SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
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¨ Definitive Additional Materials |
¨ Soliciting Material Pursuant to Section 240.14a-12 |
IVAX Diagnostics, 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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IVAX DIAGNOSTICS, INC.
2140 North Miami Avenue
Miami, Florida 33127
July 14, 2006
Dear Stockholder:
You are cordially invited to attend the 2006 Annual Meeting of Stockholders of IVAX Diagnostics, Inc., which will be held on August 9, 2006 at 5:00 p.m., local time, at the headquarters of IVAX Corporation at 4400 Biscayne Boulevard, Miami, Florida 33137.
At the Annual Meeting, holders of our Common Stock will: (1) elect five directors to our Board of Directors, and (2) consider any other business that may be properly brought before the Annual Meeting.
The Notice of Annual Meeting and Proxy Statement, which are contained in the following pages, more fully describe the actions to be considered by stockholders at the Annual Meeting.
Our Board of Directors recommends that you vote your shares “FOR” the election of each of the five nominees to the Board of Directors named in the following pages. Teva Pharmaceutical Industries Limited, indirectly through its wholly-owned subsidiary, IVAX Corporation, holds approximately 72% of our issued and outstanding Common Stock and has advised us that it intends to vote all shares of Common Stock owned by it “FOR” the election of the five nominees to the Board of Directors named in this Proxy Statement. Accordingly, the election of each of the nominees nominated by the Board of Directors is assured.
Whether or not you plan to attend the Annual Meeting, and regardless of the size of your holdings, you are encouraged to promptly sign, date and mail the enclosed proxy in the pre-stamped envelope provided. Your participation is valued. The prompt return of your proxy will save additional solicitation expense and will not affect your right to vote in person in the event that you attend the Annual Meeting. Please vote today.
On behalf of our Board of Directors and our employees, I would like to express our appreciation for your continued support.
| Sincerely, |
 |
| Giorgio D’Urso, |
| Chief Executive Officer and President |
IVAX DIAGNOSTICS, INC.
2140 North Miami Avenue
Miami, Florida 33127
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on August 9, 2006
Notice is hereby given that the 2006 Annual Meeting of Stockholders of IVAX Diagnostics, Inc. (the “Company”) will be held at the headquarters of IVAX Corporation at 4400 Biscayne Boulevard, Miami, Florida 33137 on August 9, 2006 commencing at 5:00 p.m., local time, for the following purposes:
| 1. | To elect five directors to the Company’s Board of Directors, two of whom will serve for a three-year term, two of whom will serve for a two-year term and one of whom will serve for a one-year term; and |
| 2. | To consider such other business as may properly be brought before the Annual Meeting or any postponement or adjournment thereof. |
The foregoing matters are more fully described in the Proxy Statement which forms a part of this Notice.
Only stockholders of record at the close of business on July 7, 2006 are entitled to notice of and to vote at the Annual Meeting.
| Sincerely yours, |
 |
| Mark Deutsch, |
| Secretary |
Miami, Florida
July 14, 2006
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF FURTHER REQUESTS FOR PROXIES; THEREFORE, EVEN IF YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE AND SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ENVELOPE PROVIDED. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
IVAX DIAGNOSTICS, INC.
2140 North Miami Avenue
Miami, Florida 33127
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation by the Board of Directors of IVAX Diagnostics, Inc. (the “Company”) of proxies for use at the 2006 Annual Meeting of Stockholders of the Company (the “Annual Meeting”) to be held at the headquarters of IVAX Corporation at 4400 Biscayne Boulevard, Miami, Florida 33137 on August 9, 2006 at 5:00 p.m., local time, and at any and all postponements or adjournments thereof, for the purposes set forth in the accompanying Notice of Meeting.
This Proxy Statement, Notice of Meeting and the accompanying proxy card are first being mailed to stockholders on or about July 20, 2006.
General Information
Each proxy solicited, if properly completed and received by the Company prior to the Annual Meeting and not revoked prior to its use, will be voted in accordance with the instructions contained therein. To vote by proxy, you must complete, sign and date the enclosed proxy card and return it in the prepaid envelope. Proxies received with no instructions will be voted “FOR” the election of each nominee to the Company’s Board of Directors. Although the Board of Directors is unaware of any other matter to be presented at the Annual Meeting upon which stockholders are entitled to vote, if any other matters are properly brought before the Annual Meeting, then the persons named in the proxy will vote as proxies in accordance with their own best judgment on those matters.
Any stockholder signing and returning a proxy on the enclosed form has the power to revoke it at any time before it is exercised by notifying the Secretary of the Company in writing at the address set forth above, or by submitting a proxy bearing a later date, or by attending the Annual Meeting and voting in person.
The Company will bear the expense of soliciting proxies and may reimburse brokers, banks and nominees for the out-of-pocket and clerical expenses of transmitting copies of the proxy materials to the beneficial owners of shares held of record by such brokers, banks and nominees. The Company does not intend to solicit proxies other than by use of the mail.
Record Date; Stockholders Entitled to Vote
Only holders of record of the Company’s Common Stock at the close of business on July 7, 2006 (the “Record Date”) are entitled to notice of and to vote at the Annual Meeting. If you hold your shares beneficially through a brokerage account or through a bank or other nominee, then you are considered the beneficial owner of the shares but not the record holder of the shares and your shares are held in “street name.” If you hold your shares in “street name,” then to vote your shares you must follow the voting instructions that you receive from your broker, bank or other nominee. If you hold your shares in “street name,” then you will not be entitled to vote in person at the Annual Meeting (although you will be permitted to attend), unless you have obtained a signed proxy from your broker, bank or other nominee giving you the right to vote the shares.
On the Record Date, there were 27,649,887 shares of Common Stock issued and outstanding. Holders of Common Stock are entitled to one vote per share on all matters to be considered at the Annual Meeting. Teva Pharmaceutical Industries Limited (“Teva”), which indirectly through its wholly-owned subsidiary, IVAX Corporation (“IVAX”), holds approximately 72% of the issued and outstanding Common Stock, has advised the Company that it will vote all of its shares in favor of the election of each of the five nominees for director nominated by the Company’s Board of Directors. Accordingly, the election of each of these nominees is assured.
Quorum; Adjournment
The presence, in person or by proxy, of at least a majority of the issued and outstanding shares of Common Stock is necessary to transact business at the Annual Meeting. Both abstentions and “broker non-votes,” as described below, are counted as present for purposes of determining the presence of a quorum. In the event that there are not sufficient shares represented for a quorum, the Annual Meeting may be adjourned from time to time until a quorum is obtained.
Vote Required for Approval
To elect the five nominees to the Company’s Board of Directors, the affirmative vote of a plurality of the votes cast in person or by proxy at the Annual Meeting is required. There is no right to cumulative voting in the election of directors.
Voting of Proxies by Brokers
“Broker non-votes” occur when a broker, bank or other nominee who holds shares in “street name” for a beneficial owner does not have discretionary authority to vote on a matter and has not received instructions on how to vote from the beneficial owner of the shares. “Broker non-votes” and abstentions will have no effect on the election of directors.
