rightsagreementex4-1.htm


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    EXHIBIT
      4.1

    


    EXECUTION
      COPY

    


    CARDIOTECH
      INTERNATIONAL, INC.

    


    and

    


    AMERICAN
      STOCK TRANSFER & TRUST
      COMPANY

     as
      Rights Agent

    


    RIGHTS
      AGREEMENT

    


    Dated
      as of January 28, 2008

    


     

    


    
      


    

    



    
      
         

      

      
         

        
          

        

      

      
         

      

    


    


    


     

    


    RIGHTS
      AGREEMENT

    


    THIS
      RIGHTS
      AGREEMENT(“Agreement”),
      dated as of January 28, 2008, between CARDIOTECH INTERNATIONAL, INC., a Delaware
      corporation (the “Company”), and AMERICAN STOCK TRANSFER & TRUST COMPANY
      (“Rights Agent”).

    


    The
      Company’s board of directors (the
“Board of Directors”) has authorized and declared a dividend of one preferred
      share purchase right (a “Right”) for each Common Share (as such term is
      hereinafter defined) issued and outstanding at the close of business on February
      8, 2008 (the “Record Date”), each Right representing the right to purchase one
      one-hundredth of a Preferred Share (as such term is hereinafter defined), upon
      the terms and subject to the conditions herein set forth, and has further
      authorized and directed the issuance of one Right with respect to each Common
      Share that shall become issued and outstanding between the Record Date and
      the
      earliest to occur of the Distribution Date, the Redemption Date and the Final
      Expiration Date (as such terms are hereinafter defined);  provided,
      however,  that
      Rights may be issued with respect to Common Shares that shall become issued
      and
      outstanding after the Distribution Date and prior to the earlier of the
      Redemption Date and the Final Expiration Date in accordance with the provisions
      of Section 22 hereof.

    


    Accordingly,
      in consideration of the
      premises and the mutual agreements herein set forth, the parties hereby agree
      as
      follows:

    


    SECTION
      1.         Certain Definitions.  For purposes of this
      Agreement, the following terms have the meanings indicated:

    


    (a)          “Acquiring
      Person” shall mean any
      Person (as such term is hereinafter defined) who or that, together with all
      Affiliates and Associates (as such terms are hereinafter defined) of such
      Person, shall be the Beneficial Owner (as such term is hereinafter defined)
      of
      15% or more of the Common Shares then outstanding.  Notwithstanding the
      foregoing, (A) the term Acquiring Person shall not include (i) the Company,
      (ii)
      any Subsidiary (as such term is hereinafter defined) of the Company, (iii)
      any
      employee benefit or compensation plan of the Company or any Subsidiary of the
      Company or (iv) any entity holding Common Shares for or pursuant to the terms
      of
      any such employee benefit or compensation plan of the Company or any Subsidiary
      of the Company and (B) no Person shall become an “Acquiring Person” (i) as the
      result of an acquisition of Common Shares by the Company which, by reducing
      the
      number of Common Shares issued and outstanding, increases the proportionate
      number of Common Shares beneficially owned by such Person to 15% or more of
      the
      Common Shares then outstanding;provided,
      however,  that
      if a Person shall become the Beneficial Owner of 15% or more of the Common
      Shares then outstanding by reason of share purchases by the Company and shall,
      following written notice from, or public disclosure by the Company of such
      share
      purchases by the Company, become the Beneficial Owner of any additional Common
      Shares without the prior consent of the Company and shall then Beneficially
      Own
      more than 15% of the Common Shares then outstanding, then such Person shall
      be
      deemed to be an “Acquiring Person,” (ii) as the result of the acquisition of
      Common Shares directly from the Company;  provided,  however,
      that if a Person shall become
      the Beneficial Owner of 15% or more of the Common Shares then outstanding by
      reason of share purchases or issuances directly from the Company and shall,
      after that date, become Beneficial Owner of any additional Common Shares without
      the prior written consent of the Company and shall then Beneficially Own more
      than 15% of the Common Shares then outstanding, then such Person shall be deemed
      to be an “Acquiring Person” or (iii) if the Board of Directors determines in
      good faith that a Person who would otherwise be an “Acquiring Person,” as
      defined pursuant to the foregoing provisions of this Section 1(a), has
      become such inadvertently, and such Person divests, as promptly as practicable
      (as determined in good faith by the Board of Directors), following receipt
      of
      written notice from the Company of such event, of Beneficial Ownership of a
      sufficient number of Common Shares so that such Person would no longer be an
      Acquiring Person, as defined pursuant to the foregoing provisions of this
      Section 1(a), then such Person shall not be deemed to be an “Acquiring Person”
for any purposes of this Agreement;  provided,
      however,  that
      if such Person shall again become the Beneficial Owner of 15% or more of the
      Common Shares then outstanding, such Person shall be deemed an “Acquiring
      Person,” subject to the exceptions set forth in this Section 1(a).

    


    (b)          “Affiliate”
and“Associate”shall
      have the respective meanings
      ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
      the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as in
      effect on the date of this Agreement;  provided,
      however,  that
      the limited partners of a limited partnership shall not be deemed to be
      Associates of such limited partnership solely by virtue of their limited
      partnership interests.

    


    (c)          A
      Person shall be deemed
      the“Beneficial
      Owner”of and shall be
      deemed to “beneficially own” any securities:

    


    (i)           that
      such Person or any of such
      Person’s Affiliates or Associates is deemed to beneficially own, within the
      meaning of Rule 13d-3 of the General Rules and Regulations under the Exchange
      Act as in effect on the date of this Agreement;

    


    (ii)          that
      such Person or any of such
      Person’s Affiliates or Associates has (A) the right to acquire (whether such
      right is exercisable immediately or only after the passage of time) pursuant
      to
      any agreement, arrangement or understanding (other than customary agreements
      with and between underwriters and selling group members with respect to a bona
      fide public offering of securities), or upon the exercise of conversion rights,
      exchange rights, rights (other than these Rights), warrants or options, or
      otherwise;  provided,
      however,  that a
      Person shall not be deemed the Beneficial Owner of, or to beneficially own,
      securities tendered pursuant to a tender or exchange offer made by or on behalf
      of such Person or any of such Person’s Affiliates or Associates until such
      tendered securities are accepted for purchase or exchange; or (B) the right
      to
      vote pursuant to any agreement, arrangement or understanding;  provided,
      however,  that a
      Person shall not be deemed the Beneficial Owner of, or to beneficially own,
      any
      security if the agreement, arrangement or understanding to vote such security
      (1) arises solely from a revocable proxy or consent given to such Person in
      response to a public proxy or consent solicitation made pursuant to, and in
      accordance with, the applicable rules and regulations promulgated under the
      Exchange Act and (2) is not also then reportable on Schedule 13D under the
      Exchange Act (or any comparable or successor report); or

    


    (iii)        that
      are beneficially owned,
      directly or indirectly, by any other Person with which such Person or any of
      such Person’s Affiliates or Associates has any agreement, arrangement or
      understanding (other than customary agreements with and between underwriters
      and
      selling group members with respect to a bona fide public offering of securities)
      for the purpose of acquiring, holding, voting (except to the extent contemplated
      by the proviso to Section 1(c)(ii)(B) hereof) or disposing of any
      securities of the Company.

    


    Notwithstanding
      anything in this
      definition of Beneficial Ownership to the contrary, the phrase, “then
      outstanding,” when used with reference to a Person’s Beneficial Ownership of
      securities of the Company, shall mean the number of such securities then issued
      and outstanding together with the number of such securities not then actually
      issued and outstanding which such Person would be deemed to own beneficially
      hereunder.

    


    (d)          “Business
      Day” shall mean any day
      other than a Saturday, a Sunday, or a day on which banking institutions in
      the
      State of New York are authorized or obligated by law or executive order to
      close.

    


    (e)          “Close
      of Business” on any given
      date shall mean 5:00 p.m., New York Time, on such date;provided,
      however,  that
      if such date is not a Business Day it shall mean 5:00 p.m., New York Time,
      on
      the next succeeding Business Day.

    


    (f)           “Common
      Shares” shall mean the
      shares of common stock, par value $0.001 per share, of the Company;  provided,
      however,  that,
“Common Shares,” when used in this Agreement
      in connection with a specific
      reference to any Person other than the Company, shall mean the capital stock
      (or
      equity interest) with the greatest voting power of such other Person or, if
      such
      other Person is a Subsidiary of another Person, the Person or Persons that
      ultimately control such first-mentioned Person.

    


    (g)          “Distribution
      Date” shall have the
      meaning set forth in Section 3(a) hereof.

    


    (h)          “Final
      Expiration Date” shall have
      the meaning set forth in Section 7(a) hereof.

    


    (i)           “Interested
      Stockholder” shall
      mean any Acquiring Person or any Affiliate or Associate of an Acquiring Person
      or any other Person in which any such Acquiring Person, Affiliate or Associate
      has an interest, or any other Person acting directly or indirectly on behalf
      of
      or in concert with any such Acquiring Person, Affiliate or Associate.

    


    (j)           “Person”
shall
      mean any
      individual, firm, corporation or other entity, and shall include any successor
      (by merger or otherwise) of such entity.

    


    (k)          “Preferred
      Shares” shall mean
      shares of Series A Junior Participating Preferred Stock, par value $0.001 per
      share, of the Company having the designations and the powers, preferences and
      rights, and the qualifications, limitations and restrictions set forth in the
      Form of Certificate of Designation attached to this Agreement as Exhibit
      A.

    


    (l)           “Purchase
      Price” shall have the
      meaning set forth in Section 7(b) hereof.

    


    (m)         “Redemption
      Date” shall have the
      meaning set forth in Section 7(a) hereof.

    


    (n)          “Shares
      Acquisition Date” shall
      mean the first date of public announcement by the Company or an Acquiring Person
      that an Acquiring Person has become such;  provided,
      however  that,
      if such Person is determined not to have become an Acquiring Person pursuant
      to
      Section l(a)(B)(iii) hereof, then no Shares Acquisition Date shall be
      deemed to have occurred.

    


    (o)          “Subsidiary”
of
      any Person shall
      mean any corporation or other entity of which a majority of the voting power
      of
      the voting equity securities or equity interest is owned, directly or
      indirectly, by such Person.

    


    (p)          “Transaction”
shall
      mean any
      merger, consolidation or sale of assets described in Section 13(a) hereof
      or any acquisition of Common Shares which would result in a Person becoming
      an
      Acquiring Person or a Principal Party (as such term is hereinafter
      defined).

    


    (q)          “Transaction
      Person” with respect
      to a Transaction shall mean (i) any Person who (x) is or will become an
      Acquiring Person or a Principal Party (as such term is hereinafter defined)
      if
      the Transaction were to be consummated and (y) directly or indirectly proposed
      or nominated a director of the Company which director is in office at the time
      of consideration of the Transaction, or (ii) an Affiliate or Associate of such
      a
      Person.

    


    SECTION
      2.         Appointment Of Rights
      Agent.  The Company
      hereby appoints the Rights Agent to act as agent for the Company in accordance
      with the terms and conditions hereof, and the Rights Agent hereby accepts such
      appointment.  The Company may from time to time appoint such co-Rights
      Agents as it may deem necessary or desirable.

    


    SECTION
      3.         Issue Of Right
      Certificates.

    


    (a)          Until
      the earlier of the Close of
      Business on (i) the tenth day after the Shares Acquisition Date or (ii) the
      tenth Business Day (or such later date as may be determined by action of the
      Board of Directors prior to such time as any Person becomes an Acquiring Person)
      after the date of the commencement (determined in accordance with Rule 14d-2
      under the Exchange Act) by any Person (other than the Company, any Subsidiary
      of
      the Company, any employee benefit plan of the Company or of any Subsidiary
      of
      the Company or any entity holding Common Shares for or pursuant to the terms
      of
      any such plan) of, or of the first public announcement of the intention of
      any
      Person (other than the Company, any Subsidiary of the Company, any employee
      benefit plan of the Company or of any Subsidiary of the Company or any entity
      holding Common Shares for or pursuant to the terms of any such plan) to
      commence, a tender or exchange offer (which intention to commence remains in
      effect for five Business Days after such announcement), the consummation of
      which would result in any Person becoming an Acquiring Person (including any
      such date that is after the date of this Agreement and prior to the issuance
      of
      the Rights, the earlier of such dates being herein referred to as the
“Distribution Date”), (x) the Rights will be evidenced by the certificates for
      Common Shares registered in the names of the holders thereof (which certificates
      shall also be deemed to be Right Certificates) and not by separate Right
      Certificates, and (y) the Rights (and the right to receive Right Certificates
      therefor) will be transferable only in connection with the transfer of Common
      Shares.  As soon as practicable after the Distribution Date, the Company
      will prepare and execute, the Rights Agent will countersign, and the Company
      will send or cause to be sent (and the Rights Agent will, if requested, send)
      by
      first-class, insured, postage-prepaid mail, to each record holder of Common
      Shares as of the Close of Business on the Distribution Date, at the address
      of
      such holder shown on the records of the Company, a Right Certificate, in
      substantially the form of Exhibit B hereto (a “Right Certificate”), evidencing
      one Right for each Common Share so held, subject to the adjustment provisions
      of
      Section 11 of this Agreement.  As of the Distribution Date, the Rights
      will be evidenced solely by such Right Certificates.

    


    (b)          On
      the Record Date, or as soon as
      practicable thereafter, the Company will send (directly or through the Rights
      Agent or its transfer agent) a copy of a Summary of Rights to Purchase Preferred
      Shares, in substantially the form of Exhibit C hereto (the “Summary of Rights”),
      by first-class, postage-prepaid mail, to each record holder of Common Shares
      as
      of the Close of Business on the Record Date, at the address of such holder
      shown
      on the records of the Company.  With respect to certificates for Common
      Shares outstanding as of the Record Date, until the Distribution Date, the
      Rights will be evidenced by such certificates registered in the names of the
      holders thereof.  Until the Distribution Date (or the earlier of the
      Redemption Date and the Final Expiration Date), the surrender for transfer
      of
      any certificate for Common Shares outstanding on the Record Date shall also
      constitute the transfer of the Rights associated with the Common Shares
      represented thereby.

    


    (c)          Certificates
      for Common Shares
      that become outstanding after the Record Date but prior to the earliest of
      the
      Distribution Date, the Redemption Date or the Final Expiration Date shall have
      impressed on, printed on, written on or otherwise affixed to them the following
      legend:

    


    “This
      certificate also evidences and
      entitles the holder hereof to certain rights as set forth in a Rights Agreement
      between CardioTech International, Inc.  (the “Company”) and American Stock
      Transfer & Trust Company, as Rights Agent (the “Rights Agent”), dated as of
      January 28, 2008, as amended from time to time (the “Rights Agreement”), the
      terms of which are hereby incorporated herein by reference and a copy of which
      is on file at the principal executive offices of the Company.  Under
      certain circumstances, as set forth in the Rights Agreement, such Rights will
      be
      evidenced by separate certificates and will no longer be evidenced by this
      certificate.  The Company will mail to the holder of this certificate a
      copy of the Rights Agreement without charge after receipt of a written request
      therefor.  As described in the Rights Agreement, Rights issued to any
      Person who becomes an Acquiring Person or an Affiliate or Associate thereof
      (as
      defined in the Rights Agreement) and certain related persons, whether currently
      held by or on behalf of such Person or by any subsequent holder, shall become
      null and void.”

    


    With
      respect to such certificates
      containing the foregoing legend, until the Distribution Date (or, if earlier,
      the earlier of the Redemption Date or the Final Expiration Date), the Rights
      associated with the Common Shares represented by such certificates shall be
      evidenced by such certificates alone, and the surrender for transfer of any
      such
      certificate shall also constitute the transfer of the Rights associated with
      the
      Common Shares represented thereby.  In the event that the Company purchases
      or acquires any Common Shares after the Record Date but prior to the
      Distribution Date, any Rights associated with such Common Shares shall be deemed
      canceled and retired so that the Company shall not be entitled to exercise
      any
      Rights associated with the Common Shares that are no longer outstanding. 
Notwithstanding this Section 3(c), the omission of a legend shall not
      affect the enforceability of any part of this Agreement or the rights of any
      holder of the Rights.

    


    SECTION
      4.         Form Of Right
      Certificates.

    


    (a)          The
      Right Certificates (and the
      form of election to purchase Preferred Shares, the form of assignment and the
      form of certification to be printed on the reverse thereof) shall be
      substantially the same as Exhibit B hereto and may have such marks of
      identification or designation and such legends, summaries or endorsements
      printed thereon as the Company may deem appropriate and as are not inconsistent
      with the provisions of this Agreement, or as may be required to comply with
      any
      applicable law or with any rule or regulation made pursuant thereto or with
      any
      rule or regulation of any stock exchange or quotation system on which the Rights
      may from time to time be listed, or to conform to usage.  Subject to the
      provisions of Sections 7, 11 and 22 hereof, the Right Certificates shall entitle
      the holders thereof to purchase such number of one one-hundredths of a Preferred
      Share as shall be set forth therein at the Purchase Price (as defined in
      Section 7(b)), but the number of such one one-hundredths of a Preferred
      Share and the Purchase Price shall be subject to adjustment as provided
      herein.

