IGI INC
EXHIBIT 10.111
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<TYPE>EX-10
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<FILENAME>igi2-111.txt
<DESCRIPTION>EXHIBIT 10.111
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                                                             Exhibit 10.111


                         EXCLUSIVE LICENSE AGREEMENT


      This Agreement, effective as of July 27, 2004 (the "Effective Date"),
is between the University of Massachusetts ("University"), a public
institution of higher education of the Commonwealth of Massachusetts as
represented by its Worcester campus, and IGI, Inc.("Company"), a publicly
traded corporation of New Jersey.

                               R E C I T A L S

      Whereas, Company desires to obtain a license to the invention claimed
in the U.S. Patents and Patent Applications listed in Exhibit A pertaining
to the University's invention disclosure UMMC97-32 entitled "Treatment of
Skin with Adenosine or Adenosine Analogs" invented by Dr. James Dobson and
Dr. Michael Ethier, faculty members of the University; and

      Whereas, Company desires to obtain an exclusive license in the field
of skin care treatments under the rights of University in any patent rights
claiming those inventions with the intent to sublicense the technology to a
qualified entity or entities; and

      Whereas, University is willing to grant Company an exclusive license
on the terms set forth in this Agreement.

      Therefore, University and Company agree as follows:

1.    Definitions.
      ------------

      1.1. "Confidential Information" means any confidential or proprietary
information furnished by one party (the "Disclosing Party") to the other
party (the "Receiving Party") in connection with this Agreement that is
specifically designated as confidential.

      1.2. "Field" means the development of adenosine-containing cosmetics
or dermatological skin treatments for use on human skin in the Territory.


      1.3. "Licensed Product" means any product that (a) cannot be
developed, manufactured, used, or sold without infringing one or more
claims under the Patent Rights, or (b) uses some portion of the Related
Technology.

      1.4. "Licensed Service" means any service that (a) cannot be
developed or performed without using at least one process that infringes
one or more claims under the Patent Rights, or (b) uses some portion of the
Related Technology.


<PAGE>


      1.5. "Net Sales" means the gross amount billed or invoiced on sales
by Company and its Sublicensees of Licensed Products and Licensed Services,
less the following: (a) customary trade, quantity, or cash discounts to
non-affiliated brokers or agents to the extent actually allowed and taken;
(b) amounts repaid or credited by reason of rejection or return; (c) to the
extent separately stated on purchase orders, invoices, or other documents
of sale, any taxes or other governmental charges levied on the production,
sale, transportation, delivery, or use of a Licensed Product or Licensed
Service which is paid by or on behalf of Company; and (d) outbound
transportation costs prepaid or allowed and costs of insurance in transit.

      In any transfers of Licensed Products between Company and a
Sublicensee, Net Sales are calculated based on the final sale of the
Licensed Product to an independent third party.  If Company or a
Sublicensee receives non-monetary consideration for any Licensed Products
or Licensed Services, Net Sales are calculated based on the fair market
value of that consideration.  If Company or its Sublicensees use or dispose
of a Licensed Product in the provision of a commercial service other than a
Licensed Service, the Licensed Product is sold and the Net Sales are
calculated based on the sales price of the Licensed Product to an
independent third party during the same Royalty Period or, in the absence
of sales, on the fair market value of the Licensed Product as determined by
the parties in good faith.

      1.6. "Patent Rights" means the United States patent applications
listed on Exhibit A and any divisional, continuation, or continuation-in-
part of those patent applications to the extent the claims are directed to
subject matter specifically described therein as well as any patents issued
on these patent applications and any reissues or reexaminations of those
patents, and any foreign counterparts to those patents and patent
applications.  Exhibit A shall be periodically amended to include any
additional Patent Rights that may arise.

      1.7. "Related Technology" means know-how, technical information,
research and development information, test results, and data necessary for
the effective exercise of the Patent Rights which have been developed by
James Dobson, Ph.D. as of the Effective Date and which are owned by
University.

      1.8. "Royalty Period" means the partial calendar quarter commencing
on the date on which the first Licensed Product is sold or used or the
first Licensed Service is performed and every complete or partial calendar
quarter thereafter during which either (a) this Agreement remains in effect
or (b) Company has the right to complete and sell work-in-progress and
inventory of Licensed Products pursuant to Section 8.5.

      1.9. "Sublicense Income" means payments that Company receives from a
Sublicensee in consideration of the sublicense of the rights granted
Company under Section 2.1., including without limitation license fees,
equity, royalties, milestone payments, and license maintenance fees, but
excluding the following payments: (a) payments made in consideration for
the issuance of equity or debt securities of Company at fair market value,
and (b) payments specifically committed to the development of Licensed
Products or Licensed Services.

