-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Bm6WJGJltHKKbhcDlsY13qDppFbsBZ+PtZDo81iCqyUxEZXZTJmwBJT+7tqEi69s WHPQM2KGIdA4Y7IKtd/n7g== 0001193125-08-072361.txt : 20080401 0001193125-08-072361.hdr.sgml : 20080401 20080401162621 ACCESSION NUMBER: 0001193125-08-072361 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20080326 ITEM INFORMATION: Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20080401 DATE AS OF CHANGE: 20080401 FILER: COMPANY DATA: COMPANY CONFORMED NAME: QUADRAMED CORP CENTRAL INDEX KEY: 0001018833 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROGRAMMING SERVICES [7371] IRS NUMBER: 521992861 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-32283 FILM NUMBER: 08729723 BUSINESS ADDRESS: STREET 1: 12110 SUNSET HILLS ROAD STREET 2: SUITE 600 CITY: RESTON STATE: VA ZIP: 20190 BUSINESS PHONE: 7037092300 MAIL ADDRESS: STREET 1: 12110 SUNSET HILLS ROAD STREET 2: SUITE 600 CITY: RESTON STATE: VA ZIP: 20190 8-K 1 d8k.htm FORM 8-K Form 8-K
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): March 26, 2008

 

 

QuadraMed Corporation

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-32283   52-1992861

(State or Other Jurisdiction

of Incorporation)

  (Commission File Number)  

(I.R.S. Employer

Identification No.)

12110 Sunset Hills Road, Suite 600, Reston, VA 20190

(Address of principal executive office and zip code)

(703) 709-2300

(Registrant’s telephone number, including area code)

(Not Applicable)

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


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TABLE OF CONTENTS

 

ITEM 5.02   DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS.    3
ITEM 9.01   FINANCIAL STATEMENTS AND EXHIBITS    5
SIGNATURES      6
EXHIBIT INDEX     
EXHIBIT 99.1   AMENDMENT OF EMPLOYMENT AGREEMENT DATED MARCH 26, 2008, BETWEEN KEITH B. HAGEN AND QUADRAMED.   
EXHIBIT 99.2   AMENDMENT OF EMPLOYMENT AGREEMENT DATED MARCH 26, 2008, BETWEEN DAVID L. PIAZZA AND QUADRAMED.   
EXHIBIT 99.3   AMENDMENT OF EMPLOYMENT AGREEMENT DATED MARCH 26, 2008, BETWEEN JAMES R. KLEIN AND QUADRAMED.   
EXHIBIT 99.4   AMENDMENT OF EMPLOYMENT AGREEMENT DATED MARCH 26, 2008, BETWEEN JAMES R. MILLIGAN AND QUADRAMED.   
EXHIBIT 99.5   AMENDMENT OF EMPLOYMENT AGREEMENT DATED MARCH 26, 2008, BETWEEN STEVEN V. RUSSELL AND QUADRAMED.   


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ITEM 5.02 DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS.

Adoption of Executive Long-Term Bonus Plan

On March 31, 2008, the Compensation Committee of the Board of Directors of QuadraMed Corporation (the “Company”) approved and recommended to the Board the adoption of a new cash incentive plan for the Company’s named executive officers and senior officers. Such plan, the “Executive Long-Term Bonus Plan” (“ELBP”), has two independent parts. The first portion of the ELBP requires the Company to reach total revenue of $200 million and an adjusted EBITDA target (to be determined in connection with the Company’s strategic planning process by August 2008) for the year ended December 31, 2010 in order for certain officers (including James R. Milligan, the Company’s Senior Vice President for Sales and Government Programs, and James R. Klein, the Company’s Senior Vice President and Chief Technology Officer) to receive 100% of a special one-time cash bonus and Messrs. Keith Hagen (the Company’s Chief Executive Officer), David Piazza (the Company’s Chief Financial Officer) and Steven Russell (the Company’s Senior Vice President of Corporate Development) to receive 50% of a special one-time cash bonus. In the event that the revenue and/or adjusted EBITDA targets have not been achieved in 2010, the special one-time bonus may also be paid as described above if the Company achieves total revenue of $220 million and a higher adjusted EBITDA target (to be determined in connection with the Company’s strategic planning process by August 2008) for the year ended December 31, 2011. In both cases, revenue and adjusted EBITDA would be determined without giving effect to any significant acquisition (as determined by the Compensation Committee) consummated by the Company after the adoption of the ELBP.

The second part of the ELBP only applies to Messrs. Hagen, Piazza and Russell and provides for 50% of the special one-time bonus if, for any reason, at least 90% of the Company’s Series A Preferred Stock shall convert to the Company’s common stock (or be eligible for mandatory conversion by the Board under the terms of the Certificate of Designation for the Series A Preferred Stock) on or before March 31, 2012.

The maximum amounts that may be paid out to the Company’s named executive officers are as follows: Mr. Hagen – $1.2 million; Mr. Piazza – $0.4 million; Mr. Russell – $0.4 million; Mr. Milligan – $0.25 million; and Mr. Klein – $0.1 million. The maximum amount that may be paid out in the aggregate by the Company under the ELBP to all eligible participants is $3 million.

Amendment of Employment Agreements

On March 26, 2008, the Company entered into amendments of the employment agreements (the “Amendments”) for each of the Company’s named executive officers. The Amendments (1) modify the severance benefits of the current employment agreements in effect for the named executive officers and (2) are designed to address recent revisions to Internal Revenue Code Section 409A (“Section 409A”).

Each of the Amendments with the named executive officers included the following provisions:

 

   

The definition of “Involuntary Termination” was revised to indicate that termination will be deemed involuntary only if (i) the employee is willing and able to perform his duties at the time of termination by the Company or (ii) in the event the Company has taken an action allowing the employee to voluntarily terminate his employment (such as a material reduction in duties or a relocation), the employee has provided the Company with notice of such action and a 30-day remedy period.

 

 

 

Incentive compensation bonuses and severance benefits payable in cash, to the extent not otherwise exempt from the excise tax imposed by Internal Revenue Code Section 409A, generally must be paid before March 15th of the following year.

Further, as a result of the Amendments, each of the employment agreements with Messrs. Piazza, Milligan and Russell provide the following severance benefits, some of which benefits were in effect prior to the Amendments:

 

   

In the event of an Involuntary Termination (other than a Termination for Cause (as defined in the employment agreement)) and not in connection with a Change in Control (as defined in the employment agreement), the executive will receive severance benefits of:


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twelve (12) months of his then-current annual rate of base salary paid in twelve (12) equal monthly installments; and

 

 

 

his bonus payable under the Company’s then-current incentive compensation plan (“ICP”) for the year in which such termination occurred (calculated as if the executive fully achieved any goals necessary for his full ICP payment and based upon the Company’s actual achievement of its goals under the ICP), pro-rated through the date of such termination, paid in a lump sum when the Company pays ICP bonuses to other eligible employees for service in the year of the executive’s termination, but in no event later than March 15th of the year following the year of the executive’s involuntary termination.

 

   

In the event of an Involuntary Termination (other than a Termination for Cause) occurring in connection with, or within six (6) months of a Change in Control, the executive will receive severance benefits, payable in a lump sum or twelve (12) equal monthly installments, of:

 

   

twelve (12) months of his then-current annual rate of base salary; and

 

   

his maximum bonus payable under the ICP for the year in which such termination occurred (calculated as if the executive and the Company each fully achieved any goals necessary for such full ICP payment).

