-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RhIDmCp0QAtKw8gs4wACswq4I/B2cRvkcY0IfxtbgpqFCm1tYoYcz+ATblhNcMQb DLck3eGZ+z9GDDDKffb8yA== 0001047469-98-023773.txt : 19980612 0001047469-98-023773.hdr.sgml : 19980612 ACCESSION NUMBER: 0001047469-98-023773 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 19980611 EFFECTIVENESS DATE: 19980611 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: HBO & CO CENTRAL INDEX KEY: 0000310377 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN [7373] IRS NUMBER: 370986839 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-8 SEC ACT: SEC FILE NUMBER: 333-56579 FILM NUMBER: 98646252 BUSINESS ADDRESS: STREET 1: 301 PERIMETER CTR N CITY: ATLANTA STATE: GA ZIP: 30346 BUSINESS PHONE: 7703936000 MAIL ADDRESS: STREET 1: 301 PERIMETER CTR N CITY: ATLANTA STATE: GA ZIP: 30346 S-8 1 FORM S-8 As filed with the Securities and Exchange Commission on June 11, 1998 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) -------------------- NON-QUALIFIED STOCK OPTION AGREEMENT BETWEEN HBO & COMPANY AND DUANE TISETH NON-QUALIFIED STOCK OPTION AGREEMENT BETWEEN HBO & COMPANY AND DAVID S. TISETH -------------------- 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 One Peachtree Center 303 Peachtree Street, N.E. Atlanta, Georgia 30308-3242 (404) 521-3939 Exhibit Index Appears on Page 9 Page 1 of 25 Pages
Calculation of Registration Fee - ------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------ Proposed maximum Proposed maximum Title of securities Amount to be offering price per aggregate offering Amount of to be registered registered share price registration fee - ------------------------------------------------------------------------------------------------------------------- Common Stock, $.05 par value, and 45,788 $17.265(1) $790,530(1) $233.21(2) Preferred Share shares Purchase Rights(3) - -------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------
(1) Estimated solely for calculating the amount of the registration fee, pursuant to Rule 457(h) under the Securities Act of 1933, as amended. All share and per share information set forth herein has been adjusted to give effect to the 2-for-1 stock split effected on June 9, 1998. Because all shares are presently subject to options, the offering price is based upon the actual exercise price of $17.265 per share. (2) The registration fee is calculated by multiplying the product of $17.265, the exercise price per share, and 45,788 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. Such additional indeterminable number of shares as may be required pursuant to the antidilution provisions of the non-qualified stock option agreements filed as exhibits to this Registration Statement are also registered hereby; no additional registration fee is required. Page 2 of 25 Pages 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 25 Pages 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 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 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. Page 4 of 25 Pages 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. Page 5 of 25 Pages Item 8. Exhibits.
Exhibit Number Description - ------- ----------- Included in Part II of the Registration Statement: 4(a) Non-Qualified Stock Option Agreement, dated May 26, 1998, by and between HBO & Company and Duane Tiseth 4(b) Non-Qualified Stock Option Agreement, dated May 26, 1998, by and between HBO & Company and David S. Tiseth 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 25 Pages 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 11th day of June, 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:
Signature Title Date --------- ----- ---- /s/ Charles W. McCall Chairman, President and Chief Executive June 11, 1998 - ------------------------------------ Officer (Principal Executive Officer) Charles W. McCall /s/ Jay P. Gilbertson President, Co-Chief Operating Officer, June 11, 1998 - ------------------------------------ Chief Financial Officer, Principal Jay P. Gilbertson Accounting Officer, Treasurer and Secretary (Principal Financial Officer and Principal Accounting Officer) /s/ Alfred C. Eckert III Director June 11, 1998 - ------------------------------------ Alfred C. Eckert III /s/ Philip A. Incarnati Director June 11, 1998 - ------------------------------------ Philip A. Incarnati
Page 7 of 25 Pages
Signature Title Date --------- ----- ---- /s/ Alton F. Irby III Director June 11, 1998 - ------------------------------------ Alton F. Irby III /s/ M. Christine Jacobs Director June 11, 1998 - ------------------------------------ M. Christine Jacobs /s/ Gerald E. Mayo Director June 11, 1998 - ------------------------------------ Gerald E. Mayo /s/ James V. Napier Director June 11, 1998 - ------------------------------------ James V. Napier /s/ Donald C. Wegmiller Director June 11, 1998 - ------------------------------------ Donald C. Wegmiller
Page 8 of 25 Pages EXHIBIT INDEX
Exhibit Page Number Description Number - ------ ----------- ------ Included in Part II of the Registration Statement: 4(a) Non-Qualified Stock Option Agreement, dated May 26, 1998, by and between HBO & Company and Duane Tiseth 4(b) Non-Qualified Stock Option Agreement, dated May 26, 1998, by and between HBO & Company and David S. Tiseth 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 25 Pages EX-4.(A) 2 EXHIBIT 4(A) Exhibit 4(a) May 26, 1998 Duane Tiseth 17100 28th Avenue North Plymouth, MN 55447 Re: Grant of Nonqualified Stock Option Dear Duane: This letter sets forth the terms of your nonqualified stock option (the "Option") to purchase shares of common stock of HBO & Company (the "Company"). The Option was originally granted by Enterprise Systems, Inc. ("Enterprise Systems") on June 26, 1997, and was assumed by the Company as a result of the Company's acquisition of Enterprise Systems. 