-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JSiPUwvLWQ1yf4lI70/XGqGz9yhoclHXQxKDHh01/+GjN+VVuL+oMmzUEPLv+kAU fHBhhWzmFt0tSQQIeJ861A== 0001019056-99-000535.txt : 19990928 0001019056-99-000535.hdr.sgml : 19990928 ACCESSION NUMBER: 0001019056-99-000535 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 19990927 EFFECTIVENESS DATE: 19990927 FILER: COMPANY DATA: COMPANY CONFORMED NAME: C-PHONE CORP CENTRAL INDEX KEY: 0000835585 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE & TELEGRAPH APPARATUS [3661] IRS NUMBER: 061170506 STATE OF INCORPORATION: NY FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: S-8 SEC ACT: SEC FILE NUMBER: 333-87865 FILM NUMBER: 99717798 BUSINESS ADDRESS: STREET 1: 6714 NETHERLANDS DRIVE CITY: WILMINGTON STATE: NC ZIP: 28405 BUSINESS PHONE: 9103956100 MAIL ADDRESS: STREET 1: 6714 NETHERLANDS DR CITY: WILMINGTON STATE: NC ZIP: 28405 FORMER COMPANY: FORMER CONFORMED NAME: TARGET TECHNOLOGIES INC DATE OF NAME CHANGE: 19940615 S-8 1 FORM S-8 As filed with the Securities and Exchange Commission on September __, 1999 Commission File No. 333-________ ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 C-PHONE CORPORATION (Exact name of registrant as specified in its charter) NEW YORK 06-1170506 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 6714 NETHERLANDS DRIVE, WILMINGTON, NORTH CAROLINA 28405 (Address, including zip code of registrant's principal executive offices) C-PHONE CORPORATION AMENDED AND RESTATED 1994 STOCK OPTION PLAN (Full title of the plan) DANIEL P. FLOHR PRESIDENT AND CHIEF EXECUTIVE OFFICER C-PHONE CORPORATION. 6714 NETHERLANDS DRIVE WILMINGTON, NORTH CAROLINA 28405 (910) 395-6100 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies of all communications, including all communications sent to the agent for service, should be sent to WARSHAW BURSTEIN COHEN SCHLESINGER & KUH, LLP 555 FIFTH AVENUE NEW YORK, NEW YORK 10017 (212) 984-7700 ATTENTION: MICHAEL D. SCHWAMM, ESQ.
CALCULATION OF REGISTRATION FEE ======================================================================================================== Proposed maximum Proposed maximum Title of each class of Amount to be offering aggregate offering Amount of securities to be registered registered price per share(2) price(2) registration fee - --------------------------- ---------- ------------------ -------- ---------------- Common Stock, $.01 par 375,000 shares(1) $1.234 $462,881 $129 value per share ========================================================================================================
(1) Consists of shares issuable upon exercise of options granted and to be granted pursuant to the C-Phone Corporation Amended and Restated 1994 Stock Option Plan, subject to adjustment for antidilution as provided therein. (2) Pursuant to Rule 457(h)(1), the proposed maximum offering price and the proposed maximum aggregate offering price have been calculated on the basis of the average high and low sales prices of C-Phone Corporation's common stock, as reported by the Nasdaq National Market on September 24, 1999. EXPLANATORY NOTE The amount being registered hereunder represents an addition to the 500,000 shares of Common Stock of C-Phone Corporation issuable under the C-Phone Corporation Amended and Restated 1994 Option Plan pursuant to the Registration Statement on Form S-8 filed with the Securities and Exchange Commission on August 1, 1995 (registration no. 33-95306), which registration statement is incorporated herein by reference. PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE. The following documents, which have been filed by C-Phone Corporation with the Securities and Exchange Commission pursuant to the Securities Exchange Act are incorporated by reference into this registration statement: (a) C-Phone's Annual Report on Form 10-KSB for the fiscal year ended February 28, 1999. (b) C-Phone's Quarterly Report on Form 10-QSB for the fiscal quarter ended May 31, 1999. (c) The description of the C-Phone's common stock set forth under Item 1 of its registration statement on Form 8-A, as filed with the Commission on June 22, 1994, which incorporates by reference the description set forth in the prospectus, dated August 19, 1994, contained in its registration statement on Form S-1 (File No. 33-80280), under the caption "Description of Securities - Common Stock." All documents subsequently filed by C-Phone with the Commission after the date of this registration statement pursuant to Sections 13(a), 13(c), 14, and 15(d) of the Exchange Act and prior to the filing of a post-effective amendment to this registration statement, which indicates that all securities offered hereby have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference into this registration statement and to be part hereof from the date of filing such documents; PROVIDED, HOWEVER, that the documents enumerated above or subsequently filed by C-Phone pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act in each year during which the offering made by this registration statement is in effect and prior to the filing with the Commission of C-Phone's Annual Report on Form 10-KSB covering such year, shall not be deemed to be incorporated by reference in this registration statement or be a part hereof from and after the filing of that Annual Report on Form 10-KSB. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this registration statement to the extent that a statement contained herein, or in any other subsequently filed document that also is or is deemed to be incorporated by reference herein, modifies or supersedes such statement. Any statement contained in this registration statement contained in a subsequently filed document, which is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this registration statement. ITEM 4. DESCRIPTION OF SECURITIES. Not applicable. ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL. Not applicable. II-1 ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS. As permitted by Section 722 of the New York Business Corporation Law (the "BCL"), Article SIXTH of C-Phone's Restated Certificate of Incorporation provides that: "To the fullest extent now or hereafter provided for or permitted by law, the Corporation shall indemnify the directors and officers of the Corporation and, in connection therewith, advance expenses with respect thereto. The rights to indemnification and advancement of expenses granted hereby shall not limit or exclude, but shall be in addition to, any other rights which may be granted by or pursuant to any by-law, resolution or agreement permitted by law; shall be deemed to constitute a contractual obligation of the Corporation to any director or officer of the Corporation who serves in such a capacity at any time while such rights are in effect; shall continue to exist after the repeal or modification hereof, to the extent permitted by law, with respect to events occurring prior thereto; and shall continue as to a person who has ceased to be a director or officer and shall inure to the benefit of the estate, spouse, heirs, executors, administrators or assigns of such person." In addition, Section 8.1 of C-Phone's By-Laws provides that: "The Corporation shall, to the fullest extent now or hereafter permitted by the New York Business Corporation Law, indemnify any Director or officer who is or was made, or threatened to be made, a party to an action, suit or proceeding including, without limitation, an action by or in the right of the Corporation to procure a judgment in its favor, whether civil or criminal, whether involving any actual or alleged breach of duty, neglect or error, any accountability, or any actual or alleged misstatement, misleading statement or other act or omission and whether brought or threatened in any court or administrative or legislative body or agency, including an action by or in the right of any other corporation of any type or kind, domestic or foreign, or any partnership, joint venture, trust, employee benefit plan or other enterprise, which any Director or officer of the Corporation is serving or served in any capacity at the request of the Corporation, by reason of the fact that he, his testator or intestate, is or was a Director or officer of the Corporation, or is serving or served such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise in any capacity, against judgments, fines, amounts paid in settlement, and costs, charges and expenses, including attorneys' fees, actually and necessarily incurred in connection with the defense of such action, suit or proceeding or any appeal therein; provided, however, that no indemnification shall be provided to any such Director or officer if a judgment or other final adjudication adverse to the Director or officer establishes that (i) his acts were committed in bad faith or were the result of active and deliberate dishonesty and, in either case, were material to the cause of action so adjudicated, or (ii) he personally gained in fact a financial profit or other advantage to which he was not legally entitled. Such right of indemnification shall not be deemed exclusive of any other rights to which such Director or officer may be entitled apart from the foregoing provisions. The foregoing provisions of this Section 8.1 shall be deemed to be a contract between the Corporation and each Director and officer who serves in such capacity at any time while this Article 8 and the relevant provisions of the New York Business Corporation Law and other applicable law, if any, are in effect, and any repeal or modification thereof shall not affect any rights or obligations then existing with respect to any state of facts then or theretofore existing or any action, suit or proceeding theretofore or thereafter brought or threatened based in whole or in part upon any such state of facts." The BCL, among other things, permits C-Phone to indemnify any person who was or is a party to any action by reason of the fact that such person is or was or has agreed to become a director or officer of C-Phone, or is or was serving at the request of C-Phone as a director or officer of another corporation, partnership, joint venture, trust or other enterprise against any II-2 liability incurred by him or her in connection with such action, if such person acted in good faith and in a manner such person reasonably believed to be in, or not opposed to, the best interests of C-Phone, and, with respect to any criminal action or proceeding, had no reasonable cause to believe that his or her conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, does not, of itself, create a presumption that the person did not act in good faith and in a manner which such person reasonably believed to be in, or not opposed to, the best interest of C-Phone and, with respect to any criminal action or proceeding, had reasonable cause to believe that his or her conduct was unlawful. As permitted by Section 402(b) of the BCL, Article SEVENTH of C-Phone's Restated Certificate of Incorporation provides that: "To the fullest extent now or hereafter provided for or permitted by law, directors of the Corporation shall not be liable to the Corporation or its shareholders for damages for any breach of duty in their capacity as directors. Any repeal or modification hereof shall not adversely affect any right or protection of a director of the Corporation existing hereunder with respect to any act or omission occurring prior to such repeal or modification." Section 402(b) of the BCL permits a corporation to eliminate or limit the personal liability of its directors to its shareholders and the corporation for damages for any breach of duty in such capacity. The BCL, among other things, provides that the foregoing provisions of C-Phone's Restated Certificate of Incorporation and By-Laws do not limit the liability of any director if a judgment or other final adjudication adverse to him or her establishes that his or her acts were in bad faith or involved intentional misconduct or a knowing violation of law or he or she gained in fact a financial profit or other advantage to which he or she was not legally entitled or that his or her acts violated the BCL. C-Phone also has obtained directors and officers liability insurance which covers the expenses incurred (subject to a deductible amount) in defending against a claim for breach of duty of a director or officer to the extent that such claim is also subject to a right of indemnification. ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED. Not applicable. ITEM 8. EXHIBITS. Exhibit No. Description - ----------- ----------- 4 Instruments defining the rights of security holders, including indentures 4.1 Restated Certificate of Incorporation, as filed with the Secretary of State of the State of New York on February 24, 1994(1) 4.2 Certificate of Amendment to Certificate of Incorporation, as filed with the Secretary of State of the State of New York on August 9, 1996(2) 4.3 Certificate of Amendment to Certificate of Incorporation, as filed with the Secretary of State of the State of New York on August 12, 1997(3) II-3 4.4 Certificate of Amendment to Certificate of Incorporation, as filed with the Secretary of State of the State of New York on December 18, 1997(4) 4.5 By-laws, as currently in effect(1) 4.6 Form of certificate representing shares of the C-Phone Corporation common stock(5) 4.7 C-Phone Corporation Amended and Restated 1994 Stock Option Plan and Form of Option Agreement.* 5 Opinion re legality 5.1 Opinion of Warshaw Burstein Cohen Schlesinger & Kuh, LLP* 15 Letter on unaudited interim financial information - not applicable 23 Consent of experts and counsel 23.1 Consent of Warshaw Burstein Cohen Schlesinger & Kuh, LLP (contained in Exhibit 5.1) 23.2 Consent of PricewaterhouseCoopers LLP* 24 Power of attorney (contained in the signature pages hereto) 28 Information from reports furnished to state insurance regulatory authorities not applicable. 99 Additional exhibits - not applicable - ----------------- *Filed herewith (1) Incorporated by reference to an Exhibit filed as part of the Company's Registration Statement on Form S-1 (the "S-1 Registration Statement") (Registration No. 33-80280), filed on June 14, 1994. (2) Incorporated by reference to an Exhibit filed as part of the Company's Quarterly Report on Form 10-QSB for the fiscal quarter ended August 30, 1996. (3) Incorporated by reference to an Exhibit filed as part of the Company's Quarterly Report on Form 10-QSB for the fiscal quarter ended August 30, 1997. (4) Incorporated by reference to an Exhibit filed as part of the Company's Current Report on Form 8-K, dated December 31, 1997. (5) Incorporated by reference to an Exhibit filed as part of Amendment No. 2 to the Company's Registration Statement on Form S-1 (Registration No. 33-80280), filed on August 11, 1994. II-4 ITEM 9. UNDERTAKINGS. C-Phone undertakes that it will: (1) File, during any period in which it offers or sells securities, a post-effective amendment to this registration statement to: (i) Include any prospectus required by section 10(a)(3) of the Securities Act; (ii) Reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement. (iii) Include any additional or changed material information on the plan of distribution. PROVIDED, HOWEVER, that C-Phone does not need to give the statements in paragraph (1)(i) and (1)(ii) if the information required in a post-effective amendment is incorporated by reference from periodic reports filed by C-Phone under the Exchange Act. (2) For determining liability under the Securities Act, treat each post-effective amendment as a new registration statement of the securities offered, and the offering of the securities at that time to be the initial bona fide offering. (3) File a post-effective amendment to remove from registration any of the securities that remain unsold at the end of the offering. Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the "Act") may be permitted to directors, officers and controlling persons of C-Phone pursuant to the foregoing provisions, or otherwise, C-Phone 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. If a claim for indemnification against such liabilities (other than the payment by C-Phone of expenses incurred or paid by a director, officer or controlling person of C-Phone 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, C-Phone will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. II-5 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 Wilmington, State of North Carolina, on September 27, 1999. C-PHONE CORPORATION By /s/ DANIEL P. FLOHR ----------------------------------------- Daniel P. Flohr President and Chief Executive Officer Each person whose signature appears below hereby constitutes and appoints Daniel P. Flohr, Tina L. Jacobs and Paul H. Albritton, and each of them, his or her true and lawful attorney-in-fact, with full power of substitution and resubstitution, for him or her in his or her name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement 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, hereby ratifying and confirming all that such attorneys-in-fact or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed below by the following persons in the capacities indicated and on the dates indicated.
Signature Title Date - --------- ----- ---- /s/ DANIEL P. FLOHR President, Chief Executive Officer September 27, 1999 - ------------------------- and Director (Principal Executive Officer) Daniel P. Flohr /s/ SEYMOUR L. GARTENBERG Director September 27, 1999 - ------------------------- Seymour L. Gartenberg /s/ TINA L. JACOBS Director September 27, 1999 - ------------------------- Tina L. Jacobs /s/ DONALD S. MCCOY Director September 27. 1999 - ------------------------- Donald McCoy /s/ E. HENRY MIZE Director September 27, 1999 - ------------------------- E. Henry Mize /s/ STUART E. ROSS Director September 27, 1999 - ------------------------- Stuart E. Ross /s/ PAUL H. ALBRITTON Vice President and Chief Financial September 27, 1999 - ------------------------- Officer (Principal Financial and Paul H. Albritton Accounting Officer)
II-6 EX-4.7 2 EXHIBIT 4.7 EXHIBIT 4.7 C-PHONE CORPORATION AMENDED AND RESTATED 1994 STOCK OPTION PLAN ARTICLE I PURPOSE C-Phone Corporation (the "Company") has established this "C-Phone Corporation 1994 Stock Option Plan" in order to encourage the acquisition of a proprietary interest in the Company by certain key employees and directors of the Company and its affiliates, and by certain consultants, advisors and other persons who provide services to the Company and its affiliates. Such a proprietary interest in the Company will provide such persons with a direct stake in the future welfare of the Company and strengthen their commitment to remain employed by or associated with the Company and its affiliates. It is also expected that the Plan will encourage qualified persons to seek and accept employment by or association with the Company and its affiliates. To accomplish the foregoing, the Plan contemplates the grant of Incentive Stock Options and Nonqualified Stock Options (all as hereinafter defined) to such persons. ARTICLE II DEFINITIONS Section 2.1 Definitions. Whenever used in this Plan, the following terms shall have the respective meanings set forth in this Section 2.1. "Affiliate" means