Document:

Exhibit 10.1

 Exhibit 10.1 
 

 
 The 2008 QuadraMed Incentive Compensation Plan (ICP) 
 February 2008 
 This document provides details
of the 2008 QuadraMed Incentive Compensation Plan (“ICP”). 
 The Board of Directors (“Board”) and/or the Compensation
Committee of the Board (“Compensation Committee” ) retain the right to make changes to or deviations from the ICP at any time. 
 Plan
Objectives 
  

	 	•	 	 To attract, retain and motivate valued talent by offering a market competitive incentive- based compensation program; 

  

	 	•	 	 To support our pay-for-performance philosophy by rewarding management for achievement of company financial targets and differentiating the payment based on the
achievement of individual goals; 

  

	 	•	 	 To align the interest of management with the interests of our shareholders and customers to achieve individual goals that will drive business success; and

  

	 	•	 	 To signal important organizational performance priorities. 

 Participation and Performance Period 
  

	 	•	 	 The ICP will measure performance over the fiscal/calendar year of January 1, 2008 through December 31, 2008 (“FY08”).

  

	 	•	 	 Employees in resource management positions (managing others) or those whose roles are identified as resource management positions in the future, will be eligible to
participate in the ICP. The total bonus potential is based on a targeted percentage based on management level as shown in Chart A, “Management Bonus Potential,” in the addendum. 

  

	 	•	 	 Employees who move into an ICP eligible position through September 30, 2008 will be eligible for a prorated ICP bonus based on the number of full months
employed in an eligible role in FY08; those hired/promoted after October 1, 2008 will not be eligible for an ICP award for FY08. 

  

	 	•	 	 Employees who move from one eligible position will have their ICP bonus level split according to the number of completed months spent in each eligible position.

  

	 	•	 	 Management reserves the right to include or exclude ICP eligible positions as needed. Eligible employees will be notified of their eligibility and provided
individual objectives. 

 Performance Measures and Standards 
 There are two components that constitute the ICP targets for FY08: corporate objectives and individual objectives. The components will be measured are as
follows: 
 On or before March 30, 2008, the Board will establish in writing the following: 
 (i) the targeted EBITDA for FY 08. Should measured adjusted EBITDA fall short of the target, the ICP pool will be decreased by the amount of the shortfall
so that the reported adjusted EBITDA for the Company can be equal to or greater than the target. Total bonus potential will be based on achievement of such adjusted EBITDA; 
  

 (ii) the targeted revenue for FY 08, as well as the component threshold below which no
bonus will be paid, and 
 (iii) the targeted sales bookings for FY 08, as well as the component threshold below which no bonus will be paid.

 Due to the Board’s belief that the disclosure of the Executive Targets would adversely affect the Company, the Board and all other
officers and employees of the Company who become aware of such targets shall treat such targets as confidential information. Following the initial determination of performance targets, the Compensation Committee will monitor corporate performance
throughout each fiscal quarter, and may decide at any time before final quarter or year-end determinations are reached to adjust the earlier target levels as appropriate, for example, to take into account unusual or unanticipated corporate or
industry-wide developments. 
 Individual Objectives 
  

	 	•	 	 All eligible participants will have two to five individual objectives established during the first two months of the fiscal year. 

  

	 	•	 	 These objectives must be linked to the Company’s strategy/business needs and be measurable. Objectives must be achieved by the deadlines set within the fiscal
year in order to be considered met for the purpose of bonus payout. Objectives must be approved by at least two levels of management in order to be acceptable as individual objectives. 

  

	 	•	 	 Any changes to objectives must be made in writing and approved by at least two levels of management. 

  

	 	•	 	 It is up to the individual to ensure objectives are established by the end of February 2008. New hires must have objectives established within 30 days of hire.
Should business needs mean that objectives must be changed, it is up to the individual to work with his or her manager to update such objectives. No changes to objectives may be made after September 30, 2008 unless expressly approved by the
Compensation Committee. 

  

	 	•	 	 If objectives are not established for an eligible participant as provided in the ICP, no ICP bonus shall be payable to such individual in respect of individual
objectives. 

  

	 	•	 	 Unless expressly approved by the Compensation Committee, an individual must be employed on the day the award is to be paid in order to receive the award.

