UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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:
<Table>
[ ] 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 Rule 14a-12
</Table>
Tufco Technologies, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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TUFCO TECHNOLOGIES, INC.
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MARCH 15, 2002
---------------------
To Our Stockholders:
You are invited to attend the annual meeting of stockholders of Tufco
Technologies, Inc. to be held at the Sawgrass Marriott, 1000 PGA Tour Blvd.,
Ponte Vedra Beach, Florida, 32082, on Friday, March 15, 2002, at 8:00 a.m.,
eastern standard time for the following purposes:
PROPOSAL 1. To elect six directors to serve for a one-year term and until
their successors are elected and qualified.
PROPOSAL 2. To ratify the selection of Deloitte & Touche LLP as independent
auditors for the fiscal year ending September 30, 2002.
PROPOSAL 3. To transact such other business as may properly come before the
annual meeting or any adjournments thereof.
The record date for the annual meeting is January 28, 2002. Only
stockholders of record at the close of business on that date are entitled to
notice of and to vote at the annual meeting.
The board of directors hopes that you will find it convenient to attend the
annual meeting in person, but whether or not you plan to attend, please
complete, sign, date and return the enclosed proxy to ensure that your shares of
common stock are represented at the annual meeting. Returning your proxy does
not deprive you of the right to attend the annual meeting and vote your shares
in person.
Drew W. Cook,
Secretary
February 8, 2002
PROXY STATEMENT
---------------------
ANNUAL MEETING OF STOCKHOLDERS
FRIDAY, MARCH 15, 2002
---------------------
Tufco Technologies, Inc.
4800 Simonton Road
Dallas, Texas 75244
The Board of Directors of Tufco Technologies, Inc. ("Tufco," the "Company,"
"we", or "us") is soliciting proxies to be used at the 2002 annual meeting of
stockholders to be held at the Sawgrass Marriott, 1000 PGA Tour Blvd., Ponte
Vedra Beach, Florida, 32082, on Friday, March 15, 2002, at 8:00 a.m., eastern
standard time, local time. This proxy statement, accompanying proxy and annual
report to stockholders for the fiscal year ended September 30, 2001 are first
being mailed to stockholders on or about February 8, 2002. Although the annual
report is being mailed to stockholders with this proxy statement, it does not
constitute part of this proxy statement.
WHO CAN VOTE
Only stockholders of record as of the close of business on January 28, 2002
are entitled to notice of and to vote at the annual meeting. As of January 28,
2002, we had outstanding 4,644,919 shares of common stock, the only outstanding
class of stock entitled to vote. Each stockholder of record on the record date
is entitled to one vote for each share of common stock held.
HOW YOU CAN VOTE
Shares of common stock cannot be voted at the annual meeting unless the
holder of record is present in person or by proxy. All stockholders are urged to
complete, sign, date and promptly return the proxy in the enclosed postage-paid
envelope after reviewing the information contained in this proxy statement.
Valid proxies will be voted at the annual meeting and at any postponements or
adjournments thereof as you direct in the proxy. If no direction is given and
the proxy is validly executed, the proxy will be voted FOR the election of the
nominees for the Board of Directors set forth in this proxy statement and FOR
the ratification of the selection of Deloitte & Touche LLP as independent
auditors for the fiscal year ending September 30, 2002. The persons authorized
under the proxies will vote upon such other business as may properly come before
the annual meeting in accordance with their best judgment.
REVOCATION OF PROXIES
You may revoke your proxy at any time prior to the start of the annual
meeting in three ways:
(1) by delivering a written notice of revocation to the Corporate
Secretary of Tufco;
(2) by timely submitting a duly executed proxy bearing a later date;
or
(3) by attending the annual meeting and expressing the desire to vote
your shares in person.
QUORUM
A majority of the outstanding shares of common stock on January 28, 2002
(2,322,460 shares), represented in person or by proxy, shall constitute a quorum
for the transaction of business at the annual meeting. However, if a quorum is
not present, the stockholders present at the meeting have the power to adjourn
the meeting until a quorum is present. At any such adjourned meeting at which a
quorum is present or represented, any business may be transacted that might have
been transacted at the original meeting. Broker non-votes are when a nominee
holding shares of common stock for a beneficial owner has not received voting
instructions from the beneficial owner with respect to a particular matter and
such nominee does not possess or choose to exercise discretionary authority with
respect thereto. Broker non-votes will not be included in the determination of
the number of shares present at the annual meeting for quorum purposes.
