exv10w2



 



EXHIBIT 10.2



WEBMD CORPORATION

2003 NON-QUALIFIED STOCK OPTION PLAN

FOR EMPLOYEES OF ADVANCED BUSINESS FULFILLMENT, INC.



ARTICLE 1



Purpose



      1.1    General. The purpose of the WebMD Corporation 2003 Non-Qualified
Stock Option Plan for Employees of Advanced Business Fulfillment, Inc. (the
“Plan”) is to induce employees of Advanced Business Fulfillment, Inc. (“ABF”)
to remain employees of ABF following WebMD Corporation’s (the “Corporation”)
acquisition of ABF pursuant to the Stock Purchase Agreement dated as of June
14, 2003 (the “Purchase Agreement”) and to motivate such employees to promote
the success, and enhance the value, of the Corporation, by linking the personal
interests of such employees to those of Corporation shareholders and by
providing such employees with an incentive for outstanding performance. The
Plan is further intended to provide flexibility to the Corporation in its
ability to motivate, attract, and retain the services of employees upon whose
judgment, interest, and special effort the successful conduct of ABF’s
operation is largely dependent. Accordingly, the Plan permits the grant of
non-qualified options from time to time to selected employees.


ARTICLE 2



Effective Date



      2.1    Effective Date. The Plan shall be effective as of the date upon
which it shall be approved by the Board (the “Effective Date”); provided,
however, that in the event the closing of the transactions contemplated by the
Purchase Agreement does not occur, this Plan shall be null, void and of no
further force and effect.


ARTICLE 3



Definitions



      3.1    Definitions. When a word or phrase appears in this Plan with the
initial letter capitalized, and the word or phrase does not commence a
sentence, the word or phrase shall generally be given the meaning ascribed to
it in this Section or in Section 1.1 unless a clearly different meaning is
required by the context. The following words and phrases shall have the
following meanings:


     (a)    “ABF” has the meaning specified in Article 1.


     (b)    “Board” means the Board of Directors of the Corporation.


     (c)    “Cause” as a reason for a Participant’s termination of
employment shall have the meaning assigned such term in the employment
agreement, if any, between such Participant and the Corporation or an
affiliated company, provided, however that if there is no such employment
agreement in which such term is defined, “Cause” shall mean any of the
following acts by the Participant, as determined by the Corporation:
gross neglect of duty, prolonged absence from duty without the consent of
the Corporation, intentionally engaging in any activity that is in
conflict with or adverse to the business or other interests of the
Corporation, willful misconduct, misfeasance or malfeasance of duty which
is reasonably determined to be detrimental to the Corporation or breach
of any restrictive covenant set forth in an Option Agreement or any
substantially similar provisions in any other agreements with the
Corporation or any of its subsidiaries.










 


     (c)    “Code” means the Internal Revenue Code of 1986, as amended from time
to time.


     (d)    “Committee” means the committee described in Article 4.


     (e)    “Corporation” has the meaning specified in Article 1.


     (f)    “Effective Date” has the meaning assigned such term in
Section 2.1.


     (g)    “Eligible Persons” has the meaning assigned to such
term in Section 6.1.


     (h)    “Fair Market Value”, on any date, means (i) if the Stock is
listed on a securities exchange or is traded over the Nasdaq National
Market, the closing sales price on such exchange or over such system on
such date or, in the absence of reported sales on such date, the closing
sales price on the immediately preceding date on which sales were
reported, or (ii) if the Stock is not listed on a securities exchange or
traded over the Nasdaq National Market, the mean between the bid and
offered prices as quoted by Nasdaq for such date, provided that if it is
determined that the fair market value is not properly reflected by such
Nasdaq quotations, Fair Market Value will be determined by such other
method as the Committee determines in good faith to be reasonable.


     (i)    “Option” means a right granted to a Participant under Article 7
of the Plan to purchase Stock at a specified price during specified time
periods. The Options to be granted hereunder are not intended to qualify
as “incentive stock options” within the meaning of Section 422 of the
Code or any successor provision.


     (j)    “Option Agreement” means any written agreement, contract, or
other instrument or document evidencing an Option.


     (k)    “Parent” means a corporation which owns or beneficially owns a
majority of the outstanding voting stock or voting power of the
Corporation.


     (l)    “Participant” means a person who, as an employee of the
Corporation or any Parent or Subsidiary, has been granted an Option under
the Plan.


