IPXL Impax Laboratories, Inc. (delisted)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.     )

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IMPAX LABORATORIES, INC.

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30831 Huntwood Avenue
Hayward, California 94544

Dear Stockholder:

You are cordially invited to attend the 2010 Annual Meeting of Stockholders of Impax Laboratories, Inc. to be held on Tuesday, May 25, 2010 at 9:00 a.m., Pacific Daylight Time, at the Marriott Hotel located at 1770 South Amphlett Blvd., San Mateo, California 94402.

Details regarding the business to be conducted at the annual meeting are described in the accompanying notice of the annual meeting and proxy statement. We have also made available a copy of our 2009 Annual Report, which includes our audited financial statements and provides information about our business and products. We encourage you to read these materials carefully.

Your vote is important. Whether you plan to attend the annual meeting in person or not, we hope you will vote as soon as possible. You may vote electronically through the Internet or by telephone, as described in the accompanying materials, or by completing and signing the enclosed proxy card and returning it in the self-addressed envelope provided for your convenience. Please review the instructions on each of your voting options described in this proxy statement.

On behalf of our board of directors, I would like to express our appreciation for your continued support. We look forward to seeing you at the annual meeting.

		Sincerely,
		Robert L. Burr
		Chairman of the Board of Directors

April 14, 2010

IMPAX LABORATORIES, INC.
30831 Huntwood Avenue
Hayward, California 94544

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 25, 2010

Important Notice Regarding the Availability of Proxy Materials for the
Annual Meeting of Stockholders to Be Held on May 25, 2010:
the Proxy Statement and Annual Report to Stockholders
are available at http://www.stocktrans.com/eproxy/impax2010

To Our Stockholders:

The 2010 Annual Meeting of Stockholders of Impax Laboratories, Inc. will be held on Tuesday, May 25, 2010, at 9:00 a.m., Pacific Daylight Time, at the Marriott Hotel located at 1770 South Amphlett Blvd., San Mateo, California 94402, for the following purposes:

	(i)		to elect seven directors, as described in the accompanying proxy statement;
	(ii)		to approve the amendment and restatement of our Amended and Restated 2002 Equity Incentive Plan to increase the aggregate number of shares of our common stock that may be issued under such plan by 2,000,000 shares;
	(iii)		to ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2010; and
	(iv)		to transact such other business as may properly come before the annual meeting or any postponement or adjournment thereof.

You may obtain directions to the Marriott Hotel by contacting it directly at (650) 653-6000 or accessing the hotel’s Web site at http://www.marriott.com/hotels/maps/directions/sfosa-san-mateo-marriott-san-francisco-airport .

Only stockholders of record at the close of business on March 30, 2010 are entitled to notice of, and to vote at, the annual meeting and at any postponements or adjournments thereof. A list of such stockholders will be available for inspection by our stockholders at our principal executive offices located at 30831 Huntwood Avenue, Hayward, California 94544 during ordinary business hours for the ten-day period prior to the annual meeting.

YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN PERSON. WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON, YOU ARE URGED TO VOTE YOUR SHARES PROMPTLY TO ENSURE THEY ARE REPRESENTED AT THE ANNUAL MEETING. YOU MAY SUBMIT YOUR PROXY VOTE BY TELEPHONE OR ELECTRONICALLY THROUGH THE INTERNET AS DESCRIBED IN THE FOLLOWING MATERIALS OR BY COMPLETING AND SIGNING THE ENCLOSED PROXY CARD AND RETURNING IT IN THE SELF-ADDRESSED ENVELOPE PROVIDED. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.

		By Order of the Board of Directors,
		Arthur A. Koch, Jr.
		Senior Vice President, Finance,
		Chief Financial Officer and Corporate Secretary

Hayward, California
April 14, 2010

TABLE OF CONTENTS

		Page
GENERAL INFORMATION			1
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT			5
PROPOSAL ONE — ELECTION OF DIRECTORS			7
EXECUTIVE COMPENSATION			19
COMPENSATION COMMITTEE REPORT			48
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS			49
PROPOSAL TWO — APPROVAL OF AMENDMENT AND RESTATEMENT OF AMENDED AND RESTATED 2002 EQUITY INCENTIVE PLAN			50
PROPOSAL THREE — RATIFICATION OF APPOINTMENT OF GRANT THORNTON LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM			57
AUDIT COMMITTEE REPORT			58
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE			59
STOCKHOLDER PROPOSALS			59
ANNUAL REPORT TO STOCKHOLDERS			59

IMPAX LABORATORIES, INC.
30831 Huntwood Avenue
Hayward, California 94544
(510) 476-2000

PROXY STATEMENT
2010 ANNUAL MEETING OF STOCKHOLDERS

GENERAL INFORMATION

Why am I receiving these materials?

This proxy statement is furnished to you as a holder of our common stock, par value $0.01 per share, in connection with the solicitation of proxies by our board of directors for use at the 2010 Annual Meeting of Stockholders or at any postponement or adjournment thereof. References in this proxy statement to “Impax,” “we,” “us,” and “our” mean Impax Laboratories, Inc. and its subsidiaries unless the context of the description indicates otherwise.

On or about April 14, 2010, the notice of the annual meeting, this proxy statement, the enclosed proxy card and the annual report to stockholders, collectively referred to as the “proxy materials,” will be first sent or given to our stockholders.

When and where will the annual meeting be held?

The annual meeting will be held on Tuesday, May 25, 2010, at 9:00, a.m., Pacific Daylight Time, at the Marriott Hotel located at 1770 South Amphlett Blvd., San Mateo, California 94402.

What proposals will be voted on at the annual meeting?

At the annual meeting, stockholders will consider and vote upon:

	(i)		the election of seven directors, as described in this proxy statement;
	(ii)		the approval of the amendment and restatement of our Amended and Restated 2002 Equity Incentive plan, referred to as the “2002 plan,” to increase the aggregate number of shares of common stock that may be issued under such plan by 2,000,000 shares;
	(iii)		the ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2010; and
	(iv)		such other business as may properly come before the annual meeting or any postponement or adjournment thereof.

Our board is not aware of any other matters that will come before the annual meeting or any postponement or adjournment of the annual meeting. If any other matters properly come before the meeting or any postponement or adjournment of the meeting, the persons designated as proxies intend to vote in accordance with their best judgment on such matters.

What is a proxy?

A proxy is your legal designation of another person, also referred to as the “proxy,” to vote on your behalf. By properly signing and returning the enclosed proxy card or by voting by Internet or telephone, you are giving the persons who our board designated as proxies the authority to vote your shares in the manner that you indicate on your proxy card or by voting by Internet or telephone. The board has designated Michael Nestor and Christopher Mengler to serve as proxies for the annual meeting.

Whether or not you are able to attend the annual meeting, you are urged to complete and return your proxy, which will be voted as you direct on your proxy when properly completed. In the event no directions are specified, such proxies will be voted “FOR”: (i) the election of seven directors, as described in this proxy statement; (ii) the approval of the amendment and restatement of our 2002 plan to increase the number of shares of common stock that may be issued under such plan by 2,000,000 shares; and (iii) the ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2010.

In addition, the proxy confers discretionary authority to vote with respect to any and all of the following matters that may come before the annual meeting: (i) matters to be presented at the annual meeting of which we did not have notice on or prior to February 18, 2010; (ii) 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; (iii) any proposal omitted from this proxy statement and form of proxy pursuant to Rules 14a-8 or 14a-9 under the Securities Exchange Act of 1934, as amended, referred to as the “Exchange Act”; and (iv) matters incident to the conduct of the annual meeting.

Who is entitled to vote at the annual meeting?

Our board set the close of business on March 30, 2010 as the record date for the determination of stockholders entitled to notice of and to vote at the annual meeting. Only stockholders of record at the close of business on March 30, 2010, referred to as the “record date,” are entitled to notice of and to vote at the annual meeting or any postponement or adjournment thereof. On March 30, 2010, there were issued and outstanding 62,483,415 shares of common stock.

How do I vote my shares?

If your shares of common stock are registered directly in your name with our transfer agent, StockTrans, Inc., you are considered, with respect to those shares, the stockholder of record. Stockholders of record may vote in person at the annual meeting or by proxy using the enclosed proxy card, by telephone or electronically through the Internet.

The deadline for stockholders of record to vote by telephone or electronically through the Internet is 11:59 p.m., prevailing time, on May 24, 2010. Set forth below is a summary of the three voting methods which stockholders of record may utilize to submit their votes by proxy:

Vote by Telephone — 1-866-578-5350. Use any touch-tone telephone to vote your proxy 24 hours a day, 7 days a week. Have your proxy card in hand when you call. You will be prompted to enter your control number, which is located on your proxy card, and then follow the directions given.

Vote Electronically through the Internet — http://www.votestock.com. Use the Internet to vote your proxy 24 hours a day, 7 days a week. Have your proxy card in hand when you access the Web site. You will be prompted to enter your control number, which is located on your proxy card, to create and submit an electronic ballot.

Vote by Mail — Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided you.

Whether or not you plan to attend the annual meeting, we urge you to vote promptly using one of these methods to ensure your vote is counted.

If you vote by telephone or electronically through the Internet, you do not need to return your proxy card.

Please note that although there is no charge to you for voting by telephone or electronically through the Internet, there may be costs associated with electronic or telephonic access such as usage charges of Internet service providers and telephone companies. We do not cover these costs; they are solely your responsibility. Please note, the telephone and Internet voting procedures available to you are valid forms of granting proxies under the General Corporation Law of the State of Delaware.

If your shares of common stock are held in an account at a brokerage firm, bank, broker-dealer or other similar organization, then you are the beneficial owner of shares held in “street name” and you should have received these proxy materials from that organization rather than us. The organization holding your shares is considered the stockholder of record for purposes of voting at the annual meeting. As a beneficial owner, you have the right to direct the organization holding your shares on how to vote the shares held in your account using the voting instructions received from such organization. You may vote in person at the annual meeting only if you obtain a legal proxy from the broker, trustee or nominee that holds your shares giving you the right to vote the shares at the annual meeting.

What vote is required to approve each proposal?

Each share of common stock is entitled to one vote on each matter to be presented at the annual meeting. Directors are elected (Proposal One) by a plurality of the votes of the shares of common stock that are present in person or represented by proxy at the annual meeting and are entitled to vote on the election of directors. Under Delaware law, an abstention or a broker non-vote will have no legal effect on the election of directors. A broker non-vote occurs when shares held of record by a broker are not voted with respect to a proposal because the broker does not have discretionary voting power with respect to that proposal and has not received voting instructions from the beneficial owner. Therefore, the seven nominees for director receiving the most “FOR” votes will be elected to serve on the board. Unlike prior annual meetings, as a result of recent changes in the rules of the New York Stock Exchange applicable to brokerage firms, banks, broker-dealers and other similar organizations, if your shares are held in street name and the organization holding your shares does not receive voting instructions from you, the organization holding your shares will not be able to vote your shares in the election of directors.

The approval of the amendment and restatement of our 2002 plan to increase the number of shares of common stock that may be issued under such plan by 2,000,000 shares (Proposal Two), ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2010 (Proposal Three) and the approval of any other business as may properly come before the annual meeting, or any postponement or adjournment thereof, will require the affirmative vote of the majority of the shares of common stock that are present in person or represented by proxy at the annual meeting and are entitled to vote on Proposals Two or Three or the approval of any other business as may properly come before the annual meeting, or any postponement or adjournment thereof. Under Delaware law, an abstention will have the same legal effect as an “against” vote on, and a broker non-vote will not be counted as having been voted on, or as a vote “against,” Proposals Two or Three or the approval of any other business as may properly come before the annual meeting, or any postponement or adjournment thereof.

Can I revoke my proxy?

Yes, you may revoke your proxy at any time before it is voted at the annual meeting. To revoke your proxy, submit a later-dated proxy electronically through the Internet or by telephone, or another signed proxy with a later date to Arthur A. Koch, Jr., our Senior Vice President, Finance, Chief Financial Officer and Corporate Secretary, or attend the annual meeting and vote in person.

Attendance at the annual meeting will not in itself constitute a revocation of your proxy.

Before the taking of the vote at the annual meeting, any written notice of revocation should be sent to Impax Laboratories, Inc., 30831 Huntwood Avenue, Hayward, California 94544, attention: Arthur A. Koch, Jr., or hand delivered to Mr. Koch.

If you are a beneficial owner of shares of common stock held in street name, please review the voting instructions provided by the organization holding your shares or contact such organization regarding how to change your vote.

What constitutes a quorum?

A quorum of stockholders is necessary to hold a valid annual meeting. In order for a quorum to be present at the annual meeting, a majority of the issued and outstanding shares of common stock at the close of business on the record date must be present in person or represented by proxy at the annual meeting. All such shares that are present in person or represented by proxy at the annual meeting will be counted in determining whether a quorum is present, including abstentions and broker non-votes.

Who will bear the cost of the solicitation of proxies?

