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EXHIBIT *(10.34)

                             SUBORDINATION AGREEMENT


         SUBORDINATION AGREEMENT (this "Agreement") as of October 29, 1999,
between FLEET CAPITAL CORPORATION (the "Senior Creditor") and AMERICAN CAPITAL
STRATEGIES, LTD. (the "Subordinated Creditor").

         Each of Senior Creditor and Subordinated Creditor are entering into
financing arrangements with IGI, Inc. ("IGI"), IGEN, Inc., ImmunoGenetics, Inc.
and Blood Cells, Inc. (collectively, the "Companies" and severally each a
"Company").

         To induce the Senior Creditor to enter into the Fleet Financing
Agreement (as hereinafter defined) and to make loans and extensions of credit
thereunder, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Subordinated Creditor has
agreed to subordinate the Subordinated Debt (as hereinafter defined) to the
Senior Debt (as hereinafter defined) as well as subordinate all liens and rights
in collateral securing the Subordinated Debt, all in the manner and to the
extent hereinafter provided. Accordingly, the parties hereto agree as follows:

         Section 1. Definitions. Unless otherwise defined herein capitalized
terms herein shall have the meanings provided to such terms in the Fleet
Financing Agreement. In addition, as used herein:

         "Fleet Financing Agreement" shall mean the Loan and Security Agreement
of even date herewith between the Senior Creditor and the Companies, as the same
may be amended, modified, supplemented or restated from time to time.

         "Permissible Securities" shall mean (a) any debt securities the payment
of which is subordinated, at least to the extent provided in Section 2 with
respect to the Subordinated Debt, to the payment of all Senior Debt at the time
outstanding and all securities issued in exchange therefore and (b) any shares
of common stock of IGI.

         "Permitted Refinancing" means any amendment, modification, extension,
renewal, refunding or refinancing (whether by the Senior Creditor or any
institutional lender providing replacement financing) of all (but not less than
all) of the Senior Debt, provided that (i) such amendment, modification,
extension, renewal, refunding or refinancing shall not (A) increase the
principal amount thereof or (B) advance the originally scheduled dates for
payment of principal, interest or other sums payable in respect of the
indebtedness thereby amended, modified, extended, renewed, refunded or
refinanced, and (ii) the documents evidencing the incurrence of such
indebtedness shall not (A) impose upon the Companies rates of interest (apart
from any post default rate applicable if an Event of Default is outstanding) in
excess of 1% higher than the applicable rate(s) provided for with respect to the
indebtedness thereby amended, modified, extended, renewed, refunded or
refinanced, (B) impose prepayment charges that are greater in any material
respect than the respective amounts thereof payable under the terms of the
indebtedness thereby amended, modified, extended, renewed, refunded or
refinanced, or (C) contain terms or conditions that would prohibit payment of
principal, interest and other amounts payable with respect to the Subordinated
Debt when due (except to the extent provided in this Agreement).
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         "Senior Debt" shall mean all loans, advances, extensions of credit,
liabilities and obligations, including reimbursement obligations on letters of
credit, letter of credit guaranties, foreign exchange obligations or interest
rate hedging agreements, together with all interest, fees, expenses and other
charges thereon, in which case owing, arising, due or payable from the Companies
to the Senior Creditor, of any kind or nature, whether or not evidenced by any
note, guaranty or other agreement or instrument, in each case arising under or
in connection with the Fleet Financing Agreement (or any Permitted Refinancing)
or any related agreement or document, whether direct or indirect (including
those acquired by assignment), absolute or contingent, primary or secondary,
joint or several, due or to become due, now existing or hereafter arising and
however acquired, including, without limitation, debts, liabilities and
obligations arising or occurring after the commencement of any bankruptcy,
reorganization, insolvency or similar proceeding with respect to the Company,
whether or not a claim for such post-commencement obligation is allowed;
provided that in no event shall the principal amount of obligations considered
as "Senior Debt" exceed $24,500,000 minus the aggregate amount of all scheduled
repayments of term loans (including, without limitation, any Capital Expenditure
Loans) actually made or prepaid after the date hereof.

         "Subordinated Debt" shall mean the principal of, and interest and
premium (if any) on, the loans made, and any other amounts owing, under the
Subordinated Debt Documents.