  

	 	•	 	 ICP calculations will be based on the employee’s salary as of September 30, 2008. 

  

	 	•	 	 An employee who receives an overall performance rating below “meets expectations” will not be eligible for an ICP award. 

  

	 	•	 	 Bonus payouts for all components will be based on adjusted EBITDA results. The 2008 budget will be built based on a bonus accrual of 70%; hence if the budget is
achieved exactly, the ICP payout will be 70%. If the business generates additional margins or reduced expenses during the year the ICP accrual will be adjusted up to a maximum of 100%. 

  

	 	•	 	 It may be possible to receive an ICP bonus that is greater than 100% of target bonus potential. The profit above what is required to achieve the targeted adjusted
EBITDA after paying out 100% of the ICP bonus will be split between shareholders and the ICP pool in a 75/25 split, respectively. (For example, for each $100 of overachievement, $25 will be added to the ICP pool). In no event will an eligible
participant’s ICP payout exceed 125% of their maximum ICP bonus potential. 

  

	 	•	 	 Payouts for the Revenue, Sales Bookings and Individual Objectives components will be based on level of achievement as described in Chart A below.

 Payment of Awards 
  

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 Section 409A 
 In the event that any provision of the ICP shall be determined to contravene Internal Revenue Code (“Code”) section 409A, the regulations promulgated thereunder, regulatory interpretations or announcements
with respect to section 409A or applicable judicial decisions construing section 409A, any such provision shall be void and have no effect. Moreover, the ICP shall be interpreted at all times in such a manner that the terms and provisions of the ICP
comply with Code section 409A, the regulations promulgated thereunder, regulatory interpretations or announcements with respect to section 409A and applicable judicial decisions construing section 409A. 
 Chart A 
 Management Bonus Potential

 The following chart illustrates the ICP bonus potential as a percentage of base salary for eligible participants: 
  

												
	 Position
	  	Total ICP
Potential
as % of
Base Salary	 	 	Percent of ICP Potential
Dependent on Each Component
	 	  	 	Adj.
EBITDA	  	Revenue	  	Sales
Bookings	  	Individual
Objectives**
	 Manager
	  	10	%	 	15	  	15	  	10	  	60
	 Director
	  	15	%	 	15	  	15	  	20	  	50
	 Vice President
	  	20	%	 	20	  	20	  	20	  	40
	 Sr. Vice President
	  	50	%	 	25	  	25	  	25	  	25

 The following chart illustrates how much of the total ICP bonus potential eligible participants
may earn based on completed months of service as of September 30, 2008: 
  

																												
	  	  	Full Months Employed in 2008 as of September 30, 2008	 
	 Position
	  	9	 	 	8	 	 	7	 	 	6	 	 	5	 	 	4	 	 	3	 	 	2	 	 	1	 
	 Manager
	  	100	%	 	92	%	 	83	%	 	75	%	 	67	%	 	58	%	 	50	%	 	42	%	 	33	%
	 Director
	  	100	%	 	92	%	 	83	%	 	75	%	 	67	%	 	58	%	 	50	%	 	42	%	 	33	%
	 Vice President
	  	100	%	 	92	%	 	83	%	 	75	%	 	67	%	 	58	%	 	50	%	 	42	%	 	33	%

 Individual Objectives** 
  

	 	•	 	 Each objective makes up a percent of the total potential for this component. The amount that each objective is weighted at is set by the employee and his/her
manager and approved by the next two levels of management. 

  

	 	•	 	 Payment for this component is based on completed objectives with the total percentage value of each objective added together to determine the percent of this
component to be paid. 

 Each quarter the Company will calculate what percentage of the ICP pool can be paid while still
achieving or exceeding the forecasted annual adjusted EBITDA. The percentage of any necessary ICP pool reduction would be the amount of each employee’s reduction in their maximum ICP bonus potential. 
  

 3Exhibit 10.2

 Exhibit 10.2 
 

 
 QUADRAMED CORPORATION 
 EXECUTIVE LONG-TERM BONUS PLAN 
 1. Purpose 
 The purposes of the Plan are to (i) compensate the Company’s senior management team for substantial revenue performance and other achievements
by the Company and (ii) focus the Company’s senior management team on goals which the Board believes will provide a stimulus to stock price appreciation. 
 2. Definitions 
 The following terms wherever used herein shall have the meanings set forth below. 
 (a) The term “Affiliate” shall mean any entity in which the Company or a Subsidiary has an ownership interest of at least 50%.

