UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A
(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934

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|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss. 240.14a-12

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ARROW INTERNATIONAL, INC.

(Name of Registrant as Specified in Its Charter)

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ARROW INTERNATIONAL, INC.
2400 Bernville Road
Reading, Pennsylvania 19605

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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held on January 18, 2006

To Our Shareholders:

The Annual Meeting of Shareholders of Arrow International, Inc. (the
"Company") will be held at the Company's corporate headquarters at 2400
Bernville Road, Reading, Pennsylvania at 4:00 p.m. on January 18, 2006 for the
following purposes:

(1) To approve amendments to the Company's Restated Articles of
Incorporation and By-laws to declassify the Company's Board of
Directors and provide for the annual election of all of the
Company's directors;

(2) To elect eleven directors to serve until the next Annual Meeting
of Shareholders or until their respective successors are duly
elected and qualified, in the event Proposal 1 is approved;

(3) Alternatively, to elect two directors to serve until their terms
expire in 2010 or until their respective successors are duly
elected and qualified, in the event Proposal 1 is not approved;

(4) To approve the adoption of the Company's 2006 Directors Stock
Incentive Plan;

(5) To act upon a proposal to ratify the appointment of
PricewaterhouseCoopers LLP as the Company's registered
independent accounting firm for the fiscal year ending August
31, 2006; and

(6) To transact such other business, if any, as may properly come
before the Annual Meeting or any adjournments thereof.

The Board of Directors has fixed the close of business on November 25,
2005 as the record date for the determination of shareholders entitled to notice
of, and to vote at, the Annual Meeting and any adjournments thereof.

YOUR VOTE IS IMPORTANT. PLEASE SIGN AND DATE THE ENCLOSED PROXY CARD AND
RETURN IT PROMPTLY IN THE ENCLOSED RETURN ENVELOPE, WHETHER OR NOT YOU EXPECT TO
ATTEND THE ANNUAL MEETING. YOU MAY REVOKE YOUR PROXY AND VOTE IN PERSON IF YOU
DECIDE TO ATTEND THE ANNUAL MEETING.

By Order of the Board of Directors,

John C. Long,
Corporate Secretary of
Arrow International, Inc.

December 16, 2005
Reading, Pennsylvania

PROXY STATEMENT

2006 ANNUAL MEETING OF SHAREHOLDERS

ARROW INTERNATIONAL, INC.

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GENERAL INFORMATION

This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Arrow International, Inc., a Pennsylvania
corporation (the "Company" or "Arrow"), for the Annual Meeting of Shareholders
to be held on January 18, 2006, at 4:00 p.m., local time, at the Company's
corporate headquarters at 2400 Bernville Road, Reading, Pennsylvania 19605, or
any adjournments thereof.

RECORD DATE AND SHARE OWNERSHIP. The Board of Directors has fixed the
close of business on November 25, 2005 as the record date for the determination
of the shareholders entitled to notice of, and to vote at, the Annual Meeting.
On that date there were 44,680,290 shares of common stock of the Company (the
"Common Stock") outstanding and entitled to vote at the Annual Meeting.

VOTES REQUIRED TO ADOPT PROPOSALS. Each share of Common Stock is
entitled to one vote at the Annual Meeting. A majority of the outstanding shares
of Common Stock is required to establish a quorum at the Annual Meeting. The
affirmative vote of a majority of the outstanding shares of Common Stock is
required for Proposal 1 - the approval of amendments to the Company's Restated
Articles of Incorporation and By-laws to declassify the Board of Directors and
provide for the annual election of all directors (collectively, the "Annual
Election Amendments"). The affirmative vote of a plurality of the votes cast is
required for Proposals 2 and 3 - the election of directors. The affirmative vote
of a majority of the votes cast is required for Proposal 4 - the adoption of the
Company's 2006 Directors Stock Incentive Plan and Proposal 5 - the ratification
of the appointment of the Company's registered independent accounting firm for
fiscal 2006. Shares represented by proxies will be voted in accordance with the
specifications made on the proxy card by the shareholder.

With regard to Proposals 2 and 3 - the election of directors, votes may
be cast in favor or withheld; votes that are withheld will be counted for
purposes of determining the presence or absence of a quorum for the transaction
of business at the Annual Meeting, but will be excluded entirely from the vote
and will have no effect on the outcome of the voting. With regard to Proposal 1
- - the approval of the Annual Election Amendments, Proposal 4 - the adoption of
the Company's 2006 Directors Stock Incentive Plan, and Proposal 5 - the
ratification of the appointment of the Company's registered independent
accounting firm, abstentions may be specified. Since the affirmative vote of a
majority of the outstanding shares of Common Stock is required to approve the
Annual Election Amendments pursuant to Proposal 1 and of a majority of the votes
cast is required to approve the adoption of the Company's 2006 Directors Stock
Incentive Plan and to ratify the appointment of the Company's independent
accounting firm pursuant to Proposals 4 and 5, respectively, an abstention with
respect to any of these proposals will have the same effect as a vote against
these proposals.

SUBMITTING AND REVOKING A PROXY. Shares of Common Stock represented by a
duly executed and dated proxy submitted prior to the Annual Meeting will be
voted by the persons named as proxies in accordance with the instructions
specified in the proxy. Any proxy not specifying the contrary will be voted with
regard to: Proposal 1, FOR the approval of the Annual Election Amendments;
Proposals 2 and 3, FOR each of the Board of Directors' nominees; Proposal 4, FOR
the adoption of the Company's 2006 Directors Stock Incentive Plan; and Proposal
5, FOR the ratification of the appointment of the Company's registered
independent accounting firm.

A shareholder giving a proxy has the right to revoke it by a duly
executed proxy bearing a later date, by attending the Annual Meeting and voting
in person, or by otherwise notifying the Company prior to the Annual Meeting.

Shares of Common Stock held by T. Rowe Price Trust Company, as trustee
of the Company's 401(k) Plan, also are entitled to vote on all matters submitted
to shareholders at the Annual Meeting. Each of the Company's employees
participating in the 401(k) Plan may instruct the trustee how to vote the shares
of Common Stock allocated to that person's account in the 401(k) Plan by
signing, dating and returning the enclosed proxy card.

BROKER NON-VOTES. Under applicable Pennsylvania law, broker non-votes,
which are proxies from brokers or nominees indicating that such persons have not
received instructions from the beneficial owners or other persons entitled to
vote shares on a particular matter as to which the brokers or nominees do not
have discretionary power, may be counted as present or represented for purposes
of determining the presence or absence of a quorum for the transaction of
business, but will not be counted for purposes of determining whether any
non-discretionary proposals to be voted upon at the Annual Meeting have been
approved. The Company believes that the proposals to approve the Annual Election
Amendments and the adoption of the Company's 2006 Directors Stock Incentive Plan
are non-discretionary and, therefore, brokers and other nominees who have not
received voting instructions from their clients may not vote their clients'
shares in respect of either of these proposals, but that the proposals for the
election of directors and the ratification of the appointment of the Company's
registered independent accounting firm are proposals in respect of which brokers
and other nominees typically do have discretionary power and, therefore, they
may vote their clients' shares for these proposals.

GENERAL. The mailing address of the principal executive offices of the
Company is P.O. Box 12888, 2400 Bernville Road, Reading, Pennsylvania 19612.
This Proxy Statement and the enclosed proxy card are being furnished to
shareholders on or about December 16, 2005.

PROPOSAL 1 - AMENDMENTS TO THE COMPANY'S RESTATED ARTICLES
OF INCORPORATION AND BY-LAWS TO DECLASSIFY THE BOARD OF
DIRECTORS AND PROVIDE FOR THE ANNUAL ELECTION OF ALL DIRECTORS

The Board of Directors has determined that it is in the best interest of
the Company and its shareholders that the Company's Restated Articles of
Incorporation and By-Laws be amended to eliminate the classified structure of
the Board and provide for the annual election of all directors.

ANNUAL ELECTION AMENDMENTS. The Board of Directors has unanimously
adopted, and recommends that the shareholders approve, amendments to each of
Article Eighth of the Company's Restated Articles of Incorporation and Article
IV, Sections 4.1 and 4.4, of the Company's By-Laws (collectively, the "Annual
Election Amendments") that would declassify the

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Board of Directors and provide for the annual election of all directors. The
forms of the Annual Election Amendments are attached as Exhibit A to this Proxy
Statement.

Article Eighth of the Company's Restated Articles of Incorporation and
Article IV, Section 4.1, of the Company's By-Laws currently provide that:

o the Board of Directors shall be divided into four classes, as
nearly equal in number as possible;

o one of the four classes shall stand for re-election each year;
and

o each class of directors shall hold office for a four-year term.

The affirmative vote of the holders of a majority of the outstanding
shares of Common Stock is required for the approval of the Annual Election
Amendments.

If the Annual Election Amendments are approved by the Company's
shareholders at the Annual Meeting, the Annual Election Amendments will become
effective at the Annual Meeting or as soon as practicable following the Annual
Meeting, subject to the filing of the amendment to the Company's Restated
Articles of Incorporation with the Secretary of State of the Commonwealth of
Pennsylvania, which the Company anticipates would be done as soon as practicable
following an affirmative vote on this Proposal 1 at the Annual Meeting.

REASONS FOR ANNUAL ELECTION AMENDMENTS. Classified or staggered boards
have been widely adopted and have a long history in corporate law. Classified
boards have been viewed as a means of promoting stability and continuity of
experience on a board of directors primarily because the majority of directors
at any given time will have had at least one year of experience on the board,
thus assisting a company in its long-term strategic planning efforts. Also,
because it would take at least two elections for a potential acquirer to gain
control of a classified board without the cooperation of the board, the
existence of a classified structure may enhance shareholder value by making it
more likely that a party seeking to gain control of a target company will engage
in arm's length discussions with the target's existing board instead of
launching a proxy fight in an attempt to gain control of the board and take over
the company.

However, many investors and others have come to view a classified board
structure as having the effect of reducing the accountability of directors
because classified boards limit the ability of shareholders to evaluate and
elect all directors on an annual basis. The election of directors is the primary
means for shareholders to evaluate the performance of directors on an annual
basis. The election of directors is also the primary means for shareholders to
influence corporate governance policies and to hold management accountable for
the implementation of these policies. In addition, opponents of classified
boards believe that they discourage takeover proposals and proxy contests that
could have the effect of increasing shareholder value. In light of these views,
a number of corporations, large and small, have determined that principles of
good corporate governance dictate that all directors of a corporation should be
elected annually.

The Company's Board of Directors has considered the advantages and
disadvantages of its classified board structure, which was adopted by the
Company's shareholders in April 1992 prior to the initial public offering of its
Common Stock in June 1992, and has unanimously voted to approve the Annual
Election Amendments so that the Company's directors are elected annually. In
reaching this determination, the Board of Directors concluded that the benefits
of a classified board structure were outweighed by the following considerations:

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o The Board's belief that providing the Company's shareholders
with the opportunity annually to register their views on the
collective performance of the Board and on each director
individually will further enhance the Company's corporate
governance policies and procedures and increase director
accountability to the shareholders;

o The Board's belief that, because there is no limit on the number
of terms a director may serve, the continuity and stability of
the Board's membership and policies should not be materially
affected by the declassification of the Board of Directors; and

o The Board's belief that, even though annual election of
directors may increase the ability of a third party to acquire
control of the Company without engaging in arm's length
discussions with the Board, there are other factors, such as the
statutory "anti-takeover" provisions contained in the
Pennsylvania Business Corporation Law, applicable to an
acquisition of control of the Company that reduce the likelihood
that a third-party would be successful in taking over the
Company without engaging in arm's length discussions with the
Board.

The Company's directors have unanimously indicated that they intend to
vote the 16,011,267 shares of Common Stock over which they collectively have
voting power in favor of this proposal to eliminate the classification of the
Board of Directors.

The proposal to eliminate the classification of the Board of Directors
is neither the result of any effort to unseat incumbent directors nor in
response to any shareholder proposal or initiative.

EFFECT OF VOTING OUTCOMES. If the Annual Election Amendments are
approved by the shareholders at the Annual Meeting, then each of the Company's
directors not otherwise up for re-election at the Annual Meeting has agreed to
shorten his or her existing term so that it concludes at the Annual Meeting. In
that regard, the shareholders will be asked to vote for the election of all
eleven of the Company's directors at the Annual Meeting, each to serve for a
one-year term expiring at the 2007 Annual Meeting of Shareholders and until his
or her successor shall have been elected and qualified, pursuant to Proposal 2
below.

If the Annual Election Amendments are not approved by the shareholders
at the Annual Meeting, the Board of Directors will remain classified, and the
shareholders will be asked to vote for the election of the two directors whose
terms expire at the Annual Meeting, each to serve for a four-year term expiring
at the 2010 Annual Meeting of Shareholders and until his successor shall have
been elected and qualified, pursuant to Proposal 3 below. All other directors
will continue in office for the remainder of their full four-year terms, subject
to their earlier resignation, removal or death.

The affirmative vote of the holders of a majority of all of the
outstanding shares of Common Stock is required for the approval of the Annual
Election Amendments. An abstention will have the same effect as a vote against
the proposal.

The Board of Directors recommends that shareholders vote FOR Proposal 1.
Proxies solicited by the Board of Directors will be voted FOR this proposal
unless otherwise indicated.

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PROPOSAL 2 - ELECTION OF DIRECTORS

The Board of Directors of the Company is currently composed of eleven
directors, although up to twelve directors are permitted by the Company's
Restated Articles of Incorporation and By-Laws. Under the Company's Restated
Articles of Incorporation and By-Laws, and prior to the adoption of the Annual
Election Amendments pursuant to Proposal 1, the Board is divided into four
classes, as nearly equal in number as possible. At each Annual Meeting of
Shareholders of the Company, directors constituting one class are elected for a
four-year term (or for such lesser term as may be specified in the proxy
statement furnished in connection therewith).

If Proposal 1 is approved by the shareholders at the Annual Meeting, the
Annual Election Amendments will become effective at the Annual Meeting and the
Board of Directors will no longer be classified. In that event, all eleven of
the Company's directors will stand for election at the Annual Meeting, each to
serve for a one-year term expiring at the 2007 Annual Meeting of Shareholders
and until his or her successor shall have been elected and qualified, pursuant
to this Proposal 2. This Proposal 2 will have no effect if the proposed Annual
Election Amendments are not approved by the shareholders at the Annual Meeting
pursuant to Proposal 1.

If Proposal 1 is not approved by the shareholders at the Annual Meeting,
the Annual Election Amendments will not become effective at the Annual Meeting
and the Board of Directors will remain classified as described above. In that
event, only the two directors whose terms expire at the Annual Meeting, Raymond
Neag and Richard T. Niner, will stand for election at the Annual Meeting, each
to serve for a four-year term expiring at the 2010 Annual Meeting of
Shareholders and until his successor shall have been elected and qualified,
pursuant to Proposal 3 below. All other directors will continue in office for
the remainder of their full four-year terms, subject to their earlier
resignation, removal or death.

Certain information concerning the nominees for election to the Board of
Directors at the Annual Meeting pursuant to this Proposal 2 is set forth in the
following table.

PRINCIPAL OCCUPATION, BUSINESS EXPERIENCE AND
NAME AGE DIRECTORSHIPS
- ---- --- ---------------------------------------------

Carl G. Anderson, Jr. 60 Chairman of the Board and Chief Executive Officer of the Company
since September 2003, President since January 19, 2005 and a
director of the Company since January 1998. Vice Chairman of the
Board and General Manager, Critical Care Business of the Company
from January 2002 to August 31, 2003. President and Chief
Executive Officer of ABC School Supply, Inc., a manufacturer and
marketer of materials and equipment for public and private
schools, from May 1997 to December 2001. Consultant with the New
England Consulting Group, a general management and marketing
consulting company, from May 1996 to May 1997. Vice President,
General Manager, Retail Consumer Products of James River
Corporation, a multinational company engaged in the development,
manufacture and marketing of paper-based consumer and commercial
products ("James River"), from August 1994 to March 1996, and
Vice President, Marketing, Consumer Brands of James River from
May 1992 to August

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PRINCIPAL OCCUPATION, BUSINESS EXPERIENCE AND
NAME AGE DIRECTORSHIPS
- ---- --- ---------------------------------------------

1994. From 1984 to May 1992, served in various capacities with
Nestle Foods Corporation, the latest as Vice President, Division
General Manager, Confections. Prior thereto, served in several
marketing capacities with Procter & Gamble. Director of
Carpenter Technology Corporation, a specialty steel
manufacturer, and IWT Tesoro Corporation, a manufacturer and
distributor of building tile.

John H. Broadbent, Jr. 67 Director of the Company since it was founded in 1975. Chief
Financial Officer, Vice President - Finance and Treasurer of the
Company from 1975 until his retirement in August 1998. From 1966
to 1975, served in several capacities with Carpenter Technology
Corporation, a specialty steel manufacturer, the latest as
Manager-Market Planning & Development. From 1964 to 1966,
consultant in the Management Advisory Services Department of the
international accounting firm of Price Waterhouse & Co. Director
of Bioenergy, Inc., an integrated life sciences company.

George W. Ebright 67 Director of the Company since October 1993. Director of Cytogen
Corporation, a biopharmaceutical company engaged in the
development of diagnostic and therapeutic substances for human
health care applications ("Cytogen"), from February 1989 until
May 1995. Chairman of the Board of Cytogen from February 1990
until January 1995 and President from February 1989 to August
1991. Prior thereto, President and Chief Operating Officer and a
director of SmithKline Beckman Corporation, a health care and
life services company engaged in the marketing of a broad line
of prescription and proprietary products for human and animal
health care, as well as diagnostic and analytical products and
services. From 1963 through 1987, held several senior management
positions with SmithKline & French Laboratories and two of its
divisions. Director of NABI, Inc., a biopharmaceutical company
which develops products for the prevention and treatment of
infectious diseases, and The West Company, a supplier of
specialized packaging systems to the health care and consumer
products industries.

John E. Gurski 64 Director of the Company since January 1997. Corporate Vice
President of AMP Incorporated, a multinational company engaged
in the development, manufacture and marketing of systems for
electrical and electronic applications ("AMP"), from 1989 until
his retirement in January 1999. President, Europe, Middle East
and Africa of AMP from July 1995 to December 1996, President,
Global Operations of AMP from January 1997 to August 1998, and
Corporate Vice President, Administration of AMP from August 1998
to January 1999.

