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EXHIBIT 10.18

QUOVADX, INC.

GARY T. SCHERPING SEVERANCE AGREEMENT

     This Severance Agreement (“Agreement”) is made by and between Quovadx,
Inc. (the “Company”), and Gary T. Scherping (“Executive”).

     WHEREAS, Executive was employed by the Company as its Chief Financial
Officer;

     WHEREAS, Executive’s employment with the Company will cease on April 12,
2004 (the “Termination Date”), and

     WHEREAS, Executive agrees to enter into a non-competition and
non-solicitation agreement with the Company and to release the Company from any
claims arising from or related to Executive’s service relationship;

     NOW THEREFORE, in consideration of the mutual promises made herein, the
Company and Executive (collectively referred to as “the Parties”) hereby agree
as follows:

     1. Consideration. As consideration for Executive entering into this
Agreement (including entering into and not revoking the Release of Claims
attached hereto as Exhibit A), the Parties agree as follows:

         (a) Continued Salary. The Company will pay Executive continuing payments
of severance pay at a rate equal to $18,900 per month ($226,800 annually), for
six (6) months from the Termination Date (the “Severance Payment Period”), to
be paid periodically in accordance with the Company’s normal payroll policies.

         (b) Continued Benefits. Subject to Executive electing coverage under
Title X of the Consolidated Budget Reconciliation Act of 1985 (“COBRA”), the
Company will provide Company-paid group health plan insurance coverage at the
same ratio of Company premium payment to employee premium payment as was in
effect immediately prior to the Termination Date (the “Company-Paid Coverage”).
If such coverage included the Employee’s dependents immediately prior to the
Change of Control, such dependents shall also be covered at Company expense.
Company-Paid Coverage shall continue until the earlier of (i) the end of the
Severance Payment Period, or (ii) the date upon which Executive and his
dependents become covered under another employer’s group health plan.

         (c) Outplacement Assistance. The Company will provide Executive with
outplacement assistance for a period of up to six (6) months in an amount not
to exceed $20,000.

     2. Treatment of Equity. Executive agrees and acknowledges that Executive
has three (3) months from the termination of the Severance Payment Period to
exercise Executive’s outstanding vested stock options; provided, however, that
if the Company determines, in its sole discretion, that such post-termination
exercise period will result in adverse accounting consequences, the preceding

 

 

clause regarding Executive’s post-termination exercise period shall be
without force and effect and instead Executive shall be provided the
post-termination exercise period specified in his outstanding option agreements
(and the related equity compensation plans). Executive further acknowledges
that vesting of shares under his stock options will cease as of the Termination
Date. The Company agrees to notify Executive of its determination regarding
Executive’s post-termination exercise period no later than April 19, 2004.

     3. Notice of new Employment. Notwithstanding any other provision of this
Agreement to the contrary, in the event Executive obtains employment or enters
into a consulting relationship with any entity during the Severance Payment
Period, (i) Executive agrees to notify the Company within three (3) days after
Executive’s service commences and (ii) Executive agrees and acknowledges that
all payments and benefits provided hereunder immediately shall cease.

     4. Tax Withholding. All payments and benefits provided hereunder shall be
subject to applicable tax withholding by the Company. In the event future
payments due to Executive are not sufficient to cover any applicable tax
withholding, Executive agrees to pay the Company the amount in cash necessary
to cover such withholding.

     5. Payment of Salary. The Company will pay all salary, wages, bonuses,
accrued vacation, commissions and any and all other benefits due to Executive
(the “Payments Due”) as of the Termination Date on the Termination Date. Once
Executive receives the Payments Due, Executive agrees to execute a statement
that indicates Executive acknowledges receipt of the Payments Due.

     6. Company Credit Cards. If applicable, within thirty days of the
Termination Date, the Company shall provide Executive with documentation
indicating that the Company American Express Card issued in Executive’s name
has been paid off and the account cancelled; provided however, that Executive
agrees to reimburse the Company for any charges made that would not otherwise
be reimbursable under the Company’s standard policies and practices.

     7. Confidential Information. Executive shall continue to maintain the
confidentiality of all confidential and proprietary information of the Company
and Executive shall return all the Company property and confidential and
proprietary information in his possession to the Company on the Termination
Date.

     8. Non-Competition and Non-Solicitation.

         (a) Beginning on the Termination Date and for a period of six (6) months
thereafter (the “Non-Compete Period”), Executive shall not, other than on
behalf of the Company, directly or indirectly, without the prior written
consent of the Company,

            (i) engage in the “Geographic Area” (as defined below) as an employee,
agent, consultant, advisor, independent contractor, proprietor, partner,
officer, director or otherwise of;

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            (ii) have any ownership interest in (except for passive ownership of one
percent (1%) or less of any entity whose securities have been registered under
the Securities Act of 1933 or Section 12 of the Securities Exchange Act of 1934
or the securities laws of any other jurisdiction); or

            (iii) participate in the financing, operation, management or control of:

any firm, partnership, corporation, entity or business that engages or
participates in a “competing business purpose.” The term “competing business
purpose” shall mean health care integration tools and services.

