UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
SCHEDULE
14A
PROXY
STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE
ACT OF 1934 (Amendment No. )
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by
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Preliminary
Proxy Statement
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Confidential,
for Use of the Commission only (as permitted by
Rule 14a-6(e)(2))
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| x |
Definitive
Proxy Statement
|
| o |
Definitive
Additional Materials
|
| o |
Soliciting
Material Pursuant to 240.14a-12
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TUTOGEN
MEDICAL, INC.
|
|
(Name
of Registrant as Specified In Its
Charter)
|
|
(Name
of Person(s) Filing Proxy Statement, if other than the
Registrant)
|
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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
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TUTOGEN
MEDICAL, INC.
13709
Progress Blvd., Box 19
Alachua,
Florida 32615
February
5, 2007
Dear
Shareholder:
On
behalf of
the Board of Directors, I cordially invite you to attend the 2007 Annual
Meeting
of the Shareholders of Tutogen Medical, Inc. (the "Company"), which will
be held
on March 19, 2007 at the Best Western Gateway Grand Hotel, 4200 NW
97th
Blvd.,
Gainesville, Florida 32606 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 2006 Stock Option Plan increasing the total number of shares covered
by the plan from 1,000,000 to 1,500,000, (iii) to ratify the appointment
of
Deloitte and Touche, L.L.P. as the Company’s auditors for the fiscal year ending
September 30, 2007 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 2007 Annual Meeting of Shareholders.
Very
truly
yours,
/s/
ROY
D.
CROWNINSHIELD
ROY
D.
CROWNINSHIELD
Chairman
of the
Board
TUTOGEN
MEDICAL, INC.
13709
Progress Blvd., Box 19
Alachua,
Florida 32615
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
To
Be Held March 19, 2007
TO
THE SHAREHOLDERS OF TUTOGEN MEDICAL, INC.:
NOTICE
IS HEREBY GIVEN
that the
2007 Annual Meeting of the Shareholders of Tutogen Medical, Inc., a Florida
corporation (the "Company") will be held on March 19, 2007 at the Best Western
Gateway Grand Hotel, 4200 NW 97th
Boulevard, Gainesville, Florida, 10:00 a.m. local time, to act on the following
matters:
| 1. |
To
elect eight (8) directors to serve until the 2008 Annual Meeting
of
Shareholders and until their respective successors shall be duly
elected
and qualified;
|
| 2. |
To
amend the company’s 2006 Stock Option Plan increasing the total number of
shares covered by the plan from 1,000,000 to
1,500,000.
|
| 3. |
To
ratify the appointment of Deloitte and Touche L.L.P. as the Company’s
independent auditors for the fiscal year ending September 30, 2007;
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 5,
2007
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
/s/
Roy
D.
Crowninshield
Roy
D. Crowninshield,
Chairman
of the Board
Alachua,
Florida
February
5, 2007
TUTOGEN
MEDICAL, INC.
13709
Progress Blvd., Box 19
Alachua,
Florida 32615
PROXY
STATEMENT
ANNUAL
MEETING OF SHAREHOLDERS
To
Be Held March 19, 2007
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 2007 Annual Meeting
of
Shareholders to be held on March 19, 2007 at 10:00 a.m. (the "Annual Meeting")
and at any adjournment thereof. The Annual Meeting will be held at the Best
Western Gateway Grand Hotel, 4200 NW 97th
Boulevard, Gainesville, Florida.
At
the
Annual Meeting, Shareholders will be asked to consider and vote on (i) the
election of eight (8) directors, (ii) to amend the Company’s 2006 Stock Option
Plan increasing the total number of shares covered by the plan from 1,000,000
to
1,500,000, and (iii) the ratification of Deloitte and Touche L.L.P. as the
Company's auditors for the fiscal year ending September 30, 2007. 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 nominees
for
directors, FOR the adoption of the 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 5, 2007
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 5, 2007 there were 16,655,855 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
14, 2007. 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 2008 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
|
Name
of Nominee
|
Age
|
Positions/Offices
|
Period
Served in
Office/Position
|
|
G.