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PRINCIPAL OCCUPATION, BUSINESS EXPERIENCE AND
NAME AGE DIRECTORSHIPS
- ---- --- ---------------------------------------------

Corporate Vice President, Europe of AMP from September 1993 to
July 1995 and Corporate Vice President, Business & Operations
Planning International of AMP from January 1992 to September
1993. Corporate Vice President, Capital Goods Business Sector of
AMP from 1989 to January 1992 and Divisional Vice President,
Operations of AMP from 1987 to 1989. From 1972 to 1987, served
in various manufacturing and operating capacities with AMP.
Prior thereto, was employed by General Motors Corporation.

T. Jerome Holleran 69 Director of the Company since it was founded in 1975. Secretary
of the Company from 1975 until April 2004 and a Vice President
of the Company from 1975 until September 1997. Chairman of the
Board of Directors of Precision Medical Products, Inc. ("PMP"),
a former subsidiary of Arrow Precision Products, Inc.
("Precision"), a corporation formerly controlled by principal
shareholders of the Company until its dissolution in May 2002,
since October 1999; Chief Executive Officer and President of PMP
from July 1996 to October 2000. PMP manufactures and markets
certain non-catheter medical products and was sold in August
1997 to a group of management employees of Precision (including
Mr. Holleran). From February 1986 to September 1997, Vice
President, Chief Operating Officer and a director of Precision.
President of Endovations, Inc., a former subsidiary of Precision
that manufactured and marketed certain gastroenterological
medical products ("Endovations"), from 1991 until the sale in
June 1996 of a portion of Endovations' business to the Company
and the remainder to an unrelated third party. From 1971 to
1975, Director of Business Planning-Textile Divisions of
Rockwell International Corporation and a Marketing Manager of
the Arrow Products Division of Rockwell International
Corporation, the Company's predecessor. From 1969 to 1971,
consultant with the management consulting firm of Booz, Allen
and Hamilton.

R. James Macaleer 71 Director of the Company since January 1998. Chairman of the
Board of Shared Medical Systems Corporation, a provider of
computer-based information systems and associated services to
the health industry in North America and Europe ("SMS"), from
1969 to November 1997, and Chief Executive Officer of SMS from
1969 to August 1995.

Marlin Miller, Jr. 73 Director of the Company since it was founded in 1975. Chairman
of the Board of Directors of the Company from January 1999 and
Chief Executive Officer of the Company from 1975 until his
retirement from the Company in August 2003, and President of the
Company from 1975 to January 1999. From 1972 to 1975, Vice
President and a director of Connors Investor Services, a
research and investment

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PRINCIPAL OCCUPATION, BUSINESS EXPERIENCE AND
NAME AGE DIRECTORSHIPS
- ---- --- ---------------------------------------------

management firm. From 1959 to 1972, served in several capacities
with Glen Gery Corporation, a manufacturer of building products,
the latest as Executive Vice President and a director. Director
of Carpenter Technology Corporation, a manufacturer of specialty
steel, until his retirement from this position in October 2002.

Raymond Neag 74 Director of the Company since it was founded in 1975. Vice
Chairman of the Company from January 1999 until his retirement
in October 1999, Executive Vice President of the Company from
April 1992 to January 1999 and Senior Vice President of the
Company from 1975 to April 1992. From 1973 until joining the
Company, General Manager of the Arrow Products Division of
Rockwell International Corporation, the Company's predecessor.
From 1971 to 1973, President of Teledyne Dental Products, a
manufacturer of dental products and a division of Teledyne, Inc.
Prior to 1971, Vice President and Director of Marketing of
Sherwood Medical, Inc., a medical device company.

Richard T. Niner 66 Director of the Company since 1982. General partner since
January 1999 of Wind River Associates L.P., a private investment
partnership based in Greenwich, Connecticut. From 1988 to 1999,
general partner of Brynwood Management II L.P., the general
partner of a private investment partnership based in Greenwich,
Connecticut. Director of Hurco Companies, Inc., a manufacturer
and marketer of computer numerical controls and related machine
tools.

Anna M. Seal 49 Director of the Company since September 2005. Senior Vice
President and Chief Financial Officer of the Global
Manufacturing and Supply Division of GlaxoSmithKline plc since
December 2000. Senior Vice President and Chief Financial Officer
of Worldwide Supply Operations of SmithKline Beecham plc
("SmithKline") from March 1995 to November 2000. Vice President
and Chief Financial Officer of the Animal Health Division of
SmithKline from April 1991 to February 1995. Chief Auditor and
Vice President, Corporate Audits, of SmithKline from June 1988
to July 1991. Director, Corporate Audits, of SmithKline from
October 1987 to May 1988. From 1981 to September 1987, served in
various other accounting, audit and financial reporting
capacities with SmithKline. Prior thereto, served as an Audit
Manager with Coopers & Lybrand from 1978 to 1981.

Alan M. Sebulsky 46 Director of the Company since January 1997. Managing Partner and
Portfolio Manager of Apothecary Capital LLC, an investment
advisory firm specializing in health care, since April 2003.
Independent investor and consultant from May 2002 to March 2003.
Managing Director from March 2000 to January

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PRINCIPAL OCCUPATION, BUSINESS EXPERIENCE AND
NAME AGE DIRECTORSHIPS
- ---- --- ---------------------------------------------

2002 and Executive Vice President and principal from July 1994
to March 2000 of Lincoln Capital Management, a private
investment management firm based in Chicago, Illinois, with
responsibility for investments in the health care industry. From
1988 to May 1994, Managing Director at Morgan Stanley & Company,
an international investment banking and brokerage firm, with
responsibility for equity research in the pharmaceutical and
medical device industries. From 1982 to 1988, held various
positions at T. Rowe Price & Associates, an investment
management firm, the latest as Vice President, with
responsibility for health care investment analysis and portfolio
management.

If elected pursuant to this Proposal 2, the Board expects that all of
the nominees will serve as directors until the 2007 Annual Meeting of
Shareholders and until their respective successors have been elected and
qualified. Each of the nominees has been approved and recommended for nomination
by the Nominating Subcommittee of the Corporate Governance and Nominating
Committee of the Board of Directors.

The Board believes that each of the nominees will be available and able
to serve as a director. If a nominee is unable to serve, the shares of Common
Stock represented by all valid proxies will be voted for the election of such
substitute as the Board may recommend, the Board may reduce the number of
directors to eliminate the vacancy or the Board may fill the vacancy at a later
date after selecting an appropriate nominee.

The Board of Directors recommends that shareholders vote FOR the
election of each of the above nominees. Proxies solicited by the Board of
Directors will be voted FOR this proposal unless otherwise indicated.

PROPOSAL 3 - ELECTION OF TWO DIRECTORS TO
SERVE FOR TERMS EXPIRING IN 2010

If Proposal 1 is not approved by the shareholders at the Annual Meeting
and the Annual Election Amendments do not become effective at the Annual
Meeting, the shareholders will be asked to vote for the election of Raymond Neag
and Richard T. Niner as directors of the Company at the Annual Meeting, each to
serve for a four-year term expiring at the 2010 Annual Meeting of Shareholders
and until his successor shall have been elected and qualified, pursuant to this
Proposal 3. Each of the nominees has been approved and recommended for
nomination by the Nominating Subcommittee of the Corporate Governance and
Nominating Committee of the Board of Directors. The biographical information
with respect to each of these nominees is set forth under Proposal 2. This
Proposal 3 will have no effect if the proposed Annual Election Amendments are
approved by the shareholders at the Annual Meeting pursuant to Proposal 1.

If the shareholders do not approve Proposal 1 and the Annual Election
Amendments do not become effective at the Annual Meeting, the Company expects
that each of the nominees, if elected pursuant to this Proposal 3, will serve as
directors and hold office until the 2010 Annual Meeting of Shareholders and
until their respective successors have been elected and qualified. In that
event, all other directors of the Company will continue to serve as follows:
John H. Broadbent, Jr., George W. Ebright and Anna M. Seal will remain in office
with terms expiring at

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the 2007 Annual Meeting of Shareholders; T. Jerome Holleran, R. James Macaleer
and Alan M. Sebulsky will remain in office with terms expiring at the 2008
Annual Meeting of Shareholders; and Carl G. Anderson, Jr., John E. Gurski and
Marlin Miller, Jr. will remain in office with terms expiring at the 2009 Annual
Meeting of Shareholders; subject to their earlier resignation, removal or death.

BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD

The business of the Company is managed under the direction of its Board
of Directors. The Board has responsibility for establishing broad corporate
policies and for the Company's overall performance. It is not, however, involved
in operating details on a day-to-day basis. The Board is kept advised of the
Company's business through regular reports and analyses and discussions with its
Chief Executive Officer and other officers.

"INDEPENDENT" DIRECTORS. The Board of Directors has determined that each
of the Company's directors, other than Messrs. Anderson, Miller and Holleran, is
an independent director within the meaning of the Marketplace Rules of The
Nasdaq Stock Market, Inc. ("the Nasdaq"). The Nasdaq definition of independent
director includes a series of objective tests, such as that the director is not,
and was not during the last three years, an employee of the Company and has not
received certain payments from, or engaged in various types of business dealings
with, the Company. In addition, as further required by the Nasdaq rules, the
Board has made a subjective determination as to each independent director that
no relationships exist which, in the opinion of the Board, would interfere with
such individual's exercise of independent judgment in carrying out his or her
responsibilities as a director. In making these determinations, the Board
reviewed and discussed information provided by the directors and the Company
with regard to each director's business and personal activities as they may
relate to the Company and its management.

BOARD STRUCTURE AND MEETINGS. The Board of Directors conducts its
business through meetings of the Board and through activities of its committees.
The Board and its committees meet throughout the year on a set schedule, and
also hold special meetings and act by written consent from time to time as
appropriate. Board agendas include regularly scheduled executive sessions of the
independent directors to meet without the presence of management, which are
presided over by the Company's Lead Director, who is currently George W.
Ebright. The Board has delegated various responsibilities and authority to
different committees of the Board as described below in this section of the
Proxy Statement. Committees regularly report on their activities and actions to
the full Board. Members of the Board have access to all of the Company's
employees outside of Board meetings.

The Board of Directors held five meetings during fiscal 2005. All of the
directors attended at least 75% of the meetings of the Board and any committee
on which they served during fiscal 2005. The committees of the Board currently
are the Audit Committee, the

-10-

Compensation and Human Resources Committee, and the Corporate Governance and
Nominating Committee. Each of these committees has a written charter that may be
found on the Company's website at http://www.arrowintl.com.

AUDIT COMMITTEE. The primary function of the Audit Committee is to
assist the Company's Board of Directors in its oversight of the integrity of the
Company's consolidated financial statements and internal controls, the Company's
compliance with legal and regulatory requirements, the qualifications and
independence of the Company's registered independent accounting firm, and the
performance of the Company's internal audit function and its registered
independent accounting firm. The Audit Committee, among other things, reviews
with the Company's management and its registered independent accounting firm the
Company's audited consolidated financial statements to be included in its Annual
Report on Form 10-K and its interim financial statements to be included in its
Quarterly Reports on Form 10-Q, assesses the effectiveness and adequacy of the
Company's internal control over financial reporting and audit procedures,
reviews the Company's compliance policies, and evaluates the independence of,
approves the audit and non-audit services provided by, and has the ultimate
authority and responsibility for selecting and nominating for shareholder
approval, the firm to be appointed as the registered independent accounting firm
to audit the Company's consolidated financial statements, the effectiveness of
its internal control over financial reporting and management's assessment of the
effectiveness of such internal control. The members of the Audit Committee
currently are John H. Broadbent, Jr., who acts as Chairman of the Committee,
George W. Ebright, Anna M. Seal and Alan M. Sebulsky, each of whom the Board of
Directors has determined is an independent director qualified to serve on the
Audit Committee in accordance with the applicable rules and regulations of the
Securities and Exchange Commission (the "SEC") and the Nasdaq. In addition, the
Board of Directors has determined that each of Mr. Broadbent and Ms. Seal is
qualified to serve as an "audit committee financial expert" of the Company, as
defined in applicable SEC rules, and that each member of the Audit Committee has
sufficient knowledge in reading and understanding the Company's financial
statements to serve on the Audit Committee. Ms. Seal was appointed to the Audit
Committee on November 1, 2005. The Audit Committee met seven times during the
fiscal year ended August 31, 2005.

COMPENSATION AND HUMAN RESOURCES COMMITTEE. The Compensation and Human
Resources Committee reviews and recommends to the Company's Board of Directors
the compensation for the Company's Chief Executive Officer and all of its other
executive officers, including salaries, bonuses and grants of awards under, and
administration of, the Company's stock incentive plans. The Compensation and
Human Resources Committee, among other things, reviews and recommends to the
Board employees to whom awards will be made under the Company's stock incentive
plans, determines the number of shares to be optioned or awarded, and the time,
manner of exercise and other terms of the awards. The members of the
Compensation and Human Resources Committee currently are John E. Gurski, R.
James Macaleer, who acts as Chairman of the Committee, and Raymond Neag, each of
whom is an independent director, as defined in applicable Nasdaq rules. The
Compensation and Human Resources Committee met five times during the fiscal year
ended August 31, 2005.

CORPORATE GOVERNANCE AND NOMINATING COMMITTEE. The primary function of
the Corporate Governance and Nominating Committee is to oversee the Company's
corporate governance and make recommendations to the Company's Board of
Directors regarding the organization and procedures of the Board, including the
size and compensation of the Board and the structure and makeup of its
committees. The Corporate Governance and Nominating Committee, among other
things, evaluates the operations and performance of the Board and its
committees, devises and recommends to the Board additions and modifications to
the Company's Corporate Governance Principles, reviews and recommends to the
Board the

-11-

compensation for directors, and identifies, approves and recommends the nominees
for election or re-election to the Board. The members of the Corporate
Governance and Nominating Committee currently are Marlin Miller, Jr., Raymond
Neag, Richard T. Niner, who acts as Chairman of the Committee, and Alan M.
Sebulsky, each of whom, other than Mr. Miller, is an independent director, as
defined in applicable Nasdaq rules. The Corporate Governance and Nominating
Committee met four times during the fiscal year ended August 31, 2005.

The Corporate Governance and Nominating Committee has also formed and
maintains a Nominating Subcommittee, which is comprised of Messrs. Neag, Niner
and Sebulsky, the independent members of the Corporate Governance and Nominating
Committee. The Nominating Subcommittee, among other things, establishes criteria
for Board membership and identifies, reviews and recommends individuals
qualified for membership on the Board. The Nominating Subcommittee of the
Corporate Governance and Nominating Committee met three times during the fiscal
year ended August 31, 2005.

In determining whether to nominate a candidate for membership on the
Board, the Nominating Subcommittee will consider, among other criteria, relevant
experience, skills, diversity and the ability to act on behalf of the Company's
shareholders. Candidates may come to the attention of the Subcommittee from
current Board members, officers, shareholders or other sources. The Subcommittee
will review all candidates in the same manner regardless of the source of the
recommendation.

SHAREHOLDER NOMINEES FOR DIRECTOR. Any shareholder of the Company who
wants to nominate a candidate for election to the Board must deliver timely
written notice to the Company's Corporate Secretary at Arrow International,
Inc., P.O. Box 12888, 2400 Bernville Road, Reading, Pennsylvania 19612. In order
to be timely, the notice must be delivered:

o With respect to an annual meeting of shareholders, not less than
60 days prior to the anniversary date of the immediately
preceding annual meeting of shareholders; and

o With respect to a special meeting of shareholders called for the
purpose of electing directors, not less than ten days following
the date on which notice of such special meeting is first given
to shareholders.

The shareholders' notice to the Company's Corporate Secretary must set
forth as to each person whom the shareholder proposes to nominate for election
as a director (a) his or her name, age, business address and residence address,
(b) his or her principal occupation, employment and qualifications to serve as a
director, (c) the number of shares of Common Stock which are owned beneficially
or of record by him or her, and (d) any other information relating to the
nominee that would be required to be disclosed in a proxy statement or other
filings required to be made in connection with solicitations of proxies for
election of directors pursuant to Section 14 of the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder (the
"Exchange Act"). In addition, the notice must include as to the shareholder
giving the notice (a) his or her name and record address, (b) the number of
shares of Common Stock which are owned beneficially or of record by him or her,
(c) a description of all arrangements or understandings between the shareholder
and each proposed nominee and any other person or persons (including their
names) pursuant to which the nomination(s) are to be made by the shareholder,
and (d) any other information relating to the shareholder that would be required
to be disclosed in a proxy statement or other filings required to be made in
connection with solicitations of proxies for election of directors pursuant to
Section 14 of the Exchange Act. The notice delivered by such shareholder must be

-12-

accompanied by a written consent of each proposed nominee to being named as a
nominee to the Board and to serve as a director if elected. The shareholder must
represent that he or she is a shareholder of record on the date on which he or
she gives the notice described above and on the record date for the
determination of shareholders entitled to vote at the applicable meeting of
shareholders. No person may nominate himself or herself for election as a
director.

DIRECTOR ATTENDANCE AT ANNUAL MEETINGS. The Company requests that all of
its directors attend each annual meeting of the Company's shareholders. Each
member of the Board of Directors who was a director at the time of the Company's
2005 Annual Meeting of Shareholders held on January 19, 2005 attended such
annual meeting.

COMPENSATION OF DIRECTORS

CASH COMPENSATION. The Company's directors who are not officers or
employees of the Company received a quarterly fee of $5,000 for Board membership
in fiscal 2005 and a fee of $1,000 for attendance in person and $500 for
attendance by telephone at each Board meeting and each committee meeting.
Directors are reimbursed for reasonable expenses incurred in connection with
attending Board and committee meetings. The Chairmen of the Audit Committee, the
Compensation and Human Resources Committee, and the Corporate Governance and
Nominating Committee each received an additional fee of $2,000 per year, and the
Company's Lead Director received an additional fee of $5,000 per year in fiscal
2005.