         "Subordinated Debt Documents" shall mean the Note and Equity Purchase
Agreement, the Pledge Agreement and the Security Agreement, each of even date
herewith, among the Subordinated Creditor, IGI and certain of its subsidiaries,
as the same may be amended, modified, supplemented or restated from time to
time.

         Section 2. Subordination.

         2.01 Subordination of Subordinated Debt. The Subordinated Creditor
covenants and agrees, that, to the extent and in the manner set forth in this
Agreement, the Subordinated Debt, and the payment from whatever source of the
principal of, and interest and premium (if any) on, the Subordinated Debt, are
hereby expressly made subordinate and subject in right of payment to the prior
payment in full in cash of all Senior Debt.

         2.02 Payments Upon Bankruptcy or Dissolution. In the event of (a) any
insolvency or bankruptcy, receivership, liquidation, reorganization or other
similar case or proceeding relative to any of the Companies or its assets,
whether voluntary or involuntary, or (b) any liquidation, dissolution or other
winding up of any of the Companies, whether voluntary or involuntary and whether
or not involving insolvency or bankruptcy, or (c) any assignment for the benefit
of creditors or any other marshaling of assets and liabilities of any of the
Companies, then and in any such event:

                  (1) the Senior Creditor shall be entitled to receive payment
         in full in cash of all amounts owing, due or to become due on or in
         respect of all Senior Debt before any Subordinated Creditor shall be
         entitled to receive any payment on account of principal of, or interest
         or premium (if any) on, the Subordinated Debt;

                  (2) any payment or distribution of assets of the applicable
         Company(ies) of any kind or character, whether in cash, property or
         securities, by set-off or otherwise, to which the


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         Subordinated Creditor would be entitled but for the provisions of this
         Agreement (other than Permissible Securities), including any such
         payment or distribution that may be payable or deliverable by reason of
         the payment of any other indebtedness of the applicable Company(ies)
         being subordinated to the payment of the Subordinated Debt, shall be
         paid by the party making such payment or distribution, whether a
         trustee in bankruptcy, receiver, liquidating trustee, agent, debtor, or
         otherwise, directly to the Senior Creditor to the extent necessary to
         make payment in full in cash of all Senior Debt remaining unpaid, after
         giving effect to any concurrent payment or distribution to the Senior
         Creditor; and

                  (3) if any Subordinated Creditor shall have failed to file
         claims or proofs of claim with respect to the Subordinated Debt earlier
         than 30 days prior to the deadline for any such filing, the Senior
         Creditor shall be unconditionally authorized to file such claims or
         proofs of claim (in its sole discretion and without any obligation to
         do so). Subject only to the foregoing limitation, the Subordinated
         Creditor hereby appoints the Senior Creditor as its attorney-in-fact to
         file any such claim or proof of claim and to demand, vote, collect,
         prosecute and enforce such claim and receive, endorse, deposit and
         retain any proceeds or distributions thereon (in the name of the
         Subordinated Creditor of the Senior Creditor. Nothing herein contained
         is intended to authorize or allow the Senior Creditor to become (in the
         name of the Subordinated Creditor) a member of any creditors' committee
         in any bankruptcy or reorganization proceeding.

         2.03 No Payment When Senior Debt in Default.

         (a) In the event that (1) any payment with respect to any principal of
or interest on the Senior Debt is not made when due, whether at a due date,
stated maturity, by mandatory prepayment, by acceleration, or otherwise (each
such failure, a "Senior Debt Payment Default") or (2) any Event of Default under
the Fleet Financing Agreement other than as described in clause (1) above (for
the purposes hereof, a "Non-Payment Default") shall have occurred and be
continuing permitting the Senior Creditor to declare the Senior Debt due and
payable prior to the date on which it would otherwise have become due and
payable, then no payment on account of the principal of, or interest or premium
(if any) on, the Subordinated Debt or any judgment with respect thereto (and no
payment on account of the purchase or redemption or other acquisition of the
Subordinated Debt) shall be made by or on behalf of any of the Companies, for
the period (the "Blockage Period") from the date the Subordinated Creditor
receives written notice of the existence of either a Senior Debt Payment Default
or a Non-Payment Default (each a "Senior Debt Event of Default" from the Senior
Creditor (a "Blocking Notice") until the earliest of (i) the date 180 days after
such date, (ii) the date on which such Senior Debt Event of Default is waived or
a cure thereof is accepted in writing by the Senior Creditor, and (iii) the date
on which the Senior Creditor has waived in writing the benefits of this Section
2.03 in respect of such Senior Debt Event of Default,

provided that, for purposes of the above clause(A) only one Blocking Notice
relating to any Senior Debt Event of Default may be given during any one
twelve-month period, and (B) nothing herein contained is intended to restrict or
limit the rights of the Senior Creditor hereunder if a Senior Debt Event of
Default at any time occurs.

