Document:

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                                                                   Exhibit 10.1

                                 June 15, 2001

PERSONAL & CONFIDENTIAL

Mr. J. Melville Engle
12 Deergrass Lane
Acton, MA  01720

Dear Mel:

         This letter agreement (the "Agreement") confirms the agreement that we
have reached regarding your resignation from your regular, full-time employment
and all offices you hold with Anika Therapeutics, Inc. (the "Company").

         The purpose of this Agreement is to establish an amicable arrangement
for ending your employment relationship with the Company, to release the Company
and related persons or entities from any claims and to permit you to receive
fair and reasonable separation pay and related benefits. Nothing in this
Agreement is intended to condition your entitlement to pay or benefits earned
based on your employment to and including the date of termination of your
employment on your agreement to this Agreement. Specifically, the Company has
provided or shall provide the pay referred to in Section 1 below and the right
to elect COBRA coverage, regardless of whether you agree to this Agreement.

         If you agree to the terms of this Agreement, you acknowledge that you
are entering into this Agreement voluntarily. It is customary in employment
separation agreements that provide for severance pay for the departing employee
to release the employer from any possible claims, even if the employer believes,
as is the case here, that no such claims exist. You understand that you are
giving up your right to bring any and all possible legal claims against the
Company. Neither the Company nor you want your employment relationship to end
with a legal dispute. By entering into this Agreement, you understand that the
Company is not admitting in any way that it violated any legal obligation that
it owed to you. To the contrary, the Company's willingness to enter into this
Agreement, which provides for compensation beyond what you are contractually
entitled to, demonstrates that it is continuing to deal with you fairly and in
good faith.

<PAGE>

Mr. J. Melville Engle
June 15, 2001
Page 2

         With those understandings, you and the Company agree as follows:

         1.       RESIGNATION

         Effective June 12, 2001 (the "Resignation Date"), you resigned from
your offices as Chairman of the Board, President and Chief Executive Officer,
and Director on the Company's Board of Directors, trustee of the Company's
Employee Savings and Retirement Plan and from any and all employment or offices
you hold with the Company, its subsidiaries and/or its affiliates. The Company
shall pay you your current base salary through June 12, 2001. In addition, the
Company will pay you for all accrued but unused vacation time through the
Resignation Date, which will be based on 173.85 hours of accrued but unused
vacation time. All payments to be made are subject to the provisions of Section
5 hereof.

         2.       SEVERANCE PAY

         Beginning no later than the Company's second regular payroll date after
the Effective Date, as it is defined in Section 14, the Company shall provide
severance pay ("Severance Pay") to you consisting of the continuation of your
current base salary rate of $251,472.00 per year for a forty-one and one-half
(41 1/2) week period beginning June 13, 2001 (the "Salary Continuation Period")
such that you shall receive total Severance Pay of $200,736.00, payable on the
Company's regular bi-weekly payroll dates. The Company will suspend the payment
of Severance Pay until such time as the Agreement becomes effective in
accordance with Section 14. If the Agreement becomes effective, the Company will
reinstate you to the payroll and shall provide any suspended payroll payments to
you no later than the second payroll date after this Agreement becomes
effective. All payments to be made are subject to the provisions of Section 5
hereof.

         3.       BENEFITS

                  a.       MEDICAL AND DENTAL BENEFITS

         By agreeing to this Agreement, you elect to continue your medical and
dental insurance coverage under COBRA. Your COBRA period commenced on June 13,
2001. Provided that you remain eligible for COBRA continuation coverage, the
Company shall continue to pay the premiums for your group medical and dental
insurance coverage on the same basis as if you continued to be employed through
December 12, 2001. Thereafter, you may continue coverage at your own expense for
the remainder of the COBRA period to the extent you remain eligible.

                  b.       SPOT/STAY BONUS

         The Company also will provide you with the payment of $37,500,
constituting your 2001 "Spot/Stay Bonus" payment, which will be sent to you by
mail on the date on which the

<PAGE>
Mr. J. Melville Engle
June 15, 2001
Page 3

Company regularly  distributes the "Spot/Stay Bonus" to its eligible  employees.
All payments to be made are subject to the provisions of Section 5 hereof.

                  c.       STOCK AND STOCK OPTION PLANS

         You currently hold stock options to purchase common stock under the
Company's Stock Option Plan dated March 3, 1993, as amended (the "Plan"), as set
forth below:

         o    250,000 shares at $5.25 per share on October 4, 1996 (the "October
              4, 1996 Stock Grant");

         o    100,000 shares at $7.625 per share on October 28, 1997 (the
              "October 28, 1997 Stock Grant");

         o    85,000 shares at $4.75 per share on December 21, 1998 (the
              "December 21, 1998 Stock Grant");

         o    40,000 shares at $6.938 per share on January 11, 2000 (the
              "January 11, 2000 Stock Grant") ; and

         o    60,000 shares at $1.75 per share on September 11, 2000 (the
              "September 11, 2000 Stock Grant").

         All of your vested and unvested stock options under each of the October
4, 1996 Stock Grant, October 28, 1997 Stock Grant, December 21, 1998 Stock Grant
and January 11, 2000 Stock Grant are hereby terminated as of the Resignation
Date. With respect to those shares subject to the terms of the September 11,
2000 Stock Grant, the terms of the September 11, 2000 Stock Grant are hereby
amended such that all 60,000 shares will vest as of the Resignation Date at the
option exercise price specified in the September 11, 2000 Stock Grant and shall
remain fully exercisable under the terms of the Plan until December 12, 2001.
Thereafter, the September 11, 2000 Stock Grant, or portion thereof that is
unexercised, shall terminate.

                  d.       OUTPLACEMENT

         The Company shall pay up to a maximum of $20,000 to a mutually
agreeable outplacement advisor to assist you in your efforts to obtain new
employment, provided that such outplacement services are provided on or prior to
June 12, 2002.

                  e.       OTHER BENEFITS

         Your eligibility to participate in any other employee benefit plans and
programs sponsored by or made available to employees of the Company or its
affiliated or related entities ceases effective on or after your Resignation
Date in accordance with applicable benefit plan terms and benefit practices.
Your rights to benefits, if any, are governed by the terms of those benefit
plans and programs.

