PROSPECTUS
EXCALIBUR TECHNOLOGIES CORPORATION
350,000 SHARES OF COMMON STOCK
This Prospectus relates to 350,000 shares of Common Stock, par value $.01
per share (the "Shares"), of Excalibur Technologies Corporation, a Delaware
corporation (the "Company"), which may be sold from time to time by the persons
and entities listed as Selling Shareholders herein (the "Selling Shareholders").
The Company will not receive any proceeds from the sale of the Shares by the
Selling Shareholders. See "Plan of Distribution."
The Company will pay all the expenses, estimated to be approximately
$25,000, in connection with this offering, other than underwriting commissions
and discounts and counsel fees and expenses of the Selling Shareholders.
AN INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A
HIGH DEGREE OF RISK. SEE "RISK FACTORS."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The Company's Common Stock is traded in the over-the-counter market and
included in the NASDAQ National Market System under the symbol EXCA. The last
reported sale price of the Common Stock reported in the NASDAQ National Market
System on April 1, 1996 was $28.00 per share.
The date of this Prospectus is April 3, 1996.
<PAGE>
TABLE OF CONTENTS
Page
Available Information....................................... 3
Incorporation of Certain Information by Reference........... 3
The Company................................................. 5
Risk Factors................................................ 6
Plan of Distribution........................................ 9
Use of Proceeds............................................. 10
Dilution.................................................... 10
Selling Shareholders........................................ 11
Description of Capital Stock................................ 13
Experts..................................................... 15
Legal Matters............................................... 15
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH
THE OFFERING DESCRIBED HEREIN AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION TO ANY
PERSON TO WHOM SUCH OFFER WOULD BE UNLAWFUL OR AN OFFERING OF ANY SECURITIES
OTHER THAN THE REGISTERED SECURITIES TO WHICH IT RELATES. NEITHER THE DELIVERY
OF THIS PROSPECTUS NOR ANY OFFER OR SALE MADE HEREUNDER AT ANY TIME SHALL IMPLY
THAT THE INFORMATION PROVIDED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS
DATE.
- 2 -
<PAGE>
AVAILABLE INFORMATION
---------------------
This Prospectus does not contain all of the information set forth in the
Registration Statement of which this Prospectus is a part and which is filed
with the Securities and Exchange Commission (the "Commission.") The Company is
subject to the informational requirements of the Securities Exchange Act of 1934
(the "Exchange Act") and, in accordance therewith, files reports, proxy
statements and other information with the Commission. For further information
with respect to the Company, reference is made to such Registration Statement
and the exhibits thereto, and to such reports, proxy statements and other
information filed with the Commission. Such Registration Statement, reports,
proxy statements and other information can be inspected and copied at the public
reference facilities of the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's Regional Offices
located at Room 1400, 75 Park Place, New York, New York 10007 and Suite 1400,
Northwestern Atrium Center, 500 West Madison Street, Chicago, Illinois 60661.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
-------------------------------------------------
The following documents filed by the Company with the Commission (File No.
0- 9747) are incorporated by reference:
1. The Company's Annual Report on Form 10-K for the fiscal year ended
January 31, 1995.
2. The Company's Quarterly Reports on Form 10-Q for the three month periods
ended April 30, July 31 and October 31, 1995.
3. The Company's Report on Form 10-Q/A filed November 9, 1995 amending its
Quarterly Report on Form 10-Q for the three months ended July 31, 1995.
4. The Company's Current Reports on Form 8-K filed June 7, July 7 and
August 4, 1995.
5. The Company's Amendment No. 1 to Form 8-K filed September 12, 1995 and
Amendment No. 2 to Form 8-K filed November 9, 1995, both amending the Current
Report on Form 8-K filed August 4, 1995.
6. The Company's Current Report on Form 8-K filed November 21, 1995.
7. The Company's Proxy Statement dated October 16, 1995.
All documents filed pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date of this Prospectus and prior to the
- 3 -
<PAGE>
termination of the offering of the Shares shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the date of filing of
such documents. Any statement contained in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
Copies of any and all documents that have been incorporated by reference
herein, other than exhibits to such documents, may be obtained upon request
without charge from the Company's Corporate Secretary, Excalibur Technologies
Corporation, 2000 Corporate Ridge, Suite 1095, McLean, Virginia, 22102,
telephone number (703) 790-2110. Please specify the information desired when
making such request.
