SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|X| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
|_| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Under 14a-12
IMPAX LABORATORIES, INC.
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box)
|X| No Fee Required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined.):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
IMPAX LABORATORIES, INC.
30831 Huntwood Avenue
Hayward, California 94544
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Dear Fellow Stockholder:
You are cordially invited to attend the Company's Annual Meeting of
Stockholders to be held on Monday, May 17, 2004 at 10:00 A.M., Pacific Time, at
Crowne Plaza Hotel, 1221 Chess Drive, Foster City, CA 94404.
The formal Notice of Meeting and the accompanying Proxy Statement set
forth proposals for your consideration this year. You are being asked to elect
directors, to adopt an amendment to the Company's Certificate of Incorporation
to increase the number of authorized shares of Common Stock, and ratify the
appointment of Deloitte & Touche LLP as the Company's independent accountants
for the fiscal year ending December 31, 2004.
At the meeting, the Board of Directors will also report on the affairs
of the Company, and a discussion period will be provided for questions and
comments of general interest to stockholders.
We look forward to greeting personally those of you who are able to be
present at the meeting. However, whether or not you are able to be with us at
the meeting, it is important that your shares be represented. Accordingly, you
are requested to sign, date, and mail, at your earliest convenience, the
enclosed proxy in the envelope provided for your use.
Thank you for your cooperation.
Very truly yours,
Charles Hsiao, Ph.D.
Chairman
April 12, 2004
IMPAX LABORATORIES, INC.
30831 Huntwood Avenue
Hayward, California 94544
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON May 17, 2004
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To the Stockholders of Impax Laboratories, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Impax
Laboratories, Inc. (the "Company") will be held on Monday, May 17, 2004 at 10:00
A.M., Pacific Time, at Crowne Plaza Hotel, 1221 Chess Drive, Foster City, CA
94404, for the following purposes:
(1) To elect ten directors to serve for the ensuing year.
(2) To adopt an amendment to the Company's Certificate of Incorporation
to increase the number of authorized shares of Common Stock from 75,000,000 to
90,000,000 shares.
(3) To ratify the appointment of Deloitte & Touche LLP as the Company's
independent accountants for the fiscal year ending December 31, 2004.
(4) To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.
Only stockholders of record at the close of business on April 7, 2004
will be entitled to notice of and to vote at the Annual Meeting or any
adjournment thereof.
All stockholders are cordially invited to attend the Annual Meeting in
person. However, whether or not you plan to attend the Annual Meeting in person,
each stockholder is urged to complete, date and sign the enclosed form of proxy
and return it promptly in the envelope provided. No postage is required if the
proxy is mailed in the United States. Stockholders who attend the Annual Meeting
may revoke their proxy and vote their shares in person.
By Order of the Board of Directors
CORNEL C. SPIEGLER
Secretary
Hayward, California
April 12, 2004
Impax Laboratories, Inc.
30831 Huntwood Avenue
Hayward, California 94544
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PROXY STATEMENT
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GENERAL INFORMATION
General
This Proxy Statement (first mailed to stockholders on or about April
12, 2004) is furnished to the holders of Common Stock, par value $.01 per share
(the "Common Stock") of Impax Laboratories, Inc. (the "Company") in connection
with the solicitation by the Board of Directors of the Company of proxies for
use at the Annual Meeting of Stockholders (the "Annual Meeting"), or at any
adjournment thereof, pursuant to the accompanying Notice of Annual Meeting of
Stockholders. The Annual Meeting will be held on Monday, May 17, 2004 at 10:00
A.M., Pacific Time, at Crowne Plaza Hotel, 1221 Chess Drive, Foster City, CA
94404.
At the Annual Meeting, stockholders will consider and vote upon: (i)
the election of ten directors to the Board of Directors, (ii) the amendment to
the Company's Certificate of Incorporation to increase the number of authorized
shares of Common Stock from 75,000,000 to 90,000,000 shares, and (iii) the
ratification of the appointment of Deloitte & Touche LLP as the Company's
independent accountants for the fiscal year ending December 31, 2004.
Management currently is not aware of any other matters that will come
before the Annual Meeting. If any other matters properly come before the Annual
Meeting, the persons designated as proxies intend to vote in accordance with
their best judgment on such matters.
Proxies for use at the Annual Meeting are being solicited by the Board
of Directors of the Company. Proxies will be solicited by mail or electronically
through the Internet; however, certain officers, directors, employees and agents
of the Company, none of whom will receive additional compensation therefore, may
solicit proxies by telephone, telegram or other personal contact. The Company
will bear the cost of the solicitation of the proxies, including postage,
printing and handling, and will reimburse the reasonable expenses of brokerage
firms and others for forwarding material to beneficial owners of shares of
Common Stock.
Revocability and Voting of Proxy
A form of proxy for use at the Annual Meeting and a return envelope for
the proxy are enclosed. Unless otherwise indicated on the form of proxy, shares
of Common Stock represented by any proxy in the enclosed form, assuming the
proxy is properly executed and received by the Company prior to the Annual
Meeting, will be voted with respect to the following items on the agenda: (i)
the election of each of the ten nominees for director as shown on the form of
proxy, (ii) the amendment to the Company's Certificate of Incorporation to
increase the number of authorized shares of Common Stock from 75,000,000 to
90,000,000 shares, and (iii) the ratification of the appointment of Deloitte &
Touche LLP as the Company's independent accountants for the fiscal year ending
December 31, 2004.
Stockholders may revoke the authority granted by their execution of a
proxy at any time prior to the effective exercise of the powers conferred by
that proxy by filing with the Secretary of the Company a written notice of
revocation or a duly executed proxy bearing a later date, or by voting in person
at the Annual Meeting. Shares of Common Stock represented by executed and
unrevoked proxies will be voted in accordance with the instructions specified in
such proxies. If no specifications are given, the proxies intend to vote the
shares represented thereby "for" the election of each of the ten nominees for
director as shown on the form of proxy, "for" the amendment to the Company's
Certificate of Incorporation to increase the number of authorized shares of
Common Stock from 75,000,000 to 90,000,000 shares, "for" the ratification of the
appointment of Deloitte & Touche LLP as the Company's independent accountants
for the fiscal year ending December 31 2004, and in accordance with their best
judgment on any other matters that may properly come before the Annual Meeting.
The enclosed Proxy confers discretionary authority to vote with respect
to any and all of the following matters that may properly come before the Annual
Meeting: (i) matters which the Company did not receive notice by February 26,
2004; (ii) approval of the Minutes of a prior meeting of Stockholders, if such
approval does not amount to ratification of the action taken at such meeting;
(iii) the election of any person to any office for which a bona fide nominee
named in this Proxy Statement is unable to serve or for good cause will not
serve; (iv) any proposal omitted from this Proxy Statement and the form of proxy
pursuant to Rules 14a-8 or 14a-9 under the Securities Exchange Act of 1934; and
(v) matters incident to the conduct of the Annual Meeting. In connection with
such matters, the persons named in the enclosed proxy will vote in accordance
with their best judgment.
Record Date and Voting Rights
On April 7, 2004, there were issued and outstanding 57,962,361 shares
of Common Stock. Only stockholders of record at the close of business on April
7, 2004 (the "Record Date") are entitled to notice of and to vote at the Annual
Meeting or any adjournment thereof.
Each share of Common Stock is entitled to one vote upon each of the
matters to be presented at the Annual Meeting. Accordingly, as of the Record
Date, the holders of the shares of Common Stock are entitled to cast a total of
57,962,361 votes.
The affirmative vote of the holders of a plurality of the shares
present in person or represented by proxy and entitled to vote at the Annual
Meeting is required for the election of directors. Accordingly, the ten nominees
receiving the highest number of affirmative votes of the shares present in
person or represented by proxy and entitled to vote for them shall be elected as
directors. Only votes cast for a nominee will be counted, except that the
accompanying proxy will be voted for all nominees in the absence of instructions
to the contrary.
The affirmative vote of the holders of a majority of the outstanding
shares of Common Stock is required to approve the amendment of the Company's
Certificate of Incorporation to increase the number of authorized shares of
Common Stock from 75,000,000 to 90,000,000 shares.
The affirmative vote of the holders of a majority of the shares present
in person or represented by proxy and entitled to vote at the Annual Meeting is
required for the ratification of the appointment of Deloitte & Touche LLP as the
Company's independent accountants for the fiscal year ending December 31, 2004.
Abstentions and broker non-votes will be counted for purposes of
determining the presence or absence of a quorum, but will not be counted with
respect to the specific matter being voted upon. Under the Delaware General
Corporation Law, an abstention or withholding of authority to vote on any
proposal, other than for the election of directors, will have the same legal
effect as a vote "against" the proposal. Broker non-votes do not count as votes
against any proposal or matter at the Annual Meeting. "Broker non-votes" are
shares held by brokers or nominees which are present in person or represented by
proxy, but which are not voted on a particular matter because instructions have
not been received from the beneficial owner.
2
BENEFICIAL OWNERSHIP OF COMMON STOCK BY CERTAIN STOCKHOLDERS AND MANAGEMENT
The following table sets forth information as of February 29, 2004
(except as otherwise noted in the footnotes) regarding the beneficial ownership
of the Company's Common Stock of: (i) each person known by the Company to own
beneficially more than five percent of the outstanding Common Stock; (ii) each
director and nominee for election as a director of the Company; (iii) each
executive officer named in the Summary Compensation Table (see "Executive
Compensation"); and (iv) all directors and executive officers of the Company as
a group.
Shares Beneficially Owned +
Common Stock
---------------------------
Name and Address of Beneficial Owner No. of Shares Percent
- -------------------------------------------------- --------------- -------
Leslie Z. Benet, Ph.D.(1) 14,105 *
533 Parnassus Avenue, U-68
San Francisco, CA 94143
Robert L. Burr (2) 22,438 *
Windcrest Discovery Investments LLC
80 Business Park Drive, Suite 304
Armonk, NY 10504
Barry R. Edwards (3) 623,151 1.1
Impax Laboratories, Inc.
