<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
AMENDMENT NO. 2
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _______ TO _______
COMMISSION FILE NUMBER 0-21031
QUADRAMED CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 52-1992861
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
22 PELICAN WAY, SAN RAFAEL, CALIFORNIA, 94901
(Address of Principal Executive Offices, including Zip Code)
Registrant's telephone number, including area code: (415)482-2100
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $0.01 PAR VALUE PER SHARE
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such report), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to the Form 10-K. [ ]
The aggregate market value of voting stock held by non-affiliates of the
Registrant, as of March 31, 2000 was approximately $102,490,363 (based upon the
closing price for shares of the Registrant's Common Stock as reported by the
Nasdaq National Market for the last trading date prior to that date). Shares of
Common Stock held by each officer, director and holder of 5% or more of the
outstanding Common Stock have been excluded in that such persons may be deemed
to be affiliates. This determination of affiliate status is not necessarily a
conclusive determination for other purposes.
On March 31, 2000, approximately 25,473,688 shares of the Registrant's Common
Stock, $0.01 par value per share, were outstanding.
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AMENDMENT NO. 2
The undersigned Registrant hereby amends Items 10, 11, 12 and 13 of
its Annual Report on Form 10-K for the fiscal year ended December 31, 1999 and
files such amended Items herewith. The undersigned Registrant also amends Item
14(c) of its Annual Report on Form 10-K for the fiscal year ended December 31,
1999 by adding Exhibits 10.60, 10.61, 10.62, 10.63, 10.64 and 10.65 which are
described in Item 14(c) and files such exhibits herewith.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The following sets forth certain information concerning the Company's
directors as of March 31, 2000:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
James D. Durham(1).........53 Chairman of the Board and Chief Executive Officer
Albert L. Greene(2)........50 Director
Joan P. Neuscheler(3)......39 Director
Michael J. King(4).........61 Director
E.A. Roskovensky(2)........54 Director
Scott Gross(2).............54 Director
Cornelius T. Ryan(1).......69 Director
</TABLE>
(1) Term of office expires at the 2002 Annual Meeting of Stockholders.
(2) Term of office expires at the 2000 Annual Meeting of Stockholders.
(3) Resigned on April 27, 2000.
(4) Term of office expires at the 2001 Annual Meeting of Stockholders.
BACKGROUND
James D. Durham serves as QuadraMed's Chairman of the Board and Chief
Executive Officer. Mr. Durham founded the Company in September 1993 when he
became its President and Chief Executive Officer and a director. In May 1996,
Mr. Durham became Chairman of the Board. From November 1992 to December 1993,
Mr. Durham served as the Chief Executive Officer of Trim Healthcare Systems,
Inc., a reimbursement consulting services company. From April 1992 to April
1993, Mr. Durham served as Chief Executive Officer of Care Partners, Inc., an
accounts receivable processing and funding company cofounded by Mr. Durham. From
February 1986 until its acquisition by Ameritech in February 1992, Mr. Durham
served as President and Chief Executive Officer of Knowledge Data Systems, Inc.,
a health care information systems company. Mr. Durham holds a B.S. with honors
in Industrial Engineering from the University of Florida and an M.B.A. with an
emphasis in Finance from the University of California, Los Angeles and is a
Certified Public Accountant.
Albert L. Greene has been a director of the Company since May 1997. Mr.
Greene is currently the President and Chief Executive Officer of
HealthCentral.com, an online consumer health information service. Previously,
Mr. Green was the Chief Executive Officer of Sutter Health East Bay, a health
care delivery system and the parent company of Alta Bates Health System, from
June 1996 until September 1998. From May 1990 until March 1998, Mr. Greene
served as the President and Chief Executive Officer of Alta Bates Medical
Center, a 527-bed acute care hospital located in Berkeley, California. From
January 1996 until March 1998, Mr. Greene also served as the President and Chief
Executive Officer of Alta Bates Health System, the parent company of Alta Bates
Medical Center. Mr. Greene has served as an executive in hospital administration
since 1979, most recently as the President of Sinai Samaritan Medical Center in
Milwaukee, Wisconsin from 1988 to 1990. Mr. Greene received a masters of
hospital administration at the University of Michigan, and is presently a
diplomate of the American College of Healthcare Executives and a member of the
American Hospital Association. Mr. Greene is also chair-elect of the California
Healthcare Association, a member of the board of directors of Acuson
Corporation, a manufacturer and provider of medical diagnostic ultrasound
systems, and a member of the board of directors of several other privately held
hospitals and hospital associations.
Joan P. Neuscheler became a director of the Company in March 1994 and
resigned on April 27, 2000. Ms. Neuscheler has been a general partner of
Tullis-Dickerson Partners, a venture capital firm, since September 1992, and the
President and Chief Financial Officer of Tullis-Dickerson & Co., Inc. since
April 1989. Tullis-Dickerson Partners is the general partner of Tullis-Dickerson
Capital Focus, L.P., a stockholder of the Company. Ms. Neuscheler is also a
director of several privately held companies.
Michael J. King has been a director of the Company since May 1999. Mr. King
has been the Chief Executive Officer of Healthscribe, Inc. since June 1999.
From September 9, 1996 until May 1999, Mr. King served as Chairman of the Board
of Directors and Chief Executive Officer of The Compucare Company, a healthcare
information systems company which was acquired by QuadraMed in March 1999.
Prior to joining The Compucare Company, Mr. King was Chairman of the Board of
Directors, Chief Executive Officer and President of Software AG of the
Americas, a leader in Enterprise Information Systems. Mr. King previously
served as President and Chief Executive Officer of Computer Entry Systems Corp.
and has held various high-level positions at Marietta Data Systems and the
Hoskyns Group in the United Kingdom. Mr. King holds a degree in Mechanical
Engineering from the University of Sheffield and a M.B.A. equivalent in
Management Studies from the University of Hatfield.
E.A. Roskovensky has been a director of the Company since May 1999. Mr.
Roskovensky has been the President and Chief Operating Officer of Robertson-Ceco
Corp., a publicly traded company which manufactures custom engineered metal
buildings, since November 1994. Mr. Roskovensky also has been the President and
Chief Executive Officer of Davis Wire Corporation since 1991. Mr. Roskovensky
previously has held positions at USS-Posco Industries, Double Eagle Steel
Coating Company and U.S. Steel. Mr. Roskovensky holds a B.S. in Chemical
Engineering from Villanova University, an M.B.A. from Duquesne University, and a
2
<PAGE> 3
J.D. from the University of Detroit School of Law. He is a member of the State
Bar of Michigan and the Pennsylvania Bar Association.
Scott Gross has been a director of the Company since March 2000. Mr.
Gross is currently the founder, President and Chief Executive Officer of Primus
Management, Inc., a successor organization to Alpha Hospital Management, Inc.
where Mr. Gross was the founder, President and Chief Executive Officer from 1989
to 1992. From 1988 to 1989, Mr. Gross was the Chairman and Chief Executive
Officer of Carondolet Rehabilitation Centers of America, a diversified
rehabilitation medicine services company. From 1984 to 1987, Mr. Gross was the
President and Chief Executive Officer of Hospital Group - National Medical
Enterprises. Mr. Gross holds a Bachelor of Science degree in Biology from Cal
State University, Northridge and a Master degree in Public Administration
(Health Care Management Option ) from the University of Southern California.
Cornelius T. Ryan has been a director of the Company since March 2000, and
was previously a director of the Company from March 1995 to March 1999.
Mr. Ryan has been a general partner of Oxford Partners since 1981 and of OBP
Management L.P., and OBP Management (Bermuda) Limited Partnership since 1992.
OBP Management L.P. and OBP Management (Bermuda) Limited Partnership are the
general partners of Oxford Bioscience Partners L.P. and Oxford Bioscience
Partners (Bermuda) Limited Partnership, respectively. Mr. Ryan is also a
director of several privately held companies. Mr. Ryan holds a Bachelor of
Commerce in Economics from the University of Ottawa, and an M.B.A. from the
University of Pennsylvania.
3
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MANAGEMENT
The following sets forth the names, ages and positions of the Company's
executive officers and certain key employees as of March 31, 2000:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
James D. Durham............. 53 Chairman of the Board and Chief Executive Officer
John V. Cracchiolo.......... 43 President, Chief Financial Officer
and Secretary
Keith M. Roberts............ 35 Executive Vice President, General Counsel
and Assistant Secretary
Nancy Nelson................ 47 Executive Vice President and Chief Operating Officer
Patrick Ahearn.............. 45 Executive Vice President, Product Management
Michael Wilstead............ 42 Executive Vice President, Sales and Marketing
Randall MacDonald........... 38 Executive Vice President, Customer Services
Andrew Rushmere............. 42 Executive Vice President, Research and Development
Michelle Philpot............ 34 Vice President, Finance and Chief Accounting Officer
</TABLE>
BACKGROUND
John V. Cracchiolo serves as the Company's President, Chief Financial
Officer and Secretary. Mr. Cracchiolo joined the Company in May 1995 as its
Executive Vice President, Chief Financial Officer and Secretary. In May 1998,
he was promoted to President and Chief Operating Officer. Prior to joining the
Company, Mr. Cracchiolo worked for PSICOR, Inc., a health care services
company, serving as its Chief Financial Officer from February 1993 to May 1995,
and its corporate Controller from May 1989 to February 1993. Previously, Mr.
Cracchiolo worked in various management positions for software, hardware,
defense contractor and personnel and professional services organizations within
the health care and other industries. Mr. Cracchiolo holds a B.S. in Business
Administration from California State University, Long Beach and is a Certified
Public Accountant.
Keith M. Roberts was the Company's Executive Vice President, General
Counsel and Assistant Secretary on March 31, 2000. He resigned in April 2000.
Mr. Roberts joined the Company in March 1997 as Vice President and General
Counsel and became Executive Vice President, General Counsel and Assistant
Secretary in February 1998. Mr. Roberts served as the Company's Chief Financial
Officer from June 1998 to April 1999. From May 1995 to March 1997, Mr. Roberts
was an associate of Brobeck, Phleger & Harrison LLP, a private law firm. From
September 1992 to May 1995,
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<PAGE> 5
Mr. Roberts was an associate of Hale & Dorr, a private law firm. Mr. Roberts
holds a J.D. from Stanford Law School and a B.A. in Economics and Philosophy
from the University of Rochester.
Nancy Nelson, Executive Vice President and Chief Operating Officer, joined
the Company in March 1999. Before joining the Company, Ms. Nelson was the Senior
Vice President and Chief Operating Officer of The Compucare Company. From
October 1997 until April 1998, Ms. Nelson was Compucare's Senior Vice President
of Product Marketing. Prior to her employment at The Compucare Company, which
was acquired by QuadraMed in March 1999, Ms. Nelson was a principal at First
Consulting Group, a provider of information technology and other consulting
services to payors, providers and healthcare organizations. Ms. Nelson holds a
B.S. in Biological Sciences/Biochemistry from the University of California and
has completed a graduate internship in Medical Technology at California State
University of Long Beach.
Patrick Ahearn, Executive Vice President of Product Management, joined the
Company in October 1998. Before joining the Company, Mr. Ahearn was Chief
Financial and Chief Information Officer at the Medical Center at Princeton, New
Jersey, a non-profit teaching integrated delivery network. In addition to his
financial and information system responsibilities, he was involved in the
development of the Medical Center's Physician Hospital Organization (PHO),
Medical Services Organization (MSO), its real estate company and its for-profit
ventures. Prior to his experience at Princeton, Mr. Ahearn worked in New York
City for a CPA firm, Pannell Kerr Forster. His experience was almost exclusively
in the healthcare arena and included both the audit and consulting aspects of
the practice. Mr. Ahearn received a Bachelors of Business Administration from
Iona College, New York.
Michael Wilstead, Executive Vice President of Sales and Marketing, joined
the Company in July 1998 as Vice President of Sales. Prior to joining QuadraMed,
Mr. Wilstead served as a group president at STERIS Corporation, a world leader
in microbial reduction and surgical support products. Prior to that, he held
positions at AMSCO International and AMSCO Canada, both of which are medical
equipment companies. Mr. Wilstead also founded Rocky Mountain Medical, a durable
medical equipment company, which he sold after six years. Mr. Wilstead holds a
bachelor of science in business administration from the University of Phoenix.
Randall R. Macdonald serves as Executive Vice President of Customer
Services. Prior to joining QuadraMed in June 1998, Mr. Macdonald held a similar
position at Pyramid Health Group, Inc., a cash flow management services company,
which he joined in February 1998. Prior to that date, Mr. Macdonald held
positions as Manager of Information Technology Management for Nissan Motor
Corporation USA and as a senior manager with Andersen Consulting. Mr. Macdonald
holds a Bachelor of Science degree from San Diego State University. He is a
member of the Project Management Institute.
Andrew K. Rushmere, Executive Vice President of Research and Development,
joined the Company in January 2000 as Executive Vice President of Research and
Development. Most recently, Mr. Rushmere served as vice president at Superior
Consulting, where he was responsible for strategic marketing as well as business
development opportunities and partnerships. Prior to his tenure at Superior, Mr.
Rushmere served as president of Aviant Information, Inc., a division of
Whittaker Corporation. Mr. Rushmere began his work with Whittaker Corporation as
vice president of XYPlex/Hughes LAN Systems. Mr. Rushmere has also held
positions at Persetel Networks as chief technology officer and strategic
marketing vice president, at Grinaker Networks Systems as national sales
manager, at Quality Assured as president and at Hewlett Packard as senior
technical sales manager. Mr. Rushmere earned a T3 in electrical engineering from
SA Navy and a marketing degree from the College of Marketing in South Africa.
Michelle Philpot was Vice President of Finance and Chief Accounting Officer
of the Company on March 31, 2000. She resigned in May 2000. Prior to joining
QuadraMed in July 1996, Ms. Philpot held positions as manager of worldwide
reporting and assistant controller for Digidesign, Inc., a developer of audio
editing software and systems. Ms. Philpot also spent four years in the audit
department at PricewaterhouseCoopers. Ms. Philpot holds a bachelor of science
in business from California State University-Sacramento. She is a Certified
Public Accountant.
5
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers, and persons who own more than
ten percent of a registered class of the Company's equity securities
(collectively, "Insiders"), to file with the Securities and Exchange Commission
initial reports of ownership and reports of changes in ownership of Common Stock
and other equity securities of the Company. Officers, directors and greater than
ten percent stockholders are required by Securities and Exchange Commission
regulation to furnish the Company with copies of all Section 16(a) reports they
file. Based solely on its review of the copies of such forms received by it, or
written representation from certain reporting persons that no Form 5s were
required for those persons, the Company believes that all reporting requirements
under Section 16(a) for the fiscal year ended December 31, 1999 were met in a
timely manner by its directors, executive officers, and greater than ten percent
beneficial owners.
6
<PAGE> 7
ITEM 11. EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth certain information regarding the
compensation earned during the last three fiscal years by (i) the Company's
Chief Executive Officer and (ii) each of the five other most highly compensated
executive officers of the Company serving as such as of the end of the last
fiscal year whose total annual salary and bonus exceeded $100,000, for services
rendered in all capacities to the Company and its subsidiaries. Such individuals
will be hereafter referred to as the "Named Executive Officers."
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
-------------------- ------------------------------
RESTRICTED SECURITIES
NAME AND PRINCIPAL FISCAL STOCK UNDERLYING ALL OTHER
POSITION YEAR SALARY BONUS AWARDS OPTIONS/WARRANTS COMPENSATION
------------------ ------ -------- -------- ---------- ---------------- ------------
<S> <C> <C> <C> <C> <C> <C>
James D. Durham.............. 1999 $374,000 $367,307 -- 100,000 $60,007(5)
Chairman of the Board and 1998 275,000 412,500 $1,862,000(3) 300,000 30,021(5)
Chief Executive Officer 1997 225,000 100,000 -- 305,000 --
John V. Cracchiolo........... 1999 256,000 251,580 -- 75,000 3,977(5)
President 1998 200,000 210,000 997,500(3) 150,000 2,017(5)
1997 159,375(1) 103,000 -- 155,000 --
Keith M. Roberts............. 1999 210,000 84,000 -- 35,000 --
Executive Vice President 1998 159,375(2) 131,250 498,750(3) 35,000 --
Counsel 1997 98,958(4) 50,000 -- 100,000 --
Nancy Nelson................. 1999 206,000 92,700 -- 125,000 --
Executive Vice President
and 1998 190,000 76,220 -- 14,853 --
Chief Operating Officer 1997 158,750 55,500 -- 34,657 --
Patrick Ahearn............... 1999 200,000 -- -- 20,000 --
Executive Vice President 1998 49,134(6) -- -- 100,000 --
Product Management
Michael Wilstead............. 1999 182,951 50,000 -- 90,000 --
Executive Vice President 1998 111,911(7) 3,833 -- 10,000 --
Sales and Marketing
</TABLE>
- ---------------
(1) Effective August 1997, Mr. Cracchiolo's annual salary was increased from
$150,000 to $175,000 by the Board of Directors.
(2) Effective July 1998, Mr. Robert's annual salary was increased from $150,000
to $175,000 by the Board of Directors.
(3) In October 1998, each of Mr. Durham, Mr. Cracchiolo and Mr. Roberts was
awarded a right to receive 112,000, 60,000 and 30,000 shares of Common
Stock, respectively, under the Company's 1996 Stock Incentive Plan, such
shares to be issued in October, 2003, without payment from the recipient,
provided that each such individual remains in the Company's service through
such date. The amounts shown represent the dollar value of the awards based
on the market price of the underlying shares of Common Stock on the date of
the bonus share awards in October 1998. As of the last day of the 1999
fiscal year, the value of the bonus share awards held by each such
individual, based on the market price of the underlying shares of Common
Stock on that date, was the following: Mr. Durham - $976,528; Mr.
Cracchiolo - $523,140; and Mr. Roberts - $261,570. No dividends are payable
with respect to the bonus share awards until such time as the underlying
shares of Common Stock have been issued.
(4) Represents salary paid from March 1997 through December 1997.
(5) Represents the cash value benefit of split-dollar life insurance premiums
paid by the Company. The dollar value was established using the demand loan
valuation method for the whole life portion of the premium paid by the
Company, projected on an actuarial basis. See "Employment Agreements;
Change In Control Arrangements" below.
(6) Represents salary paid from September 1998 through December 1998.
(7) Represents salary paid from June 1998 through December 1998. Includes
$27,200 of relocation expense reimbursement.
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OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information concerning the stock option
grants made to each of the Named Executive Officers during the 1999 fiscal year.
