<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)of the Securities Exchange Act of 1934
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY
(AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
EXCALIBUR TECHNOLOGIES CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
--------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
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(3) Per unit price of other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
--------------------------------
(2) Form, schedule or registration statement no.:
--------------------------------
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(4) Date filed:
--------------------------------
<PAGE>
EXCALIBUR TECHNOLOGIES CORPORATION
1921 Gallows Road, Suite 200
Vienna, Virginia 22182
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
Excalibur Technologies Corporation, a Delaware corporation ("Excalibur" or the
"Company"), will be held at The McLean Hilton Hotel located at 7920 Jones Branch
Drive, McLean, Virginia 22102, at 10:00 a.m. local time, on Thursday, June 18,
1998 for the following purposes:
1. To elect seven directors of the Company for terms expiring at the
1999 Annual Meeting.
2. To consider and take action on a shareholder proposal described
on page 5, which is opposed by the Board of Directors.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The close of business on May 11, 1998 has been fixed as the record date
for the determination of shareholders entitled to notice of and to vote at the
meeting.
PLEASE SIGN, DATE AND MAIL YOUR PROXY IN THE ENVELOPE PROVIDED FOR YOUR
CONVENIENCE. YOU MAY REVOKE THIS PROXY AT ANY TIME AND, IF YOU ATTEND THE
MEETING, YOU MAY VOTE YOUR SHARES IN PERSON.
By Order of the Board of Directors,
James H. Buchanan
Secretary
Dated: May 20, 1998
<PAGE>
EXCALIBUR TECHNOLOGIES CORPORATION
--------------------------
Annual Meeting of Shareholders
--------------------------
PROXY STATEMENT
This Proxy Statement is furnished to shareholders in connection with the
solicitation by the Board of Directors of Excalibur Technologies Corporation, a
Delaware corporation (the "Company" or "Excalibur"), of proxies for use at the
1998 Annual Meeting of Shareholders (the "Annual Meeting") of the Company to be
held on Thursday, June 18, 1998 at 10:00 a.m. local time, and at any adjournment
thereof, for the purposes set forth in the accompanying Notice of Meeting. The
Annual Meeting will be held at The McLean Hilton Hotel located at 7920 Jones
Branch Drive, McLean, Virginia 22102. The Company's principal executive offices
are located at 1921 Gallows Road, Suite 200, Vienna, Virginia 22182. The proxy
solicitation materials are being mailed to shareholders on or about May 20,
1998.
On May 11, 1998, there were outstanding 13,267,583 shares of common stock,
par value $.01 per share, each entitled to one vote. The Board of Directors has
fixed May 11, 1998 as the record date for the determination of the shareholders
entitled to notice of and to vote at the Annual Meeting.
A form of proxy is enclosed for use at the Annual Meeting. The proxy may
be revoked by a shareholder at any time prior to the exercise thereof, and any
shareholder present at the Annual Meeting may revoke his proxy thereat and vote
in person if he or she so desires. When such proxy is properly executed and
returned, the shares it represents will be voted in accordance with any
instructions noted thereon. If no direction is indicated, all shares represented
by valid proxies received pursuant to this solicitation (and not revoked prior
to exercise) will be voted for the election of the nominees for directors named
in Item 1 herein (unless authority to vote is withheld), and against the
shareholder proposal described in Item 2 of this Proxy Statement. The Board of
Directors does not anticipate that any other matters will be brought before the
Annual Meeting. If, however, other matters are properly presented, the persons
named in the proxy will have discretion, to the extent allowed by Delaware law,
to vote in accordance with their own judgment on such matters.
The Company's Annual Report for the fiscal year ended January 31, 1998 is
enclosed with this Proxy Statement for each shareholder.
<PAGE>
Item One
ELECTION OF DIRECTORS
General
Seven individuals who are members of the present Board of Directors have
been nominated for election as directors of the Company until the next annual
meeting and until their respective successors are elected and qualified. One
incumbent director has elected not to stand for re-election and his director
position will remain vacant until a suitable replacement candidate can be found.
The persons named in the proxy, who have been designated by the
management, intend, unless otherwise instructed on the proxy card, to vote for
the election to the Board of Directors of the persons named below. If any
nominee should become unavailable to serve, the proxy may be voted for the
election of another person designated by the Board of Directors. The Board has
no reason to believe any of the persons named will be unable to serve if
elected. The affirmative vote of the holders of a plurality of the shares of
common stock voting at the Annual Meeting is necessary for the election of
directors. Any shares not voted (by abstention, broker non-vote, or otherwise)
have no impact on the vote. The Board of Directors recommends a vote FOR the
nominees listed below.
Information Concerning Directors and Nominees
Information regarding each nominee for director is set forth in the
following table.
Name Age Position
- ---- --- --------
Donald R. Keough 71 Chairman of the Board of Directors
Patrick C. Condo 41 President and Chief Executive Officer,
Director
Richard M. Crooks, Jr. 58 Director
John S. Hendricks 46 Director
W. Frank King III 58 Director
John G. McMillian 71 Director
Philip J. O'Reilly 60 Director
-2-
<PAGE>
Donald R. Keough has been Chairman of the Board of Directors and a Director of
the Company since June 1996. Mr. Keough has been an advisor to the Board of
Directors of the Coca-Cola Company since April 15, 1993, and Chairman of the
Board of Allen & Company Incorporated, a New York investment banking firm that
is the Company's largest shareholder, since April 15, 1993. Mr. Keough retired
as President, Chief Operating Officer and a Director of the Coca-Cola Company on
April 15, 1993, where he had been employed since 1950. From 1986 to 1993, he
also served as Chairman of the Board of Coca-Cola Enterprises, Inc., the world's
largest bottling system. Mr. Keough serves on the Board of Directors of Allen &
Company Incorporated, H.J. Heinz Company, The Washington Post Company, Home
Depot, Inc. and McDonald's Corporation.
Patrick C. Condo was named President and Chief Executive Officer in November
1995, and a Director in January 1996. Mr. Condo was President from May 1995 to
November 1995. He became Executive Vice President in January 1995 after serving
as the Director of Business Development from November 1992. From October 1987 to
November 1992, Mr. Condo held several manager level positions for Digital
Equipment Corporation's Image, Video and Voice Business Unit and Software
Business Group in New Hampshire.
