Document:

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                                                                   EXHIBIT 10.24

                               RETENTION AGREEMENT

                                       FOR

                   VICE PRESIDENT AND CHIEF FINANCIAL OFFICER

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                               RETENTION AGREEMENT

        This Agreement between Gregory A. Thornton (you) and ReSourcePhoenix.com
Inc. (Company) have been entered into as of August 30, 2000. This Agreement
promises you severance benefits if, following a Change of Control or a Potential
Change in Control (referred to collectively hereafter as the "Change") you are
terminated without Cause or resign for Good Reason during the Term of this
Agreement. Capitalized terms are defined in the last section of this Agreement.

1. PURPOSE

        The Company considers a sound and vital management team to be essential.
Management personnel who become concerned about the possibility that the Company
may undergo a Change in Control may terminate employment or become distracted.
Accordingly, the Board has determined that appropriate steps should be taken to
minimize the distraction executives may suffer from the possibility of a Change
in Control. One step is to enter into this Agreement with you.

2. YOUR PROMISE

        If one or more of the events set forth in section 3 below occur during
the Term of this Agreement, you promise not to resign for at least 24 full
calendar months after the change except as follows: (a) you may resign if you
are given Good Reason to do so; and (b) you may terminate employment on account
of retirement on or after attaining age 65 or because you become unable to work
due to serious illness or injury.

3. EVENTS THAT TRIGGER SEVERANCE BENEFITS

(a) Termination After a Change in Control

        You will receive Severance Benefits under this Agreement if, during the
Term of this Agreement and within twelve months after a Change in Control has
occurred, your employment is terminated by the Company without Cause (other than
on account of your Disability) or you resign for Good Reason.

(b) Termination After a Potential Change in Control

        You also will receive Severance Benefits under this Agreement if, during
the Term of this Agreement and within twelve months after a Potential Change in
Control has occurred but before a Change in Control actually occurs, your
employment is terminated by the Company without Cause or you resign for Good
Reason, but only if either: (i) you are terminated at the direction of a Person
who has entered into an agreement with the Company that will result in a Change
in Control; or (ii) the event constituting Good Reason occurs at the direction
of such Person.

(c) Successor Fails To Assume This Agreement

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        You also will receive Severance Benefits under this Agreement if, during
the Term of this Agreement, a successor to the Company fails to assume this
Agreement, as provided in Section 11(a).

4. EVENTS THAT DO NOT TRIGGER SEVERANCE BENEFITS

        You will not be entitled to Severance Benefits if your employment ends
because you are terminated for Cause or on account of Disability or because you
resign without Good Reason, retire, or die. Except as provided in Section 3(b),
you will not be entitled to Severance Benefits while you remain protected by
this Agreement and remain employed by the Company, its affiliates, or their
successors.

5. TERMINATION PROCEDURES

        If you are terminated by the Company after the Change and during the
Term of this Agreement, you will receive written notice of your termination if
you are being terminated for Cause. Your termination notice will specify the
basis for that opinion in detail.

6. SEVERANCE BENEFITS

(a) In General

        If you become entitled to Severance Benefits under this Agreement, you
may receive all of the Severance Benefits described in this Section. Severance
benefits will be payable to you following your termination of employment only if
you deliver to the Company (on the form and by the deadline it prescribes) your
executed general release of all claims you may have against the Company and its
affiliates relating to your termination of employment, other than claims under
this Agreement, indemnification rights for your acts in the course and scope of
your employment, or under ERISA-regulated employee benefit plans of the Company.

(b) Lump-Sum Payment in Lieu of Future Compensation

        In lieu of any further cash compensation for periods after your
employment ends, you will be paid a cash lump sum equal to 1.0 times your annual
base salary in effect when your employment ends or, if higher, in effect
immediately before the Change, or Good Reason event for which you terminate
employment.

(c) Group Insurance Benefit Continuation

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        During the period that begins when you become entitled to Severance
Benefits under this Agreement and ends on the last day of the 12th calendar
month beginning thereafter, the Company shall provide, at no cost to you or your
spouse or dependents, the life, disability, accident, and health insurance
benefits (or substantially similar benefits) it was providing to you and your
spouse and dependents immediately before you became entitled to Severance
Benefits under this Agreement (or immediately before a benefit reduction that
constitutes Good Reason, if you terminate employment for that Good Reason).
These benefits shall be treated as satisfying the Company's COBRA obligations.
After benefit continuation under this subsection ends, you and your spouse and
dependents will be entitled to any remaining COBRA rights.

(d) Acceleration of Vesting under Stock Option Plans

        To the extent permitted by the terms of the plans or under applicable
law, your rights to options granted under any of the Company's stock option
plans shall be immediately vested with respect to shares that would have vested
during the period beginning with date the of termination and ending on the next
occurring anniversary of the applicable option grant date had your termination
not occurred.

(e) Allowance for Professional Services

        You will receive an allowance of $10,000 for your use for outplacement,
legal services, tax advice, or other professional services in connection with
the termination of your employment with the Company. Upon presentation of
invoices, the Company will pay the service providers directly until the
allowance has been exhausted. If any balance remains in the allowance fund at
the end of six months following termination, that balance will be paid to you in
a lump sum; the unused balance shall be determined on the basis of invoices
received by the Company on or before the end of the allowance period. The
Company shall have no other responsibility for expenses incurred by you except
as otherwise set forth in this Agreement.

(f) Payment of Accrued Personal Time Off ("PTO")

        The Company will pay you all PTO that has accrued through the date your
employment terminates. No additional PTO shall accrue thereafter.

(g)  Deferred Compensation Plans

        Your vested rights under the Company's 401(k) Salary Deferral Plan and
any similar Salary Deferral Plan shall continue to be governed by the terms and
conditions of the Plan documents and applicable law.

7. TIME FOR PAYMENT

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        You will be paid your cash Severance Benefits within 30 days after you
become entitled to Severance Benefits under this Agreement (e.g., within 30 days
following your termination of employment.

8. RELATION TO OTHER SEVERANCE PROGRAMS

        Your Severance Benefits under this Agreement are in lieu of any
severance or similar benefits that may be payable to you under any other
employment agreement or other arrangement; to the extent any such benefits are
paid to you, they shall be applied to reduce the amount due under this
Agreement. This Agreement constitutes the entire agreement between you and the
Company and its affiliates with respect to such benefits. Notwithstanding any
other provision of this Agreement, if you are terminated for any reason not
addressed by this Agreement, other than termination for Cause, you will receive
separation benefits consistent with the Company's written severance policy or
twelve months salary, whichever is greater.