1. Definitions. For the purposes of this Agreement, the following terms shall have the meanings set forth below: "Board" shall mean the Board of Directors of the Company. "Cause" shall mean (i) your theft or embezzlement, or attempted theft or embezzlement, of money or property of the Company, your perpetration or attempted perpetration of fraud, or your participation in a fraud or attempted fraud, on the Company or your unauthorized appropriation of, or your attempt to misappropriate, any tangible or intangible assets or property of the Company, (ii) any act or acts of disloyalty, dishonesty, misconduct, moral turpitude, or any other act or acts by you injurious to the interest, property, operations, business or reputation of the Company, (iii) your conviction of a crime the commission of which results in injury to the Company, or (iv) any material violation of any restriction on the disclosure or use of confidential information of the Company or on competition with the Company or any of its businesses then conducted or planned to be conducted, in each case as determined in the reasonable judgment of the Board. "Code" shall mean the Internal Revenue Code of 1986, as amended, and any successor statute. "Common Stock" shall mean the Company's Common Stock, $.05 par value, or, in the event that the outstanding Common Stock is hereafter changed into or exchanged for different stock or securities of the Company, such other stock or securities. "Company" shall mean HBO & Company, a Delaware corporation, and any subsidiary corporation of HBO & Company as such term is defined in Section 425(f) of the Code. "Disability" shall mean your inability, due to illness, accident, injury, physical or mental incapacity or other disability, to carry out effectively your duties and obligations to the Company or to participate effectively and actively in the management of the Company for a period of at least 90 consecutive days or for shorter periods aggregating at least 120 days (whether or not consecutive) during any twelve-month period, as determined in the reasonable judgment of the Board. "Fair Market Value" of the Common Stock shall be determined by the Board. "Option Shares" shall mean (i) all shares of Common Stock issued or issuable upon the exercise of the Option and (ii) all shares of Common Stock, or other equity securities, issued with respect to the Common Stock referred to in clause (i) above by way of stock dividend or stock split or in connection with any conversion, merger, Page 10 of 25 Pages consolidation or recapitalization or other reorganization affecting the Common Stock. Option Shares will continue to be Option Shares in the hands of any holder other than you (except for the Company or, to the extent that you are permitted to transfer Option Shares pursuant to paragraph 14 or 16 hereof, purchasers pursuant to a public offering under the Securities Act), and each such transferee thereof will succeed to the rights and obligations of a holder of Option Shares hereunder. "Retirement" shall mean the voluntary termination of employment after the age of 60 with no present intention of undertaking full-time employment at a later date. "Securities Act" shall mean the Securities Act of 1933, as amended, and any successor statute. 2. Option. (a) Terms. Your Option is to purchase up to 13,462 shares of Common Stock (the "Option Shares") at an option price per share of $34.53 (the "Exercise Price"), payable upon exercise as set forth in paragraph 2(b) below. Your Option will expire at the close of business on June 26, 2007 (the "Expiration Date"), subject to earlier expiration in connection with the termination of your employment or your death as provided in paragraph 4(b) below. Your Option is not intended to be an "incentive stock option" within the meaning of Section 422 of the Code. (b) Payment of Option Price. Subject to paragraph 3 below, your Option may be exercised in whole or in part upon payment of an amount (the "Option Price") equal to the product of (i) the Exercise Price multiplied by (ii) the number of Option Shares to be acquired. Payment shall be made in cash (including check, bank draft or money order). 3. Exercisability/Vesting. (a) Normal Vesting. In accordance with the original terms of your Option, your Option became fully vested and exercisable upon the acquisition of Enterprise Systems by the Company. 4. Expiration of Option. (a) Normal Expiration. In no event shall any part of your Option be exercisable after the Expiration Date set forth in paragraph 2(a) above. (b) Early Expiration Upon Termination of Employment. Any portion of your Option that was not vested and exercisable on the date your employment with the Company terminated (for any reason whatsoever) will expire and be forfeited on such date, and any portion of your Option that was vested and exercisable on the date your employment with the Company terminated (for any reason whatsoever) will also expire and be forfeited; provided, however, that: (i) if you die or become subject to any Disability, the portion of your Option that is vested and exercisable will expire 90 days form the date of your death or Disability, but in no event after the Expiration Date, (ii) if you Retire, the portion of your Option that is vested and exercisable will expire 90 days from the date of your Retirement, but in no event after the Expiration Date, and (iii) if you are discharged for any reason other than for Cause, the portion of your Option that is vested and exercisable will expire 30 days form the date of your discharge, but in no event after the Expiration Date. 5. Procedure for Exercise. You may exercise all or any portion of your Option, to the extent it has vested and is outstanding, at any time and from time to time prior to its expiration, by delivering (i) written notice to the Company (to the attention of the Company's Secretary), (ii) your written acknowledgment that you have read and have been afforded an opportunity to ask questions of management of the Company regarding all financial and other information provided to you regarding the Company, together with (iii) payment of the Option Price in accordance with the provisions of paragraph 2(b) above. As a condition to any exercise of your Option, you will permit the Company to deliver to your all financial and other information regarding the Company it believes necessary to enable you to make an informed investment decision, and you will make all customary investment representations which the Company requires. All of the foregoing representations, warranties, covenants and agreements shall be made in a form satisfactory to the Company and its counsel. Page 11 of 25 Pages 6. Rights of Optionee. Nothing in this Agreement shall interfere with or limit in any way the right of the Company to terminate your employment at any time (with or without Cause), nor confer upon you any right to continue in the employ of the Company for any period of time or to continue your present (or any other) rate of compensation, and in the event of your termination of employment (including, but not limited to, your termination of employment by the Company without Cause) any portion of your Option that was not previously vested and exercisable will be forfeited. 