Document:

<PAGE>   1
                                                                   EXHIBIT 10.61

QUADRAMED CORPORATION
Stock Exchange Deferred Compensation Plan
Master Plan Document
================================================================================

                            EFFECTIVE JANUARY 3, 2000

                               COPYRIGHT (C) 1999
                      BY COMPENSATION RESOURCE GROUP, INC.
                               ALL RIGHTS RESERVED

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QUADRAMED CORPORATION
Stock Exchange Deferred Compensation Plan
Master Plan Document
================================================================================

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                                      TABLE OF CONTENTS
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                                                                                          ----
<S>            <C>                                                                         <C>
               PURPOSE......................................................................1

ARTICLE 1      DEFINITIONS..................................................................1

ARTICLE 2      SELECTION, ENROLLMENT, ELIGIBILITY...........................................5

        2.1    Selection by Committee.......................................................5

        2.2    Enrollment Requirements......................................................5

        2.3    Eligibility; Commencement of Participation...................................5

        2.4    Termination of Participation.................................................5

ARTICLE 3      COMPANY CONTRIBUTION/CREDITING/TAXES.........................................5

        3.1    One-Time Company Contribution Amount.........................................6

        3.2    Investment of Trust Assets...................................................6

        3.3    Vesting......................................................................6

        3.4    Crediting/Debiting of Account Balances.......................................6

        3.5    FICA and Other Taxes.........................................................8

ARTICLE 4      SHORT-TERM PAYOUT; UNFORESEEABLE FINANCIAL EMERGENCIES; WITHDRAWAL
               ELECTION.....................................................................9

        4.1    Short-Term Payout............................................................9

        4.2    Other Benefits Take Precedence Over Short-Term...............................9

        4.3    Withdrawal Payout/Suspensions for Unforeseeable Financial Emergencies........9

        4.4    Withdrawal Election..........................................................9

ARTICLE 5      RETIREMENT OR TERMINATION BENEFIT...........................................10

        5.1    Retirement Benefit..........................................................10

        5.2    Payment of Retirement Benefit...............................................10

        5.3    Death Prior to Completion of Retirement Benefit.............................10

ARTICLE 6      PRE-RETIREMENT SURVIVOR BENEFIT.............................................11

        6.1    Pre-Retirement Survivor Benefit.............................................11

        6.2    Payment of Pre-Retirement Survivor Benefit..................................11

ARTICLE 7      TERMINATION BENEFIT.........................................................11

        7.1    Termination Benefit.........................................................11
</TABLE>

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QUADRAMED CORPORATION
Stock Exchange Deferred Compensation Plan
Master Plan Document
================================================================================

<TABLE>
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<S>            <C>                                                                         <C>
ARTICLE 8      DISABILITY WAIVER AND BENEFIT...............................................11

        8.1    Continued Eligibility; Disability Benefit...................................11

ARTICLE 9      BENEFICIARY DESIGNATION.....................................................12

        9.1    Beneficiary.................................................................12

        9.2    Beneficiary Designation; Change; Spousal Consent............................12

        9.3    Acknowledgment..............................................................12

        9.4    No Beneficiary Designation..................................................12

        9.5    Doubt as to Beneficiary.....................................................12

        9.6    Discharge of Obligations....................................................12

ARTICLE 10     TERMINATION, AMENDMENT OR MODIFICATION......................................13

        10.1   Termination.................................................................13

        10.2   Amendment...................................................................13

        10.3   Exchange Agreement..........................................................14

        10.4   Effect of Payment...........................................................14

ARTICLE 11     ADMINISTRATION..............................................................14

        11.1   Committee Duties............................................................14

        11.2   Administration Upon Change In Control.......................................14

        11.3   Agents......................................................................15

        11.4   Binding Effect of Decisions.................................................15

        11.5   Indemnity of Committee......................................................15

        11.6   Employer Information........................................................15

ARTICLE 12     OTHER BENEFITS AND AGREEMENTS...............................................15

        12.1   Coordination with Other Benefits............................................15

ARTICLE 13     [RESERVED]..................................................................15

ARTICLE 14     TRUST.......................................................................16

        14.1   Establishment of the Trust..................................................16

        14.2   Interrelationship of the Plan and the Trust.................................16

        14.3   Distributions From the Trust................................................16
</TABLE>

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Stock Exchange Deferred Compensation Plan
Master Plan Document
================================================================================

<TABLE>
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<S>            <C>                                                                         <C>
ARTICLE 15     MISCELLANEOUS...............................................................16

        15.1   Status of Plan..............................................................16

        15.2   Unsecured General Creditor..................................................16

        15.3   Employer's Liability........................................................16

        15.4   Nonassignability............................................................16

        15.5   Not a Contract of Employment................................................17

        15.6   Furnishing Information......................................................17

        15.7   Terms.......................................................................17

        15.8   Captions....................................................................17

        15.9   Governing Law...............................................................17

        15.10  Notice......................................................................17

        15.11  Successors..................................................................18

        15.12  Spouse's Interest...........................................................18

        15.13  Validity....................................................................18

        15.14  Incompetent.................................................................18

        15.15  Court Order.................................................................18

        15.16  Distribution in the Event of Taxation.......................................18

        15.17  Insurance...................................................................19

        15.18  Legal Fees To Enforce Rights After Change in Control........................19
</TABLE>

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QUADRAMED CORPORATION
Stock Exchange Deferred Compensation Plan
Master Plan Document
================================================================================

                              QUADRAMED CORPORATION
                    STOCK EXCHANGE DEFERRED COMPENSATION PLAN
                            Effective January 3, 2000

                                     PURPOSE

        The purpose of this Plan is to provide specified benefits to a select
group of management and highly compensated Employees who contribute materially
to the continued growth, development and future business success of QuadraMed, a
Delaware corporation, and its subsidiaries, if any, that sponsor this Plan. This
Plan shall be unfunded for tax purposes and for purposes of Title I of ERISA.

                                    ARTICLE 1
                                   DEFINITIONS

        For purposes of this Plan, unless otherwise clearly apparent from the
context, the following phrases or terms shall have the following indicated
meanings:

1.1     "Account Balance" shall mean, with respect to a Participant, a credit on
        the records of the Employer equal to the sum of (i) the Other
        Investments Account balance, and (ii) the Company Stock Account balance.
        The Account Balance, and each other specified account balance, shall be
        a bookkeeping entry only and shall be utilized solely as a device for
        the measurement and determination of the amounts to be paid to a
        Participant, or his or her designated Beneficiary, pursuant to this
        Plan. A Participant's "Account" shall consist of his or her Other
        Investments Account plus his or her Company Stock Account.

1.2     "Annual Installment Method" shall be an annual installment payment over
        the number of years selected by the Participant in accordance with this
        Plan, calculated as follows: The Account Balance of the Participant
        shall be calculated as of the close of business on the last business day
        of the year. The annual installment shall be calculated by multiplying
        this balance by a fraction, the numerator of which is one, and the
        denominator of which is the remaining number of annual payments due the
        Participant. By way of example, if the Participant elects a 10 year
        Annual Installment Method, the first payment shall be 1/10 of the
        Account Balance, calculated as described in this definition. The
        following year, the payment shall be 1/9 of the Account Balance,
        calculated as described in this definition. Each annual installment
        shall be paid on or as soon as practicable after the last business day
        of the applicable year.

1.3     "Base Annual Salary" shall mean W-2 wages of the Employee for such
        calendar year.

1.4     "Beneficiary" shall mean one or more persons, trusts, estates or other
        entities, designated in accordance with Article 9, that are entitled to
        receive benefits under this Plan upon the death of a Participant.

1.5     "Beneficiary Designation Form" shall mean the form established from time
        to time by the Committee that a Participant completes, signs and returns
        to the Committee to designate one or more Beneficiaries.

1.6     "Board" shall mean the board of directors of the Company.

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QUADRAMED CORPORATION
Stock Exchange Deferred Compensation Plan
Master Plan Document
================================================================================

1.7     "Cause" shall have the meaning assigned to such term in a Participant's
        employment agreement with the Employer, or if the Participant has no
        such employment agreement, the meaning assigned to such term in the
        QuadraMed Employee Manual, as such manual may be amended from time to
        time.

