<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[ ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
ON COMMAND CORPORATION
-------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
ON COMMAND CORPORATION
-------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[ ] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(J)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- - --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- - --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
- - --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- - --------------------------------------------------------------------------------
(5) Filing fee:
- - --------------------------------------------------------------------------------
<PAGE> 2
ON COMMAND CORPORATION
6331 San Ignacio Avenue,
San Jose, California 95119
April 6, 1998
Dear Stockholder:
The Annual Meeting of Stockholders of On Command Corporation (the
"Company") will be held at 11:00 a.m. on Wednesday, May 6, 1998, in the
Corporate Conference Room at the Company's headquarters at 6331 San Ignacio
Avenue, San Jose, California 95119. The matters on the meeting agenda are
described on the following pages.
If you are a stockholder of record, we urge that you send in your proxy
promptly for the Annual Meeting whether or not you plan to attend. Giving your
proxy will not affect your right to vote in person if you attend. If you wish to
give a proxy to someone other than the persons named on the enclosed proxy form,
you may cross out their names and insert the name of some other person who will
be at the meeting. The signed proxy form then should be given to that person for
his or her use at the meeting. If your shares are held in the name of a broker
and you wish to attend the meeting, you should obtain a letter of identification
from your broker and bring it to the meeting. In order to vote personally shares
held in the name of your broker, you must obtain from the broker a proxy issued
to you.
Sincerely,
/s/ /s/
Charles Lyons Robert M. Kavner
Chairman of the Board President and Chief
Executive Officer
YOUR PROXY IS IMPORTANT ... PLEASE VOTE PROMPTLY
<PAGE> 3
ON COMMAND CORPORATION
6331 San Ignacio Avenue,
San Jose, California 95119
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of ON COMMAND CORPORATION:
The 1998 Annual Meeting of Stockholders of On Command Corporation will
be held in the Corporate Conference Room at the Company's headquarters at 6331
San Ignacio Avenue, San Jose, California 95119, on Wednesday, May 6, 1998 at
11:00 a.m., Pacific Daylight Time, for the following purposes:
1. election of all directors; and
2. action on such other matters as may properly come before the meeting or
any reconvened session thereof.
The Board of Directors has fixed the close of business on March 16,
1998, as the record date for the determination of stockholders entitled to
notice of and to vote at the meeting and at any reconvened session thereof.
YOUR PROXY IS IMPORTANT. EVEN IF YOU HOLD ONLY A FEW SHARES, AND
WHETHER OR NOT YOU EXPECT TO BE PRESENT, YOU ARE URGENTLY REQUESTED TO DATE,
SIGN AND MAIL THE ENCLOSED PROXY IN THE POSTAGE-PAID ENVELOPE THAT IS PROVIDED.
THE PROXY MAY BE REVOKED BY YOU AT ANY TIME, AND THE GIVING OF YOUR PROXY WILL
NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING.
This notice is given pursuant to direction of the Board of Directors.
/s/
Jill E. Fishbein
Senior Vice President, Legal,
San Jose, California General Counsel and Secretary
April 6, 1998
<PAGE> 4
ON COMMAND CORPORATION
6331 San Ignacio Avenue,
San Jose, California 95119
Telephone: (408) 360-4500
PROXY STATEMENT
This Proxy Statement is provided by the Board of Directors of On
Command Corporation (the "Company" or "OCC") in connection with its solicitation
of proxies for the 1998 Annual Meeting of Stockholders to be held on May 6,
1998, or any adjournment or postponement thereof, for the purposes set forth in
the accompanying Notice of Annual Meeting of Stockholders. The date of this
Proxy Statement is April 6, 1998, the approximate date on which this Proxy
Statement and the accompanying proxy were first sent or given to stockholders.
Stockholders of record of the Company's Common Stock at the close of
business on March 16, 1998 are entitled to vote at the meeting in person or by
proxy. Each share is entitled to one vote, except that for the election of
directors, each Stockholder of record of the Company's Common Stock at the close
of business on March 16, 1997 is entitled to vote for each share then held and
to cumulate votes in the election of directors. If a proxy in the accompanying
form is properly executed and returned, the shares represented by the proxy will
be voted as the stockholder specifies. A stockholder may revoke a proxy at any
time before it is exercised by submitting a written revocation, submitting a
later-dated proxy, or voting in person at the meeting.
Abstentions and broker non-votes will not be counted for purposes of
determining whether any given proposal has been approved by the stockholders.
Accordingly, abstentions and broker non-votes will not affect the votes on any
of the proposals, all of which require for approval the affirmative vote of a
majority of the shares represented and entitled to vote at the meeting.
OWNERSHIP OF COMMON STOCK
As of March 16, 1998, the record date, approximately 29,857,499 shares
of Common Stock were issued and outstanding. To the knowledge of the Company,
based upon Schedules 13G or 13D filed with the Securities and Exchange
Commission (the "SEC"), the following persons were the only beneficial owners of
more than five percent of the Company's Common Stock as of December 31, 1997.
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Percent of Common Stock
Beneficial Owner Beneficial Ownership Issued and Outstanding
- - ---------------- -------------------- ----------------------
<S> <C> <C>
Ascent Entertainment Group, Inc. (1) 18,282,908 59.0%
One Tabor Center
1200 Seventeenth Street
Denver, CO 80202
Credit Suisse First Boston 2,845,445 9.5%
11 Madison Avenue
New York, NY 10010
Hilton Hotels Corporation (2) 2,486,132 8.3%
9336 Civic Center Drive
Beverly Hills, CA 90210
</TABLE>
1
<PAGE> 5
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Percent of Common Stock
Beneficial Owner Beneficial Ownership Issued and Outstanding
- - ---------------- -------------------- ----------------------
<S> <C> <C>
Princeton Services, Inc. (3) 2,125,362 7.1%
800 Scudders Mill Road
Plainsboro, NJ 08536
Gary Wilson (4) 1,810,000 5.7%
9665 Wilshire Blvd., Suite 200
Beverly Hills, CA 90212
</TABLE>
- - ------------------------
(1) Ascent Entertainment Group, Inc. ("Ascent") holds 17,140,416 shares of
Common Stock of On Command Corporation and 1,123,792 Series A Warrants of On
Command Corporation.
