EXECUTIVE EMPLOYMENT
AGREEMENT
THIS EMPLOYMENT
AGREEMENT (the “ Agreement ”) by and between
Quovadx, Inc. (the “ Company ”), and Afshin
Cangarlu (“ You ” or “ Your
”) (collectively, the “ Parties ”), is
entered into and effective as of the 24th of March, 2005 (the
“ Effective Date ”).
For good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Parties agree as follows:
A.
Position . The Company shall employ You as President —
Integration Solutions Division.
B.
Reporting . You shall report directly to the Company’s
Chief Executive Officer (“CEO”).
C.
Duties . You agree to perform all duties that are consistent
with Your position and that may otherwise be assigned to You by the
CEO from time to time. You further agree to abide by all Company
policies, procedures, and practices of general applicability to
Company executive officers.
D.
Devotion of Time . You agree to devote Your best efforts to
promote the business and/or interests of the Company and to perform
Your obligations under this Agreement. You may (i) engage in
community, charitable, and educational activities, and
(ii) manage personal investments, provided that such
activities do not materially conflict or interfere with the
performance of Your obligations under this Agreement.
2.
Term . The term of this Agreement shall commence on the
Effective Date and end on December 31, 2006 (the “
Employment Period ”). Upon expiration of the
Employment Period, this Agreement will automatically renew for a
one-year period (a “ Renewal Period ”), unless
either Party notifies the other Party in writing at least ninety
(90) days prior to the end of the Employment Period or the
Renewal Period that the Agreement will not be renewed.
Notwithstanding the foregoing provisions of this paragraph, in the
event of a Change of Control, the term of this Agreement will
extend through the one-year anniversary of such Change of Control.
Additionally, on the anniversary of such Change of Control and each
annual anniversary of the Change of Control thereafter, this
Agreement automatically will renew for an additional term of one
year unless at least ninety (90) days prior to such
anniversary, Executive or the Company gives the other party written
notice that the Agreement will not be renewed and any such
extension will be considered a “Renewal Period.” If
this Agreement is renewed in accordance with this Section 2,
each Renewal Period shall be included in the definition of
“Employment Period” for purposes of this Agreement.
Following the termination of the Employment Period (whether as a
result of non-renewal or termination of Your employment for any
reason), You agree to resign from any positions You hold with the
Company or any of its parent or subsidiary companies.
A.
Base Salary . During the Employment Period, the Company will
pay You an annual base salary (“ Base Salary ”)
of $285,000.00 in accordance with the Company’s normal
payroll practices. The Compensation Committee of the
Company’s Board of Directors (the “ Committee
”) will review Your Base Salary at least annually, and
adjustments will be made in accordance with the Committee’s
standard practices.
B.
Bonus . During the Employment Period, You will be eligible
to receive an annual bonus with a target payment of 40% of Your
then current Base Salary (“ Target Bonus ”) if
You performance meets certain criteria agreed to by the Committee
as recommended by the CEO (the “ Committee Performance
Criteria ”). The actual bonus paid may be higher or lower
than the Target Bonus for over- or under-achievement of the
Committee Performance Criteria, as determined by the Committee.
Bonuses, if any, will accrue and become payable in accordance with
the Committee’s standard practices for paying executive
incentive compensation; provided, however, that Your bonus, if any,
for any particular fiscal year will be paid no later than thirty
(30) days following the Committee’s receipt of audited
financial statements for such fiscal year.
C.
Equity Awards . Executive will be eligible to receive
options to purchase the Company’s common stock and other
equity incentive awards pursuant to any equity incentive plans or
arrangements it may have in effect from time to time. The Committee
will determine in its discretion whether Executive will be granted
any such award or awards and the terms of any such award or awards
in accordance with the terms of any applicable equity incentive
plan or arrangement that may be in effect from time to
time.
D.
Benefits Plans . During the Employment Period, You will be
eligible to participate in all benefit plans in effect for
executive officers and employees of the Company (including the
Company’s vacation policy), as such plans may exist from time
to time and subject to the terms and conditions of such
plans.
E.
Business Expenses . During the Employment Period, the
Company will reimburse You for all ordinary and reasonable business
expenses You incur in the performance of Your duties in accordance
with the policies and procedures of the Company as in effect from
time to time.
4.
Termination . This Agreement may be terminated by any of the
following events:
A.
Expiration of the Employment Period as a result of non-renewal;
or
B.
Your resignation without Good Reason; or
D.
Your Disability (as defined in the Company’s long-term
disability plan); or
E.
