<TABLE>
IGI, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(thousands, except per share information)
Three months ended Nine months ended
September 30, September 30,
1996 1995 1996 1995
---- ---- ---- ----
<CAPTION>
<S> <C> <C> <C> <C>
Net sales $ 8,291 $ 7,602 $ 25,929 $ 22,940
Cost of sales 3,769 3,863 11,694 11,189
--------- --------- --------- ---------
Gross profit 4,522 3,739 14,235 11,751
Selling, general and
administrative
expenses 3,465 2,920 10,457 8,506
Research and
development
expenses 515 309 1,569 1,012
Research revenues (124) (130) (164) (731)
--------- --------- --------- ---------
Operating profit 666 640 2,373 2,964
Interest expense, net 499 283 1,494 753
Other expense (10) - 155 -
--------- --------- --------- ---------
Income from continuing
operations before
provision for
income taxes 177 357 724 2,211
Provision for income
taxes 60 113 246 669
--------- --------- --------- ---------
Income from continuing
operations 117 244 478 1,542
Loss from discontinued
operations:
Spinoff of
biotechnology
business segment,
net of income tax
benefits:
Loss from
operations - (422) - (2,185)
Estimated loss on
disposal - (1,000) - (1,000)
--------- --------- --------- ---------
Net income (loss) $ 117 $ (1,178) $ 478 $ (1,643)
========= ========= ========= =========
Income (loss) per
common and common
equivalent share:
From continuing
operations $ .01 $ .03 $ .05 $ .16
========= ========= ========= =========
From discontinued
operations $ - $ (.15) $ - $ (.33)
========= ========= ========= =========
Net income (loss) $ .01 $ (.12) $ .05 $ (.17)
========= ========= ========= =========
Average number of
common and common
equivalent shares 9,406,869 9,771,717 9,613,186 9,798,510
The accompanying notes are an integral part
of the consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
IGI, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Amounts in thousands)
September 30, December 31,
ASSETS 1996 1995
---- ----
<CAPTION>
<S> <C> <C>
Current assets:
Cash and equivalents $ 135 $ 169
Accounts receivable, less allowance
for doubtful accounts of $306 8,291 8,456
Inventories 9,374 9,000
Current deferred taxes 55 55
Prepaid expenses and other current assets 1,236 763
------- -------
Total current assets 19,091 18,443
Notes receivable, less current maturities 191 285
------- -------
Property, plant and equipment - at cost:
Land 625 625
Buildings 9,337 9,054
Machinery and equipment 9,181 8,656
------- -------
19,143 18,335
Less accumulated depreciation (8,894) (8,225)
------- -------
10,249 10,110
------- -------
Deferred income taxes 2,791 2,791
Other assets 1,196 702
------- -------
$33,518 $32,331
======= =======
Continued
The accompanying notes are an integral part
of the consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
IGI, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS, Continued
(Unaudited)
(Amounts in thousands)
September 30, December 31,
LIABILITIES AND STOCKHOLDERS' EQUITY 1996 1995
<CAPTION>
<S> <C> <C>
Current liabilities:
Note payable to bank $ 9,394 $ 8,048
Current maturities of long-term
debt 3,446 2,415
Accounts payable 2,288 2,447
Accrued payroll 244 460
Other accrued expenses 453 772
Income taxes payable 222 17
------- -------
Total current liabilities 16,047 14,159
------- -------
Long-term debt, less current
maturities 7,723 9,624
------- -------
Commitments and contingencies
Stockholders' equity:
Common stock, $.01 par value,
30,000,000 shares authorized;
9,522,681 and 9,440,681 shares
issued in 1996 and 1995,
respectively 95 95
Stock subscribed 175 -
Additional paid-in capital 18,648 18,130
Deficit (6,401) (6,879)
------- -------
12,517 11,346
Less treasury stock; 171,096 and
176,356 shares, at cost, in
1996 and 1995, respectively (2,580) (2,609)
Stockholders' notes receivable (189) (189)
------- -------
Total stockholders' equity 9,748 8,548
------- -------
$33,518 $32,331