(2) Hilton Hotels Corporation holds 2,333,346 shares of Common Stock of On
Command Corporation and 152,782 Series A Warrants of On Command Corporation.
(3) Based on information contained in Schedule 13G filed with the Commission on
January 28, 1998. Princeton Services, Inc. ("PSI") is the beneficial owner of
2,125,362 shares of OCC Common Stock (7.0%) (sole voting and dispositive power:
0 shares and shared voting and dispositive power: 2,125,362 shares) as corporate
managing general partner of Fund Asset Management L.P and Merrill Lynch Asset
Management, L.P. ("MLAM"), each of which is a registered investment advisor.
MLAM is the beneficial owner of 1,726,499 shares of OCC common stock (5.7%)
(sole voting and dispositive power: 0 shares and shared voting and dispositive
power: 1,726,499 shares) as investment advisor to certain registered investment
companies, including Merrill Lynch Corporate Bond Fund, Inc. ("Fund"). Fund is
the beneficial owner of 1,545,567 shares of OCC Common Stock (5.2%) (sole voting
and dispositive power: 1,545,567 shares) and, according to the Schedule 13G, is
the only reporting person in the 13G with an interest related to more than 5% of
the OCC Common Stock.
(4) Mr. Wilson holds 1,810,000 Series C Warrants of On Command Corporation,
which are not publicly traded.
COMMON STOCK OWNERSHIP OF MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of the Company's Common Stock as of March 16, 1998, by all directors
and nominees, by each of the executive officers named in the Summary
Compensation Table on page 11, and by all directors and executive officers as a
group. Under rules of the SEC, beneficial ownership includes any shares over
which an individual has sole or shared voting power or investment power, and
also any shares that the individual has the right to acquire within 60 days
through the exercise of any stock option or other right.
Ascent Entertainment Group, Inc.
Name (1) Common Stock Common Stock
- - -------- ------------ ------------
Armyan Bernstein -- --
James A. Cronin, III -- --
Richard Fenwick, Jr. 52,886 (2) --
Robert M. Kavner 260,391 (3) 12,800 (3)
Ronald D. Lessack 58,626 (4) --
Charles Lyons -- (5) 19,551
Paul J. Milley 10,000 (6) --
Robert Snyder 89,007 (7) --
2
<PAGE> 6
Brian A.C. Steel 96,329 (8) --
Gary Wilson 1,810,000 (9) --
All Executive Officers
And Directors as a group
(12 persons) 2,394,265
1 Unless otherwise indicated, each person has sole voting and investment powers
over the shares listed, and no director or executive officer beneficially owns
more than 1.0% of the Common Stock of the Company or Ascent.
2 Includes vested options to purchase 52,700 shares of Common Stock and 186
Series A Warrants of On Command Corporation.
3 Includes vested options to purchase 260,391 shares of OCC Common Stocks.
Beneficial ownership of Ascent Common Stock includes 4,000 shares that may be
acquired by Mr. Kavner within 60 days after March 31, 1998, through the exercise
of stock options.
4 Includes vested options to purchase 58,440 shares of Common Stock and 186
Series A Warrants of On Command Corporation.
5 Ascent Entertainment Group, Inc. holds approximately 59.0% of the issued and
outstanding Common Stock of On Command Corporation. Mr. Lyons' ownership of OCC
Common Stock does not reflect ownership of the OCC shares owned by Ascent, even
though Mr. Lyons holds the proxy to vote those shares on behalf of Ascent.
6 Includes vested options to purchase 10,000 shares of Common Stock.
7 Includes vested options to purchase 78,774 shares of Common Stock and 10,233
Series A Warrants of On Command Corporation.
8 Included vested options to purchase 96,329 shares of OCC Common Stock.
9 Mr. Wilson holds 1,810,000 Series C Warrants of On Command Corporation, which
are not publicly traded.
COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee, which is composed of four directors, Gary L. Wilson,
Armyan Bernstein (who joined the Compensation Committee in February 1998), James
A. Cronin, III (an executive officer and director of Ascent Entertainment Group,
Inc., the Company's majority stockholder ("Ascent")), and Charles Lyons (an
executive officer and director of Ascent), is responsible for establishing and
administering the Company's executive compensation philosophy. Set forth below
is the Committee's report on the 1997 compensation of the executive officers of
the Company, including Mr. Kavner, the Chief Executive Officer, and the other
current and former executive officers of the Company whose compensation is
discussed below under "Executive Compensation" (collectively, the "Named
Executive Officers").
ANNUAL COMPENSATION
Each of the Named Executive Officer's annual compensation for 1997 was
based on the Company's executive compensation philosophy that emphasizes
risk-based performance incentives as a key component of both annual and
long-term compensation. Messrs. Kavner's, Snyder's and Steel's compensation are
based upon their respective employment agreements with the Company, or in the
case of Mr. Snyder, with the Company's wholly-owned subsidiary, On Command Video
Corporation ("OCV"). See Executive Compensation -- Employment Agreements.
The other Named Executive Officers' annual base salary rates were
consistent with competitive salary ranges developed by the Company. These salary
ranges are based on market data for companies of comparable revenue in the high
technology and entertainment industries. Annual salary adjustments take into
account individual Named Executive Officers' achievements during the prior year
towards key Company-wide objectives set annually by the Board of Directors, as
well as the Named Executive Officers' performance of their individual
responsibilities.
3
<PAGE> 7
The bonus opportunities for the Named Executive Officers for 1997 were
based on corporate financial goals (i.e., earnings before interest, taxes and
depreciation, known as "EBITDA") set by the Board of Directors for the year and
specified strategic and/or other operating objectives established by the
Compensation Committee. Distributions to the Named Executive Officers under the
executive bonus plan are reviewed and determined by the Compensation Committee
on an annual basis. The bonus targets are allocated among the individual
executive officers with reference to responsibilities, performance and goal
achievement of individual executive officers.