      1.10. "Sublicensee" means any permitted sublicensee of the rights
granted Company under this Agreement, as further described in Section 2.2.

      1.11. "Territory" means the United States, Canada, Europe, and Japan.

2.    Grant of Rights.
      ----------------

      2.1. License Grants.

            (a) Patent Rights.  University grants to Company an exclusive,
worldwide, royalty-bearing license (with the right to sublicense) under its
commercial rights in the Patent Rights to develop, make, have made, use,
and sell Licensed Products in the Field and to develop and perform Licensed
Services in the Field.

            (b) Related Technology.  University grants to Company a non-
exclusive, royalty-bearing license (with the right to sublicense) under its
commercial rights in the Related Technology to develop, make, have made,
use, and sell Licensed Products in the Field and to develop and perform
Licensed Services in the Field.

      2.2. Sublicenses.  Company may grant sublicenses of its rights under
Section 2.1. with the consent of University, which consent may not be
unreasonably withheld or delayed.  All sublicense agreements executed by
Company pursuant to this Article 2 shall expressly bind the Sublicensee to
the terms of this Agreement.  Company shall promptly furnish University
with a fully executed copy of any sublicense agreement.


<PAGE>


      2.3. Retained Rights.

            (a) University.  University retains the right to make and use
Licensed Products and to perform Licensed Services for academic research,
teaching, and non-commercial patient care, without payment of compensation
to Company.  University may license its retained rights under this Section
to research collaborators of University faculty members, post-doctoral
fellows, and students.

            (b) Federal Government.  To the extent that any invention
claimed in the Patent Rights has been funded by the federal government,
this Agreement and the grant of any rights in Patent Rights are subject to
and governed by federal law as set forth in 35 U.S.C. Sections 201-211, and
the regulations promulgated thereunder, as amended, or any successor statutes
or regulations.  Company acknowledges that these statutes and regulations
reserve to the federal government a royalty-free, non-exclusive, non-
transferrable license to practice any government-funded invention claimed
in the Patent Rights.  If any term of this Agreement fails to conform with
those laws and regulations, the relevant term is an invalid provision and
shall be modified by the parties pursuant to Section 10.11.

            (c) Other Organizations.  To the extent that any invention
claimed in the Patent Rights has been funded by a non-profit organization
or state or local agency, this Agreement and the grant of any rights in
Patent Rights are subject to and governed by the terms of the applicable
research grant.  If any term of this Agreement fails to conform with those
terms , the relevant term is an invalid provision and shall be modified by
the parties pursuant to Section 10.11.

3.    Company Obligations Relating to Commercialization.
      --------------------------------------------------

      3.1. Diligence Requirements.  Company shall use diligent efforts, or
shall cause its Sublicensees to use diligent efforts, to develop Licensed
Products or Licensed Services and to introduce Licensed Products or
Licensed Services into the commercial market.  Thereafter, Company or its
Sublicensees shall make Licensed Products or Licensed Services reasonably
available to the public.  Specifically, Company shall fulfill the following
obligations:

            (a) Within one (1) year after the Effective Date, Company shall
furnish University with a written research and development and sublicensing
plan under which Company intends to develop Licensed Products or Licensed
Services.

            (b) Within one (1) year after the Effective Date, Company shall
secure a suitable Sublicensee.

            (c) Within one (1) year after the Effective Date, Company shall
furnish University with a written report on the progress of its efforts
during the prior year to develop, commercialize, and to sublicense Licensed
Products and Licensed Services, including without limitation research and
development efforts, efforts to obtain regulatory approval, marketing
efforts, and sales figures. The report shall contain a discussion of
intended efforts and sales projections for the current year.

If University determines that Company has not fulfilled its obligations
under this Section 3.1., University shall furnish Company with written
notice of the determination.  Within sixty (60) days after receipt of the
notice, Company shall either (i) fulfill the relevant obligation or (ii)
negotiate with University a mutually acceptable schedule of revised
diligence obligations, failing which University may, immediately upon
written notice to Company, terminate this Agreement or convert the
exclusive license into a non-exclusive license and grant additional
licenses to third parties to the Patent Rights in the Field.

