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.
<TABLE>
<CAPTION>
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
- --------------------------- ---------- ------------------ -------- ----------------
<S> <C> <C> <C> <C> <C>
Common Stock, $.01 par 375,000 shares(1) $1.234 $462,881 $129
value per share
========================================================================================================
</TABLE>
(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.
<PAGE>
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.
<PAGE>
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.
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<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<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 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.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/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)
</TABLE>
II-6
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
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<PAGE>
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.
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<PAGE>
"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.
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<PAGE>
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.
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<PAGE>
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
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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
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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.
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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.
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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].
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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.
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(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.
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3 INSERT ANY OTHER MEANS OF PAYMENT AUTHORIZED BY THE COMMITTEE.
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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
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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
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