YOUR VOTE IS IMPORTANT. ACCORDINGLY, YOU ARE ASKED TO COMPLETE, DATE, SIGN
AND RETURN THE ACCOMPANYING PROXY WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL
MEETING. IF YOU PLAN TO ATTEND THE ANNUAL MEETING TO VOTE IN PERSON AND YOUR
SHARES ARE REGISTERED WITH OUR TRANSFER AGENT (STOCKTRANS, INC.) IN THE NAME OF
A BROKER OR BANK, YOU MUST SECURE A PROXY FROM THE BROKER OR BANK ASSIGNING
VOTING RIGHTS TO YOU FOR YOUR SHARES.
PROPOSAL ONE -- ELECTION OF DIRECTORS
Our bylaws provide that the board of directors will consist of one to
twelve directors, as determined from time to time by resolution of the board.
The board of directors has set the number of directors at six, all of whom are
to be elected at the annual meeting. Each director will serve until the 2003
annual meeting and until his successor has been elected and qualified or until
the director's earlier death, resignation or removal. Each nominee has consented
to being named in this proxy statement and to serve if elected.
We have no reason to believe that any of the nominees will not serve if
elected, but if any of them should become unavailable to serve as a director,
and if the board of directors designates a substitute nominee, the persons named
in the accompanying proxy will vote for the substitute nominee designated by the
board of directors, unless a contrary instruction is given in the proxy.
Each stockholder is entitled to cast one vote for each share of common
stock held on January 28, 2002. The majority vote of the shares represented in
person or by proxy at the annual meeting is required to elect each director.
Votes may be cast in favor or withheld. Votes that are withheld will be excluded
entirely from the vote and will have no effect. Votes that are withheld for a
particular nominee will be excluded from the vote for that nominee only.
NOMINEES
The persons nominated to be directors are listed below. All of the nominees
listed below are currently directors and have been since 1992, except Mr.
LeCalsey, who became a director in September 1996, and Mr. Preston who became a
director in September 1999.
During fiscal year 2001, the Board of Directors held four meetings. No
director attended less than 75% of the aggregate of the total number of meetings
held by the Board of Directors and the committees on which he served.
The following information as of February 8, 2002 is submitted concerning
the nominees named for election as directors:
<Table>
<Caption>
NAME AGE POSITION WITH TUFCO
- ---- --- -------------------
Robert J. Simon........................ 43 Chairman of the Board of Directors
Samuel J. Bero......................... 66 Director
C. Hamilton Davison, Jr. .............. 42 Director
Louis LeCalsey, III.................... 63 Director, President and Chief Executive
Officer
William J. Malooly..................... 59 Director
Seymour S. Preston, III................ 68 Director
</Table>
Robert J. Simon -- Mr. Simon has been Chairman of the Board of directors
since February 1992. Mr. Simon has been a Senior Managing Director of Bradford
Ventures, Ltd., a private investment firm, since 1992 and a General Partner of
Bradford Associates since 1989, having started at the firm in 1984. Mr. Simon
served as Chairman of the Board of Foilmark, Inc., (NASDAQ: FLMK) until May 2001
when the Company was sold to Illinois Tool Works Inc. (NYSE: ITW). Mr. Simon is
either Chairman of the Board or a director of Wolverine Brass, Parmarco
Technologies, Inc., TriMark USA, Inc., Mexican Accent, Inc., Overseas Equity
2
Investors Ltd., Overseas Private Investors Ltd., and Overseas Callander Fund,
Ltd. and several other privately held companies.
Samuel J. Bero -- Mr. Bero had been President and Chief Executive Officer
from November 1993 until he retired in July 1995, Executive Vice President since
November 1992, and our General Manager since 1974, when he co-founded Tufco
Industries, Inc., our predecessor. Mr. Bero has been a director since 1992 and
has over 33 years of experience in the converting industry.
C. Hamilton Davison, Jr. -- Mr. Davison has been a director since 1992. Mr.
Davison has been the President and a director of Paramount Cards, Inc., a
manufacturer and retailer of greeting cards, since 1988 and Chief Executive
Officer since 1995. Prior to that time, Mr. Davison was Vice President,
International and Marketing of Paramount Cards, Inc. Mr. Davison is also a
director and former President of the greeting card industry trade association.
