IGI INC (Form: 8-K, Received: 03/19/2009 16:59:24)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________________________

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

DATE OF REPORT (Date of earliest event reported): March 13, 2009

IGI LABORATORIES, INC.
(Exact name of registrant as specified in charter)


DELAWARE (State or Other Jurisdiction of Incorporation)	001-08568 (Commission file number)	01-0355758 (I.R.S. Employer Identification Number)

105 Lincoln Avenue
Buena, New Jersey 08310
(Address of principal executive offices)(Zip Code)

(856) 697-1441
(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:


o	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01. Entry into a Material Definitive Agreement.

Purchase Agreement

On March 13, 2009, IGI Laboratories, Inc., a Delaware corporation (the “ Company ”) completed a private placement of Series B-1 Convertible Preferred Stock (the “ Series B-1 Preferred Stock ”), secured convertible promissory notes (the “ Notes ”) and warrants to purchase shares of Series B-2 Preferred Stock (the “ Warrants ” and together with the Series B-1 Preferred Stock and the Notes, the “ Securities ”) to certain investment funds affiliated with Signet Healthcare Partners, G.P. (the “ Investors ”), for an aggregate purchase price of $6,000,000.00 (the “ Offering ”). Rockport Venture Securities, LLC acted as placement agent in connection with the Offering (the “ Placement Agent ”). The Company agreed to sell the Securities to the Investors pursuant to the terms of the securities purchase agreement, dated March 13, 2009 (the “ Purchase Agreement ”). Upon the closing of the Offering, the Company issued 202.9 shares of Series B-1 Preferred Stock and Notes in the aggregate principal amount of $4,782,600 to the Investors. Each share of Series B-1 Preferred Stock is convertible into 14,634 shares of the common stock of the Company, $0.01 par value (the “ Common Stock ”), for an implied common stock conversion price of $0.41 per share.

The shares of Common Stock underlying the shares of Series B-1 Preferred Stock issued to the Investors upon the closing of the Offering represent approximately 19.9% of the outstanding voting stock of the Company. Pursuant to Section 713 of the NYSE Alternext US LLC Company Guide, stockholder approval is required for issuances of securities that will (i) involve the issuance of common stock, or securities convertible into common stock, equal to 20% or more of presently outstanding stock of a company for less than the greater of book or market value of the stock and/or (ii) result in a change of control of the issuer (the “ Stockholder Approval ”). The Company anticipates seeking Stockholder Approval of the Offering and the Conversion (as described below) at its 2009 annual meeting of stockholders. In connection therewith, the Company entered into a voting agreement with Signet Healthcare Partners, G.P., and certain stockholders of the Company (the “ Voting Agreement ”), pursuant to which the stockholders signatory thereto agreed to vote their shares of Common Stock in favor of the Offering and the Conversion (as described below).

Upon Stockholder Approval of the Offering, the aggregate principal amount of the Notes will convert into an aggregate of 797.1 shares Series B-1 Preferred Stock and any accrued interest on the Notes will convert into additional shares of Series B-1 Preferred Stock. Upon conversion of the Notes, the Warrants will become null and void for all purposes. If Stockholder Approval of the Offering is not obtained, the Notes will become due and payable and will accrue simple interest at the rate of five percent (5%) per annum. Further, if Stockholder Approval is not obtained, the Warrants will become exercisable for an aggregate of 797.1 shares of non-voting Series B-2 Preferred Stock for a term of four years commencing on July 31, 2009 at a price of $6,000.00 per share. Assuming the Offering receives Stockholder Approval, the shares of Series B-1 Preferred Stock issued to the Investors upon the closing of the Offering together with the shares of Series B-1 Preferred Stock issued upon conversion of the Notes will represent approximately 49.5% of the outstanding voting stock of the Company.

In connection with the Offering, the Company entered into a registration rights agreement (the “ Registration Rights Agreement ”) with each of the Investors and the Placement Agent, dated March 13, 2009, relating to the registration of the Common Stock of which the Series B-1 Preferred Stock is convertible and the Common Stock underlying the Placement Agent Warrant (as defined below) issued in connection with the Offering (the “ Registrable Shares ”). The Registration Rights Agreement provides that the Company will file a “resale” registration statement (the “ Initial Registration Statement ”) covering all of the Registrable Shares within 9 months of the closing of the Offering (the “ Filing Date ”), subject to certain limitations. If any Registrable Shares are unable to be included on the Initial Registration Statement, the Company has agreed to file subsequent registration statements until all of the Registrable Shares have been registered. Further, the Company has agreed to pay the Investors and the Placement Agent certain cash payments as partial liquidated damages in the event the Initial Registration Statement is not filed on or prior to the Filing Date.

The Company has no material relationship with the Investors or the Placement Agent other than with respect to the Offering.

The foregoing description of each of the Purchase Agreement, Voting Agreement, Registration Rights Agreement, the form of Notes and the form of Warrants is qualified in its entirety by reference thereto, which are filed as Exhibits 10.1, 10.2, 10.3, 4.1 and 4.2 to this Current Report on Form 8-K, respectively, and incorporated herein by reference. The press release relating to the Offering, dated March 13, 2009, is attached hereto as Exhibit 99.1 and is incorporated herein by reference. The press release clarifying certain terms of the Offering, dated March 18, 2009, is attached hereto as Exhibit 99.2 and is incorporated herein by reference.

Guaranty, Security Agreement and Intercreditor Agreement

In connection with the issuance of the Notes, Immunogenetics, Inc., a wholly-owned subsidiary of the Company (the “ Guarantor ”), entered into a Guaranty Agreement with the Investors, dated March 13, 2009 (the “ Guaranty Agreement ”), pursuant to which it agreed to guaranty the Company’s obligations under the Notes. In addition, the Company and the Guarantor entered into a security agreement with the Investors, dated March 13, 2009 (the “ Security Agreement ”), pursuant to which each of the Company and the Grantor agreed to grant certain security interests in the Company’s and the Grantor’s Collateral, as defined in the Security Agreement, as security for the full and prompt payment and performance of their obligations under the Notes, the Purchase Agreement, the Security Agreement and any other indebtedness to the Investors. Further, pursuant to the terms of the Intellectual Property Security Agreement between the Company, the Grantor and the Investors, dated March 13, 2009 (the “ IP Security Agreement ”), the Company and the Grantor agreed to grant the Investors the right to create, record and perfect their security interests in the Intellectual Property Collateral (as defined in the IP Security Agreement) with the United States Patent and Trademarks Office.

The foregoing description of each of the Guaranty Agreement, Security Agreement and IP Security Agreement is qualified in its entirety by reference thereto, which are filed as Exhibits 10.4, 10.5 and 10.6, respectively, to this Current Report on Form 8-K and incorporated herein by reference.

Pinnacle Agreements, Note Conversion Agreement

In connection with the Offering, the Company entered into an intercreditor agreement, dated March 13, 2009 (the “ Intercreditor Agreement ”), with the Investors and Pinnacle Mountain Partners, LLC, a New Hampshire limited liability company and creditor of the Company, as discussed below (“ Pinnacle ”). Pursuant to the Intercreditor Agreement, the Investors and Pinnacle agreed to certain terms setting forth the debt repayment, lien positions and the rights and liabilities of each of the Investors vis-à-vis Pinnacle as creditors of the Company.

As a condition to the consummation of the Offering by the Investors, on March 13, 2009, the Company and Pinnacle entered into a third amendment (the “ Third Amendment ”) to the Loan and Security Agreement originally entered into by and between the Company and Pinnacle as of January 29, 2007, as subsequently amended on July 29, 2008 and January 26, 2009 (the “ Loan Agreement ”). Pursuant to the Third Amendment, the parties agreed to change the final payment date of the amounts borrowed pursuant to the Loan Agreement from July 31, 2009 to instead provide that 50% of the amount of all loans and advances made by Pinnacle pursuant to the Loan Agreement will become due and payable on July 31, 2010 and the remaining outstanding loans and advances, together with interest thereon, will become due and payable on July 31, 2011. In connection therewith, the Company and Pinnacle entered into a third amended and restated revolving note (the “ Pinnacle Note ”) to reflect the revised terms provided for under the Third Amendment.

In addition, as a condition to the consummation of the Offering by the Investors, the Company and Pinnacle entered into a note conversion agreement dated March 13, 2009 (the “ Note Conversion Agreement ”), pursuant to which Pinnacle agreed to convert the principal amount under the Pinnacle Note into shares of the Company’s Common Stock at a conversion rate of $0.41 per share (the “ Conversion ”) upon receipt of Stockholder Approval by the Company of the Conversion. On March 13, 2009, the Company received verbal confirmation from the NYSE Euronext that so long as Pinnacle remains a party to the Note Conversion Agreement, the vote of Pinnacle and its affiliates, as stockholders of the Company, will not be considered for purposes of obtaining Stockholder Approval of the Offering. Pursuant to the Conversion Agreement, the Company may unilaterally terminate the Note Conversion Agreement prior to receipt of the Stockholder Approval without notice to Pinnacle, in which case the Pinnacle Note shall remain outstanding and the vote of Pinnacle and its affiliates will be considered for determining whether the Stockholder Approval of the Offering was obtained. Under the terms of the Purchase Agreement, described above, the Company has agreed not to terminate the Note Conversion Agreement except upon the written request of the Investors and upon receipt of such written request, the Company will terminate the Note Conversion Agreement.

The foregoing description of each of the Intercreditor Agreement, Third Amendment, Pinnacle Note and Note Conversion Agreement is qualified in its entirety by reference thereto, which are filed as Exhibits 10.7, 10.8, 4.4 and 10.9 to this Current Report on Form 8-K, respectively, and are incorporated herein by reference.

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information set forth under Item 1.01 of this Current Report is incorporated herein by reference.

Item 3.02. Unregistered Sales of Equity Securities.

The information set forth under Item 1.01 of this Current Report is incorporated herein by reference.

In addition to the issuance by the Company of the Securities, upon consummation of the Offering, the Company issued a warrant to the Placement Agent for the purchase of up to 350,000 shares of the Company’s Common Stock (the “ Placement Agent Warrant ”) at a price of $0.41 per share, subject to the terms, conditions and limitations set forth therein. The Placement Agent Warrant may be exercised in whole or in part for a period of three years from the date of issuance provided, however, that until such time as the Stockholder Approval is obtained, the Placement Agent Warrant shall be exercisable for no more than 88,550 shares of Common Stock, subject to certain exceptions provided for therein.

The foregoing description of the Placement Agent Warrant is qualified in its entirety by reference thereto, which is filed as Exhibit 4.3 to this Current Report on Form 8-K and incorporated herein by reference.

The Company issued the Securities and the Placement Agent Warrant in reliance on the exemption from registration provided for under Section 4(2) of the Securities Act, and Rule 506 of Regulation D thereunder. The Company relied on the exemption from registration provided for under Section 4(2) of the Securities Act based in part on the representations made by each of the Investors and the Placement Agent, including the representations with respect to each Investor’s and Placement Agent’s status as an accredited investor, as such term is defined in Rule 501(a) of the Securities Act, and each party’s investment intent with respect to the Securities and the Placement Agent Warrant purchased.

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Upon the consummation of the Offering the board of directors of the Company (the “ Board ”) appointed Ms. Joyce Erony, a managing director of Signet Healthcare Partners, to a newly created seat on the Board. In addition, upon Stockholder Approval of the Offering, the Company has agreed to appoint Mr. James C. Gale, a managing director of Signet Healthcare Partners, as an additional member of the Board.

In connection with the appointment of Ms. Erony to the Board, the Company entered into an indemnification agreement with Ms. Erony, pursuant to which the Company agreed, among other things, to indemnify Ms. Erony, to the extent permitted by Delaware law, against all expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred by her in connection with any suit in which she is a party or otherwise involved as a result of her service as a member of the Board. In addition, the Company agreed that any indemnification obligations to Ms. Erony arising thereunder shall be primary to any additional indemnification Ms. Erony is entitled to receive from any third party.

In addition, in connection with the Offering, the Company entered into indemnification agreements with each of Rajiv Mathur, Jane E. Hager, Stephen J. Morris and Terrence O’Donnell as directors of the Company. Each indemnification is substantially similar, and provides that, among other things, to the extent permitted by Delaware law, the Company will indemnify the director against all expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred by the director in connection with any suit in which he or she is a party or otherwise involved as a result of his or her service as a member of the Board.

A copy of Ms. Erony’s indemnification agreement is attached hereto as Exhibit 10.10 to this Current Report on Form 8-K and incorporated herein by reference. A copy of the form of indemnification agreement entered into with each of Messrs. Mathur, Morris and O’Donnell and Ms. Hager is attached hereto as Exhibit 10.11 to this Current Report on Form 8-K and incorporated herein by reference.

Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

On March 13, 2009, the Company filed the Certificate of Designation of the Rights and Preferences of Series B-1 Convertible Preferred Stock and Series B-2 Preferred Stock (the “ Certificate of Designation ”) with the Secretary of State of the State of Delaware. The Board of Directors authorized and approved this filing on March 12, 2009 in connection with the creation, reservation and designation of 1,030 shares of a series of preferred stock as “Series B-1 Convertible Preferred Stock” and 747 shares of a series of preferred stock as “Series B-2 Preferred Stock.”

Pursuant to the terms of the Certificate of Designation, each share of Series B-1 Preferred Stock is convertible into 14,634 shares of Common Stock, subject to customary anti-dilution provisions. The Series B-1 Preferred Stock and Series B-2 Preferred Stock will pay a quarterly dividend, which will accrue at an annual rate of 5% of the Original Issue Price (as defined in the Certificate of Designation), subject to appropriate adjustment. The Series B-1 Preferred Stock shall be entitled to vote on an as-converted basis together as a single class, with the holders of the Common Stock and all other series and classes of stock permitted to vote with Common Stock on all matters submitted to a vote of holders the Common Stock, subject to certain limitations provided for under the Certificate of Designation. The Series B-2 Preferred Stock has no voting rights.

Until such time as Stockholder Approval is obtained, the holders of shares of Series B-1 Preferred Stock shall not be entitled to convert their shares of Series B-1 Preferred Stock into, in the aggregate, Common Stock in excess of 19.9% of the shares of Common Stock issued and outstanding on the trading date immediately prior to the date on which shares of Series B-1 Preferred Stock were first purchased. Pursuant to the terms of the Certificate of Designation, the Series B-1 Preferred Stock will automatically convert into shares of Common Stock upon the earlier of the date that (i) the Closing Price (as defined in the Certificate of Designation) of the Common Stock shall have exceeded $1.20 for a period of twenty-five (25) consecutive trading days immediately preceding such date and (ii) as determined by the affirmative vote or consent of the holders of at least a majority of the shares of the Series B-1 Preferred Stock outstanding at the time, given in person or by proxy, either in writing or at a meeting.

On March 18, 2009, the Company filed a Certificate of Correction to Correct a Certain Error in the Certificate of Designation of the Relative Rights and Preferences of the Series B-1 Convertible Preferred Stock and Series B-2 Preferred Stock (the “ Certificate of Correction ”) to correct an error in the number of shares designated as Series B-2 Preferred Stock from 747 shares to 798 shares.

The foregoing description of the Certificate of Designation and the Certificate of Correction is qualified in its entirety by reference thereto, which are filed as Exhibits 3.1 and 3.2 to this Current Report on Form 8-K and incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.


(d)	The following exhibits are furnished with this Current Report on Form 8-K:

3.1	Certificate of Designation of the Relative Rights and Preferences of the Series B-1 Convertible Preferred Stock and Series B-2 Preferred Stock

3.2	Certificate of Correction to Correct a Certain Error in the Certificate of Designation of the Relative Rights and Preferences of the Series B-1 Convertible Preferred Stock and Series B-2 Preferred Stock

4.1	Form of Secured Convertible Promissory Note

4.2	Form of Preferred Stock Purchase Warrant

4.3	IGI Laboratories, Inc. Common Stock Purchase Warrant in favor of Rockport Venture Securities, LLC, dated March 13, 2009

4.4	Third Amended and Restated Revolving Note in favor of Pinnacle Mountain Partners, LLC, dated March 13, 2009

10.1	Securities Purchase Agreement, by and among IGI Laboratories, Inc. and the purchasers set forth on Schedule A thereto, dated March 13, 2009

10.2	Voting Agreement by and among IGI Laboratories, Inc., Signet Healthcare Partners, G.P. and the stockholders of the Company set forth on Schedule A thereto, dated March 13, 2009

10.3	Registration Rights Agreement by and among IGI Laboratories, Inc., the purchasers set forth on Schedule A thereto and the placement agent set forth on Schedule B thereto, dated March 13, 2009

10.4	Guaranty Agreement by Immunogenetics, Inc. in favor of the parties listed on Schedule A thereto, dated March 13, 2009

10.5	Security Agreement by and among IGI Laboratories, Inc., Immunogenetics, Inc. and the secured parties listed on the signature page thereto, dated March 13, 2009

10.6	Intellectual Property Security Agreement by and among IGI Laboratories, Inc., Immunogenetics, Inc. and the secured parties listed on the signature page thereto, dated March 13, 2009

10.7	Intercreditor Agreement by and among Life Sciences Opportunities Fund II, L.P., Life Sciences Opportunities Fund (Institutional) II, L.P., Pinnacle Mountain Partners, LLC and IGI Laboratories, Inc., dated March 13, 2009

10.8	Third Amendment to Loan and Security Agreement by and between IGI Laboratories, Inc. and Pinnacle Mountain Partners, LLC, dated March 13, 2009

10.9	Note Conversion Agreement by and between IGI Laboratories, Inc. and Pinnacle Mountain Partners, LLC, dated March 13, 2009

10.10	Indemnification Agreement by and between IGI Laboratories, Inc. and Joyce Erony, dated March 13, 1999

10.11	Form of Indemnification Agreement for Certain Directors

99.1	Press Release of IGI Laboratories, Inc. dated March 13, 2009

99.2	Press Release of IGI Laboratories, Inc. dated March 18, 2009

Rule 135c Statement

This Current Report on Form 8-K and the attached exhibits are being filed pursuant to Rule 135c under the Securities Act and do not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

Forward Looking Statements

This Current Report on Form 8-K contains forward-looking statements and expectations of future results that are made under the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 and involve a number of risks and uncertainties that could materially affect future results. Among these risk factors are the continuing acceptance of the Company’s products, general competitive pressures in the marketplace, and continued overall growth in the pharmaceutical and cosmeceutical industry. Further information regarding these as well as other key risk factors and meaningful cautionary statements that could affect the Company’s financial results are included in the Company’s Form 10-KSB for the fiscal year ended December 31, 2007, supplemented by subsequent filings made with the Securities and Exchange Commission.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


	IGI LABORATORIES, INC.

Date: March 19, 2009	By:	/s/ Rajiv Mathur
	Name:	Rajiv Mathur
	Title:	President and CEO

EXHIBIT INDEX


Exhibit Number	Description of Exhibit

3.1	Certificate of Designation of the Relative Rights and Preferences of the Series B-1 Convertible Preferred Stock and Series B-2 Preferred Stock

3.2	Certificate of Correction to Correct a Certain Error in the Certificate of Designation of the Relative Rights and Preferences of the Series B-1 Convertible Preferred Stock and Series B-2 Preferred Stock

4.1	Form of Secured Convertible Promissory Note

4.2	Form of Preferred Stock Purchase Warrant

4.3	IGI Laboratories, Inc. Common Stock Purchase Warrant in favor of Rockport Venture Securities, LLC, dated March 13, 2009

4.4	Third Amended and Restated Revolving Note in favor of Pinnacle Mountain Partners, LLC, dated March 13, 2009

10.1	Securities Purchase Agreement, by and among IGI Laboratories, Inc. and the purchasers set forth on Schedule A thereto, dated March 13, 2009

10.2	Voting Agreement by and among IGI Laboratories, Inc., Signet Healthcare Partners, G.P. and the stockholders of the Company set forth on Schedule A thereto, dated March 13, 2009

10.3	Registration Rights Agreement by and among IGI Laboratories, Inc., the purchasers set forth on Schedule A thereto and the placement agent set forth on Schedule B thereto, dated March 13, 2009

10.4	Guaranty Agreement by Immunogenetics, Inc. in favor of the parties listed on Schedule A thereto, dated March 13, 2009

10.5	Security Agreement by and among IGI Laboratories, Inc., Immunogenetics, Inc. and the secured parties listed on the signature page thereto, dated March 13, 2009

10.6	Intellectual Property Security Agreement by and among IGI Laboratories, Inc., Immunogenetics, Inc. and the secured parties listed on the signature page thereto, dated March 13, 2009

10.7	Intercreditor Agreement by and among Life Sciences Opportunities Fund II, L.P., Life Sciences Opportunities Fund (Institutional) II, L.P., Pinnacle Mountain Partners LLC and IGI Laboratories, Inc., dated March 13, 2009

10.8	Third Amendment to Loan and Security Agreement by and between IGI Laboratories, Inc. and Pinnacle Mountain Partners, LLC, dated March 13, 2009

10.9	Note Conversion Agreement by and between IGI Laboratories, Inc. and Pinnacle Mountain Partners, LLC, dated March 13, 2009

10.10	Indemnification Agreement by and between IGI Laboratories, Inc. and Joyce Erony, dated March 13, 1999

10.11	Form of Indemnification Agreement for Certain Directors

99.1	Press Release of IGI Laboratories, Inc. dated March 13, 2009

99.2	Press Release of IGI Laboratories, Inc. dated March 18, 2009

EXHIBIT 3.1

CERTIFICATE OF DESIGNATION OF THE RELATIVE RIGHTS AND
PREFERENCES
OF THE
SERIES B-1 CONVERTIBLE PREFERRED STOCK
AND
SERIES B-2 PREFERRED STOCK
OF
IGI LABORATORIES, INC.

The undersigned, the Chief Executive Officer of IGI Laboratories, Inc., a Delaware corporation (the “Corporation”), in accordance with the provisions of the Delaware General Corporation Law, does hereby certify that, pursuant to the authority conferred upon the Board of Directors by the Amended and Restated Certificate of Incorporation of the Corporation, the following resolution creating a series of Series B-1 Convertible Preferred Stock and Series
B-2 Preferred Stock, was duly adopted on March 12, 2009:

RESOLVED, that the Board of Directors of the Corporation, pursuant to the authority expressly granted to and vested in the Board of Directors of the Corporation by the provisions of the Amended and Restated Certificate of Incorporation of the Corporation (the “Certificate of Incorporation”), created out of the shares of Preferred Stock, par value $.01 per share, of the Corporation authorized in Article Fourth of the Certificate of Incorporation (the “Preferred Stock”), a series of Preferred Stock designated “Series B-1 Convertible Preferred Stock” consisting of One Thousand Thirty (1,030) shares, and a series of Preferred Stock designated “Series B-2 Preferred Stock” consisting of Seven Hundred Forty Seven (747) shares, which shall have the following designations, powers, preferences and relative and other special rights and the following qualifications, limitations and restrictions:

Designation and Rank .

(a) Designation . The designation of such series of the Preferred Stock shall be Series B-1 Convertible Preferred Stock, par value $0.01 per share (the “Series B-1 Preferred Stock”) and Series B-2 Preferred Stock, par value $0.01 per share (the “Series B-2 Preferred Stock” and collectively with the Series B-1 Preferred Stock, the “Series B Preferred Stock”). The maximum number of shares of Series B-1 Preferred Stock shall be One Thousand Thirty (1,030) shares and the maximum number of shares of Series B-2 Preferred Stock shall be Seven Hundred Forty Seven (747). For purposes of this Certificate of Designation, “Original Issue Price” shall mean $6,000.00 per share on each issued and outstanding share of Series B Preferred Stock.

(b) Rank . The Series B-1 Preferred Stock and Series B-2 Preferred Stock shall, with respect to rights upon liquidation, winding up, dissolution, redemption or otherwise, rank pari passu with one another. The Series B Preferred Stock shall, with respect to rights upon liquidation, winding up, dissolution, redemption or otherwise, rank (i) junior to the Series A Convertible Preferred Stock, par value $0.01 per share (the “Series A Preferred Stock”), of the Corporation, and to each other class and series of equity securities of the Corporation which

specifically by its terms does not rank on parity with or junior to the Series B Preferred Stock (“Senior Stock”) and (ii) senior to the common stock, par value $.01 per share (the “Common Stock”), and to each other class and series of equity securities of the Corporation which specifically by its terms does not rank on a parity with or senior to the Series B Preferred Stock (“Junior Stock”).

2. Dividends . From and after the date of the issuance of shares of Series B Preferred Stock (“Issuance Date”), the holders of such shares of the Series B Preferred Stock shall be entitled to receive, out of funds legally available therefor, when and if declared by the Board of Directors, quarterly dividends at the annual rate of five percent (5%) of the Original Issue Price on each outstanding share of Series B Preferred Stock, subject to appropriate adjustment to reflect any stock split, stock dividend, reverse stock split or similar corporate event affecting the Series B Preferred Stock (the “Accruing Dividends”). Accruing Dividends shall accrue from day to day, whether or not earned or declared, commencing on the last day of the calendar quarter in which they would otherwise be declared; provided however, that except as provided in Sections 4 and 5 hereof, the Corporation shall be under no obligation to pay such Accruing Dividends unless so declared by the Board of Directors.

3. Voting Rights .

(a) Series B-1 Preferred Stock .

(i) Class Voting Rights . The Series B-1 Preferred Stock shall have the following class voting rights (in addition to the voting rights set forth in Sections 3(a)(ii) and 3(a)(iv) hereof, and as otherwise may be required by law). So long as any shares of the Series B-1 Preferred Stock remain outstanding, the Corporation shall not, and shall not permit any subsidiary to, without the affirmative vote or consent of the holders of at least a majority of the shares of the Series B-1 Preferred Stock outstanding at the time, given in person or by proxy, either in writing or at a meeting, in which the holders of the Series B-1 Preferred Stock vote separately as a class (i) authorize, create, or issue any class or series of capital stock ranking, either as to payment of dividends, distributions of assets upon liquidation or otherwise, or redemptions, prior to or on parity with the Series B-1 Preferred Stock or the Series B-2 Preferred Stock and (ii) authorize any redemptions or repurchases of Common Stock, or repurchase or redeem any Common Stock, except for repurchases or redemptions of Common Stock from employees of the Corporation upon such employees’ termination of employment from the Corporation pursuant to the terms and conditions of agreements which provide the Corporation the right to repurchase such capital stock upon such termination of employment.

(ii) General Voting Rights . In addition to the class voting rights set forth in Section 3(a) hereof, the Series B-1 Preferred Stock shall be entitled to vote, on an as-converted basis (subject to any conversion or voting limitation set forth in Section 3(a)(iii) below, including the Issuance Cap (as defined below)), together as a single class, with the holders of the Common Stock and all other series and classes of stock permitted to vote with Common Stock on all matters submitted to a vote of holders the Common Stock, except with respect to matters in respect of which one or more other classes of Common Stock is entitled to vote as a separate class under the Delaware General Corporation Law or the provisions of the Certificate of

-2-

Incorporation. The Common Stock into which the Series B-1 Preferred Stock is convertible shall, upon issuance, have all of the same voting rights as other issued and outstanding Common Stock of the Corporation.

(iii) Conversion and Voting Limitations . Until such time as the Corporation obtains stockholder approval for (i) the issuance of the Series B-1 Preferred Stock on the Initial Issuance Date (as defined below) and upon conversion of the Series B-1 Convertible Notes (as defined below) (and the Common Stock into which such Series B-1 Preferred Stock is convertible) and (ii) any change of control relating from such issuance is obtained, each pursuant to the applicable requirements of Section 713 of the NYSE Alternext Company Guide (“Stockholder Approval”), (A) the holders of the Series B-1 Convertible Notes shall not be entitled to convert the Series B-1 Convertible Notes into shares of Series B-1 Preferred Stock pursuant to the terms thereof; provided , however , that in the event of a Liquidation Event on or before the maturity date of the Series B-1 Convertible Notes and prior to receipt of Stockholder Approval, the Series B-1 Convertible Notes shall automatically convert into shares of Series B-1 Preferred Stock pursuant to the terms thereof and (B) the holders of shares of Series B-1 Preferred Stock shall not be entitled to convert their shares of Series B-1 Preferred Stock into, in the aggregate, Common Stock in excess of 19.9% (the "Issuance Cap") of the shares of Common Stock issued and outstanding on the trading date immediately prior to the date on which shares of Series B-1 Preferred Stock are first purchased (the "Initial Issuance Date"). The number of shares of Common Stock that may be acquired by all holders of Series B-1 Preferred Stock upon conversion of such shares of Series B-1 Preferred Stock pursuant to Section 5, and the number of shares of Series B-1 Preferred Stock that shall be entitled to class voting rights pursuant to this Section 3(a), shall be limited, on a pro rata basis, to the extent necessary to ensure that, following such conversion (or deemed conversion for voting purposes), the number of shares of Common Stock issuable upon the conversion (or deemed conversion for voting purposes) of all shares of Series B-1 Preferred Stock does not exceed the Issuance Cap. Each delivery of a Conversion Notice by a holder of Series B-1 Preferred Stock will constitute a representation by such holder of Series B-1 Preferred Stock that it has evaluated the limitation set forth in this paragraph and determined, subject to the accuracy of information filed under the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, with respect to the outstanding Common Stock of the Corporation, that the issuance of the full number of shares of Common Stock requested in such Conversion Notice is permitted under this paragraph. This paragraph shall be construed and administered in such manner as shall be consistent with the intent of the first sentence of this paragraph. Any provision hereof which would require a result that is not consistent with such intent shall be deemed severed herefrom and of no force or effect with respect to the conversion contemplated by a particular Conversion Notice. The “Series B-1 Convertible Notes” shall mean those certain Secured Convertible Promissory Notes in favor of the holders of Series B Preferred Stock dated as of the Initial Issuance Date, which shall be convertible into shares of Series B-1 Preferred Stock pursuant to their terms upon Stockholder Approval.

(iv) Board Seats . For so long as any shares of Series B-1 Preferred Stock remain outstanding, the holders of the Series B-1 Preferred Stock, voting separately as one class, shall be entitled to elect one (1) member of the Board of Directors of the Corporation; provided, however, that after the Stockholder Approval is obtained, the holders of Series B-1 Preferred

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Stock voting separately as one class, shall be entitled to elect two (2) members of the Board of Directors of the Corporation. At any meeting (or in a written consent in lieu thereof) held for the purpose of electing directors, the presence in person or by proxy (or the written consent) of the holders of at least a majority in interest of the then outstanding shares of Series B-1 Preferred Stock shall constitute a quorum of the Series B-1 Preferred Stock for the election or removal of directors to be elected solely by the holders of the Series B-1 Preferred Stock. A vacancy in any directorship elected by the holders of the Series B-1 Preferred Stock shall be filled only by vote or written consent of the holders of the Series B-1 Preferred Stock, consenting or voting, as the case may be, separately as one class. The directors to be elected by the holders of the Series B-1 Preferred Stock, voting separately as one class, shall serve for terms extending from the date of their election and qualification until the time of the next succeeding annual meeting of stockholders and until their successors have been duly elected and qualified. If at any time any directorship to be filled by the holders of Series B-1 Preferred Stock, voting separately as one class, pursuant to this Section 3(a)(iii) has been vacant for a period of thirty days, the Secretary of the Corporation shall, upon the written request of the holders of record of shares representing at least 25% of the voting power of the Series B-1 Preferred Stock then outstanding, call a special meeting of the holders of Series B-1 Preferred Stock for the purpose of electing a director or directors to fill such vacancy or vacancies.

(b) Series B-2 Preferred Stock . The Series B-2 Preferred Stock shall have no voting rights, other than as otherwise required by law.

4. Liquidation, Dissolution and Winding-Up .

(a) Liquidation Event . Upon a Liquidation Event (as defined below), the holders of the shares of Series B Preferred Stock then outstanding shall be paid out of the assets of the Corporation available for distribution to stockholders, an amount equal to the greater of (i) the Original Issue Price per share (subject to appropriate adjustment to reflect any stock split, stock dividend, reverse stock split or similar corporate event affecting the Series B Preferred Stock) plus any Accruing Dividends accrued but unpaid thereon, whether or not declared, and any other dividends declared but unpaid thereon and (ii) such amount per share as would have been payable had each share been converted to Common Stock pursuant to Section 5 immediately prior to the Liquidation Event, before any payment shall be made to the holders of Common Stock or any other Junior Stock but after any payment has been made to the holders of Series A Preferred Stock or any other Senior Stock. If upon any Liquidation Event, the assets to be distributed to the holders of the Series B Preferred Stock shall be insufficient to permit payment to such stockholders of the full preferential amounts aforesaid, then all of the assets of the Corporation available for distribution to holders of the Series B Preferred Stock shall be distributed to such holders of the Series B Preferred Stock pro rata, in proportion to the full respective distributable amounts to which they are entitled. For purposes of Section 4(a)(ii) above, the Series B-2 Preferred Stock shall be deemed to convert into Common Stock on the same terms as the Series B-1 Preferred Stock as set forth in Section 5 after applying any adjustment to the Series B-2 Preferred Stock as would have been applied to the Series B-1 Preferred Stock pursuant to Section 5 based on an event that occurred after the issuance of Series B-2 Preferred Stock.

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(b) Distribution . Upon any Liquidation Event, immediately after the holders of any Senior Stock and Series B Preferred Stock shall have been paid in full pursuant to Section 4(a) above, the remaining net assets of the Corporation available for distribution shall be distributed pro rata among the holders of Common Stock and any Junior Stock and the holders of the Series B Preferred Stock shall not be entitled to any further participation as such in any distribution of the assets of the Corporation.

(c) Liquidation Event . A “Liquidation Event” means the liquidation, dissolution or winding up of the affairs of the Corporation, whether voluntary or involuntary. Notwithstanding the foregoing, a consolidation or merger of the Corporation with or into any other corporation or corporations, or a sale of all or substantially all of the assets of the Corporation, or the effectuation by the Corporation of a transaction or series of transactions in which more than 50% of the voting shares of the Corporation is disposed of or conveyed, shall be deemed to be a Liquidation Event within the meaning of the provisions of this Section 4.

(d) Restrictions on a Liquidation Event . The Corporation shall not effect any transaction constituting a deemed Liquidation Event pursuant to Section 4(c) unless (i) the agreement or plan of merger or consolidation provides that the consideration payable to the stockholders of the Corporation shall be allocated among the holders of capital stock of the Corporation in accordance with Sections 4(a) and 4(b) or (ii) the holders of at least fifty (50%) of the shares of each of the Series B-1 Preferred Stock and Series B-2 Preferred Stock then outstanding specifically consent in writing to the allocation of such consideration in a manner different from that provided in Sections 4(a) and 4(b).

(e) Treatment of Liquidation Event .

(i) Transaction Payment . No less than forty-five (45) days prior to the payment date in connection with the consummation of a Liquidation Event, the Corporation, or if the Corporation is not a party to such transaction, the holders of shares of capital stock of the Corporation that are parties to such transaction, shall provide the holders of Series B Preferred Stock written notice of such event (the “Event Notice”). Unless the holders of at least greater than 50% of the then outstanding shares of each of the Series B-1 Preferred Stock and Series B-2 Preferred Stock then outstanding deliver a notice to the Corporation within five (5) business days after receipt of an Event Notice stating that such Liquidation Event shall not be treated as a Liquidation Event, such event shall be deemed to have been elected by such holders to be treated as a Liquidation Event in which case the Corporation shall, and each holder of Series B Preferred Stock shall be entitled to require that, prior to or concurrently with consideration from any such Liquidation Event being paid to the Corporation (if the consideration is to be received by the Corporation in an asset transaction), or by any third party to stockholders of the Corporation other than holders of Series B Preferred Stock (if the consideration is to be received directly by such stockholders in a merger, consolidation, stock purchase or similar transaction), a payment (the “Transaction Payment”) shall be made to the holders of Series B Preferred Stock in an amount equal to the amount that the holder of Series B Preferred Stock would have received had the entire consideration in the transaction (with respect to a Liquidation Event involving the sale of all or substantially all the assets of the Corporation, net of any liabilities of the Corporation

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not assumed or otherwise paid by the acquiring entity) been deemed assets available for distribution to the stockholders of the Corporation upon liquidation pursuant to Section 4(a).

(ii) Payment of Transaction Payment . If securities of the acquiring entity (the “Acquiring Entity Stock”) or other property are issued to the holders of the Corporation’s Series B Preferred Stock and Common Stock in the Liquidation Event, then, the Transaction Payment shall be paid to the holders of Series B Preferred Stock in such portions of cash, property or Acquiring Entity Stock, such that all holders of Series B Preferred Stock and Common Stock shall receive the same proportion of cash, property and Acquiring Entity Stock in respect of the amounts to which they are entitled pursuant to Section 4(a). The Acquiring Entity Stock utilized to make the Transaction Payment, if any, shall have the same rights, preferences and restrictions (including whether the issuance or sale of such Acquiring Entity Stock is registered or entitled to registration rights under the Securities Act of 1933, as amended) as the Acquiring Entity Stock issued to the holders of Common Stock in the Liquidation Event. Notwithstanding the foregoing, neither the Corporation nor the acquiring entity shall be obligated to deliver certificates evidencing the Acquiring Entity Stock or other property deliverable to a holder of Series B Preferred Stock as a result of the Liquidation Event unless and until the certificates representing shares of Series B Preferred Stock held by such holder of Series B Preferred Stock are either delivered to the Corporation or the acquiring entity, or their respective transfer agents, as the Corporation and the acquiring entity may require, duly endorsed in blank for transfer, or the holder certifies in writing to the Corporation or the acquiring entity, or their respective transfer agents, as the Corporation and the acquiring entity may require, that such certificates have been lost, stolen or destroyed and executes an agreement satisfactory to the Corporation or such acquiring entity to indemnify the Corporation and/or such acquiring entity from any loss incurred by it in connection with such certificates. The value of the Acquiring Entity Stock or other property determined as follows shall be used for purposes of determining the amount of the entire consideration in the transaction, the Transaction Payment and the payment thereof:

(1) If the consideration received by the Corporation or its stockholders (“Proceeds”) is other than cash or evidences of indebtedness (for which the value thereof shall be deemed to be the principal amount thereof), its value will be deemed its fair market value, determined as follows:

i) Any securities (including any Acquiring Entity Stock) included in the Proceeds shall be valued at the average Closing Price for a period of twenty-five (25) consecutive trading days immediately preceding such date.

ii) Any Proceeds other than cash, evidences of indebtedness, and securities valued in accordance with i) above shall have the fair market value of such Proceeds as determined in good faith, by the Board on the date such determination is made.

(2) The foregoing methods for valuing Proceeds to be distributed or delivered in connection with a Liquidation Event shall, upon approval by the stockholders of

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the definitive agreements governing the Liquidation Event, be superseded by any determination of such value set forth in the definitive agreements governing such Liquidation Event.

(iii) Contingent Consideration . In the event of a Liquidation Event, if any portion of the consideration payable to the stockholders of the Corporation is placed into escrow or is payable to the stockholders of the Corporation subject to contingencies, the definitive acquisition agreement relating thereto shall provide that (i) the portion of such consideration that is not placed in escrow and not subject to any contingencies (the “Initial Consideration”) shall be allocated among the holders of capital stock of the Corporation in accordance with this Section 4(e) as if the Initial Consideration were the only consideration payable in connection with such Liquidation Event and (ii) any additional consideration which becomes payable to the stockholders of the Corporation upon release from escrow or satisfaction of contingencies shall be allocated among the holders of capital stock of the Corporation in accordance with this Section 4(e) after taking into account the previous payment of the Initial Consideration as part of the same transaction.

5. Conversion . Each holder of Series B-1 Preferred Stock shall have the following conversion rights (the “Conversion Rights”):

(a) Right to Convert . At any time on or after the Issuance Date, the holder of any such shares of Series B-1 Preferred Stock may, at such holder’s option, convert all or any portion of any shares of Series B-1 Preferred Stock held by such person into the Conversion Amount. The Corporation shall keep written records of the conversion of the shares of Series B-1 Preferred Stock converted by each holder. A holder shall be required to deliver the original certificates representing the shares of Series B-1 Preferred Stock upon complete conversion of the Series B-1 Preferred Stock.

(b) Mechanics of Voluntary Conversion . The Voluntary Conversion of Series B-1 Preferred Stock shall be conducted in the following manner:

(i) Holder’s Delivery Requirements . To convert Series B-1 Preferred Stock into full shares of Common Stock on any date, the holder thereof shall deliver a fully executed notice of conversion in the form attached hereto as Exhibit I (the “Conversion Notice”), to the Corporation, together with the certificates representing the shares being converted (or an indemnification undertaking, and at the option of the Corporation, in addition, a bond, with respect to such shares in the case of their loss, theft or destruction) (the “Preferred Stock Certificates”). The conversion will be effective upon receipt by the Corporation of the foregoing, which shall be the Voluntary Conversion Date.

(ii) Record Holder . The person or persons entitled to receive the shares of Common Stock issuable upon a conversion of the Series B-1 Preferred Stock shall be treated for all purposes as the record holder or holders of such shares of Common Stock on the Conversion Date.

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(i) Subject to the provisions set forth below, each share of Series B-1 Preferred Stock outstanding on the Mandatory Conversion Date shall automatically and without any action on the part of the holder thereof convert into the Conversion Amount (a “Mandatory Conversion”).

(ii) As used herein, a “Mandatory Conversion Date” shall mean the earlier of the date that (i) the Closing Price of the Common Stock shall have exceeded $1.20 for a period of twenty-five (25) consecutive trading days immediately preceding such date and (ii) as determined by the affirmative vote or consent of the holders of at least a majority of the shares of the Series B-1 Preferred Stock outstanding at the time, given in person or by proxy, either in writing or at a meeting. The Mandatory Conversion Date and the Voluntary Conversion Date collectively are referred to in this Certificate of Designation as the “Conversion Date”

(iii) On the Mandatory Conversion Date, the outstanding shares of Series B-1 Preferred Stock shall be converted automatically without any further action by the holders of such shares and whether or not the Preferred Stock Certificates are surrendered to the Corporation or its transfer agent. Upon the occurrence of the automatic conversion of the Series B-1 Preferred Stock pursuant to this Section 5(c), the holders of the Series B-1 Preferred Stock shall promptly surrender the Preferred Stock Certificates representing the Series B-1 Preferred Stock to the Corporation and the Corporation, upon surrender of the Preferred Stock Certificates, shall promptly deliver the shares of Common Stock issuable upon such conversion.

(d) Conversion Amount .

(i) The term “Conversion Amount” shall mean 14,634 shares of Common Stock, subject to adjustment under Section 5(e) hereof, per share of Series B-1 Preferred Stock, plus such number of shares of Common Stock as shall equal (x) the accrued and unpaid dividends on the Series B-1 Preferred Stock as of the date of conversion divided by (y) $0.41.

(ii) The term “Closing Price” shall mean, for any security as of any date, the last reported price of such security on the NYSE Alternext or other National Securities Exchange on which such securities trade, or the closing bid price, on the OTC Bulletin Board or other applicable principal trading market for such security as reported by Bloomberg, or, if no closing bid price is reported for such security by Bloomberg, the last closing trade price of such security as reported by Bloomberg, or, if no last closing trade price is reported for such security by Bloomberg, the average of the bid prices of any market makers for such security as reported in the “pink sheets” by the National Quotation Bureau, Inc. If the Closing Price cannot be calculated for such security on such date on any of the foregoing bases, the Closing Price of such security on such date shall be the fair market value as reasonably determined by the Board of Directors of the Corporation.

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(e) Adjustments of Conversion Amount .

(i) Adjustments for Stock Splits and Combinations . If the Corporation shall at any time or from time to time after the Issuance Date, effect a stock split of the outstanding Common Stock, the Conversion Amount shall be proportionately increased. If the Corporation shall at any time or from time to time after the Issuance Date, combine the outstanding shares of Common Stock, the Conversion Amount shall be proportionately decreased. Any adjustments under this Section 5(e)(i) shall be effective at the close of business on the date the stock split or combination occurs.

(ii) Adjustments for Certain Dividends and Distributions . If the Corporation shall at any time or from time to time after the Issuance Date, make or issue or set a record date for the determination of holders of Common Stock entitled to receive a dividend or other distribution payable in shares of Common Stock, then, and in each event, the Conversion Amount shall be increased as of the time of such issuance or, in the event such record date shall have been fixed, as of the close of business on such record date, by multiplying, as applicable, the Conversion Amount then in effect by a fraction:

(1) the numerator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date plus the number of shares of Common Stock issuable in payment of such dividend or distribution; and

(2) the denominator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date.

(iii) Adjustment for Other Dividends and Distributions . If the Corporation shall at any time or from time to time after the Issuance Date, make or issue or set a record date for the determination of holders of Common Stock entitled to receive a dividend or other distribution payable in securities of the Corporation other than shares of Common Stock, then, and in each event, an appropriate revision to the applicable Conversion Amount shall be made and provision shall be made (by adjustments of the Conversion Amount or otherwise) so that the holders of Series B-1 Preferred Stock shall receive upon conversions thereof, in addition to the number of shares of Common Stock receivable thereon, the number of securities of the Corporation which they would have received had their Series B-1 Preferred Stock been converted into Common Stock immediately prior to such event (or the record date for such event, if applicable) and had thereafter, during the period from the date of such event to and including the Conversion Date, retained such securities (together with any distributions payable thereon during such period), giving application to all adjustments called for during such period under this Section 5(e)(iii) with respect to the rights of the holders of the Series B-1 Preferred Stock.

(iv) Adjustments for Reclassification, Exchange or Substitution . If the Common Stock issuable upon conversion of the Series B-1 Preferred Stock at any time or from time to time after the Issuance Date shall be changed to the same or different number of shares of any class or classes of stock, whether by reclassification, exchange, substitution or otherwise

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(other than by way of a stock split or combination of shares or stock dividends provided for in Sections 5(e)(i), (ii) and (iii), then, and in each event, an appropriate revision to the Conversion Amount shall be made and provisions shall be made (by adjustments of the Conversion Amount or otherwise) so that the holder of each share of Series B-1 Preferred Stock shall have the right thereafter to convert such share of Series B-1 Preferred Stock into the kind and amount of shares of stock and other securities receivable upon reclassification, exchange, substitution or other change, by holders of the number of shares of Common Stock into which such share of Series B-1 Preferred Stock might have been converted immediately prior to such reclassification, exchange, substitution or other change, all subject to further adjustment as provided herein.

(f) Certificates as to Adjustments . Upon occurrence of each adjustment or readjustment of the Conversion Amount or number of shares of Common Stock issuable upon conversion of the Series B-1 Preferred Stock pursuant to this Section 5, the Corporation at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to each holder of such Series B-1 Preferred Stock a certificate setting forth such adjustment and readjustment, showing in detail the facts upon which such adjustment or readjustment is based. The Corporation shall, upon written request of the holder of such affected Series B-1 Preferred Stock, at any time, furnish or cause to be furnished to such holder a like certificate setting forth such adjustments and readjustments, the Conversion Amount in effect at the time, and the number of shares of Common Stock and the amount, if any, of other securities or property which at the time would be received upon the conversion of a share of such Series B-1 Preferred Stock.

(g) Issue Taxes . The Corporation shall pay any and all issue and other taxes, excluding federal, state or local income taxes, that may be payable in respect of any issue or delivery of shares of Common Stock on conversion of shares of Series B-1 Preferred Stock pursuant thereto; provided , however , that the Corporation shall not be obligated to pay any transfer taxes resulting from any transfer requested by any holder in connection with any such conversion.

(h) Notices . All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally or by facsimile or three (3) business days following being mailed by certified or registered mail, postage prepaid, return-receipt requested, addressed to the holder of record at its address appearing on the books of the Corporation. The Corporation will give written notice to each holder of Series B-1 Preferred Stock at least five (5) days prior to the date on which the Corporation closes its books or takes a record (i) with respect to any dividend or distribution upon the Common Stock or (ii) for determining rights to vote with respect to any Liquidation Event and in no event shall such notice be provided to such holder prior to such information being made known to the public. The Corporation will also give written notice to each holder of Series B-1 Preferred Stock at least five (5) days prior to the date on which any Liquidation Event will take place and in no event shall such notice be provided to such holder prior to such information being made known to the public.

(i) Fractional Shares . The Series B Preferred Stock may be issued in fractional shares. A certificate for a fractional share of Series B Preferred Stock shall entitle the holder to exercise any voting rights, if applicable, receive dividends thereon and participate in any of the

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assets of the Corporation in the event of liquidation as provided hereunder. No fractional shares of Common Stock shall be issued upon conversion of the Series B-1 Preferred Stock. In lieu of any fractional shares to which the holder would otherwise be entitled, the Corporation shall at its option either (i) pay cash equal to the product of such fraction multiplied by the average of the Closing Prices of the Common Stock for the five (5) consecutive trading days immediately preceding the Voluntary Conversion Date or Mandatory Conversion Date, as applicable, or (ii) in lieu of issuing such fractional shares issue one additional whole share to the holder.

(j) Reservation of Common Stock . The Corporation shall, so long as any shares of Series B-1 Preferred Stock are outstanding, reserve and keep available out of its authorized and unissued Common Stock, solely for the purpose of effecting the conversion of the Series B-1 Preferred Stock, such number of shares of Common Stock as shall from time to time be sufficient to effect the conversion of all of the Series B-1 Preferred Stock then outstanding.

6. Restrictions and Limitations on Corporate Actions . The Corporation will not take any corporate action, whether by merger, consolidation, recapitalization or otherwise, to alter or change the designation or the powers, preferences or rights or the qualifications, limitations or restrictions of the Series B-1 Preferred Stock without the written consent of the holders of at least a majority of the then outstanding shares of Series B-1 Preferred Stock. The Corporation will not take any corporate action, whether by merger, consolidation, recapitalization or otherwise, to alter or change the designation or the powers, preferences or rights or the qualifications, limitations or restrictions of the Series B-2 Preferred Stock without the written consent of the holders of at least a majority of the then outstanding shares of Series B-2 Preferred Stock.

7. No Preemptive Rights . No holder of the Series B Preferred Stock shall be entitled to rights to subscribe for, purchase or receive any part of any new or additional shares of any class, whether now or hereinafter authorized, or of bonds or debentures, or other evidences of indebtedness convertible into or exchangeable for shares of any class, but all such new or additional shares of any class, or any bond, debentures or other evidences of indebtedness convertible into or exchangeable for shares, may be issued and disposed of by the Board of Directors on such terms and for such consideration (to the extent permitted by law), and to such person or persons as the Board of Directors in their absolute discretion may deem advisable.

8. Waiver . The provisions set forth in this Certificate of Designation may be waived on behalf of all the holders of Series B-1 Preferred Stock if in writing and signed by the holders of not less than a majority of the then outstanding shares of Series B-1 Preferred Stock. The provisions set forth in this Certificate of Designation may be waived on behalf of all the holders of Series B-2 Preferred Stock if in writing and signed by the holders of not less than a majority of the then outstanding shares of Series B-2 Preferred Stock.

9. Lost or Stolen Certificates . Upon receipt by the Corporation of evidence satisfactory to the Corporation of the loss, theft, destruction or mutilation of any Preferred Stock Certificates representing the shares of Series B Preferred Stock, and, in the case of loss, theft or destruction, of any indemnification undertaking by the holder to the Corporation, and if requested by the Corporation, a bond, and, in the case of mutilation, upon surrender and cancellation of the

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Preferred Stock Certificate(s), the Corporation shall execute and deliver new preferred stock certificate(s) of like tenor and date.

10. Construction . This Certificate of Designation shall be deemed to be jointly drafted by the Corporation and all purchasers of the Series B Preferred Stock and shall not be construed against any person as the drafter hereof.

