<PAGE>
As filed with the Securities and Exchange Commission on January 2, 1997
Registration No. 333-___________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form S-8
Registration Statement Under The Securities Act of 1933
____________________
HBO & COMPANY
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
37-0986839
(I.R.S. Employer Identification No.)
301 Perimeter Center North
Atlanta, Georgia 30346
(Address of principal executive offices) (zip code)
____________________
Expert Systems, Inc.
1993 Stock Option Plan
(Full title of the plan)
____________________
Charles W. McCall
HBO & Company
301 Perimeter Center North
Atlanta, Georgia 30346
(Name and address of agent for service)
____________________
(770) 393-6000
(Telephone number, including area code, of agent for service)
____________________
WITH COPY TO:
Lisa A. Stater, Esq.
Jones, Day, Reavis & Pogue
3500 SunTrust Plaza
303 Peachtree Street, N.E.
Atlanta, Georgia 30308-3242
(404) 521-3939
Exhibit Index Appears on Page 9
Page 1 of 22 pages
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<TABLE>
<CAPTION>
Calculation of Registration Fee
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
Proposed maxi- Proposed maxi-
Title of securities Amount to be mum offering price mum aggregate Amount of
to be registered registered per share offering price registration fee
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock,
$.05 par value, and 18,412 $2.1758(1) $40,061(1) $11.82(2)
Preferred Share shares
Purchase Rights(3)
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for calculating the amount of the registration fee,
pursuant to Rule 457(h) under the Securities Act of 1933, as amended.
Because all shares are presently subject to options, the offering price is
based upon the actual weighted average exercise price.
(2) The registration fee of $11.82 is calculated by multiplying the product
of $2.1758, the weighted average exercise price per share, and 18,412,
the number of shares subjected to option, by .000295.
(3) The Preferred Share Purchase Rights, which are attached to the shares of
Common Stock being registered, will be issued for no additional
consideration; no additional registration fee is required.
Page 2 of 22 pages
<PAGE>
EXPLANATORY NOTE
----------------
In accordance with the Note to Part I of Form S-8, the information specified
by Part I has been omitted from this Registration Statement.
Page 3 of 22 pages
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 3. Incorporation of Documents by Reference.
HBO & Company (the "Company") hereby incorporates by reference into this
Registration Statement the following documents:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1996.
(b) All other reports filed with the Securities and Exchange Commission (the
"Commission") pursuant to Section 13(a) or 15(d) of the Securities Exchange
Act of 1934, as amended (the "1934 Act"), since December 31, 1996.
(c) The description of the Common Stock and Preferred Share Purchase Rights
contained in the Company's Registration Statement on Form 8-A filed with
the Commission on August 19, 1981, as amended, and February 19, 1991, as
amended, respectively.
All documents subsequently filed by the Company pursuant to Sections 13(a),
13(c), 14 and 15(d) of the 1934 Act prior to the filing of a post-effective
amendment which indicates that all securities have been sold or which
deregisters all securities then remaining unsold shall be deemed to be
incorporated by reference in this Registration Statement and to be a part hereof
from the date of filing such documents.
Item 4. Description of Securities.
Inapplicable.
Item 5. Interests of Named Experts and Counsel.
Inapplicable.
Item 6. Indemnification of Directors and Officers.
Set forth below is a description of certain provisions of the Certificate
of Incorporation of the Company, the By-Laws, as amended (the "By-Laws") of
the Company and the General Corporation Law of the State of Delaware (the
"Delaware General Corporation Law"), as such provisions relate to the
indemnification of the directors and officers of the Company. This
description is intended only as a summary and is qualified in its entirety by
reference to the Certificate of Incorporation, the By-Laws and the Delaware
General Corporation Law.
The Company's By-Laws (Article IX, Section 1) provide that every person
who was or is a party or is threatened to be made a party to or is involved
in any action, suit, or proceeding, whether civil, criminal, administrative
or investigative, by reason of the fact that he or a person of whom he is the
legal representative is or was a director or officer of the corporation or is
or was serving at the request of the corporation or for its benefit as a
director or officer of another corporation, or as its representative in a
partnership, joint venture, trust or other enterprise, shall be indemnified
and held harmless to the fullest extent legally permissible under and
pursuant to any procedure specified in the Delaware General Corporation Law,
as amended from time to time, against all expenses, liabilities and losses
(including attorneys' fees, judgments, fines and amounts paid or to be paid
in settlement) reasonably incurred or suffered by him in connection
therewith. Such right of indemnification shall be a contract right that may
be enforced in any manner by such person. Such right of indemnification
shall not be exclusive of any other right which such directors, officers or
representatives may have or hereafter acquire and, without limiting the
Page 4 of 22 pages
<PAGE>
generality of such statement, they shall be entitled to their respective
rights of indemnification under any bylaw, agreement, vote of stockholders,
provision of law or otherwise, as well as their rights under such article.
