SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 20, 1998
WORLDCORP, INC.
(Exact name of registrant as specified in charter)
Delaware 1-5351 94-3040585
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
13873 Park Center Road, Suite 490, Herndon, Virginia 20171
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(703) 834-9200
<PAGE>
ITEM 2. Acquisition or Disposition of Assets.
On April 20, 1998, WorldCorp consummated a transaction pursuant to
which it acquired an 80% interest in Paper Acquisition Corp., a Delaware
corporation ("Paper"). Paper was organized by Sun Capital Partners, Inc. ("Sun
Capital") to acquire and operate specialty paper businesses. In December 1996,
Paper acquired and consolidated two companies that produce a variety of coated
papers and specialty inks which are sold to business forms manufacturers. For
the 12 months ended December 31, 1997, Paper had approximately $48 million
(unaudited) of sales.
Pursuant to the transaction, (i) WorldCorp exchanged seven-year
warrants to acquire 35% (after the exercise of such warrants and the WorldCorp
Acquisition Corp. options described below) of the issued and outstanding capital
stock of WorldCorp Acquisition Corp., a Delaware corporation ("WorldCorp
Acquisition"), held by WorldCorp for certain of the shares of Paper held by the
Paper shareholders (the warrants are exercisable after one-year, at an exercise
price of 125% of the estimated fair value of the WorldCorp Acquisition stock at
April 20, 1998 and payable with a seven-year, full-recourse, interest only
note), (ii) WorldCorp contributed all of its shares of World Airways and the
Paper shares received above, to WorldCorp Acquisition, in exchange for 80% of
the issued and outstanding capital stock of WorldCorp Acquisition and (iii) the
holders of Paper contributed their shares of capital stock of Paper in exchange
for (A) 20% of the issued and outstanding capital stock of WorldCorp
Acquisition, (B) the assumption of approximately $15 million of debt, net of
cash and investments, of Paper, (C) $15 million of 8% interest only promissory
notes of WorldCorp Acquisition due in April 2003, (D) $1 million of 8%
promissory notes of WorldCorp Acquisition due in April 1999 and (E) an earn-out
based on the earnings before interest, taxes, depreciation and amortization of
Paper during the next five years. The earn-out is payable, including interest at
10%, in September 2002. WorldCorp has pledged all of its shares of common stock
of both WorldCorp Acquisition and InteliData, and WorldCorp Acquisition has
pledged all of its shares of common stock of both World Airways and Paper to the
former Paper shareholders to collateralize the notes and the earn-out. One
million shares of World Airways owned by WorldCorp were previously pledged to
secure a loan of approximately $2.0 million from World Airways to WorldCorp.
After repayment of the loan and release of the shares, the shares will become
subject to the pledge to the former Paper shareholders. The notes contain
various restrictive covenants, including dividend restrictions on WorldCorp and
its subsidiaries, limitations on transfers of cash to WorldCorp, as well as
cross-default provisions. Upon an event of default, the noteholders may resume
control of the WorldCorp Acquisition board and the pledged collateral.
WorldCorp and WorldCorp Acquisition have entered into a consulting
agreement with Sun Capital, which through an affiliate owned approximately 85%
of the issued and outstanding shares of Paper immediately prior to the
transaction, pursuant to which Sun Capital will receive $500,000 per year for
financial consulting. Sun Capital also received seven-year options to acquire
20% and 10% (after the exercise of such options and the warrants described
above) of the issued and outstanding shares of common stock of WorldCorp and
WorldCorp Acquisition, respectively, which options vest over five years. The
exercise price of these options is 125% of the fair market value of the
underlying stock at April 20, 1998 and are payable with seven-year, full
recourse, interest only notes.
The WorldCorp Board of Directors unanimously approved the acquisition
of Paper because, among other things, Paper will provide WorldCorp and WorldCorp
Acquisition with a platform for WorldCorp and WorldCorp Acquisition to pursue
their growth strategy and with additional operating cash flow. Although the
acquisition of Paper will not resolve WorldCorp's liquidity issues, it is
intended to build long-term value for WorldCorp's stockholders.
ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Business Acquired. The financial
information required by this item will be filed by amendment not
later than July 6, 1998.
(b) Pro Forma Financial Information. The financial information
required by this item will be filed by amendment not later than
July 6, 1998.
(c) Exhibits.
(i) Subscription and Contribution Agreement;
(ii) WorldCorp Option Agreement;
(iii) WorldCorp Acquisition Corp. Option Agreement;
(iv) Financial Consulting Agreement; and
(v) Form of Five-Year Senior Secured Promissory Note;
(vi) Form of One-Year Senior Secured Promissory Note;
(vii) Guaranty;
(viii) Pledge Agreement;
(ix) Form of Warrant and Purchase Agreement.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
WORLDCORP, INC.
By: /s/ Patrick F. Graham
---------------------------
Patrick F. Graham
President and Chief Executive
Officer
Date: May 5, 1998
SUBSCRIPTION AND CONTRIBUTION AGREEMENT
BY AND AMONG
WORLDCORP, INC.,
WORLDCORP ACQUISITION CORP.,
AND
THE SHAREHOLDERS
OF PAPER ACQUISITION CORP.
NAMED HEREIN
April 20, 1998
<PAGE>
TABLE OF CONTENTS
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ARTICLE I CONTRIBUTION OF SHARES; CONSIDERATION.................................................................2
1.1. Contribution of Shares..............................................................................2
1.2. Consideration.......................................................................................3
1.3. Payment of Earn-Out.................................................................................4
1.4. Allocation of Consideration.........................................................................4
1.5. Closing Date........................................................................................4
ARTICLE II WARRANTIES AND REPRESENTATIONS OF WORLDCORP GROUP.....................................................4
2.1. Corporate Organization, etc.........................................................................4
2.2. Authorization.......................................................................................4
2.3. SEC Documents; Financial Statements.................................................................5
2.4. Ordinary Course; No Material Adverse Change.........................................................6
2.5. Business of the Acquisition Sub.....................................................................6
2.6. Brokers and Finders.................................................................................6
2.7. HSR.................................................................................................6
2.8. Legal Proceedings...................................................................................7
2.9. Licenses and Compliance with Law....................................................................7
2.10. Investment Company.................................................................................7
2.11. No Other Warranties................................................................................7
ARTICLE III WARRANTIES AND REPRESENTATIONS OF THE SHAREHOLDERS...................................................7
3.1. Corporate Organization, etc.........................................................................8
3.2. Authorization.......................................................................................8
3.3. Capitalization......................................................................................9
3.4. Financial Information...............................................................................9
3.5. Ordinary Course; No Material Adverse Change.........................................................10
3.6. Compliance with Credit Agreement....................................................................10
3.7. Legal Proceedings...................................................................................10
3.8. Licenses and Compliance with Law....................................................................10
3.9. Other Entities......................................................................................11
3.10. Third Party Obligations............................................................................11
3.11. Affiliate and Associate Transactions...............................................................11
3.12. Brokers and Finders................................................................................11
3.13. HSR Matters........................................................................................12
3.14. Investment.........................................................................................12
3.15. Information Accurate and Complete..................................................................12
3.16. No Other Warranties................................................................................13
3.17. Investment Company.................................................................................13
</TABLE>
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Page
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ARTICLE IV CLOSING DELIVERIES....................................................................................13
4.1. Consents under Agreements, etc......................................................................13
4.2. Certificate of Secretary............................................................................13
4.3. Non-Foreign Status..................................................................................13
4.4. Notes...............................................................................................14
4.5. Shareholders' Warrants..............................................................................14
4.6. Pledge Agreement....................................................................................14
4.7. Collateral Agent Agreement..........................................................................14
4.8. Guaranty............................................................................................14
4.9. WorldCorp Tax Sharing Agreement.....................................................................14
4.10. Acquisition Sub Tax Sharing Agreement..............................................................14
4.11. WorldCorp Financial Consulting Agreement...........................................................15
4.12. Opinion of Hunton & Williams.......................................................................15
4.13. Opinion of Parker Chapin Flattau and Klimpl........................................................15
4.14. Instruments of Transfer............................................................................15
4.15. Amendments to Credit Agreement.....................................................................15
4.16. Fairness Opinion...................................................................................15
4.17. Certificate of Secretary...........................................................................15
ARTICLE V COVENANTS..............................................................................................16
5.1. Subsequent Financial Statements.....................................................................16
5.2. Shareholder Approval................................................................................16
5.3. Affiliate and Associate Transactions................................................................16
5.4. Federal Income Tax Treatment........................................................................16
5.5. Indemnification by the Corporations.................................................................16
ARTICLE VI INDEMNIFICATION.......................................................................................17
6.1. By the Shareholders.................................................................................17
6.2. By WorldCorp........................................................................................18
6.3. Indemnification Amounts.............................................................................18
6.4. Notice of and Defense Against Claims................................................................19
6.5. Subrogation.........................................................................................20
6.6. Remedies Exclusive..................................................................................20
6.7. Adjustment to Consideration.........................................................................20
ARTICLE VII MISCELLANEOUS........................................................................................21
7.1. Further Assurances..................................................................................21
7.2. Confidentiality.....................................................................................21
7.3. No Waiver...........................................................................................21
7.4. Entire Agreement....................................................................................21
7.5. Governing Law.......................................................................................21
7.6. Binding Effect......................................................................................21
7.7. Assignment..........................................................................................21
7.8. Additional Shareholders.............................................................................21
7.9. Amendment and Waiver................................................................................22
7.10. Paragraph Headings.................................................................................22
7.11. Notices............................................................................................22
7.12. Unenforceability, Severability.....................................................................23
7.13. Brokers' Fees......................................................................................23
7.14. Appointment of Shareholders' Representative........................................................23
7.15. Knowledge..........................................................................................24
7.16. Choice of Jurisdiction.............................................................................25
7.17. Counterparts.......................................................................................25
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Exhibit A Shareholders
Exhibit B-1 Form of 8% Senior Secured Promissory Note
Exhibit B-2 Form of 8% Senior Secured Promissory Note
Exhibit C Form of Warrant and Purchase Agreement
Exhibit D Form of Pledge Agreement
Exhibit E Form of Collateral Agent Agreement
Exhibit F Form of Guaranty
Exhibit G Form of WorldCorp Tax Sharing Agreement
Exhibit H Form of Acquisition Sub Tax Sharing Agreement
Exhibit I Form of WorldCorp Financial Consulting Agreement
Exhibit J Form of Hunton & Williams Opinion
Exhibit K Form of Parker Chapin Flattau & Klimpl, LLP Opinion
<PAGE>
SUBSCRIPTION AND CONTRIBUTION AGREEMENT
SUBSCRIPTION AND CONTRIBUTION AGREEMENT, made this 20th day of
April, 1998, by and among WorldCorp, Inc., a Delaware corporation ("WorldCorp"),
WorldCorp Acquisition Corp., a Delaware corporation and wholly-owned subsidiary
of WorldCorp ("Acquisition Sub," and together with WorldCorp, the "WorldCorp
Group"), and the persons set forth on Exhibit A hereto (collectively, the
"Shareholders"), certain of whom will execute counterparts to this Agreement in
accordance with Section 7.8 of this Agreement (the "Additional Shareholders";
the Shareholders who execute this Agreement on the date hereof are referred to
herein as the "Initial Shareholders"), who together own all of the issued and
outstanding capital stock of Paper Acquisition Corp., a Delaware corporation
(the "Company").
WITNESSETH:
WHEREAS, the Shareholders are the record and beneficial owners
of all shares of the issued and outstanding capital stock of the Company, the
Company owns all of the issued and outstanding capital stock of Frye
Acquisition, Inc., a Delaware corporation ("Frye"), Frye owns all of the issued
and outstanding capital stock of Frye Carbon Products, Inc., a Delaware
corporation ("FCP"), FCP owns all of the issued and outstanding capital stock of
FryeTech, Inc., a Delaware corporation ("FryeTech"), and FryeTech owns all of
the issued and outstanding capital stock of Frye Carbon Products, Ltd., an
Ontario corporation ("Ltd."), and WorldCorp Group desires to acquire the
businesses of the Company, Frye, FCP, FryeTech and Ltd. (Frye, FCP, FryeTech and
Ltd. being collectively referred to herein as the "Subsidiaries" and together
with the Company, the "Corporations") by forming Acquisition Sub to hold the
outstanding capital stock of the Company; and
WHEREAS, the WorldCorp Group is interested in pursuing the
acquisition of the Corporations because, among other things, the acquisition is
consistent with WorldCorp's current acquisition plans, the Corporations will
provide the WorldCorp Group with additional operating cash flow and the
acquisition will provide the platform for the WorldCorp Group to make additional
acquisitions;
WHEREAS, the Initial Shareholders are interested in pursuing
the acquisition of the Corporations by the WorldCorp Group because, among other
things, the transaction will give the Shareholders the opportunity to realize
the value of the Corporations with further upside potential;
WHEREAS, the parties intend that additional acquisitions
will be pursued through Acquisition Sub; and
WHEREAS, (i) the Initial Shareholders desire to contribute
certain of the shares of the Company they own (with the remainder of such shares
to be sold to WorldCorp), (ii) the Additional Shareholders will contribute
certain of their capital stock of the Company to Acquisition Sub not more than
21 days after the date hereof (with the remainder of such shares to be sold to
WorldCorp), and (iii) WorldCorp desires to contribute all the shares of common
stock, par value $.001 per share, of World Airways, Inc. ("World Airways"), and
all of the shares of the capital stock of the Company that it owns, to the
capital of Acquisition Sub, in a transaction, which will result in Acquisition
Sub owning all of the capital stock of the Company, and which is intended to
qualify under ss. 351 of the Internal Revenue Code of 1986, as amended (the
"Code").
<PAGE>
NOW, THEREFORE, in consideration of the mutual covenants,
conditions and promises contained herein, the parties hereby agree as follows:
ARTICLE I
CONTRIBUTION OF SHARES; CONSIDERATION
1.1. Contribution of Shares.
(a) Subject to the terms and conditions set forth in this
Agreement, the Initial Shareholders hereby agree to contribute, transfer,
convey, assign and deliver to Acquisition Sub at the Closing (as hereinafter
defined) and Acquisition Sub hereby agrees to accept and acquire from the
Initial Shareholders at the Closing issued and outstanding shares of the capital
stock of the Company, in the amounts from each Initial Shareholder set forth on
Exhibit A, free and clear of all liens, charges and encumbrances, except for
liens, charges or encumbrances imposed under the Revolving Credit and Term Loan
Agreement dated as of December 30, 1996 by and between Frye Copysystems, Inc.
and the financial institutions listed therein and First National Bank of Boston,
as agent, as amended (the "Credit Agreement"), (collectively, the "Contributed
Paper Shares") consisting of 436,796 issued and outstanding shares of the
Company's Class A Voting Common Stock, par value $.01 per share (the "Company
Class A Common Stock") at the Closing.
(b) Subject to the terms and conditions set forth in this
Agreement, WorldCorp hereby agrees to contribute, transfer, convey, assign and
deliver to Acquisition Sub at the Closing and Acquisition Sub hereby agrees to
accept and acquire from WorldCorp at the Closing, 3,702,586 shares of World
Airways common stock, free and clear of all liens, charges and encumbrances
(other than 1,000,000 shares pledged to World Airways) (the "Contributed Airways
Shares") and 22,989 shares of the Company's Class A Common Stock, free and clear
of all liens, charges and encumbrances.
(c) Subject to the terms and conditions set forth in this
Agreement, the Additional Shareholders shall contribute, transfer, convey,
assign and deliver to Acquisition Sub at the Subsequent Closing (as hereinafter
defined) and Acquisition Sub hereby agrees to accept and acquire from the
Additional Shareholders at the Subsequent Closing all of the remaining issued
and outstanding shares of capital stock of the Company in the amounts from each
Additional Shareholder set forth on Exhibit A, free and clear of all liens,
charges and encumbrances, an aggregate of 9,370 issued and outstanding shares of
the Company Class A Common Stock and 950 issued and outstanding shares of the
Company's Class B Common Stock, par value $.01 per share (the "Company Class B
Common Stock").
<PAGE>
(d) Subject to the terms and conditions set forth in this
Agreement, WorldCorp hereby agrees to contribute, transfer, convey, assign and
deliver to Acquisition Sub at the Subsequent Closing and Acquisition Sub hereby
agrees to accept and acquire from WorldCorp at the Subsequent Closing, 493
shares of the Company's Class A Common Stock of the Company and 50 shares of the
Company's Class B Common Stock, free and clear of all liens, charges and
encumbrances (the "WorldCorp Paper Shares").
1.2. Consideration.
(a) As consideration for the contribution of the Contributed Paper
Shares, the Shareholders shall receive the following consideration:
(i) an aggregate of 200 shares of Acquisition Sub's
common stock, par value $.01 per share ("Acquisition Sub Common Stock");
(ii) an aggregate of five-year $15.0 million
principal amount of Acquisition Sub's 8% senior secured promissory notes,
each in the form of Exhibit B-1 (the "Five-Year Notes");
(iii) an aggregate of one-year $1.0 million principal
amount of Acquisition Sub's 8% senior secured notes, each in the form of
Exhibit B-2 (the "One-Year Notes," and together with the Five-Year Notes, the
"Notes");
(iv) the right to the Earn-Out Payment Amount (as defined
in Section 1.3(a)); and
(v) the rights to receive all of the proceeds, if any,
to which the Company shall become entitled in connection with certain Company
claims identified in a letter dated the date hereof between the Shareholders'
Representative and WorldCorp, which rights are hereby assigned to the
Shareholders (the "Claim Proceeds").
(b) As consideration for the contribution of the Contributed
Airways Shares and the WorldCorp Paper Shares, WorldCorp shall receive 800
shares of Acquisition Sub Common Stock.
(c) At the Closing, (i) Acquisition Sub shall deliver to Sun Paper
Limited Partnership, a Delaware limited partnership, as agent for the
Shareholders (the "Shareholders' Representative" or "SP"), the Notes and shares
of Acquisition Sub Common Stock and (ii) WorldCorp shall deliver to the
Shareholders' Representative the Shareholders' Warrants for delivery to the
Shareholders.
(d) the parties agree that each share of Acquisition Sub Common
Stock, the Five Year Notes, the One Year Notes and the warrants to purchase in
the aggregate, 400 shares of Acquisition Sub Common Stock from WorldCorp, each
in the form of Exhibit C (the "Shareholders' Warrants") have a fair market value
as of the date hereof of $22,400, $15,000,000, $1,000,000, and $2,090,000,
respectively. The parties agree that the issue price allocable to the Notes will
not cause the holders to be required to include interest income for tax purposes
in excess of the stated interest in the Notes.
<PAGE>
1.3. Payment of Earn-Out.
The Earn-Out Payment Amount shall be made in accordance with
the provisions of Schedule 1.3.
1.4. Allocation of Consideration.
The aggregate respective amounts of the Acquisition Sub Common
Stock, Notes, Earn-Out Payment Amount and Claim Proceeds, if any, to be paid to
the Shareholders as a group (less $100 which shall be allocated to the Claim
Proceeds) shall be allocated among the Shareholders in accordance with the
percentage of the Contributed Paper Shares contributed by each Shareholder to
Acquisition Sub as set forth on Exhibit A annexed hereto (the "Percentage").
1.5. Closing Date.
The closing of the transfer of the Initial Shares (the
"Closing") shall take place at the offices of Hunton & Williams, 951 E. Byrd
Street, Richmond, Virginia 23219 on the date hereof or such other place as the
parties hereto may agree upon (the "Closing Date").
The closing of the transfer of the Additional Shares (the
"Subsequent Closing") shall take place at the offices of Hunton & Williams, 951
E. Byrd Street, Richmond, Virginia 23219 on the date specified in the notice
delivered pursuant to Section 7.8 hereof.
ARTICLE II
WARRANTIES AND REPRESENTATIONS OF WORLDCORP GROUP
WorldCorp warrants and represents to Acquisition Sub as
follows:
2.1. Corporate Organization, etc.
Each of WorldCorp, Acquisition Sub and World Airways is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware with full corporate power to own its assets and to
carry on its business as it is now being conducted. Each of WorldCorp,
Acquisition Sub and World Airways is qualified or licensed to do business as a
foreign corporation and is in good standing in those jurisdictions in which the
failure to so qualify would have a material adverse effect on the business or
financial condition of either WorldCorp or Acquisition Sub and their respective
subsidiaries, individually or taken as a whole. WorldCorp Group and Acquisition
Sub each have the power and authority to execute and deliver this Agreement and
the agreements and instruments contemplated herein and to perform its
obligations hereunder and thereunder.
2.2. Authorization.
The execution, delivery and performance by each of WorldCorp
and Acquisition Sub of this Agreement and each of the other Transaction
Documents party thereto and the performance by WorldCorp and Acquisition Sub of
the transactions contemplated hereby and thereby have been duly authorized by
all requisite corporate action of WorldCorp and Acquisition Sub and do not
contravene any provisions of law or any order of any court or other agency of
government or their certificates of incorporation and do not contravene any
agreement or other instrument by which either is bound or by which any of their
assets are affected or violate any judgment, order, injunction, decree, statute,
rule or regulation applicable to either of them. Other than approvals under the
HSR Act (as hereinafter defined) no consents, waivers, approvals, authorizations
or orders of or registrations or qualifications with, any person, bank,
corporation, association, governmental body or court having authority or power
to regulate, supervise or direct the business and affairs of any member of the
WorldCorp Group are necessary for the consummation by any member of the
WorldCorp Group of the transactions contemplated by this Agreement. This
Agreement is and the Transaction Documents and Financial Consulting Agreements
(as defined herein) and instruments contemplated hereby are duly and validly
executed and delivered by WorldCorp and Acquisition Sub and (assuming due
authorization, execution and delivery by the Shareholders and each other party
thereto) constitute the legal, valid and binding obligations of WorldCorp Group
and Acquisition Sub, enforceable against them in accordance with their
respective terms. WorldCorp owns the Contributed Airways Shares free and clear
of all liens, charges and encumbrances, and upon contribution of such shares as
herein provided, WorldCorp will convey to Acquisition Sub good and valid title
free and clear of all liens, charges and encumbrances (other than 1,000,000
shares that are subject to a pledge to World Airways). "Transaction Documents"
means collectively, the Notes, the Pledge Agreement, the Shareholders' Warrants,
the Collateral Agent Agreement, the Guaranty, the WorldCorp Option Agreement,
the Acquisition Sub Option Agreement, the WorldCorp Tax Sharing Agreement and
the Acquisition Sub Tax Sharing Agreement, each as hereinafter defined.
"Financial Consulting Agreements" means collectively, the Financial Consulting
Agreement and the WorldCorp Financial Consulting Agreement, each as hereinafter
defined.
2.3. SEC Documents; Financial Statements.
(a) World Airways has timely filed all reports required to be
filed by it with the Securities and Exchange Commission (the "SEC") since
January 1, 1995 pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act") and the rules and regulations thereunder. WorldCorp has provided
the Shareholders' Representative with copies of (i) World Airways' annual
reports on Form 10-K for the years ended December 31, 1995, 1996 and 1997 and
(ii) World Airways' quarterly reports on Form 10-Q for the quarters ended March
31, 1997, June 30, 1997 and September 30, 1997 (collectively, together with any
other reports or filings made by World Airways since January 1, 1995 with the
SEC pursuant to the requirements of the Securities Act of 1933, as amended (the
"Securities Act") or the Exchange Act or the rules and regulations thereunder
(collectively, the "SEC Documents"). As of their respective dates, the SEC
Documents complied in all material respects with the requirements of the
Exchange Act, the Securities Act and the rules and regulations of the SEC
promulgated thereunder. Except to the extent that information contained in any
SEC Document has been revised or superseded by a later filed SEC Document (which
was filed prior to the date of this Agreement), none of the SEC Documents
contains any untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
<PAGE>
(b) Financial Statements. The financial statements of WorldCorp
and World Airways included in the SEC Documents comply as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles ("GAAP"), applied on a
consistent basis during the periods involved and fairly present the consolidated
financial position of World Airways and its subsidiaries as of the date thereof
and the consolidated results of their operations and cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal year-end tax
and audit adjustments). Except as set forth in the SEC Documents, World Airways
has no material liabilities or obligations which, individually or in the
aggregate, are reasonably likely to have a material adverse effect on the
business or financial condition of World Airways. For purposes hereof,
"subsidiaries" means as to any person, a corporation, partnership, limited
liability company or other entity of which 50% or more of the voting power of
the outstanding voting equity securities or 50% or more of the outstanding
economic equity interest is held, directly or indirectly, by such person and
shall, in any event, include World Airways with respect to Acquisition Sub.
2.4. Ordinary Course; No Material Adverse Change.
The business of World Airways has been conducted in the
ordinary course since December 31, 1997. World Airways has not suffered any
material adverse change in their business, operations, condition (financial or
otherwise), properties, assets, liabilities or earnings, taken as a whole, since
December 31, 1997. Notwithstanding the foregoing, the Shareholders acknowledge
that they have read the section entitled "Overview" within Item 7 of World
Airways Annual Report on 10-K for the year ended December 31, 1997 and
understand the risks to World Airways business described therein.
2.5. Business of the Acquisition Sub.
Prior to the Closing Date, Acquisition Sub has not conducted
any business other than in preparation for the transactions contemplated by this
Agreement.
2.6. Brokers and Finders.
Except for the engagement of L.H. Friend, Weinress, Frankson &
Presson, Inc. ("L.H. Friend") to provide a fairness opinion with respect to the
transactions contemplated hereby and a valuation of Acquisition Sub common stock
and of the Shareholder Warrants (such valuation to give effect to the respective
capital contributions contemplated hereby), the WorldCorp Group has not employed
any broker, agent or finder or, agreed to incur any liability for any brokerage
fees, agents' commissions or finders' fees in connection with the transactions
contemplated hereby.
<PAGE>
2.7. HSR.
Capitalized terms used in this Section 2.8 and in Section 3.14, and not
otherwise defined in this Agreement, are used as defined in the rules adopted
under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended, (said
act and said rules, the "HSR Act"). All applicable waiting periods of Purchaser
as an Acquiring Person necessary for the consummation of the transactions
contemplated hereby have terminated.
2.8. Legal Proceedings.
Except as set forth in Schedule 2.9, there are no material
actions, suits, proceedings, charges or complaints instituted by or against, or,
to the best knowledge of the WorldCorp Group, threatened against any member of
the WorldCorp Group or, to the knowledge of WorldCorp, its subsidiaries in
respect of their operations, whether at law or in equity or before any
governmental department, commission, board, agency or instrumentality, domestic
or foreign, whether or not fully covered by insurance. The WorldCorp Group or,
to the knowledge of WorldCorp, any of its subsidiaries is not subject to any
order, writ, injunction or decree of any court or any governmental department,
commission, board, agency or instrumentality, domestic or foreign, having
jurisdiction over it.
2.9. Licenses and Compliance with Law.
Except to the extent that the failure of any of the following
to be true would not have a material adverse effect on the business or financial
condition of WorldCorp and its subsidiaries, taken as a whole, WorldCorp and its
subsidiaries hold and are in compliance with all permits, certificates,
licenses, approvals, registrations and authorizations ("Permits") required under
all laws, rules and regulations in connection with the business of WorldCorp and
its subsidiaries and all of the Permits are in full force and effect.
2.10. Investment Company.
WorldCorp is not, nor will be immediately following
consummation of the transactions contemplated hereby, an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
2.11. No Other Warranties.
Except as expressly set forth in this Agreement, and in the
schedules and exhibits hereto and the instruments, agreements and documents
delivered pursuant hereto, WorldCorp makes no other representation, or warranty,
express or implied concerning the WorldCorp Group (including, but not limited
to, their business, operations, condition (financial or otherwise)), properties,
assets, liabilities, earnings and prospects.
<PAGE>
ARTICLE III
WARRANTIES AND REPRESENTATIONS OF THE SHAREHOLDERS
Each Initial Shareholder, severally but not jointly, warrants
and represents to Acquisition Sub as follows, except that as to the
representations contained in the last sentence of Section 3.1, Section 3.2, the
second sentence of Section 3.3, and Section 3.15 herein, such representations
are made by each of the Shareholders only as to themselves individually (the
"Individual Representation"). For purposes hereof, "1996 Schedules" refers to,
collectively, (i) the following schedules to the Stock Purchase Agreement dated
as of December 26, 1996 by and among the Company and certain shareholders of
Frye: 3.8(a) Real Property Leases, 3.8(b) Real Property, 3.9(a) and (b)
Miscellaneous Contracts and No Defaults, 3.10 Trademarks, Service Marks,
Tradenames and Copyrights, 3.12(a) and (b) Licenses and Compliance with Law,
3.13 Environmental Matters and 3.14(a) Labor Contracts; and (ii) the following
exhibits and schedules to the Asset Purchase Agreement dated as of December 27,
1996 by and between the Company and Technicarbon Company, L.P.: Exhibit 1.1
Trademarks, Service Marks, Tradenames and Copyrights, Schedule 3.7(a) Real
Property Leases, 3.7(b) Real Property, 3.8(a) and (b) Miscellaneous Contracts
and No Defaults, 3.11(a) and (b) Permits and Compliance with Law, 3.12
Environmental Matters and 3.13(a) Labor Contracts.
3.1. Corporate Organization, etc.
Each of the Company, Frye, FCP, FryeTech and Ltd. is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, Delaware, Delaware and Delaware and the Province of
Ontario, respectively, with full corporate power to own its assets and to carry
on its business as it is now being conducted. Each of the Corporations is
qualified or licensed to conduct its business as a foreign corporation and is in
good standing in those jurisdictions in which the failure to so qualify would
have a material adverse effect on the business or financial condition of the
Corporations, taken as a whole. Each Shareholder has the power and authority to
execute and deliver this Agreement and the agreements and instruments
contemplated herein and to perform its obligations hereunder and thereunder.
3.2. Authorization.
The execution, delivery and performance by each Shareholder of
this Agreement and the Transaction Documents party thereto and the performance
by each Shareholder of the transactions contemplated hereby and thereby have
been duly authorized by all requisite corporate or partnership action of each
Shareholder, do not contravene any provisions of law or any order of any court
or other agency of government or its documents of formation and management and
do not contravene any agreement or other instrument by which it is bound or by
which any of its assets are affected or violate any judgment, order, injunction,
decree, statute rule or regulation applicable to it. Other than approvals under
the HSR Act and except as set forth on the 1996 Schedules and Schedule 3.2
hereto, no consents, waivers, approvals, authorizations or orders of, or
registrations or qualifications with, any person, bank, corporation,
association, governmental body or court having authority or power to regulate,
supervise or direct the business and affairs of a Shareholder or a Corporation
are necessary for the consummation by any Shareholders of the transactions
contemplated by this Agreement. This Agreement is and the Transaction Documents
and instruments contemplated hereby are duly and validly executed and delivered
by the Shareholders and (assuming due authorization, execution and delivery by
the WorldCorp Group and each other party thereto) constitute the legal, valid
and binding obligations of each Shareholder, enforceable against him or it in
accordance with their respective terms.
<PAGE>
3.3. Capitalization.
The Company has authorized 1,000,000 shares of Company Class A
Common Stock of which 469,648 shares are issued and outstanding and 10,000
shares of Company Class B Common Stock of which 1,000 shares are issued and
outstanding. Each Shareholder owns the shares of Company Class A Common Stock
and Company Class B Common Stock set forth opposite its respective name on
Exhibit A free and clear of all liens, charges and encumbrances, and upon
contribution of such shares as herein provided, such Shareholder will convey to
Acquisition Sub good and valid title free and clear of all liens, charges and
encumbrances. Frye has authorized 10,000,000 shares of Class A Common Stock, par
value $.01, of which 4,656,984 shares are issued and outstanding. FCP has
authorized 1,000 shares of Common Stock, par value $.01, of which 100 shares are
issued and outstanding; 4,000,000 shares of Class B Common Stock, par value
$.01, of which 1,480,000 shares are issued and outstanding; and 2,000,000 shares
of Class C Common Stock, par value $.01, of which none are issued and
outstanding. FryeTech has authorized 1,000 shares of Common Stock, par value
$1.00, of which 1,000 shares are issued and outstanding. Ltd. has authorized
unlimited number of shares of Common Stock, without par value, of which
1,125,001 shares are issued and outstanding. All of the outstanding shares of
common stock of each of the Subsidiaries are owned by either the Company or
another Subsidiary free and clear of any liens, charges or encumbrances, except
for liens, charges or encumbrances imposed under the Credit Agreement, and were
duly authorized and validly issued and are fully paid and non-assessable. Except
as set forth on the 1996 Schedules and Schedule 3.3, there are no outstanding
options, warrants, rights to acquire or subscribe to, or calls or commitments of
any character whatsoever to which any of the Corporations is a party or may be
bound, requiring the issuance or sale of shares of any class of capital stock or
other equity securities of any of the Corporations or securities or rights
convertible into or exchangeable for such shares or other equity securities, and
there are no contracts, commitments, understandings or arrangements for which
any of the Corporations is or may become bound to issue additional shares of its
capital stock or other equity securities or options, warrants or rights to
acquire or subscribe to any additional shares of any class of its capital stock
or other equity securities or securities convertible into or exchangeable for
such shares or other equity securities. Except as set forth on the 1996
Schedules and Schedule 3.3, there is no existing arrangement that requires or
permits any restrictions of any kind on the transfer of any of the outstanding
shares of capital stock of any of the Corporations.
<PAGE>
3.4. Financial Information.
The audited consolidated balance sheets of the Company as at
August 31, 1997 and the related consolidated statements of operations, cash
flows and stockholders' equity of the Company for the partial year then ended
together with the notes and schedules thereto and accompanied by the report of
Price Waterhouse LLP thereon (the "Audited Financials"), and the unaudited
consolidated balance sheet of the Company and the related consolidated
statements of operations and cash flows for the seven months ended March 28,
1998 (the "Unaudited Financials," and together with the Audited Financials, the
"Financial Statements"), a copy of each of which has been delivered to the
WorldCorp Group, fairly present in all material respects the consolidated
financial condition of the Company as of the respective dates and respective
periods indicated and the results of their operations and cash flows for the
period covered by such statements of operation and have been prepared in
accordance with GAAP consistently applied, subject, in the case of the Unaudited
Financials, to normal, year-end tax and audit adjustments). The balance sheet as
at March 28, 1998 is referred to herein as the "Balance Sheet" and March 28,
1998 is referred to herein as the "Balance Sheet Date". All material contingent
liabilities of the Company at the date of the Audited Financials are noted in
the Audited Financials to the extent required by GAAP as applied in the
Financial Statements or are noted in the schedules hereto or the 1996 Schedules.
The books of account and other financial records of the Company reflect all
items of income and expense and all assets and liabilities required to be
reflected therein in accordance with the Company's past accounting practices and
have been maintained in accordance with good business and accounting practices.
3.5. Ordinary Course; No Material Adverse Change.
The business of the Company has been conducted in the ordinary
course since the Balance Sheet Date. The Company has not suffered any material
adverse change in its business, operations, condition (financial or otherwise),
properties, assets, liabilities or earnings, taken as a whole, subsequent to the
Balance Sheet Date. Notwithstanding the foregoing, the WorldCorp Group
acknowledges that (i) the Company operates in a mature industry characterized by
declining sales and increasing competition, (ii) that, the sales, earnings and
profitability of the Corporations are expected to decline in the current fiscal
year relative to past fiscal years and for the foreseeable future, and (iii) the
Corporations closed plants at Parsons, Kansas and Corcoran, California during
February 1998.
3.6. Compliance with Credit Agreement.
Since January 1, 1997, the Corporations have complied with all
covenants set forth in the Credit Agreement. The Company has heretofore
delivered copies of all compliance certificates delivered under the Credit
Agreement to the WorldCorp Group.
3.7. Legal Proceedings.
Except as set forth in the 1996 Schedules and Schedule 3.7,
there are no material actions, suits, proceedings, charges or complaints
instituted by or against, or, to the best knowledge of each Shareholder,
threatened against any Corporation in respect of its operations, whether at law
or in equity or before any governmental department, commission, board, agency or
instrumentality, domestic or foreign, whether or not fully covered by insurance.
No Corporation is subject to any order, writ, injunction or decree of any court
or any governmental department, commission, board, agency or instrumentality,
domestic or foreign, having jurisdiction over it.
<PAGE>
3.8. Licenses and Compliance with Law.
Except to the extent that the failure of any of the following
to be true would not have a material adverse effect on the business or financial
condition of the Corporations, taken as a whole, the Corporations hold and are
in compliance with all Permits required under all laws, rules and regulations in
connection with the business of the Corporations and all of the Permits are in
full force and effect.
3.9. Other Entities.
Except as set forth on the 1996 Schedules and Schedule 3.10,
no Corporation owns, directly or indirectly, any outstanding capital stock or
equity interest in any corporation, partnership, joint venture or other entity,
except that Frye owns all of the stock of FCP, FCP owns all of the stock of
FryeTech and FryeTech owns all of the stock of Ltd.
3.10. Third Party Obligations.
Except as set forth on the 1996 Schedules and Schedule 3.11,
no Corporation has any obligation or liability, either actual or accrued,
accruing or contingent, as guarantor, surety, co-signer, endorser, co-maker or
indemnitor, in respect of the obligation of any person, partnership, joint
venture, association, organization or other entity, except as endorser or maker
of checks or letters of credit, respectively, endorsed or made in the ordinary
course of business.
3.11. Affiliate and Associate Transactions.
Except as set forth on the 1996 Schedules and Schedule 3.12,
no Corporation has any loan or advance outstanding to any stockholder, officer,
director or employee and, to the knowledge of the Shareholders, no officer or
director of any Corporation or any "affiliate" or "associate" (as those terms
are defined in Rule 405 of the General Rules and Regulations under the
Securities Act) of any Shareholder, or any such officer or director has, either
directly or indirectly:
(a) an equity or debt interest in any corporation, partnership,
joint venture, association, organization or other person or entity which
purchases from or sells or furnishes to any Corporation any goods or otherwise
does business with any Corporation; or
(b) a beneficial interest in any contract, commitment or agreement
to which any Corporation is a party or under which any Corporation is obligated
or bound or to which the property of any Corporation may be subject, other than
contracts, commitments or agreements between a Corporation and such persons in
their capacities as employees, officers or directors of such Corporation;
provided, however, that such representation and warranty in clauses (a) and (b)
above shall not apply to the ownership, as a passive investment, by any such
employee, officer, director, "affiliate" or "associate", of less than 5% of a
class of securities listed for trading on a national securities exchange or
publicly traded in the over-the-counter market.
<PAGE>
3.12. Brokers and Finders.
None of the Shareholders nor any of the Corporations nor any
of their respective officers, directors or employees has employed any broker,
agent or finder or incurred any liability for any brokerage fees, agents'
commissions or finders' fees in connection with the transactions contemplated
hereby.
3.13. HSR Matters.
None of the Corporations, SP, any partner of SP (or the
Person(s) within which such partner is included for purposes of the HSR Act ) or
any other shareholder of the Company is required to make a filing as an
Acquiring Person under the HSR Act.
3.14. Investment.
Each of the Shareholders (i) understand that the Acquisition
Sub Common Stock, the Notes, the Shareholders' Warrants (and any shares of
capital stock into which the Shareholders' Warrants may be converted or
exchanged), the shares of WorldCorp issuable upon conversion of the WorldCorp
Option Agreement have not been, and will not be, registered under the Securities
Act, or under any state securities laws, and are being offered and sold in
reliance upon federal and state exemptions for transactions not involving any
public offering, (ii) is acquiring the Acquisition Sub Common Stock, the Notes,
the Shareholders' Warrants (and any shares of capital stock into which the
Shareholders' Warrants may be converted or exchanged) and the shares of
WorldCorp issuable upon conversion of the WorldCorp Option Agreement solely for
its own account for investment purposes, and not with a view to the distribution
thereof, (iii) is a sophisticated investor with knowledge and experience in
business and financial matters, (iv) has received certain information concerning
the WorldCorp Group, and has had the opportunity to obtain additional
information as desired in order to evaluate the merits and the risks inherent in
holding the Acquisition Sub Common Stock, the Notes and the Shareholders'
Warrants, (v) is able to bear the economic risk and lack of liquidity inherent
in holding the Acquisition Sub Common Stock, the Notes, the Shareholders'
Warrants (or shares of capital stock into which the Shareholders' Warrants may
be converted or exchanged) and (vi) is an Accredited Investor within the meaning
of Regulation D under the Securities Act.
