<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
WORLDCORP
(Name of Registrant as Specified In Its Charter)
CATHY RUNDE
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
(4) Proposed maximum aggregate value of transaction:
- --------
*Set forth the amount on which the filing is calculated and state how it was
determined.
[_] 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.:
(3) Filing Party:
(4) Date Filed:
Notes:
<PAGE>
April 18, 1994
Dear Stockholder:
We cordially invite you to attend your Company's Annual Meeting of
Stockholders to be held on Friday, May 20, 1994. Enclosed are a proxy state-
ment and a form of proxy. Please note that the meeting will commence at 9:30
a.m. at the Renaissance Hotel, 13869 Park Center Road, Herndon, Virginia.
At this meeting we will ask the Stockholders to elect two Class II Direc-
tors to serve until the 1996 Annual Meeting to ratify the selection of KPMG
Peat Marwick as WorldCorp's independent public accountants for the year ending
December 31, 1994.
We value your participation by voting your shares on matters that come
before the meeting. Please specify your choices by marking the enclosed proxy
card and returning it promptly.
Sincerely,
T. Coleman Andrews, III
Chief Executive Officer and President
<PAGE>
WORLDCORP, INC.
The Hallmark Building
13873 Park Center Road
Herndon, Virginia 22071
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held May 20, 1994
To the Stockholder Addressed:
WorldCorp, Inc. will hold its Annual Meeting of Stockholders at 9:30 a.m.
at the Renaissance Hotel, 13869 Park Center Road, Herndon, Virginia, on May 20,
1994, for the following purposes:
1. To elect two Class II Directors to serve until the 1996 Annual
Meeting of Stockholders and until their successors have been duly
elected and qualified;
2. To ratify the selection of KPMG Peat Marwick as independent
certified public accountants for the Company for the year ending
December 31, 1994;
3. To act upon such other matters as may properly come before the
meeting.
The record date for the determination of stockholders entitled to vote at
the meeting is April 6, 1994, and only stockholders of record at the close of
business on that date will be entitled to vote at this meeting and any
adjournment thereof.
Whether or not you plan to attend the stockholders' meeting, please
complete, date, and sign the enclosed proxy card and return it in the enclosed
envelope. You may revoke your proxy at any time prior to the time it is voted.
Herndon, Virginia By Order of the Board of Directors,
April 18, 1994
Andrew M. Paalborg
Vice President and General Counsel
<PAGE>
WORLDCORP, INC.
The Hallmark Building
13873 Park Center Road
Herndon, Virginia 22071
PROXY STATEMENT
This proxy statement is furnished to stockholders in connection with the
solicitation of proxies by the Board of Directors of WorldCorp, Inc.
("WorldCorp" or the "Company") for use at the Annual Meeting of Stockholders to
be held on Friday, May 20, 1994, and any adjournment thereof, for the purposes
set forth in the accompanying Notice of Annual Meeting of Stockholders and
described in detail herein. The meeting will be held at 9:30 a.m. at the
Renaissance Hotel, 13869 Park Center Road, Herndon, Virginia.
All properly executed proxies will be voted in accordance with the
instructions contained thereon, and if no choice is specified, the proxies will
be voted for the election of all Class II Directors named elsewhere in this
proxy statement and in favor of the appointment of KPMG Peat Marwick as
independent auditors. Any proxy may be revoked by the stockholder at any time
before it is exercised by giving written notice to that effect to the Secretary
of the Company or by signing a later-dated proxy. Stockholders who attend the
meeting may revoke any proxy previously granted and vote in person.
This proxy statement and the accompanying proxy are being mailed to the
stockholders on or about April 18, 1994.
PURPOSE OF MEETING
At the meeting, the Board of Directors will ask stockholders to (1) elect
two Class II directors to serve until the 1996 Annual Meeting of Stockholders
and until their successors are duly elected and qualified, and (2) ratify the
selection of KPMG Peat Marwick as independent certified public accountants for
the Company for the year ending December 31, 1994. In addition, the
stockholders will act upon such other matters as may properly come before the
meeting.
VOTING
General
- -------
Only holders of record of the Company's Common Stock, par value $1.00 per
share ("Common Stock"), at the close of business on April 6, 1994, will be
entitled to vote at the meeting. On April 11, 1994, 15,245,319 shares of Common
Stock were outstanding and entitled to vote. Each share of Common Stock is
entitled to one vote.
<PAGE>
Shares of Common Stock represented by proxies in the accompanying form that
are properly executed and returned to the Company will be voted at the Annual
Meeting of Stockholders in accordance with the stockholders' instructions
contained in such proxies. The proxy holders will also vote such shares at
their discretion with respect to such other matters as may properly come before
the meeting. Where no such instructions are given, proxy holders will vote
such shares in accordance with the recommendations of the Board of Directors.
A quorum at the Annual Meeting will consist of the presence, in person or
by proxy, of at least a majority of the shares of Common Stock outstanding on
the record date and entitled to vote at the Annual Meeting. Each stockholder
may cast one vote per share owned by such stockholder for each of two nominees
for Class II Director. The two nominees receiving the greatest number of votes
will be elected. In calculating the vote, broker non-votes will be disregarded
and will have no effect on the outcome of the vote. The affirmative vote of a
majority of shares voting at the meeting is required to ratify the selection of
KPMG Peat Marwick. In determining whether KPMG Peat Marwick has received the
requisite number of affirmative votes, abstentions and broker non-votes will be
counted and will have the same effect as a vote against KPMG Peat Marwick. The
Company does not know of any matters to be acted upon at the meeting other than
the two items described in this Proxy Statement. Any stockholder has the power
to revoke a proxy at any time before it is voted.
THE COMPANY
WorldCorp owns a majority position in World Airways, an air transportation
company, and a controlling interest in US Order, an interactive information and
transaction processing company.
2
<PAGE>
SECURITY OWNERSHIP OF CERTAIN PERSONS
Principal Stockholders
- ----------------------
The following are the only persons known to the Company who are
beneficial owners of more than five percent of the Company's Common Stock as
of December 31, 1993 (except as otherwise noted). With respect to the
information set forth below, the Company has relied upon Schedule 13D or
Schedule 13G filings and information received from the persons listed.
<TABLE>
<CAPTION>
Amount and
Nature of
Name of Beneficial Address of Beneficial Percent
Owner Beneficial Owner Ownership/1/ of Class/1/
- --------------------------- ---------------- ---------------- ------------
<S> <C> <C> <C>
Ganz Capital 2875 N.E. 191st Street 1,547,275/2/ 10.0%
Management, Inc. Penthouse I
North Miami Beach, FL 33180
Susan A. Andrews 6720 Wemberly Way 1,250,000/3/ 7.6%
McLean, VA 22101
Morgan Stanley 1251 Avenue of the Americas 1,078,900/4/ 7.1%
Group, Inc. New York, NY 10020
The Prudential Prudential Plaza 933,800/5/ 6.2%
Insurance Company Newark, New Jersey
of America 07102-3777
T. Coleman Andrews, III 13873 Park Center Road 792,005/6/ 5.0%
Suite 490
Herndon, Virginia 22071
- -------------------------
</TABLE>
Footnotes
/1/ Beneficial ownership as reported in the table has been determined in
accordance with Securities and Exchange Commission ("SEC") regulations and
includes shares of the Company's Common Stock which may be acquired within
60 days upon the exercise of outstanding stock options and warrants and the
conversion of the Company's 7% Convertible Subordinated Debentures due May
15, 2004 (the "Debentures"). In accordance with Rule 13d-3 of the
Securities Exchange Act of 1934 (the "Exchange Act"), shares of Common
Stock issuable upon the exercise of such options and warrants and upon
conversion of such Debentures are deemed outstanding for purposes of
computing the percentage of Common Stock of the Company owned by the
beneficial owner thereof listed in the table, but are not deemed
outstanding for purposes of computing the percentage of outstanding Common
Stock of the Company owned by any other stockholder. Except as otherwise
stated below, the named persons have sole voting and investment power with
regard to the shares shown as owned by such person. Calculation of
3
<PAGE>
the Percent of Class is based on 15,104,761 shares of the Company's Common
Stock outstanding as of December 31, 1993.