STOCK-BASED COMPENSATION. To promote the Company's ability to attract
and retain outside directors and to provide them with an incentive to maintain
and enhance the Company's long-term performance, stock awards are made to
directors who are not also employees or consultants of the Company. The stock
awards have been made pursuant to the Company's Directors Stock Incentive Plan
in the form of non-qualified stock options. The plan was approved by the
Company's shareholders at the Company's Annual Meeting of Shareholders held on
January 17, 1996, on which date the plan became effective, and amendments to the
plan were approved by the Company's shareholders at the Company's Annual Meeting
of Shareholders held on January 19, 2000, on which date these amendments became
effective. Upon an eligible director's first election to the Board, such
eligible director receives options to purchase 10,000 shares of Common Stock
and, on the date each year when directors are elected to the Board, eligible
directors receive options to purchase an additional 3,000 shares of Common
Stock. The exercise price for each option is equal to the fair market value of
the Common Stock on the date of grant. Each option has a term of ten years from
the date of grant and vests on the first anniversary of the date of grant.

The amendments to the Company's Directors Stock Incentive Plan approved
by the Company's shareholders at its 2000 Annual Meeting of Shareholders enabled
non-employee directors who were shareholders of the Company at the time of the
Company's initial public offering on June 9, 1992 to be eligible to receive
stock awards under the plan, whereas previously such directors were not so
eligible. In addition, these amendments to the plan enabled eligible directors
to receive options to purchase 3,000 shares of Common Stock on the date each
year when directors are elected to the Board, instead of the 1,000 shares
previously provided for under the plan.

On January 19, 2005, the date of the Company's 2005 Annual Meeting of
Shareholders, in accordance with the amended terms of the plan, each of the
directors of the Company, with the exception of Carl G. Anderson, Jr., the
Chairman and Chief Executive Officer of the Company, was granted options under
the plan to purchase 3,000 shares of Common Stock, in each case at an exercise
price of $30.60, the closing price per share of the Common Stock on

-13-

such date as reported on the Nasdaq National Market. In addition, after being
elected to the Company's Board of Directors on September 7, 2005, Ms. Seal was
granted options pursuant to the plan to purchase 10,000 shares of Common Stock
at an exercise price of $30.92, the closing price per share of the Common Stock
on such date as reported on the Nasdaq National Market.

The Company's current Directors Stock Incentive Plan expires on January
17, 2006, ten years after the effective date of the plan. Because the Company
believes that the granting of equity-based compensation to outside directors
provides an effective means for incentivizing such directors to maintain and
enhance the Company's long-term performance, it plans to continue to make stock
awards to directors who are not employees or consultants of the Company pursuant
to the Company's proposed 2006 Directors Stock Incentive Plan, subject to the
approval of the adoption of this plan by the Company's shareholders at the
Annual Meeting. Under the proposed plan, upon an eligible director's first
election or appointment to the Board, such eligible director will receive
options to purchase 10,000 shares of Common Stock. On the date of each Annual
Meeting of Shareholders of the Company, eligible directors will be eligible to
receive grants of options and/or restricted stock, in each case, at the
discretion of and in such amount as may be determined by the Board. See Proposal
4 - Adoption of 2006 Directors Stock Incentive Plan.

OTHER COMPENSATION. Members of the Company's Board of Directors and
their immediate families (when such family members are traveling with the
director or an executive officer of the Company) are permitted to use the
Company's aircraft. The aggregate incremental cost to the Company for all
directors' personal use of its turboprop aircraft was $121,114 in fiscal 2005,
which amount was reported and calculated in accordance with Internal Revenue
Service guidelines for imputed income for personal use of the Company's
aircraft.

CORPORATE GOVERNANCE

The Company has adopted corporate governance policies and practices to
address a number of key areas of importance to the Company's shareholders,
employees, customers, suppliers and community, including:

o A substantial majority of the members of the Company's Board of
Directors are independent of the Company and its management
within the meaning of applicable rules and regulations of the
SEC and Nasdaq, and only one member of the Board currently
serves as an officer of the Company;

o All members of the Audit Committee, the Compensation and Human
Resources Committee, and the Nominating Subcommittee of the
Corporate Governance and Nominating Committee of the Board are
independent;

o The independent members of the Company's Board of Directors meet
regularly in executive session without the presence of
management. The Lead Director presiding over these meetings
currently is Mr. Ebright;

o If Proposal 1 is approved by the shareholders at the Annual
Meeting, all directors of the Company will stand for election
every year;

o The Corporate Governance and Nominating Committee of the Board
oversees the Company's corporate governance and make
recommendations on all matters relating to the Board's
organization, practices and procedures, and this

-14-

committee is currently in the process of devising a set of
Corporate Governance Principles for the Company, which will
address, among other matters, procedures for annual evaluation
of the Board's and its committees' performance, director
retirement policy, and changes in directors' primary
responsibilities and outside commitments (including service on
the boards of other public companies);

o The Company has adopted a code of business conduct that applies
to all of its officers and other employees and is monitored by
its human resources department;

o The Company's Audit Committee has implemented procedures for the
anonymous submission of employee complaints on accounting,
internal controls and auditing matters, which procedures have
been made available to all of the Company's employees;

o The Company has adopted a code of ethics that applies to all of
its directors, officers and other employees, including its
principal executive officer, principal financial officer,
principal accounting officer and other members of its management
performing similar functions, which is posted on the Company's
website at http://www.arrowintl.com, and any waiver from the
requirements of this code with respect to any individual
director or executive officer is subject to the approval of the
Board;

o The Board has access to, and may contact and meet with, any of
the Company's employees;

o The Company's Chief Executive Officer reports at least annually
to the Board on executive management development;

o The Board works with management to schedule continuing education
programs for all directors, which may include a mix of in-house
and third-party presentations and programs designed to assist
directors in developing and maintaining the skills necessary or
appropriate for the performance of their responsibilities; and

o The Company has in each case obtained shareholder approval
before adopting or making material amendments to its stock
incentive plans.

-15-

EXECUTIVE OFFICERS

The executive officers of the Company and their ages and positions as of
November 1, 2005 are listed below. All executive officers are elected or
appointed annually and serve at the discretion of the Board of Directors. There
are no family relationships among the executive officers of the Company.

Name Office Age
---- ------ ---

Carl G. Anderson, Jr. Chairman and Chief Executive Officer 60

James T. Hatlan Senior Vice President - Manufacturing 58

Frederick J. Hirt Senior Vice President - Finance and 57
Chief Financial Officer

Kenneth E. Imler Senior Vice President - Regulatory Affairs and 56
Quality Assurance

Carl W. Staples Senior Vice President - Human Resources 54

John C. Long Vice President, Secretary and Treasurer 40

Mr. Anderson has served as Chairman and Chief Executive Officer of the
Company since September 2003 and as President since January 19, 2005. From
January 2002 to August 2003, Mr. Anderson served as Vice Chairman of the Board
and General Manager of the Company's Critical Care Division with responsibility
for worldwide sales, marketing, research and development of the Company's
critical care products. Mr. Anderson has served as a director of Arrow since
January 1998 and, prior to his employment by the Company, served as President
and Chief Executive Officer of ABC School Supply, Inc., a producer of materials
and equipment for public and private schools, from May 1997 to December 2001.
Mr. Anderson served as Principal with the New England Consulting Group, a
general management and marketing consulting company, from May 1996 to May 1997,
as Vice President, General Manager, Retail Consumer Products of James River
Corporation, a multinational company engaged in the development, manufacture and
marketing of paper-based consumer products ("James River"), from August 1994 to
March 1996, and as Vice President, Marketing, Consumer Brands of James River
from May 1992 to August 1994, and in various capacities with Nestle Foods
Corporation, the latest as Vice President, Division General Manager,
Confections, from 1984 to May 1992. Prior thereto, Mr. Anderson served in
several marketing and management capacities with Procter & Gamble from 1972 to
1984. Mr. Anderson also serves as a director of Carpenter Technology
Corporation, a specialty steel manufacturer, and IWT Tesoro Corporation, a
manufacturer and distributor of building tile.

Mr. Hatlan was elected Senior Vice President - Manufacturing effective
October 27, 2004 and served as Vice President - Strategic Planning of the
Company since September 2003. Prior to joining the Company, Mr. Hatlan served at
ABC School Supply, Inc., a producer of materials and equipment for public and
private schools, as Chairman from January to August 2002, and as Vice President
of Marketing and Manufacturing from September 1997 to January 2002, and held
various senior management positions at James River Corporation, Tambrands Inc.
and Procter & Gamble from 1972 to 1996.

Mr. Hirt was elected Senior Vice President - Finance and Chief Financial
Officer effective October 27, 2004 and served as Vice President - Finance and
Chief Financial Officer of the

-16-

Company since August 1998. From August 1998 until January 2003, he also served
as Treasurer of the Company. Prior to joining the Company, from 1980 to 1998,
Mr. Hirt served in various capacities with Pharmacia & Upjohn, Inc., the latest
as Vice President, Accounting and Reporting. From 1972 to 1980, Mr. Hirt served
in several accounting positions at the international accounting firm of Coopers
& Lybrand, the latest as audit manager.

Mr. Imler was elected Senior Vice President Regulatory Affairs and
Quality Assurance of the Company effective November 1, 2005. Prior to joining
the Company, Mr. Imler served as Principal Consultant for Quintiles Consulting,
a leading quality systems and regulatory consulting firm to the medical device,
pharmaceutical and biologics industries, from April 1999 to October 2005. As
described in Item 1 of the Company's Annual Report on Form 10-K for the fiscal
year ended August 31, 2005 (the "2005 Form 10-K"), the Company engaged Quintiles
in February 2005 to assist it in implementing rigorous compliance procedures to
achieve the highest practicable levels of product quality assurance as part of
its previously reported Project Operational Excellence program. From March 1997
to April 1999, Mr. Imler served as President and principal of KEI consulting, a
private quality assurance and regulatory affairs consulting company. From 1995
to 1997, Mr. Imler served as Director of Quality Assurance and Regulatory
Affairs for Medtronic Blood Management, a developer and manufacturer of
hemostasis and thrombosis in-vitro diagnostics and auto transfusion systems.
From 1993 to 1995, Mr. Imler served as Director of Quality Assurance and
Regulatory Affairs for COBE Renal Care, a developer and manufacturer of renal
dialysis equipment and disposables. From 1986 to 1993, Mr. Imler served as
Director of Quality Assurance and Regulatory Affairs for Medtronic Heart Valve
Division, a developer and manufacturer of biologic heart valves and associated
cardiac surgery devices. Prior to 1986, Mr. Imler held various management
positions in Quality Assurance and Regulatory Affairs at SmithKline/Beckman
Instruments, a developer and manufacturer of clinical laboratory equipment and
in-vitro diagnostics, and Behring Diagnostics, a developer and manufacturer of
in-vitro diagnostics.

Mr. Staples was elected Senior Vice President - Human Resource effective
October 27, 2004 and served as Vice President - Human Resources of the Company
since September 2002. Prior to joining the Company, Mr. Staples served as Vice
President Human Resources and in various other human resources capacities with
CIBA Specialty Chemicals, a manufacturer of specialty chemicals, from 1989
through August 2002. From 1974 to 1989, Mr. Staples served in various human
resources-related positions with Sara Lee Corporation, Bausch & Lomb
Incorporated, Rockwell International and Union Carbide Corporation.

Mr. Long has served as Vice President and Treasurer of the Company since
January 2003 and was also elected Secretary of the Company effective April 15,
2004, and served as Assistant Treasurer from 1995 to January 2003. Prior to
joining the Company, Mr. Long served as Controller for the Jaindl Companies, a
group of privately held companies involved in agribusiness and real estate
development, from 1989 to 1995. From 1986 to 1989, Mr. Long was employed in the
Allentown, Pennsylvania office of the accounting firm, Concannon, Gallagher,
Miller & Co. Mr. Long also serves as a director of American Bank Incorporated, a
regional commercial bank.

SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of November 25, 2005, the beneficial
ownership of Common Stock by (1) each director and nominee, (2) each of the
executive officers named in the Summary Compensation Table below (whose
beneficial ownership has been rounded up or down to the nearest whole share of
Common Stock), (3) all directors and officers as a group

-17-

(including the named individuals), and (4) each beneficial owner of more than 5%
of the outstanding Common Stock. Except as otherwise indicated in the notes
immediately following the table, the persons named in the table have sole voting
and investment power with respect to all shares of Common Stock shown as
beneficially owned by them, subject to community property laws where applicable.

AMOUNT PERCENT OF
NAME BENEFICIALLY OWNED CLASS OWNED
---- ------------------ -----------

Richard T. Niner.................................. 6,313,980(1) 14.1%
Marlin Miller, Jr................................. 5,452,809(2) 12.2%
Raymond Neag...................................... 2,620,556(3) 5.9%
T. Jerome Holleran................................ 1,065,130(4) 2.4%
John H. Broadbent, Jr............................. 578,378(5) 1.3%
Carl G. Anderson, Jr.............................. 357,130(6) *
Frederick J. Hirt................................. 120,624(7) *
Philip B. Fleck................................... 53,322(8) *
R. James Macaleer................................. 42,830(9) *
Alan M. Sebulsky.................................. 38,000(10) *
John E. Gurski.................................... 24,454(11) *
Carl W. Staples................................... 22,494(12) *
George W. Ebright................................. 22,000(13) *
James T. Hatlan................................... 15,900(14) *
Philip M. Croxford................................ 419(15) *
Paul L. Frankhouser............................... -- (16) *
Anna M. Seal ..................................... -- (17) *
All directors and officers as a group
(19 persons)................................... 16,753,825(18) 37.5%

Robert L. McNeil, Jr.............................. 4,563,688(19) 10.2%
Richard T. Niner and Robert W.
Cruickshank, as Trustees of the Robert L.
McNeil, Intervivos Trust dated November 30,
1983........................................... 4,624,494 10.4%
c/o Wilmington Trust Company
1100 North Market Street
Wilmington, Delaware 19890

- ------------------------
* Less than one percent.

(1) Includes an aggregate of 14,656 shares owned by Mr. Niner's wife, as to
which Mr. Niner disclaims beneficial ownership, 20,000 shares held by a
charitable foundation of which Mr. Niner is an officer and a director
with power to vote and dispose of the shares held by such foundation, as
to which Mr. Niner disclaims beneficial ownership, and 4,624,494 shares
held by Mertz & Moyer, as nominee for the Robert L. McNeil, Jr. 1983
Intervivos Trust (the "McNeil Trust"), of which Mr. Niner is one of two
trustees who have shared power to vote and dispose of the shares held in
such trust. Also includes 18,000 shares issuable upon the exercise of
vested options and options which are deemed to be presently exercisable.

(footnotes continued on next page)

-18-

(footnotes continued from previous page)

(2) Includes 6,000 shares issuable upon the exercise of vested options and
options which are deemed to be presently exercisable. Also includes
2,000 shares owned by Mr. Miller's wife, as to which Mr. Miller
disclaims beneficial ownership.

(3) Includes 18,000 shares issuable upon the exercise of vested options and
options which are deemed to be presently exercisable. Also includes
3,000 shares owned by Mr. Neag's wife as to which Mr. Neag disclaims
beneficial ownership.

(4) Includes 50,000 shares owned by Mr. Holleran's wife, as to which Mr.
Holleran disclaims beneficial ownership. Also includes 797,130 shares
owned by the Thomas Jerome Holleran Revocable Trust, of which Mr.
Holleran is trustee with sole power to vote and dispose of the shares
held by such trust. In addition, includes 18,000 shares issuable upon
the exercise of vested options and options which are deemed to be
presently exercisable.

(5) Includes 24,000 shares owned by Mr. Broadbent's wife and 500 shares
jointly owned by Mr. Broadbent's wife and her adult son, as to which Mr.
Broadbent disclaims beneficial ownership. Also includes 24,600 shares
held by a charitable foundation, of which Mr. Broadbent is one of three
trustees who have shared power to vote and dispose of the shares held by
such foundation, and 20,000 shares held by The Dana L. Bunting and
Robert L. Bunting Irrevocable Educational Trust, of which Mr. Broadbent
is sole trustee with power to vote and dispose of the shares held in
such trust. In addition, includes 18,000 shares issuable upon the
exercise of vested options and options which are deemed to be presently
exercisable. Excludes 42,379 shares held by the John H. Broadbent, Jr.
Charitable Remainder Unitrust, of which Mr. Broadbent was the grantor
but has no power to vote or dispose of such shares, and as to which Mr.
Broadbent disclaims beneficial ownership.

(6) Includes 337,000 shares issuable upon the exercise of vested options and
options which are deemed to be presently exercisable. Does not include
260,000 shares issuable upon the exercise of options which are not
presently exercisable.

(7) Includes 116,000 shares issuable upon the exercise of vested options and
options which are deemed to be presently exercisable. Does not include
74,000 shares issuable upon the exercise of options which are not
presently exercisable.

(8) As of December 31, 2004, the effective date of Mr. Fleck's retirement as
President and Chief Operating Officer of the Company, all of his options
which were then unvested became immediately exercisable pursuant to the
Company's previously reported early retirement program approved by the
Company's Board of Directors on October 27, 2004 (the "Early Retirement
Program").

(9) Includes 18,000 shares issuable upon the exercise of vested options and
options which are deemed to be presently exercisable.

(10) Includes 30,000 shares issuable upon the exercise of vested options and
options which are deemed to be presently exercisable.

(footnotes continued on next page)

-19-

(footnotes continued from previous page)

(11) Includes 20,000 shares issuable upon the exercise of vested options and
options which are deemed to be presently exercisable.

(12) Includes 22,200 shares issuable upon the exercise of vested options and
options which are deemed to be presently exercisable. Does not include
68,400 shares issuable upon the exercise of options which are not
presently exercisable.

(13) Includes 21,000 shares issuable upon the exercise of vested options and
options which are deemed to be presently exercisable.

(14) Includes 14,000 shares issuable upon the exercise of vested options and
options which are deemed to be presently exercisable. Does not include
56,000 shares issuable upon the exercise of options which are not
presently exercisable.

(15) By mutual agreement with the Company, Mr. Croxford left the employment
of the Company as of October 12, 2005.

