(b) Bonus. With respect to calendar year 2004, the bonus program and paymentpotential shall remain as previously established by the Company, provided, however, that theCompany may adjust such factors as necessary as a result of the transaction. With respect tocalendar year 2005 and forward, Executive shall be eligible for an annual bonus, the target ofwhich is 60% of his Base Salary, the amount of which is to be determined by the Company inaccordance with the Bonus Plan in effect at that time and payable at such time as bonuses are paidto employees generally so long as Executive remains in the employ of the Company on the applicablepayment date.          (c) WebMD Stock Option. Executive shall be granted, on the Effective Date, anonqualified option (the “WebMD Option”) to purchase 125,000 shares of WebMD common stock,par value $0.001 (the “Common Stock”), at an exercise price equal to the closing price ofthe Common Stock on the Effective Date. Subject to Section 4.4, the WebMD Option shall vest andbecome exercisable, subject to Executive’s continued employment on the applicable vesting dates, inequal annual installments of 25% commencing on the first anniversary of the date of grant of theWebMD Option. The WebMD Option shall be granted pursuant to and subject to the WebMD’s stockoption plan and a stock option agreement to be entered into between the WebMD and Executive, whichagreement shall be in substantially the same form provided by the WebMD to its employees generally.The WebMD Option will have a term of ten (10) years subject to earlier expiration in the event ofthe termination of Executive’s employment, as set forth in the applicable stock option agreement.          2.2 Benefits. During the Employment Period (as defined below), Executive shall beentitled to participate, on the same basis and at the same level as other similarly situatedexecutives of the Company, in any group insurance, hospitalization, medical, health and accident,disability, fringe benefit and tax-qualified retirement plans or programs of the Company nowexisting or hereafter established to the extent that he is eligible under the general provisionsthereof. Executive shall be entitled to vacation time consistent with the Company’s policies butno less than 25 days. The date or dates of such vacations shall be selected by Executive havingreasonable regard to the business needs of the Company.          2.3 Expenses. Pursuant to the Company’s customary policies in force at the time ofpayment, Executive shall be promptly reimbursed, against presentation of vouchers or receiptstherefor, for all authorized expenses properly and reasonably incurred by Executive on behalf ofthe Company or any of its Affiliates in the performance of Executive’s duties hereunder.          3. Employment Period. Executive’s employment under this Agreement shall commence asof the Effective Date, and shall terminate on the fifth anniversary thereof, unless terminatedearlier pursuant to Section 4 (the “Initial Employment Period”). Unless written notice ofeither party’s desire to terminate this Agreement has been given to the other party prior to theexpiration of the Initial Employment Period (or any one-month renewal thereof contemplated by thissentence), the term of this Agreement shall be automatically renewed for successive one-monthperiods (as it may be extended, the “Employment Period”).          4. Termination and Forfeiture of Payments and Benefits.          4.1 Termination by the Company for Cause. Executive’s employment with the Company maybe terminated at any time by the Company for Cause. Upon such a termination, the Company shallhave no obligation to Executive pursuant to this Agreement other than the payment of Executive’searned and unpaid Base Salary to the effective date of such termination plus any accrued, butunused vacation.          For purposes of this Agreement, the term “Cause” shall mean any of the following: (i) Executive’s willful failure to perform his material duties,following written notice from the Company detailing the specific acts and athirty (30) day period of time to remedy such failure;  (ii) Executive engaging in misconduct, negligence, violence orthreat of violence that is injurious to the Company or any of its Affiliates;
2

 