     (m)    “Permanent Disability” means Permanent Disability (or equivalent
definition) as defined in an employment agreement between Participant and
the Corporation or one of its Subsidiaries or in the event that the
Participant is not party to an employment agreement that defines
“Permanent Disability,” the Participant shall be deemed Permanently
Disabled if such person has been deemed “disabled” by the Corporation’s
long term disability insurance carrier.


     (n)    “Plan” means the WebMD Corporation 2003 Non-Qualified Stock
Option Plan for Employees of Advanced Business Fulfillment, Inc., as
amended from time to time.


     (o)    “Purchase Agreement” has the meaning specified in Article 1.


     (p)    “Stock” means the $.0001 par value common stock of the
Corporation and such other securities of the Corporation as may be
substituted for Stock pursuant to Article 9.1.


2







 


     (q)    “Subsidiary” means any corporation, limited liability company,
partnership or other entity of which a majority of the outstanding voting
stock or voting power is beneficially owned directly or indirectly by the
Corporation.


     (r)    “1933 Act” means the Securities Act of 1933, as amended from
time to time.


     (s)    “1934 Act” means the Securities Exchange Act of 1934, as amended
from time to time.


ARTICLE 4



Administration



      4.1.    Committee. The Plan shall be administered by the Compensation
Committee of the Board (the “Committee”) or, at the discretion of the Board
from time to time, the Plan may be administered by the Board. It is intended
that the directors appointed to serve on the Committee shall be “non-employee
directors” (within the meaning of Rule 16b-3 promulgated under the 1934 Act)
and “outside directors” (within the meaning of Code Section 162(m) and the
regulations thereunder) to the extent that Rule 16b-3 and, if necessary for
relief from the limitation under Code Section 162(m) and such relief is sought
by the Corporation, Code Section 162(m), respectively, are applicable. However,
the mere fact that a Committee member shall fail to qualify under either of the
foregoing requirements shall not invalidate any Option made by the Committee
which Option is otherwise validly made under the Plan. The members of the
Committee shall be appointed by, and may be changed at any time and from time
to time in the discretion of, the Board. During any time that the Board is
acting as administrator of the Plan, it shall have all the powers of the
Committee hereunder, and any reference herein to the Committee (other than in
this Section 4.1) shall include the Board.


      4.2.    Action by the Committee. For purposes of administering the Plan,
the following rules of procedure shall govern the Committee. A majority of the
Committee shall constitute a quorum. The acts of a majority of the members
present at any meeting at which a quorum is present, and acts approved
unanimously in writing by the members of the Committee in lieu of a meeting,
shall be deemed the acts of the Committee. Each member of the Committee is
entitled to, in good faith, rely or act upon any report or other information
furnished to that member by any officer or other employee of the Corporation or
any Parent or Subsidiary, the Corporation’s independent certified public
accountants, or any executive compensation consultant or other professional
retained by the Corporation to assist in the administration of the Plan.


      4.3.    Authority of Committee. Except as provided below, the Committee has
the exclusive power, authority and discretion to:


     (a)    Designate Participants;


     (b)    Determine the number of shares of Stock to which an Option will
relate;


     (c)    Determine the terms and conditions of any Option granted under
the Plan, including but not limited to, the exercise price, the term of
the Option, any restrictions or limitations on the Option, any schedule
for lapse of restrictions on the exercisability of an Option, and
accelerations or waivers thereof, based in each case on such
considerations as the Committee in its sole discretion determines;


     (d)    Accelerate the vesting of any outstanding Option, based in each
case on such considerations as the Committee in its sole discretion
determines;


3







 


     (e)    Prescribe the form of each Option Agreement, which need not be
identical for each Participant;


     (f)    Decide all other matters that must be determined in connection
with an Option;


     (g)    Establish, adopt or revise any rules and regulations as it may
deem necessary or advisable to administer the Plan;


     (h)    Make all other decisions and determinations that may be
required under the Plan or as the Committee deems necessary or advisable
to administer the Plan; and


     (i)    Amend the Plan or any Option Agreement as provided herein.


      Notwithstanding the above, the Board or the Committee may expressly
delegate to a special committee consisting of one or more officers of the
Corporation some or all of the Committee’s authority set forth above with
respect to those eligible Participants, who at the time of grant are not, and
are not anticipated to become, either (i) Covered Employees or (ii) persons
subject to Section 16 of the 1934 Act, provided that such delegation is in
accordance with Section 157 of the Delaware General Corporation Law.


