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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 Thursday, December 28, 2000, at the
Company's corporate headquarters, at 160 First Street Southeast, in New
Brighton, Minnesota, for the following purposes:
1. To elect a Board of Directors for the ensuing year and until their
successors are elected.
2. To ratify the appointment of Deloitte & Touche as independent
auditors for the Company for the fiscal year ending June 30, 2001.
3. 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 November 14, 2000 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
Robert V. Kling, Secretary
Dated: November 17, 2000
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IF YOU ARE UNABLE TO ATTEND THE MEETING, YOU ARE URGED TO DATE AND SIGN THE
ENCLOSED PROXY AND RETURN IT IN THE POSTAGE-PAID ENVELOPE ENCLOSED HEREWITH FOR
YOUR CONVENIENCE.
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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
Thursday, December 28, 2000, at the Company's corporate offices 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 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 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 requisite vote has been obtained. This Proxy Statement and
the accompanying form of proxy are being mailed to shareholders commencing on or
about November 17, 2000.
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 November 14, 2000 will be
entitled to vote at the annual meeting. At the close of business on November 14,
2000, the Company had 4,165,041 Common Shares (the Company's only voting
securities) outstanding and entitled to vote. Each share of 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 have sole
investment and voting power with respect to their shares.
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<TABLE>
<CAPTION>
Name of Number of Shares Percent of
Beneficial Owner Beneficially Outstanding
Owned Shares
<S> <C> <C>
William S. Sadler
160 First Street S.E.
New Brighton, MN 55112 1,474,988 (1) 34.33%
Ray L. Bergeson 28,500 (2) 0.70%
Edward L. Zeman 28,500 (2) 0.70%
L. Daniel Kuechenmeister 20,000 (3) 0.49%
All officers and directors
as a group (6 persons) 1,569,745 (4) 35.51%
</TABLE>
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(1) Includes 574,159 shares owned directly by Mr. Sadler, 704,800 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, 17,000 shares owned
jointly by Mr. Sadler and one of his granddaughters, and 167,029 shares
underlying stock warrants exercisable within 60 days.
(2) Includes 25,000 shares underlying stock options exercisable within 60 days.
(3) Includes 17,500 shares underlying stock options exercisable within 60 days.
(4) Includes 88,757 shares underlying stock options and 167,029 shares
underlying stock warrants, all 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 four. 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 four 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.
<TABLE>
<CAPTION>
NAME CURRENT POSITION WITH THE COMPANY AGE
---- --------------------------------- ---
<S> <C> <C>
William S. Sadler President, Treasurer and Director 74
Ray L. Bergeson Director 74
Edward L. Zeman Director 45
L. Daniel Kuechenmeister Director 70
</TABLE>
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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 development 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.
Edward L. Zeman has been a director of the Company since 1990. Mr. Zeman
currently is an independent consultant. From September 1995 until August 2000
Mr. Zeman was 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, 2000, the Board of Directors held six meetings.
Each of the directors attended all meetings. 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 1999 Stock Option
and Restricted Stock Plan.
During the year ended June 30, 2000, the members of the Audit Committee were Mr.
Bergeson, Mr. Zeman, and Mr. Kuechenmeister. The Audit Committee held two
meetings during such year. Each member attended both meetings.
During the year ended June 30, 2000, the members of the Stock Option Committee
were Mr. Bergeson, Mr. Zeman, and Mr. Kuechenmeister. The Stock Option Committee
held one meeting during such year. Each member attended this meeting.
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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,
2000, 1999 and 1998. Mr. Sadler was the only officer of the Company who had a
total annual salary and bonus that exceeded $100,000 for the year ended June 30,
2000.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------- ----------------------
AWARDS PAYOUTS
------ -------
OTHER RESTRICTED
ANNUAL STOCK OPTIONS LTIP(1) ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION AWARDS GRANTED PAYOUTS COMP (2)
POSITION YEAR ($) ($) ($) (#) (#) ($) ($)
-------- ---- --- --- --- --- --- --- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C>
William S. Sadler 2000 180,000 0 0 0 0 0 2,991
President(Chief 1999 178,614 0 0 0 0 0 3,572
Executive Officer) 1998 180,000 0 0 0 0 0 3,600
</TABLE>
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(1) Long-Term Incentive Plan
(2) Employer matching contributions to 401(k) plan.
STOCK OPTION INFORMATION. During the year ended June 30, 2000, there were no
stock option grants to, or stock option exercises by, the person named in the
"Summary Compensation Table" above. At June 30, 2000, such person held no
unexercised stock options.