We will bear the cost of the solicitation of proxies and will reimburse the reasonable expenses of brokerage firms, banks, broker-dealers or other similar organizations incurred in forwarding material to beneficial owners of common stock.

Who will solicit proxies on behalf of the board of directors?

In addition to mailing the proxy materials, proxies for use at the annual meeting may be solicited by our directors, officers and employees, none of whom will receive additional compensation for such solicitation activities, in person or by telephone. In addition, we have retained D.F. King & Co., Inc., a firm experienced in the solicitation of proxies on behalf of public companies, to assist in the proxy solicitation process at a fee of approximately $10,000. We have also agreed to reimburse D.F. King & Co., Inc. for certain costs and expenses and to indemnify it for any claims or liabilities it may incur as a result of the proxy solicitation.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information as of the record date (except as otherwise noted in the footnotes) regarding the beneficial ownership of our common stock by: (i) each person known by us to beneficially own more than five percent of our outstanding common stock; (ii) each director and nominee for director; (iii) each executive officer named in the Summary Compensation Table; and (iv) all of our directors and executive officers as a group. As of the record date, 62,483,415 shares of our common stock were outstanding. Except as otherwise indicated, to our knowledge, the beneficial owners of shares of common stock listed below have sole voting and investment power with respect to such shares.

		Shares Beneficially Owned (1)
		Common Stock
		Amount and
		Nature of
		Beneficial				Percent of
Name and Address of Beneficial Owner (1)		Ownership				Class
Leslie Z. Benet, Ph.D.			55,600	(2)			*
Robert L. Burr			79,207	(3)			*
Nigel Ten Fleming, Ph.D.			62,000	(4)			*
Charles V. Hildenbrand			122,834	(5)			*
Larry Hsu, Ph.D.			3,185,483	(6)			5.1	%
Arthur A. Koch, Jr.			179,625	(7)			*
Michael Markbreiter			34,500	(8)			*
Christopher Mengler			63,456	(9)			*
Michael Nestor			71,769	(10)			*
Oh Kim Sun			70,179	(11)			*
Peter R. Terreri			64,000	(12)			*
Allen Chao, Ph.D.			290,295	(13)			*
All directors and executive officers as a group (12 persons)			4,278,948	(14)			6.7	%
Wellington Management Company, LLP			7,166,957	(15)			11.5	%
BlackRock, Inc.			4,312,278	(16)			6.9	%

PROPOSAL ONE — ELECTION OF DIRECTORS

Our amended and restated bylaws provide that the number of directors on the board will consist of not less than one or more than ten, with the exact number to be fixed by the board.

At the annual meeting, the stockholders will elect seven directors, each to serve for a term of one year and until his successor has been elected and qualified or until the director’s earlier death, resignation or removal. Oh Kim Sun, age 61, a director since 1999 and member of the audit committee, has decided not to stand for re-election at the annual meeting. At the time of Mr. Oh’s decision not to stand for re-election, there were no disagreements with management or the board. To fill the vacancy to be left by Mr. Oh, Dr. Allen Chao was elected a director by the board on April 5, 2010. Dr. Chao was recommended as nominee for director by the nominating committee. Our President, Chief Executive Officer and director, Dr. Larry Hsu, recommended Dr. Chao to the nominating committee.

The board has nominated the following individuals for election as director at the annual meeting: Leslie Z. Benet, Ph.D.; Robert L. Burr; Allen Chao, Ph.D.; Nigel Ten Fleming, Ph.D.; Larry Hsu, Ph.D.; Michael Markbreiter; and Peter R. Terreri. Each nomination for director was based upon the recommendation of our nominating committee. All nominees have consented to be named and have indicated their intent to serve if elected. The board has no reason to believe that any of the nominees will decline or will be unable to serve as a director.

Unless directed otherwise, the persons named in the enclosed proxy intend to vote all proxies received by them “FOR” (i) the election as directors of the seven nominees listed above, or (ii) if any of these nominees becomes unavailable or unwilling to serve as a member on the board for any reason, for a substitute nominee designated by the board.

The following table sets forth information, as of April 5, 2010, concerning our current directors who are nominees for election to the board:

Director

Name

Age

Since

Positions Held

Committee Memberships

Leslie Z. Benet, Ph.D.

72

2001

Director

Compensation Committee and Nominating Committee

Robert L. Burr

59

2001

Chairman and Director

Audit Committee, Compensation Committee 1 and Nominating Committee

Allen Chao, Ph.D.

64

2010

Director

—

Nigel Ten Fleming, Ph.D.

56

1999

Director

Compensation Committee and Nominating Committee 1

Larry Hsu, Ph.D.

61

1999

President, Chief Executive Officer and Director

—

Michael Markbreiter

48

1997

Director

Audit Committee

Peter R. Terreri

52

2003

Director

Audit Committee 1

We entered into a new employment agreement with Dr. Hsu which was effective as of January 1, 2010. The agreement with Dr. Hsu provides that during the term of his employment, the board will nominate and recommend to stockholders his election as our director.

Other than the employment agreement with Dr. Hsu described above, none of our directors, nominees for director or executive officers is a party to any arrangement or understanding with any other person with respect to nominations of directors. In addition, there is no family relationship between any of our directors, nominees for director or executive officers.

Set forth below is the business experience of the current members of the board and nominees for director for the past five years, unless indicated otherwise, as well as a summary of their specific experience, qualifications, attributes or skills that led to the conclusion that they are qualified to serve as our directors.

Current Directors and Nominees for Director

Leslie Z. Benet, Ph.D. has been a Professor since 1969 of, and has also served as Chairman of, the Department of Bioengineering and Therapeutic Sciences (1978-1998), University of California, San Francisco (UCSF). Dr. Benet has been a founder of four biopharmaceutical start up companies, for two of which he presently serves on the Scientific Advisory Boards, Limerick Biopharma and Hurel Corp. He 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 seven 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); Long Island University (D.Sc., 1999); University of Athens, Greece (Ph.D., 2005); and Catholic University of Leuven, Belgium (Ph.D., 2010). Dr. Benet’s research interests, more than 500 publications, and 11 patents are in the areas of pharmacokinetics, biopharmaceutics, drug delivery, and pharmacodynamics. He is listed among the most highly cited pharmacologists worldwide. 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 (NAS). Dr. Benet has received the highest scientific awards of AAPS (1989 and 2000), Rho Chi (1990), American Association of Colleges of Pharmacy (1991), American Society for Clinical Pharmacology and Therapeutics (1995 and 2010), American Pharmaceutical Association (2000), International Pharmaceutical Federation (2001) and in 2004 received the Pharmaceutical Sciences World Congress Research Achievement Award and the Controlled Release Society Career Achievement in Oral Drug Delivery Award. In 2007, he was selected as the UCSF Distinguished Clinical Lecturer. 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 Forum on Drug Discovery, Development and Translation and the NAS Standing Committee on Biodefense for the Department of Defense. Dr. Benet brings to the board deep knowledge and understanding of the biopharmaceutical industry, as well as policies and practices of the U.S. Food and Drug Administration, and provides the board with a unique perspective in the development of our corporate strategy based on his more than 40 years of experience in the science underlying our business.

Robert L. Burr is a self-employed investment manager and partner of Fleming US Discovery Partners, L.P., a private equity sponsor affiliated with J.P. Morgan Chase & Co. Mr. Burr was employed by J.P. Morgan Chase & Co. and associated entities from 1995 to May 2008, at which time he resigned his position as Managing Partner of the Fleming US Discovery III Funds. From October 2001 to October 2005, Mr. Burr was a Partner at Windcrest Discovery Investments LLC, an investment management firm. From 1992 to 1995, Mr. Burr was head of Private Equity at the investment banking firm of Kidder, Peabody & Co., Inc. Prior to that time, 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 received an MBA from Columbia University and a BA from Stanford University. Mr. Burr’s financial acumen and his extensive knowledge of capital markets represent a valuable resource to the board in the assessment of our capital and liquidity needs. In addition, Mr. Burr’s venture capital and private equity investment experience gives him the leadership and consensus-building skills to guide the board on a variety of matters, including compensation, corporate governance and risk assessment.

Allen Chao, Ph.D. , has been Chairman of Newport Healthcare Advisors, LLC, a healthcare investment management and consulting company, since January 2008. Dr. Chao was a co-founder of Watson Pharmaceuticals, Inc., a specialty pharmaceutical company, serving as a director from 1985 to May 2008, Chairman of the board of directors from May 1996 to May 2008, and Chief Executive Officer from 1985 to September 2007. While at Watson, Dr. Chao oversaw the company’s growth, through internal R&D, licensing and acquisitions of pharmaceutical products and technologies, as well as mergers and acquisition activities. Dr. Chao received a Ph.D. in industrial and physical pharmacy from Purdue University in 1973. In May of 2000, he received the degree of Doctor of Science from Purdue in recognition of his leadership and vision for the production and marketing of pharmaceutical products. Dr. Chao’s experience brings to the board a profound understanding of financial investment, business development, strategic planning and operational management in our industry and can provide invaluable practical guidance, insight and perspective with respect to our operations, strategy, and corporate governance.

Nigel Ten Fleming, Ph.D. is Executive Director of A-Cube, Inc., a medical diagnostics company, Chairman of Minerva Healthcare, an emerging specialty pharmaceutical company, and, in 2008, he became Chairman and Chief Executive Officer of G2B Pharma. He previously founded Athena Diagnostics, a neurological diagnostics reference laboratory, serving variously as Chairman, CEO and Vice President of Business Development prior to the company’s 1995 sale to Athena Neurosciences /Elan Pharmaceuticals. Dr. Fleming has also served on the boards of directors of Examplar, a subsidiary of Transgenic Sciences Inc. that developed the first transgenic Alzheimer’s mouse model, and serves on the board of Genmedica Therapeutics, an oral insulin company based in Barcelona. He has also consulted for, and served in various leadership roles at a number of early-stage biotechnology companies, including Gamera Biosciences, Neurocal, Nephros’, TheraMed Partners and Plant Cell Technologies. Dr. Fleming obtained his Ph.D. in Clinical Biochemistry from the University of Cambridge in England and was a lecturer at Harvard Medical School for a number of years. Dr. Fleming’s experience at life sciences companies as well as his extensive knowledge of biochemistry provides the board with the depth of understanding of our company’s business as well as valuable financial, operational and strategic expertise. In addition, Dr. Fleming brings to the board a perspective on corporate governance and compensation matters.

Larry Hsu, Ph.D. has been our President and Chief Executive Officer since October 1, 2006. Prior to holding these positions, Dr. Hsu served as President and Chief Operating Officer beginning in 1999. Dr. Hsu co-founded Impax Pharmaceuticals, Inc. in 1994 and served as its President, Chief Operating Officer and a member of the board from its inception until its merger with us. From 1980 to 1995, Dr. Hsu worked at Abbott Laboratories, where, during his last four years, he served as 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 the University of Michigan. Dr. Hsu’s experience as our co-founder and Chief Executive Officer, and previously our President and Chief Operating Officer, provides the board with unique insights into our operations, challenges and opportunities. In addition, his 30-year background in the pharmaceutical industry and knowledge in the underlying science brings special expertise to the board in developing our business strategies.

Michael Markbreiter, a private investor, was a portfolio manager for Morgan Stanley from October 2004 to May 2005 and Sofaer Capital, a global hedge fund, from December 2000 to September 2001. 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 he 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. Mr. Markbreiter’s experience in executive management brings to the board his business and financial expertise as well as comprehensive knowledge of risk-management matters.

Peter R. Terreri has over 20 years of experience primarily in generic pharmaceuticals with a specialized expertise in finance. Mr. Terreri is President, Chief Executive Officer and director of CGM, Inc., a manufacturing company that he owns and operates. He previously served as Senior Vice President and Chief Financial Officer of Teva Pharmaceuticals USA from 1985 through 2000, where he actively participated in the growth of the company from a $20 million local generic pharmaceutical company into a global leader in generic pharmaceuticals. As an active member of senior management, he was involved in all facets of the decision-making process at Teva Pharmaceuticals USA, including structuring and negotiating company and product acquisitions, participating in multiple public financings and securing several licensing deals and a substantial credit line. In addition to his role as Chief Financial Officer, Mr. Terreri contributed to many areas related to the company’s success outside of finance, including product development selection, facility utilization, business development, strategic planning, and implementing integration plans for the company’s acquisitions. He also supervised areas such as operations, sales and marketing, and information technology during his tenure. Mr. Terreri’s more than 20 years of experience in the pharmaceutical industry provides the board with comprehensive understanding of our operations and strategy. His prior experience as the chief financial officer of a major generic pharmaceutical company also brings to the board deep understanding of accounting and risk management issues.