         (b) During the Non-Compete Period, Executive shall not, directly or
indirectly, without the prior written consent of the Company, solicit,
encourage or take any other action which is intended to induce or encourage, or
has the effect of inducing or encouraging, any employee or customer of the
Company or its subsidiaries to terminate his or her employment with or customer
relationship to the Company or its subsidiaries.

         (c) The Geographic Area shall mean anywhere in the world where the Company
or any of its subsidiaries conducts business including, without limitation, the
United States.

         (d) The covenants contained in the preceding paragraphs shall be construed
as a series of separate covenants, one for each county, city, state, or any
similar subdivision in any Geographic Area. Except for geographic coverage,
each such separate covenant shall be deemed identical in terms to the covenant
contained in the preceding paragraphs. If, in any judicial proceeding, a court
refuses to enforce any of such separate covenants (or any part thereof), then
such unenforceable covenant (or such part) shall be eliminated from this
Section to the extent necessary to permit the remaining separate covenants (or
portions thereof) to be enforced. In the event that the provisions of this
Section are deemed to exceed the time, geographic or scope limitations
permitted by applicable law, then such provisions shall be reformed to the
maximum time, geographic or scope limitations, as the case may be, permitted by
applicable laws.

         (e) Executive also acknowledges that the limitations of time, geography,
and scope of activity agreed to in this Agreement are reasonable because, among
other things, the Company is engaged in a highly competitive industry and
Executive is receiving significant compensation pursuant to this Agreement.

         (f) Executive agrees that it would be impossible or inadequate to measure
and calculate the Company’s damages from any breach of the covenants set forth
in this Section. Accordingly, Executive agrees that if he breaches any
provision of this Section, the Company will have available, in addition to any
other right or remedy otherwise available, the right to obtain an injunction
from a court of competent jurisdiction restraining such breach or threatened
breach and to specific performance of any such provision of this Agreement.
Executive further agrees that no bond or other security shall be required in
obtaining such equitable relief, nor will proof of actual damages be required
for such equitable relief. Executive hereby expressly consents to the issuance
of such injunction and to the ordering of such specific performance.

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         9. Non-Disparagement. Executive agrees to refrain from any defamation,
libel, or slander of the Company, including its officers and directors, or
tortious interference with the contracts and relationships of the Company. The
Company agrees to refrain from any defamation, libel, or slander of Executive.

         10. Continued Cooperation. Executive agrees (i) to be available on an as
needed basis and to provide assistance with respect to any investigation by a
governmental authority with respect to activities and actions of the Company or
Executive that occurred during the time period during which Executive was
employed by the Company and (ii) during the Severance Payment Period, to assist
Executive’s successor at the Company with transitional matters on an as needed
basis upon request of the Company. Executive further agrees to execute any
filing with the Securities and Exchange Commission that was filed on or prior
to the Termination Date.

         11. Impact of Breach. In the event the Company determines in good faith
that Executive has breached any terms of this Agreement (including the terms of
exhibits hereto) all payments and benefits provided to Executive hereunder
immediately shall cease and Executive’s post-termination option exercise period
immediately shall terminate. In addition, if Executive is required to forfeit
any payments or profits under Section 304 of the Sarbanes-Oxley Act of 2002 (or
Executive would be so required if Executive still were employed by the
Company), then, to the extent required under Section 304 of the Sarbanes-Oxley
Act of 2002, all payments and benefits provided to Executive hereunder
immediately shall cease and Executive’s post-termination option exercise period
immediately shall terminate.

         12. Arbitration. The Parties agree that any and all disputes arising out
of, or relating to, the terms of this Agreement, their interpretation, and any
of the matters herein released, shall be subject to binding arbitration in
Englewood, Colorado before the American Arbitration Association under its
National Rules for the Resolution of Employment Disputes. The Parties agree
that the prevailing party in any arbitration shall be entitled to injunctive
relief in any court of competent jurisdiction to enforce the arbitration award.
The Parties agree that the prevailing party in any arbitration shall be
awarded its reasonable attorneys’ fees and costs.

         13. Assignment. This Agreement will be binding upon and inure to the
benefit of (a) the heirs, executors and legal representatives of Executive upon
Executive’s death and (b) any successor of Company. Any such successor of
Company will be deemed substituted for Company under the terms of this
Agreement for all purposes. For this purpose, “successor” means any person,
firm, corporation or other business entity which at any time, whether by
purchase, merger or otherwise, directly or indirectly acquires all or
substantially all of the assets or business of Company. None of the rights of
Executive to receive any form of compensation payable pursuant to this
Agreement may be assigned or transferred except by will or the laws of descent
and distribution. Any other attempted assignment, transfer, conveyance or
other disposition of Executive’s right to compensation or other benefits will
be null and void.