No stock appreciation rights were granted during the 1999 fiscal year to the
Named Executive Officers.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL
--------------------------------------------------- REALIZABLE VALUE
PERCENT OF AT ASSUMED ANNUAL
TOTAL RATES OF STOCK
NUMBER OF OPTIONS PRICE APPRECIATION
SECURITIES GRANTED TO FOR OPTION
UNDERLYING EMPLOYEES EXERCISE OR TERM(3)
OPTIONS IN FISCAL BASE PRICE EXPIRATION --------------------
NAME GRANTED(1) 1999 PER SHARE(2) DATE 5% 10%
---- ---------- ---------- ------------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
James D. Durham........................... 100,000 3.9% $8.3125 5/18/09 $522,769 $1,324,798
John V. Cracchiolo........................ 75,000 3.0% 8.3125 5/18/09 $392,076 993,599
Keith M. Roberts.......................... 35,000 1.4% 7.3750 12/7/09 $162,333 411,385
Nancy Nelson.............................. 100,000 3.9% 8.7500 3/22/09 $550,283 1,394,525
Nancy Nelson.............................. 25,000 1.0% 7.3750 12/7/09 $115,952 293,846
Patrick Ahearn............................ 20,000 0.8% 8.3125 5/18/09 $104,554 264,960
Michael Wilstead.......................... 20,000 0.8% 8.7500 3/22/09 $110,057 296,835
Michael Wilstead.......................... 35,000 1.4% 8.3125 5/18/09 $182,969 575,241
Michael Wilstead.......................... 35,000 1.4% 7.3750 12/7/09 $162,333 631,022
</TABLE>
(1) Each option set forth in the table above has a maximum term of ten (10)
years measured from the grant date, subject to earlier termination upon the
executive officer's termination of service with the Company. Each option
becomes exercisable for 25% of the option shares upon the optionee's
completion of one year of service measured from the grant date and becomes
exercisable for the remaining shares in equal monthly installments
over the next three years of service thereafter. The option will immediately
become exercisable for all of the option shares upon an acquisition of the
Company by merger or asset sale unless the options are assumed by the
successor corporation.
(2) The exercise price may be paid in cash, in shares of the Company's Common
Stock valued at fair market value on the exercise date or through a cashless
purchase procedure involving a same-day sale of the purchased shares. The
Company may also finance the option exercise by loaning the optionee
sufficient funds to pay the exercise price for the purchased shares and the
federal and state income tax liability incurred by the optionee in
connection with such exercise.
(3) There can be no assurance provided to any executive officer or any other
holder of the Company's securities that the actual stock price appreciation
over the 10-year option term will be at the assumed 5% and 10% compounded
annual rates or at any other defined level. Unless the market price of the
Common Stock appreciates over the option term, no value will be realized
from the option grants made to the Named Executive Officers.
Option Exercises and Year-End Values
No stock appreciation rights were granted during the 1999 fiscal year or
outstanding at the end of such fiscal year. The following table sets forth
certain information with respect to the Named Executive Officers concerning
option exercises during the 1999 fiscal year as well as the number of shares of
QuadraMed's common stock subject to exercisable and unexercisable stock options
which the Named Executive Officers held at the end of the 1999 fiscal year.
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AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
(#) SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
ACQUIRED OPTIONS AT FISCAL YEAR-END FISCAL YEAR-END(1)
ON ($) VALUE ------------------------------ ------------------------------
NAME EXERCISE REALIZED(2) EXERCISABLE NON-EXERCISABLE EXERCISABLE NON-EXERCISABLE
---- ---------- ----------- ----------- --------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
James D. Durham...... 355,600(3) $2,622,550(3) 481,345(4) 358,229 $ 0 $40,650
John V. Cracchiolo... -- -- 214,896 205,104 198,760 30,488
Keith M. Roberts..... -- -- 70,354 83,626 -- 47,040
Nancy Nelson......... -- -- 49,510 125,000 110,061 33,600
Patrick Ahearn....... -- -- 30,251 90,833 5,386 8,130
Michael Wilstead..... -- -- 3,333 96,667 -- 61,628
</TABLE>
- ---------------
(1) Calculated by determining the difference between the fair market value of
Quadramed's common stock as of December 31, 1999 and the exercise price of
the option.
(2) Calculated by multiplying the number of shares acquired on exercise by the
difference between the fair market value of the shares on the date of
exercise and the exercise price.
(3) Represents 355,600 shares of common stock issued upon exercise of a warrant
held by Mr. Durham. See "Security Ownership of Certain Beneficial Owners and
Management."
(4) Includes 134,574 shares of common stock issuable upon exercise of a warrant
held by Trigon Resources Corporation. See "Security Ownership of Certain
Beneficial Owners and Management."
DIRECTOR REMUNERATION
The non-employee directors receive one thousand dollars ($1,000) for each
board meeting attended and five hundred dollars ($500) for each committee
meeting attended. Non-employee directors are also reimbursed for their
reasonable expenses incurred in connection with attending board meetings.
Non-employee directors receive periodic option grants under the Automatic
Option Grant Program in effect under the Company's 1996 Plan and are eligible
to receive option grants under the Discretionary Option Grant Program of that
plan. Each of these programs is described below.
Automatic Option Grant Program
Under the Automatic Option Grant Program, each individual who is first
elected or appointed as a non-employee Board member receives at the time of such
initial election or appointment an automatic option grant for 10,000 shares of
Common Stock, provided such individual was not previously in the Company's
employ. At each annual stockholders meeting, each individual who is to continue
in service as a non-employee Board member is automatically granted at that
meeting an option to purchase 4,000 shares of Common Stock, provided such
individual has served as a non-employee Board member for at least six (6)
months.
Each option under the Automatic Option Grant Program has an exercise price
per share equal to 100% of the fair market value per share of Common Stock on
the option grant date and a maximum term of ten (10) years measured from the
grant date. The option is immediately exercisable for all the option shares, but
any purchased shares are subject to repurchase by the Company, at the exercise
price paid per share, upon the optionee's cessation of Board service prior to
vesting in those shares. Each initial 10,000-share grant vests, and the
Company's repurchase right lapses, as follows: (i) one-third (1/3) of the option
shares vest upon the optionee's completion of one (1) year of Board service
measured from the option grant date and (ii) the balance of the option shares
vest in a series of twenty-four (24) successive equal monthly installments upon
the optionee's completion of each additional month of Board service over the
twenty-four (24)-month period measured from the first anniversary of such grant
date. Each annual 4,000-share grant vests, and the Company's repurchase right
lapses, in a series of twelve (12) successive equal monthly installments over
the optionee's period of Board service measured from the grant date.
Mr. Gross received an option for 10,000 shares upon his appointment to the
Board in March 2000, at an exercise price of $5 per share. Mr. Ryan received an
option for 10,000 shares upon his re-appointment to the Board in March 2000, at
an exercise price of $5 per share. On the date of the 2000 Annual Meeting, each
continuing Board member will receive an option for 4,000 shares at an exercise
price per share equal to the fair market value on that date.
Discretionary Option Grant Program
Under the Discretionary Option Grant Program, eligible individuals in the
Company's employ or service (including non-employee Board members, officers and
consultants) may, at the discretion of the Compensation Committee of the Board,
as Plan Administrator, be granted options to purchase shares of Common Stock at
an exercise price not less than 100% of their fair market value on the grant
date. The Compensation Committee has complete discretion to determine the
vesting schedule, maximum term and the status under Federal tax laws of any such
option grant. No non-employee Board member received any option grants under the
Discretionary Option Grant Program during the 1999 fiscal year.
EMPLOYMENT AGREEMENTS; CHANGE IN CONTROL ARRANGEMENTS
In April 1999, the Company entered into a letter agreement with Patrick
Ahearn, Executive Vice President of Product Management. Pursuant to the letter
agreement, Mr. Ahearn is to receive a base salary of $200,000 for the 2000
calendar year and is eligible for such annual cash bonuses as the Board of
Directors in its discretion shall award. The letter agreement also contains the
following severance provisions: (i) if Mr. Ahearn dies, his estate will receive
a special termination payment equal to one months' salary and (ii) if Mr. Ahearn
is terminated by reason of disability or an Involuntary Termination other than a
Termination for Cause (as those terms are defined in the letter agreement), Mr.
Ahearn will receive an aggregate amount equal to his then current annual rate of
base salary and will also continue to receive for a period of 12 months his
life, health and disability and other benefits. In addition, upon a Change in
Control or an Involuntary Termination other than a Termination for Cause, Mr.
Ahearn's outstanding options and all restricted or unvested Common Stock held by
him will vest immediately and remain exercisable for a period of three years
thereafter. The term of the agreement is two years from the effective date and
shall be extended automatically on each succeeding anniversary of the effective
date of the agreement for an additional one (1) year period unless, not later
than three (3) months preceding such anniversary date, the Company shall have
given written notice to Mr. Ahearn that it will not extend the term of the
letter agreement.
In May 1999, the Company entered into a letter agreement with John V.
Cracchiolo, the Company's President. Pursuant to the letter agreement, Mr.
Cracchiolo is to receive a base salary of $256,000 for the 2000 calendar year
and is eligible for such annual cash bonuses as the Board of Directors in its
discretion shall award. The letter agreement also contains the following
severance provisions: (i) if Mr. Cracchiolo dies, his estate will receive a
special termination payment equal to one months' salary and (ii) if Mr.
Cracchiolo is terminated by reason of disability or an Involuntary Termination
other than a Termination for Cause (as those terms are defined in the letter
agreement), Mr. Cracchiolo will receive an aggregate amount equal to the sum of
(a) two times his then current annual rate of base salary and (b) two times his
then current maximum bonus and will also continue to receive for a period of 24
months his life, health and disability and other benefits. In addition, upon a
Change in Control or an Involuntary Termination other than a Termination for
Cause, Mr. Cracchiolo's outstanding options and all restricted or unvested
Common Stock held by him will vest immediately and remain exercisable for the
full term of the option. The term of the agreement is two
9
<PAGE> 10
years from the effective date and shall be extended automatically on each
succeeding anniversary of the effective date of the agreement for an additional
one (1) year period, unless not later than three (3) months preceding such
anniversary date, the Company shall have given written notice to Mr. Cracchiolo
that it will not extend the term of the letter agreement.
In January 1999, the Company entered into a letter agreement with James D.
Durham, the Company's Chief Executive Officer. Pursuant to the letter agreement,
Mr. Durham is to receive a base salary of $373,000 for the 2000 calendar year.
In addition, Mr. Durham is eligible for such annual cash bonuses as the Board of
Directors in its discretion shall award, based upon the recommendation of the
Board's Compensation Committee. The letter agreement also contains the following
severance provisions: (i) if Mr. Durham dies, his estate will receive a special
termination payment equal to one months' salary and (ii) if Mr. Durham is
terminated by reason of disability or an Involuntary Termination other than a
Termination for Cause (as those terms are defined in the letter agreement), Mr.
Durham will receive an aggregate amount equal to the sum of (a) three times his
then current annual rate of base salary and (b) three times his then current
maximum bonus and will also continue to receive for a period of 24 months his
life, health and disability and other benefits. In addition, upon a Change in
Control or an Involuntary Termination other than a Termination for Cause, Mr.
Durham's outstanding options and all restricted or unvested Common Stock held by
him will vest immediately and remain exercisable for the full term of the
option. The term of the agreement is two years from the effective date and shall
be extended automatically on each succeeding anniversary of the effective date
of the agreement for an additional one (1) year period, unless not later than
three (3) months preceding such anniversary date, the Company shall have given
written notice to Mr. Durham that it will not extend the term of the letter
agreement.
In April 1999, the Company entered into a letter agreement with Nancy
Nelson, Executive Vice President and Chief Operating Officer. Pursuant to the
letter agreement, Ms. Nelson was to receive a base salary of $206.000. In
January 2000, Ms. Nelson's base salary was increased to $245,000. Ms. Nelson is
also eligible for such annual cash bonuses as the Board of Directors in its
discretion shall award. The letter agreement also contains the following
severance provisions: (i) if Ms. Nelson dies, her estate will receive a special
termination payment equal to one months' salary and (ii) if Ms. Nelson is
terminated by reason of disability or an Involuntary Termination other than a
Termination for Cause (as those terms are defined in the letter agreement), Ms.
Nelson will receive an aggregate amount equal to her then current annual rate of
base salary and will also continue to receive for a period of 12 months her
life, health and disability and other benefits. In addition, upon a Change in
Control or an Involuntary Termination other than a Termination for Cause, Ms.
Nelson's outstanding options and all restricted or unvested Common Stock held by
her will vest immediately and remain exercisable for a period of three years
thereafter. The term of the agreement is two years from the effective date and
shall be extended automatically on each succeeding anniversary of the effective
date of the agreement for an additional one (1) year period unless, not later
than three (3) months preceding such anniversary date, the Company shall have
given written notice to Ms. Nelson that it will not extend the term of the
letter agreement.
In 1998 the Company entered into split-dollar life insurance agreements
with Messrs. Durham and Cracchiolo pursuant to which the Company agreed to pay
premiums due on life insurance policies for Messrs. Durham and Cracchiolo. Under
the terms of the agreements, the Company is reimbursed for the amount of the
premiums it pays on the policies at such time as the split dollar life insurance
agreements are terminated, the trusts surrender or cancel the policies, or when
death benefit proceeds are paid under the policies. Such repayment has been
secured by the assignment of the policies to the Company as collateral.
10
<PAGE> 11
In connection with an acquisition of the Company by merger or asset sale,
each outstanding option held by the Chief Executive Officer and the other
executive officers under the Company's 1994 Stock Plan (the predecessor equity
incentive program to the 1996 Plan) or the 1996 Plan will automatically
accelerate in full, except to the extent such options are to be assumed by the
successor corporation. In addition, the Compensation Committee as Plan
Administrator of the 1996 Plan will have the authority to provide for the
accelerated vesting of the shares of Common Stock subject to outstanding options
held by the Chief Executive Officer or any other executive officer or any
unvested shares of Common Stock subject to direct issuances held by such
individual, in connection with the termination of the officer's employment
following: (i) a merger or asset sale in which these options are assumed or are
assigned or (ii) certain hostile changes in control of the Company.
Deferred Compensation Plan
Effective January 1, 2000 QuadraMed adopted a deferred compensation plan
(the"DCP") the purpose of which is to provide specified benefits to, and help
retain, a select group of management and highly compensated employees and
directors who contribute materially to the continued growth, development and
future business success of QuadraMed. The DCP is unfunded for tax purposes and
for purposes of Title I of ERISA. A committee of the board of directors is
responsible, in its sole discretion, to select the employees and directors to
participate in the DCP.
Under the DCP, a participant may elect to defer for each plan year a
minimum amount of $2,000 of his or her base annual salary and a minimum amount
of $2,000 of his or her annual bonus, and a maximum amount of 90% (less
applicable withholding) of his or her base annual salary, a maximum amount of
90% (less applicable withholding) of his or her annual bonus, and 100% of his or
her director's fees. QuadraMed may, in its sole discretion, credit any amount it
desires to any participant's company contribution account. QuadraMed is required
to contribute a matching amount equal to 50% of a participant's annual deferral
amount, up to 2% of such participant's total annual compensation for each plan
year, to the participant's company contribution account. The amount contributed
by a participant is 100% vested at all times. The amount contributed by
QuadraMed is vested in relation to each participant's years of service after
January 1, 2000 as follows: (a) 0% if less than 1 year; (b) 25% for 1 year; (c)
50% for 2 years; (d) 75% for 3 years; and (e) 100% for 4 years or more. In the
event of a change in control or involuntary termination of employment, other
than a termination of employment for cause, a participant's company contribution
account immediately becomes 100% vested.
Stock Exchange Deferred Compensation Plan
Effective January 3, 2000, QuadraMed adopted a Stock Exchange Deferred
Compensation Plan (the "SEDCP") the purpose of which is to provide specified
benefits to, and help retain, a select group of management and highly
compensated employees who contribute materially to the continued growth,
development and future business success of QuadraMed. The SEDCP is unfunded for
tax purposes and for purposes of Title I of ERISA. A committee of the board of
directors is responsible, in its sole discretion, to select the employees to
participate in the SEDCP.
Under the SEDCP, QuadraMed is required to credit an amount to a
participant's account under the SEDCP as of the date specified in the
participant's Exchange Agreement. One-half of the amount so credited must be
credited to the participant's company stock account and the other half must be
credited to the participant's other investments account. A participant is vested
in his or her SEDCP account in relation to each participant's years of service
after January 3, 2000 as follows: (a) 0% if less than 3 years and (b) 100% if 3
years or more. In the event of a change in control, a participant's death,
disability, retirement or involuntary termination of employment, other than a
termination of employment for cause, a participant's SEDCP account immediately
becomes 100% vested.
On January 3, 2000, James Durham entered into an Exchange Agreement with
QuadraMed pursuant to which Mr. Durham agreed that the stock options previously
granted to him in 1998 to acquire 300,000 shares of stock in QuadraMed would be
cancelled and in consideration for such cancellation, Mr. Durham would receive
an amount equal to $2,416,000 which would be credited to his SEDCP account in
accordance with the SEDCP. As of March 31, 2000, Mr. Durham's years of service
for purposes of vesting in his SEDCP account, which is based on years of
service after January 3, 2000, were three months.
On January 3, 2000, John Cracchiolo entered into an Exchange Agreement with
QuadraMed pursuant to which Mr. Cracchiolo agreed that the stock options
previously granted to him in 1998 to acquire 150,000 shares of stock in
QuadraMed would be cancelled and in consideration for such cancellation, Mr.
Cracchiolo would receive an amount equal to $1,208,000 which would be credited
to his SEDCP account in accordance with the SEDCP. As of March 31, 2000, Mr.
Cracchiolo's years of service for purposes of vesting in his SEDCP account,
which is based on years of service after January 3, 2000, were three months.
Supplemental Executive Retirement Plan
Effective January 1, 2000, QuadraMed adopted a Supplemental Executive
Retirement Plan (the "SERP") the purpose of which is to provide specified
benefits to, and help retain, a select group of management and highly
compensated employees who contribute materially to the continued growth,
development and future business success of QuadraMed. The SERP is unfunded for
tax purposes and for purposes of Title I of ERISA. A committee of the board of
directors is responsible, in its sole discretion, to select the employees to
participate in the SERP.
Under the SERP, participants receive a 20-year installment benefit, payable
monthly and commencing at age sixty (60), equal to the product of 0.05
multiplied by such participant's highest annual compensation multiplied by his
or her years of service (not to exceed 13) multiplied by 1/12. A participant is
vested in his or her SERP benefit in relation to such participant's years of
participation in the plan on the date of termination of employment, as follows:
(a) 0% if less than 7 years and (b) 100% if 7 years or more. In the event of a
change in control, a participant's death, disability, retirement or involuntary
termination of employment, other than a termination of employment for cause, a
participant becomes immediately vested in his or her SERP benefit. In the event
of an involuntary termination, other than for cause, a participant is entitled
to a lump sum amount, rather than the installment payments described above,
equal to the actuarial equivalent of a 20-year monthly installment payment equal
to the product of 0.65 multiplied by the participant's highest annual
compensation multiplied by 1/12.
