SCHEDULE 14A
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. [ ] Confidential, for use of the
Commission only (as permitted by
Rule 14a-6(e)(2)).
[X] Definitive proxy statement.
[ ] Definitive additional materials.
[ ] Soliciting material pursuant to Section 240.14a-12
TIDEL TECHNOLOGIES, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
Payment of filing fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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[TIDEL LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 26, 2002
The Annual Meeting (the "Meeting") of Stockholders of Tidel
Technologies, Inc. (the "Company") will be held at the offices of Tidel
Engineering, L.P., 2310 McDaniel Drive, Carrollton, Texas 75006, on Thursday,
September 26, 2002, at 10:00 A.M., Central Time. The purposes of the Meeting are
to vote upon:
1. The election of six (6) directors to hold office until the
next annual meeting in 2003 or until their successors have
been elected and qualified;
2. The selection of KPMG LLP as the Company's independent
auditors for the fiscal year ending September 30, 2002; and
3. Such other business as may properly come before the Meeting
and any adjournment thereof.
The Board of Directors fixed the close of business on Monday, August
19, 2002, as the record date for determining stockholders entitled to notice of,
and to vote at, the Meeting and any adjournment thereof. A complete list of
stockholders entitled to vote at the Meeting will be available at the offices of
the Company, 5847 San Felipe, Suite 900, Houston, Texas 77057, for not less than
ten days prior to the Meeting.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THIS MEETING. EVEN
IF YOU PLAN TO ATTEND THE MEETING, WE HOPE THAT YOU WILL PROMPTLY SIGN, DATE AND
RETURN THE ENCLOSED PROXY IN THE ENCLOSED ENVELOPE. A PROXY WILL NOT BE VALID
UNLESS IT IS RECEIVED AT THE OFFICE OF COMPUTERSHARE TRUST COMPANY, 350 INDIANA
STREET, SUITE 800, GOLDEN, COLORADO 80401, PRIOR TO THE DATE FIXED FOR THE
MEETING. MAILING YOUR PROXY WILL NOT LIMIT YOUR RIGHT TO ATTEND IN PERSON OR
VOTE AT THE MEETING.
James T. Rash
Chairman and
Chief Executive Officer
September 6, 2002
TIDEL TECHNOLOGIES, INC.
5847 SAN FELIPE
SUITE 900
HOUSTON, TEXAS 77057
(713) 783-8200
PROXY STATEMENT
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of Tidel Technologies, Inc., a Delaware
corporation (the "Company") of proxies in the accompanying form to be
used at the Annual Meeting (the "Meeting") of Stockholders of the
Company to be held on September 26, 2002, and any adjournment thereof.
This Proxy Statement, the accompanying form of proxy and the Company's
Annual Report on Form 10-K for the fiscal year ended September 30, 2001
(the "2001 Annual Report") were mailed to stockholders on or about
September 6, 2002. The shares represented by the proxies received
pursuant to the solicitation made hereby and not revoked will be voted
at the Meeting.
MEETING OF STOCKHOLDERS
The Meeting will be held at the offices of Tidel Engineering, L.P.,
2310 McDaniel Drive, Carrollton, Texas 75006, on Thursday, September
26, 2002, at 10:00 A.M., Central Time.
RECORD DATE AND VOTING
The Board of Directors fixed the close of business on Monday, August
19, 2002, as the record date (the "Record Date") for the determination
of holders of outstanding shares of the Company entitled to notice of
and to vote on all matters presented at the Meeting. Such stockholders
will be entitled to one vote for each share held on each matter
submitted to a vote at the Meeting. On the Record Date, there were
17,426,210 shares of the Company's Common Stock, $.01 par value (the
"Common Stock"), issued and outstanding, each of which is entitled to
one vote on each matter to be voted upon.
PURPOSES OF THE MEETING
The purposes of the Meeting are to vote upon (i) the election of six
(6) directors for the ensuing year, (ii) the selection of KPMG LLP as
the Company's independent auditors for the fiscal year ending September
30, 2002 and (iii) such other business as may properly come before the
Meeting and any adjournment thereof.
QUORUM AND REQUIRED VOTE
The presence, either in person or by properly executed proxy, of the
holders of a majority of the outstanding shares of Common Stock of the
Company is necessary to constitute a quorum for the purpose of acting
on the matters referred to in the Notice of Annual Meeting accompanying
this Proxy Statement and any other proposals which may properly come
before the Meeting. In the tabulation of votes, proxies marked
"abstain" will be counted for the purposes of determining the presence
of a quorum and for calculating the number of shares represented at the
Meeting but will not be counted as
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either affirmative votes or negative votes. So-called broker
"non-votes" (i.e., shares held by brokers, fiduciaries or other
nominees which are not permitted to vote due to the absence of
instructions from beneficial owners) will be deemed to be abstentions
and counted solely for quorum purposes.
