LOAN AND SECURITY AGREEMENT

Exhibit 10.54

LOAN AND SECURITY AGREEMENT

      This Loan and Security Agreement is entered into as of January 29, 2007 by and between IGI, Inc., a Delaware corporation with an address of 105 Lincoln Avenue, Buena, New Jersey 08310 ("Borrower") and Pinnacle Mountain Partners LLC, a New Hampshire limited liability company with an address of 206 Pinnacle Road, Lyndeborough, New Hampshire 03082 (together with its successors and assigns, "Lender").

      For value received, and in consideration of the granting by Lender of financial accommodations to or for the benefit of Borrower, including without limitation respecting the Obligations (as hereinafter defined), Borrower represents to and agrees with Lender, as of the date hereof and as of the date of each loan, credit and/or other financial accommodation, as follows:

I.

THE LOAN

1.

Revolving Loans . Lender agrees to make revolving loans (the "Revolving Loans") to or for the account of Borrower, upon Borrower's request therefor, in an aggregate amount of a maximum of One Million Dollars ($1,000,000.00) (the "Revolving Loan Amount") or such greater amounts as may from time to time be established by Lender, subject to the terms and conditions set forth herein. The Revolving Loans shall be evidenced by that certain Revolving Demand Note, of even date herewith (the "Revolving Note") by Borrower in favor of Lender in the face amount of the Revolving Loan Amount. This Agreement, the Revolving Note, and any and all documents, amendments or renewals executed and delivered in connection with any of the foregoing are collectively hereinafter referred to as the "Loan Documents." Amounts borrowed and repaid may be reborrowed one or more times.

2.

Revolving Loan Record . Lender shall keep a record of all Revolving Loans, and payments thereon and other appropriate debits and credits as provided by this Agreement.

3.

Interest . Interest respecting the Revolving Loans will be charged to Borrower on the principal amount from time to time outstanding at the rate specified in the Revolving Note.

4.

Maturity. All loans and advances made respecting the Revolving Loans shall be payable to Lender on the eighteen month anniversary of this Agreement.

5.

Overadvances . Any Revolving Loans that may be made, in Lender's sole discretion, in excess of the Revolving Loan Amount shall not affect the obligations of Borrower or any of Lender's rights or remedies hereunder or under the Loan Documents or otherwise. All such Revolving Loans shall be secured by the Collateral, as hereinafter defined, and shall be due and payable in accordance

with the terms of the Revolving Note, and shall bear interest at the rate set forth in the Revolving Note.

6.

Authorized Persons; Advances . Any person duly authorized by a general borrowing resolution of Borrower, or in the absence of such a resolution, the President, Treasurer or any Vice President of Borrower, may request discretionary loans hereunder. Such requests shall be in writing. Lender shall incur no liability to Borrower in acting upon any request referred to herein which Lender believes in good faith to have been made by an authorized person or persons. Each loan hereunder may be paid to Borrower or as Borrower directs or may be applied to any Obligations as Lender may elect.

7.

Monthly Statement . Lender will, at the end of each month, render to Borrower a statement of the Revolving Loan Account, showing all applicable credits and debits. Lender's failure or delay in respect of this obligation shall not affect its rights hereunder.

II.

GRANT OF SECURITY INTEREST

1.

Grant of Security Interest . In consideration of Lender's extending credit and other financial accommodations to or for the benefit of Borrower, Borrower hereby grants to Lender a security interest in, a lien on and a pledge of the Collateral (as hereinafter defined). The security interest granted by this Agreement is given to and shall be held by Lender as security for the payment and performance of all Obligations, including, without limitation, all amounts outstanding pursuant to the Loan Documents.

2.

Definitions . The following definitions shall apply:

"Code" shall mean the New Hampshire Uniform Commercial Code (RSA 382-A) as amended from time to time.

"Collateral" shall mean all of Borrower's present and future right, title and interest in and to any and all of the personal property of Borrower that was otherwise unencumbered as of September 30, 2006, whether such property is now existing or hereafter created, acquired or arising and wherever located from time to time, including without limitation: accounts; chattel paper; goods; inventory; equipment (including production, analytic and office equipment); instruments; investment property; documents; commercial tort claims; deposit accounts; letter-of-credit rights; general intangibles; supporting obligations; intellectual property of any sort (including without limitation all patents, trademarks, tradedress, and licenses fully or partially owned); and proceeds and products of any of the foregoing.

"Debtors" shall mean Borrower's customers who are indebted to Borrower.

"Obligations" shall mean, without limitation, all loans, advances, indebtedness, notes, liabilities, and other amounts, liquidated or unliquidated, owing by Borrower to Lender at any time, of each and every kind, nature and description, arising under this Agreement, and whether secured or unsecured, direct or indirect (that is, whether the same are due directly by Borrower to Lender, or are due under this Agreement, indirectly by Borrower to Lender as endorser, guarantor or other surety), absolute or contingent, due or to be come due, now existing or hereafter arising or contracted, including without limitation, payment when due of all amounts outstanding respecting any of the Loan Documents. Said term shall also include all interest and other charges chargeable to Borrower or due from Borrower to Lender from time to time and all costs and expenses referred to in this Agreement.

"Person" or "Party" shall mean individuals, partnerships, corporations, limited liability companies and all other entities.

3.

All words and terms used in this Agreement other than those specifically defined herein shall have the meanings accorded to them in the Code.

4.

Use of Collateral . Lender hereby authorizes and permits Borrower to hold, process, sell, use or consume Collateral in the ordinary course of Borrower's business or as permitted by Article V. Lender also hereby authorizes and permits Borrower to receive from Debtors all amounts due as proceeds of the Collateral at Borrower's own cost and expense and risk, if any, subject to the direction and control of Lender at all times; and Lender may at any time, without cause or notice, if an Event of Default has occurred and is continuing, terminate all or any part of the authority and permission herein or elsewhere in this Agreement granted to Borrower with reference to the Collateral. Until an Event of Default has occurred and is continuing, all proceeds of and collections of Collateral shall be retained by Borrower and may be used solely for the ordinary and usual operations of Borrower's business, as contemplated in a Business Plan or as permitted by Article V. From and after an Event of Default, all proceeds of and collections of the Collateral shall be held in trust by Borrower for Lender and shall not be commingled with Borrower's other funds or deposited in any bank account of Borrower, and Borrower agrees to deliver to Lender on the dates of receipt thereof by Borrower, duly endorsed to Lender or to bearer, or assigned to Lender as may be appropriate, all proceeds of the Collateral in the identical form received by Borrower. Borrower may license its intellectual property constituting Collateral (i) as permitted by a Business Plan; (ii) in accordance with agreements in effect as of the date hereof and approved by the Board of Directors; (iii) with Lender's written consent; (iv) in the ordinary course of business on a non-exclusive basis; (v) on an exclusive basis in the ordinary course of business for

rights to formulations and/or formulations in combination with the encapsulation in delivery vehicles; or (vi) approved by the Board of Directors.

5.

Records . Borrower shall keep books and records relating to the Collateral in a manner satisfactory to Lender, and shall deliver to Lender from time to time promptly at Lender's request all invoices, original documents of title, contracts, chattel paper, instruments and any other writings relating thereto, and other evidence of performance of contracts or rendering of services; and any other