As filed with the Securities and Exchange Commission on May 15, 1997
                                             Registration Statement No. 333-
                     SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.DC  20549

                                  ----------------------

                                    FORM S-3
                             ----------------------

                      REGISTRATION STATEMENT UNDER THE
                           SECURITIES ACT OF 1933
                             ----------------------

                                  IGI, INC.
           (Exact Name of Registrant as Specified in Itsits Charter)

                                  ----------------------


          DELAWARE                                        01-0355758
- -------------------------------                        -----------------
       (State or Other Jurisdiction of (I.R.S. Employer
 Incorporation or Organization)

                                 01-0355758
                      (IRS Employer Identification No.)

           Wheat Road &and Lincoln Avenue, Buena, New Jersey  08310
                               (609)(856) 697-1441
  (Address, Including Zip Code and Telephone Number, Including Area Code,
                of Registrant's Principal Executive Offices)

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                              Edward B. Hager, M.D.                          Copies to:
IGI, Inc.                                      Paul C. Remus, Esquire
Wheat Road &and Lincoln Avenue,                 Devine, Millimet & Branch, P.A.
Buena, New Jersey  08310                       (609)111 Amherst Street
(856) 697-1441                                 P.O. Box 719
(Name, Address, Including Zip Code,            Manchester, New Hampshire 03105
and Telephone Number, Including                (603) 669-1000
Area Code, of Agent for Service)

                                    Copy to:

                              David A. White, Esq.
                             White & McDermott, P.C.
                                    Suite 209
                                65 William Street
                         Wellesley, Massachusetts 02181
                                 (617) 431-1700Service of Process)

      Approximate date of commencement of proposed sale to public: As soon as
practicableFrom
time to time after the effective date of this Registration Statement becomes effective.registration statement.

      If the only securities being registered on this Formfrom are being
offered pursuant to dividend or interest reinvestment plans, please check
the following box.  [ ]

      If any of the securities being registered on this Formform are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, as amended, other than securities offered only in connection
with dividend or interest reinvestment plans, check the following box.  [X]

      If this Formform is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering.    [  ]
______________

      If this Formform is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, as amended, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering.  [ ] _____________________

      If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box.  [ ]

