<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 29, 2000
REGISTRATION NUMBER 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
---------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
ON COMMAND CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 77-04535194
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
6331 SAN IGNACIO AVENUE
-----------------------
San Jose, California 95119
(408) 360-4500
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
---------------
ARTHUR M. AARON, ESQ.
ACTING GENERAL COUNSEL
ON COMMAND CORPORATION
6331 SAN IGNACIO AVENUE
SAN JOSE, CALIFORNIA 95119
(408) 360-4500
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
---------------
WITH A COPY TO:
JEFFREY E. LAGUEUX, ESQ.
PATTERSON, BELKNAP, WEBB & TYLER LLP
1133 AVENUE OF THE AMERICAS
NEW YORK, NY 10036-6710
(212) 336-2000
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are being offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
<PAGE> 2
If this Form is filed to register additional securities pursuant to Rule
462(b) under the Securities Act, please check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
---------------
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
========================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE(2) PRICE(2) REGISTRATION FEE
- -------------------------------- ------------ ---------------- ------------------ ----------------
<S> <C> <C> <C> <C>
Common Stock, par value $.01(3)... 3,450,000 $16.125 $ 55,631,250 $ 14,686.65
--------- ------- ------------ ------------
Series C Warrants................. 3,450,000 $16.125 $ 55,631,250 $ 14,686.65
--------- ------- ------------ ------------
Total................... 6,900,000 $111,262,500 $ 29,373.30
--------- ------------ ------------
========================================================================================================
</TABLE>
(1) Pursuant to Rule 416 of the Securities Act of 1933, as amended, there are
also being registered an indeterminate number of additional shares of common
stock as may become issuable upon exercise of the Series C warrants to
prevent dilution resulting from stock splits, stock dividends or similar
transitions.
(2) Estimated solely for the purpose of calculating the registration fee. Such
estimates have been calculated in accordance with Rule 457(c) and Rule
457(g) under the Securities Act of 1933 based upon the average of the high
and low prices per share of the Registrant's common stock on the Nasdaq
National Market System on March 22, 2000.
(3) Represents shares of common stock underlying the Series C warrants held by
the selling securityholders.
---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
ii
<PAGE> 3
The information contained in this prospectus is not complete and may be changed.
We may not sell these securities until the Registration Statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and is not soliciting an offer to buy these securities
in any State where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED MARCH 28, 2000
PROSPECTUS
ON COMMAND CORPORATION
3,450,000 SERIES C WARRANTS AND THE COMMON STOCK
ISSUABLE UPON EXERCISE OF THE SERIES C WARRANTS
3,450,000 SHARES OF COMMON STOCK
The selling securityholders named in this prospectus are offering and selling
up to 3,450,000 Series C warrants to purchase shares of our common stock and up
to 3,450,000 shares of our common stock underlying the Series C warrants. We are
also registering up to 3,450,000 shares of our common stock for issuance to the
holders of Series C warrants who exercise such warrants subsequent to their sale
by the securityholders under this prospectus. We will not receive any of the
proceeds from the sale of the selling securityholders' securities but we will
receive the proceeds from the exercise of the Series C warrants.
Our common stock is quoted on the NASDAQ National Market System under the
symbol "ONCO." On March 24, 2000, the closing sales price of our common stock on
the NASDAQ National Market System was $17.00 per share. Prior to this offering,
there has been no public market for the Series C warrants.
---------------
YOU SHOULD READ THE DESCRIPTION UNDER THE CAPTION "RISK FACTORS" BEGINNING ON
PAGE 3 BEFORE PURCHASING ANY OF THE SECURITIES OFFERED BY THIS PROSPECTUS.
---------------
The securities offered or sold under this prospectus have not been approved or
disapproved by the Securities and Exchange Commission or any state securities
commission, nor have these organizations determined that this prospectus is
accurate or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus is March 28, 2000
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<PAGE> 4
GENERAL INFORMATION ABOUT ON COMMAND CORPORATION
Because this is a summary, it may not contain all information that may be
important to you. You should read this entire prospectus, including the
information incorporated by reference and the financial data and related notes,
before making an investment decision. When used in this prospectus, the terms
"we," "our" and "us" refer to On Command and not to the selling securityholders.
THE COMPANY
We are the leading provider (measured by the number of rooms served) of
in-room, on-demand video entertainment and information services to the domestic
and international lodging industries. Through two of our three wholly owned
subsidiaries, On Command Video Corporation and SpectraVision, Inc., we provide
in-room video entertainment and information services to hotel guests under
long-term contracts with hotel chains, hotel management companies and
individually owned and franchised hotel properties, predominantly in the deluxe,
luxury and upscale hotel categories serving business travelers. Our third wholly
owned subsidiary, On Command Development Corporation, supports these activities
by developing new technologies and applications to be used by On Command Video
and SpectraVision.
We were formed in 1996 by Ascent Entertainment Group, Inc. as a holding
company for On Command Video and the newly-acquired Spectradyne, Inc. (now
SpectraVision, Inc.). As of March 24, 2000, Ascent owned approximately 56.6% of
our outstanding common stock.
