WORLDCORP, INC.
The Hallmark Building
13873 Park Center Road
Herndon, Virginia 22071
PROXY STATEMENT FOR THE
SPECIAL MEETING OF STOCKHOLDERS
to be held August 19, 1994
This proxy statement is furnished to stockholders in
connection with the solicitation of proxies by the Board of Directors of
WorldCorp, Inc. ("WorldCorp" or the "Company") for use at the Special Meeting
of Stockholders to be held on Friday, August 19, 1994, and any adjournment
thereof, for the purposes set forth in the accompanying Notice of Special
Meeting of Stockholders and described in detail herein. The meeting will be
held at 9:30 a.m. at WorldCorp, 13873 Park Center Road, Suite 490, Herndon,
Virginia.
All properly executed proxies will be voted in
accordance with the instructions contained therein, and if no choice is
specified, the proxies will be voted for the proposal to amend and restate
the Company's 1988 Stock Option Plan, as amended (the "1988 Plan"). Any
proxy may be revoked by the stockholder at any time before its exercise by
delivery of written revocation to the Secretary of the Company or by signing
a later-dated proxy. Stockholders who attend the meeting may revoke any
proxy previously granted and vote in person.
This proxy statement and the accompanying proxy are
being mailed to the stockholders on or about July 18, 1994.
<PAGE>
PURPOSE OF MEETING
At the meeting, the Board of Directors will ask
stockholders to vote upon a proposal to amend and restate the Company's 1988
Plan (i) to permit the Company's Chief Executive Officer to participate in
the Plan; (ii) to provide additional grants of stock options to nonemployee
Directors upon their election to subsequent two year terms on the Board of
Directors; and (iii) to make other amendments described under "Item No. 1 -
Approval of the Amended and Restated 1988 Stock Option Plan -- Board Action."
In addition, the stockholders will act upon such other matters as may
properly come before the meeting.
VOTING
Stockholders of record of the Company's Common Stock,
par value $1.00 per share ("Common Stock"), at the close of business on July
12, 1994 (the "Record Date"), will be entitled to vote at the meeting. On
July 12, 1994, WorldCorp had outstanding 15,248,349 shares of Common Stock
par value $1.00. Each share of Common Stock is entitled to one vote. The
affirmative vote of a majority of the shares present in person or represented
by proxy at the Special Meeting is required for the approval of all matters
submitted to the stockholders for their consideration.
Shares of Common Stock represented in person or by
proxy will be tabulated by the inspectors of election appointed for the
meeting whose tabulation will determine whether or not a quorum is present.
Abstentions will be counted as shares that are present and entitled to vote
for purposes of determining the presence of a quorum with respect to any
matter but will not be counted as votes in favor of such matter.
Accordingly, an abstention from voting on a matter by a stockholder present
in person or represented by proxy at the Special Meeting will have the same
legal effect as a vote "against" the matter. If a broker holding in "street
name" indicates on the proxy that it does not have discretionary authority as
to certain shares to vote on a matter, those shares will not be present and
entitled to vote with respect to that matter. Accordingly, a "broker non-
vote" on a matter will have no effect on the voting on such matter. Shares
represented by proxies in the accompanying form that are properly executed
and returned to the Company will be voted at the Special Meeting of
Stockholders in accordance with the stockholders' instructions contained in
such proxies. The proxy holders will also vote such shares at their
discretion with respect to such other matters as may properly come before the
meeting. When no such instructions are given, proxy holders will vote such
shares in accordance with the recommendations of the Board of Directors.
THE COMPANY
WorldCorp owns a majority position in World Airways, an air
transportation company, and a controlling interest in US Order, an
interactive information and transaction processing company.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN PERSONS
<TABLE>
Principal Stockholders
The following are the only persons known to the Company who are beneficial owners of more than five percent of the
Company's Common Stock as of May 31, 1994 (except as otherwise noted). With respect to the information set forth below, the
Company has relied upon Schedule 13D or Schedule 13G filings and information received from the persons listed.
<CAPTION>
Name of Beneficial Address of Amount and Nature of Percent
Owner Beneficial Owner Beneficial Ownership<F1> of Class<F1>
____________________ _________________ ________________________ ____________
<S> <C> <C> <C>
Ganz Capital 2875 N.E. 191st Street 1,427,186<F2> 9.2
Management, Inc. Penthouse I
North Miami Beach, FL 33180
Morgan Stanley 1251 Avenue of the Americas 1,078,900<F3> 7.1
Group, Inc. New York, NY 10020
The Prudential Prudential Plaza 933,800<F4> 6.1
Insurance Company Newark, New Jersey 07102-3777
of America
________________________
<FN>
<F1> Beneficial ownership as reported in the table has been determined in accordance with Securities and Exchange Commission
("SEC") regulations and includes shares of the Company's Common Stock that may be acquired within 60 days upon the exercise
of outstanding stock options and warrants and the conversion of the Company's 7% Convertible Subordinated Debentures due
May 15, 2004 (the "Debentures"). In accordance with Rule 13d-3 of the Securities Exchange Act of 1934 (the "Exchange
Act"), shares of Common Stock issuable upon the exercise of such options and warrants and upon conversion of such
Debentures are deemed outstanding for purposes of computing the percentage of Common Stock of the Company owned by the
beneficial owner thereof listed in the table, but are not deemed outstanding for purposes of computing the percentage of
outstanding Common Stock of the Company owned by any other stockholder. Except as otherwise stated below, the named
<PAGE>
persons have sole voting and investment power with regard to the shares shown as owned by such person. Calculation of the
Percent of Class is based on 15,248,349 shares of the Company's Common Stock outstanding as of May 31, 1994.
<F2> Based on Amendment No. 4 to the Schedule 13D of Ganz Capital Management, Inc. ("GCM"), dated October 15, 1993. GCM is the
beneficial owner of (i) 1,159,558 shares of Common Stock and (ii) 2,960 Debentures convertible into 267,628 shares of
Common Stock. By virtue of his direction and control over GCM, Charles B. Ganz, President of GCM, may be deemed to be the
beneficial owner of these securities.
<F3> Based on Amendment No. 2 to the Schedule 13D of the Morgan Stanley Group, Inc. ("MS Group"), dated January 13, 1994.
Consists of indirect beneficial ownership of 1,078,900 shares of Common Stock held by the following subsidiaries and
affiliates of the MS Group: (i) Morgan Stanley International Asset Management Division ("MSI") (618,500 shares); (ii)
Morgan Stanley Asset Management Limited ("MSAM") (443,700 shares); and (iii) Morgan Stanley & Co., Incorporated ("MS & Co")
(15,000 shares indirectly; 1,700 shares directly).
<F4> Based on the Schedule 13G of The Prudential Insurance Company of America ("Prudential"), dated January 31, 1994.
Prudential holds 58,000 shares of the Company's Common Stock for the benefit of Prudential's general account. In addition,
Prudential may have direct or indirect voting and/or investment discretion over 875,800 shares that are held for the
benefit of its clients by its separate accounts, externally managed accounts, registered investment companies, and/or other
affiliates.
</TABLE>
<PAGE>
<TABLE>
Security Ownership of Directors and Executive Officers
The following table sets forth information concerning the beneficial ownership of the Company's Common Stock as of May 31,
1994, for (a) each director, (b) the Chief Executive Officer and each of the Company's four other most highly compensated executive
officers at December 31, 1993, and (c) directors and executive officers of the Company as a group.
<CAPTION>
Amount and Nature of Percent of
Name of Beneficial Owner Beneficial Class<F1>
Ownership<F1>
<S> <C> <C>
T. Coleman Andrews, III 15,072<F2> *
James E. Colburn 513,726<F3> 3.4
Juan C. O'Callahan 512,726<F4> 3.4
William F. Gorog 41,000<F5> *
Patrick F. Graham 21,875<F6> *
Geoffrey S. Rehnert 2,083<F7> *
Charles W. Pollard 286,837<F8> 1.8
A. Scott Andrews 194,024<F9> 1.3
Andrew M. Paalborg 125,804<F10> *
Directors and Executive 1,234,421<F11> 7.7
Officers as a Group
(nine persons)
* Individual is the beneficial owner of less than one percent (1%) of the Company's outstanding Common Stock.
<PAGE>
____________________
<FN>
<F1> Beneficial ownership as reported in the table has been determined in accordance with SEC regulations and includes shares
of the Company's Common Stock that may be acquired within 60 days upon the exercise of outstanding stock options and
warrants. In accordance with Rule 13d-3 of the Exchange Act, shares of Common Stock issuable upon the exercise of such
options and warrants are deemed outstanding for purposes of computing the percentage of Common Stock of the Company owned
by the beneficial owner thereof listed in the table but are not deemed outstanding for purposes of computing the percentage
of outstanding Common Stock of the Company owned by any other stockholder. Except as otherwise stated below, the named
persons have sole voting and dispositive power with regard to the shares shown as owned by such person. Calculation of
the Percent of Class is based on 15,248,349 shares of the Company's Common Stock outstanding as of May 31, 1994. For a
discussion of considerations relevant to calculating the beneficial ownership of the directors and executive officers as a
group, please see footnote 11.
<F2> Consists of (i) 10,933 shares of Common Stock allocated to Mr. Andrews' account under the WorldCorp Employee Savings and
Stock Ownership Plan ("ESSOP") and (ii) 4,139 shares of Common Stock owned directly by Mr. Andrews. Prior to May 24, 1994,
Mr. Andrews held warrants pursuant to a Warrant Agreement, dated as of August 25, 1986, between Mr. Andrews and the
Company. The unexercised warrants held by Mr. Andrews or by his wife expired on May 24, 1994, which event was reported on
a Schedule 13D filed by Mr. Andrews and his wife on June 8, 1994.
<F3> Consists of (i) 25,000 shares of Common Stock issuable upon the exercise of stock options granted under the 1988 Plan, (ii)
478,726 shares of Common Stock held by the ESSOP, as to which Mr. Colburn exercises shared voting and investment power as
one of the two trustees of the ESSOP, and (iii) 10,000 shares of Common Stock held directly. Mr. Colburn disclaims
beneficial ownership of shares held by the ESSOP.
<F4> Consists of (i) 25,000 shares of Common Stock issuable upon the exercise of stock options granted under the 1988 Plan, (ii)
9,000 shares of Common Stock owned directly, and (iii) 478,726 shares of Common Stock held by the ESSOP, as to which Mr.
O'Callahan exercises shared voting and investment power as one of the two trustees of the ESSOP. Mr. O'Callahan disclaims
beneficial ownership of shares held by the ESSOP.
<F5> Consists of 41,000 shares of Common Stock held directly.
<F6> Consists of 21,875 shares of Common Stock issuable upon the exercise of stock options granted under the 1988 Plan.
<F7> After his election to the Board of Directors at the Annual Meeting on May 20, 1994, Mr. Rehnert was granted stock options
under the 1988 Plan consisting of options for 25,000 shares. By July 31, or within 60 days of May 31, 2,083 will be
exercisable.
<PAGE>
<F8> Consists of (i) 143,333 shares of Common Stock issuable upon the exercise of stock options granted under the 1988 Plan,
(ii) 130,000 shares of Common Stock issuable upon the exercise of warrants granted to Mr. Pollard in 1989 expiring August
31, 1997, (iii) 12,504 shares of Common Stock allocated to Mr. Pollard's account under the ESSOP, and (iv) 1,000 shares of
Common Stock owned through an IRA account.
<F9> Consists of (i) 182,277 shares of Common Stock issuable upon the exercise of stock options granted under the 1988 Plan,
(ii) 500 shares of Common Stock issuable upon the exercise of warrants gifted to Mr. Scott Andrews in 1993, and (iii)
11,247 shares of Common Stock allocated to Mr. Scott Andrews' account under the ESSOP. Mr. Scott Andrews is the brother of
Mr. T. Coleman Andrews, III. Mr. Scott Andrews resigned from his position as the Company's Chief Financial Officer,
effective May 1994 to pursue private business interests. Mr. Andrews remains a director of World Airways and will provide
significant assistance to the Company throughout 1994.
