<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or 240.14a-12
Dynatec International, Inc.
--------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, If Other Than The Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(4) Date Filed:
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<PAGE>
Dynatec International, Inc.
3820 West Great Lakes Drive
Salt Lake City, UT 84120
(801) 973-9500
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 31, 2000
To the Shareholders:
Notice is hereby given that the annual meeting (the "Annual Meeting") of
the shareholders of Dynatec International, Inc. (the "Company") will be held at
the Hilton Valley Forge Hotel, 251 West DeKalb Pike, King of Prussia,
Pennsylvania 19406, on Monday, July 31, 2000, at 8:00 a.m., E.D.T., for the
following purposes, which are discussed in the following pages and which are
made part of this Notice:
1. To elect four directors to serve as the Board of Directors until the
next annual meeting of shareholders or until their successors are duly
elected and qualified;
2. To approve the Board of Directors' selection of KPMG LLP as the
Company's independent public accountants to audit the consolidated
financial statements of the Company and its subsidiaries for the
fiscal year ending December 31, 2000;
3. To approve the adoption of the Company's 1999 Incentive Stock Option
Plan, as amended to date, under which certain employees, officers,
directors and consultants may receive options to purchase shares of
the Company's Common Stock, thereby attracting, retaining, and
rewarding such persons, and strengthening the mutuality of interests
between such persons and the Company's shareholders;
4. To consider and act upon any other matters that properly may come
before the Annual Meeting or any adjournment thereof.
The Company's Board of Directors has fixed the close of business on
Tuesday, June 13, 2000, as the record date (the "Record Date") for the
determination of shareholders having the right to notice of, and to vote at, the
Annual Meeting and any adjournment thereof. A list of such shareholders will be
available for examination by a shareholder as of the record date for any purpose
germane to the meeting during ordinary business hours at the offices of the
Company at 3820 West Great Lakes Drive, Salt Lake City, Utah 84120, during the
10 business days prior to the Annual Meeting.
You are requested to date, sign and return the enclosed proxy, which is
solicited by the Board of Directors of the Company and will be voted as
indicated in the accompanying proxy statement. Your vote is important. Please
sign and date the enclosed Proxy and return it promptly in the enclosed return
envelope whether or not you expect to attend the meeting. The giving of your
proxy as requested hereby will not affect your right to vote in person should
you decide to attend the Annual Meeting. The return envelope requires no
postage if mailed in the United States. If mailed elsewhere, foreign postage
must be affixed. Your proxy is revocable at any time before the Annual Meeting.
By Order of the Board of Directors,
Frederick W. Volcansek, Sr.
Chairman and Chief Executive Officer
Salt Lake City, Utah
June 19, 2000
<PAGE>
Dynatec International, Inc.
3820 West Great Lakes Drive
Salt Lake City, Utah 84120
_____________________________
PROXY STATEMENT
_____________________________
ANNUAL MEETING OF SHAREHOLDERS
The enclosed proxy is solicited by the Board of Directors of Dynatec
International, Inc. ("Dynatec" or the "Company") for use in voting at the annual
meeting of shareholders (the "Annual Meeting") to be held at Hilton Valley Forge
Hotel, 251 West DeKalb Pike, King of Prussia, Pennsylvania 19406, on Monday,
July 31, 2000, at 8:00 a.m., E.D.T., and at any postponement or adjournment
thereof, for the purposes set forth in the attached notice. When proxies are
properly dated, executed and returned, the shares they represent will be voted
at the Annual Meeting in accordance with the instructions of the shareholder
completing the proxy. If a signed proxy is returned but no specific
instructions are given, the shares will be voted:
1. FOR the election of the slate of Directors set forth in this Proxy;
2. FOR approval of the Board of Directors' selection of KPMG LLP as the
Company's independent public accountants to audit the consolidated
financial statements of the Company and its subsidiaries for the
fiscal year ending December 31, 2000; and
3. FOR approval of the adoption of the 1999 Incentive Stock Option Plan.
A shareholder giving a proxy has the power to revoke it at any time prior to its
exercise by voting in person at the Annual Meeting, by giving written notice to
the Company prior to the Annual Meeting or by giving a later dated proxy.
The presence at the Annual Meeting, in person or by proxy, of the holders
of a majority of the Company's Common Stock issued and outstanding and entitled
to vote at the Annual Meeting is necessary to constitute a quorum to transact
business. Each share of Common Stock represented at the Annual Meeting in
person or by proxy will be counted for purposes of determining whether a quorum
is present. In deciding all matters, a holder of Common Stock on the Record
Date shall be entitled to cast one vote for each share of Common Stock then
registered in such holder's name. Abstentions and broker non-votes will count
for purposes of establishing a quorum; their effect on the specific proposals
included in this Proxy Statement is discussed separately below. Votes cast by
shareholders who attend and vote in person or by proxy at the Annual Meeting
will be counted by inspectors to be appointed by the Company (the Company
anticipates that the inspectors will be employees, attorneys or agents of the
Company).
Under Utah law and the Company's Articles of Incorporation and Bylaws, each
of the Company's directors will be elected by a plurality of the votes cast by
the shares entitled to vote in the election of directors. Under Utah law,
approval of proposals 2 and 3 requires the affirmative vote of a majority of the
shares of Common Stock present or represented at the Annual Meeting and entitled
to vote thereon, once quorum is determined to exist. Abstentions on proposals 2
and 3 may be specified and will be counted for purposes of determining the
number of shares present or represented and entitled to vote thereon. As a
result, abstentions will have the same effect as votes against these proposals.
Broker non-votes will not be counted as votes cast or entitled to be cast on the
proposals and therefore will have no effect on the result of the vote.
<PAGE>
The close of business on June 13, 2000, has been fixed as the Record Date
for determining the shareholders entitled to notice of, and to vote at, the
Annual Meeting. Each share shall be entitled to one vote on all matters. As
of the Record Date there were ______________ shares of Common Stock outstanding
and entitled to vote. For a description of the principal holders of such stock,
see "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT" below.
This Proxy Statement and the enclosed Proxy are being furnished to
shareholders on or about June 19, 2000.
_______________________
PROPOSAL NO. 1
TO ELECT FOUR DIRECTORS TO SERVE AS THE BOARD OF DIRECTORS UNTIL THE NEXT ANNUAL
MEETING OF SHAREHOLDERS OR UNTIL SUCCESSORS ARE DULY ELECTED AND QUALIFIED.
The Company's Bylaws provide that the number of directors shall be
determined from time to time by the shareholders or the Board of Directors, but
that there shall be no less than three. Presently the Company's Board of
Directors consists of four members, all of whom are nominees for election at the
Annual Meeting. Each director elected at the Annual meeting will hold office
until his successor is elected and qualified, or until the director resigns, is
removed or becomes disqualified. A plurality of votes cast by the shares
entitled to vote in the election of directors will be required to elect each
director. Unless marked otherwise, proxies received will be voted for the
election of each of the nominees named below. If any such person is unable or
unwilling to serve as a director at the date of the Annual Meeting or any
postponement or adjournment thereof, the proxies will be voted for a substitute
nominee, designated by the proxy holders or by the present Board of Directors to
fill such vacancy, or for the balance of those nominees named without nomination
of a substitute, or the Board may be reduced accordingly. The Board of Directors
has no reason to believe that any of such nominees will be unwilling or unable
to serve if elected as a director. The nominees for consideration at the Annual
Meeting are as follows:
* Frederick W. Volcansek, Sr.
* John P. Schmitz
* Wayne L. Berman
* Reed Newbold
The Board of Directors recommends a vote FOR each nominee to the Board of
Directors.
The following table sets forth certain information regarding the executive
officers and directors of Dynatec as of June15, 2000.
<TABLE>
<CAPTION>
Name Age Title
----------------------------- --- --------------------------------------------------------------
<S> <C> <C>
Frederick W. Volcansek, Sr. . 53 Chairman of the Board of Directors and Chief Executive Officer
Lloyd M. "Tag" Taggart ...... 55 Executive Vice President Sales
Michael L. Whaley ........... 43 Senior Vice President and Chief Financial Officer
Reed Newbold ................ 52 Director
Wayne L. Berman ............. 42 Director
John P. Schmitz ............. 44 Director
</TABLE>
Mr. Volcansek was employed by the Company's Board of Directors as the
Company's Chief Executive Officer on February 6, 1999. On that same day he was
appointed Chairman of the Company's Board of Directors. Prior to that time, Mr.
Volcansek served as an outside director of the Company from 1988 to February 6,
1999. Before accepting
-2-
<PAGE>
full-time employment as the Chief Executive Officer of the Company, from June
1996 to February 1999 Mr. Volcansek was the Vice President of Development for TM
Global Power, LLC and the President of Mosbacher Power do Brasil Ltda. in
Houston, Texas. Mr. Volcansek also has several years' experience in
international market development and as a political consultant for several large
multi-national corporations, including US West, Enron and Ogden Corp. President
Bush appointed Mr. Volcansek Deputy Under Secretary of the U.S. Department of
Commerce (International Trade Administration) from June 19, 1992, after serving
as Deputy Assistant Secretary of Commerce for Trade and Development from June
1990. Mr. Volcansek received a B.S. degree in 1967 from Texas Tech University.
Mr. Taggart joined the Company in April 1999. Prior to joining the
Company, from 1994 to 1999, Mr. Taggart was the President and CEO of Sweet
Water Ranch, Inc., a manufacturer of custom, handmade reproductions of the
legendary western style Molesworth furniture. Mr. Taggart expanded distribution
of that company's products from twenty-three states to all fifty states and
eight foreign countries. After service in the United States Navy, in 1972, Mr.
Taggart joined the Clorox Company's brand management team in Oakland,
California. He also served for three terms as a Commissioner of the Colorado
River Commission, a board that controls and markets $25,000,000 of hydro
electrical power generated by the Hoover Dam and 5,000,000,000 GPM of water
allocated to Nevada from the Colorado River. Mr. Taggart received a B.S. degree
from Brigham Young University in 1968.