Current Director Not Standing for Re-Election

Oh Kim Sun has been employed by the Chemical Company of Malaysia Berhad (CCM), a Malaysian corporation whose stock is listed on the Bursa Malaysia Berhad, since 1983 and served as Executive Director from 1983 through October 2003. Currently, Mr. Oh is a member of the board of directors of Nikko Electronics Berhad, Pharmaniaga Berhad, UEM Land Holdings Berhad and Faber Group Berhad, all of which are listed on the Bursa Malaysia Berhad. Mr. Oh is also a director of various other companies in Kuala Lumpur. Mr. Oh is also a member of The Malaysian Institute of Certified Public Accountants. Mr. Oh Kim Sun’s experience working for, and serving on the boards of, internationally operated companies demonstrated his business acumen and provided the board with a strategic global perspective, including insights into economic and political conditions in Asia, which was important in light of our construction of the Taiwan manufacturing facility.

Board and Committee Matters

Board Leadership Structure

We separate the roles of Chairman and Chief Executive Officer in recognition of the differences between the two roles. Mr. Burr serves as the Chairman of the board, and Dr. Hsu serves as a director as well as our President and Chief Executive Officer. Our Chief Executive Officer is responsible for setting our strategic direction and for our day to day leadership and performance, while our Chairman provides guidance to the Chief Executive Officer, sets the agenda for board meetings and presides over meetings of the board. Our Chairman qualifies as an independent director. See “— Independence.” The board has selected this leadership structure in the belief that separating the principal executive officer and board chairman positions allows for a more efficient division of responsibilities in light of the high demands on the time of each. The board believes that its leadership structure is well suited to the company’s business because it contributes to a more independent board, leads to productive internal board dynamics and allows Dr. Hsu to concentrate on our business and operations.

Board’s Role in Risk Oversight

We are exposed to a number of risks and undertake at least annually an enterprise risk management review to identify and evaluate these risks and to develop plans to manage them effectively. It is management’s responsibility to manage risk and bring the material risks applicable to the company to the board’s attention. The board has oversight responsibility of the processes established to report and monitor these risks. On behalf of the board, the audit committee plays a key role in the oversight of our enterprise risk management function. Mr. Koch, our Chief Financial Officer, is directly responsible for our enterprise risk management function and reports both to the President and Chief Executive Officer and to the audit committee in this capacity. In fulfilling his risk-management responsibilities, Mr. Koch works closely with members of our senior management and meets with the audit committee at least four times a year to discuss the risks facing our company, highlighting any new risks that may have arisen since the committee last met. The audit committee also reports to the board on a regular basis to apprise them of their discussions with Mr. Koch regarding our enterprise risk management efforts. Finally, Mr. Koch reports directly to the board on at least an annual basis to apprise it directly of our enterprise risk management efforts. In addition to the audit committee, the other committees of the board consider the risks within their areas of responsibility. For example, the compensation committee considers the risks that may be implicated by our compensation programs. The nominating committee considers risks related to succession planning and oversees the appropriate allocation of responsibility for risk oversight among the committees of the board. We believe that our current leadership structure supports the board’s risk oversight role.

Independence

The board has determined that the following directors, constituting a majority of the members of the board, are independent under the independence standards contained in the listing requirements of The NASDAQ Stock Market LLC, referred to as “NASDAQ”: Leslie Z. Benet, Ph.D., Robert L. Burr, Allen Chao, Ph.D., Nigel Ten Fleming, Ph.D., Michael Markbreiter, Oh Kim Sun and Peter R. Terreri.

Meetings of the Board and Committees

In 2009, there were 4 regular and 3 special board meetings. The board has three standing committees: the audit committee, the compensation committee and the nominating committee. Our audit committee held 7 meetings, our compensation committee held 4 meetings and our nominating committee held 3 meetings in 2009. During 2009, each of our directors attended at least 75% of the aggregate of (i) all of the meetings of the board and (ii) all of the meetings of all committees of the board on which such director served.

Committees of the Board

Audit Committee . The board has appointed a standing audit committee, currently consisting of Peter R. Terreri, as chairman, and Robert L. Burr, Michael Markbreiter and Oh Kim Sun. The board has determined that each member of the audit committee is independent, as defined in the applicable NASDAQ listing standards. In addition, the board has determined that Mr. Terreri qualifies as an “audit committee financial expert” as defined under Item 407 of Regulation S-K promulgated by the SEC. Oh Kim Sun has decided not to stand for re-election at the annual meeting.

The audit committee is governed by a written charter approved by the board, which is posted on our Web site (www.impaxlabs.com) and accessible via the “Investor Relations” page. The principal purpose of the audit committee is to oversee our accounting and financial reporting processes and the audit of our financial statements. The audit committee is directly responsible for the appointment, compensation, retention and oversight of the firm selected to be engaged as our independent registered public accounting firm, and pre-approves the engagement of the independent registered public accounting firm 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 we receive regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters.

Compensation Committee . The board has appointed a standing compensation committee consisting of Robert L. Burr, as chairman, and Leslie Z. Benet, Ph.D. and Nigel Ten Fleming, Ph.D. The board has determined that each member of the compensation committee is independent, as defined in the applicable NASDAQ listing standards.

The board has adopted a written compensation committee charter, which is posted on our Web site (www.impaxlabs.com) and accessible via the “Investor Relations” page. The principal duties of the compensation committee are to formulate, evaluate and recommend the compensation of our executive officers and directors to the board and the oversight of all compensation programs involving the issuance of our stock and other equity securities. Our Chief Executive Officer makes recommendations concerning executive compensation, other than his own compensation, to the compensation committee.

The committee uses the consulting services of Radford Surveys + Consulting, a business unit of Aon Consulting, Inc., which is a subsidiary of Aon Corporation, referred to as “Radford,” as its outside compensation consultant in evaluating executive compensation.

In connection with our process of entering into employment agreements with named executive officers in 2009, the compensation committee also retained Pearl Meyer and Partners, an executive compensation consulting firm which advised the committee as to the reasonableness of the proposed terms in light of employment arrangements for comparable executives employed by other publicly held companies.

Radford as Compensation Committee Consultant . The compensation committee has retained Radford as its outside compensation consultant as a result of a competitive bidding process conducted by management on behalf of the compensation committee. Management did not specifically recommend Radford. Radford regularly meets with the compensation committee and provides advice regarding the design and implementation of our executive compensation program as well as our director compensation program. In particular, upon compensation committee’s request, Radford:

	•		reviews and makes recommendations regarding executive and director compensation (including amounts and forms of compensation);
	•		provides market data and performs benchmarking;
	•		advises the compensation committee as to best practices; and
	•		assists in the preparation of our compensation-related disclosure included in this proxy statement.

In providing services to the compensation committee, with the compensation committee’s knowledge, Radford may contact our management from to time to time to obtain data and other information about us and to work together in the development of proposals and alternatives for the compensation committee to review and consider.

In addition, in fiscal 2009, (i) Aon Consulting, Inc., an affiliate of Radford, provided services as an insurance broker for our medical insurance and employee benefits insurance, and (ii) Aon Risk Services, an affiliate of Radford, provided services as an insurance broker for our products liability insurance and directors and officers insurance.

The compensation committee regularly evaluates the nature and scope of the services provided by Radford. The compensation committee approved the fiscal 2009 executive and director compensation consulting services described above. Although the compensation committee was aware of the other services performed by Aon Consulting and Aon Risk Services, the compensation committee did not review such other services as those services were reviewed and approved by management in the ordinary course of business.

In order to ensure that Radford is independent, Radford is only engaged by, takes direction from, and reports to, the compensation committee and, accordingly, only the compensation committee has the right to terminate or replace Radford at any time. Further, Radford maintains certain internal controls within Aon which include, among other things:

	•		Radford is managed separately within Aon Corporation and performance is measured solely on the Radford business;
	•		No commissions or cross revenue is provided to Aon Corporation in the event that Aon Corporation introduces Radford to an account, and no Aon Corporation staff member is paid commissions or incentives for Radford services;
	•		Radford is not rewarded for selling Aon Corporation services nor is Radford required to cross-sell services;
	•		Radford maintains its own account management structure, contact database and IT network and its survey data is on a separate IT platform from Aon Corporation; and
	•		No member of Radford’s team is involved in, or sits on, any Aon Corporation committee for purposes of selling Aon Corporation services.

Nominating Committee . The board has appointed a standing nominating committee currently consisting of Nigel Ten Fleming, Ph.D., as chairman, and Leslie Z. Benet, Ph.D. and Robert L. Burr. The board has determined that each member of the nominating committee is independent, as defined in the applicable NASDAQ listing standards.

The nominating committee is governed by a written charter approved by the board, which is posted on our Web site (www.impaxlabs.com) and accessible via the “Investor Relations” page. The principal purposes of the nominating committee are to develop and recommend to the board certain corporate governance policies, establish criteria for selecting new directors and identify, screen and recruit new directors. The nominating committee is also responsible for selecting and recommending individuals to serve as members of the board and recommending directors for committee membership to the board.

The information on the Web site listed above is not, and should not be, considered part of this proxy statement and is not incorporated by reference in this document. The Web site is, and is intended only to be, an inactive textual reference.

Qualifications of Director Nominees

The nominating committee has not established specific education or years of business experience requirements 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 pharmaceutical industry, technical matters generally and the specific technologies we use and develop. In addition, potential director nominees will be evaluated by reference to requirements relating to the board and committee composition under the law and applicable NASDAQ listing standards.

Our bylaws provide that each director must be at least 21 years of age and that each director or nominee for election as our director must deliver to our Corporate Secretary a completed written questionnaire with respect to his or her background and qualifications and also agree, among other matters, that he or she is not and will not become party to any agreement with a third party concerning how he or she will act or vote on any issue or question, any similar agreement that could limit or interfere with the ability to comply with his or her duties as a director, or any undisclosed agreement providing for any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director.

Director Nominee Selection Process and Diversity Policy

In the case of an incumbent director whose term of office expires, the nominating committee reviews such director’s service during the past term, including the number of board and committee meetings attended, as applicable, quality of participation and whether the candidate continues to meet the qualifications for a director, including the director’s independence, as well as any special qualifications required for membership on any committees on which such director serves.

In the case of a new director candidate, the selection process for director candidates includes the following steps:

	•		identification of director candidates by the nominating committee based upon suggestions from current directors and executives and recommendations received from stockholders, and possible engagement of a director-search firm;
	•		interviews of candidates by the nominating committee;
	•		reports to the board by the nominating committee on the selection process;
	•		recommendations by the nominating committee; and
	•		formal nominations by the board for inclusion in the slate of directors at the annual meeting.

The nominating committee does not have a formal policy with respect to diversity; however, the board and the nominating committee believe that it is essential that the board members represent diverse viewpoints. The nominating committee seeks nominees with a broad diversity of experience, professions, skills, geographic representation and backgrounds. The nominating committee does not assign specific weights to particular criteria and no particular criterion is necessarily applicable to all prospective nominees. We believe that the backgrounds and qualifications of the directors, considered as a group, should provide a significant composite mix of experience, knowledge and abilities that will allow the board to fulfill its responsibilities. Nominees are not discriminated against on the basis of race, religion, national origin, sexual orientation, disability or any other basis proscribed by law.

Procedures for Submitting Director Nominations by Stockholders

A director nominee nominated by our stockholder is eligible for election as our director at any stockholders’ meeting only if such person is nominated in accordance with the procedures set forth in our amended and restated bylaws. Set forth below is a brief summary of such procedures provided in our amended and restated bylaws. This summary is not intended to be complete and is qualified in its entirety by reference to the detailed provisions of our amended and restated bylaws.

Our stockholder can submit nominations of persons to be elected as our directors at a stockholders’ meeting, provided such stockholder:

	•		is a stockholder of record (i) on the date of the giving of the notice provided for in our amended and restated bylaws, (ii) on the record date for the determination of the stockholders entitled to vote at such meeting of stockholders, and (iii) at the time of such meeting of stockholders;
	•		is entitled to vote at the meeting of stockholders; and
	•		submits a written notice of nomination of persons for election to our board at a meeting of stockholders and complies with other specific notice procedures set forth in our amended and restated bylaws as to such nominations, including, but not limited to, the procedures regarding such notice’s timeliness and required form.

Stockholder’s Notice of Nomination

A stockholder’s written notice of nomination of persons for election to the board at an annual meeting should be submitted to our Corporate Secretary at our principal executive offices, at 30831 Huntwood Avenue, Hayward, California 94544.

Each stockholder’s notice of nomination must set forth the following information with respect to each person whom the stockholder proposes to nominate for election or reelection as a director:

	•		the name, age, business address and residence address of such person;
	•		the principal occupation and employment of such person;
	•		the class and series and number of shares of each class and series of our capital stock owned beneficially or of record by such person, which information must be supplemented not later than 10 calendar days after the record date for the meeting to disclose such ownership as of the record date;
	•		such person’s executed written consent to being named in the proxy statement as a nominee and to serving as a director if elected;

	•		all information relating to such person that would be required to be disclosed in a proxy statement or other filings required to be made with the SEC in connection with the solicitation of proxies for the election of directors in a contested election pursuant to the Exchange Act and applicable rules and regulations;
	•		a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three years, and any other material relationships, between or among such person being nominated, on the one hand, and the stockholder and any stockholder associated person which means a person (i) controlling, directly or indirectly, or acting in concert with, such stockholder, (ii) any beneficial owner of our securities owned of record or beneficially by such stockholder, and (iii) any person controlling, controlled by or under common control with such stockholder associated person, on the other hand, including, without limitation all information that would be required to be disclosed pursuant to Item 404 promulgated under Regulation S-K of the Exchange Act if the stockholder making the nomination and any stockholder associated person were the “registrant” for purposes of such rule and the person being nominated were a director or executive officer of such registrant; and
	•		the questionnaire and director agreement required under our amended and restated bylaws.

