-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Nn/d9xKuQu1RenplB7Nw0J1uki4BXGtywcfz/slN7W3OpUQZQBqbQ0eHtOGiKEF0 jEuPea7BJp9P+/PkG72qAA== 0000910647-03-000374.txt : 20031112 0000910647-03-000374.hdr.sgml : 20031111 20031112075902 ACCESSION NUMBER: 0000910647-03-000374 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 20030930 FILED AS OF DATE: 20031112 FILER: COMPANY DATA: COMPANY CONFORMED NAME: IGI INC CENTRAL INDEX KEY: 0000352998 STANDARD INDUSTRIAL CLASSIFICATION: BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836] IRS NUMBER: 010355758 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08568 FILM NUMBER: 03990525 BUSINESS ADDRESS: STREET 1: WHEAT RD AND LINCOCN AVE STREET 2: P O BOX 687 CITY: BUENA STATE: NJ ZIP: 08310 BUSINESS PHONE: 6096971441 MAIL ADDRESS: STREET 1: WHEAT ROAD AND LINCOCN AVE STREET 2: P O BOX 687 CITY: BUENA STATE: NJ ZIP: 08310 FORMER COMPANY: FORMER CONFORMED NAME: IMMUNOGENETICS INC DATE OF NAME CHANGE: 19870814 10-Q 1 igi-q3.txt BODY OF FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended Commission File No. ------------------ ------------------- September 30, 2003 001-08568 IGI, Inc. (Exact name of registrant as specified in its charter) Delaware 01-0355758 ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 105 Lincoln Avenue, Buena, NJ 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 ----- ----- Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes No X ----- ----- The number of shares outstanding of the issuer's class of common stock, as of the latest practicable date: Common Shares Outstanding at October 28, 2003 is 11,355,965 ITEM 1. Financial Statements PART I FINANCIAL INFORMATION IGI, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except share and per share information) (Unaudited)
Three months ended Nine months ended September 30, September 30, ------------------------ ------------------------ 2003 2002 2003 2002 ---- ---- ---- ---- Revenues: Sales, net $ 748 $ 861 $ 2,271 $ 2,604 Licensing and royalty income 202 285 573 669 ---------- ---------- ---------- ---------- Total revenues 950 1,146 2,844 3,273 Cost and expenses: Cost of sales 326 342 1,011 1,096 Selling, general and administrative expenses 589 567 1,941 1,895 Product development and research expenses 175 152 478 419 ---------- ---------- ---------- ---------- Operating income (loss) (140) 85 (586) (137) Interest income (expense), net - 9 8 (294) Other income, net - - - 58 Loss on early extinguishment of debt - - - (2,654) ---------- ---------- ---------- ---------- Income (loss) from continuing operations before provision for income taxes (140) 94 (578) (3,027) Provision for income taxes 1 935 3 941 ---------- ---------- ---------- ---------- Loss from continuing operations (141) (841) (581) (3,968) ---------- ---------- ---------- ---------- Discontinued operations: Loss from operations of discontinued business - - - (401) Gain (loss) on sale of discontinued business (15) (36) 154 12,432 ---------- ---------- ---------- ---------- Net income (loss) (156) (877) (427) 8,063 Mark to market for detachable stock warrants - - - (133) ---------- ---------- ---------- ---------- Net income (loss) attributable to common stock $ (156) $ (877) $ (427) $ 7,930 ========== ========== ========== ========== Basic and Diluted Earnings (Loss) per Common Share Continuing operations $ (.01) $ (.07) $ (.05) $ (.36) Discontinued operations - - .01 1.05 ---------- ---------- ---------- ---------- Net income (loss) attributable to common stock $ (.01) $ (.07) $ (.04) $ .69 ========== ========== ========== ========== Weighted Average of Common Stock and Common Stock Equivalents Outstanding Basic and diluted 11,355,965 11,766,288 11,379,905 11,448,290
The accompanying notes are an integral part of the consolidated financial statements. 2 IGI, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share information)
September 30, 2003 (unaudited) December 31, 2002 ------------------ ----------------- ASSETS Current assets: Cash and cash equivalents $ 632 $ 1,999 Marketable securities 803 - Accounts receivable, less allowance for doubtful accounts of $21 and $35 in 2003 and 2002, respectively 446 460 Licensing and royalty income receivable 150 166 Inventories 202 209 Prepaid expenses and other current assets 145 146 -------- -------- Total current assets 2,378 2,980 -------- -------- Property, plant and equipment, net 2,763 2,862 Other assets 75 87 -------- -------- Total assets $ 5,216 $ 5,929 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 18 $ 18 Accounts payable 149 115 Accrued payroll 95 71 Other accrued expenses 330 551 Income taxes payable 11 16 -------- -------- Total current liabilities 603 771 Deferred revenue 384 485 Long term debt, net of current portion 195 164 -------- -------- Total liabilities 1,182 1,420 -------- -------- Stockholders' equity: Common stock $.01 par value, 50,000,000 shares authorized; 13,321,705 and 13,262,657 shares issued in 2003 and 2002, respectively 133 133 Additional paid-in capital 23,674 23,644 Accumulated deficit (18,380) (17,953) Less treasury stock at cost, 1,965,740 and 1,878,640 shares in 2003 and 2002, respectively (1,395) (1,315) Accumulated other comprehensive income 2 - -------- -------- Total stockholders' equity 4,034 4,509 -------- -------- Total liabilities and stockholders' equity $ 5,216 $ 5,929 ======== ========
The accompanying notes are an integral part of the consolidated financial statements. 3 IGI, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (Unaudited)
Nine months ended September 30, ------------------------------- 2003 2002 ---- ---- Cash flows from operating activities: Net income (loss) $ (427) $ 8,063 Reconciliation of net income (loss) to net cash used in operating activities: Gain on sale of discontinued operations (154) (12,432) Gain on sale of marketable securities - (58) Write down of EVSCO facility to net realizable value - 632 Depreciation and amortization 196 235 Amortization of deferred financing costs and debt discount - 275 Extraordinary loss on early extinguishment of debt - 2,654 Provision for accounts and notes receivable and inventories 17 21 Recognition of deferred revenue (101) (101) Interest expense related to subordinated note agreements - 41 Directors' stock issuance 26 41 Changes in operating assets and liabilities: Accounts receivable 27 (203) Inventories (23) (181) Receivables due under licensing and royalty agreements 16 60 Prepaid expenses and other assets 1 86 Accounts payable and accrued expenses (163) (599) Income taxes payable (5) 926 Change in net assets of discontinued operations - (896) ------- -------- Net cash used in operating activities (590) (1,436) ------- -------- Cash flows from investing activities: Capital expenditures (86) (54) Capital expenditures for discontinued operations - (8) Purchase of marketable securities (801) - Proceeds from sale of marketable securities - 58 Proceeds from sale of property, plant and equipment - 550 Increase in other assets 1 (32) Proceeds from sale of discontinued operations 154 16,427 ------- -------- Net cash provided by (used in) investing activities (732) 16,941 ------- -------- Cash flows from financing activities: Borrowings under revolving credit agreement - 5,958 Repayment of revolving credit agreement - (8,284) Repayment of debt - (9,516) Borrowings from EDA loan 46 197 Repayment of EDA loan (15) (11) Proceeds from exercise of common stock options and purchase of common stock 4 36 Treasury shares purchased (80) (1,315) ------- -------- Net cash used in financing activities (45) (12,935) ------- -------- Net increase (decrease) in cash and cash equivalents (1,367) 2,570 Cash and cash equivalents at beginning of period 1,999 10 ------- -------- Cash and cash equivalents at end of period $ 632 $ 2,580 ======= ========
The accompanying notes are an integral part of the consolidated financial statements. 4 IGI, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 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 ("SEC"), and reflect all adjustments which, in the opinion of management, are necessary for a fair presentation 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 have been condensed or omitted pursuant to the rules and regulations of the SEC, although the Company believes that the disclosures contained herein are adequate to make the information presented not misleading. These consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2002 (the "2002 10-K Annual Report"). 2. Discontinued Operations On May 31, 2002, the shareholders of the Company approved, and the Company consummated, the sale of the assets and transfer of the liabilities of the Companion Pet Products division, which marketed companion pet care related products. The Companion Pet Products division, which is presented as a discontinued operation, incurred a loss of $36,000 from the sale of the Companion Pet Products division for the three months ended September 30, 2002 related to post-closing adjustments. For the three months ended September 30, 2003, the Company incurred a loss of $15,000 related to regulatory expenses at the Companion Pet Products site. For the nine months ended September 30, 2002, the Company incurred a loss from discontinued operations of $401,000 and a $12,432,000 gain on the sale of the Companion Pet Products division. For the nine months ended September 30, 2003, the Company had a net gain of $154,000, which represented an insurance settlement, net of legal costs, of $169,000 for damages incurred by the Company as a result of the heating oil leak at the Companion Pet Products manufacturing site (see Note 7), reduced by the $15,000 of regulatory expenses. 3. Marketable Securities Marketable securities at September 30, 2003 consists of an investment in a short term bond mutual fund. The Company currently classifies all marketable securities as available-for-sale. Securities classified as available-for-sale are required to be reported at fair value with unrealized gains and losses, net of taxes, excluded from earnings and shown separately as a component of accumulated other comprehensive income within stockholders' equity. Realized gains and losses on the sale of securities available-for-sale are determined using the specific-identification method. The amortized cost, gross unrealized gains and losses and fair value of the available-for-sale marketable securities as of September 30, 2003 are as follows (amounts in thousands):
Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value --------- ---------- ---------- ----- Mutual Funds 2003 $800 $3 $ - $803
There were $0 and $58,000 of sales of available-for-sale marketable securities during the nine months ended September 30, 2003 and 2002, respectively. 4. Debt In the prior year, the Company received a $246,000 loan commitment from NJEDA to provide partial funding for the costs of investigation and remediation of the environmental contamination discovered at the Companion Pet Products facility in March 2001. The loan requires monthly principal payments over a term of ten years at a rate of interest of 5%. The Company has received funding of $242,000 through September 30, 2003. The current balance of the loan at September 30, 2003 is $213,000. 5 IGI, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued 5. Inventories Inventories are valued at the lower of cost, using the first-in, first-out ("FIFO") method, or market. Inventories at September 30, 2003 and December 31, 2002 consist of:
September 30, 2003 December 31, 2002 ------------------ ----------------- (amounts in thousands) Finished goods $ 32 $ 52 Raw materials 170 157 ---- ---- Total $202 $209 ==== ====
6. Stock-Based Compensation Compensation costs attributable to stock option and similar plans are recognized based on any difference between the quoted market price of the stock on the date of grant over the amount the employees and directors are required to pay to acquire the stock (the intrinsic value method). No stock-based employee or director compensation cost is reflected in net income (loss) for options that have been granted, as all options granted under the plans had an exercise price equal to the market value of the underlying common stock on the date of grant. Since the Company uses the intrinsic value method, it makes pro forma disclosures of net income (loss) and net income (loss) per share as if the fair-value based method of accounting had been applied. If compensation cost for all grants under the Company's stock option plans had been determined based on the fair value at the grant date consistent with the provisions of Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based Compensation," the Company's net income (loss) attributable to common stock and net income (loss) per share would have changed to the pro forma amounts indicated below (amounts in thousands):
Three months ended September 30, Nine months ended September 30, -------------------------------- ------------------------------- 2003 2002 2003 2002 ---- ---- ---- ---- Net income (loss) attributable to common stock - as reported $(156) $(877) $(427) $7,930 Deduct: Total stock-based employee and directors compensation expense determined under fair value based method 5 14 20 430 ----- ----- ----- ------ Net income (loss) attributable to common stock - pro forma $(161) $(891) $(447) $7,500 ===== ===== ===== ====== Net income (loss) per share - as reported Basic and diluted $(.01) $(.07) $(.04) $ .69 Net income (loss) per share - pro forma Basic and diluted $(.01) $(.08) $(.04) $ .66
7. Regulatory Proceedings and Legal Proceedings On April 6, 2000, officials of the New Jersey Department of Environmental Protection inspected the Company's storage site in Buena, New Jersey and issued Notices of Violation (NOV's) relating to the storage of waste materials in a number of trailers at the site. The Company established a disposal and cleanup schedule and completed the removal of materials from the site. The Company continues to discuss with the authorities a resolution of any potential assessment under the NOV's and has accrued the estimated penalties related to such NOV's. On March 2, 2001, the Company discovered the presence of environmental contamination resulting from a heating oil leak at its Companion Pet Products site. The Company immediately notified the New Jersey Department of Environmental Protection and the local authorities, and hired a certified environmental contractor to assess the exposure and required clean up. Based on the initial information from the contractor, the Company originally estimated the cost for the cleanup and remediation to be $310,000. In September 2001, the contractor updated the estimated total cost for the cleanup and remediation to be $550,000. A further update was performed in December 2002, and the final estimated cost was increased to $620,000, of which $112,000 remains accrued as of September 30, 2003. The remediation has been completed as of September 30, 2003. Subsequently, there will be periodic testing and removal performed, which is projected to span over the next five years. The estimated cost of such future monitoring is included in the accrual. 6 IGI, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued 8. Recent Pronouncements The Company adopted SFAS No. 145, "Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13 and Technical Corrections", effective January 1, 2003. As a result of adoption, the Company's loss from early extinguishment of debt realized in the second quarter of 2002 has been presented within continuing operations, rather than presented as an extraordinary item. The Company adopted SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities" effective January 1, 2003. SFAS No. 146 addresses the financial accounting and reporting of expenses related to restructurings initiated after 2002, and applies to costs associated with an exit activity (including a restructuring) or with a disposal of long-lived assets. Those activities can include eliminating or reducing product lines, terminating employees and contracts, and relocating plant facilities or personnel. Under SFAS No. 146, a company will record a liability for a cost associated with an exit or disposal activity when the liability is incurred and can be measured at fair value. The provisions of SFAS No. 146 are effective prospectively for exit or disposal activities initiated after December 31, 2002, and therefore did not have an impact on the Company's consolidated financial statements. 7 IGI, INC. AND SUBSIDIARIES ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis may contain forward-looking statements. Such statements are subject to certain risks and uncertainties, including without limitation those discussed below or in the Company's 2002 10-K Annual Report, that could cause actual results to differ materially from the Company's expectations. See "Factors Which May Affect Future Results" below and in the 2002 10-K Annual Report. Readers are cautioned not to place undue reliance on any forward-looking statements, as they reflect management's analysis as of the date hereof. The Company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Results of Operations Three months ended September 30, 2003 compared to September 30, 2002 The Company had a net loss attributable to common stock of $156,000, or $(.01) per share, for the quarter ended September 30, 2003 compared to net loss attributable to common stock of $877,000, or $(.07) per share, for the quarter ended September 30, 2002. Total revenues for the quarter ended September 30, 2003 were $950,000, compared to $1,146,000 for the quarter ended September 30, 2002. The decrease in revenues was primarily due to lower product sales to Estee Lauder and Vetoquinol. As a percentage of product sales, cost of sales increased from 40% in the quarter ended September 30, 2002 to 44% in the quarter ended September 30, 2003. The resulting decrease in gross profit from product sales from 60% in the quarter ended September 30, 2002 to 56% in the quarter ended September 30, 2003 is due to the change in mix to lower gross profit products and underabsorbed fixed costs. Selling, general and administrative expenses increased $22,000, or 4%, from $567,000 in the quarter ended September 30, 2002. As a percentage of revenues, these expenses were 49% of revenues in the third quarter of 2002 compared to 62% in the third quarter of 2003. The increase is primarily due to higher legal expenses offset by lower salary and travel and entertainment expenses. Product development and research expenses increased $23,000, or 15%, compared to the quarter ended September 30, 2002. The increase is a result of additional projects that are being worked on for existing and potential new customers. Interest income, net decreased $9,000 from interest income, net of $9,000 in the quarter ended September 30, 2002. The decrease is a result of lower cash reserves and interest rates. Discontinued operations in the quarter ended September 30, 2002 consisted of a loss of $36,000 related to post-closing adjustments from the sale of the Companion Pet Products division, which occurred on May 31, 2002. The $15,000 loss on the sale of discontinued business in the quarter ended September 30, 2003 is a result of regulatory expenses at the Company's Companion Pet Products site. Nine months ended September 30, 2003 compared to September 30, 2002 The Company had a net loss attributable to common stock of $427,000, or $(.04) per share, for the nine months ended September 30, 2003 compared to net income attributable to common stock of $7,930,000, or $.69 per share, for the nine months ended September 30, 2002. Total revenues for the nine months ended September 30, 2003 were $2,844,000, which represents a decrease of $429,000, or 13%, from revenues of $3,273,000 for the nine months ended September 30, 2002. The decrease in revenues was primarily due to lower product sales to Estee Lauder and two other customers offset by increased product sales to Vetoquinol, Genesis and new customers. As a percentage of product sales, cost of sales increased from 42% for the nine months ended September 30, 2002 to 45% for the nine months ended September 30, 2003. The resulting decrease in gross profit from product sales from 58% for the nine months ended September 30, 2002 to 55% for the nine months ended September 30, 2003 is the result of the change in mix to lower gross profit products and underabsorbed fixed costs. 