<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
AMENDMENT NO. 1
TO
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
- --------------------------------------------------------------------------------
For the Quarter ended: June 30, 1994 Commission File Number 1-5351
WORLDCORP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 94-3040585
(State of incorporation) (I.R.S. Employer Identification Number)
13873 Park Center Road, Suite 490, Herndon, VA 22071
(Address of Principal Executive Offices)
(703) 834-9200
(Registrant's telephone number)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
---------- ----------
The number of shares of the registrant's Common Stock outstanding on August 9,
1994 was 15,248,349.
================================================================================
<PAGE>
WORLDCORP, INC.
JUNE 1994, QUARTERLY REPORT ON FORM 10Q
TABLE OF CONTENTS
Page
----
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets, June 30,
1994 and December 31, 1993..................................... 3
Condensed Consolidated Statements of Operations,
Three Months Ended June 30, 1994 and 1993...................... 5
Condensed Consolidated Statements of Operations
Six Months Ended June 30, 1994 and 1993........................ 7
Condensed Consolidated Statement of Changes in Common
Stockholders' Deficit, Six Months Ended June 30, 1994.......... 9
Condensed Consolidated Statements of Cash Flows,
Six Months Ended June 30, 1994 and 1993........................ 10
Notes to Condensed Consolidated Financial Statements........... 11
Exhibit 11, Calculations of Earnings Per Common Share.......... 12
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations...................................... 14
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K............................... 21
2
<PAGE>
WORLDCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
(in thousands)
<TABLE>
<CAPTION>
(Unaudited)
June 30, December 31,
1994 1993
----------- ------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents, including restricted
cash of $2,203 in 1994 and $3,171 in 1993 $ 12,615 $ 16,916
Restricted short-term investments 546 668
Trade accounts receivable, less allowance for
doubtful accounts of $320 in 1994 and $311 in 1993 8,910 8,476
Other receivables 3,124 5,109
Prepaid expenses and other current assets 3,655 3,476
Assets held for sale 6,793 6,000
------- -------
Total current assets 35,643 40,645
------- -------
ASSETS HELD FOR SALE 6,739 8,660
EQUIPMENT AND PROPERTY
Flight and other equipment 38,646 35,547
Equipment under capital leases 13,043 13,675
------- -------
51,689 49,222
Less accumulated depreciation and amortization 17,418 16,171
------- -------
Net equipment and property 34,271 33,051
------- -------
LONG-TERM OPERATING DEPOSITS 13,099 10,028
OTHER ASSETS AND DEFERRED CHARGES 6,316 4,735
------- -------
TOTAL ASSETS $ 96,068 $ 97,119
======= =======
</TABLE>
(Continued)
3
<PAGE>
WORLDCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(continued)
LIABILITIES AND COMMON STOCKHOLDERS' DEFICIT
(in thousands except share data)
<TABLE>
<CAPTION>
(Unaudited)
June 30, December 31,
1994 1993
----------- ------------
<S> <C> <C>
CURRENT LIABILITIES
Note payable to bank $ 349 $ 7,069
Current maturities of long-term obligations 13,924 10,448
Deferred aircraft rent 2,320 6,295
Accounts payable 10,145 11,064
Unearned revenue 3,730 4,456
Accrued maintenance in excess of reserves paid 10,905 14,732
Accrued salaries and wages 8,515 7,252
Accrued interest 2,165 2,224
Accrued taxes 1,282 955
--------- ---------
Total current liabilities 53,335 64,495
--------- ---------
LONG-TERM OBLIGATIONS, NET
Subordinated convertible debt 65,000 65,000
Subordinated notes, net 24,934 24,926
Deferred aircraft rent 1,781 1,850
Equipment financing and other long-term
obligations 19,372 26,825
--------- ---------
Total long-term obligations, net 111,087 118,601
--------- ---------
OTHER LIABILITIES
Deferred gain from sale leaseback transactions,
net of accumulated amortization of $31,813 in 1994
and $30,395 in 1993 8,904 10,322
Accrued postretirement benefits 2,336 2,250
Accrued maintenance in excess of reserves paid 3,056 2,080
Other 428 444
--------- ---------
Total other liabilities 14,724 15,096
--------- ---------
TOTAL LIABILITIES 179,146 198,192
--------- ---------
MINORITY INTEREST 1,098 --
COMMON STOCKHOLDERS' DEFICIT
Common stock, $1 par value, (60,000,000 shares
authorized, 15,314,976 shares issued and 15,252,391
shares outstanding at June 30, 1994 and 15,224,076
shares issued and 15,161,491 shares outstanding at
December 31, 1993) 15,315 15,224
Additional paid-in capital 34,522 34,071
Retained deficit (131,939) (148,114)
ESOP guaranteed bank loan (1,734) (1,914)
Treasury stock, at cost (340) (340)
--------- ---------
TOTAL COMMON STOCKHOLDERS' DEFICIT (84,176) (101,073)
--------- ---------
COMMITMENTS AND CONTINGENCIES
TOTAL LIABILITIES AND COMMON
STOCKHOLDERS' DEFICIT $ 96,068 $ 97,119
========= =========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements
4
<PAGE>
WORLDCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended June 30,
(in thousands except share data)
(unaudited)
<TABLE>
<CAPTION>
1994 1993
-------- --------
<S> <C> <C>
OPERATING REVENUES
Contract flight operations $77,628 $85,031
Flight operations subcontracted to other carriers 277 1,017
Other 253 271
Transaction processing - US Order 364 257
------- -------
Total operating revenues 78,522 86,576
------- -------
OPERATING EXPENSES
Flight 20,149 20,090
Maintenance 10,072 10,441
Aircraft costs 16,660 15,080
Fuel 16,809 18,289
Flight operations subcontracted to other carriers 229 1,092
Depreciation and amortization 1,335 2,217
Selling and administrative 6,758 5,232
Transaction processing - US Order 2,245 2,337
Loss on sale of Key Airlines -- 414
------- -------
Total operating expenses 74,257 75,192
------- -------
OPERATING INCOME 4,265 11,384
------- -------
OTHER INCOME (EXPENSE)
Interest expense (3,046) (2,666)
Interest income 306 121
Other, net (40) (133)
------- -------
Total other expense (2,780) (2,678)
------- -------
EARNINGS BEFORE INCOME TAXES
AND MINORITY INTEREST 1,485 8,706
INCOME TAX BENEFIT (EXPENSE) 191 (36)
MINORITY INTEREST (1,098) 1,143
------- -------
NET EARNINGS $ 578 $ 9,813
======= =======
</TABLE>
5
<PAGE>
WORLDCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Continued)
For the Three Months Ended June 30,
(Unaudited)
<TABLE>
<CAPTION>
1994 1993
---------- ----------
<S> <C> <C>
NET EARNINGS PER COMMON AND
COMMON EQUIVALENT SHARE
Primary $ 0.04 $ 0.61
====== ======
Fully diluted $ * $ 0.50
====== ======
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING
Primary 15,252,391 17,179,560
========== ==========
Fully diluted * 23,056,594
========== ==========
</TABLE>
* Fully diluted earnings per share are anti-dilutive.
See accompanying Notes to Condensed Consolidated Financial Statements
6
<PAGE>
WORLDCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Six Months Ended June 30,
(in thousands except share data)
(unaudited)
<TABLE>
<CAPTION>
1994 1993
--------- ---------
<S> <C> <C>
OPERATING REVENUES
Contract flight operations $109,189 $112,352
Flight operations subcontracted to other carriers 277 1,158
Other 413 695
Transaction processing - US Order 681 408
-------- --------
Total operating revenues 110,560 114,613
-------- --------
OPERATING EXPENSES
Flight 33,188 31,092
Maintenance 11,036 16,824
Aircraft costs 28,406 24,025
Fuel 22,146 23,767
Flight operations subcontracted to other carriers 257 1,187
Depreciation and amortization 2,669 4,369
Selling and administrative 12,378 9,270
Transaction processing - US Order 4,624 4,826
Loss on sale of Key Airlines -- 837
-------- --------
Total operating expenses 114,704 116,197
-------- --------
OPERATING LOSS (4,144) (1,584)
-------- --------
OTHER INCOME (EXPENSE)
Interest expense (6,255) (5,123)
Interest income 477 346
Gain on sale of World Airways 26,921 --
Other, net (47) (346)
-------- --------
Total other income (expense) 21,096 (5,123)
-------- --------
EARNINGS (LOSS) BEFORE INCOME TAXES
AND MINORITY INTEREST 16,952 (6,707)
INCOME TAX EXPENSE (148) (36)
MINORITY INTEREST (629) 2,368
-------- --------
NET EARNINGS (LOSS) $ 16,175 $ (4,375)
======== ========
</TABLE>
7
<PAGE>
WORLDCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Continued)
For the Six Months Ended June 30,
(Unaudited)
<TABLE>
<CAPTION>
1994 1993
----------- -----------
<S> <C> <C>
NET EARNINGS (LOSS) PER COMMON AND
COMMON EQUIVALENT SHARE
Primary $ 1.06 $ (0.31)
===== ======
Fully diluted $ 0.87 $ *
===== ======
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING
Primary 15,226,256 14,337,641
========== ==========
Fully diluted 21,107,816 *
========== ==========
</TABLE>
* Fully diluted earnings per share are anti-dilutive.
See accompanying Notes to Condensed Consolidated Financial Statements
8
<PAGE>
WORLDCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES
IN COMMON STOCKHOLDERS' DEFICIT
For the Six Months Ended June 30, 1994
(in thousands except share data)
(Unaudited)
<TABLE>
<CAPTION>
Employee
Stock Owner- Total
Additional ship Plan Treasury Common
Common Paid-in Retained Guaranteed Stock Stockholders'
Stock Capital Deficit Bank Loan at cost Deficit
------- ---------- ---------- ------------ -------- -------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT
DECEMBER 31, 1993 $15,224 $34,071 $(148,114) $(1,914) $(340) $(101,073)
Exercise of 90,000 options
and warrants 91 359 -- -- -- 450
Employee Stock Ownership Plan
guaranteed bank loan -- -- -- 180 -- 180
Other -- 92 -- -- -- 92
Net earnings -- -- 16,175 -- -- 16,175
------- ------- --------- ------- ----- ---------
BALANCE AT
JUNE 30, 1994 $15,315 $34,522 $(131,939) $(1,734) $(340) $ (84,176)
======= ======= ========= ======= ===== =========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements
9
<PAGE>
WORLDCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30,
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
1994 1993
---------- ----------
<S> <C> <C>
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD $ 16,916 $ 13,759
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings (loss) 16,175 (4,375)
Adjustments to reconcile net earnings (loss) to cash
(used) provided by operating activities:
Depreciation and amortization 2,669 4,674
Deferred gain recognition (1,418) (2,283)
Loss on sale of equipment and property 50 65
Loss on sale of investments 102 --
Minority interest income (loss) of subsidiary 629 (2,368)
Gain on sale of World Airways (26,921) --
Other 689 242
Changes in certain assets and liabilities net of
effects of non-cash transactions:
Decrease in accounts receivable 63 5,244
Increase in deposits, prepaid expenses and other
assets (5,321) (2,705)
Increase in accounts payable, accrued
expenses and other liabilities 1,330 2,905
-------- --------
Net cash (used) provided by operating activities (11,953) 1,399
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to equipment and property (3,704) (21,648)
Disposals of equipment and property 1,290 2,061
Proceeds from sales of investments 6,151 3,225
Purchase of investments (6,133) (1,038)
-------- --------
Net cash used by investing activities (2,396) (17,400)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuances under bank line of credit and debt 46,154 19,195
Repayments under bank line of credit and debt (61,207) (12,465)
Proceeds from stock transactions 450 1,304
Proceeds from sale of World Airways 24,651 --
Other -- (72)
-------- --------
Net cash provided by financing activities 10,048 7,962
-------- --------
NET DECREASE IN CASH AND CASH EQUIVALENTS (4,301) (8,039)
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 12,615 $ 5,720
======== ========
</TABLE>
NOTE: Cash payments of approximately $6.0 million and $4.7 million were made
for interest in 1994 and 1993, respectively, and cash payments of
approximately $0.1 million were made for income taxes in 1994 and 1993.
Assets acquired through capital lease transactions were approximately
$0.2 million and $10.0 million in 1994 and 1993, respectively.
See accompanying Notes to Condensed Consolidated Financial Statements
10
<PAGE>
WORLDCORP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. The condensed consolidated balance sheet of WorldCorp, Inc. ("WorldCorp"
or the "Company") as of June 30, 1994, the related condensed consolidated
statements of operations for the three and six month periods ended June 30, 1994
and 1993, the condensed consolidated statement of changes in common
stockholders' deficit for the six months ended June 30, 1994, and the condensed
consolidated statements of cash flows for the six months ended June 30, 1994 and
1993 are unaudited. In the opinion of management, all adjustments necessary for
a fair presentation of such financial statements have been included. Such
adjustments consisted only of normal recurring items. All significant
intercompany balances have been eliminated. Interim results are not necessarily
indicative of results for a full year. Certain 1993 amounts have been
reclassified to conform with the 1994 presentation.
The financial statements and notes are presented as required by Form 10-Q,
and do not contain certain information included in the Company's annual
financial statements and notes. These financial statements should be read in
conjunction with the financial statements and the notes included in the
Company's annual report filed on Form 10-K for the year ended December 31, 1993.
2. On February 28, 1994, WorldCorp, World Airways, Inc. ("World Airways"), and
MHS Berhad ("MHS") completed the 24.9% sale of World Airways' common stock for
$27.4 million in cash. WorldCorp recognized a gain of approximately $26.9
million from this transaction in the first quarter of 1994. The Company expects
to use a portion of its capital loss and net operating loss carryforwards to
offset this gain.
3. On March 31, 1994, the lease of three DC10-30 convertible aircraft expired.
World Airways will continue to sublease these aircraft from their new lessor
beginning April 1, 1994 with lease terminations at various dates between July
10, 1994 and September 3, 1994. In connection with this lease termination, the
Company reversed $4.5 million in accrued maintenance reserves during the first
quarter of 1994.
4. On August 1, 1994, US Order, Inc. ("US Order") sold its electronic banking
and bill payment operations to VISA International Services Association, Inc.
("VISA") for $15.0 million. US Order is eligible to receive certain payments
from VISA as additional purchase price consideration beginning January 1, 1995
and continuing through December 31, 2000. These potential additional payments
will be based on the number of VISA customers using the US Order technology for
bill payment, and will be calculated monthly and paid quarterly.
5. World Airways' cockpit and flight attendant crewmembers are covered by
collective bargaining agreements which expired in July 1992. World Airways and
the International Brotherhood of Teamsters ("Teamsters") could not agree under
formal mediation on a new cockpit contract and are currently in a 30-day
"cooling off" period which expires midnight August 18, 1994. If a new contract
is not reached by this date, World Airways has the right to impose a new
contract and the Teamsters have the right to conduct a work stoppage. World
Airways and the Teamsters are continuing negotiations and the management of
World Airways believes an agreement can be reached. No assurances, however, can
be given regarding the outcome of these negotiations or the specific impact any
outcome may have on the financial conditions, prospects or operations of World
Airways.
11
<PAGE>
EXHIBIT 11
1 of 2
WORLDCORP, INC. AND CONSOLIDATED SUBSIDIARIES
CALCULATIONS OF EARNINGS PER COMMON SHARE
For the Three Months Ended June 30,
(in thousands except share data)
(Unaudited)
<TABLE>
<CAPTION>
1994 1993
----------- ----------------------------
Fully
Primary Diluted
------- -------
<S> <C> <C> <C>
Earnings from continuing operations $ 578 $ 9,813 $ 9,813
Plus: assumed interest expense reduction
from conversion of convertible debt -- -- 1,137
Plus: assumed interest expense reduction
due to retirement of subordinated
notes with excess proceeds from
exercise of options and warrants -- 620 557
---------- ---------- ----------
Net earnings applicable to
common stock $ 578 $ 10,433 $ 11,507
========== ========== ==========
Weighted average common shares
outstanding 15,252,391 14,459,831 14,459,831
Weighted average options and warrants
treated as common stock equivalents -- 2,719,729 2,719,729
Weighted average other dilutive securities -- -- 5,877,034
---------- ---------- ----------
Primary and fully diluted number
of shares 15,252,391 17,179,560 23,056,594
========== ========== ==========
Net earnings per share of common
stock $ 0.04 $ 0.61 $ 0.50
========== ========== ==========
</TABLE>
12
<PAGE>
EXHIBIT 11
2 of 2
WORLDCORP, INC. AND CONSOLIDATED SUBSIDIARIES
CALCULATIONS OF EARNINGS (LOSS) PER COMMON SHARE
For the Six Months Ended June 30,
(in thousands except share data)
(Unaudited)
<TABLE>
<CAPTION>
1994 1993
------------------------ ----------
Fully
Primary Diluted
------- -------
<S> <C> <C> <C>
Earnings (loss) from continuing operations $ 16,175 $ 16,175 $ (4,375)
Plus: Assumed interest expense reduction
from conversion of Convertible Debt -- 2,275 --
---------- ---------- ----------
Net earnings (loss) applicable
to common stock $ 16,175 $ 18,450 $ (4,375)
========== ========== ==========
Weighted average common shares
outstanding 15,226,256 21,107,816 14,337,641
Primary and fully diluted number of shares 15,226,256 21,107,816 14,337,641
========== ========== ==========
Net earnings (loss) per share
of common stock $ 1.06 $ 0.87 $ (0.31)
========== ========== ==========
</TABLE>
13
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
- --------------------------------------------------------------------------
OPERATIONS
- ----------
Management's Discussion and Analysis of Financial Condition and Results of
Operations presented below relates to the operations of WorldCorp, Inc.
("WorldCorp" or "the Company") as reflected in its condensed consolidated
financial statements. These statements primarily include the accounts of the
contract flight operations of World Airways, Inc. ("World Airways"). On
February 28, 1994, the Company sold 24.9% of its ownership in World Airways to
MHS Berhad, a Malaysian aviation company. WorldCorp also has an ownership
interest in US Order, Inc. ("US Order"), a company which has developed systems
that facilitate banking, bill payment, enhanced telephone services, and shopping
from the home. In December 1993, US Order completed a $12.0 million private
equity placement. On August 1, 1994, US Order sold its electronic banking and
bill payment operations to VISA International Services Association, Inc.
("VISA"). As a result of these transactions, WorldCorp currently owns 47% of the
voting stock of US Order. WorldCorp has an option through December 15, 1994 to
purchase additional shares of the capital stock of US Order for consideration
equal to $5.0 million which, if exercised, would increase its voting ownership
percentage to 91% (see "Business Trends"). US Order's results of operations are
consolidated in the accompanying financial statements.
General
WorldCorp owns majority positions in companies that operate in two distinct
business areas: air transportation (through World Airways) and transaction
processing (through US Order and its affiliated companies). MHS Berhad of
Malaysia is an equity investor in World Airways. Knight Ridder is an equity
investor in US Order.
Air Transportation
- ------------------
World Airways is a contract air carrier that generally charges customers based
on a block hour basis rather than a per seat or per pound basis. A "block hour"
is defined as the elapsed time computed from the moment the aircraft moves at
its point of origin to the time it comes to rest at its destination.
Fluctuations in flight revenues are not necessarily indicative of true growth
because of shifts in the mix between full service contracts and basic contracts.
Under the terms of full service contracts, World Airways is responsible for all
costs associated with operating these contracts and receives a higher rate per
hour. Under the terms of basic contracts, World Airways provides only certain
services associated with the contract including aircraft, crews, insurance, and
maintenance. World Airways typically charges a lower rate per hour for basic
contracts since the customer is responsible for other operating costs. For this
reason, it is important to measure pure growth through block hours flown rather
than actual revenues earned. Typically, U.S. military contracts are full
service contracts where the rate paid is set annually and consists of all flying
costs, including fuel and ground handling of the aircraft and cargo. World
Airways, as a matter of policy, includes fuel cost adjustment mechanisms in full
service contracts, thus minimizing the risk of fuel price volatility to World
Airways.
Customers
- ---------
World Airways' business relies heavily on its U.S. Air Mobility Command
("AMC"), Malaysian Airline System Berhad ("MAS"), and P.T. Garuda Indonesia
("Garuda") contracts, which provided 24%, 17%, and 21%, respectively, of
consolidated revenues, and 19%, 16%, and 16%, respectively, of total
block hours in 1993. During the first six months of 1994, AMC, MAS, and Garuda
contracts provided 17%, 16%, and 45%, respectively, of consolidated revenues,
and 13%, 14%, and 38%, respectively, of total block hours. The loss of any of
these contracts or a substantial reduction in business from any of these
contracts, if not replaced, would have a material adverse effect on the
Company's revenues and financial condition.
AMC has awarded contracts to World Airways since 1956. World Airways' current
annual contract with AMC expires in September 1994, however, World Airways' 1995
contract with AMC was recently awarded. The minimum contract amount for 1995 of
$36.7 million is an 80% increase over 1994, and will be augmented by further
expansion business. Expansion business totaled 161% of the minimum contract
amount for 1993 and 108% for the first six months of 1994. World Airways cannot
determine how any future cuts in military spending may affect future operations
with AMC.
World Airways has provided service to MAS since 1981, transporting passengers
for the annual Hadj pilgrimage as well as providing aircraft for integration
into MAS' scheduled passenger and cargo operations. The current MAS
14
<PAGE>
contract, which was entered into in 1992, expires in 1996. In 1993, World
Airways provided four aircraft for Hadj operations. Due to limitations imposed
by the Saudi government on the number of pilgrims allowed in 1994, MAS' aircraft
requirements from World Airways was reduced to two aircraft in 1994. MHS
Berhad, which recently acquired 24.9% of World Airways, is in the process of
acquiring 32% of MAS.
World Airways has provided service to Garuda since 1988 under an annual
contract. World Airways provided six aircraft for the 1994 Garuda Hadj
operations. In addition, World Airways has provided aircraft for Garuda's cargo
operations in previous years.
Transaction Services
- --------------------
US Order is a leading provider of interactive transaction services to the home
and the only company with a smart-screen based telephone that is fully
operational with a broad menu of available services. The company completed a
transaction with VISA International Services Association, Inc. ("VISA") on
August 1, 1994 in which the company sold its banking and bill payment operations
to VISA for $15.0 million in cash plus certain future payments. US Order is
eligible to receive certain payments from VISA as additional purchase price
consideration beginning January 1, 1995 and ending December 31, 2000. These
potential additional payments are derived from the number of VISA customers
worldwide using the US Order technology for bill payment. As a result of the
purchase of US Order's banking operations by VISA, US Order has agreed to
certain restrictions on its operations with respect to the banking and financial
services industry. Similarly, VISA has agreed to certain restrictions on its
activities as they might relate to the ongoing businesses of US Order.
Additionally, VISA has agreed to market US Order as a "preferred provider" of
certain products and services. These products and services include
customization services, smart telephones, non-financial applications, customer
service, and facilities management. US Order expects to derive revenue from
these services as a wholesaler to VISA member banks, telephone companies, cable
television companies, and others.
Results of Operations
Three Months Ended June 30, 1994 Compared to the Three Months Ended June 30,
- ----------------------------------------------------------------------------
1993
- ----
Operating Revenue
- -----------------
In the second quarter of 1994, operating revenues decreased $8.1 million (9%)
to $78.5 million primarily due to guaranteed minimum payments related to the
1994 Hadj of $0.2 million which were significantly below guaranteed minimum
payments of $8.3 million in 1993. Block hours increased 8% to 9,452 in 1994
from 8,770 in 1993. This increase was partially offset by a six percent decrease
in revenue per block hour to $8,185 in 1994 from $8,745 in 1993 (excluding
revenue from guaranteed block hours). Block hours under full service contracts
were 83% of total block hours in 1994 and 99% in 1993.
Aircraft capacity, the number of days that the Company's aircraft are
available for service (including days in maintenance), increased to 10.9
available aircraft per day in the second quarter of 1994 from 10.3 in 1993.
This increase was augmented by a three percent increase in daily aircraft
utilization to 9.6 hours in 1994 from 9.3 hours in 1993. Aircraft utilization is
measured by the total block hours that the Company's aircraft were in use
divided by the number of days that the aircraft were available for service
(including days in maintenance).
Operating Expenses
- ------------------
Flight costs increased $0.1 million due to an increase in block hours flown
offset by a shift from full service to more basic contracts.
Maintenance costs decreased by $0.4 million (4%) due to a decrease in engine
repairs associated with the DC10 aircraft. Maintenance cost per block hour was
$1,066 in the second quarter of 1994 compared with $1,191 in 1993.
Aircraft costs increased by $1.6 million (10%) in 1994. This increase was
primarily due to a $3.1 million increase in rent cost associated with the
delivery of five MD-11 aircraft during March and April 1993 and April 1994. In
addition, the company incurred $1.6 million of rent costs associated with the
lease of two short-term aircraft in 1994. Partially offsetting these increases
was a reduction of $3.6 million in rent costs associated with the return of the
three DC10 aircraft in 1993.
15
<PAGE>
Fuel costs decreased by $1.5 million (8%) primarily due to a decrease in full
service contracts and a decrease in fuel price per gallon.
Flight operations subcontracted to other carriers decreased $0.9 million (79%)
primarily due to the subservice of AMC flights during 1993's Hadj program which
was not repeated in 1994.
Depreciation and amortization decreased $0.9 million (40%) primarily as a
result of the elimination of costs for leasehold improvements to two DC10-30
aircraft integrated into World Airways' fleet in April 1992. These aircraft were
initially leased under twelve-year operating leases and were returned to their
lessor in July 1993, accelerating the amortization of the related leasehold
improvements. This decrease was partially offset by the depreciation of spare
parts purchased for the MD-11 aircraft integrated into the fleet in 1993.
Selling and administrative costs increased $1.5 million (29%) primarily as a
result of increased legal and professional fees and marketing efforts.
Transaction Services - US Order
- -------------------------------
In December 1993, US Order completed a $12.0 million private equity placement.
On August 1, 1994, US Order sold its electronic banking and bill payment
operations to VISA. As a result of these transactions, WorldCorp owns 47% of
the voting stock of US Order. WorldCorp has an option through December 15,
1994, which it will likely exercise, to purchase additional shares of the voting
stock of US Order for consideration equal to $5.0 million, which would increase
its ownership of the voting stock to 91%. The accompanying statements of
operations include 59% of the results of operations of US Order for the second
quarter of 1994. This 59% is based on liquidation preferences. In the second
quarter of 1994, the Company recorded $2.2 million of losses relating to US
Order, compared to $1.4 million of losses (net of $1.1 million of minority
interest) in 1993.
Non-Operating Items
- -------------------
Interest income increased $0.2 million as a result of higher investment
balances in 1994. Interest expense increased $0.4 million (14%) in 1994 as a
result of MD-11 rotables financing, aircraft rent deferrals, and use of a bank
line of credit.
Six Months Ended June 30, 1994 Compared to the Six Months Ended June 30, 1993
- -----------------------------------------------------------------------------
Operating Revenue
- -----------------
In the first six months of 1994, operating revenues decreased $4.0 million
(4%) to $110.6 million primarily due to guaranteed minimum payments related to
the 1994 Hadj of $0.2 million which were significantly below guaranteed minimum
payments of $8.3 million in 1993. Block hours increased 11% to 13,660 in 1994
from 12,335 in 1993. This increase was partially offset by a five percent
decrease in revenue per block hour to $7,993 in 1994 from $8,432 in 1993
(excluding revenue from guaranteed block hours). Block hours under full service
contracts were 80% of total block hours in 1994 and 95% in 1993.
Aircraft capacity, the number of days that the Company's aircraft are
available for service (including days in maintenance), increased to 9.5
available aircraft per day in the first six months of 1994 from 8.8 in 1993.
This increase was augmented by a three percent increase in daily aircraft
utilization to 7.9 hours in 1994 from 7.7 hours in 1993. Aircraft utilization is
measured by the total block hours that the Company's aircraft were in use
divided by the number of days that the aircraft were available for service
(including days in maintenance).
Operating Expenses
- ------------------
Flight costs increased $2.1 million (7%) primarily due to costs associated
with increased passenger flying to South America.
