<PAGE>
As filed with the Securities and Exchange Commission on October 2, 1998
Registration No. 333-________________
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- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------
HBO & COMPANY
(Exact name of issuer as specified in its charter)
DELAWARE 37-0986839
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
301 Perimeter Center North
Atlanta, Georgia 30346
(Address of principal executive office)
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OPTION AGREEMENT BETWEEN HBO & COMPANY AND GRAHAM O. KING
AND
OPTION AGREEMENT BETWEEN HBO & COMPANY AND STEPHEN G. SULLIVAN
(Full title of the plan)
------------------
Charles W. McCall
HBO & Company
301 Perimeter Center North
Atlanta, Georgia 30346
(770) 393-6000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
With a copy to:
Lisa A. Stater, Esq.
Jones, Day, Reavis & Pogue
3500 SunTrust Plaza
303 Peachtree Street, N.E.
Atlanta, Georgia 30308-3242
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Proposed maximum Proposed maximum
Title of securities Amount to be offering price aggregate Amount of
to be registered registered per share offering price registration fee
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.05 par value
and Preferred Share Purchase
Rights (3) 142,319 shares $9.4860 (1) $1,350,038 (1) $398.26 (2)
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of 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 on the weighted average exercise price.
(2) The registration fee of $398.26 is calculated by multiplying the
product of $9.4860, the weighted average exercise price per share, and
142,319, the number of shares subject 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>
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.
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, 1997.
(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,
1997.
(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 ByLaws, 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.
1
<PAGE>
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 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.
2
<PAGE>
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.
3
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
- -------- -----------
Included in Part II of the Registration Statement:
<S> <C>
4.1 Option Agreement dated October 12, 1994, by and between US Servis, Inc. and
Graham O. King
4.2 Amendment No. 1 to the Option Agreement dated July 23, 1997 by and between
US Servis, Inc. and Graham O. King
4.3 Section 9 of Employment Agreement dated June 14, 1991 by and between US
Servis, Inc. and Stephen G. Sullivan re: Options
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)
</TABLE>
Item 9. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement
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.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, as amended (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.
(3) 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.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under 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.
(c) 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.
4
<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
2nd day of October, 1998.
HBO & COMPANY
By: /s/ Charles W. McCall
--------------------------------
Charles W. McCall
Chairman, 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:
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ Charles W. McCall Chairman, President and Chief Executive October 2, 1998
- -------------------------------
Charles W. McCall Officer (Principal Executive Officer)
/s/ Jay P. Gilbertson President, Co-Chief Operating Officer, October 2, 1998
- -------------------------------
Jay P. Gilbertson Chief Financial Officer, Principal
Accounting Officer, Treasurer and Secretary
(Principal Financial Officer and Principal
Accounting Officer)
/s/ Alfred C. Eckert III Director October 2, 1998
- -------------------------------
Alfred C. Eckert III
/s/ Philip A. Incarnati Director October 2, 1998
- -------------------------------
Philip A. Incarnati
/s/ Alton F. Irby III Director October 2, 1998
- -------------------------------
Alton F. Irby III
/s/ M. Christine Jacobs Director October 2, 1998
- -------------------------------
M. Christine Jacobs
/s/ Gerald E. Mayo Director October 2, 1998
- -------------------------------
Gerald E. Mayo
/s/ James V. Napier Director October 2, 1998
- -------------------------------
James V. Napier
/s/ Donald C. Wegmiller Director October 2, 1998
- -------------------------------
Donald C. Wegmiller
</TABLE>
5
<PAGE>
Exhibit 4.1
OPTION AGREEMENT
THIS OPTION AGREEMENT (this "Agreement"), dated as of October
12, 1994, is between Micro Healthsystems, Inc., a Delaware corporation (the
"Corporation"), and Graham O. King (the "Holder").
RECITALS
A. The Corporation has offered to employ the Holder as its
Chairman and Chief Executive Officer.
B. The Holder desires to accept such employment provided the
Corporation grants the Holder an equity incentive with respect to the
Corporation.
C. The Corporation believes that it is in the Corporation's
best interest to provide an equity incentive in the form of an option to
purchase shares of Common Stock of the Corporation to the Holder in order to
induce the Holder to accept employment with the Corporation.
D. The Corporation desires to grant certain options to
purchase shares of Common Stock to the Holder, upon the terms and subject to the
conditions contained herein.
AGREEMENTS
In consideration of the foregoing recitals and the mutual
covenants herein contained and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
hereby agree as follows:
1. Definitions. In addition to the terms defined elsewhere in this
Agreement, as used in this Agreement:
"Business Day" means a day on which banks are generally open
for business in New York.
"Cause" has the meaning ascribed to such term in the
Employment Agreement: provided, however, that if the Employment Agreement is
terminated at any time, then after such time "Cause" shall have the meaning
ascribed to it in the Employment Agreement immediately prior to such
termination.
"Closing Price" of any security means, as of any date, the
average of the closing prices of such security's sales on such date on all
securities exchanges on which such security may at the time be listed, or, if
there has been no sale on any such exchange on such date, the average of the
highest bid and lowest asked prices on all such exchanges at the end of such
date, or, if on such date such security is not so listed, the average of the
representative bid and asked prices quoted in the NASDAQ System as of 4:00 p.m.,
New York time on such date, or, if on such date such security is not quoted in
the NASDAQ System, the average of the highest bid and lowest asked prices on
such date in the domestic over-the-counter market as reported by the National
Quotation Bureau, Incorporated, or any similar successor organization.