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 Dotronix, Inc. Nonemployee
Director Stock Option and Stock Grant Plan (the "Director Plan"), which was
approved by shareholders in 1999. Each nonemployee director of the Company is
eligible to participate in the Director Plan. Under the Director Plan, an
initial option to purchase 5,000 shares is granted automatically immediately
following the Company's annual meeting of shareholders, to each eligible
director, and will be granted thereafter to each eligible director, if any, who
is elected to the Board of Directors for the first time at such meeting. In
addition, a grant of 500 shares and 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 Plan have an exercise price equal to the fair
market value of the Company's Common Stock on the date of the grant, determined
in accordance with the Director Plan, and become exercisable six months after
the date of grant (or immediately in the event of death of the holder thereof).
The option exercise price is payable in cash. Options granted under the Director
Plan are intended to be "nonqualified options" under the Internal Revenue Code
of 1986, as amended. Pursuant to the Director Plan, during the year ended June
30, 2000, Mr. Bergeson, Mr. Zeman, and Mr. Kuechenmeister each was automatically
granted an option to purchase 2,500 shares of the Company's Common Stock at $
0.50 per share and each was granted 500 shares. No options granted under the
Director Option and Stock Grant Plan have been exercised.
EMPLOYMENT CONTRACTS. Mr. Sadler is employed by the Company through June 30,
2001 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, 1999, 2000 and 2001; 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. The agreement also provides for the payment of a
one-time cash incentive award of $125,000 on July 31, 2001, if specified
corporate goals are met,
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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.
CERTAIN TRANSACTIONS
The Company leases a warehouse facility in New Brighton, Minnesota, from
Minnesota River Television, Inc., a company wholly owned by William S. Sadler,
the President of the Company and a major stockholder, The lease runs through
March 31, 2003. It also leases its headquarters in New Brighton from Mr. Sadler,
through April 2009, after which the Company has two five-year renewal options
The Company paid aggregate rentals of approximately $143,000 to Mr. Sadler and
the Minnesota River Television, Inc. during the year ended June 30, 2000 The
Company believes that these transactions, 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.
On February 23, 2000, the Company entered into a revolving credit facility with
William S. Sadler, its president and major stockholder, and in September 2000
Mr. Sadler agreed to extend the loan agreement to February 28, 2002, and to
increase the loan limit to $1,250,000 in secured financing. The revolving credit
facility contains various restrictive covenants including a minimum tangible net
worth balance of $2.0 million. In return, the Company has agreed that for every
$4 of financing that is provided by Mr. Sadler to the Company, the Company will
issue to Mr. Sadler a warrant to purchase one Common Share of the Company. The
exercise price per share under each such warrant would be the closing market
price per share of the Company's common stock on the day that Mr. Sadler
provides such financing. Each warrant would become exercisable at the earliest
time permitted under applicable law and would cease to be exercisable four years
after the date of issuance. As of November 16, 2000 warrants for 167,029 shares
of common stock have been issued to Mr. Sadler.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed Deloitte and Touche LLP as independent
auditors for the Company for the fiscal year ending June 30, 2001. 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 and Touche are
expected to be present at the annual meetings, will have an opportunity to make
a statement if they desire to do so and will be available to answer appropriate
questions from shareholders.
PROPOSALS FOR 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, 2001.
By Order of the Board of Directors
Robert V. Kling, Secretary
Dated: November 17, 2000
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UPON WRITTEN REQUEST, DOTRONIX, INC. WILL FURNISH, WITHOUT CHARGE TO PERSONS
SOLICITED BY THIS PROXY STATEMENT, COPY OF ITS REPORT ON FORM 10-KSB FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION FOR THE FISCAL YEAR ENDED JUNE 30, 2000.
REQUESTS SHOULD BE ADDRESSED TO DOTRONIX, INC., 160 FIRST STREET S.E., NEW
BRIGHTON, MINNESOTA 55112, ATTENTION: ROBERT V. KLING.
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[FORM OF PROXY CARD]
[FRONT OF CARD]
DOTRONIX, INC.
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 November 17, 2000, hereby appoints William S. Sadler and Robert
V. Kling 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 on Thursday, December 28, 2000 at the company headquarters at 160 First
Street S.E., New Brighton, Minnesota.
(continued and to be signed on the reverse side)
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[REVERSE OF CARD]
THANK YOU FOR VOTING
1. ELECTION OF DIRECTORS.
[box] FOR all nominees listed below [box] WITHHOLD AUTHORITY
(Except as marked to the to vote for all nominees
contrary below) 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, E. Zeman, L. Daniel Kuechenmeister
2. 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.
PLEASE SIGN, DATE AND MAIL THIS PROXY IN THE ENCLOSED 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:
---------------------------
--------------------------------
Signature
--------------------------------
Signature