         14. Notices. All notices, requests, demands and other communications
called for hereunder shall be in writing and shall be deemed given (i) on the
date of delivery if delivered personally, (ii) one (1) day after being sent by
a well-established commercial overnight service, or

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(iii) five (5) days after being mailed by registered or certified mail,
return receipt requested, prepaid and addressed to the Parties or their
successors at the following addresses, or at such other addresses as the
parties may later designate in writing:

If to Company:

Quovadx, Inc.

6400 South Fidlers Green Circle, Suite 1000

Englewood, Colorado 80111

Attention: Chief Financial Officer

If to Executive:

At the last residential address known by the Company.

     15. Severability. In the event that any provision hereof becomes or is
declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement shall continue in full force and effect without said
provision.

     16. Application for Employment. Executive understands and agrees that, as
a condition of this Agreement, he shall not be entitled to any employment with
the Company, its subsidiaries, or any successor, and he hereby waives any
right, or alleged right, of employment or re-employment with the Company.

     17. Authority. Executive represents and warrants that he has the capacity
to act on his own behalf and on behalf of all who might claim through him to
bind them to the terms and conditions of this Agreement.

     18. Fee Reimbursement. The Company agrees to reimburse Executive and
Lorine Sweeney for expenses incurred by both Executive and Ms. Sweeney to
ensure the proper documentation of their employment (including the cessation
thereof) with the Company in an amount up to (i) $6000 (such $6000 maximum to
be the combined reimbursement for both Executive and Ms. Sweeney) for expenses
incurred prior to March 8, 2004 and (ii) $10,000 (such $10,000 to be the
combined reimbursement for both Executive and Ms. Sweeney) for expenses
incurred on or after March 8, 2004.

     19. No Representations. Executive represents that he has had the
opportunity to consult with an attorney, and has carefully read and understands
the scope and effect of the provisions of this Agreement. Neither party has
relied upon any representations or statements made by the other party hereto
which are not specifically set forth in this Agreement.

     20. Entire Agreement. This Agreement, including the Release of Claims
addendum attached hereto as Exhibit A represents the entire agreement and
understanding between the Company and Executive concerning Executive’s
separation from the Company.

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     21. No Oral Modification. Any modification or amendment of this
Agreement, or additional obligation assumed by either party in connection with
this Agreement, shall be effective only if placed in writing and signed by both
Parties or by authorized representatives of each Party.

     22. Governing Law. This Agreement shall be governed by the internal
substantive laws, but not the choice of law rules, of the State of Colorado.

     23. Counterparts. This Agreement may be executed in counterparts, and
each counterpart shall have the same force and effect as an original and shall
constitute an effective, binding agreement on the part of each of the
undersigned.

     IN WITNESS WHEREOF, the Parties have executed this Agreement on the
respective dates set forth below.

	 	 	 	 	 
	 	 	 
	Dated: April 11, 2004 	/s/ Linda K. Wackwitz
 	 
	 	Linda Wackwitz 	 
	 	Executive Vice President and General
Counsel Quovadx, Inc. 	 
	 

	 	 	 	 	 
	 	 	 
	Dated: April 11, 2004 	/s/ Gary T. Scherping
 	 
	 	Gary T. Scherping 	 
	 	 	 
	 

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EXHIBIT A

RELEASE OF CLAIMSexv10w25

 

EXHIBIT 10.25

EQUITY BUY-BACK AGREEMENT

     This Equity Buy-Back Agreement (“Agreement”) is entered into and made
effective as of the 29th day of June, 2004 (“Effective Date”), by and between
Quovadx, Inc., a Delaware corporation with its principal place of business
located at 6400 S. Fiddler’s Green Circle, Suite 1000, Englewood, Colorado
80111 (“Quovadx”) and Royal Health Care of Long Island LLC (d/b/a Royal Health
Care, LLC), a New York limited liability company with its principal place of
business at 521 Fifth Avenue, 3rd Floor, New York, NY 10175 (“Royal”).

RECITALS

     WHEREAS, Quovadx and Royal are parties to an Asset Purchase Agreement
dated as of March 1, 2002 and a Master ASP Agreement of even date, pursuant to
which Royal acquired certain Purchased Assets and services from Quovadx in
exchange for cash and Equity in Royal; and

     WHEREAS, Quovadx desires to sell back to Royal its entire Equity portion
in Royal and Royal desires to buy back such Equity;

     NOW, THEREFORE, the parties, in consideration of the mutual agreements
herein contained and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, do hereby agree as follows:

AGREEMENT

ARTICLE I

PURCHASE AND SALE OF EQUITY

     1.1 Agreement to Purchase and Sell. On the terms and subject to the conditions
contained in this Agreement, Quovadx agrees to sell to Royal, and Royal agrees
to purchase from Quovadx, all of Quovadx’s Equity in Royal.