"Common Stock" means the Common Stock of the Corporation, par
value $.01 per share.
"Dilution Factor" means, with respect to any issuance of
Common Stock, or options, warrants or other securities exercisable for, or
convertible into, Common Stock, except for Exempt Issuances, a fraction, the
numerator of which is the number of shares of Common Stock outstanding prior to
such issuance plus the number of shares of Common Stock issued by the
Corporation on the date of such issuance plus the number of shares of Common
Stock issuable upon exercise or conversion of options, warrants or other
securities issued by the Corporation on the date of such issuance, and the
denominator of which is the number of shares of Common Stock outstanding prior
to such issuance.
"Disability" has the meaning ascribed to such term in the
Employment Agreement; provided, however, that if the Employment Agreement is
terminated at any time, then after such time "Disability" shall have the meaning
ascribed to it in the Employment Agreement immediately prior to such
termination.
6
<PAGE>
"Employment Agreement" means that certain Employment
Agreement, dated as of October 12, 1994, between the Corporation and the Holder.
"Exempt Issuances" means (a) issuances of Common Stock, or
options, warrants or other securities exercisable for or convertible into Common
Stock, in connection with, or intended primarily to fiance, an acquisition by
the Corporation of a business from another Person, (b) issuances of Common
Stock, or options, warrants or other securities exercisable for or convertible
into Common Stock, to officers and directors of the Corporation primarily for
compensatory, rather than capital raising, purposes, (c) issuances of Common
Stock, or options, warrants or other securities exercisable for or convertible
into Common Stock, intended to finance repurchases of Common Stock by the
Corporation, (d) issuances of Common Stock in connection with stock splits or
stock dividends, (e) issuances of Common Stock upon the exercise of options and
warrants which are outstanding on the date hereof, and (f) issuances of common
Stock upon the exercise or conversion of options, warrants and other securities
which were issued in Exempt Issuances; provided, however, that in order to
constitute an Exempt Issuance in each case set forth above (other than (d), (e)
and (f) the Corporation must certify to the Holder in writing prior to such
issuance that such issuance constitutes, and will continue to constitute, an
Exempt Issuance.
"Exercise Price" means the Primary Option Exercise Price or
the applicable Secondary Option Exercise Price, as the case may be.
"Good Reason" has the meaning ascribed to such term in the
Employment Agreement; provided, however, that if the Employment Agreement is
terminated at any time, then after such time "Good Reason" shall have the
meaning ascribed to it in the Employment Agreement immediately prior to such
termination.
"Number of Exercisable Option Shares" means, as of any date,
the sum of (x) the number of Option Shares for which the Options were
exercisable immediately prior to such date and (y) the number of Purchased
Option Shares as of such date.
"Number of Option Shares" means, at any time, the sum of the
Number of Primary Option Shares and the Number of Secondary Option Shares.
"Number of Primary Option Shares" means 1,000,000 shares of
Common Stock, subject to adjustment pursuant to Section 2.5 hereof.
"Number of Secondary Option Shares" means the aggregate Number
of Secondary Option Shares determined in accordance with Section 2.1(b), and
subject to adjustment pursuant to Section 2.5 hereof.
"Option Shares" means the Primary Option Shares and the
Secondary Option Shares.
"Options" means the Primary Option and the Secondary Option.
"Option Termination Time" means 5:00 p.m. (Eastern time) on
the tenth anniversary of the date of this Agreement.
"Permitted Transferee" means a Person who is either (i) the
personal representative of the Holder upon such Holder's death for purposes of
administration of the Holder's estate or (ii) a Person receiving a transfer of
the Holder's assets upon the Holder's death by will or pursuant to the laws of
descent and distribution. Upon the transfer of the Options, a Permitted
Transferee shall be deemed to be the Holder for purposes of this Agreement.
"Person" means a natural person, a partnership, a corporation,
a limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization or other entity or a governmental
entity or any department, agency or political subdivision thereof.
"Primary Option" means the option to purchase a number of
shares of Common Stock equal to the Number of Primary Option Shares for the
price per share of Common Stock equal to the Primary Option Exercise Price in
effect at the time of any exercise of such option, subject in all respects to
the terms and conditions of this Agreement, the grant to the Holder of which is
made by this Agreement.
7
<PAGE>
"Primary Option Exercise Price" means $3.50 per share of
Common Stock, subject to adjustment pursuant to Section 2.5 hereof.
"Primary Option Shares" means shares of Common Stock which
have been or may be purchased by the Holder pursuant to the exercise of the
Primary Options, whether or not the Primary Option is then exercisable for such
shares.
"Purchased Option Shares" means Option Shares that have been
purchased by the Holder or a Permitted Transferee.
"Registration Agreement" means that certain Registration
Rights Agreement between the Corporation and the Holder entered into pursuant to
the Employment Agreement.
"Secondary Option" means the option to purchase a number of
shares of Common Stock equal to the Number of Secondary Option Shares for the
price per share equal to the applicable Secondary Option Exercise Price in
effect at the time of any exercise of such option, subject in all respects to
the terms and conditions of this Agreement, the grant to the Holder of which is
made by this Agreement.
