EXHIBIT 99.2
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[IGI LETTERHEAD]

                                December 6, 2000

Mr. John Ambrose
President
IGI, Inc.
Lincoln Ave. and Wheat Road
Buena, NJ  08310

Dear John,

     The Board of Directors has deemed it appropriate that in the event of a
change in control of the company during your tenure as president certain
benefits should accrue. Accordingly, the following terms are being added to your
conditions of employment:

1.   A "Change of Control" will be deemed to have occurred if:

     (a)  Any "person" (as defined in Section 13(d) and 14(d) of the Securities
          Exchange Act of 1934, as amended (the "Exchange Act")), excluding for
          the purpose the Corporation or any subsidiary of the Corporation, or
          any employee benefit plan of the Corporation or any subsidiary of the
          Corporation, or any person or entity organized, appointed or
          established by the Corporation for or pursuant to the terms of such
          plan which acquires beneficial ownership of voting securities of the
          Corporation, is or becomes the "beneficial owner" (as defined in Rule
          13d-3 under the Exchange Act), directly or indirectly of securities of
          the Corporation representing thirty-five percent (35%) or more of the
          combined voting power of the Corporation's then outstanding
          securities; provided, however, that no Change of Control will be
          deemed to have occurred as a result of a change in ownership
          percentage resulting solely from an acquisition of securities by the
          Corporation; provided further that no Change of Control will be deemed
          to have occurred if a person inadvertently acquires an ownership
          interest of 35% or more but then promptly reduces that ownership
          interest below 35%;

     (b)  During any period of two (2) consecutive years (not including any
          period prior to the execution of this Agreement), individuals who at
          the beginning of such two-year period constitute the Board of
          Directors of the Corporation and no new directors(s) (except for a
          director designated by a person who has entered into an agreement with
          the Corporation to effect a transaction described elsewhere in this
          paragraph l0) whose election by the Board or nomination for election
          by the Corporation's shareholders was approved by a vote by at least
          two-thirds of the directors then still in office who either were
          directors at the beginning of the period or whose election or
          nomination for election was previously approved, cease for any reason
          to constitute at least a majority thereof; or

     (c)  The shareholders of the Corporation approve a plan of complete
          liquidation of the Corporation, an agreement for the sale of
          disposition of the Corporation or all or substantially all of the
          Corporation's assets, or a plan of merger or consolidation




          of the Corporation with any other corporation, except for a merger or
          consolidation in which the security owner of the Corporation
          immediately prior to the merger or consolidation continue to own at
          least sixty-five percent (65%) of the voting securities of the new (or
          continued) entity immediately after such merger or consolidation.

2.   Upon a change in control you will be entitled to receive:

     (a)  Immediate full vesting of all of otherwise unvested options to
          purchase shares of the Corporation, which options will be exercisable
          for a period of at least 2 years after the date of termination of
          employment, and

     (b)  Immediate vesting of all other equity or incentive compensation awards
          which is not otherwise vested.

     (c)  The payment in a lump sum of an amount equal to twelve months of your
          cash compensation.

3.   Binding of Successors: The Corporation will be required to have any
     successor to all or substantially all of its business and/or assets
     expressly assume these conditions in the same manner and to the same extent
     that the Corporation would be required to perform if no such succession had
     taken place.

                                        Very Truly Yours,

                                        /s/ Robert E. McDaniel

                                        Robert E. McDaniel

                                        Chief Executive Officer
                                        By order of the Board of Directors