/2/ Based on Amendment No. 4 to the Schedule 13D of Ganz Capital Management,
Inc. ("GCM"), dated October 15, 1993. GCM is the beneficial owner of (i)
1,159,558 shares of Common Stock, (ii) 2,960 Debentures convertible into
267,628 shares of Common Stock, and (iii) 118,900 warrants, expiring May
24, 1994, exercisable to purchase 120,089 shares of Common Stock. By virtue
of his direction and control over GCM, Charles B. Ganz, President of GCM,
may be deemed to be the beneficial owner of these securities.
/3/ Consists of 1,250,000 shares of Common Stock issuable upon exercise of
warrants expiring May 24, 1994. Mrs. Andrews is the wife of T. Coleman
Andrews, III. Mrs. Andrews disclaims beneficial ownership of (i) 4,139
shares owned directly by her husband, and (ii) 10,933 shares allocated to
her husband through the WorldCorp Employee Savings and Stock Ownership Plan
("ESSOP"). Also excludes 240,000 warrants expiring May 24, 1994, held by a
trust established for the Andrews' children, with respect to which Mr.
Andrews has sole voting and dispositive power. Mrs. Andrews disclaims
beneficial ownership of shares obtainable upon exercise of such warrants
held in trust for the Andrews' children. Please see footnote 6.
/4/ Based on Amendment No. 2 to the Schedule 13D of the Morgan Stanley Group,
Inc. ("MS Group"), dated January 13, 1994. Consists of indirect beneficial
ownership of 1,078,900 shares of Common Stock held by the following
subsidiaries and affiliates of the MS Group: (i) Morgan Stanley
International Asset Management Division ("MSI") (618,500 shares); (ii)
Morgan Stanley Asset Management Limited ("MSAM") (443,700 shares); and
(iii) Morgan Stanley & Co., Incorporated ("MS & Co") (15,000 shares
indirectly; 1,700 shares directly).
/5/ Based on the Schedule 13G of The Prudential Insurance Company of America
("Prudential"), dated January 31, 1994. Prudential holds 58,000 shares of
the Company's Common Stock for the benefit of Prudential's general account.
In addition, Prudential may have direct or indirect voting and/or
investment discretion over 875,800 shares which are held for the benefit of
its clients by its separate accounts, externally managed accounts,
registered investment companies, and/or other affiliates.
/6/ Consists of (i) 776,933 shares of Common Stock issuable upon the exercise
of warrants expiring May 24, 1994, of which amount (a) 536,933 shares are
issuable upon exercise of warrants held directly by Mr. Andrews, and (b)
240,000 shares are issuable upon exercise of warrants held by Mr. Andrews
in trust for his children over which Mr. Andrews retains full voting and
dispositive power; (ii) 10,933 shares of Common Stock allocated to Mr.
Andrews' account under the Company's ESSOP; and (iii) 4,139 shares of
Common Stock owned directly by Mr. Andrews. Excludes 1,250,000 shares
issuable upon exercise of warrants expiring May 24, 1994, held by Susan A.
Andrews, Mr. Andrews' wife. On October 12, 1993, Mr. Andrews sold the
1,250,000 warrants to his wife in a private transaction. Mrs. Andrews
currently has sole power to vote and to dispose of the 1,250,000 shares
that may currently be acquired by Mrs. Andrews through the exercise of such
warrants. Mr. Andrews disclaims beneficial ownership of the warrants held
by his wife. Please see footnote 3.
4
<PAGE>
Security Ownership of Directors and Executive Officers
- ------------------------------------------------------
The following table sets forth information concerning the beneficial
ownership of the Company's Common Stock as of December 31, 1993, for (a) each
director and nominee for director; (b) each executive officer; and (c) directors
and executive officers as a group.
<TABLE>
<CAPTION>
Amount and Nature of Percent of
Name of Beneficial Owner Beneficial Ownership/1/ Class/1/
- ------------------------ ----------------------- -----------
<S> <C> <C>
T. Coleman Andrews, III 792,005/2/ 5.0
W. Jerrold Scoutt, Jr. 543,093/3/ 3.6
James E. Colburn 513,726/4/ 3.4
Juan C. O'Callahan 503,726/5/ 3.3
Charles W. Pollard 266,670/6/ 1.7
A. Scott Andrews 184,631/7/ 1.2
William F. Gorog 101,000/8/ *
Andrew M. Paalborg 93,717/9/ *
John H. DeWitt 34,514/10/ *
Neal B. Freeman 33,000/11/ *
L. William Seidman 25,000/12/ *
Patrick F. Graham 16,666/13/ *
D. Fraser Bullock 5,500/14/ *
Geoffrey S. Rehnert */15/ *
Directors and Executive
Officers as a Group
(fourteen persons) 2,156,794/16/ 14.0
</TABLE>
* Individual is the beneficial owner of less than one percent (1%) of the
Company's outstanding Common Stock.
5
<PAGE>
- -------------------------
Footnotes
/1/ Beneficial ownership as reported in the table has been determined in
accordance with SEC regulations and includes shares of the Company's Common
Stock which may be acquired within 60 days upon the exercise of outstanding
stock options and warrants. In accordance with Rule 13d-3 of the Exchange
Act, shares of Common Stock issuable upon the exercise of such options and
warrants are deemed outstanding for purposes of computing the percentage of
Common Stock of the Company owned by the beneficial owner thereof listed in
the table, but are not deemed outstanding for purposes of computing the
percentage of outstanding Common Stock of the Company owned by any other
stockholder. Except as otherwise stated below, the named persons have sole
voting and dispositive power with regard to the shares shown as owned by
such person. Calculation of the Percent of Class is based on 15,104,761
shares of the Company's Common Stock outstanding as of December 31, 1993.
For a discussion of considerations relevant to calculating the beneficial
ownership of the directors and executive officers as a group, please see
footnote 16.
/2/ Consists of (i) 776,933 shares of Common Stock issuable upon the exercise
of warrants expiring May 24, 1994, of which amount (a) 536,933 shares are
issuable upon exercise of warrants held directly by Mr. Andrews, and (b)
240,000 shares are issuable upon exercise of warrants held by Mr. Andrews
in trust for his children over which Mr. Andrews retains full voting and
dispositive power; (ii) 10,933 shares of Common Stock allocated to Mr.
Andrews' account under the Company's ESSOP; and (iii) 4,139 shares of
Common Stock owned directly by Mr. Andrews. Excludes 1,250,000 shares
issuable upon exercise of warrants expiring May 24, 1994, held by Susan A.
Andrews, Mr. Andrews' wife. On October 12, 1993, Mr. Andrews sold the
1,250,000 warrants to his wife in a private transaction. Mrs. Andrews
currently has sole power to vote and to dispose of the 1,250,000 shares
that may currently be acquired by Mrs. Andrews through the exercise of such
warrants. Mr. Andrews disclaims beneficial ownership of the warrants held
by his wife.
/3/ Consists of (i) 61,867 shares of Common Stock issuable upon the exercise
of stock options granted under the WorldCorp 1988 Stock Option Plan, as
amended and restated (the "1988 Stock Option Plan"), (ii) 478,726 shares of
Common Stock held by the ESSOP, as to which Mr. Scoutt exercises shared
voting and investment power as one of three trustees of the ESSOP, and
(iii) 2,500 shares of Common Stock held directly. Mr. Scoutt disclaims
beneficial ownership of shares held by the ESSOP.
/4/ Consists of (i) 25,000 shares of Common Stock issuable upon the exercise
of stock options granted under the 1988 Stock Option Plan, (ii) 478,726
shares of Common Stock held by the ESSOP, as to which Mr. Colburn exercises
shared voting and investment power as one of the three trustees of the
ESSOP, and (iii) 10,000 shares of Common Stock held directly. Mr. Colburn
disclaims beneficial ownership of shares held by the ESSOP.
