Exhibit 10.27


 


EMPLOYMENT AGREEMENT


 


PARTIES


 


This employment Agreement
(this “Agreement”), dated as of the 3rd day of April 2006, is entered into
by and between CardioTech International, Inc., a Massachusetts corporation
having its principal place of business at 229 Andover Street, Wilmington MA
01887 (the “Company”), and Eric G. Walters., an individual with an address at
167 Monument Street, Concord, MA 01742 (the “Executive”).


 


TERMS OF AGREEMENT


 


In consideration of
this-Agreement and the continued employment of the Executive by the Company,
the parties agree as follows:


 


1.                                       Employment.
The Company hereby employs the Executive, on a full-time basis, to act as Vice
President. and Chief Financial Officer of the Company and to perform such
acts and duties and furnish such services to the Company in connection with and
related to those positions as is customary for persons with similar positions
in like companies, and as the Board of Directors of the Company (the “Board”)
shall from time to time reasonably direct. The Executive shall be an officer of
the Company. The Executive hereby accepts said employment. The Executive shall
use his best and most diligent efforts to promote the interests of the Company;
shall discharge his duties in a highly competent manner; and shall devote his
full business time and his best business judgment, skill and knowledge to the
performance of his duties and responsibilities hereunder. The Executive shall
report directly to the Chief Executive Officer. Nothing contained herein shall
preclude the Executive from devoting incidental and insubstantial amounts of
time to activities other than the business of the Company.


 


2                                          Term
of Employment. The Company
agrees to employ the Executive for
the period commencing on the date hereof and ending on April 1, 2008 (the “Employment
Period”)  Notwithstanding the foregoing,
both the Executive and the Company shall have the right to terminate the
Executive employment under this Agreement upon thirty (30) days written notice
to the other party, subject to the Company’s obligation to pay severance
benefits under certain circumstances as provided in Sections 3.6 and 3.7 hereof.
If the Executive shall remain in the employ of the Company beyond the
Employment Period, in the absence of any other express agreement between the
parties, this Agreement shall be deemed to continue on a month-to-month basis
(the “Extended Employment Period”).


 


3.                                       Compensation
and Benefits; Disability.


 


3.1.                              Salary.
During the Executive’s employment, the company shall pay the Executive an
annualized base salary of One Hundred Seventy Five Thousand Dollars ($175,000)
(the “Base Salary”), payable in equal installments pursuant to the Company’s
customary payroll policies in force at the time of payment (but in no event
less frequently than monthly), less required payroll deductions and state and
federal withholdings. The Base Salary may be adjusted from time to time in
the sole discretion of the Chief Executive Officer.


 


3.2.                              Bonus
Payment. During the Employment Period, the Executive may receive, in
the sole discretion of the Chief Executive Officer, an annual bonus payment in
an amount, if any, to be determined by the Compensation Committee.


 


3.3.                              Executive
Benefits. During the Employment Period, the Executive shall receive such
benefits as are customarily provided to other officers and employees of the
Company, including but not limited to the following benefits:


 


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(a)                                  Health
Insurance. Non-contributory health insurance pursuant to a health policy or substantially similar policy; and


 


(b)                                 Life
Insurance. Life insurance on the life of the Executive with an
Executive-directed beneficiary in the amount of 200% of the Base Salary.


 


3.4.                              Paid
time off The Executive may take
17 days of paid time off during each year at such times as shall be Consistent
with the Company’s policies and with
the Company’s paid time off schedule for officers and other employees.


 


3.5.                              Disability
or Death. If during the Employment Period, the Executive shall (I) become
ill, disabled or otherwise incapacitated so as to be unable to perform his
usual duties (a) for a period in excess of one hundred twenty (120)
consecutive days or (b) for more than one hundred eighty (180) days in-any
consecutive twelve (12) month period, or (ii) die, then the Company shall
have the right to terminate this Agreement, in accordance with applicable laws, on thirty (30) days written notice to the
Executive or his estate.


 


3.6.                              Severance
Payment. In the event (I)  the
Company terminates this Agreement without cause (i.e., other than pursuant to Section 3.5
or Section 4 hereof) at any time (including during the Extended Employment
Period), or (ii) the Executive terminates his employment for Good Reason
following a Change in Control of the Company, or (iii) the Company fails
to renew this Agreement within- two (2) years following the occurrence of
a Change in Control, the Company shall pay the Executive a severance payment
equal to the Executive’s then current Base Salary multiplied by 2.00; such
severance payment to be adjusted to the extent necessary to avoid such payment
being treated as an “excess parachute payment” for purposes of Section 28OG
of the Internal Revenue Code of 1986.


