UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934 (Amendment No.     )

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Preliminary Proxy Statement

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Definitive Proxy Statement

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Definitive Additional Materials

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Soliciting Material Pursuant to Section 240.14a-12

IGI, INC.

_______________________________________________

(Name of Registrant as Specified in Its Charter)

_______________________________________________

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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IGI, INC.
105 Lincoln Avenue
Buena, New Jersey 08310

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

to be held on May 7, 2008

To the Stockholders of
IGI, Inc.

      The Annual Meeting of Stockholders of IGI, Inc. will be held at Buena Vista Country Club, 301 Country Club Lane, Buena, New Jersey, 08310, on Wednesday, May 7, 2008, at 10:00 a.m. local time. The purposes of the Annual Meeting are:

1.

To elect four directors to serve until the next Annual Meeting of Stockholders and until their respective successors have been elected and qualified;

2.

To amend and restate our Certificate of Incorporation, as amended, to change our name to IGI Laboratories, Inc., amend the lawful purposes provision of the Certificate of Incorporation, as amended, and remove certain provisions that are no longer in effect;

3.

To transact such other business as may properly come before the Annual Meeting and any adjournments thereof.

      Our Board of Directors has fixed April 3, 2008 as the record date for the Annual Meeting. Owners of shares of our common stock or Series A Convertible Preferred Stock at the close of business on the record date are entitled to notice of and to vote at the Annual Meeting and any adjournments thereof.

      A copy of our Annual Report to Stockholders for the year ended December 31, 2007, which contains financial statements and other information of interest to stockholders, accompanies this Notice and the enclosed Proxy Statement.

WE URGE YOU TO VOTE YOUR SHARES PROMPTLY. TO VOTE YOUR SHARES, PLEASE COMPLETE, DATE, SIGN AND RETURN THE ACCOMPANYING PROXY CARD PROMPTLY. PLEASE REFER TO THE ENCLOSED PROXY CARD FOR SPECIFIC VOTING INSTRUCTIONS.

By Order of the Board of Directors,

Carlene A. Lloyd, Secretary

Buena, New Jersey

April 15, 2008

IGI, INC.
105 Lincoln Avenue
Buena, New Jersey 08310

PROXY STATEMENT

      The Board of Directors is furnishing stockholders this Proxy Statement to solicit proxies to be voted at our Annual Meeting of Stockholders, which we refer to in these proxy materials as our Annual Meeting. Our Annual Meeting will be held on Wednesday, May 7, 2008, at 10:00 a.m. local time at Buena Vista Country Club, 301 Country Club Lane, Buena, New Jersey, 08310. This Proxy Statement, including the Notice of Annual Meeting of Stockholders and the accompanying proxy card, together with our Annual Report to Stockholders for the year ended December 31, 2007 were first mailed or given to our stockholders on or about April 15, 2008.

      Each proxy received will be voted as you direct it to be voted. If you do not indicate on your proxy how you want your vote counted, your proxy will be voted FOR electing the nominees named below as directors and for the amendment and restatement of our Certificate of Incorporation, as amended. If you are a stockholder of record (that is, your stock is registered directly in your name on the books of our transfer agent, American Stock Transfer and Trust Company), you can revoke your proxy or change your vote at any time before it is exercised by giving written notice to our Secretary specifying such revocation. If you hold your shares in "street name" as a beneficial owner (that is, your broker, bank or other nominee hold stock in your account and not directly in your name), you can revoke your proxy by contacting your broker, bank or other nominee and submitting a later dated voting instruction card. Votes are tabulated by the American Stock Transfer and Trust Company and the results will be reported at the Annual Meeting.

      If you complete and properly sign the accompanying proxy card and return it to us, your proxy will be voted as you direct. If you are a stockholder of record as of the close of business on April 3, 2008, which we refer to in the proxy materials as the Record Date, and attend the Annual Meeting, you may deliver your completed proxy card in person, or vote in person at the Annual Meeting (proxy cards will be available at the Annual Meeting for that purpose), or revoke a previously submitted proxy and complete a new proxy.

      However, if you hold your shares in "street name" as a beneficial owner, your broker may vote your shares on your behalf unless you have previously informed your broker not to do so; otherwise,

      a)

you must return your voting instructions to your broker or nominee (that is, the holder of record);

      b)

if you wish to vote in person at the Annual Meeting, you must obtain from the record holder and bring to the Annual Meeting a proxy signed by the record holder identifying you as the beneficial owner of the shares and giving you the right to vote the shares at the Annual Meeting. (You may not use the voting instruction form provided by your broker or nominee to vote in person at the Annual Meeting).

      Only holders of record of our 14,833,462 outstanding shares of common stock, $0.01 par value per share, and 50 outstanding shares of Series A Convertible Preferred Stock, $0.01 par value per share, which we refer to in these proxy materials as the Series A Preferred Stock, as of the close of business on the Record Date, will be entitled to vote at the Annual Meeting. Each holder of shares of our common stock on the Record Date is entitled to one vote for each share of our common stock held by that holder. Each holder of shares of our Series A Preferred Stock on the Record Date is entitled to a number of votes for each share of Series A Preferred Stock held by such holder equal to the number of shares of common stock into which such share of Series A Preferred Stock is then convertible. Currently, each share of Series A Preferred Stock is convertible into 10,000 shares of our common stock. Holders of our common stock and Series A Preferred Stock will vote together as a single class at our Annual Meeting. If you abstain from voting, your shares will be counted as shares present and entitled to vote in determining the presence of a quorum for the Annual Meeting, but your shares will not be voted in determining approval of any matter submitted to stockholders for a vote. Abstentions related to a proposal which must be approved by a majority of the votes cast, which does not include the election of directors, will count as a "no" vote. Abstentions have no impact on the election of directors because directors are elected by a plurality of votes cast at the Annual Meeting. If you do not provide voting instructions to your broker and your broker indicates on its proxy card that it does not have

discretionary authority to vote on a particular proposal, your shares will be considered to be "broker non-votes" with regard to that matter. Broker non-votes will be considered to be represented for purposes of determining a quorum but generally will not be considered to be entitled to vote with respect to that proposal. Broker non-votes are not counted in the tabulation of the voting results with respect to the election of directors or for purposes of determining the number of votes cast with respect to a particular proposal. Thus, a broker non-vote will make a quorum more readily obtainable, but a broker non-vote will not otherwise affect the outcome of a vote on a proposal that requires a majority of the votes cast. With respect to a proposal that requires a majority of the outstanding shares (of which there are none for this Annual Meeting), a broker non-vote has the same effect as a vote against the proposal.