We incorporated in Delaware on July 25, 1996. Our offices are located at:
On Command Corporation
6331 San Ignacio Avenue
San Jose, California 95119
(408) 360-4500
PLATFORMS AND SERVICES
We provide our in-room video entertainment and information services through
three equipment and technology platforms, the recently developed OCX(TM) video
system, the On Command Video on demand system and the SpectraVision video
systems. The OCX(TM) video system provides improved graphics and an accessible
user interface to give hotel guests access to on-demand movies, video games,
TV-based Internet and other guest services. The patented On Command Video on
demand system provides similar services by means of a microprocessor controlling
the television in each room, a hand-held remote control and a central "head-end"
video rack and system computer located elsewhere in the hotel. Programming
signals originate from video cassette players located within the head-end rack
and are transmitted to individual rooms by way of proprietary video switching
technology. Movie starts are controlled automatically by the system computer
that also reports billing data to the hotel's accounting system for posting of
the charge to the guest's bill. As a company, On Command has experienced rapid
growth, increasing its base of installed rooms to approximately 956,000 rooms at
December 31, 1999, of which 884,000 rooms are served by on demand systems.
Our in-room video entertainment and information services consist of:
o On-demand and, in some cases, scheduled in-room television viewing of
major motion pictures and independent, non-rated motion pictures for
mature audiences;
o High-speed access to the Internet by means of the Company's @Hotel
Internet service through in-room television and laptop connectivity;
o Free-to-guest programming of select pay cable channels (such as HBO,
Showtime, CNN, ESPN, TBS, Disney Channel, Discovery Channel and other
cable networks);
o Video game entertainment; and
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<PAGE> 5
o Two-way, interactive information services such as on-screen guest
checkout, guest messaging services, room service ordering, survey
completion, room availability monitoring and hotel advertising and guest
information.
We are also testing shorter and more targeted non-movie programming on a lower
cost pay-per-view basis and a new sports category of programming that provides
hotel guests with a selection of sports telecasts from various markets that are
not televised nationally or are subject to local blackout restrictions.
Pay-per-view services to hotel guests were introduced in the early 1970s and
have since become a standard amenity offered by many hotels to their guests.
Historically, these services were delivered on a fixed time schedule that did
not provide the hotel guest flexibility in choosing when to watch a movie.
Typically, a guest would be offered a choice of four to eight movies, each of
which would be shown once every two to four hours. The development of video
switches (including On Command's patented video switch) has enabled providers of
pay-per-view services to offer scheduling flexibility to the viewer. Changes in
technology have also led to the ability to provide a number of on-demand
interactive services such as TV-based Internet, video game entertainment and
on-screen guest checkout and guest messaging services.
In comparison with the OCX and On Command Video on demand systems, hotels
still equipped with SpectraVision systems generally offer fewer choices to their
guests. At December 31, 1999, SpectraVision equipment was installed in
approximately 177,000 rooms. We expect to have a substantial majority of the
remaining SpectraVision rooms converted to the OCC's on-demand systems by the
end of 2001.
SECURITIES BEING OFFERED
In connection with the acquisition of SpectraVision in 1996, we issued Series
C warrants to purchase for cash an aggregate of 3,450,000 shares of our common
stock to our investment advisors in a private unregistered transaction in
consideration for banking and advisory services such advisors provided in
connection with the acquisition. Each Series C warrant entitles its holder to
purchase one share of our common stock at an exercise price of $15.27 per share
in cash at any time prior to 5:00 p.m., New York City time on October 7, 2003.
The selling securityholders named in this prospectus hold Series C warrants to
purchase an aggregate of 3,450,000 shares of our common stock. Pursuant to a
Registration Rights Agreement entered into at the time of the acquisition, we
agreed to register the Series C warrants held by the selling securityholders
together with the shares of our common stock issuable upon the exercise of the
Series C warrants pursuant to the Securities Act of 1933, as amended, to
facilitate the public sale of those Series C warrants and the underlying shares
of common stock. We will not receive any of the proceeds from the sale of the
selling securityholders' securities but we will receive the proceeds from the
exercise of the Series C warrants.
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<PAGE> 6
RISK FACTORS
INDUSTRY RISKS
You should carefully consider the following factors and other information in
this prospectus before deciding to invest in the securities being offered. This
prospectus contains forward looking statements within the meaning of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended, which reflect our current judgment on those
issues. Such forward looking statements can be identified by the use of words
such as "intend," "anticipate," "believe," "estimate," "project," or "expect."
When considering these statements, you should keep in mind the risk factors
described below and other cautionary statements in this prospectus.
The in-room entertainment and information services industry is highly
competitive.
Because the U.S. lodging industry market for in-room entertainment and
information services is nearly saturated and new hotel property construction in
the United States is a shrinking source of new customers, the industry is highly
competitive. The growth opportunities in the in-room entertainment and
information industry are: securing contracts to serve hotels that are currently
served by competitors; expanding into the international market; and broadening
the range of services provided to current customers.
Several potential competitors could use their existing infrastructure to
provide in-room entertainment and information services to the lodging industry,
including cable and wireless cable companies, telecommunications companies and
direct-to-home and direct broadcast satellite companies. Some of these companies
already provide free-to-guest services to hotels and are testing on-demand video
systems. These companies may have substantially greater technical and financial
resources than we do.