 

   

In the event of an Involuntary Termination (other than a Termination for Cause) whether or not occurring in connection with a Change in Control:

 

   

the executive will receive twelve (12) months of the same health benefits to which he (and his dependents, as applicable) had been entitled as an employee; and

 

   

all of the executive’s previously granted, but unvested, stock options will automatically vest and become immediately exercisable.

Also as a result of the Amendments, Mr. Klein’s employment agreement provides the following severance benefits, some of which benefits were in effect prior to the Amendments:

 

   

In the event of an Involuntary Termination (other than a Termination for Cause) and not in connection with a Change in Control, Mr. Klein will receive severance benefits of:

 

   

six (6) months of his then-current annual rate of base salary paid in six (6) equal monthly installments;

 

   

six (6) months of the same health benefits to which he (and his dependents, as applicable) had been entitled as an employee.

 

   

In the event of an Involuntary Termination (other than a Termination for Cause) occurring in connection with, or within twelve (12) months of a Change in Control, Mr. Klein will receive severance benefits, payable in a lump sum or twelve (12) equal monthly installments, of:

 

   

twelve (12) months of his then-current annual rate of base salary; and

 

   

his maximum bonus payable under the ICP for the year in which such termination occurred (calculated as if the executive and the Company each fully achieved any goals necessary for such full ICP payment).

 

   

twelve (12) months of the same health benefits to which he (and his dependents, as applicable) had been entitled as an employee.

 

   

In the event of an Involuntary Termination (other than a Termination for Cause) whether or not occurring in connection with a Change in Control, all of Mr. Klein’s previously granted, but unvested, restricted stock and stock options will automatically vest and become immediately exercisable.

Mr. Hagen’s Employment Agreement, dated as of October 17, 2005, was filed with the Securities and Exchange Commission (“SEC”) on September 25,2005. Mr. Piazza’s Employment Agreement, dated as of August 10, 2005, was filed with the SEC on September 1, 2005. Mr. Klein’s Employment Agreement, dated August 1, 2005, as amended, was filed with the SEC on March 16, 2006. Mr. Milligan’s Employment Agreement, dated as of July 16, 2007, was filed with the SEC on July 17, 2007. Mr. Russell’s Employment Agreement, dated as of November 21, 2005, was filed with the SEC on November 28, 2005.


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The full text of the Amendments to the employment agreements of Messrs. Hagen, Piazza, Klein, Milligan and Russell are attached hereto as Exhibits 99.1, 99.2, 99.3, 99.4, and 99.5, respectively, and all are incorporated herein by reference in response to this Item 5.02.

 

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.

 

  (d) Exhibits

 

Exhibit 99.1   Amendment of Employment Agreement dated March 26, 2008, between Keith B. Hagen and QuadraMed.
Exhibit 99.2   Amendment of Employment Agreement dated March 26, 2008, between David L. Piazza and QuadraMed.
Exhibit 99.3   Amendment of Employment Agreement dated March 26, 2008, between James R. Klein and QuadraMed.
Exhibit 99.4   Amendment of Employment Agreement dated March 26, 2008, between James R. Milligan and QuadraMed.
Exhibit 99.5   Amendment of Employment Agreement dated March 26, 2008, between Steven V. Russell and QuadraMed.


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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: April 1, 2008

 

QuadraMed Corporation

/s/ David L. Piazza

David L. Piazza,
Executive Vice President and Chief Financial Officer


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EXHIBIT INDEX

 

Exhibit No.

 

Description

99.1   Amendment of Employment Agreement dated March 26, 2008, between Keith B. Hagen and QuadraMed.
99.2   Amendment of Employment Agreement dated March 26, 2008, between David L. Piazza and QuadraMed.
99.3   Amendment of Employment Agreement dated March 26, 2008, between James R. Klein and QuadraMed.
99.4   Amendment of Employment Agreement dated March 26, 2008, between James R. Milligan and QuadraMed.
99.5   Amendment of Employment Agreement dated March 26, 2008, between Steven V. Russell and QuadraMed.
EX-99.1 2 dex991.htm EXHIBIT 99.1 Exhibit 99.1

Exhibit 99.1

AMENDMENT OF EMPLOYMENT AGREEMENT

This Employment Agreement (“Agreement”) is made as of March 26, 2008 between QuadraMed Corporation, a Delaware corporation with offices at 12110 Sunset Hill Road, Suite 600, Reston, Virginia 20190 (“Company”), and Keith B. Hagen, an individual currently residing at [ADDRESS] (“Employee”).

WITNESSETH THAT:

WHEREAS, Employee and the Company have heretofore entered into an Employment Agreement, dated as of October 17, 2005 (the “Employment Agreement”); and

WHEREAS, Employee and the Company desire to revise the Employment Agreement to specify certain involuntary termination protections as approved by the Compensation Committee, update the document based on changes in tax law, and to modify related provisions;

NOW, THEREFORE, IN WITNESS THEREOF, Employee and the Company hereby agree that from and after the date of execution of this Amendment that the Employment Agreement shall be and is hereby amended as follows:

1. Part One of the Employment Agreement is hereby amended by deleting the existing definition of “Involuntary Termination,” and inserting the following in lieu thereof:

Involuntary Termination” means the termination of the Employee’s employment with the Company:

(i) involuntarily due to (1) the independent exercise of the Company’s unilateral authority to terminate the Employee’s services (other than due to the Employee’s implicit or explicit request), where the Employee was willing and able to continue performing such services, or (2) the Company’s failure to renew this Agreement pursuant to Section 5, provided that the Employee was willing and able to execute a new contract providing terms and conditions substantially similar to those in the expiring contract and to continue providing such services; or

(ii) voluntarily provided that (1) such termination occurs within two years of the initial existence of one or more of the following events without Employee’s written concurrence: (a) a change in Employee’s position with the Company or any successor which materially reduces Employee’s level of responsibility, (b) a material reduction in Employee’s base compensation (including base salary, fringe benefits and any non discretionary bonuses or other incentive payments earned pursuant to objective standards or criteria) or (c) a relocation of Employee’s principal place of employment by more than forty-five (45) miles from Reston, Virginia, and (2) the Employee provides notice to the Company of the existence of the condition described in clause (1) within 90 days of the initial existence of the condition, upon the notice of which the Company must be provided a period of at least 30 days during which it may remedy the condition and not be required to pay any severance amount, if applicable.


2. Part Two, Section 6(f) of the Employment Agreement, pertaining to Employee’s incentive compensation, is hereby amended by deleting the existing section in its entirety and inserting the following in lieu thereof:

F. After December 31, 2006, Employee shall be eligible for an annual incentive compensation bonus of up to one hundred percent (100%) of Employee’s then-current annual rate of base salary based upon satisfaction of certain performance objectives tied to the Company’s annual Business Plan. These performance objectives shall be developed annually by the Compensation Committee. The Compensation Committee and Employee shall meet and consult and in good faith determine the performance objectives by which this incentive bonus shall be measured. This incentive bonus can be earned on a pro-rata basis according to criteria to be developed by the Compensation Committee. All bonuses payable to Employee hereunder shall be payable in accordance with the Company’s bonus plan implemented in accordance with its prior practice with respect to its executive officers; provided, however, that any incentive compensation bonus will not be paid later than the 15th day of the third month following the end of the Company’s first taxable year in which the Employee’s right to the payment is no longer subject to a substantial risk of forfeiture. All bonuses pursuant to this paragraph are subject to final approval by the Compensation Committee.