<F10> Consists of (i) 122,887 shares of Common Stock issuable upon the exercise of stock options granted under the 1988 Plan,
(ii) 500 shares of Common Stock issuable upon the exercise of warrants gifted to Mr. Paalborg in 1993, and (iii) 2,417
shares of Common Stock allocated to Mr. Paalborg's account under the ESSOP.
<F11> The 478,726 shares of Common Stock held by the ESSOP are reflected in the individual holdings of each of the ESSOP's two
trustees: Messrs. Colburn and O'Callahan. These 478,726 shares of Common Stock held by the ESSOP are only reflected once,
however, in the aggregate beneficial ownership of the directors and executive officers as a group.
</TABLE>
Section 16(a) of the Exchange Act ("Section 16") requires the
Company's directors and officers, and persons who own more than 10% of its
Common Stock, to file with the SEC initial reports of ownership of the
Company's equity securities and to file subsequent reports when there are
changes in such ownership. Due to the complexity of the rules, the Company
assists its officers and directors in preparing and filing the required
reports. During 1993 the Company filed one untimely report regarding one
transaction on behalf of Mr. Andrew M. Paalborg and two untimely reports
regarding two transactions on behalf of Mr. A. Scott Andrews.
<PAGE>
ITEM NO. 1 - APPROVAL OF THE AMENDED AND RESTATED
1988 STOCK OPTION PLAN
On August 17, 1988, the Board of Directors adopted, and on May 11,
1989, the stockholders approved the 1988 Plan under which 2,000,000 shares of
the Company's Common Stock were initially reserved for issuance. WorldCorp
believes that the plan is an important element of providing incentives to
employees, consultants, and directors of the Company and its subsidiaries, to
encourage them to acquire a proprietary interest, or increase their
proprietary interest, in the Company, and to continue to perform services for
the Company.
On May 13, 1992, the stockholders approved amendments to the 1988
Plan that (i) increased the number of shares available for issuance to
2,800,000, (ii) provided for the automatic award of Nonqualified Stock
Options to persons who were first elected to the Board on or after March 25,
1992 and who were not employees of the Company, (iii) deleted the Plan
provisions that authorized the award of "stock depreciation rights," and
(iv) revised certain provisions pertaining to change in control. The 1988
Plan specifically excluded T. Coleman Andrews, III and D. Fraser Bullock from
participation, because each was otherwise receiving an alternate form of
incentive compensation (warrants). See "Executive Compensation --
Compensation of the Chief Executive Officer." On May 31, 1994, the Company
had outstanding stock options for participating employees and directors with
respect to 1,469,139 of the 2,800,000 shares reserved under the 1988 Plan.
Board Action
The Board of Directors of WorldCorp, on June 30, 1994, adopted
certain amendments to the 1988 Plan, subject to approval by the stockholders.
A copy of the 1988 Plan as so amended (the "Amended Plan") is attached hereto
as Exhibit 1. The Board unanimously recommends that the stockholders vote in
favor of the proposal. The amendments to the 1988 Plan were made for several
reasons:
First, when the 1988 Plan was approved by the stockholders, the
President and Chief Executive Officer of WorldCorp, T. Coleman Andrews, III,
was expressly precluded from receiving stock options because, at that time,
he was already receiving incentive compensation in the form of warrants. The
<PAGE>
vast majority of the warrants expired worthless on May 24, 1994. The Board
believes that it is fair, appropriate, important, and in the stockholders'
interest to include some form of incentive compensation as part of Mr.
Andrews' compensation package. The Compensation Committee therefore
determined that the 1988 Plan should be amended so that
Mr. Andrews could be a participant and has determined, after consultation
with Mr. Andrews, on the number of stock options that Mr. Andrews will
receive and the circumstances under which he will receive them.
Disinterested members of the Board have ratified the Compensation Committee's
determinations. See "Executive Compensation -- Compensation of the Chief
Executive Officer."
Second, when the stockholders approved amendments to the 1988 Plan in
1992, nonemployee directors were awarded options for 25,000 shares of Common
Stock, vesting in equal monthly installments over the two-year period of
service as a director. The Company believes that, in order to attract,
retain, and motivate its directors, it is fair and important that nonemployee
directors be permitted to receive additional grants of options for their
service to the Company. Such grants are appropriate in light of the
significant contributions made by nonemployee directors to the Company, World
Airways and U.S. Order in the past, and anticipated future service to the
Company. The Company observes a clear trend among public companies to
compensate directors with stock options, to align the interest of directors
and stockholders. It is therefore proposed that the 1988 Plan be amended to
provide grants of options for 25,000 shares to nonemployee directors upon
their election to subsequent terms on the Board.
Third, since the stockholders last approved amendments to the 1988
Plan, there have been significant changes in the Federal securities and tax
laws. For example, last year the Internal Revenue Code was amended in
material respects. One new provision limits the ability of a public company
such as WorldCorp to deduct compensation to certain executives that exceeds
$1 million, unless certain conditions are satisfied. The Board believes that
it is appropriate to make the changes described below to the 1988 Plan so
that the Plan reflects developments in the Federal securities and tax laws.
The principal amendments to the 1988 Plan are the following:
<PAGE>
(i) eliminating the exclusion by name of T. Coleman Andrews, III and
D. Fraser Bullock from participation in the plan (although Mr. Bullock
presently remains ineligible to participate in the Plan); see "Executive
Compensation -- Compensation of the Chief Executive Officer" for a further
discussion of the addition of Mr. Andrews to the plan;
(ii) providing additional grants of options for 25,000 shares of
Common Stock to nonemployee directors upon their election to subsequent two
year terms on the Board of Directors, effective with the re-elections that
occurred on May 20, 1994, in order to align the interests of nonemployee
directors with those of the Company, and to compensate those directors for
their past and anticipated future services;
(iii) revising the provisions dealing with payment of the exercise
price (I) by adding a holding period requirement applicable to Common Stock
offered by a Participant in payment and (II) by eliminating the possibility
of a Participant's paying the exercise price using Common Stock distributable
to the Participant under the option;
(iv) limiting to 800,000 the maximum number of shares of Common Stock
that could be covered by Stock Options or Stock Appreciation Rights for any
individual in any calendar year, arising out of a new tax law limiting
compensation in excess of $1 million that can be deducted annually with
respect to certain executives, see "Item No. 1 - Approval of the Amended and
Restated 1988 Stock Option Plan - Federal Tax Consequences - Deduction
Limitation";
(v) revising the provisions to allow a person who leaves employment
at the Company, World Airways, US Order, or any other affiliate of the Company
but remains in employment with (or serves on the board of directors of) the
Company, an affiliate of the Company, or any entity in which the Company has
both a debt or equity investment and representation on the board of directors
thereof, to continue to exercise options for a year after he or she leaves
employment (or service on the board of directors) of the Company, such
affiliate, or such other entity; and
(vi) making other clarifying changes.
<PAGE>
General Description of the Plan
The Amended Plan provides for the issuance of options covering up to
2,800,000 shares of Common Stock, subject to appropriate adjustments in the
event of stock splits, stock dividends, and similar dilutive events. Options
may be granted under the Amended Plan to all employees and nonemployee
directors of, and independent contractors and consultants to, the Company and
its subsidiaries in the discretion of the Compensation Committee. As of July
12, 1994, there were approximately 490 employees of the Company and World
Airways and 4 non-employee directors of the Company who were eligible for
grants under the terms of the Plan, as were an undeterminable number of
consultants and independent contractors. As administered, however, the Plan
has made grants only to the non-employee directors and a small group of key
employees selected by the Company's Board of Directors, and there are no
present intentions to make grants to consultants or independent contractors.
The Amended Plan by its terms may be administered by the Board of
Directors or by a committee (the "Committee") of at least three persons who
are "disinterested" within the meaning of Rule 16b-3 under the Securities
Exchange Act of 1934, who are appointed by the Board of Directors for such
term as the Board determines, and who may be removed by the Board at any
time. Effective July 1, 1994, the Board has delegated authority under the
Plan to the Company's Compensation Committee, which is composed of three non-
employee directors who qualify as "outside directors" under the proposed
Treasury regulations relating to the $1 million limit on compensation
deductions for certain executives. The term "Administrator" as used below
refers to the Compensation Committee under that delegation or, when
applicable, the Board of Directors. No person serving as a member of the
Board or the Committee shall act on any matter relating solely to such
person's own interests under the Plan or any option thereunder.
Options granted may be either Incentive Stock Options (as defined in
Section 422 of the Internal Revenue Code (the "Code")) or Nonqualified Stock
Options. The exercise price of each option is determined by the
Administrator at the time of the grant, provided that the exercise price of
Incentive Stock Options may not be less than the fair market value of the
Company's Common Stock on the date of the grant, and the exercise price of
Nonqualified Stock Options may not be less than 50% of the fair market value
<PAGE>
of the Company's Common Stock on the date of the grant. The closing market
price of the Company's stock on July 12, 1994 was $4.00 per share.
The term of each option and the increments in which it is exercisable
are determined by the Administrator, provided that no option may be exercised
more than 10 years after the date of the grant. In addition, if an optionee
owns more that 10% of the total voting power of all classes of the Company's
stock at the time the individual is granted an Incentive Stock Option, the
exercise price per share cannot be less than 110% of the fair market value on
the date of the grant, and the term of the Incentive Stock Option cannot
exceed five years from the date of the grant. The Administrator may provide
that certain options will become exercisable in increments based primarily or
exclusively on the attainment of certain performance goals. No option may be
granted under the Amended Plan after August 19, 1998. The options are non-
transferable during the life of the option-holder. No monetary consideration
will be required from optionees in connection with the grant of options under
the Amended Plan.
The exercise price of stock options granted under the Amended Plan is
payable in cash (or cash equivalents), or to the extent provided in the
applicable stock option agreement, in one of the following alternative forms:
(i) full payment in shares of Common Stock having a fair market value on the
date of exercise equal to the exercise price, (ii) a combination of shares of
Common Stock valued at fair market value on the date of exercise and cash or
cash equivalents, equal in the aggregate to the option price, or (iii)
delivery of an exercise notice and irrevocable instructions to a broker to
promptly deliver to the Company the amount of sale or loan proceeds to pay
the exercise price; provided, however, that the optionee may make payment
with shares of Common Stock only if he has held such shares for at least six
months before the exercise of the particular option. All Nonqualified Stock
Options awarded to Non-Employee Directors provide that payment may be made in
any of the alternative forms described in the preceding clauses (i) through
(iii). No provision in the Amended Plan or action taken pursuant thereto
shall authorize any action that is otherwise prohibited by Federal or State
laws.
Under the Plan, the Administrator may, in its discretion and upon
such terms as it may establish, grant stock options and stock appreciation
rights that provide (or modify previously granted options and stock
<PAGE>
appreciation rights) that in the event of a "Change in Control," such awards
become fully vested and exercisable. For such purpose, a "Change in Control"
is defined as occurring when (i) any person becomes the beneficial owner of
more than 50% of the voting power of the Company, (ii) during any two
consecutive years members of the Board of Directors at the beginning of such
period cease to constitute a majority thereof, unless the election or
nomination of each director is approved by the vote of at least two-thirds of
the directors in the office who were directors at the beginning of such
period, (iii) the Company's stockholders approve a merger or consolidation
other than a merger or consolidation that would result in the stockholders'
continuing to hold more than 50% of the voting power of the combined company
or in which no entity acquires more than 50% of the voting power of the
combined company, (iv) the stockholders approve a plan of complete
liquidation or for the sale of all or substantially all of the Company's
assets. The Administrator may also, in its discretion and upon such terms as
it may establish, grant stock options that provide (or modify previously
granted options to provide) that, in the event of a Change in Control, the
option shall be cashed out on the basis of the difference between the "Change
in Control Price" and the exercise price of such option, as of the date the
Change in Control occurs or such other date as the Board may determine prior
to the Change in Control. "Change in Control Price" means the higher of (i)
the highest price per share paid or offered in any transaction related to a
Change in Control or (ii) the highest price per share paid in any transaction
reported on the New York Stock Exchange at any time during the preceding 60-
day period as determined by the Board.