1.8     "Change in Control" shall mean the first to occur of any of the
        following events:

        (a)    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;

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

        (c)    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%);

        (d)    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;

        (e)    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

        (f)    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 of election.

1.9     "Code" shall mean the Internal Revenue Code of 1986, as it may be
        amended from time to time.

1.10    "Committee" shall mean the committee described in Article 11.

1.11    "Company" shall mean QuadraMed Corporation, a Delaware corporation, and
        any successor to all or substantially all of the Company's assets or
        business.

1.12    "Company Contribution" shall mean the amount credited to a Participant's
        Account under Section 3.1.

1.13    "Company Stock Account" shall mean (i) the sum of the Company
        Contribution credited to the Participant's Company Stock Account under
        Section 3.1, plus (ii) amounts credited in accordance with all the
        applicable crediting provisions of this Plan that relate to the
        Participant's

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QUADRAMED CORPORATION
Stock Exchange Deferred Compensation Plan
Master Plan Document
================================================================================

        Company Stock Account, less (iii) all distributions made to the
        Participant or his or her Beneficiary pursuant to this Plan that relate
        to the Participant's Company Stock Account.

1.14    "Deduction Limitation" shall mean the following described limitation on
        a benefit that may otherwise be distributable pursuant to the provisions
        of this Plan. Except as otherwise provided, this limitation shall be
        applied to all distributions that are "subject to the Deduction
        Limitation" under this Plan. If an Employer determines in good faith
        prior to a Change in Control that there is a reasonable likelihood that
        any compensation paid to a Participant for a taxable year of the
        Employer would not be deductible by the Employer solely by reason of the
        limitation under Code Section 162(m), then to the minimum extent deemed
        necessary by the Employer to ensure that the entire amount of any
        distribution to the Participant pursuant to this Plan prior to the
        Change in Control is deductible, the Employer may defer all or any
        portion of a distribution under this Plan. Any amounts deferred pursuant
        to this limitation shall continue to be credited/debited with additional
        amounts in accordance with Section 3.4 below, even if such amount is
        being paid out in installments. The amounts so deferred and amounts
        credited thereon shall be distributed to the Participant or his or her
        Beneficiary (in the event of the Participant's death) at the earliest
        possible date, as determined by the Employer in good faith, on which the
        deductibility of compensation paid or payable to the Participant for the
        taxable year of the Employer during which the distribution is made will
        not be limited by Section 162(m), or if earlier, the effective date of a
        Change in Control. Notwithstanding anything to the contrary in this
        Plan, the Deduction Limitation shall not apply to any distributions made
        after a Change in Control or after an Involuntary Termination of
        Employment, other than a Termination of Employment for Cause.

1.15    "Disability" shall mean a period of disability during which a
        Participant qualifies for permanent disability benefits under the
        Participant's Employer's long-term disability plan, or, if a Participant
        does not participate in such a plan, a period of disability during which
        the Participant would have qualified for permanent disability benefits
        under such a plan had the Participant been a participant in such a plan,
        as determined in the sole discretion of the Committee. If the
        Participant's Employer does not sponsor such a plan, or discontinues to
        sponsor such a plan, Disability shall be determined by the Committee in
        its sole discretion.

1.16    "Disability Benefit" shall mean the benefit set forth in Article 8.

1.17    "Election Form" shall mean the form established from time to time by the
        Committee that a Participant completes, signs and returns to the
        Committee to make an election under the Plan.

1.18    "Employee" shall mean a person who is an employee of any Employer.

1.19    "Employer(s)" shall mean the Company and/or any of its subsidiaries (now
        in existence or hereafter formed or acquired) that have been selected by
        the Board to participate in the Plan and have adopted the Plan as a
        sponsor.

1.20    "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
        as it may be amended from time to time.

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QUADRAMED CORPORATION
Stock Exchange Deferred Compensation Plan
Master Plan Document
================================================================================

1.21    "Exchange Agreement" shall mean a written agreement, as may be amended
        from time to time, which is entered into by and between an Employer and
        a Participant. Each Exchange Agreement executed by a Participant and the
        Participant's Employer shall provide for the entire benefit to which
        such Participant is entitled under the Plan; should there be more than
        one Exchange Agreement, the Exchange Agreement bearing the latest date
        of acceptance by the Employer shall supersede all previous Exchange
        Agreements in their entirety and shall govern such entitlement. The
        terms of any Exchange Agreement may be different for any Participant,
        and any Exchange Agreement may provide additional benefits not set forth
        in the Plan or limit the benefits otherwise provided under the Plan;
        provided, however, that any such additional benefits or benefit
        limitations must be agreed to by both the Employer and the Participant.

1.22    "Involuntary Termination of Employment" shall mean the Termination of
        Employment of a Participant who has an employment agreement with an
        Employer, but only if such Termination of Employment meets the
        requirements for an involuntary termination of employment under the
        terms of such employment agreement, except that any Termination of
        Employment by the Participant during the two-year period following a
        Change in Control shall not be considered involuntary based solely on a
        change in the Participant's title during that period.

        Any use of the term "Involuntary Termination of Employment" in this Plan
        shall not apply to any Participant who does not have a currently
        effective employment agreement with an Employer containing the defined
        term "Involuntary Termination of Employment".

1.23     "Measurement Fund" shall have the meaning set forth in Section 3.4(c).

1.24    "Other Investments Account" shall mean (i) the sum of the Company
        Contribution credited to the Participant's Other Investments Account
        under Section 3.1, plus (ii) amounts credited in accordance with all the
        applicable crediting provisions of this Plan that relate to the
        Participant's Other Investments Account, less (iii) all distributions
        made to the Participant or his or her Beneficiary pursuant to this Plan
        that relate to the Participant's Other Investments Account.

1.25    "Participant" shall mean any Employee (i) who is selected to participate
        in the Plan, (ii) who elects to participate in the Plan, (iii) who signs
        a Exchange Agreement, an Election Form and a Beneficiary Designation
        Form, (iv) whose signed Exchange Agreement, Election Form and
        Beneficiary Designation Form are accepted by the Committee, (v) who
        commences participation in the Plan, and (vi) whose Exchange Agreement
        has not terminated. A spouse or former spouse of a Participant shall not
        be treated as a Participant in the Plan or have an account balance under
        the Plan, even if he or she has an interest in the Participant's
        benefits under the Plan as a result of applicable law or property
        settlements resulting from legal separation or divorce. An individual
        shall continue to be a Participant in the Plan while he or she is
        receiving benefits.

1.26    "Plan" shall mean the Company's Stock Exchange Deferred Compensation
        Plan, which shall be evidenced by this instrument and by each Exchange
        Agreement, as they may be amended from time to time.

1.27    "Plan Year" shall mean a period beginning on January 3, 2000 and ending
        on December 31, 2000 for the first Plan Year, and for each subsequent
        Plan Year a period beginning on January 1 of each such calendar year and
        continuing through December 31 of such calendar year.

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Stock Exchange Deferred Compensation Plan
Master Plan Document
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1.28    "Pre-Retirement Survivor Benefit" shall mean the benefit set forth in
        Article 6.

1.29    "Retirement", "Retire(s)" or "Retired" shall mean, with respect to an
        Employee, severance from employment from all Employers for any reason
        other than a leave of absence, death or Disability on or after the
        earlier of the attainment of (a) age sixty (60) or (b) age fifty-five
        (55) with Ten (10) Years of Service.

1.30    "Retirement Benefit" shall mean the benefit set forth in Article 5.

1.31    "Short-Term Payout" shall mean the payout set forth in Section 4.1.

1.32    "Termination Benefit" shall mean the benefit set forth in Article 7.

1.33    "Termination of Employment" shall mean the severing of employment with
        all Employers, voluntarily or involuntarily, for any reason other than
        Retirement, Disability, death or an authorized leave of absence.