    


    (b)          Any
      Right Certificate issued
      pursuant to Section 3(a) or Section 22 hereof that represents Rights
      that are null and void pursuant to the second paragraph of
      Section 11(a)(ii) hereof and any Right Certificate issued pursuant to
      Section 6 or Section 11 hereof upon transfer, exchange, replacement or
      adjustment of any other Right Certificate referred to in this sentence, shall
      contain (to the extent feasible) the following legend:

    


    “The
      Rights represented by this Right
      Certificate are or were beneficially owned by a Person who was or became an
      Acquiring Person or an Affiliate or Associate of an Acquiring Person (as such
      terms are defined in the Rights Agreement).  Accordingly, this Right
      Certificate and the Rights represented hereby are null and void.”

    


    The
      provisions of Section 11(a)(ii)
      hereof shall be operative whether or not the foregoing legend is contained
      on
      any such Right Certificate.

    


    SECTION
      5.         Countersignature And
      Registration.  The
      Right Certificates shall be executed on behalf of the Company by its Chief
      Executive Officer, its President, its Chief Financial Officer, or any of its
      Vice Presidents, either manually or by facsimile signature, may have affixed
      thereto the Company’s seal or a facsimile thereof, and shall be attested by the
      Secretary or an Assistant Secretary of the Company, either manually or by
      facsimile signature.  The Right Certificates shall be manually
      countersigned by the Rights Agent and shall not be valid for any purpose unless
      countersigned.  In case any officer of the Company who shall have signed
      any of the Right Certificates shall cease to be such officer of the Company
      before countersignature by the Rights Agent and issuance and delivery by the
      Company, such Right Certificates, nevertheless, may be countersigned by the
      Rights Agent and issued and delivered by the Company with the same force and
      effect as though the person who signed such Right Certificates had not ceased
      to
      be such officer of the Company; and any Right Certificate may be signed on
      behalf of the Company by any person who, at the actual date of the execution
      of
      such Right Certificate, shall be a proper officer of the Company to sign such
      Right Certificate, although at the date of the execution of this Agreement
      any
      such person was not such an officer.

    


    Following
      the Distribution Date, the
      Rights Agent will keep or cause to be kept, at its office designated for such
      purpose, books for registration and transfer of the Right Certificates issued
      hereunder.  Such books shall show the names and addresses of the respective
      holders of the Right Certificates, the number of Rights evidenced on its face
      by
      each of the Right Certificates and the date of each of the Right
      Certificates.

    


    SECTION
      6.         Transfer, Split Up,
      Combination And Exchange Of Right Certificates; Mutilated, Destroyed, Lost
      Or
      Stolen Right Certificates.  Subject to the provisions
      of
      Section 11(a)(ii), Section 14 and Section 24 hereof, at any time
      after the Close of Business on the Distribution Date, and at or prior to the
      Close of Business on the earlier of the Redemption Date or the Final Expiration
      Date, any Right Certificate or Right Certificates may be transferred, split
      up,
      combined or exchanged for another Right Certificate or Right Certificates,
      entitling the registered holder to purchase a like number of one one-hundredths
      of a Preferred Share as the Right Certificate or Right Certificates surrendered
      then entitled such holder to purchase.  Any registered holder desiring to
      transfer, split up, combine or exchange any Right Certificate or Right
      Certificates shall make such request in writing delivered to the Rights Agent,
      and shall surrender the Right Certificate or Right Certificates to be
      transferred, split up, combined or exchanged at the office of the Rights Agent
      designated for such purpose.  Neither the Rights Agent nor the Company
      shall be obligated to take any action whatsoever with respect to the transfer
      of
      any such surrendered Right Certificate until the registered holder shal1 have
      completed and signed the certificate contained in the form of assignment on
      the
      reverse side of such Right Certificate and shall have provided such additional
      evidence of the identity of the Beneficial Owner (or former Beneficial Owner)
      or
      Affiliates or Associates thereof as the Company shall reasonably request. 
Thereupon the Rights Agent shall, subject to Section 11(a)(ii),
      Section 14 and Section 24 hereof, countersign and deliver to the
      person entitled thereto a Right Certificate or Right Certificates, as the case
      may be, as so requested.  The Company may require payment of a sum
      sufficient to cover any tax or governmental charge that may be imposed in
      connection with any transfer, split up, combination or exchange of Right
      Certificates.

    


    Upon
      receipt by the Company and the
      Rights Agent of evidence reasonably satisfactory to them of the loss, theft,
      destruction or mutilation of a Right Certificate, and, in case of loss, theft
      or
      destruction, of indemnity or security reasonably satisfactory to them, and,
      at
      the Company’s request, reimbursement to the Company and the Rights Agent of all
      reasonable expenses incidental thereto, and upon surrender to the Rights Agent
      and cancellation of the Right Certificate if mutilated, the Company will issue,
      execute and deliver a new Right Certificate of like tenor to the Rights Agent
      for countersignature and delivery to the registered holder in lieu of the Right
      Certificate so lost, stolen, destroyed or mutilated.

    


    Notwithstanding
      any other provisions
      hereof, the Company and the Rights Agent may amend this Agreement to provide
      for
      uncertificated Rights in addition to or in place of Rights evidenced by Rights
      Certificates.

    


    SECTION
      7.         Exercise Of Rights; Purchase
      Price; Expiration Date Of Rights.

    


    (a)          The
      registered holder of any Right
      Certificate may exercise the Rights evidenced thereby (except as otherwise
      provided herein) in whole or in part at any time after the Distribution Date
      upon surrender of the Right Certificate, with the form of election to purchase
      on the reverse side thereof duly executed, to the Rights Agent at the office
      of
      the Rights Agent designated for such purpose, together with payment of the
      Purchase Price for each one one- hundredth of a Preferred Share (or such other
      number of shares or other securities) as to which the Rights are exercised,
      at
      or prior to the earliest of (i) the Close of Business on February 8, 2018 (the
      “Final Expiration Date”), (ii) the time at which the Rights are redeemed as
      provided in Section 23 hereof (the “Redemption Date”), or (iii) the time at
      which such Rights are exchanged as provided in Section 24 hereof.

    


    (b)          The
      purchase price for each one
      one-hundredth of a Preferred Share pursuant to the exercise of a Right shall
      initially be $100.00 (the “Purchase Price”) and shall be subject to adjustment
      from time to time as provided in Sections 11 and 13 hereof and shall be payable
      in lawful money of the United States of America in accordance with Section
      7(c)
      below.

    


    (c)          Upon
      receipt of a Right
      Certificate representing exercisable Rights, with the form of election to
      purchase duly executed, accompanied by payment of the Purchase Price for the
      shares to be purchased and an amount equal to any applicable transfer tax
      required to be paid by the holder of such Right Certificate in accordance with
      Section 9 hereof by certified check, cashier’s check, bank draft or money
      order payable to the order of the Company, the Rights Agent shall thereupon
      promptly (i) (A) requisition from any transfer agent for the Preferred Shares
      certificates for the number of Preferred Shares to be purchased and the Company
      hereby irrevocably authorizes its transfer agent to comply with all such
      requests, or (B) if the Company, in its sole discretion, shall have elected
      to
      deposit the Preferred Shares issuable upon exercise of the Rights hereunder
      into
      a depository, requisition from the depositary agent depositary receipts
      representing such number of one one-hundredths of a Preferred Share as are
      to be
      purchased (in which case certificates for the Preferred Shares represented
      by
      such receipts shall be deposited by the transfer agent with the depositary
      agent) and the Company hereby directs the depositary agent to comply with such
      request, (ii) when appropriate, requisition from the Company the amount of
      cash
      to be paid in lieu of issuance of fractional shares in accordance with
      Section 14 hereof, (iii) after receipt of such certificates or depositary
      receipts, cause the same to be delivered to or upon the order of the registered
      holder of such Right Certificate, registered in such name or names as may be
      designated by such holder and (iv) when appropriate, after receipt, deliver
      such
      cash to or upon the order of the registered holder of such Right
      Certificate.  In the event that the Company is obligated to issue
      securities of the Company other than Preferred Shares (including Common Shares)
      of the Company pursuant to Section 11(a) hereof, the Company will make all
      arrangements necessary so that such other securities are available for
      distribution by the Rights Agent, if and when appropriate.

    


    In
      addition, in the case of an exercise
      of the Rights by a holder pursuant to Section 11(a)(ii) hereof, the Rights
      Agent shall return such Right Certificate to the registered holder thereof
      after
      imprinting, stamping or otherwise indicating thereon that the rights represented
      by such Right Certificate no longer include the rights provided by
      Section 11(a)(ii) hereof, and, if fewer than all the Rights represented by
      such Right Certificate were so exercised, the Rights Agent shall indicate on
      the
      Right Certificate the number of Rights represented thereby that continue to
      include the rights provided by Section 11(a)(ii) hereof.

    


    (d)          In
      case the registered holder of
      any Right Certificate shall exercise fewer than all the Rights evidenced thereby
      (other than a partial exercise of rights pursuant to Section 11 (a)(ii) as
      described in Section 7(c) hereof), a new Right Certificate evidencing
      Rights equivalent to the Rights remaining unexercised shall be issued by the
      Rights Agent to the registered holder of such Right Certificate or to his duly
      authorized assigns, subject to the provisions of Section 14 hereof.

    


    (e)          The
      Company covenants and agrees
      that it will cause to be reserved and kept available out of its authorized
      and
      unissued Preferred Shares or any Preferred Shares held in its treasury, the
      number of Preferred Shares that will be sufficient to permit the exercise in
      full of all outstanding Rights in accordance with this Section 7.

    


    (f)           Notwithstanding
      anything in this
      Agreement to the contrary, neither the Rights Agent nor the Company shall be
      obligated to undertake any action with respect to a registered holder upon
      the
      occurrence of any purported exercise as set forth in this Section 7 unless
      such registered holder shall have (i) completed and signed the certification
      following the form of election to purchase set forth on the reverse side of
      the
      Rights Certificate surrendered for such exercise, (ii) tendered the Purchase
      Price (and an amount equal to any applicable transfer tax required to be paid
      by
      the holder of such Right Certificate in accordance with Section 9) to the
      Company in the manner set forth in Section 7(c), and (iii) provided such
      additional evidence of the identity of the Beneficial Owner (or former
      Beneficial Owner) or Affiliates or Associates thereof as the Company shall
      reasonably request.

    


    


    SECTION
      8.         Cancellation And Destruction
      Of Right Certificates.  All Right Certificates
      surrendered for the purpose of exercise, transfer, split up, combination or
      exchange shall, if surrendered to the Company or to any of its agents, be
      delivered to the Rights Agent for cancellation or in canceled form, or, if
      delivered or surrendered to the Rights Agent, shall be canceled by it, and
      no
      Right Certificates shall be issued in lieu thereof except as expressly permitted
      by any of the provisions of this Agreement.  The Company shall deliver to
      the Rights Agent for cancellation and retirement, and the Rights Agent shall
      so
      cancel and retire, any other Right Certificate purchased or acquired by the
      Company otherwise than upon the exercise thereof.  The Rights Agent shall
      deliver all canceled Right Certificates to the Company approximately one and
      one-half years after the cancellation date, or shall, at the written request
      of
      the Company, destroy such canceled Right Certificates, and in such case shall
      deliver a certificate of destruction thereof to the Company.

    


    SECTION
      9.         Availability Of Preferred
      Shares.  The Company
      covenants and agrees that so long as the Preferred Shares (and, after the time
      a
      person becomes an Acquiring Person, Common Shares or any other securities)
      issuable upon the exercise of the Rights may be listed on any national
      securities exchange or quotation system, the Company shall use its best efforts
      to cause, from and after such time as the Rights become exercisable, all shares
      reserved for such issuance to be listed on such exchange or quotation system
      upon official notice of issuance upon such exercise.

    


    The
      Company covenants and agrees that it
      will take all such action as may be necessary to ensure that all Preferred
      Shares (or Common Shares and other securities, as the case may be) delivered
      upon exercise of Rights shall, at the time of delivery of the certificates
      for
      such Preferred Shares (subject to payment of the Purchase Price), be duly and
      validly authorized and issued and fully paid and nonassessable shares or other
      securities.

    


    The
      Company further covenants and agrees
      that it will pay when due and payable any and all federal and state transfer
      taxes and charges that may be payable in respect of the issuance or delivery
      of
      the Right Certificates or of any Preferred Shares upon the exercise of
      Rights.  The Company shall not, however, be required to pay any transfer
      tax that may be payable in respect of any transfer or delivery of Right
      Certificates to a Person other than, or the issuance or delivery of certificates
      or depositary receipts for the Preferred Shares in a name other than that of,
      the registered holder of the Right Certificate evidencing Rights surrendered
      for
      exercise or to issue or to deliver any certificates or depositary receipts
      for
      Preferred Shares upon the exercise of any Rights until any such tax shall have
      been paid (any such tax being payable by the holder of such Right Certificate
      at
      the time of surrender) or until it has been established to the Company’s
      reasonable satisfaction that no such tax is due.

    


    As
      soon as practicable after the
      Distribution Date, the Company shall use its best efforts to:

    


    (i)           prepare
      and file a registration
      statement under the Securities Act of 1933, as amended (the “Act”), with respect
      to the securities purchasable upon exercise of the Rights on an appropriate
      form, will use reasonable efforts to cause such registration statement to become
      effective as soon as practicable after such filing and will use reasonable
      efforts to cause such registration statement to remain effective (with a
      prospectus at all times meeting the requirements of the Act) until the Final
      Expiration Date; and

    


    (ii)          use
      reasonable efforts to qualify
      or register the Rights and the securities purchasable upon exercise of the
      Rights under the blue sky laws of such jurisdictions as may be necessary or
      appropriate.

    


    SECTION
      10.       Preferred Shares Record Date.  Each person in whose
      name
      any certificate for Preferred Shares or other securities is issued upon the
      exercise of Rights shall for all purposes be deemed to have become the holder
      of
      record of the Preferred Shares or other securities represented thereby on,
      and
      such certificate shall be dated, the date upon which the Right Certificate
      evidencing such Rights was duly surrendered with the forms of election and
      certification duly executed and payment of the Purchase Price (and any
      applicable transfer taxes) was made;  provided,
      however,  that
      if the date of such surrender and payment is a date upon which the Preferred
      Shares or other securities transfer books of the Company are closed, such person
      shall be deemed to have become the record holder of such shares on, and such
      certificate shall be dated, the next succeeding Business Day on which the
      Preferred Shares or other securities transfer books of the Company are
      open.  Prior to the exercise of the Rights evidenced thereby, the holder of
      a Right Certificate, as such, shall not be entitled to any rights of a holder
      of
      Preferred Shares for which the Rights shall be exercisable, including, without
      limitation, the right to vote, to receive dividends or other distributions
      or to
      exercise any preemptive rights, and shall not be entitled to receive any notice
      of any proceedings of the Company, except as provided herein.

     

    SECTION
      11.            
Adjustment Of Purchase Price, Number Of Shares Or Number Of Rights.  The Purchase Price, the
      number of
      Preferred Shares covered by each Right and the number of Rights outstanding
      are
      subject to adjustment from time to time as provided in this
      Section 11.

    


    (a)

    


    (i)           In
      the event the Company shall at
      any time after the date of this Agreement (A) declare a dividend on the
      Preferred Shares payable in Preferred Shares, (B) subdivide the outstanding
      Preferred Shares, (C) combine the outstanding Preferred Shares into a smaller
      number of Preferred Shares or (D) issue any shares of its capital stock in
      a
      reclassification of the Preferred Shares (including any such reclassification
      in
      connection with a consolidation or merger in which the Company is the continuing
      or surviving corporation), except as otherwise provided in this
      Section 11(a), the Purchase Price in effect at the time of the record date
      for such dividend or of the effective date of such subdivision, combination
      or
      reclassification, and the number and kind of shares of capital stock issuable
      on
      such date, shall be proportionately adjusted so that the holder of any Right
      exercised after such time shall be entitled to receive the aggregate number
      and
      kind of shares of capital stock that, if such Right had been exercised
      immediately prior to such date and at a time when the Preferred Shares transfer
      books of the Company were open, such holder would have owned upon such exercise
      and been entitled to receive by virtue of such dividend, subdivision,
      combination or reclassification;  provided,
      however,  that
      in no event shall the consideration to be paid upon the exercise of one Right
      be
      less than the aggregate par value of the shares of capital stock of the Company
      issuable upon exercise of one Right.  If an event occurs that would require
      an adjustment under both Section 11(a)(i) and Section 11(a)(ii)
      hereof, the adjustment provided for in this Section 11(a)(i) shall be in
      addition to, and shall be made prior to any adjustment required pursuant to
      Section 11(a)(ii) hereof.