Richard M. Crooks, Jr. has been a Director of the Company since June 1990 and
was Chairman of the Board from June 1990 to June 1996. Mr. Crooks has been
President of RMC Consultants, a financial advisory services firm, since June
1990. Mr. Crooks is a director of and consultant to Allen & Company
Incorporated. Mr. Crooks served as a Managing Director of Allen & Company
Incorporated for more than five years prior to June 1990. Mr. Crooks is a
director of Cypress Bioscience Inc., a biotechnology company engaged in
developing, manufacturing and marketing products for the treatment of
immune-related diseases and cancers.
John S. Hendricks was appointed as a Director of the Company in May 1997. He has
been Chairman and Chief Executive Officer of Discovery Communications, Inc., a
privately-held, diversified media company, since he founded the company in 1982
in order to develop a new cable television service. The effort resulted in the
launch of the Discovery Channel in 1985, which has become one of the world's
largest cable television networks. Mr. Hendricks is a member of the boards of
various cable television industry groups, educational institutions and other
organizations promoting natural history and science. Mr. Hendricks is Chairman
of the Board of Governors of the National Academy of Cable Programming.
W. Frank King III was elected a Director of the Company in June 1992. He is
presently President, Chief Executive Officer, and a Director of PSW
Technologies, Inc., a leading provider of technology for open systems computing.
From 1988 to November 1991, Dr. King was a Senior Vice President of Development
of Lotus Development Corporation. Prior to joining Lotus, Dr. King held various
positions with IBM over 19 years, the most recent as Vice President of
Development in its Entry Systems Division. Dr. King is a director of SystemSoft
Corporation, a software engineering company; Auspex, Inc., a computer server
manufacturer; and Natural Microsystems, Inc., a developer of telephony products.
-3-
<PAGE>
John G. McMillian was elected a Director in June 1996. Mr. McMillian owns a half
interest in Peter Hughes Diving Company, a charter company, and Contender Boats,
Inc., a boat manufacturer. He was Chairman and Chief Executive Officer of
Allegheny & Western Energy Corporation, a natural gas production and
distribution company, from July 1987 until July 1995, when the company was sold.
Mr. McMillian serves on the Advisory Committee of Sun Trust Miami, N.A..
Philip J. O'Reilly has been a Director of the Company since April 1988. Mr.
O'Reilly is a partner in the law firm of O'Reilly, Marsh, Kearney &
Corteselli P.C., in Mineola, New York. Mr. O'Reilly has been in private
practice for more than the past five years. Mr. O'Reilly is a director of
Cypress Bioscience Inc., a biotechnology company engaged in developing,
manufacturing and marketing products for the treatment of immune-related
diseases and cancers.
Information Concerning the Board of Directors and Its Committees
The Board of Directors held four meetings during the fiscal year ended
January 31, 1998 and acted by unanimous consent of directors in lieu of a
meeting on one other occasion. Each incumbent director attended more than 75% of
the aggregate number of meetings of the Board of Directors and appropriate
Committees held during fiscal year 1998 since their election except as follows:
During fiscal 1998, Mr. Hendricks was unable to attend one of the two meetings
of the Board of Directors held since his election in July 1997.
The Board of Directors has established a number of Committees. The Audit
Committee, consisting of Mr. McMillian (Chairman), Dr. King and Mr. O'Reilly,
met four times during fiscal year 1998. The Audit Committee meets with the
Company's management, including its Chief Financial Officer, and its independent
accountants several times a year to discuss internal controls and accounting
matters, the Company's financial statements, and the scope and results of the
auditing programs of the independent accountants. The Compensation Committee,
currently composed of three directors, Messrs. Crooks (Chairman), O'Reilly and
Viguerie, administers management compensation and makes recommendations in that
regard to the Board. The Compensation Committee met on two occasions during
fiscal 1998. The Stock Option Plan Administration Committee, which currently
consists of Messrs. Crooks (Chairman) and O'Reilly, administers the Company's
Stock Option Plans. The Stock Option Administration Committee met five times
during fiscal 1998 and acted by written consent on one other occasion.
Each non-employee director is paid $5,000 for each meeting of the Board or
its Committees attended, whether in person or by telephone, up to a maximum of
$20,000 per fiscal year. Messrs. Keough and Crooks are not paid the foregoing
fees. All directors are reimbursed for their expenses in attending meetings of
the Board or its Committees. Each non-employee director receives options to
purchase 25,000 shares of common stock of Excalibur upon joining the Board and
additional options to purchase 25,000 shares of common stock of Excalibur after
each subsequent five-year period of service as a member of the Board. The
Chairman may be granted additional options to purchase 25,000 shares of common
stock of Excalibur upon being elected Chairman and after each subsequent
five-year period of service. Mr. Keough has not been granted any stock options.
-4-
<PAGE>
Item 2
SHAREHOLDER PROPOSAL
A shareholder of the Company has advised the Company of his intent to
present the proposal set forth below for a vote of the shareholders at the
Annual Meeting. The proposal is set forth below with the Company's reasons for
recommending a vote AGAINST the proposal. The Board of Directors and the Company
accept no responsibility for the accuracy of either the proposal or the
proponent's supporting statement.
To be adopted, the proposal must be approved by the affirmative vote of
the majority of the shares voting on the proposal present in person or
represented by proxy at the Annual Meeting. Any shares not voted (by abstention,
broker non-vote or otherwise) have no effect on such vote. The resolution which
the shareholder plans to introduce at the Annual Meeting is as follows:
"RESOLVED: That the shareholders of the Company hereby request and
recommend that the Board of Directors take all such proper actions to
effect the sale, merger or liquidation of the Company and the distribution
of the sale proceeds to the shareholders, all in such manner and on such
terms as the directors determine will best maximize shareholder value."
The name, address and number of shares of Common Stock held by the
shareholder proponent will be furnished by the Company to any person, orally or
in writing, as requested, promptly upon the receipt by the Company of any oral
or written request therefor.
