EXHIBIT 4.8
STOCK OPTION AGREEMENT dated as of August 20, 2001 (the
"Agreement") between WebMD Corporation, a Delaware corporation (the
"Company"), and Xxxxx Xxxxxxxxxx (the "Participant").
WHEREAS, the Letter Agreement dated as of August 20, 2001
(the "Letter Agreement") by and among the Company and the Participant, provides
for the grant to the Participant of a nonqualified stock option to purchase
600,000 shares of common stock, $.001 par value, of the Company (the "Common
Shares") upon the terms and conditions hereinafter set forth and in the Letter
Agreement;
NOW, THEREFORE, in consideration of the covenants and
agreements herein contained, the parties hereto agree as follows:
1. Confirmation of Grant of Option; Effectiveness.
Pursuant to a determination by the Compensation Committee (the "Committee") of
the Board of Directors of the Company (the "Board"), the Company hereby
confirms that the Participant has been granted, effective as of the date hereof
(the "Date of Grant"), and subject to the terms and conditions of this
Agreement and the Letter Agreement, a nonqualified stock option (the "Option")
to purchase that number of Common Shares specified at the foot of the signature
page hereof, upon payment of the Option Price specified at the foot of the
signature page hereof. The Option shall be exercisable as hereinafter provided.
2. Certain Restrictions. The Option may not be sold,
transferred, assigned, pledged, or otherwise encumbered or disposed of, except
by will or the laws of descent and distribution; provided, however, that the
Committee may, subject to such terms and conditions as the Committee shall
specify, permit the transfer of the Option to the Participant's family members,
to one or more trusts established in whole or in part for the benefit of one or
more of such family members or to any other entity that is owned by such family
members. During the Participant's lifetime, the Option shall be exercisable
only by the Participant or by the Participant's guardian or legal
representative. Each transferee of the Option by will or the laws of descent
and distribution shall, as a condition to the transfer thereof, execute an
agreement pursuant to which it shall become a party to this Agreement. Any
attempt to sell, transfer, assign, pledge or otherwise encumber or dispose of
the Option, contrary to the provisions of this Agreement, and any levy,
attachment or similar process upon an Option shall be null and void and without
effect, and the Board or the Committee may, in its discretion, upon the
happening of any such event, terminate the Option as of the date of such event.
3. Terms and Conditions of Option. The Option evidenced
hereby is subject to the following terms and conditions:
(a) Vesting. Subject to Section 3(b) of this Agreement,
the Participant's Option shall vest and become exercisable ("Vested
Options") in accordance with the following schedule:
Anniversary of % of Option
Effective Time Exercisable
1st 25%
2nd 50%
3rd 75%
4th 100%
(b) Option Period. (i) The Option shall not be
exercisable following the tenth anniversary of the Date of Grant, and
shall be subject to earlier termination as provided below.
(ii) In the event the Participant's employment with the
Company and its subsidiaries is terminated by the Company for Cause or
by the Participant without Good Reason (as such terms are defined on
Annex A attached to the Letter Agreement), (y) the unvested portion of
the Option shall terminate immediately and the Participant shall have
no right after such termination to exercise such unvested portion of
the Option and (z) the Vested Options shall remain outstanding and
exercisable for 90 days following the termination of the Participant's
employment.
(iii) In the event that the Participant's employment with
the Company and its subsidiaries is terminated by the Company without
Cause or the Participant terminates his employment with the Company
for Good Reason, subject to the conditions set forth in the Letter
Agreement, the Option shall, to the extent unvested, continue to vest
and remain exercisable as if the Participant remained in the employ of
the Company until the first anniversary of the date of such
termination.
(iv) In the event that the Participant remains in the
employ of the Company and its subsidiaries through the first
anniversary of a Change in Control (as such term is defined on Annex A
attached to the Letter Agreement), 75% of the unvested portion of the
Option shall vest and become exercisable on the one year anniversary
of such Change in Control.
(v) In the event that following a Change in Control the
Participant's employment with the Company and its subsidiaries is
terminated by the Company without Cause or by the Participant for Good
Reason prior to the one year anniversary date of a Change in Control,
subject to the conditions set forth in the Letter Agreement, 75% of
the unvested portion of the Option shall vest and become exercisable
upon the Participant's termination.
(c) Notice of Exercise. Subject to Sections 3(d), 3(f)
and 5(b) hereof, the Participant may exercise any or all of the Vested
Options (to the extent not forfeited) by giving written notice to the
Finance Department of the Company at its principal business office.
The date of exercise of the Vested Options shall be the later of (i)
the date on which the Finance Department of the Company receives such
written notice or (ii) the date on which the conditions provided in
Sections 3(d), 3(f) and 5(b) hereof are satisfied.
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(d) Payment. Prior to the issuance of a certificate
pursuant to Section 3(g) hereof evidencing Common Shares, the
Participant shall have paid to the Company the Option Price of all
Common Shares purchased pursuant to exercise of the Option, in cash or
by certified or official bank check, and all applicable tax
withholding obligations as provided in Section 5(b) of this Agreement.
