-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Gri8v0HS8FhVNFcUvhokoiY1ua2o6AI8S4/MEZDUteXbfZg3gngv+f6s3Jr8YI9p K/zv2UgiYTnTBdCPZSUtRA== 0000891618-97-003219.txt : 19970811 0000891618-97-003219.hdr.sgml : 19970811 ACCESSION NUMBER: 0000891618-97-003219 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 19970808 EFFECTIVENESS DATE: 19970808 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ON COMMAND CORP CENTRAL INDEX KEY: 0001020871 STANDARD INDUSTRIAL CLASSIFICATION: CABLE & OTHER PAY TELEVISION SERVICES [4841] IRS NUMBER: 770436194 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-8 SEC ACT: 1933 Act SEC FILE NUMBER: 333-33149 FILM NUMBER: 97653489 BUSINESS ADDRESS: STREET 1: 6331 SAN IGNACIO AVENUE CITY: SAN JOSE STATE: CA ZIP: 95119 BUSINESS PHONE: 4083604697 MAIL ADDRESS: STREET 1: 6331 SAN IGNACIO AVENUE CITY: SAN JOSE STATE: CA ZIP: 95119 FORMER COMPANY: FORMER CONFORMED NAME: ASCENT ACQUISITION CORP DATE OF NAME CHANGE: 19960812 S-8 1 FORM S-8 DATED AUGUST 8, 1997 1 As filed with the Securities and Exchange Commission on August 8, 1997 Registration No. 333-___ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 On Command Corporation (Exact name of issuer as specified in its charter) Delaware 77-04535194 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 6331 San Ignacio Avenue San Jose, California 95119 (Address of Principal Executive Offices, including Zip Code) ON COMMAND CORPORATION 1997 EMPLOYEE STOCK PURCHASE PLAN ON COMMAND CORPORATION 1997 NON-EMPLOYEE DIRECTORS STOCK PLAN (Full Title of the Plan) Jill E. Fishbein, Esq. Senior Vice President, General Counsel and Secretary c/o On Command Corporation 6331 San Ignacio Avenue San Jose, California 95119 (408) 360-4500 (Name, Address and Telephone Number, including Area Code, of Agent for Service) CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------------------------------------- Proposed Proposed Amount Maximum Maximum Amount of Title of Securities to be Offering Price Aggregate Registration to be Registered Registered per Share Offering Price Fee - -------------------------------------------------------------------------------------------------------------- Common Stock 290,000 $11.75 (1) $3,407,500 (1) $1,033.00 ($.01 par value) shares - --------------------------------------------------------------------------------------------------------------
(1) Estimated pursuant to Rule 457(h) and (c) solely for the purpose of calculating the registration fee on the basis of the average of the high and low prices of the Registrant's Common Stock on the Nasdaq National Market on August 4, 1997. 2 PART II INFORMATION REQUIRED IN REGISTRATION STATEMENT ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE The following documents which have been filed previously with the Securities and Exchange Commission (the "Commission") by On Command Corporation (the "Company") pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act"), are incorporated herein by reference: (a) The Company's Annual Report on Form 10-K (Commission File No. 00-21315) for the fiscal year ended December 31, 1996. (b) The Company's Quarterly Report on Form 10-Q (Commission File No. 00-21315) for the fiscal quarter ended March 31, 1997. (c) The description of the Company's Common Stock contained in Amendment No. 1 to the Company's Registration Statement Form 8-A (Commission File No. 00-21315) filed on September 10, 1996 with the Commission under Section 12(g) of the Exchange Act, which incorporates by reference the description of such Common Stock contained in the Company's Registration Statement on Form S-4 (Commission File No. 333-10407) (which description is herein incorporated by reference), and any amendment or report filed for the purpose of updating such description. All documents filed with the Commission subsequent to the date of this Registration Statement pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities remaining unsold, shall be deemed to be incorporated by reference into this Registration Statement and to be a part hereof from the date of filing of such documents with the Commission. ITEM 4. DESCRIPTION OF SECURITIES Not applicable, as the Company's Common Stock is registered under Section 12(g) of the Exchange Act. ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL An opinion as to the validity of the securities being issued has been rendered for the Company by Jill E. Fishbein, Senior Vice President, Legal, General Counsel and Secretary of the Company. As of July 30, 1997, Ms. Fishbein had options to purchase 50,000 shares of Common Stock, none of which options were exercisable. ITEM 6. INDEMNIFICATION OF OFFICERS AND DIRECTORS Reference is made to the provisions of Article IX of the Registrant's Certificate of Incorporation filed as Exhibit 4(a) hereto and the provisions of Article VIII of the Registrant's By-laws filed as Exhibit 4(b) hereto. 2 3 As permitted by Section 145 of the Delaware General Corporation Law, the Registrant's Certificate of Incorporation includes a provision that eliminates the personal liability of its directors to the Registrant or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under section 174 of the Delaware General Corporation Law or (iv) for any transaction from which the director derived an improper personal benefit. In addition, as permitted by Section 145 of the Delaware General Corporation Law, the Company's Bylaws provide that the Company will indemnify its officers and directors to the fullest extent permitted by the Delaware General Corporation Law and that the Company may indemnify its employees and agents in the discretion of the Board of Directors. Generally, Section 145 of the General Corporation Law of the State of Delaware (the "Delaware Corporation Law") permits a corporation to indemnify certain persons made a party or threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether criminal, civil, administrative or investigative, by reason of the fact that such person is or was a director or officer of the corporation or is or was serving at the request of the corporation as a director or officer of another corporation or enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with any such action, suit or proceeding if he acted in good faith and in a manner that he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, if he had no reasonable cause to believe that his conduct was unlawful. If, however, any threatened, pending or completed action, suit or proceeding is by or in the right of the corporation, the director or officer is not permitted to be indemnified in respect of any claim, issue or matter as to which he is adjudged to be liable to the corporation unless the Delaware Court of Chancery, or such other court adjudicating the action, determines otherwise. Additionally, there are in effect directors' and officers' liability insurance policies which insure the Registrant's directors and officers against certain liabilities that they may incur in such capacities. ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED Not applicable. ITEM 8. EXHIBITS Exhibit No. Description of Exhibit ----------- ---------------------- 4(a) Certificate of Amended and Restated Certificate of Incorporation of On Command Corporation (as amended through August 13, 1996) (Incorporated by reference to Exhibit 3.1 to Amendment No. 1 to the Company's Registration Statement on Form S-4, Commission File No. 333-10407 (the "Form S-4")). 4(b) By-laws of On Command Corporation (as amended through August 13, 1996) (Incorporated by reference to Exhibit 3.3 to Amendment No. 1 to the Company's Registration Statement on Form S-4). 4(c) On Command Corporation 1997 Employee Stock Purchase Plan. 4(d) On Command Corporation 1997 Non-Employee Directors Stock Plan. 3 4 4(e) Forms of agreements for On Command Corporation 1997 Non-Employee Directors Stock Plan. 5(a) Opinion of Jill E. Fishbein, Senior Vice President, Legal, General Counsel and Secretary of the Registrant. 23(a) Independent Auditors' Consent. 23(b) Consent of Jill E. Fishbein (contained in Exhibit 5(a)). 24 Powers of Attorney (see page 6). ITEM 9. UNDERTAKINGS (a) The undersigned Registrant hereby undertakes: (1) To file, during any period, in which offers or sales are being made, a post-effective amendment to this registration statement: (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; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; provided, however, that the undertakings set forth in paragraphs (1)(i) and (1)(ii) above do not apply if 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 Securities and Exchange Commission by the Registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in this 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 purposes 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 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. 4 5 (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 the 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. 5 6 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of San Jose, State of California, on August 4, 1997. On Command Corporation /s/ ROBERT M. KAVNER ------------------------------------- Robert M. Kavner President and Chief Executive Officer POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS that each individual whose signature appears below constitutes and appoints Jill E. Fishbein and Paul J. Milley, and each of them, his true and lawful attorneys-in-fact and agents with full power of substitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement on Form S-8, and to file the same with all exhibits thereto and all 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 and necessary to be done in and about the premises, as fully to all intents and purposes as he or it might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or his or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the date indicated.
Signature Title Date - --------- ----- ---- /s/ ROBERT M. KAVNER President, Chief Executive Officer and Director August 4, 1997 - -------------------------------------- (Principal Executive Officer) Robert M. Kavner /s/ BRIAN A.C. STEEL Executive Vice President, Chief Financial Officer and August 4, 1997 - -------------------------------------- Director (Principal Financial Officer) Brian A.C. Steel /s/ PAUL J. MILLEY Senior Vice President, Finance (Principal Accounting August 4, 1997 - -------------------------------------- Officer) Paul J. Milley /s/ JAMES CRONIN Director August 4, 1997 - -------------------------------------- James Cronin /s/ CHARLES LYONS Chairman of the Board August 4, 1997 - -------------------------------------- Charles Lyons /s/ GARY WILSON Director August 4, 1997 - --------------------------------------- Gary Wilson
6 7 EXHIBIT INDEX
Sequential Exhibit No. Description - ----------- ----------- 4(a) Certificate of Amended and Restated Certificate of Incorporation of On Command Corporation (as amended through August 13, 1996) (Incorporated by reference to Exhibit 3.1 to Amendment No. 1 to the Company's Registration Statement on Form S-4, Commission File No. 333-10407 (the "Form S-4")). 4(b) By-laws of On Command Corporation (as amended through August 13, 1996) (Incorporated by reference to Exhibit 3.3 to Amendment No. 1 to the Company's Registration Statement on Form S-4). 4(c) On Command Corporation 1997 Employee Stock Purchase Plan. 4(d) On Command Corporation 1997 Non-Employee Directors Stock Plan. 4(e) Forms of agreements for On Command Corporation 1997 Non-Employee Directors Stock Plan. 5(a) Opinion of Jill E. Fishbein, Senior Vice President, Legal, General Counsel and Secretary of the Registrant. 23(a) Independent Auditors' Consent. 23(b) Consent of Jill E. Fishbein (contained in Exhibit 5(a)). 24 Powers of Attorney (see page 6).
