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                                                                    EXHIBIT 10.2

                               IMPACT INNOVATIONS


                           KEY EMPLOYEE INCENTIVE PLAN






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                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                      PAGE

<S>      <C>                                                                                          <C>
SS.1.    PURPOSE.........................................................................................1

SS.2.    DEFINITIONS.....................................................................................1
         2.1      Board..................................................................................1
         2.2      Code...................................................................................1
         2.3      Company................................................................................1
         2.4      Eligible Employee......................................................................2
         2.5      Exchange Act...........................................................................2
         2.6      Fair Market Value......................................................................2
         2.7      Initial Public Offering................................................................3
         2.8      1933 Act...............................................................................3
         2.9      Option.................................................................................3
         2.10     Option Agreement.......................................................................3
         2.11     Option Price...........................................................................3
         2.12     Plan...................................................................................3
         2.13     Stock..................................................................................3

SS.3.    SHARES RESERVED UNDER THE PLAN..................................................................4
SS.4.    EFFECTIVE DATE..................................................................................5
SS.5.    ADMINISTRATION..................................................................................5
SS.6.    ELIGIBILITY.....................................................................................5
SS.7.    GRANT OF OPTIONS................................................................................5
SS.8.    OPTION PRICE....................................................................................7
SS.9.    EXERCISE PERIOD.................................................................................7
SS.10.   NONTRANSFERABILITY..............................................................................7
SS.11.   SECURITIES REGISTRATION.........................................................................8
SS.12.   LIFE OF PLAN....................................................................................9
SS.13.   ADJUSTMENT......................................................................................9
SS.14.   CHANGE OF CONTROL AND CERTAIN OTHER EVENTS.....................................................10
         14.1     Change of Control Events..............................................................10
         14.2     Accelerated Vesting...................................................................10
         14.3     Conversion of Options.................................................................10
         14.4     Notice................................................................................11
         14.5     Disposition of Stock Following Change of Control of Company...........................11
         14.6     Fractional Shares.....................................................................12

SS.15    AMENDMENT OR TERMINATION.......................................................................12

SS.16.   MISCELLANEOUS..................................................................................12
         16.1     No Stockholder Rights.................................................................12
         16.2     No Contract of Employment.............................................................13
         16.3     Other Conditions......................................................................13
         16.4     Withholding...........................................................................14
         16.5     Construction..........................................................................14
         16.6     No "Incentive Stock Option" Treatment.................................................14
         16.7     Not Rule 16b-3 Plan...................................................................14
         16.8     References............................................................................14
</TABLE>

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                               IMPACT INNOVATIONS
                           KEY EMPLOYEE INCENTIVE PLAN
                                      SS.1.

                                     PURPOSE

         The purpose of this Plan is to provide Eligible Employees with an
opportunity to share in the value created in the Company and its subsidiaries,
to assist the Company and its subsidiaries in attracting and retaining
outstanding personnel, to align the interests of Eligible Employees with the
interests of Medaphis Corporation and its stockholders, and to provide incentive
to Eligible Employees and to reward Eligible Employees for the performance
required to complete a successful Initial Public Offering or other Change of
Control of the Company.
                                      SS.2.

                                   DEFINITIONS

         Each capitalized term set forth in this ss.2 shall have the meaning set
forth opposite such capitalized term for purposes of this Plan and, for purposes
of definitions, the singular shall include the plural and the plural shall
include the singular.

         2.1      Board - means the Board of Directors of the Company.

         2.2      Code - means the Internal Revenue Code of 1986, as amended.

         2.3      Company - means Impact Innovations Holdings, Inc., a Delaware
corporation, and any successor to such corporation.


