Document:

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                                                                   EXHIBIT 10.33

                                    IGI, INC.

                                       to

                            FLEET CAPITAL CORPORATION

                     OPEN-ENDED MORTGAGE, SECURITY AGREEMENT
                       AND ASSIGNMENT OF LEASES AND RENTS

                        Dated:          October 29, 1999

                        Location:       County of Cumberland
                                        State of New Jersey

                              RECORD AND RETURN TO:

                        Blank Rome Comisky & McCauley LLP
                               a Pennsylvania LLP
                          Woodland Falls Corporate Park
                               210 Lake Drive East
                          Cherry Hill, New Jersey 08002
                     Attention: Peter W. Leibundgut, Esquire
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                     OPEN-ENDED MORTGAGE, SECURITY AGREEMENT
                       AND ASSIGNMENT OF LEASES AND RENTS

         THIS OPEN-ENDED MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF LEASES
         AND RENTS made the 29th day of October, 1999, between IGI, INC. a
         Delaware corporation, having a mailing address at Wheat Road and
         Lincoln Avenue, Buena, New Jersey 03104 (the "MORTGAGOR"), and FLEET
         CAPITAL CORPORATION, a Rhode Island corporation, having an office at
         200 Glastonbury Boulevard, Glastonbury, Connecticut 06033 (the
         "MORTGAGEE"),

                              W I T N E S S E T H:

         THIS MORTGAGE SECURES FUTURE ADVANCES AND ALL FUTURE OBLIGATIONS
WHATSOEVER OF MORTGAGOR TO MORTGAGEE.

         Terms not otherwise defined herein shall have the meanings ascribed
thereto in the Loan and Security Agreement between Mortgagor and Mortgagee of
even date herewith as same may, from time to time, be amended or restated (the
"Loan Agreement").

         Whereas the Mortgagor is the owner of a fee estate in the premises
described in Exhibit A attached hereto (the "Premises");

         NOW THEREFORE, to secure the payment of all indebtedness incurred under
the Credit Facility in the aggregate outstanding principal amount of Twenty Two
Million Dollars ($22,000,000.00), lawful money of the United States of America,
which sum is comprised of (i) a Term Loan A in the amount of $6,650,000; (ii) a
Term Loan B in the amount of $350,000; (iii) Revolving Credit Facility in the
maximum amount of $12,000,000; and (iv) Capital Expenditure Loans in the
aggregate amount of $3,000,000, or so much thereof as may be advanced in
accordance with the provisions of the Loan Agreement, to be paid with interest
(said principal indebtedness, interest and all other sums which may or shall at
any time be owing being hereinafter collectively referred to as the "DEBT")
according to certain promissory notes dated the date hereof or given in the
future by the Mortgagor to the Mortgagee (collectively, as they may be amended
or restated from time to time, the "NOTE"), all other amounts which Mortgagor
and Mortgagee may agree are to be secured hereby, with interest thereon at the
rate or rates agreed upon; all other existing or future obligations of
Mortgagor, its successors or assigns, to Mortgagee, whether oral or written,
secured or unsecured, direct or indirect, primary or secondary, absolute or
contingent, joint or several, which are now due or to become due, and regardless
of their nature, together with any such future obligations; the Mortgagor has
mortgaged, given, granted, bargained, sold, aliened, enfeoffed, conveyed,
confirmed and assigned, and by these presents does mortgage, give, grant,
bargain, sell, alien, enfeoff, convey, confirm and assign unto the Mortgagee
forever all right, title and interest of the Mortgagor now owned, or hereafter
acquired, in and to the following property, rights and interest (such property,
rights and interests being hereinafter collectively referred to as the
"MORTGAGED PROPERTY"):

         (a) The Premises;

         (b) all buildings and improvements now or hereafter located on the
Premises (the "IMPROVEMENTS");

         (c) all of the estate, right, title, claim or demand of any nature
whatsoever of the Mortgagor, either in law or in equity, in possession or
expectancy, in and to the Mortgaged Property or any part thereof;
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         (d) all easements, rights-of-way, gores of land, streets, ways, alleys,
passages, sewer rights, waters, water courses, water rights and powers, and all
estates, rights, titles, interests, privileges, liberties, tenements,
hereditaments, and appurtenances of any nature whatsoever, in any way belonging,
relating or pertaining to the Mortgaged Property (including, without limitation,
any and all development rights, air rights or similar or comparable rights of
any nature whatsoever now or hereafter appurtenant to the Premises or now or
hereafter transferred to the Premises) and all land lying in the bed of any
street, road or avenue, opened or proposed, in front of or adjoining the
Premises to the center line thereof;

         (e) except as provided in the Loan Agreement, all machinery, apparatus,
equipment, fittings, fixtures and other property of every kind and nature
whatsoever owned by the Mortgagor, or in which the Mortgagor has or shall have
an interest, now or hereafter located upon the Mortgaged Property, or
appurtenances thereto, and usable in connection with the present or future
operation and occupancy of the Mortgaged Property and all building equipment,
materials and supplies of any nature whatsoever owned by the Mortgagor, or in
which the Mortgagor has or shall have an interest, now or hereafter located upon
the Mortgaged Property (collectively, the "EQUIPMENT"), and the right, title and
interest of the Mortgagor in and to any of the Equipment which may be subject to
any security agreements (as defined in the Uniform Commercial Code of the State
in which the Premises are located), superior in lien to lien of this Mortgage;

         (f) all awards or payments, including interest thereon, and the right
to receive the same, which may be made with respect to the Mortgaged Property,
whether from the exercise of the right of eminent domain (including any transfer
made in lieu of the exercise of said right), or for any other injury to or
decrease in the value of the Mortgaged Property;

         (g) all leases and other agreements affecting the use or occupancy of
the Mortgaged Property now or hereafter entered into (the "LEASES") and the
right to receive and apply the rents, issues and profits of the Mortgaged
Property (the "RENTS") to the payment of the Debt;

         (h) all proceeds of and any unearned premiums on any insurance policies
covering the Mortgaged Property, including, without limitation, the right to
receive and apply the proceeds of any insurance, judgments, or settlements made
in lieu thereof, for damage to the Mortgaged Property; and

         (i) the right, in the name and on behalf of the Mortgagor, to appear in
and defend any action or proceeding brought with respect to the Mortgaged
Property and to commence any action or proceeding to protect the interest of the
Mortgagee in the Mortgaged Property.