Our industry depends on the lodging industry's performance.
Our business is closely linked to the lodging industry's performance. Overall
occupancy rates have been declining recently, and the occupancy rates of the
luxury and business hotels that we serve have declined more sharply than the
industry as a whole. Occupancy fluctuations result from general business,
economic, seasonal and other factors, and can significantly adversely affect our
business.
COMPANY RISKS
Ascent Entertainment Group, Inc. controls us.
As of March 24, 2000, Ascent Entertainment Group, Inc. owned approximately 57%
of our issued and outstanding common stock. As a result of that ownership,
Ascent controls our management and policies and the outcome of matters submitted
to our stockholders for approval, including the election of directors. In
addition, we have entered into a corporate agreement with Ascent that gives
Ascent approval power over our incurring additional debt or issuing additional
equity securities. Ascent's controlling interest also means that we cannot
engage in any strategic transactions without its consent.
On February 22, 2000, Ascent entered into an Agreement and Plan of Merger with
Liberty Media Corporation and a wholly-owned subsidiary of Liberty. Pursuant to
the Merger Agreement, Liberty has commenced a tender offer for 100% of the
outstanding shares of common stock of Ascent. If Liberty acquires at least a
majority of the outstanding shares of Ascent's common stock, then Liberty will
acquire the remaining shares by means of a follow-on merger. If Liberty acquires
control of Ascent, it will be able to exercise all of the same control rights
that Ascent would have prior to such acquisition. In addition, the Board of
Directors of On Command has approved Liberty's acquisition of control of On
Command pursuant to the merger agreement.
We need additional capital to grow.
The growth of our business is dependent on substantial, continuing capital
expenditures. Prior to 1996, we relied on capital provided by Ascent and cash
flow to finance that growth. Ascent has no obligation to provide us with
additional capital or debt financing. We will use our cash flow and additional
borrowings (to the extent not restricted by our corporate agreement with Ascent)
to support our growth. If those funds are not sufficient, we may sell debt or
equity securities to raise additional funds, or reduce our growth to a level
that can be supported by our cash flow.
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<PAGE> 7
Our current revenues come from a limited number of customers.
Marriott, Hilton, Holiday Inn, Hyatt and Starwood accounted for approximately
25%, 20%, 10%, 8% and 7%, respectively, of our revenues in 1999. The loss of any
of these customers, or the loss of a significant number of other hotel chain
customers, could adversely impact our business. However, these customers
represent both chain-owned and managed hotels, as well as franchisees. We often
have different contracts on different terms with the chain-owned and managed
hotels, on the one hand, as compares to franchisees (or groups of franchisees),
on the other.
Our pay-per-view service revenues are dependent on seasonality and other factors
beyond our complete control.
The revenue generated by our pay-per-view service is dependent on the
occupancy rate of the property, the "buy rate" or percentage of occupied rooms
that buy movies or other services at the property and the price of the movie or
service. Occupancy rates vary based on the property's location, its competitive
position within the marketplace, and, over time, based on seasonal factors and
general economic conditions. Higher occupancy rates usually occur during the
summer months and lower occupancy rates occur during the winter. Buy rates also
generally reflect the hotel's guest mix profile, the popularity of the motion
pictures or services available at the hotel and the guests' other entertainment
alternatives. Buy rates also vary over time with general economic conditions and
our business is closely related to the performance of the business and luxury
hotel segments of the lodging industry. As a result, we may not be able to
control negative trends in our operating revenue.
The licensing fees we pay for feature movies may increase.
Major movie studios may demand higher royalty rates or higher minimum payments
than we are currently paying. Increased licensing fees would negatively impact
our operating income.
Our technology may become obsolete or outmoded and we may not be able to replace
it.
Technology in the entertainment and communications industry is continuously
changing as new technologies and developments continue to be introduced. There
can be no assurance that future technological advances will not result in
improved equipment or software systems that could adversely affect our
competitive position. In order to remain competitive we must maintain the
programming enhancements, engineering and technical capability and flexibility
to respond to customer demands for new or improved versions of our systems and
new technological developments. We may not have the technological or financial
resources to maintain our competitive position.
We have anti-takeover provisions in place that could delay or prevent the
acquisition of On Command Corporation.
In addition to the anti-takeover effect of Ascent's control, our certificate
of incorporation has certain provisions that could make it more difficult for a
third party to acquire us, or could discourage a third party from attempting to
acquire us. Those provisions could also limit the price that investors will be
willing to pay for our stock. Other provisions allow us to issue preferred stock
(which gives holders rights senior to those of our common stockholders) and
impose procedural and other requirements that may make it more difficult for
stockholders to effect some corporate actions.
OFFER-RELATED RISKS
There is no current market for our Series C warrants and our stock price may
decline after this offering. Before this offering, there has not been a public
market for our Series C warrants and an active public market for our Series C
warrants may not develop or be sustained. In addition, after the completion of
this offering we will have a large number of shares of common stock outstanding
and available for resale. Sales of substantial amounts of shares of our common
stock in the public market following this offering, or the perception that those
sales will occur, could cause the market price of our common stock to decline.