(16) As of January 31, 2005, the effective date of Mr. Frankhouser's
retirement as Executive Vice President of the Company, all of his
options which were then unvested became immediately exercisable pursuant
to the Company's Early Retirement Program.

(17) Does not include 10,000 shares issuable upon the exercise of options
which are not presently exercisable.

(18) See footnotes (1) through (17) above.

(19) Includes 100,000 shares held by a charitable foundation of which Mr.
McNeil, a former director of the Company, is the president and one of
twelve directors who have shared power to vote and dispose of the shares
held by such foundation. Excludes 4,624,494 shares held by Mertz &
Moyer, as nominee for the McNeil Trust, of which Mr. McNeil was the
grantor for the benefit of Mr. McNeil and his lineal descendants. Mr.
McNeil disclaims beneficial ownership of such shares held in the McNeil
Trust.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act and the rules promulgated thereunder
require the Company's officers and directors and persons who beneficially own
more than ten percent of a registered class of the Company's equity securities
to file reports of ownership and changes in ownership with the SEC and to
furnish to the Company copies of all such filings. The Company has determined,
based solely upon a review of those reports and amendments thereto furnished to
the Company during and with respect to the Company's fiscal year ended August
31, 2005 and written representations from certain reporting persons, that (1)
Carl W. Staples, the Company's Senior Vice President - Human Resources, was
inadvertently late in filing a Form 4 reporting his exercise of options to
purchase 5,400 shares of Common Stock and subsequent sale of such shares on July
8, 2005; and (2) John H. Broadbent, Jr., a director of the Company, was
inadvertently late in filing a Form 4 reporting the sale of 4,000 shares of
Common Stock on August 15, 2005 by a charitable remainder unitrust in which he
has a pecuniary interest.

-20-

EXECUTIVE COMPENSATION

The following table summarizes, for the Company's past three fiscal
years, all compensation paid to the Company's Chief Executive Officer, each of
the four most highly compensated executive officers of the Company other than
the Chief Executive Officer as of August 31, 2005 and two other former executive
officers of the Company pursuant to SEC Regulation S-K Item 402(a)(3)(iii)
(collectively, the "Named Executive Officers") for services rendered to the
Company in all capacities. See "Executive Officers" beginning on page 16 of this
Proxy Statement for a complete listing of the Company's current executive
officers.

SUMMARY COMPENSATION TABLE

ANNUAL LONG-TERM
COMPENSATION(1) COMPENSATION
------------------------ -----------------------------------
SECURITIES
NAME AND FISCAL UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#)(2) COMPENSATION($)(2)
- ------------------ ---- --------- -------- ------------- ------------------

Carl G. Anderson, Jr.(3) 2005 418,752 -0- -0- 7,125(4)
Chairman and Chief 2004 364,587 300,003 400,000(5) 5,105(4)
Executive Officer 2003 294,784 145,918 -0- 110,401(4)

Philip B. Fleck(6) 2005 521,350(7) -0- -0- 153,582(8)
President and Chief 2004 306,576 220,735 45,000(9) 9,322(8)
Operating Officer 2003 294,784 145,918 -0- 6,948(8)

Paul L. Frankhouser(10) 2005 574,746(11) -0- -0- 125,850(12)
Executive Vice 2004 270,000 172,800 35,000(13) 23,690(12)
President 2003 257,936 113,492 -0- 21,179(12)

Frederick J. Hirt(14) 2005 275,563 -0- 20,000(15) 9,491(16)
Senior Vice President- Finance 2004 268,253 171,682 40,000(17) 7,931(16)
and Chief 2003 257,936 113,492 -0- 6,579(16)
Financial Officer

Philip M. Croxford(18) 2005 260,625 -0- 20,000(19) 7,398(20)
Group Vice President- 2004 240,573 99,000 20,000(21) 28,749(20)
Critical Care and Cardiac
Assist

Carl W. Staples(22) 2005 226,251 -0- 20,000(23) 17,865(24)
Senior Vice President- 2004 200,004 96,002 40,000(25) 14,395(24)
Human Resources 2003 163,945 36,300 -0- 2,877(24)

James T. Hatlan(26) 2005 226,251 -0- 20,000(27) 11,731(28)
Senior Vice President- 2004 200,000 80,002 20,000(29) 26,300(28)
Manufacturing

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

(1) Column with respect to "Other Annual Compensation" has not been included
in this table because the aggregate amount of perquisites and other
personal benefits received from the Company by any of the Named
Executive Officers did not exceed the lesser of $50,000 or 10% of the
total annual salary and bonus reported for each such Named Executive
Officer in the table.

(footnotes continued on next page)

-21-

(footnotes continued from previous page)

(2) The numbers of shares underlying option awards, the exercise prices
applicable to such awards and the numbers of shares contributed by the
Company under its 401(k) Plan that are set forth in this table and in
the corresponding footnotes have in each case been adjusted to reflect
the two-for-one split of the Common Stock effected on August 15, 2003.

(3) Mr. Anderson was elected as Chairman and Chief Executive Officer of the
Company effective September 1, 2003. From January 16, 2002 to August 31,
2003, Mr. Anderson served as Vice Chairman of the Board and General
Manager of the Company's Critical Care Division, and was not an employee
of the Company prior thereto.

(4) Consists of (a) contributions in fiscal 2005, 2004 and 2003 to Mr.
Anderson's account under the Company's 401(k) Plan of 235.94, 188.06 and
76.79 shares of Common Stock having an aggregate fair market value of
$7,125, $5,105 and $2,948, respectively, and (b) payments in fiscal 2003
to or on behalf of Mr. Anderson in connection with his relocation,
including moving expenses and settlement and closing costs, of $107,453.

(5) Represents an award to Mr. Anderson on September 1, 2003 of options to
purchase 400,000 shares of Common Stock at an exercise price of $25.80
per share under the Company's 1999 Stock Incentive Plan. Subject to Mr.
Anderson's continued employment with the Company, 25% of such stock
option award (i.e., 100,000 options) will vest on each of the first
through fourth anniversaries of the date of such award (i.e., September
1). The options are subject to immediate vesting upon the occurrence of
certain change in control events.

(6) Mr. Fleck retired as President and Chief Operating Officer of the
Company effective as of December 31, 2004.

(7) Consists of (a) $102,811 in base salary paid through December 31, 2004,
the effective date of Mr. Fleck's retirement from the Company, and (b) a
payment of $418,539 made to Mr. Fleck pursuant to the terms of the Early
Retirement Program.

(8) Consists of (a) matching contributions of $637, $4,797 and $4,000 made
by the Company to Mr. Fleck's account under the Company's 401(k) Plan in
fiscal 2005, 2004 and 2003, respectively, (b) contributions in fiscal
2005, 2004 and 2003 to Mr. Fleck's account under the Company's 401(k)
Plan of 126.33, 167.17 and 76.79 shares of Common Stock having an
aggregate fair market value of $3,666, $4,525 and $2,948, respectively,
(c) a payment of $17,512 made to Mr. Fleck in fiscal 2005 in respect of
his accrued but unused vacation allowance, and (d) a payment of $131,767
made to Mr. Fleck in fiscal 2005 pursuant to the Company's Supplemental
Executive Retirement Plan (see "- Retirement Plans - Supplemental
Executive Retirement Plan").

(9) Represents an award to Mr. Fleck on October 14, 2003 of options to
purchase 45,000 shares of Common Stock at an exercise price of $25.00
per share under the Company's 1999 Stock Incentive Plan. Pursuant to the
Early Retirement Program, these options (to the extent they were not
already vested at such time) became vested immediately on December 31,
2004, the effective date of Mr. Fleck's retirement.

(footnotes continued on next page)

-22-

(footnotes continued from previous page)

(10) Mr. Frankhouser retired as Executive Vice President of the Company
effective January 31, 2005.

(11) Consists of (a) $114,075 in base salary paid through January 31, 2005,
the effective date of Mr. Frankhouser's retirement from the Company, and
(b) a payment of $460,671 made to Mr. Frankhouser pursuant to the terms
of the Early Retirement Program.

(12) Consists of (a) matching contributions of $1,184, $4,122 and $3,570 made
by the Company to Mr. Frankhouser's account under the Company's 401(k)
Plan in fiscal 2005, 2004 and 2003, respectively, (b) contributions in
fiscal 2005, 2004 and 2003 to Mr. Frankhouser's account under the
Company's 401(k) Plan of 120.82, 147.76 and 70.85 shares of Common Stock
having an aggregate fair market value of $3,577, $3,991 and $2,728,
respectively, (c) payments of $16,122, $15,577 and $14,881 made to Mr.
Frankhouser in fiscal 2005, 2004 and 2003, respectively, in respect of
his accrued but unused vacation allowance, and (d) a payment of $104,966
to Mr. Frankhouser in fiscal 2005 pursuant to the Company's Supplemental
Executive Retirement Plan (see "-Retirement Plans - Supplemental
Executive Retirement Plan").

(13) Represents an award to Mr. Frankhouser on October 14, 2003 of options to
purchase 35,000 shares of Common Stock at an exercise price of $25.00
per share under the Company's 1999 Stock Incentive Plan. Pursuant to the
Early Retirement Program, these options (to the extent they were not
already vested at such time) became vested immediately on January 31,
2005, the effective date of Mr. Frankhouser's retirement.

(14) Mr. Hirt was elected Senior Vice President - Finance and Chief Financial
Officer of the Company effective October 27, 2004.

(15) Represents an award to Mr. Hirt on January 19, 2005 of options to
purchase 20,000 shares of Common Stock at an exercise price of $30.60
per share under the Company's 1999 Stock Incentive Plan. Subject to Mr.
Hirt's continued employment with the Company, 20% of such stock option
award (i.e., 4,000 options) will vest on each of the first through fifth
anniversaries of the date of such award (i.e., January 19). The options
are subject to immediate vesting upon the occurrence of certain change
in control events.

(16) Consists of (a) matching contributions in the amount of $5,026, $4,114
and $4,000 made by the Company to Mr. Hirt's account under the Company's
401(k) Plan in fiscal 2005, 2004 and 2003, respectively, and (b)
contributions in fiscal 2005, 2004 and 2003 to Mr. Hirt's account under
the Company's 401(k) Plan of 147.56, 140.89 and 67.19 shares of Common
Stock having an aggregate fair market value of $4,464, $3,817 and
$2,579, respectively.

(17) Represents an award to Mr. Hirt on October 14, 2003 of options to
purchase 40,000 shares of Common Stock at an exercise price of $25.00
per share under the Company's 1999 Stock Incentive Plan. Subject to Mr.
Hirt's continued employment with the Company, 25% of such stock option
award (i.e., 10,000 options) will vest on each of the first through
fourth anniversaries of the date of such award (i.e., October 14). The
options are subject to immediate vesting upon the occurrence of certain
change in control events.

(footnotes continued on next page)

-23-

(footnotes continued from previous page)

(18) Mr. Croxford was elected Group Vice President-Critical Care and Cardiac
Assist effective October 27, 2004. From August 25, 2003 to October 26,
2004, Mr. Croxford served as a Vice President of the Company, and was
not an employee of the Company prior thereto. Accordingly, no
information is provided for periods prior to August 25, 2003 for Mr.
Croxford. By mutual agreement with the Company, Mr. Croxford left the
employment of the Company as of October 12, 2005.

(19) Represents an award to Mr. Croxford on January 19, 2005 of options to
purchase 20,000 shares of Common Stock at an exercise price of $30.60
per share under the Company's 1999 Stock Incentive Plan. Subject to Mr.
Croxford's continued employment with the Company, 20% of such stock
option award (i.e., 4,000 options) will vest on each of the first
through fifth anniversaries of the date of such award (i.e., January
19). As a result of Mr. Croxford's departure from the Company as of
October 12, 2005, all of such options were cancelled.

(20) Consists of (a) matching contributions in the amount of $3,816 and
$4,350 made by the Company to Mr. Croxford's account under the Company's
401(k) Plan in fiscal 2005 and 2004, respectively, (b) contributions in
fiscal 2005 and 2004 to Mr. Croxford's account under the Company's
401(k) Plan of 117.09 and 89.19 shares of Common Stock having an
aggregate fair market value of $3,582 and $2,399, respectively, and (c)
a payment of $20,000 made to Mr. Croxford in fiscal 2004 as a sign-on
bonus.

(21) Represents an award to Mr. Croxford on October 14, 2003 of options to
purchase 20,000 shares of Common Stock at an exercise price of $25.00
per share under the Company's 1999 Stock Incentive Plan. Subject to Mr.
Croxford's continued employment with the Company, 25% of such stock
option award (i.e., 5,000 options) will vest on each of the first
through fourth anniversaries of the date of such award (i.e., October
14). As a result of Mr. Croxford's departure from the Company as of
October 12, 2005, 10,000 of such options became vested and the remaining
10,000 were cancelled.

(22) Mr. Staples was elected Senior Vice President - Human Resources of the
Company effective October 27, 2004.

(23) Represents an award to Mr. Staples on January 19, 2005 of options to
purchase 20,000 shares of Common Stock at an exercise price of $30.60
per share under the Company's 1999 Stock Incentive Plan. Subject to Mr.
Staples's continued employment with the Company, 20% of such stock
option award (i.e., 4,000 options) will vest on each of the first
through fifth anniversaries of the date of such award (i.e., January
19). The options are subject to immediate vesting upon the occurrence of
certain change in control events.

(24) Consists of (a) matching contributions of $3,717, $4,292 and $1,375 made
by the Company to Mr. Staples's account under the Company's 401(k) Plan
in fiscal 2005, 2004 and 2003, respectively, (b) contributions in fiscal
2005, 2004 and 2003 to Mr. Staples's account under the Company's 401(k)
Plan of 107.99, 89.23 and 37.32 shares of Common Stock having an
aggregate fair market value of $3,302, $2,411 and $1,502, respectively,
and (c) payments of $10,846 and $7,692 made to Mr. Staples in fiscal
2005 and 2004, respectively, in respect of his accrued but unused
vacation allowance.

(footnotes continued on next page)

-24-

(footnotes continued from previous page)

(25) Represents an award to Mr. Staples on October 14, 2003 of options to
purchase 40,000 shares of Common Stock at an exercise price of $25.00
per share under the Company's 1999 Stock Incentive Plan. Subject to Mr.
Staples's continued employment with the Company, 25% of such stock
option award (i.e., 10,000 options) will vest on each of the first
through fourth anniversaries of the date of such award (i.e., October
14). The options are subject to immediate vesting upon the occurrence of
certain change in control events.

(26) Mr. Hatlan was elected Senior Vice President - Manufacturing of the
Company effective October 27, 2004. From September 2, 2003 to October
26, 2004, Mr. Hatlan served as Vice President - Strategic Planning of
the Company, and was not an employee of the Company prior thereto.
Accordingly, no information is provided for periods prior to September
2, 2003 for Mr. Hatlan.

(27) Represents an award to Mr. Hatlan on January 19, 2005 of options to
purchase 20,000 shares of Common Stock at an exercise price of $30.60
per share under the Company's 1999 Stock Incentive Plan. Subject to Mr.
Hatlan's continued employment with the Company, 20% of such stock option
award (i.e., 4,000 options) will vest on each of the first through fifth
anniversaries of the date of such award (i.e., January 19). The options
are subject to immediate vesting upon the occurrence of certain change
in control events.

(28) Consists of (a) matching contributions of $4,133 and $4,267 made by the
Company to Mr. Hatlan's account under the Company's 401(k) Plan in
fiscal 2005 and 2004, respectively, (b) contributions in fiscal 2005 and
2004 to Mr. Hatlan's account under the Company's 401(k) Plan of 100.34
and 75.75 shares of Common Stock having an aggregate fair market value
of $3,079 and $2,033, respectively, (c) payment of $4,519 made to Mr.
Hatlan in fiscal 2005 in respect of his accrued but unused vacation
allowance, and (d) a payment of $20,000 made to Mr. Hatlan in fiscal
2004 as a sign-on bonus.

(29) Represents an award to Mr. Hatlan on October 14, 2003 of options to
purchase 20,000 shares of Common Stock at an exercise price of $25.00
per share under the Company's 1999 Stock Incentive Plan. Subject to Mr.
Hatlan's continued employment with the Company, 25% of such stock option
award (i.e., 5,000 options) will vest on each of the first through
fourth anniversaries of the date of such award (i.e., October 14). The
options are subject to immediate vesting upon the occurrence of certain
change in control events.

-25-

OPTION GRANTS

The following table sets forth certain information, as of August 31,
2005, concerning individual grants of stock options made during the fiscal year
ended August 31, 2005 to the Named Executive Officers.

OPTION GRANTS IN FISCAL 2005

POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM ($)
---------------------------------------------------------------------- -----------------------------
PERCENT OF
NUMBER OF TOTAL OPTIONS
SECURITIES GRANTED TO
UNDERLYING OPTIONS EMPLOYEES IN EXERCISE EXPIRATION
NAME GRANTED (#) FISCAL YEAR(1) PRICE ($/SH) DATE 5% 10%
- ----------------------- -------------------- ----------------- --------------- ------------ ------------- --------------

Frederick J. Hirt 20,000(2) 10.81% 30.60 1/19/15 384,800 975,400
Philip M. Croxford 20,000(2) 10.81% 30.60 1/19/15 384,800 975,400
Carl W. Staples 20,000(2) 10.81% 30.60 1/19/15 384,800 975,400
James T. Hatlan 20,000(2) 10.81% 30.60 1/19/15 384,800 975,400

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

(1) Based upon total grants of options in respect of 185,000 shares of
Common Stock during fiscal 2005.

(2) Granted under the Company's 1999 Stock Incentive Plan on January 19,
2005. Subject to continued employment by the Company, 20% of such
options (i.e., 4,000 options) will vest on each of the first through
fifth anniversaries of such date (i.e., January 19). The options are
subject to immediate vesting upon the occurrence of certain change in
control events. As a result of Mr. Croxford's departure from the Company
as of October 12, 2005, all of the options awarded to him in fiscal 2005
were cancelled.

AGGREGATE OPTION EXERCISES IN FISCAL 2005 AND FISCAL YEAR-END OPTION VALUES

The following table provides information concerning stock options
exercised during fiscal 2005 and the number of unexercised options held by the
Named Executive Officers as of August 31, 2005. Also reported are the values for
unexercised, "in the money" options, which represent the positive spread between
the respective exercise prices of such options and the fair market value of the
Common Stock as of August 31, 2005.

NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT IN-THE-MONEY OPTIONS
ACQUIRED ON AUGUST 31, 2005(#) AT AUGUST 31, 2005 ($)(1)
NAME EXERCISE (#) VALUE REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------ ------------- ------------------ ------------- --------------- ------------- ---------------

Carl G. Anderson, Jr. -- -- 207,000 360,000 1,381,963 1,678,800
Philip B. Fleck(2) 355,000 5,426,750 0 0 0 0
Paul L. Frankhouser(2) 106,178 1,132,930 0 0 0 0
Frederick J. Hirt -- -- 94,000 66,000 1,234,140 317,760
Carl W. Staples 5,400 55,128 7,000 53,600 32,200 178,446
Philip M. Croxford (3) -- -- 5,000 35,000 23,000 69,000
James T. Hatlan -- -- 5,000 35,000 23,000 69,000

-26-

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

(1) Based upon a closing sale price of the Common Stock of $29.60 per share
on August 31, 2005 as reported on the Nasdaq National Market.

(2) Messrs. Fleck and Frankhouser retired from the Company effective as of
December 31, 2004 and January 31, 2005, respectively.

(3) By mutual agreement with the Company, Mr. Croxford left the employment
of the Company as of October 12, 2005.

RETIREMENT PLANS

RETIREMENT PLAN. The Retirement Plan for Salaried Employees of Arrow
International, Inc. became effective on September 1, 1978, and was amended and
restated as of September 1, 1984, September 1, 1989, September 1, 1997 and March
28, 2005 (the "Retirement Plan"). The Retirement Plan is a non-contributory
defined benefit pension plan intended to be qualified under Section 401(a) of
the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"). The
Retirement Plan covers salaried employees of the Company who have attained age
21 and completed one year of service and provides benefits based upon years of
service and compensation. All of the executive officers of the Company
participate in the Retirement Plan. Benefits under the Retirement Plan are based
on an annual rate of 1.25% of a participant's final average earnings multiplied
by such participant's years of credited service with the Company after September
1, 1975. Final average earnings are defined under the Retirement Plan as the
participant's average annual compensation, excluding discretionary bonuses and
subject to annual limitations on compensation under the Internal Revenue Code,
during the 60 consecutive months in the final 120 months of the participant's
employment which produce the highest average. Since 1989, Internal Revenue Code
provisions have limited the amount of annual compensation that can be used for
calculating pension benefits. In 2005, no more than $210,000 of annual salary
can be used to determine an employee's annual benefit accrual. The Internal
Revenue Service adjusts this figure annually. Benefits under the Retirement Plan
are payable upon normal retirement, which is the later of age 65 or the fifth
anniversary of commencing plan participation, early retirement at age 55
following ten years of service, death, disability or other termination of
employment following five years of vesting service, and may be paid under
various annuity forms of payment.

Contributions to the Retirement Plan for any year depend on the
assumptions used by the actuary for the Retirement Plan, historic investment
experience and the level of prior years' funding. The annual contributions made
by the Company to the Retirement Plan in respect of fiscal 2003, 2004 and 2005
were $9,876,263, $3,058,289 and $12,115,702, respectively, equivalent to
approximately 29.3%, 7.8% and 27.5% of the covered compensation of all
participants in the plan for fiscal 2003, 2004 and 2005, respectively. The
amount of the contribution, payment or account in respect of a specified person
is not and cannot readily be separately or individually calculated by the
actuary of the Retirement Plan. The Named Executive Officers currently have the
following years of credited service for purposes of the Pension Plan: Mr.
Anderson has four years, each of Messrs. Fleck and Frankhouser has 29 years, Mr.
Hirt has seven years, Mr. Staples has three years and Mr. Hatlan has two years.
The following table shows the estimated annual benefits payable upon retirement
under the Retirement Plan at normal retirement age for each level of
remuneration specified at the listed years of service.

-27-

PENSION PLAN TABLE

YEARS OF SERVICE
--------------------------------------------------------------------
REMUNERATION (1) 15 20 25 30 35
- ------------------------------- ------------ ------------ ------------ ------------ ------------

$100,000................... $18,750 $25,000 $31,250 $37,500 $43,750
150,000................... 28,125 37,500 46,875 56,250 65,625
200,000................... 37,500 50,000 62,500 75,000 87,500
250,000................... 39,375 52,500 65,625 78,750 91,875
300,000................... 39,375 52,500 65,625 78,750 91,875
350,000................... 39,375 52,500 65,625 78,750 91,875
400,000................... 39,375 52,500 65,625 78,750 91,875
450,000................... 39,375 52,500 65,625 78,750 91,875
500,000................... 39,375 52,500 65,625 78,750 91,875
550,000................... 39,375 52,500 65,625 78,750 91,875

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

(1) Under current Internal Revenue Code provisions, no more than $210,000 of
annual salary can be used to determine an employee's annual benefit
accrual. The Internal Revenue Service adjusts this figure annually.

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN. The Company's Defined Benefit
Supplemental Executive Retirement Plan (the "SERP") was established by the
Company on September 1, 2000 to provide non-discretionary pension benefits to
selected executive officers and retired executive officers of the Company in
addition to those benefits payable to them under the Retirement Plan. The SERP
is an unfunded pension plan not intended to be qualified under the Internal
Revenue Code. The SERP was amended as of September 2, 2003 to permit selected
additional executive officers of the Company to receive benefits thereunder and
to clarify the benefits that are payable to spouses of eligible members if the
members die before or while receiving benefits under the SERP. Additionally, the
SERP, as amended, provides that benefits thereunder will be paid to members who
attain age 65 or have five or more years of vesting service under the Retirement
Plan. The benefits payable under the SERP are coordinated with benefits payable
under the Retirement Plan and are calculated in accordance with one of two
formulae. The first formula, which applies to Messrs. Miller, Neag and
Broadbent, provides for an annual benefit, payable for the lesser of 20 years or
the life of the member, equal to twelve times the difference between: (a) 50% of
the member's monthly average compensation (as defined under the Retirement Plan,
but disregarding annual limitations on compensation under the Internal Revenue
Code used for calculating benefits under a qualified retirement plan); and (b)
the member's monthly benefit payable under the Retirement Plan payable as a
single life annuity. The second formula, which applies to Messrs. Anderson,
Fleck, Frankhouser and Hirt, provides for an annual benefit, payable for the
lesser of 20 years or the life of the member, equal to twelve times the
difference between: (a) the member's credited service under the Retirement Plan
(capped at 25 years) times 2% of the member's monthly average compensation (as
defined under the Retirement Plan, but disregarding annual limitations on
compensation under the Internal Revenue Code used for calculating benefits under
a qualified retirement plan); and (b) the member's monthly benefit payable under
the Retirement Plan payable as a single life annuity. Generally, a member's
benefits under the SERP commence at the same time as the member's benefits under
the Retirement Plan. In fiscal 2005, the Company paid $286,442 to Mr. Miller,
the former Chairman and Chief Executive Officer and a director of the Company,
$108,445 to Mr. Neag, the former Vice Chairman and a director of the Company,
$89,051 to Mr. Broadbent, the former Vice President - Finance and Treasurer of
the Company, $131,767 to Mr. Fleck, the former President and Chief Operating
Officer of the

-28-

Company, and $104,966 to Mr. Frankhouser, the former Executive Vice President -
Global Business Development of the Company, pursuant to the SERP.

COMPENSATION AND HUMAN RESOURCES COMMITTEE
REPORT ON EXECUTIVE COMPENSATION

The Compensation and Human Resources Committee reviews and recommends to
the Board of Directors for approval the compensation arrangements for the Chief
Executive Officer of the Company and all of its other executive officers,
including salaries, bonuses and grants of awards under, and administration of,
the Company's stock incentive plans. The Compensation and Human Resources
Committee is currently composed of three directors of the Company, each of whom
is independent as defined in applicable Nasdaq rules.

COMPENSATION PHILOSOPHY

Arrow International's executive compensation program is designed to
attract, retain, motivate and reward effective executive officers and to link
executive compensation with the attainment of financial, operational and
strategic objectives. In establishing the program, the Compensation and Human
Resources Committee assesses the performance of individuals and the Company
relative to those objectives.

The Company's compensation program generally provides incentives to
achieve annual and long-term objectives. The principal components of the
compensation program are base salary, annual incentive bonuses and long-term
incentive awards in the form of stock options and/or grants of restricted Common
Stock. These elements generally are blended in order to formulate compensation
packages which provide competitive pay, reward the achievement of financial,
operational and strategic objectives, and align the interests of the Company's
executive officers and other higher level personnel with those of the Company's
shareholders.

COMPENSATION COMPONENTS

BASE SALARY. Base salary levels for executive officers are derived from
market comparisons with similarly-sized manufacturing companies, including those
engaged in the manufacture of medical products for the health care industry with
which the Company competes for executive talent. The Compensation and Human
Resources Committee believes that the Company's most direct competitors for this
purpose are not necessarily all of the companies that would be included in a
peer group established to compare shareholder returns. Therefore, the
compensation peer group is not the same as the peer group index set forth in the
Company Stock Price Performance Graph included in this Proxy Statement. Based on
information currently available to the Compensation and Human Resources
Committee, including publicly available compensation information relating to
direct competitors of the Company, the Compensation and Human Resources
Committee believes that base salary levels for executive officers, including the
Chief Executive Officer, are, on average, at or near the median of base salary
levels for executive officers of similar companies. In determining executive
officers' salaries, the Compensation and Human Resources Committee also
considers individual experience and prior service to the Company, overall job
performance and results, and level of responsibility. The Compensation and Human
Resources Committee does not assign weights to these factors nor necessarily
consider any one more important than the others.

-29-

The Compensation and Human Resources Committee annually reviews the
performance of the Chief Executive Officer, and, in determining Mr. Anderson's
level of compensation for fiscal 2005, in addition to consideration of industry
comparisons and individual performance, has taken particular note of the
Company's performance in fiscal 2005 in the following key areas: management
efficiency; the successful introduction of new products into the market and the
advancement of products under development; the implementation and status of the
Company's previously reported Project Operational Excellence program; and the
Company's overall growth and profitability.

INCENTIVE BONUSES. Incentive bonuses during fiscal 2005 were based on
two plans: a stock contribution program in which all eligible employees of the
Company, including executive officers, are eligible to participate, and a
pre-tax income growth plan limited to executive officers and certain other
management-level employees of the Company.

Pursuant to the Company's stock contribution program, the Company
contributes to each participant's account under the Company's 401(k) Plan an
additional 1% of the participant's monthly base pay in the form of vested shares
of Common Stock. With this stock contribution program, employees have the
opportunity to benefit from the Company's potential future success and should be
additionally motivated to help the Company achieve long-term profitable growth.

Pursuant to the Company's income growth bonus plan, at the discretion of
the Compensation and Human Resources Committee, Messrs. Anderson, Hirt, Staples,
Croxford and Hatlan were eligible in fiscal 2005 to receive annual incentive
bonuses equal to 5.0, 4.5, 4.5, 4.0 and 4.0 times, respectively, and other
executive officers and eligible management-level employees of the Company were
eligible to receive annual incentive bonuses ranging from 1.0 to 3.0 times the
percentage growth in the Company's pre-tax income, exclusive of extraordinary
income and expense, over the previous fiscal year times their respective base
pay; provided that, in each case, such year-over-year percentage growth equals
or exceeds 5%. Due to their retirement from the Company during fiscal 2005,
Messrs. Fleck and Frankhouser were not eligible to receive incentive bonuses in
fiscal 2005. For fiscal 2005, the Company's pre-tax income, exclusive of
extraordinary income and expense, decreased from fiscal 2004. Consequently, none
of the Company's executive officers were paid any incentive bonuses in fiscal
2005. The Compensation and Human Resources Committee continues to believe that
payment of bonuses specifically linked to the growth in profitability of the
Company provides appropriate and effective rewards for successful individual
executive performances that contribute directly to the overall success of the
Company. On November 14, 2005, the Compensation and Human Resources Committee
approved modifications to the Company's income growth bonus plan, which will be
effective for all executive officer incentive bonuses commencing in fiscal 2006,
providing that such annual incentive bonuses will only become payable to the
extent that the percentage growth in the Company's pre-tax income, exclusive of
extraordinary income and expense, over the most recent fiscal year for which
such incentive bonuses were paid, equals or exceeds 5%. Therefore, it is the
present intention of the Compensation and Human Resources Committee to approve
payment of incentive bonuses in fiscal 2006 to the executive officers and
certain other management-level employees of the Company pursuant to its income
growth bonus plan to the extent that the Company in fiscal 2006 achieves an
increase in pre-tax income, exclusive of extraordinary income and expense, of at
least 5% over fiscal 2004.

-30-

LONG-TERM INCENTIVE AWARDS. To promote the Company's long-term
objectives, stock awards are made to executive officers and other employees who
are in a position to make a significant contribution to the Company's long-term
success. In addition to the shares of Common Stock that the Company contributes
each month to the accounts of its employees under its 401(k) Plan pursuant to
its stock contribution program, as described above, stock awards are currently
made pursuant to the Company's 1999 Stock Incentive Plan in the form of stock
options.

Since the stock option awards vest and may grow in value over time, this
component of the Company's compensation plan is designed to reward performance
over a sustained period. The Company intends that these awards will strengthen
the focus of its executives and other key employees on managing the Company from
the perspective of a person with an equity stake in the Company.

Stock awards are not always granted each year. In selecting recipients
and the size of stock awards, the Compensation and Human Resources Committee
generally considers various factors such as the overall job performance and
potential of the recipient, prior grants to and amount of Common Stock currently
held by the recipient, prior service to the Company, a comparison of awards made
to executives and key employees in comparable positions at similar companies,
and the Company's performance. In fiscal 2005, each of Messrs. Hirt, Croxford,
Staples and Hatlan were awarded options to purchase 20,000 shares of Common
Stock under the Company's 1999 Stock Incentive Plan in conjunction with the
promotion of each of Messrs. Hirt, Staples and Hatlan to Senior Vice President
and Mr. Croxford to Group Vice President. Other key employees of the Company
were awarded options to purchase a total of 105,000 shares of Common Stock under
the 1999 Stock Incentive Plan during fiscal 2005, resulting in a total grant of
options in respect of 185,000 shares of Common Stock under the plan during
fiscal 2005. In selecting the recipients and size of these awards, the
Compensation and Human Resources Committee placed particular emphasis on such
executives' and key employees' overall job performance, their potential for
continued excellent service and significant contribution to the Company's growth
and profitability during fiscal 2005, and awards to individuals who had
previously not been selected due to insignificant length of service to the
Company. As a result of these awards and stock awards made prior to fiscal 2005,
each of the Company's executive officers, as well as a significant number of
non-executive employees of the Company, have been afforded the opportunity to
enjoy an equity stake in the Company as part of their long-term compensation.

TAX DEDUCTIBILITY OF EXECUTIVE COMPENSATION. Section 162(m) of the
Internal Revenue Code imposes limitations on the federal income tax
deductibility of compensation paid to the Company's chief executive officer and
to each of the other four most highly compensated executive officers of the
Company. Under these limitations, the Company may deduct such compensation only
to the extent that during any fiscal year the compensation does not exceed
$1,000,000 or meets certain specified conditions (such as certain
performance-based compensation that has been approved by the Company's
shareholders). Based on the Company's current compensation plans and policies
and the Section 162(m) rules, the Company and the Compensation and Human
Resources Committee believe that, for the near future, there is not a
significant risk that the Company will lose any significant tax deduction for
executive compensation. The Company's compensation plans and policies will be
modified to

-31-

ensure full deductibility of executive compensation if the Company and the
Compensation and Human Resources Committee determine that such an action is in
the best interests of the Company.

COMPENSATION AND HUMAN RESOURCES
COMMITTEE
R. James Macaleer, Chairman
John E. Gurski
Raymond Neag

COMPENSATION AND HUMAN RESOURCES COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION

During the fiscal year ended August 31, 2005, the Compensation and Human
Resources Committee of the Board of Directors consisted of Messrs. Gurski,
Macaleer and Neag. No member of this committee was at any time during fiscal
2005 or at any other time an officer or employee of the Company, other than Mr.
Neag, who served as an executive officer of the Company prior to his retirement
in October 1999, and no member had any relationship with the Company requiring
disclosure under SEC rules. No executive officer of the Company has served on
the board of directors or compensation committee of any other entity that has or
has had one or more executive officers who served as a member of the Company's
Board of Directors or the Compensation and Human Resources Committee during
fiscal 2005.

AUDIT COMMITTEE REPORT

The Audit Committee of the Board of Directors oversees the Company's
financial reporting, internal controls and audit process on behalf of the Board
of Directors. The Company's management has the primary responsibility for the
Company's financial statements, accounting and reporting process, including
establishing, maintaining and evaluating disclosure controls and procedures; and
establishing, maintaining and evaluating internal control over financial
reporting and evaluating any changes in controls and procedures. The Company's
independent registered public accounting firm, PricewaterhouseCoopers LLP, is
responsible for performing an independent audit of the Company's consolidated
financial statements in accordance with generally accepted auditing standards
and issuing a report relating to their audit; as well as expressing an opinion
on (1) management's assessment of the effectiveness of internal control over
financial reporting and (2) effectiveness of the Company's internal control over
financial reporting.

In fulfilling its responsibilities, the Audit Committee reviewed and
discussed with the Company's management and its registered independent
accounting firm the audited consolidated financial statements in the Company's
Annual Report on Form 10-K for the fiscal year ended August 31, 2005, including
a discussion of the quality and acceptability of the accounting principles, the
reasonableness of significant judgments and the clarity of related disclosures.
Management represented to the Audit Committee that the Company's consolidated
financial statements were prepared in accordance with accounting principles
generally accepted in the United States. During the course of fiscal 2005,
management completed the documentation, testing and evaluation of Arrow's system
of internal control over financial reporting in response to the requirements set
forth in Section 404 of the Sarbanes-Oxley Act of 2002 and related regulations.
The Audit Committee was kept apprised of the progress of the evaluation and
provided oversight and advice to management during the process.