1.34    "Trust" shall mean one or more trusts established pursuant to that
        certain Master Trust Agreement, dated as of January 3, 2000 between the
        Company and the trustee named therein, as amended from time to time.

1.35    "Unforeseeable Financial Emergency" shall mean an unanticipated
        emergency that is caused by an event beyond the control of the
        Participant that would result in severe financial hardship to the
        Participant resulting from (i) a sudden and unexpected illness or
        accident of the Participant or a dependent of the Participant, (ii) a
        loss of the Participant's property due to casualty, or (iii) such other
        extraordinary and unforeseeable circumstances arising as a result of
        events beyond the control of the Participant, all as determined in the
        sole discretion of the Committee.

1.36    "Years of Service" shall mean the total number of full years after the
        effective date of this Plan in which a Participant has been employed by
        one or more Employers. For purposes of this definition, a year of
        employment shall be a 365 day period (or 366 day period in the case of a
        leap year) that, for the first year of employment, commences on the
        Employee's date of hiring and that, for any subsequent year, commences
        on an anniversary of that hiring date. Any partial year of employment
        shall not be counted.

                                    ARTICLE 2
                       SELECTION, ENROLLMENT, ELIGIBILITY

2.1     SELECTION BY COMMITTEE. Participation in the Plan shall be limited to a
        select group of management and highly compensated Employees of the
        Employers, as determined by the Committee in its sole discretion. From
        that group, the Committee shall select, in its sole discretion,
        Employees to participate in the Plan.

2.2     ENROLLMENT REQUIREMENTS. As a condition to participation, each selected
        Employee shall complete, execute and return to the Committee an Exchange
        Agreement, an Election Form and a Beneficiary Designation Form, all
        within 30 days after he or she is selected to participate in the Plan.
        In addition, the Committee shall establish from time to time such other
        enrollment requirements as it determines in its sole discretion are
        necessary.

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QUADRAMED CORPORATION
Stock Exchange Deferred Compensation Plan
Master Plan Document
================================================================================

2.3     ELIGIBILITY; COMMENCEMENT OF PARTICIPATION. Provided an Employee
        selected to participate in the Plan has met all enrollment requirements
        set forth in this Plan and required by the Committee, including
        returning all required documents to the Committee within the specified
        time period, that Employee shall commence participation in the Plan
        effective as of the date the Employee completes all enrollment
        requirements. If an Employee fails to meet all such requirements within
        the period required, in accordance with Section 2.2, that Employee shall
        not be eligible to participate in the Plan.

2.4     TERMINATION OF PARTICIPATION. If the Committee determines in good faith
        that a Participant no longer qualifies as a member of a select group of
        management or highly compensated employees, as membership in such group
        is determined in accordance with Sections 201(2), 301(a)(3) and
        401(a)(1) of ERISA, the Committee shall have the right, in its sole
        discretion, to immediately distribute the Participant's then Account
        Balance as a Termination Benefit and terminate the Participant's
        participation in the Plan.

                                    ARTICLE 3
                      COMPANY CONTRIBUTION/CREDITING/TAXES

3.1     COMPANY CONTRIBUTION AMOUNT. The Employer shall credit an amount to the
        Participant's Account under this Plan as of the date(s) specified in the
        Participant's Exchange Agreement. One-half of the amount so credited
        shall be credited to the Participant's Company Stock Account and the
        other half shall be credited to the Participant's Other Investments
        Account.

3.2     INVESTMENT OF TRUST ASSETS. The Trustee of the Trust shall be
        authorized, upon written instructions received from the Committee or
        investment manager appointed by the Committee, to invest and reinvest
        the assets of the Trust in accordance with the applicable Trust
        Agreement, including the disposition of stock and reinvestment of the
        proceeds in one or more investment vehicles designated by the Committee.

3.3     VESTING.

        (a) A Participant shall be vested in his or her Account in accordance
        with the following schedule:
<TABLE>
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                     YEARS OF SERVICE ON DATE
                   OF TERMINATION OF EMPLOYMENT           VESTED PERCENTAGE OF ACCOUNTS
               -----------------------------------------------------------------------------
<S>            <C>                                        <C>
                         Less than 3 Years                             0%
               -----------------------------------------------------------------------------
                          3 Years or more                             100%
               -----------------------------------------------------------------------------
</TABLE>

        (b) Notwithstanding anything to the contrary contained in this Section
        3.3, in the event of a Participant's death, Disability, Retirement or
        Involuntary Termination of Employment, other than a Termination of
        Employment for Cause, a Participant's Account shall immediately become
        100% vested (if it is not already vested in accordance with the above
        vesting schedules).

        (c) Notwithstanding subsection (b), the vesting schedule for a
        Participant's Account shall be accelerated in accordance with subsection
        (b), but only to the greatest extent possible without

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Stock Exchange Deferred Compensation Plan
Master Plan Document
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        causing, in the Committee's determination, the deduction limitations of
        Code Section 280G to become effective. In the event that all of a
        Participant's Account is not vested pursuant to such a determination,
        the Participant may request independent verification of the Committee's
        calculations with respect to the application of Code Section 280G. In
        such case, the Committee must provide to the Participant within 15
        business days of such a request an opinion from a nationally recognized
        accounting firm selected by the Participant (the "Accounting Firm"). The
        opinion shall state the Accounting Firm's opinion that any limitation in
        the vested percentage hereunder is necessary to avoid the limits of Code
        Section 280G and contain supporting calculations. The cost of such
        opinion shall be paid for by the Company.

3.4     CREDITING/DEBITING OF ACCOUNT BALANCES. In accordance with, and subject
        to, the rules and procedures that are established from time to time by
        the Committee, in its sole discretion, amounts shall be credited or
        debited to a Participant's Account Balance in accordance with the
        following rules:

        (a)     ELECTION OF MEASUREMENT FUNDS. A Participant shall elect, on the
                Election Form, one or more Measurement Fund(s) (as described in
                Section 3.4(c) below) to be used to determine the additional
                amounts to be credited to his or her Other Investments Account
                Balance for the first business day in which the Participant
                commences participation in the Plan and continuing thereafter
                for each subsequent day in which the Participant participates in
                the Plan, unless changed in accordance with the next sentence.
                Commencing with the first business day that follows the
                Participant's commencement of participation in the Plan and
                continuing thereafter for each subsequent day in which the
                Participant participates in the Plan, the Participant may (but
                is not required to) elect, by submitting an Election Form to the
                Committee that is accepted by the Committee, to add or delete
                one or more Measurement Fund(s) to be used to determine the
                additional amounts to be credited to his or her Other
                Investments Account Balance, or to change the portion of his or
                her Other Investments Account Balance allocated to each
                previously or newly elected Measurement Fund. If an election is
                made in accordance with the previous sentence, it shall apply to
                the next business day and continue thereafter for each
                subsequent day in which the Participant participates in the
                Plan, unless changed in accordance with the previous sentence. A
                Participant's Company Stock Account Balance shall automatically
                be credited to the Company Stock Fund.

        (b)     PROPORTIONATE ALLOCATION. In making any election described in
                Section 3.4(a) above, the Participant shall specify on the
                Election Form, in increments of five percentage points (5%), the
                percentage of his or her Other Investments Account Balance to be
                allocated to a Measurement Fund (as if the Participant was
                making an investment in that Measurement Fund with that portion
                of his or her Other Investments Account Balance).