/5/ Consists of (i) 25,000 shares of Common Stock issuable upon the exercise
of stock options granted under the 1988 Stock Option Plan, and (ii) 478,726
shares of Common Stock held by the ESSOP, as to which Mr. O'Callahan
exercises shared voting and investment power as one of the three trustees
of the ESSOP. Mr. O'Callahan disclaims beneficial ownership of shares held
by the ESSOP.
6
<PAGE>
/6/ Consists of (i) 135,000 shares of Common Stock issuable upon the exercise
of stock options granted under the 1988 Stock Option Plan, (ii) 119,166
shares of Common Stock issuable upon the exercise of warrants granted to
Mr. Pollard in 1989 expiring August 31, 1997, (iii) 12,504 shares of Common
Stock allocated to Mr. Pollard's account under the ESSOP, and (iv) 1,000
shares of Common Stock owned through an IRA account.
/7/ Consists of (i) 172,884 shares of Common Stock issuable upon the exercise
of stock options granted under the 1988 Stock Option Plan, (ii) 500 shares
of Common Stock issuable upon the exercise of warrants gifted by Mr.
Bullock to Mr. Scott Andrews in 1993, and (iii) 11,247 shares of Common
Stock allocated to Mr. Scott Andrews' account under the ESSOP. Mr. Scott
Andrews is the brother of Mr. T. Coleman Andrews, III. Mr. Scott Andrews
resigned from his position as the Company's Chief Financial Officer,
effective May 1994 to pursue private business interests. Mr. Andrews will
remain as a director of World Airways and will provide significant
transition assistance to the Company throughout 1994.
/8/ Consists of (i) 60,000 shares of Common Stock issuable upon the exercise
of warrants expiring May 24, 1994, purchased by Mr. Gorog in 1991, and (ii)
41,000 shares of Common Stock held directly.
/9/ Consists of (i) 90,800 shares of Common Stock issuable upon the exercise
of stock options granted under the 1988 Stock Option Plan, (ii) 500 shares
of Common Stock issuable upon the exercise of warrants gifted by Mr.
Bullock to Mr. Paalborg in 1993, and (iii) 2,417 shares of Common Stock
allocated to Mr. Paalborg's account under the ESSOP.
/10/ Consists of (i) 26,000 shares of Common Stock issuable upon the exercise
of stock options granted under the 1988 Stock Option Plan, and (ii) 8,514
shares of Common Stock allocated to Mr. DeWitt's account under the ESSOP.
Mr. DeWitt retired from his position as President of World Flight Crew
Services, Inc. ("WFCS") on December 31, 1993. Mr. DeWitt has agreed to
serve as Acting President of WFCS until the appointment of his successor
and to provide certain other transition assistance to World Airways as
requested.
/11/ Consists of (i) 25,000 shares of Common Stock issuable upon the exercise
of stock options granted under the 1988 Stock Option Plan, and (ii) 8,000
shares of Common Stock owned directly.
/12/ Consists of 25,000 shares of Common Stock issuable upon the exercise of
stock options granted under the 1988 Stock Option Plan.
/13/ Consists of 16,666 shares of Common Stock issuable upon the exercise of
stock options granted under the 1988 Stock Option Plan.
/14/ Consists of 5,500 shares of Common Stock issuable upon the exercise of
warrants granted to Mr. Bullock in 1989, expiring August 31, 1997. Excludes
100,583 shares issuable upon exercise of warrants held by Jennifer Bullock,
Mr. Bullock's wife. On October 13, 1993, Mr. Bullock sold the 100,583
warrants to his wife in a private transaction. Mrs. Bullock currently has
sole power to vote and to dispose of the 100,583 shares that may currently
be acquired by Mrs. Bullock through the exercise of the warrants. Mr.
Bullock disclaims beneficial ownership of the warrants held by his wife.
/15/ After his election to the Board of Directors at the Annual Meeting on May
20, 1994, Mr. Rehnert will be granted stock options under the 1988 Stock
Option Plan.
7
<PAGE>
/16/ The 478,726 shares of Common Stock held by the ESSOP are reflected in the
individual holdings of each of the ESSOP's three trustees: Messrs. Scoutt,
Colburn, and O'Callahan. These 478,726 shares of Common Stock held by the
ESSOP are only reflected once, however, in the aggregate beneficial
ownership of the directors and executive officers as a group.
Section 16(a) of the Exchange Act ("Section 16") requires the Company's
directors and officers, and persons who own more than 10% of its Common Stock,
to file with the SEC initial reports of ownership of the Company's equity
securities and to file subsequent reports when there are changes in such
ownership. Due to the complexity of the rules, the Company assists its officers
and directors in preparing and filing the required reports. During 1993 the
Company filed one untimely report regarding one transaction on behalf of Mr.
Andrew M. Paalborg and two untimely reports regarding two transactions on behalf
of Mr. A. Scott Andrews.
BOARD OF DIRECTORS
The Board of Directors of the Company is responsible for establishing broad
corporate policies and for the overall performance of the Company. The Board
held a total of five meetings during the year ended December 31, 1993. To
manage the complex nature of the Company's business effectively, the Board of
Directors has delegated certain authority to committees of the Board.
The Board has authorized its Executive Committee to exercise all of its
power and authority when the full Board is unable to meet, except for certain
fundamental responsibilities, such as the declaration of dividends, that are
reserved for the Board. The members of the Executive Committee are William F.
Gorog (Chairman) and T. Coleman Andrews, III. The Executive Committee met two
times in 1993.
The Audit Committee recommends to the Board of Directors the auditing firm
to be selected each year as independent auditors of the Company's financial
statements and to perform services related to the completion of such audit. The
Audit Committee also has responsibility for (i) reviewing the scope and results
of the audit with the independent auditors, (ii) reviewing the Company's
financial condition and results of operations with management and the
independent auditors, (iii) considering the adequacy of the internal accounting
and control procedures of the Company, and (iv) reviewing any non-audit services
and special engagements to be performed by the independent auditors. The Audit
Committee also reviews, at least once each year, the terms of all material
transactions and arrangements between the Company and its affiliates. The
members of the Audit Committee, none of whom is an employee of the Company, are
James E. Colburn (Chairman), W. Jerrold Scoutt, Jr., and Juan C. O'Callahan.
The Audit Committee met four times in 1993.
The Board has also assigned certain responsibilities relating to employee
compensation to the Compensation Committee. The principal duties of the
Compensation Committee are to review key employee compensation policies, plans,
and programs; to monitor performance and compensation of officers of the
Company and other key employees; to prepare recommendations and periodic reports
to the Board concerning such matters; and to administer the Company's management
incentive compensation plans, including its stock option plan. The members of
the Compensation Committee, none of whom is an employee of the Company, are
James E. Colburn (Chairman) and Patrick F. Graham. The Compensation Committee
met four times in 1993.
Each director of the Company who is not an executive of the Company has
been granted options to purchase up to 25,000 shares of Common Stock of the
Company upon his election to the Board under the terms of the 1988 Stock Option
Plan. These options vest in equal monthly installments over a two year period
commencing
8
<PAGE>
on the date of a director's election to the Board. Under the plan, the exercise
price for options granted to each independent director is set at the average
closing price on the New York Stock Exchange for the Company's Common Stock, par
value of $1.00 per share, for the thirty day period preceding the grant date of
the option. Additionally, each director who is not an executive of the Company
receives an annual fee of $25,000 for serving as a director of the Company.
Directors are compensated at a daily rate of $750 for participating in committee
meetings in excess of four meetings per year.
9
<PAGE>
ITEM NO. 1 - ELECTION OF DIRECTORS
Class II Directors will be elected to serve until the 1996 Annual Meeting
and until their successors are duly elected and qualified. Unless directed to
do otherwise, the proxy holders intend to vote all of their shares for the
nominees set forth below. Although it is not contemplated that any nominee will
decline or be unable to serve, if either occurs prior to the Annual Meeting, the
Board will select a substitute nominee.