Mr. Kavner's bonus opportunity is set forth in his Employment Agreement
which provides for a target bonus in an amount equal to seventy percent of his
base salary for achieving certain performance measures as approved by the
Compensation Committee. Mr. Kavner's bonus was based on the achievement of
certain financial measures and his individual performance, including the
achievement of the Company's EBITDA target, the integration of SpectraVision,
Inc. and OCV operations, and the planning and implementation of a successful
capital structure for the Company. The Compensation Committee considered these
accomplishments and awarded a bonus of $350,000 to Mr. Kavner (representing
seventy percent of Mr. Kavner's base compensation).
Bonuses for Messrs. Steel, Lessack, Fenwick and Milley were based on
the achievement of one or more financial measures as compared to planned
performance for the Company, as well as Mr. Kavner's evaluation of each
individual executive officer's achievement of his performance objectives for the
year. Similar to Mr. Kavner's Employment Agreement, Mr. Steel's Employment
Agreement provides that Mr. Steel's target bonus is equal to seventy percent of
his base salary for achieving certain performance measures as approved by the
Compensation Committee. The Compensation Committee reviewed and approved Mr.
Kavner's bonus recommendations for each of the Named Executive Officers.
LONG TERM COMPENSATION
In connection with Mr. Kavner's and Mr. Steel's hiring by the Company
in September 1996, the Board, with the review and approval of Ascent's
Compensation Committee and Board of Directors, awarded Mr. Kavner a stock option
to purchase 1,041,5621 shares of OCC Common Stock, equal to approximately 3.5%
of the shares of OCC Common Stock outstanding immediately after the Company'
Common Stock began publicly trading in October 1996, and awarded Mr. Steel a
stock option to purchase 385,312 shares of OCC Common Stock. For each of Mr.
Kavner and Mr. Steel, these options vest 25% after one year, an additional 25%
after two years and an additional 50% after three years, and expire 10 years
after the grant. Eighty percent of the shares purchasable upon exercise of each
option may be purchased at a price per share which the Board of Directors and
the Compensation Committee determined based upon the fair value of the
combination of OCV and SpectraVision, prior to the public trading of OCC's
Common Stock which was determined to be $15.33 and the remaining twenty percent
may be purchased at $16.40 per share, which was the average of the high and low
bid prices of the OCC Common Stock for the twenty days trading following the
third trading day after OCC's public release of financial results for the third
quarter of 1996. The intent in granting the option was to create an immediate
and significant link between Mr. Kavner's and Mr. Steel's compensation and the
interests of On Command Corporation's stockholders. The size of the option award
and the vesting schedule were effectively based upon the practices of companies
engaging in public offerings.
In 1996, Messrs. Lessack, Fenwick and Milley received stock option
awards from On Command Corporation pursuant to the Company's 1996 Key Employee
Stock Plan. The amounts of the non-qualified stock options awarded to Messrs.
Lessack, Fenwick and Milley were based on internal
- - ----------
1 In February 1998 Mr. Kavner volunteered, and the Compensation Committee
accepted, the forfeiture by Mr. Kavner of his right to purchase 203,500 shares
of OCC Common Stock pursuant to Mr. Kavner's stock option award, thereby
reducing Mr. Kavner's stock option to 838,062 shares. Mr. Kavner volunteered to
forfeit such portion of his option award in order to return to the Company's
1996 Key Employee Stock Plan ("Key Employee Plan") the number of shares of OCC
Common Stock which such forfeiture represents to increase the number of shares
of OCC Common Stock subject to the Key Employee Plan available for other
executive officers.
4
<PAGE> 8
guidelines developed by the Company in an effort to be competitive with other
long-term incentive compensation for comparable positions in technology and
entertainment companies similar in amount of revenue with the Company. The
Compensation Committee wanted to establish an immediate and significant link
between senior management's compensation and the interests of On Command
Corporation's stockholders. The size of the stock awards and the vesting
schedule are based on the practices of other companies in the same industry. Mr.
Snyder did not receive a stock option award due to his having previously
received stock options to purchase OCV Common Stock which converted to stock
options to purchase OCC Common Stock in connection with OCC becoming a publicly
traded company. All grants of options will expire 10 years after grant.
COMPENSATION COMMITTEE
Gary L. Wilson, Chairman
Armyan Bernstein
James A. Cronin, III
Charles Lyons
5
<PAGE> 9
COMPARISON OF STOCKHOLDER RETURN
Set forth below is a line graph comparing the annual percentage change
in the cumulative total return on the Company's Common Stock with the cumulative
total return of the Center for Research in Securities Price Total Return for the
Nasdaq Stock Market (U.S. Companies) ("NASDAQ") and the SIC Code 4841 Index
(Cable and Other Pay Television Services - U.S. domestic only) for the period
commencing on October 10, 1996, the date that the Company's S-4 Registration
statement was declared effective by the SEC, and ending on December 31, 1997
(1).
<TABLE>
<CAPTION>
10/10/96 12/31/96 12/31/97 (2)
<S> <C> <C> <C>
On Command Corporation $100.00 $65.46 $52.58
SIC Code 4841 Index $100.00 $102.27 $155.66
Nasdaq Market Index $100.00 $104.37 $126.95
</TABLE>
- - ----------------------
(1) The Company's fiscal year ends on December 31.
(2) Assumes that $100.00 was invested in the Company's Common Stock and each
index and that all dividends were reinvested. No dividends have been
declared on the Company's Common Stock. Stockholder returns over the
indicated period should not be considered indicative of future stockholder
returns.
COMPLIANCE WITH SECURITIES LAWS
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors and executive officers, and persons who own
more than 10% of a registered class of the Company's equity securities, to file
initial reports of ownership and reports of changes in ownership with the
Securities and Exchange Commission ("SEC") and the NASDAQ National Market
System. Such persons are required by SEC regulations to furnish the Company with
copies of all Section 16(a) forms they file.
Based solely on its review of copies of such forms received by it with
respect to 1997, or written representations from certain reporting persons, the
Company believes that all of its directors and executive officers and persons
who own more than 10% of the Company's registered equity have
6
<PAGE> 10
complied with the reporting requirements of Section 16(a), except that Form 4
reports for each of Richard Fenwick, Jr., and Edward B. Neumann were
inadvertently filed subsequent to their required filing date of August 10, 1997.