    


    (ii)          Subject
      to Section 24 hereof
      and the provisions of the next paragraph of this Section 11(a)(ii), in the
      event any Person shall become an Acquiring Person, each holder of a Right shall,
      for a period of 60 days after the later of such time any Person becomes an
      Acquiring Person or the effective date of an appropriate registration statement
      filed under the Act pursuant to Section 9 hereof (provided, however that,
      if at any time prior to the expiration or termination of the Rights there shall
      be a temporary restraining order, a preliminary injunction, an injunction,
      or
      temporary suspension by the Board of Directors, or similar obstacle to exercise
      of the Rights (the “Injunction”) that prevents exercise of the Rights, a new
      60-day period shall commence on the date the Injunction is removed), have a
      right to receive, upon exercise thereof at a price equal to the then current
      Purchase Price multiplied by the number of one one-hundredths of a Preferred
      Share for which a Right is then exercisable, in accordance with the terms of
      this Agreement and in lieu of Preferred Shares, such number of Common Shares
      as
      shall equal the result obtained by (A) multiplying the then current Purchase
      Price by the number of one one-hundredths of a Preferred Share for which a
      Right
      is then exercisable and dividing that product by (B) 50% of the then current
      per
      share market price of the Common Shares (determined pursuant to
      Section 11(d) hereof) on the date such Person became an Acquiring
      Person;  provided,
      however, that if the
      transaction that would otherwise give rise to the foregoing adjustment is also
      subject to the provisions of Section 13 hereof, then only the provisions of
      Section 13 hereof shall apply and no adjustment shall be made pursuant to
      this Section 11(a)(ii).  In the event that any Person shall become an
      Acquiring Person and the Rights shall then be outstanding, the Company shall
      not
      take any action that would eliminate or diminish the benefits intended to be
      afforded by the Rights.

    


    Notwithstanding
      anything in this
      Agreement to the contrary, from and after the time any Person becomes an
      Acquiring Person, any Rights beneficially owned by (i) such Acquiring Person
      or
      an Associate or Affiliate of such Acquiring Person, (ii) a transferee of such
      Acquiring Person (or of any such Associate or Affiliate) who becomes a
      transferee after the Acquiring Person became such, or (iii) a transferee of
      such
      Acquiring Person (or of any such Associate or Affiliate) who becomes a
      transferee prior to or concurrently with the Acquiring Person’s becoming such
      and receives such Rights pursuant to either (A) a transfer (whether or not
      for
      consideration) from the Acquiring Person to holders of equity interests in
      such
      Acquiring Person or to any Person with whom the Acquiring Person has any
      continuing agreement, arrangement or understanding regarding the transferred
      Rights or (B) a transfer that the Board of Directors has determined is part
      of a
      plan, arrangement or understanding that has as a primary purpose or effect
      the
      avoidance of this Section 11(a)(ii), shall become null and void without any
      further action and no holder of such Rights shall have any rights whatsoever
      with respect to such Rights, whether under any provision of this Agreement
      or
      otherwise.  The Company shall use all reasonable efforts to insure that the
      provisions of this Section 11(a)(ii) and Section 4(b) hereof are
      complied with, but shall have no liability to any holder of Right Certificates
      or other Person as a result of its failure to make any determinations with
      respect to an Acquiring Person or its Affiliates, Associates or transferees
      hereunder.  No Right Certificate shall be issued at any time upon the
      transfer of any Rights to an Acquiring Person whose Rights would be void
      pursuant to the preceding sentence or any Associate or Affiliate thereof or
      to
      any nominee of such Acquiring Person, Associate or Affiliate; and any Right
      Certificate delivered to the Rights Agent for transfer to an Acquiring Person
      whose Rights would be void pursuant to the preceding sentence shall be
      canceled.

    


    (iii)        In
      lieu of issuing Common Shares
      in accordance with Section 11(a)(ii) hereof, the Company may, if a majority
      of the Board of Directors then in office determines that such action is
      necessary or appropriate and not contrary to the interests of holders of Rights,
      elect to (and, in the event that the Board of Directors has not exercised the
      exchange right contained in Section 24(c) hereof and there are not
      sufficient treasury shares and authorized but unissued Common Shares to permit
      the exercise in full of the Rights in accordance with Section 11(a)(ii), the
      Company shall) take all such action as may be necessary to authorize, issue
      or
      pay, upon the exercise of the Rights, cash (including by way of a reduction
      of
      the Purchase Price), property, Common Shares, other securities or any
      combination thereof having an aggregate value equal to the value of the Common
      Shares that otherwise would have been issuable pursuant to
      Section 11(a)(ii) hereof, that aggregate value shall be determined by a
      nationally recognized investment banking firm selected by a majority of the
      Board of Directors then in office.  For purposes of the preceding sentence,
      the value of the Common Shares shall be determined pursuant to
      Section 11(d) hereof.  Any such election by the Board of Directors
      must be made within 60 days following the date on which the event described
      in
      Section 11(a)(ii) hereof shall have occurred.  Following the
      occurrence of the event described in Section 11(a)(ii) hereof, a majority
      of the Board of Directors then in office may suspend the exercisability of
      the
      Rights for a period of up to 60 days following the date on which the event
      described in Section 11(a)(ii) hereof shall have occurred to the extent
      that such directors have not determined whether to exercise their rights of
      election under this Section 11(a)(iii). 

    


    (b)          In
      case the Company shall fix a
      record date for the issuance of rights, options or warrants to all holders
      of
      Preferred Shares entitling them (for a period expiring within 45 calendar days
      after such record date) to subscribe for or purchase Preferred Shares (or shares
      having the same designations and the powers, preferences and rights, and the
      qualifications, limitations and restrictions as the Preferred Shares
      (“equivalent preferred shares”)) or securities convertible into Preferred Shares
      or equivalent preferred shares at a price per Preferred Share or equivalent
      preferred share (or having a conversion price per share, if a security
      convertible into Preferred Shares or equivalent preferred shares) less than
      the
      then current per share market price of the Preferred Shares (as such term is
      hereinafter defined) on such record date, the Purchase Price to be in effect
      after such record date shall be determined by multiplying the Purchase Price
      in
      effect immediately prior to such record date by a fraction, the numerator of
      which shall be the number of Preferred Shares outstanding on such record date
      plus the number of Preferred Shares that the aggregate offering price of the
      total number of Preferred Shares and/or equivalent preferred shares so to be
      offered (and/or the aggregate initial conversion price of the convertible
      securities so to be offered) would purchase at such current market price and
      the
      denominator of which shall be the number of Preferred Shares outstanding on
      such
      record date plus the number of additional Preferred Shares and/or equivalent
      preferred shares to be offered for subscription or purchase (or into which
      the
      convertible securities so to be offered are initially convertible);  provided,
      however, that in no event
      shall the consideration to be paid upon the exercise of one Right be less than
      the aggregate par value of the shares of capital stock of the Company issuable
      upon exercise of one Right.  In case such subscription price may be paid in
      a consideration part or all of which shall be in a form other than cash, the
      value of such consideration shall be as determined in good faith by the Board
      of
      Directors, whose determination shall be described in a statement filed with
      the
      Rights Agent.  Preferred Shares owned by or held for the account of the
      Company shall not be deemed outstanding for the purpose of any such
      computation.  Such adjustment shall be made successively whenever such a
      record date is fixed; and in the event that such rights, options or warrants
      are
      not so issued, the Purchase Price shall be adjusted to be the Purchase Price
      that would then be in effect if such record date had not been fixed.

    


    (c)          In
      case the Company shall fix a
      record date for the making of a distribution to all holders of the Preferred
      Shares (including any such distribution made in connection with a consolidation
      or merger in which the Company is the continuing or surviving corporation)
      of
      evidences of indebtedness or assets (other than a regular quarterly cash
      dividend or a dividend payable in Preferred Shares) or subscription rights
      or
      warrants (excluding those referred to in Section 11(b) hereof), the
      Purchase Price to be in effect after such record date shall be determined by
      multiplying the Purchase Price in effect immediately prior to such record date
      by a fraction, the numerator of which shall be the then current per share market
      price of the Preferred Shares (as such term is hereinafter defined) on such
      record date, less the fair market value (as determined in good faith by the
      Board of Directors, whose determination shall be described in a statement filed
      with the Rights Agent) of the portion of the assets or evidences of indebtedness
      so to be distributed or of such subscription rights or warrants applicable
      to
      one Preferred Share and the denominator of which shall be such current per
      share
      market price of the Preferred Shares;  provided,
      however, that in no event
      shall the consideration to be paid upon the exercise of one Right be less than
      the aggregate par value of the shares of capital stock of the Company to be
      issued upon exercise of one Right.  Such adjustments shall be made
      successively whenever such a record date is fixed; and in the event that such
      distribution is not so made, the Purchase Price shall again be adjusted to
      be
      the Purchase Price which would then be in effect if such record date had not
      been fixed.

    


    (d)

    


    (i)           For
      the purpose of any computation
      hereunder, the “current per share market price” of any security (a “Security”
for the purpose of this Section 11(d)(i)) on any date shall be deemed to be
      the average of the daily closing prices per share of such Security for the
      30
      consecutive Trading Days (as such term is hereinafter defined) immediately
      prior
      to such date;  provided,
      however,  that
      in the event that the current per share market price of the Security is
      determined during a period following the announcement by the issuer of such
      Security of (A) a dividend or distribution on such Security payable in shares
      of
      such Security or securities convertible into such shares, or (B) any
      subdivision, combination or reclassification of such Security or securities
      convertible into such shares, or (C) any subdivision, combination or
      reclassification of such Security and prior to the expiration of 30 Trading
      Days
      after the ex dividend date for such dividend or distribution, or the record
      date
      for such subdivision, combination or reclassification, then, and in each such
      case, the current per share market price shall be appropriately adjusted to
      reflect the current market price per share equivalent of such Security. 
The closing price for each day shall be the last sale price, regular way, or,
      in
      case no such sale takes place on such day, the average of the closing bid and
      asked prices, regular way, in either case as reported in the principal
      consolidated transaction reporting system with respect to securities listed
      or
      admitted to trading on the American Stock Exchange or, if the Security is not
      listed or admitted to trading on the American Stock Exchange, as reported in
      the
      principal consolidated transaction reporting system with respect to securities
      listed on the principal national securities exchange on which the Security
      is
      listed or admitted to trading or, if the Security is not listed or admitted
      to
      trading on any national securities exchange, the last quoted price or, if not
      so
      quoted, the average of the high bid and low asked prices in the over-the-counter
      market, or, if on any such date the Security is not quoted in any such market,
      the average of the closing bid and asked prices as furnished by a professional
      market maker making a market in the Security selected by the Board of Directors
      or, if on any such date no professional market maker is making a market in
      the
      Security, the price as determined in good faith by the Board of Directors. 
The term “Trading Day” shall mean a day on which the principal national
      securities exchange on which the Security is listed or admitted to trading
      is
      open for the transaction of business or, if the Security is not listed or
      admitted to trading on any national securities exchange, a Business Day.

    


    (ii)          For
      the purpose of any computation
      hereunder, the “current per share market price” of the Preferred Shares shall be
      determined in accordance with the method set forth in Section 11(d)(i)
      hereof.  If the Preferred Shares are not publicly traded, the “current per
      share market price” of the Preferred Shares shall be conclusively deemed to be
      the current per share market price of the Common Shares as determined pursuant
      to Section 11 (d)(i) hereof (appropriately adjusted to reflect any stock
      split, stock dividend or similar transaction occurring after the date hereof)
      multiplied by one hundred.  If neither the Common Shares nor the Preferred
      Shares are publicly held or so listed or traded, “current per share market
      price” shall mean the fair value per share as determined in good faith by the
      Board of Directors, whose determination shall be described in a statement filed
      with the Rights Agent.

    


    (e)          No
      adjustment in the Purchase
      Price shall be required unless such adjustment would require an increase or
      decrease of at least 1% in the Purchase Price;  provided,
      however,  that
      any adjustments which by reason of this Section 11(e) are not required to
      be made shall be carried forward and taken into account in any subsequent
      adjustment.  All calculations under this Section 11 shall be made to
      the nearest cent or to the nearest one one-hundredth of a Preferred Share or
      one
      ten-thousandth of any other share or security as the case may be. 
Notwithstanding the first sentence of this Section 11(e), any adjustment
      required by this Section 11 shall be made no later than the earlier of (i)
      three years from the date of the transaction that requires such adjustment
      or
      (ii) the date of the expiration of the right to exercise any Rights.

    


    (f)           If
      as a result of an adjustment
      made pursuant to Section 11(a) hereof, the holder of any Right thereafter
      exercised shall become entitled to receive any shares of capital stock of the
      Company other than Preferred Shares, thereafter the number of such other shares
      so receivable upon exercise of any Right shall be subject to adjustment from
      time to time in a manner and on terms as nearly equivalent as practicable to
      the
      provisions with respect to the Preferred Shares contained in Sections 11(a)
      through 11(c) hereof, inclusive, and the provisions of Sections 7, 9, 10, 13
      and
      14 hereof with respect to the Preferred Shares shall apply on like terms to
      any
      such other shares.

    


    (g)          All
      Rights originally issued by
      the Company subsequent to any adjustment made to the Purchase Price hereunder
      shall evidence the right to purchase, at the adjusted Purchase Price, the number
      of one one-hundredths of a Preferred Share purchasable from time to time
      hereunder upon exercise of the Rights, all subject to further adjustment as
      provided herein.

    


    (h)          Unless
      the Company shall have
      exercised its election as provided in Section 11(i) hereof, upon each
      adjustment of the Purchase Price as a result of the calculations made in
      Section 11(b) and Section 11(c) hereof, each Right outstanding
      immediately prior to the making of such adjustment shall thereafter evidence
      the
      right to purchase, at the adjusted Purchase Price, that number of one
      one-hundredths of a Preferred Share (calculated to the nearest one one-
      millionth of a Preferred Share) obtained by (i) multiplying (x) the number
      of
      one one-hundredths of a Preferred Share covered by a Right immediately prior
      to
      this adjustment by (y) the Purchase Price in effect immediately prior to such
      adjustment of the Purchase Price and (ii) dividing the product so obtained
      by
      the Purchase Price in effect immediately after such adjustment of the Purchase
      Price.

    


    (i)           The
      Company may elect on or after
      the date of any adjustment of the Purchase Price to adjust the number of Rights,
      in substitution for any adjustment in the number of one one- hundredths of
      a
      Preferred Share purchasable upon the exercise of a Right.  Each of the
      Rights outstanding after such adjustment of the number of Rights shall be
      exercisable for the number of one one-hundredths of a Preferred Share for which
      a Right was exercisable immediately prior to such adjustment.  Each Right
      held of record prior to such adjustment of the number of Rights shall become
      that number of Rights (calculated to the nearest one ten-thousandth) obtained
      by
      dividing the Purchase Price in effect immediately prior to adjustment of the
      Purchase Price by the Purchase Price in effect immediately after adjustment
      of
      the Purchase Price.  The Company shall make a public announcement of its
      election to adjust the number of Rights, indicating the record date for the
      adjustment, and, if known at the time, the amount of the adjustment to be
      made.  This record date may be the date on which the Purchase Price is
      adjusted or any day thereafter, but, if the Right Certificates have been issued,
      shall be at least 10 days later than the date of the public announcement. 
If Right Certificates have been issued, upon each adjustment of the number
      of
      Rights pursuant to this Section 11(i), the Company shall, as promptly as
      practicable, cause to be distributed to holders of record of Right Certificates
      on such record date Right Certificates evidencing, subject to Section 14
      hereof, the additional Rights to which such holders shall be entitled as a
      result of such adjustment, or, at the option of the Company, shall cause to
      be
      distributed to such holders of record in substitution and replacement for the
      Right Certificates held by such holders prior to the date of adjustment, and
      upon surrender thereof, if required by the Company, new Right Certificates
      evidencing all the Rights to which such holders shall be entitled after such
      adjustment.  Right Certificates so to be distributed shall be issued,
      executed and countersigned in the manner provided for herein and shall be
      registered in the names of the holders of record of Right Certificates on the
      record date specified in the public announcement.

    


    (j)           Irrespective
      of any adjustment or
      change in the Purchase Price or the number of one one-hundredths of a Preferred
      Share issuable upon the exercise of the Rights, the Right Certificates
      theretofore and thereafter issued may continue to express the Purchase Price
      and
      the number of one one-hundredths of a Preferred Share that was expressed in
      the
      initial Right Certificates issued hereunder.

    


    (k)          Before
      taking any action that
      would cause an adjustment reducing the Purchase Price below one one-hundredth
      of
      the then par value, if any, of the Preferred Shares issuable upon exercise
      of
      the Rights, the Company shall take any corporate action that may, in the opinion
      of its counsel, be necessary in order that the Company may validly and legally
      issue fully paid and non-assessable Preferred Shares at such adjusted Purchase
      Price.

    


    (l)           In
      any case in which this
      Section 11 shall require that an adjustment in the Purchase Price be made
      effective as of a record date for a specified event, the Company may elect
      to
      defer until the occurrence of such event the issuing to the holder of any Right
      exercised after such record date of the Preferred Shares and other capital
      stock
      or securities of the Company, if any, issuable upon such exercise on the basis
      of the Purchase Price in effect prior to such adjustment;  provided,
      however,  that
      the Company shall deliver to such holder a due bill or other appropriate
      instrument evidencing such holder’s right to receive such additional shares upon
      the occurrence of the event requiring such adjustment.