<PAGE>
Mr. J. Melville Engle
June 15, 2001
Page 4

         4.       TREATMENT OF EXISTING PROMISSORY NOTES TO THE COMPANY

                  a.       $75, 000 PROMISSORY NOTE DATED MARCH 17, 1997

         You acknowledge that on or about March 17, 1997, you entered into a
Promissory Note (the "March 17, 1997 Promissory Note") with the Company pursuant
to which you borrowed the principal sum of seventy-five thousand dollars
($75,000.00), together with interest, which is payable upon the end of the
severance continuation period which is 41 1/2 weeks after the employee's
termination date or when the primary residence is paid, whichever is sooner. The
March 17, 1997 Promissory Note is secured, in part, by a second mortgage on your
primary residence located at 12 Deergrass Lane, Acton, Massachusetts (the
"Primary Residence"). You and the Company hereby agree that the terms of the
Promissory Note are hereby amended such that the Note, together with interest,
shall be payable upon the end of the severance continuation period which is 41
1/2 weeks after the employee's termination date or when the primary residence is
paid, whichever is sooner. You further covenant to give prior notice to the
Company of any impending sale of your Primary Residence.

                  b.       $59,000 PROMISSORY NOTE DATED JULY 10, 1998

         You acknowledge that on or about July 10, 1998, you entered into a
Demand Promissory Note (the "July 10, 1998 Note") with the Company pursuant to
which you borrowed the principal sum of fifty-nine thousand dollars
($59,000.00), together with interest, which is payable upon the Resignation
Date. The Company hereby forgives any repayment obligations owed by you as of
the Resignation Date under the terms of the July 10, 1998 Note. You acknowledge
and agree that you are solely responsible for any tax consequences resulting
from the Company's forgiveness of the July 10, 1998 Note.

                  c.       $41,000 PROMISSORY NOTE DATED DECEMBER 20, 1999

         You acknowledge that on or about December 20, 1999, you entered into a
Demand Promissory Note (the "December 20, 1999 Note") with the Company pursuant
to which you borrowed the principal sum of forty-one thousand dollars
($41,000.00), together with interest, which is payable upon the Resignation
Date. The Company hereby forgives any repayment obligations owed by you as of
the Resignation Date under the terms of the December 20, 1999 Note. You
acknowledge and agree that you are solely responsible for any tax consequences
resulting from the Company's forgiveness of the December 20, 1999 Note.

                  d.       $20,000 PROMISSORY NOTE DATED AUGUST 26, 1999

         You acknowledge that on or about August 26, 1999, you entered into a
Promissory Note (the "August 26, 1999 Promissory Note") with the Anika
Therapeutics, Inc. 401(k) Profit

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Mr. J. Melville Engle
June 15, 2001
Page 5

Sharing Plan (the "401(k) Plan"). The Terms of the August 26, 1999 Promissory
Note are unaffected by this Agreement and continue to be governed by the terms
of the 401(k) Plan.

                  e.       PAYMENT TO OFFSET TAX LIABILITY

         To offset tax liability you may incur as a result of the Company's
forgiveness of your payment obligations pursuant to the July 10, 1998 Note and
the December 20, 1999 Note, on or before December 31, 2001, the Company will
make a payment to you of $72,414.00. All payments to be made are subject to the
provisions of Section 5 hereof.

         5.       TAX TREATMENT

         The Company shall undertake to make deductions, withholdings and tax
reports with respect to payments and benefits under this Agreement to the extent
that it reasonably and in good faith believes that it is required to make such
deductions, withholdings and tax reports. Payments under this Agreement shall be
in amounts net of any such deductions or withholdings. Except as expressly
provided in Section 4, nothing in this Agreement shall be construed to require
the Company to make any payments to compensate you for any adverse tax effect
associated with any payments or benefits or for any deduction or withholding
from any payment or benefit.

         6.       RELEASE OF CLAIMS

         In consideration for, among other terms, the payments and benefits
described in Sections 2, 3 and 4, to which you otherwise would not be entitled,
you voluntarily release and forever discharge the Company, its affiliated and
related entities, its and their respective predecessors, successors and assigns,
and each of their current and former officers, directors, shareholders,
employees, attorneys, accountants and agents in their official and personal
capacities (collectively referred to as the "Releasees") generally from all
claims, demands, debts, damages and liabilities of every name and nature, known
or unknown, that, as of the date that you sign this Agreement, you now have,
ever had, now claim to have or ever claimed to have had against any or all of
the Releasees ("Claims"). This release includes, without limitation, all Claims
relating to your employment by and termination of employment with the Company;
all Claims of wrongful discharge; all Claims of breach of contract; all Claims
of retaliation or discrimination under federal, state or local law (including,
without limitation, Claims of age discrimination under the Age Discrimination in
Employment Act); all Claims of defamation or other torts; all Claims of
violation of public policy; all Claims for wages, bonuses, incentive
compensation, vacation pay or any other compensation or benefits; and all Claims
for damages of any sort, including, without limitation, compensatory damages,
punitive damages and attorneys fees; provided, however, that this release shall
not affect your right to enforce this Agreement.

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Mr. J. Melville Engle
June 15, 2001
Page 6

         You agree that you shall not seek or accept reinstatement with any
Releasees. You also agree that you shall not seek damages of any nature,
equitable or legal remedies, attorney's fees, or costs from any of the Releasees
with respect to any Claim. As a material inducement to the Company to enter into
this Agreement, you hereby represent that you have not heretofore assigned to
any third party and you have not heretofore filed with any agency or court any
Claim released by this Agreement.

         7.       RETURN OF PROPERTY

         You will return all Company property that is in your possession,
custody or control, including, without limitation, computer equipment, software,
cellular telephones, keys and access cards, credit cards, files and any other
documents (including computerized data and any copies made of any computerized
data or software) containing information concerning the Company, its business or
customer relationships (in the latter two cases, actual or prospective), no
later than the date when this Agreement becomes effective.

         8.       COOPERATION

         You agree that, at any time in the future, you shall cooperate fully
with the Company as reasonably requested in all regulatory matters and in the
defense or prosecution of any legal claims or actions that already have been
brought or that may be brought in the future against or on behalf of the Company
that relate to events or occurrences that transpired during your employment with
the Company. Your full cooperation in connection with such regulatory matters,
claims, actions or disputes shall include, without limitation, being available
to meet with representatives of the Company to prepare for regulatory processes
and counsel to prepare for discovery or trial and to testify truthfully as a
witness when reasonably requested by the Company. The Company will reimburse you
for any reasonable out-of-pocket expenses [(which shall not be construed to
include your personal attorney's fees)] that you incur in connection with such
cooperation, provided that you provide the Company reasonable documentation of
such out-of-pocket expenses, and receive advanced written approval of any such
expenditure or group of related expenditures in excess of $250.

         9.       CONFIDENTIALITY OF AGREEMENT

         You agree to keep the existence and terms of this Agreement and all
matters leading up to your resignation, including the rationale or reasons
therefor, in the strictest confidence and to not reveal, unless legally
compelled to do so, the existence or terms of this Agreement to any persons
except your attorney and your financial advisors, provided that they also agree
to keep such information confidential. You shall be considered to have breached
this Agreement if any of those individuals fails to keep such information
completely confidential. Nothing in this Section 9 shall be construed to prevent
you from disclosing such matters to the extent required by a lawfully issued
subpoena or duly issued court order; PROVIDED that you provide the Company

<PAGE>
Mr. J. Melville Engle
June 15, 2001
Page 7

with advance written notice as soon as is practicable and a reasonable
opportunity to contest such subpoena or court order. Nothing contained herein
shall be deemed to limit your rights under applicable law, including 29 U.S.C.
ss. 626(f)(4).