3735 Castor Avenue
Philadelphia, PA 19124
David J. Edwards (4) 34,705 *
Windcrest Discovery Investments LLC
122 East 42nd Street
New York, NY 10168
Nigel Fleming, Ph.D.(5) 26,505 *
392 Durant Way
Mill Valley, CA 94941
Charles Hsiao, Ph.D. (6) 5,323,913 9.1
Impax Laboratories, Inc.
30831 Huntwood Avenue
Hayward, CA 94544
Larry Hsu, Ph.D. (7) 3,082,235 5.3
Impax Laboratories, Inc.
30831 Huntwood Avenue
Hayward, CA 94544
Michael Markbreiter (8) 31,505 *
1120 Park Avenue
New York, NY 10128
Oh Kim Sun (9) 23,184 *
Ideal Force Sdn Bhd
Suite E-6-14 Wisma Sunrise
Plaza Mont'Kiara, No. 2 Jalan Kiara, Mont'kiara
50480 Kuala Lumpur, Malaysia
3
Shares Beneficially Owned +
Common Stock
---------------------------
Name and Address of Beneficial Owner No. of Shares Percent
- -------------------------------------------------- --------------- -------
Peter R. Terreri (10) 14,000 *
C G M, Inc.
1445 Ford Road
Bensalem, PA 19020
May Chu (11) 290,951 *
Impax Laboratories, Inc.
30831 Huntwood Avenue
Hayward, CA 94544
David S. Doll (12) 81,779 *
Impax Laboratories, Inc.
3735 Castor Avenue
Philadelphia, PA 19124
Cornel C. Spiegler (13) 121,000 *
Impax Laboratories, Inc.
3735 Castor Avenue
Philadelphia, PA 19124
Michael G. Wokasch (14) 0 *
Impax Laboratories, Inc.
30831 Huntwood Avenue
Hayward, CA 94544
Chemical Company of Malaysia Berhad 4,426,483 7.7
Wisma Sime Darby
14 Jalan Raja Laut
50708 Kuala Lumpur, Malaysia
Chiin Hsiao Children Irrevocable Trust 2,601,924 4.5
c/o Laurie A. Miller, Esquire
3542 Oak Knoll Drive
Redwood City, CA 94062
J.P. Morgan Chase & Co. 6,755,698 11.7
Fleming US Discovery Fund III, L.P. 5,104,079 8.8
Fleming US Discovery Offshore Fund III, L. P. 818,319 1.4
J.P. Morgan Investment Management 833,300 1.5
J.P. Morgan Chase & Co.
1221 Avenue of the Americas
New York, NY 10036
Laurie A. Miller, Esquire (15) 3,949,264 6.8
3542 Oak Knoll Drive
Redwood City, CA 94062
All directors and executive officers as a group (14
persons) (16) 9,689,471 16.2
- ----------
* Less than one percent
+ Beneficial Ownership is determined in accordance with the rules of the SEC
and includes voting or dispositive power with respect to the Common Stock.
For options currently exercisable or exercisable within 60 days of the
date hereof, the underlying shares of Common Stock are deemed outstanding
for computing the share ownership and percentage ownership of the person
holding such securities, but are not deemed outstanding for computing the
percentage ownership of any other person. As of February 29, 2004, there
were 57,852,057 shares outstanding.
4
(1) Includes options to purchase 10,505 shares of Common Stock which may be
exercised within 60 days; it also includes Common Stock owned by Dr.
Benet's wife.
(2) Includes warrants to purchase 5,000 shares of Common Stock and options to
purchase 3,838 shares of Common Stock which may be exercised within 60
days. Mr. Burr has a consulting agreement with J.P. Morgan Chase & Co.
under which he is the lead partner of Fleming US Discovery Partners, L.P.,
a private equity sponsor affiliated with J.P. Morgan Chase & Co.
(3) Consists of options to purchase 621,250 shares of Common Stock which may
be exercised within 60 days.
(4) Includes options to purchase 11,505 shares of common stock which may be
exercised within 60 days. Mr. Edwards is a managing member of Windcrest
Discovery Investments LLC, which is the manager of WD Partnership LP and
WD Offshore Fund Ltd, which collectively own 97,248 shares of IMPAX common
stock. Mr. Edwards has a consulting agreement with J.P. Morgan Chase & Co.
(5) Includes options to purchase 14,505 shares of Common Stock which may be
exercised with 60 days.
(6) Includes 500,370 shares of Common Stock held in trust for the benefit of
John Hsiao's children, 250,185 shares of Common Stock held in trust for
the benefit of Richard Hsiao's children and options to purchase 438,810
shares of Common Stock which may be exercised within 60 days. Does not
include 2,601,924 shares of Common Stock held in the Chiin Hsiao Children
Irrevocable Trust, as to which shares Dr. Hsiao does not have voting or
dispositive power.
(7) Includes options to purchase 432,330 shares of Common Stock which may be
exercised within 60 days. Does not include 1,254,320 shares of Common
Stock held in the Hsu Children Irrevocable Trust, as to which shares Dr.
Hsu disclaims beneficial ownership.
(8) Consists of options to purchase 31,505 shares of Common Stock which may be
exercised within 60 days.
(9) Includes options to purchase 15,584 shares of Common Stock which may be
purchased within 60 days.
(10) Consists of options to purchase 14,000 shares of Common Stock which may be
exercised within 60 days.
(11) Includes options to purchase 178,562 shares of Common Stock which may be
exercised within 60 days; it also includes Common Stock and options owned
by Mrs. Chu's husband, Mr. John Chu, an outside consultant of the Company.
(12) Includes options to purchase 79,500 shares of Common Stock which may be
exercised within 60 days.
(13) Includes options to purchase 110,250 shares of Common Stock which may be
exercised within 60 days.
(14) Mr. Wokasch resigned as an officer of the Company on December 31, 2003.
(15) Includes 2,601,924 shares of Common Stock owned by the Chiin Hsiao
Children Irrevocable Trust and 1,254,320 shares of Common Stock owned by
the Hsu Children Irrevocable Trust, for which Laurie A. Miller, Esq.,
serves as trustee. Ms. Miller disclaims beneficial ownership of these
shares held by these trusts. Also includes options to purchase 10,007
shares of Common Stock which may be exercised within 60 days and an
outstanding March 2004 Call Option for 5,000 shares.
(16) Includes options and warrants to purchase 1,967,144 shares of Common Stock
which may be exercised within 60 days.
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
Ten directors (constituting the entire Board) are to be elected at the
Annual Meeting. Unless otherwise specified, the enclosed proxy will be voted in
favor of the persons named below to serve until the next annual meeting of
stockholders and until their respective successors shall have been duly elected
and qualified. If any of these nominees becomes unavailable for any reason, or
if a vacancy should occur before the election, the shares represented by the
proxy will be voted for the person, if any, who is designated by the Board of
Directors to replace the nominee or to fill the vacancy on the Board. All
nominees have consented to be named and have indicated their intent to serve if
elected. The Board of Directors has no reason to believe that any of the
nominees will be unable to serve or that any vacancy on the Board of Directors
will occur.
5
The nominees, their ages, the year in which each became a director, and
their principal occupations or employment during, at least, the past five years
are as follows:
Director
Name Age* since Positions with Impax
- ----------------------- ---- -------- ------------------------------------
Leslie Z. Benet, Ph.D. 66 2001 Director
Robert L. Burr 53 2001 Director
Barry R. Edwards 47 1999 Chief Executive Officer and Director
David J. Edwards 38 1999 Director
Nigel Fleming, Ph.D. 50 1999 Director
Charles Hsiao, Ph.D. 60 1999 Chairman and Director
Larry Hsu, Ph.D. 55 1999 President and Director
Michael Markbreiter 42 1997 Director
Oh Kim Sun 55 1999 Director
Peter R. Terreri 46 2003 Director
*as of March 31, 2004
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Leslie Z. Benet, Ph.D. has been our Director since 2001. He has been a
Professor since 1969 of, and has also served as Chairman of, the Department of
Biopharmaceutical Sciences, University of California, San Francisco. Dr. Benet
has been Chairman, President and/or Chief Executive Officer of AvMax Inc. and
OxoN Medica Inc. since 1995 and 2000, respectively. Dr. Benet received his A.B.
(English), B.S. (Pharmacy), and M.S. from the University of Michigan, and his
Ph.D. from the University of California. Dr. Benet has received five honorary
doctorates: Uppsala University, Sweden (Pharm.D., 1987); Leiden University, The
Netherlands (Ph.D., 1995); University of Illinois at Chicago (D.Sc., 1997);
Philadelphia College of Pharmacy and Science (D.Sc., 1997); and Long Island
University (D.Sc., 1999). Dr. Benet's research interests, more than 450
publications, and ten patents are in the areas of pharmacokinetics,
biopharmaceutics, drug delivery, and pharmacodynamics. In 1985, Dr. Benet served
as President of the APhA Academy of Pharmaceutical Sciences. During 1986, Dr.
Benet was a founder and first President of the American Association of
Pharmaceutical Scientists (AAPS). In 1987, Dr. Benet was elected to membership
in the Institute of Medicine (IOM) of the National Academy of Sciences. Dr.
Benet has received the highest scientific award of AAPS (1989 and 2000), Rho Chi
(1990), American Association of Colleges of Pharmacy (1991), American Society
for Clinical Pharmacology and Therapeutics (1995), American Pharmaceutical
Association (2000), and the International Pharmaceutical Federation (2001). In
2003, he was listed among the 250 most highly cited pharmacologists worldwide.
Dr. Benet formerly served as Chair of the FDA Expert Panel on Individual
Bioequivalence and the FDA Center for Biologics Peer Review Committee, and as a
member of the FDA Science Board and the Generic Drugs Advisory Committee. Dr.
Benet presently serves as a member of the IOM Board of Health Sciences Policy.