Mr. Whaley joined the Company as Senior Vice President and Chief Financial
Officer on October 29, 1999. Prior to joining the Company, Mr. Whaley worked for
a year as an Engagement Manager for Prism Consulting International of Bethesda,
Maryland, a strategy and operations consulting firm. Before that, he worked as
the Director of Westinghouse Electric Corporation's Government Privatization
Activities Division from February 1997 though August 1998, and as the Chief
Financial Officer of Westinghouse's Commercial Nuclear Fuel Division from
January 1993 through February 1997. Mr. Whaley received his B.S. degree in
accounting from Norfolk State University in Norfolk, Virginia, and received a
Certificate of Completion of the Harvard Business School Program for Management
Development in 1996.
Mr. Newbold has been an outside Director of the Company since 1988. In
1991, Mr. Newbold founded Newbold Financial, a financial planning and mortgage
brokerage services company located in Salt Lake City, Utah. Since its founding,
Mr. Newbold has been the founding principal of Newbold Financial. Prior to his
founding of Newbold Financial, Mr. Newbold served as Vice President of Tracy
Collins Bank & Trust in Salt Lake City, Utah.
Mr. Berman was appointed to the Company's Board of Directors on March 5,
1999. Mr. Berman presently is Managing Director of Park Strategies, L.L.C., an
international business consultancy he founded in 1999. In that capacity, he
advises companies including Lockheed Martin, American International Group, US
West, BMW Corporation, AON Corporation and Philip Morris on matters relating to
new business opportunities, international financing strategies and strategic
relationships. Mr. Berman also is currently a Fellow at the Center for Strategic
and International Studies and was recently appointed to the Library of Congress'
Board of Trustees. From 1993 to 1999, Mr. Berman was Managing Director of Berman
Enterprises, an international consultancy. Prior to that, Mr. Berman was
Managing Partner of American Mercantile Group, a private merchant bank, in which
capacity he developed and managed a $100 million merchant banking fund
specializing in middle-market American companies with underdeveloped exports. In
January 1989, President George Bush appointed Mr. Berman Assistant Secretary of
Commerce for Policy, a position he occupied until January 1991. He has held
numerous other political positions, including Vice Presidential Campaign
Director for Dole-Kemp (1996), member of the Budget and Policy Priorities
Committee of the Pataki transition team (1994), Deputy Director and Executive
Producer, 1992 Republican National Convention, Senior Staff and Director of
Congressional Relations, Bush Campaign (1988), and Deputy Director of the
Reagan-Bush Transition Team (1981). Mr. Berman received his Bachelor of Arts
at the University of Buffalo and attended graduate school at Georgetown
University.
Mr. Schmitz was appointed to the Company's Board of Directors on September
16, 1999. Since 1993, he has been a partner at the Washington, D.C. office of
the law firm of Mayer, Brown & Platt where his practice specializes in the areas
of energy and environment, government and international. From 1989 to 1993 he
was Deputy Counsel to President George Bush, and from 1985 to 1989 was Deputy
Counsel to Vice President George Bush. From 1984 to
-3-
<PAGE>
1985, he was an attorney at the firm of Wilmer, Cutler & Pickering, Washington,
D.C. In 1984 he was employed at the Robert Bosch Foundation Fellowship, Office
of Bundestag Member Matthias Wissmann, Bonn, and Office of General Counsel,
Robert Bosch, GmbH, Stuttgart, Germany. From 1983 to 1984 he was law clerk to
The Honorable Antonin Scalia, U.S. Court of Appeals for the District of
Columbia, Washington, D.C. Mr. Schmitz received his J.D. from the Stanford Law
School in 1981, his M.S. from the California Institute of Technology in 1978,
and his B.A. from Georgetown University in 1976. His recent professional
activities include, among other activities, the Carnegie Endowment for
International Peace, Study Group on American-European Community Relations, 1993
to date; the International Republican Institute, Rule of Law Advisory Board,
1993 to date; U.S. Representative, Joint U.S.-Panama Commission on the
Environment, 1993-1994; Member, U.S. Delegation, United Nations Conference on
Environment and Development (UNCED), Rio de Janeiro, June 1992. He is admitted
to the bars of Pennsylvania and the District of Columbia.
Donald M. Wood served as the Company's Chairman and Chief Executive Officer
from approximately 1982 until he resigned from the Company, effective January
14, 1999. In the several months leading up to his resignation, Mr. Wood
suffered from several adverse health conditions. Moreover, certain transactions
between Mr. Wood and the Company or between entities owned by or affiliated with
Mr. Wood and the Company, and certain activities conducted by the Company's
executives during Mr. Wood's tenure were the subject of an internal
investigation conducted by the Company's Board of Directors with the assistance
of an independent third party. Specifically, the investigation focused on the
propriety of Mr. Wood's conduct in causing the Company to employ certain of his
family members; his conduct with respect to his use of Company assets, such as
Company owned or leased vehicles, a houseboat timeshare interest; his conduct in
causing the Company to insure his personal watercraft; his conduct in causing
the Company to rent certain real property owned by Mr. Wood at rates that
potentially were in excess of fair market rates; the propriety of certain
option grants made to Mr. Wood or entities controlled by or affiliated with him;
and other miscellaneous transactions and matters. By January 1999, the third
party investigator had completed its review of available information pertinent
to the investigation. Although the investigator made certain conclusions and
representations, those conclusions and representations were strongly disputed by
Mr. Wood, were not legally conclusive, by their own terms were inconclusive in
certain respects, and, in some cases, involved situations that occurred as much
as twelve years prior to the investigation. In light of his health condition
and the pendency and status of the investigation, Mr. Wood agreed to retire and
resign from the Company, effective January 14, 1999.
Additionally, during a portion of the year ended December 31, 1999, F.
Randy Jack served the Company's President and Chief Operating Officer. Mr. Jack
also served on the Company's Board of Directors from 1986 to August 24, 1998,
when he resigned from the Board of Directors. On March 17, 1999, Mr. Jack
resigned as the Company's President and Chief Operating Officer.
From October 1998 through October 8, 1999, Paul A. Boyer served as Senior
Vice President and Chief Financial Officer of the Company. Effective October 8,
1999, he resigned from the Company for personal reasons. Mr. Boyer also was a
director of the Company from January 14, 1999 through September 18, 1999. Prior
to joining the Company, from November 1996 to October 1998, Mr. Boyer served as
Director of Finance for Mrs. Fields' Original Cookies, Inc., where he was
responsible for mergers and acquisitions, corporate budgeting, financial
planning and strategic analysis. Mr. Boyer also served as Chief Financial
Officer of Wasatch Education Systems, an educational software development
company from October 1990 to November 1996 . Mr. Boyer received his Masters in
Accountancy from San Diego State University in 1987.
Compliance with Section 16(a) of the Exchange Act
During the year ended December 31, 1999, as far as the Company is aware,
all officers and directors prepared and timely filed all Forms 3, 4 and 5
required by Section 16(a) of the Exchange Act.
-4-
<PAGE>
Board Compensation
From March 1, 1999 until June 30, 1999, members of the Company's Board of
Directors, other than officers of the Company, were compensated $2,000 per month
for their services rendered. Before March 1, 1999, board members were
compensated in the amount of $10,000 annually. In June 1999, the Company issued
stock options to the non-employee members of the Board of Directors, which
option grants replace future cash compensation. As of July 1, 1999, Employee
directors are not compensated for their services on the Board of Directors,
although until July 1, 1999 they received compensation according to the
historical rate of $10,000 per annum. During the year ended December 31, 1999,
the Company's Board of Directors met at formal meetings on four occasions. All
of the members of the Board of Directors attended all such meetings.
Board Committees
Two functioning committees of the Company's Board of Directors have been
organized including (i) Compensation Committee and (ii) Audit Committee.
Following is a brief description of each of these committees. Committee meetings
during the year ended December 31, 1999 were held in conjunction with full
meetings of the Board of Directors.
Compensation Committee. The Compensation Committee is composed of Messrs.
----------------------
Berman (Chairman) Newbold and Vo1cansek. The purpose of this committee is to
ensure that the Company has a broad plan of executive compensation that is
competitive and motivating to the degree that it will attract, hold and inspire
performance of managerial and other key personnel of a quality nature and that
will enhance the growth and profitability of the Company.
Audit Committee. The Audit Committee presently is comprised of Messrs.
---------------
Newbold (Chairman), Berman and Volcansek. The purpose of the Audit Committee is
to provide oversight and review of the Company's accounting and financial
reporting process in consultation with the Company's independent auditors.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 13, 2000 the number of shares
of Common Stock of the Company beneficially owned by all persons known to be
holders of more than 5% of the Company's Common Stock and by the executive
officers and directors of the Company individually and as a group. Unless
indicated otherwise, the address of the shareholder is the Company's principal
executive offices, 3820 West Great Lakes Drive, Salt Lake City, Utah 84120.
<TABLE>
<CAPTION>
NAME, TITLE, AND ADDRESS OF COMMON STOCK PERCENT OF CLASS AS OF
BENEFICIAL OWNER BENEFICIALLY OWNED MARCH 13, 2000
-------------------------------------------- ------------------- -----------------------
<S> <C> <C>
Touchstone Transport Services 457,660 9.1%
5% Beneficial Owner
c/o Oxford International Management, Inc.
Suite 1402, 14/th/ Floor
PDCP Bank Centre, 8737 Paseo De Roxas
Cor. Makati Avenue, Makati City
Phillipines
Wilford A. Cardon 320,831 (1) 6.4%
5% Beneficial Owner
1819 East Southern Avenue, Suite B-10
</TABLE>
-5-
<PAGE>
<TABLE>
<S> <C> <C>
Mesa, Arizona 85204-5219
Frederick W. Volcansek, Sr. 94,850 (2) 1.8%
Chairman and Chief Executive Officer
Lloyd M. "Tag" Taggart 75,000 (3) 1.5%
Executive Vice President Sales & Marketing
Michael L. Whaley 75,000 (5) 1.5%
Chief Financial Officer
Reed Newbold 24,050 (4) *
Director
Wayne L. Berman 18,750 (3) *
Director
John P. Schmitz 18,750 (6) *
Director
Directors and Officers as a group 306,400 5.7%
</TABLE>
__________________________________
* Less than one percent.