3.15. Information Accurate and Complete.
To the knowledge of the Shareholders, without limiting the
specific language of any other representation or warranty herein, all
information furnished by the Shareholders to the WorldCorp Group pursuant to
this Agreement, Schedules 3.7(a), 3.7(b), 3.8(a), 3.8(b), 3.11(a), 3.11(b), 3.12
and 3.13(a) and Exhibit 1.1 to the Asset Purchase Agreement dated as of December
27, 1996 by and between the Company and Technicarbon Company, L.P. as revised in
the form annexed hereto as such schedules relate to the corresponding Sections
of that agreement, Schedules 3.8(a), 3.8(b), 3.9(a), 3.9(b), 3.10, 3.12(a),
3.12(b) and 3.14(a) to the Stock Purchase Agreement by and among the Company and
certain shareholders of Frye as revised in the form annexed hereto and as such
schedules relate to the corresponding sections of that agreement and the
representations and warranties made with respect to such schedules, does not
contain any untrue statement of a material fact or omit any material fact
necessary to make the statements therein not misleading as of the date hereof;
provided, however, that the 1996 Schedules have not been, nor will be, revised
to exclude therefrom items which have lapsed or are no longer in force or in
effect as reflected therein, nor has the disclosure of any items reflected on
the 1996 Schedules been revised to reflect any updates with respect to such
items.
<PAGE>
3.16. No Other Warranties.
Except as expressly set forth in this Agreement and in the
schedules, and exhibits hereto and the instruments, agreements and documents
delivered pursuant hereto, the Shareholders make no other representation or
warranty, express or implied, concerning the Corporations (including, but not
limited to, their businesses, operations, condition (financial or otherwise),
properties, assets, liabilities, earnings and prospects).
3.17. Investment Company.
None of the Corporations is, nor will it be immediately
following consummation of the transactions contemplated hereby, an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
ARTICLE IV
CLOSING DELIVERIES
The following deliveries shall be made at the Closing and the
Subsequent Closing, as appropriate:
4.1. Consents under Agreements, etc.
The Initial Shareholders shall provide to the WorldCorp Group
reasonable proof that they have obtained the consents that are noted as having
been obtained as set forth in Schedule 3.2, if any, and all governmental
consents and approvals, which are required in order to consummate the
transactions contemplated by this Agreement.
4.2. Certificate of Secretary.
The Shareholders shall deliver to the WorldCorp Group a
certificate of the Secretary of each Shareholder, setting forth a copy of the
resolutions adopted by the Board of Directors of such Shareholder, or other
evidence of authority, approving the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby, together with a
signature and incumbency certificate.
<PAGE>
4.3. Non-Foreign Status.
The Company shall deliver to the WorldCorp Group an affidavit,
in the form required by Section 1445 of the Code and the regulations issued
thereunder, signed under penalty of perjury, that none of the Corporations is
and has not been a United States real property holding corporation (as defined
in Section 897(c)(2) of the Code) during the applicable period specified in
Section 897(c)(1 )(A)(ii) of the Code.
4.4. Notes.
Acquisition Sub shall execute and deliver the Notes to the
Initial Shareholders at the Closing and to the Additional Shareholders at the
Subsequent Closing.
4.5. Shareholders' Warrants.
WorldCorp shall execute and deliver the Initial Shareholders'
Warrants to the Initial Shareholders (and to the Additional Shareholders at the
Subsequent Closing).
4.6. Pledge Agreement.
WorldCorp and Acquisition Sub shall execute and deliver to Sun
Paper Advisors, Inc. (the "Collateral Agent"), and the Collateral Agent shall
execute and deliver to WorldCorp and Acquisition Sub, the Pledge Agreement in
the form attached hereto as Exhibit D (the "Pledge Agreement").
4.7. Collateral Agent Agreement.
The Shareholders shall execute and deliver to the Collateral
Agent, and the Collateral Agent shall execute and deliver to the Shareholders,
the Collateral Agent Agreement in the form attached hereto as Exhibit E (the
"Collateral Agent Agreement").
4.8. Guaranty.
WorldCorp shall execute and deliver to the Collateral Agent,
and the Collateral Agent shall execute and deliver to WorldCorp, the Guaranty in
the form attached hereto as Exhibit F (the "Guaranty").
4.9. WorldCorp Tax Sharing Agreement.
WorldCorp shall execute and deliver to Acquisition Sub, and
Acquisition Sub shall execute and deliver to WorldCorp, the Tax Sharing
Agreement in the form attached hereto as Exhibit G, together with such changes
and amendments as are reasonably requested by the Shareholders' Representative,
and (x) are not adverse to any of the parties hereto, to give effect to the
transactions contemplated hereby or (y) pursuant to Section 4.15 (the "WorldCorp
Tax Sharing Agreement").
<PAGE>
4.10. Acquisition Sub Tax Sharing Agreement.
Acquisition Sub shall execute and deliver to the Company, and
the Company shall execute and deliver to Acquisition Sub, the Tax Sharing
Agreement in the form attached hereto as Exhibit H, together with such changes
and amendments as are reasonably requested by the Shareholders' Representative,
and (x) are not adverse to any of the parties hereto, to give effect to the
transactions contemplated hereby or (y) pursuant to Section 4.15 (the
"Acquisition Sub Tax Sharing Agreement").
4.11. WorldCorp Financial Consulting Agreement.
WorldCorp shall execute and deliver to Acquisition Sub, and
Acquisition Sub shall execute and deliver to WorldCorp, the WorldCorp Financial
Consulting Agreement in the form attached hereto as Exhibit I (the "WorldCorp
Financial Consulting Agreement").
4.12. Opinion of Hunton & Williams.
Hunton & Williams, counsel for the WorldCorp Group, shall
execute and deliver to the Shareholders an opinion in the form attached hereto
as Exhibit J.
4.13. Opinion of Parker Chapin Flattau and Klimpl.
Parker Chapin Flattau and Klimpl, LLP, counsel for the
Shareholders, shall execute and deliver to the WorldCorp Group an opinion in the
form attached hereto as Exhibit K.
4.14. Instruments of Transfer.
The Shareholders shall deliver to Acquisition Sub original
certificates representing the Contributed Paper Shares and WorldCorp shall
deliver to Acquisition Sub original certificates representing the Contributed
Airways Shares and the WorldCorp Paper Shares, with endorsed blank stock powers
attached, in form and substance reasonably satisfactory to Acquisition Sub to
vest in the Acquisition Sub all of the right, title and interest of each
Shareholder and WorldCorp, as applicable, in and to the Contributed Paper
Shares, the Contributed Airways Shares and the WorldCorp Paper Shares, each free
and clear of all liens, charges and encumbrances (except as set forth on
Schedule 2.3(c) in the case of the Contributed Airways Shares).
4.15. Amendments to Credit Agreement.
The Shareholders' Representative shall deliver to the
WorldCorp Group executed copies of amendments to the Credit Agreement permitting
the change of control of the Company which will occur by the transactions
contemplated hereby.
<PAGE>
4.16. Fairness Opinion.
The WorldCorp Group shall have received a fairness opinion
from L.H. Friend to the effect that the transactions contemplated hereby are
fair to the shareholders of WorldCorp from a financial point of view.
4.17. Certificate of Secretary.
The WorldCorp Group shall deliver to the Shareholders'
Representative a certificate of the Secretary of each member of the WorldCorp
Group setting forth a copy of the resolutions adopted by the Board of Directors
of each member of the WorldCorp Group approving the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby,
together with a signature and incumbency certificate.
ARTICLE V
COVENANTS
The Shareholders and the WorldCorp Group covenant and agree as
follows:
5.1. Subsequent Financial Statements.
In the event that the WorldCorp Group requires audited
historical information with respect to the Company, or any of its predecessors,
as the case may be, in connection with any registration statements or other
public reporting requirements under the rules and regulations promulgated by the
SEC, the Shareholders will use their reasonable efforts, without cost to
Shareholders, to cause Price Waterhouse LLP (as to the Company), or the
independent accountants of the Company's predecessors, to consent to the use of
their opinions on the necessary audited historical financial statements required
in public documents.
5.2. Shareholder Approval.
Not later than one (1) year after the Closing Date, WorldCorp
will seek such approval of its shareholders as may be required by the rules and
regulations of the New York Stock Exchange, Inc. in order to permit issuance of
shares of WorldCorp common stock in connection with the WorldCorp Option
Agreement.
5.3. Affiliate and Associate Transactions.
After the Closing Date, the Corporations will not engage in
any activities contemplated by the representations and warranties contained in
Section 3.12 unless first approved by a majority of the disinterested directors
of WorldCorp.
5.4. Federal Income Tax Treatment.
The Shareholders and the WorldCorp Group intend that the
transactions contemplated by this Agreement shall constitute a transfer to a
controlled corporation under Section 351 of the Code. The parties shall treat
the transactions as qualifying under Section 351 of the Code (including
reporting the transactions consistent therewith), and shall not take, and have
not taken, any action inconsistent therewith or that would adversely affect such
qualification or treatment.
<PAGE>
5.5. Indemnification by the Corporations.
For a period of not less than seven years from and after the
date hereof, WorldCorp shall indemnify and exculpate its officers and directors
and shall cause each of the Corporations and each of its future direct and
indirect subsidiaries to indemnify and exculpate each of their respective
officers and directors, through provisions in its and their respective charters
and by-laws, to the fullest extent permitted under applicable law and, during
such period, shall not amend its charter or by-laws or permit any amendment to
any of the Corporations' or such subsidiaries' charters or by-laws to decrease
the indemnification and exculpation provided to such officers and directors.
WorldCorp shall maintain its directors and officers insurance policies and cause
each of the Corporations, each of its future direct and indirect subsidiaries,
and each of its and their respective officers and directors to be named as
insured parties under such policies.
ARTICLE VI
INDEMNIFICATION
6.1. By the Shareholders.
(a) The Shareholders agree in accordance herewith and with
paragraph (e) below to indemnify and hold harmless Acquisition Sub from and
against any and all Losses (as defined in Section 6.1 (c) below) to which
Acquisition Sub becomes subject, (other than losses that decrease EBITDA)
arising out of (i) any inaccuracy in any Individual Representation by such
Shareholder in this Agreement for which indemnity such Shareholder alone shall
be responsible; (ii) any inaccuracy in any representation or warranty which is
not an Individual Representation by any Shareholder in this Agreement for which
indemnity the Shareholders shall be severally responsible in proportion to such
Shareholder's Percentage; (iii) any breach or default in the performance or
observance by any Shareholder of any of the covenants or agreements which it is
to perform or observe hereunder for which indemnity the Shareholders shall be
severally and proportionately responsible; and (iv) any brokerage, finder's fee
or the like incurred as a result of the actions of any Shareholder in connection
with the transactions herein contemplated for which indemnity the Shareholders
shall be severally and proportionately responsible.
(b) Acquisition Sub shall have no right to be indemnified pursuant
to Section 6.1(a) hereof for any Losses unless such right is asserted (whether
or not Losses have occurred) on or prior to one (1) year following the Closing
Date.
(c) For purposes hereof, "Losses" shall mean actual liabilities,
debts, obligations, losses, damages, deficiencies, claims, actions, suits,
proceedings, demands, assessments, Taxes (other than Taxes resulting from any
action taken by Acquisition Sub subsequent to the Closing), customs obligations,
penalties, interest or any other costs, order and judgments (whether now known
or unknown) including, without limitation, any and all actual costs, fees and
expenses (including, without limitation, reasonable legal and accounting fees,
but excluding any consequential damages and costs relating to, resulting from or
arising out of any of the foregoing, but in any event, reduced (but not below
zero) by insurance proceeds, in either case to which the Acquisition Sub is
entitled by virtue of any of the foregoing.
<PAGE>
(d) Notwithstanding anything herein to the contrary, the
obligation of any Shareholder to indemnify Acquisition Sub for any Losses shall,
in addition to any other limitations set forth in this Agreement, be limited to
his Percentage of the aggregate amount of indemnification otherwise owing
hereunder (except as to indemnification for any inaccuracy in any Individual
Representation made by such Shareholder with respect to which such Shareholder's
obligation to indemnify for any losses shall be such Shareholder's liability
(subject to the provisions hereof) and no other Shareholders shall be so
obligated with respect to such indemnity).
6.2. By WorldCorp.
(a) WorldCorp agrees to indemnify and hold harmless Acquisition
Sub from and against any and all Losses to which Acquisition Sub may become
subject, arising out of (i) any inaccuracy in any representation or warranty
made by the WorldCorp Group in this Agreement; (ii) any breach or default in the
performance or observance by the WorldCorp Group of any of the covenants or
agreements which either is to perform or observe hereunder; and (iii) any
brokerage, finder's fee or the like incurred as a result of the WorldCorp Group'
actions in connection with the transactions herein contemplated.
(b) Acquisition Sub shall have no right to be indemnified pursuant
to Section 6.2(a) for any Losses unless such right is asserted (whether or not
Losses have occurred) on or prior to one (1) year following the Closing Date.
(c) WorldCorp shall pay any indemnification owing to Acquisition
Sub by the contribution of shares of InteliData Common Stock owned by WorldCorp
to Acquisition Sub. Any such shares of InteliData Common Stock so contributed
shall be valued at the average closing price of such InteliData Common Stock for
the 20 trading days prior to the date such contribution is made, as reported on
NASDAQ or such national exchange on which such shares and traded. In the
alternative, WorldCorp may pay such amounts in cash to Acquisition Sub.
(d) The Shareholders' Representative shall have the exclusive
right to require that Acquisition Sub pursue, abandon or settle its
indemnification rights against WorldCorp and, upon any such demand being made
with respect to such rights, Acquisition Sub shall pursue such rights in the
manner directed by the Shareholders' Representative.
<PAGE>
6.3. Indemnification Amounts.
(a) Notwithstanding anything to the contrary contained herein,
neither Shareholders (collectively) or WorldCorp shall have any liability under
Sections 6.l(a) or 6.2(a), respectively, unless at least $50,000 of Losses are
suffered under such section by Acquisition Sub, respectively, by reason of the
matters described therein.
(b) Neither the Shareholders (collectively) nor WorldCorp shall be
liable for indemnification under Section 6.1(a) or 6.2(a), respectively (whether
in an action for indemnification or otherwise) to the extent the aggregate
amount claimed (including any amount previously recovered under Sections 6.l(a)
or 6.2(a), as applicable) exceeds $1,000,000 (except for Losses incurred by
Acquisition Sub (i) as a result of the breach of the representation contained in
the third sentence from the end of Section 2.2 or (ii) as a result of the breach
of the Individual Representation contained in the second sentence of Section
3.3, which Losses shall be payable without regard to the $1,000,000 limitation).
(c) The sole recourse of Acquisition Sub against any Shareholder
for any indemnification owing under Section 6.1(a) hereunder after a final
determination (not subject to appeal) or agreement as to whether such
Shareholder owes any indemnification amount, shall be by means of an Earn-Out
Set-Off in the amounts then owing to such Shareholder under the Earn-Out Amounts
(including any accrued interest) and no Shareholder shall be obligated to make
any cash payment in respect of Section 6.1 (a).
(d) The sole recourse of Acquisition Sub and the other indemnified
parties against WorldCorp for any indemnification amount owing under Section
6.2(a) hereunder after a final determination (not subject to appeal) or
agreement as to whether such Shareholder owes any indemnification amount, shall
be by the contribution to Acquisition Sub by WorldCorp of shares of InteliData
Common Stock or cash.
<PAGE>
6.4. Notice of and Defense Against Claims.
(a) Promptly after receipt by Acquisition Sub of notice of the
commencement of any action, demand, or claim for which indemnification under the
Article VI is available Acquisition Sub shall, if a claim in respect thereof is
to be made against the indemnifying party, send notice of the commencement
thereof to the indemnifying party. The failure of Acquisition Sub to give such
notice shall not relieve the indemnifying party of its obligations under this
Article VI except to the extent that the indemnifying party is actually and
materially prejudiced by the failure to give such notice. In case any such
action shall be brought against Acquisition Sub and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate in, and, to the extent that it shall wish, to assume the
defense thereof, with counsel reasonably satisfactory to Acquisition Sub, and
after notice from the indemnifying party to Acquisition Sub of its election so
to assume the defense thereof, the indemnifying party shall not be liable to
Acquisition Sub in respect of such action for any legal or other expenses
subsequently incurred by Acquisition Sub after the date such notice is given to
Acquisition Sub in connection with the defense thereof. Acquisition Sub,
however, shall have the right, but not the obligation, to participate at its own
cost and expense in such defense by counsel of its own choice. In the event that
the indemnifying party and Acquisition Sub are named parties in or are subject
to such action and a material conflict of interest between such parties exists
in respect of such action, the indemnifying party may decline to assume the
defense on behalf of Acquisition Sub or Acquisition Sub may retain the defense
on its own behalf but only to the extent necessary to avoid such conflict of
interest and in such case the indemnifying party shall be liable for any legal
or other expenses, including without limitation reasonable attorneys' fees and
disbursements, incurred by Acquisition Sub in such defense. If the indemnifying
party shall assume the defense of any such action, Acquisition Sub shall
cooperate with it and the indemnifying party shall not, without the consent of
Acquisition Sub, consent to the entry of any judgment or enter into any
settlement or compromise which does not include as an unconditional term thereof
the giving by the claimant or plaintiff to Acquisition Sub of a release from all
liability in respect of such action or claim. Provided the proper notice has
been duly given, if the indemnifying party shall fail promptly and diligently to
assume the defense thereof, Acquisition Sub may respond to, contest and defend
against such action and make in good faith any compromise or settlement with
respect thereto and recover the entire cost and expense thereof, including
without limitation reasonable attorneys' fees and disbursements and all amounts
paid or foregone as a result of such action or the settlement or compromise
thereof from the indemnifying party. The indemnification required hereunder
shall be made during the course of the investigation or defense, as and when
bills or invoices are received or loss, liability, obligation, damage or expense
is actually suffered or incurred. Except as is otherwise provided hereinabove,
no indemnifying party shall be liable for any settlement of any claim or action
pursuant to this Article VI effected without the prior written consent of such
indemnifying party; provided, however, that if the indemnifying party does not
consent to a settlement, Acquisition Sub may nevertheless settle, unless the
indemnifying party secures Acquisition Sub against loss to Acquisition Sub's
reasonable satisfaction.
<PAGE>
(b) Any claim on account of any loss, liability, obligation,
damage or expense referred to in Sections 6.1 and 6.2 hereof which does not
result from a third party claim shall be asserted by prompt written notice given
by Acquisition Sub to the indemnifying party.
(c) In connection with any such indemnification, Acquisition Sub
will cooperate in all reasonable requests of the indemnifying party or parties.
(d) Any action required or permitted to be taken by the
Shareholders under this Section 6.4, whether the Shareholders are the
indemnified parties or indemnifying parties, may be taken by the Shareholders'
Representative on behalf of the Shareholders.
6.5. Subrogation.
If an indemnifying party or parties make any payment under
this Article VI in respect of any Losses, the indemnifying party or parties
shall be subrogated, to the extent of such payment, to the rights of Acquisition
Sub against any insurer or third party with respect to such Losses; provided,
however, that the indemnifying party or parties shall not have any rights of
subrogation with respect to the other party hereto or any of its affiliated
entities.
<PAGE>
6.6. Remedies Exclusive.
The remedies provided in this Article VI shall be the
exclusive remedy for monetary damages (whether at law or in equity) among the
parties hereto.
6.7. Adjustment to Consideration.
Any payment under this Article VI shall be treated as a
reduction in the consideration payable by Acquisition Sub under Section 1.2, to
the extent permitted under applicable law, unless otherwise required by a court
decision or closing contract with the Internal Revenue Service.
ARTICLE VII
MISCELLANEOUS
7.1. Further Assurances.
From and after the Closing Date, each party hereto will,
without further consideration, execute and deliver such further documents and
instruments and take such other actions as may be necessary or desirable to
perfect the transactions contemplated hereby.
7.2. Confidentiality.
Each party hereto agrees that it will continue to be bound by
the terms of the Confidentiality Agreements entered into by the parties on March
12, 1998.
7.3. No Waiver.
The failure of either party hereto to enforce any provision
hereof on any occasion shall not be deemed to be a waiver of any preceding or
succeeding breach of such provision or any other provision.
7.4. Entire Agreement.
This Agreement and the exhibits and schedules annexed hereto
and the documents delivered pursuant hereto constitute the entire agreement and
understanding of the parties hereto with respect to the transactions
contemplated herein and therein and supersede all previous agreements, writings,
negotiations and commitments (other than the Confidentiality Agreements),
including, without limitation, the letter of intent dated March 20, 1998.
7.5. Governing Law.
This Agreement shall be construed, interpreted and enforced in
accordance with, and shall be governed by, the laws of the State of Delaware
applicable to contracts made and to be performed wholly therein.
<PAGE>
7.6. Binding Effect.
This Agreement shall bind and inure to the benefit of the
parties hereto and their successors.
7.7. Assignment.
No party may assign its rights or delegate its obligations
under this Agreement.
7.8. Additional Shareholders.
SP agrees that following the Closing, it shall use its best
efforts to cause the Additional Shareholders to transfer any shares of Company
Class A Common Stock or Company Class B Common Stock not included in the
Contributed Paper Shares and that remain outstanding after the Closing Date
("Additional Shares"). Each Additional Shareholder shall execute a counterpart
to this Agreement and each other Transaction Document or instrument to which the
Shareholders are required to be a party, and such Additional Shareholder shall
agree to be bound by and comply with all of the terms and provisions of this
Agreement and such other agreements and instruments as if an original signatory
thereto. All representations and warranties made by such Additional
Shareholders, individually, shall be made as of the date they enter into this
Agreement as if they were Initial Shareholders; provided, however, that
representations and warranties made with respect to the Corporations shall be as
of the date hereof.
7.9. Amendment and Waiver.
Any term of this Agreement may be amended and the observance
of any term of this Agreement may be waived (either generally or in a particular
instance, either retroactively or prospectively, and either for a specified
period of time or indefinitely), only by the written consent of all parties
hereto. Any agreement on the part of a party to any extension or waiver shall
only be valid if set forth in an instrument in writing signed on behalf of such
party. Any such waiver or extension shall not operate as waiver or extension of
any other subsequent condition or obligation.
7.10. Paragraph Headings.
The paragraph headings herein have been inserted for
convenience of reference only and shall in no way be deemed to affect the
meaning or interpretation of any of the terms or provisions hereof.
7.11. Notices.
Any notice or other communication under the provisions of this
Agreement shall be given in writing and delivered in person, by reputable
overnight courier or delivery service, by facsimile machine (receipt confirmed)
or by registered or certified mail, return receipt requested, directed to its
addresses set forth below (or to any new address of which either party hereto
shall have informed the other by the giving of notice in the manner provided
herein):
<PAGE>
In the case of the WorldCorp Group, to WorldCorp at:
13873 Park Center Road, Suite 490
Herndon, Virginia 22071
Attention: Mr. T. Coleman Andrews, III
Mr. Patrick F. Graham
with a copy to:
Hunton & Williams
951 E. Byrd Street, East Tower
Richmond, Virginia 23219
Attention: David M. Carter, Esq.
In the case of any Shareholder, to it at its address set forth
on Exhibit A hereto
with a copy to:
the Shareholders' Representative
Sun Capital Partners, Inc.
777 South Flagler Drive
West Tower, Eighth Floor
West Palm Beach, Florida 33401
Attention: Marc J. Leder and Rodger R. Krouse
and
Parker Chapin Flattau & Klimpl, LLP
1211 Avenue of the Americas
New York, New York 10036
Attention: Mark S. Hirsch, Esq.
7.12. Unenforceability, Severability.
If any provision of this Agreement is found to be void or
unenforceable by a court of competent jurisdiction, the remaining provisions of
this Agreement shall nevertheless be binding upon the parties with the same
force and effect as though the unenforceable part had been severed and deleted.
<PAGE>
7.13. Brokers' Fees.
The Shareholders warrant that WorldCorp shall have no
liability with respect to any brokerage fees or agents' commissions incurred by
any Shareholder in connection with the transactions contemplated hereby.
WorldCorp warrants that the Shareholders shall have no liability with respect to
brokerage fees or agents' commissions incurred by WorldCorp in connection with
the transactions contemplated hereby.
7.14. Appointment of Shareholders' Representative.
(a) Each Shareholder party hereto hereby irrevocably constitutes
and appoints the Shareholders' Representative with full power of substitution as
such Shareholder's true and lawful agent and attorney-in-fact with full power
and authority in such Shareholder's name, place and stead to (i) negotiate,
determine and settle all matters arising hereunder or in connection with any
document related hereto and to receive any and all consideration contemplated
hereby on behalf of such Shareholder, and (ii) execute, swear to, acknowledge,
deliver, file and record in the appropriate public offices all certificates,
documents and other instruments (including, without limitation, this Agreement
and any amendments thereto) which the Shareholders' Representative deems
appropriate or necessary under the terms of this Agreement or the laws of any
state or jurisdiction, and all certificates, documents and other instruments
which the Shareholders' Representative deems appropriate or necessary in the
exercise of its authority under (i) above. In dealing with any Shareholder
hereunder, Purchaser shall be entitled to deal exclusively with the
Shareholders' Representative, and any action taken by the Shareholders'
Representative may be considered by Purchaser to be the action of each
Shareholder with respect to which such action was taken.
(b) The foregoing power of attorney is hereby declared to be
irrevocable and a power coupled with an interest, and it shall survive and not
be affected by the subsequent death, incompetency, disability, incapacity,
dissolution or bankruptcy of such Shareholder and shall extend to such
Shareholder's heirs, transferees, successors, assigns and personal
representatives.
(c) The Shareholders' Representative may consult with legal
counsel, independent accountants and other experts selected by it with respect
to the determination of any matters or the taking of any action referred to
herein, and the Shareholders' Representative shall be fully justified and
protected in taking or omitting to take any action in good faith and in reliance
on, and in accordance with, the opinion or advice of such persons. Each of the
Shareholders agrees to bear his proportionate share (based on such Shareholder's
Percentage) of any compensation and expenses of such counsel, accountants or
experts or other out-of-pocket expenses incurred by the Shareholders'
Representative in carrying out its duties as herein provided, and upon receipt
from time to time of notices from the Shareholders' Representative as to any
amounts to be so paid by such Shareholder, to make payment thereof or reimburse
the Shareholders' representative therefor, promptly as directed by the
Shareholders' Representative. Each of the Shareholders, severally and not
jointly, in the proportions set forth above, agrees to indemnify the
Shareholders' Representative and hold it free and harmless from any and all
loss, damage or liability which it may sustain as a result of any action taken
in good faith.
<PAGE>
(d) Each Shareholder hereby irrevocably agrees that any action
required or permitted under this Agreement to be taken by the Seller'
Representative shall be valid and binding upon, and shall have the effect as
though taken by, such Shareholder hereunder, and in accordance therewith the
Shareholders' Representative may, on behalf of such Shareholder and in his name,
place and stead, accept payment of any amounts due and payable to such
Shareholders, or any of them, hereunder and make payment of any amount due and
payable form the Shareholders, or any of them, hereunder; and (ii) take any
action on behalf of such Shareholder that the Shareholders' Representative may
take on behalf of such Shareholders pursuant to Section 7.14(a) hereof.
7.15. Knowledge.
When the phrase "to the knowledge of Shareholders" or any
phrase of similar intent relating to Shareholders' knowledge (either
collectively or individually) is used throughout this Agreement, such knowledge
shall include the knowledge of each Shareholder, as well as the knowledge of
Marc Leder and Rodger Krouse, and the phrase "to the knowledge of the WorldCorp
Group" shall include the knowledge of T. Coleman Andrews, III and Patrick F.
Graham.
7.16. Choice of Jurisdiction.
WorldCorp and Acquisition Sub, the Shareholders and the
Company hereby irrevocably consent to the exclusive jurisdiction of any State or
Federal Court located within the County of Palm Beach, State of Florida, in
connection with any action or proceeding arising out of or relating to this
Agreement or any document or instrument delivered pursuant to this Agreement or
otherwise. In any such litigation, WorldCorp and Acquisition Sub waive, to the
fullest extent they may effectively do so, personal service of any summons,
complaint or other process and agree that the service thereof may be made by
certified or registered mail directed to their respective addresses included for
such purpose herein. WorldCorp Group and Acquisition Sub hereby waive, to the
fullest extent they may effectively do so, the defenses of forum non conveniens
and improper venue.
7.17. Counterparts.
This Agreement may be executed in counterparts, all of which
shall be deemed to be duplicate originals.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
instrument on the date first above written.
WORLDCORP, INC.
By:
---------------------------
Name:
Title:
WORLDCORP ACQUISITION CORP.
By:
----------------------------
Name:
Title:
SHAREHOLDERS:
SUN PAPER LIMITED PARTNERSHIP
By: SUN PAPER ADVISORS, INC.
General Partner
By: -------------------------
Name:
Title:
<PAGE>
FRYE ACQUISITION PARTNERS
a California limited partnership
By: Leach McMicking & Company
a California limited partnership
By: Leach McMicking & Company
a California corporation
By:
--------------------------
Name:
Title:
<PAGE>
[Execution Copy]
WORLDCORP OPTION AGREEMENT
OPTION AGREEMENT (this "Agreement"), dated April 20, 1998,
between SUN CAPITAL PARTNERS, INC., a Florida corporation (the "Grantee"), and
WORLDCORP, INC., a Delaware corporation ("WorldCorp").
WHEREAS, WorldCorp has issued and outstanding 13,883,243
shares of common stock, par value $1.00 per share ("Common Stock"), representing
all of WorldCorp's issued and outstanding shares of capital stock as of the Date
of Grant (as hereinafter defined);
WHEREAS, concurrently herewith, the Grantee, WorldCorp and
Paper Acquisition Corp., a Delaware corporation ("Paper"), are entering into a
Financial Consulting Agreement dated the date hereof (the "Consulting
Agreement") whereby the Grantee agrees to provide to WorldCorp and Acquisition
Sub and their subsidiaries certain financial consulting services in accordance
with the terms and provisions, and subject to the conditions, set forth therein;
and
WHEREAS, as partial consideration for the Grantee's provision
of management services under the Consulting Agreement, WorldCorp desires to
grant to the Grantee, and the Grantee desires to acquire from WorldCorp, an
option to purchase 3,540,311 shares of Common Stock, upon and subject to the
terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the agreements set forth
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
1. Grant of Option. WorldCorp hereby grants to the Grantee an
option (the "Option") to purchase an aggregate of 3,540,311 shares of Common
Stock (such shares, including any shares issued pursuant to Section 5 hereof,
are referred to herein as the "Option Shares") at an exercise price (the
"Exercise Price") of $1.25 per share; provided, however, that, prior to the
ratification of the grant of the Option (and the shares of Common Stock issuable
upon exercise thereof) by WorldCorp's stockholders, the number of shares of
Common Stock included in the Option Shares shall, solely for the purposes of
Section 4(a) hereof, include 2,762,765 shares of Common Stock.
2. Term of Option. The Option is granted as of the date first
above written (sometimes hereinafter called the "Date of Grant"), and will
terminate and expire, to the extent not previously exercised in accordance with
the terms of this Agreement, at 5:00 p.m. (New York time) on the seventh
anniversary of the Date of Grant.
-1-
<PAGE>
3. Option Exercisable in Whole or in Part. The Option shall
not be exercisable until April 21, 1999, at which time it shall become
exercisable as to one-fifth of the shares of Common Stock granted hereunder, as
to an additional one-fifth of the shares of Common Stock granted hereunder on
each of April 21, 2000 through April 21, 2003, and after such time may be
exercised by the Grantee at any time or from time to time prior to the
expiration of the Option as provided in Section 2 above. The Option may be
exercised as to all or part of the shares of Common Stock as to which it is
exercisable. This Option shall vest in accordance with the foregoing schedule
regardless of whether the Grantee shall be continuing to provide services to
Paper or WorldCorp pursuant to the Consulting Agreement.
4. Exercise of Option.
(a) The Grantee may exercise the Option with respect to all or
any part of the number of Option Shares by giving WorldCorp written notice of
intent to exercise. The notice of exercise shall specify the number of Option
Shares as to which the Option is to be exercised and the date of exercise
thereof, which date shall be at least five business days after the giving of
such notice (unless an earlier time shall have been mutually agreed upon).
(b) On the exercise date specified in the Grantee's notice,
WorldCorp shall cause to be delivered to the Grantee evidence of ownership of
the Option Shares then being purchased upon full payment for such Option Shares
as provided in Section 4(e) below and shall promptly record such Option Shares
on its official records as having been issued to the Grantee. Pursuant to
Section 9 hereof, WorldCorp may require before issuing such evidence of
ownership that, at the time of exercise, the Grantee deliver an investment
representation.
(c) In the event that the Grantee exercises the Option for a
number of Option Shares less than the total number of Option Shares that the
Grantee has a right to purchase under this Agreement, then WorldCorp shall issue
to the Grantee an Option identical in form to this Option but for a number of
Option Shares that shall be equivalent to the total number of Option Shares
covered by this Agreement less the number of Option Shares so purchased.
(d) If the Grantee fails to pay for any of the Option Shares
specified in any notice of exercise or fails to accept delivery thereof, such
Option Shares shall not be issued by WorldCorp and shall remain subject to
subsequent exercises by the Grantee pursuant to the terms hereof. The date
specified in the Grantee's notice as the date of exercise shall be deemed the
date of exercise of the Option, provided that payment (in accordance with
Section 4(e) below) for the Option Shares to be purchased upon such exercise
shall have been received by such date.
(e) Full payment by the Grantee of the Exercise Price for the
number of Option Shares purchased shall be made on or before the exercise date
specified in the notice of exercise, by delivery of, at the option of the
Grantee, cash or a full-recourse promissory note (the "Note") in an amount equal
to the Exercise Price for such Option Shares. The Note shall have a maturity
date (the "Maturity Date") of the seven-year anniversary of the execution and
delivery thereof.
-2-
<PAGE>
During the term of the Note, interest (which shall accrue at a rate of 8% per
annum) shall be payable in arrears, on the last day of March, June, September
and December or, if such day is not a business day, on the next succeeding
business day. Principal and all accrued interest shall be paid on the Maturity
Date.
5. Adjustment; Recapitalization, etc.
5.1 General Provisions.
(a) If WorldCorp shall (i) declare a dividend on its
outstanding capital stock in shares of its capital stock, (ii) subdivide its
outstanding capital stock into a greater number of shares, (iii) combine its
outstanding capital stock into a smaller number of shares or (iv) issue any
shares of its capital stock by reclassification thereof (including any such
reclassification in connection with a consolidation or merger in which it is the
continuing corporation), then in each such case the total number of shares of
Common Stock that may be issued under this Agreement (and the Exercise Price)
shall be proportionately adjusted by WorldCorp. Such adjustment shall be made
successively whenever such events shall occur. The adjustment shall become
effective immediately after the record date in the case of a dividend or
distribution and immediately after the effective date in the case of a
subdivision, combination or reclassification.
(b) If WorldCorp merges or consolidates with one or more
companies, then from and after the effective date of such merger or
consolidation, upon exercise of the Option theretofore granted, (i) the Grantee
shall be entitled to purchase under the Option, in lieu of the number of shares
of Common Stock as to which the Option shall then be exercisable but on the same
terms and conditions of exercise set forth in the Option, the number of shares
of Common Stock and/or other securities or property (including cash) to which
the Grantee would have been entitled pursuant to the terms of the agreement of
merger or consolidation if, immediately prior to such merger or consolidation,
the Grantee had been the holder of record of the total number of shares of
Common Stock receivable upon exercise of the Option (whether or not then
exercisable) and (ii) the Exercise Price shall be proportionately adjusted by
WorldCorp (to reflect any change in the number of securities into which the
Option is converted), without a change to the aggregate Exercise Price payable
for all of the Option Shares.
(c) If WorldCorp shall issue additional shares of its capital
stock for a consideration per share (the "Offering Price") that is less than the
Current Market Price (as defined below) on the date WorldCorp fixes the Offering
Price of such additional shares of capital stock, the Exercise Price shall be
adjusted immediately thereafter so that it shall equal the price determined by
multiplying such Exercise Price by a fraction, the numerator of which shall be
the sum of the number of shares of capital stock outstanding immediately prior
to the issuance of such additional shares of capital stock and the number of
shares of capital stock that the aggregate consideration received (determined as
provided in Section 5(i) below) for the issuance of such additional shares of
capital stock would purchase at such Current Market Price per share of Common
Stock, and the denominator of which shall be the number of shares of capital
stock
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<PAGE>
outstanding immediately after the issuance of such additional shares. Such
adjustment shall be made successively whenever such an issuance is made.
(d) In case WorldCorp shall issue any securities convertible
into, or exchangeable for, shares of capital stock (excluding securities issued
in transactions described in Section 5(i) below) for a consideration per share
(the "Conversion Price") initially deliverable upon conversion or exchange of
such securities (determined as provided in Section 5(i) below) less than the
Current Market Price in effect immediately prior to the issuance of such
securities, the Exercise Price in effect immediately prior to the date of such
issuance shall be adjusted immediately thereafter so that it shall equal the
price determined by multiplying such Exercise Price by a fraction, the numerator
of which shall be the sum of the number of shares of capital stock outstanding
immediately prior to the issuance of such securities and the number of shares of
capital stock that the aggregate consideration received (determined as provided
in Section 5(i) below) for such securities would purchase at such Current Market
Price per share of capital stock, and the denominator of which shall be the sum
of the number of shares of capital stock outstanding immediately prior to such
issuance and the maximum number of shares of capital stock deliverable upon
conversion of, or in exchange for, such securities at the initial conversion or
exchange price or rate. Such adjustment shall be made successively whenever such
an issuance is made. Notwithstanding anything herein to the contrary, no
adjustment pursuant to this Section 5(d) shall take place as a result of the
issuance of securities convertible into, or exchangeable for, shares of Common
Stock pursuant to the grant of stock options (and the shares of capital stock
issuable upon exercise of such options) currently authorized by currently
existing stock option plans and in accordance therewith.
(e) The "Current Market Price" on any date shall be deemed to
be the closing price of such capital stock on the day immediately preceding the
date in question. The closing price for each day shall be the last reported
sales price regular way or, in case no such reported sale takes place on such
day, the closing bid price regular way, in either case on the principal national
securities exchange (including, for purposes hereof, the Nasdaq National Market
System) on which such capital stock is listed or admitted to trading or, if such
capital stock is not listed or admitted to trading on any national securities
exchange, the highest reported bid price for such capital stock as furnished by
the National Association of Securities Dealers, Inc. through the Nasdaq SmallCap
Market or a similar organization if the Nasdaq SmallCap Market is no longer
reporting such information. If, on any such date, such capital stock is not
listed or admitted to trading on any national securities exchange and is not
quoted on the Nasdaq SmallCap Market or any similar organization, the fair value
of such capital stock on such date, as determined by an independent investment
bank appointed by the Grantee (which valuation shall be paid for by WorldCorp),
the determination of which shall be a conclusive absent manifest error.
(f) All calculations under this Section 5 shall be made to the
nearest cent or to the nearest one-hundredth of a share, as the case may be. The
number of shares of capital stock outstanding shall be deemed to include the
aggregate maximum number of shares issuable upon
-4-
<PAGE>
the exercise of options, rights or warrants and upon the conversion or exchange
of convertible or exchangeable securities.
(g) Whenever there shall be an adjustment as provided in this
Section 5, then WorldCorp shall within 10 days thereafter cause written notice
thereof to be sent by registered mail, postage prepaid, to the Grantee, which
notice shall be accompanied by an officer's certificate setting forth the number
of Option Shares issuable and the Exercise Price thereof after such adjustment
and setting forth a brief statement of the facts requiring such adjustment and
the computation thereof.
(h) WorldCorp shall not be required to issue fractions of
shares of capital stock of WorldCorp upon the exercise of this Option. If any
fraction of a shares of capital stock would be issuable on the exercise of this
Option (or specified portions thereof), WorldCorp shall purchase such fraction
for an amount in cash equal to the same fraction of the Current Market Price of
such capital stock on the date of exercise of this Option.