Shareholder's Statement:
In support of the resolution, the shareholder's letter states:
"The purpose of this proposal is to advise the Board of Directors of the
shareholders' concerns with respect to the direction of the Company and of
the shareholders' desires to realize the full value of their shareholdings
in the Company. It is the view of the proponent of this proposal that
management's activities to date have prevented the achievement of such a
result. The proposal requests the directors to consider various methods of
sale, merger or liquidation with a view to maximizing the value to the
shareholders of their holdings in the Company. It is the opinion of the
proponent that the current market price of the Company's stock does not
reflect the true value of the underlying assets because of investors' lack
of confidence that the Company's present management is prepared to adopt
appropriate strategies with respect to the business of the Company and its
future prospects so as to enable the Company and its shareholders to
realize or benefit from such value. Thus, the proponent believes that
effecting the sale, merger or liquidation of the Company would be the most
attractive and beneficial course of action at this time. It is the
proponent's opinion that management's failure to date to actively pursue
any of these options has been detrimental to the Company and its
shareholders."
-5-
<PAGE>
The Board of Directors of the Company recommends a vote "AGAINST" this
shareholder proposal for the following reasons.
The proposal implies that the Board of Directors and management of the
Company are not committed to "maximizing the value to shareholders of their
holdings in the Company." On the contrary, a fundamental goal of the Company's
Board of Directors and its management is to "maximize shareholder value" and the
operations of the Company are conducted and managed with this goal in mind every
day. While the Company's management and Board of Directors are continually
reviewing the Company's strategic options, including whether and under what
circumstances opportunities exist to maximize shareholder value by sale, merger
or other disposition of the Company or its assets, management and the Board of
Directors believe that to formally put the Company up for sale could cause
employees who are valuable to the Company to seek long term positions elsewhere,
could cause the Company's current customers to reconsider product expansion
plans and post contract support commitments of the Company's products, and could
result in prospective customers who are considering making commitments in the
Company's products to defer such commitments, or to choose to acquire products
from the Company's competitors.
Accordingly, the Board of Directors recommends that you vote "AGAINST"
this proposal, and your proxy will be so voted if the proposal is presented
unless you specify otherwise.
EXECUTIVE COMPENSATION
Identification of Executive Officers and Key Employees
Each year, the Board of Directors appoints the executive officers of the
Company to serve until the next Annual Meeting of Shareholders and until their
successors have been duly appointed and qualified. The following information
indicates the position, age and business experience of the current executive
officers, Messrs. Condo, Buchanan and Nelson, as well as key employees of the
Company. There are no family relationships between any of the executive officers
of the Company.
Name Age Position
Patrick C. Condo 41 President and Chief Executive Officer
James H. Buchanan 42 Vice President, Chief Financial Officer,
Treasurer and Secretary
Paul E. Nelson 35 Senior Vice President, Product Development
Daniel C. Agan 45 Vice President, Worldwide Marketing
Steven S. Biegler 49 Vice President, Customer Services
-6-
<PAGE>
Kamran Khan 34 Vice President, Worldwide Sales
David Nunnerley 41 Vice President, Visual Product Development
Kip Quackenbush 39 Vice President, Business Development
See the discussion included in the preceding section for the business
experience of Mr. Condo.
James H. Buchanan joined the Company as Chief Financial Officer in September
1995. Mr. Buchanan was elected Secretary and Treasurer of the Company on
November 17, 1995. From March 1991 to August 1995, Mr. Buchanan was Vice
President, Controller and Treasurer of Legent Corporation, a software
development company. Prior to that, he held several financial management
positions with Norfolk Southern Corporation and PepsiCo. Mr. Buchanan is a
certified public accountant.
Paul E. Nelson was named the Company's Senior Vice President, Product
Development in January 1998. Mr. Nelson served as a Director of the Company
from January 1, 1997 to July 21, 1997. He joined the Company as Vice
President, Text Products in July 1995 in connection with the Company's
acquisition of ConQuest Software, Inc. ("ConQuest"), a company that Mr.
Nelson co-founded in 1990. Mr. Nelson was Senior Vice President of Product
Development and a Director of ConQuest.
Daniel C. Agan joined the Company as Vice President, Worldwide Marketing in
September 1996. From 1991 through 1996, Mr. Agan was President and Chief
Executive Officer of Agan Associates, Limited, a marketing consulting firm with
experience providing executive-level service to a diverse range of clients in
the technology, on-line and broadcasting industries. Prior to this, Mr. Agan
spent fifteen years with the Public Broadcasting Service (PBS) where he served
in a variety of capacities, most notably as Senior Vice President for National
Programming and Promotion.
Steven S. Biegler was named Vice President, Customer Services in February 1998.
Since joining the Company in May 1996 as Director of Professional Services, Mr.
Biegler has overseen technical support, implementation services, education
services and software manufacturing, shipping and receiving. From 1995 to 1996,
Mr. Biegler was Vice President of Operations for Seiko Computer Systems. Prior
to that, he was Vice President of Product Support and Installations for Summit
Information Systems since 1993.
Kamran Khan was named Vice President, Worldwide Sales in May 1997. Previously,
Mr. Khan held several sales management positions since joining the Company in
September 1993. Mr. Khan served as general manager of the Company's
international sales operation and wholly-owned subsidiary Excalibur
Technologies, Ltd., located in the United Kingdom, from August 1995 until his
appointment to Vice President. Prior to joining the Company, Mr. Khan held
various positions, including regional business manager, with PAFEC Limited, a
leading firm in the United Kingdom involved with the development and
implementation of computer-aided engineering and engineering document management
software systems.
-7-
<PAGE>
David Nunnerley was named Vice President, Visual Product Development in February
1998 and has been instrumental in the development of the Company's visual
products since joining the Company in 1996. From 1994 to 1996, Mr. Nunnerley was
Vice President of Engineering for Videopress Software, a software company
providing video delivery products and solutions to cable companies deploying
cable modems. Prior to that, Mr. Nunnerley held various product
management/marketing roles and management positions with Digital Equipment
Corporation.
Kip Quackenbush joined the Company as Vice President of Business Development in
October 1997. From 1995 to 1996, Mr. Quackenbush was Director of Sales and
Business Development for Oracle Corporation's New Media Division. Prior to that,
Mr. Quackenbush spent six years with Digital Equipment Corporation where he held
several business development positions, most recently as Senior Business
Development Manager, Video and Interactive Information Services.