         TO HAVE AND TO HOLD the above granted and described Mortgaged Property
unto and to the proper use and benefit of the Mortgagee, and the successors and
assigns of the Mortgagee, forever.

         AND the Mortgagor covenants and agrees with and represents and warrants
to the Mortgagee as follows:

         1. Payment of Debt. The Mortgagor will pay the Debt at the time and in
the manner provided for its payment in the Note.

         2. Warranty of Title. Subject only to those exceptions to title
specifically set forth in the title policy issued or to be issued by Chicago
Title Insurance Company, commitment No. BT-9951, to the Mortgagee and insuring
the lien of this Mortgage, the Mortgagor warrants the title to the Premises, the
Improvements, the Equipment and the balance of the Mortgaged Property. the
Mortgagor also represents and warrants that (i) the Mortgagor is now, and after
giving effect to this Mortgage, will be in a solvent condition, (ii) the
execution and delivery of this Mortgage by the Mortgagor does not constitute a
"fraudulent conveyance" within the meaning of Title 11 of the United States Code
as now constituted or
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under any other applicable statute, and (iii) no bankruptcy or insolvency
proceedings are pending or contemplated by or against the Mortgagor.

         3. Insurance. The Mortgagor shall maintain insurance as required by the
Loan Agreement, the proceeds of which are to be paid to the Mortgagee for
application as provided by the Loan Agreement.

         4. Payment of Taxes, etc. The Mortgagor shall pay all taxes,
assessments, water rates, sewer rents and other charges, including vault charges
and license fees for the use of vaults, chutes and similar areas adjoining the
Premises, now or hereafter levied or assessed against the Mortgaged Property
(the "TAXES") prior to the date upon which any fine, penalty, interest or cost
may be added thereto or imposed by law for the nonpayment thereof. The Mortgagor
shall deliver to the Mortgagee, upon request, receipted bills, canceled checks
and other evidence satisfactory to the Mortgagee evidencing that the payment of
all taxes is current.

         5. Escrow Fund. If an Event of Default is outstanding, the Mortgagor
will, at the option of the Mortgagee, pay to the Mortgagee on the first day of
each calendar month one-twelfth of an amount (the "ESCROW FUND") which would be
sufficient to pay the Taxes payable, or estimated by the Mortgagee to be
payable, during the ensuing twelve (12) months. The Mortgagee will apply the
Escrow Fund to the payment of Taxes which are required to be paid by the
Mortgagor pursuant to the provisions of this Mortgage. If the amount of the
Escrow Fund shall exceed the amount of the Taxes payable by the Mortgagor
pursuant to the provisions of this Mortgage, the Mortgagee shall, in its
discretion, (a) return any excess to the Mortgagor, or (b) credit such excess
against future payments to be made to the Escrow Fund or (c) credit such excess
to the Debt. In allocating such excess, the Mortgagee may deal with the person
shown on the records of the Mortgagee to be the owner of the Mortgaged Property.
If the Escrow Fund is not sufficient to pay the Taxes, as the same become
payable, the Mortgagor shall pay to the Mortgagee, upon request, an amount which
the Mortgagee shall estimate as sufficient to make up the deficiency. Until
expended or applied as above provided, any amounts in the Escrow Fund may be
commingled with the general funds of the Mortgagee and shall constitute
additional security for the Debt and shall not bear interest.

         6. Condemnation. Notwithstanding any taking by any public or
quasi-public authority through eminent domain or otherwise, the Mortgagor shall
continue to pay the Debt at the time and in the manner provided for its payment
in the Note and this Mortgage and the Debt shall not be reduced until any award
or payment therefor shall have been actually received and applied by the
Mortgagee to the discharge of the Debt. The Mortgagee shall have the option to
apply the entire amount of any such award or payment to the discharge of the
Debt whether or not then due and payable in such order, priority and proportions
as the Mortgagee in its discretion shall deem proper. If the Mortgaged Property
is sold, through foreclosure or otherwise, prior to the receipt by the Mortgagee
of such award or payment, the Mortgagee shall have the right, whether or not a
deficiency judgment on the Note shall have been sought, recovered or denied, to
receive such award or payment, or a portion thereof sufficient to pay the Debt,
whichever is less. The Mortgagor shall file and prosecute its claim or claims
for any such award or payment in good faith and with due diligence and cause the
same to be collected and paid over to the Mortgagee. The Mortgagor hereby
irrevocably authorizes and empowers the Mortgagee, in the name of the Mortgagor
or otherwise, to collect and receipt for any such award or payment and to file
and prosecute such claim or claims. Although it is hereby expressly agreed that
the same shall not be necessary in any event, the Mortgagor shall, upon demand
of the Mortgagee, make, execute and deliver any and all assignments and other
instruments sufficient for the purpose of assigning any such award or payment to
the Mortgagee, free and clear of any encumbrances of any kind or nature
whatsoever.

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         7. Leases and Rents. Subject to the terms of this paragraph, the
Mortgagee waives the right to enter the Mortgaged Property for the purpose of
collecting the Rents, and grants the Mortgagor the right to collect the Rents.
The Mortgagor shall hold the Rents, or an amount sufficient to discharge all
current sums due on the Debt, in trust for use in payment of the Debt. The right
of the Mortgagor to collect the Rents may be revoked by the Mortgagee upon an
Event of Default by giving notice of such revocation to the Mortgagor. Following
such notice the Mortgagee may retain and apply the Rents toward payment of the
Debt in such order, priority and proportions as the Mortgagee, in its
discretion, shall deem proper, or to the operation, maintenance and repair of
the Mortgaged Property, and irrespective of whether the Mortgagee shall have
commenced a foreclosure of this Mortgage or shall have applied or arranged for
the appointment of a receiver. The Mortgagor shall not, without the consent of
the Mortgagee, make, or suffer to be made, any Leases or modify or cancel any
Leases or accept prepayments of installments of the Rents for a period of more
than one (1) month in advance or further assign the whole or any part of the
Rents. The Mortgagor shall (a) fulfill or perform each and every provision of
the Leases on the part of the Mortgagor to be fulfilled or performed, (b)
promptly send copies of all notices of default which the Mortgagor shall send or
receive under the Leases to the Mortgagee, and (c) enforce, short of termination
of the Leases, the performance or observance of the provisions thereof by the
tenants thereunder.