Russell Cleveland
|
68
|
Director
|
1997
- present
|
|
Roy
D. Crowninshield, Ph.D.
|
58
|
Chairman
of the Board
Director
|
July
2004 - present
2003
- present
|
|
Neal
B. Freeman
|
66
|
Director
|
June
2005 - present
|
|
J.
Harold Helderman, MD
|
61
|
Director
|
1997
- present
|
|
Udo
Henseler, PH.D.
|
67
|
Director
|
June
2005 - present
|
|
Guy
L. Mayer
|
55
|
President
& Chief Executive Officer
Director
|
January
2005 - present
January
2005 - present
|
|
Adrian
J. R. Smith
|
62
|
Director
|
June
2005 - present
|
|
Carlton
E. Turner, Ph.D., D.Sc.
|
66
|
Director
|
2000
- present
|
2
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.
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., Camino-Soft, Inc.
and Precis, Inc.
Roy
D. Crowninshield, Ph.D. is
the
current Chairman of the Board. From July 2004 to December 2004, Dr.
Crowninshield was the Interim Chief Executive Officer of the Company. Prior
to
joining Tutogen, Dr. Crowninshield served twenty-one (21) years in various
capacities at Zimmer Holdings, Inc., including President of Zimmer's U.S.
operations and most recently as the Company's Chief Scientific Officer. Prior
to
joining Zimmer, Inc. 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 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.
Neal
B. Freeman is
the
Chairman and Chief Executive Officer of The Blackwell Corporation (since 1981),
an advisory firm, with clients in the communications, defense and wealth
management industries. He is also Chairman of the Foundation Management
Institute; Chairman of the Board of Advisors of the investment advisory firm,
Train Babcock Advisors and Director of North American Management
Corp.
J.
Harold Helderman, MD
is the
Dean of Admissions and Professor of Medicine, Microbiology and Immunology (since
1999) at Vanderbilt University, Nashville, Tennessee, and the Medical Director
of the Vanderbilt Transplant Center (since 1989). 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.
Udo
Henseler, Ph.D., is
President and principal/owner of Management Services International (“MSI”), a
private business since 1994. MSI provides business development services for
biotechnology and life sciences firms at various stages of their corporate
evolution. From 2002 to 2005 Dr. Henseler was the Chief Executive Officer and
Chairman of eGene, Inc., a public biotechnology company, and further served
as a
Director in 2006. Dr. Henseler has over forty (40) years combined global public
and private company financial and operations leadership experience in the
biopharmaceutical and life science sectors, including positions as Director,
Chief Financial Officer and/or Executive Vice President. Dr. Henseler earned
his
B.A. in Germany, and Master's and Ph.D. degrees from the Claremont Graduate
University in Claremont, California. Dr. Henseler is also a Certified Public
and
Certified Management Accountant and currently serves as Director and Chair
of
the Audit Committee of Spire Corporation, a public company.
3
Adrian
J. R. Smith
has been
Chief Executive Officer of The Woolton Group since 1997, a strategic advisory
group. His business career includes 13 years in the professional services
industry and 26 years with two Fortune 500 companies. He has been a Global
Managing Partner, Marketing & Communication at Deloitte & Touche, the
Chief Executive Officer of Grant Thornton LLP, and a Managing Partner at Arthur
Andersen in the early to mid-1990’s. He held senior international management
roles with Ecolab Inc. and also with Procter & Gamble. Mr. Smith serves on
the board of the Education Foundation of Indian River County in
Florida.
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, 2006 ("Fiscal Year 2006"), the Board of
Directors of the Company held a total of three (3) regular and three (3) special
meetings. Each of the directors attended at least seventy-five percent (75%)
of
the total number of meetings of the Board of Directors and the various committee
meetings. 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, Freeman and Smith and Drs. Crowninshield,
Helderman, Henseler 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 the
Company.
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 2006, the members of the Audit Committee were Messrs. Cleveland,
Smith and Dr. Henseler. The Committee met seven (7) times during Fiscal Year
2006. 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 Dr.