8 IGI, INC. AND SUBSIDIARIES ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) Selling, general and administrative expenses increased $46,000, or 2%, from $1,895,000 for the nine months ended September 30, 2002. As a percent of revenues, these expenses were 58% of revenues for the first nine months of 2002 compared to 68% for the first nine months of 2003. The increase is primarily due to a $202,000 severance expense accrued in the second quarter of 2003 for the cost of the benefits to be provided by the Company under a severance package to one of the Company's executives, offset by a decline in salary expense due to staff reductions after the sale of the Companion Pet Products division. Product development and research expenses increased $59,000, or 14%, compared to the nine months ended September 30, 2002. The increase is a result of additional projects that are being worked on for existing and potential new customers. Interest income (expense), net went from interest expense, net of $294,000 for the nine months ended September 30, 2002 to interest income, net of $8,000 for the nine months ended September 30, 2003. The change is due to lower interest rates and the pay down of the Company's debt on May 31, 2002 using the proceeds from the sale of the Companion Pet Products division. Discontinued operations for the nine months ended September 30, 2002 consisted of a $401,000 loss from discontinued operations offset by a $12,432,000 gain from the sale of the Companion Pet Products division. The $154,000 of income from discontinued operations for the nine months ended September 30, 2003 consists of a $169,000 insurance settlement, net of legal costs, received for damages incurred by the Company as a result of the heating oil leak at the Company's Companion Pet Products site, offset by $15,000 of regulatory expenses. Liquidity and Capital Resources The Company's operating activities used $590,000 of cash during the nine months ended September 30, 2003 compared to $1,436,000 used in the comparable period in 2002. In addition to the loss from operations, payments for environmental remediation costs were the other major use of cash in 2003. In 2002, cash from the proceeds from the sale of the Companion Pet Products division was utilized to pay down accounts payable and accrued expenses. The Company used $732,000 of cash during the nine months ended September 30, 2003 for investing activities compared to cash of $16,941,000 provided by investing activities for the comparable period in 2002. The majority of the 2003 investing activities were for the purchase of marketable securities, computers, and machinery and equipment, while 2002's activity primarily was cash generated from the sale of the Companion Pet Products division, a former corporate office building and marketable securities. The Company's financing activities utilized $45,000 of cash in the nine months ended September 30, 2003 compared to $12,935,000 used in the comparable period in 2002. The cash utilized in 2003 was primarily for the purchase of Company stock as part of a stock buy-back program which was authorized in December 2002, offset by funding of the EDA loan. In 2002, cash was utilized to payoff the Fleet Capital Bank and American Capital Strategies debt using the proceeds from the sale of the Companion Pet Products division. The Company's principal sources of liquidity are cash flows from operations, cash and cash equivalents and marketable securities. Management believes that existing cash and cash equivalents, marketable securities and cash flows from operations will be sufficient to meet the Company's foreseeable cash needs for at least the next year. However, there may be acquisition and other growth opportunities that require additional external financing. Management may, from time to time, seek to obtain additional funds from the public or private issuances of equity or debt securities. There can be no assurance that such financings will be available or available on terms acceptable to the Company. There have been no material changes to the Company's contractual commitments as reflected in the 2002 10-K Annual Report. 9 IGI, INC. AND SUBSIDIARIES ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) Regulatory Proceeding and Legal Proceedings On April 6, 2000, officials of the New Jersey Department of Environmental Protection inspected the Company's storage site in Buena, New Jersey and issued Notices of Violation (NOV's) relating to the storage of waste materials in a number of trailers at the site. The Company established a disposal and cleanup schedule and completed the removal of materials from the site. The Company continues to discuss with the authorities a resolution of any potential assessment under the NOV's and has accrued the estimated penalties related to such NOV's. On March 2, 2001, the Company discovered the presence of environmental contamination resulting from a heating oil leak at its Companion Pet Products site. The Company immediately notified the New Jersey Department of Environmental Protection and the local authorities, and hired a certified environmental contractor to assess the exposure and required clean up. Based on the initial information from the contractor, the Company originally estimated the cost for the cleanup and remediation to be $310,000. In September 2001, the contractor updated the estimated total cost for the cleanup and remediation to be $550,000. A further update was performed in December 2002, and the final estimated cost was increased to $620,000, of which $112,000 remains accrued as of September 30, 2003. The remediation has been completed as of September 30, 2003. Subsequently, there will be periodic testing and removal performed, which is projected to span over the next five years. The estimated cost of such future monitoring is included in the accrual. Factors Which May Affect Future Results The industry in which the Company competes is subject to intense competitive pressures. The following sets forth some of the risks which the Company faces. Intense Competition in Consumer Products Business - ------------------------------------------------- The Company's Consumer Products business competes with large, well-financed cosmetics and consumer products companies with development and marketing groups that are well established and experienced in the industry and possess far greater financial and other resources than those available to the Company. There is no assurance that the Company's Consumer Products business 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 the Company's customers that use the Company's Novasome(r) lipid vesicles in their products may decide to reduce their purchases from the Company or shift their business to other suppliers. Effect of Rapidly Changing Technologies - --------------------------------------- In the future, the Company expects to sublicense its Novasome(r) technologies to third parties, who would manufacture and market products incorporating the technologies. If the Company's competitors develop superior technologies, the Company's technologies could be less acceptable in the marketplace and therefore the Company's planned technology sublicensing could be materially adversely affected. American Stock Exchange (AMEX) Continuing Listing Standards - ----------------------------------------------------------- On March 28, 2002, the Company was notified by AMEX that it was below certain of the Exchange's standards for continued listing. Specifically, under applicable AMEX listing standards, in order to remain listed the Company was required to reflect income from continuing operations and net income for 2002 and a minimum of $4,000,000 in stockholders' equity by December 31, 2002. On April 25, 2002, the Company submitted a plan of compliance to AMEX. On June 12, 2002, AMEX notified the Company that it had accepted the Company's plan of compliance and had granted the Company an extension of time to regain compliance with the continued listing standards by December 31, 2002. The loss from continuing operations for the year ended December 31, 2002 reflected tax expense resulting from a change in the New Jersey tax law that was retroactive to January 1, 2002. As a result of this tax expense, the Company determined during the third quarter of 2002 that it would have a loss from continuing operations for 2002. The Company notified AMEX of this issue on November 14, 2002 after release of the Company's 2002 third quarter results. In February 2003, the Company contacted AMEX after release of the Company's 2002 year-end results. On April 14, 2003, the Company received formal notification from AMEX that the Company was deemed to be in compliance with all AMEX requirements for continued listing on AMEX. 10 IGI, INC. AND SUBSIDIARIES ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) Critical Accounting Policies There have been no material changes to the Company's critical accounting policies as reflected in the 2002 10-K Annual Report. ITEM 3. Quantitative and Qualitative Disclosures about Market Risk The Company does not utilize financial instruments for trading purposes and holds no derivative financial instruments which could expose the Company to significant market risk. The Company's primary market risk exposure with regard to financial instruments is changes in interest rates. The Company's cash equivalents and marketable securities consist primarily of investments in mutual funds. Management believes, based on the current interest rate environment, that a 100 basis point change in interest rates would have an immaterial impact on interest income. ITEM 4. Controls and Procedures The Company's Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the design and operation of its disclosure controls and procedures as of September 30, 2003, and based on their evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures are effective. The evaluation referred to above did not identify any changes in the Company's internal control over financial reporting that occurred during the quarter ended September 30, 2003 that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting. 11 IGI, INC. AND SUBSIDIARIES PART II OTHER INFORMATION ITEM 1. Legal Proceedings None. ITEM 2. Changes in Securities and Use of Proceeds None. ITEM 3. Defaults Upon Senior Securities None. 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 11.01 Severance Agreement between John Ambrose and IGI, Inc. dated as of August 15, 2003. 11.02 Employment Agreement between Michael F. Holick MD, Ph.D. and IGI, Inc. dated as of September 26, 2003. 