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Item 1.01
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Entry into a Material Definitive Agreement.
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Dr. Martelet’s Employment Agreement
As previously reported, effective
December 1, 2007, the Board of Directors of AVAX Technologies, Inc. appointed Francois R. Martelet, M.D. as Chief Executive
Officer and President of the company and entered into an employment agreement, as amended, with Dr. Martelet dated as of
December 1, 2007. Dr. Martelet’s employment agreement and related amendment are filed as exhibits to this
report.
Mr. Rainey’s Employment Agreement
In conjunction with the appointment of Dr. Martelet as Chief Executive Officer and President, the company entered into certain oral agreements with Richard P. Rainey, previously the CEO, President and Chief Financial Officer of the company, regarding his continued employment with the company. Those oral agreements were subject to the execution of a mutually acceptable amendment to the employment agreements then in effect with Mr. Rainey or the execution of a new employment agreement. Those oral arrangements were described in the Current Report on Form 8-K filed by the company with the SEC on December 6, 2007.
On January 23, 2008, the company and
Mr. Rainey executed a new employment agreement, effective as of December 1, 2007, which sets forth the terms of
Mr. Rainey’s continued employment with the company through May 31, 2008. The new agreement supersedes the
previous employment agreement between the company and Mr. Rainey dated as of April 1, 2004, as amended by a letter agreement
dated October 2, 2007, except as set forth in the new agreement. Upon execution of the new agreement, Mr. Rainey received a
bonus payment of $350,000 for prior services rendered.
The new agreement provides that
Mr. Rainey will continue in employment with the company until May 31, 2008, in the capacity of Principal Accounting Officer.
Under the terms of the new agreement, Mr. Rainey receives a base salary of $275,000 per year. The agreement also provides
that Mr. Rainey will receive a severance payment of $350,000, payable in 12 monthly installments, if (i)
Mr. Rainey’s employment is terminated without Cause, as defined below, (ii) upon Mr. Rainey’s death or
disability, (iii) after Achievement of the Milestones, as defined below, (iv) due to Mr. Rainey’s resignation for Good
Reason, as defined below, or (v) upon the expiration of the employment term on May 31, 2008. The new agreement also provides that
the exercise date for all stock options held by Mr. Rainey is extended 18 months from the termination date of
Mr. Rainey’s employment with the company and that all such stock options will thereupon be accelerated and fully vested
as of the termination date, if the agreement is terminated in a manner that triggers the severance payment described in the
preceding sentence. The company may terminate Mr. Rainey for Cause or without Cause, Mr. Rainey may terminate his
employment for Good Reason, or no reason, and Mr. Rainey’s employment will terminate at the end of the term of the
employment term on May 31, 2008, unless earlier terminated.
For purposes of the new agreement,
“Cause” for termination means (a) Mr. Rainey’s material breach of, or habitual neglect or failure to perform
the material duties that he is required to perform under the terms of the agreement; the willful or intentional failure to follow
the reasonable directives or policies established by the company; or engaging in conduct that is materially detrimental to the
interest of the company such that the company sustains a material loss or injury as a result thereof, provided that the breach or
failure of performance by the Mr. Rainey has not been cured by Mr. Rainey within 30 days after he shall have
received written notice from the company stating with reasonable specificity the nature of such conduct; (b)
Mr. Rainey’s conviction or entry of nolo contendere to any felony or a crime involving moral turpitude, fraud or
embezzlement of company property; or (c) Mr. Rainey’s material breach of his duties under the agreement. For purposes of
the agreement, “Good Reason” means, without Mr. Rainey’s written consent, (a) the assignment to
Mr. Rainey of duties inconsistent in any material respect with the duties of a Principal Accounting Officer; or (b) a
material reduction in his base salary or other benefits. For purposes of the agreement, “Achievement of the Milestones,”
means the filing by the company of its Annual Report on Form 10-KSB for the year ended December 31, 2007, and the filing and
effectiveness of a registration for a primary offering of securities by the company, in each instance, with the participation of
Mr. Rainey in his capacity as Principal Accounting Officer.
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The new employment agreement also contains
a nondisclosure agreement, a 12-month covenant not to compete, and a 12- month non-solicitation agreement.
Mr. Rainey’s new agreement is filed as an exhibit to this report.