In addition, each stockholder’s notice of nomination must set forth the following information with respect to the stockholder giving the notice:

	•		the name and record address of such stockholder, as they appear on our stock ledger,
	•		the name and address of any stockholder associated person;
	•		the class and series and number of shares of each class and series of our capital stock, which are, directly or indirectly, owned beneficially and/or of record by such stockholder or any stockholder associated person, documentary evidence of such record or beneficial ownership, and the date or dates such shares were acquired and the investment intent at the time such shares were acquired;
	•		any derivative instrument directly or indirectly owned beneficially by such stockholder or any stockholder associated person and any other direct or indirect right held by such stockholder or any stockholder associated person to profit from, or share in any profit derived from, any increase or decrease in the value of our shares;
	•		any proxy, contract, arrangement, understanding, or relationship pursuant to which such stockholder or any stockholder associated person has a right to vote our shares;
	•		any short interest indirectly or directly held by such stockholder or any stockholder associated person in any security issued by us;
	•		any rights to dividends on our shares owned beneficially by such stockholder or any stockholder associated person that are separated or separable from our underlying shares;
	•		any proportionate interest in our shares or derivative instruments held, directly or indirectly, by a general or limited partnership in which such stockholder or any stockholder associated person is a general partner or, directly or indirectly, beneficially owns an interest in a general partner;
	•		any performance-related fees (other than an asset-based fee) that such stockholder or any stockholder associated person is entitled to based on any increase or decrease in the value of our shares or derivative instruments, if any, as of the date of such notice, including without limitation any such interests held by members of such stockholder’s or any stockholder associated person’s immediate family sharing the same household, which information must be supplemented by such stockholder and any stockholder associated person not later than 10 calendar days after the record date for the meeting to disclose such ownership as of the record date;

	•		a description of all arrangements or understandings between such stockholder or any stockholder associated person and each proposed nominee and any other person or persons (naming such person or persons) pursuant to which the nomination(s) are to be made by such stockholder;
	•		any material interest of such stockholder or any stockholder associated person in the election of such proposed nominee, individually or in the aggregate, including any anticipated benefit to the stockholder or any stockholder associated person therefrom;
	•		a representation that such stockholder is a holder of record of our stock entitled to vote at such meeting and that such stockholder intends to appear in person or by proxy at the meeting to nominate the person or persons named in its notice;
	•		a representation from the stockholder as to whether the stockholder or any stockholder associated person intends or is part of a group which intends (i) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of our outstanding capital stock required to elect the person proposed as a nominee and/or (ii) otherwise to solicit proxies from stockholders in support of the election of such person;
	•		whether and the extent to which any agreement, arrangement or understanding has been made, the effect or intent of which is to increase or decrease the voting power of such stockholder or such stockholder associated person with respect to any shares of our capital stock, without regard to whether such transaction is required to be reported on a Schedule 13D or other form in accordance with the Exchange Act and the applicable rules and regulations; and
	•		any other information relating to such stockholder and any stockholder associated person that would be required to be disclosed in a proxy statement or other filings required to be made with the SEC in connection with solicitations of proxies for the election of directors in a contested election pursuant to the Exchange Act and the applicable rules and regulations.

In addition to the information required above, we may require any proposed nominee to furnish such other information as may reasonably be required by us to determine the eligibility of such proposed nominee to serve as independent director or that could be material to a reasonable stockholder’s understanding of the independence, or lack thereof, of such nominee.

Deadline for Submitting Stockholder’s Notice of Nomination

To be considered timely, a stockholder’s notice of nomination must be delivered to, or mailed and received by, our Corporate Secretary, not earlier than the close of business on the 120th calendar day, and not later than the close of business on the 90th calendar day, prior to the first anniversary of the immediately preceding year’s annual meeting. If we did not hold an annual meeting in the previous year or we call the annual meeting for a date that is more than 30 calendar days earlier or more than 60 calendar days later than such anniversary date, the timely notice by the stockholder must be so delivered or received not earlier than the close of business on the 120th calendar day prior to the date of such annual meeting and not later than the close of business on the later of the 90th calendar day prior to the date of such annual meeting, or, if the first public disclosure of the date of such annual meeting is less than 100 calendar days prior to the date of such annual meeting, the 10th calendar day following the day on which we make first public disclosure of the date of such annual meeting.

However, if the number of directors to be elected to the board at an annual meeting is increased and we did not provide any public disclosure, naming all of the nominees for directors or specifying the size of the increased board, at least 90 calendar days prior to the first anniversary of the date of the immediately preceding year’s annual meeting, a stockholder’s notice will also be considered timely, but only with respect to nominees for any new positions created by such increase, if it is delivered to, or mailed and received by, our Corporate Secretary at our principal executive offices not later than the close of business on the 10th calendar day following the day on which we first make such public disclosure.

In case of a special meeting of stockholders, the proper form of a stockholder’s notice of nomination must be delivered to our Corporate Secretary not earlier than the close of business on the 120th calendar day prior to the date of such special meeting and not later than the close of business on the later of the 90th calendar day prior to the date of such special meeting or, if our first pubic disclosure of the date of such special meeting is less than 100 days prior to the date of such special meeting, not later than the 10th calendar day following the day on which we first make public disclosure of the date of the special meeting and of the nominees proposed by the board to be elected at such meeting.

Stockholder Nominee Recommendation Policy

The nominating committee will consider recommendations received from stockholders 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 board.

Any stockholder recommendation of a potential director nominee proposed for consideration by the nominating committee should include the potential director nominee’s name and qualifications for board membership and should be addressed to:

Corporate Secretary
Impax Laboratories, Inc.
30831 Huntwood Avenue
Hayward, California 94544

All stockholder 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 we first mailed our proxy material for the prior year’s annual meeting in order, upon a determination by the nominating committee to recommend such potential director nominee, for such nominee to be included in the proxy statement and the form of proxy relating to the annual meeting. The deadline for submitting recommendations of potential director nominees for the 2011 annual meeting is December 15, 2010.

Communication with the Board

Stockholders may communicate with the board 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., 30831 Huntwood Avenue, Hayward, California 94544. We will periodically forward all correspondence received to the board or to the individual member of the board to whom the correspondence is addressed.

Attendance at Annual Meeting

The board has adopted a policy that all of our directors should attend the annual meeting, absent exceptional cause. In 2009, each of the seven members of the board attended the annual meeting.

Director Compensation for Year Ended December 31, 2009

The following table sets forth information regarding the compensation of our non-employee directors during the year ended December 31, 2009.

		Fees Earned or
		Paid in Cash				Stock				Option				Total
Name		($)(1)				Awards(2)(3)				Awards(2)(4)				($)(2)
Leslie Z. Benet, Ph.D.			50,250				—				281,213				331,463
Robert L. Burr			85,500				78,600				168,728				332,828
Nigel Ten Fleming, Ph.D.			53,250				78,600				168,728				300,578
Michael Markbreiter			51,750				78,600				168,728				299,078
Oh Kim Sun			51,750				78,600				168,728				299,078
Peter R. Terreri			61,750				78,600				168,728				309,078

Narrative Disclosure to Director Compensation Table

Members of the board who are our employees do not receive any compensation for their services as our directors. Prior to March 1, 2009, each of our non-employee directors received an annual retainer of $25,000, payable in quarterly installments, and a $2,000 fee for each regularly scheduled board meeting that such director attended. In addition to the foregoing, we paid a retainer of $10,000, payable in quarterly installments, to Mr. Terreri, Chairman of the audit committee.

On March 1, 2009, the board adopted a new compensation program for directors, pursuant to which each of our non-employee directors receives an annual retainer of $30,000, payable in quarterly installments, a $2,000 fee for each board meeting attended, and a $1,500 fee for each committee meeting attended. In addition, we pay, in quarterly installments, a $30,000 retainer to our Chairman of the board and a $10,000, $5,000 and $4,000 retainer to our chairmen of the audit, compensation and nominating committees, respectively. Our non-employee directors were reimbursed for out-of-pocket expenses incurred in attending board and committee meetings.

On May 20, 2009, we made annual and special grants of stock options, at the exercise price of $6.55 per share, and restricted stock to our non-employee directors. Under the annual grant, we awarded (i) options to purchase 20,000 shares of common stock to Dr. Benet and 10,000 shares of common stock to each of the remaining non-employee directors; and (ii) 4,000 shares of restricted stock to each of our non-employee directors (excluding Dr. Benet). Pursuant to the special grant, we awarded (i) stock options to purchase 55,000 shares of common stock to Dr. Benet and 35,000 shares of common stock to each of our remaining non-employee directors; and (ii) 8,000 shares of restricted stock to each of our non-employee directors (excluding Dr. Benet) in recognition of the directors contributions during the period when we did not grant any equity awards to directors while we were working to regain compliance with our public reporting requirements. Stock options and restricted stock vest in three equal annual installments beginning on May 20, 2010.

THE BOARD RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION AS DIRECTORS OF THE SEVEN NOMINEES NAMED IN THE PROXY STATEMENT.

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

The following discussion provides an analysis of our compensation program for the executive officers named in the Summary Compensation Table beginning on page 32 and discusses the material factors involved in our decisions regarding the compensation of the following named executive officers:

	•		Larry Hsu, Ph.D, our President and Chief Executive Officer;
	•		Arthur A. Koch, Jr., our Senior Vice President, Finance and Chief Financial Officer;
	•		Christopher Mengler, R.Ph., President of Global Pharmaceuticals, our generic-products division;
	•		Michael J. Nestor, President of Impax Pharmaceuticals, our branded-products division; and
	•		Charles V. Hildenbrand, our Senior Vice President, Operations.

The following discussion cross-references those specific tabular and narrative disclosures that appear following this subsection where appropriate. You should read this Compensation Discussion and Analysis in conjunction with such tabular and narrative disclosures.

2009 Performance Summary

Our overall compensation goal is to reward our executive officers in a manner that supports our pay-for-performance philosophy while maintaining an overall level of compensation that we believe is reasonable and competitive. Our performance during the year ended December 31, 2009 was very strong and, in our compensation decision-making process described below, we took this performance into consideration.

Our total revenue increased to $358 million, up $148 million or 71% over the prior year period, and our gross profit was $188 million, a substantial increase over the $118 million in 2008. Our gross profit margin for 2009 was 52%, exceeding our full year outlook of gross profit margin of about 50%. Total operating expenses in 2009 increased only 3% as expense control remained a critical management objective.

Our strong revenue growth resulted in full year 2009 net income increasing 213% or $34 million to $50 million, with net income per diluted share increasing $0.56, from $0.26 in 2008 to $0.82 in 2009.

For 2009 we were also free cash flow positive before changes in certain working capital assets and liabilities. This represented a significant improvement over our 2009 outlook of cash flow positive from operations before changes in certain working capital assets and liabilities.

Finally, during 2009 we strengthened our balance sheet by increasing our liquid assets and retiring all of our outstanding debt. As of December 31, 2009, we had more than $90 million in cash and short-term investments and $186 million in accounts receivable as a result of our substantially higher product sales.

Compensation Philosophy and Objectives

At its core, our executive compensation program recognizes that our success is dependent upon our ability to attract, motivate and retain the highly talented individuals we need to achieve our business results. The program reflects the following key principles:

	•		To attract, motivate and retain the best talent we can obtain, our compensation should be competitive . We strongly believe that our future success rests with our people, including our executive officers. To be successful, we must be able to attract, motivate and retain quality executive officers. As compensation is a key tool to achieve this objective, one facet of our compensation program is to provide our named executive officers pay amounts and components that are competitive with those of other companies in our industry.
	•		Our compensation program should encourage and reward positive performance . Our executive compensation program is designed to promote and reward positive performance. In doing so, we consider both the overall performance of our business as well as the individual performance of each named executive officer. Positive performance on the part of our company and management will permit our named executive officers to be eligible to receive incentive compensation. On the other hand, when our business is facing financial or other challenges or an individual executive does not meet stated objectives, this incentive compensation may be appropriately reduced or eliminated.
	•		We seek to align the interests of our named executive officers and stockholders . We believe that equity compensation is an excellent way to encourage our executive officers to act in the best interests of our stockholders. We provide our named executive officers with equity awards as part of their overall compensation to encourage equity ownership and to align their interests with those of our stockholders.
	•		Compensation should encourage teamwork and executive cohesion . While individual performance is carefully reviewed and considered, we have also maintained a philosophy of similar compensation for officers who are at similar executive levels. We believe that following such a plan of pay equity fosters teamwork and cohesion and discourages internal comparison of compensation packages among executives.
	•		Our compensation program should balance our short- and long-term financial and operational goals . We generally strive to achieve a balance between achievement of both short- and long-term goals through the use of both salary and annual cash incentives and equity-based incentives. Our management incentive program primarily rewards short-term performance by paying out base salary and annual cash incentive awards based on performance over a period of one year. Equity-based awards are generally designed to reward long-term financial performance.