         (b) For the purposes of subsection (a) above, no Non-Payment Default
known to the holder of Senior Debt giving any Blocking Notice on the date any
Blocking Notice is given may be


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used or shall be effective as a basis for any subsequent Blocking Notice, it
being understood and agreed that any breach or violation of a financial covenant
with respect to the Senior Debt as of any measurement date thereof will be a new
Non-Payment Default regardless of whether a breach of such or any other covenant
which occurred on any prior measurement date was waived, cured or remains
outstanding.

         (c) Immediately upon the expiration of any Blockage Period under this
Section 2.03 during which no payment may be made on account of the Subordinated
Debt, the Companies may resume making any and all payments of principal of, and
interest and premium (if any) thereafter becoming due on, the Subordinated Debt.

         (d) If (1) any Senior Debt shall have been accelerated, (2) the
maturity of the Subordinated Debt shall have been accelerated pursuant to the
provisions of the Subordinated Debt Documents, (3) no "Event of Default" under
(and as defined in) the Subordinated Debt Documents (a "Subordinated Debt Event
of Default") shall have occurred and be continuing on the date of such
acceleration other than by reason of a Subordinated Debt Event of Default based
upon the acceleration of the maturity of such Senior Debt, (4) after the date of
such acceleration the holders of such Senior Debt shall duly rescind and annul
such acceleration of the maturity of such Senior Debt, and (5) on the date of
such rescission and annulment, no Subordinated Debt Event of Default shall have
occurred and be continuing in respect of the Subordinated Debt other than by
reason of a Subordinated Debt Event of Default based upon the acceleration of
the maturity of such Senior Debt, then such acceleration of the maturity of the
Subordinated Debt shall thereupon be deemed rescinded and annulled without
action on the part of any Subordinated Creditor, but such rescission and
annulment shall not affect the rights of any Subordinated Creditor with respect
to any subsequent or other default or Subordinated Debt Event of Default that
may occur.

         (d) The provisions of this Section 2.03 shall not alter the rights of
the holders of Senior Debt under the provisions of Section 2.02 hereof.

         2.04 Permitted Payments. Nothing contained in this Agreement or in any
of the Subordinated Debt Documents shall affect the obligation of the Companies
to make (or prevent the Companies from making) regularly scheduled payments of
principal of, or interest and premium (if any) on, the Subordinated Debt or any
other amount payable by the Companies under the Subordinated Debt Documents
except (x) during the pendency of any case, proceeding, dissolution, liquidation
or other winding up, assignment for the benefit of creditors or other marshaling
of assets and liabilities of any of the Companies referred to in Section 2.02
hereof, or (y) under the conditions described in Section 2.03 hereof, or (z) as
restricted by the provisions of Section 2.08 hereof. At no time may any
prepayment be made of or on account of the Subordinated Debt without the prior
written consent of the Senior Creditor.

         2.05 Subrogation. Subject to the prior payment in full in cash of all
Senior Debt, the Subordinated Creditor shall be subrogated (equally and ratably
with the holders of all indebtedness of the Companies that by its express terms
is subordinated to Senior Debt of the Companies to the same extent as the
Subordinated Debt is subordinated and that is entitled to like rights of
subrogation) to the rights of the Senior Creditor to receive payments and
distributions of cash, property and securities applicable to the Senior Debt
until the principal of, and interest and premium (if any) on, the Subordinated
Debt shall be paid in full in cash. For purposes of such subrogation, and to the
extent


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permitted by law, no payments or distributions to the Senior Creditor of any
cash, property or securities to which the Subordinated Creditor would be
entitled except for the provisions of this Section 2, and no payments over
pursuant to the provisions of this Section 2 to the Senior Creditor by the
Subordinated Creditor, shall, as between the Companies, their creditors other
than the Senior Creditor, and the Subordinated Creditor, be deemed to be a
payment or distribution by the applicable Companies to or on account of the
Senior Debt.

