exv4w2



 



EXHIBIT 4.2


FORM OF NOTE



[IF THE NOTE IS A GLOBAL NOTE, INSERT THE FOLLOWING TWO PARAGRAPHS:


THIS NOTE IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE OF A
DEPOSITARY. THIS NOTE IS EXCHANGEABLE FOR NOTES REGISTERED IN THE NAME OF A
PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS NOTE (OTHER
THAN A TRANSFER OF THIS NOTE AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE
DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER
NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN SUCH LIMITED
CIRCUMSTANCES.


UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO THE COMPANY OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY A PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.]


THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE
“ACT”), AND THIS SECURITY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN
OPINION OF COUNSEL SATISFACTORY TO THE ISSUER STATING THAT SUCH OFFER, SALE,
OR TRANSFER IS BEING MADE IN COMPLIANCE WITH ALL APPLICABLE FEDERAL AND STATE
SECURITIES LAWS.


THE HOLDER HEREOF, BY ITS ACCEPTANCE HEREOF, IS DEEMED TO HAVE AGREED TO BE
BOUND BY THE PROVISIONS OF THE REGISTRATION RIGHTS AGREEMENT, DATED AS OF APRIL
17, 2003, BY AND AMONG THE COMPANY AND THE PERSONS LISTED ON THE SIGNATURE
PAGES THERETO (THE “REGISTRATION RIGHTS AGREEMENT”).


1






 


NO. 001



CUSIP NO.
[ ]       

ISSUE PRICE $[ ]


QUADRAMED CORPORATION



SENIOR SECURED NOTE DUE APRIL 1, 2008

Initial Interest Rate 10%



     QuadraMed Corporation, a corporation duly organized and existing under the
laws of Delaware (herein called the “Company,” which term may include any
successor Person, subject to the provisions of the Indenture hereinafter
referred to), for value received, hereby promises to pay to [if the note is a
global note, insert “Cede & Co.”; if the note is a certificated note, insert
the name of the purchaser thereof], or registered assigns, the principal sum of
[ ] ($[ ]) [if the note is a global note, add:
or such greater or lesser amount as may, from time to time, be reflected on
Schedule A hereto] on April 1, 2008, and to pay interest thereon from and
including the date of initial issuance of Notes under the Indenture, or from
and including the most recent Interest Payment Date to which interest has been
paid or duly provided for, semiannually on April 1 and October 1 in each year,
commencing October 1, 2003, at an initial interest rate of 10% per annum (the
“Interest Rate”), until the principal hereof is paid or made available for
payment. The Interest Rate shall automatically be reduced to 9% immediately
following the next Interest Payment Date upon the (i) listing of the Company’s
common stock for trading on a U.S. national securities exchange, or (ii)
approval for trading on Nasdaq, including the Nasdaq Small Cap Market. On the
October 1, 2003 and April 1, 2004 Interest Payment Dates, the Company shall pay
the interest due on each such date with a combination of cash and additional
Notes as follows: (i) in cash equivalent to 6% per annum of the principal
amount; and (ii) in additional Notes having a principal amount equal to the
remainder of the cash interest that would have been otherwise payable in the
absence of this sentence. The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in such Indenture,
be paid to the Person in whose name this Note is registered at the close of
business on the Regular Record Date for such interest, which shall be the March
15 or September 15 (whether or not a Business Day), as the case may be, next
preceding such Interest Payment Date. Payment of the principal of (and premium,
if any) and interest on this Note will be made at the office or agency of the
Company maintained for that purpose in the Borough of Manhattan, The City of
New York, and in such other cities, if any, as the Company may designate in
writing to the Trustee, in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts; provided, however, that at the option of the Company payment of
interest may be made by check mailed to the address of the Person entitled
thereto as such address shall appear in the Security Register.


     Unless the certificate of authentication hereon has been executed by or on
behalf of the Trustee (as defined below) under the Indenture (as defined
below), by the manual signature of one of its authorized officers, this Note
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.


     Capitalized terms used in this Note which are defined in the Indenture
shall have the respective meanings assigned to them in the Indenture.


