exv4w3



 



EXHIBIT 4.3


WARRANT AGREEMENT



     This Warrant Agreement (this “Agreement”), dated as of April 17, 2003, is
by and between QuadraMed Corporation, a Delaware corporation (the “Company”),
and The Bank of New York, as warrant agent (the “Warrant Agent”).


Recitals



     A.     The Company has entered into a Purchase Agreement of even date herewith
(the “Purchase Agreement”) with the Purchasers (as defined in the Purchase
Agreement). The Company proposes to issue and sell to the Purchasers, in
accordance with the terms and conditions set forth in the Purchase Agreement,
an aggregate of $71,000,000 in principal amount of its Notes (as defined in the
Purchase Agreement), and warrants (the “Warrants”) evidenced by warrant
certificates (the “Warrant Certificates”) representing the right to purchase up
to 11,303,842 shares of the common stock, par value $0.01 per share (the
“Common Stock”), of the Company, Warrants representing the right to purchase an
additional 2,047,978 shares of Common Stock under certain circumstances
described in the Registration Rights Agreement (as defined in the Purchase
Agreement) and Warrants representing the right of Philadelphia Brokerage
Corporation (“PBC”) to purchase 282,596 shares of Common Stock. The Notes will
be issued under an indenture of even date herewith (the “Indenture”), between
the Company and The Bank of New York, as trustee.


     B.     The Company desires the Warrant Agent to act on behalf of the Company
in connection with the issuance, exchange, exercise and replacement of the
Warrant Certificates, and in this Agreement wishes to set forth, among other
things, the form and provisions of the Warrant Certificates and the terms and
conditions on which they may be issued, exchanged, exercised and replaced.


Agreement



     In consideration of the mutual covenants and agreements contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:


ARTICLE 1

ISSUANCE OF WARRANTS AND EXECUTION AND

DELIVERY OF WARRANT CERTIFICATES




		
	 	     Section 1.1  Issuance of Warrants. Warrant Certificates evidencing
the right, subject to the provisions contained herein and therein, to
purchase an aggregate amount not exceeding 13,634,416 shares of Common
Stock may be executed by the Company and delivered to the Warrant Agent
upon the execution of this Agreement or from time to time thereafter.
Each Warrant Certificate shall evidence one or more Warrants, and each
Warrant shall represent the right, subject to the provisions contained
herein and therein, to purchase one share of Common Stock (each a
“Warrant Share” and collectively, the “Warrant Shares”). The Warrant
Agent shall, upon receipt of Warrant Certificates duly



 






 







		
	 	executed on behalf of the Company, countersign the Warrant
Certificates and shall deliver such Warrant Certificates to or upon the
order of the Company. Initially, the Warrant Agent shall issue Warrant
Certificates representing 11,303,842 Warrants to the Purchasers and a
Warrant Certificate representing 282,596 Warrants to PBC. Subsequent to
such original issuance of the Warrant Certificates and except for (i)
written instructions from the Company to issue Warrant Certificates to
the Purchasers for an additional 2,047,978 Warrants pursuant to the
Purchase Agreement (the “Penalty Warrants”) and (ii) the circumstances
described in the immediately following sentence, the Warrant Agent shall
countersign a Warrant Certificate only if the Warrant Certificate is
issued in exchange or substitution for one or more previously
countersigned Warrant Certificates or in connection with their transfer,
as hereinafter provided or as provided in Section 2.3(c) hereof. In the
event that the Company issues any stock options to management on or
within 90 days after April 16, 2003, or issues any shares of Common Stock
as part of a settlement of any pending lawsuit to which the Company is a
party as of the date hereof, (x) the Company will issue to the Purchasers
additional Warrants to purchase Common Stock in such amount as is
necessary for the percentage of Warrant Shares held by the Purchasers
immediately prior to such issuance (on a fully-exercised basis) to equal
the percentage of Warrant Shares held by the Purchasers immediately after
such issuance (on a fully-exercised basis), and (y) if the Company is
required to issue Penalty Warrants pursuant to the Purchase Agreement,
the number of Penalty Warrants to be issued will be increased by the
number equal to 5% of the sum of (i) the number of additional Warrants
issued under clause (x) hereof, and (ii) such number of stock options
issued within such 90-day period or such number of shares issued in
settlement of any such lawsuit.




		
	 	     Section 1.2  Execution and Delivery of Warrant Certificates.




		
	 	     (a)     Each Warrant Certificate, whenever issued, shall be in
registered form substantially in the form set forth in Exhibit A hereto,
shall be dated the date of its issuance and may have such letters,
numbers or other marks of identification or designation and such legends
or endorsements printed, lithographed or engraved thereon as the officers
of the Company executing the same may approve (execution thereof to be
conclusive evidence of such approval) and as are not inconsistent with
the provisions of this Agreement. The Warrants will be offered and sold
in reliance on Section 4(2) of the Securities Act of 1933, as amended
(the “Securities Act”) or Regulation D promulgated thereunder, and may be
evidenced initially in the form of one or more permanent global Warrants
(each, a “Global Warrant”) evidenced by a Warrant Certificate in
definitive, fully registered form, substantially in the form set forth in
Exhibit A hereto (each, a “Global Warrant Certificate”), deposited with
the Warrant Agent, as custodian for The Depository Trust Company, as
depositary, or any successors or assigns thereof (the “Depositary”) and
registered in the name of a nominee of the Depositary, duly executed by
the Company and countersigned by the Warrant Agent as hereinafter
provided. The aggregate amount of a Global Warrant may from time to time
be increased or decreased by adjustments made on the records of the
Warrant Agent, as custodian for the Depositary or its nominee, as
hereinafter provided. The Warrant Certificates shall be signed on behalf
of the Company by any of its Chief Executive Officer, its President, one
of its Vice Presidents, its Treasurer or one of its Assistant Treasurers
under its corporate seal and attested by its Secretary or one of its
Assistant Secretaries. Such signatures may



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	 	be manual or facsimile signatures of such authorized officers and
may be imprinted or otherwise reproduced on the Warrant Certificates.
The seal of the Company may be in the form of a facsimile thereof and may
be impressed, affixed, imprinted or otherwise reproduced on the Warrant
Certificates.




		
	 	     (b)     No Warrant Certificate shall be valid for any purpose, and no
Warrant evidenced thereby shall be exercisable, until such Warrant
Certificate has been countersigned by the manual signature of the Warrant
Agent. Such signature by the Warrant Agent upon any Warrant Certificate
executed by the Company shall be conclusive evidence that the Warrant
Certificate so countersigned has been duly issued hereunder.