Change in Control
On July 25, 2005, IVAX, the Company’s approximately 72% stockholder, entered into a definitive agreement and plan of merger with Teva, providing for IVAX to be merged into a wholly-owned subsidiary of Teva. On January 26, 2006, the merger was consummated and IVAX became a wholly-owned subsidiary of Teva for an aggregate purchase price of approximately $3.8 billion in cash and 123 million Teva ADRs. The transaction was reported to be valued, for accounting purposes, at $7.9 billion, based on the fair value of the Teva ADRs during the five trading day period commencing two trading days before the date of the definitive agreement and plan of merger. As a result of the merger, Teva now, indirectly through its wholly-owned IVAX subsidiary, owns approximately 72% of the issued and outstanding Common Stock, which provides it with the voting power to control the election of the Company’s directors and any other matter requiring the affirmative vote or consent of the Company’s stockholders.
Corporate Governance
Board of Directors. The Board of Directors met five times during the 2005 fiscal year. Each of the members of the Board of Directors attended at least 75% of the meetings of the Board of Directors and Committees on which he or she served, except John B. Harley, M.D. and Jane H. Hsiao, Ph.D., were unable to attend two meetings of the Board of Directors each. All of the members of the Board of Directors, except Glenn L. Halpryn, attended the Company’s 2005 annual meeting of stockholders, although the Company has no formal policy requiring them to do so. On April 19, 2006, Itzhak Krinsky, Ph.D., Mark Durand and Richard Egosi were appointed to the Board of Directors, in each case, to serve until the Annual Meeting, to fill the vacancies created when Phillip Frost, M.D., Neil Flanzraich and Jane Hsiao, Ph.D., resigned from the Board of Directors. Dr. Krinsky has succeeded Dr. Frost as the Chairman of the Board of Directors.
Under the applicable rules of the American Stock Exchange, the Company is considered a “controlled company” because Teva, indirectly through its wholly-owned IVAX subsidiary, owns approximately 72% of the issued and outstanding Common Stock. As a “controlled company,” the Company is not subject to certain corporate governance requirements of the American Stock Exchange, including the requirements to (i) maintain a majority of “independent” directors on the Board of Directors, (ii) have a nominating committee comprised solely of “independent” directors, or (iii) have a compensation committee comprised solely of “independent” directors. As described in more detail below, however, the Company has a compensation committee of the Board of Directors.
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The Board of Directors has determined that four of the members of the Board of Directors—Fernando L. Fernandez, Glenn L. Halpryn, John B. Harley, M.D., and Jose J. Valdes-Fauli—are “independent” as such term is defined in the applicable rules of the American Stock Exchange relating to the independence of directors.
The Board of Directors has established an Audit Committee and a Compensation Committee.
Audit Committee. From the beginning of the 2005 fiscal year until January 25, 2005, the Audit Committee consisted of Jose J. Valdes-Fauli, Chairman, Jack R. Borsting, Ph.D., and Glenn L. Halpryn. On January 25, 2005, Dr. Borsting resigned from the Board of Directors and the Audit Committee. On April 8, 2005, Fernando L. Fernandez was appointed to the Board of Directors and to the Audit Committee, in each case, to serve until the Company’s 2005 annual meeting of stockholders, to fill the vacancies created by Dr. Borsting’s resignation. At the Company’s 2005 annual meeting of stockholders, Mr. Fernandez was elected to the Board of Directors. Messrs. Valdes-Fauli, Halpryn and Fernandez comprised the Audit Committee for the remainder of the 2005 fiscal year. The Audit Committee met eight times during the 2005 fiscal year. The primary responsibility of the Audit Committee is to oversee the Company’s financial reporting process on behalf of the Board of Directors and the stockholders and to report the results of its activities to the Board of Directors. The Audit Committee engages the independent auditors, approves all audit services and permitted non-audit services to be provided by the independent auditor, considers the fee arrangement and scope of the audit, reviews the financial statements and the independent auditors’ report, and reviews internal accounting procedures and controls with the Company’s financial and accounting staff. The Board of Directors has determined that all of the members of the Audit Committee are “independent” as such term is defined in the applicable regulations of the Securities and Exchange Commission and rules of the American Stock Exchange relating to directors serving on audit committees. The Board of Directors determined that each of Mr. Fernandez and Mr. Valdes-Fauli has the attributes, education and experience of an “audit committee financial expert,” as such term is defined in the applicable regulations of the Securities and Exchange Commission.
Compensation Committee. During the 2005 fiscal year, the Compensation Committee consisted of Neil Flanzraich, Chairman, Glenn L. Halpryn, and John B. Harley, M.D. The Compensation Committee met once during the 2005 fiscal year. The Compensation Committee establishes and implements compensation policies and programs for executives of the Company, including the Chief Executive Officer, and recommends the compensation arrangements for executive management and directors. It also serves as the Stock Option Committee for the purpose of making grants of options under both of the Company’s stock option plans. On April 19, 2006, Mr. Flanzraich resigned from the Board of Directors and the Compensation Committee.
Director Nominations. As a “controlled company,” the Board of Directors is not required to, and does not, have a nominating committee. The Board of Directors believes that it is appropriate for the Company to not have a nominating committee because Teva, indirectly through its wholly-owned IVAX subsidiary, owns approximately 72% of the issued and outstanding Common Stock and is in a position to control the election of the Company’s directors. The Board of Directors of the Company, together with the executive management and board of directors of Teva, performs the function of identifying and evaluating director nominees for the Company. The Board of Directors does not consider director nominees recommended by stockholders of the Company, other than those identified by Teva. While the Board of Directors has not established specific, minimum qualifications, qualities or skills that a director nominee is required to have, the Board of Directors generally considers: (i) the size of the Board of Directors best suited to fulfill its responsibilities, (ii) the overall composition of the membership of the Board of Directors to ensure that the Board of Directors has the requisite expertise and consists of persons with sufficiently diverse backgrounds, and (iii) the reputation, independence, integrity, education, and business, strategic and financial skills of director nominees. Each of the nominees for election as a director named in this Proxy Statement was unanimously recommended by the full Board of Directors for submission to the stockholders of the Company as the Board of Directors’ nominees.
Stockholder Communications with the Board of Directors. The Board of Directors has provided a process for stockholders of the Company to send communications to the Board of Directors or to a particular director. Any stockholder who wishes to communicate with the Board of Directors or any particular director may do so by
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sending all such communications in writing, via United States mail, postage prepaid, to: Secretary, IVAX Diagnostics, Inc., 2140 North Miami Avenue, Miami, Florida 33127. Each stockholder writing should include a statement indicating that the sender is a stockholder of the Company and should specify whether the communication is directed to the entire Board of Directors or to a particular director. Company personnel will review all properly sent stockholder communications and will forward the communication to the director or directors to whom it is intended, attempt to handle the inquiry directly if it relates to a routine or ministerial matter, or not forward the communication if it is primarily commercial in nature or if it is determined to relate to an improper or irrelevant topic.