- 4 -
<PAGE>
THE COMPANY
-----------
The Company is a leader in the development and sale of information
retrieval software, based on adaptive pattern recognition ("APRP(TM))
technology. This technology, which identifies patterns in the binary
representations of data, permits information storage with automatic indexing and
content-based retrieval, or "fuzzy searching," with accuracy and speed. Using
this technology, the Company has developed a family of software retrieval
products, including libraries, servers and applications, which index, search and
retrieve multimedia data -- text, image, signal and full motion video. The
libraries and servers are suitable to be used by Value Added Resellers (VARs"),
System Integrators ("SIs"), Original Equipment Manufactures ("OEMs") end-user
customers, and systems and software companies to index, search and retrieve
multimedia data in software applications and systems. The Company's principal
application software product, an off-the-shelf, commercially available document
imaging and information retrieval system, has been developed using the Company's
text library, and is sold primarily through VARs and relationships with other
software vendors.
The Company markets and distributes its products through VARs, SIs, OEMs,
direct sales, and a marketing agreement with IBM. As of January 31, 1995, more
than 500 customers were using the Company's document imaging and information
retrieval products.
The Company has established a wholly-owned subsidiary in the United
Kingdom, Excalibur Technologies International, Ltd. ("ETIL"), which began
operations in July 1992. Except as otherwise indicated, the term "Company"
refers to Excalibur Technologies Corporation and its subsidiaries.
On July 20, 1995, Excalibur Technologies Corporation ("Excalibur")
acquired all of the outstanding shares of stock of ConQuest Software, Inc.
("ConQuest"), a private company located in Columbia, Maryland engaged in the
business of providing natural language text management software tools. Excalibur
issued approximately 1,427,000 restricted shares of Excalibur common stock, and
options to acquire approximately 572,000 restricted shares of Excalibur common
stock to the former ConQuest shareholders and optionholders. The transaction has
been accounted for as a pooling of interests. The results of operations
discussed herein for the Company for the nine month periods ended October 31,
1995 and 1994 and the fiscal years ended January 31, 1995, 1994 and 1993
include, respectively, the ConQuest results of operation for the nine month
periods ended October 31, 1995 and 1994 and the years ended December 31, 1994,
1993 and 1992.
Excalibur was incorporated on February 11, 1980 as a New Mexico
corporation and reincorporated on September 26, 1989 as a Delaware corporation.
The Company's principal executive offices are located at 2000 Corporate Ridge,
Suite 1095, McLean, Virginia, 22102, telephone number (703) 790-2110.
- 5 -
<PAGE>
RISK FACTORS
------------
A prospective investor should carefully consider all of the information
contained in this Prospectus and, in particular, the following:
MARKETING ACCEPTANCE OF PRODUCTS AND HISTORICAL OPERATING LOSSES. The
Company believes that its future profitability will depend on its ability to
effectively market existing and newly-developed software products through a
balanced multi-channel distribution network. There can be no assurance that the
expenses incurred in connection with the development, introduction and promotion
of enhanced or new products will not exceed the Company's expectations, or that
these products will generate revenues sufficient to offset these expenses. The
Company has operated at a loss for each of the past three fiscal years. The
Company reported a net loss of approximately $995,000 on revenue of
approximately $12,905,000 for the nine months ended October 31, 1995 as compared
to a net loss of approximately $7,067,000 on revenue of approximately $8,813,000
for the nine months ended October 31, 1994. In addition, the Company incurred a
net loss of approximately $9,388,000 on revenue of approximately $12,638,000 for
the fiscal year ended January 31, 1995, a net loss of approximately $8,319,000
on revenue of approximately $12,285,000 for the fiscal year ended January 31,
1994 and a net loss of approximately $8,249,000 on revenue of approximately
$8,506,000 for the fiscal year ended January 31, 1993. These losses reflect the
Company's expenditures associated with building a marketing organization to sell
software products released in 1993 and 1994 and further developing software
products during such years. The Company will continue to invest in these
programs and, accordingly, operating losses may continue for at least the next
12 months.