We believe that the mix and design of the elements of our executive compensation discussed in this proxy statement do not encourage management to assume excessive risks. See “— Risk Assessment in Compensation Policies and Practices for Employees.”

Our Compensation Decision-Making Process

Role of Chief Executive Officer and Compensation Committee

In general, as to most items of compensation, the chief executive officer annually evaluates each named executive officer, other than himself, and recommends to the compensation committee each component of compensation for all of those named executive officers. Compensation that is generally not covered by the chief executive officer’s evaluation includes benefits and other compensation mandated or determined by reference to an existing employment or similar agreement or benefits and other programs generally available to all of our employees.

As to the compensation of our chief executive officer, the compensation committee discusses and creates a proposal as to the amount of and any changes to his compensation. The committee also evaluates the chief executive officer’s proposals as to the compensation of our other named executive officers. The compensation committee then submits its recommendations regarding the compensation of all of our named executive officers to the board for final approval.

Generally, as part of its process of setting and approving the executive annual compensation, the compensation committee and the board, as applicable, review gains realized from prior compensation or compensation to be received upon a future termination of employment or a change in control. Severance and change-in-control compensation is intended to maximize stockholder value and assure continuity of leadership by allowing executives to perform their duties without regard to any concerns that they may have regarding their continued employment.

Role of Compensation Consultants

In 2009, as in 2008 and 2007, we retained the consulting services of Radford to assist in the evaluation of our compensation program for our named executive officers. Radford was engaged by, and reports directly to, the compensation committee, and the compensation committee has the general authority to retain and dismiss the compensation consultants.

Review of Executive Compensation

In 2008, the compensation committee, with the assistance of Radford, conducted a comprehensive review of our executive compensation to ensure that we are paying our executive officers competitive levels of compensation that best reflect their individual responsibilities and contributions to our operations and provide incentives to achieve our business objectives.

Radford’s review took into account the fact that, since 2005, the level of our executive compensation was closer to the 25 ^th than the 50 ^th percentile of Radford compensation survey data, described below in “— Benchmarking Executive Compensation.” Such level was maintained throughout the period we were unable to file our periodic reports with the SEC and our audits for 2004, 2005, 2006 and 2007 remained open. The board made this decision to avoid even the appearance of any conflict between management and stockholder objectives even though the level of compensation was becoming increasingly less competitive with the executive compensation of our peers.

Following resolution of the issues described above, an in-depth examination of Radford’s survey led the compensation committee to conclude that the total compensation for our executive officers required adjustment to bring our compensation to a level competitive with that of other companies in our peer group and to make our compensation internally equitable for officers at similar levels of responsibility. Once the audits were completed and we reregistered our common stock with the SEC, and in recognition of our business and financial achievements, our compensation committee and the board, with the assistance of Radford:

	•		developed a new compensation philosophy that targets executive compensation at the 50 th percentile for salary, cash incentive awards and equity awards; and
	•		recognized extraordinary past performance of our executive officers in the context of executive compensation that has been below the market 50 th percentile.

In 2009, Radford reevaluated our executive compensation and recommended that the compensation of our executive officers continued to be targeted at the 50 ^th percentile of Radford compensation survey data for salary, cash incentive awards and equity awards.

Benchmarking Executive Compensation

With the assistance of Radford, the compensation committee established the following peer group of life sciences companies:

	•		Abraxis Bioscience, Inc.
	•		Alpharma Inc.
	•		Chattem, Inc.
	•		Caraco Pharmaceutical Laboratories, Ltd.
	•		Endo Pharmaceuticals Holdings, Inc.
	•		K-V Pharmaceutical Company
	•		Lannett Company, Inc.
	•		The Medicines Company
	•		Medicis Pharmaceutical Corporation
	•		Obagi Medical Products, Inc.
	•		Par Pharmaceutical Companies, Inc.
	•		Hi-Tech Pharmacal Co., Inc.
	•		Salix Pharmaceuticals, Ltd.

Such companies were selected based on: (i) similarity of business model to our business model; (ii) comparability to our company based on size, as measured by financial characteristics and number of employees; (iii) stage of product development; and (iv) financial performance.

Radford provided us with information regarding compensation practices, including both cash and equity compensation, of companies comprising our peer group and published survey data using the 2008 Radford Global Life Sciences Executive Total Direct Compensation Survey. We believe that such information constituted appropriate guidelines for our compensation committee to compare proposed pay levels for our named executive officers with those of other companies in the life sciences industry. The purpose of using these data was to assist the decision makers in assessing whether the proposed executive compensation was competitive. The decision makers considered these data only as a guidepost to their evaluation of proposed compensation amounts, and there was no mandate that any actual compensation paid must fall within any set range. Our compensation committee and the board believe that using the Radford data in this manner is useful in establishing an appropriate and competitive compensation structure.

Our compensation committee and the board review this process each year and in future years may determine to measure executive compensation by reference to data of companies in a different percentile range if our performance criteria or results, as viewed by reference to our yearly budget, change significantly, or they may choose to implement a different process altogether. The compensation committee will review the composition of the peer group annually to ensure that companies comprising the peer group are relevant for comparative purposes.

Components of Our Executive Compensation Program

Overview of Elements of Compensation

Total compensation for our named executive officers is comprised of the following elements:

	•		base salary;
	•		cash incentive awards;
	•		options and other equity-based awards;
	•		non-qualified deferred compensation plan contributions;
	•		401(k) retirement plan contributions;
	•		post-employment and change-in-control benefits, including severance protection; and
	•		other benefits and perquisites.

With respect to each of these elements, we provide the following discussion and analysis: (i) a description of the element; (ii) the objectives of each element; (iii) the specific performance that each element is designed to reward, if any; (iv) why we choose to pay each element; (v) how we determine the amount of each element; and (vi) how each element and our decisions regarding that element fit into our overall compensation objectives and affect decisions regarding those elements.

Base Salary

Base salary is paid to all employees, including our named executive officers, to provide them with a degree of financial certainty and a source of fixed compensation to meet their day-to-day living and other needs. We believe that our base salaries should be set competitively with other companies in our peer group and in the life sciences industry group in general so that they may serve to attract and retain talented executives.

We generally set an initial base salary range for a particular executive level (for example, all officers with the title of Senior Vice President or President of a division) and then apply that range to all executives at that level. In establishing these base salary ranges, we consider:

	•		the experience, education and skills required and value of the position to us and our operations;
	•		the particular needs of our company for an executive at the level being considered;
	•		our desire to promote a cohesive management team among executives of that level by establishing internal pay equity; and
	•		salaries for executives in similar positions in other companies in our peer group, as reflected in the Radford compensation survey data, applying the procedure described above in “— Our Compensation Decision-Making Process.”

Once the base salary range is established for a particular executive level, we then determine the amount of salary that a specific executive officer will receive. For new hires or promotions to a particular executive level, we consider:

	•		the individual experience, education and skills of the particular executive;
	•		for promotion candidates, the executive’s prior performance and length of service with us and the salaries of any other executives at that level; and
	•		other special circumstances applicable to the particular executive.

We believe that generally the 2009 base salary levels we set for our named executive officers represented competitive compensation for an executive who:

	•		is fully experienced and educated as required by the position;
	•		is a strong performer and strong leader who makes solid contributions; and
	•		possesses a full skill set for his or her position and applies those skills successfully.

Our compensation committee proposes salary adjustments for our chief executive officer. As for our other named executive officers, base salary adjustments are evaluated and proposed by the chief executive officer, whose proposals are reviewed by the compensation committee. In an effort to maintain pay equity, the chief executive officer generally developed 2009 base salary increases for other named executive officers consistently among executives serving in similar capacities and with similar levels of responsibility.

Based upon information available when Mr. Mengler was hired in January 2009, the salary of $445,000 that we agreed to pay him fell in the 50th percentile of the Radford data. In February 2009, we increased Dr. Hsu’s and Messrs. Koch’s, Nestor’s and Hildenbrand’s respective base salaries to $596,250, $400,000, $445,000 and $340,000 in order to bring their compensation to the 50th percentile of the Radford data to be competitive with the executive compensation of the companies in our peer group. See “— Our Compensation Decision-Making Process — Review of Executive Compensation.”

The amount of a named executive officer’s base salary may also serve as a reference point for determining the amount of his other compensation elements. For example, in 2009, the range of the potential annual cash incentive awards for each executive was derived from a percentage of the executive’s base salary.

Cash Incentive Awards

Through annual cash incentive awards, we provide our named executive officers with an increased cash compensation opportunity and based on achievement of annual corporate and individual goals. We believe that a meaningful amount of executive compensation should be variable and contingent on individual and corporate performance. Establishing executive compensation that is rewarded upon the achievement of these performance-based criteria, discussed in more detail below, supports our goal of providing incentives to our executives who dedicate their full efforts toward achieving our performance objectives, which in turn makes our business successful and contributes to increases in stockholder value in the short-term. Generally, our named executive officers who have been in their position during the year are eligible to receive these cash incentive awards.

Annual cash incentive awards are generally calculated as a percentage of base salary based upon corporate and individual performance goals that must be achieved to earn the award. In an effort to maintain pay parity, executives at the same job level and with similar degrees of responsibility will generally be assigned the same percentage of base salary.

During the first quarter of 2009, the board and the compensation committee established individual goals for the chief executive officer and corporate or company wide goals for all named executive officers, and the chief executive officer developed individual performance goals for each other named executive officer. Individual goals were customized for the applicable executive and reflected the responsibilities and duties that we believe the executive should fulfill in connection with his particular position. Corporate goals reflected company performance as a whole and included criteria based on our achievement of particular performance targets, such as revenue and net income. The establishment of individual and corporate goals in 2009 was tied to and consistent with our compensation philosophy, as described above in “— Base Salary.”

In order to further align the stockholders’ and executive officers’ interests, in 2009, we emphasized the achievement of corporate goals rather than individual goals. We believed it was important to provide short-term, cash rewards to our named executive officers, which were tied mostly to the company performance. For example, achievement of corporate goals constitutes 95% of Dr. Hsu’s possible cash incentive compensation and 85% of the possible cash incentive compensation for other named executive officers. Individual goals comprised 5% of Dr. Hsu’s possible cash incentive compensation and 15% of the possible cash incentive compensation for our other named executive officers. Used this way, our cash compensation program in 2009 rewarded the demonstration of the types of performance and presence of executive skill sets that in our experience are directly attributable to our growth and an increase in value to our stockholders.

For 2009, our corporate performance goals were comprised of the following: (i) an internal revenue target based on revenues adjusted for certain deferrals under Staff Accounting Bulletin No. 104 and (ii) an internal profit target based on the metric calculated by deducting our expenses determined in accordance with U.S. Generally Accepted Accounting Principles, referred to as “GAAP,” from the internal revenues described in (i) above. Because we defer a substantial portion of the revenue realized under our alliance agreements, we do not believe our results determined in accordance with GAAP provide as accurate a measure of our executives’ annual contribution to corporate performance as non-GAAP financial measures that reflect the flows of the products subject to these agreements to drug wholesalers and other ultimate customers as reported to us by our marketing partners.

The 2009 corporate performance goals were recommended by our chief executive officer and set by the compensation committee based on their assessment of current and anticipated market and other conditions affecting our business and the goals. In the view of the compensation committee, payout on these performance goals in 2009 required substantial achievement by each named executive officer. Because our 2009 revenue-based and profit-based performance goals ultimately exceeded the targets, all named executive officers received a cash incentive award payout based upon such performance. The use of identical performance goals tied to substantive increases in the revenue- and profit-based criteria for all of our named executive officers supports our stated compensation philosophies of rewarding named executive officers for positive performance, aligning the interests of our executives with those of our stockholders and maintaining executive cohesion and teamwork through the implementation of similar pay structures for our executives.

The individual performance goals used to determine cash incentive compensation in 2009 for the named executive officers who participated in the cash incentive program were as follows:

Executive Officer				General Description of Performance Goals
Larry Hsu		•		Adjust and implement our long-range plan for the generics business, achieve targeted ANDA filings and product or technology in-licensing and begin to implement our mergers and acquisition strategy;
		•		Adjust and implement the long-range plan for brand business, achieve targeted product development milestones and begin to implement our mergers and acquisition strategy; and
		•		Achieve acceptable litigation settlements, customer-service targets, and successful regulatory inspections and meet milestones for new Taiwan facility.
Arthur A. Koch, Jr.		•		Assist with the development of adjustments to, and the implementation of, our long-range plans and achieve budgeted expense targets;
		•		Ensure our shares are re-listed on the NASDAQ;
		•		Enhance information technology capabilities; and
		•		Provide timely budget variation reports at operating department level.
Christopher Mengler		•		Assist with development of adjustments to, and the implementation of, our long-range plans and achieve budgeted expense targets;
		•		Achieve target ANDA submissions;
		•		Plan for the launch of new products upon FDA approval and achieve target net revenue and gross margin forecasts; and
		•		Build generics division merger and acquisition activities.
Michael Nestor		•		Assist with the development of adjustments to, and the implementation of, our long-range plans and achieve budgeted expense targets;
		•		Achieve targets as to patient enrollment in the Phase III clinical protocol;
		•		Initiate feasibility studies for new products;
		•		Build brand division merger and acquisitions activities; and
		•		Achieve co-promotion revenue and margin goals.
Charles Hildenbrand		•		Assist with the development of adjustments to, and the implementation of, our long-range plans and achieve budgeted expense targets;
		•		Achieve timely customer shipment and product backorder targets;
		•		Achieve specified product quality targets; and
		•		Pass all regulatory and customer inspections.