    


    (m)         The
      Company covenants and agrees
      that, after the Distribution Date, it will not, except as permitted by
      Section 23 or Section 27 hereof, take (or permit any Subsidiary to
      take) any action the purpose of which is to, or if at the time such action
      is
      taken it is reasonably foreseeable that the effect of such action is to,
      materially diminish or eliminate the benefits intended to be afforded by the
      Rights.  Any such action taken by the Company during any period after any
      Person becomes an Acquiring Person but prior to the Distribution Date shall
      be
      null and void unless such action could be taken under this Section 11(m)
      from and after the Distribution Date.

    


    (n)          Anything
      in this Section 11
      to the contrary notwithstanding, the Company shall be entitled to make such
      reductions in the Purchase Price, in addition to those adjustments expressly
      required by this Section 11, as and to the extent that it in its sole
      discretion shall determine to be advisable in order that any consolidation
      or
      subdivision of the Preferred Shares, issuance wholly for cash of any Preferred
      Shares at less than the current market price, issuance wholly for cash of
      Preferred Shares or securities that by their terms are convertible into or
      exchangeable for Preferred Shares, dividends on Preferred Shares payable in
      Preferred Shares or issuance of rights, options or warrants referred to
      hereinabove in Section 11(b), hereafter made by the Company to holders of
      its Preferred Shares shall not be taxable to such stockholders.

    


    (o)          In
      the event that at any time
      after the date of this Agreement and prior to the Distribution Date, the Company
      shall (i) declare or pay any dividend on the Common Shares payable in Common
      Shares or (ii) effect a subdivision, combination or consolidation of the Common
      Shares (by reclassification or otherwise than by payment of dividends in Common
      Shares) into a greater or lesser number of Common Shares, then in any such
      case
      (A) the number of one one-hundredths of a Preferred Share purchasable after
      such
      event upon proper exercise of each Right shall be determined by multiplying
      the
      number of one one-hundredths of a Preferred Share so purchasable immediately
      prior to such event by a fraction, the numerator of which is the number of
      Common Shares outstanding immediately before such event and the denominator
      of
      which is the number of Common Shares outstanding immediately after such event,
      and (B) each Common Share outstanding immediately after such event shall have
      issued with respect to it that number of Rights that each Common Share
      outstanding immediately prior to such event had issued with respect to it. 
The adjustments provided for in this Section 11(o) shall be made
      successively whenever such a dividend is declared or paid or such a subdivision,
      combination or consolidation is effected.

    


    (p)          The
      exercise of Rights under
      Section 11(a)(ii) hereof shall only result in the loss of rights under
      Section 11(a)(ii) hereof to the extent so exercised and shall not otherwise
      affect the rights represented by the Rights under this Agreement, including
      the
      rights represented by Section 13 hereof.

    


    SECTION
      12.            
Certificate Of Adjusted Purchase Price Or Number Of Shares.  Whenever an adjustment
      is made as
      provided in Sections 11 and 13 hereof, the Company shall promptly (a) prepare
      a
      certificate setting forth such adjustment, and a brief statement of the facts
      accounting for such adjustment, (b) file with the Rights Agent and with each
      transfer agent for the Common Shares or the Preferred Shares a copy of such
      certificate and (c) mail a brief summary thereof to each holder of a Right
      Certificate in accordance with Section 25 hereof.  The Rights Agent
      shall be fully protected in relying on any such certificate and on any
      adjustment therein contained and shall not be deemed to have knowledge of any
      adjustment unless and until it shall have received such certificate.

    


    SECTION
      13.            
Consolidation, Merger Or Sale Or Transfer Of Assets Or Earning Power.

    


    (a)          In
      the event that, following the
      Shares Acquisition Date or, if a Transaction is proposed, the Distribution
      Date,
      directly or indirectly (x) the Company shall consolidate with, or merge with
      and
      into, any Interested Stockholder, or if in such merger or consolidation all
      holders of Common Stock are not treated alike, any other Person, (y) any
      Interested Stockholder, or if in such merger or consolidation all holders of
      Common Stock are not treated alike, any other Person shall consolidate with
      the
      Company, or merge with and into the Company, and the Company shall be the
      continuing or surviving corporation of such merger (other than, in the case
      of
      either transaction described in (x) or (y), a merger or consolidation that
      would
      result in all of the voting power represented by the securities of the Company
      outstanding immediately prior thereto continuing to represent (either by
      remaining outstanding or by being converted into securities of the surviving
      entity) all of the voting power represented by the securities of the Company
      or
      such surviving entity outstanding immediately after such merger or consolidation
      and the holders of such securities not having changed as a result of such merger
      or consolidation), or (z) the Company shall sell, mortgage or otherwise transfer
      (or one or more of its subsidiaries shall sell, mortgage or otherwise transfer),
      in one or more transactions, assets or earning power aggregating more than
      50%
      of the assets or earning power of the Company and its subsidiaries (taken as
      a
      whole) to any Interested Stockholder or Stockholders, or if in such transaction
      all holders of Common Stock are not treated alike, any other Person, (other
      than
      the Company or any Subsidiary of the Company in one or more transactions each
      of
      which individually and the aggregate does not violate Section 13(d) hereof)
      then, and in each such case, proper provision shall be made so that (i) each
      holder of a Right, subject to Section 11(a)(ii) hereof, shall have the
      right to receive, upon the exercise thereof at a price equal to the then current
      Purchase Price multiplied by the number of one one-hundredths of a Preferred
      Share for which a Right is then exercisable in accordance with the terms of
      this
      Agreement and in lieu of Preferred Shares, such number of freely tradable Common
      Shares of the Principal Party (as such term is hereinafter defined), free and
      clear of liens, rights of call or first refusal, encumbrances or other adverse
      claims, as shall be equal to the result obtained by (A) multiplying the then
      current Purchase Price by the number of one one-hundredths of a Preferred Share
      for which a Right is then exercisable (without taking into account any
      adjustment previously made pursuant to Section 11(a)(ii) hereof) and
      dividing that product by (B) 50% of the then current per share market price
      of
      the Common Shares of such Principal Party (determined pursuant to
      Section 11(d) hereof) on the date of consummation of such consolidation,
      merger, sale or transfer; (ii) such Principal Party shall thereafter be liable
      for, and shall assume, by virtue of such consolidation, merger, sale or
      transfer, all the obligations and duties of the Company pursuant to this
      Agreement; (iii) the term “Company” shall thereafter be deemed to refer to such
      Principal Party, it being specifically intended that the provisions of
      Section 11 hereof shall apply to such Principal Party; and (iv) such
      Principal Party shall take such steps (including, but not limited to, the
      reservation of a sufficient number of shares of its Common Shares in accordance
      with Section 9 hereof) in connection with such consummation as may be
      necessary to assure that the provisions hereof shall thereafter be applicable,
      as nearly as reasonably may be, in relation to its Common Shares thereafter
      deliverable upon the exercise of the Rights.

    


    (b)          “Principal
      Party” shall
      mean:

    


    (i)           in
      the case of any transaction
      described in clause (x) or (y) of Section 13(a) hereof, the Person that is
      the issuer of any securities into which Common Shares are converted in such
      merger or consolidation, and if no securities are so issued, the Person that
      is
      the other party to the merger or consolidation (or, if applicable, the Company,
      if it is the surviving corporation); and

    


    (ii)          in
      the case of any transaction
      described in clause (z) of Section 13(a) hereof, the Person that is the
      party receiving the greatest portion of the assets or earning power transferred
      pursuant to such transaction or transactions; provided,
      however,that in any case,
      (1) if the Common Shares of such Person are not at such time and have not been
      continuously over the preceding 12-month period registered under Section 12
      of the Exchange Act, and such Person is a direct or indirect Subsidiary or
      Affiliate of another Person the Common Shares of which are and have been so
      registered, “Principal Party” shall refer to such other Person; (2) if such
      Person is a Subsidiary, directly or indirectly, or Affiliate of more than one
      Person, the Common Shares of two or more of which are and have been so
      registered, “Principal Party” shall refer to whichever of such Persons is the
      issuer of the Common Shares having the greatest aggregate market value; and
      (3)
      if such Person is owned, directly or indirectly, by a joint venture formed
      by
      two or more Persons that are not owned, directly or indirectly, by the same
      Person, the rules set forth in (1) and (2) above shall apply to each of the
      chains of ownership having an interest in such joint venture as if such party
      were a “Subsidiary” of both or all of such joint venturers and the Principal
      Parties in each such chain shall bear the obligations set forth in this
      Section 13 in the same ratio as their direct or indirect interests in such
      Person bear to the total of such interests.

    


    (c)          The
      Company shall not consummate
      any such consolidation, merger, sale or transfer unless the Principal Party
      shall have a sufficient number of authorized Common Shares that have not been
      issued or reserved for issuance to permit the exercise in full of the Rights
      in
      accordance with this Section 13 and unless prior thereto the Company and
      each Principal Party and each other Person who may become a Principal Party
      as a
      result of such consolidation, merger, sale or transfer shall have (i) executed
      and delivered to the Rights Agent a supplemental agreement providing for the
      terms set forth in Sections 13(a) and (b) and (ii) prepared, filed and had
      declared and remain effective a registration statement under the Act on the
      appropriate form with respect to the Rights and the securities exercisable
      upon
      exercise of the Rights and further providing that, as soon as practicable after
      the date of any consolidation, merger, sale or transfer of assets mentioned
      in
      Section 13(a), the Principal Party at its own expense will:

    


    (i)           cause
      the registration statement
      under the Act with respect to the Rights and the securities purchasable upon
      exercise of the Rights on an appropriate form to remain effective (with a
      prospectus at all times meeting the requirements of the Act) until the Final
      Expiration Date;

    


    (ii)          use
      its best efforts to qualify or
      register the Rights and the securities purchasable upon exercise of the Rights
      under the blue sky laws of such jurisdictions as may be necessary or
      appropriate;

    


    (iii)        list
      the Rights and the securities
      purchasable upon exercise of the Rights on each national securities exchange
      on
      which the Common Shares were listed prior to the consummation of such
      consolidation, merger, sale or transfer of assets or, if the Common Shares
      were
      not listed on a national securities exchange prior to the consummation of such
      consolidation, merger, sale or transfer of assets, on a national securities
      exchange; and

    


    (iv)         deliver
      to holders of the Rights
      historical financial statements for the Principal Party and each of its
      Affiliates that comply in all material respects with the requirements for
      registration on Form 10 under the Exchange Act.

    


    The
      provisions of this Section 13
      shall similarly apply to successive mergers or consolidations or sales or other
      transfers.

    


    (d)          After
      the Distribution Date, the
      Company covenants and agrees that it shall not (i) consolidate with, (ii) merge
      with or into, or (iii) sell or transfer to, in one or more transactions, assets
      or earning power aggregating more than 50% of the assets or earning power of
      the
      Company and its subsidiaries taken as a whole, any other Person (other than
      a
      Subsidiary of the Company in a transaction that does not violate
      Section 11(m) hereof), if (x) at the time of or after such consolidation,
      merger or sale there are any charter or bylaw provisions or any rights, warrants
      or other instruments or securities outstanding, agreements in effect or any
      other action taken that would diminish or otherwise eliminate the benefits
      intended to be afforded by the Rights or (y) prior to, simultaneously with
      or
      immediately after such consolidation, merger or sale, the stockholders of the
      Person who constitutes, or would constitute, the “Principal Party” for purposes
      of Section 13(a) hereof shall have received a distribution of Rights
      previously owned by such Person or any of its Affiliates and Associates. 
The Company shall not consummate any such consolidation, merger, sale or
      transfer unless prior thereto the Company and such other Person shall have
      executed and delivered to the Rights Agent a supplemental agreement evidencing
      compliance with this Section 13(d).

    


    SECTION
      14.            
Fractional Rights And Fractional Shares.

    


    (a)          The
      Company shall not be required
      to issue fractions of Rights or to distribute Right Certificates that evidence
      fractional Rights.  In lieu of such fractional Rights, there shall be paid
      to the registered holders of the Right Certificates with regard to which such
      fractional Rights would otherwise be issuable, an amount in cash equal to the
      same fraction of the current market value of a whole Right.  For the
      purposes of this Section 14(a), the current market value of a whole Right
      shall be the closing price of the Rights for the Trading Day immediately prior
      to the date on which such fractional Rights would have been otherwise
      issuable.  The closing price for any day shall be the last sale price,
      regular way, or, in case no such sale takes place on such day, the average
      of
      the closing bid and asked prices, regular way, in either case as reported in
      the
      principal consolidated transaction reporting system with respect to securities
      listed or admitted to trading on the American Stock Exchange or, if the Rights
      are not listed or admitted to trading on the American Stock Exchange, as
      reported in the principal consolidated transaction reporting system with respect
      to securities listed on the principal national securities exchange on which
      the
      Rights are listed or admitted to trading or, if the Rights are not listed or
      admitted to trading on any national securities exchange, the last quoted price
      or, if not so quoted, the average of the high bid and low asked prices in the
      over-the-counter market, or, if on any such date the Rights are not quoted
      by
      any such organization, the average of the closing bid and asked prices as
      furnished by a professional market maker making a market in the Rights selected
      by the Board of Directors.  If on any such date no such market maker is
      making a market in the Rights, the fair value of the Rights on such date as
      determined in good faith by the Board of Directors shall be used.

    


    (b)          The
      Company shall not be required
      to issue fractions of Preferred Shares (other than fractions that are integral
      multiples of one one-hundredth of a Preferred Share) upon exercise of the Rights
      or to distribute certificates that evidence fractional Preferred Shares (other
      than fractions that are integral multiples of one one-hundredth of a Preferred
      Share).  Fractions of Preferred Shares in integral multiples of one
      one-hundredth of a Preferred Share may, at the election of the Company, be
      evidenced by depositary receipts;  provided,
      however,  that
      holders of such depositary receipts shall have all of the designations and the
      powers, preferences and rights, and the qualifications, limitations and
      restrictions to which they are entitled as beneficial owners of the Preferred
      Shares represented by such depositary receipts.  In lieu of fractional
      Preferred Shares that are not integral multiples of one one-hundredth of a
      Preferred Share, the Company shall pay to the registered holders of Right
      Certificates at the time such Rights are exercised as herein provided an amount
      in cash equal to the same fraction of the current market value of one Preferred
      Share.  For the purposes of this Section 14(b), the current market
      value of a Preferred Share shall be the current per share market price of the
      Preferred Shares (as determined pursuant to the second sentence of
      Section 11(d)(i) hereof) for the Trading Day immediately prior to the date
      of such exercise (or, if not publicly traded, in accordance with Section 11
      (d)(ii) hereof).

    


    (c)          Following
      the occurrence of one of
      the transactions or events specified in Section 11 hereof giving rise to
      the right to receive Common Shares, capital stock equivalents (other than
      Preferred Shares) or other securities upon the exercise of a Right, the Company
      shall not be required to issue fractions of Common Shares or units of such
      Common Shares, capital stock equivalents or other securities upon exercise
      of
      the Rights or to distribute certificates which evidence fractional Common
      Shares, capital stock equivalents or other securities.  In lieu of
      fractional Common Shares, capital stock equivalents or other securities, the
      Company shall pay to the registered holders of Right Certificates at the time
      such Rights are exercised as herein provided an amount in cash equal to the
      same
      fraction of the current market value of one Common Share or unit of such Common
      Shares, capital stock equivalents or other securities.  For purposes of
      this Section 14(c), the current market value shall be the current per share
      market price (as determined pursuant to Section 11(d)(i) hereof) for the
      Trading Day immediately prior to the date of such exercise and, if such capital
      stock equivalent is not traded, each such capital stock equivalent shall have
      the value of one one-hundredth of a Preferred Share.

    


    (d)          The
      holder of a Right by the
      acceptance of the Right expressly waives his right to receive any fractional
      Rights or any fractional shares upon exercise of a Right (except as provided
      above).

    


    


    SECTION
      15.            
Rights Of Action. 
All rights of action
      in respect of this Agreement, excepting the rights of
      action given to the Rights Agent under Sections 18 and 20 hereof, are vested
      in
      the respective registered holders of the Right Certificates (and, prior to
      the
      Distribution Date, the registered holders of the Common Shares) and any
      registered holder of any Right Certificate (or, prior to the Distribution Date,
      of the Common Shares), without the consent of the Rights Agent or of the holder
      of any other Right Certificate (or, prior to the Distribution Date, of the
      Common Shares), may, in his own behalf and for his own benefit, enforce, and
      may
      institute and maintain any suit, action or proceeding against the Company to
      enforce, or otherwise act in respect of, his right to exercise the Rights
      evidenced by such Right Certificate in the manner provided in such Right
      Certificate and in this Agreement.  Without limiting the foregoing or any
      remedies available to the holders of Rights, it is specifically acknowledged
      that the holders of Rights would not have an adequate remedy at law for any
      breach of this Agreement and will be entitled to specific performance of the
      obligations under, and injunctive relief against actual or threatened violations
      of the obligations of any Person subject to, this Agreement.  Holders of
      Rights shall be entitled to recover the reasonable costs and expenses, including
      attorneys fees, incurred by them in any action to enforce the provisions of
      this
      Agreement.