RELATIONSHIP WITH IBM. In July and August 1993, the Company entered into
Cooperative Marketing Agreements with IBM under which IBM made guaranteed sales
commitments to the Company for fiscal 1994 and fiscal 1995. Revenues in fiscal
1995 and 1994 from sales generated by IBM represented 12% and 13%, respectively,
of total revenues. A decision by IBM to limit or discontinue its relationship
with the Company could result in a significant loss of revenue to the Company.
LACK OF PATENT PROTECTION. The Company has not applied for patents on most
of its technology. The Company regards its software as proprietary and relies
primarily on a combination of copyright, trademark and trade secret laws of
general applicability, employee confidentiality and invention assignment
agreements, distribution and OEM software protection agreements and other
intellectual property protection methods to safeguard its technology and
software products. The Company also relies upon its efforts to design and
produce new products, and upon improvements to existing products, to maintain a
competitive position in the marketplace. The Company has no assurance that its
technology will remain proprietary.
COMPETITION. Competition in the computer and communications industry in
general, and the computer software industry in particular, is intense. The
Company's competitors include many companies which are larger and more
established and have substantially more resources than the Company.
- 6 -
<PAGE>
DEPENDENCE ON COMPUTER MANUFACTURERS. The Company's computer software
products are designed to work specifically with manufacturers' computer systems;
however, the Company has no agreement with the manufacturers of those computers
by which it may ensure that the computers will not be redesigned in a manner
incompatible with the Company's products.
DEPENDENCE ON KEY PERSONNEL. The Company's business is substantially
dependent upon the active participation and technical expertise of its executive
officers and key personnel. The Company's ability to maintain a competitive
position in light of technological developments will depend, in large part, on
its ability to attract and retain highly qualified personnel, of which there can
be no assurance. The Company has acquired $1 million life insurance policies on
the lives of each of Patrick Condo, its Chief Executive Officer, James W. Dowe
III, the Company's chief scientist, and the Company's chief engineer. In August,
1995 the Company reported that J.M. Kennedy, its Chief Executive Officer at that
time, was temporarily unable to fulfill his duties due to what has been reported
to the Company as a stroke. During Mr. Kennedy's absence, Mr. Condo assumed his
responsibilities. On November 15, 1995, Mr. Kennedy resigned as Chief Executive
Officer and Mr. Condo was elected to replace him.
RELATIONSHIP WITH DIGITAL EQUIPMENT CORPORATION. Since entering into a
distribution agreement with Digital Equipment Corporation ("Digital") in April
1990, the Company has been highly dependent on sales of its software products
through Digital to its customers, although the percentage of the Company's total
revenues from Digital declined dramatically in fiscal 1994. During fiscal 1995,
1994 and 1993, revenues from Digital represented approximately 3%, 8% and 30%,
respectively, of the Company's total revenues. A decision by Digital to
discontinue or further limit its relationship with the Company could result in a
significant loss of revenue to the Company.
RELATIONSHIP WITH NIKKEI INFORMATION SYSTEMS CO., LTD. A portion of the
Company's revenue is earned in connection with its research and development
arrangement with Nikkei Information Systems Co., Ltd. ("NIS"). During fiscal
1995, 1994 and 1993 revenues attributable to NIS represented approximately 3%,
6% and 12%, respectively, of the Company's total revenues. Revenue from NIS is
expected to continue to decline as a percentage of the Company's total revenues.
A decision by NIS to discontinue or limit its relationship with the Company
could result in a significant loss of revenue to the Company.
RELATIONSHIP WITH PRC, INC. In February 1993, the Company signed an
agreement with PRC, Inc. ("PRC"), a systems integrator, providing for a minimum
of $2 million in revenues from PRC, payable periodically over two and a half
years. For the fiscal years ended January 31, 1995 and 1994, the revenue
recognized by the Company under this contract represented 3% and 9%,
respectively, of total revenues. A decision by PRC to limit or discontinue its
relationship with the Company could result in a significant loss of revenue to
the Company.