CALCULATION OF REGISTRATION FEE
- ----------------------------------------------------------------------------- Title of Each Proposed Proposed Class of Maximum Maximum Securities Amount Offering Aggregate Amount of Title of each Class of Amount to beOf To Be To Be Price per Offering Registration Securities to be Registered Registered Share (1)Per Share(1) Price (1) Fee - --------------------------- ------------ --------- --------- ----------------------------------------------------------------------------------------- Common Stock 1,907,543 $1.25 $2,384,428.75 $629.49 $.01 par value 110,000 shares $5.1875 $570,625 $172.92- ----------------------------------------------------------------------------- Estimated solely for purposes of calculating the amount of the registration fee pursuant to Rule 457, and based upon a per share price of $1.25, the average of the high and low prices of the Common Stock of IGI, Inc., as reported on the American Stock Exchange on September 28, 2000.
(1) Estimated solely for purposes of calculating the registration fee pursuant to Rule 457(c) of the Securities Act of 1933, as amended, and based upon the average of the reported high and low sale prices of the Registrant's Common Stock on the American Stock Exchange on May 9, 1997. The Registrantregistrant hereby amends this Registration Statementregistration statement on such date or dates as may be necessary to delay its effective date until the Registrantregistrant shall file a further amendment which specifically states that this Registration Statementregistration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 as amended, or until the Registration Statementregistration statement shall thereafter become effective on such date as the Commission, acting pursuant to said Section 8(a), shall may determine. 110,000 Shares- --------------------------------------------------------------------------- SUBJECT TO COMPLETION, DATED __________, 2000 PROSPECTUS IGI, INC. 1,907,543 SHARES COMMON STOCK $.01 PAR VALUE PER SHARE This Prospectus relates to the registration of up to 1,907,543 shares (the "Shares") of Common Stock, --------------------- The shares of common stock, $.01 par value per share (the "Common Stock"), of IGI, Inc. ("IGI" or the, a Delaware corporation (the "Company") covered by this Prospectus are issued and outstanding shares, which may be offered and sold, from time to time for the account of certain stockholdersAmerican Capital Strategies Ltd. (the "Selling Shareholder" or "ACS"), upon the exercise of the Warrants (as hereinafter defined). See "THE OFFERING AND THE SELLING SHAREHOLDER - The Selling Shareholder." The Warrants were issued by the Company on October 29, 1999 in a transaction exempt from the registration requirements of the Securities Act of 1933, as amended (the "Selling Stockholders""Securities Act"). See "Selling Stockholders.""THE COMPANY - The shares of Common Stock covered by this Prospectus were issued to the Selling Stockholders in private placements exempt from registration under federal securities laws. All of the shares offered hereunder are to be sold by the Selling Stockholders.Company's Debt." The Company will not receive any of the proceeds from the sale of the sharesShares by the Selling Stockholders but will bear all expenses incurred in effecting the registration of such shares, including all registration and filing fees, "blue sky" fees, printing expenses, and the legal fees of counsel to the Company. The Selling Stockholders will bear all brokerage or underwriting expenses or commissions, if any, applicable to their respective shares. The Selling Stockholders may from time to time sell the shares covered by this Prospectus on the American Stock Exchange in ordinary brokerage transactions, in negotiated transactions, or otherwise, at market prices prevailing at the time of sale or at negotiated prices. See "Plan of Distribution."Shareholder. The Common Stock is traded on the American Stock Exchange ("AMEX") under the symbol "IG."IGI". On September 28, 2000, the last reported sale price of the Common Stock was $1.31 per share. The distribution of the Shares by the Selling Shareholder may be effected from time to time in one or more transactions (which may involve block transactions) in the over-the-counter market, on the AMEX or on any exchange on which the Common Stock may then be listed, through negotiated transactions, through the writing of options on shares (whether such options are listed on an options exchange or otherwise) or a combination of such methods of sale, at market prices prevailing at the time of sale, at prices related to such prevailing market prices or at negotiated prices. This Prospectus does not relate to the offering or sale of any such options. The Selling Shareholder may effect such transactions by selling the Shares to or through broker-dealers and such broker-dealers may receive compensation in the form of underwriting discounts, concessions or commissions from the Selling Shareholder and or from purchasers of the Shares for whom the broker-dealers may act as agent (which compensation may be in excess of customary commissions). The Selling Shareholder also may pledge the Shares as collateral for margin accounts and such Shares may be resold pursuant to the terms of such accounts. See "THE OFFERING AND THE SELLING SHAREHOLDER - The Selling Shareholder." ---------------------- THE SHARES OFFERED HEREBY INVOLVETHIS OFFERING INVOLVES A HIGH DEGREE OF RISK. FOR A DISCUSSION OF CERTAIN MATERIAL RISKS TO BE CONSIDERED IN EVALUATING AN INVESTMENT IN THE SHARES OFFERED HEREBY, SEE "RISK FACTORS" BEGINNINGFACTORS," WHICH BEGINS ON PAGE 1. ---------------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ---------------------8. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this Prospectus. Any representation to the contrary is a criminal offense. The date of this Prospectus is May , 1997. AVAILABLESeptember 29, 2000. ADDITIONAL INFORMATION The Company is subject to the informationalreporting requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files periodic reports and other information with the Securities and Exchange Commission (the "SEC" or the "Commission"). Reports,Such reports, proxy statements and other information filed byconcerning the Company with the Commission pursuant to the informational requirements of the Exchange Act may be inspected and copiedcopies may be obtained (at prescribed rates) at the public reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth Street, NW, Washington, DCD.C. 20549 and at the Commission's regional offices of the Commission located at Seven World Trade Center, Suite 1300,13th Floor, New York, NYNew York 10048 and at CiticorpNorthwest Atrium Center, 500 WestW. Madison Street, Suite 1400, Chicago, IL 60661. Copies of such materials also may be obtained from the Public Reference Section of the Commission at 450 Fifth Street NW, Washington DC 20549 at prescribed rates.Illinois 60661-2511. In addition, the Company is required to file electronic versions of theseelectronically filed documents, with the Commission through the Commission's Electronic Data Gathering, Analysis and Retrieval (EDGAR) system. The Commission maintains a World Wide Web site at http://www.sec.gov that containsincluding reports, proxy and information statements and other information regarding registrants that file electronically with the Commission.Company, can be obtained from the Commission's web site at http://www.sec.gov. The Common Stock of the Company is tradedlisted on the American Stock Exchange, under the symbol "IG." Reportsand reports, proxy statements and other information concerning the Company maycan also be inspected at the offices of the American Stock Exchange located at 86 Trinity Place, New York, NYNew York 10006. The Company has filed with the Commission a Registration Statementregistration statement on Form S-3 (which, together with all amendments to such registration statement, is referred to in this Prospectus as the "Registration Statement") under the Securities Act of 1933, as amended (the "Securities Act"), with respect to1933. This Prospectus constitutes a part of the shares of Common Stock offered hereby. This ProspectusRegistration Statement but does not contain all of the information set forth in the Registration Statement, and the exhibits and schedules thereto, as certain items areparts of which have been omitted in accordance with the rules and regulations of the Commission. For further information, pertainingreference is hereby made to the Company andRegistration Statement. Each statement made in this Prospectus concerning a document filed as part of the shares of Common Stock offered hereby,Registration Statement is qualified in its entirety by reference is made to such document for a complete statement of its provisions. The Registration Statement and the exhibits and schedules thereto, which may be inspected without charge at the officeoffices of the Commission or copies thereof may be obtained at prescribed rates from the Public Reference Section of the Commission, at 450 Fifth Street NW, Washington DC 20549, and copies of which may be obtained from the Commission at prescribed rates.addresses set forth above. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents filed byof the Company, which are on file with the Commission, are incorporated hereinin this Prospectus by reference: (1)reference and made a part hereof: (a) The Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1996; (2)1999, as amended by Form 10-K/A filed September 1, 2000. (b) The Company's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 1997; and (3)2000. (c) The Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2000, as amended by Form 10-Q/A filed September 1, 2000. (d) The Company's Current Report on Form 8-K dated June 19, 2000. (e) The Company's Current Report on Form 8-K dated July 17, 2000. (f) The Company's Current Report on Form 8-K dated July 23, 2000. (g) The Company's Current Report on Form 8-K dated September 28, 2000 (h) The Company's Proxy Statement, Schedule 14A, effective September 1, 2000. (i) The description of the Company's capital stock contained in its Registration Statement on Form 8-A dated June 9, 1988 registering the Common Stock under Section 12(b) of the Exchange Act.S-3, filed May 15, 1997. All documents filed by the Company with the Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date hereofof this Prospectus and prior to the termination of the offering of the Common Stock registered herebyShares also shall be deemed to be incorporated by reference intoin this Prospectus and to be a part hereof from the date of filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for the purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. The Company will provide without charge to each person to whom a copy of this Prospectus is delivered upon written or oral request of such person, a copy of any or all of the foregoing documents incorporated by reference into this Prospectus (without exhibits to such documents other than exhibits specifically incorporated by reference into such documents).upon written