Prepared and Filed by St Ives Financial








Andover Medical, Inc.


510 Turnpike Street


Ste 204


N.
  Andover, MA 01845


December
  20, 2006


Mr. Edwin A. Reilly


8 Algonquian Drive


Natick, MA 01760


Dear Ed:


On
  behalf of Andover Medical, Inc. (“AMI” or the “Company”),
  I am pleased to offer you the position of President and Chief Operating Officer.
  The following are the terms of your employment with AMI:


 






  	
        Title:
 	
         
 	
        President and Chief Operating officer.
 
	

        Effective
          Date:

      	

 
 	

August 31, 2006.
 
	

Salary:
 	

 
 	

        a.)
          $150,000 per year to be reviewed annually; b) Stock options from the
          Andover Medical, Inc. 2006 Employee Stock Incentive Plan in the amount
          of 700.00 shares for 2006, 700,000 shares for 2007, and
          700,000 shares for 2008. These
          shares will vest over a twelve (12) month period from
          the date
          of grant.

      
	

Annual Bonus:
 	

 
 	

Target bonus of 50% of salary based on corporate objectives and paid quarterly.
 
	

Stock Options
 	

 
 	

        You
          will participate in the Andover Medical, Inc. 2006 Employee Stock Incentive
          Plan. Annual awards will
          be made at the discretion of the Board of
          Directors.

      
	

Company Car:
 	

 
 	

        AMI
          will provide
          you the use of
          an automobile or an automobile allowance. The monthly lease cost or
          allowance will not exceed $1,000.00

      
	

Term:
 	

 
 	

Unless terminated as set forth herein, your employment hereunder shall commence on August 31, 2006, and shall continue during the period ending on the third (3rd) anniversary date (the “Term”). Thereafter, your employment shall he extended automatically for consecutive periods of one (1) year unless either party shall provide notice to the other of its intention not to extend your employment, such notice to be given not less than ninety (90) days prior
to the end of the Term, or any one (1) year extension period, (“Extended Term”) as the case may be. During the Term of this agreement the Company may terminate the agreement by giving notice to you of not less than one (1) year prior to the termination date.
 







 
















  	
        Termination:
 	
         
 	
        Your employment with the Company may be terminated as follows:
 
	

 
 	

 
 	

        (a)
          Death. Your employment shall automatically terminate upon your
          death.

      
	

 
 	

 
 	

        (b)
          Just Cause. The Company may terminate your employment at any time,
          with or without Just Cause (as defined herein), effective at such time
          that the Company notifies you of such termination (or such other time
          Specified in such notification). For purposes of this Agreement, “Just
          Cause” shall mean:

      
	

 
 	

 
 	

(i) any act of dishonesty by you in connection with the performance of your duties on behalf of the Company; or
 
	

 
 	

 
 	

(ii) any material breach of any term of this Agreement by you.
 
	

 
 	

 
 	

        (c)
          Good Reason. You may terminate your employment for “Good
          Reason” and receive severance as described in this Agreement on
          five (5) days Notice of Termination to the Company. For purposes of
          this Agreement, “Good Reason” shall mean the occurrence after
          a Change in Control, as hereinafter defined, or any of the events or
          conditions described below:

      
	

 
 	

 
 	

1.        a reduction in your Base Salary or any failure to pay you any compensation or benefits to which you are entitled within five days of the date due.
 
	

 
 	

 
 	

2.        any change in your office location more than fifty (50) miles from your home.
 
	

 
 	

 
 	

        3.        the
          failure by the Company to continue in effect (without
          reduction in benefit level and/or
          reward opportunities) any material compensation or employee benefit
          plan in which you were participating immediately prior to a Change in
          Control.

      
	

 
 	

 
 	

4.        any material breach by the Company of any provision of this Agreement.
 
	

 
 	

 
 	

5.        any purported termination of your employment for Just Cause by the Company which does not comply with the terms of this Agreement.
 
	

 
 	

 
 	

        (d)
          Resignation. You shall have the right to terminate your employment
          at any time for any reason by giving at least thirty (30) days’
          prior written notice of your resignation. The Company may waive the
          thirty (30) days prior notice of resignation requirement, in its sole
          discretion. In the event of a resignation under this provision, you
          shall not be entitled to severance.

      
	

 
 	

 
 	

        (e)
          Payments. If you resign, or if your employment is terminated
          as a result of death, or if the Company terminates your employment for
          Just Cause, the Company shall pay your salary through your last day
          of employment, shall comply with applicable law regarding payment for
          vacation and continuation of any health insurance or other benefits,
          but shall otherwise have no obligation whatsoever to pay or provide
          you any amount or benefit. Upon termination of your employment with
          the Company for any reason, the Company shall have the right to withhold
          payment of any amounts owed by you to the Company. 

      







 


















  	
        Employment Status:
 	
         
 	
        You are being employed by the Company and will devote your best efforts to the advancement of the business and the interest of the Company.
 
	

Benefits:
 	

 
 	

You will participate in a standard employee benefit program including medical, life, and disability. Until such a plan is established AMI will pay the monthly premium (not to exceed $1,200 per month) on your private medical plan.
 
	

 
 	

 
 	

        You
          will be given twenty (20) days of paid vacation time for the first year
          of employment, prorated on a monthly basis from the date hereof. Your
          vacation and sick time shall be governed by the Company’s vacation
          and sick time policies as they may be amended from time to time.

      
	

Miscellaneous:
 	

 
 	

        This
          letter agreement contains all of the terms of your employment with the
          Company, and supercedes any prior understandings or agreements, whether
          oral or written, between you and the Company. This agreement may not
          be modified, except in writing signed by both parties. This agreement
          will be governed by the laws of the Commonwealth of Massachusetts, notwithstanding
          the conflict of laws principles thereof.

      







I
  look forward to working with you, and am pleased to have you as part of our
  team.


 






	

 
 	

 
 	

 
 	

Sincerely,
 
	

 
 	

 
 	

 
 	



          /s/ Robert G. Coffill, Jr.          12/20/06

      
	

 
 	

 
 	

 
 	




 
	

 
 	

 
 	

 
 	

        Robert
          G. Coffill, Jr.

           Director and
 Chairman of the Compensation Committee

          Andover Medical, Inc.

      







 






	

Agreed and Accepted:
 	

 
 	

 
 	

 
 
	


 /s/ Edwin A. Reilly
 	

 
 	

 
 	

  
 
	




 	

 
 	

 
 	

 
 
	

Edwin A. Reilly
 	

 
 	

 
 	

 
 







Date: 12/20/06