		
	 	     (c)     In case any officer of the Company who has signed any of the
Warrant Certificates either manually or by facsimile signature ceases to
be such officer before the Warrant Certificates so signed have been
countersigned and delivered by the Warrant Agent, such Warrant
Certificates shall be countersigned and delivered with the same effect as
if such person who signed such Warrant Certificates had not ceased to be
such officer of the Company; and any Warrant Certificate may be signed on
behalf of the Company by any person who, at the actual date of the
execution of such Warrant Certificate, is a proper officer of the
Company, although at the date of the execution of this Agreement such
person was not such an officer.




		
	 	     (d)     The term “Warrant Holder” shall mean any person who is a
registered holder of a Warrant Certificate, registered upon the books
maintained by the Warrant Agent with respect to the Warrants.




		
	 	     (e)     Warrant Certificates shall be dated the date of countersignature
by the Warrant Agent.



ARTICLE 2

WARRANT PRICE, DURATION AND EXERCISE OF WARRANTS




		
	 	     Section 2.1  Warrant Price. Each Warrant shall have an exercise
price of $0.01 per share (the “Warrant Price”) of each underlying Warrant
Share. The number of Warrant Shares is subject to adjustment under
certain circumstances as provided in Article 5 hereof.




		
	 	     Section 2.2  Duration of Warrants. Each Warrant may be exercised in
whole at any time on or after the date hereof and at or before 5:00 p.m.
New York time on April      , 2008 (the “Expiration Date”). Each Warrant
not exercised at or before 5:00 p.m. New York time on the Expiration Date
shall become void, and all rights of each Warrant Holder under this
Agreement shall cease.




		
	 	     Section 2.3   Exercise of Warrants.






		
	 	     (a)     During the period specified in Section 2.2 hereof, any whole
number of Warrants may be exercised by providing certain information set
forth on the reverse side of the respective Warrant Certificate and by
paying in full, in lawful money of the United



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	 	States in cash, in each case, in immediately available funds, the
Warrant Price for each Warrant exercised, to the Warrant Agent at The
Bank of New York, Corporate Trust Administration Department, 101 Barclay
Street, Floor 8 West, New York, New York, 10286; provided, however, that
such exercise is subject to receipt by the Warrant Agent, within three
business days of such payment, of the Warrant Certificate with the form
of election to purchase Warrant Shares set forth on the reverse side of
the Warrant Certificate properly completed and duly executed. The later
of the date on which payment in full of the Warrant Price is received by
the Warrant Agent or the date of receipt of the Warrant Certificate as
aforesaid, shall be deemed to be the date on which such Warrant is
exercised (the “Exercise Date”). The Warrant Agent shall deposit all
funds received by it with respect to payment of the Warrant Price in an
account in the name of the Company and shall notify the Company by
telephone at the end of each day on which a payment for the exercise of
Warrants is received of the amount so deposited to its account. The
Warrant Agent shall promptly confirm such telephone notice to the Company
in writing.




		
	 	     (b)     The Warrant Agent shall, as promptly as practicable after the
exercise of any Warrants, advise the Company of (i) the number of
Warrants exercised, (ii) the instructions of each Warrant Holder with
respect to delivery of the Warrant Shares to which such Warrant Holder is
entitled upon such exercise, (iii) delivery of Warrant Certificates
evidencing the balance, if any, of the Warrants remaining after such
exercise and (iv) such other information as the Company shall reasonably
require.




		
	 	     (c)     As soon as practicable after the exercise of any Warrant, the
Company shall issue, in authorized denominations to or upon the order of
the Warrant Holder, certificates evidencing the total number of whole
shares of the Warrant Shares to which such Warrant Holder is entitled in
fully registered form, registered in such name or names as may be
directed by such Warrant Holder; provided that upon any such exercise no
Warrant Holder shall be entitled to sell or transfer its Warrant Shares
at any time unless, at the time of such sale or transfer, (i) a
registration statement under the Securities Act covering the offer and
sale of the Warrant Shares has been filed with, and declared effective
by, the Securities and Exchange Commission (the “SEC”), and no stop order
suspending the effectiveness of such registration statement has been
issued by the SEC or (ii) the offer and sale of the Warrant Shares by the
Warrant Holder are exempt from registration under the Securities Act and
the holder of the Warrants, if so requested by the Company, has delivered
to the Company an opinion of counsel to such effect. Such certificate or
certificates evidencing the Warrant Shares shall be deemed to have been
issued and any persons who are designated to be named therein shall be
deemed to have become the holder of record of such Warrant Shares as of
the close of business on the Exercise Date. In the event a Warrant
represents the right to a fractional Warrant Share as a result of
adjustments under Article 5 hereof, no fractional Warrant Shares shall be
issued upon exercise of any Warrant. If more than one Warrant shall be
presented for exercise in full at the same time by the same Warrant
Holder, the number of full Warrant Shares that shall be issuable upon the
exercise thereof shall be computed on the basis of the aggregate number
of Warrant Shares purchasable on exercise of the Warrants so presented.
For each fractional Warrant Share that would otherwise be issued, the
Company shall pay by Company check in an amount equal to such fraction
multiplied by



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	 	the closing sales price of the Warrant Shares on the principal
national securities exchange on which they are listed or as quoted on an
automated over-the-counter trading market on the business day immediately
preceding the Exercise Date (the “Closing Price”). If fewer than all of
the Warrants evidenced by such Warrant Certificate are exercised, the
Company shall execute, and an authorized officer of the Warrant Agent
shall manually countersign and deliver, a new Warrant Certificate
evidencing the number of such Warrants remaining unexercised.




		
	 	     (d)     In addition to the rights of the Warrant Holder set forth
herein, during the period specified in Section 2.2 hereof, in lieu of
paying the Exercise Price in cash, the Warrant Holder shall have the
right, by delivering to the Warrant Agent a Warrant Certificate with the
form of election to purchase Warrant Shares set forth on the reverse side
of the Warrant Certificate properly completed and duly executed and by
otherwise complying with the terms of this Agreement, to exercise any
Warrant in a cashless exercise for the number of shares of Warrant Shares
determined in accordance with the following formula:




	 	 	 	 	 	 	 	 	 
	 	 	 	 	( M - E )	 	 	 	 
	N	 	=	 	

	 	x
	 	W
	 	 	 	 	M	 	 	 	 



       where:

	 	 	 	 	 	 	 
	 	 	N	 	=	 	the actual number of shares of Warrant Shares to be
issued upon such cashless exercise of the applicable Warrant;
	 	 	 	 	 	 	 
	 	 	
M
	 	=
	 	the Closing Price;
	 	 	 	 	 	 	 
	 	 	
E
	 	=
	 	the Warrant Price; and
	 	 	 	 	 	 	 
	 	 	
W
	 	=
	 	the number of Warrant Shares with respect to which
the Warrant Holder is exercising the applicable Warrant.




