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                                                             EXHIBIT 10.35



                              EMPLOYMENT AGREEMENT


        This EMPLOYMENT AGREEMENT (the "Agreement"), is made and effective as
of this 19th day of December, 1996 (the "Effective Date"), by and between
QUADRAMED CORPORATION, a California corporation ("QuadraMed"), with its
executive offices at 80 East Sir Francis Drake Boulevard, Suite 2A, Larkspur,
California 94939 and FREDERICK STODOLAK ("Employee"), residing at 16 Gladiola
Drive, Howell, New Jersey 07731.

        NOW, THEREFORE, in consideration of the mutual promises and of the
mutual covenants and obligations created or affected in the Agreement, and for
other good and valuable consideration, the receipt and sufficiency of which
consideration are hereby acknowledged, the parties agree as follows:

        1.      Term of Employment. QuadraMed agrees to employ Employee from
the date hereof until December 31, 1998 (hereinafter the "Term"). For and in
consideration of his entering into the Agreement, Employee shall not be an
employee-at-will, but shall hereafter be employed for a definite term. The
employment of Employee shall continue for the Term unless sooner terminated or
otherwise extended as provided for in the Agreement or as the parties shall
mutually agree in writing. Unless QuadraMed shall notify Employee in writing
of its intention not to renew or extend the Agreement at least ninety (90) days
prior to the expiration of the Term, the Term shall be extended to an
expiration date which is ninety (90) days following the delivery of such
written notice. Neither Employee nor QuadraMed shall be obligated to consent to
the renewal or extension of the Agreement, which consent either party may
withhold in his or its respective sole and absolute discretion. In the absence
of a written agreement signed by QuadraMed, after the expiration of the Term
and any extension thereof provided for in this Section 1, Employee shall be an
employee "at-will" and the terms of Section 4 of this Agreement shall be of no
further force or effect.

        2.      Termination With Cause by Employee. The Employees may terminate
his employment hereunder in advance of the expiration of the Term on sixty (60)
days prior written notice to QuadraMed upon the occurrence of any of the
following events:

                A.      Employee's principal place of employment is moved to a
        location that is more than fifty (50) miles from Howell, New Jersey;

                B.      Employee no longer functions as Divisional President or
        a new position is created for Employee requiring Employee to report to
        anyone other than the Chief Executive Officer, President or Board of
        Directors of QuadraMed;
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                C.      Employee is required by QuadraMed's Board of Directors
        or its Chief Executive Officer after Employee's written objection
        thereto to engage in business practices or implement policies or
        practices that are unethical, immoral or illegal;

                D.      Employee is wrongfully induced to resign his position as
        a direct result of QuadraMed's actions taken in bad faith or
        constituting willful misconduct.

                Upon such termination of employment, Employee shall no longer be
        bound by any of the terms or provisions hereof other than Sections 12,
        13, 16 and 20.

        3.      Termination Without Cause by Employee. Employee shall be
entitled to resign from QuadraMed's employment hereunder on sixty (60) days
prior written notice in his sole and absolute discretion for any reason prior to
the expiration of the Term. Following such resignation Employee shall continue
to be bound and obligated by the terms and provisions Sections 12, 13, 16 and 20
and, except as provided in Section 8, QuadraMed shall be released and discharged
from any further liability, obligation or duty arising in connection with the
Agreement or in connection with Employee's employment.

        4.      Termination With Cause by QuadraMed. QuadraMed may terminate the
Employee's employment hereunder in advance of the expiration of the Term upon
the occurrence of any of the following events:

                A.      Death. The death of Employee;

                B.      Disability. Upon prior written notice to Employee
        following the physical or mental disability of Employee that prevents
        him from performing effectively the duties of his employment for a time
        period greater than six (6) consecutive months. For purposes of this
        Section 4.B., in the event of any dispute among the parties hereto as to
        physical or mental disability, the determination of whether Employee has
        been physically or mentally disabled for more than six consecutive
        months shall be made in the majority, written opinion of a three person
        licensed medical doctor panel made up of one licensed medical doctor
        appointed by Employee (or his legal representative, which representative
        may be his closest living relation if no legal representative exists),
        one licensed medical doctor appointed by QuadraMed and the third member
        a licensed medical doctor selected by the other two panel members; or