or oral request. Requests for such copiesdocuments should be directed to IGI, Inc., Wheat Road and Lincoln Avenue, P.O. Box 687, Buena, New Jersey 08310, (856) 697-1441, Attention: Robert E. McDaniel, Secretary. You should rely only on the Treasurerinformation incorporated by reference or provided in this Prospectus or any prospectus supplement. The Company has not authorized anyone, other than the Company, to provide you with additional or different information. You should not assume that any information in this Prospectus or any prospectus supplement is accurate as of any date other than the date on the front of those documents. CAUTIONARY STATEMENT This Prospectus and the documents referred to above contain certain "forward-looking" statements, including, among others, the statements regarding the amount and nature of claims or liabilities that may be asserted against the Company and the Company's prospects and future operating results. Without limiting the foregoing, words such as "anticipates," "believes," "expects," "intends," "plans" and similar expressions are intended to identify "forward-looking" statements. All of these "forward-looking" statements are inherently uncertain, and stockholders must recognize that actual events could cause actual results to differ materially from the Company's expectations. THE COMPANY Overview of the Company's Business The Company was incorporated in Delaware in 1977. Its executive offices are at Wheat Road &and Lincoln Avenue, Buena, New Jersey 08310; telephone (609) 697-1441. No person has been authorized to give any information or to make any representations in connection with this offering other than those contained in this Prospectus and, if given or made, such other information and representations must not be relied upon as having been authorized by the Company. Neither the delivery of this Prospectus nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of theJersey. The Company since the date hereof or that the information contained herein is correct as of any time subsequent to its date. This Prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities other than the registered securities to which it relates. This Prospectus does not constitute an offer to sell or a solicitation of an offer to buy such securities in any circumstances in which such offer or solicitation is unlawful. THE COMPANY IGI is a diversified company engaged in two business segments: o Animal HealthConsumer Products Business --- production and marketing of animal healthcosmetics and skin care products, and Companion Pet Products Business - production and marketing of companion pet products such as poultry vaccines, veterinary pharmaceuticals, and other products, including nutritional supplements and grooming aids; and o Cosmetics and Consumer Productsaids. On September 15, 2000, the Company consummated the sale (the "Vineland Sale") of the assets associated with the Company's now former Poultry Vaccines Business, --which involved the production and marketing of cosmetic, dermatologicpoultry vaccines and consumer products, many using IGI's licensed Novasome(R) artificial lipid vesicle technology ("Novasome"other related products. At June 30, 2000 (unaudited and without giving effect to the Vineland Sale), the Company had $37.1 million of total assets, $28.2 million of total liabilities and $8.7 million of total stockholders' equity. At December 31,1999, the Company had $33.9 million of total assets, $24.3 million of total liabilities and $5.5 million of total stockholders' equity. The Vineland Sale Overview On September 15, 2000, the Company sold the assets (the "Poultry Assets") associated with its Poultry Vaccine Business (the "Poultry Business") to Lohmann Animal Health International, a Georgia general partnership, which was formerly known as Vineland International (the "Buyer"). The Vineland Sale was effected pursuant to an Asset Purchase Agreement dated as of June 19, 2000 (the "Vineland Agreement") between the Company and the Buyer. Purchase Price; Escrow Fund In December 1995, IGI distributed its ownershipexchange for receipt of its majority-owned subsidiary, Novavax, Inc. ("Novavax"),the Poultry Assets, the Buyer assumed liabilities of the Poultry Business in the formaggregate equal to $2,300,000 and paid the Company cash in the amount of $12,500,000. A portion of the cash purchase price equal to $500,000 was paid directly into an escrow fund (the "Escrow Fund") maintained by Key Trust Company, N.A. (the "Escrow Agent"), pursuant to an Escrow Agreement dated September 15, 2000 among the Company, the Buyer and the Escrow Agent, to secure potential liability for: (a) any downward adjustments to the purchase price under the Vineland Agreement as a result of a tax-free stock dividend,decrease in the "net working capital" of the Poultry Business between March 31, 2000 and September 15, 2000, the date of the consummation of the Vineland Sale (the "Closing"), and (b) indemnification obligations of the Company under the Vineland Agreement, as described below. "Net working capital" is defined under the Vineland Agreement as current assets (inventory, net of reserves, plus accounts receivable, net of allowances) minus current liabilities (the aggregate of accounts payable, accrued commissions, accrued distributor commissions, accrued freight, accrued payroll and accrued royalties). If the net working capital of the Poultry Business as of March 31, 2000 exceeded the net working capital of the Poultry Business as of the Closing by $100,000 or more, the Company must pay such difference to IGI stockholders. Novavax had conducted the BiotechnologyBuyer. The amount then in the Escrow Fund will be applied to satisfy the Company's obligation in this regard, with any shortfall being payable directly by the Company to the Buyer. However, if the net working capital of the Poultry Business segmentas of IGI,March 31, 2000 is less than the net working capital as of the Closing by $100,000 or more, the Buyer must pay such difference to the Company. In addition, the moneys on deposit in the Escrow Fund secure the obligations of the Company to indemnify the Buyer under the Vineland Agreement if any such obligation arises prior to the date that is the later to occur of the date of payment of the purchase price adjustments described above and the date that is four (4) months after the Closing. Any amount on deposit in the Escrow Fund will be released to the Company upon the later to occur of the date that is four (4) months after the date of Closing and the date on which had been reportedany amount payable from the Escrow Fund as a discontinued operation.result of the purchase price adjustment has been paid. In connectionthe event that the purchase price adjustment occurs prior to the expiration of the four-month period following Closing and there remains a balance in the Escrow Fund after the payment of the purchase price adjustment amount, such balance will be subject to indemnification claims by the Buyer until the end of such four month period and then released to the Company, subject to a holdback for any claims by the Buyer for indemnification which claims are unresolved as of such time. Application of Vineland Sale Proceeds On September 15, 2000, the date of the Closing of the Vineland Sale, the Company applied the cash proceeds received from the Buyer as follows: Repayment of Outstanding Debt $11,700,000 Payment of Certain Closing Costs 300,000 ------------------------------------------------------------ TOTAL: $12,000,000
The Company's Debt On October 29, 1999, the Company entered into a $22 million senior bank credit agreement ("Senior Debt Agreement") with the distribution, IGI paid Novavax $5,000,000 in returnFleet Capital Corporation ("Fleet") and a $7 million subordinated debt agreement ("Subordinated Debt Agreement") with American Capital Strategies, Ltd. ("ACS"). The Senior Debt Agreement provides for a fully paid-up, ten-year licenserevolving line of credit facility of up to $12 million based upon qualifying accounts receivable and inventory, a $7 million term loan and a $3 million capital expenditures credit facility. The borrowings under the revolving line of credit bear interest at the prime rate plus 1.0% or the London Interbank offered rate plus 3.25%. The borrowings under the term loan and capital expenditure credit facility bear interest at the prime rate plus 1.5% or the London Interbank offered rate plus 3.75%. As of June 30, 2000, borrowings under the revolving line of credit, term loan and capital expenditures credit facility were $7,364,000, $7,000,000 and $257,000, respectively. Under the Subordinated Debt Agreement, the Company issued to ACS $7,000,000 in senior subordinated notes; and warrants (the "IGI License Agreement""Warrants") entitling it to the exclusive use of the Novavax Technologies in the fields of (i) animal pharmaceuticals, biologicals and other animal health products; (ii) foods, food applications, nutrients and flavorings; (iii) cosmetics, consumer products and dermatological over-the-counter and prescription products (excluding certain topically delivered hormones); (iv) fragrances; and (v) chemicals, including herbicides, insecticides, pesticides, paints and coatings, photographic chemicals and other specialty chemicals; and the processes for making the same (collectively, the "Field"). IGI has the option, exercisable within the last year of the ten-year term, to extend the exclusive license for an additional ten-year period for $1,000,000. Novavax has retainedevidencing the right to use its Novavax Technologies for all applications outsideacquire 1,907,543 shares (as adjusted from time to time in accordance with the IGI Field, including human vaccines and pharmaceuticals. IGI's executive offices are locatedterms thereof) of the Company's Common Stock at Wheat Road & Lincoln Avenue, Buena, New Jersey 08310 (telephone (609) 697-1441). Thean exercise price of $0.01 per share. Among other things, the Warrants contained a right (the "put") to require the Company was incorporated in Delaware in 1977. RISK FACTORSto repurchase the Warrants or the Common Stock acquired upon exercise of the Warrants at their then fair market value under certain circumstances. In addition, to the other information contained elsewhere in this Prospectus, the following factors should be considered carefully by potential investors in evaluating an investment in thenumber of shares of Common Stock offered hereby. Intellectual Property Considerations. IGI is entitled to license from Novavax any improvementfor which the Warrants may be exercised will increase upon the Company's issuance or sale of Common Stock, other than pursuant to the Novavax Technologies developed by Novavax withinrequirements of an employee benefit plan in effect on or before October 29, 1999, at less than the IGI Field. However, IGI and Novavax could disagree as to whether a certain development is within the IGI Field or, more generally, whether the development is an improvement of Novavax Technologies or is a separate technology outside the parametersfair market value per share of the IGI License Agreement. Disputes