SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
DOTRONIX, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] 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 transactions applies:
(3) Per unit price or other underlying value of transaction computed pursuant
to exchange Act Rule 0-11:1
(4) Proposed maximum aggregate value of transaction:
[ ] 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:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
1 Set forth the amount on which the filing fee is calculated and state how it
was determined.
DOTRONIX, INC.
160 FIRST STREET S.E.
NEW BRIGHTON, MINNESOTA 55112
NOTICE OF ANNUAL MEETING
To the Shareholders of Dotronix, Inc.:
Notice is hereby given that the annual meeting of shareholders of Dotronix,
Inc. (the "Company") will be held at 3:30 p.m. on Wednesday, November 8, 1995,
on the sixth floor of the Minneapolis Marriott City Center, Minneapolis,
Minnesota, for the following purposes:
1. To elect a Board of Directors for the ensuing year and until their
successors are elected.
2. To consider and act upon a proposed amendment to the Company's 1989
Stock Option and Restricted Stock Plan to increase the number of
shares available thereunder from 250,000 to 500,000.
3. To consider and act upon proposed amendments to the Company's
Nonemployee Director Stock Option Plan to (a) provide for an automatic
annual grant of 500 shares to each nonemployee director, and (b)
extend the term of the plan to coincide with the term of the Company's
1989 Stock Option and Restricted Stock Plan.
4. To ratify the appointment of Deloitte & Touche LLP as independent
auditors for the Company for the fiscal year ending June 30, 1996.
5. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on September 28,
1995 as the record date for the determination of shareholders entitled to notice
of and to vote at the meeting and any adjournment thereof.
A copy of the Company's Annual Report to Shareholders is included with this
mailing, which is being first made on approximately the date shown below.
We encourage you to take part in the affairs of your Company either in
person or by executing and returning the enclosed proxy.
By Order of the Board of Directors
Warren M. White, Secretary
Dated: October 6, 1995
IF YOU ARE UNABLE TO ATTEND THIS MEETING, YOU ARE URGED TO DATE
AND SIGN THE ENCLOSED PROXY AND TO RETURN IT IN THE POSTAGE-
PAID ENVELOPE ENCLOSED HEREWITH FOR YOUR CONVENIENCE.
PROXY STATEMENT
The annual meeting of shareholders of Dotronix, Inc. (the "Company"), 160
First Street S.E., New Brighton, Minnesota 55112, will be held at 3:30 p.m. on
Wednesday, November 8, 1995, on the sixth floor of the Minneapolis Marriott City
Center, Minneapolis, Minnesota, for the purposes set forth in the Notice of
Annual Meeting. The accompanying form of proxy for use at the meeting and any
adjournments thereof is solicited by the Board of Directors of the Company and
may be revoked by written notice to the Secretary of the Company at any time
prior to its exercise, by voting in person at the meeting, or by giving a later
dated proxy at any time before voting. Shares represented by a proxy will be
voted in the manner directed by a shareholder. If no direction is made, the
proxy will be voted for the election of the nominees for directors named and for
the other proposals described in this Proxy Statement. Abstentions and broker
non-votes will be counted as present or represented at the Annual Meeting for
purposes of determining whether a quorum exists. Abstentions and broker
non-votes with respect to any matter brought to a vote at the Annual Meeting
will be treated as shares present but not voted for purposes of determining
whether the requisite vote has been obtained. This Proxy Statement and the
accompanying form of proxy are being mailed to shareholders commencing on or
about October 6, 1995.
All expenses in connection with the solicitation of this proxy will be paid
by the Company, including the charges and expenses of brokerage firms and others
for forwarding solicitation materials to beneficial owners. In addition to
solicitation by mail, officers, directors and regular employees of the Company
who will receive no extra compensation for their services may solicit proxies by
telephone, telegraph or personal calls.
The Board of Directors knows of no other matters that may be brought before
the meeting. However, if any other matters are properly brought before the
meeting, persons named in the enclosed proxy or their substitutes will vote in
accordance with their best judgment on such matters.
VOTING SECURITIES AND PRINCIPAL HOLDERS
Only the holders of the Company's Common Shares whose names appear of
record on the Company's books at the close of business on September 28, 1995
will be entitled to vote at the annual meeting. At the close of business on
September 28, 1995, the Company had 4,176,885 Common Shares (the Company's only
voting securities) outstanding and entitled to vote. Each share of such stock
entitles the holder thereof to one vote upon each matter to be voted upon.
The following table sets forth, as of the record date for the meeting,
certain information with respect to beneficial share ownership by the directors
and nominees individually, by all officers and directors as a group, and by all
persons known to management to own more than 5% of the Company's outstanding
Common Shares. Except as otherwise indicated, the shareholders listed below have
sole investment and voting power with respect to their shares.
