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
Check the appropriate box:
|_| Preliminary proxy statement. |_| Confidential, for use of the
|X| Definitive proxy statement. Commission only (as permitted
|_| Definitive additional materials. by Rule 14a-6(e)(2)).
|_| Soliciting material pursuant to Rule
14a-11(c) or Rule 14a-12.
TUTOGEN MEDICAL, INC.
(Name of Registrant as specified in its Charter)
None.
(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:
(2) Aggregate number of securities to which transaction applies:
(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):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
TUTOGEN MEDICAL, INC.
1130 MCBRIDE AVENUE
WEST PATERSON, NEW JERSEY 07424
February 8, 2005
Dear Shareholder:
On behalf of the Board of Directors, I cordially invite you to attend
the 2005 Annual Meeting of the Shareholders of Tutogen Medical, Inc. (the
"Company"), which will be held on March 14, 2005 at the Doubletree Hotel, 8250
North Central Expressway, Dallas, Texas 75206 at 10:00 a.m. local time.
At the Annual Meeting, you will be asked (i) to elect eight (8)
directors, (ii) to amend the Company's 1996 Stock Option Plan increasing the
total number of shares covered by the Plan from 3,500,000 to 4,000,000, (iii) to
ratify the appointment of Deloitte & Touche, L.L.P. as the Company's auditors
for the fiscal year ending September 30, 2005 and (iv) to transact such other
business as may properly come before the meeting or any adjournment thereof. On
the following pages you will find the Notice of the Annual Meeting of
Shareholders, and the Proxy Statement providing information concerning the
matters to be acted upon at the meeting. Of course, the Board of Directors will
be present at the Annual Meeting to answer any questions you might have.
YOUR VOTE IS IMPORTANT! The Company's Board of Directors would greatly
appreciate your attendance at the Annual Meeting. HOWEVER, WHETHER OR NOT YOU
PLAN TO ATTEND THE ANNUAL MEETING, IT IS VERY IMPORTANT THAT YOUR SHARES BE
REPRESENTED. Accordingly, please sign, date, and return the enclosed proxy card,
which will indicate your vote upon the various matters to be considered. If you
do attend the meeting and desire to vote in person, you may do so by withdrawing
your proxy at that time.
I sincerely hope you will be able to attend the Annual Meeting and I
look forward to seeing you at the 2005 Annual Meeting of Shareholders.
Very truly yours,
Roy D. Crowinshield, Ph.D.
CHAIRMAN OF THE BOARD
TUTOGEN MEDICAL, INC.
1130 MCBRIDE AVENUE
WEST PATERSON, NEW JERSEY 07424
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 14, 2005
TO THE SHAREHOLDERS OF TUTOGEN MEDICAL, INC.:
NOTICE IS HEREBY GIVEN that the 2005 Annual Meeting of the Shareholders of
Tutogen Medical, Inc., a Florida corporation (the "Company") will be held at the
Doubletree Hotel, 8250 North Central Expressway, Dallas, Texas 75206, 10:00 a.m.
local time, to act on the following matters:
1. To elect eight (8) directors to serve until the 2006 Annual
Meeting of Shareholders and until their respective successors
shall be duly elected and qualified;
2. To approve an amendment to the Company's 1996 Stock Option Plan
increasing the number of shares covered thereby from 3,500,000
to 4,000,000 shares;
3. To ratify the appointment of Deloitte & Touche L.L.P. as the
Company's independent auditors for the fiscal year ending
September 30, 2005; and
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Only Shareholders of record at 5:00 p.m., Eastern Standard Time, on February 1,
2005 are entitled to receive notice of, and to vote at, the Annual Meeting. EACH
SHAREHOLDER, EVEN THOUGH HE OR SHE MAY PRESENTLY INTEND TO ATTEND THE ANNUAL
MEETING, IS REQUESTED TO SIGN AND DATE THE ENCLOSED PROXY CARD AND TO RETURN IT
WITHOUT DELAY IN THE ENCLOSED POSTAGE-PAID ENVELOPE. Any shareholder present at
the Annual Meeting may withdraw his or her proxy and vote in person on each
matter brought before the Annual Meeting.
By Order of the Board of Directors
Roy D. Crowninshield, Ph.D.
CHAIRMAN OF THE BOARD
West Paterson, New Jersey
February 8, 2005
TUTOGEN MEDICAL, INC.
1130 MCBRIDE AVENUE
WEST PATERSON, NEW JERSEY 07424
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 14, 2005
GENERAL INFORMATION
This Proxy Statement is being furnished to the holders ("Shareholders")
of the common shares, par value $.01 per share ("Common Shares"), of Tutogen
Medical, Inc., a Florida corporation (the "Company") in connection with the
solicitation, by the Company's Board of Directors, of proxies for use at the
2005 Annual Meeting of Shareholders to be held on March 14, 2005 at 10:00 a.m.
(the "Annual Meeting") and at any adjournment thereof. The Annual Meeting will
be held at the Doubletree Hotel, 8250 North Central Expressway, Dallas, Texas
75206.
At the Annual Meeting, Shareholders will be asked to consider and vote
on (i) the election of eight (8) directors, (ii) an amendment to the Company's
1996 Stock Option Plan increasing the total number of shares covered by the Plan
from 3,500,000 to 4,000,000 and (iii) the ratification of Deloitte & Touche,
L.L.P. as the Company's auditors for the fiscal year ending September 30, 2005.
All properly executed proxies received prior to or at the Annual Meeting will be
voted in accordance with the instructions indicated thereon, if any. If no
instructions are indicated, such proxies will be voted FOR the election of the
Board of Directors' nominees for directors, FOR the amendment to the 1996 Stock
Option Plan and FOR the ratification of Deloitte & Touche L.L.P. as the
Company's auditors.
The Board of Directors has fixed 5:00 p.m., Eastern Standard Time, on
February 1, 2005 as the record date (the "Record Date") for the determination of
the Shareholders of record entitled to receive notice of, and to vote at, the
Annual Meeting or any adjournment thereof. On February 1, 2005 there were
15,915,960 issued and outstanding Common Shares of the Company, constituting the
only class of stock outstanding. The presence of a majority of the outstanding
Common Shares as of the Record Date, in person or represented by proxy, will
constitute a quorum at the Annual Meeting.
Any Shareholder may revoke his or her proxy, at any time before it is
exercised, by (i) duly executing and submitting a subsequently dated proxy, (ii)
delivering a subsequently dated written notice of revocation to the Company,
which notice is received at or before the Annual Meeting, or (iii) voting in
person at the Annual Meeting (although, mere attendance at the Annual Meeting
will not, in and of itself, constitute a revocation of the proxy). Any written
notice revoking a proxy should be sent to the Secretary of the Company at the
Company's principal executive offices, located at the address set forth above.
This Proxy Statement and the enclosed proxy card are first being sent to
Shareholders, together with the Notice of Annual Meeting, on or about February
8, 2005. SHAREHOLDERS ARE REQUESTED TO COMPLETE, DATE, AND SIGN THE ACCOMPANYING
FORM OF PROXY AND RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED WITH THESE
MATERIALS. No postage is necessary if the proxy is mailed in the United States
in the accompanying envelope.
PROPOSAL I
ELECTION OF DIRECTORS
In accordance with the Company's Bylaws, the Board of Directors has
fixed the number of directors of the Company ("Directors") to be elected at the
Annual Meeting at eight (8). The Board of Directors has unanimously nominated
the following persons (each, a "Nominee"), all of whom are current Directors, to
stand for election at the Annual Meeting. Each Nominee has agreed, if elected,
to hold office until the 2006 Annual Meeting of Shareholders and until his
successor has been duly elected and qualified.