         2.06 Provisions Solely to Define Relative Rights. The provisions of
this Section 2 are and are intended solely for the purpose of defining the
relative rights of the Subordinated Creditor on the one hand and the Senior
Creditor on the other hand. No rights are intended to be created hereunder for
the benefit of the Companies or any other alleged third party beneficiary.
Subject to the subordination provisions hereof, nothing contained in this
Section 2 or elsewhere in this Agreement or in the Subordinated Debt Documents
is intended to or shall:

         (a) impair, as among the Companies, their creditors other than the
Senior Creditor and the Subordinated Creditor, the obligation of the Companies,
which is absolute and unconditional, to pay to the Subordinated Creditor the
principal of and interest on the Subordinated Debt as and when the same shall
become due and payable in accordance with its terms; or

         (b) affect the relative rights of the Subordinated Creditor against the
Companies under the Subordinated Debt Documents.

         2.07 No Waiver of Subordination Provisions. The Senior Creditor may (in
its sole discretion), at any time and from time to time, without the consent of
or notice to the Subordinated Creditor, without incurring responsibility to the
Subordinated Creditor and without impairing, affecting or releasing the
subordination provided in this Section 2 or the obligations hereunder of the
Subordinated Creditor to the holders of Senior Debt, do any one or more of the
following: (a) modify, increase (subject to the limits set forth in the
definition of "Senior Debt"), renew, extend, change the time, manner, place or
terms of payment of any Senior Debt, or otherwise waive, modify, supplement or
waive non-performance in any respect of any provisions of the Fleet Financing
Agreement or any other agreement or instrument evidencing or relating to any of
the Senior Debt; (b) sell, exchange, release, enforce its rights against, or
otherwise deal with any property pledged, mortgaged or otherwise securing Senior
Debt; (c) release or compromise claims against any of the Companies or any other
party liable in any manner for the collection of Senior Debt; and (d) exercise
or refrain from exercising any rights against any of the Companies or any other
party.

         2.08 Lien Priority and Enforcement Action.

         (a) The Subordinated Creditor agrees that, notwithstanding anything to
the contrary contained in any Subordinated Debt Documents or in any mortgage,
pledge, assignment or security agreement related thereto, the liens, pledges,
assignments, security interests, mortgages or any other security arrangements of
the Senior Creditor at any time securing the Senior Debt (collectively, "Senior
Security Interests") are senior and prior in operation and effect to any liens,
pledges, assignments, security interests, mortgages, or other security
arrangements of Subordinated Creditor (collectively, "Junior Security
Interests") and the Junior Security Interests shall be subordinate, junior and
inferior, and shall be postponed in priority, operation and effect to the Senior
Security Interests.



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         (b) The priority of security interests set forth in Section 2.08(a)
hereof shall apply and control irrespective of (1) any statement to the contrary
elsewhere herein, in any agreement creating or evidencing the Junior Security
Interests, or in any agreement or other document executed and delivered by any
party hereto or any affiliate thereof, (2) the time, order, or method of
attachment or perfection of security interests, mortgages or other liens, or (3)
the giving of, or the failure to give, notice of the acquisition or expected
acquisition of any purchase money or other security interests or liens.

         (c) Until such time as the Senior Debt shall have been paid in full in
cash and the commitment of the Senior Creditor to lend has been terminated, the
Subordinated Creditor shall not contest or challenge the validity,
enforceability, priority or perfection of, or restrict, interfere with or
prevent any action taken by the Senior Creditor to foreclose on or enforce, the
Senior Security Interests.