In addition to other private companies and not-for-profit boards, he served as a
director and member of the audit committee of Valley Resources (AMEX:VR) until
2000 when the company was sold to Southern Union (NYSE:SUG). Mr. Davison
received a Bachelors Degree from Vanderbilt University and a masters degree from
the University of Texas.
Louis LeCalsey, III -- Mr. LeCalsey has been a director and our President
and Chief Executive Officer since October 1996. Previously he was President of
Tufco Industries, Inc., our predecessor, from April 1996 through September 1996
and prior to that he served as Vice President of Worldwide Logistics for Scott
Paper Company, the culmination of a 23-year career with Scott in various
leadership positions. Mr. LeCalsey serves as a director for TriMark USA, Inc.,
as well as a member of the Advisory group for Bradford Equities Fund L.P.
William J. Malooly -- Mr. Malooly has been a director since 1992. Mr.
Malooly was the Chairman and Chief Executive Officer of Bank One, Green Bay
since 1977 until he retired from Bank One in September 1999. Mr. Malooly is
currently engaged in consulting and investing.
Seymour S. Preston, III -- Mr. Preston has been a director since September
1999. Mr. Preston is the Chairman and Chief Executive Officer of AAC Engineered
Systems, Inc. a manufacturer of deburring and metal finishing equipment. From
1990 to 1993, Mr. Preston was President and Chief Executive Officer of Elf
Atochem North America, Inc., a manufacturer and marketer of plastics and
specialty chemicals. Prior to 1990, Mr. Preston was President, Chief Operating
Officer and director of Pennwalt Corporation. Mr. Preston is currently a
director of Albemarle Corporation, Scott Specialty Gases, Inc., The Barra
Foundation, The Wistar Institute, and is the Interim President of the Academy of
Natural Sciences of Philadelphia. Mr. Preston received a BA in chemistry from
Williams College and an MBA from the Harvard Business School.
None of the directors listed herein is related to any other director or
executive officer of the Company.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR
THE ELECTION OF DIRECTORS AS SET FORTH IN PROPOSAL ONE.
3
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has an Executive Committee, a Compensation
Committee, and an Audit Committee but not a Nominating Committee.
EXECUTIVE COMMITTEE
Functions: Serves in the event action must be taken by the
board of directors at a time when convening a
meeting of the entire Board of Directors is not
feasible. May exercise all of the authority of the
board of directors in the business and affairs of
Tufco with certain exceptions.
Members: Samuel J. Bero
Robert J. Simon
Number of Meetings in 2001: One.
AUDIT COMMITTEE
Functions: Reviews proposals from our independent auditors
regarding annual audits. Recommends the engagement
or discharge of the auditors. Reviews
recommendations of the auditors concerning
accounting principles and the adequacy of internal
controls and accounting procedures and practices.
Reviews the scope of the annual audit. Approves or
disapproves each professional service or type of
service other than standard auditing services to be
provided by the auditors. Reviews and discusses the
unaudited quarterly and audited annual financial
statements with management and the auditors prior
to the earnings release.
Members: Robert J. Simon
William J. Malooly
Seymour S. Preston III
Number of Meetings in 2001: Five
COMPENSATION COMMITTEE
Functions: Reviews annual salaries and bonuses and determines
the recipients of, and time of granting of, stock
options. Determines the exercise price of each
stock option and the number of shares to be issued
upon the exercise of each stock option.
Members: Samuel J. Bero
Robert J. Simon
C. Hamilton Davison, Jr.
Number of Meetings in 2001: One.
4
DIRECTOR COMPENSATION
Our directors who are not employees receive:
- an annual fee of $7,000,
- a payment of $1,500 for each board meeting attended, and
- a payment of $1,500 for each committee meeting attended.
In addition, upon election or reelection to the Board of Directors at the annual
meeting, each non-employee director receives an option to acquire 3,000 shares
of common stock under Tufco's 1993 Non-Employee Director Stock Option Plan, as
amended. The options are exercisable immediately at an exercise price equal to
the fair market value of the common stock on the date of the annual meeting. On
March 23, 2001, Messrs. Bero, Davidson, Malooly, Preston and Simon each received
options to acquire 3,000 shares of common stock under the aforementioned stock
option plan, with an exercise price of $7.375 per share.
MANAGEMENT
COMPENSATION OF EXECUTIVE OFFICERS
The following table summarizes the compensation for each of the fiscal
years ended September 30, 2001, 2000 and 1999 to the Chief Executive Officer and
the other most highly compensated executive officers who earned a total annual
salary and bonus in excess of $100,000 in fiscal year 2001.