        (c)     MEASUREMENT FUNDS. The Participant may elect one or more of the
                following Measurement Funds, based on certain mutual funds, for
                the purpose of crediting additional amounts to his or her Other
                Investments Account Balance:

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Stock Exchange Deferred Compensation Plan
Master Plan Document
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               (1)    TRAVELERS MONEY MARKET PORTFOLIO (Seeks high current
                      income from short-term money market instruments while
                      preserving capital and maintaining a high degree of
                      liquidity);

               (2)    PUTNAM DIVERSIFIED INCOME PORTFOLIO (Seeks high current
                      income consistent with preservation of capital. The
                      Portfolio will allocate its investments among the U.S.
                      Government Sector, the High Yield Sector, and the
                      International Sector of the fixed income securities
                      markets.);

               (3)    DREYFUS SMALL CAP PORTFOLIO (Seeks to maximize capital
                      appreciation);

               (4)    MFS MID CAP GROWTH PORTFOLIO (Seeks long-term growth of
                      capital by investing under normal market conditions, at
                      least 65% of its total assets in equity securities of
                      companies with medium market capitalization which the
                      investment advisor believes have above-average growth
                      potential.);

               (5)    LARGE CAP PORTFOLIO (Fidelity) (Seeks long-term growth of
                      capital by investing primarily in equity securities of
                      companies with large market capitalizations.);

               (6)    CAPITAL APPRECIATION FUND (Janus) (Seeks growth of capital
                      through the use of common stocks. Income is not an
                      objective. The Fund invests principally in common stocks
                      of small to large companies which are expected to
                      experience wide fluctuations in price in both rising and
                      declining markets.);

               (7)    SMITH BARNEY INTERNATIONAL EQUITY PORTFOLIO (Total return
                      on assets from growth of capital and income by investing
                      at least 65% of its assets in a diversified portfolio of
                      equity securities of established non-U.S. issuers.);and

               (8)    WARBURG PINCUS TRUST EMERGING MARKETS PORTFOLIO (Seeks
                      long-term growth of capital by investing primarily in
                      equity securities of non-U.S. issuers consisting of
                      companies in emerging securities markets.)

               (9)    QUADRAMED CORPORATION COMMON STOCK FUND This Fund is
                      invested wholly in common stock of QuadraMed Corporation.

               As necessary, the Committee may, in its sole discretion,
               discontinue, substitute or add a Measurement Fund. Each such
               action will take effect as of the first day of the calendar
               quarter that follows by thirty (30) days the day on which the
               Committee gives Participants advance written notice of such
               change.

        (d) CREDITING OR DEBITING METHOD. The performance of each elected
        Measurement Fund (either positive or negative) will be determined by the
        Committee, in its reasonable discretion, based on the performance of the
        underlying investments, if any. A Participant's Account Balance shall be
        credited or debited on a daily basis based on the performance of each
        Measurement Fund to which the Participant's Account is credited, as
        determined by the Committee in its reasonable discretion.

        (e) NO ACTUAL INVESTMENT. Notwithstanding any other provision of this
        Plan that may be interpreted to the contrary, the Measurement Funds are
        to be used for measurement purposes

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        only, and a Participant's election of any such Measurement Fund, the
        allocation to his or her Account Balance thereto, the calculation of
        additional amounts and the crediting or debiting of such amounts to a
        Participant's Account Balance shall not be considered or construed in
        any manner as an actual investment of his or her Account Balance in any
        such Measurement Fund. In the event that the Company or the Trustee (as
        that term is defined in the Trust), in its own discretion, decides to
        invest funds in any or all of the Measurement Funds, no Participant
        shall have any rights in or to such investments themselves. Without
        limiting the foregoing, a Participant's Account Balance shall at all
        times be a bookkeeping entry only and shall not represent any investment
        made on his or her behalf by the Company or the Trust; the Participant
        shall at all times remain an unsecured creditor of the Company.

3.5     FICA AND OTHER TAXES.

        (a)    COMPANY CONTRIBUTION AMOUNTS. When a Participant is credited with
               an amount under his or her Account, the Participant's Employer(s)
               shall withhold from the Participant's Base Annual Salary and/or
               Bonus, in a manner determined by the Employer(s), the
               Participant's share of FICA and other employment taxes. If
               necessary, the Committee may reduce the Participant's Account in
               order to comply with this Section 3.5.

        (b)    DISTRIBUTIONS. The Participant's Employer(s), or the trustee of
               the Trust, shall withhold from any payments made to a Participant
               under this Plan all federal, state and local income, employment
               and other taxes required to be withheld by the Employer(s), or
               the trustee of the Trust, in connection with such payments, in
               amounts and in a manner to be determined in the sole discretion
               of the Employer(s) and the trustee of the Trust.

                                    ARTICLE 4
             SHORT-TERM PAYOUT; UNFORESEEABLE FINANCIAL EMERGENCIES;
                               WITHDRAWAL ELECTION

4.1     SHORT-TERM PAYOUT. In connection with the execution of his or her
        Exchange Agreement and initial election, a Participant may irrevocably
        elect to receive a future "Short-Term Payout" from the Plan with respect
        to such Participant's vested Account Balance. Subject to the Deduction
        Limitation, the Short-Term Payout shall be a lump sum payment in an
        amount that is equal to the Participant's Account Balance, determined at
        the time that the Short-Term Payout becomes payable (rather than the
        date of a Termination of Employment). Subject to the Deduction
        Limitation and the other terms and conditions of this Plan, each
        Short-Term Payout elected shall be paid out during a 60 day period
        commencing immediately after the last day of any Plan Year designated by
        the Participant that is at least three Plan Years after the Plan Year in
        which occurs the effective date of the Participant's Exchange Agreement.
        By way of example, if a three year Short-Term Payout is elected by a
        Participant whose Exchange Agreement has an effective date in 2000, the
        three year Short-Term Payout would become payable during a 60 day period
        commencing January 1, 2004.

4.2     OTHER BENEFITS TAKE PRECEDENCE OVER SHORT-TERM. Should an event occur
        that triggers a benefit under Article 5, 6, 7 or 8, any amount that is
        subject to a Short-Term Payout election

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        under Section 4.1 shall not be paid in accordance with Section 4.1 but
        shall be paid in accordance with the other applicable Article.

4.3     WITHDRAWAL PAYOUT/SUSPENSIONS FOR UNFORESEEABLE FINANCIAL EMERGENCIES.
        If the Participant experiences an Unforeseeable Financial Emergency, the
        Participant may petition the Committee to receive a partial or full
        payout from the Plan. The payout shall not exceed the lesser of the
        Participant's Account Balance, calculated as if such Participant were
        receiving a Termination Benefit, or the amount reasonably needed to
        satisfy the Unforeseeable Financial Emergency. If, subject to the sole
        discretion of the Committee, the petition for a suspension and/or payout
        is approved, suspension shall take effect upon the date of approval and
        any payout shall be made within 60 days of the date of approval. The
        payment of any amount under this Section 4.3 shall not be subject to the
        Deduction Limitation.

4.4     WITHDRAWAL ELECTION. At the earlier of (i) a Change in Control or (ii)
        the last day of the Plan Year that is three Plan Years after the Plan
        Year in which occurs the effective date of the Participant's Exchange
        Agreement, a Participant (or, after a Participant's death, his or her
        Beneficiary) may elect to withdraw all of his or her Account Balance,
        calculated as if there had occurred a Termination of Employment as of
        the day of the election, less a withdrawal penalty equal to 10% of such
        amount (the net amount shall be referred to as the "Withdrawal Amount").
        Provided it is made after the time specified in the first sentence of
        this Section 4.4, this election can be made at any time, before or after
        Retirement, Disability, death or Termination of Employment or
        termination of the Plan, and whether or not the Participant (or
        Beneficiary) is in the process of being paid pursuant to an installment
        payment schedule. If made before Retirement, Disability or death, a
        Participant's Withdrawal Amount shall be his or her Account Balance
        calculated as if there had occurred a Termination of Employment as of
        the day of the election. No partial withdrawals of the Withdrawal Amount
        shall be allowed. The Participant (or his or her Beneficiary) shall make
        this election by giving the Committee advance written notice of the
        election in a form determined from time to time by the Committee. The
        Participant (or his or her Beneficiary) shall be paid the Withdrawal
        Amount within 60 days of his or her election. Once the Withdrawal Amount
        is paid, the Participant's participation in the Plan shall terminate and
        the Participant shall not be eligible to participate in the Plan in the
        future. The payment of this Withdrawal Amount shall not be subject to
        the Deduction Limitation.

                                    ARTICLE 5
                        RETIREMENT OR TERMINATION BENEFIT

5.1     RETIREMENT BENEFIT. Subject to the Deduction Limitation, a Participant
        who Retires or Terminates from Employment shall receive, as a Retirement
        Benefit, his or her vested Account Balance.