Mr. Geoffrey S. Rehnert is a nominee for the first time. Mr. L. William
Seidman and Mr. Neal B. Freeman resigned from the Board in 1993 and 1994,
respectively. Mr. W. Jerrold Scoutt, Jr., who retired as Chairman of the Board
of the Company in May 1993, will retire as a director of the Company at the end
of his term in May 1994.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE WITH AUTHORITY FOR THE PROXY HOLDERS TO
VOTE FOR THE NOMINEES NAMED BELOW OR THEIR SUBSTITUTES AS SET FORTH HEREIN.
NOMINEES FOR ELECTION AS CLASS II DIRECTORS
Terms of Office Expiring at the 1996 Annual Meeting
<TABLE>
<CAPTION>
Name and Age Past Five Years' Principal Occupation(s) and Other Directorships
- ------------ ----------------------------------------------------------------
<S> <C>
James E. Colburn, 70 Mr. Colburn served as a director of World Airways from 1985
to 1987 and has served as a director of WorldCorp since 1987.
Mr. Colburn served as President of Aviation Consulting, Inc. from
October 1982 to July 1986 and is currently retained by Aviation
Consulting, Inc. as a consultant. From 1979 to 1982 he was Vice
President--Operations and Maintenance of Wien Air Alaska.
Geoffrey S. Rehnert, 36 Mr. Rehnert is a Managing Director of Bain Capital,
Inc., a private equity investment firm based in Boston,
Massachusetts. Bain Capital manages over $500 million of equity
capital, which it invests in management buyouts and growth
capital financings. Mr. Rehnert joined Bain Capital at its
inception in 1984 and became a partner in 1986. He is a director
of the Holson Burnes Group, Inc., a NASDAQ traded company, and is
on the Board of Directors of several privately held companies.
Prior to joining Bain Capital, Mr. Rehnert worked as a consultant
with Bain & Company for companies in the telecommu-nications,
manufacturing, consumer products, and health care industries.
</TABLE>
10
<PAGE>
INCUMBENT MEMBERS OF THE BOARD OF DIRECTORS
Class I Directors - Terms of Office Expiring at the 1995 Annual Meeting
<TABLE>
<S> <C>
T. Coleman Andrews, III, 39 Mr. Andrews was elected Chief Executive Officer and
a director of World Airways in August 1986 and Chief Executive
Officer, President, and a director of WorldCorp in June 1987.
From 1978 through 1986, he was affiliated with Bain & Company, an
international management consulting firm. He was elected partner
at Bain in 1982 and in 1984 was a founding general partner of
Bain Capital Fund, a private venture capital partnership. Prior
to his experience with Bain & Company, Mr. Andrews served in
several appointed positions in the Ford Administration.
William F. Gorog, 68 Mr. Gorog has served as Chief Executive Officer of US Order
since May 1, 1990. He was elected a director of WorldCorp in
April 1989 and was elected Chairman of the WorldCorp Board of
Directors in May 1993. From October 1987 until founding US
Order, he served as Chairman of the Board of Arbor International,
an investment management firm. From 1982 to 1987, he served as
President and Chief Executive Officer of Magazine Publishers of
America, a trade association representing the principal consumer
publications in the United States. During the Ford
Administration, Mr. Gorog served as Deputy Assistant to the
President for Economic Affairs and Executive Director of the
White House Council on International Economic Policy. Prior to
that time, he founded and served as Chief Executive Officer of
Data Corporation, which developed the LEXIS and NEXIS information
systems for legal and media research. He currently serves as a
director of NationsBank (Maryland), a bank holding company.
Juan C. O'Callahan, 60 Mr. O'Callahan was elected a director of WorldCorp in May
1991. Since December 1989, Mr. O'Callahan has been President of
JOCR Research. During the 1980s Mr. O'Callahan served as
Executive Vice President of GPA Group plc, the Irish aircraft
leasing company. From 1969 through 1981, Mr. O'Calla-han was
Chairman and President of TAI Inc., an international aviation
consulting firm. In the 1960s Mr. O'Callahan served with The
Boeing Company as sales engineer and airline analyst;
subsequently, he served as Vice President--Economic Planning with
Pacific Air Lines and Director of Marketing at World Airways.
Patrick F. Graham, 54 Mr. Graham was elected a director of WorldCorp in October
1992. Mr. Graham is a director of Bain & Company, Inc., a
management consulting firm based in Boston, Massachusetts. Mr.
Graham co-founded the firm in 1973. In addition to his primary
responsibilities with Bain clients, he has served as Bain's Vice
Chairman and Chief Financial Officer. Prior to the start of Bain
& Company, Mr. Graham was Group Vice President with the Boston
Consulting Group. His previous experience also includes
positions with IBM, Ford Motor Company, and as a captain in the
U.S. Army.
</TABLE>
11
<PAGE>
EXECUTIVE COMPENSATION
COMPENSATION REPORT
The Compensation Committee of the Company is presently composed of two
independent, non-employee directors. The Committee administers the Company's
executive incentive plans, reviews its compensation plans, programs, and
policies, monitors the performance and compensation of executive officers and
other key employees, and makes appropriate recommendations and reports to the
Board concerning matters of executive compensation.
Compensation Philosophy
- -----------------------
The Compenstion Committee maintains compensation programs designed to
attract, motivate, develop, and retain highly capable executive leaders. The
fundamental philosophy of the Company's executive compensation program is to
relate the executive's total compensation closely to superior individual and
corporate performance, and through this performance to shareholder value. To
accomplish these goals, the Compensation Committee provides that each executive
officer will receive a base salary that increases minimally over time, and the
Compensation Committee relies on bonuses and stock options to motivate
individuals to perform at their highest levels. The Compensation Committee uses
bonuses to encourage management to set and achieve goals that will lead to the
growth and development of the services and products that the Company provides.
The Compensation Committee relies on stock options to encourage officers to
consider the interests of shareholders and perform in a manner that enhances
shareholder value both immediately and in the long-term.
The Compensation Committee's executive compensation program consists of
three main components: (1) base salary; (2) potential for an annual bonus based
on overall Company performance as well as individual performance; and (3)
incentive stock options which are structured to encourage the achievement of
superior results over time and to link executive officer and shareholder
interests. In addition, the Company occasionally awards bonuses for
extraordinary individual performance. The decision to award bonuses for
extraordinary individual performance is made by the Company's Chief Executive
Officer who then advises the Compensation Committee of his decisions.
The Compensation Committee determines the compensation for the executive
officers of WorldCorp and of its wholly owned subsidiaries. Thus, in 1993, the
Compensation Committee set the compensation for the executive officers of both
the Company and World Airways. Because World Airways is no longer a wholly
owned subsidiary of the Company, the Compensation Committee may defer, in the
future, decisions concerning the compensation of World Airways officers to the
Board of Directors of World Airways.
Components of Compensation
- --------------------------
(1) Base Salary
Base salaries for new management employees are determined initially by
evaluating the responsibilities of the position held and the experience of the
individual, and by reference to the competitive marketplace for management
talent.
12
<PAGE>
Subsequent salary adjustments, if any, are determined by evaluating the
competitive marketplace, the performance of the Company, the performance of the
executive, and any change in the responsibilities of the executive. Consistent
with the Company's philosophy to link total compensation closely to the
Company's financial performance, base salaries of the Company's executives
remain relatively flat over time.
The full Board of Directors is responsible for setting the base salary of
the Company's Chief Executive Officer taking into account the recommendations of
the Compensation Committee. The Compensation Committee is responsible for
setting the base salaries of the other named executive officers, based
upon the recommendations of the Chief Executive Officer.