PROXIES
A stockholder who has given a proxy may revoke it by voting in person
at the Meeting, by giving written notice of revocation to the Secretary
of the Company or by giving a later dated proxy at any time before
voting.
On the matters coming before the Meeting as to which a choice has been
specified by a stockholder by means of the ballot on the proxy, the
shares will be voted accordingly. If no choice is so specified, the
shares will be voted (i) FOR the election of the nominees for director
listed in this Proxy Statement and (ii) FOR the selection of KPMG LLP
as the Company's independent auditors, all as referred to in Items 1
and 2, respectively, in the Notice of Annual Meeting of Stockholders
and as described in this Proxy Statement.
The form of proxy accompanying this Proxy Statement confers
discretionary authority upon the named proxyholders with respect to
amendments or variations to the matters identified in the accompanying
Notice of Meeting and with respect to any other matters which may
properly come before the Meeting. As of the date of this Proxy
Statement, management of the Company knows of no such amendment or
variation or of any matters expected to come before the Meeting which
are not referred to in the accompanying Notice of Annual Meeting.
SUBSTITUTED PROXIES
The persons named in the accompanying form of proxy have been selected
by the Company's management to act as proxies. A STOCKHOLDER DESIRING
TO APPOINT SOME OTHER PERSON (WHO NEED NOT BE A STOCKHOLDER) TO
REPRESENT HIM AT THE MEETING MAY DO SO, EITHER BY: (a) striking out the
printed names and inserting the desired person's name in the blank
space directly above the names so stricken or (b) by completing another
proper form of proxy.
COSTS OF SOLICITATION
The Company will bear the cost of printing and mailing proxy materials,
including the reasonable expenses of brokerage firms and others for
forwarding the proxy materials to beneficial owners of Common Stock. In
addition to solicitation by mail, solicitation may be made by certain
directors, officers and employees of the Company, or firms specializing
in solicitation; and may be made in person or by telephone or
telegraph. No additional compensation will be paid to any director,
officer or employee of the Company for such solicitation.
ITEM 1: ELECTION OF DIRECTORS
The Company has one class of directors, each serving a one-year term.
Directors elected at the Meeting will serve until the 2003 Annual
Meeting of Stockholders and until their respective successors are duly
elected and qualified.
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INFORMATION WITH RESPECT TO NOMINEES AND DIRECTORS
Set forth below are the names and ages of the nominees for directors
and their principal occupations at present and for the past five years.
There are, to the knowledge of the Company, no agreements or
understandings by which these individuals were so selected. No family
relationships exist between any directors or executive officers (as
such term is defined in Item 402 of Regulation S-K). All nominees are
currently serving as Directors of the Company.
All Offices
with the Director
Name Age Company Since
---- --- ----------- --------
James T. Rash 62 Chairman of the Board of the Company and 1987
the Company's operating subsidiaries,
President, Chief Executive and Financial
Officer, and Director
Mark K. Levenick 42 Chief Operating Officer of the Company, 1995
President and Chief Executive Officer of
the Company's operating subsidiaries, and
Director
Michael F. Hudson 50 Executive Vice President of the Company, Chief 2001
Operating Officer of the Company's operating
subsidiaries, and Director
Jerrell G. Clay 61 Director 1990
Raymond P. Landry 63 Director 2001
Stephen P. Griggs 44 Director 2002
BUSINESS BACKGROUND
The following is a summary of the business background and experience of
each of the persons named above:
JAMES T. RASH joined the Company in July 1987 and has served as Chief
Financial Officer and as a Director since that time. Since February
1989, he has also served continuously as Chairman of the Board of
Directors and Chief Executive Officer, with the exception of the
medical leave of absence by Mr. Rash from February 2002 to August 2002.
Mr. Rash was a previously practicing certified public accountant with
the firm of Arthur Andersen & Co. for approximately 10 years, and holds
a Bachelor of Business Administration degree from the University of
Texas. Mr. Rash also currently serves as a director of 3 Mark
Financial, Inc. and CCC GlobalCom, Inc. In August 2002, Mr. Rash
resumed his duties as Chief Executive and Financial Officer.
MARK K. LEVENICK is Chief Operating Officer of the Company and has
served as Chief Executive Officer of the Company's operating
subsidiaries for in excess of five years. Mr. Levenick has been a
Director of the Company since May 1995. He holds a Bachelor of Science
degree from the University of Wisconsin at Whitewater. Mr. Levenick
acted as Interim Chief Executive Officer of the Company during the
medical leave of absence of James T. Rash.
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MICHAEL F. HUDSON is Executive Vice President of the Company and Chief
Operating Officer of the Company's principal operating subsidiary. Mr.
Hudson has served as a Director of the Company since February 2000.
Prior to joining the Company in September 1993, he held various
positions with the Southland Corporation and its affiliates for more
than 18 years, concluding as President and Chief Executive Officer of
MoneyQuick, a large non-bank ATM network. Mr. Hudson is a recognized
authority in the ATM industry.