(1) Includes 158,831 shares and 162,000 shares owned respectively by two
entities affiliated with Mr. Cardon.
(2) Includes 93,750 shares issuable on exercise of options having an exercise
price of $1.625 per share, and 1,100 shares.
(3) All shares issuable on exercise of options having an exercise price of
$1.625 per share.
(4) Includes 18,750 shares issuable on exercise of options having an exercise
price of $1.625 per share, and 5,300 shares.
(5) All shares issuable on exercise of options having an exercise price of
$1.031 per share.
During 1996 and 1997, the Board of Directors authorized grants of non-
qualified stock options which are tied to the profitability of the Company and
based upon minimum years of employment. Options to purchase a total of 840,000
shares at an exercise price of $2.00 per share were granted on December 30,
1996, and 800,000 additional non-qualified stock options with similar terms were
granted on January 2, 1997. To vest, the holder-employee must continue his
employment with the Company through the year 2001, and the Company must be
profitable three out of four years commencing January 1, 1998.
In 1996, the Company granted 537,500 non-qualified stock options to Muito
Bem Ltd., an entity owned by Donald M. Wood, the Company's former Chairman and
Chief Executive Officer, at an exercise price of $2.50 per share in
consideration of all knowledge, trade secrets and a continuing non-compete
agreement, regarding the telephone headset product line, as well as personal
real estate pledged as collateral on Company debts by Mr. Wood. In addition,
WAC Research, Inc., an entity affiliated with Mr. Wood, was granted 200,000
options having terms identical to the Muito Bem options. These options are not
exercisable until December 30, 2000. Subsequent to the issuance of these
options, the strike price was adjusted from $2.00 to $2.50 per share to reflect
the market value on the date of grant. In January 1999, upon his resignation
from the Company, Mr. Wood agreed to the cancellation of all of the Muito Bem
options and a total of 900,000 non-qualified Common Stock purchase options
granted to him on December 31, 1996 and January 2, 1997.
-6-
<PAGE>
Indemnification and Compensation
The Company's Bylaws authorize the Company to indemnify its present and
former directors and officers and to pay or reimburse expenses for such
individuals in advance of the final disposition of a proceeding upon receipt of
an undertaking by or on behalf of such individuals to repay such amounts if so
required.
Executive Compensation
The following table sets forth information with regard to compensation for
services rendered in all capacities to the Company by the (i) Chief Executive
Officer, (ii) the four most highly compensated executive officers other than the
CEO who were serving as executive officers at the end of the last completed
fiscal year and (iii) two additional individuals for whom disclosure would have
been provided, but for the fact that the individual was not serving as an
executive officer at the end of the last completed fiscal year. Information set
forth in the table reflects compensation earned by such individuals for services
with the Company or its subsidiaries.
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term Compensation
---------------------------------------------------
Annual Compensation Awards Payouts
------------------------------- ------------------------- ------------------------
Securities
Other Restricted Underlying
Annual Stock Options/ LTIP All Other
Name and Salary Bonus (1) Compensation Award(s) SARs (2) Payouts Compensation
Principal Position Year ($) ($) ($) ($) (#) ($) ($)
--------------------------------- ---- -------- --------- ------------ ------------ ----------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Frederick W. Volcansek, Sr. (3) 1999 175,795 - 38,902 - 125,000 - -
Chairman and CEO 1998 - - - - - - -
1997 - - - - - - -
Donald M. Wood (4) 1999 40,550 - - - - - -
Former Chairman and CEO 1998 193,723 1,624 12,500 - - - -
1997 194,433 3,249 14,000 - 14,000 - -
Lloyd M. Taggart (5) 1999 107,267 - 3,570 - 110,000 - -
Executive Vice President Sales 1998 - - - - - - -
1997 - - - - - -
Michael L. Whaley (6) 1999 24,167 - 85 - 100,000 - -
Sr. Vice President and Chief 1998 - - - - - - -
Financial Officer 1997 - - - - - - -
Paul A. Boyer (7) 1999 117,267 - 7,500 - 110,000 - -
Former Sr. Vice President and 1998 28,745 - 3,130 - - - -
Chief Financial Officer 1997 - - - - - -
</TABLE>
-----------------------------
(1) Bonus compensation includes time in service bonus.
-7-
<PAGE>
(2) An incentive stock option plan was implemented in November 1996 and May
1999. Options were granted as approved by the Board of Directors on
January 2, 1997 and July 6, 1999 respectively.
(3) Employed as Company's Chief Executive Officer on February 6, 1999. Other
annual compensation includes directors fees of $7,500, personal use of a
company vehicle of $1,848, premiums paid on life insurance of $6,259 and
non-deductible moving expenses of $23,295.
(4) Resigned from Company on January 14, 1999.
(5) Employed as Company's Executive Vice President of sales on April 6, 1999.
Other annual compensation includes personal use of a company vehicle of
$371, and premiums paid on life insurance of $3,199.
(6) Employed as Company's Sr. Vice President and Chief Financial Officer on
October 29, 1999. Other annual compensation consists of personal use of a
company vehicle.
(7) Employed as Company's Sr. Vice President and Chief Financial Officer from
October 19, 1998 to October 8, 1999. Other annual compensation consists
of directors fees.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Number of
Securities % of Total
Underlying Options/SARs
Options/SARs Granted to Exercise or Base
Granted Employees in Price Expiration
Name (#) Fiscal Year ($/share) Date
-------------------------------- -------------- -------------- ---------------- ----------
<S> <C> <C> <C> <C>
Frederick W. Volcansek, Sr. 125,000 19.7% 1.625 6/8/2009
Chairman and CEO
Lloyd M. Taggart 100,000 15.8% 1.625 6/8/2009
Executive Vice President Sales
Michael L. Whaley 100,000 15.8% 1.031 11/1/2009
Sr. Vice President and CFO
Paul A. Boyer (1) 110,000 17.3% 1.625 1/8/2000
Sr. Vice President and CFO
</TABLE>
------------------------------
(1) Resigned from Company on October 8, 1999.
-8-
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of Value of
Securities Unexercised In-
Underlying the-Money
Unexercised Options/
Options/SARS at SARS at
Shares Value FY-End (#) FY-End($)
Acquired on Realized Exercisable/ Exercisable/
Name Exercise ($) Unexercisable Unexercisable
---------------------------------------- ------------- ---------- ---------------- -----------------
<S> <C> <C> <C> <C>
Frederick W. Volcansek, Sr. - - 93,750/56,250 -/-
Chairman and CEO
Donald M. Wood (1) - - -/- -/-
Former Chairman and CEO
Lloyd M. Taggart - - 75,000/25,000 -/-
Executive Vice President Sales
Michael L. Whaley - - 50,000/50,000 -/-
Sr. Vice President and Chief Financial
Officer
Paul A. Boyer (2) - - 82,500/27,500 -/-
Former Sr. Vice President and Chief
Financial Officer
</TABLE>
(1) Resigned from Company effective January 14, 1999.
(2) Resigned from Company on October 8, 1999.
In November 1996, the Company's shareholders approved an Incentive
Stock Option plan for the benefit of the officers and employees of the Company.
No formal criteria have been established to determine the amount of benefits to
be granted pursuant to the 1996 plan, except that the Plan authorizes grants of
no more than 300,000 shares. The Plan provides that options are granted at
exercise prices equal to the market value as of the date the option is granted.
On January 2, 1997 and December 30, 1996, the Board of Directors approved the
issuance of 105,000 and 95,000 options to purchase stock pursuant to the 1996
incentive stock option plan. Further description of the Plan and the exercise
prices are provided in the Notes to the accompanying Consolidated Financial
Statements.
Employment Agreements
Mr. Wood and Mr. Jack had employment contracts with the Company that
were terminated upon their respective resignations.
Mr. Volcansek, Lloyd M. "Tag" Taggart, the Company's Executive Vice
President Sales, and Michael L. Whaley, the Company's Senior Vice President and
Chief Financial Officer, each have employment agreements that provide for a
period of employment of four years from the date of the agreements, subject to
termination and extension provisions. The agreements permit each of them to
participate in any incentive compensation plan adopted by the Company and
benefit and equity-based plans or arrangements. If the Company terminates
either of Mr. Volcansek's,
-9-
<PAGE>
Mr. Taggart's, or Mr. Whaley's employment for cause, or if either of them
terminates their employment without good reason, the Company has no further
obligation to pay them under their respective agreements. If the Company
terminates either of them without cause, the terminated executive may receive
severance pay equal to two years of his then current annual salary. In the event
of a merger, acquisition, dissolution or transfer of substantially all of the
Company's assets, the employment agreements must then be honored by the
surviving entity or it must purchase the agreements for a sum equal to three (3)
years' base salary. The employment agreements prohibit each of Messrs.
Volcansek, Taggart, and Whaley for two years from the date of termination of
their respective employment under the agreements, from becoming an employee,
owner (except for investments in up to 5% of the equity securities of a company
listed or traded on a national securities exchange or the NASDAQ Stock Market),
officer, agent or director of a firm or person that competes with the Company in
the consumer products industry. The employment agreements have customary
provisions for vacation, fringe benefits, payment of expenses and automobile
allowances. Mr. Volcansek's base salary is $205,000, Mr. Taggart's base salary
is $167,500, and Mr. Whaley's base salary is $145,000.
Stock Plans
In November 1996, the Company's shareholders approved an Incentive
Stock Option Plan (the "1996 Plan") for the benefit of the officers and
employees of the Company. No formal criteria for grants under the 1996 Plan
were established, except that the 1996 Plan authorizes grants of no more than
300,000 shares of Common Stock. The 1996 Plan provides that options will be
granted under that plan at exercise prices equal to the market value as of the
date the option is granted. On January 2, 1997 and December 30, 1996, the Board
of Directors approved the issuance of 105,000 and 95,000 qualified incentive
stock options pursuant to the 1996 Plan.
Proposal Number 3 in this Proxy Statement concerns the proposal by the
Board of Directors for the shareholders of the Company to adopt a new stock
option plan. Shareholders should also read the description of the proposed
stock option plan under "PROPOSAL NO. 3" below.