It is intended that the proxies received from Shareholders, unless
contrary instructions are given therein, will be voted in favor of the election
of the Nominees named below, each of whom has consented to being named herein
and have indicated their intention to serve if elected. If any Nominee, for any
reason, should become unavailable for election, or if a vacancy should occur
before the election, it is intended that the shares represented by the proxies
will be voted for such other person, as the Company's Board of Directors shall
designate to replace such Nominee. The Board of Directors has no reason to
believe that any of the Nominees will not be available or prove unable to serve
if so elected.
NOMINEES FOR DIRECTOR
The following table sets forth the names and ages of each person
nominated for election as a Director of the Company, the positions and offices
that each Nominee has held with the Company, and the period during which each
has served in such positions and offices. Each Director serves for a term of one
(1) year and until his successor is duly elected and qualified.
TABLE OF NOMINEES
Period Served
Name of Nominee Age Positions/offices in Office/Position
--------------- --- ----------------- ------------------
G. Russell Cleveland 66 Director 1997 - present
Roy D. Crowinshield, Ph.D. 56 Chairman of the Board 2004 - present
Director 2003 - present
Robert C. Farone 62 Director 1999 - present
J. Harold Helderman, M.D. 59 Director 1997 - present
Richard J. May 40 Director 2004 - present
Guy L. Mayer 53 Chief Executive Officer January 2005 - present
Director January 2005 - present
Thomas W. Pauken 61 Director 1999 - present
Chairman of the Board 2000 - 2004
Carlton E. Turner, Ph.D., D.Sc. 64 Director 2000 - present
Set forth below are descriptions of the business experience during the
past five (5) years or more, and other biographical information, for the
Nominees seeking election to the Board of Directors.
2
G. RUSSELL CLEVELAND is the President, Chief Executive Officer, sole
Director, and majority shareholder of Renaissance Capital Group, Inc.
("Renaissance"). He is also President, Chief Executive Officer, and a director
of Renaissance Capital Growth & Income Fund III, Inc. Mr. Cleveland is a
Chartered Financial Analyst with more than thirty-five (35) years experience as
a specialist in investments for smaller capitalization companies. A graduate of
the Wharton School of Business, Mr. Cleveland has served as President of the
Dallas Association of Investment Analysts. Mr. Cleveland currently serves on the
Boards of Directors of Renaissance U.S. Growth & Income Trust PLC, Cover-All
Technologies, Inc., Digital Recorders, Inc., Integrated Security Systems, Inc.,
and BFS U.S. Special Opportunities Trust PLC (London).
ROY D. CROWNINSHIELD, PH.D. is the current Chairman of the Board. Prior
to joining Tutogen, Dr. Crowninshield served twenty-one (21) years in various
capacities at Zimmer Holdings, Inc., ("Zimmer") including President of Zimmer's
U.S. operations and most recently as the Company's Chief Scientific Officer.
Prior to joining Zimmer in 1983, he was a faculty member at the University of
Iowa where he led many research projects evaluating the function of total joint
implants. He currently holds academic appointments as a professor in the
Orthopedic Surgery Department at Rush Medical College in Chicago, Illinois and
as an adjunct professor in the College of engineering of the University of Notre
Dame. He holds an undergraduate and doctorate degrees from the University of
Vermont. He has worked in the orthopedic industry for over twenty (20) years and
has extensive experience in the research and development, manufacture, and
clinical investigation of orthopedic implants. He has authored more than 100
journal articles, book chapters, and published abstracts in orthopedics and
engineering.
ROBERT C. FARONE has been Vice President/General Manager of Samsonite
Company Stores since June 2001. Samsonite Company Stores is a chain of 188
retail luggage stores. Mr. Farone had been President of Bag'n Baggage, Ltd. from
June 1985 through February 2001. Bag'n Baggage is an 80-store retailer of
luggage and leather goods operating in eight (8) states under the trade names
Bag'n Baggage, Biagio, Houston Trunk Factory, Malm and Roberto's. Mr. Farone has
also served as a director on the board of Caribbean Marine, Inc. from June 1985
to April 2001. From September 1985 to July 1986 he served as a director on the
board of 50 Off Stores, and from August 1988 to September 1991 he served as
Chairman of the Board. 50 Off Stores was a regional chain of deep discount
stores specializing in ready to wear having 72 locations in five states.
J. HAROLD HELDERMAN, M.D. is Dean of Admissions and Professor of
Medicine, Microbiology and Immunology at Vanderbilt University, Nashville,
Tennessee, and is the Medical Director of the Vanderbilt Transplant Center. Dr.
Helderman received his MD from the State University of New York, Downstate
Medical Center in 1971, Summa Cum Laude. In addition to book and monograph
writings, he has authored more than 125 publications in his field of transplant
medicine. Dr. Helderman is past President of the American Society of
Transplantation.
RICHARD J. MAY has been Vice President of Tax and Tax Counsel for Zimmer
since January 2004. Prior to this, Mr. May held both tax and finance senior
executive positions with Centerpulse USA Holding, Inc., which was recently
acquired by Zimmer. His most recent position with Centerpulse was Group Vice
President Finance and Tax Counsel, primarily responsible for the
worldwide/global tax function. Mr. May has over eighteen (18) years of
experience in corporate tax, accounting and finance roles. Prior to joining
Centerpulse (previously Sulzer Medica), he worked at Rockwell International and
Arthur Anderson & Co. He holds a bachelor's degree in accounting (suma cum
laude) from Texas A&M University, and a Juris Doctor degree (cum laude) from the
University of Houston Law Center. He is a certified public accountant and a
member of the Texas Bar Association.
3
GUY L. MAYER is the current Chief Executive Officer of the Company.
Prior to joining Tutogen, Mr. Mayer served as Chairman and CEO of Visen medical,
a private Biotech company focused on Molecular Imaging technologies and prior to
Visen, was President and CEO of ETEX Corporation, a private biomedical company
based in Cambridge, MA. For thirteen (13) years prior to joining ETEX, Mr. Mayer
held various senior positions at Zimmer, then a division of Bristol Myers Squibb
with sales in excess of $1.2 billion. Mr. Mayer's positions at Zimmer included
President, Global Products Group, President, Orthopedics Implant Division,
President, Zimmer Japan and Sr. Vice President, Zimmer International. Prior
experience includes general management positions with Picker International in
diagnostic imaging, and American Hospital Supply Corporation. Mr. Mayer is a
1974 Graduate of the University of Ottawa and currently serves on the Board of
Directors of Spire Corporation, a publicly owned corporation, and several
private companies.
THOMAS W. PAUKEN currently serves as the Trustee for Capital Partners
II, Ltd. Liquidating Trust. He also serves on the Board of TOR Minerals
International, Inc. For six (6) years, Mr. Pauken served as Vice President and
Corporate Counsel of Garvon, Inc., a Dallas-based venture capital company. From
1981 to 1985, Mr. Pauken served as Director of ACTION, an independent federal
agency. He also served on the White House legal counsel's staff during the
Reagan Administration. Mr. Pauken's military service included a tour of duty in
Vietnam as a Military Intelligence Officer. Mr. Pauken received a B.A. from
Georgetown University and J.D. degree from Southern Methodist University Law
School.
CARLTON E. TURNER, PH.D., D.SC. has been the President and Chief
Executive Officer of Carrington Laboratories, Inc. ("Carrington") (NASDAQ: CARN)
since April 1995. Carrington is a research-based pharmaceutical and medical
device company in the field of wound care products. Dr. Turner has also served
as the Chief Operating Officer from November 1994 to April 1995 and as the
Executive Vice President of Scientific Affairs from January 1994 to November
1994 at Carrington. Before that, he was the President, Chief Operating Officer
and Founder of Princeton Diagnostic Laboratories of America from 1987 to 1993.