JERRELL G. CLAY has served as a Director of the Company since December
1990 and is Chief Executive Officer of 3 Mark Financial, Inc., an
independent life insurance marketing organization, and has served as
President of one of its predecessors for in excess of five years. Mr.
Clay also serves as a member of the Management Advisory Committee of
Protective Life Insurance Company of Birmingham, Alabama.
RAYMOND P. LANDRY has served as a Director of the Company since
February 2001 and has been engaged in private business consulting to
various companies, including some entities in the ATM industry, for in
excess of five years. He has served as a senior executive or financial
officer with three publicly traded companies and several private
concerns over the last 29 years. Prior to that time, he was employed by
the consulting group of Arthur Andersen & Co. (now known as Accenture)
for 10 years. Mr. Landry holds a Bachelor of Science degree in Business
Administration from Louisiana State University.
STEPHEN P. GRIGGS has served as a Director of the Company since June
2002 and has been primarily engaged in managing his personal
investments since 2000. From 1988 to 2000, Mr. Griggs held various
positions, including President and Chief Operating Officer, with RoTech
Medical Corporation, a Nasdaq-traded company. He holds a Bachelor of
Science degree in Business Management from East Tennessee State
University and a Bachelor of Science degree in Accounting from the
University of Central Florida. Mr. Griggs was appointed to the Board of
Directors during 2002 to fill the vacancy created by the mid-term
resignation of James L. Britton, III.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE
ELECTION OF THE SIX (6) DIRECTOR NOMINEES LISTED ABOVE.
In addition, although he is not an executive officer or director of the
Company, because of his significant contributions to the business of
the Company, M. FLYNT MORELAND is a significant employee that the
Company is including in this disclosure pursuant to Item 401(c) of
Regulation S-K. Mr. Moreland, who is 45 years old, has been the Senior
Vice President - Research and Development of the Company's principal
operating subsidiary, Tidel Engineering, L.P., since February 1990.
There are no other executive officers of Tidel Technologies, Inc.
DIRECTOR COMPENSATION
During the year ended September 30, 2001, each Director of the Company
received warrants to purchase 50,000 shares of Common Stock at an
exercise price of $2.91 (such price being equal to the fair market
value of the Common Stock at the date of the grant) for directors'
remuneration. In addition, Directors receive $1,000 per meeting as
compensation for their services as members of the Board of Directors.
Directors who serve on board committees receive $500 per committee
meeting.
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BOARD COMMITTEES AND MEETINGS
The Board of Directors has established an Audit Committee, a
Compensation Committee and a Special Committee. The Audit Committee is
composed of Messrs. Landry, Clay and Griggs, all of whom are
independent, non-employee directors. The Audit Committee, which is
chaired by Mr. Landry, is charged with reviewing the Company's
financial statements, the scope and performance of the audit and
nonaudit services provided by the Company's independent auditors and
overseeing the Company's internal accounting procedures.
The Compensation Committee is composed of Messrs. Landry and Clay, and
is chaired by Mr. Clay. The Compensation Committee administers the
Company's 1997 Long-Term Incentive Plan (the "1997 Plan") and reviews,
evaluates and makes recommendations to the Board with respect to such
matters as the payment of direct salaries, benefits and incentive
compensation to the Company's executive officers and the senior
management personnel of the subsidiaries.
The Special Committee is composed of Messrs. Rash, Clay and Landry. The
Special Committee was formed by the Board of Directors in 2002, and is
charged with evaluating financing proposals and reviewing merger and
acquisition opportunities.
During the fiscal year ended September 30, 2001, the Board of
Directors, the Audit Committee and the Compensation Committee each held
one meeting, which were attended by all members. From time to time, the
members of the Board of Directors act by unanimous written consent
pursuant to the laws of the State of Delaware.
The Company does not presently have a nominating committee, and the
customary functions of such committee are being performed by the entire
board.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and officers, and persons who own more than 10% of
a registered class of its equity securities, to file reports of
ownership and changes in ownership of such equity securities with the
Securities and Exchange Commission ("SEC") and NASDAQ. Such entities
are also required by SEC regulations to furnish the Company with copies
of all Section 16(a) forms filed.
Based solely on a review of the copies of Forms 3, 4 and 5 furnished to
the Company, and any amendments thereto, and any written
representations with respect to the foregoing, the Company believes
that its directors and officers, and greater than 10% beneficial
owners, have complied with all Section 16(a) filing requirements.
VOTING SECURITIES AND
PRINCIPAL HOLDERS THEREOF
The following table sets forth as of the Record Date, the number of shares of
Common Stock beneficially owned by (i) the only persons known to the Company to
be the beneficial owners of more than 5% of its voting securities, (ii) each
current director, nominee for director, and executive officer (as such term is
defined in Item 402 of Regulation S-K) of the Company individually and (iii) by
all current directors and the executive officers of the Company as a group.
