ASSET PURCHASE AGREEMENT



          ASSET PURCHASE AGREEMENT (together with the Annexes, Schedules and

Exhibits attached hereto, this "Agreement"), dated as of February 6, 2002 by and

between VETOQUINOL U.S.A., Inc., a Delaware corporation (the "Buyer"), and IGI,

INC., a Delaware corporation (the "Seller"). Capitalized terms used in this

Agreement are defined or otherwise referenced in Section 10.03.



                              W I T N E S S E T H:

                              - - - - - - - - - -



          WHEREAS, the Seller is in the business of the production and marketing

of companion pet products (the "Products") such as pharmaceuticals, nutritional

supplements and grooming aids and formulations under the names EVSCO

Pharmaceuticals, Tomlyn and Luv `Em (collectively, the "Pet Business"); and



          WHEREAS, the Seller desires to sell to the Buyer, and the Buyer

desires to purchase from the Seller, the Purchased Assets, and the Buyer has

agreed to assume the Assumed Liabilities, in each case in connection with the

Pet Business and upon the terms and conditions hereinafter set forth.



          NOW, THEREFORE, in consideration of the mutual representations and

warranties and covenants made herein, the Buyer and the Seller, each intending

to be legally bound, hereby agree as follows:



                                   ARTICLE I



                           PURCHASE AND SALE OF ASSETS

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     Section 1.01. Purchase and Sale of Assets.

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          (a) At the Closing provided for in Section 2.01, on the terms and

subject to the conditions set forth in this Agreement, the Seller shall, or

shall cause its Subsidiaries to, sell, convey, transfer, assign and deliver to

the Buyer, free and clear of any and all Liens and Encumbrances, and the Buyer

shall purchase and acquire from the Seller or its Subsidiaries, as applicable,

all of the right, title and interest of the Seller or its Subsidiaries, as

applicable, in and to all of the assets used solely in the Pet Business existing

on the Closing Date other than the Excluded Assets (collectively, the "Purchased

Assets"). The Purchased Assets include the following:



               (i) all inventories solely of the Pet Business including, without

     limitation, raw materials, work in progress, consigned goods, finished

     goods, packaging and labels (including, without limitation, any of the

     foregoing owned by the Seller and held for the benefit of the Seller or its

     Subsidiaries and in the possession of third party manufacturers, suppliers,

     dealers or others in transit) (the "Inventory"),



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              (ii)  except as provided in Section 1.01(b)(ii), all items of

     personal property used solely in connection with the Pet Business

     including, without limitation, the personal property set forth on Schedule

                                                                       --------

     1.01(a)(ii);

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              (iii) except for the Novasome Technology and as provided in

     Section 1.01(b)(i), all past and current product formulations,

     specifications, processes, trade secrets, inventions for which no patents

     are pending, industrial rights and technological know-how owned by the

     Seller or any of its Subsidiaries relating solely to the Products, any of

     the Purchased Assets, or the Pet Business (excepting the Novasome

     Technology and as provided in Section 1.01(b)(i), the "Technology")

     including, but not limited to, those set forth on Schedule 1.01(a)(iii);

                                                       ---------------------



              (iv)  to the extent maintained by the Seller or any of its

     Subsidiaries, all books, records, files and other data of the Seller or any

     of its Subsidiaries (including those stored electronically) other than

     Accessible Financial Records, in each case relating solely to any of the

     Products, the Purchased Assets or the Pet Business, including, but not

     limited to, customer lists, customer purchasing histories, price lists,

     distribution lists, supplier lists, inventory reports of raw materials,

     packaging, goods in process and finished goods, production data,

     manufacturing and quality control records and procedures, customer

     complaint and inquiry files, research and development files, records, data

     and laboratory books, medical reports, files relating to the safety and

     effectiveness of each of the Products, adverse reaction reports, Product

     Registrations and regulatory files (including, but not limited to, all

     correspondence with any Governmental Entity), sales materials and records,

     strategic plans, internal financial statements, marketing and promotional

     surveys, material and research, trademark and Intellectual Property files

     and import and export records; provided that the Seller may maintain and

     retain copies of all such materials;



              (v)   the agreements, personal property leases, contracts,

     licenses, leases, commitments, understandings, instruments, binding

     obligations and arrangements (oral or written) (A) set forth (or, in the

     case of oral contracts a description of the material terms of which are set

     forth) in Schedule 1.01(a)(v) or (B) that are entered into in the ordinary

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     course of the Pet Business between the date hereof and the Closing Date

     (the "Assumed Contracts");



              (vi)  to the extent their transfer is permitted by Applicable Law,

     all approvals, consents, permits, licenses, registrations, authorizations

     and clearances of any Governmental Entity including, without limitation,

     all Product Registrations, FDA approvals, product clearances and any other

     product registrations issued or granted to the Seller or any of its

     Subsidiaries relating, in each case, solely to any of the Products, the

     Purchased Assets or the Pet Business (the "Permits") including, but not

     limited to, the Permits set forth on Schedule 1.01(a)(vi);

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              (vii) all current and historical sales and promotional literature

     and other material of the Seller or any of its Subsidiaries relating solely

     to the Products, the Purchased Assets or the Pet Business, including, but

     not limited to, promotional



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     pamphlets and brochures, samples, historical and current television, radio

     and other media advertising, historical and current print advertising and

     all artwork relating to sales and promotional literature; provided that the

     Seller may maintain and retain copies of all such materials;



          (viii) all labels, logo's, graphics and associated artwork, all

     current and historical packaging, and all litho screens, master silk

     screens, printing plates and associated tooling and material, in each case

     owned by the Seller or any of its Subsidiaries and relating solely to the

     Products, the Purchased Assets or the Pet Business including, but not

     limited to, those set forth on Schedule 1.01(a)(viii); provided that the

                                    ----------------------

     Seller may maintain and retain copies of all such materials;



          (ix)   except as set forth in Section 1.01(b)(i), all rights of the

     Seller in all Intellectual Property relating solely to any of the Products,

     the Purchased Assets or the Pet Business, including the goodwill associated

     therewith, and the Seller's or its Subsidiaries' right to sue for, and

     remedies against, past, present or future infringements thereof, and rights

     of priority and protection of interest therein;



          (x)    all accounts receivable of the Seller or any of its

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