Henseler has a professional certification in accounting, Mr. Cleveland and
Mr.
Smith each has significant employment experience as a Chief Executive Officer
with financial oversight responsibilities. The Company believes that Mr.
Cleveland, Mr. Smith and Dr. Henseler 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 2006, the Nominating Committee consisted
of Messrs. Smith and Freeman and Drs. Helderman and Henseler. The Nominating
Committee met one (1) time during 2006. 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 2006, the members
of
the Compensation Committee were Drs. Helderman and Turner and Mr. Freeman.
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 2006 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 four (4) meetings
during fiscal 2006.
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.
Shareholder
Communications with Directors
The
Board
recently adopted new policies and procedures relating to shareholder
communications with the Company's directors. It provides 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. Such 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. 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.
Compensation
of Directors
The
Company's outside Directors receive a $6,000 annual retainer, $1,500 per meeting
for attendance at in-person Board meetings, and $500 per telephonic meeting,
$500 per committee 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 outside Directors each receive annually options
to
purchase 12,000 shares of the Company’s common stock.
6
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. The Company believes that
the
reporting requirements, under Section 16(a) of the Exchange Act, for all its
executive officers, directors, and each person who is the beneficial owner
of
more than 10% of the common stock of a company were satisfied except for the
following: Messrs. Helderman and Turner filed one late Form 4 Report, each
relating to two transactions and Messrs. Crowninshield, Freeman, Henseler and
Smith filed one late Form 4 Report, each relating to one
transaction. All of the aforesaid transactions involved the granting
or exercise of an option. In addition, Mr. Johnston did not file a Form 3 Report
when he became the chief financial officer of the company
The
Board of Directors recommends a vote FOR
the
election of all eight (8) Nominees.
______________________
PROPOSAL
II
AMENDMENT
TO THE 2006 STOCK OPTION PLAN
The
Company has a 1996 Stock Option Plan (“1996 Plan”) and a 2006 Stock Option Plan
(the "2006 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 expired in 2006. The 2006 Plan presently reserves
1,000,000 shares of the Company's common stock for issuance thereunder. As
of
January 31, 2007, there were options outstanding under the 1996 Plan to purchase
1,756,718 shares and options outstanding under the 2006 Plan to purchase 440,000
shares, leaving 560,000 shares available for issuance under the 2006 Plan.
Unless sooner terminated, the 2006 Plan will expire on March 13, 2016.
The
Board
of Directors of the Company has unanimously approved for submission to a vote
of
the shareholders a proposal to amend the 2006 Plan to provide for an increase
in
the number of shares reserved for issuance under the 2006 Plan from 1,000,000
shares of common stock to 1,500,000 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
an
aggregate of 1,500,000 shares of Common
Stock.
|
7
The
proposed amendment to the 2006 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 2006 Plan will remain unchanged.
At
January 31, 2007 the closing market price of the Company's shares was $6.50
Summary
of the Plan
The
following is a summary of the provisions of the 2006 Plan. This summary is
qualified in its entirety by reference to the 2006 Plan, a copy of which may
be
obtained from the Company.
The
2006
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 2006 Plan. The 2006 Plan
also authorizes the granting of NSSO's to non-employee Directors and consultants
of the Company. Pursuant to the 2006 Plan, an option to purchase 12,000 shares
of Common Stock shall be granted automatically to each outside
Director.
The
Board
of Directors or the Compensation Committee is responsible for the administration
of the 2006 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 Compensation Committee has no authority
to
administer or interpret the provisions of the 2006 Plan relating to the grant
of
options to outside Directors.
No
option
granted pursuant to the 2006 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 2006 Plan is determined by the Board of Directors or the Compensation
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 2006 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 2006 Plan is set forth in an option
agreement entered into with the optionee. Options granted to an optionee
terminate three (3) months after termination of employment except for death
or
permanent disability. In the event of death or disability, all vested options
expire one hundred eighty (180) days 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 2006 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, termination of employment except as a result
of death or disability, 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 an 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 and Touche, L.L.P., independent
public accountants, to be the Company's auditors for the fiscal year ending
September 30, 2007, 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 compensation awarded to, or paid to all persons
who have served as Chief Executive Officer, other executive officers and Dr.