3. Part Two, Section 11 of the Employment Agreement, pertaining to Employee’s severance benefits on certain terminations of his employment, is hereby amended by deleting the existing section in its entirety and inserting the following in lieu thereof:

11. Severance Benefits. Notwithstanding anything herein to the contrary, Employee will be entitled to receive only the severance benefits specified below in the event there should occur a termination of Employee’s employment (except as provided in Section 10 above):

A. Severance Benefit upon Involuntary Termination. If Employee is terminated by reason of an Involuntary Termination of Employee’s employment (other than a Termination for Cause), the Company will make a severance payment, payable in one lump sum within thirty days (30) days of the date of Employee’s Involuntary Termination, in an aggregate amount equal to:

(i) twelve (12) months of the Employee’s then-current annual rate of base salary; and

(ii) the maximum incentive compensation bonus payable to Employee under the Company’s Incentive Compensation Plan or any bonus plan that has replaced such plan (the “ICP”) for the entire year in which the


Involuntary Termination occurred. For the avoidance of doubt, such amount shall be calculated as if both Employee and the Company had achieved 100% of their respective goals and targets under the ICP in the year of his Involuntary Termination;

provided, however, that Employee may elect, in his sole discretion, to have the severance benefit payable pursuant to this Section 11.A. paid in approximately equal monthly installments over a twelve (12) month period following the date of Employee’s Involuntary Termination; provided further, however, that in no event will any amounts in this Section 10.B. be paid later than the 15th day of the third calendar month following the end of the Company’s taxable year in which Employee’s Involuntary Termination occurs.

B. Severance Upon Involuntary Termination after Change in Control. If Employee is terminated by reason of an Involuntary Termination of Employee’s employment (other than a Termination for Cause) in connection with or within six (6) months following a Change in Control, the Company will make a severance payment, payable in one lump sum within thirty days (30) days of the date of Employee’s Involuntary Termination, in an aggregate amount equal to:

(i) twenty-four (24) months of Employee’s then-current annual rate of base salary; and

(ii) the maximum incentive compensation bonus payable to Employee under the ICP for the entire year in which the Involuntary Termination occurred. For the avoidance of doubt, such amount shall be calculated as if both Employee and the Company had achieved 100% of their respective goals and targets under the ICP in the year of his Involuntary Termination;

provided, however, that Employee may elect, in his sole discretion, to have the severance benefit payable pursuant to this Section 11.B. paid in approximately equal monthly installments over a twelve (12) month period following the date of Employee’s Involuntary Termination; provided further, however, that in no event will any amounts in this Section 10.B. be paid later than the 15th day of the third calendar month following the end of the Company’s taxable year in which Employee’s Involuntary Termination occurs.

C. Effect on Options and Restricted Stock Upon Involuntary Termination. If Employee is terminated by reason of an Involuntary Termination of Employee’s employment (other than a Termination for Cause) whether or not in connection with a Change in Control, as of the date of Involuntary Termination:

(i) all of Employee’s Restricted Stock shall (to the extent not then otherwise vested) automatically accelerate and vest in accordance with the Restricted Stock Agreement;


(ii) all of Employee’s Options (to the extent not then otherwise vested or exercisable) automatically accelerate and vest in accordance with the Inducement Stock Option Agreement. Each accelerated Option, together with all of Employee’s other vested Options, will remain exercisable following such Involuntary Termination and may be exercised for any or all of the Option shares, including the accelerated shares, in accordance with the exercise provisions of the Inducement Stock Option Agreement evidencing the grant; and

(iii) all other previously granted options to purchase shares of the Company’s common stock will (to the extent not then otherwise exercisable or vested) automatically accelerate and vest.

D. Welfare Benefits. For a period of twelve (12) months following Employee’s Involuntary Termination (other than a Termination for Cause) whether or not in connection with a Change in Control, the Company shall provide Employee (and Employee’s dependents, as applicable) with the same welfare benefits (other than disability and any severance plan benefits) to which Employee was entitled as an employee immediately before the Involuntary Termination. In the event that under applicable law or the terms of any relevant Employee Benefit Plan such participation, benefits and/or coverage cannot be provided under an existing Company Employee Benefit Plan, such coverage and/or benefits shall be provided directly by the Company pursuant to this Agreement on a comparable basis. To the maximum extent permitted by applicable law, the benefits provided under this Section 11.D. shall be in discharge of any obligations of the Company or any rights of Employee under the benefit continuation provisions under Section 4980A of the Code and Part VI of Title I of ERISA (“COBRA”) or any other legislation of similar import. Notwithstanding the foregoing, in no event will the amounts in respect of any benefits described in this Section 11.D. that do not constitute medical benefits under Treasury Regulations Section 1.409A-1(b)(9)(v)(B) (“Non-Medical Amounts”) be paid later than the last day of the second taxable year of the Company following the taxable year in which the Employee’s Involuntary Termination occurs, and provided, however, that, to the extent such Non-Medical Amounts exceed the amount specified in Treasury Regulations Section 1.409A-1(b)(9)(iii)(A), such excess will be paid no later than the 15th day of the third calendar month following the end of the Company’s taxable year in which Employee’s Involuntary Termination occurs.

E. Amendments in Connection with Section 409A. Notwithstanding anything to the contrary in this Section 11, the Company shall have the authority to amend this Agreement to the extent necessary to comply with Code Section 409A and the regulations issued pursuant thereto.

F. Release of Company. Receipt of severance and welfare benefits pursuant to this Section 11 shall be in lieu of all other amounts payable by the Company to Employee and in settlement and complete release of all claims Employee may have against the Company or its directors, officers, or


shareholders, other than those arising out of the severance and welfare benefits due and payable under this Agreement and Employee’s rights under this Agreement. Employee acknowledges and agrees that execution of a general release of claims by Employee in a form reasonably acceptable to the Company shall be a condition precedent to the Company’s obligation to pay severance and welfare benefits hereunder.

G. Restrictive Covenant. During the Employment Period, Employee will not directly or indirectly, whether for Employee’s own account or as an employee, director, consultant or advisor, provide services to any business enterprise other than the Company, unless otherwise authorized by the Board in writing.

4. Section references in the Employment Agreement shall be revised to reflect the amendments set forth in the preceding paragraphs of this Amendment.

5. Except as provided in the preceding paragraphs of this Amendment, the provisions of the Employment Agreement remain in full force and effect in accordance with their respective terms.

In Witness Whereof, and intending to be legally bound hereby, the parties hereto have caused this Amendment to be duly executed under seal as of the date first above written.

 

QUADRAMED CORPORATION    
By:  

/s/ Robert L. Pevenstein

   

/s/ Keith B. Hagen

  Robert L. Pevenstein     Keith B. Hagen
  Chairman of the Board of Directors    
EX-99.2 3 dex992.htm EXHIBIT 99.2 Exhibit 99.2

Exhibit 99.2

AMENDMENT OF EMPLOYMENT AGREEMENT

This Employment Agreement (“Agreement”) is made as of March 26, 2008 between QuadraMed Corporation, a Delaware corporation with offices at 12110 Sunset Hill Road, Suite 600, Reston, Virginia 20190 (“Company”), and David L. Piazza, an individual currently residing at [ADDRESS] (“Employee”).