         10.      VALIDITY OF NON-DISCLOSURE AND NON-COMPETITION AGREEMENT

         You acknowledge and agree that you remain bound by the terms of the
Company's Non-Disclosure and Non-Competition Agreement that was executed by you
on or about August 20, 1998, in accordance with its terms after the date hereof.

         11.      NON-DISPARAGEMENT

         You will refrain from making any disparaging statements, taking any
actions, or conducting yourself in any way that adversely affects the reputation
or goodwill of the Company and/or its affiliated entities and the current and
former officers, directors, shareholders, employees and agents of any of them.
These non-disparagement obligations shall not in any way affect your obligation
to testify truthfully in any legal proceeding. You further agree to refrain from
communicating with any third parties, including, without limitation,
shareholders of the Company, regarding the Company, its business, prospects or
strategies.

         12.      CONSIDERATION OF THE AGREEMENT

         This Agreement is a legally binding document. Provided that you do not
revoke this Agreement in accordance with Section 14 below, your signature will
commit you to the terms of this Agreement. You acknowledge that you have been
advised to discuss all aspects of this Agreement with your attorney, that you
have carefully read and fully understand all of the provisions of this Agreement
and that you are voluntarily entering into this Agreement.

         13.      CONSENT TO JURISDICTION

         You and the Company hereby consent to the jurisdiction of the Superior
Court of the Commonwealth of Massachusetts and the United States District Court
for the District of Massachusetts with respect to any claim of violation of this
Agreement. With respect to any such court action you (a) submit to the
jurisdiction of such courts, (b) consent to service of process, and (c) waive
any other requirement (whether imposed by statute, rule of court or otherwise)
with respect to personal jurisdiction or venue.

         14.      OTHER PROVISIONS

         You acknowledge that you have been given the opportunity to consider
this Agreement for twenty-one (21) days before signing it. If you sign this
Agreement within less than twenty-

<PAGE>
Mr. J. Melville Engle
June 15, 2001
Page 8

one (21) days of the date of its delivery to you, you acknowledge that such
decision was entirely voluntary and that you had the opportunity to consider
this Agreement for the entire twenty-one (21) day period. To accept this
Agreement, you must provide the fully signed Agreement to the undersigned by the
end of the twenty-one (21) day period. For a period of seven (7) days from the
date you sign this Agreement, you have the right to revoke this Agreement by
written notice to the undersigned. If you do not revoke this Agreement, it shall
become effective on the eighth (8th) day after you sign it. This Agreement shall
not become effective or enforceable until the expiration of the seven (7) day
revocation period (the "Effective Date").

         You acknowledge that you are aware that under Federal and state
securities laws, certain restrictions may apply to actions and communications by
you, as well as to trading in the Company's securities.

         This Agreement constitutes the entire agreement regarding the
termination of your employment with the Company. This Agreement supersedes any
previous agreements or understandings between us (including, without limitation,
that certain letter dated September 24, 1996), except as described in Sections
3, 4 and 10. In signing this Agreement, you are not relying upon any oral
promises or representations made by anyone at or on behalf of the Company.

         This Agreement will be interpreted and enforced under the laws of the
Commonwealth of Massachusetts, without regard to conflict of law principles. In
the event of any dispute, this Agreement will be construed as a whole, will be
interpreted in accordance with its fair meaning, and will not be construed
strictly for or against either you or the Company. This Agreement is executed
under seal.

<PAGE>
Mr. J. Melville Engle
June 15, 2001
Page 9

         Please indicate your agreement to the terms of this Agreement by
signing and returning to me a copy of this letter. You are advised to consult
with an attorney before signing this Agreement.

                                                Sincerely,

                                                ANIKA THERAPEUTICS, INC.

                                                By: /s/ DOUGLAS R. POTTER
                                                   ----------------------------
Accepted and agreed to:                             Douglas R. Potter
                                                    Chief Executive Officer and
                                                    Chief Financial Officer

/s/ J. MELVILLE ENGLE
---------------------
J. Melville Engle
Date:  June 15, 2001<PAGE>

                                                                 Exhibit 10.2

                          UNITED STATES DISTRICT COURT
                            DISTRICT OF MASSACHUSETTS

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IN RE ANIKA THERAPEUTICS, INC.                    CIVIL ACTION NO. 00-11127-WGY
SECURITIES LITIGATION                             (All Actions)
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                    STIPULATION AND AGREEMENT OF COMPROMISE,
                             SETTLEMENT AND RELEASE

         Plaintiffs in the above-captioned matters, on behalf of themselves, the
Class and all Class Members (as defined below); and defendant Anika
Therapeutics, Inc. ("Anika") and individual defendants J. Melville Engle and
Sean Moran ("Individual Defendants"), by and through their attorneys, hereby
enter into this Stipulation and Agreement of Compromise, Settlement and Release
(the "Stipulation"), as of May 25, 2001, subject to the approval of the Court
pursuant to Rule 23 of the Federal Rules of Civil Procedure and the Private
Securities Litigation Reform Act of 1995. For purposes of this Stipulation,
Anika and the Individual Defendants shall be collectively referred to as
"Defendants."

         WHEREAS:

         1. Wherever used in this Stipulation, the following terms have the
meanings set forth below:

             a. "Action" means the above-captioned consolidated action pending
in the United States District Court for the District of Massachusetts.

             b. "Authorized Claimant" means a Claimant who submits a Proof of
Claim in accordance with the criteria in paragraph 12, and whose Proof of Claim
is not rejected.

             c. "Claimant" means a Class Member who submits a Proof of Claim to
the Claims Administrator.

<PAGE>

             d. "Claims Administrator" means the firm of Strategic Claims
Services, Inc., the claims administrator selected by Plaintiffs' Lead Counsel to
assist in the administration of the Settlement.

             e. "Class" means, for purposes of this Settlement only, a plaintiff
class pursuant to Rule 23 of the Federal Rules of Civil Procedure, comprising
all Persons who purchased or otherwise acquired Anika common stock during the
period beginning and including April 15, 1998 through and including May 30,
2000, together with the successors in interest and transferees, immediate and
remote, of each of them. Excluded from the Class are the Defendants, the
officers and directors of Anika during the Class Period, members of their
immediate families (i.e., spouses, parents, siblings and children), any Person
in which any Defendant has a controlling interest, and the legal
representatives, heirs, successors in interest, and/or assigns of any such
excluded party. Also excluded from the Class are any Persons who exclude
themselves by filing a request for exclusion in accordance with the requirements
set forth in the Notice.

             f. "Class Member" means any Person included in the Class.

             g. "Class Period" means the period beginning and including April
15, 1998 through and including May 30, 2000.

             h. "Complaint" means the Consolidated Amended Class Action
Complaint filed in this Court on or about October 30, 2000.

             i. "Court" means the United States District Court for the District
of Massachusetts.

             j. "Defendants' Counsel" means the law firm of Goodwin Procter LLP.