Certain Relationships and Related Transactions
The Company's subsidiary Softalk, Inc., licenses certain patent and
trademark rights associated with the Company's Softalk product line pursuant to
a royalty agreement with WAC Research Inc., a Utah corporation ("WAC"). The
Company believes that Donald M. Wood, who, until January 14, 1999, was the
Company's Chairman and Chief Executive Officer, owns a one-half equity interest
in WAC. WAC obtained the patent and trademark rights for the Softalk products in
August 1986, when WAC purchased them from the inventor of Softalk and related
products in a private transaction. The purchase price for such patent and
trademark rights was $1,000,000 to $2,000,000, which was paid to Practical
Innovations, Inc. by a combination of the Company's common stock and cash. At
that time, the Company acquired license rights to the Softalk patents and
trademark, in return for which it agreed to pay a 10% royalty on all Softalk
sales. That royalty rate subsequently was reduced to 5%. During the years ended
December 31, 1999 and 1998, the Company paid WAC $298,420 and $172,669,
respectively, in royalties.
In September 1998 WAC advanced $98,403 to the Company as reimbursement
to the Company of Mr. Wood's salary for the first six months of 1998. The
Company subsequently determined that this amount was a payable to WAC, and at
December 31, 1998 the Company had recognized the $98,403 in accounts payable -
related party, in the accompanying consolidated balance sheet. In February 1999,
the Company repaid this amount to WAC.
Donald M. Wood, who served as the Company's Chief Executive Officer
during the entirety of 1998 and until January 14, 1999, owned a residential
rental property in Park City, Utah August 1998. The Company leased this property
from him to use for Dynatec-related travel, promotional work, lodging, and
entertainment for customers, suppliers, and employees. The monthly rental
payment for this property was $7,000. The Company paid $-0- and $56,000 for each
of the years ending December 31, 1999 and 1998, respectively. This cost also
covered operating and maintenance costs, and general care of the property. In
August 1998, this property was sold by Mr. Wood. As a result, the Company is no
longer obligated to pay rental fees, and paid no such rental fees during 1999.
-10-
<PAGE>
In July 1998, the Company's Board of Directors commenced an internal
investigation into the facts and circumstances of a number of transactions
between the Company and certain of its officers and directors as well as several
general corporate and management concerns brought to the attention of the
Company's independent directors. The Company engaged an unrelated third party to
conduct the investigation, which concluded in January 1999. Thereafter, the
Company's former Chairman and CEO resigned and retired from the Company. The
Company does not anticipate taking further action, legal or otherwise, with
respect to the matters and individuals investigated, although the Company,
through its new management, has identified several areas in which new corporate
governance policies have been adopted or old policies changed. In connection
with the investigation, several of the Company's directors engaged independent
legal counsel. An aggregate of $112,938 of such legal fees were reimbursed by
the Company pursuant to action by the Company's Board of Directors at the
commencement of the investigation.
During 1997 the Board of Directors authorized grants of various
options under both non-qualified and incentive stock options plans. These
options are described in detail in Note 14. The non-qualified plans included
537,500 options granted to Muito Bem Ltd., an entity controlled by Donald M.
Wood, the former Chairman and Chief Executive Officer of the Company, at an
exercise price of $2.50 per share. Mr. Wood agreed in 1999 to cancel all stock
options issued to Muito Bem. Additionally, in 1997, 200,000 options were granted
to WAC, at an exercise price of $2.50 per share in consideration for certain
royalty reductions and abatements.
In May 1989, the Company engaged Alpha Tech Stock Transfer Company
("Alpha Tech") as the Company's stock transfer agent. Alpha Tech served in that
capacity until January 13, 1999, when the Company terminated Alpha Tech's agency
and instructed Alpha Tech to transfer the Company's records to American Stock
Transfer Company, New York, New York. James W. Farrell, the principal of Alpha
Tech, is the brother-in-law of Donald M. Wood, the Company's former Chairman and
Chief Executive Officer who resigned from the Company effective January 14,
1999. During the years ended December 31, 1999 and 1998, the Company paid Alpha
Tech a total of $-0- and $1,530, respectively, in fees for services rendered.
The Company believes that the fees paid to Alpha Tech during these periods were
roughly comparable to the fees it would have paid to a similar local transfer
agent for similar services.
PROPOSAL NO. 2
TO APPROVE THE BOARD OF DIRECTORS' SELECTION OF KPMG LLP AS THE COMPANY'S
INDEPENDENT PUBLIC ACCOUNTANTS TO AUDIT THE CONSOLIDATED FINANCIAL STATEMENTS OF
THE COMPANY AND ITS SUBSIDIARIES FOR THE FISCAL YEAR ENDING DECEMBER 31, 2000.
The Board of Directors of the Company has selected KPMG LLP as the
independent public accountants for the Company to audit its consolidated
financial statements for the fiscal year ending December 31, 2000. KPMG LLP also
served as the Company's independent public accountants for the fiscal years
ended December 31, 1998 and 1999.
At the Annual Meeting, shareholders will be asked to ratify the
selection by the Board of Directors of KPMG LLP as the Company's independent
public accountants. The vote of a majority of the shares cast at the Annual
Meeting will ratify this selection.
Representatives of KPMG LLP are expected to attend the Annual Meeting
and will have an opportunity to make a statement if they desire, and they will
be available to respond to appropriate questions from shareholders.
The Board of Directors recommends a vote for ratification of the selection of
independent public accountants.
-11-
<PAGE>
PROPOSAL NO. 3
PROPOSED ADOPTION OF DYNATEC INTERNATIONAL, INC., 1999 STOCK OPTION AND
INCENTIVE PLAN TO OFFER TO CERTAIN OF THE COMPANY'S OFFICERS, EMPLOYEES,
DIRECTORS, AND CONSULTANTS OPTIONS TO ACQUIRE EQUITY INTERESTS IN THE COMPANY,
THEREBY ATTRACTING, RETAINING, AND REWARDING SUCH PERSONS, AND STRENGTHENING THE
MUTUALITY OF INTERESTS BETWEEN SUCH PERSONS AND THE COMPANY'S SHAREHOLDERS.
The Company's Board of Directors has approved and recommended that the
Company's shareholders adopt the Dynatec International, Inc. 1999 Stock Option
and Incentive Plan (the "1999 Plan"), as the 1999 Plan has been amended and
restated by the Board of Directors as of the date hereof. The Company's Common
Stock is quoted on the Nasdaq SmallCap Market. The rules of the Nasdaq Stock
Market, as recently amended to apply to companies listed on the SmallCap Market,
require that shareholder approval be obtained when a stock option or purchase
plan is to be established or other arrangement made pursuant to which stock may
be acquired by officers or directors. Moreover, the 1999 Plan authorizes the
issuance of qualifying incentive stock options ("ISO") as that term is defined
under Section 422 of the Internal Revenue Code of 1986, as amended. Applicable
rules and regulations require that the plan under which ISOs are granted must be
approved by the shareholders of the issuer company. In compliance with these
policies and requirements, at the Annual Meeting, the Company's shareholders
will be asked to approve the adoption of the 1999 Plan, and the Board of
Directors is soliciting the enclosed proxy as to that decision. A brief
description of the material provisions of the 1999 Plan follows.
The 1999 Plan provides for the award of ISOs and Non-Statutory Stock
Options ("NSOs") to key employees and the award of non-qualified stock options,
stock appreciation rights, and other compensatory and incentive awards as
specified in the 1999 Plan to directors, employees and certain nonemployees who
have important relationships with the Company or its subsidiaries. The 1999 Plan
was adopted by the Board of Directors effective as of May 1, 1999, which date is
the effective date of the 1999 Plan. The Plan was amended and restated in April
2000. The principal provisions of the 1999 Plan are summarized below.
Administration.
The 1999 Plan is administered by a committee of three members of the
Company's Board of Directors, at least two of whom are non-employee directors
(the "1999 Plan Committee"). The 1999 Plan Committee may be the Compensation
Committee of the Board. The 1999 Plan Committee will determine and designate the
individuals and classes of individuals to whom awards under the 1999 Plan should
be made and the amount, terms and conditions of the awards. The 1999 Plan
Committee may adopt and amend rules relating to the administration of the 1999
Plan. The 1999 Plan Committee presently is comprised of Messrs. Wayne L. Berman,
Reed Newbold and Frederick W. Volcansek, Sr. The 1999 Plan is intended to comply
with and Sections 162(m) and 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), and the regulations thereto.
Eligibility.
Awards under the 1999 Plan may be made to officers, directors or key
employees of the Company and its subsidiaries, and to nonemployee agents,
consultants, advisors, and other persons whom the 1999 Plan Committee believes
have made or will make an important contribution to the Company or any
subsidiary thereof, subject to Section 422 of the Code, which limits the grant
of ISOs to executive officers and other senior managerial and professional
employees.
-12-
<PAGE>
Shares Available.
Subject to adjustment as provided in the 1999 Plan, a maximum of
1,000,000 shares of the Company's common stock will be reserved for issuance
thereunder. If an option or stock appreciation right granted under the 1999 Plan
expires or is terminated or canceled, the unissued shares subject to such option
or stock appreciation right are again available under the 1999 Plan. In
addition, if shares sold or awarded as a bonus under the 1999 Plan are forfeited
to the Company or repurchased by the Company, the number of shares forfeited or
repurchased are again available under the 1999 Plan. In the absence of an
effective registration statement under the Securities Act of 1933, as amended
(the "Act"), all shares granted under the 1999 Plan will be restricted as to
subsequent resales or transfer, pursuant to Rule 144 under the Act.
Term.
The 1999 Plan has no term and is unlimited in duration. In the event the
1999 Plan is terminated according to its terms, it shall remain in effect as
long as any awards under the 1999 Plan are outstanding. Notwithstanding the
foreoing, no ISO may be granted under the 1999 Plan on a date that is more than
ten years from the date the 1999 Plan was adopted.
Stock Option Grants (NSOs and ISOs).
The 1999 Plan Committee may grant ISOs and NSOs under the 1999 Plan.