WITNESSETH THAT:

WHEREAS, Employee and the Company have heretofore entered into an Employment Agreement, dated as of August 10, 2005 (the “Employment Agreement”); and

WHEREAS, Employee and the Company desire to revise the Employment Agreement to specify certain involuntary termination protections as approved by the Compensation Committee, update the document based on changes in tax law, and to modify related provisions;

NOW, THEREFORE, IN WITNESS THEREOF, Employee and the Company hereby agree that from and after the date of execution of this Amendment that the Employment Agreement shall be and is hereby amended as follows:

1. Part One of the Employment Agreement is hereby amended by deleting the existing definition of “Involuntary Termination,” and inserting the following in lieu thereof:

Involuntary Termination” means the termination of the Employee’s employment with the Company:

(i) involuntarily due to (1) the independent exercise of the Company’s unilateral authority to terminate the Employee’s services (other than due to the Employee’s implicit or explicit request), where the Employee was willing and able to continue performing such services, or (2) the Company’s failure to renew this Agreement pursuant to Section 3, provided that the Employee was willing and able to execute a new contract providing terms and conditions substantially similar to those in the expiring contract and to continue providing such services; or

(ii) voluntarily provided that (1) such termination occurs within two years of the initial existence of one or more of the following events without Employee’s written concurrence: (a) a change in Employee’s position with the Company or any successor which materially reduces Employee’s level of responsibility, (b) a material reduction in Employee’s base compensation or (c) a relocation of Employee’s principal place of employment by more than forty-five (45) miles from Reston, Virginia, and (2) the Employee provides notice to the Company of the existence of the condition described in clause (1) within 90 days of the initial existence of the condition, upon the notice of which the Company must be provided a period of at least 30 days during which it may remedy the condition and not be required to pay any severance amount, if applicable.


2. Part Two, Section 4(C) of the Employment Agreement, pertaining to Employee’s incentive compensation, is hereby amended by deleting the existing section in its entirety and inserting the following in lieu thereof:

C. Employee shall be eligible for an incentive compensation bonus of up to fifty (50%) percent of Employee’s then-current annual rate of base salary. Employee’s incentive compensation bonus and timing of its payment will be in accordance with the Company’s practices for its executive officers; provided, however, that any incentive compensation bonus will not be paid later than the 15th day of the third month following the end of the Company’s first taxable year in which the Employee’s right to the payment is no longer subject to a substantial risk of forfeiture.

Employee may also be eligible for additional discretionary bonuses based on the achievement of certain specified goals established by the Board. Any award for such a bonus will be recommended to the Board’s Compensation Committee by the Chief Executive Officer of the Company. All bonuses pursuant to this paragraph are subject to final approval by the Board’s Compensation Committee. Any bonuses paid pursuant to this paragraph will not be paid later than the 15th day of the third month following the end of the Company’s first taxable year in which the Employee’s right to the payment is no longer subject to a substantial risk of forfeiture.

3. Part Two, Section 10 of the Employment Agreement, pertaining to Employee’s severance benefits on certain terminations of his employment, is hereby amended by deleting the existing section in its entirety and inserting the following in lieu thereof:

10. Severance Benefits.

A. Severance Upon Involuntary Termination. If Employee is terminated by reason of an Involuntary Termination of Employee’s employment (other than a Termination for Cause) Employee will be entitled to the severance benefits described below in this Section 10.A., as follows:

(i) the Company will make a severance payment to Employee in an aggregate amount equal to the sum of twelve (12) months of the Employee’s then-current annual rate of base salary in monthly installments over a twelve (12) month period following the date of Employee’s Involuntary Termination; provided, however, that in no event will the amounts described in this Section 10.A.i. be paid later than the last day of the second taxable year of the Company following the taxable year in which the Employee’s Involuntary Termination occurs, and provided, however, that, to the extent the amounts described in this Section 10.A.i. exceed the amount specified in Treasury Regulations Section 1.409A-1(b)(9)(iii)(A), such excess will be paid no later than the 15th day of the third calendar month following the end of the Company’s taxable year in which Employee’s Involuntary Termination occurs; and


(ii) subject to the conditions set forth in this Section 10.A.ii., the Company will make a payment to Employee equal to the incentive compensation bonus payable to Employee under the Company’s Incentive Compensation Plan or any bonus plan that has replaced such plan (the “ICP”) in respect of the year during which such Involuntary Termination occurred; provided, however, that such bonus amount (if any) shall:

(a) be pro-rated through the date of Employee’s Involuntary Termination (e.g., if the date of Involuntary Termination is June 30, the maximum amount payable under this Section would be 50% of the Employee’s incentive bonus otherwise payable under the ICP);

(b) be calculated as if Employee achieved 100% performance of his individual goals (if any) under the ICP in the year of his Involuntary Termination;

(c) be dependent and calculated based upon the Company’s achievement (if any) of its financial performance and/or other targets set forth for the ICP in the year of Employee’s Involuntary Termination;

(d) be paid (if paid) in a lump sum at such time as the Company shall make payments to other eligible employees under the ICP as if Employee were still employed with the Company on the date of payment; provided, however, that in no event will the amounts in this Section 10.A.ii. be paid later than the 15th day of the third calendar month following the end of the Company’s taxable year in which Employee’s Involuntary Termination occurs.

Notwithstanding the foregoing and for the avoidance of doubt, no payment shall be made to Employee under this Section 10.A.ii. if the Company fails to meet the minimum financial performance and/or other targets under the ICP in the year during which Employee is Involuntarily Terminated.

B. Severance Upon Involuntary Termination after Change in Control. If Employee is terminated by reason of an Involuntary Termination (other than a Termination for Cause) in connection with or within six (6) months following a Change in Control, the Company will make a severance payment, payable in one lump sum within thirty days (30) days of the date of Employee’s Involuntary Termination, in an aggregate amount equal to:

(i) twelve (12) months of Employee’s then-current annual rate of base salary; and

(ii) the maximum incentive compensation bonus payable to Employee under the ICP for the entire year in which the Involuntary Termination occurred. For the avoidance of doubt, such amount shall be calculated as if both Employee and the Company had achieved 100% of their respective goals and targets under the ICP in the year of his Involuntary Termination;


provided, however, that Employee may elect, in his sole discretion, to have the severance benefit payable pursuant to this Section 10.B. paid in approximately equal monthly installments over a twelve (12) month period following the date of Employee’s Involuntary Termination; provided further, however, that in no event will any amounts in this Section 10.B. be paid later than the 15th day of the third calendar month following the end of the Company’s taxable year in which Employee’s Involuntary Termination occurs.

C. Option Vesting. Upon an Involuntary Termination (other than a Termination for Cause), whether or not in connection with a Change in Control, all previously granted, but unvested, Options shall vest and be immediately exercisable as of the date such Involuntary Termination.

D. Welfare Benefits. For a period of twelve (12) months following an Involuntary Termination (other than a Termination for Cause), whether or not in connection with a Change in Control, Employee (and his dependents, if otherwise eligible) shall be provided by the Company with the same health plan participation to which he was entitled as an employee of the Company immediately before his Involuntary Termination (excluding, however, any severance plan benefits). In the event that under applicable law or the terms of any relevant Employee Benefit Plan such participation, benefits and/or coverage cannot be provided under an existing Company Employee Benefit Plan, such coverage and/or benefits shall be provided directly by the Company pursuant to this Agreement on a comparable basis. In its sole discretion, the Company may obtain such coverage and benefits through private insurance acquired at the Company’s expense. To the maximum extent permitted by applicable law, any benefit coverage provided pursuant to this paragraph shall be in discharge of any obligations of the Company or any rights of Employee and his dependents under the benefit continuation provisions under benefit continuation provisions under Section 4980A of the Code and Part VI of Title I of ERISA (“COBRA”) or any other legislation of similar import. Notwithstanding the foregoing, nothing in this Section 10.D. shall be construed to guarantee Employee life insurance or disability insurance after the date of Involuntary Termination.