- 7 -
<PAGE>
VOTING CONTROL BY PRINCIPAL SHAREHOLDER. Allen & Company Incorporated
("Allen"), certain officers and shareholders of Allen and certain persons who
might be deemed to be related persons of Allen together beneficially own
approximately 39.4% of the outstanding shares of Common Stock of the Company.
Accordingly, Allen may be deemed to be an "affiliate" of the Company within the
meaning of the Securities Act of 1933. As a result of such ownership interest,
Allen and such other persons may be able to effectively control the outcome of
certain matters requiring a shareholder vote, including offers to acquire the
Company and election of directors. In addition, Richard M. Crooks, Jr., the
Chairman of the Board of Directors of the Company, is a director of and
consultant to Allen.
AUTHORIZATION OF PREFERRED STOCK. The Company's Certificate of
Incorporation authorizes the issuance of one million shares of Preferred Stock
with such designations, rights and preferences as may be determined from time to
time by the Company's Board of Directors. Accordingly, the Board of Directors is
empowered, without shareholder approval, to issue Preferred Stock with dividend,
liquidation, conversion, voting, or other rights that could adversely affect the
voting power or other rights of the holders of the Company's Common Stock.
Although the Company has no present intention of issuing any shares of Preferred
Stock, it can give no assurance that it will not issue Preferred Stock in the
future. See "Description of Capital Stock - Preferred Stock".
CERTAIN ANTI-TAKEOVER PROVISIONS. Certain provisions of the Company's
Certificate of Incorporation, its Stock Option Plan and Delaware law could have
the effect, either alone or in combination with each other, of making more
difficult, or discouraging an acquisition of the Company deemed undesirable by
its Board of Directors. Under the Company's Certificate of Incorporation there
are approximately 4,500,000 unreserved shares of Common Stock and 950,000 shares
of Preferred Stock available for future issuance without shareholder approval as
of January 31, 1996, after giving effect to the issuance of the shares of Common
Stock covered by this Prospectus. The existence of authorized but unissued
capital stock, together with the continued voting control of the Company by
Allen could have the foregoing effect of discouraging an acquisition of the
Company. Under the Company's Stock Option Plans, as amended (the "Plans"), in
the event of a change in control, stock appreciation rights ("SARs") and limited
SARs outstanding for at least six months and any stock options which are not
then exercisable will become fully exercisable and vested. The Plans may have
the effect of significantly increasing the costs of acquiring the Company in a
hostile takeover. The Company is subject to Section 203 of the Delaware General
Corporation Law, which prohibits a Delaware corporation, such as the Company,
from engaging in a wide range of specified transactions with any person who
becomes a 15% stockholder, under certain circumstances, within three years after
such person became an "interested shareholder."
STOCK OPTIONS OUTSTANDING. As of January 31, 1996, the Company had
outstanding stock options to purchase an aggregate of 2,416,112 shares of Common
Stock at exercise prices ranging from $1.04 to $26.21 per share. These options
are likely to be exercised, if at all, at a time when the Company otherwise
could obtain a price for the sale of shares of Common Stock which is higher than
the option exercise price per share. Such exercise or the possibility of such
exercise may impede the Company if it later seeks financing through the sale of
additional securities.
- 8 -
<PAGE>
FUTURE SALES OF COMMON STOCK. Of the Company's shares of Common Stock
currently outstanding, a substantial number of such shares are "restricted
securities" as that term is defined under Rule 144 under the Securities Act,
which, under certain circumstances, may be sold without registration with the
Commission under the Securities Act. An aggregate of approximately 933,189
shares of the Company's Common Stock subject to exercisable stock options are
presently being offered for sale under the Company's registered stock option
plan. The Company is unable to predict the effect that sales of Common Stock
made under Rule 144 or pursuant to the stock options described above, or
otherwise, may have on the then prevailing market price of Common Stock.