All performance goals are disclosed to and discussed with each executive at the beginning of the year. An executive must be actively employed by us on the payment date to receive an annual cash incentive award. Each set of performance goals counts for a portion of the total potential bonus that may be received, and items constituting individual performance goals are individually weighted. The portion of the bonus based on overall corporate performance is earned in full if the goals are met. Payouts of cash incentive awards are determined in part by the compensation committee’s or chief executive officer’s determination (in case of executive officers other than the chief executive officers) as to whether such goals were achieved in whole or in part.

The compensation committee evaluates and recommends to the board, and the board establishes, targets consisting of percentages of base salaries for our executive officers’ cash incentive compensation as part of the yearly compensation process. Upon the compensation committee’s recommendation, the board generally sets such ranges of percentages of base salaries based on the same factors that the board reviews to set base salary ranges for our named executive officers. See “— Base Salary.”

The range of percentage targets for 2009 annual cash incentive awards and actual bonuses paid in 2010 for 2009 performance (presented both as a cash payment and as a percentage of 2009 base salary established in February 2009) for each named executive officer are presented in the following table:

						Maximum
						Target for
		Annual Cash				Annual Cash								Actual Award
		Incentive				Incentive								as Percentage of
		Award Target				Award				Actual Award				Salary
Name		(%)				(%)				($)				(%)
Larry Hsu, Ph.D.			80				120				715,500				120
Arthur A. Koch, Jr.			60				90				353,600				88
Christopher Mengler			60				90				389,497				88
Michael J. Nestor			60				90				389,375				88
Charles V. Hildenbrand			60				90				293,080				86

Once set, the compensation committee has the discretion to pay at above or below the percentage targets set forth in the column “Annual Cash Incentive Award Target” in the table above depending on our overall financial and operational performance and the executive officers’ individual performance. The percentage targets in the column “Maximum Target for Annual Cash Incentive Award” represent maximum percentages of executives’ respective 2009 base salaries that we can award for superior performance. The actual cash incentive awards granted by the compensation committee for 2009 performance of our named executive officers were within the range of annual award target percentages for our named executive officers described above. See “— Grants of Plan-Based Awards During Year Ended December 31, 2009” for the amounts related to the potential annual cash incentive awards for 2009 performance.

In addition, pursuant to Mr. Mengler’s offer of employment letter, he is entitled to receive a one-time hiring bonus of $75,000 (less applicable taxes) which is payable in two installments: $37,500 after 30 days of employment at Impax and $37,500 on the first payroll date following his one-year anniversary of employment with us. We included this special hiring bonus in Mr. Mengler’s compensation package because we believed that Mr. Mengler would be a valuable asset to our company, and we recognized that there was significant competition in our industry for employees with Mr. Mengler’s experience.

Equity Awards

Annual Equity Awards

We maintain our 2002 plan for the purpose of granting stock options and other equity-based awards, such as stock appreciation rights (commonly known as SARs) and stock bonus awards (also known as restricted stock awards), to our employees, including our named executive officers. Option awards produce value to our named executive officers only if the price of our stock appreciates, and then only to the extent of the excess of our stock price over the exercise price of the option. Our stock options are granted with an exercise price equal to the fair market value on the date of grant to avoid providing any immediate benefit to the named executive officer upon grant.

Option and restricted stock awards link the interests of our executives to our stockholders. Because they generally vest incrementally over time, equity awards create an incentive for named executive officers to continue their employment with us for extended periods after the initial grant.

We have established procedures for granting equity awards to all of our eligible employees, including our named executive officers. Each year we establish a stock option or stock bonus award amount, referred to as the “equity compensation award,” for each level of responsibility within our organization, subject to approval by the compensation committee. In arriving at the option or stock component of the equity compensation award, we use a number of factors, including the grant date fair value of the award and the percentage of total shares outstanding that each award would represent.

The board or compensation committee, however, retains discretion, in appropriate circumstances, to provide a different amount of equity awards for both the new hire and/or promotion and the annual grants. We might, for example, increase the number of options above the specified amount if needed to retain an executive who would, upon leaving his current position, be required to forfeit a substantial unvested option or restricted stock position. We have not, and in the future do not intend to, time the award of any equity-based compensation to coincide with the release of favorable or unfavorable information about us.

Our equity awards to named executive officers are issued as long-term compensation that generally vest over a period of four years. This is consistent with our philosophy of linking the financial interests of our named executive officers to those of our stockholders. The long-term compensation balances the short-term compensation paid in the form of base salary and annual incentive awards.

For all of our equity awards, we establish the amount to be awarded to each of our named executive officers based upon the level of each position. As part of our goal of maintaining pay parity wherever possible, we tend to grant the same or similar amounts of equity awards to executives with similar titles and levels of responsibility.

In May 2009, we made annual grants of options and restricted stock awards to our named executive officers under the 2002 plan. Equity grants were targeted between the market 50 ^th and 75 ^th percentile based on competitive benchmarking conducted by Radford. Such grants were recommended by the compensation committee for approval by the board. For all named executive officers, except our chief executive officer, amounts and terms were proposed by our chief executive officer, subject to ultimate approval by the board upon the compensation committee’ recommendation. Equity awards to our chief executive officer were determined solely by the board upon the recommendation of the compensation committee.

Pursuant to our offer of employment letter with Mr. Mengler, we granted him shares of restricted stock and an option to purchase shares of our common stock because we believed as noted above that Mr. Mengler would be a valuable asset to our company, and we recognized that there was significant competition in our industry for employees with Mr. Mengler’s experience. We believe our decision to grant these options and restricted stock awards to Mr. Mengler was consistent with many aspects of our overall compensation philosophy, including:

	•		Aligning Mr. Mengler’s interests with those of our stockholders and rewarding him for positive performance — we chose equity-based compensation to provide Mr. Mengler with an economic benefit that increased in value only if our share price increased, thus aligning his interests with those of our stockholders. Also, because we believed that Mr. Mengler’s contributions would have a direct positive impact on our operating and financial success, it was our view that increases in value of these equity-based awards stemming from our financial performance would reward him for efforts that generated direct or indirect increases in stockholder value.
	•		Retaining and motivating Mr. Mengler’s employment with us — we chose to grant equity awards with long-term vesting periods in an effort to retain the employment of this executive over an extended period of time. We also believed that the grant of equity awards that increased in value over time as our operating performance continued to improve would serve to encourage him to maintain positive performance with us in future years.

Special Equity Awards

In May 2009, the board approved the recommendation of the compensation committee to grant special equity awards to Dr. Hsu (consisting of options to purchase 380,000 shares of common stock and 92,000 shares of restricted stock), Mr. Koch (consisting of options to purchase 90,000 shares of common stock and 26,000 shares of restricted stock) and Mr. Hildenbrand (consisting of options to purchase 95,000 shares of common stock and 18,000 shares of restricted stock) in recognition of their contributions during the period in which we made no equity grants while we were working to regain compliance with our public reporting requirements.

In addition, the board, upon the recommendation of the compensation committee, made a special grant of 50,000 shares of restricted stock to Mr. Koch in recognition of his efforts in completing the re-registration of our common stock under Section 12 of the Exchange Act, a critical prerequisite in re-listing our common stock on NASDAQ.

These special equity awards reflect our compensation objective of providing competitive compensation to attract, motivate and retain top executive talent and ensure that executive compensation encourages and rewards positive performance that can be tied to measurable increases in stockholder value.

4 01(k) Plan and Non-Qualified Deferred Compensation Plan Contributions

Retirement plans, in general, are designed to provide executives with financial security after their employment has terminated and, through the incremental vesting of our matching contributions to such plans over time, provide a retentive element to the overall pay package. Our named executive officers are eligible to participate in the Impax 401(k) Profit Sharing Plan, which allows them to contribute a portion of their base salary and bonus to support their financial needs upon retirement. We also contribute to each participant’s account an amount equal to 50% of the amount contributed by the named executive officer, with our contribution not to exceed 3% of the participant’s annual total compensation. Our matching contributions to the 401(k) plan vest depending on the number of years the named executive officer has worked at our company, with all matching contributions vesting after the third year of service. Amounts contributed to the 401(k) plan are invested in one or more investment fund options. Participants generally do not pay U.S. federal income tax on contributions to or earnings in the 401(k) plan until the participant makes withdrawals from his or her plan account.

Our named executive officers also are eligible to participate in the Impax Laboratories, Inc. Amended and Restated Executive Non-Qualified Deferred Compensation Plan, amended effective January 1, 2009. See “— Non-Qualified Deferred Compensation During Year Ended December 31, 2009” and “— Narrative Disclosure to Non-Qualified Deferred Compensation Table.” Each participant can defer up to 75% of the participant’s base salary and up to 100% of the amount of the participant’s bonus or cash incentive awards. We make a matching contribution for each participant equal to 50% of the participant’s contribution up to 10% of base salary and bonus and cash incentive awards per year. A participant’s account is notionally invested in one or more investment funds and the value of the account is determined with respect to such investment allocations.

These benefits are offered to provide financial security for our executives, and are consistent with our goal of attracting and retaining our executives. We also believe these contributions represent standard benefits that executive-level employees of public companies commonly receive. For these reasons, we do not take these matching contributions into consideration when setting other aspects of compensation for our executive officers.

Agreements with Executive Officers

In connection with developing Global Pharmaceuticals, our generic-products division, we intended to hire an executive who would lead the business development and expand the operations of the division. In November 2008, we discussed with Mr. Mengler his potential employment at our company as President of Global Pharmaceuticals, with Dr. Hsu leading these discussions for us. In November 2008, after discussions between the parties had been successfully concluded, we entered into an offer of employment letter agreement with Mr. Mengler. See “— Narrative Disclosure to Summary Compensation and Grants of Plan-Based Awards Tables” for a summary of certain material terms of Mr. Mengler’s letter agreement.

In May 2009, in connection with our consideration of emerging best practices and investor preferences, we entered into an amendment to the employment agreement with Dr. Hsu, which provided that payments to Dr. Hsu following a change in control are payable only upon the simultaneous or subsequent actual or constructive termination of Dr. Hsu’s employment.

In 2009 our compensation committee reassessed whether employment arrangements with our named executive officers were appropriate for our company, and in January 2010 we entered into employment agreements with all of our named executive officers in order to address competitive concerns of our business and to provide stability and continuity in the management of our company. The compensation committee, with the assistance of Radford and Pearl Meyer and Partners, another executive compensation consulting firm, analyzed the terms of employment arrangements for comparable executives employed by other publicly held companies. The compensation committee, led by Mr. Burr, negotiated the terms of employment agreements. In negotiating such terms, the committee considered each named executive officer’s responsibilities and contributions to our strategic business development, as well as our aggregate potential obligations under each employment agreement, including payments to an executive upon termination of employment.

Prior to entering into new employment agreements, only Dr. Hsu was a party to a formal employment agreement with us, and our other named executive officers received offer-of-employment letters in connection with their respective employment by us. See “— Narrative Disclosure to Summary Compensation and Grants of Plan-Based Awards Tables” for a discussion of the prior and new agreements with our named executive officers.

Post-Employment and Change-in-Control Benefits

Severance payments provided by us include a cash payment that is generally based upon the salary and annual incentive payment history of the named executive officer at issue. Severance benefits may also include the accelerated vesting of our matching contributions under the non-qualified deferred compensation plan, the accelerated vesting of stock options and stock bonus awards, and the extension of the exercisability of an award.

Generally speaking, we provide severance to our executives to give them financial security in the event they suffer an involuntary termination other than for cause. We believe that the risk or possibility of an involuntary termination or change in control creates uncertainty for named executive officers regarding their continued employment with us. These scenarios may include, among other things, a termination of employment or a change in an executive’s job location, position or duties, whether on an individual basis or due to an overall reduction in or change to our workforce, or a change in other members of senior management resulting from a change in control event. As a result, our severance benefits are linked to our compensation philosophy of encouraging the long-term retention of our executives.

