<PAGE>
As filed with the Securities and Exchange Commission on February 26, 1999
Reg. No. 333-
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------------
DYNATEM, INC.
(Exact name of Issuer as specified in its charter)
California 95-3627099
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
23263 Madero, Suite C
Mission Viejo, California 92691
(Address of principal executive offices)
----------------------------
1993 Stock Option Plan
1998 Stock Option Plan
(Full title of the plans)
----------------------------
Eileen DeSwert
President
23263 Madero, Suite C
Mission Viejo, California 92691
(Name and address of agent for service)
(949) 855-3235
(Telephone number, including area code, of agent for service)
Copy to:
Steven J. Dunning, Esq.
Higham, McConnell & Dunning LLP
28202 Cabot, Suite 450
Laguna Niguel, California 92677
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
============================================================================================================
Proposed maximum
Title of securities to Amount to be offering price per Proposed aggregate Amount of
be registered registered* share** offering price** registration fee
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 375,000 $0.44 $165,000 $45.87
============================================================================================================
</TABLE>
* Plus, in accordance with Rule 416 of the General Rules and Regulations
under the Securities Act of 1933 (the "General Rules"), such indeterminate
number of additional shares of Common Stock as may become issuable pursuant
to anti-dilution provisions of the 1993 and 1998 Stock Option Plans
(collectively, the "Plans").
** Estimated solely for the purpose of determining the amount of the
registration fee and, pursuant to Rules 457(c) and 457(h) of the General
Rules, based upon the average of the high and low sale prices of the Common
Stock as reported on the NASD OTC Electronic Bulletin Board on February 3,
1999. These shares of Common Stock represent the shares issuable under the
Plans.
================================================================================
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Item 1. Plan Information*
Item 2. Registrant Information and Employee Plan Annual Information*
* Information required by Part I to be contained in the Section
10(a) prospectus is omitted from the registration statement in
accordance with Rule 428 under the Securities Act of 1933 and the
Note to Part I of Form S-8.
I-1
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 3. Incorporation of Documents by Reference
The following documents filed by Dynatem, Inc. (the "Company") with
the Securities and Exchange Commission (the"Commission") are incorporated by
reference herein:
(i) the Company's annual report on Form 10-KSB for the fiscal year
ended May 31, 1998; (Commission File No. 0-16250), which report contains certain
information incorporated by reference to portions of the Company's definitive
proxy statement (the "1998 Proxy Statement") for the Company's October 7, 1998
Annual Meeting of Shareholders consisting of the information in the 1998 Proxy
Statement appearing under the headings "Election of Directors" and "Principal
Holders of Voting Securities;"
(ii) the Company's quarterly report on Form 10-QSB for the quarter
ended August 30, 1998;
(iii) the Company's quarterly report on Form 10-QSB for the quarter
ended November 30, 1998; and
(iv) the description of the Company's common stock contained in the
Company's Registration Statement on Form 8-A filed with the Commission under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), including any
amendment or report subsequently filed by the Company for the purpose of
updating that description.
In addition, any document filed by the Company with the Commission
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to
the date hereof, but prior to the filing of a post-effective amendment to this
Registration Statement which indicates that all shares of Common Stock
registered hereunder have been sold or that de-registers all such shares of
Common Stock then remaining unsold, will be deemed to be incorporated by
reference herein and to be a part hereof from the date of filing of such
documents.
Item 4. Description of Securities
Not applicable.
Item 5. Interests of Named Experts and Counsel
Not applicable.
Item 6. Indemnification of Directors and Officers
The Articles of Incorporation and the Bylaws of the Company and
indemnity agreements entered into between the Company and its directors and
officers provide for the indemnification of directors and officers to the
fullest extent permitted by the General Corporation Law of the State of
California, the state of incorporation of the Company.
Section 317 of the General Corporation Law of the State of California
authorizes indemnification by a corporation when a person is made a party to any
proceeding by reason of the fact that such person is or was a director, officer,
employee or agent of the corporation or was serving as a director, officer,
employee or agent of another enterprise, at the request of the corporation, and
if such person acted in good faith and in a manner reasonably believed by him or
her to be in, or not opposed to, the best interests of the corporation. With
respect to any criminal proceeding, such person must have had no reasonable
cause to believe that his or her conduct was unlawful. If it is
II-1
<PAGE>
determined that the conduct of such person meets these standards, he or she may
be indemnified for expenses incurred and amounts paid in such proceeding
(including attorneys' fees) if actually and reasonable incurred by him or her in
connection therewith.
If such proceeding is brought by or on behalf of the corporation (i.e., a
derivative suit), such person may be indemnified against expenses actually and
reasonably incurred if he or she acted in good faith and in a manner reasonably
believed by him or her to be in, or not opposed to, the best interests of the
corporation. There can be no indemnification with respect to any matter as to
which such person is adjudged to be liable to the corporation; however, a court
may, even in such case, allow such indemnification to such person for such
expenses as the court deems proper. Where such person is successful in any such
proceeding, he or she is entitled to be indemnified against expenses actually
and reasonably incurred by him or her. In all other cases, indemnification is
made by the corporation upon determination by it that indemnification of such
person is proper because such person has met the applicable standard of conduct.
The Company maintains an errors and omissions liability policy for the
benefit of its officers and directors, which may cover certain liabilities of
such individuals to the Company.
The foregoing indemnification provisions are broad enough to encompass
certain liabilities of directors and officers of Company under the Securities
Act of 1933.
Item 7. Exemption from Registration Claims
Not applicable.
Item 8. Exhibits
4.1 1993 Stock Option Plan
4.2 1998 Stock Option Plan
4.3 Restated Articles of Incorporation*
4.4 Bylaws, as amended*
5.1 Opinion of Higham, McConnell & Dunning LLP
23.1 Consent of Corbin & Wertz
23.2 Consent of Higham, McConnell & Dunning LLP (included as part of
Exhibit 5.1)
24.0 Power of Attorney (included at page II-4)
- -----------------------------
* Filed as an Exhibit to the Company's Annual Report on Form 10-KSB for the
fiscal year ended May 31, 1997 and incorporated herein by reference.
II-2
<PAGE>
Item 9. Undertakings
The Company hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this Registration
Statement;
(ii) To include any material information with respect to the
plan of distribution not previously disclosed in this Registration Statement or
any material change to such information in this Registration Statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Company pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered hereunder which remain unsold
at the termination of the offering.
The undersigned Company hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Company's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Company pursuant to the above-described provisions, or otherwise,
the Company has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable. In the event a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act of 1933 and will be governed by the
final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Mission Viejo, State of California, on this 26th day
of February, 1999.
DYNATEM, INC.