		
	 	If there is no listed or quoted price available for the Common Stock of
the Company on any date, the Closing Price shall be determined in good
faith by the Board of Directors of the Company and certified in a board
resolution.




		
	 	     (e)     The Company shall not be required to pay any stamp or other tax
or other governmental charge required to be paid in connection with any
transfer involved in the issue of the Warrant Shares; and in the event
that any such transfer is involved, the Company shall not be required to
issue or deliver any Warrant Shares until such tax or other charge shall
have been paid or it has been established to the Company’s satisfaction
that no such tax or other charge is due.




		
	 	     Section 2.4  Legends.




		
	 	     (a)     Except as provided in Section 4.5 hereof, each Warrant
Certificate, and each Warrant Share issued upon exercise of the Warrants,
shall bear a legend (the “Private Placement Legend”) in substantially the
following form:



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	 	 	 	“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”).”






	 	 	(b)     	The Global Warrant Certificate shall also bear the following
legend:




	 	 	 	UNLESS THIS WARRANT IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (THE
“DEPOSITARY”) TO THE COMPANY OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY WARRANT ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR TO SUCH OTHER ENTITY
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITARY OR SUCH OTHER REPRESENTATIVE OF THE DEPOSITARY OR
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITARY (AND ANY PAYMENT HEREON IS
MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
	 
	 	 	 	TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE &
CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE
AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN ARTICLE 4 OF THE WARRANT
AGREEMENT.



ARTICLE 3

OTHER PROVISIONS RELATING TO

RIGHTS OF HOLDERS OF WARRANT CERTIFICATES



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	 	     Section 3.1  No Rights as Warrant Security Holder Conferred by
Warrants or Warrant Certificates. No Warrant Certificate or Warrant
evidenced thereby shall entitle a Warrant Holder to any of the rights of
a holder of Warrant Shares, either at law or equity, and the rights of
each Warrant Holder are limited to those rights expressly provided in
this Agreement and in the Warrant Certificates.




		
	 	     Section 3.2  Lost, Stolen, Mutilated or Destroyed Warrant
Certificates. Upon receipt by the Warrant Agent of evidence reasonably
satisfactory to it from a Warrant Holder of the ownership of and the
loss, theft, destruction or mutilation of any Warrant Certificate and of
indemnity reasonably satisfactory to the Warrant Agent, and, in the case
of mutilation, upon surrender of such Warrant Certificate to the Warrant
Agent for cancellation, then, in the absence of notice to the Company or
the Warrant Agent that such Warrant Certificate has been acquired by a
bona fide purchaser, the Company shall execute, and an authorized officer
of the Warrant Agent shall manually countersign and deliver, in exchange
for or in lieu of the lost, stolen, destroyed or mutilated Warrant
Certificate, a new Warrant Certificate of the same tenor and evidencing a
like number of Warrants. Upon the issuance of any new Warrant
Certificate under this Section 3.2, the Company may require the payment
of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses (including the
fees and expenses of the Warrant Agent) in connection therewith. The
provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the
replacement of mutilated, lost, stolen or destroyed Warrant Certificates.



ARTICLE 4

EXCHANGE AND TRANSFER OF WARRANT CERTIFICATES




		
	 	     Section 4.1  Exchange and Transfer of Warrant Certificates. A
Warrant Holder may sell, assign, pledge or otherwise transfer its Warrant
Certificate or Warrants evidenced thereby, in whole or in part, upon
effective registration of the Warrant Shares underlying such Warrants or
upon receipt by the Company of an opinion of counsel that such transfer
may be effected pursuant to an applicable exemption. Warrant
Certificates evidencing Warrants may be exchanged for Warrant
Certificates in other denominations evidencing such Warrants or the
transfer thereof may be registered in whole or in part; provided,
however, that such other Warrant Certificates evidence the same aggregate
number of Warrants as the Warrant Certificates so surrendered. Whenever
any Warrant Certificates are so surrendered for exchange or registration
of transfer an authorized officer of the Warrant Agent shall manually
countersign and deliver to the person or persons entitled thereto a
Warrant Certificate or Warrant Certificates duly authorized and executed
by the Company, as so requested. The Warrant Agent shall not be required
to effect any exchange or registration of transfer that will result in
the issuance of a Warrant Certificate evidencing a fraction of a Warrant.
All Warrant Certificates issued upon any exchange or registration of
transfer of Warrant Certificates shall be the valid obligations of the
Company, evidencing the same obligations, and entitled to the same
benefits under this Agreement, as the Warrant Certificates surrendered
for such exchange or registration of transfer. No service charge shall
be made for any transfer or exchange of Warrant Certificates or any
issuance of Warrant Certificates in connection with a separation from



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	 	the Notes, but the Company may require payment of a sum sufficient
to cover any stamp or other governmental charge or tax that may be
imposed in connection with any such transfer or exchange.




		
	 	     Section 4.2  Books and Records. The Warrant Agent shall keep at its
corporate trust office books in which, subject to such reasonable
regulations as it may prescribe, it shall register Warrant Certificates
and exchanges and transfers of outstanding Warrant Certificates, upon
surrender of the Warrant Certificates to the Warrant Agent at its
corporate trust office for exchange or registration of transfer, properly
endorsed or accompanied by appropriate instruments of registration of
transfer and written instructions for transfer, all in form satisfactory
to the Company and the Warrant Agent. No service charge shall be made
for any exchange or registration of transfer of Warrant Certificates but
the Company may require payment of a sum sufficient to cover any stamp or
other tax or other governmental charge that may be imposed in connection
with any such exchange or registration of transfer.




		
	 	     Section 4.3  Treatment of Holders of Warrant Certificates. Every
holder of a Warrant Certificate, by accepting the same, consents and
agrees with the Company, the Warrant Agent and with every subsequent
holder of such Warrant Certificate that until the transfer of the Warrant
Certificate is registered on the books of the Warrant Agent, the Company
and the Warrant Agent may treat the registered holder as the absolute
owner thereof for any purpose and as the person entitled to exercise the
rights represented by the Warrants evidenced thereby, any notice to the
contrary notwithstanding.




		
	 	     Section 4.4  Cancellation of Warrant Certificates. Any Warrant
Certificate surrendered for exchange, transfer or exercise of the
Warrants evidenced thereby shall, if surrendered to the Company, be
delivered to the Warrant Agent and all Warrant Certificates surrendered
or so delivered to the Warrant Agent shall be promptly cancelled by the
Warrant Agent and shall not be reissued and, except as expressly
permitted by this Agreement, no Warrant Certificate shall be issued
hereunder in exchange or in lieu thereof. The Warrant Agent shall
deliver to the Company from time to time or otherwise dispose of
cancelled Warrant Certificates in a manner satisfactory to the Company.