Robert L. Burr has served as our Director since 2001. He has been a
Member of Windcrest Discovery Investments LLC since October 2001 and Partner of
Fleming US Discovery Partners, L.P. since September 1996. Mr. Burr has a
consulting agreement with J.P. Morgan Partners, an affiliate of J.P. Morgan
Chase & Co., to provide consulting services to Fleming US Discovery Fund III,
L.P. and Fleming US Discovery Offshore Fund III, L.P. Mr. Burr was employed by
J.P. Morgan Chase & Co. from 1995 to 2001. From 1992 to 1995, Mr. Burr was head
of Private Equity at Kidder, Peabody & Co., Inc. Previously, Mr. Burr served as
the Managing General Partner of Morgan Stanley Ventures and General Partner of
Morgan Stanley Venture Capital Fund I, L.P. and was a corporate lending officer
with Citibank, N.A. Mr. Burr serves on the Board of Directors of Displaytech,
Inc. and Hudson Technologies, Inc.
6
Barry R. Edwards has been our Chief Executive Officer since January
2004 and Director since January 1999. Mr. Edwards was our Co-Chief Executive
Officer from December 1999 until December 2003. From January 1999 until December
1999 Mr. Edwards served as President and Chief Executive Officer of Global
Pharmaceuticals Corporation. From 1996 to 1998, Mr. Edwards was Vice President,
Marketing and Business Development for Teva Pharmaceuticals USA, a leading
manufacturer of generic drugs. From 1991 to 1996, Mr. Edwards served as
Executive Director of Gate Pharmaceuticals, a brand marketing division of Teva
Pharmaceuticals USA. Prior to 1991, Mr. Edwards held a number of management
functions in strategic planning, corporate development, business development and
marketing at Teva Pharmaceuticals USA.
David J. Edwards has served as our Director since 1999. He has been a
Managing Member of Windcrest Discovery Investments LLC since October 2001 and
has a consulting agreement with J.P. Morgan Chase & Co. Previously, he was a
Partner of Fleming US Discovery Partners, L.P., a private equity sponsor
affiliated with J.P. Morgan Chase & Co. In 2000, J.P. Morgan Chase & Co.
acquired Fleming Asset Management, which had employed Mr. Edwards since 1994.
Prior to that time, Mr. Edwards was an Associate with Booz Allen & Hamilton, a
strategic management consulting company based in New York. From 1987 to 1990,
Mr. Edwards was a Process Engineer with Exxon Chemical Corporation. Mr. Edwards
received an MBA from Harvard Business School and a Masters in Engineering from
Cambridge University.
Nigel Fleming, Ph.D., has served as our Director since 1999. He is
presently working on his first nonfiction book. He was the Chief Financial
Officer and a director of Bay Area Psychological Testing (BAPTA) from January
1999 to 2002. Dr. Fleming served as Chairman, President and Chief Executive
Officer of Agricola Technologies, Inc. from July 1996 to December 1998. From
1995 to July 1996, he was Director of Business Development at Athena
Neurosciences (purchased by Elan Pharmaceuticals). After founding Genica
Pharmaceuticals Corporation in 1986, Dr. Fleming served at various times as
Chairman, Chief Executive Officer, Board Member, and Vice-President, Business
Development; by 1995, the company was sold to Athena Neurosciences. Dr. Fleming
completed a postdoctoral training at Boston University Medical School, and then
became a Lecturer at Harvard Medical School teaching biochemistry and physiology
for several years, and serving as Instructor in biochemistry at Harvard College.
Dr. Fleming obtained his Ph.D. in Clinical Biochemistry from the University of
Cambridge in England, and earned his BA with Highest Honors from the University
of North Carolina at Chapel Hill as a Morehead Scholar.
Charles Hsiao, Ph.D., has been our Chairman and Director of the Company
since December 1999. Dr. Hsiao was our Co-Chief Executive Officer from December
1999 until December 2003. Dr Hsiao co-founded Impax Pharmaceuticals, Inc. and
has served as its Chairman, Chief Executive Officer and a Director since 1995.
Dr. Hsiao co-founded IVAX Corporation in 1986. By October 1994, when he left the
Vice-Chairman position at IVAX, this company had become one of the world's
largest generic pharmaceutical companies with approximately 7,000 employees and
$1.0 billion in worldwide sales. Dr. Hsiao's technical expertise is in the area
of formulation and development of oral controlled-release dosage form. Dr. Hsiao
obtained his Ph.D. in pharmaceutics from University of Illinois.
Larry Hsu, Ph.D., has been our President and Director since December
1999 and served as Chief Operating Officer from December 1999 until January
2003. Dr. Hsu co-founded Impax Pharmaceuticals, Inc. and served as its
President, Chief Operating Officer, and a Director since 1995. From 1980 to
1995, Dr. Hsu worked at Abbott Laboratories. During his last four years at
Abbott, Dr. Hsu was the Director of Product Development in charge of formulation
development, process engineering, clinical lot manufacturing, and production
technical support of all dosage forms, managing a staff of approximately 250
people. Dr. Hsu obtained his Ph.D. in pharmaceutics from University of Michigan.
Michael Markbreiter has been our Director since 1997. He has been a
private investor since October 2001. Previously he had been a portfolio manager
for Sofaer Capital, a global hedge fund, since December 2000. From August 1995
to December 1998, Mr. Markbreiter was a portfolio manager for private equity
investments for Kingdon Capital Management Corp., a New York hedge fund. In
April 1994, Mr. Markbreiter co-founded Ram Investment Corp., a venture capital
company. From March 1993 to January 1994, Mr. Markbreiter was an analyst at
Alliance Capital Management Corp. From July 1983 to September 1989, Mr.
Markbreiter was an Executive Editor for Arts of Asia magazine. Mr. Markbreiter
graduated from Cambridge University with a degree in Engineering.
7
Oh Kim Sun has served as our Director since 1999. He has been a
Director of Ideal Force Sdn Bhd, an investment holding company, since February
1994, and Chairman since November 2003. Mr. Oh was employed with Chemical
Company of Malaysia Berhad (CCM), a Malaysian corporation whose stock is listed
on the Kuala Lumpur Stock Exchange, since 1983 and served as Executive Director
until October 2003. Mr. Oh is also a Director of Cardiome Pharma Corp. which is
a Canadian corporation listed on the Toronto Stock Exchange. Mr. Oh is a member
of The Malaysian Institute of Certified Public Accountants.
Peter R. Terreri has been our Director since 2003. He has over 20 years
of experience, primarily in generic pharmaceuticals, with a specialized
expertise in finance. Currently, he is President and Chief Executive Officer of
CGM, Inc., a manufacturing company that he owns and operates, since 2000. Prior
to CGM, Inc., Mr. Terreri was Senior Vice President and Chief Financial Officer
of Teva Pharmaceuticals USA from 1985 to 2000, where he actively participated in
the growth of Teva from a $20.0 million local generic pharmaceutical company
into a global leader in generic pharmaceuticals. He also supervised areas such
as operations, sales and marketing, and information technology during his
tenure. Mr. Terreri received his B.S. in Accounting from Drexel University and
has been a certified public accountant since 1981.
Board And Committee Matters
Independence
The Board of Directors has determined that the following directors,
constituting a majority of the members of the Board, are independent as defined
in the Corporate Governance Rules of The Nasdaq Stock Market, Inc. ("Nasdaq
Corporate Governance Rules"): Leslie Z. Benet, Ph.D., Robert L. Burr, David J.
Edwards, Nigel Fleming, Ph.D., Michael Markbreiter, Oh Kim Sun and Peter R.
Terreri.
Communication with the Board
Shareholders may communicate with the Board of Directors or individual
members of the Board, including the respective Chairs of the Board's Nominating
Committee, Compensation Committee and Audit Committee by sending correspondence
to the following address: Corporate Secretary, Impax Laboratories, Inc., 3735
Castor Avenue, Philadelphia, PA 19124. The Company will periodically forward all
correspondence received to the Board or to the individual member of the Board to
whom the correspondence is addressed.
Meetings of the Board and Committees
In 2003, there were four regular and five special board meetings of
Impax. During 2003, all directors of Impax attended at least 75% of the total
number of meetings of the Board of Directors of Impax and all committees of
which they were members.
Attendance at Annual Meeting of Shareholders
The Board of Directors has adopted a policy that all of the directors
should attend the Annual Meeting of Shareholders. Last year, nine of the ten
directors attended the Annual Meeting of Shareholders.
8
Committees of the Board
The Board of Directors of Impax has established an Audit Committee, a
Compensation Committee and a Nominating Committee.
Audit Committee
The Board of Directors of Impax has appointed a standing Audit
Committee consisting of Peter R. Terreri, Chairman, and Messrs. Robert L. Burr,
Michael Markbreiter and Oh Kim Sun. The Board of Directors and the Nominating
Committee have determined that each member of the Audit Committee is
independent, as defined in applicable Nasdaq Corporate Governance Rules and SEC
regulations. In addition, the Board of Directors and the Nominating Committee
have determined that Peter R. Terreri, Audit Committee Chairman, qualifies as an
audit committee financial expert, under applicable SEC rules. The Audit
Committee held nine meetings during 2003.
The Audit Committee is governed by a written charter approved by the
Board of Directors. A copy of the current Audit Committee Charter can be found
in Appendix A. The principal purpose of the Audit Committee is to oversee the
accounting and financial reporting processes of Impax and the audit of Impax's
financial statements. The Audit Committee is directly responsible for the
appointment, compensation, retention and oversight of the firm selected to be
engaged as Impax's independent public accountants, and preapproves the
engagement of the independent public accountants for all non-audit activities
permitted under the Sarbanes-Oxley Act of 2002. In addition, the Audit Committee
establishes procedures for the receipt, retention and treatment of complaints
received by the Company regarding accounting, internal accounting controls or
auditing matters, and the confidential, anonymous submissions by Impax employees
of concerns regarding questionable accounting or auditing matters. The report of
the Audit Committee appears on page 10.