Karl Koschatzky, Managing Director of the Company’s German subsidiary whose
compensation exceeded $100,000 for this period.
|
Annual
Compensation
|
Long Term Compensation | ||||||||||||||||||||||||
|
Awards
|
Payouts
|
||||||||||||||||||||||||
|
Other
|
Restricted
|
Securities
|
|||||||||||||||||||||||
|
Annual
|
Stock
|
Underlying
|
LTP
|
All
Other
|
|||||||||||||||||||||
|
Name
And Principal
|
Fiscal
|
Salary
|
Bonus
|
Compensation
|
Award(s)
|
Options
|
Payouts
|
Compensation
|
|||||||||||||||||
|
Position
|
Year
|
($)
|
($)
|
($)
|
($)
|
(#)
|
($)
|
(1)($)
|
|||||||||||||||||
|
Guy
L. Mayer (2)
|
2006
|
315,000
|
96,390
|
0
|
0
|
0
|
37,900
|
||||||||||||||||||
|
Chief
Executive Officer
|
2005
|
225,000
|
24,300
|
0
|
0
|
300,000
|
0
|
0
|
|||||||||||||||||
|
L.
Robert Johnston, Jr.
|
2006
|
149,100
|
21,803
|
0
|
0
|
60,000
|
0
|
26,300
|
|||||||||||||||||
|
Chief
Financial Officer (3)
|
|||||||||||||||||||||||||
|
Dr.
Karl Koschatzky
|
2006
|
157,200
|
9,200
|
0
|
0
|
0
|
0
|
47,600
|
|||||||||||||||||
|
Managing
Director
|
2005
|
148,700
|
13,100
|
0
|
0
|
0
|
0
|
51,100
|
|||||||||||||||||
|
German
Subsidiary
|
2004
|
140,000
|
0
|
0
|
0
|
0
|
0
|
39,100
|
|||||||||||||||||
|
Claude
O. Pering
|
2006
|
141,900
|
24,131
|
0
|
0
|
10,000
|
0
|
7,300
|
|||||||||||||||||
|
Vice
President - US
|
2005
|
83,100
|
20,925
|
0
|
0
|
50,000
|
0
|
0
|
|||||||||||||||||
|
Operations
|
|||||||||||||||||||||||||
|
Clifton
J. Seliga
|
2006
|
141,900
|
24,131
|
0
|
0
|
0
|
0
|
16,300
|
|||||||||||||||||
|
Vice
President - US
|
2005
|
83,100
|
20,925
|
0
|
0
|
50,000
|
0
|
0
|
|||||||||||||||||
|
Sales
and Marketing
|
|||||||||||||||||||||||||
| (1) |
Includes
401(k) contributions, relocation, car allowances and expenses, and
pension
costs.
|
| (2) |
Mr.
Mayer was appointed Chief Executive Officer on January 1,
2005.
|
| (3) |
Mr.
Johnston was appointed Chief Financial Officer of the Company in
February
2006.
|
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
current annual base salary is $347,000. In addition, the employment agreement
provides for a bonus for the balance of the Company's fiscal year 2006 in an
amount up to 60% of his earned salary for fiscal 2006, subject to the Company
realizing certain performance goals based on revenue and operating income.
In
addition, Mr. Mayer was granted a ten (10) year option, upon commencement of
employment, to purchase 250,000 shares of the Company's common stock,
exercisable at the market price on the date of grant, 25% on the date of grant
and 25% on each of the first three (3) anniversaries. For his performance during
2005 Mr. Mayer was granted a ten (10) year option to purchase 50,000 shares
of
the Company’s common stock, exercisable at the market price on the date of
grant, 25% on the date of the grant and 25% of the first three (3)
anniversaries. Mr. Mayer has a “change of control” agreement whereby he is
entitled to 24 months salary including medical benefits, in the event he is
terminated as a result of a change of control of the Company.
