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Unassociated Document

    EXHIBIT
      10.5

    EMPLOYMENT
      AGREEMENT

    

    THIS
      EMPLOYMENT AGREEMENT (this “Agreement”)
      is
      made, entered into and effective as of June 19, 2006 (the “Effective
      Date”),
      between Alternative Energy Sources, Inc. (the “Company”),
      and
      Lee Blank, an individual (the “Executive”).

    

    WHEREAS,
      the Company and the Executive wish to memorialize the terms and conditions
      of
      the Executive’s employment by the Company in the positions of Executive Vice
      President and Chief Operating Officer; 

    

    NOW,
      THEREFORE, in consideration of the covenants and promises contained herein,
      the
      Company and the Executive agree as follows:

    

    1. Employment
      Period.
      The
      Company offers to employ the Executive, and the Executive agrees to be employed
      by Company, in accordance with the terms and subject to the conditions of this
      Agreement, commencing on the Effective Date and terminating on the fourth
      anniversary of the Effective Date (the “Scheduled
      Termination Date”),
      unless terminated in accordance with the provisions of Section 12 below, in
      which case the provisions of Section 12 shall control; provided,
      however,
      that
      unless either party provides the other party with written notice of his or
      its
      intention not to renew this Agreement at least 90 days prior to the expiration
      of the initial term or any renewal term of this Agreement (as the case may
      be),
      this Agreement shall automatically renew for additional one-year periods
      commencing on the day after such expiration date. The Executive affirms that
      no
      obligation exists between the Executive and any other entity which would prevent
      or impede the Executive’s immediate and full performance of every obligation of
      this Agreement.

    

    2. Position
      and Duties.
      During
      the term of the Executive’s employment hereunder, the Executive shall continue
      to serve in, and assume duties and responsibilities consistent with, the
      positions of Executive Vice President and Chief Operating Officer, unless and
      until otherwise instructed by the Company. The Executive agrees to devote to
      the
      Company substantially all of his working time, skill, energy and best business
      efforts during the term of his employment with the Company, and the Executive
      shall not engage in business activities outside the scope of his employment
      with
      the Company if such activities would detract from or interfere with his ability
      to fulfill his responsibilities and duties under this Agreement or require
      substantial amounts of his time or of his services. 

    

    3. No
      Conflicts.
      The
      Executive covenants and agrees that for so long as he is employed by the
      Company, he shall inform the Company of each and every future business
      opportunity presented to the Executive that arises within the scope of the
      Business of the Company (as defined below) and would be feasible for the
      Company, and that he will not, directly or indirectly, exploit any such
      opportunity for his own account. 

    

    4. Hours
      of Work.
      The
      Executive’s normal days and hours of work shall coincide with the Company’s
      regular business hours. The nature of the Executive’s employment with the
      Company requires flexibility in the days and hours that the Executive must
      work,
      and may necessitate that the Executive work on other or additional days and
      hours. 

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    5. Location.
      The
      locus of the Executive’s employment with the Company shall be the Company’s
      office located in Kansas City, Missouri and any other locus where the Company
      now or hereafter has a business facility. 

    

    6. Compensation.
      

    

    (a) Base
      Salary.
      During
      the term of this Agreement, the Company shall pay, and the Executive agrees
      to
      accept, in consideration for the Executive’s services hereunder, pro
      rata
      bi-weekly payments of the annual salary of $160,000.00, less all applicable
      taxes and other appropriate deductions. 

    

    (i) Upon
      successful completion of financing in such amount as is sufficient, in the
      opinion of the Company’s Board of Directors (the “Board”),
      to
      enable the Company to finance the acquisition or construction of the Company’s
      initial operating facility (the “Initial
      Facility”),
      the
      Executive’s annual base salary shall be increased to $175,000.00. 

    

    (ii) The
      Executive’s base salary shall be increased to $210,000 at such time as the
      Initial Facility becomes operational.

    

    The
      Compensation Committee (the “Compensation Committee”) of the Board shall also
      review the Executive’s base salary annually and shall make a recommendation to
      the Board as to whether such base salary should be increased, which decision
      shall be within the Board’s sole discretion.

    

    (b) Annual
      Bonus.
      During
      the term of this Agreement, the Executive
      shall be entitled to an annual bonus of up to 125% of his base salary,
      decreasing to a maximum of 100% of his base salary (considered at the end of
      the
      period for which the bonus is being calculated) at such time as the Initial
      Facility becomes operational, the actual amount of which bonus shall be
      determined according to achievement of performance-related financial and
      operating targets established annually for the Company and the Executive by
      the
      Compensation Committee (or by the independent members of the Board if there
      exists no Compensation Committee). Such performance targets for each fiscal
      year
      shall be adopted by the Compensation Committee promptly after the end of the
      prior fiscal year, but in no event later than March 31st
      of the
      current fiscal year (except for fiscal year 2006, the performance targets for
      which are annexed to this Agreement as Exhibit A. Each annual bonus shall be
      paid by the Company to the Executive promptly after
      the
      first meeting of the Board following the completion
      of the annual audit, which meeting shall occur on or about April 15th of each
      year.

    

    7. Expenses.
      During
      the term of this Agreement, the Executive shall be entitled to payment or
      reimbursement of any reasonable expenses paid or incurred by him in connection
      with and related to the performance of his duties and responsibilities hereunder
      for the Company. All requests by the Executive for payment of
      reimbursement of such expenses shall be supported by appropriate invoices,
      vouchers, receipts or such other supporting documentation in such form and
      containing such information as the Company may from time to time require,
      evidencing that the Executive, in fact, incurred or paid said expenses.

    

    
      
         

      

      
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    8. Vacation.
      During
      the term of this Agreement, the Executive shall be entitled to accrue, on a
      pro
      rata basis,
      20
      vacation days, per year. The Executive shall be entitled to carry over any
      accrued, unused vacation days from year to year without limitation.

    

    9. Lock-Up
      Agreement.
      The
      Executive shall enter into a Lock-Up Agreement with the Company in the form
      attached hereto as Exhibit B. 

    

    10. Stock
      Options.
      The
      Company hereby agrees that the Executive
      shall be granted a non-qualified stock option on the terms and conditions
      hereinafter stated:

    

    (a) Grant
      of Options.
      On the
Effective
      Date,
      the
      Company will grant
      the
      Executive an option to purchase an aggregate of 200,000 shares of the
      Company’s common voting stock (the “Option”)
      under
      the Company’s 2006 Stock Option Plan (the “Stock
      Option Plan”).
      Such
      grant shall be evidenced by an Option Agreement as contemplated by the Stock
      Option Plan. In subsequent years the Executive shall be eligible for such grants
      of Options and other permissible awards (collectively with Options, “Awards”)
      under the Stock Option Plan as the Compensation Committee or the Board shall
      determine.

    

    (b) Option
      Price; Term.
      The
      per
      share
      exercise price of the Option shall be $1.00, which represents the fair market
      value per share of Company common voting stock on the Effective Date. The term
      of the Option shall be ten years from the date of grant.

    

    (c) Vesting
      and Exercise.
      One
      third (33.3%) of the Option shall be vested and exercisable on the first
      anniversary of the grant of the Option, an additional one third (33.3%) of
      the
      Option shall be vested and become exercisable on the second anniversary of
      the
      grant of the Option and the remaining one third (33.4%) of the Options shall
      be
      vested and become exercisable on third anniversary of the grant of the Option.
      

    

    (d) Termination
      of Service; Accelerated Vesting. 

     

    (i) If
      the
      Executive’s employment is terminated for Cause, as such term is defined below,
      all Awards, whether or not vested, shall immediately expire effective the date
      of termination of employment. 

    

    (ii) If
      the
      Executive’s employment is terminated voluntarily by the Executive without Good
      Reason, as such term is defined below, all unvested Awards shall immediately
      expire effective the date of termination of employment. Vested Awards, to the
      extent unexercised, shall expire one month after the termination of
      employment.

    

    (iii) If
      the
      Executive’s employment terminates on account of death or Disability, as defined
      below, all unvested Awards shall immediately expire effective the date of
      termination of employment. Vested Awards, to the extent unexercised, shall
      expire one year after the termination of employment.

    

    
      
         

      

      
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    (iv) If
      the
      Executive’s employment is terminated (A) in connection with a Change of Control,
      as defined below, (B) by the Company without Cause or (C) by the Executive
      for
      Good Reason, all unvested Awards shall immediately vest and become exercisable
      effective the date of termination of employment, and, to the extent unexercised,
      shall expire one year after any such event.

    

    (e) Payment.
      The
      full consideration for any shares purchased by the Executive upon exercise
      of
      the Option shall be paid in cash. 

    

    11. Other
      Benefits.
      

    

    (a) During
      the term of this Agreement, the Executive shall be eligible to participate
      in
      incentive, savings, retirement (401(k)), and welfare benefit plans, including,
      without limitation, health, medical,
      dental,
      vision,
      life (including accidental death and dismemberment)
      and
      disability insurance plans (collectively, “Benefit
      Plans”),
      in
      substantially the same manner, including but not limited to responsibility
      for
      the cost thereof, and at
      substantially the same levels, as the Company makes
      such
      opportunities available to all of the Company’s managerial
      or salaried executive
      employees 

    

    (b) The
      Executive’s spouse and dependent minor children will be covered under the
      Benefit Plans providing health, medical, dental, and vision benefits, in
      substantially the same manner, including but not limited to responsibility
      for
      the cost thereof, and at substantially the same levels, as the Company makes
      such opportunities available to the spouses and dependent minor children to
      all
      of the Company’s managerial or salaried executive employees. 

    

    (c) The
      Company shall purchase and maintain traditional directors and officers liability
      insurance coverage in the amount of at least $5,000,000 covering the Company’s
      officers and directors, including the Executive, as soon as practicable after
      the Effective Date, but in no event later than 30 days following the Effective
      Date, provided such coverage is available on commercially reasonable
      terms.

    

    (d)
       Until
      such time as Executive becomes covered by Company medical coverage, the Company
      shall pay the cost of COBRA coverage provided by Executive’s prior employer, to
      the same extent as such coverage was paid for by such prior
      employer.

    

    12. Termination
      of Employment.

    

    (a) Death.
      In the
      event that during the term of this Agreement the Executive dies, this Agreement
      and the Executive’s employment with the Company shall automatically terminate
      and the Company shall have no further obligations or liability to the Executive
      or his heirs, administrators or executors with respect to compensation and
      benefits accruing thereafter, except for the obligation to pay the Executor’s
      heirs, administrators or executors any earned but unpaid base salary, unpaid
      pro
      rata
      annual
      bonus and unused vacation days accrued through the date of death; provided,
      that
      nothing contained in this paragraph shall be deemed to excuse any breach by
      the
      Company of any provision of this Agreement. The Company shall deduct, from
      all
      payments made hereunder, all applicable taxes, including income tax, FICA and
      FUTA, and other appropriate deductions.

    

    
      
         

      

      
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    (b) “Disability.”
      In
      the
      event that, during the term of this Agreement the Executive shall be prevented
      from performing his duties and responsibilities hereunder to the full extent
      required by the Company by reason of Disability (as defined below) this
      Agreement and the Executive’s employment with the Company shall automatically
      terminate and the Company shall have no further obligations or liability to
      the
      Executive or his heirs, administrators or executors with respect to compensation
      and benefits accruing thereafter, except for the obligation to pay the Executive
      or his heirs, administrators or executors any earned but unpaid base salary,
      unpaid pro
      rata
      annual
      bonus and unused vacation days accrued through the Executive’s last date of
      Employment with the Company; provided,
      that
      nothing contained in this paragraph shall be deemed to excuse any breach by
      the
      Company of any provision of this Agreement including any failure to maintain
      the
      long-term disability insurance coverage required pursuant to Section 10(b)(iv).
      The Company shall deduct, from all payments made hereunder, all applicable
      taxes, including income tax, FICA and FUTA, and other appropriate deductions
      through
      the last date of the Executive’s employment with the Company. For purposes of
      this Agreement, “Disability”
shall
      mean a physical or mental disability that prevents the performance by the
      Executive, with or without reasonable accommodation, of his duties and
      responsibilities hereunder for a period of not less than an aggregate of three
      months during any twelve consecutive months. 

    

    (c) “Cause.”
      