Maintenance costs decreased by $5.8 million (34%). In the first quarter of
1994, the lease of three DC10-30 aircraft expired and excess accrued maintenance
reserves of $4.5 million associated with these aircraft were reversed. Excluding
the effect of this reversal, maintenance cost per block hour was $1,134 in the
first six months of 1994 compared with
16
<PAGE>
$1,364 in 1993. The reduced maintenance costs are due, in part, to guarantees
and warranties received from the engine and aircraft manufacturers of the MD-11
aircraft. Because the MD-11 is a relatively new aircraft, cost experience on
the maintenance of the aircraft is unavailable. Therefore, the Company is, in
part, relying on manufacturers' guidelines to estimate future maintenance costs
on the MD-11 aircraft. In addition, the reduced maintenance costs are due, in
part, to a decrease in costs associated with the DC10 aircraft.
Aircraft costs increased by $4.4 million (18%) in 1994. This increase was
primarily due to a $9.7 million increase in rent cost associated with the
delivery of five MD-11 aircraft during March and April 1993 and April 1994. In
addition, the company incurred $1.6 million of rent costs associated with the
lease of two short-term aircraft in 1994. Partially offsetting these increases
was $8.1 million in rent costs associated with the three DC10 aircraft which
were returned in 1993.
Fuel costs decreased by $1.6 million (7%) primarily due to a decrease in full
service contracts and a decrease in fuel price per gallon.
Flight operations subcontracted to other carriers decreased $0.9 million (79%)
primarily due to the subservice of AMC flights during 1993's Hadj program.
Depreciation and amortization decreased $1.7 million (39%) primarily as a
result of the elimination of costs for leasehold improvements to two DC10-30
aircraft integrated into World Airways' fleet in April 1992. These aircraft were
initially leased under twelve-year operating leases and were returned to their
lessor in July 1993, accelerating the amortization of the related leasehold
improvements. This decrease was partially offset by the depreciation of spare
parts purchased for MD-11 aircraft integrated into the fleet in 1993.
Selling and administrative costs increased $3.1 million (34%) primarily as a
result of increased legal and professional fees and marketing efforts.
Transaction Services - US Order
- -------------------------------
In the first six months of 1994, the Company recorded $4.6 million of losses
relating to US Order, compared to $3.4 million of losses (net of $2.3 million of
minority interest) in 1993.
Non-Operating Items
- -------------------
Interest income increased $0.1 million as a result of higher investment
balances. Interest expense increased $1.1 million (22%) in 1994 as a result of
MD-11 rotables financing, aircraft rent deferrals, and use of a bank line of
credit. In addition, WorldCorp recognized a gain of $26.9 million from the sale
of 24.9% of World Airways common stock in 1994.
Liquidity and Capital Resources
The Company's air transportation subsidiary operates in a very challenging
business environment. The combination of a generally weak economy, reduced
military spending, and the depressed state of the airline industry and the
economy has adversely affected the Company's operating performance. The Company
is highly leveraged primarily due to losses sustained by World Airways'
discontinued scheduled operations between 1979 and 1986, and losses the Company
incurred in 1990, 1992, and 1993. The Company has historically financed its
working capital and capital expenditure requirements out of cash flow from
operating activities, secured borrowings, and other financings from banks and
other lenders.
Cash Flows from Operating Activities
- ------------------------------------
During the first six months of 1994, operating activities used $12.0 million
compared to providing $1.4 million in the prior year. This decrease in cash is
primarily due to operating losses incurred in 1994 and the change in the payment
terms for the 1994 Hadj.
Cash Flows from Investing Activities
- ------------------------------------
Cash flows from investing activities used $2.4 million in 1994 as compared to
$17.4 million in 1993. In 1994, the
17
<PAGE>
Company purchased spare parts for one MD-11 aircraft integrated into the fleet
in April 1994. In 1993, the Company purchased spare parts for four MD-11
aircraft integrated into the fleet in March and April 1993. These purchases
were offset by the sale of equipment and investments.
Cash Flows from Financing Activities
- ------------------------------------
In the first six months of 1994, financing activities provided $10.0 million
as compared to $8.0 million in the prior year. This increase resulted primarily
from the sale of 24.9% of World Airways to MHS offset by repayments of debt and
a bank line of credit.
Capital Plans
- -------------
World Airways plans to exit higher cost DC10 aircraft and ultimately
standardize its fleet around the MD-11 aircraft. In October 1992 and January
1993, World Airways signed a series of agreements to lease seven new MD-11
aircraft for initial lease terms of two to five years. World Airways has taken
delivery of four passenger MD-11 aircraft and one freighter MD-11 and is
scheduled to take delivery of two convertible MD-11s in 1995. Two of the
passenger MD-11 aircraft replaced the two passenger DC10-30 aircraft which were
integrated into World Airways' fleet in April 1992 and returned to McDonnell
Douglas in July 1993. The delivery of the convertible MD-11s is expected to
occur approximately six months after the end of the lease of three DC10-30
convertibles during the third quarter of 1994.
World Airways made $5.3 million of capital expenditures and cash deposits for
MD-11 integration in the first six months of 1994. World Airways estimates that
its required capital expenditures for MD-11 integration will be approximately
$1.1 million for the remainder of 1994 and $9.8 million in 1995. As of June 30,
1994, the Company holds approximately $13.5 million (at book value) of aircraft
spare parts and transaction processing terminals currently available for sale.
The Company anticipates proceeds from the sale of a portion of these assets to
be approximately $3.9 million for the remainder of 1994, with additional amounts
to be received in 1995.
US Order's working capital and capital expenditure requirements for 1994 are
expected to be approximately $3.5 million. As of August 1, 1994, WorldCorp has
invested $11.3 million of equity (net of $3.3 million received from the
retirement of a portion of US Order preferred stock - see "Financing
Developments") and $3.5 million of unsecured debt in US Order. On August 1,
1994, US Order sold its electronic banking and bill payment operations to VISA
for $15.0 million plus certain future payments. Approximately $5.6 million of
these proceeds will be used to fund future working capital requirements of US
Order. WorldCorp does not plan to provide additional financing to US Order in
1994.
Financing Developments
- ----------------------
The Company has closed certain transactions which, in aggregate, have provided
additional cash to WorldCorp, World Airways, and US Order.
First, on October 30, 1993, WorldCorp, Inc., World Airways, Inc., and MHS
Berhad entered into a Stock Purchase Agreement (the "Stock Purchase Agreement")
pursuant to which MHS, subject to satisfactory completion of its due diligence
investigations, agreed to purchase 24.9% of World Airways' common stock for
$27.4 million in cash. On February 28, 1994, WorldCorp, World Airways, and MHS
concluded this transaction. World Airways received upon closing (the "Closing")
$12.4 million to fund its working capital requirements. The remaining $15.0
million (less a $2.7 million deposit received in November 1993) was paid to
WorldCorp to add to its cash reserves. At the time of the signing of the Stock
Purchase Agreement, World Airways was a wholly-owned subsidiary of WorldCorp. As
a result of this transaction, WorldCorp recognized a gain of approximately $26.9
million in the first quarter of 1994.
Second, in 1993, World Airways closed an agreement with a financial
institution for a $20.0 million credit facility collateralized by certain
receivables and spare parts. This agreement contains certain covenants related
to World Airways' financial condition and operating results. Approximately $10.8
million of the proceeds from this transaction were used to retire existing
obligations. The balance was added to cash reserves. As of July 31, 1994, $1.7
million of the $8.0 million portion of the credit facility collateralized by
receivables was utilized with $1.1 million borrowing capacity currently
available. World Airways was not in compliance with its debt covenants at the
end of the second quarter but has obtained waivers of these covenants from the
financial institution. World Airways will not meet these required covenants in
the third quarter of 1994, and will seek waivers. No assurances can be given,
however, that the Company will obtain the required waivers.
18
<PAGE>
Third, on August 1, 1994, US Order sold its electronic banking and bill
payment operations to VISA for $15.0 million plus certain future payments. Of
the proceeds received by US Order, $9.4 million was used to retire a portion of
its preferred stock (of which WorldCorp received $3.3 million) and vested
employee options. The remaining $5.6 million of these proceeds will be used to
fund future working capital requirements of US Order.
As of this date, WorldCorp has sufficient cash reserves and likely financing
sources to meet its obligations for the foreseeable future. Similarly, having
completed the VISA transaction, US Order has sufficient cash reserves and likely
financing sources to meet its obligations for the foreseeable future. World
Airways' overall financial condition is significantly improved from this time
one year ago. However, World Airways will have to generate additional revenue
from unsold capacity, reduce its costs as detailed below, and make some changes
to its agreements with lenders in order to maintain sufficient cash reserves
through the fourth quarter of 1994 and the first quarter of 1995. World
Airways' management believes that these objectives can be accomplished.
Business Trends
The Company's air transportation business is highly seasonal. Typically, World
Airways experiences reduced demand during the first quarter for passenger and
cargo services relative to other times of the year. World Airways generally
experiences stronger results in the second and third quarters due to demand for
commercial passenger services including the annual Hadj pilgrimage. Fourth
quarter results depend upon the overall world economic climate and global trade
patterns.
Soft demand and weakening yields have adversely affected worldwide cargo and
passenger markets. In management's view, block hours flown are a critical driver
of the airline's profitability. In order for World Airways to achieve positive
operating results it will be necessary to increase block hours flown from 1993
levels and reduce costs. In response, World Airways has significantly increased
its worldwide sales and marketing presence by 1) selling 24.9% of its equity to
MHS Berhad, solidifying a marketing alliance with a leading aviation company in
Malaysia, 2) recruiting three active outside board members with experience in
worldwide aviation and travel services, and 3) increasing its internal sales and
marketing staff from two to seven executives. The fourth quarter of 1993 was
the first recent quarter where flying level trends turned positive, increasing
by 40% over the prior year's fourth quarter. In the first quarter of 1994, the
trend continued with flying levels up 18% over the first quarter of 1993.
Despite a quota limitation imposed by the Saudian government reducing the size
of the 1994 Hadj, flying levels in the second quarter increased 8% over the
second quarter of 1993. Flying levels in July 1994 increased 36% over the same
period in 1993 resulting in year-to-date increases in flying levels of 15%
versus 1993.
As reported in the prior 10Q, third quarter results depended upon, in part,
the ability of World Airways to obtain regulatory approval from the Government
of Israel to operate a scheduled service contract. While World Airways did
obtain this regulatory approval, service was precluded from commencing until the
spring of 1995. As a result, World Airways is in the process of replacing this
third quarter business with operations for foreign carriers. In addition to
these efforts, World Airways is seeking to contract its third and fourth quarter
unsold capacity. In order to make World Airways more cost-competitive with
certain passenger and cargo carriers, and to improve cash flow, World Airways'
management has taken a series of steps to reduce operating costs. These steps
generally involve eliminating business activities that are not essential to
World Airways' operations, including eliminating those costs which customers are
not prepared to compensate for in the form of higher prices. World Airways'
management believes that these actions, which began earlier in the third
quarter, may result in improvements in operating income and cash flow of $10.0
million to $15.0 million, annually.
World Airways' cockpit and flight attendant crewmembers are covered by
collective bargaining agreements which expired in July 1992. World Airways and
the International Brotherhood of Teamsters ("Teamsters") could not agree under
formal mediation on a new cockpit contract and are currently in a 30-day
"cooling off" period which expires midnight August 18, 1994. If a new contract
is not reached by this date, World Airways has the right to impose a new
contract and the Teamsters have the right to conduct a work stoppage. World
Airways and the Teamsters are continuing negotiations and the management of
World Airways believes an agreement can be reached. No assurances, however, can
be given regarding the outcome of these negotiations or the specific impact any
outcome may have on the financial conditions, prospects or operations of World
Airways.
US Order's research clearly indicated the importance of bill payment and
banking services in attracting and retaining customers. In addition, such
research indicated that consumers prefer to receive these banking services
through their local
19
<PAGE>
bank. The transaction with VISA helps to deliver to consumers the banking
services they demand through the channel they expect. As a result of the VISA
transaction, US Order's business shifts from that of a retailer where the
company spends significant amounts of capital up front to acquire customers, to
that of a wholesaler, where the consumer acquisition costs are borne by the
third parties such as VISA and its member banks. As a result of the wholesale
strategy adopted by US Order, both revenue and expenses will be lower than
originally anticipated. The company believes that the VISA transaction sharply
reduces the risk of US Order's future performance while also expanding the
business opportunities available to US Order.
Other Matters
On August 11, 1992, WorldCorp, World Airways, and certain other commercial
paper customers of Washington Bancorporation ("WBC") were served with a
complaint by WBC as debtor-in-possession by and through the Committee of
Unsecured Creditors of WBC (the "Committee"). The complaint arises from
investment proceeds totaling $6.8 million received by WorldCorp and World
Airways from WBC in May 1990 in connection with the maturity of WBC commercial
paper. The Committee seeks to recover this amount on the grounds that these
payments constituted voidable preferences and/or fraudulent conveyances under
the Federal Bankruptcy Code and under applicable state law. On June 9, 1993,
the Company filed a motion to dismiss this litigation and intends to vigorously
contest the claim. No assurances can be given of the eventual outcome of this
litigation.
WorldCorp has never paid any cash dividends and does not plan to do so in the
foreseeable future. Both the 13 7/8% Subordinated Notes Indenture and the
indenture pursuant to which the Debentures were issued (the "Indentures")
restrict the Company's ability to pay dividends or make other distributions on
its common stock. In addition, the Indentures originally restricted the ability
of World Airways to pay dividends other than to the Company. In 1994, however,
the Company received approval from the holders of the Indentures to allow World
Airways to pay dividends to parties other than the Company.
The $20 million credit facility also contains restrictions on World Airways'
ability to pay dividends. Under this agreement, World Airways cannot declare,
pay, or make any dividend or distribution in excess of the lesser of $4.5
million or 50% of net income for the previous six months. In addition, World
Airways must have a cash balance of at least $7.5 million immediately after
giving effect to such dividend.
All of the funds from operations are generated by the Company's subsidiaries.
The ability of the Company and its subsidiaries to pay principal and interest on
their respective short and long-term obligations is substantially dependent upon
the payment to the Company of dividends, interest or other charges by its
subsidiaries and upon funds generated by the operations of the subsidiaries.
As of December 31, 1993, the Company had net operating loss carryforwards,
investment tax credit carryforwards, and alternative minimum tax credit
carryforwards of $137.2 million, $9.6 million, and $2.2 million, respectively
(the "Carryforwards"). The availability of net operating loss and tax credit
carryforwards to reduce the Company's future federal income tax liability is
subject to limitations under the Internal Revenue Code of 1986, as amended (the
"Code"). Generally, these limitations restrict availability of net operating
loss and tax credit carryforwards upon an ownership change. In August 1991, the
Company experienced an ownership change, and the use of $72.6 million of net
operating loss carryforwards available to the Company from losses generated
prior to the ownership change, plus the tax credit carryforwards described
above, are limited to approximately $6.3 million annually (the "Limitation").
As a result of the transaction with MHS in February 1994, however, the
Carryforwards will be split into two components: those generated solely by
World Airways, and those generated by the remaining entities of the controlled
group. As a result, approximately $84.8 million of the consolidated net
operating loss carryforward will no longer be available to offset federal
taxable income reflected on future consolidated tax returns. Instead, the $84.8
million will be available to World Airways on a separate company basis (subject
to the Limitation). World Airways will also retain sole use of the $9.6 million
investment tax credit carryforward and the $2.2 million alternative minimum tax
credit carryforward to reduce its future federal income tax liability, subject
to limitations under the Code.
20
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- -----------------------------------------
(a) Exhibits
--------
<TABLE>
<CAPTION>
Exhibit
No. Exhibit
- ------- -------
<S> <C> <C>
3.1 Certificate of Incorporation of WorldCorp, Inc. Incorporated
dated March 16, 1987. [Filed as Exhibit 3.1 to by reference
WorldCorp, Inc.'s Registration Statement on
Form S-4 (Commission File No. 33012735) filed
on March 19, 1987 and incorporated herein by
reference.]
3.2 Amended and Restated Bylaws of WorldCorp, Inc. Incorporated
dated November 13, 1987. (Filed as Exhibit 3.1 to by reference
WorldCorp, Inc.'s Annual Report on Form 10-K for the
fiscal year ended December 31, 1987 and incorporated
herein by reference.)
4.1 Indenture dated as of August 1, 1987 between Incorporated
WorldCorp, Inc. and Norwest Bank of Minneapolis, by reference
N.A. (Filed as Exhibit 4.1 to Amendment No. 2 to
WorldCorp, Inc.'s Form S-2 Registration Statement
(Commission File No. 33-1358276) filed August 13,
1987 and incorporated herein by reference.]
4.2 First Supplemental Indenture dated as of March 1, Incorporated
1988 between WorldCorp, Inc. and Norwest Bank of by reference
Minneapolis, N.A. (Filed as Exhibit 4.2 to WorldCorp,
Inc.'s Annual Report on Form 10-K for the fiscal
year ended December 31, 1988 and incorporated herein
by reference.)
10.1 Warrant Agreement between WorldCorp, Inc. and Incorporated
Drexel Burnham Lambert, Incorporated ("Drexel") by reference
dated as of June 30, 1988. (Filed as Exhibit 10.1
to WorldCorp, Inc.'s Form 10-Q for the quarter
ended March 31, 1989 and incorporated herein by
reference.)
10.2 Employment Agreement dated as of November 10, 1988 Incorporated
between WorldCorp, Inc. and T. Coleman Andrews, III. by reference
(Filed as Exhibit 10.4 to WorldCorp, Inc.'s Annual
Report on Form 10-K for the fiscal year ended December
31, 1988 and incorporated herein by reference.)
10.4 Aircraft Lease Agreement dated as of March 30, 1987 Incorporated
between World Airways, Inc. and The Connecticut by reference
National Bank, not in its individual capacity, but
solely as Owner Trustee. (Filed as Exhibit 10.34 to
World Airways, Inc.'s Annual Report on Form 10-K for
the fiscal year ended December 31, 1986 and
incorporated herein by reference.)
10.5 Merger Agreement and Plan of Reorganization dated as Incorporated
of April 28, 1987 by and among World Airways, Inc., by reference
World Merger Corporation and WorldCorp, Inc. [Filed
as Exhibit 10.50 to WorldCorp, Inc.'s Form S-2
Registration Statement (Commission File No. 33-
1358276) filed on July 31, 1987 and incorporated
herein by reference.]
10.6 Assumption Agreement dated as of June 23, 1987 among Incorporated
WorldCorp, Inc., World Airways, Inc. and T. Coleman by reference
Andrews, III. [Filed as Exhibit 10.51 to WorldCorp,
Inc.'s Form S-2 Registration Statement (Commission
File No. 33-1358276) filed on July 31, 1987 and
incorporated herein by reference.]
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Exhibit
- ------- -------
<S> <C> <C>
10.7 Assumption Agreement dated as of June 23, 1987 among Incorporated
WorldCorp, Inc., World Airways, Inc. and D. Fraser by reference
Bullock. [Filed as Exhibit 10.52 to WorldCorp,
Inc.'s Form S-2 Registration Statement (Commission
File No. 33-1358276) filed on July 31, 1987 and
incorporated herein by reference.]
10.8 Guaranty and Amendment Agreement dated as of June Incorporated
23, 1987 between WorldCorp, Inc. and The Connecticut by reference
National Bank, a national banking association, as
Owner Trustee, with Burnham Leasing Corporation, as
Owner Participant. [Filed as Exhibit 10.55 to
WorldCorp, Inc.'s Form S-2 Registration Statement
(Commission File No. 33-1358276) filed July 31, 1987
and incorporated herein by reference.]
10.9 Form of Assumption Agreement dated as of June 23, Incorporated
1987 among WorldCorp, Inc., World Airways, Inc. and by reference
each Indemnified Party. [Filed as Exhibit 10.60 to
WorldCorp, Inc.'s Form S-2 Registration Statement
(Commission File No. 33-1358276) filed on July 31,
1987 and incorporated herein by reference.]
10.10 Agreement between World Airways, Inc. and Cockpit Incorporated
Crewmembers represented by International Brotherhood by reference
of Teamsters. [Filed by reference as Exhibit 10.66
to WorldCorp, Inc.'s Form S-3 Registration Statement
(Commission File No. 2-91998) filed on December 10,
1987 and incorporated herein by reference.]
10.11 Agreement between World Airways, Inc. and Flight Incorporated
Attendants represented by International Brotherhood by reference
of Teamsters. [Filed reference as Exhibit 10.67 to
WorldCorp, Inc.'s Form S-3 Registration Statement
(Commission File No. 2-91998) filed on December 10,
1987 and incorporated herein by reference.]
10.12 Agreement between World Airways, Inc. and Mechanics Incorporated
represented by the International Brotherhood of by reference
Teamsters. (Filed as Exhibit 10.41 to WorldCorp,
Inc.'s Annual Report on Form 10-K for the fiscal
year ended December 31, 1988 and incorporated herein
by reference.)
10.13 Agreement between World Airways, Inc. and Stock Incorporated
Clerks and Store Room Employees represented by the by reference
International Brotherhood of Teamsters. (Filed as
Exhibit 10.42 to WorldCorp, Inc.'s Annual Report on
Form 10-K for the fiscal year ended December 31,
1988 and incorporated herein by reference.)
10.14 Office Lease - The Hallmark Building dated as of May Incorporated
16, 1987 between WorldCorp, Inc. and GT Renaissance by reference
Centre Limited Partnership. (Filed as Exhibit 10.36
to WorldCorp, Inc.'s Annual Report on Form 10-K for
the fiscal year ended December 31, 1989 and
incorporated herein by reference.)
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Exhibit
- ------- -------
<S> <C> <C>
10.15 Lease Amendment dated as of June 27, 1989 between Incorporated
WorldCorp, Inc. and GT Renaissance Centre Limited by reference
Partnership. (Filed as Exhibit 10.37 to WorldCorp,
Inc.'s Annual Report on Form 10-K for the fiscal
year ended December 31, 1989 and incorporated herein
by reference.)
10.16 Office Lease- The Hallmark Building dated as of Incorporated
September 20, 1989 between World Airways, Inc. and by reference
GT Renaissance Centre Limited Partnership. (Filed as
Exhibit 10.38 to WorldCorp, Inc's Annual Report on
form 10-K for the fiscal year ended December 31,
1989 and incorporated herein by reference.)
10.17 Warrant Agreement dated as of July 22, 1989 between Incorporated
WorldCorp, Inc. and Charles W. Pollard. (Filed as by reference
Exhibit 10.45 to WorldCorp, Inc.'s Annual Report on
Form 10-K for the fiscal year ended December 31,
1989 and incorporated herein by reference.)
10.18 Warrant Agreement dated as of July 22, 1989 between Incorporated
WorldCorp, Inc. and T. Coleman Andrews. (Filed as by reference
Exhibit 10.46 to WorldCorp, Inc.'s Annual Report on
Form 10-K for the fiscal year ended December 31,
1989 and incorporated herein by reference.)
10.19 Warrant Agreement dated as of February 23, 1990 Incorporated
between WorldCorp, Inc. and D. Fraser Bullock. by reference
(Filed as Exhibit 10.47 to WorldCorp, Inc.'s Annual
Report on Form 10-K for the fiscal year ended
December 31, 1989 and incorporated herein by
reference.)
10.21 Amendment No. 1 to WorldCorp Inc. Employee Savings Incorporated
and Stock Ownership Plan. (Filed as Exhibit 10.50 to by reference
WorldCorp, Inc.'s Annual Report on Form 10-K for the
fiscal year ended December 31, 1989 and incorporated
herein by reference.)
10.20 WorldCorp, Inc. Employee Savings and Stock Ownership Incorporated
Plan. (Filed as Exhibit 10.49 to WorldCorp, Inc.'s by reference
Annual Report on Form 10-K for the fiscal year ended
December 31, 1989 and incorporated herein by
reference.)
10.22 Loan and Security Agreement dated as of May 24, 1989 Incorporated
between WorldCorp Employee Savings and Stock by reference
Ownership Trust and American Security Bank, N.A.
(Filed as Exhibit 10.51 to WorldCorp, Inc.'s Annual
Report on Form 10-K for the fiscal year ended
December 31, 1989 and incorporated herein by
reference.)
10.23 Guaranty Agreement dated as of May 24, 1989 by Incorporated
WorldCorp, Inc. for the benefit of American Security by reference
Bank, N.A. (Filed as Exhibit 10.52 to WorldCorp,
Inc.'s Annual Report on Form 10-K for the fiscal
year ended December 31, 1989 and incorporated herein
by reference.)
10.24 Guarantor's Security Agreement dated as of May 24, Incorporated
1989 between WorldCorp, Inc. and American Security by reference
Bank, N.A. (Filed as Exhibit 10.53 to WorldCorp,
Inc.'s Annual Report on Form 10-K for the fiscal
year ended December 31, 1989 and incorporated herein
by reference.)
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Exhibit
- ------- -------
<S> <C> <C>
10.25 Warrant Agreement dated as of August 25, 1986 Incorporated
between World Airways, Inc. and T. Coleman Andrews, by reference
III. [Filed as Exhibit 10.13 to WorldCorp, Inc.'s
Form S-4 Registration Statement (Commission File No.
33-12735), filed March 19, 1987 and incorporated
herein by reference.]
10.26 Warrant Agreement dated as of August 25, 1986 Incorporated
between World Airways, Inc. and D. Fraser Bullock. by reference
[Filed as Exhibit 10.14 to WorldCorp, Inc.'s Form
S-4 Registration Statement (Commission File No.
33-12735), filed March 19, 1987 and incorporated
herein by reference.]
10.27 Aircraft Warranty Bill of Sale dated as of January Incorporated
15, 1991 between World Airways, Inc. and First by reference
Security Bank of Utah, N.A., not in its individual
capacity, but solely as Owner Trustee. (Filed as
Exhibit 10.46 to WorldCorp, Inc.'s Annual Report on
Form 10-K for the fiscal year ended December 31,
1990 and incorporated herein by reference.)
10.28 Aircraft Lease Agreement dated as of January 15, Incorporated
1991 between World Airways, Inc. and First Security by reference
Bank of Utah, N.A., not in its individual capacity,
but solely as Owner Trustee. (Filed as Exhibit 10.47
to WorldCorp, Inc.'s Annual Report on Form 10-K for
the fiscal year ended December 31, 1990 and
incorporated herein by reference.)
10.29 Loan and Security Agreement dated as of February 26, Incorporated
1992 between WorldCorp, Inc. and US Order by reference
Incorporated. (Filed as Exhibit 10.38 to WorldCorp,
Inc.'s Annual Report on Form 10-K for the fiscal
year ended December 31, 1991 and incorporated herein
by reference.)
10.30 Aircraft Lease Agreement I dated as of February 12, Incorporated
1992 between McDonnell Douglas Finance Corporation by reference
and World Airways, Inc. (Filed as Exhibit 10.39 to
WorldCorp, Inc.'s Annual Report on Form 10-K for the
fiscal year ended December 31, 1991 and incorporated
by reference.)
10.31 Aircraft Lease Agreement II dated as of February 12, Incorporated
1992 between McDonnell Douglas Finance Corporation by reference
and World Airways, Inc. (Filed as Exhibit 10.40 to
WorldCorp, Inc.'s Annual Report on Form 10-K for the
fiscal year ended December 31, 1991 and incorporated
herein by reference.)
10.32 Aircraft Engine Purchase Agreement dated as of April Incorporated
26, 1991 between Terandon Leasing Corporation and by reference
World Airways, Inc. (Filed as Exhibit 10.41 to
WorldCorp, Inc.'s Annual Report on Form 10-K for the
fiscal year ended December 31, 1991 and incorporated
herein by reference.)
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Exhibit
- ------- -------
<S> <C> <C>
10.33 Aircraft Engine Lease Agreement dated as of April Incorporated
26, 1991 between Terandon Leasing Corporation and by reference
World Airways, Inc. (Filed as Exhibit 10.42 to
WorldCorp, Inc.'s Annual Report on Form 10-K for the
fiscal year ended December 31, 1991 and incorporated
herein by reference.)
10.34 Guaranty Agreement I dated as of February 12, 1992 Incorporated
between McDonnell Douglas Finance Corporation and by reference
World Airways, Inc. (Filed as Exhibit 10.43 to
WorldCorp, Inc.'s Annual Report on Form 10-K for the
fiscal year ended December 31, 1991 and incorporated
herein by reference.)