(2) Bonus Compensation
The Company has two bonus programs that reward the accomplishment of an
officer's goals and objectives. The Company has a management bonus program for
officers and managers under which all awards must be based on individual
performance plans and appraisals that are written, put in place at the beginning
of the year, and used throughout the year. Personal performance plans and
appraisals may include the achievement of assigned projects, active
participation as part of the senior management team, and the ability to manage
and motivate reporting employees within the framework of the Company's written
Statement of Purpose and Operating Principles. In this bonus program, all bonus
awards are based upon a quantitative matrix of individual and corporate
performance. The Compensation Committee determines corporate performance after
the completion of the Company's audit each year by taking into account several
factors, including the financial results of the Company as reported in its
audited financial statements and the level of achievement by the Company of its
strategic and operating goals. If corporate performance is excellent and an
officer of the Company receives the top performance rating for that fiscal year,
such officer may receive a bonus award of up to 50% of his base salary (up to
20% for managers). If corporate performance is moderate, an officer of the
Company receiving the top performance rating may be awarded a bonus of up to 25%
of his base salary (up to 10% for managers). No officer or manager of the
Company receives a bonus under this program if corporate performance is poor or
if he or she receives either of the two lowest individual performance ratings,
regardless of the financial performance of the Company. Bonuses were awarded
for corporate performance in 1987, 1988, 1989, and 1991. No bonuses were
awarded under the program due to corporate performance in 1990 and 1992, and the
Compensation Committee has determined that no bonuses will be awarded under the
program for 1993 based on the Company's financial performance. If the Company
awards bonuses to executives under its management bonus program in any given
year, such bonuses are paid during the second quarter of the following fiscal
year after the completion of the Company's annual audit. This procedure is
designed to ensure that no bonuses are awarded to executives before the
Compensation Committee has the opportunity to review the Company's audited
financial statements for the prior fiscal year.
To assure that officers and managers will continue to strive to maintain a
high level of performance and enhance shareholder value even when no awards are
made under the management bonus program due to overall corporate performance,
the Compensation Committee gives the Chief Executive Officer the discretion to
grant bonuses for extraordinary performance to a limited number of individuals
who complete significant and complex assignments that enhance shareholder value.
In 1993, bonuses for extraordinary individual performance were made in the
aggregate amount of $225,000 to two officers of the Company and to two officers
of World Airways.
13
<PAGE>
(3) Incentive Stock Options
The Compensation Committee determines appropriate incentive stock option
awards for new employees by evaluating the responsibilities of the position held
and the experience of the individual, and by reference to the competitive
marketplace for management talent. The Compensation Committee bases decisions
concerning subsequent incentive stock option awards on recommendations made by
the Chief Executive Officer. The Compensation Committee determines whether to
accept or modify Mr. Andrews' proposals by evaluating the competitive
marketplace, the performance of the Company, the performance of the executive,
and any change in the responsibilities of the individuals. Individuals who
receive a promotion or who have maintained a high level of performance over a
long period often receive stock option awards. To promote long-term interests
between the Company's officers and managers and the Company's stockholders, each
incentive option agreement provides for options which vest in equal monthly
installments over a three to five-year period. The full Board of Directors
approves all stock option awards.
In 1993, stock option grants totalling 250,000 options were granted to two
officers of the Company and one officer of World Airways. The Board members at
the time of such approval consisted of Messrs. T. Coleman Andrews, III, Colburn,
Freeman, Gorog, O'Callahan, Scoutt, and Graham. The exercise price for these
options, in conformity with the established practice of the Board, was set at
the average closing price on the New York Stock Exchange for the Company's
Common Stock, par value $1.00 per share, for the thirty (30) days prior to and
including the grant date of the option. One officer received a grant in 1993
because the officer's individual job performance resulted in a promotion to a
position of expanded responsibilities. The remaining two officers received
option grants in 1993 based upon (i) the sustained contributions to shareholder
value made by the two officers over a period of several years, and (ii) the
desire of the Board to retain the services of these two individuals for the
Company.
Compensation of the Chief Executive Officer
- -------------------------------------------
Mr. T. Coleman Andrews, III, the Chief Executive Officer, received a base
salary of $335,058 in 1993 pursuant to the terms of his employment agreement
with the Company. Because the Company experienced the effects of a prolonged
global airline recession, Mr. Andrews elected to reduce his salary by 10% for
the period of October 23, 1992, to June 1, 1993. Mr. Andrews did not receive
any bonuses based on his performance or any stock options in 1993.
The Company and Mr. Andrews in 1989 entered into a Supplemental Incentive
Compensation Agreement (the "Incentive Agreement") in lieu of the Company
granting additional equity to Mr. Andrews. Under the Incentive Agreement, the
Company agreed to pay Mr. Andrews the amount of $1,300,000, plus interest, on
the expiration of his employment agreement if certain conditions were met,
including Mr. Andrews being an employee at that time. In December 1993, the
Company and Mr. Andrews agreed to modify the Incentive Agreement by terminating
it and entering into a new agreement. In connection with the new agreement, the
Company paid Mr. Andrews in December 1993 (approximately seven months early)
$200,830 due him under the Incentive Agreement. The new agreement delays
payment to Mr. Andrews of the balance due under the Incentive Agreement and
provides that the Company will make four annual installment payments, including
interest, between 1995 and 1998.
For further descriptions of the employment agreement, the Incentive
Agreement, and related matters, please see "Contracts and Termination of
Employment and Change in Control Arrangements" below.
14
<PAGE>
Recent Tax Legislation
- ----------------------
The Compensation Committee has reviewed the potential effect of Internal
Revenue Code Section 162(m), enacted in 1993. Section 162(m) precludes a public
corporation from taking a tax deduction in 1994 or subsequent years to the
extent that compensation of the chief executive officer or any of the four other
executive officers identified in the Summary Compensation Table exceeds $1
million. Certain performance-based compensation, with shareholder approval and
subject to other requirements set forth in Section 162(m), and certain
compensation paid pursuant to binding agreements in effect on February 17, 1993,
however, are specifically exempt from the deduction limit.
The Compensation Committee expects that, although none of the salary that
the Company pays to its named executive officers (other than the CEO) as part of
annual compensation in 1994 would be eligible for an exemption from the general
rule in Section 162(m), none of the salaries of these individuals will exceed $1
million. The Compensation Committee expects that any compensation derived from
the exercise of stock options granted under the 1988 Stock Option Plan should be
exempt from the limit on the corporate tax deduction. The Compensation
Committee believes that section 162(m) will have minimal effect on the Company
and therefore has no plan to adopt a broad compensation plan that will come
within the exemptions in section 162(m). Depending on the outcome of present
contract negotiations with the Chief Executive Officer, it is possible that part
of the compensation paid to the Chief Executive Officer in 1994 may not qualify
for exemption.
The Compensation Committee/1/
--------------------------
James E. Colburn (Chairman)
Patrick F. Graham
_________________________
Footnotes
/1/ Messrs. Scoutt and Freeman, who were members of the Compensation Committee
during the past year, did not participate in the preparation of this
Compensation Report.
15
<PAGE>
Compensation Committee Interlocks and Insider Participation
- -----------------------------------------------------------
Mr. W. Jerrold Scoutt, Jr., a member of the Compensation Committee until
his resignation from the Committee in January 1994, served as Acting President
of World Airways for approximately six months in 1984 following the death of
then-President Edward J. Daly. Mr. Scoutt is also a non-equity partner of the
law firm of Zuckert, Scoutt & Rasenberger, Washington, D.C., which rendered
legal services to the Company during 1993. The Company and its affiliates paid
$419,189 to Zuckert, Scoutt & Rasenberger in 1993.
16
<PAGE>
STOCK PERFORMANCE GRAPH*
The following graph and chart compare the five year performance of the
Company's common stock to the Russell 2000 Index, the Dow Jones Airlines Index,
and the Dow Jones Air Freight/Couriers Index. Both the graph and the chart
assume that the value of the investment in the Company's common stock and each
index was $100 at December 31, 1988, and that all dividends were reinvested.