Except as otherwise indicated, and subject to applicable community property
laws, each person has sole investment and voting power with respect to the
shares shown. Ownership information is based upon information furnished by the
respective holders and contained in the Company's records.
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Amount and Nature
Name and Address of Beneficial of Beneficial Percent of
Title of Class Owner Ownership Class (1)
-------------- ------------------------------ ----------------- ----------
Common Stock Alliance Developments 1,031,362 5.9%
One Yorkdale Rd., Suite 510
North York, Ontario
M6A 3A1
Common Stock Dimensional Fund Advisors Inc. 948,200 5.4%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
Common Stock James T. Rash 377,500(2) 2.2%
5847 San Felipe, Suite 900
Houston, Texas 77057
Common Stock Mark K. Levenick 422,500(3) 2.4%
2310 McDaniel Dr.
Carrollton, Texas 75006
Common Stock Jerrell G. Clay 231,405(4) 1.3%
2900 Wilcrest, Suite 245
Houston, Texas 77042
Common Stock Michael F. Hudson 265,200(5) 1.5%
2310 McDaniel Dr.
Carrollton, Texas 75006
Common Stock M. Flynt Moreland 92,400(6) *
2310 McDaniel Dr.
Carrollton, Texas 75006
Common Stock Raymond P. Landry 78,500(7) *
908 Town & Country Blvd.
Ste. 120
Houston, Texas
Common Stock Stephen P. Griggs -- *
5847 San Felipe, Suite 900
Houston, Texas 77057
Common Stock Directors and Executive Officers 1,467,505(8) 8.1%
as a group (7 persons)
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* Less than one percent.
(1) Based upon 17,426,210 shares outstanding as of August 19, 2002.
(2) Includes 137,500 shares which could be acquired within 60 days upon
exercise of outstanding options and warrants at exercise prices of (i)
$1.25 per share as to 50,000 shares, (ii) $1.875 per share as to 37,500
shares and (iii) $2.91 per share as to 50,000 shares.
(3) Includes 307,500 shares which could be acquired within 60 days upon
exercise of outstanding warrants and options at exercise prices of (i)
$0.875 per share as to 25,000 shares, (ii) $1.25 per share as to 70,000
shares,
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(iii) $1.4375 per share as to 25,000 shares, (iv) $1.875 per share as
to 37,500 shares, (v) $2.50 per share as to 100,000 shares and (vi)
$2.91 per share as to 50,000 shares.
(4) Includes 50,000 shares which could be acquired within 60 days upon
exercise of outstanding warrants at an exercise price of $2.91 per
share as to 50,000 shares.
(5) Includes 152,000 shares which could be acquired within 60 days upon
exercise of outstanding options and warrants at exercise prices of (i)
$1.25 per share as to 33,500 shares, (ii) $1.875 per share as to 25,000
shares, (iii) $2.50 per share as to 33,500 shares, (iv) $2.91 per share
as to 50,000 shares and (v) $5.00 per share as to 10,000 shares.
Included in the total amount beneficially owned by Mr. Hudson are
83,500 shares which are pledged to secure a loan from the Company.
(6) Includes 31,600 shares which could be acquired within 60 days upon
exercise of outstanding options at exercise prices of (i) $1.25 per
share as to 10,800 shares, (ii) $1.875 per share as to 10,000 shares
and (iii) $2.50 per share as to 10,800 shares.
(7) Includes 50,000 shares which could be acquired within 60 days upon
exercise of outstanding warrants at exercise prices of $2.91 per share.
(8) Includes the 137,500 shares referred to in Note (2) above, the 307,500
shares referred to in Note (3) above, the 50,000 shares referred to in
Note (4) above, the 152,000 shares referred to in Note (5) above, the
31,600 shares referred to in Note (6) above, and the 50,000 shares
referred to in Note (7) above, which could be acquired within 60 days
upon exercise of outstanding options and warrants.
EXECUTIVE COMPENSATION
The following table sets forth the amount of all cash and other compensation
paid by the Company for services rendered during the fiscal years ended
September 30, 2001, 2000 and 1999 to James T. Rash, the Chairman of the Board
and Chief Executive Officer, and the Company's four most highly compensated
Executive Officers, as such term is defined in Item 402 of Regulation S-K, other
than the CEO.
SUMMARY COMPENSATION TABLE
Long-term
Annual Compensation Compensation
------------------------------------------- ------------
Awards
Other Securities
Name and Principal Annual Underlying All Other
Position Year Salary($) Bonus ($) Compensation($) Options Compensation ($)(2)
------------------ ---- --------- --------- --------------- ------------ -------------------
James T. Rash 2001 $ 225,000 $ -- * -- $ 8,880
Chief Executive and 2000 225,000(1) 225,000 * 75,000 8,475
Financial Officer 1999 175,000 90,000 * 100,000 7,750
Mark K. Levenick 2001 $ 262,500 $ -- * -- $ 4,480
Chief Operating Officer 2000 262,500 278,000 * 75,000 4,480
1999 250,000 85,500 * 100,000 4,480
Michael F. Hudson 2001 $ 204,750 $ -- * -- $ --
Executive Vice President 2000 204,750 219,000 * 50,000 --
1999 195,000 66,700 * 67,000 --
M. Flynt Moreland 2001 $ 150,000 $ -- * -- $ --
Senior Vice President - 2000 150,000 134,000 * 20,000 --
Research & Development 1999 129,000 29,000 * 21,600 --
of Tidel Engineering, L.P.