By: /s/ Eileen DeSwert
------------------
Eileen DeSwert
President
POWER OF ATTORNEY
Know all men by these presents, that each person whose signature appears
below constitutes and appoints Eileen DeSwert and Harry Cavanaugh, and each of
them, his true and lawful attorney in fact and agent with full power of
substitution and re-substitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this registration statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys in fact and
agents full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys in fact and agents or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on the dates stated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Eileen DeSwert President, Principal Executive Officer and Director February 26, 1999
- -----------------------
Eileen DeSwert
/s/ Harry Cavanaugh Chairman of the Board and Director February 26, 1999
- -----------------------
Harry Cavanaugh
/s/ Belen Ramos Chief Financial Officer, Principal Financial and February 26, 1999
- ----------------------- Accounting Officer
Belen Ramos
/s/ Robert Anslow Director February 26, 1999
- -----------------------
Robert Anslow
/s/ Richard Jackson Director February 26, 1999
- -----------------------
Richard Jackson
/s/ Charles Spear Director February 26, 1999
- -----------------------
Charles Spear
/s/ Costis Toregas Director February 26, 1999
- -----------------------
Charles Toregas
/s/ Richard Anderson Director February 26, 1999
- -----------------------
Richard Anderson
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description Sequential Page Number
- ----------- ----------- ----------------------
<S> <C> <C>
4.1 1993 Stock Option Plan
4.2 1998 Stock Option Plan
4.3 Restated Articles of Incorporation*
4.4 Bylaws, as amended*
5.1 Opinion of Higham, McConnell & Dunning LLP
23.1 Consent of Corbin & Wertz
23.2 Consent of Higham, McConnell & Dunning
(included as part of Exhibit 5.1)
24.0 Power of Attorney (included at page II-4)
</TABLE>
- ---------------------------------
* Filed as an Exhibit to the Company's Annual Report on Form 10-KSB for the
fiscal year ended May 31, 1997, and incorporated herein by reference.
II-5
<PAGE>
DYNATEM, INC.
1993 STOCK OPTION PLAN
----------------------
Exhibit 4.1
<PAGE>
DYNATEM, INC.
-------------
1993 STOCK OPTION PLAN
----------------------
1. Purposes of the Plan.
--------------------
The purposes of this 1993 Stock Option Plan (the "Plan") of Dynatem,
Inc., a California corporation (the "Company"), are (a) to insure the retention
of the services of existing executive personnel, key employees and non-employee
directors of the Company or its affiliates; (b) to attract and retain competent
new executive personnel, key employees and non-employee directors; and (c) to
provide incentive to all such personnel and employees to devote their utmost
effort and skill to the advancement and betterment of the Company, by permitting
them to participate in the ownership of the Company and thereby in the success
and increased value of the Company.
2. Shares Subject to the Plan.
--------------------------
The shares of stock subject to (i) the incentive options having the
terms and conditions set forth in Section 6 below (hereinafter "incentive
options"), and/or (ii) nonqualified options having the terms and conditions set
forth in Section 7 below (hereinafter "nonqualified options") shall be shares of
the Company's authorized but unissued or reacquired common stock. The total
number of shares of common stock of the Company which may be issued under the
Plan shall not exceed, in the aggregate, 200,000 shares. The limitations
established by the preceding sentence shall be subject to adjustment as provided
in Section 9 below. In the event that any outstanding incentive option or
nonqualified option granted under the Plan can no longer under any circumstances
be exercised, for any reason, the shares allocable to the unexercised portion
thereof shall again be subject to grant or issuance under the Plan.
3. Eligibility.
-----------
(a) Incentive Options. Officers and other key employees of the
-----------------
Company or of any subsidiary corporation (including any member of the Board of
Directors of the Company (the "Board"), if such director is also an employee of
the Company or a subsidiary), as may be determined by the Committee, who qualify
for incentive stock options under the applicable provisions of the Internal
Revenue Code, will be eligible for selection to receive incentive options under
the Plan. An employee who has been granted an incentive option may, if
otherwise eligible, be granted an additional incentive option or options and/or
nonqualified options if the Committee shall so determine.
(b) Nonqualified Options. Officers and other key employees of the
--------------------
Company or of any subsidiary corporation, any member of the Board, whether or
not he or she is employed by the Company, will be eligible to receive
nonqualified options under the
<PAGE>
Plan, provided, however, that the eligibility of non-employee directors of the
-------- -------
Company shall be subject to the provisions of Section 4(c) below. An individual
who has been granted a nonqualified option may, if otherwise eligible, be
granted incentive options or additional nonqualified options if the Committee
shall so determine.
4. Administration of the Plan.
--------------------------
(a) Administration by Committee. Subject to Section 4(c) below,
---------------------------
the Plan shall be administered by a committee (the "Committee") of the Board
consisting of two (2) or more persons, who shall be appointed by, and serve at
the pleasure of, the Board. Each member of the Committee shall be a
disinterested person within the meaning of Rule 16b-3 adopted by the Securities
and Exchange Commission under the Securities Exchange Act of 1934.
(b) Authority of Committee. Subject to Section 4(c) below, the
----------------------
Committee shall have full and final authority to determine the persons to whom,
and the time or times at which, incentive options and nonqualified options shall
be granted, the number of shares to be represented by each incentive option and
nonqualified option and the consideration to be received by the Company upon the
exercise thereof; to interpret the Plan; to amend and rescind rules and
regulations relating to the Plan; to determine the form and content, terms and
conditions of the incentive options and nonqualified options to be issued under
the Plan; to determine the identity or capacity of any persons who may be
entitled to exercise a participant's rights under any incentive option or
nonqualified option under the Plan; to correct any defect or supply any omission
or reconcile any inconsistency in the Plan or in any incentive option or
nonqualified option in the manner and to the extent the Committee deems
desirable to carry the Plan, incentive option or nonqualified option into
effect; to accelerate the exercise date of any incentive option or nonqualified
option; to provide for an option to the Company to repurchase any shares issued
upon exercise of an option upon termination of employment; and to make all other
determinations necessary or advisable for the administration of the Plan, but
only to the extent not contrary to the express provisions of the Plan. Any
action, decision, interpretation or determination by the Committee with respect
to the application or administration of the Plan shall be final and binding on
all participants and prospective participants.
(c) Grant of Options to Non-Employee Directors. Notwithstanding
------------------------------------------
any other provision of this Plan, no stock options shall be granted under the
Plan to any person who is, at the time of any such proposed grant, a member of
the Board but not an employee of the Company or any of its subsidiaries (a "Non-
Employee Director"), except at the times and for the number of shares specified
in this Section 4(c). On the date the Plan becomes effective pursuant to Section
11 below, and subject to shareholder approval of the Plan, a nonqualified option
to purchase 10,000 shares of common stock shall be granted to each Non-Employee
Director who was a Non-Employee Director on such effective date (the "Initial
Grant"). After the Initial Grant, a nonqualified option to purchase 10,000
-2-
<PAGE>
shares of common stock shall be granted on the last day of the second fiscal
quarter of the Company to each person who is then a Non-Employee Director but
who did not receive the Initial Grant and who has not yet been granted a
nonqualified option under this Section 4(c) (the "Additional Grant"). The
exercise price of the shares subject to each stock option granted pursuant to
this Section 4(c) shall be 100% of the fair market value of such shares on the
date of the grant of the option, determined in accordance with Section 5. The
number of shares allocable to any Additional Grant shall be subject to
adjustment in the manner provided in Section 9 below.