regardingCommon Stock at the IGI Licensetime of such issue or sale. Under the Subordinated Debt Agreement, could involve extensive costs, including, without limitation, costs associatedACS has the right to designate for election to the Company's Board of Directors that number of directors that bears the same ratio to the total number of directors as the number equal to the sum of the number of shares of Company Common Stock owned by ACS plus the number of shares issuable upon exercise of the Warrants bears to the total number of outstanding shares of Company Common Stock on a fully-diluted basis. If ACS waives its right to so designate Company directors, for so long as ACS owns any Common Stock or Warrants or any of its loans are outstanding, ACS has the right to designate at least one director or observer on the Board of Directors. At September 1, 2000, ACS had one observer on the Company's Board of Directors. The debt agreements contain financial and other covenants and restrictions. The Company was not in compliance under financial covenants under the debt agreements related to the fixed charges coverage ratio, maximum debt to equity ratio and accounts payable ratio as of December 31, 1999. However, as of April 12, 2000, Fleet and ACS amended the debt agreements to waive the defaults as of December 31, 1999 and to establish new covenants as of April 12, 2000. The Company was in compliance with litigationall debt agreement covenants as of April 12, 2000 and delaysthe Company expected that it would be able to comply with the covenants in the amended debt agreements through at least December 31, 2000. In addition, the April 12, 2000 amendment to the Subordinated Debt Agreement replaced the put provision for the Warrants with a "make-whole" feature that requires the Company to compensate ACS in either Common Stock or cash, at the option of the Company, if the proceeds ultimately realized by ACS upon sale of the Common Stock obtained upon exercise of the Warrants are less than the fair value of the Common Stock upon exercise of the Warrants multiplied by the number of shares of Common Stock obtained upon exercise. Fair value of the Common Stock upon exercise is defined as the 30-day average value prior to notice of exercise. ACS must exercise reasonable effort to sell or manufactureplace its shares in the marketplace over a 180-day period before it can invoke the make-whole provision. The make- whole feature does not become effective until the earlier to occur of: (i) October 29, 2004, (ii) the date of products. Although IGIthe payment in full of the subordinated debt, (iii) the date of the payment in full of the senior debt, and (iv) the sale by the Company of at least 30% of its assets in a single transaction or a series of related transactions (unless ACS grants a waiver permitting the sale). However, if the Company fails to obtain an effective shelf registration statement with respect to the Shares within 180 days of the date of the April amendment to the Subordinated Debt Agreement or if the Commission issues a stop order suspending the effectiveness of such registration statement, then the make-whole feature will be revoked and the "put" provision contained in the original Subordinated Debt Agreement will be reinstated. Subsequent Events In May, 2000, the FDA initiated an inspection of the Company's Companion Pet Products division and issued an inspection report on Form FDA 483 on July 5, 2000. The July 5, 2000 FDA report includes several unfavorable observations of manufacturing and quality assurance practices and products of the division. The Company is currently compiling its responses to the July 5, 2000 FDA report. In an effort to address a number of the FDA's stated concerns, on May 24, 2000, the Company discontinued production and shipment of Liquichlor and on June 1, 2000 temporarily stopped production of Cerumite, both products of the Pet Products Division. The aggregate annual sales volume for these products for the fiscal year ended December 31, 1999 was $1,059,000. The Company has accrued $634,000 year to date in related expenses to improve production, to meet documentation, procedural and regulatory compliance. After accounting for this cessation of production and combining these results with continued operating losses in the poultry vaccine business, the Company determined that it was not in compliance with the financial covenants in the debt agreements, as amended. On June 26, 2000, the Company entered into Amendment No. 2 to Note and Equity Purchase Agreement ("Second Subordinated Amendment") with ACS. Pursuant to the Second Subordinated Amendment, the Company received $500,000 and issued to ACS $500,000 of Series C Senior Subordinated Notes due September 30, 2000 (the "Series C Notes"); and ACS waived compliance with certain financial covenants applicable to Borrower contained in the Subordinated Debt Agreement and modified certain interest payment dates with respect to the Notes. In addition, the Second Subordinated Amendment permits the Company to issue additional Series C Notes on July 31, 2000 to pay the interest then due and payable on the Notes and the Series C Notes. As of August 1, 2000, the Company issued to ACS an additional Series C Note in the aggregate principal amount of approximately $300,000 for the interest due. Also, on June 26, 2000, the Company entered into a Second Amendment to Loan and Security Agreement dated as of June 23, 2000 (the "Second Senior Amendment") with Fleet. Pursuant to the Second Senior Amendment, the Company obtained an "overadvance" of $500,000 under the senior revolving line of credit (the "Overadvance"), repayable in full on the earlier to occur of September 22, 2000 or the date of the consummation of the Vineland Sale. Under the Second Senior Amendment, Fleet agreed to forbear from exercising its right to accelerate the maturity of the Senior Loans upon the default by the Borrower under certain financial covenants (the "Forbearance Covenants") until the first to occur of: (a) September 22, 2000, (b) the date on which any default, other than a default under the Forbearance Covenants, occurs under the Senior Debt Agreement, as amended; or (c) the date of the termination of the Vineland Agreement. The Company never made any draws under the Overadvance. Due to the terms of the Second Senior Amendment and the Second Subordinated Amendment discussed above and the possibility that then existed that the Vineland Sale might not be timely consummated, the Company reclassified all debt owed to ACS and Fleet as short-term debt. In response, in August 2000, the Company's independent accountants determined that substantial doubt exists about the Company's ability to continue as a going concern. Even though the Company timely consummated the Vineland Sale and repaid the Series C Notes, the Company remains highly leveraged; furthermore, availability for borrowings under the revolving line of credit facility is dependent on the level of the Company's qualifying accounts receivable and inventory. On September 15, 2000, the Company applied the proceeds of the Vineland Sale to repay approximately $6,556,000 on the revolving line of credit, approximately $4,062,000 on the term loan (leaving approximately $2,705,000 of the term loan outstanding) and the entire outstanding balance of the capital expenditure credit facility. In addition, on September 15, 2000, the Company applied approximately $818,000 to repay the Series C Notes and interest accrued thereon in full. The Company is currently generating losses that may extend through at least the end of the year 2000, which could unfavorably affect future financial covenants and the Company's availability for borrowing under the revolving line of credit facility, which is dependent on the level of its qualifying accounts and inventory. After applying the Vineland Sale proceeds as discussed above, the Company believes it has adequate patent protectionwill have availability for its products,borrowing under the revolving line of credit. However, there can be no assurance that claims of patent infringement will not be asserted or that IGI will not be requiredcontinued availability. Further, as a result of the depletion of the Company's inventory and accounts receivable upon the consummation of the Vineland Sale, the Company is currently seeking to incurrenegotiate the expense of defending its patent rights. Further, IGI intends to engage in collaborations, sponsored research agreements and preclinical and/or field testing agreements in connection with its future products as well as clinical testing agreements with academic and research institutions and U.S. government agencies, such as the Department of Agriculture, to take advantage of their technical expertise and staff and to gain access to clinical evaluation models, patents and related technology. Consistent with pharmaceutical industry and academic standards, and the rules and regulations under the Federal Technology Transfer Act of 1986, these agreements may provide that developments and results will be freely published, that information or materials supplied by IGI will not be treated as confidential and that IGI may be required to negotiate a license to any such developments and results in order to commercialize products incorporating them. There can be no assurance with IGI will be able successfully to obtain any such license at a reasonable cost or that such developments and results will not be made available to competitors of IGI on an exclusive or nonexclusive basis. (See also, Need to Establish Collaborative Commercial Relationships; Dependence on Partners). Competition. IGI's core businesses are highly competitive. Increased competition could result in price reductions and loss of market share which would adversely affect IGI's revenues and profitability. In February 1996, IGI launched its own line of Novasome-based alpha hydroxy acid skin care products. At the end of December 1996, IGI entered into a license agreement with Glaxo Wellcome, which grants Glaxo Wellcome the exclusive right to market this product linefinancial covenants contained in the United StatesCompany's debt agreements to physicians, including, but not limited to, dermatologists. Underbetter reflect the agreement, which was amended in January 1997, IGI will manufacture and distribute these products to Glaxo customers. IGI retains the rights to market this product line to non-physicians in the U.S., and in all markets abroad. IGI has not historically produced or marketed dermatology products for this intensely competitive marketplace, and there can be no assurance that its efforts to build this part of its business will be successful. Further, IGI expects to rely on the features of the Novavax Technologies to market and expand its line of internally-developed dermatologic products. However, if its competitors develop new and improved technologies that are superior to IGI's technologies, IGI's planned expansion of its line of personal care and dermatologic products could be adversely affected. IGI's Consumer Products Business competes with large, well-financed cosmetics and consumer products