NUMBER
OF SHARES PERCENT OF
NAME OF BENEFICIALLY OUTSTANDING
BENEFICIAL OWNER OWNED SHARES
William S. Sadler
160 First Street S.E.
New Brighton, MN 55112 1,046,207(1) 24.40%
Ray L. Bergeson 13,500(2) 0.32%
Robert J. Snow 13,796(2)(3) 0.33%
Edward L. Zeman 13,500(2) 0.32%
L. Daniel Kuechenmeister 5,000(4) 0.12%
Dimensional Fund Advisors, Inc.
1299 Ocean Avenue
Santa Monica, CA 90401 218,500 5.23%
All officers and directors
as a group (8 persons) 1,121,570(5) 25.80%
(1) Includes 262,089 shares owned directly by Mr. Sadler, 659,800 shares owned
by Minnesota River Aviation, Inc., of which Mr. Sadler is President and
sole shareholder, 12,800 shares owned by Mr. Sadler's wife, and 111,518
shares underlying stock options and warrants exercisable within 60 days.
(2) Includes 12,500 shares underlying stock options exercisable within 60 days.
(3) Includes 200 shares owned by Mr. Snow's wife.
(4) Includes 5,000 shares underlying stock options exercisable within 60 days.
(5) Includes 80,941 shares and 90,000 shares underlying stock options and
warrants, respectively, exercisable within 60 days.
ELECTION OF DIRECTORS
The Board of Directors has recommended that the number of directors to be
elected for the coming year be set at five. The Board of Directors recommends
that the shareholders elect the nominees named below as directors of the Company
for the ensuing year and until their successors are elected and have qualified.
The persons named in the enclosed form of proxy intend to vote for the election
of the five nominees listed below. Each nominee is presently a director of the
Company. Each nominee has indicated a willingness to serve, but in the event any
one or more of such nominees for any reason should not be available as a
candidate for director, votes will be cast pursuant to authority granted by the
enclosed proxy for such other candidate or candidates as may be nominated by
management. The Board of Directors knows of no reason to anticipate that all of
the nominees will not be a candidate at the meeting.
NAME CURRENT POSITION WITH THE COMPANY AGE
William S. Sadler President, Treasurer and Director 69
Ray L. Bergeson Director 69
Robert J. Snow Director 75
Edward L. Zeman Director 40
L. Daniel Kuechenmeister Director 65
William S. Sadler, founder of the Company, has been President, Treasurer
and a director since the Company's organization in November 1980. Prior to
founding the Company, Mr. Sadler was President of the Video Display Division of
Audiotronics Corporation from 1978 through 1980 and Chief Executive Officer of
the Ball Electronic Display Division (formerly Miratel Electronics, Inc.) of
Ball Corporation from 1955 through 1976. From 1976 to 1978, Mr. Sadler managed
his personal real estate interests. In his positions with Audiotronics
Corporation and Ball Corporation, Mr. Sadler had overall responsibility for the
development, manufacturing and marketing of CRT displays and CCTV monitors. Mr.
Sadler also is president of Dynetic Systems Company, a manufacturer of precision
motors and a division of Minnesota River Aviation, Inc., of which Mr. Sadler is
sole shareholder.
Ray L. Bergeson has been a director of the Company since 1987. Mr. Bergeson
was employed by Honeywell, Inc. from 1952 through 1988. From 1985 until his
retirement at the end of 1988, he was the chief engineer for the engineering
design automation systems department of the Military Avionics Division. From
1978 to 1985, Mr. Bergeson was a program manager responsible for the development
and implementation of computer-aided design systems for the Military Avionics
Division. Mr. Bergeson holds a degree in electrical engineering from Purdue
University. Since his retirement, Mr. Bergeson has performed consulting work in
the area of CAD-CAM system development and strategic planning.
Robert J. Snow has been a director of the Company since 1988. Mr. Snow is
currently chairman of the board of the American Artstone Company, a manufacturer
of architectural precast concrete, and previously served as vice president and a
director from 1965 to 1989. He also was the owner of Snow-Larson, Inc.,
manufacturers' representatives, and served as president from 1968 to 1987 and
chairman of the board until 1990. Mr. Snow served as vice president and a
director of Construction Midwest, Inc., a distributor of wholesale building
materials, from 1972 to 1987. Mr. Snow holds a master's degree in architecture
from Harvard University.
Edward L. Zeman has been a director of the Company since 1990. Mr. Zeman is
currently Executive Vice President and Chief Financial Officer of ARM Financial
Group, Inc., a financial services company headquartered in Louisville, Kentucky.