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         2.4      Eligible Employee - means any person who is an employee of the
Company, or of any direct and indirect subsidiary of the Company, including
without limitation any employee of Impact Innovations Group, Inc., a Delaware
corporation, or Impact Innovations Government Solutions, Inc., a Maryland
corporation. Eligible Employees shall not include (i) any officer or director of
Medaphis Corporation, (ii) any beneficial owner, directly or indirectly, of more
than 10% of the outstanding stock of Medaphis Corporation or (iii) any officer
or director or 10% beneficial owner of stock of Medaphis Corporation who is
subject to the provisions of Section 16 of the Exchange Act with respect to
Medaphis Corporation. 

         2.5      Exchange Act -means the Securities Exchange Act of 1934, as
amended.

         2.6      Fair Market Value - means, for any date prior to an Initial
Public Offering or other Change of Control, the current valuation of a share of
Stock as provided by an independent investment banking firm selected by the
Board and updated no less often than quarterly. For any date following an
Initial Public Offering, Fair Market Value means (i) the closing price for such
date for a share of Stock as reported by The Wall Street Journal under the New
York Stock Exchange Composite Transactions quotation system (or under any
successor quotation system) or, (ii) if the Stock is not traded on the New York
Stock Exchange, as reported for such date by The Wall Street Journal under the
Nasdaq National Market System quotation system or under the quotation system
under which such closing price is reported or, (iii) if The Wall Street Journal
does not report such closing price, such closing price as reported for such date
by a newspaper or trade journal selected by the Board or, (iv) if no such
closing price is available for such date, such closing price as so reported or
quoted in accordance with ss.2.6(i), (ii) or (iii) for the immediately preceding
business day,


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or, (v) if no newspaper or trade journal reports such closing price or if no
such price quotation is available, the price that the Board acting in good faith
determines through any reasonable valuation method that a share of Stock might
change hands between a willing buyer and a willing seller, neither being under
any compulsion to buy or sell and both having reasonable knowledge of the
relevant facts.

         2.7 Initial Public Offering - means the first offering for sale by the
Company to the public of securities of the same class as any shares subject to
an Option granted hereunder pursuant to a registration statement filed in
accordance with the 1933 Act or any comparable law then in effect (other than on
Forms S-4, S-8 or any other form which does not permit registration of
securities by selling stockholders for sale to the public for cash), and the
effective date of any such Initial Public Offering shall be the first day on
which the securities covered thereby may lawfully be offered and sold pursuant
to such registration statement.

         2.8      1933 Act - means the Securities Act of 1933, as amended.

         2.9      Option - means an option granted under this Plan to purchase
Stock.

         2.10     Option Agreement - means the written agreement that sets forth
the terms of an Option granted to an Eligible Employee under this Plan.

         2.11     Option Price - means the price that shall be paid to purchase
one share of Stock upon the exercise of the Option granted under this Plan.

         2.12     Plan - means this Impact Innovations Key Employee Incentive
Plan.

         2.13     Stock - means the common stock of the Company, par value $.01
per share.


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                                      SS.3.

                         SHARES RESERVED UNDER THE PLAN

         There shall be 1,500,000 shares of Stock reserved for issuance under
this Plan, and such shares of Stock shall be reserved to the extent that the
Company deems appropriate from authorized but unissued shares of Stock and from
shares of Stock that have been repurchased by the Company. Furthermore, any
shares of Stock subject to an Option that remain unissued after the cancellation
or expiration of such Option thereafter shall again become available for use
under this Plan. The total number of shares of Stock reserved for issuance under
this Plan (the "Reserved Stock") is intended to represent Fifteen Percent (15%)
of the Company's issued and outstanding Stock, on a fully-diluted basis (i.e.,
treating all of the shares of Reserved Stock as issued and outstanding) (the
"Outstanding Shares"). If, immediately prior to the occurrence of a Change of
Control event described in ss.14.1, the total number of shares of Reserved Stock
exceeds Fifteen Percent (15%) of the number of Outstanding Shares, then,
effective no later than the last business day before the closing date of such
Change of Control, the Board shall adjust the capital structure of the Company
by causing the Company's Restated Certificate of Incorporation to be duly
amended to increase the aggregate number of shares of Stock that the Company is
authorized to issue, and by declaring a stock split to be effected in the form
of a stock dividend on the outstanding shares of Stock held by the Company's
sole stockholder, appropriate so that the number of shares of Reserved Stock
shall, as a result, be equal to, and shall not exceed, Fifteen Percent (15%) of
the number of Outstanding Shares. An adjustment to the capital structure of the
Company made pursuant to this ss.3 shall not constitute grounds under ss.13 for
adjustment of the number of shares of Stock reserved under this ss.3, the number
of shares of Stock subject to Options