Code of Ethics. The Board of Directors has adopted a Code of Conduct and Ethics, which applies to all of the Company’s directors, officers and employees, and a code of ethics, also known as a Senior Financial Officer Code of Ethics, which applies to the Company’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. The Code of Conduct and Ethics and the Senior Financial Officer Code of Ethics are posted in the “Investor Relations” section of the Company’s Internet web site at www.ivaxdiagnostics.com. If the Company makes an amendment to, or grants a waiver with respect to, any provision of the Senior Financial Officer Code of Ethics, then the Company intends to disclose the nature of such amendment or waiver by posting it in the “Investor Relations” section of the Company’s Internet web site at www.ivaxdiagnostics.com or by other appropriate means as required or permitted under the applicable regulations of the Securities and Exchange Commission and rules of the American Stock Exchange.
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PROPOSAL FOR ELECTION OF DIRECTORS
Nominees for Election as Director
The Company’s Bylaws provide that the Board of Directors shall consist of no less than one director. The Company’s Board of Directors currently consists of eight directors divided into three classes, each of which has a three year term, which terms expire in annual succession. A total of five directors will be elected at the Annual Meeting, two of whom will be elected for a term expiring in 2009, two of whom will be elected for a term expiring in 2008 and one of whom will be elected for a term expiring in 2007. Teva has advised the Company that it will vote all shares of Common Stock owned by it in favor of all of the nominees. If any nominee is unable to serve, which the Board of Directors has no reason to expect, Teva has advised the Company that it will vote all shares of Common Stock owned by it for the other named nominees and for the person, if any, who is designated by the Board of Directors to replace such nominee. Accordingly, election of the nominees nominated by the Board of Directors is assured.
The following table sets forth the names and ages of the director nominees and the year during which their terms of office will expire. Each director nominee is a current director of the Company who has been nominated for re-election at the Annual Meeting.
Name | Age | Term of Office | ||
Itzhak Krinsky, Ph.D. | 54 | 2007 | ||
Mark Durand | 47 | 2008 | ||
Richard Egosi | 44 | 2008 | ||
Giorgio D’Urso | 71 | 2009 | ||
Jose J. Valdes-Fauli | 54 | 2009 | ||
The following list contains certain information with respect to the director nominees, including the principal occupation or employment for at least the previous five years and his or her positions or offices at the Company or its subsidiaries—Delta Biologicals, S.r.l., Diamedix Corporation, and ImmunoVision, Inc.
Itzhak Krinsky, Ph.D., age 54, has served as the Company’s Chairman of the Board of Directors since April 2006. He has served as Corporate Vice President for Business Development of Teva since May 2005. Dr. Krinsky was a managing director with The Silverfern Group, Inc. from January 2003 until February 2005 and until joining Teva a managing director with Trenwith Securities, LLC, both investment banking boutiques in New York City. From July 2001 until December 2002, Dr. Krinsky was a managing director of I. Krinsky, Financial & Investment Consulting in New York City and from January 1998 until May 2001 a senior strategist with the Investment Banking Research and Strategy Group of Bankers Trust (the predecessor of Deutsche Bank Securities) and later a managing director in the Acquisition and Corporate Advisory Group of Deutsche Bank Securities in New York City. Dr. Krinsky’s academic career includes a position as Professor of Finance & Business Economics, Michael G. DeGroote School of Business, McMaster University, Canada and as a visiting professor in Institute for International Studies and Training of Japan, Kamiide, Japan, Nankai University, Tianjin The Peoples Republic of China and the Leonard N. Stern School of Business at New York University as well as extensive publications in leading academic journals. Dr. Krinsky is currently a member of the boards of Can-fite Biopharma Ltd. and Advanced Vision Technology (A.V.T.) Ltd. He received his B.A. and M.A. in economics from Tel Aviv University in 1976 and 1978, respectively, and his Ph.D. in economics from McMaster University in 1983.
Mark Durand, age 47, has served as a director of the Company since April 2006. Since 2004, Mr. Durand has served as Chief Financial Officer and Senior Vice President, Finance and Business Development of Teva North America. From 1987 to 2004, Mr. Durand served in various executive management roles in finance,
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business development and general management at Bristol-Myers Squibb Company, including in 2002 as Vice President—Finance and Business Development and in 2004 he was also appointed Vice President—Specialty Pharmaceuticals. Mr. Durand also currently serves as a member of the board of the Dartmouth Graduate School Alumni Association. Mr. Durand received a B.S. from Duke University, M.S. from Dartmouth College and M.B.A. from the University of Chicago.
Richard Egosi, age 44, has served as a director of the Company since April 2006. Since 1999, Mr. Egosi has served as Senior Vice President and General Counsel of Teva North America, overseeing the legal function for the Teva group of companies in North America. From 1995 to 1999, Mr. Egosi served as Associate General Counsel of Teva. From 1988 to 1995, Mr. Egosi was an attorney in private practice. Mr. Egosi received a J.D. and M.B.A. from Emory University.
Giorgio D’Urso, age 71, has served as the Company’s President and Chief Executive Officer and as a director since the merger of the pre-merger IVAX Diagnostics, Inc. with b2bstores.com Inc. in 2001 and had served in the same capacities with the pre-merger IVAX Diagnostics since 1996. He has served as President and Chief Executive Officer of Diamedix since 1993, President of Delta since 1980, and President of ImmunoVision since 1995. He has over 36 years of diagnostics industry experience. Mr. D’Urso founded Delta, and was its Managing Director from 1980 to 1998. From 1976 to 1980, Mr. D’Urso founded and served as the General Manager of Menarini Diagnostici, Florence, Italy, a division of Menarini S.A.S. Mr. D’Urso also founded and supervised Menarini Diagnosticos S.A. in Spain. From 1974 to 1976, Mr. D’Urso served as the Marketing Manager of the diagnostic division of SmithKline & French S.P.A. in Milan, Italy. From 1969 to 1974, Mr. D’Urso served as the Marketing Manager of Laboratori Travenol S.P.A. in Rome, Italy.
Jose J. Valdes-Fauli, age 54, has served as a director of the Company since December 2002. Mr. Valdes-Fauli has been President and Chief Executive Officer of Beach Bank since 2004. From 1998 to 2003, Mr. Valdes-Fauli was the President and Chief Executive Officer of Colonial Bank—South Florida Region, an affiliate of Colonial BancGroup. Mr. Valdes-Fauli has been involved in the banking industry for 30 years. He is a member of the Florida International University Foundation Board of Directors. He is also Director Emeritus of the Florida Grand Opera and a director of the Bass Museum of Art, the Concert Association of Florida and the Mercy Hospital Foundation. Mr. Valdes-Fauli is also a member of the Advisory Board of New Hope Charities, Inc. and a member of the Miami-Dade County Cultural Affairs Council.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU
VOTE “FOR” ALL OF THE NOMINEES FOR DIRECTOR
Directors Continuing in Office
The following list contains certain information with respect to the directors continuing in office, including the principal occupation or employment for at least the previous five years and his positions or offices at the Company or its subsidiaries.