5. Option Exercise Price.
---------------------
The exercise price of the shares covered by each nonqualified option
granted shall not be less than 100% of the fair market value of such shares on
the date the nonqualified option is granted; provided, however, that the
exercise price of shares covered by a nonqualified option granted under the Plan
to any person who, at the time of the grant of the option, owns stock possessing
10% or more of the total combined voting power of all classes of stock of the
Company or its parent or any subsidiary corporation, shall not be less than 110%
of the fair market value of such shares at the date of grant of the option. The
exercise price of the shares covered by each incentive option granted under the
Plan shall not be less than 100% of the fair market value of such shares on the
date the incentive option is granted; provided, however, that the exercise price
of shares covered by any incentive option granted under the Plan to any person
who, at the time of grant of the option, owns stock possessing 10% or more of
the total combined voting power of all classes of stock of the Company or of its
parent or any subsidiary corporation, shall not be less than 110% of the fair
market value of such shares at the date of grant of the option. The fair market
value of the Company's common stock shall, if the common stock is not listed or
admitted to trading on a stock exchange, be the average of the closing bid price
and asked price of the Company's common stock in the over-the-counter market on
the day immediately preceding the date the incentive option or nonqualified
option is granted, or, if the Company's common stock is then listed or admitted
to trading on any stock exchange, the closing sale price on such day on the
principal stock exchange on which the Company's common stock is then listed or
admitted to trading. If no closing bid and asked prices are quoted on such day,
or if no sale takes place on such day on such principal exchange, as the case
may be, then the closing sale price of the Company's common stock on such
exchange on the next preceding day on which a sale occurred, or the closing bid
and asked prices on the next preceding day on which such prices were quoted, as
the case may be, shall be the fair market value of the stock. During such times
as there is not a market price available, the fair
-3-
<PAGE>
market value of the Company's common stock shall be determined by the Committee,
which shall consider, among other facts which it considers to be relevant, the
book value of such stock and the earnings of the Company. The exercise price or
the purchase price, as the case may be, shall be subject to adjustment as
provided in Section 9 below.
6. Terms and Conditions of Incentive Options.
-----------------------------------------
Each incentive option granted pursuant to this Plan shall be evidenced
by a written Incentive Option Agreement which shall specify that the options
subject thereto are incentive options within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"). The Incentive Option
Agreement shall be in such form as the Committee shall, from time to time,
recommend, but shall comply with and be subject to the following terms and
conditions:
(a) Medium and Time of Payment. Subject to the discretion of the
--------------------------
Committee, the exercise price of an incentive option shall be payable (i) in
United States dollars payable in cash, certified check, or bank draft; (ii)
subject to any legal restrictions on the acquisition or purchase of its shares
by the Company, by the delivery of shares of common stock of the Company, which
shall be deemed to have a value to the Company equal to the aggregate fair
market value of such shares determined at the date of such exercise in
accordance with the provisions of Section 5 above; (iii) by the optionee's
promissory note (having such terms and providing for such security as the
Committee shall deem appropriate); (iv) by forgiveness of indebtedness; or (v)
any combination of (i), (ii), (iii), or (iv) above.
(b) Grant of Incentive Option. Any incentive option shall be
-------------------------
granted within ten (10) years from the date of the adoption of this Plan or the
date this Plan is approved by the shareholders of the Company, whichever is
earlier.
(c) Number of Shares. The Incentive Option Agreement shall state
----------------
the total number of shares to which it pertains.
(d) Term of Incentive Option. Each incentive option granted under
------------------------
the Plan shall expire within a period of not more than ten (10) years from the
date the incentive option is granted; provided, however, that the term of any
incentive option granted to any person who, at the time of grant of the
incentive option, owns stock possessing 10% or more of the total combined voting
power of all classes of stock of the Company or of its parent or any subsidiary
corporation, shall not exceed five (5) years.
(e) Date of Exercise. The Committee may, in its discretion,
----------------
provide that an incentive option may be exercised
-4-
<PAGE>
immediately or that it may not be exercised in whole or in part for any
specified period or periods of time; provided, however, that the exercisability
of each option granted under the Plan shall vest at a rate of not less than 20%
per year over a period of not more than five (5) years following the date of the
grant of the option. Except as may be so provided, any incentive option may be
exercised in whole at any time or in part from time to time during its term.
(f) Termination of Association Except Upon Death or Disability.
----------------------------------------------------------
In the event that an optionee's Termination of Association (as defined herein)
with the Company shall cease for any reason other than his death or permanent
and total disability (hereinafter "disability"), (i) all incentive options
granted to any such optionee pursuant to this Plan which are not exercisable at
the date of such termination of association shall terminate immediately and
become void and of no effect, and (ii) all incentive options granted to any such
optionee pursuant to this Plan which are exercisable at the date of such
termination of association may be exercised (but only to the extent they were
exercisable as of the date of such termination of association) at any time
within thirty (30) days of the date of such termination, but in any event no
later than the date of expiration of the incentive option period, and if not so
exercised within such time shall become void and of no effect at the end of such
time. For purposes of this Plan, "Termination of Association" shall mean (A)
with respect to nonqualified Options: (i) for any person who is an employee of
the Company or a subsidiary of the Company but not also a director of the
Company, the cessation of such person's employment with the Company or a
corporation or a parent or subsidiary corporation of a corporation issuing and
assuming an option in a transaction to which Section 424(a) of the Code applies
(collectively, the "Affiliates"), (ii) for any person who is a Non-Employee
Director of the Company, the cessation of such person's status as a director of
the Company, and (iii) for any person who is both a director of the Company and
an employee of the Company or a subsidiary or Affiliate of the Company, the
cessation of both such person's employment and status as a director; and (B)
with respect to incentive Options, the cessation of such persons employment with
the Company or an Affiliate.
(g) Death or Disability of Optionee. In the event of an
-------------------------------
optionee's termination of association with the Company by reason of his or her
death or disability, (i) all incentive options granted to such optionee pursuant
to this Plan which are not exercisable at the date of such termination of
association shall terminate immediately and become void and of no effect, and
(ii) all incentive options granted to such optionee pursuant to this Plan which
are exercisable at the date of such termination of association may be exercised
(but only to the extent they were exercisable as of the date of such
termination) at any time within six (6) months after the optionee's termination
of association as a result of such death or disability, but in any event no
later than the date of expiration of the incentive option period, by such
-5-
<PAGE>
optionee, or in the event of death, by the executors or administrators of the
optionee's estate or by any person or persons who shall have acquired the
incentive option directly from the optionee by bequest or inheritance. At the
end of such six month period, all incentive options held by such optionee, to
the extent they remain unexercised, shall terminate and become void and of no
effect.
(h) Limitation. Notwithstanding any other provisions of the Plan,
----------
the aggregate fair market value (determined in accordance with the provisions of
Section 5 above as of the time the incentive option is granted) of the common
stock with respect to which incentive options are exercisable for the first time
by any individual during any calendar year (under all such plans of the Company
and its parent and subsidiary corporations) shall not exceed $100,000.
7. Terms and Conditions of Nonqualified Options.
--------------------------------------------
Each nonqualified option granted pursuant to this Plan shall be
evidenced by a written Nonqualified Option Agreement which shall specify that
the options subject thereto are nonqualified options. The Nonqualified Option
Agreement shall be in such form as the Committee shall, from time to time,
recommend, but shall comply with and be subject to the following terms and
conditions:
(a) Medium and Time of Payment. Subject to the discretion of the
--------------------------
Committee, the exercise price of a nonqualified option shall be payable (i) in
cash, certified check, or bank draft; (ii) subject to any legal restrictions on
the acquisition or purchase of its shares by the Company, by the delivery of
shares of common stock of the Company, which shall be deemed to have a value to
the Company equal to the aggregate fair market value of such shares determined
at the date of such exercise in accordance with the provisions of Section 5
above; (iii) by the optionee's promissory note (having such terms and providing
for such security as the Committee shall deem appropriate); (iv) by forgiveness
of indebtedness; or (v) any combination of (i), (ii), (iii), or (iv) above.