Compensation Committee
The Board of Directors of Impax has appointed a standing Compensation
Committee currently consisting of Robert L. Burr, Chairman, and Messrs. Leslie
Z. Benet, Ph.D., David J. Edwards and Nigel Fleming, Ph.D. The Board of
Directors and the Nominating Committee have determined that each member of the
Compensation Committee is independent, as defined in applicable Nasdaq Corporate
Governance Rules. The principal duties of the Compensation Committee are to
develop and make recommendations to the Board with respect to Impax's executive
compensation programs and to determine the annual compensation to be paid to the
chief executive officer and each of the other executive officers of Impax. This
Committee met four times in 2003. The report of the Compensation Committee
appears on page 11.
Nominating Committee
The Board of Directors of Impax has appointed a standing Nominating
Committee currently consisting of Nigel Fleming, Ph.D., Chairman, and Messrs.
Leslie Z. Benet, Ph.D., Robert L. Burr and David J. Edwards. The Board of
Directors and Nominating Committee have determined that each member of the
Nominating Committee is independent, as defined in applicable Nasdaq Corporate
Governance Rules. This Committee met one time in 2003.
The Nominating Committee is governed by a written charter approved by
the Board of Directors, a copy of which can be found in Appendix B and is
available on Impax's website, www.impaxlabs.com. The principal purposes of the
Nominating Committee are to recommend to the Board certain corporate governance
policies, establish criteria for selecting new directors and identify, screen
and recruit new directors.
9
Shareholder Nominee Recommendation Policy. Any shareholder
recommendation of a potential director nominee proposed for consideration by the
Nominating Committee of the Board of the Directors of the Company should include
the potential director nominee's name and qualifications for Board membership
and should be addressed to:
Corporate Secretary
Impax Laboratories, Inc.
3735 Castor Avenue
Philadelphia, PA 19124
All shareholder recommendations of potential director nominees which
are intended to be considered by the Nominating Committee in any year must be
received at least 120 days prior to the date on which the Company first mailed
its proxy material for the prior year's Annual Meeting of Shareholders in order,
upon a determination by the Nominating Committee to nominate such potential
director nominee, for such nominee to be included in the Company's Proxy
Statement and the form of proxy relating to the Annual Meeting of Shareholders.
The deadline for submitting proposals or recommendations of potential director
nominees for the 2005 Annual Meeting of Shareholders is December 12, 2004.
The Nominating Committee will consider recommendations received from
shareholders of potential director nominees in a manner consistent with the
Nominating Committee's Charter and its consideration of potential director
nominees generally. The ultimate decision of whether to nominate a potential
director nominee remains solely within the discretion of the Nominating
Committee.
Qualifications of Director Nominees. The Nominating Committee of the
Board of Directors of the Company has not established specific, minimum age,
education, years of business experience or specific types of skills for
potential director nominees, but in general, expects that qualified nominees
will possess a proven record of business acumen, success and leadership,
including experience or expertise in one or more of the following areas:
business, financial or accounting matters generally, the specific industry and
markets in which the Company operates, technical matters generally, and the
specific technologies used and developed by the Company. In addition, potential
director nominees will be evaluated by reference to requirements relating to
Board of Directors and committee composition under applicable law and applicable
Nasdaq Corporate Governance Rules.
Audit Committee Report
The Committee has reviewed the audited financial statements for the year ended
December 31, 2003 and has met with management to review and discuss such audited
financial statements. On September 18, 2003, the Company dismissed
PricewaterhouseCoopers LLP as its independent accountants. The Company's Audit
Committee made and approved the decision to change independent accountants. The
reports of PricewaterhouseCoopers LLP on the Company's financial statements for
the past two fiscal years contained no adverse opinion or disclaimer of opinion
and were not qualified or modified as to uncertainty, audit scope or accounting
principle. In connection with its audits for the two most recent fiscal years
and through September 18, 2003, there were no disagreements with
PricewaterhouseCoopers LLP on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of PricewaterhouseCoopers
LLP, would have caused them to make reference thereto in their report on the
financial statements for such years. During the two most recent fiscal years and
through September 18, 2003, there were no reportable events (as defined in
Regulation S-K, Item 304 (a)(1)(v)).
10
As of October 2, 2003, the Company engaged Deloitte & Touche LLP as its
new independent accountants. The decision to engage Deloitte & Touche LLP was
made and approved by the Audit Committee of the Board of Directors. During the
two most recent fiscal years and through October 2, 2003, the Company had not
consulted with Deloitte & Touche LLP 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 described 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 described in Item 304(a)(1)(v) of Regulation S-K).
The Audit Committee also conducted discussions with its independent
accountants, Deloitte & Touche LLP, regarding the matters required by the
Statement on Auditing Standards No. 61 (SAS No. 61), as amended by SAS No. 89
and SAS No. 90. As required by Independence Standards Board Standard No. 1,
"Independence Discussion with Audit Committees," the Audit Committee has
received the required written disclosures and confirming letter from Deloitte &
Touche LLP regarding their independence and has discussed with Deloitte & Touche
LLP their independence. Based upon the review and discussions referred to above,
the Audit Committee recommended to the Board of Directors that the audited
financial statements be included in the Company's Annual Report on Form 10-K for
the year ended December 31, 2003.
This Audit Committee Report shall not be deemed incorporated by
reference in any document previously or subsequently filed with the SEC that
incorporates by reference all or any portion of this Proxy Statement, except to
the extent that the Company specifically requests that the Audit Committee
Report be specifically incorporated by reference.
The Audit Committee
Peter R. Terreri, Chairman
Robert L. Burr
Michael Markbreiter
Oh Kim Sun
Compensation Committee Report
The Compensation Committee of the Board of Directors establishes
general compensation policies, compensation plans, and specific compensation
levels of the Company's senior executive officers, and reviews the design,
administration, and effectiveness of compensation programs for other key
executives as well as the Company as a whole.
The Compensation Committee's executive compensation policies are designed
to:
o provide competitive levels of compensation;
o integrate pay with the Company's annual and long-term performance
goals;
o recognize individual initiative and achievements; and,
o assist the Company in attracting and retaining qualified executives.
The key elements of the Executive Compensation program are:
o a base salary;
o a performance-based annual bonus;
o periodic grants of stock-based compensation such as stock options
and/or shares of restricted stock, which may be subject to vesting
requirements; and,
o benefits such as retirement savings, healthcare, life insurance, and
a Company stock purchase plan.
Base Salary and Incentive Compensation
The base salaries of the Company's senior executive officers are
designed to be competitive with the compensation programs offered by companies
of a similar size within the specialty pharmaceutical industry. Each year, the
Compensation Committee reviews information concerning the salaries within the
specialty pharmaceutical industry as a whole, the salaries of the senior
executives at the Company's nearest competitors, and the 5-year growth plan of
the Company compared with the management tasks at similar growth companies.
11
Prior to the beginning of each fiscal year, detailed operating and
financial goals are established for the Company. Each senior executive is
responsible for accomplishing the goals pertaining to his or her area of
responsibility. The Compensation Committee aligns the annual bonus with each of
the operating and financial goals. After careful review by the Compensation
Committee, the performance-based annual bonus is paid to the executives if the
detailed operating and financial goals are met. The Compensation Committee
decided to defer the payment of 2003 annual bonus for senior executives until
2004.
Stock Options
The Company uses its 2002 Equity Incentive Plan (the "2002 Plan") as a
long-term incentive plan for executive officers and key employees. The 2002 Plan
replaced the 1999 Equity Incentive Plan (the "1999 Plan"). The objectives of the
2002 Plan with respect to executive officers are to align the long-term
interests of executive officers and shareholders by creating a direct link
between executive compensation and shareholder return and to enable executives
to develop and maintain a significant long-term equity interest in the Company.
The 2002 Plan authorizes the Compensation Committee to award stock options to
executive officers and key employees. Stock options granted to executive
officers are based upon the level and degree of responsibility of the positions
they hold, as well as performance. In general, the options are granted on an
annual basis and vest over four years. The options are typically granted with an
exercise price equal to the fair market value of the Company's Common Stock on
the date of grant. In 2003, 2002, and 2001, the Board of Directors granted
options to purchase an aggregate of 1,733,292 shares, 1,679,934 shares, and
593,000 shares, respectively, of the Company's Common Stock under the 2002 Plan
or the 1999 Plan. Information concerning the option grants to certain executive
officers is set forth in the Summary Compensation Table.
Discussion of 2003 Compensation for the Chairman, Chief Executive Officer,
and President
In considering the compensation for Dr. Charles Hsiao, Chairman (and
Co-Chief Executive Officer through December 2003), the Compensation Committee
determined his compensation based on the compensation levels of comparable
specialty pharmaceutical companies. Accordingly, the Compensation Committee
determined that the annual salary for Dr. Hsiao for the year 2003 be established
at approximately $244,000 and the annual stock option grant for the year 2003 be
established at 75,000 shares.
In considering the compensation for Barry R. Edwards, Chief Executive
Officer (Co-Chief Executive Officer through December 2003), the Compensation
Committee determined his compensation based on the compensation levels of
comparable specialty pharmaceutical companies. Accordingly, the Compensation
Committee determined that the annual salary for Mr. Edwards for the year 2003 be
established at approximately $263,000 and the annual stock option grant for the
year 2003 be established at 125,000 shares.
In considering the compensation for Dr. Larry Hsu, President, the
Compensation Committee determined his compensation based on the compensation
levels of comparable specialty pharmaceutical companies. Accordingly, the
Compensation Committee determined that the annual salary for Dr. Hsu for the
year 2003 be established at approximately $244,000 and the annual stock option
grant for the year 2003 be established at 75,000 shares.
12
The Compensation Committee
Robert L. Burr, Chairman
Leslie Z. Benet, Ph.D.
David J. Edwards
Nigel Fleming, Ph.D.