From 1981 to 1987 he was an Assistant to President Ronald Reagan with Cabinet
Rank and Director of the White House Drug Policy Office. Previously, he was a
Research Professor and Director of the Research Institute of Pharmacological
Science, University of Mississippi.
DIRECTOR MEETINGS AND COMMITTEES
During the fiscal year ended September 30, 2004 ("Fiscal Year 2004"),
the Board of Directors of the Company held a total of four (4) regular and four
(4) telephonic meetings. Each of the directors attended at least eighty percent
(80%) of the total number of meetings of the Board of Directors. It is the
Company's policy that each of the incumbent directors attends the Annual
Meetings of Shareholders.
The Board of Directors has an Audit Committee, a Compensation Committee
and a Nominating Committee, each consisting entirely of independent directors.
The Board of Directors has determined, after considering all the relevant facts
and circumstances, that Messrs. Cleveland, Farone, Pauken and Drs. Helderman and
Turner are independent directors, as "independence" is defined by the listing
standards of the American Stock Exchange (the "Exchange"), because they have no
material relationship with us.
The Board of Directors has adopted charters for the Audit, Compensation
and Nominating Committees describing the authority and responsibilities
delegated to each committee by the board. The Board of Directors has also
adopted Corporate Governance Guidelines and a Code of Ethics. The charters of
the Audit, Compensation and Nominating Committees and the Corporate Governance
Guidelines and Code of Ethics have been posted on the Company's website at
www.tutogen.com. These documents are also available in print to any stockholder
requesting a copy in writing from the corporate secretary at the executive
offices set forth in this proxy statement.
4
AUDIT COMMITTEE
The Company has a standing Audit Committee consisting of three (3)
members. For Fiscal Year 2004, the members of the Audit Committee were Messrs.
G. Russell Cleveland, Robert C. Farone and Dr. Carlton E. Turner. The Committee
met four (4) times during Fiscal Year 2004. Each member of the Audit Committee
is a member of the Board of Directors and "independent", as such term is defined
in the Exchange listing standards currently in effect and applicable to the
Company. Each of the members of the Audit Committee, by virtue of his past
employment experience, has considerable knowledge of financial statements,
finance, and accounting. Although no member of the Committee has a professional
certification in accounting, Mr. Cleveland and Dr. Turner each has significant
employment experience as a Chief Executive Officer with financial oversight
responsibilities. Dr. Turner has also served as the Chief Operating Officer of
various companies. In addition, Mr. Cleveland is a graduate of the Wharton
School of Business and has more than thirty-five (35) years of experience as a
financial analyst. The Company believes both Mr. Cleveland and Dr. Turner
qualify as "financial experts" under the Securities and Exchange Commission
regulations. The background and experience of each of the Audit Committee
members is more fully disclosed in their biographies under "Nominees for
Director".
The mission of the Company's Audit Committee is to ensure accurate and
reliable financial reporting by the Company, and to promote shareholder
confidence in the reliability of the Company's financial information. To this
end, the Audit Committee independently reviews and oversees the Company's
internal reporting process, and helps ensure that management develops and
adheres to a sound system of internal controls. The Audit Committee also is
responsible for retaining and overseeing the Company's independent auditors, and
facilitates the auditors' objective review and assessment of the Company's
financial statements and its internal reporting practices. The Audit Committee
serves as a forum, separate from management, within which the independent
auditors, among others, can candidly address issues of concern. To specify and
clarify the duties of the Audit Committee, the Company has adopted a formal
written charter. The Audit Committee reviews and reassesses the adequacy of its
charter on an annual basis.
NOMINATING COMMITTEE
The purpose and responsibilities of the Nominating Committee include the
identification of individuals qualified to become board members, the
recommendation to the Board of Directors of nominees to stand for election as
directors at each election of directors, the development and recommendation to
the Board of Directors of a set of corporate governance principles applicable to
the Company, the oversight of the selection and composition of Committees of the
Board of Directors, and the oversight of the evaluations of the Board of
Directors and management. During fiscal 2004, the Nominating Committee consisted
of Messrs. Cleveland, Farone, Pauken and Drs. Helderman and Turner. The
Nominating Committee met one (1) time during 2004. The Nominating Committee will
consider persons recommended by stockholders for inclusion as nominees for
election to the Board of Directors if the names, biographical data, and
qualifications of such persons are submitted in writing in a timely manner
addressed and delivered to the Company's secretary at the address listed herein.
The Nominating Committee identifies and evaluates nominees for the Board of
Directors, including nominees recommended by stockholders, based on numerous
factors it considers appropriate, some of which may include strength of
character, mature judgment, career, diversity, and the extent to which the
nominee would fill a present need on the Board of Directors. As discussed above,
the members of the Nominating Committee are independent, as that term is defined
by the listing standards of the Exchange.
5
COMPENSATION COMMITTEE
The Board of Directors has appointed a Compensation Committee,
consisting of independent members of the Board of Directors, to review and
approve corporate goals and objectives relevant to the compensation of the Chief
Executive Officer, evaluate the performance of the Chief Executive Officer in
light of those goals and objectives, and determine and approve the compensation
level of the Chief Executive Officer based on this evaluation. For Fiscal Year
2004, the members of the Compensation Committee were Messrs. Robert C. Farone,
Thomas W. Pauken and Dr. J. Harold Helderman. The Compensation Committee also
recommends to the Board of Directors with respect to, or, as directed by the
Board of Directors, determines and approves, compensation of the other executive
officers, and considers the grant of stock options to the executive officers
under the 1996 Stock Option Plan. The Compensation Committee makes every effort
to ensure that the compensation plan is consistent with the Company's values and
is aligned with the Company's business strategy and goals. The Compensation
Committee held three (3) meetings during fiscal 2004.
The compensation program for executive officers consists primarily of
base salary, incentive bonuses, annual discretionary bonuses, and long-term
incentives in the form of stock options. Executives also participate in various
other benefit plans, including medical and retirement plans that generally are
available to all employees.
The Company's philosophy is to pay base salaries to executives at levels
that enable the Company to attract, motivate, and retain highly qualified
executives, taking into account the possibility of performance-based bonuses.
The bonus program is designed to reward individuals for performance based on the
Company's financial results as well as the achievement of personal and corporate
objectives that contribute to the long-term success in building stockholder
value. Stock option grants are intended to result in minimal or no rewards if
the price of the Company's common stock does not appreciate, but may provide
substantial rewards to executives as stockholders in general benefit from stock
price appreciation.
Each of Messrs. Mayer and Kruger is a party to an employment agreement
which provides for designated base salaries plus incentive compensation based on
the performance of the Company and the employees as determined by the Board of
Directors.
SHAREHOLDER COMMUNICATIONS WITH DIRECTORS
At the 2005 Annual Meeting of the Board of Directors, following the
Annual Meeting of Shareholders, the Board intends to adopt new policies and
procedures relating to shareholder communications with the Company's directors.
It is presently anticipated that this initiative will provide that shareholders
and other interested parties wishing to contact any member (or all members) of
the Board of Directors, any committee of the Board, or any chair of any such
committee may do so by mail, addressed, either by name or title, to the Board of
Directors or to any such individual directors or group or committee of
directors, and that all such correspondences should be sent to the Company's
principal office. It is also anticipated that all shareholder communications to
directors will be opened by the Office of the Corporate Secretary for the
purpose of determining whether the contents represent a message to the directors
before being forwarded to the addressee. In addition, the Corporate Secretary's
office will make, if necessary, sufficient copies of the contents to be
forwarded to each director who is a member of the group or committee to which
the communication is addressed. It is further anticipated that the new director
communications policy will exclude the forwarding to directors of certain kinds
of information, such as materials in the nature of advertising, promotions of a
product or service, and patently offensive material.