With respect to each option grant, the 1999 Plan Committee will determine the
number of shares subject to the option, the option price, the period of the
option, the time or times at which the option may be exercised (including
whether the option will be subject to any vesting requirements and whether there
will be any conditions precedent to exercise of the option), and the other terms
and conditions of the option. Unless the Committee determines, in its sole
discretion, that there are circumstances which reasonably justify the
establishment of a lower option price, the option or exercise price per share of
NSOs shall be 100% of the fair market value of a share of the Company's common
stock on the date the NSOs are granted.
ISOs are subject to special terms and conditions. The aggregate fair
market value, on the date of the grant, of the common stock for which an ISO is
exercisable for the first time by the optionee during any calendar year may not
exceed $100,000. An ISO may not be granted to an employee who possesses more
than 10% of the total voting power of the Company's stock unless the option
price is at least 110% of the fair market value of the Common Stock subject to
the option on the date it is granted, and the option is not exercisable for 5
years after the date of grant. No ISO may be exercisable after 10 years from
the date of grant. The option price may not be less than 100% of the fair
market value of the Common Stock covered by the option at the date of grant.
In connection with the grant of NSOs or ISOs, the 1999 Plan authorizes
the issuance of "Reload Options" which allow employees to receive options to
purchase that number of shares that shall equal (i) the number of shares of
common stock used to exercise underlying NSOs or ISOs, and (ii) if authorized by
the 1999 Plan Committee, the number of shares of common stock used to satisfy
any tax withholding requirement incident to the exercise of the underlying NSOs
or ISOs.
No shares may be issued pursuant to the exercise of an option until full
payment therefor has been made. Upon the exercise of an option, the number of
shares reserved for issuance under the 1999 Plan will be reduced by the number
of shares issued upon exercise of the option.
Stock Appreciation Rights.
Stock appreciation rights ("SARs") may be granted under the 1999 Plan:
SARs are granted concurrently with or subsequent to stock options, and permit
the option holder to be paid, in common stock, the excess of the fair market
value of each share of common stock underlying the stock option at the date of
exercise of the SARs and the fair
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<PAGE>
market value of each share of common stock underlying the option at the grant
date. The exercise of SARs shall be in lieu of the exercise of the stock option
underlying the SARs, and upon such exercise a corresponding number of stock
options shall be canceled. Alternate SARs are exercisable upon the same terms
and conditions as are applicable to the options underlying them. Upon the
exercise of an Alternate SAR, the number of shares reserved for issuance under
the 1999 Plan will be reduced by the number of shares issued.
Stock Awards.
The 1999 Plan Committee may award shares of common stock under any one of
three separate options under the 1999 Plan. "Stock Units" are rights to receive
shares of common stock in the future. "Performance Shares" are rights to
receive shares of common stock or Stock units that are contingent on the
achievement of performance or other objectives during a specified period.
"Restrict Stock" award entitled the recipient thereof to receive shares of
common stock subject to a risk of forfeiture or other restrictions that will
lapse upon the achievement of one or more goals relating to completion of
service by the participant or the achievement of performance or other
objectives.
The 1999 Plan Committee may determine the recipients of such stock
awards, the number of shares to be awarded, the time of the award and, if
applicable, the conditions or restrictions of such awards. No stock bonus awards
have been granted under the 1999 Plan.
Non-Assignability of 1999 Plan Awards
No award under the 1999 Plan shall be assignable or transferable by the
recipient thereof, except by will or the laws of descent or pursuant to a
qualified domestic relations order as defined in the Code.
Changes in Capital Structure.
The 1999 Plan provides that if the outstanding common stock of the
Company is increased or decreased or changed into or exchanged for a different
number or kind of shares or other securities of the Company or of another
corporation by reason of any recapitalization, stock split or certain other
transactions, appropriate adjustment will be made by the 1999 Plan Committee in
the number and kind of shares available for grants under the 1999 Plan. In
addition, the 1999 Plan Committee will make appropriate adjustments in the
number and kind of shares as to which outstanding options will be exercisable.
Change in Control Transactions
In the event of a "Change in Control," all awards under the 1999 Plan
shall become fully exercisable. For purposes of the 1999 Plan, "Change in
Control" means, and except as otherwise provided in the1999 Plan or the award
agreement reflecting the applicable award, a sale of all or substantially all of
the Company's assets, a change in the beneficial ownership of the Company's
voting common stock or a change in the composition of the Board of the Company
which occurs as follows: (i) any "Person" (as such term is used in Section 13(d)
and 14(d)(2) of the Securities Exchange Act of 1934, as amended ("Exchange
Act")) is or becomes a beneficial owner, directly or indirectly, of Stock of the
Company representing 25% or more of the total voting power of the Company's then
outstanding Stock, which Person did not beneficially own at least 10% of the
outstanding stock as of the effective date of the 1999 Plan; (ii) a tender offer
(for which a filing has been made with the SEC which purports to comply with the
requirements of Section 14(d) of the Exchange Act and the corresponding SEC
rules) is made for the Stock of the Company. In case of such a tender offer,
the Change in Control will be deemed to have occurred upon the first to occur of
(i) any time during the tender offer when the Person making the offer owns or
has accepted for payment Stock of the Company with 25% or more of the total
voting power of the Company's outstanding Stock or (ii) three business days
before the offer is to terminate unless the offer is withdrawn first, if the
Person making the offer could own, by the terms of the offer plus any shares
owned by this Person, Stock with 50% or more of the total voting power of the
Company's outstanding Stock when the offer terminates; or (iii) individuals who
were the Board's nominees for election as directors of the Company
-14-
<PAGE>
immediately prior to a meeting of the shareholders of the Company involving a
contest for the election of directors shall not constitute a majority of the
Board following the election.
Tax Consequences.
The following description addresses the federal income tax consequences
of the 1999 Plan. Although the Company believes the following statements are
correct based on existing provisions of the Code and legislative history and
administrative and judicial interpretations thereof, no assurance can be given
that changes will not occur which would modify such statements. Also, such
statements are intended only to provide basic information. Each 1999 Plan
participant should consult his or her own tax advisor concerning the tax
consequences of participation in the 1999 Plan because individual financial and
federal tax situations may vary, and state and local tax considerations may be
significant.
Certain options authorized to be granted under the 1999 Plan are intended
to qualify as ISOs for federal income tax purposes. Under federal income tax
law currently in effect, the optionee will recognize no income upon grant or
exercise of the ISO. If an employee exercises an ISO and does not dispose of
any of the option shares within two years following the date of grant and within
one year following the date of exercise, then any gain realized upon subsequent
disposition of the shares will be treated as income from the sale or exchange of
a capital asset held for more than one year. If an employee disposes of shares
acquired upon exercise of an ISO before the expiration of either the one-year
holding period or the two-year waiting period, any amount realized will be
taxable as ordinary compensation income in the year of such disqualifying
disposition to the extent that the lesser of the fair market value of the shares
on the exercise date or the fair market value on the date of disposition exceeds
the exercise price. The Company will not be allowed any deduction for federal
income tax purposes at either the time of the grant or the exercise of an ISO.
Upon any disqualifying disposition by an employee, the Company will generally be
entitled to a deduction to the extent the employee realized ordinary income.
Certain options authorized to be granted under the 1999 Plan will be
treated as NSOs for federal income tax purposes. Under federal income tax law
presently in effect, no income is realized by the grantee of an NSO until the
option is exercised. When the NSO is exercised, the optionee will realize
ordinary compensation income, and the Company will generally be entitled to a
deduction, in the amount by which the market value of the shares subject to the
option at the time of exercise exceeds the exercise price. Upon the sale of
shares acquired upon exercise of an NSO, the excess of the amount realized from
the sale over the market value of the shares on the date of exercise will be
taxable.
An employee who receives stock in connection with the performance of
services will generally realize income at the time of receipt unless the shares
are not substantially vested for purposes of Section 83 of the Code and no
election under Section 83(b) of the Code is filed within 30 days after the
original transfer. The Company generally will be entitled to a tax deduction in
the amount includable as income by the employee at the same time or times as the
employee recognizes income with respect to the shares. The Company is required
to withhold employment taxes on the amount of the income the employee
recognizes. A participant who receives a cash bonus right under the 1999 Plan
generally will recognize income equal to the amount of any cash bonus paid at
the time of receipt of the bonus, and the Company generally will be entitled to
a deduction equal to the income recognized by the participant.
Section 162(m) of the Code limits to $1 million per person the amount the
Company may deduct for compensation paid to any of its most highly compensated
officers. Compensation received through the exercise of an option or SAR will
not be subject to the $1 million limit if the option or SAR and the plan
pursuant to which it is granted meet certain requirements. The currently
applicable requirements are that the option or SAR be granted by a committee of
at least two disinterested directors and that the exercise price of the option
or the SAR be not less than fair market value of the Common Stock on the date of
grant. Accordingly, the Company believes compensation received on exercise of
options and SARs granted under the 1999 Plan in compliance with the above
requirements will not be subject to the $1 million deduction limit.
-15-
<PAGE>
Amendments to 1999 Plan
The Company's Board of Directors may at any time and from time to time
terminate or modify or amend the 1999 Plan in any respect, including in response
to changes in securities, tax or other laws or rules, regulations or regulatory
interpretations thereof applicable to the 1999 Plan or to comply with stock
exchange rules or requirements, provided that no amendment or termination may,
absent the written consent to the change by the affected participated, adversely
affect the rights of any participant under any award granted under the 1999 Plan
as of such date.
The following table summarizes the awards made by the Committee as of the
date of this proxy statement:
NEW PLAN BENEFITS
<TABLE>
<CAPTION>
1999 Plan
---------------------------------------
Name and Position NSOs Granted /(1)/ Percentage of Total
Granted
-------------------------------------------------- ------------------ --------------------
<S> <C> <C>
Frederick W. Volcansek, Sr. 125,000 19.70%
Chairman and Chief Executive Officer
Paul A. Boyer (2) 110,000 17.30%
Senior Vice President and Chief Financial Officer
Lloyd M. Taggart 100,000 15.80%
Senior Vice President Sales
Michael L. Whaley 100,000 15.80%
Senior Vice President and Chief Financial Officer
Executive Group 435,000 68.60%
Non-Executive Director Group 75,000 11.80%
Non-Executive Officer Employee Group 124,500 19.60%
--------------------------------------------------------------------------------------------
</TABLE>
(1) All awards under the 1999 Plan to date were granted between June
8, 1999 and November 1, 1999, and have an exercise price which was
100% of the fair market value on the grant date. Accordingly, the
awards had no dollar value as of the date of grant. A total of
634,500 NSOs have been granted as of the date hereof.