a corporation which is a parent corporation or a subsidiary corporation (within the meaning of Section 424 of the Code) with respect to the Company. "Associate" means a person who is associated with the Company as a Director, or as a consultant, advisor or other service provider but who is not an Employee. "Board" means the board of directors of the Company. "Business Day" means any day on which banks within the State of New York are required to be opened for business. "Code" means the Internal Revenue Code of 1986, as amended. "Committee" means the Board; provided, however, that if a committee has been delegated authority pursuant to Section 3.1 to manage and administer the Plan, then Committee means such committee. "Director" means a member of the Board. "Disability" means, with respect to a Participant, any medically determinable physical or mental impairment that the Committee, on the basis of competent medical evidence, reasonably determines has rendered or will render -1- the Participant permanently and totally disabled within the meaning of Section 422(c)(6) of the Code. "Employee" means a person who performs services as an employee (within the meaning of Section 3401(c)(6) of the Code) of the Company or of an Affiliate. "Exchange Act" means the Securities Exchange Act of 1934, as amended, or any corresponding provisions of any subsequent Federal securities law. "Exercise Period" means, with respect to an Option, the period during which such Option may be exercised as determined pursuant to Section 6.2. "Fair Market Value" means, with respect to Shares subject to an Option, on any given date, the value of the Shares or Options as determined pursuant to Section 6.6. "Incentive Stock Option" means an option granted pursuant to the Plan that is intended to satisfy the requirements of Section 422(b) of the Code. "Initial Public Offering Price" means the price at which Shares are offered to the public in the Company's initial public offering. "Non-Employee Director" means a Director who comes within the definition of "non-employee director" under Rule 16b-3(b)(3) under the Exchange Act or any rule substituted therefor. "Nonqualified Stock Option" means an option granted pursuant to the Plan other than an Incentive Stock Option. "Option" means an Incentive Stock Option or a Nonqualified Stock Option, as the case may be. "Option Agreement" means, with respect to any person who has been granted an Option, a written agreement (including any amendment or supplement thereto) between the Company and such person. "Option Price" means, with respect to an Option, the price determined pursuant to Section 6.1 at which Shares subject to such Option may be purchased. "Option Value" means, with respect to an Option, on any given date the amount by which the aggregate Fair Market Value of the Shares subject to such Option on such date exceeds the product obtained by multiplying the number of Shares subject to such Option by the Option Price. "Participant" means an Employee or an Associate who receives an Option. "Plan" means the C-Phone Corporation 1994 Stock Option Plan, as set forth herein and as may be amended. "Registration Statement" means the Company's Registration Statement on Form S-1 registering Shares to be sold in the Company's initial public offering. "Retirement" means, if applicable, the termination of employment or association due to retirement after either ten years of employment or association or under a retirement plan of the Company, in each instance with the consent of the Committee. "Securities Act" means the Securities Act of 1933, as amended, or any corresponding provisions of any subsequent Federal securities law. -2- "Share" means a share of the Company's common stock described in Section 5.1. "Ten-Percent Shareholder" means, at any time an Option is granted, an individual who owns (or is considered to own under the attribution rules contained in Section 424(d) of the Code) stock possessing more than ten percent of the total combined voting power of all classes of stock of the Company or of any Affiliate. "Termination Date" means, with respect to a Participant, the date on which such Participant's status as an Employee or Associate terminates for any reason. Section 2.2 Rules of Construction. Unless the context otherwise requires or unless otherwise defined herein, (i) a term shall have the meaning assigned to it in Section 2.1, (ii) all references to section numbers shall be to sections of the Plan, (iii) all references to the "Company" shall include any successor thereto, (iv) all references to "employment" or "association" of a Participant shall be to his status as an "Employee" or "Associate," respectively, of one or more of the Company and its Affiliates, (v) "or" shall not be exclusive, (vi) words in the singular shall include the plural, and vice-versa, and (vii) words in the masculine gender shall include the feminine and neuter, and vice-versa. ARTICLE III ADMINISTRATION Section 3.1 Administration. The Plan shall be administered by the Committee, which may be the Compensation Committee of the Board or such other committee of the Board, comprised only of Non-Employee Directors and consisting of at least three Directors to which the Board may delegate the authority to administer the Plan. Section 3.2 Committee Action. In administering the Plan, the Committee shall follow any general guidelines not inconsistent with the Plan established by the Board and may adopt rules and regulations for carrying out the Plan. The Committee may consult with counsel, who may be counsel to the Company, and shall not incur any liability for any action taken in good faith in reliance upon the advice of counsel. The interpretation and decision made by the Committee with regard to any question arising under the Plan or under any Option Agreement entered into in connection with the Plan shall be final and conclusive on all persons participating or eligible to participate in the Plan. Section 3.3 Responsibilities of Committee. Subject to the terms and conditions of the Plan and such limitations as the Board from time to time may impose, the Committee shall be responsible for the overall management and administration of the Plan and shall have such authority as shall be necessary or appropriate in order to carry out its responsibilities, including, without limitation, the authority to (i) grant Options to such persons at such times as it deems