7 EX-4.(C) 2 ON COMMAND CORP. 1997 EMPLOYEE STOCK PURCHASE PLAN 1 EXHIBIT 4(c) ON COMMAND CORPORATION 1997 EMPLOYEE STOCK PURCHASE PLAN As Adopted March 17, 1997 1. ESTABLISHMENT OF PLAN. On Command Corporation (the "COMPANY") proposes to grant options for purchase of the Company's Common Stock to eligible employees of the Company and its Subsidiaries (as hereinafter defined) pursuant to this Employee Stock Purchase Plan (this "PLAN"). For purposes of this Plan, "PARENT CORPORATION" and "SUBSIDIARY" (collectively, "SUBSIDIARIES") shall have the same meanings as "parent corporation" and "subsidiary corporation" in Sections 424(e) and 424(f), respectively, of the Internal Revenue Code of 1986, as amended (the "CODE"). The Company intends this Plan to qualify as an "employee stock purchase plan" under Section 423 of the Code (including any amendments to or replacements of such Section), and this Plan shall be so construed. Any term not expressly defined in this Plan but defined for purposes of Section 423 of the Code shall have the same definition herein. A total of 180,000 shares of the Company's Common Stock is reserved for issuance under this Plan. Such number shall be subject to adjustments effected in accordance with Section 14 of this Plan. 2. PURPOSE. The purpose of this Plan is to provide employees of the Company and Subsidiaries designated by the Board of Directors of the Company (the "BOARD") as eligible to participate in this Plan with a convenient means of acquiring an equity interest in the Company through payroll deductions, to enhance such employees' sense of participation in the affairs of the Company and Subsidiaries, and to provide an incentive for continued employment. 3. ADMINISTRATION. (a) The Board shall appoint the Chief Operations Officer and Executive Vice of the Corporation to serve as "PLAN ADMINISTRATOR". Except where the Plan specifically reserves the determination of matters to the Board or a committee appointed by the Board (the "COMMITTEE"), the Plan shall be administered by the Plan Administrator. In addition to his or her duties with respect to the Plan stated elsewhere in the Plan, the Plan Administrator shall have full authority, consistently with the Plan, to interpret the Plan, to promulgate such rules and regulations with respect to the Plan as he or she deems desirable and to make all other determinations necessary or desirable for the administration of the Plan. Except as provided in paragraph (b), all decisions, determinations and interpretations of the Committee shall be binding upon all persons. (b) If a claim for benefits under the Plan is wholly or partially denied by the Plan Administrator, the claimant may request the Board (or Committee if one is appointed) to review the denial of his or her claim. The Board (or Committee if one is appointed) shall make a decision and furnish such decision to the claimant within a reasonable period of time after the request for review is made. All decisions of the Board or Committee, as appropriate, shall be final and binding upon all persons. All expenses incurred in connection with the administration of this Plan shall be paid by the Company. 4. ELIGIBILITY. Any employee of the Company or the Subsidiaries is eligible to participate in an Offering Period (as hereinafter defined) under this Plan except the following: 2 (a) employees who are not employed by the Company or Subsidiaries ten days before the beginning of such Offering Period; (b) employees who are customarily employed for less than twenty (20) hours per week; (c) employees who are customarily employed for less than five (5) months in a calendar year; (d) employees who, together with any other person whose stock would be attributed to such employee pursuant to Section 424(d) of the Code, own stock or hold options to purchase stock possessing five percent (5%) or more of the total combined voting power or value of all classes of stock of the Company or any of its Subsidiaries or who, as a result of being granted an option under this Plan with respect to such Offering Period, would own stock or hold options to purchase stock possessing five percent (5%) or more of the total combined voting power or value of all classes of stock of the Company or any of its Subsidiaries; (e) individuals who provide services to the Company as independent contractors whether or not reclassified as common law employees, unless the Company withholds or is required to withhold U.S. Federal employment taxes for such individuals pursuant to Section 3402 of the Code. 5. OFFERING DATES. The offering periods of this Plan (each, an "OFFERING PERIOD") shall be in three month periods commencing on the 23rd day of each of January, April, July, and October and ending on the 22nd day of each of April, July, October and January of the following calendar year, respectively during which payroll deductions of the participants are accumulated under this Plan. "PURCHASE PERIODS" shall be the monthly periods commencing on the 23rd day of each month and ending on the 22nd day of the next subsequent month during the Offering Period. The first business day of each Offering Period is referred to as the "OFFERING DATE". The last business day of each Purchase Period is referred to as the "PURCHASE DATE". The Board shall have the power to change the duration of Offering Periods or Purchase Periods with respect to offerings without stockholder approval if such change is announced at least fifteen (15) days prior to the scheduled beginning of the first Offering Period or Purchase Period to be affected. 6. PARTICIPATION IN THIS PLAN. Eligible employees may become participants in an Offering Period under this Plan on the first Offering Date after satisfying the eligibility requirements by delivering a subscription agreement to the Company's Legal Department (the "LEGAL DEPARTMENT") not later than the 15 days before such Offering Date unless a later time for filing the subscription agreement authorizing payroll deductions is set by the Board for all eligible employees with respect to a given Offering Period. An eligible employee who does not deliver a subscription agreement to the Legal Department by such date after becoming eligible to participate in such Offering Period shall not participate in that Offering Period or any subsequent Offering Period unless such employee enrolls in this Plan by filing a subscription agreement with the Legal Department not later than 15 days prior to preceding a subsequent Offering Date. Once an employee becomes a participant in an Offering Period, such employee will automatically participate in the Offering Period commencing immediately following the last day of the prior Offering Period unless the employee withdraws or is deemed to withdraw from this Plan or terminates further participation in the Offering Period as set forth in Section 11 below. Such participant is not required to file any additional subscription agreement in order to continue participation in this Plan. 7. GRANT OF OPTION ON ENROLLMENT. Enrollment by an eligible employee in this Plan with respect to an Offering Period will constitute the grant (as of the Offering Date) by the Company to such employee of an option to purchase on the Purchase Dates up to that number of shares of Common Stock of the Company determined by dividing (a) the amount accumulated in such employee's payroll deduction account during each such Purchase Period by ninety percent (90%) of the fair market value of a share of the ii 3 Company's Common Stock on such Purchase Date, provided, however, that the number of shares of the Company's Common Stock subject to any option granted pursuant to this Plan shall not exceed the lesser of (a) the maximum number of shares set by the Board pursuant to Section 10(c) below with respect to the applicable Offering Period, or (b) the maximum number of shares which may be purchased pursuant to Section 10(b) below with respect to the applicable Offering Period. The fair market value of a share of the Company's Common Stock shall be determined as provided in Section 8 hereof. 8. PURCHASE PRICE. The purchase price per share at which a share of Common Stock will be sold in any Offering Period shall be ninety percent (90%) the fair market value on the Purchase Date. For purposes of this Plan, the term "FAIR MARKET VALUE" means, as of any date, the value of a share of the Company's Common Stock determined as follows: (a) if such Common Stock is then quoted on the NASDAQ National Market, its closing price on the NASDAQ National Market on the date of determination as reported in The Wall Street Journal; (b) if such Common Stock is publicly traded and is then listed on a national securities exchange, its closing price on the date of determination on the principal national securities exchange on which the Common Stock is listed or admitted to trading as reported in The Wall Street Journal; (c) if such Common Stock is publicly traded but is not quoted on the NASDAQ National Market nor listed or admitted to trading on a national securities exchange, the average of the closing bid and asked prices on the date of determination as reported in The Wall Street Journal; or (d) if none of the foregoing is applicable, by the Board in good faith. 9. PAYMENT OF PURCHASE PRICE; CHANGES IN PAYROLL DEDUCTIONS; ISSUANCE OF SHARES. (a) The purchase price of the shares is accumulated by regular payroll deductions made during each Purchase Period. The deductions are made as a percentage of the participant's compensation in one percent (1%) increments not less than two percent (2%), nor greater than ten percent (10%) or such lower limit set by the Board or Committee, as appropriate. Compensation shall mean all W-2 compensation, including, but not limited to base salary, wages, commissions, overtime, shift premiums and bonuses, plus draws against commissions; provided, however, that for purposes of determining a participant's compensation, any election by such participant to reduce his or her regular cash remuneration under Sections 125 or 401(k) of the Code shall be treated as if the participant did not make such election. Payroll deductions shall commence on the first payday following the Offering Date and shall continue to the end of the Offering Period unless sooner altered or terminated as provided in this Plan. (b) A participant may lower (but not increase) the rate of payroll deductions during an Offering Period by filing with the Legal Department a new authorization for payroll deductions, in which case the new rate shall become effective for the next payroll period commencing more than fifteen (15) days after the Legal Department's receipt of the authorization and shall continue for the remainder of the Offering Period unless changed as described below. Such change in the rate of payroll deductions may be made at any time during an Offering Period, but not more than one (1) change may be made effective during any Offering Period. A participant may increase or decrease the rate of payroll deductions for any subsequent iii 4 Offering Period by filing with the Legal Department a new authorization for payroll deductions not later than 15 days before the beginning of such Offering Period. (c) All payroll deductions made for a participant are credited to his or her account under this Plan and are deposited with the general funds of the Company. No interest accrues on the payroll deductions. All payroll deductions received or held by the Company may be used by the Company for any corporate purpose, and the Company shall not be obligated to segregate such payroll deductions. (d) On each Purchase Date, so long as this Plan remains in effect and provided that the participant has not submitted a signed and completed withdrawal form before that date which notifies the Company that the participant wishes to withdraw from that Offering Period under this Plan and have all payroll deductions accumulated in the account maintained on behalf of the participant as of that date returned to the participant, the Company shall apply the funds then in the participant's account to the purchase of whole shares of Common Stock reserved under the option granted to such participant with respect to the Purchase Period to the extent that such option is exercisable on the Purchase Date. The purchase price per share shall be as specified in Section 8 of this Plan. Any amount remaining in such participant's account on a Purchase Date which is less than the amount necessary to purchase a full share of Common Stock of the Company shall be carried forward, without interest, into the next Purchase Period or Offering Period, as the case may be. In the event that this Plan has been oversubscribed, all funds not used to purchase shares on the Purchase Date shall be returned to the participant, without interest. No Common Stock shall be purchased on a Purchase Date on behalf of any employee whose participation in this Plan has terminated prior to such Purchase Date. (e) As promptly as practicable after the Purchase Date, the Company shall arrange the delivery to each participant of a certificate representing the shares purchased upon exercise of his option. (f) During a participant's lifetime, such participant's option to purchase shares hereunder is exercisable only by him or her. The participant will have no interest or voting right in shares covered by his or her option until such option has been exercised. Shares to be delivered to a participant under this Plan will be registered in the name of the participant or in the name of the participant and his or her spouse. 