======= =======
The accompanying notes are an integral part
of the consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
IGI, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Amounts in thousands)
Nine months ended September 30,
1996 1995
---- ----
<CAPTION>
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 478 $(1,643)
Reconciliation of net income
to net cash provided (used)
by operating activities:
Depreciation and amortization 669 677
Provision for loss on accounts
receivable and inventories 90 165
Accrual for estimated loss on disposal - 1,000
Issuance of stock to 401(k) plan 28 43
Stock subscribed 175 -
Change in deferred income taxes - (82)
Changes in operating assets
and liabilities:
Accounts receivable 165 (248)
Inventories (464) (1,111)
Prepaid and other assets (474) (48)
Accounts payable and
accrued expenses (694) (163)
Income taxes payable (refundable) 205 (2)
------- -------
Net cash provided (used)
by operating activities 178 (1,412)
------- -------
Cash flows from investing activities:
Capital expenditures (808) (1,961)
Decrease in notes receivable from
officer 94 147
Increase in other assets (492) (72)
Increase in net assets of biotechnology
segment - (912)
------- -------
Net cash used by investing activities (1,206) (2,798)
------- -------
Cash flows from financing activities:
Net borrowings under line of credit
agreements 1,346 1,060
Payments of long-term debt (871) (5)
Proceeds from exercise of common
stock options 519 595
Proceeds from sale of common stock - 2,500
------- -------
Net cash provided by financing
activities 994 4,150
------- -------
Net decrease in cash and equivalents (34) (62)
Cash and equivalents at beginning of
year 169 954
------- -------
Cash and equivalents at
September 30, 1996 and 1995 $ 135 $ 892
======= =======
The accompanying notes are an integral part
of the consolidated financial statements.
</TABLE>
<PAGE>
IGI, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
---------------------
The accompanying consolidated financial statements have been
prepared by IGI, Inc. without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission, and
reflect all adjustments which, in the opinion of management, are
necessary for a fair statement of the results for the interim
periods presented. All such adjustments are of a normal
recurring nature.
Certain information in footnote disclosures normally
included in financial statements prepared in accordance with
generally accepted accounting principles has been condensed or
omitted pursuant to such rules and regulations, although the
Company believes the disclosures are adequate to make the
information presented not misleading. It is suggested that these
financial statements be read in conjunction with the financial
statements and the notes thereto included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1995.
2. Net Income Per Common Share
----------------------------
Net income per share of common stock is computed by dividing
net income by the weighted average number of shares of common
stock and common stock equivalents, if dilutive, outstanding
during the three and nine month periods ended September 30, 1996
and 1995. Common stock equivalents include shares issuable upon
the exercise of dilutive common stock options. Fully diluted
earnings per share approximate primary earnings per share.
3. Inventories
-----------
Inventories are valued at the lower of cost or market using
the last-in, first-out (LIFO) method and consist of the
following: (amounts in thousands)
<TABLE>
September 30, 1996 December 31, 1995
------------------ -----------------
<CAPTION>
<S> <C> <C>
Finished Goods $3,648 $3,103
Work-in-process 2,949 2,851
Raw Materials 2,777 3,046
------ ------
Total $9,374 $9,000
====== =======
</TABLE>
Inventory values computed under the first-in, first-out
(FIFO) method approximate the values determined using LIFO.