Article IX, Section 2 of the Company's By-Laws provides that the Board of
Directors may cause the corporation to purchase and maintain insurance on
behalf of any person who is or was a director or officer of the corporation,
or is or was serving at the request of the corporation as a director or
officer of another corporation, or as its representative in a partnership,
joint venture, trust or other enterprise against any liability asserted
against such person and incurred in any such capacity or arising out of such
status, whether or not the corporation would have the power to indemnify such
person.
With respect to indemnification of officers and directors, Section 145 of
the Delaware General Corporation Law provides that a corporation shall have
the power to indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative, or investigative (other
than an action by or in the right of the corporation) by reason of the fact
that he is or was a director, officer, employee, or agent of the corporation,
or is or was serving at the request of the corporation as a director,
officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise, against expenses (including attorneys'
fees), judgments, fines, and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding
if he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. Under this provision of the Delaware General
Corporation Law, the termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person
did not act in good faith and in a manner which he reasonably believed to be
in or not opposed to the best interests of the corporation, and, with respect
to any criminal action or proceeding, had reasonable cause to believe that
his conduct was unlawful.
Furthermore, the Delaware General Corporation Law provides that a
corporation shall have power to indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending, or completed
action or suit by or in the right of the corporation to procure a judgment in
its favor by reason of the fact that he is or was a director, officer,
employee, or agent of the corporation, or is or was serving at the request of
the corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other enterprise, against
expenses (including attorneys' fees), actually and reasonably incurred by him
in connection with the defense or settlement of such action or suit if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in
which such action or suit was brought shall determine upon application that,
despite the adjudication of liability, but in view of all circumstances of
the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court shall deem proper.
In addition, the Delaware General Corporation Law was amended in 1986 to
enable a Delaware corporation to include in its certificate of incorporation
a provision eliminating or limiting a director's liability to the corporation
or its stockholders for monetary damages for breaches of a director's
fiduciary duty of care. The statutory amendment provides, however, that (a)
liability for duty or loyalty, (b) acts or omissions not in good faith or
involving intentional misconduct or knowing violations of law, (c) the
unlawful purchase or redemption of stock or unlawful dividends or (d) the
right of improper personal benefits could not be eliminated or limited in
this manner. The Company's Certificate of Incorporation has been amended to
contain provisions substantially similar to those contained in the amended
Delaware General Corporation Law.
Item 7. Exemption from Registration Claimed.
Inapplicable.
Item 8. Exhibits.
Page 5 of 22 pages
<PAGE>
Exhibit
Number Description
- ------- -----------
Included in Part II of the Registration Statement:
4 Expert Systems, Inc. 1993 Stock Option Plan
5 Opinion of Counsel re: legality
15 Letter re: unaudited interim financial information
23(a) Consent of Counsel (contained in Exhibit 5)
23(b) Consent of independent public accountants
24 Power of Attorney (included in signature page)
Item 9. Undertakings.
(a) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, as amended (the
"1933 Act"), each filing of the registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the 1934 Act (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to Section
15(d) of the 1934 Act) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
(b) Insofar as indemnification for liabilities arising under the 1933 Act may
be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the 1933 Act and
is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the 1933 Act and will be governed by the
final adjudication of such issue.
(c) The undersigned registrant undertakes to include any material information
with respect to the plan of distribution not previously disclosed in the
registration statement or any material change to such information in the
registration statement.
(d) The undersigned registrant undertakes that, for the purpose of determining
any liability under the 1933 Act, each such post-effective amendment shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(e) The undersigned registrant undertakes to remove from registration by means
of a post-effective amendment any of the securities being registered which
remain unsold at the termination of the offering.
Page 6 of 22 pages
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Atlanta, State of Georgia, on the
31st day of December, 1997.