(2) Mr. Boyer resigned from the Company effective October 8, 1999. He
did not exercise his options by January 6, 2000, and therefore the
options granted to him have expired.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL NO. 3
________________________________________
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors of the
Company does not intend to present and has not been informed that any other
person intends to present a matter for action at the Annual Meeting other than
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<PAGE>
as set forth herein and in the Notice of the Special Meeting. If any other
matter properly comes before the meeting, it is intended that the holders of
proxies will act in accordance with their best judgment.
The accompanying proxy is being solicited on behalf of the Board of
Directors of the Company. In addition to the solicitation of proxies by mail,
certain of the officers and employees of the Company, without extra
compensation, may solicit proxies personally or by telephone, and, if deemed
necessary, third party solicitation agents may be engaged by the Company to
solicit proxies by means of telephone, facsimile or telegram, although no such
third party has been engaged by the Company as of the date hereof. The Company
will also request brokerage houses, nominees, custodians and fiduciaries to
forward soliciting materials to the beneficial owners of Common Stock held of
record and will reimburse such persons for forwarding such material. The cost
of this solicitation of proxies will be borne by the Company.
_____________________________________
SHAREHOLDER PROPOSALS
Any shareholder proposal intended to be considered for inclusion in the
proxy statement for presentation in connection with the 2000 Annual Meeting of
Shareholders must have been received by the Company by December 31, 2000.
The enclosed Proxy is furnished for you to specify your choices with
respect to the matters referred to in the accompanying notice and described in
this Proxy Statement. If you wish to vote in accordance with the Board's
recommendations, merely sign, date and return the Proxy in the enclosed envelope
which requires no postage if mailed in the United States. A prompt return of
your Proxy will be appreciated.
By Order of the Board of Directors
Frederick W. Volcansek, Sr.
Chairman and Chief Executive Officer
Salt Lake City, Utah
June 19, 2000
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<PAGE>
APPENDIX
DYNATEC INTERNATIONAL, INC.
a Utah corporation
1999 Stock Option and Incentive Plan
(Amended and Restated)
SECTION 1
GENERAL
-------
1.1 Purpose. This Stock Option and Incentive Plan (the "Plan") has
been established by Dynatec International, Inc., a Utah corporation (the
"Company") to:
- attract and retain persons eligible to participate in the
Plan;
- motivate participants in the Plan by means of appropriate
incentives to achieve long-range goals;
- provide incentive compensation opportunities that are
competitive with those of other similar companies;
- closely associate the interests of the participants of the
Plan with those of the Company and its other shareholders by
reinforcing the relationship between participants' rewards
and shareholder gains through equity ownership in the
Company and increased shareholder value.
1.2 Eligibility for Participation. Participants in the Plan shall be
selected by the Committee, and awards under the Plan may be granted by the
Committee, to directors, officers and employees of the Company or any Subsidiary
of the Company, and to other individuals such as consultants and non-employee
agents of the Company or a Subsidiary, whom the Committee believes have made or
will make an essential contribution to the Company or a Subsidiary. Incentive
Stock Options may only be granted to executive officers and other employees of
the Company or a majority-owned Subsidiary who occupy responsible managerial or
professional positions, who have the capability of making a substantial
contribution to the success of the Company or Subsidiary, and who agree, in
writing, to remain in the employ of, and to render services to, the Company or
Subsidiary for a period of at least one (1) year from the date of the grant of
the Award. The Committee has the authority to select particular employees
within the eligible group to receive Awards under the Plan. In making this
selection and in determining the persons to whom Awards under the Plan shall be
granted and the form and amount of awards under the Plan, the Committee shall
consider any factors deemed relevant in connection with accomplishing the
purposes of the Plan, including the duties of the respective persons and the
-1-
<PAGE>
value of their present and potential services and contributions to the success,
profitability and sound growth of the Company. A person to whom an Award has
been granted is sometimes referred to herein as an "Participant." In the
discretion of the Committee, a Participant may be granted any Award permitted by
the Plan and more than one Award may be granted to a Participant.
1.3 Participating Companies. For purposes of the Plan, the term
"Subsidiary" means any subsidiary of the Company, and any business venture
designated by the Committee in which the Company has a significant interest, as
determined in the discretion of the Committee.
1.4 Administration of the Plan. The operation and administration of
the Plan, including the Awards made under the Plan, will be subject to the
provisions of Section 4 (relating to operation and administration). Capitalized
terms in the Plan are defined as set forth in the Plan, including the definition
provisions of Section 7 of the Plan.
SECTION 2
---------
OPTIONS AND SARS
----------------
2.1 Definitions. For purposes of this Plan:
2.1.1 The grant of an "Option" entitles the Participant to
purchase shares of the Company's common stock ("Stock") at an Exercise
Price established by the Committee. Options granted under this Section
2 may be either Incentive Stock Options ("ISOs"), the tax consequences
of which are intended to be governed by Section 422 of the Internal
Revenue Code, as amended, (the "Code") or Non-Qualified Stock Options
("NQOs"), as determined in the discretion of the Committee.
2.1.2 An SAR entitles the Participant to receive, in cash or
Stock (as determined in accordance with subsection 2.5), value equal
to (or otherwise based on) the excess of: (a) the Fair Market Value of
a specified number of shares of Stock at the time of exercise; over
(b) an Exercise Price established by the Committee.
2.2 Exercise Price. The Exercise Price of each Option and SAR granted
under this Plan will be established by the Committee or will be determined by a
method established by the Committee at the time the Option or SAR is granted;
except that the Exercise Price shall not be less than 100% of the Fair Market
Value of a share of Stock on the date of grant, unless the Committee shall
determine, in its sole discretion, that there are circumstances which reasonably
justify the establishment of a lower Exercise Price.
2.3 Term and Exercise. An Option and an SAR shall be exercisable in
accordance with such terms and conditions and during such periods as may be
established by the Committee.
2.4 Manner of Payment. The payment of the Exercise Price of an Option
granted under this Plan will be subject to the following:
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2.4.1 Subject to the following provisions of this subsection
2.4, the full Exercise Price for shares of Stock purchased upon the
exercise of any Option shall be paid at the time of such exercise
(except that, in the case of an exercise arrangement approved by the
Committee and described in paragraph 2.4.3, payment may be made as
soon as practicable after the exercise).
2.4.2 The Exercise Price shall be payable in cash or by
tendering, by either actual delivery of shares or by attestation,
shares of Stock acceptable to the Committee, and valued at Fair Market
Value as of the day of exercise, or in any combination thereof, as
determined by the Committee.
2.4.3 The Committee may permit a Participant to elect to pay the
Exercise Price upon the exercise of an Option by irrevocably
authorizing a third party to sell shares of Stock (or a sufficient
portion of the shares) acquired upon exercise of the Option and remit
to the Company a sufficient portion of the sale proceeds to pay the
entire Exercise Price and any tax withholding resulting from such
exercise.
2.5 Reload Options. Concurrently with the award of Options to a
Participant in the Plan, the Committee may, subject to the provisions of the
Plan, prescribe and authorize reload options to purchase for cash or for shares
of Stock allotted by the Committee ("Reload Options"). The number of Reload
Options shall equal (i) the number of shares of Stock used to exercise the
underlying Options and (ii) to the extent authorized by the Committee, the
number of shares of Stock used to satisfy any tax withholding requirement
incident to the exercise of the underlying Options. The grant of a Reload
Option will become effective upon the exercise of underlying Option or other
Reload Options through the use of shares of Stock held by the Participant for at
least 12 months. Notwithstanding the fact that the underlying Option may be an
ISO, a Reload Option is not intended to qualify as an ISO under Section 422 of
the Code.
2.5.1 Reload Option Amendment. Each Award Agreement shall state
whether the Committee has authorized Reload Options with respect to the
underlying Option. Upon the exercise of an underlying Option or other Reload
Option, the Reload Option will be evidenced by an amendment to the underlying
Award Agreement.
2.5.2 Reload Option Exercise Price. The Exercise Price per share
of Stock deliverable upon the exercise of a Reload Option shall be the Fair
Market Value of a share of Stock on the date the grant of the Reload Option
becomes effective, unless the Committee shall determine, in its sole discretion,
that there are circumstances which reasonably justify the establishment of a
lower Exercise Price.
2.5.3 Term and Exercise. The term of each Reload Option shall be
equal to the remaining term of the underlying Option.
2.5.4 Termination of Employment. No additional Reload Options
shall be granted to a Participant when Options and/or Reload Options are
exercised pursuant to the terms of this Plan following termination of the
Participant's employment.
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2.6 Settlement of Award. Shares of Stock delivered pursuant to the
exercise of an Option or SAR shall be subject to such conditions, restrictions
and contingencies as the Committee may establish in the applicable agreement.
Settlement of SARs may be made in shares of Stock (valued at their Fair Market
Value at the time of exercise), in cash, or in a combination thereof, as
determined in the discretion of the Committee. The Committee, in its
discretion, may impose such conditions, restrictions and contingencies with
respect to shares of Stock acquired pursuant to the exercise of an Option or an
SAR as the Committee determines to be desirable.
SECTION 3
---------
OTHER STOCK AWARDS
------------------
3.1 Definitions. For purposes of this Plan:
3.1.1 A "Stock Unit" Award is the grant of a right to receive
shares of Stock in the future;
3.1.2 A "Performance Share" Award is a grant of a right to
receive shares of Stock or Stock Units which is contingent on the
achievement of performance or other objectives during a specified
period;
3.1.3 A "Restricted Stock" Award is a grant of shares of Stock
and a "Restricted Stock Unit" Award is the grant of a right to receive
shares of Stock in the future, with such shares of Stock or right to
future delivery of such shares of Stock subject to a risk of
forfeiture or other restrictions that will lapse upon the achievement
of one or more goals relating to completion of service by the
Participant, or achievement of performance or other objectives, as
determined by the Committee.