"Secondary Option Exercise Price" means, with respect to the
portion of the Secondary Option attributable to a specific increase in the
Number of Secondary Option Shares pursuant to Section 2.1(b)(i), the Closing
Price of the Common Stock on the date of such increase. The applicable secondary
Option Exercise Price shall be subject to adjustment pursuant to Section 2.5
hereof.
"Secondary Option Shares" means shares of Common Stock which
have been or may be purchased by the Holder pursuant to the exercise of the
Secondary Option, whether or not the Secondary Option is then exercisable for
such shares.
"Underlying Option Shares" means, at any time, (i) any shares
of Common Stock then outstanding that were issued upon exercise of the Options,
(ii) any shares of Common Stock issuable upon exercise of the Options, whether
or not the Options are then exercisable, (iii) any shares of Common Stock then
outstanding that were issued as, or were issued directly or indirectly upon the
conversion or exercise of other securities issued as, a dividend or other
distribution with respect to or in replacement of other Underlying Option
Shares, and (iv) any shares of Common Stock then issuable directly or indirectly
upon the conversion or exercise of other securities that were issued as a
dividend or other distribution with respect to or in replacement of other
Underlying Option Shares.
2. Terms of Option.
2.1 Grant of the Option: Determination of Number of Secondary Option
Shares. (a) Upon the terms and conditions set forth herein, the Corporation
hereby grants to the Holder the Primary Option and the Secondary Option.
(b)(i) The Number of Secondary Option Shares shall initially
be zero and shall be increased from time to time pursuant to this
paragraph (b)(i). If the Corporation issues shares of Common Stock, or
options, warrants or other securities exercisable for, or convertible
into, Common Stock, except for Exempt Issuances, at any time or from
time to time prior to the third anniversary of the date hereof, then on
the date of such issuance the Number of Secondary Option Shares shall
be increased by a number equal to the difference between (a) the
product of (i) the number of Underlying Option Shares prior to such
issuance times (2) the Dilution Factor and (b) the number of Underlying
Option Shares prior to such issuance.
(ii) The Secondary Option shall become exercisable for Option
Shares in accordance with Section 2.3: provided that the Secondary
Option will only become exercisable on or after the day on which the
Primary Option becomes exercisable for all Primary Option Shares.
2.2 Procedures for Exercise. Subject in all respects to the Options
becoming exercisable pursuant to Section 2.3 of this Agreement, the Holder or a
Permitted Transferee may exercise the Options in whole or in part at any time or
from time to time prior to the Option Termination Time (or earlier termination
pursuant to Section 2.6 of this Agreement) by delivering written notice to the
Corporation substantially in the form attached hereto as Exhibit A, together
with payment
8
<PAGE>
in a manner set forth below of the aggregate Exercise Price for the Option
Shares with respect to which the Holder or a Permitted Transferee is exercising
the Options. The aggregate Exercise Price for the Options Shares with respect to
which the Holder or a Permitted Transferee is exercising the Options may be
paid:
(a) by cash or a check payable to the order of the
Corporation.
(b) in the manner provided in (a), (c) or (d) with respect to
$.01 per share and by delivery to the Corporation of a promissory note
of the Holder or Permitted Transferee in a principal amount equal to
the balance of such aggregate Exercise Price with respect to such
balance, which note will bear interest at the applicable Federal rate
determined from time to time by the Internal Revenue Service under
Section 1274 of the Internal Revenue Code of 1986, as amended, and the
principal amount of, and accrued interest on, such note shall be due on
the third anniversary of the date of exercise.
(c) by cancellation of shares of Common Stock, other than
shares subject to surrender pursuant to Section 5.1 of the Employment
Agreement owned by the Holder or Permitted Transferee at the time of
such exercise having a fair market value (determined based on the
Closing Price of the Common Stock on the date of exercise) equal to the
aggregate Exercise Price for such Option Shares, or
(d) by cancellation of the exercisable portion of the Options,
or a portion thereof, having a fair market value (determined based on
the difference between the Closing Price of the Common Stock on the
date of exercise and the Exercise Price) equal to the aggregate
Exercise Price for such Option Shares.
As promptly as practicable after receiving the written notice and the payment of
the aggregate Exercise Price, the Corporation will deliver to the Holder or
Permitted Transferee, as the case may be, certificates for the Option Shares
with respect to which such Holder or Permitted Transferee has exercised the
Option, issued in the name of the Holder or Permitted Transferee, as the case
may be. For all purposes, the Holder or Permitted Transferee, as the case may
be, will be deemed to have exercised the Options and to have purchased and
become the holder of the Option Shares as of the date the Corporation receives
written notice and payment of the aggregate Exercise Price from the Holder or
Permitted Transferee, as the case may be, as provided in this Section 2.2.
2.3 Vesting of the Options.
(a) Employment-Based Vesting. (i) If (A) the Number of
Exercisable Option Shares prior to the first anniversary of the date
hereof is less than 400,000 and (B) the Holder is (or pursuant to
Section 2.6 is deemed to be) an employee of the Corporation on such
anniversary, then on the first anniversary of the date hereof the
Options shall become exercisable for an additional number of Option
Shares equal to the difference between (1) 400,000 and (2) the Number
of exercisable Option Shares immediately prior to such anniversary.