EXECUTIVE COMPENSATION
The following table shows the compensation received for the three fiscal years
ended December 31, 1997 by the (i) President and Chief Executive Officer, (ii)
the Executive Vice President, Chief Financial Officer and Chief Operations
Officer, (iii) the Senior Vice President, Operations of OCC and, previously,
OCV, (iv) the Senior Vice President, Finance, (v) the Senior Vice President,
Engineering of OCC and, previously, OCV, and (vi) the former Vice Chairman of
OCC, and in his capacity as President and Chief Executive of OCV through
September 11, 1996, (the officers being hereafter referred to as the "Named
Executive Officers").
7
<PAGE> 11
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
----------------------------------- ----------------------------
OTHER RESTRICTED SECURITIES
ANNUAL STOCK UNDERLYING ALL OTHER
NAME AND POSITION SALARY BONUS COMPENSATION AWARD(S) OPTIONS/SARS COMPENSATION
YEAR ($) ($) ($) (1) ($) (2) (#) ($) (3)
<S> <C> <C> <C> <C> <C> <C> <C>
Robert M. Kavner 1997 500,000 350,000 316,672 -0- -0- 336,471
President and 1996(5) 173,034 60,000 -0- -0- 1,041,562 (4) 761
Chief Executive
Officer
Brian A.C. Steel 1997 290,000 203,000 172,467 -0- -0- 483,894
Executive Vice 1996(5) 96,273 35,000 -0- -0- 385,312 8,225
President, CFO,
COO
Ronald D. Lessack 1997 193,500 70,000 -0- -0- 10,000 + 5,572
Senior Vice 1996 183,708 27,500 -0- -0- 65,000 9,947
President, 1995(6) 161,663 20,000 -0- -0- 10,000 * 4,620
Operations 2,500 **
Paul J. Milley 1997 174,996 44,000 30,000 -0- -0- 61,403
Senior Vice 1996(5) 7,292 -0- -0- 50,000 -0-
President, Finance
Richard Fenwick, Jr. 1997 165,000 40,000 -0- -0- 10,000 + 4,984
Senior Vice 1996 168,228 22,500 -0- -0- 65,000 9,263
President, 1995(6) 151,250 15,000 -0- -0- 10,000 * 1,540
Engineering 2,500 **
Robert Snyder 1997 275,000 -0- -0- -0- 100,000 + 7,558
Vice Chairman (7) 1996 318,060 75,000 -0- -0- -0- 11,934
1995 285,779 150,000 -0- -0- 100,000 * 4,620
5,000 **
</TABLE>
All options marked with a single asterisk (*) are options to purchase Ascent
Common Stock and options marked with a double asterisk (**) are options to
purchase COMSAT Common Stock. Options marked with a single plus sign (+) are
Stock Appreciation Rights ("SARs") that were issued in exchange for Ascent
employee stock options, which options were cancelled in connection with the
SARs.
(1) Other Annual Compensation consists of tax reimbursements for the
amounts shown. Other Annual Compensation shown for 1995, 1996 and 1997
does not include perquisites and other personal benefits because the
aggregate amount of such compensation does not exceed the lesser of (i)
$50,000 or (ii) 10% of the combined salary and bonus for the Named
Executive Officer in each year.
(2) Restricted stock awards include COMSAT restricted stock awards
("RSAs"), and COMSAT restricted stock units ("RSUs") for 1995 only.
Dividends are paid on RSAs granted in 1995. Dividend equivalents are
paid on RSUs. At December 31, 1997, Mr. Snyder had 19,843 RSAs valued
at $473,751.
(3) For 1997, other compensation includes: (i) contributions by the Company
on behalf of the executive to the On Command Video 401(k) plan, (ii)
relocation expense reimbursement, (iii) life insurance premiums for
policies in excess of $50,000 face value, and (iv) loan forgiveness
amounts.
8
<PAGE> 12
<TABLE>
<CAPTION>
401(K) RELOCATION INSURANCE LOAN
NAME MATCHING EXPENSES PREMIUM FORGIVENESS TOTAL
<S> <C> <C> <C> <C> <C>
Robert M. Kavner 4,750 330,569 (*) 1,152 336,471
Brian A.C. Steel 4,750 238,880 (*) 264 240,000 483,894
Ronald D. Lessack 4,750 822 5,572
Paul J. Milley 4,000 57,148 255 61,403
Richard Fenwick, Jr. 4,750 234 4,984
Robert Snyder 4,750 2,808 7,558
</TABLE>
* Amounts include recovery of loss on sale of house.
(4) In February 1998 Mr. Kavner volunteered, and the Compensation Committee
accepted, the forfeiture by Mr. Kavner of his right to purchase 203,500
shares of OCC Common Stock pursuant to Mr. Kavner's stock option award,
thereby reducing Mr. Kavner's stock options to 838,062 shares. Mr.
Kavner volunteered to forfeit such portion of his option award in order
to return to the Key Employee Plan the number of shares of OCC Common
Stock which such forfeiture represents to increase the number of shares
of OCC Common Stock subject to the Key Employee Plan available for
other executive officers.
(5) Messrs. Kavner and Steel commenced employment with the Company in
September 1996. Mr. Milley commenced employment with the Company in
December 1996.
(6) Includes retroactive pay made in January 1996 for the period December
1, 1995 to December 31, 1995 as follows: for Mr. Lessack in the amount
of $2,500; and Mr. Fenwick in the amount of $1,875.