INCREASED ACCOUNTS RECEIVABLE. Historically, the Company has generated the
majority of its revenue in the last month of a quarter, which creates a higher
receivable at the end of a reporting period, as measured by the average sales
per day in accounts receivable. Consequently, the amount reported as accounts
receivable generally declines as the following quarter unfolds. The average days
sales outstanding at October 31, 1995, January 31, 1995 and October 31, 1994
were 97 days, 97 days and 108 days, respectively. The average days sales
outstanding may be overstated due to annual maintenance contracts sold, which
are booked to accounts receivable and deferred revenue and are recognized
ratably over the twelve-month period. Maintenance revenues represented 20% of
total revenues at January 31, 1995 up from 11% of total revenues at January 31,
1994. Maintenance revenues represented 21% of total revenues in the nine month
periods ended October 31, 1995 and 1994. The Company's normal payment terms are
net 30 days, but the average collection time is about 60 days, including
international receivables, which tend to have longer payment cycles. The Company
has not had any significant bad debt expense charges. However, in the event that
the Company were unable to collect its outstanding accounts receivable, the
amount of bad debt expense could increase.
PLAN OF DISTRIBUTION
--------------------
This Prospectus relates to the sale by the Selling Shareholders of
350,000 fully paid and non-assessable shares of the Company's Common Stock, par
value $.01 per share. The Shares may be sold from time to time by the Selling
Shareholders in the over-the-counter market at then prevailing market prices or
in privately negotiated transactions. Although the Company ultimately expects
that all 350,000 Shares may be sold, the actual number of Shares that will be
sold cannot be determined.
In offering the Shares, the Selling Shareholders and any selling broker or
dealer may be deemed to be statutory "underwriters" within the meaning of
Section 2(11) of the Securities Act in connection with such sales.
The Company has advised the Selling Shareholders that they, because they
may be deemed to be statutory underwriters, will be subject to the Prospectus
delivery requirements under the Securities Act. The Company has also advised the
- 9 -
<PAGE>
Selling Shareholders that in the event of a "distribution" of their shares, such
Selling Shareholders, any selling broker or dealer and any "affiliated
purchasers" may be subject to Rule 10b-6 under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), until its participation in that
distribution is completed. A "distribution" is defined in Rule 10b-6(c)(5) as an
offering of securities "that is distinguished from ordinary trading transactions
by the magnitude of the offering and the presence of special selling efforts and
selling methods." The Company has also advised the Selling Shareholders that
Rule 10b-7 under the Exchange Act prohibits any "stabilizing bid" or
"stabilizing purchase" for the purpose of pegging, fixing or stabilizing the
price of Common Stock in connection with this offering.
Any shares covered by this Prospectus which qualify for sale pursuant to
Rule 144 may be sold under Rule 144 rather than pursuant to this Prospectus.
The Company will pay all the expenses, estimated to be $25,000 in
connection with this offering, other than underwriting commissions and discounts
and counsel fees and expenses of the Selling Shareholders.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Shares by
the Selling Shareholders.
DILUTION
The net tangible book value of the Company as of October 31, 1995 was
approximately $11,476,744 or $.99 per common share. Since the shares are being
offered by the Selling Shareholders, there is no increase in net tangible book
value per common share to existing shareholders by virtue of the sale. Without
taking into account any changes in net tangible book value after October 31,
1995 or shares issued after that date, the Company had as of that date an
aggregate of 11,571,899 shares of Common Stock outstanding with a net tangible
book value of $.99 per share. Assuming a sale at the anticipated offering price
set forth below, this will represent an immediate dilution of $27.01 per share
to new shareholders. The following table illustrates this dilution per share:
Anticipated offering price per share $28.00
Net tangible book value per common
share before offering (1)......... $.99
Net tangible book value per common
share after offering.............. $.99
Dilution per share to new shareholders(2) $27.01
======
- 10 -
<PAGE>
The calculations above do not take into account the exercise of
outstanding stock options. On January 31, 1996, there were outstanding stock
options to purchase an aggregate of 2,416,112 shares of Common Stock at exercise
prices ranging from $1.04 to $26.21 per share. To the extent that these stock
options are exercised, there will be further dilution to new shareholders.