10.35 Guaranty Agreement II dated as of February 12, 1992 Incorporated
between McDonnell Douglas Finance Corporation and by reference
World Airways, Inc. (Filed as Exhibit 10.44 to
WorldCorp, Inc.'s Annual Report on Form 10-K for the
fiscal year ended December 31, 1991 and incorporated
herein by reference.)
10.36 Series A Preferred Stock Purchase Agreement dated as Incorporated
of September 14, 1990 between US Order, Inc. and by reference
WorldCorp, Inc. (Filed as Exhibit 10.45 to
WorldCorp, Inc.'s Annual Report on Form 10-K for the
fiscal year ended December 31, 1991 and incorporated
herein by reference.)
10.37 Stock Restriction Agreement dated as of September Incorporated
14, 1990 between WorldCorp, Inc., William F. Gorog, by reference
Jonathan M. Gorog, Peter M. Gorog, Henry R. Nichols,
William N. Melton and John Porter. (Filed as Exhibit
10.46 to WorldCorp, Inc.'s Annual Report on Form
10-K for the fiscal year ended December 31, 1991 and
incorporated herein by reference.)
10.38 Aircraft Lease Agreement for Aircraft Serial Number Incorporated
48518 dated as of September 30, 1992 between World by reference
Airways, Inc. and International Lease Finance
Corporation. (Filed as Exhibit 10.38 to WorldCorp,
Inc.'s Annual Report on Form 10-K for the fiscal
year ended December 31, 1992 and incorporated herein
by reference.)
10.39 Aircraft Lease Agreement for Aircraft Serial Number Incorporated
48519 dated as of September 30, 1992 between World by reference
Airways, Inc. and International Lease Finance
Corporation. (Filed as Exhibit 10.39 to WorldCorp,
Inc.'s Annual Report on Form 10-K for the fiscal
year ended December 31, 1992 and incorporated herein
by reference.)
10.40 Aircraft Lease Agreement for Aircraft Serial Number Incorporated
48520 dated as of September 30, 1992 between World by reference
Airways, Inc. and International Lease Finance
Corporation. (Filed as Exhibit 10.40 to WorldCorp,
Inc.'s Annual Report on Form 10-K for the fiscal
year ended December 31, 1992 and incorporated herein
by reference.)
10.41 Aircraft Lease Agreement for Aircraft Serial Number Incorporated
48633 dated as of September 30, 1992 between World by reference
Airways, Inc. and International Lease Finance
Corporation. (Filed as Exhibit 10.41 to WorldCorp,
Inc.'s Annual Report on Form 10-K for the fiscal
year ended December 31, 1992 and incorporated herein
by reference.)
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Exhibit
- ------- -------
<S> <C> <C>
10.42 Aircraft Lease Agreement for Aircraft Serial Number Incorporated
48631 dated as of September 30, 1992 between World by reference
Airways, Inc. and International Lease Finance
Corporation. (Filed as Exhibit 10.42 to WorldCorp,
Inc.'s Annual Report on Form 10-K for the fiscal
year ended December 31, 1992 and incorporated herein
by reference.)
10.43 Aircraft Lease Agreement for Aircraft Serial Number Incorporated
48632 dated as of September 30, 1992 between World by reference
Airways, Inc. and International Lease Finance
Corporation. (Filed as Exhibit 10.43 to WorldCorp,
Inc.'s Annual Report on Form 10-K for the fiscal
year ended December 31, 1992 and incorporated herein
by reference.)
10.44 AMC contract between Air Mobility Command and World Incorporated
Airways, Inc. effective January 1, 1993. (Filed as by reference
Exhibit 10.44 to WorldCorp, Inc.'s Annual Report on
Form 10-K for the fiscal year ended December 31,
1992 and incorporated herein by reference.)
10.45 MD-11 Aircraft Charter Agreement dated as of March Incorporated
18, 1993 be-tween World Airways, Inc. and PT. Garuda by reference
Indonesia. (Filed as Exhibit 10.45 to WorldCorp,
Inc.'s Annual Report on Form 10-K for the fiscal
year ended December 31, 1992 and incorporated herein
by reference.)
10.45 DC10-30 Aircraft Charter Agreement dated as of March Incorporated
18, 1993 be-tween World Airways, Inc. and PT. Garuda by reference
Indonesia. (Filed as Exhibit 10.45 to WorldCorp,
Inc.'s Annual Report on Form 10-K for the fiscal
year ended December 31, 1992 and incorporated herein
by reference.)
10.46 Accounts Receivable Management and Security Incorporated
Agreement dated as of December 7, 1993 between World by reference
Airways, Inc. and BNY Financial Corporation. (Filed
as Exhibit 10.46 to WorldCorp, Inc.'s Annual Report
on Form 10-K for the fiscal year ended December 31,
1993 and incorporated herein by reference.)
10.47 Aircraft Parts Security Agreement dated as of Incorporated
December 7, 1993 between World Airways, Inc. and BNY by reference
Financial Corporation. (Filed as Exhibit 10.47 to
WorldCorp, Inc.'s Annual Report on Form 10-K for the
fiscal year ended December 31, 1993 and incorporated
herein by reference.)
10.48 Warrant Certificate dated as of December 7, 1993 Incorporated
between WorldCorp, Inc. and BNY Financial by reference
Corporation. (Filed as Exhibit 10.48 to World-Corp
Inc.'s Annual Report on Form 10-K for the fiscal
year ended December 31, 1993 and incorporated herein
by reference.)
10.49 AMC contract dated as of October 1, 1993 between Air Incorporated
Mobility Command and World Airways, Inc. (Filed as by reference
Exhibit 10.49 to World-Corp Inc.'s Annual Report on
Form 10-K for the fiscal year ended December 31,
1993 and incorporated herein by reference.)
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Exhibit
- ------- -------
<S> <C> <C>
10.50 Subscription and Preferred Stock Purchase Agreement Incorporated
dated as of December 20, 1993 between US Order, Inc. by reference
and Knight-Ridder, Inc. (Filed as Exhibit 10.50 to
WorldCorp Inc.'s Annual Report on Form 10-K for the
fiscal year ended December 31, 1993 and incorporated
herein by reference.)
10.51 Subscription and Preferred Stock Purchase Agreement Incorporated
dated as of December 21, 1993 between US Order, Inc. by reference
and WorldCorp, Inc. (Filed as Exhibit 10.51 to
WorldCorp Inc.'s Annual Report on Form 10-K for the
fiscal year ended December 31, 1993 and incorporated
herein by reference.)
10.52 Subscription and Preferred Stock Purchase Agreement Incorporated
dated as of December 20, 1993 between US Order, Inc. by reference
and Jerome Kohlberg, Jr. (Filed as Exhibit 10.52 to
WorldCorp Inc.'s Annual Report on Form 10-K for the
fiscal year ended December 31, 1993 and incorporated
herein by reference.)
10.53 Subscription and Preferred Stock Purchase Agreement Incorporated
dated as of December 21, 1993 between US Order, Inc. by reference
and Hoechst Celanese Corporation Employee Benefit
Master Trust. (Filed as Exhibit 10.53 to WorldCorp
Inc.'s Annual Report on Form 10-K for the fiscal
year ended December 31, 1993 and incorporated herein
by reference.)
10.54 Series C Preferred Stock Purchase Agreement dated as Incorporated
of December 21, 1993 between US Order, Inc. and by reference
VeriFone, Inc. (Filed as Exhibit 10.54 to WorldCorp
Inc.'s Annual Report on Form 10-K for the fiscal
year ended December 31, 1993 and incorporated herein
by reference.)
10.55 Registration Rights Agreement dated as of December Incorporated
21, 1993 between US Order, Inc. and VeriFone, Inc. by reference
(Filed as Exhibit 10.55 to WorldCorp Inc.'s Annual
Report on Form 10-K for the fiscal year ended
December 31, 1993 and incorporated herein by
reference.)
10.56 Technology License Agreement dated as of December Incorporated
21, 1993 between US Order, Inc. and VeriFone, Inc. by reference
(Filed as Exhibit 10.56 to WorldCorp Inc.'s Annual
Report on Form 10-K for the fiscal year ended
December 31, 1993 and incorporated herein by
reference.)
10.57 Investment Agreement dated as of December 21, 1993 Incorporated
by and among US Order, Inc., WorldCorp, Inc., and by reference
VeriFone, Inc. (Filed as Exhibit 10.57 to WorldCorp
Inc.'s Annual Report on Form 10-K for the fiscal
year ended December 31, 1993 and incorporated herein
by reference.)
10.58 Settlement Agreement dated as of February 8, 1994 Incorporated
between World Airways, Inc, WorldCorp, Inc., Concord by reference
Asset Management, Inc., Concord Leasing, Inc., and
The CIT Group. (Filed as Exhibit 10.58 to WorldCorp
Inc.'s Annual Report on Form 10-K for the fiscal
year ended December 31, 1993 and incorporated herein
by reference.)
</TABLE>
27
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Exhibit
- ------- -------
<S> <C> <C>
10.59 Lease Agreement dated as of June 1, 1993 between Incorporated
World Airways, Inc. and Mattei Corporation. (Filed by reference
as Exhibit 10.59 to WorldCorp Inc.'s Annual Report
on Form 10-K for the fiscal year ended December 31,
1993 and incorporated herein by reference.)
10.60 Lease Agreement dated as of March 30, 1993 between Incorporated
World Airways, Inc. and Tinicum Properties by reference
Associates Limited Partnership, as amended by First
Amendment to Lease dated July 9, 1993. (Filed as
Exhibit 10.60 to WorldCorp Inc.'s Annual Report on
Form 10-K for the fiscal year ended December 31,
1993 and incorporated herein by reference.)
10.61 Lease Agreement dated as of January 25, 1993 between Incorporated
World Flight Crew Services, Inc. and Sakioka Farms. by reference
(Filed as Exhibit 10.61 to WorldCorp Inc.'s Annual
Report on Form 10-K for the fiscal year ended
December 31, 1993 and incorporated herein by
reference.)
10.62 Consignment Agreement dated as of September 30, 1993 Incorporated
between World Airways Inc. and The Memphis Group. by reference
(Filed as Exhibit 10.62 to WorldCorp Inc.'s Annual
Report on Form 10-K for the fiscal year ended
December 31, 1993 and incorporated herein by
reference.)
10.63 Assignment and Assumption and Consent and Release Incorporated
for Aircraft Serial Number 47818 dated as of July by reference
20, 1993 among World Airways, Inc., WorldCorp, Inc.,
McDonnell Douglas Corporation, and McDonnell Douglas
Finance Corporation. (Filed as Exhibit 10.63 to
WorldCorp Inc.'s Annual Report on Form 10-K for the
fiscal year ended December 31, 1993 and incorporated
herein by reference.)
10.64 Assignment and Assumption and Consent and Release Incorporated
for Aircraft Serial Number 46999 dated as of July 9, by reference
1993 among World Airways Inc., WorldCorp, Inc.,
McDonnell Douglas Corporation, and McDonnell Douglas
Finance Corporation. (Filed as Exhibit 10.64 to
WorldCorp Inc.'s Annual Report on Form 10-K for the
fiscal year ended December 31, 1993 and incorporated
herein by reference.)
10.65 Aircraft Lease Agreement for Aircraft Serial Number Incorporated
48458 dated as of January 15, 1993 between World by reference
Airways, Inc. and Wilmington Trust Company/GATX
Capital Corporation. (Filed as Exhibit 10.65 to
WorldCorp Inc.'s Annual Report on Form 10-K for the
fiscal year ended December 31, 1993 and incorporated
herein by reference.)
10.66 Aircraft Lease Supplement for Aircraft Serial Number Incorporated
48458 dated as of April 23, 1993 between World by reference
Airways, Inc. and Wilmington Trust Company/GATX
Capital Corporation. (Filed as Exhibit 10.66 to
World-Corp Inc.'s Annual Report on Form 10-K for the
fiscal year ended December 31, 1993 and incorporated
herein by reference.)
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Exhibit
- ------- -------
<S> <C> <C>
10.67 Aircraft Spare Parts Lease Agreement dated as of Incorporated
April 15, 1993 between World Airways, Inc. and GATX by reference
Capital Corporation. (Filed as Exhibit 10.67 to
WorldCorp Inc.'s Annual Report on Form 10-K for the
fiscal year ended December 31, 1993 and incorporated
herein by reference.)
10.68 Amendment No. 1 To Aircraft Lease Agreement for Incorporated
Aircraft Serial Number 48518 dated as of November by reference
1993 between World Airways, Inc. and International
Lease Finance Corporation. (Filed as Exhibit 10.68
to WorldCorp Inc.'s Annual Report on Form 10-K for
the fiscal year ended December 31, 1993 and
incorporated herein by reference.)
10.69 Amendment No. 2 to Aircraft Lease Agreement for Incorporated
Aircraft Serial Number 48518 dated as of March 8, by reference
1993 between World Airways, Inc. and International
Lease Finance Corporation. (Filed as Exhibit 10.69
to WorldCorp Inc.'s Annual Report on Form 10-K for
the fiscal year ended December 31, 1993 and
incorporated herein by reference.)
10.70 Assignment of Rights for Aircraft Serial Number Incorporated
48518 dated as of March 8, 1993 between World by reference
Airways, Inc. and International Lease Finance
Corporation. (Filed as Exhibit 10.70 to WorldCorp
Inc.'s Annual Report on Form 10-K for the fiscal
year ended December 31, 1993 and incorporated herein
by reference.)
10.71 Assignment of Rights for Aircraft Engines Serial Incorporated
Numbers P723942, P723945, and P723943 dated as of by reference
March 1, 1993 between World Airways, Inc. and
International Lease Finance Corporation. (Filed as
Exhibit 10.71 to WorldCorp Inc.'s Annual Report on
Form 10-K for the fiscal year ended December 31,
1993 and incorporated herein by reference.)
10.72 Agency Agreement for Aircraft Serial Number 48518 Incorporated
dated as of January 15, 1993 between World Airways, by reference
Inc. and International Lease Finance Corporation.
(Filed as Exhibit 10.72 to WorldCorp Inc.'s Annual
Report on Form 10-K for the fiscal year ended
December 31, 1993 and incorporated herein by
reference.)
10.73 Amendment No. 2 to Aircraft Lease Agreement for Incorporated
Aircraft Serial Number 48437 dated as of March 31, by reference
1993 between World Airways, Inc. and International
Lease Finance Corporation. (Filed as Exhibit 10.73
to WorldCorp Inc.'s Annual Report on Form 10-K for
the fiscal year ended December 31, 1993 and
incorporated herein by reference.)
10.74 Amendment No. 3 to Aircraft Lease Agreement for Incorporated
Aircraft Serial Number 48437 dated as of April 15, by reference
1993 between World Airways, by Inc. and
International Lease Finance Corporation. (Filed as
Exhibit 10.74 to WorldCorp Inc.'s Annual Report on
Form 10-K for the fiscal year ended December 31,
1993 and incorporated herein by reference.)
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Exhibit
- ------- -------
<S> <C> <C>
10.75 Agency Agreement for Aircraft Serial Number 48437 Incorporated
dated as of January 15, 1993 between World Airways, by reference
Inc. and International Lease Finance Corporation.
(Filed as Exhibit 10.75 to WorldCorp Inc.'s Annual
Report on Form 10-K for the fiscal year ended
December 31, 1993 and incorporated herein by
reference.)
10.76 Assignment of Rights for Aircraft Serial Number Incorporated
48437 dated as of April 15, 1993 between World by reference
Airways, Inc. and International Lease Finance
Corporation. (Filed as Exhibit 10.76 to WorldCorp
Inc.'s Annual Report on Form 10-K for the fiscal
year ended December 31, 1993 and incorporated herein
by reference.)
10.77 Assignment of Rights for Aircraft Engines Serial Incorporated
Numbers P723913, P723912, and P723914 dated as of by reference
April 15, 1993 between World Airways, Inc. and
International Lease Finance Corporation. (Filed as
Exhibit 10.77 to WorldCorp Inc.'s Annual Report on
Form 10-K for the fiscal year ended December 31,
1993 and incorporated herein by reference.)
10.78 Amendment No. 2 to Aircraft Lease Agreement for Incorporated
Aircraft Serial Number 48520 dated as of April 22, by reference
1993 between World Airways, Inc. and International
Lease Finance Corporation. (Filed as Exhibit 10.78
to WorldCorp Inc.'s Annual Report on Form 10-K for
the fiscal year ended December 31, 1993 and
incorporated herein by reference.)
10.79 Agency Agreement for Aircraft Serial Number 48520 Incorporated
dated as of January 15, 1993 between World Airways, by reference
Inc. and International Lease Finance Corporation.
(Filed as Exhibit 10.79 to WorldCorp Inc.'s Annual
Report on Form 10-K for the fiscal year ended
December 31, 1993 and incorporated herein by
reference.)
10.80 Assignment of Rights for Aircraft Serial Number Incorporated
48520 dated as of April 22, 1993 between World by reference
Airways, Inc. and International Lease Finance
Corporation. (Filed as Exhibit 10.80 to WorldCorp
Inc.'s Annual Report on Form 10-K for the fiscal
year ended December 31, 1993 and incorporated herein
by reference.)
10.81 Assignment of Rights for Aircraft Engines Serial Incorporated
Numbers P723957, P723958, and P723956 dated as of by reference
March 1, 1993 between World Airways, Inc. and
International Lease Finance Corporation. (Filed as
Exhibit 10.81 to WorldCorp Inc.'s Annual Report on
Form 10-K for the fiscal year ended December 31,
1993 and incorporated herein by reference.)
10.82 Aircraft Charter Agreement dated as of July 24, 1993 Incorporated
between World Airways, Inc. and Malaysian Airline by reference
System Berhad. (Filed as Exhibit 10.82 to WorldCorp
Inc.'s Annual Report on Form 10-K for the fiscal
year ended December 31, 1993 and incorporated herein
by reference.)
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Exhibit
- ------- -------
<S> <C> <C>
10.83 Amendment No. 1 to Aircraft Lease Agreement for Incorporated
Aircraft Serial Numbers 46835, 46837, and 46820 by reference
dated as of May 14, 1993 between World Airways, Inc.
and The Connecticut National Bank (assigned to
Federal Express Corporation). (Filed as Exhibit
10.83 to WorldCorp Inc.'s Annual Report on Form 10-K
for the fiscal year ended December 31, 1993 and
incorporated herein by reference.)
10.84 Amendment No. 2 to Aircraft Lease Agreement for Incorporated
Aircraft Serial Numbers 46835, 46837, and 47820 by reference
dated as of May 14, 1993 between World Airways, Inc.
and The Connecticut National Bank (assigned to
Federal Express Corporation). (Filed as Exhibit
10.84 to WorldCorp Inc.'s Annual Report on Form 10-K
for the fiscal year ended December 31, 1993 and
incorporated herein by reference.)
10.85 Return Agreement for Aircraft Serial Numbers 47818 Incorporated
and 46999 dated as of July 9, 1993 among World by reference
Airways, Inc., WorldCorp, Inc., International Lease
Finance Corporation, McDonnell Douglas Corporation,
and McDonnell Douglas Finance Corporation. (Filed as
Exhibit 10.85 to WorldCorp Inc.'s Annual Report on
Form 10-K for the fiscal year ended December 31,
1993 and incorporated herein by reference.)
10.86/1/ Acquisition Agreement Among VISA International Filed Herewith
Service Association, US Order, Inc. WorldCorp, Inc.
dated as of July 15, 1994.
11.1 Statement on Calculation of Earnings Per Common Filed Herewith
Share.
</TABLE>
/1/ Confidential treatment has been requested. The copy filed as an
exhibit omits the information subject to the confidentiality request.
Confidential portions so omitted have been filed separately with the
Commission.
(b) Reports on Form 8-K.
--------------------
None.
31
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
WORLDCORP, INC.
By: /s/ T. Coleman Andrews, III
---------------------------
(T. Coleman Andrews, III)
Chief Executive Officer, President,
and Principal Accounting Officer
Date: August 15, 1994
32
<PAGE>
Commission file number 1-5351
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
to
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal quarter ended June 30, 1994
WORLDCORP, INC.
(Exact name of registrant as specified in its charter)
33
<PAGE>
- --------------------------------------------------------------------------------
ACQUISITION AGREEMENT
AMONG
VISA INTERNATIONAL SERVICE ASSOCIATION
US ORDER, INC.
AND WORLDCORP, INC.
- --------------------------------------------------------------------------------
DATED AS OF JULY 15, 1994
- --------------------------------------------------------------------------------
(Confidential treatment has been requested for portions
of this exhibit. The copy filed herewith omits the
information subject to the confidentiality request.
Omissions are designated herein as "XXXXX". Confidential
portions so omitted have been filed separately with the
Commission.)
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I - PURCHASE AND SALE OF ASSETS................................... 3
1.1 Purchase and Sale of Assets..................................... 3
1.2 Consideration................................................... 6
1.3 Liabilities Not Assumed......................................... 12
1.4 Closing......................................................... 12
1.5 Execution and Delivery of Closing Documents..................... 13
1.6 Further Assurances.............................................. 13
1.7 Allocations..................................................... 13
ARTICLE II - REPRESENTATIONS AND WARRANTIES
OF US ORDER AND WORLDCORP..................................... 14
2.1 Corporate Organization, Etc..................................... 14
2.2 Capitalization of US Order...................................... 15
2.3 Subsidiaries and Affiliates..................................... 15
2.4 Authorization, Etc.............................................. 15
2.5 No Breach....................................................... 16
2.6 Financial Statements............................................ 16
2.7 No Undisclosed Liabilities, Etc................................. 17
2.8 Interim Operations.............................................. 17
2.9 Title to Properties; Encumbrances............................... 18
2.10 Condition of Tangible Assets.................................... 19
2.11 Intellectual Property: Patents, Etc............................. 19
2.12 Taxes........................................................... 21
2.13 No Violation of Any Instrument.................................. 22
2.14 Contracts and Commitments....................................... 22
2.15 Suppliers....................................................... 24
2.16 Insurance....................................................... 24
2.17 Labor Difficulties.............................................. 24
2.18 Fringe Benefit Plans............................................ 26
2.19 Litigation...................................................... 26
2.20 Consents and Approvals.......................................... 26
2.21 Compliance with Law............................................. 27
2.22 Environmental Protection........................................ 27
2.23 Compliance with ERISA........................................... 28
2.24 Good Title Conveyed, Etc........................................ 30
2.25 Brokers, Finders, and Investment Bankers........................ 30
2.26 Insider Interests............................................... 30
2.27 Insolvency...................................................... 30
2.28 Bulk Sales...................................................... 31
2.29 XXXXX........................................................... 31
2.30 Disclosure...................................................... 31
2.31 Warranty of Capacity............................................ 31
i
<PAGE>
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF VISA...................... 32
3.1 Corporate Organization, Etc..................................... 32
3.2 Authorization, Etc.............................................. 32
3.3 Brokers, Finders, and Investment Bankers........................ 33
3.4 No Breach....................................................... 33
3.5 No Violation of Any Instrument.................................. 33
3.6 Consents and Approvals.......................................... 33
ARTICLE IV - COVENANTS OF US ORDER AND WORLDCORP.......................... 34
4.1 Full Access..................................................... 34
4.2 Consents........................................................ 34
4.3 Supplements to Disclosure....................................... 35
4.4 Additional Financial Statements................................. 35
4.5 Insolvency...................................................... 35
4.6 Other Transactions.............................................. 35
4.7 Covenant to Satisfy Conditions.................................. 36
4.8 Covenants of Loyalty, Cooperation and Non-Competition........... 36
4.9 Operation of Business of US Order............................... 42
4.10 Representations and Warranties.................................. 45
4.11 Releases........................................................ 45
4.12 Labor Matters................................................... 45
4.13 Hardware........................................................ 46
4.14 Most Favored Customers.......................................... 47
4.15 Current Customer Base........................................... 49
4.16 Services Agreement.............................................. 49
4.17 Phone Subsidies................................................. 50
ARTICLE V - COVENANTS OF VISA............................................. 51
5.1 Covenant to Satisfy Conditions.................................. 51
5.2 Board Representation............................................ 51
5.3 Knight Ridder Advertising Services.............................. 52
5.4 Other Transactions.............................................. 52
ARTICLE VI - COVENANTS OF THE PARTIES..................................... 52
6.1 Efforts to Consummate........................................... 52
6.2 License Agreement............................................... 53
ARTICLE VII - CONDITIONS TO US ORDER'S AND WORLDCORP'S
OBLIGATIONS.......................................................... 53
7.1 Representations and Warranties True............................. 53
7.2 License Agreement............................................... 53
7.3 Government Consents and Authorizations.......................... 53
7.4 No Governmental Proceeding or Litigation........................ 53
7.5 Fairness Opinion................................................ 54
7.6 Consents from Shareholders...................................... 54
7.7 No Injunction................................................... 54
7.8 Legal Opinion................................................... 54
ii
<PAGE>
ARTICLE VIII - CONDITIONS TO VISA'S OBLIGATIONS........................... 54
8.1 Representations and Covenants................................... 54
8.2 Opinions of Counsel............................................. 55
8.3 Other Documents................................................. 55
8.4 Consents and Approvals.......................................... 55
8.5 No Government Proceeding or Litigation.......................... 55
8.6 No Injunction................................................... 56
8.7 Material Adverse Changes........................................ 56
8.8 Employment and Non-Compete Agreements........................... 56
8.9 License Agreement............................................... 56
8.10 Releases........................................................ 56
8.11 Consulting Agreement............................................ 56
8.12 Due Diligence................................................... 56
8.13 Fairness Opinion................................................ 56
8.14 Consents from Shareholders...................................... 56
ARTICLE IX - SURVIVAL OF REPRESENTATIONS
AND WARRANTIES; INDEMNIFICATION............................... 57
9.1 Investigations.................................................. 57
9.2 Indemnification by US Order and WorldCorp....................... 57
9.3 Indemnification by Visa......................................... 59
9.4 Notice.......................................................... 60
9.5 Limits on Indemnification....................................... 60
ARTICLE X - TERMINATION AND ABANDONMENT................................... 61
10.1 Methods of Termination.......................................... 61
10.2 Effect of Termination........................................... 61
10.3 Expenses........................................................ 61
ARTICLE XI - MISCELLANEOUS................................................ 62
11.1 Counterparts................................................... 62
11.2 Notices........................................................ 62
11.3 Successors and Assigns......................................... 63
11.4 Governing Law.................................................. 63
11.5 Waiver and Other Action........................................ 63
11.6 Entire Agreement............................................... 63
11.7 Severability................................................... 63
11.8 Specific Performance........................................... 64
11.9 Confidentiality; Publicity..................................... 64
11.10 Resolution of Conflicts........................................ 65
11.11 Interpretation................................................. 67
11.12 No Reliance on Projections..................................... 67
11.13 Additional Rights.............................................. 67
11.14 Limitation of Certain Liabilities.............................. 68
11.15 Third Party Beneficiaries...................................... 68
11.16 Post-Closing Cure Rights....................................... 68
iii
<PAGE>
EXHIBITS:/1/
Exhibit 1.1-A List of Computer Hardware, Firmware, Software and Databases
Comprising the US Order Bill-Pay System
Exhibit 1.1-B List of Excluded Assets
Exhibit 1.1-B-1 Visa Excluded Assets License
Exhibit 1.1-B-2 US Order Asset License
Exhibit 1.2-C Assumption of Liabilities and Obligations
Exhibit 1.2-D-1 Description of Springboard Preferred Stock
Exhibit 1.2-D-2 Irrevocable Proxy
Exhibit 1.5-A Bill of Sale and Assignment Agreement
Exhibit 1.5-B XXXXX Agreement
Exhibit 1.5-C Form of Employment and Noncompete Agreement
Exhibit 1.5-D Designated Employee Schedule
Exhibit 1.7 Allocation of Purchase Price
Exhibit 2-A Disclosure Schedule
Exhibit 3 Visa Disclosure Schedule
Exhibit 4.2 Deferred Consents
Exhibit 4.8 US Order Services Pricing
Exhibit 4.8-A Nonfinancial Applications
Exhibit 4.8-E US Order Employees Subject to Noncompetes
Exhibit 4.11 Form of Release
Exhibit 4.13 US Order Software
Exhibit 4.17 Phone Subsidy Calculation
/1/ Registrant agrees to furnish supplementally a copy of any omitted schedule
or exhibit to the Commission upon request.