E. Amendments in Connection with Section 409A. Notwithstanding anything to the contrary in this Section 10, the Company shall have the authority to amend this Agreement to the extent necessary to comply with Code Section 409A and the regulations issued pursuant thereto.

F. Release of Company. Receipt of severance benefits pursuant to this Section 10 shall be in lieu of all other amounts payable by the Company to Employee and in settlement and complete release of all claims Employee may have against the Company or its directors, officers, or shareholders, other than those arising out of the severance benefits due and payable under Sections 10 and 15 of this Agreement and Employee’s rights under this Agreement. Employee acknowledges and agrees that execution of a general release of claims by Employee in a form reasonably acceptable to the Company shall be a condition precedent to the Company’s obligation to pay severance benefits hereunder.


4. Section references in the Employment Agreement shall be revised to reflect the amendments set forth in the preceding paragraphs of this Amendment.

5. Except as provided in the preceding paragraphs of this Amendment, the provisions of the Employment Agreement remain in full force and effect in accordance with their respective terms.

In Witness Whereof, and intending to be legally bound hereby, the parties hereto have caused this Amendment to be duly executed under seal as of the date first above written.

 

QUADRAMED CORPORATION    
By:  

/s/ Keith B. Hagen

   

/s/ David L. Piazza

  Keith B. Hagen     David L. Piazza
  Chief Executive Officer and President    
EX-99.3 4 dex993.htm EXHIBIT 99.3 Exhibit 99.3

Exhibit 99.3

AMENDMENT OF EMPLOYMENT AGREEMENT

This Employment Agreement (“Agreement”) is made as of March 26, 2008 between QuadraMed Corporation, a Delaware corporation with offices at 12110 Sunset Hill Road, Suite 600, Reston, Virginia 20190 (“Company”), and James R. Klein, an individual currently residing at [ADDRESS] (“Employee”).

WITNESSETH THAT:

WHEREAS, Employee and the Company have heretofore entered into an Employment Agreement, dated as of August 1, 2005 (the “Employment Agreement”); and

WHEREAS, Employee and the Company desire to revise the Employment Agreement to specify certain involuntary termination protections as approved by the Compensation Committee, update the document based on changes in tax law, and to modify related provisions;

NOW, THEREFORE, IN WITNESS THEREOF, Employee and the Company hereby agree that from and after the date of execution of this Amendment that the Employment Agreement shall be and is hereby amended as follows:

1. Part One of the Employment Agreement is hereby amended by deleting the existing definition of “Involuntary Termination,” and inserting the following in lieu thereof:

Involuntary Termination” means the termination of the Employee’s employment with the Company:

(i) involuntarily due to (1) the independent exercise of the Company’s unilateral authority to terminate the Employee’s services (other than due to the Employee’s implicit or explicit request), where the Employee was willing and able to continue performing such services, or (2) the Company’s failure to renew this Agreement pursuant to Section 5, provided that the Employee was willing and able to execute a new contract providing terms and conditions substantially similar to those in the expiring contract and to continue providing such services; or

(ii) voluntarily provided that (1) such termination occurs within two years of the initial existence of one or more of the following events without Employee’s written concurrence: (a) a change in Employee’s position with the Company or any successor which materially reduces Employee’s level of responsibility, (b) a material reduction in Employee’s base compensation (including base salary, fringe benefits and any non discretionary bonuses or other incentive payments earned pursuant to objective standards or criteria) or (c) a relocation of Employee’s principal place of employment by more than twenty-five (25) miles from Reston, Virginia, and (2) the Employee provides notice to the Company of the existence of the condition described in clause (1) within 90 days of the initial existence of the condition, upon the notice of which the Company must be provided a period of at least 30 days during which it may remedy the condition and not be required to pay any severance amount, if applicable.


2. Part Two, Section 1 of the Employment Agreement pertaining to Employee’s employment and duties is hereby amended by deleting the existing section in its entirety and inserting the following in lieu thereof:

1. Employment and Duties. The Company shall employ Employee as an executive officer in the position of Senior Vice President, Chief Technology Officer and Employee’s principal place of employment shall be at the Company’s offices located in Reston, Virginia. Employee agrees to continue in such employment for the duration of the Employment Period and to perform in good faith and to the best of Employee’s ability all services which may be required of Employee in Employee’s executive position and render such services at all reasonable times and places in accordance with reasonable directives and assignments issued by the Board and the Company’s Chief Executive Officer. During Employee’s Employment Period, Employee will devote Employee’s full time and effort to the business and affairs of the Company within the scope of Employee’s executive office.

3. Part Two, Section 4(D) of the Employment Agreement, pertaining to Employee’s incentive compensation, is hereby amended by deleting the existing section in its entirety and inserting the following in lieu thereof:

D. Employee shall be eligible for an incentive compensation bonus of up to fifty (50%) percent of Employee’s then-current annual rate of base salary. Employee’s incentive compensation bonus and timing of its payment will be in accordance with the Company’s practices for its executive officers; provided, however, that any incentive compensation bonus will not be paid later than the 15th day of the third month following the end of the Company’s first taxable year in which the Employee’s right to the payment is no longer subject to a substantial risk of forfeiture.

Employee may also be eligible for additional discretionary bonuses based on the achievement of certain specified goals established by the Board. Any award for such a bonus will be recommended to the Board’s Compensation Committee by the Chief Executive Officer of the Company. All bonuses pursuant to this paragraph are subject to final approval by the Board’s Compensation Committee. Any bonuses paid pursuant to this paragraph will not be paid later than the 15th day of the third month following the end of the Company’s first taxable year in which the Employee’s right to the payment is no longer subject to a substantial risk of forfeiture.

4. Part Two, Section 10 of the Employment Agreement, pertaining to Employee’s severance benefits on certain terminations of his employment, is hereby amended by deleting the existing section in its entirety and inserting the following in lieu thereof:


10. Severance Benefits.

A. Involuntary Termination.

1. Severance Benefit. If Employee is terminated by reason of an Involuntary Termination (other than a Termination for Cause), the Company will make a severance payment to Employee in an aggregate amount equal to the sum of six (6) months of the Employee’s then-current annual rate of base salary to be paid in monthly installments over a six (6) month period following the date of Employee’s Involuntary Termination; provided, however, that in no event will the amounts described in this Section 10.A.1. be paid later than the last day of the second taxable year of the Company following the taxable year in which the Employee’s Involuntary Termination occurs, and provided, however, that, to the extent the amounts described in this Section 10.A.1. exceed the amount specified in Treasury Regulations Section 1.409A-1(b)(9)(iii)(A), such excess will be paid no later than the 15th day of the third calendar month following the end of the Company’s taxable year in which Employee’s Involuntary Termination occurs.

2. Welfare Benefits. If Employee is terminated by reason of an Involuntary Termination (other than a Termination for Cause), for a period of six (6) months, the Company shall provide Employee (and Employee’s dependents, as applicable) with the same health benefits to which Employee was entitled as an employee immediately before the Involuntary Termination. To the maximum extent permitted by applicable law, the benefits provided under this Section 10.A.2. shall be in discharge of any obligations of the Company or any rights of Employee under the benefit continuation provisions under Section 4980A of the Code and Part VI of Title I of ERISA (“COBRA”) or any other legislation of similar import. Notwithstanding the foregoing, nothing in this Section 10.A.2. shall be construed to guarantee Employee life insurance or disability insurance after the date of Involuntary Termination.