7. Withholding of Taxes. The Company shall be entitled, if necessary or desirable, to withhold from you from any amounts due and payable by the Company to you (or secure payment from you in lieu of withholding) the amount of any withholding or other tax due from the Company with respect to any Option Shares issuable under this Option, and the Company may defer such issuance unless indemnified by you to its satisfaction. 8. Adjustments. In the event of a reorganization, recapitalization, stock dividend or stock split, or combination or other change in the shares of Common Stock, the Board shall, in order to prevent the dilution or enlargement of rights under your Option, make such adjustments in the number and type of shares covered by your Option and the Exercise Price specified herein as may be determined to be appropriate and equitable. 9. Right to Purchase Option Shares Upon Your Termination of Employment. (a) Repurchase of Option Shares. If your employment with the Company shall terminate for any reason whatsoever, including your death, Disability, resignation or termination (the date on which such termination occurs being referred to as the "Termination Date"), then the Company shall have the option to repurchase all or any part of the Option Shares issued or issuable upon exercise of your Option, whether held by you or by one or more of your transferees, at the price determined in accordance with the provisions of paragraph 11 hereof (the "Repurchase Option"). (b) Repurchase by Company. The Company may elect to purchase all or any portion of the Option Shares by delivery of written notice (the "Repurchase Notice") to you or any other holder(s) of the Option Shares within 90 days after the Termination Date. The Repurchase Notice shall set forth the number of Option Shares to be acquired from you and such other holder(s), the aggregate consideration to be paid for such shares and the time and place for the closing of the transaction. The number of Option Shares to be repurchased by the Company shall first be satisfied to the extent possible from the Option Shares held by you at the time of delivery of the Repurchase Notice. If the number of Option Shares then held by you is less than the total number of Option Shares the Company has elected to purchase, then the Company shall purchase the remaining shares elected to be purchased from the other holder(s) thereof, pro rata according to the number of shares held by each such holder at the time of delivery of such Repurchase Notice. (c) Repurchase by the Company's Designees. If for any reason the Company does not elect to purchase all of the Option Shares pursuant to the Repurchase Option, then the Company may designate such other persons ("Designees") to exercise the Company's Repurchase Option in the manner set forth in paragraph 10(b) for all or any portion of the number of Option Shares the Company has not elected to purchase (the "Available Shares"). As soon as practicable after the Company has determined that there will be Available Shares, but in any event within 90 days after the Termination Date, the Company shall deliver written notice (the "Option Notice") to the Designees setting forth the number of Available Shares and the price for each Available Share. Each Designee may elect to purchase any number of Available Shares by delivering written notice to the Company within 20 days after receipt of the Option Notice from the Company. If more than one Designee elects to purchase the Available Shares and such elections exceed the number of Available Shares, the number of Available Shares to be purchased by the electing Designees will be allocated among them pro rata based upon their relative percentage ownership of Common Stock at the time of the Option Notice. As soon as practicable, and in any event within five days after the expiration of such 20-day period, the Company shall notify you and any other holder(s) of Option Shares as to the number of Option Shares being purchased from you by the Designees (the "Supplemental Repurchase Notice"). At the time the Company delivers the Supplemental Repurchase Notice to you and such other holder(s) of Option Shares, each Designee shall also receive written notice from the Company setting forth the number of shares it is entitled to purchase, the aggregate purchase price and the time and place of the closing of the transaction. Page 12 of 25 Pages (d) Closing of Repurchase of Option Shares. The purchase of Option Shares pursuant to this paragraph 10 will be closed at the Company's executive offices within 20 days after the expiration of the 90-day period referred to in paragraph 10(b). At the closing, the purchaser or purchasers shall pay the purchase price in the manner specified in paragraph 11(b) and you and any other holders of Option Shares being purchased shall deliver the certificate or certificates representing such shares to the purchaser or purchasers or their nominees, accompanied by duly executed stock powers. Any purchaser of Option Shares under the paragraph 10 shall be entitled to receive customary representations and warranties from you and any other selling holder(s) of Option Shares regarding the sale of such shares (including representations and warranties regarding good title to such shares, free and clear of any liens or encumbrances). (e) No Purchase Obligation. Notwithstanding any other provision of this Agreement, you acknowledge that the Company has no obligation to repurchase your Option Shares in any circumstances whatsoever. The Repurchase Option is an option in favor of the Company, and not an obligation, and shall not impose any obligation on behalf of the Company, and that the Company has not made, and no person is authorized on behalf of the Company to make, and any representations contrary to this Section 10(e). 