5.2     PAYMENT OF RETIREMENT BENEFIT. A Participant, in connection with his or
        her commencement of participation in the Plan, shall elect on an
        Election Form to receive his Other Investments Account Balance upon
        Retirement in a lump sum or pursuant to an Annual Installment Method of
        5, 10 or 15 years. Subject to any election of the Participant under
        Section 4.1, the Participant's Company Stock Account Balance shall be
        distributed to the Participant in a lump

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        sum upon his or her Retirement. The Participant may annually change his
        or her election for the distribution of his or her Other Investments
        Account Balance upon Retirement to an allowable alternative payout
        period by submitting a new Election Form to the Committee, provided that
        any such Election Form is submitted at least 3 years prior to the
        Participant's Retirement and is accepted by the Committee in its sole
        discretion. The Election Form most recently accepted by the Committee
        shall govern the payout of the Other Investments Account Balance. If a
        Participant does not make any election with respect to the payment of
        the Other Investments Account Balance, then such benefit shall be
        payable in a lump sum. The lump sum payment shall be made, or
        installment payments shall commence, no later than 60 days after the
        last day of the Plan Year in which the Participant Retires. Any payment
        made shall be subject to the Deduction Limitation.

5.3     DEATH PRIOR TO COMPLETION OF RETIREMENT BENEFIT. If a Participant dies
        after Retirement but before the Retirement Benefit is paid in full, the
        Participant's unpaid Retirement Benefit payments shall continue and
        shall be paid to the Participant's Beneficiary (a) over the remaining
        number of years and in the same amounts as that benefit would have been
        paid to the Participant had the Participant survived, or (b) in a lump
        sum, if requested by the Beneficiary and allowed in the sole discretion
        of the Committee, that is equal to the Participant's unpaid remaining
        Account Balance.

                                    ARTICLE 6
                         PRE-RETIREMENT SURVIVOR BENEFIT

6.1     PRE-RETIREMENT SURVIVOR BENEFIT. Subject to the Deduction Limitation,
        the Participant's Beneficiary shall receive a Pre-Retirement Survivor
        Benefit equal to the Participant's Account Balance if the Participant
        dies before he or she Retires, experiences a Termination of Employment
        or suffers a Disability.

6.2     PAYMENT OF PRE-RETIREMENT SURVIVOR BENEFIT. A Participant, in connection
        with his or her commencement of participation in the Plan, shall elect
        on an Election Form whether the Pre-Retirement Survivor Benefit
        attributable to his or her Other Investments Account shall be received
        by his or her Beneficiary in a lump sum or pursuant to an Annual
        Installment Method of 5, 10 or 15 years. The Participant may annually
        change such election to an allowable alternative payout period by
        submitting a new Election Form to the Committee, which form must be
        accepted by the Committee in its sole discretion. The Election Form most
        recently accepted by the Committee prior to the Participant's death
        shall govern the payout of the Participant's Pre-Retirement Survivor
        Benefit attributable to his or her Other Investments Account. If a
        Participant does not make any election with respect to the payment of
        the Pre-Retirement Survivor Benefit, then such benefit shall be paid in
        a lump sum. The Pre-Retirement Survivor Benefit attributable to a
        Participant's Company Stock Account Balance shall be distributed to the
        Participant's Beneficiary in a lump sum. The lump sum payment shall be
        made, or installment payments shall commence, no later than 60 days
        after the last day of the Plan Year in which the Committee is provided
        with proof that is satisfactory to the Committee of the Participant's
        death. Any payment made shall be subject to the Deduction Limitation.

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                                    ARTICLE 7
                               TERMINATION BENEFIT

7.1     TERMINATION BENEFIT. Subject to the Deduction Limitation, the
        Participant shall receive a Termination Benefit, which shall be equal to
        the Participant's vested Account Balance if a Participant experiences a
        Termination of Employment prior to his or her Retirement, death or
        Disability.

7.2     PAYMENT OF TERMINATION BENEFIT. The Committee, in its sole discretion,
        may cause the Termination Benefit, other than any Termination Benefit
        made after a Change in Control or after an Involuntary Termination of
        Employment not for Cause, to be paid in a lump sum or pursuant to an
        Annual Installment Method of 5 years. In the case of a Termination
        Benefit payable after a Change in Control or a Participant's Involuntary
        Termination of Employment not for Cause, the Termination Benefit shall
        be paid in a lump sum. The lump sum payment shall be made, or
        installment payments shall commence, no later than 60 days after the
        last day of the Plan Year in which the Participant experiences the
        Termination of Employment. Any payment made shall be subject to the
        Deduction Limitation, other than any distributions made after a Change
        in Control or after an Involuntary Termination of Employment not for
        Cause.

                                    ARTICLE 8
                          DISABILITY WAIVER AND BENEFIT

8.1     CONTINUED ELIGIBILITY; DISABILITY BENEFIT. A Participant suffering a
        Disability shall, for benefit purposes under this Plan, continue to be
        considered to be employed, and shall be eligible for the benefits
        provided for in Articles 4, 5, 6 or 7 in accordance with the provisions
        of those Articles. Notwithstanding the above, the Committee shall have
        the right to, in its sole and absolute discretion and for purposes of
        this Plan only, and must in the case of a Participant who is otherwise
        eligible to Retire, deem the Participant to have experienced a
        Termination of Employment, or in the case of a Participant who is
        eligible to Retire, to have Retired, at any time (or in the case of a
        Participant who is eligible to Retire, as soon as practicable) after
        such Participant is determined to be suffering a Disability, in which
        case the Participant shall receive a Disability Benefit equal to his or
        her Account Balance at the time of the Committee's determination;
        provided, however, that should the Participant otherwise have been
        eligible to Retire, he or she shall be paid in accordance with Article
        5. The Disability Benefit shall be paid in a lump sum within 60 days of
        the Committee's exercise of such right. Any payment made shall be
        subject to the Deduction Limitation.

                                    ARTICLE 9
                             BENEFICIARY DESIGNATION

        9.1 BENEFICIARY. Each Participant shall have the right, at any time, to
        designate his or her Beneficiary(ies) (both primary as well as
        contingent) to receive any benefits payable under the Plan to a
        beneficiary upon the death of a Participant. The Beneficiary designated
        under this Plan

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        may be the same as or different from the Beneficiary designation under
        any other plan of an Employer in which the Participant participates.

9.2     BENEFICIARY DESIGNATION; CHANGE; SPOUSAL CONSENT. A Participant shall
        designate his or her Beneficiary by completing and signing the
        Beneficiary Designation Form, and returning it to the Committee or its
        designated agent. A Participant shall have the right to change a
        Beneficiary by completing, signing and otherwise complying with the
        terms of the Beneficiary Designation Form and the Committee's rules and
        procedures, as in effect from time to time. If the Participant names
        someone other than his or her spouse as a Beneficiary, a spousal
        consent, in the form designated by the Committee, must be signed by that
        Participant's spouse and returned to the Committee. Upon the acceptance
        by the Committee of a new Beneficiary Designation Form, all Beneficiary
        designations previously filed shall be canceled. The Committee shall be
        entitled to rely on the last Beneficiary Designation Form filed by the
        Participant and accepted by the Committee prior to his or her death.

9.3     ACKNOWLEDGMENT. No designation or change in designation of a Beneficiary
        shall be effective until received and acknowledged in writing by the
        Committee or its designated agent.

9.4     NO BENEFICIARY DESIGNATION. If a Participant fails to designate a
        Beneficiary as provided in Sections 9.1, 9.2 and 9.3 above or, if all
        designated Beneficiaries predecease the Participant or die prior to
        complete distribution of the Participant's benefits, then the
        Participant's designated Beneficiary shall be deemed to be his or her
        surviving spouse. If the Participant has no surviving spouse, the
        benefits remaining under the Plan to be paid to a Beneficiary shall be
        payable to the executor or personal representative of the Participant's
        estate.

