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                                                                   Exhibit 10.22

                 PLAN AND AGREEMENT OF MERGER AND REORGANIZATION

         This Plan and Agreement of Merger (this "AGREEMENT"), dated as of
March, 12, 2004 is entered into by and among Cardiotech International, Inc., a
Massachusetts corporation ("Cardiotech"), Dermaphylyx International Inc., a
Delaware corporation ("DERMAPHYLYX DELAWARE") and Dermaphylyx International
Inc., a Massachusetts corporation ("DERMAPHYLYX Massachusetts") a wholly-owned
subsidiary of Cardiotech , each with an office at 229 Andover Street,
Wilmington, Massachusetts 01887.

                                    RECITALS:

         WHEREAS, the Board of Directors of each of the parties to this
Agreement have determined it is in the best interests of the parties to this
Agreement and their shareholders to effect a business combination pursuant to
which Dermaphylyx Delaware will merge with and into Dermaphylyx Massachusetts on
the terms and subject to the conditions set forth herein (the "MERGER");

         WHEREAS, the Board of Directors of each of Cardiotech, Dermaphylyx
Delaware and Dermaphylyx Massachusetts and the shareholders of Dermaphylyx
Delaware and Dermaphylyx Massachusetts have approved this Agreement and the
Merger pursuant to the terms and conditions herein set forth as of the date
hereof;

         WHEREAS, for federal income tax purposes, it is intended that the
Merger shall qualify to the extent possible as a reorganization within the
meaning of Section 368(a)(1)(A) of the Internal Revenue Code of 1986, as amended
(the "CODE");

         NOW, THEREFORE, in consideration of the above premises and the mutual
promises set forth in this Agreement, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows.

                                   THE MERGER

Section 1. THE MERGER. At the Effective Time (as hereinafter defined) and upon
the terms and subject to the conditions of this Agreement and in accordance with
the Delaware General Corporation Law (the "DGCL") and the Massachusetts General
Laws, Chapter 156B (the "MGL"), Dermaphylyx Delaware shall be merged with and
into Dermaphylyx Massachusetts. Following the Merger, Dermaphylyx Massachusetts
shall continue as the surviving corporation (the "SURVIVING CORPORATION"), and
the separate corporate existence of Dermaphylyx Delaware shall cease.

Section 2. EFFECTIVE TIME. The parties hereto will file with the Secretary of
State of the State of Delaware and the Secretary of Commonwealth of the
Commonwealth of Massachusetts or other governmental agencies as required under
applicable law certificates of merger in such form as required by, and executed
in accordance with, the relevant provisions of the corporation law of each such
state. The effective time of the later of the filing of the certificate of
merger with the Secretary of State of the State of Delaware or the Secretary of
the Commonwealth of Massachusetts, as required under applicable law, is the
"Effective Time."

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Section 3. EFFECTS OF THE MERGER. The Merger shall have the effects set forth in
the DGCL and the MGL. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time, all the properties, rights, privileges,
powers and franchises of Dermaphylyx Delaware and Dermaphylyx Massachusetts
shall vest in the Surviving Corporation, and all debts, liabilities and duties
of Dermaphylyx Delaware and Dermaphylyx Massachusetts shall become the debts,
liabilities and duties of the Surviving Corporation.

Section 4. CERTIFICATE OF INCORPORATION AND BYLAWS. The certificate of
incorporation and by-laws of Dermaphylyx Massachusetts, as in effect immediately
prior to the Effective Time, shall be the certificate of incorporation and
by-laws of the Surviving Corporation until amended in accordance with applicable
law.

Section 5. DIRECTORS AND OFFICERS. As of the Effective Time, the directors and
officers of the Surviving Corporation shall be comprised of the individuals
listed in SCHEDULE 5 hereto who shall hold office in accordance with the
certificate of incorporation and bylaws of the Surviving Corporation until their
successors are duly elected or appointed and qualified or until their earlier
death, resignation or removal.

Section 6. CONVERSION OF DERMAPHYLYX MASSACHUSETTS AND DERMAPHYLYX DELAWARE
SECURITIES

         (a) At the Effective Time, each outstanding share of the Common Stock,
par value $0.01 per share, of Dermaphylyx Delaware shall, by virtue of the
Merger and without any action on the part of Cardiotech, Dermaphylyx Delaware or
Dermaphylyx Massachusetts, be canceled and extinguished and converted into the
right to recover (i) newly issued fully paid and non-assessable shares of Common
Stock, par value $ .01 per share, of Cardiotech (the "Cardiotech COMMON STOCK")
at an exchange ratio (the "EXCHANGE RATIO") of 3.827 shares of Cardiotech Common
Stock for each share of Dermaphylyx Delaware Common Stock so that an aggregate
of 3,827 shares of Cardiotech Common Stock shall be issued to the Shareholders
of Dermaphylyx Delaware (the "Conversion Consideration").