    

    (i) At
      any
      time during the term of this Agreement, the Company may terminate this Agreement
      and the Executive’s employment hereunder for “Cause.” For purposes of this
      Agreement, “Cause”
shall
      be defined as the occurrence of: (A)
      gross
      neglect, malfeasance or gross insubordination in performing the Executive’s
      duties under this Agreement; (B) the Executive’s conviction for a felony,
      excluding convictions associated with traffic violations; (C) an egregious
      act
      of dishonesty (including without limitation theft or embezzlement) or a
      malicious action by the Executive toward the Company’s customers or employees;
      (D) a willful and material violation of any provision of Sections 13 and 14
      hereof; (E) intentional reckless conduct that is materially detrimental to
      the
      business or reputation of the Company; or (F) material failure, other than
      by
      reason of Disability, to carry out reasonably assigned duties or instructions
      consistent with the titles of Executive Vice President and Chief Operating
      Officer (provided that material failure to carry out reasonably assigned duties
      shall be deemed to constitute Cause only after a finding by the Board of
      Directors, or a duly constituted committee thereof, of material failure on
      the
      part of the Executive and the failure to remedy such performance to the Board’s
      or the committee’s satisfaction within 30 days after delivery of written notice
      to the Executive of such finding).

    

    (ii) Upon
      termination of this Agreement for Cause, the Company shall have no further
      obligations or liability to the Executive or his heirs, administrators or
      executors with respect to compensation and benefits thereafter, except for
      the
      obligation to pay the Executive any earned but unpaid base salary, unpaid
pro
      rata
      annual
      bonus and unused vacation days accrued through the Executive’s last day of
      employment with the Company. The Company shall deduct, from all payments made
      hereunder, all applicable taxes, including income tax, FICA and FUTA, and other
      appropriate deductions.

    

    
      
         

      

      
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    (d) Change
      of Control.
      For
      purposes of this Agreement, “Change
      of Control”
means
      the occurrence of, or the Company’s Board votes to approve: (A) any
      consolidation or merger of the Company pursuant to which the stockholders
      of the Company immediately before the transaction do not retain immediately
      after the transaction, in substantially the same proportions as their ownership
      of shares of the Company’s
      voting
      stock immediately before the transaction, direct or indirect beneficial
      ownership of more than 50% of the total combined voting power of the outstanding
      voting securities of the surviving business entity;
      (B) any
      sale, lease, exchange or other transfer (in one transaction or a series of
      related transactions) of all, or substantially all, of the assets of the Company
      other than any sale, lease, exchange or other transfer to any company where
      the
      Company owns, directly or indirectly, 100% of the outstanding voting securities
      of such company after any such transfer; (C)
      the
      direct or indirect sale or exchange in a single or series of related
      transactions by the stockholders of the Company of more than 50% of the voting
      stock of the Company.

    

    (e) “Good
      Reason.”

     

    (i) At
      any
      time during the term of this Agreement, subject to the conditions set forth
      in
      Section 12(e)(ii) below, the Executive may terminate this Agreement and the
      Executive’s employment with the Company for “Good Reason.” For purposes of this
      Agreement, “Good
      Reason”
shall
      mean the occurrence of any of the following events: (A) the assignment, without
      the Executive’s consent, to the Executive of duties that are significantly
      different from, and that result in a substantial diminution of, the duties
      that
      he assumed on the Effective Date; (B) the assignment, without the Executive’s
      consent, to the Executive of a title that is different from and subordinate
      to
      the title specified in Section 2 above; (C) any termination of the Executive’s
      employment by the Company, other than a termination for Cause, within
      12
      months after a Change of Control;
      (D) the
      assignment, without the Executive’s consent, to the Executive of duties that are
      significantly different from, and that result in a substantial diminution of,
      the duties that he assumed on the Effective Date within 12 months after a Change
      of Control; or (E) material
      breach by the Company of this Agreement. 

    

    (ii) The
      Executive shall not be entitled to terminate his employment with the Company
      and
      this Agreement for Good Reason unless and until he shall have delivered written
      notice to the Company of his intention to terminate this Agreement and his
      employment with the Company for Good Reason, which notice specifies in
      reasonable detail the circumstances claimed to provide the basis for such
      termination for Good Reason, and the Company shall not have eliminated the
      circumstances constituting Good Reason within 30 days of its receipt from the
      Executive of such written notice. 

    

    (iii) In
      the
      event that the Executive terminates this Agreement and his employment with
      the
      Company for Good Reason, the Company shall pay or provide to the Executive
      (or,
      following his death, to the Executive’s heirs, administrators or executors): (A)
      any earned but unpaid base salary, unpaid pro
      rata
      annual
      bonus and unused vacation days accrued through the Executive’s last day of
      employment with the Company; (B) the Executive’s full base salary through the
      Scheduled Termination Date (as the same may have been extended through any
      extensions of this Agreement); (C) the value of vacation days that the Executive
      would have accrued through the Scheduled Termination Date; (D) continued
      coverage, at the Company’s expense, under all Benefits Plans in which the
      Executive was a participant immediately prior to his last date of employment
      with the Company, or, in the event that any such Benefit Plans do not permit
      coverage of the Executive following his last date of employment with the
      Company, under benefit plans that provide no less coverage than such Benefit
      Plans, through the Scheduled Termination Date; and (E) severance in an amount
      equal to one year’s base salary, as in effect immediately prior to the
      Executive’s termination hereunder. All payments due hereunder shall be made
      within 45 days after the date of termination of the Executive’s employment. The
      Company shall deduct, from all payments made hereunder, all applicable taxes,
      including income tax, FICA and FUTA, and other appropriate
      deductions.

     

    
      
         

      

      
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    (iv) The
      Executive shall have no duty to mitigate his damages, except that continued
      benefits required to be provided under Section 11(e)(iii)(D) shall be canceled
      or reduced to the extent of any comparable benefit coverage offered to the
      Executive during the period prior to the Scheduled Termination Date by a
      subsequent employer or other person or entity for which the Executive performs
      services, including but not limited to consulting services. 

    

    (f) Without
      “Cause.”

     

    (i) By
      The
      Executive.
      At any
      time during the term of this Agreement, the Executive shall be entitled to
      terminate this Agreement and the Executive’s employment with the Company without
      Cause by providing prior written notice of at least 90 days to the Company.
      Upon
      termination by the Executive of this Agreement and the Executive’s employment
      with the Company without Cause, the Company shall have no further obligations
      or
      liability to the Executive or his heirs, administrators or executors with
      respect to compensation and benefits thereafter, except for the obligation
      to
      pay the Executive any earned but unpaid base salary and unused vacation days
      accrued through the Executive’s last day of employment with the Company. The
      Company shall deduct, from all payments made hereunder, all applicable taxes,
      including income tax, FICA and FUTA, and other appropriate
      deductions.

    

    (ii) By
      The
      Company.
      At any
      time during the term of this Agreement, the Company shall be entitled to
      terminate this Agreement and the Executive’s employment with the Company without
      Cause by providing prior written notice of at least 90 days to the Executive.
      Upon termination by the Company of this Agreement and the Executive’s employment
      with the Company without Cause, the Company shall pay or provide to the
      Executive (or, following his death, to the Executive’s heirs, administrators or
      executors): (A) any earned but unpaid base salary, unpaid pro
      rata
      annual
      bonus and unused vacation days accrued through the Executive’s last day of
      employment with the Company; (B) the Executive’s full base salary through the
      Scheduled Termination Date (as the same may have been extended through any
      extensions of this Agreement); (C) the value of vacation days that the Executive
      would have accrued through the Scheduled Termination Date; (D) continued
      coverage, at the Company’s expense, under all Benefits Plans in which the
      Executive was a participant immediately prior to his last date of employment
      with the Company, or, in the event that any such Benefit Plans do not permit
      coverage of the Executive following his last date of employment with the
      Company, under benefit plans that provide no less coverage than such Benefit
      Plans, through the Scheduled Termination Date; and (E) severance in an amount
      equal to one year’s base salary, as in effect immediately prior to the
      Executive’s termination hereunder. All payments due hereunder shall be made
      within 45 days after the date of termination of the Executive’s employment.. The
      Company shall deduct, from all payments made hereunder, all applicable taxes,
      including income tax, FICA and FUTA, and other appropriate deductions.

     

    
      
         

      

      
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    13. Confidential
      Information.
      

    

    (a) The
      Executive expressly acknowledges that, in the performance of his duties and
      responsibilities with the Company, he has been exposed since prior to the
      Effective Date, and will be exposed, to the trade secrets, business and/or
      financial secrets and confidential and proprietary information of the Company,
      its affiliates and/or its clients, business partners or customers (“Confidential
      Information”).
      The
      term “Confidential Information” includes information or material that has actual
      or potential commercial value to the Company, its affiliates and/or its clients,
      business partners or customers and is not generally known to and is not readily
      ascertainable by proper means to persons outside the Company, its affiliates
      and/or its clients or customers.

    

    (b) Except
      as
      authorized in writing by the Board, during the performance of the Executive’s
      duties and responsibilities for the Company and until such time as any such
      Confidential Information becomes generally known to and readily ascertainable
      by
      proper means to persons outside the Company, its affiliates and/or its clients,
      business partners or customers, the Executive agrees to keep strictly
      confidential and not use for his personal benefit or the benefit to any other
      person or entity (other than the Company) the Confidential Information.
“Confidential Information” includes the following, whether or not expressed in a
      document or medium, regardless of the form in which it is communicated, and
      whether or not marked “trade secret” or “confidential” or any similar legend:
      (i) lists of and/or information concerning customers, prospective customers,
      suppliers, employees, consultants, co-venturers and/or joint venture candidates
      of the Company, its affiliates or its clients or customers; (ii) information
      submitted by customers, prospective customers, suppliers, employees, consultants
      and/or co-venturers of the Company, its affiliates and/or its clients or
      customers; (iii) non-public information proprietary to the Company, its
      affiliates and/or its clients or customers, including, without limitation,
      cost
      information, profits, sales information, prices, accounting, unpublished
      financial information, business plans or proposals, expansion plans (for current
      and proposed facilities), markets and marketing methods, advertising and
      marketing strategies, administrative procedures and manuals, the terms and
      conditions of the Company’s contracts and trademarks and patents under
      consideration, distribution channels, franchises, investors, sponsors and
      advertisers; (iv) proprietary technical information concerning products and
      services of the Company, its affiliates and/or its clients, business partners
      or
      customers, including, without limitation, product data and specifications,
      diagrams, flow charts, know how, processes, designs, formulae, inventions and
      product development; (v) lists of and/or information concerning applicants,
      candidates or other prospects for employment, independent contractor or
      consultant positions at or with any actual or prospective customer or client
      of
      Company and/or its affiliates, any and all confidential processes, inventions
      or
      methods of conducting business of the Company, its affiliates and/or its
      clients, business partners or customers; (vi) acquisition or merger targets;
      (vii) business plans or strategies, data, records, financial information or
      other trade secrets concerning the actual or contemplated business, strategic
      alliances, policies or operations of the Company or its affiliates; or (viii)
      any and all versions of proprietary computer software (including source and
      object code), hardware, firmware, code, discs, tapes, data listings and
      documentation of the Company; or (ix any other confidential information
      disclosed to the Executive by, or which the Executive obligated under a duty
      of
      confidence from, the Company, its affiliates, and/or its clients, business
      partners or customers.

    

    
      
         

      

      
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    (c) The
      Executive affirms that he does not possess and will not rely upon the protected
      trade secrets or confidential or proprietary information of his prior
      employer(s) in providing services to the Company. 

    

    (d) In
      the
      event that the Executive’s employment with the Company terminates for any
      reason, the Executive shall deliver forthwith to the Company any and all
      originals and copies of Confidential Information.