 


“Good Reason” shall mean,
during the nine (9) month period following a Change -in Control, (1) a
good faith determination by the Executive that as a result of such Change in
Control he is not able to discharge his duties effectively or (2) without
the Executive’s express written consent, the occurrence of any of the following
circumstances: (a) the assignment to the Executive of any duties
inconsistent (except in the nature of a promotion) with the position in the
Company that he held immediately prior to the Change in Control or a
substantial adverse alteration in the nature or status of his position or
responsibilities or the Conditions of his employment from those in effect
immediately prior to the Change in Control; (b) a reduction by the Company
in the Base Salary as in effect on the date of the Change in Control; (c) the
Company’s requiring the Executive to be based more than twenty-five (25) miles
from the Company’s offices at which he was principally employed immediately
prior to the date of the Change in Control except for required travel on the
Company’s business to an extent substantially consistent with his present
business travel obligations; or (d) the failure by the Company to continue
in effect any material compensation or benefit plan in which the Executive
participates immediately prior to the Change in Control unless an equitable
arrangement (embodied in an ongoing substitute or alterative plan) has been
made with respect to such plan, or the failure by the Company to Continue the
Executive’s participation therein (or in such substitute or alterative plan) on
a basis not materially less favorable, both in terms of the amount of benefits
provided and the level of his participation relative to other participants than
existed at the time of the Change in Control. The Executive’s continued
employment shall not constitute consent to, or a waiver of rights with respect
to, any circumstance constituting Good Reason hereunder.


 


For purposes of this
Agreement, a “Change in Control” shall occur or be deemed to have occurred only
if any of the following events occur: (i) any person, as such term is used
in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”), (other than any majority owned subsidiary
thereof, the Company, any trustee or other fiduciary holding securities under
an employee benefit plan of the Company, any trustee or other fiduciary of a
trust treated for federal, income tax purposes as a grantor trust of which the
Company is the grantor, or any corporation owned directly or indirectly by the
Stockholders of the Company in substantially the same proportion as their
ownership of stock of the Company) is or becomes the “beneficial owner” (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the company representing 50% or more of the combined voting power
of the Company’s then outstanding securities on any matter which could come
before its stockholders for approval; (ii) individuals who, as of the date hereof, constitute the
Board (the “Incumbent Board”) cease for any reason to constitute at least a
majority of the Board, provided that any person becoming a director subsequent
to the date hereof whose election, or nomination for election by the Company’s
stockholders,


 


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was approved by a vote of
at least a majority of the directors then comprising the Incumbent Board (other
than an election or nomination of an individual whose initial assumption of
office is in connection with an actual or threatened election contest relating
to the election of the directors of the Company, as such terms are used in
Rule14 a -11 of Regulation 14A under the Exchange Act) shall be, for purposes
of this Agreement, considered as though such person were a member of the
Incumbent Board; (iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than (A) a
merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either
by remaining outstanding or by being converted into voting securities of the
surviving entity) more than 80% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately
after such merger or consolidation or (B) a merger or consolidation
effected to implement a recapitalization of the Company (or similar
transaction) in which no person (as hereinabove defined) acquires more than 50%
of the combined voting power of the Company’s then outstanding securities; or (iv) the
stockholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of all or
substantially all of the Company’s assets.


 


3.7.                        Benefits
After Termination  Except as
otherwise required by law, the Executive shall not be entitled to any employee
benefits provided under Section 3.3 hereof after termination of the
employment of the Executive, whether or not severance pay is being provided,
except that if the Executive is entitled to the severance payment described in Section 3.6
of this Agreement, (I) the Company shall continue in full force and effect, at
its expense, the life insurance provided for in Section 3.3(b) hereof
for a period of one (1) year after termination of the Executive’s
employment hereunder or until the Executive becomes employed, whichever first
occurs, and (ii) during the six (6) month period following the
termination of the Executive’s employment, the Company shall reimburse the Executive
for out-of-pocket health insurance expenses incurred by the Executive pursuant
to the Consolidated Omnibus Budget Reconciliation Act of 1986 (“COBRA”). If the
Executive elects not to maintain health insurance pursuant to COBRA, the
Company is under no obligation to reimburse the Executive for his otherwise
elected coverage. The Executive shall be obligated to give the Company prompt
notice of his employment.


 


4.                                       Discharge
for Cause. The Company may discharge the Executive and terminate his
employment under this Agreement for Cause without further liability to the
Company by a majority vote of the Board, except that Executive, if a Director,
shall not be entitled to vote thereon. As used in this Agreement, “Cause” shall
mean any or all of the following:


 


(a)                                  misconduct
of the Executive during the course of his employment which is materially
injurious to the Company and which is brought to the attention of the Executive
promptly after discovery by the Company, including but not limited to, theft or
embezzlement from the Company, the intentional provision of services to
competitors of the Company, or improper disclosure of proprietary information,
but not including any act or failure to act by the Executive that he believed
in good faith to be proper conduct not adverse to his duties hereunder;


 


(b)                                 willful
disregard or neglect by the Executive of his duties or of the Company’s
interests that continues after being brought to the attention of the Executive;


 


(c)                                  unavailability
(except as provided in Section 3.5 hereof) of the Executive to
substantially perform the duties provided for herein;


 


(d)                                 conviction
of a fraud or felony or any criminal offense involving dishonesty, breach of
trust or moral turpitude during the Executive’s employment;


 


(e)                                  the
Executive’s breach of any of the material terms of this Agreement (including
the failure of the Executive to discharge his duties in a highly competent
manner) or any of the agreements executed in connection herewith as enumerated
in Section 10.1 hereof.