6
COMPENSATION OF DIRECTORS
The Company's outside Directors receive a $6,000 annual retainer, $1,500
per meeting for attendance at Board meetings, and $500 per telephonic meeting,
plus reimbursement of out-of-pocket expenses. The Chairman of the Board receives
$1,000 per month for his services as Chairman. Additionally, the Company's
Directors are eligible to participate in the Company's 1996 Stock Option Plan.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The rules of the Securities and Exchange Commission require our
directors, officers, and persons who own more than ten percent (10%) of a
registered class of our equity securities to file reports of ownership and
changes in ownership with the Commission. The regulations also require that such
persons to furnish the Company with copies of all such reports they file. To our
knowledge, based solely upon our review of the copies of such reports received
by us during the fiscal year ended September 30, 2004 and representations from
our officers, directors and ten percent (10%) shareholders, the Company believes
that each person who, at any time during Fiscal Year 2004 was a director,
officer, or beneficial owner of more than ten percent (10%) of our common stock,
complied with all Section 16(a) filing requirements during the such year.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
THE ELECTION OF ALL EIGHT (8) NOMINEES.
----------------------
PROPOSAL II
AMENDMENT TO THE 1996 STOCK OPTION PLAN
The Company has a 1996 Stock Option Plan (the "1996 Plan") to attract,
maintain and develop management by encouraging ownership of the Company's common
stock by Directors, Officers and other key employees. The 1996 Plan presently
reserves 3,500,000 shares of the Company's common stock for issuance thereunder.
As of January 8, 2005, options have been issued to purchase 3,367,097 shares
leaving 132,903 shares available for issuance under the 1996 Plan. Unless sooner
terminated, the 1996 Plan will expire on February 27, 2006.
The Board of Directors of the Company has unanimously approved for
submission to a vote of the shareholders a proposal to amend the 1996 Plan to
provide for an increase in the number of shares reserved for issuance under the
1996 Plan from 3,500,000 shares of common stock to 4,000,000 shares of common
stock. The Board of Directors believes it is in the Company's and its
shareholders' best interests to approve the Amendment because it will provide
sufficient shares remaining under the Plan to enable the Board to utilize stock
based incentive compensation for both current and future employees of the
Company.
The proposed amendment will cause Section 3.1 of the Plan to be replaced
with the following:
3.1 SHARES SUBJECT TO PLAN. THE STOCK SUBJECT TO THE OPTIONS
GRANTED UNDER THE PLAN SHALL BE SHARES OF THE COMPANY'S
AUTHORIZED BUT UNISSUED COMMON STOCK, PAR VALUE $.01 PER
SHARE ("COMMON STOCK"). THE TOTAL NUMBER OF SHARES THAT
MAY BE ISSUED PURSUANT TO OPTIONS GRANTED UNDER THE PLAN
SHALL NOT EXCEED 4,000,000 SHARES OF COMMON STOCK.
7
The proposed amendment to the 1996 Plan will be adopted upon receiving
the affirmative vote of holders of a majority of the shares present or
represented by proxy at the Meeting. Except for such amendment, if approved by
the shareholders, the 1996 Plan will remain unchanged.
At January 31, 2005 the closing market price of the Company's shares was
$ 2.37.
SUMMARY OF THE PLAN
The following is a summary of the provisions of the 1996 Plan. This
summary is qualified in its entirety by reference to the 1996 Plan, a copy of
which may be obtained from the Company.
The 1996 Plan authorizes the granting of both incentive stock options,
as defined under Section 422 of the Internal Revenue Code of 1986 ("ISO"), and
non-statutory stock options ("NSSO") to purchase Common Stock. All employees of
the Company and its affiliates are eligible to participate in the 1996 Plan. The
1996 Plan also authorizes the granting of NSSO's to non-employee Directors and
consultants of the Company. Pursuant to the 1996 Plan, an option to purchase
10,000 shares of Common Stock shall be granted automatically to each outside
Director who is newly elected to the Board. In addition, the Plan provides for
the granting of options to purchase 2,500 shares of Common Stock on the date of
each annual meeting of shareholders to each outside Director who has served in
that capacity for at least the past six (6) months and continues to serve
following such meeting.
The Board of Directors or the Compensation and Stock Option Committee is
responsible for the administration of the 1996 Plan and determines the employees
to which options will be granted, the period during which each option will be
exercisable, the exercise price, the number of shares of the Common Stock
covered by each option, and whether an option will be a non-qualified or an
incentive stock option. The exercise price, however, for the purchase of shares
subject to such an option, cannot be less than one hundred percent (100%) of the
fair market value of the Common Stock on the date the option is granted. The
Stock Option Committee has no authority to administer or interpret the
provisions of the 1996 Plan relating to the grant of options to outside
Directors. The Compensation Committee also acts as the Stock Option Committee.
No option granted pursuant to the 1996 Plan is transferable otherwise
than by will or the laws of descent and distribution. The term of each option
granted to an employee under the 1996 Plan is determined by the Board of
Directors or the Compensation and Stock Option Committee, but in no event may
such term exceed ten (10) years from the date of grant. Each option granted to
an outside Director under the 1996 Plan shall be exercisable in whole or in part
during the four (4) year period commencing on the date of the grant of such
option. Any option granted to an outside Director should remain effective during
its entire term, regardless of whether such Director continues to serve as a
Director. The purchase price per share of Common Stock under each option granted
to a Director will be the fair market value of such share on the date of grant.
The vesting period for options granted under the 1996 Plan are set forth
in an option agreement entered into with the optionee. Options granted to an
optionee terminate three (3) years after retirement. In the event of death or
disability, all vested options expire one year from the date of death or
termination of employment due to disability. Upon the occurrence of a "change in
control" of the Company, the maturity of all options then outstanding under the
1996 Plan will be accelerated automatically, so that all such options will
become exercisable in full with respect to all shares that have not been
previously exercised or become exercisable. A "change in control" includes
certain mergers, consolidation, and reorganization, sales of assets, or
dissolution of the Company.
8
FEDERAL INCOME TAX CONSEQUENCES
The holder of an ISO does not realize taxable income upon the grant or
upon the exercise of the option (although the option spread is an item of tax
preference income potentially subject to the alternative minimum tax). If the
stock acquired upon exercise of the options sold or otherwise disposed of within
two (2) years from the option grant date or within one year from the exercise
date then, in general, gain realized on the sale is treated as ordinary income
to the extent of the option spread at the exercise date, and the company
receives a corresponding deduction. Any remaining gain is treated as capital
gain. If the stock is held for at least two (2) years from the grant date and
one year from the exercise date, then gain or loss realized upon the sale will
be capital gain or loss and the Company will not be entitled to a deduction. A
special basis adjustment applies to reduce the gain for alternative minimum tax
purposes.
An optionee does not realize taxable income upon the grant of an NQO. In
general, the holder of a NQO realizes ordinary income in an amount equal to the
difference between the exercise price and the market value on the date of
exercise. The Company is entitled to an expense deduction at the same time and
in a corresponding amount.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
---------------------
PROPOSAL III
APPROVAL AND RATIFICATION OF APPOINTMENT
OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected the firm of Deloitte & Touche
L.L.P., independent public accountants, to be the Company's auditors for the
fiscal year ending September 30, 2005, and recommends that Shareholders vote to
ratify that appointment. Although neither the law nor the governing documents of
the Company requires the submission of this matter to a Shareholder vote, in the
event of a negative vote, the Board of Directors will reconsider its selection
of auditors. Ratification of the appointment of the auditors will require that,
at a meeting where a quorum is present, the votes cast in favor of the
ratification exceed those votes cast opposing ratification. Deloitte & Touche
L.L.P. is expected to have a representative at the Annual Meeting who will be
available to respond to appropriate questions from Shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
---------------------
9
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the cash and non-cash compensation paid
to or accrued to all persons who have served as Chief Executive Officer and
other officers or individuals whose compensation exceeded $100,000 for the
Fiscal Year 2004.