    

    14. Non-Competition
      And Non-Solicitation.
      

     

    (a) The
      Executive agrees and acknowledges that the Confidential Information that the
      Executive has already received and will receive is valuable to the
      Company and
      that
      its protection and maintenance constitutes a legitimate business interest of
      the
      Company, to be protected by the non-competition restrictions set forth herein.
      The Executive agrees and acknowledges that the non-competition restrictions
      set
      forth herein are reasonable and necessary and do not impose undue hardship
      or
      burdens on the Executive. The Executive also acknowledges that the products
      and
      services developed or provided by the Company, its
      affiliates and/or its clients or customers
      are or
      are intended to be sold, provided, licensed and/or distributed to customers
      and
      clients in and throughout the Mid-West (the “Geographic
      Boundary”)
      (to
      the extent the Company comes to own or operate any material asset in other
      areas
      of the United States during the term of the Executive’s employment, the
      definition of Geographic Boundary shall be automatically expanded to cover
      such
      other areas), and that the Geographic Boundary, scope of prohibited competition,
      and time duration set forth in the non-competition restrictions set forth below
      are reasonable and necessary to maintain the value of the Confidential
      Information of, and to protect the goodwill and other legitimate business
      interests of, the Company, its
      affiliates and/or its clients or customers.
      

    

    (b) The
      Executive hereby agrees and covenants that he shall not, without the prior
      written consent of the Company, directly or indirectly, in any capacity
      whatsoever, including, without limitation, as an employee, employer, consultant,
      principal, partner, shareholder, officer, director or any other individual
      or
      representative capacity (other than a holder of less than one percent (5%)
      of
      the outstanding voting shares of any publicly held company), or whether on
      the
      Executive’s own behalf or on behalf of any other person or entity or otherwise
      howsoever, during the Executive’s employment with the Company and for a period
      equal to the greater of (i) one year (two years, if termination of this
      Agreement or of the Executive’s employment is pursuant to Section 12(f)(i)
      hereof) following the termination of this Agreement or of the Executive’s
      employment with the Company or (ii) the period during which the Executive
      continues to receive his base salary pursuant to Sections 12(e) or 12(f)(ii)
      of
      this Agreement following the termination of this Agreement and of the
      Executive’s employment, in the Geographic Boundary:

    

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    (i) Engage,
      own, manage, operate, control, be employed by, consult for, participate in,
      or
      be connected in any manner with the ownership, management, operation or control
      of any business in competition with the Business of the Company. The
“Business
      of the Company”
is
      defined is as the development and production of ethanol and other alternatives
      to petroleum-based fuels within the Geographic Boundary within the Geographic
      Boundary.

    

    (ii) Recruit,
      solicit or hire, or attempt to recruit, solicit or hire, any employee, or
      independent contractor of the Company to leave the employment (or independent
      contractor relationship) thereof, whether or not any such employee or
      independent contractor is party to an employment agreement. 

    

    (iii) Attempt
      in any manner to solicit or accept from any customer of the Company, with whom
      the Executive had significant contact during the term of the Agreement, business
      of the kind or competitive with the business done by the Company with such
      customer or to persuade or attempt to persuade any such customer to cease to
      do
      business or to reduce the amount of business which such customer has customarily
      done or is reasonably expected to do with the Company, or if any such customer
      elects to move its business to a person other than the Company, provide any
      services (of the kind or competitive with the Business of the Company) for
      such
      customer, or have any discussions regarding any such service with such customer,
      on behalf of such other person.

    

    (iv) Interfere
      with any relationship, contractual or otherwise, between the Company and any
      other party, including; without limitation, any supplier, co-venturer or joint
      venturer of the Company to discontinue or reduce its business with the Company
      or otherwise interfere in any way with the Business of the Company.

    

    15. Dispute
      Resolution.
      The
      Executive and the Company agree that any dispute or claim, whether based on
      contract, tort, discrimination, retaliation, or otherwise, relating to, arising
      from, or connected in any manner with this Agreement or with the Executive’s
      employment with Company shall be resolved exclusively through final and binding
      arbitration under the auspices of the American Arbitration Association
      (“AAA”).
      The
      arbitration shall be held in Kansas City, Missouri. The arbitration shall
      proceed in accordance with the National Rules for the Resolution of Employment
      Disputes of the AAA in effect at the time the claim or dispute arose, unless
      other rules are agreed upon by the parties. The arbitration shall be conducted
      by one arbitrator who is a member of the AAA, unless the parties mutually agree
      otherwise. The arbitrators shall have jurisdiction to determine any claim,
      including the arbitrability of any claim, submitted to them. The arbitrators
      may
      grant any relief authorized by law for any properly established claim. The
      interpretation and enforceability of this paragraph of this Agreement shall
      be
      governed and construed in accordance with the United States Federal Arbitration
      Act, 9. U.S.C. § 1, et
      seq.
      More
      specifically, the parties agree to submit to binding arbitration any claims
      for
      unpaid wages or benefits, or for alleged discrimination, harassment, or
      retaliation, arising under Title VII of the Civil Rights Act of 1964, the Equal
      Pay Act, the National Labor Relations Act, the Age Discrimination in Employment
      Act, the Americans With Disabilities Act, the Employee Retirement Income
      Security Act, the Civil Rights Act of 1991, the Family and Medical Leave Act,
      the Fair Labor Standards Act, Sections 1981 through 1988 of Title 42 of the
      United States Code, COBRA, the New York State Human Rights Law, the New York
      City Human Rights Law, and any other federal, state, or local law, regulation,
      or ordinance, and any common law claims, claims for breach of contract, or
      claims for declaratory relief. The Executive acknowledges that the purpose
      and
      effect of this paragraph is solely to elect private arbitration in lieu of
      any
      judicial proceeding he might otherwise have available to him in the event of
      an
      employment-related dispute between him and the Company. Therefore, the Executive
      hereby waives his right to have any such employment-related dispute heard by
      a
      court or jury, as the case may be, and agrees that his exclusive procedure
      to
      redress any employment-related claims will be arbitration.

    

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    16. Notice.
      For
      purposes of this Agreement, notices and all other communications provided for
      in
      this Agreement or contemplated hereby shall be in writing and shall be deemed
      to
      have been duly given when personally delivered, delivered by a nationally
      recognized overnight delivery service or when mailed United States Certified
      or
      registered mail, return receipt requested, postage prepaid, and addressed as
      follows:

    

    If
      to the
      Company: 

    

    Alternative
      Energy Sources, Inc.

    c/o
      McGuireWoods LLP

    1345
      Avenue of the Americas, Seventh Floor

    New
      York,
      New York 10105

    Attention:
      Louis W. Zehil, Esq., Corporate Secretary

    (212)
      548-2175 (facsimile)

    (212)
      548-2138 (direct)

    

    

    If
      to the
      Executive:

    

    Lee
      Blank

    

    17. Miscellaneous.

    

    (a) All
      issues and disputes concerning, relating to or arising out of this Agreement
      and
      from the Executive’s employment by the Company, including, without limitation,
      the construction and interpretation of this Agreement, shall be governed by
      and
      construed in accordance with the internal laws of the State of Missouri, without
      giving effect to that State’s principles of conflicts of law.

    

    (b) The
      Executive and the Company agree that any provision of this Agreement deemed
      unenforceable or invalid may be reformed to permit enforcement of the
      objectionable provision to the fullest permissible extent. Any provision of
      this
      Agreement deemed unenforceable after modification shall be deemed stricken
      from
      this Agreement, with the remainder of the Agreement being given its full force
      and effect.

    

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    (c) The
      Company shall be entitled to equitable relief, including injunctive relief
      and
      specific performance as against the Executive, for the Executive’s threatened or
      actual breach of Sections 13 or 14 of this Agreement, as money damages for
      a
      breach thereof would be incapable of precise estimation, uncertain, and an
      insufficient remedy for an actual or threatened breach of Sections 13 or 14
      of
      this Agreement. The Executive and the Company agree that any pursuit of
      equitable relief in respect of Sections 13 or 14 of this Agreement shall have
      no
      effect whatsoever regarding the continued viability and enforceability of
      Section 15 of this Agreement.

    

    (d) Any
      waiver or inaction by the Company for any breach of this Agreement shall not
      be
      deemed a waiver of any subsequent breach of this Agreement.

    

    (e) The
      Executive and the Company independently have made all inquiries regarding the
      qualifications and business affairs of the other which either party deems
      necessary. The Executive affirms that he fully understands this Agreement’s
      meaning and legally binding effect. Each party has participated fully and
      equally in the negotiation and drafting of this Agreement. Each party assumes
      the risk of any misrepresentation or mistaken understanding or belief relied
      upon by him or it in entering into this Agreement.

    

    (f) The
      Executive’s obligations under this Agreement are personal in nature and may not
      be assigned by the Executive to any other person or entity.

    

    (g) This
      instrument constitutes the entire Agreement between the parties regarding its
      subject matter. When signed by all parties, this Agreement supersedes and
      nullifies all prior or contemporaneous conversations, negotiations, or
      agreements, oral and written, regarding the subject matter of this Agreement.
      In
      any future construction of this Agreement, this Agreement should be given its
      plain meaning. This Agreement may be amended only by a writing signed by the
      Company and the Executive.

    

    (h) This
      Agreement may be executed in counterparts, a counterpart transmitted via
      facsimile, and all executed counterparts, when taken together, shall constitute
      sufficient proof of the parties’ entry into this Agreement. The parties agree to
      execute any further or future documents which may be necessary to allow the
      full
      performance of this Agreement. This Agreement contains headings for ease of
      reference. The headings have no independent meaning.

    

    (i) THE
      EXECUTIVE STATES THAT HE HAS FREELY AND VOLUNTARILY ENTERED INTO THIS AGREEMENT
      AND THAT HE HAS READ AND UNDERSTOOD EACH AND EVERY PROVISION THEREOF. THIS
      AGREEMENT IS EFFECTIVE UPON THE EXECUTION OF THIS AGREEMENT BY BOTH
      PARTIES.

    

    

    [Signature
      Page Follows]

    

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF, the Company and the Executive have executed this Employment
      Agreement as of the day and year first above written.

     

    
      	Executive 	 	 	Alternative
              Energy Sources, Inc.
	 	 	 	 
	/s/ 	 	
              By:

            	/s/ 
	
              
Lee
              Blank 	 	 	
              

            
	 	 	 	Name
Title

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

     

    

    Exhibit
      A

    

    Annual
      Performance Targets

    [To
      Be
      Discussed and Added]

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    Exhibit
      B

    Lock-up
      Agreement

    

    

    June
      19,
      2006

    

    Tompkins
      Capital Group

    488
      Madison Avenue,

    New
      York,
      New York 10022

    Attention:
      Mr. Mark N. Tompkins

    

    Mr.
      Tompkins:

    

    Reference
      is made to that certain Term Sheet (the “Term Sheet”), dated May 8, 2006,
      relating to a proposed business combination between Alternative Energy Sources,
      Inc., a Delaware corporation (the “Company”) and Beemer Energy, Inc., a Delaware
      corporation (“BEEMER”) and a related private placement financing (the
“Transactions”). In connection with the Transactions, the Company and BEEMER
      also entered into that certain Merger Agreement (the “Merger Agreement”), dated
      as of June 19, 2006, pursuant to which BEEMER stockholders received common
      stock, par value $0.0001 per share, of the Company (the “Common Stock”) in
      consideration for shares of BEEMER held by them at the effective time of the
      merger. In consideration of the Company and BEEMER entering into the
      Transaction, and for Tompkins Capital Group to facilitate the Transactions
      and
      for other good and valuable consideration, the receipt and sufficiency of which
      are hereby acknowledged, the undersigned hereby agrees as follows:

    

    1. The
      undersigned hereby covenants and agrees, except as provided herein, not to
      (1)
      offer, sell, contract to sell or otherwise dispose of and (2) transfer title to
      (a “Prohibited Sale”) any of the shares (the “Acquired Shares”) of Common Stock
      acquired by the undersigned pursuant to or in connection with the Merger
      Agreement, during the period commencing on the “Closing Date” (as that term is
      defined in the Term Sheet) and ending on the 24-month anniversary of the Closing
      Date (the “Lockup Period”), without the prior written consent of the Company and
      Tompkins Capital Group (which consent shall not be unreasonably withheld).
      Notwithstanding the foregoing, the undersigned shall be permitted from time
      to
      time during the Lockup Period, without the prior written consent of the Company
      or Tompkins Capital Group, as applicable, (i) to acquire shares of Common Stock
      pursuant to the undersigned’s participation in the Company’s stock option plan,
      or (ii) to transfer all or any part of the Acquired Shares to any family member,
      for estate planning purposes or to an affiliate thereof (as such term is defined
      in Rule 405 under the Securities Exchange Act of 1934, as amended), provided
      that such transferee agrees with the Company and Tompkins Capital Group to
      be
      bound hereby, and in any transaction in which holders of the Common Stock of
      the
      Company participate or have the opportunity to participate pro rata, including,
      without limitation, a merger, consolidation or binding share exchange involving
      the Company, a disposition of the Common Stock in connection with the exercise
      of any rights, warrants or other securities distributed to the Company’s
      stockholders, or a tender or exchange offer for the Common Stock, and no
      transaction contemplated by the foregoing clauses (i) or (ii) shall be deemed
      a
      Prohibited Sale for purposes of this Letter Agreement.