HBO & COMPANY
By: /s/ Charles W. McCall
-------------------------------------
Charles W. McCall
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Charles W. McCall and Jay P. Gilbertson,
jointly and severally, each in his own capacity, his true and lawful
attorneys-in-fact and agents, each with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments to this Registration Statement,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming
all that each of said attorneys-in-fact and agents, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated:
Signature Title Date
--------- ----- ----
/s/ Charles W. McCall
________________________ Director, President and Chief December 31, 1997
Charles W. McCall Executive Officer (Principal
Executive Officer)
/s/ Jay P. Gilbertson
________________________ President, Co-Chief Operating December 31, 1997
Jay P. Gilbertson Officer, Chief Financial
Officer, Principal Accounting
Officer, Treasurer and
Secretary (Principal Financial
Officer and Principal
Accounting Officer)
/s/ Holcombe T. Green, Jr.
________________________ Chairman of the Board of December 31, 1997
Holcombe T. Green, Jr. Directors
/s/ Alfred C. Eckert III
________________________ Director December 31, 1997
Alfred C. Eckert III
Page 7 of 22 pages
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Signature Title Date
--------- ----- ----
/s/ Philip A. Incarnati
________________________ Director December 31, 1997
Philip A. Incarnati
/s/ Alton F. Irby III
________________________ Director December 31, 1997
Alton F. Irby III
/s/ Gerald E. Mayo
________________________ Director December 31, 1997
Gerald E. Mayo
/s/ James V. Napier
________________________ Director December 31, 1997
James V. Napier
/s/ Donald C. Wegmiller
________________________ Director December 31, 1997
Donald C. Wegmiller
Page 8 of 22 pages
<PAGE>
EXHIBIT INDEX
-------------
Exhibit Page
Number Description Number
- ------- ----------- ------
Included in Part II of the Registration Statement:
4 Expert Systems, Inc. 1993 Stock Option Plan
5 Opinion of Counsel re: legality
15 Letter re: unaudited interim financial information
23(a) Consent of Counsel (contained in Exhibit 5)
23(b) Consent of independent public accountants
24 Power of Attorney (included in signature page)
Page 9 of 22 pages
<PAGE>
EXPERT SYSTEMS, INC.
1993 STOCK OPTION PLAN
I. PURPOSE.
The Expert Systems, Inc. 1993 Stock Option Plan is intended as an incentive
and to encourage stock ownership by directors, officers and other key employees
of the Corporation and of its Parent, Subsidiaries and Affiliates, and
consultants and other representatives of the Corporation or its Parent,
Subsidiaries and Affiliates in order to provide them with a proprietary interest
or to increase their proprietary interest in the Corporation's success and/or to
encourage them to remain in the employ or engagement of the Corporation or its
Parent, Subsidiary or Affiliate.
II. DEFINITIONS.
Where the following words appear in this Plan, they shall have the
respective meanings set forth below, unless their context clearly indicates a
contrary meaning:
A. Affiliate -Any corporation or other business organization in
which the Parent owns, directly or indirectly, 25% or more of the voting stock
or capital at the time of the granting of the Option.
B. Board of Directors -The Board of Directors of the Corporation.
C. Code -The Internal Revenue Code of 1986, as amended, including
amendments hereafter adopted.
D. Committee -The Compensation Committee of the Board of Directors
or any successor Committee appointed by the Board of Directors as provided in
Paragraph III.B of the Plan.
E. Consultant -Consultant shall mean any consultant or other
representative of the Corporation or any present or future Parent, Subsidiary or
Affiliate.
F. Corporation -Expert Systems, Inc., a Georgia corporation, that is
the parent corporation as defined in Subsections 424(e) and (g) of the Code.
G. Employee -Employee shall mean any officer or other key employee
(including an officer or other key employee who is also a director) employed on
a full-time basis by the Corporation or any present or future Parent, Subsidiary
or Affiliate.
H. ISO -An option granted under the Plan which constitutes an
incentive stock option within the meaning of Section 422 of the Code.
Page 10 of 22 pages
<PAGE>
I. Non-Qualified Stock Option -An option granted under the Plan
which does not qualify as an incentive stock option within the meaning of
Section 422 of the Code.
J. Option -An option granted under the Plan which may be either an
ISO or a Non-Qualified Stock Option.
K. Option Agreement -The document setting forth the terms and
conditions of each Option.
L. Optionee -The holder of an Option.
M. Parent -Parent shall mean any present or future parent corporation
of the Corporation, as defined in Subsections 424 (e) and (g) of the Code.
N. Plan -Expert Systems, Inc. 1993 Stock Option Plan, as the same
may be amended from time to time in accordance with the terms hereof.