3.2 Restrictions on Stock Awards. Each Stock Unit Award, Restricted
Stock Award, Restricted Stock Unit Award and Performance Share Award under this
Plan will be subject to the following:
3.2.1 Any such Award shall be subject to such conditions,
restrictions and contingencies as the Committee shall determine.
3.2.2 The Committee may designate whether any such Award being
granted to any Participant is intended to be "performance-based
compensation" as that term is used in Section 162(m) of the Code. Any
such Awards designated as intended to be "performance-based
compensation" shall be conditioned upon the achievement of one or more
"Performance Measures." The Performance Measures that may be used by
the Committee for such Awards shall be based on any one or more of the
following, as selected by the Committee: (i) achievement of
development milestones or specific goals related to the Participant's
role within the Company; (ii) the experience, education and particular
expertise of the Participant in the context of his or her role
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within the Company; and (iii) specific Performance Measures identified
by the Committee and made part of the grant of the Award to such
Participant. For Awards intended to be "performance-based
compensation," the grant of the Awards and the establishment of the
Performance Measures shall be made during the period required under
Code Section 162(m).
SECTION 4
---------
OPERATION AND ADMINISTRATION
----------------------------
4.1 Effective Date. Subject to the approval of the shareholders of
the Company at the Company's 1999 annual meeting of its shareholders, the Plan
shall be effective as of May 1, 1999 (the "Effective Date"); provided, however,
that to the extent that Awards are granted under the Plan prior to its approval
by the shareholders, the Awards shall be contingent on approval of the Plan by
the shareholders of the Company at such annual meeting or an intervening special
meeting at which a vote is taken as to approval of the Plan. The Plan shall be
unlimited in duration and, in the event of Plan termination, shall remain in
effect as long as any Awards under it are outstanding; provided, however, that,
to the extent required by the Code, no ISO may be granted under the plan on a
date that is more than ten years from the date the Plan is adopted or, if
earlier, the date the Plan is approved by shareholders.
4.2 Shares Subject to Plan. The shares of Stock for which Awards may
be granted under the Plan shall be subject to the following:
4.2.1 Subject to the following provisions of this subsection
4.2, the maximum number of shares of Stock that may be delivered to
Participants and their beneficiaries under the Plan shall be 1,000,000
shares of Stock; however, the Board may increase such number of
shares, but not in any event without shareholder approval of an
increase that would result in the number of shares available in the
aggregate for Awards under the Plan exceeding 20% of the total
authorized common shares of the Company.
4.2.2 To the extent any shares of Stock covered by an Award are
not delivered to a Participant or beneficiary because the Award is
forfeited or canceled, or the shares of Stock are not delivered
because the Award is settled in cash or used to satisfy the applicable
tax withholding obligation, such shares will not be deemed to have
been delivered for purposes of determining the maximum number of
shares of Stock available for delivery under the Plan.
4.2.3 If the Exercise Price of any Option granted under the Plan
is satisfied by tendering shares of Stock to the Company (by actual
delivery or by attestation), only the number of shares of Stock issued
net of the shares of Stock tendered shall be deemed delivered for
purposes of determining the maximum number of shares of Stock
available for delivery under the Plan.
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4.3 General Restrictions. Delivery of shares of Stock or other
amounts under the Plan shall be subject to the following:
4.3.1 Notwithstanding any other provision of the Plan, the
Company shall have no liability to deliver any shares of Stock under
the Plan or make any other distribution of benefits under the Plan
unless such delivery or distribution would comply with all applicable
laws (including, without limitation, the requirements of the
Securities Act of 1933), and the applicable requirements of any
securities exchange or similar entity.
4.3.2 To the extent that the Plan provides for issuance of stock
certificates to reflect the issuance of shares of Stock, the issuance
may be effected on a non-certificated basis, to the extent not
prohibited by applicable law or the applicable rules of any stock
exchange.
4.4 Tax Withholding. All distributions under the Plan are subject to
withholding of all applicable taxes, and the Committee may condition the
delivery of any shares or other benefits under the Plan on satisfaction of the
applicable withholding obligations. The Committee, in its discretion, and
subject to such requirements as the Committee may impose prior to the occurrence
of such withholding, may permit such withholding obligations to be satisfied
through cash payment by the Participant, through the surrender of shares of
Stock which the Participant already owns, or through the surrender of shares of
Stock to which the Participant is otherwise entitled under the Plan.
4.5 Use of Shares. Subject to the overall limitation on the number
of shares of Stock that may be delivered under the Plan, the Committee may use
available shares of Stock as the form of payment for compensation, grants or
rights earned or due under any other compensation plans or arrangements of the
Company or a Subsidiary, including the plans and arrangements of the Company or
a Subsidiary assumed in business combinations.
4.6 Dividends and Dividend Equivalents. An Award (including without
limitation an Option or SAR Award) may provide the Participant with the right to
receive dividend payments or dividend equivalent payments with respect to Stock
subject to the Award (both before and after the Stock subject to the Award is
earned, vested, or acquired), which payments may be either made currently or
credited to an account for the Participant, and may be settled in cash or Stock
as determined by the Committee. Any such settlements, and any such crediting of
dividends or dividend equivalents or reinvestment in shares of Stock, may be
subject to such conditions, restrictions and contingencies as the Committee
shall establish, including the reinvestment of such credited amounts in Stock
equivalents.
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4.7 Payments. Awards may be settled through cash payments, the
delivery of shares of Stock, the granting of replacement Awards, or combination
thereof as the Committee shall determine. Any Award settlement, including
payment deferrals, may be subject to such conditions, restrictions and
contingencies as the Committee shall determine. The Committee may permit or
require the deferral of any Award payment, subject to such rules and procedures
as it may establish, which may include provisions for the payment or crediting
of interest, or dividend equivalents, including converting such credits into
deferred Stock equivalents. Each Subsidiary shall be liable for payment of cash
due under the Plan with respect to any Participant to the extent that such
benefits are attributable to the services rendered for that Subsidiary by the
Participant. Any disputes relating to liability of a Subsidiary for cash
payments shall be resolved by the Committee.
4.8 Transferability. Except as otherwise provided by the Committee,
Awards under the Plan are not transferable except as designated by the
Participant by will or by the laws of descent and distribution.
4.9 Form and Time of Elections. Unless otherwise specified herein,
each election required or permitted to be made by any Participant or other
person entitled to benefits under the Plan, and any permitted modification, or
revocation thereof, shall be in writing filed with the Committee at such times,
in such form, and subject to such restrictions and limitations, not inconsistent
with the terms of the Plan, as the Committee shall require.
4.10 Award Agreement. An Award under the Plan shall be subject to
such terms and conditions, not inconsistent with the Plan, as the Committee
shall, in its sole discretion, prescribe. The terms and conditions of any Award
to any Participant shall be reflected in such form of written document as is
determined by the Committee. A copy of such document shall be provided to the
Participant, and the Committee may, but need not require that the Participant
shall sign a copy of such document. Such document is referred to in the Plan as
an "Award Agreement" regardless of whether any Participant signature is
required.
4.11 Action by Company or Subsidiary. Any action required or
permitted to be taken by the Company or any Subsidiary shall be by resolution of
its Board, or by action of one or more members of the Board (including a
committee of the Board) who are duly authorized to act for the Board, or (except
to the extent prohibited by applicable law or applicable rules of any stock
exchange) by a duly authorized officer of such company.
4.12 Gender and Number. Where the context admits, words in any gender
shall include any other gender, words in the singular shall include the plural
and the plural shall include the singular.
4.13 Limitation of Implied Rights.
4.13.1 Neither a Participant nor any other person shall, by
reason of participation in the Plan, acquire any right or title to any
assets, funds or property of the Company or any Subsidiary whatsoever,
including, without limitation, any specific funds, assets, or other
property which the Company or any Subsidiary, in their sole
discretion, may set aside in anticipation of a liability under the
Plan. A Participant shall have only a contractual right to the Stock
or amounts, if any, payable under the Plan, unsecured by any assets of
the Company or any Subsidiary, and nothing contained in the Plan shall
constitute a guarantee that the assets of the Company or any
Subsidiary shall be sufficient to pay any benefits to any person.
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4.13.2 The Plan does not constitute a contract of employment,
and selection as a Participant will not give any participating
employee the right to be retained in the employ of the Company or any
Subsidiary, nor any right or claim to any benefit under the Plan,
unless such right or claim has specifically accrued under the terms of
the Plan. Except as otherwise provided in the Plan, no Award under the
Plan shall confer upon the holder thereof any rights as a shareholder
of the Company prior to the date on which the individual fulfills all
conditions for receipt of such rights.
4.14 Evidence. Evidence required of anyone under the Plan may be by
certificate, affidavit, document or other information which the person acting on
it considers pertinent and reliable, and signed, made or presented by the proper
party or parties.
SECTION 5
---------
CHANGE IN CONTROL
-----------------
5.1 Effect of Change in Control. Except as otherwise provided in the
Plan or the Award Agreement reflecting the applicable Award, upon the occurrence
of a Change in Control:
5.1.1 All outstanding Options (regardless of whether in tandem
with SARs) shall become fully exercisable.
5.1.2 All outstanding SARs (regardless of whether in tandem with
Options) shall become fully exercisable.
5.1.3 All Stock Units, Restricted Stock, Restricted Stock Units,
and Performance Shares shall become fully vested.
5.2 Definition. For purposes of the Plan, the term "Change in
Control" shall mean a sale of all or substantially all of the Company's assets,
or a change in the beneficial ownership of the Company's voting Stock or a
change in the composition of the Board of the Company which occurs as follows:
5.2.1 Any "Person" (as such term is used in Section 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended ("Exchange
Act")) becomes a beneficial owner, directly or indirectly, of Stock of
the Company representing 25% or more of the total voting power of the
Company's then outstanding Stock which Person did not own at least 10%
of the outstanding stock as of the effective date of this Plan.
