UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): September 15, 2000
IGI, INC
(Exact name of registrant as specified in its charter)
DELAWARE 1-08568 01-0355758
(State or other jurisdiction of (Commission File Number) (IRS Employer
incorporation or organization) Identification
Number)
WHEAT ROAD AND LINCOLN AVENUE
BUENA, NEW JERSEY 08310
(Address of principal executive offices) (Zip Code)
(856) 697-1441
(registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes [X] No [ ]
CAUTIONARY STATEMENT
This Report contains "forward-looking" statements that are based upon
current expectations, estimates, forecasts and projections and beliefs and
assumptions made by management of the Company. In addition, other written
or oral statements that constitute forward-looking statements may be made
by or on behalf of the Company. Words such as "expects," "anticipates,"
"intends," "plans," "believes," "seeks," "estimates," variations of such
words and similar expressions are intended to identify such forward-looking
statements. These statements are not guarantees of future performance, and
involve certain risks, uncertainties and assumptions which are difficult to
predict. Therefore, actual outcomes and results may differ materially from
what is expressed or forecasted in such forward-looking statements.
Item 2. Acquisition or Disposition of Assets
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The Vineland Sale
Overview
On September 15, 2000, the IGI, Inc. (the "Company") consummated the
sale (the "Vineland Sale") of the assets more particularly described below
(the "Poultry Assets") associated with its Poultry Vaccine Business (the
"Poultry Business") to Lohmann Animal Health International, a Georgia
general partnership (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.
Buyer; No Material Relationship Between the Buyer and the Company
The Buyer, which was formerly known as "Vineland International," is a
general partnership, the general partners of which are Avian Health GmbH, a
German limited liability company with principal offices in Visbek-
Recterfeld, Germany, and Vineland Laboratories Inc., a Delaware
corporation, which is a wholly-owned subsidiary of Avian Health GmbH.
Avian Health GmbH is an affiliate of Lohmann & Co. AG, a German company
with principal offices in Cuxhaven, Germany. Avian Health GmbH and the
other companies that are part of the Lohmann Group are generally engaged in
the production of avian vaccines and in other avian and animal businesses.
Except pursuant to the Vineland Agreement and all agreements and
instruments contemplated by the Vineland Agreement, there is no material
relationship between the Buyer and the Company or any of the Company's
affiliates, any officer or director of the Company or any associate of any
of the Company's directors or officers.
Purchase Price; Escrow Fund
In exchange for receipt of the Poultry Assets, the Buyer assumed
liabilities of the Poultry Business in the aggregate 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
any downward adjustments to the purchase price under the Vineland Agreement
as a result of a 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 indemnification
obligations of the Company, as described below.
The purchase price under the Vineland Agreement is subject to
adjustment for changes in "net working capital" with respect to the Poultry
Business occurring between March 31, 2000 and the September 15, 2000, the
Closing date. "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 the Buyer. 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 as
of 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 any amount payable from the
Escrow Fund as a result of the purchase price adjustment has been paid. In
the 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:
<TABLE>
<CAPTION>
<S> <C>
Repayment of Outstanding Debt $11,700,000
Payment of Certain Closing Costs 300,000
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TOTAL: $12,000,000.
</TABLE>
Item 5. Other Events.
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Appointment of Earl R. Lewis as Director
On September 12, 2000, the Company's Board of Directors elected Earl
R. Lewis to fill the vacancy on the Board as a result of the resignation
of Paul D. Paganucci. Mr. Lewis currently is the President and Chief
Executive Officer of Thermo Instrument Systems, Inc.
Appointment of Robert E. McDaniel as Interim Chief Executive Officer
Also, on September 12, 2000, the Company's Board of Directors
appointed Robert E. McDaniel as the Company's interim Chief Executive
Officer. Mr. McDaniel joined the Company in 1998 as Vice President and
General Counsel and was promoted to the position of Executive Vice
President in 1999. Prior to joining the Company, Mr. McDaniel was General
Counsel of Presstek, Inc. (NASDAQ: PRST - news). He had previously been in
private practice as an office and an officer and shareholder at the law
firm of Devine, Millimet & Branch, P.A., where Mr. McDaniel represented
public companies, institutions and individuals. Before going into private
law practice, Mr. McDaniel served as an attorney at the U.S. Department of
Justice in the United States Attorney's Office for the District of
Columbia.
Appointment of John Ambrose as President and Chief Operating Officer
On September 5, 2000, the Company announced that it appointed John
Ambrose as President and Chief Operating Officer of the Company. Mr.
Ambrose is a 35-year veteran of the pharmaceutical and healthcare
industries who began his career with Eli Lily and has held positions at
Upjohn, Medserv and Fresenius Medical Care. Mr. Ambrose's most recent
position was Vice President of Sales and Marketing at Digitrace Care
Services of Boston, Massachusetts. Mr. Ambrose succeeds Paul Woitach who
resigned.
Appointment of Domenic N. Golato as Chief Financial Officer
On July 13, 2000, the Company announced that it appointed Domenic N.
Golato as Senior Vice President and Chief Financial Officer of the Company.
Mr. Golato was formerly the Vice President and Chief Financial Officer of
IVC, Inc., a publicly traded manufacturer of vitamins and nutritional
products. Prior to that he was the Vice President and Chief Financial
Officer of RF Power Products, Inc., a publicly traded manufacturer in the
semi-conductor and flat panel industries. Mr. Golato succeeds Manfred
Hanuschek, who resigned for personal and family reasons.
Effective September 15, 2000, Mr. Golato also assumed the positions
of Treasurer and Chief Accounting Officer. Mr. Golato succeeds Charles
Carroll in these positions. Mr. Carroll resigned for personal and family
reasons.
Appointment of James Wehrmeyer and Rajiv Mathur as Division
Presidents
In addition, on September 5, 2000, the Company announced that it had
shifted the responsibilities of two Senior Vice Presidents, promoting James
Wehrmeyer to the position of President, IGI Petcare division and Rajiv
Mathur to the position of President, IGI Consumer Products and Cosmetics
division.
Item 7. Financial Statements and Exhibits.
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(c) Exhibits
<TABLE>
<CAPTION>
Exhibit Number Description
-------------- -----------
<S> <C>
10.1 Asset Purchase Agreement dated as of June 19,
2000 by and between the Buyer and the Company
[Incorporated by reference to Annex A to the
Company's Definitive Proxy Statement on Schedule
14A effective September 1, 2000].
</TABLE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
IGI, INC.
September 28, 2000 By: /s/ Robert E. McDaniel
-----------------------
Robert E. McDaniel
Chief Executive Officer