         (d) Notwithstanding anything to the contrary contained herein, the
Subordinated Creditor agrees that in the event that any property of any of the
Companies that is subject to the Junior Security Interests herein is sold,
transferred, conveyed or otherwise disposed of (1) as permitted under the Fleet
Financing Agreement or (2) as otherwise consented to by the Senior Creditor, the
Subordinated Creditor shall be deemed to have consented to the sale, transfer or
conveyance and shall release all rights to and interests in such property
(including the Junior Security Interests), and such property shall be
transferred free and clear of all liens and security interests (including the
Junior Security Interests) in favor of the Subordinated Creditor, provided,
however, that such consent and release by the Subordinated Creditor shall not be
effective unless written notice of the proposed sale, transfer or conveyance
containing the material terms of the transaction is provided to the Subordinated
Creditor and the Subordinated Creditor fails to deliver to the selling Company
and the Senior Creditor a bona fide, signed written commitment from another
buyer directed to the selling Company, the Senior Creditor and the Subordinated
Creditor who is ready, willing and able to purchase the property in question on
the identical terms as set forth in the notice given to the Subordinated
Creditor and is also ready, willing and able to increase the purchase price by
an amount in cash equal to 15% of the total purchase price set forth in such
notice. The Subordinated Creditor shall execute such termination and release
documents as the Senior Creditor may request to effectuate the terms hereof. To
implement the provisions of this clause (d), the Subordinated Creditor hereby
appoints the Senior Creditor as its attorney-in-fact to execute and deliver, on
behalf of the Subordinated Creditor, termination and release documents, which
Power of Attorney may be exercised (in the sole discretion of the Senior
Creditor and without any obligation to do so) if the Subordinated Creditor fails
to execute any such termination and release documents following not less than
three (3) days written notice from either the Senior Creditor or the Company.

         (e) Until such time as the Senior Debt shall have been paid in full in
cash and the commitment of the Senior Creditor to lend has been terminated, the
Subordinated Creditor shall not take any action to foreclose, enforce or realize
upon any of the Junior Security Interests or exercise any right or remedy to
enforce the Junior Security Interests if:

                  (i) the Senior Debt has been accelerated and the holder of the
         Senior Debt has commenced action to enforce its rights against a
         material portion of the Collateral, or

                  (ii) if no acceleration of the Senior Debt has occurred, until
         the expiration of (A) a period of 180 days ("Enforcement Blockage
         Period") after the occurrence of an Subordinated


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         Debt Event of Default (irrespective of the existence of a Blockage
         Period, if any, then preventing such payment from being made) and such
         failure has not been cured by the Companies or (at its sole discretion,
         and without any obligation to do so) by the Senior Creditor and (B) the
         60th day after written notice by the Subordinated Creditor of the
         intent to take action against the Junior Security Interests has been
         given to the Senior Creditor, which notice under this clause (B) may
         only be given following the 180th day of the Enforcement Blockage
         Period.

         (f) Nothing contained herein is intended to prevent the Subordinated
Creditor from obtaining a judgment or filing an involuntary bankruptcy petition
against the Companies following the occurrence of a Subordinated Debt Event of
Default so long as (i) the Subordinated Debt Event of Default has not been cured
or waived and (ii) either (A) the Enforcement Blockage Period has expired or (B)
the events contained in clause (i) above have occurred.

         (g) The Senior Creditor may at any time apply the proceeds of any of
the property subject to the Senior Security Interests (including without
limitation proceeds of any sale of property subject to the provisions of clause
(d) above), together with any rights of the Senior Creditor under any insurance
policy, including (without limitation) any hazard or casualty insurance, credit
insurance, business interruption or title insurance policy or condemnation
proceeding, to the Senior Debt, and among such obligations at such time and in
such order as it shall determine.

         (h) The Subordinated Creditor shall not have any right to receive or
retain any portion of any property securing the Subordinated Debt or proceeds
thereof, or apply any portion thereof to the Subordinated Debt, until such time
as the Senior Debt shall have been paid in full in cash and the commitment of
the Senior Creditor to lend has been terminated.

         Section 3. Representations and Warranties of the Subordinated Creditor.
The Subordinated Creditor represents and warrants to the Senior Creditor that:

         3.01 Corporate Existence. The Subordinated Creditor is a corporation
duly organized and validly existing under the laws of the jurisdiction of its
incorporation.

         3.02 No Breach. None of the execution and delivery of this Agreement,
the consummation of the transactions herein contemplated or compliance with the
terms and provisions hereof will conflict with or result in a breach of, or
require any consent under, the charter or bylaws of the Subordinated Creditor,
any applicable law or regulation, or any order, writ, injunction or decree of
any court or governmental authority or agency, or any agreement or instrument to
which the Subordinated Creditor is a party or by which the Subordinated Creditor
is bound or to which the Subordinated Creditor is subject, or constitute a
default under any such agreement or instrument, or result in the creation or
imposition of any Lien upon any of the revenues or assets of the Subordinated
Creditor pursuant to the terms of any such agreement or instrument.