The following table shows the estimated annual payments payable at normal
retirement to a SERP participant. The benefits shown in the table are not
subject to offset for Social Security or other benefits.
Pension Plan Table
Annual Benefits Upon Retirement
With Years of Service Indicated
<TABLE>
<CAPTION>
Highest Annual
Compensation 5 Years 10 Years 15 Years
- -------------- ------- -------- --------
<S> <C> <C> <C>
$500,000 $125,000 $250,000 $325,000
$600,000 150,000 300,000 390,000
$700,000 175,000 350,000 455,000
$800,000 200,000 400,000 520,000
$900,000 225,000 450,000 585,000
</TABLE>
For purposes of the SERP, "highest annual compensation" means a
participant's highest annual compensation, including salary and bonuses, during
the participant's last ten years of employment. The "salary" and "bonuses" used
to determine a participant's "highest annual compensation" are the same as the
salary and bonuses disclosed in the "Salary" and "Bonuses" columns of the
Summary Compensation Table.
As of March 31, 2000, the "years of service" for Mr. Durham and Mr.
Cracchiolo were approximately 6.5 years and 5 years, respectively. For purposes
of vesting under the SERP, as of March 31, 2000 the "period of plan
participation" for both Mr. Durham and Mr. Cracchiolo was three months. No
other officers of the Company were participants in the SERP as of March 31,
2000.
Grantor Trust Agreement
Effective January 1, 2000, QuadraMed entered into a Grantor Trust
Agreement with Wachovia Bank, N.A. pursuant to which QuadraMed agreed to make
contributions to a trust established pursuant to the agreement to satisfy
QuadraMed's obligations under the DCP, the SEDCP and the SERP. Under the terms
of the agreement, upon a threatened change in control the Company is required to
make contributions to the trust in an amount equal to not less than 100%, but
not more than 120%, of the amount necessary to pay the participants in such
plans the benefits they would be entitled to under the terms of such plans on
the date the threatened change in control occurs. In the event a change in
control does not occur within six months of the threatened change in control,
the Company has the right to recover such funds. Upon a change in control, the
Company is obligated to make an irrevocable contribution to the trust in an
amount equal to not less than 100%, but not more than 120%, of the amount
necessary to pay the participants in such plans the benefits they would be
entitled to under the terms of such plans on the date the change in control
occurs. The Company is also obligated to fund a $125,000 expense reserve for the
trustee upon a threatened change in control or a change in control. A
"threatened change in control" is defined to include any pending offer for the
Company's outstanding shares of common stock, any pending offer to acquire the
Company by merger, or any pending action or plan to effect a change in control.
A "change in control" is defined to include the merger of the Company into
another corporation if the Company is not the surviving corporation or if after
such transaction any person or group owns more than 50% of the outstanding
shares of common stock or assets of the Company, the sale or transfer to any
person or group in a single transaction or a series of related transactions of
more than 35% of the outstanding shares of common stock of the Company, the
acquisition by any person or group of substantially all of the assets of the
Company, or any other transaction the Board of Directors determines affects
control of the Company and constitutes a change in control.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee during the 1999 fiscal year consisted
of Mr. Roskovensky (Chairperson) and Mr. Greene. No member of such Committee
was at any time during the 1999 fiscal year or at any other time an officer or
employee of the Company. No executive officer of the Company served on the
compensation committee or another entity or any other committee of the
board of directors of another entity performing similar functions during the
Company's last fiscal year.
11
<PAGE> 12
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of March 31, 2000 by (i) each person
(or group of affiliated persons) known by the Company to be the beneficial owner
of more than five percent of the outstanding shares of the Company's Common
Stock, (ii) each director of the Company, (iii) each Named Executive Officer of
the Company and (iv) all executive officers and directors of the Company as a
group.
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
BENEFICIALLY OWNED(1)
----------------------
NAME OF BENEFICIAL OWNERS NUMBER PERCENT
------------------------- ---------- --------
<S> <C> <C>
Pilgrim Baxter & Associates, Ltd(2)...................... 1,860,700 7.3%
825 Duportail Road
Wayne, PA 19087
AXA Financial, Inc.(3)................................... 1,408,488 5.5%
1290 Avenue of the Americas
New York, NY 10104
Nitin T. Mehta(4)........................................ 1,326,362 5.2%
58 Greenoaks Drive
Atherton, CA 94027
Joe D. Whisenhunt, Sr.(5)................................ 1,255,190 4.9%
Harmony Meadows Ranch
Route 2, Box 150
Bee Branch, AR 72013
James D. Durham(6)....................................... 1,330,469 5.2%
John V. Cracchiolo(7).................................... 480,000 1.9%
Keith M. Roberts(8)...................................... 183,980 *
Nancy Nelson(9).......................................... 174,510 *
Patrick Ahearn(10)....................................... 121,084 *
Michael Wilstead(11)..................................... 100,000 *
Albert L. Greene(12)..................................... 18,000 *
Scott Gross(13).......................................... 12,000 *
Michael J. King(14)...................................... 159,322 *
Joan P. Neuscheler(15)................................... 145,493 *
E.A. Roskovensky(16)..................................... 12,900 *
Cornelius T. Ryan(17).................................... 28,000 *
All executive officers and directors as a group (15
persons)(18)........................................... 3,053,727 12%
</TABLE>
- ---------------
* Less than one percent.
(1) Percentage ownership is based on approximately 25,473,688 shares of Common
Stock outstanding on March 31, 2000. Beneficial ownership is determined in
accordance with the rules of the Securities and Exchange Commission and
generally includes voting or investment power with respect to securities.
Shares of Common Stock subject to options, warrants and convertible notes
currently exercisable or convertible, or exercisable or convertible within
60 days, are deemed outstanding for computing the percentage of the person
holding such options, but are not deemed outstanding for computing the
percentage of any other person. Except as indicated by footnote, and
subject to community property laws where applicable, the persons named in
the table have sole voting and investment power with respect to all shares
of Common Stock shown as beneficially owned by them.
12
<PAGE> 13
(2) Represents shares beneficially owned by Pilgrim Baxter & Associates, Ltd.
("Pilgrim Baxter") based on the information contained in Amendment No 2 to
Schedule 13G filed on January 19, 1999. Pilgrim Baxter is an investment
adviser registered under the Investment Advisers Act of 1940.
(3) Represents shares beneficially owned by AXA Financial, Inc., formerly The
Equitable Companies Incorporated ("AXA") based on information in a Schedule
13G filed on February 14, 2000. All shares of the Common Stock reported as
beneficially owned by AXA were directly beneficially owned by subsidiaries
of AXA.
(4) Represents shares beneficially owned by Nitin T. Mehta based on information
contained in a Schedule 13G filed on June 15, 1998.
(5) Represents shares beneficially owned by Joe D. Whisenhunt, Sr. based on
information contained in a Schedule 13D filed on October 15, 1998. Share
ownership shown is less than 5% of the outstanding shares of the Company's
Common Stock. Details on share ownership are provided for informational
purposes only.
(6) Includes 23,295 shares of Common Stock owned by Trigon Resources
Corporation ("Trigon"), a corporation owned by Mr. Durham and his two
children and 134,574 shares of Common Stock issuable upon exercise of a
warrant held by Trigon. Also includes 705,000 shares issuable upon exercise
of options, 434,791 of which are exercisable within 60 days of March 31,
2000 and 112,000 shares subject to a stock bonus award, which shares will
be issued in October 2003, or earlier, in the event certain performance
milestones are attained. Mr. Durham's address is 22 Pelican Way, San
Rafael, California 94901.
(7) Includes 420,000 shares issuable upon exercise of options, 265,416 of which
are exercisable within 60 days of March 31, 2000 and 60,000 shares subject
to a stock bonus award, which shares will be issued in October 2003, or
earlier, in the event certain performance milestones are attained.
(8) Includes 153,980 shares issuable upon exercise of options, 83,235 of which
are exercisable within 60 days of March 31, 2000 and 30,000 shares subject
to a stock bonus award, which shares will be issued in October 2003, or
earlier, in the event certain performance milestones are attained.
(9) Includes 174,510 shares of Common Stock issuable upon exercise of options,
78,677 of which are exercisable within 60 days of March 31, 2000.
(10) Includes 121,084 Shares of Common Stock issuable upon exercise of options,
40,667 of which are exercisable within 60 days of March 31, 2000.
(11) Includes 100,000 shares of Common Stock issuable upon exercise of options,
18,958 of which are exercisable within 60 days of March 31, 2000.
(12) Includes 18,000 shares issuable upon exercise of options, 17,000 of which
are exercisable within 60 days of March 31, 2000.
(13) Includes 12,000 shares of Common Stock issuable upon exercise of options,
2,000 of which are exercisable within 60 days of March 31, 2000.
(14) Includes 159,322 shares issuable upon exercise of options, 159,322 of which
are exercisable within 60 days of March 31, 2000.
(15) Includes 122,005 shares of Common Stock issuable upon exercise of certain
warrants issued to Tullis-Dickerson Capital Focus, L.P. Also includes
22,000 shares issuable upon exercise of options held by Ms. Neuscheler,
21,000 of which are exercisable within 60 days of March 31, 2000. Ms.
Neuscheler, a director of the Company, is a general partner of
Tullis-Dickerson Partners, which is the general partner of Tullis-Dickerson
Capital Focus, L.P. Ms. Neuscheler disclaims beneficial ownership in the
shares held by Tullis-Dickerson Capital Focus, L.P., except to the extent
of her pecuniary interest arising from her general partnership interest in
Tullis-Dickerson Partners. Also includes 744 shares held in trust for the
benefit of Susannah Dickerson and 744 shares held in trust for the benefit
of Caroline Dickerson. Ms. Neuscheler disclaims beneficial ownership in
such shares.
(16) Includes 10,000 shares of Common Stock issuable upon exercise of options,
none of which are exercisable within 60 days of March 31, 2000.
(17) Includes 28,000 shares of Common Stock issuable upon exercise of options,
18,000 of which are exercisable within 60 days of March 31, 2000.
(18) Includes 23,295 shares of Common Stock owned by Trigon Resources
Corporation ("Trigon"), a corporation owned by Mr. Durham and his two
children and 134,574 shares of Common Stock issuable upon exercise of a
warrant held by Trigon. Includes 2,211,865 shares issuable upon exercise
of options, 1,154,067 of which shares are exercisable within 60 days of
March 31, 2000 and 202,000 shares subject to a stock bonus award, which
shares will be issued in October 2003, or earlier, in the event certain
performance milestones are attained.
13
<PAGE> 14
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
In addition to the indemnification provisions contained in the Company's
Restated Certificate of Incorporation and Bylaws, the Company has entered into
separate indemnification agreements with each of its directors and officers.
These agreements require the Company, among other things to indemnify such
director or officer against expenses (including attorneys' fees), judgments,
fines and settlements (collectively, "Liabilities") paid by such individual in
connection with any action, suite or proceeding arising out of such individual's
status or service as a director or officer of the Company (other than
Liabilities arising from willful misconduct or conduct that is knowingly
fraudulent or deliberately dishonest) and to advance expenses incurred by such
individual in connection with any proceeding against such individual with
respect to which such individual may be entitled to indemnification by the
Company.
Michael King, a director of the Company, is the Chief Executive Officer
of Healthscribe, Inc., a provider of transcription services. During 1999,
QuadraMed paid a total of $717,278 to Healthscribe, Inc. for transcription
services.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
Item 14(c) is hereby amended by adding the following exhibits:
10.60 QuadraMed Corporation Deferred Compensation Plan, effective January 1,
2000
10.61 QuadraMed Corporation Stock Exchange Deferred Compensation Plan,
effective January 3, 2000
10.62 Exchange Agreement dated January 3, 2000 between QuadraMed Corporation
and Jim Durham
10.63 Exchange Agreement dated January 3, 2000 between QuadraMed Corporation
and John Cracchiolo
10.64 QuadraMed Corporation Supplemental Executive Retirement Plan, effective
January 1, 2000
10.65 Grantor Trust Agreement dated January 1, 2000 between QuadraMed
Corporation and Wachovia Bank, N.A.
14
<PAGE> 15
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
QUADRAMED CORPORATION
Date: MAY 26, 2000
By: /s/ JOHN V. CRACCHIOLO
------------------------------------
John V. Cracchiolo
President, Chief Financial
Officer and Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons in the capacities and on
the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ JAMES D. DURHAM Chairman of the Board May 26, 2000
- ---------------------------------- and Chief Executive Officer
James D Durham (Principal Executive Officer)
/s/ JOHN V. CRACCHIOLO President, May 26, 2000
- ---------------------------------- Chief Financial Officer and
John V. Cracchiolo Secretary (Principal Financial and
Accounting Officer)
/s/ ALBERT L. GREENE* Director May 26, 2000
- -----------------------------------
Albert L. Greene
/s/ SCOTT GROSS* Director May 26, 2000
- -----------------------------------
Scott Gross
/s/ MICHAEL J. KING* Director May 26, 2000
- -----------------------------------
Michael J. King
/s/ E. A. ROSKOVENSKY* Director May 26, 2000
- -----------------------------------
E. A. Roskovensky
/s/ CORNELIUS T. RYAN* Director May 26, 2000
- -----------------------------------
Cornelius T. Ryan
* By /s/ JOHN V. CRACCHIOLO
------------------------------
John V. Cracchiolo,
Attorney-In-Fact
</TABLE>
15
<PAGE> 16
EXHIBIT INDEX
10.60 QuadraMed Corporation Deferred Compensation Plan, effective January 1,
2000
10.61 QuadraMed Corporation Stock Exchange Deferred Compensation Plan,
effective January 3, 2000
10.62 Exchange Agreement dated January 3, 2000 between QuadraMed Corporation
and Jim Durham
10.63 Exchange Agreement dated January 3, 2000 between QuadraMed Corporation
and John Cracchiolo
10.64 QuadraMed Corporation Supplemental Executive Retirement Plan effective
January 1, 2000
10.65 Grantor Trust Agreement dated January 1, 2000 between QuadraMed
Corporation and Wachovia Bank, N.A.
<PAGE> 17
QUADRAMED CORPORATION
1999 FORM 10-K/A ANNUAL REPORT
AMENDMENT NO. 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
PART III.................................................................... 2
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT............... 2
ITEM 11. EXECUTIVE COMPENSATION........................................... 7
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT... 12
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS................... 14
PART IV..................................................................... 14
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K... 14
SIGNATURES.................................................................. 15
</TABLE>
<PAGE> 1
EXHIBIT 10.60
QUADRAMED CORPORATION
Deferred Compensation Plan
Master Plan Document
================================================================================
EFFECTIVE JANUARY 1, 2000
COPYRIGHT (C) 1999
BY COMPENSATION RESOURCE GROUP, INC.
ALL RIGHTS RESERVED
<PAGE> 2
QUADRAMED CORPORATION
Deferred Compensation Plan
Master Plan Document
================================================================================
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
----
<S> <C> <C>
PURPOSE ...............................................................................1
ARTICLE 1 DEFINITIONS....................................................................1
ARTICLE 2 SELECTION, ENROLLMENT, ELIGIBILITY.............................................6
2.1 SELECTION BY COMMITTEE.........................................................6
2.2 ENROLLMENT REQUIREMENTS........................................................7
2.3 ELIGIBILITY; COMMENCEMENT OF PARTICIPATION.....................................7
2.4 TERMINATION OF PARTICIPATION AND/OR DEFERRALS..................................7
ARTICLE 3 DEFERRAL COMMITMENTS/COMPANY MATCHING/CREDITING TAXES..........................7
3.1 MINIMUM DEFERRALS..............................................................7
3.2 MAXIMUM DEFERRAL...............................................................8
3.3 ELECTION TO DEFER; EFFECT OF ELECTION FORM.....................................8
3.4 WITHHOLDING OF ANNUAL DEFERRAL AMOUNTS.........................................9
3.5 ANNUAL COMPANY CONTRIBUTION AMOUNT.............................................9
3.6 ANNUAL COMPANY MATCHING AMOUNT.................................................9
3.7 INVESTMENT OF TRUST ASSETS....................................................10
3.8 VESTING.......................................................................10
3.9 CREDITING/DEBITING OF ACCOUNT BALANCES........................................10
3.10 FICA AND OTHER TAXES..........................................................12
ARTICLE 4 SHORT-TERM PAYOUT; UNFORESEEABLE FINANCIAL EMERGENCIES; WITHDRAWAL ELECTION;
401(k) ROLL-OVER..............................................................13
4.1 SHORT-TERM PAYOUT.............................................................13
4.2 OTHER BENEFITS TAKE PRECEDENCE OVER SHORT-TERM................................13
4.3 WITHDRAWAL PAYOUT/SUSPENSIONS FOR UNFORESEEABLE FINANCIAL EMERGENCIES.........13
4.4 WITHDRAWAL ELECTION...........................................................14
ARTICLE 5 RETIREMENT BENEFIT............................................................14
5.1 RETIREMENT BENEFIT............................................................14
5.2 PAYMENT OF RETIREMENT BENEFIT.................................................14
5.3 DEATH PRIOR TO COMPLETION OF RETIREMENT BENEFIT...............................15
ARTICLE 6 PRE-RETIREMENT SURVIVOR BENEFIT...............................................15
6.1 PRE-RETIREMENT SURVIVOR BENEFIT...............................................15
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
6.2 PAYMENT OF PRE-RETIREMENT SURVIVOR BENEFIT....................................15
ARTICLE 7 TERMINATION BENEFIT...........................................................16
7.1 TERMINATION BENEFIT...........................................................16
7.2 PAYMENT OF TERMINATION BENEFIT................................................16
ARTICLE 8 DISABILITY WAIVER AND BENEFIT.................................................16
8.1 DISABILITY WAIVER.............................................................16
8.2 CONTINUED ELIGIBILITY; DISABILITY BENEFIT.....................................16
ARTICLE 9 BENEFICIARY DESIGNATION.......................................................17
9.1 BENEFICIARY...................................................................17
9.2 BENEFICIARY DESIGNATION; CHANGE; SPOUSAL CONSENT..............................17
9.3 ACKNOWLEDGEMENT...............................................................17
9.4 NO BENEFICIARY DESIGNATION....................................................17
9.5 DOUBT AS TO BENEFICIARY.......................................................17
9.6 DISCHARGE OF OBLIGATIONS......................................................18
ARTICLE 10 LEAVE OF ABSENCE..............................................................18
10.1 PAID LEAVE OF ABSENCE.........................................................18
10.2 UNPAID LEAVE OF ABSENCE.......................................................18
ARTICLE 11 TERMINATION, AMENDMENT OR MODIFICATION........................................18
11.1 TERMINATION...................................................................18
11.2 AMENDMENT.....................................................................19
11.3 PLAN AGREEMENT................................................................19
11.4 EFFECT OF PAYMENT.............................................................19
ARTICLE 12 ADMINISTRATION................................................................19
12.1 COMMITTEE DUTIES..............................................................19
12.2 ADMINISTRATION UPON CHANGE IN CONTROL.........................................20
12.3 AGENTS........................................................................20
12.4 BINDING EFFECT OF DECISIONS...................................................20
12.5 INDEMNITY OF COMMITTEE........................................................20
12.6 EMPLOYER INFORMATION..........................................................21
ARTICLE 13 OTHER BENEFITS AND AGREEMENTS.................................................21
13.1 COORDINATION WITH OTHER BENEFITS..............................................21
ARTICLE 14 CLAIMS PROCEDURES.............................................................21
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
ARTICLE 15 TRUST.........................................................................21
15.1 ESTABLISHMENT OF THE TRUST....................................................21
15.2 INTERRELATIONSHIP OF THE PLAN AND THE TRUST...................................21
15.3 DISTRIBUTIONS FROM THE TRUST..................................................21
ARTICLE 16 MISCELLANEOUS.................................................................22
16.1 STATUS OF PLAN................................................................22
16.2 UNSECURED GENERAL CREDITOR....................................................22
16.3 EMPLOYER'S LIABILITY..........................................................22
16.4 NONASSIGNABILITY..............................................................22
16.5 NOT A CONTRACT OF EMPLOYMENT..................................................22
16.6 FURNISHING INFORMATION........................................................22
16.7 TERMS.........................................................................23
16.8 CAPTIONS......................................................................23
16.9 GOVERNING LAW.................................................................23
16.10 NOTICE........................................................................23
16.11 SUCCESSORS....................................................................23
16.12 SPOUSE'S INTEREST.............................................................23
16.13 VALIDITY......................................................................23
16.14 INCOMPETENT...................................................................24
16.15 COURT ORDER...................................................................24
16.16 DISTRIBUTION IN THE EVENT OF TAXATION.........................................24
16.17 INSURANCE.....................................................................24
16.18 LEGAL FEES TO ENFORCE RIGHTS AFTER CHANGE IN CONTROL..........................25
</TABLE>
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QUADRAMED CORPORATION
DEFERRED COMPENSATION PLAN
Effective January 1, 2000
PURPOSE
The purpose of this Plan is to provide specified benefits to a select
group of management and highly compensated Employees and Directors 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 Deferral Account
balance, (ii) the vested Company Contribution Account balance and (iii)
the vested Company Matching 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.