-8-
<PAGE>
Summary Compensation Table
The following table presents information concerning the compensation of the
Chief Executive Officer and each of the other most highly compensated executive
officers during the 1998 fiscal year (collectively, the "Named Executive
Officers") for services rendered in all capacities to the Company for the fiscal
year ended January 31, 1998, as well as the previous two fiscal years:
<TABLE>
<CAPTION>
Long Term Compensation
-----------------------------------------
Annual Compensation Awards Payouts
----------------------------- --------------------- -------------------
Other Securities All
Annual Restricted Under- Other
Compen- Stock lying LTIP Compen-
Name and Principal Fiscal sation Award Options/ Payouts sation
Position Year Salary($) Bonus($) ($) ($) SARs(#) ($) ($)
- -------- ---- --------- -------- --- --- ------- --- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Patrick C. Condo 1998 200,000 86,000 -- -- 400,000 (1) -- --
Chief Executive 1997 200,000 46,200 -- -- -- -- --
Officer and President 1996 145,833 74,250 -- -- 200,000 -- 131,862 (2)
James H. Buchanan 1998 165,514 70,950 -- -- 150,000 (3) -- --
Vice President, Chief 1997 155,688 34,650 -- -- -- -- 1,395 (4)
Financial Officer, 1996 57,955 30,000 -- -- 100,000 -- 50,000 (4)
Secretary and Treasurer
Paul E. Nelson 1998 157,500 69,586 -- -- 84,750 (5) -- --
Senior Vice President, 1997 150,000 34,650 -- -- -- -- --
Product Development 1996 86,250 33,000 -- -- 84,750 -- --
<FN>
(1) This amount includes options to purchase 300,000 shares that were granted
in prior years and subsequently repriced on May 8, 1997. Disclosure with
respect to such repricing follows in this Proxy Statement, including under
the table captioned "Ten-Year Option Repricings."
(2) This amount includes reimbursed relocation payments of $78,194 and
reimbursed taxes of $53,668.
(3) This amount includes options to purchase 100,000 shares that were granted
in prior years and subsequently repriced on May 8, 1997. Disclosure with
respect to such repricing follows in this Proxy Statement, including under
the table captioned "Ten-Year Option Repricings."
(4) Other compensation includes the reported value of a quota club trip
attended by the officer's spouse in 1997, and includes reimbursed
relocation costs in 1996.
(5) Represents options to purchase 84,750 shares that were granted in prior
years and subsequently repriced on May 8, 1997. Disclosure with respect to
such repricing follows in this Proxy Statement, including under the table
captioned "Ten-Year Option Repricings."
</FN>
</TABLE>
-9-
<PAGE>
<TABLE>
<CAPTION>
Option Grants in Last Fiscal Year
Individual Grants Potential Realizable
----------------- Value at Assumed
% of Total Annual Rates of
Options Stock Price
Granted to Appreciation for
Employees Exercise Option Term (3)
Options in Fiscal or Base Expiration ---------------
Name Granted (#) Year(1)(2) Price Date 5% ($) 10% ($)
- ---- ----------- ----------- -------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Patrick C. Condo 100,000 12.3% $7.63 8/13/07 479,847 1,216,025
10,000 (4) * $4.75 11/13/02 14,683 32,890
15,000 (4) * $4.75 1/04/04 27,371 63,207
75,000 (4) 3.8 $4.75 12/06/04 159,576 377,879
100,000 (4) 5.0 $4.75 6/02/05 229,329 550,409
100,000 (4) 5.0 $4.75 11/01/05 243,786 591,927
James H. Buchanan 50,000 6.2 $7.63 8/13/07 239,923 608,013
30,000 (4) 1.5 $4.75 9/13/05 71,728 173,509
70,000 (4) 3.5 $4.75 11/01/05 170,650 414,349
Paul E. Nelson 84,750 (4) 4.3 $4.75 7/20/05 198,198 477,432
- -------------------------------------------
<FN>
* Represents less than 1%.
(1) These options vest in equal 12-1/2% increments every six months from the
dates of original grant.
(2) For options that were granted in fiscal year 1998, the denominator used
to calculate the percentage of total options granted does not consider
approximately 1.2 million options that were granted in prior years and
subsequently repriced on May 8, 1997. For options that were repriced on
May 8, 1997, the denominator includes the 1.2 million repriced options.
(3) The option term used to calculate potential realized value is the term
commencing with the original grant date, or in the case of options that
were repriced, the term commencing with the date of the repricing; the
option price used is the exercise price stated in the table. The amounts
shown are hypothetical gains that would exist for the respective options if
exercised at the end of the option term. The assumed 5% and 10% rates of
stock price appreciation are mandated by rules of the Securities and
Exchange Commission and do not represent the Company's estimate or
projection of future increases in the price of its Common Stock.
(4) Reflects options that were granted in prior years and subsequently repriced
on May 8, 1997. Repriced options were not exercisable for a period of six
months following the repricing date except in a transaction involving a
change of control of the Company.
</FN>
</TABLE>
-10-
<PAGE>
Aggregate Option Exercises in Last Fiscal Year and Fiscal Year-End Values
<TABLE>
<CAPTION>
Number of Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARS at (Options/SARS at
Shares Fiscal Year-End Fiscal Year-End
Acquired on Value (#) Exercisable/ ($) Exercisable/
Name Exercise(#) Realized ($ Unexercisable Unexercisable (1)
---- ----------- ------------ ---------------- -------------------
<S> <C> <C> <C> <C>
Patrick C. Condo -- -- 193,750/206,250 $1,138,281/$923,719
James H. Buchanan -- -- 50,000/100,000 $293,750/$443,500
Paul E. Nelson 97,982 (2) $556,635 57,794/ 31,782 $342,484/$186,719
<FN>
(1) The closing price of the Company's common stock on January 30, 1998, the
last trading day of the Company's fiscal year, was $10.625 per share.
(2) Represents options that were scheduled to expire between April 30, 1997 and
September 30, 1997.
</FN>
</TABLE>
Report of the Board of Directors on Repricing of Options
The Board of Directors held a meeting on May 7, 1997, from which Patrick C.