9. DISABILITY

        Following a Change in Control, while you are absent from work as a
result of physical or mental illness, the Company will continue to pay you your
full salary and provide you all other compensation and benefits payable to you
under the Company's compensation or benefit plans, programs, or arrangements.
These payments will stop if and when your employment is terminated by the
Company for Disability or at the end of the Term of this Agreement, whichever is
earlier. Severance Benefits under this Agreement are not payable if you are
terminated on account of your Disability.

10. EFFECT OF REEMPLOYMENT

        Your Severance Benefits will not be reduced by any other compensation
you earn or could have earned.

11. SUCCESSORS

(a) Assumption Required

        In addition to obligations imposed by law on a successor to the Company,
during the Term of this Agreement the Company will require any successor to all
or substantially all of the business or assets of the Company expressly to
assume and to agree to perform this Agreement in the same manner and to the same
extent that the Company was required to perform. If the Company fails to obtain
such an assumption and agreement before the effective date of a succession, you
will be entitled to Severance Benefits as if you were terminated by the Company
without Cause on the effective date of that succession. Notwithstanding the
foregoing, you and the Company or its successor may in writing agree to replace
or modify the terms of this Agreement.

(b) Heirs and Assigns

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        This Agreement will inure to the benefit of, and be enforceable by, your
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees, and legatees. If you die while any amount is still
payable to you under this Agreement, that amount will be paid to the executor,
personal representative, or administrator of your estate.

12. AMENDMENTS

        This Agreement may be modified only by a written agreement executed by
you and the Chief Executive Officer of the Company.

13. GOVERNING LAW

        To the extent that state law is applicable, the statutes and common law
of the State of California (excluding its choice of law statutes or common law)
shall apply.

14.  DISPUTE RESOLUTION

(a) Sole Remedy

        Both you and the Company agree that the sole and exclusive remedy for
any alleged breach of this Agreement by the other, or for any other dispute
arising out of any act or omission of you or the Company affecting, involving or
relating to this Agreement, shall be final and binding arbitration conducted by
and pursuant to the Employment Dispute Resolution Rules of the American
Arbitration Association in the County of San Francisco, California. The Parties
expressly waive venue in any other county or state in which they live or might
live.

(b) Time

        Before demanding arbitration, the Party making the demand shall serve
written notice upon the other Party of the alleged breach or claim. Such written
notice must be served by hand delivery or by being placed in the U.S. Mail,
postage pre-paid, return receipt requested, or with an overnight mail delivery
service, not more than ninety (90) days after the breach or after the claim
arises. Failure timely to serve such notice shall constitute a waiver of the
claim. The party upon whom the notice is served shall have thirty (30) days from
the date of receipt of the notice to respond. If the party upon whom the notice
is served fails to respond within that time, of if the claim is not resolved
within that time, the party seeking arbitration must serve a demand for
arbitration upon the American Arbitration Association within fourteen (14) days.
Failure timely to serve the demand shall constitute a waiver of the claim.

(c) Expenses and Attorneys' Fees

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        The prevailing party in any such proceeding, as determined by the
arbitrator, shall be entitled to an award of its reasonable attorneys' fees and
costs, including the full cost of the arbitration.

15. LIMITATION ON EMPLOYEE RIGHTS

        This Agreement does not give you the right to be retained in the service
of the Company.

16. VALIDITY

        The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement.

17. COUNTERPARTS

        This Agreement may be executed in several counterparts, each of which
will be deemed an original, but all of which will constitute one and the same
instrument.

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18. GIVING NOTICE

(a) To the Company

        All communications from you to the Company relating to this Agreement
must be sent to the Company in writing, addressed as follows (or in any other
manner the Company notifies you to use):

        If Mailed         ReSourcePhoenix.com
                          Attention: General Counsel
                          2401 Kerner Boulevard
                          San Rafael, California 94901

        If Faxed          ReSourcePhoenix.com
                          Attention: General Counsel
                          Fax: (415) 451-7551
                          Tel.: (415) 485-4600

(b) To You

        All communications from the Company to you relating to this Agreement
must be sent to you in writing, addressed as indicated at the end of this
Agreement.

19. DEFINITIONS

(a) Agreement

        "Agreement" means this contract, as amended.

(b) Beneficial Owner

        "Beneficial Owner" has the meaning set forth in Rule 13d-3 under the
Exchange Act.

(c) Board

        "Board" means the Board of Directors of the Company.

(d) Cause

        "Cause" means any of the following:

        (1)     Failure to Perform Duties. You continue to fail to perform your
                duties for the Company after a written demand for performance
                has been delivered to you by the Company that specifically
                identifies how you have failed to perform. You may not be
                terminated for Cause under this paragraph after

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                you have properly notified the Company that you are resigning
                for Good Reason.

        (2)     Adverse Conduct. You engage in conduct that is demonstrably and
                materially injurious to the Company or its affiliates,
                monetarily or otherwise.

(e) Change in Control

        "Change in Control," means the first of the following to occur after the
date of this Agreement:

        (1)     Acquisition of Controlling Interest. Any Person becomes the
                Beneficial Owner, directly or indirectly, of securities of the
                Company representing 50 percent or more of the combined voting
                power of the Company's then outstanding securities. In applying
                the preceding sentence, securities acquired directly from the
                Company or its affiliates by or for the Person shall not be
                taken into account.

        (2)     Merger Approved. The shareholders of the Company approve a
                merger or consolidation of the Company with any other
                corporation unless: (a) the voting securities of the Company
                outstanding immediately before the merger or consolidation would
                continue to represent (either by remaining outstanding or by
                being converted into voting securities of the surviving entity)
                at least 50 percent of the combined voting power of the voting
                securities of the Company or such surviving entity outstanding
                immediately after such merger or consolidation; and (b) no
                Person becomes the Beneficial Owner, directly or indirectly, of
                securities of the Company representing 50 percent or more of the
                combined voting power of the Company's then outstanding
                securities.

        (3)     Sale of Assets. The shareholders of the Company approve an
                agreement for the sale or disposition by the Company of all or
                substantially all of the Company's assets or a plan of complete
                liquidation of the Company.

(f) Code

        "Code" means the Internal Revenue Code of 1986, as amended.

(g) Company

        "Company" means ReSourcePhoenix.com Inc. and any successor to its
business or assets that (by operation of law, or otherwise) assumes and agrees
to perform this Agreement. However, for purposes of determining whether a Change
in Control has occurred in connection with such a succession, the successor
shall not be considered to be the Company.