11.03 Memorandum of Agreement between Michael F. Holick, MD, Ph.D. and IGI, Inc. dated as of September 26, 2003. 31.1 Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification of the Chief Financial Officer as pursuant to Section 302 the Sarbanes-Oxley Act of 2002. 32.1 Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as enacted under Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as enacted under Section 906 of the Sarbanes-Oxley Act of 2002. (b) Reports on Form 8-K None. 12 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 12, 2003 By: /s/ Frank Gerardi ---------------------- Frank Gerardi Chairman and Chief Executive Officer Date: November 12, 2003 By: /s/ Domenic N. Golato ------------------------------- Domenic N. Golato Senior Vice President and Chief Financial Officer 13 EX-11 3 igi-1101.txt EXHIBIT 11.01 Exhibit 11.01 SEVERANCE AGREEMENT ------------------- THIS AGREEMENT ("Agreement") is made by and between IGI, INC. ("IGI"), a Delaware corporation, with its principal place of business at 105 Lincoln Avenue, Buena, New Jersey 08310, and JOHN F. AMBROSE ("Ambrose") residing at 10 Bradlee Road, Marblehead, Massachusetts 01945. RECITALS WHEREAS, Ambrose was employed by IGI as its President and Chief Operating Officer from September 2000 to May 2001, and as IGI's President and Chief Executive Officer from May 2001 to August 15, 2003; and WHEREAS, the parties hereto mutually agreed to the termination of Ambrose's employment with IGI as of August 15, 2003; and WHEREAS, Ambrose and IGI wish to resolve by this Agreement any and all claims and/or disputes of any kind whatsoever that may exist between them relating to Ambrose's employment with IGI, the termination of Ambrose's employment with IGI and/or any other matter; and WHEREAS, the parties agree that any and all payments and/or other benefits of any kind whatsoever, if any, that Ambrose is or may claim to be entitled to receive from IGI in conjunction with his employment with IGI and/or the termination thereof shall be exclusively and conclusively governed by the terms of this Agreement, and Ambrose agrees that in accordance with the terms hereof he shall be forever prohibited from seeking and/or claiming any additional compensation, benefits, damages, remedies and/or any other payments of any kind whatsoever from IGI, NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which is acknowledged by the parties hereto, IGI and Ambrose agree as follows: 1. Incorporation of Recitals. The Recitals set forth above are hereby incorporated into and made a part of this Agreement. 2. Effective Date. Subject to the terms of Paragraph 15 of this Agreement and Ambrose' rights thereunder, the parties expressly acknowledge and agree that the effective date of this Agreement is August 15, 2003 (the "Effective Date"), irrespective of the date upon which it was formally executed by the parties. 3. Employment Termination Date. The parties expressly acknowledge and agree that Ambrose's employment with IGI is terminated as of August 1 15, 2003. As of August 15, 2003, Ambrose resigns from any and all officerships and directorships he holds with IGI, and thereby waives, relieves, relinquishes, renounces and surrenders as of August 15, 2003, any and all rights, powers, obligations, authorities and/or benefits of any kind whatsoever with respect thereto. Ambrose agrees to fully cooperate with IGI to accomplish such resignations, including without limitation, execution of any and all documents as may be necessary to effectuate such resignations. Ambrose further agrees, warrants and represents that as of August 15, 2003, and forever thereafter, he shall not represent and/or hold himself out as an employee, officer and/or director of IGI. 4. Payments to Ambrose. -------------------- A. On the Effective Date, IGI shall pay Ambrose a lump sum gross amount of $173,250.00 (less any and all applicable taxes, withholdings, contributions and other deductions), which amount represents 90% of Ambrose's gross annual salary in effect immediately prior to the termination of his employment with IGI. B. The parties expressly acknowledge and agree that any and all payments to be made by IGI to Ambrose under Paragraphs 4(A) shall be paid, treated and reported by IGI and Ambrose as W-2 income, and that Ambrose shall be solely responsible for the payment of any and all federal, state and/or local income taxes, penalties and/or interest with respect to thereto. 5. Reimbursement of Business Expenses. ----------------------------------- On or before September 30, 2003, Ambrose shall submit to IGI a final Business Expense Report ("Final Expense Report") to request reimbursement for any and all costs, expenses, and/or expenditures he had incurred as of August 15, 2003, in performing his employment with IGI. The Final Expense Report shall be submitted, reviewed, approved/declined and paid in accordance with the IGI's rules and procedures relative to such matters as currently in effect as of August 15, 2003. 6. Continuation of Health/Medical Insurance Coverage For Ambrose and Dependents. For a period of twelve (12) months commencing August 31, 2003 and ending August 31, 2004, IGI shall continue to provide Ambrose and his dependents with health, medical and dental Insurance coverage benefits under the IGI, 2 Inc. Aetna, Inc. Group Health Insurance Plan and/or any other employer (IGI) provided plan or policy, if any. As of August 31, 2004, Ambrose and his dependents shall no longer be entitled to nor be permitted to participate in any and all insurance coverage and/or other benefits provided under the IGI, Inc. Aetna, Inc. Group Health Insurance Plan and/or any under other employer (IGI) provided plan or policy, if any. Any and all coverage and/or benefits previously afforded to Ambrose and/or his dependents thereunder shall terminate on August 31, 2004, subject to any and all rights by Ambrose and/or his dependents to elect to continue participation therein under COBRA and/or any other applicable laws, and Ambrose and/or his dependents shall be solely responsible for the payment of any and all costs and expenses relating thereto, including, without limitation, premium costs and expenses for continued coverage under COBRA and/or any other applicable law. 7. Termination of 401K Plan Benefits. In accordance with the terms and conditions of the IGI, Inc. 401K Retirement Savings Plan ("401K Plan"), Ambrose's eligibility to participate therein terminated on August 15, 2003, and from that date onward Ambrose shall not be permitted to make any further contributions to the 401K Plan nor is he entitled to any employer matching contributions made by IGI after such date. Any and all account balances in the 401K Plan for the benefit of Ambrose shall be held in such account and/or distributed to Ambrose in accordance with the terms of the 401K Plan and notice to IGI of Ambrose's compliance with any and all requirements contained therein. Ambrose shall be solely responsible for any and all federal, state and/or local taxes, penalties and/or interest that may be assessed in relation to any and all distributions to Ambrose from and under the 401K Plan. Ambrose agrees and acknowledges that he is in possession of a complete and current copy of the 401K Plan and is fully familiar with and has been fully advised as to his rights there under. 8. Termination of Life Insurance Benefits. As of August 31, 2003, Ambrose shall no longer be entitled to nor be permitted to participate in any and all life insurance coverage and/or other benefits provided by IGI under its life insurance plan and/or under any other employer (IGI) provided plan or policy, if any. Any and all coverage and/or benefits previously afforded to Ambrose thereunder shall terminate on August 31, 2003, without any further notice by IGI to Ambrose, unless otherwise required by law. 9. Termination of Unexercised Stock Options. Ambrose hereby agrees as of the Effective Date to release, relinquish and forever discharge any and all rights, title, interest and claims in and to any and all 400,000 stock options granted to him under the IGI, Inc. 1999 Stock Option Plan, the IGI, Inc. 1998 Stock Option Plan and/or otherwise. As such, irrespective of the exercise date stated in and/or on any stock option grant or other document relating thereto, all of Ambrose's 400,000 stock options shall automatically terminate on the Effective 3 Date without further notice and/or action by IGI unless as otherwise required by law. 10. Return of IGI Property. Ambrose represents and warrants that as of the Effective Date, he has returned to IGI any and all equipment, property, manuals, materials and/or any other documents belonging to IGI and/or that were provided to or came into Ambrose's possession as the result of his employment with IGI, including, without limitation, any and all documents that contain trade secrets of IGI and/or proprietary and/or confidential information relating to IGI and/or its business. Ambrose further represents and warrants that he has not copied, duplicated and/or otherwise reproduced any such manuals, materials, documents and/or information. Ambrose expressly agrees that he shall not use for and/or in conjunction with any future business and/or employment purposes and/or disclose to any other individual, corporation, person, partnership (general or limited), limited liability company and/or other business entity, IGI's trade secrets and/or confidential/proprietary information of IGI that Ambrose may have acquired at any time during his employment with IGI, including, without limitation, client lists, price lists, manufacturing processes, manufacturing costs and business plans. 