-32-

The Audit Committee also met with the Company's registered independent
accounting firm, with and without management present, to discuss the overall
scope of their audit of the Company's annual consolidated financial statements
and internal control over financial reporting, the results of their
examinations, the cooperation received by them during their audit examination
and the overall quality of the Company's financial reporting.

The Audit Committee reviewed and discussed with the Company's registered
independent accounting firm their judgments as to the quality and acceptability
of the Company's accounting principles and such other matters as are required to
be discussed under generally accepted auditing standards pursuant to Statement
on Auditing Standards No. 61 ("Communication with Audit Committees"), as
amended, and Public Company Accounting Oversight Board Auditing Standard No. 2,
"An Audit of Internal Control Over Financial Reporting Performed in Conjunction
with an Audit of Financial Statements." In addition, the Audit Committee
received from the Company's registered independent accounting firm the written
disclosure and letter regarding their independence as required by Independence
Standards Board Standard No. 1, "Independence Discussions with Audit
Committees." The Audit Committee also discussed with the Company's registered
independent accounting firm their independence from management and the Company,
and whether the non-audit services provided by the registered independent
accounting firm are compatible with maintaining the auditors' independence.

Based on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors, and the Board of Directors
approved, that the Company's audited consolidated financial statements be
included in the Company's Annual Report on Form 10-K for the fiscal year ended
August 31, 2005 for filing with the SEC.

In addition, the Audit Committee approved the appointment of
PricewaterhouseCoopers LLP as the Company's registered independent accounting
firm for the fiscal year ending August 31, 2006, and the Board of Directors
concurred with such selection. The Audit Committee has recommended to the
shareholders that they ratify the selection of PricewaterhouseCoopers LLP as the
Company's registered independent accounting firm for the fiscal year ending
August 31, 2006.

The Audit Committee reviews and assesses the adequacy of its charter on
an annual basis. While the Audit Committee believes that the charter in its
present form is adequate, it may in the future recommend to the Board of
Directors amendments to the charter to the extent it deems necessary to react to
changing conditions and circumstances.

Each of the Audit Committee members is independent as defined in rules
and regulations issued by the SEC and the Nasdaq, and, in particular, as defined
in Rules 5200(a) and 5350(d)(2) of the Nasdaq's Marketplace Rules. The Board of
Directors appointed Anna M. Seal as member of the Audit Committee on November 1,
2005.

AUDIT COMMITTEE
John H. Broadbent, Jr., Chairman
George W. Ebright
Anna M. Seal
Alan M. Sebulsky

-33-

STOCK PRICE PERFORMANCE

Set forth below is a line graph comparing the yearly cumulative total
shareholder return on the Common Stock with the cumulative total return of the
Standard & Poor's 500 Stock Index and the Standard & Poor's 500 Health Care
Equipment Index for the period beginning on August 31, 2000 and ending on August
31, 2005. The comparison assumes $100 was invested on August 31, 2000 in the
Common Stock and in each of the foregoing indices and also assumes reinvestment
of all dividends.

[PERFORMANCE GRAPH]

- ----------------------------- -------------- ------------ -------------- ------------- -------------- --------------
August 31, August 31, August 31, August 31, August 31, August 31,
2000 2001 2002 2003 2004 2005
- ----------------------------- -------------- ------------ -------------- ------------- -------------- --------------

Arrow International, Inc. $100.00 $104.01 $99.56 $147.90 $163.95 $174.38
- ----------------------------- -------------- ------------ -------------- ------------- -------------- --------------
S&P 500 Stock Index $100.00 $75.60 $62.01 $69.49 $77.45 $87.17
- ----------------------------- -------------- ------------ -------------- ------------- -------------- --------------
S&P 500 - Health Care $100.00 $88.40 $82.81 $103.76 $120.47 $134.49
Equipment Index
- ----------------------------- -------------- ------------ -------------- ------------- -------------- --------------

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

-34-

Notwithstanding anything to the contrary set forth in any of the
Company's previous filings under the Securities Act of 1933, as amended, or the
Exchange Act that might incorporate future filings made by the Company under
those statutes, none of the preceding Compensation and Human Resources Committee
Report on Executive Compensation, the Audit Committee Report or the Company
Stock Price Performance Graph will be incorporated by reference into any of
those prior filings, nor will any of such reports or graph be incorporated by
reference into any future filings made by the Company under those statutes.

CERTAIN TRANSACTIONS

Arrow Precision Products, Inc. ("Precision") was a former subsidiary of
the Company which was formally dissolved in May 2002 (all of its assets had
previously been liquidated and distributed to shareholders). Prior to the sale
of its remaining operating subsidiary, Precision Medical Products, Inc. ("PMP"),
in August 1997 to a company owned by certain management employees of Precision,
including Mr. Holleran, the former Vice President and Chief Operating Officer of
Precision and a director of the Company, Precision was engaged in the business
of manufacturing and marketing certain gastroenterological and other
non-catheter medical products, including ground needles and injection sites
primarily for use by the Company. Prior to Precision's dissolution in fiscal
2002, certain officers, directors and principal shareholders of the Company
owned substantially all of Precision's outstanding common stock. Mr. Holleran
has served as Chairman of the Board of PMP since October 1999 and served as
Chief Executive Officer and President of PMP from July 1996 to October 2000.

In fiscal 2005, the Company made purchases amounting to $123,220 of
products from PMP that it had formerly purchased from Precision. The Company
solicits competitive quotations from unrelated suppliers for products it
purchases from PMP. In the future, the Company may continue to purchase products
from PMP, provided that the quotations the Company receives from PMP for such
products are competitive with those received from unrelated suppliers in terms
of product availability, price, quality and delivery considerations.

The Company reviews all related party transactions involving amounts in
excess of $60,000 for potential conflicts of interest on an ongoing basis and
all such transactions in which the Company is a party are approved by a majority
of the independent directors of the Company or the Audit Committee in accordance
with applicable Nasdaq rules.

PROPOSAL 4 - ADOPTION OF 2006 DIRECTORS STOCK INCENTIVE PLAN

The Board of Directors has unanimously adopted, and recommends that the
shareholders approve the adoption of, the Company's 2006 Directors Stock
Incentive Plan (the "2006 Plan"). The 2006 Plan is intended to replace the
Company's current Directors Stock Incentive Plan (the "Current Plan"), which was
approved by the Company's shareholders at its Annual Meeting of Shareholders
held on January 17 1996, amended with the approval of the Company's shareholders
at its Annual Meeting of Shareholders held on January 19, 2000, and expires on
January 17, 2006, ten years after the effective date of the plan.

The Board of Directors believes that the granting of equity-based
compensation to outside directors provides an effective means for incentivizing
such directors to maintain and enhance the Company's long-term performance. In
the view of the Board of Directors, the Current Plan has been successful in
achieving these objectives. Therefore, the Board of Directors has determined
that it is in the best interest of the Company and its shareholders that the
2006 Plan be adopted to replace the Current Plan.

-35-

The following is a summary of certain features of the 2006 Plan. The
summary is qualified in its entirety by reference to the plan document, a copy
of which is attached as Exhibit B to this Proxy Statement.

GENERAL

The purpose of the 2006 Plan is to enable the Company and its
subsidiaries to attract and retain outside directors and provide them with an
incentive to maintain and enhance the Company's long-term performance record by
creating a long-term mutuality of interests between the outside directors and
the shareholders of the Company.

A total of 500,000 shares of Common Stock (subject to adjustment in the
event of any stock dividend, stock split, recapitalization, reorganization or
similar event) has been reserved for issuance under the 2006 Plan. Directors of
the Company and its subsidiaries who are not also employees or consultants of
the Company or its subsidiaries, and who do not serve on the Board as
representatives of the interests of shareholders who have made an investment in
the Company, are eligible to receive awards under the 2006 Plan. Currently, all
of the directors of the Company, other than Mr. Anderson, will be eligible for
awards under the 2006 Plan. Awards under the 2006 Plan are in the form of
non-qualified stock options and restricted stock grants. Under the Current Plan,
only stock options are permitted to be awarded to outside directors. The Board
believes that providing it with the flexibility to also make equity-based
compensation awards in the form of shares of restricted stock will enable it to
further align the long-term interests of the Company's outside directors with
those of its shareholders. No awards may be made after the tenth anniversary of
the 2006 Plan.

The 2006 Plan may be amended by the Company's shareholders or the Board,
provided that the Board may not, without shareholder approval, make any material
amendments to the plan, including, without limitation, to materially increase
the benefits accruing to participants under the plan, increase the maximum
number of shares as to which awards may be granted under the plan, change the
minimum grant or exercise price at which options or restricted stock may be
granted, change the class of eligible persons, extend the period for which
awards may be granted or exercised, expand the types of awards that may be
granted, or extend the duration of the plan.

ADMINISTRATION

The 2006 Plan is administered by the Board of Directors. The Board has
authority to interpret the 2006 Plan and to prescribe rules, regulations and
procedures in connection with the operation of the plan, and to prescribe
generally the terms of the awards granted under the plan. Determinations of the
Board are conclusive and binding. Notwithstanding the discretion granted to the
Board of Directors to administer the 2006 Plan, the plan itself prescribes that
each eligible director is entitled to receive a grant of options to purchase
10,000 shares of Common Stock on the date the director is first elected or
appointed to the Board. The Board of Directors has no discretion as to these
initial option grants. This feature of the 2006 Plan is also included in the
Current Plan.

AWARDS

Awards granted under the 2006 Plan are in the form of non-qualified
stock options and/or restricted stock grants. They will be evidenced by
agreements between the individual director and the Company.

-36-

STOCK OPTIONS. The 2006 Plan provides for an initial grant to eligible
directors of options to purchase 10,000 shares of Common Stock to be made upon
an eligible director's first election or appointment to the Board, and further
provides that, subsequent to an eligible director's initial election or
appointment to the Board, on the date of each Annual Meeting of Shareholders of
the Company, each eligible director serving on the new Board will be eligible to
receive an award of options. The Board has the discretion to determine the
number of such options, if any, to be granted to an eligible director, and any
other terms and conditions it deems appropriate. Under the Current Plan, options
to purchase 3,000 shares of Common Stock are automatically granted to each
eligible director on the date each year when new directors are elected to the
Board, and the Board of Directors has no discretion as to these subsequent
option grants. The Board of Directors believes that providing it with the
discretion under the 2006 Plan to determine the size of annual equity awards and
the extent to which such awards will even be granted to outside directors in a
particular year will enable it to tailor director compensation more
appropriately to changing circumstances of the Company and individual directors.

Options under the 2006 Plan are exercisable for ten years after the date
of grant. The exercise price for any option will be equal to the fair market
value of the Common Stock at the time the option is granted. Payment of an
option's exercise price may be made in cash, by check or, in certain
circumstances, by delivery of shares of Common Stock assigned to the Company, or
by a combination of the foregoing. The 2006 Plan provides that options granted
thereunder vest in full on the first anniversary of the grant date. Options are
not transferable other than by will or by the laws of descent and distribution
and may be exercised only by the participant, his or her guardian, legal
representative or beneficiary. If a participant terminates service as a director
for any reason, all unvested options will be forfeited.

RESTRICTED STOCK. On the date of each Annual Meeting of Shareholders of
the Company that occurs after the date an eligible director is first elected or
appointed to the Board, each eligible director serving on the new Board will be
eligible to receive restricted stock awards under the 2006 Plan. As discussed
above in this section of the Proxy Statement, the Current Plan provides that
only stock options may be granted to eligible directors. The Board has the
discretion to determine the number of such shares of restricted stock, if any,
to be granted to an eligible director, the period of time during which the
restricted stock may not be sold, transferred, assigned or otherwise alienated,
which will not be earlier than the first anniversary of the grant date, and any
other terms and conditions it deems appropriate, including, without limitation,
additional time-based restrictions, restrictions under applicable laws, or
holding requirements or sale restrictions placed on the shares upon the vesting
of such restricted stock. The restricted stock will become freely transferable
by an eligible director only when all restrictions have been satisfied or lapse.
Unless the Board determines otherwise, during the restricted period, an eligible
director will have the right to vote the restricted shares. Dividends payable
with respect to restricted stock will be subject to such conditions as the Board
may determine, for example, to require that the dividends will accumulate and be
held by the Company until the end of the restricted period and then be paid out
in a manner determined by the Board.

ACCELERATION ON CHANGE OF CONTROL. Upon the acquisition of beneficial
ownership of 30% or more of the outstanding Common Stock by any unaffiliated
person, entity or group, all stock options will become fully exercisable and all
restricted stock grants will become fully vested.

NEW PLAN BENEFITS. The following table sets forth certain information
concerning awards that would have been received by the following persons during
the fiscal year ended August 31, 2005 under the 2006 Plan if the plan had been
in effect during fiscal 2005 and if the Board of

-37-

Directors had determined to make the same awards under the 2006 Plan as were
made under the Current Plan during fiscal 2005:

NEW PLAN BENEFITS

2006 DIRECTORS STOCK INCENTIVE PLAN

NUMBER OF NUMBER OF
SHARES SHARES OF
NAME AND POSITION DOLLAR VALUE ($)(1) OPTIONED RESTRICTED STOCK
- ----------------- ------------------- -------- ----------------

Carl G. Anderson, Jr.(2) -- -- --
Chairman and Chief
Executive Officer

Philip B. Fleck(2) -- -- --
President and Chief
Operating Officer

Paul L. Frankhouser(2) -- --
Executive Vice
President

Frederick J. Hirt(2) -- -- --
Vice President - Finance
And Chief Financial Officer

Philip M. Croxford(2) -- -- --
Group Vice President-
Critical Care and Cardiac Assist

Carl W. Staples(2) -- -- --
Senior Vice President-
Human Resources

James T. Hatlan(2) -- -- --
Senior Vice President-
Manufacturing

All Current Executive Officers as a -- -- --
Group(2)

All Current Non-Executive Officer 1,350 27,000 --
Directors as a Group(3)

All Non-Executive Officer Employees as -- -- --
a Group(2)

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

(1) Based upon a closing sale price of the Common Stock of $30.65 per share
on November 25, 2005 as reported on the Nasdaq National Market, less the
exercise price of $30.60 per share which would have been applicable if
the grants had been made pursuant to the 2006 Plan during fiscal 2005.

(2) Not eligible to receive awards under the 2006 Plan due to status as
employees of the Company.

-38-

(3) All of the Company's directors, other than Mr. Anderson, would have been
eligible to receive awards under the 2006 Plan if the plan had been in
effect during fiscal 2005. Ms. Seal was not elected to the Board until
September 7, 2005, on which date she was granted options to purchase
10,000 shares of Common Stock at an exercise price of $30.92 per share
pursuant to the Current Plan.

Other than as set forth above, no director, nominee for election as a
director or associate of any of the Company's current directors, executive
officers or nominees for election as a director would have received awards
during fiscal 2005 under the 2006 Plan if the plan had been in effect during
fiscal 2005.

CERTAIN INCOME TAX CONSEQUENCES

This discussion covers only the federal income tax consequences of an
award under the 2006 Plan. Participants are also likely to have employment tax
or state income tax consequences.

A participant who is awarded a stock option or restricted stock under
the 2006 Plan will not realize any income, nor will the Company be entitled to
any deduction, at the time of grant.

In the case of an award of a stock option, a participant will generally
recognize ordinary income on the date of exercise in an amount equal to the
excess of the fair market value of the underlying shares on the date of exercise
over the option price. If a participant is an "insider" on the date of exercise,
the ordinary income will be recognized on the later of the date of exercise or
the first day on which the sale of the shares would not subject the participant
to the liability under Section 16(b) of the Exchange Act. The holding period for
capital gain or loss purposes will commence on the date of exercise. If the
exercise price of an option is paid by surrendering stock of the Company, the
participant will recognize no gain or loss on the shares that he or she
surrenders to pay the option price (the "surrendered shares"). The number of
shares that the participant receives upon exercise of the option in excess of
the surrendered shares are considered "additional shares." The participant will
recognize ordinary income on the date of exercise equal to the fair market value
of the additional shares on the date of exercise, less any cash paid towards the
exercise price. The basis of the additional shares will be equal to their fair
market value on the date of exercise, and their holding period will begin on
that date. The shares that the participant receives upon exercise equal to the
surrendered shares will have a basis and holding period equal to that of the
surrendered shares. When a participant disposes of Common Stock acquired through
the exercise of an option, any amount received in excess of the fair market
value of the shares on the date of exercise will be subject to taxation at
capital gains rates. If the amount received is less than such fair market value
of the shares, the difference will be treated as a capital loss for tax
purposes.

In the case of an award of restricted stock, a participant will
generally recognize ordinary income on the date when the shares become
substantially vested, i.e., when all restrictions have been satisfied or lapse.
If a participant is an "insider" on the date the shares become vested, the
recognition of ordinary income will be deferred, if later, to the date when the
shares would not subject the participant to liability under Section 16(b) of the
Exchange Act. The amount of ordinary income will equal the fair market value of
the Common Stock on the date the forfeiture restrictions are satisfied or lapse
(including restrictions arising as a result of Section 16(b)). The fair market
value will be the basis of the vested stock and upon the ultimate sale of such
stock a participant will recognize capital gain or loss. The holding period for
capital gains purpose begins to run on the date the ordinary income is
recognized. If a participant makes an election under Section 83(b) of the
Internal Revenue Code, instead of deferring the recognition

-39-

of ordinary income until all restrictions are satisfied or lapse, the
participant will recognize ordinary income on the date of grant equal to the
fair market value of the restricted stock on the grant date. A Section 83(b)
election must be filed with the Internal Revenue Service no later than 30 days
after a restricted stock award is made.

The Company will be entitled to a deduction for federal tax purposes at
the same time and in the same amount as the participant is considered to have
realized ordinary income with respect to any option or restricted stock grant.

OTHER REGULATORY CONSIDERATIONS

The 2006 Plan is not intended to be a tax-qualified plan under Section
401(a) of the Internal Revenue Code and is not subject to the Employee
Retirement Income Security Act of 1974, as amended. Furthermore, the 2006 Plan
is designed to avoid having the awards thereunder treated as deferred
compensation subject to the requirements of Section 409A of the Internal Revenue
Code.