(7) Mr. Snyder retired from his position as Vice-Chairman of the Company in
November 1997.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- - ---------------------------------------------------------------------
NUMBER OF PERCENT OF TOTAL OPTIONS/ GRANT DATE
SECURITIES SARS GRANTED TO ASCENT EXERCISE OR EXPIRATION DATE PRESENT VALUE $
UNDERLYING EMPLOYEES IN FISCAL YEAR BASE PRICE (3)
NAME OPTIONS/SARS (2) ($/SH)
GRANTED (#) (1)
- - -------------- ----------- ------------------------ --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Ronald Lessack 10,000 .007% $9.53 12/18/05 $ 39,119
Richard Fenwick, Jr. 10,000 .007% $9.53 12/18/05 $ 39,119
Robert Snyder 100,000 7.000% $9.53 12/18/05 $391,191
</TABLE>
(1) In order for COMSAT to receive a ruling from the Internal Revenue
Service that the distribution to COMSAT shareholders of COMSAT's shares
of Ascent Common Stock would be a tax-free transaction (the
"Distribution"), COMSAT required Ascent to agree to cancel
substantially all outstanding options issued pursuant to the 1995
Ascent Key Employee Stock Plan. As consideration for the cancellation,
effective June 27, 1997, Ascent and its subsidiary employee
optionholders were granted SARs payable only in cash at an exercise
price equal to $9.53, which was the five day high and low trading
average at the time of grant. The SARs were granted with the same
vesting provisions and expiration dates as the options that were
canceled. The SARs for Mr. Lessack and Mr. Fenwick vest as follows: 25%
on December 18, 1996, an additional 25% on December 18, 1997 and the
remaining 50% on December 18, 1998. The SARs for Mr. Snyder vest as
follows: 10% on June 27, 1997, an additional 15% on December 18, 1997,
an additional 25% on December 18, 1998, an additional 25% on December
18, 1999, and the remaining 25% on December 18, 2000.
(2) The total number of SARs granted to Ascent employees in 1997 was
1,404,750.
9
<PAGE> 13
(3) On Command used the Black-Scholes option pricing model to determine
grant date present values using the following assumptions: a dividend
yield of 0.0%; stock price volatility of 55.2%; a five to six year SAR
term for On Command; and a risk-free rate of return of 5.9%. The use of
this model is in accordance with SEC rules; however, the actual value
of a SAR realized will be measured by the difference between the stock
price and the exercise price on the date the SAR is exercised.
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table sets forth information on (i) options exercised by the Named
Executive Officers in 1997, and (ii) the number and value of their unexercised
options at December 31, 1997.
AGGREGATED OPTION EXERCISES IN 1997, AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF IN-THE MONEY
OPTIONS AT 12/31/97 OPTIONS AT 12/31/97
------------------- -------------------
SHARES
UNDERLYING
OPTIONS VALUE EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME EXERCISED REALIZED (#) (#) ($) ($)
<S> <C> <C> <C> <C> <C> <C>
Robert M. Kavner -0- -0- 260,391 781,171 -0- -0-
Ascent -0- -0- 3,000 5,000 -0- -0-
Brian A.C. Steel -0- -0- 96,329 288,983 -0- -0-
Ronald D. Lessack -0- -0- 47,080 74,720 44,645 -0-
Ascent -0- -0- 5,000 5,000 3,150 3,150
Paul J. Milley -0- -0- 10,000 -0- -0- -0-
Richard Fenwick, Jr. 10,000 60,950 52,700 52,000 271,151 -0-
Ascent -0- -0- 5,000 5,000 3,150 3,150
Robert Snyder 34,826 153,310 61,734 17,040 243,849 67,308
Ascent -0- -0- 25,000 75,000 15,662 46,987
</TABLE>
EMPLOYMENT AGREEMENTS
In September 1996, the Company and each of Robert M. Kavner
and Brian A.C. Steel entered into employment agreements that expire on
September 11, 2000. Pursuant to the agreements, Mr. Kavner's and Mr.
Steel's base salary will be $500,000 and $290,000 per year,
respectively, subject to increases at the discretion of the Board of
Directors of the Company. Messrs. Kavner and Steel will also be
eligible for annual bonuses based on performance measures determined by
the Compensation Committee with a target bonus equal to 70% of each
such executive's respective base salary for achieving 100% of the
target level for the performance measures. In addition, Messrs. Kavner
and Steel have been granted options to purchase 1,041,562 and 385,312
shares of OCC Common Stock, respectively, exercisable at the following
per-share prices: (i) 80% of each such executive's options shall be
exercisable at a per-share price equal to $15.33 and (ii) 20% of each
such executive's options shall be exercisable at a per-share price
equal to $16.40. The options will vest 25% on September 11, 1997, an
additional 25% on September 11, 1998 and the remaining 50% on September
11, 1999. The options will expire at the earlier of (i) three months
after the date upon which such executive is terminated for "cause" (as
defined in each such executive's employment agreement); (ii) one year
after each such executive's employment agreement is terminated as a
result of such executive's death or (iii) on September 11, 2006.
Messrs. Kavner and Steel will also be entitled to participate in group
health, dental and disability insurance programs and any group profit
sharing, deferred compensation, life insurance or other benefit plans
as are generally made available by the Company to its senior executive
officers on a favored nations basis.
In addition, the employment agreements for each of Messrs.
Kavner and Steel provide that upon a "Change of Control Event" (as
defined in such agreement), each of Messrs. Kavner and
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<PAGE> 14
Steel will be entitled to elect to terminate his employment with the
Company and, for the longer of (a) the remainder of the term of such
executive's employment agreement as if such agreement had not been
terminated and (b) one year following the date of such termination
(such period being the "Duration Period"), will receive: (i) his then
current base salary; (ii) an annual bonus equal to 70% of his then
current base salary for each year during the Duration Period; and (iii)
all other benefits provided pursuant to such executive's employment
agreement. A "Change of Control Event" is defined in the employment
agreements as an affirmative determination, either jointly by either
Mr. Kavner or Mr. Steel, respectively, and the Board of Directors or
pursuant to an arbitration which either Mr. Kavner or Mr. Steel,
respectively, has the right to invoke, that any "change of control" of
the Company (defined as an event as result of which (i) a single person
or entity other than Ascent or its affiliates owns 50% or more of the
voting stock of the Company or (ii) a single person or entity other
than COMSAT Corporation ("COMSAT") or its affiliates (which as of the
date of the employment agreements held approximately 80% of the
outstanding Common Stock of Ascent, but which consummated the
distribution of its 80.67% ownership interest in Ascent to the COMSAT
shareholders on June 27, 1997) owns directly or indirectly 50% or more
of the voting stock of Ascent) or prospective change of control would
be reasonably likely to have a materially detrimental effect on either
the day-to-day circumstances of Mr. Kavner's or Mr. Steel's employment,
respectively, or the compensation payable to Mr. Kavner or Mr. Steel,
respectively, under his employment agreement.