                C.      Cause. Immediately upon written notice to Employee, if
        Employee, at any time, (i) has engaged in gross misconduct, including an
        act of dishonesty, fraud, theft, embezzlement or moral turpitude or
        conviction of a felony, or (ii) has unlawfully appropriated a corporate
        opportunity involving the business of QuadraMed, or (iii) has violated
        in any material respect any covenant, term or condition contained in
        this


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        Agreement or any policy or policies of QuadraMed that are annexed to
        this Agreement as Exhibit A or any supplements or amendments thereto,
        provided such supplements or amendments have been approved by the Board
        of Directors in the exercise of their good faith reasonable business
        judgment and are as described in the last sentence of Section 14 of this
        Agreement, or (iv) has materially breached any obligation,
        representation, warranty, covenant or agreement by Employee under that
        certain Assets Purchase Agreement entered into effective as of December
        31, 1995 by and among Kaden Arnone, Inc.,Eugene M. Arnone, David S.
        Rikkola, Frederick Stodolak, Marc A. Stahl, Joanne H. Vaul, Gregory M.
        Adams, Samuel Donio, Jr. and QuadraMed Acquisition Corporation or made
        any representation or warranty therein or any document furnished
        thereunder which was materially false.
                
        Upon termination of Employee's employment pursuant to this Section, the
Agreement shall be deemed terminated except as to any provision of the
Agreement which is intended by its terms to survive and continue, including,
but not limited to, the provisions of Sections 8, 12, 13, 16 and 20.

        5.      Termination Without Cause by QuadraMed.  QuadraMed shall be
entitled to terminate Employee's employment hereunder in its sole and absolute
discretion for any reason prior to the expiration of the Term on thirty (30)
days prior written notice to Employee.

        6.      Title and Duties Of Employee.  Employee shall serve as
Divisional President and in connection therewith Employee shall report to the
Board of Directors, Chief Executive Officer, or a corporate officer of
QuadraMed. Employee shall perform operational, managerial and executive duties
which are consistent with the duties of Divisional President which shall
include, without limitation, supervision of the personnel, decision making
authority and accountability over expenditures and customer contracts within the
scope of overall approved operating budgets, capital budgets, pricing policies,
standard contract terms and revenue recognition policies, budgeting and sales
and development functions of the business, and providing input to the Board of
Directors of QuadraMed with respect to the long range objectives, policies and
plans of the Business.

        Employee agrees to devote his entire time, skill, labor, and attention
exclusively to the business of QuadraMed throughout the period of his
employment hereunder; provided that employee shall be entitled to make
investments in and participate in businesses and ventures that do not directly
compete with the Business or with QuadraMed's other business and which do not
materially impair the Employee's ability to perform his duties hereunder.

        7.      Best Efforts of Employee.  Employee agrees he will at all times
faithfully, industriously, and to the best of his ability, experience, and
talent, perform all of duties required of and from him pursuant to this
Agreement. During the Term, Employee shall not


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enter into the services of, or be employed in any capacity or for any purpose
whatsoever by any person, firm or corporation other than QuadraMed, or actively
participate, other than an investment capacity as specified in Section 6, in any
business enterprise or undertaking other than his employment under the
Agreement, unless the prior, written consent of QuadraMed shall be obtained by
the specific written authorization of a duly authorized officer of QuadraMed,
which authorization may be withheld in the reasonable discretion of QuadraMed,
QuadraMed agrees that it will at all times faithfully, industriously, and to the
best of its ability, perform all obligations required to be performed by it
under the Agreement. 

        8.      Base Compensation.  For all services rendered by him during the
Term, Employee shall be paid an annual base salary of One Hundred Seventy-Five
Thousand Dollars ($175,000) (the "Base Salary").

        The Base Salary shall be paid to Employee on the same periodic basis as
other QuadraMed officers, but in no event less frequently than monthly, minus
standard deductions for all applicable state and federal taxes and other bona
fide deductions.

        In the event the Employee's employment is terminated by the Employee
under Section 2 or by QuadraMed under Section 5, Employee shall be entitled to
Base Salary and bonus and all other applicable benefits that would otherwise
have been paid or provided to Employee pursuant to Sections 8, 9 or 11 through
the effective date of such termination or with respect to any period ending on
or prior to such effective date. Following such termination of employment,
Employee shall, as severance, receive payments over a one-year time period equal
to One Hundred Seventy-Five Thousand Dollars ($175,000). Such severance payments
shall be payable in the manner provided under this Section 8 as if Employee were
continuing as an employee for the balance of the Term; provided that following
such termination Employee shall not be entitled to any bonus and/or other
benefits with respect to any period following the effective date of such
termination.