      4.4.    Decisions Binding. The Committee’s interpretation of the Plan, any
Option granted under the Plan, any Option Agreement and all decisions and
determinations by the Committee with respect to the Plan are final, binding,
and conclusive on all parties.


ARTICLE 5



Shares Subject to the Plan



      5.1.    Number of Shares. Subject to adjustment as provided in Section 9.1,
the aggregate number of shares of Stock reserved and available for Options
shall be 3.6 million shares.


      5.2.    Lapsed Options. To the extent that an Option is canceled,
terminates, expires, is forfeited or lapses for any reason, any shares of Stock
subject to the Option will again be available for the grant of an Option under
the Plan.


      5.3.    Stock Distributed. Any Stock issued pursuant to an Option may
consist, in whole or in part, of authorized and unissued Stock, treasury Stock
or Stock purchased on the open market.


      5.4.    Limitation on Options. Notwithstanding any provision in the Plan to
the contrary (but subject to adjustment as provided in Section 9.1), the
maximum number of shares of Stock with respect to one or more Options that may
be granted during any one calendar year under the Plan to any one Participant
shall be 700,000.


ARTICLE 6



Eligibility



      6.1.    General. Options may be granted only to individuals who are
employees of ABF; provided, however, that no person who is subject to Section
16(a) of the Exchange Act shall be eligible for an Option hereunder (“Eligible
Persons”).


4







 


ARTICLE 7



TERMS OF STOCK OPTION



      7.1.    General. The Committee is authorized to grant Options to
Participants on the following terms and conditions:


     (a)    Exercise Price. The exercise price per share of Stock under an
Option shall be determined by the Committee but shall not be less than
100 percent of the Fair Market Value on the date of grant.


     (b)    Time and Conditions of Exercise. The Committee shall determine
the time or times at which an Option may be exercised in whole or in
part, subject to Section 7.1(e). The Committee also shall determine the
performance or other conditions, if any, that must be satisfied before
all or part of an Option may be exercised. The Committee may waive any
exercise provisions at any time in whole or in part based upon factors as
the Committee may determine in its sole discretion so that the Option
becomes exercisable at an earlier date. Unless the Option Agreement
states otherwise, an Option shall vest in the following manner: 25% per
year commencing on the first anniversary of the date of grant.


     (c)    Payment. The Committee shall determine the methods by which
the exercise price of an Option may be paid, the form of payment,
including, without limitation, cash, shares of Stock, or other property
(including “cashless exercise” arrangements through a broker), and the
methods by which shares of Stock shall be delivered or deemed to be
delivered to Participants; provided, however, that if shares of Stock are
used to pay the exercise price of an Option, such shares must have been
held by the Participant for at least six months.


     (d)    Evidence of Grant. All Options shall be evidenced by a written
Option Agreement between the Corporation and the Participant. The Option
Agreement shall include such provisions, not inconsistent with the Plan,
as may be specified by the Committee.


     (e)    Exercise Term. In no event may any Option be exercisable for
more than ten years from the date of its grant.


     (f)    Termination of Employment.


     (1)    In the event that a Participant’s employment with the
Corporation or any of its Subsidiaries or Parents terminates for
any reason (other than Cause), the Participant (or the
Participant’s estate) shall, unless otherwise provided in the
applicable Option Agreement, be entitled to exercise the
Participant’s Options which have become vested as of the date of
termination for a period of 90 days (one year in the event of death
or Permanent Disability) following the date of termination.


     (2)    In the event that a Participant’s employment with the
Corporation or any of its Subsidiaries or Parents terminates for
any reason, any Options which have not become vested as of the date
of termination (the “Date of Termination”) shall, unless otherwise
provided in the applicable Option Agreement, terminate and be
cancelled without any consideration being paid therefor. In the
event that a Participant’s employment is terminated by the
Corporation, or a Subsidiary or Parent for Cause, all of such
Participant’s Options (including the vested portion) shall, unless
otherwise provided in
the applicable Option Agreement, terminate and be cancelled
without any consideration being paid therefor.