11. Failure or Indulgence Not Waiver . No failure or delay on the part of a holder of Series B Preferred Stock in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege.

[ Signature Page Follows ]

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IN WITNESS WHEREOF, the undersigned has executed and subscribed this Certificate and does affirm the foregoing as true this 13th day of March, 2009.


	IGI LABORATORIES, INC.


	By:	/s/ Rajiv Mathur
	Name:	Rajiv Mathur
	Title:	President and CEO

[ Signature Page to the Certificate of Designation of the Relative Rights and Preferences of the Series B-1 Convertible Preferred Stock and the Series B-2 Preferred Stock ]

EXHIBIT I

IGI LABORATORIES, INC.
CONVERSION NOTICE

Reference is made to the Certificate of Designation of the Relative Rights and Preferences of the Series B-1 Preferred Stock of IGI Laboratories, Inc. (the “Certificate of Designation”). In accordance with and pursuant to the Certificate of Designation, the undersigned hereby elects to convert the number of shares of Series B-1 Preferred Stock, par value $.01 per share (the “Preferred Shares”), of IGI Laboratories, Inc., a Delaware corporation (the “Corporation”), indicated below into shares of Common Stock, par value $.01 per share (the “Common Stock”), of the Corporation, by tendering the stock certificate(s) representing the share(s) of Preferred Shares specified below as of the date specified below.


Date of Conversion:

Number of Preferred Shares to be converted:

Stock certificate no(s). of Preferred Shares to be converted:

Conversion Amount:

Number of shares of Common Stock to be issued:

Please issue the Common Stock into which the Preferred Shares are being converted and, if applicable, any check drawn on an account of the Corporation in the following name and to the following address:


Issue to:

Facsimile Number:

Authorization:

	By:

	Title:

Dated:

I-1

Exhibit 3.2

CERTIFICATE OF CORRECTION FILED TO

CORRECT A CERTAIN ERROR IN THE

CERTIFICATE OF DESIGNATION OF THE RELATIVE RIGHTS AND

PREFERENCES OF THE

SERIES B-1 CONVERTIBLE PREFERRED STOCK

AND

SERIES B-2 PREFERRED STOCK

IGI LABORATORIES, INC.

IGI Laboratories, Inc., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the “Corporation”), does hereby certify that:

FIRST:

The Certificate of Designation of the Relative Rights and Preferences of the Series B-1 Convertible Stock and Series B-2 Preferred Stock of the Corporation filed with the Delaware Secretary of State on March 13, 2009 (the “Certificate”) was an inaccurate record of corporate action therein referred to in that it incorrectly stated the number of designated Series B-2 Preferred Stock.

SECOND:

This Certificate of Correction is permitted by Section 103(f) of the General Corporation Law of the State of Delaware.

THIRD:

The second paragraph of the Certificate is hereby corrected to read in its entirety as follows:

RESOLVED, that the Board of Directors of the Corporation, pursuant to the authority expressly granted to and vested in the Board of Directors of the Corporation by the provisions of the Amended and Restated Certificate of Incorporation of the Corporation (the “Certificate of Incorporation”), created out of the shares of Preferred Stock, par value $.01 per share, of the Corporation authorized in Article Fourth of the Certificate of Incorporation (the “Preferred Stock”), a series of Preferred Stock designated “Series B-1 Convertible Preferred Stock” consisting of One Thousand Thirty (1,030) shares, and a series of Preferred Stock designated “Series B-2 Preferred Stock” consisting of Seven Hundred Ninety Eight (798) shares, which shall have the following designations, powers, preferences and relative and other special rights and the following qualifications, limitations and restrictions:

FOURTH:

Article 1(a) of the Certificate is hereby corrected to read in its entirety as follows:

(a)

Designation . The designation of such series of the Preferred Stock shall be Series B-1 Convertible Preferred Stock, par value $0.01 per share (the “Series B-1 Preferred Stock”) and Series B-2 Preferred Stock, par value $0.01 per share (the “Series B-2 Preferred Stock” and collectively with the Series B-1 Preferred Stock, the “Series B Preferred Stock”). The maximum number of shares of Series B-1 Preferred Stock shall be One Thousand Thirty (1,030) shares and the maximum number of shares of Series B-2 Preferred Stock shall be Seven Hundred Ninety Eight (798). For purposes of this Certificate of Designation, “Original Issue Price” shall mean $6,000.00 per share on each issued and outstanding share of Series B Preferred Stock.

IN WITNESS WHEREOF, the undersigned, being an authorized officer of the Corporation, does hereby execute this Certificate of Correction this 18th day of March, 2009.


	IGI LABORATORIES, INC.


	By:	/s/ Rajiv Mathur
	Name:	Rajiv Mathur
	Title:	President and CEO

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Exhibit 4.1

THE SECURITIES REPRESENTED BY THIS SECURED CONVERTIBLE PROMISSORY NOTE HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE " SECURITIES ACT "), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

SECURED CONVERTIBLE PROMISSORY NOTE


$[_____________] Number: A-___	Date: March 13, 2009 New York, NY

FOR VALUE RECEIVED, IGI LABORATORIES, INC., a Delaware corporation (" Issuer "), promises to pay to [_____________] (" Lender "), at its principal executive office located at Carnegie Hall Towers, 152 West 57th Street, 19th Floor, New York, NY 10019 or such other place as the holder of this Secured Convertible Promissory Note (this " Note ") may designate from time to time, the principal sum of [_____________] $[_________]) together with interest from the date of this Note on the unpaid principal balance, upon the terms and conditions specified below. This Note is one of a series of Convertible Promissory Notes of like tenor (collectively, the " Notes ") issued pursuant to a Securities Purchase Agreement, dated as of the date hereof, by and among Issuer and the parties identified on Schedule A thereto (the " Purchase Agreement ") and that certain Security Agreement dated as of the date hereof, by and among Issuer and the other parties thereto (the " Security Agreement "). Additional rights of Lender are set forth in the Purchase Agreement and the Security Agreement. Lender, together with the lenders under other Notes, are referred to collectively as the " Lenders ".

Payment .

1.1.

Maturity . Subject to the provisions of Section 2 hereof relating to the conversion of this Note, the outstanding principal balance of this Note, together with interest accrued and unpaid to date, shall be due and payable upon the earliest to occur of (i) the Maturity Date; (ii) the date of consummation of an Exit Event (the "Exit Event Date"); and (iii) following an Event of Default, upon demand by Lender (other than an Event of Default contemplated by Section 4.3 or 4.4 hereof, in which case no demand shall be necessary).

1.2.

Interest . This Note shall accrue simple interest, from the date hereof until such principal is paid or converted as provided in Section 2, on any unpaid principal balance at the rate of five percent (5%) per annum; provided, however, to the extent permitted by law, upon the occurrence and during the continuation of an Event of Default, this Note shall accrue simple interest at a rate of twelve (12%) per annum. Interest shall be calculated on the basis of actual

number of days elapsed based on a year of three hundred sixty five (365) days. Accrued but unpaid interest shall be payable on the Maturity Date unless such interest is converted into shares of capital stock in the manner set forth in Section 2 below. Notwithstanding any provision in this Note, it is the parties' intent not to contract for, charge or receive interest at a rate that is greater than the maximum rate permissible by law that a court of competent jurisdiction shall deem applicable hereto (which under applicable law shall be deemed to be the laws relating to permissible rates of interest on commercial loans). If any interest payment due hereunder is determined to be in excess of the legal maximum rate, then that portion of each interest payment representing an amount in excess of the then legal maximum rate shall instead be deemed a payment of principal and shall be applied against principal.

1.3.

Payments; Allocation of Payments . Principal and interest are payable in lawful money of the United States of America. All payments shall be credited first to interest, fees, costs and expenses then due and the remainder to the principal amount of the Obligations.

1.4.

Prepayment of the Note . Issuer may not prepay all or any portion of the amount due under this Note.

1.5.

Application of Payments . Aggregate principal and interest payments in respect of loans made under the Notes shall be apportioned among all loans outstanding under the Notes, in each case pro rata according to the respective unpaid principal amounts of loans owed to the Lenders.

Conversion .

2.1.

Automatic Conversion . In the event the Company Stockholder Approval is effective prior to the Maturity Date, the Conversion Amount shall be automatically converted, in whole and not in part, without any further action of Lender, into shares of Series B-1 Preferred Stock on the date that such Company Stockholder Approval is effective. The number of shares of Series B-1 Preferred Stock to be issued to Lender upon conversion pursuant to this Section 2.1 shall equal (i) the Conversion Amount, divided by (ii) the Conversion Price.

2.2.

Conversion Upon Exit Event . In the event of an Exit Event on or before the Maturity Date, and provided the Conversion Amount has not been automatically converted pursuant to Section 2.1, the Conversion Amount shall be automatically converted, in whole and not in part, without any further action of Lender, into shares of Series B-1 Preferred Stock. The number of shares of Series B-1 Preferred Stock to be issued to Lender upon conversion pursuant to this Section 2.2 shall equal (i) the Conversion Amount, divided by (ii) the Conversion Price. Any conversion pursuant to this Section 2.2 shall occur immediately prior to, and shall be contingent on, the consummation of the Exit Event.

2.3.

Delivery of Note and Share Certificates . Upon conversion of the Conversion Amount pursuant to Sections 2.1 or 2.2, this Note will, for all purposes, be deemed to be converted into shares of Series B-1 Preferred Stock, at which time this Note shall for all purposes be deemed cancelled and all Obligations shall be deemed paid in full. Upon conversion of the Conversion Amount, delivery and surrender of this Note to Issuer duly endorsed and

marked cancelled and paid and execution by Lender of any documents and agreements entered into by the other investors who hold Series B-1 Preferred Stock, Issuer shall issue and deliver to Lender a certificate or certificates for the number of full shares of Series B-1 Preferred Stock to which Lender is entitled and a check or cash with respect to any fractional interest in a share of Series B-1 Preferred Stock. Issuer covenants that all shares of Series B-1 Preferred Stock issued upon conversion will, upon issuance, be duly authorized and validly issued, fully paid and non-assessable and free from all taxes, liens and charges caused or created by Issuer with respect to the issuance thereof.

2.4.

Adjustments . If there shall occur any reorganization, recapitalization, reclassification or other similar event involving Issuer in which the Series B-1 Preferred Stock is reclassified as, converted into or exchanged for new or different securities (the "Successor Securities"), then, following any such reorganization, recapitalization, reclassification or other event, this Note shall be convertible pursuant to Section 2.1 or 2.2 for such Successor Securities and all references in this Note to the Series B-1 Preferred Stock shall be deemed to be references to such Successor Securities, mutatis mutandis .

Demand; Protest; Expenses . Issuer waives demand, protest, notice of protest, notice of default or dishonor, notice of payment and nonpayment, notice of any default, diligence in collection and notices of intention to accelerate maturity, nonpayment at maturity, release, compromise, settlement, extension, or renewal of accounts, documents, instruments, chattel paper, and guarantees at any time held by Lender on which Issuer may in any way be liable and all other notices or demands relative to this instrument. If action is instituted to collect this Note, Issuer promises to pay all costs and expenses, including, without limitation, reasonable attorneys' fees and costs, incurred in connection with such action.

Event of Default . If there shall be any Event of Default hereunder, at the option and upon the declaration of Lender and upon written notice to Issuer (which declaration and notice shall not be required in the case of an Event of Default under Section 4.3 or 4.4), this Note shall accelerate and all principal and unpaid accrued interest shall become due and payable. Subject to the provisions hereof, Lender shall have all rights and may exercise any remedies available to it under law, successively or concurrently. The occurrence of any one or more of the following shall constitute an Event of Default:

4.1.

Issuer fails to pay (i) when due any principal payment on the due date hereunder or (ii) any interest or other payment required under the terms of this Note on the date due and any such payment described in (i) or (ii) above shall not have been made within five (5) business days of Issuer's receipt of Lender's written notice to Issuer of such failure to pay;

4.2.

Issuer fails to perform any covenant under this Note or under Section 5.01(f) of the Purchase Agreement in a timely manner or any representation or warranty of Issuer hereunder shall be inaccurate in any material respect when made;

4.3.

Issuer (i) applies for or consent to the appointment of a receiver, trustee, liquidator or custodian of itself or of all or a substantial part of its property; (ii) is unable, or admits in writing its inability, to pay its debts generally as they mature; (iii) makes a general

assignment for the benefit of its or any of its creditors; (iv) is dissolved or liquidated in full or in part; (v) becomes insolvent (as such term may be defined or interpreted under any applicable statute); (vi) commences a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or consents to any such relief or to the appointment of or taking possession of its property by any official in an involuntary case or other proceeding commenced against it; or (vii) takes any action for the purpose of effecting any of the foregoing;

4.4.

Proceedings for the appointment of a receiver, trustee, liquidator or custodian of Issuer or of all or a substantial part of the property thereof, or an involuntary case or other proceedings seeking liquidation, reorganization or other relief with respect to Issuer or the debts thereof under any bankruptcy, insolvency or other similar law or hereafter in effect are commenced and an order for relief entered or such proceeding is not be dismissed or discharged within thirty (30) days of commencement;

4.5.

Issuer or any subsidiary of Issuer is in default under any indebtedness of Issuer in excess of One Hundred Thousand Dollars ($100,000) or in the performance of or compliance with any term of any evidence of any such indebtedness or of any mortgage, indenture or other agreement relating thereto the effect of which is to cause such indebtedness to become due and payable before its stated maturity or before its regularly scheduled dates of payment, and such default, event or condition continues for more than the period of grace, if any, specified therein and not waived pursuant thereto; provided, however, that for purposes of this Section 4.5, indebtedness shall not include trade payables arising in the ordinary course of the business of the Issuer.

Collateral . The full amount of this Note is secured by the collateral identified and described as security therefor in the Security Agreement (the "Collateral"). Lender shall not, directly or indirectly, create, permit or suffer to exist, and shall defend the Collateral against and take such other action as is necessary to remove, any lien on or in the Collateral, or in any portion thereof, except as permitted pursuant to the Security Agreement.

Definitions . As used herein, the following terms shall have the following meanings:

6.1.

" Company Stockholder Approval " shall have the meaning ascribed thereto in the Purchase Agreement.

6.2.

" Conversion Amount " means, as of any date of determination, the sum of (a) all principal under this Note then outstanding, plus (b) all accrued interest under this Note as of such date.

6.3.

" Conversion Price " means six thousand dollars ($6,000.00) per share, as adjusted for stock splits, stock dividends, recapitalizations, combinations and the like.

6.4.

" Exit Event " shall mean a Liquidation Event as such term is defined for purposes of Section 4 of the Certificate of Designation of the Relative Rights and Preferences of the Series B-1 Convertible Preferred Stock and Series B-2 Preferred Stock of the Company, as the same may be amended from time to time.

6.5.

" Maturity Date " means July 31, 2009.

6.6.

" Obligations " means all debt, principal, interest, expenses and other amounts owed to Lender by Issuer pursuant to this Note, whether absolute or contingent, due or to become due, now existing or hereafter arising.

6.7.

" Series B-1 Preferred Stock " means the Series B-1 Preferred Stock of Issuer, $0.01 par value per share

Amendment Provisions . This Note may not be amended or modified, nor may any of its terms be waived, except by written instruments signed by (a) Issuer and (b) the holders at least a majority of the aggregate principal amount of Notes issued pursuant to the Purchase Agreement. No waivers of or exceptions to any term, condition or provision of this Note, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such term, condition or provision.

Severability . The invalidity or unenforceability of any provision of this Note shall not affect the validity or enforceability of any other provision of this Note.

Transfer; Assignment; Binding Effect .

9.1.

This Note shall not be transferable by Issuer without the prior written consent of Lender. Subject to the provisions of Section 9.2, Lender may assign its rights hereunder to any transferee or assignee in accordance with the terms of the Purchase Agreement. This Note shall be binding upon, and shall inure to the benefit of, Issuer and Lender and their respective successors and permitted assigns.

9.2.

Notwithstanding any provision in this Note to the contrary, no portion of this Note may be transferred or assigned unless and until there is a simultaneous transfer or assignment of an equivalent portion of the warrant issued by the Issuer to Lender on the date hereof (the "Warrant") by the Lender to the same proposed transferee or assignee. For purposes of this Note, an "equivalent portion of the Warrant" shall mean the number of shares of Series B-2 Preferred Stock of the Issuer then subject to the Warrant or portion of the Warrant equal to the number of shares of Series B-1 Preferred Stock of the Issuer issuable upon conversion of this Note or portion of this Note that the Lender proposes to transfer or assign to the proposed transferee or assignee.

10.

York City time) on a business day; (b) the business day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified herein later than 5:30 p.m. (New York City time) on any date and earlier than 11:59 p.m. (New York City time) on such date; (c) the business day following the date of mailing, if sent by nationally recognized overnight courier service; (d) five (5) business days after mailing if sent by certified or registered mail; or (e) actual receipt by the party to whom such notice is required to be given if delivered by hand. The address for such notices and communications shall be as follows:

(a)

If to Issuer:

IGI Laboratories, Inc.

105 Lincoln Avenue

Buena, New Jersey 08310

Telephone No.: (856) 697-1441

Facsimile No.: (856) 697-1001

Attn.: Chief Executive Officer

(b)

With required copies (which shall not constitute notice hereunder) to:

Pepper Hamilton LLP

3000 Two Logan Square

Philadelphia, Pennsylvania 19103

Telephone: (215) 981-4193

Facsimile: (215) 981-4750

Attention: Brian M. Katz, Esq.

(c)

If to Lender, to:

c/o Signet Healthcare Partners, G.P.

Carnegie Hall Towers

152 West 57th Street, 19th Floor

New York, New York 10019

Telephone No.: (212) 419-3906

Facsimile No.: (212) 419-3956

Attn.: James C. Gale, Managing Director

(d)

With required copies (which shall not constitute notice hereunder) to:

Bingham McCutchen LLP

399 Park Avenue

New York, New York 10022

Telephone No.: (212) 705-7492

Facsimile No.: (212) 702-3631

Attn: Shon E. Glusky, Esq.

or such other address as Issuer or Lender, as the case may be, may designate to the other in writing hereafter.

11.

No Rights as Stockholder . This Note, as such, shall not entitle Lender to any rights as a stockholder of Issuer.

12.

Headings and Governing Law . The headings herein are for convenience only, do not constitute a part of this Note and shall not be deemed to limit or affect any of the provisions hereof. This Note and all acts and transactions pursuant hereto and the rights and obligations of Issuer and Lender hereunder shall be governed, construed and interpreted in accordance with the internal laws of the State of Delaware, without giving effect to principles of conflicts of law. Each of Issuer and Lender (a) submits to the jurisdiction of any state or federal court sitting in Delaware in any action or proceeding arising out of or relating to this Note; (b) agrees that all claims in respect of such action or proceeding may be heard and determined in any such court; (c) waives any claim of inconvenient forum or other challenge to venue in such court; (d) agrees not to bring any action or proceeding arising out of or relating to this Note in any other court; and (e) waives any right it may have to a trial by jury with respect to any action or proceeding arising out of or relating to this Note. Each of Issuer and Lender agrees to accept service of any summons, complaint or other initial pleading made in the manner provided for the giving of notices in Section 10 , provided that nothing in this Section shall affect the right of a party to serve such summons, complaint or other initial pleading in any other manner permitted by law.

13.

No Impairment . Except and to the extent as waived or consented to by Lender in accordance with Section 7 above, Issuer will not, by amendment of its Certificate of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of any debt or equity securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by Issuer, but will at all times in good faith assist in the carrying out of all the provisions of this Note in order to protect the rights of Lender hereunder against impairment.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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

ISSUER:

IGI LABORATORIES, INC.


By:
Name:
Title:

Date of Note: [________________]
Lender: [________________]
Principal Amount: $[________________]

Exhibit 4.2

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

IGI LABORATORIES, INC.

PREFERRED STOCK PURCHASE WARRANT

Warrant No. A-__

[___________] shares

Original Issue Date: March 13, 2009

THIS CERTIFIES THAT, FOR VALUE RECEIVED, [_________] or its registered assigns (“ Holder ”) is entitled to purchase, on the terms and subject to the conditions set forth herein, at any time or from time to time during the Exercise Period (as defined below), but not thereafter, up to [______________] ([______]) shares of the Series B-2 Preferred Stock, $0.01 par value per share (the “ Series B-2 Preferred Stock ”), of IGI Laboratories, Inc., a Delaware corporation (the “ Company ”), at a price of $6,000.00 per share (the “ Exercise Price ”), such number of shares and Exercise Price being subject to adjustment pursuant to the terms set forth in Section 3 of this Warrant. Each share of Series B-2 Preferred Stock for which this Warrant is exercisable is a “ Warrant Share ” and all such shares are collectively referred to as the “ Warrant Shares .” Holder and Issuer hereby agree that the stated value of this Warrant is $100.00.

Section 1.

Exercise Period; Exercise of Warrant .

(a)

This Warrant shall be exercisable, in whole or in part, during the term commencing on July 31, 2009 and ending at 5:00 p.m., Eastern Time, on July 31, 2013, or if such date is not a day on which the Company is open for business, then the next succeeding day on which the Company is open for business; provided, however, that if the convertible promissory note issued by the Company to Holder on the date hereof (the “ Convertible Promissory Note ”) converts into shares of Series B-1 Preferred Stock of the Company, $0.01 par value per share, in accordance with its terms, on or prior to July 31, 2009, this Warrant shall not become exercisable and shall be null and void for all purposes (the “ Warrant Termination Event ”). In the event of an Exit Event (as defined below) on or after August 1, 2009, and provided that the Warrant Termination Event has not occurred, then this Warrant shall become exercisable, in whole or in part, immediately prior to (and contingent upon) the consummation by the Company of such Exit Event; provided , however , that if this Warrant is not exercised in

whole immediately prior to the consummation by the Company of such Exit Event, then immediately following the consummation by the Company of such Exit Event, this Warrant will not be exercisable and shall be null and void for all purposes. For purposes hereof, an “ Exit Event ” shall mean a Liquidation Event as such term is defined for purposes of Section 4 of the Certificate of Designation of the Relative Rights and Preferences of the Series B-1 Convertible Preferred Stock and Series B-2 Preferred Stock of the Company, as the same may be amended from time to time.

(b)

This Warrant may, at the option of Holder, be exercised in whole or in part from time to time during the exercise periods set forth in Section 1(a) by delivery to the Company at its principal office: (i) a written notice of such Holder’s election to exercise this Warrant (the “ Exercise Notice ”), which notice may be in the form of the Notice of Exercise attached hereto, properly executed and completed by Holder or an authorized officer thereof; (ii) a check payable to the order of the Company and/or cancellation of indebtedness owed by the Company to Holder, in each case in an amount equal to the product of the Exercise Price multiplied by the number of Warrant Shares specified in the Exercise Notice; and (iii) this Warrant (the items specified in (i), (ii), and (iii) are collectively the “ Exercise Materials ”).

(c)

As promptly as practicable, and in any event within five (5) business days after its receipt of the Exercise Materials, the Company shall execute or cause to be executed and delivered to Holder a certificate or certificates representing the number of Warrant Shares specified in the Exercise Notice, together with cash in lieu of any fraction of a share, and if this Warrant is partially exercised, a new warrant on the same terms for the unexercised balance of the Warrant Shares. The stock certificate or certificates shall be registered in the name of Holder or such other name or names as shall be designated in the Exercise Notice. The date on which the Warrant shall be deemed to have been exercised (the “ Effective Date ”), and the date the person in whose name any certificate evidencing the Warrant Shares issued upon the exercise hereof is issued shall be deemed to have become the holder of record of such shares, shall be the date the Company receives the Exercise Materials, irrespective of the date of delivery of a certificate or certificates evidencing the Warrant Shares issued upon the exercise hereof, provided, however, that if the Exercise Materials are received by the Company on a date on which the transfer agent of the Company is closed, the Effective Date shall be the next succeeding date on which the transfer agent is open. In the event that this Warrant is exercised, in whole or in part, in connection with an Exit Event, the Effective Date shall be the date of the consummation by the Company of such Exit Event. All Warrant Shares will, upon issuance, be fully paid and nonassessable and free from all taxes, liens, and charges with respect thereto.

Section 2.

Net Exercise . In lieu of exercising this Warrant pursuant to Section 1(b) , Holder may elect to receive, without payment by Holder of any additional consideration, shares of Series B-2 Preferred Stock equal to the value of this Warrant (or the portion thereof being cancelled) by surrender of this Warrant at the principal office of the Company together with an Exercise Notice, in which event the Company shall issue to Holder a number of shares of Series B-2 Preferred Stock computed using the following formula:

Y (A - B)

Where:

X =

The number of shares of Series B-2 Preferred Stock to be

issued to Holder pursuant to this net exercise;

Y =

The number of Warrant Shares in respect of which the net

issue election is made;

A =

The fair market value of one (1) share of Series B-2

Preferred Stock at the time the net issue election is made;

and

B =

The Exercise Price (as adjusted to the date of the net

issuance)

For purposes of this Section 2 , the fair market value of one (1) share of Series B-2 Preferred Stock as of a particular date shall be determined as follows: (i) if listed or quoted for trading on a securities market or exchange, the value shall be deemed to be the average closing price of the securities on such exchange over the thirty (30) day period ending three (3) days prior to the net exercise election; (ii) if traded over-the-counter, the value shall be deemed to be the average of the closing bid or sale prices (whichever is applicable) over the thirty (30) day period ending three (3) days prior to the net exercise election; and (iii) if there is no active public market, the value shall be the fair market value thereof, as jointly determined in good faith by Holder and the Company’s Board of Directors. If Holder and the Company’s Board of Directors are unable to reach such a determination, Holder and the Company’s Board of Directors shall jointly select an appraiser, who is experienced in such matters. The decision of such appraiser shall be final and conclusive, and the cost of such appraiser shall be borne equally by Holder and the Company.

Section 3.

Adjustment of Exercise Price and Number of Warrant Shares . The number of and kind of securities purchasable upon exercise of this Warrant and the Exercise Price shall be subject to adjustment from time to time as follows:

(a)

Subdivisions, Combinations and Other Issuances . If the Company shall at any time prior to the expiration of this Warrant subdivide its Series B-2 Preferred Stock, by split-up or otherwise, or combine its Series B-2 Preferred Stock, or issue additional shares of its Series B-2 Preferred Stock or Common Stock as a dividend with respect to any shares of its Series B-2 Preferred Stock, the number of Warrant Shares issuable on the exercise of this Warrant shall forthwith be proportionately increased in the case of a subdivision or stock dividend, or proportionately decreased in the case of a combination. Appropriate adjustments shall also be made to the purchase price payable per share, but the aggregate purchase price payable for the total number of Warrant Shares purchasable under this Warrant (as adjusted) shall remain the same. Any adjustment under this Section 3(a) shall become effective at the close of business on the date the subdivision or combination becomes effective, or as of the record date of such dividend, or in the event that no record date is fixed, upon the making of such dividend.

(b)

Reclassification, Reorganization and Consolidation . In case of any reclassification, capital reorganization, or change in the Series B-2 Preferred Stock of the

Company (other than as a result of a subdivision, combination, or stock dividend provided for in Section 3(a) above), then, as a condition of such reclassification, reorganization, or change, lawful provision shall be made, and duly executed documents evidencing the same from the Company or its successor shall be delivered to Holder, so that Holder shall have the right at any time prior to the expiration of this Warrant to purchase, at a total price equal to that payable upon the exercise of this Warrant, the kind and amount of shares of stock and other securities and property receivable in connection with such reclassification, reorganization, or change by a holder of the same number of shares of Series B-2 Preferred Stock as were purchasable by Holder immediately prior to such reclassification, reorganization, or change. In any such case appropriate provisions shall be made with respect to the rights and interest of Holder so that the provisions hereof shall thereafter be applicable with respect to any shares of stock or other securities and property deliverable upon exercise hereof, and appropriate adjustments shall be made to the purchase price per share payable hereunder, provided the aggregate purchase price shall remain the same.

(c)

Notice of Adjustment . When any adjustment is required to be made in the number or kind of shares purchasable upon exercise of the Warrant, or in the Exercise Price, the Company shall promptly notify Holder of such event and of the number of shares of Series B-2 Preferred Stock or other securities or property thereafter purchasable upon exercise of this Warrant.

(d)

No Impairment . The Company and Holder will not, by any voluntary action, directly or indirectly, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company or Holder, respectively, but will at all times in good faith assist in the carrying out of all the provisions of this Section 3 and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Company and Holder against impairment.

Section 4.

No Stockholder Rights . This Warrant shall not entitle Holder to any voting rights or other rights as a stockholder of the Company.

Section 5.

Issuance of Warrant Shares . The Company covenants that it will at all times keep available such number of authorized shares of its Series B-2 Preferred Stock, free from all preemptive rights with respect thereto, which will be sufficient to permit the exercise of this Warrant for the full number of Warrant Shares specified herein.

Section 6.

Transfer of Securities .

(a)

This Warrant and the Warrant Shares and any shares of capital stock received in respect thereof, whether by reason of a stock split or share reclassification thereof, a stock dividend thereon, or otherwise, shall not be transferable except upon compliance with the provisions of the Securities Act of 1933, as amended (the “ Securities Act ”), and applicable state securities laws with respect to the transfer of such securities. Holder, by acceptance of this Warrant, agrees to be bound by the provisions this Section 6 and to indemnify and hold harmless the Company against any loss or liability arising from the disposition of this Warrant or the

Warrant Shares issuable upon exercise hereof or any interest in either thereof in violation of the provisions of this Warrant.

(b)

Each certificate for the Warrant Shares and any shares of capital stock received in respect thereof, whether by reason of a stock split or share reclassification thereof, a stock dividend thereon or otherwise, and each certificate for any such securities issued to subsequent transferees of any such certificate shall (unless otherwise permitted by the provisions hereof) be stamped or otherwise imprinted with a legend in substantially the following form:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ SECURITIES ACT ”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.”

Section 7.

Miscellaneous .

(a)

The terms of this Warrant shall be binding upon and shall inure to the benefit of any successors or permitted assigns of the Company and Holder.

(b)

Notwithstanding any provision herein to the contrary, no portion of this Warrant may be transferred or assigned unless and until there is a simultaneous transfer or assignment of an equivalent portion of the Promissory Note (including any right to receive interest thereon) by the Holder to the same proposed transferee or assignee. For purposes of this Warrant, an “equivalent portion of the Promissory Note” shall mean the principal amount of the Promissory Note then convertible into the number of shares of Series B-1 Preferred Stock of the Company equal to the number of shares of Series B-2 Preferred Stock of the Company then subject to this Warrant or the portion of this Warrant that the Holder proposes to transfer or assign to the proposed transferee or assignee.

(c)

Except as otherwise provided herein, this Warrant and all rights hereunder are transferable by Holder in person or by duly authorized attorney on the books of the Company upon surrender of this Warrant, properly endorsed, to the Company. The Company may deem and treat the registered holder of this Warrant at any time as the absolute owner hereof for all purposes and shall not be affected by any notice to the contrary.

(d)

Notwithstanding any provision herein to the contrary, Holder may not exercise, sell, transfer, or otherwise assign this Warrant unless the Company is provided with an opinion of counsel satisfactory in form and substance to the Company, to the effect that such exercise, sale, transfer, or assignment would not violate the Securities Act or applicable state securities laws.

(e)

Subject to Section 7(b), this Warrant may be divided into separate warrants covering one share of Series B-2 Preferred Stock or any whole multiple thereof, for the total number of shares of Series B-2 Preferred Stock then subject to this Warrant at any time, or from time to time, upon the request of the registered holder of this Warrant and the surrender of the same to the Company for such purpose. Such subdivided Warrants shall be issued promptly by the Company following any such request and shall be of the same form and tenor as this Warrant, except for any requested change in the name of the registered holder stated herein.

(f)

Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section prior to 5:30 p.m. (New York City time) on a business day; (b) the business day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified herein later than 5:30 p.m. (New York City time) on any date and earlier than 11:59 p.m. (New York City time) on such date; (c) the business day following the date of mailing, if sent by nationally recognized overnight courier service; (d) five (5) business days after mailing if sent by certified or registered mail; or (e) actual receipt by the party to whom such notice is required to be given if delivered by hand. The address for such notices and communications shall be as follows:

If to the Company:

IGI Laboratories, Inc.
105 Lincoln Avenue
Buena, New Jersey 08310
Telephone No.: (856) 697-1441
Facsimile No.: (856) 697-1001
Attn.: Chief Executive Officer

With a copy to:

Pepper Hamilton LLP
3000 Two Logan Square
Philadelphia, Pennsylvania 19103
Telephone: (215) 981-4193
Facsimile: (215) 981-4750
Attention: Brian M. Katz, Esq.

If to Holder:

c/o Signet Healthcare Partners, G.P.
Carnegie Hall Towers
152 West 57th Street, 19th Floor
New York, New York 10019
Telephone No.: (212) 419-3906
Facsimile No.: (212) 419-3956
Attn.: James C. Gale, Managing Director

With a copy to:

Bingham McCutchen LLP
399 Park Avenue
New York, New York 10022
Telephone No.: (212) 705-7492
Facsimile No.: (212) 702-3631
Attn: Shon E. Glusky, Esq.

or such other address as may be designated in writing hereafter, in the same manner, by such Person.

(g)

In case any one or more of the provisions of this Warrant shall be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Warrant shall not in any way be affected or impaired thereby and the parties will attempt to agree upon a valid and enforceable provision which shall be a reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Warrant.

(h)

The headings herein are for convenience only, do not constitute a part of this Warrant and shall not be deemed to limit or affect any of the provisions hereof.

(i)

This Warrant and all acts and transactions pursuant hereto and the rights and obligations of the Company and Holder hereunder shall be governed, construed and interpreted in accordance with the internal Laws of the State of Delaware, without giving effect to principles of conflicts of law. Each of the Company and Holder (a) submits to the jurisdiction of any state or federal court sitting in Delaware in any action or proceeding arising out of or relating to this Warrant; (b) agrees that all claims in respect of such action or proceeding may be heard and determined in any such court; (c) waives any claim of inconvenient forum or other challenge to venue in such court; (d) agrees not to bring any action or proceeding arising out of or relating to this Warrant in any other court; and (e) waives any right it may have to a trial by jury with respect to any action or proceeding arising out of or relating to this Warrant. Each of the Company and Holder agrees to accept service of any summons, complaint or other initial pleading made in the manner provided for the giving of notices in Section 7(e) , provided that nothing in this Section shall affect the right of a party to serve such summons, complaint or other initial pleading in any other manner permitted by law.

[Signature Page Follows]

IN WITNESS WHEREOF, the Company, has caused this Warrant to be executed in its name by its duly authorized officers under seal, and to be dated as of the date first above written.


	IGI LABORATORIES, INC.

	By:
	Name:
	Title:

[SIGNATURE PAGE TO PREFERRED STOCK PURCHASE WARRANT OF IGI LABORATORIES, INC.]

ASSIGNMENT

(To be Executed by Holder to effect a transfer of the foregoing Warrant)

FOR VALUE RECEIVED, the undersigned hereby sells, and assigns and transfers unto ______________________ the foregoing Warrant and the rights represented thereto to purchase shares of Series B-2 Preferred Stock, par value $0.01 per share, of IGI Laboratories, Inc. in accordance with terms and conditions thereof, and does hereby irrevocably constitute and appoint ________________ as attorney to transfer the said Warrant on the books of the Company, with full power of substitution.

HOLDER


Entity Name:
By:
Title:
Date:

Address:

EXERCISE NOTICE

[To be signed only upon exercise of Warrant]

To:

IGI LABORATORIES, INC.

The undersigned Holder of the attached Warrant hereby irrevocably elects to:


_________		(a) Purchase _________ shares of Series B-2 Preferred Stock, par value $0.01 per share, of IGI Laboratories, Inc., pursuant to the terms of the attached Warrant and payment of the Exercise Price per share required under such Warrant accompanies this Notice;

OR

_________		(b) Exercise the attached Warrant for [all of the shares] [_______ of the shares] [ cross out inapplicable phrase ] purchasable under the Warrant pursuant to the net exercise provisions of Section 2 of such Warrant.

The undersigned herewith requests that the certificates for such shares be issued in the name of, and delivered to the undersigned, whose address is _______________________.

If electronic book entry transfer, complete the following:

Account Number: ______________________

Transaction Code Number: ______________

Dated: ___________________

HOLDER


Entity Name:
By:
Title:
Date:

Address:

Exhibit 4.3

NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY APPLICABLE STATE SECURITIES LAW AND NEITHER MAY BE SOLD OR OTHERWISE TRANSFERRED UNTIL (I) A REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (II) THE COMPANY SHALL HAVE RECEIVED A WRITTEN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY TO THE EFFECT THAT REGISTRATION UNDER SUCH SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED TRANSFER.

IGI LABORATORIES, INC.

COMMON STOCK PURCHASE WARRANT

Warrant No. ___

350,000 shares

Original Issue Date: March 13, 2009

THIS CERTIFIES THAT, FOR VALUE RECEIVED, ROCKPORT VENTURE SECURITIES, LLC or its registered assigns (the " Holder ") is entitled to purchase, on the terms and conditions hereinafter set forth, at any time in whole or in part from the Original Issue Date set forth above until 5:00 p.m., Eastern Time, on the third anniversary of the Original Issue Date, or if such date is not a day on which the Company (as hereinafter defined) is open for business, then the next succeeding day on which the Company is open for business (such date is the " Expiration Date "), but not thereafter, three hundred and fifty thousand (350,000) shares of the Common Stock, $0.01 par value (the " Common Stock "), of IGI Laboratories, Inc., a Delaware corporation (the " Company "), at $0.41 per share (the " Exercise Price "), such number of shares and Exercise Price being subject to adjustment upon the occurrence of the contingencies set forth in this Warrant. Each share of Common Stock as to which this Warrant is exercisable is a " Warrant Share " and all such shares are collectively referred to as the " Warrant Shares ."

Section 1.

Definitions .

(a) " Effective Date " shall mean the date on which the Warrant shall be deemed to have been exercised.

(b) " Initial Issuance Date " shall mean the date on which shares of Series B-1 Preferred Stock are first purchased pursuant to the Purchase Agreement.

(c) " Liquidation Event " shall mean (i) the liquidation, dissolution or winding up of the affairs of the Company, whether voluntary or involuntary, (ii) the consolidation or merger of the Company with or into any other corporation or corporations in which the Company is not the surviving entity, (iii) the sale of all or substantially all of the assets of the Company or (iv) the effectuation by the Company of a transaction or series of transactions in which more than 50% of the voting shares of the Company is disposed of or conveyed.

(d) " Purchase Agreement " shall mean the Securities Purchase Agreement by and among the Company and the purchasers set forth on Schedule A thereto, dated March 13, 2009.

(e) " Registration Rights Agreement " shall mean the Registration Rights Agreement by and among the Company, Rockport Venture Securities, LLC and the purchasers set forth on Schedule A thereto, dated March 13, 2009.

(f) " Series B-1 Convertible Note " shall mean the secured convertible promissory note convertible into shares of Series B-1 Preferred Stock pursuant to the terms of the Purchase Agreement.

(g) " Series B-1 Preferred Stock " shall mean the Series B-1 Convertible Preferred Stock of the Company, par value $0.01 per share.

Section 2.

Exercise of Warrant; Conversion of Warrant .

(a) Until such time as the Company obtains stockholder approval for (i) the issuance of the Series B-1 Preferred Stock on the Initial Issuance Date and upon conversion of the Series B-1 Convertible Note (and the Common Stock into which such Series B-1 Preferred Stock is convertible) pursuant to the terms of the Purchase Agreement and (ii) any change of control relating from such issuance, each pursuant to the applicable requirements of Section 713 of the NYSE Alternext Company Guide (the " Stockholder Approval "), this Warrant shall be exercisable for no more than eighty-eight thousand five hundred fifty (88,550) shares of Common Stock, subject to adjustment upon the occurrence of the contingencies set forth in this Warrant. From and after such time as the Stockholder Approval is obtained, this Warrant may, at the option of the Holder, be exercised in whole or in part. Notwithstanding the foregoing, in the event of a Liquidation Event prior to the Company's receipt of Stockholder Approval, this Warrant shall become exercisable, in whole immediately prior to (and contingent upon) the consummation by the Company of such Liquidation Event.

(b) Subject to the limitations described in Section 2(a) above, this Warrant may, at the option of the Holder, be exercised in whole or in part from time to time, on or before 5:00 p.m., Eastern Time, on the Expiration Date, by delivery to the Company at its principal office (i) a written notice of such Holder's election to exercise this Warrant (the " Exercise Notice "), which notice may be in the form of the Notice of Exercise attached hereto, properly executed and completed by the Holder or an authorized officer thereof, (ii) a check or other funds (the " Funds ") payable to the order of the Company, in an amount equal to the product of the Exercise Price multiplied by the number of Warrant Shares specified in the Exercise Notice, and (iii) this Warrant (the items specified in (i), (ii), and (iii) are collectively the " Exercise Materials "); provided, however , that if this Warrant is not exercised in whole immediately prior to the consummation by the Company of a Liquidation Event, then immediately following the consummation by the Company of such Liquidation Event, this Warrant will not be exercisable and shall be null and void for all purposes. Notwithstanding anything in this Warrant Agreement to the contrary, if this Warrant shall not have been exercised in full immediately prior to a Liquidation Event, then this Warrant shall be automatically exercised pursuant to Section 3 below, without further action on the part of the Holder (and the Holder hereof shall be deemed to be a holder of the Common Stock issued upon such automatic exercise), immediately prior to the Liquidation Event, unless at any time on or before such time, the Holder shall notify the Company in writing that no such automatic exercise is to occur.

(c) As promptly as practicable, and in any event within five (5) business days after the later of (i) its receipt of the Exercise Materials and (ii) the clearing of the Funds, the Company shall execute or cause to be executed and delivered to the Holder a certificate or certificates representing the number of Warrant Shares specified in the Exercise Notice, together with cash in lieu of any fraction of a share. The stock certificate or certificates shall be registered in the name of the Holder or such other name or names as shall be designated in the Exercise Notice. The Effective Date and the date the person in whose name any certificate evidencing the Common Stock issued upon the exercise hereof is issued shall be deemed to have become the holder of record of such shares, shall be the date the Company receives the Exercise Materials, irrespective of the date of delivery of a certificate or certificates evidencing the Common Stock issued upon the exercise or conversion hereof, provided, however , that if the Exercise Materials are received by the Company on a date on which the stock transfer books of the Company are closed, the Effective Date shall be the next succeeding date on which the stock transfer books are open. If this Warrant shall have been exercised only in part, then, unless this Warrant has expired, the Company shall, at its expense, at the time of delivery of such certificates, deliver to the Warrantholder a new Warrant representing the right to purchase the number of shares with respect to which this Warrant shall not then have been exercised. In the

-2-

event that this Warrant is exercised, in whole in connection with a Liquidation Event, the Effective Date shall be the date of the consummation by the Company of such Liquidation Event. All shares of Common Stock issued upon the exercise or conversion of this Warrant will, upon issuance, be fully paid and non-assessable and free from all taxes, liens, and charges with respect thereto.

Section 3.

Cashless Exercise . In lieu of exercising this Warrant pursuant to Section 2(c) , the Holder may elect to receive, without payment by the Holder of any additional consideration, shares of Common Stock equal to the value of this Warrant (or the portion thereof being cancelled) by surrender of this Warrant at the principal office of the Company together with an Exercise Notice, in which event the Company shall issue to the Holder a number of shares of Common Stock computed using the following formula:

Y (A - B)

Where:

X =

The number of shares of Common Stock to be issued to the

Holder pursuant to this cashless exercise;

Y =

The number of Warrant Shares in respect of which the cashless exercise election is made;

A =

The fair market value of one (1) share of Common Stock at the time the cashless exercise election is made; and

B =

The Exercise Price (as adjusted to the date of the cashless exercise)

For purposes of this Section 3 , the fair market value of one (1) share of Common Stock as of a particular date shall be determined as follows: (i) if listed or quoted for trading on a securities market or exchange, the value shall be deemed to be the average closing price of the securities on such exchange over the thirty (30) day period ending three (3) days prior to the cashless exercise election; (ii) if traded over-the-counter, the value shall be deemed to be the average of the closing bid or sale prices (whichever is applicable) over the thirty (30) day period ending three (3) days prior to the cashless exercise election; and (iii) if there is no active public market, the value shall be the fair market value thereof, as jointly determined in good faith by the Holder and the Company's Board of Directors. If the Holder and the Company's Board of Directors are unable to reach such a determination, the Holder and the Company's Board of Directors shall jointly select an appraiser, who is experienced in such matters. The decision of such appraiser shall be final and conclusive, and the cost of such appraiser shall be borne equally by the Holder and the Company.

Section 4.

Adjustments to Warrant Shares . The Exercise Price and number of Warrant Shares issuable upon exercise of this Warrant are subject to adjustment from time to time as set forth in this Section 4 .

(a) Subdivisions, Combinations and Other Issuances . If the Company shall at any time prior to the expiration of this Warrant subdivide its Common Stock, by split-up or otherwise, or combine its Common Stock, or issue additional shares of its Common Stock as a dividend, the number of Warrant Shares issuable on the exercise of this Warrant shall forthwith be proportionately increased in the case of a subdivision or stock dividend, or proportionately decreased in the case of a combination. Appropriate adjustments shall also be made to the Exercise Price, but the aggregate Exercise Price payable for the total number of Warrant Shares purchasable under this Warrant (as adjusted) shall remain the same. Any adjustment under this Section 4(a) shall become effective at the close of business on the date the subdivision or combination becomes effective, or as of the record date of such dividend, or in the event that no record date is fixed, upon the making of such dividend.

(b) Reclassification, Reorganization and Consolidation . In case of any reclassification, capital reorganization, or change in the Common Stock of the Company (other than as a result of a subdivision, combination, or stock dividend provided for in Section 4(a) above), then, as a condition of such reclassification, reorganization, or change, lawful provision shall be made, and duly executed documents evidencing the same from

-3-

the Company or its successor shall be delivered to the Holder, so that the Holder shall have the right at any time prior to the expiration of this Warrant to purchase, at a total price equal to that payable upon the exercise of this Warrant, the kind and amount of shares of stock and other securities and property receivable in connection with such reclassification, reorganization, or change by a holder of the same number of shares of Common Stock as were purchasable by the Holder immediately prior to such reclassification, reorganization, or change. In any such case appropriate provisions shall be made with respect to the rights and interest of the Holder so that the provisions hereof shall thereafter be applicable with respect to any shares of stock or other securities and property deliverable upon exercise hereof, and appropriate adjustments shall be made to the Exercise Price payable hereunder, provided the aggregate Exercise Price shall remain the same.

(c) Calculations . All calculations under this Section 4 shall be made to the nearest cent or the nearest 1/100th of a share, as applicable. The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the Company, and the disposition of any such shares shall be considered an issue or sale of Common Stock.

(d) The Company covenants and agrees that all Warrant Shares which may be issued will, upon issuance, be validly issued, fully paid, and non-assessable. The Company further covenants and agrees that the Company will at all times have authorized and reserved, free from preemptive rights, a sufficient number of shares of its Common Stock to provide for the exercise of this Warrant in full.

Section 5.

Notice of Adjustments . Upon the occurrence of each adjustment pursuant to Section 4 , the Company at its expense will promptly compute such adjustment in accordance with the terms of this Warrant and prepare a certificate setting forth such adjustment, including a statement of the adjusted Exercise Price, describing the transactions giving rise to such adjustments and showing in detail the facts upon which such adjustment is based. When any such adjustment is required to be made, the Company will promptly, but in any event no later than ten (10) days after said adjustment, notify the Holder of the event giving rise to such adjustment and deliver a copy of each such certificate to the Holder.

Section 6.

Registration Rights . The Holder shall be entitled to registration rights with respect to the Warrant Shares as set forth in the Registration Rights Agreement.

Section 7.

No Stockholder Rights . This Warrant shall not entitle Holder to any voting rights or other rights as a stockholder of the Company.

Section 8.

Transfer of Securities .

(a) This Warrant and the Warrant Shares and any shares of capital stock received in respect thereof, whether by reason of a stock split or share reclassification thereof, a stock dividend thereon, or otherwise, shall not be transferable except upon compliance with the provisions of the Securities Act of 1933, as amended (the " Securities Act "), and applicable state securities laws with respect to the transfer of such securities. The Holder, by acceptance of this Warrant, agrees to be bound by the provisions this Section 8 hereof and to indemnify and hold harmless the Company against any loss or liability arising from the disposition of this Warrant or the Warrant Shares issuable upon exercise hereof or any interest in either thereof in violation of the provisions of this Warrant.

(b) Each certificate for the Warrant Shares and any shares of capital stock received in respect thereof, whether by reason of a stock split or share reclassification thereof, a stock dividend thereon, or otherwise, and each certificate for any such securities issued to subsequent transferees of any such certificate shall (unless otherwise permitted by the provisions hereof) be stamped or otherwise imprinted with a legend in substantially the following form:

"NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAW AND NEITHER MAY BE SOLD OR OTHERWISE TRANSFERRED UNTIL (I) A REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS

-4-

SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (II) THE COMPANY SHALL HAVE RECEIVED A WRITTEN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY TO THE EFFECT THAT REGISTRATION UNDER SUCH SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED TRANSFER."

Section 9.

Replacement of Warrant . If this Warrant is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation hereof, or in lieu of and substitution for this Warrant, a new warrant (the " New Warrant "), but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and customary and reasonable bond or indemnity, if requested.

Section 10.

Miscellaneous .

(a) The terms of this Warrant shall be binding upon and shall inure to the benefit of any successors or permitted assigns of the Company and the Holder.

(b) Except as otherwise provided herein, this Warrant and all rights hereunder are transferable by the registered holder hereof in person or by duly authorized attorney on the books of the Company upon surrender of this Warrant, properly endorsed, to the Company. The Company may deem and treat the registered holder of this Warrant at any time as the absolute owner hereof for all purposes and shall not be affected by any notice to the contrary.

(c) Notwithstanding any provision herein to the contrary, the Holder may not exercise, sell, transfer, or otherwise assign this Warrant unless the Company is provided with an opinion of counsel satisfactory in form and substance to the Company, to the effect that such exercise, sale, transfer, or assignment would not violate the Securities Act or applicable state securities laws.

(d) Any notices, consents, waivers, or other communications required or permitted to be given under the terms of this Warrant must be in writing and will be deemed to have been delivered (a) upon receipt, when delivered personally, (b) upon receipt, when sent by facsimile, provided a copy is mailed by U.S. certified mail, return receipt requested, (c) three (3) days after being sent by U.S. certified mail, return receipt requested, or (d) one (1) day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same.

If to the Company:

IGI Laboratories, Inc.
105 Lincoln Avenue
Buena, New Jersey 08310
Telephone No.: (856) 697-1441
Facsimile No.: (856) 697-1001
Attn.: Chief Executive Officer

With a copy to:

Pepper Hamilton LLP
3000 Two Logan Square
Philadelphia, Pennsylvania 19103
Telephone: (215) 981-4193
Facsimile: (215) 981-4750
Attention: Brian M. Katz, Esq.

If to Holder:

Rockport Venture Securities, LLC
275 Cabot Street, Suite 10
Beverly, Massachusetts 01915
Facsimile No.: (978) 969-3500
Attn.: Thomas R. Bassinger

-5-

With a copy to:

Choate, Hall & Stewart LLP
Two International Place
Boston, Massachusetts 02110
Telephone Number (617) 248-5000
Facsimile No: (617) 248-4000
Attn: Frederick P. Callori

(f) All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by the internal laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Delaware. Each party hereby irrevocably submits to the non-exclusive jurisdiction of the state and federal courts sitting in the State of Delaware, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Warrant and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.