      3.2. Indemnification.

            (a) Indemnity.  Company and Sublicensees shall indemnify,
defend, and hold harmless University and its trustees, officers, faculty,
students, employees, and agents and their respective successors, heirs and
assigns (the "Indemnitees"), against any liability, damage, loss, or
expense (including reasonable attorneys fees and expenses of litigation)
incurred by or imposed upon any of the Indemnitees in connection with any
claims, suits, actions, demands or judgments arising out of any theory of
liability (including without limitation actions in the form of tort,
warranty, or strict liability and regardless of whether the action has any
factual basis) concerning any product, process, or service that is made,
used, or sold pursuant to any right or license granted under this
Agreement.  However, indemnification does not apply to any liability,
damage, loss, or expense to the extent directly attributable to (i) the
negligent activities or intentional misconduct of the


<PAGE>


Indemnitees or (ii) the settlement of a claim, suit, action, or demand by
Indemnitees without the prior written approval of Company.

            (b) Procedures.  The Indemnitees agree to provide Company with
prompt written notice of any claim, suit, action, demand, or judgment for
which indemnification is sought under this Agreement.  Company agrees, at
its own expense, to provide attorneys reasonably acceptable to University
to defend against any claim.  The Indemnitees shall cooperate fully with
Company in the defense and will permit Company to conduct and control the
defense and the disposition of the claim, suit, or action (including all
decisions relative to litigation, appeal, and settlement).  However, any
Indemnitee may retain its own counsel, at the expense of Company, if
representation of the Indemnitee by the counsel retained by Company would
be inappropriate because of actual or potential differences in the
interests of the Indemnitee and any other party represented by that
counsel.  Company agrees to keep University informed of the progress in the
defense and disposition of the claim and to consult with University
regarding any proposed settlement.

            (c) Insurance.  Company shall maintain insurance or self-
insurance that is reasonably adequate to fulfill any potential obligation
to the Indemnitees, but not less than one million dollars ($1,000,000) for
injuries to any one person arising out of a single occurrence and five
million dollars ($5,000,000) for injuries to all persons arising out of a
single occurrence.  Company shall provide University, upon request, with
written evidence of insurance or self-insurance.  Company shall continue to
maintain such insurance or self-insurance after the expiration or
termination of this Agreement during any period in which Company or
Sublicensee continues (a) to make, use, or sell a product that was a
Licensed Product under this Agreement or (b) to perform a service that was
a Licensed Service under this Agreement, and thereafter for a period of
five (5) years.

      3.3. Use of University Name.  In accordance with Section 7.3.,
Company and its Sublicensees may not use the name "University of
Massachusetts" or any variation of that name in connection with the
marketing or sale of any Licensed Products or Licensed Services.

      3.4. Marking of Licensed Products.  To the extent commercially
feasible and consistent with prevailing business practices, Company shall
mark and shall cause its Sublicensees to mark all Licensed Products that
are manufactured or sold under this Agreement with the number of each
issued patent under the Patent Rights that applies to a Licensed Product.

      3.5. Compliance with Law.  Company shall comply with, and shall
ensure that its Sublicensees comply with, all local, state, federal, and
international laws and regulations relating to the development,
manufacture, use, and sale of Licensed Products and Licensed Services.
Company expressly agrees to comply with the following:

            (a) Company or its Sublicensees shall obtain all necessary
approvals from the United States Food & Drug Administration and any similar
governmental authorities of any foreign jurisdiction in which Company or
Sublicensee intends to make, use, or sell Licensed Products or to perform
Licensed Services.

            (b) Company and its Sublicensees shall comply with all United
States laws and regulations controlling the export of commodities and
technical data, including without limitation all Export Administration
Regulations of the United States Department of Commerce.  Among other
things, these laws and regulations prohibit or require a license for the
export of certain types of commodities and technical data to specified
countries.  Company hereby gives written assurance that it will comply with
and will cause its Sublicensees to comply with all United States export
control laws and regulations, that it bears sole responsibility for any
violation of those laws and regulations by itself or its Sublicensees, and
that it will indemnify, defend, and hold University harmless (in accordance
with Section 3.2.) for the consequences of any violation.

            (c) To the extent that any invention claimed in the Patent
Rights has been partially funded by the United States government, and only
to the extent required by applicable laws and regulations, Company agrees
that any Licensed Products used or sold in the United States will be
manufactured substantially in the United States or its territories.
Current law provides that if domestic manufacture is not commercially
feasible under the circumstances, University may seek a waiver of this
requirement from the relevant federal agency on behalf of Company.

4.    Consideration for Grant of Rights.
      ----------------------------------

      4.1. License Fee.  In partial consideration of the rights granted
Company under this Agreement, Company shall pay to University on the
Effective Date the first license fee payment of


<PAGE>


twenty five thousand dollars ($25,000). Company shall pay to University on
October 1, 2004, the second license fee payment of twenty five thousand
dollars ($25,000). The license fee payments are nonrefundable and are not
creditable against any other payments due to University under this
Agreement.