         3.03 Corporate Action: Execution and Delivery. The Subordinated
Creditor has all necessary corporate power and authority to execute, deliver and
perform its obligations under this Agreement; the execution, delivery and
performance by the Subordinated Creditor of this Agreement have been duly
authorized by all necessary action on its part; and this Agreement has been duly
and validly


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         executed and delivered by the Subordinated Creditor and constitutes the
         legal, valid and binding obligation of the Subordinated Creditor,
         enforceable in accordance with its terms.

         3.04 Approvals. No authorizations, approvals or consents of, and no
filings or registrations with, any governmental or regulatory authority or
agency are necessary for the execution, delivery or performance by the
Subordinated Creditor of this Agreement or for the validity or enforceability
hereof.

         Section 4. Representations and Warranties of the Senior Creditor. The
Senior Creditor represents and warrants to the Subordinated Creditor that:

         4.01 Corporate Existence. The Senior Creditor is a corporation duly
organized and validly existing under the laws of the jurisdiction of its
incorporation.

         4.02 No Breach. None of the execution and delivery of this Agreement,
the consummation of the transactions herein contemplated or compliance with the
terms and provisions hereof will conflict with or result in a breach of, or
require any consent under, the charter or bylaws of the Senior Creditor, any
applicable law or regulation, or any order, writ, injunction or decree of any
court or governmental authority or agency, or any agreement or instrument to
which the Senior Creditor is a party or by which the Senior Creditor is bound or
to which the Senior Creditor is subject, or constitute a default under any such
agreement or instrument, or result in the creation or imposition of any Lien
upon any of the revenues or assets of the Senior Creditor pursuant to the terms
of any such agreement or instrument.

         4.03 Corporate Action: Execution and Delivery. The Senior Creditor has
all necessary corporate power and authority to execute, deliver and perform its
obligations under this Agreement; the execution, delivery and performance by the
Senior Creditor of this Agreement have been duly authorized by all necessary
action on its part; and this Agreement has been duly and validly executed and
delivered by the Senior Creditor and constitutes the legal, valid and binding
obligation of the Senior Creditor, enforceable in accordance with its terms.

         4.04 Approvals. No authorizations, approvals or consents of, and no
filings or registrations with, any governmental or regulatory authority or
agency are necessary for the execution, delivery or performance by the Senior
Creditor of this Agreement or for the validity or enforceability hereof.

         Section 5. Payments Held in Trust. In the event that, notwithstanding
the foregoing provisions of Sections 2.02, 2.03, 2.08 or any other provision
hereof, the Subordinated Creditor shall have received any payment or
distribution of assets or proceeds (other than Permissible Securities)
prohibited by the provisions of this Agreement, including, without limitation,
any such payment arising out of the exercise by any Subordinated Creditor of a
right of set-off or counterclaim and any such payment received by reason of
other indebtedness of the Companies being subordinated to the Subordinated Debt,
then, and in any such event, such payment shall be held in trust for the benefit
of, and shall be immediately paid over or delivered to, the Senior Creditor, for
application to the Senior Debt whether or not then due and payable.

         Section 6. Bailment for Perfection. Senior Creditor agrees that it
shall hold any collateral as to which perfection is accomplished solely by
possession for its own benefit, and, for the purposes of perfection only, for
the benefit of the Subordinated Creditor, subject to the provisions of this


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Agreement. Notwithstanding the foregoing, Senior Creditor shall not owe any
duties or obligations, or incur any liabilities, of any kind whatsoever toward
the Subordinated Creditor as a result of this agreement by the Senior Creditor,
including without limitation any duty to exercise reasonable care in the holding
of such collateral, any duty to retain, preserve or protect any such collateral,
or any duty to sell or not to sell any such collateral. In no way shall the
Senior Creditor be deemed to stand in a trust or fiduciary relationship with the
Subordinated Creditor.

         Section 7. Miscellaneous.