(ii) If (A) the Number of exercisable Option Shares
prior to the eighth anniversary of the date hereof is less
than the Number of Option Shares and (B) the Holder is (or
pursuant to Section 2.6 is deemed to be) an employee of the
Corporation on such anniversary, then on the eighth
anniversary of the date hereof the Options shall become
exercisable for an additional number of Option Shares equal to
the difference between (x) the Number of Option Shares and (y)
the Number of Exercisable Option Shares prior to such
anniversary.
(b) Change of Control Vesting. (i) If (A) the Number of
Exercisable Option Shares prior to the occurrence of a Change of
Control (as hereinafter defined) is less than the Number of Option
Shares and (B) the Holder is (or pursuant to Section 2.6 is deemed to
be) an employee of the Corporation on the date on which such Change of
Control occurs, then upon the occurrence of such Change of control the
Options shall become exercisable for an additional number of Option
Shares equal to the difference between (x) the Number of Option Shares
and (y) the Number of Exercisable Option Shares prior to such Change in
Control. For purposes of this Agreement, a "Change of Control" shall be
deemed to have occurred if any time after the date hereof:
(A) the Corporation sells or otherwise disposes of
all or substantially all of its assets;
9
<PAGE>
(B) the Corporation participates in a merge or
consolidation and immediately following the consummation of
such merger or consolidation, the Corporation's stockholders
prior to such merger or consolidation do not own 50% or more
of the voting shares of stock of the surviving or successor
corporation; or
(C) any person or entity, including a "person" as
such term is used in Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended, but excluding current
officers or directors of the Corporation, becomes the
beneficial owner of 50% or more of the combined voting power
of the Corporation's voting securities.
(ii) If (A) the Number of Secondary Option Shares
increases at any time or from time to time on or after the
date on which a Change of Control occurs and (B) the Holder is
(or pursuant to Section 2.6 is deemed to be) an employee of
the Corporation on the date of such increase, then on the date
of such increase the Options shall become exercisable for an
additional number of Option Shares equal to the number by
which the Number of Secondary Option Shares increased pursuant
to Section 2.1(b)(i) hereof.
(c) Stock Price Vesting. (i) If on any date after the
date hereof (A) the closing Price of the Common Stock has been
at least $5.00 on at least 30 of the 40 Business Days during
the period ending on such date and commencing on the date
which is 39 Business Days prior to such date if such date is a
Business Day (or 40 Business Days prior to such date if such
date is not a Business Day), (B) the Number of Exercisable
Option Shares on such date is less than the Number of Option
Shares and (C) the Holder is (or pursuant to Section 2.6 is
deemed to be) an employee of the Corporation on such date,
then on such date the Options shall become exercisable for an
additional number of Option Shares equal to the difference
between (x) the Number of Option Shares and (y) the Number of
Exercisable Option Shares prior to such date.
(ii) If the Number of Secondary Option Shares
increases at any time or from time to time after the Options
had become exercisable for a number of Option Shares equal to
the Number of Option Shares prior to such increase and (b) the
Holder is (or pursuant to Section 2.6 is deemed to be) an
employee of the Corporation on the date of such increase, then
on the date of such increase the Options shall become
exercisable for an additional number of Option Shares equal to
the number by which the Number of Secondary Option Shares
increased pursuant to Section 2.1(b)(i) hereof.
(d) Exercise after Vesting. After the Options have
become exercisable for any number of Option Shares, the
Options may be exercised for up to the aggregate number of
Option Shares for which the Options have become exercisable at
any time or from time to time thereafter in accordance with
the provisions of Section 2.1 (but prior to the termination of
the Options in accordance with this Agreement). Under no
circumstances will a decrease in the Closing Price of the
Common Stock affect the exercisability of the Options to the
extent that they have already become exercisable or reduce the
number of Option Shares for which the Options are exercisable.
2.4 Fractional Shares. Fractional shares will not be issued upon the
exercise of the Options, but in any case where the Holder would, except for the
provisions of this Section 2.4, be entitled under the terms of this Agreement to
receive a fractional share upon the complete exercise of the Options, the
Corporation will, upon the exercise of the Options for the largest number of
whole shares, then called for, pay a sum in cash equal to the excess of the
value of such fractional share (determined based on the Closing Price of the
Common Stock as of the date of exercise) over the proportional part of the
applicable Exercise Price represented by such fractional share.
2.5 Antidilution Provisions. In the event of any stock dividend, stock
split, combination, or exchange of shares of Common Stock or any
recapitalization or change in capitalization affecting shares of Common Stock,
the number and kind of shares that are subject to the Options, the thresholds
for exercisability set forth herein and the applicable Exercise Price shall be
proportionately and appropriately adjusted.
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<PAGE>
2.6 Termination of Option.
(a) In the event that (1) the Corporation terminates the
Holder's employment for Cause or (2) the Holder voluntarily terminates
his employment with the Corporation other than for Good Reason, at any
time while the Options are outstanding and unexercised in whole or in
part:
(i) the portion of the Options that is not
exercisable shall terminate as of such termination of
employment; and
(ii) the portion of the Options that is exercisable
shall continue to be exercisable in accordance with the terms
of this Agreement until the earlier of (A) the Option
Termination Time and (B) the first anniversary of such
termination of employment.