9.5     DOUBT AS TO BENEFICIARY. If the Committee has any doubt as to the proper
        Beneficiary to receive payments pursuant to this Plan, the Committee
        shall have the right, exercisable in its discretion, to cause the
        Participant's Employer to withhold such payments until this matter is
        resolved to the Committee's satisfaction.

9.6     DISCHARGE OF OBLIGATIONS. The payment of benefits under the Plan to a
        Beneficiary shall fully and completely discharge all Employers and the
        Committee from all further obligations under this Plan with respect to
        the Participant, and that Participant's Exchange Agreement shall
        terminate upon such full payment of benefits.

                                   ARTICLE 10
                     TERMINATION, AMENDMENT OR MODIFICATION

10.1    TERMINATION. Although each Employer anticipates that it will continue
        the Plan for an indefinite period of time, there is no guarantee that
        any Employer will continue the Plan or will not terminate the Plan at
        any time in the future. Accordingly, each Employer reserves the right to
        discontinue its sponsorship of the Plan and/or to terminate the Plan at
        any time with respect to any or all of its participating Employees, by
        action of its board of directors. Upon the termination of the Plan with
        respect to any Employer, the Exchange Agreements of the affected
        Participants who are employed by that Employer, shall terminate and
        their Account Balances, determined as if they had experienced a
        Termination of Employment on the date of Plan termination or, if Plan

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        termination occurs after the date upon which a Participant was eligible
        to Retire, then with respect to that Participant as if he or she had
        Retired on the date of Plan termination, shall be paid to the
        Participants as follows: Prior to a Change in Control, if the Plan is
        terminated with respect to all of its Participants, an Employer shall
        have the right (subject to the overriding right of the Participant under
        Section 4.4 to effect an immediate withdrawal of his or her benefit), in
        its sole discretion, and notwithstanding any elections made by the
        Participant (other than any election by the Participant under Section
        4.4), to pay such benefits in a lump sum or pursuant to an Annual
        Installment Method of up to 10 years, with amounts credited and debited
        with Measuring Fund returns during the installment period as provided
        herein. If the Plan is terminated with respect to less than all of its
        Participants, an Employer shall be required to pay such benefits in a
        lump sum. After a Change in Control, the Employer shall be required to
        pay such benefits in a lump sum. The termination of the Plan shall not
        adversely affect any Participant or Beneficiary who has become entitled
        to the payment of any benefits under the Plan as of the date of
        termination; provided however, that the Employer shall have the right to
        accelerate installment payments without a premium or prepayment penalty
        by paying the Account Balance in a lump sum or pursuant to an Annual
        Installment Method using fewer years (provided that the present value of
        all payments that will have been received by a Participant at any given
        point of time under the different payment schedule shall equal or exceed
        the present value of all payments that would have been received at that
        point in time under the original payment schedule).

10.2    AMENDMENT. Any Employer may, at any time, amend or modify the Plan in
        whole or in part with respect to that Employer by the action of its
        board of directors; provided, however, that: (i) no amendment or
        modification shall be effective to decrease or restrict the value of a
        Participant's Account Balance in existence at the time the amendment or
        modification is made, calculated as if the Participant had experienced a
        Termination of Employment as of the effective date of the amendment or
        modification or, if the amendment or modification occurs after the date
        upon which the Participant was eligible to Retire, the Participant had
        Retired as of the effective date of the amendment or modification, and
        (ii) no amendment or modification of this Section 10.2 or Section 11.2
        of the Plan shall be effective. The amendment or modification of the
        Plan shall not affect any Participant or Beneficiary who has become
        entitled to the payment of benefits under the Plan as of the date of the
        amendment or modification; provided, however, that the Employer shall
        have the right to accelerate installment payments by paying the Account
        Balance in a lump sum or pursuant to an Annual Installment Method using
        fewer years (provided that the present value of all payments that will
        have been received by a Participant at any given point of time under the
        different payment schedule shall equal or exceed the present value of
        all payments that would have been received at that point in time under
        the original payment schedule).

10.3    EXCHANGE AGREEMENT. Despite the provisions of Sections 10.1 and 10.2
        above, if a Participant's Exchange Agreement contains benefits or
        limitations that are not in this Plan document, the Employer may only
        amend or terminate such provisions with the consent of the Participant.

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10.4    EFFECT OF PAYMENT. The full payment of the applicable benefit under
        Articles 4, 5, 6, 7 or 8 of the Plan shall completely discharge all
        obligations to a Participant and his or her designated Beneficiaries
        under this Plan and the Participant's Exchange Agreement shall
        terminate.

                                   ARTICLE 11
                                 ADMINISTRATION

11.1    COMMITTEE DUTIES. Except as otherwise provided in this Article 11, this
        Plan shall be administered by a Committee which shall consist of the
        Board, or such committee as the Board shall appoint. Members of the
        Committee may be Participants under this Plan. The Committee shall also
        have the discretion and authority to (i) make, amend, interpret, and
        enforce all appropriate rules and regulations for the administration of
        this Plan and (ii) decide or resolve any and all questions including
        interpretations of this Plan, as may arise in connection with the Plan.
        Any individual serving on the Committee who is a Participant shall not
        vote or act on any matter relating solely to himself or herself. When
        making a determination or calculation, the Committee shall be entitled
        to rely on information furnished by a Participant or the Company.

11.2    ADMINISTRATION UPON CHANGE IN CONTROL. For purposes of this Plan, the
        Company shall be the "Administrator" at all times prior to the
        occurrence of a Change in Control. Upon and after the occurrence of a
        Change in Control, the "Administrator" shall be an independent third
        party selected by the Trustee and approved by the individual who,
        immediately prior to such event, was the Company's Chief Executive
        Officer or, if not so identified, who was the Company's highest ranking
        officer (the "Ex-CEO"). The Administrator shall have the discretionary
        power to determine all questions arising in connection with the
        administration of the Plan and the interpretation of the Plan and Trust
        including, but not limited to benefit entitlement determinations;
        provided, however, upon and after the occurrence of a Change in Control,
        the Administrator shall have no power to direct the investment of Plan
        or Trust assets or select any investment manager or custodial firm for
        the Plan or Trust. Upon and after the occurrence of a Change in Control,
        the Company must: (1) pay all reasonable administrative expenses and
        fees of the Administrator; (2) indemnify the Administrator against any
        costs, expenses and liabilities including, without limitation,
        attorney's fees and expenses arising in connection with the performance
        of the Administrator hereunder, except with respect to matters resulting
        from the gross negligence or willful misconduct of the Administrator or
        its employees or agents; and (3) supply full and timely information to
        the Administrator or all matters relating to the Plan, the Trust, the
        Participants and their Beneficiaries, the Account Balances of the
        Participants, the date of circumstances of the Retirement, Disability,
        death or Termination of Employment of the Participants, and such other
        pertinent information as the Administrator may reasonably require. Upon
        and after a Change in Control, if the Administrator resigns, a
        replacement shall be appointed by the Trustee.

11.3    AGENTS. In the administration of this Plan, the Committee may, from time
        to time, employ agents and delegate to them such administrative duties
        as it sees fit (including acting through a duly appointed
        representative) and may from time to time consult with counsel who may
        be counsel to any Employer.

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11.4    BINDING EFFECT OF DECISIONS. The decision or action of the Administrator
        with respect to any question arising out of or in connection with the
        administration, interpretation and application of the Plan and the rules
        and regulations promulgated hereunder shall be final and conclusive and
        binding upon all persons having any interest in the Plan.

11.5    INDEMNITY OF COMMITTEE. All Employers shall indemnify and hold harmless
        the members of the Committee, any Employee to whom the duties of the
        Committee may be delegated, and the Administrator against any and all
        claims, losses, damages, expenses or liabilities arising from any action
        or failure to act with respect to this Plan, except in the case of
        willful misconduct by the Committee, any of its members, any such
        Employee or the Administrator.

11.6    EMPLOYER INFORMATION. To enable the Committee and/or Administrator to
        perform its functions, the Company and each Employer shall supply full
        and timely information to the Committee and/or Administrator, as the
        case may be, on all matters relating to the compensation of its
        Participants, the date and circumstances of the Retirement, Disability,
        death or circumstances of the Retirement, Disability, death or
        Termination of Employment of its Participants, and such other pertinent
        information as the Committee or Administrator may reasonably require.