(g) The headings herein are for convenience only, do not constitute a part of this Warrant and shall not be deemed to limit or affect any of the provisions hereof.

(h) In case any one or more of the provisions of this Warrant shall be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Warrant shall not in any way be affected or impaired thereby and the parties will attempt in good faith to agree upon a valid and enforceable provision which shall be a commercially reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Warrant.

[the remainder of this page intentionally left blank]

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SIGNATURE PAGE
TO
IGI LABORATORIES, INC.

COMMON STOCK PURCHASE WARRANT

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed in its name by its duly authorized officers under seal, and to be dated as of the date first above written.


	IGI LABORATORIES, INC.

	By:	/s/ Rajiv Mathur
		Name: Rajiv Mathur
		Title: Chief Executive Officer

[Signature Page to IGI Laboratories, Inc. Common Stock Purchase Warrant]

ASSIGNMENT

(To be Executed by the Holder to effect a transfer of the foregoing Warrant)

FOR VALUE RECEIVED, the undersigned hereby sells, and assigns and transfers unto ______________________ the foregoing Warrant and the rights represented thereto to purchase shares of Common Stock, par value $0.01 per share, of IGI LABORATORIES, INC. in accordance with terms and conditions thereof, and does hereby irrevocably constitute and appoint ________________ Attorney to transfer the said Warrant on the books of the Company, with full power of substitution.


	Holder:





	Address

	Dated: __________________, 20__

	In the presence of:

NOTICE OF EXERCISE

[To be signed only upon exercise of Warrant]

To:

IGI LABORATORIES, INC.

The undersigned Holder of the attached Warrant hereby irrevocably elects to exercise the Warrant for, and to purchase thereunder, _________ shares of Common Stock, par value $0.01 per share, of IGI LABORATORIES, INC., issuable upon exercise of said Warrant and hereby surrenders said Warrant.

The undersigned herewith requests that the certificates for such shares be issued in the name of, and delivered to the undersigned, whose address is ________________________________.

If electronic book entry transfer, complete the following:

Account Number: ____________________________

Transaction Code Number: _____________________

Dated: ___________________


	Holder:





	By:
		Name:
		Title:

NOTICE

The signature above must correspond to the name as written upon the face of the within Warrant in every particular, without alteration or enlargement or any change whatsoever.

-9-

Exhibit 4.4

Date:

March 13, 2009

$500,000.00

THIRD AMENDED AND RESTATED
REVOLVING NOTE

For value received IGI Laboratories, Inc. (f/k/a IGI, Inc.), a Delaware corporation with an address of 105 Lincoln Avenue, Buena, New Jersey 08310 (“Borrower”), promises to pay to the order of Pinnacle Mountain Partners, LLC, a New Hampshire limited liability company, with an address of 206 Pinnacle Road, South Lyndeborough, New Hampshire 03082 (together with its successors and assigns, “Lender”), the principal amount of Five Hundred Thousand Dollars and Zero Cents ($500,000.00), or if less, such amount as may be the aggregate unpaid principal amount of all loans or advances made by Lender to Borrower pursuant hereto, in two payments as follows: (i) on July 31, 2010, one-half of the then outstanding aggregate unpaid principal amount and (ii) on July 31, 2011, the then remaining aggregate unpaid principal amount, together with interest from the date hereof on the unpaid principal balance of such amounts from time to time outstanding until paid in full, all in accordance with the terms of the Loan and Security Agreement dated January 29, 2007 (as amended from time to time, the “Loan and Security Agreement”). The aggregate principal balance outstanding shall bear interest thereon at a per annum rate equal to Eight and One-Half Percent (8.5%). All accrued and unpaid interest shall be payable monthly in arrears on the first of each month, commencing on March 1, 2007.

Principal and interest shall be payable at Lender’s address above or at such other place as Lender may designate in writing, in immediately available funds in lawful money of the United States of America without set-off, deduction or counterclaim. Interest shall be calculated on the basis of actual number of days elapsed in a 360-day year.

This Note is a revolving note and, subject to the foregoing and in accordance with the provisions hereof and of any and all other agreements between Borrower and Lender related hereto, Borrower may, at its option, borrow and reborrow repeatedly hereunder at any time prior to July 31, 2009; provided, however, that in any event the principal balance outstanding hereunder shall at no time exceed the face amount of this Note. Subject to the forgoing, Borrower may, at its option, pay and prepay repeatedly hereunder at any time prior to July 31, 2011. Notwithstanding the foregoing, this Note may be extended beyond the terms set forth herein by the written agreement of the parties. This Note shall continue in full force and effect until all obligations and liabilities evidenced by this Note are paid in full and Lender is no longer obligated to extend financial obligations to Borrower, even if, from time to time, there are no amounts outstanding with respect to this Note.

Any payments received by Lender on account of this Note shall, at Lender’s option, be applied first to accrued and unpaid interest; second, to the unpaid principal balance hereof; third, to any costs, expenses or charges then owed to Lender by Borrower; and the balance to escrows, if any.

If pursuant to the terms of this Note, Borrower is at any time obligated to pay interest on the principal balance at a rate in excess of the maximum interest rate permitted by applicable law

for the loan evidenced by this Note, the applicable interest shall be immediately reduced to such maximum rate and all previous payments in excess of the maximum rate shall be deemed to have been payments in reduction of principal and not on account of the interest due hereunder.

Borrower represents to Lender that the proceeds of this Note will not be used for personal, family or household purposes or for the purpose of purchasing or carrying margin stock or margin securities within the meaning of Regulations U and X of the Board of Governors of the Federal Reserve System, 12 C.F.R. Parts 221 and 224.

Borrower and each endorser and guarantor hereof grant to Lender a continuing lien on and security interest in any and all assets of Borrower unencumbered as of September 30, 2006, as further set forth in the Loan and Security Agreement.

No delay or omission on the part of Lender in exercising any right hereunder shall operate as a waiver of such right or of any other right of Lender, nor shall any delay, omission or waiver on any one occasion be deemed a bar or waiver of the same or any other right on any future occasion. Borrower and every endorser or guarantor of this Note, regardless of the time, order or place of signing, waives presentment, demand, protest, notice of intent to accelerate, notice of acceleration and all other notices of every kind in connection with the delivery, acceptance, performance or enforcement of this Note and assents to any extension or postponement of the time of payment or any other indulgence, to any substitution, exchange or release of collateral, and to the addition or release of any other party or person primarily or secondarily liable and waives all recourse to suretyship and guarantor defenses generally, including any defense based on impairment of collateral.

Borrower and each endorser and guarantor of this Note shall indemnify, defend and hold Lender and its directors, officers, shareholders, agents and attorneys harmless against any claim brought or threatened against Lender by Borrower, by any endorser or guarantor, or by any other person (as well as from reasonably attorneys’ fees and expenses in connection therewith) on account of Lender’s relationship with Borrower or any endorser or guarantor hereof (each of which may be defended, compromised, settled or pursued by Lender with counsel of Lender’s selection, but at the expense of Borrower and any endorser and/or guarantor), except for any claim arising out of Lender’s gross negligence or willful misconduct.

Borrower and each endorser and guarantor of this Note agree to pay costs (which shall be added to principal) of collection of all amounts under this Note including, without limitation, principal and interest, or in connection with the enforcement of, or realization on, any security for this Note, including, without limitation, to the extent permitted by applicable law, reasonable attorneys’ fees and expenses. While an Event of Default (as defined in the Loan and Security Agreement), is continuing, interest shall accrue at a rate per annum equal to the aggregate of two (2) percent plus the rate provided for herein. If any payment due under this Note is unpaid for ten (10) days or more, Borrower shall pay, in addition to any other sums due under this Note (and without limiting Lender’s other remedies on account thereof), a late charge equal to the greater of $35.00 or two (2) percent of such unpaid amount.

This Note shall be binding on Borrower and each endorser and guarantor hereof and upon their respective heirs, successors, assigns and legal representatives, and shall inure to the benefit of Lender and its successors, endorsees and assigns.

The liabilities of Borrower and any endorser or guarantor of this Note are joint and several, provided, however the release by Lender of Borrower or any one or more endorsers or guarantors shall not release any other person obligated on account of this Note. Any and all present and future debts of Borrower to any endorser or guarantor of this Note are subordinated to the full payment and performance of all present and future debts and obligations of Borrower to Lender. Each reference in this Note to Borrower, any endorser, and any guarantor, is to such person individually and also to all such persons jointly. No person obligated on account of this Note may seek contribution from any other person also obligated, unless and until all liabilities, obligations and indebtedness to Lender of the person from whom contribution is sought have been satisfied in full. The release or compromise by Lender of any collateral shall not release any person obligated on account of this Note.

Borrower and each endorser and guarantor of this Note each authorizes Lender to complete this Note if delivered incomplete in any respect. A photographic or other reproduction of this Note may be made by Lender, and any such reproduction shall be admissible in evidence with the same effect as the original in any judicial or administrative proceeding, whether or not the original is in existence.

Borrower will, from time to time, execute and deliver to Lender such documents, and take or cause to be taken, all such further action, as Lender may request in order to effect and confirm or vest more securely in Lender all rights contemplated by this Note or any other loan documents related thereto (including, without limitation, to correct clerical or typographical errors) or to vest more fully in or assure to the Lender the security interest in any collateral securing this Note or to comply with applicable statute or law.

Borrower and each endorser and guarantor of this Note each irrevocably submits to the nonexclusive jurisdiction of any Federal or State court sitting in New Jersey, over any suit, action or proceeding arising out of or relating to this Note. Each of the Borrower and any endorser and guarantor irrevocably waives, to the fullest extent allowed by applicable law, any objection it may now or hereafter have to the laying of venue of any such suit, action or proceeding brought in any such court and any claim that the same has been brought in an inconvenient forum. The laws of the State of New Jersey shall govern this Note.

Borrower, each endorser and guarantor and Lender each hereby knowingly, voluntarily and intentionally, and after an opportunity to consult with legal counsel, (A) waives any and all rights to a trial by jury in any action or proceeding in connection with this Note, any of the obligations of Borrower, each endorser and guarantor to Lender, and all matters contemplated hereby and documents executed in connection herewith, and (B) agrees not to seek to consolidate any such action with any other action in which a jury trial can not be, or has not been, waived. Borrower, each endorser and guarantor and Lender each certifies that neither Lender nor any of its representatives, agents or counsel has represented, expressly or otherwise, that Lender would not in the event of any such proceeding seek to enforce this waiver of right to trial by jury.

This Note evidences and constitutes the restatement, renewal and modification of that certain Revolving Note dated January 29, 2007 from Borrower to Lender in the original principal amount of $1,000,000, which was subsequently restated, renewed and modified as set forth in that certain Amended and Restated Revolving Note dated July 29, 2008 in the principal amount of $500,000, which was subsequently restated, renewed and modified as set forth in that certain Second Amended and Restated Revolving Noted dated January 26, 2009 in the principal amount of $500,000, issued pursuant to the Loan and Security Agreement (the “Original Note”). The execution and delivery of this Note shall not in any circumstances be deemed to have terminated, extinguished, released or discharged Borrower’s indebtedness under the Original Note, which indebtedness and the collateral security therefor shall continue under and be governed by this Note and the Loan and Security Agreement. This Note shall, for all purposes, be deemed the “Note” in connection with any of the documents executed and delivered in connection with or pursuant to the Original Note.

[s ignature page attached ]

EXECUTED as of March 13, 2009.


BORROWER

IGI LABORATORIES, INC.

By:	/s/ Rajiv Mathur
Name:	Rajiv Mathur
Title:	President and CEO

Acknowledged and agreed as of the date hereof.

LENDER

PINNACLE MOUNTAIN PARTNERS LLC


By:	/s/ Jane E. Hager, Pres.
Name:	Jane E. Hager
Title:	President

[Signature Page to Third Amended and Restated Revolving Note]

Exhibit 10.1

SECURITIES PURCHASE AGREEMENT

THIS SECURITIES PURCHASE AGREEMENT (the “ Agreement ”) dated as of March 13, 2009, is made by and among IGI Laboratories, Inc., a Delaware corporation (the “ Company ”), and the purchasers set forth on Schedule A hereto (each an “ Investor ” and, collectively, the “ Investors ”).

WHEREAS, on the terms and subject to the conditions set forth in this Agreement, the Company desires to issue and sell to the Investors, and each Investor, severally and not jointly, wishes to purchase from the Company: (a) shares of the Company’s Series B-1 Preferred Stock (each a “ Share ” and, collectively, the “ Shares ”), par value $0.01 per share (the “ Series B-1 Preferred Stock ”), with the designation, rights and preferences set forth in the Certificate of Designation (the “ Certificate of Designation ”) attached hereto as Exhibit A ; (b) a warrant to purchase shares of the Company’s Series B-2 Preferred Stock, par value $0.01 per share (the “ Series B-2 Preferred Stock ”) with the designation, rights and preferences set forth in the Certificate of Designation, substantially in the form attached hereto as Exhibit B (each a “ Warrant ” and collectively, the “ Warrants ”); and (C) a secured convertible promissory note, substantially in the form attached hereto as Exhibit C (each a “ Note ” and collectively, the “ Notes ”).

NOW, THEREFORE, in consideration of the foregoing premises and the representations, warranties and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows.

ARTICLE I

PURCHASE OF SECURITIES

1.01.

Authorization . The Company shall have adopted and filed the Certificate of Designation with the Secretary of State of the State of Delaware prior to the Closing.

1.02.

Sale and Purchase of Securities . On the terms and subject to the conditions hereof, at the Closing, the Company shall issue and sell to each Investor, and each Investor shall purchase from the Company: (a) the number of Shares set forth opposite such Investor’s name on Schedule A attached hereto, at a purchase price of $6,000.00 per share (the “ Series B-1 Purchase Price ”); (b) a Warrant to purchase the number of shares of Series B-2 Preferred Stock set forth opposite such Investor’s name on Schedule A attached hereto; and (c) a Note in the principal amount set forth opposite such Investor’s name on Schedule A attached hereto.

1.03.

Closing, Delivery and Payment . The closing of the sale and purchase of the Shares under this Agreement (the “ Closing ”) shall take place at the offices of Pepper Hamilton LLP, 3000 Two Logan Square, Philadelphia, Pennsylvania 19103, on the Closing Date. At the Closing, on the terms and subject to the conditions hereof, the Company shall deliver to each Investor: (a) a certificate representing the number of Shares to be purchased at the Closing by such Investor set forth on Schedule A attached hereto; (b) a Warrant exercisable for

the number of Underlying Warrant Shares set forth on Schedule A attached hereto; and (c) a Note in the principal amount set forth on Schedule A attached hereto, in each case, against payment of the aggregate consideration therefor set forth on Schedule A attached hereto in immediately available funds by wire transfer to an account designated by the Company.

ARTICLE II

DEFINITIONS

2.01.

Definitions . For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires:

“ Affiliate ” means, with respect to any Person, any other Person that directly or indirectly controls or is controlled by or under common control with such Person. For the purposes of this definition, “control,” when used with respect to any Person, means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise; and the terms of “affiliated,” “controlling” and “controlled” have meanings correlative to the foregoing.

“ Agreement ” shall have the meaning ascribed thereto in the Preamble hereof.

“ Board ” means the Board of Directors of the Company.

“ Certificate of Designation ” shall have the meaning ascribed in the Recitals hereof.

“ CERCLA ” means the federal Comprehensive Environmental Response, Compensation and Liability Act of 1980.

“ Closing ” shall have the meaning ascribed thereto in Section 1.03 hereof.

“ Closing Date ” means the Trading Day when each of the Transaction Documents has been executed and delivered by the applicable parties thereto, and all conditions precedent to (i) the Investors’ obligations to pay the Purchase Price and (ii) the Company’s obligations to deliver the Securities have been satisfied or waived.

“ Code ” means the Internal Revenue Code of 1986, as amended, and unless otherwise indicated, references to the “Code” hereunder shall also include the applicable Treasury Regulations thereunder and any corresponding and applicable provisions of state, local or foreign Tax Law.

“ Common Stock ” means the common stock of the Company, par value $0.01 per share.

“ Company ” shall have the meaning ascribed thereto in the Preamble hereof.

“ Company Governing Documents ” shall mean the certificate of incorporation, including the Certificate of Designation, when filed, and the Company’s by-laws, in each case, as may be amended from time to time.

“ Company Intellectual Property ” shall have the meaning ascribed thereto in Section 3.10(a) hereof.

“ Company Plan ” means any Employee Benefit Plan maintained, or contributed to, by the Company or any ERISA Affiliate.

“ Company Property ” shall have the meaning ascribed thereto in Section 3.09 hereof.

“ Company Stockholder Approval ” shall mean the adoption and approval by the stockholders of the Company, by the requisite vote required under, and in accordance with, applicable Law, the rules and regulations of the NYSE Alternext (including exemptions granted with respect thereto) and the Company Governing Documents, of the issuance and sale of the Shares and the Conversion Shares and the other transactions contemplated by the Transaction Documents, which approval may be obtained by the written consent of the stockholders or at any special or annual meeting of the stockholders.

“ Company Stockholders Meeting ” means the meeting of the stockholders of the Company to adopt and approve all of the proposals set forth in the Proxy Statement.

“ Company Subsidiary ” means each Subsidiary of the Company.

“ Consultant ” means any Person who is an independent contractor of the Company.

“ Conversion Date ” means the date on which the Shares are automatically converted into the Underlying Shares pursuant to the Certificate of Designation.

“ Conversion Shares ” means the shares of Series B-1 Preferred Stock into which the Notes are convertible.

“ Copyrights ” means rights arising from or in respect to copyrights and copyrightable works and registrations, applications and renewals for registration thereof, mask works and registrations and applications for registration or renewals thereof, computer software, data, databases and documentation including copies and tangible embodiments (in whatever form or medium) thereof whether protected, created or arising under the laws of the United States or any other jurisdiction.

“ Current Balance Sheet ” shall mean the unaudited consolidated balance sheet of the Company at September 30, 2008.

“ Customer Offerings ” means (a) the products that the Company (i) currently develops, manufactures, markets, distributes, makes available, sells or licenses to third parties or (ii) has developed, manufactured, marketed, distributed, made available, sold or licensed to third parties within the previous three (3) years; and (b) the services that the Company (i) currently provides or makes available to third parties or (ii) has provided or made available to third parties within the previous three (3) years.

“ Disclosure Schedule ” means the document delivered by the Company to the Investors simultaneously with the execution and delivery hereof containing the information required to be

included therein pursuant to this Agreement with each item of disclosure set forth on the Disclosure Schedule referring with specificity to representations and warranties in Article III of this Agreement to which such disclosure relates.

“ Employee ” means any person employed by the Company, whether directly or indirectly, or by co-employment arrangement with a third-party or otherwise.

“ Employee Benefit Plan ” means any “employee pension benefit plan” (as defined in Section 3(2) of ERISA), any “employee welfare benefit plan” (as defined in Section 3(1) of ERISA), and any other written or oral plan, agreement or arrangement involving direct or indirect compensation, including insurance coverage, severance benefits, disability benefits, deferred compensation, bonuses, stock options, stock purchase, phantom stock, stock appreciation or other forms of incentive compensation or post-retirement compensation.

“ Environmental Laws ” means any Law relating to the environment, occupational health and safety, Materials of Environmental Concern or natural resources including, without limitation, any Law pertaining to: (a) the presence of or the treatment, storage, disposal, generation, transportation, handling, distribution, manufacture, processing, use, import, export, labeling, recycling, registration, investigation or remediation of Materials of Environmental Concern; (b) air, water and noise pollution; (c) groundwater and soil contamination; and (d) the release or threatened release into the environment, the workplace or other areas of Materials of Environmental Concern, including emissions, discharges, injections, spills, escapes or dumping of Materials of Environmental Concern. As used above, the term “release” shall have the meaning set forth in CERCLA.

“ Equity Securities ” means all shares of capital stock of the Company, all securities convertible into or exercisable or exchangeable for, directly or indirectly, shares of capital stock of the Company, and all options, warrants, and other rights to purchase or otherwise acquire from the Company shares of such capital stock and all equity participation rights.

“ ERISA ” means the Employee Retirement Income Security Act of 1974.

“ ERISA Affiliate ” means any entity which is, or at any applicable time was, a member of (a) a controlled group of corporations (as defined in Section 414(b) of the Code); (b) a group of trades or businesses under common control (as defined in Section 414(c) of the Code); or (c) an affiliated service group (as defined under Section 414(m) of the Code or the regulations under Section 414(o) of the Code), any of which includes or included the Company.

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“ GAAP ” shall have the meaning ascribed thereto in Section 3.06 hereof.

“ Governmental Authority ” means any nation or government, any state or other political subdivision thereof, any agency, authority, instrumentality, regulatory body, court, administrative tribunal, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

“ Insurance Policies ” shall have the meaning ascribed thereto in Section 3.18 hereof.

“ Intercreditor Agreement ” means the Intercreditor Agreement by and among the Company, the Investors and Pinnacle Mountain Partners LLC, a New Hampshire limited liability company, substantially in the form attached hereto as Exhibit D .

“ Investor ” shall have the meaning ascribed thereto in the Preamble hereof.

“ Knowledge ” means and includes the actual knowledge of Rajiv Mathur, Nadya Lawrence and Justine Kostka, and shall include all information each such person knows or should have known after due inquiry of those individuals that would reasonably be expected to have knowledge of the matter in question.

“ Law ” shall mean, collectively, all applicable international, foreign, Federal, state, county, regional and local statutes, treaties, rules, regulations, ordinances, codes, orders, decrees, judgments and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, in each case having the force of law.

“ Legal Proceeding ” shall mean any (a) action, suit, proceeding, claim or arbitration by or before any Governmental Authority or before any arbitrator; and (b) any investigation by a Governmental Authority of which the subject of such investigation has actual knowledge.

“ Liabilities ” means direct or indirect liabilities, indebtedness or obligations, known or unknown, asserted or unasserted and whether accrued, absolute, contingent, matured or unmatured.

“ Lien ” means (a) any encumbrance, mortgage, pledge, lien, charge or other security interest of any kind upon any property or assets of any character, or upon the income or profits therefrom; (b) any acquisition of or agreement to have an option to acquire any property or assets upon conditional sale or other title retention agreement, device or arrangement (including a capitalized lease); or (c) any sale, assignment, pledge or other transfer for security of any accounts, general intangibles or chattel paper, with or without recourse.

“ Material Adverse Effect ” means any change, event or circumstance that has a material adverse effect on (a) the business, assets, Liabilities, financial condition or results of operations of the Company and the Company Subsidiaries, taken as a whole; or (b) the ability of the Company to consummate the transactions contemplated by the Transaction Documents or perform its obligations hereunder.

“ Material Contracts ” shall have the meaning ascribed thereto in Section 3.11 hereof.

“ Materials of Environmental Concern ” means any: pollutants, contaminants or hazardous substances (as such terms are defined under CERCLA), pesticides (as such term is defined under the Federal Insecticide, Fungicide and Rodenticide Act), solid wastes and hazardous wastes (as such terms are defined under the Resource Conservation and Recovery Act), chemicals, other hazardous, radioactive or toxic materials, oil, petroleum and petroleum products (and fractions thereof), or any other material (or article containing such material) listed, subject to regulation or

forming the basis of liability under any Environmental Law (including, without limitation, asbestos in any form, urea formaldehyde, perchlorate or polychlorinated biphenyls).

“ Most Recent Financial Statements ” shall have the meaning ascribed thereto in Section 3.06 hereof.

“ Most Recent Reporting Date ” shall have the meaning ascribed thereto in Section 3.06 hereof.

“ Note ” shall have the meaning ascribed thereto in the Recitals hereof.

“ NYSE Alternext ” means NYSE Alternext US LLC (formerly named the American Stock Exchange).

“ Option Plans ” mean (i) the IGI, Inc. 1989 Stock Option Plan; (ii) the IGI, Inc. Non-Qualified Stock Option Plan; (iii) the IGI, Inc. 1991 Stock Option Plan, as amended; (iv) the IGI, Inc. 1998 Directors Stock Plan; (v) the IGI, Inc. 1999 Stock Incentive Plan, as amended; and (vi) the IGI, Inc. 1999 Director Stock Option Plan, as amended.

“ Owned Property ” shall have the meaning ascribed thereto in Section 3.09 hereof.

“ Patents ” means rights arising from or in respect to patents and patent applications, including continuation, divisional, continuation-in-part, reissue or reexamination patent applications and patents issuing therefrom, patent disclosures and inventions, draft patent applications and foreign versions of the foregoing whether protected, created or arising under the Laws of the United States or any other jurisdiction.

“ Permits ” shall have the meaning ascribed thereto in Section 3.13(a) hereof.

“ Person ” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

“ Preferred Stock ” means the Series A Preferred Stock, the Series B-1 Preferred Stock and the Series B-2 Preferred Stock.

“ Proxy Statement ” means the proxy statement on Schedule 14A to be filed by the Company with the SEC in accordance with Section 5.01(f) and sent to stockholders of the Company in connection with the Company Stockholders Meeting to approve the issuance and sale of the Shares and the Conversion Shares and the other transactions contemplated by the Transaction Documents, as required by applicable Law as well as any other matters to be considered by the stockholders at the Company Stockholders Meeting.

“ Real Property Lease ” shall have the meaning ascribed thereto in Section 3.09 hereof.

“ Registration Rights Agreement ” means the Registration Rights Agreement by and among the Company and the Investors party thereto, dated as of the date hereof, substantially in the form attached hereto as Exhibit E .

“ Reserved Shares ” shall have the meaning ascribed thereto in Section 3.02(a) hereof.

“ SEC ” means the United States Securities and Exchange Commission.

“ SEC Documents ” shall have the meaning ascribed thereto in Section 3.03 hereof.

“ Securities ” means the Shares, the Notes, the Warrants, the Underlying Shares and the Underlying Warrant Shares.

“ Securities Act ” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

“ Security Agreement ” means the Security Agreement by and among the Company and the Investors, dated as of the date hereof, substantially in the form attached hereto as Exhibit F .

“ Series A Preferred Stock ” means the Series A Preferred Stock of the Company, par value $0.01 per share.

“ Series B-1 Preferred Stock ” shall have the meaning ascribed thereto in the Recitals hereof.

“ Series B-2 Preferred Stock ” shall have the meaning ascribed thereto in the Recitals hereof.

“ Series B-1 Purchase Price ” shall have the meaning ascribed thereto in Section 1.03 hereof.

“ Share ” and “ Shares ” shall have the meanings ascribed thereto in the Recitals hereof.

“ Short Sales ” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall not be deemed to include the location and/or reservation of borrowable shares of Common Stock).

“ SOXA ” means the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated thereunder, as the same may be in effect from time to time.

“ Subsidiary ” means any corporation, partnership, trust, limited liability company or other non-corporate business enterprise in which a Person or any subsidiary thereof holds stock or other ownership interests representing (a) more than fifty percent (50%) of the voting power of all outstanding stock or ownership interests of such entity; or (b) the right to receive more than fifty percent (50%) of the net assets of such entity available for distribution to the holders of outstanding stock or ownership interests upon a liquidation or dissolution of such entity.

“ Taxes ” means all United States federal, state, local or foreign taxes, charges, fees, levies or other assessments, including, without limitation, income, gross receipts, excise, real and personal property, profits, estimated, severance, occupation, production, capital gains, capital stock, goods and services, environmental, employment, withholding, stamp, value added, alternative or add-on minimum, sales, transfer, use, license, payroll and franchise taxes or any

other tax, custom, duty or governmental fee, or other like assessment or charge of any kind whatsoever, imposed by the United States, or any state, county, local or foreign government or subdivision or agency thereof, and such term shall include any interest, penalties, fines, related liabilities or additions to tax attributable to such taxes, charges, fees, levies or other assessments.

“ Terrorism Order ” shall have the meaning ascribed thereto in Section 3.24 hereof.

“ Trademarks ” means rights arising from or in respect to trademarks, service marks, trade names, logos, internet domain names and corporate names (whether registered or unregistered, including any applications for registration of the foregoing), trade dress rights and general intangibles of a like nature, industrial or product designs, together with all of the goodwill associated therewith, and foreign versions of the foregoing whether protected, created or arising under the Laws of the United States or any other jurisdiction.

“ Trade Secrets ” means rights arising from or in respect to trade secrets and other confidential information (including, without limitation, ideas, formulas, compositions, inventions (whether patentable or unpatentable and whether or not reduced to practice), know ‑ how, concepts, manufacturing and production processes and techniques, research and development information, drawings, specifications, designs, plans, proposals, technical data, financial and marketing plans and customer and supplier lists and information, whether protected, created or arising under the Laws of the United States or any other jurisdiction.

“ Trading Day ” means a day on which the principal Trading Market is open for trading.

“ Trading Market ” means the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: NYSE Alternext, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange or the OTC Bulletin Board.

“ Transaction Documents ” means this Agreement, the Notes, the Warrants, the Registration Rights Agreement, the Security Agreement, the Voting Agreement, the Intercreditor Agreement and any other agreements or documents that are required to be executed by the parties pursuant to the terms hereof or thereof.

“ Transfer Agent ” means American Stock Transfer & Trust Company, and any successor transfer agent of the Company.

“ Treasury Regulations ” means the regulations promulgated under the Code.

“ Underlying Shares ” means the shares of Common Stock into which the Shares or the Conversion Shares are convertible pursuant to the terms of the Certificate of Designation.

“ Underlying Warrant Shares ” means the shares of Series B-2 Preferred Stock issuable upon the exercise of the Warrants.

“ Voting Agreement ” means the Voting Agreement by and among the Company, Signet Healthcare Partners, G.P., and the other parties thereto, dated as of the date hereof, substantially in the form attached hereto as Exhibit G .

“ Warrant ” shall have the meaning ascribed thereto in the Recitals hereof.

The plural of any defined term shall have a meaning correlative to such defined term.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company hereby represents and warrants to the Investors as follows:

3.01.

Organization . The Company is a corporation duly organized, validly existing and in good standing under the Laws of the State of Delaware, and each Company Subsidiary is an entity duly organized, validly existing and in good standing under the Laws of the jurisdiction of its organization. Each of the Company and the Company Subsidiaries is duly qualified or licensed to do business as a foreign corporation and is in good standing under the Laws of each jurisdiction where the nature of the property owned or leased by it or the nature of the business conducted by it makes such qualification or license necessary, except where the failure to be so qualified or licensed would not reasonably be expected to either prevent or delay its ability to perform its obligations under the Transaction Documents and would not, individually or in the aggregate, have a Material Adverse Effect. The Company and each Company Subsidiary has the full corporate power and authority to own and operate its properties, to lease the property it operates under lease and to conduct its business as now conducted and proposed to be conducted. Other than the Company Subsidiaries, which are set forth on Section 3.01 of the Disclosure Schedule, and except as set forth on Section 3.01 of the Disclosure Schedule, there are no corporations, partnerships, joint ventures, associations or other entities in which the Company owns, of record or beneficially, any direct or indirect equity or other interest or any right (contingent or otherwise) to acquire the same. Neither the Company nor any Company Subsidiary is a member of (nor is any part of the business of the Company or any Company Subsidiary conducted through) any partnership, nor is the Company or any Company Subsidiary a participant in any joint venture or similar arrangement. For purposes of this Agreement, “proposed to be conducted” when used in connection with the conduct of the Company’s business shall mean as proposed or discussed at a Board meeting.

3.02.

Capitalization of the Company .

(a)

Immediately prior to the Closing and following the filing of the Certificate of Designation with the Secretary of State of the State of Delaware, the authorized capital stock of the Company consists of (i) 50,000,000 shares of Common Stock, of which 14,923,407 shares are issued and outstanding; and (ii) 1,000,000 shares of Preferred Stock, of which (A) 100 shares have been designated Series A Preferred Stock, 50 of which are issued and outstanding; (B) 1,030 of which have been designated Series B-1 Preferred Stock, none of which are issued and outstanding; and (C) 798 of which have been designated Series B-2 Preferred Stock, none of which are issued and outstanding. All issued and outstanding shares of Common Stock and Preferred Stock have been duly authorized and validly issued, and are fully paid and nonassessable. The Company has reserved 500,000 shares of Common Stock for issuance upon conversion of the Series A Preferred Stock, 14,634,000 shares of Common Stock for issuance upon conversion of the Series B-1 Preferred Stock, 227,500 shares of Common Stock for

issuance upon exercise of certain warrants issued by the Company, 797.1 shares of Series B-1 Preferred Stock for issuance upon conversion of the Notes, 797.1 shares of Series B-2 Preferred Stock for issuance upon exercise of the Warrants, and 4,551,919 shares of Common Stock (which number of shares includes all shares subject to stock options outstanding as of the Closing Date) for issuance to officers, directors, Employees and Consultants pursuant to the Option Plans (collectively, the “ Reserved Shares ”). The Series A Preferred Stock, the Series B-1 Preferred Stock, the Series B-2 Preferred Stock and the Common Stock each have the rights, preferences, privileges and restrictions set forth in the Company’s certificate of incorporation and the Certificate of Designation. Except as set forth herein, there are no options, warrants, conversion privileges or other rights presently outstanding to purchase or otherwise acquire, directly or indirectly, any authorized but unissued shares of the capital stock or other securities of the Company, nor any agreements or understandings with respect thereto.

(b)

Except as set forth in this paragraph or in Section 3.02(b) of the Disclosure Schedule, there are no: (i) other securities of the Company directly or indirectly convertible into or exercisable or exchangeable for shares of capital stock or other securities of the Company; (ii) “phantom” stock, stock appreciation rights or similar rights or agreements intended to confer on any Person rights similar to any rights accruing to owners of Equity Securities; (iii) restrictions on the transferability of Equity Securities (by agreement, statute or otherwise) other than pursuant to applicable Federal and state securities laws; or (iv) other rights granted by the Company relating to or which create a Lien upon Equity Securities. In addition, except as set forth in Section 3.02 of the Disclosure Schedule, to the Company’s Knowledge, there are no agreements, understandings or arrangements between or among holders of Equity Securities with respect to the voting, sale or other disposition of any Equity Securities.

(c)

Section 3.02(c) of the Disclosure Schedule accurately sets forth the issued and outstanding capital securities (including warrants and other rights of purchase) of the Company immediately after the Closing. Except as contemplated herein, there are no statutory or contractual preemptive rights or rights of refusal or similar rights with respect to the issuance of the Securities hereunder, the issuance of the Underlying Shares upon conversion of the Shares or the Conversion Shares, issuance of the Conversion Shares upon conversion of the Notes, issuance of the Series B-2 Preferred Shares upon exercise of the Warrants, or the issuance of any other Equity Securities by the Company. The Company has complied with and has not violated any applicable Federal or state securities or “blue sky” laws in connection with the offer, sale or issuance of any Equity Securities, and the offer, sale and issuance of the Securities hereunder do not require registration under the Securities Act or any applicable state securities or “blue sky” laws. Except as disclosed in Section 3.02(c) of the Disclosure Schedule and as set forth in the Registration Rights Agreement, effective as of the Closing, there are no agreements or arrangements under which the Company is obligated to register the sale of any of its securities. The Company has no obligation to pay any dividend on or make any distribution in respect of any capital stock.

3.03.

SEC Documents . The Company has filed all reports required to be filed by it under the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, since January 1, 2006 on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Documents prior to the expiration of any such extension. Any reports required to be filed by the Company since January 1, 2006 under the Exchange Act, including

pursuant to Section 13(a) or 15(d) thereof, together with any materials filed or furnished by the Company under the Exchange Act and together with any amendments to such reports, whether or not any such reports were required, are collectively referred to herein as the “ SEC Documents ”. As of their respective dates, the SEC Documents filed by the Company complied with the requirements of the Exchange Act, and none of the SEC Documents when filed by the Company and as of the date such statements were made, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

3.04.

Authorization; Enforcement . The Company has all requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement and the other Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of this Agreement and the other Transaction Documents by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary actions on the part of the Company. This Agreement and the other Transaction Documents have been duly executed by the Company and when delivered in accordance with the terms hereof or thereof, shall constitute the legal, valid and binding obligations of the Company enforceable against the Company in accordance with their terms, except as such enforceability may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar Laws of general applicability relating to or affecting creditors’ rights generally and to general principles of equity.

3.05.

No Conflicts . Neither the execution and delivery of this Agreement or any other Transaction Document, nor the consummation of the transactions contemplated hereby or thereby, by the Company will violate any provision of the Company Governance Documents or certificate of incorporation or by-laws of any of the Company Subsidiaries, or, except as specified in Section 3.05 of the Disclosure Schedule (with respect to which written waivers have been obtained and delivered to each of the Investors), violate, or be in conflict with, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, or cause the acceleration of the maturity of any debt or obligation pursuant to, or result in the creation or imposition of any Lien upon any property or assets of the Company or any Company Subsidiary under, any contract, agreement or commitment to which the Company or any Company Subsidiary is a party or by which the Company or any Company Subsidiary is bound, or to which the property of the Company or any Company Subsidiary is subject, or violate any Law.

3.06.

Financial Statements; No Undisclosed Liabilities .

(a)

Each of the consolidated financial statements (including, in each case, any notes thereto) contained in the SEC Reports was prepared in accordance with United States generally accepted accounting principals (“ GAAP ”) applied on a consistent basis throughout the periods indicated (except as may be indicated in the notes thereto or, in the case of unaudited statements, as permitted by Form 10-Q of the SEC) and each fairly presents in all material respects the consolidated financial position, results of operations and cash flows of the Company and its consolidated subsidiaries as at the respective dates thereof and for the respective periods indicated therein, except as otherwise noted therein.

(b)

There are no Liabilities or obligations of the Company or any Company Subsidiary of any kind whatsoever in existence on the date hereof that, either individually or in the aggregate, would be reasonably likely to have a Material Adverse Effect, whether accrued, contingent, absolute, determined, determinable or otherwise, required to be set forth in the Company’s balance sheet under GAAP, other than (A) Liabilities or obligations disclosed in the Company’s Quarterly Report on Form 10-Q, as amended, for the quarter ended September 30, 2008 (the “ Most Recent Financial Statements ” and such date, the “ Most Recent Reporting Date ”), or (B) Liabilities or obligations incurred in the ordinary course of business since the Most Recent Reporting Date consistent with past practices, which individually and in the aggregate are not material. Since the Most Recent Reporting Date (x) there has been no Material Adverse Effect and (y) the Company has not taken any action that would, if taken after the date hereof, or as disclosed under this Agreement, be prohibited by Section 5.01 , except as set forth in Section 3.06(b) of the Disclosure Schedule.

3.07.

Books and Records . The books and records of the Company accurately reflect in all material respects the assets, Liabilities, business, financial condition and results of operations of the Company, and have been maintained in accordance with good business and bookkeeping practices and in accordance with applicable Law.

3.08.

Absence of Certain Changes . Except as set forth in Section 3.08 of the Disclosure Schedule, since the Most Recent Reporting Date, neither the Company nor any Company Subsidiary has effected, suffered or granted (as the case may be):

(a)

any change in the assets, Liabilities, financial condition or operating results from those reflected in the Most Recent Financial Statements, except changes in the ordinary course of business consistent with past practices, none of which individually or in the aggregate has or is reasonably expected to have a Material Adverse Effect;

(b)

any damage, destruction or loss, whether or not covered by insurance, materially and adversely affecting its assets, properties, financial condition, operations, results, prospects or business (as such business is presently conducted and currently proposed to be conducted);

(c)

any waiver of a valuable right or of a material debt owed to it;

(d)

any satisfaction or discharge of any Lien or payment of any obligation, except in the ordinary course of business consistent with past practices;

(e)

any amendment to a material contract or arrangement by which the Company or any of its assets or properties is bound or subject;

(f)

any material change in any compensation arrangement or agreement with any Employee, Consultant, officer or director (including the entering into or amendment of any employment contract or severance arrangement);

(g)

any material change, except in the ordinary course of business, in its contingent obligations by way of guaranty, endorsement, indemnity, warranty or otherwise;

(h)

any sale, license, assignment or transfer of any Company Intellectual Property or other intangible assets (other than in the ordinary course of business consistent with past practices);

(i)

any resignation or termination of services of any officer, key Employee, Consultant or group of Employees or Consultants (and, to the Company’s Knowledge, any impending resignation or termination of employment of any such officer, key Employee, Consultant or group of Employees or Consultants);

(j)

receipt of notice that there has been or will be a loss of, or material order reduction or cancellation by, any customer;

(k)

any Lien created with respect to any properties or assets, except Liens for Taxes not yet due or payable;

(l)

any loans or guarantees made to or for the benefit of the Employees, Consultants, officers or directors, or any members of their immediate families, other than travel advances and other advances made in the ordinary course of its business consistent with past practices;

(m)

any declaration, setting aside or payment or other distribution in respect of any Equity Securities, or any direct or indirect redemption, purchase or other acquisition of any of such Equity Securities;

(n)

any other event or condition of any character that individually or in the aggregate, might materially and adversely affect the assets, properties, financial condition, prospects, operating results or business of the Company and the Company Subsidiaries, taken as a whole (as such business is presently conducted and as it is proposed to be conducted); or

(o)

any arrangement or commitment by the Company to do any of the things described in this Section 3.08 .

3.09.

Title to Properties; Liens .

(a)

Except as specifically provided in Section 3.09(b), the Company and each Company Subsidiary has good, valid and marketable title to all the properties and assets which it purports to own (real, personal and mixed, tangible and intangible), including, without limitation, all the properties and assets reflected in the Most Recent Financial Statements (other than inventory sold in the ordinary course), free and clear of all Liens. The rights, properties and other assets presently owned, leased or licensed by the Company and the Company Subsidiaries include all rights, properties and other assets necessary to permit the Company and the Company Subsidiaries to conduct its business in all material respects in the same manner as its business has been conducted prior to the date hereof and as currently proposed to be conducted. The personal property owned by the Company and the Company Subsidiaries is in good operating condition and repair (ordinary wear and tear excepted).

(b)

Section 3.09(b) of the Disclosure Schedule contains a complete list of (i) all real property and interests in real property, including improvements thereon and easements appurtenant thereto owned in fee by the Company and the Company Subsidiaries (individually, an “ Owned Property ” and collectively, the “ Owned Properties ”) and (ii) all real property and interests in real property leased by the Company and the Company Subsidiaries (individually, a “ Real Property Lease ” and collectively, the “ Real Property Leases ” and, together with the Owned Properties, being referred to herein individually as a “ Company Property ” and collectively as the “ Company Properties ”) as lessee, including a description of each such Real Property Lease (including the name of the third party lessor and the date of the lease or sublease and all amendments thereto). The Company and the Company Subsidiaries have good and marketable fee title to all Owned Property, free and clear of all Liens of any nature whatsoever, except those Liens set forth in Section 3.09(b) of the Disclosure Schedule. The Company Properties constitute all interests in real property currently owned, leased, used or occupied by the Company and the Company Subsidiaries or currently held for use in connection with the business of the Company and the Company Subsidiaries and which are necessary for the continued operation of the business of the Company and the Company Subsidiaries as such business is being conducted on the date hereof.

(c)

To the Knowledge of the Company (i) all of the Company Property, fixtures and improvements thereon owned or leased by the Company and the Company Subsidiaries are in good operating condition without material structural defects; (ii) all mechanical and other systems located thereon are (A) in good operating condition, and no condition presently exists requiring imminent material repairs, alterations or corrections and (B) suitable, sufficient and appropriate in all material respects for their current and contemplated uses; (iii) none of the improvements located on the Company Properties constitutes a prior non-conforming use; and (iv) none of the improvements located on the Company Properties constitutes a non-conforming use requiring any special dispensation, variance or special permit under any Laws which has not already been obtained. The Company has delivered to the Investors true, correct and complete copies of (i) all deeds, title reports and surveys and (ii) the Real Property Leases, together with all amendments, modifications or supplements, if any, thereto. The Owned Properties are not subject to any leases, rights of first refusal, agreements of sale, options to purchase or lease or rights of occupancy, except as may be set forth in Section 3.09(c) of the Disclosure Schedule.

(d)

The Company and the Company Subsidiaries, as applicable, have a valid and enforceable leasehold interest under each of the Real Property Leases, pursuant to which the Company or a Company Subsidiary is tenant, free and clear of all Liens other than as set forth in Section 3.09(d) of the Disclosure Schedule, and each of the Real Property Leases is in full force and effect. The Company is not in default under any Real Property Lease, and to the Knowledge of the Company, no events have occurred and, to the Knowledge of the Company, no circumstances exist which, if not remedied, and whether with or without notice or the passage of time or both, would result in such a default. Neither the Company nor any Company Subsidiary has received or given any notice of any default or event that with notice or lapse of time, or both, would constitute a default by the Company or any Company Subsidiary under any of the Real Property Leases and, to the Knowledge of the Company, no other party is in default thereof, and no party to the Real Property Leases has exercised any termination rights with respect thereto.

(e)

The Company and the Company Subsidiaries have all permanent certificates of occupancy necessary or useful for the current use and operation of each Company Property and to the Knowledge of the Company, such permanent certificates of occupancy contain no limitations or restrictions on the current use of the Company Property, and the Company and the Company Subsidiaries have fully complied, in all material respects, with all conditions of the certificates of occupancy applicable to them. To the Knowledge of the Company, no default or violation, or event that with the lapse of time or giving of notice or both would become a default or violation, has occurred in the due observance of any certificate of occupancy.

(f)

Except as set forth on Section 3.09(f) of the Disclosure Schedule, there does not exist any actual or, to the Knowledge of the Company, threatened or contemplated condemnation or eminent domain proceedings that affect any Owned Property or any part thereof, and the Company has received no notice, oral or written, of the intention of any Governmental Authority or other Person to take or use all or any part thereof.

(g)

There does not exist any pending or, to the Knowledge of the Company, proposed proceeding to change or redefine the zoning classification of all or any portion of any Company Property.

(h)

The Company has received no notice from any insurance company that has issued a policy with respect to any Company Property requiring performance of any structural or other repairs or alterations to such Company Property.

3.10.

Intellectual Property .

(a)

Section 3.10(a) of the Disclosure Schedule contains a complete and accurate list of all Patents, Trademarks and Copyrights owned, licensed or used by the Company and the Company Subsidiaries in the business as currently conducted or as proposed to be conducted, other than licenses or agreements arising from the purchase of “off-the-shelf” software (such Patents, Trademarks and Copyrights, together with the Company’s Trade Secrets, being hereinafter referred to as the “ Company Intellectual Property ”), including a complete and accurate list of all licenses, sublicenses, agreements or other rights granted or assigned by any third party to the Company.

(b)

Except as set forth on Section 3.10(b) of the Disclosure Schedule, the Company and the Company Subsidiaries own all right, title and interest in and to, or possess sufficient rights to use, all of the Company Intellectual Property, subject to the terms of the applicable agreement, free and clear of all Liens or claims of others.

(c)

Except as set forth on Section 3.10(c) of the Disclosure Schedule, the Company and the Company Subsidiaries have not received any notice, written or otherwise, or claim challenging the complete and exclusive ownership or possession of the Company’s and the Company Subsidiaries’ rights to use the Company Intellectual Property, or suggesting that any other Person has any claim of legal or beneficial ownership with respect thereto. Similarly, the Company and the Company Subsidiaries have not received any notice, written or otherwise, challenging, terminating, amending, or affecting the interest of the Company and the Company Subsidiaries in the Company Intellectual Property. To the Company’s Knowledge, neither the Company nor any of the Company Subsidiaries is infringing, misappropriating or otherwise misusing any third party’s intellectual property rights.

(d)

To the Company’s Knowledge, the Company and the Company Subsidiaries have taken all necessary and commercially reasonable actions to maintain and protect the Company Intellectual Property that any of them owns, licenses or uses, including, if and when applicable and required, the secrecy or confidentiality thereof, which actions may be taken by the Company and the Company Subsidiaries, and the Company Intellectual Property is in compliance with all applicable legal requirements (including timely payment of filing, examination, maintenance and legal fees) necessary to protect the Company Intellectual Property. Furthermore, to the Knowledge of the Company, owners of any Company Intellectual Property licensed to the Company and the Company Subsidiaries have taken all desirable actions to maintain and protect the intellectual property rights that are the subject of such licenses. Each Employee or Consultant who has made a material contribution to the Company Intellectual Property, or who has or is proposed to have access to confidential and proprietary information of the Company, has executed and delivered an agreement with the Company relating to invention assignment, confidentiality and non-competition.

(e)

Neither the Company nor any Company Subsidiary has received any notice, written or otherwise of a claim nor does the Company have any Knowledge that there are any facts which indicate a likelihood that any of the Company Intellectual Property is invalid, unenforceable, or misused.

(f)

No Company Intellectual Property owned by the Company and the Company Subsidiaries and, to the Knowledge of the Company, no Company Intellectual Property owned by a third party, is involved in any interference, reissue, reexamination, opposition or cancellation proceeding or any other Legal Proceeding of any kind in the United States or in any other jurisdiction.

(g)

Except as set forth on Section 3.10(g) of the Disclosure Schedule, no third party has been put on notice of nor, to the Knowledge of the Company, are there any facts or circumstances which would indicate that a third party has, will be, or currently is infringing, misappropriating, diluting or otherwise misusing any of the Company Intellectual Property that is owned by the Company or any Company Subsidiary or, to the Knowledge of the Company, Company Intellectual Property owned by a third party.

(h)

To the Company’s Knowledge, no third party is conducting preclinical or clinical trials with a compound, the manufacture or use of which would be covered by any of the Company Intellectual Property.

(i)

Except as provided by the Security Agreement, the transactions contemplated by this Agreement shall have no adverse effect on the right, title and interest of the Company and the Company Subsidiaries in and to any Company Intellectual Property.

(j)

Neither the Company nor any Company Subsidiary has received any communications, written or otherwise, from any Person alleging, nor does the Company have any Knowledge, that there are any facts or circumstances which would indicate, that the Company or any Company Subsidiary has violated or, by conducting the business as currently conducted or proposed to be conducted, would violate any of the intellectual property rights of any other Person. To the Company’s Knowledge, it is not necessary to the business, as currently conducted or proposed to be conducted, to obtain any other intellectual property rights from any Person other than those which have already been acquired by or licensed to the Company and the Company Subsidiaries.

(k)

It is not necessary to the business, as currently conducted or as proposed to be conducted, to utilize any intellectual property of any of the Employees made prior to their employment by the Company or any Company Subsidiary, except for inventions, Trade Secrets or proprietary information that have been assigned to the Company and the Company Subsidiaries.

3.11.

Material Contracts . Section 3.11 of the Disclosure Schedule contains a true and complete list of all written and oral material contracts, agreements, instruments, other understandings and commitments, proposed transactions to which the Company or any Company Subsidiary is a party or to which it may be bound (collectively, “ Material Contracts ”), including, without limitation, any:

(a)

distributorship, dealer, sales, advertising, agency, manufacturer’s representative or other contract relating to the payment of a commission;

(b)

collective bargaining agreement or other contract with or commitment to any labor union or proposed labor union;

(c)

contract for the future purchase of products, materials, supplies, equipment or services by the Company;

(d)

contract or commitment for the sale of Customer Offerings by the Company anticipated to result in payments to the Company in excess of twenty-five thousand dollars ($25,000) in any twelve (12)-month period, or which require the sale of Customer Offerings by the Company and which cannot be canceled by the Company on thirty (30) days’ or less notice without material cost, forfeiture or Liability;

(e)

contract or commitment for the employment of any officer, Employee or Consultant or any other type of contract or understanding with any officer, Employee or Consultant, including any agreement or understanding relating to severance payments or non-competition;

(f)

indenture, mortgage, promissory note, loan agreement, pledge agreement, guarantee or other agreement or commitment relating to the borrowing of money, for a line of credit or for a leasing transaction;

(g)

contract or commitment for charitable contribution;

(h)

contract or commitment for a capital expenditure in excess of twenty-five thousand dollars ($25,000);

(i)

agreement or arrangement for the sale of any assets, properties or rights or Customer Offerings other than the sale thereof in the ordinary course of business;

(j)

contract with respect to the lending or investing of funds;

(k)

contract of indemnification with respect to any form of intangible property, including any intellectual property or confidential and proprietary information (except prepackaged software used in the ordinary course);

(l)

contract which restricts the Company from engaging in any aspect of its business anywhere in the world;

(m)

lease under which the Company leases real property;

(n)

license or other transfer of any intellectual property by or to the Company (other than “shrink wrap” or “off the shelf” software licenses); and

(o)

other contract which is material to the business of the Company.