    

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

    2. This
      Letter Agreement shall be governed by and construed in accordance with the
      laws
      of the State of New York, without regard to its conflict of laws
      principles.

    

    3. This
      Letter Agreement will become a binding agreement among the undersigned as of
      the
      Closing Date. This Letter Agreement (and the agreements reflected herein) may
      be
      terminated by the mutual agreement of the Company, Tompkins Capital Group and
      the undersigned, and if not sooner terminated, will terminate upon the
      expiration date of the Lockup Period. This Letter Agreement may be duly executed
      by facsimile and in any number of counterparts, each of which shall be deemed
      an
      original, and all of which together shall be deemed to constitute one and the
      same instrument. Signature pages from separate identical counterparts may be
      combined with the same effect as if the parties signing such signature page
      had
      signed the same counterpart. This Letter Agreement may be modified or waived
      only by a separate writing signed by each of the parties hereto expressly so
      modifying or waiving such agreement.

    

    

    Very
      truly yours,

    

    Signature:__________________

    Print
      Name:________________

    

    

    Address:
      ______________________________________

    Number
      of
      shares of Common Stock owned: __________

    Certificate
      Numbers: _____________________________

    

    
      
         

      

        16EXHIBIT 4.1

                              POSSIS MEDICAL, INC.

                                       and

                                WELLS FARGO BANK,
                              NATIONAL ASSOCIATION

                              AMENDED AND RESTATED
                                RIGHTS AGREEMENT

                          Dated as of December 23, 2006

<PAGE>

                                TABLE OF CONTENTS
                                -----------------

                                                                            Page
                                                                            ----

SECTION 1.  CERTAIN DEFINITIONS.....................................          1

SECTION 2.  APPOINTMENT OF RIGHTS AGENT.............................          4

SECTION 3.  ISSUE OF RIGHT CERTIFICATES.............................          4

SECTION 4.  FORM OF RIGHT CERTIFICATES..............................          5

SECTION 5.  COUNTERSIGNATURE AND REGISTRATION.......................          6

SECTION 6.  TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
            CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT
            CERTIFICATES............................................          7

SECTION 7.  EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
            RIGHTS..................................................          7

SECTION 8.  CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES......          9

SECTION 9.  AVAILABILITY OF PREFERRED SHARES........................          9

SECTION 10. PREFERRED SHARES RECORD DATE............................         10

SECTION 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES OR
            NUMBER OF RIGHTS........................................         11

SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF
            SHARES..................................................         18

SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
            EARNING POWER...........................................         18

SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.................         21

SECTION 15. RIGHTS OF ACTION........................................         22

SECTION 16. AGREEMENT OF RIGHT HOLDERS..............................         22

SECTION 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER.......         23

SECTION 18. CONCERNING THE RIGHTS AGENT.............................         23

SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS
            AGENT...................................................         23

<PAGE>

SECTION 20. DUTIES OF RIGHTS AGENT..................................         24

SECTION 21. CHANGE OF RIGHTS AGENT..................................         26

SECTION 22. ISSUANCE OF NEW RIGHT CERTIFICATES......................         27

SECTION 23. REDEMPTION..............................................         27

SECTION 24. EXCHANGE................................................         28

SECTION 25. NOTICE OF CERTAIN EVENTS................................         29

SECTION 26. NOTICES.................................................         30

SECTION 27. SUPPLEMENTS AND AMENDMENTS..............................         30

SECTION 28. SUCCESSORS..............................................         30

SECTION 29. BENEFITS OF THIS AGREEMENT..............................         30

SECTION 30. SEVERABILITY............................................         31

SECTION 31. GOVERNING LAW...........................................         31

SECTION 32. COUNTERPARTS............................................         31

SECTION 33. DESCRIPTIVE HEADINGS....................................         31

Exhibit A -- Certificate of Designation of Series A Junior Participating
             Preferred Stock

Exhibit B -- Form of Right Certificates

Exhibit C -- Summary of Rights to Purchase Preferred Shares

                                       ii

<PAGE>

                      AMENDED AND RESTATED RIGHTS AGREEMENT
                      -------------------------------------

     AGREEMENT, originally dated as of December 12, 1996, between Possis
Medical, Inc., a Minnesota corporation (the "Company"), and Wells Fargo Bank,
National Association (the "Rights Agent") and amended and restated effective as
of December 23, 2006.

     The Board of Directors of the Company authorized and declared a dividend of
one preferred share purchase right (a "Right") for each Common Share of the
Company outstanding at the Close of Business on December 23, 1996 (the "Record
Date"), each Right representing the right to purchase one one-hundredth of a
Preferred Share, upon the terms and subject to the conditions herein set forth,
and authorized and directed the issuance of one Right with respect to each
Common Share that become outstanding between the Record Date and the earliest 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 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 of this
Agreement. The Board of Directors has amended and restated this plan as of
December 23, 2006 to, among other things, extend the Final Expiration Date,
change the Purchase Price consistent therewith, and eliminate certain provisions
that limited the authority of the Board of Directors after a Distribution Date.

     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:

          "Acquiring Person" shall mean any Person who or which, together with
     all Affiliates and Associates of such Person, shall be the Beneficial Owner
     of the Threshold Percentage or more of the Common Shares then outstanding,
     other than pursuant to a Permitted Offer, but shall not include any Exempt
     Person. Notwithstanding the foregoing, no Person shall become an "Acquiring
     Person" as the result of an acquisition of Common Shares by the Company
     which, by reducing the number of shares outstanding, increases the
     proportionate number of shares beneficially owned by such Person to the
     Threshold Percentage or more of the Common Shares of the Company then
     outstanding; provided, however, that if a Person shall become the
     Beneficial Owner of the Threshold Percentage or more of the Common Shares
     of the Company then outstanding by reason of share purchases by the Company
     and shall, after such share purchases by the Company, increase the number
     of Common Shares of the Company beneficially owned by such Person above the
     number of Common Shares of the Company beneficially owned by such Person at
     the time of the last such share purchase by the Company, then such Person
     shall be deemed to be an "Acquiring Person." Notwithstanding the foregoing,
     if the Board of Directors of the Company determines in good faith that a
     Person who would otherwise be an "Acquiring Person", as defined pursuant to
     the foregoing provisions of this paragraph has become such inadvertently,
     and such Person divests as promptly as practicable a sufficient number of

<PAGE>

     Common Shares so that such Person would no longer be an "Acquiring Person",
     as defined pursuant to the foregoing provisions of this paragraph then such
     Person shall not be deemed to be an "Acquiring Person" for any purposes of
     this Agreement.

          "Affiliate" and "Associate" shall have the respective meanings
     ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
     under the Exchange Act.

          A Person shall be deemed the "Beneficial Owner" of and shall be deemed
     to "beneficially own" any securities:

               (i) which such Person or any of such Person's Affiliates or
          Associates beneficially owns, directly or indirectly, including
          without limitation securities with respect to which such Person or any
          such Person's Affiliates or Associates has "beneficial ownership"
          pursuant to Rule 13d-3 of the General Rules and Regulations under the
          Exchange Act, as in effect on the date of this Agreement;

               (ii) which 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) which are beneficially owned, directly or indirectly, by
          any other Person (or any Affiliate or Associate thereof) 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 clause(ii)(B) above) or disposing of
          any securities of the Company.

                                       2
<PAGE>

          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.

               "Business Day" shall mean any day other than a Saturday, a Sunday
          or a day on which banking institutions in the State of Minnesota are
          authorized or obligated by law or executive order to close.

               "Close of Business" on any given date shall mean 5:00 P.M.,
          prevailing Minneapolis time, on such date; provided, however, that if
          such date is not a Business Day, it shall mean 5:00 P.M., prevailing
          Minneapolis time, on the next succeeding Business Day.

               "Common Shares," when used with reference to the Company, shall
          mean the shares of Common Stock, par value $.40 per share, of the
          Company. "Common Shares," when used with 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 any other Person, the Person or Persons
          which ultimately control such first mentioned Person.

               "Distribution Date" shall have the meaning set forth in Section
          3.

               "Exchange Act" shall mean the Securities Exchange Act of 1934, as
          amended.

               "Exchange Date" shall have the meaning set forth in Section 7.

               "Exempt Person" shall mean the Company, any Subsidiary of the
          Company, any employee benefit plan of the Company or of any Subsidiary
          of the Company, and any Person organized, appointed or established by
          the Company for or pursuant to the terms of any such plan, and any
          Person who or which, together with all Affiliates and Associates of
          such Person, shall become the Beneficial Owner of the Threshold
          Percentage or more of the then outstanding Common Shares as the result
          of acquisitions of Common Shares directly from the Company.

               "Final Expiration Date" shall have the meaning set forth in
          Section 7.

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

               "Permitted Offer" shall mean a tender offer or an exchange offer
          for all outstanding Common Shares of the Company at a price and on
          terms determined, prior to the purchase of shares under such tender or
          exchange offer, by a majority of the members of the Board of Directors
          of the Company, after receiving advice from one or more investment
          banking firms, to be (a) fair to shareholders (taking into account all

                                       3
<PAGE>

          factors which such members of the Board of Directors deems relevant)
          and (b) otherwise in the best interests of the Company, its
          shareholders, employees, customers, suppliers and creditors and the
          communities in which the Company does business, and which such members
          of the Board of Directors determines to recommend to the shareholders
          of the Company.

               "Preferred Shares" shall mean shares of Series A Junior
          Participating Preferred Stock, par value $.40, of the Company having
          the rights and preferences set forth in the form of Certificate of
          Designations attached to this Agreement as Exhibit A.

               "Redemption Date" shall have the meaning set forth in Section 7.

               "Section 11(a)(ii) Event" shall mean any event described in
          Section 11(a)(ii).

               "Section 13 Event" shall mean any event described in clauses (w),
          (x), (y) or (z) of Section 13(a).

               "Shares Acquisition Date" shall mean the first date of public
          announcement (which, for purposes of this definition, shall include,
          without limitation, a report filed pursuant to Section 13(d) of the
          Exchange Act) by the Company or any Person that such Person has become
          an Acquiring Person.

               "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.

               "Threshold Percentage" shall mean 20%.

               "Triggering Event" shall mean any Section 11(a)(ii) Event or any
          Section 13 Event.

     Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3, shall prior to the Distribution Date also be the
holders of the Common Shares) 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 (i) the tenth Business 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 by any Person
(other than an Exempt Person) of, or of the first public announcement of the
intention of any Person (other than an Exempt Person) to commence, a tender or
exchange offer the consummation of which would result in any Person becoming an
Acquiring Person (the earlier of such dates being referred to herein as the
"Distribution Date"), (y) the Rights will be evidenced (subject to the
provisions of Section 3(b)) 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 (z) the right to

                                       4
<PAGE>

receive Right Certificates 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, 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 (a "Right Certificate"), evidencing one
Right for each Common Share so held. As of the Distribution Date, the Rights
will be evidenced solely by such Right Certificates.

     (b) The Company distributed a copy of a Summary of Rights to Purchase
Preferred Shares to each record holder of Common Shares as of the Close of
Business on the Record Date which summary has been amended as set forth in
Exhibit C (the "Summary of Rights"). With respect to certificates for Common
Shares outstanding as of the Close of Business on 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 or the Final Expiration Date if occurring prior to the
Distribution 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 which 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 Possis Medical, Inc. and
     Wells Fargo Bank, National Association, dated as of December 12, 1996, as
     amended and restated effective December 23, 2006 (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 Possis Medical,
     Inc. 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. Possis Medical, Inc. will mail to the
     holder of this certificate a copy of the Rights Agreement without charge
     after receipt of a written request therefor. Under certain circumstances,
     as set forth in the Rights Agreement, Rights issued to any Person who
     becomes an Acquiring Person or an Associate or Affiliate thereof (as
     defined in the Rights Agreement), or certain transferees of such Person,
     may become null and void.