10. LIMITATIONS ON SHARES TO BE PURCHASED. (a) No employee shall be entitled to purchase stock under this Plan at a rate which, when aggregated with his or her rights to purchase stock under all other employee stock purchase plans of the Company or any Subsidiary, exceeds $25,000 in fair market value, determined as of the Offering Date (or such other limit as may be imposed by the Code) for each calendar year in which the employee participates in this Plan. (b) No more than two hundred percent (200%) of the number of shares determined by using ninety percent (90%) of the fair market value of a share of the Company's Common Stock on the Offering Date as the denominator may be purchased by a participant on any single Purchase Date. (c) No employee shall be entitled to purchase more than the Maximum Share Amount (as defined below) on any single Purchase Date. Not less than thirty (30) days prior to the commencement of any Offering Period, the Board may, in its sole discretion, set a maximum number of shares which may be purchased by any employee at any single Purchase Date (hereinafter the "MAXIMUM SHARE AMOUNT"). In no event shall the Maximum Share Amount exceed the amounts permitted under Section 10(b) above. If a new Maximum Share Amount is set, then all participants must be notified of such Maximum Share Amount not less than fifteen (15) days prior to the commencement of the next Offering Period. Once the Maximum iv 5 Share Amount is set, it shall continue to apply with respect to all succeeding Purchase Dates and Offering Periods unless revised by the Board as set forth above. (d) If the number of shares to be purchased on a Purchase Date by all employees participating in this Plan exceeds the number of shares then available for issuance under this Plan, then the Company will make a pro rata allocation of the remaining shares in as uniform a manner as shall be reasonably practicable and as the Board shall determine to be equitable. In such event, the Company shall give written notice of such reduction of the number of shares to be purchased under a participant's option to each participant affected thereby. (e) Any payroll deductions accumulated in a participant's account which are not used to purchase stock due to the limitations in this Section 10 shall be returned to the participant as soon as practicable after the end of the applicable Purchase Period, without interest. 11. WITHDRAWAL. (a) Each participant may withdraw from an Offering Period under this Plan by signing and delivering to the Legal Department a written notice to that effect on a form provided for such purpose. Such withdrawal may be elected at any time at least fifteen (15) days prior to the end of a Purchase Period. (b) Upon withdrawal from this Plan, the accumulated payroll deductions shall be returned to the withdrawn participant, without interest, and his or her interest in this Plan shall terminate. In the event a participant voluntarily elects to withdraw from this Plan, he or she may not resume his or her participation in this Plan during the same Offering Period, but he or she may participate in any Offering Period under this Plan which commences on a date subsequent to such withdrawal by filing a new authorization for payroll deductions in the same manner as set forth above for initial participation in this Plan. (c) As long as a participant is participating in the Plan as of the end of an Offering Period and has not filed a notice of withdrawal as set forth above, the Company will automatically enroll such participant in the subsequent Offering Period. A participant does not need to file any forms with the Company to automatically be enrolled in the subsequent Offering Period. 12. TERMINATION OF EMPLOYMENT. Termination of a participant's employment for any reason, including retirement, death or the failure of a participant to remain an eligible employee, immediately terminates his or her participation in this Plan. In such event, the payroll deductions credited to the participant's account will be returned to him or her or, in the case of his or her death, to his or her legal representative, without interest. For purposes of this Section 12, an employee will not be deemed to have terminated employment or failed to remain in the continuous employ of the Company in the case of sick leave, military leave, or any other leave of absence approved by the Board; provided that such leave is for a period of not more than ninety (90) days or reemployment upon the expiration of such leave is guaranteed by contract or statute. 13. RETURN OF PAYROLL DEDUCTIONS. In the event a participant's interest in this Plan is terminated by withdrawal, termination of employment or otherwise, or in the event this Plan is terminated by the Board, the Company shall promptly deliver to the participant all payroll deductions credited to such participant's account. No interest shall accrue on the payroll deductions of a participant in this Plan. 14. CAPITAL CHANGES. Subject to any required action by the stockholders of the Company, the number of shares of Common Stock covered by each option under this Plan which has not yet been v 6 exercised and the number of shares of Common Stock which have been authorized for issuance under this Plan but have not yet been placed under option (collectively, the "RESERVES"), as well as the price per share of Common Stock covered by each option under this Plan which has not yet been exercised, shall be proportionately adjusted for any increase or decrease in the number of issued and outstanding shares of Common Stock of the Company resulting from a stock split or the payment of a stock dividend (but only on the Common Stock) or any other increase or decrease in the number of issued and outstanding shares of Common Stock effected without receipt of any consideration by the Company; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been "effected without receipt of consideration". Such adjustment shall be made by the Board, whose determination shall be final, binding and conclusive. Except as expressly provided herein, no issue by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock subject to an option. In the event of the proposed dissolution or liquidation of the Company, the Offering Period will terminate immediately prior to the consummation of such proposed action, unless otherwise provided by the Board. The Board may, in the exercise of its sole discretion in such instances, declare that the options under this Plan shall terminate as of a date fixed by the Board and give each participant the right to exercise his or her option as to all of the optioned stock, including shares which would not otherwise be exercisable. In the event of a proposed sale of all or substantially all of the assets of the Company, or the merger or consolidation of the Company with or into another corporation, each option under this Plan shall be assumed or an equivalent option shall be substituted by such successor corporation or a parent or subsidiary of such successor corporation, unless the Board determines, in the exercise of its sole discretion and in lieu of such assumption or substitution, that the participant shall have the right to exercise the option as to all of the optioned stock. If the Board makes an option exercisable in lieu of assumption or substitution in the event of a merger, consolidation or sale of assets, the Board shall notify the participant that the option shall be fully exercisable for a period of twenty (20) days from the date of such notice, and the option will terminate upon the expiration of such period. The Board may, if it so determines in the exercise of its sole discretion, also make provision for adjusting the Reserves, as well as the price per share of Common Stock covered by each outstanding option, in the event that the Company effects one or more reorganizations, recapitalizations, rights offerings or other increases or reductions of shares of its outstanding Common Stock, or in the event of the Company being consolidated with or merged into any other corporation. 15. NONASSIGNABILITY. Neither payroll deductions credited to a participant's account nor any rights with regard to the exercise of an option or to receive shares under this Plan may be assigned, transferred, pledged or otherwise disposed of in any way (other than by will, the laws of descent and distribution or as provided in Section 22 hereof) by the participant. Any such attempt at assignment, transfer, pledge or other disposition shall be void and without effect. 16. REPORTS. Individual accounts will be maintained for each participant in this Plan. Each participant shall receive promptly after the end of each Purchase Period a report of his or her account setting forth the total payroll deductions accumulated, the number of shares purchased, the per share price thereof and the remaining cash balance, if any, carried forward to the next Purchase Period or Offering Period, as the case may be. 17. DISPOSITION. Participants may only dispose of the shares purchased in Purchase Periods pursuant to the Plan during two distinct one-month periods which are May and November; however, if vi 7 Participants are otherwise prohibited from disposing of the shares purchased in the Purchase Period during any such May or November (a "BLACK-OUT MONTH") due to other restrictions (the "OTHER RESTRICITIONS"), such Participants shall be permitted to sell the shares they were prohibited from selling during the Black-Out Month during the next subsequent one month period during which there are no Other Restrictions. The Board may change such periods, in accordance with Section 25 below, but in no event shall the Board change such time periods upon less than thirty (30) days notice. Each participant shall notify the Company if the participant disposes of any of the shares purchased in any Purchase Period pursuant to this Plan if such disposition occurs within two (2) years from the Offering Date or within one (1) year from the Purchase Date on which such shares were purchased (the "NOTICE PERIOD"). Unless such participant is disposing of any of such shares during the Notice Period, such participant shall keep the certificates representing such shares in his or her name (and not in the name of a nominee) during the Notice Period. The Company may, at any time during the Notice Period, place a legend or legends on any certificate representing shares acquired pursuant to this Plan requesting the Company's transfer agent to notify the Company of any transfer of the shares. The obligation of the participant to provide such notice shall continue notwithstanding the placement of any such legend on the certificates. 18. NO RIGHTS TO CONTINUED EMPLOYMENT. Neither this Plan nor the grant of any option hereunder shall confer any right on any employee to remain in the employ of the Company or any Subsidiary, or restrict the right of the Company or any Subsidiary to terminate such employee's employment. 19. EQUAL RIGHTS AND PRIVILEGES. All eligible employees shall have equal rights and privileges with respect to this Plan so that this Plan qualifies as an "employee stock purchase plan" within the meaning of Section 423 or any successor provision of the Code and the related regulations. Any provision of this Plan which is inconsistent with Section 423 or any successor provision of the Code shall, without further act or amendment by the Company or the Board, be reformed to comply with the requirements of Section 423. This Section 19 shall take precedence over all other provisions in this Plan. 20. NOTICES. All notices or other communications by a participant to the Company under or in connection with this Plan shall be deemed to have been duly given when received in the form specified by the Company at the location, or by the person, designated by the Company for the receipt thereof. 21. TERM; STOCKHOLDER APPROVAL. After this Plan is adopted by the Board, this Plan will become effective on the date that is the first Offering Date after this Plan has been approved by the stockholders of the Company, in any manner permitted by applicable corporate law, which shall be within twelve (12) months after the date this Plan has been adopted by the Board. No purchase of shares pursuant to this Plan shall occur prior to such stockholder approval. This Plan shall continue until the earlier to occur of (a) termination of this Plan by the Board (which termination may be effected by the Board at any time), (b) issuance of all of the shares of Common Stock reserved for issuance under this Plan, or (c) ten (10) years from the adoption of this Plan by the Board. 