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granted under this Plan or the Option Price of such Options.

                                      SS.4.

                                 EFFECTIVE DATE

         The effective date of this Plan shall be July 28, 1998.

                                      SS.5.

                                 ADMINISTRATION

         The Plan shall be administered by the Board. The Board acting in its
absolute discretion shall exercise such power and take such action as expressly
called for under this Plan and, further, the Board shall have the power to
interpret this Plan and to take such other action in the administration and
operation of this Plan as the Board deems equitable under the circumstances,
which action shall be binding on the Company, on each affected Eligible Employee
and on each other person directly or indirectly affected by such action. No
member of the Board shall be liable for any action or determination made in good
faith with respect to this Plan or any Option granted under this Plan.

                                      SS.6.

                                   ELIGIBILITY

         Only Eligible Employees shall be eligible for the grant of Options
under this Plan.

                                      SS.7.

                                GRANT OF OPTIONS

         The Board, acting in its absolute discretion, shall have the right to
grant Options to Eligible Employees under this Plan. Each grant of an Option
shall be evidenced by an Option Agreement, and each Option Agreement shall
incorporate such terms and conditions as the Board, acting in its absolute
discretion, deems consistent with the terms of this Plan,


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provided that (unless the Board decides otherwise with respect to any Option
grant) each Option Agreement shall provide that if the Eligible Employee ceases
to be an employee of the Company or of any parent or subsidiary of the Company
(other than as a result of transaction contemplated by ss.14 or for reasons
other than death or disability (within the meaning of Code Section 22(e)(3))
before the Option is fully vested, any portion of the Option which is not fully
vested on the date of the such termination of employment shall be automatically
forfeited as of such employment termination date, and the vested portion of the
Option which is unexercised shall expire, terminate and become unexercisable no
later than the earlier to occur of: (i) the expiration of three (3) months from
the date on which the Eligible Employee ceases to be an employee of the Company
or any parent or subsidiary of the Company, or (ii) the stated term of such
Option.

         If an Eligible Employee ceases to be an employee of the Company or of
any parent or subsidiary of the Company as a result of death or disability
(within the meaning of Code Section 22(e)(3)) before an Option issued hereunder
is fully vested, any portion of the Option which is not fully vested on the date
of such termination of employment shall become fully vested and immediately
exercisable as of such employment termination date, and any such Options which
are unexercised shall expire no later than the earlier to occur of: (i) six (6)
months from the date the Eligible Employee ceases to be employed by the Company
or any parent or subsidiary of the Company for reasons of death or disability
(within the meaning of Code Section 22(e)(3)) or (ii) the stated term of such
Option. Notwithstanding any provision hereof or of any Option Agreement to the
contrary, any Option that becomes exercisable hereunder as a result of the death
or disability of an Eligible Employee (within the meaning of Code Section
22(e)(3)) prior to either (i) a Change of Control event described


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in ss.14.1 or (ii) the conversion of Options described in ss.14.3, and which is
exercised prior to such Change of Control event or conversion of Options, shall,
at the Company's sole discretion, entitle the holder to receive in lieu of Stock
a cash payment in an amount equal to the "in the money" value of such Option
upon exercise (i.e., the difference between the Fair Market Value on the date of
exercise and the Fair Market Value on the date of grant, multiplied by the
number of shares of Stock otherwise purchaseable upon exercise of the Option).