Fernando L. Fernandez, age 45, has served as a director of the Company since April 2005. Mr. Fernandez serves as Senior Vice President-Finance, Chief Financial Officer, Treasurer, and Secretary of Continucare Corporation. Mr. Fernandez, a certified public accountant, served as Senior Vice President-Finance, Chief Financial Officer, Treasurer, and Secretary of Whitman Education Group, Inc. from 1996 until 2003. From 1991 to 1996 and for a brief period after his service at Whitman Education Group, Inc., Mr. Fernandez served as Chief Financial Officer of several private investment entities owned by Phillip Frost, M.D. Prior to 1991, Mr. Fernandez served as Audit Manager for PricewaterhouseCoopers LLP (formerly Coopers & Lybrand) in Miami, Florida.
Glenn L. Halpryn, age 45, has served as a director of the Company since December 2002. Mr. Halpryn has been Chairman of the Board of Directors and President of Orthodontix, Inc. since April 2001. Mr. Halpryn has also been Chief Executive Officer of Transworld Investment Corporation since June 2001 and the President of Chelsea Management Corporation since September 2004. Since January 1987, Mr. Halpryn has been a portfolio manager of International Venture Capital, Ltd. From 1984 to June 2001, Mr. Halpryn served as Vice President of
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Transworld Investment Corporation. Since 1984, Mr. Halpryn has been engaged in real estate investment and development activities, including the management, finance and leasing of commercial real estate. From April 1988 through June 1998, Mr. Halpryn was Vice Chairman of Central Bank, a Florida state-chartered bank. Since February 1987, Mr. Halpryn has been the President of United Security Corporation, a broker-dealer registered with the NASD. From June 1992 through May 1994, Mr. Halpryn served as the Vice President, Secretary and Treasurer and as a director of Frost Hanna Halpryn Capital Group, Inc., a “blank check” company whose business combination was effected in May 1994 with Sterling Healthcare Group, Inc.
John B. Harley, M.D., age 56, has served as a director of the Company since the merger of the pre-merger IVAX Diagnostics in 2001. He has held various positions at the University of Oklahoma Health Sciences Center since 1982. In the Department of Medicine, his positions include Chief of Rheumatology, Allergy and Immunology Section and Vice Chair for Research, George Lynn Cross Research Professor (1999 to present), James R. McEldowney Chair in Immunology and Professor of Medicine (1992 to present), Associate Professor (1986 to 1992), and Assistant Professor (1982 to 1986). Since 1996 Dr. Harley has been an Adjunct Professor in the Department of Pathology. In the Department of Microbiology, Dr. Harley has served as Adjunct Professor (1992 to present), Adjunct Associate Professor (1988 to 1992), and Adjunct Assistant Professor (1983 to 1988). Since 1982, Dr. Harley has also been associated with the Oklahoma Medical Research Foundation’s Arthritis and Immunology Program as Program Head (1999 to present), Member (1998 to present), Associate Member (1989 to present), Affiliated Associate Member (1986 to 1989), and Affiliated Assistant Member (1982 to 1986). Dr. Harley has also served as a Staff Physician (1982, 1984 to 1987 and 1992 to present), and a Clinical Investigator (1987 to 1992), Immunology Section, Medical Service at the Veterans Affairs Medical Center, Oklahoma City, Oklahoma. In 1981 and 1982, Dr. Harley was a Postdoctoral Fellow in Rheumatology with the Arthritis Branch of the National Institute of Arthritis, Diabetes and Digestive and Kidney Diseases, National Institute of Health, Bethesda, Maryland. He was also a Clinical Associate at the Laboratory of Immunoregulation, National Institute of Allergy and Infectious Diseases, National Institutes of Health, Bethesda, Maryland from 1979 to 1982. Dr. Harley is also the Secretary and Treasurer of JK Autoimmunity, Inc.
Identification of Executive Officers
The following individuals are executive officers of the Company.
Name | Age | Position | ||
Giorgio D’Urso | 71 | Chief Executive Officer, President and Director | ||
Duane M. Steele | 55 | Vice President—Business Development | ||
Mark S. Deutsch | 43 | Chief Financial Officer and Vice President—Finance | ||
All officers serve until they resign or are replaced or removed at the pleasure of the Board of Directors.
The following additional information is provided for the executive officers shown above who are not directors of the Company or nominees for directors.
Duane M. Steele, age 55, has served as the Company’s Vice President—Business Development since the merger of the pre-merger IVAX Diagnostics in 2001 and had served in the same capacity with the pre-merger IVAX Diagnostics since 1996. He joined Diamedix in 1995 and has over 28 years of diagnostics industry experience. He has served as the Chief Operating Officer of Diamedix since 1997. From 1995 to 1997, he served as Vice President—Business Development of Diamedix. From 1990 to 1994, he served as President and Chief Executive Officer of LaserCharge, Inc. in Austin, Texas. From 1988 to 1989, Mr. Steele was the General Manger of Austin Biological Laboratories, Inc. From 1972 to 1987, Mr. Steele held a variety of positions with Kallestad Diagnostics, Inc., including Senior Vice President.
Mark S. Deutsch, age 43, has served as the Company’s Chief Financial Officer and Vice President—Finance since the merger of the pre-merger IVAX Diagnostics in 2001 and had served in the same capacities
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with the pre-merger IVAX Diagnostics since 1996. He has served as the Vice President—Finance of Diamedix since 1993 and has 12 years of diagnostics industry experience. From 1988 to 1993, Mr. Deutsch held various positions including Accounting Manager of IVAX and Controller of certain subsidiaries of IVAX. From 1985 to 1988, Mr. Deutsch worked for Arthur Andersen & Co. as a Senior Accountant.
Directors’ Fees
Non-employee directors of the Company do not receive cash compensation for attendance at meetings of the Board of Directors or committee meetings. Directors who are also officers of the Company or its subsidiaries do not receive additional compensation for attendance at meetings of the Board of Directors or committee meetings. Non-employee directors have in the past received automatic grants of options to purchase shares of Common Stock. Non-employee directors of the Company, who are employed by Teva, have not received options to purchase shares of Common Stock. During the 2005 fiscal year, non-employee directors each received a grant of options to purchase 10,000 shares of the Company’s Common Stock under the Company’s 1999 Performance Equity Plan. Additionally, during the 2005 fiscal year, each member of the Audit Committee received a grant of options to purchase 10,000 shares of the Company’s Common Stock and each member of the Compensation Committee received a grant of options to purchase 5,000 shares of the Company’s Common Stock, in each case, under the Company’s 1999 Performance Equity Plan.