advisable, (ii) determine the terms of such Options to be included in grants and the number of Options, (iii) prescribe the terms of the Option Agreements evidencing such Options, and (iv) adopt rules and regulations and prescribe forms for the operation and administration of the Plan. Section 3.4 Compliance with Section 16 of the Exchange Act. It is the intent of the Company that the Plan and any Options granted hereunder be interpreted in a manner so that the Plan and any Options granted hereunder to Participants satisfy the applicable requirements of Rule 16b-3 promulgated under the Exchange Act, so that each Participant, to the maximum extent practicable, will be entitled to the benefits of Rule 16b-3 or other exemptions provided pursuant to the rules adopted under Section 16 of the Exchange Act, and will not be subjected to the "short-swing" liability provisions of Section 16 of the Exchange Act. If any provision of the Plan or of any Option granted hereunder would otherwise frustrate or conflict with the intent expressed in this Section 3.4, that provision to the extent possible shall be interpreted and deemed amended so as to avoid such conflict. To the extent of any remaining irreconcilable conflict with such intent, such provision shall be deemed void as applicable to such persons. -3- ARTICLE IV ELIGIBILITY AND PARTICIPATION Employees and Associates are eligible to participate in the Plan, without regard to length of employment or association; provided, however, that an Associate shall not be eligible to receive Incentive Stock Options. The Committee shall determine whether and when an Employee or Associate shall become a Participant and shall determine the numbers of Shares for which Options shall be granted to such person; provided, however, that if such person is a Director and the Committee does not consist of the Board, then the Board shall ratify such grant and the terms thereof in order for such grant to be effective. An Employee or Associate shall be a Participant with respect to any Shares subject to an Option only if he or she executes an Option Agreement with respect to such Shares in such form as the Committee may prescribe. ARTICLE V STOCK SUBJECT TO PLAN; OPTION AGREEMENTS Section 5.1 Stock Subject to Plan. The stock to be offered and delivered under the Plan, pursuant to the exercise of an Option, shall be shares of the Company's authorized common stock, par value $0.01, and may be unissued shares or reacquired shares, as the Committee from time to time may determine. The aggregate number of Shares to be reserved under the Plan shall not exceed 875,000, subject to adjustment as set forth in Article VIII. If, during the term of the Plan, an Option expires or terminates for any reason prior to the exercise thereof in full, the Shares subject to such Option but not delivered shall thereafter be available for grants hereunder. The Shares subject to an Option that is exercised shall be charged against the aggregate number of Shares available under the Plan. Section 5.2 Option Agreements. The grant of each Option shall be evidenced by a written Option Agreement executed by the Company and the Participant which shall, among other things (i) designate such Option as either an Incentive Stock Option or a Nonqualified Stock Option, (ii) specify the number of Shares subject to such Option, (iii) specify the Option Price for the Shares subject to such Option and the period during which such Option may be exercised, (iv) set forth specifically or incorporate by reference the applicable provisions of the Plan, and (v) contain such other terms and conditions not inconsistent with the Plan as the Committee may prescribe. ARTICLE VI TERMS OF OPTIONS Section 6.1 Option Price. The Option Price of Shares subject to an Option that may be purchased upon exercise of an Option shall be such amount as may be determined by the Committee at the time the Option is granted; provided, however, that (i) the Option Price of any Option shall not be less than the Fair Market Value of such Shares on the date such Option is granted, or less than one hundred and ten percent of the Fair Market Value of such Shares in the case of an Incentive Stock Option granted to a Ten-Percent Shareholder and (ii) the Option Price of any Option granted within one year after the effective date of the Registration Statement shall not be less than the greater of the Initial Public Offering Price and the Fair Market Value on the date of grant. Section 6.2 Exercise Period. Except as otherwise provided in Sections 6.3 and 6.4, an Option shall vest and be exercisable during such Exercise Period as may be determined by the Committee in its sole discretion on the date the Option is granted. Notwithstanding anything to the contrary contained in the Plan, the Exercise Period for an Incentive Stock Option shall not exceed ten years from the date such Option is granted, or five years from the date such option is granted in the case of an Incentive Stock Option granted to a Ten-Percent Shareholder. -4- Section 6.3 Exercise Upon Change in Control. An Option shall automatically become vested and shall be immediately exercisable in full upon the occurrence of any of the following events: (i) any person (within the meaning of Section 13(d) of the Exchange Act) other than the Company or an Affiliate shall, after the Effective Date, become the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of securities of the Company representing thirty percent or more of the combined voting power of the Company's then outstanding voting securities as a result of a tender or exchange offer or open market purchases (privately negotiated or otherwise), unless such ownership by such person has been approved by the Board immediately prior to the acquisition of such securities by such person; (ii) the shareholders of the Company approve (A) an agreement to merge or consolidate with or into another entity pursuant to which the Company is not the survivor, (B) an agreement to sell or otherwise dispose of all or substantially all of the Company's assets, or (C) a plan to liquidate the Company; provided, however, that the Board may determine that Options shall not automatically vest upon approval of any such agreement or plan; or (iii) at any time during a period of two consecutive years (not including any period prior to the adoption of the Plan), individuals who at the beginning of such period constitute the Board cease for