10. Purchase Price for Option Shares. (a) Purchase Price. The purchase price per share to be paid for the Option Shares purchased by the Company pursuant to paragraph 10 shall be equal to the Fair Market Value of such Option Shares as of the Termination Date. (b) Manner of Payment. If the Company elects to purchase all or any part of the Option Shares, including Option Shares held by one or more transferees, the Company may pay for the Shares (i) first, up to 50% of the aggregate purchase price for the Option Shares, by delivery of a cashier's or certified check or wire transfer of funds, to the extent such payment would not cause the Company to violate the Business Corporation Act of the State of Illinois and would not cause the Company to breach any agreement to which it is a party relating to the indebtedness for borrowed money or other material agreement, and (ii) thereafter, the balance of the purchase price by delivery of a subordinated promissory note of the Company, bearing interest per annum at the prime rate in effect at LaSalle National Bank, N.A. on the date of issuance of such promissory note plus 2% (which shall be payable annually in cash unless otherwise prohibited), shall have all principal payment due on the second anniversary of the date of issuance and shall be subordinated on terms and conditions satisfactory to the holders of the Company's outstanding indebtedness for borrowed money. If any Designees elect to purchase all or any portion of the Available Shares, such Designee(s) shall pay the purchase price for that portion of such Option Shares by certified or cashier's check or wire transfer of funds. 11. Securities Laws Restrictions on Transfer of Option Shares. You represent that when you exercise your Option you will be purchasing Option Shares for your own account and not on behalf of others. You understand and acknowledge that federal and state securities laws govern and restrict your right to offer, sell or otherwise dispose of any Option Shares unless your offer, sale or other disposition thereof is registered under the Securities Act and state securities laws, or in the opinion of the Company's counsel, such offer, sale or other disposition is exempt from registration or qualification thereunder. You agree that you will not offer, sell or otherwise dispose of any Option Shares in any manner which would: (i) require the Company to file any registration statement with the Securities and Exchange Commission (or any similar filing under state law) or to amend or supplement any such filing or (ii) violate or cause the Company to violate the Securities Act, the rules and regulations promulgated thereunder or any other state or federal law. You further understand that the certificates for any Option Shares you purchase will bear such legends as the Company deems necessary or desirable in connection with the Securities Act or other rules, regulations or laws. 12. Non-Transferability of Option. Your Option is personal to you and is not transferable by you other than to your estate by will or the laws of descent and distribution. During your lifetime only you (or your guardian or legal representative) may exercise your Option. In the event of your death, your Option may be exercised only (i) by the executor or administrator of your estate and (ii) to the extent that you were entitled hereunder at the date of your death. Page 13 of 25 Pages 13. Additional Restrictions on Transfer. (a) Restrictive Legend. The certificates representing the Option Shares will bear the following legend: "The securities represented by this certificate under any state securities laws and may not be sold or transferred in the absence of an effective registration statement under the Securities Act of 1933, as amended, and applicable state securities laws or an exemption from registration thereunder. The securities represented by this certificate are also subject to additional restrictions on transfer, certain repurchase options and certain other agreements set forth in and option agreement between the Company and Duane Tiseth, a copy of which may be obtained by the holder hereof at the Company's principal place of business without charge." (b) Opinion of Counsel. The Company may condition any sale, transfer or disposition by you of any Option Shares (except pursuant to an effective registration statement under the Securities Act upon your delivery to the Company an opinion of counsel reasonably acceptable in form and substance to the Company that registration under the Securities Act or any applicable state securities law is not required in connection with such transfer. (c) Holdback. You agree not to effect any public sale or distribution of any equity securities of the Company, or any securities convertible into or exchangeable or exercisable for such securities, during the seven days prior to and the 180 days after the effectiveness of any underwritten registration of securities of the Company under the Securities Act, except as part of such underwritten registration if otherwise permitted. (d) Transfers in Violation of Agreement. Any transfer or attempted transfer of the Option or Option Shares in violation of any provision of this Agreement shall be void, and the Company shall not record such transfer on its books or treat any purported transferee of the Option or such Option Shares as the owner of the Option or such Option Shares for any purpose. 14. Remedies. The parties hereto will be entitled to enforce their rights under this Agreement specifically, to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights existing in their favor. The parties hereto acknowledge and agree that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that any party hereto may in its sole discretion, apply to any court of law or equity of competent jurisdiction for specific performance and/or injunctive relief (without posting bond or other security) in order to enforce or prevent any violation of the provisions of this Agreement. 15. Amendment. Except as otherwise provided herein, any provision of this Agreement may be amended or waived only with the prior written consent of you and the Company. 16. 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 permitted assigns of the parties hereto whether so expressed or not. 17. Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement. 18. Counterparts. This Agreement may be executed simultaneously in two or more counterparts, each of which shall constitute an original, but all of which taken together shall constitute one and the same Agreement. Page 14 of 25 Pages 19. Descriptive Headings. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement. 20. Governing Law. All questions concerning the construction, validity and interpretation of this Agreement will be governed by the internal law, and not the law of conflicts, of Georgia. 21. Notices. All notices, demands or other communications to be given or delivered under or by reason of the provisions of this Agreement shall be in writing and shall be deemed to have been given when delivered personally or mailed by certified or registered mail, return receipt requested and postage prepaid, to the recipient. Such notices, demands and other communications shall be sent to you and to the Company at the addresses indicated below: (a) If to the Optionee: Duane Tiseth 17100 28th Avenue North Plymouth, MN 55447 (b) If to the Company: HBO & Company 301 Perimeter Center North Atlanta, GA 30346 Attention: Secretary or to such other address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party. 22. Entire Agreement. This Agreement constitutes the entire understanding between you and the Company, and supersedes all other agreements, whether written or oral, with respect to the acquisition by you of Common Stock of the Company. Please execute the extra copy of this Agreement in the space below and return it to the Company's Secretary at its executive officers to confirm your understanding and acceptance of the agreements contained in this Agreement. Very truly yours, HBO & COMPANY By: /s/ Jay P. Gilbertson ------------------------------- Title: President, Co-COO & CFO ----------------------------- The undersigned hereby acknowledges having read this Agreement and hereby agrees to be bound by all provisions set forth herein. OPTIONEE: /s/ Duane Tiseth ------------------------------------ Page 15 of 25 Pages EX-4.(B) 3 EXHIBIT 4(B) Exhibit 4(b) May 26, 1998 Mr. David S. Tiseth 1400 North Lake Shore Drive Suite 17F Chicago, IL 60610 Re: Grant of Nonqualified Stock Option Dear David: This letter sets forth the terms of your nonqualified stock option (the "Option") to purchase shares of common stock of HBO & Company (the "Company"). The Option was originally granted by Enterprise Systems, Inc. ("Enterprise Systems") on June 26, 1997, and was assumed by the Company as a result of the Company's acquisition of Enterprise Systems. 1. Definitions. For the purposes of this Agreement, the following terms shall have the meanings set forth below: "Board" shall mean the Board of Directors of the Company. "Cause" shall mean (i) your theft or embezzlement, or attempted theft or embezzlement, of money or property of the Company, your perpetration or attempted perpetration of fraud, or your participation in a fraud or attempted fraud, on the Company or your unauthorized appropriation of, or your attempt to misappropriate, any tangible or intangible assets or property of the Company, (ii) any act or acts of disloyalty, dishonesty, misconduct, moral turpitude, or any other act or acts by you injurious to the interest, property, operations, business or reputation of the Company, (iii) your conviction of a crime the commission of which results in injury to the Company, or (iv) any material violation of any restriction on the disclosure or use of confidential information of the Company or on competition with the Company or any of its businesses then conducted or planned to be conducted, in each case as determined in the reasonable judgment of the Board. "Code" shall mean the Internal Revenue Code of 1986, as amended, and any successor statute. "Common Stock" shall mean the Company's Common Stock, $.05 par value, or, in the event that the outstanding Common Stock is hereafter changed into or exchanged for different stock or securities of the Company, such other stock or securities. "Company" shall mean HBO & Company, a Delaware corporation, and any subsidiary corporation of HBO & Company as such term is defined in Section 425(f) of the Code. "Disability" shall mean your inability, due to illness, accident, injury, physical or mental incapacity or other disability, to carry out effectively your duties and obligations to the Company or to participate effectively and actively in the management of the Company for a period of at least 90 consecutive days or for shorter periods aggregating at least 120 days (whether or not consecutive) during any twelve-month period, as determined in the reasonable judgment of the Board. Page 16 of 25 Pages "Fair Market Value" of the Common Stock shall be determined by the Board. "Option Shares" shall mean (i) all shares of Common Stock issued or issuable upon the exercise of the Option and (ii) all shares of Common Stock, or other equity securities, issued with respect to the Common Stock referred to in clause (i) above by way of stock dividend or stock split or in connection with any conversion, merger, consolidation or recapitalization or other reorganization affecting the Common Stock. Option Shares will continue to be Option Shares in the hands of any holder other than you (except for the Company or, to the extent that you are permitted to transfer Option Shares pursuant to paragraph 14 or 16 hereof, purchasers pursuant to a public offering under the Securities Act), and each such transferee thereof will succeed to the rights and obligations of a holder of Option Shares hereunder. "Retirement" shall mean the voluntary termination of employment after the age of 60 with no present intention of undertaking full-time employment at a later date. "Securities Act" shall mean the Securities Act of 1933, as amended, and any successor statute. 