Long Term
Compensation
Awards
------
Annual Compensation
------------------- Securities All Other
Fiscal Underlying Compensation
Name and Principal Position Year Salary ($) Bonus ($) Options (#) (1)($)
--------------------------- ---- ---------- --------- ----------- ------
Roy D. Crowinshield, Ph.D.(2) 2004 21,000 0 100,000 0
Chief Executive Officer
and Interim Chief Executive Officer
Manfred K. Kruger
President and Chief 2004 428,550 0 0 67,600
Operating Officer 2003 352,500 179,700 37,500 76,900
2002 282,500 68,000 50,000 58,600
George Lombardi
Chief Financial Officer 2004 166,500 0 0 0
Treasurer and Secretary 2003 160,125 67,500 20,000 0
2002 152,300 29,000 0 0
Dr. Karl Koschatzky
Vice President of 2004 140,000 0 0 39,100
R & D Worldwide 2003 107,600 32,400 45,000 28,800
2002 91,200 18,750 15,000 17,600
------------
(1) Includes primarily pension contribution and automobile leasing and other
automobile related expenses.
(2) Dr. Crowninshield was appointed Chairman and interim Chief Executive
Officer on July 1, 2004. As CEO of the Company, Dr. Crowninshield
devoted at least one-third of his time on Company affairs for which he
was compensated at the rate of $7,000 per month and was granted options
to purchase 100,000 shares of the Company's Common Stock. Effective
January 1, 2005, Dr. Crowninshield resigned as Chief Executive Officer
and was replaced by Mr. Guy L. Mayer. Dr. Crowninshield remains as
Chairman of the Board.
EMPLOYMENT AGREEMENTS
On December 6, 2004, the Company entered into an employment agreement
with Mr. Guy L. Mayer to serve as Chief Executive Officer (CEO) of the Company,
commencing January 1, 2005. The term of employment is indefinite and terminates
upon written notice by the Company, notice of termination by Mr. Mayer or
termination of employment for cause. Minimum notice of termination by the
Company, except for cause, is one (1) year from the end of any calendar quarter.
Mr. Mayer's employment annual base salary is $300,000. In addition, the
employment agreement provides for a bonus for the balance of the Company's
fiscal year 2005 in an amount up to ninety percent (90%) of his earned salary
for fiscal 2005, subject to the Company realizing certain performance goals
based on revenue and operating income. In addition, on January 3, 2005, Mr.
Mayer was granted a ten (10) year option to purchase 250,000 shares of the
Company's Common Stock, exercisable at the market price ($2.60) on the
10
date of grant, twenty-five percent (25%) vesting on the date of grant and
twenty-five percent (25%) on each of the first three (3) anniversaries.
The Company has an employment agreement with Manfred Kruger, its
President, Chief Operating Officer and Managing Director, International
Operations. Pursuant to that agreement, the term of Mr. Kruger's employment with
the Company commenced on June 16,1997. The agreement is for an indefinite period
and shall terminate upon written notice by the Company, notice of his election
to terminate, or the Company terminates his employment for cause. Minimum notice
of termination by the Company, except for cause, is one (1) year from the end of
a calendar quarter. Mr. Kruger's annual base salary commencing April 1, 2005
will be $320,000. In addition, the employment agreement provides for an annual
bonus in an amount up to forty-seven percent (47%) of his annual base salary,
subject to the satisfaction of reasonable performance goals established by the
board. In addition, Mr. Kruger has a "change of control" agreement whereby he is
entitled to twelve (12) months salary in the event he is terminated as the
result of a change of control of the Company.
The Company has a severance agreement with George Lombardi, its Chief
Financial Officer, Treasurer and Secretary. Pursuant to that agreement, upon
written notice of his termination at least six weeks before the end of a
calendar quarter, the Company will provide Mr. Lombardi with six (6) months
salary including medical benefits. Mr. Lombardi's annual base salary is
currently $166,500. The Company also provides a management incentive bonus in an
amount up to forty-one percent (41%) of his annual salary, subject to the
satisfaction of reasonable performance goals established by the board. In
addition, Mr. Lombardi has a "change of control" agreement whereby he is
entitled to twelve (12) months salary including medical benefits in the event he
is terminated as the result of a change of control of the Company.
MANAGEMENT BONUS INCENTIVE PLAN
The Company provides a management bonus incentive plan based on
operating goals agreed upon by the Board of Directors and individual MBO's
(Management by Objectives), both established on or about the beginning of each
fiscal year. The incentive bonus can range up to forty-one percent (41%) of
salary for key managers to forty-seven percent (47%) for the President and Chief
Operating Officer to ninety percent (90%) for the Chief Executive Officer.
OPTION GRANTS IN FISCAL YEAR 2004
OPTION GRANTS IN FISCAL YEAR 2004
(Individual Grants)
Potential Realizable
Value at Assumed
Number of Percent of Annualized Rates of
Securities Total Stock Price
Underlying Options Exercise or Appreciation for
Options Granted To Base Price Expiration Option Term (1)
Granted (#) Employees ($/Sh) Date 5% 10%
----------- ---------- ----------- ----------- ---------- --------
Roy D. Crowninshield, Ph.D. 100,000 44.4% $3.75 8/5/2014 $610,835 $972,653
(1) Potental realizable value is based on the assumption that the Common
Stock appreciates at the annual rate shown (compounded annually) from
the due date of grant until the expirationof the option term. These
numbers are calculated based on the requirements of the SEC and do not
reflect the Company's estimate of future price growth.
11
The following table sets forth the value of the unexercised options at
September 30, 2004. No options were exercised during this fiscal year. The
market price of the Company's Common Stock at September 30, 2004 was $2.99.
FY-END OPTION VALUES
Number of Unexercised Value of Unexercised
Options at In-the-Money Options at
Name September 30, 2004 September 30, 2004
---- --------------------------------- ---------------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
Roy D. Crowninshield, Ph.D. 25,000 75,000 - 0 - - 0 -
Manfred K. Kruger 568,750 31,250 $ 692,425 - 0 -
George Lombardi 208,000 10,000 $ 230,015 $ 3,200
Dr. Karl Koschatzky 90,418 36,250 $ 119,619 $ 7,200
401(K) PLAN
The Board of Directors of the Company approved a tax-deferred investment
plan (the "401(k) Plan") effective in 1991. All full-time employees of the
Company may elect to participate in the 401(k) Plan, once he or she has
completed six (6) months of service to the Company. Under the 401(k) Plan, a
participating employee is given an opportunity to make an elective contribution
under a salary deferral savings arrangement of up to the maximum allowed by law.
In addition, the Company makes a separate matching contribution, in an amount
equal to fifty percent (50%) of the amount contributed by the employee. An
employee of the Company may elect to retire after attaining age 65. At that
time, the total amount contributed, plus any accumulated earnings, will be used
to provide a lump sum payment to any retiring participant in the 401(k) Plan.
Participants terminating employment prior to normal retirement date will be
fully vested in their own elective contribution. Funds accumulated from the
Company's matching contributions will vest over a six (6) year period. During
Fiscal 2004, Mr. Lombardi participated in the 401(k) Plan at five percent (5%)
of his salary.
EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth certain information regarding the
Company's 1996 Stock Option Plan as of February 1, 2005.
(b) (c)
(a) Number of securities
Weighted-average Remaining available
Number of securities to Exercise price of For future issuance
be Issued upon exercise Outstanding (excluding securities
of Outstanding options, options, Warrants reflected in
Plan Category Warrants and Rights and Rights Column (A))
------------- ------------------- ---------- -----------
Equity compensation plan approved by
Securities holders (1).................. 2,413,768 $2.72 132,903
Equity compensation plan not approved by
Securities holders....................... -0- -0- -0-
--------------- ----------- ------------
Total 2,413,768 $2.72 132,903
(1) Reflects options to purchase shares of the Company's common stock and
shares available for Issuance under the Company's 1996 Stock Option
Plan.
12
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of Messrs. Farone, Pauken and Dr.
Helderman. There are no "interlocks" as defined by the SEC with respect ot any
member of the committee.
COMPENSATION COMMITTEE REPORT
The following Report of the Compensation Committee and the information
under the heading Performance Graph below shall not be deemed incorporated by
reference by any general statement incorporating by reference into any filing
under the Securities Act of 1933 or under the Securities Exchange Act of 1934
together, the "Acts"), except to the extent that the Company specifically
incorporates the information by reference, and shall not otherwise be deemed
filed uner the Acts.
The Compensation Committee oversees the Company's compensation program.
The goals of the Company's compensation program are to attract, retain, motivate
and reward highly qualified management personnel and to provide them with
long-term career opportunities. The Company's compensation philosophy is to
provide its executives with a competitive total compensation package which
motivates superior job performance, the achievement of the Company's business
objectives, and the enhancement of shareholder value.
Compensation of the Company's executive officers is reviewed annually by
the Board of Directors and the Compensation Committee. Changes proposed for
these employees are evaluated and approved by the Compensation Committee on an
individual basis. The Company's general approach to compensating executive
officers is to pay cash salaries which generally are competitive within ranges
of salaries paid to executives of other similar companies, although the Company
does not attempt to meet salary levels of such companies. Instead, the Committee
sets overall compensation at a level it believes to be fair, based upon a
subjective analysis of the individual executive's experience and past and
potential contributions to the Company. The Committee also establishes bonus
goals for executive officers so as to compensate them on a performance basis. To
assist in determining appropriate overall compensation, the Compensation
Committee also reviews information regarding the Company's revenues and income.
Stock option grants to employees of the Company, including the Chief
Executive Oficer, are made at the discretion of the Compensation Committee
pursuant to the Company's 1996 Stock Option Plan. Factors and criteria to be
used by the Committee in the award of stock options include individual
responsibilities, individual prerformenace and direct and indirect contributions
to the profitability performance and direct and indirect contributions to the
profitability of the Company.
Respectfully submitted,
The Compensation Committee
Robert C. Farone
Thomas W. Pauken
J. Harold Helderman, M.D.
13
REPORT OF THE AUDIT COMMITTEE
In connection with its duty to ensure the independence of the Company's
auditors, and consistent with "Independence Standards Board Standard No. 61",
the Audit Committee met with the Company's independent public accountants to
discuss the auditor's independence. Based on those discussions, the Audit
Committee and the independent accountants collectively concluded that there were
no relationships between the auditor and its related entities and the Company
and its related entities, which in the auditor's professional judgment may
reasonably be thought to bear on its independence and no written disclosure of
such relationships by the auditors was warranted under such circumstances. The
Audit Committee received a confirmation letter from the Company's accountants
that, in its professional judgment, the auditor is independent of the Company
within the meaning of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). The Audit Committee also discussed with the independent public
accountants the plans for the audit engagement, approved the services to be
performed, determined the range of audit and non-audit fees, and reviewed the
Company's system of internal accounting and controls.
Following the completion of the auditors' examination of the Company's
financial statements, with management present, the Audit Committee reviewed and
discussed with the independent auditors the results of the auditors' examination
of the financial statements, and the audited financial statements for the fiscal
year ended September 30, 2004 ("Fiscal Year 2004"). In addition, the Audit
Committee and management engaged in an open and frank discussion with the
auditors of such matters as the consistency of the Company's accounting policies
and their application, and the clarity, faithfulness, verifiability, neutrality
and completeness of the accounting information included in the Company's
financial statements, and all other communications required to be addressed by
generally accepted auditing standard, including those describe in "Statement on
Auditing Standards No. 61 - Communications with Audit Committees". Based on the
foregoing reviews and discussions, the Audit Committee recommended to the full
Board of Directors that the Company's audited financial statements be included
in the Company's Annual Report on Form 10-K for Fiscal Year 2004 and filed with
the Securities and Exchange Commission. The Audit Committee also recommended the
reappointment of the independent auditors for the Company's fiscal year ending
September 30, 2005, subject to shareholder approval, and the Board of Directors
concurred in such recommendation.
Respectfully submitted,
The Audit Committee
G. Russell Cleveland
Robert C. Farone
Carlton E. Turner, Ph.D., D.Sc.
14
PERFORMANCE GRAPH
The following graph shows a comparison of cumulative five (5) year total
stockholder returns for the Company's Common Stock, with the cumulative return
of the Nasdaq Stock Market - U.S. Index and an industry peer group. The industry
peer group of companies selected by the Company is made up of the Company's
publicly held competitors in the Medical Device industry. The graph assumes the
investment of $100 on August 17, 2000, the date on which trading commenced on
the American Stock Exchange. The comparisons reflect in the table and graph,
however, are not intended to forcast the future performance of the Common Stock
and may not be indicative of such future performance.
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG TUTOGEN MEDICAL INC.,
AMEX MARKET INDEX AND PEER GROUP INDEX
[PERFORMANCE GRAPH]
Note: Assumes $100 invested on August 17, 2000 and assumes dividends reinvested.
8/17/00 12/31/00 12/31/01 12/31/02 12/31/03
TUTOGEN MEDICAL 100.00 64.71 47.84 51.76 70.75
PEER GROUP INDEX 100.00 87.66 106.68 86.27 126.91
NASDAQ MARKET INDEX 100.00 90.88 86.69 83.23 113.29
15
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock as of February 1, 2005 by (i)
each person known to the Company to own beneficially more than five percent (5%)
of its Common Stock, (ii) each director and executive officer of the Company,
and (iii) all directors and executive officers as a group. As of February 1,
2005 there were approximately 15,915,960 shares of Common Stock issued and
outstanding.
-------------------------------------------------------------------------------------------------------------------
Name and Address Amount and Nature Percentage
of Beneficial Owner of Beneficial Owner (1)(2) of Class (3)
-------------------------------------------------------------------------------------------------------------------
SPV 1996 LP......................................................... 1,896,794 11.92%
101 Finsbury Pavement
London, England
EC2A 1EJ
Zimmer CEP (formerly Centerpulse) USA Holding Co.................... 5,297,124 33.28%
Subsidiary of Zimmer Holdings, Inc.
345 East Main Street
Warsaw, IN 46580
G. Russell Cleveland (4)............................................ 107,300 *
Roy D. Crowinshield, Ph.D. (11)..................................... 35,000 *
Robert C. Farone (5)................................................ 145,814 *
J. Harold Helderman, M.D. (7)....................................... 110,000 *
Dr. Karl Koschatsky (8)............................................. 96,668 *
Manfred K. Kruger (8)............................................... 581,250 3.52%
George Lombardi (8)................................................. 210,500 1.31%
Guy L. Mayer (8).................................................... 62,500 *
Richard J. May (6).................................................. - 0 - -0-
Thomas W. Pauken (9)................................................ 380,540 2.37%
Carlton E. Turner, Ph.D., D.Sc. (8)................................. 60,000 *
All directors and officers as a group (11 persons) (10)............. 7,086,696 41.05%
* Less than one percent (1%)
(1) In accordance with Rule 13d-3 promulgated pursuant to the Exchange Act,
a person is deemed to be the beneficial owner of the security for
purposes of the rule if he or she has or shares voting power or
dispositive power with respect to such security or has the right to
acquire such ownership within sixty (60) days. As used herein, "voting
power" is the power to vote or direct the voting of shares and
"dispositive power" is the power
16
to dispose or direct the disposition of shares, irrespective of any
economic interest therein.