The Administrator may, in its sole discretion, and upon such terms as
it may establish, grant stock appreciation rights in connection with stock
options awarded to employees and consultants under the Amended Plan. Such
stock appreciation rights may be granted at the time a stock option is
originally granted or subsequent to the date of the grant. A stock
appreciation right entitles a Participant to surrender all or a portion of an
unexercised option (to the extent then exercisable) in exchange for a payment
equal in amount to the difference between (i) the fair market value (on the
date of surrender) of the shares of Common Stock with respect to which the
option is surrendered and (ii) the aggregate exercise price payable for such
shares. Such payment is made in either shares of Common Stock valued at fair
market value (as of the date of surrender) or cash, or partly in cash and
partly in shares of Common Stock, subject to the discretion of the
<PAGE>
Administrator (at the time the stock appreciation right is granted or, if the
stock appreciation right so provides, at the time of surrender). If a
Participant is at the time of exercise of a stock appreciation right subject
to Section 16(b) of the Exchange Act, and the stock appreciation right is
being exercised in whole or in part for cash, then the stock appreciation
right may only be exercised after the expiration of six months from the date
of grant of the stock appreciation right and only in accordance with the
applicable requirements of Rule 16(b)-3(e) under the Exchange Act and any
other applicable law.
In order to assist a Participant in the exercise of any outstanding
stock option granted under the Amended Plan, including the satisfaction of
any federal and state income and employment tax obligations arising
therefrom, the Administrator may, in its discretion, authorize (i) the
extension of a loan from the Company to a Participant, (ii) the payment by a
Participant of the exercise price in a series of installments over a period
of years, or (iii) the guarantee by the Company of a loan obtained by the
Participant from a third party. The terms of any such loan, installment
payment or guarantee (including the interest rate, if any, and terms of
repayment) will be subject to the discretion of the Administrator, and the
loan may be granted with or without collateral or security. No loans or
guarantees may be made with respect to Nonqualified Stock Options awarded to
Non-Employee Directors.
Pursuant to the Amended Plan, which modified the 1988 Plan to allow
for a stock option grant to T. Coleman Andrews, III, the Committee granted
options to Mr. Andrews, see "Executive Compensation - Compensation of the
Chief Executive Officer." This grant, which was ratified by the Board, is
expressly contingent upon approval of the Amended Plan by the stockholders of
the Company at the Special Meeting. Mr. Andrews' options consist solely of
Nonqualified Stock Options.
The Company intends that the Amended Plan qualify as a plan described
in Rule 16b-3 ("Rule 16b-3") of the Securities Exchange Act of 1934 (the
"Exchange Act"). Grants of options under the Amended Plan will therefore be
exempt from the short-swing profit rules of Section 16(b) of the Exchange
Act. The Amended Plan may be amended by the Board of Directors, consistent
with Rule 16b-3, and the Amended Plan specifically authorizes the Board of
Directors to make any amendment deemed necessary or advisable to ensure that
<PAGE>
Incentive Stock Options and Nonqualified Stock Options continue to be treated
as such, respectively, under all applicable laws.
OPTIONS GRANTED UNDER THE 1988 PLAN
Name and Position Year Number of Units
_________________ ____ _______________
T. Coleman Andrews, III 1993 NA<F1>
President/CEO 1992
WorldCorp 1991
1990
1989
1988
William F. Gorog 1993 0
Chairman, WorldCorp; 1992 0
Chairman/CEO, US Order 1991 0
1990 0
1989 0
1988 0
Charles W. Pollard 1993 0
President 1992 100,000
World Airways 1991 0
1990 0
1989 0
1988 100,000
A. Scott Andrews 1993 50,000
CFO 1992 100,000
WorldCorp 1991 90,519
1990 19,481
1989 0
1988 90,000
<PAGE>
Andrew M. Paalborg 1993 100,000
VP & General Counsel 1992 100,000
WorldCorp 1991 83,766
1990 16,234
1989 0
1988 0
All current executive officers 1993 250,000
1992 300,000
1991 376,883
1990 263,117
1989 0
1988 330,000
All current directors (excluding 1993 0<F2>
executive officers) 1992 0
1991 75,000
1990 0
1989 0
1988 0
All employees (including officers 1993 0
and excluding executive officers) 1992 0
1991 55,519
1990 19,481
1989 0
1988 0
__________
[FN]
<F1> Mr. Andrews was ineligible to participate in the 1988 Plan through
1993, and therefore did not receive any options under the 1988 Plan.
<F2> Mr. Rehnert received options for 25,000 shares of Common Stock upon
his election as director on May 20, 1994.
<PAGE>
Federal Tax Consequences
Options granted under the Amended Plan may be (i) Incentive Stock
Options within the meaning of Section 422(b) of the Code or (ii) options
other than Incentive Stock Options (i.e., Nonqualified Stock Options).
Incentive Stock Options. An employee realizes no income upon the
grant of an Incentive Stock Option. An optionee who holds his shares until
the date two years after the grant of the option and one year after he
receives the shares upon its exercise will not incur any federal income tax
liability as a result of the exercise of the option (except that the spread
between the option exercise price and the fair market value of the Common
Stock at the time of exercise will be includable in his alternative minimum
taxable income), and he will realize taxable long-term capital gain upon a
subsequent sale of his shares at a price greater than the option price. No
deduction will be allowable to the Company for federal income tax purposes in
connection with the grant or exercise of an Incentive Stock Option. However,
if the optionee sells his shares without complying with the above holding
periods, that would be treated as a "disqualifying disposition." In general,
an optionee will recognize taxable income at the time of a disqualifying
disposition as follows: (i) ordinary income in an amount equal to the excess
of (A) the lesser of the fair market value of the shares of Common Stock on
the date the Incentive Stock Option is exercised or the amount realized on
such disqualifying disposition over (B) the exercise price and (ii) capital
gain to the extent of any excess of the amount realized on such disqualifying
disposition over the fair market value of the shares of Common Stock on the
date the Incentive Stock Option is exercised (or capital loss to the extent
of any excess of the exercise price over the amount realized on disposition).
Any capital gain or loss recognized by the optionee will be long-term or
short-term depending upon the holding period for the stock sold. The Company
may claim a deduction at the time of the disqualifying disposition equal to
the amount of ordinary income the optionee recognizes. If an Incentive Stock
Option is not exercised within three months after the termination of the
optionee's employment (one year in the case of disability of the optionee for
any reason other than death), it will be treated for federal income tax
purposes as a Nonqualified Stock Option, as described below.
In general, an optionee who pays the exercise price of an Incentive
Stock Option, in whole or in part, by delivering shares of Common Stock
<PAGE>
already owned by the optionee will recognize no gain or loss for federal
income tax purposes on the shares surrendered. However, if the shares
delivered to exercise the Incentive Stock Option were acquired pursuant to
the prior exercise of an Incentive Stock Option and the holding period
requirements discussed above have not been met with respect to such shares,
the delivery of such shares to exercise the Incentive Stock Option will be
considered a taxable disposition of the shares. Under proposed Treasury
Regulations, a number of shares received upon exercise of an Incentive Stock
Option equal in number to the shares surrendered will have a basis equal to
the basis of the shares surrendered (increased, if applicable, by any income
recognized as a result of the exchange) and the holding period of such shares
will include the holding period of the shares surrendered (except for
purposes of determining whether there has been a disqualifying disposition of
the shares). The basis of the additional shares received upon such exercise
will be zero, and the holding period of such shares for all purposes will
begin on the date the shares are transferred.
Nonqualified Stock Options. An employee or other individual will
also realize no income upon the grant of a Nonqualified Stock Option.
However, the general rule is that the holder of a Nonqualified Stock Option
will realize taxable ordinary income at the time of the exercise of his
option in an amount equal to the excess of the fair market value of the
shares acquired at the time of such exercise over the option exercise price,
and such amount will be deductible by the Company for income tax purposes.
Any gain or loss realized by the optionee upon a subsequent sale of his
shares will be a capital gain or a capital loss, and such gain or loss will
be long-term or short-term depending upon the length of time the optionee
held the stock after he acquired it.
An optionee who pays the exercise price of a Nonqualified Stock
Option, in whole or in part, by delivering shares of Common Stock already
owned by the optionee will recognize no gain or loss for federal income tax
purposes on the shares surrendered, but will otherwise be taxed in accordance
with the rules described above for Nonqualified Stock Options. With respect
to shares of Common Stock acquired upon exercise that are equal in number to
the shares of Common Stock surrendered, the basis of such shares will be
equal to the basis of the shares surrendered, and the holding period of such
shares will include the holding period of the shares surrendered. The basis
of additional shares received upon exercise will be equal to the fair market
<PAGE>
value of such shares on the date of exercise, and the holding period for such
additional shares will commence on the day after the date the option is
exercised.
Stock Appreciation Rights ("SAR"). The grant of a stock appreciation
right to a participant under the Plan will not result in the recognition of
taxable income by the participant or in a deduction for the Company. In
general, upon exercise of a SAR granted in connection with an Incentive Stock
Option or a Nonqualified Stock Option, the participant will recognize
ordinary income for Federal income tax purposes equal to the amount of any
cash received plus the fair market value of any shares of Common Stock
received. The Company is required to withhold income tax on amounts
recognized as ordinary income by employees and is entitled to a tax deduction
equal to the amount of income recognized by the participant.
The application of the tax law to each individual will vary depending
on his own particular circumstances. Each individual should therefore
consult his own personal advisor with respect to the tax effects of his
exercise of any option granted under the Amended Plan and his sale or other
disposition of any Common Stock acquired upon the exercise of an option.
Deduction Limitation. Because the Company's Common Stock is
publicly-traded, its annual compensation deductions for certain executives
are limited by Section 162(m) of the Code to $1 million per person, except
for compensation that qualifies as "performance-based." The Company expects
and intends that any compensation deductions with respect to the Amended Plan
will qualify as performance based, and therefore be fully deductible,
because, among other reasons, (i) the Amended Plan will have been submitted
to stockholders for approval and no grants under the Amended Plan will be
made after January 1, 1994 unless the Amended Plan is approved by the
stockholders, (ii) the Amended Plan provides a maximum number of shares
subject to option that can be granted in any calendar year to any employee
(800,000 shares), and (iii) the discretionary grants made after the effective
date of Section 162(m) will be determined by the Compensation Committee,
which is composed of "outside directors" as defined in the proposed
regulations issued under Section 162(m). (It should be noted that the
proposed regulations under Section 162(m) provide that any options that
become exercisable as a result of retirement, death, disability, or change in
<PAGE>
control provisions, all of which could be triggers for exercisability under
the Amended Plan, may not necessarily be considered performance-based.)
The Amended Plan is neither qualified under Section 401(a) of the
Code nor subject to the provisions of the Employee Retirement Income Security
Act of 1974.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR THE PROPOSAL.
<PAGE>
EXECUTIVE COMPENSATION
The Board of Directors of the Company is responsible for establishing
broad corporate policies and for the overall performance of the Company. To
manage the complex nature of the Company's business effectively, the Board of
Directors has delegated certain authority to committees of the Board. The
Board has assigned certain responsibilities relating to employee compensation
to the Compensation Committee. The principal duties of the Compensation
Committee are to review key employee compensation policies, plans, and
programs; to monitor performance and compensation of officers of the Company
and other key employees; to prepare recommendations and periodic reports to
the Board concerning such matters; and to administer the Company's management
incentive compensation plans, including its stock option plan. The members
of the Compensation Committee, none of whom is an employee of the Company,
are James E. Colburn (Chairman), Patrick F. Graham, and Geoffrey S. Rehnert.
The proxy for the WorldCorp 1994 Annual Meeting included the report
of the Compensation Committee which described, among other things, the
factors considered by the Compensation Committee in determining the
appropriate level of compensation for employees, including the Chief
Executive Officer. The general philosophy has not changed since that report.