The Company has provided to each Investor a full and complete copy of each Material Contract. There are no agreements or understandings, oral or written, or side agreements not contained therein that relate to or modify the substance thereof in any respect. Each Material Contract: (i) has been duly authorized by all necessary corporate and other action on the part of the Company or Company Subsidiary; (ii) was validly executed and delivered by the Company or Company Subsidiary and; (iii) is a legal, valid and binding obligation of the Company or Company Subsidiary, enforceable in accordance with its terms, except as limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar Laws of general applicability relating to or affecting creditors’ rights generally and to general principles of equity. Each such document is in full force and effect, none of its material provisions has been waived or modified by any party thereto and there are no defaults thereunder or notice of defaults delivered pursuant thereto, and, to the Company’s Knowledge, there are no circumstances which could reasonably be expected to give rise to a default under any of such documents. For the purposes of this Section 3.11 , all indebtedness, Liabilities, agreements, understandings, instruments, contracts and proposed transactions involving the same person or entity (including persons or entities that, to the Company’s Knowledge are affiliated therewith) shall be aggregated for the purpose of meeting the individual minimum dollar amounts of such subsections.

3.12.

Related Party Transactions . Except for (a) payment of salary or fees (in the case of Consultants) for services rendered to the Company in the ordinary course; (b) reimbursement for reasonable expenses incurred on behalf of or in connection with services to the Company; (c) standard employee benefits made generally available to all Employees, and except as set forth on Section 3.12 of the Disclosure Schedule or as entered into in connection with this Agreement, there are no oral or written agreements, understandings or proposed transactions between the Company, on the one hand, and any of the Company’s officers, directors, stockholders, Employees or Consultants, on the other hand. Other than as disclosed in Section 3.12 of the Disclosure Schedule, none of the officers, directors, stockholders, Employees or Consultants of the Company, or any members of his or her respective immediate family, is indebted to the Company or (with respect to Consultants, to the Company’s Knowledge) has any direct or indirect ownership interest in any Person with which the Company is affiliated or with which the Company has a business relationship, or any Person which competes with the Company, other than passive investments in publicly traded companies (representing less than one percent (1%) of such company) which may compete with the Company. To the Company’s Knowledge, no officer, director, stockholder, Employee or any Consultant of the Company or any member of his or her respective immediate family, has, directly or indirectly, an interest in any contract with the Company (other than such contracts as relate to any such person’s ownership of Equity Securities). Except as set forth on Section 3.12 of the Disclosure Schedule, to the Company’s Knowledge, there is no familial or other significant business relationship that exists between or among any Employee or Consultant and any customer, supplier, vendor or contractor of the Company.

3.13.

Permits; Regulatory .

(a)

The Company and each Company Subsidiary has and maintains, in full force and effect, all licenses, permits, registrations, consents, authorizations and other approvals from all Governmental Authorities (collectively, the “ Permits ”) as are required under applicable Laws (including, without limitation, Environmental Laws) or are otherwise necessary for the operations of the Company or any Company Subsidiary, and the Company and each of the Company Subsidiaries are in material compliance with all of the Permits.

(b)

The studies and tests conducted by or on behalf of or sponsored by the Company or any Company Subsidiary or in which the Company, any Company Subsidiary or the Customer Offerings under development have participated, if any, were and, if still pending, are being conducted in accordance with standard medical and scientific research procedures. The Company has no Knowledge of any other studies or tests the results of which are inconsistent with or otherwise call into question the results of the above referenced tests.

(c)

The Company, the Company Subsidiaries, or their designated agents, own or have the right to use all regulatory documents, including all correspondence and reports made to Governmental Authorities with respect to the Customer Offerings or currently proposed Customer Offerings.

(d)

Neither the Company nor the Company Subsidiaries, nor any of their agents or Affiliates have received any notice that any Governmental Authority has commenced or, to the Company’s Knowledge, threatened to initiate any action to withdraw, to hinder approval for a Customer Offering or to limit the ability of the Company or the Company Subsidiaries to manufacture (or to have manufactured for it by a third party) any Customer Offering or to request the recall of any Customer Offering, or commenced or threatened to initiate any action to enjoin production of such Customer Offering at any facility.

(e)

All manufacturing operations conducted by the Company and the Company Subsidiaries (or by third parties on behalf of the Company), if any, relating to the manufacture of the Customer Offerings or proposed Customer Offerings are being conducted in material compliance with current good manufacturing practices or similar foreign Laws or regulations, and all arrangements relating to such manufacturing operations are memorialized in agreements which are listed on Section 3.11 of the Disclosure Schedule.

(f)

The Company has not received (i) any reports of inspection observations; (ii) any establishment inspection reports; or (iii) any warning letters or any other documents from any Governmental Authority relating to the Customer Offerings and/or arising out of the conduct of the Company or any Company Subsidiary that assert a violation or non-compliance with any applicable Laws or regulatory requirements.

(g)

In addition, except as set forth in Section 3.13(g) of the Disclosure Schedule:

(i)

neither the Company nor any Company Subsidiary nor, to the Company’s Knowledge, any Person that manufactures, tests or distributes any Customer Offering on behalf of the Company or any Company Subsidiary, has made with respect to any Customer Offering, an untrue statement of a material fact or fraudulent statement to any Governmental Authority or failed to disclose a material fact required to be disclosed to any Governmental Authority;

(ii)

to the Company’s Knowledge, no officer, Employee or agent of the Company or any Company Subsidiary has made and, to the Company’s Knowledge, no officer, employee or agent of any Person that manufactures, tests or distributes any Customer Offering on behalf of the Company or any Company Subsidiary has made, with respect to any Customer Offering or proposed Customer Offering, an untrue statement of a material fact or fraudulent statement to any Governmental Authority or failed to disclose a material fact required to be disclosed to any Governmental Authority;

(iii)

neither Company nor any Company Subsidiary has been convicted of any crime;

(iv)

to the Company’s Knowledge, no officer, Employee or agent of the Company or any Company Subsidiary has been convicted of any felony;

(v)

neither the Company nor any Company Subsidiary nor, to the Company’s Knowledge, any Person that manufactures, tests or distributes any Customer Offering or proposed Customer Offering on behalf of the Company or any Company Subsidiary has engaged in any conduct for which debarment is mandated by 21 U.S.C. §335a(a) or any similar state or foreign Law or authorized by 21 U.S.C. §335a(b) or any similar state or foreign Law;

(vi)

to the Knowledge of the Company, no officer, Employee or agent of the Company or any Company Subsidiary, and no officer, employee or agent of any Person that manufactures, tests or distributes any Product on behalf of the Company or any Company Subsidiary has engaged in any conduct for which debarment is mandated by 21 U.S.C. §335a(a) or any similar state or foreign Law or authorized by 21 U.S.C. §335a(b) or any similar state or foreign Law; and

(vii)

neither the Company nor any Company Subsidiary, nor to the Company’s Knowledge, any Person that manufactures, tests or distributes any Customer Offering on behalf of the Company or any Company Subsidiary, has received any notice that the any Governmental Authority has commenced, or threatened to initiate, any action to place a clinical hold on a clinical investigation of any Customer Offering or proposed Customer Offering, withdraw its approval that clinical investigations of any Customer Offering or proposed Customer Offering proceed or request the recall of any Customer Offering or proposed Customer Offering, or commenced, or threatened to initiate, any adverse regulatory action against the Company, the Person who manufactures, test or distributes the Customer Offering or proposed Customer Offering, or any of their agents, licensees or contract research organizations.

3.14.

Environmental and Safety Laws .

(a)

The Company and each Company Subsidiary is and has been in compliance, in all material respects, with all applicable Environmental Laws. There is no pending or, to the Knowledge of the Company, threatened civil or criminal litigation, written notice of violation, formal administrative proceeding, information request or, to the Knowledge of the Company, investigation from, of or by any Governmental Authority relating to any Environmental Law to which the Company or any Company Subsidiary is the subject. Neither the Company nor any Company Subsidiary is a party to or bound by any court order, administrative order, consent order or other binding agreement entered into in connection with any legal obligation or Liability arising under any Environmental Law. Set forth in Section 3.14(a) of the Disclosure Schedule is a list of all documents (whether in hard copy or electronic form) in the possession of the Company or any Company Subsidiary that contain any environmental reports, assessments, investigations, audits or correspondence to or from any Person (including, without limitation, any Governmental Authority) pertaining to Environmental Laws or Materials of Environmental Concern relating to the operations of the Company or any Company Subsidiary or any real property currently or previously owned, used or operated by the Company or any Company Subsidiary. A complete and accurate copy of each such document has been provided to the Investors.

(b)

Neither the Company nor any of the Company Subsidiaries has received any notice from any Person, including, without limitation, any Governmental Authority that (i) any Materials of Environmental Concern which the Company, any of the Company Subsidiaries or any of their respective predecessors-in-interest has generated, transported or disposed of has been found at any site at which a Governmental Authority or other Person has conducted or has ordered that the Company, any of the Company Subsidiaries or, to the Knowledge of the Company, any of their respective predecessors-in-interest conduct a remedial investigation, removal or other response action pursuant to any Environmental Law; (ii) alleges any past or present violations of any Environmental Laws by the Company or any of the Company Subsidiaries; or (iii) alleges any event, condition, circumstance, activity, practice, incident, action or plan which is reasonably likely to interfere with or prevent continued compliance with or which would give rise to any common law or statutory liability, or otherwise form the basis of any claim, action, suit or proceeding, against the Company or any of the Company Subsidiaries based on or resulting from the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling, or the emission, discharge or release of any Material of Environmental Concern.

(c)

Except as set forth in Section 3.14(c) of the Disclosure Schedule (i) no portion of any real property presently or, to the Knowledge of the Company, formerly owned, leased or operated by the Company or any of the Company Subsidiaries has been used for the handling, manufacturing, processing, generation, storage or disposal of Materials of Environmental Concern, except as is customary for the operation of the business of the Company and the Company Subsidiaries as such business is being conducted on the date hereof and in compliance with applicable Environmental Laws, and no underground tank is located on such properties; (ii) there have been no releases or threatened releases of Materials of Environmental Concern on, upon, into, from or, to the Knowledge of the Company, in the vicinity of any real property presently or formerly owned, leased or operated by the Company or any of the Company Subsidiaries; and (iii) any Materials of Environmental Concern that have been generated on any real property presently or, to the Knowledge of the Company, formerly owned, leased or operated by the Company or any of its Subsidiaries have been transported offsite and treated or disposed of in accordance with applicable Environmental Laws.

3.15.

Use of Proceeds . The proceeds from the sale of the Securities shall be used solely for working capital and other corporate purposes.

3.16.

Employee Benefits .

(a)

Section 3.16 of the Disclosure Schedule contains a complete and accurate list of all Company Plans. Complete and accurate copies of, to the extent applicable, (i) all Company Plans which have been reduced to writing; (ii) all current related trust agreements, insurance contracts and summary plan descriptions; and (iii) all annual reports filed on Form 5500 and (for all funded plans) all plan financial statements for the last three plan years for each Company Plan, have been provided to the Investors.

(b)

Each Company Plan has been administered in all material respects in accordance with its terms and the Company has in all material respects met its obligations with respect to each Company Plan and has made all required contributions thereto. Each Company Plan is in compliance in all material respects with the currently applicable provisions of ERISA and the Code. All filings and reports as to each Company Plan required to have been submitted to the Internal Revenue Service or to the United States Department of Labor have been duly submitted. No Company Plan has assets that include securities issued by the Company or any ERISA Affiliate.

(c)

To the Knowledge of the Company, there are no Legal Proceedings against or involving any Company Plan or asserting any rights or claims to benefits under any Company Plan that could give rise to any material Liability of the Company.

(d)

All the Company Plans that are intended to be qualified under Section 401(a) of the Code have received a favorable determination or opinion letter from the Internal Revenue Service, and no such determination or opinion letter has been revoked and, to the Knowledge of the Company, such revocation has not been threatened.

(e)

Neither the Company nor any ERISA Affiliate has ever maintained or otherwise has any material Liability under or with respect to an Employee Benefit Plan subject to Section 412 of the Code or Title IV of ERISA.

(f)

The Company is not obligated to contribute to or otherwise has any material Liability under or with respect to any “multiemployer plan” (as defined in Section 4001(a)(3) of ERISA).

(g)

Other than as set forth in Section 3.16(g) of the Disclosure Schedule, no Company Plan provides benefits after termination of employment to any Employee (or to any beneficiary of such Employee), including but not limited to retiree health coverage, but excluding continuation of health coverage required to be continued under Section 4980B of the Code or other applicable Law, insurance conversion privileges under state Law and any Company Plan intended to be qualified under Section 401(a) of the Code. The assets of each Company Plan which is funded are reported at their fair market value on the books and records of such Company Plan.

(h)

To the Knowledge of Company, no act or omission has occurred and no condition exists with respect to any Company Plan that would subject the Company to any material fine, penalty, Tax or Liabilities of any kind imposed under ERISA or the Code.

(i)

No Company Plan is funded by, associated with or related to a “voluntary employee’s beneficiary association” within the meaning of Section 501(c)(9) of the Code.

(j)

Other than as set forth in Section 3.16(j) of the Disclosure Schedules, each Company Plan is amendable and terminable unilaterally by the Company at any time without Liability or expense to the Company or such Company Plan as a result thereof (other than for benefits accrued through the date of termination or amendment and reasonable administrative expense related thereto).

(k)

Section 3.16(k) of the Disclosure Schedule discloses each: (i) agreement, plan or arrangement under which any Person may receive payments from the Company that may be subject to the Tax imposed by Section 4999 of the Code or included in the determination of such Person’s “parachute payment” under Section 280G of the Code; (ii) agreement or plan binding the Company, including any stock option plan, stock appreciation right plan, restricted stock plan, stock purchase plan, severance benefit plan or Company Plan, any of the benefits of which will be increased, or the vesting of the benefits of which will be accelerated, by the occurrence of any of the transactions contemplated by this Agreement or the value of any of the benefits of which will be calculated on the basis of any of the transactions contemplated by this Agreement; and (iii) agreement or plan binding the Company to pay severance payments or post-employment termination payments to any Employee.

(l)

Each Company Plan that is a “nonqualified deferred compensation plan” (as defined in Code Section 409A(d)(1)) has been operated since January 1, 2005 in good faith compliance with Code Section 409A and IRS Notice 2005-1. No Company Plan that is a “nonqualified deferred compensation plan” has been materially modified (as determined under Notice 2005-1 and Section 1.409A-6 of the Treasury Regulations) since October 3, 2004. No event has occurred that would be treated by Code Section 409A(b) as a transfer of property for purposes of Code Section 83. No stock option or equity unit option granted under any Company Plan has an exercise price that is less than the fair market value of the underlying stock or equity units (as the case may be) as of the date such option was granted or has any feature for the deferral of compensation other than the deferral of recognition of income until the later of exercise or disposition of such option.

3.17.

Tax Returns; Payments and Elections . The Company and each Company Subsidiary has prepared and filed with all appropriate Governmental Authorities all tax returns in respect of Taxes by the date such returns were due to be filed (after giving effect to extensions timely filed), and all such returns are correct and complete in all material respects. The Company and each Company Subsidiary has paid in full all Taxes due and payable, whether or not shown on such tax returns, or has made adequate provision for all Taxes on the Current Balance Sheet. No examination or audit of any tax return relating to any Taxes of the Company or any Company Subsidiary or with respect to any Taxes due from or with respect to the Company by any Governmental Authority is currently in progress or threatened or contemplated. No assessment of Tax has been proposed in writing against the Company or any Company Subsidiary or any of the assets or properties of any of them and the Company knows of no grounds for any such assessment. There are no outstanding agreements, waivers or arrangements extending the statutory period of limitation applicable to any claim for, or the period for the collection or assessment of, Taxes due from or with respect to the Company or any Company Subsidiary for any taxable period. Neither the Company nor any of the Company Subsidiaries has net operating losses or other Tax attributes presently subject to limitation under Sections 382, 383 or 384 of the Code, or the federal consolidated return regulations, (or any corresponding provision of state, local or foreign law), and the amount of such net operating losses are. Such net operating losses are valid through the 2008 tax year.

3.18.

Insurance . Section 3.18 of the Disclosure Schedule hereto lists each insurance policy maintained by the Company and each Company Subsidiary with respect to the properties, assets and business of each of them (the “ Insurance Policies ”). All such Insurance Policies are in full force and effect, and neither the Company nor any Company Subsidiary is in default, in any material respect with respect to its obligations under any of such Insurance Policies and has not received any notification of cancellation of any of such Insurance Policies and has no claim outstanding which could be expected to cause a material increase in the insurance rates. To the Knowledge of the Company, no facts or circumstances exist that would relieve the insurer under any such policy of its obligation to satisfy in all material respects any claim of the Company or any Company Subsidiary thereunder. Neither Company nor any Company Subsidiary has received any notice that (a) any of such policies has been or will be canceled or terminated or will not be renewed on substantially the same terms as are now in effect; or (b) the premium on any of such policies will be materially increased on the renewal thereof. The Company and each Company Subsidiary maintains insurance for its benefit in amounts and against all risks that are normal and customary for Persons operating similar properties and businesses under policies in effect and issued by insurers of recognized responsibility.

3.19.

Legal Proceedings . Except as set forth on Section 3.19 of the Disclosure Schedule, there are no Legal Proceedings pending or, to the Knowledge of the Company, currently threatened against the Company or any Company Subsidiary. The foregoing includes, without limitation, actions, suits, proceedings or investigations pending or threatened (or any basis therefor known to the Company) involving the prior employment of any Employees, their use in connection with the Company’s business of any information or techniques allegedly proprietary to any of their former employers, or their obligations under any agreements with prior employers. Neither Company nor any Company Subsidiary is a party or subject to the provisions of any order, writ, injunction, judgment or decree of any court or Governmental Authority. There are no Legal Proceedings by the Company currently pending or that the Company or any Company Subsidiary intends to initiate.

3.20.

Offering . Subject in part to the truth and accuracy of each Investor’s representations set forth in Article IV of this Agreement, the offer, sale and issuance of the Securities as contemplated by this Agreement are exempt from the registration requirements of the Securities Act and state securities and “blue sky” laws, and neither the Company nor any authorized agent acting on its behalf will take any action hereafter that would cause the loss of such exemption.

3.21.

Valid Issuance of Securities . The Securities that are being purchased by the Investors hereunder, when issued, sold and delivered in accordance with the terms of this Agreement and in accordance with their respective terms for the consideration expressed herein and therein, will be duly and validly issued, outstanding, fully paid, and nonassessable, and will be free of restrictions on transfer other than restrictions on transfer under this Agreement and under applicable Laws.

3.22.

Compliance with Laws . The operations of the Company and each Company Subsidiary have been conducted in material compliance with all applicable Laws. Neither Company nor any Company Subsidiary has received any notification of any asserted present or past failure by the Company or any Company Subsidiary to comply with such Laws.

3.23.

Brokers and Finders . Except as disclosed in Section 3.23 of the Disclosure Schedule, neither the Company nor any of its officers, directors or Employees has employed any broker or finder or incurred any Liability for any brokerage fees, commissions or finder’s fees in connection with the transactions contemplated by this Agreement.

3.24.

Foreign Assets Control Regulations, Etc.

(a)

Neither the Company nor any Company Subsidiary has violated (i) the United States Trading with the Enemy Act, as amended; (ii) any of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating thereto; (iii) Executive Order No. 13,224, 66 Fed Reg 49,079 (2001), issued by the President of the United States (Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit or Support Terrorism) (the “ Terrorism Order ”); or (iv) the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, Public Law 107-56 (October 26, 2001).

(b)

Neither the Company nor any Company Subsidiary (i) is a “blocked person” as described in Section 1 of the Terrorism Order; and (ii) to the Company’s Knowledge, engages in any dealings or transactions or otherwise associates with any “blocked person”.

(c)

The Company and each Company Subsidiary is in compliance, in all material respects, with the Uniting And Strengthening America By Providing Appropriate Tools Required To Intercept And Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, Public Law 107-56 (October 26, 2001).

3.25.

Internal Controls .

(a)

The Company and the Company Subsidiaries have in place the “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) required in order for the principal executive officer and principal financial officer of the Company to engage in the review and evaluation process mandated by Section 302 of SOXA. The Company’s “disclosure controls and procedures” are reasonably designed to ensure that material information (both financial and non-financial) relating to the Company required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods applicable to the Company specified in the rules and forms of the SEC, and that such information is accumulated and communicated to the Company’s principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure as to the Company and to make the certifications of the principal executive officer and principal financial officer of the Company required by Section 302 of SOXA with respect to such reports. There is and has been no failure on the part of the Company or any of the Company’s directors or officers, in their capacities as such, to comply with any provision of SOXA that is applicable to the Company, including (as applicable) Section 402 related to loans and Section 906 related to certifications.

(b)

The Company and the Company Subsidiaries maintain systems of “internal control over financial reporting” (as defined in Rule 13a-15(f) of the Exchange Act) that comply with the applicable requirements of the Exchange Act and have been designed by, or under the supervision of, their respective principal executive and principal financial officers, or persons performing similar functions, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, including, but not limited to, internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. Except as disclosed in the SEC Reports filed prior to the date hereof, there are no material weaknesses in such systems of “internal control over financial reporting.”

3.26.

Employees . The Company has no collective bargaining agreements with any of its Employees. There is no labor union organizing activity pending or, to the Company’s Knowledge, threatened with respect to the Company. No Employee or Consultant is in violation of any term of any employment contract or any other agreement relating to the right of any such individual to be employed by, or to contract with, the Company; and to the Company’s Knowledge the continued employment by the Company of its Employees, and the performance of the Company’s contracts with its Consultants, will not result in any such violation. The Company has not received any notice alleging that any such violation has occurred. Each former Employee whose employment was terminated by the Company has entered into an agreement with the Company providing for the full release of any claims against the Company or any related party arising out of such employment. There are no actions pending, or to the Company’s Knowledge, threatened, by any former or current Employee concerning such person’s employment by the Company.

3.27.

Warranties . Except as may be permitted by applicable Law and other than as set forth in Section 3.27 of the Disclosure Schedule, no Customer Offering is subject to any guaranty, warranty, right of return, right of credit or other indemnity other than (a) the applicable standard terms and conditions of sale or lease of the Company, which have been provided to the Investors; and (b) manufacturers’ warranties for which the Company does not have any Liability. Section 3.27 of the Disclosure Schedule sets forth the aggregate expenses incurred by the Company in fulfilling its obligations under their guaranty, warranty, right of return and indemnity provisions during each of the fiscal years and the interim period covered by the financial statements.

3.28.

Relationships with Suppliers and Customers . Set forth on Section 3.28 of the Disclosure Schedule is a list of (a) the material suppliers of the Company and the Company Subsidiaries who, in the aggregate, for the one year period ended December 31, 2008, were the ten (10) largest dollar volume suppliers to the Company and the Company Subsidiaries; and (b) each customer that accounted for more than two percent (2%) of the revenues of the Company and the Company Subsidiaries during the one year period ended December 31, 2008, and the amount of revenues accounted for by such customer during such period. None of the suppliers or customers set forth on Section 3.28 of the Disclosure Schedule has given the Company or any Company Subsidiary written notice terminating, canceling or threatening to terminate or cancel any contract or relationship with the Company or any Company Subsidiary or has made any other claim under any contract with the Company or any Company Subsidiary.

3.29.

Inventory . The inventory of the Company and the Company Subsidiaries is of a quality and quantity usable and saleable in the ordinary course of business, except for obsolete items and items of below-standard quality, which, in the case of inventory reflected on the Current Balance Sheet, have been written-off or written-down to net realizable value or otherwise reserved for in a manner consistent with past practice and in accordance with GAAP on the Current Balance Sheet.

3.30.

Accounts Receivable . To the Company’s Knowledge, all accounts receivable of the Company are valid receivables subject to no setoffs or asserted counterclaims, and the Company believes the reserves for bad debts reflected on the Current Balance Sheet are adequate and calculated consistent with past practice. A complete and accurate list of the accounts receivable reflected on the Current Balance Sheet, showing the aging thereof, has been provided to the Investors. Other than as set forth in Section 3.30 of the Disclosure Schedule, the Company has not received any notice from an account debtor stating that any account receivable in an amount in excess of ten thousand dollars ($10,000) is subject to any contest, claim or setoff by such account debtor. Other than as set forth in Section 3.30 of the Disclosure Schedule, no Person has any Lien in the accounts receivable of the Company, and no agreement for a material deduction or material discount has been made with respect to any outstanding account receivable with an undiscounted value in excess of ten thousand dollars ($10,000).

3.31.

Obligations of Management . To the Company’s Knowledge, each officer and key Employee of the Company is currently devoting substantially all of his or her business time to the conduct of the business of the Company. The Company is not aware that any officer or key Employee of the Company is planning to work less than full time at the Company in the future. To the Company’s Knowledge, no officer or key Employee is currently working or plans to work for a competitive enterprise, whether or not such officer or key Employee is or will be compensated by such enterprise.

3.32.

Accountants . The Company’s accountants, who the Company expects will render their opinion with respect to the financial statements to be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008, are, to the Company’s Knowledge, independent accountants as required by the Securities Act.

3.33.

Listing and Maintenance Requirements . The Common Stock is registered pursuant to Section 12(b) of the Exchange Act, and the Company has taken no action designed to, or which to its Knowledge is likely to have the effect of terminating the registration of the Common Stock under the Exchange Act. Except as specified in the SEC Reports, the Company has not, in the two (2) years preceding the date hereof, received written notice from the NYSE Alternext to the effect that the Company is not in compliance with the listing or maintenance requirements thereof.

3.34.

Investment Company . The Company is not and, immediately after receipt of payment for the Securities, will not be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

3.35.

No Integrated Offering . Assuming the accuracy of the Investors’ representations and warranties set forth in Article IV , and except as contemplated by this Agreement, neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of Securities to be integrated with prior offerings by the Company for purposes of the Securities Act any state securities Law or any applicable shareholder approval provisions, including, without limitation, under the rules and regulations of the NYSE Alternext.

3.36.

No Other Representations . Each Investor acknowledges and agrees that the Company makes no representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in this Article III .

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE INVESTORS

Each Investor hereby represents and warrants to the Company, severally and not jointly as to itself, as follows:

4.01.

Organization; Authority . Each Investor, if a corporation or other legal entity, was organized, and is validly existing and in good standing under the Laws of the jurisdiction of its organization with the requisite power and authority to enter into and to consummate the transactions contemplated by this Agreement and to carry out its obligations hereunder. The acquisition of the Shares hereunder by each Investor has been duly authorized by all necessary action on the part of such Investor. This Agreement has been duly executed and delivered by each Investor and constitutes the valid and legally binding obligation of the Investor, enforceable against it in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar Laws of general applicability relating to or affecting creditors’ rights generally and to general principles of equity.

4.02.

Purchase Entirely for Own Account . This Agreement is made with each Investor in reliance upon such Investor’s representation to the Company, which by such Investor’s execution of this Agreement, each Investor hereby confirms that the Shares to be received by such Investor will be acquired for investment for such Investor’s own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that such Investor has no present intention of selling, granting any participation in, or otherwise distributing the same. By executing this Agreement, each Investor further represents that such Investor does not have any contract, undertaking, agreement or arrangement with any Person to sell, transfer or grant participations to such Person or to any third Person, with respect to any of the Shares.

4.03.

Disclosure of Information . Each Investor believes it has received all the information it considers necessary or appropriate for deciding whether to purchase the Shares. Each Investor further represents that it has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Shares and the business, properties, prospects and financial condition of the Company. The foregoing, however, does not limit or modify the representations and warranties of the Company in Article III of this Agreement or the right of the Investors to rely thereon.

4.04.

Brokers . No Investor has entered into an agreement for the payment of any broker’s or finder’s fee or commission in connection with the purchase or sale of the Shares.

4.05.

Private Placement . Each Investor understands that the Securities have not been registered under the Securities Act or registered or qualified under any state securities Laws on the grounds that such Securities are being issued in a transaction exempt from the registration requirements of the Securities Act and the registration or qualification requirement of applicable state securities Laws, and that the Securities must be held indefinitely unless Securities are subsequently registered under the Securities Act and qualified or registered under applicable state securities Laws or an exemption from registration and qualification is available, and that, except as otherwise provided in the Transaction Documents, the Company is under no obligation to register or qualify the Securities. Each Investor shall hold harmless the Company and its directors, officers, Employees and agents against any loss or Liability from any disposition of Securities by it in violation of this Section 4.05 .

4.06.

Accredited Investor . Each Investor is an “accredited investor” within the meaning of Rule 501 of Regulation D promulgated under the Securities Act and has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the investment to be made hereunder by it and it is able to bear the economic risk of its investment.

4.07.

Reliance . Each Investor understands and acknowledges that (a) the Securities to be acquired by it hereunder are being offered and sold to it without registration under the Securities Act in a private placement that is exempt from the registration provisions of the Securities Act and; (b) the availability of such exemption depends in part on, and the Company will rely upon the accuracy and truthfulness of, the foregoing representations, and such Investor hereby consents to such reliance.

4.08.

No Other Representations . The Company acknowledges and agrees that the Investors make no representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in this Article IV .

4.09.

No Knowledge of Misrepresentation or Omissions . No Investor has actual knowledge that the representations and warranties of the Company contained in this Agreement are not true and correct in any material respect.

ARTICLE V

AFFIRMATIVE COVENANTS OF THE COMPANY

5.01.

The Company hereby covenants and agrees with the Investors as follows:

(a)

Conduct of the Company . Between the date hereof and the Maturity Date (as defined in the Notes), the Company will:

(i)

preserve and maintain in full force and effect its existence and good standing under the laws of its jurisdiction of formation or organization;

(ii)

preserve and maintain in full force and effect all material rights, privileges, qualifications, applications, licenses and franchises necessary in the normal conduct of its business;

(iii)

conduct its business in the ordinary course in accordance with sound business practices and keep its properties in good working order and condition (normal wear and tear excepted);

(iv)

take all reasonable actions to protect and maintain the Company Intellectual Property, including, without limitation, prosecuting all pending applications for Patents or registration of Trademarks and Copyrights and maintaining, to the extent permitted by law, each Patent or registration owned by the Company;

(v)

comply in all material respects with all applicable laws, rules and regulations and with the directions of any Governmental Authority having jurisdiction over the Company or its business or property; and

(vi)

file or cause to be filed in a timely manner all reports, applications, estimates and licenses that shall be required by a Governmental Authority.

(b)

Reservation of Common Stock, Series B-1 Preferred Stock and Series B-2 Preferred Stock . The Company shall at all times reserve and keep available out of (i) its authorized shares of Common Stock, solely for the purpose of the issuance and delivery of the Underlying Shares, the maximum number of shares of Series B-1 Preferred Stock and Common Stock that may be issuable or deliverable thereupon and (ii) out if its shares of Series B-2 Preferred Stock, solely for the purpose of issuance and delivery of the Underlying Warrant Shares, the maximum number of shares of Series B-2 Preferred Stock that may be issuable or deliverable thereupon.

(c)

Restrictions on Public Sale of Securities . Except as contemplated in the Registration Rights Agreement, the Company agrees (i) not to effect a public offering or distribution of any Equity Securities and (ii) not to register any shares of Equity Securities (except pursuant to registration on Form S-8 or any successor thereto) during the period beginning on the date hereof and ending on the date on which a registration statement covering the Underlying Shares pursuant to the terms and conditions of the Registration Rights Agreement has been declared effective by the SEC.

(d)

Securities Law Filings . For so long as the Investors and their respective Affiliates in the aggregate hold at least two percent (2%) of the outstanding shares of Common Stock on an as if converted basis, the Company agrees to file with the SEC in a timely manner all reports and other filings required of the Company under the Securities Act and the Exchange Act.

(e)

Form S-3 Eligibility . The Company hereby covenants and agrees to use its commercially reasonable efforts to maintain its eligibility to make filings with the SEC on Form S-3 until one or more registration statements covering the resale of all of the Underlying Shares shall have been filed with, and declared effective by, the SEC pursuant to the terms and conditions of the Registration Rights Agreement.

(f)

Proxy Statement .

(i)

In the event that the Company has not previously obtained the Company Stockholder Approval by written consent, then as promptly as reasonably practicable after the date hereof, but in any event prior to April 10, 2009, the Company shall prepare and file with the SEC the Proxy Statement; provided that the Company shall consult with the Investors and provide the Investors and their counsel a reasonable opportunity to review and comment on such Proxy Statement (and any amendments or supplements thereto), and shall reasonably consider such comments of the Investors, prior to filing. The parties shall reasonably cooperate with each other in the preparation of the Proxy Statement and to have such document cleared by the SEC as promptly as reasonably practicable after such filing. Each Investor shall furnish to the Company the information relating to it that is required by the rules and regulations promulgated by the SEC under the Exchange Act for inclusion in the Proxy Statement. The Company shall apply commercially reasonable efforts to cause the Proxy Statement to be mailed to the holders of Equity Securities as promptly as practicable upon the earlier of (A) receiving notification that the SEC is not reviewing the Proxy Statement and (B) the conclusion of any SEC review of the Proxy Statement. The Company shall promptly provide copies, consult with the Investors and prepare written responses with respect to any written comments received from the SEC with respect to the Proxy Statement and advise the Investors of any oral comments received from the SEC. The Company shall cause the Proxy Statement to comply as to form with the rules and regulations promulgated by the SEC under the Exchange Act.

(ii)

The Company shall make all necessary filings with respect to the transactions contemplated thereby under the Exchange Act and the rules and regulations thereunder. The Company will advise the Investors, promptly after it receives notice thereof, of any request by the SEC for any amendment of or supplement to the Proxy Statement or comments thereon and responses thereto or requests by the SEC for additional information. The Company shall provide the Investors and their counsel a reasonable opportunity to review and comment on any such comments and any amendment or supplement to the Proxy Statement made in response thereto and the Company shall reasonably consider the Investors’ and their counsel’s comments prior to filing. If at any time prior to the date on which Company Stockholder Approval is obtained, any information relating to the Investors or the Company, or any of their respective Affiliates, officers or directors, should be discovered by the Investors or the Company that should be set forth in an amendment or supplement to the Proxy Statement, so that such documents would not include any misstatement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, the party which discovers such information shall promptly notify the other parties hereto and an appropriate amendment or supplement describing such information shall be promptly filed with the SEC and, to the extent required by applicable Law, disseminated to the holders of Equity Securities.

(iii)

The Company shall, acting through the Board, cause the Company Stockholders Meeting to be duly called and held as soon as reasonably practicable following the commencement of the mailing of the Proxy Statement to the stockholders of the Company, but in any event no later than May 15, 2009, for the purpose of obtaining the Company Stockholder Approval.

(g)

Termination of Conversion Agreement . The Company shall not terminate that certain Conversion Agreement, dated as of March 13, 2009, by and between the Company and Pinnacle Mountain Partners LLC, a New Hampshire limited liability company, pursuant to Section 1.3 thereof except upon the written request of the Investors and, upon such written request of the Investors, the Company shall terminate such agreement subject to the terms of Section 1.3 thereof.

ARTICLE VI

OTHER AGREEMENTS OF THE PARTIES

6.01.

Transfer Restrictions .

(a)

The Securities may only be disposed of pursuant to an effective registration statement under the Securities Act, to the Company or pursuant to an available exemption from or in a transaction not subject to the registration requirements thereof. In connection with any transfer of any Securities other than pursuant to an effective registration statement or to the Company, the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration under the Securities Act. Notwithstanding the foregoing, the Company hereby consents to and agrees to register any transfer of Securities by an Investor to an Affiliate

of the Investor, or any transfers between or among any such Affiliates, provided that the transferee certifies to the Company that it is an “accredited investor” as defined in Rule 501(a) under the Securities Act and that it is acquiring any such Securities in accordance with the representation provided by the original Investor in Article IV . Each transferee of Securities shall have the rights of an Investor under this Agreement.

(b)

Each Investor agrees to the imprinting, so long as is required by this Section 6.01(b) , of the following legend on the Securities:

The Company agrees that it will provide each Investor, upon request, with a certificate or certificates representing the Shares free from such legend at such time as such legend is no longer required hereunder. The Company may not make any notation on its records or give instructions to any transfer agent of the Company which enlarge the restrictions of transfer set forth in this Section 6.01 .

6.02.

Certain Securities Laws Disclosures . The Company shall timely file with the SEC a Form D as required under Regulation D promulgated under the Securities Act and provide a copy thereof to each Investor promptly after the filing thereof.

6.03.

NYSE Alternext Listing . The Company shall promptly prepare and submit to the NYSE Alternext a listing application covering the Underlying Shares and shall apply commercially reasonable efforts to obtain, as promptly as practicable and prior to the Conversion Date, approval for the listing of such Underlying Shares and the Investors shall cooperate with the Company with respect to such listing. The Company shall promptly (within twenty-four (24) hours) inform the Investors if it receives any communication from the NYSE Alternext regarding the delisting of the Common Stock, and shall consult with the Investors and provide the Investors and its counsel a reasonable opportunity to review and comment on any proposed written responses to the NYSE Alternext, and shall reasonably consider such comments of the Investors prior to responding, and provide the Investors and its counsel reasonable opportunity to participate in any discussions or meetings with the NYSE Alternext.

6.04.

Short Sales After The Date Hereof . Each Investor, severally and not jointly with the other Investors, covenants that neither it, nor any Affiliate acting on its behalf or pursuant to any understanding with it, will execute any Short Sales during the period commencing with the date hereof and ending at such time (a) as the Note has either been repaid in full or has converted pursuant to its terms and (b) the Investor no longer beneficially owns any Shares, Conversion Shares or Underlying Warrant Shares.

ARTICLE VII

ACTIONS AT THE CLOSING

Each and every obligation of the Company and the Investors under this Agreement to be performed on or before the Closing shall be subject to the satisfaction, on or before the Closing, of each of the following conditions, unless waived in writing by the Company and the Investors.

7.01.

No Legal Proceedings . No provision of any applicable Law or regulation and no judgment, injunction, order or decree shall prohibit the Closing or the consummation of any of the transactions contemplated by the Transaction Documents or shall prohibit or restrict any Investor or its Affiliates from owning, or fully voting and converting, the Securities to be acquired by such Investor pursuant to the terms of such respective Securities, and no lawsuit shall have been commenced by a Governmental Authority seeking to effect any of the foregoing.

7.02.

Certificate of Designation . The Certificate of Designation shall be in full force and effect and shall have been filed with the Secretary of State of the State of Delaware and shall have not been further amended or modified, and the Investors shall have received satisfactory evidence thereof.

7.03.

Opinion of the Company’s Counsel . The Company shall have delivered an opinion in favor of the Investors from Pepper Hamilton LLP as to matters of law, dated as of the Closing Date, comprising the matters set forth in Exhibit H hereto.

7.04.

Closing Documents, Resolutions, Consents . The Company shall have delivered to each Investor at the Closing:

(a)

certified copies of the resolutions duly adopted by the Board authorizing, among other things, the execution, delivery and performance of the Transaction Documents, the filing of the Certificate of Designation referred to herein, the issuance and sale of the Securities, the reservation of the Underlying Shares for issuance upon conversion of the Shares and the Conversion Shares, reservation of the Conversion Shares for issuance upon conversion of the Notes, reservation of the Underlying Warrant Shares for issuance upon exercise of the Warrants, and the consummation of all other transactions contemplated by this Agreement and the other Transaction Documents;

(b)

certified copies of the Company Governance Documents, each as in effect at the Closing;

(c)

a certificate of good standing issued by the Secretary of State of the State of Delaware and each other jurisdiction where the Company or any Company Subsidiary is authorized to do business;

(d)

copies of all third party and governmental consents, approvals and filings required in connection with the consummation of the transactions hereunder (including, without limitation, all blue sky law filings and waivers of all preemptive rights and rights of first refusal); and

(e)

an original, duly executed (i) certificate representing the Shares; (ii) a Note; and (iii) a Warrant, each in accordance with Section 1.03 .

7.05.

Blue Sky; Federal Securities Law Compliance . The Company shall have made all filings, if any, under all applicable Federal securities Laws necessary to consummate the issuance of the Shares pursuant to this Agreement in compliance with such Laws.

7.06.

Registration Rights Agreement . The Registration Rights Agreement shall have been executed and delivered to the Investors by the Company and each other party thereto.

7.07.

Security Agreement . The Security Agreement shall have been executed and delivered to the Investors by the Company and each other party thereto.

7.08.

Intercreditor Agreement. The Intercreditor Agreement shall have been executed and delivered to the Investors by the Company and each other party thereto.

7.09.

Voting Agreement and Proxies . The Voting Agreement (including each irrevocable proxy to be delivered pursuant thereto) shall have been executed and delivered to the Investors by the Company and each other party thereto.

7.10.

Indemnification Agreements . The Company shall have executed and delivered indemnification agreements with each of the directors selected by the Investors to serve on the Board, in form and substance reasonably satisfactory to the Investors.

7.11.

Expenses . The Company shall have paid the expenses of the Investors by wire transfer of immediately available funds in accordance with Section 9.01 and concurrently with the Closing .

7.12.

Proceedings . All corporate and other proceedings taken or required to be taken by the Company in connection with the transactions contemplated hereby to be consummated at or prior to the Closing, and all documents incident thereto shall be satisfactory in form and substance to the Investors and their counsel.

7.13.

Board of Directors . In accordance with Section 3(a)(iv) of the Certificate of Designation, the Board shall have taken all necessary action to expand the size of the board to five (5) directors and, subject only to the consummation of the closing, shall take all action necessary to appoint the person designated by the Investors, which person is identified on Exhibit I attached hereto, to fill such vacancy (the “ Series B-1 Director ”), who shall serve for a term extending from the date of his election and qualification until the time of the next succeeding annual meeting of stockholders and until a successor has been duly elected and qualified. In accordance with Section 3(a)(iv) of the Certificate of Designation, the Series B Director, or any successor thereto, shall be subject to election or removal by holders of the outstanding Series B-1 Preferred Stock.

ARTICLE VIII

SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
BREACHES; INDEMNIFICATION

8.01.

Investigations; Survival of Warranties . The representations and warranties of the Company, on the one hand, and the Investors, on the other hand, contained herein or in any certificates or other documents delivered prior to or at the Closing shall not be deemed waived or otherwise affected by any investigation made by any party hereto. The representations and warranties herein shall survive the Closing until 5:30 p.m. (New York City time) on the date that is eighteen (18) months following the Closing Date.

8.02.

Indemnification .

(a)

Subject to the provisions of Section 8.01 , the Company shall indemnify and hold harmless the Investors in respect of any and all Liability, loss or damage, together with all reasonable costs and expenses related thereto (including reasonable legal fees and expenses), in connection with the following:

(i)

any untruth, inaccuracy or breach of any representation or warranty made by the Company in this Agreement or any other Transaction Document;

(ii)

the breach of any covenant, agreement or obligation of the Company in this Agreement or any other Transaction Document; and

(iii)

with respect to any brokers’ or finders’ fees or compensation owing or alleged to be owing by it in connection with the transactions contemplated hereby.

(b)

Subject to the provisions of Section 8.01 , the Investors, severally and not jointly, shall indemnify and hold harmless the Company in respect of any and all Liability, loss or damage, together with all reasonable costs and expenses related thereto (including reasonable legal fees and expenses) with respect to a breach of the representation set forth in Sections 4.04 or 4.10 .

(c)

Claims for Indemnification . Whenever any claim shall arise for indemnification hereunder, the Investors or the Company, as the case may be, shall promptly notify the other party in writing in accordance with Section 9.03 hereof, of the claim and, when known, the facts constituting the basis for such claim. In the event of any claim by a third party, the notice to the other party shall specify, if known, a reasonable estimate of the amount of the Liability arising therefrom. Any claim properly noticed shall, unless objected to in writing by the other party within ten (10) days following such notice, be paid by the other party or otherwise settled to the satisfaction of the damaged party within forty five (45) days of such notice.

ARTICLE IX

MISCELLANEOUS

9.01.

Fees and Expenses . At the Closing, the Company will pay (i) all reasonable costs and other expenses incurred by the Investors in connection with the consummation of the transactions contemplated by the Transaction Documents and (ii) the reasonable and documented fees and expenses of Bingham McCutchen LLP, counsel to the Investors, for its services in connection with the transactions contemplated by the Transaction Documents, which shall not exceed eighty-two thousand dollars ($82,000) without the Company’s consent, which consent shall not be unreasonably withheld.

9.02.

Entire Agreement . This Agreement and the other Transaction Documents, together with the Exhibits and Schedules hereto and thereto, contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters.

9.03.

Notices . Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section 9.03 prior to 5:30 p.m. (New York City time) on a business day; (b) the business day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified herein later than 5:30 p.m. (New York City time) on any date and earlier than 11:59 p.m. (New York City time) on such date; (c) the business day following the date of mailing, if sent by nationally recognized overnight courier service; (d) five (5) business days after mailing if sent by certified or registered mail; or (e) actual receipt by the party to whom such notice is required to be given if delivered by hand. The address for such notices and communications shall be as follows:

If to the Company:

IGI Laboratories, Inc.
105 Lincoln Avenue
Buena, New Jersey 08310
Telephone No.: (856) 697-1441
Facsimile No.: (856) 697-1001
Attn.: Chief Executive Officer

With a copy to:

Pepper Hamilton LLP
3000 Two Logan Square
Philadelphia, Pennsylvania 19103
Telephone: (215) 981-4193
Facsimile: (215) 981-4750
Attention: Brian M. Katz, Esq.

If to an Investor:

To the names and address set forth on Schedule A hereto.

With a copy to:

Bingham McCutchen LLP
399 Park Avenue
New York, New York 10022
Telephone No.: (212) 705-7492
Facsimile No.: (212) 702-3631
Attn: Shon E. Glusky, Esq.

or such other address as may be designated in writing hereafter, in the same manner, by such Person.

9.04.

Amendments; Waivers . No provision of this Agreement may be waived or amended except in a written instrument signed by both the Company and holders of at least a majority of the Shares issued and sold hereunder. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter. Any amendment, waiver or consent effected in accordance with this Section 9.04 shall be binding on all Investors, notwithstanding that all Investors have not executed such amendment, waiver or consent.

9.05.

Headings . The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.

9.06.

Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns.

9.07.

No Third-Party Beneficiaries . This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

9.08.

Governing Law; Submission to Jurisdiction. This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the internal Laws of the State of Delaware, without giving effect to principles of conflicts of law. Each of the parties hereto (a) submits to the jurisdiction of any state or federal court sitting in Delaware in any action or proceeding arising out of or relating to this Agreement or the other Transaction Documents; (b) agrees that all claims in respect of such action or proceeding may be heard and determined in any such court; (c) waives any claim of inconvenient forum or other challenge to venue in such court; (d) agrees not to bring any action or proceeding arising out of or relating to this Agreement or the other Transaction Documents in any other court; and (e) waives any right it

may have to a trial by jury with respect to any action or proceeding arising out of or relating to this Agreement or the other Transaction Documents. Each Party agrees to accept service of any summons, complaint or other initial pleading made in the manner provided for the giving of notices in Section 9.03 , provided that nothing in this Section 9.08 shall affect the right of a party to serve such summons, complaint or other initial pleading in any other manner permitted by law.

9.09.

Execution . This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature page were an original thereof.

9.10.

Construction .

The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties and no presumption shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement. Any reference to any Federal, state or local statute or Law shall be deemed to also refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. The word “including” shall mean including without limitation. The parties intend that each representation, warranty or covenant contained herein shall have independent significance. If any party has breached any representation, warranty or covenant herein in any respect, the fact that there exists another representation, warranty or covenant relating to the same subject matter (regardless of the relative levels of specificity) which the party has not breached shall not detract from or mitigate the fact that the party is in breach of the first representation, warranty or covenant.

9.11.

Severability . In case any one or more of the provisions of this Agreement shall be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affected or impaired thereby and the parties will attempt to agree upon a valid and enforceable provision which shall be a reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Agreement.

9.12.

Aggregation .

Shares of capital stock of the Company owned by partnerships, limited liability companies and corporations having substantially common ownership interests or managed by the same principals and owned by individual investors affiliated with one another shall be aggregated for the purposes of calculating the aggregate percentage of capital stock of the Company owned by any Investor and any permitted transferee hereunder.

[Signature Pages Follow]

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.


	COMPANY


	IGI LABORATORIES, INC.


	By:	/s/ Rajiv Mathur
	Name:	Rajiv Mathur
	Title:	President & CEO


	INVESTORS


	LIFE SCIENCES OPPORTUNITIES FUND II, L.P.


	By:	Signet Healthcare Partners, G.P., its General Partner


	By:	/s/ James C. Gale
	Name:	James C. Gale
	Title:	Managing Partner


	LIFE SCIENCES OPPORTUNITIES FUND (INSTITUTIONAL) II, L.P.


	By:	Signet Healthcare Partners, G.P., its General Partner

	By:	/s/ James C. Gale
	Name:	James C. Gale
	Title:	Managing Partner

[ Signature Page to the Securities Purchase Agreement]

SCHEDULE A

SCHEDULE OF INVESTORS


Name and Address of Investor	Number of Shares of Series B Preferred Stock	Principal Amount of Note	Number of Underlying Warrant Shares	Aggregate Consideration
Life Sciences Opportunities Fund II, L.P. c/o Signet Healthcare Partners, G.P. Carnegie Hall Towers 152 West 57th Street, 19th Floor New York, NY 10019 Telephone No.: (212) 419-3906 Facsimile No.: (212) 419-3956 Attn.: James C. Gale, Managing Director	30.8	$725,998.68	121	$910,800.00

Life Sciences Opportunities Fund (Institutional) II, L.P. c/o Signet Healthcare Partners, G.P. Carnegie Hall Towers 152 West 57th Street, 19th Floor New York, NY 10019 Telephone No.: (212) 419-3906 Facsimile No.: (212) 419-3956 Attn.: James C. Gale, Managing Director	172.1	$4,056,601.32	676.1	$5,089,200.00

EXHIBIT A

Certificate of Designation

EXHIBIT B

Form of Warrant

EXHIBIT C

Form of Note

EXHIBIT D

Intercreditor Agreement

EXHIBIT E

Registration Rights Agreement

EXHIBIT F

Security Agreement

EXHIBIT G

Voting Agreement

EXHIBIT H

Legal Opinion of Pepper Hamilton LLP

EXHIBIT I

Series B-1 Director

Joyce Erony

Exhibit 10.2

VOTING AGREEMENT

THIS VOTING AGREEMENT (the “ Agreement ”) dated as of March 13, 2009, is made by and among IGI Laboratories, Inc., a Delaware corporation (the “ Company ”), Signet Healthcare Partners, G.P., a Delaware general partnership (“ Signet ”), and the stockholders of the Company set forth on Schedule A hereto (each a “ Stockholder ” and, collectively, the “ Stockholders ”).