22. DESIGNATION OF BENEFICIARY. (a) A participant may file a written designation of a beneficiary who is to receive any shares and cash, if any, from the participant's account under this Plan in the event of such participant's death subsequent to the end of an Purchase Period but prior to delivery to him of such shares and cash. In addition, a participant may file a written designation of a beneficiary who is to receive any cash from the participant's account under this Plan in the event of such participant's death prior to a Purchase Date. vii 8 (b) Such designation of beneficiary may be changed by the participant at any time by written notice. In the event of the death of a participant and in the absence of a beneficiary validly designated under this Plan who is living at the time of such participant's death, the Company shall deliver such shares or cash to the executor or administrator of the estate of the participant, or if no such executor or administrator has been appointed (to the knowledge of the Company), the Company, in its discretion, may deliver such shares or cash to the spouse or to any one or more dependents or relatives of the participant, or if no spouse, dependent or relative is known to the Company, then to such other person as the Company may designate. 23. CONDITIONS UPON ISSUANCE OF SHARES; LIMITATION ON SALE OF SHARES. Shares shall not be issued with respect to an option unless the exercise of such option and the issuance and delivery of such shares pursuant thereto shall comply with all applicable provisions of law, domestic or foreign, including, without limitation, the Securities Act of 1933, as amended, the Exchange Act, the rules and regulations promulgated thereunder, and the requirements of any stock exchange or automated quotation system upon which the shares may then be listed, and shall be further subject to the approval of counsel for the Company with respect to such compliance. 24. APPLICABLE LAW. The Plan shall be governed by the substantive laws (excluding the conflict of laws rules) of the State of California. 25. AMENDMENT OR TERMINATION OF THIS PLAN. The Board may at any time amend, terminate or the extend the term of this Plan, except that any such termination cannot affect options previously granted under this Plan, nor may any amendment make any change in an option previously granted which would adversely affect the right of any participant, nor may any amendment be made without approval of the stockholders of the Company obtained in accordance with Section 21 hereof within twelve (12) months of the adoption of such amendment (or earlier if required by Section 21) if such amendment would: (a) increase the number of shares that may be issued under this Plan; (b) change the designation of the employees (or class of employees) eligible for participation in this Plan; or (c) constitute an amendment for which stockholder approval is required in order to comply with Rule 16b-3 (or any successor rule) of the Exchange Act. viii EX-4.(D) 3 1997 NON-EMPLOYEE DIRECTORS STOCK PLAN 1 EXHIBIT 4(d) ON COMMAND CORPORATION 1997 NON-EMPLOYEE DIRECTORS STOCK PLAN On Command Corporation (the "Company"), a Delaware corporation, hereby adopts the 1997 Non-employee Directors Stock Plan (the "Plan"), effective upon the later to occur of: (i) affirmative vote of at least 50.1% of the Company's stockholders and (ii) the a registration statement filed with the Securities and Exchange Commission covering the shares subject to this Plan (as set forth in Article II, Section 1 below) is effective or deemed effective, for the benefit of its eligible Independent Directors (as such term is defined below). The purposes of this Plan are as follows: (1) To provide an additional incentive for Directors of the Company to further the growth, development and financial success of the Company by personally benefiting through the ownership of Company stock and rights which recognize such growth, development and financial success. (2) To enable the Company to obtain and retain the services of Directors considered essential to the long range success of the Company by offering them an opportunity to own stock in the Company and rights which will reflect the growth, development and financial success of the Company. ARTICLE I DEFINITIONS I.1 General. Wherever the following terms are used in this Plan they shall have the meaning specified below, unless the context clearly indicates otherwise. I.2 "Board" shall mean the Board of Directors of the Company. I.3 "Code" shall mean the Internal Revenue Code of 1986, as amended. I.4 "Common Stock" shall mean the common stock of the Company, par value $.01 per share, and any equity security of the Company issued or authorized to be issued in the future, but excluding any warrants, options or other rights to purchase Common Stock. Debt securities of the Company convertible into Common Stock shall be deemed equity securities of the Company. I.5 "Company" shall mean On Command Corporation, a Delaware corporation. I.6 "Corporate Transaction" shall mean any of the following stockholder-approved transactions to which the Company is a party: (a) a merger or consolidation in which the Company is not the surviving entity, except for a transaction the principal purpose of which is to change the State in which the Company is incorporated, form a holding company or effect a similar reorganization as to form whereupon this Plan and all Options are assumed by the successor entity; 2 (b) the sale, transfer, exchange or other disposition of all or substantially all of the assets of the Company, in complete liquidation or dissolution of the Company in a transaction not covered by the exceptions to clause (a), above; or (c) any reverse merger in which the Company is the surviving entity but in which securities possessing more than fifty percent (50%) of the total combined voting power of the Company's outstanding securities are transferred to a person or person different from those who held such securities immediately prior to such merger. I.7 "Director" shall mean a member of the Board. I.8 "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. I.9 "Fair Market Value" of a share of Common Stock as of a given date shall be (i) the mean between the highest and lowest selling price of a share of Common Stock on the principal exchange on which shares of Common Stock are then trading, if any, on such date, or if shares were not traded on such date, then on the closest preceding date on which a trade occurred, or (ii) if Common Stock is not traded on an exchange, the mean between the closing representative bid and asked prices for the Common Stock on such date as reported by NASDAQ or, if NASDAQ is not then in existence, by its successor quotation system; or (iii) if Common Stock is not publicly traded, the Fair Market Value of a share of Common Stock as established by the Board acting in good faith. I.10 "Independent Director" shall mean a Director who is not an employee of the Company nor an officer or employee of Ascent Entertainment Group, Inc. or COMSAT Corporation so long as Ascent Entertainment, Inc. or COMSAT Corporation, respectively, directly or indirectly holds 50% or more of the outstanding Common Stock. I.11 "Option" shall mean a stock option granted under Article III of this Plan. I.12 "Optionee" shall mean an Independent Director granted an Option under this Plan. I.13 "Plan" shall mean the 1997 Non-employee Directors Stock Plan. I.14 "Registration Statement" shall mean the Company's Form S-8 Registration Statement to be filed with the Securities and Exchange Commission in connection with this Plan. I.15 "Rule 16b-3" shall mean that certain Rule 16b-3 under the Exchange Act, as such Rule may be amended from time to time. I.16 "Stock Award" shall mean an award of shares of Common Stock. I.17 "Subsidiary" shall mean any corporation in an unbroken chain of corporations beginning with the Company if each of the corporations other than the last corporation in the unbroken chain then owns stock possessing 50 percent or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. I.18 "Termination of Directorship" shall mean the time when an Optionee ceases to be a Director for any reason, including, but not by way of limitation, a termination by resignation, failure to be elected, death or retirement. The Board, in its sole and absolute discretion, shall determine the effect of all matters and questions relating to Termination of Directorship. ii 3 ARTICLE II SHARES SUBJECT TO PLAN II.1 Shares Subject to Plan. The shares of stock subject to Options and Stock Awards shall be Common Stock, initially shares of the Company's Common Stock, par value $.01 per share. The aggregate number of such shares which may be issued upon exercise of such options or upon any such awards under the Plan shall not exceed 110,000 (One hundred ten thousand). II.2 Unexercised Options. If any Option expires or is cancelled without having been fully exercised, the number of shares subject to such Option but as to which such Option was not exercised prior to its expiration or cancellation may again be optioned hereunder, subject to the limitations of Section II.1. ARTICLE III GRANTING OF OPTIONS III.1 Eligibility. Each Independent Director of the Company shall be eligible to be granted Options at the times and in the manner set forth in Section III.2. III.2 Granting of Options (a) On the date that the Company's Registration Statement is declared or deemed to be effective by the Securities Exchange Commission, each individual then serving as an Independent Director (or nominated for election at the first shareholder's meeting to elect Directors following such date) shall be granted an Option to acquire 4,000 shares of Common Stock. (b) As of the close of each annual shareholder's meeting at which Directors are elected, each individual then serving as an Independent Director shall be granted an Option to acquire 4,000 shares of Common Stock. ARTICLE IV TERMS OF OPTIONS IV.1 Option Agreement. Each Option shall be evidenced by a written Stock Option Agreement, which shall be executed by the Optionee and an authorized officer of the Company and which shall contain such terms and conditions as the Board shall determine, consistent with this Plan. IV.2 Option Price. The price per share of the shares subject to each Option shall be the Fair Market Value of a share of Common Stock on the date of grant of the Option. IV.3 Option Term. The term of an Option shall be ten (10) years from the date the Option is granted. iii 4 IV.4 Option Vesting (a) Except as set forth below in subsection (b), each Option shall vest as follows:
PERCENT OF OPTION TIME FROM GRANT DATE WHICH IS EXERCISABLE - -------------------- -------------------- Prior to the first anniversary of the Grant Date 0% On the first anniversary of the Grant Date 25% On the second anniversary of the Grant Date 50% On the third anniversary of the Grant Date 100%
(b) No portion of an Option which is unexercisable at Termination of Directorship shall thereafter become exercisable. IV.5 Consideration. In consideration of the granting of an Option, the Optionee shall agree, in the written Stock Option Agreement, to serve as an Independent Director of the Company or any Subsidiary until the next annual meeting of stockholders of the Company. Nothing in this Plan or in any Stock Option Agreement hereunder shall interfere with or restrict in any way the rights of the Company and any Subsidiary, which are hereby expressly reserved, to discharge any Optionee at any time for any reason whatsoever, with or without good cause. ARTICLE V EXERCISE OF OPTIONS V.1 Partial Exercise. An exercisable Option may be exercised in whole or in part. However, an Option shall not be exercisable with respect to fractional shares and the Board may require that, by the terms of the Option, a partial exercise be with respect to a minimum number of shares. V.2 Manner of Exercise. All or a portion of an exercisable Option shall be deemed exercised upon delivery of all of the following to the Secretary of the Company or his/her office: (a) A written notice complying with the applicable rules established by the Board stating that the Option, or a portion thereof, is exercised. The notice shall be signed by the Optionee or other person then entitled to exercise the Option or such portion; (b) Such representations and documents as the Board, in its absolute discretion, deems necessary or advisable to effect compliance with all applicable provisions of the Securities Act of 1933, as amended, and any other federal or state securities laws or regulations. The Board may, in its absolute discretion, also take whatever additional actions it deems appropriate to effect such compliance including, without limitation, placing legends on share certificates and issuing stop- iv 5 transfer notices to agents and registrars; (c) In the event that the Option shall be exercised pursuant to Section X.1 by any person or persons other than the Optionee, appropriate proof of the right of such person or persons to exercise the Option; and (d) Full cash payment to the Secretary of the