From 1990 until August 1995, Mr. Zeman was Chief Operating and Financial
Officer, Treasurer and Vice President for SBM Company, a financial services
company that was acquired by ARM Financial Group, Inc. in June 1995. Prior to
June 1990, Mr. Zeman was an audit manager for Deloitte & Touche in Minneapolis,
Minnesota since before 1985. Mr. Zeman is a certified public accountant and has
a B.S. degree in accounting from the University of Minnesota.
L. Daniel Kuechenmeister has been a director of the Company since 1994. Mr.
Kuechenmeister was employed by Honeywell, Inc. in various management positions
from 1956 through 1990. From 1984 until his retirement in 1990 he was Manager of
Contracts for the Inertial Components Business Area. Since his retirement he has
consulted in the areas of contract negotiations and utilities auditing and
taught classes in government contract negotiations as an adjunct professor at
the University of St. Thomas, St. Paul, Minnesota. He is currently President of
the Board of Merrick Companies, Inc., a non-profit social services entity. Mr.
Kuechenmeister holds a B.A. degree from the University of Minnesota.
During the year ended June 30, 1995, the Board of Directors held eight
meetings. Mr. Sadler and Mr. Snow attended all eight meetings. Mr. Bergeson and
Mr. Zeman attended seven and five meetings respectively. Mr. Kuechenmeister
attended all four meetings subsequent to his election as a Director. The
Company's Board also acts from time to time by unanimous written consent in lieu
of meetings.
The Board of Directors has two standing committees, the Audit Committee and
the Stock Option Committee. The Audit Committee reviews and makes
recommendations to the Board of Directors with respect to designated financial
and accounting matters. The Stock Option Committee administers the Company's
1989 Stock Option and Restricted Stock Plan.
During the year ended June 30, 1995, the members of the Audit Committee
were Mr. Bergeson, Mr. Snow and Mr. Zeman. The Audit Committee held three
meetings during such year. Mr. Bergeson and Mr. Snow attended all three meetings
and Mr. Zeman attended two meetings.
During the year ended June 30, 1995, the members of the Stock Option
Committee were Mr. Bergeson, Mr. Snow and Mr. Zeman. The Stock Option Committee
held three meetings during such year. Mr. Snow attended all three meetings and
Mr. Bergeson and Mr. Zeman attended two and one meeting respectively.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE. The following table summarizes the total
compensation earned or paid for services rendered by William S. Sadler, the
Chief Executive Officer of the Company, during each of the years ended June 30,
1995, 1994 and 1993 and Michael J. Hopkins, Vice President during the years
ended June 30, 1995 and 1994. No other officer of the Company had a total annual
salary and bonus exceeding $100,000 for the year ended June 30, 1995.
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL COMPENSATION AWARDS PAYOUTS
OTHER RESTRICTED
ANNUAL STOCK OPTIONS LTIP(1) ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION AWARDS(3) GRANTED PAYOUTS COMPENSATION(2)
POSITION YEAR ($) ($) ($) (#) (#) ($) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
William S. Sadler 1995 180,000 150,000 0 0 21,518 0 1,500
President (Chief 1994 180,000 34,027 0 0 0 0 1,800
Executive Officer) 1993 162,073 34,027 0 0 21,518 0 1,621
and Chairman
Michael J. Hopkins 1995 100,000 16,585 0 0 47,000 0 0
Vice President 1994 83,716 0 0 10,000 0 0 0
</TABLE>
(1) Long-Term Incentive Plan.
(2) Employer matching contributions to 401(k) savings plan.
(3) Shares were awarded under an employment contract dated August 31, 1993 and
were restricted as to transferability during the first year of employment.
All restrictions were removed September 1, 1994.
STOCK OPTION GRANTS IN LAST FISCAL YEAR. The following table sets forth
information concerning the grant of stock options to each person named in the
"Summary Compensation Table" above during the year ended June 30, 1995.
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO
OPTIONS EMPLOYEES EXERCISE EXPIRATION
NAME GRANTED IN FISCAL YEAR PRICE DATE
William S. Sadler 21,518 17.4% $2.544 June 14, 2000
Michael J. Hopkins 15,000 $1.125 September 1, 2004
30,000 $1.063 October 6, 2004
2,000 $2.313 June 14, 2005
47,000 38.0%
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES. The following table sets forth information concerning the exercise of
stock options by each person named in the "Summary Compensation Table" above
during the year ended June 30, 1995, and the value of all exercisable and
unexercisable options at June 30, 1995.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
SHARES NUMBER OF UNEXERCISED IN-THE-MONEY
ACQUIRED VALUE OPTIONS AT JUNE 30, 1995 OPTIONS AT JUNE 30, 1995(1)
ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME (#) ($) (#) (#) ($) ($)
<S> <C> <C> <C> <C> <C> <C>
William S. Sadler 21,518 31,900 21,518 32,277 20,011 24,768
Michael J. Hopkins 0 0 0 47,000 0 75,859
</TABLE>
(1) Value of unexercised in-the-money options equals fair market value of the
shares underlying such options at June 30, 1995 ($2.75 per share) less the
exercise price, times the number of in-the-money options outstanding.