B. Severance after Change in Control. If Employee is terminated by reason of an Involuntary Termination (other than a Termination for Cause) in connection with or within twelve (12) months following a Change in Control, Employee will be entitled to the severance and welfare benefits described below in this Section 10.B. These benefits are in lieu of any entitlement to severance and welfare benefit continuation under any preceding subsection or subsections of this Section 10, but in addition to any entitlements arising under other provisions of this Agreement (e.g., provisions providing accelerated vesting of Options). These benefits are as follows:

1. A severance payment, payable in one lump sum within thirty days (30) days of the date of such an Involuntary Termination, in an aggregate amount equal to:

(i) twelve (12) months of Employee’s then-current annual rate of base salary; and.


(ii) the maximum incentive compensation bonus payable to Employee under the Company’s Incentive Compensation Plan, or such bonus plan that has replaced such plan (the “ICP”) for the entire year in which the Involuntary Termination occurred. For the avoidance of doubt, such amount shall be calculated as if both Employee and the Company had achieved 100% of their respective goals and targets under the ICP in the year of his Involuntary Termination;

provided, however, that Employee may elect, in his sole discretion, to have the severance benefit payable pursuant to this Section 10.B paid in approximately equal monthly installments over a twelve (12) month period following the date of his Involuntary Termination; provided further, however, that in no event will any amounts in this Section 10.B. be paid later than the 15th day of the third calendar month following the end of the Company’s taxable year in which Employee’s Involuntary Termination occurs.

2. For a period of twelve (12) months, the same health benefits to which Employee (and Employee’s dependents, as applicable) was entitled as an employee immediately before the Involuntary Termination. To the maximum extent permitted by applicable law, the benefits provided under this Section 10.B.2. shall be in discharge of any obligations of the Company or any rights of Employee under the benefit continuation provisions under COBRA or any other legislation of similar import. Notwithstanding the foregoing, nothing in this Section 10.B.2. shall be construed to guarantee Employee life insurance or disability insurance after the date of Involuntary Termination.

C. Option Vesting. Upon an Involuntary Termination (other than a Termination for Cause), whether or not in connection with a Change in Control, all previously granted, but unvested, Options shall vest and be immediately exercisable as of the date such Involuntary Termination.

D. Amendments in Connection with Section 409A. Notwithstanding anything to the contrary in this Section 10, the Company shall have the authority to amend this Agreement to the extent necessary to comply with Code Section 409A and the regulations issued pursuant thereto.

E. Release of Company. Receipt of severance benefits pursuant to this Section 10 shall be in lieu of all other amounts payable by the Company to Employee and in settlement and complete release of all claims Employee may have against the Company or its directors, officers, or shareholders, other than those arising out of the severance benefits due and payable under Sections 10 and 15 of this Agreement and Employee’s rights under this Agreement. Employee acknowledges and agrees that execution of a general release of claims by Employee in a form reasonably acceptable to the Company shall be a condition precedent to the Company’s obligation to pay severance benefits hereunder.


5. Section references in the Employment Agreement shall be revised to reflect the amendments set forth in the preceding paragraphs of this Amendment.

6. Except as provided in the preceding paragraphs of this Amendment, the provisions of the Employment Agreement remain in full force and effect in accordance with their respective terms.


In Witness Whereof, and intending to be legally bound hereby, the parties hereto have caused this Amendment to be duly executed under seal as of the date first above written.

 

QUADRAMED CORPORATION    
By:  

/s/ Keith B. Hagen

   

/s/ James R. Klein

  Keith B. Hagen     James R. Klein
  Chief Executive Officer and President    
EX-99.4 5 dex994.htm EXHIBIT 99.4 Exhibit 99.4

Exhibit 99.4

AMENDMENT OF EMPLOYMENT AGREEMENT

This Employment Agreement (“Agreement”) is made as of March 26, 2008 between QuadraMed Corporation, a Delaware corporation with offices at 12110 Sunset Hill Road, Suite 600, Reston, Virginia 20190 (“Company”), and James R. Milligan, an individual currently residing at [ADDRESS] (“Employee”).

WITNESSETH THAT:

WHEREAS, Employee and the Company have heretofore entered into an Employment Agreement, dated as of July 16, 2007 (the “Employment Agreement”); and

WHEREAS, Employee and the Company desire to revise the Employment Agreement to specify certain involuntary termination protections as approved by the Compensation Committee, update the document based on changes in tax law, and to modify related provisions;

NOW, THEREFORE, IN WITNESS THEREOF, Employee and the Company hereby agree that from and after the date of execution of this Amendment that the Employment Agreement shall be and is hereby amended as follows:

1. Part One of the Employment Agreement is hereby amended by deleting the existing definition of “Involuntary Termination,” and inserting the following in lieu thereof:

Involuntary Termination” means the termination of the Employee’s employment with the Company:

(i) involuntarily due to (1) the independent exercise of the Company’s unilateral authority to terminate the Employee’s services (other than due to the Employee’s implicit or explicit request), where the Employee was willing and able to continue performing such services, or (2) the Company’s failure to renew this Agreement pursuant to Section 5, provided that the Employee was willing and able to execute a new contract providing terms and conditions substantially similar to those in the expiring contract and to continue providing such services; or

(ii) voluntarily provided that (1) such termination occurs within two years of the initial existence of one or more of the following events without Employee’s written concurrence: (a) a change in Employee’s position with the Company or any successor which materially reduces Employee’s level of responsibility, (b) a material reduction in Employee’s base compensation (including base salary, fringe benefits and any non discretionary bonuses or other incentive payments earned pursuant to objective standards or criteria) or (c) a relocation of Employee’s principal place of employment by more than forty-five (45) miles from Reston, Virginia, and (2) the Employee provides notice to the Company of the existence of the condition described in clause (1) within 90 days of the initial existence of the condition, upon the notice of which the Company must be provided a period of at least 30 days during which it may remedy the condition and not be required to pay any severance amount, if applicable.


2. Part Two, Sections 4(C) and 4(D) of the Employment Agreement, pertaining to Employee’s incentive compensation and commissions, are hereby amended by deleting the existing sections in their entirety and inserting the following in lieu thereof:

C. Employee shall be eligible for an incentive compensation bonus of up to fifty (50%) percent of Employee’s then-current annual rate of base salary. Employee’s incentive compensation bonus and timing of its payment will be in accordance with the Company’s practices for its executive officers; provided, however, that any incentive compensation bonus will not be paid later than the 15th day of the third month following the end of the Company’s first taxable year in which the Employee’s right to the payment is no longer subject to a substantial risk of forfeiture.

D. Employee shall be eligible for sales commissions under the Company’s Sales Compensation Plan. Employee’s commission shall be based on a percentage of the Company’s sales quota targets, determined annually. Employee shall earn commissions on the last day of the month following the month for which the sales bookings are recorded. Notwithstanding the foregoing, provided, however, that any commissions will not be paid later than the 15th day of the third month following the end of the Company’s first taxable year in which the Employee earns such commissions.

3. Part Two, Section 10 of the Employment Agreement, pertaining to Employee’s severance benefits on certain terminations of his employment, is hereby amended by deleting the existing section in its entirety and inserting the following in lieu thereof:

10. Severance Benefits.

A. Severance Upon Involuntary Termination. If Employee is terminated by reason of an Involuntary Termination of Employee’s employment (other than a Termination for Cause) Employee will be entitled to the severance benefits described below in this Section 10.A., as follows:

(i) the Company will make a severance payment to Employee in an aggregate amount equal to the sum of twelve (12) months of the Employee’s then-current annual rate of base salary in monthly installments over a twelve (12) month period following the date of Employee’s Involuntary Termination; provided, however, that in no event will the amounts described in this Section 10.A.i. be paid later than the last day of the second taxable year of the Company following the taxable year in which the Employee’s Involuntary Termination occurs, and provided, however, that, to the extent the amounts described in this Section 10.A.i. exceed the amount specified in Treasury Regulations Section 1.409A-1(b)(9)(iii)(A), such excess will be paid no later than the 15th day of the third calendar month following the end of the Company’s taxable year in which Employee’s Involuntary Termination occurs.