Company for the shares with respect to which the Option, or portion thereof, is exercised. However, at the discretion of the Board the terms of the Option may (i) allow a delay in payment up to thirty (30) days from the date the Option, or portion thereof, is exercised; (ii) allow payment, in whole or in part, through the delivery of shares of Common Stock owned by the Optionee for a period of not less than six months, duly endorsed for transfer to the Company with a Fair Market Value on the date of delivery equal to the aggregate exercise price of the Option or exercised portion thereof; (iii) allow payment, in whole or in part, through the delivery of property of any kind which constitutes good and valuable consideration; (iv) allow payment, in whole or in part, through the delivery of a full recourse promissory note bearing interest (at no less than such rate as shall then preclude the imputation of interest under the Code) and payable upon such terms as may be prescribed by the Board, or (v) allow payment through any combination of the consideration provided in the foregoing subparagraphs (ii), (iii) and (iv). In the case of a promissory note, the Board may also prescribe the form of such note and the security to be given for such note. The Option may not be exercised, however, by delivery of a promissory note or by a loan from the Company when or where such loan or other extension of credit is prohibited by law. V.3 Certain Timing Requirements. At the discretion of the Board, shares of Common Stock issuable to the Optionee upon exercise of the Option may be used to satisfy the Option exercise price or the tax withholding consequences of such exercise, in the case of persons subject to Section 16 of the Exchange Act, only (i) during the period beginning on the third business day following the date of release of the quarterly or annual summary statement of sales and earnings of the Company and ending on the twelfth business day following such date or (ii) pursuant to an irrevocable written election by the Optionee to use shares of Common Stock issuable to the Optionee upon exercise of the Option to pay all or part of the Option price or the withholding taxes made at least six months prior to the payment of such Option price or withholding taxes. V.4 Conditions to Issuance of Stock Certificates. The Company shall not be required to issue or deliver any certificate or certificates for shares of stock purchased upon the exercise of any Option or portion thereof prior to fulfillment of all of the following conditions: (a) The admission of such shares to listing on all stock exchanges on which such class of stock is then listed; (b) The completion of any registration or other qualification of such shares under any state or federal law, or under the rulings or regulations of the Securities and Exchange Commission or any other governmental regulatory body which the Board shall, in its absolute discretion, deem necessary or advisable; (c) The obtaining of any approval or other clearance from any state or federal governmental agency which the Board shall, in its absolute discretion, determine to be necessary or advisable; v 6 (d) The lapse of such reasonable period of time following the exercise of the Option as the Board may establish from time to time for reasons of administrative convenience; and (e) The receipt by the Company of full payment for such shares, including payment of any applicable withholding tax. V.5 Rights as Stockholders. The holders of Options shall not be, nor have any of the rights or privileges of, stockholders of the Company in respect of any shares purchasable upon the exercise of any part of an Option unless and until certificates representing such shares have been issued by the Company to such holders. V.6 Ownership and Transfer Restrictions. The Board, in its discretion, may impose such restrictions on the ownership and transferability of the shares purchasable upon the exercise of an Option as it deems appropriate. Any such restriction shall be set forth in the respective Stock Option Agreement and may be referred to on the certificates evidencing such shares. V.7 Limitations on Exercise of Options. No Option may be exercised to any extent by anyone after the first to occur of the following events: (a) The expiration of twelve (12) months from the date of the Optionee's death; (b) the expiration of twelve (12) months from the date of the Optionee's Termination of Directorship by reason of his/her permanent and total disability (within the meaning of Section 22(e)(3) of the Code); (c) the expiration of three (3) months from the date of the Optionee's Termination of Directorship for any reason other than such Optionee's death or his/her permanent and total disability, unless the Optionee dies within said three-month period; (d) a Corporate Transaction; provided, however, that any Option granted or deemed regranted within six months of such Corporate Transaction shall remain exercisable until the expiration of six months and one day from the later of the date such Option was granted or the date such Option was deemed regranted; or (e) The expiration of ten years from the date the Option was granted. ARTICLE VI STOCK AWARDS VI.1 Eligibility. Each Independent Director of the Company shall be eligible to be granted Stock Awards at the times and in the manner set forth in Section VI.2. vi 7 VI.2 Granting of Stock Awards (a) On the date that the Company's Registration Statement is declared or deemed to be effective by the Securities Exchange Commission, each individual then serving as an Independent Director (or nominated for election at the first shareholder's meeting to elect Directors following such date) shall be granted a Stock Award of 400 shares of Common Stock. (b) As of the close of each annual shareholder's meeting at which Directors are elected, each individual then serving as an Independent Director shall be granted a Stock Award of 400 shares of Common Stock. ARTICLE VII ADMINISTRATION VII.1 Duties and Powers of Board. It shall be the duty of the Board to conduct the general administration of this Plan in accordance with its provisions. The Board shall have the power to interpret this Plan and the agreements pursuant to which Options are granted, and to adopt such rules for the administration, interpretation, and application of this Plan as are consistent therewith and to interpret, amend or revoke any such rules. Any such grant under this Plan need not be the same with respect to each Optionee. VII.2 Majority Rule. The Board shall act by a majority of its members in attendance at a meeting at which a quorum is present or by a memorandum or other written instrument signed by all members of the Board. VII.3 Compensation; Professional Assistance; Good Faith Actions. All expenses and liabilities which members of the Board incur in connection with the administration of this Plan shall be borne by the Company. The Board may, employ attorneys, consultants, accountants, appraisers, brokers, or other persons. The Board, the Company and the Company's officers and Directors shall be entitled to rely upon the advice, opinions or valuations of any such persons. All actions taken and all interpretations and determinations made by the Board in good faith shall be final and binding upon all Optionees, the Company and all other interested persons. No members of the Board shall be personally liable for any action, determination or interpretation made in good faith with respect to this Plan or Options, and all members of the Board shall be fully protected by the Company in respect of any such action, determination or interpretation. ARTICLE VIII MISCELLANEOUS PROVISIONS VIII.1 Not Transferable. Options under this Plan may not be sold, pledged, assigned, or transferred in any manner other than by will or the laws of descent and distribution. No Option or interest or right therein shall be liable for the debts, contracts or engagements of the Optionee or his/her successors in interest or shall be subject to disposition by transfer, alienation, anticipation, vii 8 pledge, encumbrance, assignment or any other means whether such disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted disposition thereof shall be null and void and of no effect. During the lifetime of the Optionee, only he may exercise an Option (or any portion thereof) granted to him under the Plan. After the death of the Optionee, any exercisable portion of an Option may, prior to the time when such portion becomes unexercisable under the Plan or the applicable Stock Option Agreement, be exercised by his/her personal representative or by any person empowered to do so under the deceased Optionee's will or under the then applicable laws of descent and distribution. VIII.2 Amendment, Suspension or Termination of this Plan. Unless sooner terminated under this Section VIII.2, the Plan will terminate after the expiration of ten years from the date the Registration Statement is declared or deemed to be effective by the Securities and Exchange Commission. The Plan may be wholly or partially amended or otherwise modified, suspended or terminated at any time or from time to time by the Board. However, without approval of the Company's stockholders given within twelve months before or after the action by the Board, no action of the Board may, except as provided in Section VII.3, increase the limits imposed in Section II.1 on the maximum number of shares which may be issued under this Plan, and no action of the Board may be taken that would otherwise require stockholder approval as a matter of applicable law, regulation or rule. Notwithstanding the foregoing, except as permitted by the applicable exemptive conditions of Rule 16b-3, the provisions of this Plan relating to formula grants of Options and Stock Awards to Directors, including the amount, price and timing thereof, shall not be amended more than once in any six-month period other than to comport with changes in the Code, the Employee Retirement Income Security Act of 1974, as amended, or the respective rules thereunder. No amendment, suspension or termination of this Plan shall, without the consent of the holder of Options and Stock Awards, alter or impair any rights or obligations under any Options or Stock Awards theretofore granted, unless the award itself otherwise expressly so provides. No Options or Stock Awards may be granted during any period of suspension or after termination of this Plan. VIII.3 Changes in Common Stock or Assets of the Company, Acquisition or Liquidation of the Company and Other Corporate Events. (a) Subject to Section VIII.3(e), in the event that the Board determines that any dividend or other distribution (whether in the form of cash, Common Stock, other securities, or other property), recapitalization, reclassification, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, liquidation, dissolution, or sale, transfer, exchange or other disposition of all or substantially all of the assets of the Company, or exchange of Common Stock or other securities of the Company, issuance of warrants or other rights to purchase Common Stock or other securities of the Company, or other similar corporate transaction or event, in the Board's sole discretion, affects the Common Stock such that an adjustment is determined by the Board to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan or with respect to an Option or Stock Award then the Board shall, in such manner as it may deem equitable, adjust any or all of (i) the number and kind of shares of Common Stock (or other securities or property) with respect to which Options may be granted under the Plan, or which may be granted as Stock Awards (including, but not limited to, adjustments of the limitations in Section II.1 on the viii 9 maximum number and kind of shares which may be issued), (ii) the number and kind of shares of Common Stock (or other securities or property) subject to outstanding Options and in the number and kind of shares of outstanding Stock Awards, and (iii) the grant or exercise price with respect to any Option. (b) Subject to Section VIII.3(e), in the event of any corporate transaction or other event described in Section VIII.3(a) which results in shares of Common Stock being exchanged for or converted into cash, securities (including securities of another corporation) or other property, the Board will have the right to terminate this Plan as of the date of the event or transaction, in which case all Options and Stock Awards granted under this Plan shall become the right to receive such cash, securities or other property, net of any applicable exercise price. (c) Subject to Sections VIII.3(c)(vii) and VIII.3(e), in the event of any corporate transaction or other event described in Section VIII.3(a) or any unusual or nonrecurring transactions or events affecting the Company, any affiliate of the Company, or the financial statements of the Company or any affiliate, or of changes in applicable laws, regulations, or accounting principles, the Board in its discretion is hereby authorized to take any one or more of the following actions