                                   ARTICLE 12
                          OTHER BENEFITS AND AGREEMENTS

12.1    COORDINATION WITH OTHER BENEFITS. The benefits provided for a
        Participant and Participant's Beneficiary under the Plan are in addition
        to any other benefits available to such Participant under any other plan
        or program for employees of the Participant's Employer. The Plan shall
        supplement and shall not supersede, modify or amend any other such plan
        or program except as may otherwise be expressly provided.

                                   ARTICLE 13
                                   [RESERVED]

                                   ARTICLE 14
                                      TRUST

14.1    ESTABLISHMENT OF THE TRUST. The Company shall establish the Trust, and
        each Employer shall at least annually transfer over to the Trust such
        assets as the Employer determines, in its sole discretion, are necessary
        to provide, on a present value basis, for its respective future
        liabilities created with respect to the Accounts for such Employer's
        Participants for all periods prior to the transfer, as well as any
        debits and credits to the Participants' Account Balances for all periods
        prior to the transfer, taking into consideration the value of the assets
        in the trust at the time of the transfer.

14.2    INTERRELATIONSHIP OF THE PLAN AND THE TRUST. The provisions of the Plan
        and the Exchange Agreement shall govern the rights of a Participant to
        receive distributions pursuant to the Plan.

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        The provisions of the Trust shall govern the rights of the Employers,
        Participants and the creditors of the Employers to the assets
        transferred to the Trust. Each Employer shall at all times remain liable
        to carry out its obligations under the Plan.

14.3    DISTRIBUTIONS FROM THE TRUST. Each Employer's obligations under the Plan
        may be satisfied with Trust assets distributed pursuant to the terms of
        the Trust, and any such distribution shall reduce the Employer's
        obligations under this Plan.

                                   ARTICLE 15
                                  MISCELLANEOUS

15.1    STATUS OF PLAN. The Plan is intended to be a plan that is not qualified
        within the meaning of Code Section 401(a) and that "is unfunded and is
        maintained by an employer primarily for the purpose of providing
        deferred compensation for a select group of management or highly
        compensated employee" within the meaning of ERISA Sections 201(2),
        301(a)(3) and 401(a)(1). The Plan shall be administered and interpreted
        to the extent possible in a manner consistent with that intent.

15.2    UNSECURED GENERAL CREDITOR. Participants and their Beneficiaries, heirs,
        successors and assigns shall have no legal or equitable rights,
        interests or claims in any property or assets of an Employer. For
        purposes of the payment of benefits under this Plan, any and all of an
        Employer's assets shall be, and remain, the general, unpledged
        unrestricted assets of the Employer. An Employer's obligation under the
        Plan shall be merely that of an unfunded and unsecured promise to pay
        money in the future.

15.3    EMPLOYER'S LIABILITY. An Employer's liability for the payment of
        benefits shall be defined only by the Plan and the Exchange Agreement,
        as entered into between the Employer and a Participant. An Employer
        shall have no obligation to a Participant under the Plan except as
        expressly provided in the Plan and his or her Exchange Agreement.

15.4    NONASSIGNABILITY. Neither a Participant nor any other person shall have
        any right to commute, sell, assign, transfer, pledge, anticipate,
        mortgage or otherwise encumber, transfer, hypothecate, alienate or
        convey in advance of actual receipt, the amounts, if any, payable
        hereunder, or any part thereof, which are, and all rights to which are
        expressly declared to be, unassignable and non-transferable. No part of
        the amounts payable shall, prior to actual payment, be subject to
        seizure, attachment, garnishment or sequestration for the payment of any
        debts, judgments, alimony or separate maintenance owed by a Participant
        or any other person, be transferable by operation of law in the event of
        a Participant's or any other person's bankruptcy or insolvency or be
        transferable to a spouse as a result of a property settlement or
        otherwise.

15.5    NOT A CONTRACT OF EMPLOYMENT. The terms and conditions of this Plan
        shall not be deemed to constitute a contract of employment between any
        Employer and the Participant. Such employment is hereby acknowledged to
        be an "at will" employment relationship that can be terminated at any
        time for any reason, or no reason, with or without cause, and with or
        without notice, unless expressly provided in a written employment
        agreement. Nothing in this Plan shall

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<PAGE>   22
QUADRAMED CORPORATION
Stock Exchange Deferred Compensation Plan
Master Plan Document
================================================================================

        be deemed to give a Participant the right to be retained in the service
        of any Employer or to interfere with the right of any Employer to
        discipline or discharge the Participant at any time.

15.6    FURNISHING INFORMATION. A Participant or his or her Beneficiary will
        cooperate with the Committee by furnishing any and all information
        requested by the Committee and take such other actions as may be
        requested in order to facilitate the administration of the Plan and the
        payments of benefits hereunder, including but not limited to taking such
        physical examinations as the Committee may deem necessary.

15.7    TERMS. Whenever any words are used herein in the masculine, they shall
        be construed as though they were in the feminine in all cases where they
        would so apply; and whenever any words are used herein in the singular
        or in the plural, they shall be construed as though they were used in
        the plural or the singular, as the case may be, in all cases where they
        would so apply.

15.8    CAPTIONS. The captions of the articles, sections and paragraphs of this
        Plan are for convenience only and shall not control or affect the
        meaning or construction of any of its provisions.

15.9    GOVERNING LAW. Subject to ERISA, the provisions of this Plan shall be
        construed and interpreted according to the internal laws of the State of
        California without regard to its conflicts of laws principles.

15.10   NOTICE. Any notice or filing required or permitted to be given to the
        Committee under this Plan shall be sufficient if in writing and
        hand-delivered, or sent by registered or certified mail, to the address
        below:

                            Committee c/o Keith Roberts, Esq.
                            QuadraMed Corporation
                            22 Pelican Way
                            San Rafael, CA 94901

        Such notice shall be deemed given as of the date of delivery or, if
        delivery is made by mail, as of the date shown on the postmark on the
        receipt for registration or certification.

        Any notice or filing required or permitted to be given to a Participant
        under this Plan shall be sufficient if in writing and hand-delivered, or
        sent by mail, to the last known address of the Participant.

15.11   SUCCESSORS. The provisions of this Plan shall bind and inure to the
        benefit of the Participant's Employer and its successors and assigns and
        the Participant and the Participant's designated Beneficiaries.

15.12   SPOUSE'S INTEREST. The interest in the benefits hereunder of a spouse of
        a Participant who has predeceased the Participant shall automatically
        pass to the Participant and shall not be transferable by such spouse in
        any manner, including but not limited to such spouse's will, nor shall
        such interest pass under the laws of intestate succession.

                                      -18-
<PAGE>   23
QUADRAMED CORPORATION
Stock Exchange Deferred Compensation Plan
Master Plan Document
================================================================================

15.13   VALIDITY. In case any provision of this Plan shall be illegal or invalid
        for any reason, said illegality or invalidity shall not affect the
        remaining parts hereof, but this Plan shall be construed and enforced as
        if such illegal or invalid provision had never been inserted herein.

15.14   INCOMPETENT. If the Committee determines in its discretion that a
        benefit under this Plan is to be paid to a minor, a person declared
        incompetent or to a person incapable of handling the disposition of that
        person's property, the Committee may direct payment of such benefit to
        the guardian, legal representative or person having the care and custody
        of such minor, incompetent or incapable person. The Committee may
        require proof of minority, incompetence, incapacity or guardianship, as
        it may deem appropriate prior to distribution of the benefit. Any
        payment of a benefit shall be a payment for the account of the
        Participant and the Participant's Beneficiary, as the case may be, and
        shall be a complete discharge of any liability under the Plan for such
        payment amount.