SUMMARY COMPENSATION TABLE
<Table>
<Caption>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION SECURITIES
NAME AND ------------------- OTHER ANNUAL UNDERLYING ALL OTHER
PRINCIPAL POSITION FISCAL YEAR SALARY BONUS COMPENSATION OPTIONS COMPENSATION
- ------------------ ----------- -------- -------- ------------ ------------ ------------
Louis LeCalsey, III......... 2001 $250,000 $ 75,000 -- -- --
Director, President and 2000 237,500 41,563 -- 75,000 --
Chief Executive Officer 1999 225,000 184,670 -- 34,000 --
Gregory L. Wilemon(1)....... 2001 $183,750 $ 55,125 -- -- --
Chief Financial Officer, 2000 $175,000 $ 15,313 -- 42,000 --
Chief Operating Officer, 1999 167,500 137,476 -- 12,000 --
Secretary and Treasurer
</Table>
- ---------------
(1) Gregory L. Wilemon was replaced as acting Chief Financial Officer of the
Company by Drew Cook on December 19, 2001.
EMPLOYMENT AGREEMENTS
Mr. LeCalsey entered into an employment agreement with us effective
September 19, 1996, under which he serves as the President and Chief Executive
Officer for an initial term of three years with successive one-year renewal
terms. If we terminate his employment for cause, or as a result of his death or
disability, our obligation to compensate him immediately terminates. If he is
terminated without cause, we are obligated to compensate him for the remaining
term of the agreement or for a period of one year, whichever is greater. The
employment agreement prohibits him from competing with us while employed by us
(or while receiving severance pay from us) and for one year after termination of
his employment with us. The employment agreement provides for an initial annual
base salary of $200,000, an annual bonus and various fringe benefits. The bonus
is based upon a budget for pre-tax income determined by the board of directors.
5
Mr. Wilemon entered into an employment agreement with us effective October
1, 1996, under which he served as Chief Financial Officer, Chief Operating
Officer, Secretary and Treasurer for an initial term of two years. The agreement
provides for successive one-year renewal terms. If we terminate his employment
for cause, or as a result of his death or disability, our obligation to
compensate him immediately terminates. If he is terminated without cause, we
will be obligated to compensate him for the remaining term of the agreement or
for a period of one year, whichever is greater. The employment agreement
prohibits him from competing with us while employed by us (or while receiving
severance pay from us) and for one year thereafter. The employment agreement
provides for an initial annual base salary of $150,000, an annual bonus and
various fringe benefits. The bonus is based upon a budget for pre-tax income
determined by the board of directors.
OPTION TABLES
OPTION GRANTS
No stock options were granted by the Company during fiscal year 2001 to the
named executive officers.
OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
The following table sets forth certain information concerning the value of
the unexercised options as of September 30, 2001 held by the executive officers.
In fiscal year 2001, Louis LeCalsey, III exercised options to acquire 3,645 and
5,924 shares of common stock, for an exercise price of $7.00 and $6.75 per
share, respectively, and Greg Wilemon exercised options to acquire 4,170 shares
of common stock for an exercise price of $7.00 per share.
AGGREGATE OPTION EXERCISES IN FISCAL YEAR 2001 AND
FISCAL 2001 YEAR-END OPTION VALUES
<Table>
<Caption>
NUMBER OF SHARES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL 2001 IN-THE-MONEY OPTIONS AT
SHARES YEAR-END FISCAL 2001 YEAR-END(2)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ----------- ----------- ------------- ----------- -------------
Louis LeCalsey III..... 9,569 $3,873 150,666 38,334 $42,000 $ --
Gregory L. Wilemon..... 4,170 1,043 54,834 22,666 13,500 --
</Table>
- ---------------
(1) Represents the difference between the exercise price and the last sales
price of the Common Stock on the date of exercise.
(2) The fair market value on September 30, 2001 of the common stock underlying
the options was $7.50 per share.
6
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
Notwithstanding anything to the contrary set forth in any of the Company's
filings under the Securities Act of 1933 or the Securities Exchange Act of 1934,
the following report of the Audit Committee shall not be incorporated by
reference into any such filings and shall not otherwise be deemed filed under
such acts.