2. Option. (a) Terms. Your Option is to purchase up to 9,432 shares of Common Stock (the "Option Shares") at an option price per share of $34.53 (the "Exercise Price"), payable upon exercise as set forth in paragraph 2(b) below. Your Option will expire at the close of business on June 26, 2007 (the "Expiration Date"), subject to earlier expiration in connection with the termination of your employment or your death as provided in paragraph 4(b) below. Your Option is not intended to be an "incentive stock option" within the meaning of Section 422 of the Code. (b) Payment of Option Price. Subject to paragraph 3 below, your Option may be exercised in whole or in part upon payment of an amount (the "Option Price") equal to the product of (i) the Exercise Price multiplied by (ii) the number of Option Shares to be acquired. Payment shall be made in cash (including check, bank draft or money order). 3. Exercisability/Vesting. (a) Normal Vesting. In accordance with the original terms of your Option, your Option became fully vested and exercisable upon the acquisition of Enterprise Systems by the Company. 4. Expiration of Option. (a) Normal Expiration. In no event shall any part of your Option be exercisable after the Expiration Date set forth in paragraph 2(a) above. (b) Early Expiration Upon Termination of Employment. Any portion of your Option that was not vested and exercisable on the date your employment with the Company terminated (for any reason whatsoever) will expire and be forfeited on such date, and any portion of your Option that was vested and exercisable on the date your employment with the Company terminated (for any reason whatsoever) will also expire and be forfeited; provided, however, that: (i) if you die or become subject to any Disability, the portion of your Option that is vested and exercisable will expire 90 days form the date of your death or Disability, but in no event after the Expiration Date, (ii) if you Retire, the portion of your Option that is vested and exercisable will expire 90 days from the date of your Retirement, but in no event after the Expiration Date, and (iii) if you are discharged for any reason other than for Cause, the portion of your Option that is vested and exercisable will expire 30 days form the date of your discharge, but in no event after the Expiration Date. 5. Procedure for Exercise. You may exercise all or any portion of your Option, to the extent it has vested and is outstanding, at any time and from time to time prior to its expiration, by delivering (i) written notice to the Company (to the attention of the Company's Secretary), (ii) your written acknowledgment that you have read and have been afforded an opportunity to ask questions of management of the Company regarding all financial and other information provided to you regarding the Company, together with (iii) payment of the Option Price in accordance with the provisions of paragraph 2(b) above. As a condition to any exercise of your Option, you will permit the Company to Page 17 of 25 Pages deliver to your all financial and other information regarding the Company it believes necessary to enable you to make an informed investment decision, and you will make all customary investment representations which the Company requires. All of the foregoing representations, warranties, covenants and agreements shall be made in a form satisfactory to the Company and its counsel. 6. Rights of Optionee. Nothing in this Agreement shall interfere with or limit in any way the right of the Company to terminate your employment at any time (with or without Cause), nor confer upon you any right to continue in the employ of the Company for any period of time or to continue your present (or any other) rate of compensation, and in the event of your termination of employment (including, but not limited to, your termination of employment by the Company without Cause) any portion of your Option that was not previously vested and exercisable will be forfeited. 7. Withholding of Taxes. The Company shall be entitled, if necessary or desirable, to withhold from you from any amounts due and payable by the Company to you (or secure payment from you in lieu of withholding) the amount of any withholding or other tax due from the Company with respect to any Option Shares issuable under this Option, and the Company may defer such issuance unless indemnified by you to its satisfaction. 8. Adjustments. In the event of a reorganization, recapitalization, stock dividend or stock split, or combination or other change in the shares of Common Stock, the Board shall, in order to prevent the dilution or enlargement of rights under your Option, make such adjustments in the number and type of shares covered by your Option and the Exercise Price specified herein as may be determined to be appropriate and equitable. 9. Right to Purchase Option Shares Upon Your Termination of Employment. (a) Repurchase of Option Shares. If your employment with the Company shall terminate for any reason whatsoever, including your death, Disability, resignation or termination (the date on which such termination occurs being referred to as the "Termination Date"), then the Company shall have the option to repurchase all or any part of the Option Shares issued or issuable upon exercise of your Option, whether held by you or by one or more of your transferees, at the price determined in accordance with the provisions of paragraph 11 hereof (the "Repurchase Option"). (b) Repurchase by Company. The Company may elect to purchase all or any portion of the Option Shares by delivery of written notice (the "Repurchase Notice") to you or any other holder(s) of the Option Shares within 90 days after the Termination Date. The Repurchase Notice shall set forth the number of Option Shares to be acquired from you and such other holder(s), the aggregate consideration to be paid for such shares and the time and place for the closing of the transaction. The number of Option Shares to be repurchased by the Company shall first be satisfied to the extent possible from the Option Shares held by you at the time of delivery of the Repurchase Notice. If the number of Option Shares then held by you is less than the total number of Option Shares the Company has elected to purchase, then the Company shall purchase the remaining shares elected to be purchased from the other holder(s) thereof, pro rata according to the number of shares held by each such holder at the time of delivery of such Repurchase Notice. (c) Repurchase by the Company's Designees. If for any reason the Company does not elect to purchase all of the Option Shares pursuant to the Repurchase Option, then the Company may designate such other persons ("Designees") to exercise the Company's