		
	 	     Section 4.5  Book-Entry Provisions for Global Warrants.




		
	 	     (a)     The Global Warrant Certificate initially shall (i) be registered
in the name of the Depositary or the nominee of such Depositary, (ii) be
delivered to the Warrant Agent as custodian for the Depositary and (iii)
bear legends as set forth in Sections 2.4(a) and (b) hereof.




		
	 	     (b)     Transfers of the Global Warrant Certificate shall be limited to
transfers of such Global Warrant Certificate in whole, but not in part,
to the Depositary, its successors or their respective nominees.
Beneficial interests in the Global Warrant may be transferred in
accordance with the applicable rules and procedures of the Depositary.
In addition, physical warrants in substantially the form set forth in
Exhibit A hereto (“Physical Warrant Certificates”), evidencing physical
warrants (the “Physical Warrants”), shall be transferred to all
beneficial owners in exchange for their beneficial



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	 	interests in the Global Warrant if (i) the Depositary notifies the
Company that it is unwilling or unable to continue as, or ceases to be, a
“Clearing Agency” registered under Section 17A of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), and a successor depositary
registered as a “Clearing Agency” under Section 17 of the Exchange Act is
not appointed by the Company within 90 days of such notice or (ii) an
Event of Default (as defined in the Indenture) has occurred and is
continuing and the Warrant Agent has received a request from the
Depositary.




		
	 	     (c)     In connection with any transfer of a beneficial interest in any
Global Warrant to a transferee receiving Physical Warrants pursuant to
Section 4.5(b) hereof, the Warrant Agent shall reflect on its books and
records the date and a decrease in the aggregate amount of such Global
Warrant in an amount equal to the aggregate amount of the beneficial
interest in such Global Warrant to be transferred, and the Company shall
execute, and the Warrant Agent shall countersign and deliver, one or more
Physical Warrant Certificates of like tenor and amount.




		
	 	     (d)     In connection with the transfer of an entire Global Warrant to
beneficial owners pursuant to Section 4.5(b) hereof, such Global Warrant
shall be deemed to be surrendered to the Warrant Agent for cancellation,
and the Company shall execute, and the Warrant Agent shall countersign
and deliver, to each beneficial owner identified by the Depositary in
exchange for its beneficial interest in such Global Warrant, an equal
aggregate amount of Physical Warrant Certificates of authorized
denominations.




		
	 	     (e)     Any Physical Warrant Certificates delivered in exchange for an
interest in the Global Warrant pursuant to Sections 4.5(b), (c) or (d)
hereof shall, except as otherwise provided by Section 4.6(c) hereof, bear
the legends regarding transfer restrictions applicable to the Physical
Warrant set forth in Sections 2.4(a) and (b) hereof.




		
	 	     (f)     
The registered holder of a Global Warrant may grant proxies and
otherwise authorize any person, including Agent Members (as defined in
certain regulations of the Depositary) and persons that may hold
interests through Agent Members, to take any action that a Warrant holder
is entitled to take under this Agreement or the Warrants.




		
	 	     Section 4.6  Special Transfer Provisions.




		
	 	     (a)     Transfers to QIBs. If the Warrant to be transferred consists of
Physical Warrants, the Warrant Agent shall register the transfer if such
transfer is being made by a proposed transferor who has checked the box
provided for on the form of Warrant stating, or has otherwise advised the
Company and the Warrant Agent in writing, that the sale has been made in
compliance with the provisions of Rule 144A to a transferee who has
signed the certification provided for on the form of Warrant stating, or
has otherwise advised the Company and the Warrant Agent in writing, that
it is purchasing the Warrant 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 QIB within the meaning of Rule 144A, 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 it has requested pursuant



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	 	to Rule 144A or has determined not to request such information and
that it is aware that the transferor is relying upon its foregoing
representations in order to claim the exemption from registration
provided by Rule 144A.




		
	 	     (b)     Private Placement Legend. Upon the transfer, exchange or
replacement of Warrant Certificates not bearing the Private Placement
Legend, the Warrant Agent shall deliver Warrant Certificates that do not
bear the Private Placement Legend. Upon the transfer, exchange or
replacement of Warrant Certificates bearing the Private Placement Legend,
the Warrant Agent shall deliver only Warrant Certificates that bear the
Private Placement Legend unless there is delivered to the Warrant Agent
an opinion of counsel reasonably satisfactory to the Company and the
Warrant Agent to the effect that neither such legend nor the related
restrictions on transfer are required in order to maintain compliance
with the provisions of the Securities Act.




		
	 	     (c)     General. The provisions hereof shall be qualified in their
entirety by any applicable securities laws of the United States and any
other applicable jurisdiction and by the procedures of any applicable
clearing agency, in each case as in effect from time to time, and all
such laws and clearing procedures shall be deemed to be incorporated
herein by reference. By its acceptance of any Warrant Certificate
bearing the Private Placement Legend, each holder of such a Warrant
Certificate shall be deemed to acknowledge the restrictions on transfer
of such Warrant Certificate set forth in this Agreement and in the
Private Placement Legend and agrees that it will transfer such Warrant
Certificate only as provided in this Agreement. The Warrant Agent shall
not register a transfer of any Warrant Certificate unless such transfer
complies with the restrictions on transfer of such Warrant Certificate
set forth in this Agreement. In connection with any transfer of Warrant
Certificates, each Warrant Holder agrees by its acceptance of the Warrant
Certificates to furnish the Warrant Agent or the Company such
certifications, legal opinions or other information as either of them may
reasonably require to confirm that such transfer is being made pursuant
to an exemption from, or a transaction not subject to, the registration
requirements of the Securities Act; provided that the Warrant Agent shall
not be required to determine (but may rely on a determination made by the
Company with respect to) the sufficiency of any such certifications,
legal opinions or other information.



ARTICLE 5

ADJUSTMENTS




		
	 	     Section 5.1  Consolidation, Merger or Sale of Assets.  In the event
the Company consolidates with, merges with or into, or sells all or
substantially all of its property and assets to another entity, and in
connection therewith, consideration to the holders of shares of Common
Stock in exchange for their shares is (a) not payable solely in cash,
each Warrant thereafter shall entitle the holder thereof to receive (upon
exercise of the Warrant) the number of shares of capital stock or other
securities or property that the holder of any shares of Common Stock is
entitled to receive upon completion of such consolidation, merger or sale
of assets (the “Merger Consideration”) or (b) payable solely in cash
(“Cash Payment”), or in the event of the dissolution, liquidation or
winding-up of the Company, then the holders of the Warrants shall receive
distributions on an equal



10






 





		
	 	basis with the holders of shares of Common Stock or other securities
issuable upon exercise of the Warrants, as if the Warrants had been
exercised immediately prior to such event, less the Warrant Price. Upon
receipt of the Merger Consideration or Cash Payment, if any, the Warrants
will expire and the rights of the holders thereof will cease.