                                      SS.8.

                                  OPTION PRICE

         The Option Price for each share of Stock subject to an Option will
equal the Fair Market Value of a share of Stock on the date such Option is
granted.

                                      SS.9.

                                 EXERCISE PERIOD

         Each Option granted under this Plan shall be exercisable in whole or in
part at such time as set forth in the related Option Agreement, but no Option
Agreement shall make an Option exercisable after the earlier of:

         (a)      the date such Option is exercised in full or forfeited, or

         (b)      the date which is the tenth (10th) anniversary of the date
                  such Option is granted.

                                     SS.10.

                               NONTRANSFERABILITY

         No Option granted under this Plan shall be transferable by an Eligible
Employee other than by will or by the laws of descent and distribution at his or
her death, and an Option


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shall be exercisable during the Eligible Employee's lifetime only by the
Eligible Employee or, if the Eligible Employee is determined under applicable
law to be incompetent to act on his or her own behalf, by the person authorized
under such applicable law to act on the Eligible Employee's behalf. The Company
shall treat any person to whom an Option is transferred by will or by the laws
of descent and distribution the same as an Eligible Employee for the purposes of
exercising such Option.

                                     SS.11.

                             SECURITIES REGISTRATION

         Each Option Agreement shall provide that, upon the receipt of shares of
Stock as a result of the exercise of an Option, the Eligible Employee shall, if
so requested by the Company, hold such shares of Stock for investment and not
with a view to resale or distribution to the public and, if so requested by the
Company, shall deliver to the Company a written statement satisfactory to the
Company to that effect. Each Option Agreement also shall provide that, if so
requested by the Company, the Eligible Employee shall make a written
representation to the Company that he or she will not sell or offer to sell any
of such Stock unless a registration statement shall be in effect with respect to
such stock under the 1933 Act and any applicable state securities law or unless
he or she shall have furnished to the Company an opinion, in form and substance
satisfactory to the Company, of legal counsel acceptable to the Company, that
such registration is not required. Certificates representing the Stock
transferred upon the exercise of an Option granted under this Plan may at the
discretion of the Company bear a legend to the effect that such Stock has not
been registered under the 1933 Act or any applicable state securities law and
that such stock may not be sold or offered for sale in the absence of an
effective registration statement as to such


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Stock under the 1933 Act and any applicable state securities law or an opinion,
in form and substance satisfactory to the Company, of legal counsel acceptable
to the Company, that such registration is not required.

                                     SS.12.

                                  LIFE OF PLAN

         No Option shall be granted under this Plan on or after the earlier of

         (a)      the tenth (10th) anniversary of the effective date of this
                  Plan (as determined under ss.4) in which event this Plan
                  thereafter shall continue in effect until all outstanding
                  Options have been exercised in full or no longer are
                  exercisable, or

         (b)      the date on which all of the Stock reserved under ss.3 has (as
                  a result of the exercise of Options granted under this Plan)
                  been issued or no longer is available for use under this Plan,
                  in which event this Plan also shall terminate on such date.

                                     SS.13.

                                   ADJUSTMENT

         The number of shares of Stock reserved under ss.3, the number of shares
of Stock subject to Options granted under this Plan and the Option Price of such
Options may be adjusted by the Board in an equitable manner to reflect any
change in the capitalization of the Company, except for any adjustment to the
capital structure of the Company made pursuant to ss.3, including, but not
limited to, such changes as stock dividends or stock splits, a subdivision or
combination of the stock, a reclassification of the Stock, a merger or
consolidation of the Company or any like changes in the Stock or in the value of
a share of


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Stock. If any adjustment under this ss.13 would create a fractional share of
Stock or a right to acquire a fractional share of Stock such fractional shares
shall be disregarded and the number of shares of Stock reserved under this Plan
and the number subject to any Options granted under this Plan shall be the next
lower number of shares of Stock, rounding all fractions downward. Any adjustment
made under this ss.13 by the Board shall be conclusive and binding on affected
persons.