(h) Disability

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        "Disability" means that, due to physical or mental illness: (i) you have
been absent from the full-time performance of your duties with the Company for
substantially all of a period of 6 consecutive months; (ii) the Company has
notified you that it intends to terminate you on account of Disability; and
(iii) you do not resume the full-time performance of your duties within 30 days
after receiving notice of your intended termination on account of Disability.

(i) Exchange Act

        "Exchange Act" means the Securities Exchange Act of 1934, as amended.

(j) Good Reason

        "Good Reason" means the occurrence of any of the following without your
express written consent after the Change:.

        (1)     Pay Cut. Your annual base salary is reduced other than as part
                of across-the-board salary reductions affecting all employees of
                similar status employed by the Company and any Person in control
                of the Company.

        (2)     Relocation. If your principal office is transferred to another
                location, which increases your one-way commute to work by more
                than 30 miles, based on your residence when the transfer was
                announced and the Company fails to pay (or reimburse you) for
                all reasonable moving expenses you incur in changing your
                principal residence in connection with the relocation and to
                indemnify you against any loss you may realize when you sell
                your principal residence in connection with the relocation in an
                arm's-length sale for adequate consideration. For purposes of
                the preceding sentence, your "loss" will be the difference
                between the actual sales price of your residence and your
                aggregate investment in the residence.

        (3)     Discontinuance of Compensation Plan Participation. Other than as
                part of an across-the-board reduction affecting all employees of
                similar status employed by the Company and any Person in control
                of the Company, the Company fails to continue, or continue your
                participation in, any compensation plan in which you
                participated immediately before the Change that is material to
                your total compensation, unless an equitable substitute
                arrangement has been adopted or made available on a basis not
                materially less favorable to you than the plan in effect
                immediately before the Change, both as to the benefits you
                receive and your level of participation relative to other
                participants. The plans referred to in the preceding sentence
                include such programs as Incentive Compensation Plan and
                Incentive Stock Option Plan (if still in effect immediately
                before the Change), similar programs, and any substitute plans
                adopted before the Change.

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        (4)     Discontinuance of Benefits. Other than as part of an
                across-the-board change affecting all employees of similar
                status employed by the Company, the Company stops providing you
                with benefits that, in the aggregate, are substantially as
                valuable to you as those you enjoyed immediately before the
                Change under the Company's pension, savings, deferred
                compensation, life insurance, medical, health, disability,
                accident, vacation, and any other fringe benefit plans,
                programs, and arrangements.

        (5)     Notice of Prospective Action. During the Term of this Agreement,
                you are officially notified or it is officially announced that
                the Company will take any of the actions listed above.

However, an event that is or would constitute Good Reason shall cease to be Good
Reason if: (a) you do not terminate employment within 90 days after the event
occurs; (b) the Company reverses the action or cures the default that
constitutes Good Reason before you terminate employment; or (c) you were a
primary instigator of the Good Reason event and the circumstances make it
inappropriate for you to receive benefits under this Agreement (e.g., you agree
temporarily to relinquish your position on the occurrence of a merger
transaction you negotiate). If you have Good Reason to terminate employment, you
may do so even if you are on a leave of absence due to physical or mental
illness or any other reason.

 (k) Person

        "Person" has the meaning given in Section 3(a)(9) of the Exchange Act,
as modified and used in Section 13(d) of that Act, and shall include a "group,"
as defined in Rule 13d-5 promulgated thereunder. However, a Person shall not
include: (i) the Company or any of its subsidiaries; (ii) a trustee or other
fiduciary holding securities under an employee benefit plan of the Company or
any of its subsidiaries; (iii) an underwriter temporarily holding securities
pursuant to an offering of such securities; or (iv) a corporation owned,
directly or indirectly, by the stockholders of the Company in substantially the
same proportions as their ownership of stock of the Company.

(l) Potential Change in Control

        "Potential Change in Control" means that any of the following has
occurred during the term of this Agreement:

        (1)     Agreement Signed. The Company enters into an agreement that will
                result in a Change in Control.

        (2)     Board Declaration. With respect to this Agreement, the Board
                adopts a resolution declaring that a Potential Change in Control
                has occurred.

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(m) Severance Benefits

        "Severance Benefits" means your benefits under Section 6 of this
Agreement.

(n) Term of this Agreement

        "Term of this Agreement" means the period that commences on the date of
this Agreement and ends on the last day of the 12th month from the Change.

Date: 8/30/00         /s/ GUS CONSTANTIN
      -------         -------------------------------
                      Gus Constantin
                      Title:  CEO

Date: 8/30/00         /s/ GREGORY A. THORNTON
      -------         -------------------------------
                      Gregory A. Thornton

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                                                                  EXHIBIT 10.68

September 18, 2000

Michael H. Lanza, Esq.
52 East Weatogue Street
Post Office Box 705
Simsbury, Connecticut 06070-0705

Dear Mr. Lanza:

        We are pleased to inform you that the Board of Directors (the "Board")
of QuadraMed Corporation (the "Company") has authorized an employment package
for you which will provide certain assurances concerning the terms and
conditions of your employment with the Company and will allow you to receive
severance benefit payments should your employment terminate. The purpose of this
letter agreement (the "Agreement") is to document the terms of your employment
package by providing you with a formal employment contract.

        The Company considers it essential to the continuing operation of the
Company and in the best interests of its stockholders to assure the continuous
dedication of key management personnel. It is recognized in the context of
public ownership that a termination of an employee's employment without cause
may be sought and that such circumstances could prove distracting to key
executives and detrimental to the ongoing management and administration of the
Company. Such distraction is not in the best interest of the stockholders of the
Company. Accordingly, the Board has determined to discourage the inevitable
distraction to you in the face of potentially disturbing circumstances inherent
in any uncertainty regarding your employment status. This Agreement is intended
to secure and encourage your ongoing retention by providing severance benefits
in the event that your employment is altered as hereinafter described. In order
to induce you to remain in the employ of the Company, and in consideration of
your agreement set forth in Sections 12, 13, 14 and 15 of Part Two hereof, the
Company agrees to pay the severance payments and benefits set forth in this
Agreement, under the circumstances described herein.

        Part One of this Agreement sets forth certain definitional provisions to
be in effect for purposes of determining your benefit entitlements. Part Two
specifies the terms and conditions which will apply to your continued employment
with the Company, including the severance payments to which you will become
entitled in the event your employment should be terminated in certain
circumstances. Part Three concludes this Agreement with a series of general
terms and conditions applicable to your employment benefits.