(ii) subject to the conditions set forth in this Section 10.A.ii., the Company will make a payment to Employee equal to the incentive compensation bonus payable to Employee under the Company’s Incentive Compensation Plan or any bonus plan that has replaced such plan (the “ICP”) in respect of the year during which such Involuntary Termination occurred; provided, however, that such bonus amount (if any) shall:

(a) be pro-rated through the date of Employee’s Involuntary Termination (e.g., if the date of Involuntary Termination is June 30, the maximum amount payable under this Section would be 50% of the Employee’s incentive bonus otherwise payable under the ICP);

(b) be calculated as if Employee achieved 100% performance of his individual goals (if any) under the ICP in the year of his Involuntary Termination;

(c) be dependent and calculated based upon the Company’s achievement (if any) of its financial performance and/or other targets set forth for the ICP in the year of Employee’s Involuntary Termination;

(d) be paid (if paid) in a lump sum at such time as the Company shall make payments to other eligible employees under the ICP as if Employee were still employed with the Company on the date of payment; provided, however, that in no event will the amounts in this Section 10.A.ii.d. be paid later than the 15th day of the third calendar month following the end of the Company’s taxable year in which Employee’s Involuntary Termination occurs.

Notwithstanding the foregoing and for the avoidance of doubt, no payment shall be made to Employee under this Section 10.A.ii. if the Company fails to meet the minimum financial performance and/or other targets under the ICP in the year during which Employee is Involuntarily Terminated.

B. Severance after Change in Control. If Employee is terminated by reason of an Involuntary Termination (other than a Termination for Cause) in connection with or within six (6) months following a Change in Control, the Company will make a severance payment, payable in one lump sum within thirty days (30) days of the date of Employee’s Involuntary Termination, in an aggregate amount equal to:

(i) twelve (12) months of Employee’s then-current annual rate of base salary; and.

(ii) the maximum incentive compensation bonus payable to Employee under the ICP for the entire year in which the Involuntary Termination


occurred. For the avoidance of doubt, such amount shall be calculated as if both Employee and the Company had achieved 100% of their respective goals and targets under the ICP in the year of his Involuntary Termination;

provided, however, that Employee may elect, in his sole discretion, to have the severance benefit payable pursuant to this Section 10.B. paid in approximately equal monthly installments over a twelve (12) month period following the date of Employee’s Involuntary Termination; provided further, however, that in no event will any amounts in this Section 10.B. be paid later than the 15th day of the third calendar month following the end of the Company’s taxable year in which Employee’s Involuntary Termination occurs.

C. Option Vesting. Upon an Involuntary Termination (other than a Termination for Cause), whether or not in connection with a Change in Control, all previously granted, but unvested, options to purchase shares of the Company’s common stock shall vest and be immediately exercisable as of the date such Involuntary Termination.

D. Welfare Benefits. For a period of twelve (12) months following an Involuntary Termination (other than a Termination for Cause), whether or not in connection with a Change in Control, Employee (and his dependents, if otherwise eligible) shall be provided by the Company with the same health plan participation to which he was entitled as an employee of the Company immediately before his Involuntary Termination (excluding, however, any severance plan benefits). In the event that under applicable law or the terms of any relevant Employee Benefit Plan such participation, benefits and/or coverage cannot be provided under an existing Company Employee Benefit Plan, such coverage and/or benefits shall be provided directly by the Company pursuant to this Agreement on a comparable basis. In its sole discretion, the Company may obtain such coverage and benefits through private insurance acquired at the Company’s expense. To the maximum extent permitted by applicable law, any benefit coverage provided pursuant to this paragraph shall be in discharge of any obligations of the Company or any rights of Employee and his dependents under the benefit continuation provisions under Section 4980A of the Code and Part VI of Title I of ERISA (“COBRA”) or any other legislation of similar import. Notwithstanding the foregoing, nothing in this Section 10.D. shall be construed to guarantee Employee life insurance or disability insurance after the date of Involuntary Termination.

E. Amendments in Connection with Section 409A. Notwithstanding anything to the contrary in this Section 10, the Company shall have the authority to amend this Agreement to the extent necessary to comply with Code Section 409A and the regulations issued pursuant thereto.

F. Release of Company. Receipt of severance and health benefits pursuant to this Section 10 shall be in lieu of all other amounts payable by the Company to Employee and in settlement and complete release of all claims


Employee may have against the Company or its directors, officers, or shareholders, other than those arising out of the severance benefits due and payable under this Agreement and Employee’s rights under this Agreement. Employee acknowledges and agrees that execution of a general release of claims by Employee in a form reasonably acceptable to the Company shall be a condition precedent to the Company’s obligation to pay severance benefits hereunder.

4. Section references in the Employment Agreement shall be revised to reflect the amendments set forth in the preceding paragraphs of this Amendment.

5. Except as provided in the preceding paragraphs of this Amendment, the provisions of the Employment Agreement remain in full force and effect in accordance with their respective terms.

In Witness Whereof, and intending to be legally bound hereby, the parties hereto have caused this Amendment to be duly executed under seal as of the date first above written.

 

QUADRAMED CORPORATION    
By:  

/s/ Keith B. Hagen

   

/s/ James R. Milligan

  Keith B. Hagen     James R. Milligan
  Chief Executive Officer and President    
EX-99.5 6 dex995.htm EXHIBIT 99.5 Exhibit 99.5

Exhibit 99.5

AMENDMENT OF EMPLOYMENT AGREEMENT

This Employment Agreement (“Agreement”) is made as of March 26, 2008 between QuadraMed Corporation, a Delaware corporation with offices at 12110 Sunset Hill Road, Suite 600, Reston, Virginia 20190 (“Company”), and Steven V. Russell, an individual currently residing at [ADDRESS] (“Employee”).

WITNESSETH THAT:

WHEREAS, Employee and the Company have heretofore entered into an Employment Agreement, dated as of November 21, 2005 (the “Employment Agreement”); and

WHEREAS, Employee and the Company desire to revise the Employment Agreement to specify certain involuntary termination protections as approved by the Compensation Committee, update the document based on changes in tax law, and to modify related provisions;

NOW, THEREFORE, IN WITNESS THEREOF, Employee and the Company hereby agree that from and after the date of execution of this Amendment that the Employment Agreement shall be and is hereby amended as follows:

1. Part One of the Employment Agreement is hereby amended by deleting the existing definition of “Involuntary Termination,” and inserting the following in lieu thereof:

Involuntary Termination” means the termination of the Employee’s employment with the Company:

(i) involuntarily due to (1) the independent exercise of the Company’s unilateral authority to terminate the Employee’s services (other than due to the Employee’s implicit or explicit request), where the Employee was willing and able to continue performing such services, or (2) the Company’s failure to renew this Agreement pursuant to Section 5, provided that the Employee was willing and able to execute a new contract providing terms and conditions substantially similar to those in the expiring contract and to continue providing such services; or

(ii) voluntarily provided that (1) such termination occurs within two years of the initial existence of one or more of the following events without Employee’s written concurrence: (a) a change in Employee’s position with the Company or any successor which materially reduces Employee’s level of responsibility, (b) a material reduction in Employee’s base compensation (including base salary, fringe benefits and any non discretionary bonuses or other incentive payments earned pursuant to objective standards or criteria) or (c) a relocation of Employee’s principal place of employment by more than forty-five (45) miles from Reston, Virginia, and (2) the Employee provides notice to the Company of the existence of the condition described in clause (1) within 90 days of the initial existence of the condition, upon the notice of which the Company must be provided a period of at least 30 days during which it may remedy the condition and not be required to pay any severance amount, if applicable.