Severance benefits for a change in control, as specified in the December 1999 employment agreement with Dr. Hsu, were paid pursuant to a “single trigger”; that is, they were earned regardless of whether the executive had been terminated or demoted or had otherwise experienced any diminution in compensation or duties. We believed that a single trigger gave Dr. Hsu a modest level of financial security in the event that we experience a change in control, regardless of whether the executive had suffered or would suffer any specific adverse employment circumstance. See “— Potential Payments upon Termination or Change in Control” for a summary of these severance and change in control provisions, the amount of potential payments that our named executive officers might receive and the method by which these benefit levels were determined.

The January 2010 employment agreements with our named executive officers provide for severance benefits pursuant to a “double trigger”; that is, the executive is entitled to the severance benefits only if we terminate the executive involuntarily or the executive resigns for good cause following a change of control of our company. We believe a “double trigger” maximizes stockholder value by preventing an unintended windfall to executives in the event of a friendly change of control, while still providing our executives with appropriate incentives to cooperate in negotiating any change of control and a certain measure of job security and protection against termination without cause or loss of employment through no fault of their own. See “— Narrative Disclosure to Summary Compensation and Grants of Plan-Based Awards Tables — Agreements with Our Named Executive Officers — New Employment Agreements with Named Executive Officers” for a summary of the termination provisions in the January 2010 employment agreements with our named executive officers.

Other Benefits and Perquisites

Our named executive officers participate in a wide array of benefit plans that are available to all of our salaried employees generally, including an employee stock purchase plan as well as medical, dental, vision, life and short-term and long-term disability insurance plans. We generally do not offer our named executive officers any material compensation in the form of perquisites.

Tax and Accounting Treatment of Compensation

Section 162(m)

Section 162(m) of the Internal Revenue Code of 1986, as amended, referred to as the “Code,” generally limits our federal income tax deduction for compensation paid in any year to an individual who, as of the end of the taxable year, is our chief executive officer (CEO) and any other employee whose compensation is required to be reported to stockholders by reason of being among the three most highly compensated officers to $1 million, to the extent that such compensation is not “performance based.”

Amounts we pay as base salary and cash incentive compensation do not qualify for the “performance-based compensation” exception. We intend that options issued under our 2002 plan will not be subject to the $1 million limitation in reliance upon the performance-based exception. However, several types of awards issued under our 2002 plan, including restricted stock, will not meet the requirements of the performance-based exception. There can be no assurance that we will be able to comply or that we will intend to comply with all of the technical requirements of 162(m) in the future.

Section 280G

Under Section 280G of the Code, a 20% excise tax is imposed upon named executive officers and other executive officers or employees who receive an “excess parachute payment” upon a change in control. An excess parachute payment is deemed to be received to the extent that such a change-in-control payment exceeds an amount approximating three times the employee’s average annual compensation, determined using the employee’s average compensation over the five years preceding the year the change in control occurs. A company also loses its tax deduction for any excess parachute payments made.

Section 409A

Section 409A of the Code may impose additional taxes on our directors, officers and employees with respect to various nonqualified deferred compensation arrangements we maintain, including:

	•		employment and severance agreements between us and our officers;
	•		our non-qualified deferred compensation plan; and
	•		other compensation arrangements we enter into with our directors, officers and employees.

Section 409A of the Code generally does not apply to incentive stock options and nonqualified stock options that are granted at fair market value if no deferral is provided beyond exercise. Section 409A also does not apply to our stock bonus awards. In the event that a deferred compensation arrangement fails to comply with Section 409A in form or operation, an officer, director or employee may become subject to:

	•		the imposition of U.S. federal income tax, and potentially state and local income tax, on all amounts deferred in the tax year in which the amounts are deferred (or, if later, in the tax year when the receipt of the benefits is no longer subject to a substantial risk of forfeiture);
	•		a penalty tax of 20% of the includable amount (in addition to the regular income tax at ordinary income rates); and
	•		interest at the underpayment rate plus 1 percent from the time the amount was first deferred (or, if later, the tax year when the benefits are no longer subject to a substantial risk of forfeiture) until the time the amount is included in income.

ASC Topic 718

Accounting rules and pronouncements govern how we value option and stock bonus awards that we make and when those awards are to be recognized as compensation expense on our consolidated financial statements. Under ASC Topic 718, we calculate the full grant date fair value of awards using a variety of assumptions. This calculation is performed for accounting purposes, as an executive officer might never realize any value from the award. This may happen, for example, when the value of a share of stock on which the executive holds an option falls below the exercise price of the option and remains below the exercise price, rendering the option worthless to the executive. ASC Topic 718 also requires that companies recognize the compensation cost of a stock option or stock bonus award proportionately over the period that an employee is required to render service in exchange for a share-based payment.

Summary Compensation Table

The following table sets forth information relating to all compensation awarded to, earned by or paid to the following individuals for all services rendered in all capacities to us and our subsidiaries during each of the years ended December 31, 2009, 2008 and 2007, respectively:

	•		our principal executive officer;
	•		our principal financial officer; and
	•		our three most highly compensated executive officers whose total compensation for the year ended December 31, 2009 exceeded $100,000.

														Stock				Option				Incentive Plan								All Other
										Bonus				Awards				Awards				Compensation								Compensation
Name and Principal Position		Year				Salary ($)				($)				($)(1)				($)(1)				($)(2)								($)(3)(4)				Total ($)
Larry Hsu, Ph.D.			2009				585,144				—				903,900				1,934,757								715,500				56,415				4,195,716
President and Chief Executive Officer (principal executive officer)			2008				375,000				956,860				—				—								276,281				101,953				1,710,094
			2007				375,000				—				—				—								243,750				63,292				682,042
Arthur A. Koch, Jr.			2009				392,308				—				582,950				478,804								353,600				50,347				1,858,009
Senior Vice President, Finance and Chief Financial Officer (principal financial officer)			2008				250,000				421,909				—				—								186,688				60,741				919,338
			2007				243,472				—				—				—								167,500				34,713				445,685
Christopher Mengler (5)			2009				436,443				37,500				180,000				273,068								389,497				—				1,316,508
President, Global Pharmaceuticals division (commencing January 5, 2009)
Michael J. Nestor (6)			2009				459,038				—				85,150				127,030								389,375				110,843				1,171,436
President, Impax Pharmaceuticals division (commencing March 31, 2008)			2008				302,404				—				255,900				411,810								218,902				107,289				1,296,305
Charles V. Hildenbrand			2009				334,718				—				176,850				459,261								293,080				50,615				1,314,524
Senior Vice President, Operations			2008				220,662				331,200				—				—								138,300				46,147				736,309
			2007				219,801				—				—				—								143,430				31,483				394,714

		Matching
		Contributions												Long-
		Under Non-												Term
		Qualified				Matching				Life				Disability				Reimbursement
		Deferred				Contributions				Insurance				Insurance				of Temporary				Reimbursement				Tax Gross
		Compensation				Under 401(k)				Premium				Premium				Housing				of Relocation				Up
		Plan				Plan				Payments				Payments				Expenses				Expenses				Payments (a)
Name		($)				($)				($)				($)				($)				($)				($)
Larry Hsu, Ph.D.			43,071				8,393				3,135				—				—				—				1,816
Arthur A. Koch, Jr.			28,950				9,244				493				7,940				—				—				3,720
Christopher Mengler			—				—				—				—				—				—				—
Michael J. Nestor			10,945				8,243				—				—				21,079				37,500				33,076
Charles V. Hildenbrand			23,651				11,034				743				9,344				—				—				5,843

(a)		Represents tax gross-up payments related to the payment of (i) life insurance premiums for Dr. Hsu and Messrs. Koch and Hildenbrand; (ii) long term disability insurance premiums for Messrs. Koch and Hildenbrand; (iii) Mr. Nestor’s temporary housing expenses ($12,210) and Mr. Nestor’s housing relocation expenses ($20,866).

(5)		Mr. Mengler was appointed President of Global Pharmaceuticals, our generic products division, effective January 5, 2009.
(6)		Mr. Michael J. Nestor was appointed President of Impax Pharmaceuticals, our branded products division, effective March 31, 2008.

Grants of Plan-Based Awards During Year Ended December 31, 2009

The following table sets forth information regarding grants of plan-based awards to our named executive officers during the year ended December 31, 2009.

						Estimated Possible Payouts Under
						Non-Equity Incentive Plan Awards
																		All Other				All Other
																		Stock				Option								Grant
																		Awards:				Awards:								Date Fair
																		Number of				Number of				Exercise or				Value of
																		Shares of				Securities				Base Price				Stock and
																		Stock or				Underlying				of Option				Option
						Threshold				Target				Maximum				Units				Options				Awards				Awards
Name		Grant Date				($)(1)				($)(1)				($)(1)				(#)(2)				(#)(2)				($/Sh)(2)				($)(3)
Larry Hsu, Ph.D.							—				477,000				715,500				—				—				—				—
		May 20, 2009					—				—				—				138,000				—				—				903,900
		May 20, 2009					—				—				—				—				495,000				6.55				1,934,757
Arthur A. Koch, Jr.							—				240,000				360,000				—				—				—				—
		May 20, 2009					—				—				—				89,000				—				—				582,950
		May 20, 2009					—				—				—				—				122,500				6.55				478,804
Christopher Mengler							—				267,000				400,500				—				—				—				—
		March 5, 2009					—				—				—				30,000				—				—				180,000
		March 5, 2009					—				—				—				—				75,000				6.00				273,068
Michael J. Nestor							—				267,000				400,500				—				—				—				—
		May 20, 2009					—				—				—				13,000				—				—				85,150
		May 20, 2009					—				—				—				—				32,500				6.55				127,030
Charles V. Hildenbrand							—				204,000				306,000				—				—				—				—
		May 20, 2009					—				—				—				27,000				—				—				176,850
		May 20, 2009					—				—				—				—				117,500				6.55				459,261

Narrative Disclosure to Summary Compensation and Grants of Plan-Based Awards Tables

Agreements with Our Named Executive Officers

During 2009, we had employment agreements with Dr. Hsu and offer of employment letters with Messrs. Koch, Mengler, Nestor and Hildenbrand. In January 2010, we entered into new employment agreements with all of our named executive officers. The new agreement with Dr. Hsu has the effect of terminating our prior employment agreement with him, dated December 14, 1999, as amended.

Agreement with Dr. Larry Hsu

At the closing of the merger of Global Pharmaceutical Corporation and Impax Pharmaceuticals, Inc., effective December 14, 1999, we entered into an employment agreement with Dr. Hsu.

The employment agreement contained an initial three-year term that automatically renewed for successive one-year periods unless terminated by either party at least six months prior to the expiration of the initial term or any renewal term.

Pursuant to the employment agreement, base salary for Dr. Hsu was initially set at $175,000 per year, subject to discretionary increases in accordance with our normal procedures and policies. We also agreed to provide Dr. Hsu with additional compensation, including:

•

a bonus, based on criteria established by the board;

•

full health, dental, vision and disability insurance, as well as life insurance and any other benefits customarily offered to our senior executive officers;

•

four weeks of paid vacation time annually; and

•

the reimbursement of all out-of-pocket expenses related to job performance.

The employment agreement contained customary non-competition, non-interference, non-disclosure and assignment of inventions provisions.

The employment agreement also contained provisions that provided for payments upon termination or a change in control. On May 19, 2009, in connection with our consideration of emerging best practices and investor preferences, we entered into an amendment to the employment agreement with Dr. Hsu, which provided that payments following a change in control were payable only upon the simultaneous or subsequent actual or constructive termination of Dr. Hsu’s employment. See “— Potential Payments upon Termination or Change in Control” for a discussion of the potential payments to Dr. Hsu upon termination or a change in control.

Agreements with Arthur A. Koch, Jr., Christopher Mengler, Michael J. Nestor and Charles Hildenbrand

We entered into agreements with Messrs. Koch, Mengler, Nestor and Hildenbrand on February 9, 2005, November 12, 2008, March 6, 2008 and August 31, 2004, respectively. The agreements provided for at will employment and contained substantially similar terms summarized below. Pursuant to the agreements, annual base salary for Messrs. Koch, Mengler, Nestor and Hildenbrand was initially set at $220,000, $445,000, $425,000, and $190,000, respectively. In addition, Messrs. Koch, Mengler, Nestor and Hildenbrand received an option to purchase 50,000, 75,000, 75,000 and 50,000 shares of common stock, respectively. Each of Messrs. Mengler and Nestor also received 30,000 shares of restricted common stock. Messrs. Koch, Mengler, Nestor, and Hildenbrand were eligible to participate in our executive bonus program, employee stock purchase plan, non-qualified deferred compensation plan and any other benefit customarily offered to our executive officers. The agreements with Messrs. Nestor and Hildenbrand provided for relocation payments of $75,000 and $70,000, respectively. Mr. Nestor’s relocation payment was grossed up towards any relocation expenses incurred and we agreed to provide Mr. Nestor with temporary housing at a mutually agreeable location until his relocation was complete. Mr. Mengler’s agreement provided for a one-time hiring bonus of $75,000 (less applicable taxes), of which $37,500 was paid after 30 days of employment and $37,500 was paid on the first payroll date following Mr. Mengler’s one-year anniversary of employment at our company. If Mr. Mengler’s employment were terminated voluntarily or for cause during his first year of employment, we could recover the first hiring bonus installment in full. If Mr. Mengler’s employment were terminated voluntarily or for cause during his second year of employment, we could recover the second hiring bonus installment in full. Mr. Hildenbrand also received a $20,000 sign-on bonus.