11. Non-Disclosure of Confidential Information. ------------------------------------------- A. For the purposes of and as used in Paragraph 11(B) or otherwise in this Agreement, the term "Confidential Information" shall be defined as and mean as follows: IGI's trade secrets and proprietary information, as well as any and all information of a business and/or technical nature disclosed to, revealed, discovered, learned and/or developed by Ambrose at any time during and/or in the course of his employment with IGI, which information relates in any way whatsoever to the business of IGI, to the business of any customer of IGI, and/or to the business of any other person and/or entity which consults with IGI in any way whatsoever in conjunction with IGI's business, which such information is generally unknown in the industry. Confidential Information shall include, but not limited to, information and knowledge relating to IGI's computer and/or IT systems, programs, software, passwords and/or other specifications relating thereto, Novasome(R) technologies, formulations, manufacturing processes, procedures, packaging, developments, improvements, methods or operation, sales, pricing and profit margins, customers, clients credit and other financial information about IGI and/or IGI's customers and/or relationships between IGI and its customers, clients and other who have dealings with the Company. B. Except as expressly required by law, Ambrose hereby agrees that 4 he will not at any time whatsoever from the Effective Date of this Agreement and forever thereafter, without the express prior written consent of IGI: (1) disclosure directly and/or indirectly any Confidential Information to any person, entity and/or other third-party not a signatory to this Agreement; and/or (2) use directly and/or indirectly any Confidential Information for the benefit of himself and/or any other person, entity and/or other third-party not a signatory to this Agreement. C. Ambrose represents and warrants that as of the Effective Date he has not without the prior written consent of IGI: (1) disclosed directly and/or indirectly any Confidential Information to any person, entity and/or other third-party not a signatory to this Agreement; and/or (2) use directly and/or indirectly any Confidential Information for the benefit of himself and/or any other person, entity and/or other third-party not a signatory to this Agreement. D. Ambrose further acknowledges and agrees that any violation of the terms of this Paragraph 11 shall be deemed a breach of this Agreement entitling IGI to any and all rights and remedies under this Agreement, as well as any and all rights and remedies available at law and/or equity. 12. No Admission of Liability. Ambrose expressly agrees and acknowledges that IGI has voluntarily agreed as a business decision to enter into this Agreement with Ambrose, and that IGI is neither required nor obligated, by law, contract or otherwise, to enter into this Agreement with Ambrose and/or to pay Ambrose any of the amounts and/or benefits provided for herein. IGI disputes any claim by Ambrose that IGI is obligated and/or otherwise liable to him for any monetary amounts, benefits and/or other damages arising from the termination of his employment with IGI and/or with respect to any other matter. Neither the execution of this Agreement nor any of the terms contained herein shall be construed and/or interpreted as an admission of liability by IGI with respect to any claims by Ambrose relating to his employment with IGI and/or the termination of his employment with IGI. Neither this Agreement nor any term hereof shall be admissible in any judicial, administrative and/or arbitration proceeding to which IGI now or hereafter may be a party, except any judicial, administrative and/or arbitration proceeding relating to this Agreement. 13. Ambrose Release. Except as expressly provided in Paragraph 14 of this Agreement, Ambrose, on behalf of himself and his heirs, executors, administrators, and assigns, does hereby remise, release and forever discharge IGI and its affiliates, subsidiaries and/or its past and present agents, attorneys, representatives, officers, directors, employees, successors, administrators, shareholders and assigns, of 5 and from any and all claims, liabilities, complaints, rights, injuries, damages, judgments, torts, causes of action, demands, suits, debts, losses, costs, expenses, fees, penalties, assessments, fines and interest, of any kind whatsoever, whether direct or indirect, absolute, fixed or contingent, liquidated or unliquidated, past or present, known or unknown, that Ambrose had, now has or may have against IGI, its subsidiaries, affiliates and/or its past and present agents, attorneys, representatives, officers, directors, employees, successors, administrators, shareholders and assigns relating to or arising out of Ambrose' employment with and/or termination of employment with IGI and/or any other matter, including, without limitation, any and all rights or claims relating to or arising under (i) federal and/or state common law; (ii) the Rehabilitation Act of 1973; (iii) the Federal Age Discrimination in Employment Act of 1967, as amended; (iv) the American With Disabilities Act; (v) Title VII of the Civil Rights Act of 1964, as amended; (vi) the Family Leave and Medical Act, (vii) the Employment Retirement Income Security Act of 1974, as amended, (viii) any and all federal, state, and/or local laws, statutes, ordinances, regulations and/or executive orders protecting the rights against discrimination upon the basis of age, race, sex, national origin, religion, non-job related disability, sexual preference and other types of discrimination; (ix) New Jersey Conscientious Employee Protection Act; (x) any and all any federal, state, and/or local laws, statutes, ordinances, regulations and/or executive orders protecting employees against sexual harassment and/or hostile work place environment; (xi) the Warn Act and/or any other similar state or federal laws, statutes, ordinances, regulations and/or executive orders requiring, among other things, advance notice to employees of certain workforce reductions; and (xii) any and all legal restrictions of any type whatsoever on IGI's right to terminate its employees, including Ambrose. Ambrose also agrees not to initiate, commence and/or file a lawsuit and/or any other judicial, administrative and/or arbitration proceeding in any jurisdiction whatsoever against IGI, its subsidiaries, affiliates and/or its past and present agents, attorneys, representatives, officers, directors, employees, successors, administrators, shareholders and assigns, with respect to, relating to and/or otherwise seeking to assert any claim released by Ambrose under the terms of this Agreement. 14. Exception to Ambrose Release. Notwithstanding the terms of Paragraph 13 above, the parties acknowledge and agree that by this Agreement Ambrose does not waive, release and/or relinquish (i) any and all rights and claims he may have under the Federal Age Discrimination in Employment Act of 1967, as amended, relating to events that may occur and/or facts that made known to Ambrose after the Effective Date, or (ii) his right to file a charge with or cooperate in 6 an investigation with the Equal Employment Opportunity Commission after the Effective Date. 15. Rights and Remedies. -------------------- A. In the event of a material breach of this Agreement by Ambrose, and in addition to any and all rights, remedies and damages available to IGI hereunder and/or otherwise by law or equity, IGI shall immediately and automatically be forever relieved from that date forward, without any further action by IGI, from any and all obligations to Ambrose under this Agreement. B. Ambrose acknowledges and agrees that his breach of any of the terms and/or covenants contained in Paragraphs 10, 11, and/or 17(A) of this Agreement can cause irreparable damage to IGI for which the remedy at law would not be adequate. Accordingly, in addition to any other remedy available to IGI under this Agreement and/or as otherwise provided by law or equity, IGI shall be entitled to injunctive relief restraining Ambrose from any actual or threatened violation of any of the terms of Paragraphs 10, 11, and/or 17(A) or any other appropriate decree of specific performance (without any bond or other security being required). C. In the event either party is required to incur legal fees and/or costs in seeking enforcement of this Agreement, the prevailing party shall be entitled to recover from the other party any and all such legal fees and/or costs so incurred. 16. Waiting Period and Revocation Rights. Ambrose represents and warrants that he has been advised by IGI to consult with an attorney prior to executing this Agreement. Ambrose further represents and warrants that he understands that he shall have twenty-one (21) days from the date this Agreement has been executed by IGI and delivered to Ambrose to decide whether to sign this Agreement and relinquish the legal claims as provided for herein. Ambrose further represents and warrants that he has been advised by IGI that he shall have a period of seven (7) days following his execution of this Agreement to revoke it so that it has no continuing or past legal effect. Ambrose represents and warrants that he understands that to revoke this Agreement during such seven (7) day period he must provide IGI with written notice revoking the same and deliver such notice to IGI in accordance with the terms hereof prior to the expiration of the seven (7) days revocation period. 7 17. Non-Disparagement. ------------------ A. Ambrose agrees that neither he nor any person or entity on his behalf shall, directly or indirectly, make, orally or in writing, any comments, statements, and/or remarks of any kind whatsoever disparaging to IGI, its business, and/or its affiliates, subsidiaries and/or its past and present agents, attorneys, representatives, officers, directors, employees, administrators, and/or shareholders. Ambrose further acknowledges and agrees that any violation of the terms of this Paragraph 17(A) shall be deemed a material breach of this Agreement, entitling IGI to any and all rights and remedies hereunder, as well as otherwise available at law or equity. B. IGI agrees that neither it nor any person or entity on its behalf shall, directly or indirectly, make, orally or in writing, any comments, statements, and/or remarks of any kind whatsoever disparaging to Ambrose. Unless otherwise mutually agreed in writing by IGI and Ambrose, in the event IGI is contacted by a third-party for a recommendation and/or any other information related to Ambrose' employment with IGI and/or the termination thereof, IGI shall not provide any information and/or make any statements in response thereto other than confirmation of the position held by Ambrose at IGI and the dates of employment. Irrespective of the foregoing, Ambrose acknowledges and aggress that nothing contained herein requires IGI to provide any information, statements and/or recommendations to any inquiring third-party other than that which is expressly set forth in this Paragraph 17(B). 