Eugene W. Moore (3) 2001 $ 115,000 $ -- * -- $ --
Senior Vice President - 2000 115,000 90,000 * 17,500 --
Operations of Tidel 1999 110,000 25,000 * 21,600 --
Engineering, L.P.
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* - Certain of the officers of the Company routinely receive other benefits
from the Company, the amounts of which are customary in the industry.
The aggregate dollar value of such benefits paid to any named executive
office did not exceed the lesser of $50,000 or 10% of the total annual
salary and bonus during each of the fiscal years ended September 30,
2001, 2000 and 1999.
(1) - Includes $50,000 of salary earned in the year ended September 30, 2000,
which was deferred and paid in the year ended September 30, 2001.
(2) - The amounts relate to the dollar value of insurance premiums paid by
the Company during the covered fiscal year with respect to term life
insurance for the benefit of a named executive officer.
(3) - Mr. Moore died May 28, 2002.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The Company did not grant any stock options or stock appreciation rights to any
of the Company's executive officers during the fiscal year ended September 30,
2001.
OPTION EXERCISES IN LAST FISCAL YEAR AND OPTION VALUES AT FISCAL YEAR END
The following table provides (i) information relating to the exercise of stock
options by Mr. Moore, (ii) the number of options exercisable by the respective
optionees and (iii) the respective valuations at September 30, 2001.
Number of
Securities Underlying Value of Unexercised
Unexercised Options at in-the-Money Options at
Shares September 30, 2001 September 30, 2001
acquired Value (Shares) ($)(2)
on exercise realized ------------------------------- -------------------------------
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
----------------- ------------- ------------- ------------- ------------- ------------- -------------
James T. Rash -- -- 80,000 175,000 $ -- $ --
Mark K. Levenick -- -- 200,000 175,000 -- --
Michael F. Hudson -- -- 33,500 117,000 -- --
M. Flynt Moreland -- -- 10,800 41,600 -- --
Eugene W. Moore 50,000 $ 227,500(1) 21,600 39,100 -- --
----------
(1) On January 14, 2001, Mr. Moore exercised 50,000 options at an exercise
price of $1.513 per share. Based on the closing price of the Company's
Common Stock of $6.063 on the date of exercise, the difference between
the exercise cost and the market value of the shares was $227,500. Mr.
Moore died May 28, 2002. At the time of his death, he beneficially
owned all 50,000 shares, which are pledged to secure a loan from the
Company.
(2) Based on the closing price of the Company's Common Stock of $0.70 per
share on September 30, 2001.
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LONG-TERM INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR
The Company did not grant any awards to any of the Company's executive officers
under any long-term incentive plans during the fiscal year ended September 30,
2001.
EMPLOYMENT AGREEMENTS
Messrs. Rash, Levenick, Hudson, and Moreland have employment agreements with the
Company, which provide for minimum annual salaries of $225,000, $262,500,
$204,750, and $150,000, respectively, over a three-year term ending January
2005, with certain change of control provisions. In the event of a change of
control, the executive officers are entitled to all compensation due through the
balance of the term of the agreements, and immediate vesting of all restricted
stock, performance units, stock options, stock appreciation rights, warrants and
employee benefit plans. Mr. Moore was a party to a similar agreement, which
provided for a minimum annual salary of $115,000, and terminated upon his death,
May 28, 2002.
COMPENSATION COMMITTEE INTERLOCKS
Jerrell G. Clay, Chairman of the Compensation Committee, has an ownership
interest that is greater than 10% in, and is an executive officer of, a
privately held corporation that was provided with certain office space and
administrative services by the Company from 1997 to 1999. This corporation was
indebted to the Company in the aggregate amount of $22,341 at September 30,
2001, which was the largest aggregate amount of indebtedness outstanding at any
time during the fiscal year. This indebtedness has been paid in full subsequent
to the fiscal year ended September 30, 2001. James T. Rash, Chairman and Chief
Executive Officer, is a director of, and also has a greater than 10% interest
in, this privately held corporation.
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") is composed entirely of
non-employee directors. The Committee's principal functions are to establish
base salary levels, to determine and measure achievement of corporate and
individual goals for the named executive officers and other executive officers
on an annual basis, and to select the participants, measure achievement of
objectives and determine awards under the 1997 Plan. In addition, the Committee
reviews any proposed changes to any benefit plans of the Company such as
deferred compensation plans and 401(k) Savings Plans. The Committee's
recommendations are subject to the approval of the Board of Directors.