With respect to such certificates containing the foregoing legend, until the
Distribution 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.

     Section 4. Form of Right Certificates.

                                       5
<PAGE>

     (a) The Right Certificates (and the forms of election to purchase Preferred
Shares and of assignment to be printed on the reverse thereof) shall be
substantially the same as Exhibit B 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 automated quotations system on which the Rights may from
time to time be listed, or to conform to usage. Subject to the provisions of
Sections 11 and 22, 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 price per one one-hundredth of a Preferred Share set forth
therein (the "Purchase Price"), 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 Rights Certificate issued pursuant to Section 3(a) or Section 22
hereof that represents Rights beneficially owned by: (i) an Acquiring Person or
any Associate or Affiliate of an Acquiring Person, (ii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such, or (iii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person 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 such Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which the Board of Directors of the Company has
determined is part of a plan, arrangement or understanding which has as a
primary purpose or effect the avoidance of Section 7(e) hereof, and any Rights
Certificate issued pursuant to Section 6 or Section 11 hereof upon transfer,
exchange, replacement or adjustment of any other Rights Certificate referred to
in this sentence, shall contain (to the extent feasible) the following legend:

     The Rights represented by this Rights 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 Rights Certificate and the Rights represented
     hereby may become null and void in the circumstances specified in Section
     7(e) of such Agreement.

     Section 5. Countersignature and Registration. The Right Certificates shall
be executed on behalf of the Company by its Chairman of the Board, its
President, any of its Vice Presidents or its Treasurer either manually or by
facsimile signature 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 for purposes of
authorization only 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 Rights Agreement any
such Person was not such an officer.

                                       6
<PAGE>

     Following the Distribution Date, the Rights Agent will keep or cause to be
kept, at its principal office, 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.

     (a) Subject to the provisions of Section 4(b), Section 7(e) and Section 14,
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 (or, following a Triggering Event,
Common Shares, other securities, cash or other assets, as the case may be) 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 principal office of the Rights Agent. Thereupon the Rights
Agent shall, subject to Section 4(b), Section 7(e), Section 14 and Section 24,
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.

     (b) 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.

     Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.

     (a) Subject to Section 7(e), 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 or offices of the
Rights Agent designated for such purpose, together with payment of the Purchase
Price for each one one-hundredth of a Preferred Share as to which the Rights are

                                       7
<PAGE>

exercised, at or prior to the earliest of (i) the Close of Business on December
23, 2016 (the "Final Expiration Date"), (ii) the time at which the Rights are
redeemed as provided in Section 23 (the "Redemption Date") or (iii) the time at
which such Rights are exchanged as provided in Section 24 (the "Exchange Date").

     (b) The Purchase Price for each one one-hundredth of a Preferred Share
purchasable pursuant to the exercise of a Right shall initially be $160.00,
shall be subject to adjustment from time to time as provided in Sections 11 and
13 and shall be payable in lawful money of the United States of America in
accordance with paragraph (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 Preferred Shares (or other shares, securities, cash
or other assets, as the case may be) 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 by certified check, cashier's check 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 (or make available, if the Rights Agent is the transfer agent for such
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 shall have elected to deposit with a depository
agent the total number of Preferred Shares issuable upon exercise of the Rights
hereunder, 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, (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.

     (d) In case the registered holder of any Right Certificate shall exercise
less than all of the Rights evidenced thereby, 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
such holder's duly authorized assigns, subject to the provisions of Section 14.

     (e) Notwithstanding anything in this Agreement to the contrary, from and
after the first occurrence of a Section 11(a)(ii) Event, any Rights Beneficially
Owned by (i) an Acquiring Person or an Associate or Affiliate of an Acquiring
Person, (ii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee after the Acquiring Person becomes such, or
(iii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee prior to or concurrently with the Acquiring
Person 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

                                       8
<PAGE>

regarding the transferred Rights or (B) a transfer which the Board of Directors
of the Company has determined is part of a plan, arrangement or understanding
which has as a primary purpose or effect the avoidance of this Section 7(e),
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 7(e) and
Section 4(b) hereof are complied with, but shall have no liability to any holder
of Rights Certificates or other Person as a result of its failure to make any
determinations with respect to an Acquiring Person or any of their respective
Affiliates, Associates or transferees hereunder.

     (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 unless such registered holder shall have (i) duly
completed and executed the form of election to purchase set forth on the reverse
side of the Right Certificate surrendered for such exercise and (ii) provided
such additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) of such Right Certificate 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 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 Rights 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, or shall, at the written request
of the Company and after any required Securities and Exchange Commission
retention period, 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.

     (a) The Company covenants and agrees that it will cause to be reserved and
kept available out of its authorized and unissued Preferred Shares the number of
Preferred Shares that will be sufficient to permit the exercise in full of all
outstanding Rights.

     (b) At such time, if any, as the Preferred Shares issuable upon the
exercise of Rights may be listed on any national securities exchange, the
Company shall use its best efforts to cause, from and after such time as the
Rights become exercisable (but only to the extent that it is reasonably likely
that the Rights will be exercised), all shares reserved for such issuance to be
listed on such exchange upon official notice of issuance upon such exercise.

     (c) The Company will prepare and file, as soon as practicable after the
Distribution Date, a registration statement under the Securities Act of 1933, as
amended (the "Act"), with respect to the Rights and the securities purchasable
upon exercise of the Rights on an appropriate form, and use its best efforts to
cause such registration statement to (i) become effective as soon as practicable

                                       9
<PAGE>

after such filing, and (ii) remain effective (with a prospectus at all times
meeting the requirements of the Act) until the earlier of (A) the date as of
which the Rights are no longer exercisable for such securities or (B) the Final
Expiration Date. The Company will also take such action as may be appropriate
under, or to ensure compliance with, the securities or "blue sky" laws of the
various states in connection with the exercisability of the Rights. The Company
may temporarily suspend, for a period of time not to exceed 90 days after the
date the registration statement is filed, the exercisability of the Rights in
order to permit the registration statement to become effective. Upon any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction if the requisite qualification in
such jurisdiction shall not have been obtained or the exercise thereof is not
permitted under applicable law.

     (d) The Company covenants and agrees that it will take all such action as
may be necessary to ensure that all Preferred Shares 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 and any applicable transfer
taxes), be duly and validly authorized and issued and fully paid and
nonassessable shares.

     (e) The Company further covenants and agrees that it will pay when due and
payable any and all federal and state transfer taxes and charges which 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 which 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, scrip 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, scrip 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.

     Section 10. Preferred Shares Record Date. Each Person in whose name any
certificate for a number of one one-hundredths of a Preferred Share (or Common
Shares and/or other securities, as the case may be) 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 Common Shares and/or other securities, as the case
may be) represented thereby on, and such certificate shall be dated, the date
upon which the Right Certificate evidencing such Rights was duly surrendered 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 transfer books of the Company for the Preferred Shares 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
such transfer books are open. Prior to the exercise of the Rights evidenced
thereby, the holder of a Right Certificate 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

                                       10
<PAGE>

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 and kind of 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) and Section 7(e), 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 which, 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 which would require an adjustment under both Section 11(a)(i)
and Section 11(a)(ii), 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).

          (ii) Subject to Section 24 of this Agreement, in the event any Person
     becomes an Acquiring Person, other than pursuant to any transaction set
     forth in Section 13(a), then proper provision shall be made so that each
     holder of a Right (except as otherwise provided below and in Section 7(e))
     shall thereafter have a right to receive, upon exercise thereof at the then
     current Purchase Price in accordance with the terms of this Agreement and
     in lieu of Preferred Shares, such number of Common Shares of the Company as
     shall equal the result obtained by (x) multiplying the then current
     Purchase Price by the number of one one-hundredths of a Preferred Share for
     which a Right was exercisable immediately prior to the first occurrence of
     a Section 11(a)(ii) Event and dividing that product by (y) 50% of the then
     current per share market price of the Company's Common Shares (determined
     pursuant to Section 11(d)) on the date of the occurrence of such event
     (such number of shares being referred to as the "Adjustment Shares"). 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 which
     would eliminate or diminish the benefits intended to be afforded by the
     Rights.

                                       11
<PAGE>

          (iii) In the event that the number of Common Shares which are
     authorized by the Company's Articles of Incorporation but not outstanding
     or reserved for issuance for purposes other than upon exercise of the
     Rights are not sufficient to permit the exercise in full of the Rights in
     accordance with the foregoing subparagraph (ii) of this Section 11(a), the
     Company shall (A) determine the value of the Adjustment Shares issuable
     upon the exercise of a Right (the "Current Value"), and (B) with respect to
     each Right (subject to Section 7(e) hereof), make adequate provision to
     substitute for the Adjustment Shares, upon the exercise of a Right and
     payment of the applicable Purchase Price, (1) cash, (2) a reduction in the
     Purchase Price, (3) Common Shares or other equity securities of the Company
     (including, without limitations, shares, or units of shares, of preferred
     stock, such as the Preferred Stock, which the Board has deemed to have
     essentially the same value or economic rights as Common Shares (such shares
     of preferred stock being referred to as "Common Share Equivalents")), (4)
     debt securities of the Company, (5) other assets, or (6) any combination of
     the foregoing, having an aggregate value equal to the Current Value (less
     the amount of any reduction in the Purchase Price), where such aggregate
     value has been determined by the Board based upon the advice of a
     nationally recognized investment banking firm selected by the Board;
     provided, however, that if the Company shall not have made adequate
     provision to deliver value pursuant to clause (B) above within thirty (30)
     days following the first occurrence of a Section 11(a)(ii) Event, then the
     Company shall be obligated to deliver, upon the surrender for exercise of a
     Right and without requiring payment of the Purchase Price, Common Shares
     (to the extent available) and then, if necessary, cash, which shares and/or
     cash have an aggregate value equal to the Spread. For purposes of the
     preceding sentence, the term "Spread" shall mean the excess of (i) the
     Current Value over (ii) the Purchase Price. If the Board determines in good
     faith that it is likely that sufficient additional shares of Common Stock
     could be authorized for issuance upon exercise in full of the Rights, the
     thirty (30) day period set forth above may be extended to the extent
     necessary, but not more than ninety (90) days after the Section 11(a)(ii)
     Event, in order that the Company may seek shareholder approval for the
     authorization of such additional shares (such thirty (30) day period, as it
     may be extended, is herein called the "Substitution Period"). To the extent
     that action is to be taken pursuant to the first and/or third sentences of
     this Section 11(a)(iii), the Company (1) shall provide, subject to Section
     7(e) hereof, that such action shall apply uniformly to all outstanding
     Rights, and (2) may suspend the exercisability of the Rights until the
     expiration of the Substitution Period in order to seek such shareholder
     approval for such authorization of additional shares and/or to decide the
     appropriate form of distribution to be made pursuant to such first sentence
     and to determine the value thereof. 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, as well as a
     public announcement at such time as the suspension is no longer in effect.
     For purposes of this Section 11(a)(iii), the value of each Adjustment Share
     shall be the "current per share market price" (as determined pursuant to
     Section 11(d)(i)) per Common Share on the date of the first occurrence of
     Section 11(a)(ii) Event and the per share or per unit value of any Common
     Stock Equivalent shall be deemed to equal the "current market price" per
     Common Share on such date.