<PAGE>
IGI, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
4. Business Segments
-----------------
Summary operating results for the Company's Animal Health
and Cosmetic and Consumer Products segments for the three and
nine month periods ended September 30, 1996 and 1995 appear
below: (amounts in thousands)
<TABLE>
3 months ended 9 months ended
September 30, September 30,
1996 1995 1996 1995
---- ---- ---- ----
<CAPTION>
<S> <C> <C> <C> <C>
Net Sales:
Animal Health $7,327 $7,298 $23,403 $21,682
Consumer Products 964 30 2,526 1,258
------ ------ ------- -------
Total $8,291 $7,602 $25,929 $22,940
====== ====== ======= =======
Gross Profit:
Animal Health $3,884 $3,868 $12,404 $11,492
Consumer Products 638 (129) 1,831 259
------ ------ ------- -------
Total $4,522 $3,739 $14,235 $11,751
====== ====== ======= =======
Operating profit (loss):
Animal Health $1,603 $1,766 $ 5,643 $ 5,216
Consumer Products 18 (387) (555) (14)
Corporate (955) (739) (2,714) (2,238)
------ ------ ------- -------
Total $ 666 $ 640 $ 2,373 $ 2,964
====== ====== ======= =======
</TABLE>
5. Equity Transaction
------------------
In August 1993, the Company entered into an agreement with
an industry partner for the testing of the Novasome technology as
a microcarrier and adjuvant for various human vaccines. This
agreement was amended in December 1995 in connection with the
Spinoff of Novavax. Under the terms of the amended agreement,
the industry partner had the option to purchase up to
approximately $6.8 million of IGI Common Stock and $3.7 million
of Novavax Common Stock, concurrently. The agreement was
terminated in 1996.
<PAGE>
IGI, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
- ---------------------
Three months ended September 30, 1996 compared to September 1995
- ----------------------------------------------------------------
Sales increased $689,000 or 9%. This increase was due
principally to the cosmetic and consumer products segment, which
had sales of $964,000, an increase of $660,000 or 217% over the
third quarter of 1995. Sales in this segment consisted primarily
of products manufactured for Estee Lauder and the Company's Nova
Skin Care products. International sales of the Company's animal
health products increased $376,000 or 14% and accounted for
$3,113,000 or 42% of animal health products sales and 38% of the
Company's total sales, compared to 38% and 36%, respectively, for
the same period a year ago. These increases were offset, in
part, by a domestic decline in sales of the Company's animal
health products. Gross profit increased $783,000 or 21% due
principally to the higher sales volume. As a percentage of
sales, gross profit was 55%, up from 49% for the third quarter of
1995. This improvement was due to increased sales of higher
margin cosmetic products.
Selling, general and administrative costs increased $545,000
or 19%. Selling and marketing expenses related to the Nova Skin
Care product line accounted for $454,000 of the increase.
Research and development expenses increased $206,000 or 66%.
This increase was the result of stepped-up product development in
both of the Company's business segments. The Company had
$124,000 of research revenues during the third quarter of 1996,
compared to $130,000 during the same period in 1995.
Net interest expense increased $216,000 or 76% due to higher
borrowings which were incurred in 1995 to fund the operations of
the Company's former biotechnology business segment (Novavax) and
to fund the $5,000,000 license payment that was made in
connection with the spinoff of Novavax in December 1995.
During the third quarter of 1995, the Company incurred
expenses of $1,422,000 for the operations of Novavax, which was
reported as a discontinued operation.
Nine months ended September 30, 1996 compared to September 30,
1995
- -------------------------------------------------------------
The Company's Animal Health segment had operating profits of
$5,643,000, an increase of $427,000 or 8% over the first nine
months of 1995. This increase was offset by a $541,000 increase
in operating losses of the Company's Cosmetic and Consumer
Products segment and increased corporate expenses of $476,000 or
21% over 1995. The operating loss of the Cosmetic and Consumer
Products segment was due to costs associated with the market
introduction of the Company's Nova Skin Care product line. These
costs offset profits generated from the increased sales of
cosmetic products to Estee Lauder. Consolidated operating profit
decreased $591,000 or 20% compared to the same period a year ago.
(See Note 4 of Notes to Consolidated Financial Statements).
<PAGE>
IGI, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Sales increased $2,989,000 or 13%. Sales of animal health
products increased in both domestic and international markets.