10
In
connection with their employment, the Company has agreed to a six (6) month
severance package for Messrs. Pering and Seliga in the event of termination
due
to 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 thirty percent (30%) of salary for key managers
and up to sixty percent (60%) for the Chief Executive Officer.
Option
Grants in Fiscal Year 2006
The
following table provides information as to options granted to the Company's
Chief Executive Officer and other Executive Officers during the fiscal year
ended September 30, 2006. All such options were granted under the Company's
1996
Stock Option Plan.
|
Number
of
Securities
Underlying
Options
Granted
(#)
|
Percent
of Total
Options
Granted
to
Employees
|
Exercise
or
Base
Price
($/Sh)
|
Expiration
Date
|
Potential
Realizable
Value
at Assumed
Annualized
Rates of
Stock
Price Appreciation
for
Option Term (2)
5%
10%
|
|||||||||||||||
|
L.
Robert Johnston, Jr. (1)
Claude
O. Pering
|
60,000
10,000
|
56%
9
|
$
$
|
2.95
3.12
|
01/17/2016
12/05/2015
|
$
$
|
111,314
19,622
|
$
$
|
282,092
49,725
|
||||||||||
(1)
Stock
options related to Mr. Johnston’s appointment as the new Chief Financial Officer
of the Company in February 2006.
(2)
Potential 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 expiration of 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,
2006. No options were exercised during this fiscal year. The market price of
the
Company's common stock at September 30, 2006 was $4.50.
Fiscal
Year-End Option Values
|
Number
of Unexercised
Options
at
September
30, 2006
|
Value
of Unexercised
in-the-Money
Options at
September
30, 2006
|
||||||||||||
|
Name
|
Exercisable
|
Unexercisable
|
Exercisable
|
Unexercisable
|
|||||||||
|
Guy
L. Mayer
|
150,000
|
150,000
|
$
|
245,750
|
$
|
245,750
|
|||||||
|
L.
Robert Johnston, Jr.
|
15,000
|
45,000
|
23,250
|
69,750
|
|||||||||
|
Dr.
Karl Koschatzky
|
115,418
|
11,250
|
282,950
|
18,338
|
|||||||||
|
Claude
O. Pering
|
12,500
|
47,500
|
14,750
|
58,050
|
|||||||||
|
Clifton
J. Seliga
|
12,500
|
37,500
|
14,750
|
44,250
|
|||||||||
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 four (4) year period.
12
Equity
Compensation Plan Information
The
following table sets forth certain information regarding the Company's equity
compensation plans as of September 30, 2006.
|
Plan
Category
|
Number
of securities to
be
Issued upon exercise
of
Outstanding options,
warrants
and rights
|
Weighted-average
Exercise
price of
Outstanding
options,
Warrants
and rights
|
Number
of securities
Remaining
available
For
future issuance under
Equity
compensation plans
|
|
Equity
compensation plan approved by
Securities
holders - 1996 Option Plan
|
2,221,368
|
$
2.63
|
-0-
|
|
Equity
compensation plan approved by
Securities
holders - 2006 Option Plan
|
17,500
|
$
4.92
|
982,500
|
|
Equity
compensation plan not approved by
Securities
holders
|
-0-
|
-0-
|
-0-
|
|
Total
|
2,238,868
|
$
2.65
|
982,500
|
Compensation
Committee Interlocks and Insider Participation
The
Compensation Committee consists of Drs. Turner and Helderman and Mr. Freeman.
There are no "interlocks" as defined by the SEC with respect to 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 under 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.
13
Stock
option grants to employees of the Company, including the Chief Executive
Officer, are made at the discretion of the Compensation Committee pursuant
to
the Company's Option Plans.
Respectfully
submitted,
The
Compensation Committee
Dr.
Carlton E. Turner, Chairman
Dr.
J.
Harold Helderman
Neal
B.
Freeman
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, 2006 ("Fiscal Year 2006"). 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 2006 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, 2007, subject to shareholder approval, and the Board of Directors
concurred in such recommendation.