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<PAGE> 8
WHERE YOU CAN GET MORE INFORMATION ABOUT ON COMMAND
We are a reporting company and file annual, quarterly and current reports,
proxy statements and other information with the SEC. You may read and copy these
reports, proxy statements and other information at the SEC's public reference
rooms in Washington, DC, New York, New York and Chicago, Illinois. You can
request copies of these documents by writing to the SEC and paying a fee for the
copying cost. Please call the SEC at 1-800-SEC-0330 for more information about
the operation of the public reference rooms. Our SEC filings are also available
at the SEC's web site at "http://www.sec.gov." In addition, you can read and
copy our SEC filings at the office of the National Association of Securities
Dealers, Inc. at 1735 K Street, N.W., Washington, DC 20006.
The SEC allows us to "incorporate by reference" information that we file with
the SEC, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus and information that we file later with
the SEC will automatically update and supersede this information. We incorporate
by reference the documents listed below and any future filings we will make with
the SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act
of 1934:
o Annual Report on Form 10-K for the year ended December 31, 1999 filed
March 28, 2000; and
o The description of our common stock contained in the Registration
Statement on Form S-4, File No. 333-10407, and any amendment or report
filed for the purpose of updating this description filed subsequent to
the date of this prospectus and prior to the termination of this
offering.
You may request a copy of these filings at no cost, by writing or telephoning
us at the following address:
Arthur M. Aaron, Esq.
Acting General Counsel
On Command Corporation
6331 San Ignacio Avenue
San Jose, California 95119
(408) 360-4500
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SELLING SECURITYHOLDERS
The following table sets forth as of March 17, 2000 certain information with
respect to the selling securityholders. Mr. Gary L. Wilson has been a member of
our Board of Directors since October 1996 and serves on the audit committee of
the Board of Directors. None of the other selling securityholders has or has had
any material relationship with us in the past three years. As a result of their
ownership of the Series C warrants, the selling securityholders are deemed to be
the beneficial owners of the shares of common stock underlying the warrants,
which represent approximately 10.24% of our outstanding common stock. The
securities offered by this prospectus may be offered from time to time by the
selling securityholders named below.
<TABLE>
<CAPTION>
SECURITIES OWNED SECURITIES SECURITIES OWNED
PRIOR TO OFFERING OFFERED AFTER OFFERING (1)
------------------------- --------------------- -------------------
NAME OF SELLING COMMON SERIES C COMMON SERIES C COMMON SERIES C
SECURITYHOLDER STOCK WARRANTS STOCK (2) WARRANTS STOCK WARRANTS
-------------- ---------- --------- --------- --------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
Alfred D. Boyer........... 950,000(2) 950,000 950,000 950,000 0 0
CPI Securities LP......... 379,000(2) 379,500 379,500 379,500 0 0
R. Christian B. Evensen... 58,080(2) 58,080 58,080 58,080 0 0
Donald M. Farris.......... 112,560(2) 112,560 112,560 112,560 0 0
Joshua S. Friedman........ 58,080(2) 58,080 58,080 58,080 0 0
Mitchell R. Julis......... 58,080(2) 58,080 58,080 58,080 0 0
K. Robert Turner.......... 23,700(2) 23,700 23,700 23,700 0 0
Gary L. Wilson............ 1,823,700(3) 1,810,000 1,810,000 1,810,000 13,700(4) 0
--------- --------- --------- --------- ------
Total................. 3,463,900 3,450,000 3,450,000 3,450,000 13,700 0
========= ========= ========= ========= ====== =
</TABLE>
- ----------
(1) Assumes the sale of all the securities offered by this prospectus.
(2) Represents shares of common stock underlying the Series C warrants.
(3) Includes vested options to purchase 12,500 shares of common stock and 1,200
shares of common stock issued to Mr. Gary L. Wilson pursuant to the 1997
Non-Employee Directors Stock Plan and 1,810,000 shares of common stock
underlying the Series C warrants.
(4) Represents vested options to purchase 12,500 shares of common stock and
1,200 shares of common stock issued to Mr. Gary L. Wilson pursuant to the
1997 Non-Employee Directors Stock Plan.
PLAN OF DISTRIBUTION
We are registering the Series C warrants and the shares of common stock
underlying such warrants in order to facilitate the public sale of such
securities by the selling securityholders named in this prospectus. We will
receive no proceeds from the sale of the selling securityholders' securities
offered hereby but we will receive the proceeds from the exercise of the Series
C warrants. The selling securityholders will act independently of us in making
decisions with respect to the timing, manner and size of each sale. The sales
may be made on one or more exchanges or in the over-the-counter market or
otherwise, at prices and at terms then prevailing or at prices related to the
then current market price, or in negotiated transactions. The selling
securityholders may effect such transactions by selling the securities offered
hereby to or through broker-dealers. The securities may be sold by one or more
of, or a combination of, the following:
o a block trade in which the broker-dealer so engaged will attempt to sell
the securities as agent but may position and resell a portion of the
block as principal to facilitate the transaction;
o purchases by a broker-dealer as principal and resale by such
broker-dealer for its account pursuant to this prospectus;
o an exchange distribution in accordance with the rules of such exchange;
o ordinary brokerage transactions and transactions in which the broker
solicits purchasers; and
o in privately negotiated transactions.
