July 31, 1997

IGI, Inc. and Subsidiaries
Wheat Road and Lincoln Avenue
Buena, New Jersey 08310

      Re: Seventh Amendment to Second Amended and Restated Loan Agreement
          ---------------------------------------------------------------

Dear Sirs:

     Reference is made to the Second Amended and Restated Loan Agreement, dated
as of December 13, 1995, by and among Fleet Bank-NH, Mellon Bank, N.A., and IGI,
Inc. and certain of its subsidiaries (as heretofore amended, the "Loan
Agreement"). All capitalized terms used herein without definition have the
respective meanings ascribed to them in the Loan Agreement.

     This will confirm our mutual agreement to amend the Loan Agreement as
follows:

         1. Extension of Line of Credit Commitment. The line of credit
termination date is hereby extended to September 30, 1997, and the reference to
"July 31, 1997" currently contained in Section 2.02(a) of the Loan Agreement is
hereby amended to refer to "September 30, 1997."

         2. No Novation; Confirmation and Reaffirmation.

            (a) Each of the Borrowers hereby reaffirms all of its 
representations and warranties in the Loan Agreement (as amended hereby) and the
Security Documents on and as of the date hereof, as if expressly made on and as
of the date hereof.

            (b) Each of the Borrowers hereby confirms the ongoing validity of
all of the Obligations outstanding on the date hereof (including but not limited
to Obligations under the Notes), and further acknowledges, confirms and agrees
that the amendment effected by this agreement does not constitute a novation
of any of the Obligations outstanding on the date hereof.

            (c) Each of the Borrowers hereby reaffirms the validity of all of
the liens and security interests heretofore granted to the Agent as collateral
security for the Obligations, and acknowledges that all of such liens and
security interests, and all collateral heretofore pledged as security for the
Obligations, continue to be and remain collateral for the Obligations from and
after the effectiveness of this agreement.

            (d) Each of the Borrowers hereby represents, warrants and confirms
that, as of the date hereof, no Default or Event of Default has occurred and is
continuing.


<PAGE>



         3. Ongoing Force and Effect. Except as and to the extent expressly 
provided in this agreement, all covenants, terms and conditions of the Loan
Agreement shall remain unchanged and in full force and effect. All references to
the Loan Agreement contained in the Notes and the Security Documents shall
hereafter mean and refer to the Loan Agreement as amended by this agreement.

     Kindly confirm the Borrowers' agreement to the foregoing by countersigning
a counterpart Copy of this letter in the spaces provided below.


                                            Very truly yours,

                                            FLEET BANK-NH

                                            By: /s/ Marcia LaTorre
                                                -------------------------------


                                            MELLON BANK, N.A.

                                            By: /s/ John P. Gallo
                                                -------------------------------


Acknowledged, Confirmed
and Agreed to:

IGI, INC.

By: /s/ Lawrence R. Hoffman
    ------------------------------


IGEN, INC.

By: /s/ George P. Warren, Jr.
    ------------------------------


IMMUNOGENETICS, INC.

By: /s/ Kevin J. Batton
    ------------------------------


BLOOD CELLS, INC.

By: /s/ Kevin J. Batton
    ------------------------------

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