5







 


ARTICLE 8

MISCELLANEOUS



      8.1.    Limits on Transfer. No right or interest of a Participant in any
unexercised Option may be pledged, encumbered, or hypothecated to or in favor
of any party other than the Corporation or a Parent or Subsidiary, or shall be
subject to any lien, obligation, or liability of such Participant to any other
party other than the Corporation or a Parent or Subsidiary. No unexercised or
restricted Option shall be assignable or transferable by a Participant other
than by will or the laws of descent and distribution or, pursuant to a domestic
relations order that would satisfy Section 414(p)(1)(A) of the Code if such
Section applied to an Option under the Plan; provided, however, that the
Committee may (but need not) permit other transfers where the Committee
concludes that such transferability (i) does not result in accelerated
taxation, and (ii) is otherwise appropriate and desirable, taking into account
any factors deemed relevant, including without limitation, state or federal tax
or securities laws applicable to transferable Options.


      8.2.    Beneficiaries. A Participant may, in the manner determined by the
Committee, designate a beneficiary to exercise the rights of the Participant
and to receive any distribution with respect to any Option upon the
Participant’s death. A beneficiary, legal guardian, legal representative, or
other person claiming any rights under the Plan is subject to all terms and
conditions of the Plan and any Option Agreement applicable to the Participant,
except to the extent the Plan and Option Agreement otherwise provide, and to
any additional restrictions deemed necessary or appropriate by the Committee.
If no beneficiary has been designated or survives the Participant, payment
shall be made to the Participant’s estate. Subject to the foregoing, a
beneficiary designation may be changed or revoked by a Participant at any time
provided the change or revocation is filed with the Committee.


      8.3.    Stock Certificates. All Stock issuable under the Plan are subject
to any stop-transfer orders and other restrictions as the Committee deems
necessary or advisable to comply with federal or state securities laws, rules
and regulations and the rules of any national securities exchange or automated
quotation system on which the Stock is listed, quoted, or traded. The Committee
may place legends on any Stock certificate or issue instructions to the
transfer agent to reference restrictions applicable to the Stock.


      8.4.    Termination of Employment. Whether military, government or other
service or other leave of absence shall constitute a termination of employment
shall be determined in each case by the Committee at its discretion, and any
determination by the Committee shall be final and conclusive. A termination of
employment shall not occur (i) in a circumstance in which a Participant
transfers from the Corporation to one of its Parents or Subsidiaries, transfers
from a Parent or Subsidiary to the Corporation, or transfers from one Parent or
Subsidiary to another Parent or Subsidiary, or (ii) in the discretion of the
Committee as specified at or prior to such occurrence, in the case of a
spin-off, sale or other disposition of the Participant’s employer from the
Corporation or any Parent or Subsidiary.


ARTICLE 9



Changes in Capital Structure



      9.1.    General. In the event of a corporate transaction involving the
Corporation (including, without limitation, any stock dividend, stock split,
extraordinary cash dividend, recapitalization, reorganization, merger,
consolidation, split-up, spin-off, combination or exchange of shares), the


6







 



authorization limits under Section 5.1 and 5.4 shall be adjusted
proportionately, and the Committee may adjust Options to preserve the benefits
or potential benefits of the Options. Action by the Committee may include: (i)
adjustment of the number and kind of shares which may be delivered under the
Plan; (ii) adjustment of the number and kind of shares subject to outstanding
Options; (iii) adjustment of the exercise price of outstanding Options; and
(iv) any other adjustments that the Committee determines to be equitable.
Without limiting the foregoing, in the event a stock dividend or stock split is
declared upon the Stock, the authorization limits under Section 5.1 and 5.4
shall be increased proportionately, and the shares of Stock then subject to
each Option shall be increased proportionately without any change in the
aggregate purchase price therefor.



ARTICLE 10



Amendment, Modification and Termination



      10.1.    Amendment, Modification and Termination. The Board or the
Committee may, at any time and from time to time, amend, modify or terminate
the Plan without shareholder approval; provided, however, that the Board or
Committee may condition any amendment or modification on the approval of
shareholders of the Corporation if such approval is necessary or deemed
advisable with respect to tax, securities or other applicable laws, policies or
regulations.


      10.2.    Options Previously Granted. At any time and from time to time, the
Committee may amend, modify or terminate any outstanding Option without
approval of the Participant; provided, however, that, subject to the terms of
the applicable Option Agreement, such amendment, modification or termination
shall not, without the Participant’s consent, reduce or diminish the value of
such Option and provided further that the original term of any Option may not
be extended. No termination, amendment, or modification of the Plan shall
adversely affect any Option previously granted under the Plan, without the
written consent of the Participant.


ARTICLE 11



General Provisions



      11.1.    No Rights to Options. No Participant or any Eligible Person shall
have any claim to be granted any Option under the Plan, and neither the
Corporation nor the Committee is obligated to treat Participants or Eligible
Persons uniformly.