         8. Maintenance of the Mortgaged Property. The Mortgagor shall cause the
Mortgaged Property to be maintained in good condition and repair and will not
commit or suffer to be committed any waste of the Mortgaged Property. The
Improvements and the Equipment shall not be removed, demolished or materially
altered (except for normal replacement of the Equipment), without the consent of
the Mortgagee. The Mortgagor shall promptly comply with all existing and future
governmental laws, orders, ordinances, rules and regulations affecting the
Mortgaged Property, or any portion thereof or the use thereof. The Mortgagor
shall promptly repair, replace or rebuild any part of the Mortgaged Property
which may be damaged or destroyed by fire or other property hazard or casualty
(including any fire or other property hazard or casualty for which insurance was
not obtained or obtainable) or which may be affected by any taking by any public
or quasi-public authority through eminent domain or otherwise, and shall
complete and pay for, within a reasonable time, any structure at any time in the
process of construction or repair on the Premises. The Mortgagor will not,
without obtaining the prior consent of the Mortgagee, initiate, join in or
consent to any private restrictive covenant, zoning ordinance, or other public
or private restrictions, limiting or affecting the uses which may be made of the
Mortgaged Property or any part thereof.

         9. Environmental Provisions. For the purposes of this paragraph the
following terms shall have the following meanings: (i) the term "HAZARDOUS
MATERIAL" shall mean any material or substance including petroleum products
that, whether by its nature or use, is subject to regulation under any
Environmental Requirement, (ii) the term "ENVIRONMENTAL REQUIREMENTS" shall
collectively mean the Spill Compensation and Control Act, N.J.S.A. 58:11-23.11,
et seq., the Comprehensive Environmental Response, Compensation and Liability
Act of 1980 (42 U.S.C. Section 9601 et seq.), the Hazardous Materials
Transportation Act (49 U.S.C. Section 1801 et seq.), the Resource Conservation
and Recovery Act (42 U.S.C. Section 6901 et seq.), the Toxic Substances Control
Act (15 U.S.C. Section2601 et seq.), the Clean Air Act (42 U.S.C. Section 7401
et seq.) and the Federal Water Pollution Control Act (33 U.S.C. Section 1251 et
seq.), all as presently in effect and as the same may hereafter be amended, any
regulation pursuant thereto, or any other present or

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future law, ordinance, rule, regulation, order or directive addressing
environmental, health or safety issues of or by any Governmental Authority,
(iii) the term "GOVERNMENTAL AUTHORITY" shall mean the Federal government, or
any state or other political subdivision thereof, or any agency, court or body
of the Federal government, any state or other political subdivision thereof,
exercising executive, legislative, judicial, regulatory or administrative
functions, and (iv) the term "DILIGENT INQUIRY" shall mean a level of inquiry at
least equal to an environmental site assessment of the Mortgaged Property
conducted in accordance with the Mortgagee's environmental policies and
procedures. The Mortgagor hereby represents and warrants to the Mortgagee that
to the best of the Mortgagor's knowledge after diligent inquiry (i) except for
Hazardous Material used in the ordinary course of Mortgagor's business in
compliance with all Environmental Requirements, no Hazardous Material has been
or is currently located at, in, on, under or about the Mortgaged Property in a
manner which violates any Environmental Requirement, or which requires cleanup
or corrective action of any kind under any Environmental Requirement, (ii) no
releasing, emitting, discharging, leaching, dumping or disposing of any
Hazardous Material from the Mortgaged Property onto or into any other property
or from any other property onto or into the Mortgaged Property has occurred or
is occurring in violation of any Environmental Requirement, (iii) no notice of
violation, lien, complaint, suit, order or other notice with respect to the
environmental condition of the Mortgaged Property is outstanding, nor has any
such notice been issued which has not been fully satisfied and complied with in
a timely fashion so as to bring the Mortgaged Property into full compliance with
all Environmental Requirements, (iv) no lien has been attached to any revenues
of, or any real or personal property owned by, the Mortgagor and located in the
State of New Jersey under any Environmental Requirement, (v) no Hazardous
Material is currently located at, on, in, under or about any real property owned
or occupied by the Mortgagor and located in the State of New Jersey, in a manner
which violates any Environmental Requirement or which requires cleanup or
corrective action of any kind under any Environmental Requirement, (vi)
Mortgagor has, and will continue to have, all necessary federal, state and local
licenses, certificates, permits and approvals relating to its facilities,
business, premises and equipment at the Mortgaged Property and is in compliance
with all applicable consent orders, judgments, injunctions and Environmental
Requirements, and (vii) all closures, terminations and transfers of operations,
as defined by the New Jersey Industrial Site Recovery Act, N.J.S.A. 13:1K-6 et
seq. and the regulations thereunder ("ISRA"), on or relating to the Mortgaged
Property since December 31, 1983 have been completed only after full compliance
with ISRA, to the extent applicable. The Mortgagor shall comply, and shall cause
all tenants or other occupants of the Mortgaged Property to comply, in all
respects with all Environmental Requirements, and will not generate, store,
handle, process, dispose of or otherwise use, and will not permit any tenant or
other occupant of the Mortgaged Property to generate, store, handle, process,
dispose of or otherwise use, Hazardous Materials at, in, on, under or about the
Mortgaged Property in a manner that could lead or potentially lead to the
imposition on the Mortgagor, the Mortgagee or the Mortgaged Property of any
liability or lien of any nature whatsoever under any Environmental Requirement.
All closures, terminations and transfers of operations, as defined by ISRA, on
or relating to the Mortgaged Property during the term of this Mortgage, shall be
completed only after full compliance with ISRA, to the extent applicable, by the
Mortgagor and all tenants or other occupants of the Mortgaged Property to the
extent Mortgagor believes that ISRA is not applicable to any closures,
terminations or transfers of operations at the Mortgaged Property during the
term of this Mortgage, Mortgagor shall obtain a Letter of Non-Applicability as
provided for in ISRA. The Mortgagor shall notify the Mortgagee promptly in the
event of any spill or other release of any Hazardous Material at, in, on, under
or about the Mortgaged Property which is required to be reported to a
Governmental Authority under any Environmental Requirement, will promptly
forward to the Mortgagee copies of any notices received by the Mortgagor
relating to alleged violations of any Environmental Requirement and will
promptly pay when due any fine or assessment against the Mortgagee, the
Mortgagor or the Mortgaged Property relating to any Environmental Requirement.
If at any time it is determined that the past, present or future operation or
use of the