companies with development and marketing groups that are experienced in the industry and possess far greater resources than those available to IGI. There is no assurance that IGI's consumer products can compete successfully against its competitors or that it can develop and market new products that will be favorably received in the marketplace. In addition, certain of IGI's customers that use IGI's Novasome lipid vesicles in their products may decide to reduce their purchases from IGI or shift their business to other suppliers. The emergence of pet superstores, the consolidation of distribution channels into a smaller number of large, more powerful companies and the diminishing traditional role of veterinarians in the animal health business may adversely affect IGI's ability to expand its animal health business and to operate this business at the gross margin levels historically enjoyed by IGI. Need to Establish Collaborative Commercial Relationships; Dependence on Partners. IGI intends to engage in the production of Novasomes or licensing of the Novavax Technologies for consumer and industrial uses, and has entered into agreements and arrangements to develop products utilizing the Novavax Technologies for a variety of uses. Although certain products have been marketed by IGI, there can be no assurance that prototypes of products developed or being developed by IGI in conjunction with prospective customers will ever be marketed, or that sufficient revenues or profit margins will be achieved. Furthermore, there can be no assurance that IGI will be able to negotiate new contracts or arrangements with prospective customers, or that any such relationships, if established, will be commercially successful. (See also, Competition). Marketing and Distribution. IGI intends to produce Novasome encapsulation products to be marketed by its customers, or to sublicense the Novavax Technologies to customers. Therefore, IGI is dependent upon its customers for the successful marketing of certain Novasome-based products. Certain products initially developed for customers and incorporating Novavax Technologies are being or may be sold by IGI. Because IGI presently has limited distribution channels, it intends to rely upon distributors and third-party sales organizations to market these products.Company's current business. There can be no assurance that IGIthe Company will enter into successful or suitable marketing arrangements. International Sales,be able to comply with the debt agreement covenants unless Fleet and ACS agree to revise the debt agreement covenants, which the lenders have no legal obligation to do. Regulatory Standards and Currency Exchange. International sales of IGI's poultry vaccines and small animal products have accounted for a significant portion of IGI's net sales, and IGI expects that international sales will continue to constitute a significant portion of its net sales. IGI has encountered increasingly severe competition from international producers of poultry vaccines, particularly increased price competition coupled with a downward trend in vaccine prices. Further, while many of IGI's current products are designed to meet the regulatory standards of foreign markets, any inability to obtain foreign regulatory approvals on a timely basis could have an adverse effect on operating results. Additionally, international business may be subject to a variety of risks, including delays in establishing international distribution channels and increased costs associated with maintaining international marketing efforts. Mexico and certain Latin American countries are important markets for IGI's poultry vaccines and other products. These countries have historically experienced varying degrees of political unrest and economic and currency instability. Because of the volume of business transacted by IGI in those countries, continuation or the recurrence of such unrest or instability could adversely affect the businesses of its customers in those countries or IGI's ability to collect its receivables from such customers, which in either case could adversely impact IGI's future operating results. IGI is also subject to the usual risks of doing business abroad, including fluctuations in currency exchange rates, increases in duty rates, difficulties in obtaining export licenses and difficulties in enforcement of intellectual property rights. Fluctuations in Quarterly Performance. IGI's revenues and operating results may vary significantly from quarter to quarter due to factors such as the timing of significant orders, changes in IGI's operating expenses, personnel changes, demand for IGI's products, supply shortages and the like. Due to the foregoing factors, IGI believes that period-to-period comparisons of its operating results are not necessarily meaningful and that such comparisons cannot be relied upon as indicators of future performance. It is also possible that with respect to any quarter, IGI's operating results may be below the expectations of public market analysts and investors, which, in turn, could materially adversely affect the price of IGI's Common Stock. Government Regulation.Legal Action The production and marketing of IGI'sthe Company's products and its research and development activities are subject to regulation for safety, efficacy and quality by numerous government authorities in the United States and other countries. IGI's development, manufacturing and marketing of poultry biologics are subject to regulation in the United States for safety and efficacy by the United States Department of Agriculture ("USDA") in accordance with the Virus Serum Toxin Act of 1914. The development, manufacturing and marketing of veterinary pharmaceuticals are subject to regulation in the United States for safety and efficacy by the Food and Drug Administration ("FDA") in accordance with the Food, Drug and Cosmetic Act. In the United States, pharmaceuticals and vaccines are subject to rigorous FDA regulation including preclinical and clinical testing. The process of completing clinical trialsCompany's manufacturing procedures, equipment and obtaining FDA approvals for a new drug is likely to take a number of years, requires the expenditure of substantial resources and is oftenfacilities are subject to unanticipated delays. There can be no assurance that any product will receive such approval on a timely basis, if at all. In addition to product approval, IGI may be required to obtain a satisfactory inspectioncompliance with FDA rules and regulations and related oversight and inspections by the FDA covering the manufacturing facilities before a product can be marketed in the United States. The FDA will review the manufacturing procedures and inspect the facilities and equipment for compliance with applicable rules and regulations. Any material change by IGI in the manufacturing process, equipment or location would necessitate additional FDA review and approval. Further, the FDA may determine that IGI's alpha hydroxy acid-based products are "drugs" and, therefore, should be subject to the expensive and sometimes protracted FDA regulatory approval process. Whether or not FDA approval has been obtained, approval of a pharmaceutical product by comparable government regulatory authorities in foreign countries must be obtained prior to the commencement of clinical trials and subsequent marketing of such product in such countries. The approval procedure varies from country to country, and the time required may be longer or shorter than that required for FDA approval. Although there are some procedures for unified filing in certain European countries, in general each country has its own procedures and requirements. Certain of IGI's products may not be approved for sale overseas on a timely basis, thereby limiting IGI's ability to expand its foreign sales.FDA. In addition to regulations enforced by the USDA andFDA, the FDA, IGICompany is also subject to regulation under the Occupational Safety and Health Act, the Toxic Substances Control Act, the Resource Conservation and Recovery Act and other present and potential future federal, state or local regulations. FDA Inspection Observations In May, 2000, the FDA initiated an inspection of the Company's Companion Pet Products division and issued an inspection report on Form FDA 483 on July 5, 2000. The July 5, 2000 FDA report includes several unfavorable observations of manufacturing and quality assurance practices and products of the division. The Company is currently compiling its responses to the July 5, 2000 FDA report. In an effort to address a number of the FDA's stated concerns, on May 24, 2000, the Company discontinued production and shipment of Liquichlor and on June 1, 2000 temporarily stopped production of Cerumite, both products of the Pet Products Division. The aggregate annual sales volume for these products for the fiscal year ended December 31, 1999 was $1,059,000. Upon receipt of the Company's formal response to the July 5, 2000 observations, the FDA will evaluate the Company's response and will determine the ultimate outcome of the FDA inspection. An unfavorable outcome could result in fines, penalties and the potential halt of the sale of certain regulated products, any or all of which could have a material, adverse effect on the Company. The Company has incurred $634,000 year to date in related expenses to improve production, to compile and complete documentation and to achieve procedural and substantive regulatory compliance. SEC Investigation On July 26, 2000, the Company reached an agreement in principle with the staff of the SEC to resolve matters arising with respect to the informal investigation of the Company commenced by the SEC in April 1998. Under the agreement, which will not be final until approved by the SEC, the Company neither admits nor denies that the Company violated the financial reporting and record-keeping requirements of Section 13 of the Securities Exchange Act of 1934, as amended, for the fiscal years 1995, 1996 and 1997. Further, in the agreement, the Company agrees to the entry of an order to cease and desist from any such violation in the future. No monetary penalty is expected. The investigation and settlement focus on fraudulent actions taken by former members of the company's management. Upon becoming aware of the fraudulent activity, IGI, through its Board of Directors, immediately commenced an internal investigation which led to the termination of employment of those responsible. IGI then cooperated fully with the staff of the SEC and disclosed to the Commission the results of the internal investigation. NJDEP Action On April 6, 2000, officials of the New Jersey Department of Environmental Protection inspected a company storage site in Buena, New Jersey and issued a Notice of Violation relating to the storage of waste materials in a number of trailers at the site. The Company has established a disposal and cleanup schedule and has commenced operations to remove materials from the site. Small amounts of hazardous waste were discovered and the Company was issued a notice of violation relating to the storage of these materials. The