Exhibit 10.7
QUADRAMED CORPORATION
AMENDMENT OF EMPLOYMENT AGREEMENT
THIS AGREEMENT (the "Agreement"), dated this 19th day of
September, 2001, is by and between QuadraMed Corporation, a corporation
organized under the laws of the State of Delaware and having its principal
place of business at San Rafael, California (the "Company"), and ▇▇▇▇
▇▇▇▇▇▇▇▇, an individual currently residing in North Hills, California (the
"Employee"), and
WITNESSETH THAT:
WHEREAS, Employee and the Company have heretofore entered into an
employment agreement, dated as of August 16, 2000 (the "Employment
Agreement");
WHEREAS, Employee and the Company desire to revise the Employment
Agreement to incorporate describe certain additional bonus opportunities
and change of control protections as recommended to the Company by the
Company's Employee compensation consultant, ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇ & Co., Inc.;
NOW, THEREFORE, Employee and the Company hereby agree that from
and after the date of execution of this Agreement the Employment Agreement
shall be and is hereby amended as follows:
1. Part One of the Employment Agreement is hereby amended by
adding a definition of "Board," to read in its entirety as follows:
""Board" means the Board of Directors of the Company."
2. Part One of the Employment Agreement is hereby further amended
by amending the definition of "Stock Option Plan" contained therein to read
in its entirety as follows:
""Stock Option Plan" means any plan, program or policy of
the Company for the granting of options to acquire Company stock
or other equity-based incentives to employees of the Company and
affiliates, including but not limited to the Company's 1996 Stock
Incentive Plan (including the predecessor 1994 Stock Option Plan),
as amended through the date hereof. and the Company's 1999 Stock
Incentive Plan, as amended through the date hereof."
3. Part Two, Section 4C, pertaining to Employee's potential bonus
compensation for services to the Company, is deleted in its entirety and
the following is inserted in lieu thereof:
"C. Employee shall be eligible for a discretionary bonus
of up to fifty (50%) percent of Employee's then-current annual
rate of base salary. Employee's discretionary bonus and timing of
its payment will be determined by the Board in its sole discretion
and based upon the recommendation of the Company's Compensation
Committee and such additional factors as the Board deems
appropriate, including Employee's individual performance and the
Company's financial results.
"If the Company exceeds its annual operating cash flow
goal for any of 2001, 2002 and 2003, then, in addition to whatever
other bonuses to which Employee may be entitled under the other
paragraphs of this Section 4C in respect of that year, Employee
will be eligible to receive a cash bonus equal to 50% of his
target annual bonus for the same year (the "Enhanced Bonus"). Any
Enhanced Bonus earned for any year will be paid promptly following
December 31, 2003 or, if earlier, promptly following the date of a
Change in Control if but only if the Employee remains employed by
the Company through such date and otherwise shall be forfeited. If
for any of the specified years the Company does not exceed its
annual operating cash flow goal, Employee will not be eligible for
an Enhanced Bonus for that year; provided, however, that Employee
will be eligible to receive the amount of Enhanced Bonus to which
Employee would have otherwise been eligible for the year, subject
to the vesting and payment provisions previously described, if
over the total three years the Company achieves the aggregate of
its annual operating cash flow goals.
"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."
4. The Employment Agreement and Part Two, Section 10 thereof,
pertaining to Employee's severance benefits on certain terminations of his
employment, is hereby amended by (i) redesignating Sections 10 C through D
as Sections 10 D through E and adjusting appropriately all cross-references
to any of said Sections and (ii) adding a new Section 10 C to read in its
entirety as follows:
"10 ▇. ▇▇▇▇▇▇▇▇▇ and Welfare Benefits 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 twenty-four (24) months
following a Change in Control, he will be entitled to the
severance and welfare benefits described below in this Section.
These benefits are in lieu of any entitlement to severance and
welfare benefit continuation under preceding subsection or
subsections of this Section, 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
the sum of Employee's then-current annual rate of base
salary and his annual target bonus for the year in which
the Change in Control occurs. Employee may elect, in his
sole discretion, to have the severance benefit payable
pursuant to this Section paid in approximately equal
monthly installments over a one year period following the
date of his Involuntary Termination.