 (iii) Executive’s material breach of a policy of the Company or anyof its Affiliates, which breach is not remedied (if susceptible to remedy)following written notice by the Board of Directors of the Company or itsdesignee detailing the specific breach and a thirty (30) day period of time toremedy such breach;  (iv) Any material breach by Executive of this Agreement, whichbreach is not remedied (if susceptible to remedy) following written notice bythe Board of Directors of the Company or its designee detailing the specificbreach and a thirty (30) day period of time to remedy such breach; or  (v) Executive’s commission of a felony in respect of a dishonest orfraudulent act or other crime of moral turpitude involving the Company or anyof its Affiliates, or which is likely to reflect negatively upon the Company orany of its Affiliates or otherwise impair or impede its operations.          4.2 Permanent Disability. If during his employment with the Company, (i) Executiveshall become ill, mentally or physically disabled, or otherwise incapacitated so as to be unableregularly to perform the duties of his position for a period in excess of 90 consecutive days ormore than 180 days in any consecutive 12-month period, or (ii) a qualified independent physicianjointly selected by the Company and Executive, both of whom shall act reasonably and in good faith,determines that Executive is mentally or physically disabled so as to be unable to regularlyperform the duties of his position and such condition is expected to be of a permanent duration (a“Permanent Disability”), then the Company shall have the right to terminate Executive’semployment with the Company upon written notice to Executive. Upon such a termination, the Companyshall have no obligation to Executive other than (i) the payment of Executive’s earned and unpaidBase Salary to the effective date of such termination and (ii) accrued, but unused vacation, and(iii) any earned but unpaid bonus from any prior fiscal year payable at such time as payments undersuch plan are made generally.          4.3 Death. Executive’s employment with the Company shall be deemed terminated by theCompany upon the death of Executive and the Company shall have no obligation to Executive orExecutive’s estate other than the payment of Executive’s earned and unpaid Base Salary to theeffective date of such termination. The Company will also pay to Executive any earned but unpaidbonus from any prior fiscal year payable at such time as payments under such plan are madegenerally plus any accrued, but unused vacation.          4.4 Termination by the Company Without Cause. Executive’s employment with the Companymay be terminated at any time by the Company without Cause. Nonrenewal of this Agreement by theCompany pursuant to Section 3 above shall be treated as termination without Cause. In the eventthat Executive’s employment with the Company is terminated by the Company without Cause, theCompany shall have no obligation to Executive other than (subject to Executive’s continuedcompliance with his obligations under this Agreement): (i) the payment of Executive’s Base Salarythrough the effective date of such termination, and (ii) a continuation of Executive’s Base Salary(at the rate in effect at the time of such termination) for a period commencing on the date oftermination and ending 12 months from the date of termination (the “Severance Period”), (iii) anyearned but unpaid bonus from any prior fiscal year payable at such time as payments under such planare made generally, (iv) the WebMD Option, to the extent unvested as of the date of termination,shall remain outstanding and continue to vest until the next vesting date applicable to the WebMDOption and the post termination exercise period with respect to such portion shall commence on suchvesting date, (v) a pro rata bonus payment for the year of termination, with such amount determinedin accordance with the plan as if Executive had been an employee at the end of the plan period,provided such termination has occurred more than six (6) months into the fiscal year, payable atsuch time as payments under such plan are made generally, and (vi) any accrued, but unusedvacation.. In addition, the Company will pay the portion of the COBRA premiums it generally paysfor active employees with similar coverage through the earlier of (i) the Severance Period and (ii)the date Executive becomes eligible for comparable coverage with a subsequent employer.          4.5 Termination by Executive for Good Reason. (a) Executive’s employment with theCompany may be terminated at any time by Executive for Good Reason (as defined below). In the eventthat Executive terminates his employment with the Company for Good Reason, Executive shall beentitled to the payments and COBRA benefits specified in Section 4.4 above.