The employment agreement with Mr. Steel provided that, in
order to facilitate such executive's transition to the Company, Ascent
caused a $240,000 unsecured, no interest loan (the "Transition Loan")
to be made to Mr. Steel concurrent with Mr. Steel's employment with the
Company (the "Effective Time"). The Transition Loan was due and payable
by Mr. Steel on September 11, 1997; provided that if Mr. Steel was
still employed by Ascent, OCC, OCV or any of their successors or
affiliates on such date, or if Mr. Steel's employment was terminated by
the Company other than for "cause" prior to such date, then the
Transition Loan would be forgiven in its entirety. On September 11,
1997, the Transition Loan was forgiven in accordance with its terms.
OCV and Mr. Snyder entered into an employment agreement that
expires in 1999. Pursuant to the agreement, Mr. Snyder's salary for
1997 was set by the board of directors of OCV at $275,000, and Mr.
Snyder is eligible for incentive bonus compensation to be established
by mutual consent of Mr. Snyder and the board of directors of OCV. Mr.
Snyder did not receive a bonus for 1997. Pursuant to the terms of Mr.
Snyder's employment agreement, the circumstances surrounding Mr.
Snyder's departure entitle Mr. Snyder to receive his full salary
through January 31, 1999 and receive a consulting fee of $20,000 per
year for the next two years thereafter.
PROPOSAL 1. ELECTION OF DIRECTORS
BOARD OF DIRECTORS
The Company's Board of Directors consists of six directors,
all of whom are elected annually by the stockholders for a term of one
year or until their successors have been elected and qualified.
Pursuant to the Company's Certificate of Incorporation and the
Corporate Agreement (the "Corporate Agreement") between the Company and
Ascent the Company has agreed, for so long as Ascent beneficially owns,
directly or indirectly, the largest percentage (and at least 40%) of
the outstanding securities of the Company entitled to be cast for the
election of directors, to propose, at each election of directors, a
slate of directors, or in the case of vacancies, individual directors,
for election so that at all times during the term of the Corporate
Agreement, a majority of the Board of Directors of the Company is
comprised of persons designated by Ascent. See "Certain Relationships
and Related Party Transactions." The Board met six times in 1997. All
incumbent directors who were directors in 1997 attended all of such
Board meetings.
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<PAGE> 15
VOTING FOR DIRECTORS
At the meeting all of the Directors will be elected to serve
until the 1999 Annual Meeting of Stockholders and until their
successors are elected and qualified. All of the nominees currently
serve as directors.
Each stockholder is entitled to cumulate votes in the election
of directors. The right to cumulate votes in an election of directors
entitles a stockholder to as many votes as he or she has shares
multiplied by the number of directors to be elected (in this case, 6),
which votes may then be allocated among the nominees in such proportion
as the stockholder decides, including casting all of the votes for one
nominee. If a stockholder wishes to cumulate his or her votes, the
proxy card should be marked, in any way that the stockholder desires in
order to: (i) indicate clearly that the stockholder is exercising the
right to cumulate votes and (ii) specify how the votes are to be
allocated among the nominees for director. For example, a stockholder
may write next to the name of each nominee for whom the stockholder
desires to cast votes, the number of votes to be cast for such nominee.
Unless contrary directions are set forth on the proxy card,
proxies will be voted in such manner as to elect all or as many of the
nominees listed as possible. If either of the "For All Nominees Listed
Above" or "Exception" boxes is marked or no instructions are given, the
named proxies will have discretionary authority to cumulate votes if
they so choose and allocate votes among the nominees as they deem
appropriate (except for any nominee specifically excepted by the
stockholder), including not casting any votes for one or more nominees.
If any of the nominees becomes unavailable for election, which is not
currently anticipated, shares represented by proxies in the
accompanying form will be voted for a substitute nominee designated by
the Board of Directors.
NOMINEES FOR ELECTION OF DIRECTORS
CHARLES LYONS, 43, has been Chairman of the Board of On Command
Corporation since its formation in July 1996. Mr. Lyons has been
President, Chief Executive Officer, and director of Ascent since
October 1995 and Chairman of Ascent since June 1997. Prior thereto, he
was President of Ascent's predecessors since February 1992. He was Vice
President and General Manager of COMSAT Video Enterprises, now Ascent
Network Services, from October 1990 to January 1992. Mr. Lyons had been
Chairman of the Board of Directors of OCV since December 1994 and a
Director since 1992.
ARMYAN BERNSTEIN, 50, has been a Director of On Command Corporation
since February 1998. Mr. Bernstein has also been Chairman and Chief
Executive Officer of Beacon Communications Corporation ("Beacon") since
1991. Beacon is a privately- held, wholly owned subsidiary of Ascent.
Mr. Bernstein does not receive any compensation from Ascent.
JAMES A. CRONIN, III, 43, has been a Director of On Command Corporation
since its formation in July 1996 and was Vice President and Acting
Chief Financial Officer from July 1996 until September 1996. Mr. Cronin
has been Executive Vice President, Chief Financial Officer and Chief
Operating Officer of Ascent since November 1996, and prior thereto was
Chief Operating Officer and Executive Vice President, Finance for
Ascent since June 1996. Prior to joining Ascent, Mr. Cronin served as a
financial and management consultant from 1992 through June 1996. Mr.
Cronin is also a director of Landair Services, Inc.
ROBERT M. KAVNER, 54, has been President, Chief Executive Officer, and
Director of On Command Corporation since September 1996. Prior thereto,
Mr. Kavner was a principal in Kavner & Associates, a consulting firm
for media and communication companies. From June
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<PAGE> 16
1994 through September 1995, Mr. Kavner was an Executive Vice President
of Creative Artists Agency, Inc. Prior to joining Creative Artists
Agency, Mr. Kavner was Executive Vice President of AT&T Corp. ("AT&T")
and Chief Executive Officer of AT&T's Multimedia Products and Services
Group. He was also a member of AT&T's Management Executive Committee.
From 1992 to 1994, Mr. Kavner was Group Executive for Communications
Products Group of AT&T. Mr. Kavner is also a director of the Fleet
Financial Corp. and Earthlink Networks, Inc.