Votes Required

      The holders of capital stock representing a majority of the outstanding voting power of all outstanding shares of our common stock and Series A Preferred Stock entitled to vote at the Annual Meeting shall constitute a quorum for the transaction of business at the Annual Meeting. Shares of our common stock or Series A Preferred Stock present in person or represented by proxy (including shares which abstain or do not vote with respect to one or more of the matters presented for stockholder approval) will be counted for purposes of determining whether a quorum exists at the Annual Meeting.

      Election of Directors. The affirmative vote of a plurality of the votes cast at the Annual Meeting is required for the election of directors. A properly executed proxy marked "Withhold Authority" with respect to the election of one or more directors will not be voted with respect to the director or directors indicated, although such proxy will be counted for purposes of determining whether there is a quorum.

      Amendment and Restatement of Certificate of Incorporation, as amended. The affirmative vote of a majority of the votes present in person or by proxy and entitled to vote will be required for approval.

      Other Items. For each other item, the affirmative vote of a majority of the votes present in person or by proxy and entitled to vote will be required for approval.

      Abstentions with respect to Proposal 2 (relating to our Amended and Restated Certificate of Incorporation) are treated as shares present or represented and voting, so abstaining has the same effect as a negative vote. Shareholders may not exercise appraisal rights in connection with any proposal being considered at the Annual Meeting.

PROPOSAL 1 - ELECTION OF DIRECTORS

Nominees for Election as Directors

      At the Annual Meeting, stockholders will elect four members to our Board of Directors by plurality of the votes cast. Our Board of Directors proposes the four nominees named below.

      All of the nominees named below are currently serving as our directors. None of our directors, executive officers or nominees for director is related by family to any other director, executive officer or nominee for director. If any nominee for director is unavailable to serve, we solicit discretionary authority to vote to elect another person unless we reduce the size of the Board of Directors. Each director will serve until the next annual meeting of stockholders, and until his or her successor has been elected and qualified, or until his or her earlier resignation or removal. We have no reason to believe that any nominee will not be available for election as a director for the prescribed term.

      The following table sets forth information regarding each nominee for director according to the information furnished to us by each such nominee:

Name

Age

Positions Currently
held with IGI

Committee
Membership

Director of IGI
Since

Terrence O'Donnell

64

Director

A, C, N

1993 - Present

Stephen J. Morris

75

Director

C, N

1999 - Present

Rajiv Mathur

53

Director, President and
Chief Executive Officer

______

2005 - 2006
2006 - Present

Jane E. Hager

62

Director

A, C, N

1982 - 2003
2007 - Present

A - Audit Committee
C - Organization and Compensation Committee
N - Nominating and Corporate Governance Committee

Name

Principal Occupation, Other Business Experience and Other Directorships

Terrence O'Donnell

Executive Vice President and General Counsel, Textron Inc., a producer of aircraft, automotive products and industrial products, since March 2000; Member of the Law Firm of Williams & Connolly, Washington, D.C., since April 1991 and from March 1977 to October 1989; General Counsel of Department of Defense from October 1989 to March 1991; Special Assistant to President Ford from August 1974 to January 1977; Deputy Special Assistant to President Nixon from May 1972 to August 1974; Director of ePlus, Inc. (formerly MLC Holdings), a provider of enterprise cost management software.

Stephen J. Morris

Chairman of Pure Energy Corporation, a developer of cleaner burning motor fuels and production technologies to produce bio-chemicals, since September 2003; co-founder and General Manager of John Morris Sons, Inc., a hotel and restaurant enterprise, which Mr. Morris owned and managed from July 1958 to December 1998; co-founder and Advisor of International Scientific Communications, a scientific publishing company, since 1969.

Rajiv Mathur

President and Chief Executive Officer of IGI, Inc. since January 1, 2007; Director from September 12, 2005 to November 30, 2006 and from December 12, 2006 to present; Vice President of Skin Care Operations, Cardinal Health Topical Technologies, a pharmaceutical distribution and marketing company, from April 2001 to December 29, 2006; President of Consumer Products Division; Senior Vice President of Operations and Vice President of Research and Development at IGI Inc. from 1992 to 2001. Mr. Mathur holds an MBA and a Bachelor of Science, Pharmacy.

Jane E. Hager

President of Prescott Investment Corp., since 1991 and Pinnacle Mountain Partners, LLC since 2002; Managing Member of Gulf Coast Investment Partners, LLC since 2003 and Angelfish Investments, LLC since 2004, all of which are real estate development and/or investment companies. She is a founder and past director of IGI, Inc. from 1982 to 2003 and Novavax, Inc. [NASDAQ] from 1995 to 2002. Mrs. Hager is also a founding director and Chair of the Audit Committee of Centrix Bank & Trust, Bedford, NH [OTCBB] since 1999 and a director of ZSGenetics, Stoddard, NH since 2006, a gene expression and sequencing company.

Independence of Directors

      Our Board of Directors has determined nominees Terrence O'Donnell, Stephen J. Morris, and Jane E. Hager are independent directors pursuant to the independence standards established by the American Stock Exchange, Inc. (AMEX) and U.S. Securities & Exchange Commission (SEC).

      For information relating to shares of our common stock held by each of the directors, see "Security Ownership of Certain Beneficial Owners and Management."

Board Recommendation

Our Board of Directors Recommends a Vote "For" the election of the Nominees listed above.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT

      The following table sets forth certain information, as of April 3, 2008, with respect to the beneficial ownership of our common stock and Series A Preferred Stock held by: (i) each stockholder known by us to be the beneficial owner of more than 5% of our common stock or Series A Preferred Stock; (ii) each director or director nominee; (iii) each one of our executive officers named in the Summary Compensation Table in this proxy statement, whom we refer to as our Named Executive Officers and (iv) all current executive officers and directors as a group.

      Beneficial ownership is determined in accordance with the rules of the SEC. Shares of our capital stock subject to options or warrants currently exercisable or exercisable within 60 days of April 3, 2008 are deemed to be outstanding for calculating the percentage of outstanding shares of the person holding those options or warrants, but are not deemed outstanding for calculating the percentage of any other person. Percentage of beneficial ownership of our common stock and Series A Preferred Stock is based upon 14,833,462 shares of our common stock and 50 shares of our Series A Preferred Stock outstanding as of April 3, 2008, respectively. To our knowledge, except as set forth in the footnotes to this table and subject to applicable community property laws, each person named in the table has sole voting and investment power with respect to the shares set forth opposite such person's name. Except as otherwise indicated, the address of each of the persons in this table is c/o IGI, Inc., 105 Lincoln Avenue, Buena, New Jersey 08310.