Condo and Paul E. Nelson as employees of the Company abstained, in which the
Chairman reported that the Board of Directors and management of the Company were
aware that the stock market's disfavor over the previous several months with
many technology companies, including the Company, had affected the value of
options outstanding under existing stock option plans. One effect of the
depressed market price of the Company's common stock was the substantial
differential between the equity based incentives being realized by longer term
employees with those expected to be provided to newly hired persons. The Board
of Directors felt it was important to restore incentives and motivation for the
Company's employees by lowering the exercise price of the options. In addition,
the Board of Directors also felt that such action was important in order to
counteract its competitors' ability to lure the Company's valuable long-term
employees with options priced at current trading prices.
-11-
<PAGE>
The Board believes that the future success of the Company is dependent upon
the Company's ability to attract, retain and motivate its employees and that the
Company's stock option plans are an important factor in achieving those goals.
Accordingly, the Chairman recommended that the Company's Board of Directors
approve an option repricing program whereby current employees of the Company
holding options under the 1989 and 1995 stock option plans could elect to have
the exercise price of some or all of their options reduced to $4.75 per share,
the closing price of the Company's common stock on May 7, 1997 as reported by
NASDAQ. Repriced options would be unchanged in all other respects, except that
for a period of six months, any options elected to be repriced would not be
exercisable other than in a transaction involving a change of control of the
Company.
Following a discussion by the Board, the recommendation of the Chairman was
unanimously approved, and the option repricing program was adopted. The
following table sets forth all repricings of options held by any executive
officer during the last ten completed fiscal years.
Board of Directors
Donald R. Keough, Chairman
Richard M. Crooks, Jr.
John S. Hendricks
W. Frank King III
John G. McMillian
Philip J. O'Reilly
Shaun C. Viguerie
Ten-Year Option Repricings
<TABLE>
<CAPTION>
Number of Market Length of Original
Securities Price of Exercise Option Term
Underlying Stock at Price at New Remaining
Options Time of Time of Exercise at date of
Name Date Repriced (#) Repricing ($) Repricing ($) Price ($) Repricing
- ---- ---- ------------ ------------- ------------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Patrick C. 5/8/97 10,000 $4.75 $12.40 $4.75 5.5 years
Condo 5/8/97 15,000 $4.75 $11.64 $4.75 6.7 years
5/8/97 75,000 $4.75 $ 6.34 $4.75 7.6 years
5/8/97 100,000 $4.75 $12.41 $4.75 8.1 years
5/8/97 100,000 $4.75 $15.97 $4.75 8.5 years
James H.
Buchanan 5/8/97 30,000 $4.75 $16.85 $4.75 8.4 years
5/8/97 70,000 $4.75 $15.97 $4.75 8.5 years
Paul E.
Nelson 5/8/97 84,750 $4.75 $15.23 $4.75 8.2 years
</TABLE>
-12-
<PAGE>
Description of the 1989 Incentive Plan
In September 1989, the Company adopted and its shareholders approved the
1989 Incentive Plan (the "1989 Plan") which authorized the granting of options
to purchase shares of the Company's common stock, and other forms of incentive
compensation, in order to attract and retain personnel who possess a high degree
of competence, experience and motivation. At present, options to purchase up to
3,450,000 shares may be granted pursuant to the 1989 Plan, including the
1,000,000 shares authorized by the Company's shareholders in June, 1996.
The 1989 Plan provides for the issuance of incentive stock options within
the meaning of Section 422A of the Internal Revenue Code and non-qualified stock
options, as well as stock appreciation rights. All employees, including officers
and directors who are also employees, are eligible to be granted incentive stock
options under the 1989 Plan. Non-qualified stock options may be granted under
the 1989 Plan to employees or to other persons who perform substantial services
for or on behalf of the Company, including officers and directors who are not
members of the Stock Option Plan Administration Committee of the Board of
Directors (the "Committee"). Options are not transferable by the optionee, other
than by will or the laws of descent and distribution, and are exercisable during
the optionee's lifetime only by the optionee.
The 1989 Plan is currently administered by the Committee. Subject to the
terms of the 1989 Plan, the Committee has the authority to determine all terms
and provisions under which stock options are granted under the 1989 Plan,
including determining the individuals to whom options may be granted, the
exercise price and number of shares subject to each option, the time or times
during which all or a portion of each option may be exercised and certain other
terms of each option. The maximum term of options granted under the 1989 Plan is
ten years.
Under the Company's 1989 Plan, incentive stock options have been granted
to officers and key employees of the Company to purchase shares of the common
stock at a purchase price equal to the fair market value of the common stock on
the date of grant. The Committee has the power, when and to the extent it deems
appropriate and with the consent of optionees, to substitute outstanding options
with replacement options at a lower exercise price. Options granted and
outstanding under the 1989 Plan vest over a period of up to four years. The 1989
Plan provides that optionees may be granted stock appreciation rights ("SARs")
at the discretion of the Board of Directors. No SARs have been granted to date
under the 1989 Plan. The vesting schedule of outstanding options granted under
the 1989 Plan would accelerate in the event of the occurrence of certain events
constituting a change in control of the Company.
-13-
<PAGE>
Upon termination of an employee for cause, such employee's stock options
will terminate. If the employee is involuntarily terminated without cause, his
stock options will be exercisable for three months following termination or
until the end of the option period, whichever is shorter. Upon the disability or
retirement of the employee, stock options will be exercisable within the lesser
of the remainder of the option period or one year from the date of disability or
retirement. Upon the death of an employee, stock options will be exercisable by
the deceased employee's representative within the lesser of the remainder of the
option period or one year from the date of the employee's death. Unless
otherwise determined by the Committee, only options which are exercisable on the
date of termination, death, disability or retirement may be subsequently
exercised. Options granted to non-employees including directors do not terminate
upon termination of such persons' relationship with the Company.
The 1989 Plan may be amended by the Board of Directors, except that the
Board may not, without the approval of the Company's stockholders, increase the
number of shares available for distribution, decrease the option price of a
stock option below 100% of the fair market value at grant, change the pricing
rule applicable for stock purchase rights, change the class of employees
eligible to receive awards under the 1989 Plan or extend the term of any option
award.