Compensation of the Chief Executive Officer
___________________________________________
As part of its ongoing review of the compensation of the Chief
Executive Officer, the Compensation Committee has determined that it is
appropriate for the Chief Executive Officer to be eligible to participate in
the 1988 Plan. When the 1988 Plan was originally adopted in 1988 by the
stockholders and amended in 1992 by the stockholders, the Chief Executive
Officer was not an eligible participant because he had otherwise received
incentive compensation in the form of warrants from the Company; the warrants
served as the functional equivalent of stock options for the Chief Executive
Officer. The Compensation Committee is aware that the vast majority of the
warrants held by the Chief Executive Officer directly or beneficially expired
worthless on
May 24, 1994, and that he no longer holds any warrants or stock options of
the Company.
<PAGE>
The Compensation Committee believes that one important element of the
compensation of the Chief Executive Officer is incentive compensation. The
Chief Executive Officer currently does not have, as part of his compensation
package, an incentive compensation component. The Compensation Committee
considered various alternative forms of incentive compensation for the Chief
Executive Officer, including warrants and stock appreciation rights. The
Compensation Committee considered the securities, tax, financial accounting,
and other relevant issues presented by the different alternatives. To assist
it, the Compensation Committee retained the services of an independent
compensation consultant. The Compensation Committee reviewed compensation
data for the Chief Executive Officers of other public companies, including
companies comparable to World Airways engaged in the non-scheduled air
transportation business. Based on its review, the Compensation Committee
determined that it is appropriate and in the stockholders' interest for the
1988 Plan to be amended so that the Chief Executive Officer may be a
participant under that plan. As a result, the Compensation Committee
believes that the Chief Executive Officer's interests and those of the
stockholders will be aligned.
The Compensation Committee and the Chief Executive Officer have
reached an agreement on the number of WorldCorp stock options for which the
Chief Executive Officer would be eligible, provided that certain conditions
are met, that the Board of Directors has ratified that agreement, and that the
stockholders have approved the Amended Plan. Upon stockholder approval, the
Chief Executive Officer would have the right to receive options relating to a
total of 800,000 shares of WorldCorp if all conditions are met.
The stock options will become exercisable by the Chief Executive
Officer under a schedule that is largely dependent on increases in the stock
price of the Company. Options may become exercisable only so long as the
Chief Executive Officer is employed in that capacity by WorldCorp. The
options generally will expire at the earlier of (i) the end of ten years and
(ii) one year after he ceases to provide any services, including services as
a member of the board of directors, to the Company, World Airways, US Order,
the Company's other affiliates, or any other entity in which the Company has
both an equity or debt investment and representation on the board of directors
thereof. In the event that the Chief Executive Officer is no longer employed
in that capacity by WorldCorp, options that have not become exercisable by such
time will not thereafter become exercisable.
<PAGE>
The Chief Executive Officer will, immediately upon stockholder
approval, receive options to purchase 800,000 shares of Common Stock at an
exercise price of $4.50 per share, under which he could immediately exercise
an option for 200,000 shares. The remaining options for 600,000 shares will
become exercisable ten years less 90 days from the original date of grant;
however, the exercise date will be accelerated with respect to these 600,000
shares if certain targets are achieved regarding the Company's stock price.
Pursuant to this provision, the Chief Executive Officer will be entitled to
exercise options to purchase 100,000 shares of Common Stock, at the $4.50
exercise price, each time that WorldCorp stock trades at a price that is an
increase of 25% over the preceding eligibility level for twenty trading days,
up to the maximum of 600,000 shares. Thus, the Chief Executive Officer will
be entitled to exercise options for 100,000 shares, at the exercise price of
$4.50 per share, if WorldCorp stock trades at or above $5.63 for twenty
trading days (that is, at a 25% increase in the price of the stock above the
preceding option grant). The same entitlement would arise for five
additional grants of options for 100,000 shares each, at the exercise price
of $4.50 per share, if WorldCorp stock trades at or above $7.03, $8.79,
$10.99, $13.74, and $17.17, for twenty trading days each (each of these
trading prices is 25% above the price of the stock at the earlier tier). The
following chart summarizes this information:
Number of Shares Exercise Options Become Exercisable
Covered by Options Price When...
200,000 $4.50 Stockholders approve Amended Plan
100,000 $4.50 WorldCorp stock trades at or above
an average of $5.63 for 20 trading
days
100,000 $4.50 WorldCorp stock trades at or above
an average of $7.03 for 20 trading
days
100,000 $4.50 WorldCorp stock trades at or above
an average of $8.79 for 20 trading
days
<PAGE>
100,000 $4.50 WorldCorp stock trades at or above
an average of $10.99 for 20
trading days
100,000 $4.50 WorldCorp stock trades at or above
an average of $13.74 for 20 trading
days
100,000 $4.50 WorldCorp stock trades at or above
an average of $17.17 for 20
trading days
Any remaining shares
subject to unexercisable
options $4.50 May 21, 2004
Finally, as a result of certain financial accounting rules,
the Compensation Committee has decided that the Chief Executive Officer will
be entitled to exercise options for all of the 800,000 shares of Common Stock
even if WorldCorp stock does not trade at or above the levels set forth
above, assuming the Chief Executive Officer meets all other required
conditions (including that he is still employed as Chief Executive Officer of
the Company at the time). Any remaining shares subject to unexercisable
options would become exercisable on the date that is ten years, less 90 days,
from the date of grant. All options will expire at the end of ten years from
the date of grant.
At the date of grant by the Compensation Committee, the
exercise price of $4.50 for the options granted to Mr. Andrews was at or
above the fair market value of the Common Stock. The Company's management
believes that it will be required to reflect an expense for purposes of its
financial statements to the extent, if any, that the fair market value of the
Common Stock exceeds $4.50 at the date of stockholder approval. The expense
will be accrued over the schedule for initial exercisability of the options.
<PAGE>
The Compensation Committee and the Chief Executive Officer
have also reached certain understandings, not yet embodied in a formal
agreement, with respect to the Chief Executive Officer's contract. Please
see "Contracts and Termination of Employment and Change in Control
Arrangements," below.
The Board of Directors has ratified the course of action
taken by the Compensation Committee with respect to its negotiations with the
Chief Executive Officer and believes that stockholder approval of the Amended
Plan will facilitate finalizing these arrangements and be in the best
interests of the Company.
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE<F1>
Long-Term
Annual Compensation Compensation
______________________________________
Awards
___________
Securities
Underlying All Other
Options/ Compensa-
Name and Principal Year Salary Bonus SARs<F3> tion<F4>
Position <F2> ($) (#) ($)
_______________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
T. Coleman Andrews, 1993 335,058<F5> --- --- 215,281<F6>
III President/CEO 1992 357,280<F5> --- --- 4,403
WorldCorp 1991 350,012 70,000 --- ---
William F. Gorog 1993 187,646 --- --- ---
Chairman/CEO 1992 110,365 --- --- ---
US Order 1991 --- --- ---
<PAGE>
Charles W. Pollard 1993 172,316<F5> --- --- 14,960
President 1992 165,891 --- 100,000 8,958
World Airways 1991 140,000 35,000 --- ---
A. Scott Andrews 1993 160,000 50,000 50,000 13,279
CFO 1992 146,308 --- 100,000 6,804
WorldCorp 1991 105,000 31,250 90,519 ---
Andrew M. Paalborg 1993 160,485 25,000 100,000 10,480
VP & General Counsel 1992 146,308 --- 150,000 3,997
WorldCorp 1991 102,116 31,250 83,766 ---
____________________
<FN>
<F1> Reflects compensation for each of the executives listed as of each of the last three completed fiscal years. Does not
include twenty-four cockpit crewmembers each of whose compensation exceeded $100,000 in 1993.
<F2> Includes compensation deferred under the Company's ESSOP.
<F3> Includes options granted in 1993, 1992, and 1991 under the 1988 Plan and warrants granted pursuant to various warrant
agreements between the Company and its named executive officers. No warrants were granted in 1993, 1992, or 1991. The
Company has never granted any SARs.
<PAGE>
<F4> Amount represents value of Company contributions to the Company's ESSOP. Company contributions are made in WorldCorp
Common Stock and are valued using closing prices for the year in which the contributions were made. Pursuant to the SEC
transition provisions, this information is not included for 1991.
<F5> Due to the prolonged global airline recession and its adverse effects on the Company's recent financial performance,
Messrs. T. Coleman Andrews, III and Pollard elected to reduce their salaries by 10% for the period beginning October 23,
1992, and ending June 1, 1993.
<F6> Consists of (i) $14,451 of Company contributions to the Company's ESSOP and (ii) $200,830 paid in connection with the
modification of Mr. Andrews' Supplemental Incentive Compensation Agreement. Please see, "Contracts and Termination of
Employment and Change in Control Arrangements" below.
</TABLE>
<PAGE>
<TABLE> OPTION GRANTS IN 1993<F1>
INDIVIDUAL GRANTS
--------------------------------------------------------------------
<CAPTION>
NUMBER OF % OF
SECURITIES TOTAL
UNDERLYING OPTIONS GRANT DATE
OPTIONS GRANTED TO EXERCISE PRESENT
GRANTED EMPLOYEES IN PRICE<F2> EXPIRATION VALUE<F3>
NAME (#) 1993 ($/SH) DATE ($)
--------------------- ------------- ------------ ---------- --------------- -----------
<S> <C> <C> <C> <C> <C>
T. Coleman Andrews, --- --- --- --- ---
III
William F. Gorog --- --- --- --- ---
Charles W. Pollard --- --- --- --- ---
A. Scott Andrews 50,000<F4> 20.00% $4.72 November 9, 2001 200,500
Andrew M. Paalborg 100,000<F4> 40.00% $4.72 November 9, 2001 401,000
____________________
<F1> Reflects stock options granted during the last completed fiscal year.
<F2> Pursuant to the relevant stock option agreements, the exercise price for each of the grants reflected in this table was set
at the average closing price on the New York Stock Exchange of the Common Stock for the thirty days prior to and including
the grant date.
<PAGE>
<F3> The Black-Scholes option valuation model was chosen to estimate the grant date present value of the options set forth in
this table. The Company's use of this model should not be construed as an endorsement of its accuracy at valuing options.
All stock option valuation models, including the Black-Scholes model, require a prediction about the future movement of the
stock price. The real value of the options in this table depends upon the actual performance of the Company's stock during
the applicable period. For calculation under the Black-Scholes model, the volatility was assumed to be 50%, and the risk-
free rate of return was assumed to be the Treasury Bill rate of 5.3%. The exercise price of $4.72 for the 8 year term of
the option was used.
<F4> These options vest in 36 equal monthly installments beginning December 1, 1993. For information on change in control
provisions associated with these option grants, all of which were granted pursuant to the 1988 Plan, please see "Contracts
and Termination of Employment and Change in Control Arrangements."
</TABLE>
<PAGE>
AGGREGATED OPTION EXERCISES IN 1993
AND YEAR-END OPTION VALUES<F1>
NUMBER OF VALUE OF
SECURITIES UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
FY-END (#) FY-END ($)
(EXERCISABLE/ (EXERCISABLE/
NAME UNEXERCISABLE) UNEXERCISABLE)
-------------------- --------------------------- -----------------------
T. Coleman Andrews, 776,933/0<F2> 485,583/0
III
William F. Gorog 60,000/0<F3> 37,500/0
Charles W. Pollard 246,500/83,500<F4> 14,354/1,896
A. Scott Andrews 161,389/165,611<F5> 1,320/43,993
Andrew M. Paalborg 79,778/199,722<F6> 2,577/87,986
______________________
[FN]
<F1> Reflects exercise of stock options during the last completed fiscal
year.
<F2> Consists of 776,933 warrants issued to Mr. Andrews in 1986, which
expired May 24, 1994. Excludes 1,250,000 warrants held as of fiscal
year-end by Susan A. Andrews, Mr. Andrews' wife. On October 12,
1993, Mr. Andrews sold the 1,250,000 warrants to his wife in a
private transaction. Mrs. Andrews had sole power to vote and dispose
of the 1,250,000 shares that could have been acquired through
<PAGE>
exercise of such warrants. Mr. Andrews disclaimed any beneficial
ownership of the 1,250,000 warrants held by his wife. Of the
warrants held by Mrs. Andrews at year-end, warrants for 90,000 shares
were exercised by Mrs. Andrews in March, 1994, and the balance with
respect to 1,160,000 shares expired on May 24, 1994.