Respectfully
submitted,
The
Audit
Committee
Udo
Henseler, Ph.D.. Chairman
G.
Russell Cleveland
Adrian
J.
R. Smith
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 AMEX
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 September 30, 2001. The comparisons reflect in the table and graph,
however, are not intended to forecast the future performance of the Common
Stock
and may not be indicative of such future performance.
COMPARISON
OF CUMULATIVE TOTAL RETURN OF ONE OR MORE
COMPANIES,
PEER GROUPS, INDUSTRY INDEXES AND/OR BROAD MARKETS
|
FISCAL
YEAR ENDING
|
||||||||||||
|
COMPANY/INDEX/MARKET
|
9/30/01
|
9/30/02
|
9/30/03
|
9/30/04
|
9/30/05
|
9/30/06
|
||||||
|
|
||||||||||||
|
TUTOGEN
MEDICAL INC
|
100.00
|
118.33
|
212.50
|
124.58
|
190.00
|
187.50
|
||||||
|
PEER
GROUP INDEX
|
100.00
|
93.31
|
126.31
|
146.71
|
166.52
|
170.86
|
||||||
|
AMEX
MARKET INDEX
|
100.00
|
108.63
|
134.25
|
154.97
|
187.60
|
195.30
|
||||||
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 November 30, 2006, 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 November 30, 2006,
there were 16,413,185 shares of common stock issued and
outstanding.
|
Name
and Address of Beneficial Owner
|
Amount
and Nature
of
Beneficial Owner (1)(2)
|
Percentage
of
Class (3)
|
|||||
|
SPV
1996 LP
101
Finsbury Pavement
London,
England
EC2A
1EJ
|
1,896,794
|
11.56
|
|||||
|
Zimmer
CEP (formerly Centerpulse) USA Holding Co.
Subsidiary
of Zimmer Holdings, Inc.
345
East Main Street
Warsaw,
IN 46580
|
5,297,124
|
32.27
|
|||||
|
G.
Russell Cleveland (4)
|
124,300
|
*
|
|||||
|
Roy
D. Crowninshield, Ph.D. (5)
|
62,000
|
*
|
|||||
|
Neal
B. Freeman (6)
|
44,500
|
*
|
|||||
|
Dr.
J. Harold Helderman (7)
|
117,000
|
*
|
|||||
|
Udo
Henseler, Ph.D. (8)
|
24,500
|
*
|
|||||
|
L.
Robert Johnston, Jr. (8)
|
15,000
|
*
|
|||||
|
Guy
L. Mayer (8).
|
150,000
|
*
|
|||||
|
Claude
Pering (8)
|
15,000
|
*
|
|||||
|
Clifton
Seliga (9)
|
13,500
|
*
|
|||||
|
Adrian
J. R. Smith (8)
|
24,500
|
*
|
|||||
|
Carlton
E. Turner (10)
|
57,000
|
*
|
|||||
|
All
directors and officers as a group (11 persons)
|
600,000
|
3.5
|
|||||
*
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
to dispose or direct the disposition of shares, irrespective of any
economic interest therein.
|
16
|
(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 exercisable within sixty (60) days after November
30,
2006 held by such individual or group.
|
| (4) |
Includes
47,000 shares of common stock issuable upon exercise of options
exercisable within sixty (60) days.
|
| (5) |
Includes
42,000 shares of common stock issuable upon exercise of options
exercisable within sixty (60) days.
|
| (6) |
Includes
24,500 shares of common stock issuable upon exercise of options
exercisable within sixty (60) days.
|
| (7) |
Includes
87,000 shares of common stock issuable upon exercise of options
exercisable within sixty (60) days.
|
|
(8)
|
All
of the shares of common stock beneficially owned by Messrs. Henseler,
Johnston, Mayer, Pering, Seliga and Smith are derivative securities
issuable upon exercise of options exercisable within sixty (60)
days.
|
| (9) |
Includes
12,500 shares of common stock issuable upon exercise of options
exercisable within sixty (60) days.
|
| (10) |
Includes
47,000 shares of common stock issuable upon exercise of options
exercisable within sixty (60) days.