[GRAPH APPEARS HERE]
<TABLE>
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG WORLDCORP INC., RUSSELL 2000 INDEX, DOW JONES AIR FREIGHT/COURIERS INDEX
AND DOW JONES AIRLINES INDEX
<CAPTION>
Dow Jones
Russell Air Freight/ Dow Jones
Measurement period WorldCorp 2000 Couriers Airlines
(Fiscal year Covered) Inc. Index Index Index
- --------------------- -------- -------- ---------- -------
<S> <C> <C> <C> <C>
Measurement PT -
12/31/88 $ 100 $ 100 $ 100 $ 100
FYE 12/31/89 $ 226 $ 116 $ 100 $ 133
FYE 12/31/90 $ 74 $ 94 $ 78 $ 96
FYE 12/31/91 $ 183 $ 137 $ 100 $ 127
FYE 12/31/92 $ 113 $ 162 $ 124 $ 125
FYE 12/31/93 $ 96 $ 192 $ 163 $ 151
</TABLE>
__________________________________
* The Dow Jones Airlines Index and Dow Jones Air Freight/Couriers Index
(collectively, the "Dow Jones Indices") have been used as industry peer group
indices because such peer group data is unavailable from the primary competitors
of the Company with respect to its air transportation services business (these
competitors, consisting of other chartered airline services, being foreign-owned
or privately-held). Although the Company has used the Dow Jones Indices as peer
group indices, differences between the companies which comprise these indices
and the Company reduce the comparability of stock price performance and other
performance indicators. The Dow Jones Airlines Index consists of the major,
scheduled, domestic airline carriers whereas World Airways is a smaller, non-
scheduled airline carrier. The Dow Jones Air Freight/Couriers Index consists of
large freight/courier companies such as Federal Express which have freight and
courier operations significantly larger than World Airways' cargo operations.
In addition, comparability is affected by the non-air transport-related
components of the Company's business. If, and to the extent that, air
transportation services become a smaller component of the Company's total
operations in future years, different industry peer group indices may be used by
the Company at that time.
17
<PAGE>
PERFORMANCE GRAPH INDEX
Dec. 1988 to Dec. 1993
18
<PAGE>
SUMMARY COMPENSATION TABLE/1/
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
-------------------------------------------
Awards
---------------
Securities
Underlying
Options/ All Other
Name and Principal Year Salary/2/ Bonus SARs/3/ Compensation/4/
Position ($) ($) (#) ($)
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
T. Coleman Andrews, III 1993 335,058/5/ --- --- 215,281/6/
President/CEO 1992 357,280/5/ --- --- 4,403
WorldCorp 1991 350,012 70,000 --- ---
William F. Gorog 1993 187,646 --- --- ---
President/CEO 1992 110,365 --- --- ---
US Order 1991 --- --- --- ---
Charles W. Pollard 1993 172,316/5/ --- --- 14,960
President 1992 165,891/5/ --- 100,000 8,958
World Airways 1991 140,000 35,000 --- ---
A. Scott Andrews 1993 160,000 50,000 50,000 13,279
CFO 1992 146,308 --- 150,000 6,804
WorldCorp 1991 105,000 31,250 40,519 ---
Andrew M. Paalborg 1993 160,485 25,000 100,000 10,480
VP & General Counsel 1992 146,308 --- 150,000 3,997
WorldCorp 1991 102,116 31,250 83,766 ---
- --------------------
</TABLE>
Footnotes
/1/ Does not include twenty-four cockpit crewmembers each of whose compensation
exceeded $100,000 in 1993.
/2/ Includes compensation deferred under the Company's ESSOP.
/3/ Includes options granted in 1993, 1992, and 1991 under the 1988 Stock
Option Plan and warrants granted pursuant to various warrant agreements
between the Company and its named executive officers. No warrants were
granted in 1993, 1992, or 1991. The Company did not grant any SARs in
1993, 1992, or 1991.
/4/ Amount represents value of Company contributions to the Company's ESSOP.
Company contributions are made in WorldCorp Common Stock and are valued
using closing prices for the year in which the contributions were made.
Pursuant to the SEC transition provisions, this information is not included
for 1991.
/5/ Due to the prolonged global airline recession and its adverse effects on
the Company's recent financial performance, Messrs. T. Coleman Andrews,
III, and Pollard elected to reduce their salaries by 10% for the period
beginning October 23, 1992, and ending June 1, 1993.
19
<PAGE>
/6/ Consists of (i) $14,451 of Company contributions to the Company's ESSOP,
and (ii) $200,830 paid in connection with the modification of Mr. Andrews'
Supplemental Incentive Compensation Agreement. Please see, "Contracts and
Termination of Employment and Change in Control Arrangements" below.
20
<PAGE>
OPTION GRANTS IN 1993
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------------------------
NUMBER OF % OF
SECURITIES TOTAL
UNDERLYING OPTIONS GRANT DATE
OPTIONS GRANTED TO EXERCISE PRESENT
GRANTED EMPLOYEES IN PRICE/1/ EXPIRATION VALUE/2/
NAME (#) 1993 ($/SH) DATE ($)
- -------------------------- ------------------- ------------------ ---------------- --------------- -----------------
<S> <C> <C> <C> <C> <C>
T. Coleman Andrews, III --- --- --- --- ---
William F. Gorog --- --- --- --- ---
Charles W. Pollard --- --- --- --- ---
A. Scott Andrews 50,000/3/ 20.00% $4.72 November 9, 2001 200,500
Andrew M. Paalborg 100,000/3/ 40.00% $4.72 November 9, 2001 401,000
</TABLE>
/1/ Pursuant to the relevant stock option agreements, the exercise price for
each of the grants reflected in this table was set at the average closing
price on the New York Stock Exchange of the Common Stock for the thirty
days prior to and including the grant date.
/2/ The Black-Scholes option valuation model was chosen to estimate the grant
date present value of the options set forth in this table. The Company's
use of this model should not be construed as an endorsement of its accuracy
at valuing options. All stock option valuation models, including the Black-
Scholes model, require a prediction about the future movement of the stock
price. The real value of the options in this table depends upon the actual
performance of the Company's stock during the applicable period. For
calculation under the Black-Scholes model, the volatility was assumed to be
50%, and the risk-free rate of return was assumed to be the Treasury Bill
rate of 5.3%. The exercise price of $4.72 for the 8 year term of the option
was used.
/3/ These options vest in 36 equal monthly installments beginning December 1,
1993. For information on change in control provisions associated with these
option grants, all of which were granted pursuant to the 1988 Stock Option
Plan (as amended and restated), please see "Contracts and Termination of
Employment and Change in Control Arrangements."
21
<PAGE>
AGGREGATED OPTION EXERCISES IN 1993
AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
FY-END (#) FY-END ($)
(EXERCISABLE/ (EXERCISABLE/
NAME UNEXERCISABLE) UNEXERCISABLE)
------------------------ --------------------- -------------
<S> <C> <C>
T. Coleman Andrews, III 776,933/0/1/ 485,583/0
William F. Gorog 60,000/0/2/ 37,500/0
Charles W. Pollard 246,500/83,500/3/ 14,354/1,896
A. Scott Andrews 161,389/165,611/4/ 1,320/43,993
Andrew M. Paalborg 79,778/199,722/5/ 2,577/87,986
</TABLE>
- --------------------------------------------------------------------------------
/1/ Consists of 776,933 warrants issued to Mr. Andrews in 1986. Mr. Andrews
disclaims beneficial ownership of 1,250,000 warrants held by his wife. See
Footnote 2 to "Security Ownership of Directors and Executive Officers."
/2/ Consists of 60,000 warrants expiring May 24, 1994.
/3/ Consists of (i) 130,000 warrants issued to Mr. Pollard in 1989, and (ii)
options to purchase 200,000 shares of Common Stock granted to Mr. Pollard
between 1988 and 1992. At year end, options to purchase 131,667 shares of
Common Stock and warrants with respect to 114,833 shares of Common Stock
were exercisable.
/4/ Consists of (i) 500 warrants transferred to Mr. Andrews in 1993, and (ii)
options to purchase 326,500 shares of Common Stock granted to Mr. Andrews
between 1988 and 1993. At year end, options to purchase 160,889 shares of
Common Stock and warrants with respect to 500 shares of Common Stock were
exercisable.
/5/ Consists of (i) 500 warrants transferred to Mr. Paalborg in 1993, and (ii)
options to purchase 279,000 shares of Common Stock granted to Mr. Paalborg
between 1990 and 1993. At year end, options to purchase 79,278 shares of
Common Stock and warrants with respect to 500 shares of Common Stock were
exercisable.