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             k. "Effective Date of Settlement" or "Effective Date" means the
date upon which the Settlement contemplated by this Stipulation shall become
effective, as set forth in paragraph 21 below.

             l. "Final Judgment" means an Order And Final Judgment to be entered
by the Court substantially in the form attached hereto as Exhibit B.

             m. "Lead Plaintiffs" means David West and Vivian West.

             n. "Notice" means the Notice of Pendency of Class Action, Proposed
Settlement Thereof, Settlement Hearing and Right to Share in the Settlement
Fund, which is to be sent to Class Members substantially in the form attached
hereto as Exhibit 1 to Exhibit A.

             o. "Notice and Administration Costs" means the notice and
administrative costs described in paragraph 6 below.

             p. "Person" means an individual, corporation, general or limited
partnership, joint stock company, joint venture, limited liability company,
estate, legal representative, trust, unincorporated association, and any other
business or legal entity and its heirs, successors, or assigns.

             q. "Plaintiffs' Lead Counsel" means the law firm of Berman,
DeValerio & Pease LLP.

             r. "Plan of Allocation" means the Plan of Allocation prepared by
Plaintiffs' Lead Counsel or such other Plan of Allocation as may be approved by
the Court.

             s. "Preliminary Approval Order" means an Order of Preliminary
Approval in Connection with Settlement Procedures to be entered by the Court
substantially in the form attached hereto as Exhibit A.

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<PAGE>

             t. "Proof of Claim" means the Proof of Claim and Release in the
form attached hereto as Exhibit 3 to Exhibit A.

             u. "Publication Notice" means the Publication Notice of Pendency of
Class Action, Proposed Settlement and Settlement Hearing in the form attached as
Exhibit 2 to Exhibit A.

             v. "Released Parties" means any and all of the Defendants and their
past or present subsidiaries, parents, predecessors, officers, directors,
shareholders, agents, employees, attorneys, advisers, investment advisers,
financial advisers, underwriters, auditors, accountants, insurers, lenders,
investment bankers, affiliates, associates, general and limited partners and
partnerships, family members, legal representatives, heirs, executors,
administrators, successors in interest or assigns, and any person, firm, trust,
corporation, officer, director or other individual or entity in which any
Defendant has a controlling interest or which is related to or affiliated with
any of the Defendants.

             w. "Settled Claims" means any and all actions, suits, claims,
demands, rights, liabilities and causes of action, of every nature and
description whatsoever, whether known or unknown, accrued or unaccrued, whether
based on federal, state, local, statutory or common law or any other law, rule
or regulation, including without limitation Unknown Claims as herein defined,
whether or not concealed or hidden, that were asserted or that could have been
asserted or could be asserted in any forum, whether brought directly, indirectly
or derivatively (including but not limited to claims for negligence, gross
negligence, breach of duty of care and/or breach of duty of loyalty, fraud,
breach of fiduciary duty, or violations of any statutes, rules, duties or
regulations), that the Lead Plaintiffs, the Class, the Class Members or any of
them, or any of their heirs, executors, administrators, representatives,
attorneys, successors, assigns, agents,

                                       4
<PAGE>

affiliates and partners, and any Persons they represent, in the past had, now
have, or might in the future have against the Released Parties or any of them,
which regard, concern, relate to, refer to, arise out of, or are based upon, in
any way: (a) the allegations, transactions, facts, matters, occurrences,
representations, omissions, disclosures, statements, failure to disclose or
failure to act involved, set forth, referred to or that were, could be, or could
have been asserted in the Action, whether known or unknown, including without
limitation Unknown Claims as herein defined, and whether or not concealed or
hidden; (b) the purchase or acquisition of shares of Anika stock during the
Class Period; (c) the Defendants' defense of or settlement of the Action; and
(d) the administration of the settlement or the distribution of funds from the
Settlement Fund. Provided, however, that the definition of Settled Claims shall
not in any way impair or restrict the rights of the settling parties to enforce
the settlement set forth in this Stipulation. As used herein, "Unknown Claims"
shall mean any and all actions, suits, claims, demands, rights, liabilities and
causes of action that the Lead Plaintiffs, the Class, or any of the Class
Members do not know of or suspect to exist in their favor at the time of the
release of the Released Parties, including but not limited to those that, if
known by them, might have affected their agreement to the Settlement. With
respect to Unknown Claims, the Lead Plaintiffs, the Class, and each of the Class
Members hereby expressly waive and relinquish, to the fullest extent permitted
by law, the benefits of Section 1542 of the California Civil Code, which states:

         A general release does not extend to claims which the creditor does not
         know or suspect to exist in his favor at the time of executing the
         release, which if known by him must have materially affected his
         settlement with the debtor;

and any and all provisions, rights, and benefits of any similar state or federal
or other law.

             x. "Settlement" means the settlement contemplated by this
Stipulation.

                                       5
<PAGE>

             y. "Settlement Fund" means the $1,250,000 payment to be made by
Defendants within ten (10) business days after the Court executes the
Preliminary Approval Order, together with all interest accrued and paid therein.

             z. "Settlement Hearing" means the final settlement hearing,
required by the Court, to determine, among other things, the fairness,
reasonableness, and adequacy of the Settlement.

             aa. "Stipulation" means this Stipulation and Agreement of
Compromise, Settlement and Release.

         2. The first of the putative class action complaints filed against the
Defendants and consolidated in this Action was filed in this Court on or about
June 8, 2000, and captioned CASAZZA, ET AL. V. ANIKA THERAPEUTICS, INC., J.
MELVILLE ENGLE AND SEAN MORAN, Civil Action No. 00-11127-WGY.

         3. Thereafter, additional complaints were filed against the Defendants,
also in this Court, and consolidated in this action. The second, filed on or
about June 26, 2000, was captioned NEMETH-COSLETT, ET AL. V. ANIKA THERAPEUTICS,
INC., J. MELVILLE ENGLE AND SEAN MORAN, Civil Action No. 00-11257-WGY. The
third, filed on or about August 2, 2000, was captioned ROCKEFELLER, ET AL. V.
ANIKA THERAPEUTICS, INC., J. MELVILLE ENGLE AND SEAN MORAN, Civil Action No.
00-11540-WGY. Each of these putative class action complaints encompassed the
same class period and covered substantively identical allegations.

         4. On or about August 7, 2000, David and Vivian West, alleged members
of the Class, filed a motion to have the Court appoint them to be Lead
Plaintiffs, to appoint Berman, DeValerio & Pease LLP as Plaintiffs' Lead
Counsel, as well as a motion for consolidation of the above cases. On or about
September 13, 2000, this Court granted David and Vivian West's

                                       6
<PAGE>

motions, consolidated the cases referred to in paragraphs 2 and 3, above, and
recaptioned the consolidated Action IN RE ANIKA THERAPEUTICS, INC. SECURITIES
LITIGATION, Civil Action No. 00-11127-WGY.

         5. On or about October 30, 2000, Lead Plaintiffs filed a Consolidated
Amended Class Action Complaint in the Action. The Complaint alleges that the
Defendants violated the federal securities laws by, INTER ALIA, making material
misrepresentations and omissions in certain public disclosures during the period
between April 15, 1998 and May 30, 2000. The alleged misrepresentations and
omissions relate to the Company's historical revenue recognition policies and
its restatement of revenues for fiscal year 1998 and the first three quarters of
1999.

