock. Mr. Korn is President and a director of the
Company. Mr. Korn's address is c/o Colonial Commercial Corp., 3601
Hempstead Turnpike, Levittown, NY.
(6) Mr. MacNeill is a director of the Company. His address is 510 No. Ocean
Blvd., Pompano Beach, FL.
(7) Mr. Miller is a director of the Company. His address is 5 Willipie Street,
Wapakoneta, OH.
(8) Mr. Rose is a director of the Company. His address is 220 Lake Link Road,
Winter Haven, FL.
8
<PAGE>
(9) Mr. Selden is President of Atlantic, the Company's principal operating
subsidiary. His address is 601 West 26th Street, New York, NY.
(10) Mr. Stewart is Executive Vice President, Chief Financial Officer and a
director of the Company. Mr. Stewart's address is c/o Colonial Commercial
Corp., 3601 Hempstead Turnpike, Levittown, NY.
(11) Assuming the exercise and sale of all options registered hereunder, after
this offering Mr. Sussman would hold approximately 2.6% of the Company's
outstanding Common Stock. Mr. Sussman is a director of the Company. His
address is 3869 Darston Street, Palm Harbor, FL.
</FN>
</TABLE>
MATERIAL DEVELOPMENTS
The following material developments have occurred since the Company's
filing of its quarterly report on Form 10-QSB for the fiscal quarter ended June
30, 1997.
On August 19, 1997, the Company announced that it was discontinuing its
efforts to acquire US Computer Group, Inc., a computer maintenance and products
company.
PLAN OF DISTRIBUTION
The Shares are being offered for the respective accounts of the Selling
Shareholders. The Company will not receive any proceeds from the sale of any
Shares by the Selling Shareholders. The Company will receive the exercise prices
of any options which are exercised by the Selling Shareholders.
The sale of Shares by the Selling Shareholders may be effected from time to
time in transactions on Nasdaq, in negotiated transactions, through the timing
of options on the Shares, or through a combination of such methods of sale, at
fixed prices, which may be charged at market prices prevailing at the time of
sale, at prices related to such prevailing market prices or at negotiated
prices. The Selling Shareholders may effect such transactions by selling the
Shares to or through broker-dealers, and such broker-dealers may receive
compensation in the form of discounts, concessions or commissions from the
Selling Shareholders and/or the purchasers of the Shares for which such
broker-dealers may act as agent or to whom they sell as principal, or both
(which compensation as to a particular broker-dealer may be in excess of
customary compensation).
The Selling Shareholders and any broker-dealers who act in connection with
the sale of the Shares hereunder may be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Act, and any commissions received by
them and profit on any sale of the Shares as principal might be deemed to be
underwriting discounts and commissions under the Securities Act.
9
<PAGE>
EXPERTS
The consolidated financial statements of Colonial Commercial Corp. and
subsidiaries as of December 31, 1996 and 1995, and for each of the years in the
three-year period ended December 31, 1996 have been incorporated by reference
herein and in the registration statement in reliance upon the report of KPMG
Peat Marwick LLP, independent certified public accountants, incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing.
LEGAL MATTERS
Certain legal matters in connection with this offering are being passed
upon for the Company by Oscar D. Folger, Esq., New York, New York. Mr. Folger
owns 20,000 shares of Common Stock of the Company and holds options to acquire
15,000 shares which are included in this Prospectus.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents are incorporated in this Prospectus and made a part
hereof by reference:
1. The Company's annual report on Form 10-KSB and definitive Proxy
Statement for the year ended December 31, 1996.
2. The Company's quarterly reports on Form 10-QSB for the fiscal
quarters ended March 31, 1997 and June 30, 1997.
3. The section entitled "Capital Stock - Common Stock" contained in
Registration Statement No. 2-62100 on Form S-8 filed with the
Commission, under the Securities Act, on April 13, 1987.
In addition, all reports, proxy statements and other documents of the
Company hereafter filed with the Commission pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act, prior to the termination of the offering of the
securities covered by this Prospectus or the filing of a post-effective
amendment, which indicates that all securities have been sold or which
deregisters all securities then remaining unsold, shall be deemed to be
incorporated in this Prospectus and made a part hereof by reference from the
date of filing each such document. The Commission file number for such documents
is 1-6663. Any statement contained in an earlier document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other
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<PAGE>
subsequently filed document which also is incorporated or deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded to constitute a part of this Prospectus.