22
<PAGE>
CONTRACTS AND TERMINATION OF EMPLOYMENT AND
CHANGE IN CONTROL ARRANGEMENTS
The Company and Mr. T. Coleman Andrews, III, entered into an employment
agreement effective November 10, 1988, to extend Mr. Andrews' term as Chief
Executive Officer and President of WorldCorp through August 1, 1994. The
contract is automatically extended annually at the end of the term of the
agreement unless either party provides 12 months advance, written notice of its
intent to terminate the agreement. The Company and Mr. Andrews did not provide
written notice by August 1, 1993, of their intent to terminate the agreement,
and, therefore, Mr. Andrews' employment agreement has been automatically
extended through August 1995. Mr. Andrews and the Compensation Committee are
currently engaged in negotiations concerning a new employment agreement.
The current agreement provides for Mr. Andrews to receive a minimum annual
salary of $350,000 beginning August 1989. Mr. Andrews may terminate his
employment in the event (i) the Company relocates its headquarters outside of
the Washington, D.C. area, (ii) his duties are diminished in a manner materially
altering his responsibilities, or (iii) the Board determines that the Company
should be liquidated or dissolved during the term of the employment agreement.
In the event Mr. Andrews exercises this termination right, the Company is
obligated to pay him the undiscounted remainder of his base salary during the
term and all granted but unvested equity compensation, if any. In the event the
Company terminates Mr. Andrews' employment with the Company other than for Cause
(as defined in the agreement), the Company is obligated to pay Mr. Andrews the
undiscounted remainder of his base salary, the value of any granted but unvested
stock appreciation rights, if any, held by Mr. Andrews at the time of such a
termination, and any federal or state taxes imposed upon this termination
payment. The agreement requires the Company to maintain a $5 million key man
life insurance policy and to use the proceeds, in the event of Mr. Andrews'
death, to purchase warrants and/or Common Stock then owned by him (or his
estate).
The Company and Mr. Andrews in 1989 entered into a Supplemental Incentive
Compensation Agreement (the "Incentive Agreement") in lieu of the Company
granting additional equity to Mr. Andrews. Under the Incentive Agreement, the
Company agreed to pay Mr. Andrews the amount of $1,300,000, plus interest, on
the expiration of his employment agreement if certain conditions were met,
including Mr. Andrews being an employee at that time. In December 1993, the
Company and Mr. Andrews agreed to modify the Incentive Agreement by terminating
it and entering into a new agreement. In connection with the new agreement, the
Company paid Mr. Andrews in December 1993 (approximately seven months early)
$200,830 due him under the Incentive Agreement. The new agreement delays
payment to Mr. Andrews of the balance due under the Incentive Agreement and
provides that the Company will make four annual installment payments, including
interest, between 1995 and 1998.
In 1989, the Company loaned Mr. Andrews $1,300,000 under a full recourse
promissory note that bore interest at the same rate as the interest rate set
forth in the Incentive Agreement. The Company and Mr. Andrews agreed, in
December 1993, to cancel the earlier note and to substitute a new, full
recourse promissory note due in installments between January 1994 and February
1998; the new note bears interest at the same rate as the interest rate set
forth in the new incentive agreement. Mr. Andrews reduced the principal
balance of his obligation to the Company by $80,000 in January 1994.
The Board of Directors determined on November 20, 1989, after receiving the
report of an independent compensation consultant, that the Company should take
steps to ensure the retention of certain executives in the event of
circumstances presenting the possibility of a change of control. The Board
authorized the Company to enter into severance agreements with Messrs. Paalborg
and A. Scott Andrews (the "Severance Agreements"). Each Severance Agreement
provides that in the event of termination of the executive officer's employment
by the Company without Cause (as defined) or by the executive officer for Good
Reason (as defined) within two years after a Change of Control (as defined) the
Company will pay the executive officer a severance benefit
23
<PAGE>
equal to one-half the executive's annual base salary and continuation of health,
life, accident, and disability insurance at the Company's expense for 12 months
after termination.
The Company has issued stock options to each of Messrs. Paalborg, Pollard,
and A. Scott Andrews. Certain of the options issued to executive officers under
the Company's 1988 Stock Option Plan prior to May 13, 1992, provided that upon a
Change of Control (as defined) the executive officer's option shall become
immediately exercisable as of the date of the Change of Control for up to double
the number of shares of Common Stock for which the option is otherwise
exercisable as of the date of the Change of Control (not to exceed the total
number of Option Shares, as defined). Other options issued to executive officers
under the 1988 Stock Option Plan prior to May 13, 1992, provided that in the
event of termination of the executive officer's employment by the Company
without Cause (as defined) or by the executive officer for Good Reason (as
defined) within two years after a Change of Control (as defined) the executive
officer's stock options shall become fully vested and exercisable. In 1992, the
Company amended and restated its 1988 Stock Option Plan. The Company's
stockholders approved the amended and restated 1988 Stock Option Plan on May 13,
1992. Options issued to executive officers under the 1988 Stock Option Plan as
amended and restated provide that in the event of termination of the executive
officer's employment by the Company without Cause (as defined) or by the
executive officer for Good Reason (as defined) within two years after a Change
of Control (as defined) the executive officer's stock options shall become fully
vested and exercisable.
Mr. Charles W. Pollard has entered into a Warrant Agreement with the
Company dated as of July 22, 1989 (the "1989 Warrant Agreement"). Under this
agreement, Mr. Pollard received 130,000 warrants which vest over a 60 month
period. The stockholders of the Company approved the issuance of the warrants
under the 1989 Warrant Agreement on June 4, 1990. The 1989 Warrant Agreement
provides that in the event of a Change of Control of the Company (as defined) or
in the event Mr. Pollard is involuntarily terminated as an employee of the
Company without Cause (as defined) all warrants granted under the 1989 Warrant
Agreement shall become immediately vested and exercisable.
CERTAIN TRANSACTIONS
Mr. William F. Gorog is Chief Executive Officer and Chairman of the Board
of US Order, and Mr. Gorog, together with certain members of his immediate
family, owns 42% of US Order. On September 10, 1990, the Board of Directors of
the Company unanimously authorized the Company to enter into and consummate a
Stock Purchase Agreement dated as of September 14, 1990 (the "Stock Purchase
Agreement"), under which the Company agreed to purchase 1,250,000 shares of
Series A Preferred Stock issued by US Order ("Series A Preferred Stock"). The
Company entered into a related Stock Restriction Agreement dated as of September
14, 1990 (the "Stock Restriction Agreement"). The Board of Directors of the
Company authorized the purchase of US Order as part of the Company's continuing
efforts to diversify its interests. The Stock Purchase Agreement also gave the
Company the option to purchase an additional 3,954,082 shares of Series A
Preferred Stock. On July 1, 1992, the Company purchased an incremental 6% of the
Series A Preferred Stock for $1.0 million which increased the Company's
ownership in US Order to 51%. As of December 31, 1993, the Company had purchased
for an aggregate amount of $5,325,000 a total of 5,204,082 shares of Series A
Preferred Stock, which are convertible into Common Stock. Under the terms of the
Stock Restriction Agreement, the Company has the option to purchase all of the
outstanding shares of common stock of US Order except for 2,500,000 shares
reserved for issuance to employees of US Order pursuant to the future exercise
of stock options. The number of shares subject to this option may be reduced by
2% in certain circumstances. This option expires on December 15, 1994 (and may
expire prior to such date under certain circumstances).
In December 1993, US Order completed a private equity placement for $12.0
million with financial and strategic partners. The Company invested $1.7
million in this equity offering in return for Series C Preferred Stock.
Following this transaction, the Company owned 46% of the voting stock of US
Order. WorldCorp has
24
<PAGE>
an option through December 15, 1994, to purchase additional shares of the voting
stock of US Order for consideration equal to $5.0 million, which would, if
exercised, increase its ownership of the voting stock to 79%. The Company and
the financial and strategic partners of US Order own stock that carries
liquidation preferences pursuant to which WorldCorp is currently entitled to 59%
of any distribution of the assets and funds of US Order made pursuant to a
liquidation.