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ACQUISITION AGREEMENT
This ACQUISITION AGREEMENT (this "Agreement") is entered into as of July
15, 1994, among Visa International Service Association, a Delaware non-stock
membership corporation ("Visa"), US Order, Inc. a Delaware corporation ("US
Order") and WorldCorp, Inc., a Delaware corporation ("WorldCorp").
W I T N E S S E T H:
WHEREAS, US Order desires to sell and Visa desires to purchase
substantially all of the business and assets of US Order and this purchase
facilitates Visa's efforts to research and develop a transactional bill-pay
system;
WHEREAS, Visa anticipates that it will designate an affiliated company
("Springboard") prior to Closing and assign some or all of its rights and
obligations hereunder to this affiliated company.
NOW, THEREFORE, in consideration of the mutual agreements contained herein,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows.
DEFINED TERMS
-------------
"abandon" is defined in Section 1.2(c)(iii).
"Acceptance" is defined in Section 1.2(a).
"Accrued Benefit" is defined in Section 2.23(d).
"Actions" is defined in Section 4.8(g).
"Active" is defined in Section 1.2(c)(i).
"Actions" is defined in Section 4.8(g).
"ADSI" is defined in Section 4.13(b).
"Advisor" is defined in Section 5.2.
"Affiliates" is defined in Section 1.2(c)(iii).
"Agreement" is defined on page 1.
"Applications" is defined in Section 4.14(a).
"Assets" is defined in Section 1.1(a).
"Assignee" is defined in Section 1.2(c)(i).
"Assignments" is defined in Section 1.5(a).
"Assumption of Liabilities and Obligations" is defined in
Section 1.2(b)(ii).
"Biller File" is defined in Section 1.1(a).
"Capital Stock" is defined in Section 2.2.
"Claims" is defined in Section 2.19.
"Closing" is defined in Section 1.4(a).
"Closing Date" is defined in Section 1.4(a).
"Closing Payment" is defined in Section 1.2(b)(i).
"COBRA" is defined in Section 2.17(d).
"COBRA Regulation" is defined in Section 2.17(d).
"Code" is defined in Section 2.23(f).
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"Common Stock" is defined in Section 2.2.
"Consulting Agreement" is defined in Section 2.11(c).
"Consumer Devices" is defined in Section 4.8.
"Controlling Shareholder" is defined in Section 4.8(g).
"Copyrights" is defined in Section 2.11(b).
"CPR Amount(s)" is defined in Section 1.2(c).
"CPR Period" is defined in Section 1.2(c).
"CPR Term" is defined in Section 1.2(c).
"Current Value" is defined in Section 2.23(d).
"Customer Services" is defined in Section 4.8.
"Customization Services" is defined in Section 4.8.
"Damages" is defined in Section 9.2.
"Deferred Consents" is defined in Section 4.2.
"Designated Employees" is defined in Section 1.5(a).
"Disclosure Payment" is defined in Section 1.2(a).
"Disclosure Schedule" is defined in Article II.
"Dispute" is defined in Section 11.10(a).
"Dispute Notice" is defined in Section 11.10(a).
" XXXXX Agreement" is defined in Section 1.5(a).
"Environmental Claim" is defined in Section 2.22(e).
"Environmental Laws" is defined in Section 2.22(e).
"ERISA" is defined in Section 2.23(f).
"Excluded Assets" is defined in Section 1.1(b).
"Exercise Notice" is defined in Section 4.14(a)(ii).
"Facilities Management" is defined in Section 4.8.
"Financial Services" is defined in Section 4.8.
"Financial Statements" is defined in Section 2.6.
"First Payment" is defined in Section 1.2(a).
"Good Faith Estimate" is defined in Section 11.16(a).
"Group Member" is defined in Section 1.2(c).
"Indemnified Parties" is defined in Section 9.2.
"Initial Payment" is defined in Section 1.2(a).
"Insider" is defined in Section 4.9(j).
"Latest Balance Sheet" is defined in Section 2.6.
"Legal Items" is defined in Section 2.19.
"License Agreements" is defined in Section 6.2.
"Liens" is defined in Section 2.9.
"Major Competitor" is defined in Section 4.8(a)(ii).
"Maskworks" is defined in Section 2.11(b).
"Material Adverse Effect" is defined in Section 2.1.
"Materials of Environmental Concern" is defined in Section 2.22(e).
"Member" is defined in Section 1.2(c).
"Monthly Accrual" is defined in Section 1.2(c)(iii).
"Multi-employer Plan" is defined in Section 2.23(f).
"Non-Financial Applications" is defined in Section 4.8.
"Notice" is defined in Section 4.8(a)(iii).
"Notice Period" is defined in Section 4.14(a)(ii).
"Patent" is defined in Section 4.18(i).
"Patents" is defined in Section 2.11(a).
"Plan" is defined in Section 2.23(f).
"Preferred Provider" is defined in Section 4.16(a).
"Preferred Stock" is defined in Section 2.2.
"Protocols" is defined in Section 1.1(a).
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"Proxy" is defined in Section 1.2(b)(iii).
"Quarterly Obligations" is defined in Section 1.2(c)(ii).
"Remote Banking" is defined in Section 4.8.
"Repurchase Amounts" is defined in Section 1.2(c)(iii).
"Retail Bill-Pay Account" is defined in Section 1.2(c)(i).
" XXXXX " is defined in Section 4.18(i).
"Series A Preferred" is defined in Section 2.2.
"Series B Preferred" is defined in Section 2.2.
"Series C Preferred" is defined in Section 2.2.
"Shareholders" is defined in Section 1.1(a).
"Springboard" is defined on page 1.
"Springboard Preferred Stock" is defined in Section 1.2(b)(iii)
"Terminals" is defined in Section 1.1(a).
"Terminal Resident Software" is defined in Section 1.1(a).
"Trade Secrets" is defined in Section 2.11(c).
"Trademarks" is defined in Section 2.11(b).
"Transfer" is defined in Section 4.14(a).
"Transfer Notice" is defined in Section 4.14(a)(i).
"Two Year Reps and Warranties" is defined in Section 9.2(a).
"Unit of Capacity" is defined in Section 2.31.
"US Order" is defined on page 1.
"US Order Asset License" is defined in Section 1.1(c)
"US Order Bill-Pay System" is defined in Section 1.1(a).
"US Order Director" is defined in Section 5.2.
"US Order Parties" is defined in Section 4.8.
"US Order Services" is defined in Section 4.8.
"Visa" is defined on page 1.
"Visa Bill-Pay System" is defined in Section 1.1(a).
"Visa Disclosure Statement" is defined in Article III.
"Visa E-Pay System" is defined in Section 1.2(c)(i).
"Visa Excluded Assets License" is defined in Section 1.1(b).
"Voice Response Unit" is defined in Section 1.1(a).
"Warranty of Capacity" is defined in Section 9.2(a).
"WARN" is defined in Section 2.17(b).
"WorldCorp" is defined on page 1.
ARTICLE I
PURCHASE AND SALE OF ASSETS
1.1 Purchase and Sale of Assets.
---------------------------
(a) Subject to the exceptions listed in Section 1.1(b), and subject to
the terms and conditions of this Agreement, at the Closing US Order shall sell,
assign, transfer and deliver to Visa or its designee, Springboard, and Visa or
its designee shall purchase from US Order, free and clear of all obligations of
US Order and the shareholders of US Order (the "Shareholders") and of all liens,
claims, liabilities and encumbrances of any kind (except those liabilities and
obligations which Springboard will explicitly assume pursuant to Section
1.2(b)(ii)), all of US Order's assets, properties, rights, claims, contracts,
goodwill and businesses of every kind, character, and description, whether
tangible or intangible,
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owned, licensed or leased, real, personal or mixed, accrued, contingent or
otherwise, and wherever located, all as the same shall exist on the Closing Date
(other than the assets listed in Section 1.1(b)), hereinafter called the
"Assets".
Because it may be impossible or impractical to divide ownership of certain
intellectual property rights of US Order, including those in software, source
code and know-how, the parties have agreed that Visa will acquire ownership of
all of the intellectual property rights of US Order that are not clearly
separate, distinct and divisible and these will be included as part of the
Assets. Where the parties intend that US Order be able to continue to use
certain of these indivisible intellectual property rights in its business, they
have agreed that at the Closing, Visa will grant to US Order a perpetual,
royalty-free, worldwide license to these rights as provided in Exhibit 1.1-B-2
("US Order License"). Similarly, at the Closing, US Order will grant to Visa a
perpetual, royalty-free, worldwide license as provided in Exhibit 1.1-B-1 ("Visa
Excluded Assets License") to use certain of the divisible intellectual property
rights of US Order which US Order is retaining under this Agreement, as well as
to use modifications and enhancements made by or for US Order to these retained
intellectual property rights and to the intellectual property rights licensed
from Visa as referred to above.
The "US Order Bill-Pay System" means all computer hardware, firmware,
software, databases and associated source code, know-how and documentation which
relate to the US Order electronic bill-pay service system acquired by Visa
pursuant to this Agreement, including the interactive transaction processing,
database management and telecommunications functions and systems, but excluding
the Biller-File, the Protocols, the Terminals, the Terminal Resident Software
and the Voice Response Unit. The US Order Bill-Pay System does not include any
portion of the Assets used for financial transaction settlement or clearing.
The "Biller-File" means all computer firmware, software, databases and
associated source code, know-how and documentation which relate to US Order's
biller-file, including the data on approximately 80,000 billers, the methodology
and format of information and organization of this biller file and the methods
of accessing and revising this biller file.
The "Protocols" means all computer firmware, software, databases and
associated source code, know-how and documentation which relate to US Order's
device-to-host communication protocols and message formats, including
communications software which relate to the US Order Bill-Pay System and that
facilitate a consumer (including personal computer) device-to-host interface.
The "Terminals" means all US Order telephones and smartphones, including
ScanFone, PhonePlus, Eagle IIa, and Eagle
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III, which are or can be used in connection with the Visa Bill-Pay System.
The "Terminal Resident Software" means US Order software which is or can be
installed on a Terminal and used in connection with the Visa Bill-Pay System for
Remote Banking.
The "Voice Response Unit" means all computer hardware, firmware, software,
databases and associated source code, know-how and documentation which relate to
US Order's InterVoice voice response platform.
The "Visa Bill-Pay System" means the US Order Bill-Pay System together with
improvements, enhancements and modifications thereto made by Visa, its
subsidiaries and its Affiliates after the Closing, but not including any
enhancements or modifications that are independently developed and are not based
upon or do not use the US Order Bill-Pay System except know-how. The Visa Bill-
Pay System does not include know-how developed by Visa and its Affiliates after
the Closing.
Without limiting the foregoing, the Assets shall include the items shown on
Exhibit 1.1-A and the following:
(i) All rights in any computer hardware, computer firmware,
computer software, and databases (including all copies of associated source code
and documentation) which has been or is currently being marketed to any customer
or under any of US Order's trade designations, which is currently being
developed, or which is used by US Order in the provision of services to
customers, or in the process of developing new computer hardware, firmware,
software or databases, or for any other purpose in the business of US Order;
including the US Order Bill-Pay System, the Protocols, and the Voice Response
Unit.
(ii) the Visa Excluded Assets License referred to in Section 1(b)
and attached as Exhibit 1-B-1, which is a license from US Order to Visa with
respect to the Excluded Assets;
(iii) All technical information, data and know-how of any kind,
including engineering, design, production, communication and processing
techniques and systems, relating to or utilized in the business of US Order;
(iv) All of the patents, patent applications, copyrights,
copyright applications, trademarks, trade names or other trade designations
whether registered or not, including associated goodwill, and any other
intellectual property rights, and all licenses and rights to use any of the
foregoing, that are related to or utilized in the business of US Order;
(v) All biller files relating to or used in the business of US
Order including the Biller File;
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(vi) All other goodwill and intangible properties and assets of
US Order related to the foregoing;
(vii) All right, title and interest in and under any other
contracts or leases assigned or intended so to be pursuant to this Agreement;
and
(viii) All books, records, information, copies and documentation
regarding the foregoing.
(b) The Assets to be so sold and acquired shall not include the assets
listed on Exhibit 1.1-B, none of which are intellectual property or other rights
which are not clearly separate, distinct, and divisible, and none of which are
an indivisible part of any Asset (the "Excluded Assets"). At the Closing US
Order shall grant to Visa a worldwide, royalty-free, perpetual, nonexclusive
license to use any Excluded Assets (other than hardware) that are necessary for
the operation of the Visa Bill-Pay System or needed in connection with any
Remote Banking, Facilities Management, Customer Service, Customization Services
or Financial Services offered by Visa or its Affiliates, all as described in the
Excluded Assets License attached as Exhibit 1.1-B-1 (the "Visa Excluded Assets
License"). Visa shall pay to US Order a fee equal to the out-of-pocket, non-
salary incremental costs to US Order of providing the Visa Excluded Assets
License to Visa.
(c) At the Closing, Visa shall grant to US Order (i) a worldwide,
royalty-free, perpetual, exclusive license to use certain Assets, and (ii) a
worldwide, royalty-free, perpetual, nonexclusive license to use certain Assets,
all as described in the "US Order Asset License" attached as Exhibit 1.1-B-2.
(d) In addition to purchased assets, Visa is also compensating US
Order for certain in-process research and development activities related to
improvement of the purchased technology.
1.2 Consideration.
-------------
(a) Initial Payments. On June 23, 1994, Visa delivered $1 million to
----------------
US Order (the "First Payment"). On the date of this Agreement, Visa shall
deliver $1 million to US Order (the "Disclosure Payment"). US Order and Visa
shall hereafter deliver to the parties and their counsel all Schedules and
Exhibits required to be attached to this Agreement and not attached on the date
hereof. This Agreement is intended to be the binding obligation of the parties,
notwithstanding that it is being signed before all of the Exhibits and Schedules
have been prepared and attached, and the parties are obligated to proceed in
good faith to prepare and attach these Exhibits and Schedules with the intention
that a court supply any missing terms in the Exhibits and Schedules necessary to
make this a binding
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agreement. The Disclosure Payment shall be made to US Order by wire transfer to
a U.S. bank account designated by US Order. As used in this Agreement the term
"Initial Payment" shall mean the First Payment and the Disclosure Payment taken
together.
(b) Closing Payment; Liabilities Assumed; Preferred Stock. Subject to
-----------------------------------------------------
the terms and conditions of this Agreement, at the Closing:
(i) Visa shall pay to US Order $13 million in the manner
hereafter provided (the "Closing Payment"). The Closing Payment shall be made by
certified check or by wire transfer to a U.S. bank account which shall be
designated by US Order at least three (3) business days prior to the Closing;
(ii) Visa shall deliver to US Order an assumption of liabilities
and obligations in the form attached hereto as Exhibit 1.2-C (the "Assumption of
Liabilities and Obligations"), whereby Visa will assume certain liabilities and
obligations of US Order to the extent they are fully described on such Exhibit;
and
(iii) Visa will cause the due authorization, sale and issuance to
US Order of shares of redeemable capital stock of Springboard having only the
rights, privileges and preferences as are set forth on Exhibit 1.2-D-1 hereof
(the "Springboard Preferred Stock"), and US Order will deliver to Visa the
irrevocable proxy to vote the Springboard Preferred Stock in the form attached
as Exhibit 1.2-D-2 (the "Proxy").
(c) CPR Amounts. (i) During the seventy-two (72) month period
-----------
commencing January 1, 1995 and ending December 31, 2000, or such shorter period
as may apply in accordance with the provisions of paragraph 1.2(c)(iii) below
(the "CPR Term"), US Order shall be entitled to additional payments from Visa
calculated and payable as described in this Section 1.2(c).
For each calendar month during the CPR Term (individually, a "CPR Period"),
Visa shall calculate an amount as follows (the "CPR Amounts" or "CPR Amount"):
XXXXX
All references in this Section to Visa include Visa and its subsidiaries
and Affiliates.
As used in this Agreement the term "Member" shall have the meaning set
forth in the By-laws of Visa or any "Group Member" of
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Visa as any such By-laws may be amended from time to time in the sole discretion
of Visa.
A "Retail Bill-Pay Account" means any end-user account of Visa, Springboard
or the Members where such account could generate an instruction to pay a bill
and generate a payment authorization on the Visa Bill-Pay System. A Retail
Bill-Pay Account will include any and all accounts which use the Visa Bill-Pay
System through a sale, disposition, transfer or license of any part of the Visa
Bill-Pay System from Visa.
A Retail Bill-Pay Account will be considered to be "Active" during a CPR
Period only if during that CPR Period (i) the account uses a significant portion
of the Visa Bill-Pay System to pay a bill, and (ii) the end-user customer
completes at least one bill payment. In no event, however, will any Retail
Bill-Pay Account be counted as Active more than one time during a CPR Period.
Notwithstanding anything to the contrary in this Agreement, US Order will
not be entitled to any CPR Amount for accounts as to which the Visa Bill-Pay
System serves only as a "switch" or "gateway" to a participating financial
institution or service provider that utilizes a bill pay system other than the
Visa Bill-Pay System.
Notwithstanding anything to the contrary in this Agreement, US Order will
not be entitled to any CPR Amount for accounts as to which Visa provides
services contemplated by the Visa E-Pay System or comparable services; except in
cases (i) where there is a separate use of the Visa Bill-Pay System in an Active
Retail Bill-Pay Account, or (ii) where the Visa E-Pay System has expanded beyond
bank payment authorization, clearing and settlement and includes functions
performed by the Visa Bill-Pay System and uses a significant portion of the Visa
Bill-Pay System to perform these functions. The "Visa E-Pay System" is Visa's
payment authorization, clearing and settlement system for bill payment, as from
time to time modified by Visa.
During the CPR Period, Visa will not transfer the resident software in any
US Order smartphone for use on interactive hardware, except (i) for use on any
US Order smartphone or related US Order products, or (ii) if such interactive
hardware is connected to the Visa Bill-Pay System.
(A) In the event that market conditions or costs require changes in the
timing or amount of CPR Amounts payable under this Section, Visa may request the
rescheduling of such amounts, which rescheduling will be subject to the approval
of US Order, which will not be unreasonably withheld or delayed, provided that
the net present value of such rescheduled payments equals the amount reasonably
projected at that time of the net present value of the CPR Amounts that would
otherwise accrue from then until the end of the CPR Term. This net present
value will be calculated using
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a discount rate of 10% per annum, compounded quarterly. The rescheduled
payments may take the form of a reduction in the CPR Amount and a corresponding
increase in the duration of the CPR Term.
(B) Visa agrees that it will not under any circumstances replace, modify
or abandon in favor of another system the Visa Bill-Pay System for the purpose
of avoiding its obligation to pay any or all of the CPR Amounts. If Visa does
replace, modify or abandon in favor of another system the Visa Bill-Pay System
for the purpose of avoiding its obligation to pay any or all of the CPR Amounts,
Visa will remain obligated to pay the CPR Amounts to US Order with respect to
the replacement system as if the replacement or modified system was the Visa
Bill-Pay System.
However, Visa shall be entitled to replace, modify or abandon in favor of
another system the Visa Bill-Pay System, at any time, with a system that is
materially different and that does not use any significant portion of the Visa
Bill-Pay System, its source code or documentation, and in so doing Visa shall
not be obligated to continue to pay the CPR Amounts to US Order; provided that
Visa makes a good faith determination, documented to US Order upon US Order's
written request, that the replacement or modified system is required for
commercial purposes other than avoidance of its obligation to pay CPR Amounts.
At all times prior to deciding to replace the Visa Bill-Pay System in a way that
would eliminate the CPR Amounts, Visa will in good faith consider modifications
and improvements to the Visa Bill-Pay System that would avoid elimination of CPR
Amounts.
(ii) The CPR Amount for each CPR Period shall be calculated and
paid by Visa quarterly during the CPR Term for the periods ending March 31, June
30, September 30 and December 31 with respect to only those CPR Periods ending
during such quarter. Quarterly payments shall be due 40 calendar days from the
end of such quarters, will be payable to US Order (or to an account or lockbox
designated in writing by US Order) in immediately available funds, and will be
accompanied by a computation of the CPR Amounts for such quarter certified by
the Chief Financial Officer of Visa or Springboard.
Notwithstanding anything in this Agreement to the contrary, the payment
right granted to US Order pursuant to this Section 1.2(c) shall not be
transferred, assigned or encumbered by US Order unless: (A) all obligations of
US Order under this Agreement are transferred with such payment right; (B) such
transfer, assignment or encumbrance shall not create any additional obligations
of Visa under applicable laws or cause Visa to lose any benefits of this
Agreement; and (C) Visa shall consent in writing to such transfer, which consent
shall not be unreasonably withheld. Notwithstanding the preceding sentence,
once payments of the CPR Amounts have been made to US Order, US Order may
redistribute the payments at its sole discretion.
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XXXXX
(iii) In no event shall Visa be restricted from informing Members
regarding any technology or services that compete with the bill-pay function or
any other aspect of the Visa Bill-Pay System, or from promoting or providing
access to any competing technology through the Visa Bill-Pay System. Neither
Visa nor any other person shall have any liability to US Order or any other
person by reason of failure to achieve any level of Active Retail Bill-Pay
Accounts other than as a result of a breach of an express covenant made by such
party in this Agreement. In particular, it is acknowledged and agreed that Visa
(1) has no obligation of any kind to provide capital, personnel or other
resources to Springboard; and (2) may elect at any time to sell, transfer or
abandon the Visa Bill-Pay System. If Visa abandons the entire Visa Bill-Pay
System, Visa shall deliver notice of such abandonment to US Order, the CPR Term
XXXXX
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shall terminate and all obligations under this Section 1.2(c) shall terminate
except that US Order shall have thirty calendar days from receipt of such notice
to acquire the Visa Bill-Pay System on the following terms: US Order shall pay
Visa solely out of quarterly payments calculated in the manner described below
an aggregate amount equal to the sum of the First Payment, the Disclosure
Payment, the Closing Payment, all other payments made by Visa under this
Agreement, all reductions of CPR Amounts and any other offsets or reductions
made by Visa pursuant to this Agreement, and the research and development,
engineering and other development expenses of Visa and its Affiliates (as that
term is defined in Rule 12b-2 under the Securities Exchange Act or 1934, as
amended ("Affiliates"), except that a Member will not be considered an Affiliate
of Visa for purposes of this Agreement) associated with the Visa Bill-Pay System
through the date of sale (the "Repurchase Amounts"). For each calendar month
after the date of such reacquisition, US Order shall calculate an amount (the
"Monthly Accrual") equal to
XXXXX
For the purpose of making this calculation, the reference to the Visa Bill-Pay
System in the definition of an Active Retail Bill-Pay Account shall include all
modifications and enhancements made to the US Order Bill-Pay System or the Visa
Bill-Pay System after the reacquisition of the system by US Order, but not
including any enhancements or modifications that are independently developed and
not based upon or using the source code or documentation in the Visa Bill-Pay
System. The Monthly Accruals for each month shall be calculated and paid by US
Order quarterly following the reacquisition for the periods ending March 31,
June 30, September 30 and December 31, with respect only to those months ending
during such quarter. Quarterly payments shall be due forty (40) calendar days
from the end of each such quarter, will be available to Visa in immediately
available funds, and will be accompanied by a computation of the quarterly
payment for such quarter certified by the Chief Financial Officer of US Order.
As used in this Section, the term "abandon" shall mean that Visa has
notified US Order in writing that neither Visa nor any of its Affiliates or
Members, or any Assignee, are using the Visa Bill-Pay System or any technology
or know-how embodied therein or presently intend, in their sole discretion, to
make any such use in the future. Visa agrees not to unreasonably delay the
delivery of notice of abandonment.
(iv) US Order shall be entitled to conduct one audit of the
calculation of the CPR Amounts per calendar year, with the first such audit
being conducted on or after February 1, 1996, so long as such audits shall meet
the following conditions: (A) the auditor shall be an independent Big Six
accounting firm; (B) such audit firm and its employees shall sign
confidentiality
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agreements reasonably acceptable to Visa; (C) US Order shall notify Visa a
reasonable time in advance of such audit; (D) such audit shall be conducted in a
manner that causes no unreasonable disruption of the normal business operations
of Visa or Springboard; (E) such audit shall be completed within three business
days; (F) US Order shall bear all costs associated with such audit; (G) the
auditors will review only materials which Visa reasonably determines will not
compromise or interfere with the confidentiality or security of its data or
technology; and (H) the results of such audit, including copies of any working
papers delivered by the accounting firm to US Order, will be delivered to Visa.
1.3 Liabilities Not Assumed. It is understood and agreed that the
-----------------------
responsibility for, and risk of loss or liability resulting from, the conduct or
the business of US Order for all periods through the Closing Date shall be that
of US Order. Unless otherwise specifically provided in the Assumption of
Liabilities and Obligations, US Order shall be responsible for, and Visa shall
not assume or agree to pay, perform or discharge any debts, liabilities or
obligations of US Order, or claims against US Order, whether known or unknown to
it, and whether disclosed or not disclosed pursuant to this Agreement, and
whether or not contingent, that are outstanding on the Closing Date or that
result or arise from events, circumstances or conditions that occurred or took
place on or prior to the Closing Date.
1.4 Closing.
-------
(a) Upon the terms and subject to the conditions contained in this
Agreement, the closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of Farella, Braun & Martel, 235
Montgomery Street, San Francisco, CA 94104, or such other place as the parties
may mutually agree, on any business day, selected by Visa, within five business
days following satisfaction of the conditions set forth in Articles VII and VIII
hereof, or on such later date as the parties may mutually agree upon (such date
is referred to herein as the "Closing Date"). The parties intend, and shall use
their reasonable best efforts, to cause the Closing Date to occur on or before
July 29, 1994.
(b) If (i) the Closing shall occur, but if it occurs after August 1,
1994 or such later date as shall result from a notice and cure period as
described in Sections 10.1(b) and (c) hereof, (ii) such Closing occurs more than
five (5) business days after the satisfaction of the conditions set forth in
Article VIII hereof, and (iii) the delay in the Closing is not attributable to,
or caused in whole or part by, WorldCorp, US Order or their representatives,
then US Order shall be entitled to a payment from Visa equal to XXXXX
multiplied by the number of days between the Closing Date and the later of (1)
August 1, 1994, (2) five business days after satisfaction of the conditions
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set forth in Article VIII hereof, or (3) such date as shall result from a notice
and cure period as described in Section 10.1(b) or (c) hereof. Such amount, if
any, shall be payable on the Closing Date by certified check or wire transfer to
a U.S. bank account designated by US Order.
1.5 Execution and Delivery of Closing Documents. Before the Closing, each
-------------------------------------------
party shall cause to be prepared, and at the Closing each party shall execute
and deliver, each agreement and instrument required by this Agreement to be so
executed and delivered and not theretofore accomplished. At the Closing:
(a) US Order will deliver or cause to be delivered to Visa: (i) a
duly executed Bill of Sale and Assignment in the form attached hereto as Exhibit
1.5-A; (ii) Visa Excluded Assets License, the US Order Asset License, and the
Encryption Rights Agreement ("Encryption Rights Agreement") attached as Exhibit
1.5-B; (iii) assignments in a recordable form, satisfactory to Visa, of all
patents, trademarks, trade names, assumed names, and copyrights and all
applications therefor which are included in Section 2.11 of the Disclosure
Schedule (the "Assignments"); (iv) Employment and Noncompete Agreements (in the
form attached as Exhibit 1.5-C) of employees listed on Exhibit 1.5-D (the
"Designated Employees"); (v) all documents containing or relating to "know-how"
to be purchased by Visa or its designee pursuant hereto; (vi) all such other
deeds, endorsements, assignments, documents of title and other instruments that
Visa's counsel deems reasonably necessary to vest in Visa or its designee good
and marketable title to the Assets; and (vii) all other previously undelivered
documents required by this Agreement to be delivered by US Order or WorldCorp to
Visa or Springboard at or prior to the Closing.
(b) Visa will deliver or cause to be delivered to US Order: (i) a
duly executed Assumption of Liabilities and Obligations; (ii) the Closing
Payment and any payment that may be due pursuant to Section 1.4(b); (iii) the US
Order License, the Visa Excluded Assets License and the Encryption Rights
Agreement; and (iv) all previously undelivered documents required by this
Agreement to be delivered by Visa to US Order at or prior to the Closing.