1.2 "Annual Bonus" shall mean any compensation, in addition to Base Annual
Salary relating to services performed during any calendar year, whether
or not paid in such calendar year or included on the Federal Income Tax
Form W-2 for such calendar year, payable to a Participant as an Employee
under any Employer's annual bonus and cash incentive plans, excluding
stock options.
1.3 "Annual Company Contribution Amount" shall mean, for any one Plan Year,
the amount determined in accordance with Section 3.5.
1.4 "Annual Company Matching Amount" for any one Plan Year shall be the
amount determined in accordance with Section 3.6.
1.5 "Annual Deferral Amount" shall mean that portion of a Participant's Base
Annual Salary, Annual Bonus and Directors Fees that a Participant elects
to have, and is deferred, in accordance with Article 3, for any one Plan
Year. In the event of a Participant's Retirement, Disability (if
deferrals cease in accordance with Section 8.1), death or a Termination
of Employment prior to the end of a Plan Year, such year's Annual
Deferral Amount shall be the actual amount withheld prior to such event.
1.6 "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,
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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.
1.7 "Base Annual Salary" shall mean W-2 wages of the Employee for such
calendar year, excluding bonuses, overtime, fringe benefits, stock
options, relocation expenses, incentive payments, non-monetary awards,
directors fees and other fees, automobile and other allowances paid to a
Participant for employment services rendered (whether or not such
allowances are included in the Employee's gross income). Base Annual
Salary shall be calculated before reduction for compensation voluntarily
deferred or contributed by the Participant pursuant to all qualified or
non-qualified plans of any Employer and shall be calculated to include
amounts not otherwise included in the Participant's gross income under
Code Sections 125, 402(e)(3), 402(h), or 403(b) pursuant to plans
established by any Employer; provided, however, that all such amounts
will be included in compensation only to the extent that, had there been
no such plan, the amount would have been payable in cash to the
Employee.
1.8 "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.
1.9 "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.
1.10 "Board" shall mean the board of directors of the Company.
1.11 "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.
1.12 "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%);
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(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.
1.13 "Code" shall mean the Internal Revenue Code of 1986, as it may be
amended from time to time.
1.14 "Committee" shall mean the committee described in Article 12.
1.15 "Company" shall mean QuadraMed Corporation, a Delaware corporation, and
any successor to all or substantially all of the Company's assets or
business.
1.16 "Company Contribution Account" shall mean (i) the sum of the
Participant's Annual Company Contribution Amounts, plus (ii) amounts
credited in accordance with all the applicable crediting provisions of
this Plan that relate to the Participant's Company Contribution 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 Contribution Account.
1.17 "Company Matching Account" shall mean (i) the sum of all of a
Participant's Annual Company Matching Amounts, plus (ii) amounts
credited in accordance with all the applicable crediting provisions of
this Plan that relate to the Participant's Company Matching 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 Matching Account.
1.18 "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 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 3.9 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
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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.
1.19 "Deferral Account" shall mean (i) the sum of all of a Participant's
Annual Deferral Amounts, plus (ii) amounts credited in accordance with
all the applicable crediting provisions of this Plan that relate to the
Participant's Deferral Account, less (iii) all distributions made to the
Participant or his or her Beneficiary pursuant to this Plan that relate
to his or her Deferral Account.
1.20 "Director" shall mean any member of the board of directors of any
Employer.
1.21 "Directors Fees" shall mean the annual fees paid by any Employer,
including retainer fees and meetings fees, as compensation for serving
on the board of directors.
1.22 "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.
1.23 "Disability Benefit" shall mean the benefit set forth in Article 8.
1.24 "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.
1.25 "Employee" shall mean a person who is an employee of any Employer.
1.26 "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.
1.27 "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as it may be amended from time to time.
1.28 "First Plan Year" shall mean the period beginning January 1, 2000 and
ending December 31, 2000.
1.29 "401(k) Plan" shall be that certain QuadraMed Corporation 401(k) Plan,
dated July 1, 1996 adopted by the Company.
1.30 "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. 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".
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1.31 "Maximum 401(k) Amount" with respect to a Participant, shall be the
maximum amount of elective contributions that can be made by such
Participant, consistent with Code Section 402(g) and the limitations of
Code Section 401(k)(3), for a given plan year under the 401(k) Plan.
1.32 "Measurement Fund" shall have the meaning set forth in Section 3.9(c).
1.33 "Participant" shall mean any Employee or Director (i) who is selected to
participate in the Plan, (ii) who elects to participate in the Plan,
(iii) who signs a Plan Agreement, an Election Form and a Beneficiary
Designation Form, (iv) whose signed Plan Agreement, Election Form and
Beneficiary Designation Form are accepted by the Committee, (v) who
commences participation in the Plan, and (vi) whose Plan 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.
1.34 "Plan" shall mean the Company's Deferred Compensation Plan, which shall
be evidenced by this instrument and by each Plan Agreement, as they may
be amended from time to time.
1.35 "Plan 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 Plan 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 Plan Agreement, the Plan Agreement bearing the latest date of
acceptance by the Employer shall supersede all previous Plan Agreements
in their entirety and shall govern such entitlement. The terms of any
Plan Agreement may be different for any Participant, and any Plan
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.
1.36 "Plan Year" shall mean a period beginning on January 1 of each calendar
year and continuing through December 31 of such calendar year.
1.37 "Pre-Retirement Survivor Benefit" shall mean the benefit set forth in
Article 6.
1.38 "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; and shall mean with respect to a
Director who is not an Employee, severance of his or her directorships
with all Employers on or after the later of (y) the attainment of age
seventy (70), or (z) in the sole discretion of the Committee, an age
later than age seventy (70). If a Participant is both an Employee and a
Director, Retirement shall not occur until he or she Retires as both an
Employee and a Director, which Retirement shall be deemed to be a
Retirement as a Director; provided, however, that such a Participant may
elect, at least three years prior to Retirement and in accordance with
the policies and procedures established by the Committee, to Retire for
purposes of this Plan at the time he or she Retires as an Employee,
which Retirement shall be deemed to be a Retirement as an Employee.
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1.39 "Retirement Benefit" shall mean the benefit set forth in Article 5.
1.40 "Short-Term Payout" shall mean the payout set forth in Section 4.1.
1.41 "Termination Benefit" shall mean the benefit set forth in Article 7.
1.42 "Termination of Employment" shall mean the severing of employment with
all Employers, or service as a Director of all Employers, voluntarily or
involuntarily, for any reason other than Retirement, Disability, death
or an authorized leave of absence. If a Participant is both an Employee
and a Director, a Termination of Employment shall occur only upon the
termination of the last position held; provided, however, that such a
Participant may elect, at least three years before Termination of
Employment and in accordance with the policies and procedures
established by the Committee, to be treated for purposes of this Plan as
having experienced a Termination of Employment at the time he or she
ceases employment with an Employer as an Employee.
1.43 "Trust" shall mean one or more trusts established pursuant to that
certain Master Trust Agreement, dated as of January 1, 2000 between the
Company and the trustee named therein, as amended from time to time.
1.44 "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.
1.45 "Years of Plan Participation" shall mean the total number of full Plan
Years a Participant has been a Participant in the Plan prior to his or
her Termination of Employment (determined without regard to whether
deferral elections have been made by the Participant for any Plan Year).
Any partial year shall not be counted. Notwithstanding the previous
sentence, a Participant's first Plan Year of participation shall be
treated as a full Plan Year for purposes of this definition, even if it
is only a partial Plan Year of participation.
1.46 "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 and
Directors of the Employers, as determined by the Committee in its sole
discretion. From that group, the Committee shall select, in its sole
discretion, Employees and Directors to participate in the Plan.
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2.2 ENROLLMENT REQUIREMENTS. As a condition to participation, each selected
Employee or Director shall complete, execute and return to the Committee
a Plan 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.
2.3 ELIGIBILITY; COMMENCEMENT OF PARTICIPATION. Provided an Employee or
Director 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 or Director shall commence
participation in the Plan on the first day of the month following the
month in which the Employee or Director completes all enrollment
requirements. If an Employee or a Director fails to meet all such
requirements within the period required, in accordance with Section 2.2,
that Employee or Director shall not be eligible to participate in the
Plan until the first day of the Plan Year following the delivery to and
acceptance by the Committee of the required documents.
2.4 TERMINATION OF PARTICIPATION AND/OR DEFERRALS. 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 (i) terminate any deferral election
the Participant has made for the remainder of the Plan Year in which the
Participant's membership status changes, (ii) prevent the Participant
from making future deferral elections and/or (iii) immediately
distribute the Participant's then Account Balance as a Termination
Benefit and terminate the Participant's participation in the Plan.
ARTICLE 3
DEFERRAL COMMITMENTS/COMPANY MATCHING/CREDITING/TAXES
3.1 MINIMUM DEFERRALS.
(a) BASE ANNUAL SALARY, ANNUAL BONUS AND DIRECTOR'S FEES. For each
Plan Year, a Participant may elect to defer, as his or her Annual
Deferral Amount, Base Annual Salary, Annual Bonus and/or
Director's Fees in the following minimum amounts for each
deferral elected:
<TABLE>
<CAPTION>
--------------------------------------------------
DEFERRAL MINIMUM AMOUNT
--------------------------------------------------
<S> <C> <C>
Base Annual Salary $2,000
--------------------------------------------------
Annual Bonus $2,000
--------------------------------------------------
Directors Fees $ 0
--------------------------------------------------
</TABLE>
If an election is made for less than stated minimum amounts, or
if no election is made, the amount deferred shall be zero.
(b) SHORT PLAN YEAR. Notwithstanding the foregoing, if a Participant
first becomes a Participant after the first day of a Plan Year,
or in the case of the first Plan Year of the
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Plan itself, the minimum Base Annual Salary deferral shall be an
amount equal to the minimum set forth above, multiplied by a
fraction, the numerator of which is the number of complete
months remaining in the Plan Year and the denominator of which
is 12.
3.2 MAXIMUM DEFERRAL.
(a) BASE ANNUAL SALARY, ANNUAL BONUS AND DIRECTORS FEES. For each
Plan Year, a Participant may elect to defer, as his or her Annual
Deferral Amount, Base Annual Salary, Annual Bonus and/or
Directors Fees up to the following maximum percentages for each
deferral elected:
<TABLE>
<CAPTION>
--------------------------------------------------
DEFERRAL MAXIMUM AMOUNT
--------------------------------------------------
<S> <C> <C>
Base Annual Salary 90% (less applicable
withholding)
--------------------------------------------------
Annual Bonus 90% (less applicable
withholding)
--------------------------------------------------
Directors Fees 100%
--------------------------------------------------
</TABLE>
Notwithstanding the foregoing, if a Participant first becomes a
Participant after the first day of a Plan Year, or in the case of
the first Plan Year of the Plan itself, the maximum Annual
Deferral Amount, with respect to Base Annual Salary, Annual Bonus
and Directors Fees shall be limited to ninety percent (90%) (less
applicable withholding) of the amount of compensation not yet
earned by the Participant as of the date the Participant submits
a Plan Agreement and Election Form to the Committee for
acceptance.
3.3 ELECTION TO DEFER; EFFECT OF ELECTION FORM.
(a) FIRST PLAN YEAR. In connection with a Participant's commencement
of participation in the Plan, the Participant shall make an
irrevocable deferral election for the Plan Year in which the
Participant commences participation in the Plan, along with such
other elections as the Committee deems necessary or desirable
under the Plan. For these elections to be valid, the Election
Form must be completed and signed by the Participant, timely
delivered to the Committee (in accordance with Section 2.2 above)
and accepted by the Committee.
(b) SUBSEQUENT PLAN YEARS. For each succeeding Plan Year, an
irrevocable deferral election for that Plan Year, and such other
elections as the Committee deems necessary or desirable under the
Plan, shall be made by timely delivering to the Committee, in
accordance with its rules and procedures, before the end of the
Plan Year preceding the Plan Year for which the election is made,
a new Election Form. If no such Election Form is timely delivered
for a Plan Year, the Annual Deferral Amount shall be zero for
that Plan Year.
3.4 WITHHOLDING OF ANNUAL DEFERRAL AMOUNTS. For each Plan Year, the Base
Annual Salary portion of the Annual Deferral Amount shall be withheld
from each regularly scheduled Base Annual Salary payroll in
substantially equal amounts, as adjusted from time to time for increases
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and decreases in Base Annual Salary. The Annual Bonus and/or Directors
Fees portion of the Annual Deferral Amount shall be withheld at the time
the Annual Bonus or Directors Fees are or otherwise would be paid to the
Participant, whether or not this occurs during the Plan Year itself.
3.5 ANNUAL COMPANY CONTRIBUTION AMOUNT. For each Plan Year, an Employer, in
its sole discretion, may, but is not required to, credit any amount it
desires to any Participant's Company Contribution Account under this
Plan, which amount shall be for that Participant the Annual Company
Contribution Amount for that Plan Year. The amount so credited to a
Participant may be smaller or larger than the amount credited to any
other Participant, and the amount credited to any Participant for a Plan
Year may be zero, even though one or more other Participants receive an
Annual Company Contribution Amount for that Plan Year. The Annual
Company Contribution Amount, if any, shall be credited as of the last
day of the Plan Year. If a Participant is not employed by an Employer,
or is no longer providing services as a Director, as of the last day of
a Plan Year other than by reason of his or her Retirement, Involuntary
Termination of Employment, other than a Termination of Employment for
Cause, or death during such Plan Year or as a the result of a Change in
Control during such Plan Year, the Annual Company Contribution Amount
for that Plan Year shall be zero. In the event a Participant is not
employed by an Employer, or is no longer providing services as a
Director, as of the last day of a Plan Year by reason of Retirement,
Involuntary Termination of Employment, other than a Termination of
Employment for Cause, or death during the Plan Year or as the result of
a Change in Control during the Plan Year, the Participant shall be
credited with the Annual Company Contribution Amount for such Plan Year.
3.6 ANNUAL COMPANY MATCHING AMOUNT. For any Plan Year, a Participant's
Annual Company Matching Amount shall be equal to 50% of that portion of
the Participant's Annual Deferral Amount that does not exceed 4% of his
or her total annual compensation. Accordingly, the maximum Annual
Company Matching Amount for any Plan Year is 2% of the Participant's
total annual compensation. If a Participant is not employed by an
Employer, or is no longer providing services as a Director, as of the
last day of a Plan Year other than by reason of his or her Retirement,
Involuntary Termination of Employment, other than a Termination of
Employment for Cause, or death during such Plan Year or as the result of
a Change in Control during such Plan Year, the Annual Company Matching
Amount for such Plan Year shall be zero. In the event a Participant is
not employed by an Employer, or is no longer providing services as a
Director, as of the last day of a Plan Year by reason of Retirement,
Involuntary Termination of Employment, other than a Termination of
Employment for Cause, or death during the Plan Year or as the result of
a Change in Control during the Plan Year, the Participant shall be
credited with the Annual Company Matching Amount for such Plan Year.
3.7 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.
3.8 VESTING.
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(a) A Participant shall at all times be 100% vested in his or her
Deferral Account.
(b) A Participant shall be vested in his or her Company Contribution
Account and Company Matching Account in accordance with the
following schedule:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
YEARS OF SERVICE ON DATE VESTED PERCENTAGE OF
OF TERMINATION OF EMPLOYMENT COMPANY CONTRIBUTION AND MATCHING
ACCOUNTS
-----------------------------------------------------------------------------
<S> <C> <C>
Less than 1 Year 0%
-----------------------------------------------------------------------------
1 Year 25%
-----------------------------------------------------------------------------
2 Years 50%
-----------------------------------------------------------------------------
3 Years 75%
-----------------------------------------------------------------------------
4 Years or more 100%
-----------------------------------------------------------------------------
</TABLE>
(c) Notwithstanding anything to the contrary contained in this
Section 3.8, in the event of a Change in Control or Involuntary
Termination of Employment, other than a Termination of Employment
for Cause, a Participant's Company Contribution Account and
Company Matching Account shall immediately become 100% vested (if
it is not already vested in accordance with the above vesting
schedules).