whenever the Board determines that such action is appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan or with respect to any Option or Stock Award under this Plan, to facilitate such transactions or events or to give effect to such changes in laws, regulations or principles: (i) In its sole and absolute discretion, and on such terms and conditions as it deems appropriate, the Board may provide, either automatically or upon the Optionee's request, for either the purchase of any such Option for an amount of cash equal to the amount that could have been attained upon the exercise of such Option or realization of the Optionee's rights had such Option been currently exercisable or payable or the replacement of such Option or Stock Award with other rights or property selected by the Board in its sole discretion; (ii) In its sole and absolute discretion, the Board may provide, either by the terms of such Option or by action taken prior to the occurrence of such transaction or event that it cannot be exercised after such event; (iii) In its sole and absolute discretion, and on such terms and conditions as it deems appropriate, the Board may provide, either by the terms of such Option or by action taken prior to the occurrence of such transaction or event, that for a specified period of time prior to such transaction or event, such Option shall be exercisable as to all shares covered thereby, notwithstanding anything to the contrary in (i) Section IV.4 or (ii) the provisions of such Option; (iv) In its sole and absolute discretion, and on such terms and conditions as it deems appropriate, the Board may provide, either by the terms of such Option or Stock Award or by action taken prior to the occurrence of such transaction or event, that upon such event, such option, right or award be assumed by the successor corporation, or a parent or subsidiary thereof, or shall be substituted for by similar options, rights or awards covering the stock of the successor corporation, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kind of shares and prices; and ix 10 (v) In its sole and absolute discretion, and on such terms and conditions as it deems appropriate, the Board may make adjustments in the number and type of shares of Common Stock (or other securities or property) subject to outstanding Options, and in the number and kind of outstanding Stock Awards and/or in the terms and conditions of (including the grant or exercise price), and the criteria included in, outstanding options, rights and awards and options, rights and awards which may be granted in the future. (vi) In its sole and absolute discretion, and on such terms and conditions as it deems appropriate, the Board may provide either by the terms of a Stock Award or by action taken prior to the occurrence of such event that, for a specified period of time prior to such event, the restrictions imposed under a Stock Award Agreement upon some or all shares of the Stock Award may be terminated. (vii) None of the foregoing discretionary terms of this Section VIII.3(c) shall be permitted with respect to Options and Stock Awards to the extent that such discretion would be inconsistent with the requirements of Rule 16b-3. In the event of a Corporate Transaction, to the extent that the Board does not have the ability under Rule 16b-3 to take or to refrain from taking the discretionary actions set forth above, each Option shall be exercisable as to all shares covered thereby during the five days immediately preceding the consummation of such Corporate Transaction and subject to such consummation, notwithstanding anything to the contrary in Section IV.4 and except as provided in Section V.7(d), Options cannot be exercised following such event. (d) Subject to Section VIII.3(e) and VIII.8, the Board may, in its discretion, include such further provisions and limitations in any Option or Stock Award agreement or certificate, as it may deem equitable and in the best interests of the Company. (e) No adjustment or action described in this Section VIII.3 or in any other provision of the Plan shall be authorized to the extent that such adjustment or action would violate Section 16 or the exemptive conditions of Rule 16b-3. The number of shares of Common Stock subject to any option, right or award shall always be rounded to the next whole number. VIII.4 Approval of Plan by Stockholders. This Plan will be submitted for the approval of the Company's stockholders within twelve months after the date of the Board's initial adoption of this Plan. Options and Stock Awards may be granted prior to such stockholder approval, provided that such Options shall not be exercisable prior to the time when this Plan is approved by the stockholders, and provided further that if such approval has not been obtained at the end of said twelve-month period, all Options and Stock Awards previously granted under this Plan shall thereupon be cancelled and become null and void. VIII.5 Forfeiture Provisions. Pursuant to its general authority to determine the terms and conditions applicable to awards under the Plan, the Board shall have the right (to the extent consistent with the requirements of Rule 16b-3) to provide, in the terms of Options or other awards made under the Plan, or to require the recipient to agree by separate written instrument, that (a) any proceeds, gains or other economic benefit actually or constructively received by the recipient upon any receipt or exercise of the award, or upon the receipt or resale of any Common Stock underlying such award, must be paid to the Company, and (b) the award shall terminate and any unexercised portion of such award (whether or not vested) shall be forfeited, if (i) a Termination of Directorship occurs prior to a specified date, or within a specified time period following receipt or exercise of the award, or (ii) the x 11 recipient at any time, or during a specified time period, engages in any activity in competition with the Company, or which is inimical, contrary or harmful to the interests of the Company, as further defined by the Board. VIII.6 Limitations Applicable to Section 16 Persons. Notwithstanding any other provision of this Plan, the Plan and any Option or Stock Award granted to a Director who is then subject to Section 16 of the Exchange Act, shall be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of the Exchange Act) that are requirements for the application of such exemptive rule. To the extent permitted by applicable law, the Plan, Options and Stock Awards granted or awarded hereunder shall be deemed amended to the extent necessary to conform to such applicable exemptive rule. VIII.7 Effect of Plan Upon Options and Compensation Plans. The adoption of this Plan shall not affect any other compensation or incentive plans in effect for the Company or any Subsidiary. Nothing in this Plan shall be construed to limit the right of the Company (i) to establish any other forms of incentives or compensation for employees or Directors of the Company or any Subsidiary or (ii) to grant or assume options or other rights otherwise than under this Plan in connection with any proper corporate purpose including but not by way of limitation, the grant or assumption of options in connection with the acquisition by purchase, lease, merger, consolidation or otherwise, of the business, stock or assets of any corporation, partnership, firm or association. VIII.8 Compliance with Laws. This Plan, the granting and vesting of Options under this Plan and the issuance and delivery of shares of Common Stock under Options or Stock Awards granted hereunder are subject to compliance with all applicable federal and state laws, rules and regulations (including but not limited to state and federal securities law and federal margin requirements) and to such approvals by any listing, regulatory or governmental authority as may, in the opinion of counsel for the Company, be necessary or advisable in connection therewith. Any securities delivered under this Plan shall be subject to such restrictions, and the person acquiring such securities shall, if requested by the Company, provide such assurances and representations to the Company as the Company may deem necessary or desirable to assure compliance with all applicable legal requirements. To the extent permitted by applicable law, the Plan, Options and Stock Awards granted hereunder shall be deemed amended to the extent necessary to conform to such laws, rules and regulations. VIII.9 Titles. Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Plan. VIII.10 Governing Law. This Plan and any agreements hereunder shall be administered, interpreted and enforced under the internal laws of the State of Delaware without regard to conflicts of laws thereof. xi EX-4.(E) 4 FORMS OF AGREEMENTS FOR DIRECTORS STOCK PLAN 1 EXHIBIT 4(e) ON COMMAND CORPORATION 1997 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN DIRECTORS NONQUALIFIED STOCK OPTION GRANT This Stock Option Grant (this "GRANT") is made and entered into as of the date of grant set forth below (the "DATE OF GRANT") by and between On Command Corporation, a Delaware corporation (the "COMPANY"), and the Optionee named below ("OPTIONEE"). ----------------------------------------- Optionee: ----------------------------------------- Optionee's Address: ----------------------------------------- Total Shares Subject to Option: 4,000 ----------------------------------------- Exercise Price Per Share: ----------------------------------------- Date of Grant: ----------------------------------------- Expiration Date: ----------------------------------------- 1. GRANT OF OPTION. The Company hereby grants to Optionee an option (this "OPTION") to purchase up to the total number of shares of Common Stock of the Company set forth above (collectively, the "SHARES") at the exercise price per share set forth above (the "EXERCISE PRICE"), subject to all of the terms and conditions of this Grant and the Company's 1997 Non-Employee Directors Stock Option Plan (the "PLAN"). Unless otherwise defined herein, capitalized terms used herein shall have the meanings ascribed to them in the Plan. 2. EXERCISE AND VESTING OF OPTION. Subject to the terms and conditions of the Plan and this Grant, this Option shall become exercisable as it vests. Subject to the terms and conditions of the Plan and this Grant, this Option shall vest as to twenty-five percent (25%) of the Shares on the first anniversary of the Date of Grant, as to twenty-five percent (25%) of the Shares on the second anniversary of the Date of Grant and as to fifty percent (50%) of the Shares on the third anniversary of the Date of Grant so long as the Optionee continuously remains a member of the Board of Directors (a "BOARD MEMBER") of the Company. 3. RESTRICTION ON EXERCISE. This Option may not be exercised unless such exercise is in compliance with the Securities Act, and all applicable state securities laws, as they are in effect on the date of exercise, and the requirements of any stock exchange or national market system on which the Company's Common Stock may be listed at the time of exercise. Optionee understands that the Company is under no obligation to register, qualify or list the Shares with the SEC, any state securities commission or any stock exchange or national market system to effect such compliance. 4. TERMINATION OF OPTION. Except as provided below in this Section, this Option shall terminate if Optionee ceases to be a Board 2 Member of the Company. The date on which Optionee ceases to be a Board Member of the Company shall be referred to as the "TERMINATION DATE." No portion of an Option which is unexercisable at the Termination Date will thereafter become exercisable. 4.1 Termination Generally. If Optionee ceases to be a Board Member of the Company for any reason except death or permanent and total disability, then this Option, to the extent (and only to the extent) that it would have been exercisable by Optionee on the Termination Date, may be exercised by Optionee within three (3) months after the Termination Date, or, if the Optionee dies within such three-month period, may be exercised by the Optionee's legal representative within twelve (12) months after the Optionee's death but in no event later than the Expiration Date. 4.2 Death or Disability. If Optionee ceases to be a Board Member of the Company because of the death of Optionee or the permanent and total disability of Optionee within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended, then this Option, to the extent (and only to the extent) that it would have been exercisable by Optionee on the Termination Date, may be exercised by Optionee (or Optionee's legal representative) within twelve (12) months after the Termination Date, but in no event later than the Expiration Date. 4.3 Corporate Transaction. This Option shall terminate upon the occurrence of a Corporate Transaction, as defined in the Plan; provided however that any Option granted or deemed regranted within six months of such Corporate Transaction shall remain exercisable until the expiration of six months and one day from the later of the date such Option was granted or the date such Option was deemed regranted. 