Simultaneously with the execution and delivery of this Agreement, the Company and certain affiliates of Signet (the “ Investors ”) have entered into a Securities Purchase Agreement (the “ Purchase Agreement ”) pursuant to which, among other things, the Company will issue and sell to the Investors, and each of the Investors will purchase, (A) shares of the Company’s Series B-1 Preferred Stock, par value $0.01 per share; (B) a secured convertible promissory note (each, a “ Note ” and collectively, the “ Notes ”); and (C) a warrant to purchase shares of the Company’s Series B-2 Preferred Stock, par value $0.01 per share (each, a “ Warrant ” and collectively, the “ Warrants ”). The transactions contemplated by the Purchase Agreement and the other Transaction Documents (as defined in the Purchase Agreement) are collectively referred to herein as the “ Financing ”. All capitalized terms used but not defined herein shall have the meanings ascribed thereto in the Purchase Agreement.

In addition, simultaneously with the execution and delivery of the Purchase Agreement, the Company and Pinnacle Mountain Partners, LLC, a New Hampshire limited liability company (“ Pinnacle ”) have entered into that certain Note Conversion Agreement (the “ Conversion Agreement ”) pursuant to which the principle amount outstanding under the Third Amended and Restated Note issued by the Company to Pinnacle (the “ Pinnacle Note ”) will be converted into shares of common stock of the Company, $0.01 par value per share (the “ Common Stock ”), at a conversion rate of $0.41 per share (the “ Conversion ”), subject to the Conversion being approved by the vote of the Company’s stockholders.

Each Stockholder is the record and beneficial owner (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”)) of that number of shares of Common Stock of the Company as is set forth opposite the name of such Stockholder on Schedule A attached hereto (the “ Shares ”).

NOW, THEREFORE, to induce the Investors to enter into, and in consideration of their entering into, the Purchase Agreement, and in consideration of the premises and the representations and warranties and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

Transfer and Encumbrance . The Stockholder shall not transfer, sell, exchange, pledge or otherwise dispose of or encumber the Shares or any New Shares (as defined in Section 2 hereof), or make any offer or agreement relating thereto at any time prior to the earlier to occur of (i) such date and time as the Company Stockholder Approval (as defined in the Purchase Agreement) is obtained and (ii) July 31, 2009 (the earlier to occur of (i) and (ii), “ Expiration

Date ”); provided that the Stockholder is permitted to transfer the Shares or any New Shares to any person or entity where, as a precondition to such transfer, the transferee agrees in writing pursuant to an agreement in form and substance reasonably acceptable to Signet to be bound by all the terms and conditions of this Agreement (a “ Transferee Agreement ”). The Company, at the request of Signet, shall cause stop transfer orders to be placed with its transfer agent with respect to certificates for the Shares in the event a Transferee Agreement is not executed and delivered in connection with any transfer of Shares.

Agreement to Vote Shares .

(a)

At each and every meeting of the Stockholders of the Company called with respect to any of the following, and at every adjournment thereof, and with respect to each and every action or approval by written consent of the Stockholders of the Company in lieu of a meeting with respect to any of the following, the Stockholder shall vote, or execute and deliver a written consent with respect to, the Shares and any shares of capital stock of the Company that the Stockholder purchases or with respect to which the Stockholder otherwise acquires beneficial ownership after the date hereof and prior to the Expiration Date (the “ New Shares ”) (i) in favor of approving the Financing and any matter that could reasonably be expected to facilitate the consummation of the Financing; (ii) against approval of any proposal made in opposition to or in competition with consummation of the Financing; and (iii) against any liquidation or winding up of the Company.

(b)

The Stockholder shall in no event take any action directly or indirectly, that may delay or otherwise impede the consummation of the Financing.

(c)

The Stockholder shall vote, or execute and deliver a written consent with respect to, the Shares and any New Shares (i) in favor of the Conversion and any matter that could reasonably be expected to facilitate the consummation of the Conversion and (ii) against any approval of a proposal made in opposition to or in competition with consummation of the Conversion.

(d)

This Agreement is intended to bind the Stockholder as a Stockholder of the Company only with respect to the specific matters set forth herein and shall not prohibit the Stockholder from acting in accordance with his or her fiduciary duties, if applicable, as an officer or director of the Company.

Irrevocable Proxy . Concurrently with the execution and delivery of this Agreement, the Stockholder is executing and delivering to Signet a proxy in the form attached hereto as Exhibit A (the “ Proxy ”), which shall be irrevocable to the extent provided in Section 212 of the Delaware General Corporation Law, covering the Shares and the New Shares beneficially owned (as such term is defined in Rule 13d-3 under the Exchange Act) by the Stockholder, as set forth therein. In the event the Stockholder breaches, fails to fulfill or anticipatorily breaches his, her or its obligations under Section 2 above, which breach, failure to fulfill or anticipatory breach shall be reasonably determined by Signet in its sole and absolute discretion, Signet may exercise its right to vote the Shares and the New Shares under the Proxy, provided, however, that in the event the exercise by Signet of its right to vote the Shares and/or the New Shares under the Proxy is challenged by any party or invalidated, in whole or in part,

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Signet shall be entitled to seek all remedies available to it under Section 8(d) hereof. Signet shall also be entitled to exercise its right to vote the Shares and the New Shares under the proxy in the event the Stockholder is unavailable to exercise his, her or its right to vote in accordance with Section 2 above.

Representations, Warranties and Covenants of the Stockholder . The Stockholder hereby represents, warrants and covenants to Signet as follows:

(a)

Ownership of Shares . The Stockholder: (i) is the beneficial owner of the Shares, which at the date of this Agreement and at all times until the Expiration Date, will be free and clear of any Liens; (ii) does not beneficially own any shares of capital stock of the Company other than the Shares (excluding shares as to which the Stockholder currently disclaims beneficial ownership in accordance with applicable law); and (iii) has full power and authority to execute, deliver and perform this Agreement and the Proxy.

(b)

Enforceability . This Agreement and the Proxy are valid and binding obligations of the Stockholder, enforceable against the Stockholder in accordance with the terms hereof and thereof.

(c)

Representation by Legal Counsel . The Stockholder has been advised to seek legal counsel in connection with the negotiation and execution of this Agreement.

Legends .

(a)

Each certificate representing any New Shares issued to the Stockholder after the date hereof, if any, shall be endorsed by the Company with a legend reading substantially as follows:

“The sale or other disposition of any of the shares represented by this certificate is restricted by a Voting Agreement by and among the holder of this certificate, Signet Healthcare Partners, G.P. and IGI Laboratories, Inc. (the “ Agreement ”). A copy of the Agreement is available for inspection without charge at the office of the Secretary of the Corporation.”

(b)

The Company, by its execution of this Agreement, agrees that it will cause the certificates evidencing the New Shares, if any, to bear the legend required by Section 5(a) of this Agreement, and it shall make available for inspection without charge, a copy of this Agreement at the office of the Secretary of the Corporation.

(c)

The parties to this Agreement hereby agree that the failure to cause the certificates evidencing the New Shares to bear the legend required by Section 5(a) of this Agreement or the failure of the Company to make available for inspection without charge a copy of this Agreement as required by Section 5(b) shall not affect the validity or enforcement of this Agreement.

(d)

Immediately following the Expiration Date, the Company shall take, or shall cause to be taken, all action necessary to remove, or cause the removal of, the legend

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required by Section 5(a) of this Agreement from any New Shares and shall be relieved of its obligation to make available for inspection without charge a copy of this Agreement as required by Section 5(b).

Consent and Waiver . The Stockholder hereby gives any consents and waivers that are reasonably required for the consummation of the Financing, the Conversion and its performance of this Agreement under the terms of any agreement to which the Stockholder is a party or pursuant to any rights the Stockholder may have.

Termination . This Agreement (other than Section 4 and Sections 8(a) through 8(j) (inclusive) which shall survive the termination of this Agreement) and the Proxy delivered in connection herewith shall terminate and shall have no further force or effect on and as of the Expiration Date.

Miscellaneous .

(a)

(b)

Binding Effect and Assignment . This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns; provided, however, that except as otherwise specifically provided herein, neither this Agreement nor any of the rights, interests or obligations of the parties hereto may be assigned by any party hereto without the prior written consent of the other parties hereto.

(c)

Amendments and Modification . No provision of this Agreement may be waived or amended except in a written instrument signed by the parties hereto. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter.

(d)

Specific Performance; Injunctive Relief . The parties hereto acknowledge that Signet will be irreparably harmed and that there will be no adequate remedy at law for a violation of any of the covenants or agreements of the Stockholder set forth herein. Therefore, it is agreed that, in addition to any other remedies that may be available to Signet upon any such violation, Signet shall have the right to enforce such covenants and agreements by specific performance, injunctive relief or by any other means available to Signet at law or in equity.

(e)

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p.m. (New York City time) on a business day; (b) the business day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified herein later than 5:30 p.m. (New York City time) on any date and earlier than 11:59 p.m. (New York City time) on such date; (c) the business day following the date of mailing, if sent by nationally recognized overnight courier service; (d) five (5) business days after mailing if sent by certified or registered mail; or (e) actual receipt by the party to whom such notice is required to be given if delivered by hand. The address for such notices and communications shall be as follows:


	if to Signet, to:

	Signet Healthcare Partners, G.P. Carnegie Hall Towers 152 West 57th Street, 19th Floor New York, NY 10019 Telephone No.: (212) 419-3906 Facsimile No.: (212) 419-3956 Attn.: James C. Gale, Managing Director

	with a copy to:

	Bingham McCutchen LLP 399 Park Avenue New York, New York 10022 Telephone No.: (212) 705-7492 Facsimile No.: (212) 702-3631 Attn: Shon E. Glusky, Esq.

	if to a Stockholder, to:

	the address for notice set forth on the Schedule A hereto;

	with a copy to:

	IGI Laboratories, Inc. 105 Lincoln Avenue Buena NJ 08310 Telephone No.: (856) 697-1441 Facsimile No.: (856) 697-1001 Attn.: Chief Executive Officer

(f)

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state or federal court sitting in Delaware in any action or proceeding arising out of or relating to this Agreement; (b) agrees that all claims in respect of such action or proceeding may be heard and determined in any such court; (c) waives any claim of inconvenient forum or other challenge to venue in such court; (d) agrees not to bring any action or proceeding arising out of or relating to this Agreement in any other court; and (e) waives any right it may have to a trial by jury with respect to any action or proceeding arising out of or relating to this Agreement. Each Party agrees to accept service of any summons, complaint or other initial pleading made in the manner provided for the giving of notices in Section 8(e), provided that nothing in this Section shall affect the right of a party to serve such summons, complaint or other initial pleading in any other manner permitted by law.

(g)

Entire Agreement . This Agreement and the Proxy contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters.

(h)

Counterparts . This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature page were an original thereof.

(i)

Attorneys’ Fees . In the event of any legal action or proceeding to enforce or interpret the provisions of this Agreement, the prevailing party shall be entitled to reasonable attorneys’ fees, whether or not the proceeding results in a final judgment.

(j)

Effect of Headings . The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.

(k)

Additional Documents . The Stockholder and the Company hereby covenant and agree to execute and deliver any additional agreements and instruments necessary or desirable, in the reasonable opinion of Signet, to carry out the purpose and intent of this Agreement.

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


IGI LABORATORIES, INC.


By:	/s/ Rajiv Mathur
Name:	Rajiv Mathur
Title:	President & CEO


SIGNET HEALTHCARE PARTNERS, G.P.


By:	/s/ James C. Gale
Name:	James C. Gale
Title:	Managing Partner


STOCKHOLDER


If an individual:



Print Name:


If an entity:


Entity Name:		Univest Mgt. E.P.S.P.

By:	/s/ Frank Gerardi
Name:	Frank Gerardi
Title:	Trustee

[SIGNATURE PAGE TO VOTING AGREEMENT


	STOCKHOLDER


	If an individual:


	/s/ Jane E. Hager
	Print Name:		Jane E. Hager


	If an entity:


	Entity Name:


	By:
	Name:
	Title:

[SIGNATURE PAGE TO VOTING AGREEMENT]


	STOCKHOLDER


	If an individual:


	/s/ Stephen J. Morris
	Print Name:		Stephen J. Morris


	If an entity:


	Entity Name:


	By:
	Name:
	Title:

[SIGNATURE PAGE TO VOTING AGREEMENT]

SCHEDULE A

Stockholders


Name and Address	Number of Shares of Common Stock Beneficially Owned

Frank Gerardi c/o Univest Management Inc. EPSP 149 West Village Way Jupiter, FL 33458	2,625,627

Jane E. Hager c/o IGI, Inc. 105 Lincoln Avenue Buena, New Jersey 08310	2,179,031

Stephen Morris 66 Navesink Avenue Rumson, New Jersey 07760	3,018,546

Exhibit 10.3

REGISTRATION RIGHTS AGREEMENT

This Registration Rights Agreement (this “ Agreement ”) dated as of March 13, 2009, is made by and among IGI Laboratories, Inc., a Delaware corporation (the “ Company ”), the purchasers set forth on Schedule A hereto (each an “ Investor ” and collectively, the “ Investors ”), and the placement agent set forth on Schedule B hereto (the “ Agent ”).

WHEREAS, the Company and the Investors have entered into a Securities Purchase Agreement (the “ Purchase Agreement ”) dated as of even date herewith pursuant to which the Company agreed to issue and sell to each of the Investors, and each of the Investor agreed to purchase from the Company, shares (the “ Shares ”) of the Company’s Series B-1 Convertible Preferred Stock, $0.01 par value per share (the “ Series B-1 Preferred Stock ”), a secured convertible promissory note (each a “ Note ” and collectively, the “ Notes ”) and a warrant (each a “ Warrant ” and collectively, the “ Warrants ”) to purchase shares of the Company’s Series B-2 Preferred Stock, $0.01 par value per share (the “ Series B-2 Preferred Stock ”). The Shares, the Notes and the Warrants are referred to collectively as the “ Securities .” A condition to the Investors’ obligations under the Purchase Agreement is that the Company enters into this Agreement in order to provide the Investors with certain rights relating to the registration of certain equity securities held by the Investors.

WHEREAS, the Company and the Agent have entered into an Engagement Letter, dated August 28, 2008, as amended and supplemented through the date hereof (the “ Engagement Letter ”), pursuant to which the Company has issued to the Agent a warrant dated as of the date hereof (the “ Agent Warrant ”) to purchase 350,000 shares of the Company’s Common Stock (such shares of Common Stock, the “ Agent Shares ”) in partial compensation for services provided by the Agent pursuant to the terms of the Engagement Letter. A condition to the Agent’s obligations under the Engagement Letter was that the Company provide the Agent with certain rights relating to the registration of the Agent Shares issuable upon exercise of the Agent Warrant.

The Company desires to facilitate the rights set forth in this Agreement, and the sale and purchase of the Securities pursuant to the Purchase Agreement, and to satisfy its obligations under the Engagement Letter, by agreeing to the terms and conditions set forth below. All capitalized terms used herein but not otherwise defined shall have the meanings ascribed to such terms in the Purchase Agreement.

Definitions .

As used in this Agreement, the following terms shall have the following meanings:

“ Advice ” shall have the meaning set forth in Section 6(d) .

“ Agent ” shall have the meaning set forth in the Preamble.

“ Agent Shares ” shall have the meaning set forth in the Recitals.

“ Agent Warrant ” shall have the meaning set forth in the Recitals.

“ Agreement ” shall have the meaning set forth in the Preamble.

“ Commission ” means the United States Securities and Exchange Commission.

“ Common Stock ” means the common stock of the Company, par value $0.01 per share.

“ Company ” shall have the meaning set forth in the Preamble.

“ Conversion Shares ” means the shares of Series B-1 Preferred Stock into which the Notes are convertible.

“ Effectiveness Date ” means, with respect to the Initial Registration Statement required to be filed hereunder, the one (1) year anniversary of the date hereof, and with respect to any additional Registration Statements which may be required pursuant to Section 3(c) , the ninetieth (90th) calendar day following the date on which an additional Registration Statement is required to be filed hereunder; provided, however, that in the event the Company is notified by the Commission that one or more of the above Registration Statements will not be reviewed or is no longer subject to further review and comments, the Effectiveness Date as to such Registration Statement shall be the fifth (5th) Trading Day following the date on which the Company is so notified if such date precedes the dates otherwise required above.

“ Effectiveness Period ” shall have the meaning set forth in Section 2(a) .

“ Engagement Letter ” shall have the meaning set forth in the Recitals.

“ Event ” shall have the meaning set forth in Section 2(b) .

“ Event Date ” shall have the meaning set forth in Section 2(b) .

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“ FINRA ” means the Financial Industry Regulatory Authority and any successor self-regulatory organization.

“ Filing Date ” means, with respect to the Initial Registration Statement required hereunder, the nine (9) month anniversary of the date hereof and, with respect to any additional Registration Statements which may be required pursuant to Section 3(c) , the earliest practical date on which the Company is permitted by SEC Guidance to file such additional Registration Statement related to the Registrable Securities.

“ Holder ” or “ Holders ” means the holder or holders, as the case may be, from time to time of Registrable Securities.

“ Indemnified Party ” shall have the meaning set forth in Section 5(c) .

“ Indemnifying Party ” shall have the meaning set forth in Section 5(c) .

“ Initial Registration Statement ” means the initial Registration Statement filed pursuant to this Agreement.

“ Investor ” or “ Investors ” shall have the meaning set forth in the Preamble.

“ Losses ” shall have the meaning set forth in Section 5(a) .

“ Note ” or “ Notes ” shall have the meaning set forth in the Recitals.

“ Proceeding ” means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial proceeding, such as a deposition), whether commenced or threatened.

“ Prospectus ” means the prospectus included in a Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated by the Commission pursuant to the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by a Registration Statement, and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus.

“ Purchase Agreement ” shall have the meaning set forth in the Recitals.

“ Registrable Securities ” means (a) the Underlying Shares and the Agent Shares and (b) any securities issued or issuable upon any stock split, dividend or other distribution, recapitalization or similar event with respect to the foregoing; provided, however, that Registrable Securities shall not include, and the Company shall not be required to maintain the effectiveness or file another Registration Statement hereunder with respect to, any shares of Common Stock described in clause (a) or (b) above which (i) are subject to an effective registration statement, (ii) have been sold to the public either pursuant to a Registration Statement or Rule 144, (iii) which have been sold in a private transaction in which the transferor’s rights under this Agreement are not assigned, or (iv) are eligible for resale without volume or manner-of-sale restrictions and without current public information pursuant to Rule 144.

“ Registration Statement ” means any registration statement required to be filed hereunder pursuant to Section 2(a) and any additional registration statements contemplated by Section 3(c) , including (in each case) the Prospectus, amendments and supplements to any such registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference in any such registration statement.

“ Restated Certificate ” means the Amended and Restated Certificate of Incorporation of the Company.

“ Rule 144 ” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.

“ Rule 415 ” means Rule 415 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.

“ Rule 424 ” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.

“ SEC Guidance ” means (i) any publicly-available written or oral guidance, comments, requirements or requests of the Commission staff and (ii) the Securities Act.

“ Securities ” shall have the meaning set forth in the Recitals.

“ Securities Act ” means the Securities Act of 1933, as amended.

“ Series B-1 Preferred Stock ” shall have the meaning set forth in the Recitals.

“ Series B-2 Preferred Stock ” shall have the meaning set forth in the Recitals.

“ Shares ” shall have the meaning set forth in the Recitals.

“ Trading Day ” means a day on which the principal Trading Market is open for trading.

“ Trading Market ” means the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: NYSE Alternext US, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange or the OTC Bulletin Board.

“ Underlying Shares ” means the shares of Common Stock into which the Shares or the Conversion Shares are convertible pursuant to the terms of the Restated Certificate.

“ Warrant ” or “ Warrants ” shall have the meaning set forth in the Recitals.

Shelf Registration .

(a)

Subject to any objection as contemplated by Section 3(a) hereof, on or prior to each Filing Date, the Company shall prepare and file with the Commission a Registration Statement covering the resale of Registrable Securities in an amount at least equal to the

Underlying Shares and Agent Shares that are not then registered on an effective Registration Statement for an offering to be made on a continuous basis pursuant to Rule 415. Each Registration Statement filed hereunder shall be on Form S-3 (except if the Company is not then eligible to register for resale the Registrable Securities on Form S-3, in which case such registration shall be on another appropriate form in accordance herewith) and shall contain a plan of distribution in a form reasonably acceptable to the Holders. Subject to the terms of this Agreement, the Company shall use its commercially reasonable efforts to cause a Registration Statement to be declared effective under the Securities Act as promptly as possible after the filing thereof, but in any event prior to the applicable Effectiveness Date, and shall use its commercially reasonable efforts to keep such Registration Statement continuously effective under the Securities Act until all Registrable Securities covered by such Registration Statement have been sold, or may be sold without volume or manner-of-sale restrictions pursuant to Rule 144, without the requirement for the Company to be in compliance with the current public information requirement under Rule 144, as determined by the counsel to the Company pursuant to a written opinion letter to such effect, addressed and acceptable to the Transfer Agent and the affected Holders (the “ Effectiveness Period ”). The Company shall telephonically request effectiveness of a Registration Statement as of 5:00 p.m. New York City time on a Trading Day. The Company shall immediately notify the Holders via facsimile or by e-mail of the effectiveness of a Registration Statement on the same Trading Day that the Company telephonically confirms effectiveness with the Commission, which shall be the date requested for effectiveness of such Registration Statement. The Company shall, by 9:30 a.m. New York City time on the Trading Day after the effective date of such Registration Statement, file a final Prospectus with the Commission as required by Rule 424. Failure to so notify the Holder within one (1) Trading Day of such notification of effectiveness or failure to file a final Prospectus as foresaid shall be deemed an Event under Section 2(b) .

(b)

If: (i) the Initial Registration Statement is not filed on or prior to its Filing Date (provided, that if the Company files the Initial Registration Statement without affording the Holders the opportunity to review and comment on the same as required by Section 3(a) herein, the Company shall be deemed to have not satisfied this clause (i)); (ii) the Company fails to file with the Commission a request for acceleration of a Registration Statement in accordance with Rule 461 promulgated by the Commission pursuant to the Securities Act, within five (5) Trading Days of the date that the Company is notified (orally or in writing, whichever is earlier) by the Commission that such Registration Statement will not be “reviewed” or will not be subject to further review; (iii) prior to the effective date of a Registration Statement, the Company fails to use commercially reasonable efforts to file a pre-effective amendment and otherwise respond in writing to comments made by the Commission in respect of such Registration Statement within fifteen (15) business days after the receipt of comments by or notice from the Commission that such amendment is required in order for such Registration Statement to be declared effective; (iv) a Registration Statement registering for resale all of the Registrable Securities (or such lesser number of Registrable Securities in the event the Commission restricts the number of Registrable Securities to be included) is not declared effective by the Commission by the Effectiveness Date of the Initial Registration Statement; (v) after the effective date of a Registration Statement, such Registration Statement ceases for any reason to remain continuously effective as to all Registrable Securities included in such Registration Statement, or the Holders are otherwise not permitted to utilize the Prospectus therein to resell such Registrable Securities, and such Registrable Securities are ineligible for resale pursuant to Rule 144, for more than sixty (60)

calendar days (which need not be consecutive calendar days) during any twelve (12) month period; or (vi) the Company fails to satisfy the current public information requirement under Rule 144 as to the applicable Registrable Securities (any such failure or breach being referred to as an “ Event ”, and for purposes of clauses (i), (iv), (v) and (vi), the date on which such Event occurs, and for purpose of clause (ii) the date on which such five (5) Trading Day period is exceeded, and for purpose of clause (iii) the date which such fifteen (15) business day period is exceeded, and for purpose of clause (v) the date on which such thirty (30) or sixty (60) calendar day period, as applicable, is exceeded being referred to as “ Event Date ”), then, in addition to any other rights the Holders may have hereunder or under applicable law, on each such Event Date and on each monthly anniversary of each such Event Date (if the applicable Event shall not have been cured by such date) until the earlier of (1) the cure of the applicable Event and (2) the Registrable Securities cease to be Registrable Securities, the Company shall pay (i) to the Investors an aggregate amount in cash, as partial liquidated damages and not as a penalty, equal to fifteen thousand dollars ($15,000.00) and (ii) to the Agent an amount in cash, as partial liquidated damages and not as a penalty, equal to three hundred sixty dollars ($360.00). If the Company fails to pay any partial liquidated damages pursuant to this Section in full within three (3) calendar days after the date payable, the Company will pay interest thereon at a rate of fifteen percent (15%) per annum (or such lesser maximum amount that is permitted to be paid by applicable law) to the Holder, accruing daily from the date such partial liquidated damages are due until such amounts, plus all such interest thereon, are paid in full. The partial liquidated damages pursuant to the terms hereof shall apply on a daily pro rata basis for any portion of a month prior to the cure of an Event. However, for purposes of clause (iii), (iv), and (v), the Company shall not be liable for liquidated damages under the Agreement if the reason for noncompliance is attributable to any Holder, as evidenced by the Commission’s comments or other administrative or judicial action, and the Company has so notified the Holders.

Registration Procedures .

In connection with the Company’s registration obligations hereunder, the Company shall:

(a)

Not less than five (5) Trading Days prior to the filing of each Registration Statement and not less than one (1) Trading Day prior to the filing of any related Prospectus or any amendment or supplement thereto (including any document that would be incorporated or deemed to be incorporated therein by reference), the Company shall (i) furnish to each Holder copies of all such documents proposed to be filed, which documents (other than those incorporated or deemed to be incorporated by reference) will be subject to the review of such Holders and (ii) cause its officers and directors, counsel and independent registered public accountants to respond to such inquiries as shall be necessary, in the reasonable opinion of respective counsel to each such Holder, to conduct a reasonable investigation within the meaning of the Securities Act. The Company shall not file a Registration Statement or any such Prospectus or any amendments or supplements thereto to which the Holders of a majority of the Registrable Securities shall reasonably object in good faith, provided that, the Company is notified of such objection in writing no later than five (5) Trading Days after such Holders have been so furnished copies of a Registration Statement or one (1) Trading Day after such Holders have been so furnished copies of any related Prospectus or amendments or supplements thereto.

(b)

(i) Prepare and file with the Commission such amendments, including post-effective amendments, to a Registration Statement and the Prospectus used in connection therewith as may be necessary to keep a Registration Statement continuously effective as to all of the Registrable Securities for the Effectiveness Period; (ii) cause the related Prospectus to be amended or supplemented by any required Prospectus supplement (subject to the terms of this Agreement), and, as so supplemented or amended, to be filed pursuant to Rule 424; (iii) respond as promptly as reasonably possible to any comments received from the Commission with respect to a Registration Statement or any amendment thereto and provide as promptly as reasonably possible to the Holders true and complete copies of all correspondence from and to the Commission relating to a Registration Statement (provided that, the Company may excise any information contained therein which would constitute material non-public information as to any Holder which has not executed a confidentiality agreement with the Company); and (iv) comply in all material respects with the provisions of the Securities Act and the Exchange Act with respect to the disposition of all Registrable Securities covered by a Registration Statement during the applicable period in accordance (subject to the terms of this Agreement) with the intended methods of disposition by the Holders thereof set forth in such Registration Statement as so amended or in such Prospectus as so supplemented.

(c)

If during the Effectiveness Period, the number of Registrable Securities at any time exceeds one hundred percent (100%) of the number of shares of Common Stock then registered in a Registration Statement, then the Company shall file as soon as reasonably practicable, but in any case prior to the applicable Filing Date, an additional Registration Statement covering the resale by the Holders of not less than the number of such Registrable Securities.

(d)

Notify the Holders of Registrable Securities to be sold (which notice shall, pursuant to clauses (iii) through (vi) of this subsection (d), be accompanied by an instruction to suspend the use of the Prospectus until the requisite changes have been made) as promptly as reasonably possible (and, in the case of (i)(A) below, not less than one (1) Trading Day prior to such filing) and (if requested by any such Person) confirm such notice in writing no later than one (1) Trading Day following the day (i)(A) when a Prospectus or any Prospectus supplement or post-effective amendment to a Registration Statement is proposed to be filed; (B) when the Commission notifies the Company whether there will be a “review” of such Registration Statement and whenever the Commission comments in writing on such Registration Statement; and (C) with respect to a Registration Statement or any post-effective amendment, when the same has become effective; (ii) of any request by the Commission or any other federal or state governmental authority for amendments or supplements to a Registration Statement or Prospectus or for additional information; (iii) of the issuance by the Commission or any other federal or state governmental authority of any stop order suspending the effectiveness of a Registration Statement covering any or all of the Registrable Securities or the initiation of any Proceedings for that purpose; (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any Proceeding for such purpose; (v) of the occurrence of any event or passage of time that makes the financial statements included in a Registration Statement ineligible for inclusion therein or any statement made in a Registration Statement or Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires any revisions to

a Registration Statement, Prospectus or other documents so that, in the case of a Registration Statement or the Prospectus, as the case may be, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; and (vi) of the occurrence or existence of any pending corporate development with respect to the Company that the Company believes may be material and that, in the determination of the Company, makes it not in the best interest of the Company to allow continued availability of a Registration Statement or Prospectus, provided that, any and all of such information shall remain confidential to each Holder until such information otherwise becomes public, unless disclosure by a Holder is required by law; provided, further, that notwithstanding each Holder’s agreement to keep such information confidential, each such Holder makes no acknowledgement that any such information is in fact material, non-public information.

(e)

Use its commercially reasonable efforts to avoid the issuance of, or, if issued, obtain the withdrawal of (i) any order stopping or suspending the effectiveness of a Registration Statement, or (ii) any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, at the earliest practicable moment.

(f)

Furnish to each Holder, without charge, at least one conformed copy of each such Registration Statement and each amendment thereto, including financial statements and schedules, all documents incorporated or deemed to be incorporated therein by reference to the extent requested by such Person, and all exhibits to the extent requested by such Person (including those previously furnished or incorporated by reference) promptly after the filing of such documents with the Commission; provided, that any such item which is available on the EDGAR system need not be furnished in physical form.

(g)

Subject to the terms of this Agreement, the Company hereby consents to the use of such Prospectus and each amendment or supplement thereto by each of the selling Holders in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any amendment or supplement thereto, except after the giving of any notice pursuant to Section 3(d) .

(h)

The Company shall cooperate with any broker-dealer through which a Holder proposes to resell its Registrable Securities in effecting a filing with the FINRA Corporate Financing Department pursuant to FINRA Rule 5110, as requested by any such Holder, and the Company shall pay the filing fee required by such filing within two (2) Business Days of request therefor.

(i)

Prior to any resale of Registrable Securities by a Holder, use its commercially reasonable efforts to register or qualify or cooperate with the selling Holders in connection with the registration or qualification (or exemption from the Registration or qualification) of such Registrable Securities for the resale by the Holder under the securities or Blue Sky laws of such jurisdictions within the United States as any Holder reasonably requests in writing, to keep each registration or qualification (or exemption therefrom) effective during the Effectiveness Period and to do any and all other acts or things reasonably necessary to enable the

disposition in such jurisdictions of the Registrable Securities covered by each Registration Statement; provided, that, the Company shall not be required to qualify generally to do business in any jurisdiction where it is not then so qualified, subject the Company to any material tax in any such jurisdiction where it is not then so subject or file a general consent to service of process in any such jurisdiction.

(j)

If requested by a Holder, cooperate with such Holders to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be delivered to a transferee pursuant to a Registration Statement, which certificates shall be free, to the extent permitted by the Purchase Agreement, in the case of the Underlying Shares, or the Agent Warrant, in the case of the Agent Shares, of all restrictive legends, and to enable such Registrable Securities to be in such denominations and registered in such names as any such Holder may request.

(k)

Upon the occurrence of any event contemplated by Section 3(d) , as promptly as reasonably possible under the circumstances taking into account the Company’s good faith assessment of any adverse consequences to the Company and its stockholders of the premature disclosure of such event, prepare a supplement or amendment, including a post-effective amendment, to a Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, and file any other required document so that, as thereafter delivered, neither a Registration Statement nor such Prospectus will contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. If the Company notifies the Holders in accordance with clauses (iii) through (vi) of Section 3(d) above to suspend the use of any Prospectus until the requisite changes to such Prospectus have been made, then the Holders shall suspend use of such Prospectus. The Company will use its commercially reasonable efforts to ensure that the use of the Prospectus may be resumed as promptly as is practicable. The Company shall be entitled to exercise its right under this Section 3(k) to suspend the availability of a Registration Statement and Prospectus for a period not to exceed sixty (60) calendar days (which need not be consecutive days) in any twelve (12) month period, subject to the payment of partial liquidated damages otherwise required pursuant to Section 2(b) in the event that such suspension exceeds sixty (60) calendar days (which need not be consecutive days) in any twelve (12) month period.

(l)

Use its commercially reasonable efforts to comply with all applicable rules and regulations of the Commission relating to the registration of the Registrable Securities pursuant to the Registration Statement or otherwise.

(m)

Notwithstanding anything in this Agreement to the contrary, not be required to effect a registration pursuant to Section 2 or Section 3(c): (i) subject to Section 6(b), during the period starting with the date sixty (60) days prior to the Company’s good faith estimate of the date of filing of, and ending on a date one hundred eighty (180) days after the effective date of, a Company-initiated registration; provided that the Company is actively employing in good faith all reasonable efforts to cause such registration statement to become effective; or (ii) if the Company shall furnish each Holder a certificate signed by the Chairman of the Board stating that in the good faith and reasonable judgment of the Board of Directors of the

Company, it would be seriously detrimental to the Company and its shareholders for such registration statement to be effected at such time, in which event the Company shall have the right to defer such filing for a period of not more than sixty (60) days; provided that such right to delay a filing shall be exercised by the Company not more than once in any twelve (12) month period.

Registration Expenses . All fees and expenses incident to the performance of or compliance with this Agreement by the Company shall be borne by the Company whether or not any Registrable Securities are sold pursuant to a Registration Statement. The fees and expenses referred to in the foregoing sentence shall include, without limitation, (i) all registration and filing fees (including, without limitation, fees and expenses of the Company’s counsel and independent registered public accountants) (A) with respect to filings made with the Commission; (B) with respect to filings required to be made with any Trading Market on which the Common Stock is then listed for trading; (C) in compliance with applicable state securities or Blue Sky laws reasonably agreed to by the Company in writing (including, without limitation, fees and disbursements of counsel for the Company in connection with Blue Sky qualifications or exemptions of the Registrable Securities); and (D) with respect to any filing that may be required to be made by any broker through which a Holder intends to make sales of Registrable Securities with FINRA pursuant to FINRA Rule 5110, so long as the broker is receiving no more than a customary brokerage commission in connection with such sale; (ii) printing expenses (including, without limitation, expenses of printing certificates for Registrable Securities); (iii) messenger, telephone and delivery expenses; (iv) fees and disbursements of counsel for the Company; (v) Securities Act liability insurance, if the Company so desires such insurance; (vi) reasonable fees and expenses of one (1) counsel to the Holders; and (vii) fees and expenses of all other Persons retained by the Company in connection with the consummation of the transactions contemplated by this Agreement. In addition, the Company shall be responsible for all of its internal expenses incurred in connection with the consummation of the transactions contemplated by this Agreement (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit and the fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange as required hereunder. In no event shall the Company be responsible for any broker or similar commissions of any Holder.

Indemnification .

(a)

Indemnification by the Company . The Company shall, notwithstanding any termination of this Agreement, indemnify and hold harmless each Holder, the officers, directors, and employees (and any other Persons with a functionally equivalent role of a Person holding such titles, notwithstanding a lack of such title or any other title) of each of them, each Person who controls any such Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, members, partners, agents and employees (and any other Persons with a functionally equivalent role of a Person holding such titles, notwithstanding a lack of such title or any other title) of each such controlling Person, to the fullest extent permitted by applicable law, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation, reasonable attorneys’ fees) and expenses (collectively, “ Losses ”), as incurred, arising out of or relating to (1) any untrue or alleged untrue statement of a material fact contained in a Registration Statement, any Prospectus

or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading; or (2) any violation or alleged violation by the Company of the Securities Act, the Exchange Act or any state securities law, or any rule or regulation thereunder, in connection with the performance of its obligations under this Agreement, except to the extent, but only to the extent, that (i) such untrue statements or omissions are based solely upon information regarding such Holder furnished in writing to the Company by such Holder expressly for use therein, or to the extent that such information relates to such Holder or such Holder’s proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by such Holder, or such Holder’s legal counsel, expressly for use in a Registration Statement, such Prospectus or in any amendment or supplement thereto; or (ii) in the case of an occurrence of an event of the type specified in Section 3(d)(iii) - (vi) , the use by such Holder of an outdated or defective Prospectus after the Company has notified such Holder in writing that the Prospectus is outdated or defective and prior to the receipt by such Holder of the Advice contemplated in Section 6(d) . The Company shall notify the Holders promptly of the institution, threat or assertion of any Proceeding arising from or in connection with the transactions contemplated by this Agreement of which the Company is aware.

(b)

Indemnification by Holders . Each Holder shall, severally and not jointly, indemnify and hold harmless the Company, its directors, officers and employees, each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, agents or employees of such controlling Persons, to the fullest extent permitted by applicable law, from and against all Losses, as incurred, to the extent arising out of or based solely upon: (1) such Holder’s failure to comply with the prospectus delivery requirements of the Securities Act; or (2) any untrue or alleged untrue statement of a material fact contained in any Registration Statement, any Prospectus, or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading (i) to the extent, but only to the extent, that such untrue statement or omission is contained in any information so furnished in writing by such Holder to the Company specifically for inclusion in such Registration Statement or such Prospectus; (ii) to the extent that such information relates to such Holder’s proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by such Holder, or such Holder’s legal counsel, expressly for use in a Registration Statement, such Prospectus or in any amendment or supplement thereto; or (iii) in the case of an occurrence of an event of the type specified in Section 3(d)(iii) - (vi) , the use by such Holder of an outdated or defective Prospectus after the Company has notified such Holder in writing that the Prospectus is outdated or defective and prior to the receipt by such Holder of the Advice contemplated in Section 6(d) . In no event shall the liability of any selling Holder hereunder be greater in amount than the dollar amount of the net proceeds received by such Holder upon the sale of the Registrable Securities giving rise to such indemnification obligation.

(c)

Conduct of Indemnification Proceedings . If any Proceeding shall be brought or asserted against any Person entitled to indemnity hereunder (an “ Indemnified Party ”), such Indemnified Party shall promptly notify the Person from whom indemnity is sought (the

“ Indemnifying Party ”) in writing, and the Indemnifying Party shall have the right to assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees and expenses incurred in connection with defense thereof; provided, that, the failure of any Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that it shall be finally determined by a court of competent jurisdiction (which determination is not subject to appeal or further review) that such failure shall have prejudiced the Indemnifying Party.

An Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in writing to pay such fees and expenses; (2) the Indemnifying Party shall have failed promptly to assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding; or (3) the named parties to any such Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and counsel to the Indemnified Party shall reasonably believe that a material conflict of interest is likely to exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense thereof and the reasonable fees and expenses of no more than one separate counsel shall be at the expense of the Indemnifying Party). The Indemnifying Party shall not be liable for any settlement of any such Proceeding effected without its written consent, which consent shall not be unreasonably withheld or delayed. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending Proceeding in respect of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding.

Subject to the terms of this Agreement, all reasonable fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such Proceeding in a manner not inconsistent with this Section) shall be paid to the Indemnified Party, as incurred, within ten (10) Trading Days of written notice thereof to the Indemnifying Party; provided, that, the Indemnified Party shall promptly reimburse the Indemnifying Party for that portion of such fees and expenses applicable to such actions for which such Indemnified Party is judicially determined not to be entitled to indemnification hereunder.

(d)

Contribution . If the indemnification under Section 5(a) or 5(b) is unavailable to an Indemnified Party or insufficient to hold an Indemnified Party harmless for any Losses, then each Indemnifying Party shall contribute to the amount paid or payable by such Indemnified Party, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been

taken or made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission. The amount paid or payable by a party as a result of any Losses shall be deemed to include, subject to the limitations set forth in this Agreement, any reasonable attorneys’ or other fees or expenses incurred by such party in connection with any Proceeding to the extent such party would have been indemnified for such fees or expenses if the indemnification provided for in this Section was available to such party in accordance with its terms.

The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 5(d) were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding paragraph. Notwithstanding the provisions of this Section 5(d) , no Holder shall be required to contribute, in the aggregate, any amount in excess of the amount by which the net proceeds actually received by such Holder from the sale of the Registrable Securities subject to the Proceeding exceeds the amount of any damages that such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

The indemnity and contribution agreements contained in this Section are in addition to any liability that the Indemnifying Parties may have to the Indemnified Parties.

Miscellaneous .

(a)

Remedies . In the event of a breach by the Company or by a Holder of any of their respective obligations under this Agreement, each Holder or the Company, as the case may be, in addition to being entitled to exercise all rights granted by law and under this Agreement, including recovery of damages, shall be entitled to specific performance of its rights under this Agreement. The Company and each Holder agree that monetary damages would not provide adequate compensation for any losses incurred by reason of a breach by it of any of the provisions of this Agreement and hereby further agrees that, in the event of any action for specific performance in respect of such breach, it shall not assert or shall waive the defense that a remedy at law would be adequate.

(b)

No Piggyback on Registrations; Prohibition on Filing Other Registration Statements . Neither the Company nor any of its security holders (other than the Holders in such capacity pursuant hereto) may include securities of the Company in any Registration Statements other than the Registrable Securities. The Company shall not file any other registration statements until all Registrable Securities are registered pursuant to a Registration Statement that is declared effective by the Commission, provided that this Section 6(b) shall not prohibit the Company from (i) filing amendments to registration statements filed prior to the date of this Agreement or (ii) filing a registration statement on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with the Company’s stock option or other employee benefit plans.

(c)

Compliance . Each Holder covenants and agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable to it in connection with sales of Registrable Securities pursuant to a Registration Statement.

(d)

Discontinued Disposition . By its acquisition of Registrable Securities, each Holder agrees that, upon receipt of a notice from the Company of the occurrence of any event of the kind described in Section 3(d)(iii) - (vi) , such Holder will forthwith discontinue disposition of such Registrable Securities under a Registration Statement until it is advised in writing (the “ Advice ”) by the Company that the use of the applicable Prospectus (as it may have been supplemented or amended) may be resumed. The Company will use its commercially reasonable efforts to ensure that the use of the Prospectus may be resumed as promptly as is practicable. The parties agree and acknowledge that any periods during which the Holder is required to discontinue the disposition of the Registrable Securities hereunder shall be subject to the provisions of Section 2 (b) and Section 3(k) .

(e)

Piggy-Back Registrations . If, at any time during the Effectiveness Period, there is not an effective Registration Statement covering all of the Registrable Securities and the Company shall determine to prepare and file with the Commission a registration statement relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with the Company’s stock option or other employee benefit plans, then the Company shall deliver to each Holder a written notice of such determination and, if within fifteen (15) days after the date of the delivery of such notice, any such Holder shall so request in writing, the Company shall include in such registration statement all or any part of such Registrable Securities such Holder requests to be registered; provided, however, that the Company shall not be required to register any Registrable Securities pursuant to this Section 6(e) that are the subject of a then effective Registration Statement. The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 6(e) prior to the effectiveness of such registration whether or not any Holder has elected to include securities in such registration.

(f)

Amendments and Waivers . No provision of this Agreement may be waived or amended except in a written instrument signed by both the Company and Holders of a majority of the then outstanding Registrable Securities (including, for this purpose any Registrable Securities issuable upon exercise or conversion of any Security or the Agent Warrant). If any amendment or waiver of any provision of this Agreement would have an adverse effect on the rights of any Holder in a manner different from the effect of such amendment or waiver on the rights of Holders generally, then such amendment or waiver shall require the approval of such adversely affected Holder. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter. Any amendment, waiver or consent effected in accordance with this Section 6(f) shall be binding on all Holders, notwithstanding that all Holders have not executed such amendment, waiver or consent.

(g)

Notices . Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be delivered as set forth in the Purchase Agreement or the Agent Warrant, as applicable.

(h)

Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company may not assign (except by merger) its rights or obligations hereunder without the prior written consent of a majority of the Holders of the then outstanding Registrable Securities. Each Holder may assign their respective rights hereunder to any transferee or assignee of Shares, Conversion Shares, the Agent Warrant and/or Registrable Securities.

(i)

No Inconsistent Agreements . Neither the Company nor any of its Subsidiaries has entered, as of the date hereof, nor shall the Company or any of its Subsidiaries, on or after the date of this Agreement, enter into any agreement with respect to its securities, that would have the effect of impairing the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof. Except as provided in Section 3.02(c) of the Disclosure Schedule, neither the Company nor any of its Subsidiaries has previously entered into any agreement granting any registration rights with respect to any of its securities to any Person that have not been satisfied in full.

(j)

Execution and Counterparts . This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature page were an original thereof.

(k)

Governing Law . This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the internal Laws of the State of Delaware, without giving effect to principles of conflicts of law. Each of the parties hereto (a) submits to the jurisdiction of any state or federal court sitting in Delaware in any action or proceeding arising out of or relating to this Agreement; (b) agrees that all claims in respect of such action or proceeding may be heard and determined in any such court; (c) waives any claim of inconvenient forum or other challenge to venue in such court; (d) agrees not to bring any action or proceeding arising out of or relating to this Agreement in any other court; and (e) waives any right it may have to a trial by jury with respect to any action or proceeding arising out of or relating to this Agreement. Each of the parties hereto agrees to accept service of any summons, complaint or other initial pleading made in the manner provided for the giving of notices as provided in Section 6(g), provided that nothing in this Section 6(k) shall affect the right of a party to serve such summons, complaint or other initial pleading in any other manner permitted by law.

(l)

Cumulative Remedies . The remedies provided herein are cumulative and not exclusive of any other remedies provided by law.

(m)

(n)

Headings . The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.

(o)

Independent Nature of Holders’ Obligations and Rights . The obligations of each Holder hereunder are several and not joint with the obligations of any other Holder hereunder, and no Holder shall be responsible in any way for the performance of the obligations of any other Holder hereunder. Nothing contained herein or in any other agreement or document delivered at any closing, and no action taken by any Holder pursuant hereto or thereto, shall be deemed to constitute the Holders as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Holders are in any way acting in concert with respect to such obligations or the transactions contemplated by this Agreement. Each Holder shall be entitled to protect and enforce its rights, including without limitation the rights arising out of this Agreement, and it shall not be necessary for any other Holder to be joined as an additional party in any proceeding for such purpose.

[Signature Pages Follow]

IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first written above.


	IGI LABORATORIES, INC.


	By:	/s/ Rajiv Mathur
	Name:	Rajiv Mathur
	Title:	President & CEO


	LIFE SCIENCES OPPORTUNITIES FUND II, L.P.


	By:	Signet Healthcare Partners, G.P., its General Partner


	By:	/s/ James C. Gale
	Name:	James C. Gale
	Title:	Managing Partner


	LIFE SCIENCES OPPORTUNITIES FUND (INSTITUTIONAL) II, L.P.


	By:	Signet Healthcare Partners, G.P., its General Partner


	By:	/s/ James C. Gale
	Name:	James C. Gale
	Title:	Managing Partner


	ROCKPORT VENTURE SECURITIES, LLC


	By:	/s/ Mark Bosland
	Name:	Mark Bosland
	Title:	Managing Director

[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]

SCHEDULE A

PURCHASERS

Life Sciences Opportunities Fund II, L.P.

Life Sciences Opportunities Fund (Institutional) II, L.P.

SCHEDULE B

PLACEMENT AGENT

Rockport Venture Securities, LLC

Exhibit 10.4

GUARANTY AGREEMENT

THIS GUARANTY dated as of March 13, 2009 (together with any amendments or modifications hereto in effect from time to time, the “Guaranty” ), is made by Immunogenetics, Inc., a Delaware corporation, having an office at 105 Lincoln Avenue, Buena, New Jersey 08310 ( “Guarantor” ), in favor of the parties listed on Schedule A hereto (each, a “Lender” and collectively, the “Lenders” ).

To induce the Lenders to make loans, extensions of credit or other financial accommodations to IGI Laboratories, Inc. ( “Borrower” ), now or in the future, to secure the observance, payment and performance of the Liabilities (as defined below), and with full knowledge that the Lenders would not make the said loans, extensions of credit or financial accommodations without this Guaranty Agreement, which shall be construed as a contract of suretyship, Guarantor, jointly and severally and unconditionally agrees as follows:

LIABILITIES GUARANTEED .

Guarantor, jointly and severally, hereby guarantees and becomes surety to the Lenders for the full, prompt and unconditional payment of the Liabilities (as defined below), when and as the same shall become due, whether at the stated maturity date, by acceleration or otherwise, and the full, prompt and unconditional performance of each term and condition to be performed by Borrower under the Loan Documents (as defined below). This Guaranty is a primary obligation of Guarantor and shall be a continuing inexhaustible Guaranty. This is a guaranty of payment and not of collection. The Lenders may require Guarantor to pay and perform its liabilities and obligations under this Guaranty and may proceed immediately against Guarantor without being required to bring any proceeding or take any action against Borrower, any other guarantor or any other person, entity or property prior thereto, the liability of Guarantor hereunder being joint and several, and independent of and separate from the liability of Borrower, any other guarantor or person, and the availability of other collateral security for the Notes and the other Loan Documents.

DEFINITIONS .

2.1.

“Notes” means those certain Secured Convertible Promissory Notes of even date herewith in the aggregate principal amount of Four Million Seven Hundred Eighty Two Thousand Six Hundred Dollars ($4,782,600.00) from Borrower to the Lenders.

2.2.

“Loan Documents” means this Agreement, the Notes and the Security Agreement.

2.3.

“Liabilities” means, collectively: (i) the repayment of all sums due under the Notes (and all extensions, renewals, replacements and amendments thereof) and the other Loan Documents; (ii) the performance of all terms, conditions and covenants set forth in the Loan Documents; and (iii) all other obligations or indebtedness of Borrower to the Lenders whenever borrowed or incurred, including without limitation, principal, interest, fees, late charges and expenses, including attorneys’ fees.

2.4.

“Security Agreement” means that certain Security Agreement by and among Borrower and the Lenders, dated as of even date herewith.

2.5.

All capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Notes.

REPRESENTATION AND WARRANTIES . Guarantor represents and warrants to the Lenders as follows:

3.1.

Organization, Powers . Guarantor is (i) a corporation, duly organized, validly existing and in good standing under the laws of the state of its organization, and is authorized to do business in each other jurisdiction wherein its ownership of property or conduct of business legally requires such authorization; (ii) has the power and authority to own its properties and assets and to carry on its business as now being conducted and as now contemplated; and (iii) has the power and authority to execute, deliver and perform, and by all necessary action has authorized the execution, delivery and performance of, all of its obligations under this Guaranty and any other Loan Document to which it is a party.

3.2.

Execution of Guaranty . This Guaranty and each other Loan Document to which Guarantor is a party have been duly executed and delivered by Guarantor. Execution, delivery and performance of this Guaranty and each other Loan Document to which Guarantor is a party will not: (i) violate any of its organizational documents, provision of law, order of any court, agency or instrumentality of government, or any provision of any indenture, agreement or other instrument to which it is a party or by which it or any of its properties is bound; (ii) result in the creation or imposition of any lien, charge or encumbrance of any nature, other than the liens created by the Loan Documents; and (iii) require any authorization, consent, approval, license, exemption of, or filing or registration with, any court or governmental authority.

3.3.