3

 
          (b) For purposes of this Agreement, the term “Good Reason” shall mean any of thefollowing conditions or events which condition(s) or event(s) remain in effect thirty (30) daysafter written notice is provided by Executive to the Company detailing such condition or event:     (i) Any material breach by the Company of this Agreement;     (ii) The relocation of Executive’s principal place of work to a location more than 50miles from the location of Executive’s principal place of work as in effect on the datehereof; or     (iii) Any reduction in Executive’s Base Salary or any material diminution inExecutive’s duties.          4.6 Termination by Executive Without Good Reason. Executive may voluntarily resignfrom his employment with the Company without Good Reason, provided that Executive shallprovide the Company with thirty (30) days’ advance written notice (which notice requirement may bewaived, in whole or in part, by the Company in its sole discretion) of his intent to terminate.Upon such a termination, the Company shall have no obligation other than the payment of Executive’searned but unpaid compensation to the effective date of such termination plus any accrued, butunused vacation.          4.7 Release of Claims. As a condition to receiving the payments set forth in Section4.4 or Section 4.5 upon a termination by the Company without Cause or by Executive for Good Reason,Executive shall be required to execute and not revoke a waiver and release of claims, in a formprovided by the Company, attached hereto as Exhibit A.          5. Covenants.          5.1 Confidentiality.          (a) Proprietary Information. Executive understands and acknowledges that, during thecourse of his employment with the Company, Executive shall be granted and has been granted accessto valuable information relating to the business of the Company and its Affiliates that providesthe Company and its Affiliates with a competitive advantage (or that could be used to the Company’sdisadvantage by a Competitive Business (as defined herein)), which is not generally known by, noreasily learned or determined by, persons outside the Company (collectively referred to herein as“Proprietary Information”) including, but not limited to: (a) specifications, manuals,software in various stages of development, and other technical data; (b) customer and prospectlists, details of agreements and communications with customers and prospects, and other customerinformation; (c) sales plans and projections, product pricing information, protocols, acquisition,expansion, marketing, financial and other business information and existing and future products andbusiness plans and strategies of the Company; (d) sales proposals, demonstrations systems, salesmaterial; (e) research and development; (f) software systems, computer programs and source codes;(g) sources of supply; (h) identity of specialized consultants and contractors and ProprietaryInformation developed by them for the Company; (i) purchasing, operating and other cost data; (j)special customer needs, cost and pricing data; (k) clinical procedures and guidelines; and (l)employee information (including, but not limited to, personnel, payroll, compensation and benefitdata and plans), including all such information recorded in manuals, memoranda, projections,reports, minutes, plans, drawings, sketches, designs, formula books, data, specifications, softwareprograms and records, whether or not legended or otherwise identified by the Company as ProprietaryInformation, as well as such information that is the subject of meetings and discussions withrespect to such Proprietary Information and not recorded. Proprietary Information shall notinclude such information that Executive can demonstrate is generally available to the public (otherthan as a result of a disclosure by Executive or a third party).          (b) Duty of Confidentiality. Executive agrees at all times, both during and afterExecutive’s employment with the Company, to hold all of the Company’s Proprietary Information in afiduciary capacity for the benefit of the Company and its Affiliates and to safeguard all suchProprietary Information. Executive also agrees that he will not, directly or indirectly, discloseany such Proprietary Information to, or use such Proprietary Information for the benefit of, anythird person or entity outside the Company, except as may be necessary in the good faithperformance of Executive’s duties for the Company. Executive further agrees that, in addition to
4

 
enforcing this restriction, the Company may have other rights and remedies under the commonlaw or applicable statutory laws relating to the protection of trade secrets. Notwithstandinganything in this Agreement to the contrary, Executive understands that he may disclose theCompany’s Proprietary Information to the extent required by applicable laws or governmentalregulations or judicial or regulatory process or to enforce the terms of this Agreement,provided that Executive gives the Company prompt notice of any and all such requests fordisclosure so that it has ample opportunity to take all necessary or desired action, to avoiddisclosure.          (c) Investors, Other Third-Parties, and Goodwill. Executive acknowledges that allthird-parties that Executive services or proposes to service while employed by the Company aredoing business with the Company and not with Executive personally, and that, in the course ofdealing with such third-parties, the Company establishes goodwill with respect to each suchthird-party that is created and maintained at the Company’s expense (“Third-PartyGoodwill”). Executive also acknowledges that, by virtue of his employment with the Company, hehas gained or will gain knowledge of the business needs of, and other information concerning,third-parties, and that Executive will inevitably have to draw on such information were Executiveto solicit or service any of the third-parties on his own behalf or on behalf of a CompetitiveBusiness.          (d) Nondisparagement. Executive agrees that at no time during his employment by theCompany or thereafter, shall he make, or cause or assist any other person to make, any publicstatement or other public communication (other than for the purpose of enforcing this Agreement) toany third party which impugns or attacks, or is otherwise critical of, the reputation, business orcharacter of the Company or any of its Affiliates or any of their respective directors, officers oremployees.          5.2 Restrictions on Solicitation. (a) During the period beginning on the EffectiveDate and ending on the first anniversary of the date of termination of Executive’s employment bythe Company or Executive for any reason whatsoever (the “Restricted Period”), Executiveshall not, without the prior written approval of the Company, directly or indirectly, solicit,induce or attempt to induce employees, agents or consultants of the Company or any of itsAffiliates to do anything from which Executive is restricted by reason of this Agreement fromdoing, nor shall Executive hire or aid others to hire any individuals who are or were at anytimewithin one year prior to the date of termination, employees, agents or consultants of the Companyor any of its Affiliates, or solicit or induce or aid others to solicit or induce any suchindividuals to terminate their employment with the Company or any of its Affiliates and/or to enterinto an employment, agency or consultancy relationship with Executive or any other person or entitywith whom Executive is affiliated.          (b) During the Restricted Period, Executive shall not, directly or indirectly, without theprior written approval of the Company, solicit or contact any customer of the Company or any of itsAffiliates or any potential customer with whom the Company or any Affiliates has had any contact ofwhich Executive has actual knowledge or received or submitted a proposal for services within theprior 12 months for the purpose of: (i) soliciting services or products on behalf of a CompetitiveBusiness, (ii) providing such customer or potential customer products or services that are the sameas or substantially similar to those provided or offered to be provided by the Company or any ofits Affiliates or (iii) taking away or interfering or attempting to interfere with any custom,trade, business or patronage of the Company or any of its Affiliates.          5.3 Restrictions on Competitive Employment. (a) Executive acknowledges that thebusiness of the Company and its Affiliates is national in scope, that their products and servicesare marketed throughout the entire United States, that the Company and its Affiliates compete innearly all of their business activities with other individuals or entities that are, or could be,located in nearly any part of the United States and that the nature of Executive’s services,position, and expertise are such that Executive is capable of competing with the Company and itsAffiliates from nearly any location in the United States.          (b) Accordingly, in order to protect the Company’s Proprietary Information and Third-PartyGoodwill, Executive acknowledges and agrees that during the Restricted Period, Executive shall not,without the Company’s express written consent, directly or indirectly (including through theInternet), own, control, manage, operate, participate in, be employed by, or act for or on behalfof, any Competitive Business located anywhere within the geographic boundaries of the UnitedStates.
5

 
          (c) For purposes of this Agreement, “Competitive Business” shall mean any of thefollowing: (i) Any enterprise engaged in the business of the Company aspresently conducted or as conducted during Executive’s employment with theCompany;  (ii) Any enterprise engaged in establishing electronic linkagesbetween individual healthcare patients, providers, physicians, payors(including, without limitation, insurance companies, HMO’s, pharmacy benefitsmanagement companies, and/or self-insured employer groups), pharmacies,laboratories and/or other participants in the healthcare industry, for thepurpose of facilitating or conducting financial and/or administrativecommunications and/or transactions; or  (iii) Any enterprise engaged in any other type of business in whichthe Company or any of its Affiliates is also engaged, or plans to be engaged,so long as Executive is directly involved in such business or planned businesson behalf of the Company or any of its Affiliates.          (d) Executive agrees that the Restricted Period and the geographical areas encompassed by suchcovenant are necessary and reasonable in order to protect the Company and its Affiliates in theconduct of their businesses. The parties intend that the foregoing covenant of Executive shall beconstrued as a series of separate covenants, one for each geographic area specified. Except forgeographic coverage, each such separate covenant shall be deemed identical in terms to the covenantset forth in paragraph (b) above. To the extent that the foregoing covenant or any provision ofthis Section 5.3 shall be deemed illegal or unenforceable by a court or other tribunal of competentjurisdiction with respect to (i) any geographic area, (ii) any part of the time period covered bysuch covenant, (iii) any activity or capacity covered by such covenant or (iv) any other term orprovision of such covenant, such determination shall not affect such covenant with respect to anyother geographic area, time period, activity or other term or provision covered by or included insuch covenant.          