International sales of these products increased $1,394,000 or 16%
and accounted for $10,258,000 or 44% of animal health product
sales and 40% of the Company's total sales, compared to 41% and
39% respectively, for the same period a year ago. Sales of
cosmetic and consumer products were $2,526,000, an increase of
$1,268,000 or 101% compared to 1995. Sales in this segment
consisted principally of products manufactured for Estee Lauder
and the Company's Nova Skin Care products, which were introduced
during the first quarter of 1996. Gross profit increased
$2,484,000 or 21% due principally to the higher sales volume. As
a percentage of sales, gross profit was 55%, up from 51% for the
first nine months of 1995. This improvement was due to the
increased sales of higher margin cosmetic products.
Selling, general and administrative costs increased
$1,951,000 or 23%. Selling and marketing expenses related to the
Nova Skin Care product line accounted for $1,190,000 of the
increase. Variable costs associated with the higher sales volume
of animal health products and corporate expenses accounted for
the remainder of the increase. Research and development expenses
increased $557,000 or 55%. This increase was the result of
stepped-up product development in both the Company's business
segments. The Company had $164,000 of research revenues during
the first nine months of 1996, compared to $731,000 during the
same period in 1995.
Net interest expense increased $741,000 or 98% due to higher
borrowings incurred in 1995 to fund the operations of the
Company's former biotechnology business segment (Novavax) and to
fund the $5,000,000 license payment that was made in connection
with the spinoff of Novavax in December 1995. In connection with
the settlement of a lawsuit brought against the Company related
to employment contracts of certain IGI employees with their
former employer, the Company incurred charges of $175,000, for
which the Company will issue shares of IGI common stock. Such
charges are reported as other expense. As a result of this
payment, the Company will have the right to continue to use these
employees for the selling, marketing and product development of
its Nova Skin Care product line. The Company is seeking
reimbursement for these charges under its insurance policy.
During the first nine months of 1995, the Company incurred
expenses of $3,185,000 for the operations of Novavax, which was
reported as a discontinued operation.
Liquidity and Capital Resources
- -------------------------------
The Company's operating activities provided $178,000 of cash
for the first nine months of 1996. Accounts receivable turnover
ratio was 4.13 compared to 3.89 for the year ended December 31,
1995. Accounts receivable balances due from Mexico and Latin
America were 28% of the total receivable balance compared to 30%
at December 31, 1995 and the Company believes the net amounts are
fully collectible. Mexico and certain Latin American countries
are important markets for the Company's poultry vaccines and
other products. These countries have historically experienced
varying degrees of political unrest and economic and currency
instability.
<PAGE>
IGI, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Because of the volume of business transacted by the Company in
those countries, continuation or the recurrence of such unrest or
instability could adversely affect the businesses of its
customers in those countries or the Company's ability to collect
its receivables from such customers, which in either case would
have a material adverse effect on the Company's future operating
results. The inventory turnover ratio for 1996 was 1.77,
compared to 1.81 for the year ended December 31, 1995. The
Company believes its reserves for inventory obsolescence and
accounts receivable are adequate. The Company used $1,206,000 in
investing activities principally for capital expenditures and
other deferred costs associated with the Nova Skin Care division.
Funding for the Company's investing activities were provided by
operating activities and borrowings under the Company's working
capital line of credit.
In June and August of 1996, the Company's Loan Agreement was
amended to provide that the amount available for borrowing under
its $12 million revolving credit facility shall be reduced by
$857,000 per quarter (formerly $800,000 per quarter). At
September 30, 1996, the Company had outstanding borrowings under
its revolving credit facility of approximately $11.1 million, the
maximum amount available under that facility at that date. In
addition, the Company failed to comply, at September 30, 1996,
with the covenant in the Loan Agreement which required quarterly
net income of at least $250,000 at September 30, 1996. The
Company's lenders have agreed to reduce the net income
requirement for September 30, 1996 so that the Company will be in
compliance with such covenant. Also, at September 30, 1996, the
Company had $606,000 of available borrowing capacity under its
$10 million working capital line of credit, and at November
12, 1996 had $1,060,000 available under this line of credit.