         6. Following negotiations, the parties reached an agreement in
principle on the terms of a settlement of the Action. Accordingly, the parties
entered into a Memorandum of Understanding ("MOU") dated March 8, 2001. The MOU
provides that the effectuation of the settlement contemplated thereunder is
subject to, among other things, (i) the parties' execution of an appropriate
Stipulation; (ii) certification of the Class for purposes of the Settlement;
(iii) Court approval of the Settlement; (iv) confirmatory discovery and (v)
dismissal of the Action with prejudice and with each party bearing his/its own
costs except as otherwise provided for herein.

         7. Solely for purposes of settlement and for carrying out the terms of
this Stipulation, the parties have agreed to this Court's certification of the
Class pursuant to Rule 23 of the Federal Rules of Civil Procedure.

         8. Defendants deny all liability with respect to the Action, deny that
they have engaged in any wrongdoing, deny the allegations in the Complaint filed
in the Action, deny that they committed any violation of law, deny that they
acted improperly in any way, and deny

                                       7
<PAGE>

liability of any kind to the plaintiffs named in the initial complaints, the
Lead Plaintiffs, the Class, or the Class Members, but have agreed to the
settlement and dismissal of the Action with prejudice in order to: (i) avoid the
substantial expense, inconvenience and distraction of protracted litigation; and
(ii) finally put to rest and terminate the Action and any and all Settled
Claims.

         9. Plaintiffs' Lead Counsel has conducted discussions and arms' length
negotiations with Defendants' Counsel with respect to a compromise and
settlement of the Action with a view to settling the issues in dispute and
achieving the best relief possible consistent with the interests of the Lead
Plaintiffs, the Class, and all Class Members.

         10. Plaintiffs' Lead Counsel has concluded that the terms and
conditions of this Stipulation are fair, reasonable, and in the best interests
of the Lead Plaintiffs, the Class, and all Class Members; have agreed that the
Released Parties should be released from the Settled Claims pursuant to the
terms and provisions of this Stipulation; and have agreed to the dismissal of
the Action with prejudice, after considering the substantial benefits that the
Lead Plaintiffs, the Class, and all Class Members will receive from settlement
of the Action, the risks of litigation, and the desirability of permitting the
Settlement to be consummated as provided by the terms of this Stipulation.

         NOW, THEREFORE, it is hereby STIPULATED AND AGREED, by and among the
parties to this Stipulation, through their respective attorneys, subject to the
approval of the Court pursuant to Rule 23(e) of the Federal Rules of Civil
Procedure and the Private Securities Litigation Reform Act of 1995, in
consideration of the benefits flowing to the parties hereto from the Settlement,
that the Settled Claims as against the Released Parties shall be compromised,

                                       8
<PAGE>

settled, forever released, barred, and dismissed with prejudice, upon and
subject to the following terms and conditions:

                      RELEASE; SCOPE AND EFFECT OF RELEASE

         1. The obligations incurred pursuant to this Stipulation shall be in
full and final disposition of the Action with prejudice and of any and all
Settled Claims as against all Released Parties.

         2. On the Effective Date, the Lead Plaintiffs, the Class, and the Class
Members, on behalf of themselves, their heirs, executors, administrators,
representatives, attorneys, successors, assigns, agents, affiliates and
partners, and any Persons they represent ("Releasing Parties"), shall be deemed
to have, and by operation of the Final Judgment shall have, fully, finally and
forever released, relinquished, and discharged the Released Parties of and from
any and all of the Settled Claims, and the Releasing Parties shall forever be
barred and enjoined from bringing or prosecuting any Settled Claim against any
of the Released Parties.

                            SETTLEMENT CONSIDERATION

         3. Within ten (10) business days after the Court executes the
Preliminary Approval Order, Defendants shall pay or cause to be paid
$1,250,000.00 ("the Settlement Fund") into an interest bearing escrow account to
be established by Plaintiffs' Lead Counsel. Plaintiffs' Lead Counsel shall
administer the Settlement Fund. The Settlement Fund, less any amounts reasonably
incurred for notice, administration, and/or taxes pursuant to the Stipulation,
shall revert to the Defendant(s) making the payment of the settlement amount if
the Settlement does not become effective.

         4. (a) The Settlement Fund, net of any taxes on the income thereof,
shall be used to pay (i) the reasonable Notice and Administration Costs referred
to in paragraph 6 hereof, and

                                       9
<PAGE>

(ii) the award of attorneys' fees and reimbursement of expenses referred to in
paragraph 7 hereof. The balance of the Settlement Fund after the above payments
shall be distributed to the Authorized Claimants in this Action as provided in
paragraphs 8-16 hereof. All funds held by Plaintiffs' Lead Counsel in the
Settlement Fund shall be deemed to be IN CUSTODIA LEGIS and shall remain subject
to the jurisdiction of the Court until such time as the funds shall be
distributed or returned to Defendants pursuant to this Stipulation and/or
further order of the Court. Plaintiffs' Lead Counsel shall invest any funds in
excess of $50,000 in United States Government obligations with a maturity of 180
days or less, and shall collect and reinvest in the Settlement Fund all interest
accrued thereon. Any funds held in escrow in an amount of less than $50,000 may
be held in an interest bearing bank account insured by the Federal Deposit
Insurance Corporation (FDIC).

             (b) The parties hereto agree that the Settlement Fund is intended
to be a Qualified Settlement Fund within the meaning of Income Tax Regulation
ss. 1.468B-1 and that the Claims Administrator, as administrator of the
Settlement Fund within the meaning of Income Tax Regulation ss. l.468B-2(k)(3),
shall be responsible for filing tax returns for the Settlement Fund and paying
from the Settlement Fund any taxes owed with respect to the Settlement Fund.
Defendants' Counsel agree to provide promptly to Plaintiffs' Lead Counsel the
statement described in Income Tax Regulation ss. 1.468B-3(e).

(i) ADMINISTRATION.

         5. The Claims Administrator shall administer the Settlement under
Plaintiffs' Lead Counsel's supervision and subject to the jurisdiction of this
Court. The allocation of the Settlement Fund among the Class Members shall be
subject to a plan of allocation to be proposed by Plaintiffs' Lead Counsel and
approved by the Court. Except as stated in the last sentence of

                                       10
<PAGE>

this paragraph, Defendants shall have no responsibility for the administration
of the Settlement, the maintenance or investments of the Settlement Fund, or
distribution of the Settlement Fund, and shall have no liability to the Lead
Plaintiffs, the Class, or any Class Member in connection with such
administration or distribution or the maintenance or investment of the
Settlement Fund. Defendants agree to provide Plaintiffs' Lead Counsel, within
ten (10) business days after signing this Stipulation, such information from
Defendants' stock transfer records concerning the identity of Class Members as
made available by Defendants' stock transfer agent following request by
Defendants as appropriate for providing Notice to the Class.