(b) In the event that (i) the Holder voluntarily terminates
his employment with the Corporation for Good Reason, (ii) the
Corporation terminates the Holder's employment other than for Cause,
(iii) the Holder's employment is terminated as a result of the Holder's
death or Disability, or (iv) the Holder's employment with the
Corporation, is terminated upon expiration of the Term (as defined in
the Employment Agreement) as a result of notice from the Corporation
(the date of such termination being referred to as the "Termination
Date"), then, solely for purposes of this Agreement, the Holder shall
be deemed to be an employee of the Corporation until the earlier of (x)
the Option Termination Time and (y) the first anniversary of the
Termination Date (the "Vesting Date") and the options may become
exercisable in accordance with the terms of Section 2.3 of this
Agreement at any time until and including the Vesting Date and the
Options may be exercised, to the extent they become exercisable, from
time to time at any time before the earlier of (i) the later of (A) one
year after the date on which the Options become exercisable and (B) the
first anniversary of the Termination Date and (2) the Option
Termination time.
(c) For purposes of this Agreement, the Holder shall be an
employee of the Corporation if he is an employee of either the
Corporation or any subsidiary of the Corporation.
2.7 Non-Transferable. The Holder will not transfer, sell, convey,
exchange, pledge or otherwise dispose of (herein referred to as "disposition" or
"to dispose of") the Options and the rights and privileges of the Holder under
this Agreement, except that in the event of the Holder's death or incompetency,
the Options may be transferred to a Permitted Transferee.
2.8 No Rights as a Stockholder. The Options do not confer upon the
Holder or any Permitted transferee any right to vote or consent or to receive
notice as a stockholder of the Corporation, as such, in respect of any matters
whatsoever, or any other rights or liabilities as a stockholder, prior to the
exercise of the Options as hereinbefore provided.
2.9 No Rights to Employment or Other Relationship. Nothing contained in
this Agreement shall confer upon the Holder any right with respect to employment
by or any relationship with the Corporation or interfere in any way with the
right of the Corporation at any time to terminate the employment of the Holder
or terminate any other relationship the Holder may have with the Corporation or
to increase or decrease any compensation paid by the Corporation to the Holder.
2.10 Capital Reorganization. If there shall be any consolidation or
merger to which the Corporation is a party, other than a consolidation or a
merger in which the Corporation is a continuing corporation and which does not
result in any reclassification of, or change (other than a subdivision or
combination of the Common Stock or a change in par value) in, outstanding shares
of Common Stock, or any sale or conveyance of the property of the corporation as
an entirety or substantially as an entirety (any such event being called a
"Capital Reorganization"), then, effective upon the effective date of such
Capital Reorganization, the Holder shall have the right to purchase upon
exercise of the Options, the kind and amount of shares of stock and other
securities and property (including cash) which the Holder would have owned or
have been entitled to receive after such Capital Reorganization if the Options
had been exercised immediately prior to such Capital Reorganization, assuming
the Options were exercisable for all of the Option Shares immediately prior to
such Capital Reorganization. As a condition to effecting any Capital
Reorganization, the Corporation or the successor or surviving corporation, as
the case may be, shall execute and deliver to the Holder an agreement as to the
Holder's rights in accordance with this Section 2.10, providing for rights as
nearly as equivalent as may be practicable to the rights provided for in this
Agreement. The provisions of this Section 2.10 shall similarly apply to
successive Capital Reorganizations.
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<PAGE>
2.11 Protection of Purchase Rights. The Corporation shall not
participate in any reorganization, transfer of assets, consolidation, merger,
dissolution, issuance, sale, repurchase or redemption of securities or any other
voluntary action, for the purpose of avoiding or seeking to avoid the observance
or performance of any of the terms to be observed or performed by the
Corporation under this Agreement or the rights of the Holder under this
Agreement, but will at all times in good faith assist in the carrying out of all
the provisions of this Agreement and will take all actions that may be necessary
or appropriate in order to protect the rights of the Holder under this Agreement
against impairment.
2.12 Notices of Increases. Whenever the Number of Secondary Option
Shares increases, the Corporation will promptly prepare a certificate setting
forth, in reasonable detail, the calculation of such increase and the applicable
Secondary Option Exercise Price with respect to such increase and will cause
such certificate to be delivered to the Holder.
3. Covenants of the Corporation. The Corporation covenants and agrees as
follows: (a) that during the period within which the Options may be exercised,
the Corporation will at all times have authorized and in reserve a sufficient
number of shares of its Common Stock to provide for the exercise of the Option,
(b) the Option Shares, when issued, sold and delivered in accordance with the
terms of this Agreement, will be validly issued, fully paid, non-assessable, and
(c) the Corporation will pay all federal and state taxes (other than income
taxes) which may be payable in respect of the Options or any Common Stock or
certificates therefor upon its exercise pursuant to the provisions of this
Agreement.
4. Miscellaneous.
4.1 Successors and Assigns. Except as otherwise expressly provided
herein, all covenants and agreements contained in this Agreement by or on behalf
of any of the parties hereto will bind and inure to the benefit of the
respective successors and assigns of the parties hereto, whether so expressed or
not.
4.2 Descriptive Headings: Rounding. The descriptive headings of this
Agreement are inserted for convenience of reference only and do not constitute a
part of this Agreement. All calculations under this Agreement shall be made to
the nearest cent or one-hundredth of a share, as the case may be.
4.3 Closing of Transfer Books. The right to exercise the Options will
not be suspended during any period while the stock transfer books of the
Corporation for the Common Stock may be closed. The Corporation will not be
required, however, to deliver certificates of the Common Stock upon such
exercise while such books are duly closed for any purpose, but the Corporation
may postpone the delivery of such certificates until the opening of such books,
and they will, in such case, be delivered forthwith upon the opening thereof, or
as soon as practicable thereafter.