(i) For purposes of any computation respecting consideration
received pursuant to Sections 5(c) and (d) above, the following shall apply:
(i) in the case of the issuance of shares of capital
stock for cash, the consideration shall be the amount of such cash,
provided that in no case shall any deduction be made for any
commissions, discounts, or other expenses incurred by WorldCorp for any
underwriting of the issue or otherwise in connection therewith;
(ii) in the case of the issuance of shares of capital
stock for a consideration in whole or in part other than cash, the
consideration other than cash shall be deemed to be the fair market
value thereof as determined by an independent investment bank appointed
by the Grantee and WorldCorp (which valuation shall be paid for by
WorldCorp), the determination of which shall be a conclusive absent
manifest error; and
(iii) in the case of the issuance of securities
convertible into, or exchangeable for, shares of capital stock, the
aggregate consideration received therefor shall be deemed to be the
consideration received by WorldCorp for the issuance of such securities
plus the additional minimum consideration, if any, to be received by
Acquisition Sub upon the conversion or exchange thereof (the
consideration in each case to be determined in the same manner as
provided in clauses (i) and (ii) of this Section 5(i)).
5.2 Certain Conversions of Debentures. Upon any conversion of
WorldCorp's Convertible Subordinated Debentures due 2004 prior to the exercise
of all or part of this Option, the number of Option Shares shall increase to a
number equal to 20% of the number of shares of Common Stock issued and
outstanding after giving effect to (i) any conversion of such debentures prior
to such exercise of this Option and (ii) such exercise of this Option.
-5-
<PAGE>
6. Report or Certificate as to Adjustments. In each case of
any adjustment or readjustment in the Option Shares issuable upon the exercise
of the Option, WorldCorp at its expense will promptly deliver a certificate of
its Chief Financial Officer showing in reasonable detail the computation of such
adjustment or readjustment in accordance with the terms of this Agreement.
7. Notices of Corporate Action. In the event of:
(a) any taking by WorldCorp of a record of the holders of any
class of securities for the purpose of determining the holders thereof who are
entitled to receive any dividend or other distribution, or any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right, or
(b) any capital reorganization of WorldCorp, any
reclassification or recapitalization of the capital stock of WorldCorp, any
consolidation or merger involving WorldCorp and any other Person or any transfer
of all or substantially all the assets of WorldCorp to any other Person, or
(c) any voluntary or involuntary dissolution, liquidation
or winding-up of WorldCorp, or
(d) any plan or proposal by WorldCorp to register any class of
its shares of Common Stock with the Commission,
then WorldCorp shall deliver to the Grantee a notice specifying (i) the date or
expected date on which any such record is to be taken for the purpose of such
dividend, distribution or right, and the amount and character of such dividend,
distribution or right, or (ii) the date or expected date on which any such
reorganization, reclassification, recapitalization, consolidation, merger,
transfer, dissolution, liquidation or winding-up is to take place and the time,
if any such time is to be fixed, as of which the Grantee shall be entitled to
exchange the Option Shares for the securities or other property deliverable upon
such reorganization, reclassification, recapitalization, consolidation, merger,
transfer, dissolution, liquidation or winding-up. Such notice shall be furnished
at least 30 days prior to the date therein specified.
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<PAGE>
8. Registration Rights.
8.1 Required Registration.
(a) At any time after the Date of Grant, the holders of a
majority of the Registrable Stock (as hereinafter defined) may request WorldCorp
to register under the Securities Act all or any portion of the shares of
Registrable Stock held by such requesting holder or holders for sale in the
manner specified in such notice. For purposes of this Agreement, "Registrable
Stock" shall mean all of the Option Shares (including, without limitation, any
Option shares issuable (but not yet issued) upon exercise of this Option,
excluding Option Shares that (i) have been registered under the Securities Act
pursuant to an effective registration statement filed thereunder and disposed of
in accordance with the registration statement covering them, (ii) have been
publicly sold pursuant to Rule 144 under the Securities Act, or (iii) are
otherwise publicly tradeable, without registration, pursuant to any other
applicable exemption from registration under the Securities Act. If, at the time
any request for registration of Registrable Stock, WorldCorp is engaged in, or
has fixed plans to engage in within 30 days of the time of such request, a
registered public offering, or is engaged in any other activity that in the good
faith determination of the Board of Directors of WorldCorp would be materially
and adversely affected by such registration, then WorldCorp may, at its option,
delay such registration of Registrable Stock for a period not to exceed 60 days
from the time of such request.
(b) Following receipt of any notice under this Section 8.1,
WorldCorp shall immediately notify all holders of Registrable Stock from whom
notice has not been received, and such holders shall then be entitled within 10
days thereafter to request WorldCorp to include in the requested registration
all or any portion of their shares of Registrable Stock. WorldCorp shall use its
reasonable best efforts to register under the Securities Act, for public sale in
accordance with the method of disposition specified in the notice from
requesting holders described in paragraph (a) above, the number of shares of
Registrable Stock specified in such notice (and in all notices received by
WorldCorp from other holders within 30 days after the giving of such notice by
WorldCorp). If such method of disposition shall be an underwritten public
offering, the holders of a majority of the shares of Registrable Stock to be
sold in such offering may designate the managing underwriter of such offering,
subject to the approval of WorldCorp, which approval shall not be unreasonably
withheld or delayed. WorldCorp shall be obligated to register Registrable Stock
pursuant to this Section 8.1 and Section 8.3 on up to three occasions in the
aggregate; provided, however, that such obligation shall be deemed satisfied
only when a registration statement covering all shares of Registrable Stock
specified in notices received as aforesaid, for sale in accordance with the
method of disposition specified by the requesting holders, shall have become
effective and, if such method of disposition is a firm commitment underwritten
public offering, all such shares shall have been sold pursuant thereto.
(c) WorldCorp shall be entitled to include in any registration
statement referred to in this Section 8.1, for sale in accordance with the
method of disposition specified by the requesting holders, shares of Common
Stock to be sold by WorldCorp for its own account, except as and to the extent
that, in the opinion of the managing underwriter (if such method of disposition
shall be an underwritten public offering), such inclusion would adversely affect
the marketing of the Registrable Stock to be sold. Except for registration
statements on Form S-4, S- 8 or any successor thereto, WorldCorp will not file
with the Commission any other registration statement with respect to its
securities, whether for its own account or that of other stockholders, from the
date of receipt of a notice from requesting holders pursuant to this Section 8.1
until the completion of the period of distribution of the registration
contemplated thereby.
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8.2 Incidental Registration. If WorldCorp at any time (other
than pursuant to Section 8.1 or Section 8.3) proposes to register any of its
securities under the Securities Act for sale to the public, whether for its own
account or for the account of other security holders or both (except with
respect to registration statements on Forms S-4, S-8 or another form not
available for registering the Registrable Stock for sale to the public), each
such time it will give written notice to all holders of outstanding Registrable
Stock of its intention so to do. Upon the written request of any such holder,
received by WorldCorp within 30 days after the giving of any such notice by
WorldCorp, to register any of its Registrable Stock, WorldCorp will cause the
Registrable Stock as to which registration shall have been so requested to be
included in the securities to be covered by the registration statement proposed
to be filed by WorldCorp, all to the extent requisite to permit the sale or
other disposition by the holder (in accordance with its written request) of such
Registrable Stock so registered. In the event that any registration pursuant to
this Section 8.2 shall be, in whole or in part, an underwritten public offering
of Common Stock by WorldCorp, the number of shares of Registrable Stock to be
included in such an underwriting shall be reduced (pro rata among the requesting
holders and any other holders of Common Stock who are registering such Common
Stock pursuant to registration rights granted prior to the date hereof, based
upon the number of shares each requesting holder and each such other holder has
proposed to include in such registration) if and to the extent that the managing
underwriter shall be of the opinion that such inclusion would adversely affect
the marketing of the securities to be sold by WorldCorp therein; provided,
however, that WorldCorp shall cause all of the Registrable Stock of any
requesting holder to be registered before causing any Common Stock not subject
to registration rights granted prior to the date hereof to be registered.
Notwithstanding the foregoing provisions, WorldCorp may withdraw any
registration statement referred to in this Section 8.2 without thereby incurring
any liability to the holders of Registrable Stock. WorldCorp shall be obligated
to register Registerable Stock under this Section 8.2 an unlimited number of
times; provided, however, that such obligation shall be deemed satisfied only
when a registration statement covering all shares of Registrable Stock specified
in written requests received as aforesaid, for sale in accordance with the
method of disposition specified by the requesting holders, shall have become
effective and, if such method of disposition is a firm commitment underwritten
public offering, all such shares shall have been sold pursuant thereto.
8.3 Registration on Form S-3. If, at any time, (a) a holder or
holders of a majority of the Registrable Stock, without any of the other holders
of Registrable Stock, request that WorldCorp file a registration statement on
Form S-3 or any successor thereto for a public offering of all or any portion of
the shares of Registrable Stock held by such requesting holder or holders, and
(b) WorldCorp is a registrant entitled to use Form S-3 or any successor thereto
to register such shares, then WorldCorp shall use its best efforts to register
under the Securities Act on Form S-3 or any successor thereto, for public sale
in accordance with the method of disposition specified in such notice, the
number of shares of Registrable Stock specified in such notice. Whenever
WorldCorp is required by this Section 8.3 to use its reasonable best efforts to
effect the registration of Registrable Stock, each of the procedures and
requirements of Section 8.1 (including but not limited to the requirement that
WorldCorp notify all holders of
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Registrable Stock from whom notice has not been received and provide them with
the opportunity to participate in the offering) shall apply to such
registration.
8.4 Registration Procedures. If and whenever WorldCorp is
required by the provisions of Sections 8.1, 8.2 or 8.3 to use its reasonable
best efforts to effect the registration of any shares of Registrable Stock under
the Securities Act, WorldCorp will, as expeditiously as possible:
(a) prepare and file with the Commission a registration
statement (which, in the case of an underwritten public offering pursuant to
Section 8.1, shall be on Form S-1 or other form of general applicability
satisfactory to the managing underwriter selected as therein provided) with
respect to such securities and use its best efforts to cause such registration
statement to become and remain effective for the longer of (i) a period of nine
(9) months, or (ii) the period of the distribution contemplated thereby
(determined as hereinafter provided);
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective for
the period specified in paragraph (a) above and comply with the provisions of
the Securities Act with respect to the disposition of all Registrable Stock
covered by such registration statement in accordance with the sellers' intended
method of disposition set forth in such registration statement for such period;
(c) furnish to each seller of Registrable Stock and to each
underwriter such number of copies of the registration statement and each such
amendment and supplement thereto (in each case including all exhibits) and the
prospectus included therein (including each preliminary prospectus) as such
persons reasonably may request in order to facilitate the public sale or other
disposition of the Registrable Stock covered by such registration statement;
(d) use its reasonable best efforts to register or qualify the
Registrable Stock covered by such registration statement under the securities or
"blue sky" laws of such jurisdictions as the sellers of Registrable Stock or, in
the case of an underwritten public offering, the managing underwriter reasonably
shall request; provided, however, that WorldCorp shall not for any such purpose
be required to (i) qualify generally to transact business as a foreign
corporation in any jurisdiction where it is not so qualified, (ii) subject
itself to taxation other than "blue sky" fees or (iii) consent to general
service of process in any such jurisdiction;
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(e) use its best efforts to list the Registrable Stock covered
by such registration statement with any securities exchange on which the Option
Shares are then listed;
(f) immediately notify each seller of Registrable Stock and
each underwriter under such registration statement, at any time when a
prospectus relating thereto is required to be delivered under the Securities
Act, of the happening of any event of which WorldCorp has knowledge as a result
of which the prospectus contained in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing, and promptly
prepare and furnish to such seller a reasonable number of copies of a prospectus
supplemented or amended so that, as thereafter delivered to the purchasers of
such Registrable Stock, such prospectus shall not include an untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the
circumstances then existing;
(g) if the offering is underwritten and at the request of any
seller of Registrable Stock, use its best efforts to furnish on the date that
Registrable Stock is delivered to the underwriters for sale pursuant to such
registration: (i) an opinion dated such date of counsel representing WorldCorp
for the purposes of such registration, addressed to the underwriters and to such
seller, to such effects as reasonably may be requested by counsel for the
underwriters or by such seller or its counsel, and (ii) a letter dated such date
from the independent public accountants retained by WorldCorp, addressed to the
underwriters and to such seller, stating that they are independent public
accountants within the meaning of the Securities Act and that, in the opinion of
such accountants, the financial statements of WorldCorp included in the
registration statement or the prospectus, or any amendment or supplement
thereof, comply as to form in all material respects with the applicable
accounting requirements of the Securities Act, and such letter shall
additionally cover such other financial matters (including information as to the
period ending no more than five (5) business days prior to the date of such
letter) with respect to such registration as such underwriters reasonably may
request;
(h) make available for inspection by each seller of
Registrable Stock, any underwriter participating in any distribution pursuant to
such registration statement, and any attorney, accountant or other agent
retained by such seller or underwriter, reasonable access to all financial and
other records, pertinent corporate documents and properties of WorldCorp, as
such parties may reasonably request, and cause WorldCorp's officers, directors
and employees to supply all information reasonably requested by any such seller,
underwriter, attorney, accountant or agent in connection with such registration
statement;
(i) cooperate with the selling holders of Registrable Stock
and the managing underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Registrable Stock to be sold, such
certificates to be in such denominations and registered in such names as such
holders or the managing underwriters may request at least two (2) business days
prior to any sale of Registrable Stock; and
(j) otherwise cooperate in such manner as may be reasonably
requested by sellers of the Registrable Stock, in the marketing of all
Registrable Stock to be sold, including, without limitation, participating in
any customary "road shows" and related presentations to prospective purchasers
in connection therewith, and use all reasonable efforts to maximize the price at
which the Registrable Stock is to be sold.
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For purposes of Section 8.4(a) and 8.4(b) and of Section
8.1(c), the period of distribution of Registrable Stock in an underwritten
public offering shall be deemed to extend until each underwriter has completed
the distribution of all securities purchased by it, and the period of
distribution of Registrable Stock in any other registration shall be deemed to
extend until the earlier of the sale of all Registrable Stock covered thereby
and 90 days after the effective date thereof.
In connection with each registration hereunder, the sellers of
Registrable Stock will furnish to WorldCorp in writing such information
requested by WorldCorp with respect to themselves and the proposed distribution
by them as reasonably shall be necessary in order to assure compliance with
federal and applicable state securities laws. The refusal to provide any such
information pursuant to a written request therefor shall be grounds for removal
of the Registrable Stock of such seller from such offering.
In connection with each registration pursuant to Sections 8.1,
8.2 or 8.3 covering an underwritten public offering, WorldCorp and each seller
agree to enter into a written agreement with the managing underwriter selected
in the manner herein provided in such form and containing such provisions as are
customary in the securities business for such an arrangement between such
underwriter and companies of WorldCorp's size and investment stature.
8.5 Expenses. All expenses incurred by WorldCorp in complying
with Sections 8.1, 8.2 and 8.3, including, without limitation, all registration
and filing fees, printing expenses, fees and disbursements of counsel and
independent public accountants for WorldCorp, fees and expenses (including
counsel fees) incurred in connection with complying with state securities or
"blue sky" laws, fees of the securities exchange upon which the Common Stock is
then listed, transfer taxes, fees of transfer agents and registrars, costs of
any insurance which might be obtained, and the reasonable fees and disbursements
of one counsel to the sellers of Registrable Stock, but excluding any Selling
Expenses (as defined below), are called "Registration Expenses". All
underwriting discounts and selling commissions applicable to the sale of
Registrable Stock are called "Selling Expenses".
WorldCorp shall pay all Registration Expenses in connection
with each registration statement under Sections 8.1, 8.2 or 8.3. All Selling
Expenses in connection with each registration statement under Sections 8.1, 8.2
or 8.3 shall be borne by the participating sellers in proportion to the number
of shares sold by each, or by such participating sellers, other than WorldCorp
(except to the extent WorldCorp shall be a seller), as they may agree.
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8.6 Indemnification and Contribution.
(a) In the event of a registration of any of the Registrable
Stock, under the Securities Act pursuant to Sections 8.1, 8.2 or 8.3, WorldCorp
will indemnify and hold harmless each seller of such Registrable Stock
thereunder, its officers and directors, each underwriter of such Registrable
Stock thereunder and each other person, if any, who controls such seller or
underwriter within the meaning of the Securities Act, against any losses,
claims, damages or liabilities, joint or several, to which such seller, officer,
director, underwriter or controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (i)
any untrue statement or alleged untrue statement of any material fact contained
in any registration statement under which such Registrable Stock was registered
under the Securities Act pursuant to Sections 8.1, 8.2 or 8.3, any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereof, (ii) any blue sky application or other document executed by WorldCorp
specifically for that purpose or based upon written information furnished by
WorldCorp filed in any state or other jurisdiction in order to qualify any or
all of the Registrable Stock under the securities laws thereof (any such
application, document or information herein called a "Blue Sky Application"),
(iii) the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
(iv) any violation by WorldCorp or its agents of any rule or regulation
promulgated under the Securities Act applicable to WorldCorp or its agents and
relating to action or inaction required of WorldCorp in connection with such
registration, or (v) any failure to register or qualify the Registrable Stock in
any state where WorldCorp or its agents has affirmatively undertaken or agreed
in writing that WorldCorp (the undertaking of any underwriter chosen by
WorldCorp being attributed to WorldCorp) will undertake such registration or
qualification on the seller's behalf (provided that in such instance WorldCorp
shall not be so liable if it has undertaken its best efforts to so register or
qualify the Registrable Stock) and will reimburse each such seller, and such
officer and director, each such underwriter and each such controlling person for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that WorldCorp will not be liable in any such case if and to
the extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission so made in conformity with information furnished by any seller
of Registered Stock, any such underwriter or any such controlling person in
writing specifically for use in such registration statement or prospectus.
(b) In the event of a registration of any of the Registrable
Stock under the Securities Act pursuant to Sections 8.1, 8.2 or 8.3, each seller
of such Registrable Stock thereunder, severally and not jointly, will indemnify
and hold harmless WorldCorp, each person, if any, who controls WorldCorp within
the meaning of the Securities Act, each officer of WorldCorp who signs the
registration statement, each director of WorldCorp, each other seller of
Registrable Stock, each underwriter and each person who controls any underwriter
within the meaning of the Securities Act, against all losses, claims, damages or
liabilities, joint or several, to which WorldCorp or such officer, director,
other seller, underwriter or controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the registration statement under which such Registrable Stock was registered
under the Securities Act pursuant to Sections 8.1, 8.2 or 8.3, any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereof, or any Blue Sky Application or arise out of or are based upon the
omission or
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alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and will reimburse
WorldCorp and each such officer, director, other seller, underwriter and
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that such seller will be liable
hereunder in any such case if and only to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in reliance upon
and in conformity with information pertaining to such seller, as such, furnished
in writing to WorldCorp by such seller specifically for use in such registration
statement or prospectus; and provided, further, however, that the liability of
each seller hereunder shall be limited to the proportion of any such loss,
claim, damage, liability or expense which is equal to the proportion that the
public offering price of the shares sold by such seller under such registration
statement bears to the total public offering price of all securities sold
thereunder, but not in any event to exceed the proceeds received by such seller
from the sale of Registrable Stock covered by such registration statement. Not
in limitation of the foregoing, it is understood and agreed that the
indemnification obligations of any seller hereunder pursuant to any underwriting
agreement entered into in connection herewith shall be limited to the
obligations contained in this paragraph (b).
(c) Promptly after receipt by an indemnified party hereunder
of notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party hereunder,
notify the indemnifying party in writing thereof, but the omission so to notify
the indemnifying party shall not relieve it from any liability which it may have
to such indemnified party other than under this Section 8.6 and shall only
relieve it from any liability which it may have to such indemnified party under
this Section 8.6 if and to the extent the indemnifying party is prejudiced by
such omission. In case any such action shall be brought against any indemnified
party and it shall notify the indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to participate in and, to the extent it
shall wish, to assume and undertake the defense thereof with counsel
satisfactory to such indemnified party, and, after notice from the indemnifying
party to such indemnified party of its election so to assume and undertake the
defense thereof, the indemnifying party shall not be liable to such indemnified
party under this Section for any legal expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation and of liaison with counsel so selected; provided,
however, that, if the defendants in any such action include both the indemnified
party and the indemnifying party and the indemnified party shall have reasonably
concluded that there may be reasonable defenses available to it which are
different from or additional to those available to the indemnifying party or if
the interests of the indemnified party reasonably may be deemed to conflict with
the interests of the indemnifying party, the indemnified party shall have the
right to select a separate counsel and to assume such legal defenses and
otherwise to participate in the defense of such action, with the expenses and
fees of such separate counsel and other expenses related to such participation
to be reimbursed by the indemnifying party as incurred.
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(d) In order to provide for just and equitable contribution to
joint liability under the Securities Act in any case in which either (i) any
holder of Registrable Stock exercising rights under this Agreement, or any
controlling person of any such holder, makes a claim for indemnification
pursuant to this Section 8.6 but it is judicially determined (by the entry of a
final judgment or decree by a court of competent jurisdiction and the expiration
of time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
this Section 8.6 provides for indemnification in such case, or (ii) contribution
under the Securities Act may be required on the part of any such selling holder
or any such controlling person in circumstances for which indemnification is
provided under this Section 8.6; then, and in each such case, WorldCorp and such
holder will contribute to the aggregate losses, claims, damages or liabilities
to which they may be subject (after contribution from others) in such
proportions so that such holder is responsible for the portion represented by
the percentage that the public offering price of its Registrable Stock offered
by the registration statement bears to the public offering price of all
securities offered by such registration statement, and WorldCorp is responsible
for the remaining portion; provided, however, that, in any such case, (A) no
such holder will be required to contribute any amount in excess of the public
offering price of all such Registrable Stock offered by it pursuant to such
registration statement; and (B) no person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
will be entitled to contribution from any person or entity who was not guilty of
such fraudulent misrepresentation.
(e) The indemnities provided in this Section 8.6 shall survive
the transfer of any Registrable Stock by such holder.
9. Requirements of Law. WorldCorp shall not be required to
sell or issue any Option Shares upon the exercise of the Option if the issuance
of such Option Shares shall constitute a violation by the Grantee or WorldCorp
of any provision of any law, statute, or regulation of any governmental
authority whether it be Federal or State. Unless a registration statement is in
effect under the Securities Act with respect to the Option Shares covered by
this Agreement, WorldCorp shall not be required to issue Option Shares upon
exercise of the Option unless (i) WorldCorp has received evidence reasonably
satisfactory to it to the effect that the Grantee is acquiring such Option
Shares for investment and not with a view to the distribution thereof; or (ii)
an opinion of Parker Chapin Flattau & Klimpl, LLP or such other counsel
reasonably acceptable to WorldCorp has been received by WorldCorp, in a form and
substance reasonably acceptable to WorldCorp, to the effect that a registration
statement is not required for the issuance of the Option Shares. In the event
the Option Shares issuable upon exercise of the Option are not registered under
the Securities Act, WorldCorp may imprint on any evidence of ownership of the
Option Shares the following legend or any other legend that counsel for
WorldCorp considers necessary or advisable to comply with the Securities Act:
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"THE SECURITIES EVIDENCED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD
OR TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT, OR PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE ACT."
Except as otherwise provided in Section 8 hereof: (i) WorldCorp may, but in no
event shall be obligated to, register any securities issuable upon the exercise
of the Option pursuant to the Securities Act or any state securities laws and,
in the event any shares are so registered, WorldCorp may remove any legend on
certificates representing such shares; and (ii) WorldCorp shall not be obligated
to take any affirmative action in order to cause the exercise of the Option or
the issuance of Option Shares pursuant thereto to comply with any law or
regulation of governmental authority.
10. Representations and Warranties of WorldCorp. WorldCorp
represents and warrants as follows:
(a) WorldCorp is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware;
(b) upon the delivery and payment for the Option Shares, as
provided in this Agreement, the Option Shares will be duly authorized, validly
issued and non-assessable, and none of the Option Shares will be issued in
violation of the preemptive rights of any member of WorldCorp, and WorldCorp has
reserved sufficient Option Shares for issuance hereunder; and
(c) this Agreement has been duly authorized, executed and
delivered by WorldCorp.
The foregoing representations and warranties shall survive and
remain in full force and effect after the date hereof and shall not affect the
validity or enforceability of any representations, warranties and agreements
made by WorldCorp herein.
11. Reservation of Stock, etc. WorldCorp will at all times
reserve and keep available, solely for issuance and delivery upon the exercise
of the Options, the number of Option Shares from time to time issuable upon the
exercise of the Option. All such securities shall be duly authorized and, when
issued upon such exercise or purchase, as the case may be, shall be validly
issued and, in the case of shares, fully paid and nonassessable with no
liability on the part of the holders thereof.
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12. Rights as Stockholder. The Grantee shall not have any
rights of a stockholder of WorldCorp with respect to Option Shares subject to
this Agreement, until, after proper exercise of the Option, such Option Shares
have been recorded on WorldCorp's official records as having been issued or
transferred to the party exercising the Option. No adjustment shall be made for
dividends or other rights for which the record date is prior to the date such
shares are recorded as issued or transferred (to the party exercising the
Option) in WorldCorp's official records, except as provided in Section 5.
13. Certain Definitions. As used herein, unless the context
otherwise requires the following terms have the following respective meanings:
(i) "Commission" shall mean the Securities and Exchange Commission or any other
Federal agency at the time administering the Securities Act; (ii) "Exchange Act"
shall mean the Securities Exchange Act of 1934, or any similar Federal statute,
and the rules and regulations of the Commission thereunder, all as the same
shall be in effect at the time; (iii) "Person" shall mean a corporation, an
association, a partnership, an organization or business, an individual, a
government or political subdivision thereof or a governmental agency; (iv)
"Securities Act" shall mean the Securities Act of 1933, or any similar Federal
statute on the rules and regulations of the Commission thereunder, all as the
same shall be in effect at the time; and (v) the term "affiliate" shall have the
meaning set forth in Rule 12b-2 of the General Rules and Regulations promulgated
under the Securities Exchange Act of 1934, as amended.
14. Miscellaneous.
(a) Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware without regard
to principles of conflicts or choice of law (or any other law that would make
any substantive laws of any state other than the State of Delaware applicable
hereto).
(b) Waiver of Jury Trial and Setoff; Consent to Jurisdiction;
Etc.
(i) In any litigation in any court with respect to,
in connection with, or arising out of this Agreement or any instrument
or document delivered pursuant to this Agreement, or the validity,
protection, interpretation, collection or enforcement hereof or
thereof, or any other claim or dispute howsoever arising, between
WorldCorp and the Grantee, WorldCorp, to the fullest extent it may
legally do so, (i) waives the right to interpose any setoff,
recoupment, counterclaim or cross-claim in connection with any such
litigation, irrespective of the nature of such setoff, recoupment,
counterclaim or cross-claim, unless such setoff, recoupment,
counterclaim or cross-claim could not, by reason of any applicable
federal or state procedural laws, be interposed, pleaded or alleged in
any other action and (ii) WAIVES TRIAL BY JURY IN CONNECTION WITH ANY
SUCH LITIGATION AND ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY
SUCH LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL
DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES.
WORLDCORP AGREES THAT THIS SECTION 14(b) IS A SPECIFIC AND MATERIAL
ASPECT OF THIS AGREEMENT AND ACKNOWLEDGE THAT THE GRANTEE WOULD NOT
ENTER THIS AGREEMENT OR THE TRANSACTIONS OF WHICH THIS
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AGREEMENT IS A PART IF THIS SECTION 14(b) WERE NOT PART OF THIS
AGREEMENT.
(ii) WorldCorp hereby irrevocably consents to the
exclusive jurisdiction of any State or Federal Court located within the
County of Palm Beach, State of Florida, in connection with any action
or proceeding arising out of or relating to this Agreement or any
document or instrument delivered pursuant to this Agreement or
otherwise. In any such litigation, WorldCorp waives, to the fullest
extent it may effectively do so, personal service of any summons,
complaint or other process and agrees that the service thereof may be
made by certified or registered mail directed to WorldCorp at its
address for notice determined in accordance with Section 14(e) hereof.
WorldCorp hereby waives, to the fullest extent it may effectively do
so, the defenses of forum non conveniens and improper venue.
(c) Expenses. WorldCorp agrees to pay or reimburse within 30
days of demand therefore by the Grantee any and all reasonable out-of-pocket
costs and expenses incurred by the Grantee, whether directly or indirectly, in
connection with the enforcement and adjudication of this Agreement, the Option
or rights created under any documents executed in connection herewith. The
Grantee shall endeavor to provide reasonable documentation in connection with
any demand for payment under this Section.
(d) Admissibility of the Agreement. WorldCorp agrees that any
copy of this Agreement signed by WorldCorp and transmitted by telecopier for
delivery to the Grantee shall be admissible in evidence as the original itself
in any judicial or administrative proceeding, whether or not the original is in
existence.
(e) Address for Notices. Any notice or other communication
under the provisions of this Agreement shall be given in writing and delivered
in person, by reputable overnight courier or delivery service, by facsimile
machine (receipt confirmed) or by registered or certified mail, return receipt
requested, directed to its addresses set forth below (or to any new address of
which either party hereto shall have informed the other by the giving of notice
in the manner provided herein):
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In the case of the Grantee , to it at:
Sun Capital Partners, Inc.
777 South Flagler Drive
West Tower, 8th Floor
West Palm Beach, Florida 33401
Attention: Messrs. Marc J. Leder and Rodger K. Krouse
Telecopier: (561) 835-1314
with a copy to:
Parker Chapin Flattau & Klimpl, LLP
1211 Avenue of the Americas
New York, New York 10036
Attention: Mark S. Hirsch, Esq.
Telecopier (212) 704-6288
In the case of WorldCorp, to it at:
13873 Park Center Road
Herndon, Virginia 20171
Attention: Mr. T. Coleman Andrews, III
Telecopier: (703) 834-9211
with a copy to:
Hunton & Williams
951 East Byrd Street
Richmond, Virginia 23219
Attention: David M. Carter, Esq.
Telecopier: (804) 788-8218
(f) Amendments and Modification. No provision hereof shall be
modified, altered, waived or limited except by written instrument expressly
referring to this Agreement and to such provision, and executed by the parties
hereto.
(g) Counterparts. This Agreement may be executed by the
parties hereto individually or in any combination, in one or more counterparts,
each of which shall be an original and all of which shall together constitute
one and the same agreement.
(h) Captions. The captions of the various sections and
paragraphs of this Agreement have been inserted only for the purposes of
convenience; such captions are not a part of this Agreement and shall not be
deemed in any manner to modify, explain, enlarge or restrict any of the
provisions of this Agreement.
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(i) Severability. In the event that any term or provision of
this Agreement shall be finally determined to be superseded, invalid, illegal or
otherwise unenforceable pursuant to applicable law by an authority having
jurisdiction and venue, that determination shall not impair or otherwise affect
the validity, legality or enforceability (i) by or before that authority of the
remaining terms and provisions of this Agreement, which shall be enforced as if
the unenforceable term or provision were deleted, or (ii) by or before any other
authority of any of the terms and provisions of this Agreement.
(j) Entire Agreement. This Agreement contains the entire
agreement of the parties and supersedes all other agreements and understandings,
oral or written, with respect to the matters contained herein.
(k) Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the respective heirs, representatives,
successors and assigns of the parties hereto, provided that this Agreement may
not be assigned by WorldCorp without the prior written consent of the other
party hereto and may be assigned by the Grantee to an affiliate of the Grantee
without the consent of WorldCorp.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement effective as of the day and year first above written.
WORLDCORP, INC.
By:
----------------------
Name:
Title:
SUN CAPITAL PARTNERS, INC.
By:
----------------------
Name:
Title:
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Exhibit H
WORLDCORP ACQUISITION CORP. OPTION AGREEMENT
OPTION AGREEMENT (this "Agreement"), dated April 20, 1998,
between SUN CAPITAL PARTNERS, INC., a Florida corporation (the "Grantee"), and
WORLDCORP ACQUISITION CORP., a Delaware corporation ("Acquisition Sub").
WHEREAS, Acquisition Sub will have issued and outstanding
1,000 shares of Common Stock, par value $.01 per share ("Common Stock"),
representing all of Acquisition Sub's issued and outstanding shares of capital
stock as of the Date of Grant (as hereinafter defined) after giving effect to
the contribution of all of the shares of capital stock of Paper Acquisition
Corp., a Delaware corporation, by the stockholders thereof to Acquisition Sub;
WHEREAS, concurrently herewith, the Grantee, Acquisition Sub
and WorldCorp, Inc., a Delaware corporation ("WorldCorp"), are entering into a
Financial Consulting Agreement, of even date herewith (the "Consulting
Agreement"), whereby the Grantee agrees to provide to Acquisition Sub and
WorldCorp certain financial consulting services in accordance with the terms and
provisions, and subject to the conditions, set forth therein; and
WHEREAS, as partial consideration for the Grantee's providing
of services under the Consulting Agreement, Acquisition Sub desires to grant to
the Grantee, and the Grantee desires to acquire from Acquisition Sub, an option
to purchase 143 shares of Common Stock, upon and subject to the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the agreements set forth
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
1. Grant of Option. Acquisition Sub hereby grants to the
Grantee an option (the "Option") to purchase an aggregate of 143 shares of
Common Stock (such shares, including any shares issued pursuant to Section 5
hereof, are referred to herein as the "Option Shares") at an exercise price of
$28,000 per share.
2. Term of Option. The Option is granted as of the date first
above written (sometimes hereinafter called the "Date of Grant"), and will
terminate and expire, to the extent not previously exercised in accordance with
the terms of this Agreement, at 5:00 p.m. (New York time) on the seventh
anniversary of the Date of Grant.
3. Option Exercisable in Whole or in Part. The Option shall
not be exercisable until April 21, 1999, at which time it shall become
exercisable as to one-fifth of the shares of Common Stock granted hereunder, as
to an additional one-fifth of the shares of Common Stock granted hereunder on
April 21, 2000 through April 21, 2003. Thereafter, the
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Option may be exercised by the Grantee at any time or from time to time prior to
the expiration of the Option as provided in Section 2 above. The Option may be
exercised as to all or part of the shares of Common Stock as to which it is then
exercisable. This Option shall vest in accordance with the foregoing schedule
regardless of whether the Grantee shall be continuing to provide services to
Paper or WorldCorp pursuant to the Consulting Agreement.
4. Exercise of Option.
(a) The Grantee may exercise the Option with respect to all or
any part of the number of Option Shares by giving Acquisition Sub written notice
of intent to exercise. The notice of exercise shall specify the number of Option
Shares as to which the Option is to be exercised and the date of exercise
thereof, which date shall be at least five business days after the giving of
such notice unless an earlier time shall have been mutually agreed upon.
(b) On the exercise date specified in the Grantee's notice,
Acquisition Sub shall cause to be delivered to the Grantee evidence of ownership
of the Option Shares then being purchased upon full payment for such Option
Shares as provided in Section 4(e) below and shall promptly record such Option
Shares on its official records as having been issued to the Grantee. Pursuant to
Section 8 hereof, Acquisition Sub may require before issuing such evidence of
ownership that, at the time of exercise, the Grantee deliver an investment
representation.
(c) In the event that the Grantee exercises the Option for a
number of Option Shares less than the total number of Option Shares that the
Grantee has a right to purchase under this Agreement, then Acquisition Sub shall
issue to the Grantee an Option identical in form to this Option but for a number
of Option Shares that shall be equivalent to the total number of Option Shares
covered by this Agreement less the number of Option Shares so purchased.
(d) If the Grantee fails to pay for any of the Option Shares
specified in any notice of exercise or fails to accept delivery thereof, such
Option Shares shall not be issued by Acquisition Sub and shall remain subject to
subsequent exercises by the Grantee pursuant to the terms hereof. The date
specified in the Grantee's notice as the date of exercise shall be deemed the
date of exercise of the Option, provided that payment (in accordance with
Section 4(e) below) for the Option Shares to be purchased upon such exercise
shall have been received by such date.
(e) Full payment by the Grantee of the Exercise Price for the
number of Option Shares purchased shall be made on or before the exercise date
specified in the notice of exercise, by delivery of, at the option of the
Grantee, cash or a full-recourse promissory note (the "Note") in an amount equal
to the Exercise Price for such Option Shares. The Note shall have a maturity
date (the "Maturity Date") of the seven-year anniversary of the execution and
delivery thereof. During the term of the Note, interest (which shall accrue at a
rate of 8% per annum) shall be payable in arrears, on the last day of March,
June, September and December of each year, or, if such date is not a business
day, on the next succeeding business day. Principal and any accrued interest
shall be paid on the Maturity Date.
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5. Adjustment; Recapitalization, etc.
(a) If Acquisition Sub shall (i) declare a dividend on its
outstanding capital stock in shares of its capital stock, (ii) subdivide its
outstanding capital stock into a greater number of shares, (iii) combine its
outstanding capital stock into a smaller number of shares or (iv) issue any
shares of its capital stock by reclassification thereof (including any such
reclassification in connection with a consolidation or merger in which it is the
continuing corporation), then in each such case the total number of shares of
Common Stock that may be issued under this Agreement (and the Exercise Price)
shall be proportionately adjusted by Acquisition Sub. Such adjustment shall be
made successively whenever such events shall occur. The adjustment shall become
effective immediately after the record date in the case of a dividend or
distribution and immediately after the effective date in the case of a
subdivision, combination or reclassification.
(b) If Acquisition Sub merges or consolidates with one or more
companies, then from and after the effective date of such merger or
consolidation, upon exercise of the Option theretofore granted, (i) the Grantee
shall be entitled to purchase under the Option, in lieu of the number of shares
of Common Stock as to which the Option shall then be exercisable but on the same
terms and conditions of exercise set forth in the Option, the number of shares
of Common Stock and/or other securities or property (including cash) to which
the Grantee would have been entitled pursuant to the terms of the agreement of
merger or consolidation if, immediately prior to such merger or consolidation,
the Grantee had been the holder of record of the total number of shares of
Common Stock receivable upon exercise of the Option (whether or not then
exercisable) and (ii) the Exercise Price shall be proportionately adjusted by
Acquisition Sub (to reflect any change in the number of securities into which
the Option is converted), without a change to the aggregate Exercise Price
payable for all of the Option Shares.
6. Report or Certificate as to Adjustments. In each case of
any adjustment or readjustment in the Option Shares issuable upon the exercise
of the Option, Acquisition Sub at its expense will promptly deliver a
certificate of its Chief Financial Officer showing in reasonable detail the
computation of such adjustment or readjustment in accordance with the terms of
this Agreement.
7. Notices of Corporate Action. In the event of:
(a) any taking by Acquisition Sub of a record of the holders
of any class of securities for the purpose of determining the holders thereof
who are entitled to receive any dividend or other distribution, or any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right, or
(b) any capital reorganization of Acquisition Sub, any
reclassification or recapitalization of the capital stock of Acquisition Sub,
any consolidation or merger involving
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Acquisition Sub and any other Person or any transfer of all or substantially all
the assets of Acquisition Sub to any other Person, or
(c) any voluntary or involuntary dissolution, liquidation
or winding-up of Acquisition Sub, or
(d) any plan or proposal by Acquisition Sub to register any
class of its shares of Common Stock with the Commission,
then, in each case, Acquisition Sub shall deliver to the Grantee a notice
specifying (i) the date or expected date on which any such record is to be taken
for the purpose of such dividend, distribution or right, and the amount and
character of such dividend, distribution or right, or (ii) the date or expected
date on which any such reorganization, reclassification, recapitalization,
consolidation, merger, transfer, dissolution, liquidation or winding-up is to
take place and the time, if any such time is to be fixed, as of which the
Grantee shall be entitled to exchange the Option Shares for the securities or
other property deliverable upon such reorganization, reclassification,
recapitalization, consolidation, merger, transfer, dissolution, liquidation or
winding-up. Such notice shall be furnished at least thirty days prior to the
date therein specified.