Compensation of Directors
Members of the Board of Directors of the Company who are employees
received no annual remuneration for acting in that capacity during the fiscal
year ended December 31, 2003. The Company's non-employee directors were paid an
annual retainer of $12,000. The Company reimburses its directors for their
respective out-of-pocket expenses incurred in attending board and committee
meetings. Pursuant to the terms of the 2002 Plan, each non-employee director is
granted options to purchase 7,500 shares of Common Stock annually. In addition,
a non-employee director, when first selected, is granted an option to purchase
12,000 shares. All of these options vest ratably over three years commencing on
the first anniversary of the grant date and are exercisable at the fair value
market value on the date of grant. On May 16, 2003, pursuant to the 2002 Plan,
Drs. Leslie Z. Benet and Nigel Fleming, and Messrs. Robert L. Burr, David J.
Edwards, Michael Markbreiter, Oh Kim Sun, and Peter R. Terreri were each granted
options to purchase 7,500 shares of Common Stock at an exercise price of $8.00
per share. On January 21, 2003, Mr. Peter R. Terreri was granted options to
purchase 12,000 shares of Common Stock at an exercise price of $4.30 per share
upon his appointment to the Board of Directors.
In October 2002, the Company entered into a consulting agreement with
Mr. David Edwards, a Director of the Company. Mr. Edwards provided consulting
services related to a number of strategic and tactical issues. Mr. Edwards
earned, under the consulting agreement, $59,999 for services rendered in 2003
and $45,000 for services rendered in 2002. The consulting agreement terminated
in accordance with its terms and conditions on December 31, 2003.
Certain Transactions
Consulting Agreement. In May 2002, the Company entered into a two-year
consulting agreement with Ann Hsu, Ph.D., the wife of Larry Hsu, Ph.D., the
President and a Director of the Company. Dr. Ann Hsu provides clinical
development consulting services. Under the agreement, Dr. Ann Hsu is entitled to
an annual fee of $204,000 plus an annual bonus of up to $50,000 based on the
achievement of agreed-upon goals. Dr. Ann Hsu also received an option to
purchase 80,000 shares of Common Stock at an exercise price of $7.10 per share
that becomes exercisable in three equal, annual installments beginning in May
2003. Dr. Ann Hsu was paid $190,723 for services rendered in 2003.
Stock Performance Graph
The graph which follows indicates the cumulative total return on the
Company's Common Stock since December 31, 1998, compared with the cumulative
total return of companies included in the Nasdaq Stock Market Index and in the
Nasdaq Pharmaceutical Stock Index. Cumulative total return on the Company's
Common Stock or the index equals the total increase in value since December 31,
1998, assuming reinvestment of all dividends. The graph assumes that $100 was
invested on December 31, 1998 in the Company's Common Stock and in each of the
indexes. The Company paid no dividends during the period. The data points used
for the performance graph are listed in the chart below.
13
[GRAPHIC OMITTED]
12/31/98 12/31/99 12/31/2000 12/31/2001 12/31/2002 12/31/2003
-------- -------- ---------- ---------- ---------- ----------
S&P 100 121 110 97 76 98
Nasdaq US 100 185 112 89 61 92
Nasdaq Pharmaceutical Stocks 100 189 235 200 130 190
IPXL 100 200 278 565 168 605
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who beneficially own
more than 10% of the Company's Common Stock, to file with the SEC initial
reports of ownership and reports of changes in ownership of Common Stock and
other equity securities of the Company. Officers, directors and greater than 10%
shareholders are required by regulation of the SEC to furnish the Company with
copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company, the Company's directors, officers and
beneficial owners of 10% or more of the Company's Common Stock were in
compliance with the reporting requirements of Section 16(a) under the Securities
Exchange Act of 1934, as amended.
Compensation Committee Interlocks and Insider Participation
No person who served as a member of the Compensation Committee during
fiscal 2003 was a current or former officer or employee of the Company or
engaged in certain transactions with the Company required to be disclosed by
regulations of the SEC, other than Mr. David Edwards. Additionally, there were
no compensation committee "interlocks" during 2003, which generally means that
no executive officer of the Company served as a director or member of the
compensation committee of another entity, which had an executive officer serving
as a director or member of the Company's Compensation Committee.
14
THE BOARD OF DIRECTORS DEEMS THE ELECTION AS DIRECTORS OF THE TEN
NOMINEES LISTED ABOVE TO BE IN THE BEST INTERESTS OF THE COMPANY AND ITS
STOCKHOLDERS AND RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF THESE NOMINEES.
EXECUTIVE COMPENSATION
The following table summarizes the compensation earned by or paid to
the Company's Chairman (and former Co-CEO through December 2003), Chief
Executive Officer (formerly Co-CEO through December 2003), the President, the
Company's four most highly compensated executive officers, and certain other
officers for 2003, 2002, and 2001.
Long-Term
Annual Compensation Compensation
--------------------------------------------- --------------
Common Stock
Other Annual Underlying
Compensation Options
Name and Principal Position Year Salary ($) Bonus ($) ($) (#)
- --------------------------------------------- ---- ---------- ------------- -------------- -------------
Charles Hsiao, Ph.D. 2003 243,894 46,250 (1) 27,344 (2) 75,000
Chairman 2002 249,500 85,975 19,232 100,000
2001 195,000 102,395 9,924 --
Barry R. Edwards 2003 263,100 46,250 (1) 20,270 (3) 125,000
Chief Executive Officer 2002 249,543 85,975 11,173 300,000
2001 195,000 102,395 9,401 --
Larry Hsu, Ph.D. 2003 243,894 46,250 (1) 25,174 (4) 75,000
President 2002 249,500 85,975 16,416 100,000
2001 195,000 102,395 7,854 --
Michael G. Wokasch (5) 2003 266,539 100,000 84,897 (6) 250,000
Chief Operating Officer 2002 -- -- -- --
2001 -- -- -- --
Cornel C. Spiegler 2003 181,781 21,369 (1) 22,843 (7) 25,000
Chief Financial Officer 2002 184,648 50,816 12,572 30,000
2001 160,000 40,800 10,123 --
May Chu 2003 165,640 20,869 (1) 14,585 (8) 20,000
Senior Vice President, Quality Affairs 2002 166,432 42,221 8,737 30,000
2001 150,000 40,500 2,636 --
David S. Doll (9) 2003 166,730 56,791 (1) 20,488 (10) 30,000
Senior Vice President, Sales and Marketing 2002 162,874 125,894 10,457 30,000
2001 120,946 22,400 5,453 115,000
- ----------------
(1) Represents bonus earned in 2002 and paid in 2003.
(2) Represents a life insurance premium payment along with gross-up tax
payment with respect to such insurance payment of $5,822, 401(k) Plan
Company match of $7,015, and Non-Qualified Deferred Compensation Company
match of $14,507.
(3) Represents life insurance and long-term disability insurance premium
payments along with gross-up tax payments with respect to such insurance
payments of $4,989, 401(k) Plan Company match of $6,001, and Non-Qualified
Deferred Compensation Company match of $9,280.
(4) Represents a life insurance premium payment, along with gross-up tax
payment with respect to such insurance payment of $3,652, 401(k) Plan
Company match of $7,015, and Non-Qualified Deferred Compensation Company
match of $14,507.
(5) On January 2, 2003, Michael G. Wokasch, formerly a member of the Company's
Board of Directors, became Chief Operating Officer. He resigned as an
officer on December 31, 2003.
(6) Represents life insurance premium and long-term disability insurance
premium payments, along with gross-up tax payments with respect to such
insurance payments of $12,397, moving allowance of $56,000, 401(k) Plan
Company match of $3,808, and Non-Qualified Deferred Compensation Company
match of $12,692.
(7) Represents life insurance and long-term disability insurance premium
payments, along with gross-up tax payments with respect to such insurance
payments of $6,681, 401(k) Plan Company match of $6,005, and Non-Qualified
Deferred Compensation Company match of $10,157.
15
(8) Represents a life insurance premium payment along with gross-up tax
payment with respect to such insurance payment of $255, 401(k) Plan
Company match of $5,005, and Non-Qualified Deferred Compensation Company
match of $9,325.
(9) Mr. Doll joined the Company in March 2001; his annual salary rate for 2001
was $149,000.
(10) Represents life insurance premium and long-term disability insurance
premium payments, along with gross-up tax payments with respect to such
insurance payments of $3,310, 401(k) Plan Company match of $6,002, and
Non-Qualified Deferred Compensation Company match of $11,176.
Option Grants In Last Fiscal Year
The following table sets forth information on option grants in the
fiscal year ended December 31, 2003 to the persons named in the Summary
Compensation Table. The exercise price per share of each option was equal to the
fair market value of the Common Stock at the grant date as determined by the
Board of Directors.
Individual Grants
-----------------------------------------------------------------
Potential Realizable
% of Total Value at Assumed
Number of Options Annual Rates of
Securities Granted to Stock Price
Underlying Employees in Exercise Expiration Appreciation for
Name Options Granted Fiscal Year Price ($/sh) Date Option Term ($)(1)
---- --------------- ----------- ------------ ---- ------------------
5% 10%
----- -----
Charles Hsiao, Ph.D. 75,000 4.3 3.04 3/10/2013 143,000 363,000
Barry R. Edwards 125,000 7.2 3.04 3/10/2013 239,000 606,000
Larry Hsu, Ph.D. 75,000 4.3 3.04 3/10/2013 143,000 363,000
Michael G. Wokasch 250,000 14.4 4.40 1/02/2013 692,000 1,753,000
Cornel C. Spiegler 25,000 1.4 3.04 3/10/2013 48,000 121,000
May Chu 20,000 1.2 3.04 3/10/2013 57,000 145,000
David S. Doll 30,000 1.7 3.04 3/10/2013 38,000 97,000
Total Granted 1,733,292 in 2003.