(b) Number of Shares. The Nonqualified Option Agreement shall
----------------
state the total number of shares to which it pertains.
(c) Term of Nonqualified Option. Each nonqualified option granted
---------------------------
under the Plan shall expire within a period of not more than ten (10) years from
the date the nonqualified option is granted.
(d) Date of Exercise. The Committee may, in its discretion,
----------------
provide that a nonqualified option may be exercised immediately or that it may
not be exercised in whole or in part for any specified period or periods of
time; provided, however, that
-6-
<PAGE>
the exercisability of each option granted under the Plan shall vest at a rate of
not less than 20% per year over a period of not more than five (5) years
following the date of the grant of the option. Except as may be so provided, any
nonqualified option may be exercised in whole at any time or in part from time
to time during its term.
(e) Termination of Association Except Upon Death or Disability. In
----------------------------------------------------------
the event of an optionee's termination of association with the Company for any
reason other than his or her death or disability (i) all nonqualified options
granted to any such optionee pursuant to this Plan which are not exercisable at
the date of such termination of association shall terminate immediately and
become void and of no effect, and (ii) all nonqualified options granted to any
such optionee pursuant to this Plan which are exercisable at the date of such
termination of association may be exercised (but only to the extent they were
exercisable as of the date of the termination of association) at any time within
thirty (30) days of the date of such termination of association, but in any
event no later than the date of expiration of the nonqualified option period,
and if not so exercised within such time shall become void and of no effect at
the end of such time.
(f) Death or Disability of Optionee. In the event of an optionee's
-------------------------------
termination of association with the Company by reason of his or her death or
disability (i) all nonqualified options granted to such optionee pursuant to
this Plan which are not exercisable at the date of such termination of
association shall terminate immediately and become void and of no effect, and
(ii) all nonqualified options granted to such optionee pursuant to this Plan
which are exercisable at the date of such termination of association may be
exercised (but only to the extent they were exercisable as of the date of the
termination of association) at any time within six (6) months after the
optionee's death or disability, but in any event no later than the date of
expiration of the nonqualified option period, by such optionee, or in the event
of death, by the executors or administrators of the optionee's estate or by any
person or persons who shall have acquired the nonqualified option directly from
the optionee by bequest or inheritance. At the end of such six month period,
all nonqualified options held by such optionee, to the extent they remain
unexercised, shall terminate and become void and of no effect.
(g) Termination of Non-Employee Director. In the event of the
------------------------------------
termination of association with the Company of an optionee who is a Non-Employee
Director of the Company, for any reason whatsoever, including his or her death
or disability, (i) all nonqualified options granted to such optionee pursuant to
this Plan which are not exercisable at the date of such termination of
association shall terminate immediately and become void and of no effect, and
(ii) all nonqualified options granted to such optionee
-7-
<PAGE>
pursuant to this Plan which are exercisable at the date of such termination of
association may be exercised (but only to the extent they were exercisable as of
the date of the termination of association) at any time prior to the expiration
date of the option.
8. Terms and Conditions Applicable Equally to Incentive Options and
----------------------------------------------------------------
Nonqualified Options.
--------------------
(a) Rights as a Shareholder. No optionee under an incentive option
-----------------------
or nonqualified option shall have any rights as a shareholder with respect to
any shares covered by his or her option until the date of the issuance of a
share certificate to such optionee for such shares. Except as expressly provided
in Section 9 below, no adjustment shall be made for dividends or distributions
or other rights for which the record date is prior to the date such share
certificate is issued.
(b) Nonassignability of Rights. No incentive option or nonqualified
--------------------------
option granted under the Plan shall be assignable or transferable by the person
receiving the same other than by will or the laws of descent and distribution.
During the life of such person, the option shall be exercisable only by him or
her.
(c) Other Provisions. Any Incentive Option Agreement or
----------------
Nonqualified Option Agreement may contain such other terms, provisions and
conditions as may be determined by the Committee. Options granted to different
persons, or to the same person at different times, may be subject to terms,
conditions and restrictions which differ from each other.
9. Changes in Capital Structure.
----------------------------
In the event that the outstanding shares of common stock of the
Company are hereafter increased or decreased or changed into or exchanged for a
different number or kind of shares or other securities of the Company by reason
of merger, consolidation or reorganization in which the Company is the surviving
corporation or of a recapitalization, stock split, combination of shares,
reclassification, reincorporation, stock dividend (in excess of 2%), or other
change in the corporate structure of the Company, appropriate adjustments shall
be made by the Committee in the aggregate number and kind of shares subject to
this Plan and the number and kind of shares and the price per share subject to
outstanding incentive options and nonqualified options in order to preserve, but
not to increase, the benefits to persons then holding incentive options and/or
nonqualified options.
In the event that the Company at any time proposes to (i) merge into,
consolidate with or to enter into any other reorganization (including the sale
of substantially all of its assets) in which the Company is not the surviving
corporation, or (ii) enter into a merger or other reorganization as a result of
-8-
<PAGE>
which the outstanding common stock of the Company will be changed into or
exchanged for shares of the capital stock or other securities of another
corporation or for cash or other property, then the Plan and all unexercised
incentive options and nonqualified options granted hereunder shall terminate,
unless provision is made in writing in connection with such transaction for the
continuance of the Plan and for the assumption of incentive options and
nonqualified options theretofore granted, or the substitution for such incentive
options and nonqualified options of new incentive options and nonqualified
options covering the shares of a successor corporation, with appropriate
adjustments as to number and kind of shares and prices, in which event the Plan
and the incentive options and nonqualified options theretofore granted or the
new incentive options and nonqualified options substituted therefor, shall
continue in the manner and under the terms so provided. If such provision is
not made in such transaction for the continuance of the Plan and the assumption
of incentive options and nonqualified options theretofore granted or the
substitution for such incentive options and nonqualified options of new
incentive options and nonqualified options covering the shares of a successor
corporation, then the Committee shall cause written notice of the proposed
transaction to be given to the persons holding incentive options or nonqualified
options not less than thirty (30) days prior to the anticipated effective date
of the proposed transaction, and all incentive options and nonqualified options
shall, concurrently with the effective date of the proposed transaction,
automatically expire and shall thereafter be void and of no effect. No such
transaction shall accelerate the vesting of any option granted under the Plan.
10. Amendment and Termination of the Plan.
-------------------------------------
The Board may from time to time alter, amend, suspend or terminate the
Plan in such respects as the Board may deem advisable; provided, however, that
no such alteration, amendment, suspension or termination shall be made which
shall substantially affect or impair the rights of any person under any
incentive option or nonqualified option theretofore granted without such
person's consent; and, provided further, however, that no amendment which would
(i) materially increase the benefits accruing to participants under the Plan,
(ii) materially increase the number of securities which may be issued under the
Plan, or (iii) materially modify the requirements as to eligibility for
participation in the Plan, shall be made except with the approval of the
Company's shareholders. Notwithstanding the foregoing, the provisions of
Section 4(c) and 5 (as Section 5 relates to the grant of nonqualified options
granted to Non-Employee Directors pursuant to Section 4(c)) shall not be amended
more than once every six (6) months, other than to comport with changes in the
Code, the Employment Retirement Income Security Act, or the rules thereunder.