    


    SECTION
      16.            
Agreement Of Right Holders.  Every holder of a Right,
      by
      accepting the same, consents and agrees with the Company and the Rights Agent
      and with every other holder of a Right that:

    


    (a)          prior
      to the Distribution Date,
      the Rights will be transferable only in connection with the transfer of the
      Common Shares;

    


    (b)          after
      the Distribution Date, the
      Right Certificates are transferable (subject to the provisions of this
      Agreement) only on the registry books of the Rights Agent if surrendered at
      the
      principal office of the Rights Agent, duly endorsed or accompanied by a proper
      instrument of transfer; and

    


    (c)          the
      Company and the Rights Agent
      may deem and treat the person in whose name the Right Certificate (or, prior
      to
      the Distribution Date, the associated Common Shares certificate) is registered
      as the absolute owner thereof and of the Rights evidenced thereby
      (notwithstanding any notations of ownership or writing on the Right Certificates
      or the associated Common Shares certificate made by anyone other than the
      Company or the Rights Agent) for all purposes whatsoever, and neither the
      Company nor the Rights Agent shall be affected by any notice to the
      contrary.

    


    SECTION
      17.            
Right Certificate Holder Not Deemed A Stockholder.  No holder, as such, of
      any Right
      Certificate shall be entitled to vote, receive dividends or be deemed for any
      purpose the holder of the Preferred Shares or any other securities of the
      Company that may at any time be issuable on the exercise of the Rights
      represented thereby, nor shall anything contained herein or in any Right
      Certificate be construed to confer upon the holder of any Right Certificate,
      as
      such, any of the rights of a stockholder of the Company or any right to vote
      for
      the election of directors or upon any matter submitted to stockholders at any
      meeting thereof, or to give or withhold consent to any corporate action, or
      to
      receive notice of meetings or other actions affecting stockholders (except
      as
      provided in Section 25 hereof), or to receive dividends or subscription
      rights, or otherwise, until the Right or Rights evidenced by such Right
      Certificate shall have been exercised in accordance with the provisions
      hereof.

    


    SECTION
      18.            
Concerning The Rights Agent.  The Company agrees to
      pay to the
      Rights Agent reasonable compensation for all services rendered by it hereunder
      and, from time to time, on demand of the Rights Agent, its reasonable expenses
      and counsel fees and other disbursements incurred in the administration and
      execution of this Agreement and the exercise and performance of its duties
      hereunder.  The Company also agrees to indemnify the Rights Agent for, and
      to hold it harmless against, any loss, liability, or expense, incurred without
      gross negligence, bad faith or willful misconduct on the part of the Rights
      Agent, for anything done or omitted by the Rights Agent in connection with
      the
      acceptance and administration of this Agreement, including the costs and
      expenses of defending against any claim of liability in the premises.  The
      indemnity provided herein shall survive the expiration of the Rights and the
      termination of this Agreement.

    


    The
      Rights Agent shall be protected and
      shall incur no liability for, or in respect of any action taken, suffered or
      omitted by it in connection with, its administration of this Agreement in
      reliance upon any Right Certificate or certificate for the Preferred Shares
      or
      Common Shares or for other securities of the Company, instrument of assignment
      or transfer, power of attorney, endorsement, affidavit, letter, notice,
      direction, consent, certificate, statement, or other paper or document believed
      by it to be genuine and to be signed, executed and, where necessary, verified
      or
      acknowledged, by the proper person or persons, or otherwise upon the advice
      of
      counsel as set forth in Section 20 hereof.  In no case will the Rights
      Agent be liable for special, indirect, incidental or consequential or
      consequential loss or damage at any kind whatsoever (including but not limited
      to lost profits), even if the Rights Agent has been advised of such loss or
      damage.

    


    SECTION
      19.            
Merger Or Consolidation Or Change Of Name Of Rights Agent.  Any corporation into
      which the
      Rights Agent or any successor Rights Agent may be merged or with which it may
      be
      consolidated, or any corporation resulting from any merger or consolidation
      to
      which the Rights Agent or any successor Rights Agent shall be a party, or any
      corporation succeeding to the shareholder services or corporate trust business
      of the Rights Agent or any successor Rights Agent, shall be the successor to
      the
      Rights Agent under this Agreement without the execution or filing of any paper
      or any further act on the part of any of the parties hereto, provided that
      such
      corporation would be eligible for appointment as a successor Rights Agent under
      the provisions of Section 21 hereof.  In case at the time such
      successor Rights Agent shall succeed to the agency created by this Agreement
      any
      of the Right Certificates shall have been countersigned but not delivered,
      any
      such successor Rights Agent may adopt the countersignature of the predecessor
      Rights Agent and deliver such Right Certificates so countersigned; and in case
      at that time any of the Right Certificates shall not have been countersigned,
      any successor Rights Agent may countersign such Right Certificates either in
      the
      name of the predecessor Rights Agent or in the name of the successor Rights
      Agent; and in all such cases such Right Certificates shall have the full force
      provided in the Right Certificates and in this Agreement.

    


    In
      case at any time the name of the
      Rights Agent shall be changed and at such time any of the Right Certificates
      shall have been countersigned but not delivered, the Rights Agent may adopt
      the
      countersignature under its prior name and deliver Right Certificates so
      countersigned; and in case at that time any of the Right Certificates shall
      not
      have been countersigned, the Rights Agent may countersign such Right
      Certificates either in its prior name or in its changed name; and in all such
      cases such Right Certificates shall have the full force provided in the Right
      Certificates and in this Agreement.

    


    SECTION
      20.            
Duties Of Rights Agent.  The Rights Agent undertakes
      the
      duties and obligations imposed by this Agreement upon the following terms and
      conditions, by all of which the Company and the holders of Right Certificates,
      by their acceptance thereof, shall be bound:

    


    (a)          The
      Rights Agent may consult with
      legal counsel of its choice (who may be legal counsel for the Company), and
      the
      opinion of such counsel shall be full and complete authorization and protection
      to the Rights Agent as to any action taken or omitted by it in good faith and
      in
      accordance with such opinion.

    


    (b)          Whenever
      in the performance of its
      duties under this Agreement the Rights Agent shall deem it necessary or
      desirable that any fact or matter be proved or established by the Company prior
      to taking or suffering any action hereunder, such fact or matter (unless other
      evidence in respect thereof be herein specifically prescribed) may be deemed
      to
      be conclusively proved and established by a certificate signed by any one of
      the
      Chairman of the Board, the Chief Executive Officer, the President, the Chief
      Financial Officer, any Vice President, the Treasurer or the Secretary of the
      Company and delivered to the Rights Agent; and such certificate shall be full
      authorization to the Rights Agent for any action taken or suffered in good
      faith
      by it under the provisions of this Agreement in reliance upon such
      certificate.

    


    (c)          The
      Rights Agent shall be liable
      hereunder to the Company and any other Person only for its own gross negligence,
      bad faith or willful misconduct.

    


    (d)          The
      Rights Agent shall not be
      liable for or by reason of any of the statements of fact or recitals contained
      in this Agreement or in the Right Certificates (except its countersignature
      thereof) or be required to verify the same, but all such statements and recitals
      are and shall be deemed to have been made by the Company only.

    


    (e)          The
      Rights Agent shall not be
      under any responsibility in respect of the validity of this Agreement or the
      execution and delivery hereof (except the due execution hereof by the Rights
      Agent) or in respect of the validity or execution of any Right Certificate
      (except its countersignature thereof); nor shall it be responsible for any
      breach by the Company of any covenant or condition contained in this Agreement
      or in any Right Certificate; nor shall it be responsible for any change in
      the
      exercisability of the Rights (including the Rights becoming void pursuant to
      Section 11(a)(ii) hereof) or any adjustment in the terms of the Rights
      (including the manner, method or amount thereof) provided for in Sections 3,
      11,
      13, 23 or 24 hereof, or the ascertaining of the existence of facts that would
      require any such change or adjustment (except with respect to the exercise
      of
      Rights evidenced by Right Certificates after receipt of a certificate pursuant
      to Section 12 hereof describing such change or adjustment); nor shall it by
      any act hereunder be deemed to make any representation or warranty as to the
      authorization or reservation of any Preferred Shares to be issued pursuant
      to
      this Agreement or any Right Certificate or as to whether any Preferred Shares
      will, when issued, be validly authorized and issued, fully paid and
      nonassessable.

    


    (f)           The
      Company agrees that it will
      perform, execute, acknowledge and deliver or cause to be performed, executed,
      acknowledged and delivered all such further and other acts, instruments and
      assurances as may reasonably be required by the Rights Agent for the carrying
      out or performing by the Rights Agent of the provisions of this
      Agreement.

    


    (g)          The
      Rights Agent is hereby
      authorized and directed to accept instructions with respect to the performance
      of its duties hereunder from any one of the Chairman of the Board, the Chief
      Executive Officer, the President, the Chief Financial Officer, any Vice
      President, the Secretary or the Treasurer of the Company, and to apply to such
      officers for advice or instructions in connection with its duties, and it shall
      not be liable for any action taken or suffered by it in good faith in accordance
      with instructions of any such officer or for any delay in acting while waiting
      for those instructions.  Any application by the Rights Agent for written
      instructions from the Company may, at the option of the Rights Agent, set forth
      in writing any action proposed to be taken or omitted by the Rights Agent with
      respect to its duties or obligations under this Agreement and the date on and/or
      after which such action shall be taken or omitted and the Rights Agent shall
      not
      be liable for any action taken or omitted in accordance with a proposal included
      in any such application on or after the date specified therein (which date
      shall
      not be less than three Business Days after the date indicated in such
      application unless any such officer shall have consented in writing to an
      earlier date) unless, prior to taking or omitting any such action, the Rights
      Agent has received written instructions in response to such application
      specifying the action to be taken or omitted.

    


    (h)          The
      Rights Agent and any
      stockholder, director, officer or employee of the Rights Agent may buy, sell
      or
      deal in any of the Rights or other securities of the Company or become
      pecuniarily interested in any transaction in which the Company may be
      interested, or contract with or lend money to the Company or otherwise act
      as
      fully and freely as though it were not Rights Agent under this Agreement. 
Nothing herein shall preclude the Rights Agent from acting in any other capacity
      for the Company or for any other legal entity.

    


    (i)           The
      Rights Agent may execute and
      exercise any of the rights or powers hereby vested in it or perform any duty
      hereunder either itself or by or through its attorneys or agents, and the Rights
      Agent shall not be answerable or accountable for any act, default, neglect
      or
      misconduct of any such attorneys or agents or for any loss to the Company
      resulting from any such act, default, neglect or misconduct, provided reasonable
      care was exercised in the selection and continued employment thereof.

    


    (j)           No
      provision of this Agreement
      shall require the Rights Agent to expend or risk its own funds or otherwise
      incur any financial liability in the performance of any of its duties hereunder
      or in the exercise of its rights if there shall be reasonable grounds for
      believing that repayment of such funds or adequate indemnification against
      such
      risk or liability is not reasonably assured to it.

    


    (k)          If,
      with respect to any Right
      Certificate surrendered to the Rights Agent for exercise or transfer, the
      certificate attached to the form of assignment or form of election to purchase,
      as the case may be, has not been executed, the Rights Agent shall not take
      any
      further action with respect to such requested exercise of transfer without
      first
      consulting with the Company.

    


    


    SECTION
      21.            
Change Of Rights Agent.  The Rights Agent or any
      successor
      Rights Agent may resign and be discharged from its duties under this Agreement
      upon 30 days’ notice in writing mailed to the Company and to each transfer agent
      for the Common Shares or Preferred Shares by registered or certified mail,
      and
      to the holders of the Right Certificates by first-class mail.  The Company
      may remove the Rights Agent or any successor Rights Agent upon 30 days’ notice
      in writing, mailed to the Rights Agent or successor Rights Agent, as the case
      may be, and to each transfer agent for the Common Shares or Preferred Shares
      by
      registered or certified mail, and to the holders of the Right Certificates
      by
      first-class mail.  If the Rights Agent shall resign or be removed or shall
      otherwise become incapable of acting, the Company shall appoint a successor
      to
      the Rights Agent.  If the Company shall fail to make such appointment
      within a period of 30 days after giving notice of such removal or after it
      has
      been notified in writing of such resignation or incapacity by the resigning
      or
      incapacitated Rights Agent or by the holder of a Right Certificate (who shall,
      with such notice, submit his Right Certificate for inspection by the Company),
      then the registered holder of any Right Certificate may apply to any court
      of
      competent jurisdiction for the appointment of a new Rights Agent.  Any
      successor Rights Agent, whether appointed by the Company or by such a court,
      shall be either (a) a corporation, business trust or limited liability company
      organized and doing business under the laws of the United States or of any
      other
      state of the United States that is authorized under such laws to exercise
      corporate trust or stock transfer powers and is subject to supervision or
      examination by federal or state authority and that has at the time of its
      appointment as Rights Agent a combined capital and surplus of at least $50
      million or (b) a direct or indirect wholly owned Subsidiary of such an entity
      or
      its wholly-owning parent.  After appointment, the successor Rights Agent
      shall be vested with the same powers, rights, duties and responsibilities as
      if
      it had been originally named as Rights Agent without further act or deed; but
      the predecessor Rights Agent shall deliver and transfer to the successor Rights
      Agent any property at the time held by it hereunder, and execute and deliver
      any
      further assurance, conveyance, act or deed necessary for the purpose.  Not
      later than the effective date of any such appointment the Company shall file
      notice thereof in writing with the predecessor Rights Agent and each transfer
      agent for the Common Shares or Preferred Shares, and mail a notice thereof
      in
      writing to the registered holders of the Right Certificates.  Failure to
      give any notice provided for in this Section 21,  however,  or
      any defect therein,
      shall not affect the legality or validity of the resignation or removal of
      the
      Rights Agent or the appointment of the successor Rights Agent, as the case
      may
      be.

    


    SECTION
      22.            
Issuance Of New Right Certificates.  Notwithstanding any of
      the
      provisions of this Agreement or of the Rights to the contrary, the Company
      may,
      at its option, issue new Right Certificates evidencing Rights in such form
      as
      may be approved by its Board of Directors to reflect any adjustment or change
      in
      the Purchase Price and the number or kind or class of shares or other securities
      or property purchasable under the Right Certificates made in accordance with
      the
      provisions of this Agreement.  In addition, in connection with the issuance
      or sale of Common Shares following the Distribution Date and prior to the
      earlier of the Redemption Date and the Final Expiration Date, the Company (a)
      shall with respect to Common Shares so issued or sold pursuant to the exercise
      of stock options or under any employee plan or arrangement in existence prior
      to
      the Distribution Date, or upon the exercise, conversion or exchange of
      securities, notes or debentures issued by the Company and in existence prior
      to
      the Distribution Date, and (b) may, in any other case, if deemed necessary
      or
      appropriate by the Board of Directors, issue Right Certificates representing
      the
      appropriate number of Rights in connection with such issuance or sale;provided,
      however,  that
      (i) the Company shall not be obligated to issue any such Right Certificates
      if,
      and to the extent that, the Company shall be advised by counsel that such
      issuance would create a significant risk of material adverse tax consequences
      to
      the Company or the Person to whom such Right Certificate would be issued, and
      (ii) no Right Certificate shall be issued if, and to the extent that the
      appropriate adjustment shall otherwise have been made in lieu of the issuance
      thereof.

    


    SECTION
      23.            
Redemption.

    


    (a)          The
      Rights may be redeemed by
      action of the Board of Directors pursuant to Section 23(b) hereof and shall
      not be redeemed in any other manner.

    


    (b)

    


    (i)           The
      Board of Directors may, at its
      option, at any time prior to the earlier of (A) such time as any Person becomes
      an Acquiring Person, or (B) the Final Expiration Date, redeem all but not less
      than all of the then outstanding Rights at a redemption price of $0.01 per
      Right, appropriately adjusted to reflect any stock split, stock dividend or
      similar transaction occurring after the date hereof (such redemption price
      being
      hereinafter referred to as the “Redemption Price”), and the Company may, at its
      option, pay the Redemption Price in Common Shares (based on the “current
      per-share market price,” as such term is defined in Section 11(d) hereof,
      of the Common Shares at the time of redemption), cash or any other form of
      consideration deemed appropriate by the Board of Directors.  The redemption
      of the Rights by the Board of Directors may be made effective at such time,
      on
      such basis and subject to such conditions as the Board of Directors in its
      sole
      discretion may establish.  Notwithstanding anything contained in this
      Agreement to the contrary, the Rights shall not be exercisable pursuant to
      Section 11(a)(ii) hereof prior to the expiration or termination of the
      Company’ s right of redemption under this Section 23(b)(i).