Common Stock

Series A Preferred Stock (1)

Names and Beneficial Owners
(address, if ownership is
more than 5%)

Number

Percent
of Class

Number

Percent
of Class

Stephen J. Morris (2)

    Director
    666 Navesink Avenue
    Rumson, NJ 07760

3,206,073

21.3

--

--

Frank Gerardi (3)

    c/o Univest Management Inc. EPSP
    149 West Village Way
    Jupiter, FL 33458

2,273,435

15.3

--

--

Edward B. Hager, M.D. (4)(5)

    Pinnacle Mountain Farms
    Lyndeboro, NH 03082

1,601,886

10.6

--

--

Jane E. Hager (4)(6)

    Pinnacle Mountain Farms
    Lyndeboro, NH 03082

2,291,716

15.2

--

--

Hager Family Trust (4)

    Pinnacle Mountain Farms
    Lyndeboro, NH 03082

1,407,635

  9.5

Pharmachem Laboratories, Inc. (7)

    265 Harrison Avenue
    Harrison, NJ 07032

1,500,000

10.1

--

--

Federico Buonanno (8)

    42 E. Bergen Place
    Red Bank, NJ 07701

   675,000

  4.5

50

100%

Other Directors and Executive Officers Named in the Summary Compensation Table

Terrence O'Donnell (9)

   402,040

  2.7

--

--

Rajiv Mathur (10)

   290,791

  1.9

--

--

Carlene Lloyd (11)

     76,993

*

--

--

Nadya Lawrence (12)

   266,178

  1.8

--

--

All Executive Officers and Directors, As a Group

All executive officers and directors as a
group (6 persons)(2)(5)(8)(9)(10)(11)

6,533,791

40.7

--

--

--

*

Less than 1%

(1)

Matters on which the holders of Series A Preferred Stock vote together as a single class with the holders of common stock, each holder of shares of our Series A Preferred Stock is entitled to a number of votes for each share of Series A Preferred Stock held by such holder equal to the number of shares of common stock into which such share of Series A Preferred Stock is then convertible. Currently, each share of Series A Preferred Stock is convertible into 10,000 shares of our common stock. Such conversion ratio may be adjusted from time to time pursuant to customary adjustment features as set forth in the Certificate of Designation for the Series A Preferred Stock. The holders of our Series A Preferred Stock would vote as a separate class with respect to any change to the rights, designations, and preferences of the Series A Preferred Stock. On all other matters, holders of our common stock and Series A Preferred Stock will vote together as a single class at our Annual Meeting.

(2)

Includes 157,016 shares of common stock which may be acquired pursuant to stock options exercisable within 60 days after April 3, 2008. Includes 2,411,325 shares which Mr. Morris owns jointly with his wife and 200 shares owned directly by his wife. Excludes 160,765 shares, which are owned by Mr. Morris' children as Mr. Morris disclaims beneficial ownership of such shares due to his children's attainment of the age of majority.

(3)

Information is based on Amendment No. 4 to Schedule 13D on February 25, 2008 and a Form 4 filed on March 12, 2008 with the Securities and Exchange Commission by Frank Gerardi. Includes 1,830,237 shares of common stock and warrants to acquire an additional 52,500 shares of common stock held by Univest Management Inc. Employee Profit Sharing Plan. Mr. Gerardi serves as the trustee of such plan and all shares owned by such plan are for the benefit of Mr. Gerardi. Mr. Gerardi possesses sole power to vote and direct the disposition of all of the securities held by the Univest Management Inc. Employee Profit Sharing Plan. Such amount also includes 198,266 shares of common stock which may be acquired pursuant to stock options exercisable within 60 days after April 3, 2008.

(4)

Includes 1,407,635 shares of common stock held by the Hager Family Trust. Jane E. Hager and Edward B. Hager are co-trustees of the Hager Family Trust and share voting and dispositive power over the shares held by the trust.

(5)

Includes (i) 100,000 shares of common stock which may be acquired pursuant to stock options exercisable within 60 days after April 3, 2008, (ii) 4,251 shares of common stock held directly by Mr. Hager's wife and (iii) 90,000 shares of common stock which may be acquired pursuant to stock options exercisable by Mr. Hager's wife within 60 days of April 3, 2008.

(6)

Includes (i) 90,000 shares of common stock which may be acquired pursuant to stock options exercisable within 60 days after April 3, 2008, (ii) 689,830 shares of common stock are held by the Jane E. Hager Trust of 1990 of which Mrs. Hager acts as sole trustee and has sole voting and dispositive power over the shares held by the trust, and (iii) 100,000 shares of common stock which may be acquired pursuant to stock options exercisable by Mrs. Hager's husband within 60 days of April 3, 2008.

(7)

Information based on a Form 3 filed by Pharmachem Laboratories, Inc. with the Securities and Exchange Commission on May 24, 2007.

(8)

Includes 500,000 shares of common stock which may be acquired pursuant to the conversion of shares of Series A Preferred Stock convertible within 60 days after April 3, 2008.

(9)

Includes 215,000 shares of common stock which may be acquired pursuant to stock options exercisable within 60 days after April 3, 2008.

(10)

Includes 280,000 shares of common stock which may be acquired pursuant to stock options exercisable within 60 days after April 3, 2008.

(11)

Includes 75,000 shares of common stock which may be acquired pursuant to stock options exercisable within 60 days after April 3, 2008.

(12)

Includes 255,250 shares of common stock which may be acquired pursuant to stock options exercisable within 60 days after April 3, 2008.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

      Section 16(a) of the Exchange Act requires our directors, executive officers and holders of more than 10% of our common stock ("Reporting Persons") to file with the SEC and the AMEX initial reports of ownership and reports of changes in ownership of our common stock and other equity securities. SEC regulations also require such persons to furnish us with copies of all such reports. Based solely on our review of copies of reports filed by Reporting Persons and furnished to us, we believe that, except as set forth below, during 2007 our officers, directors and holders of more than 10% of our common stock complied with all Section 16(a) filing requirements. During 2007, Rajiv Mathur filed one late Form 4 relating to one transaction, Jane E. Hager filed one late Form 4 relating to four transactions and one late Form 5 relating to one transaction from 2006, Steve Morris filed one late Form 4 relating to one transaction, Terrence O'Donnell filed one late Form 4 in 2008 relating to 16 separate transactions in 2007, Pharmachem Laboratories filed a late Form 3 and Frank Gerardi filed five late Form 4's relating to 14 transactions.