Employment Agreements
On October 1, 1998, the pre-merger IVAX Diagnostics entered into a five-year employment agreement with Giorgio D’Urso, President and Chief Executive Officer, at a base annual salary of $348,519, with discretionary annual adjustments. The Company assumed this employment agreement in the merger of the pre-merger IVAX Diagnostics. The Company has extended the term of Mr. D’Urso’s employment agreement until February 24, 2010. Mr. D’Urso’s employment may be terminated with or without cause at any time upon written notice. For a termination without cause, the Company must pay Mr. D’Urso his then current annual base salary in installments for the remainder of the employment term. While employed by the Company and for a two-year period thereafter, Mr. D’Urso cannot employ or contract with any current or former employees of the Company, except former employees who have not been employed by the Company for more than one year.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s directors, executive officers and 10% stockholders to file initial reports of ownership and reports of changes in ownership of Common Stock and other equity securities of the Company with the Securities and Exchange Commission and the American Stock Exchange. Directors, executive officers and 10% stockholders are required to furnish the Company with copies of all Section 16(a) reports they file. Based on a review of the copies of such reports furnished to the Company and written representations from directors and executive officers of the Company that no other reports were required, the Company believes that its directors, executive officers and 10% stockholders complied with all Section 16(a) filing requirements applicable to them for the year ended December 31, 2005.
Certain Relationships and Related Transactions
Upon completion of the merger of the pre-merger IVAX Diagnostics, the Company entered into a registration rights agreement with IVAX that required the Company to file a registration statement on Form S-3 (at any time after one year, and before the earlier of five years, following the completion of the merger or such time at which all the shares of the Company’s Common Stock owned by IVAX can be sold in any three-month period without registration) to register not less than $1.0 million of the Company’s Common Stock owned by IVAX. Additionally, IVAX was permitted to “piggyback” on registrations initiated by the Company or other holders exercising similar demand registration rights. The Company could delay the filing of any registration statement for 120 days if the Company determined in good faith that to effect such registration statement would
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be detrimental to the Company or the Company’s stockholders. The Company agreed to pay all fees and expenses in connection with such registrations, except for any underwriting discounts and commissions. If the Company filed a registration statement in connection with an underwritten offering, IVAX agreed to sign a customary underwriting agreement in connection with such registration and its rights to register shares would be subject to a proration provision if the underwriters determined that the success of the offering would be jeopardized from too many shares being included in the offering. Shares to be sold by the Company on any registered offering would be included prior to the inclusion of any other shares of the Company’s Common Stock held by IVAX. The registration rights agreement also contained customary mutual indemnification and market stand-off provisions. IVAX could assign or transfer its rights under the registration rights agreement. The registration rights agreement expired on March 15, 2006.
In connection with the merger of the pre-merger IVAX Diagnostics, the Company entered into a shared services agreement with IVAX pursuant to which IVAX would continue to provide administrative and management services previously provided by IVAX to the pre-merger IVAX Diagnostics prior to the merger at IVAX’ cost plus 15% for a period of three months. These services may include payroll, including printing paychecks and making associated tax filings; treasury, including cash management services such as disbursements, receipts, banking and investing; insurance, including procuring and administering policies; human resources, including administering employee benefits and plans; financial reporting, including public reports, income taxes; and information systems, including network and website hosting, phone and data systems, software licenses and information systems support.
In connection with the merger of the pre-merger IVAX Diagnostics, the Company entered into a use of name license with IVAX that grants the Company a non-exclusive, royalty free license to use the name “IVAX.” IVAX may terminate the license upon 90 days’ written notice. Upon termination of the agreement, the Company must take all steps reasonably necessary to change its name as soon as is practicable. If IVAX abandons its use of the name, IVAX must transfer all rights to the name to the Company. The termination of this agreement by IVAX could have a material adverse affect on the Company’s ability to market its products and on the Company.
As an indirect subsidiary of Teva, both the Company’s directors and officers insurance as well as property insurance coverage falls within the scope of Teva’s directors and officers and property insurance policies. Prior to Teva’s acquisition of IVAX, both the Company’s directors and officers insurance as well as property insurance coverage fell within the scope of IVAX’ directors and officers and property insurance policies. During 2005 and 2004, the Company paid $617,000 and $720,000, respectively, to IVAX for premium payments for the Company’s directors and officers insurance coverage. Additionally, during 2005 and 2004, the Company paid $60,000 and $82,000, respectively, in premiums to IVAX for property insurance coverage.
Mary Celli D’Urso, the wife of the Company’s Chief Executive Officer and President, has been employed by the Company for annual compensation of $89,250.
Giulio D’Urso, the son of the Company’s Chief Executive Officer and President, has been engaged by the Company’s subsidiaries and the Company for annual compensation of $159,408. Due to currency exchange rate fluctuations, this amount of compensation may vary from year-to-year.
9
Summary Compensation Table
The following table contains certain information regarding aggregate compensation paid or accrued by the Company during 2005, 2004 and 2003 to the Chief Executive Officer and to each of the Company’s other highest paid executive officers other than the Chief Executive Officer whose total annual salary and bonus exceed $100,000.
SUMMARY COMPENSATION TABLE
| Annual Compensation | Long Term Compensation | |||||||||||||
Name and Principal Position | Year | Salary ($) | Bonus ($) | Shares Underlying Stock Options (#) | All ($) | |||||||||
Giorgio D’Urso | 2005 | $ | 348,519 | $ | 50,000 | — | $ | 906,000 | (1) | |||||
Chief Executive | 2004 | $ | 348,519 | — | — | — | ||||||||
Officer | 2003 | $ | 348,519 | — | — | — | ||||||||
Duane M. Steele | 2005 | $ | 165,801 | — | 10,000 | $ | 211,200 | (1) | ||||||
Vice President | 2004 | $ | 157,794 | — | — | — | ||||||||
Business Development | 2003 | $ | 150,280 | $ | 10,233 | 10,233 | — | |||||||
Mark S. Deutsch | 2005 | $ | 116,024 | — | 10,000 | $ | 63,360 | (1) | ||||||
Chief Financial | 2004 | $ | 110,385 | — | — | — | ||||||||
Officer | 2003 | $ | 107,170 | $ | 5,116 | 5,116 | — | |||||||
| (1) | In July 2005, the Company offered each holder of options to purchase shares of its Common Stock, which were granted under its 1999 Stock Option Plan, the opportunity to participate in a program whereby the Company would cancel 50% of such option holder’s options in exchange for a cash payment to such holder of $3.52 per share (except for the options of Mr. D’Urso, for which he would receive a cash payment of $3.02 per share), such option holder would then exercise all of his or her remaining options by paying to the Company the exercise price, and such option holder would agree to hold all of the shares of the Company’s Common Stock received upon exercise for a period of at least one year. All but one of the option holders under the 1999 Stock Option Plan elected to participate in this program. The participating option holders held a total of 998,795 options under the 1999 Stock Option Plan (including, without limitation, 600,000 options owned by Mr. D’Urso, 120,000 options owned by Mr. Steele and 36,000 options owned by Mr. Deutsch), all of which options were fully vested, had an exercise price of $0.73 per share and had an expiration date in the second (and, in one case, the third) quarter of 2006. Under this program, the Company paid Mr. D’Urso $906,000 for the cancellation of 50% of his options and Mr. D’Urso paid the Company $219,000 in connection with the exercise of his remaining options under the 1999 Stock Option Plan. Under this program, the Company paid Mr. Steele $211,200 for the cancellation of 50% of his options and Mr. Steele paid the Company $43,800 in connection with the exercise of his remaining options under the 1999 Stock Option Plan. Under this program, the Company paid Mr. Deutsch $63,360 for the cancellation of 50% of his options and Mr. Deutsch paid the Company $13,140 in connection with the exercise of his remaining options under the 1999 Stock Option Plan. |
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Stock Option Grants Table
The following table sets forth information concerning stock option grants made by the Company during 2005 to the executive officers named in the “Summary Compensation Table.”