INDEMNIFICATION
The Certificate of Incorporation of the Company provides that all
directors, officers, employees and agents of the Company shall be entitled to be
indemnified by the Company to the fullest extent permitted by law. Insofar as
indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers or persons controlling the Company pursuant to
the foregoing provisions, or otherwise, the Company has been advised that in the
opinion of the Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.
ADDITIONAL INFORMATION
This Prospectus contains certain information concerning the Company and its
securities, but does not contain all the information set forth in the
Registration Statement and the Exhibits thereto filed with the Commission under
the Securities Act, to which reference is made. Any summary from the Exhibits
contained in this Prospectus is necessarily incomplete and must not be
considered as a full statement of the provisions of such instruments.
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<PAGE>
COLONIAL COMMERCIAL CORP.
1,727,500 SHARES OF COMMON STOCK
----------------------
PROSPECTUS
----------------------
October 2, 1997
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE 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. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER TO BUY ANY
SECURITIES IN ANY JURISDICTION IN WHICH SUCH AN OFFER OR SOLICITATION WOULD BE
UNLAWFUL. 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.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
----------------------------------------
See "Incorporation of Certain Information by Reference."
ITEM 4. DESCRIPTION OF SECURITIES.
-------------------------
Not Applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
--------------------------------------
See "Experts" and "Legal Matters."
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
-----------------------------------------
Section 721 of the New York Business Corporation Law provides as follows:
The indemnification and advancement of expenses granted pursuant to, or
provided by, this article shall not be deemed exclusive of any other rights to
which a director or officer seeking indemnification or advancement of expenses
may be entitled, whether contained in the certificate of incorporation or
by-laws, (i) a resolution of shareholders, (ii) a resolution of directors, or
(iii) an agreement providing for such indemnification, provided that no
indemnification may be made to or on behalf of any director or officer if a
judgment or other final adjudication adverse to the director or officer
establishes that his 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 personally gained in fact a financial profit or other
advantage to which he was not legally entitled. Nothing contained in this
article shall affect any rights to indemnification to which corporate personnel
other than directors and officers may be entitled by contract or otherwise under
law.
The Company's Certificate of Incorporation, as amended, permits the
indemnification of officers and directors in connection with both derivative and
non-derivative actions to the full extent permitted by the statute. The relevant
provision of the Certificate of Incorporation is as follows:
The directors and officers of the Corporation shall be entitled to be
indemnified by the Corporation to the fullest extent permitted by law.
The relevant provisions of the By-laws are as follows:
II-1
The Corporation shall indemnify its directors and officers to the fullest
extent permitted by law at the time indemnity is requested. Such indemnification
shall be made for all matters or omissions whenever occurring, whether before or
after the adoption of these by-laws.
Expenses incurred by a director or officer in defending a civil or criminal
action, suit or proceeding, shall be paid by the Corporation in advance of the
final disposition of such action, suit or proceeding. However, such payment
shall be made only upon receipt of an undertaking by or on behalf of such
director or officer to repay the amounts paid by the Corporation if it shall
ultimately be determined that he is not entitled to indemnification by the
Corporation in respect of the matters for which such payment was made.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (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. 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 action, suit or proceeding) is asserted by such
director, officer or controlling person 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 the 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.
--------
(5) Opinion of Oscar D. Folger as to legality
(23)(a) Consent of Oscar D. Folger (included in Exhibit 5)
(23)(b) Consent of KPMG Peat Marwick LLP (included in Part II)
(28)(a) 1986 Stock Option Plan (incorporated by reference from Exhibit 10
(c)(ii) to the Company's Annual Report on Form 10-K for 1987 filed with
the Commission on March 30, 1988).
(28)(b) 1996 Stock Option Plan
ITEM 9. UNDERTAKINGS.