COMPENSATION OF DIRECTORS. Directors of the Company who are not employees
of the Company are compensated at the rate of $4,000 per fiscal year and $400
per Board meeting attended during a fiscal year in excess of four such meetings.
In addition, nonemployee directors participate in the Dotronix, Inc. Nonemployee
Director Stock Option Plan (the "Director Option Plan"), which was approved by
shareholders in 1991. Each nonemployee director of the Company is eligible to
participate in the Director Option Plan. Under the Director Option Plan, an
initial option to purchase 5,000 shares (1) was granted automatically
immediately following the Company's 1991 annual meeting of shareholders to each
eligible director, and (2) will be granted automatically immediately following
each meeting of the Company's shareholders or Board of Directors thereafter to
each eligible director, if any, who is elected to the Board of Directors for the
first time at such meeting. In addition, an option to purchase 2,500 shares will
be granted automatically on an annual basis immediately following each annual
meeting of the Company's shareholders to each eligible director in office who
previously received an initial grant as described in the preceding sentence. All
options granted under the Director Option Plan have an exercise price equal to
the fair market value of the Company's Common Stock on the date of grant,
determined in accordance with the Director Option Plan, and become exercisable
six months after the date of grant (or immediately in the event of the death of
the holder thereof). The option exercise price is payable in cash. Options
granted under the Director Option Plan are intended to be "nonqualifed options"
under the Internal Revenue Code of 1986, as amended. Pursuant to the Director
Option Plan, during the year ended June 30, 1995, Mr. Bergeson, Mr. Snow and Mr.
Zeman each was automatically granted an option to purchase 2,500 shares of the
Company's Common Stock at $1.3125 per share, and Mr. Kuechenmeister was
automatically granted an option to purchase 5,000 shares of Common Stock at the
same price per share. No options granted under the Director Option Plan have
been exercised.
The Director Option Plan is proposed to be amended. See "Proposed
Amendments to Nonemployee Director Stock Option Plan" elsewhere herein.
EMPLOYMENT CONTRACTS. Mr. Sadler is employed by the Company through June
30, 1998 under an amended and restated employment agreement approved by the
independent directors. The agreement provides for an annual base salary of
$180,000 per year, subject to annual salary adjustments equal to the average
annual salary adjustment of all Company employees (but not to decrease to less
than $180,000). The agreement also provides for Mr. Sadler to be paid a bonus of
$150,000 in each of fiscal years 1995, 1996, 1997 and 1998; provided, that the
bonus in any one year cannot exceed 20% of corporate pre-tax earnings before the
payment of such bonus. If the bonus is restricted by this 20% limitation in one
year, it will be made up in a subsequent year, provided that the sum of the
bonus payments does not exceed 20% of corporate pre-tax earnings before the
payment of such bonuses. At Mr. Sadler's option, up to 50% of the foregoing
bonus for any fiscal year may be paid in the form of warrants to purchase
Company Common Stock having an exercise price of $1.00 per share and a term of
three years from the date of issuance, on the basis of one such warrant for each
dollar of bonus compensation paid in the form of warrants. The agreement also
provides for the payment of a one-time cash incentive award of $125,000 on July
31, 1998, if specified corporate goals are met, and for the payment of severance
benefits of up to the remaining base salary due under the agreement if Mr.
Sadler's employment is terminated under specified circumstances.
PROPOSED AMENDMENT TO 1989 STOCK OPTION
AND RESTRICTED STOCK PLAN
PROPOSED AMENDMENT
In 1989 the Board of Directors and shareholders of the Company approved the
Company's 1989 Stock Option and Restricted Stock Plan (the "Employee Option
Plan"). The terms of the Employee Option Plan are described in detail below
under "-- Description of Employee Option Plan."
Under the Employee Option Plan, stock options and stock grants may be made
at any time and from time to time through September 11, 1999. Under the Employee
Option Plan as presently in effect, options and grants covering up to 250,000
shares of the Company's Common Stock may be made. Through June 30, 1995, options
and grants covering 197,939 shares had been made under this plan (not including
options granted conditional upon approval of the proposed amendment to the
plan), leaving only 52,061 additional shares available for grants through
September 11, 1999.