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
As
of
September 30, 2006, Zimmer CEP (formerly Centerpulse) USA Holding Co., a
subsidiary of Zimmer Holdings, Inc., is a 32% owner of the Company's outstanding
shares of Common Stock.
The
Company has an exclusive license and distribution agreement with Zimmer Spine,
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 years ended September 30, 2006 and 2005 product sales to Zimmer
Spine total approximately $2.9 million, and $3.1 million, respectively. Accounts
receivable from Zimmer Spine were approximately $952,000 and $44,000 at
September 30, 2006 and September 30, 2005, respectively.
The
Company has also engaged Zimmer Dental to act as an exclusive distributor for
the Company's bone tissue for dental applications in the United States and
certain international markets. Under this distribution agreement, the Company
sells directly to Zimmer Dental’s customers. For the years ended September 30,
2006 and 2005, Zimmer Dental was paid commissions aggregating approximately
$7.2
million, and $6.1 million, respectively. Accounts payable to Zimmer Dental
totaled approximately $1.9 million and $1.7 million at September 30, 2006 and
September 30, 2005, respectively.
On
March
10, 2006, Zimmer Holdings Inc. (“Zimmer”) filed an amended Schedule 13 (d)
expressing its intention to initiate discussions with the Company which could
possibly include further investment by Zimmer in securities of the Company
or
the acquisition by Zimmer of some or all of the outstanding common stock of
the
Company.
On
August
9, 2006, representatives of Zimmer contacted the management of the Company
telephonically to propose to the Company a non-binding indication of interest
(“the Indication of Interest”) with respect to a proposed acquisition of the
Company at an indicative price range of $5.00 - $6.00 per share of Common Stock.
Later on the same day, the Company contacted Zimmer and rejected the Indication
of Interest. Subsequently, Zimmer filed an amended 13(d) expressing that they
had determined not to pursue an acquisition of the Company at that time, but
based on other factors deemed relevant by Zimmer, including, but not limited
to,
the price and availability of Common Stock, subsequent developments affecting
Zimmer and the Company, the business prospects of Zimmer and the Company,
general stock market and economic conditions and tax considerations, Zimmer may
formulate other plans and/or make other proposals and take other actions with
respect to its investment in the company that it deems to be
appropriate.
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 LLP for the audit of
the Company's annual financial statements for the years ended September 30,
2006
and 2005, and all fees billed for other services by Deloitte & Touche LLP
during those periods:
|
Year
Ended September 30,
|
|
2006
|
2005
|
|
|||
|
|
|
|
|
|
|||
|
Audit
fees (1)
|
|
$
|
515,000
|
|
$
|
143,000
|
|
|
Audit-related
fees (2)
|
|
|
44,000
|
|
|
55,000
|
|
|
Tax
fees (3)
|
|
|
33,000
|
|
|
4,000
|
|
|
All
other fees (4)
|
|
|
39,000
|
|
|
-
|
|
|
Total
Accounting Fees and Services
|
|
$
|
631,000
|
|
$
|
202,000
|
|
(1)
AUDIT
FEES. These are fees for professional services for the audit of the Company's
annual financial statements, for the review of the financial statements included
in the Company's filings on Form 10-Q and for services that are normally
provided in connection with statutory and regulatory filings or engagements.
For
2006, total audit fees include $173,000 for fees associated with the restatement
of the prior year financial results in the 2005 Form 10-K/A and the results
of
the quarter ending December 31, 2005 in the Form 10-Q/A, $199,000 related to
the
2005 audit and $56,000 for interim and planning procedures relating to the
2006
audit.
(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.
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 LLP for the fiscal years ended September 30, 2006 and 2005 were
approved by the Audit Committee.
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 audits, 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 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.
18
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 approve the Company’s Incentive and Non
Statutory Stock Option Plan and 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 2008 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 2008 Annual Meeting.