4.4 Notices. Any notices desired, required or permitted to be given
hereunder will be delivered personally or mailed, certified mail, return receipt
requested, or delivered by overnight courier service, to the following
addresses, or such other address as any party hereto designates by written
notice to the Corporation, and will be deemed to have been given upon delivery,
if delivered personally, five business days after mailing, if mailed, or one
business day after the delivery to the overnight courier service, if delivered
by overnight courier service:
If to the Holder, to:
Graham O. King
1022 South Leopard Road
Berwyn, Pennsylvania 19312
with a copy to:
Stanford J. Goldblatt, Esq.
Hopkins & Sutter
Three First National Plaza
Suite 8800
Chicago, Illinois 60602
If to the Corporation, to:
12
<PAGE>
Micro Healthsystems, Inc.
414 Eagle Rock Avenue
West Orange, New Jersey 07052
Attention: President
with a copy to:
Stephen J. Feinberg, Esq.
Salon, Marrow & Dyckman
685 Third Avenue
21st Floor
New York, New York 10017
4.5 Governing Law. The validity, meaning and effect of this Agreement
will be determined in accordance with the internal law of, and not the law of,
conflicts of the State of New Jersey.
4.6 Exhibits. All exhibits hereto are an integral part of this
Agreement.
4.7 Final Agreement. This Agreement, together with the Employment
Agreement and the Registration Agreement, constitutes the final agreement of the
parties concerning the matters referred to herein, and supersedes all prior
agreements and understandings with respect thereto.
4.8 No Attachment. Except as required by law, no right to receive
Option Shares under this Agreement shall be subject to anticipation,
commutation, alienation, sale, assignment, encumbrance, charge, pledge, or
hypothecation or to execution, attachment, levy, or similar process or
assignment by operation of law, and any attempt, voluntary or involuntary, to
effect any such action shall be null, void and of no effect.
4.9 Execution in Counterparts. this Agreement may be executed in any
number of counterparts, each of which when so executed and delivered will be
deemed an original, and such counterparts together will constitute one
instrument.
This Option Agreement was executed as of the date first set forth
above.
MICRO HEALTHSYSTEMS, INC.
By: /s/ S. M. Caravetta
-------------------------
Its: Chairman
-------------------------
HOLDER:
/s/ Graham O. King
-------------------------
Graham O. King
13
<PAGE>
EXHIBIT A
TO: MICRO HEALTHSYSTEMS, INC.
The undersigned, pursuant to the terms and conditions of the Option
Agreement dated , 1994, by and between Micro Healthsystems, Inc. and the
undersigned (the "Option Agreement"), hereby exercises the options granted
thereby to purchase the following number of shares of Common Stock pursuant to
such options at the corresponding price per share provided in the Option
Agreement and is hereby tendering full payment therefor in accordance with the
terms of the Option Agreement.
Number of Shares Aggregate
to be purchased: Exercise Price:
__________ ____________
Dated: _______________________ _______________________
Graham O. King
14
<PAGE>
Exhibit 4.2
AMENDMENT NO. 1
to the
Option Agreement
Dated October 12, 1994
This AMENDMENT NO. 1, dated July 23, 1997 (the "Amendment), is by and
between US SERVIS, INC. (f/k/a Micro Healthsystems, Inc.), a Delaware
corporation (the "Corporation"), and GRAHAM O. KING (the "Holder").
RECITALS
A. The Corporation and the Holder are parties to that certain Option
Agreement dated October 12, 1994 (the "Option Agreement"). Capitalized terms not
otherwise defined herein shall have the meanings ascribed to them in the Option
Agreement.
B. The Corporation and the Holder desire to amend the Option Agreement
upon the terms and subject to the conditions set forth herein.
AGREEMENTS
In consideration of the agreements and mutual covenants contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereby agree as follows:
Section 1. Amendments. The Option Agreement is hereby amended
as follows:
a. Definitions. Section 1 of the Option Agreement is
hereby amended such that the following definitions
read as follows:
"Number of Primary Option Shares" means 800,000 shares of
Common Stock subject to adjustment pursuant to Section 2.5 hereof."
"Primary Option Exercise Price" means $1.3125 per share of
Common Stock, subject to adjustment pursuant to Section 2.5 hereof."
b. Vesting of the Options. Section 2.3(a)(ii) and 2.3(c)
of the Option Agreement are hereby amended to read in
their entirety as follows:
"(ii) If (A) the Number of Exercisable Option Shares prior to
July 23, 1998, July 23, 1999 and July 23, 2000 is less than 533,333, 666,666 and
800,000, respectively, (each value representing the "Total Possible Vested
Shares") on such date, respectively) and (B) the Holder is (or pursuant to
Section 2.6 is deemed to be) an employee of the Corporation on such date, then
on such date the Options shall become exercisable for an additional number of
Option Shares equal to the difference between (x) the Total Possible Vested
Shares on such date and (y) the Number of Exercisable Option Shares prior to
such date."