(d) Notwithstanding subsection (c), the vesting schedule for a
Participant's Company Contribution Account and Company Matching
Account shall be accelerated, but only to the greatest extent
possible without 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 Company Contribution
Account and/or Company Matching 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 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 Section 280G and contain supporting calculations. The cost of
such opinion shall be paid for by the Company.
3.9 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, in connection with
his or her initial deferral election in accordance with Section
3.3(a) above, shall elect, on the Election Form, one or more
Measurement Fund(s) (as described in Section 3.9(c) below) to be
used to determine the additional amounts to be credited to his
or her 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
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Master Plan Document
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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 Account Balance, or to change the portion of his or
her 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.
(b) PROPORTIONATE ALLOCATION. In making any election described in
Section 3.9(a) above, the Participant shall specify on the
Election Form, in increments of five percentage points (5%), the
percentage of his or her 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 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
Account Balance:
(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
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Master Plan Document
================================================================================
(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.)
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 selected by the Participant, as determined by the
Committee in its reasonable discretion. The Participant's Annual Company
Matching Amount shall be credited to his or her Company Matching Account
for purposes of this Section 3.9(d) as of the close of business on the
first business day in February of the Plan Year following the Plan Year
to which it relates.
(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 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.
3.10 FICA AND OTHER TAXES.
(a) ANNUAL DEFERRAL AMOUNTS. For each Plan Year in which an Annual
Deferral Amount is being withheld from a Participant, the
Participant's Employer(s) shall withhold from that portion of the
Participant's Base Annual Salary and Bonus that is not being
deferred, in a manner determined by the Employer(s), the
Participant's share of FICA and other employment taxes on such
Annual Deferral Amount. If necessary, the Committee may reduce
the Annual Deferral Amount in order to comply with this Section
3.10.
(b) COMPANY MATCHING AND COMPANY CONTRIBUTION AMOUNTS. When a
Participant becomes vested in a portion of his or her Company
Matching Account or Company Contribution Account, the
Participant's Employer(s) shall withhold from the Participant's
Base Annual Salary and/or Bonus that is not deferred, 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 vested portion of the Participant's Company Matching
Account in order to comply with this Section 3.10.
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Deferred Compensation Plan
Master Plan Document
================================================================================
(c) 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 each election to defer an Annual
Deferral Amount, a Participant may irrevocably elect to receive a future
"Short-Term Payout" from the Plan with respect to such Annual Deferral
Amount. Subject to the Deduction Limitation, the Short-Term Payout shall
be a lump sum payment in an amount that is equal to the Annual Deferral
Amount plus amounts credited or debited in the manner provided in
Section 3.9 above on that amount, 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 the Annual Deferral Amount
is actually deferred. By way of example, if a three year Short-Term
Payout is elected for Annual Deferral Amounts that are deferred in the
Plan Year commencing January 1, 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 Annual Deferral
Amount, plus amounts credited or debited thereon, that is subject to a
Short-Term Payout election 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 (i) suspend any deferrals
required to be made by a Participant and/or (ii) 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. A Participant (or, after a Participant's death, his
or her Beneficiary) may elect, at any time, 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"). This election can be made at any time, before or
after Retirement, Disability, death or
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Deferred Compensation Plan
Master Plan Document
================================================================================
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 BENEFIT
5.1 RETIREMENT BENEFIT. Subject to the Deduction Limitation, a Participant
who Retires shall receive, as a Retirement Benefit, his or her 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 the Retirement Benefit in a lump sum or
pursuant to an Annual Installment Method of 5, 10 or 15 years. The
Participant may annually change his or her election 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 Retirement
Benefit. If a Participant does not make any election with respect to the
payment of the Retirement Benefit, 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.
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Deferred Compensation Plan
Master Plan Document
================================================================================
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 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 this 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. 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. Despite the foregoing, if the Participant's
Account Balance at the time of his or her death is less than $25,000,
payment of the Pre-Retirement Survivor Benefit may be made, in the sole
discretion of the Committee, in a lump sum or pursuant to an Annual
Installment Method of not more than 5 years. 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.
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 Account Balance if a Participant experiences an
Involuntary Termination of Employment, other than a Termination of
Employment for Cause, prior to his or her Retirement, death or
Disability.
7.2 PAYMENT OF TERMINATION BENEFIT. If the Participant's Account Balance at
the time of his or her Termination of Employment is less than $25,000,
payment of his or her Termination Benefit shall be paid in a lump sum.
If his or her Account Balance at such time is equal to or greater than
that amount, the Committee, in its sole discretion, may cause the
Termination Benefit to be paid in a lump sum or pursuant to an Annual
Installment Method of 5 years. 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.
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QUADRAMED CORPORATION
Deferred Compensation Plan
Master Plan Document
================================================================================
ARTICLE 8
DISABILITY WAIVER AND BENEFIT
8.1 DISABILITY WAIVER.
(a) WAIVER OF DEFERRAL. A Participant who is determined by the
Committee to be suffering from a Disability shall be excused
from fulfilling that portion of the Annual Deferral Amount
commitment that would otherwise have been withheld from a
Participant's Base Annual Salary, Annual Bonus and/or Directors
Fees for the Plan Year during which the Participant first
suffers a Disability. During the period of Disability, the
Participant shall not be allowed to make any additional deferral
elections, but will continue to be considered a Participant for
all other purposes of this Plan.
(b) RETURN TO WORK. If a Participant returns to employment, or
service as a Director, with an Employer, after a Disability
ceases, the Participant may elect to defer an Annual Deferral
Amount for the Plan Year following his or her return to
employment or service and for every Plan Year thereafter while a
Participant in the Plan; provided such deferral elections are
otherwise allowed and an Election Form is delivered to and
accepted by the Committee for each such election in accordance
with Section 3.3 above.
8.2 CONTINUED ELIGIBILITY; DISABILITY BENEFIT. A Participant suffering a
Disability shall, for benefit purposes under this Plan, continue to be
considered to be employed, or in the service of an Employer as a
Director, 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 may be the same as or different from the Beneficiary
designation under any other plan of an Employer in which the Participant
participates.
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QUADRAMED CORPORATION
Deferred Compensation Plan
Master Plan Document
================================================================================
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 Plan Agreement shall terminate
upon such full payment of benefits.
ARTICLE 10
LEAVE OF ABSENCE
10.1 PAID LEAVE OF ABSENCE. If a Participant is authorized by the
Participant's Employer for any reason to take a paid leave of absence
from the employment of the Employer, the Participant shall continue to
be considered employed by the Employer and the Annual Deferral Amount
shall continue to be withheld during such paid leave of absence in
accordance with Section 3.3.
10.2 UNPAID LEAVE OF ABSENCE. If a Participant is authorized by the
Participant's Employer for any reason to take an unpaid leave of absence
from the employment of the Employer, the Participant shall continue to
be considered employed by the Employer and the Participant shall be
excused from making deferrals until the earlier of the date the leave of
absence expires or the Participant returns to a paid employment status.
Upon such expiration or return, deferrals shall resume for the remaining
portion of the Plan Year in which the expiration or return occurs, based
on the
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deferral election, if any, made for that Plan Year. If no election was
made for that Plan Year, no deferral shall be withheld.
ARTICLE 11
TERMINATION, AMENDMENT OR MODIFICATION
11.1 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 and
Directors, by action of its board of directors. Upon the termination of
the Plan with respect to any Employer, the Plan Agreements of the
affected Participants who are employed by that Employer, or in the
service of that Employer as Directors, 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 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).
11.2 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 11.2 or Section 12.2
of the Plan shall be effective. The amendment or modification of the
Plan
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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).
11.3 PLAN AGREEMENT. Despite the provisions of Sections 11.1 and 11.2 above,
if a Participant's Plan 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.
11.4 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 Plan Agreement shall terminate.
ARTICLE 12
ADMINISTRATION
12.1 COMMITTEE DUTIES. Except as otherwise provided in this Article 12, 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.
12.2 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
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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.
12.3 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.
12.4 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.
12.5 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.
12.6 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 13
OTHER BENEFITS AND AGREEMENTS
13.1 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 14
[RESERVED]
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ARTICLE 15
TRUST
15.1 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 Annual Deferral Amounts, Annual
Company Contribution Amounts, and Company Matching Amounts 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.
15.2 INTERRELATIONSHIP OF THE PLAN AND THE TRUST. The provisions of the Plan
and the Plan Agreement shall govern the rights of a Participant to
receive distributions pursuant to the Plan. 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.
15.3 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 16
MISCELLANEOUS
16.1 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.
16.2 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.
16.3 EMPLOYER'S LIABILITY. An Employer's liability for the payment of
benefits shall be defined only by the Plan and the Plan 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 Plan Agreement.
16.4 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
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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.
16.5 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 be deemed to give a Participant
the right to be retained in the service of any Employer, either as an
Employee or a Director, or to interfere with the right of any Employer
to discipline or discharge the Participant at any time.
16.6 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.
16.7 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.
16.8 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.
16.9 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.
16.10 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.
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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.
16.11 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.
16.12 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.
16.13 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.
16.14 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.
16.15 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.
16.16 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
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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.
16.17 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
such documents as may be required by the insurance company or companies
to whom the Employers have applied for insurance.
16.18 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.
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================================================================================
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
--------------------------------
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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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Master Plan Document
================================================================================
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
----
<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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Master Plan Document
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<TABLE>
<CAPTION>
<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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Master Plan Document
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<TABLE>
<CAPTION>
<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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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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Master Plan Document
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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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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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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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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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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>
<CAPTION>
-----------------------------------------------------------------------------
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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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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(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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Master Plan Document
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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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<PAGE> 18
QUADRAMED CORPORATION
Stock Exchange Deferred Compensation Plan
Master Plan Document
================================================================================
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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<PAGE> 19
QUADRAMED CORPORATION
Stock Exchange Deferred Compensation Plan
Master Plan Document
================================================================================
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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<PAGE> 20
QUADRAMED CORPORATION
Stock Exchange Deferred Compensation Plan
Master Plan Document
================================================================================
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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<PAGE> 21
QUADRAMED CORPORATION
Stock Exchange Deferred Compensation Plan
Master Plan Document
================================================================================
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.
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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
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<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.
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<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
------------------------------------
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<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
<PAGE> 1
EXHIBIT 10.63
[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 John Cracchiolo
(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 150,000 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 $1,208,000 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 ($604,000) 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/ JOHN V. CRACCHIOLO 1/3/00
----------------------------------------
Signature of Participant Date
JOHN V. CRACCHIOLO
----------------------------------------
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
<PAGE> 1
EXHIBIT 10.64
QUADRAMED CORPORATION
Supplemental Executive Retirement Plan
Master Plan Document
================================================================================
EFFECTIVE JANUARY 1, 2000
<PAGE> 2
QUADRAMED CORPORATION
Supplemental Executive Retirement Plan
Master Plan Document
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QUADRAMED CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
EFFECTIVE JANUARY 1, 2000
PURPOSE
The purpose of this Plan is to provide specified benefits to a select
group of management and highly compensated employees 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 hereof, unless otherwise clearly apparent from the context,
the following phrases or terms shall have the following indicated meanings:
1.1 "Actuarial Equivalent" shall mean an actuarial equivalent value of an
amount payable in a different form or at a different date computed on
the basis of (a) the Applicable Mortality Table and (b) the Applicable
Interest Rate for the second month prior to the month in which the
payment is made or commences. For purposes of the preceding definition,
"Applicable Mortality Table" shall mean the "applicable mortality table"
described in Code section 417(e)(3), and "Applicable Interest Rate"
shall mean the annual interest rate on 30-year Treasury securities as
described in Code section 417(e)(3).
1.2 "Beneficiary" shall mean the individual designated, in accordance with
Article 9, that is entitled to receive benefits under this Plan upon the
death of a Participant.
1.3 "Beneficiary Designation Form" shall mean the form established from time
to time by the Plan Administrator that a Participant completes, signs
and returns to the Plan Administrator to designate a Beneficiary.
1.4 "Board" shall mean the board of directors of the Company.
1.5 "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;
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(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.
1.6 "Claimant" shall have the meaning set forth in Section 8.1.
1.7 "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
1.8 "Company" shall mean QuadraMed, a Delaware corporation.
1.9 "Disability" shall mean a period of disability during which a
Participant qualifies for benefits under the Participant's Employer's
Executive Group 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 benefits under such a plan had the
Participant been a participant in such a plan, as determined in the sole
discretion of the Plan Administrator. If the Participant's Employer does
not sponsor such a plan or discontinues to sponsor such a plan,
Disability shall be determined by the Plan Administrator in its sole
discretion.
1.10 "Employer(s)" shall mean the Company and any subsidiaries of the Company
that have been selected by the Board to participate in the Plan.
1.11 "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time.
1.12 "Highest Annual Compensation" shall mean a Participant's annual
Compensation that is highest during his or her last ten calendar years
of employment (including the annualized compensation for the calendar
year in which the event that entitled the Participant to a distribution
of benefits under this Plan occurred). For purposes of the preceding
definition, "Compensation" shall mean the annual compensation, including
bonuses, but excluding
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commissions, overtime, relocation expenses, non-monetary awards,
directors fees and other fees and automobile allowances paid to a
Participant for employment services rendered to any Employer, and such
other nonrecurring payments as may be determined by the Plan
Administrator, before reduction for compensation deferred pursuant to
all qualified, non-qualified and Code Section 125 plans of any Employer.
1.13 "Involuntary Termination" 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. Any use of the term "Involuntary Termination" 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".
1.14 "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 Plan Agreement and a Beneficiary Designation Form, (iv) whose signed
Plan Agreement Form and Beneficiary Designation Form are accepted by the
Plan Administrator, (v) who commences participation in the Plan, and
(vi) whose Plan Agreement has not terminated.
1.15 "Plan" shall mean the Company's Supplemental Executive Retirement Plan,
which shall be evidenced by this instrument and by each Plan Agreement,
as amended from time to time.
1.16 "Plan Administrator" shall mean the plan administrator described in
Article 7.
1.17 "Plan 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 Plan Agreement executed by a Participant shall provide
for the entire benefit to which such Participant is entitled under the
Plan, and the Plan Agreement bearing the latest date of acceptance by
the Plan Administrator shall govern such entitlement.
1.18 "Plan Year" shall, for the first Plan Year, begin on January 1, 2000 and
end on December 31, 2000. For each Plan Year thereafter, the Plan Year
shall begin on January 1 of each year and continue through December 31.
1.19 "Preretirement Survivor Benefit" shall mean a benefit that is the
Actuarial Equivalent of the Participant's Vested SERP Benefit as of the
date of such Participant's death and that is payable monthly to such
Participant's Beneficiary in the form of a 20-year installment benefit.
1.20 "SERP Benefit" shall mean a 20-year installment benefit, payable monthly
and commencing at age sixty (60), equal to the product of 0.05
multiplied by the Participant's Highest Annual Compensation multiplied
by his or her Years of Service (not to exceed 13) multiplied by
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1/12. Notwithstanding the foregoing, if a Participant experiences a
Termination of Employment that is an Involuntary Termination other than
a Termination for Cause, "SERP Benefit" shall mean a lump sum amount
that is the Actuarial Equivalent of a 20-year installment benefit
payable monthly and commencing as of the first day of the month
following such Involuntary Termination, equal to the product of 0.65
multiplied by the Participant's Highest Annual Compensation multiplied
by 1/12.
1.21 "Termination of Employment" shall mean a Participant ceasing to be an
employee of all Employers, voluntarily or involuntarily, but shall
exclude cessation of employment with all Employers as a result of death
or Disability.
1.22 "Termination for 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.
1.23 "Trust" shall mean the trust established pursuant to that certain Master
Trust Agreement, dated as of January 1, 2000, between the Company and
the trustee named therein, as amended from time to time.
1.24 "Vested" shall mean that portion of a Participant's benefits under this
Plan in which the Participant has a nonforfeitable right or vested
interest as determined in accordance with Article 3 below.
1.25 "Waiting Period Requirement" shall mean both (i) the attainment of age
twenty-one (21) and (ii) a Participant's continued employment for an
Employer for one Year of Service, commencing with the Participant's date
of hire.
1.26 "Years of Service" shall mean the total number of full years 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 hire and that, for any
subsequent year, commences on an anniversary of that hire date. Any
partial year of employment shall not be counted.
1.27 "Years of Plan Participation" shall mean the total number of full years
in which a Participant has been selected to participate in the Plan. For
purposes of this definition, a year of Plan Participation shall be a 365
day period (or 366 day period in the case of a leap year) that, for the
first year of Plan participation, commences on the date the Employee
commences Plan participation and that, for any subsequent year,
commences on an anniversary of that participation date. Any partial year
of Plan participation shall not be counted.
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ARTICLE 2
ELIGIBILITY
2.1 SELECTION BY PLAN ADMINISTRATOR. Participation in the Plan shall be
limited to a select group of management and highly compensated employees
of the Employers who have met the Waiting Period Requirements. From that
group, the Plan Administrator 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 Plan Administrator a
Plan Agreement and a Beneficiary Designation Form. In addition, the Plan
Administrator shall establish from time to time such other enrollment
requirements as it determines in its sole discretion are necessary.
2.3 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 Plan Administrator, that employee shall
commence participation in the Plan on the date specified by the Plan
Administrator. If a selected employee fails to meet all such
requirements prior to that date, that employee shall not be eligible to
participate in the Plan until the completion of those requirements.
ARTICLE 3
VESTING
3.1 VESTING IN BENEFITS.
(a) GENERAL. Except as provided in Sections 3.1(b) or 9.4 below, each
Participant shall have a nonforfeitable right or vested interest
in his or her SERP Benefit according to the following vesting
schedule:
<TABLE>
<CAPTION>
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YEARS OF PLAN VESTED PERCENTAGE
PARTICIPATION
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<S> <C> <C>
Less than 7 0
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7 or more 100%
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</TABLE>
(b) SPECIAL. Notwithstanding Section 3.1(a) above, and subject to
Section 9.4 below, a Participant, or his or her Beneficiary in
the case of a survivor benefit, shall have a nonforfeitable right
or vested interest in the Participant's SERP Benefit upon the
Participant's death or Disability, upon a Change in Control, or
upon the Participant's Involuntary Termination other than a
Termination for Cause.
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ARTICLE 4
BENEFITS
4.1 ELIGIBILITY FOR BENEFITS.
(a) TERMINATION BENEFIT. If a Participant experiences a Termination
of Employment, then he or she shall be entitled to his or her
Vested SERP Benefit.