         (b) At the Effective Time, all options, warrants, convertible notes and
other rights, entitling the holders thereof to purchase or otherwise acquire any
shares of Dermaphylyx Delaware capital stock shall be canceled, retired and
cease to exist at and as of the Effective Time.

         (c) The holders of the Shares of Dermaphylyx Massachusetts prior to the
Effective Time shall remain the holders of shares of Dermaphylyx Massachusetts
after the Effective Time with no change in ownership.

Section 7. TAX CONSEQUENCES. It is intended by the parties hereto that the
Merger shall constitute a tax-free reorganization within the meaning of Section
368(a)(1)(A) of the Code. Each party hereto shall use its commercially
reasonable efforts to cause the Merger to be so qualified, shall report the
transactions contemplated by this Agreement in a manner consistent with such
reorganization treatment and will not take any position inconsistent therewith
in any tax return, refund claim, litigation or otherwise unless required to do
so by law.

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Section 8. NO FURTHER OWNERSHIP RIGHTS IN DERMAPHYLYX DELAWARE COMMON STOCK. The
Conversion Consideration issued or paid upon conversion of Dermaphylyx Delaware
Common Stock in accordance with the terms of Section 6 above shall be deemed to
have been issued or paid in full satisfaction of all rights pertaining to
Dermaphylyx Delaware Common Stock. At the Effective Time, subject to and after
giving effect to the provisions of Section 6(b) above, each share of Dermaphylyx
Delaware Common Stock owned prior to the Effective Time shall be canceled and
extinguished.

Section 9. STOCK CERTIFICATES. At or after the Effective Time, any certificates
representing Dermaphylyx Delaware Common Stock presented to the Surviving
Corporation or Cardiotech for any reason shall be converted into Cardiotech
Common Stock with respect to Dermaphylyx Massachusetts Common Stock formerly
represented thereby at the Exchange Ratio and the other applicable Conversion
Consideration.

Section 10. SHAREHOLDERS' ApprOVAL. This Agreement and the Merger provided for
herein have been submitted for approval to, and approved by, the sole
shareholder of Dermaphylyx Massachusetts in the manner prescribed by the
provisions of the MGL. This Agreement and the Merger provided for herein have
been submitted for approval to, and approved by, the shareholders of Dermaphylyx
Delaware in the manner prescribed by the provisions of the DGCL.

Section 11. COMMERCIALLY REASONABLE EFFORTS. Subject to the terms and conditions
of this Agreement, each party will use commercially reasonable efforts to take,
or cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws to consummate the Merger
and the other transactions contemplated by this Agreement. Neither Cardiotech,
Dermaphylyx Delaware nor Dermaphylyx Massachusetts will take, agree to take or
knowingly permit to be taken any action or do or knowingly permit to be done
anything in the conduct of the business of the companies, or otherwise, which
would be contrary to or in breach of any of the terms or provisions of this
Agreement.

Section 12. TERMINATION. This Agreement may be terminated and the Merger and the
other transactions contemplated herein may be abandoned at any time prior to the
Effective Time by mutual consents of Dermaphylyx Massachusetts, Cardiotech and
Dermaphylyx Delaware.

Section 13. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of Massachusetts, excluding any choice of law rules
that may direct the application of the laws of another jurisdiction.

Section 14. COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be an original, but all of which together shall constitute one
and the same agreement.

                            [signature page follows]

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         IN WITNESS WHEREOF, the parties hereto caused this Agreement to be
executed on their behalf by their respective officers thereunto duly authorized
all as of the date first above written.

                                          CARDIOTECH INTERNATIONAL INC.

                                          By:
                                              -----------------------------
                                              Name:  Michael Szycher
                                              Title: President

                                          DERMAPHYLYX INTERNATIONAL INC., A
                                          DELAWARE CORPORATION

                                          By:
                                              -----------------------------
                                              Name:  Michael Szycher
                                              Title: Chairman

                                          DERMAPHYLYX INTERNATIONAL INC., A
                                          MASSACHUSETTS CORPORATION

                                          By:
                                              -----------------------------
                                              Name:  Michael Szycher
                                              Title: President

                                       4
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                                   SCHEDULE 5

The following persons shall be directors of the Surviving Corporation as of the
Effective Time:

The following persons shall hold the offices of the Surviving Corporation set
forth opposite their respective names as of the Effective Time:

                  NAME                              OFFICE
                  ----                              ------

                  MICHAEL SZYCHER                   President
                  --------------------------

                  THOMAS LOVETT                     Clerk
                  --------------------------

                  THOMAS LOVETT                     Treasurer
                  --------------------------

                                       5Exhibit 10.20  

FIELDSTONE INVESTMENT CORPORATION
  11000 Broken Land Parkway, Suite 600

Columbia, Maryland 21044 

November 10,
2003 

Friedman,
Billings, Ramsey Group, Inc.