5.2.2 A tender offer (for which a filing has been made with the
SEC which purports to comply with the requirements of Section 14(d) of
the Exchange Act and the corresponding SEC rules) is made for the
Stock of the Company. In case of such a tender offer, the Change in
Control will be deemed to have occurred upon the first to occur of (i)
any time during the tender offer when the Person making the offer owns
or has accepted for payment Stock of the Company with 25% or more of
the total voting
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power of the Company's outstanding Stock or (ii) three business days
before the offer is to terminate unless the offer is withdrawn first,
if the Person making the offer could own, by the terms of the offer
plus any shares owned by this Person, Stock with 50% or more of the
total voting power of the Company's outstanding Stock when the offer
terminates.
5.2.3 Individuals who were the Board's nominees for election as
directors of the Company immediately prior to a meeting of the
shareholders of the Company involving a contest for the election of
directors shall not constitute a majority of the Board following the
election.
SECTION 6
---------
COMMITTEE
---------
6.1 Administration. The authority to control and manage the
operation and administration of the Plan shall be vested in a committee (the
"Committee") in accordance with this Section 6. The Committee shall be selected
by the Board of the Company and shall consist of three members of the Board, at
least two of whom are not also employees of the Company. If the Committee does
not exist, or for any other reason determined by the Board, the Board may take
any action under the Plan that would otherwise be the responsibility of the
Committee.
6.2 Powers of Committee. The Committee's administration of the Plan
shall be subject to the following:
6.2.1 Subject to the Plan, the Committee will have the authority
and discretion to select from among the Eligible Employees those
persons who shall receive Awards, to determine the time or times of
receipt, to determine the types of Awards and the number of shares
covered by the Awards, to establish the terms, conditions, performance
criteria, restrictions, and other provisions of such Awards, and
(subject to the restrictions imposed by Section 7) to cancel or
suspend Awards.
6.2.2 To the extent that the Committee determines that the
restrictions imposed by the Plan preclude the achievement of the
material purposes of the Awards in jurisdictions outside the United
States, the Committee will have the authority and discretion to modify
those restrictions as the Committee determines to be necessary or
appropriate to conform to applicable requirements or practices of
jurisdictions outside of the United States.
6.2.3 The Committee will have the authority and discretion to
interpret the Plan, to establish, amend, and rescind any rules and
regulations relating to the Plan, to determine the terms and
provisions of any Award Agreement made pursuant to the Plan, and to
make all other determinations that may be necessary or advisable for
the administration of the Plan.
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6.2.4 Any interpretation of the Plan by the Committee and any
decision made by it under the Plan is final and binding on all
persons.
6.2.5 In controlling and managing the operation and
administration of the Plan, the Committee shall take action in a
manner that conforms to the articles and bylaws of the Company, and
applicable state corporate law.
6.3 Delegation by Committee. Except to the extent prohibited by
applicable law or the applicable rules of a stock exchange, the Committee may
allocate all or any portion of its responsibilities and powers to any one or
more of its members and may delegate all or any part of its responsibilities and
powers to any person or persons selected by it. Any such allocation or
delegation may be revoked by the Committee at any time.
6.4 Information to be Furnished to Committee. The Company and
Subsidiaries shall furnish the Committee with such data and information as it
determines may be required for it to discharge its duties. The records of the
Company and Subsidiaries as to an employee's or Participant's employment,
termination of employment, leave of absence, reemployment and compensation shall
be conclusive on all persons unless determined to be incorrect. Participants
and other persons entitled to benefits under the Plan must furnish the Committee
such evidence, data or information as the Committee considers desirable to carry
out the terms of the Plan.
SECTION 7
---------
AMENDMENT AND TERMINATION
-------------------------
The Board may, at any time, amend or terminate the Plan, provided that
no amendment or termination may, in the absence of written consent to the change
by the affected Participant (or, if the Participant is not then living, the
affected beneficiary), adversely affect the rights of any Participant or
beneficiary under any Award granted under the Plan prior to the date such
amendment is adopted by the Board.
SECTION 8
---------
DEFINED TERMS
-------------
In addition to the other definitions contained herein, the following
definitions shall apply:
8.1 "Award" shall mean any award or benefit granted under the Plan,
including, without limitation, the grant of Options, SARs, Stock Unit Awards,
Restricted Stock Awards, Restricted Stock Unit Awards and Performance Share
Awards.
8.2 "Board" shall mean the Board of Directors of the Company.
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8.3 "Code" shall mean the Internal Revenue Code of 1986, as amended.
A reference to any provision of the Code shall include reference to any
successor provision of the Code.
8.4 "Disability" is deemed to occur during the period in which a
Participant is unable, by reason of a medically determinable physical or mental
impairment, to engage in any substantial gainful activity, which condition, in
the opinion of a physician selected by the Committee, is expected to have a
duration of not less than 120 days.
8.5 "Eligible Employee" shall mean any employee of the Company or a
Subsidiary. An Award may be granted to an employee, in connection with hiring,
retention or otherwise, prior to the date the employee first performs services
for the Company or the Subsidiaries, provided that such Award shall not become
vested prior to the date the employee first performs such services.
8.6 "Fair Market Value" of a share of Stock under the Plan, as of any
date, shall be determined as follows:
8.6.1 If the principal market for the Stock is a national
securities exchange or the Nasdaq stock market (including the Nasdaq
SmallCap Market), then "Fair Market Value" as of that date will be the
mean between the lowest and highest reported sale prices of the Stock
on that date on the principal exchange on which the Stock is then
listed or admitted to trading.
8.6.2 If sale prices are not available or if the principal
market for the Stock is not a national securities exchange and the
Stock is not quoted on the Nasdaq stock market, the average between
the highest bid and lowest asked prices for the Stock on such day as
reported on the Nasdaq OTC Electronic Bulletin Board Service or by the
National Quotation Bureau, Incorporated, or a comparable service.
8.6.3 If the day is not a business day, and as a result,
paragraphs 8.5.1 and 8.5.2 are not applicable, the Fair Market Value
of the Stock will be determined as of the last preceding business day.
If paragraphs 8.5.1 and 8.5.2 are otherwise inapplicable, then the
Fair Market Value of the Stock shall be determined in good faith by
the Committee.
8.7 "Retirement" of a Participant shall mean the occurrence of a
Participant's Date of Termination after completing at least five years of
service and attaining age 65.
8.8 "Subsidiary" means any company during any period in which it is a
subsidiary corporation as that term is defined in Code section 424(f) with
respect to the Company.
8.7 "Stock" means shares of the Company's common stock.
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SECTION 9
---------
MISCELLANEOUS
-------------
9.1 General Restriction. Each Award under the Plan shall be subject
to the requirement that, if at any time the Committee shall determine that (i)
the listing, registration or qualification of the shares of Stock subject or
related thereto upon any securities exchange or under any state or federal law,
or (ii) the consent or approval of any government regulatory body, or (iii) an
agreement by the Participant with respect to the disposition of Stock, is
necessary or desirable as a condition of, or in connection with, the granting of
such Award or the issue or purchase of Stock thereunder, such Award may not be
exercised or consummated in whole or in part unless and until such listing,
registration, qualification, consent, approval or agreement shall have been
effected or obtained free of any conditions not acceptable to the Committee.
9.2 Non-Uniform Determinations. The Committee's determinations under
the Plan (including without limitation determinations of the persons to receive
Awards, the form, amount and timing of such Awards, the terms and provisions of
such Awards and the agreements evidencing same) need not be uniform and may be
made by it selectively among persons who receive, or are eligible to receive,
Awards under the Plan, whether or not such persons are similarly situated.
9.3 Fractional Shares. Fractional shares shall not be granted under
any Award under this Plan, unless the provision of the Plan which authorizes
such Award also specifies the terms under which fractional shares or interests
may be granted.
9.4 Effects of Headings. The Section and Subsection headings
contained herein are for convenience only and shall not affect the construction
hereof.
ADOPTED BY RESOLUTION OF THE BOARD OF DIRECTORS, EFFECTIVE THE 1/ST/ DAY OF MAY,
1999.
________________________________________
________________________, Secretary
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PROXY
DYNATEC INTERNATIONAL, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Frederick W. Volcansek, Sr. and Lloyd M. Taggart
and each of them as Proxies, with full power of substitution, and hereby
authorizes them to represent and vote, as designated below, all shares of Common
Stock of the Company held of record by the undersigned at the Annual Meeting of
Shareholders to be held at the Hilton Valley Forge Hotel, 251 West DeKalb Pike,
King of Prussia, Pennsylvania 19406, on Monday, July 31, 2000, at 8:00 a.m.,
E.D.T., or at any adjournment thereof.
1. Election of Directors.
FOR WITHHOLD AS TO ALL FOR ALL EXCEPT
/ / / / / /
(INSTRUCTIONS: IF YOU MARK THE "FOR ALL EXCEPT" CATEGORY ABOVE, INDICATE
THE NOMINEE(S) AT TO WHICH YOU DESIRE TO WITHHOLD AUTHORITY BY STRIKING A
LINE THROUGH SUCH NOMINEE(S) NAME IN THE LIST BELOW:)
Frederick W. Volcansek, Sr.
Wayne L. Berman
John P. Schmitz
Reed Newbold
2. To approve the Board of Directors' selection of KPMG LLP as the Company's
independent public accountants to audit the consolidated financial
statements of the Company and its subsidiaries for the fiscal year ending
December 31, 2000.
FOR AGAINST ABSTAIN
/ / / / / /
3. To approve the adoption of the Company's 1999 Incentive Stock Option Plan
under which certain employees, officers, directors and consultants may
receive options to purchase shares of the Company's Common Stock, thereby
attracting, retaining, and rewarding such persons, and strengthening the
mutuality of interests between such persons and the Company's
shareholders;
FOR AGAINST ABSTAIN
/ / / / / /
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the Annual Meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSAL NOS. 1, 2 and 3.
Please sign and Date this Proxy Where Shown Below and Return it Promptly:
<PAGE>
Date: _____________________________, 2000
Signed:
SIGNATURE(S)___________________________________________________________________
_______________________________________________________________________________
PLEASE SIGN ABOVE EXACTLY AS THE SHARES ARE ISSUED. WHEN SHARES ARE HELD BY
JOINT TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY, AS EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A
CORPORATION, PLEASE SIGN IN FULL CORPORATE NAME BY PRESIDENT OR OTHER AUTHORIZED
OFFICER. IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON.