Obligations of Guarantor . This Guaranty and each other Loan Document to which Guarantor is a party are the legal, valid and binding obligations of Guarantor, enforceable against it in accordance with their terms, except as the same may be limited by bankruptcy, insolvency, reorganization or other laws or equitable principles relating to or affecting the enforcement of creditors’ rights generally. The loans or credit accommodations made by the Lenders to Borrower and the assumption by Guarantor of its obligations hereunder and under any other Loan Document to which Guarantor is a party will result in material benefits to Guarantor. This Guaranty was entered into by Guarantor for commercial purposes.

3.4.

Litigation . There is no action, suit, or proceeding at law or in equity or by or before any governmental authority, agency or other instrumentality now pending or, to the knowledge of Guarantor, threatened against or affecting Guarantor or any of its properties or rights which, if adversely determined, would materially impair or affect: (i) the value of any collateral securing the Liabilities; (ii) Guarantor’s right to carry on its business substantially as now conducted (and as now contemplated); (iii) its financial condition; or (iv) its capacity to consummate and perform its obligations under this Guaranty or any other Loan Document to which Guarantor is a party.

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3.5.

No Defaults . Guarantor is not in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained herein or in any material agreement or instrument to which it is a party or by which it or any of its properties is bound.

3.6.

No Untrue Statements . No Loan Document or other document, certificate or statement furnished to the Lenders by or on behalf of Guarantor contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein and therein not misleading. Guarantor acknowledges that all such statements, representations and warranties shall be deemed to have been relied upon by the Lenders as an inducement to make the Loan to Borrower.

NO LIMITATION OF LIABILITY .

4.1.

Without incurring responsibility to Guarantor, and without impairing or releasing the obligations of Guarantor to the Lenders, and without reducing the amount due under the terms of this Guaranty, the Lenders may at any time and from time to time, without the consent of or notice to Guarantor, upon any terms or conditions, and in whole or in part:

4.1.1.

Change the manner, place or terms of payment of (including, without limitation, the interest rate and monthly payment amount), and/or change or extend the time for payment of, or renew or modify, any of the Liabilities, any security therefor, or any of the Loan Documents evidencing same, and the Guaranty herein made shall apply to the Liabilities and the Loan Documents as so changed, extended, renewed or modified;

4.1.2.

Sell, exchange, release, surrender, realize upon or otherwise deal with in any manner and in any order, any property securing the Liabilities;

4.1.3.

Exercise or refrain from exercising any rights against Borrower or other obligated parties (including Guarantor) or against any security for the Liabilities;

4.1.4.

Settle or compromise any Liabilities, whether in a proceeding or not, and whether voluntarily or involuntarily, dispose of any security therefor (with or without consideration), and subordinate the payment of any of the Liabilities, whether or not due, to the payment of liabilities owing to creditors of Borrower other than the Lenders and Guarantor;

4.1.5.

Apply any sums it receives, by whomever paid or however realized, to any of the Liabilities;

4.1.6.

Add, release, settle, modify or discharge the obligation of any maker, endorser, guarantor, surety, obligor or any other party who is in any way obligated for any of the Liabilities;

4.1.7.

Accept any additional security for the Liabilities; and/or

4.1.8.

Take any other action which might constitute a defense available to, or a discharge of, Borrower or any other obligated party (including Guarantor) in respect of the Liabilities.

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4.2.

The invalidity, irregularity or unenforceability of all or any part of the Liabilities or any Loan Document, or the impairment or loss of any security therefor, whether caused by any action or inaction of the Lenders, or otherwise, shall not affect, impair or be a defense to Guarantor’s obligations under this Guaranty.

LIMITATION ON SUBROGATION . Until such time as the Liabilities are paid in full, Guarantor waives any present or future right to which Guarantor is or may become entitled to be subrogated to the Lenders’ rights against Borrower or to seek contribution, reimbursement, indemnification, payment or the like, or participation in any claim, right or remedy of the Lenders against Borrower or any security which the Lenders now have or hereafter acquire, whether or not such claim, right or remedy arises under contract, in equity, by statute, under common law or otherwise. If, notwithstanding such waiver, any funds or property shall be paid or transferred to Guarantor on account of such subrogation, contribution, reimbursement, or indemnification at any time when all of the Liabilities have not been paid in full, Guarantor shall hold such funds or property in trust for the Lenders and shall forthwith pay over to the Lenders such funds and/or property to be applied by the Lenders to the Liabilities.

SECURITY FOR GUARANTY . Guarantor hereby grants to the Lenders a continuing security interest in all property of Guarantor, now or hereafter in the possession of the Lenders, as security for the performance of this Guaranty, which security interest shall be enforceable and subject to all the provisions of this Guaranty, as if such property were specifically pledged hereunder.

EVENTS OF DEFAULT .

Each of the following shall constitute a default (each, an “Event of Default” ) hereunder:

7.1.

Non-payment when due of any sum required to be paid to the Lenders under any of the Loan Documents or of any of the other Liabilities;

7.2.

A breach by Guarantor of any other term, covenant, condition, obligation or agreement under this Guaranty, and the continuance of such breach for a period of fifteen (15) days after written notice thereof shall have been given to Guarantor;

7.3.

Any representation or warranty made by Guarantor in this Guaranty shall prove to be false, incorrect or misleading in any material respect as of the date when made; or

7.4.

An Event of Default under any of the Loan Documents.

REMEDIES .

8.1.

Upon an Event of Default, all liabilities of Guarantor hereunder shall become immediately due and payable without demand or notice and, in addition to any other remedies provided by law, the Lenders may:

8.1.1.

Enforce the obligations of Guarantor under this Guaranty.

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8.1.2.

To the extent not prohibited by and in addition to any other remedy provided by law, setoff against any of the Liabilities any sum owed by the Lenders in any capacity to Guarantor whether due or not.

8.1.3.

Perform any covenant or agreement of Guarantor in default hereunder (but without obligation to do so) and in that regard pay such money as may be required or as the Lenders may reasonably deem expedient. Any costs, expenses or fees, including reasonable attorneys’ fees and costs, incurred by the Lenders in connection with the foregoing shall be included in the Liabilities guaranteed hereby, and shall be due and payable on demand, together with interest at the rate payable upon the occurrence and during the continuance of an Event of Default as set forth in Section 1.2 of the Notes, such interest to be calculated from the date of such advance to the date of repayment thereof. Any such action by the Lenders shall not be deemed to be a waiver or release of Guarantor hereunder and shall be without prejudice to any other right or remedy of the Lenders.

8.2.

Settlement of any claim by the Lenders against Borrower, whether in any proceeding or not, and whether voluntary or involuntary, shall not reduce the amount due under the terms of this Guaranty, except to the extent of the amount actually paid by Borrower or any other obligated party and legally retained by the Lenders in connection with the settlement (unless otherwise provided for herein).

MISCELLANEOUS .

9.1.

Disclosure of Financial Information . The Lenders are hereby authorized to disclose any financial or other information about Guarantor to any regulatory body or agency having jurisdiction over the Lenders or to any present, future or prospective participant or successor in interest in any loan or other financial accommodation made by the Lenders to Borrower or Guarantor. The information provided may include, without limitation, amounts, terms, balances, payment history, return item history and any financial or other information about Guarantor.

9.2.

Remedies Cumulative . The rights and remedies of the Lenders, as provided herein and in any other Loan Document, shall be cumulative and concurrent, may be pursued separately, successively or together, may be exercised as often as occasion therefor shall arise, and shall be in addition to any other rights or remedies conferred upon the Lenders at law or in equity. The failure, at any one or more times, of the Lenders to exercise any such right or remedy shall in no event be construed as a waiver or release thereof. the Lenders shall have the right to take any action it deems appropriate without the necessity of resorting to any collateral securing this Guaranty.

9.3.

Integration . This Guaranty and the other Loan Documents constitute the sole agreement of the parties with respect to the transaction contemplated hereby and supersede all oral negotiations and prior writings with respect thereto.

9.4.

Attorneys’ Fees and Expenses . If the Lenders retain the services of counsel by reason of a claim of a default or an Event of Default hereunder or under any of the other Loan Documents, or on account of any matter involving this Guaranty, or for examination of matters

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subject to the Lenders’ approval under the Loan Documents, all costs of suit and all reasonable attorneys’ fees and such other reasonable expenses so incurred by the Lenders shall forthwith, on demand, become due and payable and shall be secured hereby.

9.5.

No Implied Waiver . The Lenders shall not be deemed to have modified or waived any of its rights or remedies hereunder unless such modification or waiver is in writing and signed by the Lenders, and then only to the extent specifically set forth therein. A waiver in one event shall not be construed as continuing or as a waiver of or bar to such right or remedy on a subsequent event.

9.6.

Waiver .

9.6.1.

Guarantor waives notice of acceptance of this Guaranty and notice of the Liabilities and waives notice of default, non-payment, partial payment, presentment, demand, protest, notice of protest or dishonor, and all other notices to which Guarantor might otherwise be entitled or which might be required by law to be given by the Lenders. Guarantor waives the right to marshalling of Borrower’s assets or any stay of execution and the benefit of all exemption laws, to the extent permitted by law, and any other protection granted by law to guarantors, now or hereafter in effect with respect to any action or proceeding brought by the Lenders against it. Guarantor irrevocably waives all claims of waiver, release, surrender, alteration or compromise and the right to assert against the Lenders any defenses, set-offs, counterclaims, or claims that Guarantor may have at any time against Borrower or any other party liable to the Lenders.

9.6.2.

To the fullest extent permitted by applicable law, each Guarantor hereby waives the right by statute or otherwise to require any Lender to institute suit against Borrower or to exhaust any rights and remedies which any Lender has or may have against Borrower. In this regard, Guarantor agrees that it is bound to the payment of each and all Liabilities, whether now existing or hereafter arising, as fully as if the Liabilities were directly owing to Lenders by Guarantor. Guarantor further waives any defense arising by reason of any disability or other defense (other than the defense that the Liabilities shall have been performed and paid in the manner provided for by the applicable Loan Documents, to the extent of any such payment) of Borrower or by reason of the cessation from any cause whatsoever of the liability of Borrower in respect thereof.

9.7.

No Third Party Beneficiary . This Guaranty is intended for the benefit of the parties hereto and their respective permitted successors and assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

9.8.

Severability . In case any one or more of the provisions of this Guaranty shall be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Guaranty shall not in any way be affected or impaired thereby and the parties will attempt to agree upon a valid and enforceable provision which shall be a reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Guaranty.

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9.9.

Binding Effect . The covenants, conditions, waivers, releases and agreements contained in this Guaranty shall bind, and the benefits thereof shall inure to, the parties hereto and their respective heirs, executors, administrators, successors and assigns; provided, however, that this Guaranty cannot be assigned by Guarantor without the prior written consent of the Lenders, and any such assignment or attempted assignment by Guarantor shall be void and of no effect with respect to the Lenders.

9.10.

Modifications . This Guaranty may not be supplemented, extended, modified or terminated except by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification or discharge is sought.

9.11.

Jurisdiction . This Guaranty and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the internal laws of the State of Delaware, without giving effect to principles of conflicts of law. Each of the parties hereto (a) submits to the jurisdiction of any state or federal court sitting in Delaware in any action or proceeding arising out of or relating to this Guaranty or the other Loan Documents; (b) agrees that all claims in respect of such action or proceeding may be heard and determined in any such court; (c) waives any claim of inconvenient forum or other challenge to venue in such court; (d) agrees not to bring any action or proceeding arising out of or relating to this Guaranty or the other Loan Documents in any other court; and (e) waives any right it may have to a trial by jury with respect to any action or proceeding arising out of or relating to this Guaranty or the other Loan Documents. Each party agrees to accept service of any summons, complaint or other initial pleading made in the manner provided for the giving of notices in Section 9.12 , provided that nothing in this Section 9.11 shall affect the right of a party to serve such summons, complaint or other initial pleading in any other manner permitted by law.

9.12.

Notices . Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section 9.12 prior to 5:30 p.m. (New York City time) on a business day; (b) the business day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified herein later than 5:30 p.m. (New York City time) on any date and earlier than 11:59 p.m. (New York City time) on such date; (c) the business day following the date of mailing, if sent by nationally recognized overnight courier service; (d) five (5) business days after mailing if sent by certified or registered mail; or (e) actual receipt by the party to whom such notice is required to be given if delivered by hand. The address for such notices and communications shall be as follows:


If to the Lenders:	c/o Signet Healthcare Partners, G.P. Carnegie Hall Towers 152 West 57th Street, 19th Floor New York, NY 10019 Telephone No.: (212) 419-3906 Facsimile No.: (212) 419-3956 Attn.: James C. Gale, Managing Director

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	with a copy to: Bingham McCutchen LLP 399 Park Avenue New York, New York 10022 Telephone No.: (212) 705-7492 Facsimile No.: (212) 702-3631 Attn: Shon E. Glusky, Esq.

If to the Borrower or the Guarantor:	IGI Laboratories, Inc. 105 Lincoln Avenue Buena, New Jersey 08310 Telephone No.: (856) 697-1441 Facsimile No.: (856) 697-1001 Attn.: Chief Executive Officer

	with a copy to: Pepper Hamilton LLP 3000 Two Logan Square Philadelphia, Pennsylvania 19103 Telephone: (215) 981-4193 Facsimile: (215) 981-4750 Attention: Brian M. Katz, Esq.

9.13.

Continuing Enforcement . If, after receipt of any payment of all or any part of the Liabilities, the Lenders are compelled or agree, for settlement purposes, to surrender such payment to any person or entity for any reason (including, without limitation, a determination that such payment is void or voidable as a preference or fraudulent conveyance, an impermissible setoff, or a diversion of trust funds), then this Guaranty shall continue in full force and effect or be reinstated, as the case may be, and Guarantor shall be liable for, and shall indemnify, defend and hold harmless the Lenders with respect to the full amount so surrendered. The provisions of this Section shall survive the termination of this Guaranty and shall remain effective notwithstanding the payment of the Liabilities, the cancellation of the Notes, this Guaranty or any other Loan Document, the release of any security interest, lien or encumbrance securing the Liabilities or any other action which the Lenders may have taken in reliance upon its receipt of such payment. Any cancellation, release or other such action shall be deemed to have been conditioned upon any payment of the Liabilities having become final and irrevocable.

[Signature Page Follows]

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IN WITNESS WHEREOF , Guarantor, intending to be legally bound, has duly executed and delivered this Guaranty Agreement as of the day and year first above written.

GUARANTOR:

IMMUNOGENETICS, INC.


By:	/s/ Rajiv Mathur
Name:	Rajiv Mathur
Title:	President & CEO

[SIGNATURE PAGE TO GUARANTY AGREEMENT]

Schedule A

Lenders

Life Sciences Opportunities Fund II, L.P., a Delaware limited partnership

Life Sciences Opportunities Fund (Institutional) II, L.P., a Delaware limited partnership

Exhibit 10.5

SECURITY AGREEMENT

THIS SECURITY AGREEMENT dated as of March 13, 2009 (“ Security Agreement ”), is made by and among IGI LABORATORIES, INC. , a Delaware corporation (“ IGI ”), IMMUNOGENETICS, INC. , a Delaware corporation (“ Subsidiary ”, each of IGI and Subsidiary, a “ Grantor ” and collectively, the “ Grantors ”), and the secured parties listed on the signature pages hereto (each, a “ Secured Party ” and, collectively, the “ Secured Parties ”).

RECITALS

Each Secured Party has agreed to make certain advances of money and to extend certain financial accommodation to Grantors (collectively, the “ Loans ”) as evidenced by those certain Secured Convertible Promissory Notes executed by IGI in favor of each Secured Party (each, a “ Note ” and, collectively, the “ Notes ”) issued under that certain Securities Purchase Agreement, dated as of March 13, 2009, by and among IGI and the Secured Parties (the “ Purchase Agreement ”).

The Secured Parties are willing to make the Loans to Grantors, but only upon the condition, among others, that Grantors shall have executed and delivered this Security Agreement to the Secured Parties.

IGI’s obligations under the Notes are guaranteed by Subsidiary pursuant to a Guaranty Agreement made by Subsidiary in favor of the Secured Parties, dated as of even date herewith (the “ Guaranty Agreement ”).

AGREEMENT

NOW, THEREFORE, in order to induce the Secured Parties to make the Loans and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, and intending to be legally bound, each Grantor hereby represents, warrants, covenants and agrees as follows:

DEFINED TERMS. When used in this Security Agreement the following terms shall have the following meanings (such meanings being equally applicable to both the singular and plural forms of the terms defined):

“ Bankruptcy Code ” means Title XI of the United States Code.

“ Collateral ” shall have the meaning assigned to such term in Section 2 of this Security Agreement.

“ Contracts ” means all contracts (including any customer, vendor, supplier, service or maintenance contract), leases, licenses, undertakings, purchase orders, permits, franchise agreements or other agreements (other than any right evidenced by Chattel Paper, Documents or Instruments), whether in written or electronic form, in or under which a Grantor now holds or hereafter acquires any right, title or interest, including, without limitation, with respect to an Account, any agreement relating to the terms of payment or the terms of performance thereof.

“ Copyright License ” means any agreement, whether in written or electronic form, in which a Grantor now holds or hereafter acquires any interest, granting any right in or to any Copyright or Copyright registration (whether a Grantor is the licensee or the licensor thereunder) including, without limitation, licenses pursuant to which a Grantor has obtained the exclusive right to use a copyright owned by a third party.

“ Copyrights ” means all of the following now owned or hereafter acquired or created (as a work for hire for the benefit of a Grantor) by a Grantor or in which a Grantor now holds or hereafter acquires or receives any right or interest, in whole or in part: (a) all copyrights, whether registered or unregistered, held pursuant to the laws of the United States, any State thereof or any other country; (b) registrations, applications, recordings and proceedings in the United States Copyright Office or in any similar office or agency of the United States, any State thereof or any other country; (c) any continuations, renewals or extensions thereof; (d) any registrations to be issued in any pending applications, and shall include any right or interest in and to work protectable by any of the foregoing which are presently or in the future owned, created or authorized (as a work for hire for the benefit of a Grantor) or acquired by a Grantor, in whole or in part; (e) prior versions of works covered by copyright and all works based upon, derived from or incorporating such works; (f) income, royalties, damages, claims and payments now and hereafter due and/or payable with respect to copyrights, including, without limitation, damages, claims and recoveries for past, present or future infringement; (g) rights to sue for past, present and future infringements of any copyright; and (h) any other rights corresponding to any of the foregoing rights throughout the world.

“ Event of Default ” means (a) any failure by a Grantor forthwith to pay or perform any of the Secured Obligations unless such failure is cured within five (5) days after such Grantor receives notice of such failure; (b) any report, information or notice made to, obtained or received by Secured Parties at any time after the date hereof indicating that Secured Parties’ security interest in the Collateral is not prior to all other security interests in the Collateral or other interests reflected in such report, information or notice unless the Secured Parties’ security interest in the Collateral becomes prior to all other security interests in the Collateral or other interests reflected in such report, information or notice within five (5) days after the date a Grantor becomes aware of such report, information or notice; (c) any failure by a Grantor to perform any covenant set forth herein or Notes, or any representation or warranty of a Grantor hereunder or thereunder shall be inaccurate in any material respect when made; and (d) any other “Event of Default” as defined in the Notes.

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“ Intellectual Property ” means any intellectual property, in any medium, of any kind or nature whatsoever, now or hereafter owned or acquired or received by a Grantor or in which a Grantor now holds or hereafter acquires or receives any right or interest, and shall include, in any event, any Copyright, Trademark, Patent, trade secret, customer list, internet domain name (including any right related to the registration thereof), proprietary or confidential information, mask work, source, object or other programming code, invention (whether or not patented or patentable), technical information, procedure, design, knowledge, know-how, software, data base, data, skill, expertise, recipe, experience, process, model, drawing, material or record.

“ Intercreditor Agreement ” means the Intercreditor Agreement by and among IGI, the Secured Parties, and Pinnacle Mountain Partners LLC, a New Hampshire limited liability company (“ Pinnacle ”), dated as of the date hereof.

“ License ” means any Copyright License, Patent License, Trademark License or other license of rights or interests, whether in-bound or out-bound, whether in written or electronic form, now or hereafter owned or acquired or received by a Grantor or in which a Grantor now holds or hereafter acquires or receives any right or interest, and shall include any renewals or extensions of any of the foregoing thereof.

“ Lien ” means any mortgage, lien, deed of trust, charge, pledge, security interest or other encumbrance.

“ Majority Lenders ” means any Secured Party or group of Secured Parties holding greater than sixty percent (60%) of the outstanding and unpaid principal under all Loans of all Secured Parties.

“ Patent License ” means any agreement, whether in written or electronic form, in which a Grantor now holds or hereafter acquires any interest, granting any right with respect to any invention on which a Patent is in existence (whether a Grantor is the licensee or the licensor thereunder).

“ Patents ” means all of the following in which a Grantor now holds or hereafter acquires any interest: (a) all letters patent of the United States or any other country, all registrations and recordings thereof and all applications for letters patent of the United States or any other country, including, without limitation, registrations, recordings and applications in the United States Patent and Trademark Office or in any similar office or agency of the United States, any state thereof or any other country; (b) all reissues, divisions, continuations, renewals, continuations-in-part or extensions thereof; (c) all petty patents, divisionals and patents of addition; (d) all patents to issue in any such applications; (e) income, royalties, damages, claims and payments now and hereafter due and/or payable with respect to patents, including, without limitation, damages, claims and recoveries for past, present or future infringement; and (f) rights to sue for past, present and future infringements of any patent.

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“ Permitted Lien ” means: (a) any Liens granted to Pinnacle to the extent such Liens are subject to the Intercreditor Agreement; (b) Liens for taxes, fees, assessments or other governmental charges or levies, either not delinquent or being contested in good faith by appropriate proceedings, provided the same have no priority over any of Secured Parties’ security interests; (c) Liens (i) upon or in any Equipment acquired or held by a Grantor to secure the purchase price of such Equipment or indebtedness incurred solely for the purpose of financing the acquisition of such Equipment or (ii) existing on such Equipment at the time of its acquisition, provided that the Lien is confined solely to the Equipment so acquired, improvements thereon and the Proceeds of such Equipment; (d) leases or subleases and licenses or sublicenses granted to others in the ordinary course of a Grantor’s business if such are otherwise permitted under this Security Agreement and do not interfere in any material respect with the business of such Grantor; (e) any right, title or interest of a licensor under a license provided that such license or sublicense does not prohibit the grant of the security interest granted hereunder; (f) Liens arising from judgments, decrees or attachments; (g) easements, reservations, rights-of-way, restrictions, minor defects or irregularities in title and other similar Liens affecting real property not interfering in any material respect with the ordinary conduct of the business of a Grantor; (h) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods; (i) Liens arising solely by virtue of any statutory or common law provision relating to banker’s liens, rights of setoff or similar rights and remedies as to deposit accounts or other funds maintained with a creditor depository institution; (j) Liens on equipment leased by a Grantor pursuant to an operating lease in the ordinary course of such Grantor’s business (including proceeds thereof and accessions thereto), all incurred solely for the purpose of financing the lease of such equipment (including Liens arising from UCC financing statements regarding such leases); and (k) any Lien approved in advance in writing by the Majority Lenders.

“ Pro Rata ” means, as to any Secured Party at any time, the percentage equivalent at such time of such Secured Party’s aggregate unpaid principal amount of Loans, divided by the combined aggregate unpaid principal amount of all Loans of all Secured Parties.

“ Secured Obligations ” means (a) the obligation of a Grantor to repay each Secured Party all of the unpaid principal amount of, and accrued interest on (including any interest that accrues after the commencement of bankruptcy), such Secured Party’s Loans; (b) the obligation of a Grantor to pay any fees, costs or expenses of the Secured Parties under the Notes, the Purchase Agreement or this Security Agreement; and (c) all other indebtedness, liabilities and obligations of a Grantor to each Secured Party, whether now existing or hereafter incurred, and whether created under, arising out of or in connection with any written agreement or otherwise.

“ Security Agreement ” means this Security Agreement and all Schedules hereto, as the same may from time to time be amended, modified, supplemented or restated.

“ Trademark License ” means any agreement, whether in written or electronic form, in which a Grantor now holds or hereafter acquires any interest, granting any right in and to any Trademark or Trademark registration (whether a Grantor is the licensee or the licensor thereunder).

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“ Trademarks ” means any of the following in which a Grantor now holds or hereafter acquires any interest: (a) any trademarks, tradenames, corporate names, company names, business names, trade styles, service marks, logos, other source or business identifiers, prints and labels on which any of the foregoing have appeared or appear, designs and general intangibles of like nature, now existing or hereafter adopted or acquired, all registrations and recordings thereof and any applications in connection therewith, including, without limitation, registrations, recordings and applications in the United States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof or any other country (collectively, the “ Marks ”); (b) any reissues, extensions or renewals thereof; (c) the goodwill of the business symbolized by or associated with the Marks; (d) income, royalties, damages, claims and payments now and hereafter due and/or payable with respect to the Marks, including, without limitation, damages, claims and recoveries for past, present or future infringement; and (e) rights to sue for past, present and future infringements of the Marks.

“ UCC ” means the Uniform Commercial Code as the same may from time to time be in effect in the State of Delaware (and each reference in this Security Agreement to an Article thereof (denoted as a Division of the UCC as adopted and in effect in the State of Delaware) shall refer to that Article (or Division, as applicable) as from time to time in effect; provided , however , in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection or priority of the Secured Parties’ security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of Delaware, the term “ UCC ” shall mean the Uniform Commercial Code (including the Articles thereof) as in effect at such time in such other jurisdiction for purposes of the provisions hereof relating to such attachment, perfection or priority and for purposes of definitions related to such provisions.

In addition, the following terms shall be defined terms having the meaning set forth for such terms in the UCC: “Account” (including health-care-insurance receivables), “Account Debtor”, “Chattel Paper” (including tangible and electronic chattel paper), “Commercial Tort Claims”, “Commodity Account”, “Deposit Account”, “Documents”, “Equipment” (including all accessions and additions thereto), “Fixtures”, “General Intangible” (including payment intangibles and software), “Instrument”, “Inventory” (including all goods held for sale or lease or to be furnished under a contract of service, and including returns and repossessions), “Investment Property” (including securities and securities entitlements), “Letter-of-Credit Right” (whether or not the letter of credit is evidenced by a writing), “Payment Intangibles”, “Proceeds”, “Promissory Notes”, “Securities Account”, and “Supporting Obligations”. Each of the foregoing defined terms shall include all of such items now owned, or hereafter acquired, by a Grantor.

GRANT OF SECURITY INTEREST. As collateral security for the full, prompt, complete and final payment and performance when due (whether at stated maturity, by acceleration or otherwise) of all the Secured Obligations and in order to induce the Secured Parties to cause the Loans to be made, each Grantor hereby assigns, conveys, mortgages, pledges, hypothecates and transfers to the Secured Parties, and hereby grants to the Secured Parties, a security interest in all of such Grantor’s right, title and interest in, to and under the following, whether now owned or hereafter acquired, (all of which being collectively referred to herein as the “ Collateral ”):

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(a)

All Accounts of Grantor;

(b)

All Chattel Paper of Grantor;

(c)

All Commercial Tort Claims of Grantor;

(d)

All Contracts of Grantor;

(e)

All Deposit Accounts of Grantor;

(f)

All Documents of Grantor;

(g)

All Equipment of Grantor;

(h)

All Fixtures of Grantor;

(i)

All General Intangibles of Grantor, including, without limitation, Payment Intangibles, all Copyrights, Patents, Trademarks, Licenses, designs, drawings, technical information, marketing plans, customer lists, trade secrets, proprietary or confidential information, inventions (whether or not patentable), procedures, know-how, models and data;

(j)

All Instruments of Grantor, including, without limitation, Promissory Notes;

(k)

All Inventory of Grantor;

(l)

All Investment Property of Grantor;

(m)

All Letter-of Credit Rights of Grantor;

(n)

All Supporting Obligations of Grantor;

(o)

All property of Grantor held by any Secured Party, or any other party for whom any Secured Party is acting as agent hereunder, including, without limitation, all property of every description now or hereafter in the possession or custody of or in transit to any Secured Party or such other party for any purpose, including, without limitation, safekeeping, collection or pledge, for the account of Grantor, or as to which Grantor may have any right or power;

(p)

All other goods and personal property of Grantor, wherever located, whether tangible or intangible, and whether now owned or hereafter acquired, existing, leased or consigned by or to Grantor; and

(q)

To the extent not otherwise included, all Proceeds of each of the foregoing and all accessions to, substitutions and replacements for and rents, profits and products of each of the foregoing.

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Notwithstanding the foregoing provisions of this Section 2 , the grant, assignment and transfer of a security interest as provided herein shall not extend to, and the term “ Collateral ” shall not include: (a) “intent-to-use” trademarks at all times prior to the first use thereof, whether by the actual use thereof in commerce, the recording of a statement of use with the United States Patent and Trademark Office or otherwise; (b) any Contract, Instrument or Chattel Paper in which a Grantor has any right, title or interest if and to the extent such Contract, Instrument or Chattel Paper includes a provision containing a restriction on assignment such that the creation of a security interest in the right, title or interest of such Grantor therein would be prohibited and would, in and of itself, cause or result in a default thereunder enabling another person party to such Contract, Instrument or Chattel Paper to enforce any remedy with respect thereto; provided that the foregoing exclusion shall not apply if (i) such prohibition has been waived or such other person has otherwise consented to the creation hereunder of a security interest in such Contract, Instrument or Chattel Paper or (ii) such prohibition would be rendered ineffective pursuant to Sections 9-407(a) or 9-408(a) of the UCC, as applicable and as then in effect in any relevant jurisdiction, or any other applicable law (including the Bankruptcy Code) or principles of equity); provided further that immediately upon the ineffectiveness, lapse or termination of any such provision, the Collateral shall include, and each Grantor shall be deemed to have granted a security interest in, all its rights, title and interests in and to such Contract, Instrument or Chattel Paper as if such provision had never been in effect; and provided further that the foregoing exclusion shall in no way be construed so as to limit, impair or otherwise affect any Secured Party’s unconditional continuing security interest in and to all rights, title and interests of each Grantor in or to any payment obligations or other rights to receive monies due or to become due under any such Contract, Instrument or Chattel Paper and in any such monies and other proceeds of such Contract, Instrument or Chattel Paper; or (c) any Equipment subject to Permitted Liens in cases where the secured party has prohibited additional Liens.

RIGHTS OF SECURED PARTIES; COLLECTION OF ACCOUNTS.

(a)

Notwithstanding anything contained in this Security Agreement to the contrary, each Grantor expressly agrees that it shall remain liable under each of its Contracts and each of its Licenses to observe and perform all the conditions and obligations to be observed and performed by it thereunder and that it shall perform all of its duties and obligations thereunder, all in accordance with and pursuant to the terms and provisions of each such Contract or License. No Secured Party shall have any obligation or liability under any Contract or License by reason of or arising out of this Security Agreement or the granting to the Secured Parties of a lien therein or the receipt by any Secured Party of any payment relating to any Contract or License pursuant hereto, nor shall any Secured Party be required or obligated in any manner to perform or fulfill any of the obligations of any Grantor under or pursuant to any Contract or License, or to make any payment, or to make any inquiry as to the nature or the sufficiency of any payment received by it or the sufficiency of any performance by any party under any Contract or License, or to present or file any claim, or to take any action to collect or enforce any performance or the payment of any amounts which may have been assigned to it or to which it may be entitled at any time.

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(b)

Each Secured Party authorizes each Grantor to collect its Accounts, provided that such collection is performed in a prudent and businesslike manner, and the Secured Parties may, upon the occurrence and during the continuation of any Event of Default, limit or terminate said authority at any time. Upon the occurrence and during the continuance of any Event of Default, at the request of the Majority Lenders, Grantors shall deliver all original and other documents evidencing and relating to the performance of labor or service which created such Accounts, including, without limitation, all original orders, invoices and shipping receipts.

(c)

Any Secured Party may at any time, upon the occurrence and during the continuance of any Event of Default and the written consent of the Majority Lenders, without notifying Grantors of its intention to do so, notify Account Debtors of Grantors, parties to the Contracts of Grantors, obligors in respect of Instruments of Grantors and obligors in respect of Chattel Paper of Grantors that the Accounts and the right, title and interest of Grantors in and under such Contracts, Instruments and Chattel Paper have been assigned to the Secured Parties and that payments shall be made directly to the Secured Parties. Upon the request of the Majority Lenders, each Grantor shall so notify such Account Debtors, parties to such Contracts, obligors in respect of such Instruments and obligors in respect of such Chattel Paper. Upon the occurrence and during the continuance of any Event of Default, any Secured Party may, in its name or in the name of other Secured Parties, communicate with such Account Debtors, parties to such Contracts, obligors in respect of such Instruments and obligors in respect of such Chattel Paper to verify with such parties, to such Secured Party’s satisfaction, the existence, amount and terms of any such Accounts, Contracts, Instruments or Chattel Paper.

REPRESENTATIONS AND WARRANTIES . Each Grantor hereby represents and warrants to the Secured Parties that:

(a)

Except for the security interest granted to the Secured Parties under this Security Agreement and Permitted Liens, Grantor is the sole legal and equitable owner of each item of the Collateral in which it purports to grant a security interest hereunder, having good and marketable title thereto, free and clear of any and all Liens.

(b)

No effective security agreement, financing statement, equivalent security or lien instrument or continuation statement covering all or any part of the Collateral exists, except for Permitted Liens.

(c)

This Security Agreement creates a legal and valid security interest on and in all of the Collateral in which Grantor now has rights and will create a legal and valid security interest in the Collateral in which Grantor later acquires rights.

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(d)

Grantor’s taxpayer identification number is, and chief executive office, principal place of business, and the place where Grantor maintains its records concerning the Collateral are presently located at the address set forth on the signature page hereof. If Grantor is a corporation, limited liability company, limited partnership, corporate trust or other registered organization, the State (or if not a state, the other jurisdiction) under whose law such registered organization was organized is set forth on the signature page hereof. The Collateral, other than Deposit Accounts, Securities Accounts, Commodity Accounts and motor vehicles and other mobile goods of the type contemplated in Section 9103(3)(a) of the UCC, is presently located at such address and at such additional addresses set forth on Schedule A attached hereto.

(e)

The name and address of each depository institution at which Grantor maintains any Deposit Account and the account number and account name of each such Deposit Account is listed on Schedule B attached hereto. The name and address of each securities intermediary or commodity intermediary at which Grantor maintains any Securities Account or Commodity Account and the account number and account name is listed on Schedule B attached hereto. Grantor agrees to notify the Secured Parties from time to time within five (5) business days after opening any additional Deposit Account, Securities Account or Commodity Account, or closing or changing the account name or number on any existing Deposit Account, Securities Account, or Commodity Account.

(f)

None of the Investment Property of Grantor has been transferred in violation of the securities registration, securities disclosure or similar laws of any jurisdiction to which such transfer may be subject.

(g)

All Copyrights, Copyright Licenses, Patents, Patent Licenses, Trademarks and Trademark Licenses now owned, held or in which Grantor otherwise has any interest are listed on Schedule C attached hereto. Grantor shall amend Schedule C from time to time within twenty (20) business days after the filing of any application for a Patent, Trademark or Copyright or the issuance of any Patent or registration of any Trademark or Copyright to reflect any additions to or deletions from this list. Except as set forth on Schedule C , none of the Patents, Trademarks or Copyrights has been licensed to any third party.

COVENANTS . Each Grantor covenants and agrees with the Secured Parties that from and after the date of this Security Agreement and until the Secured Obligations have been performed and paid in full:

5.1.

Disposition of Collateral. Subject to the next sentence of this Section 5.1 , Grantor shall not sell, lease, transfer or otherwise dispose of any of the Collateral, or attempt or contract to do so, other than (a) the sale of Inventory; (b) the granting of non-exclusive Licenses or exclusive Licenses if the grant of an exclusive License is approved by the Board of the Directors of the Grantor; and (c) the disposal of worn-out or obsolete Equipment, all in the ordinary course of Grantor’s business.

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5.2.

Change of Jurisdiction of Organization, Relocation of Business or Collateral. Grantor shall not change its jurisdiction of organization, relocate its chief executive office, principal place of business or its records, or allow the relocation of any Collateral (except as allowed pursuant to Section 5.1 immediately above) from such address(es) provided to the Secured Parties pursuant to Section 4(d) above without thirty (30) days prior written notice to the Secured Parties.

5.3.

Limitation on Liens on Collateral. Grantor shall not, directly or indirectly, create, permit or suffer to exist, and shall defend the Collateral and any other assets of Grantor of any kind (including real property) against and take such other action as is necessary to remove, any Lien on the Collateral or any other such property, except (a) Permitted Liens and (b) the Lien granted to the Secured Parties under this Security Agreement. Grantor shall use its commercially reasonable efforts to further defend the right, title and interest of the Secured Parties in and to any of Grantor’s rights under the Chattel Paper, Contracts, Documents, General Intangibles, Instruments and Investment Property and to the Equipment and Inventory and in and to the Proceeds thereof against the claims and demands of all persons whomsoever.

5.4.

Limitations on Modifications of Accounts, Etc. Upon the occurrence and during the continuance of any Event of Default, Grantor shall not, without the Majority Lenders’ prior written consent which shall not be unreasonably withheld, grant any extension of the time of payment of any of the Accounts, Chattel Paper, Instruments or amounts due under any Contract or Document, compromise, compound or settle the same for less than the full amount thereof, release, wholly or partly, any person liable for the payment thereof, or allow any credit or discount whatsoever thereon other than trade discounts and rebates granted in the ordinary course of Grantor’s business.

5.5.

Insurance. Grantor shall maintain reasonable insurance policies insuring the Collateral against loss or damage from such risks and in such amounts and forms and with such companies as are customarily maintained by businesses similar to Grantor.

5.6.

Taxes, Assessments, Etc. Grantor shall pay promptly when due all property and other taxes, assessments and government charges or levies imposed upon, and all claims (including claims for labor, materials and supplies) against, the Equipment, Fixtures or Inventory, except to the extent the validity thereof is being contested in good faith and adequate reserves are being maintained in connection therewith.

5.7.

Maintenance of Records. Grantor shall keep and maintain at its own cost and expense reasonably satisfactory and complete records of the Collateral. Grantor shall not create any Chattel Paper without placing a legend on the Chattel Paper acceptable to the Majority Lenders indicating that the Secured Parties have a security interest in the Chattel Paper.

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5.8.

Registration of Intellectual Property Rights. Grantor shall promptly register or cause to be registered (to the extent not already registered) the most recent version of any Copyright and any Copyright License and any Patent, Patent License, Trademark or Trademark License, which, individually or in the aggregate, is material to the conduct of Grantor’s business, with the United States Copyright Office or Patent and Trademark Office or similar offices in overseas jurisdictions, as applicable, including, without limitation, in all such cases, the filing of applications for renewal, affidavits of use, affidavits of noncontestability and opposition and interference and cancellation proceedings. Grantor shall register or cause to be registered with the United States Copyright Office or Patent and Trademark Office or similar offices in overseas jurisdictions, as applicable, those additional rights and interests developed or acquired by Grantor after the date of this Security Agreement, including, without limitation, any additions to the rights and interests of Grantor listed on Schedule C hereto, prior to the sale nr licensing of any product containing such rights and interests.

5.9.

Notification Regarding Changes in Intellectual Property. Grantor shall:

(a)

promptly advise the Secured Parties of any subsequent ownership right or interest of the Grantor in or to any Copyright, Patent, Trademark or License not specified on Schedule C hereto and shall permit the Secured Parties to amend such Schedule, as necessary, to reflect any addition or deletion to such ownership rights; and

(b)

promptly give Secured Parties written notice of any applications or registrations of intellectual property rights filed with the United States Patent and Trademark Office and the United States Copyright Office or similar offices in overseas jurisdictions, including the date of such filing and the registration or application numbers, if any.

5.10.

Defense of Intellectual Property. Grantor shall (a) use its commercially reasonable efforts to protect, defend and maintain the validity and enforceability of the Copyrights, Patents and Trademarks, (b) use its commercially reasonable efforts to detect infringements of the Copyrights, Patents and Trademarks and promptly advise the Secured Parties in writing of material infringements detected and (c) not allow any Copyrights, Patents or Trademarks to be abandoned, forfeited or dedicated to the public without the written consent of the Majority Lenders unless reasonable business practice would determine that any such abandonment is appropriate.

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5.11.

Further Assurances; Pledge of Instruments. At any time and from time to time, upon the written request of the Majority Lenders, and at the sole expense of Grantor, Grantor shall promptly and duly execute and deliver any and all financing statements, fixture filings, security agreements, pledges, assignments, endorsements of certificates of title, mortgages, deeds of trust, opinions of counsel, and all other documents (collectively, the “ Additional Documents ”) and take such further action as the Majority Lenders may reasonably deem necessary or desirable to obtain the full benefits of this Security Agreement, including, without limitation, (a) using its commercially reasonable efforts to secure all consents and approvals necessary or appropriate for the grant of a security interest to the Secured Parties in any Contract held by Grantor or in which Grantor has any right or interest not heretofore assigned; (b) executing, delivering and causing to be filed any financing or continuation statements (including “in lieu” continuation statements) under the UCC with respect to the security interests granted hereby; (c) filing or cooperating with the Secured Parties in filing any forms or other documents required to be recorded with the United States Patent and Trademark Office, United States Copyright Office or similar offices in overseas jurisdictions, or any actions, filings, recordings or registrations in any foreign jurisdiction or under any international treaty, required to secure or protect the Secured Parties’ interest in Grantor’s Collateral; (d) transferring Grantor’s Collateral to the Secured Parties’ possession (only if a security interest in such Collateral can be perfected by possession); (e) at any Secured Party’s reasonable request, placing the interest of the Secured Parties as lienholder on the certificate of title (or similar evidence of ownership) of any vehicle, watercraft or other Equipment constituting Collateral owned by Grantor which is covered by a certificate of title (or similar evidence of ownership); (f) at any Secured Party’s reasonable request, executing and delivering or causing to be delivered written notice to insurers of the Secured Parties’ security interest in, or claim in or under, any policy of insurance (including unearned premiums); and (g) at the Majority Lenders’ reasonable request, using its commercially reasonable efforts to obtain acknowledgments from bailees having possession of any Collateral and waivers of liens from landlords and mortgagees of any location where any of the Collateral may from time to time be stored or located. Any Secured Party may at any time and from time to time file Additional Documents that describe the Collateral as all assets of Grantor or words of similar effect. To the maximum extent permitted by law, any Additional Documents may be signed by any Secured Party on behalf of Grantor and may be filed at any time in any jurisdiction. Grantor also hereby authorizes any Secured Party to file any such Additional Documents (including “in lieu” continuation statements) without the signature of Grantor. If any amount payable under or in connection with any of the Collateral is or shall become evidenced by any Instrument, such Instrument, other than checks and notes received in the ordinary course of business and any Instrument in the outstanding or stated amount of less than twenty-five thousand dollars ($25,000), shall be duly endorsed in a manner reasonably satisfactory to the Majority Lenders and delivered to the Secured Parties promptly and in any event within five (5) business days of Grantor’s receipt thereof.

RIGHTS AND REMEDIES UPON DEFAULT. After any Event of Default shall have occurred and while such Event of Default is continuing:

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(a)

Upon the written consent of the Majority Lenders, the Secured Parties may exercise in addition to all other rights and remedies granted to it under this Security Agreement, the Intercreditor Agreement, the Guaranty or the Notes and under any other instrument or agreement securing, evidencing or relating to the Secured Obligations, all rights and remedies of a secured party under the UCC. Without limiting the generality of the foregoing, each Grantor expressly agrees that in any such event the Secured Parties, without demand of performance or other demand, advertisement or notice of any kind (except the notice specified below of time and place of public or private sale) to or upon such Grantor or any other person (all and each of which demands, advertisements and notices are hereby expressly waived to the maximum extent permitted by the UCC and other applicable law), may (i) reclaim, take possession, recover, store, maintain, finish, repair, prepare for sale or lease, shop, advertise for sale or lease and sell or lease (in the manner provided herein) the Collateral, and in connection with the liquidation of the Collateral and collection of the accounts receivable pledged as Collateral, use any Trademark, Copyright, or process used or owned by a Grantor and (ii) forthwith collect, receive, appropriate and realize upon the Collateral, or any part thereof, and may forthwith sell, lease, assign, give an option or options to purchase or sell or otherwise dispose of and deliver said Collateral (or contract to do so), or any part thereof, in one or more parcels at public or private sale or sales, at any exchange or broker’s board or at any Secured Party’s offices or elsewhere at such prices as they may deem best, for cash or on credit or for future delivery without assumption of any credit risk. To the extent a Grantor has the right to do so, each Grantor authorizes any Secured Party, on the terms set forth in this Section 6 to enter the premises where the Collateral is located during normal business hours, to take possession of the Collateral, or any part of it, and to pay, purchase, contact, or compromise any encumbrance, charge, or lien which, in the opinion of any Secured Party, appears to be prior or superior to its security interest. Any Secured Party shall have the right upon any such public sale or sales, and, to the extent permitted by law, upon any such private sale or sales, to purchase the whole or any part of said Collateral so sold, free of any right or equity of redemption, which equity of redemption each Grantor hereby releases. Each Grantor further agrees, at the Majority Lenders’ request, to assemble its Collateral and make it available to the Secured Parties at places which the Secured Parties shall reasonably select, whether at Grantor’s premises or elsewhere. The Secured Parties shall apply the net proceeds of any such collection, recovery, receipt, appropriation, realization or sale as provided in Section 6(f) below and only after so paying over such net proceeds and after the payment by the Secured Parties of any other amount required by any provision of law, remit the surplus from the Secured Parties’ account, if any, to Grantors. To the maximum extent permitted by applicable law, each Grantor waives all claims, damages, and demands against the Secured Parties arising out of the repossession, retention or sale of the Collateral. Each Grantor agrees that the Secured Parties need not give more than ten (10) days’ notice of the time and place of any public sale or of the time after which a private sale may take place and that such notice is reasonable notification of such matters. Each Grantor shall remain liable for any deficiency if the proceeds of any sale or disposition of its Collateral are insufficient to pay all amounts to which the Secured Parties are entitled from Grantor, such Grantor also being liable for the attorney costs of any attorneys employed by the Secured Parties to collect such deficiency.

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(b)

As to any Collateral constituting certificated securities or uncertificated securities, if, at any time when the Secured Parties shall determine to exercise their right to sell the whole or any part of such Collateral hereunder, such Collateral or the part thereof to be sold shall not, for any reason whatsoever, be effectively registered under Securities Act of 1933, as amended (as so amended the “ Act ”), the Secured Parties may, in their discretion (subject only to applicable requirements of law), sell such Collateral or part thereof by private sale in such manner and under such circumstances as the Secured Parties may deem necessary or advisable, but subject to the other requirements of this Section 6(b) , and shall not be required to effect such registration or cause the same to be effected. Without limiting the generality of the foregoing, in any such event the Secured Parties may, in their discretion, (i) in accordance with applicable securities laws, proceed to make such private sale notwithstanding that a registration statement for the purpose of registering such Collateral or part thereof could be or shall have been filed under the Act; (ii) approach and negotiate with a single possible purchaser to effect such sale; and (iii) restrict such sale to a purchaser who will represent and agree that such purchaser is purchasing for its own account, for investment, and not with a view to the distribution or sale of such Collateral or part thereof. In addition to a private sale as provided above in this Section 6(b) , if any of such Collateral shall not be freely distributable to the public without registration under the Act at the time of any proposed sale hereunder, then the Secured Parties shall not be required to effect such registration or cause the same to be effected but may, in their discretion (subject only to applicable requirements of law), require that any sale hereunder (including a sale at auction) be conducted subject to such restrictions as the Secured Parties may, in their discretion, deem necessary or appropriate in order that such sale (notwithstanding any failure so to register) may be effected in compliance with the Bankruptcy Code and other laws affecting the enforcement of creditors’ rights and the Act and all applicable state securities laws.

(c)

Each Grantor agrees that in any sale of any of such Collateral, whether at a foreclosure sale or otherwise, the Secured Parties are hereby authorized to comply with any limitation or restriction in connection with such sale as it may be advised by counsel is necessary in order to avoid any violation of applicable law (including compliance with such procedures as may restrict the number of prospective bidders and purchasers, require that such prospective bidders and purchasers have certain qualifications and restrict such prospective bidders and purchasers to persons who will represent and agree that they are purchasing for their own account for investment and not with a view to the distribution or resale of such Collateral), or in order to obtain any required approval of the sale or of the purchaser by any governmental authority, and each Grantor further agrees that such compliance shall not result in such sale being considered or deemed not to have been made in a commercially reasonable manner, nor shall the Secured Parties be liable nor accountable to a Grantor for any discount allowed by the reason of the fact that such Collateral is sold in compliance with any such limitation or restriction.

(d)

Each Grantor also agrees to pay all fees, costs and expenses of the Secured Parties, including, without limitation, reasonable attorneys’ fees, incurred in connection with the enforcement of any of their rights and remedies hereunder.

(e)

Each Grantor hereby waives presentment, demand, protest or any notice (to the maximum extent permitted by applicable law) of any kind in connection with this Security Agreement or any Collateral.

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(f)

Subject to the terms of the Intercreditor Agreement, the Proceeds of any sale, disposition or other realization upon all or any part of the Collateral shall be distributed by the Secured Parties in the following order of priorities:

FIRST , to each Secured Party in an amount sufficient to pay in full the reasonable costs of such Secured Party in connection with such sale, disposition or other realization, including all fees, costs, expenses, liabilities and advances incurred or made by any Secured Party in connection therewith, including, without limitation, reasonable attorneys’ fees;

SECOND , to the Secured Parties in amounts proportional to the Pro Rata share of the then unpaid Secured Obligations of each Secured Party; and

FINALLY , upon payment in full of the Secured Obligations, to each Grantor or its representatives, in accordance with the UCC or as a court of competent jurisdiction may direct.

(g)

The costs of enforcing or pursuing any right or remedy hereunder, including without limitation any repossession, sale, possession and management (including, without limitation, reasonable attorneys’ fees), and distribution shall be borne Pro Rata by the Secured Parties. Each Secured Party shall reimburse the other Secured Parties, as applicable, for its Pro Rata share of all such costs promptly upon demand.

ACTIONS BY THE SECURED PARTIES AND AMENDMENTS. All actions, omissions and decisions of the Secured Parties hereunder or any amendment of this Security Agreement or any Note (each called herein an “ Act of the Secured Parties ”) shall be determined by and require the written consent of the Majority Lenders. Each Secured Party shall take such actions and execute such documents as may be necessary to confirm or accomplish any Act of the Secured Parties. Notwithstanding the foregoing, the consent of each affected Secured Party shall be necessary to do the following to any Note:

(a)

reduce the percentage of the principal and interest amount of Loans whose holders must consent to constitute Majority Lenders’ consent;

(b)

reduce the rate of or change the time for payment of interest on any Loan;

(c)

reduce the principal of or change the fixed maturity of any Loan;

(d)

make any change in the terms of any Note that adversely affects the right to convert any Note or increases the conversion price of such Note (as described in such Note); or

(e)

make any Loan payable in money other than that stated in the Purchase Agreements.

-15-

UNEQUAL PAYMENT BY GRANTORS. Each Secured Party agrees that if it shall obtain or receive, through the exercise of any right granted to the Secured Parties under this Security Agreement, the Intercreditor Agreement, the Guaranty, the Notes or the Purchase Agreement or by applicable law, including, but not limited to any right of set-off, any secured claim under Section 506 of the Bankruptcy Code or any other security or interest, any payment or payments greater than its Pro Rata share of all Loans, as measured immediately prior to the receipt of such payment or payments, then (a) such Secured Party shall promptly purchase at par (and shall be deemed to have thereupon purchased) from other Secured Parties, a participation in the Loans of such other Secured Parties, so that each Secured Party shall have received payments in proportion to its Pro Rata share immediately prior to such transactions and (b) such other adjustments shall be made from time to time as shall be equitable to ensure that the Secured Parties share the benefits of such payment on a Pro Rata basis. The term “Loan” as used in this paragraph shall include accrued interest thereon.