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To the extent required, this prospectus may be amended or supplemented from
time to time to describe a specific plan of distribution. In effecting sales,
broker-dealers engaged by the selling securityholders may arrange for other
broker-dealers to participate in the resales.
The selling securityholders may enter into hedging transactions with
broker-dealers in connection with distributions of the securities offered hereby
or otherwise. In such transactions, broker-dealers may engage in short sales of
the securities in the course of hedging the positions they assume with the
selling securityholders. The selling securityholders also may sell securities
offered hereby short and redeliver the securities offered hereby to close out
such short positions. The selling securityholders may enter into option or other
transactions with broker-dealers which require the delivery to the broker-dealer
of the securities. The broker-dealer may then resell or otherwise transfer such
securities offered hereby pursuant to this prospectus. The selling
securityholders also may loan or pledge the securities to a broker-dealer. The
broker-dealer may sell the securities so loaned, or upon a default the
broker-dealer may sell the pledged securities pursuant to this prospectus.
Broker-dealers or agents may receive compensation in the form of commissions,
discounts or concessions from the selling securityholders. Broker-dealers or
agents may also receive compensation from the purchasers of the securities
offered hereby for whom they act as agents or to whom they sell as principals,
or both. Compensation as to a particular broker-dealer might be in excess of
customary commissions and will be in amounts to be negotiated in connection with
the sale. Broker-dealers or agents and any other participating broker-dealers or
the selling securityholders may be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Act of 1933 in connection with sales
of the securities offered hereby. Accordingly, any such commission, discount or
concession received by them and any profit on the resale of the securities
purchased by them may be deemed to be underwriting discounts or commissions
under the Securities Act of 1933. Because the selling securityholders may be
deemed to be "underwriters" within the meaning of Section 2(11) of the
Securities Act of 1933, the selling securityholders will be subject to the
prospectus delivery requirements of the Securities Act of 1933. In addition, any
securities covered by this prospectus which qualify for sale pursuant to Rule
144 promulgated under the Securities Act of 1933 may be sold under Rule 144
rather than pursuant to this prospectus. The selling securityholders have
advised us that they have not entered into any agreements, understandings or
arrangements with any underwriters or broker-dealers regarding the sale of
securities offered hereby. There is no underwriter or coordinating broker acting
in connection with the proposed sale of the securities offered hereby by the
selling securityholders.
The securities offered hereby will be sold only through registered or licensed
brokers or dealers if required under applicable state securities laws. In
addition, in certain states the securities offered hereby may not be sold unless
they have been registered or qualified for sale in the applicable state or an
exemption from the registration or qualification requirement is available and is
complied with.
Under applicable rules and regulations under the Securities Exchange Act of
1934, any person engaged in the distribution of the securities offered hereby
may not simultaneously engage in market making activities with respect to our
common stock for a period of two business days prior to the commencement of such
distribution. In addition, the selling securityholders will be subject to
applicable provisions of the Securities Exchange Act of 1934 and the associated
rules and regulations under the Securities Exchange Act of 1934, including
Regulation M, which provisions may limit the timing of purchases and sales of
securities by the selling securityholders. We will make copies of this
prospectus available to the selling securityholders and we have informed them of
the need for delivery of copies of this prospectus to purchasers at or prior to
the time of any sale of the securities offered hereby.
We will file a supplement to this prospectus, if required, pursuant to Rule
424(b) under the Securities Act of 1933 upon being notified by the selling
securityholders that any material arrangement has been entered into with a
broker-dealer for the sale of securities offered hereby through a block trade,
special offering, exchange distribution or secondary distribution or a purchase
by a broker or dealer. Such supplement will disclose:
o the name of the participating broker-dealer(s);
o the number and type of securities involved;
o the price at which such securities were sold;
o the commissions paid or discounts or concessions allowed to such
broker-dealer(s), where applicable;
o that such broker-dealer(s) did not conduct any investigation to verify
the information set out or incorporated by reference in this prospectus;
and
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o other facts material to the transaction.
We will bear all costs, expenses and fees in connection with the registration
of the securities offered hereby. The selling securityholders will bear all
commissions and discounts, if any, attributable to the sales of the securities
offered hereby. The selling securityholders may agree to indemnify any
broker-dealer or agent that participates in transactions involving sales of the
securities offered hereby against certain liabilities, including liabilities
arising under the Securities Act of 1933. The selling securityholders have
agreed to indemnify certain persons, including broker-dealers and agents,
against certain liabilities in connection with the offering of the securities
offered hereby, including liabilities arising under the Securities Act of 1933.
In addition, we are also registering up to 3,450,000 shares of common stock
for issuance to the holders of Series C warrants who exercise such warrants
subsequent to their sale by the selling securityholders under this prospectus.