This line of credit expires June 30, 1997. The Company believes
that cash generated from operations will be sufficient to meet
its obligations to reduce its bank borrowings at the rate of
$857,000 per quarter and to meet its short-term obligations.
However, over the long term the Company will require additional
funds to finance its business operations. The Company currently
is seeking to obtain such funds from additional borrowing
arrangements and/or a sale of debt or equity securities. There
can be no assurance that funds required by the Company in the
future will be available to the Company on terms satisfactory to
the Company, if at all. The inability to obtain needed funding
on satisfactory terms may require the Company to reduce certain
of its planned expenditures, scale back its operations or enter
into financing arrangements on terms which it would not otherwise
accept and would have a material adverse effect on the Company's
business and financial results.
<PAGE>
IGI, INC. AND SUBSIDIARIES
Part II OTHER INFORMATION
Item 1 - Legal Proceedings
- --------------------------
There were no material developments in the litigation
previously described in the Company's Annual Report on Form 10-K
for the year ended December 31, 1995.
Item 2 - Changes in Securities
- ------------------------------
The constituent instruments defining the rights of the
holders of any class of securities were not modified nor were the
rights evidenced by any class of registered securities materially
limited or qualified during the period covered by this report.
Item 3 - Defaults Upon Senior Securities
- ----------------------------------------
At September 30, 1996, the Company was not in compliance
with its quarterly net income covenant of its loan agreement,
which required the Company to have net income of $250,000. The
Company's lenders have agreed to reduce the net income
requirement for September 30, 1996 so that the Company will be in
compliance with such covenant. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -
Liquidity and Capital Resources".
Item 4 - Submission of Matters to a Vote of Security Holders
- ------------------------------------------------------------
None
Item 5 - Other Information
- --------------------------
None
Item 6 - Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibits:
--------
Exhibit 10.1 - Second Amendment to Second Amended and
Restated Loan Agreement, dated June 26, 1996.
Exhibit 10.2 - Third Amendment to Second Amended and
Restated Loan Agreement, dated August 13,
1996.
Exhibit 11 - Computation of Net Income Per Common Share
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
-------------------
None
<PAGE>
IGI, INC. AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
IGI, INC.
(Registrant)
Date: November 14, 1996
By:
---------------------
Donald J. MacPhee
Vice President
(Principal Financial
and Accounting
Officer)
EXHIBIT 10.1
SECOND AMENDMENT TO
SECOND AMENDED AND RESTATED LOAN AGREEMENT
AGREEMENT (this "Agreement"), made as of this 26th day of
June, 1996, by and among FLEET BANK-NH, a trust company organized
under the laws of New Hampshire ("Fleet"); MELLON BANK, N.A., a
national banking association ("Mellon"); and IGI, INC., a
Delaware corporation ("IGI"), IGEN, INC., a Delaware corporation
("IGEN"), IMMUNOGENETICS, INC., a Delaware corporation
("ImmunoGen"), and BLOOD CELLS, INC., a Delaware corporation
("BCI"). Fleet and Mellon are hereinafter sometimes individually
referred to as a "Lender" and collectively referred to as the
"Lenders", and IGI, IGEN, ImmunoGen and BCI are hereinafter
sometimes individually referred to as a "Borrower" and
collectively referred to as the "Borrowers".
WITNESSETH:
WHEREAS, the Lenders and the Borrowers are parties to a
Second Amended and Restated Loan Agreement between them dated as
of December 13, 1995 (the "Original Agreement"), as amended by
First Amendment to Second Amended and Restated Loan Agreement
dated as of March 27, 1996 (the "First Amendment", and
collectively with the Original Agreement, the "Loan Agreement"),
the terms and conditions of which are hereby incorporated herein
by reference; and
WHEREAS, the Borrowers have requested certain amendments
with respect to the terms and conditions of the Loans under the
Loan Agreement; and
WHEREAS, the Lenders are willing to grant such amendments
upon the terms and conditions contained in this Agreement;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained, the parties hereby agree as
follows:
1. Definitions.
Except as otherwise defined herein, all capitalized
terms used in this Agreement have the respective meanings
ascribed to them in the Loan Agreement.