Repurchase Option in the manner set forth in paragraph 10(b) for all or any portion of the number of Option Shares the Company has not elected to purchase (the "Available Shares"). As soon as practicable after the Company has determined that there will be Available Shares, but in any event within 90 days after the Termination Date, the Company shall deliver written notice (the "Option Notice") to the Designees setting forth the number of Available Shares and the price for each Available Share. Each Designee may elect to purchase any number of Available Shares by delivering written notice to the Company within 20 days after receipt of the Option Notice from the Company. If more than one Designee elects to purchase the Available Shares and such elections exceed the number of Available Shares, the number of Available Shares to be purchased by the electing Designees will be allocated among them pro rata based upon their relative percentage ownership of Common Stock at the time of the Option Notice. As soon as practicable, and in any event within five days after the expiration of such 20-day period, the Company shall notify you and any other holder(s) of Option Shares as to the number of Option Shares being purchased from you by the Designees (the "Supplemental Repurchase Notice"). At the time the Company delivers the Supplemental Repurchase Notice to you and such other holder(s) of Option Shares, each Designee shall also receive Page 18 of 25 Pages written notice from the Company setting forth the number of shares it is entitled to purchase, the aggregate purchase price and the time and place of the closing of the transaction. (d) Closing of Repurchase of Option Shares. The purchase of Option Shares pursuant to this paragraph 10 will be closed at the Company's executive offices within 20 days after the expiration of the 90-day period referred to in paragraph 10(b). At the closing, the purchaser or purchasers shall pay the purchase price in the manner specified in paragraph 11(b) and you and any other holders of Option Shares being purchased shall deliver the certificate or certificates representing such shares to the purchaser or purchasers or their nominees, accompanied by duly executed stock powers. Any purchaser of Option Shares under the paragraph 10 shall be entitled to receive customary representations and warranties from you and any other selling holder(s) of Option Shares regarding the sale of such shares (including representations and warranties regarding good title to such shares, free and clear of any liens or encumbrances). (e) No Purchase Obligation. Notwithstanding any other provision of this Agreement, you acknowledge that the Company has no obligation to repurchase your Option Shares in any circumstances whatsoever. The Repurchase Option is an option in favor of the Company, and not an obligation, and shall not impose any obligation on behalf of the Company, and that the Company has not made, and no person is authorized on behalf of the Company to make, and any representations contrary to this Section 10(e). 10. Purchase Price for Option Shares. (a) Purchase Price. The purchase price per share to be paid for the Option Shares purchased by the Company pursuant to paragraph 10 shall be equal to the Fair Market Value of such Option Shares as of the Termination Date. (b) Manner of Payment. If the Company elects to purchase all or any part of the Option Shares, including Option Shares held by one or more transferees, the Company may pay for the Shares (i) first, up to 50% of the aggregate purchase price for the Option Shares, by delivery of a cashier's or certified check or wire transfer of funds, to the extent such payment would not cause the Company to violate the Business Corporation Act of the State of Illinois and would not cause the Company to breach any agreement to which it is a party relating to the indebtedness for borrowed money or other material agreement, and (ii) thereafter, the balance of the purchase price by delivery of a subordinated promissory note of the Company, bearing interest per annum at the prime rate in effect at LaSalle National Bank, N.A. on the date of issuance of such promissory note plus 2% (which shall be payable annually in cash unless otherwise prohibited), shall have all principal payment due on the second anniversary of the date of issuance and shall be subordinated on terms and conditions satisfactory to the holders of the Company's outstanding indebtedness for borrowed money. If any Designees elect to purchase all or any portion of the Available Shares, such Designee(s) shall pay the purchase price for that portion of such Option Shares by certified or cashier's check or wire transfer of funds. 11. Securities Laws Restrictions on Transfer of Option Shares. You represent that when you exercise your Option you will be purchasing Option Shares for your own account and not on behalf of others. You understand and acknowledge that federal and state securities laws govern and restrict your right to offer, sell or otherwise dispose of any Option Shares unless your offer, sale or other disposition thereof is registered under the Securities Act and state securities laws, or in the opinion of the Company's counsel, such offer, sale or other disposition is exempt from registration or qualification thereunder. You agree that you will not offer, sell or otherwise dispose of any Option Shares in any manner which would: (i) require the Company to file any registration statement with the Securities and Exchange Commission (or any similar filing under state law) or to amend or supplement any such filing or (ii) violate or cause the Company to violate the Securities Act, the rules and regulations promulgated thereunder or any other state or federal law. You further understand that the certificates for any Option Shares you purchase will bear such legends as the Company deems necessary or desirable in connection with the Securities Act or other rules, regulations or laws. 12. Non-Transferability of Option. Your Option is personal to you and is not transferable by you other than to your estate by will or the laws of descent and distribution. During your lifetime only you (or your guardian or legal representative) may exercise your Option. In the event of your death, your Option may be exercised only (i) by the executor or administrator of your estate and (ii) to the extent that you were entitled hereunder at the date of your death. Page 19 of 25 Pages 13. Additional Restrictions on Transfer. (a) Restrictive Legend. The certificates representing the Option Shares will bear the following legend: "The securities represented by this certificate under any state securities laws and may not be sold or transferred in the absence of an effective registration statement under the Securities Act of 1933, as amended, and applicable state securities laws or an exemption from registration thereunder. The securities represented by this certificate are also subject to additional restrictions on transfer, certain repurchase options and certain other agreements set forth in and option agreement between the Company and David S. Tiseth, a copy of which may be obtained by the holder hereof at the Company's principal place of business without charge." (b) Opinion of Counsel. The Company may condition any sale, transfer or disposition by you of any Option Shares (except pursuant to an effective registration statement under the Securities Act upon your delivery to the Company an opinion of counsel reasonably acceptable in form and substance to the Company that registration under the Securities Act or any applicable state securities law is not required in connection with such transfer. (c) Holdback. You agree not to effect any public sale or distribution of any equity securities of the Company, or any securities convertible into or exchangeable or exercisable for such securities, during the seven days prior to and the 180 days after the effectiveness of any underwritten registration of securities of the Company under the Securities Act, except as part of such underwritten registration if otherwise permitted. (d) Transfers in Violation of Agreement. Any transfer or attempted transfer of the Option or Option Shares in violation of any provision of this Agreement shall be void, and the Company shall not record such transfer on its books or treat any purported transferee of the Option or such Option Shares as the owner of the Option or such Option Shares for any purpose. 14. Remedies. The parties hereto will be entitled to enforce their rights under this Agreement specifically, to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights existing in their favor. The parties hereto acknowledge and agree that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that any party hereto may in its sole discretion, apply to any court of law or equity of competent jurisdiction for specific performance and/or injunctive relief (without posting bond or other security) in order to enforce or prevent any violation of the provisions of this Agreement. 15. Amendment. Except as otherwise provided herein, any provision of this Agreement may be amended or waived only with the prior written consent of you and the Company. 16. 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 permitted assigns of the parties hereto whether so expressed or not. 17. Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement. 18. Counterparts. This Agreement may be executed simultaneously in two or more counterparts, each of which shall constitute an original, but all of which taken together shall constitute one and the same Agreement. Page 20 of 25 Pages 19. Descriptive Headings. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement. 20. Governing Law. All questions concerning the construction, validity and interpretation of this Agreement will be governed by the internal law, and not the law of conflicts, of Georgia. 21. Notices. All notices, demands or other communications to be given or delivered under or by reason of the provisions of this Agreement shall be in writing and shall be deemed to have been given when delivered personally or mailed by certified or registered mail, return receipt requested and postage prepaid, to the recipient. Such notices, demands and other communications shall be sent to you and to the Company at the addresses indicated below: (a) If to the Optionee: Mr. David S. Tiseth 1400 North Lake Shore Drive Suite 17F Chicago, IL 60610 (b) If to the Company: HBO & Company 301 Perimeter Center North Atlanta, GA 30346 Attention: Secretary or to such other address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party. 22. Entire Agreement. This Agreement constitutes the entire understanding between you and the Company, and supersedes all other agreements, whether written or oral, with respect to the acquisition by you of Common Stock of the Company. Page 21 of 25 Pages Please execute the extra copy of this Agreement in the space below and return it to the Company's Secretary at its executive officers to confirm your understanding and acceptance of the agreements contained in this Agreement. Very truly yours, HBO & COMPANY By: /s/ Jay P. Gilbertson -------------------------------------- Title: President, Co-COO & CFO ----------------------------------- The undersigned hereby acknowledges having read this Agreement and hereby agrees to be bound by all provisions set forth herein. OPTIONEE: /s/ David S. Tiseth ----------------------------------------- Page 22 of 25 Pages EX-5 4 EXHIBIT 5 JONES, DAY, REAVIS & POGUE 3500 SunTrust Plaza 303 Peachtree Street, N.E. Atlanta, Georgia 30308 Exhibit 5 June 8, 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 45,788 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 Non-Qualified Stock Option Agreement dated May 26, 1998 by and between the Company and Duane Tiseth and that certain Non-Qualified Stock Option Agreement dated May 26, 1998 by and between the Company and David S. Tiseth 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 Page 23 of 25 Pages EX-15 5 EXHIBIT 15 Exhibit 15 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 Annual Report on Form 10-K for the fiscal year ended December 31, 1997 and its Form 10-Q for the quarter ended March 31, 1998 which includes our report dated May 6, 1998, 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 June 10, 1998 Page 24 of 25 Pages EX-23.(B) 6 EXHIBIT 23(B) Exhibit 23(b) Arthur Andersen LLP 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. Arthur Andersen LLP Atlanta, Georgia June 10, 1998 Page 25 of 25 Pages -----END PRIVACY-ENHANCED MESSAGE-----