BRIAN A.C. STEEL, 38, has been Executive Vice President, Chief
Financial Officer, and Chief Operating Officer of On Command
Corporation since September 1996 and a Director of On Command
Corporation since October 1996. Prior thereto, Mr. Steel was Executive
Vice President, Strategic Development, and Chief Financial Officer for
TELE-TV, a video services partnership among several regional telephone
companies, since August 1995. Prior to joining TELE-TV, Mr. Steel was
Vice President, Strategic Development of Pacific Telesis Enhanced
Services and Executive Director, Corporate Development of Pacific
Telesis Group from January 1994 to July 1995. Prior to joining Pacific
Telesis, Mr. Steel was a principal in Conversion Management Associates
from January 1993 to December 1993. From June 1986 to December 1992,
Mr. Steel was employed by Shearson Lehman Brothers Inc. as Senior Vice
President, Real Estate Merchant Banking Group and First Vice President,
E.F. Hutton Properties.
GARY L. WILSON, 58, has been a Director of On Command Corporation since
October 1996. Mr. Wilson has also been Chairman of Northwest Airlines
Corporation, parent company of Northwest Airlines, since April 1997 and
was Co-Chairman of the Board and a principal investor in Northwest
Airlines Corporation and several other transportation-related
subsidiaries since January 1991. Mr. Wilson is also a director of The
Walt Disney Company, CB Commercial Real Estate Services Group, Inc. and
Veritas Holdings GmbH.
OTHER INFORMATION CONCERNING DIRECTORS
COMMITTEES
The Board has two standing committees, described below.
The Audit Committee consists of Messrs. Wilson and Bernstein.
The Committee makes recommendations to the Board of Directors
concerning the selection of independent public accountants; confers
with the independent public accountants to determine the scope of the
audit that such accountants will perform; receives reports from the
Independent Public Accountants and transmits such reports to the Board
of Directors, and after the close of the fiscal year, transmits to the
Board of Directors the financial statements certified by such
accountants; inquires into, examines and makes comments on the
accounting procedures of the Company and the reports of the Independent
Public Accountants; considers and makes recommendations to the Board of
Directors upon matters presented to it by the officers of the Company
pertaining to the audit practices and procedures adhered to by the
Company; considers and makes recommendations to the Board of Directors
in respect of the financial affairs of the Company, including matters
related to the capital structure and requirements, financial
performance, dividend policy, capital and significant capital
commitments; and reviews and approves the Company's overall financial
policies and procedures, spending controls, systems integrity, balance
sheet reserve levels, and revenue and expense accountability. The
Committee met twice in 1997 and all incumbent directors who were
members of the Audit Committee in 1997 attended such meetings.
The Compensation Committee consists of Messrs. Wilson,
Bernstein, Cronin, and Lyons. The Committee approves long-term
compensation for senior executives; considers and
13
<PAGE> 17
makes recommendations to the Board of Directors with respect to:
programs for human resources development and management organization
and succession; salary and bonus for senior executives; and
compensation matters and policies and employee benefit and incentive
plans; and exercises authority granted to it to administer such plans.
In addition, the Compensation Committee recommends to the Board of
Directors qualified candidates for election as directors and as
Chairman of the Board, and considers, acts upon or makes
recommendations to the Board of Directors with respect to such other
matters as may be referred to it by the Board of Directors, the
Chairman of the Board or the Chief Executive Officer. It will consider
candidates recommended by stockholders, if the recommendations are
submitted in writing to the Secretary of the Company. The Committee met
four times during 1997 and all incumbent directors who were members of
the Compensation Committee in 1997 attended such meetings.
DIRECTORS COMPENSATION
In May 1997 the Company adopted a compensation plan for
Independent Directors, which is defined for purposes of such
compensation as a Director who is not an employee of the Company nor an
officer or employee of Ascent or COMSAT, so long as Ascent or COMSAT,
respectively, directly or indirectly holds 50% or more of the
outstanding Common Stock of the Company. (On June 27, 1997, COMSAT
consummated the distribution of its 80.67% ownership interest in Ascent
to the COMSAT shareholders on a pro-rata basis in a transaction that
was tax-free for federal income tax purposes and COMSAT's
representative to the Board resigned.) Such Independent Directors will
receive an annual retainer of $6,000 in cash, payable quarterly; $500
for each Board of Directors meeting attended by such Director; and $500
for each official Committee of the Board of Directors meeting attended
by an Independent Directors for which such Director is a member. Each
Independent Director who is also a chairman of an official Committee of
the Board of Directors will receive an additional annual fee of $2,000
payable quarterly. In addition, the Board of Directors and the
Company's stockholders approved the 1997 Non-Employee Directors Stock
Plan (the "Directors Plan") to grant annual awards of the Company's
Common Stock and options to purchase the Company's Common Stock to
Independent Directors. The Directors Plan authorizes the granting of an
award of 400 shares of the Company's Common Stock and a non-qualified
option to purchase 4,000 shares of the Company's Common Stock, priced
at the fair market value on the date of grant, to each Independent
Director on an annual basis following the company's Annual Stockholder
meeting. Such option will generally be exercisable as follows: 25% on
the first anniversary of the date of grant, 50% on the second
anniversary of the date of grant and 100% on the third anniversary of
the date of grant.
Executive compensation is described beginning on page 6.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Kavner was a member of the Compensation Committee of the
Board of Directors of Ascent from January 1996 through March 1997.
Messrs. Cronin and Lyons have been on the Compensation Committee of On
Command Corporation from October 1996. There was no other compensation
committee interlocks or insider participation in compensation decisions
during 1997.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
RELATIONSHIP WITH ASCENT
Ascent owns approximately 57% of the Company's issued and
outstanding Common Stock. For so long as Ascent continues to own more
than 50% of the outstanding voting stock of
14
<PAGE> 18
the Company, Ascent will be able, among other things, to approve any
corporate action requiring majority stockholder approval, including the
election of a majority of the Company's directors, effect amendments to
the Company's Certificate of Incorporation and Bylaws and approve any
other matter submitted to a vote of the stockholders without the
consent of the other stockholders of the Company. In addition, through
its representation on the Board of Directors, Ascent is able to
influence certain decisions, including decisions with respect to the
Company's dividend policy, the Company's access to capital (including
the decision to incur additional indebtedness or issue additional
shares of Common Stock), mergers or other business combinations
involving the Company, the acquisition or disposition of assets by the
Company and any change in control of the Company.