Company is cooperating with the authorities and expects the assessment of fines or penalties. The Company has expensed the full cost of $160,000 related to the disposal and cleanup. On or around, May 17, 2000, the Company became aware of a spill at its now-former Vineland Laboratories facility of about 965 gallons of #2 fuel oil. By May 26, 2000 the Company had completed remediation of the soil and nearby creek that were affected by the heating oil spill. To assure that the nearby groundwater was not contaminated by the spill, the Company's environmental consultants advised the Company to drill a test well. The well is being drilled and the Company expects to have analytical results by the end of September, 2000. The Company has expensed the costs of the initial remediation and accrued the costs of drilling the test well. Any residual liability as a result of the fuel oil spill was retained by the Company as a "Retained Liability" under the Vineland Agreement. Cohanzick Partners, LP Action On April 14, 1999, a lawsuit was filed in the U.S. District Court for the Southern District of New York by Cohanzick Partners, LP, against IGI, Inc., Edward B. Hager, the Company's Chairman, the following directors of the Company: Terrence D. Daniels, Jane E. Hager, Constantine L. Hampers and Terrence O'Donnell and the following former directors and officers of the Company: Kevin J. Bratton, Stephen G. Hoch, Surendra Kumar, Donald J. Machpee, Lawrence N. Zitto, Paul D. Paganucci, David G. Pinosky and John O. Marsh (collectively, the "IGI Defendants") and John P. Gallo, the Company's former President. The suit which sought approximately $420,000 in actual damages together with fees, costs and interest, alleges violations of the securities laws, fraud, and negligent misrepresentation concerning certain disclosures made and other actions taken by the Company in 1996 and 1997. The IGI Defendants settled the matter pursuant to a Stipulation and Order of Dismissal signed by the Court on July 19, 2000. In exchange for the plaintiff's agreement to dismiss its claims against the IGI Defendants, the Company issued to the plaintiff 35,000 shares of unregistered Common Stock of the Company, $.01 par value per share, and the Company's insurer agreed to pay $97,500 to the plaintiff. The Company issued the 35,000 shares of Common Stock in June, 2000 and recorded the issuance at the fair market value of the Common Stock on the date of issuance ($1.375 per share) or $48,125 in the aggregate. As of December 31, 1999, the Company established a reserve with respect the Cohanzick suit of $88,750. The Company intends to record the $48,125 upon issuance of stock as an offset to its reserve in the third quarter 2000. RISK FACTORS The Shares offered pursuant to this Prospectus involve a high degree of risk and should not be acquired by any person who cannot afford the loss of the entire investment. Accordingly, prospective investors should consider carefully the following factors, in addition to the other information concerning the Company and its business included or incorporated by reference in this Prospectus. Going Concern; Substantial Indebtedness As a result of the timely consummation of the Vineland Sale, the Company has repaid the Series C Notes. However, in anticipation that the Vineland Sale might not be timely consummated and, therefore, of the possibility that the Overadvance and Series C Notes might not be timely repaid, the Company reclassified its long-term debt, outstanding as of December 31, 1999 as short term debt. Even given the consummation of the Vineland Sale and the timely repayment of Series C Notes, the Company remains very highly leveraged and subject to restrictive covenants and restraints which are contained in its Senior Debt Agreement, as amended, and its Subordinated Debt Agreement, as amended, such as requirements to achieve minimum tangible net worth and minimum fixed charge coverage ratios. Furthermore, the Company's available borrowings under the revolving line of credit from Fleet are dependent upon the level of the Company's qualifying accounts receivable and inventory. As a result of the depletion of the Company's inventory and accounts receivable upon the consummation of the Vineland Sale, the Company is currently seeking to renegotiate the financial covenants contained in the Company's debt agreements to better reflect the Company's current business. There can be no assurance that the Company will be able to comply with the debt agreement covenants unless Fleet and ACS agree to revise the debt agreement covenants, which the lenders have no legal obligation to do. Over the past eight months, the Company has obtained several waivers and extensions from its lenders under the debt agreements relating primarily to the Company's failure to satisfy certain financial covenants contained in the debt agreements and to timely pay interest. There can be no assurance that the Company will be able to continue to obtain waivers or extensions from the lenders with respect to any non-compliance. If the Company is not successful in meeting its financial covenants, a default could occur under the debt agreements and any such default, if not resolved, could lead to curtailment of certain the Company's business operations, sale of certain assets or commencement of bankruptcy proceedings. In response to these and other events, the Company's independent accountants determined that substantial doubt exists about the Company's ability to continue as a going concern. Government Regulation The Company's operations and products are subject to regulation by various state and federal agencies, including the FDA, which, on July 5, 2000, issued an inspection report containing a number of unfavorable observations with respect to the Company's pet products business. In an effort to address a number of the FDA's concerns, the Company has discontinued production and shipment of Liquichlor and has temporarily stopped production of Cerumite, both products of the Pet Products Division. The aggregate annual sales volume for these products for the fiscal year ended December 31, 1999 was $1,059,000. Upon receipt of the Company's formal response to the July 5, 2000 observations, the FDA will evaluate the Company's response and will determine the ultimate outcome of the FDA inspection. An unfavorable outcome could result in fines, penalties and the potential halt of the sale of certain regulated products, any or all of which could have a material, adverse effect on the Company. The Company has incurred $634,000 year to date in related expenses. Hazardous Materials; Environmental Matters. IGI'sThe Company's research and development processes may involve the controlled use of hazardous materials, chemicals, viruses and bacteria. IGIThe Company is subject to federal, state and local laws, regulations and standards governing the use, manufacture, storage, handling and disposal of such materials and certain waste products. Although IGI believesOn April 6, 2000, officials of the New Jersey Department of Environmental Protection inspected a company storage site in Buena, New Jersey and issued a Notice of Violation relating to the storage of waste materials in a number of trailers at the site. The Company has established a disposal and cleanup schedule and has commenced operations to remove materials from the site. In addition, to assure that no groundwater contamination resulted from a May, 2000 fuel oil spill at the Company's former Vineland Laboratories facility, the Company is drilling a test well and expects to have analytical results by the end of September, 2000. The Company has expensed the costs of the initial remediation and accrued the costs of drilling the test well. Any liabilities in connection with the fuel oil spill have been retained by the Company under the Vineland Agreement. Losses from Operations and Capital Requirements The successful consummation of the Vineland Sale enabled the Company to repay a significant amount of its safety proceduresoutstanding debt and dispose of a division that was generating substantial operating losses for handlingthe Company. Nonetheless, after closing the Vineland Sale, the Company has retained administrative infrastructure that was, in part, sustained by the operating revenues of the Poultry Business. The Company has initiated steps to reduce its overhead and disposing of such materialsinfrastructure in response to the Vineland Sale; but there is no assurance that the Company will be successful in sufficiently reducing its costs so as to continue to comply with the standards prescribed by such laws and regulations, the risk of accidental contamination or injury from these materials cannot be completely eliminated. In the event of such an accident, IGI could be held liable for any damages that result and any such liability could exceed the IGI's resources. Although IGI believes that it is in compliance in all material respects with applicable environmental laws and regulations and currently does not expect to make material capital expenditures for environmental control facilitiesfinancial covenants contained in the near term, thereCompany's debt agreements. The Company is currently generating losses that may extend through at least the end of the year 2000. These losses could unfavorably affect future compliance with financial covenants and the Company's availability for borrowing under the revolving line of credit facility, which is dependent on the level of the Company's qualifying accounts and inventory. There can be no assurance that IGIthe Company will not be required to incur significant costscontinue to comply with environmental lawsthe debt agreement covenants and regulationsthat funds will continue to be available to the Company under its revolving line of credit. As discussed under "Government Regulation," the Company is reviewing the FDA inspection report issued on July 5, 2000 with respect to the Company's pet products division. Resolution of the issues raised by the FDA may include the need to upgrade certain of the equipment and manufacturing processes associated with the pet products business. The amount of any such expenditures and the Company's ability to finance them cannot now be predicted. Dilution As described in the future. USE OF PROCEEDS TheCompany's Annual Report on Form 10-K, as amended by Form 10-K/A, for the year ended December 31, 1999, the Company will not receive any proceeds from the sale ofhas issued its Common Stock and granted stock options pursuant to various employment benefit plans adopted by the Selling Stockholders. SELLING STOCKHOLDERS There are two unrelated selling shareholders (the "Selling Shareholders"), whose shares are covered by this Prospectus. OneCompany. As of the Selling Shareholders is Allergan, Inc. ("Allergan"), holding 25,000December 31, 1999, 360,000 shares of Common Stock issuedare reserved for issuance under these plans to it in connection with the settlement of a dispute between Allerganconsultants, scientific advisors, employees and the Companydirectors, and two of its officers. The Company and said officers consented, in an agreement dated July 