2. Part Two, Section 4(c) of the Employment Agreement, pertaining to Employee’s incentive compensation, is hereby amended by deleting the existing section in its entirety and inserting the following in lieu thereof:

C. Commencing in 2006, Employee shall be eligible for an incentive compensation bonus of up to fifty (50%) percent of Employee’s then-current annual rate of base salary. Employee’s incentive compensation bonus and timing of its payment will be in accordance with the Company’s practices for its executive officers; provided, however, that any incentive compensation bonus will not be paid later than the 15th day of the third month following the end of the Company’s first taxable year in which the Employee’s right to the payment is no longer subject to a substantial risk of forfeiture.

3. Part Two, Section 10 of the Employment Agreement, pertaining to Employee’s severance benefits on certain terminations of his employment, is hereby amended by deleting the existing section in its entirety and inserting the following in lieu thereof:

10. Severance Benefits.

A. Severance Upon Involuntary Termination. If Employee is terminated by reason of an Involuntary Termination of Employee’s employment (other than a Termination for Cause) Employee will be entitled to the severance and welfare benefits described below in this Section 10.A., as follows:

(i) the Company will make a severance payment to Employee in an aggregate amount equal to the sum of twelve (12) months of the Employee’s then-current annual rate of base salary in monthly installments over a twelve (12) month period following the date of Employee’s Involuntary Termination; provided, however, that in no event will the amounts described in this Section 10.A.i. be paid later than the last day of the second taxable year of the Company following the taxable year in which the Employee’s Involuntary Termination occurs, and provided, however, that, to the extent the amounts described in this Section 10.A.i. exceed the amount specified in Treasury Regulations Section 1.409A-1(b)(9)(iii)(A), such excess will be paid no later than the 15th day of the third calendar month following the end of the Company’s taxable year in which Employee’s Involuntary Termination occurs; and

(ii) subject to the conditions set forth in this Section 10.A.ii., the Company will make a payment to Employee equal to the incentive compensation bonus payable to Employee under the Company’s Incentive Compensation Plan or any bonus plan that has replaced such plan (the “ICP”) in respect of the year during which such Involuntary Termination occurred; provided, however, that such bonus amount (if any) shall:

(a) be pro-rated through the date of Employee’s Involuntary Termination (e.g., if the date of Involuntary Termination is June 30, the maximum amount payable under this Section would be 50% of the Employee’s incentive bonus otherwise payable under the ICP);


(b) be calculated as if Employee achieved 100% performance of his individual goals (if any) under the ICP in the year of his Involuntary Termination;

(c) be dependent and calculated based upon the Company’s achievement (if any) of its financial performance and/or other targets set forth for the ICP in the year of Employee’s Involuntary Termination;

(d) be paid (if paid) in a lump sum at such time as the Company shall make payments to other eligible employees under the ICP as if Employee were still employed with the Company on the date of payment; provided, however, that in no event will the amounts in this Section 10.A.ii. be paid later than the 15th day of the third calendar month following the end of the Company’s taxable year in which Employee’s Involuntary Termination occurs.

Notwithstanding the foregoing and for the avoidance of doubt, no payment shall be made to Employee under this Section 10.A.ii. if the Company fails to meet the minimum financial performance and/or other targets under the ICP in the year during which Employee is Involuntarily Terminated.

B. Severance after Change in Control. If Employee is terminated by reason of an Involuntary Termination of Employee’s employment (other than a Termination for Cause) in connection with or within six (6) months following a Change in Control, the Company will make a severance payment, payable in one lump sum within thirty days (30) days of the date of Employee’s Involuntary Termination, in an aggregate amount equal to:

(i) twelve (12) months of Employee’s then-current annual rate of base salary; and.

(ii) the maximum incentive compensation bonus payable to Employee under the ICP for the entire year in which the Involuntary Termination occurred. For the avoidance of doubt, such amount shall be calculated as if both Employee and the Company had achieved 100% of their respective goals and targets under the ICP in the year of his Involuntary Termination;

provided, however, that Employee may elect, in his sole discretion, to have the severance benefit payable pursuant to this Section 10.B. paid in approximately equal monthly installments over a twelve (12) month period following the date of Employee’s Involuntary Termination; provided further, however, that in no event will any amounts in this Section 10.B. be paid later than the 15th day of the third calendar month following the end of the Company’s taxable year in which Employee’s Involuntary Termination occurs


C. Option Vesting. Upon an Involuntary Termination (other than a Termination for Cause), whether or not in connection with a Change in Control, all previously granted, but unvested, options to purchase shares of the Company’s common stock, including the Options, shall vest and be immediately exercisable as of the date such Involuntary Termination.

D. Welfare Benefits. For a period of twelve (12) months following an Involuntary Termination (other than a Termination for Cause), whether or not in connection with a Change in Control, Employee (and his dependents, if otherwise eligible) shall be provided by the Company with the same health plan participation to which he was entitled as an employee of the Company immediately before his Involuntary Termination (excluding, however, any severance plan benefits). In the event that under applicable law or the terms of any relevant Employee Benefit Plan such participation, benefits and/or coverage cannot be provided under an existing Company Employee Benefit Plan, such coverage and/or benefits shall be provided directly by the Company pursuant to this Agreement on a comparable basis. In its sole discretion, the Company may obtain such coverage and benefits through private insurance acquired at the Company’s expense. To the maximum extent permitted by applicable law, any benefit coverage provided pursuant to this paragraph shall be in discharge of any obligations of the Company or any rights of Employee and his dependents under the benefit continuation provisions under Section 4980A of the Code and Part VI of Title I of ERISA (“COBRA”) or any other legislation of similar import. Notwithstanding the foregoing, nothing in this Section 10.D. shall be construed to guarantee Employee life insurance or disability insurance after the date of Involuntary Termination.

E. Amendments in Connection with Section 409A. Notwithstanding anything to the contrary in this Section 10, the Company shall have the authority to amend this Agreement to the extent necessary to comply with Code Section 409A and the regulations issued pursuant thereto.

F. Release of Company. Receipt of severance and health benefits pursuant to this Section 10 shall be in lieu of all other amounts payable by the Company to Employee and in settlement and complete release of all claims Employee may have against the Company or its directors, officers, or shareholders, other than those arising out of the severance benefits due and payable under this Agreement and Employee’s rights under this Agreement. Employee acknowledges and agrees that execution of a general release of claims by Employee in a form reasonably acceptable to the Company shall be a condition precedent to the Company’s obligation to pay severance benefits hereunder.


4. Section references in the Employment Agreement shall be revised to reflect the amendments set forth in the preceding paragraphs of this Amendment.

5. Except as provided in the preceding paragraphs of this Amendment, the provisions of the Employment Agreement remain in full force and effect in accordance with their respective terms.

In Witness Whereof, and intending to be legally bound hereby, the parties hereto have caused this Amendment to be duly executed under seal as of the date first above written.

 

QUADRAMED CORPORATION    
By:  

/s/ Keith B. Hagen

   

/s/ Steven V. Russell

  Keith B. Hagen     Steven V. Russell
  Chief Executive Officer and President    
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