2. Modification of Revolving Credit Commitment.
Section 2.01 (a) of the Loan Agreement is hereby
amended so as to read in full as follows:
"(a) Subject at all times to all of the terms and
conditions of this Agreement, the Lenders hereby severally (and
not jointly and severally) agree to extend to the Borrowers
(jointly and severally) a secured revolving credit facility, to
December 31, 1999 (the "Revolving Credit Termination Date"), in
an aggregate principal amount not to exceed, at any time
outstanding, the maximum amount available at such time as set
forth below (the "Revolving Credit Commitment"):
<TABLE>
Time Period Maximum Amount
<CAPTION>
<S> <C>
12/31/95 - 9/29/96 $12,000,000
9/30/96 - 12/30/96 $11,142,857
12/31/96 - 3/30/97 $10,285,714
3/31/97 - 6/29/97 $ 9,428,571
6/30/97 - 9/29/97 $ 8,571,428
9/30/97 - 12/30/97 $ 7,714,285
12/31/97 - 3/30/98 $ 6,857,142
3/31/98 - 6/29/98 $ 5,999,999
6/30/98 - 9/29/98 $ 5,142,856
9/30/98 - 12/30/98 $ 4,285,713
12/31/98 - 3/30/99 $ 3,428,570
3/31/99 - 6/29/99 $ 2,571,427
6/30/99 - 9/30/99 $ 1,714,284
9/30/99 - 12/30/99 $ 857,141
12/31/99 and thereafter - 0 -
</TABLE>
3. Modification of Line of Credit Commitment.
The Line of Credit Termination Date is hereby extended
to June 30, 1997, and the reference to "June 30, 1996" currently
contained in Section 2.02 (a) of the Loan Agreement is hereby
amended to refer to "June 30, 1997."
4. Modification of Financial Covenant.
Section 5.09 of the Loan Agreement is hereby amended so
as to read in full as follows:
"Section 5.09. Indebtedness to Capital Base Ratio. As
at the end of each quarter of each Fiscal Year, maintain an
Indebtedness to Capital Base Ratio of not more than (a) 3.00 to 1
from September 30, 1995 through June 30, 1996, (b) 2.75 to 1 from
July 1, 1996 through September 30, 1996, (c) 2.50 to 1 from
October 1, 1996 through December 31 1996, (d) 2.00 to 1 from
January 1, 1997 through June 30, 1997, and (e) 1.50 to 1 from and
after July 1, 1997."
5. Clarification of Prior Waiver.
The waiver contained in paragraph 1 of the First
Amendment, although permanent with respect to compliance with
Section 5.09A of the Loan Agreement as of December 31, 1995,
shall only apply with respect to compliance as of such date, and
shall not constitute a waiver with respect to compliance as of
any other date.
6. No Novation; Confirmation and Reaffirmation.
(a) Each of the Borrowers hereby reaffirms all of its
representations and warranties in the Loan Agreement (as amended
hereby) and the Security Documents on and as of the date hereof,
as if expressly made on and as of the date hereof.
(b) Each of the Borrowers hereby confirms the ongoing
validity of all of the Obligations outstanding on the date hereof
(including but not limited to Obligations under the Notes), and
further acknowledges, confirms and agrees that none of the
amendments effected by this Agreement constitutes a novation of
any of the Obligations outstanding on the date hereof.
(c) Each of the Borrowers hereby reaffirms the validity
of all of the liens and security interests heretofore granted to
the Agent as collateral security for the Obligations, and
acknowledges that all of such liens and security interest, and
all collateral heretofore pledged as security for the
Obligations, continue to be and remain collateral for the
Obligations from and after the effectiveness of this Agreement.
7. Ongoing Force and Effect.
Except as and to the extent expressly provided in this
Agreement, all covenants, terms and conditions of the Loan
Agreement shall remain unchanged and in full force and effect.