The Committee's goal is to establish a motivational compensation plan for
executives that will enable the Company to attract and retain those individuals
deemed most qualified to improve and enhance its future performance. The Company
currently has three basic elements in the compensation for its executive
officers. These elements are (a) base salary compensation, (b) annual incentive
compensation and (c) long-term incentive compensation. These elements of
compensation recognize both individual and corporate performance. Annual
incentive compensation provides awards for performance over a shorter period,
while long-term incentive compensation optimizes rewards for performance over a
longer term based upon achievement of cumulative earnings. In addition, stock
option grants result in a reward when the market value appreciates in relation
to the option price.
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In 1997, the Company retained KPMG LLP to establish the base criteria and
performance parameters for all aspects of compensation for each executive
officer. On an annual basis, the Committee conducts an evaluation to update the
data and establish the objectives for the next year within the guidelines
recommended by KPMG LLP in their initial study.
The latest evaluation, performed in December 2000 to set objectives for fiscal
2001, included a review of compensation policies of companies similar to the
Company in size, industry and geographic location. To the greatest extent
possible, the survey included some of the companies with which the Company
competes for talented executives.
The following is a discussion of each element of compensation:
BASE SALARY COMPENSATION
The base salary for all executive officers is reviewed annually, and the
Committee's review process continues throughout the year. This review includes
an analysis of past and expected future performance of the executive officers,
as well as the responsibilities and qualifications of the executive officers
individually and the performance of the Company in comparison with companies
similar to the Company. The Committee's compensation policy is to generally set
base salary at or below median.
ANNUAL INCENTIVE COMPENSATION
The Annual Incentive Plan (the "Incentive Plan") recognizes the performance of
the named executive officers, other executive officers and key managers who
contribute to the Company's success. These participants have the greatest impact
on the profitability of the Company. In general, the participants with the most
significant responsibility have a significant portion of their cash compensation
tied to the Incentive Plan. The performance criteria, which are described in
more detail below, reflect a combination of corporate operating profit and
specific individual goals and objectives.
At the beginning of each year, the Committee establishes annual performance
goals for the Company which are based on Earnings Before Interest, Taxes,
Depreciation and Amortization ("EBITDA"). The performance goals include
threshold and maximum amounts for achievement. The Committee established the
threshold level for 2001 at levels that required the Company to exceed by 14
percent the EBITDA achieved in 2000 before any payout could occur and with the
maximum amount at 52 percent over 2000. No Incentive Plan compensation is paid
if the Company does not achieve at least the threshold amount of its EBITDA
goal. In 2001, the Company did not achieve the minimum threshold of its
performance goals due to the material adverse effect on sales and earnings as a
result of the termination of business with the Company's former largest
customer, Credit Card Center ("CCC"), and related losses incurred in connection
with the collection of receivables from CCC. Accordingly, no executive officers
received compensation under the Incentive Plan for the fiscal year ended
September 30, 2001.
LONG-TERM INCENTIVE COMPENSATION
The Committee believes that stock options provide an essential competitive
component in the executive compensation program. Also, the Committee believes
that stock options align the interests of the named executive officers and other
executive officers with those of the Company's shareholders since no benefit
inures to the executive officers unless stock price appreciation occurs over a
period of years. Due to aforementioned difficulties incurred as a result of the
termination of business with CCC, the Company did not grant any awards to any of
the Company's executive officers under any long-term incentive plans during the
fiscal year ended September 30, 2001.
11
CHIEF EXECUTIVE OFFICER COMPENSATION
James T. Rash, who currently continues to serve as Chairman of the Board of the
Company, also served as Chief Executive Officer and Chief Financial Officer
throughout 2001. Mr. Rash typically participates in all three elements of
compensation previously discussed. The criteria used in setting Mr. Rash's total
compensation plan include his longevity with the Company, his experience, the
financial performance of the Company and increases in the market capitalization
of the Company.
COMPENSATION COMMITTEE
Jerrell G. Clay, Chairman
Raymond P. Landry
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL
RETURN AMONG TIDEL TECHNOLOGIES, INC.,
PEER GROUP INDEX AND NASDAQ MARKET INDEX
1997(1) 1998 1999 2000 2001
-------- -------- -------- -------- --------
Tidel Technologies, Inc. $ 165.71 $ 71.43 $ 90.00 $ 317.17 $ 31.95
Peer group (2) 128.81 72.13 88.36 106.84 128.13
NASDAQ Market Index 135.92 141.25 228.51 312.59 128.07
----------
(1) Assumes $100 invested on October 1, 1996 and no dividends paid in any year
thereafter.