STRUCTURE AND PRACTICES OF THE BOARD OF DIRECTORS

Corporate Governance Principles

      Our Certificate of Incorporation, together with all amendments, our Bylaws, and the charters of the Audit Committee, Nominating and Corporate Governance Committee, and Organization and Compensation Committee, provide the framework for our management and governance.

      Our Board of Directors is elected by and responsible to our stockholders. Except with respect to matters reserved to stockholders, the Board of Directors is our ultimate decision making body. In that capacity, the Board of Directors takes an engaged and focused approach to its responsibilities and duties, and sets standards to better ensure that we are committed to business success and enhancement of stockholder value by maintaining the highest standard of responsibility and ethics. The Board of Directors has designed its governance approach to be a working structure for principled actions, effective decision-making and appropriate monitoring of both compliance and performance.

      Our employees, managers and officers conduct our business under the direction of senior management and the leadership of our Chief Executive Officer, who are accountable to the Board of Directors and ultimately to the stockholders. Management is responsible for the day-to-day operation of our business, strategic planning, budgeting, financial reporting and risk management.

Committees of the Board of Directors

      Our Board of Directors has an Audit Committee, a Nominating and Corporate Governance Committee, and an Organization and Compensation Committee. The present compositions of the committees of the Board of Directors are set forth below.

      The members of the committees are as follows:

Audit Committee

Nominating and
Corporate
Governance Committee

Organization and
Compensation
Committee

Jane E. Hager*

Terrence O'Donnell*

Stephen J. Morris*

Terrence O'Donnell

Jane E. Hager

Terrence O'Donnell

Stephen J. Morris

Jane E. Hager

* - Denotes Chairman

      Organization and Compensation Committee. Our Board of Directors has adopted a charter governing the duties and responsibilities of the Organization and Compensation Committee. The full text of the charter of the Organization and Compensation Committee is available on our website at www.askigi.com. Pursuant to the charter, the purposes of the Committee are to: (i) recommend to the Board of Directors compensation arrangements for the Chief Executive Officer and other executive officers and review their responsibilities and performance and plans for their succession; and (ii) approve compensation arrangements for and changes in other corporate officers. In furtherance of this purpose, the Committee shall have the following goals and responsibilities:

•

Review with appropriate representatives of our management our organizational structure and, in particular, the responsibilities and performance of executive officers and, from time to time, senior operations executives and the plans for their succession; and to report at least annually thereon to the Board of Directors.

•

Consider appropriate competitive data and recommend to the Board of Directors compensation and fringe benefits (except pension generally applicable to salaried employees) for executive officers.

•

Consider appropriate competitive data, and any recommendation made by the Chief Executive Officer and approve: (i) executive salary structure; and (ii) compensation and fringe benefits (except pensions generally applicable to salaried employees) for other corporate officers.

•

In connection with our annual incentive compensation programs, each year: (i) review and approve the Chief Executive Officer's goals and his/her performance against those goals; (ii) approve annual incentive compensation targets; (iii) approve an annual incentive compensation award for the Chief Executive Officer, other executive officers and other corporate officers; (iv) review the annual performance objectives of the other executive officers; and (v) review annual incentive compensation awards for senior operations executives.

•

Review with appropriate officers: (i) changes in corporate officers; (ii) policy on matters pertaining to compensation; (iii) special benefits and perquisites; (iv) each year on a retrospective basis, compensation changes made in the prior year to determine whether policies established by the Committee have been executed as intended and are achieving the intended result; (v) each year on a retrospective basis, corporate results against corporate goals; and (vi) any other matter of concern to the Committee relating to our overall corporate organization or compensation policy.

      The members of the Organization and Compensation Committee are Terrence O'Donnell, Jane E. Hager and Stephen J. Morris (Chair). We believe that the composition and functioning of the Organization and Compensation Committee complies with all applicable requirements of the Sarbanes-Oxley Act of 2002, AMEX and SEC rules and regulations, including those regarding the independence of the Organization and Compensation Committee Members. During our 2007 fiscal year, the Organization and Compensation Committee met one time.

      Audit Committee. The Audit Committee has been established for the purpose of overseeing our accounting and financial reporting processes and the audit of our annual financial statements, as well as our internal controls and audit functions. The Audit Committee operates under a written charter adopted by the Board of Directors. The full text of the charter of the Audit Committee is available on our website at www.askigi.com.

      As described more fully in the Audit Committee Charter, the purpose of the Audit Committee is to assist the Board of Directors in fulfilling its responsibilities to stockholders concerning our accounting and reporting practices, and to facilitate open communication between the Audit Committee, the Board of Directors, our outside auditor and management. The Audit Committee is required to discharge its responsibilities, and assess the information provided by our management and the outside auditor, in accordance with its business judgment. In exercising its business judgment, the Audit Committee is required to rely on the information and advice provided by management and/or our outside auditor. Pursuant to its charter, the function of the Audit Committee includes:

•

to provide the opportunity for direct communication between the Board of Directors and our external auditors;

•

to monitor the design and maintenance of our system of internal accounting controls;

•

to select, evaluate and, if necessary, replace the external auditors;

•

to review the results of internal and external audits as to the reliability and integrity of the financial and operating information systems established to monitor compliance with our policies, plans and procedures and with laws and regulations; and

•

to review the relationship between us and the external auditors and to ascertain the independence of the external auditors.

      The members of the Audit Committee are Jane E. Hager (Chair) and and Terrence O'Donnell. We believe that the composition and functioning of our audit committee complies with all applicable requirements of the Sarbanes-Oxley Act of 2002, AMEX and SEC rules and regulations, including those regarding the independence of the Audit Committee members. The Board of Directors has determined that Jane E. Hager is an "audit committee financial expert" as currently defined under the SEC's rules implementing Section 407 of the Sarbanes-Oxley Act of 2002. The Audit Committee met four times during the 2007 fiscal year. A report of the Audit Committee is set forth herein.

