QUADRAMED CORPORATION PROPRIETARY INFORMATION AND NON-COMPETITION AGREEMENT

Exhibit 99.3

QUADRAMED CORPORATION

PROPRIETARY INFORMATION AND NON-COMPETITION AGREEMENT

This PROPRIETARY INFORMATION AND NON-COMPETITION AGREEMENT (the “Agreement”), effective as of the last date written below, is by and between QuadraMed Corporation , a Delaware corporation, with an address at 12110 Sunset Hills Road Reston, VA 20190 and Steven Russell ( Employee ).

Employee is, or expects to become, employed by QuadraMed Corporation or one or more of QuadraMed’s affiliates (such affiliates, whether now or hereafter existing, together with QuadraMed, are referred to herein, collectively, as QuadraMed ).

In consideration of, and as part of the terms of, the employment or continued employment of Employee by QuadraMed, the compensation paid and to be paid by QuadraMed to Employee, the entrusting to Employee of certain trade secrets and proprietary information of QuadraMed, and the mutual covenants and promises set forth herein, Employee and QuadraMed, for itself and for QuadraMed, agree as follows:

1.  Freedom to Contract .  Employee represents to QuadraMed that (i) Employee is free to enter into this Agreement, (ii) Employee has not made and will not make any agreements in conflict with this Agreement, and (iii) Employee will not disclose or make available to QuadraMed, or use for QuadraMed’s benefit, any trade secrets or confidential information which is the property of Employee or of any third party, including without limitation, any former employer, partner, co-venturer, client, customer or supplier. EMPLOYEE REPRESENTS AND WARRANTS TO QUADRAMED THAT (A) EMPLOYEE HAS DELIVERED TO QUADRAMED A COPY OF EVERY AGREEMENT THAT MAY BEAR ON EMPLOYEE’S EMPLOYMENT WITH QUADRAMED, INCLUDING, WITHOUT LIMITATION, ANY NON-COMPETITION AGREEMENT, EMPLOYMENT AGREEMENT, PROPRIETARY RIGHTS AGREEMENT, NONDISCLOSURE AGREEMENT OR THE LIKE AND (B) EMPLOYEE WILL HONOR ALL SUCH AGREEMENTS.

2.  Confidentiality .

2.1  Definitions .

Confidential Information means (i) all Information acquired by Employee from QuadraMed, its other employees, its suppliers or customers, its agents or consultants, or others, during Employee’s employment by QuadraMed, that relates to the present or potential businesses, products or services of QuadraMed, as well as any other Information (as defined below) as may be designated by QuadraMed as confidential or that a reasonable person would understand from the circumstances of the disclosure to be confidential; (ii) all Information created or acquired by Employee in the course of any Included Activity (as defined in Section 3.1); and (iii) all Derivative Information.

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Derivative Information means all copies, digests, summaries of Information, as well as feedback, suggestions, improvements or other QuadraMed Creations (as defined in Section 3.1) derived from the Information.

Information means all forms and types of financial, business, marketing, operations, scientific, technical, economic and engineering information, whether tangible or intangible, including, without limitation, patterns, plans, compilations, devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, codes, know-how, computer software, databases, product names or marks, marketing materials or programs, plans, specifications, shop-practices, customer lists, supplier lists, customer information (including account information, names, addresses, telephone numbers or other contact or identifying information), engineering and manufacturing information, price lists, costing information, employee and consulting relationship information (including information pertaining to salaries, duties, and performance levels of QuadraMed employees, contractors and consultants), accounting and financial data, profit margin, marketing and sales data, strategic plans, trade secrets, information indicating the source of QuadraMed’s income and all other proprietary information, irrespective of the Medium in which such Information is memorialized or communicated.

Medium (Media) means any communications or storage medium, regardless of method of storage, compilation or memorialization, if any, including without limitation, physical storage or representation (including models and prototypes), electronic storage, graphical (including designs and drawings) or photographic representation, or writings and in the case of information that is not stored or otherwise memorialized, oral communication.

2.2  Acknowledgment .  Employee recognizes and acknowledges that:

(i) QuadraMed’s Confidential Information is a valuable, special and unique asset of QuadraMed;

(ii) access to and knowledge of the Confidential Information by Employee may be required so that Employee can perform his/her duties as an employee of QuadraMed; it is vital to QuadraMed’s legitimate business interests that (A) the confidentiality of the Confidential Information be preserved and (B) the Confidential Information only be used for the benefit of QuadraMed;

(iii) disclosure of the Confidential Information to any other person or entity outside QuadraMed or use of the Confidential Information by or on behalf of any other person or entity could result in irreparable harm to QuadraMed;

(iv) disclosure or use beyond the permitted scope of Confidential Information entrusted to QuadraMed by its customers and contractors could expose QuadraMed to substantial damages;

(v) the Confidential Information is and shall remain the exclusive property of QuadraMed; and

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(vi) nothing in this Agreement shall be construed as a grant to Employee of any rights, title or interest in, to or under the Confidential Information.