                             PART ONE -- DEFINITIONS

DEFINITIONS. For purposes of this Agreement, the following definitions will be
in effect:

"CHANGE IN CONTROL" means:

(i)     a merger or acquisition in which the Company is not the surviving
        entity, except for a transaction the principal purpose of which is to
        change the State of the Company's incorporation;

(ii)    a stockholder approved sale, transfer or other disposition of all or
        substantially all of the assets of the Company;

(iii)   a transfer of all or substantially all of the Company's assets pursuant
        to a partnership or joint venture agreement or similar arrangement where
        the Company's resulting interest is less than fifty percent (50%);

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(iv)    any reverse merger in which the Company is the surviving entity but in
        which fifty percent (50%) or more of the Company's outstanding voting
        stock is transferred to holders different from those who held the stock
        immediately prior to such merger;

(v)     on or after the date hereof, a change in ownership of the Company
        through an action or series of transactions, such that any person is or
        becomes the beneficial owner, directly or indirectly, of securities of
        the Company representing fifty percent (50%) or more of the securities
        of the combined voting power of the Company's outstanding securities; or

(vi)    a majority of the members of the Board are replaced during any
        twelve-month period by directors whose appointment or election is not
        endorsed by a majority of the members of the Board prior to the date of
        such appointment or election.

"CODE" means the Internal Revenue Code of 1986, as amended from time to time.

"COMPANY" means QuadraMed Corporation, a Delaware corporation.

"EFFECTIVE DATE" shall mean September 18, 2000.

"EMPLOYEE" means Michael H. Lanza.

"EMPLOYEE BENEFIT PLAN" shall have the meaning given the term under Section 3 of
ERISA.

"EMPLOYMENT PERIOD" means the period of Employee's employment with the Company
governed by the terms and provisions of this Agreement.

"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as in
effect from time to time.

"INVOLUNTARY TERMINATION" means the termination of Employee's employment with
the Company:

(i)     involuntarily upon Employee's discharge or dismissal or the Company's
        failure to renew this Agreement pursuant to Section 3 of Part Two,
        whether or not in connection with a Change in Control; or

(ii)    voluntarily or involuntarily, provided such termination occurs in
        connection with (a) a change in Employee's position with the Company or
        any successor which materially reduces Employee's level of
        responsibility or changes Employee's titles from Executive Vice
        President and General Counsel, (b) a reduction in Employee's level of
        compensation (including base salary, fringe benefits and any
        non-discretionary bonuses or other incentive payments earned pursuant to
        objective standards or criteria) or (c) a relocation of Employee's
        principal place of employment by more than forty-five (45) miles and
        such change, reduction or relocation is effected without Employee's
        written concurrence.

        "OPTION" means any option or share purchase right granted to Employee
under the Stock Option Plan which is outstanding at the time of a Change in
Control or Employee's Involuntary Termination.

        "STOCK OPTION PLAN" means collectively the Company's 1996 Stock
Incentive Plan (including the predecessor 1994 Stock Option Plan), as amended
through the date hereof and the Company's 1999 Stock Incentive Plan, as amended
through the date hereof.

        "TERM" shall mean the term beginning on the Effective Date and ending on
the second anniversary thereof, subject to the provisions of Sections 3 and 4 of
Part Two.

        "TERMINATION FOR CAUSE" will mean an Involuntary Termination of
Employee's employment for (i) one or more alleged acts of fraud, embezzlement,
misappropriation of proprietary information, misappropriation of the Company's
trade secrets or other confidential information, a verifiable breach of
Employee's fiduciary duties to the Company or any other verifiable misconduct
adversely affecting the business reputation of the Company in a material manner;
or (ii) Employee's failure to adhere to any written Company policy or the terms
of this Agreement or Employee's verifiable failure to perform the material
duties of his position following written notice from the Company describing the
failure and a reasonable opportunity to cure such failure; provided, however,
Employee will

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have the right to perform incidental services as are necessary in connection
with (a) his private passive investments, (b) his charitable or community
activities and (c) his participation in trade or professional organizations, but
only to the extent such incidental services do not materially interfere with the
performance of Employee's services hereunder.

                 PART TWO -- TERMS AND CONDITIONS OF EMPLOYMENT

        The following terms and conditions will govern Employee's employment
with the Company throughout the Employment Period and will also, to the extent
expressly indicated below, remain in effect following Employee's termination
date.

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

2.      AT WILL EMPLOYEE. The Company hereby employs the Employee, and the
        Employee hereby accepts employment by the Company, upon the terms and
        conditions set forth in this Agreement. Employee shall be an employee
        "at will," terminable at any time by the Company for cause or without
        cause.

3.      TERM; AUTOMATIC EXTENSION; ETC.. The initial term of this Agreement
        shall be one (1) year from the effective date hereof. Commencing on the
        anniversary of the effective date hereof, and on each succeeding
        anniversary of the date hereof, the term of this Agreement shall
        automatically be extended for one (1) additional year unless, not less
        than one (1) month preceding such anniversary date, either party to this
        Agreement shall have given written notice to the other party pursuant to
        Section 12 of Part Three that such party will not extend the term of
        this Agreement.

4.      COMPENSATION.

        A.      For service in the 2000 calendar year on or after the Effective
                Date, Employee's base salary will be paid at the annual rate of
                Two Hundred Ten Thousand Dollars ($210,000). Employee's annual
                rate of base salary may be subject to adjustment each calendar
                year by the Board.

        B.      Employee's base salary will be paid at periodic intervals in
                accordance with the Company's payroll practices for salaried
                employees.

        C.      Employee shall be eligible for a discretionary bonus of up to
                forty percent (40%) of Employee's base salary (which bonus shall
                be prorated for the period commencing from the Effective Date
                until December 31, 2000) for each calendar year Employee is
                employed by the Company. Employee's discretionary bonus and
                timing of its payment will be determined by the Board in its
                sole discretion and based upon the recommendation of the
                Company's Compensation Committee and such additional factors as
                the Board deems appropriate, including Employee's individual
                performance and the Company's financial results.