The Company and Ascent have entered into a Management Services
Agreement pursuant to which Ascent provides certain management
services, including insurance, administration, coordination and
advisory services regarding corporate financing, employee benefits
administration, public relations and other corporate functions to the
Company and makes available certain of its employee benefit plans to
the Company's employees. Pursuant to the Services Agreement, Ascent is
entitled to the payment of (i) an annual fee of $1.2 million, (ii) the
actual cost to Ascent of the benefits provided to the Company's
employees and (iii) certain of Ascent's actual out-of-pocket expenses
in connection with the Services Agreement (not including overhead and
the cost of its personnel). Further, the Company will indemnify Ascent
from all damages from Ascent's performance of services under the
Services Agreement unless such damages are caused by willful breach by
Ascent or willful misconduct or gross negligence by Ascent's employees
in fulfilling its obligations under the Services Agreement. Ascent will
indemnify the Company from damages arising from willful breach by
Ascent or gross negligence or willful misconduct by Ascent's employees
in the performance of the Services Agreement. The Services Agreement is
for an initial term through December 31, 1999, renewable for additional
one-year terms by Ascent upon notice to On Command which election
Ascent may exercise as long as it and its subsidiaries own at least 50%
of the outstanding Common Stock. The Services Agreement is subject to
the termination by either party upon 60 days prior notice if Ascent
fails to own the largest percentage and at least 40% of the Company's
outstanding securities.
The Company and Ascent have also entered into a Corporate
Agreement that governs certain other relationships and arrangements
between the Company and Ascent. Pursuant to the Corporate Agreement,
for so long as Ascent beneficially owns, directly or indirectly, the
largest percentage (and at least 40%) of the outstanding securities of
the Company entitled to be cast for the election of directors, Ascent
may propose, at each election of directors, a slate of directors, or in
the case of vacancies, individual directors, for election so that at
all times during the term of the Corporate Agreement, a majority of the
Board of Directors of the Company is comprised of persons designated by
Ascent. In addition, pursuant to the Corporate Agreement, as amended,
for so long as Ascent owns the largest percentage (and at least 40%) of
the outstanding OCC Common Stock (i) the Company will not incur any
indebtedness, other than that under its existing Credit Facility (and
refinancings thereof) and indebtedness incurred in the ordinary course
of business which together shall not exceed $157 million in the
aggregate through December 31, 1998, or issue any equity securities or
any securities convertible into equity securities without Ascent's
prior consent, (ii) the Company may not amend its Certificate of
Incorporation or Bylaws without Ascent's prior consent, and (iii) the
Company will utilize reasonable cash management procedures and use its
reasonable best efforts to minimize the Company's excess cash holdings.
DIRECTOR LOAN
The employment agreement with Mr. Steel provided that, in
order to facilitate such executive's transition to the Company, Ascent
would cause the Transition Loan to be made to Mr.
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<PAGE> 19
Steel at the Effective Time. In accordance with the terms of Mr.
Steel's employment agreement and the Transition Loan, the Transition
Loan was forgiven On September 11, 1997. See Executive Compensation -
Employment Agreements.
OTHER MATTERS
At March 16, 1998, management knew of no other matters to be
presented for action at the meeting. If any other matter is properly
introduced, the persons named in the accompanying form of proxy will
vote the shares represented by the proxies according to their judgment.
The Company will bear all costs of the proxy solicitation. In
addition to the solicitation by mail, the Company's directors, officers
and employees, without additional compensation, may solicit proxies by
telephone, personal contact or other means. The Company also has
retained D.F. King to assist in the solicitation, at a cost of $1,500.
The Company will reimburse brokers and other persons holding shares in
their names, or in the names of nominees, for their expenses in
forwarding proxy materials to the beneficial owners.
Stockholders wishing to submit proposals for consideration at
the 1999 Annual Meeting should submit them in writing to the Secretary,
On Command Corporation, 6331 San Ignacio Avenue, San Jose, California
95119, to be received no later than December 7, 1998.
This proxy statement is provided by direction of the Board of
Directors.
/s/
Jill E. Fishbein
Senior Vice President, Legal,
General Counsel and Secretary
San Jose, California
April 6, 1998
16
<PAGE> 20
ON COMMAND CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS, May 6, 1998
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Robert M. Kavner and Brian A.C. Steel, and each
or any of them (with power of substitution), proxies for the undersigned to
represent and to vote, as designated on the reverse side hereof, all shares of
Common Stock of On Command Corporation which the undersigned would be entitled
to vote if personally present at the Annual Meeting of its stockholders to be
held on May 6, 1998, and at any reconvened session thereof, subject to any
directions indicated on the reverse side of this card. If no directions are
given, this proxy will be voted FOR Proposal 1.
This proxy is continued on the reverse side. Please sign and return
promptly in the envelope provided. No postage is required if mailed in the
United States. If you attend the Meeting and vote in person, the proxy will not
be used.
Continued and to be signed and dated on reverse side.
ON COMMAND CORPORATION
P.O. Box 11114
New York, N.Y. 10203-0114
<PAGE> 21
Directors recommend a vote FOR Proposal 1.
1. Election of All Proposed Directors
FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote for
all nominees listed below [ ]
*EXCEPTIONS [ ]
Nominees: Charles Lyons, Armyan Bernstein,
James A. Cronin, III, Robert M. Kavner,
Brian A.C. Steel, and Gary Wilson.
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark
the "Exceptions" box and write that nominees name in the space provided below.
If you desire to culminate your votes for any individual nominee(s), write your
instruction, as to the number of votes cast for each, on the space provided
below. The total must not exceed six times the number of shares you hold.)
*Exceptions
------------------------------------------------------------------
Please sign exactly as name or names appear on
this proxy. If stock is held jointly, each holder
should sign. If signing as attorney, trustee,
executor, administrator, custodian, guardian or
corporate officer, please give full title:
DATE , 1998
----------------------
SIGNED
--------------------------------------------
--------------------------------------------------
Please sign, date and return this Please mark votes as
card promptly in the enclosed in this example: [X]
envelope.