                                     SS.14.

                   CHANGE OF CONTROL AND CERTAIN OTHER EVENTS

         14.1 Change of Control Events. The following events shall constitute
"Change of Control" events for purposes of this Plan: (1) the acquisition of the
Stock such that Medaphis Corporation or an entity controlled by or under common
control with Medaphis Corporation does not own, directly or indirectly, more
than fifty percent (50%) of the voting stock of the Company; (2) the sale of
substantially all of the assets of the Company and its subsidiaries to an entity
other than an entity controlled by or under common control with Medaphis
Corporation; (3) the merger, reorganization, or consolidation of the Company
other than in a transaction in which Medaphis Corporation or an entity
controlled by or under common control with Medaphis Corporation retains,
directly or indirectly, more than a fifty percent (50%) interest in the
surviving corporation; or (4) an Initial Public Offering.

         14.2 Accelerated Vesting. Upon the consummation of a Change of Control
event described in ss.14.1, all outstanding Options under this Plan will become
fully vested and immediately exercisable.

         14.3 Conversion of Options. If a Change of Control event does not occur
prior to the third (3rd) anniversary of the effective date of the Plan, any
Options outstanding as of


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the third (3rd) anniversary of the effective date of the Plan will be converted
into options under the Medaphis Corporation Non-Qualified Stock Option Plan for
Non-Executive Employees, as amended, or any successor plan, to purchase a number
of shares of Medaphis Corporation common stock determined by the Board. Any
Option converted into an option to purchase Medaphis Corporation stock pursuant
to this ss.14.3 shall have an exercise price equal to the fair market value of
Medaphis Corporation common stock as of the original date of grant of the
converted Option, as determined by the Board. If a Change of Control event
occurs prior to the third (3rd) anniversary of the effective date of the Plan,
then upon such occurrence this ss.14.3 will immediately terminate and will be of
no further force or effect.

         14.4 Notice. Subject to compliance with applicable federal and state
securities laws, the Board will undertake to provide applicable Eligible
Employees with reasonable notice of any Change of Control event described in
ss.14.1 prior to the occurrence of such Change of Control event.

         14.5 Disposition of Stock Following Change of Control of Company. In
the event of a Change of Control event described in ss.14.1(1), (2), or (3),
each Eligible Employee electing to exercise any outstanding Option will have the
right in connection with the closing of such Change of Control event either to
(1) sell to the Company or the surviving or resulting corporation, the shares of
Stock which the Eligible Employee received upon exercise of such Option at a
cash price per share equivalent to the Fair Market Value of the Stock as of the
date of such Change of Control event, or (2) receive the number and class of
shares of stock or other securities or any other property to which the terms of
the agreement of merger, consolidation, or other reorganization would entitle
the Eligible Employee to receive as the holder of record of the number of shares
of Stock which the Eligible Employee


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received upon exercise of such Option; provided, however, that in the event a
Change of Control event contemplated by this ss.14.5 involves a merger to be
accounted for under the "pooling of interests" accounting method, then the Board
shall have the authority hereunder to modify the rights of an Eligible Employee
under this ss.14.5 to the extent necessary in order to preserve the "pooling of
interests" accounting treatment for such merger.

         14.6 Fractional Shares. No Change of Control event or conversion of
options contemplated by this ss.14 shall create a right to acquire a fractional
share of Stock or a fractional share of Medaphis Corporation common stock, and
any such fractional share shall be forfeited by the Eligible Employee.

                                     SS.15.