        D.      Employee shall be paid additional bonus payments equal to
                amounts credited to a QuadraMed Corporation phantom stock
                account as set forth in this Section 4.D. As of the Effective
                Date, the Company shall establish, as an unfunded, unsecured
                arrangement, a phantom stock account in the name of the Employee
                and the Company shall credit to such account 95,293 shares of
                QuadraMed Corporation Common Stock, which shares shall have an
                initial value equal to the closing price of the Company's Common
                Stock as of the Effective Date. Such account shall be adjusted
                as of each relevant measurement date such that each share
                credited to the account shall be valued at the closing price of
                the Company's Common Stock as of the close of business two (2)
                days prior to the relevant measure date. Bonus payments to
                Employee pursuant to this Section 4.D. will become due and
                payable if Employee continues to be employed by the Company as
                follows: (i) on February 25, 2001,

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                the Company shall pay to Employee a bonus equal to the value of
                43,672 phantom shares credited to Employee's phantom stock
                account; (ii) on February 26, 2002, the Company shall pay to
                Employee a bonus equal to the value of 29,306 phantom shares
                credited to Employee's phantom stock account; and (iii) on
                February 23, 2003, the Company shall pay to Employee a bonus
                equal to the value of 22,315 phantom shares credited to
                Employee's phantom stock account. In the event of a subdivision
                of the outstanding shares of the Company's Common Stock, a
                declaration of a dividend payable in shares of the Company's
                Common Stock into a lesser number of such shares, a
                recapitalization, a reclassification or a similar occurrence,
                the Company shall make appropriate adjustments in the number of
                phantom shares credited to Employee's phantom stock account.

        E.      The Company will deduct and withhold, from the compensation
                payable to Employee hereunder, any and all applicable federal,
                state and local income and employment withholding taxes and any
                other amounts required to be deducted or withheld by the Company
                under applicable statute or regulation.

5.      STOCK OPTIONS. The Company will issue Employee non-qualified stock
        options to purchase 200,000 shares of Common Stock in the Company at an
        exercise price equal to the closing price of the Company's Common Stock
        as of the Effective Date. These Options will be subject to vesting over
        a four (4) year period with 50,000 of such Options vesting upon the
        expiration of a one (1) year period following the Effective Date and the
        remaining 150,000 of such options vesting ratably on a monthly basis
        thereafter and shall otherwise be subject to the standard terms and
        conditions contained in the Stock Plan and the form Stock Option
        Agreements approved by the Board in connection therewith.

6.      EXPENSE REIMBURSEMENT; MOVING EXPENSES. Employee will be entitled to
        reimbursement from the Company for all customary, ordinary and necessary
        business expenses incurred by Employee in the performance of his duties
        hereunder, provided Employee furnishes the Company with vouchers,
        receipts and other substantiation of such expenses in accordance with
        Company policies. Company shall pay to Employee (or pay such portion(s)
        thereof directly to such parties as Employee shall direct as payment for
        moving expenses) the aggregate amount of $65,000 to defray Employee's
        relocation expenses.

7.      FRINGE BENEFITS. During the Employment Period, Employee will be eligible
        to participate in any group life insurance plan, group medical and/or
        dental insurance plan, accidental death and dismemberment plan,
        short-term disability program and other employee benefit plans,
        including profit sharing plans, cafeteria benefit programs and stock
        purchase and option plans, which are made available to executives and
        for which Employee qualifies.

8.      VACATION. Employee will accrue four (4) weeks of paid vacation benefits
        during each calendar year of the Employment Period in accordance with
        the Company policy in effect for executive officers.

9.      DEATH OR DISABILITY.

        A.      Upon Employee's death or disability during the Employment
                Period, the employment relationship created pursuant to this
                Agreement will immediately terminate, and no further
                compensation will become payable to Employee pursuant to Part
                Two, Section 4. In connection with such termination by reason of
                death, the Company will only be required to pay Employee (or his
                estate) any unpaid compensation earned under Part Two, Section 4
                for services rendered through the date of Employee's death. In
                connection with such termination by reason of disability, the
                Company will be required to pay to Employee any unpaid
                compensation earned under Part Two, Section 4 for services
                rendered through the date of his disability, together with any
                income continuation payments provided Employee under any
                disability income/insurance policies or programs funded by the
                Company on Employee's behalf.

        B.      Employee will be deemed disabled if he is so characterized
                pursuant to the terms of the Company's disability insurance
                policies or programs applicable to Employee from time to time,
                or if so such policy is applicable, if Employee is unable to
                perform the essential functions of his duties for physical or
                mental reasons for one hundred twenty (120) consecutive days, or
                one hundred eighty (180) days during any twelve (12) month
                period.

        C.      Upon death or disability of Employee, the relevant terms of the
                Stock Option Plan will apply.

<PAGE>   5

10.     SEVERANCE BENEFITS. Notwithstanding anything herein to the contrary,
        Employee will be entitled to receive only the severance benefits
        specified below in the event there should occur a termination of
        Employee's employment:

        A.      SEVERANCE BENEFIT. If Employee is terminated by reason of an
                Involuntary Termination of Employee's employment (other than a
                Termination for Cause), the Company will make a severance
                payment to Employee, in one lump sum within thirty (30) days of
                the date of such an Involuntary Termination, in an aggregate
                amount equal to the sum of one (1) times Employee's then-current
                rate of base salary. Employee may elect, in his sole discretion,
                to have the severance benefit payable pursuant to this Section
                10.A. in monthly installments over a one year period following
                the date of his Involuntary Termination.

        B.      WELFARE BENEFITS. For a period of twelve (12) months, Employee
                (and his dependents, as applicable) shall be provided by the
                Company with the same life, health and disability plan
                participation, benefits and other coverages to which he was
                entitled as an employee immediately before the disability or the
                Involuntary Termination. In the event that under applicable law
                or the terms of the relevant Employee Benefit Plans such
                participation, benefits and/or coverage cannot be provided to
                Employee following his Involuntary Termination, such coverage
                and/or benefits shall be provided directly by the Company
                pursuant to this Agreement on a comparable basis. In its sole
                discretion, the Company may obtain such coverage and benefits
                for Employee through private insurance acquired at the Company's
                expense. Amounts paid or payable to or on behalf of Employee
                pursuant to any "employee welfare benefit plan," as defined in
                ERISA, providing health and/or disability benefits, that is
                sponsored by the Company or an affiliate of the Company, shall
                be credited against amounts due under this Section 10.B. To the
                maximum extent permitted by applicable law, the benefits
                provided under this Section 10.B. shall be in discharge of any
                obligations of the Company or any rights of Employee under the
                benefit continuation provisions under Section 4980A of the Code
                and Part VI of Title I of ERISA ("COBRA") or any other
                legislation of similar import.