0. Shares -The shares of common stock of the Corporation, no par
value, subject to adjustment as provided in Paragraph V of the Plan.
P. Subsidiary -Any present or future subsidiary corporation of the
Corporation, as defined in Subsections 424(f) and (g) of the Code.
III. ADMINISTRATION.
A. The Board of Directors shall have full and complete authority in its
sole discretion, but subject to the express provisions of the Plan, to grant
Options, to determine the option price of the Shares covered by each option, to
determine the directors, officers, Employees and Consultants of the Corporation
and of any Parent, Subsidiary and Affiliate to whom, and the time or times at
which, Options shall be granted and the number of Shares to be covered by each
option; to interpret the Plan; to prescribe, amend and rescind rules and
regulations relating to the Plan; to determine the terms and provisions of the
respective Option grants (which terms need not be identical); to cancel and
amend Options (with the consent of the holder of the Option where required); to
impose such conditions on the grant of options as it determines to be
appropriate, including the surrender of outstanding stock options issued under
the Plan or any other stock option plan of the Corporation or of any parent,
Subsidiary or Affiliate, regardless of the option price; and to make all other
determinations and rules and take such other action deemed necessary or
advisable for the administration of the Plan. In addition, the Board of
Directors may extend the duration of any Option for a period not to exceed one
year subject to the provisions of Paragraph VI.B without changing the option
price upon such terms as the Board of Directors may deem advisable.
Page 11 of 22 pages
<PAGE>
Each determination, interpretation, rule or other action made or taken
pursuant to the Plan by the Board of Directors shall be final and conclusive for
all purposes and upon all persons, including, but without limitation thereto,
the Corporation, its Parent, Subsidiaries and Affiliates, the Board of
Directors, the Committee, directors, officers, Employees and Consultants of the
Corporation and its Parent, Subsidiaries and Affiliates, and Optionees and their
respective successors in interest.
B. The Board of Directors may at any time hereafter appoint a Committee
consisting of not less than three (3) members and may from time to time fix the
number of members (subject to the foregoing minimum), appoint members of the
Committee in substitution for or in addition to members previously appointed,
and fill vacancies, however caused, on the Committee. Upon its appointment, the
Committee shall have all the powers and authority of the Board of Directors
granted under Paragraphs III, IV and VI of the Plan unless, and to the extent,
otherwise limited from time to time by the Board of Directors.
Each member of the Committee shall be a member of the Board of Directors
who is not eligible to participate under the Plan and who has not been granted
or awarded equity securities of the Corporation for at least one year prior to
the time the director becomes a member of the Committee or during such service
on the Committee pursuant to the Plan or any other "plan" within the meaning of
Rule 16b-3 promulgated under the Securities Exchange Act of 1934 ("34 Act")
except as otherwise permitted under Rule 16b-3 (or any successor rule or
regulation).
The Board of Directors may designate one (1) of the members of the
Committee as its chairman, and the Committee shall hold its meetings at such
times and places as it shall deem advisable. A majority of its members shall
constitute a quorum. All determinations of the Committee shall be made by a
majority of its members present at a meeting at which a quorum was present. Any
decision or determination reduced to writing and signed by all the members of
the Committee shall be effective as if it had been made by a vote at a meeting
duly called and held. The Committee shall keep minutes of its meetings and
shall make such rules and regulations for the conduct of its business as it
shall deem advisable.
C. No member of the Board of Directors or of the Committee shall be
liable for any action or determination made in good faith with respect to the
administration of the Plan and the granting of Options thereunder.
IV. ELIGIBILITY AND LIMITATIONS.
Options may be granted only to directors, officers, Employees and
Consultants of the Corporation or of any present or future Parent, Subsidiary or
Affiliate. Notwithstanding the foregoing, Options may not be granted to
directors who are not Employees upon the Corporation or any present or future
Parent registering any class of any equity security pursuant to Section 12 of
the 34 Act. Persons who are not Employees of the Corporation or of a Parent or
Subsidiary will not be eligible to receive an ISO. In determining the number of
shares to be covered by each Option, subject to Paragraph V hereof, and persons
to whom
Page 12 of 22 pages
<PAGE>
options shall be granted, the Board of Directors shall take into account such
factors as it shall deem relevant in connection with accomplishing the purposes
of the Plan as set forth in Paragraph I hereof. Any person who has been granted
an Option may be granted an additional Option or Options if the Board of
Directors shall so determine. No ISO shall be granted to an individual who, at
the time the ISO is granted, owns (within the meaning of Section 422 (b) (6) of
the Code) stock possessing more than 10% of the total combined voting power of
all classes of stock of the Corporation or of its Parent or any Subsidiary,
unless, at the time the ISO is granted, the option price is at least 110 percent
(110%) of the fair market value of the Shares subject to the ISO, and the ISO by
its terms is not exercisable after the expiration of five (5) years from the
date the ISO is granted.