22, 1996,options to a mutual release of claims, without such constituting an admission of liability or an admission of any unlawful act or breach of duty, in exchange for the issuance to Allergan of Common Stock equal to $175,000 on the day prior to the date the Company's transfer agent was requested to issue such stock. The Company made such request on January 8, 1997 and, in accordance with such agreement, 25,000purchase 1,909,866 shares of Common Stock wereare outstanding and are exercisable at prices between $1.56 per share and $9.88 per share. Upon exercise of the Warrants and without giving effect to any other issuance of Common Stock, under the Company's employee benefit plans or otherwise, in the aggregate, the Shares will constitute approximately 15.7% of the issued and outstanding Common Stock. To the extent the Shares offered hereby are made available pursuant to Allergan on January 9, 1997, which constitutea partial exercise of the Warrants, additional Common Stock, up to a maximum of 1,907,543 shares (as that number may be increased pursuant to the terms of the Warrants), may be issued upon future exercise of the remaining Warrants. The existence of the Warrants and the options that have been or may be issued under the Company's employee benefit plans may prove to be a hindrance to future financing efforts by the Company. Further, the holders of such options and Warrants may be able to exercise them at a time when the Company may otherwise be able to obtain additional equity capital on terms more favorable to the Company. Furthermore, sales of substantial amounts of shares underlying the aforesaid options and Warrants, including the Shares offered by Allergan pursuant to this Prospectus. The second selling stockholder is John P. Gallo, President and a director of IGI ("Mr. Gallo"). Mr. Gallo acquiredhereby, could adversely affect the prevailing market prices for the Common Stock he is seeking to sell herebyand the exercise of any such options or Warrants may have a dilutive effect on January 5, 1984 in connection with the reorganizationnet tangible book value per share of Medatz, Inc. and IGI, whereby Medatz, Inc. became a wholly owned subsidiarythe Common Stock. THE OFFERING AND THE SELLING SHAREHOLDER The Shares All of IGI and Mr. Gallo, as the holder of 170 shares of Medatz, Inc. common stock, became the holder of 85,000 shares of Common Stock.Stock to be registered under this Prospectus and Registration Statement (the "Shares") and offered by this Prospectus will be sold for the account of the Selling Shareholder. The Selling Shareholder Pursuant to the Subordinated Debt Agreement, the Selling Shareholder acquired the Warrants evidencing the right to acquire 1,907,543 shares (as adjusted from time to time in accordance with the terms thereof) of the Company's Common Stock Mr. Gallo acquired in such reorganization has not previously been registered.at an exercise price of $0.01 per share. The following table sets forth the number of shares of Common Stock beneficially owned by each Selling Stockholder asfor which the Warrants may be exercised will increase upon the Company's issuance or sale of May 9, 1997,Common Stock at less than the numberfair market value per share of shares to be offered by each Selling Stockholderthe Common Stock at the time of such issue or sale, unless such sale or issuance is pursuant to this Prospectus and the numberrequirements of an employee benefit plan in effect on or before October 29, 1999. On February 11, 2000, the Selling Shareholder filed a Schedule 13G with the Commission reporting beneficial ownership of 1,907,543 shares to be beneficially owned by each Selling Stockholder ifof Common Stock, all of which are issuable upon exercise of the shares offered hereby are soldWarrants. ACS reported that it has sole voting and dispositive power over all 1,907,543 shares. With the exception of its role as described herein. Allergansubordinated lender to the Company under the Subordinated Debt Agreement, as amended, ACS has not held any positionsno position, office or offices with, been employed by, or otherwise had aother material relationship with the Company or any of its predecessorsaffiliates or affiliates (except that certain employeeshad any such position, office or other material relationship within the last three years. Use of Proceeds Upon exercise of the Warrants by the Selling Shareholder, the Company were formerly employed by Allergan). Mr. Gallo has served as President, Chief Operating Officer andwill receive the exercise price of $.01 per Share, or a directormaximum of IGI since 1985. In addition, Mr. Gallo serves as a director and member$19,075, which will be used for general corporate purposes. The Company will not receive any of the executive committeeproceeds from the sale of the BoardShares by the Selling Shareholder. The Company has agreed to pay all costs of Directorsthe registration of Novavax. Further, Mr. Gallo served as Chief Operating Officerthe Shares. Such costs, fees and Treasurerexpenses are estimated to be approximately $24,629. Plan of Novavax from September 1995Distribution The Selling Shareholder is entitled to June 30, 1996 and from September 1995 to May 1996, respectively, as President of Novavax from January through September 1995, as Vice President of IGI from 1983 to 1984 and as Vice President of Vineland Laboratories, Inc. and Evsco Pharmaceutical Corp. (subsidiaries of IGI) from 1973 to 1983.
Number of Shares of Number of Shares of Common Stock Number of Shares Common Stock Name of Selling Beneficially Owned as of Common Stock Beneficially Owned Stockholder of May 9, 1997 Offered Hereby After Offering - --------------- --------------------- ----------------- -------------------- Allergan, Inc. 25,000 25,000 0 John P. Gallo 663,397(1) 85,000 578,397
- ---------- (1) Includes 345,000 shares which Mr. Gallo may acquire pursuant to stock options exercisable within 60 days after May 9, 1997. PLAN OF DISTRIBUTION Shares of Common Stock covered hereby may be offered and solddistribute from time to time byup to 1,907,543 shares of the Selling Stockholders. The Selling Stockholders will act independentlyShares. If the Warrants were exercised effective August 15, 2000, in the aggregate, the Shares would constitute approximately 15.7% of the issued and outstanding Common Stock of the Company andon August 15, 2000. The Selling Shareholder's plan of each otherdistribution is set forth on the cover page of this Prospectus. EXPERTS The consolidated financial statements incorporated in making decisions with respectthis Prospectus by reference to the timing, manner and size of each sale. Such sales may be madeCompany's Annual Report on Form 10-K for the year ended December 31, 1999, as amended by Form 10-K/A filed September 1, 2000, have been so incorporated in reliance on the American Stock Exchange, in the over-the-counter market or otherwise, at prices related to the then current market price or in negotiated transactions, including one or more of the following methods: (a) purchases by the broker-dealer as principal and resale by such broker or dealer for its account pursuant to this Prospectus; (b) ordinary brokerage transactions and transactions in which the broker solicits purchasers; and (c) block trades in which the broker-dealer so engaged will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction. The Company has been advised by each Selling Stockholder that it or he, respectively, has not made any arrangementsreport (which contains an explanatory paragraph relating to the distribution of the shares covered by this Prospectus. In effecting sales, broker-dealers engaged by the Selling Stockholders may arrange for other broker-dealersCompany's ability to participate. Broker-dealers will receive commissions or discounts from the Selling Stockholderscontinue as a going concern as described in amounts to be negotiated immediately priorNote 8 to the sale. In offeringfinancial statements) of PricewaterhouseCoopers LLP, independent accountants, given upon the sharesauthority of Common Stock covered hereby, the Selling Stockholdersthat firm as an expert in accounting and any broker-dealers and any other participating broker-dealers who execute sales for the Selling Stockholders may be deemed to be "underwriters" within the meaning of the Securities Act in connection with such sales, and any profits realized by the Selling Stockholders and the compensation of such broker-dealer may be deemed to be underwriting discounts and commissions. The Company has advised the Selling Stockholders that during such time as either of them may be engaged in a distribution of Common Stock included herein it or he is required to comply with Rules 10b-6 and 10b-7 under the Exchange Act (as those Rules are described in more detail below) and, in connection therewith, that neither it nor he may engage in any stabilization activity in connection with IGI securities, is required to furnish to each broker-dealer through which Common Stock included herein may be offered copies of this Prospectus, and may not bid for or purchase any securities of the Company or attempt to induce any person to purchase any IGI securities except as permitted under the Exchange Act. Each Selling Stockholder has agreed to inform the Company when the distribution of the shares is completed. Rule 10b-6 under the Exchange Act prohibits, with certain exceptions, participants in a distribution from bidding for or purchasing, for an account in which the participant has a beneficial interest, any of the securities that are the subject of the distribution. Rule 10b-7 governs bids and purchases made in order to stabilize the price of a security in connection with a distribution of the security. This offering will terminate on the date on which all shares offered hereby have been sold by the Selling Stockholders.auditing. LEGAL MATTERS The validity of the shares of Common Stock offered hereby will be passed upon for the Company by WhiteDevine, Millimet & McDermott, P.C.Branch, P.A., Wellesley Massachusetts. EXPERTS The consolidated financial statements and financial statement schedule of IGI at December 31, 1996 and 1995, and for the years ended December 31, 1996, 1995 and 1994 included in IGI's Annual Report on Form 10-K for the year ended December 31, 1996 and incorporated herein by reference have been incorporated herein in reliance on the report of Coopers & Lybrand L.L.P., independent accountants, given on the authority of that firm as experts in accounting and auditing. Manchester, New Hampshire. PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 14.14 Other Expenses of Issuance and Distribution.Distribution The following is an itemized statement of expenses to be incurred in connection with this Registration Statement, which are payableStatement. All of the expenses will be paid by the Company. Securities and Exchange Commission registration fee $ 629.49 Blue Sky fees and expenses 0.00 Public accountants' fees 12,000.00 Company legal fees and expenses 12,000.00 Miscellaneous expenses 0.00 --------------------------------------------------------------------- TOTAL: $24,629.49