any reason to constitute at least a majority thereof, unless the election or the nomination for election by the Company's shareholders of each new director during such two-year period is approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of such period. Section 6.4 Exercise Upon Termination. If a Participant's employment or association with the Company or an Affiliate terminates for any reason other than for cause, Options granted to such Participant that are exercisable on his Termination Date shall remain exercisable (i) until the expiration of three months (or such other time as shall be determined by the Committee in its sole discretion on the date the Option is granted) from such Termination Date, if such termination occurs for a reason other than the Participant's death, Disability or Retirement, or (ii) the expiration of twelve months (or such other time as shall be determined by the Committee in its sole discretion on the date the Option is granted) from such Termination Date, if such termination occurs on account of the Participant's death, Disability or Retirement. No Option shall be exercisable by a Participant after termination of employment or association for cause. This Section 6.4 shall not apply to a Participant who continues to be an Employee or Associate of the Company or any Affiliate. Notwithstanding anything to the contrary contained in this Section 6.4, no Option shall be exercisable in whole or in part after the expiration date of the Option or more than ten years after the date of grant of such Option. Section 6.5 Limitations on Incentive Stock Options. Except as otherwise provided under the Code, to the extent that the aggregate Fair Market Value (determined at the time the Option is granted) of Shares with respect to which Incentive Stock Options are exercisable for the first time by a Participant during a calendar year (under all stock option plans of the Company and its Affiliates) exceeds $100,000, such Options shall be treated as Nonqualified Stock Options. Incentive Stock Options shall not be issued to any person who is not an Employee. Section 6.6 Fair Market Value. The Fair Market Value on any given date of Shares subject to an Option shall be the closing price of the Shares on the principal national securities exchange on which the Shares are traded on the day immediately preceding the date as of which Fair Market Value is being determined, or on the next preceding date on which the Shares are traded if no Shares were traded on such immediately preceding day. If the Shares are not traded on a securities exchange but are quoted on the Nasdaq National Market, then the Fair Market shall be deemed to be the closing price of the Shares on the Nasdaq National Market on the day immediately preceding the date as of which Fair Market Value is being determined, or on the next preceding date on which the Shares are traded if no Shares were traded on such immediately preceding day; and if the Shares are not traded on the Nasdaq National Market, but are traded on the Nasdaq SmallCap Market, then the Fair Market shall be deemed to be -5- the last price of the Shares on the Nasdaq SmallCap Market on the day immediately preceding the date as of which Fair Market Value is being determined, or on the next preceding date on which the Shares are traded if no Shares were traded on such immediately preceding day; and if the Shares are not traded on the Nasdaq SmallCap Market, then Fair Market Value shall be deemed to be the average of the high bid and low asked prices of the Shares in the over-the-counter market on the day immediately preceding the date as of which Fair Market Value is being determined or on the next preceding date on which such high bid and low asked prices were recorded as reported by a generally accepted reporting service. If the Shares are not publicly traded, Fair Market Value shall be determined in good faith by the Board or the Committee. In no event shall Fair Market Value be less than the par value of the Shares. Section 6.7 Whole or Partial Exercise. Except as otherwise provided in Article VI or as specifically stated in an Option Agreement, an Option may be exercised in whole or in part at any time during the Exercise Period. ARTICLE VII EXERCISE OF OPTIONS Section 7.1 Payment for Shares. Upon the exercise of an Option by a Participant, the Company shall cause the purchased Shares to be issued only when it shall have received the full Option Price therefor paid in cash or, if permitted by applicable law and set forth in the applicable Option Agreement, with Shares, or by surrender of currently exercisable Options, or such other property (not inconsistent with the terms of the Plan) or a combination of cash, Shares and Options to be valued at the Fair Market Value thereof on the date of exercise, and such other property at its fair market value as determined by the Committee. If payment is made by delivery to the Company of Shares owned by the Participant, any Shares so delivered shall have been beneficially owned by the Participant for a period of not less than six months prior to the date of exercise and such Shares shall be in proper form for transfer and accompanied by all requisite stock transfer tax stamps or cash in lieu thereof. If payment is made by surrender to the Company of Options owned by the Participant, such Options shall have an Option Value equal to the Option Price of the Shares as to which the Option is being exercised. Section 7.2 Nontransferability. Any Option granted under the Plan shall be nontransferable except by will or by the laws of descent and distribution. In the event of any such transfer, the entire Option shall be transferred to the same person or entity. During the lifetime of a Participant, any Option granted to such Participant may be exercised only by the Participant. No right or interest of a Participant in any Option shall be subject to any lien, obligation or liability whatsoever. Section 7.3 Fractional Shares. In no event shall an Option be exercisable for or with respect to a fractional share. ARTICLE VIII ADJUSTMENTS FOR CHANGES IN CAPITALIZATION, ETC. In the event of any change in the outstanding Shares through merger, consolidation, reorganization, recapitalization, stock dividend, stock split, split-up, split-off, spin-off, combination or exchange of shares of the Company's stock, or other like change in the capital structure of the Company, an adjustment shall