"(2) For a period of twelve (12) months Employee
(and his dependents, if otherwise eligible) shall be
provided by the Company with the same life, health and
disability plan participation, benefits and other welfare
benefit coverages to which he was entitled to 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."
5. Part Three is hereby amended by adding at the end thereof a new
Section 14 to read in its entirety as follows:
"14. Tax Effect of Payments.
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"▇. ▇▇▇▇▇-Up Payment. In the event that it is determined
that any payment or distribution of any type to or for Employee's
benefit made by the Company, by any of its affiliates, by any
person who acquires ownership or effective control of the Company
or ownership of a substantial portion of the Company's assets
(within the meaning of Section 280G of the Code and the
regulations thereunder) or by any affiliate of such person,
whether paid or payable or distributed or distributable pursuant
to the terms of this Agreement or otherwise (the "Total
Payments"), would be subject to the excise tax imposed by Section
4999 of the Code or any interest or penalties with respect to such
excise tax (such excise tax, together with any such interest or
penalties, are collectively referred to as the "Excise Tax"), then
Employee shall be entitled to receive an additional payment (a
"Gross-Up Payment") in an amount such that after payment by
Employee of all taxes imposed upon the Gross-Up Payment, including
any Excise Tax, Employee retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed on the Total Payments."
"B. Determination by Accountant. All mathematical
determinations and all determinations of whether any of the Total
Payments are "parachute payments" (within the meaning of Section
280G of the Code) that are required to be made under this Section,
including all determinations of whether a Gross-Up Payment is
required, of the amount of such Gross-Up Payment and of amounts
relevant to the last sentence of this Section, shall be made by an
independent accounting firm selected by Employee and reasonably
acceptable to the Company from among the largest five (5)
accounting firms in the United States (the "Accounting Firm"),
which shall provide its determination, together with detailed
supporting calculations regarding the amount of any Gross-Up
Payment and any other relevant matters (the "Determination"), both
to the Company and to Employee within five (5) business days of
Employee's termination date, if applicable, or such earlier time
as is requested by the Company or by Employee (if Employee
reasonably believes that any of the Total Payments may be subject
to the Excise Tax). If the Accounting Firm determines that no
Excise Tax is payable by Employee, it shall furnish Employee with
a written statement that such Accounting Firm has concluded that
no Excise Tax is payable (including the reasons therefor) and that
Employee has substantial authority not to report any Excise Tax on
Employee's federal income tax return. If a Gross-Up Payment is
determined to be payable, it shall be paid to Employee within five
(5) business days after the Determination is delivered to the
Company or to Employee. Any Determination by the Accounting Firm
shall be binding upon the Company and Employee, absent manifest
error. All of the costs and expenses of the Accounting Firm shall
be borne by the Company."
"C. Underpayments and Overpayments. As a result of
uncertainty in the application of Section 4999 of the Code at the
time of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments not made by the
Company should have been made ("Underpayments") or that Gross-Up
Payments will have been made by the Company which should not have
been made ("Overpayments"). In either event, the Accounting Firm
shall determine the amount of the Underpayment or Overpayment that
has occurred. In the case of an Underpayment, the amount of such
Underpayment shall promptly be paid by the company to or for
Employee's benefit. In the case of an Overpayment, Employee shall,
at the direction and expense of the Company, take such steps as
are reasonably necessary (including the filing of returns and
claims for refund), follow reasonable instructions from, and
procedures established by, the Company and otherwise reasonably
cooperate with the Company to correct such Overpayment; provided,
however, that (i) Employees shall in no event be obligated to
return to the Company an amount greater than the net after-tax
portion of the Overpayment that Employee has retained or has
received as a refund from the applicable taxing authorities and
(ii) this provision shall be interpreted in a manner consistent
with the intent of this Section, which is to make Employee whole,
on an after-tax basis, for the application of the Excise Tax, it
being understood that the correction of an Overpayment may result
in Employee's repaying to the Company an amount which is less than
the Overpayment."
6. Except as provided in the preceding paragraphs of this
Agreement, 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 Agreement to be duly executed under seal as
of the date first above written.
QUADRAMED CORPORATION
By:_________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Its Executive Vice President
EMPLOYEE
____________________________________
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