18. New Jersey Law Governs. This Agreement shall be executed, governed, enforced, construed and interpreted in accordance with the laws of the State of New Jersey. The parties hereto consent to the exclusive jurisdiction of the state and federal courts of New Jersey for the judicial resolution of any and all disputes that may arise under this Agreement, including without limitation enforcement of this Agreement and damages relating to a breach thereof. 19. Entire Agreement. This Agreement incorporates the understandings and agreements of the parties hereto, and each party acknowledges that in executing this Agreement they are not relying upon prior written or oral discussions or statements made by either party. This Agreement contains the entire understanding of the parties hereto and there are no representations, warranties, covenants or undertakings other than those expressly set forth herein. Except as expressly provided for in this Agreement, Ambrose acknowledges and agrees that he shall not be entitled to receive from IGI, nor shall IGI be required to pay and/or provide Ambrose, with any benefits, monetary amounts, stock options, health, medical, life and/or disability insurance 8 coverage, auto allowance and/or compensation of any kind whatsoever, by virtue of, under, relating to and/or with respect to Ambrose's employment with IGI and/or the termination of Ambrose's employment with IGI. 20. Modification/Waiver. A modification or waiver of any of the provisions of this Agreement shall be effective only if made in writing and executed by the parties with the same formality as this Agreement. The failure of any party to insist upon strict performance of any of the provisions of this Agreement shall not be construed as a waiver, release and/or discharge of any subsequent default and/or breach of the same or similar nature. 21. Product of Negotiations. This Agreement is the product of negotiations between the parties and shall be construed neutrally, without regard to the identity of the party who drew it. 22. Headings. The parties expressly acknowledge and agree that paragraph headings contained in this Agreement are for convenience purposes only and shall not be considered part of the terms and conditions of the Agreement. 23. Interpretation Provisions. All references in this Agreement to the plural shall also mean the singular and to the singular shall also mean the plural unless the context otherwise requires. The words "hereof", "herein", "hereunder", "this Agreement", "the Agreement" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not any particular provision of this Agreement unless the context otherwise requires. The word "including" when used in this Agreement shall mean "including, without limitation". "And" and "or" as used in this Agreement shall be interpreted conjunctively and shall not be interpreted disjunctively to exclude any information otherwise within the scope thereof. 24. Invalid or Unenforceable Provisions. In the event any provision of this Agreement shall be determined to be invalid or unenforceable in any respect, the remaining provisions of this Agreement shall not be affected thereby and shall continue in full force and effect. 25. Parties Bound. This Agreement shall be binding upon the parties hereto and their respective heirs, successors and assigns. 9 26. Legal Advice of Counsel. The parties have obtained legal advice concerning this Agreement from the attorneys of their own choosing and have not relied on anything the other party or the other party's attorneys have said in deciding to sign this Agreement. 27. Voluntary Agreement. Ambrose represents and warrants that he has read and fully understands the terms of this Agreement. Ambrose further represents and warrants that he has executed this Agreement voluntarily without coercion, undue influence or duress, with full knowledge of the nature, consequences and legal effect of this Agreement. Ambrose further acknowledges and agrees that the terms hereof are a fair and adequate resolution of any and all claims, if any, he may have against IGI relating to his employment with IGI and/or the termination of his employment with IGI. 28. Notices. Any and all notices required and/or permitted to be given under this Agreement to be effective must be sent via hand- delivery or via Federal Express or other reliable overnight delivery service to the addresses set forth below, unless otherwise advised in writing by the other party in accordance with the terms hereof of a change of address. Any and all notices under this Agreement shall be deemed made on the date upon which it is actually delivered to the party to whom it is directed. (a) To Ambrose: John F. Ambrose 10 Bradlee Road Marblehead, MA 01945 (b) To IGI: Frank Gerardi, Chairman IGI, Inc. 105 Lincoln Ave. Buena, NJ 08103 With Copy To: Diane L. Mulligan, Esq. Edell & Associates, P.C. 1776 On the Green - 8th Floor Morristown, New Jersey 07960 10 IN WITNESS WHEREOF, the parties have signed this Agreement on August 18, 2003, effective as of August 15, 2003. EMPLOYER IGI, INC. By: /s/ Frank Gerardi ----------------- Frank Gerardi Chairman EMPLOYEE Witnessed: /s/ Diane Mulligan /s/ John F. Ambrose - --------------------------- ------------------- An Attorney At Law John F. Ambrose of the State of New Jersey 11 EX-11 4 igi-1102.txt EXHIBIT 11.02 Exhibit 11.02 EMPLOYMENT AGREEMENT -------------------- THIS AGREEMENT, dated as of September 26, 2003, by and between IGI, Inc., a Delaware corporation (the "Company"), located at 105 Lincoln Avenue, Buena, New Jersey, 08310, and Michael F. Holick, MD, Ph.D ("Holick") residing at ___________________. WHEREAS, the Company wishes to assure itself of the services of Holick as its Vice President of Research and Development and Chief Scientific Officer; and WHEREAS, Holick is willing to enter into this Employment Agreement upon the terms and conditions herein set forth. NOW, THEREFORE, in consideration of the mutual promises, covenants, undertakings and agreements set forth herein, the sufficiency of which is acknowledged by the parties, the Company and Holick agree as follows: 1. Employment. The Company shall employ Holick to serve the Company as its Vice President of Research and Development and Chief Scientific Officer during the Term of Employment as defined in Section 2 of this Agreement set forth below. Holick shall report to the Company's Chief Executive Officer and/or such other person as the Company may direct. Holick's duties shall be consistent with his title as its Vice President of Research and Development and Chief Scientific Officer. Holick shall devote his best efforts and a substantial portion of his business time to advancing the interests of the Company and in execution of his duties and obligations to the Company as its Vice President of Research and Development and Chief Scientific Officer. It is understood that Holick services during the Term of Employment shall be performed primarily in the Boston, Massachusetts and Buena, New Jersey areas or such other area in which the Company's offices or business operations are located, subject to such reasonable travel outside such areas and in and outside the United States as performance of his duties and the business of the Company may reasonably require. 2. Term of Employment. "Term of Employment" is defined and used herein to mean the three (3) year period beginning on the Effective Date of this Agreement as set forth in Section 17 hereof and ending on the third annual anniversary of such Effective Date, unless this Agreement and/or Holick's employment with the Company is terminated earlier thereto in accordance with the terms of Section 4 of this Agreement. 3. Compensation and Other Benefits (a) From the Effective Date of this Agreement through to December 31, 2003, the Company shall pay Holick a monthly gross salary of $4,000.00, payable in equal installments in accordance with the Company's customary payroll practices then in effect. (b) Beginning January 1, 2004, the Company shall pay Holick a monthly gross salary of $8,000.00, payable in equal installments in accordance with the Company's customary payroll practices then in effect. (c) During the Term of Employment, Holick may participate subject to eligibility requirements in any 401(k) or other similar deferred compensation plan as in effect from time to time for employees of the Company in accordance with the terms of such plans or programs subject to modification or termination by the Company at any time. Nothing contained in this Agreement obligates and/or requires the Company to create, obtain and/or otherwise maintain any such plans or programs. 2 (d) During the Term of Employment, Holick shall be entitled as provided herein to participate in any group hospitalization, medical, health and dental insurance plans or programs of the Company now existing or hereafter established for employees of the Company in accordance with the terms of such plans or programs subject to a modification or termination by the Company ("Health Benefits"); provided, however, that Holick shall not be entitled to receive such Health Benefits from the Company at any time during which he is receiving or is eligible to receive or otherwise obtain similar Health Benefits from, by or through Boston University and/or Boston University Medical Center in conjunction with his employment and/or other affiliation therewith. Nothing contained in this Agreement obligates the Company to create, obtain and/or maintain any such Health Benefits plans or programs. (e) The Company agrees to reimburse Holick for all reasonable business expenses incurred by him in connection with the performance of his duties hereunder in accordance with the policies of the Company then in effect. 