1.6 Further Assurances. After the Closing, US Order and WorldCorp shall
------------------
from time to time, at the request of Visa and without further cost or expense to
Visa, execute and deliver such other instruments of conveyance and transfer and
take such other actions as Visa may reasonably request, in order to more
effectively consummate the transactions contemplated by this Agreement and to
vest in Visa or its designee good and marketable title to the Assets (including,
without limitation, assistance in the collection or reduction to possession of
any of the Assets).
1.7 Allocations.
-----------
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(a) The parties agree that US Order and Springboard shall file
identical Forms 8594 with their tax returns for their respective taxable years
within which the Closing occurs, and that the purchase price allocations set
forth in such Forms shall reflect the allocation of the fair market value of the
various components of the Assets indicated in Exhibit 1.7. US Order shall
supply Visa with a copy of the Form 8594 that US Order files with its tax return
for the period within which the Closing occurs.
(b) The parties agree that a substantial portion of the consideration
is properly allocable to in-process research and development. Further, it is
agreed that a degree of uncertainty exists as to whether the in-process research
and development will result in a commercially viable product. The consideration
for the in-process research and development is as shown in Exhibit 1.7.
(c) US Order and Visa shall equally divide any sales, use or transfer
taxes applicable to the transfer of the Assets pursuant to this Agreement that
are imposed by federal, state or local authority, except that US Order's
liability pursuant to this Section 1.7(c) shall not exceed $250,000. Visa and
Springboard shall have no obligation to pay any taxes of any kind based on, or
determined by reference to; (i) any payments to be made pursuant to this
Agreement after the Closing, or (ii) the income of US Order or any Shareholder.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF US ORDER AND WORLDCORP
-------------------------
US Order, and WorldCorp with respect only to its representation in Sections
2.4, 2.5 and 2.27, hereby represents and warrants to Visa that the statements
contained in this Article II are true, correct and complete as of the date of
this Agreement and will be true, correct and complete as of the Closing Date
(with the same force and effect as if made on the Closing Date), except as set
forth in the disclosure schedule attached hereto as Exhibit 2-A (the "Disclosure
Schedule"). The Disclosure Schedule is arranged in paragraphs corresponding to
the numbered sections and subsections contained in this Article II. Each of
these representations and warranties is intended to and shall survive the
Closing and any waiver or consent of Visa made at or before the Closing.
2.1 Corporate Organization, Etc. US Order is a corporation duly
----------------------------
organized, validly existing, and in good standing under the laws of the State of
Delaware and has full corporate power and authority to carry on its business as
it is now being conducted and to own the properties and assets it now owns. US
Order is duly qualified or licensed to do business as a foreign corporation in
good standing in all of the jurisdictions where
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failure to be so qualified or in good standing could have a material adverse
effect on the business, assets, liabilities, results of operations, prospects or
financial condition of US Order relating to the Assets or the value of such
Assets to Visa (a "Material Adverse Effect"). The copies of the Articles of
Incorporation and Bylaws of US Order heretofore delivered to Visa are complete
and correct copies of such instruments as currently in effect.
2.2 Capitalization of US Order. The authorized capital stock of US Order
--------------------------
consists of: (i) 30,000,000 shares of Common Stock, par value $0.001 per share
(the "Common Stock"), 5,000,000 of which are issued and outstanding; and (ii)
11,010,000 shares of Preferred Stock, par value $0.001 per share, of which
5,204,082 shares of Series A Preferred Stock (the "Series A Preferred") are
issued and outstanding, 7,550 shares of Series B Preferred Stock (the "Series B
Preferred") are issued and outstanding, and 1,683,031 shares of Series C
Preferred Stock (the "Series C Preferred" and, together with the Series A
Preferred and the Series B Preferred, the "Preferred Stock") are issued and
outstanding. All issued and outstanding shares of Common Stock and Preferred
Stock (the "Capital Stock") of US Order are validly issued, fully paid, and
nonassessable and are owned of record and beneficially by the persons listed in
Section 2.2 of the Disclosure Schedule. As of the date of this Agreement, there
are also outstanding options to purchase an aggregate of 2,353,628 shares of
Common Stock; and all of such options are listed in Section 2.2 of the
Disclosure Schedule and owned by the person or entity named as owner in that
Section. Except as set forth above, there are no outstanding: (i) securities
convertible into or exchangeable for capital stock of US Order; (ii) options,
warrants, or other rights to purchase or subscribe to capital stock of US Order
or securities convertible into or exchangeable for capital stock of US Order; or
(iii) contracts, commitments, agreements, understandings, or arrangements of any
kind relating to the issuance of any capital stock of US Order, any such
convertible or exchangeable securities, or any such options, warrants, or
rights.
2.3 Subsidiaries and Affiliates. Except for the subsidiary described in
---------------------------
Section 2.3 of the Disclosure Schedule, which subsidiary has no business,
assets, liabilities or operations, US Order does not own, directly or
indirectly, any capital stock of, or any equity, profit-sharing, participation,
ownership or other interest in, any partnership, joint venture or other entity.
2.4 Authorization, Etc. US Order has the corporate power and authority,
-------------------
and all licenses, authorizations and permits required by governmental or other
authorities, to own, lease and operate its assets and property and to carry on
its business as now being conducted, and to execute, deliver and perform this
Agreement and the other documents required to be executed by it pursuant to this
Agreement. WorldCorp has the corporate power and authority to execute, deliver
and perform this Agreement and
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the other documents executed or required to be executed by it in connection with
this Agreement. This Agreement and each of the other documents executed in
connection with this Agreement has been duly authorized, executed and delivered
by US Order and WorldCorp, and approved by the Shareholders, and no other
corporate proceedings on the part of US Order or WorldCorp (or other action by
any Shareholder) are necessary to authorize this Agreement or to consummate the
transactions contemplated by this Agreement. This Agreement and the other
documents executed or to be executed in connection with this Agreement are (or
will be upon execution) the legal, valid and binding obligations of US Order and
WorldCorp enforceable in accordance with its or their terms, except as
enforceability may be limited by bankruptcy, insolvency or similar laws and
subject to general principles of equity.
2.5 No Breach. The execution, delivery and performance of this Agreement
---------
and the consummation by US Order and WorldCorp of the transactions contemplated
hereby will not violate, breach, conflict with, constitute a default under, or
permit the termination or the acceleration of maturity or performance of, or
result in the imposition of any lien, claim or encumbrance upon any property or
asset of US Order pursuant to: (i) any provision of the Articles of
Incorporation or Bylaws of US Order; (ii) any law, statute, rule or regulation
or order, writ, judgment, injunction, award or decree of any court, arbitrator
or governmental or regulatory body, or (iii) any note, bond, indenture,
mortgage, deed of trust, evidence of indebtedness, loan, contract, license or
lease agreement, other agreement or instrument (including with customers) to
which US Order or WorldCorp is a party, by which US Order or WorldCorp is bound,
or to which any of their respective assets or properties are subject.
2.6 Financial Statements. US Order has heretofore delivered to Visa true,
--------------------
correct and complete copies of the following financial statements of US Order
(the "Financial Statements"), copies of which have been previously delivered to
Visa: (i) the balance sheets of US Order as at December 31 in each of the years
1990 through 1993 and related statements of income, statements of changes in
shareholders' equity and statements of changes in financial position or
statements of cash flow for each of the years then ended, all certified by
independent public accountants, and (ii) an unaudited balance sheet of the
Company at March 31, 1994 (the "Latest Balance Sheet") and at May 31, 1994, and
statements of income, changes in shareholders' equity and cash flow for the
three month period ended March 31, 1994. Such balance sheets and the notes
thereto are true, complete and accurate and fairly present the assets,
liabilities, and financial condition of US Order as at the respective dates
thereof, and such statements of income, changes in shareholders' equity, changes
in financial position, and cash flow and the notes thereto are true, complete,
and accurate and fairly present the results of operations for the periods
therein
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referred to; all in accordance with generally accepted accounting principles
consistently applied throughout the periods involved.
2.7 No Undisclosed Liabilities, Etc. US Order has no material liabilities
--------------------------------
or obligations of any nature (absolute, accrued, contingent, or otherwise) which
were not fully reflected or reserved against in the Latest Balance Sheet, except
for liabilities and obligations incurred since the date of the Latest Balance
Sheet in the ordinary course of business and consistent with past practice; and
the reserves reflected in the Latest Balance Sheet are adequate, appropriate,
and reasonable.
2.8 Interim Operations. Since the date of the Latest Balance Sheet, US
------------------
Order has not:
(a) Suffered any change in its business, results of operations,
working capital, assets, liabilities (absolute, accrued, contingent or
otherwise), or condition (financial or otherwise) or the manner of conducting
its business other than changes that, individually or in the aggregate, have not
had and will not have a Material Adverse Effect;
(b) Suffered any damage or destruction to or loss of the Assets not
covered by insurance, or any loss of suppliers, or terminated or lost the
services of any key employee, any of which has had or is likely to have a
Material Adverse Effect;
(c) Incurred any liabilities or obligations (absolute, accrued,
contingent or otherwise) relating to the Assets except non-material items
incurred in the ordinary course of business and consistent with past practice,
which in the aggregate do not exceed $100,000;
(d) Permitted or allowed any of the Assets (real, personal or mixed,
tangible or intangible) to be subjected to any mortgage, pledge, lien, security
interest, encumbrance, restriction or charge of any kind, except for liens for
current taxes not yet due;
(e) Cancelled any debts relating to the Assets;
(f) Purchased, received or otherwise acquired, any of the Assets;
(g) Disposed of or permitted to lapse any rights to the use of any
patent, trademark, trade name or copyright, or disposed of or disclosed to any
person other than representatives of Visa any trade secret, formula, process or
know-how included in the Assets not theretofore a matter of public knowledge;
sold, transferred, or otherwise disposed of, any of the Assets; waived any
claims or rights of substantial value relating to the Assets; or entered into
any agreement or understanding, whether in writing or otherwise, for US Order to
take any of the actions specified in this paragraph.
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(h) Entered into or terminated any material agreement or commitment,
or agreed to or made any changes in material leases or agreements related to or
affecting the Assets;
(i) Formed or acquired or disposed of any interest in any corporation,
partnership, joint venture or other entity;
(j) Written up, written down or written off the book value of any
material amount of the Assets;
(k) Declared, paid, or set aside for payment any dividend or
distribution with respect to its capital stock, or made any loans or advances to
any shareholder, officer, director or employee;
(l) Redeemed, purchased or otherwise acquired, or sold, granted or
otherwise disposed of, directly or indirectly, any of its capital stock or
securities or any rights to acquire such capital stock or securities, or agreed
to changes in the terms and conditions of any such rights;
(m) Increased the compensation (including, without limitation, any
increase pursuant to any bonus, pension, profit-sharing or other plan or
commitment) of or paid or accrued any bonuses to any Designated Employee or
contributed or accrued a contribution to any employee benefit plan;
(n) Entered into any employment, compensation or consulting agreement
with any Designated Employee, or entered any collective bargaining agreement
with any person or group, or modified or amended the terms of any such existing
agreement or experienced any material labor trouble, problem or grievance;
(o) Entered into, adopted or materially amended any employee benefit
plan;
(p) Entered into any other commitment or transaction or experienced
any other event that is material to this Agreement or that has or may have a
Materially Adverse Effect;
(q) Entered any agreement or understanding, whether in writing or
otherwise, for US Order to take any of the actions specified in items (a)
through (p) above.
2.9 Title to Properties; Encumbrances. US Order has good and marketable
---------------------------------
title to all assets and properties (whether real, personal or mixed, tangible or
intangible) that are material to the condition (financial or otherwise),
business or operations of US Order (except for Excluded Assets or such
properties or assets held pursuant to leases, in which event US Order has a
valid leasehold interest), including the Assets and all assets and properties
(other than Excluded Assets) that are described in Exhibit 1.1-A, reflected in
the Latest Balance Sheet, or owned
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<PAGE>
and acquired subsequent thereto (except to the extent that such assets and
properties have been disposed of for fair value in the ordinary course of
business consistent with past practice since the date of the Latest Balance
Sheet). None of the assets and properties of US Order are subject to any
restrictions, encumbrances, liens, mortgages, security interests or pledges
("Liens") except: (1) Liens reflected in the financial statements of US Order
for the period ended the date of the Latest Balance Sheet; (2) mechanics,
carriers, workers, repairs and other similar liens or encumbrances arising or
incurred in the ordinary course of business which are not material in amount and
which do not materially adversely affect the value or impair the use of the
property subject thereto; and (3) Liens that are not in the aggregate material
to US Order. All Assets are currently owned, leased, or licensed by US Order,
and the Assets include all assets necessary to operate, or relevant to or
associated with, the US Order Bill-Pay System, the Protocols, the Biller File
and the Voice Response Unit, including without limitation all assets of US Order
relevant to or associated with Remote Banking.
2.10 Condition of Tangible Assets. The tangible Assets (including without
----------------------------
limitation all real and personal property) whether owned or leased, are in good
condition and repair subject only to ordinary wear and tear, are adequate for
the uses to which they are being put in the ordinary course of business of US
Order, conform in all material respects with all applicable ordinances,
regulations and laws, and are not in need of maintenance or repairs which are in
the aggregate material in nature or cost.
2.11 Intellectual Property: Patents, Etc.
------------------------------------
(a) Section 2.11(a) of the Disclosure Schedule lists all domestic and
foreign patents and patent applications owned or licensed by US Order (the
"Patents") and all agreements relating thereto. Except where such Patents are
indicated to be licensed, US Order owns the Patents and all related patent
rights free and clear of all liens, claims or encumbrances and may assign or
license them free and clear of any liens, claims or encumbrances. There are no
proceedings, and to US Order's knowledge, there are no claims, threats or other
communications, which challenge the validity of any claim of any Patent except
as set forth on Section 2.11(a) of the Disclosure Schedule and attached thereto.
All such Patents are currently in compliance with formal legal requirements
(including payment of filing, examination and maintenance fees and proofs of
working or use) and US Order has no reason to believe that any of the Patents is
not, or upon issuance will not be, valid and enforceable. Except as set forth
in Section 2.11(a) of the Disclosure Schedule, no Patent has been or is now
involved in any interference proceeding or has been challenged in any way and US
Order is not aware of any interfering patent or patent application. US Order is
not aware of any relevant information that is material to the examination
19
<PAGE>
of an application for any Patent that has not been disclosed to the U.S. Patent
and Trademark Office pursuant to the disclosure requirements of 37 C.F.R. 1.56.
US Order has delivered or made available to Visa copies of all opinions and
memoranda of counsel received by it and relating to (i) the validity and
patentability of the Patents, (ii) infringement by third parties of the Patents
and (iii) US Order's freedom to operate. Section 2.11(a) of the Disclosure
Schedule lists all agreements including licenses relating to the Patents granted
to third parties by US Order. Except as disclosed in such Section, subject to
any right of US Order to conduct an audit of its licensees, all royalties and
other payments due under said agreements have been paid and no party to those
agreements is in default in any manner respecting its obligations under those
agreements. Except for the agreements listed in Section 2.11(a) of the
Disclosure Schedule and except for any license implied by the sale of a product,
no other license, covenant, or agreement has been granted or entered into by US
Order with respect to the Patents.
(b) Section 2.11(b) of the Disclosure Schedule lists all domestic and
foreign registered copyrights and describes US Order's other copyrighted
material that is not registered (collectively "Copyrights") trademarks and
trademark applications, service marks and service mark applications
("Trademarks") and maskworks and maskwork applications ("Maskworks") owned or
licensed by US Order from or to third parties indicating in each case whether
the Trademark, Maskwork or Copyright is owned or licensed, registered or
unregistered and includes a listing and summary description of all agreements
relating to the Trademarks, Maskworks and Copyrights. US Order owns free and
clear of all liens, claims or encumbrances Maskworks and Copyrights which are so
designated as owned by them, and all agreements with respect to Maskworks and
Copyrights are valid and binding, are in full force and effect, and neither US
Order nor any other party thereto is in default, or with the giving of notice or
lapse of time or both, would be in default under the terms of such agreement.
All registered Maskworks and Copyrights are in compliance with all formal legal
requirements, are valid and enforceable, and are not subject to any maintenance
fees or taxes or actions falling due within 180 days after the Closing Date.
There are no interference, opposition or cancellation proceedings or
infringement suits pending or, to US Order's knowledge, threatened, with respect
to any of the Trademarks, Maskworks or Copyrights. US Order has not been advised
and has no reason to believe that US Order is infringing a Trademark, Maskwork
or Copyright held by another person.
(c) All assets (tangible and intangible) developed pursuant to the
Consulting Services Agreement between Visa and US Order, dated June 10, 1994
(the "Consulting Agreement"), are the property of Visa. US Order owns or has in
its possession certain information, know-how and show-how (including, without
limitation, data, documents, cell lines, drawings, software, procedures,
customer lists and other proprietary materials) relating
20
<PAGE>
to, without limitation, the specification, examination, simulation, design,
implementation, processing, manufacture, procurement of materials, ingredients
and the like from suppliers or subcontractors, quality control and testing, use
and delivery of its products (the "Trade Secrets"). US Order has taken all
reasonable precautions to maintain Trade Secrets in confidence and to prevent
their disclosure to unauthorized persons, including having each of its past and
present employees and independent contractors execute and deliver their
respective standard proprietary information protection and assignment agreement
(a copy of which has been delivered to Visa). US Order has good title and an
absolute (though not necessarily exclusive) right to use all Trade Secrets and
the use of the Trade Secrets does not infringe the rights of any third party.
Section 2.11(c) of the Disclosure Schedule sets forth a list of all agreements
relating to the Trade Secrets. To the extent that the Trade Secrets are not
available in documentary or fixed form, disclosure shall be made to Visa to
permit Visa to make full use of the Trade Secrets to operate the business of US
Order as it is presently conducted and proposed to be conducted. Set forth on
Section 2.11(c) of the Disclosure Schedule is a list of all third parties or
entities to whom US Order has granted any rights to Trade Secrets and a list of
all such persons or entities from whom US Order has obtained any license or
other rights to Trade Secrets.
(d) To the knowledge of US Order, no person is infringing upon any
Patent, Copyright or Maskwork or is misappropriating any Trade Secret owned by
US Order. No material, software code, or other property of any third party is
incorporated into any of US Order's existing products, and such existing
products were independently developed by employees of US Order who have assigned
their rights in such products to US Order, except as set forth in Section
2.11(d) of the Disclosure Schedule. None of the products manufactured or sold
or licensed by, nor any processes, software code or know-how used by US Order,
infringes any patent, trademark, copyright or other intellectual property right
of any third party. There is no intellectual property, in any form, whether
patent, trademark, tradename, trade secret, copyright or otherwise, necessary
for the operation of US Order's business which US Order does not currently own
or license on commercially reasonable terms, and the use by Visa or Springboard
of such intellectual property will not infringe the right of any third party.
2.12 Taxes. US Order has duly and timely filed all tax returns and reports
-----
to be filed by it, which returns and reports are complete and accurate and have
been made available to Visa, and has: (i) duly and timely paid all taxes that
have become due, and (ii) has established adequate reserves that are fully
reflected in its most recent Financial Statements for taxes for all periods
prior to this Agreement including taxes payable but not yet due. There are no
present disputes as to taxes of any nature paid or payable by US Order, no issue
has been raised by
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the Internal Revenue Service in any such examination which, by application of
the same or similar principles, reasonably could be expected to result in a
proposed deficiency for US Order for any period not so examined and no state of
facts exists or has previously existed which would constitute grounds for the
assessment of any additional tax against US Order for any other period not
audited by the Internal Revenue Service. There are no liens on the assets or
properties of US Order imposed by any taxing authority and neither US Order nor
WorldCorp know of any proposal by any taxing authority to attach any such liens.
No material deficiencies for any taxes have been proposed, asserted or assessed
against US Order. For the purpose of this Section, the term "tax" (including,
with correlative meaning, the terms "taxes" and "taxable") shall include all
Federal, state, local and foreign income, profits, franchise, gross receipts,
payroll, sales, employment, use, property, withholding, excise and other taxes,
duties or assessments of any nature whatsoever, together with all interest,
penalties and additions imposed with respect to such amounts.
2.13 No Violation of Any Instrument. US Order is not in violation of or
------------------------------
default under nor, to the knowledge of US Order, has any event occurred that,
with the lapse of time or the giving of notice or both, would constitute a
violation of or default under, or permit the termination or the acceleration of
maturity of, or result in the imposition of a lien, claim or encumbrance upon
any property or asset of US Order pursuant to, the Articles of Incorporation or
Bylaws of US Order or any note, bond, indenture, mortgage, deed of trust,
evidence of indebtedness, loan, contract, license or lease agreement, other
agreement or instrument, judgment, order, injunction, or decree to which US
Order is a party, by which it is bound, or to which any of its assets are
subject, which would have a Material Adverse Effect.
2.14 Contracts and Commitments. Set forth in Section 2.14 of the
-------------------------
Disclosure Schedule is a complete and accurate list of the following contracts
and commitments (including summaries of oral agreements (to the extent that such
agreements create binding contracts)) to which US Order is a party or bound, or
which are material to the Assets or the business, results of operations,
prospects or financial condition of US Order related to the Assets or to the
consummation of the transactions contemplated by this Agreement:
(a) Contracts with or commitments to any labor union;
(b) Employee benefit plans or agreements, including without limitation
any profit-sharing, bonus, employee stock ownership, stock option, stock
appreciation right, pension, retirement, disability, stock purchase, severance,
hospitalization, insurance or similar plan or agreement, formal or informal,
providing benefits or perquisites;
22
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(c) Employment, consulting or similar contracts, including
confidentiality agreements;
(d) Leases, whether as lessor or lessee;
(e) Loan agreements, mortgages, indentures, instruments of
indebtedness or commitments involving indebtedness for borrowed money or money
loaned to others;
(f) Guaranties or suretyships, performance bonds, indemnification or
contribution agreements, including without limitation each corporate or personal
guarantee to suppliers, sureties, banks or others that has any impact on or
relevance to the business, operations or financial condition of US Order;
(g) Contracts and work-in-process with customers or suppliers
involving, in each case, financial obligations aggregating $25,000 or more per
year, or that are material to US Order or any of the Assets;
(h) Distribution, marketing, dealership, sales, agency, franchise or
similar agreements or any other contract relating to the payment of a commission
to or from US Order;
(i) Joint venture, partnership or other agreements evidencing an
ownership interest or participation in or sharing of profits;
(j) Contracts containing noncompetition covenants (except as part of
Section 2.14 of the Disclosure Schedule, US Order has delivered a true and
correct copy of each form of noncompetition agreement used and a list of all
persons who have executed those forms), covenants to register securities, or
negative or restrictive financial covenants;
(k) Insurance policies;
(l) Powers of attorney;
(m) Shareholders' agreements;
(n) Contracts for future capital expenditures or purchase of products,
materials, supplies, equipment or services which either (i) exceed $25,000
individually or $100,000 in the aggregate or (ii) are not terminable by US Order
on 30 days or less notice without cost or other liability, penalty or premium;
(o) Agreements or arrangements relating to any Patents, Copyrights,
Trademarks, Maskworks, Trade Secrets or other intellectual property rights of
any kind, owned, used or contemplated to be used by US Order;
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<PAGE>
(p) Other contracts not made in the ordinary course of business or
that are material to the business, operations, assets, financial condition or
prospects of US Order.
US Order and WorldCorp have furnished or made available to Visa true and
complete copies of all of the contracts, commitments or instruments listed in
Section 2.14 of the Disclosure Schedule. All such contracts are valid, binding
and enforceable in all material respects and shall not be materially affected by
the transactions contemplated by this Agreement, and there is no material
dispute among, or breach by any of, the parties to any such contract and no
material penalty has been incurred with respect thereto. None of the customers
or suppliers of US Order has refused, or communicated that it will or may refuse
to purchase or supply goods or services, as the case may be, or has communicated
that it will or may substantially reduce amounts of goods or services that it is
willing to purchase from, or sell to, US Order.
2.15 Suppliers. Section 2.15 of the Disclosure Schedule sets forth: the
---------
ten largest suppliers of US Order in terms of purchases during the five months
ended May 31, 1994, showing the approximate total purchases by US Order from
each such supplier. There has not been any material adverse change in the
business relationship of US Order with any supplier named in Section 2.15 of the
Disclosure Schedule.
2.16 Insurance. Section 2.16(a) of the Disclosure Schedule contains an
---------
accurate and complete description of all material policies of fire, liability,
workmen's compensation, and other forms of insurance owned or held by US Order
that relate to or affect the Assets. All such policies are in full force and
effect, all premiums with respect thereto covering all periods up to and
including the Closing Date have been paid, and no notice of cancellation or
termination has been received with respect to any such policy. Such policies:
(i) are sufficient for compliance with all requirements of law and of all
agreements to which US Order is a party; (ii) are valid, outstanding, and
enforceable policies; (iii) provide adequate insurance coverage for the assets
and operations of US Order; and (iv) will remain in full force and effect
through the respective dates set forth in Section 2.16(a) of the Disclosure
Schedule without the payment of additional premiums. Section 2.16(b) of the
Disclosure Schedule identifies all risks which US Order, its Board of Directors,
or officers have designated as being self insured. US Order has not been
refused any insurance with respect to its assets or operations, nor has its
coverage been limited, by any insurance carrier to which it has applied for any
such insurance or with which it has carried insurance during the last five
years.
2.17 Labor Difficulties.
------------------
24
<PAGE>
(a) US Order (i) is in compliance with all applicable laws respecting
employment and employment practices, terms and conditions of employment, and
wages and hours, and is not engaged in any unfair labor practice, (ii) is not
delinquent in payments to any of its employees for any wages, salaries,
commissions, bonuses or other compensation for any services performed by them or
amounts required to be reimbursed to such employees, (iii) is not liable, upon
termination of the employment of any US Order employee for so-called 'severance
pay' or any similar or other contingent payments, other than accrued vacation
which is fully reflected for all employees in US Order's most recent financial
statements, (iv) to its knowledge, no charges with respect to or relating to US
Order are pending before the Equal Employment Opportunity Commission or any
state or local agency responsible for the prevention of unlawful employment
practices, and (v) has no written or other personnel policy applicable to the
employees, other than those set forth in Section 2.17(a) of the Disclosure
Schedule, true and correct copies of which have heretofore been delivered to
Visa. There is no unfair labor practice complaint against US Order pending, or
to the best of US Order's knowledge, threatened before the National Labor
Relations Board or any comparable state, local or foreign agency. There is no
labor strike, dispute, slowdown or stoppage actually pending or, to the best of
US Order's knowledge, threatened against or involving US Order and during the
past three years there has been no such action. No collective bargaining
agreement is currently in effect or being negotiated by US Order. To the
knowledge of US Order, no question of union representation exists respecting the
employees of US Order, and no union organizing activities are taking place.
(b) All employees of US Order that are to be employed by Visa are
employed on an at will basis and may be terminated without cause and without
penalty or liability to US Order or Visa. Neither US Order nor any Shareholder
has made any promise or representation to employees that are to be employed by
Visa or Springboard of continued employment following the Closing. None of the
actions contemplated by this Agreement, including without limitation the actions
contemplated by Section 4.12 hereof, shall violate or require notification
pursuant to the Worker Adjustment and Retraining Notification Act ("WARN").
(c) All individuals who are performing or have performed services for
US Order and are or were classified as 'independent contractors' for tax
purposes qualify for such classification.
(d) COBRA Coverage. US Order is in full compliance with its
--------------
obligations under Section 4980B of the Internal Revenue Code of 1986, as amended
from time to time ("COBRA"), and any regulation, including, without limitation,
proposed or temporary regulations promulgated thereunder ("COBRA Regulation")
and, to the best knowledge of US Order after due inquiry, there are no Claims
(as defined in Section 2.19 below) asserting the contrary.
25
<PAGE>
Except as specifically set forth otherwise in Section 2.17(d) of the Disclosure
Schedule, (i) no 'covered employee or 'qualified beneficiary' (as defined in
COBRA or the COBRA Regulations) is receiving, has elected to receive, or is
eligible to elect to receive 'continuation coverage' (as defined in the COBRA
Regulation); and (ii) US Order has received no notice of a 'qualifying event'
(as defined in the COBRA Regulation) with respect to any 'covered employee' or
'qualified beneficiary.'