With respect to fiscal 2001, the Audit Committee has reviewed and discussed
the audited financial statements with management. Management has the
responsibility for the preparation of our financial statements, and the
independent auditors have the responsibility for the examination of those
statements. The Audit Committee has discussed with the independent auditors the
matters required to be discussed by SAS 61. The Audit Committee received the
written disclosures and the letter from the independent auditors required by
Independence Standards Board Standard No. 1, and has discussed with the
independent auditors the auditors' independence.
Based on the review and discussions referred to above, the Audit Committee
recommended to the Board of Directors that the financial statements be included
in the Annual Report on Form 10-K for the fiscal year ended September 30, 2001
for filing with the Securities and Exchange Commission. The Audit Committee also
recommended the reappointment, subject to stockholder approval, of the
independent auditors, and the Board of Directors concurred in such
recommendations.
As a general rule, NASDAQ requires audit committees to consist of at least
three members, each of whom is independent and is able to read and understand
financial statements or will become able to do so within a reasonable period of
time after appointment to the committee. Also, at least one member must have the
experience or background which results in financial sophistication. According to
NASDAQ rules, a director will not be considered "independent" if, among other
things, he has:
- been employed by the Company or any affiliate of the Company in the
current year or in any of the past three years;
- an immediate family member who is or has been employed as an executive
officer by the Company or an affiliate of the Company in any of the past
three years;
- been employed as an executive of an entity other than the Company having
a compensation committee which includes any of the Company's executives;
- received from the Company or any affiliate of the Company compensation
(other than benefits under a tax qualified retirement plan, compensation
for director service or nondiscretionary compensation) greater than
$60,000 during the previous fiscal year; or
- in any of the past three years, been a partner in, or controlling
shareholder or executive of, a for-profit business organization to which
the Company made or from which the Company received payment (other than
payment arising solely from investments in the Company's securities) that
exceeds the greater of: (1) $200,000; or (2) more than 5% of the
Company's or business organization's consolidated gross revenues for the
year.
One member of the Company's Audit Committee, Robert J. Simon has served as
Senior Managing Director of Bradford Ventures, Ltd., since 1992, and a General
Partner of Bradford Associates since 1989. During fiscal 2001, we paid Bradford
Ventures $275,840.56 in fees. We believe that the terms of the agreement with
Bradford Ventures are at least as favorable to us as could be obtained from an
unaffiliated party. NASDAQ rules permit the appointment of one director who is
not considered independent to a company's audit committee if the board of
directors believes such director's appointment is required by the best interests
of the company and its stockholders. Based upon Mr. Simon's financial experience
and background the Company's Board of Directors has determined that Mr. Simon's
membership on the Audit Committee is required by the best interests of the
Company and its stockholders.
Respectfully submitted,
Robert J. Simon
William J. Malooly
Seymour S. Preston III
7
AUDIT FEES; FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES; ALL
OTHER FEES
In addition to performing the audit of the Company's consolidated financial
statements, Deloitte & Touche LLP has provided various other services during
fiscal 2001. The aggregate fees billed for fiscal 2001 for each of the following
categories of services are set forth below:
Audit of the Company's annual financial statements for fiscal 2001 and
reviews of the quarterly financial statements included in the Company's
quarterly reports on Form 10-Q for fiscal 2001: $123,082
All other services: $45,000
Deloitte & Touche LLP has not provided any information technology services
to the Company during fiscal 2001. The fee set forth above for "other services"
pertains to tax return preparation and tax consulting services.
The Audit Committee has reviewed summaries of the services provided and the
related fees and has considered whether the provision of non-audit services is
compatible with maintaining the independence of Deloitte & Touche LLP.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
Our executive compensation is supervised by our compensation committee. The
functions of the compensation committee are to review general compensation
policies and to review recommendations made regarding the salaries of executive
officers. We seek to provide executive compensation that will support the
achievement of our financial goals while attracting and retaining talented
executives and rewarding superior performance. In performing this function, the
compensation committee reviews executive compensation surveys and other
available information and may from time to time consult with independent
compensation consultants.
In general, we compensate our executive officers through base salary, but
may also consider cash bonuses and long-term incentive compensation. In
addition, executive officers participate in benefit plans that are generally
available to our employees.
The compensation committee's compensation policies for executive officers
follow our compensation policy for all employees. This policy emphasizes the
principle that compensation should be commensurate with performance of the
individual and the company. With regard to the chief executive officer, the
compensation committee considers a broad array of factors in establishing his
base salary and bonus, including the salary and bonus payments for chief
executive officers at companies in similar businesses. For fiscal year 2001, our
chief executive officer had an employment agreement that provided for a minimum
base salary of $200,000.