be made to each outstanding Option granted hereunder such that each such Option shall thereafter be exercisable for such securities, cash and/or other property as would have been received in respect of the Shares subject to such Option had it been exercised in full immediately prior to such change, and such adjustment shall be made successively each time any such change shall occur. The term "Shares" after any such change shall refer to the securities, cash and/or property then receivable upon exercise of an Option. In addition, in the event of any such change, the Committee shall make any further adjustment as may be appropriate to the maximum number of Shares subject to the Plan, and the number of Shares and Option Price of Shares subject to outstanding Options, as shall be equitable to prevent dilution or enlargement of rights -6- under any Option. Notwithstanding the foregoing provisions of this Article VIII (i) each such adjustment with respect to an Incentive Stock Option shall comply with the rules of Section 424(a) of the Code, and (ii) in no event shall any adjustment be made which would render any Incentive Stock Option granted hereunder other than an "incentive stock option" within the meaning of Section 422 of the Code. ARTICLE IX COMPLIANCE WITH LAW No Option shall be exercisable, no Shares shall be delivered, and no payment shall be made under the Plan except in compliance with all Federal and state laws and regulations (including, without limitation, withholding tax requirements and federal and state securities laws and the regulations) and rules of all securities exchanges or self-regulatory organizations on which the Shares may be listed or traded. The Company shall have the right to rely on an opinion of counsel as to such compliance. Any certificate issued to evidence Shares for which an Option is exercised may bear such legends and statements as the Committee upon advice of counsel may deem advisable to assure compliance with Federal and state laws and regulations. No Option shall be exercisable, nor shall Shares nor certificates therefor be issued, under the Plan until the Company has obtained such consent or approval as the Committee may deem advisable from any regulatory bodies having jurisdiction over such matters. ARTICLE X MISCELLANEOUS Section 10.1 Effect on Employment. Neither the adoption of the Plan or its operation, nor any documents describing or referring to the Plan (or any part hereof) shall confer upon any person any right to continue as an Employee or Associate of the Company or any Affiliate or in any way affect any right or power of the Company or any Affiliate to terminate the employment of any Employee or the association of any Associate at any time without assigning a reason therefor. Section 10.2 Unfunded Plan. The Plan, insofar as it provides for grants, shall be unfunded, and the Company shall not be required to segregate any assets that may at any time be represented by grants under the Plan. Any liability of the Company to any person with respect to any grant under the Plan shall be based solely upon any contractual obligations that may be created pursuant to the Plan. No such obligation of the Company shall be deemed to be secured by any pledge of, or other encumbrance on, any property of the Company. Section 10.3 Use of Proceeds. The proceeds received by the Company from the sale of Shares pursuant to the Plan shall be used for general corporate purposes. Section 10.4 Rights as a Shareholder. A Participant shall have no rights with respect to any Share until the Participant shall have become a holder of record of such Share, and the Participant shall not be entitled to any dividends or distributions or other rights in respect of such Share for which the record date is prior to the date on which the Participant shall have become the holder of record therefor, except as otherwise provided in Article VIII. Section 10.5 Construction. Headings are given to the articles and sections of the Plan solely as a convenience to facilitate reference and shall not in any way affect the meaning of the Plan. Section 10.6 Applicable Law. The Plan shall be governed and construed in accordance with the internal laws (and not the law of conflicts) of the State of New York. -7- ARTICLE XI AMENDMENT; TERMINATION; EFFECTIVE DATE Section 11.1 Amendment and Termination. The Board may amend or terminate the Plan at any time or from time to time; provided, however, that no amendment shall without all required approvals with respect thereto (i) increase (except as provided by Article VIII) the maximum number of shares as to which Options may be granted under the Plan, or (ii) materially modify the requirements in Article IV as to eligibility for participation in the Plan. Any provision of the Plan to the contrary notwithstanding, no termination or amendment of the Plan may, without the consent of the individual to whom an Option shall have been previously granted, adversely affect the rights conferred by such Option. The Board may amend the terms of any Option at any time or from time to time with the consent of the holder of such Option; provided, however, that no Option may be amended to reduce the Option Price thereof. Section 11.2 Duration of the Plan. Unless terminated earlier pursuant to Section 11.1, the Plan shall terminate upon the expiration of ten years from the earlier of the date of its adoption by the Board or the date on which the Plan is approved by the shareholders of the Company, and no Option shall be granted after termination of the Plan. Section 11.3 Effective Date. The Plan shall become effective upon its adoption by the Board, subject to the approval by the affirmative vote of the holders of a majority of the outstanding shares of Common Stock of the Company present, in person, or by proxy, at a shareholders meeting duly held within one year following adoption of the Plan by the Board. All options granted prior to the date of such shareholder approval shall be subject to such approval and No Option shall be exercisable and no Shares shall be delivered until such approval shall have been received. -8- C - PHONE CORPORATION STOCK OPTION AGREEMENT THIS AGREEMENT, dated as of _______, 199_, between C-Phone Corporation, a New York corporation (the "Company"), and _______________ ("Participant"), is made pursuant and subject to the provisions of the Company's Amended and Restated 1994 Stock Option Plan (the "Plan"), a copy of which is annexed hereto as Exhibit A. All capitalized terms used herein and not otherwise defined herein shall have the meaning herein as given them in the Plan. 1. GRANT OF OPTION. Pursuant to the Plan, the Compensation Committee of the Board of Directors of the Company (the "Committee"), on ____________, 199_ (the "Date of Grant"), granted to Participant, subject to the terms and conditions of the Plan and to the terms and conditions herein set forth, the right and option to purchase from the Company all or any part of an aggregate of _______ shares of common stock, par value $.01 per share (the "Common Stock") at the Option Price of $_____ per share.