"(c) Stock Price Vesting. (i) If on any date after the date
hereof (A) the Closing Price of the Common Stock has been at least $5.00 on 20
consecutive Business Days, (B) the Number of Exercisable Option Shares on such
date is less than the Number of Option Shares and (C) the Holder is (or pursuant
to Section 2.6 is deemed to be) an employee of the Corporation on such date,
then on such date the Options shall become exercisable for an additional number
of Option Shares equal to the difference between (x) the Number of Option Shares
and (y) the Number of Exercisable Option Shares prior to such date."
Section 2. Miscellaneous.
a. Reference to and Effect on the Option Agreement.
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<PAGE>
(a) Upon the effectiveness of this Amendment, each reference
in the Option Agreement to "this Agreement," "hereunder," "herein," or words of
like import shall mean and be a reference to the Option Agreement as amended
hereby, and each reference to the Option Agreement in any other document,
instrument or agreement shall mean and be a reference to the Option Agreement as
amended hereby.
(b) Except as specifically amended above, the Option Agreement
shall remain full force and effect and is hereby ratified and confirmed.
(c) The execution, delivery and effectiveness of this
Amendment shall not operate as a waiver of any right, power or remedy of any
party hereto under the Option Agreement nor constitute a waiver of any provision
contained therein, except as specifically set forth herein.
b. Execution in Counterparts. This Amendment may be
executed in any number of counterparts and by
different parties hereto in separate counterparts,
each of which when so executed and delivered shall be
deemed to be an original and all of which taken
together shall constitute but one and the same
instrument.
c. Headings. Section headings in this Amendment are
included herein for convenience of reference only and
shall not constitute a part of this Amendment for any
other purpose.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first written above.
US SERVIS, INC.
By: /s/ S. M. Caravetta
----------------------
Title: Chairman
----------------------
/s/ Graham O. King
----------------------
GRAHAM O. KING
16
<PAGE>
Exhibit 4.3
Section 9. Grant of Stock Options.
9.1 Grant. Micro hereby grants to Sullivan ("Optionee") an
option to purchase up to 75,000 shares of the Company's stock of the same class
as that currently registered by the Company under the Securities Act of 1933
from Micro at a purchase price of $18.52 per share (subject to adjustment
pursuant to Section 9.2 hereof) (the "Option"). The right to acquire such shares
pursuant to the Option shall vest at the rate of 15,000 for each Employment Year
during the Term when Sullivan shall be in the employ of the Company or any
successor in interest thereto, on the last day of the relevant Employment Year.
The first such Employment Year shall end on May 31, 1992. Sullivan may exercise
said Option, in whole or in part, at any time or from time to time, but only
with respect to stock the option rights to which have previously vested in him
hereunder, and only on or prior to June 30, 2001. Payment of the option price in
respect to any shares may be paid in whole or in part in cash or by delivery of
the Optionee's promissory note (the "Note"), bearing interest payable annually,
on the due date of the Note, on the amount due thereunder at any time and from
time to time, at the minimum rate permitted by the Internal Revenue Code and the
Regulations issued thereunder, to avoid imputation of interest. The Note shall
be due on the 120th day after the effective date of any Registration Statement
which includes all of the shares purchased upon exercise of any Options
hereunder, provided, however, that it shall be payable sooner out of the first
proceeds of the sale of any shares of the Company's common stock purchased with
the loan evidenced by the Note, to the extent of said proceeds, except for that
portion of the proceeds which is needed to pay Optionee's tax liability,
pursuant to the third subsequent sentence hereof. Payment of the Note shall be
secured by the deposit with the Company of all of the shares of common stock
purchased with the loan evidenced by the Note, except those sold as permitted
hereunder, with the Optionee attaching to the shares, his duly executed and
witnessed irrevocable stock powers; such security deposit shall not limit the
liability of the maker of the Note thereon. The Note shall be prepayable in
whole or in part, at any time. The Company shall, to the extent permitted by
law, immediately permit the Optionee to sell that number of shares as will yield
cash proceeds to pay Optionee's tax liability upon exercise of any Option
hereunder. Upon the death, disability or constructive termination of Sullivan
pursuant to Section 9.4 of this Agreement all unvested options shall immediately
be fully vested and may be exercisable by Sullivan at any time prior to June 30,
2001.
9.2 Anti-Dilution Provisions. If all or any portion of the
Option shall be exercised subsequent to any stock dividend, split-up,
recapitalization, merger, consolidation, combination or exchange or shares,
separation, reorganization, or liquidation of Micro occurring after the
Commencement Date hereof, as a result of which shares of any class shall be
issued in respect of outstanding shares of Common Stock of Micro, or shares of
Micro's Common Stock shall be changed into the same or a different number of
shares of the same or another class or classes, or shares shall entitle the
holder thereof to receive assets of any type then Sullivan shall receive, for
the aggregate price paid upon such exercise, the aggregate number and class of
shares or assets to which he would have been entitled if shares of Common Stock
(as authorized at the date hereof) had been purchase at the date hereof for the
same aggregate price (on the basis of the price per share set forth above) and
had not been disposed of, such person or persons would be holding at any time of
such exercise, as a result of such purchase and all such stock dividends,
split-ups, recapitalizations, mergers, consolidations, combinations or exchanges
of shares, separations, reorganizations or liquidations; provided, however, that
no fractional shares shall be issued upon such exercise, and that the aggregate
price paid shall be appropriately increased on account of any fractional share
not issued.