    


    (ii)          In
      addition, the Board of
      Directors may, at its option, at any time after the time a Person becomes an
      Acquiring Person and after the expiration of any period during which the holder
      of Rights may exercise the rights under Section 11(a)(ii) hereof but prior
      to any event described in clause (x), (y) or (z) of the first sentence of
      Section 13 hereof, redeem all but not less than all of the then outstanding
      Rights at the Redemption Price (x) in connection with any merger, consolidation
      or sale or other transfer (in one transaction or in a series of related
      transactions) of assets or earning power aggregating 50% or more of the assets
      or earning power of the Company and its subsidiaries (taken as a whole) in
      which
      all holders of Common Shares are treated alike and not involving (other than
      as
      a holder of Common Shares being treated like all other such holders) an
      Interested Stockholder or a Transaction Person or (y)(A) if and for so long
      as
      the Acquiring Person is not thereafter the Beneficial Owner of 20% or more
      of
      the then outstanding Common Shares, and (B) at the time of redemption no other
      Persons are Acquiring Persons.

    


    (c)          Immediately
      upon the action of the
      Board of Directors ordering the redemption of the Rights pursuant to
      Section 23(b) hereof, and without any further action and without any
      notice, the right to exercise the Rights will terminate and the only right
      thereafter of the holders of Rights shall be to receive the Redemption
      Price.  The Company shall promptly give public notice of any such
      redemption;  provided,
      however,  that
      the failure to give, or any defect in, any such notice shall not affect the
      validity of such redemption.  Within 10 days after such action of the Board
      of Directors ordering the redemption of the Rights pursuant to
      Section 23(b) hereof, the Company shall mail a notice of redemption to all
      the holders of the then outstanding Rights at their last addresses as they
      appear upon the registry books of the Rights Agent or, prior to the Distribution
      Date, on the registry books of the transfer agent for the Common Shares,  provided,
      however,  that
      failure to give, or any defect in, any such notice shall not affect the validity
      of such redemption.  Any notice that is mailed in the manner herein
      provided shall be deemed given, whether or not the holder receives the
      notice.  Each such notice of redemption will state the method by which the
      payment of the Redemption Price will be made.  Neither the Company nor any
      of its Affiliates or Associates may redeem, acquire or purchase for value any
      Rights at any time in any manner other than that specifically set forth in
      this
      Section 23 or in Section 24 hereof, and other than in connection with
      the purchase of Common Shares prior to the Distribution Date.

    


    (d)          The
      Company may, at its option,
      discharge all of its obligations with respect to any redemption of the Rights
      by
      (i) issuing a press release announcing the manner of redemption of the Rights
      and (ii) mailing payment of the Redemption Price to the registered holders
      of
      the Rights at their last addresses as they appear on the registry books of
      the
      Rights Agent or, prior to the Distribution Date, on the registry books of the
      transfer agent for the Common Shares, and upon such action, all outstanding
      Right Certificates shall be null and void without any further action by the
      Company.

    


    SECTION
      24.            
Exchange.

    


    (a)          The
      Board of Directors may, at its
      option, at any time after any Person becomes an Acquiring Person, exchange
      all
      or part of the then outstanding and exercisable Rights (which shall not include
      Rights that have become void pursuant to the provisions of
      Section 11(a)(ii) hereof) for Common Shares at an exchange ratio of one
      Common Share per Right, appropriately adjusted to reflect any stock split,
      stock
      dividend or similar transaction occurring after the date hereof (such exchange
      ratio being hereinafter referred to as the “Exchange Ratio”). 
Notwithstanding the foregoing, the Board of Directors shall not be empowered
      to
      effect such exchange at any time after any Person (other than the Company,
      any
      Subsidiary of the Company, any employee benefit plan of the Company or any
      such
      Subsidiary, or any entity holding Common Shares for or pursuant to the terms
      of
      any such plan), together with all Affiliates and Associates of such Person,
      becomes the Beneficial Owner of 50% or more of the Common Shares then
      outstanding.

    


    (b)          Immediately
      upon the action of the
      Board of Directors ordering the exchange of any Rights pursuant to
      Section 24(a) hereof and without any further action and without any notice,
      the right to exercise such Rights shall terminate and the only right thereafter
      of a holder of such Rights shall be to receive that number of Common Shares
      equal to the number of such Rights held by such holder multiplied by the
      Exchange Ratio.  The Company shall promptly give public notice of any such
      exchange;  provided,
      however,  that
      the failure to give, or any defect in, such notice shall not affect the validity
      of such exchange.  The Company promptly shall mail a notice of any such
      exchange to all of the holders of such Rights at their last addresses as they
      appear upon the registry books of the Rights Agent;  provided,
      however,  that
      the failure to give, or any defect in, such notice shall not affect the validity
      of such exchange.  Any notice that is mailed in the manner herein provided
      shall be deemed given, whether or not the holder receives the notice.  Each
      such notice of exchange will state the method by which the exchange of the
      Common Shares for Rights will be effected and, in the event of any partial
      exchange, the number of Rights that will be exchanged.  Any partial
      exchange shall be effected pro rata based on the number of Rights (other than
      Rights that have become void pursuant to the provisions of
      Section 11(a)(ii) hereof) held by each holder of Rights.

    


    (c)          In
      lieu of issuing Common Shares
      in accordance with Section 24(a) hereof, the Company may, if a majority of
      the Board of Directors then in office determines that such action is necessary
      or appropriate and not contrary to the interests of the holders of Rights,
      elect
      to (and, in the event that there are not sufficient treasury shares and
      authorized but unissued Common Shares to permit any exchange of the Rights
      in
      accordance with Section 24(a) hereof, the Company shall) take all such
      action as may be necessary to authorize, issue or pay, upon the exchange of
      the
      Rights, cash, property, Common Shares, other securities or any combination
      thereof having an aggregate value equal to the value of the Common Shares that
      otherwise would have been issuable pursuant to Section 24(a) hereof, which
      aggregate value shall be determined by a nationally recognized investment
      banking firm selected by a majority of the Board of Directors then in
      office.  For purposes of the preceding sentence, the value of the Common
      Shares shall be determined pursuant to Section 11(d) hereof.  Any
      election pursuant to this Section 24(c) by the Board of Directors must be
      made by resolution within 60 days following the date on which the event
      described in Section 11(a)(ii) hereof shall have occurred.  Following
      the occurrence of the event described in Section 11(a)(ii) hereof, a
      majority of the Board of Directors then in office may suspend the exercisability
      of the Rights for a period of up to 60 days following the date on which the
      event described in Section 11(a)(ii) hereof shall have occurred to the
      extent that such directors have not determined whether to exercise their rights
      of exchange under this Section 24(c).  In the event of any such
      suspension, the Company shall issue a public announcement stating that the
      exercisability of the Rights has been temporarily suspended.

    


    (d)          The
      Company shall not be required
      to issue fractions of Common Shares or to distribute certificates that evidence
      fractional Common Shares.  In lieu of such fractional Common Shares, the
      Company shall pay to the registered holders of the Right Certificates with
      regard to which such fractional Common Shares would otherwise be issuable an
      amount in cash equal to the same fraction of the current market value of a
      whole
      Common Share.  For the purposes of this Section 24(d), the current
      market value of a whole Common Share shall be the closing price of a Common
      Share (as determined pursuant to the second sentence of Section 11(d)(i)
      hereof) for the Trading Day immediately after the date of the first public
      announcement by the Company that an exchange is to be effected pursuant to
      this
      Section 24.

    


    


    SECTION
      25.            
Notice Of Certain Events.

    


    (a)          In
      case the Company shall propose
      (i) to pay any dividend payable in stock of any class to the holders of its
      Preferred Shares or to make any other distribution to the holders of its
      Preferred Shares (other than a regular quarterly cash dividend), (ii) to offer
      to the holders of its Preferred Shares rights or warrants to subscribe for
      or to
      purchase any additional Preferred Shares or shares of stock of any class or
      any
      other securities, rights or options, (iii) to effect any reclassification of
      its
      Preferred Shares (other than a reclassification involving only the subdivision
      of outstanding Preferred Shares), (iv) to effect any consolidation or merger
      into or with, or to effect any sale or other transfer (or to permit one or
      more
      of its Subsidiaries to effect any sale or other transfer), in one or more
      transactions, of 50% or more of the assets or earning power of the Company
      and
      its Subsidiaries (taken as a whole), to any other Person, (v) to effect the
      liquidation, dissolution or winding up of the Company, or (vi) to declare or
      pay
      any dividend on the Common Shares payable in Common Shares or to effect a
      subdivision, combination or consolidation of the Common Shares (by
      reclassification or otherwise than by payment of dividends in Common Shares),
      then, in each such case, the Company shall give to each holder of a Right
      Certificate, in accordance with Section 26 hereof, a notice of such
      proposed action, which shall specify the record date for the purpose of such
      stock dividend, or distribution of rights or warrants, or the date on which
      such
      reclassification, consolidation, merger, sale, transfer, liquidation,
      dissolution, or winding up is to take place and the date of participation
      therein by the holders of the Common Shares and/or the Preferred Shares, if
      any
      such date is to be fixed, and such notice shall be so given in the case of
      any
      action covered by clause (i) or (ii) above at least 10 days prior to the record
      date for determining holders of the Preferred Shares for purposes of such
      action, and in the case of any such other action, at least 10 days prior to
      the
      date of the taking of such proposed action or the date of participation therein
      by the holders of the Common Shares and/or the Preferred Shares, whichever
      shall
      be the earlier.

    


    (b)          In
      case the event set forth in
      Section 11(a)(ii) hereof shall occur, then the Company shall as soon as
      practicable thereafter give to each holder of a Right Certificate, in accordance
      with Section 26 hereof, a notice of the occurrence of such event, which
      notice shall describe the event and the consequences of the event to holders
      of
      Rights under Section 11(a)(ii) hereof.

    


    


    SECTION
      26.            
Notices.  Notices or
      demands authorized by this Agreement to be given or made by the Rights Agent
      or
      by the holder of any Right Certificate to or on the Company shall be
      sufficiently given or made if sent by first-class mail, postage prepaid,
      addressed (until another address is filed in writing with the Rights Agent)
      as
      follows:

    


    CardioTech
      International, Inc.

    229
      Andover Street

    Wilmington,
      MA 01887

    Attention:
      Michael F. Adams, Chief
      Executive Officer and President

    


    with
      a copy (which shall not constitute
      notice) to:

    


    Seyfarth
      Shaw LLP

    Two
      Seaport Lane

    Boston,
      MA 02210

    Attention:
      David E. Dryer

    


    Subject
      to the provisions of
      Section 21 hereof, any notice or demand authorized by this Agreement to be
      given or made by the Company or by the holder of any Right Certificate to or
      on
      the Rights Agent shall be sufficiently given or made if sent by first-class
      mail, postage prepaid, addressed (until another address is filed in writing
      with
      the Company) as follows:

    


    American
      Stock Transfer & Trust
      Company

    6201
      15thAvenue

    Brooklyn,
      NY 11219

    Attention:
      Executive Vice
      President

    


    


    Notices
      or demands authorized by this
      Agreement to be given or made by the Company or the Rights Agent to the holder
      of any Right Certificate shall be sufficiently given or made if sent by
      first-class mail, postage prepaid, addressed to such holder at the address
      of
      such holder as shown on the registry books of the Company.

    


    SECTION
      27.            
Supplements And Amendments.  Prior to the Distribution
      Date,
      the Company and the Rights Agent shall, if the Company so directs, supplement
      or
      amend any provision of this Agreement without the approval of any holders of
      the
      Rights.  From and after the Distribution Date, the Company and the Rights
      Agent shall, if the Company so directs, from time to time supplement or amend
      any provision of this Agreement without the approval of any holders of Right
      Certificates in order to (i) cure any ambiguity, (ii) correct or supplement
      any
      provision contained herein that may be defective or inconsistent with any other
      provisions herein, or (iii) change any other provisions with respect to the
      Rights that the Company may deem necessary or desirable;  provided,
      however,  that
      no such supplement or amendment shall be made that would adversely affect the
      interests of the holders of Rights (other than the interests of an Acquiring
      Person or its Affiliates or Associates).  Any supplement or amendment
      adopted during any period after any Person has become an Acquiring Person but
      prior to the Distribution Date shall become null and void unless such supplement
      or amendment could have been adopted by the Company from and after the
      Distribution Date.  Any such supplement or amendment shall be evidenced by
      a writing signed by the Company and the Rights Agent.  Upon delivery of a
      certificate from an appropriate officer of the Company that states that the
      proposed supplement or amendment is in compliance with the terms of this
      Section 27, the Rights Agent shall execute such supplement or amendment
      unless the Rights Agent shall have determined in good faith that such supplement
      or amendment would adversely affect its interest under this Agreement. 
Prior to the Distribution Date, the interests of the holders of Rights shall
      be
      deemed coincident with the interests of the holders of Common Shares.

    


    SECTION
      28.            
Determination And Actions By The Board Of Directors, Etc.  For all purposes of this
      Agreement, any calculation of the number of Common Shares outstanding at any
      particular time, including for purposes of determining the particular percentage
      of such outstanding Common Shares or any other securities of which any Person
      is
      the Beneficial Owner, shall be made in accordance with the last sentence of
      Rule
      13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act
      as in
      effect on the date of this Agreement.  The Board of Directors shall have
      the exclusive power and authority to administer this Agreement and to exercise
      all rights and powers specifically granted to the Board, or the Company, or
      as
      may be necessary or advisable in the administration of this Agreement, including
      without limitation, the right and power to (i) interpret the provisions of
      this
      Agreement, and (ii) make all determinations deemed necessary or advisable for
      the administration of this Agreement (including a determination to redeem or
      not
      redeem the Rights or to amend the Agreement).  All such actions,
      calculations, interpretations and determinations that are done or made by the
      Board in good faith, shall (x) be final, conclusive and binding on the Rights
      Agent and the holders of the Rights, and (y) not subject the Board to any
      liability to the holders of the Rights.

    


    SECTION
      29.            
Successors.  All the
      covenants and provisions of this Agreement by or for the benefit of the Company
      or the Rights Agent shall bind and inure to the benefit of their respective
      successors and assigns hereunder.

    


    SECTION
      30.            
Benefits Of This Agreement.  Nothing in this Agreement
      shall
      be construed to give to any person or corporation other than the Company, the
      Rights Agent and the registered holders of the Right Certificates (and, prior
      to
      the Distribution Date, the Common Shares) any legal or equitable right, remedy
      or claim under this Agreement; but this Agreement shall be for the sole and
      exclusive benefit of the Company, the Rights Agent and the registered holders
      of
      the Right Certificates (and, prior to the Distribution Date, the Common
      Shares).

    


    SECTION
      31.            
Severability.  If any
      term, provision, covenant or restriction of this Agreement is held by a court
      of
      competent jurisdiction or other authority to be invalid, void or unenforceable,
      the remainder of the terms, provisions, covenants and restrictions of this
      Agreement shall remain in full force and effect and shall in no way be affected,
      impaired or invalidated.

    


    SECTION
      32.            
Governing Law.  This
      Agreement and each Right Certificate issued hereunder shall be deemed to be
      a
      contract made under the laws of the State of Delaware and for all purposes
      shall
      be governed by and construed in accordance with the laws of such State
      applicable to contracts to be made and performed entirely within such
      State.

    


    SECTION
      33.            
Counterparts.  This
      Agreement may be executed in any number of original or facsimile counterparts
      and each of such counterparts shall for all purposes be deemed to be an
      original, and all such counterparts shall together constitute but one and the
      same instrument.

    


    SECTION
      34.            
Descriptive Headings.  Descriptive headings
      of the
      several Sections of this Agreement are inserted for convenience only and shall
      not control or affect the meaning or construction of any of the provisions
      hereof.

    


    [Signature
      Page
      Follows]

    



    
      
         

      

      
         

        
          

        

      

      
         

      

    


    


    


     

    


    IN
      WITNESS
      WHEREOF, the parties
      hereto have caused this Agreement to be duly executed as of the day and year
      first above written.

    


    


    CARDIOTECH
      INTERNATIONAL, INC.

    


    


    By:           
      /s/ Michael F.
      Adams

    Name:                      
      Michael F. Adams

    Title:           
      Chief Executive Officer and President

    


    


    AMERICAN
      STOCK TRANSFER & TRUST COMPANY

    


    


    By:           
      /s/ Herbert J.
      Lemmer

    Name:                      
      Herbert J. Lemmer

    Title:           
      Vice President

    


    



    
      
         

      

      
         

        
          

        

      

      
         

      

    


    


    


    


    FORM
      OF

     CERTIFICATE
      OF DESIGNATION

    


    OF

    


    SERIES
      A JUNIOR PARTICIPATING PREFERRED
      STOCK

    


    (Exhibit
      A to Rights Agreement)

    


    (Pursuant
      to Section 151 of the

     Delaware
      General Corporation
      Law)

    


    CARDIOTECH
      INTERNATIONAL, INC.,a
      corporation organized and existing under the General Corporation Law of the
      State of Delaware (hereinafter called the “Company”), hereby certifies that the
      following resolutions were adopted by the Board of Directors of the Corporation
      as required by Section 151 of the General Corporation Law pursuant to an
      action by unanimous written consent of the Board of Directors:

    


    RESOLVED,that
      pursuant to the authority
      granted to and vested in the Company’s Board of Directors in accordance with the
      provisions of the Company’s Certificate of Incorporation (the “Charter”), the
      Board of Directors hereby creates a series of Junior Preferred Stock and hereby
      states the designation and number of shares, and fixes the designations and
      the
      powers, preferences and rights, and the qualifications, limitations and
      restrictions thereof (in addition to the provisions set forth in the Charter,
      which are applicable to all classes and series of the Company’s preferred
      stock), as follows:

    


    Series A
      Junior Participating
      Preferred Stock:

    


    Section
      1.             
Designation and Amount. Five Hundred Thousand
      (500,000) shares
      of Preferred Stock, par value $0.001 per share, are designated “Series A Junior
      Participating Preferred Stock” with the designations and the powers, preferences
      and rights, and the qualifications, limitations and restrictions specified
      herein (the “Junior Preferred Stock”).  Such number of shares may be
      increased or decreased by resolution of the Board of Directors;  provided,  that
      no decrease shall
      reduce the number of shares of Junior Preferred Stock to a number less than
      the
      number of shares then outstanding plus the number of shares reserved for
      issuance upon the exercise of outstanding options, rights or warrants or upon
      the conversion of any outstanding securities issued by the Company convertible
      into Junior Preferred Stock.