      Nominating and Corporate Governance Committee. Our Board of Directors has adopted a charter governing the duties and responsibilities of the Nominating and Corporate Governance Committee. The full text of the charter of the Nominating and Corporate Governance Committee is available on our website at www.askigi.com. Pursuant to the charter, the purpose of the Nominating and Corporate Governance Committee is to identify individuals qualified to become members of our Board of Directors, and to recommend that our Board of Directors select the director nominees for the next annual meeting of stockholders, to develop and recommend to the Board of Directors a set of corporate governance principles applicable to us, and to make recommendations on compensation of the Board of Directors. In furtherance of such purpose, the Nominating and Corporate Governance Committee shall have the following goals and responsibilities:

•

To identify, review and recommend to the Board of Directors qualified candidates for director nominees to fill any existing or anticipated vacancy on the Board of Directors;

•

To identify, review and recommend to the Board of Directors, prior to each year's annual meeting of stockholders, successors to the class of directors whose term shall then expire (including any director in such class proposing to stand for election to another term), and additional director nominees, if any, for election to the Board of Directors on whose behalf the Board of Directors will solicit proxies;

•

To recommend to the Board of Directors the size of the Board of Directors;

•

To review and make recommendations to the Board of Directors with respect to suggestions for director nominees made by stockholders to the Board of Directors or to management in accordance with our Bylaws;

•

To review annually the Board of Director's overall performance and oversee the annual performance evaluation for each of its committees;

•

To recommend to the Board of Directors whether resignations tendered by members who have had a substantial change in their job responsibilities should be accepted;

•

To review annually the Board of Directors committee structure, charters and membership and, in consultation with the Chairman of the Board of Directors, recommend to the Board of Directors changes, if any; and to recommend to the Board of Directors the assignment of members of the Board of Directors to the various committees and appointment, rotation or removal of committee chairs;

•

To review and make recommendations to the Board of Directors with respect to changes in directors' compensation and benefits; and

•

To develop and recommend to the Board of Directors a set of corporate governance guidelines and to review the guidelines at least annually and recommend changes as necessary.

      The Nominating and Corporate Governance Committee shall have sole authority to retain and terminate any consulting firm to assist it in carrying out its duties and responsibilities, as the committee may deem appropriate in its sole discretion. The Nominating and Corporate Governance Committee shall have sole authority to approve related fees and other retention terms.

      The Nominating and Corporate Governance Committee's process for recruiting and selecting nominees is for Committee members to attempt to identify individuals who are thought to have certain minimum qualifications, including appropriate business background and experience, industry specific knowledge and general reputation and expertise that would allow them to contribute as effective directors to our governance, and who are willing to serve as directors of a public company. To date, we have not engaged any third party to assist in identifying or evaluating potential nominees. After a possible candidate is identified, the individual meets with various members of the Committee to ascertain his or her interest and willingness to serve, and Committee members discuss among themselves the individual's potential to be an effective member of the Board of Directors. If the discussions and evaluation are

positive, the individual is recommended by the Nominating and Corporate Governance Committee to the entire Board of Directors.

      The entire Board of Directors, including the Nominating and Corporate Governance Committee, approved the nomination of the candidates reflected in Proposal 1. The Nominating and Corporate Governance Committee will consider stockholder recommendations for candidates to serve on the Board of Directors. The name of any recommended candidate for director, together with pertinent biographical information, a document indicating the candidate's willingness to serve if elected, and evidence of the nominating stockholder's ownership of our common stock should be sent to the Nominating and Corporate Governance Committee c/o IGI, Inc., Corporate Secretary, 105 Lincoln Avenue, Buena, New Jersey 08310. To date, the Nominating and Corporate Governance Committee has not adopted a specific formal policy with respect to the consideration of director candidates recommended by stockholders and to date no director candidates have been recommended by stockholders. If a director candidate were to be recommended by a stockholder, the Nominating and Corporate Governance Committee expects to evaluate such candidate in the same manner it evaluates director candidates it identifies.

      The members of the Nominating and Corporate Governance Committee are Terrence O'Donnell (Chair), Jane E. Hager and Stephen J. Morris. We believe that the composition of the Nominating and Corporate Governance Committee complies with any applicable requirements of the Sarbanes-Oxley Act of 2002, AMEX and SEC rules and regulations, including those regarding the independence of the Nominating and Corporate Governance Committee members. The Nominating and Corporate Governance Committee met one time during the 2007 fiscal year. Since the Nominating and Corporate Governance Committee is composed solely of non-management directors, all nominees for director at the Annual Meeting were nominated by non-management directors.

Board Meeting and Attendance

      During our 2007 fiscal year, our Board of Directors met five times. Each of our current directors attended at least 75% of the meetings of the Board of Directors during the period in which he or she was a director and attended at least 75% of the meetings of the committees of the Board of Directors on which he or she served, during the period in which he or she served.

Stockholder Communications with Directors and Director Attendance at Annual Meetings

      Stockholders who wish to send communications to our Board of Directors may do so by sending them c/o IGI, Inc., Corporate Secretary, 105 Lincoln Avenue, Buena, New Jersey 08310. Such communications may be addressed either to specified individual directors or the entire Board of Directors. The Secretary will have the discretion to screen and not forward to directors communications that the Secretary determines are communications unrelated to our business or governance, commercial solicitations, offensive, obscene, or otherwise inappropriate. The Secretary will, however, compile all stockholder communications that are not forwarded and such communications will be available to any director.

      It is the policy of our Board of Directors that directors are strongly encouraged to attend all annual stockholder meetings. Each of our directors serving at the time attended the 2007 annual meeting of stockholders.

Director Compensation

      Director Options. In September 1999, our Board of Directors adopted the 1999 Director Stock Option Plan, which we refer to as the 1999 Plan. Under the 1999 Plan, on January 2 of each year, (i) each non-employee director is granted a stock option to purchase 15,000 shares of our common stock; and (ii) each of the Chairmen of the Audit Committee and the Organization and Compensation Committee is granted additional stock options to purchase 15,000 and 10,000 shares of our common stock, respectively. Additionally, under the 1999 Plan, each newly elected director will receive a stock option grant to purchase 15,000 shares of our common stock at the time of his or her election. All of such options will be granted at an exercise price equal to the closing price of our common stock on the AMEX on the date of grant. All options granted under the 1999 Plan become 100% vested 12 months after the date of grant.