(2) Except as otherwise indicated by footnote, the persons named in the
table have sole voting and investment power with respect to all of the
Common Stock beneficially owned by them.
(3) In calculating the percentage ownership for a given individual or group,
the number of shares of Common Stock outstanding includes unissued
shares subject to options, warrants, rights or conversion privileges
exercisable within sixty (60) days after November 30, 2004 held by such
individual or group.
(4) Includes 50,000 shares of Common Stock issuable upon exercise of options
exercisable within sixty (60) days. Mr. Cleveland is the President and
majority shareholder of Renaissance Capital Group, Inc. His business
address is 8080 N. Central Expressway, Suite 210-LB 59, Dallas, TX
75206.
(5) Includes 50,000 shares of Common Stock issuable upon exercise of options
exercisable within sixty (60) days.
(6) Mr. May serves on the board as representative of Zimmer. Mr. May
disclaims beneficial ownership of the shares owned by Zimmer CEP USA
Holding Co., a subsidiary of Zimmer.
(7) Includes 90,000 shares of Common Stock issuable upon exercise of options
and warrants exercisable within sixty (60) days.
(8) All of the shares of Common Stock beneficially owned by Drs. Koschatzky
and Turner and Messrs. Kruger, Lombardi and Mayer are derivative
securities issuable upon exercise of options exercisable within sixty
(60) days.
(9) Mr. Pauken has beneficial ownership in 330,540 shares of Common Stock,
which includes 120,000 shares of Common Stock issuable upon exercise of
options and warrants exercisable within sixty (60) days and, as Trustee
of Capital Partners II, Ltd. Liquidating Trust, has voting rights to
50,000 shares owned by the Trust.
(10) Includes shares owned by Zimmer CEP USA Holding Co., a subsidiary of
Zimmer.
(11) Includes 25,000 shares of Common Stock issuable upon exercise of options
and warrants exercisable within sixty (60) days.
RELATED TRANSACTIONS
The Company has an exclusive license and distribution agreement with
Zimmer Spine, a wholly owned subsidiary of Zimmer, whereby Zimmer Spine has been
granted the right to act as the Company's exclusive distributor of bone tissue
for spinal applications in the United States. For the year ended September 30,
2004, sales to Zimmer Spine were $4.8 million, which represented sixteen percent
(16%) of the Company's total revenues.
The Company has also engaged Zimmer Dental, also a wholly owned
subsidiary of Zimmer, to act as an exclusive distributor for the Company's bone
tissue for dental applications in the United States and certain international
markets. For the year ended September 30, 2004, Dental was paid commissions
aggregating approximately $3.2 million on revenues of $6.9 million.
Centerpulse, a wholly owned subsidiary of Zimmer is the owner of
approximately thirty-three and three-tenth percent (33.3%) of the Company's
outstanding shares of Common Stock and has representation on the Company's Board
of Directors.
17
PRINCIPAL ACCOUNTING FEES AND SERVICES
The following table represents the aggregate fees billed for
professional audit services rendered to the Company by Deloitte & Touche, L.L.P.
for the audit of the Company's annual financial statements for the years ended
September 30, 2004 and 2003, and all fees billed for other services by Deloitte
& Touche L.L.P. during those periods:
Year Ended September 30, 2004 2003
------------------------ ---- ----
Audit fees (1) $105,500 $126,873
Audit-related fees (2) 27,864 - 0 -
Tax fees (3) 11,462 4,134
All other fees (4) - 0 - 16,212
-------- --------
Total Accounting Fees and Services $144,826 $143,085
(1) AUDIT FEES. These are fees for professional services for the
audit of the Company's annual financial statements, and for the
review of the financial statements included in the Company's
filings on Form 10Q and for services that are normally provided
in connection with statutory and regulatory filings or
engagements.
(2) AUDIT-RELATED FEES. These are fees for the assurance and related
services reasonably related to the performance of the audit or
the review of the Company's financial statements.
(3) TAX FEES. These are fees for professional services with respect
to tax compliance, tax advice, and tax planning.
(4) ALL OTHER FEES. These are fees for permissible work that does
not fall within any of the other fee categories, i.e., Audit
Fees, Audit-Related Fees, or Tax Fees.
PRE-APPROVAL POLICY FOR AUDIT AND NON-AUDIT SERVICES
The Company's Audit Committee has responsibility for the approval of all
audit and non-audit services before the Company engages an accountant. All of
the services rendered to the Company by Deloitte & Touche L.L.P. for the fiscal
years ended September 30, 2004 and 2003 were pre-approved by the Audit Committee
before the engagement of the auditors for such services.
The Company and the Audit Committee are working with the Company's legal
counsel to establish formal pre-approval policies and procedures for all future
engagements of the Company's accountants. In accordance with the rules and
regulations of the U.S. Securities and Exchange Commission relating to the
independence of auditors, the Company's new pre-approval policies and procedures
will be detailed as to particular services, will require that the Audit
Committee be informed of each service, and will prohibit the delegation of any
pre-approval responsibilities to the Company's management.
The Company's pre-approval policy will expressly provide for the annual
pre-approval of all audit, audit-related and all non-audit services proposed to
be rendered by the independent auditor for the fiscal year, as specifically
described in the auditor's engagement letter, such annual pre-approval to be
performed by the Audit Committee. The new policy will also provide that all
additional engagements of the auditor that were not approved in the annual
pre-approval process, and all engagements that are anticipated to exceed
previously approved thresholds, shall be presented by the President or Chief
Financial Officer of the Company to the Audit Committee for pre-approval, on a
case-by-case basis, before management engages the auditors for any such
purposes. The Audit Committee may be authorized
18
to delegate, to one or more of its members, the authority to pre-approve certain
permitted services, provided that the estimated fee for any such service does
not exceed a specified dollar amount.
All pre-approvals shall be contingent on a finding, by the Audit
Committee, or delegates thereof, as the case may be, that the provision of the
proposed services by the Company's auditor is compatible with the maintenance of
the auditor's independence in the conduct of its auditing functions. In no event
shall any non-audit related service be approved that would result in the
independent auditor no longer being considered independent under the applicable
rules and regulations of the Securities and Exchange Commission.
VOTING SECURITIES
Under the Florida Business Corporation Act ("FBCA"), directors are
elected by a plurality of the votes cast at a meeting in which a quorum is
present. In connection with an election of directors, votes may be cast in favor
of, or withheld from, each nominee. Votes withheld from a nominee will be
counted in determining whether a quorum has been reached. However, since
directors are elected by a plurality, votes withheld from a nominee or nominees
will be excluded entirely and will not be counted as a vote cast in an election
of directors.