- --------------
(1) This column shows the hypothetical gain or option spreads of the options
based on assumed annual compound stock appreciation rates of 5% and 10%
over the full term of the options. The 5% and 10% assumed rates of
appreciation are mandated by the SEC rules and do not represent the
Company's estimate or projection of future Common Stock prices. The gains
shown are net of the option exercise price, but do not include deductions
for taxes or other expenses associated with the exercise of the option or
the sale of the underlying shares, or reflect non-transferability, vesting
or termination provisions. The actual gains, if any, on the exercise of
stock options will depend on the future performances of the Common Stock.
Aggregated Option Exercises In Last Fiscal Year And Fiscal Year-End Option
Values
The following table sets forth information with respect to the number
and value of unexercised stock options held at December 31, 2003 by the persons
named in the Summary Compensation Table.
Number of Securities
Shares Value Underlying Unexercised Value of Unexercised
Acquired Received Options Held at in-the-Money Options
Name on Exercise ($) Fiscal Year End (#) at Fiscal Year End ($)(1)
---- ----------- -------- ---------------------------- -----------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
Charles Hsiao, Ph.D. 0 0 395,060 174,320 5,059,510 1,654,865
Barry R. Edwards 0 0 515,000 370,000 5,263,725 3,332,300
Larry Hsu, Ph.D. 0 0 388,580 170,000 5,023,481 1,614,300
Michael G. Wokasch 0 0 10,500 259,000 50,825 2,550,750
Cornel C. Spiegler 0 0 96,500 69,500 991,860 655,155
May Chu 0 0 72,845 68,243 861,756 692,660
David S. Doll 0 0 42,000 133,000 267,379 1,002,734
- ---------------------
(1) Based on the last reported sale price on the NASDAQ National Market on
December 31, 2003 ($14.39 per share) less the option exercise price.
16
Employment Agreements
At the closing of the merger between Global Pharmaceutical Corporation
and Impax Pharmaceuticals, Inc., effective December 14, 1999, each of Mr. Barry
R. Edwards and Drs. Hsiao and Hsu entered into a new employment agreement with
the Company. Each of these employment agreements has substantially the same
terms. Mr. Edward's and Dr. Hsiao's agreements provide that they will serve as
Co-Chief Executive Officers of the Company and, in the case of Dr. Hsiao,
Chairman of the Board. Dr. Hsu's Agreement provides that he will serve as
President of the Company. The other material terms of these employment
agreements are described below. As of January 2004, Dr. Hsiao will serve as
Chairman of the Board and Mr. Edwards will serve as Chief Executive Officer.
Each employment agreement will be for an initial term of three years,
and will be renewed automatically for successive one-year terms unless
terminated by either party at least six months prior to the expiration of the
initial term or any renewal term. Each of the executives will receive an annual
salary of at least $175,000 and will be entitled to a bonus, based on criteria
established by the Board of the Company. Any bonus paid to one of these three
executives must be similarly paid at the same time to the other two executives.
Any of the executives may be terminated by the Company, either with or
without cause. The executive may terminate his own employment for any reason, or
for good reason. These terms are defined more fully in the employment
agreements. In general, cause means:
o a material breach of the provisions of the employment agreement
relating to proprietary information, trade secrets, confidentiality
and non-competition;
o a material breach of any other provision of the employment agreement
that is not remedied within 30 days of such breach;
o any act of fraud or embezzlement against the Company; or
o any indictment of the executive for a felony or other crime that
would cause injury to the reputation of the Company.
In general, good reason means:
o assignment of duties or a reduction in duties which is inconsistent
with the executive's position;
o a material reduction in executive's salary or benefits not agreed to
by the executive;
o a relocation that would require executive to have commute of more
than 50 miles; or
o a change in control of the Company.
In general, a change in control is defined as:
o the acquisition by any person or entity of ownership or control of
more than 50% of the voting power of the Company;
o a sale or disposition of assets totaling more than 50% of the value
of the Company;
o a merger or reorganization in which the Company's stockholders,
immediately prior to the merger, do not own a least 51% of the
voting power of the Company after the merger;
17
o any transaction where the Company's stockholders, immediately prior
to the transaction, do not own at least 51% of the voting power of
the Company after the transaction; or
o any other transaction that the Board determines would materially
alter the structure, ownership or control of the Company.
If the executive is terminated without cause or terminates his
employment for good reason, he will be entitled to receive a payment of all
accrued and unpaid salary and benefits, plus salary and benefits for the next
six months or, if less, the remainder of the term of the employment agreement.
The executives have also agreed to keep all proprietary information of
the Company confidential and to assign all proprietary information or
intellectual property developed by the executive during the course of his
employment to the Company. Each executive has also agreed that, during the term
of the employment agreement and for a period of two years following the
termination of his employment, he will not engage in a business competitive with
that of the Company or entice any of the Company's customers, suppliers or
business partners to end their relationship with the Company.
In addition to the terms previously described, Mr. Edwards' employment
agreement provides that he will receive an option to purchase 270,000 shares of
Common Stock at the prevailing market price at the time the option is granted.
The shares covered by this option vest and are exercisable on the following
schedule: (i) first year - 0%; (ii) second year - 10%; (iii) third year - 40%;
(iv) fourth year - 50%.
Code of Ethics
The Company has adopted a Code of Ethics that applies to its Chief
Executive Officer, Chief Financial Officer and any other accounting officer,
controller or persons performing similar functions. The Company filed the Code
of Ethics with the SEC as Exhibit 14.1 to its Annual Report on Form 10-K for the
year ended December 31, 2003. The Code of Ethics is also available on Impax's
website, www.impaxlabs.com.
PROPOSAL NO. 2 - PROPOSAL TO INCREASE THE NUMBER OF AUTHORIZED
SHARES OF COMMON STOCK FROM 75,000,000 TO 90,000,000 SHARES
Subject to stockholder approval at the Annual Meeting, the Company's
Board of Directors has adopted an amendment to the Company's Restated
Certificate of Incorporation, as amended (the "Certificate of Incorporation"),
to increase the number of authorized shares of Common Stock from 75,000,000 to
90,000,000 shares (the "Amendment"). The text of the proposed amendment to the
Certificate of Incorporation is included as Appendix C to this Proxy Statement.
Required Vote. The affirmative vote of a majority of the outstanding
shares of the Company's Common Stock is necessary to approve this Proposal 2.
Purpose of Changes to Authorized Stock. The Certificate of
Incorporation currently provides for 77,000,000 authorized shares, consisting of
75,000,000 shares of Common Stock and 2,000,000 shares of preferred stock.
At the close of business on April 7, 2004, of the 75,000,000 shares of
Common Stock presently authorized by the Certificate of Incorporation,
57,962,361 shares were issued and outstanding and 801,503, 466,681, and
8,228,354 shares were reserved for issuance upon exercise of outstanding
warrants, purchases under the Employee Stock Purchase Plan (ESPP), and stock
options granted under the Company's stock option plans, respectively. Thus,
after deducting the shares reserved for issuance upon such warrants, purchases
under ESPP, and option exercises, the Company would have only 7,541,101
authorized shares of Common Stock not reserved for other purposes. Adoption of
this Proposal 2 would increase the number of authorized and unissued shares of
Common Stock by 15,000,000 shares.
18
If the Company's Shareholders approve this Proposal 2 at the Annual
Meeting, the Certificate of Incorporation, as amended, will provide for
92,000,000 authorized shares, consisting of 90,000,000 shares of Common Stock
and 2,000,000 shares of preferred stock. The Company's Board of Directors
believes that it is in the Company's best interest to increase the number of
shares of Common Stock that it is authorized to issue in order to provide for
future issuances. The Board of Directors also believes the availability of
additional authorized shares of Common Stock will provide it with the
flexibility to issue Common Stock for any proper corporate purpose which may be
identified in the future such as to raise equity capital, acquisitions or
possible stock splits. The Board generally will be able to issue shares from
time to time without obtaining the approval of shareholders. However, Nasdaq
rules require shareholder approval of issuances of common stock under certain
circumstances, including when the number of shares to be issued equals or
exceeds 20% of the common stock or 20% of the voting power outstanding (for the
Company, as of April 7, 2004, issuance of approximately 11,592,472 or more
shares of Common Stock).
The additional authorized shares of Common Stock would have the same
rights as the presently authorized shares, including the right to cast one vote
per share and to receive dividends (if any) paid by the Company. Although the
increase in the number of authorized shares of Common Stock would not, in
itself, have any effect on shareholder rights, issuance of additional shares of
Common Stock, other than for a stock split or dividend, could, under certain
circumstances, have a dilutive effect on voting rights and earnings per share.
Shareholders of the Company generally do not have preemptive rights.
The increase in the authorized number of shares of Common Stock and the
subsequent issuance of such shares could have the effect of delaying or
preventing a change in control of the Company without further action by the
shareholders. Shares of authorized and unissued Common Stock could (within the
limits imposed by applicable law) be issued in one or more transactions that
would make a change in control of the Company more difficult, and therefore less
likely. Any such issuance of additional stock could have the effect of diluting
the earnings per share and book value per share of outstanding shares of Common
Stock, and such additional shares could be used to dilute the stock ownership or
voting rights of a person seeking to obtain control of the Company. The Board is
not aware of any attempt by any person or entity to seek to effect a change in
control of the Company and has not presented this proposal with the intention
that the increase in the authorized number of shares of Common Stock be used as
an antitakeover device.
If the Amendment is approved by the stockholders at the Annual Meeting,
Subparagraph (a) of Paragraph Fourth of the Certificate of Incorporation will be
revised to read as follows:
(a): The total number of shares of all classes of stock which
the Corporation shall have the authority to issue is Ninety-Two Million
(92,000,000) shares, consisting of Ninety Million (90,000,000) shares
of Common Stock, par value $.01 per share (the "Common Stock"), and Two
Million (2,000,000) shares designated preferred stock, $.01 par value
per share (the "Preferred Stock").