Section 162(m) of the Internal Revenue Code of 1986, as amended, limits the
deduction that may be claimed by a public company for total compensation in
excess of $1 million paid to the chief executive officer or to any of the other
four most highly compensated officers except to the extent that any compensation
in excess of $1 million is paid pursuant to a performance-based plan. This
provision became effective January 1, 1994 with respect to us. After considering
the application of Section 162(m) to its compensation policies, the committee
has determined that the provisions of Section 162(m) would not affect the
compensation of any of the officers named above. To the extent that this might
not continue to be the case, the committee would consider any changes necessary
to conform to the provisions of Section 162(m).
8
The compensation committee determined the salary for our chief executive
officer for fiscal year 2001 based on the foregoing factors.
Respectfully submitted,
Compensation Committee:
Samuel J. Bero
Robert J. Simon
C. Hamilton Davison, Jr.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Bero and Mr. Simon serve on our compensation committee. Mr. Bero was an
officer from November 1993 until his retirement in July 1995 and Mr. Simon
currently is a general partner of Bradford Associates.
We lease one of our facilities from a partnership in which Samuel J. Bero
is a partner. The lease has a seven-year term that expires on April 1, 2003. We
have options to renew the lease for an additional three-year term at a
negotiable rental rate. We paid total rent of $111,060 to the partnership that
is the lessor of this facility for fiscal year 2001. We believe that the terms
of this lease are at least as favorable to us as could have been obtained from
an unaffiliated party.
We have made interest-free advances to Mr. Bero and one other former
stockholder of Tufco Industries, Inc., to purchase life insurance policies on
their lives. The policies are collectively assigned to us as security for the
advances. As of September 30, 2001, the only outstanding advance in excess of
$60,000 was $89,829 to Mr. Bero.
Upon completion of the acquisition of Executive Converting Corporation in
January 1994, we amended an agreement with Bradford Ventures, Ltd., an affiliate
of Bradford Venture Partners, L.P., one of our stockholders, and Mr. Simon,
under which Bradford Ventures provides various financial consulting services to
us for an initial term of 10 years, with successive automatic renewal terms of
one year each unless terminated by either party. Under this agreement, Bradford
Ventures has assisted us in structuring our initial public offering and the
Executive Converting Corporation acquisition and restructuring our long-term
obligations. We expect to use the services of Bradford Ventures in the future
for similar services as well as in any major transaction, such as loans,
subsequent public offerings and acquisitions. We are obligated to pay Bradford
Ventures an annual fee of $239,245 under the agreement, subject to a 5% annual
increase, plus reasonable out-of-pocket expenses. During fiscal year 2001, we
paid Bradford Ventures $275,840.56 in fees. We believe that the terms of the
agreement with Bradford Ventures are at least as favorable to us as could be
obtained from an unaffiliated party.
9
PERFORMANCE GRAPH
SEC rules require the presentation of a line graph comparing, over a period
of five years, the cumulative total stockholder return to a performance
indicator of a broad equity market index and either a nationally recognized
industry index or a peer group index constructed by us.
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG TUFCO TECHNOLOGIES, INC.,
NASDAQ MARKET INDEX AND MG GROUP INDEX
[PERFORMANCE GRAPH]
ASSUMES $100 INVESTED ON OCT. 1, 1996
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING SEPT. 30, 2001
<Table>
<Caption>
- --------------------------------------------------------------------------------
1996 1997 1998 1999 2000 2001
- --------------------------------------------------------------------------------
Tufco Technologies,
Inc. 100.00 166.00 112.00 120.00 162.00 120.00
MG Group Index 100.00 114.19 74.75 87.93 64.18 67.71
NASDAQ Market Index 100.00 135.92 141.25 228.51 312.59 128.07
</Table>
The graph above compares the performance of our common stock with the
performance of the NASDAQ Market Index and the MG Paper Products Group Index
from October 1, 1996, through September 30, 2001. The comparison assumes $100
was invested on October 1, 1996, in our common stock and in each of the
aforementioned indices and assumes reinvestment of dividends.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our officers
and directors, and persons who own more than 10% of a registered class of our
equity securities, to file reports of ownership and changes in ownership of such
securities with the SEC. Officers, directors and greater than 10% beneficial
owners are required by applicable regulations to furnish us with copies of all
Section 16(a) forms they file.