The Option Price may also be payable by a "cashless" exercise
procedure through a broker and approved by the Committee.
(e) Shareholder Rights. The Participant shall have no
rights as a shareholder with respect to any Common Shares issuable
upon the exercise of the Option until a certificate or certificates
evidencing such shares shall have been issued to the Participant, and
no adjustment shall be made for dividends or distributions or other
rights in respect of any share for which the record date is prior to
the date upon which the Participant shall become the holder of record
thereof.
(f) Limitation on Exercise. (i) The Common Shares issued
upon exercise of the Option shall be issued only to the Participant or
a person permitted to exercise the Option pursuant to Section 2. Each
share certificate representing Common Shares purchased upon exercise
of the Option shall bear a legend stating that the Common Shares
evidenced thereby may not be sold or transferred except in compliance
with the Securities Act of 1933, as amended (the "1933 Act") and the
provisions of this Agreement. The certificate(s) may be made subject
to a stop transfer order placed with the Company's transfer agent.
(ii) The Option shall not be exercisable unless and until
(A) a registration statement under the 1933 Act has been duly filed
and declared effective pertaining to the Common Shares subject to such
Option and such Common Shares shall have been qualified under
applicable state "blue sky" laws, or (B) the Committee in its sole
discretion determines that such registration and qualification is not
required as a result of the availability of an exemption from such
registration and qualification under such laws. The Company shall use
all reasonable efforts to file a registration statement with the
Securities and Exchange Commission on Form S-8 with respect to the
Common Shares subject to the Option on or prior to the date on which
such Option becomes exercisable. The Company shall have no obligation
to issue any Common Shares pursuant to the exercise of the Option if
the Company reasonably determines at the time of such exercise that
the issuance of Common Shares at such time would violate applicable
law with respect to xxxxxxx xxxxxxx or otherwise, or then existing
policies of the Company applicable to employees of the Company or its
subsidiaries holding options to purchase Common Shares.
(g) Issuance of Certificate. As soon as practicable
following the exercise of the Option, a certificate evidencing the
number of Common Shares issued in connection with such exercise shall
be issued in the name of the Participant.
4. Representations and Warranties. The Participant is
aware of and familiar with the restrictions imposed on the transfer of the
Option. The Participant represents that this Agreement has been duly executed
and delivered by the Participant and constitutes a legal, valid and binding
agreement of the Participant, enforceable against the Participant in accordance
with
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its terms, except as limited by any applicable bankruptcy, insolvency,
reorganization, moratorium or similar law affecting creditors' rights generally
and by general principles of equity. It shall be a further condition to the
Company's obligation to issue and deliver to the Participant certificates for
Common Shares upon exercise of the Option that the Participant deliver to the
Company in writing a representation that the Participant is exercising such
Option for his own account and, unless the Common Shares are then registered
under the 1933 Act, for investment only and not with a view to distribution and
that the Participant will not make any sale, transfer or other disposition of
any Common Shares purchased except (i) pursuant to the registration thereof
under the 1933 Act, (ii) pursuant to an opinion of counsel satisfactory in form
and substance to the Company that the sale, transfer or other disposition may
be made without registration, or (iii) pursuant to a "no-action" letter from
the Securities and Exchange Commission. The Participant has been advised and
understands that the Common Shares must be held indefinitely unless they are
registered for resale under the 1933 Act or an exemption from registration is
available.
5. Miscellaneous.
(a) No Rights to Grants or Continued Employment. Neither
this Agreement nor any action taken or omitted to be taken hereunder
or thereunder shall be deemed to create or confer on the Participant
any right to be retained in the employ of the Company, or to interfere
with or to limit in any way the right of the Company, to terminate the
employment of the Participant at any time. The Participant shall have
no rights in the benefits conferred by the Option or in any Common
Shares except to the extent the Option is exercised while vested and
exercisable and otherwise in accordance with the terms of this
Agreement and the Letter Agreement. Termination of the Option by
reason of cessation of employment shall not give rise to any claim for
damages by the Participant under this Agreement or the Letter
Agreement and shall be without prejudice to any rights or remedies
which the Company, may have against the Participant.
(b) Tax Withholding. The Company and its subsidiaries
shall have the right to require the Participant to remit to the
Company, prior to the delivery of any certificates evidencing Common
Shares pursuant to the exercise of the Option, any amount sufficient
to satisfy any federal, state or local tax withholding requirements.
With the consent of the Company in its sole discretion, prior to the
Company's determination of such withholding liability, the Participant
may make an irrevocable election to satisfy, in whole or in part, such
obligation to remit taxes by directing the Company to withhold Common
Shares that would otherwise be received by the Participant. Such
election may be denied by the Company in its sole discretion, or may
be made subject to certain conditions specified by the Company,
including, without limitation, conditions intended to avoid the
imposition of liability against the Participant under Section 16(b) of
the Securities and Exchange Act of 1934, as amended.