8. Requirements of Law. Acquisition Sub shall not be required
to sell or issue any Option Shares upon the exercise of the Option if the
issuance of such Option Shares shall constitute a violation by the Grantee or
Acquisition Sub of any provision of any law, statute, or regulation of any
governmental authority whether it be Federal or State. Unless a registration
statement is in effect under the Securities Act with respect to the Option
Shares covered by this Agreement, Acquisition Sub shall not be required to issue
Option Shares upon exercise of the Option unless (i) Acquisition Sub has
received evidence reasonably satisfactory to it to the effect that the Grantee
is acquiring such Option Shares for investment and not with a view to the
distribution thereof; or (ii) an opinion of Parker Chapin Flattau & Klimpl, LLP
or such other counsel reasonably acceptable to Acquisition Sub has been received
by Acquisition Sub, in a form and substance reasonably acceptable to Acquisition
Sub, to the effect that a registration statement is not required for the
issuance of the Option Shares. In the event the Option Shares issuable upon
exercise of the Option are not registered under the Securities Act, Acquisition
Sub may imprint on any evidence of ownership of the Option Shares the following
legend or any other comparable legend that counsel for Acquisition Sub considers
necessary or advisable to comply with the Securities Act:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR UNDER THE SECURITIES LAWS OF ANY STATE AND MAY NOT
BE SOLD OR TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT, OR PURSUANT
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TO AN EXEMPTION FROM REGISTRATION UNDER THE
ACT."
Acquisition Sub (i) may, but in no event shall be obligated to, register any
securities issuable upon the exercise of the Option pursuant to the Securities
Act or any state securities laws and, in the event any shares are so registered,
Acquisition Sub may remove any legend on certificates representing such shares;
and (ii) shall not be obligated to take any affirmative action in order to cause
the exercise of the Option or the issuance of Option Shares pursuant thereto to
comply with any law or regulation of governmental authority.
9. Representations and Warranties of Acquisition Sub.
Acquisition Sub represents and warrants as follows:
(a) Acquisition Sub is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware;
(b) upon the delivery and payment for the Option Shares, as
provided in this Agreement, the Option Shares will be duly authorized, validly
issued and non-assessable, and none of the Option Shares will be issued in
violation of the preemptive rights of any member of Acquisition Sub, and
Acquisition Sub has reserved sufficient Option Shares for issuance hereunder;
and
(c) this Agreement has been duly authorized, executed and
delivered by Acquisition Sub.
The foregoing representations, warranties and agreements shall
survive and remain in full force and effect after the date hereof and shall not
affect the validity or enforceability of any representations, warranties and
agreements made by Acquisition Sub herein.
10. Reservation of Stock, etc. Acquisition Sub will at all
times reserve and keep available, solely for issuance and delivery upon the
exercise of the Options, the number of Option Shares from time to time issuable
upon the exercise of the Option. All such securities shall be duly authorized
and, when issued upon such exercise or purchase, as the case may be, shall be
validly issued and, in the case of shares, fully paid and nonassessable with no
liability on the part of the holders thereof.
11. Rights as Stockholder. The Grantee shall not have any
rights of a stockholder of Acquisition Sub with respect to Option Shares subject
to this Agreement, until, after proper exercise of the Option, such Option
Shares have been recorded on Acquisition Sub's official records as having been
issued or transferred to the party exercising the Option. No adjustment shall be
made for dividends or other rights for which the record date is prior to the
date such shares are recorded as issued or transferred (to the party exercising
the Option) in Acquisition Sub's official records, except as provided in Section
5.
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12. Certain Definitions. As used herein, unless the context
otherwise requires the following terms have the following respective meanings:
(i) "Commission" shall mean the Securities and Exchange Commission or any other
Federal agency at the time administering the Securities Act; (ii) "Exchange Act"
shall mean the Securities Exchange Act of 1934, or any similar Federal statute,
and the rules and regulations of the Commission thereunder, all as the same
shall be in effect at the time; (iii) "Person" shall mean a corporation, an
association, a partnership, an organization or business, an individual, a
government or political subdivision thereof or a governmental agency; (iv)
"Securities Act" shall mean the Securities Act of 1933, or any similar Federal
statute on the rules and regulations of the Commission thereunder, all as the
same shall be in effect at the time; and (v) the term "affiliate" shall have the
meaning set forth in Rule 12b-2 of the General Rules and Regulations promulgated
under the Securities Exchange Act of 1934, as amended.
13. Miscellaneous.
(a) Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware without regard
to principles of conflicts or choice of law (or any other law that would make
any substantive laws of any state other than the State of Delaware applicable
hereto).
(b) Waiver of Jury Trial and Setoff; Consent to
Jurisdiction; Etc.
(i) In any litigation in any court with respect to,
in connection with, or arising out of this Agreement or any instrument
or document delivered pursuant to this Agreement, or the validity,
protection, interpretation, collection or enforcement hereof or
thereof, or any other claim or dispute howsoever arising, between
Acquisition Sub and the Grantee, Acquisition Sub, to the fullest extent
it may legally do so, (i) waives the right to interpose any setoff,
recoupment, counterclaim or cross-claim in connection with any such
litigation, irrespective of the nature of such setoff, recoupment,
counterclaim or cross-claim, unless such setoff, recoupment,
counterclaim or cross-claim could not, by reason of any applicable
federal or state procedural laws, be interposed, pleaded or alleged in
any other action and (ii) WAIVES TRIAL BY JURY IN CONNECTION WITH ANY
SUCH LITIGATION AND ANY RIGHT THEY MAY HAVE TO CLAIM OR RECOVER IN ANY
SUCH LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL
DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES.
ACQUISITION SUB AGREES THAT THIS SECTION 13(b) IS A SPECIFIC AND
MATERIAL ASPECT OF THIS AGREEMENT AND ACKNOWLEDGE THAT THE GRANTEE
WOULD NOT ENTER THIS AGREEMENT OR THE TRANSACTIONS OF WHICH THIS
AGREEMENT IS A PART IF THIS SECTION 13(b) WERE NOT PART OF THIS
AGREEMENT.
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(ii) Acquisition Sub hereby irrevocably consents to
the exclusive jurisdiction of any State or Federal Court located within
the County of Palm Beach, State of Florida, in connection with any
action or proceeding arising out of or relating to this Agreement or
any document or instrument delivered pursuant to this Agreement or
otherwise. In any such litigation, Acquisition Sub waives, to the
fullest extent it may effectively do so, personal service of any
summons, complaint or other process and agrees that the service thereof
may be made by certified or registered mail directed to Acquisition Sub
at its address for notice determined in accordance with Section 13(e)
hereof. Acquisition Sub hereby waives, to the fullest extent it may
effectively do so, the defenses of forum non conveniens and improper
venue.
(c) Expenses. Acquisition Sub agrees to pay or reimburse,
promptly upon receipt of demand therefor by the Grantee, any and all
out-of-pocket costs and expenses incurred by the Grantee, whether directly or
indirectly, in connection with the enforcement and adjudication of this
Agreement, the Option or rights created under any documents executed in
connection herewith. The Grantee shall endeavor to provide reasonable
documentation in connection with any demand for payment under this Section.
(d) Admissibility of the Agreement. Acquisition Sub agrees
that any copy of this Agreement signed by Acquisition Sub and transmitted by
telecopier for delivery to the Grantee shall be admissible in evidence as the
original itself in any judicial or administrative proceeding, whether or not the
original is in existence.
(e) Address for Notices. Any notice or other communication
under the provisions of this Agreement shall be given in writing and delivered
in person, by reputable overnight courier or delivery service, by facsimile
machine (receipt confirmed) or by registered or certified mail, return receipt
requested, directed to its addresses set forth below (or to any new address of
which either party hereto shall have informed the other by the giving of notice
in the manner provided herein):
In the case of the Grantee, to it at:
Sun Capital Partners, Inc.
777 South Flagler Drive
West Tower, 8th Floor
West Palm Beach, Florida 33401
Attention: Messrs. Marc J. Leder and Rodger R. Krouse
Telecopier: (561) 835-1314
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<PAGE>
with a copy to:
Parker Chapin Flattau & Klimpl, LLP
1211 Avenue of the Americas
New York, New York 10036
Attention: Mark S. Hirsch, Esq.
Telecopier (212) 704-6288
In the case of Acquisition Sub, to it at:
WorldCorp Acquisition Corp.
13873 Park Center Road
Herndon, Virginia 20171
Attention: Mr. T. Coleman Andrews, III
Telecopier: (703) 834-9211
with a copy to:
Hunton & Williams
951 East Byrd Street
Richmond, Virginia 23219
Attention: David M. Carter, Esq.
Telecopier: (804) 788-8218
(f) Amendments and Modification. No provision hereof shall be
modified, altered, waived or limited except by written instrument expressly
referring to this Agreement and to such provision, and executed by the parties
hereto.
(g) Counterparts. This Agreement may be executed by the
parties hereto individually or in any combination, in one or more counterparts,
each of which shall be an original and all of which shall together constitute
one and the same agreement.
(h) Captions. The captions of the various sections and
paragraphs of this Agreement have been inserted only for the purposes of
convenience; such captions are not a part of this Agreement and shall not be
deemed in any manner to modify, explain, enlarge or restrict any of the
provisions of this Agreement.
(i) Severability. In the event that any term or provision of
this Agreement shall be finally determined to be superseded, invalid, illegal or
otherwise unenforceable pursuant to applicable law by an authority having
jurisdiction and venue, that determination shall not impair or otherwise affect
the validity, legality or enforceability (i) by or before that authority of the
remaining terms and provisions of this Agreement, which shall be enforced as if
the unenforceable
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term or provision were deleted, or (ii) by or before any other authority of any
of the terms and provisions of this Agreement.
(j) Entire Agreement. This Agreement contains the entire
agreement of the parties and supersedes all other agreements and understandings,
oral or written, with respect to the matters contained herein.
(k) Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the respective heirs, representatives,
successors and assigns of the parties hereto, provided that this Agreement may
not be assigned by Acquisition Sub without the prior written consent of the
other party hereto and may be assigned by the Grantee to an affiliate of the
Grantee without the consent of Acquisition Sub.
[THE REST OF THIS PAGE INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement effective as of the day and year first above written.
SUN CAPITAL PARTNERS, INC.
By:
----------------------------
Name:
Title:
WORLDCORP ACQUISITION CORP., INC.
By:
----------------------------
Name:
Title:
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Exhibit I
FINANCIAL CONSULTING AGREEMENT
April 20, 1998
WorldCorp, Inc.
13873 Park Center Road
Herndon, Virginia 20171
Attention: Mr. T. Coleman Andrews, III
WorldCorp Acquisition Corp.
13873 Park Center Road
Herndon, Virginia 20171
Attention: Mr. T. Coleman Andrews, III
Dear Sir or Madam:
This will confirm the arrangement, terms and conditions
pursuant to which Sun Capital Partners, Inc., a Florida corporation (the
"Advisor"), has been retained to serve as a financial consultant and advisor to
WorldCorp, Inc., a Delaware corporation ("WorldCorp"), and WorldCorp Acquisition
Corp., a Delaware corporation ("Acquisition Sub" and, together with WorldCorp,
the "Companies"), on a non-exclusive basis. This agreement shall have a term of
five years from the date hereof, with such term to be automatically extended for
successive one-year terms commencing on each anniversary of the fifth
anniversary of the date hereof (each, a "Renewal Date") unless terminated by any
party upon written notice to the other at least 90 days prior to any Renewal
Date; provided, however, that the Advisor may terminate this agreement upon 30
days written notice to the Companies.
The undersigned hereby agree to the following terms and
conditions:
1. Duties of the Advisor.
(a) The Advisor shall, at the request of either of the
Companies, upon reasonable notice, provide such financial consulting services
and advice as WorldCorp or Acquisition Sub, as the case may be, may from time to
time reasonably request. Without limiting the generality of the foregoing, the
Advisor may provide recommendations to the Companies concerning the following
financial and related matters: (i) rendering advice and assistance to the
Companies in connection with the preparation of their annual and interim reports
and press releases; (ii) advising the Companies with respect to financial public
relations; (iii) arranging meetings, at appropriate times, with securities
analysts of appropriate investment banking firms; (iv) rendering advice with
regard to (A) changes in the either of the Companies' capitalization, (B)
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changes in either of the Companies' corporate structure, (C) offerings of
securities in public or private transactions, (D) alternative uses of the
Companies' assets and (E) alternative structures and uses of debt and
off-balance sheet financing; and (v) furnishing advice to the Companies and
their Subsidiaries (as defined herein) in connection with (A) the acquisition of
and/or merger with other companies, (B) divestiture of any assets or any similar
transaction, (C) the sale of either of the Companies or their Subsidiaries (or a
significant percentage of any assets, subsidiaries or affiliates thereof) and
(D) bank financing for either of the Companies and any of their respective
Subsidiaries from financial institutions (including, without limitation, lines
of credit, letters of credit, loans or other financings).
(b) In addition to the foregoing, Acquisition Sub may request
that the Advisor furnish advice to Acquisition Sub with regard to (i) the
formation of corporate goals and their implementation; (ii) Acquisition Sub's
financial structure and its divisions and subsidiaries; and (iii) securing, when
necessary, additional financing through banks and/or insurance companies.
(c) The services described in this Section 1 shall be rendered
by the Advisor without any direct supervision by either of the Companies and at
such time and place and in such manner (whether by conference, telephone, letter
or otherwise) as the Advisor may determine.
2. Compensation.
(a) As compensation for the Advisor's services to WorldCorp
and its Subsidiaries hereunder, WorldCorp shall pay the Advisor an annual fee of
$500,000 in each of the first five years of this agreement, payable every
quarter, in advance, within 10 days of the first day of each quarter, with the
first such payment to be made on the date hereof. As additional compensation for
the Advisor's services hereunder, WorldCorp shall grant the Advisor an option to
purchase 3,540,311 shares of WorldCorp's Common Stock, par value $1 per share
("Common Stock"), a form of which is attached hereto as Exhibit A; provided,
however, that until approval by WorldCorp's stockholders, such option shall only
be exercisable with respect to 2,762,765 shares of Common Stock on the date
hereof.
(b) As compensation for the Advisor's services to Acquisition
Sub and its Subsidiaries hereunder, Acquisition Sub hereby unconditionally and
irrevocably guarantees the payment by FryeTech, Inc., a Delaware corporation
("FryeTech"), to Sun Paper Limited Partnership, a Delaware limited partnership
("Sun Paper"), of an annual fee of $500,000, in each of the first five years of
this agreement, pursuant to that certain Management Agreement (the "Management
Agreement") between FryeTech and the Advisor. Upon any non-payment by FryeTech
of any fees to the Advisor pursuant to the Management Agreement, Acquisition Sub
hereby covenants and agrees that, upon written request from Sun Paper,
Acquisition Sub shall
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promptly pay such fees to Sun Paper. As additional compensation for the
Advisor's services hereunder, Acquisition Sub shall grant the Advisor an option
to purchase 143 shares of capital stock of Acquisition Sub, a form of which is
attached hereto as Exhibit B.
(c) In connection with the financial consulting services
described in Section 1 above, the Advisor may, from time to time, bring
WorldCorp, Acquisition Sub and/or any of their respective Subsidiaries in
contact with persons, whether individuals or entities, that may be suitable
candidates to purchase substantially all of the stock or assets of WorldCorp,
Acquisition Sub or such Subsidiary, to have substantially all of its stock or
assets purchased by WorldCorp, Acquisition Sub or such Subsidiary, to merge with
WorldCorp, Acquisition Sub or such Subsidiary, or to enter into a joint venture
or other transaction with WorldCorp, Acquisition Sub or such Subsidiary (each,
an "M&A Transaction"). If, during the term hereof, WorldCorp, Acquisition Sub or
any of their Subsidiaries enters into an agreement with any such persons or
their affiliates, or with any persons introduced to WorldCorp, Acquisition Sub
or any of their Subsidiaries or their affiliates by any such persons or their
affiliates, pursuant to which, WorldCorp, Acquisition Sub or any of their
Subsidiaries enters into an M&A Transaction, or if WorldCorp, Acquisition Sub or
any of their Subsidiaries enters into an M&A Transaction with any of the
foregoing persons within one year following any termination hereof, WorldCorp or
Acquisition Sub, as the case may be, shall pay to the Advisor, in accordance
with the formula set forth below, compensation based on the aggregate value of
the consideration, whether in cash, securities, assumption of (or purchase
subject to) debt or liabilities (including, without limitation, indebtedness for
borrowed money, pension liabilities and guarantees), or other property,
obligations or services, paid or payable, directly or indirectly (in escrow or
otherwise), or otherwise assumed in connection with such M&A Transaction (the
"Consideration").
The compensation to be paid shall be paid upon the closing of
the M&A Transaction (except that, if any part of the Consideration is in the
form of contingent payments to be calculated by reference to uncertain future
occurrences, such as future financial or business performance, then the portion
of the fees of the Advisor relating to such part of the Consideration shall be
payable at the earlier of (i) the receipt or payment of such Consideration or
(ii) the time that the amount of such Consideration can be determined), by
certified check or wire transfer of immediately available funds, in the
following amounts:
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5% of the first $2 million of the Consideration;
4% of the Consideration in excess of $2 million and up to $4
million;
3% of the Consideration in excess of $4 million and up to $6
million;
2% of the Consideration in excess of $6 million and up to $8
million; and
1 1/2% of the Consideration in excess of $8 million.
(d) In connection with the financial consulting services
described in Section 1 above, the Advisor may, from time to time, bring
WorldCorp, Acquisition Sub and/or any of their respective Subsidiaries in
contact with persons, whether individuals or entities, that may be suitable
candidates for providing WorldCorp, Acquisition Sub or such Subsidiary with, or
may lead WorldCorp, Acquisition Sub or such Subsidiary to, other individuals or
entities that may provide WorldCorp, Acquisition Sub or such Subsidiary with,
debt or equity financing or other on or off balance sheet corporate finance
transactions (each, a "Finance Transaction"). If, during the term hereof,
WorldCorp, Acquisition Sub or any of their Subsidiaries enters into an agreement
with any such persons or their affiliates, or with any persons introduced to
WorldCorp, Acquisition Sub or any of their Subsidiaries or their affiliates by
any such persons or their affiliates, pursuant to which WorldCorp, Acquisition
Sub or any of their Subsidiaries enters into a Finance Transaction, or if
WorldCorp or Acquisition Sub or any of their Subsidiaries enters into a Finance
Transaction with any of the foregoing persons within one year following any
termination hereof, WorldCorp or Acquisition Sub, as the case may be, shall pay
to the Advisor, customary investment banking fees at the time of such Finance
Transaction and as a condition to the consummation thereof.
For the purposes hereof, the term "Subsidiary" shall mean any
corporation, limited liability company or other entity of which more than 20% of
the total voting power of shares of stock (or equivalent ownership or
controlling interest) entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is, at the time, owned or controlled, directly or indirectly, by that person or
one or more subsidiaries of that person, or a combination thereof, either on or
after the date hereof, and, in any event, shall include Acquisition Sub,
InteliData and their Subsidiaries with respect to WorldCorp, and World Airways
and Paper and their Subsidiaries with respect to Acquisition Sub.
(e) WorldCorp and Acquisition Sub jointly and severally agree
to pay or reimburse, within 30 days of demand therefor by the Advisor, any and
all reasonable costs and expenses incurred by the Advisor, whether directly or
indirectly, in connection with the
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performance of its services hereunder. The Advisor shall endeavor to provide
reasonable documentation with any demand for payment hereunder.
3. Available Time. The Advisor shall make available such time
as it, in its sole discretion, shall deem appropriate for the performance of its
obligations under this agreement and may, in certain circumstances, be entitled
to additional compensation in connection therewith.
4. Relationship. Nothing herein shall constitute the Advisor
as an employee or agent of the Company, except to such extent as might
hereinafter agreed upon for a particular purpose. Except as might hereinafter be
expressly agreed, the Advisor shall not have the authority to obligate or commit
the Company in any manner whatsoever.
5. Entire Agreement. This agreement contains the entire
agreement of the parties and supersedes all other agreements and understandings,
oral or written, with respect to the matters contained herein.
6. No Waiver. No act, omission or delay by the Advisor shall
constitute a waiver of its rights and remedies hereunder or otherwise. No single
or partial waiver by the Advisor of any default, right or remedy that it may
have shall operate as a waiver of any other default, right or remedy, or of the
same default, right or remedy on a future occasion.
7. Assignment. This agreement shall be binding upon and inure
to the benefit of the respective heirs, representatives, successors and assigns
of the parties hereto, provided; however, that this agreement may not be
assigned by WorldCorp or Acquisition Sub without the prior written consent of
the Advisor; provided, further, however, that the Advisor may assign its rights
and delegate its duties under this agreement to any affiliate of the Advisor
without the consent of WorldCorp or Acquisition Sub. As used in the preceding
sentence, the term "affiliate" shall have the meaning set forth in Rule 12b-2 of
the General Rules and Regulations promulgated under the Securities Exchange Act
of 1934, as amended.
8. Waiver of Jury Trial and Setoff; Consent to Jurisdiction;
Etc.
(a) In any litigation in any court with respect to, in
connection with, or arising out of this agreement or any instrument or document
delivered pursuant to this agreement, or the validity, protection,
interpretation, collection or enforcement hereof or thereof, or any other claim
or dispute howsoever arising, between WorldCorp and Acquisition Sub on the one
hand, and the Advisor on the other hand, WorldCorp and Acquisition Sub, to the
fullest extent they may legally do so, (i) waive the right to interpose any
setoff, recoupment, counterclaim or cross-claim in connection with any such
litigation, irrespective of the nature of such setoff, recoupment,
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counterclaim or cross-claim, unless such setoff, recoupment, counterclaim or
cross-claim could not, by reason of any applicable federal or state procedural
laws, be interposed, pleaded or alleged in any other action and (ii) WAIVE TRIAL
BY JURY IN CONNECTION WITH ANY SUCH LITIGATION AND ANY RIGHT IT MAY HAVE TO
CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES. WORLDCORP AND ACQUISITION SUB AGREE THAT THIS SECTION 8(a) IS A
SPECIFIC AND MATERIAL ASPECT OF THIS AGREEMENT AND ACKNOWLEDGE THAT THE ADVISOR
WOULD NOT ENTER INTO THIS AGREEMENT IF THIS SECTION 8(a) WERE NOT PART OF THIS
AGREEMENT.
(b) WorldCorp and Acquisition Sub hereby irrevocably consent
to the exclusive jurisdiction of any State or Federal Court located within the
County of Palm Beach, State of Florida, in connection with any action or
proceeding arising out of or relating to this agreement or any document or
instrument delivered pursuant to this agreement or otherwise. In any such
litigation, WorldCorp and Acquisition Sub waive, to the fullest extent they may
effectively do so, personal service of any summons, complaint or other process
and agree that the service thereof may be made by certified or registered mail
directed to WorldCorp or Acquisition Sub, as the case may be, at its address on
the first page hereof. WorldCorp and Acquisition Sub hereby waive, to the
fullest extent they may effectively do so, the defenses of forum non conveniens
and improper venue.
9. Governing Law. This agreement shall be deemed to be a
contract made under the laws of the State of Delaware and for all purposes shall
be construed in accordance with the laws of said State.
[THE REST OF THIS PAGE INTENTIONALLY BLANK]
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Please indicate your acceptance of the foregoing by signing
below where indicated.
Very truly yours,
SUN CAPITAL PARTNERS, INC.
By:
-----------------------
Name:
Title:
Accepted and Agreed:
WORLDCORP, INC.
By:
----------------------
Name:
Title:
WORLDCORP ACQUISITION CORP.
By: ----------------------
Name:
Title:
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Exhibit B-1
MANY OF THE RIGHTS OF THE LENDER UNDER
THIS NOTE ARE SUBJECT TO A COLLATERAL
AGENT AGREEMENT DATED THE DATE HEREOF
FIVE-YEAR 8% SENIOR SECURED PROMISSORY NOTE
New York, New York
$___________ ________, 1998
FOR VALUE RECEIVED, the undersigned, WORLDCORP ACQUISITION
CORP., a Delaware corporation having an office at 13873 Park Center Road,
Herndon, Virginia 20171 ("Acquisition Sub"), hereby promises to pay to the order
of ______________________ ______________________ (the "Lender"), at
_______________________________________ __________________________, or at such
other place as may be designated from time to time in writing by the Lender, the
principal sum of ______________________________________ ($____________) (the
"Principal"), plus interest, all as provided in this promissory note (as the
same may be supplemented, modified, amended or restated from time to time in the
manner provided herein, the "Note"; and, together with all of Acquisition Sub's
other five-year 8% Senior Secured Promissory Notes, the "Notes"; the holders of
the Notes are referred to herein as the "Lenders").
1. Interest. Acquisition Sub promises to pay interest on the
principal amount of this Note to Lender at the rate and in the manner specified
herein.
(a) Interest Rate. Interest on the unpaid principal amount of
this Note shall accrue at a rate of eight percent (8%) per annum,
compounded quarterly (the "Interest Rate").
(b) Payment of Interest. Interest on the principal amount of
this Note shall be paid, in cash, in arrears on the last day of
February, May, August and November of each year (commencing May 31,
1998), or if any such day is not a business day, on the next succeeding
business day (each, an "Interest Payment Date").
(c) Miscellaneous Provisions Relating to Interest. Interest
shall be computed for the actual number of days elapsed on the basis of
a 360-day year consisting of twelve 30-day months. Interest shall
accrue from the most recent date to which interest has been paid or, if
no interest has been paid, from the issuance date of this Note.
(d) Maximum Interest Rate; Compensation for Reduction.
(i) Maximum Interest Rate. In no event shall
the interest rate payable with respect to this Note exceed the
maximum rate of interest permitted to be
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charged under applicable law (the "Maximum Rate"). If the
amount of interest payable for the account of the Lender on
any Interest Payment Date in respect of the immediately
preceding quarter would exceed the Maximum Rate, the amount of
interest payable for Lender's account on such Interest Payment
Date shall automatically be reduced to the Maximum Rate.
(ii) Compensation for Reduction. If the amount of
interest payable for the Lender's account in respect of any
interest computation period hereunder is reduced pursuant to
clause (i) of this Section 1(d) because the amount of interest
payable for the account of the Lender would exceed the Maximum
Rate and the amount of interest payable for the Lender's
account in respect of any subsequent interest computation
period would be less than the Maximum Rate, then the amount of
interest payable for the Lender's account in respect of such
subsequent interest computation period shall be automatically
increased to such Maximum Rate, until such time as the
aggregate amount by which interest had been reduced pursuant
to clause (i) of this subsection (d) is restored.
2. Payments.
(a) Acquisition Sub shall pay the Principal, and any accrued
and unpaid interest, to the Lender on the fifth anniversary of the date
hereof.
(b) All payments under or pursuant to this Note shall be made
in United States Dollars, by check or wire transfer of immediately
available funds, to the Lender at its office set forth in the first
paragraph of this Note or to such other person and/or address as Lender
shall designate in writing.
3. Acceleration. If while this Note remains outstanding there occurs
either a Sale (as hereafter defined) or an Initial Public Offering (as hereafter
defined), then the entire outstanding principal amount of and interest on this
Note shall immediately become due and payable unless waived by a Majority in
Interest (as defined herein). For purposes hereof:
"Sale" shall mean a single transaction or a series of related
transactions having the effect of (i) the sale or other
transfer of all or substantially all of the assets, rights and
properties of Acquisition Sub to a third party, (ii) the
merger or consolidation of Acquisition Sub with or into an
unaffiliated third party, or (iii) the sale or other transfer
of a majority of the issued and outstanding voting securities
of Acquisition Sub to one or more persons.
"Initial Public Offering" shall mean an underwritten public
offering of Acquisition Sub's (or any of its subsidiaries')
common stock pursuant to a registration statement filed under
the Securities Act of 1933, as amended (other than any
registration statement relating to warrants, options or shares
of capital stock of Acquisition Sub granted or to be granted
or sold primarily to employees, directors, or officers of
Acquisition Sub, a registration statement filed pursuant to
Rule 145
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under the Securities Act or any successor rule, a registration
statement relating to employee benefit plans or interests
therein).
4. Security. The full payment by Acquisition Sub to the Lender of the
Principal amount hereof, together with all accrued interest thereon, shall be
guaranteed by WorldCorp, Inc., a Delaware corporation ("WorldCorp"), in
accordance with the terms and provisions of a Guaranty dated April 20, 1998 in
favor of the holders of the Notes and shall be secured (the "Pledge") by certain
assets in accordance with the terms and provisions of a Pledge Agreement (the
"Pledge Agreement") dated April 20, 1998 among WorldCorp, Acquisition Sub, and
Sun Paper Advisors, Inc., a Florida corporation, as collateral agent (the
"Collateral Agent").
5. Affirmative Covenants. Acquisition Sub and WorldCorp hereby agree
that so long as this Note is outstanding, Acquisition Sub and WorldCorp shall:
(a) Further Assurances. Execute and deliver, and cause each of
Acquisition Sub's subsidiaries to execute and deliver, any and all
documents and instruments in connection with the transactions
contemplated by the Transaction Documents (as defined herein),
including financing statements and continuation statements, as the
Collateral Agent shall require;
(b) Books and Records. Maintain its books and records in a
true, accurate and commercially reasonable manner and grant to the
Collateral Agent, its employees, agents, accountants and attorneys,
subject to the confidentiality provision (the "Confidentiality
Provision") of Section 7 of the Collateral Agent Agreement among the
Collateral Agent and the Lenders, reasonable access thereto, including,
without limitation, authorization to communicate directly with the
Accountant (as defined herein) and authorization of the Accountant to
disclose to the Collateral Agent any and all financial statements and
other supporting financial documents and schedules (including copies of
any management letter with respect to the business, financial condition
and other affairs of Acquisition Sub or any of its subsidiaries), for
the purpose of inspection and make extracts therefrom at all reasonable
times and as often as the Collateral Agent may reasonably require, and
pay all reasonable and actual fees, costs and expenses of the
Collateral Agent in connection therewith;
(c) Deliveries. Deliver to the Collateral Agent:
(i) Within 90 days after the last day of each fiscal
year of Acquisition Sub, an audited consolidated balance sheet
of Acquisition Sub (and all of its consolidated subsidiaries),
together with a related consolidating balance sheet for the
fiscal year then ended and related, audited consolidated
statements for profit and loss and retained earnings, and a
reconciliation of net worth and a statement of cash flows for
the year then ended, together with related supplemental
consolidating statements, each prepared by management of
Acquisition Sub in accordance with generally accepted
accounting principles consistently applied, in reasonable
detail and certified without qualification or limitation by
KPMG Peat
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Marwick LLP or another certified public accountant acceptable
to the Collateral Agent (the "Accountant") and accompanied by
a certificate executed by the Chief Executive Officer and the
Chief Financial Officer of Acquisition Sub confirming that as
of the last day of such fiscal year, and as of the date of
such certificate, no defaults existed or exist under the Notes
(a "no-default certificate");
(ii) Within 45 days after the last day of each of the
first, second and third fiscal quarters of Acquisition Sub,
the foregoing consolidated and consolidating financial
statements for the fiscal quarter then ended, each compiled
and prepared by the Chief Financial Officer and Chief
Executive Officer of Acquisition Sub and accompanied by a
no-default certificate;
(iii) Within 30 days after the last day of each
month, the foregoing consolidated and consolidating financial
statements for the month then ended, accompanied by a
no-default certificate;
(iv) Copies of any reports submitted to Acquisition
Sub by its Accountant in connection with any annual or interim
audit or review of the books of Acquisition Sub and its
subsidiaries conducted by such Accountant, subject to the
Confidentiality Provision;
(v) Copies of all federal, state, local and foreign
tax returns of Acquisition Sub and each of its subsidiaries,
within 30 days after such tax returns have been filed with the
applicable governmental authorities, subject to the
Confidentiality Provision;
(vi) Not later than the beginning of each fiscal year
of Acquisition Sub, any projections, including, without
limitation, any projected annual operating budgets, of
Acquisition Sub and each of its subsidiaries and, if
applicable, any updated projections promptly upon completion
of such updated projections, subject to the Confidentiality
Provision; and
(vii) From time to time, any other financial data and
financial information as the Lender or the Collateral Agent
may reasonably request, subject to the Confidentiality
Provision.
(d) Mark Books and Records. Mark Acquisition Sub's and
each of its subsidiaries' books and records to evidence the Lenders'
security interest upon the Pledged Collateral;
(e) Certain Expenses. On demand, to pay all reasonable costs
and expenses incurred by the Collateral Agent or the Lenders (including
reasonable attorneys' fees) in perfecting, protecting or realizing upon
the Pledged Collateral (as defined in the Pledge Agreement), or
otherwise enforcing or preserving any of its or their rights under or
in connection with the Notes, the Pledge Agreement, the Subscription
and Contribution
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Agreement (the "Contribution Agreement") dated the date hereof among
WorldCorp, Acquisition Sub, Paper Acquisition Corp., a Delaware
corporation ("Paper"), and certain stockholders of Paper, the Guaranty
dated April 20, 1998 granted by WorldCorp in favor of the Collateral
Agent on behalf of Lenders, each Warrant Agreement (collectively, the
"Warrants") between WorldCorp and one of the Lenders pursuant to which
such Lender may acquire shares of Acquisition Sub's capital stock owned
by WorldCorp, the Tax Sharing Agreement between WorldCorp and
Acquisition Sub and the Tax Sharing Agreement between Paper and
Acquisition Sub (together with the Tax Sharing Agreement between
WorldCorp and Acquisition Sub and the Amended and Restated Tax Sharing
Agreement dated April 20, 1998 among Paper, Frye Acquisition, Inc.,
Frye Carbon Products, Inc., FryeTech, Inc. ("FryeTech") and Frye Carbon
Products, Ltd., the "Tax Sharing Agreements" and, together with all of
the foregoing, the "Loan Documents"), or in connection with the
administration, interpretation, modification or amendment of the Loan
Documents. Until the Collateral Agent is so reimbursed, such costs and
expenses, including interest thereon at the rate charged hereon, shall
become part of the Secured Obligations;
(f) Notices. Promptly, and in any event within five days after
an officer of Acquisition Sub obtains notice thereof, give, notice to
the Collateral Agent and the Lender of:
(i) The occurrence of any event that constitutes
an Event of Default (as defined herein);
(ii) Any pending or threatened litigation or
governmental investigation or proceeding pending against
Acquisition Sub or any of its subsidiaries that could
reasonably be expected to materially and adversely affect the
business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of Acquisition Sub or
any of its subsidiaries;
(iii) Any judgment not covered by insurance against
Acquisition Sub or any of its subsidiaries, final or
otherwise, in an amount in excess of $100,000;
(iv) Any (A) violation of any environmental law by
Acquisition Sub or any of its subsidiaries or (B) inquiry,
proceeding, investigation or other action, including, without
limitation, a notice, from any federal, state, local or
foreign environmental agency or board, that has the potential
to materially and adversely affect the business, operations,
property, assets, liabilities, condition (financial or
otherwise) or prospects of Acquisition Sub or any of its
subsidiaries;
(v) Any setoff, claim, withholding or other defense
to which any of the Pledged Collateral, or the Lender's rights
with respect to the Pledged Collateral, is subject; and
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(vi) Any change in the name under which Acquisition
Sub or any subsidiary thereof conducts its business, any
change of the location of the chief executive office of
Acquisition Sub or any subsidiary thereof and the opening of
any new place of business or the closing of any existing place
of business, and any change in the location of the places
where any of the Pledged Collateral, or any part thereof, or
the books and records, or any part thereof, are kept;
(g) Consents, Etc. Under Transaction Documents. Furnish or
cause to be furnished to the Lender and the Collateral Agent, any
consents, approvals, waivers or modifications delivered or received by
Acquisition Sub or any of its subsidiaries pursuant to any of the Loan
Documents, the Financial Consulting Agreement (the "Consulting
Agreement") dated April 20, 1998 among Sun Capital Partners, Inc., a
Florida corporation ("Sun Capital"), WorldCorp and Acquisition Sub, the
Option Agreement (the "WorldCorp Option") dated April 20, 1998 between
WorldCorp and Sun Capital, the Option Agreement dated April 20, 1998
between Acquisition Sub and Sun Capital (the "Acquisition Sub Option";
the WorldCorp Option and the Acquisition Sub Option are referred to
herein as the "Options"), the Management Agreement (the "Management
Agreement") dated April 20, 1998 between WorldCorp and Acquisition Sub
(together with the Options and the Loan Documents, the "Transaction
Documents"), promptly, and in any event within five days, upon receipt
or delivery thereof;
(h) Insurance. Maintain or cause to be maintained, with
financially sound and reputable insurers, insurance with respect to its
and its subsidiaries' properties and businesses against such casualties
and contingencies, of such types, on such terms and in such amounts
(including deductibles, co-insurance and self-insurance, if adequate
reserves are maintained with respect thereto) as is customary in the
case of entities of established reputations engaged in the same or a
similar businesses and similarly situated;
(i) Maintenance of Properties; Conduct of Business. Maintain
and keep, or cause to be maintained and kept, its and its subsidiaries'
properties in good repair, working order and condition (other than
ordinary wear and tear), so that the business carried on in connection
therewith may be properly conducted at all times and continue to
engage, and cause each of its subsidiaries to continue to engage, in
the businesses now conducted by them and in related businesses,
provided, however, that this Section 5(i) shall not prevent Acquisition
Sub or its subsidiaries from discontinuing the operation and the
maintenance of any of its or their properties if such discontinuance is
desirable in the conduct of its or their businesses and Acquisition Sub
or such subsidiaries has reasonably concluded that such discontinuance
would not, individually or in the aggregate, reasonably be expected to
have a material adverse effect on the business of Acquisition Sub or
its subsidiaries; provided, further, however, that this Section 5(i)
shall not prevent Acquisition Sub or any subsidiary formed after the
date hereof, from acquiring a business pursuant to Section 6(d)(ii)
hereof;
(j) Taxes. Duly and timely file, or cause to be filed, all tax
returns required to be filed in any jurisdiction and duly and timely
pay and discharge all taxes required to be
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paid and discharged, including, without limitation, all taxes shown to
be due and payable on such returns and all other taxes, assessments,
governmental charges, or levies imposed on it or any of its
subsidiaries or any of its of their properties, assets, income or
franchises, to the extent such taxes, assessments, charges or levies
have become due and payable and before they have become delinquent and
all claims for which sums have become due and payable that have or
might become a lien on properties or assets of Acquisition Sub or any
of its subsidiaries; provided, however, the Collateral Agent may, at
its option, pay any liens and security interests upon the Pledged
Collateral and any sums so expended shall become part of the Secured
Obligations (as defined in the Pledge Agreement), provided, further,
however, that Acquisition Sub and its subsidiaries need not pay any
such tax or assessment or claims if (i) the amount, applicability or
validity thereof is contested by Acquisition Sub or such subsidiary on
a timely basis in good faith and in appropriate proceedings, and
Acquisition Sub or such subsidiary has established adequate reserves
therefor on its books or (ii) the nonpayment of all such taxes,
assessments and claims in the aggregate could not reasonably be
expected to have a material adverse effect on the business of
Acquisition Sub or any subsidiary;
(k) Subsidiaries, Legal Existence. At all times, preserve and
keep in full force and effect, or cause to be prepared and kept in full
force and effect, its corporate existence, rights and franchises and
the appropriate existence, rights and franchises of its subsidiaries,
unless, in the good faith judgment of Acquisition Sub or its
subsidiaries, the termination of or failure to preserve and keep in
full force and effect such corporate existence, right or franchise
would not, individually or in the aggregate, have a material adverse
effect on Acquisition Sub's or any of its subsidiaries' businesses;
(l) ERISA.