<F3> Consists of 60,000 warrants which expired on May 24, 1994.
<F4> Consists of (i) 130,000 warrants issued to Mr. Pollard in 1989 and
(ii) options to purchase 200,000 shares of Common Stock granted to
Mr. Pollard between 1988 and 1992. At year end, options to purchase
131,667 shares of Common Stock and warrants with respect to 114,833
shares of Common Stock were exercisable.
<F5> Consists of (i) 500 warrants transferred to Mr. Andrews in 1993 and
(ii) options to purchase 326,500 shares of Common Stock granted to
Mr. Andrews between 1988 and 1993. At year end, options to purchase
160,889 shares of Common Stock and warrants with respect to 500
shares of Common Stock were exercisable.
<F6> Consists of (i) 500 warrants transferred to Mr. Paalborg in 1993 and
(ii) options to purchase 279,000 shares of Common Stock granted to
Mr. Paalborg between 1990 and 1993. At year end, options to purchase
79,278 shares of Common Stock and warrants with respect to 500 shares
of Common Stock were exercisable.
<PAGE>
CONTRACTS AND TERMINATION OF EMPLOYMENT AND
CHANGE IN CONTROL ARRANGEMENTS
The Company and T. Coleman Andrews, III entered into an employment
agreement effective November 10, 1988, to extend Mr. Andrews' term as Chief
Executive Officer and President of WorldCorp through August 1, 1994. The
contract is automatically extended annually at the end of the term of the
agreement unless either party provides 12 months' advance, written notice of
its intent to terminate the agreement. The Company and Mr. Andrews did not
provide written notice by August 1, 1993, of their intent to terminate the
agreement, and, therefore, Mr. Andrews' employment agreement has been
automatically extended through August 1995.
Mr. Andrews and the Compensation Committee are currently engaged in
negotiations concerning a new employment agreement. Those negotiations,
although not yet reduced to a written agreement, have produced understandings
between the Company and Mr. Andrews as to the principal terms of a new
employment agreement. The Company and Mr. Andrews expect to execute a new
employment agreement in the near future.
The principal terms of the new agreement would be the following: (i)
Mr. Andrews would receive a minimum salary of $350,000 beginning on the date
of an executed contract, (ii) the contract would be for a term that ends on
December 31, 1997, subject to a renewal provision described below, (iii) Mr.
Andrews would be eligible for an annual bonus pursuant to the company's
officer incentive bonus plan, (iv) Mr. Andrews would be eligible to receive
options under the Amended Plan, and (v) the Company would be required to
maintain a $5 million key man life insurance policy and to use the proceeds,
in the event of Mr. Andrews' death, to purchase stock options and/or
WorldCorp common stock then owned by him (or his estate). The Compensation
Committee has also required Mr. Andrews to hold a substantial number of
shares of the Common Stock of the Company, and a final agreement may set
forth a minimum number of shares that Mr. Andrews would hold under certain
circumstances. The Company and Mr. Andrews have also reached an
understanding that by December 31, 1996 (that is, one year before the new
agreement would otherwise expire), the parties either would reach a new
definitive agreement, or one party must give written notice to the other
party that the agreement will expire, unrenewed, on December 31, 1997. If
<PAGE>
neither event occurs, though, the agreement would extend for an additional
eighteen months, with all economic provisions extended on a pro rata basis.
Following is a summary of the principal terms of the current
employment agreement that would be retained in the new agreement. Mr.
Andrews may terminate his employment in the event (i) the Company relocates
its headquarters outside of the Washington, D.C. area, (ii) his duties are
diminished in a manner materially altering his responsibilities, or (iii) the
Board determines that the Company should be liquidated or dissolved during
the term of the employment agreement. In the event Mr. Andrews exercises
this termination right, the Company is obligated to pay him the undiscounted
remainder of his base salary during the term. In the event the Company
terminates Mr. Andrews' employment with the Company other than for Cause (as
defined in the agreement), the Company is obligated to pay Mr. Andrews the
undiscounted remainder of his base salary, the value of any granted but
unvested stock appreciation rights, if any, held by Mr. Andrews at the time
of such a termination, and any federal or state taxes imposed upon this
termination payment.
The Company and Mr. Andrews in 1989 entered into a Supplemental
Incentive Compensation Agreement (the "Incentive Agreement") in lieu of the
Company's granting additional equity to Mr. Andrews. Under the Incentive
Agreement, the Company agreed to pay Mr. Andrews the amount of $1,300,000,
plus interest, on the expiration of his employment agreement if certain
conditions were met, including Mr. Andrews' being an employee at that time.
In December 1993, the Company and Mr. Andrews agreed to modify the Incentive
Agreement by terminating it and entering into a new agreement. In connection
with the new agreement, the Company paid Mr. Andrews in December 1993
(approximately seven months early) $200,830 due him under the Incentive
Agreement. The new agreement delays payment to Mr. Andrews of the balance
due under the Incentive Agreement and provides that the Company will make
four annual installment payments, including interest, between 1995 and 1998.
In 1989, the Company loaned Mr. Andrews $1,300,000 under a full
recourse promissory note that bore interest at the same rate as the interest
rate set forth in the Incentive Agreement. The Company and Mr. Andrews
agreed, in December 1993, to cancel the earlier note and to substitute a new,
full recourse promissory note due in installments between January 1994 and
February 1998; the new note bears interest at the same rate as the interest
<PAGE>
rate set forth in the new incentive agreement. Mr. Andrews reduced the
principal balance of his obligation to the Company by $80,000 in January
1994.
The Board of Directors determined on November 20, 1989, after
receiving the report of an independent compensation consultant, that the
Company should take steps to ensure the retention of certain executives in
the event of circumstances presenting the possibility of a change of control.
The Board authorized the Company to enter into severance agreements with
Messrs. Paalborg and A. Scott Andrews (the "Severance Agreements"). Each
Severance Agreement provides that in the event of termination of the
executive officer's employment by the Company without Cause (as defined) or
by the executive officer for Good Reason (as defined) within two years after
a Change of Control (as defined) the Company will pay the executive officer a
severance benefit equal to one-half the executive's annual base salary and
continuation of health, life, accident, and disability insurance at the
Company's expense for 12 months after termination.
The Company has issued stock options to each of Messrs. Paalborg,
Pollard, and A. Scott Andrews. Certain of the options issued to executive
officers under the Company's 1988 Plan prior to May 13, 1992, provided that
upon a Change of Control (as defined) the executive officer's options shall
become immediately exercisable as of the date of the Change of Control for up
to double the number of shares of Common Stock for which the options are
otherwise exercisable as of the date of the Change of Control (not to exceed
the total number of Option Shares, as defined). Other options issued to
executive officers under the 1988 Plan prior to May 13, 1992, provided that
in the event of termination of the executive officer's employment by the
Company without Cause (as defined) or by the executive officer for Good
Reason (as defined) within two years after a Change of Control (as defined)
the executive officer's stock option shall become fully vested and
exercisable. In 1992, the Company amended and restated its 1988 Plan. The
Company's stockholders approved the amended and restated 1988 Plan on May 13,
1992. Options issued to executive officers under the 1988 Plan as amended
and restated provide that in the event of termination of the executive
officer's employment by the Company without Cause (as defined) or by the
executive officer for Good Reason (as defined) within two years after a
Change of Control (as defined) the executive officer's stock options shall
become fully vested and exercisable.
<PAGE>
Mr. Charles W. Pollard has entered into a Warrant Agreement with the
Company dated as of July 22, 1989 (the "1989 Warrant Agreement"). Under this
agreement, Mr. Pollard received 130,000 warrants which vest over a 60 month
period. The stockholders of the Company approved the issuance of the
warrants under the 1989 Warrant Agreement on June 4, 1990. The 1989 Warrant
Agreement provides that in the event of a Change of Control of the Company
(as defined) or in the event Mr. Pollard is involuntarily terminated as an
employee of the Company without Cause (as defined) all warrants granted under
the 1989 Warrant Agreement shall become immediately vested and exercisable.
INTEREST OF CERTAIN PERSONS
The President and Chief Executive Officer of WorldCorp, T. Coleman
Andrews, III, is interested in this matter because the 1988 Plan approved by
the stockholders in 1992 expressly provided that Mr. Andrews could not
receive WorldCorp stock options under that plan. If the stockholders approve
the Amended and Restated 1988 Plan (the "Amended Plan"), as recommended by
the WorldCorp Board of Directors, Mr. Andrews would be entitled to
participate in the plan subject to the provisions thereof. See "Executive
Compensation -- Compensation of the Chief Executive Officer" and "Item No.1 -
Approval of the Amended and Restated 1988 Stock Option Plan."
In addition, each of the non-employee directors (presently Messrs.
Colburn, O'Callahan, Graham and Rehnert) is interested in this matter because
of option grants they would be eligible to receive under the Amended Plan.
If the stockholders approve the Amended Plan, as recommended by the WorldCorp
Board of Directors, each of the non-employee directors would be entitled to
receive a grant of options for 25,000 shares of Common Stock upon each
reelection to a two-year term of service as a director of WorldCorp,
beginning with the election on May 20, 1994, in addition to the grant on
initial election to the Board already provided by the 1988 Plan as amended in
1992. These options would become exercisable ratably each month over a two-
year period.
<PAGE>
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 1995 Annual
Meeting of Stockholders must be received by the Company's Secretary no later
than December 1, 1994, to be included in the Company's 1995 proxy materials.
Proposals intended for inclusion in next year's proxy statement
should be sent to the Secretary of the Company at WorldCorp, Inc., The
Hallmark Building, 13873 Park Center Road, Herndon, Virginia 22071.
OTHER MATTERS TO COME BEFORE THE MEETING
The Company does not intend to bring any other matter before the
meeting and does not know of any other matter which is proposed to be brought
before the meeting. However, should any other matter properly come before
the meeting, the persons named in the enclosed proxy will have discretionary
authority to vote all proxies in accordance with their judgment on such
matter.
<PAGE>
OTHER INFORMATION
This solicitation of proxies is made by the Board of Directors, and
the Company will bear the costs of solicitation. In addition to solicitation
by mail, proxies may also be solicited by directors, officers, and employees
of the Company, who will not receive additional compensation for such
solicitation. Brokerage firms and other custodians, nominees, and
fiduciaries will be reimbursed by the Company for their reasonable expenses
incurred in sending proxy material to beneficial owners of the Common Stock.
The address of WorldCorp's principal executive offices is The Hallmark
Building, 13873 Park Center Road, Herndon, Virginia 22071, and its telephone
number is (703) 834-9200. The above notice and proxy statement are sent by
order of the Board of Directors.
Dated: July 18, 1994
By Order of the Board of Directors,
/s/ Andrew M. Paalborg
_______________________________
Andrew M. Paalborg
Vice President & General Counsel
Exhibit 1
WORLDCORP, INC.
1988 STOCK OPTION PLAN
(as amended and restated effective July 1, 1994)
1. PURPOSE OF THE PLAN
The WorldCorp, Inc. 1988 Stock Option Plan (the
"Plan") is intended to promote the interests of WorldCorp, Inc. by providing
incentives to certain employees, consultants, and directors of the
Corporation and its Subsidiaries who are responsible for the management,
growth, and financial success of the Corporation and its Subsidiaries, to
encourage them to acquire a proprietary interest, or increase their
proprietary interest, in the Corporation, and to continue to perform
services for the Corporation and its Subsidiaries. The Plan, as amended in
July, 1994, shall apply to all Stock Option grants made or Stock
Appreciation Rights issued on or after July 1, 1994, and may apply, as
designated by the Board of Directors, to Stock Options previously granted.
2. DEFINITIONS
For purposes of the Plan, the following terms shall
have the meanings set forth below:
(a) "Administrator" means the Board, or if the
Board delegates responsibility for any matter to the Committee, the
Committee.
(b) "Board" means the Board of Directors of the
Corporation.
(c) "Code" means the Internal Revenue Code of
1986, as amended from time to time, or any successor thereto.