        In the event Employee resigns pursuant to Section 3 or the Employee's
employment is terminated by QuadraMed pursuant Section 4 (other than subpart B,
thereof), Employee shall be entitled to Base Salary and bonus and all other
applicable benefits that would otherwise have been paid or provided to Employee
pursuant to Sections 8, 9 or 11 through the effective date of such resignation
or termination, as applicable, or with respect to any period ending on or prior
to such effective date, but Employee shall forfeit any right to receive any
further payments or benefits pursuant to the Agreement, with respect to any
periods commencing on or after such effective date.

        In the event Employee's employment is terminated by QuadraMed pursuant
to Section 4.B. Employee shall be entitled to Base Salary and bonus and all
other applicable benefits that would otherwise have been paid or provided to
Employee pursuant to Sections 8, 9 or 11 through the effective date of such
termination or with respect to any period ending on or prior


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to such effective date. Following such termination of employment, Employees
shall, as severance, receive payments equal to One Hundred Seventy-Five
Thousand Dollars ($175,000) payable over a period of one year (less any
disability insurance payments payable under insurance provided by QuadraMed);
provided that following such termination Employee shall not be entitled to any
Base Salary, bonus and/or other benefits with respect to any period following
the effective date of such termination.

        9.      Bonus.  During the Term, in addition to the Base Salary payable
pursuant to Section 8, Employee shall be entitled to such annual bonus
payments, as the Board of Directors of QuadraMed shall determine in their sole
and absolute discretion, which shall be consistent with the review of other
officers for annual bonuses and based on individual performance and on the
performance of the Business and any other lines of business for which Employee
has responsibility. 

        10.     Stock.  As of the date hereof Employee shall continue to hold
his previous grant of an incentive stock option pursuant to QuadraMed's 1994
Qualified Incentive Stock Option Plan (the "Plan") to purchase 24,000 shares of
Common Stock, at a price of $3.75/share, subject to the vesting restrictions
and other terms of his applicable option agreement.

        11.     Benefits and Perquisites.  In addition to the Base Salary,
bonus payments and stock described in Sections 8, 9 and 10, Employee shall be
entitled to (a) reimbursement with respect to the automobile leased or owned by
Employee with respect to mileage driven by Employee in accordance with the
Company's then existing policies; (b) a paid annual vacation of at least four
(4) weeks; and such other benefits and perquisites provided to other executive
officers of QuadraMed.

        12.     Confidential and Proprietary Information.  The Employee
acknowledges that Employee has knowledge of information of substantial value
regarding the Company's business, and will have access to the same with respect
to QuadraMed's business pursuant to the terms of the Employment Agreement,
which is not generally known and which gives QuadraMed an advantage over
competitors who do not know or use it, including (without limitation) know-how,
trade secrets, marketing strategies, sales, customer lists, business and
financial information relating to the business, services, practices or
techniques of QuadraMed (hereinafter referred to as the "Confidential
Information"). The term "Confidential Information" shall not include
information which is generally or readily obtainable by the public or the
trade, or is publicly known or becomes known, through no fault or activity of
Employee. Employee hereby expressly acknowledges and agrees that the
Confidential Information constitutes confidential and valuable trade secret
business information of QuadraMed. Employee agrees, at all times during the
Term and for a period of three (3) years thereafter (the "Restricted Period"),
to regard and preserve as confidential such Confidential Information, and to
refrain from publishing or disclosing any part of it or from using, copying or
duplicating it in any way or by any means whatsoever for purposes other than 
as absolutely

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necessary to perform Employee's duties under the Employment Agreement. Employee
further agrees, at all times during the Restricted Period, that such
Confidential Information will not be disclosed by Employee to any person or
entity without the prior written consent of QuadraMed, which may be withheld in
its sole discretion. Employee acknowledges that the disclosure or use of any
Confidential Information could gravely affect the effective and successful
conduct of the business of QuadraMed and the value of its goodwill, and that
breach of the terms of this Section 12 is a material breach of the terms of
this Employment Agreement.