Description of the 1995 Stock Option Plan
The 1995 Stock Option Plan authorizes the granting of stock options and
other forms of incentive compensation to purchase up to 400,000 shares of the
Company's common stock in order to attract and retain personnel who possess a
high degree of competence, experience and motivation. The terms of the 1995
Stock Option Plan are identical to the 1989 Stock Option Plan described above,
except that the 1995 Stock Option Plan does not provide that optionees may be
granted stock appreciation rights. The 1995 Stock Option Plan is administered by
the Committee.
Description of the Stock Purchase Plan
In June 1996, the shareholders approved the Stock Purchase Plan (the
"Stock Plan") for the purpose of encouraging eligible employees to acquire
shares of the Company's Common Stock. All active employees of the Company are
eligible to participate. The aggregate number of shares of Common Stock which
may be purchased under the Stock Plan shall not exceed 250,000, subject to
adjustment in the event of stock dividends, stock splits, combination of shares,
recapitalizations, or other changes in the outstanding Common Stock.
The Company makes grants of options on February 1 and/or August 1 of each
year the Stock Plan is in effect or on such other designated date. Each eligible
employee on a date of exercise is entitled to purchase shares of Common Stock at
a purchase price equal to 85% of the closing sale price of shares of Common
Stock in the over-the-counter market on the applicable date of exercise. Options
are exercised on April 30, July 31, October 31 and January 31 of each fiscal
year.
-14-
<PAGE>
Payment for shares of Common Stock purchased under the Stock Plan is made
by authorized payroll deductions from an eligible employees' eligible
compensation. Eligible employees who elect to participate in the Plan designate
that a stated whole percentage equaling at least 1%, but no more than 10% of
eligible compensation be deducted. No participant in the Stock Plan is permitted
to purchase Common Stock under the Stock Plan at a rate that exceeds $25,000 in
fair market value of Common Stock, determined at the time options are granted,
for each calendar year.
It is intended that the Stock Plan constitutes an "employee stock purchase
plan" under the provisions of Section 423 of the Code. No Federal income tax
liability results from the grant or exercise of an option to purchase shares of
Common Stock pursuant to the Stock Plan, although amounts deducted from payroll
are included in an employee's compensation as ordinary income.
The Board of Directors shall have the right to terminate the Stock Plan or
any offering at any time for any reason. The Stock Plan is anticipated to
continue in effect through July 31, 2001.
Report of the Compensation Committee
The following is the Report of the Compensation Committee of the Board of
Directors, describing the compensation policies and rationale applicable to the
Company's executive officers with respect to the compensation paid to such
executive officers for the fiscal year ended January 31, 1998 (the information
contained in the report shall not be deemed to be "soliciting material" or to be
"filed" with the Securities and Exchange Commission (SEC) nor shall such
information be incorporated by reference into any future filing under the
Securities Act of 1933, as amended (the Securities Act), or the Securities
Exchange Act of 1934, as amended (the Exchange Act), except to the extent that
the Company specifically incorporates it by reference into such filing):
As members of the Compensation Committee, it is our duty to set
compensation policies applicable to the Company's executive officers and to
evaluate the performance of the Company's executive officers.
The compensation policy of the Company is that a substantial portion of
the annual compensation of each executive officer should relate to and be
contingent upon the performance of the Company, as well as the individual
contribution of each executive officer. In addition, the Compensation
Committee believes that the total compensation package must be competitive
with other companies in the industry to ensure that the Company can continue
to attract, retain and motivate key executives who are critical to the
long-term success of the Company. Under the Company's bonus scheme, bonuses
are paid based upon the Company attaining certain sales, expense and
profitability goals and on each officer's individual contribution to the
Company's attainment of such goals.
-15-
<PAGE>
Mr. Condo's base salary for the fiscal year ended January 31, 1998 was
$200,000. Mr. Condo's salary was determined by negotiation between Mr.
Condo and the Company. Mr. Condo's bonus plan was renegotiated following
the end of the first quarter. Mr. Condo was paid $86,000 during fiscal
year 1998, all of which was paid subsequent to the first quarter, for the
achievement of certain goals in the nine months remaining in the fiscal
year. Twenty-seven percent of Mr. Condo's potential bonus was based on the
achievement of quarterly revenue goals; twenty-seven percent was based on
the achievement of quarterly profitability goals; twenty-three percent was
based on the achievement of revenue and profitability goals for the nine
months ended January 31, 1998 and twenty-three percent was based on the
achievement of working capital and cash position goals at year-end.
During fiscal 1998, the Committee also considered stock option grants to
each of the executive officers of the Company. Mr. Condo received 100,000
stock options. The Committee believes that the use of stock options links the
interest of officers and employees of the Company to the interest of the
shareholders. Executive grants were approved by both the Stock Option Plan
Administration Committee which includes Messrs. Crooks and O'Reilly and by Mr.
Keough, Chairman of the Board.
Compensation Committee: Richard M. Crooks, Jr., Chairman
Philip J. O'Reilly
Shaun C. Viguerie
Compensation Committee Interlocks and Insider Participation
The members of the Compensation Committee during fiscal 1998 were Messrs.
Crooks, O'Reilly and Viguerie, none of whom is an officer or employee of the
Company or its subsidiaries. No member of the Compensation Committee or
executive officer of the Company has a relationship that would constitute an
interlocking relationship with executive officers or directors of another
entity.
Employment Agreements
Under an agreement between the Company and Patrick C. Condo, President and
Chief Executive Officer entered into in May 1998, Mr. Condo will be paid an
amount equal to twelve months' base salary plus bonus compensation and
continuation of his employee benefits for one year in the event Mr. Condo's
employment is terminated or he is removed from his position as Chief Executive
Officer within six months following certain "change of control" events relating
to the Company. For fiscal 1998, Mr. Condo's annual salary and bonus amounted to
$286,000. Such arrangement was approved by the full Board of Directors.
-16-
<PAGE>
The offer of employment letter dated September 7, 1995 for James H.
Buchanan, Chief Financial Officer, Secretary and Treasurer of the Company,
stipulates that Mr. Buchanan will be paid an amount equal to twelve months' base
salary in semi-monthly installments should his employment be terminated by the
Company without cause.
On July 20, 1995, the Company entered into an Employment Agreement with
Paul E. Nelson, a co-founder of ConQuest in connection with the Company's
acquisition of ConQuest. Pursuant to his Employment Agreement, Mr. Nelson was
awarded options to purchase 84,750 shares of common stock of the Company in July
1995 at an exercise price of $15.23 per share. The options were subsequently
elected by Mr. Nelson to be repriced on May 8, 1997 to $4.75 per share as part
of the Company's stock option repricing program. The Employment Agreement
included a two-year term that expired on July 20, 1997.