2






 


     NO RECOURSE SHALL BE HAD FOR THE PAYMENT OF THE PRINCIPAL OF OR THE
INTEREST ON THIS NOTE OR FOR ANY CLAIM BASED HEREON, OR OTHERWISE IN RESPECT
HEREOF, OR BASED ON OR IN RESPECT OF THE INDENTURE OR ANY INDENTURE
SUPPLEMENTAL THERETO AGAINST ANY INCORPORATOR, STOCKHOLDER, OFFICER OR
DIRECTOR, AS SUCH, PAST OR PRESENT OR FUTURE OF THE COMPANY OR OF ANY SUCCESSOR
THEREOF, WHETHER BY VIRTUE OF ANY CONSTITUTION, STATUTE OR RULE OF LAW, OR BY
THE ENFORCEMENT OF ANY ASSESSMENT OR PENALTY OR OTHERWISE, ALL SUCH LIABILITY
BEING, BY THE ACCEPTANCE HEREOF AND AS PART OF THE CONSIDERATION FOR THE ISSUE
HEREOF, EXPRESSLY WAIVED AND RELEASED.


     THE PROVISIONS OF THIS NOTE ARE CONTINUED ON THE REVERSE SIDE HEREOF AND
SUCH CONTINUED PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS THOUGH
FULLY SET FORTH AT THIS PLACE.


     IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed, manually or in facsimile.



	 	 	 	 	 
	 	QUADRAMED CORPORATION
	 
	 	By
	 	 	 
	 	 
	
Name:	 	 
	 	 	Title:	 	 
	 	 	 	 	 





	CERTIFICATE OF AUTHENTICATION

This is one of the Notes referred to in

the within-mentioned Indenture.	 	 	 






	 	 	 	 	 	 
	The Bank of New York, as Trustee	 	 	 
	 	 	 	 	 	 
	By
	 	 	 	 	 
	 	
Authorized Signatory	
 	 	 	 



	Dated:	

	 	 	 	 




3






 



REVERSE SIDE OF NOTE



     This Note is one of a duly authorized issue of Notes of the Company
designated as its Senior Secured Notes due 2008, initial interest rate 10%,
(herein called the “Notes”), in initial aggregate principal amount of
$71,000,000, issued and to be issued under an Indenture, dated as of April 17,
2003 (the “Indenture”), between the Company and The Bank of New York, as
Trustee (herein called the “Trustee,” which term includes any successor trustee
under the Indenture), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of the Company, the
Trustee, and the Holders of the Notes, and of the terms upon which the Notes
are, and are to be, authenticated and delivered. Capitalized terms used herein
and not defined herein have the meanings ascribed thereto in the Indenture.
The Notes are subject to all such terms, and Holders of the Notes are referred
to the Indenture and the Act for a statement of those terms.


     The Notes are subject to redemption upon not less than 30 nor more than 60
days’ notice by first class mail, at any time on or after April 17, 2006, as a
whole or in part, at the election of the Company, at the following Redemption
Prices (expressed as percentages of the principal amount):


     If redeemed during the 12-month period beginning April 1 of the years
indicated (April 17, in the case of 2006), the redemption price shall be:



	 	 	 	 	 
	Year	 	Redemption Price
	
	 	

	2006
	 	 	101.50	%
	2007
	 	 	100.75	%
	2008
	 	 	100.00	%



together in the case of any such redemption with accrued interest to the
Redemption Date, but interest installments whose Stated Maturity is on or prior
to such Redemption Date will be payable to the Holders of such Notes, or one or
more Predecessor Notes, of record at the close of business on the Regular
Record Dates referred to on the face hereof, all as provided in the Indenture.


     The Indenture provides that if a Change of Control (as defined therein)
occurs, each Holder of Notes shall have the right, in accordance with the
provisions of the Indenture, to require the Company to repurchase all of such
Holder’s Notes, or any portion thereof that is an integral multiple of $1,000,
for cash at a price equal to 100% of the principal amount of such Notes to be
repurchased, together with accrued interest to the Repurchase Date, but any
interest installment the Stated Maturity of which is on or prior to such
Repurchase Date will be payable to the Holders of such Notes, or one or more
Predecessor Notes, of record at the close of business on the Regular Record
Dates referred to on the face hereof, all as provided in the Indenture.