         6. Prior to the Effective Date, Plaintiffs' Lead Counsel may expend
from the Settlement Fund, without further approval from the Defendants or the
Court, up to the sum of $50,000.00 to pay the reasonable costs and expenses
actually incurred in the administration of the Settlement, including without
limitation the costs of identifying members of the Class, mailing the Notice,
and publishing the Publication Notice. Such amounts shall include, without
limitation, the reasonable actual costs of publication, printing and mailing the
Notice, reasonable reimbursements to nominee owners for forwarding notice to
their beneficial owners, and the reasonable administrative expenses incurred and
fees charged by the Claims Administrator in connection with providing notice and
processing the claims filed. All such amounts are the "Notice and Administration
Costs." All Notice and Administration Costs shall be paid solely from the
Settlement Fund, and none of the Defendants shall be required to pay any portion
of the Notice and Administration Costs.

(ii) ATTORNEYS' FEES AND EXPENSES.

         7. Plaintiffs' Lead Counsel will apply to the Court for an award from
the Settlement Fund of attorneys' fees and reimbursement of out-of-pocket
expenses on behalf of plaintiffs'

                                       11
<PAGE>

counsel. Defendants agree that they will take no position with regard to
Plaintiffs' Lead Counsel's application for an award of attorneys' fees and
reimbursement of expenses. Such attorneys' fees and reimbursement of expenses as
are awarded by the Court shall be paid from the Settlement Fund to Plaintiffs'
Lead Counsel immediately upon entry by the Court of an order awarding them,
notwithstanding the existence of any timely-filed objections thereto or
potential for appeal therefrom, or collateral attack on the Settlement, subject
to the joint and several obligation of all Plaintiffs' counsel to make
appropriate refunds or repayments to the Settlement Fund plus accrued interest
at the rate paid on the Settlement Fund by the financial institution holding it,
if and when, as a result of any appeal and/or further proceedings on remand, or
a successful collateral attack, the award is reduced or reversed or does not
become final. All such attorneys' fees and reimbursement of expenses shall be
paid solely from the Settlement Fund, and none of the Defendants shall be
required to pay any portion of such attorneys' fees and reimbursement of
expenses.

(iii) CLASS DISTRIBUTION.

         8. The Claims Administrator shall determine for each Authorized
Claimant the appropriate PRO RATA share of the Settlement Fund, based upon each
Authorized Claimant's Recognized Loss (as defined in the Plan of Allocation).

         9. Each Authorized Claimant shall be allocated a PRO RATA share of the
Settlement Fund based on his or her Recognized Loss compared to the total
Recognized Losses of all accepted claimants. In no case, however, shall an
Authorized Claimant's PRO RATA share of the Settlement Fund be greater than such
Authorized Claimant's Recognized Loss. The Claims Administrator shall pay each
Authorized Claimant the appropriate distribution amount from the Settlement
Fund, net of attorneys' fees, expenses, and other costs described above. If any
funds remain in the Settlement Fund after all Authorized Claimants have been
paid, then such funds shall be donated to charity.

                                       12
<PAGE>

                        ADMINISTRATION OF THE SETTLEMENT

         10. Any Class Member who does not submit a Proof of Claim is not
eligible to receive any portion of the Settlement Fund, but otherwise shall be
bound by all of the terms of this Stipulation and the Settlement, including the
terms of the Order and Final Judgment to be entered in the Action and the
releases provided for herein, and will be barred and enjoined from bringing or
prosecuting any action against the Released Parties concerning the Settled
Claims.

         11. Plaintiffs' Lead Counsel shall be responsible for supervising the
administration of the Settlement and disbursement of the Settlement Fund by the
Claims Administrator. Defendants shall have no responsibility for the
administration of the Settlement or distribution of the Settlement Fund and
shall have no liability to the Lead Plaintiffs, the Class, or any Class Member
in connection with such administration or distribution. Plaintiffs' Lead Counsel
shall have the right, but not the obligation, to waive what they deem to be
formal or technical defects in any submitted Proof of Claim in the interests of
achieving substantial justice.

         12. For purposes of determining the extent, if any, to which a Class
Member shall be entitled to be treated as an "Authorized Claimant," the
following conditions shall apply:

             (a) Each Class Member shall be required to submit a complete and
executed Proof of Claim (see attached Exhibit 3 to Exhibit A), supported by such
documents as are designated therein, including proof of the Class Member's loss,
or such other documents or proof as Plaintiffs' Lead Counsel, in their
discretion, may deem acceptable;

             (b) All Proofs of Claim must be submitted by the date specified in
the Notice unless such period is extended by Order of the Court. Any Class
Member who fails to submit a Proof

                                       13
<PAGE>

of Claim by such date shall be forever barred from receiving any payment
pursuant to this Stipulation (unless, by Order of the Court, a later-submitted
Proof of Claim by such Class Member is approved), but otherwise shall be bound
by all of the terms of this Stipulation and Settlement, including the terms of
the Final Judgment to be entered in the Action and the releases provided for
herein, and will be barred and enjoined from bringing or prosecuting any action
against the Released Parties concerning the Settled Claims. A Proof of Claim
shall be deemed to have been submitted when postmarked, if received with a
postmark indicated on the envelope and if mailed first class, and addressed in
accordance with the instructions thereon. In all other cases, the Proof of Claim
shall be deemed to have been submitted when actually received by the Claims
Administrator;

             (c) Each Proof of Claim shall be submitted to the Claims
Administrator and shall be reviewed by the Claims Administrator under the
supervision of Plaintiffs' Lead Counsel, who shall determine in accordance with
this Stipulation the extent, if any, to which each claim shall be allowed,
subject to review by the Court pursuant to subparagraph (e) below;

             (d) Proofs of Claim that do not meet the submission requirements
may be rejected. Prior to rejection of a Proof of Claim, the Claims
Administrator shall communicate with the Class Member submitting the Proof of
Claim ("the Claimant") in order to remedy any curable deficiencies in the Proof
of Claim submitted. The Claims Administrator, under supervision of Plaintiffs'
Lead Counsel, shall notify, in a timely fashion and in writing, all Claimants
whose Proofs of Claim it proposes to reject in whole or in part, setting forth
the reasons therefore, and shall indicate in such notice that the Claimant whose
claim is to be rejected has the right to a review by the Court if the Claimant
so desires and complies with the requirements of subparagraph (e) below; and

                                       14
<PAGE>

             (e) If any Claimant whose claim has been rejected in whole or in
part desires to contest such rejection, the Claimant must, within twenty (20)
days after the date of mailing of the notice required in subparagraph (d) above,
serve upon the Claims Administrator a notice and statement of reasons indicating
the Claimant's grounds for contesting the rejection, along with any supporting
documentation, and requesting a review thereof by the Court. If a dispute
concerning a claim cannot be otherwise resolved, Plaintiffs' Lead Counsel shall
thereafter present the notice and statement of reasons to the Court for its
review.