INDEMNITY. Each Grantor agrees to defend, indemnify and hold harmless the Secured Parties and their officers, employees, and agents against (a) all obligations, demands, claims, and liabilities claimed or asserted by any other party in connection with the transactions contemplated by this Security Agreement and (b) all losses or expenses in any way suffered, incurred, or paid by any Secured Party as a primary and direct result of transactions between any Secured Party and any Grantor, whether under this Security Agreement or otherwise (including without limitation, reasonable attorneys fees and expenses), except for losses arising from or out of such Secured Party’s negligence, bad faith or willful misconduct.

10.

REINSTATEMENT. This Security Agreement shall remain in full force and effect and continue to be effective should any petition be filed by or against any Grantor for liquidation or reorganization, should any Grantor become insolvent or make an assignment for the benefit of creditors or should a receiver or trustee be appointed for all or any significant part of any Grantor’s property and assets, and shall continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Secured Obligations, or any part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee of the Secured Obligations, whether as a “voidable preference,” “fraudulent conveyance,” or otherwise, all as though such payment or performance had not been made. In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned, the Secured Obligations shall be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.

11.

MISCELLANEOUS.

11.1.

Waivers; Modifications. None of the terms or provisions of this Security Agreement may be waived, altered, modified or amended except by an instrument in writing, duly executed by each Grantor and the Majority Lenders. Each Secured Party acknowledges that because this Security Agreement may be amended with the consent of the Majority Lenders, each Secured Party’s rights hereunder may be amended or waived without such Secured Party’s consent.

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11.2.

Termination of this Security Agreement. Subject to Section 10 hereof, this Security Agreement shall terminate upon (i) the payment and performance in full of the Secured Obligations or (ii) the conversion of the Notes in accordance with their terms, whichever occurs first.

11.3.

Successor and Assigns. This Security Agreement and all obligations of Grantors hereunder shall be binding upon the successors and assigns of Grantors, and shall, together with the rights and remedies of the Secured Parties hereunder, inure to the benefit of the Secured Parties, any future holder of any of the indebtedness and their respective successors and assigns. No sales of participations, other sales, assignments, transfers or other dispositions of any agreement governing or instrument evidencing the Secured Obligations or any portion thereof or interest therein shall in any manner affect the lien granted to the Secured Parties hereunder.

11.4.

Governing Law. In all respects, including all matters of construction, validity and performance, this Security Agreement and the Secured Obligations arising hereunder shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware applicable to contracts made and performed in such state, without regard to the principles thereof regarding conflict of laws, except to the extent that the UCC provides for the application of the law of a different jurisdiction.

11.5.

Counterparts. This Security Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instruments.

[Signature pages follow]

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IN WITNESS WHEREOF , each of the parties hereto has caused this Security Agreement to be executed and delivered by its dilly authorized officer on the date first set forth above.


GRANTORS:

IGI LABORATORIES, INC ., AS GRANTOR			ADDRESS :

			105 Lincoln Avenue
By:		/s/ Rajiv Mathur	Buena, New Jersey 08310

Printed Name:		Rajiv Mathur	TAXPAYER IDENTIFICATION NUMBER

Title:		President & CEO	01-0355758

			JURISDICTION OF ORGANIZATION: DELAWARE

IMMUNOGENETICS, INC., AS GRANTOR			ADDRESS :

			105 Lincoln Avenue
By:		/s/ Rajiv Mathur	Buena, New Jersey 08310

Printed Name:		Rajiv Mathur	TAXPAYER IDENTIFICATION NUMBER

Title:		President & CEO	52-1521639

			JURISDICTION OF ORGANIZATION: DELAWARE

ACCEPTED AND ACKNOWLEDGED BY:

LIFE SCIENCES OPPORTUNITIES FUND II L.P., AS SECURED PARTY			LIFE SCIENCES OPPORTUNITIES FUND (INSTITUTIONAL) II, L.P., AS SECURED PARTY

By:	Signet Healthcare Partners, G.P., its General Partner		By:	Signet Healthcare Partners, G.P., its General Partner

By:		/s/ James C. Gale	By:		/s/ James C. Gale

Printed Name:		James C. Gale	Printed Name:		James C. Gale

Title:		Managing Partner	Title:		Managing Partner

[Signature Page to the Security Agreement]

Schedule A

Location of Collateral

105 Lincoln Avenue, Buena, New Jersey, Buena Vista Township, 08310

Little Linc Warehouse, Lincoln Avenue, Vineland, New Jersey, 08360

Schedule B

Deposit, Securities and Commodities Accounts


Name	Address	Account Number	Account Name
Bank of America	3680 East Landis Avenue, Vineland, NJ 08360	0094 1955 8100	IGI, Inc. Funding Account
Bank of America	3680 East Landis Avenue, Vineland, NJ 08360	0094 1955 8071	IGI, Inc. Operating Account
Bank of America	3680 East Landis Avenue, Vineland, NJ 08360	0094 1955 8098	IGI, Inc. Payroll
Bank of America	3680 East Landis Avenue, Vineland, NJ 08360	0094 1955 8055	IGI, Inc. Money Market Account
Bank of America	3680 East Landis Avenue, Vineland, NJ 08360	0038 1259 8299	IGI, Inc.
First National Merchant Solutions	P.O. Box 3190, Omaha, NE 68103-0190	Merchant #8388520	IGI, Inc.

Schedule C

Intellectual Property

Patents


Docket No .	Application Date or First Claimed	U.S. Patent No.	Inventor(s)	Title	Issue Date
NVR-041	March 13, 1987	5,104,736	WALLACH	REINFORCED PAUCILAMELLAR LIPID VESICLES	April 14, 1992
NVR- 031CN	March 13, 1987	5,147,723	WALLACH	PAUCILAMELLAR LIPID VESICLES	September 15, 1992
NVR-078	March 3, 1988	5,160,669	WALLACH ET AL.	METHOD OF MAKING OIL FILLED PAUCILAMELLAR LIPID VESICLES	November 3, 1992
NVR- 046C2	March 13, 1987	5,234,767	WALLACH	HYBRID PAUCILAMELLAR LIPID VESICLES	August 10, 1993
NVR- 091CN	March 28, 1991	5,256,422	ALBERT ET AL.	LIPID VESICLE CONTAINING WATER- IN-OIL EMULSIONS	October 26, 1993
NVR-121	September 17, 1991	5,260,065	MATHUR ET AL.	BLENDED LIPID VESICLES	November 9, 1993
NVR-215	November 8, l993	5,405,615	MATHUR	SUCROSE DISTEARATE LIPID VESICLES	April 11, l995
NVR-214	November 8, l993	5,439,967	MATHUR	PROPYLENE GLYCOL STEARATE VESICLES	August 8, l995


NVR- 031CN3	February 3, l994	5,474,848	WALLACH	PAUCILAMELLAR LIPID VESICLES	December 12, l995
NVR- 146CN	November 7, 1994	5,510,117	ABATE	ENTRAPMENT VEHICLE AND METHOD	April 23, 1996
NVR- 046C4	May 31, l995	5,628,936	WALLACH	HYBRID PAUCILAMELLAR LIPID VESICLES	May 13, l997
NVR- 209C2	September 17, 1991	5,643,600	MATHUR	LIPID VESICLES CONTAINING AVOCADO OIL UNSAPONIFIABLES	July 1, 1997
IMH-374	April 11, 1997	5,756,014	MATHUR	HEAT RESISTANT LIPID VESICLES	May 26, 1998
IMH-386 (IGEN)	October 2, 1998	6,251,425	MATHUR	GLUCOSIDE- PACILLAMELAR VESICLES	June 26, 2001
IMH-392 (IGEN)	June 10, 1999	6,087,393	MATHUR	STABILIZED VITAMIN C FORMULATIONS	July 11, 2000
IMH-395 (IGEN)	September 15, 1999	6,309,664 B1	MATHUR ET AL.	METHODS, USES AND COMPOSITIONS OF FLUID PETROLATUM	October 30, 2001
IMH-392 (IGEN)	May 15, 2000	6,211,231 B1	MATHUR	STABILIZED VITAMIN C FORMULATIONS	April 3, 2001
	Sept. 25, 2003	7,205,006	MATHUR, LAWRENCE & MILLS	MAHONIA AQUIFOLIUM EXTRACT, EXTRACTION PROCESS & PHARMACEUTICAL COMPOSITION CONTAINING THE SAME	April 17, 2007
12/017,932	January 22, 2008	12/017,932	MATHUR, LAWRENCE & LORENZO	LIPID DERIVED FROM OLIVE OIL FATTY ACIDS
NVR-083	February 12, 1991	5,164,191	TABIBI ET AL.	LIPID VESICLES HAVING AN ALKYD AS A WALL-FORMING MATERIAL	November 17, 1992


NVR-082	July 25, 1991	5,213,805	WALLACH ET AL.	LIPID VESICLES HAVING N,N- DIMETHYLAMIDE DERIVATIVES AS THEIR PRIMARY LIPID	May 25, 1993
NVR-086	March 3, 1988	5,219,538	HENDERSON ET AL.	GAS AND OXYGEN CARRYING LIPID VESICLES	June 15, 1993
NVR-073	March 9, 1989	5,234,915	MATHUR ET AL.	BIODEGRADABLE GEL	August 10, 1993
NVR- 148CN	December 2, l992	5,490,985	WALLACH ET AL.	EXTENDED DURATION ANTACID PRODUCT	February 13, l996
	December 23, 1996	5,776,536	MATHUR, TREMBLAY	REDUCED FAT CHOCOLATE AND METHOD OF MANUFACTURE	July 7, 1998
NVR-282	May 20, l994	5,547,677	WRIGHT	ANTIMICROBIAL OIL-IN- WATER EMULSIONS	August 20, l996
NVR-298	October 13, l994	5,549,901	WRIGHT	ANTIMICROBIAL OIL-IN- WATER EMULSIONS	August 27, l996
NVR- 127CN	June 24, l994	5,561,062	VARANELLI ET AL.	METHOD OF INHIBITING VIRAL REPRODUCTION USING NON-PHOSPHOLIPID, PAUCIL AMELLAR LIPOSOMES	October 1, l996
NVR-311	May 18, l995	5,618,840	WRIGHT	ANTIBACTERIAL OIL-IN- WATER EMULSIONS	April 8, l997
NVR-310	January 31, l995	5,629,021	WRIGHT	MICELLAR NANOPARTICLES	May 13, l997


NVR- 216CN	April 11, l995	5,665,380	WALLACH ET AL.	LIPID VESICLE FUSION AS A METHOD OF TRANSMITTING A BIOLOGICALLY ACTIVE MATERIAL TO A CELL	September 9, l997
NVR-325	June 7, 1995	5,730,989	WRIGHT	ORAL VACCINE AGAINST GRAM NEGATIVE BACTERIAL INFECTION (AS AMENDED)	March 24, 1998
NVR- 308CPA	October 6, 1995	5,834,014	WEINER ET AL.	STIMULATION OF HAIR FOLLICES	November 10, 1998
NVR- 299CPA		6,034,073			March 7, 2000
IMH-390 (IGEN)	February 19, 1999	6,080,211	MATHUR	LIPID VESICLE-BASED FUEL ADDITIVES AND LIQUID ENERGY SOURCES CONTAINING SAME	June 27, 2000
IMH- 390CN (IGEN)	June 26, 2000	6,371,998 B1	MATHUR	LIPID VESICLE-BASED FUEL ADDITIVES AND LIQUID ENERGY SOURCES CONTAINING SAME	April 16, 2002
NVR- 213CPCP A	April 24, 1997	6,387,373 B1	WRIGHT, ET AL.	VACCINES CONTAINING PAUCILLAMELLAR LIPID VESICLES AS IMMUNOLOGICAL ADJUVANTS	May 14, 2002

Trademarks


Trademark	Filing Date	Case No.	Registration No.	Renewal Date
Miaj	February 10, 2005	IGW-0001DV	3407385	April 1, 2018
ZAP A SPOT, United States	April 5, 1996	IMH-0353	2047607	March 25, 2017


ZAP A SPOT, Canada	April 3, 1996	IMH-0354	TMA 508885	March 5, 2014
ZAP A SPOT, Mexico	April 17, 1996	IMH-0355	524176	April 17, 2016
ZAP A SPOT, European Community	October 2, 1996	IMH-0362	366690	October 2, 2016
APPLY & DRY, United States	September 23, 1991	NVR-0097	1827972	March 29, 2014
Novasome, United States	May 11, 1989	IMH-0057	1710953	September 1, 2012
Novasome, Spain	June 26, 1993	NVR-0057ES	1769163	June 26, 2013
Novasome, France	July 28, 1993	NVR-0057FR	93478240	July 27, 2013
Novasome, Benelux	September 29, 1993	NVR-0258	544156	September 29, 2013

Copyrights

None.

Licenses

License Agreement by and between Micro Pak, Inc. and Igen, Inc., dated December 13, 1995, as amended

Agreement to Sublicense between Novavax, Inc. and Igen, Inc., dated September 5, 2006

Agreement between Pharmachem Laboratories, Inc. and IGI, Inc., dated July 1, 2007

Mutual Termination Agreement by and between Pharmachem Laboratories, Inc. and IGI Laboratories, Inc. dated June 30, 2008

Exclusivity, Manufacturing and Supply Agreement between Dermworx Incorporated and IGI, Inc., dated August 23, 2007

Exclusivity, Manufacturing and Supply Agreement between Dermworx Incorporated and IGI, Inc., dated November 19, 2007

Technology Rights Agreement by and among IGI, Inc., Igen, Inc. and Vetoquinol USA, Inc., dated May 31, 2002

License Agreement between IGI, Inc., Igen, Inc., Immunigenetics, Inc., and Ethicon, Inc., dated August 28, 1998, as amended March 19, 2002

License and Supply Agreement between IGI, Inc., on behalf of Micro Pak, Inc. and Micro Vesicular Systems, Inc. and Estee Lauder Inc., dated December 2, 1992, as amended August 26, 1994 and November 16, 2004

Manufacturing and Supply Agreement by and among IGI, Inc., Immunogenetics, Inc., Igen, Inc. and Genesis Pharmaceutical Inc., dated February 14, 2001, as amended August 3, 2004 and April 24, 2006

License Agreement by and among IGI, Inc. and Michael Holick and A&D Biosciences Inc., dated December 24, 2003

Sublicense Agreement between IGI, Inc. and Tarpan Therapeutics, Inc., dated April 14, 2004

Sublicense Agreement between IGI, Inc. and Tarpan Therapeutics, Inc., dated May 4, 2004

License Agreement by and between IGI, Inc., Micro Vesicular Systems, Inc., Micro-Pak, Inc. and Johnson & Johnson Consumer Products, Inc., dated March 31, 1995

Manufacturing and Supply Agreement between Dr. Watts Skin Care and Beauty Products LLC, and IGI, Inc., dated August 7, 2007(1)

Manufacturing and Supply Agreement between Biasi Co. and IGI, Inc. dated December 17, 2007(2)

Patent and Know-How License Agreement by and between Perio-Tech Inc. and IGI, Inc., dated February 6, 2006

Novasome Supply and Collaboration Agreement by and between Bharat Biotech International Limited and Novavax Inc., dated March 3, 2006

Avian Flu Supply and Collaboration Agreement by and between Novavax Inc. and Bharat Biotech International Limited, dated March 3, 2006

License Agreement between Igen, Inc. and ImmunoGenetics, Inc., dated December 13, 1995

(1)

While the Company has terminated this agreement for non-payment, pursuant to Section 7.6 thereof, certain obligations survive termination, including warranties, indemnities, payment obligations, confidentiality and limitation of liability.

(2)

While the Company has terminated this agreement for non-payment, pursuant to Section 8.5 thereof, certain obligations survive termination, including warranties, indemnities, payment obligations, confidentiality and limitation of liability.

Domain Names


Website	Current Owner	Domain Name Registry	Status	Renewal Due Date	Creation Date
Askigi.com	SJCOM	eNom, Inc.	Locked	2/4/10	2/4/99
Askigi.net	n/a	n/a	Available for registration	n/a	n/a
igilaboratories.com	unavailable	Network Solutions, LLC	Pending Renewal or Deletion	1/18/09	1/18/08
igilaboratories.net	SJCOM	eNom, Inc.	Locked	1/18/10	1/18/08
igilaboratoriesinc.com	unavailable	Network Solutions, LLC	Pending Renewal or Deletion	1/18/09	1/18/08
igilaboratoriesinc.net	SJCOM	eNom, Inc.	Locked	1/18/10	1/18/08
Igilabs.com	unavailable	Network Solutions, LLC	Pending Renewal or Deletion	1/18/09	1/18/08
Igilabs.net	SJCOM	eNom, Inc.	Locked	1/18/10	1/18/08
igilabsinc.com	unavailable	Network Solutions, LLC	Pending Renewal or Deletion	1/18/09	1/18/08
igilabsinc.net	SJCOM	eNom, Inc.	Locked	1/18/10	1/18/08
miaj.com	Biasi Enterprise Inc.	eNom, Inc.	Active	3/28/10	3/28/05
miaj.net	Wayne Forester	GoDaddy. com	Ok	4/8/09	4/8/08

Exhibit 10.6

INTELLECTUAL PROPERTY SECURITY AGREEMENT

THIS INTELLECTUAL PROPERTY SECURITY AGREEMENT dated as of March 13, 2009 (this “ IP Security Agreement ”), is made by and among IGI LABORATORIES, INC. , a Delaware corporation (“ IGI ”), IMMUNOGENETICS, INC. , a Delaware corporation (“ Subsidiary ”, each of IGI and Subsidiary, a “ Grantor ” and collectively, the “ Grantors ”), and the secured parties listed on the signature pages hereto (each, a “ Secured Party ” and, collectively, the “ Secured Parties ”).

RECITALS

Each Secured Party has agreed to make certain advances of money and to extend certain financial accommodation to Grantors (collectively, the “ Loans ”) as evidenced by those certain Secured Convertible Promissory Notes executed by IGI in favor of each Secured Party (each, a “ Note ” and, collectively, the “ Notes ”) issued under that certain Purchase Agreement, dated as of March 13, 2009, by and among IGI and the Secured Parties (the “ Purchase Agreement ”).

The Secured Parties are willing to make the Loans to Grantors, but only upon the condition precedent, among others, that Grantors shall have executed and delivered to the Secured Parties this IP Security Agreement providing for the grant to the Secured Party of a security interest in all of the Intellectual Property Collateral (as defined below) of the Grantors to secure all of the Secured Obligations (as defined in the Security Agreement) under the Purchase Agreement, the Notes, the Security Agreement dated as of March 13, 2009, by and among Grantors and the Secured Parties (the “ Security Agreement ”) this IP Security Agreement the any other mortgages, pledges, or other collateral documents, and any amendment, amendment and restatement, modification or supplement to any of the foregoing.

The Grantors have agreed to provide the Secured Parties a general security interest in Collateral (as this term is defined in the Security Agreement) and to enter into this IP Security Agreement in addition to, and not in limitation of, the Security Agreement for the purpose of creating, recording, and perfecting the security interest of the Secured Parties in the Intellectual Property Collateral with the United States Patent and Trademarks Office.

AGREEMENT

DEFINED TERMS. Unless otherwise defined or specified herein, terms used in this IP Security Agreement have the meanings provided in the Security Agreement.

GRANT OF SECURITY INTEREST. As collateral security for the full, prompt, complete and final payment and performance when due (whether at stated maturity, by

acceleration or otherwise) of all the Secured Obligations and in order to induce the Secured Parties to cause the Loans to be made, each Grantor hereby assigns, conveys, mortgages, pledges, hypothecates and transfers to the Secured Parties, and hereby grants to the Secured Parties, a security interest in all of such Grantor’s right, title and interest in, to and under the following, whether now owned or hereafter acquired, (all of which being collectively referred to herein as the “ Intellectual Property Collateral ”):

(a)

all of the following in which a Grantor now holds or hereafter acquires any interest: (i) all letters patent of the United States or any other country, all registrations and recordings thereof and all applications for letters patent of the United States or any other country, including, without limitation, registrations, recordings and applications in the United States Patent and Trademark Office or in any similar office or agency of the United States, any state thereof or any other country; (ii) all reissues, divisions, continuations, renewals, continuations-in-part or extensions thereof; (iii) all petty patents, divisionals and patents of addition; (iv) all patents to issue in any such applications; (v) income, royalties, damages, claims and payments now and hereafter due and/or payable with respect to patents, including, without limitation, damages, claims and recoveries for past, present or future infringement; and (vi) rights to sue for past, present and future infringements of any patent, including without limitation with respect to each of the foregoing clauses (i) through (vi), those patents and patent applications listed in Schedule A attached hereto and made a part hereof;

(b)

all of the following in which a Grantor now holds or hereafter acquires any interest: (i) any trademarks, tradenames, corporate names, company names, business names, trade styles, service marks, logos, other source or business identifiers, prints and labels on which any of the foregoing have appeared or appear, designs and general intangibles of like nature, now existing or hereafter adopted or acquired, all registrations and recordings thereof and any applications in connection therewith, including, without limitation, registrations, recordings and applications in the United States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof or any other country (collectively, the “ Marks ”); (ii) any reissues, extensions or renewals thereof; (iii) the goodwill of the business symbolized by or associated with the Marks; (iv) income, royalties, damages, claims and payments now and hereafter due and/or payable with respect to the Marks, including, without limitation, damages, claims and recoveries for past, present or future infringement; and (v) rights to sue for past, present and future infringements of the Marks, including without limitation with respect to each of the foregoing clauses (i) through (v), those trademarks, servicemarks and applications listed in Schedule B attached hereto and made a part hereof;

(c)

all licenses of rights or interests, whether in-bound or out-bound, whether in written or electronic form, now or hereafter owned or acquired or received by a Grantor or in which a Grantor now holds or hereafter acquires or receives any right or interest, including any renewals or extensions of any of the foregoing thereof; and

(d)

To the extent not otherwise included, all Proceeds of each of the foregoing and all accessions to, substitutions and replacements for and rents, profits and products of each of the foregoing.

SECURITY AGREEMENT. This IP Security Agreement has been executed and delivered by the Grantors for the purpose of recording the security interest of the Secured Parties in the Intellectual Property Collateral with the United States Patent and Trademark Office, to the extent it may be so registered therein. The security interest granted hereby has been granted as a supplement to, and not in limitation of, the security interest granted to the Secured Parties under the Security Agreement. The Security Agreement (and all rights and remedies of the Secured Parties thereunder) shall remain in full force and effect in accordance with its terms.

RELEASE OF SECURITY INTEREST. Upon payment in full of all Secured Obligations, the Secured Parties shall, at IGI’s expense, execute and deliver to the Grantors all instruments and other documents as may be necessary or proper to release the lien on any security interest in the Intellectual Property Collateral which has been granted hereunder.

ACKNOWLEDGEMENT. The Grantors do hereby further acknowledge and affirm that the rights and remedies of the Secured Parties with respect to the security interest in the Intellectual Property Collateral granted hereby are more fully set forth in the Security Agreement, the terms and provisions of which (including the remedies provided for therein) are incorporated by references herein as if fully set forth herein.

PURCHASE AGREEMENT. Notwithstanding any other term or provision hereof, in the event that any provisions hereof contradict and are incapable of being construed in conjunction with the provisions of the Purchase Agreement or the Security Agreement, the provisions of the Purchase Agreement shall take precedence over those contained herein and, in particular, if any act of the Company is expressly permitted under the Purchase Agreement or Security Agreement but is permitted hereunder and any encumbrance expressly permitted under the Purchase Agreement or Security Agreement to exist or to remain outstanding shall be permitted hereunder and thereunder.

COUNTERPARTS. This IP Security Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

GOVERNING LAW. This IP Security Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware applicable to contracts made and performed in such state, without regard to the principles thereof regarding conflict of laws, except to the extent that the UCC provides for the application of the law of a different jurisdiction.

[Signature pages follow]

IN WITNESS WHEREOF , each of the parties hereto has caused this IP Security Agreement to be executed and delivered by its duly authorized officer on the date first set forth above.


GRANTORS:
IGI LABORATORIES, INC., as Grantor		ADDRESS:
		105 Lincoln Avenue
By:	/s/ Rajiv Mathur	Buena, New Jersey 08310
Printed Name:	Rajiv Mathur
Title:	President & CEO	TAXPAYER IDENTIFICATION NUMBER
		01-0355758

		JURISDICTION OF ORGANIZATION: DELAWARE

IMMUNOGENETICS, INC., as Grantor		ADDRESS:
		105 Lincoln Avenue
By:	/s/ Rajiv Mathur	Buena, New Jersey 08310
Printed Name:	Rajiv Mathur
Title:	President & CEO	TAXPAYER IDENTIFICATION NUMBER
		52-1521639

		JURISDICTION OF ORGANIZATION: DELAWARE
ACCEPTED AND ACKNOWLEDGED BY:
LIFE SCIENCES OPPORTUNITIES FUND II, L.P., as Secured Party		LIFE SCIENCES OPPORTUNITIES FUND (INSTITUTIONAL) II, L.P., as Secured Party
By: Signet Healthcare Partners, G.P., its General Partner		By: Signet Healthcare Partners, G.P., its General Partner
By:	/s/ James C. Gale	By:	/s/ James C. Gale
Printed Name:	James C. Gale	Printed Name:	James C. Gale
Title:	Managing Partner	Title:	Managing Partner

[Signature Page to the IP Security Agreement]

Schedule A

Patents


Application Date or First Claimed	U.S. Patent No.	Inventor(s)	Title	Issue Date
March 13, 1987	5,104,736	WALLACH	REINFORCED PAUCILAMELLAR LIPID VESICLES	April 14, 1992
March 13, 1987	5,147,723	WALLACH	PAUCILAMELLAR LIPID VESICLES	September 15, 1992
March 3, 1988	5,160,669	WALLACH ET AL.	METHOD OF MAKING OIL FILLED PAUCILAMELLAR LIPID VESICLES	November 3, 1992
March 13, 1987	5,234,767	WALLACH	HYBRID PAUCILAMELLAR LIPID VESICLES	August 10, 1993
March 28, 1991	5,256,422	ALBERT ET AL.	LIPID VESICLE CONTAINING WATER-IN-OIL EMULSIONS	October 26, 1993
September 17, 1991	5,260,065	MATHUR ET AL.	BLENDED LIPID VESICLES	November 9, 1993
November 8, l993	5,405,615	MATHUR	SUCROSE DISTEARATE LIPID VESICLES	April 11, l995
November 8, l993	5,439,967	MATHUR	PROPYLENE GLYCOL STEARATE VESICLES	August 8, l995
February 3, l994	5,474,848	WALLACH	PAUCILAMELLAR LIPID VESICLES	December 12, l995
November 7, 1994	5,510,117	ABATE	ENTRAPMENT VEHICLE AND METHOD	April 23, 1996
May 31, l995	5,628,936	WALLACH	HYBRID PAUCILAMELLAR LIPID VESICLES	May 13, l997
September 17, 1991	5,643,600	MATHUR	LIPID VESICLES CONTAINING AVOCADO OIL UNSAPONIFIABLES	July 1, 1997
April 11, 1997	5,756,014	MATHUR	HEAT RESISTANT LIPID VESICLES	May 26, 1998
October 2, 1998	6,251,425	MATHUR	GLUCOSIDE-PACILLAMELAR VESICLES	June 26, 2001
June 10, 1999	6,087,393	MATHUR	STABILIZED VITAMIN C FORMULATIONS	July 11, 2000
September 15, 1999	6,309,664 B1	MATHUR ET AL.	METHODS, USES AND COMPOSITIONS OF FLUID PETROLATUM	October 30, 2001
May 15, 2000	6,211,231 B1	MATHUR	STABILIZED VITAMIN C FORMULATIONS	April 3, 2001
Sept. 25, 2003	7,205,006	MATHUR, LAWRENCE & MILLS	MAHONIA AQUIFOLIUM EXTRACT, EXTRACTION PROCESS & PHARMACEUTICAL COMPOSITION CONTAINING THE SAME	April 17, 2007


January 22, 2008	12/017,932	MATHUR, LAWRENCE & LORENZO	LIPID DERIVED FROM OLIVE OIL FATTY ACIDS
February 12, 1991	5,164,191	TABIBI ET AL.	LIPID VESICLES HAVING AN ALKYD AS A WALL-FORMING MATERIAL	November 17, 1992
July 25, 1991	5,213,805	WALLACH ET AL.	LIPID VESICLES HAVING N,N- DIMETHYLAMIDE DERIVATIVES AS THEIR PRIMARY LIPID	May 25, 1993
March 3, 1988	5,219,538	HENDERSON ET AL.	GAS AND OXYGEN CARRYING LIPID VESICLES	June 15, 1993
March 9, 1989	5,234,915	MATHUR ET AL.	BIODEGRADABLE GEL	August 10, 1993
December 2, l992	5,490,985	WALLACH ET AL.	EXTENDED DURATION ANTACID PRODUCT	February 13, l996
December 23, 1996	5,776,536	MATHUR, TREMBLAY	REDUCED FAT CHOCOLATE AND METHOD OF MANUFACTURE	July 7, 1998
May 20, l994	5,547,677	WRIGHT	ANTIMICROBIAL OIL-IN-WATER EMULSIONS	August 20, l996
October 13, l994	5,549,901	WRIGHT	ANTIMICROBIAL OIL-IN-WATER EMULSIONS	August 27, l996
June 24, l994	5,561,062	VARANELLI ET AL.	METHOD OF INHIBITING VIRAL REPRODUCTION USING NON-PHOSPHOLIPID, PAUCIL AMELLAR LIPOSOMES	October 1, l996
May 18, l995	5,618,840	WRIGHT	ANTIBACTERIAL OIL-IN-WATER EMULSIONS	April 8, l997
January 31, l995	5,629,021	WRIGHT	MICELLAR NANOPARTICLES	May 13, l997
April 11, l995	5,665,380	WALLACH ET AL.	LIPID VESICLE FUSION AS A METHOD OF TRANSMITTING A BIOLOGICALLY ACTIVE MATERIAL TO A CELL	September 9, l997
June 7, 1995	5,730,989	WRIGHT	ORAL VACCINE AGAINST GRAM NEGATIVE BACTERIAL INFECTION (AS AMENDED)	March 24, 1998
October 6, 1995	5,834,014	WEINER ET AL.	STIMULATION OF HAIR FOLLICES	November 10, 1998
	6,034,073			March 7, 2000
February 19, 1999	6,080,211	MATHUR	LIPID VESICLE-BASED FUEL ADDITIVES AND LIQUID ENERGY SOURCES CONTAINING SAME	June 27, 2000
June 26, 2000	6,371,998 B1	MATHUR	LIPID VESICLE-BASED FUEL ADDITIVES AND LIQUID ENERGY SOURCES CONTAINING SAME	April 16, 2002

April 24, 1997

6,387,373 B1

WRIGHT,
ET AL.

VACCINES CONTAINING
PAUCILLAMELLAR LIPID
VESICLES AS
IMMUNOLOGICAL ADJUVANTS

May 14, 2002

Schedule B

Trademarks


Trademark	Filing Date	Case No.	Registration No.	Renewal Date
Miaj	February 10, 2005	IGW-0001DV	3407385	April 1, 2018
ZAP A SPOT, United States	April 5, 1996	IMH-0353	2047607	March 25, 2017
ZAP A SPOT, Canada	April 3, 1996	IMH-0354	TMA 508885	March 5, 2014
ZAP A SPOT, Mexico	April 17, 1996	IMH-0355	524176	April 17, 2016
ZAP A SPOT, European Community	October 2, 1996	IMH-0362	366690	October 2, 2016
APPLY & DRY, United States	September 23, 1991	NVR-0097	1827972	March 29, 2014
Novasome, United States	May 11, 1989	IMH-0057	1710953	September 1, 2012
Novasome, Spain	June 26, 1993	NVR-0057ES	1769163	June 26, 2013
Novasome, France	July 28, 1993	NVR-0057FR	93478240	July 27, 2013
Novasome, Benelux	September 29, 1993	NVR-0258	544156	September 29, 2013

Exhibit 10.7

INTERCREDITOR AGREEMENT

THIS INTERCREDITOR AGREEMENT (this “Agreement”) is made and entered into as of the 13th day of March, 2009, by and among (i) Life Sciences Opportunities Fund II, L.P., a Delaware limited partnership (“Fund”) and Life Sciences Opportunities Fund (Institutional) II, L.P., a Delaware limited partnership (“Institutional” and together with Fund, the “Life Sciences Lenders”), (ii) Pinnacle Mountain Partners LLC, a New Hampshire limited liability company (“Pinnacle”), and (iii) IGI Laboratories, Inc., a Delaware corporation (“Borrower”).

WHEREAS, pursuant to the terms and provisions of a certain Securities Purchase Agreement, dated as of March 13, 2009 (as the same may be modified or amended from time to time, the “Life Sciences Purchase Agreement”), by and among the Life Sciences Lenders and Borrower, the Life Sciences Lenders purchased, among other things, Secured Convertible Promissory Notes issued by Borrower (together with all extensions, renewals, modifications and substitutions therefor or thereof, collectively, the “Notes”), in the aggregate original principal amount of $4,782,600.00 (the “Life Sciences Loans”); and

WHEREAS, pursuant to the terms and conditions of a certain Loan and Security Agreement, dated as of January 29, 2007, as amended by that certain First Amendment to Loan and Security Agreement, dated as of July 28, 2008, and as further amended by that certain Second Amendment to Loan and Security Agreement, dated as of January 26, 2009 (as the same may be modified or amended from time to time, the “Pinnacle Loan Agreement”), by and between Pinnacle and Borrower, Pinnacle has agreed to make loans and certain other financial accommodations available to the Company in the aggregate maximum principal amount of up to $500,000.00, as evidenced by the Second Amended and Restated Revolving Note, dated as of January 26, 2009 (the “Pinnacle Note”) and secured by, among other things, a first-priority lien on and security interest in certain of the assets of Borrower; and

WHEREAS, as a condition precedent to the Life Sciences Lenders making the Life Sciences Loans available to Borrower, Life Sciences requires that Borrower and Pinnacle enter into this Agreement with the Life Sciences Lenders to confirm the parties’ agreements and understandings with respect to the payment and collection of the Pinnacle Debt, and Pinnacle and Borrower have determined that it is in their best interest and to their financial benefit to do so.

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

Certain Definitions .

As used herein, the following terms shall have the following respective meanings:

“Bankruptcy Code” means Title 11 of the United States Code (11 U.S.C. § 101 et seq .).

“Bankruptcy Proceeding” shall mean any voluntary or involuntary case by or against Borrower under the Bankruptcy Code, or other judicial proceeding for the dissolution, winding up, liquidation, arrangement or reorganization relating to Borrower, or an assignment for the benefit of creditors or any other marshaling of the assets and liabilities of Borrower or otherwise, whether in any bankruptcy, insolvency, arrangement, reorganization or receivership proceedings.

“Collateral” means any asset of Borrower in which Pinnacle and any Life Sciences Lender has a Lien.

“Enforcement Action” shall mean any judicial, arbitral or other proceeding or any other enforcement action of any kind which does not constitute a Restricted Enforcement Action or Prohibited Action.

“Lien” shall mean any pledge, assignment, hypothecation, mortgage, security interest, deposit arrangement, option, conditional sale or title retention contract, sale and leaseback transaction, financing statement filing, lessor’s or lessee’s interest under any lease, subordination of any claim or right, judgment, or any other type of lien, charge, encumbrance, preferential arrangement or other claim or right.

“Pinnacle Debt” shall mean any and all indebtedness, obligations and liabilities, of Borrower to Pinnacle, whether direct or indirect, absolute or contingent, secured or unsecured, now existing or hereafter created or arising, due or to become due, arising under the Pinnacle Debt Documents, together with any renewal or renewals thereof, extension or extensions thereof, or expansions or increases in principal amount thereof, including, without limitation, all present and future indebtedness, obligations and other liabilities of Borrower with respect thereto as debtors-in-possession under any bankruptcy act or code, state or federal law, common law or equitable doctrine and of any trustee, receiver or other party appointed for Borrower under any such laws, doctrine or proceedings, and all interest and other amounts accruing with respect thereto after the filing of any petition under any bankruptcy or similar laws, whether or not such amount is an allowable claim, and further including, without limitation, all rights and remedies of Pinnacle with respect to any collateral for the Pinnacle Debt, any guaranties for the Pinnacle Debt and all other rights and remedies of Pinnacle under the Pinnacle Debt Documents and otherwise with respect to the Pinnacle Debt.

“Pinnacle Default” shall mean the failure by Borrower to comply with the terms of the Pinnacle Debt Documents, which failure continues unremedied beyond the expiration of any applicable notice and/or cure period, including, without limitation, any default in payment of any Pinnacle Debt after acceleration thereof.

“Pinnacle Debt Documents” shall mean the Pinnacle Loan Agreement, the Pinnacle Note and each other document, instrument and/or agreement now existing or hereafter executed, issued and/or delivered in connection with the Pinnacle Loans, in each case as from time to time amended, modified or supplemented in accordance with the terms thereof.

-2-

“Prohibited Action” shall mean any judicial, arbitral or other proceeding or other enforcement action of any kind which (i) seeks to prohibit, restrict, limit or impair the commencement or pursuit by any Life Sciences Lender of any of its rights or remedies against any assets of Borrower securing Life Sciences Debt at any time, (ii) challenges the creation, validity, attachment, perfection, priority or enforceability of any security interest or Lien which the Life Sciences Lenders may now or hereafter have in, to or on any assets of Borrower, or (iii) challenges, or otherwise seeks recourse against a Life Sciences Lender based on any action or inaction by such Life Sciences Lender with respect to its rights to foreclose on, sell and/or otherwise dispose of any assets of Borrower.

“Restricted Enforcement Action” shall mean any involuntary Bankruptcy Proceeding, or any other judicial, arbitral or other proceeding or any other repossession, foreclosure or enforcement action of any kind (other than a Prohibited Action) against Borrower, any assets of Borrower, or any guarantor or pledgor of collateral, other than legal actions (including, without limitation, any suit or action against Borrower to collect principal, interest or other amounts owed to Pinnacle in respect of the Pinnacle Debt) necessary to obtain and maintain a judgment lien against such assets. Without limiting the foregoing, it is expressly understood and agreed that any action to foreclose, repossess, collect or otherwise realize upon any judgment lien obtained against Borrower or any assets of Borrower (including, without limitation, any action to levy upon, sell, transfer or assign any asset of Borrower which may be encumbered by or otherwise subject to such judgment lien), other than any and all actions necessary to obtain and maintain such judgment lien, shall constitute a “Restricted Enforcement Action”.

“Life Sciences Debt” shall mean the indebtedness evidenced by the Notes and any and all other indebtedness, obligations and liabilities of Borrower to any Life Sciences Lender, whether direct or indirect, absolute or contingent, now existing or hereafter created or arising, due or to become due, whether or not arising under the Life Sciences Debt Documents, together with any renewal or renewals thereof, extension or extensions thereof, or expansions or increases in principal amount thereof, including, without limitation, all present and future indebtedness, obligations and other liabilities of Borrower with respect thereto as debtors-in-possession under any bankruptcy act or code, state or federal law, common law or equitable doctrine and of any trustee, receiver or other party appointed for Borrower under any such laws, doctrine or proceedings, and all interest and other amounts accruing with respect thereto after the filing of any petition under any bankruptcy or similar laws, whether or not such amount is an allowable claim, and further including, without limitation, any guaranties of the Life Sciences Debt and all other rights and remedies of the Life Sciences Lenders under the Life Sciences Debt Documents and otherwise with respect to the Life Sciences Debt.

“Life Sciences Debt Default” shall mean the failure by Borrower to comply with the terms of the Life Sciences Debt Documents, which failure continues unremedied beyond the expiration of any applicable notice and/or cure period, including, without limitation, any default in payment of any Life Sciences Debt after acceleration thereof.

-3-

“Life Sciences Debt Documents” shall mean the Notes and the Security Agreement by and among Borrower and the Life Sciences Lenders, dated as of the date hereof, and all other documents, instruments and agreements entered into in connection with the Life Sciences Debt, in each case as from time to time amended, modified or supplemented in accordance with the terms thereof.

All other capitalized terms used but not defined herein shall have the meanings ascribed thereto in the Life Sciences Debt Documents as in effect on the date hereof.

Priorities .

(a)

All Life Sciences Debt and all Pinnacle Debt shall be pari passu in right to the payment, priority, collection and enforcement thereof, except as otherwise set forth in this Agreement.

(b)

Notwithstanding (i) the date, time, method, manner or order of grant, or attachment of any Liens granted to any Life Sciences Lender or Pinnacle in respect of all or any portion of the Collateral; (ii) the order or time of filing or recordation of any document or instrument for perfecting the Liens in favor of any Life Sciences Lender or Pinnacle in any Collateral; (iii) any provision of the UCC, any other applicable law, any of the Pinnacle Debt Documents or the Life Sciences Debt Documents, each Life Sciences Lender and Pinnacle hereby agree that (A) any Lien in respect of all or any portion of the Collateral now or hereafter held by or on behalf of Pinnacle that secures all or any portion of the Pinnacle Debt shall in all respects be pari passu to all Liens granted to the Life Sciences Lenders in such Collateral to secure all or any portion of the Life Sciences Debt and (B) any Lien in respect of all or any portion of the Collateral now or hereafter held by or on behalf of the Life Sciences Lenders that secures all or any portion of the Life Sciences Debt shall in all respects be pari passu to all Liens granted to Pinnacle in such Collateral to secure all or any portion of the Pinnacle Debt.

(c)

In furtherance of the foregoing, all Collateral and all proceeds of Collateral received by any Life Sciences Lender or Pinnacle in connection with any Enforcement Action shall be applied ratably to repay the Pinnacle Debt and the Life Sciences Debt.

(d)

So long as any of the Life Sciences Debt shall remain unpaid, the Life Sciences Lenders may at all times, in their discretion, exercise any and all powers and rights, including without limitation the right to foreclose or otherwise realize upon any Collateral for the Life Sciences Debt in the event of a Life Sciences Debt Default, all without the necessity of obtaining any consent or approval of Pinnacle, nor shall any Life Sciences Lender have any liability to Pinnacle for any action taken or failure to take any action with respect to any Collateral.

-4-

Restriction on Action by Pinnacle .

(a)

Pinnacle may, at any time, commence, continue or participate in any Enforcement Action against Borrower necessary to (i) obtain, preserve and/or protect any monetary judgment (or other judicial remedy not constituting a Prohibited Action) against Borrower and/or any judgment lien against Borrower’s assets securing repayment thereof or (ii) protect their interests in any Bankruptcy Proceeding to preserve their position therein. Notwithstanding the foregoing, so long as all or any part of the Life Sciences Debt shall remain unpaid or outstanding, Pinnacle shall not commence, continue or participate in any Prohibited Action or, except as expressly permitted pursuant to this Agreement, any Restricted Enforcement Action. Pinnacle shall not be permitted to commence a Restricted Enforcement Action except upon the earliest to occur of: (A) the date on which the Life Sciences Debt shall have been accelerated and declared immediately due and payable in full, (B) subject to any applicable bankruptcy rules or regulations (i.e., a stay on enforcement which may be in effect as a result of a Bankruptcy Proceeding), (1) the date on which Borrower shall become the subject of any Bankruptcy Proceeding (other than an involuntary Bankruptcy Proceeding), or (2) the date which is sixty (60) days after the commencement of any involuntary Bankruptcy Proceeding commenced by any person or entity (other than Pinnacle) against Borrower (or any of them) which has not been dismissed on or before such date, or (C) sixty (60) days after Pinnacle notifies each Life Sciences Lender that a payment due under the Pinnacle Note has not been made.

(b)

Notwithstanding the expiration of the applicable standstill period set forth in clause (a) above, Pinnacle shall not interfere with any Enforcement Action in which a Life Sciences Lender is engaged; provided, however, that the commencement, continuation or participation in any Restricted Enforcement Action will not de facto constitute interference with any such Enforcement Action in which a Life Sciences Lender is engaged.

(c)

Pinnacle may not, without the prior written consent of the Life Sciences Lenders, amend, modify or supplement or agree to any amendment, modification or supplement of, or to, any of the Pinnacle Debt Documents.

Bankruptcy; Voting . This Agreement shall remain in full force and effect and enforceable pursuant to its terms in accordance with Section 510(a) of the Bankruptcy Code, and all references herein to Borrower shall be deemed to apply to such entity as debtor in possession and to any trustee in bankruptcy for the estate of such entity in a Bankruptcy Proceeding.

-5-

Unauthorized Payments . In the event that any payment or distribution upon or with respect to the Pinnacle Debt or Life Sciences Debt is received by Pinnacle or a Life Sciences Lender, as applicable, contrary to the terms and provisions set forth in this Agreement, including, without limitation, the provisions of Section 2(a) of this Agreement, such payment or distribution shall be received in trust for the benefit of the Life Sciences Lenders or Pinnacle, as applicable, shall be segregated from other funds and property held by Pinnacle or the Life Sciences Lenders, as applicable, and shall be forthwith remitted to Pinnacle or the Life Sciences Lenders, as applicable, in the same form as so received (with any necessary endorsement) and if such payment or distribution is received at a point in time when the Pinnacle Debt or the Life Sciences Debt, as applicable, has been paid in full, it shall be received in trust for the benefit of Borrower, shall be segregated from funds and other property held by Pinnacle or the Life Sciences Lenders, and shall be forthwith returned to Borrower, in the same form as so received (with any necessary endorsement).

Obligations of the Borrower Unconditional . Nothing contained in this Agreement is intended to or shall impair, as between Borrower and its creditors other than the Life Sciences Lenders, the obligations of Borrower to Pinnacle, which are absolute and unconditional, to pay the Pinnacle Debt as and when it shall become due and payable in accordance with its terms, or is intended to or shall affect the relative rights of Pinnacle and creditors of Borrower other than the Life Sciences Lenders. Except as otherwise expressly provided in this Agreement, Pinnacle may exercise all remedies otherwise permitted by applicable law upon the happening of a default under the Pinnacle Debt Documents.

Representations and Warranties .

(a)

Pinnacle hereby represents and warrants that: (i) as of the date hereof there is no other indebtedness, obligation or liability of any kind of Borrower owing to Pinnacle, other than the Pinnacle Debt evidenced by the Pinnacle Note, the Pinnacle Loan Agreement and the Pinnacle Debt Documents executed in connection therewith, (ii) except as provided in the Pinnacle Debt Documents, no security or collateral of any kind has been taken by Pinnacle to secure any of the Pinnacle Debt, whether from Borrower or otherwise, and, except as provided in the Pinnacle Debt Documents, there are no Liens on or with respect to any of Borrower’s assets to secure any part of the Pinnacle Debt; (iii) Pinnacle has not relied and will not rely on any representation or information of any nature made by or received from the Life Sciences Lenders relative to Borrower in deciding to execute this Agreement or to permit it to continue in effect; (iv) it is the lawful owner of all Pinnacle Debt; (v) it has not heretofore assigned or transferred any of the Pinnacle Debt, any interest therein or any other rights pertaining thereto; (vi) the execution, delivery and performance of this Agreement are within its organizational powers, have been duly authorized and are not in contravention of law or of the terms of its articles of incorporation, bylaws, partnership agreement or other organizational documents, or of any law, order, judgment, decree, contract or undertaking to which it is a party or by which its properties is bound or affected; (vii) it has reviewed and approved all transactions contemplated by the Life Sciences Debt Documents; and (viii) this Agreement constitutes the legal, valid and binding obligation of Pinnacle, enforceable against it in accordance with its terms.

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(b)

Each Life Sciences Lender represents and warrants that: (i) as of the date hereof, there is no other indebtedness, obligation or liability of any kind of Borrower owing to any Life Sciences Lender, other than the Life Sciences Debt; (ii) it has not relied and will not rely on any representation or information of any nature made by or received from Pinnacle relative to Borrower (except as expressly set forth herein) in deciding to execute this Agreement or to permit it to continue in effect; (iii) the Life Sciences Lenders are the lawful owners of the Life Sciences Debt; (iv) it has not heretofore assigned or transferred any of the Life Sciences Debt, any interest therein or any other rights pertaining thereto; (v) the execution, delivery and performance of this Agreement are within its organizational powers, have been duly authorized and are not in contravention of law or of the terms of its organizational documents, or of any law, order, judgment, decree, contract or undertaking to which it is a party or by which it or any of its properties is bound or affected; and (vi) this Agreement constitutes the legal, valid and binding obligation of such Life Sciences Lender, enforceable against it in accordance with its terms.

(c)

Borrower represents and warrants that: (i) the Pinnacle Debt is evidenced by the Pinnacle Note and the Pinnacle Loan Agreement (true, correct and complete copies of which have been previously provided to the Life Sciences Lenders and their counsel), and there are no other documents, agreements or instruments evidencing, securing or relating in any way to the Pinnacle Debt (other than the Pinnacle Debt Documents executed in connection with the Pinnacle Note and the Pinnacle Loan Agreement, true, correct and complete copies of which have been previously provided to the Life Sciences Lenders and their counsel); (ii) as of the date hereof, there is no indebtedness, obligation or liability of any kind of Borrower owing to Pinnacle (other than the Pinnacle Debt evidenced by the Pinnacle Notes and the Pinnacle Loan Agreement) or to the Life Sciences Lenders (other than the Life Sciences Debt); (iii) except as provided in the Pinnacle Debt Documents, no security or collateral of any kind has been taken by Pinnacle to secure any of the Pinnacle Debt, whether from Borrower or otherwise, and there are no Liens on or with respect to Borrower’s assets to secure any part of the Pinnacle Debt; (iv) no part of the Pinnacle Debt or the Life Sciences Debt is subject to any defense, offset or counterclaim; (v) the execution, delivery and performance of this Agreement are within its organizational powers, have been duly authorized and are not in contravention of law or of the terms of its articles of incorporation, bylaws, partnership agreement or other organizational documents, or of any law, order, judgment, decree, contract or undertaking to which it is a party or by which it or any of its properties is bound or affected; and (vi) this Agreement constitutes the legal, valid and binding obligation of Borrower, enforceable against each of them in accordance with its terms.

Covenants . Until all of the Life Sciences Debt has been paid and satisfied in full, unless otherwise consented to by the Life Sciences Lenders in writing, in the event that Pinnacle or the Life Sciences Lenders (as the case may be) issue a notice of default to Borrower or otherwise declare a default under the Pinnacle Debt or the Life Sciences Debt (as applicable), Borrower shall give Pinnacle or the Life Sciences Lenders (as applicable) prompt written notice thereof, specifying the nature of such default and the plans (if any) to remedy or seek a waiver thereof.

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Continuing Nature . This Agreement shall constitute a continuing agreement which shall remain in effect until the earlier of (i) the payment and satisfaction in full of the Life Sciences Debt or (ii) the conversion of the Notes in accordance with their terms, whereupon this Agreement shall terminate.

10.

Further Documents . Each of the parties hereto shall execute and deliver to the other parties hereto such further documents, agreements and instruments and shall take such further action as may, at any time or times, be reasonably necessary in order to carry out the provisions and intent of this Agreement.

11.