(i) Comply with, cause its majority-owned
subsidiaries to comply with, and cause its other subsidiaries
to comply with, the funding requirements of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"),
with respect to employee benefit plans for its or their
respective employees, and shall not permit, with respect to
any employee benefit plan, any transaction that is either
prohibited under ERISA or that results in, or may result in,
Acquisition Sub or any of its subsidiaries incurring any
material liability; and
(ii) Promptly, and in any event within five days,
upon (i) filing the same with the Department of Labor or
Internal Revenue Service, furnish a copy of the most recent
actuarial statement required to be submitted under ERISA to
the Collateral Agent and (ii) receipt or dispatch, furnish to
the Collateral Agent any notice, report or demand sent or
received in respect of any ERISA requirement; and
(m) Compliance With Laws. Comply and cause its subsidiaries to
comply, in all material respects, or cause compliance in all material
respects with, all laws, ordinances, regulations or other governmental
restrictions applicable to Acquisition Sub and its
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subsidiaries, and maintain and cause its subsidiaries to maintain all
permits, franchises, governmental authorizations, licenses and
concessions required or proper to operate its or their businesses as
they are presently being operated.
6. Negative Covenants. WorldCorp and Acquisition Sub hereby agree that,
so long as any of the Notes are outstanding, neither they nor any of their
majority-owned subsidiaries shall, and WorldCorp and Acquisition Sub shall use
their best efforts, to not permit any other subsidiary, to:
(a) Indebtedness. Create, incur, assume, guarantee or suffer
to exist any Indebtedness (as defined herein) except:
(i) Indebtedness (as defined herein) to the
Lenders;
(ii) Indebtedness pursuant to the Revolving Credit
and Term Loan Agreement dated as of December 30, 1996 among
FryeTech, the financial institution parties thereto referred
to as Banks, and The First National Bank of Boston, as Agent
for the Banks (as from time to time amended, supplemented or
modified, the "Credit Agreement"), Permitted Supplier Debt (as
defined in the Credit Agreement), Indebtedness made or
permitted pursuant to Section 10.1 of the Credit Agreement and
any other Indebtedness of Paper and its subsidiaries on the
date hereof; and
(iii) Indebtedness, on the date hereof, of WorldCorp,
World Airways, Inc., a Delaware corporation ("World Airways"),
and any of World Airways' subsidiaries; and
(iv) Bank Indebtedness, including, without
limitation, Indebtedness under Section 6(a)(iii), of World
Airways, InteliData Technologies Corp., a Delaware corporation
("InteliData"), and any hereafter formed subsidiary or
subsidiaries of Acquisition Sub formed pursuant to Section
6(d)(iii), which does not, in any event, exceed $25,000,000 as
to any one of them or $50,000,000 to them in the aggregate;
(b) Liens.
(i) Create, incur, assume or suffer to exist any
mortgage, pledge, hypothecation, assignment, encumbrance,
charge or other lien, security interest or any interest or
title of any vendor, lessor, lender or other secured party
(each, a "Lien") upon any of the Pledged Collateral or any
other property or assets of Acquisition Sub or any of its
subsidiaries (other than pursuant to the Credit Agreement, or
created, incurred, assumed, or suffered to be created,
incurred or assumed pursuant to Section 10.2 of the Credit
Agreement) whether now owned or hereafter acquired;
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(ii) Transfer any such property or assets or income
or property therefrom for the purpose of subjecting the same
to the payment of Indebtedness or the performance of any other
obligation in priority to payment of its general creditors;
(iii) Acquire, or agree or have an option to acquire,
any property or assets upon conditional sale or title
retention or purchase money security agreement, device or
arrangement;
(iv) Suffer to exist for a period of more than thirty
days after the same shall have been incurred any Indebtedness
or claim or demand against it that, if unpaid, would by law or
upon bankruptcy or insolvency, or otherwise, be entitled to
any priority whatsoever over its general creditors; or
(v) Sell, assign or otherwise transfer (except to the
extent permitted by Section 6(c) hereof) any accounts,
contractual rights, general intangibles, chattel paper or
instruments, with or without recourse;
provided, however, that Acquisition Sub and its subsidiaries
may incur Liens (x) to the Lenders in compliance with the
terms of the Transaction Documents, (y) imposed by law, which
were incurred in the ordinary course of business and do not
secure Indebtedness for borrowed money, such as carriers',
warehousemen's, materialmen's and mechanics' liens and other
similar liens arising in the ordinary course of business, and
which do not in the aggregate materially detract from the
value of its property or assets or materially impair the use
thereof in the operation of business and (z) to secure bank
Indebtedness incurred pursuant to Section 6(a)(iv) but only if
such Liens are for assets owned by the respective borrower of
Indebtedness and do not create any lien upon the Pledged
Collateral or the capital stock of Acquisition Sub or any now
existing or hereafter formed subsidiary thereof;
(c) Dissolution, Sale of Assets. Dissolve, reorganize,
liquidate, acquire or sell any of the assets or capital stock of or to
any person or enter into any merger or consolidation with any person
except (w) dispositions in the ordinary course of business consistent
with past practice, other than the disposition of any capital stock,
(x) other than pursuant to Section 6(d), (y) dispositions not in excess
of $5,000,000 individually or $10,000,000 in the aggregate, other than
the disposition of any capital stock, or (z) dispositions by InteliData
of its interactive services or telecommunications divisions at their
fair market value as determined by the Board of Directors of
InteliData;
(d) Capital Ownership. Cause, permit or suffer any change in
Acquisition Sub's or any of its now or hereafter existing subsidiaries'
capital ownership, except (i) for the change resulting from the
exercise of all or part of the Acquisition Sub Option or the or the
Warrants, (ii) for the change resulting from issuances at fair market
value of
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InteliData by InteliData in amounts not to exceed $10,000,000 in the
aggregate and (iii) pursuant to the acquisition of a business by way of
a purchase of stock, merger or asset acquisition; provided, however,
that (w) no Event of Default exists prior to such acquisition (and is
accompanied by a no-default certificate dated the date of the
consummation of such transaction to that effect), (x) the consummation
of such acquisition does not create a significant likelihood of an
Event of Default (and is accompanied by a no-default certificate dated
the date of the consummation of such transaction to that effect), (y)
the stock (or comparable ownership interest) of the person formed or
acquired pursuant to such acquisition, if any, is (I) 100% owned
directly by Acquisition Sub or by one or more hereafter created
subsidiaries of Acquisition Sub (and is not owned directly or
indirectly, by any other direct or indirect subsidiary of Acquisition
Sub) and (II) is pledged to the Collateral Agent, as Agent on behalf of
the Lenders, and on its own behalf, which pledge grants them a
perfected first priority security interest in such stock (or comparable
ownership interest), and (z) the Previously Pledged Shares (as defined
in the Pledge Agreement) have been released from the Prior Pledge and a
perfected first priority security interest with respect to such shares
is granted to the Collateral Agent, as Agent on behalf of the Lenders,
and on its own behalf, under the Pledge Agreement;
(e) Investments, Loans and Other Transactions. Other than as
expressly permitted under this Note, (i) make, permit or suffer any
investment in, loan to, or any guarantee on behalf of, (ii) transfer,
sell, lease or assign any assets owned by it (by operation of law or
otherwise) to, or (iii) enter into, permit or suffer any other
transaction directly or indirectly with or for the benefit of, any
person, including, without limitation, investments in or for the
benefit of any affiliate, subsidiary, joint venture or partnership,
except for (w) transactions with Sun Capital or its assignee, (x) any
merger or acquisition pursuant to Section 6(d)(iii) hereof, (y)
investments in marketable direct or guaranteed obligations of the
United States of America that mature within one year from the date of
purchase by Acquisition Sub or such subsidiary and by Moody's Investors
Services or "A 1" by Standard and Poor's and (z) investments by
InteliData and World Airways that do not exceed $2,500,000 by any one
of them or $5,000,000 in the aggregate;
(f) Dividends, Restricted Payments. Declare or pay any
dividends, purchase any stock, provide for any return of capital or any
other dividends or make any distribution of any kind on, or purchase,
redeem or otherwise retire any of the capital stock of, Acquisition
Sub's or any of its subsidiaries' outstanding capital stock or set
aside any sum for any such purpose, including, without limitation, any
repurchase of any capital stock of Acquisition Sub or any of its
affiliates, or make any prepayment or other repurchase of any
Indebtedness of Acquisition Sub or any of its subsidiaries, except
that: (i) any party to either of the Tax Sharing Agreements may make a
payment pursuant to such Tax Sharing Agreement; (ii) any subsidiary of
Acquisition Sub may make a distribution to Acquisition Sub or its
subsidiary that is used solely to (A) pay any principal or interest due
on any of the Notes, (B) pay any amounts due under the Financial
Consulting Agreement (subject to the limitations imposed by Section
6(o) hereof), (C) make any payment due to WorldCorp under the
Management Agreement, (D) make a
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distribution permitted under Section 10.4 of the Credit Agreement and
(E) make a distribution that is used solely to repay the Notes; and
(iii) Paper and any direct or indirect subsidiary of Paper may make any
payments permitted under Section 10.4 of the Credit Agreement;
(g) Business. Except as otherwise permitted by this Note, make
any material change in its business, or in the nature of its operation,
or liquidate or dissolve itself (or suffer any liquidation or
dissolution), or convey, sell, lease, assign, transfer or otherwise
dispose of any of its property, assets or business (by operation of law
or otherwise) except in the ordinary course of business and for a fair
consideration or dispose of any shares of stock or any Indebtedness,
whether now owned or hereafter acquired, or, discount, sell, pledge,
hypothecate or otherwise dispose of accounts receivable except to the
Lenders and the Collateral Agent;
(h) Subsidiaries. Form any subsidiary or transfer any of its
assets or property to any subsidiary or affiliate, or issue any capital
stock (or sell any assets of such subsidiary) other than pursuant to
any acquisition pursuant to Section 6(d)(iii) hereof;
(i) Amendments. Amend their articles or certificate of
incorporation, or by-laws, except for amendments that do not adversely
effect the holders of the Notes, or amend any of the Transaction
Documents or any agreements between WorldCorp or Acquisition Sub, or
any of their subsidiaries;
(j) Obligations Under the Notes. By amendment of its articles
of incorporation, or bylaws or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities
or any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of the Notes, but shall at all times in
good faith assist in the carrying out of all such terms and in the
taking of all such actions as may be necessary or appropriate in order
to protect the rights of the holders of the Notes hereunder and under
the Notes;
(k) Sale and Leaseback. Enter into any arrangement, directly
or indirectly, whereby Acquisition Sub or any subsidiary shall sell or
transfer any property owned by it in order then or thereafter to lease
such property or lease other property that Acquisition Sub or any
subsidiary intends to use for substantially the same purpose as the
property being sold or transferred, other than sales or transfers by
World Airways that are consistent with past practice and do not exceed
$5,000,000 individually or $10,000,000 in the aggregate;
(l) Employee Benefit Plans.
(i) Engage in any non-exempt "prohibited transaction"
within the meaning of Section 406 of ERISA or Section 4975 of
the Internal Revenue Code of 1986, as amended (the "Code"),
that could result in a material liability for Acquisition Sub
or any of its subsidiaries;
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(ii) Permit any pension plan to incur an "accumulated
funding deficiency," as such term is defined in Section 302 of
ERISA, whether or not such deficiency is or may be waived;
(iii) Fail to contribute to any pension plan in a
manner that could result in the imposition of a Lien on the
assets of Acquisition Sub or any of its subsidiaries; or
(iv) Permit or take any action that could result in
the aggregate benefit liabilities (within the meaning of
Section 4001 of ERISA) of all pension plans to exceed the
value of the aggregate assets of such plans, disregarding for
this purpose the benefit liabilities and assets of any such
plan with assets equal to or in excess of its benefit
liabilities;
(m) Stock Issuances. Except to the extent otherwise permitted
by this Note:
(i) Issue any capital stock, or any options, warrants
or other instruments, or enter into any agreement or
agreements that provide for the issuance of any capital stock,
or class thereof, or that are convertible into any class of
capital stock (other than issuances of shares of capital stock
upon the exercise of options granted prior to the date hereof
and the grant of stock options (and the shares of capital
stock issuable upon the exercise of such options) permitted by
currently existing stock option plans and in accordance
therewith);
(ii) Amend any agreement or agreements that provide
for the issuance of any capital stock, or class thereof, of
WorldCorp or Acquisition Sub, including, without limitation,
any repricing or other revision to any of their agreements,
options, warrants or other similar instruments, or to any of
their agreements, options, warrants or other similar
instruments that are convertible into any class of capital
stock;
(iii) Amend any agreement or agreements that provide
for the issuance of any capital stock, or class thereof, of
World Airways, including its options, warrants or other
similar instruments, that has the effect of lengthening the
term, increasing the number of shares issuable under, or
repricing the exercise price of, such options, warrants or
other similar instruments; or
(iv) Dispose of or license any rights or interests to
any intangible property, causing to or inject in the public
domain or make public, or dispose of or license or disclose to
any entity any intangible personal property not theretofore a
matter of public knowledge;
(n) Affiliate Transactions. Enter into any transaction
with, make any payment to or otherwise distribute any asset to any of
its directors, officers, or stockholders or any
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affiliate of any such person, except for the Tax Sharing Agreements,
the Management Agreement and transactions with Sun Capital or its
assignee; and
(o) Certain Payments. Permit any payments to be made by
Acquisition Sub to WorldCorp pursuant to the Management Agreement so
long as a default or Event of Default pursuant to Section 7(a) hereof
in any payments owed to the Lenders by Acquisition Sub or WorldCorp or
any of their subsidiaries occurs and is continuing.
For purposes of this Note, "Indebtedness" of any person shall mean (i)
all indebtedness for borrowed money; (ii) obligations under leases that, in
accordance with generally accepted accounting principles constitute capital
leases; (iii) notes payable and drafts accepted (including, without limitation,
cash overdrafts) representing extensions of credit, whether or not representing
obligations for borrowed money; (iv) any obligation owed for all or any part of
the deferred purchase price of property or services if the purchase price is due
more than six months from the date the obligation is incurred or is evidenced by
a note or similar written instrument; (v) all indebtedness secured by any Lien
on any property or asset owned or held by that person regardless of whether the
indebtedness secured thereby shall have been assumed by that person or is
non-recourse to the credit of that person; (vi) all guarantees, endorsements and
other contingent obligations, whether direct or indirect, in respect of
indebtedness of others, including, without limitation, any obligation to supply
funds to, or in any manner to invest in, directly or indirectly, any person, to
purchase indebtedness or to insure the owner of indebtedness against loss; (vii)
obligations in respect of letters of credit; and (viii) any interest rate
exchange transaction, pursuant to which a third party has agreed to pay such
person an amount equal to the amount of interest on a notional amount of
principal that would have been due and payable on such date.
7. Events of Default. The occurrence of any of the following events
shall be an "Event of Default" under this Note.
(a) Nonpayment. Acquisition Sub shall fail to pay, on or
before five business days after the date when due, any principal,
interest or other amounts payable hereunder;
(b) Breach.
(i) Acquisition Sub shall fail to comply with,
observe or perform in any material respect any of its
covenants, agreements or obligations contained in the
Transaction Documents and such failure shall not be cured or
waived in accordance with the terms hereof or thereof within
30 days after the occurrence thereof;
(ii) Acquisition Sub, WorldCorp or any of their
respective subsidiaries shall default in the payment of any
Indebtedness or other obligation owed to any person other than
the Lender, or default in the performance or observance of the
terms of any agreement, document or instrument pursuant to
which such Indebtedness or other obligation pursuant to which
such indebtedness or other
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obligation was created, secured or guaranteed, the effect of
which default is to cause or permit the holder of such
Indebtedness in excess of $1,000,000 or the obligee of such
obligation to cause or permit the same to be due prior to its
stated maturity; or
(iii) Acquisition Sub, WorldCorp or any of their
respective subsidiaries shall fail to comply with, observe,
perform or otherwise breach any covenant, agreement,
representation, warranty or other obligation to be performed
by them or such subsidiary under any material agreement
including, without limitation, the Credit Agreement, to which
either of them or any of their respective subsidiaries is a
party, and such failure shall not be cured or waived in
accordance with the terms thereof and the result of which is
reasonably likely to have a material adverse effect on the
business, financial condition, results of operations or
prospects of such person;
provided, however, that, until the day after the first
anniversary of the date hereof, any default by WorldCorp
pursuant to this Section 7(b) shall be an Event of Default
only if the holder of such Indebtedness causes the same to be
due prior to its stated maturity.
(c) Bankruptcy. (i) Acquisition Sub or WorldCorp or any of
their subsidiaries shall suffer, or consent to or apply for, the
appointment of a receiver, trustee, custodian, liquidator or other
officer with similar powers to take possession of all or a substantial
portion of its property or operate all or a substantial portion of its
business or any of its property, or Acquisition Sub or any subsidiaries
of Acquisition Sub or subsidiaries of WorldCorp shall generally fail to
pay its or their debts as they become due, or Acquisition Sub or any of
its subsidiaries or any of WorldCorp's subsidiaries shall admit in
writing its inability to pay its debts as they become due, or shall
make a general assignment for the benefit of creditors; or (ii)
Acquisition Sub, WorldCorp or any of their respective subsidiaries
shall file a voluntary petition in bankruptcy, or seeking
reorganization, in order to effect a plan or other arrangement with
creditors or any other relief under the United States Bankruptcy Code,
Title 11 of the United States Code, as amended or recodified from time
to time (the "Bankruptcy Code") or under any state or federal law
granting relief to debtors, whether now or hereafter in effect (or the
board of directors shall adopt any resolution or otherwise authorize
action to approve any of the foregoing); or (iii) any involuntary
petition or proceeding pursuant to the Bankruptcy Code or any other
applicable state or federal law relating to bankruptcy, reorganization
or other relief for debtors is filed or commenced against Acquisition
Sub, WorldCorp or any of their respective subsidiaries;
(d) Judgments, Etc. The entry of any judgment against
Acquisition Sub, WorldCorp or any of their respective subsidiaries, or
any attachment, levy or execution against any property of Acquisition
Sub, WorldCorp or any of their respective subsidiaries, other than
judgments, attachments, levies or executions that, individually or
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in the aggregate, do not have a material adverse effect on the business
of Acquisition Sub, WorldCorp or any of their respective subsidiaries,
as the case may be; or
(e) Dissolution or Liquidation. Acquisition Sub or any
affiliate of Acquisition Sub shall dissolve or liquidate, or there
shall be commenced an action for the involuntary dissolution of
Acquisition Sub, WorldCorp or any of their respective subsidiaries that
is not contested by an appropriate proceeding promptly instituted and
diligently prosecuted.
(f) Certain Corporate Action. The Board of Directors of
Acquisition Sub, WorldCorp or any of their subsidiaries shall vote to
adopt, authorize or otherwise approve any action that would result in
the breach of any covenant or agreement in any of the Transaction
Documents or that is itself an Event of Default.
8. Remedies. Upon the occurrence of an Event of Default:
(a) Acceleration. If an Event of Default occurs and is
continuing under Section 7 hereof, the holders of more than 50% of the
outstanding principal amount of the Notes (the "Majority in Interest"),
in accordance with the provisions of the Collateral Agent Agreement (as
amended, supplemented or modified, the "Collateral Agent Agreement")
among the Collateral Agent and all of the holders of the Notes, upon
written notice to Acquisition Sub, may cause the Collateral Agent to
declare the unpaid principal amount of this Note to be, and the same
shall thereupon become, due and payable, together with any and all
accrued interest thereon and all costs payable pursuant to this Note,
without presentment, demand, protest, diligence, any additional notice
whatsoever or other requirements of any kind, all of which are hereby
expressly waived by Acquisition Sub, except as otherwise required by
applicable law.
(b) Enforcement. If an Event of Default occurs and is
continuing under Section 7 hereof, a Majority in Interest may, without
notice to or demand upon Acquisition Sub, which are hereby expressly
waived by Acquisition Sub, cause the Collateral Agent to proceed in
accordance with the provisions of the Collateral Agent Agreement to
protect, exercise and enforce the rights and remedies of the Lenders
under the Notes against Acquisition Sub, and such other rights and
remedies as are provided by law or equity. Such proceeding may take
place either by suit in equity or by action at law, or both, and may be
for specific performance of any covenant or agreement contained in this
Note or in the aid of the exercise of any power granted in this Note.
(c) Control of Board.
(i) For so long as any of the Notes remain
outstanding, if an Event of Default occurs and is continuing
under Section 7 hereof, a Majority in Interest (or the
Collateral Agent, as instructed by a Majority in Interest) may
designate an additional number of directors to the Board of
Directors of Acquisition Sub that constitute a majority of
such Board of Directors, and WorldCorp and Acquisition Sub
shall take all necessary action to effect the election of such
directors,
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including, without limitation, effecting any amendments to the
certificate of incorporation and by-laws of Acquisition Sub as
may be necessary to permit the election of, and voting for,
such additional directors.
(ii) For so long as any of the Notes remain
outstanding, if an Event of Default occurs and is continuing
under Section 7 hereof, WorldCorp and Acquisition Sub shall
allow two designated representatives of the Collateral Agent
to attend all meetings of their respective Boards of Directors
(which such representatives shall have all of the privileges
and benefits of a Director of their respective Boards of
Directors, except voting rights, but shall have none of the
duties, responsibilities or liabilities of such Directors by
virtue of attendance at such meetings or the failure to attend
the same), give the Collateral Agent the same information that
is provided to such Directors at such meetings and give the
Collateral Agent the same notice of such meetings that is
provided to Directors of WorldCorp and Acquisition Sub.
(iii) For so long as any of the Notes remain
outstanding, if an Event of Default occurs and is continuing
under Section 7 hereof, WorldCorp and Acquisition Sub shall
use their best efforts to cause their respective Subsidiaries,
InteliData, World Airways and Paper, to each allow two
designated representatives of the Collateral Agent to attend
all meetings of their respective Boards of Directors (which
such representatives shall have all of the privileges and
benefits of a Director of their respective Boards of
Directors, except voting rights, but shall have none of the
duties, responsibilities or liabilities of such Directors by
virtue of attendance at such meetings or the failure to attend
the same), give the Collateral Agent the same information that
is provided to such direction at such meetings and give the
Collateral Agent the same notice of such meetings that is
provided to their respective Directors.
(d) Waiver. If an Event of Default occurs and is continuing
under Section 7 hereof, only a Majority in Interest (or the Collateral
Agent, as instructed by a Majority in Interest) may waive such Event of
Default.
9. Miscellaneous.
(a) Subscription and Contribution Agreement. This Note
has been delivered pursuant to the Contribution Agreement, and is
subject to all of the terms and conditions thereof.
(b) Collateral Agent May Perform. The Collateral Agent may
perform any act that a Majority in Interest is permitted to perform
hereunder so long as the Collateral Agent is authorized to perform such
act by a Majority in Interest, either pursuant to the Collateral Agent
Agreement or otherwise.
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(c) Waiver of Jury Trial and Setoff; Consent to
Jurisdiction; Etc.
(i) In any litigation in any court with respect to,
in connection with, or arising out of this Note or any
instrument or document delivered pursuant to this Note, or the
validity, protection, interpretation, collection or
enforcement hereof or thereof, or any other claim or dispute
howsoever arising, between Acquisition Sub or WorldCorp, on
one hand, and the Lender, on the other hand, Acquisition Sub
and WorldCorp, to the fullest extent they may legally do so,
(i) waive the right to interpose any setoff, recoupment,
counterclaim or cross-claim in connection with any such
litigation, irrespective of the nature of such setoff,
recoupment, counterclaim or cross-claim, unless such setoff,
recoupment, counterclaim or cross-claim could not, by reason
of any applicable federal or state procedural laws, be
interposed, pleaded or alleged in any other action and (ii)
WAIVE TRIAL BY JURY IN CONNECTION WITH ANY SUCH LITIGATION AND
ANY RIGHT THEY MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH
LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL
DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES. ACQUISITION SUB AND WORLDCORP AGREE THAT THIS SECTION
9(c) IS A SPECIFIC AND MATERIAL ASPECT OF THIS NOTE AND
ACKNOWLEDGE THAT THE LENDER WOULD NOT EXTEND ANY CREDIT TO
ACQUISITION SUB HEREUNDER IF THIS SECTION 9(c) WERE NOT PART
OF THIS NOTE.
(ii) Acquisition Sub and WorldCorp hereby irrevocably
consent to the exclusive jurisdiction of any State or Federal
Court located within the County of Palm Beach, State of
Florida, in connection with any action or proceeding arising
out of or relating to this Agreement or any document or
instrument delivered pursuant to this Agreement or otherwise.
In any such litigation, Acquisition Sub and WorldCorp waive,
to the fullest extent they may effectively do so, personal
service of any summons, complaint or other process and agrees
that the service thereof may be made by certified or
registered mail directed to Acquisition Sub at its address set
on the first page hereof or to WorldCorp at its address for
notices in the Pledge Agreement. Acquisition Sub and WorldCorp
hereby waive, to the fullest extent they may effectively do
so, the defenses of forum non conveniens and improper venue.
(d) Notice. Any notice, request, demand or other communication
permitted or required to be given hereunder shall be in writing, shall
be sent by one of the following means to the addressee at the address
set forth above with a copy to the Collateral Agent as set forth in the
Collateral Agent Agreement (or at such other address as shall be
designated hereunder by notice to the other parties and persons
receiving copies, effective upon actual receipt) and shall be deemed
conclusively to have been given: (i) on the first business day
following the day timely deposited with Federal Express (or other
equivalent national overnight courier) or United States Express Mail,
with the cost of delivery
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prepaid; (ii) on the fifth business day following the day duly sent by
certified or registered United States mail, postage prepaid and return
receipt requested; or (iii) when otherwise actually delivered to the
addressee. Copies may be sent by regular first-class mail, postage
prepaid, to such person(s) as a party may direct from time to time by
notice to the others, but failure or delay in sending copies shall not
affect the validity of any such notice, request, demand or other
communication so given to a party.
(e) Amendments and Modification. No provision hereof may be
altered, amended, waived or limited except by written instrument
expressly referring to this Note and to such provision and executed by
Acquisition Sub and the Collateral Agent.
(f) Governing Law. This Note shall be governed by, and
construed and enforced in accordance with, the laws of the State of
Delaware without regard to principles of conflicts or choice of law (or
any other law that would make any substantive laws of any state other
than the State of Delaware applicable hereto).
(g) Expenses. Acquisition Sub shall pay or reimburse within 30
days of demand therefore by the Collateral Agent or any Lender any and
all reasonable out-of-pocket costs and expenses incurred by the
Collateral Agent or any Lender, whether directly or indirectly, in
connection with the enforcement and adjudication of this Note. The
Collateral Agent and any such Lender shall endeavor to provide
reasonable documentation in connection with any demand for payment
under this Section.
(h) Captions; Certain Definitions. The section and paragraph
headings contained in this Note are solely for the purpose of
reference, are not part of the agreement of the parties and shall not
in any way affect the meaning or interpretation of this Note. All
capitalized terms used herein and not otherwise defined shall have the
meanings given to them in the Contribution Agreement. As used in this
Note: (i) the term "person" shall mean and include an individual, a
partnership, a joint venture, a corporation, a limited liability
company, a trust, an unincorporated organization and a government or
any department or agency thereof; (ii) the term "affiliate" shall have
the meaning set forth in Rule 12b-2 of the General Rules and
Regulations promulgated under the Securities Exchange Act of 1934, as
amended; and (iii) the term "subsidiary" of any person shall mean any
person of which more than 20% of the total voting power of shares of
stock (or equivalent ownership or controlling interest) entitled
(without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof, is, at the time,
owned or controlled, directly or indirectly, by that person, or one or
more subsidiaries of that person, or a combination thereof and, in any
event, shall include InteliData, with respect to WorldCorp, and Paper
and World Airways with respect to Acquisition Sub (for the purposes
hereof, World Airways shall be a "majority-owned" subsidiary of
Acquisition Sub).
(i) Not Negotiable. This Note is not negotiable. It may be
assigned without the consent of Acquisition Sub; provided, however,
that it shall be a condition of any
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transfer that the transferee of this Note must sign the Collateral
Agent Agreement as a Lender thereunder.
(j) Presentment. Presentment for payment, notice of dishonor,
protest and notice of protest are hereby each waived by Acquisition
Sub. Any other waiver or consent respecting this Note shall be
effective only if in writing and granted by a Majority in Interest in
accordance with the Collateral Agent Agreement and then only in the
specific instance and for the specific purpose for which given. No such
other waiver or consent shall be deemed, regardless of frequency given,
to be a further or continuing waiver or consent. The failure or delay
of a Majority in Interest at any time or times to require performance
of, or to exercise the Lender's rights with respect to, any term or
provision of this Note in no manner shall affect a Majority in
Interest's right at a later time to enforce any such term or provision.
No notice to or demand on Acquisition Sub in any case shall entitle
such party to any other or further notice or demand. All rights,
powers, privileges, remedies and other interests of the Lender under
this Note and applicable law are cumulative and not alternatives.
(k) Entire Agreement. This Note contains the entire agreement
of the parties and supersedes all other agreements and understandings,
oral or written, with respect to the matters contained herein.
[THE REST OF THIS PAGE INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, Acquisition Sub and WorldCorp have
executed and delivered this Note as of the date first written above.
WORLDCORP ACQUISITION CORP.
By: ________________________
Name:
Title:
Solely as to Sections 4, 5,
8, 9(c) and 9(d):
WORLDCORP.
By: ________________________
Name:
Title:
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Exhibit B-2
MANY OF THE RIGHTS OF THE LENDER UNDER
THIS NOTE ARE SUBJECT TO A COLLATERAL
AGENT AGREEMENT DATED THE DATE HEREOF
ONE-YEAR 8% SENIOR SECURED PROMISSORY NOTE
New York, New York
$________ _________, 1998
FOR VALUE RECEIVED, the undersigned, WORLDCORP ACQUISITION
CORP., a Delaware corporation having an office at 13873 Park Center Road,
Herndon, Virginia 20171 ("Acquisition Sub"), hereby promises to pay to the order
of _____________________ _______________________ (the "Lender"), at
_____________________________________ _________________________, or at such
other place as may be designated from time to time in writing by the Lender, the
principal sum of ______________________________________ ____________ ($______)
(the "Principal"), plus interest, all as provided in this promissory note (as
the same may be supplemented, modified, amended or restated from time to time in
the manner provided herein, the "Note"; and, together with all of Acquisition
Sub's other one-year 8% Senior Secured Promissory Notes, the "Notes"; the
holders of the Notes are referred to herein as the "Lenders").
1. Interest. Acquisition Sub promises to pay interest on the
principal amount of this Note to Lender at the rate and in the manner specified
herein.
(a) Interest Rate. Interest on the unpaid principal amount of
this Note shall accrue at a rate of eight percent (8%) per annum,
compounded quarterly (the "Interest Rate").
(b) Payment of Interest. Interest on the principal amount of
this Note shall be paid, in cash, in arrears on the last day of
February, May, August and November of each year (commencing May 30,
1998), or if any such day is not a business day, on the next succeeding
business day (each, an "Interest Payment Date").
(c) Miscellaneous Provisions Relating to Interest. Interest
shall be computed for the actual number of days elapsed on the basis of
a 360-day year consisting of twelve 30-day months. Interest shall
accrue from the most recent date to which interest has been paid or, if
no interest has been paid, from the issuance date of this Note.
(d) Maximum Interest Rate; Compensation for Reduction.
(i) Maximum Interest Rate. In no event shall the
interest rate payable with respect to this Note exceed the
maximum rate of interest permitted to be charged under
applicable law (the "Maximum Rate"). If the amount of interest
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payable for the account of the Lender on any Interest Payment
Date in respect of the immediately preceding quarter would
exceed the Maximum Rate, the amount of interest payable for
Lender's account on such Interest Payment Date shall
automatically be reduced to the Maximum Rate.
(ii) Compensation for Reduction. If the amount of
interest payable for the Lender's account in respect of any
interest computation period hereunder is reduced pursuant to
clause (i) of this Section 1(d) because the amount of interest
payable for the account of the Lender would exceed the Maximum
Rate and the amount of interest payable for the Lender's
account in respect of any subsequent interest computation
period would be less than the Maximum Rate, then the amount of
interest payable for the Lender's account in respect of such
subsequent interest computation period shall be automatically
increased to such Maximum Rate, until such time as the
aggregate amount by which interest had been reduced pursuant
to clause (i) of this subsection (d) is restored.
2. Payments.
(a) In addition to any interest due on each Interest Payment
Date, Acquisition Sub shall pay $250,000 of principal to the Lender on
each such date. Acquisition Sub shall pay any outstanding principal and
unpaid interest on March 1, 1999.
(b) All payments under or pursuant to this Note shall be made
in United States Dollars, by check or wire transfer of immediately
available funds, to the Lender at its office set forth in the first
paragraph of this Note or to such other person and/or address as Lender
shall designate in writing.
3. Acceleration. If while this Note remains outstanding there occurs
either a Sale (as hereafter defined) or an Initial Public Offering (as hereafter
defined), then the entire outstanding principal amount of and interest on this
Note shall immediately become due and payable unless waived by a Majority in
Interest (as defined herein). For purposes hereof:
"Sale" shall mean a single transaction or a series of related
transactions having the effect of (i) the sale or other
transfer of all or substantially all of the assets, rights and
properties of Acquisition Sub to a third party, (ii) the
merger or consolidation of Acquisition Sub with or into an
unaffiliated third party, or (iii) the sale or other transfer
of a majority of the issued and outstanding voting securities
of Acquisition Sub to one or more persons.
"Initial Public Offering" shall mean an underwritten public
offering of Acquisition Sub's (or any of its subsidiaries')
common stock pursuant to a registration statement filed under
the Securities Act of 1933, as amended (other than any
registration statement relating to warrants, options or shares
of capital stock of Acquisition Sub granted or to be granted
or sold primarily to employees, directors, or officers of
Acquisition Sub, a registration statement filed pursuant to
Rule 145
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under the Securities Act or any successor rule, a registration
statement relating to employee benefit plans or interests
therein).
4. Security. The full payment by Acquisition Sub to the Lender of the
Principal amount hereof, together with all accrued interest thereon, shall be
guaranteed by WorldCorp, Inc., a Delaware corporation ("WorldCorp"), in
accordance with the terms and provisions of a Guaranty dated April 20, 1998 in
favor of the holders of the Notes and shall be secured (the "Pledge") by certain
assets in accordance with the terms and provisions of a Pledge Agreement (the
"Pledge Agreement") dated April 20, 1998 among WorldCorp, Acquisition Sub, and
Sun Paper Advisors, Inc., a Florida corporation, as collateral agent (the
"Collateral Agent").
5. Affirmative Covenants. Acquisition Sub and WorldCorp hereby agree
that so long as this Note is outstanding, Acquisition Sub and WorldCorp shall:
(a) Further Assurances. Execute and deliver, and cause each of
Acquisition Sub's subsidiaries to execute and deliver, any and all
documents and instruments in connection with the transactions
contemplated by the Transaction Documents (as defined herein),
including financing statements and continuation statements, as the
Collateral Agent shall require;
(b) Books and Records. Maintain its books and records in a
true, accurate and commercially reasonable manner and grant to the
Collateral Agent, its employees, agents, accountants and attorneys,
subject to the confidentiality provision (the "Confidentiality
Provision") of Section 7 of the Collateral Agent Agreement among the
Collateral Agent and the Lenders, reasonable access thereto, including,
without limitation, authorization to communicate directly with the
Accountant (as defined herein) and authorization of the Accountant to
disclose to the Collateral Agent any and all financial statements and
other supporting financial documents and schedules (including copies of
any management letter with respect to the business, financial condition
and other affairs of Acquisition Sub or any of its subsidiaries), for
the purpose of inspection and make extracts therefrom at all reasonable
times and as often as the Collateral Agent may reasonably require, and
pay all reasonable and actual fees, costs and expenses of the
Collateral Agent in connection therewith;
(c) Deliveries. Deliver to the Collateral Agent:
(i) Within 90 days after the last day of each fiscal
year of Acquisition Sub, an audited consolidated balance sheet
of Acquisition Sub (and all of its consolidated subsidiaries),
together with a related consolidating balance sheet for the
fiscal year then ended and related, audited consolidated
statements for profit and loss and retained earnings, and a
reconciliation of net worth and a statement of cash flows for
the year then ended, together with related supplemental
consolidating statements, each prepared by management of
Acquisition Sub in accordance with generally accepted
accounting principles consistently applied, in reasonable
detail and certified without qualification or limitation by
KPMG Peat
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Marwick LLP or another certified public accountant acceptable
to the Collateral Agent (the "Accountant") and accompanied by
a certificate executed by the Chief Executive Officer and the
Chief Financial Officer of Acquisition Sub confirming that as
of the last day of such fiscal year, and as of the date of
such certificate, no defaults existed or exist under the Notes
(a "no-default certificate");
(ii) Within 45 days after the last day of each of the
first, second and third fiscal quarters of Acquisition Sub,
the foregoing consolidated and consolidating financial
statements for the fiscal quarter then ended, each compiled
and prepared by the Chief Financial Officer and Chief
Executive Officer of Acquisition Sub and accompanied by a
no-default certificate;
(iii) Within 30 days after the last day of each
month, the foregoing consolidated and consolidating financial
statements for the month then ended, accompanied by a
no-default certificate;
(iv) Copies of any reports submitted to Acquisition
Sub by its Accountant in connection with any annual or interim
audit or review of the books of Acquisition Sub and its
subsidiaries conducted by such Accountant, subject to the
Confidentiality Provision;
(v) Copies of all federal, state, local and foreign
tax returns of Acquisition Sub and each of its subsidiaries,
within 30 days after such tax returns have been filed with the
applicable governmental authorities, subject to the
Confidentiality Provision;
(vi) Not later than the beginning of each fiscal year
of Acquisition Sub, any projections, including, without
limitation, any projected annual operating budgets, of
Acquisition Sub and each of its subsidiaries and, if
applicable, any updated projections promptly upon completion
of such updated projections, subject to the Confidentiality
Provision; and
(vii) From time to time, any other financial data and
financial information as the Lender or the Collateral Agent
may reasonably request, subject to the Confidentiality
Provision.