     In the event of redemption, conversion or repurchase of this Note in part
only, a new Note or Notes for the portion hereof not redeemed, converted or
repurchased will be issued in the name of the Holder hereof upon the
cancellation hereof.


4






 


     As provided in the Indenture and the Security Documents and subject to
certain limitations set forth therein, the obligations of the Company under the
Indenture and the Security Documents are secured by the Collateral as provided
in the Security Documents. Each Holder, by accepting a secured Note, agrees to
be bound by all the terms and provisions of the Security Documents, as the same
may be amended from time to time. The Liens created under the Security
Documents shall be released upon the terms and subject to the conditions set
forth in the Indenture and the Security Documents.


     If an Event of Default shall occur and be continuing, the principal of all
the Notes and interest accrued thereon may be declared due and payable in the
manner and with the effect provided in the Indenture. The Indenture provides
that in certain events such declaration and its consequences may be waived by
the holders of a majority in aggregate principal amount of the Notes then
outstanding.


     As provided in and subject to the provisions of the Indenture, the Holder
of this Note shall not have the right to institute any proceeding with respect
to the Indenture or for the appointment of a receiver or trustee or for any
other remedy thereunder, unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default with respect to the
Notes, the Holders of not less than 25% in principal amount of the Notes at the
time Outstanding shall have made written request to the Trustee and offered the
Trustee reasonable indemnity, and the Trustee shall not have received from the
Holders of a majority in principal amount at the time Outstanding a written
direction inconsistent with such request, and the Trustee shall have failed to
institute any such proceeding for 60 days after receipt of such notice, request
and offer of indemnity. The foregoing shall not apply to any suit instituted by
the Holder of this Note for the enforcement of any payment of principal hereof
or any premium or interest hereon on or after the respective due dates
expressed herein or of the right to convert this Note in accordance with the
Indenture.


     The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Notes under the Indenture at any
time by the Company and the Trustee with the consent of the Holders of a
majority in aggregate principal amount of the Notes at the time Outstanding.
The Indenture also contains provisions permitting the Holders of specified
percentages in aggregate principal amount of the Notes at the time Outstanding,
on behalf of the Holders of all the Notes, to waive compliance by the Company
with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Note shall be conclusive and binding upon such Holder and upon all future
Holders of this Note and of any Note issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof, whether or not notation of
such consent or waiver is made upon this Note.


     No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of (and premium, if any) and
interest on this Note at the times, place and rate, and in the coin or
currency, herein prescribed or to convert this Note as provided in the
Indenture.


5






 


     As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Note is registrable in the Security Register,
upon surrender of this Note for registration of transfer at the office or
agency of the Company in any place where the principal of (and premium, if any)
and interest on this Note are payable, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Notes, of authorized
denominations and for the same aggregate principal amount, will be issued to
the designated transferee or transferees.


     The Notes are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, Notes are
exchangeable for a like aggregate principal amount of Notes of a different
authorized denomination, as requested by the Holder surrendering the same.


     Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Notes and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to the Holders. No representation is
made as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.


     No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.


     Prior to due presentment of this Note for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.


     All terms used in this Note which are defined in the Indenture shall have
the meanings assigned to them in the Indenture.


     THE INDENTURE AND THIS NOTE SHALL BE DEEMED TO BE A CONTRACT UNDER THE
LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF SUCH STATE, WITHOUT REGARD TO THE CONFLICTS OF LAW
PRINCIPLES THEREOF.


6






 




ABBREVIATIONS



     The following abbreviations, when used in the inscription on the face of
this Note, shall be construed as though they were written out in full according
to applicable laws or regulations:



	 	 	 	 	 
	TEN COM -

TEN ENT -


JT TEN -	 	
as tenants in common

as tenants by the 

entireties

as joint tenants with

right of Survivorship

and not as tenants in

common
	 	UNIF GIFT MIN
ACT -                CUSTODIAN    

                     
                      (Cust)                
               (Cust)

under Uniform Gifts to Minors Act    

                            
                                  
  (State)



Additional abbreviations may also be used though not in the above list.