      4.2. Sublicense Income.  Company shall pay University a total of
fifty percent (50%) of all Sublicense Income.  Sublicense Income is due and
payable within sixty (60) days after Company receives the relevant payment
from the Sublicensee.

      4.3. Royalties. In partial consideration of the rights granted
Company and Sublicensees under this Agreement, Company and Sublicensees
shall pay University a minimum annual royalty of twenty-five thousand
dollars ($25,000) each calendar year during the term of this Agreement
commencing July 27, 2007. If the actual royalty payments to University in
any calendar year are less than the minimum royalty payment required for
that year, Company and Sublicensees shall have the right to pay University
the difference between the actual royalty payment and the minimum royalty
payment in full satisfaction of its obligations under this Section. Waiver
of any minimum royalty payment by University and Sublicensees shall not be
construed as a waiver of any subsequent minimum royalty payment. If Company
and Sublicensees fails to make any minimum royalty payment within the
sixty-day period, such failure shall constitute a material breach of its
obligations under this Agreement, and University shall have the right to
terminate this Agreement.

5.    Royalty Reports; Payments; Records.
      -----------------------------------

      5.1. First Sale.  Company shall report to University the date of
first commercial sale of each Licensed Product and the date of first
commercial performance of each Licensed Service within thirty (30) days
after occurrence in each country.

      5.2. Reports and Payments.  Within sixty (60) days after the
conclusion of each Royalty Period, Company or Sublicensee shall deliver to
University a report containing the following information:

            (a) the number of Licensed Products sold to independent third
parties in each country and the number of Licensed Products used by Company
in the provision of Licensed Services and other services in each country;

            (b) the number of Licensed Services provided by Company in each
country;

            (c) the gross sales price for each Licensed Product and the
gross charge for each Licensed Service by Company during the applicable
Royalty Period in each country;

            (d) calculation of Net Sales for the applicable Royalty Period
in each country, including a listing of applicable deductions;

            (e) total royalty payable on Net Sales in United States
dollars, together with the exchange rates used for conversion; and

            (f) Sublicense Income due to University for the applicable
Royalty Period from each Sublicensee.

If no royalties are due to University for any Royalty Period, the report
shall so state.  Concurrent with this report, Company shall remit to
University any payment due for the applicable Royalty Period.

      5.3. Payments in United States Dollars.  All payments due under this
Agreement are payable in United States dollars.  Conversion of foreign
currency to United States dollars shall be made at the conversion rate
existing in the United States (as reported in the Wall Street Journal) on
the last working day of the calendar quarter preceding the applicable
Royalty Period. Payments shall be without deduction of exchange,
collection, or other charges.

      5.4. Payments in Other Currencies.  If by law, regulation, or fiscal
policy of a particular country, conversion into United States dollars or
transfer of funds of a convertible currency to the United States is
restricted or forbidden, Company shall give University prompt written
notice of the restriction, within the sixty-day payment deadline described
in Section 5.2.  Company shall pay any amounts due University through
whatever lawful methods University reasonably designates.  However, if
University fails to designate a payment method within thirty (30) days
after University is notified of the restriction, Company may deposit
payment in


<PAGE>


local currency to the credit of University in a recognized banking
institution selected by Company and identified by written notice to
University, and that deposit fulfills all obligations of Company to
University with respect to that payment.

      5.5. Records.  Company shall maintain and shall cause its
Sublicensees to maintain complete and accurate records of Licensed Products
and Licensed Services that are made, used, sold, or performed under this
Agreement and any amounts payable to University in relation to Licensed
Products and Licensed Services, which records shall contain sufficient
information to permit University to confirm the accuracy of any reports
delivered to University under Section 5.2.  The relevant party shall retain
records relating to a given Royalty Period for at least three (3) years
after the conclusion of that Royalty Period, during which time University
shall have the right, at its expense, to cause its internal accountants or
an independent, certified public accountant to inspect records during
normal business hours for the sole purpose of verifying any reports and
payments delivered under this Agreement.  The accountant may not disclose
to University any information other than information relating to accuracy
of reports and payments delivered under this Agreement.  The parties shall
reconcile any underpayment or overpayment within thirty (30) days after the
accountant delivers the results of the audit.  If any audit performed under
this Section reveals an underpayment in excess of ten percent (10%) in any
Royalty Period, Company shall bear the full cost of the audit.  University
may exercise its rights under this Section only once every year and only
with reasonable prior notice to Company.

      5.6. Late Payments.  Any payments by Company that are not paid on or
before the date  payments are due under this Agreement bear interest to the
extent permitted by law at two percentage points above the Prime Rate of
interest as reported in the Wall Street Journal on the date payment is due,
with interest calculated based on the number of days that payment is
delinquent.