The Company's Stock Option Committee has granted options to a broad base of
employees on a regular basis under this plan since its inception. At June 30,
1995, a total of 140 employees held options granted under the plan. The
Company's Board of Directors believes that these options provide an effective
non-cash means for providing an incentive to this broad base of employees to
contribute to the success of the Company. The Stock Option Committee also has on
occasion utilized restricted stock awards in hiring desired employees. However,
since only a limited number of shares remains available under this plan as
presently in effect, these stock option grants and restricted stock awards will
have to be discontinued unless the plan is amended to increase the number of
shares available.
The Board of Directors believes that it is in the best interests of the
Company and its shareholders for the Stock Option Committee to be able to
continue making these stock option grants and restricted stock awards. The Board
of Directors therefore has approved an amendment to the plan increasing the
number of shares available thereunder from 250,000 to 500,000, and it recommends
that shareholders vote FOR the proposed amendment. This proposal requires an
affirmative vote of the shareholders of a majority of the voting power present
and entitled to vote in order to be approved.
DESCRIPTION OF EMPLOYEE OPTION PLAN
General. The purpose of the Employee Option Plan is to aid in maintaining
and developing personnel capable of assuring the future success of the Company,
to provide such personnel with an incentive to contribute to the future success
of the Company, and to afford them an opportunity to acquire an ownership
interest in the Company through stock options or restricted stock awards.
Options granted under the plan may be either incentive stock options ("ISOs")
intended to qualify for favorable tax treatment under the Internal Revenue Code
of 1986, as amended (the "Code"), or as options which do not so qualify
("non-ISOs"). Up to 250,000 shares are available under the plan, which number is
proposed to be increased to 500,000.
The Employee Option Plan is administered by a committee of three or more
members of the Board of Directors (the "Committee"). The Committee members may
not be officers or employees of the Company. The Committee has the authority to
determine the terms of option exercise, the number and type of options granted
to each eligible employee, the exercise price for Common Stock covered by the
options and other administrative and plan interpretation matters as provided in
the plan. The Committee also has the authority to determine the terms and
conditions upon which restricted stock awards will be granted to eligible
employees.
Eligibility. Only full or part-time employees of the Company or any of its
subsidiaries, including officers and directors, are eligible under the Plan to
receive ISOs. Consultants or other independent contractors who provide valuable
service to the Company or any of its subsidiaries are eligible to receive
non-ISOs and restricted stock awards. In determining the eligible persons to
whom options and restricted stock awards will be granted and the number of
options and restricted stock awards to be granted, the Committee may take into
account, among other things, the nature of any services rendered by such persons
and their present and future potential contributions to the success of the
Company.
Alternative Stock Appreciation Rights. At the time of grant of an option
under the Employee Option Plan (or at any time thereafter as to options which
are non-ISOs) the Committee may, in its discretion, grant to the holder of such
option an alternative Stock Appreciation Right ("SAR") for all or any part of
the number of shares covered by the holder's option. Any such SAR may be
exercised as an alternative to, but not in addition to, an option granted under
the plan, and any exercise of an SAR shall reduce the corresponding option by
the same number of shares as to which the SAR is exercised. The time period in
which an SAR must be exercised will be specified in the SAR at the time the SAR
is granted. If an SAR is granted for a number of shares less than the total
number of shares covered by the corresponding option, the Committee may later
(as to options which are non-ISOs) grant to the optionholder an additional SAR
covering additional shares, provided that the aggregate amount of SARs held by
any optionholder shall at no time exceed the total number of shares covered by
the optionholder's unexercised options.
The holder of an SAR which by its terms is then exercisable may, in lieu of
exercising his or her option, elect to exercise the SAR. An optionholder wishing
to exercise an SAR must provide the Company with written notice stating that the
optionholder elects to exercise the SAR, the number of shares as to which the
SAR is being exercised, and the portion, if any, of the SAR exercise amount
(hereinafter defined) the holder requests to be paid to him or her in cash and
in Common Stock, respectively. The Committee shall promptly cause to be paid to
such holder the SAR exercise amount either in cash, in Common Stock of the
Company, or in any combination thereof as the Committee may determine. The SAR
exercise amount is the excess of the fair market value of one share of the
Company's Common Stock on the date of exercise over the per share exercise price
for the option in respect of which the SAR was granted, multiplied by the number
of shares as to which the SAR is exercised. All provisions of the Employee
Option Plan applicable to options apply with equal effect to an SAR.
Through June 30, 1995, no SARs had been granted under the Employee Option
Plan.