DILUTION
Our net tangible book value as of December 31, 1999 was $90.9 million, or
approximately $3.00 per share. Net tangible book value per share represents
stockholders' equity less intangible assets divided by the number of shares of
common stock outstanding. After giving effect to the exercise of the 3.45
million warrants at $15.27 per share, our net tangible book value as of December
31, 1999 would have been $143.5 million, or approximately $4.25 per share. This
represents an immediate increase in net tangible book value of $1.25 per share
to existing stockholders and an immediate dilution in net tangible book value of
$11.02 per share to new investors of common stock. The following table
illustrates this dilution on a per share basis:
<TABLE>
<S> <C> <C>
Exercise price per share of the warrants.............. $15.27
Net tangible book value per share as of
December 31, 1999................................. $3.00
Increase attributable to warrant holders............ $1.25
Net tangible book value per share after exercise
of warrants......................................... 4.25
------
Dilution per share to warrant holders................. $11.02
------
</TABLE>
To the extent that any shares are issued for less than the exercise price of
the warrants upon exercise of options or warrants that were outstanding at
December 31, 1999 or granted after that date, or reserved for future issuance
under our stock plans, there will be further dilution to the warrant holder.
LEGAL MATTERS
The validity of the securities offered hereby has been passed upon for us by
Patterson, Belknap, Webb & Tyler LLP, 1133 Avenue of the Americas, New York, New
York 10036-6710.
EXPERTS
The consolidated financial statements and the related financial statement
schedule incorporated in this prospectus by reference from On Command's Annual
Report on Form 10-K for the year ended December 31, 1999 have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their report, which is
incorporated herein by reference, and has been so incorporated in reliance upon
the report of such firm given upon their authority as experts in accounting and
auditing.
9
<PAGE> 12
================================================================================
WE HAVE NOT AUTHORIZED ANY DEALER, SALESMAN OR OTHER PERSON TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS. DO
NOT RELY ON ANY INFORMATION OR REPRESENTATION NOT CONTAINED HEREIN. THIS
PROSPECTUS IS NOT AN OFFER TO SELL ANY OF THE SECURITIES OFFERED HEREBY AND IT
IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE
SUCH AN OFFER OR SOLICITATION WOULD BE UNLAWFUL. THIS INFORMATION CONTAINED IN
THIS PROSPECTUS IS CURRENT ONLY AS OF ITS DATE.
---------------
CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
General Information About On Command
Corporation ............................... 2
Risk Factors ................................ 4
Where You Can Get More Information
About On Command .......................... 6
Selling Securityholders ..................... 7
Plan of Distribution ........................ 7
Dilution..................................... 9
Legal Matters ............................... 9
Experts ..................................... 9
</TABLE>
================================================================================
================================================================================
3,450,000 SERIES C WARRANTS AND THE COMMON STOCK ISSUABLE UPON
EXERCISE OF THE SERIES C WARRANTS 3,450,000 SHARES OF
COMMON STOCK
ON COMMAND
CORPORATION
---------------
PROSPECTUS
---------------
MARCH 28, 2000
================================================================================
10
<PAGE> 13
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various estimated amount of fees and
expenses payable in connection with this offering other than sales commissions.
All such expenses will be borne by the Registrant.
<TABLE>
<CAPTION>
ITEM AMOUNT OF EXPENSES
---- ------------------
<S> <C>
SEC Registration Fee .............. $ 29,373.30
Printing Expenses ................. 20,000.00*
Accounting Fees and Expenses ...... 5,000.00*
Legal Fees and Expenses ........... 35,000.00*
NASD Listing Fee .................. 60,000*
Miscellaneous Expenses ............ 1,000.00*
-----------
Total ........................... $150,373.30*
===========
</TABLE>
- ----------
* Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Amended and Restated Certificate of Incorporation of On Command
Corporation provides for the indemnification by the corporation of each director
and officer of the corporation to the fullest extent permitted by the Delaware
General Corporation Law, as the same exists or may hereafter be amended. Section
145 of the Delaware General Corporation Law provides in relevant part that a
corporation may 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 such
person 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 such person
in connection with the defense or settlement of such action or suit if such
person acted in good faith and in a manner such person reasonably believed to be
in or not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, such person had no reasonable cause to
believe such person's conduct was unlawful.
In addition, Section 145 provides that a corporation may 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 such a person 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 such person in connection with the defense or settlement of such
action or suit if such person acted in good faith and in a manner such person
reasonably believed to be in or not opposed to the best interests of the
corporation and 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 Delaware 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 the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Delaware Court of Chancery or
such other court shall deem proper. Delaware law further provides that nothing
in the above-described provisions shall be deemed exclusive of any other rights
to indemnification or advancement of expenses to which any person may be
entitled under any bylaw, agreement, vote of stockholders or disinterested
directors or otherwise. The Bylaws of On Command provides for the advancement of
expenses (including attorneys' fees) actually and reasonably incurred by a
director or officer of the corporation in connection with the defense of an
action for which the corporation is required to indemnify such individual,
subject to an undertaking by such individual to reimburse the corporation if it
is ultimately determined that he or she is not entitled to be indemnified by the
corporation.