      5.7. Method of Payment.  All payments under this Agreement should be
made to the "University of Massachusetts" and sent to the address
identified below.  Each payment should reference this Agreement and
identify the obligation under this Agreement that the payment satisfies.

      5.8. Withholding and Similar Taxes.  Royalty payments and other
payments due to University under this Agreement may not be reduced by
reason of any withholding or similar taxes applicable to payments to
University.

6.    Patents and Infringement.
      -------------------------

      6.1. Responsibility for Patent Rights.  University has primary
responsibility for the preparation, filing, prosecution, and maintenance of
all Patent Rights, using patent counsel reasonably acceptable to Company.
University shall consult with Company as to the preparation filing,
prosecution, and maintenance of all Patent Rights reasonably prior to any
deadline or action with the PTO or any foreign patent office and shall
furnish Company with copies of relevant documents reasonably in advance of
consultation.

      6.2. Cooperation. Company shall cooperate fully in the preparation,
filing, prosecution, and maintenance of all Patent Rights.  Cooperation
includes, without limitation, (a) promptly executing all papers and
instruments or requiring employees of Company to execute papers and
instruments as reasonable and appropriate to enable University to file,
prosecute, and maintain Patent Rights in any country; and (b) promptly
informing the University of matters that may affect the preparation,
filing, prosecution, or maintenance of Patent Rights (such as, becoming
aware of an additional inventor who is not listed as an inventor in a
patent application).

      6.3. Payment of Expenses. Beginning on the first anniversary of the
Effective Date, within thirty (30) days after University invoices Company,
Company shall reimburse University for fifty percent (50%) of all patent-
related expenses incurred by University pursuant to Section 6.1. Company
may elect, upon sixty (60) days written notice to University, to cease
payment of the expenses associated with obtaining or maintaining patent
protection for one or more Patent Rights in one or more countries. If
Company elects to cease payment of any patent expenses, Company loses all
rights under this Agreement with respect to the particular Patent Rights.

      6.4. Infringement.

            (a) Notification of Infringement.  Each party agrees to provide
written notice to the other party promptly after becoming aware of any
infringement of the Patent Rights.


<PAGE>


            (b) Company Right to Prosecute.  So long as Company remains the
only licensee of the Patent Rights in the Field, Company may, under its own
control and at its own expense, prosecute any third party infringement of
the Patent Rights in the Field or, together with licensees of the Patent
Rights in other fields (if any), defend the Patent Rights in any
declaratory judgment action brought by a third party which alleges
invalidity, unenforceability, or infringement of the Patent Rights.  Prior
to commencing any action, Company shall consult with University and shall
consider the views of University regarding the advisability of the proposed
action and its effect on the public interest.  Company may not enter into
any settlement, consent judgment, or other voluntary final disposition of
any infringement action under this Subsection without the prior written
consent of University, which consent may not be unreasonably withheld or
delayed.  Any recovery obtained in an action under this Subsection shall be
distributed as follows: (i) each party shall be reimbursed for any expenses
incurred in the action (including the amount of any royalty payments
withheld from University as described below); (ii) as to ordinary damages,
Company shall receive an amount equal to its lost profits or a reasonable
royalty on the infringing sales (whichever measure of damages the court
applied), less a reasonable approximation of the royalties that Company
would have paid to University if Company had sold the infringing products
and services rather than the infringer; and (iii) as to special or punitive
damages, the parties shall share equally in any award.  Company may offset
a total of fifty percent (50%) of any expenses incurred under this
Subsection against any royalty payments due to University under this
Agreement.   However, royalty payments under Section 4.5. may never be
reduced by more than fifty percent (50%) in any Royalty Period.

            (c) University as Indispensable Party.  University shall permit
any action under this Section to be brought in its name if required by law,
provided that Company shall hold University harmless from, and if necessary
indemnify University against, any costs, expenses, or liability that
University may incur in connection with the action.

            (d) University Right to Prosecute.  If Company fails to
initiate an infringement action within a reasonable time after it first
becomes aware of the basis for the action, or to answer a declaratory
judgment action within a reasonable time after the action is filed,
University may prosecute the infringement or answer the declaratory
judgment action under its sole control and at its sole expense, and any
recovery obtained shall be given to University.

            (e) Cooperation.  Both parties shall to cooperate fully in any
action under this Section 6.6. which is controlled by the other party,
provided that the controlling party reimburses the cooperating party
promptly for any costs and expenses incurred by the cooperating party in
connection with providing assistance.