-9-
<PAGE>
11. Effective Date and Termination of the Plan.
------------------------------------------
The Plan shall be effective on the date of its approval by the Board
and, unless the Plan shall have been sooner terminated as provided herein, shall
terminate on the tenth anniversary of (i) the date the Plan is approved and
adopted by the Board, or (ii) the date the Plan is approved by the Company's
shareholders, whichever is earlier.
12. Application of Funds.
--------------------
The proceeds received by the Company from the sale of shares of common
stock pursuant to incentive options and nonqualified options will be used for
general corporate purposes.
13. Tax Withholding.
---------------
Whenever shares are to be issued under the Plan, the Company or any
subsidiary of the Company employing the recipient shall have the right to deduct
from the recipient's compensation or require the recipient to remit to the
employer corporation, prior to the issuance of the shares, an amount sufficient
to satisfy federal, state and local withholding tax requirements.
14. Continuance of Employment or Status as Director.
-----------------------------------------------
The Plan or the granting of any incentive option or nonqualified
option hereunder shall not impose any obligation on the Company, its
shareholders or any subsidiary of the Company to continue the employment of any
optionee or offeree who is an employee, or to retain as a director any optionee
or offeree who is a director.
15. Information to Optionees.
------------------------
The Company shall provide to each participant in the Plan a copy of
the Company's financial statements for each fiscal year of the Company within a
reasonable time after such financial statements are prepared and approved by the
Company's management. The Company shall also provide each participant in the
Plan with a copy of any annual or other report generally distributed by the
Company to its shareholders.
16. Shareholder Approval.
--------------------
This Plan must be approved by the Company's shareholders within twelve
(12) months following its adoption by the Board. Any stock option exercised
before shareholder approval is obtained must be rescinded if shareholder
approval is not obtained within twelve (12) months following the adoption of the
Plan by the Board. Such shares shall not be counted in determining whether such
approval is obtained.
-10-
<PAGE>
17. General Provisions.
------------------
Notwithstanding any other provision of this Plan or agreements made
pursuant thereto, the Company shall not be required to issue or deliver any
certificate or certificates for shares of stock upon the exercise of options
granted under this Plan prior to fulfillment of all of the following conditions:
(a) The listing or approval for listing upon notice of issuance, of
such shares on any securities exchange as may at the time be the market for the
Company's common stock;
(b) Any registration or other qualification of such shares under any
state or federal law or regulation, or the maintaining in effect of any such
registration or other qualification which the Committee shall, in its absolute
discretion upon the advice of counsel, deem necessary or advisable;
(c) The obtaining of any other consent, approval or permit from any
state or federal governmental agency or any stock exchange on which the
Company's common stock is then listed, which the Committee shall, in its
absolute discretion upon the advice of counsel, determine to be necessary or
advisable; and
(d) The execution and delivery to the Company by the recipient of an
investment representation letter containing such assurances and/or
representations as the Committee shall, in its absolute discretion upon the
advice of counsel, determine to be necessary or advisable to satisfy the
requirements for exemptions from registration and qualification under applicable
state and federal securities laws.
END OF PLAN
-11-
<PAGE>
DYNATEM, INC.
1998 STOCK OPTION PLAN
Exhibit 4.2
<PAGE>
DYNATEM, INC.
1998 STOCK OPTION PLAN
----------------------
1. Purposes of the Plan. The purposes of this 1998 Stock Option
--------------------
Plan (the "Plan") of DYNATEM, INC., a California corporation (the "Company"),
are: (i) to insure the retention of the services of existing executive
personnel, key employees and non-employee directors of the Company or its
affiliates; (ii) to attract and retain competent new executive personnel, key
employees and non-employee directors; (iii) to provide incentive to all such
personnel and employees to devote their utmost effort and skill to the
advancement and betterment of the Company; and (iv) compensate consultants,
business associates, vendors and others who render bona fide services to the
Company so long as such services are not rendered in connection with the offer
and sale of securities in a capital-raising transaction (collectively, the
"Consultants"), by permitting them to participate in the ownership of the
Company and thereby in the success and increased value of the Company.
2. Shares Subject to the Plan. The shares of stock subject to: (i)
--------------------------
the incentive options having the terms and conditions set forth in Section 6
hereof (the "Incentive Options"); and/or (ii) the nonqualified options having
the terms and conditions set forth in Section 7 hereof (the "Nonqualified
Options") shall be shares of the Company's authorized but unissued or reacquired
common stock (the "Shares"). The total number of Shares which may be issued
under the Plan shall not exceed, in the aggregate, Two Hundred Thousand
(200,000) Shares. The limitations established by the preceding sentence shall be
subject to adjustment as provided in Section 9 hereof. In the event that any
outstanding Incentive Option or Nonqualified Option granted under the Plan can
no longer under any circumstances be exercised, for any reason, the Shares
allocable to the unexercised portion thereof shall again be subject to grant or
issuance under the Plan.
3. Eligibility.
-----------
(a) Incentive Options. Officers and other key employees of the
-----------------
Company or of any subsidiary corporation (including any member of the Board of
Directors of the Company (the "Board"), if such director is also an employee of
the Company or a subsidiary), as may be determined by the Administrator (as
defined herein), who qualify for "incentive stock options" under the applicable
provisions of the Internal Revenue Code of 1986, as amended (the "Code"), will
be eligible for selection to receive Incentive Options under the Plan. An
employee who has been granted an Incentive Option may, if otherwise eligible, be
granted an additional Incentive Option or options and/or Nonqualified Options if
the Administrator shall so determine.
(b) Nonqualified Options. Officers and other key employees of the
--------------------
Company or of any subsidiary corporation, any member of the Board, whether or
not he or she is employed by the Company, and the Consultants, will be eligible
to receive Nonqualified Options under the Plan. An individual who has been
<PAGE>
granted a Nonqualified Option may, if otherwise eligible, be granted Incentive
Options or additional Nonqualified Options if the Administrator shall so
determine.
4. Administration of the Plan.
--------------------------
(a) Administration by Administrator. The Plan shall be administered
-------------------------------
by either the Board, or a committee of the Board consisting of two (2) or more
persons, who shall be appointed by, and serve at the pleasure of, the Board and
who shall be a "non-employee director" within the meaning of Rule 16b-3 adopted
by the Securities and Exchange Commission under the Securities Exchange Act of
1934 (the "Administrator").
(b) Authority of Administrator. The Administrator shall have full and
--------------------------
final authority to determine the persons to whom, and the time or times at
which, Incentive Options and Nonqualified Options shall be granted, the number
of Shares to be represented by each Incentive Option and Nonqualified Option and
the consideration to be received by the Company upon the exercise thereof; to
interpret the Plan; to amend and rescind rules and regulations relating to the
Plan; to determine the form and content, terms and conditions of the Incentive
Options and Nonqualified Options to be issued under the Plan; to determine the
identity or capacity of any persons who may be entitled to exercise a
participant's rights under any Incentive Option or Nonqualified Option under the
Plan; to correct any defect or supply any omission or reconcile any
inconsistency in the Plan or in any Incentive Option or Nonqualified Option in
the manner and to the extent the Administrator deems desirable to carry the
Plan, Incentive Option or Nonqualified Option into effect; to provide for an
option to the Company to repurchase any Shares issued upon exercise of an option
upon termination of optionees association with the Company and to release and/or
waive such right; to provide for rights of first refusal and other restrictions
on transfer on any Shares issued upon exercise of an Incentive Option and/or
Nonqualified Option and to release and/or waive any such right or restriction;
and to make all other determinations necessary or advisable for the
administration of the Plan, but only to the extent not contrary to the express
provisions of the Plan. Any action, decision, interpretation or determination
by the Administrator with respect to the application or administration of the
Plan shall be final and binding on all participants and prospective
participants.