Based solely upon a review of the reports furnished to us with respect to
fiscal year 2001, no person failed to disclose on a timely basis reports
required by Section 16(a).
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SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of our common stock as of January 21, 2002 by (1) each person known by
us to own beneficially more than 5% of our outstanding common stock, (2) each
current director, (3) each named executive officer, and (4) all current
directors and named executive officers as a group. Unless otherwise indicated,
the shares listed in the table are owned directly by the individual or entity,
or by both the individual and the individual's spouse. The individual or entity
has sole voting and investment power as to shares shown or, in the case of the
individual, such power is shared with the individual's spouse.
Certain of the shares listed below are deemed to be owned beneficially by
more than one stockholder under SEC rules. Accordingly, the sum of the ownership
percentages listed exceeds 100%.
<Table>
<Caption>
AMOUNT AND NATURE OF PERCENT OF
BENEFICIAL OWNERSHIP CLASS
-------------------- ----------
OVER 5% STOCKHOLDERS
Robert J. Simon (1)(3)(4)(5)................................ 2,647,543 56.8%
Barbara M. Henagan(1)(3).................................... 2,621,661 56.4
Bradford Venture Partners, L.P.(1)(2)....................... 1,909,870 41.1
Overseas Equity Investors Partners(3)(6).................... 709,870 15.3
OTHER DIRECTORS AND EXECUTIVE OFFICERS
Samuel J. Bero(7)........................................... 204,000 4.4
Louis LeCalsey III(8)....................................... 240,917 5.0
C. Hamilton Davison, Jr.(5)................................. 21,842 *
Seymour S. Preston III(11).................................. 11,000 *
William J. Malooly(5)....................................... 21,000 *
Gregory L. Wilemon(9)....................................... 76,850 1.6
Directors and Executive Officers as a Group (7
persons)(1)(3)(10)........................................ 3,225,073 65.5%
</Table>
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* Less than one percent
(1) The amounts shown for Mr. Simon and Ms. Henagan include the shares owned of
record by Bradford Venture Partners, as to which they may be deemed to
share beneficial ownership due to their having voting and dispositive power
over such shares. Bradford Associates, a general partnership of which such
two persons are the partners, is the sole general partner of Bradford
Venture Partners and, as such, holds a 1% interest in that partnership. The
business address of each of Mr. Simon and Ms. Henagan is 44 Nassau Street,
Princeton, New Jersey, 08542.
(2) The address of the stockholder is 44 Nassau Street, Princeton, New Jersey
08542.
(3) The amounts shown for Mr. Simon and Ms. Henagan includes the shares owned
of record by Overseas Equity Investors Partners as to which they may be
deemed to share beneficial ownership due to their having voting power over
such shares. Mr. Simon serves as chairman of the board of directors of the
corporation that acts as the managing partner of Overseas Equity. Bradford
Associates holds a 1% partnership interest in Overseas Equity, which may
increase upon the satisfaction of certain contingencies related to the
overall performance of Overseas Equity's investment portfolio, and also
acts as an investment advisor for Overseas Equity.
(4) The stockholder is also one of our directors.
(5) The amount shown includes 18,000 shares that may be acquired under options
currently exercisable.
(6) The address of the stockholder is Clarendon House, Church Street, Hamilton
5-31, Bermuda.
(7) The amount shown includes 14,000 shares that may be acquired under options
currently exercisable.
(8) The amount shown includes 150,666 shares that may be acquired under options
currently exercisable.
(9) The amount shown includes 54,834 shares that may be acquired under options
currently exercisable. Mr. Wilemon served as the Chief Financial Officer of
the Company until December 18, 2001.
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(10) The amount shown includes an aggregate of 279,500 shares that may be
acquired under options currently exercisable.
(11) The amount shown includes 6,000 shares that may be acquired under options
currently exercisable.
PROPOSAL TWO -- RATIFICATION OF INDEPENDENT AUDITORS
The stockholders are asked to ratify the appointment by the Board of
Directors of Deloitte & Touche LLP as independent auditors for the fiscal year
ending September 30, 2002. The selection was based upon the recommendation of
our audit committee.
Representatives of Deloitte & Touche LLP will be available by
teleconference at the annual meeting to respond to appropriate questions from
stockholders.