7.    Confidential Information; Publications; Publicity.
      --------------------------------------------------

      7.1. Confidential Information.

            (a) Designation.  Confidential Information that is disclosed in
writing shall be marked with a legend indicating its confidential status
(such as, "Confidential" or "Proprietary").  Confidential Information that
is disclosed orally or visually shall be documented in a written notice
prepared by the Disclosing Party and delivered to the Receiving Party
within thirty (30) days of the date of disclosure.   The notice shall
summarize the Confidential Information disclosed to the Receiving Party and
reference the time and place of disclosure.

            (b) Obligations.  For a period of five (5) years after
disclosure of any portion of Confidential Information, the Receiving Party
shall (i) maintain Confidential Information in confidence, except that the
Receiving Party may disclose or permit the disclosure of any Confidential
Information to its trustees or directors, officers, employees, consultants,
and advisors who are obligated to maintain the confidential nature of
Confidential Information and who need to know Confidential Information for
the purposes of this Agreement; (ii) use Confidential Information solely
for the purposes of this Agreement; and (iii) allow its trustees or
directors, officers, employees, consultants, and advisors to reproduce the
Confidential Information only to the extent necessary for the purposes of
this Agreement, with all reproductions being Confidential Information.

            (c) Exceptions.  The obligations of the Receiving Party under
Subsection 7.1.(b) above do not apply to the extent that the Receiving
Party can demonstrate that Confidential Information (i) was in the public
domain prior to the time of its disclosure under this Agreement; (ii)
entered the public domain after the time of its disclosure under this
Agreement through means other than an unauthorized disclosure resulting
from an act or omission by the Receiving Party; (iii) was independently
developed or discovered by the Receiving Party without use of the
Confidential Information; (iv) is or was disclosed to the Receiving Party
at any time, whether prior to or after the time of its disclosure under
this Agreement, by a third party having no fiduciary relationship with the
Disclosing Party and having no obligation of confidentiality with respect
to the Confidential Information; or (v) is required to be disclosed to
comply with applicable laws or regulations or with a court or


<PAGE>


administrative order, provided that the Disclosing Party receives
reasonable prior written notice of the disclosure.

            (d) Ownership and Return.  The Receiving Party acknowledges
that the Disclosing Party (or a third party entrusting its own information
to the Disclosing Party) owns the Confidential Information in the
possession of the Receiving Party.  Upon expiration or termination of this
Agreement, or at the request of the Disclosing Party, the Receiving Party
shall return to the Disclosing Party all originals, copies, and summaries
of documents, materials, and other tangible manifestations of Confidential
Information in the possession or control of the Receiving Party, except
that the Receiving Party may retain one copy of the Confidential
Information in the possession of its legal counsel solely for the purpose
of monitoring its obligations under this Agreement.

      7.2. Publications.  University and its employees are free to disclose
publicly (through journals, lectures, or otherwise) the results of any
research relating to the Field or the subject matter of the Patent Rights,
except as otherwise provided by written agreement between University and
Company (e.g., a sponsored research agreement).

      7.3. Publicity Restrictions.  Company may not use the name of
University or any of its trustees, officers, faculty, students, employees,
or agents, or any adaptation of their names, or any terms of this Agreement
in any promotional material or other public announcement or disclosure
without the prior written consent of University.  The foregoing
notwithstanding, Company may disclose that information without the consent
of University in any prospectus, offering memorandum, or other document or
filing required by applicable securities laws or other applicable law or
regulation, provided that Company provides University with written notice
of the proposed text for the purpose of giving University the opportunity
to comment on the text.

8.    Term and Termination.
      ---------------------

      8.1. Term.  This Agreement commences on the Effective Date and
remains in effect until (i) the expiration of all issued patents within the
Patent Rights or (ii) for a period of ten (10) years after the Effective
Date if no such patents have issued within that ten-year period, unless
earlier terminated in accordance with the provisions of this Agreement.

      8.2. Termination for Default.  If either party commits a material
breach of its obligations under this Agreement and fails to cure that
breach within sixty (60) days after receiving written notice of the breach,
the other party may terminate this Agreement immediately upon written
notice to the party in breach.  If the alleged breach involves nonpayment
of any amounts due University under this Agreement, Company has only one
opportunity to cure a material breach for which it receives notice as
described above.  Any subsequent material breach by Company will entitle
University to terminate this Agreement immediately upon written notice to
Company, without the sixty-day cure period.

      8.3. Force Majeure.  Neither party is responsible for delays
resulting from causes beyond its reasonable control, including without
limitation fire, explosion, flood, war, strike, or riot, provided that the
nonperforming party uses commercially reasonable efforts to avoid or remove
those causes of nonperformance and continues performance under this
Agreement with reasonable dispatch whenever the causes are removed.