     1.2 Equity. The parties hereby acknowledge that regardless of whether a
Certificate of Interest has been issued, the Equity owned by Quovadx consists
of 0.3857 Units representing a 4.6% Percentage Interest in Royal, which is
diluted to 4.186% after giving effect to 9.0% phantom equity.

ARTICLE II

PURCHASE PRICE AND MANNER OF PAYMENT

     2.1 Purchase Price. Royal and Quovadx have mutually agreed upon a valuation of
Royal of seventy-five million dollars ($75,000,000) (“Valuation Amount”), based
on which Royal shall pay Quovadx three million one hundred thirty-nine thousand
and five hundred dollars ($3,139,500) (“Equity Purchase Price”) in exchange for
Quovadx’s 0.3857 Units, or 4.186% diluted Equity in Royal.

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EXECUTION FINAL

     2.2 Manner of Payment. Upon Quovadx signing over and returning to Royal any
and all certificates issued to Quovadx evidencing the duly authorized, validly
issued and fully paid Units or interests in Royal, Royal shall pay Quovadx the
Equity Purchase Price by wire transfer to such account as Quovadx shall
designate by written notice to Royal.

     2.3 Timing of Transaction. The purchase and sale of Quovadx’s Equity in Royal
as contemplated hereunder shall occur on or before June 30, 2004, or such other
date as mutually agreed upon by the parties.

ARTICLE III

TAXES AND LIABILITY

     3.1 Taxes. Each of Royal and Quovadx agree to report the transaction
contemplated hereunder as required under applicable federal, state and local
law for tax purposes and to comply with all applicable notice, filing and
reporting obligations. Each of Royal and Quovadx shall be responsible for any
capital gains or other taxes assessed as a result of their respective purchase
or sale of Equity as contemplated hereunder.

     3.2 Liability. Nothing herein shall release Quovadx from any liability or
obligation of Royal to the extent such liability or obligation is related to or
arises out of that period of time in which Quovadx was a Member of Royal (the
“Membership Period”), which liability shall be limited to an amount equal to
the value of the investment by Quovadx in Royal held at the time any such
liability or obligation arose. Quovadx shall, however, be released from any
liability or obligation of Royal that arises after the completion of the
transaction contemplated hereunder and in no way pertains to that period of
time in which Quovadx was a Member of Royal, except to the extent related to
this transaction. Notwithstanding anything else herein, Quovadx acknowledges
that it is in no way released from any obligations as set forth in the Master
ASP Agreement and Quovadx shall continue to abide by the terms of such
agreement.

     Royal acknowledges that the Quovadx agreement in the first paragraph of
this Section 3.2 is made in reliance on the following Royal representations and
warranties:

	 	a.	 	At all times during the Membership Period, Royal has been a
limited liability company organized and in good standing under the
laws of the state of New York;
	 
	 	b.	 	There is no litigation or proceeding, in law or in equity,
and there are no claims, proceedings or governmental investigations,
pending, or to Royal’s knowledge, threatened, against Royal that
arose during the Membership Period that could result in an
assessment against a Member due to such Member’s Equity interest in
Royal; and
	 
	 	c.	 	To Royal’s knowledge, there are no undisclosed liabilities,
contingent or otherwise, that arose during the Membership Period
that could result in an assessment against a Member due to such
Member’s Equity interest in Royal.

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EXECUTION FINAL

ARTICLE IV

GENERAL PROVISIONS

     4.1 Capitalized terms not otherwise defined herein, shall have the meaning
ascribed to them in the Asset Purchase Agreement, Master ASP Agreement or the
Second Amended and Restated Operating Agreement of Royal, as applicable.

     4.2 Each party represents that it has the power and authority to enter
into this Agreement and that this Agreement has been duly executed and
delivered by such party’s duly authorized officers.

     4.3 This Agreement shall be governed and controlled by the laws of the
State of New York.

     By signing below, the parties hereto indicate their acceptance of the
terms herein, which shall become effective on the Effective Date noted above.

	 	 	 
	Quovadx, Inc.	 	
Royal Health Care of Long Island, LLC
	 	 	 
	/s/ Melvin L. Keating

	 	
/s/ Steven J. Bory

	Signature	 	
Signature
	 	 	 
	Melvin L. Keating

	 	
Steven J. Bory

	Print Name	 	
Print Name
	 	 	 
	Acting Chief Financial Officer

	 	
President and CEO

	Title	 	
Title
	 	 	 
	6/29/04

	 	
6/30/04

	Date	 	
Date

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