Stock Option Grants in Fiscal Year 2005
| Individual Grants | Potential Realizable Value At Assumed Annual Rate of Stock Price Appreciation for Option Term | |||||||||||||||
Name | Shares Underlying Stock Options Granted (#) | % of Total Options Granted to Employees | Exercise Price | Expiration Date | 5%($) | 10%($) | ||||||||||
Giorgio D’Urso | — | — | — | — | — | — | ||||||||||
Duane M. Steele | 10,000 | 22.2 | % | $ | 4.35 | July 12, 2015 | $ | 27,357 | $ | 69,328 | ||||||
Mark S. Deutsch | 10,000 | 22.2 | % | $ | 4.35 | July 12, 2015 | $ | 27,357 | $ | 69,328 | ||||||
Stock Option Exercises and Year-End Option Value Table
The following table sets forth information concerning stock option exercises during 2005 by each of the executive officers named in the “Summary Compensation Table” and the year-end value of unexercised options held by such officers and does not include any stock option exercises for shares of IVAX Corporation under the IVAX Corporation 1997 Employee Stock Option Plan.
STOCK OPTION EXERCISES IN FISCAL YEAR 2005
AND FISCAL YEAR-END OPTION VALUES
Name | Shares Acquired on Exercise (#) | Value Realized ($) | Number of Shares Underlying Unexercised Stock Options at Fiscal Year-End (#) | Value of Unexercised In-the-Money Stock Options at Fiscal Year-End ($) | ||||||||||
| Exercisable | Unexercisable | Exercisable | Unexercisable | |||||||||||
Giorgio D’Urso | 300,000 | $ | 906,000 | — | — | — | — | |||||||
Duane M. Steele | 60,000 | $ | 211,200 | 12,558 | 57,674 | — | $ | 30,000 | ||||||
Mark S. Deutsch | 18,000 | $ | 63,360 | 11,279 | 33,837 | — | $ | 18,000 | ||||||
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COMPENSATION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
Executive Officer Compensation
The Company’s compensation program for executive officers consists of three key elements: a base salary, an incentive bonus and periodic grants of stock options. The Compensation Committee believes that this approach best serves the interests of stockholders by compensating the Company’s executive officers in a manner that advances both the short and long term interests of the Company and its stockholders. Thus, compensation for the Company’s executive officers involves a portion of pay that depends on incentive payments which are earned only if corporate goals are met or exceeded and stock options which directly relate a significant portion of an executive officer’s long term remuneration to stock price appreciation realized by the Company’s stockholders. The Company must compete for the services of its executives with numerous other companies, many of which have greater financial resources and more comprehensive benefit plans than the Company’s. The Compensation Committee believes that the Company’s compensation policies are appropriate.
Base Salary
The Company offers salaries it believes are competitive based on a review of market practices and the duties and responsibilities of each executive officer. In setting base compensation, the Compensation Committee periodically examines market compensation levels and trends observed in the labor market, primarily in the healthcare industry and primarily in the geographic areas in which the Company operates. Market information is used as an initial frame of reference for annual salary adjustments and starting salary offers. Salary decisions are determined based on an annual review by the Compensation Committee with input and recommendations from the Chief Executive Officer for executive officers other than the Chief Executive Officer. Salary determinations are made based on, among other things, the decision making responsibilities of each position, and the contribution, experience and work performance of each executive officer.
Annual Incentive Program
The Company’s management incentive program is designed to motivate executives by recognizing and rewarding performance. The annual incentive program is a discretionary bonus plan used to compensate executives based on the Company’s profitability and the achievement of individual performance goals with the greatest weight given to the Company’s profitability.
Each participant’s bonus is intended to take into account corporate and individual components, which are weighted according to the executive’s sphere of responsibility. In 2005, the Company awarded a $50,000 discretionary bonus to Mr. D’Urso based upon his successful leadership of and individual performance with respect to the Company, the Company’s progress in achieving certain strategic business goals, and the Compensation Committee’s acknowledgement that, since 2001, Mr. D’Urso had not received any increase in base salary, any discretionary bonus or any grant of stock options. In 2005, the Company did not meet profitability goals, and no discretionary bonuses were paid to the other executive officers named in the “Summary Compensation Table.”
Stock Options
Stock options represent a significant portion of the total compensation for the Company’s executive officers. Stock options are generally awarded to executive officers at the time that they join the Company and periodically thereafter. Executive officers named in the “Summary Compensation Table” were granted a total of 20,000 stock options for the 2005 fiscal year. The granting of options is totally discretionary and options are awarded based on an assessment of an employee’s contribution to the success and growth of the Company. For executive officers other than the Chief Executive Officer, grants of stock options are generally based on the level of an executive’s
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position with the Company, an evaluation of the executive’s past and expected performance, the number of outstanding and previously granted options and discussions with the executive and, in addition, the Compensation Committee also considers the recommendations of the Chief Executive Officer. The Compensation Committee believes that providing executives with opportunities to acquire an interest in the future growth and prosperity of the Company through the grant of stock options will assist the Company in attracting and retaining qualified and experienced executive officers and offer additional long term incentives. The Compensation Committee believes that utilization of stock options more closely aligns the executives’ interests with those of the Company’s stockholders because the ultimate value of such compensation is directly dependent on the stock price.
Compensation of the Chief Executive Officer
As previously indicated, the Compensation Committee believes that the Company’s total compensation program is appropriate based upon the Company’s business performance, market compensation levels, and personal performance of the Company’s executives. The Chief Executive Officer has previously entered into an employment agreement with the pre-merger IVAX Diagnostics, as described above. Under the terms of the employment agreement, the Compensation Committee reviews and fixes the base salary of the Chief Executive Officer based on those factors described above for other executive officers, as well as the Compensation Committee’s assessment of Mr. D’Urso’s past performance as Chief Executive Officer and its expectation as to his future contributions. In 2005, Mr. D’Urso did not receive a base salary increase, which was consistent with the underlying market conditions and was considered appropriate. In 2005, Mr. D’Urso was awarded a $50,000 discretionary bonus based upon his successful leadership of and individual performance with respect to the Company, the Company’s progress in achieving certain strategic business goals, and the Compensation Committee’s acknowledgement that, since 2001, Mr. D’Urso had not received any increase in base salary, any discretionary bonus or any grant of stock options. Future salary increases and bonuses will continue to reflect the amounts paid to chief executive officers at other public companies, as well as the Company’s financial condition, operating results and attainment of strategic objectives.