Option Exercise Price. The Employee Option Plan requires the option
exercise price for each ISO to be at least equal to the fair market value of the
Common Stock on the date the ISO is granted, determined in a manner specified in
the plan; provided, that ISOs granted to 10% holders of the Company's Common
Stock must have an exercise price at least equal to 110% of such fair market
value. The option price for non-ISOs shall be determined by the Committee but
cannot be less than 50% of the fair market value of the Common Stock on the date
of grant. The plan provides for adjustment in shares reserved under the Plan and
outstanding options, SARs and option exercise prices upon a change in the
Company's outstanding Common Stock through merger, consolidation,
reorganization, stock dividends, stock split, combination of shares, exchange of
shares or otherwise to avoid dilution or enlargement of an option or SAR.
Option Term And Vesting; Exercise. The term of any option or SAR may be
specified by the Committee but in no case may exceed ten years from the date of
grant in the case of ISOs (five years in the case of ISOs granted to 10%
holders) and associated SARs or 15 years in the case of non-ISOs and associated
SARs. Options and SARs become exercisable in whole or in part at stated times
determined by the Committee at the time of grant. An optionholder electing to
exercise an option under the Employee Option Plan must provide the Company with
written notice stating the number of options exercised, accompanied by payment
of the exercise price in accordance the plan.
Transfer Restrictions and Option Termination. Options granted under the
Employee Option Plan are not transferable in any manner except by will or the
laws of descent and distribution and, during the lifetime of the optionholder,
are exercisable only by the optionholder; provided, that if the optionholder
becomes disabled, his or her options may be exercised by the optionholder or his
or her personal representative, guardian, or administrator. If an optionholder
ceases employment with the Company or its subsidiaries for any reason other than
for serious misconduct, the optionholder may exercise the option at such time
after termination of employment as may be specified in the applicable option
agreement, provided that no option may be exercised after its term has expired.
If an optionholder ceases employment with the Company or its subsidiaries by
reason of his or her serious misconduct during the course of his or her
employment, the option terminates on the date of the misconduct.
Amendment or Discontinuation of the Plan. The Board of Directors may amend
or terminate the Employee Option Plan at any time. No amendment of the plan,
however, shall without shareholder approval (i) increase the maximum number of
shares under the plan; (ii) decrease the minimum option price; (iii) extend the
maximum option term; or (iv) modify the eligibility requirements for
participation in the plan. The Board may not alter or impair any option granted
under the plan without the consent of the optionholder.
Restricted Stock Awards. Under the Employee Option Plan, the Committee also
has the authority to grant, in its discretion, restricted stock awards. Awards
of such restricted shares of Common Stock are subject to forfeiture in the event
the employee does not remain in the continuous employment of the Company for a
restricted period determined by the Committee. The restricted period need not be
the same for all shares subject to a restricted stock award, and the
restrictions will lapse as determined by the Committee. The Committee may, in
its discretion, also set forth performance or other conditions which will
subject the shares to forfeiture and transfer restrictions.
Restricted stock awards are granted pursuant to agreements approved by the
Committee which set forth the restricted period during which the grantee must
remain in the employment of the Company and any other conditions which must be
satisfied in order for the restrictions to lapse. At the time a restricted stock
award is granted, a certificate representing the number of shares subject to the
award is registered in the name of the grantee, but the certificate is held by
the Company until the end of the restricted period. The grantee has all the
rights of a shareholder in such shares, including the right to receive dividends
and vote the shares. The grantee is prohibited, however, from transferring the
shares during the restricted period. Upon expiration of the restricted period
and the satisfaction of any other conditions, the grantee is entitled to
delivery of the certificate representing the shares subject to the restricted
stock award. If the grantee has not remained employed by the Company throughout
the restricted period or other conditions are not fulfilled, the grantee's
shares are forfeited and all of the grantee's rights in the shares are
terminated. The Committee may, in its discretion, waive all or any part of the
restrictions applicable to shares subject to any or all outstanding restricted
stock awards.
Income Tax Withholding and Tax Bonuses. Under the terms of the Employee
Option Plan, optionholders exercising non-ISOs or grantees, upon the grant of a
restricted stock award or the lapse of restrictions relating to such awards,
may, subject to the discretion of the Committee and such terms and conditions as
it may adopt, surrender Common Stock of the Company to the Company to satisfy
federal and state tax withholding obligations. Such shares of Common Stock may
be either shares received upon exercise of the option, shares received upon the
lapse of the restrictions related to a restricted stock award, or other shares
previously owned by the optionholder or grantee. Under the plan, the Committee
may also grant, subject to its discretion and such rules as it may adopt, a tax
bonus to an optionholder or a grantee of a restricted stock award, in an amount
determined by the Committee.
PROPOSED AMENDMENTS TO NONEMPLOYEE
DIRECTOR STOCK OPTION PLAN
PROPOSED AMENDMENTS
In 1991 the Board of Directors and shareholders of the Company approved the
Company's Nonemployee Director Stock Option Plan (the "Director Option Plan").