      8.4. Effect of Termination.  The following provisions survive the
expiration or termination of this Agreement: Articles 1 and 9; Sections
3.2., 3.5., 5.2. (obligation to provide final report and payment), 5.5.,
6.4., 7.1., 7.3., 8.4., and 10.9.  Upon the early termination of this
Agreement, Company and its permitted Sublicensees may complete and sell any
work-in-progress and inventory of Licensed Products that exist as of the
effective date of termination, provided that (a) Company is current in
payment of all amounts due University under this Agreement, (b) Company
pays University the applicable royalty and Sublicense Income on sales of
Licensed Products in accordance with the terms of this Agreement, and (c)
Company and its Sublicensees complete and sell all work-in-progress and
inventory of Licensed Products within six (6) months after the effective
date of termination.

9.    Dispute Resolution.
      -------------------

      9.1. Procedures Mandatory.  The parties agree that any dispute
arising out of or relating to this Agreement will be resolved solely by
means of the procedures set forth in this Article, and that these
procedures constitute legally binding obligations that are an essential
provision of this Agreement.  However, all procedures and deadlines
specified in this Article may be modified by written agreement of the
parties.  If either party fails to observe the procedures of this Article,
as modified by their written agreement, the other party may bring an action
for specific performance in any court of competent jurisdiction.


<PAGE>


      9.2. Dispute Resolution Procedures.

            (a) Negotiation.  In the event of any dispute arising out of or
relating to this Agreement, the affected party shall notify the other
party, and the parties shall attempt in good faith to resolve the matter
within ten (10) days after the date of notice (the "Notice Date").  Any
disputes not resolved by good faith discussions shall be referred to senior
executives of each party, who shall meet at a mutually acceptable time and
location within thirty (30) days after the Notice Date and attempt to
negotiate a settlement.

            (b) Mediation.  If the matter remains unresolved within sixty
(60) days after the Notice Date, or if the senior executives fail to meet
within thirty (30) days after the Notice Date, either party may initiate
mediation upon written notice to the other party, whereupon both parties
shall  to engage in a mediation proceeding under the then current CPR
Institute for Dispute Resolution ("CPR") Model Procedure for Mediation of
Business Disputes, except that specific provisions of this Section override
inconsistent provisions of the CPR Model Procedure.  The mediator will be
selected from the CPR Panels of Neutrals.  If the parties cannot agree upon
the selection of a mediator within ninety (90) days after the Notice Date,
then upon the request of either party, the CPR shall appoint the mediator.
The parties shall attempt to resolve the dispute through mediation until
one of the following occurs: (i) the parties reach a written settlement;
(ii) the mediator notifies the parties in writing that they have reached an
impasse; (iii) the parties agree in writing that they have reached an
impasse; or (iv) the parties have not reached a settlement within one
hundred twenty (120) days after the Notice Date.

            (c) Trial Without Jury.  If the parties fail to resolve the
dispute through mediation, or if neither party elects to initiate
mediation, each party may pursue any other remedies legally available to
resolve the dispute.  However, the parties expressly waive the right to a
jury trial in the legal proceeding under this Section.

      9.3. Preservation of Rights Pending Resolution.

            (a) Performance to Continue.  Each party shall continue to
perform its obligations under this Agreement pending final resolution of
any dispute arising out of or relating to this Agreement.  However, a party
may suspend performance of its obligations during any period in which the
other party fails or refuses to perform its obligations.

            (b) Provisional Remedies.  Although the procedures specified in
this Article are the exclusive procedures for resolution of disputes
arising out of or relating to this Agreement, either party may seek a
preliminary injunction or other provisional equitable relief if, in its
reasonable judgment, that action is necessary to avoid irreparable harm to
itself or to preserve its rights under this Agreement.

            (c) Statute of Limitations.  The parties agree that all
applicable statutes of limitation and time-based defenses (such as,
estoppel and laches) are tolled while the procedures set forth in
Subsections 9.2.(a) and 9.2(b) are pending.  The parties shall take any
actions necessary to effectuate this result.

10.   Miscellaneous.
      --------------

      10.1. Representations and Warranties.  University represents that its
employees have assigned to University their entire right, title, and
interest in the Patent Rights and that it has authority to grant the rights
and licenses set forth in this Agreement.  UNIVERSITY MAKES NO OTHER
WARRANTIES CONCERNING THE PATENT RIGHTSAND RELATED TECHNOLOGY INCLUDING
WITHOUT LIMITATION ANY EXPRESS OR IMPLIED WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE.  Specifically, University makes no
warranty or representation (a) regarding the validity or scope of the
Patent Rights, (b) that the exploitation of the Patent Rights or Related
Technology or any Licensed Product or Licensed Service will not infringe
any patents or other intellectual property rights of a third party, and (c)
that any third party is not currently infringing or will not infringe the
Patent Rights.