-17-
<PAGE>
Performance Graph
The following graph is a comparison of the cumulative total return to
shareholders of the Company's Common Stock at January 31, 1998 since February 1,
1993 to the cumulative total return over such period of (i) the NASDAQ Stock
Market-U.S., and (ii) the Standard & Poor's High Tech Composite, assuming an
investment in each of $100 on February 1, 1993 and the reinvestment of
dividends. The information contained in the Performance Graph shall not be
deemed to be "soliciting material" or to be "filed" with the SEC, nor shall such
information be incorporated by reference into any future filing under the
Securities Act or the Exchange Act, except to the extent that the Company
specifically incorporates it by reference into such filing.
(Cumulative Total Return graph appears here, plot points are as follows)
Cumulative Total Return
Fiscal Year Ended January 31,
---------------------------------------
1993 1994 1995 1996 1997 1998
Excalibur Technologies
Corporation (EXCA) 100 92 60 224 106 85
NASDAQ Stock Market (U.S.) 100 115 110 155 203 240
Standard & Poor's
Technology Sector 100 123 137 203 314 380
-18-
<PAGE>
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth, as of April 30, 1998, information
concerning the ownership of Common Stock of the Company of (i) all persons known
to the Company to beneficially own 5% or more of the Company's Common Stock,
(ii) each director of the Company, (iii) each Named Executive Officer and (iv)
all directors and executive officers of the Company as a group.
Amount and Nature Percent
Name and Address of Beneficial of Class
of Beneficial Owner Ownership (1) Owned
- ---------------------------- ------------------ --------
Allen & Company Incorporated 3,725,846 (2)(3) 27.6%
711 Fifth Avenue
New York, NY 10022
Donald R. Keough 130,000 (4) 1.0%
Patrick C. Condo 241,648 (5) 1.8%
Richard M. Crooks, Jr. 399,750 (6) 3.0%
John S. Hendricks 25,000 (7) *
W. Frank King III 38,000 (8) *
John G. McMillian 40,000 (9) *
Philip J. O'Reilly 30,000 (10) *
Shaun C. Viguerie 55,510 (11) *
James H. Buchanan 69,595 (12) *
Paul E. Nelson 346,823 (13) 2.6%
All directors and executive
officers as a group (12 persons) 1,376,326 (14) 9.9%
* Represents less than one percent of the outstanding common stock.
(1) To the Company's knowledge, each person listed has sole voting and
investment power as to the shares indicated, except as described below.
(2) Does not include shares owned by persons, including Messrs. Keough and
Crooks and entities which, together with Allen & Company Incorporated, may
be considered a "group," as such term is defined by Section 13(d) of the
Securities Exchange Act of 1934, because (as reported on Schedule 13D filed
with the SEC on July 21, 1997) many of these persons or entities are Allen
stockholders, officers, directors or relatives of the foregoing. No person
or entity included in this possible "group," with the exception of Allen &
Company Incorporated, owns 5% or more of the outstanding common stock.
-19-
<PAGE>
(3) Includes 271,800 shares of common stock issuable upon conversion of 27,180
shares of the Company's cumulative convertible preferred stock.
(4) Does not include shares owned by Allen & Company Incorporated, of which Mr.
Keough is Chairman of the Board, and as to which shares Mr. Keough
disclaims beneficial ownership.
(5) Includes (a) 10,000 shares of common stock owned beneficially but not of
record upon exercise of stock options at a price of $4.75 per share
expiring November 13, 2002; (b) 15,000 shares of common stock owned
beneficially but not of record upon exercise of stock options at a price of
$4.75 per share, expiring January 4, 2004; (c) 65,625 shares of common
stock owned beneficially but not of record upon exercise of stock options
at a price of $4.75 per share, expiring December 6, 2004; (d) 75,000 shares
of common stock owned beneficially but not of record, issuable upon
exercise of stock options at a price of $4.75 per share, expiring June 2,
2005; (e) 62,500 shares of common stock owned beneficially but not of
record, issuable upon exercise of stock options at a price of $4.75 per
share expiring November 1, 2005; and (f) 12,500 shares of common stock
owned beneficially but not of record, issuable upon exercise of stock
options at a price of $7.63 per share expiring August 13, 2007.
(6) Includes (a) 50,000 shares of common stock owned beneficially but not of
record, issuable upon exercise of stock options of the Company at a price
of $16.10 per share expiring June 28, 2000, and (b) 50,000 shares of common
stock issuable upon exercise of stock options of the Company at a price of
$20.56 per share expiring November 27, 2005. Does not include shares owned
by Allen & Company Incorporated, of which Mr. Crooks is a director and as
to which shares Mr. Crooks disclaims beneficial ownership.
(7) Includes 25,000 shares of common stock owned beneficially but not of
record, issuable upon exercise of stock options the Company at a price of
$4.875 per share expiring June 2, 2007.
(8) Includes (a) 13,000 shares of common stock owned beneficially but not of
record, issuable upon exercise of stock options of the Company at a price
of $12.50 per share, expiring July 2, 2002; and (b) 25,000 shares of common
stock owned beneficially but not of record, issuable upon exercise of stock
options of the Company at a price of $4.75 per share, expiring May 8, 2007.
(9) Includes (a) 25,000 shares of common stock owned beneficially but not of
record, issuable upon exercise of stock options of the Company at a price
of $22.50 per share, expiring June 28, 2006, and (b) 10,000 shares of
common stock owned beneficially but not of record, issuable upon exercise
of stock options of the Company at a price of $14.00 per share, expiring
October 28, 2006.
(10) Includes 25,000 shares of common stock owned beneficially but not of
record, issuable upon exercise of stock options of the Company at a price
of $13.00 per share expiring March 12, 2003.
(11) Includes (a) 25,000 shares of common stock owned beneficially but not of
record, issuable upon exercise of stock options of the Company at a price
of $22.50 per share expiring June 28, 2006, and (b) 510 shares owned
beneficially by Mr. Viguerie's spouse, as to which shares Mr.