The terms of the Director Option Plan are described in detail below under "--
Description of Director Option Plan."
Under the Director Option Plan, each new nonemployee director of the
Company receives an automatic grant of an option to purchase 5,000 shares of the
Company's Common Stock immediately after the first shareholder meeting or Board
meeting at which such director is elected, and each continuing director receives
an automatic grant of an option to purchase 2,500 shares of the Company's Common
Stock immediately after each annual shareholder meeting at which such director
is reelected. The exercise price of all options granted under the plan is equal
to the fair market value at the date of grant of the shares covered by the
options, determined as set forth in the plan. By its present terms, the plan
expires on December 11, 1996.
Subject to shareholder approval, the Board of Directors has approved two
amendments to the Director Option Plan. Under the first amendment, in addition
to the initial and annual stock option grants referred to above, on the
applicable option grant dates each director would receive an automatic grant of
500 shares of the Company's Common Stock. No shares so granted would be subject
to transfer (other than by will or by the laws of descent and distribution)
prior to six months after the date of grant, and no such shares could be
transferred or disposed of except in compliance with applicable federal and
state securities laws.
The Board of Directors believes that this first proposed amendment is
desirable and in the best interests of the Company and its shareholders both to
ensure that nonemployee directors have an ongoing, direct and substantial
economic interest in the Company and to supplement the cash compensation
received by nonemployee directors, thus enhancing the Company's ability to
attract and retain qualified outside directors. Although certain of the
Company's current nonemployee directors have purchased shares of the Company's
Common Stock on the open market, they are not required to do so, and none of
these directors has yet exercised options granted to them under the Director
Option Plan. The proposed automatic grants of shares to nonemployee directors
would ensure that these directors have a direct stake in the success of the
Company.
Under the second proposed amendment to the Director Option Plan, the term
of the plan would be extended from December 11, 1996 to September 11, 1999. The
purpose of this amendment is to make the termination date of the Director Option
Plan coincide with the termination date of the Company's Employee Option Plan,
thus enabling the Board and shareholders to consider the extension, replacement
or discontinuation of these two plans at the same time. The Board of Directors
believes that it will be appropriate and in the best interests of the Company
and its shareholders for these two stock-based plans to be considered in
conjunction with one another.
For the foregoing reasons, the Board of Directors recommends that
shareholders vote FOR the proposed amendments to the Director Option Plan
described above. This proposal requires an affirmative vote of the shareholders
of a majority of the voting power present and entitled to vote in order to be
approved.
DESCRIPTION OF DIRECTOR OPTION PLAN
A total of 100,000 shares of the Company's Common Stock are reserved for
issuance under the Director Option Plan. Each director of the Company is
eligible to participate in the plan unless such director is an employee of the
Company or any subsidiary of the Company. Under the plan, an initial option to
purchase 5,000 shares is granted automatically on the first business day
immediately following each meeting of the Company's shareholders or Board of
Directors to each eligible director, if any, who is elected to the Board of
Directors for the first time at such meeting. In addition, an option to purchase
2,500 shares is granted automatically on an annual basis on the first business
day immediately following each annual meeting of the Company's shareholders to
each eligible director in office on such date who previously has received an
initial grant as described in the preceding sentence.
All options granted under the Director Option Plan have an exercise price
equal to the fair market value of the Company's Common Stock on the date of
grant, determined in accordance with the plan, and become exercisable six months
after the date of grant (or immediately in the event of the death of the holder
thereof). The option exercise price is payable in cash. The options expire ten
years from the date of grant (subject to earlier termination in the event of
death) and are not transferable other than by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations order.
If an optionee dies prior to the time that an option is fully exercised, an
option may be exercised at any time within one year after such optionee's death
(unless the option expires). The Board of Directors may suspend, discontinue,
revise or amend the Director Option Plan at any time, but may not, without
shareholder approval, make any amendments or revisions that (i) absent
shareholder approval, would cause Rule 16b-3 under the Securities Exchange Act
of 1934 to become unavailable with respect to the plan, or (ii) require the
approval of the Company's shareholders under any rules or regulations of the
National Association of Securities Dealers, Inc. or any securities exchange that
are applicable to the Company. The Board of Directors may not alter or impair
any option granted under the plan without the consent of the holder of the
option.
Under the Director Option Plan, appropriate adjustments in the plan and in
outstanding options will be made in the event of changes in the Company's Common
Stock through merger, consolidation, reorganization, recapitalization, stock
dividend, stock split or other change in corporate structure. Options granted
under the plan are intended to be "nonqualified options." i.e., options which do
not meet the requirements of Section 422 under the Code for "incentive stock
options."