(c) No Restriction on Right of Company to Effect
Corporate Changes. This Agreement shall not affect in any way the
right or power of the Company or its stockholders to make or authorize
any or all adjustments, recapitalizations, reorganizations or other
changes in the capital structure or business of the Company, or any
merger or consolidation of the Company, or any issue of stock or of
options, warrants or rights to purchase stock or of bonds, debentures,
preferred or prior preference stocks whose rights are superior to or
affect the
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Common Shares or the rights thereof or which are convertible into or
exchangeable for Common Shares, or the dissolution or liquidation of
the Company, or any sale or transfer of all or any part of the assets
or business of the Company, or any other corporate act or proceeding,
whether of a similar character or otherwise.
(d) Notice of Exercise. Notwithstanding any other
provision of this Agreement, the Company may, from time to time,
require reasonable notice of the Participant's intent to exercise all
or a portion of the Option in order for the Company to comply with any
applicable securities laws, including, without limitation, Regulation
M under the Exchange Act. The Company shall not be liable for any
adverse change in the market value of the Common Shares during any
such notice period.
6. Adjustment.
(a) The number and price per Common Share covered by the
Option, and any other rights under the Option, shall be appropriately
adjusted, as deemed appropriate by the Board or the Committee, as the
case may be (whose good faith determination shall be absolute and
binding on the Participant), to reflect any subdivision (stock split)
or consolidation (reverse split) of the issued Common Shares, or any
other recapitalization of the Company, or any business combination or
other transaction involving the Company, which shall substantially
affect the rights of holders of Common Shares. The Committee or the
Board, as the case may be, shall provide for appropriate adjustment of
the Option in the event of stock dividends or distributions of assets
or securities of other companies owned by the Company to stockholders
relating to Common Shares for which the record date is prior to the
date the Common Shares purchased by exercise of the Option are issued
or transferred, except that no such adjustment shall be made for stock
dividends of 10% or less (cumulatively, in the aggregate) or cash
dividends.
(b) In the event of a change in the presently authorized
Common Shares which is limited to a change of all of its presently
authorized Common Shares into the same number of shares without par
value, or any change of all of the then authorized Common Shares with
par value into the same number of shares with a different par value,
the shares resulting from any such change shall be deemed to be Common
Shares for purposes hereof, and no change in the number of Common
Shares covered by the Option or in the Option Price shall take place.
7. Survival.
All agreements, representations and warranties made herein
and in any certificates delivered pursuant hereto shall survive the issuance to
the Participant of the Option and the Common Shares and, notwithstanding any
investigation heretofore or hereafter made by the Participant or the Company or
on the Participant's or the Company's behalf, shall continue in full force and
effect. Whenever in this Agreement any of the parties hereto is referred to,
such reference shall be deemed to include the heirs and permitted successors
and assigns of such party; and all agreements herein by or on behalf of the
Company, or by or on behalf of the Participant, shall bind and inure to the
benefit of the heirs and permitted successors and assigns of such parties
hereto.
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8. Notices. All notices and other communications
provided for herein shall be in writing and shall be delivered by hand or sent
by certified or registered mail, return receipt requested, postage prepaid,
addressed, if to the Participant, to his attention at the most recent mailing
address that the Company has on record and, if to the Company, to it at River
Drive Center 2, 000 Xxxxx Xxxxx, Xxxxxxx Xxxx, Xxx Xxxxxx 00000-0000,
Telecopier No.: (000) 000-0000, Attention: VP-Finance. All such notices shall
be conclusively deemed to be received and shall be effective, if sent by hand
delivery, upon receipt, or if sent by registered or certified mail, on the
fifth day after the day on which such notice is mailed.
9. Waiver. The waiver by either party of compliance
with any provision of this Agreement by the other party shall not operate or be
construed as a waiver of any other provision of this Agreement, or of any
subsequent breach by such party of a provision of this Agreement.
10. Source of Rights. This Agreement and the Letter
Agreement shall be the sole and exclusive source of any and all rights which
the Participant, and the Participant's personal representatives or heirs at
law, may have in respect of the Option as granted hereunder.
11. Captions. The captions contained in this Agreement
are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
12. Entire Agreement; Governing Law. This Agreement and
the Letter Agreement set forth the entire agreement and understanding between
the parties hereto and supersede all prior agreements and understandings
relating to the subject matter hereof. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, but all
such counterparts shall together constitute one and the same agreement. The
headings of sections and subsections herein are included solely for convenience
of reference and shall not affect the meaning of any of the provisions of this
Agreement. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New Jersey without reference to the choice of
law provisions of New Jersey law.
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IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed by its duly authorized officer and the Participant has executed
this Agreement, both as of the day and year first above written.
WEBMD CORPORATION
By: /s/ Authorized Signatory
----------------------------------------
Name:
Title:
PARTICIPANT
/s/ Xxxxx Xxxxxxxxxx
----------------------------------------
XXXXX XXXXXXXXXX
Number of Options: 600,000
Option Price: $4.81 per Common Share(1)
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(1) The Option Price is the closing price of the Common Share on the Date
of Grant.
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