19
THE BOARD RECOMMENDS THAT YOU VOTE FOR THE PROPOSED AMENDMENT TO THE
COMPANY'S RESTATED CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF SHARES
OF COMMON STOCK AUTHORIZED FOR ISSUANCE TO 90,000,000.
PROPOSAL NO. 3 - RATIFICATION OF APPOINTMENT
OF INDEPENDENT ACCOUNTANTS
The stockholders will be asked to ratify the appointment of Deloitte &
Touche LLP as the independent accountants of the Company for the fiscal year
ending December 31, 2004.
Deloitte & Touche LLP audited the financial statements of the Company
for the fiscal year ended December 31, 2003. A representative of Deloitte &
Touche LLP is expected to be present at the Annual Meeting, will have an
opportunity to make a statement if he or she desires to do so, and is expected
to be available to respond to appropriate questions from stockholders.
Stockholder ratification of the selection of Deloitte & Touche LLP as
the Company's independent accountants is not required by applicable law, or by
the Company's Certificate of Incorporation, bylaws or other governing documents.
However, the Audit Committee is submitting the appointment of Deloitte & Touche
LLP to the stockholders as a matter of good corporate practice. If the
stockholders fail to ratify the appointment, the Audit Committee will reconsider
whether or not to retain the firm. The affirmative vote of the holders of a
majority of the shares present in person or represented by proxy and entitled to
vote at the 2003 Annual Meeting will be required to ratify the selection of
Deloitte & Touche LLP.
Principal Accountant Fees and Services
On September 18, 2003, the Company dismissed PricewaterhouseCoopers LLP
as its independent accountants and engaged Deloitte & Touche LLP on October 2,
2003 as its new independent accountants.
Our Audit Committee reviewed and discussed with Deloitte & Touche LLP,
the member firms of Deloitte Touche Tohmatsu and their respective affiliates
(collectively, the "Deloitte Entities"), the following fees for services
rendered for the 2003 fiscal year and considered the compatibility of non-audit
services with the independence of both Deloitte & Touche LLP and
PricewaterhouseCoopers LLP.
Aggregate fees for professional services rendered for the Company by
the Deloitte Entities and PricewaterhouseCoopers LLP as of or for the years
ended December 31, 2003 and 2002, were:
Deloitte Entities
-----------------
($ in millions) 2003
----
Audit Fees (a) $ 179,850
Audit Related Fees (b) --
Tax Fees (c) --
All Other Fees --
----------
Total Fees $ 179,850
==========
20
PricewaterhouseCoopers LLP
--------------------------
($ in millions) 2003 2002
---- ----
Audit Fees (a) $ 122,653 $ 274,635
Audit Related Fees (b) 61,733 17,300
Tax Fees (c) 28,000 51,700
All Other Fees -- --
--------- ----------
Total Fees $ 212,386 $ 343,635
========= ==========
(a) Fees for audit services billed in 2003 and 2002 consisted of:
o Reviews of the Company's quarterly financial statements; and
o Comfort letters, statutory and regulatory audits, consents and
other services related to SEC matters.
(b) Fees for audit-related services billed in 2003 and 2002 consisted
of:
o Financial accounting and reporting consultations; and
o Employee benefit plan audits.
(c) Tax fees as of the years ended December 31, 2003 and 2002,
respectively, were for services related to tax compliance and consulting,
including preparation of tax returns, tax planning and tax advice.
THE BOARD OF DIRECTORS DEEMS PROPOSAL NO. 3 TO BE IN THE BEST INTERESTS
OF THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE "FOR" APPROVAL
THEREOF.
STOCKHOLDER PROPOSALS
All stockholder proposals which are intended to be presented at the
Annual Meeting of Stockholders of the Company to be held in 2005 must be
received by the Company no later than December 12, 2004 for inclusion in the
Board of Directors' Proxy Statement and form of proxy relating to that meeting.
Any such proposal must also comply with the proxy rules under the Securities
Exchange Act of 1934, including Rule 14a-8. Any notice of a shareholder proposal
for consideration at the 2005 Annual Meeting that is submitted to the Company
outside the processes of Rule 14a-8 will be considered untimely for purposes of
Rule 14a-4(c)(1) if it is submitted after February 26, 2005. Rule 14(a)-4(c)(1)
provides that discretionary voting authority may be exercised by the Company
with respect to such untimely proposals.
OTHER BUSINESS
The Board of Directors knows of no other business to be acted upon at
the Annual Meeting. However, if any other business properly comes before the
Annual Meeting, it is the intention of the persons named in the enclosed proxy
to vote on such matters in accordance with their best judgment.
APPENDIX A
Impax Laboratories, Inc.
Audit Committee Charter
Purpose
There shall be a committee of the board of directors (the "Board") to
be known as the audit committee. The audit committee's purpose is to:
(A) oversee the accounting and financial reporting processes of the
Company and the audits of the financial statements of the Company; and
(B) prepare an audit committee report as required by the SEC's rules to
be included in the Company's annual Proxy Statements, or, if the Company does
not file a Proxy Statement, in the Company's annual report filed on Form 10-K
with the SEC.
Composition
The audit committee shall have at least three (3) members, each of whom
must meet the following conditions: (i) be independent as defined under Rule
4200(a)(15) of The Nasdaq Stock Market (except as set forth in Rule 4350
(d)(2)(B)); (ii) meet the criteria for independence set forth in Rule
10A-3(b)(1) under the Securities Exchange Act of 1934 (subject to the exemptions
provided in Rule 10A-3(c)); (iii) not have participated in the preparation of
the financial statements of the Company or any current subsidiary of the Company
at any time during the past three years; and (iv) be able to read and understand
fundamental financial statements, including a Company's balance sheet, income
statement, and cash flow statement. Additionally, the Company must certify that
it has, and will continue to have, at least one member of the audit committee
who has past employment experience in finance or accounting, requisite
professional certification in accounting, or any other comparable experience or
background which results in the individual's financial sophistication, including
being or having been a chief executive officer, chief financial officer or other
senior officer with financial oversight responsibilities.
The Board shall elect or appoint a chairperson of the audit committee
(or, if it does not do so, the audit committee members shall elect a chairperson
by vote of a majority of the full committee); the chairperson will have
authority to act on behalf of the audit committee between meetings.
Specific Responsibilities and Authority
The specific responsibilities and authority of the audit committee
shall be as follows:
(A) be directly responsible for the appointment, compensation,
retention and oversight of the work of any registered public accounting firm
engaged (including resolution of disagreements between management and the
auditor regarding financial reporting) for the purpose of preparing or issuing
an audit report or performing other audit, review or attest services for the
Company, and each such registered public accounting firm must report directly to
the audit committee.
(B) establish procedures for (i) the receipt, retention and treatment
of complaints received by the Company regarding accounting, internal accounting
controls or auditing matters, and (ii) the confidential, anonymous submissions
by Company employees of concerns regarding questionable accounting or auditing
matters;
(C) have the authority to engage independent counsel and other
advisers, as it determines necessary to carry out its duties;
(D) receive appropriate funding from the Company, as determined by the
audit committee in its capacity as a committee of the Board, for payment of: (i)
compensation to any registered public accounting firm engaged for the purpose of
preparing or issuing an audit report or performing other audit, review or attest
services for the Company; (ii) compensation to any advisers employed by the
audit committee; and (iii) ordinary administrative expenses of the audit
committee that are necessary or appropriate in carrying out its duties;
(E) ensure its receipt from the outside auditors of a formal written
statement delineating all relationships between the auditor and the Company,
consistent with Independence Standards Board Standard 1, and actively engaging
in a dialogue with the auditor with respect to any disclosed relationships or
services that may impact the objectivity and independence of the auditor and for
taking, or recommending that the full Board take, appropriate action to oversee
the independence of the outside auditor;
(F) report regularly to the Board;
(G) discuss the Company's annual audited financial statements and
quarterly financial statements with management and the independent auditor,
including the Company's disclosures under "Management's Discussion and Analysis
of Financial Condition and Results of Operations";
(H) review and reassess the adequacy of the audit committee's charter
annually;
(I) comply with all preapproval requirements of Section 10A(i) of the
Securities Exchange Act of 1934 and all SEC rules relating to the administration
by the audit committee of the auditor engagement to the extent necessary to
maintain the independence of the auditor as set forth in 17 CFR Part
210.2-01(c)(7); and
(J) make such other recommendations to the Board on such matters,
within the scope of its function, as may come to its attention and which in its
discretion warrant consideration by the Board.
General Comments
While the fundamental responsibility for the Company's financial
statements and disclosures rests with management and the independent auditor,
the audit committee will review (A) major issues regarding accounting principles
and financial statement presentations, including any significant changes in the
Company's selection or application of accounting principles, and major issues as
to the adequacy of the Company's internal controls and any special audit steps
adopted in light of material control deficiencies; (B) analyses prepared by
management and/or the independent auditor setting forth significant financial
reporting issues and judgments made in connection with the preparation of the
financial statements, including analyses of the effects of alternative generally
accepted accounting principle ("GAAP") methods on the financial statements; (C)
the effect of regulatory and accounting initiatives, as well as off-balance
sheet structures, on the financial statements of the Company; and (D) the type
and presentation of information to be included in earnings press releases
(paying particular attention to any use of "pro forma," or "adjusted" non-GAAP,
information), as well as review any financial information and earnings guidance
provided to analysts and rating agencies.
Meetings
The audit committee shall meet at least four times per year on a
quarterly basis, or more frequently as circumstances require. One or more
meetings may be conducted in whole or in part by telephone conference call or
similar means if it is impracticable to obtain the personal presence of each
audit committee member. The Company shall make available to the audit committee,
at its meetings and otherwise, such individuals and entities as may be
designated from time to time by the audit committee, such as members of
management including (but not limited to) the internal audit and accounting
staff, the independent auditors, inside and outside counsel, and other
individuals or entities (whether or not employed by the Company and including
any corporate governance employees and individuals or entities performing
internal audit services as independent contractors).