(b) DISABILITY BENEFIT. If a Participant suffers a Disability, he or
she shall be entitled to his or her Vested SERP Benefit.
(c) SURVIVOR'S BENEFITS. If a Participant dies prior to the
commencement of benefits under this Plan, his or her Beneficiary
shall be entitled to receive the Participant's Vested SERP
Benefit. If a Participant dies after the commencement of his or
her benefits under this Plan, his or her Beneficiary shall be
entitled to receive any remaining payments at the time and in
the amount they would have been paid to the Participant if he or
she had not died.
4.2 PAYMENT OF BENEFITS. Payments of benefits shall be made in the following
manner.
(a) TERMINATION OF EMPLOYMENT. If a Participant's benefits become
payable because of his or her Termination of Employment under
Section 4.1(a), such benefit payments shall commence as of the
later of the first day of the month following such Termination
of Employment or the first day of the month following his or her
attainment of age 55. If such benefits are to be paid or
commence other than the month following the month in which the
Participant attained age 60, he or she shall receive the
Actuarial Equivalent of his or her Vested SERP Benefit.
Notwithstanding the foregoing, if a Participant's benefit
becomes payable because of a Termination of Employment that is
an Involuntary Termination other than a Termination for Cause,
his or her SERP Benefit shall be paid in a lump sum as of the
first day of the month following such Involuntary Termination.
(b) DISABILITY, OR DEATH PRIOR TO COMMENCEMENT OF BENEFITS. If a
Participant's benefits become payable because of his or her
Disability, or because of his or her death prior to the
commencement of benefit payments under this Plan, such benefit
payments shall commence as of the first day of the month
following such Disability or death. If such benefits are to be
paid or commence other than the month following the month in
which the Participant attained age 60, the Participant, or the
Participant's Beneficiary, shall receive the Actuarial
Equivalent of his or her Vested SERP Benefit.
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4.3 ALTERNATIVE FORMS OF PAYMENT; ELECTIONS.
(a) LUMP SUM. A Participant or his or her Beneficiary, as the case
may be, may elect, at any time at least twelve months before the
date he or she commences to receive benefit payments under this
Plan, to receive those payments in a lump sum, based on the
Actuarial Equivalent of his or her Vested SERP Benefit.
(b) WITHDRAWAL ELECTION. A Participant or his or her Beneficiary, as
the case may be, may elect, at any time after he or she
commences to receive benefits payments under this Plan, to
receive those payments in a lump sum, based on the Actuarial
Equivalent of his or her remaining Vested SERP Benefit less a
10% penalty (as described below) (the net amount shall be
referred to as the "Benefit Amount"). No election to partially
accelerate benefits shall be allowed. The Participant shall make
this election by giving the Plan Administrator advance written
notice of the election in a form determined from time to time by
the Plan Administrator. The penalty shall be equal to 10% of the
Participant's remaining Vested SERP Benefit, determined on an
Actuarial Equivalent basis. The Participant shall be paid the
Benefit Amount within 60 days of his or her election. Once the
Benefit 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.
(c) PLAN ADMINISTRATOR DISCRETION. Upon the request of a
Participant, the Plan Administrator, in its sole discretion and
consistent with its established procedures and rules, may
consider other forms of benefit payments, or the timing of
benefit payments, as it deems necessary and prudent under the
circumstances.
4.4 LIMITATION ON BENEFITS. Notwithstanding the foregoing provisions of this
Article 4, in no event shall a Participant or his or her Beneficiary
receive more than one form of benefit under this Article 4.
4.5 WITHHOLDING AND PAYROLL TAXES. The Employers shall withhold from any and
all benefits made under this Article 4, all federal, state and local
income, employment and other taxes required to be withheld by the
Employer in connection with the benefits hereunder, in amounts to be
determined in the sole discretion of the Employers.
ARTICLE 5
TERMINATION, AMENDMENT OR MODIFICATION OF THE PLAN
5.1 TERMINATION. Each Employer reserves the right to terminate the Plan at
any time with respect to its participating employees by the actions of
its board of directors. The termination of the Plan shall not adversely
affect any Participant or his or her Beneficiary who has a 100% Vested
SERP Benefit under the Plan as of the date of termination; provided,
however, that the Employer shall have the right to accelerate benefit
payments by paying the Actuarial
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Equivalent value of such payments. For all other Participants, upon the
termination of the Plan, all Plan Agreements shall terminate and the
Actuarial Equivalent of a Participant's accrued SERP Benefit shall be
paid out in a lump sum.
5.2 AMENDMENT. Any Employer may, at any time, amend or modify the Plan in
whole or in part with respect to its participating employees by the
actions of its board of directors; provided, however, that no amendment
or modification shall be effective to decrease or restrict a
Participant's then accrued SERP Benefit, determined on an Actuarial
Equivalent basis. The amendment or modification of the Plan shall not
affect any Participant or his or her 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
Actuarial Equivalent value of such payments either in a lump sum or in
some other accelerated form of payment.
5.3 TERMINATION OF PLAN AGREEMENT. Absent the earlier termination,
modification or amendment of the Plan, the Plan Agreement of any
Participant shall terminate upon the full payment of the applicable
Vested SERP Benefit as provided under Article 4.
ARTICLE 6
OTHER BENEFITS AND AGREEMENTS
6.1 COORDINATION WITH OTHER BENEFITS. The benefits provided for a
Participant under this Plan are in addition to any other benefits
available to such Participant under any other plan or program for
employees of the Employers. 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 7
ADMINISTRATION OF THE PLAN
7.1 PLAN ADMINISTRATOR DUTIES. This Plan shall be administered by a Plan
Administrator which shall consist of the Board, or such committee as the
Board shall appoint. Members of the Plan Administrator may be
Participants under this Plan. The Plan Administrator 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.
7.2 AGENTS. In the administration of this Plan, the Plan Administrator may
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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7.3 BINDING EFFECT OF DECISIONS. The decision or action of the Plan
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.
7.4 INDEMNITY OF PLAN ADMINISTRATOR. All Employers shall indemnify and hold
harmless the members of the Plan 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 Plan Administrator or any of its members.
7.5 EMPLOYER INFORMATION. To enable the Plan Administrator to perform its
functions, each Employer shall supply full and timely information to the
Plan Administrator on all matters relating to the compensation of its
Participants, the date and circumstances of the retirement, Disability,
death or Termination of Employment of its Participants, and such other
pertinent information as the Plan Administrator may reasonably require.
ARTICLE 8
CLAIMS PROCEDURES
8.1 PRESENTATION OF CLAIM. Any Participant or Beneficiary of a deceased
Participant (such Participant or Beneficiary being referred to below as
a "Claimant") may deliver to the Plan Administrator a written claim for
a determination with respect to the amounts distributable to such
Claimant from the Plan. If such a claim relates to the contents of a
notice received by the Claimant, the claim must be made within 60 days
after such notice was received by the Claimant. The claim must state
with particularity the determination desired by the Claimant. All other
claims must be made within 180 days of the date on which the event that
caused the claim to arise occurred. The claim must state with
particularity the determination desired by the Claimant.
8.2 NOTIFICATION OF DECISION. The Plan Administrator shall consider a
Claimant's claim within a reasonable time, and shall notify the Claimant
in writing:
(a) that the Claimant's requested determination has been made, and
that the claim has been allowed in full; or
(b) that the Plan Administrator has reached a conclusion contrary,
in whole or in part, to the Claimant's requested determination,
and such notice must set forth in a manner calculated to be
understood by the Claimant:
(i) the specific reason(s) for the denial of the claim, or
any part of it;
(ii) specific reference(s) to pertinent provisions of the
Plan upon which such denial was based;
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(iii) a description of any additional material or information
necessary for the Claimant to perfect the claim, and an
explanation of why such material or information is
necessary; and
(iv) an explanation of the claim review procedure set forth
in Section 8.3 below.
8.3 REVIEW OF A DENIED CLAIM. Within 60 days after receiving a notice from
the Plan Administrator that a claim has been denied, in whole or in
part, a Claimant (or the Claimant's duly authorized representative) may
file with the Plan Administrator a written request for a review of the
denial of the claim. Thereafter, but not later than 30 days after the
review procedure began, the Claimant (or the Claimant's duly authorized
representative):
(a) may review pertinent documents;
(b) may submit written comments or other documents; and/or
(c) may request a hearing, which the Plan Administrator, in its sole
discretion, may grant.
8.4 DECISION ON REVIEW. The Plan Administrator shall render its decision on
review promptly, and not later than 60 days after the filing of a
written request for review of the denial, unless a hearing is held or
other special circumstances require additional time, in which case the
Plan Administrator's decision must be rendered within 120 days after
such date. Such decision must be written in a manner calculated to be
understood by the Claimant, and it must contain:
(a) specific reasons for the decision;
(b) specific reference(s) to the pertinent Plan provisions upon
which the decision was based; and
(c) such other matters as the Plan Administrator deems relevant.
8.5 LEGAL ACTION. A Claimant's compliance with the foregoing provisions of
this Article 8 is a mandatory prerequisite to a Claimant's right to
commence any legal action with respect to any claim for benefits under
this Plan.
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 may be the same as or different from the Beneficiary
designation under any other plan of an Employer in which the Participant
participates.
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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 Plan Administrator
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 Plan Administrator'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 Plan Administrator, must be
signed by that Participant's spouse and returned to the Plan
Administrator. Upon the acceptance by the Plan Administrator of a new
Beneficiary Designation Form, all Beneficiary designations previously
filed shall be cancelled. The Plan Administrator shall be entitled to
rely on the last Beneficiary Designation Form filed by the Participant
and accepted by the Plan Administrator prior to his or her death.
9.3 ACKNOWLEDGMENT. No designation or change in designation of a Beneficiary
shall be effective until received, accepted and acknowledged in writing
by the Plan Administrator 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 spouse shall be the designated Beneficiary. If the
Participant has no surviving spouse, the benefits remaining under the
Plan shall be forfeited.
9.5 DOUBT AS TO BENEFICIARY. If the Plan Administrator has any doubt as to
the proper Beneficiary to receive payments pursuant to this Plan, the
Plan Administrator 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 Plan Administrator'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
Plan Administrator from all further obligations under this Plan with
respect to the Participant, and that Participant's Plan Agreement shall
terminate upon such full payment of benefits.
ARTICLE 10
TRUST
10.1 ESTABLISHMENT OF THE TRUST. The Company shall establish the Trust. The
Employers shall transfer over to the Trust such assets, if any, as the
Employers determine, in their sole discretion.
10.2 INTERRELATIONSHIP OF THE PLAN AND THE TRUST. The provisions of the Plan
and the Plan Agreement shall govern the rights of a Participant to
receive distributions pursuant to the Plan. 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
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all times remain liable to carry out its obligations under the Plan.
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
Agreement.
ARTICLE 11
MISCELLANEOUS
11.1 UNSECURED GENERAL CREDITOR. Participants and their Beneficiaries
successors and assigns shall have no legal or equitable rights,
interests or claims in any property or assets of an Employer. 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.
11.2 EMPLOYER'S LIABILITY. An Employer's liability for the payment of
benefits shall be defined only by the Plan and the Plan 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 Plan Agreement.
11.3 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 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 or
sequestration for the payment of any debts, judgments, alimony or
separate maintenance owed by a Participant or any other person, nor be
transferable by operation of law in the event of a Participant's or any
other person's bankruptcy or insolvency.
11.4 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, with or without cause, unless expressly provided in
a written employment agreement. Nothing in this Plan shall 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.
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11.5 FURNISHING INFORMATION. A Participant or his or her Beneficiary will
cooperate with the Plan Administrator by furnishing any and all
information requested by the Plan Administrator 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 Plan Administrator
may deem necessary.
11.6 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 wherever 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.
11.7 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.
11.8 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 conflict of laws principles.
11.9 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 and invalid provision had never been inserted herein.
11.10 NOTICE. Any notice or filing required or permitted to be given to the
Plan Administrator 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.
13
<PAGE> 15
QUADRAMED CORPORATION
Supplemental Executive Retirement Plan
Master Plan Document
================================================================================
11.11 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 Beneficiary.
11.12 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.
11.13 INCOMPETENT. If the Plan Administrator 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 Plan Administrator 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 Plan
Administrator may require proof of minority, incompetency, 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.
11.14 COURT ORDER. The Plan Administrator is authorized to make any payments
directed by court order in any action in which the Plan or Plan
Administrator has been named as a party.
11.15 DISTRIBUTION IN THE EVENT OF TAXATION. If, for any reason, all or any
portion of a Participant's benefit under this Plan becomes taxable to
the Participant prior to receipt, a Participant may petition the Plan
Administrator 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, 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 Vested SERP Benefit 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.
11.16 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
14
<PAGE> 16
QUADRAMED CORPORATION
Supplemental Executive Retirement Plan
Master Plan Document
================================================================================
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.
IN WITNESS WHEREOF, E. A. Roskovensky has signed this Plan document
on May 12, 2000.
QuadraMed Corporation, a Delaware corporation
By: /s/ E. A. ROSKOVENSKY
-------------------------------------------
Title: Compensation Committee
----------------------------------------
15
<PAGE> 1
EXHIBIT 10.65
QUADRAMED CORPORATION
GRANTOR TRUST AGREEMENT
This Grantor Trust Agreement (the "Trust Agreement") is made this 1st day of
January, 2000, by and between QUADRAMED CORPORATION (the "Company"), and
WACHOVIA BANK, N.A. (the "Trustee").
RECITALS
(a) WHEREAS, the Company (sometimes referred to as the "Employer" and
individually as an "Employer") has adopted the nonqualified deferred
compensation plans and arrangements listed in Exhibit A (the
"Arrangements");
(b) WHEREAS, the Employer has incurred or expects to incur liability under
the terms of such Arrangements with respect to the individuals
participating in such Arrangements (the "Participants and
Beneficiaries");
(c) WHEREAS, the Employers wishes to establish a Trust dated January 1,
2000, to cover such Arrangements (the "Trust") and the Employer shall
contribute to the Trust assets that shall be held therein, subject to
the claims of the creditors of the Employer in the event of the
Insolvency (as defined herein) of the Employer, until paid to
Participants and their Beneficiaries in such manner and at such times as
specified in the Arrangements and in this Trust Agreement;
(d) WHEREAS, it is the intention of the parties that this Trust shall
constitute an unfunded arrangement and shall not affect the status of
the Arrangements as an unfunded plan maintained for the purpose of
providing deferred compensation for a select group of management or
highly compensated employees for purposes of Title I of the Employee
Retirement Income Security Act of 1974; and
(e) WHEREAS, it is the intention of the Employer to make contributions to
the Trust to provide itself with a source of funds (the "Fund") to
assist it in satisfying its liabilities under the Arrangements.
NOW, THEREFORE, the parties do hereby establish the Trust and agree that the
Trust shall be comprised, held and disposed of as follows:
SECTION 1. ESTABLISHMENT OF THE TRUST
(a) The Trust is intended to be a grantor trust, of which the Employer is
the Grantor, within the meaning of subpart E, part I, subchapter J,
chapter 1, subtitle A of the Internal Revenue Code of 1986, as amended,
and shall be construed accordingly.
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The Trust is established for the benefit of the Participants and
Beneficiaries of the Arrangements. A list of Participants and
Beneficiaries and the Arrangements in which they participate is
contained in Exhibit B.
(b) The Employer shall be considered a grantor with respect to the account
maintained under the Trust for the Employer as described in Section 9.
(c) The Trust hereby established is irrevocable by the Employer.
(d) The Company hereby makes the deposit described in Exhibit C which shall
become the principal of the Trust to be held, administered and disposed
of by the Trustee as provided in this Trust Agreement.
(e) The principal of the Trust, and any earnings thereon, shall be held
separate and apart from other funds of the Employer and shall be used
exclusively for the uses and purposes of Participants and general
creditors as herein set forth. Participants and their Beneficiaries
shall have no preferred claim on, nor any beneficial ownership interest
in, any assets of the Trust. Any rights created under the Arrangements
and this Trust Agreement shall be unsecured contractual rights of
Participants and their Beneficiaries against the Employer. Any assets
held by the Trust in the account of the Employer will be subject to the
claims of the general creditors of the Employer under federal and state
law in the event the Employer is Insolvent, subject to the provisions of
Section 3 herein.
(f) The Trustee shall, upon direction of the Employer, establish two
separate funds (each individually referred to as a "Benefit Fund"). One
Benefit Fund shall be for Arrangements having a lump sum payout as
provided under the Arrangement and the other Benefit Fund shall be for
all other arrangements. Prior to a Change in Control, the Trustee shall,
upon direction, create in the Benefit Funds separate accounts (each
individually referred to as an "Account").
(g) The Employer, in its sole discretion, may at any time, or from time to
time, make deposits of cash or other property acceptable to the Trustee
in the Trust to augment the principal to be held, administered and
disposed of by the Trustee as provided in this Trust Agreement. When
making such deposits, the Employer shall certify the Benefit Fund or
Funds to which such deposits shall be allocated and the Trustee shall
allocate the contributions accordingly. Further, the Employer may direct
the Trustee, prior to a Change in Control, the amount of deposits being
made with respect to each Account of each Participant and the Trustee
shall allocate the deposits among the Accounts accordingly. Prior to a
Change in Control, neither the Trustee nor any Participant or
Beneficiary shall have any right to compel additional deposits.
(h) Upon a Threatened Change in Control, the Company shall, as soon as
possible, but in no event longer than thirty (30) days following the
occurrence of a
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<PAGE> 3
Threatened Change in Control, as defined herein, make a contribution to
the Trust in an amount that is sufficient to fund the Trust in an amount
equal to no less than 100% but no more than 120% (in addition to
$125,000 to fund an expense reserve for the Trustee) of the amount
necessary to pay each Participant or Beneficiary the benefits to which
Participants or their Beneficiaries would be entitled pursuant to the
terms of the Arrangements as of the date on which the Threatened Change
in Control occurred.
(i) In the event a Change in Control does not occur within six (6) months of
a Threatened Change in Control, the Company shall have the right, upon
direction, to recover any amounts contributed to and remaining on hand
in the Trust pursuant to Section 1(h)).
(j) Upon a Change in Control, the Company shall, as soon as possible, but in
no event longer than thirty (30) days following the occurrence of a
Change in Control, as defined herein, make an irrevocable contribution
to the Trust in an amount that is sufficient to fund the Trust in an
amount equal to no less than 100 % but no more than 120% of the amount
necessary to pay each Participant or Beneficiary the benefits to which
Participants or their Beneficiaries would be entitled pursuant to the
terms of the Arrangements as of the date on which the Change in Control
occurred. The Company shall also fund an expense reserve for the Trustee
in the amount of $125,000.00 unless such amount was previously funded
pursuant to Section 1(h) above and not recovered pursuant to Section 1
(i) above.