All referenced to the Loan Agreement contained in the Notes and
the Security Documents shall hereafter mean and refer to the Loan
Agreement as amended by this Agreement.
8. Miscellaneous.
(a) The Borrowers will jointly and severally reimburse
the Lenders and the Agent upon demand for all out-of-pocket
costs, charges and expenses of the Lenders and the Agent
(including, without limitation, the reasonable fees and
disbursements of counsel to the Lenders and the Agent) in
connection with the preparation, execution and delivery of this
Agreement, any and all further agreements and instruments in
connection herewith, and any amendments, modifications, consents,
waivers or enforcement action in connection herewith.
(b) This Agreement shall be governed by and construed
in accordance with the laws of the State of New Hampshire
(without giving effect to principles of conflicts of laws).
(c) Neither this Agreement nor any provision hereof may
be waived, amended or modified except by means of a written
agreement signed by the party to be charged therewith, and then
only in the specific instance and for the specific purposes
stated therein.
(d) This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective
successors and assigns, except that none of the Borrowers shall
have any right to assign any of its rights or obligations
hereunder or any interest herein without the prior written
consent of the Lenders.
(e) Each of the Borrowers hereby consents to the
jurisdiction of all courts (state and federal) sitting in the
State of New Hampshire, and of all courts from which appeal may
be taken from any of such courts, for the purpose of any suit,
action or other proceeding arising out of any of its obligations
hereunder or with respect to the transactions contemplated
hereby. Each of the Borrowers hereby expressly waives any and
all objections which it may have as to venue in any of such
courts, and also hereby knowingly WAIVES TRIAL BY JURY in any
such suit, action or other proceeding.
(f) The paragraph headings in this Agreement are
included for convenience of reference only, and shall not affect
the construction or interpretation of any of the provisions
hereof.
(g) This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all
of which shall together constitute one and the same instrument.
(h) The parties acknowledge and agree that each of them
and its counsel have reviewed and negotiated the terms and
provisions of this Agreement, and have contributed to its final
form; accordingly, any rules of construction to the effect of
construing ambiguities against the drafting party shall not be
employed in the interpretation of this Agreement, which shall be
construed fairly as to all parties hereto and not in favor of or
against any particular party who might generally have been
responsible for the preparation hereof.
(i) This Agreement is intended for the sole and
exclusive benefit of the parties hereto and their respective
successors and permitted assigns, and no other person or entity
shall have any right to rely on this Agreement or to derive any
benefit herefrom absent the express written consent of the party
to be charged with such reliance or benefit.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers as of
the date first set forth above.
FLEET BANK-NH
By:_____________________________________
MELLON BANK, N.A.
By:_____________________________________
IGI, INC.
By:_____________________________________
IGEN, INC.
By:_____________________________________
IMMUNOGENETICS, INC.
By:_____________________________________
BLOOD CELLS, INC.
By:_____________________________________
STATE OF NEW HAMPSHIRE )
) ss:
COUNTY OF _____________)
On the _____ day of June, 1996, personally appeared before
me ______________________________, of Fleet Bank-NH, who
acknowledged that he is the SVP of Fleet Bank-NH, and that said
instrument was signed by him on behalf of said corporation by due
authority.
________________________________________
Notary Public
My Commission Expires:
_____________________
<PAGE>
EXHIBIT 10.2
August 13, 1996
IGI, Inc. and Subsidiaries
Wheat Road and Lincoln Avenue
Buena, New Jersey 08310
Re: Third Amendment to Second Amended
and Restated Loan Agreement
Dear Sirs:
Reference is made to the Second Amended and Restated Loan
Agreement, dated as of December 13, 1995, by and among Fleet
Bank-NH, Mellon Bank, N.A., and IGI, Inc. and certain of its
subsidiaries (as heretofore amended, the "Loan Agreement"). All
capitalized terms used herein without definition have the
respective meanings ascribed to them in the Loan Agreement.