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Mortgaged Property violates any applicable Environmental Requirement or that
there are Hazardous Materials located at, in, on, under or about the Mortgaged
Property which, under any Environmental Requirement, require special handling in
collection, storage, treatment or disposal, or any other form of cleanup or
corrective action, the Mortgagor shall, within thirty (30) days after receipt of
notice thereof from any Governmental Authority or from the Mortgagee, take, at
its sole cost and expense, such actions as may be necessary to fully comply in
all respects with all Environmental Requirements, provided, however, that if
such compliance cannot reasonably be completed within such thirty (30) day
period, the Mortgagor shall commence such necessary action within such thirty
(30) day period and shall thereafter diligently and expeditiously proceed to
fully comply in all respects and in a timely fashion with all Environmental
Requirements. If the Mortgagor fails to timely take, or to diligently and
expeditiously proceed to complete in a timely fashion, any such action, the
Mortgagee may, in its sole and absolute discretion, make advances or payments
towards the performance or satisfaction of the same, but shall in no event be
under any obligation to do so. All sums so advanced or paid by the Mortgagee
(including, without limitation, counsel and consultant fees and expenses,
investigation and laboratory fees and expenses, and fines or other penalty
payments) and all sums advanced or paid in connection with any judicial or
administrative investigation or proceeding relating thereto, will immediately,
upon demand, become due and payable from the Mortgagor and shall bear interest
at the Default Rate (as defined in the Loan Agreement) from the date any such
sums are so advanced or paid by the Mortgagee until the date any such sums are
repaid by the Mortgagor to the Mortgagee. The Mortgagor will execute and
deliver, promptly upon request, such instruments as the Mortgagee may deem
useful or necessary to permit the Mortgagee to take any such action, and such
additional notes and mortgages, as the Mortgagee may require to secure all sums
so advanced or paid by the Mortgagee. If a lien is filed against the Mortgaged
Property by any Governmental Authority resulting from the need to expend or the
actual expending of monies arising from an action or omission, whether
intentional or unintentional, of the Mortgagor or for which the Mortgagor is
responsible, resulting in the releasing, spilling, leaking, leaching, pumping,
emitting, pouring, emptying or dumping of any Hazardous Material into the waters
or onto land located within or without the State where the Mortgaged Property is
located, then the Mortgagor will, within ten (10) days from the date that the
Mortgagor is first given notice that such lien has been placed against the
Mortgaged Property (or within such shorter period of time as may be specified by
the Mortgagee if such Governmental Authority has commenced steps to cause the
Mortgaged Property to be sold pursuant to such lien) either (a) pay the claim
and remove the lien, or (b) furnish a cash deposit, bond, or such other security
with respect thereto as is satisfactory in all respects to the Mortgagee and is
sufficient to effect a complete discharge of such lien on the Mortgaged
Property. As a condition precedent to any action by Mortgagor, whether in equity
or at law, to seek to rescind its interest in the Mortgaged Property, including,
without limitation, any statutory rights of rescission under either N.J.S.A.
13:1K-13(b) or N.J.S.A. 13:18A-22(c), Mortgagor shall notify Mortgagee and
provide replacement collateral which in Mortgagee's sole discretion is
equivalent to the Mortgaged Premises. The Mortgagee may, at its option, if the
Mortgagee reasonably believes that a Hazardous Material or other environmental
condition violates or threatens to violate any Environmental Requirement, cause
an environmental audit of the Mortgaged Property or portions thereof to be
conducted to confirm the Mortgagor's compliance with the provisions of this
paragraph, and the Mortgagor shall cooperate in all reasonable ways with the
Mortgagee in connection with any such audit and shall pay all costs and expenses
incurred in connection therewith. The Mortgagor will defend, indemnify, and hold
harmless the Mortgagee, its employees, agents, officers, and directors, from and
against any and all claims, demands, penalties, causes of action, fines,
liabilities, settlements, damages, costs, or expenses of whatever kind or
nature, known or unknown, foreseen or unforeseen, contingent or otherwise
(including, without limitation, counsel and consultant fees and expenses,
(including, without limitation, counsel and consultant fees and expenses,
investigation and laboratory fees and expenses, court costs, and litigation
expenses) arising out of, in any way related to, (i) any breach by the Mortgagor
of any of the provisions of this paragraph, (ii) the presence, disposal,

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spillage, discharge, emission, leakage, release, or threatened release of any
Hazardous Material which is at, in, on, under, about, from or affecting the
Mortgaged Property, including, without limitation, any damage or injury
resulting from any such Hazardous Material to or affecting the Mortgaged
Property or the soil, water, air, vegetation, buildings, personal property,
persons or animals located on the mortgaged Property or on any other property or
otherwise, (iii) any personal injury (including wrongful death) or property
damage (real or personal) arising out of or related to any such Hazardous
Material, (iv) any lawsuit brought or threatened, settlement reached, or order
or directive of or by any Governmental Authority relating to such Hazardous
Material, or (v) any violation of any Environmental Requirement or any policy or
requirement of the Mortgagee hereunder. This indemnification shall,
notwithstanding any exculpatory or other provision of any nature whatsoever to
the contrary set forth in the Note, this Mortgage or any other document or
instrument now or hereafter executed and delivered in connection with the loan
evidenced by the Note and secured by this Mortgage, constitute the personal
recourse undertakings, obligations and liabilities of the Mortgagor. If this
Mortgage is foreclosed or the Mortgagor tenders a deed or assignment in lieu of
foreclosure, the Mortgagor shall deliver the Mortgaged Property to the purchaser
at foreclosure or to the Mortgagee, its nominee, or wholly owned subsidiary, as
the case may be, in a condition that complies in all respects with all
Environmental Requirements. The obligations and liabilities of the Mortgagor
under this paragraph shall survive and continue in full force and effect and
shall not be terminated, discharged or released, in whole or in part,
irrespective of whether the Debt has been paid in full and irrespective of any
foreclosure of this Mortgage or acceptance by the Mortgagee, its nominee or
wholly owned subsidiary of a deed or assignment in lieu of foreclosure and
irrespective of any other fact or circumstance of any nature whatsoever.