SECTION 2. PAYMENTS TO PARTICIPANTS AND THEIR BENEFICIARIES
(a) Prior to a Change in Control, distributions from the Trust shall be made
by the Trustee to Participants and Beneficiaries at the direction of the
Employer. The entitlement of a Participant or his or her Beneficiaries
to benefits under the Arrangements shall be determined by the Employer
or such party or professional administrator as it shall designate under
the Arrangements as the Employer's agent, and any claim for such
benefits shall be considered and reviewed under the procedures set out
in the Arrangements.
(b) Notwithstanding Section 2(a) above, a Participant or his or
Beneficiaries may make application to the Trustee for payment of their
benefit in the event he believes a Failure to Pay, as defined in Section
16, has occurred. In the event that the Trustee determines that a
Failure to Pay has occurred, it shall make its own independent
determination of the benefit which is payable to the Participant or
Beneficiary. Upon reaching its determination, the Trustee shall pay the
benefit, if any, which it has determined is due the Participant or
Beneficiary.
(c) The Employer may make payment of benefits directly to Participants or
their Beneficiaries as they become due under the terms of the
Arrangements. The
3
<PAGE> 4
Employer shall notify the Trustee of its decision to make payment of
benefits directly prior to the time amounts are payable to Participants
or their Beneficiaries. In addition, if the principal of the Trust, and
any earnings thereon, are not sufficient to make payments of benefits in
accordance with the terms of the Arrangements, the Employer shall make
the balance of each such payment as it falls due in accordance with the
Arrangements. The Trustee shall notify the Employer where principal and
earnings are not sufficient. Nothing in this Agreement shall relieve the
Employer of its liabilities to pay benefits due under the Arrangements
except to the extent such liabilities are met by application of assets
of the Trust.
(d) To the extent there remains an amount credited to a Benefit Fund after
the benefits with respect to which such Benefit Fund was established
have been paid in full, such excess shall be reallocated to the
remaining Benefit Funds, if any, as of the end of the calendar quarter
in which the last payment from such Benefit Fund was made, in proportion
to the respective Benefit Fund balances.
If Individual Accounts have been established within a Benefit Fund, to
the extent there remains an amount credited to a Participant's Account
after the Benefit with respect to which such Account was established has
been paid in full, such excess shall be reallocated to the remaining
Accounts of the Participant, if any. If no Account remains for such
Participant, the excess shall be reallocated to the Accounts of all
other Participants, as of the end of the calendar quarter in which the
last payment to such Participant was made, in proportion to the
respective Account balances.
After all the benefits payable to all Participants pursuant to the
Payment Schedules have been paid in full, the remaining Trust property,
if any, shall upon written certification by each person entitled to
receive the last Payment Schedule that all Benefits due to such person
and funded within the Trust have been paid, be returned to the Company.
Prior to the return of such assets, the Trustee may deduct its fees and
expenses.
(e) It is the intention of the Company to have each Benefit Fund and each
Account, if any, established hereunder treated as a separate account
designed to satisfy the Company's legal liability under the applicable
Agreement in respect of the Participant or Participants for whom such
Benefit Fund has been established, or the Participant for whom such
Account has been established, as the case may be, and to have the
balance, if any, in each Benefit Fund or Account, as the case may be,
revert to the Company only after all of the Company's legal liabilities
(including but not limited to the expenses of this Trust) with respect
to Benefits payable to all Participants have been met. The Company
agrees that all income, deductions and credits of the Trust Fund (or, if
applicable, the Accounts) belong to it as owner for income tax purposes
and will be included on the Company's income tax returns.
4
<PAGE> 5
(f) After a Threatened Change in Control and before a Change in Control, the
Company shall deliver to the Trustee a schedule of benefits due under
the Arrangements ("Payment Schedule"). Subsequent to a Change in
Control, the Trustee shall pay benefits, subject to the terms of this
Trust Agreement and the applicable underlying Plan, due in accordance
with such schedule. After a Change in Control, the Employer shall
continue to make the determination of benefits due to Participants or
their Beneficiaries and shall provide the Trustee with an updated
schedule of benefits due; provided however, a Participant or their
Beneficiaries may make application to the Trustee for an independent
decision as to the amount or form of their benefits due under the
Arrangements.
(g) In making any determination required or permitted to be made by the
Trustee under this Section 2, the Trustee shall, in each such case,
reach its own independent determination, in its absolute and sole
discretion, as to the Participant's or Beneficiary's entitlement to a
payment hereunder. In making its determination, the Trustee may consult
with and make such inquiries of such persons, including the Participant
or Beneficiary, the Employer, legal counsel, actuaries or other persons,
as the Trustee may reasonably deem necessary. Any reasonable costs
incurred by the Trustee in arriving at its determination shall be
reimbursed by the Employer and, to the extent not paid by the Employer
within a reasonable time, shall be charged to the Trust. The Employer
waives any right to contest any amount paid over by the Trustee
hereunder pursuant to a good faith determination made by the Trustee
notwithstanding any claim by or on behalf of the Employer (absent a
manifest abuse of discretion by the Trustee) that such payments should
not be made.
(h) The Trustee agrees that it will not itself institute any action at law
or at equity, whether in the nature of an accounting, interpleading
action, request for a declaratory judgment or otherwise, requesting a
court or administrative or quasi-judicial body to make the determination
required to be made by the Trustee under this Section 2 in the place and
stead of the Trustee. The Trustee may, in its discretion, institute an
action to collect a contribution due the Trust following a Change in
Control or in the event that the Trust should ever experience a
short-fall in the amount of assets necessary to make payments pursuant
to the terms of the Arrangements.
(i) In the event any Participant or his or her Beneficiary is determined to
be subject to federal income tax on any amount to the credit of his or
her account under any Arrangement prior to the time of payment
hereunder, whether or not due to the establishment of or contributions
to this Trust, a portion of such taxable amount equal to the federal,
state and local taxes (excluding any interest or penalties) owed on such
taxable amount, shall be distributed by the Trustee as soon thereafter
as practicable to such Participant or Beneficiary. The Employer shall
promptly reimburse the Trust for any such distribution in an amount
certified by
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<PAGE> 6
the Trustee to be needed for the Participant's benefits. For these
purposes, a Participant or Beneficiary shall be deemed to pay state and
local taxes at the highest marginal rate of taxation in the state in
which the Participant resides or is employed (or both) where a tax is
imposed and federal income taxes at the highest marginal rate of
taxation, net of the maximum reduction in federal income taxes which
could be obtained from deduction of such state and local taxes. Such
distributions shall be at the direction of the Employer or the Trustee,
or upon proper application of the Participant or Beneficiary; provided,
that the actual amount of the distribution shall be determined by the
Employer prior to a Change in Control and the Trustee following a Change
in Control. An amount to the credit of a Participant's Account shall be
determined to be subject to federal income tax upon the earliest of: (a)
a final determination by the United States Internal Revenue Service
addressed to the Participant or his Beneficiary which is not appealed to
the courts; (b) a final determination by the United States Tax Court or
any other federal court affirming any such determination by the Internal
Revenue Service; or (c) an opinion by the Employer's tax counsel,
addressed to the Employer and the Trustee, to the effect that by reason
of Treasury Regulations, amendments to the Internal Revenue Code,
published Internal Revenue Service rulings, court decisions or other
substantial precedent, amounts to the credit of Participants hereunder
are subject to federal income tax prior to payment. The Employer shall
undertake at its sole expense to defend any tax claims described herein
which are asserted by the Internal Revenue Service against any
Participant or Beneficiary, including attorney fees and cost of appeal,
and shall have the sole authority to determine whether or not to appeal
any determination made by the Service or by a lower court. The Employer
also agrees to reimburse any Participant or Beneficiary for any interest
or penalties in respect of tax claims hereunder upon receipt of
documentation of same. Any distributions from the Fund to a Participant
or Beneficiary under this Section 2(e) shall be applied in accordance
with the provisions of the Arrangement to reduce the Employer
liabilities to such Participant and/or Beneficiary under the Arrangement
with such reductions to be made on a pro-rata basis over the term of
benefit payments under the Arrangement; provided, however, that in no
event shall any Participant, Beneficiary or estate of any Participant or
Beneficiary have any obligation to return all or any part of such
distribution to the Employer if such distribution exceeds benefits
payable under an Arrangement. Any reduction in accordance with the
foregoing sentence and the Arrangements shall be determined by the
Employer prior to a Change in Control . Following a Change in Control,
the Employer shall continue to make such determination subject to the
right of a Participant to petition the Trustee under Section 2(b).
SECTION 3. TRUSTEE RESPONSIBILITY REGARDING PAYMENTS TO THE TRUST
BENEFICIARY WHEN THE EMPLOYER IS INSOLVENT
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<PAGE> 7
(a) The Trustee shall cease payment of benefits to Participants and their
Beneficiaries if the Employer is Insolvent. The Employer shall be
considered "Insolvent" for purposes of this Trust Agreement if (i) the
Employer is unable to pay its debts as they become due, or (ii) the
Employer is subject to a pending proceeding as a debtor under the United
States Bankruptcy Code.
(b) At all times during the continuance of this Trust, except to the extent
assets of the Trust have been pledged to secure loans to the Trust, the
principal and income of the Trust shall be subject to claims of general
creditors of the Employer under federal and state law as set forth
below:
(1) The Board of Directors and the Chief Executive Officer of the
Employer shall have the duty to inform the Trustee in writing
that the Employer is Insolvent. If a person claiming to be a
creditor of the Employer alleges in writing to the Trustee that
the Employer has become Insolvent, the Trustee shall determine in
its sole and absolute discretion whether the Employer is
Insolvent and, pending such determination, the Trustee shall
discontinue payment of benefits to Participants or their
Beneficiaries.
(2) Unless the Trustee has actual knowledge that the Employer is
Insolvent, or has received notice from the Employer or a person
claiming to be a creditor alleging that the Employer is
Insolvent, the Trustee shall have no duty to inquire whether the
Employer is Insolvent. The Trustee may in all events rely on
such evidence concerning the Employer's solvency as may be
furnished to the Trustee and that provides the Trusteewith a
reasonable basis for making a determination concerning the
Employer's solvency.
(3) If at any time the Trustee has determined that the Employer is
Insolvent, the Trustee shall discontinue payments to Participants
or their Beneficiaries and shall hold the assets of the Trust for
the benefit of the Employer's general creditors. Nothing in this
Trust Agreement shall in any way diminish any rights of
Participants or their Beneficiaries to pursue their rights as
general creditors of the Employer with respect to benefits due
under the Arrangements or otherwise.
(4) The Trustee shall resume the payment of benefits to Participants
or their Beneficiaries in accordance with Section 2 of this Trust
Agreement only after the Trustee has determined that the Employer
is not Insolvent (or is no longer Insolvent).
(c) Provided that there are sufficient assets, if the Trustee discontinues
the payment of benefits from the Trust pursuant to Section 3(b) hereof
and subsequently resumes
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<PAGE> 8
such payments, the first payment following such discontinuance shall
include the aggregate amount of all payments due to Participants or
their Beneficiaries under the terms of the Arrangements for the period
of such discontinuance plus earnings on the amounts which were not paid
less the aggregate amount of any payments made to Participants or their
Beneficiaries by the Employer in lieu of the payments provided for
hereunder during any such period of discontinuance.
SECTION 4. PAYMENTS WHEN A SHORT-FALL OF THE TRUST ASSETS OCCURS
(a) If there are not sufficient assets for the payment of benefits pursuant
to Section 2 or Section 3(c) hereof and the Employer does not otherwise
make such payments within a reasonable time after demand from the
Trustee, the Trustee shall make payment of benefits from the Trust to
the Participants or their Beneficiaries pro-rata except to the extent
that the Trustee has been instructed to establish an Account pursuant to
Section 2.
(b) Upon receipt of a contribution from the Employer necessary to make up
for a short-fall in the payments due, the Trustee shall resume payments
to all the Participants and Beneficiaries under the Arrangements.
Following a Change in Control, the Trustee shall have the right, in its
discretion, to compel a contribution to the Trust from the Employer to
make-up for any short-fall.
SECTION 5. PAYMENTS TO THE EMPLOYER
Except as may otherwise be provided by this Trust, the Employer shall have no
right or power to direct the Trustee to return to the Employer or to divert to
others any of the Trust assets before all payment of benefits have been made to
Participants and their Beneficiaries pursuant to the terms of the Arrangements.
SECTION 6. INVESTMENT AUTHORITY
(a) The Trustee shall not be liable in discharging its duties hereunder,
including without limitation its duty to invest and reinvest the Fund,
if it acts for the exclusive benefit of the Participants and their
Beneficiaries, in good faith and as a prudent person would act in
accomplishing a similar task and in accordance with the terms of this
Trust Agreement and any applicable federal or state laws, rules or
regulations.
(b) Subject to investment guidelines agreed to in writing from time to time
by the Company and the Trustee prior to a Change in Control, the Trustee
shall have the power in investing and reinvesting the Fund in its sole
discretion:
(1) To invest and reinvest in any readily marketable common and
preferred stocks, bonds, notes, debentures (including convertible
stocks and securities, and including stock and securities of the
Company, but not
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<PAGE> 9
including any stock or security of the Trustee other than a de
minimis amount held in a collective or mutual fund),
certificates of deposit or demand or time deposits (including
any such deposits with the Trustee) and shares of investment
companies and mutual funds, including any proprietary mutual
funds of the Trustee, without being limited to the classes or
property in which the Trustees are authorized to invest by any
law or any rule of court of any state and without regard to the
proportion any such property may bear to the entire amount of
the Fund;
(2) To commingle for investment purposes all or any portion of the
Fund with assets of any other similar trust or trusts
established by the Company with the Trustee for the purpose of
safeguarding deferred compensation or retirement income benefits
of its employees and/or directors;
(3) To retain any property at any time received by the Trustee;
(4) To sell or exchange any property held by it at public or private
sale, for cash or on credit, to grant and exercise options for
the purchase or exchange thereof, to exercise all conversion or
subscription rights pertaining to any such property and to enter
into any covenant or agreement to purchase any property in the
future;
(5) To participate in any plan of reorganization, consolidation,
merger, combination, liquidation or other similar plan relating
to property held by it and to consent to or oppose any such plan
or any action thereunder or any contract, lease, mortgage,
purchase, sale or other action by any person;
(6) To deposit any property held by it with any protective,
reorganization or similar committee, to delegate discretionary
power thereto, and to pay part of the expenses and compensation
thereof any assessments levied with respect to any such property
to deposited;
(7) To extend the time of payment of any obligation held by it;
(8) To hold uninvested any moneys received by it, without liability
for interest thereon, but only in anticipation of payments due
for investments, reinvestments, expenses or disbursements;
(9) To exercise all voting or other rights with respect to any
property held by it and to grant proxies, discretionary or
otherwise;
(10) For the purposes of the Trust, to borrow money from a bank,
including Wachovia Bank, N.A. or an affiliated bank, to issue its
promissory note or notes therefor, and to secure the repayment
thereof by pledging any property(including but not limited to any
insurance policies)held by it;
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<PAGE> 10
(11) To employ and rely upon suitable contractors and counsel, who may
be counsel to the Company or to the Trustee, and to pay their
reasonable expenses and compensation from the Fund to the extent
not paid by the Company;
(12) To register investments in its own name or in the name of a
nominee; to hold any investment in bearer form; and to combine
certificates representing securities with certificates of the
same issue held by it in other fiduciary capacities or to deposit
or to arrange for the deposit of such securities with any
depository, even though, when so deposited, such securities may
be held in the name of the nominee of such depository with other
securities deposited therewith by other persons, or to deposit or
to arrange for the deposit of any securities issued or guaranteed
by the United States government, or any agency or instrumentality
thereof, including securities evidenced by book entries rather
than by certificates, with the United States Department of the
Treasury or a Federal Reserve Bank, even though, when so
deposited, such securities may not be held separate from
securities deposited therein by other persons; provided, however,
that no securities held in the Fund shall be deposited with the
United States Department of the Treasury or a Federal Reserve
Bank or other depository in the same account as any individual
property of the Trustee, and provided, further, that the books
and records of the Trustee shall at all times show that all such
securities are part of the Trust Fund;
(13) To settle, compromise or submit to arbitration any claims, debts
or damages due or owing to or from the Trust, respectively, to
commence or defend suits or legal proceedings to protect any
interest of the Trust, and to represent the Trust in all suits or
legal proceedings in any court or before any other body or
tribunal; provided, however, that the Trustee shall not be
required to take any such action unless it shall have been
indemnified by the Company to its reasonable satisfaction against
liability or expenses it might incur therefrom;
(14) To hold and retain policies of life insurance, annuity contracts,
and other property of any kind which policies are contributed to
the Trust by the Employer or are purchased by the Trustee;
(15) To hold any other class of assets which may be contributed by the
Employer and that is deemed reasonable by the Trustee, unless
expressly prohibited herein; and
(16) Generally, to do all acts, whether or not expressly authorized,
that the Trustee may deem necessary or desirable for the
protection of the Fund.
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(c) Prior to a Change in Control, the Company shall have the right, subject
to this Section 6, to direct the Trustee with respect to investments.
(1) The Company may at any time direct the Trustee to segregate all
or a portion of the Fund in a separate investment account or
accounts and may appoint one or more investment managers and/or
an investment committee established by the Company to direct the
investment and reinvestment of each such investment account or
accounts. In such event, the Company shall notify the Trustee of
the appointment of each such investment manager and/or
investment committee. No such investment manager shall be
related, directly or indirectly, to the Company, but members of
the investment committee may be employees of the Company.
(2) Thereafter, the Trustee shall make every sale or investment with
respect to such investment account as directed in writing by the
investment manager or investment committee. It shall be the duty
of the Trustee to act strictly in accordance with each direction.
The Trustee shall be under no duty to question any such direction
of the investment manager or investment committee, to review any
securities or other property held in such investment account or
accounts acquired by it pursuant to such directions or to make
any recommendations to the investment managers or investment
committee with respect to such securities or other property.
(3) Notwithstanding the foregoing, the Trustee, without obtaining
prior approval or direction from an investment manager or
investment committee, shall invest cash balances held by it from
time to time in short term cash equivalents including, but not
limited to, through the medium of any short term mutual fund
established and maintained by the Trustee subject to the
instrument establishing such trust fund, U.S. Treasury Bills,
commercial paper (including such forms of commercial paper as
may be available through the Trustee's Trust Department),
certificates of deposit (including certificates issued by the
Trustee in its separate corporate capacity), and similar type
securities, with a maturity not to exceed one year; and,
furthermore, sell such short term investments as may be
necessary to carry out the instructions of an investment manager
or investment committee regarding more permanent type investment
and directed distributions.