    


    Section
      2.             
Dividends and Distributions.

    


    (A)         Subject
      to the rights of the
      holders of any shares of any series of the Company’s preferred stock, par value
      $0.001 per share (“Preferred Stock”), or any similar stock, ranking prior and
      superior to the Junior Preferred Stock with respect to dividends, the holders
      of
      shares of Junior Preferred Stock, in preference to the holders of the Company’s
      common stock, par value $0.001 per share (“Common Stock”), and of any other
      junior stock, shall be entitled to receive, when, as and if declared by the
      Board of Directors out of funds legally available for the purpose, quarterly
      dividends payable in cash on the first day of April, July, October and January
      in each year (each such date being referred to herein as a “Quarterly Dividend
      Payment Date”), commencing on the first Quarterly Dividend Payment Date after
      the first issuance of a share or fraction of a share of Junior Preferred Stock,
      in an amount per share (rounded to the nearest cent) equal to the greater of
      (a)
      $1.00 or (b) subject to the provision for adjustment hereinafter set forth,
      100
      times the aggregate per share amount of all cash dividends, and 100 times the
      aggregate per share amount (payable in kind) of all non-cash dividends or other
      distributions, other than a dividend payable in shares of Common Stock or a
      subdivision of the outstanding shares of Common Stock (by reclassification
      or
      otherwise), declared on the Common Stock since the immediately preceding
      Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend
      Payment Date, since the first issuance of any share or fraction of a share
      of
      Junior Preferred Stock.  In the event the Company shall at any time declare
      or pay any dividend on the Common Stock payable in shares of Common Stock,
      or
      effect a subdivision or combination or consolidation of the outstanding shares
      of Common Stock (by reclassification or otherwise than by payment of a dividend
      in shares of Common Stock) into a greater or lesser number of shares of Common
      Stock, then in each such case, the amount to which holders of shares of Junior
      Preferred Stock were entitled immediately prior to such event under clause
      (b)
      of the preceding sentence shall be adjusted by multiplying such amount by a
      fraction, the numerator of which is the number of shares of Common Stock
      outstanding immediately after such event and the denominator of which is the
      number of shares of Common Stock that were outstanding immediately prior to
      such
      event.

    


    (B)         The
      Company shall declare a
      dividend or distribution on the Junior Preferred Stock as provided in paragraph
      (A) of this Section immediately after it declares a dividend or distribution
      on
      the Common Stock (other than a dividend payable in shares of Common
      Stock);  provided,
      that in the event no dividend or
      distribution shall have been declared on the Common Stock during the period
      between any Quarterly Dividend Payment Date and the next subsequent Quarterly
      Dividend Payment Date, a dividend of $1.00 per share on the Junior Preferred
      Stock shall nevertheless be payable on such subsequent Quarterly Dividend
      Payment Date.

    


    (C)         Dividends
      shall begin to accrue
      and be cumulative on outstanding shares of Junior Preferred Stock from the
      Quarterly Dividend Payment Date next preceding the date of issue of such shares,
      unless the date of issue of such shares is prior to the record date for the
      first Quarterly Dividend Payment Date, in which case dividends on such shares
      shall begin to accrue from the date of issue of such shares, or unless the
      date
      of issue is a Quarterly Dividend Payment Date or is a date after the record
      date
      for the determination of holders of shares of Junior Preferred Stock entitled
      to
      receive a quarterly dividend and before such Quarterly Dividend Payment Date,
      in
      either of which events such dividends shall begin to accrue and be cumulative
      from such Quarterly Dividend Payment Date.  Accrued but unpaid dividends
      shall not bear interest.  Dividends paid on the shares of Junior Preferred
      Stock in an amount less than the total amount of such dividends at the time
      accrued and payable on such shares shall be allocated pro rata on a
      share-by-share basis among all such shares at the time outstanding.  The
      Board of Directors may fix a record date for the determination of holders of
      shares of Junior Preferred Stock entitled to receive payment of a dividend
      or
      distribution declared thereon, which record date shall be not more than 60
      days
      prior to the date fixed for the payment thereof.

    


    Section
      3.             
Voting Rights. The
      holders of shares of Junior Preferred Stock shall have the following voting
      rights:

    


    (A)         Subject
      to the provision for
      adjustment hereinafter set forth, each share of Junior Preferred Stock shall
      entitle the holder thereof to 100 votes on all matters submitted to a vote
      of
      the Company’s stockholders (the “Stockholders”).  In the event the Company
      shall at any time declare or pay any dividend on the Common Stock payable in
      shares of Common Stock, or effect a subdivision or combination or consolidation
      of the outstanding shares of Common Stock (by reclassification or otherwise
      than
      by payment of a dividend in shares of Common Stock) into a greater or lesser
      number of shares of Common Stock, then in each such case the number of votes
      per
      share to which holders of shares of Junior Preferred Stock were entitled
      immediately prior to such event shall be adjusted by multiplying such number
      by
      a fraction, the numerator of which is the number of shares of Common Stock
      outstanding immediately after such event and the denominator of which is the
      number of shares of Common Stock that were outstanding immediately prior to
      such
      event.

    


    (B)         Except
      as otherwise provided
      herein, in any other Certificate of Designation creating a series of Preferred
      Stock or any similar stock, or by law, the holders of shares of Junior Preferred
      Stock and the holders of shares of Common Stock and any other capital stock
      having general voting rights shall vote together as one class on all matters
      submitted to a vote of the Stockholders.

    


    (C)         Except
      as set forth herein, or as
      otherwise provided by law, holders of Junior Preferred Stock shall have no
      special voting rights and their consent shall not be required (except to the
      extent they are entitled to vote with holders of Common Stock as set forth
      herein) for taking any corporate action.

    


    Section
      4.             
Certain Restrictions.

    


    (A)         Whenever
      quarterly dividends or
      other dividends or distributions payable on the Junior Preferred Stock as
      provided in Section 2 are in arrears, thereafter and until all accrued and
      unpaid dividends and distributions, whether or not declared, on shares of Junior
      Preferred Stock outstanding shall have been paid in full, the Company shall
      not:

    


    (i)           declare
      or pay dividends, or make
      any other distributions, on any shares of stock ranking junior (either as to
      dividends or upon liquidation, dissolution or winding up) to the Junior
      Preferred Stock;

    


    (ii)          declare
      or pay dividends, or make
      any other distributions, on any shares of stock ranking on a parity (either
      as
      to dividends or upon liquidation, dissolution or winding up) with the Junior
      Preferred Stock, except dividends paid ratably on the Junior Preferred Stock
      and
      all such parity stock on which dividends are payable or in arrears in proportion
      to the total amounts to which the holders of all such shares are then
      entitled;

    


    (iii)        redeem
      or purchase or otherwise
      acquire for consideration shares of any stock ranking junior (either as to
      dividends or upon liquidation, dissolution or winding up) to the Junior
      Preferred Stock, provided that the Company may at any time redeem, purchase
      or
      otherwise acquire shares of any such junior stock in exchange for shares of
      any
      stock ranking junior (either as to dividends or upon dissolution, liquidation
      or
      winding up) to the Junior Preferred Stock; or

    


    (iv)         redeem
      or purchase or otherwise
      acquire for consideration any shares of Junior Preferred Stock, or any shares
      of
      stock ranking on a parity (either as to dividends or upon liquidation,
      dissolution or winding up) with the Junior Preferred Stock, except in accordance
      with a purchase offer made in writing or by publication (as determined by the
      Board of Directors) to all holders of such shares upon such terms as the Board
      of Directors, after consideration of the respective annual dividend rates and
      other relative rights and preferences of the respective series and classes,
      shall determine in good faith will result in fair and equitable treatment among
      the respective series or classes.

    


    (B)         The
      Company shall not permit any
      of its subsidiaries to purchase or otherwise acquire for consideration any
      shares of the Company’s capital stock unless the Company could, under paragraph
      (A) of this Section 4, purchase or otherwise acquire such shares at such
      time and in such manner.

    


    Section
      5.             
Reacquired Shares. Any shares of Junior
      Preferred Stock
      purchased or otherwise acquired by the Company in any manner whatsoever shall
      be
      retired and cancelled promptly after the acquisition thereof.  All such
      shares shall upon their cancellation become authorized but unissued shares
      of
      Preferred Stock and may be reissued as part of a new series of Preferred Stock
      subject to the conditions and restrictions on issuance set forth herein, in
      the
      Amended and Restated Certificate of Incorporation, or in any other Certificate
      of Designation creating a series of Preferred Stock or any similar stock or
      as
      otherwise required by law.

    


    Section
      6.             
Liquidation, Dissolution or Winding Up. Upon the Company’s liquidation,
      dissolution or winding up, no distribution shall be made (1) to the holders
      of
      shares of stock ranking junior (either as to dividends or upon liquidation,
      dissolution or winding up) to the Junior Preferred Stock unless, prior thereto,
      the holders of shares of Junior Preferred Stock shall have received $100 per
      share, plus an amount equal to accrued and unpaid dividends and distributions
      thereon, whether or not declared, to the date of such payment, provided that
      the
      holders of shares of Junior Preferred Stock shall be entitled to receive an
      aggregate amount per share, subject to the provision for adjustment hereinafter
      set forth, equal to 100 times the aggregate amount to be distributed per share
      to holders of shares of Common Stock, or (2) to the holders of shares of stock
      ranking on a parity (either as to dividends or upon liquidation, dissolution
      or
      winding up) with the Junior Preferred Stock, except distributions made ratably
      on the Junior Preferred Stock and all such parity stock in proportion to the
      total amounts to which the holders of all such shares are entitled upon such
      liquidation, dissolution or winding up.  In the event the Company shall at
      any time declare or pay any dividend on the Common Stock payable in shares
      of
      Common Stock, or effect a subdivision or combination or consolidation of the
      outstanding shares of Common Stock (by reclassification or otherwise than by
      payment of a dividend in shares of Common Stock) into a greater or lesser number
      of shares of Common Stock, then in each such case the aggregate amount to which
      holders of shares of Junior Preferred Stock were entitled immediately prior
      to
      such event under the proviso in clause (1) of the preceding sentence shall
      be
      adjusted by multiplying such amount by a fraction the numerator of which is
      the
      number of shares of Common Stock outstanding immediately after such event and
      the denominator of which is the number of shares of Common Stock that were
      outstanding immediately prior to such event.

    


    Section
      7.             
Consolidation, Merger, Etc. In case the Company shall
      enter into any
      consolidation, merger, combination or other transaction in which the shares
      of
      Common Stock are exchanged for or changed into other stock or securities, cash
      and/or any other property, then in any such case each share of Junior Preferred
      Stock shall at the same time be similarly exchanged or changed into an amount
      per share, subject to the provision for adjustment hereinafter set forth, equal
      to 100 times the aggregate amount of stock, securities, cash and/or any other
      property (payable in kind), as the case may be, into which or for which each
      share of Common Stock is changed or exchanged.  In the event the Company
      shall at any time declare or pay any dividend on the Common Stock payable in
      shares of Common Stock, or effect a subdivision or combination or consolidation
      of the outstanding shares of Common Stock (by reclassification or otherwise
      than
      by payment of a dividend in shares of Common Stock) into a greater or lesser
      number of shares of Common Stock, then in each such case the amount set forth
      in
      the preceding sentence with respect to the exchange or change of shares of
      Junior Preferred Stock shall be adjusted by multiplying such amount by a
      fraction, the numerator of which is the number of shares of Common Stock
      outstanding immediately after such event and the denominator of which is the
      number of shares of Common Stock that were outstanding immediately prior to
      such
      event.

    


    Section
      8.             
No Redemption. The
      shares of Junior Preferred Stock shall not be redeemable.

    


    Section
      9.             
Rank. The Junior
      Preferred Stock shall rank, with respect to the payment of dividends and the
      distribution of assets, junior to all series of any other class of Preferred
      Stock.

    


    Section
      10.           
Amendment. The
      Company’s Certificate of Incorporation, shall not be amended in any manner which
      would materially alter or change the powers, preferences or special rights
      of
      the Junior Preferred Stock so as to affect them adversely without the
      affirmative vote of the holders of at least two-thirds of the outstanding shares
      of Junior Preferred Stock, voting together as a single class.

    


    IN
      WITNESS
      WHEREOF,the undersigned
      have executed this certificate as of January 28, 2008.

    


     

    CARDIOTECH
      INTERNATIONAL, INC.

    


    


    By:           
      ___________________________

    Name:                      
      Michael F. Adams

    Title:           
      Chief Executive Officer and President

    


    


    


    FORM
      OF RIGHT CERTIFICATE

    


    (Exhibit
      B to Rights Agreement)

    
      	
              Certificate
                No. R-

            	
              Rights

            


    

    


     

    


    NOT
      EXERCISABLE AFTER FEBRUARY 8, 2018,
      OR EARLIER IF REDEMPTION OR EXCHANGE OCCURS.  THE RIGHTS ARE SUBJECT TO
      REDEMPTION AT $0.001 PER RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE
      RIGHTS AGREEMENT.

    


    RIGHT
      CERTIFICATE

     CARDIOTECH
      INTERNATIONAL,
      INC.

    


    This
      certifies that
                              
or registered assigns, is the registered owner of the number of Rights set
      forth
      above, each of which entitles the owner thereof, subject to the terms,
      provisions and conditions of the Rights Agreement, dated as of January 28,
      2008
      (the “Rights Agreement”), between CardioTech International, Inc., a Delaware
      corporation (the “Company”), and American Stock Transfer & Trust Company
      (the “Rights Agent”), to purchase from the Company at any time after the
      Distribution Date (as such term is defined in the Rights Agreement) and prior
      to
      5:00 pm, New York City time, on February 8, 2018, at the office of the Rights
      Agent designated for such purpose, or at the office of its successor as Rights
      Agent, one one-hundredth of a fully paid non-assessable share of the Company’s
      Series A Junior Participating Preferred Stock, par value $0.001 per share
      (the “Preferred Shares”), at a purchase price of $100.00 per one one-hundredth
      of a Preferred Share (the “Purchase Price”), upon presentation and surrender of
      this Right Certificate with the Form of Election to Purchase duly
      executed.  The number of Rights evidenced by this Right Certificate (and
      the number of one one-hundredths of a Preferred Share which may be purchased
      upon exercise hereof) set forth above, and the Purchase Price set forth above,
      are the number and Purchase Price as of February 8, 2008 based on the Preferred
      Shares as constituted at such date.

    


    From
      and after the time any Person
      becomes an Acquiring Person (as such terms are defined in the Rights Agreement),
      if the Rights evidenced by this Right Certificate are beneficially owned by
      (i) an Acquiring Person or an Affiliate or Associate of any such Acquiring
      Person (as such terms are defined in the Rights Agreement), (ii) a
      transferee of any such Acquiring Person, Associate or Affiliate who becomes
      a
      transferee after the Acquiring Person becomes such, or (iii) under certain
      circumstances specified in the Rights Agreement, a transferee of any such
      Acquiring Person, Associate or Affiliate who becomes a transferee prior to
      or
      concurrently with the Acquiring Person becoming such, such Rights shall become
      null and void without any further action and no holder hereof shall have any
      right with respect to such Rights from and after the time any Person becomes
      an
      Acquiring Person.

    


    As
      provided in the Rights Agreement, the
      Purchase Price and the number of one one-hundredths of a Preferred Share which
      may be purchased upon the exercise of the Rights evidenced by this Right
      Certificate are subject to modification and adjustment upon the happening of
      certain events.

    


    This
      Right Certificate is subject to all
      of the terms, provisions and conditions of the Rights Agreement, as amended
      from
      time to time, which terms, provisions and conditions are hereby incorporated
      herein by reference and made a part hereof and to which Rights Agreement
      reference is hereby made for a full description of the rights, limitations
      of
      rights, obligations, duties and immunities hereunder of the Rights Agent, the
      Company and the holders of the Right Certificates.  Copies of the Rights
      Agreement are on file at the Company’s principal executive offices and at the
      Rights Agent’s offices located at 6201 15thAvenue,
      Brooklyn, NY 11219,
      Attention: Executive Vice President.