The Company has noted Mr. D’Urso’s leadership during 2005, including his successful leadership of the Company toward progress in achieving certain strategic business goals and efforts toward continuing to increase the visibility of and interest in the Company. Accordingly, the Compensation Committee approved the extension of, and the Company extended, the term of Mr. D’Urso’s employment agreement until February 24, 2010.
Submitted by the Members of the Compensation Committee:
Glenn L. Halpryn
John B. Harley, M.D.
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Compensation Committee Interlocks and Insider Participation
During fiscal year 2005, the Compensation Committee consisted of Neil Flanzraich, Chairman, Glenn L. Halpryn, and John B. Harley, M.D. From May 1998 until January 2006, Mr. Flanzraich had served as the Vice Chairman and President of IVAX. On April 19, 2006, Mr. Flanzraich resigned from the Board of Directors and the Compensation Committee. See “Certain Relationships and Related Transactions” above for a description of the transactions between IVAX, Teva and the Company.
Stockholder Return Performance Graph
Set forth below are a graph and a table comparing the cumulative total returns (assuming reinvestment of dividends) for the Common Stock of the Company, the Hemscott Group Index—Diagnostic Substances and the American Stock Exchange. The graph and the table show annual comparisons, assuming $100 was invested on December 31, 2000.
| 12/31/00 | 12/31/01 | 12/31/02 | 12/31/03 | 12/31/04 | 12/31/05 | |||||||
IVAX Diagnostics, Inc. | 100.00 | 232.00 | 113.33 | 322.00 | 290.00 | 240.00 | ||||||
Hemscott Group Index—Diagnostic Substances | 100.00 | 98.91 | 61.90 | 98.37 | 111.71 | 107.86 | ||||||
American Stock Exchange | 100.00 | 95.39 | 91.58 | 124.66 | 142.75 | 157.43 |
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AUDIT COMMITTEE REPORT
From the beginning of the 2005 fiscal year until January 25, 2005, the Audit Committee consisted of Jose J. Valdes-Fauli, Chairman, Jack R. Borsting, Ph.D., and Glenn L. Halpryn. On January 25, 2005, Dr. Borsting resigned from the Board of Directors and the Audit Committee. On April 8, 2005, Fernando L. Fernandez was appointed to the Board of Directors and to the Audit Committee, in each case, to serve until the Company’s 2005 annual meeting of stockholders, to fill the vacancies created by Dr. Borsting’s resignation. At the Company’s 2005 annual meeting of stockholders, Mr. Fernandez was elected to the Board of Directors. Messrs. Valdes-Fauli, Halpryn and Fernandez comprised the Audit Committee for the remainder of the 2005 fiscal year. The Audit Committee operates under a written charter adopted and approved by the Board of Directors.
The Audit Committee reviewed and discussed the audited consolidated financial statements for the fiscal year ended December 31, 2005 with management and the Company’s independent auditors for the fiscal year ended December 31, 2005, Ernst & Young LLP (“Ernst & Young”).
The Audit Committee also discussed with the independent auditors matters required to be discussed with audit committees under generally accepted auditing standards, including, among other things, matters related to the conduct of the audit of the Company’s consolidated financial statements and the matters required to be discussed by Statement on Auditing Standards No. 61 (Communication with Audit Committees).
The Company’s independent auditors also provided to the Audit Committee the written disclosures and the letter required by Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees), and the Audit Committee discussed with the independent auditors their independence from the Company. When considering Ernst & Young’s independence, the Audit Committee considered whether their provision of services to the Company was compatible with maintaining their independence. The Audit Committee also reviewed, among other things, the amount of fees paid to Ernst & Young for audit services and non-audit services.
The Audit Committee also met with the independent auditors, with and without management present, to discuss the results of their examinations, their evaluations of the Company’s internal controls and the overall quality of the Company’s financial reporting.
Based on the Audit Committee’s review and these meetings, discussions and reports, the Audit Committee recommended to the Board of Directors that the Company’s audited consolidated financial statements for the fiscal year ended December 31, 2005 be included in the Company’s Annual Report on Form 10-K.
Submitted by the Members of the Audit Committee:
Jose J. Valdes-Fauli, Chairman
Glenn L. Halpryn
Fernando L. Fernandez
15
Principal Accountant Fees and Services
The following table sets forth the aggregate fees billed to the Company by Ernst & Young, the Company’s principal accountant for the fiscal years ended December 31, 2005 and 2004.
| For the years ended December 31, | ||||||
| 2005 | 2004 | |||||
Audit Fees | $ | 280,000 | $ | 187,500 | ||
Audit-Related Fees | 65,600 | — | ||||
Tax Fees | — | — | ||||
All Other Fees | — | — | ||||
Total Fees | $ | 345,600 | $ | 187,500 | ||
In the table above, pursuant to their definitions under the applicable regulations of the Securities and Exchange Commission, “audit fees” are fees for professional services rendered for the audit of the Company’s annual financial statements and review of the Company’s financial statements included in the Company’s quarterly reports on Form 10-Q and for services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements; “audit-related fees” are fees for assurance and related services that are reasonably related to the performance of the audit and review of the Company’s financial statements, and primarily include accounting consultations and audits in connection with acquisitions; “tax fees” are fees for tax compliance, tax advice and tax planning; and “all other fees” are fees for any services not included in the first three categories.
The Audit Committee of the Board of Directors is responsible for pre-approving all audit services and permitted non-audit services to be performed by the Company’s principal accountant, except in those instances which do not require such pre-approval pursuant to the applicable regulations of the Securities and Exchange Commission. The Audit Committee has established policies and procedures for its pre-approval of audit services and permitted non-audit services and, from time to time, the Audit Committee reviews and revises its policies and procedures for pre-approval.
16
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table indicates, as of July 7, 2006, information about the beneficial ownership of the Common Stock of the Company by (1) each director, (2) each executive officer named in the “Summary Compensation Table,” (3) all directors and executive officers as a group, and (4) each person who the Company knows beneficially owns more than 5% of the Common Stock of the Company. All such shares were owned directly with sole voting and investment power unless otherwise indicated. Unless otherwise indicated, the principal business address of each person listed below is 2140 North Miami Avenue, Miami, Florida 33127.