         10. Transfer or Encumbrance of the Mortgaged Property. Except for
Permitted Liens, no part of the Mortgaged Property nor any interest of any
nature whatsoever therein shall in any manner be further encumbered, sold,
transferred or conveyed, or permitted to be further encumbered, sold,
transferred, assigned or conveyed without the prior consent of the Mortgagee,
which consent in any and all circumstances may be withheld in the sole and
absolute discretion of the Mortgagee. The provisions of the foregoing sentence
of this paragraph shall apply to each and every such further encumbrance, sale,
transfer, assignment or conveyance, regardless of whether or not the Mortgagee
has consented to, or waived by its action or inaction its rights hereunder with
respect to, any such previous further encumbrance, sale, transfer, assignment or
conveyance, and irrespective of whether such further encumbrance, sale,
transfer, assignment or conveyance is voluntary, by reason of operation of law
or is otherwise made.

         11. Notice. Any notice, request, demand, statement, authorization,
approval or consent made hereunder shall be in writing and shall be hand
delivered or sent by Federal Express, or other reputable courier service, or by
postage pre-paid registered or certified mail, return receipt requested, and
shall be deemed given (i) when received at the following addresses if hand
delivered or sent by Federal Express, or other reputable courier service, and
(ii) three (3) business days after being postmarked and addressed as follows if
sent by registered or certified mail, return receipt requested:

         If to the Mortgagor:       IGI, Inc.
                                    Wheat Road & Lincoln Avenue
                                    Buena, New Jersey 08310
                                    Attn:   Paul Woitach, President
                                    Telecopy No.: 609-697-1001

         If to the Mortgagee:       Fleet Capital Corporation

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<PAGE>   9
                                    200 Glastonbury Boulevard
                                    Glastonbury, Connecticut
                                    Attn.:  Walter Schuppe
                                    Telecopy No.:   860-657-7759/7689

         With a copy to:            Blank Rome Comisky & McCauley LLP
                                    One Logan Square
                                    Philadelphia, Pennsylvania 19103
                                    Attn:   Harvey I. Forman, Esquire
                                    Telecopy No.:   215-569-5522

Each party may designate a change of address by notice to the other party, given
at least fifteen (15) days before such change of address is to become effective.

         12. Sale of Mortgaged Property. If this Mortgage is foreclosed, the
Mortgaged Property, or any interest therein, may, at the discretion of the
Mortgagee, be sold in one or more parcels or in several interests or portions
and in any order or manner.

         13. Changes in Laws Regarding Taxation. In the event of the passage
after the date of this Mortgage of any law of the State in which the Premises
are located deducting from the value of real property for the purpose of
taxation any lien or encumbrance thereon or changing in any way the laws for the
taxation of mortgages or debts secured by mortgages for state or local purposes
or the manner of the collection of any such taxes, and imposing a tax, either
directly or indirectly, on this Mortgage, the Note or the Debt, the Mortgagor
shall, if permitted by law, pay any tax imposed as a result of any such law
within the statutory period or within fifteen (15) days after demand by the
Mortgagee, whichever is less.

         14. No Credits on Account of the Debt. The Mortgagor will not claim or
demand or be entitled to any credit or credits on account of the Debt for any
part of the Taxes assessed against the Mortgaged Property or any part thereof
and no deduction shall otherwise be made or claimed from the taxable value of
the Mortgaged Property, or any part thereof, by reason of this Mortgage or the
Debt.

         15. Other Security for the Debt. The Mortgagor shall observe and
perform all of the terms, covenants and provisions contained in the Note and in
all other mortgages and other instruments or documents evidencing, securing or
guaranteeing payment of the Debt, in whole or in part, or otherwise executed and
delivered in connection with the Note, this Mortgage or the loan evidenced and
secured thereby.

         16. Documentary Stamps. If at any time the United States of America,
any state thereof, or any governmental subdivision of any such state, shall
require revenue or other stamps to be affixed to the Note or this Mortgage, the
Mortgagor will pay for the same, with interest and penalties thereon, if any.

         17. Right of Entry. The Mortgagee and its agents shall have the right
to enter and inspect the Mortgaged Property at all reasonable times upon
reasonable prior notice.

         18. Performance of Other Agreements. The Mortgagor shall observe and
perform each and every term to be observed or performed by the Mortgagor
pursuant to the terms of any agreement

                                       9
<PAGE>   10
or recorded instrument affecting or pertaining to the Mortgaged Property.

         19. Events of Defaults. The Debt shall become due at the option of the
Mortgagee upon the occurrence of any one or more of the following events
(collectively, "EVENTS OF DEFAULT"):

                  (a) the occurrence of an Event of Default under the Loan
Agreement;

                  (b) if any representation or warranty in this Mortgage is
false or incorrect in any material respect or the Mortgagor fails to perform or
fulfill any covenant, condition or undertaking continued in this Mortgage; or

                  (c) if the Mortgaged Property shall become subject (i) to any
tax lien, other than a lien for local real estate taxes and assessments not due
and payable, or (ii) to any lis pendens, notice of pendency, stop order, notice
of intention to file mechanic's or materialman's lien, mechanic's or
materialman's lien or other lien of any nature whatsoever and the same shall not
either be discharged of record or in the alternative insured over to the
satisfaction of the Mortgagee by the title company insuring the lien of this
Mortgage within a period of ten (10) days after the same is filed or recorded,
and irrespective of whether the same is superior or subordinate in lien or other
priority to the lien of this Mortgage and irrespective of whether the same
constitutes a perfected or inchoate lien or encumbered on the Mortgaged Property
or is only a matter of record or notice.

To the extent any of the above provisions conflict with the Loan Agreement, the
terms of the Loan Agreement shall control. Upon the occurrence of any Event of
Default, the Mortgagee may commence an action to foreclose this Mortgage and/or
exercise any and all other rights contained in this Mortgage or otherwise
available at law or in equity to enforce its rights.