(1) Net tangible book value per common share represents the amount of total
tangible assets less total liabilities and preferred stock, divided by the
number of shares of Common Stock outstanding at that date.
(2) Dilution is determined by subtracting net tangible book value per common
share after the offering from the amount paid by an investor for a share
of Common Stock.
SELLING SHAREHOLDERS
On March 6, 1996, the Company sold 350,000 of its shares of Common Stock
to five institutional investors in a private placement in consideration for the
payment of $8,750,000. The Company agreed as part of that transaction to file a
Registration Statement within 30 days covering the shares which the Company
would use its reasonable best efforts to cause to become effective
expeditiously.
The following table sets forth the number of shares of Common Stock
of the Company beneficially owned by the Selling Shareholders on March 31, 1996,
the number of Shares covered by this Prospectus and the amount and percentage
ownership by the Selling Shareholder after the offering. All shares are
beneficially owned and the sole voting and investment power is held by the
person named. None of the Selling Shareholders has had any material relationship
with the Company during the past three years other than the ownership of shares
of Common Stock.
- 11 -
<PAGE>
Number of
Shares of
Common Number of
Stock Shares Percentage of
Beneficially Covered by Number of Class of
Owned on this Shares to be Beneficial
Name March 31, Prospectus Retained Ownership
1996
Drake and Company as
nominee for Citibank
N.A. 280,000 150,000 130,000 less than 1%
The Cypress Partners 90,000 90,000 0 --
L.P.
Cypress International 10,000 10,000 0 --
Partners Limited
Scudder Development 297,200 50,000 247,200 2%
Fund
Essex Investment Mgmt. 97,625 50,000 47,625 less than 1%
Co. Inc.
===============================================================================
- 12 -
<PAGE>
DESCRIPTION OF CAPITAL STOCK
----------------------------
The authorized capital stock of the Company consists of 20,000,000 shares
of Common Stock, par value $.01 per share, and 1,000,000 shares of Preferred
Stock, par value $.01 per share, of which 49,587 shares are designated as
Cumulative Convertible Preferred Stock. At January 31, 1996, 11,953,268 shares
of Common Stock were issued and outstanding and no shares of Preferred Stock
were issued or outstanding, except for 27,180 shares of Cumulative Convertible
Preferred Stock.
Common Stock
- ------------
The issued and outstanding shares of Common Stock are, and the Shares
being offered hereby by the Selling Shareholders are, validly issued, fully paid
and non-assessable. The holders of outstanding shares of Common Stock are
entitled to receive dividends out of assets legally available therefor at such
times and in such amounts as the Board of Directors may from time to time
determine. The Company has not paid any dividends and does not expect to pay
cash dividends on its Common Stock in the foreseeable future.
All shares of Common Stock have equal voting rights and, when validly
issued and outstanding, have one vote per share in all matters to be voted upon
by the shareholders. Cumulative voting in the election of directors is not
allowed, which means that the holders of more than 50% of the outstanding shares
can elect all the directors if they choose to do so and, in such event, the
holders of the remaining shares will not be able to elect any directors.
The shares have no pre-emptive, subscription, conversion or redemption
rights. Upon liquidation, dissolution or winding-up of the Company, the holders
of Common Stock are entitled to receive pro rata the assets of the Company which
are legally available for distribution to shareholders.
Preferred Stock
- ---------------
The Board of Directors of the Company has the authority to issue 950,413
shares of Preferred Stock in one or more series and to fix the designation,
relative powers, preferences and rights and qualifications, limitations or
restrictions of all shares of each such series, including, without limitation,
dividend rates, conversion rights, voting rights, redemption and sinking fund
provisions, liquidation preferences and the number of shares constituting each
such series, without any further vote or action by the shareholders.