		
	 	     In the event a Warrant Holder is entitled, pursuant to the
provisions of this Section 5.1, to receive the Merger Consideration or a
Cash Payment as a result of any consolidation, merger or sale of assets,
the surviving or acquiring entity, and in the event of any dissolution,
liquidation or winding-up of the Company, the Company, shall deposit
promptly with the Warrant Agent the Merger Consideration, Cash Payment or
funds, as the case may be, necessary to pay the holders of the Warrants.
After such Merger Consideration, Cash Payment or funds, as the case may
be, and the surrendered Warrant Certificates are received, the Warrant
Agent shall make appropriate distribution of the Merger Consideration,
Cash Payment or funds, as the case may be, to such person or persons as
it may be directed in writing by the holders surrendering such Warrants.




		
	 	     Section 5.2  Reclassification. If the Company at any time shall, by
subdivision, combination or reclassification of securities or otherwise,
change any of the Warrant Shares into the same or a different number of
securities of any other class or classes, this Agreement shall thereafter
represent the right to acquire such number and kind of securities as
would have been issuable as the result of such change with respect to the
Warrant Shares that were subject to the subdivision, combination,
reclassification or other change.




		
	 	     Section 5.3  Split, Subdivision or Combination of Shares. If the
Company at any time shall split or subdivide the applicable Warrant
Shares, the Warrant Price shall be proportionately decreased and the
number of shares issuable pursuant to this Agreement shall be
proportionately increased. If the Company at any time shall combine or
reverse split the applicable Warrant Shares, the Warrant Price shall be
proportionately increased and the number of shares issuable pursuant to
this Agreement shall be proportionately decreased.




		
	 	     Section 5.4  Stock Dividends.  If the Company at any time shall pay a
dividend payable in Common Stock, then the Warrant Price shall be
adjusted, from and after the date of determination of stockholders
entitled to receive such dividend, to that price determined by
multiplying the Warrant Price in effect immediately prior to such date of
determination by a fraction (a) the numerator of which shall be the total
number of shares of Common Stock outstanding immediately prior to such
dividend and (b) the denominator of which shall be the total number of
shares of Common Stock outstanding immediately after such dividend. The
Warrant Holder shall thereafter be entitled to purchase, at the Warrant
Price resulting from such adjustment, the number of shares of the
applicable Warrant Shares (calculated to the nearest whole share)
obtained by multiplying (x) the Warrant Price in effect immediately prior
to such adjustment by (y) the number of shares of the applicable Warrant
Shares issuable upon the exercise hereof immediately prior to such
adjustment and dividing the product thereof by the Warrant Price
resulting from such adjustment.



11






 





		
	 	     Section 5.5  Reservation of Warrant Shares.  The Company shall at all
times reserve and keep available, free of preemptive rights and free from
all taxes, liens, charges and security interests with respect to the
issuance thereof, out of the aggregate of its authorized but unissued
Common Stock, for the purpose of enabling it to satisfy any obligation to
issue Warrant Shares upon the exercise of Warrants, the maximum number of
shares of Common Stock that may then be deliverable upon the exercise of
all outstanding Warrants.




		
	 	     The Company or the transfer agent for the Common Stock (the
“Transfer Agent”) and every subsequent transfer agent for any shares of
the Company’s capital stock issuable upon the exercise of any of the
rights of purchase aforesaid will be irrevocably authorized and directed
at all times to reserve such number of authorized shares as shall be
required for such purpose. The Company shall keep a copy of this
Agreement on file with the Transfer Agent and with every subsequent
transfer agent for any shares of the Company’s capital stock issuable
upon the exercise of the rights of purchase represented by the Warrants.
The Warrant Agent is hereby irrevocably authorized to requisition from
time to time from such Transfer Agent the stock certificates required to
honor outstanding Warrants upon exercise thereof in accordance with the
terms of this Agreement. The Company will supply such Transfer Agent
with duly executed certificates for such purposes and will provide or
otherwise make available to the Warrant Agent any cash that may be
payable as provided in Section 2.3(c) hereof. The Company shall furnish
such Transfer Agent a copy of all notices of adjustments and certificates
related thereto transmitted to each holder pursuant to Article 5 hereof.




		
	 	     The Company covenants that all Warrant Shares that may be issued
upon exercise of Warrants will be, upon payment of the Exercise Price and
issuance thereof, duly and validly issued, fully paid, nonassessable,
free of preemptive rights and free from all taxes, liens, charges and
security interests with respect to the issuance thereof.




		
	 	     Section 5.6  Obtaining Stock Exchange Listings. The Company shall
from time to time take all action necessary so that the Warrant Shares,
immediately upon their issuance upon the exercise of Warrants, will be
listed on the principal securities exchanges, interdealer quotation
systems and markets, if any, on which any shares of Common Stock are then
listed or quoted.



ARTICLE 6

THE WARRANT AGENT




		
	 	     Section 6.1  Warrant Agent.  The Company hereby appoints The Bank of
New York, as Warrant Agent of the Company in respect of the Warrants and
the Warrant Certificates, upon the terms and subject to the conditions
herein set forth; and The Bank of New York hereby accepts such
appointment. The Warrant Agent shall have the powers and authority
granted to and conferred upon it in this Agreement and in the Warrant
Certificates and such further powers and authority to act on behalf of
the Company as the Company may hereafter grant to or confer upon it. All
of the terms and provisions with respect to such powers and authority
contained in the Warrant Certificates are subject to and governed by the
terms and provisions hereof.



12






 





		
	 	     Section 6.2  Conditions of Warrant Agent’s Obligations. The Warrant
Agent hereby accepts and agrees to its obligations set forth herein upon
the terms and conditions hereof, including, without limitation, each of
the following, by all of which the Company and each Warrant Holder, by
acceptance of its respective Warrants, shall be bound:




		
	 	     (a)     The Company agrees to promptly pay the Warrant Agent the
compensation to be agreed upon with the Company for all services rendered
by the Warrant Agent and to reimburse the Warrant Agent for reasonable
out-of-pocket expenses (including attorneys’ fees) incurred by the
Warrant Agent in connection with the services rendered hereunder by the
Warrant Agent. The Company also agrees to indemnify the Warrant Agent
for, and to hold it harmless against, any loss, liability, claim, damage
or expense incurred, without negligence or willful misconduct on the part
of the Warrant Agent, arising out of or in connection with its acting as
Warrant Agent hereunder, as well as the costs and expenses of defending
against any claim of such liability.