CERTAIN TRANSACTIONS
The Company leases a service facility in New Brighton from Minnesota River
Aviation Inc., a company wholly owned by Mr. Sadler, on a month to month basis,
and it leases a warehouse facility in New Brighton from Minnesota River
Television, Inc., which is also wholly owned by Mr. Sadler, through March 31,
1998. The Company paid aggregate rentals of approximately $86,000 to these two
companies during the year ended June 30, 1995. The Company believes that these
rentals, which have been approved by the independent directors of the Company,
are fair and no less favorable to the Company than could have been obtained
elsewhere.
APPOINTMENT OF AUDITORS
The Board of Directors has appointed Deloitte & Touche LLP as independent
auditors for the Company for the fiscal year ending June 30, 1996. A proposal to
ratify that appointment will be presented at the annual meeting. Deloitte &
Touche LLP and its predecessor have served as the Company's auditors since March
1981, and has no relationship with the Company other than that arising from its
employment as independent auditors. Representatives of Deloitte & Touche LLP are
expected to be present at the annual meeting, will have an opportunity to make a
statement if they desire to do so and will be available to respond to
appropriate questions from shareholders.
The Board of Directors recommends a vote FOR this proposal. If the
appointment is not ratified by shareholders, the Board of Directors is not
obligated to appoint other auditors, but the Board of Directors will give
consideration to such unfavorable vote.
PROPOSALS FOR THE NEXT ANNUAL MEETING
Any proposal by a shareholder to be presented at the next annual meeting
must be received at the Company's principal executive offices, 160 First Street
S.E., New Brighton, Minnesota 55112, not later than July 1, 1996.
By Order of the Board of Directors
Warren M. White, Secretary
Dated: October 6, 1995
UPON WRITTEN REQUEST, DOTRONIX, INC. WILL FURNISH, WITHOUT CHARGE, TO
PERSONS SOLICITED BY THIS PROXY STATEMENT, A COPY OF ITS REPORT ON FORM 10-K SB
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION FOR THE FISCAL YEAR ENDED JUNE
30, 1995. REQUESTS SHOULD BE ADDRESSED TO DOTRONIX, INC., 160 FIRST STREET S.E.,
NEW BRIGHTON, MINNESOTA 55112, ATTENTION: WARREN M. WHITE.
DOTRONIX, INC.
160 FIRST STREET S.E.
NEW BRIGHTON, MINNESOTA 55112
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned, having duly received the Notice of Annual Meeting and Proxy
Statement dated October 6, 1995, hereby appoints William S. Sadler and Warren M.
White proxies (each with the power to act alone and with the power of
substitution and revocation), to represent the undersigned and to vote, as
designated below, all common shares of Dotronix, Inc. which the undersigned is
entitled to vote at the annual meeting of shareholders of Dotronix, Inc., to be
held at 3:30 p.m. on Wednesday, November 8, 1995 on the sixth floor of the
Minneapolis Marriott City Center, Minneapolis, Minnesota, and any adjournment
thereof.
1. ELECTION OF DIRECTORS.
[ ] FOR all nominees listed below
(except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY
to vote for all nominees listed below
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE STRIKE A
LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW:)
W. Sadler, R. Bergeson, R. Snow, E. Zeman, L. Daniel Kuechenmeister
2. PROPOSAL TO INCREASE THE NUMBER OF SHARES AVAILABLE UNDER THE 1989 STOCK
OPTION AND RESTRICTED STOCK PLAN FROM 250,000 TO 500,000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. PROPOSAL TO PROVIDE FOR AN AUTOMATIC ANNUAL GRANT OF 500 SHARES TO EACH
NONEMPLOYEE DIRECTOR UNDER THE NONEMPLOYEE DIRECTOR STOCK OPTION PLAN AND
TO EXTEND THE TERM OF THE PLAN TO SEPTEMBER 11, 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. PROPOSAL TO RATIFY THE APPOINTMENT OF DELOITTE & TOUCHE LLP as the
independent auditors for the Company for the fiscal year ending June 30,
1996.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(Continued and to be dated and signed on other side)
(Continued from other side)
5. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the 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 ALL DIRECTORS NAMED IN ITEM 1 AND FOR PROPOSALS 2, 3 AND 4.
PLEASE SIGN, DATE AND MAIL THIS PROXY STATEMENT IN THE ENCLOSED ADDRESSED
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE U.S.
Sign exactly as your name appears below; in the case of joint tenancy, both
joint tenants must sign; fiduciaries please indicate title and authority.
Date: ___________________, 1995
_______________________________
Signature
_______________________________
Signature