The aggregate fair market value (determined as of the time an ISO is
granted) of the Shares with respect to which ISO's are exercisable for the first
time by the Optionee during any calendar year (under all plans of the
Corporation and the Parent and Subsidiaries, if any) shall not exceed $100,000.
ISOs granted to an Optionee in excess of such limitation in any calendar year
shall be deemed to be a Non-Qualified Stock Option.
Each Option must be granted within ten (10) years from the date on which
the Plan is adopted by the Board of Directors or the date the Plan is approved
by the shareholders of the Corporation, whichever is earlier.
V. AVAILABLE SHARES AND STOCK ADJUSTMENTS.
A. The total number of Shares that may be issued pursuant to Options
granted under this Plan shall not exceed 100,000 Shares, subject to adjustment
as set forth hereinafter. Shares subject to the Plan may be either authorized
but unissued Shares or Shares that were once issued and subsequently reacquired
by the Corporation. If any Option is surrendered before exercise or lapses
without exercise or for any other reason ceases to be exercisable (including by
reason of the purchase of the Option by the Corporation in lieu of issuing
Shares), the Shares reserved therefor shall continue to be available under the
Plan. The Corporation will reserve and keep available a sufficient number of
authorized but unissued Shares and/or treasury Shares to be issued upon the
exercise of the Options.
B. In the event of a stock split, stock dividend, combination of Shares,
or a reclassification of the Shares or other similar action by the Corporation,
the total number of Shares which may be issued under the Plan upon the exercise
of Options and the total number of Shares and/or the option price contained in
any outstanding Option pursuant to which Options were granted under this Plan,
shall be appropriately adjusted as determined by the Board of Directors in its
sole discretion. Any such adjustment in the number of Shares and/or option
price of an ISO shall be made in such manner as to not constitute a modification
as defined in Subsection 424 (h) (3) of the Code and only to the extent
permitted by Sections 422 and 425 of the Code.
C. In the event of any merger or consolidation or other reorganization in
which the Corporation shall be the surviving corporation and its shareholders
have a right to receive
Page 13 of 22 pages
<PAGE>
(or retain), in whole or in part, equity securities for the outstanding Shares
held, each holder of an outstanding option shall be entitled to receive (or
retain), upon the exercise of the Option, in lieu of the number of Shares as to
which such holder of the Option would otherwise have been entitled to receive
upon the exercise of the Option immediately prior to such merger or
consolidation or other reorganization, the number and class of shares or other
securities and consideration to which such holder of the Option would have been
entitled pursuant to the terms of the merger or consolidation or other
reorganization if, at the time of such merger or consolidation or other
reorganization, such holder of the Option had been the holder of record of a
number of Shares equal to the number of Shares to which such Option is then
being so exercised. Comparable rights shall accrue to each holder of an Option
in the event of successive mergers or consolidations or other reorganization.
D. In the event of any merger or consolidation or other reorganization,
in which the shareholders of the Corporation shall not receive (or retain) any
equity securities of the surviving corporation for their Shares, regardless of
whether the Corporation is the surviving corporation, or upon the dissolution or
liquidation of the Corporation, except as hereinafter set forth, all Options
(whether or not vested in whole or in part) which have not been exercised prior
to such event, shall terminate upon such event unless and to the extent the
Board of Directors shall have provided for the substitution of other options
for, or for the assumption by another corporation of, any unexercised options
then outstanding. Such action by the Board of Directors may be taken with
respect to ISO's only to the extent permitted by the Code, including Sections
422 and 424, unless the Options are or are to become Non-Qualified Stock
Options. Except to the extent the Board of Directors shall have provided for
the substitution of other options for, or for the assumption by another
corporation of, any unexercised Options then outstanding or shall have
specifically otherwise provided as permitted by this subparagraph D, the Options
which have not vested shall not become exercisable prior to such event and all
outstanding Options shall expire upon such event.