Adoption of Proposal Two requires approval by the holders of a majority of
shares of common stock present in person or represented by proxy, and entitled
to vote at the annual meeting. Abstentions may be specified on this proposal to
ratify the selection of the independent auditors. Abstentions will be considered
present and entitled to vote at the annual meeting but will not be counted as
votes cast in the affirmative. Abstentions will have the effect of a negative
vote for this proposal to ratify the selection of the independent auditors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR
THE RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT
AUDITORS FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 2002.
STOCKHOLDER PROPOSALS
To be included in the proxy statement, any proposals of holders of common
stock of the Company intended to be presented at the Annual Meeting of
Stockholders of the Company to be held in 2003 must be received by the Company,
addressed to the Secretary of the Company, 4800 Simonton Road, Dallas, Texas,
75244, no later than October 11, 2002, and must otherwise comply with the
requirements of Rule 14a-8 under the Securities Exchange Act of 1934.
Any holder of common stock of the Company desiring to bring business before
the 2003 annual meeting of stockholders in a form other than a stockholder
proposal in accordance with the preceding paragraph must give written notice
that is received by the Company, addressed to the Secretary of the Company, 4800
Simonton Road, Dallas, Texas, 75244, no later than December 25, 2002.
OTHER BUSINESS
We know of no other business that will be presented at the annual meeting.
If other matters requiring a vote of the stockholders properly comes before the
annual meeting, the persons authorized under the proxies will vote and act
according to their best judgment.
EXPENSES
The expense of preparing, printing, and mailing proxy materials to our
stockholders will be borne by us. In addition to the solicitation of proxies by
use of the mail, proxies may be solicited personally or by telephone or
facsimile by directors, officers and regularly engaged employees, none of whom
will receive additional compensation therefor. Brokerage houses, nominees and
other similar record holders will be requested to forward proxy materials to the
beneficial owners of the common stock and will be reimbursed by us upon request
for their reasonable out-of-pocket expenses.
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ANNUAL REPORT
We have provided without charge a copy of our annual report to stockholders
for fiscal year 2001 to each person being solicited by this proxy statement.
UPON THE WRITTEN REQUEST BY ANY PERSON BEING SOLICITED BY THIS PROXY STATEMENT,
WE WILL PROVIDE WITHOUT CHARGE A COPY OF THE ANNUAL REPORT ON FORM 10-K AS FILED
WITH THE SEC (EXCLUDING EXHIBITS, FOR WHICH A REASONABLE CHARGE SHALL BE
IMPOSED). All such requests should be directed to: Drew W. Cook, Corporate
Secretary, Tufco Technologies, Inc., 4800 Simonton Road, Dallas, Texas 75244.
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P
R
O
X
Y
TUFCO TECHNOLOGIES, INC.
ANNUAL MEETING OF STOCKHOLDERS, MARCH 15, 2002
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF
TUFCO TECHNOLOGIES, INC.
The undersigned hereby appoints ROBERT J. SIMON and DREW COOK, and each of them,
jointly and severally, as proxies, each with full power of substitution, to vote
all of the undersigned's shares of common stock held of record on January 28,
2002, at the 2002 annual meeting of stockholders or at any postponements or
adjournments thereof.
This proxy, when properly executed, will be voted in accordance with the
directions made on the reverse side. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE FIRST TWO PROPOSALS. THE PROXIES WILL VOTE WITH RESPECT TO THE
THIRD PROPOSAL ACCORDING TO THEIR BEST JUDGMENT.
1. Election of Directors.
<Table>
FOR all nominees listed below (except as marked below to the WITHHOLD AUTHORITY to vote for all nominees listed below [ ]
contrary) [ ]
</Table>
(Samuel J. Bero, C. Hamilton Davison, Jr., Louis LeCalsey III, William J.
Malooly, Seymour S. Preston III and Robert J. Simon)
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE
A LINE THROUGH THAT NOMINEE'S NAME ABOVE.
2. Ratification of the selection of Deloitte & Touche LLP as independent
auditors for the 2002 fiscal year.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. In their discretion, the proxies are authorized to vote upon such other
matters as may properly come before the meeting or any postponements or
adjournments thereof.
Please sign exactly as name appears below. When shares are held in more than one
name, all parties should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by an authorized officer. If a
partnership, please sign in partnership name by an authorized person.
Dated: , 2002
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Signature
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Signature if shares held in more
than one name
PLEASE MARK, SIGN, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED ENVELOPE.