(d) "Committee" means the committee described in
Section 3 hereof.
(e) "Common Stock" means shares of the common
stock, $1.00 par value, of the Corporation.
(f) "Corporation" means WorldCorp, Inc., a
corporation organized under the laws of the State of Delaware (or any
successor corporation).
(g) "Eligible Person" means an employee or
consultant of the Group as described in Section 5 hereof.
(h) "Exchange Act" means the Securities Exchange
Act of 1934, as amended.
(i) "Fair Market Value" means:
(i) if the Common Stock is not at
the time listed or admitted to trading on any stock exchange
but is traded in the over-the-counter market (but not on the
NASDAQ National Market System), the fair market value shall
be the mean between the reported bid price and reported
<PAGE>
asked price of one share of Common Stock on the applicable
date in the over-the-counter market, as such prices are
reported by the National Association of Securities Dealers
through its NASDAQ system or any successor system. If there
are no reported bid and asked prices on such date, then the
mean between the reported bid price and reported asked price
on the last preceding date for which such quotations exist
shall be determinative of fair market value, subject to
clause (iv) of this Section 2(h).
(ii) if the Common Stock is traded
over-the-counter on the NASDAQ National Market System, the
fair market value shall be the closing selling price of one
share of Common Stock on the applicable date as such price
is reported by the National Association of Securities
Dealers through such system or any successor system. If
there is no reported closing selling price for Common Stock
on such date, then the closing selling price on the last
preceding date for which such quotation exists shall be
determinative of fair market value, subject to clause (iv)
of this Section 2(h).
(iii) if the Common Stock is at
the time listed or admitted to trading on any stock
exchange, then the fair market value shall be the closing
price of one share of Common Stock on the applicable date on
the stock exchange determined by the Administrator to be the
primary market for Common Stock, as such price is officially
quoted on such exchange. If there is no reported sale of
Common Stock on such exchange on such date, then the fair
market value shall be the closing price on the exchange on
such last preceding date for which such quotation exists,
subject to clause (iv) of this Section 2(h).
(iv) if the Common Stock is at the
time neither listed nor admitted to trading on any stock
exchange nor traded in the over-the-counter market (or,
except with respect to Stock Options awarded pursuant to
Section 7 hereof, if the Administrator determines that the
value as determined pursuant to the preceding clauses (i),
(ii), or (iii) does not reflect fair market value), then the
Administrator shall determine fair market value after taking
into account such factors as it deems appropriate.
(j) "Group" means the Corporation and its
Subsidiaries.
(k) "Incentive Stock Option" means a Stock Option
that is intended to qualify as an incentive stock option within the meaning
of Section 422 of the Code. Only employees of the Group may be granted
Incentive Stock Options under this plan.
(l) "Non-Employee Director" means a member of the
Board who is not an employee of the Group.
(m) "Nonqualified Stock Option" means a Stock
Option that is not an Incentive Stock Option.
<PAGE>
(n) "Participant" means any Eligible Person or
Non-Employee Director who has been awarded a Stock Option.
(o) "Stock Appreciation Right" means a stock
appreciation right as described in Section 8 hereof.
(p) "Stock Option" means any option to purchase
shares of Common Stock granted pursuant to Sections 6 or 7 hereof.
(q) "Stock Option Agreement" means a written
agreement executed by the Participant and the Corporation that contains the
terms and conditions required by the Plan and such additional terms and
conditions, consistent with the Plan, as the Administrator may decide.
(r) "Subsidiary" means a subsidiary corporation of
the Corporation within the meaning of Section 424(f) of the Code.
(s) "Termination of Employment" means the time
when the employer-employee or other service-providing relationship, other
than as a director, between the Participant and the Corporation and all of
its Subsidiaries and other affiliates terminates for any reason, including,
unless otherwise provided by the Stock Option Agreement, death, disability,
or retirement.
3. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Board or, to
the extent provided by the Board, a committee (the "Committee") appointed by
the Board. The composition of the Committee shall comply with the
applicable requirements of Rule 16b-3 under the Exchange Act. Members of
the Committee shall serve for such term as the Board may determine and shall
be subject to removal by the Board at any time. No person serving as a
member of the Board or the Committee shall act on any matter relating solely
to such person's own interests under the Plan or any option thereunder.
The Administrator shall have full power and author-
ity to (i) determine which Eligible Persons shall receive awards of Stock
Options and Stock Appreciation Rights under Sections 6 and 8 hereof, (ii)
determine the number of shares to be covered by each such award, (iii)
determine whether a Stock Option award shall be an Incentive Stock Option or
a Nonqualified Stock Option, (iv) determine the time or times at which each
Stock Option or Stock Appreciation Right becomes exercisable, (v) determine
the exercise price for each such option, (vi) determine the maximum term
during which a Stock Option or Stock Appreciation Right may be exercised,
and (vii) determine all other terms and conditions of Stock Options and
Stock Appreciation Rights. The Administrator shall have the full power and
authority (subject to the provisions of the Plan) to establish such rules
and regulations as it may deem appropriate for the proper administration of
the Plan and to make such determinations under, and issue such
interpretations of, the Plan and any outstanding award as it may deem
necessary or advisable. Decisions of the Administrator shall be final and
binding on all parties who have an interest in the Plan or any outstanding
Stock Option or Stock Appreciation Right.
<PAGE>
4. STOCK SUBJECT TO THE PLAN
(a) Number of Shares. The total number of shares
of Common Stock reserved and available for issuance under the Plan shall be
2,800,000, subject to adjustment as provided in Section 4(c). The number of
shares of Common Stock subject to any particular exercise of a Stock Option
shall be subtracted from the foregoing total, with no adjustment for the
number of shares of Common Stock, if any, delivered or relinquished by a
Participant in satisfaction of tax withholding obligations or delivered by a
Participant in payment for exercise of a Stock Option. Should a Stock
Option or Stock Appreciation Right be terminated or cancelled without being
exercised (in whole or in part), the number of shares of Common Stock with
respect to which the Stock Option terminates or is cancelled shall be
available for subsequent grants under the Plan.
(b) Individual Limit. No more than eight hundred
thousand (800,000) shares of Common Stock may be subject to Stock Options or
Stock Appreciation Rights granted to a single Eligible Person under this
Plan in any calendar year. If a portion of a Stock Option is repriced, the
number of shares subject to that portion shall be counted against the
foregoing individual limit. Canceled options shall be counted against the
limit for the period during which they were granted.
(c) Adjustments. If any change is made to the
Common Stock issuable under the Plan (whether by reason of merger,
consolidation, reorganization, recapitalization, stock dividend, stock
split, combination of shares, exchange of shares, or other change in capital
structure made without receipt of consideration), the Administrator will
make equitable adjustments to the maximum number and class of shares
issuable under the Plan to reflect the effect of such change upon the
Corporation's capital structure, and will make equitable adjustments to the
number and class of shares covered by outstanding Stock Options (and any
related Stock Appreciation Rights), the exercise price per share of Stock
Options (and any related Stock Appreciation Rights) and the number of shares
of Common Stock covered by Stock Options granted to Non-Employee Directors
pursuant to Section 7 hereof. The adjustments determined by the
Administrator shall be final, binding, and conclusive.
<PAGE>
5. ELIGIBILITY FOR AWARDS
Employees (whether or not they are officers or
members of the Board) and consultants of the Group shall be eligible to
receive awards of Stock Options and Stock Appreciation Rights under Sections
6 and 8 hereof. Non-Employee Directors shall receive awards of Stock
Options under this Plan only to the extent provided by Section 7 hereof.
Non-Employee Directors shall not be eligible to receive awards of Stock
Options and Stock Appreciation Rights pursuant to Sections 6 and 8 hereof.
6. STOCK OPTION AWARDS TO ELIGIBLE PERSONS
Stock Options granted under the Plan to Eligible
Persons shall be either Incentive Stock Options or Nonqualified Stock
Options, as designated by the Administrator. Each such Stock Option granted
under this Section 6 shall be clearly identified either as a Nonqualified
Stock Option or an Incentive Stock Option and shall be evidenced by a
written Stock Option Agreement that specifies the terms and conditions of
the grant. Such Stock Options shall be subject to the following terms and
conditions and such other terms and conditions not inconsistent with this
Plan as the Administrator may specify:
(a) Price. The price per share of Common Stock at
which a Nonqualified Stock Option granted pursuant to this Section 6 may be
exercised shall not be less than fifty percent of the Fair Market Value of
the Common Stock on the date of grant of the Stock Option. In the case of
an Incentive Stock Option, the exercise price per share of Common Stock
shall not be less than one hundred percent of the Fair Market Value of the
Common Stock on the date of grant. Notwithstanding the foregoing, in the
case of an Incentive Stock Option granted to a Participant who (applying the
rules of Section 424(d) of the Code) owns stock possessing more than ten
percent of the total combined voting power of all classes of stock of the
Corporation or a Subsidiary (a "Ten-Percent Shareholder"), the exercise
price per share shall not be less than one hundred and ten percent of the
Fair Market Value of the Common Stock on the date on which the option is
granted.
(b) Exercisability. All Stock Options granted
pursuant to this Section 6 shall be exercisable at such times and under such
conditions as shall be determined by the Administrator; provided, however,
that no portion of a Stock Option that is unexercisable by reason of
Termination of Employment shall thereafter become exercisable, unless the
Stock Option Agreement provides otherwise.
(c) Payment of Exercise Price. The exercise price
of a Stock Option shall be paid upon exercise of the option and, subject to
the provisions of Section 11, shall be payable in cash or cash equivalents.
To the extent provided in the applicable Stock Option Agreement, payment may
be made in one of the following alternative forms:
(i) Full payment in shares of
Common Stock having a Fair Market Value on the date of
exercise equal to the exercise price; or
(ii) A combination of shares of
Common Stock valued at Fair Market Value on the date of
exercise and cash or cash equivalents, equal in the
aggregate to the exercise price; or
<PAGE>
(iii) By delivering a properly
executed exercise notice together with irrevocable
instructions to a broker to promptly deliver to the
Corporation the amount of sale or loan proceeds to pay the
exercise price.
The Participant may deliver shares of Common Stock in payment only if he has
previously held those shares for at least six months, unless that holding
requirement is waived by the Administrator after due consideration of the
effect on the Corporation's financial statements.
(d) Transferability. No Stock Option shall be
assignable or transferable by a Participant other than by will or by the
laws of descent and distribution. During the lifetime of a Participant, a
Stock Option shall be exercisable only by the Participant.
(e) Restrictions Applicable to Common Stock Issued
on Exercise. Common Stock issuable upon exercise of a Stock Option granted
pursuant to this Section 6 may be subject to such restrictions on transfer,
repurchase rights, rights of first refusal, or other restrictions as may be
determined by the Administrator, including the right of the Corporation (or
its assigns), exercisable upon a Participant's cessation of employment by
the Group, to repurchase at the original exercise price any or all of the
shares of Common Stock previously acquired by the Participant upon the
exercise of such option. Any such repurchase right shall be exercisable by
the Corporation (or its assigns) upon such terms and conditions (including
provisions providing for the expiration of such right in one or more
installments) as the Administrator may specify in the instrument evidencing
such right. Notwithstanding the foregoing, in no event may any restrictions
on transfer, repurchase rights, rights of first refusal, or other
restrictions be imposed by the Administrator on any Common Stock issuable on
or after the date of a Change in Control (as defined in Section 9(b) hereof)
upon exercise of a Stock Option granted pursuant to this Section 6, except
to the extent necessary under the rules, regulations, and other requirements
of the Securities and Exchange Commission, any stock exchange upon which the
Common Stock is then listed, or any applicable Federal or State securities
law.
(f) Expiration of Options. No one may exercise
a Stock Option after the expiration of ten (10) years from its date of grant
(five years in the case of an Incentive Stock Option granted to a Ten-
Percent Shareholder) or, if earlier, one year after the Participant's
Termination of Employment; provided, however, that Termination of Employment
for purposes of this subsection is delayed until all affiliation, including
as a member of the board of directors, of a Participant ceases with the
Corporation, its Subsidiaries, its other affiliates, or any other entity in
which the Corporation has both a debt or equity investment and representation
on the board of directors thereof. The Administrator may, however, provide in
the terms of a Stock Option Agreement that any portion of the Stock Option,
whether then exercisable or not, expires immediately upon a Termination of
Employment without regard to the delay provided in the foregoing sentence.