        C.      PHANTOM SHARE CONVERSION INTO COMMON SHARES UPON INVOLUNTARY
                TERMINATION. In connection with the Involuntary Termination of
                Employee's employment (other than Termination for Cause),
                whether before or after a Change in Control transaction, the
                Company shall issue to Employee in Employee's name shares of
                Common Stock in the Company equal to the number of shares in
                Employee's phantom stock account specified in Section 4.D. of
                Part Two of this Agreement as of the Date of Involuntary
                Termination. Such Shares shall be free of any repurchase rights
                or other vesting restrictions in favor of the Company. Employee
                acknowledges that such shares will not be registered under the
                Securities Act of 1933, as amended (the "Securities Act") by
                reason of a specific exemption there from and that such shares
                must be held indefinitely, unless they are subsequent registered
                under the Securities Act or Employee obtains an opinion of
                counsel, in form and substance satisfactory to the Company and
                its counsel, that such registration is not required. Employee
                further acknowledges and understands that the Company is under
                no obligation to register the shares. Employee agrees that, as a
                condition precedent to issuance of the shares, he will make
                customary investment representations in favor of the Company and
                will agree to reasonable restrictions on transfer of the shares
                in light of the requirements of the Securities Act and will, if
                requested by the Company, execute a "market stand-off" covenant
                providing that he shall not transfer such shares for a period of
                one hundred eighty (180) days after the Company's initial public
                offering. After issuance of such shares, the Company will have
                no further obligation to pay Employee any bonuses pursuant to
                Part Two, Section 4.D.

        D.      OPTION ACCELERATION UPON INVOLUNTARY TERMINATION. In connection
                with the Involuntary Termination of Employee's employment (other
                than Termination for Cause), whether before or after a Change in
                Control transaction, each of Employee's Options under the Stock
                Option Plan and all restricted or unvested Common Stock granted
                by the Company will (to the extent not then otherwise
                exercisable or vested) automatically accelerate and vest and any
                repurchase rights with respect thereto will terminate so that
                each such Option or share of restricted or unvested Common Stock
                will become immediately and fully exercisable or vested as of
                the date of termination. Each such accelerated Option, together
                with all of Employee's other vested Options, will remain
                exercisable for a period of three (3) years following Employee's
                Involuntary Termination and may be exercised for any or all of

<PAGE>   6

                the option shares, including the accelerated shares, in
                accordance with the exercise provisions of the Option agreement
                evidencing the grant.

        E.      RELEASE OF COMPANY. Receipt of severance benefits pursuant to
                this Section 10 shall be in lieu of all other amounts payable by
                the Company to Employee and in settlement and complete release
                of all claims Employee may have against the Company other than
                those arising out of the severance benefits due and payable
                under Sections 10 and 16 of Part Two of this Agreement and
                Employee's rights under Part Three of this Agreement. Employee
                acknowledges and agrees that execution of a general release of
                claims by Employee in a form reasonably acceptable to the
                Company shall be a condition precedent to the Company's
                obligation to pay severance benefits hereunder.

11.     OPTION/VESTING ACCELERATION UPON CHANGE IN CONTROL.

        A.      To the extent the acquiring company in any Change in Control
                transaction does not assume or otherwise continue in full force
                and effect the Employee's outstanding Options under the Stock
                Option Plan, those Options shall automatically accelerate and
                vest so that each such Option will, immediately prior to the
                Change in Control, become fully exercisable for all the option
                shares and shall terminate immediately after the Change in
                Control transaction.

        B.      The following provisions shall govern any Options which are to
                be assumed or otherwise continued in effect in the Change in
                Control and any restricted or unvested shares of Common Stock
                held by the Employee at the time of the Change in Control.

                The Options shall accelerate and vest at the time of the Change
                in Control so that each Option will become exercisable for all
                of the Option shares immediately prior to the Change in Control
                transaction, except to the extent the Option parachute payment
                attributable to such accelerated vesting would otherwise result
                in an excess parachute payment under Code Section 280G. Any
                Option which does not accelerate and vest at the time of the
                Change in Control by reason of the foregoing limitation shall
                continue to become exercisable and vest in accordance with the
                vesting schedule applicable to that Option immediately prior to
                the Change in Control.

                Any restricted or unvested shares of Common Stock held by the
                Employee at the time of the Change in Control shall immediately
                vest at that time and the Company's repurchase rights with
                respect to those shares shall terminate, except to the extent
                the parachute payment attributable to such accelerated vesting,
                when added to the parachute payment attributable to the
                acceleration of the Employee's outstanding Options, would result
                in an excess parachute payment under Code Section 280G. The
                Company's repurchase rights with respect to any restricted or
                unvested shares which do not vest at the time of the Change in
                Control by reason of the foregoing limitation shall continue in
                effect and shall be assigned to any successor entity in the
                Change in Control transaction, and Employee shall continue to
                vest in those shares in accordance with the vesting schedule in
                effect for the shares immediately prior to the Change in
                Control.

                Any Option which does not accelerate, and any restricted or
                unvested shares of Common Stock which do not vest at the time of
                the Change in Control by reason of the foregoing limitations
                shall immediately vest in full pursuant to the provisions of
                Section 11.C. upon any Involuntary Termination of Employee's
                employment following the Change in Control (other than a
                Termination for Cause). Each such accelerated Option, together
                with each of the Employee's other vested Options shall remain
                exercisable and outstanding for a period of three (3) years and
                may be exercised for any or all of the Option shares, including
                the accelerated shares, in accordance with the provisions of the
                Option agreement evidencing such Option.

                All determinations concerning the application of the parachute
                payment provisions of Code Section 280G to the accelerated
                vesting of Options and shares pursuant to this Section 11 shall
                be made by the Company's independent certified public
                accountant, whose determination shall be binding.

                Each Option which is assumed or otherwise continued in effect
                will be appropriately adjusted to apply to the number and class
                of securities which would have been issued to Employee in the
                consummation of the Change in Control transaction had the Option
                been exercised immediately prior to such

<PAGE>   7

                transaction, and appropriate adjustments will be made to the
                Option exercise price payable per share, provided the aggregate
                exercise price will remain the same.

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

13.     NON-SOLICITATION AND NON-DISPARAGEMENT. During any period for which
        Employee is receiving compensation payments pursuant to Part Two,
        Section 4 and two (2) years thereafter, Employee will not directly or
        indirectly (i) solicit any Company employee, independent contractor or
        consultant to leave the Company's employ or otherwise terminate such
        person's relationship with the company for any reason or interfere in
        any other manner with the employment or other relationships at the time
        existing between the Company and its current employees, independent
        contractors or consultants, (ii) solicit any of the Company's customers
        for products or services substantially similar to those offered by the
        Company, or (iii) disparage the Company or any of its stockholders,
        directors, officers, employees or agents.