                            AMENDMENT OR TERMINATION

         This Plan may be amended by the Board from time to time to the extent
that the Board deems necessary or appropriate. The Board also may suspend the
granting of Options under this Plan at any time and may terminate this Plan at
any time; provided, however, the Board shall not have the right unilaterally to
modify, amend or cancel any Option granted before such modification, amendment
or cancellation unless the Eligible Employee consents in writing to such
modification, amendment or cancellation.

                                     SS.16.

                                  MISCELLANEOUS

         16.1 No Stockholder Rights. No Eligible Employee shall have any rights
as a stockholder of the Company as a result of the grant of an Option to him or
to her under the Plan or his or her exercise of such Option pending the actual
delivery of Stock subject to such Option to such Eligible Employee.


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         16.2 No Contract of Employment. The grant of an Option to an Eligible
Employee under this Plan shall not constitute a contract of employment and shall
not confer on an Eligible Employee any rights upon his or her termination of
employment in addition to those rights, if any, expressly set forth in the
Option Agreement which evidences his or her Option.

         16.3 Other Conditions. Notwithstanding anything contained herein or in
any Option Agreement to the contrary, no purported exercise of any Option shall
be effective without the written approval of the Company, which may be withheld
to the extent that the exercise, either individually or in the aggregate with
the exercise of other previously exercised Options and/or offers and sales
pursuant to any prior or contemplated offering of securities, would, in the
opinion of the Company's counsel, result in (i) the violation of any statute,
law, regulation or rule applicable to the Company, its parent or any of its
subsidiaries, including without limitation, any federal or state securities law;
(ii) a default under the Credit Agreement dated as of February 13, 1998 among
Medaphis Corporation, various financial institutions from time to time parties
thereto, DLJ Capital Funding, Inc., as Syndication Agent, and Wachovia Bank,
N.A., as Administrative Agent (as it may be amended from time to time, the
"Credit Agreement"), under any agreement entered into pursuant to the Credit
Agreement, or under any similar agreement entered into in substitution for or
replacement of the Credit Agreement; or (iii) a default under the Indenture with
respect to Medaphis Corporation's $175,000,000 of 9 1/2% Senior Notes due
February 15, 2005, dated as of February 20, 1998 among Medaphis Corporation, the
Subsidiary Guarantors named therein and State Street Bank and Trust Company, as
Trustee (as it may be amended from time to time, the "Indenture"), under any
agreement entered into pursuant to the Indenture, or under any similar agreement
entered into in substitution for or replacement of the


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Indenture. Each Option Agreement may require that an Eligible Employee (as a
condition to the exercise of an Option) enter into any agreement or make such
representations requested by the Company, including any agreement which
restricts the transfer of Stock acquired pursuant to the exercise of such Option
and provides for the repurchase of such Stock by the Company under certain
circumstances.

         16.4 Withholding. The exercise of any Option granted under this Plan
shall constitute an Eligible Employee's full and complete consent to whatever
action the Board deems necessary to satisfy the federal and state tax
withholding requirements, if any, which the Board acting in its discretion deems
applicable to such exercise.

         16.5 Construction. This Plan shall be construed under Delaware law.

         16.6 No "Incentive Stock Option" Treatment. No Option granted under
this Plan shall be treated as an "incentive stock option" within the meaning of
ss.422 of the Code.

         16.7 Not Rule 16b-3 Plan. This Plan is not intended to satisfy and
will not satisfy the conditions set forth in Rule 16b-3 under ss.16 of the
Exchange Act.

         16.8 References. Any references in this Plan to a section (ss.) shall
be a section (ss.) of this Plan unless otherwise specified in such reference.

         IN WITNESS WHEREOF, the Company has caused its duly authorized officer
to execute this Plan as of the 28th day of July, 1998 to evidence adoption of
this Plan.

                                        IMPACT INNOVATIONS HOLDINGS, INC.

                                        By: /s/ RANDOLPH L. M. HUTTO
                                           -------------------------------------
                                            Randolph L. M. Hutto
                                            Executive Vice President,
                                            General Counsel and Secretary


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