EFFECTIVE DATE

The effective date of the 2006 Plan will be the date on which the plan
is approved by the shareholders of the Company. If such approval is obtained at
the Annual Meeting, the 2006 Plan will be effective on the date of the Annual
Meeting and the Board of Directors will be able to grant awards to eligible
directors on that date in accordance with the terms of the plan.

RECOMMENDATION

The Board of Directors recommends that shareholders vote FOR the
approval of the adoption of the Company's 2006 Directors Stock Incentive Plan.
Proxies solicited by the Board of Directors will be voted FOR this proposal
unless otherwise indicated.

PROPOSAL 5 - RATIFICATION OF APPOINTMENT
OF REGISTERED INDEPENDENT ACCOUNTING FIRM

The Company's registered independent accounting firm is
PricewaterhouseCoopers LLP. PricewaterhouseCoopers LLP has served as the
Company's independent accountants and auditors since fiscal 1985. At the Annual
Meeting, the shareholders will consider and vote upon a proposal to ratify the
appointment of the Company's registered independent accounting firm for its
fiscal year ending August 31, 2006. The Audit Committee of the Board of
Directors has recommended that PricewaterhouseCoopers LLP be re-elected as the
Company's registered independent accounting firm for fiscal 2006.

Representatives of PricewaterhouseCoopers LLP will be present at the
Annual Meeting to make a statement, if desired, and to respond to appropriate
questions from shareholders.

AUDIT FEES

The aggregate fees billed for professional services rendered by
PricewaterhouseCoopers LLP in connection with its audit of the Company's annual
consolidated financial statements, audit of management's assessment of the
Company's internal control over financial reporting and the effectiveness of the
Company's internal control over financial reporting, statutory audit of the
Company's foreign subsidiaries, and reviews of the interim

-40-

financial statements included in the Company's quarterly reports on Form 10-Q
were $2,734,560 and $815,165 for the fiscal years ended August 31, 2005 and
2004, respectively.

AUDIT-RELATED FEES

In addition to fees disclosed under "Audit Fees" above, the aggregate
fees billed for professional services rendered by PricewaterhouseCoopers LLP for
assurance and related services that are reasonably related to the performance of
the audit and reviews of the Company's financial statements were $5,000 and
$153,418 for the fiscal years ended August 31, 2005 and 2004, respectively. Such
services included accounting consultations and audits in connection with
acquisitions, and additional assurance and related services for the Company's
foreign subsidiaries.

TAX FEES

TAX COMPLIANCE. The aggregate fees billed for professional services
rendered by PricewaterhouseCoopers LLP for tax compliance assistance in
connection with the tax preparation and tax computations for the Company's U.S.
and foreign subsidiaries were $197,043 and $210,000 for the fiscal years ended
August 31, 2005 and 2004, respectively.

TAX AUDIT. The aggregate fees billed for professional services rendered
by PricewaterhouseCoopers LLP for tax audit assistance and defense, including
transfer pricing for the Company's U.S. and foreign subsidiaries, were $101,187
and $309,657 for the fiscal years ended August 31, 2005 and 2004, respectively.

TAX PLANNING. The aggregate fees billed for professional services
rendered by PricewaterhouseCoopers LLP for miscellaneous tax planning and
advice, including U.S. federal, state and international taxes, for the Company's
U.S. and foreign subsidiaries were $95,003 and $41,814 for the fiscal years
ended August 31, 2005 and 2004, respectively.

ALL OTHER FEES

The aggregate fees billed for professional services rendered by
PricewaterhouseCoopers LLP for other services for the Company's U.S. and foreign
subsidiaries, consisting of consulting services relating to the Company's
Retirement Plan, were $0 and $64,450 for the fiscal years ended August 31, 2005
and 2004, respectively.

AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES

The Audit Committee of the Company's Board of Directors pre-approves on
an annual basis the audit, audit-related, tax and other non-audit services to be
rendered by the Company's registered independent accounting firm based on
historical information and anticipated requirements for the following fiscal
year. The Audit Committee pre-approves specific types or categories of
engagements constituting audit, audit-related, tax and other non-audit services
as well as the range of fee amounts corresponding to each such engagement. To
the extent that the Company's management believes that a new service or the
expansion of a current service provided by the Company's registered independent
accounting firm is necessary or desirable, such new or expanded services are
presented to the Audit Committee for its review and approval prior to the
Company's engagement of its registered independent accounting firm to render
such services. No non-audit, review or attest services were approved by the
Audit Committee pursuant to Rule 2-01, paragraph (c)(7)(i)(C) of SEC Regulation
S-X during the fiscal year ended August 31, 2005. Both the Company's Senior Vice
President-Finance and Chief

-41-

Financial Officer and its Vice President and Treasurer report regularly to the
Audit Committee on the services rendered by the Company's registered independent
public accounting firm and related fees for audit, audit-related, tax and
permitted non-audit services.

In making its recommendation to ratify the appointment of
PricewaterhouseCoopers LLP as the Company's registered independent accounting
firm for the fiscal year ending August 31, 2006, the Audit Committee considered
whether the non-audit services provided by PricewaterhouseCoopers LLP are
compatible with maintaining the independence of PricewaterhouseCoopers LLP.

The Board of Directors recommends that shareholders vote FOR the
ratification of the appointment of PricewaterhouseCoopers LLP as the Company's
registered independent accounting firm for fiscal 2006. Proxies solicited by the
Board of Directors will be voted FOR this proposal unless otherwise indicated.

OTHER MATTERS

As of the date of this Proxy Statement, the Board of Directors knows of
no other matters which are likely to be brought before the Annual Meeting. If,
however, any other matters are properly brought before the Annual Meeting, the
persons named in the enclosed proxy or their substitutes shall vote thereon in
accordance with the recommendation of the Board of Directors or, in the absence
of such a recommendation, in accordance with their judgment pursuant to the
discretionary authority conferred by the form of proxy.

ADDITIONAL INFORMATION

"HOUSEHOLDING" OF PROXY MATERIALS. The SEC has adopted rules that permit
companies and intermediaries such as brokers to satisfy delivery requirements
for proxy statements with respect to two or more shareholders sharing the same
address by delivering a single proxy statement addressed to those shareholders.
This process, which is commonly referred to as "householding," potentially
provides extra convenience for shareholders and cost savings for companies. The
Company and some brokers household proxy materials, delivering a single proxy
statement or annual report to multiple shareholders sharing an address, unless
contrary instructions have been received from the affected shareholders. Once
you have received notice from your broker or the Company that they or it will be
householding materials to your address, householding will continue until you are
notified otherwise or until you revoke your consent. If, at any time, you no
longer wish to participate in householding and would prefer to receive a
separate proxy statement or annual report, please notify the Company by sending
a written request to Investor Relations, Arrow International, Inc., P.O. Box
12888, 2400 Bernville Road, Reading, Pennsylvania 19612 or by calling the
Company at 610-320-3917 or toll free at 1-877-639-6912.

LIST OF SHAREHOLDERS. The names of shareholders entitled to vote at the
Annual Meeting will be available at the Annual Meeting and for ten days prior to
the Annual Meeting for any purpose germane to the Annual Meeting, between the
hours of 9:00 a.m. and 4:30 p.m., at the Company's principal executive offices
at 2400 Bernville Road, Reading, Pennsylvania 19605 by contacting the Company's
Corporate Secretary.

SHAREHOLDER PROPOSALS FOR 2007 ANNUAL MEETING. Proposals of shareholders
intended to be presented at the Company's 2007 Annual Meeting of Shareholders
(1) must be received by the Company's Corporate Secretary at its principal
executive offices provided above no later than August 18, 2006, (2) may not
exceed 500 words, and (3) must otherwise satisfy the

-42-

conditions established by the SEC for shareholder proposals to be included in
the Company's Proxy Statement for that meeting.

COMMUNICATION WITH THE BOARD. Shareholders may communicate with the
Company's Board of Directors by sending a letter to the Arrow International,
Inc. Board of Directors, c/o Corporate Secretary, Arrow International, Inc.,
P.O. Box 12888, 2400 Bernville Road, Reading, Pennsylvania 19612. The Secretary
has the authority to disregard any inappropriate communications or to take other
appropriate actions with respect to such inappropriate communication. If deemed
appropriate, the Secretary will submit your correspondence to the Chairman of
the Board or as directed by such correspondence.

PROXY SOLICITATION COSTS. The cost of the solicitation of proxies hereby
will be borne by the Company. In addition to the solicitation of proxies by
mail, certain of the officers and employees of the Company, without extra
compensation therefor, may solicit proxies personally or by telephone or
telecopy. The Company will also request brokers, banks and other nominees,
custodians and fiduciaries to forward soliciting materials to their principals
and to request authority for the execution of proxies and will reimburse such
persons for forwarding such materials.

ANNUAL REPORT. A copy of the Company's 2005 Annual Report accompanies
this Proxy Statement. Additional copies may be obtained from the Corporate
Secretary, Arrow International, Inc., P.O. Box 12888, 2400 Bernville Road,
Reading, Pennsylvania 19612.

By Order of the Board of Directors,

John C. Long,
Corporate Secretary of
Arrow International, Inc.

December 16, 2005
Reading, Pennsylvania

-43-

Exhibit A

PROPOSED AMENDMENTS TO THE RESTATED ARTICLES OF INCORPORATION
AND THE BY-LAWS OF ARROW INTERNATIONAL, INC.

PROPOSED AMENDMENT TO RESTATED ARTICLES OF INCORPORATION:

Article EIGHTH of the Company's Restated Articles of Incorporation is amended to
read in its entirety as follows:

Note: The text of the proposed amendment is marked to reflect the proposed
changes.

EIGHTH: The business and affairs of the corporation shall be managed by a Board
of Directors comprised as follows:

(1) The Board of Directors shall consist of not less than four nor
more than twelve persons, the exact number to be fixed from time
to time by the Board of Directors pursuant to a resolution
adopted by a majority vote of the directors then in office;

(2) Directors shall [BEGIN DELETION], from and after the annual
meeting of shareholders next held after April 1, 1992, continue
to be classified with respect to the time for which they shall
severally hold office by dividing them into four classes, as
nearly equal in number as possible. At such meeting and at each
succeeding [END DELETION][BEGIN NEW TEXT] be elected by the
shareholders at each [END NEW TEXT] annual meeting of
shareholders[BEGIN DELETION], the class of directors then being
elected shall be elected to [END DELETION][BEGIN NEW TEXT]. Each
director shall [END NEW TEXT]hold office for a term of [BEGIN
DELETION] four years. Each director shall hold office for the
term for which elected [END DELETION][BEGIN NEW TEXT] one year
[END NEW TEXT] and until his or her successor shall have been
elected and qualified;

(4) Subject to the rights of the holders of any series of Preferred
Stock then outstanding, vacancies in the Board of Directors,
including vacancies resulting from an increase in the number of
directors, shall be filled only by a majority vote of the
remaining directors then in office, though less than a quorum. A
director elected to fill a vacancy shall hold office until the
next [BEGIN DELETION] election of the class for which such
director has been chosen, [END DELETION][BEGIN NEW TEXT] annual
meeting of shareholders [END NEW TEXT] and until his or her
successor shall have been elected and qualified. No decrease in
the number of directors constituting the Board of Directors
shall shorten the term of any incumbent director.

PROPOSED AMENDMENT TO BY-LAWS:

Article FOUR, Section 4.1, of the Company's By-Laws is amended to read in its
entirety as follows:

Note: The text of the proposed amendment is marked to reflect the proposed
changes.

4.1 Board of Directors. The business and affairs of the corporation shall be
managed by a Board of Directors comprised as follows:

(2) Directors shall [BEGIN DELETION], from and after the annual
meeting of shareholders next held after April 1, 1992, continue
to be classified with respect to the time for which they shall
severally hold office by dividing them into four classes, as
nearly equal in number as possible. At such meeting and at each
succeeding [END DELETION][BEGIN NEW TEXT] be elected by the
shareholders at each [END NEW TEXT] annual meeting of
shareholders [BEGIN DELETION], the class of directors then being
elected shall be elected to [END DELETION][BEGIN NEW TEXT]. Each
director shall [END NEW TEXT] hold office for a term of [BEGIN
DELETION] four years. Each director shall hold office for the
term for which elected [END DELETION][BEGIN NEW TEXT] one year
[END NEW TEXT] and until his or her successor shall have been
elected and qualified;

(3) Subject to the rights of the holders of any series of Preferred
Stock then outstanding, any director [BEGIN DELETION], any class
of directors, [END DELETION] or the entire Board of Directors
may be removed from office by vote of the shareholders entitled
to vote thereon only for cause; provided, however, that the
entire Board of Directors may be removed at any time with or
without cause by the unanimous vote of shareholders entitled to
vote thereon. For purposes of this paragraph, "cause" shall mean
any one of the following: (i) a director is judicially declared
to be of unsound mind; (ii) a director is convicted of an
offense punishable by imprisonment for a term of more than one
year; (iii) a director breaches or fails to perform the
statutory duties of that director's office and the breach or
failure constitutes self-dealing, willful misconduct or
recklessness; or (iv) within 60 days after notice of his or her
election, a director does not accept the office either in
writing or by attending a meeting of the Board of Directors and
fulfilling any other requirements of qualification that these
By-laws or the Articles of Incorporation may provide [BEGIN
DELETION].[END DELETION][BEGIN NEW TEXT]; and [END NEW TEXT]

A-2

[BEGIN NEW TEXT] annual meeting of shareholders [END NEW TEXT]
and until his or her successor shall have been elected and
qualified. No decrease in the number of directors constituting
the Board of Directors shall shorten the term of any incumbent
director.

Article FOUR, Section 4.4, of the Company's By-Laws is amended to read in its
entirety as follows:

Note: The text of the proposed amendment is marked to reflect the proposed
changes.

4.4. Organizational Meeting. The first regular meeting of the Board
of Directors [BEGIN DELETION] following the election of each newly-elected class
of directors [END DELETION] shall be held immediately following the annual
meeting of the shareholders, and no notice of such meeting shall be necessary in
order legally to constitute the meeting, provided that a quorum of the Board of
Directors shall be present. At such meeting the Board of Directors shall
organize itself and may elect officers, appoint members of standing committees
and transact any other business.

A-3

Exhibit B

ARROW INTERNATIONAL, INC.

2006 DIRECTORS STOCK INCENTIVE PLAN

Arrow International, Inc. (the "Company") hereby establishes, effective
as of the date of approval by the Company's shareholders, the Arrow
International, Inc. 2006 Directors Stock Incentive Plan (the "Plan").

1. PURPOSE

The purpose of the Plan is to enable the Company and its subsidiaries to
attract and retain outside directors and provide them with an incentive to
maintain and enhance the Company's long-term performance record. It is intended
that this purpose will best be achieved by granting eligible directors
non-qualified stock options ("options") and/or restricted stock ("restricted
stock") under this Plan pursuant to the rules set forth in Section 83 of the
Internal Revenue Code, as amended from time to time (the "Code"). Grants of
options and restricted stock (collectively, "grants") may consist of one or both
types of awards.

2. ADMINISTRATION

The Plan shall be administered by the Company's Board of Directors or a
committee of the Board to whom the Board has delegated its responsibilities with
respect to the Plan (in either case, the "Board"). Subject to the terms and
provisions of the Plan, the Board shall possess the authority, in its
discretion: (a) to determine the eligibility of a director to participate in the
Plan; (b) to determine whether to award grants in the form of options or of
restricted stock or in a combination of options and restricted stock and the
number of shares subject to each grant; (c) to prescribe the form of stock
option and restricted stock agreements, including any appropriate terms and
conditions applicable to the grants, and to make any amendments to such
agreements; (d) to interpret the Plan and the grant agreements; (e) to make and
amend rules and regulations relating to the Plan; and (f) to make all other
determinations necessary or advisable for the administration of the Plan. The
Board's determinations shall be conclusive and binding. No member of the Board
shall be liable for any action taken or decision made in good faith relating to
the Plan or any grants hereunder.

3. ELIGIBLE DIRECTORS

Members of the Board of Directors of the Company and its subsidiaries
are eligible to participate in this Plan if they are not also employees or
consultants of the Company or its subsidiaries and do not serve on the Board as
representatives of the interests of shareholders who have made an investment in
the Company.

4. SHARES AVAILABLE

The total number of shares of the Company's Common Stock, no par value
per share (the "Common Stock"), available in the aggregate for grants under this
Plan shall not exceed 500,000 (subject to substitution or adjustment as provided
in Section 9). Such shares may be authorized and unissued shares. If an option
expires, terminates or is cancelled without being exercised or if restricted
stock is forfeited prior to becoming vested, new grants may thereafter

be made covering such shares. No grant may be made more than ten years after the
effective date of the Plan.

5. TERMS AND CONDITIONS OF OPTIONS

Each option granted under the Plan shall be evidenced by an option
agreement in such form as the Board shall approve from time to time, which
agreement shall conform with this Plan and contain the following terms and
conditions:

(a) Number of Shares. On the date on which an eligible
director is first elected or appointed to the Board, such eligible director
shall receive an option to purchase 10,000 shares of the Common Stock. Annually
thereafter, on the date of each Annual Meeting of Shareholders of the Company
that occurs after the date of an eligible director's initial election or
appointment to the Board, each such eligible director who will be serving on the
new Board shall be eligible to receive an award of options under the Plan. The
Board shall determine the number of such options, if any, to be granted to an
eligible director. The grant date and such number of options shall be specified
in the option agreement.

(b) Exercise Price. The exercise price under each option
shall equal the fair market value of the Common Stock at the time such option is
granted.

(c) Duration of Option. Each option by its terms shall not
be exercisable after the expiration of ten years from the date such option is
granted.

(d) Options Nontransferable. Each option by its terms shall
not be transferable by the participant otherwise than by will or the laws of
descent and distribution, and shall be exercisable, during the participant's
lifetime, only by the participant, the participant's guardian or the
participant's legal representative.

(e) Vesting and Time of Exercise. Each option granted under
the Plan shall become fully exercisable with respect to the shares subject
thereto on the first anniversary of the date of grant. Options may be partially
exercised from time to time during the period extending from the time they first
become exercisable until the tenth anniversary of the date of grant.