The Company's 49,587 shares of Cumulative Convertible Preferred Stock are
convertible into shares of Common Stock at the rate of ten shares of Common
Stock per share of Cumulative Convertible Preferred Stock. Holders of the
- 13 -
<PAGE>
Cumulative Convertible Preferred Stock are entitled to receive cumulative
dividends at $0.50 per share per annum payable annually on April 1, if declared
by the Board of Directors, in cash or shares of Common Stock (to be determined
by the Board), valued at the lower of $1.00 per share or the market price on the
date of declaration. In the event of voluntary liquidation, dissolution or
winding-up of the Company, or upon any distribution of assets, whether voluntary
or involuntary, holders of the Cumulative Convertible Preferred Stock would have
a liquidation preference of $10.00 per share, plus accrued and unpaid dividends.
The issuance of Preferred Stock could decrease the amount of earnings and
assets available for distribution to holders of Common Stock or adversely affect
the rights and powers, including voting rights, of the holders of Common Stock
and could, among other things, have the effect of delaying, deferring or
preventing a change in control of the Company without further action by the
shareholders. The Company has no present plans to issue any shares of Preferred
Stock or Cumulative Convertible Preferred Stock.
Certain Anti-Takeover Provisions
- --------------------------------
Under the Company's Certificate of Incorporation, there are approximately
4,500,000 unreserved shares of Common Stock, 950,413 shares of Preferred Stock
and 22,407 shares of Cumulative Convertible Preferred Stock available for future
issuance without shareholder approval, as of January 31, 1996, after giving
effect to the issuance of the shares of Common Stock covered by this Prospectus.
The existence of authorized but unissued capital stock, together with the
continued voting control of the Company by Allen (see "Risk Factors -- Voting
Control by Principal Shareholder"), could have the effect, either alone or in
combination with each other, of making more difficult or discouraging an
acquisition of the Company deemed undesirable by its Board of Directors.
Under the Company's Stock Option Plan, as amended (the "Plan"), in the
event of a change in control, stock appreciation rights ("SARs") and limited
SARs outstanding for at least six months and any stock options which are not
then exercisable will become fully exercisable and vested. The Plan may have the
effect of significantly increasing the costs of acquiring the Company in a
hostile takeover.
The Company is subject to Section 203 of the Delaware General Corporation
Law, which prohibits a Delaware corporation, such as the Company, from engaging
in a wide range of specified transactions with any person who becomes a 15%
stockholder, under certain circumstances, within three years after such person
became an "interested shareholder." Because Allen & Company Incorporated's stock
ownership in the Company, which otherwise would cause it to be such an
"interested stockholder," antedates the 1987 effective date of Section 203,
Allen is not subject to the prohibitions of such Section.
Transfer Agent
- --------------
The transfer agent and registrar for the Common Stock is American
Securities Transfer, Inc. of Denver, Colorado.
- 14 -
<PAGE>
EXPERTS
-------
The audited financial statements and schedules of Excalibur Technologies
Corporation incorporated by reference in this Prospectus and elsewhere in the
Registration Statement have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their report with respect thereto, and are
incorporated herein by reference in reliance upon the authority of said firm as
experts in giving said report.
The financial statements of ConQuest Software, Inc. ("ConQuest") as of and
for the year ended December 31, 1993 incorporated in this Prospectus by
reference to the Company's Current Report on Form 8-K dated November 9, 1995,
have been incorporated in reliance on the report (which contains an explanatory
paragraph relating to ConQuest's ability to continue as a going concern as
described in Note 1 to the financial statements) of Price Waterhouse LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
The financial statements of ConQuest as of and for the year ended December
31, 1994 incorporated in this Prospectus by reference to the Company's Current
Report on Form 8-K dated November 9, 1995, have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their report (which
contains an explanatory paragraph relating to ConQuest's ability to continue as
a going concern as described in Note 1 to the financial statements) with respect
thereto, and are incorporated herein by reference in reliance upon the authority
of said firm as experts in giving said report.
LEGAL MATTERS
-------------
The validity of the Common Stock offered hereby will be passed upon for
the Company by Tenzer Greenblatt LLP, The Chrysler Building, 405 Lexington
Avenue, 23rd Floor, New York, New York 10174. Members of that firm beneficially
own an aggregate of 25,000 shares of the Company's Common Stock. Jay H. Diamond,
a partner in such law firm, is a Director of the Company.
- 15 -