         13. Each Claimant shall be deemed to have submitted to the jurisdiction
of the Court with respect to the Claimant's Proof of Claim, and the Proof of
Claim will be subject to investigation and discovery under the Federal Rules of
Civil Procedure, provided that such investigation and discovery shall be limited
to that Claimant's status as a Class Member and the validity and amount of the
Claimant's Proof of Claim. No discovery shall be allowed on the merits of the
Action or the Settlement.

         14. Payment pursuant to this Stipulation shall be deemed final and
conclusive against all Class Members. Any Class Member whose claim is rejected
shall be barred from participating in distributions from the Settlement Fund,
but otherwise shall be bound by all of the terms of this Stipulation and the
Settlement, including the terms of the Final Judgment to be entered in the
Action and the releases provided for herein, and will be barred and enjoined
from bringing or prosecuting any action against the Released Parties concerning
the Settled Claims.

         15. All proceedings with respect to the administration, processing, and
determination of Claims described by paragraphs 8-16 of this Stipulation and the
determination of all controversies relating thereto, including disputed
questions of law and fact with respect to the validity of any Proof of Claim,
shall be subject to the jurisdiction of the Court.

                                       15
<PAGE>

         16. The Settlement Fund shall be distributed to Authorized Claimants by
the Claims Administrator only after the Effective Date and after: (i) all Claims
have been processed, and all Claimants whose Proofs of Claim have been rejected
or disallowed, in whole or in part, have been notified and provided the
opportunity to be heard, pursuant to this Stipulation and the Preliminary
Approval Order, concerning such rejection or disallowance; (ii) all objections
with respect to all rejected or disallowed Proofs of Claim have been resolved by
the Court, and all appeals from such rulings by the Court have been resolved or
the time for such appeal has expired; (iii) all matters with respect to
attorneys' fees and reimbursement of expenses have been resolved by the Court,
and all appeals from such rulings by the Court have been resolved or the time
for such appeals has expired; and (iv) all costs of administration pursuant to
the Stipulation have been paid.

                    RIGHT TO REQUEST EXCLUSION FROM THE CLASS

         17. Class Members shall have the right to request exclusion from the
Class by submitting a written request for exclusion to Plaintiffs' Lead Counsel
and Defendants' Counsel in accordance with procedures to be approved by the
Court. Any Class Member who properly and timely requests exclusion from the
Class shall not be bound by the Final Judgment and shall have no right to
participate in any distribution from the Settlement Fund. In order to be
effective, a request for exclusion ("Request for Exclusion") must be postmarked
by the date set forth in the Preliminary Approval Order, must set forth the
information required by the Preliminary Approval Order and must be signed by the
Class Member seeking exclusion.

                                       16
<PAGE>

                      TERMS OF ORDER FOR NOTICE AND HEARING

         18. Concurrently with their filing of this Stipulation, Plaintiffs'
Lead Counsel and Defendants' Counsel shall jointly apply to the Court for
preliminary Court approval of the Settlement contemplated by this Stipulation
and entry of a Preliminary Approval Order, substantially in the form appended
hereto as Exhibit A.

                        TERMS OF ORDER AND FINAL JUDGMENT

         19. If the Settlement contemplated by this Stipulation is approved by
the Court, counsel for the parties shall request that the Court enter Final
Judgment substantially in the form appended hereto as Exhibit B.

                               OPTION TO WITHDRAW

         20. Defendants shall have the option to withdraw from this Stipulation
without prejudice if holders of a certain number of shares of Anika
publicly-traded common stock as set forth in a letter agreement among counsel
for the parties, purchased during the Class Period by members of the Class
(which purchasers would otherwise be entitled to participate as members of the
Class), timely and validly request exclusion from the Class pursuant to the
Preliminary Approval Order. The procedure for making such an election is as
follows:

         (a) Plaintiffs' Lead Counsel and/or the Claims Administrator will
inform Defendants' Counsel no later than fourteen (14) days before the
Settlement Hearing of the number of Class Members who requested exclusion from
the Class and the number of shares purchased by each such Class Member during
the Class Period.

         (b) Such option to withdraw shall be exercised by serving written
notice, signed by Defendants' Counsel, upon Plaintiffs' Lead Counsel, but not
fewer than four (4) business days before the Settlement Hearing.

                                       17
<PAGE>

         (c) If Defendants exercise their option to withdraw from the Settlement
as provided herein, this Stipulation will be null and void and of no further
force and effect, except that the provisions of paragraphs 23 and 24 will
survive and apply.

               EFFECTIVE DATE OF SETTLEMENT, WAIVER OR TERMINATION

         21. The Effective Date of Settlement shall be the date when all the
following shall have occurred:

             (a) entry of the Preliminary Approval Order in all material
respects in the form appended hereto as Exhibit A;

             (b) approval by the Court of the Settlement, following notice to
the Class and a hearing, as prescribed by Rule 23 of the Federal Rules of Civil
Procedure; and

             (c) entry by the Court of Final Judgment, in all material respects
in the form appended hereto as Exhibit B, and the expiration of any time for
appeal or review of such Final Judgment, or, if any appeal is filed and not
dismissed, after such Final Judgment is upheld on appeal in all material
respects and is no longer subject to review upon appeal or review by writ of
certiorari, or, in the event that the Court enters an order and final judgment
in a form other than that provided above ("Alternative Judgment") and none of
the parties hereto elects to terminate this Settlement, the date that such
Alternative Judgment becomes final and no longer subject to appeal or review by
writ of certiorari.

         22. Defendants' Counsel or Plaintiffs' Lead Counsel shall have the
right to terminate the Settlement and this Stipulation by providing written
notice of their election to do so ("Termination Notice") to all other parties
hereto within thirty days of (a) the Court's declining to enter the Preliminary
Approval Order or modification of that Preliminary Approval Order in any
material respect; (b) the Court's declining to approve the Settlement embodied
in this

                                       18
<PAGE>

Stipulation, or any material part of it; (c) the Court's declining to enter the
Final Judgment or modification of the Final Judgment in any material respect;
(d) the date upon which the Final Judgment is modified, reversed, or vacated in
any material respect by the Court, the Court of Appeals or the United States
Supreme Court; or (e) the date upon which an Alternative Judgment is modified,
reversed, or vacated in any material respect by the Court, the Court of Appeals
or by the United States Supreme Court.

         23. Except as otherwise provided herein, in the event the Settlement is
terminated or modified in any material respect or fails to become effective for
any reason, then the Settlement shall be without prejudice and none of its terms
shall be effective or enforceable; the parties to this Stipulation shall be
deemed to have reverted to their respective status in the Action as of the date
and time immediately prior to the execution of this Stipulation; except as
otherwise expressly provided, the parties shall proceed in all respects as if
this Stipulation and any related orders had not been entered; and any portion of
the Settlement Fund previously paid by Defendants, together with any interest
earned thereon, less any taxes due with respect to such income and less Notice
and Administration Costs actually incurred and paid or payable from the
Settlement Fund pursuant to this Stipulation, shall be returned to such
Defendant(s) as paid the settlement amount into the Settlement Fund. In the
event the Settlement is terminated or modified in any material respect, the
Defendants shall be deemed to have retained all rights to object to the
maintenance of the Action as a class action or the appropriateness of the Lead
Plaintiffs as class representatives pursuant to Rule 23 of the Federal Rules of
Civil Procedure and shall further be deemed not to have waived, modified, or be
estopped from asserting any additional defenses available to them.