Article Tenth of the Amended and Restated Certificate of Incorporation of On
Command Corporation provides that a director of the
II-1
<PAGE> 14
corporation shall not be personally liable to the corporation or its
stockholders for monetary damages for any breach of fiduciary duty as a
director. Article Eighth of the Bylaws of the corporation provides that a
director, officer, employee, or other agent of the corporation shall be
indemnified against actions by reason of the fact that the person is or was an
agent of the corporation. Section 102(b)(7) of the Delaware General Corporation
Law provides that a provision so limiting the personal liability of a director
shall not eliminate or limit the liability of a director for, among other
things: breach of the duty of loyalty; acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of the law; and
unlawful payment of dividends and transactions from which the director derived
an improper personal benefit.
ITEM 16. EXHIBITS.
NUMBER DESCRIPTION OF DOCUMENT
------ -----------------------
4.1(1) Registration Rights Agreement by and among On Command
Corporation and the other parties named therein.
4.2(1) Warrant Agreement by and among On Command Corporation
and the other parties named therein.
5.1(2) Opinion of Patterson, Belknap, Webb & Tyler LLP
10.7(3) Corporate Agreement dated as of October 8, 1996,
between On Command Corporation and Ascent Entertainment
Group, Inc.
10.8(4) 1996 Key Employee Stock Plan.
10.9(5) 1997 Employee Stock Purchase Plan.
10.10(6) Amended and Restated 1997 Non-Employee Directors Stock
Plan.
10.11(7) First Amended and Restated Credit Agreement dated as of
November 24, 1997, between On Command Corporation and
the Lenders named therein and NationsBank of Texas, N.A
10.12(7) Change of Control Severance Plan for Executive Officers
23.1(2) Independent Auditor's Consent.
23.2(2) Consent of Patterson, Belknap, Webb & Tyler LLP
(included in Exhibit 5.1).
24(2) Power of Attorney (included on p. II-5).
- ----------
(1) Incorporated by reference to exhibit bearing the same number from the
Company's Registration Statement on Form S-4 (Registration No. 333-10407).
(2) Filed herewith.
(3) Incorporated by reference to Exhibit 10.22 of the Annual Report on Form
10-K for the year ended December 31, 1996 of Ascent Entertainment Group,
Inc. filed March 31, 1997 (Commission File No. 000-27192).
(4) Incorporated by reference to Exhibit 10.13 of the Company's Annual Report
on Form 10-K for the year ended December 31, 1996 filed March 31, 1997
(Commission File No. 000-21315).
(5) Incorporated by reference to Exhibit 4(c) from the Company's Registration
Statement on Form S-8 (Registration No. 333-33149) declared effective by
the Securities and Exchange Commission on August 8, 1997.
(6) Incorporated by reference to Exhibit 4(d) from the Company's Registration
Statement on Form S-8 (Registration No. 333-33149) declared effective by
the Securities and Exchange Commission on August 8, 1997.
(7) Incorporated by reference to exhibit bearing the same number from the
Company's Annual Report on Form 10-K for the year ended December 31, 1998
filed March 29, 1999 (Commission File No. 000-21315).
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
II-2
<PAGE> 15
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this registration statement or any
material change to such information in this registration statement;
provided, however, that paragraphs (a) (1) (i) and (a) (1) (ii) do not apply
if the registration statement is on Form S-3, Form S-8 or Form F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
(b) The undersigned registrant hereby undertakes that, for the purpose of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 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 Securities and Exchange
Commission such indemnification is against public policy as expressed in said
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 Act and will
be governed by the final adjudication of such issue.
II-3
<PAGE> 16
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-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in City of San Jose, State of California, on March 28, 2000.
ON COMMAND CORPORATION
By: /s/ ARTHUR M. AARON
--------------------------
Name: Arthur M. Aaron, Esq.
Title: Acting General Counsel
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
dates indicated. Each person whose signature appears below constitutes and
appoints Arthur M. Aaron and James A. Cronin, III, jointly and severally, 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 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.
<TABLE>
<S> <C>
/s/ ALLAN H. GOODSON March 28, 2000
-------------------------------------
Allan H. Goodson
Executive Vice President and
Chief Operating Officer
(Principal Executive Officer)
/s/ PAUL J. MILLEY March 28, 2000
-------------------------------------
Paul J. Milley
Senior Vice President, Finance and
Chief Financial Officer
(Principal Accounting Officer)
/s/ JAMES A. CRONIN, III March 28, 2000
-------------------------------------
James A. Cronin, III
Chairman of the Board
/s/ RICHARD D. GOLDSTEIN March 28, 2000
-------------------------------------
Richard D. Goldstein, Director
/s/ CHARLES M. LILLIS March 28, 2000
-------------------------------------
Charles M. Lillis, Director
/s/ PETER MAY March 28, 2000
-------------------------------------
Peter May, Director
/s/ J.C. SPARKMAN March 28, 2000
-------------------------------------
J.C. Sparkman, Director
/s/ GARY L. WILSON March 28, 2000
-------------------------------------
Gary L. Wilson, Director
/s/ J. DAVID WARGO March 28, 2000
-------------------------------------
J. David Wargo, Director
</TABLE>
II-4
<PAGE> 17
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
NUMBER DESCRIPTION OF DOCUMENT
------ -----------------------
<S> <C>
4.1(1) Registration Rights Agreement by and among On Command
Corporation and the other parties named therein.