(2) Peer group consists of companies utilizing the category for Calculating and
Accounting Equipment, SIC 3578.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In September 2000, the Company loaned $141,563 to Michael F. Hudson, Executive
Vice President of the Company and Chief Operating Officer of the Company's
principal operating subsidiary, in a promissory note maturing October 1, 2002,
and bearing interest at 10% per annum. During the year ended September 30 2001,
the Company loaned an additional $225,000 to Mr. Hudson, and $75,625 to Eugene
Moore, Senior Vice President of the Company, in promissory notes maturing
October 1, 2002, and bearing interest at 10% per annum. The notes from Messrs.
Hudson and Moore are secured by a pledge of 83,500 shares and 50,000 shares,
respectively, of the Company's Common Stock. The note to Mr. Hudson in the
amount of $141,563 and the note to Mr. Moore in the amount of $75,625 relate to
the exercise of certain stock option agreements.
At September 30, 2001, James T. Rash, Chairman and CEO of the Company, had
outstanding advances due to the Company in the aggregate amount of $843,554,
which were converted to a promissory note dated September 30, 2001, bearing
interest at 10% per annum, and maturing September 30, 2004. Subsequent to
September 30, 2001, Mr. Rash received additional advances from the Company in
the aggregate amount of $300,000, which were converted to a promissory note
dated January 14, 2002, bearing interest at 10% per annum, and maturing January
14, 2005.
From 1994 to 1997, the Company had provided certain office space and
administrative services to two privately held entities with which Mr. Rash
previously had an affiliation. The entities are indebted to the Company in the
aggregate amount of $215,866, such amount being the largest aggregate amount of
indebtedness outstanding at any time during the fiscal year ended September 30,
2001. The Company is
12
uncertain about the collectibility of these accounts, however, and established a
reserve for losses from these accounts in the amount of $200,000 during the
fiscal year ended September 30, 2001.
From 1997 to 1999, the Company had provided certain office space and
administrative services to a privately held corporation in which Mr. Rash and
Jerrell G. Clay, Director of the Company, each have a greater than 10% ownership
interest and Mr. Clay is an executive officer. This corporation was indebted to
the Company in the aggregate amount of $22,341 at September 30, 2001, such
amount being the largest aggregate amount of indebtedness outstanding at any
time during the fiscal year. This amount was paid in full subsequent to the
fiscal year ended September 30, 2001.
ITEM 2: RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected KPMG LLP to serve as the Company's
independent auditors. KPMG LLP has served as the Company's independent auditors
since October 1991. While it is not required to do so, the Board of Directors is
submitting the selection of that firm as the Company's independent auditors for
the fiscal year ending September 30, 2002 to stockholders for ratification in
order to ascertain the stockholders views. Such ratification of the selection of
KPMG LLP will require the affirmative vote of the holders of a majority of the
shares of Common Stock of the Company entitled to vote thereon and represented
at the Meeting. The Board of Directors will reconsider its selection should the
stockholder votes evidence disapproval.
AUDIT FEES
The following schedule summarizes fees billed to the Company by KPMG LLP for
calendar year 2001 services:
Audit fees.................................. $ 143,534
All other fees (1).......................... 80,979
---------
Total..................................... $ 224,513
=========
----------
(1) Includes tax planning and compliance fees totaling $55,479 and
non-financial statement advisory and regulatory services totaling
$25,500.
The Audit Committee considered whether the providing of non-audit services
impacted KPMG's independence from an audit standpoint, and concluded that their
independence was not compromised.
Representatives of KPMG LLP are expected to be present at the Meeting and
available to respond to appropriate questions. Such representatives will have
the opportunity to make a statement if they desire to do so.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR RATIFICATION OF
THE SELECTION OF KPMG LLP.
STOCKHOLDER PROPOSALS
Pursuant to Regulation 14A governing solicitation of proxies and the Company's
By-laws, stockholders must give advance notice to the Company of nominations for
election to the Board of Directors, of stockholder proposals and of other
matters that the stockholder wishes to present for action at the Company's 2003
annual meeting of stockholders. Such stockholder's notice must be given in
writing, include the information required by Regulation 14A and the Company's
By-laws, and be delivered or mailed by first class United States mail, postage
prepaid, to the Secretary of the Company at its principal offices. In order to
be considered for
13
inclusion in the proxy materials to be distributed in connection with the next
annual meeting of stockholders of the Company, stockholder proposals for such
meeting must be submitted to the Company no later than May 10, 2003.
REPORT OF THE AUDIT COMMITTEE
In accordance with its written charter adopted by the Board of Directors, which
is attached as "Exhibit A" to the Company's Definitive Proxy Statement for the
annual meeting dated February 8, 2001 which was filed with the Securities and
Exchange Commission on January 9, 2001, the Audit Committee assists the Board in
fulfilling its responsibility for oversight of the quality and integrity of the
accounting, auditing and financial reporting practices of the Company. All of
the members of the Audit Committee are independent (as independence is defined
in Rule 4200(a)(15) of the National Association of Securities Dealers' listing
standards). During fiscal 2001, the Committee met one time.