4. Termination of Employment (a) Holick's employment shall terminate upon his death, and may be terminated, at the option of the Company upon written notice to Holick (i) as a result of his "disability," as defined in Section 4(b) below, (ii) for "cause," as defined in Section 4(c) below; and/or (iii) for "Business Reasons" defined in Section 4(d) below. Such termination shall be 3 effective five (5) days after the Company gives Holick written notice of termination. (b) As used herein, "disability" shall mean such physical or mental disability or incapacity of Holick which has substantially prevented him from performing his principal duties hereunder during any period of 90 consecutive calendar days or for a total of 120 calendar days (whether or not consecutive) in any 365-day period. During such period of disability and until notice of termination is given by the Company to Holick under Section 4(a), Holick shall continue to receive his compensation and other benefits, if any, as set forth in Section 3 above as in effect at such time, reduced by the amount, if any, of all disability benefits received by Holick during this period, including without limitation any benefits received by Holick from the Social Security Administration or any other state or federal governmental agency and/or benefits provided under any policy of disability insurance covering Holick. (c) As used herein, "cause" shall mean (i) willful misconduct involving bad faith by Holick in respect of his duties and obligations under this Agreement, which misconduct causes or was intended by Holick to cause injury to the Company, or (ii) commission of a crime involving moral turpitude which would adversely affect the Company should Holick continue to serve as an employee of the Company. "Cause" shall not include a bona fide disagreement over a corporate policy so long as Holick does not willfully violate on a continuing basis (three times or more in any 4 given year) directions from the Board of Directors, the Chairman, the Chief Executive Officer and/or President and provided such directions are consistent with the provisions of this Agreement. (d) As used herein "Business Reasons" shall mean that as of December 31, 2003, thee Company and Holick have not entered into a fully executed Exclusive License Agreement pursuant to which Holick exclusively licenses to IGI all rights, title and interests in and to Parathyroid Hormone Related Peptide (PTHrP) and glycoside drugs, including all patents and patent applications claiming the composition or methods of use thereof and all related data and know how thereto ("the Exclusive License Agreement"). As provided herein, if the Company and Holick have not entered into a fully executed Exclusive License Agreement by December 31, 2003, the Company has the right to terminate Holick's employment at any time on or after January 1, 2004. (e) On the termination of Holick's employment as a result of death, disability, for cause or for Business Reasons, the Company shall, within ten (10) business days of the Effective Date of the termination as provided in Section 4(a), pay to Holick or to his beneficiaries, personal representative or his Estate, as the case may be, any unpaid salary accrued as of the Effective Date of the termination. (f) If Holick's employment is terminated by the Company before the expiration of the Term of Employment for any reason other than death, disability or cause, then Holick shall be entitled to receive, and the 5 Company shall be obligated to pay to Holick, his base salary in effect at such time as set forth in Section 3(a) or 3(b) as the case may be for the shorter of the period of one (1) year or the remainder of the Term of Employment, such base salary to be paid in accordance wit the Company's customary payroll practices on the dates it would have been paid had Holick's employment had not been terminated. All payments made under the terms of this paragraph shall be in full and complete satisfaction of any and all claims Holick may have against the Company, its officers, directors, shareholders, employees, attorneys, agents and representatives relating to his employment with the Company, including without limitation, all claims under this Agreement and under any and all claims under applicable state or federal law. 5. Confidentiality and Restrictive Covenants (a) Holick shall not, at any time during the Term of Employment or for a period of three (3) years thereafter, solicit or permit any business of which he is an owner, partner, shareholder, member, manager or executive to solicit any employee or former employee of the Company or any of its affiliates, to leave its employ or join the employ of another, then or at a later time. (b) During the Term of Employment and for a period of three (3) years thereafter, Holick shall not, directly or indirectly, solicit any of the current or potential customers of the Company. 6 (c) Except as required in the performance of his duties to the Company, or as authorized in writing by the Company, Holick shall not at any time, during or after the Term of Employment, disclose or use, directly or indirectly, any confidential information belonging to or used by the Company of which Holick shall obtain knowledge by reason of his employment hereunder. All such confidential information shall be retained by Holick in trust in a fiduciary capacity for the sole benefit of the Company. Such confidential information includes, but is not limited to, information with respect to marketing, advertising and sales presentation methods and materials, customer and supplier lists, external and internal business forms, manuals, corporate planning, manufacturing, distribution and marketing processes, procedures, devices and materials utilized by the Company in providing goods to customers, plans for expansion into new areas or markets and information regarding internal operations together with all written and graphic materials relating to all or any part of the same. This restriction may not and shall not be used by the Company to challenge any employment of Holick following the termination of his employment with the Company based upon information which has become part of Holick's general knowledge. (d) Upon termination of the Term of Employment or at any other time as the Board of Directors of the Company may request, Holick shall promptly deliver to the Company all confidential data and materials in his possession, including, but not limited to, sales presentation materials, 7 other internal and external business forms, manuals, correspondence, notes and customer and supplier lists together with all copies thereof, and Holick shall not make or retain any copy or extract of any of the foregoing. (e) Holick acknowledges and agrees that the provisions of this Section 5 are reasonable and necessary for the protection of the Company and that the Company will be irrevocably damaged if such covenants are not specifically enforced. Holick further acknowledges and agrees that his breach of any of the restrictive covenants contained in this Section 5 can cause irreparable damage to the Company for which the remedy at law would not be adequate. Accordingly, in addition to any other remedy provided by law or equity, the Company shall be entitled to injunctive relief restraining Holick from any actual or threatened violation of this Section 5 or any other appropriate decree of specific performance (without any bond or other security being required), including, without limitation, any injunction restraining Holick from rendering any services to any person or entity in competition with the then business being conducted by the Company to whom all or any part of any confidential information and materials has been disclosed by Holick. (f) The provisions contained in this Section 5 as to the time periods, scope of activities, persons or entities affected and territories restricted shall be deemed divisible so that, if any provision contained in this Section 5 is determined to be invalid or unenforceable, such provisions shall be 8 deemed modified so as to be valid and enforceable to the full extent lawfully permitted. 6. Notices. Any and all notices and other communications under this Agreement shall be given in writing and shall be sent to the addresses set forth below, or at such other address as may be designated in writing hereafter by Holick and/or the Company in accordance with the terms hereof. If mailed, such notice, demand or request shall be made by certified or registered mail, and deposited in any post office station or letter-box, enclosed in a postage paid envelope and shall be deemed to have been made on the third (3rd) business day following posting as aforesaid. If commercially sent, the party giving such notice shall use a recognized, overnight commercial courier service and notice shall be deemed to have been made on the day following actual delivery of such notice to the commercial carrier. If sent by facsimile transmission, the party sending the transmission shall send it to the facsimile number, if any, set forth below, or to such other number as a party thereto shall direct by written notice given in accordance with this Section 6. Delivery shall be deemed to have been made on the day that the facsimile transmission occurred if received prior to 4:00 p.m. on a business day at the place of receipt, otherwise on the following business day. (a) To Holick Dr. Michael F. Holick _________________ _________________ Fax no. _______________ 9 (b) To the Company Frank Gerardi Chairman & Chief Executive Officer IGI, Inc. 105 Lincoln Avenue Buena, New Jersey 08310 Fax No.: (856) 697-1441 With a copy to: Diane L. Mulligan, Esq. Edell & Associates, P.C. 1776 On the Green - 8th Floor 67 Park Place Morristown, New Jersey 07960 Fax No.: (973) 605-1812 7. Entire Agreement. This Agreement constitutes the entire Agreement between the parties with respect to the subject matter hereof and supersedes all previous proposal negotiations, representations, commitments, writings and all other communications between the parties, both oral and written 8. Assigns and Successors This Agreement shall inure to the benefit of and shall be binding upon the parties hereto and their respective heirs, representatives, successors and permitted assignees. This Agreement shall not be assignable except only by the Company to any corporation resulting from the reorganization, merger or consolidation of the Company with any other corporation or any corporation to which the Company may sell all or substantially all of its assets. 9. Severability If any provision of this Agreement is determined by a court of competent jurisdiction to be invalid or unenforceable, such determination shall not 10 affect the validity or enforceability of any other part or provision of this which shall continue in full force and effect. 