During 1992, the Company loaned $1,750,000 to US Order for working capital
purposes. Effective December 31, 1992, the Company converted these borrowings
to 1,750 shares of nonvoting Series B Preferred Stock, $1,000 liquidation
preference per share, redeemable at the end of five years for cash with a 7.5%
per annum dividend payable in cash quarterly ("Series B Preferred Stock"). In
1992 and early 1993 the Company advanced US Order an additional $2,800,000. The
Company converted these borrowings to an additional 2,800 shares of Series B
Preferred Stock. As of March 31, 1993, the Company had advanced an additional
$2,551,000 to US Order. On April 1, 1993, the Company converted this borrowing
into 2,551 shares of Series B Preferred Stock. During 1993, the Company also
purchased an additional 449 shares of Series B Preferred Stock for $449,000. In
June 1993, the Company advanced $3,500,000 to US Order in the form of a note due
in December 1995 with a variable interest rate (15.5 percent at December 31,
1993). On February 28, 1994, the interest rate on the note was reduced to a
fixed annual rate of 14 percent. In summary, WorldCorp's interest in US Order
consists of $5.3 million invested in return for Series A Preferred Stock, $7.5
million invested in return for Series B Preferred Stock, $1.7 million invested
in return for Series C Preferred Stock, and $3.5 million invested in the form of
a 14 percent note due in December 1995.
The Company provides certain business services to US Order, including the
sublease of office space to US Order. The Company bills US Order for the costs
of these services. In 1993, US Order paid approximately $500,139 to the
Company and owed $124,699 to the Company for these services as of December 31,
1993.
Mr. T. Coleman Andrews, III, has served as Chief Executive Officer of the
Company since June of 1987. In 1989, the Company loaned Mr. Andrews $1,300,000
under a full recourse, interest-bearing promissory note (see "Contracts and
Termination of Employment and Change in Control Arrangements"). The Company
and Mr. Andrews agreed, in December 1993, to cancel the earlier note and to
substitute a new, full recourse promissory note due February 1998 for the
principal amount of $1,763,320; the new note bears interest at 3.83% for the
first two years and 5.07% for the last two years. Mr. Andrews reduced the
principal balance of his obligation to the Company by $80,000 in January 1994.
For information on certain transactions with respect to certain members of
the Compensation Committee, please see "Compensation Committee Interlocks and
Insider Participation."
25
<PAGE>
ITEM NO. 2 -- RATIFICATION OF SELECTION OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The firm of KPMG Peat Marwick served as independent certified public
accountants for the Company in 1993 and is expected to be represented at the
Annual Meeting. A representative of KPMG Peat Marwick will have an opportunity
to make a statement if the representative so desires and will be available to
respond to appropriate questions.
As of this date, the Board of Directors desires to have KPMG Peat Marwick
continue as accountants for the Company for the year ending December 31, 1994.
Accordingly, the Company is presenting a resolution to the meeting to ratify the
appointment by the Board of Directors. If the stockholders do not approve the
proposal, the Board of Directors will reconsider its action with respect to the
appointment of accountants. Approval of the resolution, however, will in no way
limit the Board's authority to terminate or otherwise change the engagement of
KPMG Peat Marwick during the year ending December 31, 1994.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 1995 Annual Meeting
of Stockholders must be received by the Company's Secretary no later than
December 1, 1994, to be included in the Company's 1995 proxy materials.
Proposals intended for inclusion in next year's proxy statement should be
sent to the Secretary of the Company at WorldCorp, Inc., The Hallmark Building,
13873 Park Center Road, Herndon, Virginia 22071.
OTHER MATTERS TO COME BEFORE THE MEETING
In addition to the matters described above, there will be an address by the
Chief Executive Officer and a general discussion period during which
stockholders will have an opportunity to ask questions about the business.
The Company does not intend to bring any other matter before the meeting
and does not know of any other matter which is proposed to be brought before the
meeting. However, should any other matter properly come before the meeting, the
persons named in the enclosed proxy will have discretionary authority to vote
all proxies in accordance with their judgment on such matter.
ANNUAL REPORT
A copy of the Annual Report is being mailed to each stockholder entitled to
vote at the Annual Meeting of Stockholders. A copy of the Company's Form 10-K
is available at no charge to all stockholders. For a copy write to: Andrew M.
Paalborg, Vice President and General Counsel, WorldCorp, Inc., The Hallmark
Building, 13873 Park Center Road, Herndon, Virginia 22071.
26
<PAGE>
OTHER INFORMATION
This solicitation of proxies is made by the Board of Directors, and the
Company will bear the costs of solicitation. In addition to solicitation by
mail, proxies may also be solicited by directors, officers, and employees of the
Company, who will not receive additional compensation for such solicitation.
Brokerage firms and other custodians, nominees and fiduciaries will be
reimbursed by the Company for their reasonable expenses incurred in sending
proxy material to beneficial owners of the Common Stock. The address of
WorldCorp's principal executive offices is The Hallmark Building, 13873 Park
Center Road, Herndon, Virginia 22071, and its telephone number is (703) 834-
9200. The above notice and proxy statement are sent by order of the Board of
Directors.
Dated: April 18, 1994
By Order of the Board of Directors,
Andrew M. Paalborg
Vice President & General Counsel
27
<PAGE>
WORLDCORP, INC.
THIS PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS ON MAY 20, 1994
P IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
R The undersigned hereby appoints T. COLEMAN ANDREWS, III, WILLIAM F.
GOROG and ANDREW M. PAALBORG, and each of them, the proxy or proxies of the
O undersigned, with full power of substitution, to vote all shares of Common
Stock, par value $1 per share, of WorldCorp, Inc. (the "Company") which the
X undersigned is entitled to vote at the Annual Meeting of Stockholders of the
Company to be held at the Renaissance Hotel in Herndon, Virginia on May 20,
Y 1994, at 9:30 A.M., and at any adjournments or postponements thereof, with
the same force and effect as the undersigned might or could do if personally
present thereat.
Unless a contrary instruction is indicated, this proxy will be voted
for the election of directors as described in the accompanying Proxy
Statement and in favor of the proposal to ratify the selection of the
independent public accountants for 1994. This proxy will also be voted at
the discretion of the proxy holders on such matters other than the two
specific items as may come before the meeting.
A majority of such proxies or their substitutes as shall be present
and acting at the meeting, or if only one be present and acting then that
one, shall have and may exercise all of the powers of all of said proxies
hereunder.
PLEASE MARK, DATE AND SIGN ON THE REVERSE SIDE SEE REVERSE
AND RETURN PROMPTLY SIDE
<PAGE>
[X] Please mark
votes as in
this example.
The shares represented by this proxy will be voted as directed by the
stockholder. If no direction is given when the duly executed proxy is
returned, such shares will be voted "WITH" authority in Item 1 and "FOR"
Item 2.
1. AUTHORITY TO VOTE FOR THE FOLLOWING NOMINEES AS DESCRIBED IN THE
ACCOMPANYING PROXY STATEMENT:
Nominees: James E. Colburn, Geoffrey S. Rehnert
WITH WITHOUT
[_] [_]
- ----------------------------------------
(INSTRUCTION: To withhold authority to vote for one individual nominee, write
such name in the space provided above)
2. PROPOSAL TO RATIFY THE SELECTION OF KPMG PEAT MARWICK as independent
public accountants for the Company for the fiscal year ending December 31,
1994.
FOR AGAINST ABSTAIN
[_] [_] [_]
MARK HERE
FOR ADDRESS [_]
CHANGE AND
NOTE AT LEFT
Please sign exactly as name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation please
sign in full corporate name by President or other authorized person. If a
partnership, please sign in full partnership name by authorized person.
PLEASE MARK, DATE, SIGN AND RETURN Signature: Date
THE PROXY CARD PROMPTLY USING THE ------------------- ----------
ENCLOSED ENVELOPE. Signature: Date
------------------- ----------