This will confirm our agreement to grant a one-time covenant
waiver under the Loan Agreement, and to amend the Loan Agreement,
as follows:
1. Certain Waiver. By their execution and delivery hereof,
the Lenders hereby irrevocably waive compliance as of June 30,
1996 with the minimum Capital Base covenant pursuant to Section
5.08 of the Loan Agreement. Such waiver shall only be applicable
in this specific instance and for the specific date, and shall
not be deemed a waiver (or an agreement to grant a waiver) with
respect to any other covenant or for any other time period.
2. Certain Amendment. Section 5.08 of the Loan Agreement
is hereby amended so as to read in full as follows:
"Section 5.08. Net Income. In each quarter of each Fiscal
Year as set forth below, achieve Net Income of not less than the
minimum amount set forth below for such fiscal quarter.
<TABLE>
Quarter Ending Minimum Net Income
<CAPTION>
<S> <C>
September 30, 1996 $250,000
December 31, 1996 $300,000
March 31, 1997 $500,000
June 30, 1997 $500,000
September 30, 1997 $500,000
December 31, 1997 $500,000
March 31, 1998 $625,000
and each quarter thereafter"
</TABLE>
Except as expressly set forth herein, all of the terms and
conditions of the Loan Agreement shall remain unmodified and in
full force and effect.
Kindly confirm the Borrowers' agreement to the foregoing by
countersigning a counterpart copy of this letter in the spaces
provided below.
Very truly yours,
FLEET BANK-NH
By:_____________________________________
MELLON BANK, N.A.
By:_____________________________________
Acknowledged, Confirmed
and Agreed to:
IGI, INC.
By:______________________________________
IGEN, INC.
By:______________________________________
IMMUNOGENETICS, INC.
By:______________________________________
BLOOD CELLS, INC.
By:______________________________________
<TABLE>
EXHIBIT 11
IGI, INC. AND SUBSIDIARIES
COMPUTATION OF NET INCOME PER COMMON SHARE
(Unaudited)
(thousands, except per share information)
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Income from continuing
operations $ 117 $ 244 $ 478 $ 1,542
Loss from discontinued
operations - (1,422) - (3,185)
--------- -------- --------- ---------
Net income (loss) for
primary earnings per
share $ 117 $ (1,178) $ 478 $ (1,643)
========= ========== ========= =========
Weighed average
shares outstanding 9,353,602 9,193,643 9,307,127 9,155,431
Common stock
equivalents (net of
common stock deemed
reacquired) based
on average market
price 53,267 578,074 306,059 643,079
--------- --------- --------- ---------
Total equivalent
shares for primary
computation 9,406,869 9,771,717 9,613,186 9,798,510
========= ========= ========= =========
Per share amounts:
Primary:
Income from
continuing
operations $ .01 $ .03 $ .05 $ .16
========= ========= ========= =========
Loss from
discontinued
operations $ - $ (.15) $ - $ (.33)
========= ========== ========= =========
Net income (loss) $ .01 $ (.12) $ .05 $ (.17)
========= ========== ========= =========
Fully diluted earnings per share have been omitted as they
approximate primary earnings per share.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 135
<SECURITIES> 0
<RECEIVABLES> 8,291
<ALLOWANCES> 306
<INVENTORY> 9,374
<CURRENT-ASSETS> 19,091
<PP&E> 19,143
<DEPRECIATION> 8,894
<TOTAL-ASSETS> 33,518
<CURRENT-LIABILITIES> 16,047
<BONDS> 0
<COMMON> 95
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 33,518
<SALES> 25,929
<TOTAL-REVENUES> 25,929
<CGS> 11,694
<TOTAL-COSTS> 11,862
<OTHER-EXPENSES> 155
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,494
<INCOME-PRETAX> 724
<INCOME-TAX> 264
<INCOME-CONTINUING> 478
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 478
<EPS-PRIMARY> .05
<EPS-DILUTED> .05
</TABLE>