E. In the event of any merger or consolidation or other reorganization in
which the Corporation is not the surviving corporation and in which its
shareholders shall receive equity securities (regardless of whether they receive
other consideration) for their Shares, each holder of an outstanding Option
shall be entitled to receive, upon the exercise of the Option, in lieu of the
number of Shares as to which such holder of the Option would otherwise have been
entitled to receive upon the exercise of the Option immediately prior to such
merger or consolidation or other reorganization, the number and class of shares
and other securities and consideration to which such holder of the option would
have been entitled pursuant to the terms of the merger or consolidation or other
reorganization if, at the time of such merger or consolidation or other
reorganization, such holder of the option had been the holder of record of a
number of Shares equal to the number of Shares to which such option is then
being so exercised. Comparable rights shall accrue to each holder of an Option
in the event of successive mergers or consolidations or reorganizations.
Page 14 of 22 pages
<PAGE>
F. Any adjustments pursuant to this Paragraph V may provide for the
elimination of any fractional interest which might otherwise become subject to
an Option, with or without consideration, as determined by the Board of
Directors of the Corporation.
VI. OPTION TERMS
The options will be granted under terms and conditions set forth in a
written instrument as determined by the Board of Directors from time to time,
which will include (but not by way of limitation) the following:
A. Price and Payment -The purchase price of each Share covered by each
Option shall be determined by the Board of Directors. The purchase price of
each Share covered by an Option shall not be less than the fair market value of
a Share at the time of the granting of the Option. The fair market value of a
Share shall be determined without regard to any restriction other than
restrictions which by their terms will never lapse. The purchase price of the
Shares to which an Option shall be exercised shall be paid in full at the time
of the exercise in cash or by check, subject to collection. The Board of
Directors may also provide that the purchase price may be paid in whole or in
part by the Optionee by assigning to the Corporation a number of Shares having a
fair market value, determined as of the date the Option is exercised, equal to
the cash amount of the option price for the Shares being acquired upon the
exercise of the Option in exchange for the Shares being assigned. In such
event, the Board of Directors may, in its sole discretion, require certain
representations and other conditions precedent to the acceptance of the Shares
from the Optionee.
B. Duration -The duration of the Options shall be as determined by the
Board of Directors, but in no event shall an option granted hereunder be
exercisable after the earliest of any of the following dates: (i) the
expiration of ten (10) years from the date the Option is granted; (ii) one (1)
year after the cessation of employment, engagement, officership or directorship,
as the case may be, of the holder of the Option with the Corporation, any
Subsidiary, or the Parent or any Affiliate, except in the event of termination
of such employment, engagement or election, as the case may be, by reason of
disability or death; (iii) two (2) years after the cessation of such employment,
engagement, officership or directorship, as the case may be, in the event of
termination of employment or engagement or election, as the case may be, due to
death or disability (within the meaning of Section 422(c)(6) of the Code). The
Board of Director's determination as to whether such employment, engagement or
election of an optionee has ceased and the effective date thereof shall be final
and conclusive on all persons affected thereby. Whether military or other
government or eleemosynary service or other leave of absence will constitute
termination of such employment, engagement or election shall be determined in
each case by the Board of Directors in its sole discretion.
Page 15 of 22 pages
<PAGE>
C. Non-transferability -Options granted under the Plan shall not be
transferable otherwise than by will or the laws of descent and distribution or
as otherwise permitted pursuant to Section 424 (c) (4) of the Code (or any
successor provision). Options may be exercised during the lifetime of the
Optionee only by the Optionee personally or by the Optionee's legal
representative.
D. Exercise of Option -Options granted hereunder shall be exercisable in
whole or in part as determined by the Board of Directors; provided, however,
that no ISO shall be exercisable in whole or in part prior to one (1) year from
the date the ISO is granted except as permitted pursuant to Paragraph V.