 (b) The term “Board” shall mean the Board of Directors of QuadraMed Corporation. 
 (c) The term “Compensation Committee” shall mean the Compensation Committee of the Board. 
 (d) The term “Company” shall mean QuadraMed Corporation and/or any of its Subsidiaries and Affiliates, as the context requires.

 (e) The term “Effective Date” shall mean the date the Plan is approved by the Board. 
 (f) The term “Adjusted EBITDA” shall mean, in any given fiscal year, the earnings of the Company before interest, taxes,
depreciation and amortization, determined by the Compensation Committee based on the audited financial statements of the Company, without giving effect to any Significant Acquisition consummated by the Company after the Effective Date of the Plan.

 (g) The term “Participant” shall mean each of the members of the Company’s senior management as selected by
the Compensation Committee. The initial Participants are identified on Exhibit A to the Plan. 
 (h) The term
“Payment Date” shall mean the date of payment of any bonus payable pursuant to the terms of the Plan determined by the Compensation Committee. 
 (i) The term “Plan” shall mean the QuadraMed Corporation Executive Long-Term Bonus Plan, as the same may be amended from time to time. 
 (j) The term “Revenues” shall mean, in any given fiscal year, the total consolidated revenues of the Company as determined by
the Compensation Committee based on the audited financial statements of the Company, without giving effect to any Significant Acquisition consummated by the Company after the Effective Date of the Plan. 
 (k) The term “Significant Acquisition” shall mean an acquisition of assets and/or entity/ies determined to be significant by the
Compensation Committee in its sole discretion. 
 (l) The term “Subsidiary” shall mean any corporation which at the
time qualified as a subsidiary of the Company under the definition of “subsidiary corporation” in Section 424 of the Internal Revenue Code of 1986, as amended. 
 3. Effective Date of the Plan 
 The Plan shall become effective upon Board approval, such approval
made based upon the recommendation of the Compensation Committee. 
 4. Administration 
 (a) The Plan shall be administered by the Compensation Committee. 
  

 (b) The Compensation Committee may establish, from time to time and at any time, subject
to the limitations of the Plan as set forth herein, such rules and regulations and amendments and supplements thereto, as it deems necessary for the proper administration of the Plan. 
 (c) Bonus payments shall be paid to the Participants by the Company only after prior approval of the Compensation Committee. 

(d) All bonus payments to be paid to the Participants pursuant to the Plan are subject to withholding of all applicable taxes, and the
Compensation Committee may condition the payment of any bonuses under the Plan on satisfaction of the applicable withholding obligations. 
 (e) The Compensation Committee’s interpretation and construction of the provisions of the Plan and the rules and regulations adopted by the Compensation Committee shall be final and binding on all persons, unless
otherwise determined by the Board. No member of the Compensation Committee or the Board shall be liable for any action taken or determination made, in respect of the Plan, in good faith. 
 5. Participation in the Plan 
 (a) The Plan is intended for Participants only.

 (b) The Plan is not exclusive; additional bonuses may be granted by the Company to the Participants pursuant to other
compensation plans offered by the Company or other properly approved compensation awards. 
 6. Bonus Payment Criteria 
 (a) Bonus payments that may be made to the Participants pursuant to the Plan are calculated based upon the achievement of goals specified
by the Compensation Committee. Such goals have been determined by the Compensation Committee to be as follows (the “Goals”): 
 (i) Revenue/Adjusted EBITDA. 
 (A) For the fiscal year ended December 31, 2010,
both: 
 (1) Revenues of at least $200 million; and 
 (2) an Adjusted EBITDA target to be defined by the Compensation Committee no later than August 29, 2008 (collectively, the
“2010 Goals”), or 
 (B) In the event the Company fails to achieve the 2010 Goals, for the fiscal year ended
December 31, 2001, both: 
 (1) Revenues of at least $220 million; and 
 (2) an Adjusted EBITDA target to be defined by the Compensation Committee no later than August 29, 2008 (collectively, the
“2011 Goals”). 
 (ii) Series A Preferred Stock Conversion. For any reason whatsoever on or before
March 31, 2012, the conversion of at least 90% of the total shares of the Company’s Series A Cumulative Mandatory Convertible Preferred Stock issued and outstanding as of the Effective Date of the Plan into shares of the Company’s
common stock (or eligibility for mandatory conversion by the Board under the terms of the Certificate of Designation for the Series A Cumulative Mandatory Convertible Preferred Stock, as amended). 
 (b) Each Participant may be eligible for bonus payments pursuant to the Plan based upon the Company’s achievement of one or more of
the Goals. Goal(s), the weighting of multiple Goals (if and as applicable), the maximum amount payable, and the amount(s) that may be paid based upon the achievement of the Goal(s), shall be determined on an individual Participant basis by the
Compensation Committee and shall be recorded on Exhibit A to the Plan. 
  