9.3 Limitations on Option. This Option shall not be
transferable or assignable except to adult members of Sullivan's immediate
family or to express written trusts for members of his immediate family and that
it may descend to his estate, his personal representatives or his heirs,
legatees and intestate distributes ("authorized transferees"). This Option shall
not be subject to seizure or attachment by any legal process. This Option may
not be hypothecated except to the extent required as a part of a plan whereby
Sullivan or his authorized transferees borrow money or make other arrangements
for the sole purpose of exercising the Option.
9.4 Further Provisions for Termination of Option. Sullivan's
Option rights hereunder shall expire, to the extent not theretofore vested in
Sullivan under Subsection 9.1, in the event of voluntary termination of
employment by Sullivan or in the event of the Company's termination of
Sullivan's employment pursuant to Section 10.3 hereof. However such expiration
shall not derogate from Sullivan's rights with respect to any portion of the
Option which has previously vested in him pursuant to Subsection 9.1 hereof. In
addition, the Constructive Termination of Sullivan, as defined in Subsection
10.4 hereof, and his subsequent unrescinded election to terminate his employment
shall not be governed by the
17
<PAGE>
provisions of Subsection 9.4, and, if such Constructive Termination occurs,
Sullivan's Option rights hereunder shall be fully vested as of the effective
date of Constructive Termination.
9.5 Method of Exercise of Option. Stock may be purchased
pursuant to the Option only by notice in writing given to Micro by Sullivan or
his authorized transferee of the intention to purchase, which notice specifies
the number of shares as to which he desires to exercise the Option and the date
on which he desires to complete his purchase. Upon the date specified for the
purchase of his shares, the purchaser shall pay Micro the full purchase price
for the shares by certified check and/or by a Note pursuant to the terms set
forth in Section 9.1.
9.6 Reservation of Stock. Micro shall at all times prior to
the expiration of the Option reserve sufficient shares of stock of the class
which is subject to this Option to comply with this Option and, if such Stock
has been listed on a national securities exchange, shall list the shares of
stock so reserved.
9.7 Provisions Applicable Upon Exercise of Option. Upon any
exercise of the Option, Micro shall immediately cause a certificate or
certificates for the shares purchased on such exercise to be issued in the name
of the Optionee or any authorized transferee and in such denominations as the
person exercising the Option shall direct and shall deliver said certificate or
certificates to or upon the order of such person.
9.8 Restriction with Respect to Stock. If the shares of Stock
subject to the Option have not been registered under the Securities Act of 1933,
as amended (the "Act"), then, unless the said shares have previously, or will
simultaneously or immediately thereafter be registered under the Act, the person
exercising the Option shall, as a condition of its exercise, furnish Micro with
a written statement signed by him representing and agreeing (i) that he is
purchasing the stock subject to this Option for investment and not with a view
to a distribution, (ii) that he will not offer, sell, pledge or otherwise
transfer the shares acquired through the exercise of this Option, without having
first obtained and delivered to Micro an opinion of counsel satisfactory to
Micro to the effect that such transfer will not be in violation of the Act, or a
letter from the staff of the Securities and Exchange Commission to the effect
that no action will be taken or recommended by such staff in the event of such
transfer, and (iii) that Micro is authorized to inscribe on all Stock
certificates issued upon the exercise of the Option a legend referring to the
provisions of this paragraph; the foregoing shall be explicit and precise
conditions precedent to Micro's obligation to issue any shares pursuant to the
Option.
9.9 Registration Rights with respect to Stock Subject to the
Option. The Optionee or his authorized transferee may demand that Micro register
all or any part of the Stock which may be issued in accordance with terms set
forth on Schedule A hereto.
9.10 Additional Right of Sullivan. Sullivan and the Company
agree that at the request of Sullivan made within 180 days from the date hereof
the Company will review and make a determination as to whether it is feasible to
include a portion of his Options under Section 9, as an Incentive Stock Option
under the Company's Stock Option Plan, in effect from time to time, and, if it
is feasible, the Company will permit the Optionee to participate therein to the
maximum extent permitted by law, on the most favorable terms accorded to any
participant therein. Any Options included as an Incentive Stock Option shall
reduce the number of Options hereunder.
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<PAGE>
Exhibit 5
JONES, DAY, REAVIS & POGUE
3500 SUNTRUST PLAZA
303 PEACHTREE STREET
ATLANTA, GEORGIA 30308-3242
October 2, 1998
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 142,319
shares of Common Stock, $.05 par value per share, of the Company (the "Shares"),
to be issued by the Company in accordance with that certain Option Agreement
dated October 12, 1994, as amended by and between the Company and Graham O. King
and that certain Option Agreement dated June 14, 1991 by and between the Company
and Stephen G. Sullivan 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
Registration Statement, 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
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<PAGE>
[ARTHUR ANDERSEN LOGO]
Exhibit 15
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 for the quarters ended March
31, 1998 and June 30,1998, which includes our reports dated May 6, 1998 and
July 20, 1998, 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.
/s/ Arthur Andersen LLP
- -----------------------------------
Atlanta, Georgia
October 1, 1998
20
<PAGE>
[ARTHUR ANDERSEN LOGO]
Exhibit 23(b)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this Registration Statement on Form S-8 of our
reports dated February 6, 1998 included or incorporated by reference in HBO &
Company's Form 10-K for the year ended December 31, 1997.
/s/ Arthur Andersen LLP
- -----------------------------------
Atlanta, Georgia
October 1, 1998
21