(g) $100,000 Limit for Incentive Stock Options.
No portion of a Stock Option granted to a Participant shall be treated as an
Incentive Stock Option to the extent such portion of a Stock Option would
cause the aggregate Fair Market Value of all shares with respect to which
Incentive Stock Options are exercisable by such Participant for the first
<PAGE>
time during any calendar year to exceed $100,000. That portion of the Stock
Option shall instead be treated as a Nonqualified Stock Option. For
purposes of determining whether an Incentive Stock Option would cause such
aggregate Fair Market Value to exceed the $100,000 limitation, all such
Incentive Stock Options shall be taken into account in the order granted and
the Fair Market Value for each share under an option shall be determined as
of that option's date of grant. For purposes of this section, Incentive
Stock Options include all incentive stock options under all plans of the
Corporation that are "incentive stock option plans" within the meaning of
Section 422 of the Code.
<PAGE>
7. STOCK OPTION AWARDS TO NON-EMPLOYEE DIRECTORS
Each Non-Employee Director who is first elected to
the Board on or after March 25, 1992 shall be automatically granted upon
such election a Nonqualified Stock Option to purchase 25,000 shares of
Common Stock. Upon each election by such Non-Employee Directors to
additional two-year terms on the Board, they shall be automatically granted
an additional Nonqualified Stock Option to purchase 25,000 shares of Common
Stock. (Non-Employee Directors re-elected on May 20, 1994 will receive a
Nonqualified Stock Option for 25,000 shares of Common Stock with a deemed
grant date of May 20, 1994, as long as the Plan as amended is approved by
the stockholders no later than September 1, 1994.) Stock Options granted to
Non-Employee Directors shall be evidenced by a written Stock Option
Agreement and shall specify the following terms and conditions:
(a) Price. The price per share of Common Stock at
which the Stock Option may be exercised shall be equal to the average Fair
Market Value of the Common Stock during the thirty day period preceding the
date of grant of the Stock Option.
(b) Exercisability. A Stock Option granted
pursuant to this Section 7 shall be exercisable as to one-twenty-fourth of
the shares covered thereby in equal monthly installments after the date of
grant of the Stock Option. Stock Options granted pursuant to this Section
7 shall not be exercisable after the expiration of 10 years from the date of
grant nor, except as provided in Section 7(e), after a Non-Employee Director
ceases to be a member of the Board.
(c) Payment of Option Price. Subject to Section
7(b), Stock Options awarded pursuant to this Section may be exercised in
whole or in part at any time during the term of the option by giving written
notice to the Corporation specifying the number of shares to be purchased,
accompanied by delivering payment in any of the following alternative forms:
(i) Full payment in cash or cash
equivalents; or
(ii) Full payment in shares of
Common Stock having a Fair Market Value on the date of
exercise equal to the exercise price; or
(iii) A combination of shares of
Common Stock valued at Fair Market Value on the date of
exercise and cash or cash equivalents, equal in the
aggregate to the exercise price; or
(iv) by delivering a properly exe-
cuted exercise notice together with irrevocable instructions
to a broker to promptly deliver to the Corporation the
amount of sale or loan proceeds to pay the exercise price.
The Participant may deliver shares of Common Stock in payment only if he has
previously held those shares for at least six months, unless that holding
requirement is waived by the Administrator after due consideration of the
effect on the Corporation's financial statements.
<PAGE>
(d) Transferability. Stock Options granted
pursuant to this Section 7 shall be subject to the same transfer
restrictions as specified in Section 6(d) of this Plan.
(e) Termination of Membership on the Board. If a
Non-Employee Director who holds an outstanding Stock Option ceases for any
reason (including death or disability) to be a member of the Board, such
Stock Option may, subject to the provisions of this Section 7, be exercised
(to the extent the option was exercisable by the Non-Employee Director at
the time of termination of his membership on the Board) at any time within
one year after the termination of his membership on the Board.
8. STOCK APPRECIATION RIGHTS
The Administrator may, in its sole discretion, and
upon such terms as it may establish, grant Stock Appreciation Rights in
connection with Stock Options granted pursuant to Section 6 hereof. Such
Stock Appreciation Rights may be granted at the time a Stock Option is
originally granted or subsequent to the date of grant of the option. A
Stock Appreciation Right shall entitle a Participant to surrender all or a
portion of an unexercised option (to the extent then exercisable) in
exchange for a payment from the Corporation equal in amount to the
difference between (i) the Fair Market Value (as of the date of surrender)
of the shares of Common Stock with respect to which the option is
surrendered and (ii) the aggregate exercise price payable for such shares.
Such payment shall be made in either shares of Common Stock valued at Fair
Market Value (as of the date of surrender) or cash, or partly in cash and
partly in shares of Common Stock, subject to the discretion of the
Administrator (at the time the Stock Appreciation Right is granted or, if
the Stock Appreciation Right so provides, at the time of surrender). A
Stock Appreciation Right may provide that it may not be exercised and that
no surrender of the related Stock Option under this Section shall be effec-
tive unless it is approved by the Administrator.
If a Participant is at the time of the exercise of
a Stock Appreciation Right subject to Section 16(b) of the Exchange Act, and
the Stock Appreciation Right is being exercised in whole or in part for
cash, then the Stock Appreciation Right may only be exercised after the
expiration of six months from the date of grant of the Stock Appreciation
Right and only in accordance with the applicable requirements of Rule 16b-
3(e) under the Exchange Act or any successor provision.
9. CHANGES IN CONTROL
(a) Vesting In the Event of a Change in Control.
The Administrator may, in its discretion and upon such terms as it may
establish, grant Stock Options pursuant to Section 6 that provide (or modify
Stock Options previously granted pursuant to Section 6 to provide) that in
the event of a Change in Control (as defined in Section 9(b)), or the
termination of a Participant's employment by the Group within a specified
period following a Change in Control, any Stock Options awarded to the
Participant under the Plan shall become fully vested and exercisable.
(b) Definition of Change in Control. For purposes
of Section 6(e) and this Section 9, a Change in Control shall be deemed to
have occurred if the conditions set forth in any one of the following
paragraphs shall have been satisfied:
<PAGE>
(i) any Person is or becomes the
Beneficial Owner (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange
Act")), directly or indirectly, of securities of the
Corporation (not including in the securities beneficially
owned by such person any securities acquired directly from
the Corporation or its affiliates) representing more than
50% of the combined voting power of the Corporation's then
outstanding securities; or
(ii) during any period of two (2)
consecutive years (not including any period prior to
December 1, 1989), individuals who at the beginning of such
period constitute the Board and any new director (other than
a director designated by a Person who has entered into an
agreement with the Corporation to effect a transaction
described in clause (i), (iii), or (iv) of this Section
9(b)) whose election by the Board or nomination for election
by the Corporation's stockholders was approved by a vote of
at least two-thirds (2/3) of the directors then still in
office who either were directors at the beginning of the
period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a
majority thereof; or
(iii) the shareholders of the
Corporation approve a merger or consolidation of the
Corporation with any other corporation, other than (A) a
merger or consolidation which would result in the voting
securities of the Corporation outstanding immediately prior
thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of
the surviving entity), in combination with the ownership of
any trustee or other fiduciary holding securities under an
employee benefit plan of the Corporation or any of its
affiliates, at least 50% of the combined voting power of the
voting securities of the Corporation or such surviving
entity outstanding immediately after such merger or
consolidation, or (B) a merger or consolidation effected to
implement a recapitalization of the Corporation (or similar
transaction) in which no Person acquires more than 50% of
the combined voting power of the Corporation's then
outstanding securities; or
(iv) the shareholders of the
Corporation approve a plan of complete liquidation of the
Corporation or an agreement for the sale or disposition by
the Corporation of all or substantially all the Corpo-
ration's assets.
For purposes of this Section, "Person" shall have
the meaning given in Section 3(a)(9) of the Exchange Act, as modified and
used in Sections 13(d) and 14(d) thereof; however, a Person shall not
include (i) the Corporation or any of its subsidiaries, (ii) a trustee or
other fiduciary holding securities under an employee benefit plan of the
Corporation or any of its subsidiaries, (iii) an underwriter temporarily
holding securities pursuant to an offering of such securities, or (iv) a
<PAGE>
corporation owned, directly or indirectly, by the stockholders of the
Corporation in substantially the same proportions as their ownership of
stock of the Corporation.
(c) Cash-Out Based on Change in Control Price.
The Administrator may, in its discretion and upon such terms as it may
establish, grant Stock Options pursuant to Section 6 that provide (or modify
Stock Options previously granted pursuant to Section 6 to provide) that in
the event of a Change in Control the option shall be cashed out on the basis
of the difference between the Change in Control Price (as hereinafter
defined) and the exercise price of such option, as of the date the Change in
Control occurs or such other date as the Board may determine prior to the
Change in Control. The Administrator may also, in its discretion and upon
such terms as it may establish, grant Stock Options under Section 6 that
provide (or modify Stock Options previously granted pursuant to Section 6 to
provide) that the Corporation shall pay to a Participant all reasonable
legal fees and expenses incurred by the Participant as a result of seeking
in good faith after a Change in Control to obtain or enforce any benefit or
right provided under this Plan. For purposes of this Section 9(c) "Change
in Control Price" means the higher of (i) the highest price per share paid
or offered in any transaction related to a Change in Control of the
Corporation or (ii) the highest price per share paid in any transaction
reported on the exchange on which the Common Stock is traded, at any time
during the preceding sixty (60) day period as determined by the Board,
except that, in the case of Incentive Stock Options such price shall be
based only on transactions reported for the date on which the Board
determines to cash out such options.
(d) The grant of Stock Options and Stock
Appreciation Rights under the Plan shall not affect the right of the
Corporation to adjust, reclassify, reorganize or otherwise change its
capital or business structure or to merge, consolidate, dissolve, liquidate
or sell or transfer all or any part of its business or assets.
10. CANCELLATION AND NEW GRANT OF OPTIONS
The Administrator shall have the authority to
effect, at any time and from time to time, with the consent of the affected
Participants, the cancellation of any or all outstanding Stock Options and
Stock Appreciation Rights under the Plan and to grant in substitution
therefor new Stock Options and Stock Appreciation Rights under the Plan
covering the same or different numbers of shares of Common Stock but having
an exercise price per share not less than 100% of Fair Market Value on the
new date of grant, or not less than 110% of Fair Market Value in the case of
an Incentive Stock Option granted to a Ten-Percent Shareholder.
11. LOANS OR GUARANTEE OF LOANS
The Administrator may, in its discretion, assist
any Participant who is an Eligible Person (including an Eligible Person who
is an officer or director of the Corporation) in the exercise of one or more
Stock Options under the Plan, including the satisfaction of any Federal and
State income and employment tax obligations arising therefrom by (i)
authorizing the extension of a loan from the Corporation to such
Participant, (ii) permitting the Participant to pay the exercise price in
installments over a period of years, or (iii) authorizing a guarantee by the
Corporation of a third party loan to the Participant. Any such assistance
<PAGE>
shall be upon such terms as the Administrator specifies in the Stock Option
Agreement. Loans, installment payments and guarantees may be granted with
or without security, collateral, or interest, but the maximum credit
available to the Participant shall not exceed the sum of (i) the aggregate
exercise price payable for the purchased shares plus (ii) any Federal and
State income and employment tax liability incurred by the Participant in
connection with the exercise of the option.
12. GENERAL PROVISIONS.
(a) The Administrator may require each person
purchasing shares pursuant to a Stock Option or Stock Appreciation Right to
represent to and agree with the Corporation in writing that such person is
acquiring the shares without a view to distribution thereof. The
certificates for such shares may include any legend which the Administrator
deems appropriate to reflect any restrictions on transfer.