         20. Right to Cure Defaults. If default in the performance of any of the
covenants of the Mortgagor herein occurs, the Mortgagee may, at its discretion,
remedy the same and for such purpose shall have the right to enter upon the
Mortgaged Property or any portion thereof without thereby becoming liable to the
Mortgagor or any person in possession thereof holding under the Mortgagor. If
the Mortgagee shall remedy such a default or appear in, defend, or bring any
action or proceeding to protect its interest in the Mortgaged Property or to
foreclose this Mortgage or collect the Debt, the costs and expenses thereof
(including reasonable attorneys' fees to the extent permitted by law), with
interest as provided in this paragraph, shall be paid by the Mortgagor to the
Mortgagee upon demand and shall constitute part of the Debt secured by this
Mortgage. All such costs and expenses incurred by the Mortgagee in remedying
such default or in appearing in, defending, or bringing any such action or
proceeding shall be paid by the Mortgagor to the Mortgagee upon demand, with
interest (calculated for the actual number of days elapsed on the basis of a
360-day year) at a rate per annum equal to the Default Rate set forth in the
Loan Agreement.

         21. Appointment of Receiver. The Mortgagee, in any action to foreclose
this Mortgage or upon the actual or threatened waste to any part of the
Mortgaged Property or upon the occurrence of any default hereunder, shall be at
liberty, without notice, to apply for the appointment of a receiver of the
Rents, and shall be entitled to the appointment of such receiver as a matter of
right, without regard to the value of the Mortgaged Property as security for the
Debt, or the solvency or insolvency of any person then liable for the payment of
the Debt.

         22. Non-Waiver. The failure of the Mortgagee to insist upon strict
performance of any term

                                       10
<PAGE>   11
of this Mortgage shall not be deemed to be a waiver of any term of this
Mortgage. The Mortgagor shall not be relieved of the Mortgagor's obligation to
pay the Debt at the time and in the manner provided for its payment in the Note
and this Mortgage by reason of (i) failure of the Mortgagee to comply with any
request of the Mortgagor to take any action to foreclose this Mortgage or
otherwise enforce any of the provisions hereof or of the Note or any other
mortgage, instrument or document evidencing, securing or guaranteeing payment of
the Debt or any portion thereof, (ii) the release, regardless of consideration,
of the whole or any part of the Mortgaged Property or any other security for the
Debt, or (iii) any agreement or stipulation between the Mortgagee and any
subsequent owner or owners of the Mortgaged Property or other person extending
the time of payment or otherwise modifying or supplementing the terms of the
Note, this Mortgage or any other mortgage, instrument or document evidencing,
securing or guaranteeing payment of the Debt or any portion thereof, without
first having obtained the consent of the Mortgagor, and in the latter event, the
Mortgagor shall continue to be obligated to pay the Debt at the time and in the
manner provided in the Note and this Mortgage, as so extended, modified and
supplemented, unless expressly released and discharged from such obligation by
the Mortgagee in writing. Regardless of consideration, and without the necessity
for any notice to or consent by the holder of any subordinate lien, encumbrance,
right, title or interest in or to the Mortgaged Property, the Mortgagee may
release any person at any time liable for the payment of the Debt or any portion
thereof or any part of the security held for the Debt and may extend the time of
payment or otherwise modify the terms of the Note or this Mortgage, including,
without limitation, a modification of the interest rate payable on the principle
balance of the Note, without in any manner impairing or affecting this Mortgage
or the lien thereof or the priority of this Mortgage, as so extended and
modified, as security for the Debt over any such subordinate lien, encumbrance,
right, title or interest. The Mortgagee may resort for the payment of the Debt
to any other security held by the Mortgagee in such order and manner as the
Mortgagee, in its discretion, may elect. The Mortgagee may take action to
recover the Debt, or any portion thereof, or to enforce any covenant hereof
without prejudice to the right of the Mortgagee thereafter to foreclose this
Mortgage. The Mortgagee shall not be limited exclusively to the rights and
remedies herein stated but shall be entitled to every additional right and
remedy now or hereafter afforded by law. The rights of the Mortgagee under this
Mortgage shall be separate, distinct and cumulative and none shall be given
effect to the exclusion of the others. No act of the Mortgagee shall be
construed as an election to proceed under any one provision herein to the
exclusion of any other provision.

         23. Liability. If the Mortgagor consists of more than one person, the
obligations and liabilities of each such person hereunder shall be joint and
several.

         24. Construction. The terms of this Mortgage shall be construed in
accordance with the laws of the State in which the Premises are located.

         25. Security Agreement. This Mortgage constitutes both a real property
mortgage and a "security agreement", within the meaning of the Uniform
Commercial Code, and the Mortgaged Property includes both real and personal
property and all other rights and interest, whether tangible or intangible in
nature, of the Mortgagor in the Mortgaged Property. The Mortgagor by executing
and delivering this Mortgage has granted to the Mortgagee, as security for the
Debt, a security interest in the Equipment. If an Event of Default occurs under
the Loan Agreement or this Mortgage, the Mortgagee, in addition to any other
rights and remedies which it may have, shall have and may exercise immediately
and without demand, any and all rights and remedies granted to a secured party
upon default under the Uniform Commercial Code, including, without limiting the
generality of the foregoing, the right to take possession of the Equipment or
any part thereof, and to take such other measures as the Mortgagee may deem
necessary for the care, protection and preservation of the Equipment. Upon
request or demand of the

                                       11
<PAGE>   12
Mortgagee, the Mortgagor shall at its expense assemble the Equipment and make it
available to the Mortgagee at a convenient place acceptable to the Mortgagee.
The Mortgagor shall pay to the Mortgagee on demand any and all expenses,
including legal expenses and attorneys' fees, incurred or paid by the Mortgagee
in protecting its interest in the Equipment and in enforcing its rights
hereunder with respect to the Equipment. Any notice of sale, disposition or
other intended action by the Mortgagee with respect to the Equipment sent to the
Mortgagor in accordance with the provisions of this Mortgage at least seven (7)
days prior to the date of any such sale, disposition or other action, shall
constitute reasonable notice to the Mortgagor, and the method of sale or
disposition or other intended action set forth or specified in such notice shall
conclusively be deemed to be commercially reasonable within the meaning of the
Uniform Commercial Code unless objected to in writing by the Mortgagor within
five (5) days after receipt by the Mortgagor of such notice. The proceeds of any
sale or disposition of the Equipment, or any part thereof, may be applied by the
Mortgagee to the payment of the Debt in such order, priority and proportions as
the Mortgagee in its discretion shall deem proper.