     (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 to
subscribe for or purchase Preferred Shares (or shares having the

                                       12
<PAGE>

     same rights, privileges and preferences as the Preferred Shares (such
     shares are herein called "preferred share equivalents")) or securities
     convertible into Preferred Shares or preferred share equivalents at a price
     per Preferred Share or preferred share equivalent (or having a conversion
     price per share, if a security convertible into Preferred Shares or
     preferred share equivalents) less than the then current per share market
     price (as such term is defined in Section 11(d)) of the Preferred Shares 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 which the aggregate offering price of the total
     number of Preferred Shares and/or preferred share equivalents 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 preferred share equivalents 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 determined in good faith by the
     Board of Directors of the Company, whose determination shall be described
     in a statement filed with the Rights Agent and shall be binding on the
     Rights Agent and the holders of the Rights. Preferred Shares 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 which 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)), 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 on such record date,
less the fair market value (as determined in good faith by the Board of
Directors of the Company, 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

                                       13
<PAGE>

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
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 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 New York Stock Exchange or, if the Security is not
listed or admitted to trading on the New York 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, as reported by the National Association of Securities Dealers, Inc.
Automated Quotations System ("NASDAQ") or such other system then in use, or, if
on any such date the Security is 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 Security selected by the Board of Directors
of the Company. If on any such day no market maker is making a market in the
Common Shares, the fair value of such share on such day as determined in good
faith by the Board of Directors of the Company shall be used in lieu of the
closing price for such day. 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); provided,
     however, 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) (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

                                       14
<PAGE>

     share market price" of the Preferred Shares shall mean the fair value per
     share as determined in good faith by the Board of Directors of the Company,
     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-millionth 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 which 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) and
13(a), 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 Section 11(a) through (c), inclusive, and the
provisions of Sections 7, 9, 10, 13 and 14 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) below, subject to the provisions of Sections 11(a) and 13, upon
each adjustment of the Purchase Price as a result of the calculations made in
Sections 11(b) and (c), 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 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

                                       15
<PAGE>

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 ten 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, 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, may bear,
at the option of the Company, the adjusted Purchase Price, 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 which were 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 which may, in the opinion of its counsel, be necessary in
order that the Company may validly and legally issue fully paid and
nonassessable 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 over and above 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.

                                       16
<PAGE>

     (m) 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 in their sole discretion the Board of Directors of the Company
shall determine to be advisable in order that any (i) consolidation or
subdivision of the Preferred Shares, (ii) issuance wholly for cash of any
Preferred Shares at less than the current market price, (iii) issuance wholly
for cash of Preferred Shares or securities which by their terms are convertible
into or exchangeable for Preferred Shares, (iv) dividends on Preferred Shares
payable in Preferred Shares or (v) 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 shareholders.

     (n) The Company covenants and agrees that it shall not, at any time after
the Distribution Date, (i) consolidate with any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(o)
hereof), (ii) merge with or into any other Person (other than a Subsidiary of
the Company in a transaction which complies with Section 11(o) hereof, or (iii)
sell or transfer (or permit any Subsidiary to sell or transfer), in one
transaction, or a series of related 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 other Person or Persons (other than the
Company and/or any of its subsidiaries in one or more transaction each of which
complies with Section 11(o) hereof), if (x) at the time of or immediately after
such consolidation, merger or sale there are any rights, warrants or other
instruments or securities outstanding or agreements in effect which would
substantially 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 shareholders 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.

     (o) The Company covenants and agrees that, after the Distribution Date, it
will not, except as permitted by Section 23, 24 or 27, take (or permit any
Subsidiary of the Company to take) any action if at the time such action is
taken it is reasonably foreseeable that such action will diminish substantially
or otherwise eliminate the benefits intended to be afforded by the Rights.

     (p) Anything in this Agreement or the Rights to the contrary
notwithstanding, 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 (i) 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

                                       17
<PAGE>

outstanding immediately before such event and the denominator of which is the
number of Common Shares outstanding immediately after such event, and (ii) each
Common Share outstanding immediately after such event shall have issued with
respect to it that number of Rights which each Common Share outstanding
immediately prior to such event had issued with respect to it. The adjustments
provided for in this Section 11(p) shall be made successively whenever such a
dividend is declared or paid or such a subdivision, combination or consolidation
is effected. If an event occurs which would require an adjustment under Section
11(a)(ii) and this Section 11(p), the adjustments provided for in this Section
11(p) shall be in addition and prior to any adjustment required pursuant to
Section 11(a)(ii).

     Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Sections 11 and 13, 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.

     Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power.

     (a) In the event that, on or following the Shares Acquisition Date,
directly or indirectly,

          (i) the Company shall consolidate with, or merge with and into, any
     other Person (other than a Subsidiary of the Company in a transaction which
     complies with Section 11(o)) and the Company shall not be the continuing or
     surviving corporation of such consolidation or merger,

          (ii) any Person (other than a Subsidiary of the Company in a
     transaction which complies with Section 11(o)) shall consolidate with, or
     merge with and into, the Company, the Company shall be the continuing or
     surviving corporation of such consolidation or merger and, in connection
     with such consolidation or merger, all or part of the Common Shares shall
     be changed into or exchanged for stock or other securities of any other
     Person or cash or any other property,

          (iii) the Company shall effect a statutory share exchange with the
     outstanding Common Shares of the Company being exchanged for stock or other
     securities of any other Person, cash or property, or

          (iv) the Company shall sell or otherwise transfer (or one or more of
     its Subsidiaries shall sell or otherwise transfer), in one or more
     transactions, assets or earning power aggregating 50% or more of the assets
     or earning power of the Company and its Subsidiaries (taken as a whole) to
     any other Person (other than the Company or one or more of its wholly owned
     Subsidiaries in a transaction which complies with Section 11(o)),

then, and in each such case, except as contemplated by Section 13(e), proper
provision shall be made so that (i) each holder of a Right (except as otherwise

                                       18
<PAGE>

provided in Section 7(e)) shall thereafter have the right to receive, upon the
exercise thereof at the then current Purchase Price, in accordance with the
terms of this Agreement and in lieu of Preferred Shares, such number of validly
authorized and issued, fully paid, nonassessable and freely tradable Common
Shares of the Principal Party, not subject to any liens, encumbrances, rights of
first refusal or adverse claims, as shall be equal to the result obtained by (x)
multiplying the then current Purchase Price by the number of one one-hundredths
of a Preferred Share for which a Right is, immediately prior to the first
occurrence of a Section 13 Event (or, if a Section 11(a)(ii) Event has occurred
prior to the first occurrence of a Section 13 Event, multiplying the number of
such one one-hundredths of a shares for which a Right was exercisable
immediately prior to the first occurrence of the Section 11(a)(ii) Event by the
Purchase Price in effect immediately prior to the first occurrence), exercisable
and (y) dividing that product by 50% of the current per share market price of
the Common Shares of such Principal Party (determined pursuant to Section 11(d))
on the date of consummation of such Section 13 Event; (ii) such Principal Party
shall thereafter be liable for, and shall assume, by virtue of such merger,
consolidation, statutory share exchange, 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 shall apply only to such
Principal Party following the first occurrence of a Section 13 Event; and (iv)
such Principal Party shall take such steps (including, but not limited to, the
reservation of a sufficient number of its Common Shares to permit the exercise
of all outstanding Rights) in connection with the consummation of any such
transaction as may be necessary to assure that the provisions of this Agreement
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 clauses (i), (ii) or
     (iii) of the first sentence of Section 13(a), the Person that is the issuer
     of any securities into which Common Shares of the Company are converted in
     such merger, consolidation or exchange, or if no securities are so issued,
     the Person that is the other party to such merger, consolidation or
     exchange; and

          (ii) in the case of any transaction described in clause (iv) of the
     first sentence of Section 13(a), 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 such case, (1) if the Common Shares of such
Person are not at such time or 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 of another Person the Common Shares of which
are and have been so registered, "Principal Party" shall refer to such other
Person, and (2) in case such Person is a Subsidiary, directly or indirectly, 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.

     (c) The Company shall not consummate any Section 13 Event unless the
Principal Party shall have a sufficient number of authorized, unreserved Common
Shares which have not been issued or are held in treasury to permit the exercise

                                       19
<PAGE>

in full of the Rights in accordance with this Section 13 and unless prior
thereto the Company and such Principal Party shall have executed and delivered
to the Rights Agent a supplemental agreement providing for the terms set forth
in paragraphs (a) and (b) of this Section 13 and further providing that, as soon
as practicable after the date of any Section 13 Event, the Principal Party will:

          (i) prepare and file a registration statement under the Act, with
     respect to the Rights and the securities purchasable upon exercise of the
     Rights, on an appropriate form, and use its best efforts to cause such
     registration statement to (A) become effective as soon as practicable after
     such filing and (B) remain effective (with a prospectus at all times
     meeting the requirements of the Act) until the earlier of (1) the date as
     of which the Rights are no longer exercisable for such securities or (2)
     the Final Expiration Date; (ii) take such action as may be appropriate
     under, or to ensure compliance with, the securities or "blue sky" laws of
     the various states in connection with the exercisability of the Rights; and

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

     (d) The Company shall not enter into any transaction of the kind referred
to in this Section 13 if at the time of such transaction there are any rights,
warrants, instruments or securities outstanding or any agreements or
arrangements which, as a result of the consummation of such transaction, would
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights. Without limiting the generality of the preceding
sentence, in case the Principal Party which is to be a party to a transaction of
the kind referred to in this Section 13 has a provision in any of its authorized
securities or in its articles of incorporation or bylaws or other instrument
governing its corporate affairs, which provision would have the effect of (i)
causing such Principal Party to issue, in connection with, or as a consequence
of, the consummation of a transaction of the kind referred to in this Section
13, Common Shares of such Principal Party at less than the then current per
share market price (determined pursuant to Section 11(d)) or securities
exercisable for or convertible into Common Shares of such Principal Party at
less than such then current market price (other than to holders of Rights
pursuant to this Section 13) or (ii) providing for any special payment, tax or
similar provisions in connection with the issuance of Common Shares of such
Principal Party pursuant to the provisions of Section 13; then, in such event,
the Company shall not consummate any such transaction unless prior thereto the
provision in question of such Principal Party shall have been canceled, waived
or amended so as to avoid any of the effects referred to in clauses (i) and (ii)
of this paragraph, or the authorized securities shall have been redeemed, so
that the applicable provision will have no effect in connection with, or as a
consequence of, the consummation of the proposed transaction.

     (e) Notwithstanding anything in this Agreement to the contrary, Section 13
shall not be applicable to a transaction described in clauses (i), (ii) or (iii)
of Section 13(a) if (i) such transaction is consummated with a Person or Persons
who acquired Common Shares pursuant to a Permitted Offer (or a wholly owned
Subsidiary of any such Person or Persons), (ii) the price per Common Share
offered in such transaction is not less than the price per Common Share paid to
all holders of Common Shares whose shares were purchased pursuant to such tender

                                       20
<PAGE>

offer or exchange offer and (iii) the form of consideration being offered to the
remaining holders of Common Shares pursuant to such transaction is the same as
the form of consideration paid pursuant to such tender offer or exchange offer.
Upon consummation of any such transaction contemplated by this Section 13(e),
all Rights hereunder shall expire.

     (f) The provisions of this Section 13 shall similarly apply to successive
mergers, consolidations, statutory share exchanges or sale or other transfers.

     Section 14. Fractional Rights and Fractional Shares.

     (a) The Company shall not be required to issue fractions of Rights or to
distribute Right Certificates which 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 New York Stock Exchange or,
if the Rights are not listed or admitted to trading on the New York 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, as reported by NASDAQ or such other
system then in use 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 of the Company. 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 of the Company shall be used.

     (b) The Company shall not be required to issue fractions of Preferred
Shares (other than fractions which are integral multiples of one one-hundredth
of a Preferred Share) upon exercise of the Rights or to distribute certificates
which evidence fractional Preferred Shares (other than fractions which 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
pursuant to an appropriate agreement between the Company and a depositary
selected by it; provided, however, that if the Company issues depositary
receipts pursuant to any such agreement, such agreement shall provide that the
holders of such depositary receipts shall have all the rights, privileges and
preferences 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

                                       21
<PAGE>

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 closing price of a Preferred Share (as determined pursuant to
Section 11(d)) for the Trading Day immediately prior to the date of such
exercise.

     (c) The holder of a Right by the acceptance of the Right expressly waives
the holder's 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
Section 18, 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 such holder's own behalf and
for such holder's own benefit, enforce, and may institute and maintain any suit,
action or proceeding against the Company to enforce, or otherwise act in respect
of, such holder's 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.

     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
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) subject to Section 6(a) and Section 7(f), 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;
and

     (d) notwithstanding anything in this Agreement to the contrary, neither the
Company nor the Rights Agent shall have any liability to any holder of a Right
or other Person as a result of its inability to perform any of its obligations
under this Agreement by reason of any preliminary or permanent injunction or

                                       22
<PAGE>

other order, decree or ruling issued by a court of competent jurisdiction or by
a governmental, regulatory or administrative agency or commission, or any
statute, rule, regulation or executive order promulgated or enacted by any
governmental authority, prohibiting or otherwise restraining performance of such
obligation; provided, however, the Company must use its best efforts to have any
such order, decree or ruling lifted or otherwise overturned as soon as possible.