2.18 Fringe Benefit Plans. Except as set forth in Section 2.14(b) of the
--------------------
Disclosure Schedule, US Order has no bonus, deferred compensation, pension,
profit-sharing, retirement, stock purchase, stock option, or any other fringe
benefit plan, arrangement, or practice, whether formal or informal. Section
2.18(a) of the Disclosure Schedule contains an accurate and complete description
of, and sets forth the annual amount payable pursuant to, each bonus, deferred
compensation, pension, profit-sharing or retirement plan or arrangement, and
each other fringe benefit plan, of US Order and each US Order Subsidiary,
whether formal or informal. Except as set forth in Section 2.18(b) of the
Disclosure Schedule, the aggregate of such amounts will not exceed $10,000 for
the fiscal year ended 1994 and the Latest Balance Sheet reflects in the
aggregate an accrual of all amounts accrued but unpaid under such plans and
arrangements as of the date thereof. US Order has no commitments, whether
formal or informal and whether legally binding or not, to create any additional
such plan or arrangement.
2.19 Litigation. Except as described in Section 2.19 of the Disclosure
----------
Schedule, there is no (i) suit, claim, action, or litigation, or governmental,
administrative, arbitration or other similar proceeding, investigation or
inquiry pending or, to the knowledge of US Order, threatened (the "Claims")
against or affecting US Order or its business, assets, properties or operations,
or the ability of US Order to consummate the transactions contemplated by this
Agreement, or (ii) order, judgment or decree to which US Order or its business,
assets, properties or operations or WorldCorp is subject (together with the
Claims, the "Legal Items") and which may have a Material Adverse Effect or which
may affect the ability of US Order or WorldCorp to consummate the transactions
contemplated by this Agreement. With respect to every Legal Item disclosed in
Section 2.19 of the Disclosure Schedule, US Order has provided Visa with
complete copies of all files relating to such Legal Item and there is included a
summary explanation of: the claims and defenses relating to such Legal Item, the
date the Legal Item became known to WorldCorp or US Order, the anticipated scope
and duration of any process involved to resolve the Legal Item, the anticipated
legal and other costs to US Order from the Legal Item, any liabilities or
contingent liabilities associated with the Legal Item, and whether or not the
Legal Item is anticipated to have a material impact on US Order (or Visa or
Springboard after the Closing) or its business, assets, properties or operations
or the transactions contemplated by this Agreement.
26
<PAGE>
2.20 Consents and Approvals. Except as set forth in Section 2.20 of the
----------------------
Disclosure Schedule, no consent, approval, permit, license or authorization of,
or declaration, filing, or registration with, any governmental or regulatory
authority or agency or any other third party or person is required on the part
of US Order or any Shareholders in connection with the execution, delivery, and
performance of this Agreement or the consummation of the transactions
contemplated hereby.
2.21 Compliance with Law. US Order is in material compliance with all
-------------------
laws, ordinances, regulations and orders applicable to its business or
operations and has not received any notification of any asserted past or present
failure to comply with any material law, ordinance, regulation or order.
2.22 Environmental Protection.
------------------------
(a) Except as set forth in Section 2.22(a) of the Disclosure Schedule,
US Order is in full compliance with the Environmental Laws, which compliance
includes, but is not limited to, the possession by US Order of all permits and
other governmental authorizations required under applicable Environmental Laws
and compliance with the terms and conditions thereof. Except as set forth in
Section 2.22(a) of the Disclosure Schedule, US Order has not received any
communication (written or oral), whether from a governmental authority, citizens
group, employee, or otherwise, that alleges that US Order is not in such full
compliance, and, to US Order's and WorldCorp's best knowledge after due inquiry,
there are no circumstances that may prevent or interfere with such full
compliance in the future. All permits and other governmental authorizations
currently held by US Order pursuant to the Environmental Laws are identified in
Section 2.22(a) of the Disclosure Schedule.
(b) Except as set forth in Section 2.22(b) of the Disclosure Schedule,
there is no Environmental Claim pending or threatened against US Order or, to US
Order's and WorldCorp's best knowledge after due inquiry, against any person or
entity whose liability for any Environmental Claim US Order has retained or
assumed either contractually or by operation of law.
(c) Except as set forth in Section 2.22(c) of the Disclosure Schedule,
there are no past or present actions, activities, circumstances, conditions,
events, or incidents, including, without limitation, the release, emission,
discharge, presence, or disposal of any Material of Environmental Concern, that
could reasonably be expected to form the basis of any Environmental Claim
against US Order or, to US Order's or WorldCorp's best knowledge after due
inquiry, against any person or entity whose liability for any Environmental
Claim US Order has retained or assumed either contractually or by operation of
law.
27
<PAGE>
(d) (i) US Order has not stored, disposed, or arranged for the
disposal of Materials of Environmental Concern; (ii) except as set forth in
Section 2.22(d) of the Disclosure Schedule, there is no asbestos contained in or
forming part of any building, building component, structure, or office space
owned or leased by US Order; and (iii) no polychlorinated biphenyls (PCB's), or
PCB-containing items are used or stored at any property owned or leased by US
Order.
(e) "Environmental Claim" means any claim, action, cause of action,
investigation, or notice (written or oral) by any person or entity alleging
potential liability (including, without limitation, potential liability for
investigatory costs, cleanup costs, governmental response costs, natural
resources damages, property damages, personal injuries, or penalties) arising
out of, based on, or resulting from: (i) the presence, or release into the
environment, of any Material of Environmental Concern at any location, whether
or not owned or operated by US Order; or (ii) circumstances forming the basis of
any violation, or alleged violation, of any Environmental Law.
"Environmental Laws" means all Federal, state, local, and foreign laws and
regulations relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface water, ground
water, land surface, or subsurface strata), including, without limitation, laws
and regulations relating to emissions, discharges, releases, or threatened
releases of Materials of Environmental Concern, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Materials of Environmental Concern.
"Materials of Environmental Concern" means chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances, petroleum, and
petroleum products.
2.23 Compliance with ERISA.
---------------------
(a) Prohibited Transactions. US Order has not engaged in a
-----------------------
transaction in connection with which US Order could be subject to either a civil
penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed by Section
4975 of the Code.
(b) Plan Termination; Material Liabilities. No liability to the
--------------------------------------
Pension Benefit Guaranty Corporation has been incurred with respect to any Plan
by US Order. The Pension Benefit Guaranty Corporation has not instituted
proceedings to terminate any Plan. Section 2.23(a) of the Disclosure Schedule
sets forth a list of all notices of reportable events (within the meaning of
Section 4043(b) of ERISA) which US Order has filed with the Pension Benefit
Guaranty Corporation with respect to any Plan and a list of all Plans that have
terminated and whose 'date of termination' (within the meaning of Section 4048
of ERISA)
28
<PAGE>
occurred after September 1, 1974, with a description of the actions, if any,
taken by the Pension Benefit Guaranty Corporation with respect thereto. To the
best knowledge of US Order, the aforementioned lists reflect all reportable
events relating to and all terminations of such Plans occurring since September
1, 1974. Except as and to the extent set forth in Section 2.23(b) of the
Disclosure Schedule, no event has occurred, and there exists no condition or set
of circumstances as of the date of this Agreement, which presents a material
risk as of such date of the termination of any Plan (other than the terminations
reflected in the aforementioned lists) which could reasonably be expected to
result in any liability on the part of US Order to the Pension Benefit Guaranty
Corporation. Except as and to the extent set forth in Section 2.23(a) of the
Disclosure Schedule, the occurrence of the reportable events and terminations
reflected in such lists will not adversely affect the business, prospects,
operations, properties, or the condition (financial or otherwise) of US Order.
(c) Accumulated Funding Deficiency. Full payment has been made of all
------------------------------
amounts which US Order is required under the terms of all Plans to have paid as
contributions to such Plans as of the last day of the most recent fiscal year of
each such Plan ended prior to the date of this Agreement, and there are no
'accumulated funding deficiencies' (as defined in Section 302 of ERISA and
Section 412 of the Code), whether or not waived, as may exist with respect to
such Plans, determined as of the last day of the most recent fiscal year of each
of such Plans ended prior to the date of this Agreement. Any amount contributed
by US Order to any Plan which under the provisions of Section 412(c) (10) of the
Code and Section 302(c) (10) of ERISA is considered as having been made on the
last day of the most recent fiscal year of such Plan shall be considered as
having been so made for purposes of the representations contained in the
preceding sentences. With respect to Multiemployer Plans to which US Order
makes contributions required under collective bargaining agreements or
otherwise, US Order has not failed to make payment of an aggregate amount of
such required contributions which when added to any accumulated funding
deficiencies referred to above could reasonably be expected to result in a
liability which would adversely affect the business, operations, properties, or
the condition (financial or otherwise) of US Order.
(d) Relationship of Vested Benefits to Pension Plan Assets. The
------------------------------------------------------
current value of all vested Accrued Benefits under all Plans, other than
Multiemployer Plans, as of the date of this Agreement, did not exceed the then
Current Value of the assets of such Plans allocable to such vested Accrued
Benefits by more than $10,000. For purposes of the representation in the
preceding sentence, the term "Current Value" has the same meaning as in Section
4062(b)(1) of ERISA and the term "Accrued Benefit" has the meaning specified in
Section 3 of ERISA.
29
<PAGE>
(e) Compliance with Applicable Laws. Each Plan is in compliance with
-------------------------------
applicable Federal laws, including but not limited to ERISA.
(f) Definitions to Be Used in Conjunction with ERISA Representations
----------------------------------------------------------------
and Warranties and Covenants. Whenever any of the terms set forth below is used
- ----------------------------
in this Agreement, they shall have the following meaning: (i) "ERISA" means the
Employee Retirement Income Security Act of 1974, as amended from time to time;
(ii) "Plan" means an employee benefit plan (within the meaning of Section 3 of
ERISA) which is or has been established or maintained, or to which contributions
are or have been made, by US Order or any US Order Subsidiary; (iii) "Multi-
employer Plan" means an employee pension plan meeting the definition of that
term contained in Section 3(37) of ERISA to which contributions are or have been
made by US Order or any US Order Subsidiary; and (iv) "Code" means the Internal
Revenue Code of 1986, as amended.
2.24 Good Title Conveyed, Etc. US Order has complete and unrestricted
-------------------------
power and the unqualified right to sell, transfer, convey, assign, and deliver
to Visa or its designee, and upon consummation of the transactions contemplated
by this Agreement, Visa or its designee will acquire, good, valid and marketable
title to the Assets free and clear of all mortgages, pledges, liens, security
interests, conditional sales agreements, encumbrances, or charges of any kind,
except those referred to in Section 2.9 hereof. The Bill of Sale and Assignment
and the deeds, endorsements, assignments, and other instruments to be executed
and delivered by US Order at the Closing will be valid and binding obligations
of US Order, respectively, enforceable in accordance with their terms, and will
effectively vest in Visa or its designee good, valid, and marketable title to
all the Assets. All of the Excluded Assets are clearly separate, distinct and
divisible from the Assets.
2.25 Brokers, Finders, and Investment Bankers. Neither US Order, any of
----------------------------------------
its officers, directors, or employees, nor any of the Shareholders has employed
or will employ any broker, finder, or investment banker or has incurred or will
incur any liability for any brokerage fees, commissions, or finder's fees in
connection with the transactions contemplated by this Agreement, except that US
Order has arrangements with National Westminster, PLC, New York (it being
understood that US Order shall pay any fees due to National Westminster under
such arrangements).
2.26 Insider Interests. Except as set forth in Section 2.26 of the
-----------------
Disclosure Schedule, no officer, director or Shareholder of US Order has any
material interest, direct or indirect, in any property (real or personal,
tangible or intangible), including without limitation, inventions, patents,
trademarks, or trade names, used in or pertaining to the business of US Order,
and none of such persons has any direct or indirect interest in any competitor,
supplier or customer of US Order.
30
<PAGE>
2.27 Insolvency. No insolvency proceedings of any kind, including without
----------
limitation, bankruptcy, receivership, reorganization, composition or arrangement
with creditors, voluntary or involuntary, affecting US Order or any of its
assets or properties are pending or, to the knowledge of US Order or WorldCorp,
threatened, nor has US Order made any assignment for the benefit of creditors or
taken any action which would constitute the basis for the institution of any
such insolvency proceedings. Immediately after the Closing and after giving
effect to the transactions contemplated by this Agreement, US Order will not (i)
be insolvent (either because its financial condition is such that the sum of its
debt is greater than the fair value of its assets or because the fair salable
value of its assets is less than the amount required to pay its probable
liability on its existing debts as they mature), (ii) have unreasonably small
capital with which to engage in its business, or (iii) have incurred debts
beyond its ability to pay as they become due.
2.28 Bulk Sales. No filing with any government agency or authority,
----------
creditor or other entity or person shall be required to comply with any bulk
sales or similar statutes applicable to the transfer of assets as a result of
the transactions contemplated by this Agreement, and consummation of the
transactions contemplated by this Agreement shall not result in any liability
(contingent or otherwise) or obligation to Visa or Springboard under any bulk
sales, creditors' rights or similar laws.
2.29 XXXXX . US Order has full authority to grant each
------------------------
and every license of the intellectual property called for in this Agreement,
including the license of the intellectual property in the XXXXX
Agreement and the Visa Excluded Assets License.
2.30 Disclosure. No representations or warranties by US Order in this
----------
Agreement and no statement contained in any document (including financial
statements and the Disclosure Schedule and any supplements thereto),
certificate, or other writing furnished or to be furnished by US Order or
WorldCorp to Visa or any of its representatives pursuant to the provisions
hereof or in connection with the transactions contemplated hereby contains or
will contain any untrue statement of material fact or omits or will omit to
state any material fact necessary, in light of the circumstances under which it
was made, in order to make the statements herein or therein not misleading.
2.31 Warranty of Capacity. US Order warrants that the software and
--------------------
hardware contained in the US Order Bill-Pay System, as enhanced and modified
from time to time, can be scaled up to service and support XXXXX Active
Retail Bill Pay Accounts (the "Capacity Requirement") without any material
changes to the US Order Bill-Pay System architecture. US Order further warrants
31
<PAGE>
that as the US Order Bill-Pay System and the Visa Bill-Pay System are scaled up
in reasonable increments to meet the Capacity Requirement, the costs incurred by
Visa and its Affiliates to increase capacity to service and support each
additional Active Retail Bill Pay Account (a "Unit of Capacity") shall not
exceed XXXXX, and the average cost of all capacity added by Visa and its
Affiliates shall not exceed XXXXX through that date.
If at any time on or before December 31, 1997, it can be reasonably
determined that this representation has been breached, then:
(i) Visa shall submit a documented written claim for breach of this
warranty and representation to US Order, and
(ii) Visa's Damages under Article IX shall equal the amount by which costs
and expenses incurred by Visa and its Affiliates before and after the date of
the claim to scale up the US Order and Visa Bill-Pay Systems to meet the
Capacity Requirement exceeds XXXXX added to such systems. Such amounts will be
paid by US Order within 30 calendar days of Visa incurring such indemnifiable
costs and expenses and submitting a written claim to US Order and shall include
interest at 10% per annum, compounded quarterly, until Visa is paid in full.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF VISA
--------------------------------------
Visa hereby represents and warrants to US Order that the statements
contained in this Article III are true, correct and complete as of the date of
this Agreement and will be true, correct and complete as of the Closing Date
(with the same force and effect as if made on the Closing Date), except as set
forth in any disclosure schedule attached hereto as Exhibit 3 (the "Visa
Disclosure Statement"). Each of these representations and warranties is
intended to and shall survive the Closing and any waiver or consent of US Order
made at or before the Closing.
3.1 Corporate Organization, Etc. Visa is a non-stock membership
----------------------------
corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware. Upon formation, Springboard shall be a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware.
3.2 Authorization, Etc. Visa has, and Springboard will have, full
-------------------
corporate power and authority to enter into this Agreement and to carry out the
transactions contemplated hereby. The Board of Directors of Visa has taken, and
the Board of Directors of Springboard will take, all action required by law, its
Articles of Incorporation, its Bylaws, or otherwise to authorize the execution
and delivery of this Agreement and the
32
<PAGE>
transactions contemplated hereby, and this Agreement and each other document
executed by Visa or Springboard in connection with this Agreement is (or will be
upon execution and delivery) a legal, valid and binding agreement of Visa
enforceable in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency or similar laws and subject to general
principles of equity.
3.3 Brokers, Finders, and Investment Bankers. Visa has not employed and
----------------------------------------
will not employ any broker, finder, or investment banker and it has not incurred
and will not incur any liability for any brokerage fees, commissions, or
finder's fees in connection with the transactions contemplated hereby, except
that Visa has arrangements with Montgomery Securities (it being understood and
agreed that Visa shall pay any fees due to Montgomery Securities pursuant to
such arrangements).
3.4 No Breach. The execution, delivery and performance of this Agreement
---------
and the consummation by Visa and Springboard of the transactions contemplated
hereby will not violate, breach, conflict with, constitute a default under, or
permit the termination or the acceleration of maturity or performance of, or
result in the imposition of any lien, claim or encumbrance upon any property or
asset of Visa pursuant to: (i) any provision of the Articles of Incorporation
or Bylaws of Visa; (ii) any law, statute, rule or regulation or order, writ,
judgment, injunction, award or decree of any court, arbitrator or governmental
or regulatory body, or (iii) any note, bond, indenture, mortgage, deed of trust,
evidence of indebtedness, loan, contract, license or lease agreement, other
agreement or instrument (including with customers) to which Visa is a party, by
which Visa is bound, or to which any of its assets or properties are subject.
3.5 No Violation of Any Instrument. Visa is not in violation of or
------------------------------
default under nor, to the knowledge of Visa, has any event occurred that, with
the lapse of time or the giving of notice or both, would constitute a violation
of or default under, or permit the termination or the acceleration of maturity
of, or result in the imposition of a lien, claim or encumbrance upon any
property or asset of Visa pursuant to, the Articles of Incorporation or Bylaws
of Visa or any note, bond, indenture, mortgage, deed of trust, evidence of
indebtedness, loan, contract, license or lease agreement, other agreement or
instrument, judgment, order, injunction, or decree to which Visa is a party, by
which it is bound, or to which any of its assets are subject, which would have a
material adverse effect on its business, assets or results of operations.
3.6 Consents and Approvals. Except for (i) any Hart-Scott-Rodino
----------------------
Antitrust Improvements Act filing or waiting period that may be required because
of the assets or revenue of US Order or any Shareholder or any options to
acquire equity in US Order, or (ii) any notice or other requirements under any
bulk sales or similar statutes, no consent, approval, permit, license or
33
<PAGE>
authorization of, or declaration, filing, or registration with, any governmental
or regulatory authority or agency or any other third party or person is required
on the part of Visa in connection with the execution, delivery, and performance
of this Agreement or the consummation of the transactions contemplated hereby.
3.7 Statement of Intention. At the Closing it is the present intention of
----------------------
Visa to be actively involved in the bill paying business through the use of the
Visa Bill-Pay System. Visa acknowledges that over time Visa will have to expend
money and personnel resources to enhance, modify and improve the US Order Bill-
Pay System as the retail customer bill paying business grows and changes.
ARTICLE IV
COVENANTS OF US ORDER AND WORLDCORP
-----------------------------------
US Order, and WorldCorp to the extent of its covenants in Sections 4.6,
4.7, 4.8, 4.10 and 4.11, hereby covenants and agrees with Visa as follows:
4.1 Full Access. Until the Closing, US Order shall afford to Visa, its
-----------
counsel, accountants, and other representatives full access to the assets,
properties, books, contracts and records of US Order in order that Visa may have
full opportunity to make such investigations as it shall desire to make of the
affairs of US Order; and US Order will cause its officers and accountants to
furnish such additional financial and operating data and other information as
Visa shall, from time to time, request. Until the Closing, US Order will allow
Visa access to US Order's employees, customers and suppliers on a basis mutually
satisfactory to US Order and Visa.
4.2 Consents. US Order shall obtain, prior to the Closing, all consents
--------
necessary to the consummation of the transactions contemplated by this
Agreement, including: (i) the consent of any person holding a mortgage,
security interest or lien on real property or personal property that are Assets
to the transfer of such property to Visa at the Closing; (ii) the consent of
each lessor of real or personal property leased by US Order, including the
capital leases listed on Exhibit 1.2-C, to the assignment of the lessee's
interest under the lease of such property to Visa at the Closing in
consideration of the assumption by Visa of the lessee's liability thereunder;
and (iii) any other consents or approvals described in the Disclosure Schedule
except for those consents and approvals listed on Exhibit 4.2 (the "Deferred
Consents"), which Deferred Consents, individually and in the aggregate, are not
material to the Assets or the transactions contemplated by this Agreement, and
failure to obtain any or all of such consents will not have a Material Adverse
Effect. With respect to any Deferred Consent which is not satisfied at or
before the Closing, US Order or WorldCorp as the case may be,
34
<PAGE>
will cause the consent to be obtained and delivered to Visa within 45 days after
the Closing. If a Deferred Consent is not delivered to Visa within this 45 day
period, US Order will promptly pay to Visa all increased costs, fees and
expenses reasonably anticipated to be incurred by Visa in obtaining the
property, services, license or whatever else Visa would have obtained had the
Deferred Consent been obtained within this period. All such consents shall be
in writing and executed counterparts thereof shall be delivered to Visa at or
prior to the Closing.
4.3 Supplements to Disclosure. From time to time prior to the Closing, US
-------------------------
Order shall promptly advise Visa in writing of (i) any Materially Adverse
Effect; (ii) the occurrence of any event which causes the representations and
warranties made by US Order and WorldCorp or the information included in the
Disclosure Schedule to be incomplete or inaccurate in any material respect; and
(iii) the receipt of any inquiry relating to any acquisition proposal from a
third party, including the identity of the third party and a copy of the
inquiry.
4.4 Additional Financial Statements. To the extent such financial
-------------------------------
statements are available in accordance with US Order's customary practice, US
Order shall furnish Visa with the same type of financial statements as those
referred to in Section 2.6 hereof as of June 30, 1994, and for the six month
period ending on such date, and for any other month and related interim period,
if any, that shall end before the Closing Date, all certified by the Chief
Financial Officer of US Order, as soon as they become available. After the
Closing Date and until December 31, 2000, US Order shall deliver an unaudited
balance sheet and related statements of income, changes in shareholders' equity
and cash flow for its first, second and third fiscal quarters each year and an
audited balance sheet and related statements of income, changes in shareholders'
equity and cash flow for each fiscal year-end.
4.5 Insolvency. US Order will not transfer the Closing Payment in a
----------
manner that will render US Order insolvent, leave it unable to pay its debts as
they mature, or leave it with unreasonably small capital with which to engage in
its business. Furthermore, US Order will not take action so as to defraud its
creditors (including the making of a constructive fraudulent transfer) within
the meaning of Cal. Civ. Code Section 3439, et seq. the comparable provisions of
Virginia law, 11 U.S.C. (S) 548, the Uniform Fraudulent Transfer Act, the
Uniform Fraudulent Conveyances Act, or other applicable law regarding fraudulent
transfer.
4.6 Other Transactions. Until the Closing, without the written approval
------------------
of Visa, none of WorldCorp, US Order, or their respective Boards of Directors,
officers or employees shall (and WorldCorp and US Order shall use their best
efforts to cause each other Shareholder not to), directly or indirectly,
facilitate,
35
<PAGE>
encourage, solicit or enter into negotiations or discussions concerning, or
recommend or approve, any sale or issuance of capital stock, merger,
consolidation, disposition of a material portion of US Order's business,
properties, or assets including any Asset (other than to Visa pursuant to this
Agreement), acquisition or other business combination or proposal therefore, or
furnish or cause to be furnished any information concerning the business,
properties, or assets of US Order (other than to Visa pursuant to this
Agreement) to any party in connection with any such transaction.
4.7 Covenant to Satisfy Conditions. US Order shall use its best efforts
------------------------------
to insure that the conditions set forth in Article VIII hereof are satisfied,
insofar as such matters are within its control.
4.8 Covenants of Loyalty, Cooperation and Non-Competition.
-----------------------------------------------------
The parties have agreed that to foster the success of Visa in Remote
Banking and Financial Services and to improve the likelihood that the stream of
CPR Amount payments will be larger, US Order, WorldCorp and their subsidiaries
and Affiliates (the "US Order Parties") will work exclusively with Visa in
certain areas and will refrain from certain activities that are in competition
with Visa and its Members. These understandings are set out in this Section
4.8. The parties have negotiated these provisions in good faith for separate
and valuable consideration and agree that they are fair and reasonable
restrictions in light of the mutual goals of the parties and the worldwide
operations of Visa.
"Remote Banking" means remote access electronic banking services, including
bill paying, balance inquiry, deposit, withdrawal, inter-account transfer,
credit cards, debit cards, prepaid cards, stored value cards, loan or similar
financial transactions between a customer and a Member or a commercial bank,
thrift, credit union or similar financial entity, or other Financial Services
provided by Visa, its subsidiaries or Affiliates.
"Financial Services" means: (i) any services which a Member is permitted
by applicable law and regulation to provide in the country in which the service
is to be provided, and (ii) any financial processing activities, investment
services or products, and insurance products to the extent not included in
Remote Banking.
"Facilities Management" means services related to Remote Banking for
management of retail telemarketing services, and management of a distribution
warehouse or similar facility for distribution of interactive hardware and
software products.
"Customer Services" means services related to Remote Banking providing
technical support, application support and claims handling assistance to
wholesale users and end users of the Visa Bill-Pay System, and management of
voice response systems.
"Customization Services" means services related to Remote Banking which
customize for Members and their Affiliates personal computer software owned,
licensed or developed by Visa, smartphone software developed by US Order,
customizing for Members and their Affiliates voice response systems developed by
or licensed to Visa or US Order, all for use with the Visa Bill-Pay System.
"Non-Financial Applications" means those application programs and on-line
services for use with the Visa Bill-Pay System that are not related to Remote
Banking or Financial Services and that US Order currently and actively provides
immediately after the Closing, or has a present good faith intention to provide
within 12 months after the Closing, to third parties, all of which applications
are described on Exhibit 4.8-A.
"Consumer Devices" means devices related to Remote Banking which are
interactive consumer devices connected to the Visa Bill-Pay System and
manufactured, sold or distributed by US Order.
"US Order Services" means Facilities Management, Customer Service,
Customization Services, sales of Consumer Devices and Non-Financial
Applications.
XXXXX
36
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XXXXX
37
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XXXXX
38
<PAGE>
XXXXX
39
<PAGE>
XXXXX
40
<PAGE>
XXXXX
41
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XXXXX
4.9 Operation of Business of US Order. Until the Closing Date, US Order
---------------------------------
will operate its business relating to the Assets and its obligations under this
Agreement as presently operated and only in the normal and ordinary course
consistent with past practices and, consistent with such operation, will use its
best efforts to preserve intact its related business organization, employees,
assets and relationships with persons having business dealings with it. Without
limiting the generality of the foregoing, between the date hereof and the
Closing:
(a) US Order will not issue or sell any shares of its capital stock or
other securities, acquire directly or indirectly (by redemption or otherwise)
any such capital stock except as required in connection with the repurchase of
certain US Order securities in a manner that will not impact or affect the
Assets, the transactions or obligations contemplated by this Agreement or the
proposed business of Visa and its subsidiaries and Affiliates, reclassify or
split-up any such capital stock, declare or pay any dividends thereon in cash,
securities, or other property or make any other distribution with respect
thereto, or grant or enter into any options, warrants, calls, or commitments of
any kind with respect thereto;
(b) no change shall be made in the charter or bylaws of US Order
except as required in connection with the repurchase of certain US Order
securities in a manner that will not impact or affect the Assets, the
transactions or obligations contemplated by this Agreement or the proposed
business of Visa and its subsidiaries and Affiliates;
(c) US Order will not borrow or agree to borrow any funds or incur, or
assume or become subject to (whether directly or by way of guarantee or
otherwise), any obligation or liability (absolute or contingent), except
obligations and liabilities
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incurred in the ordinary course of business, consistent with past practice and
as evidenced by the Latest Balance Sheet except as required to consummate this
Agreement in connection with the repurchase of certain US Order securities in a
manner that will not impact or affect the Assets, the transactions or
obligations contemplated by this Agreement or the proposed business of Visa and
its subsidiaries and Affiliates;
(d) US Order will not pay, discharge, or satisfy any claim, liability,
or obligation (absolute, accrued, contingent or otherwise), other than the
payment, discharge, or satisfaction in the ordinary course of business and
consistent with past practice of liabilities or obligations with a fixed
maturity of less than 90 days reflected or reserved against in the Latest
Balance Sheet or incurred in the ordinary course of business and consistent with
past practice since the date of the Latest Balance Sheet.