E. Conditions to Exercise of Options -Shares shall not be issued with
respect to any Option granted under the Plan unless the issuance and delivery of
such Shares shall comply with (or be exempt from) all relevant provisions of
law, including, without limitation, the Securities Act of 1933, as amended, the
rules and regulations promulgated thereunder, any applicable state securities
law, and the requirements of any stock exchange or national market system on
which the Shares may then be listed. If the issuance or transfer of Shares to
be issued or issued pursuant to any Option granted under this Plan may in the
opinion of counsel to the Corporation conflict or be inconsistent with any
applicable laws or regulations of any governmental agency having jurisdiction,
including, without limitation, federal and state securities laws, the
Corporation reserves the right to delay the issuance of the Shares upon the
exercise of an option and such delay shall be without liability to or other
obligation of the Corporation. The Corporation shall have no obligation
hereunder to file registration statements or other reports or notices or obtain
any license or permit or exemption under any federal or state law with respect
to the grant of an Option or the issuance of Shares upon the exercise of an
Option or the transfer of such Shares at any time thereafter. The Board of
Directors may require that the holder of an option, as a condition to each
exercise of the option in whole or in part, to represent to the Corporation in
writing that the Shares to be acquired upon the exercise of the Option are to be
acquired by the holder of the Option for investment purposes only, for such
person's own account, and not with a view to distribution and make such other
representations as counsel to the Corporation may reasonably request to assure
the availability of an exemption from or compliance with the registration,
notice, reporting or licensing requirements of applicable federal or state
securities laws. The Option may also set forth such other terms and conditions
relating to the non-registration or qualification of the Shares or the issuance
or transfer of the Shares by the Corporation under the federal and state
securities laws, as the Board of Directors may prescribe. Such representations
and other terms and conditions shall continue in effect as long as counsel to
the Corporation may reasonably request. Shares issued with respect to any
Option may be subject to a shareholders agreement restricting transferability of
the Shares and containing such other terms and conditions as may be determined
by the Board of Directors from time to time.
F. Disposition of Shares -In the event the disposition of Shares acquired
upon the exercise of any option is not covered by a then current registration
statement under the Securities Act of 1933, as amended, and under state
securities laws, the Shares so purchased shall be restricted against transfer to
the extent and for as long as required by such laws
Page 16 of 22 pages
<PAGE>
and regulations promulgated thereunder or until, and as long as, the Shares are
covered by applicable registration statements filed by the Corporation in its
sole discretion.
G. Tax Withholdings -The Committee may, in its sole discretion and on
terms it shall determine, withhold, or grant to an Optionee the right to elect
to have withheld, Shares having a fair market value not in excess of the amount
necessary to satisfy the withholding tax obligations of the Optionee, in whole
or in part, relating to the exercise of the Option. Any election granted to an
executive officer (as defined pursuant to rules promulgated under the 1934 Act)
or director of the Parent shall only be made during the period set forth in Rule
16b-3 promulgated under the 1934 Act (or any successor rule or regulation).
VII. EXERCISE.
An Option granted hereunder shall be exercisable in whole or in part only
by written notice delivered in person or by mail to the President or the Chief
Financial Officer of the Corporation at its principal executive office,
specifying the number of Shares to be purchased and accompanied by payment
therefor and other consideration in accordance with the option. The holder of
an Option shall not be deemed to be a holder of any Shares subject to any Option
and shall not be entitled to the rights of a holder of any Shares, including the
right to receive dividends, unless and until a stock certificate representing
such Shares has been issued.
VIII. TERMINATION AND AMENDMENT.
The Board of Directors may at any time terminate the Plan, or make such
amendments thereto or modifications thereof as it shall deem advisable,
including amendments deemed necessary or desirable to conform any ISO to any
change in the Code or regulations thereto; provided, however, that the Board of
Directors may not, without further approval by the shareholders of the
Corporation, increase the maximum number of Shares for which Options may be
granted under the Plan or change the designation of the class of employees and
other persons eligible to receive Options. No termination, modification or
amendment of the Plan shall, without the consent of the person to whom an Option
shall theretofore have been granted, adversely affect the rights of such person
under such Option without such person's consent.
IX. MISCELLANEOUS.
Applicable Law. The Plan shall be governed and construed in accordance with the
laws of the State of Georgia.
Page 17 of 22 pages
<PAGE>
Employee/Employer Rights. The granting of options hereunder shall be entirely
discretionary and nothing in the Plan shall be deemed to give any Employee,
Consultant, officer or director any right of continued employment, engagement,
officership, or directorship, as the case may be, or give any person any right
to receive options or additional options hereunder or interfere in any way with
the right of the Corporation, its Parent, Subsidiary or Affiliate to terminate
the Optionee's employment, engagement or election, as the case may be, for any
reason or the right of the Employee, Consultant, officer or director to
terminate his/her employment, engagement, officership or directorship, as the
case may be, for any reason.
IS0 Grants. This Plan is intended to provide in part for the grant of incentive
stock options pursuant to Section 422 of the Code, including amendments thereto
hereafter adopted, and the provisions of the Plan as they relate to ISO's and
the ISO's granted shall be construed to effectuate such purpose. If for any
reason it is subsequently determined that an Option intended to qualify as an
ISO does not so qualify, the Corporation, Parent and Subsidiary shall have no
liability to the Optionee.