        In the event that Employee becomes legally compelled (by deposition,
interrogatory, request for documents, order, subpoena, civil investigative
demand or similar process issued by a court of competent jurisdiction or by a
governmental body) to disclose any of the Confidential Information, prompt
prior written notice of such requirement shall be provided to QuadraMed so that
QuadraMed may seek a protective order or other appropriate remedy and/or waive
compliance with the terms of this Agreement. In the event that such protective
order or other remedy is not obtained, and irrespective of whether or not
compliance with the provisions hereof is waived, then it is agreed that only
that portion of the Confidential Information which Employee is advised in
writing by its counsel is legally required to be disclosed shall be disclosed
and reasonable efforts shall be made to obtain assurance that confidential
treatment will be accorded such Information.

        Notwithstanding anything to the contrary contained herein, in the event
the Employee's employment shall be terminated by the Employee under Section 2
or by the Company under Section 5, the Restricted Period shall commence upon
the effective date of such termination and continue for a period of three (3)
years thereafter.

        13.     Documents, Written Materials and Tangible Properties.  To the
extent not otherwise provided for in the Agreement, Employee agrees that all
documents, written materials and other tangible property, including copies
thereof, relating in any way to the business of QuadraMed, shall be and remain
the exclusive property of QuadraMed and shall be returned to QuadraMed by
Employee immediately upon termination of his employment by QuadraMed or at the
request of QuadraMed. Employee shall be entitled to retain his card file or
rolodex containing names, addresses and telephone numbers and personal diaries
and calendars; provided, however, that Employee shall continue to be bound by
the terms of Section 12 hereof to the extent such retained materials constitute
"Confidential Information" as defined herein.

        14.     QuadraMed Policies.  Employee acknowledges that, as a condition
of this Agreement, Employee is to be bound by the policies established by
QuadraMed that are annexed hereto as Exhibit A and any amendments or
supplements thereto that are approved by the Board of Directors of QuadraMed in
the exercise of their good faith reasonable business judgment; and that, in the
event there are any inconsistencies between said policies and this Agreement,
the provisions of this Agreement shall govern. For purposes of this Agreement,



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the policies of QuadraMed shall (i) not include any policies directed
individually at Employee, but rather shall be intended to include only policies
applicable to all executive personnel of QuadraMed, and (ii) not include
policies establishing standards for the financial performance of the Business.
QuadraMed shall not be bound by any policy which is not in writing and signed
by an officer of QuadraMed.

        15.     Proprietary Information.  Employee acknowledges that, as a
condition to the effectiveness of this Agreement, Employee will continue to be
bound by the terms of that certain Proprietary Information Agreement in the
form originally annexed to Employee's original Employment Agreement with
QuadraMed. To the extent that any provision in the Proprietary Information
Agreement or and the exhibits thereto signed by Employee conflicts with or is
inconsistent with this Agreement, the applicable provisions of this Agreement
shall govern.

        16.     Non-Solicitation.  Employee hereby agrees that, during the Term
and for a one (1) year period thereafter (the "Non-Solicitation Period"),
Employee shall not, whether for his own account or for the account of any other
individual, partnership, firm, corporation or other business organization,
attempt to solicit for the purposes of selling healthcare software that competes
in any way with the healthcare software products of QuadraMed, any customers of
QuadraMed who had been customers of QuadraMed during the Term, or induce or
attempt to induce, directly or indirectly, any person to terminate his or her
employment or other business association with QuadraMed. Notwithstanding
anything to the contrary contained herein, in the event the Employee's
employment shall be terminated by the Employee under Section 2 or by the
Company under Section 5, the Non-Solicitation Period shall commence upon the
effective date of such termination and continue for a period of one (1) year
thereafter. 

        17      Waiver of Breach.  A waiver by QuadraMed of a breach of any
provision of the Agreement shall not operate or be construed as a waiver of any
subsequent breach by Employee of the same or any other provision of the
Agreement. 

        18.     Notices.  Any notice required to be given under the Agreement
shall be deemed sufficient, if in writing, and sent by certified mail, return
receipt requested, or hand delivered, to the other party at the address shown
below: 

For QuadraMed:          QuadraMed Corporation
                        80 East Sir Francis Drake Blvd., Suite 2A
                        Larkspur, California 94939
                        Attn: John V. Cracchiolo

with a copy to:         Zevnik Horton Guibord & McGovern, L.L.P.
                        101 West Broadway, 17th Floor
                        San Diego, California 92101

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                        Attn: Steven G. Rowles, Esq.
                        