4.2(1) Warrant Agreement by and among On Command Corporation
and the other parties named therein.
5.1(2) Opinion of Patterson, Belknap, Webb & Tyler LLP
10.7(3) Corporate Agreement dated as of October 8, 1996,
between On Command Corporation and Ascent Entertainment
Group, Inc.
10.8(4) 1996 Key Employee Stock Plan.
10.9(5) 1997 Employee Stock Purchase Plan.
10.10(6) Amended and Restated 1997 Non-Employee Directors Stock
Plan.
10.11(7) First Amended and Restated Credit Agreement dated as of
November 24, 1997, between On Command Corporation and
the Lenders named therein and NationsBank of Texas, N.A
10.12(7) Change of Control Severance Plan for Executive Officers
23.1(2) Independent Auditor's Consent.
23.2(2) Consent of Patterson, Belknap, Webb & Tyler LLP
(included in Exhibit 5.1).
24(2) Power of Attorney (included on p. II-5).
</TABLE>
- ----------
(1) Incorporated by reference to exhibit bearing the same number from the
Company's Registration Statement on Form S-4 (Registration No. 333-10407).
(2) Filed herewith.
(3) Incorporated by reference to Exhibit 10.22 of the Annual Report on Form
10-K for the year ended December 31, 1996 of Ascent Entertainment Group,
Inc. filed March 31, 1997 (Commission File No. 000-27192).
(4) Incorporated by reference to Exhibit 10.13 of the Company's Annual Report
on Form 10-K for the year ended December 31, 1996 filed March 31, 1997
(Commission File No. 000-21315).
(5) Incorporated by reference to Exhibit 4(c) from the Company's Registration
Statement on Form S-8 (Registration No. 333-33149) declared effective by
the Securities and Exchange Commission on August 8, 1997.
(6) Incorporated by reference to Exhibit 4(d) from the Company's Registration
Statement on Form S-8 (Registration No. 333-33149) declared effective by
the Securities and Exchange Commission on August 8, 1997.
(7) Incorporated by reference to exhibit bearing the same number from the
Company's Annual Report on Form 10-K for the year ended December 31, 1998
filed March 29, 1999 (Commission File No. 000-21315).
<PAGE> 1
EXHIBIT 5.1
March 28, 2000
On Command Corporation
6331 San Ignacio Avenue
San Jose, CA 95119
Dear Sirs:
We have acted as counsel to On Command Corporation, a Delaware
corporation (the "Company"), in connection with the proposed registration by the
Company under the Securities Act of 1933, as amended (the "Act"), of 3,450,000
Series C warrants (the "Warrants") to purchase shares of the Company's common
stock, par value $.01 per share, and 3,450,000 shares of the Company's common
stock, par value $.01 per share, underlying the Warrants (the "Shares") pursuant
to the Company's registration statement on Form S-3 (the "Registration
Statement") filed with the Securities and Exchange Commission (the "Commission")
on March 28, 2000.
In rendering this opinion we have examined the Company's Certificate of
Incorporation and Bylaws, each as amended to date, and the minutes of the
corporate proceedings taken by the Company in connection with the authorization
of the Warrants and Shares. We have also examined the originals, or copies
certified or otherwise identified to us, of the corporate records of the
Company, certificates of public officials and representatives of the Company,
and such other documents and records, and have made such investigations of law,
as we have deemed necessary for purposes of this opinion. We have assumed the
genuineness of all signatures, the conformity to the original of all copies and
the factual accuracy of certificates submitted to us.
On the basis of the foregoing, we are of the opinion that the Warrants
and the Shares have been duly authorized by all necessary corporate action on
the part of the Company. When sold and delivered as contemplated by the
Registration Statement, the Warrants will constitute duly authorized and fully
vested rights to purchase the Shares. When the Warrants are exercised and
converted into the Shares or when the Shares are sold and delivered as
contemplated by the Registration Statement, the Shares will constitute duly
authorized, validly issued, fully paid and nonassessable shares of common stock
of the Company.
We express no opinion as to any laws other than the General Corporation
Law of the State of Delaware and the federal laws of the United States of
America.
We hereby consent to the filing of this opinion with the Commission as
an exhibit to the Registration Statement. In furnishing this opinion and giving
this consent, we do not admit that we are in the category of persons whose
consent is required under Section 7 of the Act, or the rules and regulations of
the Commission thereunder.
PATTERSON, BELKNAP, WEBB & TYLER LLP
By: /s/ Jeffrey E. LaGueux
------------------------------------
A Member of the Firm
cc: Arthur M. Aaron, Esq.
<PAGE> 1
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
On Command Corporation on Form S-3 of our report dated March 3, 2000, appearing
in the Annual Report on Form 10-K of On Command Corporation for the year ended
December 31, 1999 and to the reference to us under the heading "Experts" in this
Prospectus, which is part of this Registration Statement.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
San Jose, California
March 24, 2000