-2-
<PAGE>
5. Option Exercise Price.
---------------------
(a) Nonqualified Option. The exercise price of the Shares covered by
-------------------
each Nonqualified Option granted shall not be less than eight-five percent (85%)
of the fair market value of such Shares on the date the Nonqualified Option is
granted; provided, however, that the exercise price of Shares covered by a
-------- -------
Nonqualified Option granted under the Plan to any person who, at the time of the
grant of the Nonqualified Option, owns stock possessing ten percent (10%) or
more of the total combined voting power of all classes of stock of the Company
or its parent or any subsidiary corporation, shall not be less than one hundred
ten percent (110%) of the fair market value of such Shares at the date of grant
of the Nonqualified Option.
(b) Incentive Option. The exercise price of the Shares covered by
----------------
each Incentive Option granted under the Plan shall not be less than one hundred
percent (100%) of the fair market value of such Shares on the date the Incentive
Option is granted; provided, however, that the exercise price of Shares covered
-------- -------
by any Incentive Option granted under the Plan to any person who, at the time of
grant of the Incentive Option, owns stock possessing ten percent (10%) or more
of the total combined voting power of all classes of stock of the Company or of
its parent or any subsidiary corporation, shall not be less than one hundred ten
percent (110%) of the fair market value of such Shares at the date of grant of
the Incentive Option.
(c) Fair Market Value. The fair market value of the Shares shall, if
-----------------
the Shares are not listed or admitted to trading on a stock exchange, be the
average of the closing bid price and asked price of the Shares in the over-the-
counter market on the day immediately preceding the date the Incentive Option or
Nonqualified Option is granted, or, if the Shares are then listed or admitted to
trading on any stock exchange, the closing sale price on such day on the
principal stock exchange on which the Shares are then listed or admitted to
trading. If no closing bid and asked prices are quoted on such day, or if no
sale takes place on such day on such principal exchange, as the case may be,
then the closing sale price of the Shares on such exchange on the next preceding
day on which a sale occurred, or the closing bid and asked prices on the next
preceding day on which such prices were quoted, as the case may be, shall be the
fair market value of the Shares. During such times as there is not a market
price available, the fair market value of the Shares shall be determined by the
Administrator, which shall consider, among other facts which it considers to be
relevant, the book value and the earnings of the Company. The exercise price or
the purchase price, as the case may be, shall be subject to adjustment as
provided in Section 9 hereof.
6. Terms and Conditions of Incentive Options. Each Incentive Option
-----------------------------------------
granted pursuant to this Plan shall be evidenced by a written Incentive Option
Agreement which shall specify that the options subject thereto are Incentive
Options within the
-3-
<PAGE>
meaning of Section 422 of the Code. The Incentive Option Agreement shall be in
such form as the Administrator shall, from time to time, recommend, but shall
comply with and be subject to the following terms and conditions:
(a) Medium and Time of Payment. Subject to the discretion of the
--------------------------
Administrator, the exercise price of an Incentive Option shall be payable: (i)
in United States Dollars payable in cash, certified check, or bank draft; (ii)
subject to any legal restrictions on the acquisition or purchase of its Shares
by the Company, by the delivery of Shares, which shall be deemed to have a value
to the Company equal to the aggregate fair market value of such Shares
determined at the date of such exercise in accordance with the provisions of
Section 5 hereof; (iii) by the optionee's promissory note (having such terms and
providing for such security as the Administrator shall deem appropriate); (iv)
by forgiveness of indebtedness; or (v) any combination of (i), (ii), (iii), or
(iv) above.
(b) Grant of Incentive Option. Any Incentive Option shall be granted
-------------------------
within ten (10) years from the date of the adoption of this Plan or the date
this Plan is approved by the shareholders of the Company, whichever is earlier.
(c) Number of Shares. The Incentive Option Agreement shall state the
----------------
total number of Shares to which it pertains.
(d) Term of Incentive Option. Each Incentive Option granted under the
------------------------
Plan shall expire within a period of not more than ten (10) years from the date
the Incentive Option is granted; provided, however, that the term of any
-------- -------
Incentive Option granted to any person who, at the time of grant of the
Incentive Option, owns stock possessing ten percent (10%) or more of the total
combined voting power of all classes of stock of the Company or of its parent or
any subsidiary corporation, shall not exceed five (5) years.
(e) Date of Exercise. The Administrator may, in its discretion,
----------------
provide that an Incentive Option may be exercised immediately or that it may not
be exercised in whole or in part for any specified period or periods of time;
provided, however, that the exercisability of each Incentive Option granted
- -------- -------
under the Plan shall vest at a rate of not less than twenty percent (20%) per
year over a period of not more than five (5) years following the date of the
grant of the Incentive Option. Except as may be so provided, any Incentive
Option may be exercised in whole at any time or in part from time to time during
its term.
(f) Termination of Association Except Upon Death or Disability. In
----------------------------------------------------------
the event that an optionee's Termination of Association (as defined herein) with
the Company shall cease for any reason other than his death or permanent and
total disability (hereinafter "Disability"): (i) all Incentive Options granted
to any such optionee pursuant to this Plan which are not exercisable
-4-
<PAGE>
at the date of such Termination of Association shall terminate immediately and
become void and of no effect; and (ii) all Incentive Options granted to any such
optionee pursuant to this Plan which are exercisable at the date of such
Termination of Association may be exercised (but only to the extent they were
exercisable as of the date of such Termination of Association) at any time
within thirty (30) days after the date of such Termination of Association, but
in any event no later than the date of expiration of the Incentive Option
period, and if not so exercised within such time shall become void and of no
effect at the end of such time. For purposes of this Plan, "Termination of
Association" shall mean: (A) with respect to Nonqualified Options: (1) for any
person who is an employee of the Company or a subsidiary of the Company but not
also a director of the Company, the cessation of such person's employment with
the Company or a corporation or a parent or subsidiary corporation of a
corporation issuing and assuming an option in a transaction to which Section
424(a) of the Code applies (collectively, the "Affiliates"); (2) for any person
who is a Non-Employee Director of the Company, the cessation of such person's
status as a director of the Company; (3) for any person who is both a director
of the Company and an employee of the Company or a subsidiary or Affiliate of
the Company, the cessation of both such person's employment and status as a
director; and (4) for any Consultant, the cessation of such person being a
service provider to the Company or its Affiliates; and (B) with respect to
Incentive Options, the cessation of such person's employment with the Company or
an Affiliate.
(g) Disability of Optionee. In the event of an optionee's Termination
----------------------
of Association with the Company by reason of his or her Disability: (i) all
Incentive Options granted to such optionee pursuant to this Plan which are not
exercisable at the date of such Termination of Association shall terminate
immediately and become void and of no effect; and (ii) all Incentive Options
granted to such optionee pursuant to this Plan which are exercisable at the date
of such Termination of Association may be exercised by such optionee (but only
to the extent they were exercisable as of the date of such Termination of
Association) at any time within twelve (12) months after the optionee's
Termination of Association as a result of such Disability, but in any event no
later than the date of expiration of the Incentive Option period. At the end of
such twelve (12)-month period, all Incentive Options held by such optionee, to
the extent they remain unexercised, shall terminate and become void and of no
effect.