(e) US Order shall not organize any new subsidiary, acquire or agree
to acquire by merging or consolidating with, by purchasing a substantial portion
of the assets of, or by any other means, any business or organization or
otherwise acquire or agree to acquire any assets (other than merchandise,
materials, supplies or equipment acquired in the ordinary course of business and
consistent with past practice) or equity or ownership interest in any business;
(f) except as required to consummate this Agreement in connection with
the repurchase of certain US Order securities in a manner that will not impact
or affect the Assets, the transactions contemplated by this Agreement or the
proposed business of Visa and its subsidiaries and Affiliates, US Order shall
not sell, lease or otherwise dispose of its assets or properties, except in the
ordinary course of business and consistent with past practices;
(g) US Order shall not (i) enter into an employment agreement with any
of the Designated Employees, (ii) enter into any collective bargaining
agreements, or (iii) grant or pay any increase in the compensation payable to
any of the Designated Employees including any bonus or increases in the amount
payable under any employee benefit plan made to, for or with any such officers
or employees, not required by such plan;
(h) US Order shall not create, assume or incur any mortgage, lien,
pledge or other encumbrance of any kind in respect of the property of US Order
other than mortgages, liens, pledges or other encumbrances which are in the
ordinary course of business consistent with past practice and permitted by
Section 2.9 hereof, except as required to consummate this Agreement in
connection with the repurchase of certain US Order securities in a manner that
will not impact or affect the Assets, the transactions or obligations
contemplated by this Agreement or the proposed business of Visa, its
subsidiaries or Affiliates;
43
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(i) US Order shall not cancel any debt or amend, terminate or waive
any right of substantial value belonging to or held by US Order except as
required to consummate this Agreement in connection with the repurchase of
certain US Order securities in a manner that will not impact or affect the
Assets, the transactions or obligations contemplated by this Agreement or the
proposed business of Visa, its subsidiaries or Affiliates;
(j) US Order shall not engage in any material transaction, directly or
indirectly, with an Insider, as that term is defined below except as required to
consummate this Agreement in connection with the repurchase of certain US Order
securities in a manner that will not impact or affect the Assets, the
transactions contemplated by this Agreement or the proposed business of Visa,
its subsidiaries or Affiliates. For the purposes of this Agreement the term
"Insider" shall mean any director, officer, key employee or Shareholder, and
their respective Affiliates;
(k) without the prior written consent of Visa, US Order will not make
any capital expenditure or commitment for additions to property, plant, or
equipment in excess of $100,000 in the aggregate;
(l) no contract or commitment shall be entered into, and no purchase
of supplies and no sale of assets shall be made, by or on behalf of US Order,
except: (i) normal contracts or commitments for the purchase of, and normal
purchases of, supplies, made in the ordinary course of business and consistent
with past practice; (ii) normal contracts or commitments for the sale of, and
normal sales of, services in the ordinary course of business and consistent with
past practice; and (iii) other contracts, commitments, purchases, or sales in
the ordinary course of business and consistent with past practice;
(m) US Order shall adequately insure all property, real, personal and
mixed, owned or leased by US Order, against all ordinary and insurable risks;
and all such property shall be used, operated, maintained, and repaired in a
careful and reasonably efficient manner;
(n) US Order shall not do any act or omit to do any act, or permit any
act or omission to act, which will cause a breach of any material contract or
commitment of US Order;
(o) US Order shall duly comply with all laws applicable to it and its
properties, operations, business, and employees; and
(p) US Order shall not dispose of or permit to lapse any rights to the
use of any patent, trademark, trade name or copyright, or disperse of or
disclose to any person any trade secret, formula, process or know-how, not
previously a matter of public knowledge.
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4.10 Representations and Warranties. Pending the Closing Date, neither US
------------------------------
Order nor WorldCorp will, directly or indirectly, take or fail to take, or cause
or encourage another person to take or fail to take, any action that would cause
or permit the representations or warranties made herein to be misleading or
inaccurate (without reference to any Disclosure Schedule update).
4.11 Releases. On or before the Closing, US Order and WorldCorp shall
--------
execute a release in substantially the form attached hereto as Exhibit 4.11.
4.12 Labor Matters.
-------------
(a) Visa and US Order have jointly reviewed all current US Order
personnel and consultants and, prior to making the Disclosure Payment, Visa
shall designate on Exhibit 1.5-D the Designated Employees that it wishes Visa or
its subsidiaries or Affiliates to hire. At the Closing, all Designated
Employees shall resign or be terminated by US Order from US Order's employment,
and US Order shall have paid in cash to each such employee the amount of all
accruals for vacation, sick leave, severance or other similar employee benefits.
Visa will either reimburse US Order for an amount equal to the accrued but
unpaid vacation pay of the Designated Employees as described on Schedule 1.2-C
or will offer to extend to the Designated Employees the right to begin their
employment with Visa with a comparable number of days of accrued vacation. Visa
shall not be obligated to employ any of US Order's former or present employees,
and no written or oral representations or implied promises have been made by US
Order, WorldCorp or their agents or representatives to any of US Order's former
or present employees that would impact on Visa in any way. Neither WorldCorp
nor US Order shall take or fail to take any action before or after the Closing,
if such action or failure to act would violate or require notice pursuant to the
WARN Act.
(b) Prior to the Closing, US Order shall use its best efforts to cause
each Designated Employee who Visa desires to be covered by an Employment
Agreement to enter into the Employment Agreements.
(c) US Order shall (i) continue to provide or offer to provide
'continuation coverage' to each person receiving or entitled to receive
'continuation coverage' as of the date of the Closing, and (ii) offer
'continuation coverage' to all 'covered employees' and 'qualified beneficiaries'
who become entitled to 'continuation coverage' as the result of the consummation
of the transactions contemplated herein, including, without limitation,
Designated Employees (and their current or former dependents) whose pre-existing
medical condition(s) are not covered by any group health plan offered by Visa.
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4.13 Hardware and Related Software.
-----------------------------
(a) Until December 31, 2000, US Order will use its best efforts to
ensure that: (i) all interactive hardware, including smartphones and related
technology, developed, sold, licensed or distributed by US Order or its
Affiliates that facilitates Remote Banking or Financial Services will be
compatible with the Visa Bill-Pay System, and (ii) that any operating systems
used in such interactive hardware (and its application software) of US Order
will provide for compatibility with the Visa Bill-Pay System at the time such
interactive hardware or operating system is first made available by US Order or
its Affiliates.
At the Closing, US Order shall deliver to Visa in a sealed envelope a copy
of the source code and all relevant documentation and development tools for the
US Order software and the information and documentation relating to US Order
hardware and firmware described in Exhibit 4.13. Thereafter and until December
31, 2000, US Order shall deliver to Visa a sealed copy of the source code for
any new US Order software prior to any offer, sale, transfer or license of such
software to a third party and copies of the information and documentation
described in Exhibit 4.13 with respect to any new US Order hardware and
firmware. On December 31 of each year up to and including December 31, 2000, US
Order shall deliver to Visa sealed copies of the source code and all relevant
documentation and development tools for each item of US Order software, and the
documentation and information relating to the US Order hardware and firmware,
updated to include any enhancements or modifications. Upon any Default of US
Order (as defined in Exhibit 4.13), Visa may open the sealed copies of the
source codes and the documentation, in formation and development tools and use
such software, hardware and firmware on the terms described in Exhibit 4.13,
with this license to be granted at the Closing on the terms provided in Exhibit
4.13.
The parties acknowledge that subject to the provisions of Section 4.14
(Most Favored Customers), US Order will be obligated to first offer Visa the
opportunity to become the transferee of US Order of the rights described in the
documentation in Exhibit 4.13. However, if Visa is not the transferee of these
rights, Visa will have the right to approve the transferee, provided that Visa
will not unreasonably withhold or delay its consent to any transferee. If the
rights are transferred to a transferee approved by Visa, the transferee will be
relieved of the obligations under this paragraph and the documentation in
Exhibit 4.13 to deposit updated source code and documentation to enhancements to
the transferred rights with Visa.
(b) Visa and its Affiliates and Members shall have an exclusive right
to purchase and use any smartphones or other interactive hardware products
developed, sold or licensed by US Order or its Affiliates, or for which US Order
or its Affiliates
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has exclusive distribution rights, which facilitate Remote Banking, including
the Eagle IIA and Eagle III smartphones, until twelve months after the date such
smartphones or interactive hardware or any modifications or models that have a
different stock-keeping unit identification are first made compatible with the
Visa Bill-Pay System and are made available to Visa in commercially reasonable
quantities.
US Order agrees to provide Visa with reasonable numbers of 'developer kits'
at a standard market price not to exceed $500 for use with, such future
products, including the Eagle IIA and Eagle III, which developer kit shall
include all tools and specifications necessary to allow Visa to make the Visa
Bill-Pay System operable on and compatible with such hardware and its operating
software./2/
Furthermore, any interactive hardware products developed, sold or licensed
by US Order or its Affiliates that are (or may be made) compatible with the Visa
Bill-Pay System, and that are capable of analog display services interface
("ADSI"), will be shipped with the ADSI function switched off (unless a customer
unilaterally requests otherwise) if it is physically possible to do so.
(c) It is contemplated by the parties that each of US Order and Visa
may from time to time operate one or more electronic data telecommunications
hubs and that these hubs may receive customer "calls" that need to be routed
through the hub of one company to the hub of the other company. US Order and
Visa agree that they will interconnect their relevant hubs and will receive and
reroute these calls to the proper hub at no cost to the other; provided that
each party will be obligated to bear the costs of its own hub and
telecommunications lines. The parties will cooperate so that there is no unfair
burden imposed on either company in connection with these hub and rerouting
operations. For example, if a ScanFone has only one line that it can call and
the customer using the ScanFone wants to do a transaction that is bill-pay using
the Visa Bill-Pay System, and the call is first received at a US Order
telecommunications hub, US Order will reroute that call to Visa at no charge,
though Visa will have to pay for the cost of its own telecommunications lines.
4.14 Most Favored Customers.
----------------------
(a) If at any time after the Closing US Order or any of its Affiliates
desires to sell, transfer or grant an exclusive license to, or otherwise
transfer by means other than a non-
- ----------------
/2/ US Order will also include VISA or Springboard as a test site of all
"alpha" and "beta" tests which US Order may conduct on or off site with
such hardware or software products.
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exclusive license covered by Section 4.14(b) below (a "Transfer") any rights in
any software, modifications or enhancements thereof relating to, facilitating
use of or operational on the Visa Bill-Pay System (the "Applications") then:
(i) US Order shall deliver a notice (the "Transfer Notice") to Visa
identifying the proposed sale or transfer price and all other material terms and
conditions of such proposed Transfer;
(ii) Visa shall have the right for 30 business days from the receipt
of the Transfer Notice (the "Notice Period"), exercisable by written notice (the
"Exercise Notice"), to elect to obtain a Transfer of the Applications on the
terms and conditions described in the Transfer Notice.
(iii) If Visa does not exercise its right to obtain the Transfer
within the Notice Period, US Order or its Affiliate shall be free to Transfer
the Applications on terms and conditions specified in the Transfer Notice which
are not materially more favorable to the Transferee than the terms offered to
Visa, for a period of 12 months following the end of the Notice Period. If US
Order shall not so complete a Transfer of the Applications within 12 months
following the Notice Period, all provisions of this Section 4.14(a) shall again
apply to the Applications. Accordingly, any Transfer on terms and conditions
more favorable to the Transferee than those offered to Visa shall be void and of
no effect unless Visa was again first offered the opportunity to accept the
transfer pursuant to a new Transfer Notice describing the more favorable terms
and conditions.
(iv) If Visa exercises its right specified in this Section 4.14(a),
the closing of the Transfer of the Applications shall take place within a
reasonable time not to exceed 30 business days after delivery of the Exercise
Notice by Visa or if later as otherwise provided in the Transfer Notice, at a
place, time, and date specified by US Order. At such closing, Visa shall
deliver to US Order cash or immediately available funds in an amount equal to
the transfer price set forth in the Transfer Notice, and US Order or its
Affiliate shall deliver such documents of conveyance or transfer and take such
other actions as Visa shall reasonably request to perfect such Transfer of the
Application to Visa.
(b) Until December 31, 2000, neither US Order nor any of its Affiliates
shall grant a non-exclusive license of any rights in an Application to a person
other than Visa unless: (i) US Order or its Affiliate shall deliver to Visa a
written notice of its intent to grant a non-exclusive license, including a
complete and accurate description of all material terms of such proposed non-
exclusive license, at least 30 business days prior to the grant of any such
license to a third party, and (ii) Visa shall be entitled to obtain a non-
exclusive license of such Application during such 30 business day period on the
terms described in such
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notice, but with an 'economic protection' clause that gives Visa the right to
any better terms offered by US Order or its Affiliate to any third party within
90 business days after Visa executes and delivers such non-exclusive license.
Visa shall also have the right, at any time, to obtain a non-exclusive license,
separate and apart from any license granted pursuant to the preceding sentence,
of any rights in an Application on the terms made available by US Order to its
most favored arms-length customer.
4.15 Current Customer Base. For so long as US Order maintains its current
---------------------
customers, US Order shall process such customer's transactions through Visa, and
US Order may continue to bill such customers under current contractual
arrangements. For each such customer, US Order will be required from the
Closing Date to pay XXXXX to Visa until such customer shall be
transferred to a Member in accordance with the following sentence. US Order
agrees to transfer any or all of these customers and their associated contracts
to any Member or Members designated by Visa and approved by US Order (such
approval not to be unreasonably withheld) without charge, except that such
Member shall pay to US Order for each customer to whom US Order sells a
PhonePlus smartphone after the Closing at a price at or below XXXXX, a fee equal
to (A) XXXXX, less (B) XXXXX, multiplied by the number of 30-day periods and any
fraction of a 30-day period between such phone sale and the transfer of such
customer to a Member. As to any customers not transferred to a Member by the
end of the twelfth calendar month after the Closing, the XXXXX monthly amount
payable by US Order to Visa shall be adjusted to be the greater of (i) the
regular unsubsidized rate charged by Visa to its most favored arms-length
customers for use of the Visa Bill-Pay System (not including any promotional
pricing and discount marketing programs of less than 24 months duration), and
(ii) XXXXX for each customer that is an Active Retail Bill Pay Account.
4.16 Services Agreement.
------------------
(a) For so long as US Order actually provides particular US Order
Services at the prices and consistent with the standards and other terms
required by this Agreement, but not later than December 31, 2000, Visa agrees to
inform Members (through Visa's customary communications with Members) in the
United States that US Order is a preferred provider ("Preferred Provider") or
other similar designation of such services.
(b) For so long as US Order actually provides US Order Services at the
prices and consistent with the standards and other terms required by this
Agreement, but not later than December 31, 2000, Visa shall inform its Members
in the United States of US Order Services offered by US Order through various
programs which may (but shall not be required to) include: (i) production and
distribution of marketing materials;
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(ii) smartphone device subsidies; (iii) customer acquisition and integration
fees; and (iv) retail POS advertising support.
(c) For the twelve month period following the Closing Date, Visa
agrees that, in the United States, so long as US Order actually provides the US
Order Services at the prices and consistent with the standards and other terms
required by this Agreement: it will not designate any third party as a
Preferred Provider of US Order Services offered by US Order, but it is
acknowledged that during and after this period Visa may inform its Members and
their customers in the United States that there are certified providers or other
similar providers who may also offer services similar to the US Order Services
to Members and their customers in connection with the Visa Bill-Pay System.
(d) Notwithstanding any other provision in this Agreement, Visa's
performance of its obligations in this Section 4.16 shall not require it to
incur any minimum costs or expenses.
4.17 Phone Subsidies. For each PhonePlus Smart Telephone that US Order
---------------
sells after the Closing at a price of XXXXX to customers who connect to the Visa
Bill-Pay System through a Member, Visa will pay XXXXX up to the Phone Subsidy
Amount. Visa will pay US Order monthly upon receipt of adequate proof of such
sales. The Phone Subsidy Amount will be XXXXX less the sum of the
obligations assumed by Visa and listed in Exhibit 4.17 (or referred to in
Exhibit 1.2-C as specifically applicable to this Section 4.17), with the result
of this subtraction increased or decreased by the amount by which the accrued
but unpaid vacation amounts and the net present value (calculated at a discount
rate of 10% per annum, compounded quarterly) of the assumed capital lease
obligations listed in Exhibit 1.2-C are more or less than XXXXX. For
example, if the assumed obligations totaled XXXXX, the initial Phone Subsidy
Amount would be XXXXX; and if the sum of the accrued vacation and the net
present value of the capital lease obligations was XXXXX, the Phone Subsidy
Amount would be further adjusted by XXXXX.
4.18 XXXXX Agreement. At the Closing US Order and Visa shall
---------------------------
execute the XXXXX Agreement having substantially the following
terms:
XXXXX
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XXXXX
(vi) Any other terms contained in the XXXXX Agreement.
Notwithstanding the foregoing, the terms described above shall be governed and
superseded in all respects by the actual terms of the XXXXX Agreement, and the
terms above shall in no way interpret, contradict, limit or supplement the terms
of such XXXXX Agreement.
ARTICLE V
COVENANTS OF VISA
-----------------
5.1 Covenant to Satisfy Conditions. Visa will use its best efforts to
------------------------------
insure that the conditions set forth in Article VII hereof are satisfied,
insofar as such matters are within its control.
5.2 Board Representation. Until the end of the CPR Term, US Order may
--------------------
designate one individual to be a director (the "US Order Director") to sit on
the Board of Directors of Springboard, which US Order Director (or any
replacement) shall be acceptable to Visa in its reasonable discretion (it being
acknowledged that Bill Gorog, Coleman Andrews or John Backus is acceptable).
Visa will cause the designated individual to be elected as a director of
Springboard during this period. Also during this period, and in the event and
only for so long as the Board of Directors of
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Springboard shall exceed six members, US Order shall have the right to designate
an advisor (the "Advisor"), which Advisor (or any replacement) shall be
acceptable to Visa in its reasonable discretion (it being acknowledged that Bill
Gorog, Coleman Andrews or John Backus is acceptable), to attend any or all Board
of Director meetings of Springboard, but who shall not be a director of
Springboard and shall have no voting rights at such meetings. Notwithstanding
the foregoing, Visa will have the right to remove the US Order Director and the
Advisor and to purchase the Springboard Preferred Stock for $100, if a Dispute
Notice shall be delivered and the amount claimed in the Dispute is in excess of
$1 million. If there shall be any Dispute between the parties involving $1
million or less, the US Order Director and the Advisor shall be excluded from
all board meetings during any time that the Dispute is discussed, and will not
be entitled to receive any information regarding such Dispute. When the Dispute
has been finally resolved and all judgments or awards have been satisfied, Visa
will again be obligated to comply with its obligations under the first three
sentences of this paragraph, unless and until there is another Dispute subject
to the fourth and fifth sentences of this paragraph.
5.3 Knight Ridder Advertising Services. Visa agrees to make reasonable
----------------------------------
efforts to place orders (which are at prices which are at or below market rates)
with Knight Ridder for advertising services in support of PhonePlus to assist US
Order in using its XXXXX with Knight Ridder. Nothing herein shall
obligate Visa or any other entity or person to make any expenditures of funds or
place any such orders with Knight-Ridder.
5.4 Other Transactions. Until the earlier of September 1, 1994 or the
------------------
Closing, Visa and its Board of Directors, officers and employees shall not,
directly or indirectly, enter into any discussions concerning, or recommend or
approve, any debt investment, or acquisition of any interest (whether by asset,
stock purchase, or otherwise), or any offer, option or other commitment or
understanding (written or oral) to acquire any interest in any corporation,
partnership, association, or any other form of business entity (whether
organized for profit or not) which engages in any business which is competitive
with the home banking business of US Order (as presently being conducted)
(except for the potential transaction between XXXXX, which has been previously
disclosed by Visa to US Order.
ARTICLE VI
COVENANTS OF THE PARTIES
------------------------
The parties covenant and agree as follows:
6.1 Efforts to Consummate. Subject to the terms and conditions herein
---------------------
provided, each of the parties to this Agreement
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shall use its best efforts to take or cause to be taken all action and do or
cause to be done all things necessary, proper or advisable under applicable laws
and regulations to consummate and make effective, as soon as reasonably
practicable, the transactions contemplated hereby.
6.2 License Agreement. At the Closing, US Order and Visa shall execute
-----------------
and deliver the Visa Excluded Assets License, the US Order Asset License and the
XXXXX Agreement (collectively, the "License Agreements").
ARTICLE VII
CONDITIONS TO US ORDER'S AND WORLDCORP'S OBLIGATIONS
----------------------------------------------------
The obligation of US Order and WorldCorp to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction, at or
before the Closing, of each of the following conditions, unless waived in
writing by US Order:
7.1 Representations and Warranties True. (i) The representations and
-----------------------------------
warranties made by Visa herein shall be true and correct in all material
respects on and as of the Closing Date with the same effect as if such
warranties and representations had been made on and as of the Closing Date; (ii)
Visa shall have performed and complied in all material respects with all
agreements, covenants and conditions on its part required to be performed or
complied with on or prior to the Closing Date, and (iii) US Order shall have
received a certificate executed by the President or any Vice President of Visa
to the foregoing effect.
7.2 License Agreement. Visa shall have executed and delivered the License
-----------------
Agreements.
7.3 Government Consents and Authorizations. All consents, authorizations,
--------------------------------------
orders or approvals of, and filings or registrations with, any Federal, state,
local or foreign governmental commission, board or other regulatory body which
are required for or in connection with the execution and delivery by Visa of
this Agreement and the consummation by Visa of the transactions contemplated
hereby shall have been obtained or made.
7.4 No Governmental Proceeding or Litigation. No suit, action,
----------------------------------------
investigation, inquiry, or other proceeding by any governmental body or other
person or legal or administrative proceeding shall have been instituted or
threatened which questions the validity or legality of the transactions
contemplated by this Agreement; provided that, in the case of such a proceeding
brought by a person other than a governmental body, the condition set forth in
this Section 7.4 shall be deemed to have been satisfied if US Order shall have
been provided with an opinion of counsel to Visa to the effect that it is
reasonably
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probable that the relief sought in such proceeding will not be granted.
7.5 Fairness Opinion. US Order shall have received a copy of the Fairness
----------------
Opinion of National Westminster PLC New York delivered to US Order stating that
the transaction is fair to US Order and its shareholders from a financial point
of view. This condition will be deemed satisfied upon US Order's acceptance of
the Disclosure Payment.
7.6 Consents from Shareholders. US Order shall have received copies of
--------------------------
consents from each Shareholder to the transactions contemplated by this
Agreement and the use by US Order of the proceeds of this Agreement. This
condition will be deemed satisfied upon US Order's acceptance of the Disclosure
Payment.
7.7 No Injunction. On the Closing Date, there shall be no effective
-------------
injunction, writ, preliminary restraining order, or any order of any nature
issued by a court of competent jurisdiction or agency or other authority
directing that the transactions contemplated by this Agreement or any of them
not be consummated as so provided or imposing any conditions on the consummation
of the transactions which Visa deems unacceptable in its sole discretion.
7.8 Legal Opinion. Visa shall have delivered a legal opinion from its in-
-------------
house general counsel in a form reasonably satisfactory to US Order stating that
Visa is duly organized, validly existing and in good standing under the laws of
the State of Delaware and has full corporate power and authority to enter into
this Agreement and to carry out the transactions contemplated by this Agreement,
that the Board of Directors of Visa has taken all action required by law, its
Articles of Incorporation, its Bylaws and otherwise to authorize the execution
and delivery of this Agreement and the other documents contemplated by it, and
that to the best of their knowledge that the execution, delivery and performance
of this Agreement will not violate, breach or conflict with any law or agreement
to which Visa is a party or to which its assets or properties are subject.
ARTICLE VIII
CONDITIONS TO VISA'S OBLIGATIONS
--------------------------------
The obligation of Visa to consummate the transactions contemplated by this
Agreement shall be subject to the satisfaction, at or before the Closing, of
each of the following conditions, unless waived in writing by Visa:
8.1 Representations and Covenants. (i) The representations and warranties
-----------------------------
made by US Order and WorldCorp herein shall be true and correct in all material
respects on and as of the
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Closing Date with the same effect as if such warranties and representations had
been made on and as of the Closing Date, (ii) US Order and WorldCorp shall have
performed and complied in all material respects with all agreements, covenants
and conditions on their part required to be performed or complied with on or
prior to the Closing Date, and (iii) Visa shall have received a certificate
executed by the Executive Vice President of US Order to the foregoing effects.
8.2 Opinions of Counsel. Visa shall have received from Mr. Andrew M.
-------------------
Paalborg, Esq., acting in his capacity as in-house general counsel of WorldCorp
and sometime in-house counsel for US Order, a legal opinion in form reasonably
satisfactory to Visa stating that US Order and WorldCorp are each duly
organized, validly existing and in good standing under the laws of the State of
Delaware and each has full corporate power and authority to enter into this
Agreement and to carry out the transactions contemplated by this Agreement, that
the Board of Directors of each of them has taken all action required by law, its
Articles of Incorporation, its Bylaws and otherwise to authorize the execution
and delivery of this Agreement and the other documents contemplated by it, and
that to the best of his knowledge that the execution, delivery and performance
of this Agreement will not violate, breach or conflict with any law or agreement
to which US Order or WorldCorp is a party or to which their assets or properties
are subject.
8.3 Other Documents. Visa shall have received copies of the resolutions
---------------
adopted by the Board of Directors and Shareholders of US Order authorizing the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, certified by the Secretary or Assistant
Secretary of US Order.
8.4 Consents and Approvals. US Order shall have delivered to Visa duly
----------------------
executed copies of all consents and approvals contemplated by this Agreement or
otherwise required for consummation of the transactions hereunder, including,
without limitation, all consents, authorizations, orders or approvals of, and
filings or registrations with, any Federal, state, local or foreign governmental
commission, board or other regulatory body which are required for or in
connection with the execution and delivery by US Order of this Agreement and the
consummation by US Order and WorldCorp of the transactions contemplated hereby,
other than the Deferred Consents.
8.5 No Government Proceeding or Litigation. No suit, action,
--------------------------------------
investigation, inquiry, or other proceeding by or before any court or
governmental body or agency shall have been instituted or threatened which
questions the validity or legality of this Agreement or the transactions
contemplated hereby or which in the sole and exclusive judgment of Visa might
have a Materially Adverse Effect.
55
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8.6 No Injunction. On the Closing Date, there shall be no effective
-------------
injunction, writ, preliminary restraining order, or any order of any nature
issued by a court of competent jurisdiction or agency or other authority
directing that the transactions contemplated by this Agreement or any of them
not be consummated as so provided or imposing any conditions on the consummation
of the transactions which Visa deems unacceptable in its sole discretion.
8.7 Material Adverse Changes. There shall have occurred no material
------------------------
adverse change (whether or not such change is referred to or described in any
supplement to the Disclosure Schedule) in the Assets or in the value of such
Assets to Visa between the date of the Latest Balance Sheet and the Closing
Date, and Visa shall receive a certificate to that effect from the Chief
Financial Officer of US Order at the Closing.
8.8 Employment and Non-Compete Agreements. The Designated Employees who
-------------------------------------
Visa desires to be covered by an Employment Agreement shall have entered into
the Employment Agreements. The key employees of US Order designated by Visa but
not hired by Springboard shall have entered into noncompete agreements in a form
satisfactory to Visa.
8.9 License Agreement. US Order shall have executed and delivered the
-----------------
License Agreements and delivered to Visa all materials called for under these
agreements.
8.10 Releases. US Order and WorldCorp shall have executed a release in
--------
substantially the form attached hereto as Exhibit 8.10.
8.11 Consulting Agreement. The Consulting Agreement shall have been
--------------------
terminated.
8.12 Due Diligence. Visa's due diligence review in relation to business,
-------------
financial, legal, tax and technology shall not reveal matters which, in the good
faith belief of Visa and its counsel or financial advisors, result or may
reasonably be expected to result in a Material Adverse Effect.
8.13 Fairness Opinion. Visa shall have received in a form acceptable to
----------------
Visa in its reasonable judgment a copy of the Fairness Opinion of National
Westminster PLC New York delivered to US Order stating that the transaction is
fair to US Order and its shareholders from a financial point of view. This
condition to Closing will not be waived except by a written waiver of Visa dated
the Closing Date that specifically references the Closing.