      During 2007, we granted the number of options that were granted under the 1999 Director Stock Option Plan as listed in the footnotes to the table below:

2007 Director Compensation

Name of Director

Fees Earned
or Paid in
Cash ($)

Stock Awards
($) (1) (2)

Option Awards
($) (1) (3) (4)

Total
($)

Terrence O'Donnell

--

5,750

12,013

17,763

Stephen J. Morris

--

7,000

20,021

27,021

Rajiv Mathur (5)

--

--

--

--

Jane E. Hager

--

4,500

12,013

16,513

Frank Gerardi (6)

--

2,000

  5,005

  7,005

Sunil K. Pai (7)

--

1,500

10,011

11,511

(1)

The amount reflected in this column reflects the dollar amount recognized in accordance with Statement of Financial Accounting Standard No. 123R, "Share Based Payments" for financial statement purposes for 2007.

(2)

The dollar amount reflected in this column equals (i) the number of shares granted to the director pursuant to our 1998 Directors Stock Plan multiplied by (ii) the closing price of our common stock on the effective date of the grant.

(3)

As of December 31, 2007, the aggregate amount of shares that can be acquired by each director pursuant to outstanding option awards for Terrence O'Donnell, Stephen J. Morris, Jane E. Hager, Frank Gerardi and Sunil K. Pai, are 215,000, 157,016, 190,000 (including options to purchase 100,000 shares of our common stock held by Mr. Hager and excluding an option to purchase 10,000 shares of common stock held by Ms. Hager that expired on December 31, 2007), 198,266, and 27,500 respectively. During 2007 we granted to each of Terrence O'Donnell, Stephen J. Morris, Jane E. Hager, Frank Gerardi and Sunil K. Pai, options to purchase 15,000, 25,000, 15,000 6,250 and 12,500 shares of our common stock, respectively.

(4)

We issued the options in this column at a strike price equal to the fair market value of the closing price of our common stock on the date of the grant. We valued these options using a Black-Scholes model. In the model, we used an expected life of five and one-half (5.5) years to value the ten (10) year options that we issued. We used an interest rate equal to the yield on treasury bonds that have approximately five and one-half (5.5) years remaining until maturity and uses the volatility of our stock price over a period that is approximately five and one half (5.5) years prior to the grant date.

(5)

In January 2007, Mr. Mathur was appointed as our President and Chief Executive Officer and accordingly did not receive compensation for his service on our Board of Directors for 2007.

(6)

Frank Gerardi did not stand for reelection at the 2007 annual meeting of stockholders. Thus, Mr. Gerardi's compensation reflects fees paid for service prior to May 10, 2007, which was the date of our 2007 annual meeting of stockholders.

(7)

Sunil K. Pai did not stand for reelection at the 2007 annual meeting of stockholders. Thus, Mr. Pai's compensation reflects fees paid for service prior to May 10, 2007, which was the date of our 2007 annual meeting of stockholders. Mr. Pai served as an independent member of our Board of Directors during his service.

      Director Fees. Our Board of Directors adopted the 1998 Directors Stock Plan in October 1998 to provide each outside director with the right to receive shares of our common stock as director compensation in lieu of cash payments

of director fees, thereby encouraging ownership in our securities by the directors. Each non-employee director receives $2,000 in value of shares of our common stock for each meeting of the Board of Directors he or she attends in person, $1,000 in value of shares of our common stock for each telephonic meeting of the Board of Directors attended, $500 in value of shares of our common stock for each committee meeting attended which is held on the same day as a meeting of the Board of Directors, $1,000 in value of shares of our common stock for each committee meeting attended which is not held on the same day as a meeting of the Board of Directors, and up to $5,000 in value of shares of our common stock annually for the Chairmen of certain committees of the Board of Directors. The fees are payable quarterly and the number of shares of common stock issued to each director is determined by dividing the fees payable for the quarter by the closing price of our common stock on the last business day of the applicable quarter.

      At the meeting of the Board of Directors held on July 19, 2002, the directors unanimously expressed their willingness to accept a significant reduction in the amount of the share grants to be received under the 1998 Plan as compensation for service on the Board of Directors in an effort to provide us with their personal support, commitment and assistance at a pivotal time in our growth and development. In furtherance thereof during the July 19, 2002 meeting, the members of the Board of Directors collectively agreed to a 50% reduction in the amount of the share grant fee compensation payable to each director under the 1998 Plan for the third and fourth quarters of 2002. At the meeting of the Board of Directors on July 23, 2003, a resolution was unanimously adopted providing that unless, until, and only in the event that we return to profitability shall the directors' compensation be prospectively restored to the full amounts provided by the 1998 Plan as in effect prior to the directors' voluntary 50% reduction program in effect since July 19, 2002. Our Board of Directors has continued to honor this commitment in support of our future success.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      Other than compensation agreements and other arrangements which are described in the "Director Compensation" and "Executive Compensation" sections of this proxy statement and the transactions described below, during our last fiscal year, there has not been, and there is not currently proposed, any transaction or series of similar transactions to which we were or will be a party in which the amount involved exceeded or will exceed one percent of the average of our total assets at year-end for the last three completed fiscal years and in which any of our directors, nominees for director, executive officers, holders of more than five percent of any class of our voting securities or any member of the immediate family of the foregoing persons had or will have a direct or indirect material interest.

      Universal Chemical Technologies, Inc.

      In February 2004, we signed a license agreement with Universal Chemical Technologies, Inc. (UCT) to utilize its patented technology for an electroless nickel boride metal finishing process. This was a new venture for us and we had capital expenditures of approximately $913,000 spread over 2004 and 2005 (approximately $131,000 in 2005) in order to set up the operations. We had an exclusive license within a 150 mile radius of its facility for commercial and military applications. In the start of the second quarter of 2005, we began production in its metal finishing division, utilizing the patented UltraCem technology. However, we had been informed by potential new customers of the consumer division, that those customers were not comfortable with the metal finishing division being housed in the same facility as our consumer products division. In light of this information, we ceased operations under this venture. Frank Gerardi, our former Chairman and Chief Executive Officer, as well a holder of more than 10% of our common stock, personally invested $350,000 in UCT, which represents less than a 1% ownership interest in UCT. We have written down the value of the assets that we own relating to this business to $350,000 for the year ended December 31, 2006. We currently do not conduct any business under this arrangement. In the second quarter of 2007, UCT re-purchased the plating equipment from us for a purchase price of $378,000.