(d) Mark Books and Records. Mark Acquisition Sub's and
each of its subsidiaries' books and records to evidence the Lenders'
security interest upon the Pledged Collateral;
(e) Certain Expenses. On demand, to pay all reasonable costs
and expenses incurred by the Collateral Agent or the Lenders (including
reasonable attorneys' fees) in perfecting, protecting or realizing upon
the Pledged Collateral (as defined in the Pledge Agreement), or
otherwise enforcing or preserving any of its or their rights under or
in connection with the Notes, the Pledge Agreement, the Subscription
and Contribution
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Agreement (the "Contribution Agreement") dated the date hereof among
WorldCorp, Acquisition Sub, Paper Acquisition Corp., a Delaware
corporation ("Paper"), and certain stockholders of Paper, the Guaranty
dated April 20, 1998 granted by WorldCorp in favor of the Collateral
Agent on behalf of Lenders, each Warrant Agreement (collectively, the
"Warrants") between WorldCorp and one of the Lenders pursuant to which
such Lender may acquire shares of Acquisition Sub's capital stock owned
by WorldCorp, the Tax Sharing Agreement between WorldCorp and
Acquisition Sub and the Tax Sharing Agreement between Paper and
Acquisition Sub (together with the Tax Sharing Agreement between
WorldCorp and Acquisition Sub and the Amended and Restated Tax Sharing
Agreement dated April 20, 1998 hereof among Paper, Frye Acquisition,
Inc., Frye Carbon Products, Inc., FryeTech, Inc. ("FryeTech") and Frye
Carbon Products, Ltd., the "Tax Sharing Agreements" and, together with
all of the foregoing, the "Loan Documents"), or in connection with the
administration, interpretation, modification or amendment of the Loan
Documents. Until the Collateral Agent is so reimbursed, such costs and
expenses, including interest thereon at the rate charged hereon, shall
become part of the Secured Obligations;
(f) Notices. Promptly, and in any event within five days after
an officer of Acquisition Sub obtains notice thereof, give, notice to
the Collateral Agent and the Lender of:
(i) The occurrence of any event that constitutes
an Event of Default (as defined herein);
(ii) Any pending or threatened litigation or
governmental investigation or proceeding pending against
Acquisition Sub or any of its subsidiaries that could
reasonably be expected to materially and adversely affect the
business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of Acquisition Sub or
any of its subsidiaries;
(iii) Any judgment not covered by insurance against
Acquisition Sub or any of its subsidiaries, final or
otherwise, in an amount in excess of $100,000;
(iv) Any (A) violation of any environmental law by
Acquisition Sub or any of its subsidiaries or (B) inquiry,
proceeding, investigation or other action, including, without
limitation, a notice, from any federal, state, local or
foreign environmental agency or board, that has the potential
to materially and adversely affect the business, operations,
property, assets, liabilities, condition (financial or
otherwise) or prospects of Acquisition Sub or any of its
subsidiaries;
(v) Any setoff, claim, withholding or other defense
to which any of the Pledged Collateral, or the Lender's rights
with respect to the Pledged Collateral, is subject; and
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(vi) Any change in the name under which Acquisition
Sub or any subsidiary thereof conducts its business, any
change of the location of the chief executive office of
Acquisition Sub or any subsidiary thereof and the opening of
any new place of business or the closing of any existing place
of business, and any change in the location of the places
where any of the Pledged Collateral, or any part thereof, or
the books and records, or any part thereof, are kept;
(g) Consents, Etc. Under Transaction Documents. Furnish or
cause to be furnished to the Lender and the Collateral Agent, any
consents, approvals, waivers or modifications delivered or received by
Acquisition Sub or any of its subsidiaries pursuant to any of the Loan
Documents, the Financial Consulting Agreement (the "Consulting
Agreement") dated April 20, 1998 among Sun Capital Partners, Inc., a
Florida corporation ("Sun Capital"), WorldCorp and Acquisition Sub, the
Option Agreement (the "WorldCorp Option") dated April 20, 1998 between
WorldCorp and Sun Capital, the Option Agreement dated April 20, 1998
between Acquisition Sub and Sun Capital (the "Acquisition Sub Option";
the WorldCorp Option and the Acquisition Sub Option are referred to
herein as the "Options"), the Management Agreement (the "Management
Agreement") dated April 20, 1998 between WorldCorp and Acquisition Sub,
(together with the Options and the Loan Documents, the "Transaction
Documents"), promptly, and in any event within five days, upon receipt
or delivery thereof;
(h) Insurance. Maintain or cause to be maintained, with
financially sound and reputable insurers, insurance with respect to its
and its subsidiaries' properties and businesses against such casualties
and contingencies, of such types, on such terms and in such amounts
(including deductibles, co-insurance and self-insurance, if adequate
reserves are maintained with respect thereto) as is customary in the
case of entities of established reputations engaged in the same or a
similar businesses and similarly situated;
(i) Maintenance of Properties; Conduct of Business. Maintain
and keep, or cause to be maintained and kept, its and its subsidiaries'
properties in good repair, working order and condition (other than
ordinary wear and tear), so that the business carried on in connection
therewith may be properly conducted at all times and continue to
engage, and cause each of its subsidiaries to continue to engage, in
the businesses now conducted by them and in related businesses,
provided, however, that this Section 5(i) shall not prevent Acquisition
Sub or its subsidiaries from discontinuing the operation and the
maintenance of any of its or their properties if such discontinuance is
desirable in the conduct of its or their businesses and Acquisition Sub
or such subsidiaries has reasonably concluded that such discontinuance
would not, individually or in the aggregate, reasonably be expected to
have a material adverse effect on the business of Acquisition Sub or
its subsidiaries; provided, further, however, that this Section 5(i)
shall not prevent Acquisition Sub or any subsidiary formed after the
date hereof, from acquiring a business pursuant to Section 6(d)(ii)
hereof;
(j) Taxes. Duly and timely file, or cause to be filed, all tax
returns required to be filed in any jurisdiction and duly and timely
pay and discharge all taxes required to be
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paid and discharged, including, without limitation, all taxes shown to
be due and payable on such returns and all other taxes, assessments,
governmental charges, or levies imposed on it or any of its
subsidiaries or any of its of their properties, assets, income or
franchises, to the extent such taxes, assessments, charges or levies
have become due and payable and before they have become delinquent and
all claims for which sums have become due and payable that have or
might become a lien on properties or assets of Acquisition Sub or any
of its subsidiaries; provided, however, the Collateral Agent may, at
its option, pay any liens and security interests upon the Pledged
Collateral and any sums so expended shall become part of the Secured
Obligations (as defined in the Pledge Agreement), provided, further,
however, that Acquisition Sub and its subsidiaries need not pay any
such tax or assessment or claims if (i) the amount, applicability or
validity thereof is contested by Acquisition Sub or such subsidiary on
a timely basis in good faith and in appropriate proceedings, and
Acquisition Sub or such subsidiary has established adequate reserves
therefor on its books or (ii) the nonpayment of all such taxes,
assessments and claims in the aggregate could not reasonably be
expected to have a material adverse effect on the business of
Acquisition Sub or any subsidiary;
(k) Subsidiaries, Legal Existence. At all times, preserve and
keep in full force and effect, or cause to be prepared and kept in full
force and effect, its corporate existence, rights and franchises and
the appropriate existence, rights and franchises of its subsidiaries,
unless, in the good faith judgment of Acquisition Sub or its
subsidiaries, the termination of or failure to preserve and keep in
full force and effect such corporate existence, right or franchise
would not, individually or in the aggregate, have a material adverse
effect on Acquisition Sub's or any of its subsidiaries' businesses;
(l) ERISA.
(i) Comply with, cause its majority-owned
subsidiaries to comply with, and cause its other subsidiaries
to comply with, the funding requirements of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"),
with respect to employee benefit plans for its or their
respective employees, and shall not permit, with respect to
any employee benefit plan, any transaction that is either
prohibited under ERISA or that results in, or may result in,
Acquisition Sub or any of its subsidiaries incurring any
material liability; and
(ii) Promptly, and in any event within five days,
upon (i) filing the same with the Department of Labor or
Internal Revenue Service, furnish a copy of the most recent
actuarial statement required to be submitted under ERISA to
the Collateral Agent and (ii) receipt or dispatch, furnish to
the Collateral Agent any notice, report or demand sent or
received in respect of any ERISA requirement; and
(m) Compliance With Laws. Comply and cause its subsidiaries to
comply, in all material respects, or cause compliance in all material
respects with, all laws, ordinances, regulations or other governmental
restrictions applicable to Acquisition Sub and its
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subsidiaries, and maintain and cause its subsidiaries to maintain all
permits, franchises, governmental authorizations, licenses and
concessions required or proper to operate its or their businesses as
they are presently being operated.
6. Negative Covenants. WorldCorp and Acquisition Sub hereby agree that,
so long as any of the Notes are outstanding, neither they nor any of their
majority-owned subsidiaries shall, and WorldCorp and Acquisition Sub shall use
their best efforts, to not permit any other subsidiary, to:
(a) Indebtedness. Create, incur, assume, guarantee or suffer
to exist any Indebtedness (as defined herein) except:
(i) Indebtedness (as defined herein) to the
Lenders;
(ii) Indebtedness pursuant to the Revolving Credit
and Term Loan Agreement dated as of December 30, 1996 among
FryeTech, the financial institution parties thereto referred
to as Banks, and The First National Bank of Boston, as Agent
for the Banks (as from time to time amended, supplemented or
modified, the "Credit Agreement"), Permitted Supplier Debt (as
defined in the Credit Agreement), Indebtedness made or
permitted pursuant to Section 10.1 of the Credit Agreement and
any other Indebtedness of Paper and its subsidiaries on the
date hereof; and
(iii) Indebtedness, on the date hereof, of WorldCorp,
World Airways, Inc., a Delaware corporation ("World Airways"),
and any of World Airways' subsidiaries; and
(iv) Bank Indebtedness, including, without
limitation, Indebtedness under Section 6(a)(iii), of World
Airways, InteliData Technologies Corp., a Delaware corporation
("InteliData"), and any hereafter formed subsidiary or
subsidiaries of Acquisition Sub formed pursuant to Section
6(d)(iii), which does not, in any event, exceed $25,000,000 as
to any one of them or $50,000,000 to them in the aggregate;
(b) Liens.
(i) Create, incur, assume or suffer to exist any
mortgage, pledge, hypothecation, assignment, encumbrance,
charge or other lien, security interest or any interest or
title of any vendor, lessor, lender or other secured party
(each, a "Lien") upon any of the Pledged Collateral or any
other property or assets of Acquisition Sub or any of its
subsidiaries (other than pursuant to the Credit Agreement, or
created, incurred, assumed, or suffered to be created,
incurred or assumed pursuant to Section 10.2 of the Credit
Agreement) whether now owned or hereafter acquired;
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(ii) Transfer any such property or assets or income
or property therefrom for the purpose of subjecting the same
to the payment of Indebtedness or the performance of any other
obligation in priority to payment of its general creditors;
(iii) Acquire, or agree or have an option to acquire,
any property or assets upon conditional sale or title
retention or purchase money security agreement, device or
arrangement;
(iv) Suffer to exist for a period of more than thirty
days after the same shall have been incurred any Indebtedness
or claim or demand against it that, if unpaid, would by law or
upon bankruptcy or insolvency, or otherwise, be entitled to
any priority whatsoever over its general creditors; or
(v) Sell, assign or otherwise transfer (except to the
extent permitted by Section 6(c) hereof) any accounts,
contractual rights, general intangibles, chattel paper or
instruments, with or without recourse;
provided, however, that Acquisition Sub and its subsidiaries
may incur Liens (x) to the Lenders in compliance with the
terms of the Transaction Documents, (y) imposed by law, which
were incurred in the ordinary course of business and do not
secure Indebtedness for borrowed money, such as carriers',
warehousemen's, materialmen's and mechanics' liens and other
similar liens arising in the ordinary course of business, and
which do not in the aggregate materially detract from the
value of its property or assets or materially impair the use
thereof in the operation of business and (z) to secure bank
Indebtedness incurred pursuant to Section 6(a)(iv) but only if
such Liens are for assets owned by the respective borrower of
Indebtedness and do not create any lien upon the Pledged
Collateral or the capital stock of Acquisition Sub or any now
existing or hereafter formed subsidiary thereof;
(c) Dissolution, Sale of Assets. Dissolve, reorganize,
liquidate, acquire or sell any of the assets or capital stock of or to
any person or enter into any merger or consolidation with any person
except (w) dispositions in the ordinary course of business consistent
with past practice, other than the disposition of any capital stock,
(x) other than pursuant to Section 6(d), (y) dispositions not in excess
of $5,000,000 individually or $10,000,000 in the aggregate, other than
the disposition of any capital stock, or (z) dispositions by InteliData
of its interactive services or telecommunications divisions at their
fair market value as determined by the Board of Directors of
InteliData;
(d) Capital Ownership. Cause, permit or suffer any change in
Acquisition Sub's or any of its now or hereafter existing subsidiaries'
capital ownership, except (i) for the change resulting from the
exercise of all or part of the Acquisition Sub Option or the Warrants,
(ii) for the change resulting from issuances at fair market value of
InteliData by
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InteliData in amounts not to exceed $10,000,000 in the aggregate and
(iii) pursuant to the acquisition of a business by way of a purchase of
stock, merger or asset acquisition; provided, however, that (w) no
Event of Default exists prior to such acquisition (and is accompanied
by a no-default certificate dated the date of the consummation of such
transaction to that effect), (x) the consummation of such acquisition
does not create a significant likelihood of an Event of Default (and is
accompanied by a no-default certificate dated the date of the
consummation of such transaction to that effect), (y) the stock (or
comparable ownership interest) of the person formed or acquired
pursuant to such acquisition, if any, is (I) 100% owned directly by
Acquisition Sub or by one or more hereafter created subsidiaries of
Acquisition Sub (and is not owned directly or indirectly, by any other
direct or indirect subsidiary of Acquisition Sub) and (II) is pledged
to the Collateral Agent, as Agent on behalf of the Lenders, and on its
own behalf, which pledge grants them a perfected first priority
security interest in such stock (or comparable ownership interest), and
(z) the Previously Pledged Shares (as defined in the Pledge Agreement)
have been released from the Prior Pledge and a perfected first priority
security interest with respect to such shares is granted to the
Collateral Agent, as Agent on behalf of the Lenders, and on its own
behalf, under the Pledge Agreement;
(e) Investments, Loans and Other Transactions. Other than as
expressly permitted under this Note, (i) make, permit or suffer any
investment in, loan to, or any guarantee on behalf of, (ii) transfer,
sell, lease or assign any assets owned by it (by operation of law or
otherwise) to, or (iii) enter into, permit or suffer any other
transaction directly or indirectly with or for the benefit of, any
person, including, without limitation, investments in or for the
benefit of any affiliate, subsidiary, joint venture or partnership,
except for (w) transactions with Sun Capital or its assignee, (x) any
merger or acquisition pursuant to Section 6(d)(iii) hereof, (y)
investments in marketable direct or guaranteed obligations of the
United States of America that mature within one year from the date of
purchase by Acquisition Sub or such subsidiary and by Moody's Investors
Services or "A 1" by Standard and Poor's and (z) investments by
InteliData and World Airways that do not exceed $2,500,000 by any one
of them or $5,000,000 in the aggregate;
(f) Dividends, Restricted Payments. Declare or pay any
dividends, purchase any stock, provide for any return of capital or any
other dividends or make any distribution of any kind on, or purchase,
redeem or otherwise retire any of the capital stock of, Acquisition
Sub's or any of its subsidiaries' outstanding capital stock or set
aside any sum for any such purpose, including, without limitation, any
repurchase of any capital stock of Acquisition Sub or any of its
affiliates, or make any prepayment or other repurchase of any
Indebtedness of Acquisition Sub or any of its subsidiaries, except
that: (i) any party to either of the Tax Sharing Agreements may make a
payment pursuant to such Tax Sharing Agreement; (ii) any subsidiary of
Acquisition Sub may make a distribution to Acquisition Sub or its
subsidiary that is used solely to (A) pay any principal or interest due
on any of the Notes, (B) pay any amounts due under the Financial
Consulting Agreement (subject to the limitations imposed by Section
6(o) hereof), (C) make any payment due to WorldCorp under the
Management Agreement, (D) make a distribution permitted under Section
10.4 of the Credit Agreement and (E) make a
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distribution that is used solely to repay the Notes; and (iii) Paper
and any direct or indirect subsidiary of Paper may make any payments
permitted under Section 10.4 of the Credit Agreement;
(g) Business. Except as otherwise permitted by this Note, make
any material change in its business, or in the nature of its operation,
or liquidate or dissolve itself (or suffer any liquidation or
dissolution), or convey, sell, lease, assign, transfer or otherwise
dispose of any of its property, assets or business (by operation of law
or otherwise) except in the ordinary course of business and for a fair
consideration or dispose of any shares of stock or any Indebtedness,
whether now owned or hereafter acquired, or, discount, sell, pledge,
hypothecate or otherwise dispose of accounts receivable except to the
Lenders and the Collateral Agent;
(h) Subsidiaries. Form any subsidiary or transfer any of its
assets or property to any subsidiary or affiliate, or issue any capital
stock (or sell any assets of such subsidiary) other than pursuant to
any acquisition pursuant to Section 6(d)(iii) hereof;
(i) Amendments. Amend their articles or certificate of
incorporation, or by-laws, except for amendments that do not adversely
effect the holders of the Notes, or amend any of the Transaction
Documents or any agreements between WorldCorp or Acquisition Sub, or
any of their subsidiaries;
(j) Obligations Under the Notes. By amendment of its articles
of incorporation, or bylaws or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities
or any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of the Notes, but shall at all times in
good faith assist in the carrying out of all such terms and in the
taking of all such actions as may be necessary or appropriate in order
to protect the rights of the holders of the Notes hereunder and under
the Notes;
(k) Sale and Leaseback. Enter into any arrangement, directly
or indirectly, whereby Acquisition Sub or any subsidiary shall sell or
transfer any property owned by it in order then or thereafter to lease
such property or lease other property that Acquisition Sub or any
subsidiary intends to use for substantially the same purpose as the
property being sold or transferred, other than sales or transfers by
World Airways that are consistent with past practice and do not exceed
$5,000,000 individually or $10,000,000 in the aggregate;
(l) Employee Benefit Plans.
(i) Engage in any non-exempt "prohibited transaction"
within the meaning of Section 406 of ERISA or Section 4975 of
the Internal Revenue Code of 1986, as amended (the "Code"),
that could result in a material liability for Acquisition Sub
or any of its subsidiaries;
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(ii) Permit any pension plan to incur an "accumulated
funding deficiency," as such term is defined in Section 302 of
ERISA, whether or not such deficiency is or may be waived;
(iii) Fail to contribute to any pension plan in a
manner that could result in the imposition of a Lien on the
assets of Acquisition Sub or any of its subsidiaries; or
(iv) Permit or take any action that could result in
the aggregate benefit liabilities (within the meaning of
Section 4001 of ERISA) of all pension plans to exceed the
value of the aggregate assets of such plans, disregarding for
this purpose the benefit liabilities and assets of any such
plan with assets equal to or in excess of its benefit
liabilities;
(m) Stock Issuances. Except to the extent otherwise permitted
by this Note:
(i) Issue any capital stock, or any options, warrants
or other instruments, or enter into any agreement or
agreements that provide for the issuance of any capital stock,
or class thereof, or that are convertible into any class of
capital stock (other than issuances of shares of capital stock
upon the exercise of options granted prior to the date hereof
and the grant of stock options (and the shares of capital
stock issuable upon the exercise of such options) permitted by
currently existing stock option plans and in accordance
therewith);
(ii) Amend any agreement or agreements that provide
for the issuance of any capital stock, or class thereof, of
WorldCorp or Acquisition Sub, including, without limitation,
any repricing or other revision to any of their agreements,
options, warrants or other similar instruments, or to any of
their agreements, options, warrants or other similar
instruments that are convertible into any class of capital
stock;
(iii) Amend any agreement or agreements that provide
for the issuance of any capital stock, or class thereof, of
World Airways, including its options, warrants or other
similar instruments, that has the effect of lengthening the
term, increasing the number of shares issuable under, or
repricing the exercise price of, such options, warrants or
other similar instruments; or
(iv) Dispose of or license any rights or interests to
any intangible property, causing to or inject in the public
domain or make public, or dispose of or license or disclose to
any entity any intangible personal property not theretofore a
matter of public knowledge;
(n) Affiliate Transactions. Enter into any transaction
with, make any payment to or otherwise distribute any asset to any of
its directors, officers, or stockholders or any
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affiliate of any such person, except for the Tax Sharing Agreements,
the Management Agreement and transactions with Sun Capital or its
assignee; and
(o) Certain Payments. Permit any payments to be made by
Acquisition Sub to WorldCorp pursuant to the Management Agreement so
long as a default or Event of Default pursuant to Section 7(a) hereof
in any payments owed to the Lenders by Acquisition Sub or WorldCorp or
any of their subsidiaries occurs and is continuing.
For purposes of this Note, "Indebtedness" of any person shall mean (i)
all indebtedness for borrowed money; (ii) obligations under leases that, in
accordance with generally accepted accounting principles constitute capital
leases; (iii) notes payable and drafts accepted (including, without limitation,
cash overdrafts) representing extensions of credit, whether or not representing
obligations for borrowed money; (iv) any obligation owed for all or any part of
the deferred purchase price of property or services if the purchase price is due
more than six months from the date the obligation is incurred or is evidenced by
a note or similar written instrument; (v) all indebtedness secured by any Lien
on any property or asset owned or held by that person regardless of whether the
indebtedness secured thereby shall have been assumed by that person or is
non-recourse to the credit of that person; (vi) all guarantees, endorsements and
other contingent obligations, whether direct or indirect, in respect of
indebtedness of others, including, without limitation, any obligation to supply
funds to, or in any manner to invest in, directly or indirectly, any person, to
purchase indebtedness or to insure the owner of indebtedness against loss; (vii)
obligations in respect of letters of credit; and (viii) any interest rate
exchange transaction, pursuant to which a third party has agreed to pay such
person an amount equal to the amount of interest on a notional amount of
principal that would have been due and payable on such date.
7. Events of Default. The occurrence of any of the following events
shall be an "Event of Default" under this Note.
(a) Nonpayment. Acquisition Sub shall fail to pay, on or
before five business days after the date when due, any principal,
interest or other amounts payable hereunder;
(b) Breach.
(i) Acquisition Sub shall fail to comply with,
observe or perform in any material respect any of its
covenants, agreements or obligations contained in the
Transaction Documents and such failure shall not be cured or
waived in accordance with the terms hereof or thereof within
30 days after the occurrence thereof;
(ii) Acquisition Sub, WorldCorp or any of their
respective subsidiaries shall default in the payment of any
Indebtedness or other obligation owed to any person other than
the Lender, or default in the performance or observance of the
terms of any agreement, document or instrument pursuant to
which such Indebtedness or other obligation pursuant to which
such indebtedness or other
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obligation was created, secured or guaranteed, the effect of
which default is to cause or permit the holder of such
Indebtedness in excess of $1,000,000 or the obligee of such
obligation to cause or permit the same to be due prior to its
stated maturity; or
(iii) Acquisition Sub, WorldCorp or any of their
respective subsidiaries shall fail to comply with, observe,
perform or otherwise breach any covenant, agreement,
representation, warranty or other obligation to be performed
by them or such subsidiary under any material agreement
including, without limitation, the Credit Agreement, to which
either of them or any of their respective subsidiaries is a
party, and such failure shall not be cured or waived in
accordance with the terms thereof and the result of which is
reasonably likely to have a material adverse effect on the
business, financial condition, results of operations or
prospects of such person;
provided, however, that, until the day after the first
anniversary of the date hereof, any default by WorldCorp
pursuant to this Section 7(b) shall be an Event of Default
only if the holder of such Indebtedness causes the same to be
due prior to its stated maturity.
(c) Bankruptcy. (i) Acquisition Sub or WorldCorp or any of
their subsidiaries shall suffer, or consent to or apply for, the
appointment of a receiver, trustee, custodian, liquidator or other
officer with similar powers to take possession of all or a substantial
portion of its property or operate all or a substantial portion of its
business or any of its property, or Acquisition Sub or any subsidiaries
of Acquisition Sub or subsidiaries of WorldCorp shall generally fail to
pay its or their debts as they become due, or Acquisition Sub or any of
its subsidiaries or any of WorldCorp's subsidiaries shall admit in
writing its inability to pay its debts as they become due, or shall
make a general assignment for the benefit of creditors; or (ii)
Acquisition Sub, WorldCorp or any of their respective subsidiaries
shall file a voluntary petition in bankruptcy, or seeking
reorganization, in order to effect a plan or other arrangement with
creditors or any other relief under the United States Bankruptcy Code,
Title 11 of the United States Code, as amended or recodified from time
to time (the "Bankruptcy Code") or under any state or federal law
granting relief to debtors, whether now or hereafter in effect (or the
board of directors shall adopt any resolution or otherwise authorize
action to approve any of the foregoing); or (iii) any involuntary
petition or proceeding pursuant to the Bankruptcy Code or any other
applicable state or federal law relating to bankruptcy, reorganization
or other relief for debtors is filed or commenced against Acquisition
Sub, WorldCorp or any of their respective subsidiaries;
(d) Judgments, Etc. The entry of any judgment against
Acquisition Sub, WorldCorp or any of their respective subsidiaries, or
any attachment, levy or execution against any property of Acquisition
Sub, WorldCorp or any of their respective subsidiaries, other than
judgments, attachments, levies or executions that, individually or
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in the aggregate, do not have a material adverse effect on the business
of Acquisition Sub, WorldCorp or any of their respective subsidiaries,
as the case may be; or
(e) Dissolution or Liquidation. Acquisition Sub or any
affiliate of Acquisition Sub shall dissolve or liquidate, or there
shall be commenced an action for the involuntary dissolution of
Acquisition Sub, WorldCorp or any of their respective subsidiaries that
is not contested by an appropriate proceeding promptly instituted and
diligently prosecuted.
(f) Certain Corporate Action. The Board of Directors of
Acquisition Sub, WorldCorp or any of their subsidiaries shall vote to
adopt, authorize or otherwise approve any action that would result in
the breach of any covenant or agreement in any of the Transaction
Documents or that is itself an Event of Default.
8. Remedies. Upon the occurrence of an Event of Default:
(a) Acceleration. If an Event of Default occurs and is
continuing under Section 7 hereof, the holders of more than 50% of the
outstanding principal amount of the Notes (the "Majority in Interest"),
in accordance with the provisions of the Collateral Agent Agreement (as
amended, supplemented or modified, the "Collateral Agent Agreement")
among the Collateral Agent and all of the holders of the Notes, upon
written notice to Acquisition Sub, may cause the Collateral Agent to
declare the unpaid principal amount of this Note to be, and the same
shall thereupon become, due and payable, together with any and all
accrued interest thereon and all costs payable pursuant to this Note,
without presentment, demand, protest, diligence, any additional notice
whatsoever or other requirements of any kind, all of which are hereby
expressly waived by Acquisition Sub, except as otherwise required by
applicable law.
(b) Enforcement. If an Event of Default occurs and is
continuing under Section 7 hereof, a Majority in Interest may, without
notice to or demand upon Acquisition Sub, which are hereby expressly
waived by Acquisition Sub, cause the Collateral Agent to proceed in
accordance with the provisions of the Collateral Agent Agreement to
protect, exercise and enforce the rights and remedies of the Lenders
under the Notes against Acquisition Sub, and such other rights and
remedies as are provided by law or equity. Such proceeding may take
place either by suit in equity or by action at law, or both, and may be
for specific performance of any covenant or agreement contained in this
Note or in the aid of the exercise of any power granted in this Note.
(c) Control of Board.
(i) For so long as any of the Notes remain
outstanding, if an Event of Default occurs and is continuing
under Section 7 hereof, a Majority in Interest (or the
Collateral Agent, as instructed by a Majority in Interest) may
designate an additional number of directors to the Board of
Directors of Acquisition Sub that constitute a majority of
such Board of Directors, and WorldCorp and Acquisition Sub
shall take all necessary action to effect the election of such
directors,
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including, without limitation, effecting any amendments to the
certificate of incorporation and by-laws of Acquisition Sub as
may be necessary to permit the election of, and voting for,
such additional directors.
(ii) For so long as any of the Notes remain
outstanding, if an Event of Default occurs and is continuing
under Section 7 hereof, WorldCorp and Acquisition Sub shall
allow two designated representatives of the Collateral Agent
to attend all meetings of their respective Boards of Directors
(which such representatives shall have all of the privileges
and benefits of a Director of their respective Boards of
Directors, except voting rights, but shall have none of the
duties, responsibilities or liabilities of such Directors by
virtue of attendance at such meetings or the failure to attend
the same), give the Collateral Agent the same information that
is provided to such Directors at such meetings and give the
Collateral Agent the same notice of such meetings that is
provided to Directors of WorldCorp and Acquisition Sub.
(iii) For so long as any of the Notes remain
outstanding, if an Event of Default occurs and is continuing
under Section 7 hereof, WorldCorp and Acquisition Sub shall
use their best efforts to cause their respective Subsidiaries,
InteliData, World Airways and Paper, to each allow two
designated representatives of the Collateral Agent to attend
all meetings of their respective Boards of Directors (which
such representatives shall have all of the privileges and
benefits of a Director of their respective Boards of
Directors, except voting rights, but shall have none of the
duties, responsibilities or liabilities of such Directors by
virtue of attendance at such meetings or the failure to attend
the same), give the Collateral Agent the same information that
is provided to such direction at such meetings and give the
Collateral Agent the same notice of such meetings that is
provided to their respective Directors.
(d) Waiver. If an Event of Default occurs and is continuing
under Section 7 hereof, only a Majority in Interest (or the Collateral
Agent, as instructed by a Majority in Interest) may waive such Event of
Default.
9. Miscellaneous.
(a) Subscription and Contribution Agreement. This Note
has been delivered pursuant to the Contribution Agreement, and is
subject to all of the terms and conditions thereof.
(b) Collateral Agent May Perform. The Collateral Agent may
perform any act that a Majority in Interest is permitted to perform
hereunder so long as the Collateral Agent is authorized to perform such
act by a Majority in Interest, either pursuant to the Collateral Agent
Agreement or otherwise.
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(c) Waiver of Jury Trial and Setoff; Consent to
Jurisdiction; Etc.
(i) In any litigation in any court with respect to,
in connection with, or arising out of this Note or any instrument or
document delivered pursuant to this Note, or the validity, protection,
interpretation, collection or enforcement hereof or thereof, or any
other claim or dispute howsoever arising, between Acquisition Sub or
WorldCorp, on one hand, and the Lender, on the other hand, Acquisition
Sub and WorldCorp, to the fullest extent they may legally do so, (i)
waive the right to interpose any setoff, recoupment, counterclaim or
cross-claim in connection with any such litigation, irrespective of the
nature of such setoff, recoupment, counterclaim or cross-claim, unless
such setoff, recoupment, counterclaim or cross-claim could not, by
reason of any applicable federal or state procedural laws, be
interposed, pleaded or alleged in any other action and (ii) WAIVE TRIAL
BY JURY IN CONNECTION WITH ANY SUCH LITIGATION AND ANY RIGHT THEY MAY
HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY,
PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN
ADDITION TO, ACTUAL DAMAGES. ACQUISITION SUB AND WORLDCORP AGREE THAT
THIS SECTION 9(c) IS A SPECIFIC AND MATERIAL ASPECT OF THIS NOTE AND
ACKNOWLEDGE THAT THE LENDER WOULD NOT EXTEND ANY CREDIT TO ACQUISITION
SUB HEREUNDER IF THIS SECTION 9(c) WERE NOT PART OF THIS NOTE.
(ii) Acquisition Sub and WorldCorp hereby irrevocably
consent to the exclusive jurisdiction of any State or Federal Court
located within the County of Palm Beach, State of Florida, in
connection with any action or proceeding arising out of or relating to
this Agreement or any document or instrument delivered pursuant to this
Agreement or otherwise. In any such litigation, Acquisition Sub and
WorldCorp waive, to the fullest extent they may effectively do so,
personal service of any summons, complaint or other process and agrees
that the service thereof may be made by certified or registered mail
directed to Acquisition Sub at its address set on the first page hereof
or to WorldCorp at its address for notices in the Pledge Agreement.
Acquisition Sub and WorldCorp hereby waive, to the fullest extent they
may effectively do so, the defenses of forum non conveniens and
improper venue.
(d) Notice. Any notice, request, demand or other communication
permitted or required to be given hereunder shall be in writing, shall
be sent by one of the following means to the addressee at the address
set forth above with a copy to the Collateral Agent as set forth in the
Collateral Agent Agreement (or at such other address as shall be
designated hereunder by notice to the other parties and persons
receiving copies, effective upon actual receipt) and shall be deemed
conclusively to have been given: (i) on the first business day
following the day timely deposited with Federal Express (or other
equivalent national overnight courier) or United States Express Mail,
with the cost of delivery prepaid; (ii) on the fifth business day
following the day duly sent by certified or registered United States
mail, postage prepaid and return receipt requested; or (iii) when
otherwise actually delivered to the addressee. Copies may be sent by
regular first-class mail, postage
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prepaid, to such person(s) as a party may direct from time to time by
notice to the others, but failure or delay in sending copies shall not
affect the validity of any such notice, request, demand or other
communication so given to a party.
(e) Amendments and Modification. No provision hereof may be
altered, amended, waived or limited except by written instrument
expressly referring to this Note and to such provision and executed by
Acquisition Sub and the Collateral Agent.
(f) Governing Law. This Note shall be governed by, and
construed and enforced in accordance with, the laws of the State of
Delaware without regard to principles of conflicts or choice of law (or
any other law that would make any substantive laws of any state other
than the State of Delaware applicable hereto).
(g) Expenses. Acquisition Sub shall pay or reimburse within 30
days of demand therefore by the Collateral Agent or any Lender any and
all reasonable out-of-pocket costs and expenses incurred by the
Collateral Agent or any Lender, whether directly or indirectly, in
connection with the enforcement and adjudication of this Note. The
Collateral Agent and any such Lender shall endeavor to provide
reasonable documentation in connection with any demand for payment
under this Section.
(h) Captions; Certain Definitions. The section and paragraph
headings contained in this Note are solely for the purpose of
reference, are not part of the agreement of the parties and shall not
in any way affect the meaning or interpretation of this Note. All
capitalized terms used herein and not otherwise defined shall have the
meanings given to them in the Contribution Agreement. As used in this
Note: (i) the term "person" shall mean and include an individual, a
partnership, a joint venture, a corporation, a limited liability
company, a trust, an unincorporated organization and a government or
any department or agency thereof; (ii) the term "affiliate" shall have
the meaning set forth in Rule 12b-2 of the General Rules and
Regulations promulgated under the Securities Exchange Act of 1934, as
amended; and (iii) the term "subsidiary" of any person shall mean any
person of which more than 20% of the total voting power of shares of
stock (or equivalent ownership or controlling interest) entitled
(without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof, is, at the time,
owned or controlled, directly or indirectly, by that person, or one or
more subsidiaries of that person, or a combination thereof and, in any
event, shall include InteliData, with respect to WorldCorp, and Paper
and World Airways with respect to Acquisition Sub (for the purposes
hereof, World Airways shall be a "majority-owned" subsidiary of
Acquisition Sub).
(i) Not Negotiable. This Note is not negotiable. It may be
assigned without the consent of Acquisition Sub; provided, however,
that it shall be a condition of any transfer that the transferee of
this Note must sign the Collateral Agent Agreement as a Lender
thereunder.
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(j) Presentment. Presentment for payment, notice of dishonor,
protest and notice of protest are hereby each waived by Acquisition
Sub. Any other waiver or consent respecting this Note shall be
effective only if in writing and granted by a Majority in Interest in
accordance with the Collateral Agent Agreement and then only in the
specific instance and for the specific purpose for which given. No such
other waiver or consent shall be deemed, regardless of frequency given,
to be a further or continuing waiver or consent. The failure or delay
of a Majority in Interest at any time or times to require performance
of, or to exercise the Lender's rights with respect to, any term or
provision of this Note in no manner shall affect a Majority in
Interest's right at a later time to enforce any such term or provision.
No notice to or demand on Acquisition Sub in any case shall entitle
such party to any other or further notice or demand. All rights,
powers, privileges, remedies and other interests of the Lender under
this Note and applicable law are cumulative and not alternatives.
(k) Entire Agreement. This Note contains the entire agreement
of the parties and supersedes all other agreements and understandings,
oral or written, with respect to the matters contained herein.
[THE REST OF THIS PAGE INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, Acquisition Sub and WorldCorp have
executed and delivered this Note as of the date first written above.
WORLDCORP ACQUISITION CORP.
By: ________________________
Name:
Title:
Solely as to Sections 4, 5,
8, 9(c) and 9(d):
WORLDCORP.
By: ________________________
Name:
Title:
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Exhibit F
GUARANTY
GUARANTY (this "Guaranty"), dated April 20, 1998, made by
WORLDCORP, INC., a Delaware corporation ("WorldCorp"), in favor of the
Collateral Agent (as defined herein), as agent on behalf of the holders of the
notes referred to below (individually, a "Lender" and collectively, the
"Lenders").
WHEREAS, certain of the Lenders are contributing their shares
of the capital stock of Paper Acquisition Corp., a Delaware corporation
("Paper"), to WorldCorp Acquisition Corp., a Delaware corporation ("Acquisition
Sub"), pursuant to a Subscription and Contribution Agreement dated as of the
date hereof (the "Contribution Agreement") among WorldCorp, Inc., a Delaware
corporation, Acquisition Sub, Paper and certain of the Lenders and the remainder
of the Lenders will contribute their shares of Paper capital stock pursuant to a
contribution agreement on the same terms as the Contribution Agreement;
WHEREAS, pursuant to the Contribution Agreement, Acquisition
Sub will issue an aggregate of $15 million of five-year 8% Senior Secured
Promissory Notes (collectively, the "Five-Year Notes") and an aggregate of $1
million of one-year 8% Senior Secured Promissory Notes (together with the
Five-Year Notes, the "Notes"; each capitalized term used but not defined herein
shall have the meaning ascribed to it in the Notes), Acquisition Sub is
incurring other obligations to the Lenders pursuant to an amount (the
"Earn-Out") to be paid by Acquisition Sub as set forth in Schedule 1.3(b) to the
Contribution Agreement.
WHEREAS, as a condition to the Lenders transferring their
shares of capital stock of Paper to Acquisition Sub, the Lenders have required
the execution and delivery of this Guaranty by WorldCorp; and
WHEREAS, WorldCorp has executed a Pledge Agreement dated as of
the date hereof among WorldCorp, Acquisition Sub and Sun Paper Advisors, Inc., a
Florida corporation (the "Collateral Agent") (as amended, modified or
supplemented from time to time, the "Pledge Agreement"), in favor of the Lenders
to secure its obligations under this Guaranty.
NOW, THEREFORE, in consideration of the premises set forth
herein and for other good and valuable consideration, the parties hereto agree
as follows:
1. Defined Terms. Unless otherwise defined herein,
terms which are defined in the Pledge Agreement and used herein are so used as
so defined.
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2. Guaranty.
(a) WorldCorp hereby, unconditionally and irrevocably,
guarantees to the Collateral Agent as agent on behalf of the Lenders, the prompt
and complete payment and performance by Acquisition Sub, when due (whether at
stated maturity, by acceleration or otherwise), of all the Secured Obligations,
and WorldCorp further agrees to pay, as primary obligor, any and all reasonable
expenses (including, without limitation, all reasonable fees and disbursements
of counsel) that may be paid with respect to, or collecting, any or all of the
Secured Obligations and/or enforcing any rights with respect thereto; provided,
however, that notwithstanding anything herein to the contrary (and, other than
pursuant to any right of setoff to credit, indebtedness or claims to, or for the
credit or account of, Acquisition Sub pursuant to Section 3 hereof), WorldCorp's
obligations under the Guaranty is a limited recourse obligation of WorldCorp and
may be satisfied solely by recourse to the Pledged Collateral.
(b) Subject only to the proviso in Section 2(a), the Guaranty
contained herein is an absolute, unconditional and continuing guaranty of the
full and punctual payment and performance by WorldCorp of the Secured
Obligations, is not a guaranty of collection, and is no way conditioned upon any
requirement that the Lenders (or the Collateral Agent on their behalf) first
collect or attempt to collect the Secured Obligations, or any portion thereof,
from Acquisition Sub, or resort to any security or any other means of obtaining
payment of any of the Secured Obligations. Payments by WorldCorp may be required
by the Lenders on a number of occasions.
(c) No payment or payments made by Acquisition Sub or any
other person by virtue of any action or proceeding or any setoff or
appropriation or appropriation at any time, or from time to time, in reduction
of, or in payment of the Secured Obligations, shall be deemed to modify, reduce,
release or otherwise affect, the liability of WorldCorp hereunder, which shall
remain until the Secured Obligations are permanently reduced to zero.
(d) WorldCorp covenants and agrees that whenever, at any time,
or from time to time, it shall make any payment to the Collateral Agent on
account of its liability hereunder, it shall notify the Collateral Agent in
writing that such payment is made under this Guaranty for such purpose.
3. Right of Setoff. The Collateral Agent is hereby irrevocably
authorized at any time and from time to time following the occurrence of an
Event of Default, without notice to WorldCorp, any such notice being hereby
waived by WorldCorp, to set off and appropriate and apply any and all currency,
and any other credits, indebtedness or claims, in any currency, in each case
whether direct or indirect, absolute or contingent, matured or unmatured, at any
time held or owing by the Collateral Agent or any Lender to or for the credit or
the account of WorldCorp in any case, only to the extent any such deposits,
currency, credits, indebtedness or claims constitute Pledged Collateral (as
defined in the Pledge Agreement), or any part thereof in such amounts as the
Collateral Agent or such Lender may elect, on account of the liabilities of
WorldCorp
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hereunder, whether or not the Collateral Agent or such Lender has made any
demand for payment. The Collateral Agent or such Lender shall notify WorldCorp
(as to which a set off was made) promptly of (but in no event later than five
business days after) any such setoff and the application made by the Collateral
Agent or such Lender of the proceeds application. The rights of the Collateral
Agent or any Lender under this paragraph are in addition to any other rights and
remedies (including, without limitation, other rights of setoff) that the
Collateral Agent or the Lenders may have.