14.     CONFIDENTIALITY.

        A.      Employee hereby acknowledges that the Company may, from time to
                time during the Employment Period, disclose to Employee
                confidential or proprietary information pertaining to the
                Company's business and affairs and client base or prospects,
                including (without limitation) customer lists and accounts,
                other similar items indicating the source of the Company's
                income and information pertaining to the salaries, duties and
                performance levels of the Company's employees. Employee will
                not, at any time during or after such Employment Period,
                disclose to any third party or directly or indirectly make use
                of any such confidential information, including (without
                limitation) the names, addresses and telephone numbers of the
                Company's customers, other than in connection with, and in
                furtherance of, the Company's business and affairs. Nothing
                contained in this section shall be construed to prevent Employee
                from disclosing the amount of his salary.

        B.      All documents and data (whether written, printed or otherwise
                reproduced or recorded) containing or relating to any such
                confidential or proprietary information of the Company which
                come into Employee's possession during the Employment Period
                will be returned by Employee to the Company immediately upon the
                termination of the Employment Period or upon any earlier request
                by the Company, and Employee will not retain any copies, notes
                or excerpts thereof. Notwithstanding the foregoing, Employee
                shall be entitled to retain his 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 14.A. above to the extent such
                retained materials constitute confidential information.

        C.      Employee's obligations under this Section 14 will continue in
                effect after the termination of his employment with the Company,
                whatever the reason or reasons for such termination, and the
                Company will have the right to communicate with any of
                Employee's future or prospective employers concerning his
                continuing obligations under this Section 14.

15.     OWNERSHIP RIGHTS.

        A.      All materials, ideas, discoveries and inventions pertaining to
                the Company's business or clients, including (without
                limitation) all patents and copyrights, patent applications,
                patent renewals and extensions, trade secrets, software and the
                names, addresses and telephone numbers of customers and
                prospects, will belong solely to the Company.

        B.      All materials, ideas, discoveries and inventions which Employee
                may devise, conceive, develop or reduce to practice (whether
                individually or jointly with others) during the Employment
                Period will be the sole property of the Company and are hereby
                assigned by Employee to the Company, except for any idea,
                discovery or invention (i) for which no Company equipment,
                supplies, facility or trade secret information is used, (ii)
                which is developed entirely on Employee's own time and (iii)
                which neither (a) relates at the time of conception or reduction
                to practice, to the Company's business or any actual or
                demonstrably-anticipated research or development program of the
                Company nor (b) results from any

<PAGE>   8

                work performed by Employee for the Company. The foregoing
                exception corresponds to the assignment of inventions precluded
                by California Labor Code Section 2870, attached as Exhibit A.

        C.      Employee will, at all times whether during or after the
                Employment Period, assist the Company, at the Company's sole
                expense, in obtaining, maintaining, defending and enforcing all
                legal rights and remedies of the Company, including, without
                limitation, patents, copyrights and other proprietary rights of
                the Company. Such assistance will include (without limitation)
                the execution of documents and assistance and cooperation in
                legal proceedings.

        D.      Employee will execute and be bound by all the terms and
                provisions of the Company's standard Proprietary Information
                Agreement, which is incorporated in whole herein by this
                reference. Nothing in this document will be deemed to modify or
                affect Employee's duties and obligations under those other
                agreements, which shall be deemed to be obligations under this
                Agreement.

16.     TERMINATION OF EMPLOYMENT.

        A.      The Company (or any successor entity resulting from a Change in
                Control) may terminate Employee's employment under this
                Agreement at any time for any reason, with or without cause, by
                providing Employee with at least seven (7) days prior written
                notice. However, such notice requirement will not apply in the
                event there is a Termination for Cause under subsection D below.

        B.      In the event there is a termination of Employee's employment by
                reason of an Involuntary Termination of his employment with the
                Company (other than Termination for Cause) during the Term,
                Employee will become entitled to the benefits specified in Part
                Two, Section 10 in addition to any unpaid compensation earned by
                Employee under Part Two, Section 4.A. for services rendered
                prior to such termination.

        C.      Should Employee's employment with the Company terminate by
                reason of his death or disability during the Employment Period,
                no severance benefits will be payable to Employee under Part
                Two, Section 10, and only the limited death or disability
                benefits provided under Part Two, Section 9 will be payable.

        D.      The Company may at any time, upon written notice, terminate
                Employee's employment hereunder for any act qualifying as a
                Termination for Cause or at any time following the expiration of
                the Term. Such termination will be effective immediately upon
                such notice.

        E.      Upon such Termination for Cause or at any time following the
                expiration of the Term, the Company will only be required to pay
                Employee any unpaid compensation earned by Employee pursuant to
                Part Two, Section 4.A. for services rendered through the date of
                such termination, and no termination or severance benefits will
                be payable to Employee under Part Two, Section 10.

                     PART THREE -- MISCELLANEOUS PROVISIONS

1.      MITIGATION. Employee shall not be required to mitigate damages or the
        amount of any payment provided for under this Agreement by seeking other
        employment or otherwise and no future income earned by Employee from
        employment or otherwise shall in any way reduce or offset any payments
        due to Employee hereunder. The provisions of this Agreement, and any
        payment provided for hereunder, shall not reduce any amounts otherwise
        payable, or in any way diminish Employee's existing rights which would
        accrue solely as a result of the passage of time, under any Company
        Employee Benefit Plan, "Payroll practice" (as defined in ERISA),
        compensation arrangement, incentive plan, stock option or other
        stock-related plan.

2.      INDEMNIFICATION. The indemnification provisions for officers and
        directors under the Company's Bylaws and any applicable indemnification
        agreement between Employee and the Company will (to the maximum extent
        permitted by law) be extended to Employee, during the period following
        Employee's Involuntary Termination, with respect to any and all matters,
        events or transactions occurring or effected during Employee's
        Employment Period.

<PAGE>   9

3.      MISCELLANEOUS. The provisions of this Agreement will be construed and
        interpreted under the laws of the State of California. This Agreement
        incorporates the entire Agreement between Employee and the Company
        relating to the terms of his employment and the subject of severance
        benefits and supersedes all prior agreements and understandings with
        respect to such subject matter. This Agreement may only be amended by
        written instrument signed by Employee and an authorized executive
        officer of the Company.

4.      INJUNCTIVE RELIEF AND ADDITIONAL REMEDY. Employee acknowledges that the
        injury that would be suffered by the Company as a result of a breach of
        the provisions of Sections 12, 13, 14 and 15 would be irreparable and
        that an award of monetary damages to the Company for such a breach would
        be an inadequate remedy. Consequently, the Company will have the right,
        in addition to any other rights it may have, to obtain injunctive relief
        to restrain any breach or threatened breach or otherwise to specifically
        enforce any provision of this Agreement, and the Company will not be
        obligated to post bond or other security in seeking such relief.