For Employee:           16 Gladiola Drive
                        Howell, New Jersey 07731

with a copy to:         Matthew P. DeMaria, Esq.
                        550 Boulevard
                        Elwood Park, New Jersey 07407 

Either party may change its or his address for notices under this section by
giving notice of the change to the other pursuant to this section.

        19.     Applicable Law.  By express agreement of the parties, the
Agreement, and all of its terms and conditions, shall be governed, controlled
and construed by the internal laws of the State of California.

        20.     Dispute Resolution.  Should either party, at any time, claim
there to be a breach of this Agreement, specifically including any claims
arising out of the termination of employment, the parties hereby agree that the
sole and exclusive recourse for any such claims shall be to arbitrate as herein
provided, with the exception of actions for injunctive and other relief which
may be pursued by QuadraMed as set forth herein. Submission for arbitration
shall be by written notice to the San Francisco, California office of the
American Arbitration Association, with a copy to the other party. The
arbitration process shall be governed by the then current Employment Dispute
Arbitration Rules of the American Arbitration Association. Should an arbitration
hearing be necessary, it shall take place in San Francisco, California. The fees
and expenses of the Arbitrator and the administrative fees of the American
Arbitration Association will be paid by the party initiating the arbitration
process; however, the prevailing party shall be entitled to reimbursement of any
such fees paid, as well at its attorneys and witness fees, if any.

        21.      Entire Agreement.  The agreement contains the entire agreement
between the parties. The Agreement shall not be amended except by a written
agreement signed by both parties. That certain first Amendment to the
Employment Agreement and Stock Option Agreement dated June 1, 1996, shall have
no further effect and shall not be binding upon the parties except to the
extent of rights, duties and obligations accrued as of the Effective Date.

        22.     Severability.  If any of the provisions of the Agreement are
determined to be invalid or unenforceable in part, the remaining provisions,
and the enforceable portions of any partially unenforceable provisions, shall
nevertheless be binding and enforceable. 
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        23.     Binding Effect. The Agreement shall inure to the benefit of and
shall be binding upon QuadraMed and its successors and assigns, and upon
Employee and his heirs, legatees, executors, administrators, successors and
beneficiaries.

        24.     Assignment. The Agreement shall not be assignable either by
QuadraMed or by Employee.

        25.     Prompt Action. Time is of the essence with respect to each
provision of the Agreement.

        26.     Captions. Captions of Sections are inserted only as a matter of
convenience and reference and in no way define, limit or describe the substance
or scope of the Agreement or the intent of any of its provisions.

        27.     Rules of Construction. The Agreement has been negotiated by the
parties and is to be interpreted according to its fair meaning as if the parties
had prepared it together and not strictly for or against any party. All
references in the Agreement to "parties" refer to parties in the Agreement
unless expressly indicated otherwise. References in the Agreement to sections
are to sections of the Agreement unless expressly indicated otherwise.
References in the Agreement to "provisions" of the Agreement refer to the terms,
conditions and promises contained in the Agreement. At each place in the
Agreement where the context so requires, the masculine, feminine or neuter
gender includes the others and the singular or plural number includes the other.
Forms of the verb "including" mean "including without limitation." The word "or"
is inclusive and includes "and."

        28.     Counterpart. This Agreement may be executed in any number of
counterparts and any party hereto may execute any such counterpart, each of
which when executed and delivered shall be deemed to be an original and all of
which counterparts taken together shall constitute but one and the same
instrument. This Agreement shall become binding when one or more counterparts
taken together shall have been executed and delivered by the parties by
facsimile transmission or otherwise.

        28.     Indemnification. QuadraMed shall indemnify Employee to the
extent and in such fashion as it indemnifies other executive officers of
QuadraMed, but in no event shall such indemnification be less than provided for
by Section 317 of the California Corporations Code.

                  [Remainder of Page Intentionally Left Blank]


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        IN WITNESS WHEREOF the Employee has executed the Agreement, by his hand
and under seal, QuadraMed has caused the Agreement to be executed in its name
by its general partner, all as of the date first above written.

                                        QUADRAMED CORPORATION, a California
                                        corporation


                                        By:     /s/ JAMES D. DURHAM
                                           --------------------------------
                                        Title:  CEO
                                              -----------------------------


                                                /s/ FREDERICK STODOLAK
                                        -----------------------------------
                                        FREDERICK STODOLAK

                    [Signature Page to Employment Agreement]


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