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
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FORM S-3
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REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
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IGI, INC.
(Exact Name of Registrant as Specified in Itsits Charter)
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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)
----------------------
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
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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