(4) The Trustee shall neither be liable nor responsible for any loss
resulting to the Fund by reason of any sale or purchase of an
investment directed by an investment manager or investment
committee nor by reason of the failure to take any action with
respect to any investment which was acquired pursuant to any such
direction in the absence of further directions of such investment
manager or investment committee.
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(5) Notwithstanding anything in this Agreement to the contrary, the
Trustee shall be indemnified and saved harmless by the Company
from and against any and all personal liability to which the
Trustee may be subjected by carrying out any directions of an
investment manager or investment committee issued pursuant
hereto or for failure to act in the absence of directions of the
investment manager or investment committee including all
expenses reasonably incurred in its defense in the event the
Company fails to provide such defense; provided, however, the
Trustee shall not be so indemnified if it participates knowingly
in, or knowingly undertakes to conceal, an act or omission of an
investment manager or investment committee, having actual
knowledge that such act or omission is a breach of a fiduciary
duty; provided further, however, that the Trustee shall not be
deemed to have knowingly participated in or knowingly undertaken
to conceal an act or omission of an investment manager or
investment committee with knowledge that such act or omission
was a breach of fiduciary duty by merely complying with
directions of an investment manager or investment committee or
for failure to act in the absence of directions of an investment
manager or investment committee. The Trustee may rely upon any
order, certificate, notice, direction or other documentary
confirmation purporting to have been issued by the investment
manager or investment committee which the Trustee believes to be
genuine and to have been issued by the investment manager or
investment committee. The Trustee shall not be charged with
knowledge of the termination of the appointment of any
investment manager or investment committee until it receives
written notice thereof from the Company.
(d) Following a Change in Control, the Trustee shall have the sole and
absolute discretion in the management of the Trust assets and shall have
all the powers set forth under Section 6(b) and (c). In investing the
Trust assets, the Trustee shall consider:
(1) the needs of the Arrangements;
(2) the need for matching of the Trust assets with the liabilities
of the Arrangements; and
(3) the duty of the Trustee to act solely in the best interests of
the Participants and their Beneficiaries.
(e) The Trustee shall have the right, in its sole discretion, to delegate
its investment responsibility to an investment manager who may be an
affiliate of the Trustee. In the event the Trustee shall exercise this
right, the Trustee shall remain, at all times responsible for the acts
of an
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investment manager. The Trustee shall have the right to purchase an
insurance policy or an annuity to fund the benefits of the Arrangements.
(f) The Employer shall have the right at any time, and from time to time in
its sole discretion, to substitute assets of equal fair market value for
any asset held by the Trust. This right is exercisable by the Employer
in a nonfiduciary capacity without the approval or consent of any person
in a fiduciary capacity.
SECTION 7. INSURANCE CONTRACTS
(a) Prior to a Change in Control, the Company may direct the Trustee to
invest Trust assets in an insurance contract or may, in its discretion,
contribute insurance policies to the Trust. To the extent that the
Trustee is directed by the Company prior to a Change in Control to
invest part or all of the Trust Fund in insurance contracts, the type
and amount thereof shall be specified by the Company. The Trustee shall
be under no duty to make inquiry as to the propriety of the type or
amount so specified.
(b) Each insurance contract issued shall provide that the Trustee shall be
the owner thereof with the power to exercise all rights, privileges,
options and elections granted by or permitted under such contract or
under the rules of the insurer. The exercise by the Trustee of any
incidents of ownership under any contract shall, prior to a Change in
Control, be subject to the direction of the Company. After a Change in
Control, the Trustee shall have all such rights.
(c) The Trustee shall have no power to name a beneficiary of the policy
other than the Trust, to assign the policy (as distinct from conversion
of the policy to a different form) other than to a successor Trustee, or
to loan to any person the proceeds of any borrowing against an insurance
policy held in the Trust Fund.
(d) No insurer shall be deemed to be a party to the Trust and an insurer's
obligations shall be measured and determined solely by the terms of
contracts and other agreements executed by the insurer.
SECTION 8. DISPOSITION OF INCOME
All income received by the Trust, net of expenses and taxes, shall be
accumulated and reinvested within the Trust.
SECTION 9. ACCOUNTING BY THE TRUSTEE
The Trustee shall keep accurate and detailed records of all investments,
receipts, disbursements, and all other transactions required to be made,
including such specific records as shall be agreed upon in writing between the
Company and the Trustee within
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forty-five (45) days following the close of each calendar year and within
forty-five (45) days after the removal or resignation of the Trustee. The
Trustee shall deliver to the Company a written account of its administration of
the Trust during such year or during the period from the close of the last
preceding year to the date of such removal or resignation setting forth all
investments, receipts, disbursements and other transactions effected by it,
including a description of all securities and investments purchased and sold
with the cost or net proceeds of such purchases or sales (accrued interest paid
or receivable being shown separately), and showing all cash, securities and
other property held in the Trust at the end of such year or as of the date of
such removal or resignation, as the case may be. The Company may approve such
account by an instrument in writing delivered to the Trustee.
In the absence of the Company's filing with the Trustee objections to any such
account within ninety (90) days after its receipt, the Company shall be deemed
to have so approved such account. In such case, or upon the written approval by
the Company of any such account, the Trustee shall, to the extent permitted by
law, be discharged from all liability to the Company for its acts or failures to
act described by such account. The foregoing, however, shall not preclude the
Trustee from having its accounting settled by a court of competent jurisdiction.
The Trustee shall be entitled to hold and to commingle the assets of the Trust
in one Fund for investment purposes, but, at the direction of the Company prior
to a Change in Control, the Trustee shall maintain an account in the name of the
Employer, Arrangement or Participant, which pursuant to the rules established by
the Company, will reflect:
(a) deposits made by the Employer pursuant to this Trust Agreement for the
benefit of an Arrangement or Participant;
(b) income, losses, and appreciation or depreciation in the value of trust
assets resulting from investment of the trust fund to the extent such
items are attributable to the Employer's deposits as provided herein;
(c) payments made from the Trust to Participants employed or formerly
employed by the Employer (or to their Beneficiaries) in the form of
benefits payable to them under the Arrangement, or to the Employer's
creditors; and
(d) any other amounts charged to the Employer's account, including its share
of compensation and expenses described in Section 11.
In making the payments required by the Trustee under Sections 2, 3 and 4 hereof,
the Trustee shall not be permitted to invade an Account established pursuant to
this Section 9 to pay benefits due under another Arrangement or to another
Participant until all benefits due which are attributable to the Account have
been paid in full.
SECTION 10. RESPONSIBILITY OF THE TRUSTEE
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(a) The Trustee shall act with the care, skill, prudence and diligence under
the circumstances then prevailing that a prudent person acting in like
capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims, provided, however,
that the Trustee shall incur no liability to any person for any action
taken pursuant to a direction, request or approval given by the Company
which is contemplated by, and in conformity with, the terms of the
Arrangements or this Trust and is given in writing by the Company. In
the event of a dispute between the Company and a party, the Trustee may
apply to a court of competent jurisdiction to resolve the dispute,
subject, however to Section 2(d) hereof.
(b) The Company hereby indemnifies the Trustee against losses, liabilities,
claims, costs and expenses in connection with the administration of the
Trust, unless resulting from the negligence or misconduct of Trustee. To
the extent the Company fails to make any payment on account of an
indemnity provided in this Section 10(b), in a reasonably timely manner,
the Trustee may obtain payment from the Trust. If the Trustee undertakes
or defends any litigation arising in connection with this Trust or to
protect a Participant's or Beneficiary's rights under the Arrangements,
the Company agrees to indemnify the Trustee against the Trustee's costs,
reasonable expenses and liabilities (including, without limitation,
attorneys' fees and expenses) relating thereto and to be primarily
liable for such payments. If the Company does not pay such costs,
expenses and liabilities in a reasonably timely manner, the Trustee may
obtain payment from the Trust.
(c) Prior to a Change in Control, the Trustee may consult with legal counsel
(who may also be counsel for the Company generally) with respect to any
of its duties or obligations hereunder. Following a Change in Control
the Trustee shall select independent legal counsel and may consult with
counsel or other persons with respect to its duties and with respect to
the rights of Participants or their Beneficiaries under the
Arrangements.
(d) The Trustee may hire agents, accountants, actuaries, investment
advisors, financial consultants or other professionals to assist it in
performing any of its duties or obligations hereunder and may rely on
any determinations made by such agents and information provided to it by
the Company.
(e) To furnish the employers with such information in the Trustee's
possession as the Company may need or desire for tax or other purposes.
(f) The Trustee shall have, without exclusion, all powers conferred on the
Trustee by applicable law, unless expressly provided otherwise herein.
(g) Notwithstanding any powers granted to the Trustee pursuant to this Trust
Agreement or to applicable law, the Trustee shall not have any power
that could give this Trust the objective of carrying on a business and
dividing the gains
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therefrom, within the meaning of section 301.7701-2 of the Procedure and
Administrative Regulations promulgated pursuant to the Internal Revenue
Code.
SECTION 11. COMPENSATION AND EXPENSES OF THE TRUSTEE
The Trustee's compensation shall be as agreed in writing from time to time by
the Company and the Trustee. The Company shall pay all administrative expenses
and the Trustee's fees and shall promptly reimburse the Trustee for any fees and
expenses of its agents. If not so paid, the fees and expenses shall be paid from
the Trust.
SECTION 12. RESIGNATION AND REMOVAL OF THE TRUSTEE
(a) Prior to a Change in Control, the Trustee may resign at any time by
written notice to the Company, which shall be effective sixty (60) days
after receipt of such notice unless the Company and the Trustee agree
otherwise. Following a Change in Control, the Trustee may resign only
after the appointment of a successor Trustee or as provided by Section
12(c) below.
(b) The Trustee may be removed by the Company on sixty days (60) days notice
or upon shorter notice accepted by the Trustee prior to a Change in
Control. Subsequent to a Change in Control, the Trustee may only be
removed by the Company with the consent of a two-thirds majority of the
Participants.
(c) If the Trustee resigns within two years after a Change in Control, as
defined herein, the Company, or if the Company fails to act within a
reasonable period of time following such resignation, the Trustee shall
apply to a court of competent jurisdiction for the appointment of a
successor Trustee or for instructions.
(d) Upon resignation or removal of the Trustee and appointment of a
successor Trustee, all assets shall subsequently be transferred to the
successor Trustee. The transfer shall be completed within sixty (60)
days after the resignation, removal or transfer, unless the Company
extends the time limit.
(e) If the Trustee resigns or is removed, a successor shall be appointed by
the Company, in accordance with Section 13 hereof, by the effective date
of resignation or removal under paragraph(s) (a) or (b) of this section.
If no such appointment has been made, the Trustee may apply to a court
of competent jurisdiction for appointment of a successor or for
instructions. All expenses of the Trustee in connection with the
proceeding shall be allowed as administrative expenses of the Trust.
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SECTION 13. APPOINTMENT OF SUCCESSOR
(a) If the Trustee resigns or is removed in accordance with Section 12
hereof, the Company may appoint, subject to Section 12, any third party
national banking association with a market capitalization exceeding
$1,000,000,000 to replace the Trustee upon resignation or removal. The
successor Trustee shall have all of the rights and powers of the former
Trustee, including ownership rights in the Trust. The former Trustee
shall execute any instrument necessary or reasonably requested by the
Company or the successor Trustee to evidence the transfer.
(b) The successor Trustee need not examine the records and acts of any prior
Trustee and may retain or dispose of existing Trust assets, subject to
Section 8 and 9 hereof. The successor Trustee shall not be responsible
for and the Company shall indemnify and defend the successor Trustee
from any claim or liability resulting from any action or inaction of any
prior Trustee or from any other past event, or any condition existing at
the time it becomes successor Trustee.
SECTION 14. AMENDMENT OR TERMINATION
(a) This Trust Agreement may be amended by a written instrument executed by
the Trustee and the Company. Notwithstanding the foregoing, no such
amendment shall conflict with the terms of the Arrangements or shall
make the Trust revocable.
(b) The Trust shall not terminate until the date on which Participants and
their Beneficiaries have received all of the benefits due to them under
the terms and conditions of the Arrangements.
(c) Upon written approval of all Participants or Beneficiaries entitled to
payment of benefits pursuant to the terms of the Arrangements, the
Company may terminate this Trust prior to the time all benefit payments
under the Arrangements have been made. All assets in the Trust at
termination shall be returned to the Employer.
(d) This Trust Agreement may not be amended or terminated by the Company for
two (2) years following a Change in Control without the written consent
of a majority of the Participants; provided however, the Trust Agreement
may be amended by the Company and the Trustee following a Change in
Control without the written consent of a majority of the Participants to
comply with legal or regulatory requirements necessary to maintain the
tax status for Participants or Beneficiaries.
(e) In no event may this Trust Agreement be terminated as to any Accounts
which have been established without the consent of the Participants or
Beneficiaries for whom such Account was established..
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SECTION 15. CHANGE IN CONTROL
(a) For purposes of this Trust, the following terms shall be defined as set
forth below:
(1) Threatened Change in Control shall mean, as determined by the
Company in its discretion:
Any pending offer for the Company's outstanding shares of
common stock, or any pending offer to acquire the Company
by merger or consolidation, or any other pending action or
plan to effect a Change in Control of the Company.
(2) Change in Control - The term "Change in Control" as used herein
shall mean the occurrence of one of the following:
(i) the Company consolidates or merges with or into
another corporation, or is otherwise reorganized, if the
Company is not the surviving corporation in such
transaction or if after such transaction any other
corporation, association or other person, entity or group
or the shareholders thereof own, direct and/or indirectly,
more than 50% of the then outstanding shares of common
stock or more than 50% of the assets of the Company; or
(ii) more than 35% of the then outstanding shares
of common stock of the Company are, in a single
transaction or in a series of related transactions, sold
or otherwise transferred to or are acquired by any other
corporation, association or other person, entity or group,
whether or not any such shareholder or any shareholders
included in such group were shareholders of the Company
prior to the Change in Control; or
(iii) all or substantially all of the assets of the
Company are sold or otherwise transferred to or otherwise
acquired by any other corporation, association or other
person, entity or group; or
(iv) the occurrence of any other event or
circumstance which is not covered by (i) through (iii)
above which the Board determines affects control of the
Company and constitutes a Change in Control for purpose of
this Agreement.
(b) The General Counsel of the Company shall have the specific authority to
determine whether a Potential Change in Control or Change in Control has
transpired under the guidance of this Section 15(a) and shall be
required to give the Trustee notice of a Change in Control or a
Potential Change in Control. The
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Trustee shall be entitled to rely upon such notice, but if the Trustee
receives notice of a Change in Control from another source, the Trustee
shall make its own independent determination.
SECTION 16. FAILURE TO PAY
"Failure to Pay" shall mean that the circumstances described in either (a) or
(b) have occurred:
(a) Any Plan Participant shall have notified the Trustee and the Company in
writing that the Company shall have failed to pay to the Participant,
when due, either directly or by direction to the Trustee in accordance
with the terms hereof, at least 75% of any and all amounts which the
Participant was entitled to receive at any time in accordance with the
terms of any Plan, the Payment Schedule or this trust Agreement, and
that such amount remains unpaid. Such notice must set forth the amount,
if any, which was paid to the Participant, and the amount which the
Participant believes he was entitled to receive under the Arrangements,
the Payment Schedule and this Trust. Subject to this Trust, the failure
to make such payment shall have continued for a period of 30 days after
receipt of such notice by the Trustee and by the Company,and during such
30 day period, the Company shall have failed to prove, by clear and
convincing evidence as determined by the Trustee in its sole and
absolute discretion, that such amount was in fact paid or was not due
and payable; or
(b) More than two Participants in an Arrangement shall have notified the
Trustee and the Company in writing, either individually or jointly, that
they have not been paid, when due, amounts to which they are entitled
under the Arrangements, the Payment Schedule and this Trust. Within 15
days after receipt of such notice, the Trustee shall determine on a
preliminary basis, whether any failure to pay such Participants has
resulted in a failure to pay when due, directly or by direction, at
least 75% of the aggregate amount due to all Participants under the
Arrangements, the Payment Schedule or this Trust and that such amount
remains unpaid. Subject to this Trust, if the Trustee determines that
such a failure has occurred, then it shall so notify the Company and
Participants in writing. If the Company shall fail to prove by clear and
convincing evidence as determined by the Trustee in its sole and
absolute discretion that such payments have been made or were not due, a
Failure to Pay shall be deemed to have occurred.
SECTION 17. MISCELLANEOUS
(a) Any provision of this Trust Agreement prohibited by law shall be
ineffective to the extent of any such prohibition, without invalidating
the remaining provisions hereof.
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(b) The Employer hereby represents and warrants that all of the Arrangements
have been established, maintained and administered in accordance with
all applicable laws, including without limitation, ERISA. The Employer
hereby indemnifies and agrees to hold the Trustee harmless from all
liabilities, including attorney's fees, relating to or arising out of
the establishment, maintenance and administration of the Arrangements.
To the extent the Employers do not pay any of such liabilities in a
reasonably timely manner, the Trustee may obtain payment from the Trust.
(c) Benefits payable to Participants and their Beneficiaries under this
Trust Agreement may not be anticipated, assigned (either at law or in
equity), alienated, pledged, encumbered or subjected to attachment,
garnishment, levy, execution or other legal or equitable process.
(d) This Trust Agreement shall be governed by and construed in accordance
with the laws of North Carolina.
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IN WITNESS WHEREOF, this Grantor Trust Agreement has been executed on behalf of
the parties hereto on the day and year first above written.
COMPANY TRUSTEE
By: By:
/s/ E. A. ROSKOVENSKY /s/ Joe O. Long
- -------------------------------- ---------------------------------
Its: Its:
Compensation Committee SVP/GE
- -------------------------------- ---------------------------------
ATTEST: ATTEST:
- -------------------------------- ---------------------------------
By: By:
- -------------------------------- ---------------------------------
Its: Its:
- -------------------------------- ---------------------------------
[ATTACH AN ADDITIONAL SIGNATURE PAGE FOR EACH SUBSIDIARY THAT IS A PARTY TO THE
TRUST AGREEMENT.]
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EXHIBIT A
QUADRAMED CORPORATION
NON-QUALIFIED DEFERRED COMPENSATION
PLANS AND ARRANGEMENTS
1. QuadraMed Corporation Deferred Compensation Plan, effective January 1,
2000.
2. QuadraMed Corporation Stock Exchange Deferred Compensation Plan,
effective January 3, 2000.
3. QuadraMed Corporation Supplemental Executive Retirement Program,
effective January 1, 2000.
22