(f) Payment of Exercise Price. An option shall be exercised
by the delivery of a written, electronic or telephonic notice of exercise to the
Company or its designated agent, setting forth the number of shares with respect
to which the option is to be exercised accompanied by full payment of the option
price for the shares. The payment shall be made in cash, by check or, if the
option agreement so permits, by delivery of shares of Common Stock of the
Company registered in the name of the participant, duly assigned to the Company
with the assignment guaranteed by a bank, trust company or member firm of the
New York Stock Exchange, or by a combination of the foregoing. Any such shares
so delivered shall be deemed to have a value per share equal to the fair market
value of the shares on such date. For this purpose, fair market value shall
equal the closing price of the Common Stock on the Nasdaq National Market System
on the date the option is exercised, or, if there was no trading in such stock
on the date of such exercise, the closing date on the last preceding day on
which there was such trading.

Subject to any governing rules or regulations, as soon as practicable
after receipt of notification of exercise and full payment, the Company shall
deliver to the participant, in the

B-2

participant's name, share certificates in an appropriate amount based upon the
number of shares purchased pursuant to the option.

(g) Other Terms and Conditions. The Board may impose such
additional terms and conditions with respect to the receipt, holding and
exercise of options as it deems appropriate under the circumstances.

6. TERMS AND CONDITIONS OF RESTRICTED STOCK

Each grant of restricted stock under the Plan shall be evidenced by a
restricted stock agreement in such form as the Board shall approve from time to
time, which agreement shall conform with this Plan and contain the following
terms and conditions:

(a) Grant of Restricted Stock. On the date of each Annual
Meeting of Shareholders of the Company that occurs after the date of an eligible
director's initial election or appointment to the Board, each such eligible
director who will be serving on the new Board shall be eligible to receive an
award of restricted stock under the Plan. The Board shall determine the number
of such shares of restricted stock, if any, to be granted to an eligible
director. The grant date and such number of shares of restricted stock shall be
specified in the restricted stock agreement.

(b) Transferability. Shares of restricted stock granted
herein may not be sold, transferred, pledged, assigned, or otherwise alienated
or hypothecated until the end of the applicable period of restriction
established by the Board, which shall not be earlier than the first anniversary
of the date of grant, as specified in the restricted stock agreement, or upon
satisfaction of any other conditions that may be established by the Board, in
its sole discretion, and set forth in the restricted stock agreement. Until all
restrictions are lifted, all rights with respect to the restricted stock granted
to an eligible director under the Plan shall be available during his or her
lifetime only to such eligible director.

(c) Other Restrictions. The Board shall impose such other
conditions and/or restrictions on any shares of restricted stock granted
pursuant to the Plan as it may deem advisable, including, without limitation,
additional time-based restrictions, restrictions under applicable laws or under
the requirements of any stock exchange or market upon which such shares are
listed or traded, or holding requirements or sale restrictions placed on the
shares by the Company upon the vesting of such restricted stock.

To the extent deemed appropriate by the Board, the Company may retain
the certificates representing shares of restricted stock in the Company's
possession until such time as all conditions and/or restrictions applicable to
such shares have been satisfied or lapse.

Shares of restricted stock covered by each restricted stock grant shall
become freely transferable by the eligible director after all conditions and
restrictions applicable to such shares have been satisfied or lapse.

(d) Certificate Legend. In addition to any legends placed on
certificates pursuant to subsection (c) above, each certificate representing
shares of restricted stock granted pursuant to the Plan may bear a legend such
as the following or as otherwise determined by the Board in its sole discretion:

B-3

"The sale or other transfer of the shares of stock
represented by this certificate, whether voluntary,
involuntary, or by operation of law, is subject to
certain restrictions on transfer as set forth in the
Arrow International, Inc. 2006 Directors Stock Incentive
Plan and in the associated restricted stock agreement. A
copy of the Plan and such restricted stock agreement may
be obtained from Arrow International, Inc."

(e) Voting Rights. Unless otherwise determined by the Board
and set forth in the restricted stock agreement, to the extent permitted or
required by law, as determined by the Board, eligible directors holding shares
of restricted stock may be granted the right to exercise full voting rights with
respect to those shares during the period prior to their becoming vested.

(f) Dividends and Other Distributions. During the period
prior to the shares becoming vested, eligible directors holding shares of
restricted stock granted hereunder may, if the Board so determines, be credited
with dividends paid with respect to the underlying shares while they are so held
in a manner determined by the Board, in its sole discretion. The Board may apply
any restrictions to the dividends that the Board deems appropriate. The Board,
in its sole discretion, may determine the time when such dividends will be
released to an eligible director and the form of payment, including cash,
shares, or additional shares of restricted stock.

(g) Subsection 83(b) Election. The Board may provide in a
restricted stock agreement that the grant of restricted stock is conditioned
upon the eligible director making or refraining from making an election with
respect to the grant under Section 83(b) of the Code. If an eligible director
makes an election pursuant to Section 83(b) of the Code concerning a restricted
stock grant the eligible director shall be required to file promptly a copy of
such election with the Company.

7. GENERAL RESTRICTION ON ISSUANCE OF STOCK CERTIFICATES WITH RESPECT TO
OPTIONS AND RESTRICTED STOCK

The Company shall not be required to deliver any certificate upon the
exercise of an option or the grant or vesting of restricted stock until it has
been furnished with such opinion, representation or other document as it may
reasonably deem necessary to ensure compliance with any law or regulation of the
Securities and Exchange Commission or any other governmental authority having
jurisdiction under this Plan. Certificates delivered upon such exercise, grant
or vesting may bear a legend restricting transfer absent such compliance. Each
grant shall be subject to the requirement that, if at any time the Board shall
determine, in its discretion, that the listing, registration or qualification of
the shares subject to such grant upon the Nasdaq National Market System or any
securities exchange or automated quotation system, or under any state or federal
law, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition of, or in connection with, the grant,
exercise, vesting or issuance of shares, such grant may not be made, exercised,
vested or shares issued in connection therewith, in whole or in part unless such
listing, registration, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Board in the
exercise of its reasonable judgment.

B-4

8. TERMINATION OF DIRECTORSHIP

If a participant's directorship terminates for any reason (including,
without limitation, resignation or removal), all nonvested options and nonvested
restricted stock grants shall be forfeited. Vested but unexercised options may
be exercised by the director or, in the case of death, by his or her legal
representative or beneficiary in accordance with the terms of the Plan and the
option agreement. Vested restricted stock and accumulated dividends, if any,
held by the Company on the date of a director's death shall be paid to such
director's legal representative or beneficiary.

Each participant under this plan may, from time to time, name any
beneficiary or beneficiaries (who may be named contingently or successively) to
whom any vested benefit under this Plan is to be paid in case of his or her
death before he or she receives any or all of such benefit. Each such
designation shall revoke all prior designations by the same participant, shall
be in a form prescribed by the Board, and will be effective only when filed by
the participant in writing with the Company during the participant's lifetime.
In the absence of any such beneficiary designation, vested benefits remaining
unpaid or rights remaining unexercised at the participant's death shall be paid
or exercised by the participant's executor, administrator, or legal
representative.

9. ADJUSTMENT OF SHARES

In the event of any change in the Common Stock by reason of any stock
dividend, stock split, recapitalization, reorganization, merger, consolidation,
split-up, combination, or exchange of shares, or of any similar change affecting
the Common Stock, the number and kind of shares authorized under Section 4, the
number and kind of shares which thereafter are subject to an option or
restricted stock grant under the Plan and the number and kind of shares set
forth under outstanding grant agreements and the price per share shall be
adjusted automatically consistent with such change to prevent substantial
dilution or enlargement of the rights granted to, or available for, participants
in the Plan.

Upon obtaining any approval of the shareholders of the Company required
by applicable law or the listing requirements of the Nasdaq National Market
System or any other securities exchange or automated quotation system on which
the Common Stock may then be traded, the Board shall have the authority to
effect (i) the repricing of any outstanding options under the Plan and/or (ii)
with the consent of the affected participant, the cancellation of any
outstanding options under the Plan and the grant in substitution therefor of new
options under the Plan covering the same or different number of shares of Common
Stock, but having an exercise price per share not less than 100% of the fair
market value per share of Common Stock on the new grant date. Notwithstanding
the foregoing, the Board may grant an option with an exercise price lower than
that set forth above if such option is granted as part of a transaction to which
Section 424(a) of the Code applies.

10. LIMITATIONS APPLICABLE TO SECTION 16 PERSONS

In addition to other limitations and conditions on grants specified in
this Plan, grants shall be subject to any applicable exemptive rule under
Section 16 of the Securities Exchange Act of 1934, as amended (including any
amendment to Rule 16b-3), that are requirements for the application of such
exemptive rule. To the extent permitted by applicable law, the Plan shall be
deemed to incorporate the exemptive requirements and any grants issued under the
Plan shall be deemed to be amended to conform to such requirements.

B-5

11. NO CONTINUING DIRECTORSHIP RIGHTS

The Plan and any grants under the Plan shall not confer upon any
director any right with respect to continuance, nomination or re-election as a
director of the Company or any subsidiary, nor shall they interfere in any way
with any right the Company or its subsidiaries may have to terminate the
director's position as a director at any time.

12. RIGHTS AS A SHAREHOLDER UNDER AN OPTION

The recipient of any option under the Plan shall have no rights as a
shareholder with respect thereto unless and until certificates for the
underlying shares of Common Stock are issued to the recipient.

13. AMENDMENT AND DISCONTINUANCE

This Plan may be amended, modified or terminated by the shareholders of
the Company or by the Board of Directors, except that the Board may not, without
approval of the shareholders, make any material amendment to the Plan,
including, without limitation, the following: (a) materially increase the
benefits accruing to participants under the Plan, including any material change
to (1) permit a repricing (or decrease in option price) of outstanding options,
(2) reduce the price at which options or restricted stock may be granted, or (3)
extend the duration of the Plan; (b) materially increase the maximum number of
shares as to which options or restricted stock may be granted under the Plan;
(c) modify the requirements as to eligibility for participation in the Plan, or
otherwise materially expand the class of participants eligible to participate in
the Plan; (d) extend the period for which awards may be granted or options
exercised; (e) expand the types of options or other grants that may be awarded
under the Plan; or (f) modify the Plan in any other manner that requires
shareholder approval under applicable law or the rules of the Nasdaq National
Market System or any other securities exchange or automated quotation system on
which the Common Stock may then be traded. Notwithstanding the foregoing, to the
extent permitted by law, the Board may amend the Plan without the approval of
shareholders, to the extent it deems necessary to cause the Plan to comply with
Securities and Exchange Commission Rule 16b-3 or any successor rule, as it may
be amended from time to time. Except as required by law, no amendment,
modification, or termination of the Plan may, without the written consent of a
participant to whom any grant shall theretofore have been awarded, adversely
affect the rights of such participant under such grant.

14. CHANGE IN CONTROL

For purposes of the Plan, a "change in control" shall be deemed to have
occurred upon the acquisition of thirty percent (30%) or more of the Company's
outstanding shares of capital stock having general voting rights by an
unaffiliated person, entity or group. The Board shall promptly notify, in
writing, each holder of an outstanding option or of restricted stock of the
occurrence of any such change in control. Notwithstanding any other provision of
the Plan or any grant agreement, all options shall become fully exercisable and
all restricted stock shall become fully vested on receipt of such notice. All
outstanding options shall expire if not exercised within 30 days of receipt of
the notice of a change of control.

15. COMPLIANCE WITH CODE SECTION 409A

Notwithstanding any provision of this Plan to the contrary, if one or
more of the payments or benefits received or to be received by a participant
pursuant to a grant would

B-6

constitute deferred compensation subject to Section 409A of the Code and would
cause a participant to incur any penalty tax or interest under Section 409A of
the Code or any regulations or Treasury guidance promulgated thereunder, the
Company may reform such provision to maintain to the maximum extent practicable
the original intent of applicable provision without violating the provisions of
Section 409A of the Code; provided, however, that if no reasonably practicable
reformation would avoid the imposition of any penalty tax or interest under
Section 409A of the Code, no payment or benefit will be provided under a grant,
the grant will be deemed null, void and of no force and effect, and the Company
shall have no further obligation with respect to the grant or the failure to
issue any shares of Common Stock or other compensation pursuant to the grant or
this Plan.

16. EFFECTIVE DATE

The effective date of this Plan will be the date of its adoption by the
shareholders of the Company.

17. DEFINITIONS

Any terms or provisions used herein which are defined in Sections 83 or
409A of the Code or the regulations thereunder or corresponding provisions of
subsequent laws and regulations in effect at the time grants are made hereunder,
shall have the meanings as therein defined.

18. GOVERNING LAW

To the extent not inconsistent with the provisions of the Code that
relate to non-qualified stock options or restricted stock grants, this Plan and
any grant agreement adopted pursuant to it shall be construed under the laws of
the Commonwealth of Pennsylvania and applicable federal law.

B-7

PLEASE MARK VOTES REVOCABLE PROXY
[X] AS IN THIS EXAMPLE ARROW INTERNATIONAL, INC.

The undersigned hereby appoints Frederick J. Hirt and 2. If Proposal 1 is approved, election of
Carl W. Staples, and each or any of them, his/her eleven directors for terms expiring in WITH- FOR ALL
Proxies, each with full power to appoint his/her 2007: FOR HOLD EXCEPT
substitute, and hereby authorizes them to represent and [ ] [ ] [ ]
to vote, as designated hereon, all shares of common Carl G. Anderson, Jr. John H. Broadbent, Jr.
stock of ARROW INTERNATIONAL, INC. (the "Company") held John E. Gurski T. Jerome Holleran
of record by the undersigned on November 25, 2005 at the Marlin Miller, Jr. Raymond Neag
Annual Meeting of Shareholders to held on January 18, Anna M. Seal Alan M. Sebulsky
2006, 4:00 p.m. at the Company's corporate headquarters George W. Ebright R. James Macaleer
at 2400 Bernville Road, Reading, Pennsylvania and any Richard T. Niner
adjournments thereof, and hereby further authorizes each INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE(S),
of them, in their discretion, to vote upon any other MARK "FOR ALL EXCEPT" AND WRITE THE NAME(S) OF SUCH NOMINEE(S)
business that may properly come before the meeting. IN THE SPACE PROVIDED BELOW.

-----------------------------------------------------------------
WITH- FOR ALL
FOR HOLD EXCEPT
[ ] [ ] [ ]

3. Alternatively, if Proposal 1 is not
approved, election of two directors for
terms expiring in 2010:
Raymond Neag Richard T. Niner
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE(S),
MARK "FOR ALL EXCEPT" AND WRITE THE NAME(S) OF SUCH NOMINEE(S)
IN THE SPACE PROVIDED BELOW.

-----------------------------------------------------------------
FOR AGAINST ABSTAIN
4. Adoption of 2006 Directors Stock
Incentive Plan. [ ] [ ] [ ]

5. Ratification of appointment of
PricewaterhouseCoopers LLP as [ ] [ ] [ ]
registered independent accounting firm.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL
PROPOSALS.

YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE
APPROPRIATE BOXES ABOVE, BUT YOU NEED NOT MARK ANY BOX WITH
REGARD TO A PARTICULAR PROPOSAL IF YOU WISH TO VOTE FOR SUCH
PROPOSAL. THE PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN
AND RETURN THIS CARD.
--------------------------
Please be sure to sign and date Date THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE
this Proxy in the box below. MANNER DIRECTED HEREIN. IF NO DIRECTION IS GIVEN WITH RESPECT
------------------------------------------------------------- TO A PARTICULAR PROPOSAL, THIS PROXY WILL BE VOTED FOR SUCH
PROPOSAL.

The signer hereby revokes all proxies heretofore given by the
-- Stockholder sign above-----Co-holder (if any) sign above-- signer to vote at said meeting or any adjournments thereof.

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

^ DETACH ABOVE CARD, SIGN, DATE AND MAIL IN POSTAGE PAID ENVELOPE PROVIDED. ^
ARROW INTERNATIONAL, INC.

- ------------------------------------------------------------------------------------------------------------------------------------
Please sign exactly as name appears hereon. If shares are registered in more than one name, the signatures of all such persons
are required. A corporation should sign its full corporate name by a duly authorized officer stating his/her title. Trustees,
guardians, executors and administrators should sign in their official capacity giving their full title as such. If a partnership,
please sign in the partnership name by authorized persons.

PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
- ------------------------------------------------------------------------------------------------------------------------------------

IF YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED BELOW AND RETURN THIS PORTION WITH THE PROXY IN THE
ENVELOPE PROVIDED.

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

PLEASE MARK VOTES REVOCABLE PROXY
[X] AS IN THIS EXAMPLE ARROW INTERNATIONAL, INC.

FOR AGAINST ABSTAIN
SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL 1. Approval of amendments to Restated [ ] [ ] [ ]
MEETING OF SHAREHOLDERS ON JANUARY 18, 2006. Articles of Incorporation and By-laws
to declassify Board of Directors and
The undersigned hereby appoints Frederick J. Hirt and 4 elect directors annually.
Carl W. Staples, and each or any of them, his/her
Proxies, each with full power to appoint his/her 0 2. If Proposal 1 is approved, election of
substitute, and hereby authorizes them to represent and eleven directors for terms expiring in WITH- FOR ALL
to vote, as designated hereon, all shares of common 1 2007: FOR HOLD EXCEPT
stock of ARROW INTERNATIONAL, INC. (the "Company") held [ ] [ ] [ ]
of record by the undersigned on November 25, 2005 at the K Carl G. Anderson, Jr. John H. Broadbent, Jr.
Annual Meeting of Shareholders to held on January 18, John E. Gurski T. Jerome Holleran
2006, 4:00 p.m. at the Company's corporate headquarters Marlin Miller, Jr. Raymond Neag
at 2400 Bernville Road, Reading, Pennsylvania and any Anna M. Seal Alan M. Sebulsky
adjournments thereof, and hereby further authorizes each George W. Ebright R. James Macaleer
of them, in their discretion, to vote upon any other Richard T. Niner
business that may properly come before the meeting. INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE(S),
MARK "FOR ALL EXCEPT" AND WRITE THE NAME(S) OF SUCH NOMINEE(S)
IN THE SPACE PROVIDED BELOW.