1001 Nineteenth Street North

Arlington, VA 22209 

	Re:
	Fieldstone
Investment Corporation—Board Observer Rights 

Gentlemen:

        Fieldstone
Investment Corporation (the "Company") is offering 41,000,000 shares of the Company's common stock, par value $0.01 per share, in a private offering under Rule 144A,
Regulation S and Regulation D under the Securities Act of 1933, as amended (the "Offering"). Friedman, Billings, Ramsey & Co., Inc. ("FBR") is acting as initial purchaser
and placement agent for the Company in connection with the Offering. Friedman, Billings, Ramsey Group, Inc. ("FBR Group"), which is the parent company of FBR, is purchasing 3,584,229 shares of
the Company's common stock in the Offering at a purchase price equal to the offering price per share in the Offering less the amount of the initial purchaser's discount and placement fee in the
Offering. 

        1.     In
consideration of FBR Group's purchase of 3,584,229 shares of the Company's common stock in the Offering, the Company hereby agrees that FBR Group has the right to
designate two representatives who are employees or agents of FBR Group (the "FBR Designees") to attend and, in a non-voting capacity, participate in all meetings of the Board of Directors
(the "Board") of the Company and all committees thereof (hereinafter referred to as the "Observer Rights"). The Observer Rights afford FBR Group's designated representatives all of the same rights
that the directors of the Company have with respect to the (i) receipt of notices of Board and Board committee meetings, (ii) receipt of Board and Board committee packages and other
information and reports that the Company delivers to the Company's directors, and (iii) attendance at Board and Board committee meetings, whether in person or telephonically. Except as
expressly provided in Section 3 hereof, the failure to provide any of the notices or material required under clauses (i) or (ii) above, or to permit the FBR Designees to attend
any Board or Board committee meetings in accordance with clause (iii) above, shall constitute a breach of this letter agreement. In no event, however, shall the failure to provide the notices
described above invalidate in any way any action taken at a meeting of the Board or any Board committee. The Observer Rights do not afford FBR Group or the FBR Designees any of the voting rights that
the Company's directors have and does not impose on FBR Group or the FBR Designees any of the fiduciary duties that the directors of the Company have in their capacity as directors. 

        2.     FBR
Group and the FBR Designees shall be subject to, and shall abide by, the same confidentiality restrictions that the Company's directors are subject to as directors,
and FBR shall cause the FBR Designees to enter into the same written agreements with the Company regarding confidentiality restrictions as the Company enters into with the Company's directors. FBR
Group shall be subject to any insider trading policy, including black-out periods, that the Company may adopt or impose on its directors. 

        3.     Notwithstanding
anything to the contrary contained herein, the Board shall have the right to meet in executive session and may exclude from any such executive session any
person, including either or both of the FBR Designeees hereunder, and the Company shall have the right to withhold from the FBR Designees written material or other information, including portions of
the minutes of Board and committee meetings, if the Board, in its good faith judgment, considers these actions necessary or appropriate to carry out its duties to the Company in accordance with
reasonable corporate governance principles and practices. 

 

        4.     FBR
Group's Observer Rights and any obligations that FBR Group has under this Agreement shall continue in effect until the earlier of (a) the date on which FBR
Group owns less than 1,425,000 shares of the Company's common stock and (b) with respect to one of FBR Group's designated representatives, the second anniversary of the date of closing of the
Offering and, with respect to FBR Group's other designated representative, the fourth anniversary of the date of closing of the Offering. Other than as expressly provided in the immediately preceding
sentence, this Agreement may not be terminated by the Company; however, the Agreement may be terminated by FBR Group at any time and in the event FBR Group terminates this Agreement all obligations
and restrictions applicable to FBR Group will also terminate at that time, other than the confidentiality restrictions described above, which shall survive termination of this letter agreement. 

        5.     The
Observer Right may be assigned by FBR Group to any successor-in-interest, including any successor-by-merger without
the need for any consent by the Company, provided such successor assumes FBR Group's obligations hereunder in connection with any such assignment, but excluding any purchaser of FBR's or FBR Group's
shares in the offering. 

        6.     FBR
Group's initial designated representatives shall be Richard Hendrix and Edward Wheeler. In the event that any FBR Designee shall cease to be an employee or agent of
FBR for any reason, the vacancy resulting therefrom shall be filled by FBR Group upon written notice to the Company. In the event neither FBR Designee is able to attend a Board or Board committee
meeting, FBR Group may designate one substitute designee who is reasonably acceptable to the Company after giving prior notice to the Company of the proposed substitute designee to attend such
meetings. 

        Please
acknowledge your agreement with the provisions of this Agreement by executing this Agreement in the place provided below. 

	 	 	Very truly yours,
	

 	
 	

FIELDSTONE INVESTMENT CORPORATION
	

 	
 	

By:	
 	

/s/  MICHAEL J. SONNENFELD      
 Name: Michael J. Sonnenfeld

Title: President

Acknowledged
and agreed as of the date first shown above: 

FRIEDMAN,
BILLINGS, RAMSEY GROUP, INC. 

	By:	 	/s/  J. ROCK TONKEL, JR.      
 Name: J. Rock Tonkel, Jr.

Title: EVP	 	 

2

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