8.14 Consents from Shareholders. Visa shall have received in a form
--------------------------
acceptable to Visa in its reasonable judgment copies of consents from each
Shareholder to the transactions contemplated by this Agreement and the use by US
Order of the proceeds of this Agreement. This condition to Closing will not be
waived except
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by a written waiver of Visa dated the Closing Date that specifically references
the Closing.
8.15 Disclosure Payment. The Disclosure Payment shall have been made by
------------------
Visa.
ARTICLE IX
SURVIVAL OF REPRESENTATIONS
AND WARRANTIES; INDEMNIFICATION
-------------------------------
9.1 Investigations. The respective representations and warranties of US
--------------
Order, WorldCorp, and Visa contained herein or in any certificates or other
documents delivered prior to or at the Closing shall not be deemed waived or
otherwise affected by any investigation made by any party hereto.
9.2 Indemnification by US Order and WorldCorp. US Order, WorldCorp and
-----------------------------------------
their respective officers, directors and employees, jointly and severally, agree
to indemnify, reimburse, defend, and hold harmless Visa and its subsidiaries and
Affiliates and their officers and directors ("Indemnified Parties") for, from,
and against all demands, claims, actions or causes of action, assessments,
losses, damages, liabilities, costs, and expenses, including interest,
penalties, reasonable attorneys' fees, disbursements, and expenses, and
reasonable experts' and consultants' fees, disbursements, and expenses, asserted
against, resulting to, imposed on, or incurred by Indemnified Parties, directly
or indirectly, in connection with any of the following (collectively,
"Damages"); it further being understood that the Indemnified Parties will have
recourse to the assets of the shareholders, directors, officers, employees,
agents and representatives of indemnifying parties to the extent and only to the
extent that they personally received, directly or indirectly, funds traceable to
sums paid by Visa to US Order pursuant to the terms of this Agreement and the
Damages being indemnified against are a result of any intentional misstatement
or omission of a material fact or fraud:
(a) Any inaccuracy in or breach of, or failure by US Order or
WorldCorp to perform, any of their respective representations, warranties,
covenants, or agreements in this Agreement or in any agreement of US Order
executed pursuant hereto, except that (i) WorldCorp shall have no liability for
any breach of the representations and warranties in Sections 2.1 to 2.7, 2.8(a)
to (f), 2.8(h) to (q), 2.13, 2.14(a) to (n), 2.14(p), 2.15 to 2.18, 2.21, 2.23,
2.25, 2.26 and 2.30 to the extent, but only to the extent, that the breach of
Section 2.30 would constitute a breach of one of the other Sections enumerated
in this sentence (collectively the "Two Year Reps and Warranties") and (ii)
WorldCorp shall have no liability for any breach of the representation and
warranty in Section 2.31 (the "Warranty of Capacity");
57
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(b) Any pollution or threat to human health or the environment that is
related in any way to US Order's, or any previous owner's or operator's
management, use, control, ownership, or operation of any of their properties or
assets, including without limitation, Environmental Claims and all on-site and
off-site activities involving Materials of Environmental Concern, and that
occurs, exists or arises out of conditions or circumstances that occurred or
existed, or was caused, in whole or in part, on or before the Closing Date,
including any such pollution or threat to human health or the environment that
is disclosed or described in the Disclosure Schedule;
(c) Whether or not such matters are disclosed or described in the
Disclosure Schedule, any income, employment or withholding, franchise, sales,
use and other ad valorem or excise taxes of US Order, and any penalties and
interest with respect thereto, relating to tax periods of US Order ending on or
prior to the Closing Date to the extent any amounts so assessed, paid or
incurred exceed the taxes, penalties and interest shown on and heretofore paid
pursuant to the applicable tax returns and, with respect to returns not filed as
of the Closing Date to the extent any amounts so assessed, paid or incurred
exceed the accruals for such taxes, penalties and interest on the books and
records of US Order made through the Closing Date in accordance with the same
methods for accrual of such items utilized in preparation of the Financial
Statements, consistently applied to all periods through the Closing Date;
(d) Whether or not such matters are described in the Disclosure
Schedule, any failure by US Order to adequately fund any retirement, pension or
profit sharing plans for the benefit of its present or former employees, or to
properly administer or terminate any such plans in accordance with all
applicable regulations and the terms of any applicable agreement;
(e) Any Legal Items or other litigation or claims pending, or to the
knowledge of WorldCorp or US Order, threatened against US Order or WorldCorp on
or before the Closing Date, whether or not such matters are disclosed or
described in the Disclosure Schedule, and any other suit, claim, action or
litigation, or governmental, administrative, arbitration or other similar
proceeding, investigation or inquiry, or order, judgment or decree against any
Indemnified Party or the Assets that occurs, exists or arises out of activities,
operations, actions, or omissions of US Order before the Closing Date or
conditions or circumstances that occurred or existed, or was caused, in whole or
in part, on or before the Closing Date, whether or not the activities,
operations, actions, omissions, conditions or circumstances giving rise to such
matters are disclosed or described in the Disclosure Schedule;
(f) Any claim, whenever asserted, that any Indemnified Parties
possession or use within the scope of this Agreement of the Assets (including
without limitation the US Order Bill-Pay
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System, the Visa Bill-Pay System, and any intellectual property transferred or
licensed in accordance with this Agreement) infringes or violates the copyright,
patent, trade secret or other proprietary right of any third party; provided,
however, that Visa must inform US Order or WorldCorp, in writing within 30 days
of the claim. Notwithstanding the foregoing, neither US Order nor WorldCorp
shall have any liability under this Subsection 9.2(f) for Damages where it is
proved that (i) there would not have been any infringement or violation if the
enhancements and modifications made by Visa to the US Order System had not been
made, or (ii) there would not have been any infringement or violation if the US
Order System, without any modifications or enhancements made by Visa, had been
used for the purpose for which the Visa Bill-Pay System was in fact used by
Visa. Until the final determination that a claim is excluded from Damages under
the preceding sentence, the Indemnified Parties will be indemnified by the
indemnifying parties throughout the adjudication process, and if the claim is
determined to be properly excluded, the Indemnified Parties will reimburse the
indemnifying parties for the costs reasonably incurred in connection with
providing this indemnity against the claim together with interest at 10% per
annum, compounded quarterly, until paid in full;
(g) Any claim by any creditor, creditors' committee, liquidating
agent, or bankruptcy trustee (or any similar party) of US Order or WorldCorp (1)
seeking to set aside any transfer contemplated by this Agreement, or (2)
asserting any liability of any Indemnified Party or any interest in Assets
transferred to them under any product line, successor in interest, bulk sales,
or other creditors' rights theory; and
(h) Any liabilities and obligations of US Order or the Shareholders
arising out of facts or circumstances existing on or occurring prior to the
Closing Date that are not expressly assumed by Visa pursuant to the Assumption
of Liabilities and Obligations.
9.3 Indemnification by Visa. Visa agrees to indemnify, reimburse, defend,
-----------------------
and hold harmless US Order and WorldCorp and their officers and directors for,
from, and against all demands, claims, actions or causes of action, assessments,
losses, damages, liabilities, costs, and expenses, including without limitation,
interest, penalties, reasonable experts' and attorneys' fees, disbursements, and
expenses, and reasonable consultants' fees, disbursements, and expenses,
asserted against, resulting to, imposed on, or incurred by US Order, WorldCorp,
or their officers or directors (directly or indirectly) in connection with any
of the following:
(a) any inaccuracy in or breach of, or failure by Visa to perform, its
representations, warranties, covenants, or agreements in this Agreement or any
intentional misstatement or omission of a material fact or fraud; and
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(b) any income, employment or withholding, franchise sales, use and
other ad valorem or excise tax of Visa relating to actions of Visa taken after
the Closing Date.
9.4 Notice.
------
(a) An indemnified party shall promptly give notice to the
indemnifying party within 15 business days after actual receipt of service or
summons to appear in any action begun in respect of which indemnity may be
sought hereunder, or actual notice of assertion of a claim with respect to which
he or it seeks indemnification. Failure to so notify the indemnifying party or
parties shall not cause the indemnified party to lose his or its right to
indemnification unless, and then only to the extent that, such failure to so
notify results in the loss of substantive rights or defenses or otherwise
prejudices the indemnifying party. The indemnifying party shall assume the
defense of such action, including the employment of counsel reasonably
satisfactory to the indemnified party, and shall assume the payment of all
expenses. If the indemnifying party does not assume such defense on a timely
basis, the indemnified party shall be entitled to do so at the expense and risk
of the indemnifying party. The indemnified party shall have the right to employ
separate counsel in any such action and to participate in the defense thereof,
but the fees and expenses of such counsel shall be at the expense of the
indemnified party unless: (i) the indemnifying party and the indemnified party
shall have mutually agreed to the retention of such counsel; or (ii) the
representation of indemnified party is required due to actual or potential
differing interests of parties to the action, or (iii) there is an imminent risk
that the indemnifying party will not have sufficient resources available to
vigorously defend and, if called upon, to pay the indemnity amounts.
(b) If there be a final judgment for the plaintiff in any such action
or proceeding, then the indemnifying party shall indemnify and hold harmless the
indemnified party from and against any loss or liability (to the extent stated
above) by reason of such judgment. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any
pending or threatening proceeding without the written approval of the
indemnified party, which consent will not be unreasonably withheld.
9.5 Limits on Indemnification.
-------------------------
(a) Any claim for indemnification under Section 9.2 for breach of any
Two Year Rep and Warranty shall be asserted by a written demand within two years
of the Closing Date. Any claim under Section 9.2 for breach of the warranty in
Section 2.31 (Warranty of Capacity) must be made as provided in that Section
2.31. Any other claim for indemnification under Section 9.2 must be asserted by
a written demand prior to December 31, 2000.
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(b) Any claim for indemnification under Section 9.3(a) shall be
asserted by a written demand within two years of the Closing Date, and any other
claim for indemnification under Section 9.3 must be asserted by a written demand
prior to December 31, 2000.
ARTICLE X
TERMINATION AND ABANDONMENT
---------------------------
10.1 Methods of Termination. The transactions contemplated by this
----------------------
Agreement may be terminated and abandoned at any time prior to the Closing in
any of the following manners:
(a) By mutual consent in writing of the Chief Executive Officers of
Visa and US Order;
(b) By Visa for Visa Cause which shall mean: (i) any breach of any
representation, warranty, covenant or agreement herein by WorldCorp or US Order
unless such breach is cured within ten days after receipt of notice from Visa;
or (ii) if any of the conditions provided for in Article VIII shall not have
been met (or waived in writing by Visa) prior to August 1, 1994;
(c) By the Board of Directors of US Order for: (i) any breach of any
representation, warranty, covenant or agreement herein by Visa unless such
breach is cured within ten days after receipt of notice from US Order; or (ii)
if the conditions provided in Article VII shall not have been met (or waived in
writing by US Order or WorldCorp) prior to August 1, 1994.
10.2 Effect of Termination. Nothing contained in this Article X shall
---------------------
preclude either Visa or US Order from asserting its rights to specific
performance or other equitable relief as provided in Section 11.8 (Specific
Performance) or to damages in connection with any breach or failure of
performance. However, in addition to any other rights and damages to which it
may be entitled, if the Closing does not occur, Visa shall be entitled to
receive back from US Order and WorldCorp, jointly and severally, the First
Payment, the Disclosure Payment (if paid by Visa), and all other sums paid by
Visa to or for the benefit of US Order or WorldCorp pursuant to this Agreement.
Furthermore, Visa shall be entitled to offset any sums not previously returned
to it as required by this Section 10.2 or otherwise under this Agreement.
10.3 Expenses. Whether or not the transactions contemplated by this
--------
Agreement are consummated, WorldCorp, US Order and Visa will each bear their own
respective expenses incurred in connection with the preparation, execution and
performance of this Agreement and the transactions contemplated by it, including
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all fees and expenses of agents, representatives, counsel and accountants.
ARTICLE XI
MISCELLANEOUS
-------------
11.1 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which when so executed and delivered shall be deemed an
original, and such counterparts together shall constitute only one original.
11.2 Notices. All notices, demands, requests, or other communications
-------
that may be or are required to be given, served, or sent by any party to any
other party pursuant to this Agreement shall be in writing and shall be
delivered in person or mailed by registered or certified mail, return receipt
requested, addressed as follows:
If to US Order: US Order, Inc.
13873 Park Center Road
Suite 353
Herndon, VA 22071
Attn: John C. Backus
President
If to WorldCorp: WorldCorp, Inc.
13873 Park Center Road
Suite 490
Herndon, VA 22071
Attn: T. Coleman Andrews, III
President
If to Visa: Visa International Service
Association
900 Metro Center Boulevard
Foster City, CA 94404
Attention: General Counsel
with a copy (which shall not Farella, Braun & Martel
constitute notice) to: 235 Montgomery Street
30th Floor
San Francisco, CA 94104
Attn: Jeffrey P. Newman, Esq.
Delivery shall be effective upon delivery or refusal of delivery, with the
receipt or affidavit of a messenger deemed conclusive evidence of such delivery
or refusal. Each party may designate by notice in writing a new address to
which any notice, demand,
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request, or communication may thereafter be so given, served, or sent.
11.3 Successors and Assigns. This Agreement and the rights, interests,
----------------------
and obligations hereunder shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and permitted assigns, but
neither this Agreement nor any of the rights, interests, or obligations
hereunder shall be assigned by any party hereto without the prior written
consent of the other parties, except: (i) by operation of law, (ii) Visa may
assign its rights under this Agreement to its subsidiaries or Affiliates (and
doing so will not increase the costs or obligations of Visa under this Agreement
nor will it relieve Visa of any obligations under this Agreement), and (iii) US
Order can transfer its rights and obligations under Section 1.2(c)(ii) in the
manner and subject to the restrictions described in Section 1.2(c).
11.4 Governing Law. This Agreement shall be construed and enforced in
-------------
accordance with the laws of the State of California.
11.5 Waiver and Other Action. This Agreement may be amended, modified, or
-----------------------
supplemented only by a written instrument executed by the parties against which
enforcement of the amendment, modification, or supplement is sought.
11.6 Entire Agreement. This Agreement, the Disclosure Schedule, the
----------------
Exhibits hereto, and the other documents and agreements executed or delivered
pursuant hereto contain the complete agreement among the parties with respect to
the transactions contemplated hereby and supersede all prior agreements and
understandings among the parties with respect to such transactions including any
letters of intent. Section and other headings are for reference purposes only
and shall not affect the interpretation or construction of this Agreement.
11.7 Severability. If any provision of this Agreement is held to be
------------
illegal, invalid, or unenforceable, such provision shall be fully severable, and
this Agreement shall be construed and enforced as if such illegal, invalid, or
unenforceable provision were never a part hereof; the remaining provisions
hereof shall remain in full force and effect and shall not be affected by the
illegal, invalid, or unenforceable provision or by its severance (except to the
extent much remaining provisions constitute obligations of another party to this
Agreement corresponding to the unenforceable provision); and in lieu of such
illegal, invalid, or unenforceable provision, there shall be added automatically
as part of this Agreement, a provision as similar in its terms to such illegal,
invalid, or unenforceable provision as may be possible and be legal, valid, and
enforceable. Notwithstanding the foregoing, the parties agree that in any
bankruptcy proceeding this Agreement is to be construed as one indivisible
agreement and that separate
63
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provisions or portions hereof may not be separately assumed or rejected in such
bankruptcy proceeding.
11.8 Specific Performance. Each party's obligations under this Agreement
--------------------
are unique. If any party should default in its or his obligations under this
Agreement, the parties each acknowledge that it would be extremely impracticable
to measure the resulting damages; accordingly, the nondefaulting party, in
addition to any other available rights or remedies, may sue in equity for
specific performance, and the parties each expressly waive the defense that a
remedy in damages will be adequate, provided neither party shall be entitled to
recover consequential or special damages.
11.9 Confidentiality; Publicity.
--------------------------
(a) Each party hereto will hold and will cause its consultants and
advisors to hold in strict confidence, unless compelled to disclose by judicial
or administrative process or, in the opinion of its counsel, by other
requirements of law, all documents and information concerning the other party
furnished to it by such other party or its representatives in connection with
the transactions contemplated by this Agreement (except to the extent that such
information can be shown to have been: (i) previously known by the party to
which it was furnished; (ii) in the public domain other than as a result of
disclosure directly or indirectly by such party; or (iii) later lawfully
obtained from other sources by the party to which it was furnished or acquired
by Visa as part of the Assets), and each party will not release or disclose such
information to any other person, except its auditors, attorneys, financial
advisors, bankers, and other consultants and advisors in connection with this
Agreement and the transactions contemplated hereby. If the Closing shall not
occur: (i) such confidence shall be maintained except to the extent such
information comes into the public domain through no fault of the party required
to hold it in confidence; (ii) such information shall not be used to the
detriment of, or in relation to any investment in, the other party; and (iii)
all such documents (including copies thereof) shall be returned to the other
party immediately upon the written request of such other party. Each party
shall be deemed to have satisfied its obligation to hold confidential
information concerning or supplied by the other party if it exercises the same
care as it takes to preserve confidentiality for its own similar information.
Each of US Order and WorldCorp further agrees to hold and will cause its
consultants and advisors to hold in strict confidence, unless compelled to
disclose by judicial or administrative process or, in the opinion of its
counsel, by other requirements of law, all information relating to the Assets,
unless it is in the public domain through no fault of such persons.
(b) Unless required by applicable law, neither WorldCorp, US Order nor
Visa shall make any public announcement
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or statement with respect to this Agreement or the transactions contemplated
hereby, except after consultation and agreement with the other parties.
Moreover, with respect to any announcement required by law, the parties hereto
agree to consult with each other prior to issuing such public announcement or
statement as may be required. The parties contemplate making a joint public
announcement within a reasonable time after the Closing.
11.10 Resolution of Conflicts. (a) If the parties shall have any
-----------------------
disagreement regarding liability for, or the amount or payment of, Damages, CPR
Amounts or other monetary amounts payable pursuant to other terms of this
Agreement or the other agreements executed in connection herewith (a "Dispute"),
they shall attempt in good faith to settle such matter by mutual agreement. If
no such agreement can be reached within 30 days after either US Order or Visa
delivers to the other a notice of such Dispute that sets forth the amount
claimed and the basis for such claim under this Section or Section 11.16 (the
"Dispute Notice"), the Dispute shall be submitted promptly to binding
arbitration under the rules then in effect under the following procedures and
rules if the amount claimed in the Dispute cannot reasonably be expected to
exceed $1 million. If it is reasonably expected to exceed this amount, or if
the relief to be sought is equitable relief, in lieu of or in addition to
Damages the party asserting the claim may proceed directly to court and will not
be obligated to arbitrate the Dispute, and in no event will the arbitrator(s)
have any authority to enter any award in excess of $1.5 million. In any matter
which is required to be arbitrated, the parties will not be precluded from
proceeding to court to obtain ancillary equitable relief:
(i) Unless otherwise agreed by the parties, all such Disputes shall be
decided in San Francisco, California by a single arbitrator in accordance with
the Commercial Rules of the American Arbitration Association except as modified
herein.
(ii) Unless otherwise agreed by the parties, the arbitrator shall be a
business attorney in practice for at least 15 years, with substantial experience
in the negotiating and drafting of business acquisition agreements including the
acquisition of substantial intellectual property related to computer application
software.
(iii) It is the intent of the parties that the arbitration be held in
an efficient, economical and expeditious manner. Accordingly, the parties shall
meet in a prehearing conference as promptly as practicable after selection of
the arbitrator to establish the scope and extent of all discovery and the
schedule of the arbitration. Discovery shall be limited to that necessary to
resolve the disputed issues, in the judgment of the arbitrator. If any party
wishes to take discovery, including document productions, interrogatories or
depositions, a request to do so must be submitted to the arbitrator in
accordance with the procedures determined at the pre-hearing conference. The
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arbitrator in his sole discretion may allow limited discovery, all of which must
be completed within 20 business days of the arbitrator's directive unless
extended for good cause by the arbitrator.
(iv) The arbitrator shall not be bound by rules of evidence or
judicial procedures regarding the conduct of the hearing. However the
Arbitrator shall be obligated to follow California substantive law except to the
extent any agreement executed in connection herewith is expressly governed by
the laws of another jurisdiction, in which case such agreement shall be
interpreted under the laws of such other jurisdiction.
(v) The decision of the arbitrator as to the validity and amount of
damages as to any Dispute shall, subject to the above limitations, be binding
and conclusive upon the parties of this Agreement. The arbitrator shall issue
such decision, including a brief statement of the reasons for the award and the
calculation of damages awarded, within 25 days after completion of the
arbitration hearing. The arbitrator shall not have authority to assess punitive
damages. Judgment upon any award rendered by the arbitrator may be entered in
any court having jurisdiction.
(b) Any suit, action or other proceeding brought by any party hereto or
its successors and permitted assigns seeking legal or equitable relief pursuant
to this Agreement or any agreement executed in connection herewith shall be
brought in a court sitting in San Francisco, California. Each party hereto (i)
hereby irrevocably submits itself to the jurisdiction of the United States
District Court for the Northern District of California, of the United States of
America, and if such jurisdiction is not available, to the jurisdiction of the
Superior Court for the City and County of San Francisco, for the purposes of any
suit, action or other proceeding brought by any party hereto, or their
successors or permitted assigns, and (ii) to the extent permitted by applicable
law, hereby waives, and agrees not to assert, by way of motion, as a defense or
otherwise, in any such suit, action or proceeding, the defense that the suit,
action or proceeding is brought in an inconvenient forum, that the venue of the
suit, action or proceeding is improper, or that this Agreement or other
agreements executed in connection herewith, or the subject matter thereof, may
not be enforced in or by such courts. Without limiting the foregoing, each of
the parties hereto consents to process being served on it in any such suit,
action or proceeding at the address of such party set forth in Section 11.2. The
parties agree that they would generally prefer any suit action or claim under
this Section 11.10(b) to be heard in federal, not state, court and shall use
their best efforts to do so.
(c) The Non-Prevailing Party in any action described in 11.10(a) or (b)
shall pay the reasonable expenses (including attorneys' fees, experts' and
consultants' fees and other costs
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and expenses reasonably incurred in connection with the Dispute) of the
Prevailing Party and the arbitrator or judicial fees and administrative or court
expenses associated with the arbitration or action. In any arbitration or
action hereunder a party shall be deemed to be the Prevailing Party in the event
that it prevails on the most significant disputed matters. In the event of a
bankruptcy filing, the costs and attorneys' fees of the other party to this
agreement in dealing with any default and in enforcing its rights in bankruptcy
shall constitute an 'actual pecuniary loss' that must be paid by the bankruptcy
debtor party in accordance with the Bankruptcy Code. For purposes of
calculation of the amount of this 'actual pecuniary loss,' the fees for the in-
house attorney of the non-debtor party shall be charged at the prevailing rate
for outside counsel of similar experience.
11.11 Interpretation. This Agreement shall be construed according to the
--------------
fair meaning of its language. The rule of construction to the effect that
ambiguities are to be resolved against the drafting party shall not be employed
in interpreting this Agreement. Whenever the term "including" is used in this
Agreement, it shall be interpreted as meaning 'including, but not limited to'
the matter or matters thereafter enumerated.
11.12 No Reliance on Projections. Except for the representations and
--------------------------
warranties contained in this Agreement, the exhibits and schedules hereto and
the certificates delivered pursuant hereto, neither Visa nor any person acting
for Visa makes any other representation or warranty, express or implied, with
respect to the execution, delivery or performance by such party of this
Agreement or with respect to the transactions contemplated hereby, and Visa
hereby disclaims any such representation or warranty, whether by Visa or any of
its officers, directors, employees, agents or representatives or any other
person. Neither Visa nor any other person will have or be subject to any
liability to US Order or WorldCorp or any other person resulting from the
distribution to US Order, or US Order's use of, any information regarding Visa
not included in this Agreement, the exhibits and schedules of Visa hereto or in
the certificates delivered by Visa pursuant hereto (including any projections,
estimates or analysis of anticipated performance of the Visa Bill-Pay System).
Neither US Order or any other person will have or be subject to any liability to
Visa or any other person resulting from any distribution to Visa, or Visa's use
of, any projections, estimates or analysis of anticipated performance of the
Visa Bill-Pay System.
11.13 Additional Rights. In the event US Order has any rights to the
-----------------
Assets that are not or cannot be assigned to Visa and cannot be waived, US Order
hereby grants to Visa, to the extent legally permitted to do so, and its
respective successors and assigns, a perpetual, exclusive, worldwide, royalty-
free license to reproduce, distribute, modify, publicly perform and publicly
display, with the right to sublicense and assign such
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Assets including the right to use the Assets in any way whatsoever. US Order
and WorldCorp agree not to challenge the validity of Visa's or Springboard's
rights to the Assets or the licenses granted to Visa or its Affiliates.
Furthermore, in the event US Order has any rights to the Assets that cannot be
assigned to Visa or Springboard, US Order hereby unconditionally and irrevocably
agrees to refrain from exercising these rights and waives the enforcement of all
such rights and all claims and causes of action of any kind with respect to such
rights against Visa or Springboard and their successors, assigns, distributors
and customers. US Order agrees, at the request and expense of Visa or
Springboard, to: (i) consent to and join in any action to enforce such rights;
and (ii) procure a waiver of such rights from the holders of such rights.
11.14 Limitation of Certain Liabilities. Notwithstanding anything to the
---------------------------------
contrary in this Agreement or any agreement executed and delivered in connection
herewith, the parties hereto agree that:
(a) no Member, nor any director, officer, employee, agent or
representative of any Member shall have any individual or personal liability
under or arising out of this Agreement or the agreements executed and delivered
in connection herewith;
(b) Visa and Springboard, and their respective directors, officers,
employees, agents and representatives, shall not have any individual or personal
liability under or arising out of this Agreement or the agreements executed and
delivered in connection herewith as a result of any Member's action or failure
to take action; and
(c) The respective directors, officers, employees, agents and
representatives of US Order or WorldCorp shall not have any individual or
personal liability under or arising out of this Agreement or the agreements
executed and delivered in connection herewith except as provided in Section 9.2
or as a result of such person's own knowing or intentional material misstatement
or omission or fraud.
11.15 Third Party Beneficiaries. Nothing in this Agreement is intended to
-------------------------
confer upon any person other than the parties hereto and their successors and
permitted assigns any rights or remedies under or by reason of this Agreement.
11.16 Post-Closing Cure Rights. (a) Any party to this Agreement will have
------------------------
the right to offset and withhold monies otherwise payable to another party under
this Agreement 30 days after the party claiming the right to setoff delivers
either a Dispute Notice as called for in Section 11.10 or a notice described in
Section 11.16(b) so that the other party will know the amount claimed and the
basis for the claim in reasonable detail, except that such notice and 30 day
waiting period shall not be required if the party claiming the setoff reasonably
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believes that the other party is in a bankruptcy proceeding or the commencement
of a bankruptcy or insolvency proceeding is imminent. In the event that the
amount any party sets off hereunder exceeds such party's good faith estimate of
the monetary damages or Damages involved in such Dispute (the "Good Faith
Estimate"), the offsetting party will pay the other party an amount equal to 10%
of the amount by which such set off exceeds the Good Faith Estimate for each six
month period during which the improper set off continues.
(b) With respect to any breach or default under this Agreement after the
Closing where the breach or default can be cured by the payment of money, the
party claimed to be in breach or default will have five business days after
receipt of notice from the other party identifying the breach or default within
which to cure the breach or default. If the breach or default cannot be cured
by the payment of money, but can be cured within a reasonable period not to
exceed 60 days, then the party claimed to be in breach or default will have a
reasonable time not to exceed 60 days after receipt of notice from the other
party identifying the breach or default within which to cure the breach or
default, provided that the party commences promptly and proceeds diligently with
its efforts to effect a cure of the breach or default.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
VISA INTERNATIONAL SERVICE ASSOCIATION
By: /s/ Bennett Katz
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Its: Group Executive Vice President
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US ORDER, INC.
By: /s/ John C. Backus
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Its: Executive Vice President
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WORLDCORP, INC.
By: T. Coleman Andrews, III
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Its: Chief Executive Officer, President, and
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Principal Accounting Officer
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