5. MANNER OF EXERCISE. 5.1 Exercise Agreement. This Option shall be exercisable by Optionee (or, in the case of exercise after Optionee's death or incapacity, Optionee's executor, administrator, heir or legatee, as the case may be) delivery to the Company of an executed written Directors Stock Option Exercise Agreement in the form attached hereto as Exhibit A, or in such other form as may be approved by the Board, which shall set forth Optionee's election to exercise some or all of this Option, the number of shares being purchased, any restrictions imposed on the Shares and such other representations and agreements as may be required by the Company to comply with applicable securities laws. If someone other than Optionee exercises the Option, then such person must submit documentation reasonably acceptable to the Company that such person has the right to exercise the Option. 5.2 Payment. Payment for the Shares purchased upon exercise of this Option may be made (a) in cash or by check; (b) by surrender of shares of Common Stock of the Company that have been owned by Optionee for more than six (6) months (and which have been paid for within the meaning of SEC Rule 144 and, if such shares were purchased from the Company by use of a promissory note, such note has been fully paid with respect to such shares), having a Fair Market Value equal to the Exercise Price of the Option; (c) by waiver of compensation due or accrued to Optionee for services rendered; (d) provided that a public market for the Company's stock exists, through a "same day sale" commitment from the Optionee and a broker-dealer that is a member of the National Association of Securities Dealers (an "NASD DEALER") whereby the Optionee irrevocably elects to exercise the Option and to sell a portion of the Shares so purchased to pay for the Exercise Price and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to forward the Exercise Price directly to the Company; (e) provided that a public market for the Company's stock exists, through a "margin" commitment from the Optionee and a NASD Dealer whereby the Optionee irrevocably elects to exercise the Option and to pledge the Shares so purchased to the NASD Dealer in a margin account as security for a loan from the NASD Dealer in the amount of the Exercise Price, and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to forward the Exercise Price directly to the Company; (f) [OPTIONAL AT THE DISCRETION OF THE BOARD:] THROUGH THE DELIVERY OF A FULL RECOURSE PROMISSORY NOTE BEARING INTEREST (AT NO LESS THAN SUCH RATE AS SHALL THEN PRECLUDE THE IMPUTATION OF INTEREST UNDER THE INTERNAL REVENUE CODE OF 1986) AND PAYABLE ON SUCH 2 3 TERMS AS MAY BE PRESCRIBED BY THE BOARD; or (g) by any combination of the foregoing, provided that the par value of the shares shall be paid in cash or by check. 5.3 Withholding Taxes. Prior to the issuance of the Shares upon exercise of this Option, Optionee shall pay or make adequate provision for any applicable federal or state withholding obligations of the Company. If the Board permits, Optionee may provide for payment of withholding taxes upon exercise of the Option by requesting that the Company retain Shares with a Fair Market Value equal to the minimum amount of taxes required to be withheld. In such case, the Company shall issue the net number of Shares to the Option by deducting the Shares retained from the Shares issuable upon exercise. 5.4 Issuance of Shares. Provided that such notice and payment are in form and substance satisfactory to counsel for the Company, the Company shall cause the Shares to be issued in the name of Optionee or Optionee's legal representative. To enforce any restrictions on Optionee's Shares, the Committee may require Optionee to deposit all certificates, together with stock powers or other instruments of transfer approved by the Committee appropriately endorsed in blank, with the Company or an agent designated by the Company to hold in escrow until such restrictions have lapsed or terminated, and the Committee may cause a legend or legends referencing such restrictions to be placed on the certificates. 6. NONTRANSFERABILITY OF OPTION. During the lifetime of the Optionee, this Option shall be exercisable only by Optionee, unless otherwise permitted by the Board. This Option may not be sold, pledged, assigned, hypothecated, transferred or disposed of in any manner other than by will or by the laws of descent and distribution. 7. TAX CONSEQUENCES. Set forth below is a brief summary as of the Date of Grant of some of the federal and California tax consequences of exercise of the Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THIS SUMMARY DOES NOT ADDRESS IN ANY MANNER TAX CONSEQUENCES IN COUNTRIES OTHER THAN THE UNITED STATES. PARTICIPANT SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THE OPTION OR DISPOSING OF THE SHARES. 8. PRIVILEGES OF STOCK OWNERSHIP. Participant shall not have any of the rights of a shareholder with respect to any Shares until Participant exercises the Option and pays the Exercise Price. 9. INTERPRETATION. Any dispute regarding the interpretation of this Grant shall be submitted by Optionee or the Company to the Board that administers the Plan, which shall review such dispute at its next regular meeting. The resolution of such a dispute by the Board shall be final and binding on the Company and on Optionee. 10. TENURE AS BOARD MEMBER. In consideration of the granting of this Option, the Optionee agrees to serve as an Independent Director as defined under the terms of the Plan until the next annual meeting of the stockholders of the Company. However, nothing in the Plan or this Grant shall confer on Optionee any right to continue as a Board Member, and the Company expressly reserves its rights to discharge Optionee at any time for any reason whatsoever, with or without good cause. 11. ENTIRE AGREEMENT. The Plan and the Directors Stock Option Exercise Agreement in the form attached hereto as Exhibit A, and the terms and conditions thereof, are incorporated herein by reference. This Grant, the Plan and the Directors Stock Option Exercise Agreement constitute the entire agreement and understanding of the parties hereto with respect to the subject matter hereof and supersede all prior understandings and agreements with respect to such subject matter. 3 4 12. NOTICES. Any notice required to be given or delivered to the Company under the terms of this Agreement shall be in writing and addressed to the Corporate Secretary of the Company at its principal corporate offices. Any notice required to be given or delivered to Optionee shall be in writing and addressed to Optionee at the address indicated above or to such other address as such party may designate in writing from time to time to the Company. All notices shall be deemed to have been given or delivered upon: personal delivery; three (3) days after deposit in the United States mail by certified or registered mail (return receipt requested); one (1) business day after deposit with any return receipt express courier (prepaid); or one (1) business day after transmission by facsimile, rapifax or telecopier. 13. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth herein, this Agreement shall be binding upon Optinee and Optionee's heirs, executors, administrators, legal representatives, successors and assigns. 14. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of California as such laws are applied to agreements between California residents entered into and to be performed entirely within California. If any provision of this Agreement is determined by a court of law to be illegal or unenforceable, then such provision will be enforced to the maximum extent possible and the other provisions will remain fully effective and enforceable. ON COMMAND CORPORATION By: __________________________________ Name: _________________________________ Title: _______________________________ 4 5 ACCEPTANCE OF STOCK OPTION GRANT Optionee hereby acknowledges receipt of a copy of the Plan, represents that Optionee has read and understands the terms and provisions thereof, and accepts this Option subject to all the terms and conditions of the Plan and this Grant. Optionee acknowledges that there may be adverse tax consequences upon exercise of this Option or disposition of the Shares and that Optionee has been advised by the Company that Optionee should consult a qualified tax advisor prior to such exercise or disposition. - -------------------------------------------------------------------------------- - -------------------------- -----------------------------------, Optionee [ACCEPTANCE SIGNATURE PAGE TO 1997 NON-EMPLOYEE DIRECTORS NONQUALIFIED INITIAL STOCK OPTION GRANT] 5 6 EXHIBIT A 1997 NON-EMPLOYEE DIRECTORS STOCK OPTION EXERCISE AGREEMENT 7 Exhibit A ON COMMAND CORPORATION 1997 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN (THE "PLAN") DIRECTORS STOCK OPTION EXERCISE AGREEMENT I hereby elect to purchase the number of shares of Common Stock of ON COMMAND CORPORATION (the "Company") as set forth below: Optionee: _____________________________________ Number of Shares Purchased: _______________ Social Security Number: _______________________ Purchase Price per Share: _________________ Address: ______________________________________ Aggregate Purchase Price: _________________ _______________________________________________ Date of Stock Option Grant: _______________ Type of Stock Option: Nonqualified Stock Option Exact Name of Title to Shares: ____________ ___________________________________________
1. DELIVERY OF PURCHASE PRICE. Optionee hereby delivers to the Company the Aggregate Purchase Price, to the extent permitted in the Directors Nonqualified Stock Option Grant referred to above (the "Grant") as follows (check as applicable and complete): [ ] in cash or by check in the amount of $_____, receipt of which is acknowledged by the Company; [ ] by delivery of ____________ fully-paid, nonassessable and vested shares of the Common Stock of the Company owned by Optionee for at least six (6) months prior to the date hereof (and which have been paid for within the meaning of SEC Rule 144) and owned free and clear of all liens, claims, encumbrances or security interests, valued at the current Fair Market Value of $_____ per share; [ ] by the waiver hereby of compensation due or accrued to Optionee for services rendered in the amount of $_____; [ ] through a "same-day-sale" commitment, delivered herewith, from Optionee and the NASD Dealer named therein, in the amount of $_____; or [ ] through a "margin" commitment, delivered herewith from Optionee and the NASD Dealer named therein, in the amount of $_____. [ ] through the delivery of a full recourse promissory note acceptable to the Board in the amount of $_____, secured by a Pledge Agreement of even date herewith. The portion of the Purchase Price equal to the par value of the Shares in the amount of $____ is in cash (by check), receipt of which is acknowledged by the Company. 2. MARKET STANDOFF AGREEMENT. Optionee, if requested by the Company and an underwriter of Common Stock (or other securities) of the Company, agrees not to sell or otherwise transfer or dispose of any Common Stock (or other securities) of the Company held by Optionee during the period requested by the managing underwriter following the effective date of a registration statement of the Company filed under the Securities Act, provided that all officers and directors of the Company are required to enter into similar agreements. Such agreement shall be in writing in a form satisfactory to the Company and such underwriter. The Company may impose stop-transfer instructions with respect to the shares (or other securities) subject to the foregoing restriction until the end of such period. 3. TAX CONSEQUENCES. OPTIONEE UNDERSTANDS THAT OPTIONEE MAY SUFFER ADVERSE TAX CONSEQUENCES AS A RESULT OF OPTIONEE'S PURCHASE OR DISPOSITION OF THE SHARES. OPTIONEE REPRESENTS THAT OPTIONEE HAS CONSULTED WITH ANY TAX CONSULTANT(S) OPTIONEE DEEMS ADVISABLE IN CONNECTION WITH THE PURCHASE OR DISPOSITION OF THE SHARES AND THAT OPTIONEE IS NOT RELYING ON THE COMPANY FOR ANY TAX ADVICE. 