      10.2. Compliance with Law and Policies.  Company agrees to comply
with applicable law and the policies of University in the area of
technology transfer and shall promptly notify University of any violation
that Company knows or has reason to believe has occurred or is likely to
occur.  The University policies currently in effect at the Worcester campus
are the Intellectual Property Policy, Policy on Conflicts of Interest
Relating to Intellectual Property and Commercial Ventures, and Policy on
Faculty Consulting and Outside Activities.


<PAGE>


      10.3. Tax-Exempt Status.  Company acknowledges that University, as a
public institution of the Commonwealth of Massachusetts, is an exempt
organization under the United States Internal Revenue Code of 1986, as
amended.  Company also acknowledges that certain facilities in which the
licensed inventions were developed may have been financed through offerings
of tax-exempt bonds.  If the Internal Revenue Service determines, or if
counsel to University reasonably determines, that any term of this
Agreement jeopardizes the tax-exempt status of University or the bonds used
to finance University facilities, the relevant term is invalid and shall be
modified in accordance with Section 10.11.

      10.4. Counterparts.  This Agreement may be executed in one or more
counterparts, each of which is an original, and all of which together are
one instrument.

      10.5. Headings.  All headings are for convenience only and do not
affect the meaning of any provision of this Agreement.

      10.6. Binding Effect.  This Agreement is binding upon and inures to
the benefit of the parties and their respective permitted successors and
assigns.

      10.7. Assignment.  This Agreement may not be assigned by either party
without the prior written consent of the other party.

      10.8. Amendment and Waiver.  This Agreement may be amended,
supplemented, or otherwise modified only by means of a written instrument
signed by both parties.  Any waiver of any rights or failure to act in a
specific instance relates only to that instance and is not an agreement to
waive any rights or fail to act in any other instance.

      10.9. Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts
irrespective of any conflicts of law principles.

      10.10. Notice.  Any notices required or permitted under this
Agreement shall be in writing, shall specifically refer to this Agreement,
and shall be sent by recognized national overnight courier, or registered
or certified mail, postage prepaid, return receipt requested, to the
following addresses:

If to University:

Executive Director
Office of Technology Management
University of Massachusetts Medical School
365 Plantation Street, Suite 130
Worcester, MA 01605-2395

If to Company:

Frank Gerardi
IGI, Inc.
105 Lincoln Ave.
Buena, NJ 08310
United States

All notices under this Agreement are effective upon receipt.  A party may
change its contact information immediately upon written notice to the other
party in the manner provided in this Section.

      10.11. Severability.  If any provision of this Agreement is held
invalid or unenforceable for any reason, the invalidity or unenforceability
does not affect any other provision of this Agreement, and the parties
shall negotiate in good faith to modify the Agreement to preserve (to the
extent possible) their original intent.  If the parties fail to reach a
modified agreement within sixty (60) days after the relevant provision is
held invalid or unenforceable, then the dispute shall be resolved in
accordance with the procedures set forth in Article 9.  While the dispute
is pending resolution, this Agreement shall be construed as if the
provision were deleted by agreement of the parties.


<PAGE>


      10.12. Entire Agreement.  Except for the Common Stock Purchase
Agreement, this Agreement constitutes the entire agreement between the
parties with respect to its subject matter and supersedes all prior
agreements or understandings between the parties relating to its subject
matter.


The parties have caused this Agreement to be executed by their duly
authorized representatives as of the Effective Date.


UNIVERSITY OF MASSACHUSETTS            IGI, Inc.


By: /s/ Chester Bisbee                 By: /s/ Frank Gerardi
-----------------------------------    ------------------------------------
Name:  Chester Bisbee, Ph.D., J.D.     Name:  Frank Gerardi
Title: Acting Executive Director       Title: CEO
Date:  7/27/04                         Date:   7/27/04


<PAGE>


                                  Exhibit A
                           Patent Rights-UMMC97-32


Title:          Treatment of Skin with Adenosine or Adenosine Analog

Inventors:      James Dobson, Ph.D.
                Michael Ethier, Ph.D.

Docket:         UMMC97-32

Patent #6,423,327 issued July 23, 2002

Patent #6,645,513 issued November 11, 2003

Continuation Application 10/680,370 filed October 7, 2003


<PAGE>

</TEXT>
</DOCUMENT>