(h) Death of Optionee. In the event of an optionee's Termination of
-----------------
Association with the Company by reason of his or her death: (i) all Incentive
Options granted to such optionee pursuant to this Plan which are not exercisable
at the date of such Termination of Association shall terminate immediately and
become void and of no effect; and (ii) all Incentive Options granted to such
optionee pursuant to this Plan which are exercisable at the date of such
Termination of Association may be exercised (but only to the extent they were
exercisable as of the date of such Termination of Association) by the executors
or
-5-
<PAGE>
administrators of the optionee's estate or by any person or persons who shall
have acquired the Incentive Option directly from the optionee by bequest or
inheritance at any time prior to the date of expiration of the Incentive Option
period.
(i) Limitation. Notwithstanding any other provisions of the Plan, the
----------
aggregate fair market value (determined in accordance with the provisions of
Section 5 hereof as of the time the Incentive Option is granted) of the Shares
with respect to which Incentive Options are exercisable for the first time by
any individual during any calendar year (under all such plans of the Company and
its parent and subsidiary corporations) shall not exceed One Hundred Thousand
Dollars ($100,000).
7. Terms and Conditions of Nonqualified Options. Each Nonqualified
--------------------------------------------
Option granted pursuant to this Plan shall be evidenced by a written
Nonqualified Option Agreement which shall specify that the options subject
thereto are Nonqualified Options. The Nonqualified Option Agreement shall be in
such form as the Administrator shall, from time to time, recommend, but shall
comply with and be subject to the following terms and conditions:
(a) Medium and Time of Payment. Subject to the discretion of the
--------------------------
Administrator, the exercise price of a Nonqualified Option shall be payable:
(i) in cash, certified check, or bank draft; (ii) subject to any legal
restrictions on the acquisition or purchase of its Shares by the Company: (A) by
the delivery of Shares, which shall be deemed to have a value to the Company
equal to the aggregate fair market value of such Shares determined at the date
of such exercise in accordance with the provisions of Section 5 hereof; or (B)
in lieu of using previously outstanding Shares therefor, by use of some of the
Shares as to which the Nonqualified Option is then being exercised as stated in
the notice of exercise which directs the Company to retain a number of the
Shares that would otherwise be delivered to the optionee upon such exercise as
equals the number of Shares that would have been surrendered to the Company if
the purchase price had been paid with the previously issued Shares; (iii) by the
optionee's promissory note (having such terms and providing for such security as
the Administrator shall deem appropriate); (iv) by forgiveness of indebtedness;
or (v) any combination of (i), (ii), (iii), or (iv) above.
(b) Number of Shares. The Nonqualified Option Agreement shall state
----------------
the total number of Shares to which it pertains.
(c) Term of Nonqualified Option. Each Nonqualified Option granted
---------------------------
under the Plan shall expire within a period of not more than ten (10) years from
the date the Nonqualified Option is granted.
(d) Date of Exercise. The Administrator may, in its discretion,
----------------
provide that a Nonqualified Option may be exercised immediately or that it may
not be exercised in whole or in part for
-6-
<PAGE>
any specified period or periods of time; provided, however, that the
-------- -------
exercisability of each Nonqualified Option granted under the Plan shall vest at
a rate of not less than twenty percent (20%) per year over a period of not more
than five (5) years following the date of the grant of the Nonqualified Option.
Except as may be so provided, any Nonqualified Option may be exercised in whole
at any time or in part from time to time during its term.
(e) Termination of Association Except Upon Death or Disability. In
----------------------------------------------------------
the event of an optionee's Termination of Association with the Company for any
reason other than his or her death or Disability: (i) all Nonqualified Options
granted to any such optionee pursuant to this Plan which are not exercisable at
the date of such Termination of Association shall terminate immediately and
become void and of no effect; and (ii) all Nonqualified Options granted to any
such optionee pursuant to this Plan which are exercisable at the date of such
Termination of Association may be exercised (but only to the extent they were
exercisable as of the date of the Termination of Association) at any time within
thirty (30) days after the date of such Termination of Association, but in any
event no later than the date of expiration of the Nonqualified Option period,
and if not so exercised within such time shall become void and of no effect at
the end of such time.
(f) Disability of Optionee. In the event of an optionee's Termination
----------------------
of Association with the Company by reason of his or her Disability: (i) all
Nonqualified Options granted to such optionee pursuant to this Plan which are
not exercisable at the date of such Termination of Association shall terminate
immediately and become void and of no effect; and (ii) all Nonqualified Options
granted to such optionee pursuant to this Plan which are exercisable at the date
of such Termination of Association may be exercised by such optionee (but only
to the extent they were exercisable as of the date of the Termination of
Association) at any time within twelve (12) months after the optionee's
Disability, but in any event no later than the date of expiration of the
Nonqualified Option period. At the end of such twelve (12)-month period, all
Nonqualified Options held by such optionee, to the extent they remain
unexercised, shall terminate and become void and of no effect.
(g) Death of Optionee. In the event of an optionee's Termination of
-----------------
Association with the Company by reason of his or her death: (i) all Nonqualified
Options granted to such optionee pursuant to this Plan which are not exercisable
at the date of such Termination of Association shall terminate immediately and
become void and of no effect; and (ii) all Nonqualified Options granted to such
optionee pursuant to this Plan which are exercisable at the date of such
Termination of Association may be exercised (but only to the extent they were
exercisable as of the date of the Termination of Association) by the executors
or administrators of the optionee's estate or by any person or persons who shall
have acquired the Nonqualified Option directly from the
-7-
<PAGE>
optionee by bequest or inheritance at any time prior to the date of expiration
of the Nonqualified Option period.
8. Terms and Conditions Applicable Equally to Incentive Options and
----------------------------------------------------------------
Nonqualified Options.
--------------------
(a) Rights as a Shareholder. No optionee under an Incentive Option or
-----------------------
Nonqualified Option shall have any rights as a shareholder with respect to any
Shares covered by his or her option until the date of the issuance of a Share
certificate to such optionee for such Shares. Except as expressly provided in
Section 9 hereof, no adjustment shall be made for dividends or distributions or
other rights for which the record date is prior to the date such Share
certificate is issued.
(b) Nonassignability of Rights. No Incentive Option or Nonqualified
--------------------------
Option granted under the Plan shall be assignable or transferable by the person
receiving the same other than by will or the laws of descent and distribution.
During the life of such person, the option shall be exercisable only by him or
her.
(c) Other Provisions. Any Incentive Option Agreement or Nonqualified
----------------
Option Agreement may contain such other terms, provisions and conditions as may
be determined by the Administrator. Options granted to different persons, or to
the same person at different times, may be subject to terms, conditions and
restrictions which differ from each other.
9. Changes in Capital Structure. In the event that the Shares are
----------------------------
hereafter increased or decreased or changed into or exchanged for a different
number or kind of shares or other securities of the Company by reason of merger,
consolidation or reorganization in which the Company is the surviving
corporation or of a recapitalization, stock split, combination of Shares,
reclassification, reincorporation, stock dividend (in excess of 2%), or other
change in the corporate structure of the Company, appropriate adjustments shall
be made by the Administrator in the aggregate number and kind of shares subject
to this Plan and the number and kind of shares and the price per share subject
to outstanding Incentive Options and Nonqualified Options in order to preserve,
but not to increase, the benefits to persons then holding Incentive Options
and/or Nonqualified Options.