Eligible Shareholders who wish to submit a proposal for inclusion in the
Company's proxy materials for the 2008 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
October 15, 2007. The proposal must be in the form required by applicable rules
of the Commission.
Alternatively,
Shareholders who wish to have a proposal presented at the 2008 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,
2007 and January 31, 2008. 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 2008 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.
19
ANNUAL
REPORT
The
Company's annual report for the year ended September 30, 2006 (the "Annual
Report") accompanies this proxy statement. The Annual Report contains a copy
of
the Company's Form 10-K Report 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 2006 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 2007 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
/s/
Roy
D.
Crowninshield, Ph.D.
Roy
D. Crowninshield,
Ph.D.
Chairman
of the
Board
February
5, 2007
Alachua,
Florida
20
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(IF ANY)
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Using
a
black
inkpen,
mark your
votes with an X as shown in this example. Please do not write
outside the
designated areas.
|
x
|
|
Annual
Meeting Proxy Card
|
||
 PLEASE
FOLD
ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN
THE
ENCLOSED ENVELOPE. |
Proposals
—
The
Board
of Directors recommends a vote FOR all the listed nominees and
FOR
Proposals 2
–
4.|
1.
Election of
Directors:
|
For
|
Withhold
|
For
|
Withhold
|
For
|
Withhold
|
+
|
||||||||||
|
01
- G.
Russell Cleveland
|
o
|
o
|
02
- Neal B.
Freeman
|
o
|
o
|
03
- Udo
Henseler
|
o
|
o
|
|||||||||
|
04
-J. Harold
Heldeiman
|
o
|
o
|
05
- Guy L.
Mayer
|
o
|
o
|
06
- Adrian
J.R. Smith
|
o
|
o
|
|||||||||
|
07
- Carlton
E. Turner
|
o
|
o
|
08
- Roy D.
Crowninshield
|
o
|
o
|
|
For
|
Against
|
Abstain
|
For
|
Against
|
Abstain
|
|||||||||
|
2.
To amend
the Company’s
2006
Stock Option Plan increasing the total number of shares covered
by the
Plan from 1,000,000 to 1,500,000.
|
o
|
o
|
o
|
3.
Ratify the
appointment of Deloitte & Touche L.L.P. as the Company’s
auditors for the 2007 fiscal year.
|
o
|
o
|
o
|
|||||||
|
4.
In their
discretion, on such other business as may properly come before
the
meeting.
|
o
|
o
|
o
|
Non-Voting
Items| Change of Address — Please print new address below. |
Meeting
Attendance
|
|||
|
Mark
box to
the right if you plan to attend the Annual Meeting.
|
o
|
Authorized
Signatures — This section
must be completed for your vote to be counted. — Date and Sign
BelowPlease
sign exactly
as name(s) appears hereon. Joint owners should each sign. When signing
as
attorney, executor, administrator, corporate officer, trustee, guardian,
or
custodian, please give full title.
|
Date
(mm/dd/yyyy) — Please print date below.
|
Signature
1 —
Please keep signature within the box.
|
Signature
2 —
Please keep signature within the box.
|
|||||
|
/ /
|
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J
N T
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O Y # # # 1
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MR
A SAMPLE
(THIS AREA IS SET UP TO ACCOMMODATE
140
CHARACTERS) MR A SAMPLE AND MR A SAMPLE AND
MR
A SAMPLE
AND MR A SAMPLE AND MR A SAMPLE AND
MR
A SAMPLE
AND MR A SAMPLE AND MR A SAMPLE AND
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+
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<STOCK#>
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00O2LA
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PLEASE
FOLD ALONG THE PERFORATION, DETACH AND RETURN THE
BOTTOM PORTION IN THE ENCLOSED ENVELOPE. Proxy
—
Tutogen Medical, Inc.
Annual
Meeting of Shareholders March 19, 2007
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 5, 2007 at
the
Annual Meeting of Shareholders of Tutogen Medical, Inc. to be held at the
Best
Western Gateway Grand Hotel, 4200 NW 97* Blvd., Gainesville, Florida 32606
on
March 19, 2007, 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; 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.)