Delegation
Any duties and responsibilities of the audit committee, including, but
not limited to, the authority to preapprove all audit and permitted non-audit
services, may be delegated to one or more members of the audit committee or a
subcommittee of the audit committee.
Limitations
The audit committee is responsible for the duties and responsibilities
set forth in this charter, but its role is oversight and therefore it is not
responsible for either the preparation of the Company's financial statements or
the auditing of the Company's financial statements. The members of the audit
committee are not employees of the Company and may not be accountants or
auditors by profession or experts in accounting or auditing. Management has the
responsibility for preparing the financial statements and implementing internal
controls and the independent auditors have the responsibility for auditing the
financial statements and monitoring the effectiveness of the internal controls,
subject, in each case, to the oversight of the audit committee described in this
charter. The review of the financial statements by the audit committee is not of
the same character or quality as the audit performed by the independent
auditors. The oversight exercised by the audit committee is not a guarantee that
the financial statements will be free from mistake or fraud. In carrying out its
responsibilities, the audit committee believes its policies and procedures
should remain flexible in order to best react to a changing environment.
APPENDIX B
Impax Laboratories, Inc.
Nominating Committee Charter
This Nominating Committee Charter (the "Charter") has been adopted by
the Board of Directors (the "Board") of Impax Laboratories, Inc. (the
"Company").
Purpose
The Nominating Committee (the "Committee") of the Board is responsible
for developing and recommending to the Board certain corporate
governance policies for the Company, establishing criteria for
selecting new directors, and identifying, screening and recruiting new
directors. The Committee is also responsible for selecting and
recommending nominees for directors to the Board and recommending
directors for committee membership to the Board.
Composition
The Committee shall be comprised of three or more members, all of whom
must qualify as independent directors ("Independent Directors") under
the listing standards of the Nasdaq Stock Market, Inc. ("NASDAQ").
Notwithstanding this independence requirement, if the Committee is
comprised of at least three members, one director, who is not
independent as defined in Rule 4200 of the NASDAQ Marketplace Rules
("Rule 4200"), and is not a current officer or employee or a Family
Member (as defined by Rule 4200) of such person, may be appointed to
the Committee if the Board, under exceptional and limited
circumstances, determines that such individual's membership on the
committee is required by the best interests of the Company and its
shareholders, and the Board discloses, in the next annual meeting Proxy
Statement subsequent to such determination, the nature of the
relationship and the reasons for the determination. A member appointed
under this exception may not serve longer than two years.
Notwithstanding the above paragraph, if the Committee is comprised of
at least three members, and if the exception described in the above
paragraph is not relied upon, one director who owns twenty percent
(20%) or more of the Company's common stock or voting power
outstanding, and is not independent as defined in Rule 4200 because
that director is also an officer, may be appointed to the Committee if
the Board determines that such individual's membership on the Committee
is required by the best interests of the Company and its shareholders,
and the Board discloses, in the next annual meeting Proxy Statement
subsequent to such determination, the nature of the relationship, and
the reasons for the determination. A member appointed under this
exception may not serve longer than two years.
A member shall promptly notify the Committee and the Board if the
member is no longer an Independent Director and such member shall be
removed from the Committee unless the Board determines that an
exception to the Independent Director requirement is available under
the NASDAQ rules with respect to such member's continued membership on
the Committee.
The requirements of Rule 4350(c) of the NASDAQ Marketplace Rules ("Rule
4350(c)") provide that a majority of the Board must be comprised of
Independent Directors as defined in Rule 4200. If the Company fails to
comply with the requirement of Rule 4350(c) due to one vacancy or
because a director ceases to be independent, the Company shall regain
compliance with Rule 4350(c) by the earlier of its next annual
shareholders meeting or one year from the occurrence of the event that
caused the failure to comply. The Committee and Board shall immediately
provide notice to NASDAQ upon learning that a member is no longer an
Independent Director.
Meetings and Procedures
Consistent with the Company's Restated Certificate of Incorporation, as
amended, By-laws and applicable state law, the Committee shall meet at
least twice a year and more frequently as circumstances require.
Responsibilities and Duties of the Nominating Committee
The Nominating Committee has the following duties and responsibilities:
Selection of Director Nominees and Committee Membership
o Establish the process for identifying and evaluating nominees
for director, including but not limited to establishing criteria
for selecting new director nominees.
o Determine the minimum qualifications that must be met by
Nominating Committee recommended candidates.
o Select the slate of director nominees to be proposed for
election by the stockholders and recommend to the Board
individuals to be considered by the Board to fill vacancies.
o Recommend to the Board those directors to be selected for
membership on the various Board committees. Recommendations
should consider the qualifications for membership on each
committee.
o Establish policies regarding the consideration of potential
director nominees recommended by security holders.
o Establish procedures to be followed by security holders in
submitting recommendations for potential director nominees.
o Recommend to the Board a process for security holders to
communicate with the Board.
o Recommend to the Board a policy with respect to Board member
attendance at annual meetings.
Investigations and Studies; Outside Advisors
The Committee may conduct or authorize investigations into or studies
of matters within the scope of the Committee's duties and
responsibilities, and may retain, at the Company's expense, such
experts and other professionals as it deems necessary. The Committee
shall have the sole authority to retain or terminate any search firm to
be used to identify director candidates, including sole authority to
approve the search firm's fees and other retention terms, such fees to
be borne by the Company.
Dated: March 4, 2004
APPENDIX C
Certificate of Amendment
of
Restated Certificate of Incorporation
of
Impax Laboratories, Inc.
Impax Laboratories, Inc., a corporation organized and existing under
the laws of the State of Delaware (the "Corporation"), hereby states that the
original name under which the corporation was originally incorporated was Global
Pharmaceutical Corporation and the original date of incorporation was March 23,
1995, and does hereby further certify as follows:
FIRST: The Board of Directors of the Corporation (the "Board") adopted
a resolution proposing and declaring advisable that Subparagraph (a) of
Paragraph FOURTH of the Restated Certificate of Incorporation, as amended, of
the Corporation (the "Restated Certificate of Incorporation") be amended by
striking Subparagraph (a) in its entirety and replace therefore:
"(a) The total number of shares of all classes of stock which the
Corporation shall have the authority to issue is Ninety-Two Million (92,000,000)
shares, consisting of (i) Ninety Million (90,000,000) shares of Common Stock,
$.01 par value per share (the "Common Stock"), and (ii) Two Million (2,000,000)
shares designated preferred stock, $.01 par value per share (the "Preferred
Stock")."
SECOND: The Certificate of Amendment of Restated Certificate of
Incorporation herein certified was duly adopted by vote of the stockholders in
accordance with the provisions of Section 242 of the General Corporation Law of
the State of Delaware.
IN WITNESS WHEREOF, the undersigned has caused this Certificate of
Amendment of Restated Certificate of Incorporation to be signed, under penalties
of perjury, and the facts stated herein are true and correct.
Dated: May 17, 2004 IMPAX LABORATORIES, INC.
By:
-------------------------------
Cornel C. Spiegler, Secretary
Impax Laboratories, Inc.
This Proxy is solicited by the Board of Directors for the Annual Meeting of Stockholders to
Be Held on May 17, 2004.
The undersigned, a stockholder of Impax Laboratories, Inc. (the "Corporation"), hereby
constitutes and appoints Charlie Hsiao, Ph.D. and Cornel C. Spiegler, and each of them, the true and
lawful proxies and attorneys-in-fact of the undersigned, with full power of substitution in each of
them, to vote all shares of Common Stock of the Corporation which the undersigned is entitled to
vote at the Annual Meeting of Stockholders of the Corporation to be held on Monday, May 17, 2004,
and at any and all adjournments or postponements thereof, as follows:
(1) ELECTION OF DIRECTORS
|_| FOR the nominees listed below |_| WITHHOLDING AUTHORITY
(except as marked to the contrary below) to vote for all nominees listed below
(INSTRUCTIONS: To withhold authority to vote for any individual nominee,
strike a line through the nominee's name in the list below).
Nominees: Leslie Z. Benet, Ph.D., Robert L. Burr, Barry R. Edwards, David J. Edwards, Nigel Fleming, Ph.D.,
Charles Hsiao, Ph.D., Larry Hsu, Ph.D., Michael Markbreiter, Oh Kim Sun, and Peter R. Terreri
(2) PROPOSAL TO ADOPT AN AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION TO INCREASE
THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK FROM 75,000,000 TO 90,000,000 SHARES
|_| FOR |_| AGAINST |_| ABSTAIN
(3) PROPOSAL TO RATIFY THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE COMPANY'S INDEPENDENT
ACCOUNTANTS FOR THE FISCAL YEAR ENDING DECEMBER 31, 2004
|_| FOR |_| AGAINST |_| ABSTAIN
(4) In their discretion, upon such other business as may properly come before the meeting and
any and all adjournments and postponements thereof.
(Continued on reverse side.)
(Continued)
Shares represented by this Proxy will be voted in accordance with the instructions
indicated in items 1, 2 and 3 above. If no instruction is indicated, this Proxy will be voted FOR
all listed nominees for directors and FOR Proposals 2 and 3.
The attorneys and proxies named herein present and acting at the meeting in person or by
their substitutes (or if only one is present and acting then that one) may exercise all the powers
conferred hereby. Discretionary authority is conferred hereby as to certain matters as may properly
come before the meeting.
Any and all proxies heretofore given by the undersigned are hereby revoked.
Receipt of the Notice of Annual Meeting of Stockholders and
Proxy Statement dated April 12, 2004 is hereby acknowledged.
Dated:
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Please sign exactly as your name(s) appear hereon. If shares
are held by two or more persons each should sign. Trustees,
executors and other fiduciaries should indicate their
capacity. Shares held by corporations, partnerships,
associations, or any other entity, should be signed by an
authorized person, giving full title or authority.
Please Date, Sign and Mail in the Enclosed Reply Envelope