In the event that the Company at any time proposes to: (i) merge into,
consolidate with or to enter into any other reorganization (including the sale
of substantially all of its assets) in which the Company is not the surviving
corporation; or (ii) enter into a merger or other reorganization as a result of
which the Shares will be changed into or exchanged for shares of the capital
stock or other securities of another corporation or for cash or other property,
then the Plan and all unexercised Incentive Options and Nonqualified Options
granted hereunder shall terminate, unless provision is made in writing in
connection with such transaction for the continuance of the Plan and for the
assumption
-8-
<PAGE>
of Incentive Options and Nonqualified Options theretofore granted, or the
substitution for such Incentive Options and Nonqualified Options of new
Incentive Options and Nonqualified Options covering the shares of a successor
corporation, with appropriate adjustments as to number and kind of shares and
prices, in which event the Plan and the Incentive Options and Nonqualified
Options theretofore granted or the new Incentive Options and Nonqualified
Options substituted therefor, shall continue in the manner and under the terms
so provided. If such provision is not made in such transaction for the
continuance of the Plan and the assumption of Incentive Options and Nonqualified
Options theretofore granted or the substitution for such Incentive Options and
Nonqualified Options of new Incentive Options and Nonqualified Options covering
the shares of a successor corporation, then the Administrator shall cause
written notice of the proposed transaction to be given to the persons holding
Incentive Options or Nonqualified Options not less than thirty (30) days prior
to the anticipated effective date of the proposed transaction, and all Incentive
Options and Nonqualified Options shall, concurrently with the effective date of
the proposed transaction, automatically expire and shall thereafter be void and
of no effect.
10. Amendment and Termination of the Plan. The Board may from time
-------------------------------------
to time alter, amend, suspend or terminate the Plan in such respects as the
Board may deem advisable; provided, however, that no such alteration, amendment,
-------- -------
suspension or termination shall be made which shall substantially affect or
impair the rights of any person under any Incentive Option or Nonqualified
Option theretofore granted without such person's consent; and, provided further,
-------- -------
however, that no amendment which would: (i) materially increase the benefits
- -------
accruing to participants under the Plan; (ii) materially increase the number of
securities which may be issued under the Plan; or (iii) materially modify the
requirements as to eligibility for participation in the Plan, shall be made
except with the approval of the Company's shareholders.
11. Effective Date and Termination of the Plan. The Plan shall be
------------------------------------------
effective on the date of its approval by the Board and, unless the Plan shall
have been sooner terminated as provided herein, shall terminate on the tenth
(10th) anniversary of: (i) the date the Plan is approved and adopted by the
Board; or (ii) the date the Plan is approved by the Company's shareholders,
whichever is earlier.
12. Application of Funds. The proceeds received by the Company from
--------------------
the sale of Shares pursuant to Incentive Options and Nonqualified Options will
be used for general corporate purposes.
13. Tax Withholding. Whenever Shares are to be issued under the
---------------
Plan, the Company or any subsidiary of the Company employing the recipient shall
have the right to deduct from the recipient's compensation or require the
recipient to remit to the employer corporation, prior to the issuance of the
Shares, an
-9-
<PAGE>
amount sufficient to satisfy federal, state and local withholding tax
requirements.
14. Continuance of Employment or Status as Director. The Plan or the
-----------------------------------------------
granting of any Incentive Option or Nonqualified Option hereunder shall not
impose any obligation on the Company, its shareholders or any subsidiary of the
Company to continue the employment of any optionee or offeree who is an
employee, or to retain as a director any optionee or offeree who is a director.
15. Information to Optionees. The Company shall provide to each
------------------------
participant in the Plan a copy of the Company's financial statements for each
fiscal year of the Company within a reasonable time after such financial
statements are prepared and approved by the Company's management. The Company
shall also provide each participant in the Plan with a copy of any annual or
other report generally distributed by the Company to its shareholders.
16. Shareholder Approval. This Plan must be approved by the
--------------------
Company's shareholders within twelve (12) months following its adoption by the
Board. Any option exercised before shareholder approval is obtained must be
rescinded if shareholder approval is not obtained within twelve (12) months
following the adoption of the Plan by the Board. Such Shares shall not be
counted in determining whether such approval is obtained.
17. General Provisions. Notwithstanding any other provision of this
------------------
Plan or agreements made pursuant thereto, the Company shall not be required to
issue or deliver any certificate or certificates for Shares upon the exercise of
options granted under this Plan prior to fulfillment of all of the following
conditions:
(a) The listing or approval for listing upon notice of issuance,
of such Shares on any securities exchange as may at the time be the market for
the Company's common stock;
(b) Any registration or other qualification of such Shares under
any state or federal law or regulation, or the maintaining in effect of any such
registration or other qualification which the Administrator shall, in its
absolute discretion upon the advice of counsel, deem necessary or advisable; and
(c) The obtaining of any other consent, approval or permit from
any state or federal governmental agency or any stock exchange on which the
Company's common stock is then listed, which the Administrator shall, in its
absolute discretion upon the advice of counsel, determine to be necessary or
advisable.
END OF PLAN
-10-
<PAGE>
CERTIFICATE OF ADOPTION
-----------------------
The undersigned, being the duly elected and acting Secretary of DYNATEM, INC.,
a California corporation (the "Company"), does hereby certify that the Company's
1998 Stock Option Plan in the form attached hereto was duly adopted by the Board
of Directors of the Company on March 13, 1998, and approved by the written
consent of the shareholders of the Company on October 7, 1998.
/s/Michael Horan
-------------------------
Michael Horan, Secretary
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<PAGE>
February 26, 1999
Dynatem, Inc.
23263 Madero, Suite C
Mission Viejo, California 92691
Re: Registration Statement on Form S-8
----------------------------------
Ladies and Gentlemen:
We have acted as counsel for Dynatem, Inc. (the "Company") in connection with
the preparation and filing of the Company's Registration Statement on Form S-8
under the Securities Act of 1933, as amended (the "Registration Statement"),
relating to 375,000 shares of the Company's Common Stock, no par value (the
"Common Stock"), issuable collectively under the Company's 1993 and 1998 Stock
Option Plans.
We have examined originals or copies, certified or otherwise identified to our
satisfaction, of the Plan and of such other documents, corporate records,
certificates of public officials and other instruments relating to the adoption
and implementation of the Plan as we deemed necessary or advisable for purposes
of this opinion.
Based on the foregoing examination and subject to compliance with applicable
state securities and "blue sky" laws, we are of the opinion that the shares of
Common Stock issuable pursuant to the Plan are duly authorized and, when issued
in accordance with the Plan, will be legally issued, fully paid and
nonassessable.
We consent to the filing of this opinion as an exhibit to the Registration
Statement and to all references therein to our firm.
Very truly yours,
HIGHAM, McCONNELL & DUNNING LLP
Exhibit 5.1
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We have issued our report dated July 20, 1998 accompanying the financial
statements of Dynatem, Inc. appearing in the Annual Report of Dynatem, Inc. on
Form 10-KSB for the fiscal year ended May 31, 1998 which are incorporated by
reference in this Registration Statement. We hereby consent to the incorporation
by reference in the Registration Statement of the aforementioned report.
/s/ Corbin & Wertz
CORBIN & WERTZ
Irvine, California
February 26, 1999