      Related Party Transactions with Univest Management EPSP

      Promissory Note in Favor of Univest

      On December 12, 2005, we issued a secured promissory note in favor of Univest Management EPSP, c/o Frank Gerardi, Trustee, or its registered assigns, in the principal amount of $1,000,000. Mr. Gerardi is the trustee and controls Univest. Mr. Gerardi has previously served as our Chief Executive Officer from September 2003 to December 31, 2006 and was a member of our Board of Directors from 2002 until May 2007. In addition, Mr. Gerardi beneficially owns more than 5% of our common stock. The promissory note was originally payable on or before the earlier to occur of (i) the closing of the conveyance by us of our real property, identified as Lots 22.02 and 23 on the Tax Map of Buena Vista Township, Atlantic County, New Jersey; or (ii) July 31, 2006. The promissory note was secured by a mortgage covering Lots 22.02 and 23. On January 30, 2006, we entered into a letter agreement with Univest pursuant to which the stated interest rate on the secured promissory note, dated December 12, 2005, in favor of Univest, was revised from 30% per annum to 12% per annum as of February 1, 2006. On July 21, 2006, the maturity date of the loan was extended until the earlier to occur of (i) September 30, 2006; or (ii) the closing of the real property conveyance. On October 4, 2006, the maturity date was further extended to December 31, 2006, and the stated interest rate was reduced to 10% effective October 1, 2006. On December 29, 2006, the maturity date was further extended to January 31, 2007. On January 31, 2007, the maturity date was further extended to February 28, 2007. On March 1, 2007 the maturity date was further extended to April 3, 2008. The note was repaid in full on March 8, 2007.

      Univest Subscription Agreement

      On December 10, 2007, we and Univest Management, Inc. EPSP, an entity controlled by Frank Gerardi, our former Chief Executive Officer and Chairman of the Board of Directors and a beneficial owner of over 5% of our common stock, entered into a subscription agreement pursuant to which we issued to Univest 150,000 shares of common stock and a warrant to purchase 52,500 shares of common stock at an exercise price of $1.25 per share, expiring two years from issuance, for aggregate consideration of $150,000. The closing of the transaction occurred on December 31, 2007.

      Related Party Transactions with Pharmachem Laboratories, Inc.

      Pharmachem Line of Credit

      On December 6, 2006, we entered into a $1,000,000 line of credit with Pharmachem Laboratories, Inc., a holder of more than 5% of our outstanding common stock, with interest accruing on outstanding amounts due under such line of credit at a rate of prime plus 1.5%. Amounts due under this line of credit are secured by all of our assets with the exception of any real property owned by us. All accrued and unpaid interest due under this line of credit is payable monthly on the first day of each month. The line of credit expires on December 5, 2007. On January 29, 2007, the line of credit was repaid in full and terminated.

      Pharmachem Subscription Agreement

      On February 6, 2007 we entered into a subscription agreement with Pharmachem whereby Pharmachem agreed to purchase 1,500,000 shares of our common stock in exchange for gross proceeds of $1,500,000. This transaction closed on March 7, 2007.

      Pharmachem Sublicense Agreement

      On August 21, 2007, we executed an agreement with Pharmachem pursuant to which we agreed to exclusively manufacture for Pharmachem and supply to Pharmachem certain ingredients and finished products intended for use in cosmetic and topical skin care applications, developed and manufactured by us using the Novasome® technology. Under the agreement, we granted Pharmachem the exclusive right to market, sell and promote these products with the Novasome® trademark through the direct sales and direct marketing channels in the United States, and such other regions as we and Pharmachem may further agree. Pharmachem has a minimum annual purchase requirement for such exclusivity inclusive of specified minimum monthly amounts for product development. In the event Pharmachem is unable to meet the minimum annual purchase requirement, they will have an option to pay us a percentage of the balance required to maintain such exclusivity. The prices charged to Pharmachem for the products allow for pre determined gross margins to us. The agreement has a term of one year and is renewable annually upon mutual agreement of the parties. In 2007, Pharmachem made payments to us aggregating $152,570.

      Pinnacle Mountain Partners Line of Credit

      On January 30, 2007, we entered into a $1,000,000 line of credit with Pinnacle Mountain Partners, LLC for a term of eighteen months. Pinnacle Mountain Partners is an entity affiliated with Jane E. Hager, a member of our Board of Directors and holder of more than five percent of our outstanding common stock and Edward B. Hager M.D., a holder of more than five percent of our outstanding common stock. The line of credit permits us to borrow money on a portion of the available principal balance which has not been borrowed by us during the term of the agreement. We may also repay the outstanding balance of the credit agreement and continue to draw down on the balance of the agreement during its term. Any principal balance outstanding at the end of the term must be repaid together with interest. Loans under the credit agreement bear interest at the Wall Street prime rate plus 1.5% and are secured by our assets. All accrued and unpaid interest is payable monthly in arrears on the first of each month. We have borrowed $500,000 under the line of credit which has accrued interest of $49,250.

EXECUTIVE COMPENSATION

Executive Officers

      In addition to Rajiv Mathur whose biography is set forth above in "Proposal No. 1 -- Election of Directors", the following people serve as our executive officers:

Name

Title

Nadya Lawrence

Executive Vice President of Operations

Carlene Lloyd

Vice President of Finance

      Nadya Lawrence (39) has served as our Executive Vice President of Operations since 2006 and Vice President of Operations from 2001 to 2006. Previously, Ms. Lawrence served as our R&D Technical Director and R&D Manager from 1995 to 2001.

      Carlene Lloyd (35) has served as our Vice President of Finance since July 2004. Prior to that, Ms. Lloyd served as our Controller and Senior Accountant from 1998 to 2004.

Summary Compensation Table

      The following table sets forth the cash and non-cash compensation for the previous two fiscal years, which was earned by our President and Chief Executive Officer and our two other most highly compensated executive officers who received compensation in excess of $100,000 during 2007 and who were serving as executive officers at the end of 2007. We refer to these people in this proxy statement as our Named Executive Officers.

Name and Principal Position (1)

Year

Salary
($)

Bonus
($)

Option
Awards
($) (2)

All Other
Compensation
($) (2)

Total
($)

Rajiv Mathur

2007

292,000

50,000 (4)

203,750

24,649

570,399

    President and Chief Executive
    Officer

Nadya Lawrence

2007

140,000

6,796

-

26,452

173,248

    Executive Vice President of
    Operations

2006

140,000

-

23,865

163,865

Carlene Lloyd

2007

  85,000

4,250

-

16,711

105,961

    Vice President of Finance

2006

  85,000

-

19,619

104,619

(1)

Lists the principal positions held as of December 31, 2007. On January 4, 2007, Rajiv Mathur assumed the position as our President and Chief Executive Officer.