All of the above items, except the registration fee, are estimated as follows: SEC Registration Fee .......................................... $ 172.92 Legal (including Blue Sky) and Accounting Fees and Expenses ... $10,000.00 Miscellaneous ................................................. $ 827.08 ---------- $11,000.00 ==========estimates. Item 15.15 Indemnification of Directors and Officers.Officers Section 145 of the Delaware General Corporation Law as amended (the "Delaware General Corporation Law""DGCL"), provides that a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was a director, officer, employee or agent of the corporation or is or was serving at its request in such capacity in another corporation or business association,directors and officers as well as other employees and individuals against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with suchspecified actions, suits or proceedings, whether civil, criminal, administrative or investigative (other than an action suitby or proceedingin the right of the corporation - a "derivative action"), if hethey acted in good faith and in a manner hethey reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe histheir conduct was unlawful. A similar standard is applicable in the case of derivative actions, except that indemnification only extends to expenses (including attorney's fees) actually and reasonably incurred in connection with the defense or settlement of such action, and the statute requires court approval before there can be any indemnification where the person seeking indemnification has been found liable to the corporation. The statute provides that it is not exclusive of other indemnification that may be granted by a corporation's by-laws, disinterested director vote, stockholder vote, agreement or otherwise. Under the terms of the Company's Bylaws and subject to the applicable provisions of Delaware law, the Company has indemnified each of its directors and officers and, subject to the discretion of the Board of Directors, any other person, against expenses incurred or paid in connection with any claim made against such director or officer or any actual or threatened action, suit or proceeding in which such director or officer may be involved by reason of being or having been a director or officer of the Company or of serving or having served at the Company's request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, or by reason of any action taken or not taken by such director or officer in such capacity, and against the amount or amounts paid by such director or officer in settlement of any such claim, action, suit or proceeding or any judgment or order entered therein. Section 102(b)(7) ofif the Delaware General Corporation LawDGCL permits a corporation to provideprovision in itsthe certificate of incorporation thatof each corporation organized thereunder, such as the Company, eliminating or limiting, with certain exceptions, the personal liability of a director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of Delaware General Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit. Article NINTH of thedirector. The Company's Certificate of Incorporation, as amended, (the "Certificateeliminates the liability of Incorporation"), provides that,directors to the fullest extent permitted by Section 145the DGCL. The Company carries directors' and officers' liability insurance that covers certain liabilities and expenses of the Delaware General Corporation Law, the Company will indemnify each person whom it shall have the powerdirectors and officers. The Company has entered into employment agreements with certain officers and directors to indemnify under said section from and against any and all of the expenses, liabilities or other matters referred to or covered by said section. Article ELEVENTH of the Company's Certificate of Incorporation provides that no director of the Company shall be liable for monetary damages for any breach of fiduciary duty, except to the extent that the Delaware General Corporation Law prohibits the elimination or limitation of liability of directors for breach of fiduciary duty. effectuate these indemnity provisions. Item 16. Exhibits. Exhibit Description of Exhibit Page 4.1 Specimen stock certificate for shares of * Common Stock, par value, $.01 per share (incorporated by reference to Exhibit (4) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1989, filed April 2, 1990 (the "1989 Form 10-K")). 516 Exhibits 5.1 Opinion of WhiteDevine, Millimet & McDermott, P.C.Branch, P. A. 23.1 Consent of CoopersDevine, Millimet & Lybrand L.L.P.Branch, P.A. 23.2 Consent of White & McDermott, P.C. (included in Exhibit 5) 24PricewaterhouseCoopers LLP 24.1 Power of Attorney (included on the signature pages of this Registration Statement) - ---------------- *Incorporated herein by reference. Item 17. Undertakings.17 Undertakings A. Undertaking Pursuant to Rule 415. The Company hereby undertakes: (1) Toto file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) Toto include any prospectus required by Section 10(a)(3) of the Securities Act of 1933 as amended (the "Securities Act"); (ii) Toto reflect in the prospectus any facts or events arising after the effective date of thisthe Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in thisthe Registration Statement. NotwithstandingStatement (Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the formfor of prospectus filed with the Securities and Exchange Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement.); (iii) Toto include any material information with respect to the plan of distribution not previously disclosed in thisthe Registration Statement or any material change to such information in thisthe Registration Statement; provided, however, that paragraphs (1)A(1)(i) and (1)A(1)(ii) do not apply if the Registration Statement is on Form S-3 and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the Company pursuantpusuant to Section 13 or Section 15(d)15 (d) of the Securities Exchange Act of 1934 as amended (the "Exchange Act"), that are incorporated by reference in thisthe Registration Statement. (2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at thethat time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. B. Undertaking Regarding Filings Incorporating Subsequent Exchange Act Documents by Reference. The Company hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Company's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act)Act of 1934) that is incorporated by reference in thisthe Registration Statement shall be deemed to be a new registration statementRegistration Statement relating to the securities offered therein, and the offering of such securities at thethat time shall be deemed to be the initial bona fide offering thereof. C. Undertaking in Respect of Indemnification. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Company pursuant to the indemnificationforegoing provisions, described herein, or otherwise, the Company has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Companyregistrant of expenses incurred or paid by a director, officer or controlling person of the Companyregistrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Company will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrantregistrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Nashua,Buena, State of New HampshireJersey, on the 13th day of May, 1997.September 29, 2000. IGI, INC. By: /s/ Edward B. Hager -------------------------- Edward B. Hager Chairman and Chief Executive Officer POWER OF ATTORNEY We, the undersigned officers and directors of IGI, Inc., hereby severally constitute Edward B. Hager, Donald J. MacPhee and David A. White, and each of them singly, our true and lawful attorneys with full power to them, and each of them singly, to sign for us and in our names in the capacities indicated below, the Registration Statement on Form S-3 filed herewith and any and all subsequent amendments to said Registration Statement, and generally to do all such things in our names and behalf in our capacities as officers and directors to enable IGI, Inc. to comply with all requirements of the Securities and Exchange Commission, hereby ratifying and confirming our signatures as they may be signed by said attorneys, or any of them, to said Registration Statement and any and all amendments thereto. John Ambrose ------------------------- JOHN AMBROSE President Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the datesdate indicated. Signature Title Date - --------- ----- ---- /s/ Edward B. Hager Chairman andof the Board September 28, 2000 - ---------------------------- EDWARD B. HAGER /s/ Robert E. McDaniel Chief May 13, 1997 - --------------------- Executive Officer Edward B. HagerSeptember 28, 2000 - ---------------------------- (Principal Executive Officer)executive ROBERT E. MCDANIEL officer) /s/ John P. GalloAmbrose President and Director May 13, 1997September 28, 2000 - --------------------- John P. Gallo---------------------------- JOHN AMBROSE /s/ Donald J. MacPheeDomenic N. Golato Senior Vice President and May 13, 1997September 28, 2000 - ---------------------- Controller---------------------------- Chief Financial Officer DOMENIC N. GOLATO (Principal Donaldfinancial officer and principal accounting officer) /s/ Stephen J. MacPhee Financial and Chief Accounting Officer)Morris Director September 28, 2000 - ---------------------------- STEPHEN J. MORRIS /s/ Terrence D. Daniels Director September 28, 2000 - ---------------------------- TERRENCE D. DANIELS /s/ Jane E. Hager Director May 13, 1997September 28, 2000 - ----------------------- Jane---------------------------- JANE E. Hager /s/ David G. Pinosky Director May 13, 1997 - ----------------------- David G. Pinosky /s/ Terrence O'Donnell Director May 13, 1997 - ----------------------- Terrence O'DonnellHAGER /s/ Constantine L. Hampers Director May 13, 1997September 28, 2000 - -------------------------- Constantine---------------------------- CONSTANTINE L. HampersHAMPERS /s/ Terrence D. DanielsO' Donnell Director May 13, 1997September 28, 2000 - -------------------------- Terrence D. Daniels---------------------------- TERRENCE O'DONNELL /s/ Paul D. PaganucciDonald W. Joseph Director May 13, 1997September 28, 2000 - -------------------------- Paul D. Paganucci ---------------------------- DONALD W. JOSEPH Director September 28, 2000 - ---------------------------- EARL R. LEWIS The undersigned, by signing his name hereto, does hereby sign this registration statement or amendment thereto on behalf of each of the above- indicated directors or officers of IGI, Inc. pursuant to powers of attorney executed by each such director or officer. /s/ Robert E. McDaniel ------------------------------------ Robert E. McDaniel, Attorney-in-Fact EXHIBIT INDEX The following Exhibits are filed as part of this Registration Statement on Form S-3 or are incorporated herein by reference.
Exhibit No. Description Page - --------------------------------------------------------------------------- 5.1 Opinion and Consent of Devine, Millimet & Branch, P. A. 23.1 Consent of PricewaterhouseCoopers LLP 24.1 Power of Attorney