2.3  Restrictions .  Except as expressly directed by QuadraMed, Employee, during or after the term of Employee’s employment by QuadraMed shall neither disclose, in whole or in part, such Confidential Information to any person, firm, corporation, association or other entity for any reason or purpose whatsoever other than in connection with, and in furtherance of, QuadraMed’s business and affairs, nor shall Employee, during or after the term of Employee’s employment, make use of any such Confidential Information for Employee’s own purposes or for the benefit of any person, firm, corporation or other entity under any circumstances; provided that if applicable law restricts the duration of the confidentiality and nonuse obligations set forth in this Section 2.3 (the Confidentiality and Non-Use Obligations ) for Confidential Information that is not also a trade secret under applicable law ( Other Confidential Information ), the Confidentiality and Non-Use Obligations as to Other Confidential Information shall remain in effect during the term of Employee’s employment by QuadraMed and for a period of seven (7) years thereafter and shall be perpetual as to trade secrets.

2.4  Exclusions .  The Confidentiality and Non-Use Obligations shall not apply to such Confidential Information that Employee can establish by clear and convincing written proof: (i) was known by Employee both prior to employment and other than by disclosure by QuadraMed; (ii) was lawfully in the public domain and generally known in the trade prior to its disclosure hereunder, or becomes publicly available and generally known in the trade other than through a breach of this Agreement or any other obligation of confidentiality to QuadraMed; or (iii) was specifically authorized for nonconfidential disclosure by a duly authorized executive officer of QuadraMed other than by authority of Employee; provided that only the specific information that meets the exclusion shall be excluded and not any other information that happens to appear in proximity to such excluded portion (for example, a portion of a document may be excluded without affecting the confidential nature of those portions that do not themselves qualify for exclusion). The Confidentiality and Non-Use Obligations shall not prevent Employee from disclosing the amount of Employee’s salary.

2.5  Required Disclosures .  Employee agrees to notify QuadraMed promptly upon learning about any court order or other legal requirement that purports to compel disclosure of any Confidential Information and to cooperate with QuadraMed in the exercise of QuadraMed’s right to protect the confidentiality of the Confidential Information before any tribunal or governmental agency. Disclosure of Confidential Information pursuant to a court order or other legal requirement that purports to compel disclosure of any Confidential Information shall not alter the character of that information as Confidential Information hereunder.

2.6  Return of Confidential Information .  All Confidential Information, including without limitation, all Derivative Information and QuadraMed Creations, are and shall continue to be the exclusive property of QuadraMed. Immediately upon any termination of Employee’s employment or at any time upon the request of QuadraMed, Employee shall deliver to QuadraMed, or its designee, all Confidential Information and all other QuadraMed property then in Employee’s actual or potential possession or control in any tangible or electronic form. If Employee and QuadraMed agree that any specific Information or property cannot reasonably be

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delivered, Employee shall provide reasonable evidence that such materials have been destroyed, including but not limited to, the purging or erasing of any and all computer records and data files. Notwithstanding the foregoing, Employee shall be entitled to retain Employee’s files or Rolodex containing names, addresses and telephone numbers and personal diaries and calendars; provided, however, that Employee shall continue to be bound by the terms of Section 2.3 above to the extent that such retained materials constitute Confidential Information, Derivative Information, Developments or QuadraMed Creations.

2.7  Third Party Information .  Employee acknowledges that QuadraMed has received and may in the future receive confidential and proprietary information from third parties subject to a duty on QuadraMed’s part to maintain the confidentiality of such information and, in some cases, to use it only for certain limited purposes. Employee agrees that Employee owes QuadraMed and such third parties, during the term of Employee’s employment and thereafter, a duty to hold all such confidential or proprietary information in strictest confidence and not to disclose or use it in any manner that is not consistent with QuadraMed’s agreement with such third parties, unless expressly authorized to do so by a duly authorized executive officer of QuadraMed (other than Employee, if Employee is an executive officer of QuadraMed).

2.8 Stored/Transmitted Information . Employee acknowledges that all Information stored on or transmitted using QuadraMed-owned or QuadraMed-leased property or equipment is the property of QuadraMed and is subject to access by QuadraMed at any time without notice.

3. Intellectual Property & QuadraMed Creations .

3.1  Definitions .

Included Activity means at the relevant time of determination, any activity conducted by, for or under the direction of QuadraMed, whether or not conducted at QuadraMed’s facilities, during working hours or using QuadraMed’s resources, or which relates directly or indirectly to (i) the business of QuadraMed as then operated or under consideration or development or (ii) any method, program, computer software, apparatus, design, plan, model, specification, formulation, technique, product, process (including, without limitation, any business processes and any operational processes) or device, then purchased, sold, leased, used or under consideration or development by QuadraMed.

Development means any idea, material, discovery, improvement, invention (including without limitation any discovery of new technology and any improvement to existing technology), trade secret, software, customer and prospect information (including names, addresses, telephone numbers and other contact information), Confidential Information, know-how, innovation, writing, work of authorship, compilation and other development or improvement, whether or not patented or patentable, copyrightable, or reduced to practice or writing.

QuadraMed Creation means any Development that arises out of any Included Activity.

3.2  Assignment .  Employee agrees to, and hereby does, sell, transfer and assign to QuadraMed, or its designee(s), the entire right, title and interest of Employee in and to all QuadraMed Creations made, discovered, invented, authored, created, developed, originated or conceived by Employee, solely or jointly, during the term of Employee’s employment with QuadraMed and