(1) This Option is [A NONQUALIFIED STOCK OPTION] [AN INCENTIVE STOCK OPTION] 2. TERMS AND CONDITIONS. This Option is subject to the following terms and conditions: (a) EXPIRATION DATE. This Option shall expire on the date which is the _________ anniversary of the Date of Grant (the "Expiration Date").(2) (b) EXERCISE OF OPTION. Except as otherwise provided herein, [THIS OPTION SHALL BECOME FULLY EXERCISABLE ON THE DATE WHICH IS ______ MONTHS FROM THE DATE HEREOF.] [THIS OPTION SHALL BECOME EXERCISABLE IN _______ SUBSTANTIALLY EQUAL INSTALLMENTS, THE FIRST SUCH INSTALLMENT TO BECOME EXERCISABLE ON THE FIRST ANNIVERSARY OF THE DATE OF GRANT AND THE REMAINING INSTALLMENTS TO BECOME EXERCISABLE ON EACH SUBSEQUENT ANNIVERSARY THEREOF UNTIL ALL THE SHARES SUBJECT TO THIS OPTION HAVE BECOME EXERCISABLE]. - ----------------- 1 THE OPTION PRICE OF AN OPTION CAN NOT BE LESS THAN FAIR MARKET VALUE OF THE SHARES ON THE DATE OF GRANT (OR 110% OF FAIR MARKET VALUE IN THE CASE OF A GRANT OF AN INCENTIVE STOCK OPTION TO A TEN PERCENT SHAREHOLDER). 2 EXPIRATION DATE MAY NOT EXCEED TEN YEARS IN THE CASE OF A NON-QUALIFIED STOCK OPTION AND FIVE YEARS IN THE CASE OF AN INCENTIVE STOCK OPTION. -9- (c) METHOD OF EXERCISING AND PAYMENT FOR SHARES. This Option is exercisable by written notice, accompanied by payment in full of the Option Price, delivered to the attention of the Company's Secretary at the Company's principal office in Wilmington, North Carolina. The Date of Exercise shall be the later of the date of the aforesaid notice and the date the Option Price is received by the Company. The Option Price shall be paid in cash[, OR WITH SHARES OF COMMON STOCK, OR BY SURRENDER OF CURRENTLY EXERCISABLE OPTIONS, [OR BY (INSERT OTHER MEANS APPROVED BY THE COMMITTEE)] OR A COMBINATION THEREOF.](3) 3. FRACTIONAL SHARE. In no event shall this Option be exercisable for or with respect to a fractional share. 4. GOVERNING LAW. This Agreement is to be governed by the laws of the State of New York, without regard to the conflict of law provisions thereof. 5. CONFLICTS. In the event of any conflict between the provisions of the Plan as in effect on the date hereof and the provisions of this Agreement, the provisions of the Plan are to govern. All references to the Plan are intended to mean the Plan as in effect on the date hereof and as the same by be amended from time to time in accordance with the provisions of the Plan. 6. PARTICIPANT BOUND BY PLAN. Participant acknowledges receipt of a copy of the Plan and agrees to be bound by all the terms and provisions thereof. 7. BINDING EFFECT. Subject to the limitations stated above and in the Plan, this Agreement is to be binding upon and inure to the benefit of the legatees, distributees and personal representatives of Participant and the successors of the Company. - --------------------- 3 INSERT ANY OTHER MEANS OF PAYMENT AUTHORIZED BY THE COMMITTEE. -10- IN WITNESS WHEREOF, the Company has caused this Agreement to be signed by a duly authorized officer, and Participant has affixed his or her signature hereto. C-PHONE CORPORATION By:________________________ ___________________________ Participant -11- EX-5 3 EXHIBIT 5 EXHIBIT 5 WARSHAW BURSTEIN COHEN SCHLESINGER & KUH, LLP 555 Fifth Avenue New York, New York 10017 Telephone: (212) 984-7700 Facsimile: (212) 972-9150 September 27, 1999 C-Phone Corporation 6714 Netherlands Drive Wilmington, North Carolina 28405 Gentlemen and Ladies: You have requested our opinion, as counsel for C-Phone Corporation, a New York corporation (the "Company"), in connection with the Registration Statement on Form S-8 (the "Registration Statement") under the Securities Act of 1933 (the "Act"), filed by the Company with the Securities and Exchange Commission (the "Commission"). The Registration Statement relates to the registration of an additional 375,000 shares (the "Shares") of the Company's common stock, par value $.01 per share (the "Common Stock"), issuable upon the exercise of options granted or to be granted under the Company's Amended and Restated 1994 Stock Option Plan (the "Plan"). In the preparation of our opinion, we have examined (1) the Restated Certificate of Incorporation of the Company, as amended to date, (2) the By-Laws of the Company, as in effect on the date hereof, (3) minutes of meetings of the Company's Board of Directors, as made available to us by executive officers of the Company, (4) a certificate from an executive officer of the Company, (5) the Registration Statement, and (6) the Plan. In our examinations, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals, the conformity to the originals of all documents submitted to us as certified, photostatic or conformed copies, and the authenticity of the originals of all such latter documents. Based upon such examination, we are of the opinion that the Shares, when issued in accordance with the terms of the Plan, will be validly issued, fully paid and nonassessable. We hereby consent to the filing of our opinion as an exhibit to the Registration Statement. Partners of our Firm and persons associated with our Firm beneficially own shares of Common Stock. Sincerely yours, WARSHAW BURSTEIN COHEN SCHLESINGER & KUH, LLP AAK/MDS EX-23.1 4 EXHIBIT 23.1 EXHIBIT 23.1 Consent of Independent Accountants ---------------------------------- We hereby consent to the incorporation by reference in this Registration Statement on Form S-8 of our report, dated April 15, 1999, relating to the financial statements, which appears in the 1999 Annual Report to Shareholders of C-Phone Corporation, which is incorporated by reference in C-Phone Corporation's Annual Report on Form 10-KSB for the year ended February 28, 1999. Raleigh, North Carolina September 27, 1999 -----END PRIVACY-ENHANCED MESSAGE-----