All certificates for shares of Common Stock issued
pursuant to the Plan shall be subject to such stock transfer orders and
other restrictions as the Administrator may deem advisable under the rules,
regulations and other requirements of the Securities and Exchange
Commission, any stock exchange upon which the Common Stock is then listed,
or any applicable Federal or State securities laws. The Administrator may
place a legend or legends on any such certificates to make appropriate
reference to such restrictions.
(b) Nothing contained in this Plan shall prevent
the Board or the Committee from adopting other or additional compensation
arrangements, subject to stockholder approval if such approval is required;
and such arrangements may be either generally applicable or applicable only
in specific cases. The adoption of the Plan shall not confer upon (i) any
member of the Board any right to continued membership on the Board, or (ii)
any employee or consultant of the Group any right to continued employment or
engagement by or with the Group, nor shall it interfere in any way with the
right of the Group to terminate the employment or engagement of any of its
employees or consultants at any time.
(c) No member of the Board or the Committee, nor
any officer or employee of the Group acting on behalf of the Board or the
Committee, shall be personally liable for any action, determination, or
interpretation taken or made in good faith with respect to the Plan, and all
members of the Board or the Committee and each and any officer or employee
of the Group acting on their behalf shall, to the extent permitted by law,
be fully indemnified and protected by the Corporation in respect of any such
action, determination or interpretation.
(d) The masculine pronoun wherever used shall
include the feminine pronoun, and the singular shall include the plural
unless the context clearly indicates the distinction.
(e) No Participant shall have any of the rights of
a stockholder with respect to any shares covered by a Stock Option until
such Participant has exercised the option and has been issued a stock
certificate for the purchased shares.
<PAGE>
(f) No provision in the Plan or action taken
pursuant thereto shall authorize any action that is otherwise prohibited by
Federal or State laws.
13. AMENDMENT AND TERMINATION OF THE PLAN AND AWARDS
The Board shall have complete and exclusive power
and authority to amend or terminate the Plan in any respect at any time;
provided, however, that no amendment of the Plan may be made by the Board
without the approval of the Corporation's stockholders, if in the judgment
of the Board, such amendment requires approval of the Corporation's
shareholders in order to comply with the requirements of Rule 16b-3 under
Section 16 of the Exchange Act. Notwithstanding the foregoing, to the
extent required by Rule 16b-3(c)(2) under the Exchange Act, Section 7 hereof
may not be amended more than once during any six month period. No amendment
of the Plan shall impair the rights of a Participant under any award there-
tofore granted without the consent of the Participant. The Administrator
may amend or modify outstanding Stock Options and Stock Appreciation Rights
issued under the Plan in any or all respects whatsoever not inconsistent
with the terms of the Plan; provided, however, that no such amendment shall
adversely affect the rights and obligations of a Participant unless the
Participant consents to such amendment.
14. EFFECTIVE DATE AND TERM OF PLAN
(a) The Plan shall become effective when adopted
by the Board, but no Stock Option granted under the Plan as amended shall
become exercisable unless and until the Plan has been approved by the
Corporation's stockholders. If such stockholder approval is not obtained
within 12 months after the date of the Board's adoption of the amended Plan,
then any Stock Options previously granted under the Plan after such
amendment shall terminate and no further Stock Options shall be granted.
Subject to such limitation, Stock Options may be granted under the Plan at
any time after the effective date and before the date fixed herein for
termination of the Plan.
(b) Unless the Plan is sooner terminated in
accordance with Section 13, no Stock Options or Stock Appreciation Rights
may be granted under the Plan after August 19, 1998.
15. WITHHOLDING
The Corporation's obligation to (i) deliver stock
certificates upon the exercise of any Stock Option or (ii) pay cash or
deliver stock certificates upon the exercise of any Stock Appreciation Right
granted under the Plan shall be subject to the Participant's satisfaction of
all applicable Federal, State, and local income and employment tax
withholding requirements. The Administrator may, in its discretion, and
subject to such rules as it may prescribe in its discretion, permit a
Participant to satisfy applicable tax withholding obligations by any of the
following means or by a combination of such means: (a) tendering a cash
payment; (b) authorizing the Corporation to withhold from the Common Stock
otherwise issuable to the Participant as the result of the exercise of a
Stock Option, a number of shares having a Fair Market Value, as of the date
the withholding tax obligation arises, less than or equal to the amount of
the withholding tax obligation; or (c) delivering to the Corporation already
<PAGE>
owned and unencumbered shares of Common Stock having a Fair Market Value, as
of the date the withholding tax obligation arises, less than or equal to the
amount of the withholding tax obligation. Notwithstanding the foregoing,
applicable withholding taxes with respect to Stock Options granted to Non-
Employee Directors under Section 7 may be satisfied, in the discretion of
the applicable Non-Employee Director, by any of the means described in the
foregoing clauses (a), (b), and (c) without the consent of the
Administrator. A Participant may use shares of the Corporation's Common
Stock issuable to the Participant upon exercise of the Stock Option to
satisfy the tax withholding consequences of such exercise only (a) during
the period beginning on the third business day following the date of release
of the quarterly or annual summary statement of sales and earnings of the
Corporation and ending on the twelfth business day following such date or
(b) pursuant to the Participant's irrevocable written election to use such
shares of the Corporation's Common Stock to pay all or part of the exercise
price or the withholding taxes made at least six months before the payment
of such exercise price or withholding taxes.
16. REGULATORY APPROVALS
The implementation of the Plan, the granting of any
award under the Plan, and the issuance of Common Stock upon the exercise of
any Stock Option or Stock Appreciation Right shall be subject to the
Corporation's procurement of all approvals and permits required by
regulatory authorities having jurisdiction over the Plan, the awards granted
under it, and the Common Stock issued pursuant to it.
WORLDCORP, INC.
THIS PROXY FOR THE SPECIAL MEETING OF STOCKHOLDERS ON AUGUST 19, 1994
IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints T. COLEMAN ANDREWS, III,
WILLIAM F. GOROG and ANDREW M. PAALBORG, and each of them, the proxy or
proxies of the undersigned, with full power of substitution, to vote all
shares of Common Stock, par value $1 per share, of WorldCorp, Inc. (the
"Company") that the undersigned is entitled to vote at the Special Meeting of
Stockholders of the Company to be held at WorldCorp, Inc. in Herndon,
Virginia on August 19, 1994, at 9:30 A.M., and at any adjournments or
postponements thereof, with the same force and effect as the undersigned
might or could do if personally present thereat.
Unless a contrary instruction is indicated, this proxy will
be voted in favor of the proposal to amend and restate the Company's 1988
Stock Option Plan (the "Plan") (a) to permit the Company's Chief Executive
Officer to participate in the Plan, (b) to provide additional grants of stock
options under the Plan to Non-Employee Directors upon their reelection to two
years on the Board of Directors; and (c) to make other amendments discussed
in the enclosed Proxy Statement. This proxy will also be voted at the
discretion of the proxy holders on such matters other than the proposal to
amend and restate the Plan as may come before the meeting.
A majority of such proxies or their substitutes as shall be
present and acting at the meeting, or if only one be present and acting then
that one, shall have and may exercise all of the powers of all of said
proxies hereunder.
PLEASE MARK, DATE AND SIGN ON THE REVERSE SIDE SEE REVERSE
AND RETURN PROMPTLY SIDE
<PAGE>
X Please mark
votes as in
this example.
1. PROPOSAL TO AMEND AND RESTATE
THE COMPANY'S 1988 STOCK OPTION PLAN.
FOR AGAINST ABSTAIN*
_____ ____ _____
MARK HERE
FOR ADDRESS
CHANGE AND ___
NOTE AT LEFT
Please sign exactly as name appears hereon. When shares
are held by joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee or guardian, please
give full title as such. If a corporation please sign in full
corporate name by President or other authorized person. If a
partnership, please sign in full partnership name by authorized
person.
* Please note that a vote to
abstain will, for this purpose,
be treated as a vote AGAINST
the proposal.
PLEASE MARK, DATE, SIGN AND RETURN THE PROXY
CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
Signature: ________________________ Date______________________
Signature: ________________________ Date______________________
WORLDCORP, INC.
The Hallmark Building
13873 Park Center Road
Herndon, Virginia 22071
NOTICE OF A SPECIAL MEETING OF STOCKHOLDERS
To be held August 19, 1994
To the Stockholder Addressed:
WorldCorp, Inc. will hold a Special Meeting of Stockholders
at 9:30 a.m. at WorldCorp, 13873 Park Center Road, Herndon, Virginia, on
August 19, 1994, for the following purposes:
1. To amend and restate the Company's 1988 Stock Option
Plan (the "Plan") (a) to permit the Company's Chief
Executive Officer to participate in the Plan, (b) to
provide additional grants of stock options under the
Plan to Non-Employee Directors upon their reelection
to two year terms on the Board of Directors, and (c)
to make other amendments described in the enclosed
Proxy Statement; and
2. To act upon such other matters as may properly come
before the meeting.
The record date for the determination of stockholders
entitled to vote at the meeting is July 12, 1994, and only stockholders of
record at the close of business on that date will be entitled to vote at this
meeting and any adjournment thereof.
Whether or not you plan to attend the stockholders' meeting,
please complete, date, and sign the enclosed proxy card and return it in the
enclosed envelope. You may revoke your proxy at any time prior to the time
it is voted.
Herndon, Virginia By Order of the Board of Directors,
July 18, 1994
/s/ Andrew M. Paalborg
__________________________________
Andrew M. Paalborg
Vice President and General Counsel
July 18, 1994
Dear Stockholder:
We cordially invite you to attend a Special Meeting of
Stockholders to be held on Friday, August 19, 1994. Enclosed are a proxy
statement and a form of proxy. Please note that the meeting will commence at
9:30 a.m. at WorldCorp, 13873 Park Center Road, Suite 490, Herndon, Virginia.
At the meeting, the Board of Directors will ask stockholders
to vote upon a proposal to amend and restate the Company's 1988 Stock Option
Plan the ("Plan") (i) to permit the Company's Chief Executive Officer and
President to participate in the Plan, (ii) to provide additional stock option
grants to Non-employee Directors upon their election to subsequent two year
terms on the Board of Directors, and (iii) to make other changes described in
the enclosed Proxy Statement. In addition, the stockholders will act upon
such other matters as may properly come before the meeting.
We value your participation by voting your shares on matters
that come before the meeting. Please specify your choices by marking the
enclosed proxy card and returning it promptly.
Sincerely,
/s/ William F. Gorog
____________________
William F. Gorog
Chairman
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant _x_
Filed by a Party other than the Registrant ___
Check the appropriate box:
___ Preliminary Proxy Statement
_x_ Definitive Proxy Statement
___ Definitive Additional Materials
___ Soliciting Material Pursuant to Sec. 240.14a-
11(c) or Sec. 240.14a-12
WorldCorp, Inc.
______________________________________________________________
(Name of Registrant as Specified In Its Charter)
Murray A. Indick, Esq., Wilmer, Cutler & Pickering,
2445 M Street, N.W., Washington, D.C. 20037
______________________________________________________________
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
_x_ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-
6(i)(1), or 14a-6(i)(2).
___ $500 per each party to the controversy pursuant
to Exchange Act Rule 14a-6(i)(3).
___ Fee computed on table below per Exchange Act
Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which
transaction applies:
___________________________________________________________
<PAGE>
2) Aggregate number of securities to which
transaction applies:
___________________________________________________
3) Per unit price or other underlying value of
transaction computed pursuant to Exchange
Act Rule 0-11:<F1>
___________________________________________
4) Proposed maximum aggregate value of
transaction:
___________________________________________________________
__________________________
[FN]
<F1> Set forth the amount on which the filing fee is
calculated and state how it was determined.
[ ] Check box if any part of the fee is offset as
provided by Exchange Act Rule 0-11(a)(2) and identify
the filing for which the offsetting fee was paid
previously. Identify the previous filing by
registration statement number, or the Form or Schedule
and the date of its filing.
1) Amount Previously Paid:
________________________________________
2) Form, Schedule or Registration Statement No.:
________________________________________
3) Filing Party:
________________________________________