For Cause; (“ Cause ” shall mean a termination
by the Company because of any one of the following events:
(i) Your breach of this Agreement that results in material
injury to the Company which, if capable of cure, has not been cured
by You within thirty (30) days after receipt by You of written
notice from the CEO of such breach; (ii) Your misconduct,
fraud, dishonesty, or malfeasance that results in material injury
to the Company; (iii) Your willful or intentional failure to
(a) perform Your duties under this Agreement, (b) follow
the reasonable and legal direction of the CEO, or (c) follow
the policies, procedures, and rules of the Company. For any such
failure listed in this sub-section (iii), the CEO shall first give
You written notice setting forth with specificity the reasons that
the CEO believes You are failing, and thirty (30) days to cure such
failure; or (iv) Your conviction of, or plea of nolo contendre
to, a felony.
For
purposes of this Agreement, Your failure to achieve certain
results, such as those set forth in a business plan of the Company,
that is not the result of Your demonstrating willful and deliberate
dereliction of duty shall not constitute Cause); or
F.
Your resignation for Good Reason; (“ Good Reason
” shall mean the occurrence of any of the following:
(i) the Company, without Your written consent, (a) takes
any action which results in the reduction of, Your then current
title, duties, or responsibilities, other than a reduction or
change required by applicable law or listing requirements,
(b) reduces Your then current Base Salary or Target Bonus
other than a one-time reduction of not more than 10% that also is
applied to substantially all executive officers of the Company,
(c) reduces the benefits to which You are entitled on the
Effective Date, unless a similar reduction is made for
substantially all other executive officers, or (d) relocates
You to a facility or a location more than 75 miles from Your then
present location, (ii) a successor to the Company fails to
assume this Agreement in writing upon becoming a successor or
assignee of the Company, or (iii) the Company breaches this
Agreement and such breach results in material injury to You;
provided, however, that if the event that potentially constitutes
Good Reason is capable of cure, Good Reason only shall exist if the
Company has not cured such event within thirty (30) days after
receipt by the CEO of written notice from You describing why You
believe Good Reason exists.); or
G.
Without Cause (meaning a termination by the Company without Cause.
For purposes of clarification, the Company’s providing notice
to You as provided in Section 2 to not renew this Agreement
for an additional period will not be considered a termination
without Cause).
Upon any such
termination, the Employment Period automatically will terminate
(but in no event will this affect the survival of Your and the
Company’s post-termination obligations pursuant to Section
16).
5.
Company’s Post-Termination Obligations
A.
Accrued Compensation . If Your employment terminates for any
reason, then the Company will pay You all accrued but unpaid
vacation, expense reimbursements, wages, and other benefits due to
You under any Company-provided plans, policies, and
arrangements.
B.
Termination by Company Without Cause . In addition to the
payments and benefits provided under Section 5A, if Your
employment is terminated by the Company without Cause during the
Employment Period, then, subject to Your compliance with the
provisions of Section 8 and You executing and not revoking a
separation agreement and general release of claims in a form
satisfactory to the Company, the Company will (i) continue to
pay You Your Base Salary through the period of six months following
Your termination date (the “ Restricted Period ”
in the event You are entitled to benefits under this
Section 5B), (ii) pay You a lump sum payment equal to a
pro-rated amount of Your Target Bonus for the year in which the
termination occurs, to be paid on the date bonuses are paid to
other executive officers of the Company, but in no event more than
one year following Your termination date, and (iii) reimburse
You for COBRA continuation coverage premiums to continue medical
benefits for You and Your eligible dependents for the Restricted
Period (but, if further limited by applicable law, the maximum
permissible period) or, if earlier, until You become eligible for
substantially similar benefits from another employer, provided You
validly elect to continue Your medical benefits in accordance with
applicable law.
C.
Non-Renewal of Employment or Renewal Period by Company . In
addition to the payments and benefits provided under
Section 5A, in the event the Company chooses not to extend the
Employment Period by providing notice to You as provided in
Section 2 (whether before or after a Change of Control), then,
subject to Your compliance with the provisions of Section 8
and You executing and not revoking a separation agreement and
general release of claims in a form satisfactory to the Company,
the Company will (i) continue to pay You Your Base Salary
through the period of three (3) months following Your
termination date (the “ Restricted Period ” in
the event You are entitled to benefits under this Section 5C),
and (ii) reimburse You for COBRA continuation coverage
premiums to continue medical benefits for You and Your eligible
dependents for the Restricted Period (but, if further limited by
applicable law, the maximum permissible period) or, if earlier,
until You become eligible for substantially similar benefits from
another employer, provided You validly elect to continue Your
medical benefits in accordance with applicable law.
D.
No Duty to Mitigate . In no event shall You be obligated to
seek other employment or take any other action by way of mitigation
of the amounts payable to You under this Agreement, and such amount
shall not be reduced,
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