7






 





ASSIGNMENT



     FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto



	 
	

	(Please print or typewrite name and address including

postal zip code of assignee)
	 
	              
                            
                                                        
                           
this Note and all

(Please insert Social Security or other identifying

number of Assignee)

	 
	rights thereunder hereby irrevocably constituting and appointing           ,
Attorney, to transfer this Note
on the books of the Trustee, with full power of substitution in the
premises.
	 
	Dated:              




	 	 	 	 
	 	 	 	


	 	 	 	
Notice: The signature(s) on this

Assignment must correspond with the

name(s) as written upon the face of this

Note in every particular, without

alteration or enlargement or any change
whatsoever.
	 	 	 	 
	 	 	Signature Guaranty:
	 			




[form continues on next page]



8






 





     In connection with any transfer or exchange of any of the Notes evidenced
by this certificate occurring prior to the date that is two years after the
later of the date of original issuance of such Notes and the last date, if any,
on which such Notes were owned by the Company or any Affiliate of the Company,
the undersigned confirms that such Notes are being:


CHECK ONE BOX BELOW:




	 	 	 	 	 
	 	1	
o
	 	acquired for the undersigned’s own account, without transfer; or
	 
	 	2	
o
	 	transferred to the Company; or
	 
	 	3	
o
	 	transferred pursuant to and in compliance with Rule 144A under the
Securities Act of 1933, as amended (the “Securities Act”); or
	 
	 	4	
o
	 	transferred pursuant to an effective registration statement under the
Securities Act; or
	 
	 	5	
o
	 	transferred pursuant to and in compliance with Regulation S under
the Securities Act; or
	 
	 	6	
o
	 	transferred to an institutional “accredited investor” (as defined in
	 	 	 	 	Rule 501(a)(1), (2), (3) or (7) under the Securities Act),
that has furnished to the Trustee a signed letter containing
certain representations and agreements (the form of which
letter appears as Section [    ] of the Indenture; or
	 
	 	7	
o
	 	transferred pursuant to another available exemption
from the registration
requirements of the securities Act of 1933.



Unless one of the boxes is checked, the Trustee will refuse to register any of
the Notes evidenced by this certificate in the name of any person other than
the registered Holder thereof; provided however, that if box (5), (6) or (7) is
checked, the Trustee or the Company may require, prior to registering any such
transfer of the Notes, in their sole discretion, such legal opinions,
certifications and other information as the Trustee or the Company may
reasonably request to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933, such as the exemption provided by
Rule 144 under such Act.



	 	 	 
	 	 	


	
 
Signature Guarantee:	 	
Signature
	 	 	 
	
	 	


	(Signature must be guaranteed)	 	
Signature
	 



9






 



The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
SEC Rule 17d-15.


TO BE COMPLETED BY PURCHASER IF (1) OR (3) ABOVE IS CHECKED.


     The undersigned represents and warrants that it is purchasing this Note
for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a “qualified
institutional buyer” within the meaning of Rule 144A under the Securities Act
of 1933, as amended, and is aware that the sale to it is being made in reliance
on Rule 144A and acknowledges that it has received such information regarding
the Company as the undersigned has requested pursuant to Rule 144A or has
determined not to request such information and that it is aware that the
transferor is relying upon the undersigned’s foregoing representations in order
to claim the exemption from registration provided by Rule 144A.



	 
	

Dated:



10






 



SCHEDULE FOR ENDORSEMENTS ON GLOBAL NOTES



TO REFLECT CHANGES IN PRINCIPAL
AMOUNT1



Schedule A



Changes to Principal Amount of Global Notes




	 
	 	 	Principal Amount of Senior
	 	 	Secured Notes due 2008, initial
	 	 	interest rate 10%, by which this
	 	 	Global Note is to be Reduced or	Remaining Principal
	 	 	Increased, and	 	 	Amount of this	 	 	Notation
	Date	 	Reason for Reduction or Increase	Global Note	 	 	Made By
	
	 	
	
	 	 	










	 	 	1This should be included only if the Note is issued in global form.



11