      11.2.    No Stockholder Rights. No Option gives the Participant any of the
rights of a shareholder of the Corporation unless and until shares of Stock are
in fact issued to such person in connection with the exercise of such Option.


      11.3.    Withholding. The Corporation or any Parent or Subsidiary shall
have the authority and the right to deduct or withhold, or require a
Participant to remit to the Corporation, an amount sufficient to satisfy
federal, state, and local taxes (including the Participant’s FICA obligation)
required by law to be withheld with respect to any taxable event arising as a
result of the Plan. With respect to withholding required upon any taxable event
under the Plan, the Committee may, at the time the Option is granted or
thereafter, require or permit that any such withholding requirement be
satisfied, in whole or in part, by withholding from the Option shares of Stock
having a Fair Market Value on the date of withholding equal to the minimum
amount (and not any greater amount) required to be withheld for tax purposes,
all in accordance with such procedures as the Committee establishes.


7







 


      11.4.    No Right to Continued Service. Nothing in the Plan or any Option
Agreement shall interfere with or limit in any way the right of the Corporation
or any Parent or Subsidiary to terminate any Participant’s employment at any
time, nor confer upon any Participant any right to continue as an employee of
the Corporation or any Parent or Subsidiary.


      11.5.    Unfunded Status of Options. The Plan is intended to be an
“unfunded” plan for incentive and deferred compensation. With respect to any
payments not yet made to a Participant pursuant to an Option, nothing contained
in the Plan or any Option Agreement shall give the Participant any rights that
are greater than those of a general creditor of the Corporation or any Parent
or Subsidiary.


      11.6.    Indemnification. To the extent allowable under applicable law,
each member of the Committee shall be indemnified and held harmless by the
Corporation from any loss, cost, liability, or expense that may be imposed upon
or reasonably incurred by such member in connection with or resulting from any
claim, action, suit, or proceeding to which such member may be a party or in
which he may be involved by reason of any action or failure to act under the
Plan and against and from any and all amounts paid by such member in
satisfaction of judgment in such action, suit, or proceeding against him
provided he gives the Corporation an opportunity, at its own expense, to handle
and defend the same before he undertakes to handle and defend it on his own
behalf. The foregoing right of indemnification shall not be exclusive of any
other rights of indemnification to which such persons may be entitled under the
Corporation’s Certificate of Incorporation or Bylaws, as a matter of law, or
otherwise, or any power that the Corporation may have to indemnify them or hold
them harmless.


      11.7.    Relationship to Other Benefits. No payment under the Plan shall be
taken into account in determining any benefits under any pension, retirement,
savings, profit sharing, group insurance, welfare or benefit plan of the
Corporation or any Parent or Subsidiary unless provided otherwise in such other
plan.


      11.8.    Expenses. The expenses of administering the Plan shall be borne by
the Corporation and its Parents or Subsidiaries.


      11.9.    Titles and Headings. The titles and headings of the Sections in
the Plan are for convenience of reference only, and in the event of any
conflict, the text of the Plan, rather than such titles or headings, shall
control.


      11.10.    Gender and Number. Except where otherwise indicated by the
context, any masculine term used herein also shall include the feminine; the
plural shall include the singular and the singular shall include the plural.


      11.11.    Fractional Shares. No fractional shares of Stock shall be issued
and the Committee shall determine, in its discretion, whether cash shall be
given in lieu of fractional shares or whether such fractional shares shall be
eliminated by rounding up.


      11.12.    Government and Other Regulations. The obligation of the
Corporation to make payment of Options in Stock or otherwise shall be subject
to all applicable laws, rules, and regulations, and to such approvals by
government agencies as may be required. The Corporation shall be under no
obligation to register under the 1933 Act, or any state securities act, any of
the shares of Stock issued in connection with the Plan. The shares issued in
connection with the Plan may in certain circumstances be exempt from
registration under the 1933 Act, and the Corporation may restrict the transfer
of such shares in such manner as it deems advisable to ensure the availability
of any such exemption.


8







 


      11.13.    Governing Law. To the extent not governed by federal law, the
Plan and all Option Agreements shall be construed in accordance with and
governed by the laws of the State of Delaware.


      11.14.    Additional Provisions. Each Option Agreement may contain such
other terms and conditions as the Committee may determine; provided that such
other terms and conditions are not inconsistent with the provisions of this
Plan.




9