4. ENTIRE AGREEMENT. The Plan and the Grant are incorporated herein by reference. This Agreement, the Plan and the Grant constitute the entire agreement of the parties and supersede in their entirety all prior understandings and agreements of the Company and Optionee with respect to the subject matter hereof, and are governed by California law. Date:____________________ ________________________________________ SIGNATURE OF OPTIONEE 8 ON COMMAND CORPORATION 1997 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN SPOUSE'S CONSENT I acknowledge that I have read the foregoing Directors Stock Option Exercise Agreement (the "Agreement") and that I know its contents. I hereby consent to and approve all the provisions of the Agreement and agree that the shares of the Common Stock of On Command Corporation purchased thereunder (the "Shares") and any interest I may have in such Shares are subject to all the provisions of the Agreement. I will take no action at any time to hinder operation of the Agreement on these Shares or any interest I may have on them. ____________________________________ Date:__________________________ SIGNATURE OF OPTIONEE'S SPOUSE ____________________________________ OPTIONEE'S NAME - TYPED OR PRINTED ____________________________________ SPOUSE'S NAME - TYPED OR PRINTED 9 NO. ____ ON COMMAND CORPORATION 1997 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN STOCK AWARD AGREEMENT This Stock Award Agreement (this "AGREEMENT") is made and entered into as of _______________, 19____ (the "EFFECTIVE DATE") by and between On Command Corporation, a Delaware corporation (the "COMPANY"), and the participant named below (the "PARTICIPANT"). Capitalized terms not defined herein shall have the meaning ascribed to them in the Company's 1997 Non-Employee Directors Option Plan (the "PLAN"). PARTICIPANT: _______________________________________ SOCIAL SECURITY NUMBER: _______________________________________ ADDRESS: _______________________________________ TOTAL NUMBER OF SHARES: _______________________________________ FAIR MARKET VALUE PER SHARE AT THE EFFECTIVE DATE: _______________________________________ TOTAL FAIR MARKET VALUE AT THE EFFECTIVE DATE: _______________________________________ TOTAL PAR VALUE AT THE EFFECTIVE DATE: _______________________________________ 1. GRANT OF SHARES. 1.1 GRANT OF SHARES. On the Effective Date and subject to the terms and conditions of this Agreement and the Plan, and in consideration of services rendered by Participant to the Company, and provided that the par value of the shares shall be paid by Participant in cash (by check), the Company hereby grants to Participant the Total Number of Shares set forth above of the Company's Common Stock. As used in this Agreement, the term "SHARES" refers to the shares purchased under this Agreement and includes all securities received (a) as a result of stock dividends or stock splits in respect of the Shares and (b) in replacement of the Shares, whether in a merger, recapitalization, reorganization or similar corporate transaction. 1.2 TITLE TO SHARES. The exact spelling of the name(s) under which Participant will take title to the Shares is: ________________________________________________________________ ________________________________________________________________ Participant desires to take title to the Shares as follows: [ ] Individual, as separate property [ ] Husband and wife, as community property [ ] Joint Tenants 10 [ ] Alone or with spouse as trustee(s) of the following trust (including date): __________________________________________ __________________________________________ [ ] Other; please specify: ___________________ __________________________________________ 2. DELIVERY. 2.1 DELIVERIES BY PARTICIPANT. Participant hereby delivers to the Company (i) this Agreement executed by Participant and (ii) payment for the par value of the Shares in cash or check. 2.2 DELIVERIES BY THE COMPANY. Upon its receipt of this Agreement in form and substance satisfactory to counsel for the Company and cash payment for the par value of the Shares, the Company will issue a duly executed stock certificate evidencing the Shares in the name specified in Section 1.2 above. 3. REPRESENTATIONS AND WARRANTIES OF PARTICIPANT. Participant represents and warrants to the Company that Participant has received a copy of the Plan and this Agreement, has read and understands the terms of the Plan and this Agreement and agrees to be bound by their terms and conditions. 4. RIGHTS AS STOCKHOLDER. Subject to the terms and conditions of this Agreement, Participant will have all of the rights of a stockholder of the Company with respect to the Shares from and after the date that the Shares are issued until such time as Participant disposes of the Shares. 5. NO OBLIGATION TO CONTINUE AS DIRECTOR. Nothing in the Plan or this Agreement shall confer on Participant any right to continue as a Director of, or in any other relationship with, the Company or any Parent or Subsidiary of the Company, or limit in any way the right of the Company or any Parent or Subsidiary of the Company to terminate Participant's relationship at any time, with or without cause. 6. MARKET STANDOFF AGREEMENT. Participant, if requested by the Company and an underwriter of Common Stock (or other securities) of the Company, agrees not to sell or otherwise transfer or dispose of any Common Stock (or other securities) of the Company held by Participant during the period requested by the managing underwriter following the effective date of a registration statement of the Company filed under the Securities Act, provided that all officers and directors of the Company are required to enter into similar agreements. Such agreement shall be in writing in a form satisfactory to the Company and such underwriter. The Company may impose stop-transfer instructions with respect to the shares (or other securities) subject to the foregoing restriction until the end of such period. 7. TAXES. 7.1 TAX WITHHOLDING. Participant understands and acknowledges that Participant must recognize ordinary income in the amount of the Total Fair Market Value of the Shares on the Effective Date. Prior to the issuance of the Shares, Participant must pay or provide for any applicable federal or state withholding obligations of the Company. Participant may provide for payment of withholding taxes by requesting the Company to retain Shares with a Fair Market Value equal to the minimum amount of taxes required to be withheld. In such case, the Company shall issue the net number of Shares to the Participant by deducting the Shares retained from the Total Number of Shares set forth above. 7.2 TAX CONSEQUENCES. PARTICIPANT UNDERSTANDS THAT PARTICIPANT MAY SUFFER ADVERSE TAX CONSEQUENCES AS A RESULT OF PARTICIPANT'S ACQUISITION OR DISPOSITION OF THE SHARES. PARTICIPANT REPRESENTS THAT PARTICIPANT HAS CONSULTED WITH ANY TAX ADVISER PARTICIPANT DEEMS ADVISABLE IN CONNECTION 2 11 WITH THE ACQUISITION OR DISPOSITION OF THE SHARES AND THAT PARTICIPANT IS NOT RELYING ON THE COMPANY FOR ANY TAX ADVICE. 8. COMPLIANCE WITH LAWS AND REGULATIONS. The issuance and transfer of the Shares will be subject to and conditioned upon compliance by the Company and Participant with all applicable state and federal laws and regulations and with all applicable requirements of any stock exchange or automated quotation system on which the Company's Common Stock may be listed or quoted at the time of such issuance or transfer. 9. GOVERNING LAW; SEVERABILITY. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware as such laws are applied to agreements between Delaware residents entered into and to be performed entirely within Delaware. If any provision of this Agreement is determined by a court of law to be illegal or unenforceable, then such provision will be enforced to the maximum extent possible and the other provisions will remain fully effective and enforceable. 10. NOTICES. Any notice required to be given or delivered to the Company shall be in writing and addressed to the Corporate Secretary of the Company at its principal corporate offices. Any notice required to be given or delivered to Participant shall be in writing and addressed to Participant at the address indicated above or to such other address as Participant may designate in writing from time to time to the Company. All notices shall be deemed effectively given upon personal delivery, three (3) days after deposit in the United States mail by certified or registered mail (return receipt requested), one (1) business day after its deposit with any return receipt express courier (prepaid) or one (1) business day after transmission by fax or telecopier. 11. FURTHER INSTRUMENTS. The parties agree to execute such further instruments and to take such further action as may be reasonably necessary to carry out the purposes and intent of this Agreement. 12. HEADINGS. The captions and headings of this Agreement are included for ease of reference only and will be disregarded in interpreting or construing this Agreement. All references herein to Sections will refer to Sections of this Agreement. 13. ENTIRE AGREEMENT. The Plan and this Agreement constitute the entire agreement and understanding of the parties with respect to the subject matter of this Agreement and supersede all prior understandings and agreements, whether oral or written, between the parties hereto with respect to the specific subject matter hereof. IN WITNESS WHEREOF, the Company has caused this Agreement to be executed in duplicate by its duly authorized representative and Participant has executed this Agreement in duplicate as of the Effective Date. ON COMMAND CORPORATION PARTICIPANT By: ______________________________ ____________________________________ (Signature) __________________________________ ____________________________________ (Please print name) (Please print name) __________________________________ (Please print title) 3 EX-5.(A) 5 OPINION OF JILL E. FISHBEIN 1 EXHIBIT 5(a) August 4, 1997 On Command Corporation 6331 San Ignacio Avenue San Jose, California 95119 Re: Registration Statement on Form S-8 Ladies and Gentlemen: At your request, I have examined the Registration Statement on Form S-8 (the "Registration Statement") to be filed by you with the Securities and Exchange Commission on or about August 8, 1997 in connection with the registration under the Securities Act of 1933, as amended, of an aggregate of 290,000 shares of Common Stock (the "Stock") subject to issuance by you in connection with stock awards or purchase rights or upon the exercise of stock options to be granted by you under your 1997 Employee Stock Purchase Plan (the "Purchase Plan") and 1997 Non-Employee Directors Stock Plan (the "Directors Plan"). In rendering this opinion, I have examined the following: (1) the Registration Statement, together with the Exhibits filed as a part thereof; (2) the Prospectuses prepared in connection with the Registration Statement; and (3) copies of the minutes of meetings of the Company's Board of Directors and stockholders relating to the adoption of the Purchase Plan and Directors Plan. In my examination of documents for purposes of this opinion, I have assumed, and express no opinion as to, the genuineness of all signatures on original documents, the authenticity of all documents submitted to me as originals, the conformity to originals of all documents submitted to me as copies, the legal capacity of all natural persons executing the same, the lack of any undisclosed terminations, modifications, waivers or amendments to any documents reviewed by me and the due execution and delivery of all documents where due execution and delivery are prerequisites to the effectiveness thereof. As to matters of fact relevant to this opinion, I have relied solely upon my examination of the documents referred to above and have assumed the current accuracy and completeness of the information obtained from records included in the documents referred to above. I have made no independent investigations or other attempts to verify the accuracy of any of such information or to determine the existence or non-existence of any other factual matters; however, I am not aware of any facts that would lead me to believe that the opinion expressed herein is not accurate. Based upon the foregoing, it is my opinion that the 290,000 shares of Stock that may be issued and sold by you in connection with stock awards or purchase rights or upon the exercise of stock options to be granted under the Purchase Plan and Directors Plan when issued and sold in accordance with the Purchase Plan and Directors Plan and agreements to be entered into thereunder reflecting the stock awards, purchase rights or stock options, and in the manner referred to in the relevant Prospectus associated with the Registration Statement, will be legally issued, fully paid and nonassessable. 2 I consent to the use of this opinion as an exhibit to the Registration Statement and further consent to all references to me, if any, in the Registration Statement, the Prospectus constituting a part thereof and any amendments thereto. This opinion speaks only as of its date and is intended solely for your use as an exhibit to the Registration Statement for the purpose of the above sale of the Stock and is not to be relied upon for any purpose. Very truly yours, /s/ JILL E. FISHBEIN -------------------------------------- Jill E. Fishbein Senior Vice President, General Counsel and Secretary 2 EX-23.(A) 6 INDEPENDENT AUDITORS' CONSENT 1 EXHIBIT 23(a) INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this Registration Statement on Form S-8 of On Command Corporation of our report dated January 27, 1997 (March 27, 1997 as to Note 14), appearing in the Annual Report on Form 10-K of On Command Corporation for the year ended December 31, 1996. /s/ Deloitte & Touche LLP Deloitte & Touche LLP San Jose, California August 6, 1997 -----END PRIVACY-ENHANCED MESSAGE-----