-------------
(a) The undersigned Registrant hereby undertakes:
II-2
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the Prospectus any fact or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
PROVIDED, HOWEVER, that paragraphs (1)(i) and (1)(ii) do not apply if
the registration statement is on Form S-3, or Form S-8, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by Registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(b) The undersigned Registrant hereby undertakes that for purposes of
determining any liability under the Securities Act of 1933, each filing of
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(h) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers or
persons controlling the Registrant pursuant to the foregoing provisions, or
otherwise, Registrant 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. In the
II-3
<PAGE>
event that a claim for indemnification against such liabilities (other than the
payment by Registrant of expenses paid or incurred by a director, officer or
controlling person of Registrant in the successful defense of any action, suit
or proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to the 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.
II-4
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Levittown, State of New York, on the 29th day of
September, 1997.
COLONIAL COMMERCIAL CORP.
By: /S/ BERNARD KORN
President
II-5
<PAGE>
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and
appoints Bernard Korn as his true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, for him and in his name, place
and stead in any and all capacities to sign any and all amendments (including
post-effective amendments) to this registration statement on Form S-8 and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission under the Securities Act
of 1933.
--------------------
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
- --------- ----- ----
/S/ President and Director September 29,1997
Bernard Korn
/S/ Director and Treasurer September 29,1997
James W. Stewart (Principal Accounting and
Financial Officer)
/S/ Director September 29, 1997
- ------------------
Raphael M. Brackman
/S/ Director September 29, 1997
- ------------------
Gerald S. Deutsch
/S/ Director September 29, 1997
- ------------------
William Koon
/S/ Director September 29, 1997
- ------------------
Donald K. MacNeill
/S/ Director September 29, 1997
Ronald Miller
/S/ Director September 29, 1997
Jack Rose
/S/ Director September 29, 1997
- ------------------
Carl L. Sussman
II-6
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Colonial Commercial Corp.
and Subsidiaries
We consent to the use of our report incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the prospectus.
KPMG Peat Marwick LLP
Jericho, New York
September 29, 1997
E X H I B I T 5
<PAGE>
LAW OFFICES OF OSCAR D. FOLGER
521 Fifth Avenue
New York, New York 10175
September 30, 1997
Colonial Commercial Corp.
3601 Hempstead Turnpike
Levittown, New York 11756-1315
Gentlemen:
We have acted as counsel to Colonial Commercial Corp. a New York
corporation (the "Company") in connection with the registration by the Company
of 1,727,500 shares of its Common Stock, $.01 par value, which are issuable
under the Company's 1996 and 1986 Stock Option Plans (collectively the
"Shares"), and which are the subject of a Registration Statement on Form S-8
under the Securities Act of 1933, as amended (the "Act"). As counsel to the
Company we have examined and relied upon the original or copies, certified of
otherwise identified to our satisfaction, of such documents, corporate records
and other instruments as we have deemed necessary in order to render the
following opinion.
Based upon the foregoing, we are of the opinion that the Shares to be
issued by the Company pursuant to the aforementioned Plans are duly authorized
and, when issued and paid for in accordance with the Plans as described in the
Registration Statement, will be validly issued, fully paid and nonassessable.
We are aware that we are referred to under the caption "Legal Matters"
in the Reoffer Prospectus included in the Registration Statement and we hereby
consent to such reference to us and to the filing of this opinion as Exhibit 5
to the Registration Statement. In giving such consent, however, we do not hereby
imply or admit that we are within the category of persons whose consent is
required under Section 7 of the Act or under the General Rules and Regulations
of the Securities and Exchange Commission adopted thereunder.
Very truly yours,
Oscar D. Folger
EXHIBIT 28B
<PAGE>
COLONIAL COMMERCIAL CORP.
1996 STOCK OPTION PLAN
================================================================================
There is hereby established a 1996 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.
1. 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 canceled 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.
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
<PAGE>
(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.
(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 Options 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 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
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<PAGE>
of the Company or interfere with the right of the Company to terminate
such Optionee's employment or other services at any time.
(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 options 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 principle corporate 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
fiscal 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:
(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
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<PAGE>
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 Board,
(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 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 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:
================================================================================
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<PAGE>
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 1933, 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 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.
10. AMENDMENT AND DISCONTINUE 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 shareholders, (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
- 5 -
<PAGE>
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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