X. EFFECTIVE DATE.
The Plan shall become effective on the date of its adoption by the Board of
Directors subject to the approval of the Plan by the shareholders of the
Corporation within twelve (12) months after the date of its adoption. The date
of granting of an Option shall be the date on which the Board of Directors or
the Committee, as the case may be, makes the determination of granting such
Option or such later date as designated by the Board of Directors or the
Committee.
Page 18 of 22 pages
<PAGE>
EXHIBIT A
AMENDMENT TO EXPERT SYSTEMS, INC.
1993 STOCK OPTION PLAN
The following amendment to Paragraph V.D of the EXPERT SYSTEMS, INC. 1993
STOCK OPTION PLAN was adopted by the unanimous written consent of the Board of
Directors as of November 23, 1993:
"V. Available Shares and Stock Adjustments
* * *
D. In the event of any merger or consolidation or other reorganization,
in which the shareholders of the Corporation shall not receive (or retain) any
equity securities of the surviving corporation for their Shares, regardless of
whether the Corporation is the surviving corporation, or upon the dissolution or
liquidation of the corporation, except as hereinafter set forth, all options
which have been granted hereunder and are held by persons who are then
directors, officers, Employees or Consultants of the Corporation or of any
Parent, Subsidiary or Affiliate shall become immediately vested in full, unless
and to the extent the Board of Directors shall have provided for the
substitution of other options for, or for the assumption by another corporation
of, any unexercised options then outstanding. Such action by the Board of
Directors may be taken with respect to ISO's only to the extent permitted by the
Code, including Sections 422 and 424, unless the Options are or are to become
Non-Qualified Stock Options."
Page 19 of 22 pages
<PAGE>
Exhibit 5
JONES, DAY, REAVIS & POGUE
3500 SunTrust Plaza
303 Peachtree Street, N.E.
Atlanta, Georgia 30308-3242
(404) 521-3939
December 29, 1997
HBO & Company
301 Perimeter Center North
Atlanta, Georgia 30346
Gentlemen:
We have acted as counsel to HBO & Company, a Delaware corporation
(the "Company"), in connection with the registration of 18,412 shares of
Common Stock, $.05 par value per share, of the Company (the "Shares"), to be
issued by the Company in accordance with the Expert Systems, Inc. 1993 Stock
Option Plan (the "Plan") pursuant to a Registration Statement on Form S-8
filed with the Securities and Exchange Commission (the "Registration
Statement") to which this opinion appears as Exhibit 5.
We have examined originals or certified or photostatic
copies of such records of the Company, certificates of officers of the
Company, and public officials and such other documents as we have deemed
relevant or necessary as the basis of the opinion set forth below in this
letter. In such examination, we have assumed the genuineness of all
signatures, the conformity to original documents submitted as certified or
photostatic copies, and the authenticity of originals of such latter
documents. Based on the foregoing, we are of the following opinion:
The Shares, when issued in the manner contemplated by the Plan,
will be validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as Exhibit 5 to
the Registration Statement.
Sincerely,
/s/ Jones, Day, Reavis & Pogue
JONES, DAY, REAVIS & POGUE
Page 20 of 22 pages
<PAGE>
ARTHUR ANDERSEN LLP
LETTER REGARDING UNAUDITED
INTERIM FINANCIAL INFORMATION
We are aware that HBO & Company has incorporated by reference in this Form
S-8 Registration Statement, its Form 10-Q's for the quarters ended March 31,
1997, June 30, 1997 and September 30, 1997 which include our reports dated
April 16, 1997, July 16, 1997 and October 17, 1997, respectively, covering
the unaudited interim financial information contained therein. Pursuant to
Regulation C of the Securities Act of 1933 (the "Act"), those reports are not
considered to be a part of the Registration Statement prepared or certified
by our firm within the meaning of Sections 7 and 11 of the Act.
Arthur Andersen LLP
Atlanta, Georgia
December 29, 1997
Page 21 of 22 pages
<PAGE>
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accounts, we hereby consent to the incorporation by
reference in this Registration Statement on Form S-8 of our reports dated
February 6, 1997 included or incorporated by reference in HBO & Company's
Form 10-K for the year ended December 31, 1996.
Arthur Andersen LLP
Atlanta, Georgia
December 29, 1997
Page 22 of 22 pages