In discharging its responsibility for oversight of the audit process, the Audit
Committee obtained from the independent auditors, KPMG LLP, a formal written
statement describing any relationships between the auditors and the Company that
might bear on the auditors' independence consistent with the Independent
Standards Board Standard No. 1, "Independence Discussions with Audit
Committees," and discussed with the auditors any relationships that might impact
the auditors' objectivity and Independence and satisfied itself as to the
auditors' independence.
The Committee discussed and reviewed with the independent auditors the
communications required by generally accepted auditing standards, including
those described in Statement on Auditing Standards No. 61, as amended,
"Communication with Audit Committees" and discussed and reviewed the results of
the independent auditors' examination of the financial statements for the year
ended September 30, 2001.
The Committee reviewed the audited financial statements of the Company as of and
for the fiscal year ended September 30, 2001, with management and the
independent auditors. Management has the responsibility for preparation of the
Company's financial statements and the independent auditors have the
responsibility for examination of those statements.
Based upon the above-mentioned review and discussions with management and the
independent auditors, the Committee recommended to the Board that the Company's
audited financial statements be included in its Annual Report on Form 10-K for
the fiscal year ended September 30, 2001, for filing with the Securities and
Exchange Commission.
AUDIT COMMITTEE
Raymond P. Landry, Chairman
Jerrell G. Clay
Stephen P. Griggs
OTHER MATTERS
The Board of Directors knows of no other business which will be presented to the
Meeting. If any other business is properly brought before the Meeting, it is
intended that proxies in the enclosed form will be voted in respect to any such
matters in accordance with the judgment of the persons voting the proxies.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K AND ANY AMENDMENTS THERETO
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS PROVIDED WITH CERTAIN OTHER
STOCKHOLDER INFORMATION IN THE MATERIALS ACCOMPANYING THIS PROXY STATEMENT. TO
OBTAIN ADDITIONAL COPIES WITHOUT CHARGE, PLEASE WRITE
14
TO: LEONARD L. CARR, JR., SECRETARY, 5847 SAN FELIPE, SUITE 900, HOUSTON, TEXAS
77057. Whether or not you intend to be present at this Meeting you are urged to
sign and return your proxy promptly.
By order of the Board of Directors,
James T. Rash
Chairman
Houston, Texas
September 6, 2002
15
TIDEL TECHNOLOGIES, INC.
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD THURSDAY, SEPTEMBER 26, 2002
The undersigned hereby appoints James T. Rash as proxy, with full
power of substitution, to vote as proxy all of the shares of common stock, par
value $.01 per share, of TIDEL TECHNOLOGIES, INC. (the "Company") standing in
the name of the undersigned at the Annual Meeting of Stockholders of the
Company (the "Meeting") to be held on Thursday, September 26, 2002, and at any
adjournment thereof.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE STOCKHOLDER'S
SPECIFICATIONS HEREON. IF NO SPECIFICATION IS MADE, ALL SHARES REPRESENTED BY
THIS PROXY WILL BE VOTED IN FAVOR OF EACH OF THE NOMINEES FOR DIRECTOR NAMED
HEREIN.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING.
PLEASE PROMPTLY SIGN, DATE AND RETURN THIS PROXY IN THE
ENCLOSED POSTAGE PREPAID ENVELOPE.
(Continued, and to be signed on other side.)
TIDEL TECHNOLOGIES, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [X]
FOR WITHHOLD FOR ALL
1. TO ELECT the six (6) directors of the Company to serve until the 2003 ALL ALL EXCEPT*
annual meeting of stockholders of the Company and until their [ ] [ ] [ ]
successors are duly elected and qualified--
Nominees: 01 - James T. Rash,
02 - Mark K. Levenick, 03 - Michael F. Hudson,
04 - Jerrell G. Clay, 05 - Raymond P. Landry,
06 - Stephen P. Griggs
*Instruction: To withhold authority to vote for any nominee, draw
a line through the name of the nominee in the list above.
2. TO RATIFY AND APPROVE the appointment of KPMG, LLP as independent FOR AGAINST ABSTAIN
auditors of the Company for the fiscal year ending [ ] [ ] [ ]
September 30, 2002.
This proxy may be revoked at any time before it is
exercised (1) by providing written notice of
revocation to the Secretary of the Company prior to
the Meeting or (2) by attending the Meeting and
voting in person.
EXECUTED this ____ day of __________________, 2002
Signature(s)_______________________________________
___________________________________________________
**INSTRUCTION: Signature(s) should agree exactly
with name(s) on stock certificate(s). If this Proxy
is signed on behalf of a corporation or
partnership, please print both the name of the
entity and the name and title of the signatory.
Executors, administrators, trustees, guardians and
attorneys should indicate the capacity in which
they are signing. If stock is held jointly, each
owner should sign.
--------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
YOUR VOTE IS IMPORTANT!
PLEASE PROMPTLY SIGN, DATE AND RETURN THIS PROXY IN THE
ENCLOSED POSTAGE PAID ENVELOPE.