		
	 	     (b)     In acting under this Agreement and in connection with the
Warrant Certificates, the Warrant Agent is acting solely as agent of the
Company and does not assume any obligation, fiduciary or otherwise, or
relationship of agency or trust for or with any of the Warrant Holders or
beneficial owners of Warrants.




		
	 	     (c)     The Warrant Agent may consult at any time with counsel
satisfactory to it and the Warrant Agent shall incur no liability to the
Company or any Warrant Holder, in respect of any action taken in good
faith reliance on the advice of such counsel; provided, however, that the
Warrant Agent shall have exercised reasonable care in the selection and
continued employment of such counsel.




		
	 	     (d)     The Warrant Agent shall incur no liability for or in respect of
any action taken by it in reliance upon any Warrant Certificate, notice,
direction, consent, certificate, affidavit, statement or other paper or
document (whether in original or facsimile form) reasonably believed by
it to be genuine and to have been presented or signed by the proper party
or parties.




		
	 	     (e)     The Warrant Agent, and its officers, directors and employees,
may become the owners of, or acquire an interest in, the Warrants, with
the same rights that it or they would have if it were not the Warrant
Agent hereunder, and, to the extent permitted by applicable law, it or
they may engage or be interested in any financial or other transaction
with the Company and may act on, or as depositary, trustee or agent for,
any committee or body of Warrant Holders or holders of other obligations
of the Company as freely as if it were not the Warrant Agent hereunder.




		
	 	     (f)     The Warrant Agent shall have no liability for interest on any
monies at any time received by it pursuant to any of the provisions of
this Agreement or of the Warrant Certificates.
	 
	 	     (g)     The Warrant Agent shall have no liability with respect to any
invalidity of this Agreement or any of the Warrant Certificates.



13






 





		
	 	     (h)     The Warrant Agent shall not be responsible for any of the
recitals or representations contained herein or in the Warrant
Certificates (except as to the Warrant Agent’s countersignature thereon),
all of which are made solely by the Company.




		
	 	     (i)     The Warrant Agent shall be obligated to perform only such duties
as are specifically set forth herein and in the Warrant Certificates, and
no implied duties or obligations shall be read into this Agreement or the
Warrant Certificates against the Warrant Agent. The Warrant Agent shall
not be under any obligation to take any action hereunder that may tend to
involve it in any expense or liability, the payment of which within a
reasonable time is not, in its reasonable opinion, assured. The Warrant
Agent shall not be accountable or under any duty or responsibility for
the use by the Company of any of the Warrant Certificates authenticated
by the Warrant Agent and delivered by it to the Company pursuant to this
Agreement or for the application by the Company of the proceeds of the
Warrant Certificates. The Warrant Agent shall have no duty or
responsibility in case of any default by the Company in the performance
of its covenants or agreements contained herein or in the Warrant
Certificates or in the case of the receipt of any written demand from a
holder of a Warrant Certificate with respect to such default, including,
without limiting the generality of the foregoing, any duty or
responsibility to initiate or attempt to initiate any proceedings at law
or otherwise or, except as provided in Section 6.2 hereof, to make any
demand upon the Company.




		
	 	     Section 6.3  Resignation and Appointment of Successor.




		
	 	     (a)     The Company agrees, for the benefit of the Warrant Holders, that
there shall at all times be a Warrant Agent hereunder until all the
Warrant Certificates are no longer exercisable.




		
	 	     (b)     The Warrant Agent may at any time resign as such agent by giving
written notice to the Company of such intention on its part, specifying
the date on which its resignation shall become effective; provided,
however, that such date shall not be less than three months after the
date on which such notice is given unless the Company otherwise agrees.
The Warrant Agent hereunder may be removed at any time by the filing with
it of an instrument in writing signed by or on behalf of the Company and
specifying such removal and the date when it shall become effective.
Such resignation or removal shall take effect upon the appointment by the
Company, as hereinafter provided, of a successor Warrant Agent (that
shall be a bank or trust company authorized under the laws of the
jurisdiction of its organization to exercise corporate trust powers) and
the acceptance of such appointment by such successor Warrant Agent. The
obligation of the Company under Section 6.3(a) hereof shall continue to
the extent set forth therein notwithstanding the resignation or removal
of the Warrant Agent.




		
	 	     (c)     In case at any time the Warrant Agent shall resign, or shall be
removed, or shall become incapable of acting, or shall be adjudged a
bankrupt or insolvent, or shall file a petition seeking relief under the
Federal Bankruptcy Code, as now constituted or hereafter amended, or
under any other applicable federal or state bankruptcy law or similar law
or make an assignment for the benefit of its creditors or consent to the
appointment of a receiver or custodian of all or any substantial part of
its property, or



14






 





		
	 	shall admit in writing its inability to pay or meet its debts as
they mature, or if a receiver or custodian of it or of all or any
substantial part of its property shall be appointed, or if an order of
any court shall be entered for relief against it under the provisions of
the Federal Bankruptcy Code, as now constituted or hereafter amended, or
under any other applicable federal or state bankruptcy or similar law, or
if any public officer shall have taken charge or control of the Warrant
Agent or of its property or affairs, for the purpose of rehabilitation,
conservation or liquidation, a successor Warrant Agent, qualified as
aforesaid, shall be appointed by the Company by an instrument in writing,
filed with the successor Warrant Agent. Upon the appointment as
aforesaid of a successor Warrant Agent and acceptance by the successor
Warrant Agent of such appointment, the Warrant Agent shall cease to be
Warrant Agent hereunder.




		
	 	     (d)     Any successor Warrant Agent appointed hereunder shall execute,
acknowledge and deliver to its predecessor and to the Company an
instrument accepting such appointment hereunder, and thereupon such
successor Warrant Agent, without any further act, deed or conveyance,
shall become vested with all the authority, rights, powers, trusts,
immunities, duties and obligations of such predecessor with like effect
as if originally named as Warrant Agent hereunder, and such predecessor,
upon payment of its charges and disbursements then unpaid, shall
thereupon become obligated to transfer, deliver and pay over, and such
successor Warrant Agent shall be entitled to receive, all monies,
securities and other property on deposit with or held by such
predecessor, as Warrant Agent hereunder.