Name | Shares (#)(1) | Percent of Class (%) | ||||
Teva Pharmaceutical Industries Ltd. | 20,000,000 | 72.3 | % | |||
IVAX Corporation c/o Teva Pharmaceuticals USA, Inc. | ||||||
425 Privet Road | ||||||
P.O. Box 1005 | ||||||
Horsham, PA 19044 | ||||||
Giorgio D’Urso | 324,000 | (2) | 1.2 | % | ||
Duane M. Steele | 75,116 | (3) | * | |||
Mark S. Deutsch | 30,558 | (4) | * | |||
Itzhak Krinsky, Ph.D. | — | — | ||||
Richard Egosi | — | — | ||||
Mark Durand | — | — | ||||
Fernando L. Fernandez | 25,000 | (5) | * | |||
Glenn L. Halpryn | 75,000 | (6) | * | |||
John B. Harley, M.D. | 50,000 | (7) | * | |||
Jose J. Valdes-Fauli | 60,000 | (8) | * | |||
All directors and executive officers as a group (10 persons) | 639,674 | 2.3 | % |
| * | Represents beneficial ownership of less than 1%. |
| (1) | For purposes of this table, beneficial ownership is computed pursuant to Rule 13d-3 under the Securities Exchange Act of 1934. |
| (2) | Includes 9,000 shares of common stock owned by Mr. D’Urso’s wife. Mr. D’Urso disclaims beneficial ownership of the shares of common stock owned by his wife. |
| (3) | Includes options for 15,116 shares of common stock granted to Mr. Steele. |
| (4) | Includes options for 12,558 shares of common stock granted to Mr. Deutsch. |
| (5) | Includes options for 25,000 shares of common stock granted to Mr. Fernandez. |
| (6) | Includes options for 75,000 shares of common stock granted to Mr. Halpryn. |
| (7) | Includes options for 50,000 shares of common stock granted to Dr. Harley. |
| (8) | Includes options for 60,000 shares of common stock granted to Mr. Valdes-Fauli. |
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OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors is not aware of any matters, other than those referred to in the accompanying Notice of Meeting, to be brought before the Annual Meeting. However, if any other matters should properly come before the Annual Meeting, the persons named as proxy holders will have the discretion to vote any shares of Common Stock for which they hold proxies in accordance with their best judgment. If for any reason any of the nominees for election to the Board of Directors is not available as a candidate for director, the persons named proxy holders will vote any shares of Common Stock for which they hold proxies for such other candidate or candidates as may be nominated by the Board of Directors.
INDEPENDENT PUBLIC ACCOUNTANTS
PricewaterhouseCoopers LLP (“PwC”) has been selected by the Company’s Audit Committee to serve as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2006. Ernst & Young acted as the Company’s independent registered public accounting firm for the fiscal years ended December 31, 2005 and 2004. On April 19, 2006, the Company notified Ernst & Young that effective immediately the Company decided to discontinue its engagement of Ernst & Young as the Company’s independent registered public accounting firm and the Company appointed PwC as its new independent registered public accounting firm for the fiscal year ending December 31, 2006 effective immediately. The decisions to discontinue its engagement of Ernst & Young and to appoint PwC were made and approved by the Company’s Audit Committee.
The audit report of Ernst & Young on the Company’s financial statements for the fiscal years ended December 31, 2005 and 2004 did not contain an adverse opinion or disclaimer of opinion, nor was it qualified or modified as to uncertainty, audit scope or accounting principles.
During the two most recent fiscal years ended December 31, 2005 and 2004, and the subsequent interim period through April 19, 2006, the Company had no disagreements with Ernst & Young on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreement, if not resolved to Ernst & Young’s satisfaction, would have caused Ernst & Young to make reference to the subject matter of the disagreement in connection with its reports. In addition, during that time, there were no reportable events (as defined in Item 304(a)(1)(v) of Regulation S-K).
During the two most recent fiscal years ended December 31, 2005 and 2004, and the subsequent interim period through April 19, 2006, the Company did not consult with PwC regarding: (i) either the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s financial statements; or (ii) any matter that was either the subject of a disagreement, as that term is defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions to Item 304 of Regulation S-K, or a reportable event, as that term is defined in Item 304(a)(1)(v) of Regulation S-K.
Representatives of PwC are expected to be present at the Annual Meeting, will have the opportunity to make a statement if they desire and will be available to respond to appropriate questions from stockholders.
Representatives of Ernst & Young will be invited to be present at the Annual Meeting. Should they choose to attend, they will have the opportunity to make a statement if they desire and will be available to respond to appropriate questions from stockholders.
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STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the next annual meeting of the Company, expected to be held in August 2007, and to be included in the Company’s proxy statement and form of proxy for that meeting must be in writing and in compliance with applicable rules and regulations and received by the Secretary of the Company at its main offices at 2140 North Miami Avenue, Miami, Florida 33127, no later than March 22, 2007. In addition to any other applicable requirements, for a stockholder to properly present any proposal at the next annual meeting of the Company, but not to be included in the Company’s proxy statement and form of proxy for that meeting, the proposal must be in writing and in compliance with the Company’s Bylaws and received by the Secretary of the Company at its main offices, as listed above, no earlier than March 22, 2007 and no later than May 21, 2007.
| BY ORDER OF THE BOARD OF DIRECTORS |
|
Mark Deutsch, |
Secretary |
July 14, 2006
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Appendix A
IVAX DIAGNOSTICS, INC.
2140 North Miami Avenue
Miami, Florida 33127
PROXY
This Proxy is solicited on behalf of the Board of Directors of IVAX Diagnostics, Inc.
I (whether one or more of us) appoint Giorgio D’Urso and Duane Steele, and each of them separately, as my proxies, each with the power to appoint his substitute, and authorize each of them to vote as designated on the reverse side, all of my shares of Common Stock of IVAX Diagnostics, Inc. held of record by me at the close of business on July 7, 2006, at the Annual Meeting of Stockholders to be held on August 9, 2006, and at any postponement or adjournment of the meeting.
When properly executed and returned, this Proxy will be voted in the manner directed by me. If no direction is indicated, this Proxy will be voted “FOR” the election of all director nominees and according to the discretion of the proxy holders on any other matters that may properly come before the Annual Meeting or any postponement or adjournment thereof.
Please complete, date and sign this Proxy on the reverse side, and mail it promptly in the enclosed envelope.
(continued and to be signed on other side)
A-1
(continued from other side)
The Board of Directors of IVAX Diagnostics, Inc. unanimously recommends a vote “FOR” all of the nominees for director:
| 1. | ELECTION OF DIRECTORS |
FOR each nominee listed | WITHHOLD AUTHORITY | Name | Term of Office | |||
| ¨ | ¨ | Itzhak Krinsky, Ph.D. | 2007 | |||
| Mark Durand | 2008 | |||||
| Richard Egosi | 2008 | |||||
| Giorgio D’Urso | 2009 | |||||
| Jose J. Valdes-Fauli | 2009 | |||||
| (INSTRUCTION: To withhold authority to vote for any individual nominee, draw a line through such nominee’s name.) | ||||||
| 2. | In their discretion, the proxy holders are authorized to vote upon such other matters as may properly come before the meeting or any postponement or adjournment thereof. |
I acknowledge receipt of the accompanying Notice of Annual Meeting of Stockholders and Proxy Statement for the August 9, 2006 meeting.
| Dated: , 2006 |
Signature |
Signature if held jointly |
(Please date this Proxy and sign exactly as name or names appear on this Proxy. When shares are held by joint tenants, both should sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by president or other authorized officer. If a partnership, please sign in partnership name by authorized person.)
Please complete, date, sign and mail this Proxy promptly in the enclosed envelope. Postage is not necessary if mailed in the United States.
A-2