Viguerie disclaims beneficial ownership.
-20-
<PAGE>
(12) Includes (a) 18,750 shares of common stock owned beneficially but not of
record, issuable upon exercise of stock options of the Company at a price
of $4.75 per share expiring September 13, 2005; (b) 43,750 shares owned
beneficially but not of record, issuable upon exercise of stock options of
the Company at a price of $4.75 per share expiring November 1, 2005; and (
c) 6,250 shares of common stock owned beneficially but not of record,
issuable upon exercise of stock options of the Company at a price of $4.75
per share expiring August 13, 2007.
(13) Includes (a) 2,413 shares of common stock owned beneficially but not of
record, issuable upon exercise of stock options of the Company at a price
of $4.14 per share expiring May 31, 1998; (b) 2,413 shares owned
beneficially but not of record, issuable upon exercise of stock options of
the Company at a price of $4.14 per share expiring December 31, 1998; and (
c) 52,968 shares of common stock owned beneficially but not of record,
issuable upon exercise of stock options of the Company at a price of $4.75
per share expiring July 20, 2005.
(14) Includes 615,169 shares of common stock owned beneficially but not of
record, issuable upon the exercise of options to purchase common stock of
the Company.
-21-
<PAGE>
Certain Relationships and Related Transactions
Donald R. Keough, the Chairman of the Board of Directors of the Company,
is the Chairman of the Board of Allen & Company Incorporated ("Allen"). Richard
M. Crooks, Jr., a director of the Company, is a director of and consultant to
Allen.
The Company's policy is that it will not make loans to, or enter into
other transactions with directors, officers or affiliates unless such loans or
transactions are approved by a majority of the Company's independent
disinterested directors, may reasonably be expected to benefit the Company, and
will be on terms no less favorable to the Company than could be obtained from
unaffiliated third parties.
See also "Compensation Committee Interlocks and Insider Participation" above.
Compliance With Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 and regulations of
the SEC thereunder require the Company's executive officers and directors, and
persons who own more that ten percent of a registered class of the Company's
equity securities, to file reports of initial ownership and changes in ownership
with the SEC. Based solely on its review of copies of such forms received by the
Company, or on written representations from certain reporting persons that no
other reports were required for such persons, the Company believes that during
or with respect to the period from February 1, 1997 to January 31, 1998 all of
the Section 16(a) filing requirements applicable to its executive officers,
directors and ten percent shareholders were complied with on a timely basis.
Shareholder Proposals To Be Presented At Next Annual Meeting
Proposals of shareholders intended to be presented by such shareholders
at next year's Annual Meeting must be received by the Company at its principal
office no later than January 20, 1999 and must satisfy the conditions
established by the Securities and Exchange Commission for shareholder proposals
to be included in the Company's proxy statement for that meeting.
-22-
<PAGE>
OTHER MATTERS
Expenses of Solicitation
The accompanying proxy is solicited by and on behalf of the Board of
Directors of the Company, and the entire cost of such solicitation will be borne
by the Company. Proxies may also be solicited by directors, officers and
employees of the Company, without additional compensation, by personal
interview, telephone and facsimile. Arrangements will be made with brokerage
houses and other custodians, nominees and fiduciaries for the forwarding of
solicitation material and annual reports to the beneficial owners of stock held
of record by such persons, and the Company will reimburse them for reasonable
out-of-pocket and clerical expenses incurred by them in connection therewith.
Discretionary Authority
The Annual Meeting is called for the specific purposes set forth in the
Notice of Meeting and discussed above, and also for the purpose of transacting
such other business as may properly come before the Annual Meeting. At the date
of this Proxy Statement, the Company does not expect that any other matters will
be submitted for consideration at the Annual Meeting other than those
specifically referred to above. If any other matters properly come before the
Annual Meeting, the proxy holders will be entitled to exercise discretionary
authority.
By Order of the Board of Directors,
James H. Buchanan
Secretary
Dated: Vienna, Virginia
May 20, 1998
-23-
<PAGE>
- --------------------------------------------------------------------------------
PROXY EXCALIBUR TECHNOLOGIES CORPORATION PROXY
1921 Gallows Road, Suite 200
Vienna, Virginia 22182
The undersigned holder of Common Stock of Excalibur Technologies Corporation
(the "Company") hereby constitutes and appoints Patrick C. Condo and James H.
Buchanan, and each of them, attorneys and proxies with full power of
substitution to each, for and in the name of the undersigned to vote the shares
of Common Stock of the Company, which the undersigned would be entitled to vote
if personally present at the Annual Meeting of Shareholders of the Company to be
held at The McLean Hilton Hotel, 7920 Jones Branch Drive, McLean, Virginia
22102, on Thursday, June 18, 1998 at 10:00 a.m., local time, or at any and all
adjournments thereof, on all matters as may properly come before the meeting.
The undersigned hereby revokes any and all proxies heretofore given with respect
to such meetings.
Each of such attorneys and proxies present at the meeting shall and may exercise
the powers granted hereunder.
Receipt is acknowledged of the Notice of Annual Meeting of Shareholders dated
May 20, 1998 and the Proxy Statement accompanying said notice.
Said attorneys are hereby instructed to vote as specified below. If no
specification is made, this proxy will be voted FOR Item 1 below and AGAINST
Item 2 on the reverse side.
1. Election of the following seven (7) nominees to serve as directors until the
next Annual Meeting of Shareholders and until their successors are elected and
qualified.
Nominees: Donald R. Keough Patrick C. Condo Richard M. Crooks, Jr.
W. Frank King III John G. McMillian Philip J. O'Reilly
John S. Hendricks
[ ] FOR [ ] WITHHELD [ ]
----------------------------------------------------
For all nominees except as noted above
- --------------------------------------------------------------------------------
<PAGE>
2. Consider and take action on the shareholder proposal described in the Proxy
Statement.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, to vote upon such other matters as may properly come
before the meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Dated: , 1998
----------------------
---------------------------------------
Signature
---------------------------------------
Signature(s) if held jointly
Please sign your name as it appears hereon. In the case of joint owners or
tenants in common, each should sign. If signing as a trustee, guardian or in any
other representative capacity or on behalf of a corporation or partnership,
please indicate your title.
- --------------------------------------------------------------------------------