 


In the event the Company
exercises its right to terminate the Executive’s employment under this Section 4,
the Executive shall not be entitled to receive any severance pay or other
termination benefits, except as required by law.


 


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5.                                       Termination
Without Cause. The Company may terminate this Agreement without cause,
without further liability to the Company except as set forth in Sections 3.6
and 3.7 hereof, by a majority vote of the Board. The Executive, if a Director,
shall not be entitled to vote on the termination of this Agreement without
Cause.


 


6.                                       Expenses.
Pursuant to the Company’ s customary policies in force at the time of payment,
the Executive shall be promptly reimbursed, against presentation of vouchers or
receipts therefor, for all authorized expenses properly incurred by him on the
Company’s behalf in the performance of his duties hereunder.


 


7.                                       Additional
Agreements. The Executive has executed and delivered to the Company a
Non-Disclosure and Invention Assignment Agreement, dated October 3, 2005,
which shall survive the expiration of or termination of this Agreement and the
termination of Executive’s employment with the Company for any reason.


 


8.                                       Arbitration.
All disputes and claims relating
to this Agreement and the rights, obligations and performance of the parties
hereto shall be settled by a single arbitrator sitting in Boston, Massachusetts
under the applicable rules of the American Arbitration Association.


 


9.                                       Notices.
Any notice of communication given by any party hereto to the other party or
parties shall be in writing and personally delivered, mailed by certified mail,
return receipt requested, postage prepaid, or delivered by a recognized
overnight carrier, to the addresses provided above. All notices shall be deemed
given when actually received. Any person entitled to receive notice (or a copy
thereof) may designate in writing, by notice to the others, another
address to which notices to such person shall thereafter be sent.


 


10.                                 Miscellaneous.


 


10.1.                        Entire
Agreement. This Agreement contains the entire understanding of the parties
in respect of its subject matter and supersedes all prior agreements and
understandings between the parties with respect to such subject matter;
provided, however, that nothing in this Agreement shall affect the Executive’s
or the Company’s obligations under the Non-Disclosure and Invention Assignment
Agreement dated October 3, 2005, between the parties hereto.


 


10.2.                        Amendment;
Waiver. This Agreement may not be amended, supplemented, canceled or
discharged, except by written instrument executed by the party affected thereby.
No failure to exercise, and no delay in exercising, any right, power or
privilege hereunder shall operate as a waiver thereof. No waiver of any breach
of any provision of this Agreement shall be deemed to be a waiver of any
preceding or succeeding breach of the same or any other provisions.


 


10.3.                        Binding
Effect; Assignment. The rights and obligations of this Agreement shall bind
and inure to the benefit of any successor of the Company by reorganization,
merger or consolidation, or any assignee of all or substantially all of the
Company’s business and properties. The Executive’s rights or obligations under
this Agreement may not be assigned by the Executive; except that the
Executive’s right to compensation to the earlier of the date of death,
disability pursuant to Section 3.5 hereof, or termination of actual
employment, shall pass to the Executive’s executor or administrator.


 


10.4.                        Headings.
The headings contained in this Agreement are for reference purposes only and
shall not affect the meaning or interpretation of this Agreement.


 


10.5.                        Governing
Law: Interpretation. This Agreement shall be construed in accordance with
and governed for all purposes by the laws and public policy of the Commonwealth
of Massachusetts applicable to contracts executed and to be wholly performed
within such Commonwealth. Service of process in any dispute shall be effective (a) upon
the Company, if service is made on any officer of the Company other than the
Executive; (b) upon the Executive, if served at the Executive’s residence
last known to the Company with an information copy to the Executive at any
other residence, or in care of a subsequent employer of which the Company may be
aware.


 


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10.6.                        Further Assurances. Each
of the parties agrees to execute, acknowledge, deliver and perform, or cause to
be executed, acknowledged, delivered or performed, at any time, or from time to
time, as the case may be, all such further acts deeds, assignments,
transfers, conveyances, powers of attorney and assurances as may be
necessary or proper to carry out the provisions or intent of this Agreement.


 


10.7.                        Severability.
If any one or more of the terms, provisions, covenants or restrictions of this
Agreement shall be determined by a court of competent jurisdiction to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect, and shall in no way be affected, impaired or invalidated. If, moreover,
any one or more of the provisions contained in this Agreement shall for any
reason be determined by a court of competent jurisdiction to be excessively
broad as to duration, geographical scope, activity or subject, it shall be
construed by limiting or reducing it so as to be enforceable to the extent
compatible with then applicable law.


 


EXECUTION


 


The parties executed this
Agreement as a sealed instrument as of
the date first above written, whereupon it became binding in accordance with
its terms.


 


 


	
   

  	
  CARDIOTECH
  INTERNATIONAL, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
  Michael Szycher

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Michael Szycher, Ph.D.

  
	
   

  	
   

  	
  Title:

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
  Eric G. Walters

  	
   

  
	
   

  	
   

  	
   

  	
  Eric G. Walters

  
						



 


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