     Section 17. Right Certificate Holder Not Deemed a Shareholder. 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 which 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 shareholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 25), 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 of
this Agreement.

     Section 18. Concerning the Rights Agent.

     (a) 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 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.

     (b) 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 for scrip or depositary receipts
evidencing fractional interests in 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.

     Section 19. Merger or Consolidation or Change of Name of Rights Agent.

     (a) 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

                                       23
<PAGE>

stock transfer 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 to this Agreement, provided that such corporation would be
eligible for appointment as a successor Rights Agent under the provisions of
Section 21. 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.

     (b) 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 (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
President, 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 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.

                                       24
<PAGE>

     (e) The Rights Agent shall not be under any responsibility in respect of
the validity of this Agreement or the execution and delivery of this Agreement
(except the due execution of this Agreement 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)) or
any adjustment in the terms of the Rights (including the manner, method or
amount thereof) provided for in Section 3, 11, 13, 23 or 24, 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 actual notice from the Company stating that a change or
adjustment is required and specifying the manner and amount thereof); 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 President, 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 to be taken by it in good faith in accordance
with instructions of any such officer or for any delay in acting while waiting
for those instructions.

     (h) The Rights Agent and any shareholder, 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,

                                       25
<PAGE>

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 either not
been completed or indicates an affirmative response to clause 1 and/or 2
thereof, 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
of the Common Shares and 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 of the Common Shares and 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 the holder's 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 (a) a corporation organized and doing business under the laws of the
United States or of the State of Minnesota or New York (or of any other state of
the United States so long as such corporation is authorized to do business as a
banking institution in the State of Minnesota or New York), in good standing,
having an office in the State of Minnesota or New York, which 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 which
has or is a subsidiary of a corporation which has at the time of its appointment
as Rights Agent a combined capital and surplus of at least $100 million, or (b)
an affiliate of a corporation described in clause (a) of this sentence. 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

                                       26
<PAGE>

appointment the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Shares and
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
redemption or expiration of the Rights, 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, granted or awarded as of the
Distribution Date, or upon the exercise, conversion or exchange of securities
hereinafter issued by the Company, and (b) may, in any other case, if deemed
necessary or appropriate by the Board of Directors of the Company, issue Rights
Certificates representing the appropriate number of rights in connection with
such issuance or sale; provided, however, that (i) no such Rights Certificate
shall be issued 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 Rights Certificate
would be issued, and (ii) no such Rights Certificate shall be issued if, and to
the extent that, appropriate adjustment shall otherwise have been made in lieu
of the issuance thereof.

     Section 23. Redemption.

     (a) The Board of Directors may, at its option, at any time prior to the
earlier of (i) the Shares Acquisition Date or (ii) the Final Expiration Date,
redeem all but not less than all of the then outstanding Rights at a redemption
price of $.01 per Right, appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date of this Agreement
(such redemption price being hereinafter referred to as the "Redemption Price").
The redemption of the Rights by the Directors may be made effective at such time
and on such basis and with such conditions as the Directors in their sole
discretion may establish. The Company may, at its option, pay the Redemption
Price in cash, Common Shares (based on the "current market price", as defined in
Section 11(d)(i), of the Common Shares at the time of the redemption) or any
other form of consideration deemed appropriate by a majority of the Board of
Directors; provided, however, that if the Company elects to pay the Redemption
Price in Common Shares, the Company shall not be required to issue any
fractional Common Shares, and the number of shares issuable to each holder of
Rights shall be rounded down to the next whole number.

     (b) Immediately upon the action of the Board of Directors ordering the
redemption of the Rights pursuant to paragraph (a) of this Section 23, 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 ten days after such action of the Board of Directors ordering the
redemption of the Rights, the Company shall mail a notice of redemption to all

                                       27
<PAGE>

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. Any
notice which 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, and other than in
connection with the purchase of Common Shares prior to the Distribution Date.

     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 7(e)), for Common Shares, with each Right
to be exchanged for such number of Common Shares as shall equal the result
obtained by dividing (x) the Purchase Price by (y) the current market price of
the Common Shares (determined pursuant to Section 11(d) (such number of shares
being hereinafter referred to as the "Exchange Ratio"). The Exchange Ratio shall
be appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date of this Agreement. Notwithstanding the
foregoing, the Continuing Directors shall not be empowered to effect such
exchange at any time after any Person (other than an Exempt Person) 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 paragraph (a) of this Section 24 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. Any notice which 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 which will be exchanged. Any partial
exchange shall be effected pro rata based on the number of outstanding and
exercisable Rights (other than Rights which have become void pursuant to the
provisions of Section 11(a)(ii)) held by each holder of Rights.

     (c) In the event that there shall not be sufficient Common Shares
authorized but unissued and unreserved to permit any exchange of Rights as
contemplated in accordance with this Section 24, the Company shall take all such
action as may be necessary to authorize additional Common Shares for issuance
upon exchange of the Rights. In the event the Company shall, after good faith
effort, be unable to take all such action as may be necessary to authorize such

                                       28
<PAGE>

additional Common Shares, the Company shall substitute, for each Common Share
that would otherwise be issuable upon exchange of a Right, a number of Preferred
Shares or fraction thereof such that the current per share market price of one
Preferred Share multiplied by such number or fraction is equal to the current
per share market price of one Common Share as of the date of issuance of such
Preferred Shares or fraction thereof.

     (d) The Company shall not be required to issue fractions of Common Shares
or to distribute certificates which 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
paragraph (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)) for the Trading Day immediately prior to the date of
exchange 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 any statutory share exchange with the
outstanding Common Shares of the Company being exchanged for stock or other
securities of any other corporation or cash or other property, (vi) to effect
the liquidation, dissolution or winding up of the Company, or (vii) 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, a notice of such proposed action,
which shall specify the record date for the purposes 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 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) of
this paragraph at least ten 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 ten 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 Preferred Shares, whichever shall be the earlier.

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

                                       29
<PAGE>

     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:

                           Possis Medical, Inc.
                           9055 Evergreen Boulevard., N.W.
                           Minneapolis, MN 55433-8003

Subject to the provisions of Section 21, 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:

                           Wells Fargo Bank, N.A.
                           Attention:  Manager, Shareowner Services
                           161 North Concord Exchange Street
                           South St. Paul, MN 55075-1139

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. The Company and the Rights Agent
shall, if the Company so directs, supplement or amend this Agreement without the
approval of any holders of Rights Certificates in order (i) to cure any
ambiguity, (ii) to correct or supplement or amend any provision contained herein
which may be defective or inconsistent with any other provisions herein, (iii)
prior to the time that any Person becomes an Acquiring Person, to otherwise
change or supplement any provision in this Agreement in any manner which the
Company may deem necessary or desirable, or (iv) subject to clause (i) of this
Section 27, from and after the time that any Person becomes an Acquiring Person,
to otherwise change or supplement any provision in this Agreement in any manner
which the Company may deem necessary or desirable and which shall not adversely
affect the interests of the holders of Right Certificates (other than an
Acquiring Person or an Affiliate or Associate of an Acquiring Person).

     Section 28. 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 29. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any Person 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

                                       30
<PAGE>

of the Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common Shares).

     Section 30. 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 31. 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
Minnesota 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 32. Counterparts. This Agreement may be executed in any number of
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 33. 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 of this
Agreement.

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

                                        POSSIS MEDICAL, INC.

                                        By
                                                --------------------------------
                                        Its
                                                --------------------------------

                                        WELLS FARGO BANK,
                                          NATIONAL ASSOCIATION

                                        By
                                                --------------------------------
                                        Its
                                                --------------------------------

                                       31
<PAGE>

                                                                       Exhibit A
                                                                       ---------

                           CERTIFICATE OF DESIGNATION
                                       OF
                  SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
                                       OF
                              POSSIS MEDICAL, INC.

     The undersigned hereby certifies that the Board of Directors of Possis
Medical, Inc. (the "Corporation"), a corporation organized and existing under
the Minnesota Business Corporation Act, duly adopted the following resolution on
December 11, 1996:

     RESOLVED, that a series of preferred stock of the Corporation is hereby
created, and the designation and amount thereof and the relative rights and
preferences of the shares of such series, are as follows:

     Section 1. Designation and Amount. The shares of such series shall be
designated as "Series A Junior Participating Preferred Stock" (the "Preferred
Shares") and the number of shares constituting the Preferred Shares shall be
1,000,000. Such number of shares may be increased or decreased by resolution of
the Board of Directors and any necessary shareholder approval; provided,
however, that no decrease shall reduce the number of shares of Preferred Shares
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
Corporation convertible into Preferred Shares.

     Section 2. Dividends and Distributions.

     (a) Subject to the rights of the holders of any shares of any series of
preferred stock (or any similar stock) ranking prior and superior to the
Preferred Shares with respect to dividends, the holders of Preferred Shares, in
preference to the holders of Common Stock, par value $0.40 per share (the
"Common Stock"), of the Corporation, 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 March, June, September and December 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 Preferred Shares, in an amount per share
(rounded to the nearest cent) equal to the greater of (i) $0.01 or (ii) 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

                                       32
<PAGE>

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 Preferred Shares. In the
event the Corporation shall at any time after December 23, 1996, 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) into a greater or lesser number of
shares of Common Stock, then in each such case the amount to which holders of
shares of Preferred Shares were entitled immediately prior to such event under
clause (ii) 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 Corporation shall declare a dividend or distribution on the
Preferred Shares 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 or a subdivision of the outstanding
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 $0.01 per share on the Preferred Shares shall nevertheless be
payable, out of funds legally available for such purpose, on such subsequent
Quarterly Dividend Payment Date.

     (c) Dividends shall begin to accrue and be cumulative on outstanding shares
of Preferred Shares from their date of issue. Accrued but unpaid dividends shall
not bear interest. Dividends paid on the shares of Preferred Shares 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 Preferred Shares 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.

     (a) Subject to the provision for adjustment hereinafter set forth, each
Preferred Share shall entitle the holder thereof to 100 votes on all matters
submitted to a vote of the shareholders of the Corporation. In the event the
Corporation shall at any time after December 23, 1996, 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) 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 Preferred Shares 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 or by law, the holders of Preferred
Shares and the holders of Common Stock and any other capital stock of the
Corporation having general voting rights shall vote together as one class on all
matters submitted to a vote of shareholders of the Corporation.

                                       33
<PAGE>

     (c) Except as set forth herein or required by law, holders of Preferred
Shares 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 Preferred Shares 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 Preferred Shares outstanding shall have been paid
in full, the Corporation 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 Preferred Shares;

          (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 Preferred Shares, except
     dividends paid ratably on the Preferred Shares 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 Preferred Shares; provided, however, that
     the Corporation may at any time redeem, purchase or otherwise acquire
     shares of any such junior stock in exchange for shares of any stock of the
     Corporation ranking junior (either as to dividends or upon dissolution,
     liquidation or winding up) to the Preferred Shares; or

          (iv) redeem or purchase or otherwise acquire for consideration any
     Preferred Shares, or any stock ranking on a parity with the Preferred
     Shares, 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 Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation 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 Preferred Shares purchased or otherwise
acquired by the Corporation in any manner whatsoever shall be retired and
canceled 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 Articles of

                                       34
<PAGE>

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 any liquidation,
dissolution or winding up of the Corporation, 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 Preferred Shares unless, prior
thereto, the holders of Preferred Shares shall have received the greater of (i)
$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, or
(ii) 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 Common Stock, or (2) to the holders of stock ranking on
a parity (either as to dividends or upon liquidation, dissolution or winding up)
with the Preferred Shares, except distributions made ratably on the Preferred
Shares 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 Corporation shall at any time after December 23,
1996, 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) 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 Preferred Shares were entitled
immediately prior to such event under clause (1)(ii) 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 Corporation 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
Preferred Shares 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
Corporation shall at any time after December 23, 1996, 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) 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 Preferred
Shares 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 Preferred Shares shall not be
redeemable.

                                       35
<PAGE>

     Section 9. Rank. The Preferred Shares shall rank, with respect to the
payment of dividends and the distribution of assets, junior to all series of any
other class of the Corporation's preferred stock.

     Section 10. Fractional Shares. Preferred Shares may be issued in fractions
of a share which are integral multiples of one one-hundredth of a share which
shall entitle the holder, in proportion to such holder's fractional shares, to
receive dividends, participate in distributions and to have the benefit of all
other rights of holders of Preferred Shares.