10. Modification This Agreement may be amended or modified only by a written instrument signed by both the Company and Holick. 11. Governing Law; Jurisdiction This Agreement shall be governed by and construed in accordance with the laws of the State of New Jersey. The parties hereto each expressly submit themselves and consent to the jurisdiction of the state and federal courts of New Jersey with respect to any action that may be commenced relating in any way to this Agreement. The parties hereto each further agree that service of process with respect to any judicial action between the parties relating to this Agreement shall be deemed made when sent via ordinary United States mail to the parties at addresses set forth above in Section 6. In the event either party is required to incur legal fees and costs in seeking enforcement of this Agreement, the prevailing party shall be entitled to recover from the other party any and all such legal fees and costs so incurred. 12. Headings Section headings are for convenience only and shall not be considered a part of the terms and provisions of the Agreement. 13. Waiver The failure of a party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver or deprive that party of the right to thereafter to insist upon strict adherence to that term or any other term of this Agreement. 14. Interpretation (a) All references in this Agreement to the plural shall also mean the singular and to the singular shall also mean the plural unless the context otherwise requires. The words "hereof", "herein", "hereunder", "this Agreement", "the Agreement" and words of similar import when used in this Agreement shall 11 refer to this Agreement as a whole and not any particular provision of this Agreement unless the context otherwise requires. The word "including" when used in this Agreement shall mean "including, without limitation". "And" and "or" as used in this Agreement shall be interpreted conjunctively and shall not be interpreted disjunctively to exclude any information otherwise within the scope thereof. (b) Any reference in this Agreement to any corporate and/or other business entity shall include and extend to the benefit of such corporate and/or other business entities' predecessors, successors, subsidiaries, affiliates, assigns and/or any and all of their respective past and present agents, attorneys, representatives, officers, directors, employees, representatives, independent contractors, accountants and shareholders, as if same were named individually herein. 15. Neutral Construction This Agreement is the product of negotiations between the parties and shall be construed neutrally, without regard to the identity of the party who drew it. 16. Counterpart Execution This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 17. Effective Date The Effective Date of this Agreement is September 26, 2003. IN WITNESS WHEREOF, the parties hereunto set their hands and seals this 26th day of September 2003. IGI, INC. By: /s/ Frank Gerardi -------------------------------- Frank Gerardi Chairman & Chief Executive Officer /s/ Michael F. Holick, MD, Ph.D -------------------------------- Michael F. Holick, MD, Ph.D 12 EX-11 5 igi-1103.txt EXHIBIT 11.03 Exhibit 11.03 MEMORANDUM OF AGREEMENT ----------------------- * PARTIES:. IGI, Inc. ("IGI") and Michael F. Holick, MD, Ph.D. ("Holick") * EXCLUSIVE LICENSE AGREEMENT:.On or before December 31, 2003, IGI and Holick shall enter into an Exclusive License Agreement (the "License") in accordance with the terms set forth herein and such other additional terms as mutually agreed by the parties consistent herewith, by which Holick will exclusively license to IGI free and clear of any and all liens, encumbrances, claims or other impairments all rights, title and interest in and to the Parathyroid Hormone Related Peptide (PTHrP) and glycoside drugs, formulations and technologies, including without limitation all patents and patent applications claiming the composition or methods of use thereof and all related data and know how (the "PTHrP/GLYCOSIDE Rights") in consideration of upfront payments, the grant of options to purchase shares of Common Stock of IGI, royalty payments and/or consideration of an upfront payment, the grant of an option to purchase shares of Common Stock of IGI, royalty.payments and/or certain rights to receive a portion of payments received by IGI upon sublicensing the PTHrP/GLYCOSIDE Rights as set forth below. * CONSIDERATION UNDER EXCLUSIVE LICENSE AGREEMENT i. Subject to rights for reimbursement by setoff against royalty and/or sublicense payments, IGI shall be responsibility for any and all costs for the prosecution and oversight of any intellectual property rights related to the development of the PTHrP/GLYCOSIDE Rights on a going forward basis, such obligations include, but are not limited to, the costs incurred by Holick for the costs of prosecuting the patents included in the PTHrP/GLYCOSIDE Rights on or after January 1, 2003. ii. Upon execution of this Memorandum of Agreement, Holick shall receive from IGI a non-refundable payment of $50,000. iii. Upon execution of the Exclusive License Agreement, Holick shall receive from IGI payment in the amount of $50,000. iv. Holick shall receive from IGI payment in the amount of $100,000 upon the earlier of (i) the initiation of the PTH(7-34) human chemotherapy alopecia trials, (ii) equity acquisition by a third party of 20% or more of IGI's outstanding common stock, or.(iii) January 1, 2004. v. Holick shall receive from IGI payment in the amount of $100,000 on.June 1, 2004. vi. IGI shall guarantee the payments under (iii)-(v) above by a promissory note to be executed simultaneously with the Exclusive License Agreement. vii. Upon execution of the Exclusive License Agreement, IGI will grant to Holick options to purchase 300,000 shares of IGI's Common in accordance with the terms and conditions of the Company's stock option plans. viii. If IGI grants to a third party a sublicense to the PTHrP/Glycoside Rights, IGI will pay to Holick 50% of cash received for upfront and milestone payments and 50% of royalties on net sales received by IGI from its sub- licensee. However, Holick shall not be entitled to any such payments until such time as IGI has recover 100% of the amount of the payments and expenses set forth in (i) - (v) above. * EMPLOYMENT AGREEMENT:. Simultaneous with the execution of this Memorandum of Agreement, IGI and Holick shall execute a Employment Agreement effective as of September 26, 2003, under which Holick shall serve as IGI's Executive Vice President of Research and Development and Chief Scientific Officer in accordance with the terms thereof. IGI shall have the right to terminate Holick's employment as provided thereunder in the event IGI and Holick have not executed the Exclusive License Agreement on or before December 31, 2003. * EXCLUSIVE DEALING:.In recognition of IGI's payment to Holick of $50,000 upon execution of this Memorandum of Agreement, Holick agrees not to enter into any discussions or negotiations with any third party relative to the acquisition, licensing, assignment or other use of the PTHrP/GLYCOSIDE Rights. IN WITNESS WHEREOF, the parties hereunto set their hands and seals this 26th day of September 2003. IGI, Inc. By: /s/ Frank Gerardi -------------------------------- Frank Gerardi Chairman & CEO /s/ Michael F. Holick, MD, Ph.D. -------------------------------- Michael F. Holick, MD, Ph.D EX-31 6 igi3-311.txt EXHIBIT 31.1 Exhibit 31.1 CERTIFICATION OF FRANK GERARDI CHAIRMAN & CHIEF EXECUTIVE OFFICER OF IGI, INC. ----------------------------- I, Frank Gerardi, Chairman & Chief Executive Officer of IGI, Inc., certify that: 1. I have reviewed this quarterly report on Form 10-Q of IGI, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors: a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial data; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls. Date: November 12, 2003 /s/ Frank Gerardi ----------------- Frank Gerardi Chairman & Chief Executive Officer EX-31 7 igi3-312.txt EXHIBIT 31.2 Exhibit 31.2 CERTIFICATION OF DOMENIC N. GOLATO CHIEF FINANCIAL OFFICER OF IGI, INC. ----------------------------- I, Domenic N. Golato, Chief Financial Officer of IGI, Inc., certify that: 1. I have reviewed this quarterly report on Form 10-Q of IGI, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors: a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonable likely to adversely affect the registrant's ability to record, process, summarize and report financial data; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls. Date: November 12, 2003 /s/ Domenic N. Golato --------------------- Domenic N. Golato Chief Financial Officer EX-32 8 igi3-321.txt EXHIBIT 32.1 Exhibit 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ENACTED UNDER SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 --------------------------------------------- In connection with the Quarterly Report of IGI, Inc. (the "Company") on Form 10-Q for the period ending September 30, 2003, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Frank Gerardi, Chairman and Chief Executive Officer of the Company, state and certify, pursuant to 18 U.S.C. [SECTION] 1350, as enacted under [SECTION] 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company as of September 30, 2003 (the end of the period covered by the Report). Date: November 12, 2003 /s/ Frank Gerardi ----------------- Frank Gerardi Chairman & Chief Executive Officer EX-32 9 igi3-322.txt EXHIBIT 32.2 Exhibit 32.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ENACTED UNDER SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 --------------------------------------------- In connection with the Quarterly Report of IGI, Inc. (the "Company") on Form 10-Q for the period ending September 30, 2003, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Domenic N. Golato, Senior Vice President and Chief Financial Officer of the Company, state and certify, pursuant to 18 U.S.C. [SECTION] 1350, as enacted under [SECTION] 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company as of September 30, 2003 (the end of the period covered by the Report). Date: November 12, 2003 /s/ Domenic N. Golato --------------------- Domenic N. Golato Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----