4. Subrogation. Upon any payment by WorldCorp of any sums due
to the Lenders as provided herein, all rights of WorldCorp against Acquisition
Sub arising as a result thereof by way of right of subrogation, reimbursement,
indemnity or otherwise shall in all respects be subordinate and junior in right
of payment to the prior indefeasible payment in full in cash of all Secured
Obligations to zero. If any amount (a "Non-Permitted Payment") shall be paid to
WorldCorp on account of such subrogation rights at any time when all of the
Secured Obligations shall not have been paid in full, such Non-Permitted Payment
shall be held by WorldCorp in trust for the Lenders segregated from other funds
of WorldCorp, and shall, forthwith upon (and in any event within five business
days of) receipt by WorldCorp, be turned over to the Collateral Agent in the
exact form received by WorldCorp (duly endorsed by WorldCorp to the Collateral
Agent, if required), to be applied against the Secured Obligations, whether
matured or unmatured, in such order as the Collateral Agent may determine,
subject to the provisions of the Pledge Agreement.
5. Amendments, etc., With Respect to the Secured Obligations.
WorldCorp shall remain obligated hereunder notwithstanding that, without any
reservation of rights against WorldCorp, and without notice to or further assent
by WorldCorp, any demand for payment of any of the Secured Obligations made by
the Collateral Agent or Lenders representing more than 50% of the outstanding
principal amount of the Notes (the "Majority in Interest") may be rescinded by
the Collateral Agent or such Majority in Interest, and any of the Secured
Obligations continued, and the Secured Obligations, or the liability of any
other party upon or for any part thereof, or any collateral security or guaranty
therefor or right of offset with respect thereto, may, from time to time, or any
collateral security or guaranty therefor or right of offset with respect
thereto, may, from time to time, in whole or in part, be renewed, extended,
amended, modified, accelerated, compromised, waived, surrendered or released by
the Collateral Agent or a Majority in Interest, and this Guaranty, the
Contribution Agreement, the Pledge Agreement or any other document executed in
connection herewith or therewith may be amended, modified, supplemented or
terminated, in whole or in part, as the Collateral Agent or Majority in Interest
may deem advisable from time to time, and any guaranty or right of offset at any
time held by the Collateral Agent or Majority in Interest for the payment of the
Secured Obligations may be sold, exchanged, waived, surrendered or released.
When making any demand hereunder against WorldCorp, the Collateral Agent or
Majority in Interest may, but shall be under no obligation to, make a similar
demand on any other person (including, without limitation, Acquisition Sub), and
any failure by the Collateral Agent or Majority in Interest to make any such
demand or to collect any payments from any other person (including, without
limitation, Acquisition Sub) or any such other guarantor or any release of any
other person or entity (including, without limitation,
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Acquisition Sub) shall not impair or affect the rights and remedies, express or
implied, or as a matter of law, of the Collateral Agent or the Lenders against
WorldCorp. For the purposes hereof "demand" shall include the commencement and
continuance of any legal proceedings.
6. Guaranty Absolute and Unconditional; Termination. WorldCorp
waives any and all notice of the creation, renewal, extension or accrual of the
Secured Obligations and notice of, or proof of reliance by, the Lenders or the
Collateral Agent of reliance on, this Guaranty; and the Secured Obligations
shall be deemed to have been created, contracted or incurred in reliance upon
this Guaranty. WorldCorp waives diligence, presentment, protest, demand for
payment and notice of default or non-payment to or upon Acquisition Sub or
itself with respect to the Secured Obligations. The Guaranty shall be construed
as a continuing, absolute and unconditional guaranty of payment without regard
to (i) the validity or enforceability of any of the Notes, and of the Secured
Obligations or guaranty or right of offset with respect thereto at any time or
from time to time held by the Lenders or the Collateral Agent, (ii) any defense,
setoff or counterclaim (other than a defense of payment or performance) that may
at any time be available or asserted by WorldCorp or Acquisition Sub against the
Lenders or the Collateral Agent, as the case may be, or (iii) any other
circumstance whatsoever that constitutes, or might be construed to constitute,
an equitable or legal discharge of WorldCorp or Acquisition Sub for the Secured
Obligations, under this Agreement, in bankruptcy or in any other instance. Any
failure by the Lenders or the Collateral Agent, as the case may be, to pursue
such other rights or remedies, or to collect any payments from Acquisition Sub
or any other person, or to exercise any right of offset, or any release of
Acquisition Sub or any such other person or guaranty or right of offset, shall
not relieve WorldCorp of any liability hereunder, and shall not impair or affect
the rights and remedies, whether express, implied or available as a matter of
law, to the Lenders or the Collateral Agent against WorldCorp. This Guaranty
shall remain in full force and effect and be binding in accordance with and to
the extent of its terms upon WorldCorp and the successors and assigns thereof,
and shall inure to the benefit of the Collateral Agent and the Lenders and its
and their successors and endorsees and permitted transferees and assigns, until
the obligations of WorldCorp under this Guaranty shall have been satisfied by
payment in full in cash or in another manner acceptable to the Collateral Agent
or a Majority in Interest of the Secured Obligations and permanent reduction of
the Secured Obligations to zero, upon the occurrence of all of which this
Guaranty shall, subject to Section 7 hereof, terminate.
7. Reinstatement. The Guaranty shall continue to be effective,
or be reinstated, as the case may be, if at any time, payment, or any part
thereof, of any of the Secured Obligations is rescinded or is or must otherwise
be restored or returned by Acquisition Sub or upon or as a result of the
appointment of a receiver, intervenor or conservator or, or trustee or similar
officer for, Acquisition Sub or any substantial part of its property, or
otherwise, as though such payments had not been made.
8. Payments. WorldCorp hereby agrees that satisfaction of the
Secured Obligations shall be made to the Lenders without setoff (other than with
respect to any obligations of the Lenders to Acquisition Sub pursuant to Section
6.1 [Indemnification by the
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Shareholders] of the Contribution Agreement), deduction, withholding or
counterclaim, by wire transfer or delivery to the Collateral Agent or at such
other place as the Collateral Agent or a Majority in Interest may direct from
time to time by notice to WorldCorp.
9. Representations and Warranties of WorldCorp. WorldCorp
hereby represents and warrants that:
(a) Corporate Organization, Etc. Each of WorldCorp,
Acquisition Sub and World Airways is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, with full
corporate power to own its assets and to carry on its business as it is now
being conducted. Each of WorldCorp, Acquisition Sub and World Airways is
qualified or licensed to do business as a foreign corporation and is in good
standing in those jurisdictions in which the failure to so qualify would have a
material adverse effect on the business or financial condition of WorldCorp and
its subsidiaries, taken as a whole. WorldCorp and Acquisition Sub have the power
and authority to execute and deliver the Transaction Documents (as defined in
the Notes) executed by them and the agreements and instruments contemplated
herein and to perform their obligations thereunder.
(b) Authorization. The execution, delivery and performance by
the WorldCorp or Acquisition Sub of the Transaction Documents to which they are
a party and the performance by the WorldCorp and Acquisition Sub of the
transactions contemplated thereby have been duly authorized by all requisite
corporate action of WorldCorp or Acquisition Sub, as the case may be, and do not
contravene any provisions of law or any order of any court or other agency of
government or their certificates of incorporation and do not contravene any
agreement or other instrument by which either is bound or by which any of their
assets are affected or violate any judgment, order, injunction, decree, statute,
rule or regulation applicable to either of them. Other than approvals under the
Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended, and the rules
and regulations promulgated thereunder, no consents, waivers, approvals,
authorizations or orders of, or registrations or qualifications with, any
person, bank, corporation, association, governmental body or court having
authority or power to regulate, supervise or direct the business and affairs of
WorldCorp or Acquisition Sub are necessary for the consummation by them of the
transactions contemplated by the Transaction Documents. The Transaction
Documents and instruments contemplated thereby are duly and validly executed and
delivered by WorldCorp and/or Acquisition Sub and (assuming due authorization,
execution and delivery by each other party thereto) constitute the legal, valid
and binding obligations of WorldCorp or Acquisition Sub, as the case may be,
enforceable against them in accordance with their respective terms.
(c) Capitalization.
(i) WorldCorp has authorized 60,000,000 shares of
common stock, par value $1.00 per share, of which 13,883,243 shares
were outstanding at March 31, 1998 and 35,000,000 shares of preferred
stock, par value $.01 per share, of which no
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shares were issued and outstanding at March 31, 1998. Acquisition Sub
has authorized 2,000 shares of common stock, par value $.01 per share
of which no shares are issued and outstanding. World Airways has
authorized 40,000,000 shares of common stock, par value of $.001 per
share, of which 7,230,064 shares were outstanding at March 31, 1998.
Except as disclosed in the SEC Documents and except for the Acquisition
Sub Warrant Agreements, the WorldCorp Option Agreement and the
Acquisition Sub Option Agreement there are no outstanding options,
warrants, rights to acquire or subscribe to, or calls or commitments of
any character whatsoever to which WorldCorp, Acquisition Sub or World
Airways is a party or may be bound, requiring the issuance or sale of
shares of any class of capital stock or other equity securities of
WorldCorp, Acquisition Sub or World Airways or securities or rights
convertible into or exchangeable for such shares or other equity
securities, and there are no contracts, commitments, understandings or
arrangements for which WorldCorp, Acquisition Sub or World Airways is
or may become bound to issue additional shares of its capital stock or
other equity securities or options, Acquisition Sub Warrant Agreements,
or rights to acquire or subscribe to any additional shares of any class
of its capital stock or other equity securities or securities
convertible into or exchangeable for such shares or other equity
securities. There is no existing arrangement that requires or permits
any shares of the capital stock of WorldCorp, Acquisition Sub or World
Airways to be voted by or at the discretion of anyone other than the
record owner thereof and there are no proxies provided for such a
voting arrangement. The shares of common stock issuable upon exercise
of the WorldCorp Option Agreement, the Acquisition Sub Option Agreement
and the Acquisition Sub Warrant Agreements will be, when paid for in
accordance to the terms and conditions of the relevant agreement, free
and clear of all liens, charges and encumbrances, fully paid and
non-assessable.
(ii) As of the date hereof, WorldCorp's total
indebtedness was $72,025,000 consisting of: $65,000,000 of convertible
subordinated debentures; $5,000,000 senior subordinated notes;
$2,000,000 owed to World Airways; and a $25,000 capital lease
obligation.
(iii) WorldCorp owns 3,702,586 shares and 9,179,273
shares, respectively, of the common stock of World Airways and
InteliData Technologies Corp., a Delaware corporation ("InteliData).
Except for 1,000,000 of World Airways pledged to World Airways all of
such shares are owned free and clear of all liens, charges and
encumbrances.
(d) SEC Documents; Financial Statements.
(i) Each of WorldCorp and World Airways has timely
filed all reports required to be filed by it with the Securities and
Exchange Commission (the "SEC") since January 1, 1995, except for
WorldCorp's fiscal 1997 Annual Report on Form 10-K, pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
the rules and regulations thereunder. WorldCorp has provided the
Collateral Agent with
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copies of (i) WorldCorp's and World Airways' annual reports on Form
10-K for the years ended December 31, 1995, 1996 and 1997 (such annual
report of WorldCorp for 1997 being in draft form), and (ii) WorldCorp's
and World Airways' quarterly reports on Form 10-Q for the quarters
ended March 31, 1997, June 30, 1997 and September 30, 1997
(collectively, together with any other reports or filings made by
WorldCorp or World Airways since January 1, 1995 with the SEC pursuant
to the requirements of the Securities Act of 1933 (the "Securities
Act") or the Exchange Act or the rules and regulations thereunder
(collectively, the "SEC Documents"). As of their respective dates, the
SEC Documents complied in all material respects with the requirements
of the Exchange Act, the Securities Act and the rules and regulations
of the SEC promulgated thereunder. Except to the extent that
information contained in any SEC Document has been revised or
superseded by a later filed SEC Document (which was filed prior to the
date of this Agreement), none of the SEC Documents contains any untrue
statement of a material fact or omits to state any material fact
required to be stated therein or necessary in order to make the
statement therein, in light of the circumstances under which they were
made, not misleading.
(ii) Financial Statements. The financial statements
of WorldCorp and World Airways included in the SEC Documents comply as
to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis during the
periods involved and fairly present the consolidated financial position
of WorldCorp and its subsidiaries and World Airways and its
subsidiaries as of the respective dates thereof and the consolidated
results of their operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end tax
and audit adjustments). Except as set forth in the SEC Documents,
neither WorldCorp nor any of WorldCorp's subsidiaries has any material
liabilities or obligations which, individually or in the aggregate, are
reasonably likely to have a material adverse effect on the business or
financial condition of WorldCorp and its subsidiaries, taken as a
whole.
(e) Ordinary Course; No Material Adverse Change. The business
of WorldCorp and its subsidiaries has been conducted in the ordinary course
since December 31, 1997. WorldCorp and its subsidiaries have not suffered any
material adverse change in their business, operations, condition (financial or
otherwise), properties, assets, liabilities or earnings, taken as a whole, since
December 31, 1997, other than changes described in Section 2.4 of the
Contribution Agreement.
10. Affirmative Covenants. WorldCorp hereby agrees that so
long as any of the Notes are outstanding, it shall:
(a) Further Assurances. Execute and deliver, and cause
each of WorldCorp's subsidiaries to execute and deliver, any and all documents
and instruments in connection with the
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transactions contemplated by the Transaction Documents (as defined in any of the
Notes), including financing statements and continuation statements, as the
Collateral Agent shall require;
(b) Certain Expenses. On demand, to pay all reasonable costs
and expenses incurred by the Collateral Agent or the Lenders (including
reasonable attorneys' fees) in perfecting, protecting or realizing upon the
Pledged Collateral, or otherwise enforcing or preserving any of its or their
rights under or in connection with any of the Transaction Documents (as defined
in any of the Notes), or in connection with the administration, interpretation,
modification or amendment of the Transaction Documents. Until the Collateral
Agent is so reimbursed, such costs and expenses, including interest thereon at
the rate charged hereon, shall become part of the Secured Obligations;
(c) Consents, Etc. Under Transaction Documents. Furnish or
cause to be furnished to the Lender and the Collateral Agent, any consents,
approvals, waivers or modifications delivered or received by WorldCorp or any of
its subsidiaries pursuant to any of the Transaction Documents, promptly, and in
any event within five days, upon receipt or delivery thereof.
11. Miscellaneous.
(a) No Waiver; Cumulative Remedies. Neither the Collateral
Agent, a Majority in Interest nor any Lender shall, by any act (except by a
written instrument pursuant to Section h hereof) or delay, indulgence, omission
or otherwise be deemed to have waived any right or remedy hereunder or to have
acquiesced in any Event of Default or in any breach of any of the terms and
conditions hereof. No failure to exercise, nor any delay in exercising, on the
part of any Lender, the Collateral Agent or a Majority in Interest, any right,
power or privilege hereunder shall operate as a waiver thereof. No single or
partial exercise of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. A waiver by the Collateral Agent or a Majority in Interest of any
right or remedy hereunder on any one occasion shall not be construed as a bar to
any right or remedy which the Collateral Agent or a Majority in Interest would
otherwise have on any future occasion. The rights and remedies herein provided
are cumulative, may be exercised singly or concurrently and are not exclusive of
any rights or remedies provided by law.
(b) Binding Nature. This Guaranty shall be binding upon the
respective successors and assigns of WorldCorp, and shall, together with the
rights and remedies of the Collateral Agent and the Lenders hereunder, be
binding upon and inure to the benefit of the Collateral Agent and the Lenders
and its and their successors and permitted assigns.
(c) Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware without regard
to principles of conflicts or choice of law (or any other law that would make
any substantive laws of any state other than the State of Delaware applicable
hereto).
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(d) Waiver of Jury Trial and Setoff; Consent to
Jurisdiction; Etc.
(i) In any litigation in any court with respect to, in
connection with, or arising out of this Guaranty, the Notes or any
instrument or document delivered hereby or thereby, or the validity,
protection, interpretation, collection or enforcement hereof or
thereof, or any other claim or dispute howsoever arising, between
WorldCorp and the Collateral Agent or the Lenders, WorldCorp, to the
fullest extent it may legally do so, (i) waives the right to interpose
any setoff, recoupment, counterclaim or cross-claim in connection with
any such litigation, irrespective of the nature of such setoff,
recoupment, counterclaim or cross-claim, unless such setoff,
recoupment, counterclaim or cross-claim could not, by reason of any
applicable federal or state procedural laws, be interposed, pleaded or
alleged in any other action and (ii) WAIVES TRIAL BY JURY IN CONNECTION
WITH ANY SUCH LITIGATION AND ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER
IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO,
ACTUAL DAMAGES. WORLDCORP AGREES THAT THIS SECTION 11(d) IS A SPECIFIC
AND MATERIAL ASPECT OF THIS GUARANTY AND ACKNOWLEDGES THAT THE LENDERS
WOULD NOT EXTEND TO ACQUISITION SUB ANY FINANCIAL ACCOMMODATIONS UNDER
THE NOTES IF THIS SECTION 11(d) WERE NOT PART OF THIS GUARANTY.
(ii) WorldCorp hereby irrevocably consents to the exclusive
jurisdiction of any State or Federal Court located within the County of
Palm Beach, State of Florida, in connection with any action or
proceeding arising out of or relating to the Contribution Agreement,
this Guaranty or any Notes or any document or instrument delivered
hereby or thereby. In any such litigation, WorldCorp waives, to the
fullest extent it may effectively do so, personal service of any
summons, complaint or other process and agree hereby and thereby that
the service thereof may be made by certified or registered mail
directed to WorldCorp, at its address for notice determined in
accordance with Section 11(g) hereof. WorldCorp hereby waives, to the
fullest extent it may effectively do so, the defenses of forum non
conveniens and improper venue.
(e) Expenses. WorldCorp agrees to pay or reimburse within 30
days of demand therefore by the Collateral Agent or any Lender any and all
reasonable out-of-pocket costs and expenses incurred by the Collateral Agent or
any Lender, whether directly or indirectly, in connection with the enforcement
and adjudication of this Agreement, the Contribution Agreement, any of the Notes
or rights created under any documents executed in connection herewith or
therewith. The Collateral Agent and any such Lender shall endeavor to provide
reasonable documentation in connection with any demand for payment under this
Section.
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(f) Admissibility of Guaranty. WorldCorp agrees that any copy
of this Guaranty signed by it and transmitted by telecopier for delivery to the
Collateral Agent shall be admissible in evidence as the original itself in any
judicial or administrative proceeding, whether or not the original is in
existence.
(g) Address for Notices. Any notice or other communication
under the provisions of this Guaranty shall be given in writing and delivered in
person, by reputable overnight courier or delivery service, by facsimile machine
(receipt confirmed) or by registered or certified mail, return receipt
requested, directed to its addresses set forth below (or to any new address of
which either party hereto shall have informed the other by the giving of notice
in the manner provided herein):
In the case of any Lender, to the Collateral Agent.
In the case of the Collateral Agent, to it at:
Sun Paper Advisors, Inc.
777 South Flagler Drive
West Tower, 8th Floor
West Palm Beach, Florida 33401
Attention: Messrs. Marc J. Leder and Rodger R. Krouse
Telecopier: (561) 835-1314
with a copy to:
Parker Chapin Flattau & Klimpl, LLP
1211 Avenue of the Americas
New York, New York 10036
Attention: Mark S. Hirsch, Esq.
Telecopier: (212) 704-6288
In the case of WorldCorp, to it at:
13873 Park Center Road
Herndon, Virginia 20171
Attention: Mr. T. Coleman Andrews, III
Telecopier: (703) 834-9211
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with a copy to:
Hunton & Williams
951 East Byrd Street
Richmond, Virginia 23219
Attention: David M. Carter, Esq.
Telecopier: (804) 788-8218
(h) Amendments and Modification. No provision hereof shall be
modified, altered, waived or limited except by written instrument expressly
referring to this Guaranty and to such provision, and executed by the WorldCorp
and the Collateral Agent.
(i) Counterparts. This Guaranty may be executed by the parties
hereto individually or in any combination, in one or more counterparts, each of
which shall be an original and all of which shall together constitute one and
the same agreement.
(j) Captions: Certain Definitions. The captions of the various
sections and paragraphs of this Guaranty have been inserted only for the
purposes of convenience; such captions are not a part of this Agreement and
shall not be deemed in any manner to modify, explain, enlarge or restrict any of
the provisions of this Agreement. As used in this Guaranty, (i) all terms
defined in the UCC and used herein shall have the meanings as defined in the
UCC, unless the context otherwise requires; (ii) the term "person" shall mean
and include an individual, a partnership, a joint venture, a corporation, a
limited liability company, a trust, an unincorporated organization and a
government or any department or agency thereof; (iii) the term "subsidiary"
shall mean any corporation, limited liability company or other entity of which
more than 20% of the total voting power of shares of stock (or equivalent
ownership or controlling interest) entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is, at the time, owned or controlled, directly or indirectly, by that
person or one or more subsidiaries of that person, or a combination thereof,
either on or after the date hereof, and, in any event, shall include World
Airways, Inc., a Delaware corporation, and, except with respect to Sections 9(d)
and (e) hereof, InteliData Technologies Corp., a Delaware corporation; and (iv)
the term "affiliate" shall have the meaning set forth in Rule 12b-2 of the
General Rules and Regulations promulgated under he Securities Exchange act of
1934, as amended.
(k) Severability. In the event that any term or provision of
this Agreement or shall be finally determined to be superseded, invalid, illegal
or otherwise unenforceable pursuant to applicable law by an authority having
jurisdiction and venue, that determination shall not impair or otherwise affect
the validity, legality or enforceability (i) by or before that authority of the
remaining terms and provisions of this Guaranty, which shall be enforced as if
the unenforceable term or provision were deleted, or (ii) by or before any other
authority of any of the terms and provisions of this Guaranty.
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(l) Entire Agreement. This Guaranty contains the entire
agreement of the parties and supersedes all other agreements and understandings,
oral or written, with respect to the matters contained herein.
(m) Schedules. The Collateral Agent is authorized to annex
hereto any schedules referred to herein.
[THE REST OF THIS PAGE INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, WorldCorp has caused this Guaranty to be
signed, by its duly authorized officer, as of the date first above written.
WORLDCORP, INC.
By:___________________________
Name:
Title:
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Exhibit B
PLEDGE AGREEMENT
PLEDGE AGREEMENT (this "Agreement") dated April 20, 1998 among
SUN PAPER ADVISORS, INC., a Florida corporation, as collateral agent (the
"Collateral Agent") on behalf of the holders of the notes referred to below
(individually, a "Lender" and collectively, "Lenders"), WORLDCORP, INC., a
Delaware corporation ("WorldCorp"), and WORLDCORP ACQUISITION CORP., a Delaware
corporation ("Acquisition Sub"; and, together with WorldCorp, the "Pledgors";
the Pledgors are sometimes referred to individually herein as a "Pledgor").
WHEREAS, pursuant to a Subscription and Contribution Agreement
(the "Contribution Agreement") dated as of the date hereof among WorldCorp,
Acquisition Sub and certain of the stockholders of Paper Acquisition Corp., a
Delaware Corporation ("Paper"), Acquisition Sub is acquiring shares of capital
stock of Paper;
WHEREAS, upon consummation of the transactions contemplated by
the Contribution Agreement, Acquisition Sub will own certain of the capital
stock of World Airways, Inc., a Delaware corporation ("World Airways"), and
Paper and WorldCorp is the owner of certain of the capital stock of Acquisition
Sub and InteliData Technologies Corp., a Delaware corporation ("InteliData");
WHEREAS, as a result of the Contribution Agreement,
Acquisition Sub will issue to the stockholders of Paper an aggregate of $15
million of five-year 8% Senior Secured Promissory Notes (collectively, the
"Five-Year Notes") and an aggregate of $1 million of one-year Senior Secured
Promissory Notes (together with the Five-Year Notes, the "Notes"; each
capitalized term used but not defined herein shall have the meaning ascribed to
it in the Notes) and Acquisition Sub is incurring other obligations to the
Lenders pursuant to an amount (the "Earn-Out") to be paid by Acquisition Sub as
set forth in Schedule 1.3(b) to the Contribution Agreement;
WHEREAS, in order to induce the Lenders to accept the Notes,
WorldCorp and Acquisition Sub wish to grant a pledge and security interest in
favor of the Lenders as provided herein;
WHEREAS, in order to facilitate the administration of the
Pledged Collateral (as defined herein), the holders of the Notes have appointed
the Collateral Agent to administer the Pledged Collateral pursuant to the
Collateral Agent Agreement dated the date hereof among the Collateral Agent and
the Lenders (as the same may be amended, supplemented or modified, the
"Collateral Agent Agreement");
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WHEREAS, as a condition to the Lenders making any loans to
Acquisition Sub, the Lenders have required the execution and delivery of this
Agreement by the Pledgors and the execution and delivery of a guaranty by
WorldCorp; and
NOW, THEREFORE, in consideration of the premises set forth
herein and for other good and valuable consideration, the parties hereto agree
as follows:
1. Pledge. As collateral security for the prompt and complete
payment, performance and observance of all present and future obligations
arising under the Notes and the Earn-Out and all interest on any of the
foregoing, whether accruing prior or subsequent to the commencement of a
bankruptcy or similar proceeding involving any of them as a debtor and whether
or not such interest is an allowed claim in any such proceeding) (all of the
foregoing being herein referred to as the "Secured Obligations"), WorldCorp and
Acquisition Sub hereby pledge to the Collateral Agent as agent on behalf of the
Lenders, for the ratable benefit of the Lenders, and grant to the Collateral
Agent for the ratable benefit of the Lenders in each of such capacities a first
priority security interest (except for the one million shares of common stock,
$.001 par value per share, of World Airways that are pledged (the "Prior
Pledge") to secure a loan to WorldCorp from World Airways (the "Previously
Pledged Shares"), as to which WorldCorp grants to the Collateral Agent a second
priority security interest that shall convert into a first priority security
interest at such time as the Previously Pledged Shares are released from the
Prior Pledge) in, Acquisition Sub's and WorldCorp's respective collateral
described in Section 2 below (collectively, the "Pledged Collateral").
2. Description of Pledged Collateral.
(a) The Pledged Collateral is described as follows and on any
separate schedules at any time furnished by WorldCorp or Acquisition Sub to the
Collateral Agent (which schedules are hereby deemed part of this Agreement):
(i) all right, title and interest of WorldCorp as a
stockholder (whether now or in the future) in the capital stock of
Acquisition Sub, Paper, World Airways and InteliData, whether now
issued to WorldCorp or hereafter acquired by WorldCorp, and all shares
and/or other securities, shares of stock, certificates, instruments or
other documents evidencing or representing all of the foregoing;
(ii) all right, title and interest of WorldCorp in
any notes hereafter issued by the Lenders (the "Lenders' Notes") to
WorldCorp as payment of the Exercise Price (as defined in the Warrants)
of the Warrants, all interest payable by the Lenders on the Lenders'
Notes and all certificates, instruments or other documents representing
all of the foregoing;
(iii) all right, title and interest of Acquisition
Sub as a stockholder (whether now or in the future) in the capital
stock of Paper, World Airways and
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InteliData, whether now issued to Acquisition Sub or hereafter acquired
by Acquisition Sub, and all shares and/or other securities, shares of
stock, certificates, instruments or other documents representing all of
the foregoing;
(iv) all right, title and interest of Acquisition Sub
as a stockholder in the capital stock of any hereafter formed
subsidiary of Acquisition Sub, whether direct or indirect, and all
shares and/or other securities, shares of stock, certificates,
instruments or other documents representing all of the foregoing.
(v) all right, title and interest of either of the
Pledgors in and to all present and future payments, proceeds, dividends
(cash or otherwise), distributions, bonus issues, offers by way of
rights allotments, instruments, compensation, property, assets,
interests and rights in connection with or related to the Pledged
Collateral, and all monies due or to become due and payable to either
of the Pledgors in connection with or related to the Pledged Collateral
or otherwise paid, issued or distributed from time to time in respect
of or in exchange therefor, and any certificate, instrument or other
document evidencing or representing the same (including, without
limitation, all proceeds of dissolution or liquidation); and
(vi) all proceeds of every kind and nature, including
proceeds of proceeds, of any and all of the foregoing (including,
without limitation, proceeds which constitute property of the type
described above) and to the extent not otherwise included, all money
and cash.
(b) The shares and/or other securities, shares of stock,
certificates, instruments or other documents evidencing or representing the
foregoing shall be collectively referred to herein as the "Pledged Securities".
3. Delivery of Certificates, Instruments, Etc.
(a) WorldCorp and Acquisition Sub, as the case may be, shall
deliver or cause to be delivered to the Collateral Agent:
(i) all of WorldCorp's shares and/or other
securities, original shares of stock, certificates, instruments and
other documents evidencing or representing WorldCorp's outstanding
equity of Acquisition Sub and InteliData (as set forth on Schedule A
hereto) concurrently with the execution and delivery of this Agreement;
(ii) all of the Lenders' Notes promptly upon their
issuance by the Lenders to WorldCorp and any written instructions to
the Lenders that are reasonably requested by the Collateral Agent to
cause any interest paid on the Lenders' Notes to be paid to the
Collateral Agent as part of the Pledged Collateral;
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(iii) all of Acquisition Sub's shares and/or other
securities, original shares of stock, certificates, instruments and
other documents evidencing or representing Acquisition Sub's
outstanding equity of World Airways (other than the Previously Pledged
Shares and shall be delivered immediately upon release of the Prior
Pledge) and Paper (as set forth on Schedule A) concurrently with the
execution and delivery of this Agreement; and
(iv) the shares and/or other securities, original
shares of stock, certificates, instruments or other documents
evidencing or representing title to all other Pledged Collateral
(except for Pledged Collateral that this Agreement specifically permits
a Pledgor to retain), including, without limitation, any shares of
capital stock pledged pursuant to Section 2(a)(iii) and the Previously
Pledged Shares upon their release from the pledge to World Airways,
within five business days after such Pledgor's receipt thereof.
(b) All Pledged Securities that are certificated securities
shall be in bearer form or, if in registered form, shall be issued in the name
of the Collateral Agent or endorsed to the Collateral Agent or accompanied by
blank stock powers.
4. Registration. At any time and from time to time during the
continuance of an Event of Default, the Collateral Agent may cause all or any of
the Pledged Securities to be transferred to, or registered in, its name or the
name of its nominee or nominees; provided, however, that the Collateral Agent
may cause all or any of the Previously Pledged Shares to be transferred to, or
registered in, its name or the name of its nominee or nominees only after their
release from the Prior Pledge.
5. Representations, Warranties and Covenants of the Pledgor.
The Pledgors hereby represent, warrant and covenant, as to themselves and the
Pledged Collateral pledged by each of them hereunder, that:
(a) Pledged Collateral. Set forth on Schedule A is a complete
and accurate list and description of all the Pledged Collateral existing on the
date hereof owned by WorldCorp or Acquisition Sub, as the case may be, and
WorldCorp or Acquisition Sub is the sole registered owner and the sole
beneficial owner of such Pledged Collateral, free and clear of any mortgage,
lien, pledge, charge, security interest or other encumbrance, or any interest or
title of any vendor, lessor, lender or other secured party (each, a "Lien")
thereon, except for the Lien created by this Agreement and the Lien on the
Previously Pledged Shares.
(b) Place of Perfection; Records: Etc. The address of the
chief executive office and principal place of business of WorldCorp and
Acquisition Sub, and the location of the books and records relating to the
Pledged Collateral, are set forth below in Section 14(f) hereto, and without the
prior notice to the Collateral Agent, neither WorldCorp nor Acquisition Sub
shall change its respective listed address or location, or merge or consolidate
with any person or change its name.
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(c) Sale or Other Disposition of Pledged Collateral.
Notwithstanding anything to the contrary contained in this Agreement, neither
WorldCorp nor Acquisition Sub (and, with respect to the Previously Pledged
Shares, to the extent permitted with respect thereto, before the release thereof
from the Prior Pledge) shall assign, sell, mortgage, lease, transfer, pledge,
hypothecate, or grant a security interest in or Lien upon, encumber or otherwise
dispose of or abandon, nor will WorldCorp or Acquisition Sub suffer or permit
any of the same to occur with respect to, any Pledged Collateral or any other
securities issued by the issuer of any Pledged Collateral and the inclusion of
"proceeds" of the Pledged Collateral under the security interest granted herein
shall not be deemed a consent by any Lender or the Collateral Agent to any sale
or other disposition of any Pledged Collateral or any other securities issued by
the issuer of any Pledged Collateral except as expressly permitted herein.
(d) Percentage of Outstanding Equity.
(i) The Pledged Securities of Acquisition Sub
identified on Schedule A constitute 80% of the outstanding equity of
Acquisition Sub as of the date hereof (after giving effect to the
consummation of the transactions contemplated by the Contribution
Agreement).
(ii) The Pledged Securities of InteliData identified
on Schedule A constitute 28.9% of the outstanding equity of InteliData
as of the date hereof (after giving effect to the consummation of the
transactions contemplated by the Contribution Agreement).
(iii) The Pledged Securities of Paper identified on
Schedule A constitute 100% of the outstanding capital stock of Paper as
of the date hereof (after giving effect to the consummation of the
transactions contemplated by the Contribution Agreement).
(iv) The Pledged Securities of World Airways
identified on Schedule A constitute 51.2% of the outstanding capital
stock of World Airways as of the date hereof (after giving effect to
the consummation of the transactions contemplated by the Contribution
Agreement).
(e) All of WorldCorp's Interests. The Pledged Collateral
includes, and so long as this Agreement remains in effect will continue to
include (i) all of the equity interests held by WorldCorp in Acquisition Sub,
Paper, World Airways and InteliData, respectively and (ii) all of the Lenders'
Notes that may be issued to WorldCorp.
(f) All of Acquisition Sub's Interests. The Pledged Collateral
includes, and so long as this Agreement remains in effect will continue to
include, all the equity interests held by Acquisition Sub in Paper, World
Airways and InteliData respectively.
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(g) Due Authorization, Etc., of Stock. The Pledged Securities
listed on Schedule A have been duly authorized and validly issued and are fully
paid and nonassessable and are not subject to any warrants, conversions, options
to purchase or similar rights of any person, except as provided in the
Contribution Agreement.
(h) Required Consents. Except as may be required in connection
with any disposition of any portion of the Pledged Securities by laws affecting
the offering and sale of securities generally, no consent of any person
(including, without limitation, shareholders, partners or creditors of any
Lender or the Collateral Agent) and no license, permit, approval or
authorization of, exemption by, notice or report to, or registration, filing or
declaration with any governmental instrumentality that has not been obtained is
required in connection with (i) the execution, delivery, performance, validity
or enforceability of this Agreement, (ii) the perfection or maintenance of the
security interest created hereby (including the first priority nature of such
security interest as applicable) or (iii) the exercise by the Collateral Agent
of the voting or other rights provided for in this Agreement.
(i) Nature of Security Interest. Upon the delivery of the
Pledged Securities to the Collateral Agent, the pledge of the Pledged Collateral
pursuant to this Agreement creates a valid and perfected first priority security
interest in the Pledged Collateral (except for the Previously Pledged Shares, as
to which it creates a second priority security interest), securing the prompt
and complete payment, performance and observance of the Secured Obligations.
(j) Modification of Agreements. Neither WorldCorp nor
Acquisition Sub shall, without the prior written consent of the Collateral
Agent, modify, amend or alter, in any respect, the terms and conditions of any
of the Loan Documents (as defined in any of the Notes).
(k) Further Assurances. The Pledgors shall, at their sole cost
and expense, perform all acts and execute all documents reasonably requested by
the Collateral Agent from time to time to evidence, perfect, maintain or enforce
the Collateral Agent's first priority security interest granted herein or
otherwise in furtherance of the provisions of this Agreement, including, without
limitation, any financing statements.
6. Voting Rights and Certain Payments Prior to an Event of
Default. So long as no Event of Default shall have occurred and be continuing,
WorldCorp or Acquisition Sub, as the case may be, shall be entitled:
(a) to exercise, in its discretion, but in a manner not
inconsistent with the terms hereof, of the Notes or of the Secured Obligations,
the voting power with respect to the Pledged Collateral (and, with respect to
the Previously Pledged Shares, only to the extent permitted with respect thereto
before the release thereof from the Prior Pledge) of WorldCorp or Acquisition
Sub, as the case may be, and for that purpose the Collateral Agent shall (if any
Pledged Securities shall be registered in the name of the Collateral Agent or
its nominee) execute or cause to be executed from time to time, at the expense
of WorldCorp or Acquisition Sub, as the case may be,
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such proxies or other instruments in favor of WorldCorp or Acquisition Sub, as
the case may be, in such form and for such purposes as shall be reasonably
required by WorldCorp or Acquisition Sub, as the case may be, and shall be
specified in a written request therefor, to enable it to exercise such voting
power with respect to its Pledged Securities; provided, however, that neither
WorldCorp nor Acquisition Sub shall exercise or refrain from exercising any such
voting rights if such action could have an adverse effect on the value of any
Pledged Collateral or any part thereof; and
(b) except as otherwise provided in Sections 7 and 8 hereof
(and, with respect to the Previously Pledged Shares, only to the extent
permitted with respect thereto before the release thereof from the Prior
Pledge), to receive and retain for its own account any and all payments,
proceeds, dividends, distributions, monies, compensation, property, assets,
instruments or rights to the extent such are not prohibited under the Notes,
other than (i) stock or liquidating dividends or (ii) extraordinary dividends
and dividends or other amounts payable under or in connection with any
recapitalization, restructuring, or other non-ordinary course event (the
dividends and amounts in this clause (ii) being "Extraordinary Payments"), paid,
issued or distributed from time to time in respect of its Pledged Collateral.
7. Extraordinary Payments and Distributions.
(a) In case, upon the dissolution or liquidation (in whole or
in part) of Acquisition Sub, InteliData, Paper, or World Airways, any sum shall
be paid or payable as a liquidating dividend or otherwise upon or with respect
to any of the Pledged Securities (and, with respect to the Previously Pledged
Shares, only to the extent permitted with respect thereto before the release
thereof from the Prior Pledge) or, in the event any other Extraordinary Payment
is paid or payable, then and in any such event, such sum shall be paid over to
the Collateral Agent immediately upon receipt thereof, to be held by the
Collateral Agent as additional collateral hereunder.
(b) In case any stock dividend shall be declared with respect
to any of the Pledged Collateral (and, with respect to the Previously Pledged
Shares, only to the extent permitted with respect thereto before the release
thereof from the Prior Pledge), or any shares of stock or fractions thereof
shall be issued pursuant to any stock split involving any of the Pledged
Collateral, or any distribution of capital shall be made on any of the Pledged
Collateral, or any shares, obligations or other property shall be distributed
upon or with respect to the Pledged Collateral, in each case pursuant to a
recapitalization or reclassification of the capital of Acquisition Sub,
InteliData, Paper or World Airways, as the case may be, or pursuant to the
dissolution, liquidation (in whole or in part), bankruptcy or reorganization of
Acquisition Sub, InteliData, Paper or World Airways, as the case may be, or to
the merger or consolidation of Acquisition Sub, InteliData, Paper or World
Airways, as the case may be, with or into another corporation, the shares,
obligations or other property so distributed shall be delivered to the
Collateral Agent immediately upon receipt thereof, to be held by the Collateral
Agent as
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additional collateral hereunder subject to the terms of this Agreement, and all
of the same shall constitute Pledged Collateral for all purposes hereof.
8. Voting Rights and Certain Payments After an Event of
Default.
(a) Upon the exercise or enforcement by the Collateral Agent
of any of the rights and remedies of any of the Lenders pursuant to Section 8 of
any of the Notes, all rights of WorldCorp and Acquisition Sub to exercise or
refrain from exercising the voting and other consensual rights that they would
otherwise be entitled to exercise pursuant to Section 6(a) hereof and to receive
the payments, proceeds, dividends, distributions, monies, compensation,
property, assets, instruments or rights which they would otherwise be authorized
to receive and retain pursuant to Section 6(b) hereof, in each case, shall
cease, and thereupon the Collateral Agent shall be entitled to exercise all
voting power with respect to the Pledged Securities and to receive and retain,
as additional collateral hereunder, any and all payments, proceeds, dividends,
distributions, monies, compensation, property, assets, instruments or rights at
any time declared or paid upon or in respect of any of the Pledged Collateral.