		
	 	     (e)     Any corporation into which the Warrant Agent hereunder may be
merged or converted or any corporation with which the Warrant Agent may
be consolidated, or any corporation resulting from any merger, conversion
or consolidation to which the Warrant Agent shall be a party, or any
corporation to which the Warrant Agent shall sell or otherwise transfer
all or substantially all of its corporate trust assets and business of
the Warrant Agent, provided that it shall be qualified as aforesaid,
shall be the successor Warrant Agent under this Agreement without the
execution or filing of any paper or any further act on the part of any of
the parties hereto. In case at the time such successor to the Warrant
Agent shall succeed to the agency created by this Agreement, and in case
at that time any of the Warrant Certificates shall have been
countersigned but not delivered, any such successor to the Warrant Agent
may adopt the countersignature of the original Warrant Agent; and in case
at that time any of the Warrant Certificates shall not have been
countersigned, any successor to the Warrant Agent may countersign such
Warrant Certificates either in the name of the predecessor Warrant Agent
or in the name of the successor to the Warrant Agent; and in all such
cases such Warrant Certificates shall have the full force and effect
provided in the Warrant Certificates and in this Agreement.




		
	 	     In case at any time the name of the Warrant Agent shall be changed
and at such time any of the Warrant Certificates shall have been
countersigned but not delivered, the Warrant Agent whose name has been
changed may adopt the countersignature under its prior name, and in case
at that time any of the Warrant Certificates shall not have been
countersigned, the Warrant Agent may countersign such Warrant
Certificates either in its prior name or in its changed name, and in all
such cases such Warrant Certificates shall have the full force and effect
provided in the Warrant Certificates and in this Agreement.



15






 






ARTICLE 7

MISCELLANEOUS




		
	 	     Section 7.1     Amendment.  This Agreement may be amended by the parties
hereto, without the consent of any Warrant Holder, for the purpose of
curing any ambiguity, or of curing, correcting or supplementing any
defective or inconsistent provision contained herein, or making any other
provisions with respect to matters or questions arising under this
Agreement as the Company and the Warrant Agent may deem necessary or
desirable; provided, however, that such action shall not materially and
adversely affect the interests of the Warrant Holders. With the consent
of the Warrant Holders holding not less than a majority in number of the
then outstanding unexercised Warrants affected, the Company and the
Warrant Agent may modify or amend any other term of this Agreement;
provided, however, that no such modification or amendment may be made
without the consent of the Warrant Holders affected thereby if such
proposed amendment would (a) shorten the period of time during which the
Warrants may be exercised, (b) otherwise materially and adversely affect
the exercise rights of the Warrant Holders or (c) reduce the number of
outstanding Warrants.
	 
	 	     Section 7.2     Notices and Demands to the Company and Warrant Agent. If
the Warrant Agent shall receive any notice or demand addressed to the
Company by a Warrant Holder pursuant to the provisions of the Warrant
Certificates, the Warrant Agent shall promptly forward such notice or
demand to the Company.




		
	 	     Section 7.3     Addresses.  Any communication from the Company to the
Warrant Agent with respect to this Agreement shall be addressed to The
Bank of New York, Corporate Trust Administration Department, 101 Barclay
Street, Floor 8 West, New York, New York, 10286, and any communication
from the Warrant Agent to the Company with respect to this Agreement
shall be addressed to QuadraMed Corporation, 12110 Sunset Hills Road,
Reston, Virginia 20190, Attention: General Counsel (or such other address
as shall be specified in writing by the Warrant Agent or by the Company).




		
	 	     Section 7.4     Applicable Law.  The validity, interpretation and
performance of this Agreement and each Warrant Certificate issued
hereunder and of the respective terms and provisions thereof shall be
governed by and construed in accordance with, the laws of the State of
New York, without giving effect to the conflict of laws principles
thereof.




		
	 	     Section 7.5     Persons Having Rights under Agreement.  Nothing in this
Agreement shall give to any person other than the Company, the Warrant
Agent and the Warrant Holders any right, remedy or claim under or by
reason of this Agreement.




		
	 	     Section 7.6     Headings.  The descriptive headings of the several
Articles and Sections of this Agreement are inserted for convenience only
and shall not control or affect the meaning or construction of any of the
provisions hereof.




		
	 	     Section 7.7     Counterparts.  This Agreement may be executed in any
number of counterparts, each of which as so executed shall be deemed to
be an original, and which shall together constitute but one and the same
instrument.



16






 





		
	 	     Section 7.8     Inspection of Agreement.  A copy of this Agreement shall
be available at all reasonable times at the principal corporate trust
office of the Warrant Agent for inspection by any Warrant Holder. The
Warrant Agent may require a Warrant Holder to submit its Warrant
Certificate for inspection prior to providing such Warrant Holder with a
copy of this Agreement for inspection.



[Signature Page Follows]



17






 






		
	 	     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and all as of the day and year first above written.




	 	 	 	 	 
	 	 	QUADRAMED CORPORATION
	 	 	 	 	 
	 	 	By:	 	 
	 	 	 	

	 	 	 	Name:	 
	 	 	 	 	


	 	 	 	Title:	 
	 	 	 	 	







	 	 	 	 	 
	 	 	THE BANK OF NEW YORK
	 	 	 	 	 
	 	 	By:	 	 
	 	 	 	

	 	 	 	Name:	 
	 	 	 	 	


	 	 	 	Title:	 
	 	 	 	 	





18






 



Exhibit A


(FORM OF WARRANT CERTIFICATE)

[Face of Warrant Certificate]



Exercisable Only if Countersigned by the Warrant Agent as Provided Herein



QUADRAMED CORPORATION

WARRANTS TO PURCHASE

SHARES OF COMMON STOCK, PAR VALUE $0.01 PER SHARE



Void After 5:00 p.m. New York Time on April 17, 2008




	 	 	 
	[No.      ]	 	
Warrants



          This certifies that [               ]
or its registered assigns is the registered
owner of the above indicated number of Warrants, each Warrant entitling such
owner to purchase, at any time after issuance, and on or before 5:00 p.m. New
York time on April 17, 2008, one share of common stock, par value $0.01 per
share (the “Warrant Shares”), of QuadraMed Corporation, a Delaware corporation
(the “Company”) to be issued for the exercise price of $0.01 per share (the
“Warrant Price”) for each Warrant.



          This Warrant Certificate is issued under and in accordance with the
Warrant Agreement dated as of April 17, 2003, (the “Warrant Agreement”) by and
between the Company and The Bank of New York (the “Warrant Agent”) and is
subject to the terms and provisions contained in the Warrant Agreement, to all
of which terms and provisions the holder of this Warrant Certificate consents
by acceptance hereof. Copies of the Warrant Agreement are on file at the
above-mentioned office of the Warrant Agent.



          The holder hereof may exercise the Warrants evidenced hereby by (a)
providing certain information set forth on the back hereof (b) (i) paying in
full, in lawful money of the United States in cash, in each case, in
immediately available funds, the Warrant Price for each Warrant exercised to
the Warrant Agent or (ii) a cashless exercise using the formula set forth in
Section 2.3(d) of the Warrant Agreement and (c) by surrendering this Warrant
Certificate, with the purchase form on the back hereof duly executed, at the
corporate trust office of Warrant Agent, or its successors as warrant agent,
currently at the address specified on the reverse hereof, and upon compliance
with and subject to the conditions set forth herein and in the Warrant
Agreement.