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 (c) In the event that a Participant is eligible to receive bonus payments based upon
multiple Goals, the Company’s failure to achieve one such Goal shall not affect the Participant’s eligibility for bonus payments associated with other Goals. 
 (d) A Participant shall have no right to receive any bonus payment pursuant to the Plan unless such Participant is employed by the Company
on a full-time basis on the Payment Date established by the Compensation Committee for such bonus payment. 
 (e) The
aggregate maximum amount payable to all Participants pursuant to the Plan shall not exceed $3 million. 
 (f) Each bonus
payment made to a Participant pursuant to the Plan shall be paid in cash by the Company on the Payment Date established by the Compensation Committee for such bonus payment. 
 7. Amendments and Discontinuance of the Plan 
 The Compensation Committee shall have the right at any
time and from time to time to amend, modify, or discontinue the Plan. 
 8. Plan Subject to Governmental Laws and Regulations 
 The Plan and the payment of bonuses pursuant to the Plan shall be subject to all applicable governmental laws and regulations. Notwithstanding any other
provision of the Plan to the contrary, the Compensation Committee may in its sole and absolute discretion make such changes in the Plan as may be required to conform the Plan to such laws and regulations. 
 9. Exclusion From Retirement and Fringe Benefit Computation 
 No portion of any Award under the Plan shall be taken into account as “wages,” “salary” or “compensation” for any purpose, whether in determining eligibility, benefits or otherwise, under (i) any pension,
retirement, profit sharing or other qualified or non-qualified plan of deferred compensation, (ii) any employee welfare or fringe benefit plan including, but not limited to, group insurance, hospitalization, medical, disability and severance
programs, or (iii) any form of extraordinary pay including but not limited to bonuses, sick pay, vacation pay, termination indemnities or the like. 
 10. Non-Guarantee of Employment 
 Nothing in the Plan or any bonus payment made pursuant to the Plan shall be construed as a
contract of employment between the Participant and the Company or any Subsidiary or Affiliate, and selection of any person as a Participant in the Plan will not give that person the right to continue in the employ of the Company or any Subsidiary or
Affiliate, the right to continue to provide services to the Company or any Subsidiary or Affiliate, or as a limitation of the right of the Company or any Subsidiary or Affiliate to discharge any Participant or any other person at any time.

 11. Liability Limited; Indemnification 
 (a) To the maximum extent permitted by the law of the State of Delaware, neither the Company, the Board, the Compensation Committee nor any of the members of the Board or Compensation Committee, shall be liable for
any action or determination made with respect to the Plan. 
 (b) In addition to such other rights of indemnification that
they may have, the members of the Board and the Compensation Committee shall be indemnified by the Company to the maximum extent permitted by Delaware law against any and all liabilities and expenses incurred in connection with their service in such
capacity. 
  

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 12. Miscellaneous 
 (a) The headings in the Plan are for reference purposes only and shall not affect the meaning or interpretation of the Plan. 
 (b) The Plan shall be governed by, and construed in accordance with, the laws of the State of Delaware, without regard to principles of
conflict of laws of any jurisdiction. 
 (c) All notices and other communications made or given pursuant to the Plan shall be
in writing and shall be sufficiently made or given if delivered or mailed, addressed to the Participant at the address contained in the records of the Company or to the Company at the principal executive offices of the Company. 
 As approved by the Board of Directors of QuadraMed Corporation on May 6, 2008. 
  

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