                                       19
<PAGE>

                           NO ADMISSION OF WRONGDOING

         24. This Stipulation, whether or not consummated, and any proceedings
taken pursuant to it:

             (a) shall not be offered or received against the Defendants as
evidence of, or construed as or deemed to be evidence of, any presumption,
concession, or admission by any of the Defendants of the truth of any fact
alleged by the Plaintiffs or the validity of any claim that had been or could
have been asserted in the Action or in any litigation, whether directly or
derivatively, or the deficiency of any defense that has been or could have been
asserted in the Action, or of any liability, negligence, fault, or wrongdoing of
the Defendants;

             (b) shall not be offered or received against the Defendants as
evidence of a presumption, concession, or admission of any fault,
misrepresentation, or omission with respect to any statement or written document
approved or made by any Defendant, or against the Plaintiffs and the Class as
evidence of any infirmity in the claims of the Plaintiffs and the Class;

             (c) shall not be offered or received against the Defendants as
evidence of a presumption, concession, or admission of any liability,
negligence, fault or wrongdoing, or in any way referred to for any other reason
as against any of the parties to this Stipulation, in any other civil, criminal,
or administrative action or proceeding, other than such proceedings as may be
necessary to effectuate the provisions of this Stipulation; provided, however,
that if this Stipulation is approved by the Court, Defendants may refer to it
and rely upon it to effectuate the liability protection granted them hereunder;
and

             (d) shall not be construed against the Defendants or the Plaintiffs
and the Class as an admission or concession that the consideration to be given
hereunder represents the amount that could be or would have been recovered after
trial.

                                       20
<PAGE>

                            MISCELLANEOUS PROVISIONS

         25. All of the exhibits attached hereto are hereby incorporated by
reference as though fully set forth herein.

         26. The parties to this Stipulation intend the Settlement to be a final
and complete resolution of all disputes asserted or that could be or could have
been asserted by the Lead Plaintiffs, the Class, and/or any of the Class Members
against the Released Parties with respect to the Settled Claims. Accordingly,
the Defendants agree not to assert that the litigation was brought in bad faith
or without a reasonable basis. The parties agree that the amount paid and the
other terms of the Settlement were negotiated at arms' length in good faith by
the parties, and reflect a settlement that was reached voluntarily by the
parties after consultation with their respective experienced legal counsel. The
parties will propose to the Court an agreed upon Final Judgment, which will
contain a finding that, at all times during the litigation, all parties hereto
and their counsel complied with Fed. R. Civ. P. 11.

         27. This Stipulation may not be modified or amended, nor may any of its
provisions be waived except by a writing signed by all parties hereto or their
successors-in-interest.

         28. The headings herein are used for the purpose of convenience only
and are not intended to have legal effect.

         29. The administration and consummation of the Settlement as embodied
in this Stipulation shall be under the authority of the Court, and the Court
shall retain jurisdiction for the purpose of entering orders providing for
awards of attorneys' fees and reimbursement of expenses to Plaintiffs' counsel
and enforcing the terms of this Stipulation.

         30. The waiver by one party of any breach of this Stipulation by any
other party shall not be deemed a waiver of any other prior or subsequent breach
of this Stipulation.

                                       21
<PAGE>

         31. This Stipulation and its exhibits constitute the entire agreement
among the parties hereto concerning the Settlement of the Action, and no
representations, warranties, or inducements have been made by any party hereto
other than those contained and memorialized in such documents.

         32. This Stipulation may be executed in one or more counterparts. All
executed counterparts and each of them shall be deemed to be one and the same
instrument provided that counsel for the parties to this Stipulation shall
exchange among themselves original signed counterparts.

         33. This Stipulation shall be binding upon, and inure to the benefit
of, the successors and assigns of the parties hereto.

         34. The construction, interpretation, operation, effect and validity of
this Stipulation, and all documents necessary to effectuate it, shall be
governed by the internal laws of the Commonwealth of Massachusetts without
regard to conflicts of laws, except to the extent that preemption by federal law
requires that federal law govern.

         35. This Stipulation shall not be construed more strictly against one
party than another merely by virtue of the fact that it, or any part of it, may
have been prepared by counsel for one of the parties, it being recognized by the
parties that this Stipulation is the result of arms' length negotiations between
the parties and that all parties have contributed substantially and materially
to the preparation of this Stipulation.

         36. All counsel and any other person executing this Stipulation and any
of the exhibits hereto, or any related settlement documents, warrant and
represent that they have the full authority to do so and that they have the
authority to take appropriate action required or permitted to be taken pursuant
to the Stipulation to effectuate its terms.

                                       22
<PAGE>

         37. Plaintiffs' Lead Counsel and Defendants' Counsel agree to cooperate
fully with one another in seeking Court approval of the Preliminary Order in
Connection with the Settlement Proceedings, the Stipulation and Agreement of
Settlement, and to promptly agree upon and execute all such other documentation
as may be reasonably required to obtain final approval by the Court of the
Settlement.

Dated:  May 25, 2001

                                     BERMAN, DEVALERIO & PEASE LLP

                                     By: /s/ KATHLEEN M. DONOVAN-MAHER
                                         -----------------------------
                                         Glen DeValerio, BBO #122010
                                         Kathleen M. Donovan-Maher, BBO #558947
                                         One Liberty Square
                                         Boston, MA  02109
                                         (617) 542-8300

                                     PLAINTIFFS' LEAD COUNSEL

LAW OFFICES OF CHARLES J. PIVEN
Charles J. Piven
The World Trade Center, Suite 2525
401 E. Pratt Street
Baltimore, MD 21202
(410) 332-0030

LAW OFFICES OF LEO W. DESMOND
Leo W. Desmond
2161 Palm Beach Lake Blvd., Suite 204
W. Palm Beach, FL 33409
(561) 712-8000

                                       23
<PAGE>

RABIN & PECKEL LLP
Brian Murray
275 Madison Avenue
New York, NY 10016
(212) 682-1818

WOLF HALDENSTEIN ADLER FREEMAN & HERZ
Peter C. Harrar
270 Madison Avenue
New York, NY 10016
(212) 545-4600

ADDITIONAL PLAINTIFFS' COUNSEL

                                          GOODWIN PROCTER LLP

                                          By: /s/ GUS P. COLDEBELLA
                                              ---------------------
                                              Stephen D. Poss, P.C. BBO #551760
                                              Gus P. Coldebella BBO #566918
                                              Exchange Place
                                              Boston, MA  02109
                                              (617) 570-1000

                                          COUNSEL FOR DEFENDANTS ANIKA
                                          THERAPEUTICS, INC., J. MELVILLE ENGLE
                                          AND SEAN MORAN

                                       24

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