    


    This
      Right Certificate, with or without
      other Right Certificates, upon surrender at the office of the Rights Agent
      designated for such purpose, may be exchanged for another Right Certificate
      or
      Right Certificates of like tenor and date evidencing Rights entitling the holder
      to purchase a like aggregate number of Preferred Shares as the Rights evidenced
      by the Right Certificate or Right Certificates surrendered shall have entitled
      such holder to purchase.  If this Right Certificate shall be exercised in
      part, the holder shall be entitled to receive upon surrender hereof another
      Right Certificate or Right Certificates for the number of whole Rights not
      exercised.

    


    Subject
      to the provisions of the Rights
      Agreement, the Rights evidenced by this Certificate (i) may be redeemed by
      the
      Company at a redemption price of $0.01 per Right or (ii) may be exchanged in
      whole or in part for shares of the Company’s Common Stock, par value $0.001 per
      share, or, upon circumstances set forth in the Rights Agreement, cash, property
      or other securities of the Company, including fractions of a share of Preferred
      Stock.

    


    No
      fractional Preferred Shares will be
      issued upon the exercise of any Right or Rights evidenced hereby (other than
      fractions which are integral multiples of one one-hundredth of a Preferred
      Share, which may, at the Company’s election, be evidenced by depositary
      receipts) but in lieu thereof a cash payment will be made, as provided in the
      Rights Agreement.

    


    No
      holder of this Right Certificate
      shall be entitled to vote or receive dividends or be deemed for any purpose
      the
      holder of the Preferred Shares or of any other securities of the Company which
      may at any time be issuable on the exercise hereof, nor shall anything contained
      in the Rights Agreement or herein be construed to confer upon the holder hereof,
      as such, any of the rights of a stockholder of the Company or any right to
      vote
      for the election of directors or upon any matter submitted to stockholders
      at
      any meeting thereof, or to give or withhold consent to any corporate action,
      or
      to receive notice of meetings or other actions affecting stockholders (except
      as
      provided in the Rights Agreement), or to receive dividends or subscription
      rights, or otherwise, until the Right or Rights evidenced by this Right
      Certificate shall have been exercised as provided in the Rights
      Agreement.

    


    This
      Right Certificate shall not be
      valid or obligatory for any purpose until it shall have been countersigned
      by
      the Rights Agent.

    


    WITNESSthe
      signature of the proper officers of
      the Company dated
              ,
      20  .

    


    
      	
              ATTEST:

            	
               

            	
              CardioTech
                International,
                Inc. 

            
	
               

            	
               

            	
               

            
	
               

            	
               

            	
               

            
	
               

            	
               

            	
               

            
	
              Name:

            	
               

            	
              Name:

            
	
              Title:

            	
               

            	
              Title:

            
	
               

            	
               

            	
               

            
	
               

            	
               

            	
               

            
	
              COUNTERSIGNED:

            	
               

            	
               

            
	
               

            	
               

            	
               

            
	
               

            	
               

            	
               

            
	
              AMERICAN
                STOCK TRANSFER &
                TRUST

            	
               

            	
               

            
	
              COMPANY,as
                Rights Agent

            	
               

            	
               

            
	
               

            	
               

            	
               

            
	
               

            	
               

            	
               

            
	
              By:

            	
               

            	
               

            	
               

            
	
               

            	
              Authorized
                Officer

            	
               

            	
               

            
	
               

            	
              Name:

            	
               

            	
               

            	
               

            
	
               

            	
              Title:

            	
               

            	
               

            	
               

            	
               

            
	

            	

            	

            	

            	

            	

            


    

    


     

    


    


    


    FORM
      OF REVERSE SIDE OF RIGHT
      CERTIFICATE

    


     

    


    FORM
      OF ASSIGNMENT

    


    (To
      be executed by the registered holder
      if such

     holder
      desires to transfer the
      Right Certificate.)

    


    FOR
      VALUE
      RECEIVED________________________________________
      hereby sells, assigns and transfers unto

    


     

    


     

    
      	

            
	
              (Please
                print name and address of
                transferee)

            


    

    


     

    


    _________________________________________________
      this Right Certificate, together with all right, title and interest therein,
      and
      does hereby irrevocably constitute and appoint ___________________________
      Attorney, to transfer the within Right Certificate on the books of the
      within-named Company, with full power of substitution.

    


     

    
      	
              Dated:

            	
               

            	
               

            
	
               

            	
               

            
	
               

            	
              Signature

            
	

            	

            	

            	

            


    

    


    


    Signature
      Guaranteed:

     

    


    SIGNATURES
      must be guaranteed by an
“Eligible Guarantor Institution” as defined in Rule 17Ad-15 promulgated under
      the Securities Exchange Act of 1934, as amended.

    


    
      


    

    The
      undersigned hereby certifies that
      (1) the Rights evidenced by this Right Certificate are not being sold,
      assigned or transferred by or on behalf of a Person who is or was an Acquiring
      Person, an Interested Stockholder or an Affiliate or Associate thereof (as
      such
      terms are defined in the Rights Agreement); and (2) after due inquiry and
      to the best of the knowledge of the  undersigned, the undersigned did not
      acquire the Rights evidenced by this Right Certificate from any Person who
      is or
      was an Acquiring Person, an Interested Stockholder, or an Affiliate or Associate
      thereof.

    


    


    
      	

            	
               

            
	
               

            	
              Signature

            


    

    


    



    
      
         

      

      
         

        
          

        

      

      
         

      

    


    FORM
      OF ELECTION TO PURCHASE

    


    (To
      be executed if holder desires to
      exercise

     Rights
      represented by the Right
      Certificate.)

    


     To
      American Stock
      Transfer & Trust Company:

    


    The
      undersigned hereby irrevocably
      elects to exercise
                                                           
Rights represented by this Right Certificate to purchase the Preferred Shares
      issuable upon the exercise of such Rights and requests that certificates for
      such Preferred Shares be issued in the name of:

    


    Please
      insert social security

    
      	
              or
                other identifying
                number:

            	
               

            	
               

            


    

    


     

     

    
      	

            
	
              (Please
                print name and
                address)

            


    

    


    


     

    
      	

            


    

    


    If
      such number of Rights shall not be
      all the Rights evidenced by this Right Certificate, a new Right Certificate
      for
      the balance remaining of such Rights shall be registered in the name of and
      delivered to:

    


    Please
      insert social security

    
      	
              or
                other identifying
                number:

            	
               

            	
               

            


    

    


     

     

    
      	

            
	
              (Please
                print name and
                address)

            


    

    


     

     

    
      	

            


    

    


      

    
      	
              Dated:

            	
               

            	
               

            
	
               

            	
               

            
	
               

            	
              Signature

            
	

            	

            	

            	

            


    

    


     

    



    
      
         

      

      
         

        
          

        

      

      
         

      

    


    Signature
      Guaranteed:

    


    Signatures
      must be guaranteed by an
“Eligible Guarantor Institution” as defined in Rule 17Ad-15 promulgated under
      the Securities Exchange Act of 1934, as amended.

    


    
      


    

    


    The
      undersigned hereby certifies that
      (1) the Rights evidenced by this Right Certificate are not beneficially owned
      by
      nor are they being exercised on behalf of an Acquiring Person, an Interested
      Stockholder or an Affiliate or Associate thereof (as such terms are defined
      in
      the Rights Agreement); and (2) after due inquiry and to the best of the
      knowledge of the undersigned, the undersigned did not acquire the Rights
      evidenced by this Right Certificate from any Person who is or was an Acquiring
      Person, an Interested Stockholder, or an Affiliate or Associate thereof.

    


    
      	

            	
               

            
	
               

            	
              Signature

            


    

    


    


    


    NOTICE

    


    The
      signature in the Form of Assignment
      or Form of Election to Purchase, as the case may be, must conform to the name
      as
      written upon the face of this Right Certificate in every particular, without
      alteration or enlargement or any change whatsoever.

    


    In
      the event the certification set forth
      above in the Form of Assignment or the Form of Election to Purchase, as the
      case
      may be, is not completed, the Company and the Rights Agent will deem the
      beneficial owner of the Rights evidenced by this Right Certificate to be an
      Acquiring Person or an Affiliate or Associate thereof (as defined in the Rights
      Agreement) and such Assignment or Election to Purchase will not be
      honored.


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    


    


    


    CARDIOTECH
      INTERNATIONAL, INC.

    


    SUMMARY
      OF RIGHTS TO PURCHASE

     PREFERRED
      SHARES

    


    (EXHIBIT
      C TO RIGHTS AGREEMENT)

    


    On
      January 25, 2008, the Board of
      Directors (the “Board”) ofCARDIOTECH
      INTERNATIONAL, INC.(the
“Company”) declared a dividend
      of one preferred share purchase right (a “Right”)
      for each outstanding share of common stock, par value $0.001 per share (the
      “Common Shares”), of the Company.  The dividend is effective as of February
      8, 2008 (the “Record Date”) with respect to the stockholders of record on that
      date.  The Rights will also attach to new Common Shares issued after the
      Record Date.  Each Right entitles the registered holder to purchase from
      the Company one one-hundredth of a share of Series A Junior Participating
      Preferred Stock, par value $0.001 per share (the “Preferred Shares”), of the
      Company at a price of $100.00 per one one-hundredth of a Preferred Share (the
      “Purchase Price”), subject to adjustment.  The description and terms of the
      Rights are set forth in a Rights Agreement dated as of January 28, 2008 (the
      “Rights Agreement”), between the Company and American Stock Transfer & Trust
      Company (the “Rights Agent”).

    


    DETACHMENT
      AND TRANSFER OF RIGHTS

    


    Initially,
      the Rights will be evidenced
      by the stock certificates representing Common Shares then outstanding, and
      no
      separate Right Certificates will be distributed.  Until the earlier to
      occur of (i) 10 days following a public announcement that a person or group
      of
      affiliated or associated persons, has become an “Acquiring Person” (as such term
      is defined in the Rights Agreement) or (ii) 10 business days (or such later
      date
      as the Board may determine) following the commencement of, or announcement
      of an
      intention to make, a tender offer or exchange offer which would result in the
      beneficial ownership by an Acquiring Person of 15% or more of the outstanding
      Common Shares (the earlier of such dates being called the “Distribution Date”),
      the Rights will be evidenced, with respect to any of the Common Share
      certificates outstanding as of the Record Date, by such Common Share
      certificate.  In general, an “Acquiring Person” is a person, the affiliates
      or associates of such person, or a group, which has acquired beneficial
      ownership of 15% or more of the outstanding Common Shares.

    


    The
      Rights Agreement provides that,
      until the Distribution Date (or earlier redemption or expiration of the Rights),
      the Rights will be transferable with and only with the Common Shares. 
Until the Distribution Date (or earlier redemption or expiration of the Rights),
      new Common Share certificates issued after the Record Date upon transfer or
      new
      issuance of Common Shares will contain a notation incorporating the Rights
      Agreement by reference.  Until the Distribution Date (or earlier redemption
      or expiration of the Rights) the surrender or transfer of any certificates
      for
      Common Shares outstanding as of the Record Date, even without such notation
      or a
      copy of this Summary of Rights being attached thereto, will also constitute
      the
      transfer of the Rights associated with the Common Shares represented by such
      certificate.  As soon as practicable following the Distribution Date,
      separate certificates evidencing the Rights (“Right Certificates”) will be
      mailed to holders of record of the Common Shares as of the close of business
      on
      the Distribution Date and such separate Right Certificates alone will evidence
      the Rights.

    


    EXERCISABILITY
      OF RIGHTS

    


    The
      Rights are not exercisable until the
      Distribution Date.  The Rights will expire on February 8, 2018 (the “Final
      Expiration Date”), unless the Final Expiration Date is extended or unless the
      Rights are earlier redeemed or exchanged by the Company, in each case as
      described below.  Until a Right is exercised, the holder thereof, as such,
      will have no rights as a stockholder of the Company, including, without
      limitation, the right to vote or to receive dividends.

    


    The
      Purchase Price payable, and the
      number of Preferred Shares or other securities or property issuable or payable,
      upon exercise of the Rights are subject to adjustment from time to time to
      prevent dilution.  The number of outstanding Rights and the number of one
      one-hundredths of a Preferred Share issuable upon exercise of each Right are
      also subject to adjustment in the event of a stock split of the Common Shares
      or
      a stock dividend on the Common Shares payable in Common Shares, or subdivisions,
      consolidations or combinations of the Common Shares occurring, in any such
      case,
      prior to the Distribution Date.  With certain exceptions, no adjustment in
      the Purchase Price will be required until cumulative adjustments require an
      adjustment of at least 1% in such Purchase Price.  No fractional Preferred
      Shares will be issued (other than fractions which are integral multiples of
      one
      one-hundredth of a Preferred Share, which may, at the election of the Company,
      be evidenced by depositary receipts) and in lieu thereof, an adjustment in
      cash
      will be made based on the market price of the Preferred Shares on the last
      trading day prior to the date of exercise.

    


    TERMS
      OF PREFERRED SHARES

    


    Preferred
      Shares purchasable upon
      exercise of the Rights will not be redeemable.  Each Preferred Share will
      be entitled to a minimum preferential quarterly dividend payment of $1.00 per
      share, when, as and if declared by the Board of Directors, but will be entitled
      to an aggregate dividend of 100 times any dividend declared per Common
      Share.  In the event of liquidation, the holders of the Preferred Shares
      will be entitled to a minimum preferential liquidation payment of $100.00 per
      share but will be entitled to an aggregate payment of 100 times the payment
      made
      per Common Share.  Each Preferred Share will have 100 votes, voting
      together with the Common Shares.  Finally, in the event of any merger,
      consolidation or other transaction in which Common Shares are exchanged, each
      Preferred Share will be entitled to receive 100 times the amount received per
      Common Share.  These rights are protected by customary anti-dilution
      provisions.  Because of the nature of the Preferred Shares’ dividend,
      liquidation and voting rights, the value of the one one-hundredth interest
      in a
      Preferred Share purchasable upon exercise of each Right should approximate
      the
      value of one Common Share.  The Preferred Shares would rank junior to any
      other series of the Company’s preferred stock.

    


    TRIGGER
      OF FLIP-IN AND FLIP-OVER
      RIGHTS

    


    In
      the event that any person or group of
      affiliated or associated persons becomes an Acquiring Person, each holder of
      a
      Right, other than Rights beneficially owned by the Acquiring Person or any
      affiliate or associate thereof (which will thereafter be void), will thereafter
      have the right to receive upon exercise that number of Common Shares having
      a
      market value of two times the exercise price of the Right.

    


    In
      the event that the Company is
      acquired in a merger or other business combination transaction or 50% or more
      of
      its consolidated assets or earning power are sold to an Acquiring Person, its
      affiliates or associates or certain other persons in which such persons have
      an
      interest, proper provision will be made so that each such holder of a Right
      will
      thereafter have the right to receive, upon the exercise thereof at the then
      current exercise price of the Right, that number of shares of common stock
      of
      the acquiring company which at the time of such transaction will have a market
      value of two times the exercise price of the Right.

    


    REDEMPTION
      AND EXCHANGE OF RIGHTS

    


    At
      any time prior to the earlier of
      (i) such time that a person has become an Acquiring Person, or
      (ii) the Final Expiration Date, the Board may redeem all, but not less than
      all, of the Rights at a price of $0.01 per Right (the “Redemption Price”). 
In general, the redemption of the Rights may be made effective at such time
      on
      such basis with such conditions as the Board of Directors in its sole discretion
      may establish  Immediately upon any redemption of the Rights, the right to
      exercise the Rights will terminate and the only right of the holders of Rights
      will be to receive the Redemption Price.

    


    At
      any time after any Person becomes an
      Acquiring Person and prior to the acquisition by such person or group of 50%
      or
      more of the outstanding Common Shares, the Board may exchange the Rights (other
      than Rights owned by such person or group which will have become void), in
      whole
      or in part, at an exchange ratio of one Common Share, or, under circumstances
      set forth in the Rights Agreement, cash, property or other securities of the
      Company, including fractions of a Preferred Share (or of a share of a class
      or
      series of the Company’s preferred stock having equivalent designations and the
      powers, preferences and rights, and the qualifications, limitations and
      restrictions), per Right (with value equal to such Common Shares).

    


    AMENDMENT
      OF RIGHTS

    


    The
      terms of the Rights generally may be
      amended by the Board without the consent of the holders of the Rights, except
      that from and after such time as the Rights become detached no such amendment
      may adversely affect the interests of the holders of the Rights (excluding
      the
      interest of any Acquiring Person or its affiliates or associates).

    


    ADDITIONAL
      INFORMATION

    


    A
      copy of the Rights Agreement has been
      filed with the Securities and Exchange Commission as an Exhibit to a
      Current Report on Form 8-K filed on January 28, 2008.  A copy of the Rights
      Agreement is available from the Company by writing to CardioTech International,
      Inc., Investor Relations, 229 Andover Street, Wilmington, MA 01887.  This summary description
      of the
      Rights is not intended to be complete and is qualified in its entirety by
      reference to the Rights Agreement, which is hereby incorporated herein by
      reference.