5.      REPRESENTATIONS AND WARRANTIES BY EMPLOYEE. Employee represents and
        warrants to the Company that the execution and delivery by Employee of
        this Agreement do not, and the performance by Employee of Employee's
        obligations hereunder will not, with or without the giving of notice or
        the passage of time, or both: (a) violate any judgment, writ,
        injunction, or order of any court, arbitrator, or governmental agency
        applicable to Employee or (b) conflict with, result in the breach of any
        provisions of or the termination of, or constitute a default under, any
        agreement to which Employee is a party or by which Employee is or may be
        bound.

6.      WAIVER. The rights and remedies of the parties to this Agreement are
        cumulative and not alternative. Neither the failure nor any delay by
        either party in exercising any right, power, or privilege under this
        Agreement will operate as a waiver of such right, power, or privilege,
        and no single or partial exercise of any such right, power, or privilege
        will preclude any other or further exercise of such right, power, or
        privilege or the exercise of any other right, power, or privilege. To
        the maximum extent permitted by applicable law, (a) no claim or right
        arising out of this Agreement can be discharged by one party, in whole
        or in part, by a waiver or renunciation of the claim or right unless in
        writing signed by the other party; (b) no waiver that may be given by a
        party will be applicable except in the specific instance for which it is
        given; and (c) no notice to or demand on one party will be deemed to be
        a waiver of any obligation of such party or of the right of the party
        giving such notice or demand to take further action without notice or
        demand as provided in this Agreement.

7.      BINDING EFFECT; DELEGATION OF DUTIES. This Agreement shall be binding
        upon and inure to the benefit of the Company and any successor of the
        Company, including, without limitation, any corporation or corporations
        acquiring directly or indirectly all or substantially all of the stock,
        business or assets of the Company, whether by merger, consolidation,
        division, sale or otherwise (and such successor shall thereafter be
        deemed the "Company" for purposes of this Agreement). The Company will
        require any successor (whether direct or indirect, by purchase, merger,
        consolidation or otherwise) to all or substantially all of the business
        and/or assets of the Company, by agreement in form and substance
        satisfactory to Employee, to expressly assume and agree to perform this
        Agreement in the same manner and to the same extent that the Company
        would be required to perform if such succession had not taken place.
        Failure of the Company to obtain such assumption and agreement prior to
        the effectiveness of any such succession shall be a breach of this
        Agreement entitling Employee to the benefits hereunder, as though
        Employee was subject to Involuntary Termination. This Agreement shall be
        binding and inure to the benefit of Employee, his successors, assigns,
        executors, administrators or beneficiaries. The duties and covenants of
        Employee under this Agreement, being personal, may not be delegated.

8.      ENTIRE AGREEMENT; AMENDMENTS. This Agreement contains the entire
        agreement between the parties with respect to the subject matter hereof
        and supersedes all prior agreements and understandings, oral or written,
        between the parties hereto with respect to the subject matter hereof.
        This Agreement may not be amended orally, but only by an agreement in
        writing signed by the parties hereto.

9.      ARBITRATION. Any controversy which may arise between Employee and the
        Company with respect to the construction, interpretation or application
        of any of the terms, provisions, covenants or conditions of this
        Agreement or any claim arising from or relating to this Agreement will
        be submitted to final and binding

<PAGE>   10

        arbitration in San Francisco, California in accordance with the rules of
        the American Arbitration Association then in effect.

10.     SEVERABILITY. If any provision of this Agreement is held invalid or
        unenforceable by any court of competent jurisdiction, the other
        provisions of this Agreement will remain in full force and effect. Any
        provision of this Agreement held invalid or unenforceable only in part
        or degree will remain in full force and effect to the extent not held
        invalid or unenforceable.

11.     COUNTERPARTS; FACSIMILE. This Agreement may be executed in one or more
        counterparts, each of which will be deemed to be an original copy of
        this Agreement and all of which, when taken together, will be deemed to
        constitute one and the same agreement. To the maximum extent permitted
        by applicable law, this Agreement may be executed via facsimile.

12.     NOTICES. Any notice required to be given under this Agreement shall be
        deemed sufficient, if in writing, and sent by certified mail, return
        receipt requested, via overnight courier, or hand delivered to the
        Company at 22 Pelican Way, San Rafael, California 94901, and to Employee
        at his most recent address reflected in the permanent Company records.

13.     LEGAL COSTS. If any legal action or other proceeding is brought by
        either party for the enforcement of this Agreement, or because of an
        alleged dispute, breach, default or misrepresentation in connection with
        any of the provisions of this Agreement, the prevailing party shall be
        entitled to recover reasonable attorneys fees and other costs incurred
        in that action or proceeding. Notwithstanding anything herein above to
        the contrary, as between Employee and the Company, the Company shall
        bear all legal costs and expenses of defending the validity of this
        Agreement against any third party. The Company shall bear all legal
        costs and expenses incurred in the event the Company should contest or
        dispute the characterization of any amounts paid pursuant to this
        Agreement as being nondeductible under Section 280G of the Code or
        subject to imposition of an excise tax under Section 4999 of the Code.

        Please indicate your acceptance of the foregoing provisions of this
Agreement by signing the enclosed copy of this Agreement and returning it to the
Company.

                                    Very truly yours,

                                    QUADRAMED CORPORATION

                                    By:
                                        --------------------------------------
                                        Lawrence P. English
                                        Chief Executive Officer

ACCEPTED BY AND AGREED TO:

--------------------------------------
Michael H. Lanza

                            DATED: SEPTEMBER 18, 2000

<PAGE>   11

                                    EXHIBIT A

SECTION 2870.  EMPLOYMENT AGREEMENTS; ASSIGNMENT OF RIGHTS.

(a)     Any provision in an employment agreement which provides that an employee
        shall assign, or offer to assign, any of his or her rights in an
        invention to his or her employer shall not apply to an invention that
        the employee developed entirely on his or her own time without using the
        employer's equipment, supplies, facilities, or trade secret information
        except for those inventions that either:

        (1)     Relate at the time of conception or reduction to practice of the
                invention to the employer's business, or actual or demonstrably
                anticipated research or development of the employer; or

        (2)     Result from any work performed by the employee for the employer.

(b)     To the extent a provision in an employment agreement purports to require
        an employee to assign an invention otherwise excluded from being
        required to be assigned under subdivision (a), the provision is against
        the public policy of this state and is unenforceable.

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