     Section 11. Amendment. The Articles of Incorporation of the Corporation
shall not be amended in any manner which would materially alter or change the
powers, preferences or rights of the Preferred Shares so as to affect them
adversely without the affirmative vote of the holders of at least two-thirds of
the outstanding shares of Preferred Shares, voting together as a single class.

     IN WITNESS WHEREOF, I have subscribed my name this ___ day of December,
1996.

                                                POSSIS MEDICAL, INC.

                                                By _____________________________
                                                   [Name and Title]

                                       36
<PAGE>

                                                                       Exhibit B
                                                                       ---------

                           FORM OF RIGHT CERTIFICATES
                           --------------------------

Certificate No. R-___  ___________________ Rights

NOT EXERCISABLE AFTER DECEMBER 23, 2006 OR EARLIER IF REDEMPTION OR EXCHANGE
OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.01 PER RIGHT (SUBJECT TO
ADJUSTMENT) AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS
BENEFICIALLY OWNED BY A PERSON WHO IS, WAS OR BECOMES AN ACQUIRING PERSON OR AN
AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT) AND SUBSEQUENT HOLDERS OF SUCH RIGHTS MAY BECOME NULL AND
VOID.

                                RIGHT CERTIFICATE

                              POSSIS MEDICAL, 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 December 12, 1996 as amended and restated effective December 23, 2006 (the
"Rights Agreement"), between Possis Medical, Inc., a Minnesota corporation (the
"Company"), and Wells Fargo Bank, National Association (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 P.M., Minneapolis time, on
December 23, 2016 at the office or offices of the Rights Agent designated for
such purpose, or of its successor as Rights Agent, one one-hundredth of a fully
paid non-assessable share of Series A Junior Participating Preferred Stock, par
value $.40 per share (the "Preferred Shares"), of the Company, at a purchase
price of $____.00 (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 December 23, 2006, based on the Preferred Shares as
constituted at such date. 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, 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 principal executive offices of the
Company and the office or offices of the Rights Agent and will be mailed without

                                       37
<PAGE>

charge by the Company or the Rights Agent to the holder of this certificate
promptly following receipt by the Company or the Rights Agent of a written
request therefor.

     From and after the occurrence of a Section 11(a)(ii) Event (as such term is
defined in the Rights Agreement), any Rights that are or were acquired or
beneficially owned by any Acquiring Person (or any Associate or Affiliate of
such Acquiring Person) (as such terms are defined in the Rights Agreement) shall
be void and any holder of such Rights shall thereafter have no right to exercise
such Rights under any provision of this Agreement.

     This Right Certificate, with or without other Right Certificates, upon
surrender at the office or offices 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, but are not required to, be redeemed by the Company at
a redemption price of $.01 per Right, subject to adjustment as provided in the
Rights Agreement, and (ii) may, but are not required to, be exchanged by the
Company in whole or in part for Common Shares.

     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 election
of the Company, be evidenced by scrip or 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
shareholder of the Company or any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting shareholders (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.

                                       38
<PAGE>

     WITNESS the manual or facsimile signature of the proper officer of the
Company.

Dated:____________________________________

                                                        POSSIS MEDICAL, INC.

                                                        By _____________________
                                                           [Name and Title]

Countersigned for purposes
of authentication only:

WELLS FARGO BANK,
  NATIONAL ASSOCIATION

By ______________________________________
   Authorized Signature

                                       39
<PAGE>

                    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
______________________________ (print name of transferee)
_____________________________ (print 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.

Please insert social security
number, taxpayer identification

number or other identifying number:_____________________________________________

Dated:____________________________

                                                     ___________________________
                                                                Signature

Signature Medallion Guaranteed:______________________

     The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.

<PAGE>

              Form of Reverse Side of Right Certificate--continued

                                   CERTIFICATE
                                   -----------

     The undersigned hereby certifies (after due inquiry and to the best of its
knowledge) by checking the appropriate boxes that:

     (1)  this Right Certificate

               [ ] is

                    OR

               [ ] is not

being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of an Acquiring Person (as such terms are defined in
the Rights Agreement); and

     (2)  the undersigned

               [ ] did

                    OR

               [ ] did not

acquire the Rights evidenced by this Right Certificate from any Person who is,
was or subsequently became an Acquiring Person or an Affiliate or Associate of
an Acquiring Person.

                       _________________________________
                                    Signature

                                     NOTICE
                                     ------

     The signature of the foregoing Assignment and Certificate must correspond
to the name as written upon the face of this Right Certificate in every
particular, with out alteration or enlargement or any change whatsoever.

     In the event the certification set forth above in the foregoing Assignment
or 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.

                                        2

<PAGE>

              Form of Reverse Side of Right Certificate--continued

                          FORM OF ELECTION TO PURCHASE
                          ----------------------------

                      (To be executed if holder desires to
                        exercise the Right Certificate.)

To:  Possis Medical, Inc.

     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
number, taxpayer identification
number 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
number, taxpayer identification
number or other identifying number:
                                   ---------------------------------------------

--------------------------------------------------------------------------------
                         (Please print name and address)

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

Dated:
       ---------------------------

                        ----------------------------------------
                        Signature

Signature Guaranteed:
                       ---------------------------------------------------------

     The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.

<PAGE>

              Form of Reverse Side of Right Certificate--continued

                                   CERTIFICATE
                                   -----------

     The undersigned hereby certifies (after due inquiry and to the best of its
knowledge) by checking the appropriate boxes that:

     (1)  this Right Certificate

               [ ] is

                    OR

               [ ] is not

being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of an Acquiring Person (as such terms are defined in
the Rights Agreement); and

     (2)  the undersigned

               [ ] did

                    OR

               [ ] did not

acquire the Rights evidenced by this Right Certificate from any Person who is,
was or subsequently became an Acquiring Person or an Affiliate or Associate of
an Acquiring Person.

                       _________________________________
                                    Signature

                                     NOTICE
                                     ------

     The signature of the foregoing Election to Purchase and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, with out alteration or enlargement or any change whatsoever.

     In the event the certification set forth above in the foregoing Assignment
or 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.

                                        2
<PAGE>

                                                                       Exhibit C
                                                                       ---------

                              POSSIS MEDICAL, INC.

                          SUMMARY OF RIGHTS TO PURCHASE
                                PREFERRED SHARES

     On December 11, 1996, the Board of Directors of Possis Medical, Inc. (the
"Company"), declared a dividend of one preferred share purchase right (a
"Right") per share for each outstanding share of Common Stock, par value $.40
(the "Common Shares"), of the Company. The dividend was payable on December 23,
1996 (the "Record Date") to shareholders of record on that date. The terms of
the Rights are set forth in a Rights Agreement (the "Rights Agreement"), dated
as of December 12, 1996, as amended and restated effective December 23, 2006,
between the Company and Wells Fargo Bank, National Association, as Rights Agent
(the "Rights Agent").

     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 $.40 (the "Preferred Shares"), of the Company at a price of $75.00 per
one-hundredth of a Preferred Share (the "Purchase Price"), subject to
adjustment.

     Initially, the Rights will be evidenced by the certificates representing
Common Shares then outstanding and no separate Right Certificates will be
distributed. The Rights will separate from the Common Shares, and a Distribution
Date for the Rights will occur upon the earlier of: (i) the first date of public
announcement that a Person or group of affiliated or associated Persons has
become an "Acquiring Person" (i.e., has become, subject to certain exceptions,
the beneficial owner of 20% or more of the outstanding Common Shares) (except
pursuant to a Permitted Offer, as hereinafter defined) and (ii) the 10th day
following the commencement or public announcement of a tender offer or exchange
offer, the consummation of which would result in a Person or group of affiliated
or associated Persons becoming, subject to certain exceptions, the beneficial
owner of 20% or more of the outstanding Common Shares (or such later date as may
be determined by the Board of Directors of the Company prior to a Person or
group of affiliated or associated Persons becoming an Acquiring Person) (the
earlier of such dates being called the "Distribution Date").

     Until the Distribution Date, (i) the Rights will be evidenced by the Common
Share certificates and will be transferred with and only with the Common Shares,
(ii) new Common Share certificates issued after the Record Date upon transfer or
new issuance of the Common Shares will contain a notation incorporating the
Rights Agreement by reference, and (iii) the surrender for transfer of any
Common Share certificate, even without such notation or a copy of this Summary
of Rights attached thereto, will also constitute the transfer of the Rights
associated with the Common Shares represented by such certificate.

                                       3

<PAGE>

     As promptly 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.

     The Rights are not exercisable until the Distribution Date. The Rights will
expire on December 23, 2016, unless extended or earlier redeemed or exchanged by
the Company as described below.

     The Purchase Price payable and the number of Preferred Shares or other
securities or property issuable upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution: (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Preferred
Shares, (ii) upon the grant to holders of the Preferred Shares of certain
rights, options or warrants to subscribe for or purchase Preferred Shares or
convertible securities at less than the then current market price of the
Preferred Shares, or (iii) upon the distribution to holders of the Preferred
Shares of evidences of indebtedness or assets (excluding regular periodic cash
dividends or dividends payable in Preferred Shares) or of subscription rights or
warrants (other than those described in clause (ii) of this paragraph). With
certain exceptions, no adjustment in the Purchase Price will be required until
cumulative adjustments require an adjustment of at least 1% in the Purchase
Price.

     No fraction of a Preferred Share (other than fractions in integral
multiples of one one-hundredth of a share) will be issued and, in lieu thereof,
an adjustment in cash will be made based on the closing price on the last
trading date prior to the date of exercise.

     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.

     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 $.01 per share but will be entitled to an
aggregate dividend of 100 times the 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 $.01 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 subject to
adjustment in the event of a stock dividend on the Common Shares or a
subdivision, combination or consolidation of the Common Shares.

     In the event that a person or group becomes an Acquiring Person (except
pursuant to a Permitted Offer (as defined below)), each holder of a Right, other
than the Acquiring Person or the affiliates, associates or transferees thereof
(whose Rights will thereafter be void), will thereafter have the right to
receive upon exercise thereof at the then current exercise price of the Right
that number of Common Shares having a market value of two times the exercise
price of the Right, subject to certain possible adjustments.

                                       4

<PAGE>

     In the event that the Company is acquired in certain mergers or other
business combination transactions or 50% or more of the assets or earning power
of the Company and its subsidiaries (taken as a whole) are sold after a person
or group becomes an Acquiring Person (except pursuant to a Permitted Offer),
holders of the Rights will thereafter have the Right to receive, upon exercise
thereof at the then current exercise price of the Right, that number of Common
Shares of the acquiring company (or, in certain cases, one of its Affiliates)
having a market value of two times the exercise price of the Right.

     A "Permitted Offer" is a tender offer or an exchange offer for all
outstanding Common Shares of the Company at a price and on terms determined by a
majority of the Board of Directors of the Company, after receiving advice from
one or more investment banking firms, to be (a) fair to shareholders (taking
into account all factors which the Board of Directors deems relevant) and (b)
otherwise in the best interests of the Company and its shareholders employees,
customers, suppliers and creditors and the communities in which the Company does
business, and which the Board of Directors determines to recommend to the
shareholders of the Company.

     At any time after a Person becomes an Acquiring Person (subject to certain
exceptions), and prior to the acquisition by a Person of 50% or more of the
outstanding Common Shares, the Board of Directors may exchange all or part of
the Rights for Common Shares at an exchange ratio per Right equal to the result
obtained by dividing the exercise price of a Right by the current per share
market price of the Common Shares, subject to adjustment.

     At any time before a Person has become an Acquiring Person, the Board of
Directors may redeem the Rights in whole, but not in part, at a price of $.01
per Right (the "Redemption Price"), subject to adjustment. The redemption of the
Rights may be made effective at such time, on such basis and with such
conditions as such Board of Directors may, in their sole discretion, establish.

     Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including without limitation, the right
to vote or to receive dividends.

     A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A dated
December 19, 2006. A copy of the Rights Agreement is available free of charge
from the Company by contacting the Secretary at Possis Medical, Inc., 9055
Evergreen Boulevard., N.W., Minneapolis, Minnesota 55433-8003. This summary
description of the Rights does not purport to be complete and is qualified in
its entirety by reference to the Rights Agreement, which is hereby incorporated
herein by reference.

                                        5

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