5.4 Assignment of Developments. (a) Executive acknowledges that all developments,including, without limitation, the creation of new products, conferences, training/seminars,publications, programs, methods of organizing information, inventions, discoveries, concepts,ideas, improvements, patents, trademarks, trade names, copyrights, trade secrets, designs, works,reports, computer software or systems, flow charts, diagrams, procedures, data, documentation, andwritings and applications thereof relating to the past, present, or future business of the Companyand its Affiliates that Executive, alone or jointly with others, may have discovered, suggested,conceived, created, made, developed, reduced to practice, or acquired during Executive’s employmentwith or as a result of Executive’s employment with the Company or any of its Affiliates(collectively, “Developments”) are works made for hire and shall remain the sole andexclusive property of the Company and its Affiliates, free of any reserved or other rights of anykind on Executive’s part. Executive hereby assigns to the Company all of his rights, titles andinterest in and to all such Developments, if any. Executive agrees to disclose to the Companypromptly and fully all future Developments and, at any time upon request and at the expense of theCompany, to execute, acknowledge and deliver to the Company all instruments that the Company shallprepare, to give evidence, and to take any and all other actions (including, among other things,the execution and delivery under oath of patent or copyright applications and instruments ofassignment) that are necessary or desirable in the reasonable opinion of the Company to enable theCompany to file and prosecute applications for, and to acquire, maintain, and enforce, all letterspatent, trademark registrations, or copyrights covering the Developments in all countries in whichthe same are deemed necessary by the Company. All data, memoranda, notes, lists, drawings,records, files, investor and client/customer lists, supplier lists, and other documentation (andall copies thereof) made or compiled by Executive or made available to Executive concerning theDevelopments or otherwise concerning the past, present, or planned business of the Company and itsAffiliates are the property of the Company, and will be delivered to the Company immediately uponthe termination of Executive’s employment with the Company.          (b) If a patent application or copyright registration is filed by Executive or on Executive’sbehalf during Executive’s employment with the Company or within one (1) year after Executive’sleaving the Company’s employ, describing a Development within the scope of Executive’s work for theCompany or which otherwise relates to a portion of the business of the Company and its Affiliatesof which Executive had knowledge
6

 
during Executive’s employment with the Company, it is to be conclusively presumed that theDevelopment was conceived by Executive during the period of such employment.          5.5 Remedies. Executive acknowledges that the Company has a compelling businessinterest in preventing unfair competition stemming from the intentional or inadvertent use ordisclosure of the Company’s Proprietary Information. Executive further acknowledges and agreesthat damages for a breach or threatened breach of any of the covenants set forth in this Section 5will be difficult to determine and will not afford a full and adequate remedy, and therefore agreesthat the Company, in addition to seeking actual damages in connection therewith and the terminationof the Company’s obligations in Section 4.4 and Section 4.5, may seek specific enforcement of anysuch covenant in any court of competent jurisdiction, including, without limitation, by theissuance of a temporary or permanent injunction without the necessity of showing any actual damagesor posting any bond or furnishing any other security, and that the specific enforcement of theprovisions of this Agreement will not eliminate Executive’s ability to earn a livelihood.Executive also agrees that any request for such relief by the Company shall be in addition to, andwithout prejudice to, any claim for monetary damages that the Company may elect to assert.          5.6 Extension of Restricted Period. The Restricted Period shall be extended by thelength of any period during which Executive is in breach of any of the terms of section 5.2 orSection 5.3.          5.7 Rights to Materials and Return of Materials. All papers, files, notes,correspondence, lists, software, software code, memoranda, e-mails, price lists, plans, sketches,documents, reports, records, data, research, proposals, specifications, technical information,models, flow charts, schematics, tapes, printouts, designs, graphics, drawings, photographs,abstracts, summaries, charts, graphs, notebooks, investor lists, customer/client lists, informationon the use, development and integration of software and all other compilations of information,regardless of how such information may be recorded and whether in printed form or on a computer ormagnetic disk or in any other medium (together with all copies of such documents and things)relating to the business of the Company and its Affiliates or containing Proprietary Informationand/or Developments, which Executive shall use or prepare or come in contact with in the course of,or as a result of, Executive’s employment by the Company shall, as between the parties to thisAgreement, remain the sole property of the Company. Laptop computers, other computers, softwareand related data, information and things provided to Executive by the Company or obtained byExecutive, directly or indirectly, from the Company and its Affiliates, also shall remain the soleproperty of the Company. Upon the termination of Executive’s employment or upon the prior demandof the Company, Executive shall immediately return all such materials and things to the Company andshall not retain any copies or remove or participate in removing any such materials or things fromthe premises of the Company after termination or the Company’s request for return.          6. Notices. Any notice or communication given by either party hereto to the other shall be inwriting and personally delivered or mailed by registered or certified mail, return receiptrequested, postage prepaid, to the following addresses:if to the Company:VIPS, Inc.