         26. Further Acts, etc. The Mortgagor will, at the cost of the
Mortgagor, and without expense to the Mortgagee, do, execute, acknowledge and
deliver all and every such further acts, deeds, conveyances, mortgages,
assignments, notices of assignments, transfers and assurances as the Mortgagee
shall, from time to time, require for the better assuring, conveying, assigning,
transferring and confirming unto the Mortgagee the property and rights hereby
mortgaged or intended now or hereafter so to be, or which the Mortgagor may be
or may hereafter become bound to convey or assign to the Mortgagee, or for
carrying out the intention or facilitating the performance of the terms of this
Mortgage or for filing, registering or recording this mortgage and, on demand,
will execute and deliver and hereby authorizes the Mortgagee to execute in the
name of the Mortgagor to the extent the Mortgagee may lawfully do so, one or
more financing statements, chattel mortgages or comparable security instruments,
to evidence more effectively the lien hereof upon the Mortgaged Property.

         27. Headings, etc. The headings and captions of various paragraphs of
this Mortgage are for convenience of reference only and are not to be construed
as defined or limiting, in any way, the scope or intent of the provisions
hereof.

         28. Filing of Mortgage, etc. The Mortgagor forthwith upon the execution
and delivery of this Mortgage and thereafter, from time to time, will cause this
Mortgage, and any security instrument creating a lien or evidencing the lien
hereof upon the Mortgaged Property and each instrument of further assurance to
be filed, registered or recorded in such manner and in such places as may be
required by any present or future law in order to publish notice of and fully to
protect, preserve and perfect the lien hereof upon, and the interest of the
Mortgagee in, the Mortgaged Property. The Mortgagor will pay all filing,
registration and recording fees, and all expenses incident to the preparation,
execution and acknowledgment of this Mortgage, any mortgage supplemental hereto,
any security instrument with respect to the Mortgaged Property, and any
instrument of further assurance, and all Federal, state, county and municipal
taxes, duties, imposts, assessments and charges arising out of or in connection
with the execution and delivery of this Mortgage, any mortgage supplemental
hereto, any security instrument with respect to the Mortgaged Property or any
instrument of further assurance. The Mortgagor shall hold harmless and indemnify
the Mortgagee, its successors and assigns, against any liability incurred by
reason of the imposition of any tax on the making and recording of this
Mortgage.

         29. Usury Laws. This Mortgage and the Note are subject to the express
condition that at no time shall the Mortgagor be obligated or required to pay
interest on the principal balance due under the Note at a rate which could
subject the holder of the Note to either civil or criminal liability as a result
of being in excess of the maximum interest rate which the Mortgagor is permitted
by law to contract or

                                       12
<PAGE>   13
agree to pay. If by the terms of this Mortgage or the Note, the Mortgagor is at
any time required or obligated to pay interest on the principal balance due
under the Note at a rate in excess of such maximum rate, the rate of interest
under the Note shall be deemed to be immediately reduced to such maximum rate
and the interest payable shall be computed at such maximum rate and all prior
interest payments in excess of such maximum rate shall be applied and shall be
deemed to have been payments in reduction of the principal balance of the Note.

         30. Recovery of Sums Required To Be Paid. The Mortgagee shall have the
right from time to time to take action to recover any sum or sums which
constitute a part of the Debt as the same become due, without regard to whether
or not the balance of the Debt shall be due, and without prejudice to the right
of the Mortgagee thereafter to bring an action of foreclosure, or any other
action, for a default or defaults by the Mortgagor existing at the time such
earlier action was commenced.

         31. Authority. The Mortgagor (and the undersigned representative of the
Mortgagor, if any) has full power, authority and legal right to execute this
Mortgage, and to mortgage, give, grant, bargain, sell, alien, enfeoff, convey,
confirm and assign the Mortgaged Property pursuant to the terms hereof and to
keep and observe all of the terms of this Mortgage on the Mortgagor's part to be
performed.

         32. Actions and Proceedings. The Mortgagee shall have the right to
appear in and defend any action or proceeding brought with respect to the
Mortgaged Property and to bring any action or proceeding, in the name and on
behalf of the Mortgagor, which the Mortgagee, in its discretion, feels should be
brought to protect its interest in the Mortgaged Property.

         33. Inapplicable Provisions. If any term, covenant or condition of this
Mortgage shall be held to be invalid, illegal or unenforceable in any respect,
this Mortgage shall be construed without such provision.

         34. Duplicate Originals. This Mortgage may be executed in any number of
duplicate originals and each such duplicate original shall be deemed to
constitute but one and the same instrument.

         35. Certain Definitions. Unless the context clearly indicates a
contrary intent or unless otherwise specifically provided herein, words used in
this Mortgage shall be used interchangeably in singular or plural form and the
word "Mortgagor" shall mean each the Mortgagor and any subsequent owner or
owners of the Mortgaged Property or any part thereof or interest therein; the
word "Mortgagee" shall mean the Mortgagee or any subsequent holder of the Note;
the word "Note" shall mean the Revolving Credit Note, Term Loan Note Capital
Expenditure Note or any other evidence of indebtedness secured by this Mortgage;
the word "Guarantor" shall mean each person guaranteeing payment of the Debt or
any portion thereof or performance by the Mortgagor of any of the terms of this
Mortgage and their respective heirs, executors, administrators, legal
representatives, successors and assigns; the word "person" shall include an
individual, corporation, partnership, trust, unincorporated association,
government, governmental authority, or other entity; the words "Mortgaged
Property" shall include any portion of the Mortgaged Property or interest
therein; and the word "Debt" shall mean all sums secured by this Mortgage; and
the word "default" shall mean the occurrence of any default by the Mortgagor or
other person in the observance or performance of any of the terms, covenants or
provisions of the Loan Agreement, Note or this Mortgage on the part of the
Mortgagor or such other person to be observed or performed without regard to
whether such default constitutes or would constitute upon notice or lapse of
time, or both, an Event of Default under this Mortgage. Whenever the context may
require, any pronouns used herein shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns and pronouns shall
include the plural and vice versa.