New Employment Agreements with Named Executive Officers

The new employment agreements with Dr. Hsu and Messrs. Koch, Mengler, Nestor and Hildenbrand are effective as of January 1, 2010 and expire on December 31, 2012 unless further extended or terminated earlier as provided in the agreements. Each agreement automatically renews for a one-year period unless either party provides at least 90 days written notice of non-renewal prior to the end of the applicable term or unless it is terminated earlier.

Pursuant to the agreements, annual base salary for Dr. Hsu and Messrs. Koch, Mengler, Nestor and Hildenbrand is currently set at $700,000, $458,400, $458,400, $458,400, and $350,200, respectively, subject to increase or decrease as determined by the board or the compensation committee. The named executive officers are also eligible to receive: (i) an annual cash incentive bonus based upon a percentage of each person’s base salary and the attainment of goals established in writing by the board or its compensation committee; (ii) grants of stock options and restricted stock in an amount and on the terms determined by the compensation committee; and (iii) other compensation that may be awarded by the board or the compensation committee. Each named executive officer is also entitled to have the benefit of all group life, disability, hospital, surgical and major medical insurance plans and other employee benefit plans made available to our executive personnel. In addition, the agreement with Dr. Hsu also provides that during the term of his employment, the board will nominate and recommend to stockholders his election as our director.

The named executive officers’ employment may be terminated by us with or without “cause” or by the named executive officers for “good reason” or for no reason, as such terms are defined in the agreements. The named executive officers are entitled to certain compensation arrangements in the case of the termination without cause or for good reason, as well as in case of a termination related to the change in control of our company.

Additionally, the agreements require the named executive officers to maintain the confidentiality of information relating to our company during and after the term of the agreement and also contain non-competition, non-solicitation and non-disparagement covenants as well as other provisions customary for this type of employment agreement.

Outstanding Equity Awards at December 31, 2009

The following table sets forth the information regarding the outstanding option and stock awards for our named executive officers at December 31, 2009.

						Option Awards																Stock Awards
																										Market
						Number of				Number of												Number				Value of
						Securities				Securities												of Shares				Shares of
						Underlying				Underlying												of Stock				Stock
						Unexercised				Unexercised				Option								That				That
						Options				Options (#)				Exercise				Option				Have Not				Have Not
		Grant				(#)				Unexercisable				Price				Expiration				Vested				Vested
Name		Date				Exercisable(1)				(1)				($)				Date				(#)(1)				($)(2)
Larry Hsu, Ph.D.			12/22/2000				50,000				—				5.00				12/22/2010				—				—
			03/08/2002				100,000				—				6.72				03/08/2012				—				—
			03/10/2003				75,000				—				3.04				03/10/2013				—				—
			05/20/2009				—				495,000				6.55				05/20/2019				138,000				1,878,180
Arthur A. Koch, Jr.			02/22/2005				50,000				—				17.13				02/22/2015				—				—
			05/20/2009				—				122,500				6.55				05/20/2019				89,000				1,211,290
Christopher Mengler			03/05/2009				—				75,000				6.00				03/05/2019				30,000				408,300
Michael J. Nestor			06/06/2008				18,750				56,250				8.53				06/06/2018				22,500				306,225
			05/20/2009				—				32,500				6.55				05/20/2019				13,000				176,930
Charles V. Hildenbrand			08/30/2004				50,000				—				14.55				08/30/2014				—				—
			09/21/2005				11,459				—				9.85				09/21/2015				—				—
			05/20/2009				—				117,500				6.55				05/20/2019				27,000				367,470

Option Exercises and Stock Vested During Year Ended December 31, 2009

The following table provides information about the value realized by the named executive officers on the vesting of stock awards during the year ended December 31, 2009. No options were exercised during the year ended December 31, 2009 by any named executive officer.

		Stock Awards
		Number of Shares
		Acquired on				Value Realized
Name		Vesting (#)				on Vesting ($) (1)
Larry Hsu, Ph.D.			—				—
Arthur A. Koch, Jr.			—				—
Christopher Mengler			—				—
Michael J. Nestor			7,500				56,625
Charles V. Hildenbrand			—				—

Non-Qualified Deferred Compensation During Year Ended December 31, 2009

The following table sets forth the benefits received by our named executive officers under our non-qualified deferred compensation plan during the year ended December 31, 2009 as well as the aggregate non-qualified deferred compensation balances at December 31, 2009:

																		Aggregate
		Executive				Registrant				Aggregate				Aggregate				Balance at
		Contributions				Contributions				Earnings in				Withdrawals/				December 31,
		in 2009				in 2009				2009				Distributions				2009
Name		($)(1)				($)(2)				($)				($)				($)(3)
Larry Hsu, Ph.D.			86,143				43,071				161,347				—				931,796
Arthur A. Koch, Jr.			57,900				28,950				76,419				—				356,349
Christopher Mengler			—				—				—				—				—
Michael J. Nestor			21,890				10,945				16,162				—				48,997
Charles V. Hildenbrand			54,217				23,651				52,249				—				206,542

						Non-Equity
						Incentive
						Contributions
		2009 Salary				for 2008
		Contributions				Performance
Name		($)				($)
Larry Hsu, Ph.D.			58,514				27,628
Arthur A. Koch, Jr.			39,231				18,669
Christopher Mengler			—				—
Michael J. Nestor			—				21,890
Charles V. Hildenbrand			33,472				20,745

Narrative Disclosure to Non-Qualified Deferred Compensation Table

Our non-qualified deferred compensation plan permits highly-compensated individuals to receive a similar level of benefits (in terms of the overall percentage of their income eligible for tax deferral and employer matching contributions) as are available to employees with lower levels of income. Each participant can defer up to 75% of the participant’s base salary and up to 100% of the amount of the participant’s bonus or cash incentive awards. We make a matching contribution for each participant equal to 50% of the participant’s contribution up to 10% of base salary and bonus and cash incentive awards per year. A participant’s account is notionally invested in one or more investment funds and the value of the account is determined with respect to such investment allocations. Participants are fully vested in their contributions when made. Our matching contributions vest depending on the number of years of service, with participants being fully vested after five years of service. No contributions are forfeited as a result of a separation due to death, disability, termination of the plan or a change in control.

Benefits attributable to a participant may be valued as if they were invested in one or more investment funds (as set forth in the non-qualified deferred compensation plan), as directed by participants in writing. Participants may change their selection of investment funds from time to time in writing in accordance with the procedure established by the plan administrator. Changes will take effect as soon as administratively practicable.

If a participant terminates his or her employment, or an eligible consultant ceases to render service to us, for any reason, including death, we will pay the participant an amount equal to the value of the vested balance credited to the participant’s plan account. If the participant has died, the balance of that account will be paid to one or more beneficiaries designated by the participant. See “— Potential Payments upon Termination or Change in Control” for a description of the form of payouts, withdrawals and other distributions under our non-qualified deferred compensation plan.

Description of Equity Compensation Plans

The following description of the material terms of the 2002 plan, Impax Laboratories, Inc. 2001 Non-Qualified Employee Stock Purchase Plan, referred to as the “2001 plan,” and 1999 plan is intended as a summary only and is qualified in its entirety by reference to the complete text of such plans. We have submitted the amendment of our 2002 plan for your approval at this annual meeting. See “Proposal Two — Approval of the Amendment and Restatement of Amended and Restated 2002 Equity Incentive Plan” for a description of the 2002 plan and the proposal to approve the amendment of the 2002 plan.

2002 Plan

The 2002 plan authorizes the grant of incentive stock options, referred to as “ISOs,” nonstatutory stock options, SARs and stock bonus awards, to our officers, employees, directors and consultants, or those of our affiliates. We may also, from time to time, assume outstanding awards granted by another company by either granting an award under the 2002 plan in replacement of the award we assumed or by treating the assumed award as if it had been granted under the 2002 plan.

Except for awards granted to our non-employee directors and the power to amend or terminate the plan, the board may delegate its authority under the 2002 plan to a committee. This committee must consist of at least two directors who are “non-employee directors” under Exchange Act Rule 16b-3 and “outside directors” under Section 162(m) of the Code. However, if the committee does not meet either of these requirements, the validity of awards granted or actions taken under the 2002 plan will not be affected. The board may also delegate nondiscretionary administrative duties to one or more of our employees. We have chosen to exercise this delegation of authority to the fullest extent permitted by the plan. Subject to the terms of the 2002 plan, the board and, except for awards granted to our non-employee directors, the committee, can grant awards under the 2002 plan and determine the recipients and terms of those awards. They also can interpret the provisions of the 2002 plan and related award agreements, and generally otherwise administer the 2002 plan. See “Proposal Two — Approval of the Amendment and Restatement of Amended and Restated 2002 Equity Incentive Plan” for additional information regarding the 2002 plan.

2001 Plan

In February 2001, in order to encourage employee ownership of our common stock, the board approved the 2001 plan, under which we can issue 500,000 shares of common stock, subject to certain adjustments as set forth in such plan. The 2001 plan provides an opportunity for employees to purchase common stock at a 15% discount to the market price through payroll deductions or lump sum cash investments of up to $25,000 in any one calendar year. The 2001 plan is administered by the compensation committee, which has the authority to interpret, amend and make any determinations necessary to administer the 2001 plan.

1999 Plan

Our stockholders adopted the 1999 plan in connection with the merger of Global Pharmaceutical Corporation with Impax Pharmaceuticals, Inc. effective December 14, 1999. In October 2000, our stockholders approved an increase in the number of shares of common stock authorized for issuance under the plan from 2,400,000 to 5,000,000. Except for the differences noted below in the summary of the 1999 plan, the material terms of the 1999 plan are substantially similar to those of the 2002 plan.

Under the 1999 plan, we may issue up to 5,000,000 shares of our common stock. The board may adjust this maximum number without stockholder approval to give effect to any stock split, stock dividend, combination, recapitalization, or similar transaction with respect to our common stock. Shares subject to awards under the 1999 plan that are cancelled, expired, terminated, forfeited or withheld to satisfy the applicable purchase price or tax withholding obligations are again available for issuance under the 1999 plan. Under the 1999 plan, and subject to adjustments to reflect stock dividends and other changes in our common stock, the maximum number of shares of common stock with respect to which stock options or SARs may be granted during any calendar year to any employee may not exceed 300,000 shares. While the 1999 plan provides for the annual grant of options to purchase 2,000 shares of common stock to each of our non-employee directors, we did not grant options to our non-employee directors during 2005, 2006, 2007 or 2008 (nor did we grant options to our non-employee directors during those years under our 2002 plan, under which we had until 2005 granted each of them options to purchase 5,500 shares annually). Non-employee directors become eligible for such options after one year of service in that capacity. The options authorized are exercisable for 10 years, have an exercise price equal to the fair market value of the common stock on the date of grant, and generally vest in three equal increments over the three years following the grant. Upon termination of service, unvested options expire and vested options may be exercised for 90 days thereafter, except when termination is the result of death or disability, in which case the vested options may be exercised within one year.

Potential Payments upon Termination or Change in Control

In 2009, upon termination of employment or upon a change in control, each of our named executive officers may be entitled to receive from us payments and benefits under the following agreements and plans:

•

our employment agreement with Dr. Hsu;

•

our 1999 plan and 2002 plan; and

•

our non-qualified deferred compensation plan.

New employment agreements with our named executive officers were not effective until January 1, 2010, and, therefore, the description of potential payments upon termination and change in control provided below is based on agreements that were in effect in 2009.

Employment Agreements

The employment agreement with Dr. Hsu specified our obligations to Dr. Hsu upon termination of his employment under various circumstances. The employment agreement could be terminated by either party on 30 days written notice, and by us at any time, for “cause.”

Under the terms of the employment agreement, “cause” means:

•

a material breach of a provision relating to proprietary information, assignment of inventions, non-interference, non-disclosure and non-competition;

•

a material breach of any other provision not remedied within 30 days of such breach;

•

any act of fraud or embezzlement against us; or

•

any indictment for a felony or other crime that would cause injury to our reputation.

Under the terms of the employment agreement, “good reason” means:

•

the assignment of duties or reduction in duties inconsistent with Dr. Hsu’s employment position;

•

the material reduction in salary or benefits not agreed to by Dr. Hsu;

•

a relocation requiring Dr. Hsu to commute more than 50 miles; or

•

a “change in control.”

Under the terms of the employment agreement, a “change in control” is defined as:

•

the acquisition by any person or entity of ownership or control of more than 50% of our voting power;

•

a sale or disposition of assets totaling more than 50% of our value;

•

a merger or reorganization in which our stockholders, immediately prior to the merger, do not own a least 51% of our voting power after the merger;

•

any transaction where our stockholders, immediately prior to the transaction, do not own at least 51% of our voting power after the transaction; or