In connection with the proposals to ratify the Company's auditors, votes
may be cast "For" or "Against" a proposal, or a Shareholder may "Abstain" from
voting on the proposal or proposals. Under the FBCA, at a meeting where a quorum
is present, all matters submitted to Shareholders (other than an election of
directors) are approved if the vote's cast in favor of the action exceeds the
vote's cast in opposition to the matter presented (unless the Articles of
Incorporation or state law requires a greater number of votes). Accordingly,
with respect to any proposal coming before the Annual Meeting, other than the
election of Directors, all abstentions and broker non-votes will be counted as
present for purposes of determining the existence of a quorum, but since they
are neither a vote cast in favor of, or a vote cast against, a proposed action,
abstentions and broker non-votes will not be counted as a vote cast on any
matter coming before the meeting. A broker non-vote generally occurs when a
broker, who holds shares in street name for a customer, does not have authority
to vote on certain non-routine matters because its customer has not provided any
voting instructions on the matter.
Each Common Share outstanding on the Record Date entitles the record
holder thereof to cast one vote with respect to each matter to be voted upon.
DEADLINE FOR SUBMITTING SHAREHOLDER PROPOSALS
FOR THE 2006 ANNUAL MEETING
Under the applicable laws of the Securities and Exchange Commission,
Shareholder proposals may be eligible for inclusion in the Company's proxy
statement and form of proxy that are mailed to all Shareholders in advance of
the annual meeting. A Shareholder is eligible to submit a proposal for inclusion
in the Company's proxy materials, if at such time the Shareholder owns at least
one percent (1%) or $2,000 in market value of the Company's Common Stock. In
addition, the Shareholder must have held such shares for at least one (1) year,
and must continue to own such shares through the date of the 2005 Annual
Meeting. Eligible Shareholders who wish to submit a proposal for inclusion in
the Company's proxy materials for the 2005 Annual Meeting of Shareholders should
submit the proposal(s), in writing, to the Office of the Secretary of the
Company at the address set forth on the first page of this Proxy Statement. All
such proposals must be received at the Office of the Secretary no later than
November 15, 2005. The proposal must be in the form required by applicable rules
of the Commission.
19
Alternatively, Shareholders who wish to have a proposal presented at the
2006 Annual Meeting, but are not seeking to include the proposals in the
Company's written proxy materials mailed to shareholders prior to the meeting,
should submit the proposals to the Office of the Secretary of the Company
between December 15, 2005 and January 31, 2006. There are no shareholder
eligibility requirements for Shareholders who not seeking to include their
proposals in the Company's written proxy materials. However, the proposals must
include (i) a brief description of the matter to be brought before the Annual
Meeting and the reasons therefore, (ii) the name and record address of the
Shareholder proposing the matter, (iii) the class and number of shares
beneficially owned by the Shareholder, (iv) any material interest of the
Shareholder, an immediate family member of the Shareholder, or an affiliate of
the Shareholder in the proposed matter; and (v) any other information which is
reasonably required in order to make the proposal not materially misleading. If
the Chairman of the 2005 Annual Meeting determines that a matter has not been
properly brought before the meeting in accordance with the foregoing procedures,
such matter will not be presented and no action will be taken thereon at the
Annual Meeting.
ANNUAL REPORT
The Company's annual report for the year ended September 30, 2004 (the
"Annual Report") accompanies this proxy statement. The Annual Report contains a
copy of the Company's Form 10-K Report (without exhibits) for the year then
ended.
SOLICITATION COSTS
The Company will bear the costs of preparing, assembling and mailing the
Proxy Statement, the proxy card, and the 2004 Annual Report in connection with
the Annual Meeting. In addition to the use of the mail to solicit proxies for
the Annual Meeting, certain employees of the Company may be utilized by the
Company to solicit Shareholders' proxies by telephone, telegraph or in person.
Such employees will not receive additional compensation for such services to the
Company. Arrangements may be made with banks, brokerage houses, and other
institutions, nominees, and fiduciaries, to forward the proxy materials to
beneficial owners and to obtain authorization from beneficial owners for the
execution of proxies. The Company will, upon request, reimburse those persons
and entities for expenses incurred in forwarding proxy materials to beneficial
owners.
OTHER MATTERS
At the time of the preparation of this Proxy Statement, the Board of
Directors of the Company had not been informed of any matters which would be
presented for action at the 2005 Annual Meeting, other than the proposals
specifically identified in the Notice of Annual Meeting of Shareholders and
described above. If any other matters are properly submitted for action at the
Annual Meeting, it is intended that the persons named in the accompanying proxy
card will vote or refrain from voting on such matters in accordance with their
best judgment, after consultation with the Board of Directors.
By Order of the Board of Directors
Roy D. Crowinshield, Ph.D.
CHAIRMAN OF THE BOARD
February 8, 2005
West Paterson, New Jersey
20
[LOGO] Tutogen Medical, Inc.
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ANNUAL MEETING PROXY CARD
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A ELECTION OF DIRECTORS
1. The Board of Directors recommends a vote FOR the listed nominees.
FOR WITHHOLD FOR WITHHOLD
01 - G. Russell Cleveland [ ] [ ] 05 - Guy L. Mayer [ ] [ ]
02 - Robert C. Farone [ ] [ ] 06 - Thomas W. Pauken [ ] [ ]
03 - Richard J. May [ ] [ ] 07 - Carlton E. Turner [ ] [ ]
04 - J. Harold Helderman [ ] [ ] 08 - Roy D. Crowninshield [ ] [ ]
B ISSUES
The Board of Directors recommends a vote FOR the following proposals.
FOR AGAINST ABSTAIN
2. Amend the Company's 1996 Incentive and
Non-Statutory Stock Option Plan [ ] [ ] [ ]
increasing the total number of shares
covered by the Plan from 3,500,000 to
4,000,000.
3. Ratify the appointment of Deloitte and Mark box at the right if you plan to
Touche L.L.P. as the Company's auditors [ ] [ ] [ ] attend the meeting. [ ]
for the 2005 fiscal year.
4. In their discretion, on such other
business as may properly come before the
meeting. [ ] [ ] [ ]
C AUTHORIZED SIGNATURES - SIGN HERE - THIS SECTION MUST BE COMPLETED FOR YOUR INSTRUCTIONS TO BE EXECUTED.
NOTE: Please sign your name here exactly as it appears hereon. Joint owners should each sign. When signing as an
attorney, executor, administrator, trustee, guardian, corporate officer or other similar capacity, so indicate. If the
owner is a corporation, an authorized officer should sign for the corporation and state his title. This Proxy shall be
deemed valid for all shares held in all capacities that they are held by the signatory.
Signature 1 - Please keep signature within Signature 2 - Please keep signature within Date (mm/dd/yyyy)
the box the box
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PROXY - TUTOGEN MEDICAL, INC.
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ANNUAL MEETING OF SHAREHOLDERS MARCH 14, 2005
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned holder of Common Shares of Tutogen Medical, Inc., a corporation
organized under the laws of the state of Florida, does hereby appoint Roy D.
Crowninshield and Guy L. Mayer, and each of them, as due and lawful
attorneys-in-fact (each of whom shall have full power of substitution), to
represent and vote as designated below all of the Common Shares of Tutogen
Medical, Inc. that the undersigned held of record at 5:00 p.m., Eastern Standard
Time, on February 1, 2005 at the Annual Meeting of Shareholders of Tutogen
Medical, Inc. to be held at the Doubletree Hotel, located at the Dallas Campbell
Centre, 8250 North Central Expressway, Dallas, Texas 75206 on March 14, 2005, at
10:00 a.m., local time, or any adjournment thereof, on the following matters,
and on 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 SHAREHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR THE
ELECTION OF ALL NOMINEES AS DIRECTORS; THE AMENDMENT OF THE COMPANY'S STOCK
OPTION PLAN; AND FOR THE RATIFICATION OF THE AUDITORS.
(PLEASE SIGN, DATE, AND RETURN THIS PROXY CARD EXACTLY AS YOUR NAME OR NAMES
APPEAR ON THE REVERSE SIDE, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING.)