15.15   COURT ORDER. The Committee is authorized to make any payments directed
        by court order in any action in which the Plan or the Committee has been
        named as a party. In addition, if a court determines that a spouse or
        former spouse of a Participant has an interest in the Participant's
        benefits under the Plan in connection with a property settlement or
        otherwise, the Committee, in its sole discretion, shall have the right,
        notwithstanding any election made by a Participant, to immediately
        distribute the spouse's or former spouse's interest in the Participant's
        benefits under the Plan to that spouse or former spouse.

15.16   DISTRIBUTION IN THE EVENT OF TAXATION.

        (a)     IN GENERAL. If, for any reason, all or any portion of a
                Participant's benefits under this Plan becomes taxable to the
                Participant prior to receipt, a Participant may petition the
                Committee before a Change in Control, or the trustee of the
                Trust after a Change in Control, for a distribution of that
                portion of his or her benefit that has become taxable. Upon the
                grant of such a petition, which grant shall not be unreasonably
                withheld (and, after a Change in Control, shall be granted), a
                Participant's Employer shall distribute to the Participant
                immediately available funds in an amount equal to the taxable
                portion of his or her benefit (which amount shall not exceed a
                Participant's unpaid Account Balance under the Plan). If the
                petition is granted, the tax liability distribution shall be
                made within 90 days of the date when the Participant's petition
                is granted. Such a distribution shall affect and reduce the
                benefits to be paid under this Plan.

        (b)     TRUST. If the Trust terminates in accordance with its terms and
                benefits are distributed from the Trust to a Participant in
                accordance therewith, the Participant's benefits under this Plan
                shall be reduced to the extent of such distributions.

15.17   INSURANCE. The Employers, on their own behalf or on behalf of the
        trustee of the Trust, and, in their sole discretion, may apply for and
        procure insurance on the life of the Participant, in such amounts and in
        such forms as the Trust may choose. The Employers or the trustee of the
        Trust, as the case may be, shall be the sole owner and beneficiary of
        any such insurance. The Participant shall have no interest whatsoever in
        any such policy or policies, and at the request of the Employers shall
        submit to medical examinations and supply such information and execute

                                      -19-
<PAGE>   24
QUADRAMED CORPORATION
Stock Exchange Deferred Compensation Plan
Master Plan Document
================================================================================

        such documents as may be required by the insurance company or companies
        to whom the Employers have applied for insurance.

15.18   LEGAL FEES TO ENFORCE RIGHTS AFTER CHANGE IN CONTROL. The Company and
        each Employer is aware that upon the occurrence of a Change in Control,
        the Board or the board of directors of a Participant's Employer (which
        might then be composed of new members) or a shareholder of the Company
        or the Participant's Employer, or of any successor corporation might
        then cause or attempt to cause the Company, the Participant's Employer
        or such successor to refuse to comply with its obligations under the
        Plan and might cause or attempt to cause the Company or the
        Participant's Employer to institute, or may institute, litigation
        seeking to deny Participants the benefits intended under the Plan. In
        these circumstances, the purpose of the Plan could be frustrated.
        Accordingly, if, following a Change in Control, it should appear to any
        Participant that the Company, the Participant's Employer or any
        successor corporation has failed to comply with any of its obligations
        under the Plan or any agreement thereunder or, if the Company, such
        Employer or any other person takes any action to declare the Plan void
        or unenforceable or institutes any litigation or other legal action
        designed to deny, diminish or to recover from any Participant the
        benefits intended to be provided, then the Company and the Participant's
        Employer irrevocably authorize such Participant to retain counsel of his
        or her choice at the expense of the Company and the Participant's
        Employer (who shall be jointly and severally liable) to represent such
        Participant in connection with the initiation or defense of any
        litigation or other legal action, whether by or against the Company, the
        Participant's Employer or any director, officer, shareholder or other
        person affiliated with the Company, the Participant's Employer or any
        successor thereto in any jurisdiction.

                                      -20-
<PAGE>   25
QUADRAMED CORPORATION
Stock Exchange Deferred Compensation Plan
Master Plan Document
================================================================================

IN WITNESS WHEREOF, the Company has signed this Plan document as of May 12,
2000.

                                  QuadraMed Corporation, a Delaware corporation

                                  By:  /s/ E. A. ROSKOVENSKY
                                     ---------------------------------------
                                  Title:  Compensation Committee
                                        ------------------------------------

                                      -21-<PAGE>   1

                                                                   EXHIBIT 10.62

[QUADRAMED(TM) LOGO]
Stock Exchange Deferred Compensation Plan
Exchange Agreement
================================================================================

        THIS EXCHANGE AGREEMENT (this "Agreement") is entered into as of January
3rd, 2000 between QuadraMed Corporation (the "Employer"), and Jim Durham (the
"Participant").

                                     Recital

        A. The Participant is a key employee of the Employer, and the Employer
desires to have the continued services and counsel of the Participant.

        B. The Employer has adopted, effective January 3, 2000, the QuadraMed
Corporation Stock Exchange Deferred Compensation Plan (the "Plan"), as amended
from time to time, and the Participant has been selected to participate in the
Plan.

        C. The Participant desires to participate in the Plan and exchange
options previously granted to the Participant by the Employer for a deferred
compensation account under the Plan.

                                    Agreement

        NOW THEREFORE, it is mutually agreed that:

        1. Definitions. Unless otherwise provided in this Agreement, the
capitalized terms in this Agreement shall have the same meaning as under the
Plan's master plan document (the "Plan Document").

        2. Integrated Agreement: Parties Bound. The Plan Document, a copy of
which has been delivered to the Participant, is hereby incorporated into and
made a part of this Agreement as though set forth in full in this Agreement. The
parties to this Agreement agree to and shall be bound by, and have the benefit
of, each and every provision of the Plan as set forth in the Plan Document. This
Agreement and the Plan Document, collectively, shall be considered one complete
contract between the parties.

        3. Acknowledgment. The Participant hereby acknowledges that he or she
has read and understands this Agreement and the Plan Document.

        4. Exchange of Options. The Participant hereby agrees that the stock
options previously granted to the Participant in 1998 to acquire 300,000 shares
of stock in the Employer (the "Stock Options") are hereby cancelled and of no
further affect. As consideration for such cancellation the

                                       1
<PAGE>   2
[QUADRAMED(TM) LOGO]
Stock Exchange Deferred Compensation Plan
Exchange Agreement
================================================================================

Participant agrees that he shall have an amount equal to $2,416,000 credited to
his account under this Plan; such amount being equal to the value of the Stock
Options, as computed using the Black Scholes method of valuation as of January
3rd, 2000. One half of this initial account balance ($1,208,000) shall be deemed
to earn a rate of return based on the Employer Stock Fund under the Plan. The
remainder of the initial account balance shall be deemed to earn a rate of
return based on the investment elections selected by the Participant in
accordance with the Election Form.

        5. Conditions to Participation. As a condition to participation in the
Plan, the Participant must complete, sign, date and return to the Committee an
original copy of this Agreement, an Election Form and a Beneficiary Designation
and Spousal Consent Form.

        6. Successors and Assigns. This Agreement shall inure to the benefit of,
and be binding upon the Employer, its successors and assigns, and the
Participant.

                                       2

<PAGE>   3
[QUADRAMED(TM) LOGO]
Stock Exchange Deferred Compensation Plan
Exchange Agreement
================================================================================

        7. Governing Law. To the extent not preempted by the Employee Retirement
Income Security Act of 1974, as amended, this Agreement shall be governed by and
construed under the laws of the State of California, as in effect at the time of
the execution of this Agreement.

        IN WITNESS WHEREOF, the Participant has signed and the Employer has
accepted this Plan Agreement as of the date first written above.

                                         PARTICIPANT:

                                          /s/ JAMES D. DURHAM          1/3/00
                                         --------------------------------------
                                         Signature of Participant          Date

                                          James D. Durham
                                         --------------------------------------
                                         Type or Print Name

AGREED AND ACCEPTED BY THE COMPANY:

QuadraMed Corporation
                                         COMMITTEE:

                                           /s/ E. A. ROSKOVENSKY
                                         --------------------------------------
                                         Signature of Committee Member

                                           E. A. Roskovensky
                                         --------------------------------------
                                         Type or Print Name

                                       3

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