         7.01 No Waiver. No failure on the part of the Senior Creditor to
exercise, and no course of dealing with respect to, and no delay in exercising,
any right, power or remedy hereunder or under the Fleet Financing Agreement or
related agreements shall operate as a waiver thereof; nor shall any single or
partial exercise by the Senior Creditor of any right, power or remedy hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy. The remedies herein are cumulative and are not exclusive
of any remedies provided at law or in equity.

         7.02 Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the Commonwealth of Pennsylvania (without regard
to Pennsylvania conflicts of laws principles).

         7.03 Notices. All notices, requests, consents and demands hereunder
shall be in writing and telexed, telecopied or delivered to the intended
recipient at the "Address for Notices" specified beneath its name on the
signature pages hereof or, as to any party, at such other address as shall be
designated by such party in a written notice to each other party. Except as
otherwise provided in this Agreement, all such communications shall be deemed to
have been duly given when transmitted by telex or telecopier or personally
delivered or, in the case of a mailed notice, upon receipt, in each case given
or addressed as aforesaid.

         7.04 No Modifications. The terms of this Agreement may be waived,
altered or amended only by an instrument in writing duly executed by the
Subordinated Creditor and Senior Creditor.

         7.05 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the respective successors and assigns of the
Subordinated Creditor and the Senior Creditor. The terms "Senior Creditor" and
"Subordinated Creditor" shall respectively apply to any successor and assign of
any such party. Each party agrees to notify any successor and assign of the
existence and terms of this Agreement.

         7.06 Captions. The captions and section headings appearing herein are
included solely for convenience of reference and are not intended to affect the
interpretation of any provision of this Agreement.

         7.07 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.

         7.08 Subordination Legend. Each instrument, document or agreement
creating or evidencing the Subordinated Debt and Junior Security Interests shall
contain a conspicuous legend (in form and


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substance satisfactory to the Senior Creditor) that such instrument, document or
agreement and the rights therein are subject to the provisions of this
Agreement.

         7.09 Amendment to Subordinated Debt Documents. The Subordinated
Creditor covenants and agrees that it will not modify any of the Subordinated
Debt Documents in any manner which would accelerate the date on which any
payment thereunder is to become due, increase the Companies' monetary
obligations thereunder, or make more restrictive any financial covenants
thereunder.

         7.10 Expenses. Senior Creditor shall have the right to recover on
demand from Subordinated Creditor all expenses incurred by the Senior Creditor
to enforce the provisions of this Agreement against the Subordinated Creditor.

         7.11 Proceeds of Key-Executive Life Insurance. Notwithstanding anything
set forth in this Agreement to the contrary, including, without limitation, any
of the provisions of Sections 2.02, 2.03 and 2.08, the holders of the
Subordinated Debt shall be entitle to receive and retain, and apply to the
payment, prepayment, forgiveness or reductions of the Subordinated Debt, any
distributions, payments or proceed of any life insurance policy upon the life of
Paul Woitach or Robert McDaniel paid to the holders of the Subordinated Debt, as
beneficiaries and assignees of such policy.


         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.

SUBORDINATED CREDITOR                        SENIOR CREDITOR

AMERICAN CAPITAL STRATEGIES, LTD.            FLEET CAPITAL CORPORATION

By: /s/ JOHN R. ERICKSON                     By: /s/ WALTER SCHUPPE
    ----------------------                       ----------------------------
    Name: JOHN R. ERICKSON                       Name: WALTER SCHUPPE
    Title: CFO                                   Title: S.V.P.

Address for Notices:
2 Bethesda Metro Center, 14th Floor          Address for Notices:
Bethesda, MD 20814
                                             200 Glastonbury Boulevard
                                             Glastonbury, Connecticut 06033
Attention: Chairman
                                             Attention: Northeast Loan
                                                        Administration
Facsimile No.: (301) 654-6714
                                             Facsimile No.: (860) 657-7759




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<PAGE>   11
ACKNOWLEDGED AND AGREED:


IGI, INC.
IGEN, INC.
IMMUNOGENETICS, INC.
BLOOD CELLS, INC.


By: /s/ MANFRED HANUSCHEK
    -----------------------------
    Name: MANFRED HANUSCHEK

    As authorized officer of each of the above
    named companies




                   (Signature Page to Subordination Agreement)




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