                                       13
<PAGE>   14
         36. Waiver of Notice. The Mortgagor shall not be entitled to any
notices of any nature whatsoever from the Mortgagee except with respect to
matters for which this Mortgage specifically and expressly provides for the
giving of notice by the Mortgagee to the Mortgagor, and the Mortgagor hereby
expressly waives the right to receive any notice from the Mortgagee with respect
to any matter for which this Mortgage does not specifically and expressly
provide for the giving of notice by the Mortgagee to the Mortgagor.

         37. No Oral Change. This Mortgage may only be modified, amended or
changed by an agreement in writing signed by the Mortgagor and the Mortgagee,
and may only be released, discharged or satisfied of record by an agreement in
writing signed by the Mortgagee. No waiver of any term, covenant or provision of
this Mortgage shall be effective unless given in writing by the Mortgagee and if
so given by the Mortgagee shall only be effective in the specific instance in
which given. The Mortgagor acknowledges that the Note, this Mortgage, the Loan
Agreement, and the other documents and instruments executed and delivered in
connection therewith or otherwise in connection with the loan secured hereby set
forth the entire agreement and understanding of the Mortgagor and the Mortgagee
with respect to the loan secured hereby and that no oral or other agreements,
understanding, representation or warranties exist with respect to the loan
secured hereby other than those set forth in the Note, this Mortgage, the Loan
Agreement and such other executed and delivered documents and instruments.

         38. Absolute and Unconditional Obligation. The Mortgagor acknowledges
that the Mortgagor's obligation to pay the Debt in accordance with the provision
of the Note and this Mortgage is and shall at all times continue to be absolute
and unconditional in all respects, and shall at all times be valid and
enforceable irrespective of any other agreements or circumstances of any nature
whatsoever which might otherwise constitute a defense to the Note or this
Mortgage or the obligation of the Mortgagor thereunder to pay the Debt or the
obligations of any other person relating to the Note or this Mortgage or the
obligations of the Mortgagor under the Note or this Mortgage or otherwise with
respect to the loan secured hereby, and the Mortgagor absolutely,
unconditionally and irrevocably waives any and all right to assert any defense,
setoff, counterclaim or crossclaim of any nature whatsoever with respect to the
obligation of the Mortgagor to pay the Debt in accordance with the provisions of
the Note and this Mortgage or the obligations of any other person relating to
the Note or this Mortgage or obligations of the Mortgagor under the Note or this
Mortgage or otherwise with respect to the loan secured hereby in any action or
proceeding brought by the Mortgagee to collect the Debt, or any portion thereof,
or to enforce, foreclose and realize upon the lien and security interest created
by this Mortgage or any other document or instrument securing repayment of the
Debt, in whole or in part.

         39. Waiver of Trial by Jury. The Mortgagor hereby irrevocably and
unconditionally waives, and the Mortgagee by its acceptance of the Note and this
Mortgage irrevocably and unconditionally waives, any and all rights to trial by
jury in any action, suit or counterclaim arising in connection with, out of or
otherwise relating to the Note, this Mortgage the Loan Agreement, any other
document or instrument now or hereafter executed and delivered in connection
therewith or the loan secured by this Mortgage.

         40. Waiver of Statutory Rights. The Mortgagor shall not and will not
apply for or avail itself of any appraisement, valuation, stay, extension or
exemption laws, or any so-called "Moratorium Laws", now existing or hereafter
enacted, in order to prevent or hinder the enforcement or foreclosure of this
Mortgage, but hereby waives the benefit of such laws to the full extent that the
Mortgagor may do so

                                       14
<PAGE>   15
under applicable law. The Mortgagor for itself and all who may claim through or
under it waives any and all right to have the property and estates comprising
the Mortgaged Property marshaled upon any foreclosure of the lien of this
Mortgage and agrees that any court having jurisdiction to foreclose such lien
may order the Mortgaged Property sold as an entirety. The Mortgagor hereby
waives for itself and all who may claim through or under it, and to the full
extent the Mortgagor may do so under applicable law, any and all rights of
redemption from sale under any order of decree of foreclosure of this Mortgage
or granted under any statute now existing or hereafter enacted.

         41. True Copy. The Mortgagor acknowledges receipt of a true copy of
this Mortgage without charge.

         42. Future Disbursements. This Mortgage secures a loan which by its
terms is subject to modification as defined in N.J.S.A. 46:9-8.1.

         43. Relationship. The relationship of the Mortgagee to the Mortgagor
hereunder is strictly and solely that of lender and borrower and nothing
contained in the Note, this Mortgage, the Loan Agreement or any other document
or instrument now or hereafter executed and delivered in connection therewith or
otherwise in connection with the loan secured hereby is intended to create, or
shall in any event or under any circumstance be construed as creating, a
partnership, joint venture, tenancy-in-common, joint tenancy or other
relationship of any nature whatsoever between the Mortgagee and the Mortgagor
other than as lender and borrower.

         IN WITNESS WHEREOF, the Mortgagor has duly executed this Mortgage the
day and year first above written. Mortgagor acknowledges receipt of a true copy
of this Mortgage.

<TABLE>
<CAPTION>
Attest:                                              IGI, INC.

<S>                                      <C>
By: /s/ Robert E. McDaniel               By:     /s/ Manfred Hanuschek

Title:   General counsel_____________    Title: __Chief Financial Officer__________________________
</TABLE>

                                       15
<PAGE>   16
                            CORPORATE ACKNOWLEDGMENT

STATE OF             :
                     :  ss
COUNTY OF            :

         On this, the 29th day of October, 1999, before me, the subscriber, a
notary public in and for the State and County aforesaid, personally appeared
Manfred Hanuschek, a CFO of IGI, Inc., a Delaware corporation, and who
acknowledged that he, as such CFO, being authorized to do so, executed the
foregoing instrument on behalf of said corporation for the purposes therein
contained.

         WITNESS my hand and seal the day and year aforesaid.

                                  /s/ Carolyn Elliott
                                  Notary Public
                                  My Commission Expires: 1/8/00

                                       16
<PAGE>   17
                                    EXHIBIT A

                            (Description of Premises)<PAGE>   1

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).
<PAGE>   2
         "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

                                       2
<PAGE>   3
         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

                                       3
<PAGE>   4
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

                                       4
<PAGE>   5
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.

                                       5
<PAGE>   6
         (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

                                       6
<PAGE>   7
         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

                                       7
<PAGE>   8
         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

                                       8
<PAGE>   9
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

                                       9
<PAGE>   10
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

                                       10
<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)

                                       11

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