Notices . Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section 11 prior to 5:30 p.m. (New York City time) on a business day; (b) the business day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified herein later than 5:30 p.m. (New York City time) on any date and earlier than 11:59 p.m. (New York City time) on such date; (c) the business day following the date of mailing, if sent by nationally recognized overnight courier service; (d) five (5) business days after mailing if sent by certified or registered mail; or (e) actual receipt by the party to whom such notice is required to be given if delivered by hand. The address for such notices and communications shall be as follows:


If to the Life Sciences Lenders:	c/o Signet Healthcare Partners, G.P. Carnegie Hall Towers 152 West 57th Street, 19th Floor New York, NY 10019 Telephone No.: (212) 419-3906 Facsimile No.: (212) 419-3956 Attn.: James C. Gale, Managing Director

	with a copy to:

	Bingham McCutchen LLP 399 Park Avenue New York, New York 10022 Telephone No.: (212) 705-7492 Facsimile No.: (212) 702-3631 Attn: Shon E. Glusky, Esq.

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If to Pinnacle:	Pinnacle Mountain Partners LLC 206 Pinnacle Road Lyndeborough, New Hampshire 03082 Telephone No.: (603) 654-2790 Facsimile No.: (603) 654-2100 Attn: Jane E. Hager, President

	with a copy to:

	Rath, Young and Pignatelli, P.C. One Capital Plaza Concord, New Hampshire 03302-1500 Telephone No.: (603) 226-2600 Facsimile No.: (603) 226-2700 Attn: Sherilyn Burnett Young, Esq.

If to Borrower:	IGI Laboratories, Inc. 105 Lincoln Avenue Buena, New Jersey 08310 Telephone No.: (856) 697-1441 Facsimile No.: (856) 697-1001 Attn.: Chief Executive Officer

	with a copy to:

	Pepper Hamilton LLP 3000 Two Logan Square Philadelphia, Pennsylvania 19103 Telephone: (215) 981-4193 Facsimile: (215) 981-4750 Attention: Brian M. Katz, Esq.

12.

Waivers . This Agreement is effective notwithstanding any defect in the validity or enforceability of any instrument or document evidencing any of the Pinnacle Debt or the Life Sciences Debt. Except as otherwise set forth in this Agreement, presentment, demand, protest and notice of protest or dishonor, diligence and marshaling in collecting any of the Pinnacle Debt or the Life Sciences Debt are each hereby waived by each Life Sciences Lender, Pinnacle and Borrower (as applicable). Notice of acceptance of this Agreement by Pinnacle and/or the Life Sciences Lenders is hereby waived by each Life Sciences Lender, Pinnacle and Borrower (as applicable).

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13.

Amendments, Etc . No amendment, modification or waiver shall be deemed to be made or consented to by Pinnacle or the Life Sciences Lenders of any of their respective rights hereunder unless the same shall be in writing and signed by Pinnacle or the Life Sciences Lenders, as applicable. Each such waiver, if any, shall be a waiver only with respect to the specific matters to which the waiver relates and shall in no way impair the rights of Pinnacle or the Life Sciences Lenders, as applicable, or the obligations of Pinnacle and Borrower to the Life Sciences Lenders, or vice-versa, as applicable, in any other respect at any time.

14.

Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of Borrower, Pinnacle and the Life Sciences Lenders (as the case may be) and their respective successors and assigns; provided, however , that Borrower may not assign or otherwise transfer any of its obligations hereunder and any such attempted assignment or other transfer shall be null and void; provided, further , that (a) the Life Sciences Lenders may from time to time, pursuant to the terms of the Life Sciences Notes, and without affecting the validity or enforceability of this Agreement, assign or transfer any or all of the Life Sciences Debt or any interest therein and every immediate and successive assignee or transferee of any Life Sciences Debt or any interest therein shall, to the extent of the interest of such assignee or transferee in the Life Sciences Debt, be bound by the obligations and entitled to the benefits of this Agreement with the same effect as if such assignee was an original signatory hereto; it being understood and agreed, however, that no such assignment shall be effective unless the assignee thereof shall have agreed, by written instrument executed and delivered to Pinnacle, to be bound by all of the terms and conditions of this Agreement as if such assignee was an original signatory hereto; and (b) Pinnacle may from time to time with the prior written consent of the Life Sciences Lenders, and without affecting the validity or enforceability of this Agreement, assign or transfer any or all of the Pinnacle Debt as provided in the Pinnacle Debt Documents, any interest therein or any judgment lien or award with respect thereto and every immediate and successive assignee or transferee of any Pinnacle Debt, any interest therein or any judgment lien or award with respect thereto shall be bound by the obligations and entitled to the benefits of this Agreement with the same effect as if such assignee was an original signatory hereto; it being understood and agreed, however, that no such assignment shall be effective unless (i) the Life Sciences Lenders have received prior written notice of such assignment or transfer and consented in writing thereto, and (ii) the assignee thereof shall have agreed, by written instrument executed and delivered to the Life Sciences Lenders, to be bound by all of the terms and conditions of this Agreement as if such assignee was an original signatory hereto.

15.

Reliance by the Parties . Each of the Life Sciences Lenders and Pinnacle, by their acceptance hereof, acknowledge and agree that the foregoing terms and provisions are, and are intended to be an inducement and a consideration to the Life Sciences Lenders and Pinnacle to establish and continue to hold the Life Sciences Debt and the Pinnacle Debt (as applicable).

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16.

Integration and Severability . This Agreement embodies the entire agreement and understanding among the Life Sciences Lenders, Pinnacle and Borrower relating to the subject matter hereof, and supersedes all prior agreements and understandings relating to the subject matter hereof. In case any one or more of the obligations of Borrower, Pinnacle and/or the Life Sciences Lenders under this Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining obligations of Pinnacle, the Life Sciences Lenders and Borrower shall not in any way be affected or impaired thereby, and such invalidity, illegality or enforceability in one jurisdiction shall not affect the validity, legality or enforceability of the obligations of Pinnacle, the Life Sciences Lenders and Borrower under this Agreement in any other jurisdiction.

17.

Governing Law, Consent to Jurisdiction; Definitions . This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the internal Laws of the State of Delaware, without giving effect to principles of conflicts of law. Each of the parties hereto (a) submits to the jurisdiction of any state or federal court sitting in Delaware in any action or proceeding arising out of or relating to this Agreement; (b) agrees that all claims in respect of such action or proceeding may be heard and determined in any such court; (c) waives any claim of inconvenient forum or other challenge to venue in such court; and (d) agrees not to bring any action or proceeding arising out of or relating to this Agreement in any other court. Each Party agrees to accept service of any summons, complaint or other initial pleading made in the manner provided for the giving of notices in Section 11, provided that nothing in this Section 17 shall affect the right of a party to serve such summons, complaint or other initial pleading in any other manner permitted by law. Unless otherwise defined herein or in the Life Sciences Loan Agreement, terms used in the Uniform Commercial Code in effect from time to time in the State of Delaware are used herein as therein defined on the date hereof. The headings of the various subdivisions hereof are for convenience of reference only and shall in no way modify any of the terms or provisions hereof.

18.

Waiver of Jury Trial . Pinnacle, each Life Sciences Lender and Borrower, after consulting or having had the opportunity to consult with counsel, each knowingly, voluntarily and intentionally waive any right any of them may have to a trial by jury in any litigation based upon or arising out of this Agreement or any related instrument or agreement or any of the transactions contemplated by this Agreement or any course of conduct, dealing, statements (whether oral or written) or actions of any of them. None of Pinnacle, the Life Sciences Lenders or Borrower shall seek to consolidate, by counterclaim or otherwise, any such action in which a jury trial has been waived with any other action in which a jury trial cannot be or has not been waived. These provisions shall not be deemed to have been modified in any respect or relinquished by Pinnacle, the Life Sciences Lenders or Borrower, except by a written instrument executed by all of them.

19.

Counterparts . This Agreement may be executed by facsimile and in two or more counterparts, each of which shall be deemed an original and all of which together shall be deemed one and the same instrument.

[Signature Page Follows]

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement by their officers thereunto duly authorized as of the date first written above.


	LIFE SCIENCES LENDERS:

	LIFE SCIENCES OPPORTUNITIES FUND II, L.P., a Delaware limited partnership

	By:	Signet Healthcare Partners, G.P., its General Partner

	By:	/s/ James C. Gale
	Name:	James C. Gale
	Title:	Managing Partner

	LIFE SCIENCES OPPORTUNITIES FUND (INSTITUTIONAL) II, L.P., a Delaware limited partnership

	By:	Signet Healthcare Partners, G.P., its General Partner

	By:	/s/ James C. Gale
	Name:	James C. Gale
	Title:	Managing Partner

	PINNACLE

	PINNACLE MOUNTAIN PARTNERS LLC, a New Hampshire limited liability company

	By:	/s/ Jane E. Hager
	Name:	Jane E. Hager
	Title:	Pres./Manager

[Signature Page to the Intercreditor Agreement]


	BORROWER :

	IGI LABORATORIES, INC., a Delaware corporation

	By:	/s/ Rajiv Mathur
	Name:	Rajiv Mathur
	Title:	President & CEO

[Signature Page to the Intercreditor Agreement]

Exhibit 10.8

THIRD AMENDMENT

LOAN AND SECURITY AGREEMENT

THIS THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “ Amendment ”) is made on March 13, 2009 by and between IGI Laboratories, Inc. (f/k/a IGI, Inc.), a Delaware corporation with an address of 105 Lincoln Avenue, Buena, New Jersey 08310 (“ Borrower ”), and Pinnacle Mountain Partners, LLC, a New Hampshire limited liability company with an address of 206 Pinnacle Road, Lyndeborough, New Hampshire, 03082 (together with its successors and assigns, “ Lender ”).

WHEREAS, Borrower and Lender entered into that certain Loan and Security Agreement, dated as of January 29, 2007, as amended by amendment No. 1 thereto dated July 29, 2008, as amended by amendment No. 2 thereto dated January 26, 2009 (as amended, the “ Loan Agreement ”), and the Loan Agreement provides that it may only be amended by a writing signed by both Borrower and Lender; and

WHEREAS, Borrower and Lender desire to amend certain provisions of the Loan Agreement as set forth herein.

NOW, THEREFORE, in consideration of the mutual promises contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, Borrower and Lender hereby agree that the Loan Agreement is hereby amended as follows:

Amendment to Article I, Section 4 . Section 4 of Article I of the Loan Agreement is hereby amended and restated in its entirety to read:

Maturity . 50% of the amount of all loans and advances made respecting the Revolving Loans shall be payable to Lender on July 31, 2010. Notwithstanding the foregoing, all then outstanding loans and advances made respecting the Revolving Loans shall be payable to Lender on July 31, 2011.

Valid Obligation . The execution, delivery and performance of this Amendment by Borrower has been duly authorized by all necessary corporate action, represents a legal, valid and binding obligation of Borrower, and is fully enforceable according to its terms, except as limited by laws relating to the enforcement of creditor’s rights.

Miscellaneous .

Defined Terms . Capitalized terms not otherwise defined herein have the meanings set forth in the Loan Agreement.

No Further Amendment . Except as otherwise amended and supplemented by this Amendment, all provisions of the Loan Agreement, including, without limitation, provisions relating to governing law, shall remain in full force and effect and shall apply to this Amendment (unless this Amendment specifically amends a particular provision of the Loan Agreement) and the Loan Agreement and this Amendment shall each be construed together and considered one and the same agreement.

Counterparts . This Amendment may be signed in one or more counterparts, all of which shall constitute a single agreement.

[ Signature Page Follows ]

IN WITNESS WHEREOF, this Third Amendment to Loan and Security Agreement has been executed by the parties hereto as of the day and year first written above.



	IGI LABORATORIES, INC.


	By:	/s/ Rajiv Mathur
	Name:	Rajiv Mathur
	Title:	President and CEO


	PINNACLE MOUNTAIN PARTNERS LLC


	By:	/s/ Jane E. Hager, Pres.
	Name:	Jane E. Hager
	Title:	President

[Signature Page to Third Amendment to Loan and Security Agreement]

Exhibit 10.9

NOTE CONVERSION AGREEMENT

THIS NOTE CONVERSION AGREEMENT (the “Agreement”) is entered into as of March 13, 2009, by and among IGI Laboratories, Inc. (f/k/a IGI, Inc.), a Delaware corporation (the “Company”) and Pinnacle Mountain Partners, LLC, a New Hampshire limited liability company (the “Holder”).

WHEREAS, the Holder holds that certain Third Amended and Restated Revolving Note, dated March 13, 2009 issued by the Company in the principal amount of Five Hundred Thousand Dollars ($500,000.00) (the “Note”); and

WHEREAS, the Company is party to that certain Securities Purchase Agreement (the “Purchase Agreement”) dated as of even date herewith, pursuant to which the Company has agreed to issue and sell to each of the investors party thereto certain securities of the Company (the “PIPES Transaction”); and

WHEREAS, subject to the terms and conditions set forth herein, the Company and the Holder desire to convert the Note into shares of Common Stock (the “Conversion”);

NOW THEREFORE, in consideration of the foregoing recitals and the mutual promises hereinafter set forth, the parties hereto agree as follows:

Conversion of Notes; Issuance of Common Stock .

1.1

Conditioned upon the receipt of the Stockholder Approval described in Section 1.2 below, the Holder hereby irrevocably agrees to convert the principal amount of the Note into shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”), at a conversion rate of $0.41 per share of Common Stock (the “Conversion Shares”). In consideration of the foregoing, Holder agrees that, upon receipt of the Conversion Shares, the obligations and liabilities of the Company to repay the principal amount of the Note will be deemed satisfied and paid in full.

1.2

The Company hereby agrees to submit the Conversion and the issuance of the Conversion Shares for stockholder approval pursuant to Part VII of the Amex Company Guide, at the Company’s 2009 annual stockholders’ meeting (the “Stockholder Approval”), and, the parties hereto agree that, immediately upon receipt of such Stockholder Approval, the Company shall promptly issue the Conversion Shares to the Holder and upon the issuance of such Conversion Shares and the payment of any then accrued but unpaid interest, the Note shall be deemed to be of no further force or effect.

1.3

In the event that the Company is informed by representatives of the NYSE Euronext that this Agreement, or the transactions contemplated hereby, will preclude the Holder, Jane Hager or any of her or its affiliates, from voting to approve the PIPES Transaction as required pursuant to Section 712 of the of the Amex Company Guide, at the Company’s 2009 annual stockholders’ meeting, then the Company may, but shall not be required to, unilaterally terminate this Agreement prior to receipt of the Shareholder Approval without notice to the Holder, in which case the Note shall remain outstanding and this Agreement will be of no further force or effect.

Miscellaneous .

2.1

None of the provisions of this Agreement may be waived, changed or terminated orally or otherwise, except as specifically set forth herein or except by a writing signed by the Company and Holder.

2.2

This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware.

2.3

This Agreement may be executed in any number of counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument.

[Remainder of Page Intentionally Left Blank.]

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IN WITNESS WHEREOF, the undersigned have executed, or caused to be executed on their behalf by an agent there unto duly authorized, this Conversion Agreement as of the date first above written.


	IGI LABORATORIES, INC.


	By:	/s/ Rajiv Mathur
	Name:	Rajiv Mathur
	Title:	President and CEO


	PINNACLE MOUNTAIN PARTNERS, LLC


	By:	/s/ Jane E. Hager, Pres.
	Name:	Jane E. Hager
	Title:	President

Signature Page to Note Conversion Agreement

Exhibit 10.10

INDEMNIFICATION AGREEMENT

THIS INDEMNIFICATION AGREEMENT (the “ Agreement ”) is made and entered into as of March 13, 2009 by and between IGI Laboratories, Inc. , a Delaware corporation (the “ Company ”), and Joyce Erony (“ Indemnitee ”).

WITNESSETH THAT:

WHEREAS, the Certificate of Incorporation of the Company requires indemnification of the officers and directors of the Company. Indemnitee may also be entitled to indemnification pursuant to the General Corporation Law of the State of Delaware (“ DGCL ”). The Certificate of Incorporation and the DGCL expressly provide that the indemnification provisions set forth therein are not exclusive, and thereby contemplate that contracts may be entered into between the Company and members of the board of directors, officers and other persons with respect to indemnification;

WHEREAS, the Board of Directors of the Company (the “ Board ”) has determined that the increased difficulty in attracting and retaining such persons is detrimental to the best interests of the Company's stockholders and that the Company should act to assure such persons that there will be increased certainty of such protection in the future;

WHEREAS, it is reasonable, prudent and necessary for the Company contractually to obligate itself to indemnify, and to advance expenses on behalf of, such persons to the fullest extent permitted by applicable law so that they will serve or continue to serve the Company free from undue concern that they will not be so indemnified;

WHEREAS, this Agreement is a supplement to and in furtherance of the Certificate of Incorporation of the Company and any resolutions adopted pursuant thereto, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder; and

WHEREAS, Indemnitee does not regard the protection available under the Company's Certificate of Incorporation and insurance as adequate in the present circumstances, and may not be willing to serve as an officer or director without adequate protection, and the Company desires Indemnitee to serve in such capacity. Indemnitee is willing to serve, continue to serve and to take on additional service for or on behalf of the Company on the condition that he be so indemnified; and

WHEREAS, Indemnitee has certain rights to indemnification and/or insurance provided by third parties which Indemnitee and such third parties intend to be secondary to the primary obligation of the Company to indemnify Indemnitee as provided herein, with the Company’s acknowledgement and agreement to the foregoing being a material condition to Indemnitee’s willingness to serve on the Board.

NOW, THEREFORE, in consideration of Indemnitee’s agreement to serve as a director from and after the date hereof, the parties hereto agree as follows:

Indemnity of Indemnitee . The Company hereby agrees to hold harmless and indemnify Indemnitee to the fullest extent permitted by law, as such may be amended from time to time. In furtherance of the foregoing indemnification, and without limiting the generality thereof:

(a)

Proceedings Other Than Proceedings by or in the Right of the Company . Indemnitee shall be entitled to the rights of indemnification provided in this Section l(a) if, by reason of his Corporate Status (as hereinafter defined), the Indemnitee is, or is threatened to be made, a party to or participant in any Proceeding (as hereinafter defined) other than a Proceeding by or in the right of the Company. Pursuant to this Section 1(a) , Indemnitee shall be indemnified against all Expenses (as hereinafter defined), judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by him, or on his behalf, in connection with such Proceeding or any claim, issue or matter therein, if the Indemnitee acted in good faith and in a manner the Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and with respect to any criminal Proceeding, had no reasonable cause to believe the Indemnitee’s conduct was unlawful.

(b)

Proceedings by or in the Right of the Company . Indemnitee shall be entitled to the rights of indemnification provided in this Section 1(b) if, by reason of his Corporate Status, the Indemnitee is, or is threatened to be made, a party to or participant in any Proceeding brought by or in the right of the Company. Pursuant to this Section 1(b) , Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by the Indemnitee, or on the Indemnitee’s behalf, in connection with such Proceeding if the Indemnitee acted in good faith and in a manner the Indemnitee reasonably believed to be in or not opposed to the best interests of the Company; provided, however, if applicable law so provides, no indemnification against such Expenses shall be made in respect of any claim, issue or matter in such Proceeding as to which Indemnitee shall have been adjudged to be liable to the Company unless and to the extent that the Court of Chancery of the State of Delaware shall determine that such indemnification may be made.

(c)

Indemnification for Expenses of a Party Who is Wholly or Partly Successful . Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of his Corporate Status, a party to and is successful, on the merits or otherwise, in any Proceeding, he shall be indemnified to the maximum extent permitted by law, as such may be amended from time to time, against all Expenses actually and reasonably incurred by him or on his behalf in connection therewith. If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by him or on his behalf in connection with each successfully resolved claim, issue or matter. For purposes of this Section and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

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Additional Indemnity . In addition to, and without regard to any limitations on, the indemnification provided for in Section 1 of this Agreement, the Company shall and hereby does indemnify and hold harmless Indemnitee against all Expenses, judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by him or on his behalf if, by reason of his Corporate Status, he is, or is threatened to be made, a party to or participant in any Proceeding (including a Proceeding by or in the right of the Company), including, without limitation, all liability arising out of the negligence or active or passive wrongdoing of Indemnitee. Notwithstanding the foregoing, the Company shall not be obligated to make any indemnity payments to Indemnitee (A) in connection with any claim made against Indemnitee for (i) violations of insider trading laws such as Section 16(b) of the 1934 Act, (ii) conduct that is finally determined (under the procedures, and subject to the presumptions, set forth in Sections 6 and 7 hereof) to be knowingly fraudulent or deliberately dishonest or to constitute willful misconduct, (iii) actions brought by the Indemnitee without Board approval or (iv) actions relating to proxy contests in opposition to the Board or (B) if such payments are finally determined (under the procedures, and subject to the presumptions, set forth in Sections 6 and 7 hereof) to be unlawful.

Contribution .

(a)

Whether or not the indemnification provided in Sections 1 and 2 hereof is available, in respect of any threatened, pending or completed action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), the Company shall pay, in the first instance, the entire amount of any judgment or settlement of such action, suit or proceeding without requiring Indemnitee to contribute to such payment and the Company hereby waives and relinquishes any right of contribution it may have against Indemnitee. The Company shall not enter into any settlement of any action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding) unless such settlement provides for a full and final release of all claims asserted against Indemnitee.

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(b)

Without diminishing or impairing the obligations of the Company set forth in the preceding subparagraph, if, for any reason, Indemnitee shall elect or be required to pay all or any portion of any judgment or settlement in any threatened, pending or completed action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), the Company shall contribute to the amount of Expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred and paid or payable by Indemnitee in proportion to the relative benefits received by the Company and all officers, directors or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, from the transaction from which such action, suit or proceeding arose; provided, however, that the proportion determined on the basis of relative benefit may, to the extent necessary to conform to law, be further adjusted by reference to the relative fault of the Company and all officers, directors or employees of the Company other than Indemnitee who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, in connection with the events that resulted in such expenses, judgments, fines or settlement amounts, as well as any other equitable considerations which the Law may require to be considered. The relative fault of the Company and all officers, directors or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, shall be determined by reference to, among other things, the degree to which their actions were motivated by intent to gain personal profit or advantage, the degree to which their liability is primary or secondary and the degree to which their conduct is active or passive.

(c)

The Company hereby agrees to fully indemnify and hold Indemnitee harmless from any claims of contribution which may be brought by officers, directors or employees of the Company, other than Indemnitee, who may be jointly liable with Indemnitee.

(d)

To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amount incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement and/or for Expenses, in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received by the Company and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such Proceeding; and/or (ii) the relative fault of the Company (and its directors, officers, employees and agents) and Indemnitee in connection with such event(s) and/or transaction(s).

Indemnification for Expenses of a Witness . Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of his Corporate Status, a witness, or is made (or asked to) respond to discovery requests, in any Proceeding to which Indemnitee is not a party, he shall be indemnified against all Expenses actually and reasonably incurred by him or on his behalf in connection therewith.

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Advancement of Expenses . Notwithstanding any other provision of this Agreement, the Company shall advance all Expenses incurred by or on behalf of Indemnitee in connection with any Proceeding by reason of Indemnitee’s Corporate Status within thirty (30) days after the receipt by the Company of a statement or statements from Indemnitee requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding. Such statement or statements shall reasonably evidence the Expenses incurred by Indemnitee and shall include or be preceded or accompanied by a written undertaking by or on behalf of Indemnitee to repay any Expenses advanced if it shall ultimately be determined that Indemnitee is not entitled to be indemnified against such Expenses. Any advances and undertakings to repay pursuant to this Section 5 shall be unsecured and interest free.

Procedures and Presumptions for Determination of Entitlement to Indemnification . It is the intent of this Agreement to secure for Indemnitee rights of indemnity that are as favorable as may be permitted under the DGCL and public policy of the State of Delaware. Accordingly, the parties agree that the following procedures and presumptions shall apply in the event of any question as to whether Indemnitee is entitled to indemnification under this Agreement:

(a)

To obtain indemnification under this Agreement, Indemnitee shall submit to the Company a written request, including therein or therewith such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification. The Secretary of the Company shall, promptly upon receipt of such a request for indemnification, advise the Board of Directors in writing that Indemnitee has requested indemnification. Notwithstanding the foregoing, any failure of Indemnitee to provide such a request to the Company, or to provide such a request in a timely fashion, shall not relieve the Company of any liability that it may have to Indemnitee unless, and to the extent that, such failure actually and materially prejudices the interests of the Company.

(b)

Upon written request by Indemnitee for indemnification pursuant to the first sentence of Section 6(a) hereof, a determination with respect to Indemnitee’s entitlement thereto shall be made in the specific case by one of the following four methods, which shall be at the election of the Board: (1) by a majority vote of the disinterested directors, even though less than a quorum, (2) by a committee of disinterested directors designated by a majority vote of the disinterested directors, even though less than a quorum, (3) if there are no disinterested directors or if the disinterested directors so direct, by independent legal counsel in a written opinion to the Board of Directors, a copy of which shall be delivered to the Indemnitee, or (4) if so directed by the Board of Directors, by the stockholders of the Company. For purposes hereof, disinterested directors are those members of the board of directors of the Company who are not parties to the action, suit or proceeding in respect of which indemnification is sought by Indemnitee. Notwithstanding the foregoing, in the event the Indemnitee submits a request for indemnification within six (6) months following a Change in Control, the determination with respect to Indemnitee’s entitlement thereto shall be made by Independent Counsel, in a written opinion to the Board of Directors, a copy of which shall be delivered to the Indemnitee.

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(c)

If the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 6(b) hereof, the Independent Counsel shall be selected as provided in this Section 6(c) . The Independent Counsel shall be selected by the Board of Directors. Indemnitee may, within 10 days after such written notice of selection shall have been given, deliver to the Company a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “ Independent Counsel ” as defined in Section 13 of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person so selected shall act as Independent Counsel. If a written objection is made and substantiated, the Independent Counsel selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court has determined that such objection is without merit. If, within 20 days after submission by Indemnitee of a written request for indemnification pursuant to Section 6(a) hereof, no Independent Counsel shall have been selected and not objected to, either the Company or Indemnitee may petition the Court of Chancery of the State of Delaware or other court of competent jurisdiction for resolution of any objection which shall have been made by the Indemnitee to the Company’s selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by the court or by such other person as the court shall designate, and the person with respect to whom all objections are so resolved or the person so appointed shall act as Independent Counsel under Section 6(b) hereof. The Company shall pay any and all reasonable fees and expenses of Independent Counsel incurred by such Independent Counsel in connection with acting pursuant to Section 6(b) hereof, and the Company shall pay all reasonable fees and expenses incident to the procedures of this Section 6(c) , regardless of the manner in which such Independent Counsel was selected or appointed.

(d)

In making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by a preponderance of the evidence. Neither the failure of the Company (including by its directors or independent legal counsel) to have made a determination prior to the commencement of any action pursuant to this Agreement that indemnification is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor an actual determination by the Company (including by its directors or independent legal counsel) that Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct.

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(e)

Indemnitee shall be deemed to have acted in good faith if Indemnitee’s action is based on the records or books of account of the Enterprise (as hereinafter defined), including financial statements, or on information supplied to Indemnitee by the officers of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or on information or records given or reports made to the Enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Enterprise. In addition, the knowledge and/or actions, or failure to act, of any director, officer, agent or employee of the Enterprise shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement. Whether or not the foregoing provisions of this Section 6(e) are satisfied, it shall in any event be presumed that Indemnitee has at all times acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by a preponderance of the evidence.

(f)

If the person, persons or entity empowered or selected under Section 6 to determine whether Indemnitee is entitled to indemnification shall not have made a determination within sixty (60) days after receipt by the Company of the request therefor, the requisite determination of entitlement to indemnification shall be deemed to have been made and Indemnitee shall be entitled to such indemnification absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law; provided, however, that such 60-day period may be extended for a reasonable time, not to exceed an additional thirty (30) days, if the person, persons or entity making such determination with respect to entitlement to indemnification in good faith requires such additional time to obtain or evaluate documentation and/or information relating thereto; and provided, further, that the foregoing provisions of this Section 6(f) shall not apply if the determination of entitlement to indemnification is to be made by the stockholders pursuant to Section 6(b) of this Agreement and if (A) within fifteen (15) days after receipt by the Company of the request for such determination, the Board of Directors or the Disinterested Directors, if appropriate, resolve to submit such determination to the stockholders for their consideration at an annual meeting thereof to be held within seventy-five (75) days after such receipt and such determination is made thereat, or (B) a special meeting of stockholders is called within fifteen (15) days after such receipt for the purpose of making such determination, such meeting is held for such purpose within sixty (60) days after having been so called and such determination is made thereat.

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(g)

Indemnitee shall cooperate with the person, persons or entity making such determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination. Any Independent Counsel, member of the Board of Directors or stockholder of the Company shall act reasonably and in good faith in making a determination regarding the Indemnitee’s entitlement to indemnification under this Agreement. Any costs or expenses (including attorneys’ fees and disbursements) incurred by Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom.

(h)

The Company acknowledges that a settlement or other disposition short of final judgment may be successful if it permits a party to avoid expense, delay, distraction, disruption and uncertainty. In the event that any action, claim or proceeding to which Indemnitee is a party is resolved in any manner other than by adverse judgment against Indemnitee (including, without limitation, settlement of such action, claim or proceeding with or without payment of money or other consideration) it shall be presumed that Indemnitee has been successful on the merits or otherwise in such action, suit or proceeding. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by a preponderance of the evidence.

(i)

The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that his conduct was unlawful.

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Remedies of Indemnitee .

(a)

In the event that (i) a determination is made pursuant to Section 6 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 5 of this Agreement, (iii) no determination of entitlement to indemnification is made pursuant to Section 6(b) of this Agreement within 90 days after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to this Agreement within ten (10) days after receipt by the Company of a written request therefor or (v) payment of indemnification is not made within ten (10) days after a determination has been made that Indemnitee is entitled to indemnification or such determination is deemed to have been made pursuant to Section 6 of this Agreement, Indemnitee shall be entitled to an adjudication in an appropriate court of the State of Delaware, or in any other court of competent jurisdiction, of Indemnitee’s entitlement to such indemnification. Indemnitee shall commence such proceeding seeking an adjudication within 180 days following the date on which Indemnitee first has the right to commence such proceeding pursuant to this Section 7(a) . The Company shall not oppose Indemnitee’s right to seek any such adjudication.

(b)

In the event that a determination shall have been made pursuant to Section 6(b) of this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding commenced pursuant to this Section 7 shall be conducted in all respects as a de novo trial on the merits, and Indemnitee shall not be prejudiced by reason of the adverse determination under Section 6(b) .

(c)

If a determination shall have been made pursuant to Section 6(b) of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding commenced pursuant to this Section 7 , absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s misstatement not materially misleading in connection with the application for indemnification, or (ii) a prohibition of such indemnification under applicable law.

(d)

In the event that Indemnitee, pursuant to this Section 7 , seeks a judicial adjudication of his rights under, or to recover damages for breach of, this Agreement, or to recover under any directors’ and officers’ liability insurance policies maintained by the Company, the Company shall pay on his behalf, in advance, any and all expenses (of the types described in the definition of Expenses in Section 13 of this Agreement) actually and reasonably incurred by him in such judicial adjudication, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advancement of expenses or insurance recovery.

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(e)

The Company shall be precluded from asserting in any judicial proceeding commenced pursuant to this Section 7 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court that the Company is bound by all the provisions of this Agreement. The Company shall indemnify Indemnitee against any and all Expenses and, if requested by Indemnitee, shall (within ten (10) days after receipt by the Company of a written request therefore) advance, to the extent not prohibited by law, such expenses to Indemnitee, which are incurred by Indemnitee in connection with any action brought by Indemnitee for indemnification or advance of Expenses from the Company under this Agreement or under any directors' and officers' liability insurance policies maintained by the Company, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advancement of Expenses or insurance recovery, as the case may be.

(f)

Notwithstanding anything in this Agreement to the contrary, no determination as to entitlement to indemnification under this Agreement shall be required to be made prior to the final disposition of the Proceeding.

Non-Exclusivity; Survival of Rights; Insurance; Primacy of Indemnification; Subrogation .

(a)

The rights of indemnification as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Certificate of Incorporation, any agreement, a vote of stockholders, a resolution of directors or otherwise, of the Company. No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in his Corporate Status prior to such amendment, alteration or repeal. To the extent that a change in the DGCL, whether by statute or judicial decision, permits greater indemnification than would be afforded currently under the Certificate of Incorporation and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.

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(b)

To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, officers, employees, or agents or fiduciaries of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise that such person serves at the request of the Company, Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any director, officer, employee, agent or fiduciary under such policy or policies. If, at the time of the receipt of a notice of a claim pursuant to the terms hereof, the Company has director and officer liability insurance in effect, the Company shall give prompt notice of the commencement of such proceeding to the insurers in accordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such proceeding in accordance with the terms of such policies.

(c)

The Company hereby acknowledges that Indemnitee has certain rights to indemnification, advancement of expenses and/or insurance provided by third parties and certain of its affiliates (collectively, the “ Fund Indemnitors ”). The Company hereby agrees (i) that it is the indemnitor of first resort (i.e., its obligations to Indemnitee are primary and any obligation of the Fund Indemnitors to advance expenses or to provide indemnification for the same expenses or liabilities incurred by Indemnitee are secondary), (ii) that it shall be required to advance the full amount of expenses incurred by Indemnitee and shall be liable for the full amount of all Expenses, judgments, penalties, fines and amounts paid in settlement to the extent legally permitted and as required by the terms of this Agreement and the Certificate of Incorporation of the Company (or any other agreement between the Company and Indemnitee), without regard to any rights Indemnitee may have against the Fund Indemnitors, and, (iii) that it irrevocably waives, relinquishes and releases the Fund Indemnitors from any and all claims against the Fund Indemnitors for contribution, subrogation or any other recovery of any kind in respect thereof. The Company further agrees that no advancement or payment by the Fund Indemnitors on behalf of Indemnitee with respect to any claim for which Indemnitee has sought indemnification from the Company shall affect the foregoing and the Fund Indemnitors shall have a right of contribution and/or be subrogated to the extent of such advancement or payment to all of the rights of recovery of Indemnitee against the Company. The Company and Indemnitee agree that the Fund Indemnitors are express third party beneficiaries of the terms of this Section 8(c) .

(d)

Except as provided in paragraph (c) above, in the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee (other than against the Fund Indemnitors), who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.

(e)

Except as provided in paragraph (c) above, the Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.

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(f)

Except as provided in paragraph (c) above, the Company's obligation to indemnify or advance Expenses hereunder to Indemnitee who is or was serving at the request of the Company as a director, officer, employee or agent of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise shall be reduced by any amount Indemnitee has actually received as indemnification or advancement of expenses from such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise.

Exception to Right of Indemnification . Notwithstanding any provision in this Agreement, the Company shall not be obligated under this Agreement to make any indemnity in connection with any claim made against Indemnitee:

(a)

for which payment has actually been made to or on behalf of Indemnitee under any insurance policy or other indemnity provision, except with respect to any excess beyond the amount paid under any insurance policy or other indemnity provision, provided, that the foregoing shall not affect the rights of Indemnitee or the Fund Indemnitors set forth in Section 8(c) above; or

(b)

for an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning of Section 16(b) of the Securities Exchange Act of 1934, as amended, or similar provisions of state statutory law or common law; or

(c)

in connection with any Proceeding (or any part of any Proceeding) initiated by Indemnitee, including any Proceeding (or any part of any Proceeding) initiated by Indemnitee against the Company or its directors, officers, employees or other indemnitees, unless (i) the Board of Directors of the Company authorized the Proceeding (or any part of any Proceeding) prior to its initiation or (ii) the Company provides the indemnification, in its sole discretion, pursuant to the powers vested in the Company under applicable law.

10.

Duration of Agreement . All agreements and obligations of the Company contained herein shall continue during the period Indemnitee is an officer or director of the Company (or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise) and shall continue thereafter so long as Indemnitee shall be subject to any Proceeding (or any proceeding commenced under Section 7 hereof) by reason of his Corporate Status, whether or not he is acting or serving in any such capacity at the time any liability or expense is incurred for which indemnification can be provided under this Agreement. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), assigns, spouses, heirs, executors and personal and legal representatives.

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11.

Security . To the extent requested by Indemnitee and approved by the Board of Directors of the Company, the Company may at any time and from time to time provide security to Indemnitee for the Company’s obligations hereunder through an irrevocable bank line of credit, funded trust or other collateral. Any such security, once provided to Indemnitee, may not be revoked or released without the prior written consent of the Indemnitee.

12.

Enforcement .

(a)

The Company expressly confirms and agrees that it has entered into this Agreement and assumes the obligations imposed on it hereby in order to induce Indemnitee to serve as an officer or director of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement in serving as an officer or director of the Company.

(b)

This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof.

13.

Definitions . For purposes of this Agreement:

(a)

“ Change in Control ” shall be deemed to occur upon the earliest to occur after the date of this Agreement of any of the following events:

(i)

Acquisition of Stock by Third Party . Any Person (as defined below) is or becomes the Beneficial Owner (as defined below), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the combined voting power of the Company's then outstanding securities;

(ii)

Change in Board of Directors . During any period of two (2) consecutive years (not including any period prior to the execution of this Agreement), individuals who at the beginning of such period constitute the Board, and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in Sections 13(a)(i), 13(a)(iii) or 13(a)(iv)) whose election by the Board or nomination for election by the Company's stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a least a majority of the members of the Board;

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(iii)

Corporate Transactions . The effective date of a merger or consolidation of the Company with any other entity, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 51% of the combined voting power of the voting securities of the surviving entity outstanding immediately after such merger or consolidation and with the power to elect at least a majority of the board of directors or other governing body of such surviving entity;

(iv)

Liquidation . The approval by the stockholders of the Company of a complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets; and

(v)

Other Events . There occurs any other event of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or a response to any similar item on any similar schedule or form) promulgated under the Exchange Act (as defined below), whether or not the Company is then subject to such reporting requirement.

For purposes of this Section 13(a) , the following terms shall have the following meanings:

(A)

“ Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended.

(B)

“ Person ” shall have the meaning as set forth in Sections 13(d) and 14(d) of the Exchange Act; provided, however, that Person shall exclude (i) the Company, (ii) any trustee or other fiduciary holding securities under an employee benefit plan of the Company, and (iii) any corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.

(C)

“ Beneficial Owner ” shall have the meaning given to such term in Rule 13d-3 under the Exchange Act; provided, however, that Beneficial Owner shall exclude any Person otherwise becoming a Beneficial Owner by reason of the stockholders of the Company approving a merger of the Company with another entity.

(b)

“ Corporate Status ” describes the status of a person who is or was a director, officer, employee, agent or fiduciary of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise that such person is or was serving at the express written request of the Company.

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(c)

“ Disinterested Director ” means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee.

(d)

“ Enterprise ” shall mean the Company and any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise that Indemnitee is or was serving at the express written request of the Company as a director, officer, employee, agent or fiduciary.

(e)

“ Expenses ” shall include all documented reasonable attorneys’ fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, participating, or being or preparing to be a witness in a Proceeding, or responding to, or objecting to, a request to provide discovery in any Proceeding. Expenses also shall include Expenses incurred in connection with any appeal resulting from any Proceeding and any federal, state, local or foreign taxes imposed on the Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement, including without limitation the premium, security for, and other costs relating to any cost bond, supersede as bond, or other appeal bond or its equivalent. Expenses, however, shall not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee.

(f)

“ Independent Counsel ” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five years has been, retained to represent: (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement. The Company agrees to pay the reasonable fees of the Independent Counsel referred to above and to fully indemnify such counsel against any and all Expenses, claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.

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(g)

“ Proceeding ” includes any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought by or in the right of the Company or otherwise and whether civil, criminal, administrative or investigative, in which Indemnitee was, is or will be involved as a party or otherwise, by reason of the fact that Indemnitee is or was an officer or director of the Company, by reason of any action taken by him or of any inaction on his part while acting as an officer or director of the Company, or by reason of the fact that he is or was serving at the request of the Company as a director, officer, employee, agent or fiduciary of another corporation, partnership, joint venture, trust or other Enterprise; in each case whether or not he is acting or serving in any such capacity at the time any liability or expense is incurred for which indemnification can be provided under this Agreement; including one pending on or before the date of this Agreement, but excluding one initiated by an Indemnitee pursuant to Section 7 of this Agreement to enforce his rights under this Agreement.

14.

Severability . The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision. Without limiting the generality of the foregoing, this Agreement is intended to confer upon Indemnitee indemnification rights to the fullest extent permitted by applicable laws. In the event any provision hereof conflicts with any applicable law, such provision shall be deemed modified, consistent with the aforementioned intent, to the extent necessary to resolve such conflict.

15.

Modification and Waiver . No supplement, modification, termination or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.

16.

Notice By Indemnitee . Indemnitee agrees promptly to notify the Company in writing upon being served with or otherwise receiving any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification covered hereunder. The failure to so notify the Company shall not relieve the Company of any obligation which it may have to Indemnitee under this Agreement or otherwise unless and only to the extent that such failure or delay materially prejudices the Company.

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17.

Notices . All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient, and if not so confirmed, then on the next business day, (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent:

(a)

To Indemnitee at the address set forth below Indemnitee signature hereto.

(b)

To the Company at:

IGI Laboratories, Inc.
105 Lincoln Avenue
Buena, New Jersey 08310
Telephone No.: (856) 697-1441
Facsimile No.: (856) 697-1001
Attn.: Chief Executive Officer

With a copy to:

Pepper Hamilton LLP
3000 Two Logan Square
Philadelphia, Pennsylvania 19103
Telephone: (215) 981-4193
Facsimile: (215) 981-4750
Attention: Brian M. Katz, Esq.

or to such other address as may have been furnished to Indemnitee by the Company or to the Company by Indemnitee, as the case may be.

18.

Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same Agreement. This Agreement may also be executed and delivered by facsimile signature and in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

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19.

Headings . The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.

20.

Governing Law and Consent to Jurisdiction. This Agreement and the legal relations among the parties shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to its conflict of laws rules. The Company and Indemnitee hereby irrevocably and unconditionally (i) agree that any action or proceeding arising out of or in connection with this Agreement shall be brought only in the Chancery Court of the State of Delaware (the “ Delaware Court ”), and not in any other state or federal court in the United States of America or any court in any other country, (ii) consent to submit to the exclusive jurisdiction of the Delaware Court for purposes of any action or proceeding arising out of or in connection with this Agreement, (iii) appoint, to the extent such party is not otherwise subject to service of process in the State of Delaware, irrevocably The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware, as its agent in the State of Delaware as such party's agent for acceptance of legal process in connection with any such action or proceeding against such party with the same legal force and validity as if served upon such party personally within the State of Delaware, (iv) waive any objection to the laying of venue of any such action or proceeding in the Delaware Court, and (v) waive, and agree not to plead or to make, any claim that any such action or proceeding brought in the Delaware Court has been brought in an improper or inconvenient forum.

[Signature Pages Follow]

-18-

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and as of the day and year first above written.


	COMPANY

	IGI LABORATORIES, INC.


	By:	/s/ Rajiv Mathur
	Name:	Rajiv Mathur
	Title:	President & CEO

	INDEMNITEE


	/s/ Joyce Erony
	Name:	Joyce Erony

	Address:

	Signet Healthcare Partners
	152 W. 57th St.
	NY, NY 10022

[Signature Page to the Indemnification Agreement]

Exhibit 10.11

INDEMNIFICATION AGREEMENT

WITNESSETH THAT:

NOW, THEREFORE, in consideration of Indemnitee’s agreement to serve as a director from and after the date hereof, the parties hereto agree as follows:

(a)

(b)

(c)

-2-

Contribution .

(a)

-3-

(b)

(c)

(d)

-4-

(a)

-5-

(b)

(c)

-6-

(d)

(e)

(f)

-7-

(g)

(h)

(i)

-8-

Remedies of Indemnitee .

(a)

(b)

(c)

(d)

-9-

(e)

(f)

Non-Exclusivity; Survival of Rights; Insurance; Primacy of Indemnification; Subrogation .

(a)

-10-

(b)

(c)

In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.

(d)

The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.

(e)

The Company's obligation to indemnify or advance Expenses hereunder to Indemnitee who is or was serving at the request of the Company as a director, officer, employee or agent of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise shall be reduced by any amount Indemnitee has actually received as indemnification or advancement of expenses from such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise.

(a)

(b)

-11-

(c)

10.

11.

12.

Enforcement .

(a)

(b)

-12-

13.

Definitions . For purposes of this Agreement:

(a)

“ Change in Control ” shall be deemed to occur upon the earliest to occur after the date of this Agreement of any of the following events:

(i)

(ii)

(iii)

(iv)

(v)

-13-

For purposes of this Section 13(a) , the following terms shall have the following meanings:

(A)

“ Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended.

(B)

(C)

(b)

(c)

“ Disinterested Director ” means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee.

(d)

(e)

-14-

(f)

(g)

14.

15.

-15-

16.

17.

(a)

To Indemnitee at the address set forth below Indemnitee signature hereto.

(b)

To the Company at:

IGI Laboratories, Inc.
105 Lincoln Avenue
Buena, New Jersey 08310
Telephone No.: (856) 697-1441
Facsimile No.: (856) 697-1001
Attn.: Chief Executive Officer

With a copy to:

Pepper Hamilton LLP
3000 Two Logan Square
Philadelphia, Pennsylvania 19103
Telephone: (215) 981-4193
Facsimile: (215) 981-4750
Attention: Brian M. Katz, Esq.

or to such other address as may have been furnished to Indemnitee by the Company or to the Company by Indemnitee, as the case may be.

-16-

18.

19.

Headings . The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.

20.

[Signature Pages Follow]

-17-

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and as of the day and year first above written.


	COMPANY

	IGI LABORATORIES, INC.


	By:
	Name:
	Title:

	INDEMNITEE

	[See Schedule Below]


	Name:

	Address:

[Signature Page to the Indemnification Agreement]

SCHEDULE OF DIFFERENCES

Other than the identification of the Indemnitee, each Indemnification Agreement executed with the directors listed below is substantially the same as this form and as each other.

Director

Jane E. Hager

Rajiv Mathur

Stephen J. Morris

Terrence O’Donnell

Exhibit 99.1

News From

[EX991003.JPG]

Buena, NJ 08310

Release Date : March 13, 2009

Contact :

Rajiv Mathur

President & Chief Executive Officer

IGI Laboratories, Inc.

856-697-1441 ext. 211

www.askigi.com

IGI LABORATORIES, INC. RAISES $6 MILLION THROUGH PRIVATE
PLACEMENT

BUENA, NJ March 13, 2009 - IGI Laboratories, Inc. (AMEX: IG) , a premier provider of topical formulation development, analytical, manufacturing and packaging services, today announced that it has completed a private placement of Series B-1 Convertible Preferred Stock, secured convertible promissory notes and warrants to purchase shares of Series B-2 Preferred Stock to certain investment funds affiliated with Signet Healthcare Partners, G.P., for an aggregate purchase price of $6,000,000.00. At closing, 253 shares of Series B-1 Convertible Preferred Stock and secured convertible promissory notes in the aggregate principal amount of $4,482,000 were issued. Each share of Series B-1 Convertible Preferred Stock is convertible into 14,634 shares of common stock, for an implied common stock conversion price of $0.41 per share. Upon stockholder approval of the transaction, the principal amount of the secured convertible promissory notes will convert into an aggregate of 747 shares Series B-1 Convertible Preferred Stock and the accrued interest will convert into additional shares of Series B-1 Convertible Preferred Stock. If stockholder approval of the transaction is not obtained, the secured convertible promissory notes will become due and payable and the warrants will become exercisable for an aggregate of 747 shares of non-voting Series B-2 Preferred Stock for a price of $6,000.00 per share. The Company expects to use the proceeds to support its pharmaceutical product development efforts, as well as other general corporate purposes.

The shares of Series B-1 Convertible Preferred Stock, the secured convertible promissory notes, the shares of common stock underlying the Series B-1 Convertible Stock, the warrants and shares of Series B-2 Preferred Stock underlying the warrants offered by IGI in this transaction have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. The Company has agreed with the investors to register the shares of common stock underlying the Series B-1 Preferred Stock.

The Company anticipates seeking stockholder approval of the transaction at its 2009 annual meeting of stockholders.

Upon the consummation of the transaction, Ms. Joyce Erony, a Managing Director of Signet Healthcare Partners, joined the Company’s board of directors. Upon stockholder approval of the transaction, Mr. James C. Gale, a Managing Director of Signet Healthcare Partners, will join the Company’s board of directors.

In commenting on the transaction, Rajiv Mathur, President and CEO of IGI said “Given the current challenges in the global economy, we are excited to have Signet as a major stockholder in the Company and look forward to a fruitful partnership. Signet brings to the table its long successful track record of investment in the specialty pharmaceutical industry. This financing will improve our working capital base and provide the Company with additional resources to invest in the long-term opportunities available to us while withstanding our shorter-term business volatility. In addition, we anticipate that completion of this financing will allow us to regain compliance with NYSE Alternext US LLC Listing Standards.”

Joyce Erony, Managing Director of Signet, said “We look forward to helping IGI expand its capabilities in dermatology and offering a broader scope of products and services to customers in the near term.”

Rockport Venture Securities, LLC acted as placement agent in connection with this offering.

This press release is being issued pursuant to Rule 135c under the Securities Act and does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

About IGI Laboratories, Inc.

IGI engages in the development, manufacturing, filling, and packaging of topical, semi solid, and liquid products for pharmaceutical and cosmeceutical companies. The company offers the patented Novasome® encapsulation technology which contributes value-added qualities to pharmaceutical and cosmeceutical products, providing improved dermal absorption and sustained release of the active molecule.

IGI “Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: This press release includes certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, plans, objectives, expectations and intentions and other statements contained in this press release that are not historical facts and statements identified by words such as " will," "possible," "one time," "provides an opportunity," "continue" or words of similar meaning. These statements are based on our current beliefs or expectations and are inherently subject to various risks and uncertainties, including those set forth under the caption "Risk Factors" in IGI's most recent Annual Report on Form 10-KSB as filed with the Securities and Exchange Commission and as revised or supplemented by IGI's quarterly reports on Form 10-Q. Actual results may differ materially from these expectations due to changes in global political, economic, business, competitive, market and regulatory factors or IGI's ability to implement business strategies. IGI does not undertake any obligation to update any forward-looking statements contained in this document as a result of new information, future events or otherwise .

Exhibit 99.2

News From

[EX992003.JPG]

Buena, NJ 08310

Release Date : March 18, 2009

Contact :

Rajiv Mathur

President & Chief Executive Officer

IGI Laboratories, Inc.

856-697-1441 ext. 211

www.askigi.com

IGI Laboratories, Inc. Issues Correction to Reported Amounts in $6 Million Private Placement

BUENA, N.J.--(BUSINESS WIRE) - - March 18, 2009 - - IGI Laboratories, Inc. (AMEX: IG - News),announced today that the press release issued by IGI Laboratories on March 16, 2009, contained typographical errors in the reporting of certain numbers and amounts. The corrected information is as follows:

At closing, 202.9 shares of Series B-1 Convertible Preferred Stock and secured convertible promissory notes in the aggregate principal amount of $4,782,600 were issued.

Upon stockholder approval of the transaction, the principal amount of the secured convertible promissory notes will convert into an aggregate of 797.1 shares Series B-1 Convertible Preferred Stock and the accrued interest will convert into additional shares of Series B-1 Convertible Preferred Stock.

If stockholder approval of the transaction is not obtained, the secured convertible promissory notes will become due and payable and the warrants will become exercisable for an aggregate of 797.1 shares of non-voting Series B-2 Preferred Stock for a price of $6,000.00 per share.

These errors do not impact the aggregate amount of the investors’ investment made in connection with the private placement.

About IGI Laboratories, Inc.