(2)

The amount reflected in this column reflects the dollar amount recognized in accordance with Statement of Financial Accounting Standard No. 123R, "Share Based Payments" for financial statement purposes for 2007. We valued these options using a Black-Scholes model. In the model, we used an expected life of five and one-half (5.5) years to value the ten year options that we issued. We used an interest rate equal to the yield on the treasury bonds that have approximately five and one-half years remaining until maturity

and uses the volatility of our stock price over a period that is approximately five and one-half years prior to the grant date.

(3)

The amounts shown in this column represent premiums for group life insurance, medical, and dental insurance paid by us, and contributions made by us to the executive's account under our 401(k) Plan. The amounts shown also include $9,000 in automobile reimbursements made to Nadya Lawrence in 2007 and 2006 and to Rajiv Mathur in 2007. In 2007, we paid $9,958, $13,971, and $14,404 for medical and dental insurance for Rajiv Mathur, Nadya Lawrence, and Carlene Lloyd, respectively. We also made contributions to the 401(k) Plan accounts of Rajiv Mathur, Nadya Lawrence and Carlene Lloyd in the amounts of $2,943, $1,953, and $1,264, respectively. In 2006, we paid $12,914, and $18,361 for medical and dental insurance for Nadya Lawrence, and Carlene Lloyd, respectively. We also made contributions to the 401(k) Plan accounts of Nadya Lawrence and Carlene Lloyd in the amounts of $1,951, and $1,258, respectively.

(4)

Mr. Mathur received a $50,000 bonus in November 2007 for remaining employed by us on the date of payment as set forth in his employment agreement.

Outstanding Equity Awards at Fiscal Year-End

      The following table sets forth certain information concerning outstanding option awards as of December 31, 2007.

Name

Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable

Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable

Option
Exercise
Price ($)

Option
Expiration Date

Rajiv Mathur

  15,000

-

$1.06

09/12/15

President and Chief

  15,000

-

$1.30

07/10/16

Executive Officer

-

500,000 (1)

$1.04

01/01/17

Nadya Lawrence

       250

$1.94

03/16/09

Executive Vice

    5,000

$  .50

12/06/10

President of Operations

    5,000

$2.75

03/20/10

    5,000

$  .52

12/27/11

  30,000

$  .80

05/16/11

  40,000

$  .65

05/23/12

100,000

$1.07

05/20/13

  30,000

$1.27

12/20/14

  40,000

$  .76

12/09/15

Carlene Lloyd

    2,000

$1.56

12/09/09

Vice President of

    2,000

$  .50

12/06/10

Finance

    1,000

$  .80

05/16/11

  30,000

$1.27

12/20/14

  40,000

$  .76

12/09/15

(1)

250,000 shares vested on January 4, 2008 and the remaining 250,000 shares vest on January 4, 2009.

Employment Agreements

      Rajiv Mathur. Rajiv Mathur, our President and Chief Executive Officer, entered into a three year employment agreement with us on November 15, 2006. Mr. Mathur commenced employment with us on January 4, 2007 at an annual salary of $292,000, with a minimum of a 3.5% increase in pay on each of January 1, 2008 and January 1, 2009.

On February 10, 2008, our Compensation Committee approved an increase in the base salary of Mr. Mathur to $302,220. Mr. Mathur's employment agreement automatically extends for additional one year periods unless a notice of non-renewal is sent by either party 180 days prior to the end of the term. Mr. Mathur is also entitled to a $1,000 per month automobile allowance along with a reimbursement for maintenance expenses, insurance expenses, and gasoline and parking expense incurred in connection with the performance of business activities. Mr. Mathur is also entitled to an annual bonus for each of 2007, 2008, and 2009, provided that he is employed by us on December 31 of each respective year. His bonus will be based on one (1) or more of the following metrics for the respective fiscal year for which the bonus relates: (i) growth in our annual revenue; (ii) growth in our operating profit; and (iii) growth in our cash flow from continuing operations. See "-- Cash Incentive Plan Arrangements" below. Mr. Mathur also received a $50,000 bonus in November 2007 for remaining employed by us on the date of payment as set forth in his employment agreement.

      If Mr. Mathur's employment is terminated (i) as a result of Mr. Mathur's death or disability; (ii) without cause (as defined in the agreement), by non-renewal of the agreement by us at any time; or (iii) within six months after a change of control (as defined in the agreement) by Mr. Mathur, in each case he is to receive severance of one year's salary and continuation of health and dental benefits until the earlier of one year after termination or his coverage commencing under another employer's health plan. Pursuant to Mr. Mathur's employment agreement, Mr. Mathur was granted options to purchase 500,000 shares of common stock on January 1, 2007, with an exercise price based on the average closing price of our common stock during the 30 day period prior to January 1, 2007. Options with respect to 250,000 shares vest on the first anniversary of employment and options with respect to the other 250,000 shares vest on the second anniversary of employment. In February 2008, the Compensation Committee further awarded Mr. Mathur a stock option pursuant to the our 1999 Stock Incentive Plan to purchase 500,000 shares of our common stock. The options have an exercise price equal to the closing price of our common stock on the date of grant and one-half will vest on December 31, 2008 and the remaining one-half will vest on December 31, 2009. Pursuant to his employment agreement, we will be in breach of the agreement if Mr. Mathur is not nominated for election to our Board of Directors for each year that the agreement is still in effect.

Cash Incentive Plan Arrangements

      In February 2008, the Compensation Committee approved our 2008 Management Incentive Plan for our Chief Executive Officer and President, Executive Vice President and Vice President. The incentive bonuses for each of these individuals will be based in part on our performance as compared to budgeted results for net income or earnings per share and in part on annual performance reviews for such individuals. Our budgeted results involve confidential, strategic, commercial and financial information which, if disclosed, may result in competitive harm to us.

      Participants will be eligible for an incentive bonus payout based upon our achievement of the following targets for either net income or earnings per share (the greater level of achievement to be utilized for determining the payout) as compared to budget results:

Target

% Awarded of Total Eligible
(the "Target Payout")

Less than 25% of budgeted results

0%

25% - 75% of budgeted results

20% or board's discretion

75% - 85% of budgeted results

50%

85% - 95% of budgeted results

80%

95% - 110% of budgeted results

100%

More than 110% of budgeted results

120%