          Any whole number of Warrants evidenced by this Warrant Certificate may be
exercised to purchase Warrant Shares in registered form. Upon any exercise of
fewer than all of the Warrants evidenced by this Warrant Certificate, there
shall be issued to the holder hereof a new Warrant Certificate evidencing the
number of Warrants remaining unexercised. The Company shall not be required to
issue fractional shares of Warrant Shares upon exercise of the Warrants or
distribute stock certificates that evidence fractional shares of Warrant
Shares. In lieu of fractional Warrant Shares, the Company shall pay to the
registered holder of this Warrant Certificate at the time such Warrant
Certificate is exercised an amount by company check as determined in accordance
with Section 2.3(c) of the Warrant Agreement.

 






 





          Transfer of this Warrant Certificate may be registered when this Warrant
Certificate is surrendered at the corporate trust office of the Warrant Agent
by the registered owner or its assigns, in person or by an attorney duly
authorized in writing, in the manner and subject to the limitations provided in
the Warrant Agreement.



          After countersignature by the Warrant Agent and prior to the expiration of
this Warrant Certificate, this Warrant Certificate may be exchanged at the
corporate trust office of the Warrant Agent for Warrant Shares representing the
same aggregate number of Warrants.



          This Warrant Certificate shall not entitle the holder hereof to any of the
rights of a holder of Warrant Shares.



          This Warrant Certificate shall not be valid or obligatory for any purpose
until countersigned by the Warrant Agent.



Dated as of




	 	 	 	 	 
	 	 	
QUADRAMED CORPORATION
	 	 	 
	 	 	
By:
	 	 	 	



	 	 	 	 	
Name:

Title:



Attest:










	 	 	 	 	 
	 	 	
THE BANK OF NEW YORK,

as warrant agent
	 	 	 
	 	 	
By:
	 	 	 	


	 	 	 	 	
Name:

Title:



 






 



[Reverse of Warrant Certificate]



[Legend to be included on Global Warrant Certificate]



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



          TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE,
BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
ARTICLE 4 OF THE WARRANT AGREEMENT.



[Private Placement Legend]



          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”).”



Instructions for Exercise of Warrant



          To exercise the Warrants evidenced hereby, the holder must pay in cash, in
immediately available funds, the Warrant Price in full for Warrants exercised
to The Bank of New York

 






 





corporate trust department [address of Warrant Agent], Attn: [             ],
which payment must specify the name of the holder and the number of Warrants
exercised by such holder, or the Warrant Holder may exercise the Warrants by
cashless exercise as set forth in Section 2.3(d) of the Warrant Agreement. In
addition, the holder must complete the information required below and present
this Warrant Certificate in person or by mail (registered mail is recommended)
to the Warrant Agent at the addresses set forth below. This Warrant
Certificate, completed and duly executed, must be received by the Warrant Agent
within three business days of the payment.


To Be Executed Upon Exercise of Warrant



          The undersigned hereby irrevocably:



          [check applicable box]



          [  ] elects to exercise Warrants evidenced by this Warrant Certificate, to
purchase          Warrant Shares and represents that the undersigned has
tendered payment for such Warrant Shares in cash, in each case, in immediately
available funds, to the order of QuadraMed Corporation, c/o [name and address
of Warrant Agent], in the amount of [$       ] in accordance with the
terms hereof.



          [  ] elects to exercise Warrants evidenced by this Warrant Certificate in
a cashless exercise for the number of shares of Warrant Shares determined by
using the formula set forth in Section 2.3(d) of the Warrant Agreement.



          The undersigned requests that said Warrant Shares be in fully registered
form, registered in such names and delivered as follows:




	 	Name:

Address:




          If the number of Warrants exercised is less than all of the Warrants
evidenced hereby, the undersigned requests that a new Warrant Certificate
representing the remaining Warrants evidenced hereby be issued and delivered as
follows:




	 	Name:

Address:




          The undersigned represents that the Warrant Shares are being acquired for
the account of the undersigned (or its designee) for investment and not with a
view to, or for resale in connection with, the distribution thereof and that
the undersigned (or its designee) has no present intention of distributing or
reselling such Warrant Shares.




	 	 	 
	Dated:	 	 
	 	 	 
	Signature:	 	 
	 	

	 



 






 


	 	 	 
	Name:	 	 
	 	
(Please Print)	 



EIN or Social Security Number of Holder



The Warrants evidenced hereby may be exercised at the following addresses:


By hand at: [insert Warrant Agent’s street address]


By mail at: [insert Warrant Agent’s mailing address]


 






 


Assignment



(Form of Assignment to be Executed if Holder Desires

to Transfer Warrants Evidenced Hereby)



          For value received,                    hereby sells, assigns and
transfers unto






(Please print name and address, including zip code of assignee, and EIN, Social
Security Number or other identifying number)



          the Warrants represented by the within Warrant Certificate and does hereby
irrevocably constitute and appoint                 attorney, to transfer
said Warrant Certificate on the books of the Warrant Agent with full power of
substitution in the premises.



          In connection with any transfer of the Warrants occurring prior to the
date which is the earlier of (i) the date of an effective registration
statement or (ii) three years after the later of the original issuance of the
Warrants or the last date on which the Warrants were held by an affiliate of
the Company, the undersigned confirms, that without utilizing any general
solicitation or general advertising:



[check applicable box]




	 	 	 
	[  ]	 	
(a)

      the Warrants are being transferred in compliance
with the exemption from registration under the
Securities Act of 1933, as amended, provided by
Rule 144A thereunder.
	 	 	 
	or	 	 
	 	 	 
	[  ]	 	
(b)
      the Warrants are being transferred other than in
accordance with (a) above and documents are being
furnished that comply with the conditions of
transfer set forth in this Warrant Certificate and
the Warrant Agreement.



If none of the foregoing boxes is checked, the Warrant Agent shall not be
obligated to register the Warrants in the name of any person other than the
holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Article 4 of the Warrant Agreement shall
have been satisfied.


Dated




	 	 	 
	 	 	


Signature
	 	 	 
	 	 	
(Signature must conform in all respect to

name of holder as specified on the face of

this Warrant Certificate and must bear a

signature guarantee of a commercial bank or

trust company.)




 






 





Signature Guaranteed:









TO BE COMPLETED BY PURCHASER IF PARAGRAPH (a) ABOVE IS CHECKED.


          The undersigned represents and warrants that it is purchasing this Warrant
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




	 
	

[Signature of Purchaser’s Executive Officer]