(b) All payments, proceeds, dividends, distributions, monies,
property, assets, instruments or rights that are received by WorldCorp or
Acquisition Sub contrary to the provisions of Paragraph 7(a) above shall be
received and held in trust for the benefit of the Lenders, shall be segregated
by WorldCorp or Acquisition Sub from other funds of WorldCorp or Acquisition
Sub, as the case may be and shall be forthwith paid over to the Collateral Agent
as Pledged Collateral in the same form as so received (with any necessary
endorsement).
9. Application of Cash Collateral. Any cash received and
retained by the Collateral Agent as additional collateral hereunder pursuant to
the foregoing provisions may at any time and from time to time in the sole
discretion of the Collateral Agent, be applied by the Collateral Agent to the
payment of the Secured Obligations.
10. Expenses. WorldCorp and Acquisition Sub jointly and
severally agree, promptly upon demand, to pay the Collateral Agent and any
Lenders any and all reasonable costs, sums and out-of-pocket expenses that the
Collateral Agent or any such Lender may pay or incur pursuant to the provisions
of this Agreement or in perfecting, defending, protecting or enforcing this
Agreement or the security interest granted herein or in enforcing payment of the
Secured Obligations, the Contribution Agreement, any of the Notes or otherwise
in connection with the provisions hereof or thereof, including, without
limitation, all reasonable filing or recording fees, court costs, collection
charges, travel expenses, computer fees, telephone fees, duplicating fees and
reasonable attorneys' fees. Such expenses shall include, without limitation, any
such costs paid or incurred by the Collateral Agent in connection with any
waivers, amendments, modifications, extensions, renewals or renegotiations. All
of the foregoing, together with interest thereon as specified in Section 14(m)
hereof, shall be part of the Secured Obligations and shall be payable on demand.
The Collateral Agent and any such Lender shall endeavor to provide reasonable
documentation in connection with any demand for payment under this Section.
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11. Remedies.
(a) Upon the occurrence and during the continuance of any
Event of Default, the Collateral Agent may exercise in respect of the Pledged
Collateral, in addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured party on
default under the UCC at that time (whether or not applicable to the affected
Pledged Collateral to the extent permitted by applicable law) and may also,
without obligation to resort to other security, at any time and from time to
time, sell, resell, assign and deliver, in its sole discretion, all or any of
the Pledged Collateral, in one or more lots at the same or different times, and
all right, title and interest, claim and demand therein and right of redemption
thereof, on any securities exchange on which any Pledged Collateral or any of
them may be listed, or at public or private sale, for cash, upon credit or for
future delivery, WorldCorp and Acquisition Sub hereby waiving and releasing, to
the extent permitted by applicable law, any and all equity and right of
redemption. In connection with the foregoing, the Collateral Agent may also
grant options to purchase all or any of the Pledged Collateral.
(b) Without any limitation of the foregoing, the proceeds of
any sale of the Pledged Collateral, as well as any Pledged Collateral consisting
of cash, shall be applied by the Collateral Agent as follows:
(i) to the payment of all reasonable costs and
out-of-pocket expenses incurred by the Collateral Agent or any Lender
in connection with such collection or sale or otherwise in connection
with this Agreement or any of the Secured Obligations, including,
without limitation, all costs and expenses under Section 10 hereof;
(ii) pro-rata to the payment in full of any
interest due to the Lenders on the Secured Obligations;
(iii) pro-rata to the payment in full of all Secured
Obligations (other than those Secured Obligations previously referenced
in this sentence);
(iv) pro-rata to the satisfaction of any indebtedness
secured by any security interest on the Pledged Collateral that is
junior to the Secured Obligations; and
(v) to the Pledgors, their successors or assigns, or
as a court of competent jurisdiction may otherwise direct.
(c) If any of the Pledged Collateral is sold by the Collateral
Agent upon credit or for future delivery, neither the Collateral Agent nor any
Lender shall be liable for the failure of the purchaser to purchase or pay for
the same and, in the event of any such failure, the Collateral Agent may resell
such Pledged Collateral. In no event shall WorldCorp or Acquisition Sub be
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credited with any part of the proceeds of sale of any Pledged Collateral until
cash payment thereof has actually been received by each of the Lenders.
(d) Any Lender may purchase any Pledged Collateral at any
public sale and, if any Pledged Collateral is of a type customarily sold in a
recognized market or is of the type that is the subject of widely distributed
standard price quotations, any Lender may purchase such Pledged Collateral at
private sale, free from any right of redemption, which is hereby waived and
released to the extent permitted by applicable law, and in each case may make
payment therefor by any means, including, without limitation, by release or
discharge of Secured Obligations in lieu of cash payment.
(e) The rights of WorldCorp or Acquisition Sub to receive the
surplus, if any, from any sale or other disposition of the Pledged Collateral to
the payment of the Secured Obligations shall be subject to any duty of the
Collateral Agent imposed by law to the holder of any subordinate security
interest in the Pledged Collateral known to the Collateral Agent.
(f) WorldCorp and Acquisition Sub recognize that the
Collateral Agent may be unable to effect a public sale of all or part of the
Pledged Collateral consisting of securities by reason of certain prohibitions
contained in the Securities Act of 1933 or in applicable Blue Sky or other state
securities laws, as now or hereafter in effect, but may be compelled to resort
to one or more private sales to a restricted group of purchasers who will be
obliged to agree, among other things, to acquire such securities for their own
account, for investment and not with a view to the distribution or resale
thereof. WorldCorp and Acquisition Sub agree that any such Pledged Collateral
sold at any such private sale may be sold at a price and upon other terms less
favorable to the seller than if sold at public sale. The Collateral Agent shall
have no obligation to delay sale of any such securities for the period of time
necessary to permit the issuer of such securities, even if such issuer would
agree, to register such securities for public sale under the Securities Act of
1933 or any other applicable law. WorldCorp and Acquisition Sub agree that
private sales made under the foregoing circumstances shall be deemed to have
been made in a commercially reasonable manner.
(g) No demand, advertisement or notice, all of which are
hereby expressly waived, shall be required in connection with any sale or other
disposition of any part of the Pledged Collateral that threatens to decline
speedily in value or which is of a type customarily sold on a recognized market;
otherwise the Collateral Agent shall give WorldCorp or Acquisition Sub, as the
case may be, at least five days' prior notice of the time and place of any
public sale and of the time after which any private sale or other disposition is
to be made, which notice WorldCorp and Acquisition Sub agree is reasonable, all
other demands, advertisements and notices being hereby waived.
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(h) The Collateral Agent shall not be obligated to make any
sale of Pledged Collateral if it shall determine not to do so, regardless of the
fact that notice of sale may have been given. The Collateral Agent may, without
notice or publication, adjourn any public or private sale or cause the same to
be adjourned from time to time by announcement at the time and place fixed for
sale, and such sale may, without further notice, be made at the time and place
to which the same was so adjourned.
(i) The remedies provided herein in favor of the Collateral
Agent and each of the Lenders shall not be deemed exclusive, but shall be
cumulative, and shall be in addition to all other remedies in favor of them
existing at law or in equity.
12. Collateral Agent Appointed Attorney-in-Fact.
(a) To effectuate the terms and provisions hereof, WorldCorp
and Acquisition Sub hereby appoint the Collateral Agent as WorldCorp's and
Acquisition Sub's attorney-in-fact for the purpose, from and after the
occurrence and during the continuance of an Event of Default, of carrying out
the provisions of this Agreement and taking any action and executing any
instrument that the Collateral Agent may deem necessary or advisable (and
lawful) to accomplish the purposes hereof. Without limiting the generality of
the foregoing, the Collateral Agent shall, from and after the occurrence and
during the continuance of an Event of Default, have the right and power to:
(i) receive, endorse and collect all checks and other
orders for the payment of money made payable to WorldCorp or
Acquisition Sub representing any interest or dividend or other
distribution or amount payable in respect of the Pledged Collateral or
any part thereof and to give full discharge for the same, and
(ii) execute endorsements, assignments or other
instruments of conveyance or transfer with respect to all or any of the
Pledged Collateral and to exercise all rights and privileges of (or on
behalf of) the owner of the Pledged Collateral, including, without
limitation, all voting rights with respect to the Pledged Securities.
(b) All acts done under the foregoing authorization are hereby
ratified and approved and neither the Collateral Agent, the Lenders nor any
designee or agent thereof shall be liable for any acts of commission or
omission, for any error of judgment or for any mistake of fact or law except for
acts of gross negligence or wilful misconduct.
(c) This power of attorney, being coupled with an interest, is
irrevocable while this Agreement remains in effect.
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13. Collateral Agent's Duties; Reasonable Care.
(a) The Collateral Agent shall have the duty to exercise
reasonable care in the custody and preservation of any Pledged Collateral in its
possession, which duty shall be fully satisfied if the Collateral Agent
exercises the same standard of care with respect to the Pledged Collateral as it
does with securities held for its own account in its possession and, with
respect to any calls, conversions, exchanges, redemptions, offers, tenders or
similar matters relating to any such Pledged Collateral (herein called
"events"):
(i) the Collateral Agent exercises reasonable care to
ascertain the occurrence and to give reasonable notice to WorldCorp and
Acquisition Sub of any events applicable to any Pledged Securities
pledged by WorldCorp or Acquisition Sub that are registered and held in
the name of the Collateral Agent or its nominee;
(ii) the Collateral Agent gives WorldCorp or
Acquisition Sub reasonable notice of the occurrence of any events, of
which the Collateral Agent has received actual knowledge, as to any
securities pledged by WorldCorp or Acquisition Sub that are in bearer
form or are not registered and held in the name of the Collateral Agent
or its nominee (such Pledgor agreeing to give the Collateral Agent
reasonable notice of the occurrence of any events applicable to any
securities in the possession of the Lender of which such Pledgor has
received knowledge); and
(iii) in the exercise of its reasonable discretion
(x) the Collateral Agent endeavors to take such action with respect to
any of the events as WorldCorp or Acquisition Sub may reasonably and
specifically request in writing in sufficient time for such action to
be evaluated and taken or (y) if the Collateral Agent determines that
the action requested by WorldCorp or Acquisition Sub might adversely
affect the value of the Pledged Collateral as collateral, the
collection of the Secured Obligations, or otherwise prejudice the
interests of the Lenders, the Collateral Agent gives reasonable notice
to WorldCorp or Acquisition Sub that any such requested action will not
be taken and if the Collateral Agent makes such determination or if
WorldCorp or Acquisition Sub fails to make such timely request, the
Collateral Agent takes such other action as it deems reasonably
advisable in the circumstances.
(b) Except as hereinabove specifically set forth, neither the
Collateral Agent nor any Lender shall have any further obligation to ascertain
the occurrence of, or to notify WorldCorp or Acquisition Sub with respect to,
any events, and shall not be deemed to assume any such further obligation as a
result of the establishment by the Collateral Agent of any internal procedures
with respect to any securities in its possession, nor shall the Collateral Agent
or any Lender be deemed to assume any other responsibility for, or obligation or
duty with respect to, any Pledged Collateral, or its use, of any nature or kind,
or any matter or proceedings arising out of or relating thereto, including,
without limitation, any obligation or duty to take any action to collect,
preserve or protect the Lenders', WorldCorp's or Acquisition Sub's rights in the
Pledged Collateral or against any claims by any other parties with respect
thereto, but the same shall be at WorldCorp's and Acquisition Sub's sole risk
and responsibility at all times.
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(c) WorldCorp and Acquisition Sub hereby release the
Collateral Agent and each Lender from any claims, causes of action and demands
at any time arising out of or with respect to this Agreement, the Pledged
Collateral and/or any actions taken or omitted to be taken by the Collateral
Agent with respect thereto (except such claims, causes of action and demands
arising from the Collateral Agent's gross negligence, willful misconduct or
knowing violation of the law) and such Pledgor hereby agrees to hold the
Collateral Agent and each Lender harmless from and with respect to any and all
such claims, causes of action and demands (except such claims, causes of action
and demands arising from the Collateral Agent's gross negligence, willful
misconduct or knowing violation of the law).
14. Miscellaneous.
(a) Rights and Remedies Not Waived. The prior recourse of the
Collateral Agent or any Lender to any Pledged Collateral shall not constitute a
condition of any demand, suit or proceeding for payment or collection of the
Secured Obligations. No act, omission or delay by the Collateral Agent or any
Lender shall constitute a waiver of their respective rights and remedies
hereunder or otherwise. No single or partial waiver by the Collateral Agent of
any default hereunder or right or remedy that it may have shall operate as a
waiver of any other default, right or remedy or of the same default, right or
remedy on a future occasion.
(b) Collateral Agent May Perform. If WorldCorp or Acquisition
Sub fail to perform any agreement contained herein, the Collateral Agent may
itself perform, or cause performance of, such agreement, and the costs and
expenses of the Collateral Agent and the Lenders incurred in connection
therewith shall be payable by such Pledgor pursuant to the terms of Section 10
hereof.
(c) Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware without regard
to principles of conflicts or choice of law (or any other law that would make
any substantive laws of any state other than the State of Delaware applicable
hereto).
(d) Waiver of Jury Trial and Setoff; Consent to
Jurisdiction; Etc.
(i) In any litigation in any court with respect to,
in connection with, or arising out of this Agreement the Pledged
Collateral, the Notes or any instrument or document delivered pursuant
to this Agreement, or the validity, protection, interpretation,
collection or enforcement hereof or thereof, or any other claim or
dispute howsoever arising, between WorldCorp and Acquisition Sub on the
one hand, and the Collateral Agent or the Lenders, on the other hand,
WorldCorp and Acquisition Sub, to the fullest extent they may legally
do so, (i) waive the right to interpose any setoff, recoupment,
counterclaim or cross-claim in connection with any such litigation,
irrespective of the nature of such setoff, recoupment, counterclaim or
cross-claim, unless such setoff, recoupment, counterclaim or
cross-claim could not, by reason of any applicable federal or state
procedural laws, be interposed, pleaded or alleged in any other action
and (ii) WAIVE TRIAL BY JURY IN CONNECTION WITH ANY SUCH LITIGATION AND
ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH
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LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR
ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. WORLDCORP
AND ACQUISITION SUB AGREE THAT THIS SECTION 14(a) IS A SPECIFIC AND
MATERIAL ASPECT OF THIS AGREEMENT AND ACKNOWLEDGE THAT THE LENDERS
WOULD NOT EXTEND TO ACQUISITION SUB ANY FINANCIAL ACCOMMODATIONS UNDER
THE NOTES AND THIS AGREEMENT IF THIS SECTION 14(a) WERE NOT PART OF
THIS AGREEMENT.
(ii) WorldCorp and Acquisition Sub hereby irrevocably
consent to the exclusive jurisdiction of any State or Federal Court
located within the County of Palm Beach, State of Florida, in
connection with any action or proceeding arising out of or relating to
this Agreement, the Pledged Collateral, or any Notes or any document or
instrument delivered pursuant to this Agreement or otherwise. In any
such litigation, WorldCorp and Acquisition Sub waive, to the fullest
extent they may effectively do so, personal service of any summons,
complaint or other process and agree that the service thereof may be
made by certified or registered mail directed to WorldCorp or
Acquisition Sub, as the case may be, at its address for notice
determined in accordance with Section 14(f) hereof. WorldCorp and
Acquisition Sub hereby waive, to the fullest extent it may effectively
do so, the defenses of forum non conveniens and improper venue.
(e) Admissibility of Agreement. WorldCorp and Acquisition Sub
agree that any copy of this Agreement signed by WorldCorp or Acquisition Sub and
transmitted by telecopier for delivery to the Collateral Agent shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding, whether or not the original is in existence.
(f) Address for Notices. Any notice or other communication
under the provisions of this Agreement shall be given in writing and delivered
in person, by reputable overnight courier or delivery service, by facsimile
machine (receipt confirmed) or by registered or certified mail, return receipt
requested, directed to its addresses set forth below (or to any new address of
which either party hereto shall have informed the other by the giving of notice
in the manner provided herein):
In the case of any Lender, to the Collateral Agent.
In the case of the Collateral Agent, to it at:
Sun Paper Advisors, Inc.
777 South Flagler Drive
West Tower, 8th Floor
West Palm Beach, Florida 33401
Attention: Messrs. Marc J. Leder and Rodger R. Krouse
Telecopier: (561) 835-1314
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with a copy to:
Parker Chapin Flattau & Klimpl, LLP
1211 Avenue of the Americas
New York, New York 10036
Attention: Mark S. Hirsch, Esq.
Telecopier (212) 704-6288
In the case of WorldCorp, to it at:
13873 Park Center Road
Herndon, Virginia 20171
Attention: Mr T. Coleman Andrews, III
Telecopier: (703) 834-9211
In the case of Acquisition Sub, to it at:
13100 Worldgate Drive
Herndon, Virginia 20170
Attention: Mr T. Coleman Andrews, III
Telecopier:(703) 834-9211
with a copy, in the case of WorldCorp and Acquisition Sub, to:
Hunton & Williams
951 East Byrd Street
Richmond, Virginia 23219
Attention: David M. Carter, Esq.
Telecopier: (804) 788-8218
(g) Amendments and Modification. No provision hereof shall be
modified, altered, waived or limited except by written instrument expressly
referring to this Agreement and to such provision, and executed by the parties
hereto.
(h) Continuing Pledge; Assignments. This Agreement shall
create a continuing security interest in the Pledged Collateral and shall (i)
remain in full force and effect until the payment in full in cash of the Secured
Obligations, (ii) inure to the benefit of, be binding upon, and be enforceable
by, the Pledgor, its successors and assigns, and (iii) inure to the benefit of,
be binding upon, and be enforceable by, the Collateral Agent and the Lenders,
and its and their respective successors, transferees and assigns including,
without limitation, any successor collateral agent appointed pursuant to the
Collateral Agent Agreement. Upon the occurrence of clause (i) of this Section,
the security interest granted hereby shall terminate and all rights to the
Pledged Collateral shall revert to the respective Pledgors; provided, however,
that, if upon the
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exercise of all or part of the Acquisition Sub Option or the Warrants, the
security interest granted hereby has not terminated, (x) the security interest
granted hereby with respect to the shares of capital stock of Acquisition Sub
issued by Acquisition Sub upon the exercise of any of such Acquisition Sub
Option or transferred by WorldCorp upon the exercise of any such Warrants shall
terminate, and all rights to such shares of the capital stock of Acquisition Sub
shall vest in the person who receives such capital stock upon exercise of the
Acquisition Sub Option or the Warrants; and (y) upon the receipt of a notice of
exercise of all or part of the Warrants by the Collateral Agent, WorldCorp and
each Grantee (as defined in the Warrants) who is not a member of the Majority in
Interest providing such notice pursuant to the Warrants, the Collateral Agent
shall, at WorldCorp's and Acquisition Sub's expense and without representation
or warranty of any nature whatsoever, and wholly without recourse, remit to
Acquisition Sub that portion of the Pledged Collateral (consisting solely of
shares of capital stock of Acquisition Sub) that is issuable upon such exercise
of the Warrants and Acquisition Sub shall promptly take all steps necessary to
cause the transfer of such shares of Acquisition Sub's capital stock to the
Lenders. Upon any termination pursuant to clause (i) of this Section, the
Collateral Agent shall, at WorldCorp's and Acquisition Sub's expense and without
representation or warranty of any nature whatsoever and wholly without recourse,
return to WorldCorp or Acquisition Sub, as the case may be, such of the Pledged
Collateral provided to the Collateral Agent as agent on behalf of the Lenders by
the Pledgors as shall not have been sold or otherwise applied pursuant to the
terms hereof and execute and deliver to WorldCorp and Acquisition Sub, as the
case may be, such documents as WorldCorp and Acquisition Sub shall reasonably
request to evidence such termination.
(i) Security Interest Absolute. All rights of the Lenders and
security interests hereunder, and all of the obligations of WorldCorp and
Acquisition Sub hereunder, shall be absolute and unconditional, irrespective of:
(i) any lack of validity or enforceability of
the Notes, any Secured Obligations or any other agreement or instrument
relating thereto;
(ii) any change in the time, manner or place of
payment of, or in any other term of, all or any of the Secured
Obligations, or any other amendment or waiver of or any consent to any
departure from any of the Notes;
16
<PAGE>
(iii) any exchange, release or non-perfection of any
other collateral, or any release or amendment or waiver of or consent
to departure from any guaranty, for all or any of the Secured
Obligations; or
(iv) any other circumstance that might otherwise
constitute a defense available to, or a discharge of, WorldCorp,
Acquisition Sub or a third party pledgor of a security interest or
lien.
(j) Counterparts. This Agreement may be executed by the
parties hereto individually or in any combination, in one or more counterparts,
each of which shall be an original and all of which shall together constitute
one and the same agreement.
(k) Captions: Certain Definitions. The captions of the various
sections and paragraphs of this Agreement have been inserted only for the
purposes of convenience; such captions are not a part of this Agreement and
shall not be deemed in any manner to modify, explain, enlarge or restrict any of
the provisions of this Agreement. All terms defined in the UCC and used herein
shall have the meanings as defined in the UCC, unless the context otherwise
requires. As used in this Agreement (i) the term "person" shall mean and include
an individual, a partnership, a joint venture, a corporation, a limited
liability company, a trust, an unincorporated organization and a government or
any department or agency, and (ii) the term "affiliate" shall have the meaning
set forth in Rule 12b-2 of the General Rules and Regulations promulgated under
the Securities Exchange Act of 1934, as amended and (iii) the term "subsidiary"
of any person shall mean any person of which more than 20% of the total voting
power of shares of stock (or equivalent ownership or controlling interest)
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof, is, at the time, owned or
controlled, directly or indirectly, by that person, or one or more subsidiaries
of that person, or a combination thereof and, in any event, shall include
InteliData, with respect to WorldCorp, and Paper and World Airways with respect
to Acquisition Sub.
(l) Interest. All amounts payable from time to time by the
Pledgors hereunder shall constitute Secured Obligations and shall bear interest
at the Maximum Rate under the Notes.
(m) Severability. In the event that any term or provision of
this Agreement or shall be finally determined to be superseded, invalid, illegal
or otherwise unenforceable pursuant to applicable law by an authority having
jurisdiction and venue, that determination shall not impair or otherwise affect
the validity, legality or enforceability (i) by or before that authority of the
remaining terms and provisions of this Agreement, which shall be enforced as if
the unenforceable term or provision were deleted, or (ii) by or before any other
authority of any of the terms and provisions of this Agreement.
17
<PAGE>
(n) Entire Agreement. This Agreement contains the entire
agreement of the parties and supersedes all other agreements and understandings,
oral or written, with respect to the matters contained herein.
(o) Schedules. The Collateral Agent is authorized to annex
hereto any schedules referred to herein.
(p) Acknowledgment of Receipt. WorldCorp and Acquisition Sub
acknowledge receipt of a copy of this Agreement.
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18
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed, by their respective duly authorized officers or
directly, as of the date first above written.
SUN PAPER ADVISORS, INC.
By:___________________________
Name:
Title:
WORLDCORP, INC.
By:___________________________
Name:
Title:
WORLDCORP ACQUISITION CORP.
By:___________________________
Name:
Title:
19
<PAGE>
SCHEDULE A
List and Description of Pledged Securities
<TABLE>
<CAPTION>
Percentage
Certificate Number of Total
Issuer of Stock Class of Stock Number(s) of Shares Shares
--------------- -------------- --------- --------- ------
<S> <C>
WorldCorp Acquisition Common Stock, par 1 800 (a) 80.0%
Corp., a Delaware value $.01 per share
corporation
---------------
Total: 800
===============
InteliData Technologies Common Stock, par IDT0685
Corp., a Delaware value $.001 per 28.9%
corporation share 8,779,273 (a)
IDT0686 400,000 (a)
---------------
Total: 9,179,273
===============
Paper Acquisition Corp., Class A Common A17
a Delaware corporation Stock, par value 99.8%
$.01 per share 459,785 (a)
A19 9,863 (b)
---------------
Total: 469,648
===============
Paper Acquisition Corp., Class B Common B3 1,000 (b) .2%
a Delaware corporation Stock, par value
$.01 per share
---------------
Total: 1,000
===============
</TABLE>
A-1
<PAGE>
<TABLE>
<CAPTION>
Percentage
Certificate Number of Total
Issuer of Stock Class of Stock Number(s) of Shares Shares
--------------- -------------- --------- --------- ------
<S> <C>
World Airways, Inc., a Common Stock, par WA5152 1,000,000 (c)
Delaware corporation value $.001 per
share
WA5153 2,688,915 (a) 51.2%
----------------
Total: 3,702,586 (d)
================
</TABLE>
- -----------------
(a) Delivered herewith.
(b) To be delivered by Acquisition Sub at the Subsequent Closing.
(c) Represents the Previously Pledged Shares.
(d) The listed total of 3,702,586 is 13,671 shares greater than each of the
certificates of for World Airways Common Stock listed herein. The
certificate or certificates representing the additional shares shall be
delivered after prompt completion of a lost stock certificate affidavit
and posting of any necessary bond by WorldCorp.
A-2
<PAGE>
Exhibit C
WARRANT AND PURCHASE AGREEMENT
WARRANT AND PURCHASE AGREEMENT (this "Agreement"), dated April
20, 1998, between FRYE ACQUISITION PARTNERS, a California limited partnership
(the "Grantee"), and WORLDCORP, INC., a Delaware corporation ("WorldCorp").
WHEREAS, WorldCorp Acquisition Corp., a Delaware corporation
("Acquisition Sub"), will have issued and outstanding 1,000 shares of Common
Stock, par value $.01 per share ("Common Stock"), representing all of
Acquisition Sub's issued and outstanding shares of capital stock as of the Date
of Grant (as hereinafter defined), after giving effect to the contribution of
all of the shares of capital stock of Paper Acquisition Corp., a Delaware
corporation ("Paper"), by the stockholders thereof (including WorldCorp, after
giving effect to the transfer of certain shares of capital stock of Paper to
WorldCorp) to Acquisition Sub;
WHEREAS, the Grantee is transferring certain of its shares of
the capital stock of Paper to WorldCorp pursuant to this Agreement and is
contributing the balance of such shares held by it to Acquisition Sub pursuant
to a Subscription and Contribution Agreement among Paper, the Grantee,
Acquisition Sub, WorldCorp and certain other stockholders of Paper; and
WHEREAS, as consideration for the Grantee's transfer of the
capital stock of Paper to WorldCorp, WorldCorp desires to grant to the Grantee,
and the Grantee desires to acquire from WorldCorp, a warrant to purchase the
number of shares of Common Stock set forth herein upon and subject to the terms
and conditions hereinafter set forth (the shares of Common Stock issuable upon
the exercise of all of the warrants granted to all of the stockholders of Paper
(the "Warrants") as consideration for their shares of the capital stock of Paper
are referred to herein as the "Stockholders' Shares").
NOW, THEREFORE, in consideration of the agreements set forth
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
1. Purchase Price; Grant of Warrant. WorldCorp hereby agrees
to purchase from the Grantee, and the Grantee hereby agrees to sell to
WorldCorp, _____ shares (the "Shares") of Paper's Class A Common Stock, par
value $.01 per share, for a warrant (the "Warrant"), which WorldCorp hereby
grants to the Grantee, to purchase an aggregate of _____ shares of Common Stock
(such shares, including any shares issued pursuant to Section 5 hereof, are
referred to herein as the "Warrant Shares") at an exercise price of $28,000 per
share.
2. Term of Warrant. The Warrant is granted as of the date
first above written (sometimes hereinafter called the "Date of Grant"), and will
terminate and expire, to
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<PAGE>
the extent not previously exercised in accordance with the terms of this
Agreement, at 5:00 p.m. (New York time) on the seventh anniversary of the Date
of Grant.
3. Warrant Exercisable Only by Majority in Interest, in Whole
or in Part. The Warrant may be exercised, in whole or in part, only upon receipt
by Sun Paper Advisors, Inc., a Florida corporation (the "Collateral Agent") (or
its successor as Collateral Agent pursuant to that certain Collateral Agent
Agreement among the Collateral Agent and the stockholders of Paper, including
the Grantee), WorldCorp and the Grantee of a notice (a "Notice") from the
holders of warrants to purchase more than 50% of the Stockholders' Shares (a
"Majority in Interest"), at any time or from time to time after April 21, 1999
prior to the expiration of the Warrant as provided in Section 2 above; provided,
however, that a Majority in Interest may exercise the Warrant only on a pro rata
basis among the holders of all of the Warrants. Upon receipt of a Notice,
WorldCorp shall instruct Acquisition Sub (or its transfer agent) to transfer
such number of Warrant Shares (or part of the Warrant Shares, as the case may
be) to the Grantee by way of the issuance to the Grantee of a stock certificate
evidencing such number of Warrant Shares. The Notice shall specify the number of
Warrant Shares as to which each Warrant is to be exercised and the date, which
shall be at least five business days after the giving of such notice (unless an
earlier time shall have been mutually agreed upon), on which such Warrant Shares
(or part of the Warrant Shares, as the case may be) shall be issued.
4. Exercise of Warrant.
(a) On the exercise date specified in the Notice, WorldCorp
shall cause to be delivered to the Grantee by Acquisition Sub (or its transfer
agent) a stock certificate registered in the Grantee's name upon full payment
for such Warrant Shares as provided in Section 4(d) below and shall cause
Acquisition Sub to record promptly such Warrant Shares on its official records
as having been issued to the Grantee.
(b) In the event that the Grantee exercises the Warrant for a
number of Warrant Shares less than the total number of Warrant Shares that the
Grantee has a right to purchase under this Agreement, then WorldCorp shall issue
to the Grantee a Warrant identical in form to this Warrant but for a number of
Warrant Shares that shall be equivalent to the total number of Warrant Shares
covered by this Agreement less the number of Warrant Shares so purchased.
(c) If the Grantee fails to pay for any of the Warrant Shares
specified in any notice of exercise or fails to accept delivery thereof, such
Warrant Shares shall not be transferred by WorldCorp and shall remain subject to
subsequent exercises by the Grantee pursuant to the terms hereof. Such failure
to pay by another holder of Warrants, however, shall not affect WorldCorp's
obligation to cause delivery of the Warrant Shares issuable to the Grantee upon
exercise of the Warrant. The date specified in the Notice as the date of
exercise shall be deemed the date of exercise of the Warrant, provided that
payment (in accordance with Section 4(d)
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<PAGE>
below) for the Warrant Shares to be purchased upon such exercise shall have been
received by such date.
(d) Full payment by the Grantee of the Exercise Price for the
number of Warrant Shares purchased shall be made on or before the exercise date
specified in the Notice by delivery of, at the option of the Grantee, cash or a
full-recourse promissory note (the "Note") in an amount equal to the Exercise
Price for such Warrant Shares. The Note shall have a maturity date (the
"Maturity Date") of the seven-year anniversary of the execution and delivery
thereof. During the term of the Note, interest (which shall accrue at a rate of
8% per annum) shall be payable in arrears, on the last day of March, June,
September and December or, if such date is not a business day, on the next
succeeding business day. Principal and any accrued interest shall be paid on the
Maturity Date. The Note shall provide that for so long as that certain Guaranty
(the "Guaranty") dated the date hereof by WorldCorp of certain obligations of
Acquisition Sub shall remain outstanding, interest and principal payments under
the Note shall be paid to the Collateral Agent as security for WorldCorp's
obligations under the Guaranty. After satisfaction of WorldCorp's obligations
under the Guaranty, the payment of interest and principal under the Note shall
be made to WorldCorp.
5. Adjustment; Recapitalization, etc.
(a) If Acquisition Sub shall (i) declare a dividend on its
outstanding capital stock in shares of its capital stock, (ii) subdivide its
outstanding capital stock into a greater number of shares, (iii) combine its
outstanding capital stock into a smaller number of shares or (iv) issue any
shares of its capital stock by reclassification thereof (including any such
reclassification in connection with a consolidation or merger in which it is the
continuing corporation), then in each such case the total number of shares of
Common Stock that may be issued under the Warrant (and the Exercise Price) shall
be proportionately adjusted by WorldCorp. Such adjustment shall be made
successively whenever such events shall occur. The adjustment shall become
effective immediately after the record date in the case of a dividend or
distribution and immediately after the effective date in the case of a
subdivision, combination or reclassification.
(b) If Acquisition Sub merges or consolidates with one or more
companies, then from and after the effective date of such merger or
consolidation, upon exercise of the Warrant theretofore granted, (i) the Grantee
shall be entitled to purchase under the Warrant, in lieu of the number of shares
of Common Stock as to which the Warrant shall then be exercisable but on the
same terms and conditions of exercise set forth in the Warrant, the number of
shares of Common Stock and/or other securities or property (including cash)
received by WorldCorp in such merger or consolidation to which the Grantee would
have been entitled pursuant to the terms of the agreement of merger or
consolidation if, immediately prior to such merger or consolidation, the Grantee
had exercised this Warrant in full and had been the holder of record of the
total number of shares of Common Stock receivable upon exercise of the Warrant
(whether or not then
-3-
<PAGE>
exercisable) and (ii) the Exercise Price shall be proportionately adjusted by
WorldCorp (to reflect any change in the number of securities into which the
Warrant converted), without a change to the aggregate Exercise Price payable for
all of the Warrant Shares.
6. Report or Certificate as to Adjustments. In each case of
any adjustment or readjustment in the Warrant Shares issuable upon the exercise
of the Warrant, WorldCorp at its expense will promptly deliver a certificate of
its Chief Financial Officer showing in reasonable detail the computation of such
adjustment or readjustment in accordance with the terms of this Agreement.
7. Notices of Corporate Action. In the event of:
(a) any taking by Acquisition Sub of a record of the holders
of any class of securities for the purpose of determining the holders thereof
who are entitled to receive any dividend or other distribution, or any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right, or
(b) any capital reorganization of Acquisition Sub, any
reclassification or recapitalization of the capital stock of Acquisition Sub,
any consolidation or merger involving Acquisition Sub and any other Person or
any transfer of all or substantially all the assets of Acquisition Sub to any
other Person, or
(c) any voluntary or involuntary dissolution, liquidation
or winding-up of Acquisition Sub, or
(d) any plan or proposal by Acquisition Sub to register any
class of its shares of Common Stock with the Commission,
then, in each case, promptly upon receipt by WorldCorp of any notice of such
action by Acquisition Sub, WorldCorp shall deliver to the Grantee a notice
specifying (i) the date or expected date on which any such record is to be taken
for the purpose of such dividend, distribution or right, and the amount and
character of such dividend, distribution or right, or (ii) the date or expected
date on which any such reorganization, reclassification, recapitalization,
consolidation, merger, transfer, dissolution, liquidation or winding-up is to
take place and the time, if any such time is to be fixed, as of which the
Grantee shall be entitled to exchange the Warrant Shares for the securities or
other property deliverable upon such reorganization, reclassification,
recapitalization, consolidation, merger, transfer, dissolution, liquidation or
winding-up. Such notice shall be furnished at least thirty days prior to the
date therein specified. The foregoing shall not preclude the Grantee from
continuing to hold the Warrant, which shall be subject to adjustment pursuant to
Section 5 without the Grantee taking any action.
8. Requirements of Law. WorldCorp shall not be required to
sell any Warrant Shares upon the exercise of the Warrant if the sale of such
Warrant Shares shall constitute a violation by the Grantee or WorldCorp of any
provision of any law, statute, or regulation of any governmental authority
whether it be Federal or State. Unless a registration statement is in effect
under the Securities Act with respect to the Warrant Shares covered by this
Agreement, WorldCorp shall not be required to transfer Warrant Shares upon
exercise of the Warrant unless (i) WorldCorp has received evidence reasonably
satisfactory to it to the effect that the Grantee is acquiring such Warrant
Shares for investment and not with a view to
-4-
<PAGE>
the distribution thereof; or (ii) an opinion of Parker Chapin Flattau & Klimpl,
LLP or such other counsel reasonably acceptable to WorldCorp has been received
by WorldCorp, in a form and substance reasonably acceptable to WorldCorp, to the
effect that a registration statement is not required for the issuance of the
Warrant Shares. In the event the Warrant Shares issuable upon exercise of the
Warrant are not registered under the Securities Act, the Grantee agrees that
Acquisition Sub may imprint on any evidence of ownership of the Warrant Shares
the following legend or any other comparable legend that counsel for Acquisition
Sub considers necessary or advisable to comply with the Securities Act:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR UNDER THE SECURITIES LAWS OF ANY STATE AND MAY NOT
BE SOLD OR TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT, OR PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE ACT."
WorldCorp (i) may, but in no event shall be obligated to, register any
securities issuable upon the exercise of the Warrant pursuant to the Securities
Act or any state securities laws and, in the event any shares are so registered,
the Grantee agrees that Acquisition Sub may remove any legend on certificates
representing such shares; and (ii) shall not be obligated to take any
affirmative action in order to cause the exercise of the Warrant or the issuance
of Warrant Shares pursuant thereto to comply with any law or regulation of
governmental authority.
9. Representations and Warranties of WorldCorp and the
Grantee.
(a) WorldCorp represents and warrants to the Grantee as
follows:
(i) WorldCorp is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware;
(ii) WorldCorp has valid and unencumbered title to
the Warrant Shares (other than the security interest granted to the
Collateral Agent as agent on behalf of certain Lenders pursuant to the
Pledge Agreement among the Collateral Agent, WorldCorp and Acquisition
Sub); and
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<PAGE>
(iii) this Agreement has been duly authorized,
executed and delivered by WorldCorp.
The foregoing representations, warranties and
agreements shall survive and remain in full force and effect after the
date hereof and shall not affect the validity or enforceability of any
representations, warranties and agreements made by WorldCorp herein.
(b) The Grantee represents and warrants to WorldCorp as
follows:
(i) the Grantee has valid and unencumbered title
to the Shares; and
(ii) this Agreement has been duly authorized,
executed and delivered by the Grantee.
The foregoing representations, warranties and
agreements shall survive and remain in full force and effect after the
date hereof and shall not affect the validity or enforceability of any
representations, warranties and agreements made by the Grantee herein.
10. No Transfers, Etc. Until after the seventh anniversary of
the Date of Grant, WorldCorp shall not offer, sell, pledge, hypothecate,
transfer or otherwise dispose of the Warrant Shares, other than pursuant to the
exercise of the Warrant.
11. Certain Definitions. As used herein, unless the context
otherwise requires the following terms have the following respective meanings:
(i) "Commission" shall mean the Securities and Exchange Commission or any other
Federal agency at the time administering the Securities Act; (ii) "Exchange Act"
shall mean the Securities Exchange Act of 1934, or any similar Federal statute,
and the rules and regulations of the Commission thereunder, all as the same
shall be in effect at the time; (iii) "Person" shall mean a corporation, an
association, a partnership, an organization or business, an individual, a
government or political subdivision thereof or a governmental agency; (iv)
"Securities Act" shall mean the Securities Act of 1933, or any similar Federal
statute on the rules and regulations of the Commission thereunder, all as the
same shall be in effect at the time; and (v) the term "affiliate" shall have the
meaning set forth in Rule 12b-2 of the General Rules and Regulations promulgated
under the Securities Exchange Act of 1934, as amended.
12. Miscellaneous.
(a) Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware without regard
to principles of conflicts or choice of law (or any other law that would make
any substantive laws of any state other than the State of Delaware applicable
hereto).
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<PAGE>
(b) Waiver of Jury Trial and Setoff; Consent to
Jurisdiction; Etc.
(i) In any litigation in any court with respect to,
in connection with, or arising out of this Agreement or any instrument
or document delivered pursuant to this Agreement, or the validity,
protection, interpretation, collection or enforcement hereof or
thereof, or any other claim or dispute howsoever arising, between
WorldCorp and the Grantee, WorldCorp, to the fullest extent it may
legally do so, (i) waives the right to interpose any setoff,
recoupment, counterclaim or cross-claim in connection with any such
litigation, irrespective of the nature of such setoff, recoupment,
counterclaim or cross-claim, unless such setoff, recoupment,
counterclaim or cross-claim could not, by reason of any applicable
federal or state procedural laws, be interposed, pleaded or alleged in
any other action and (ii) WAIVES TRIAL BY JURY IN CONNECTION WITH ANY
SUCH LITIGATION AND ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY
SUCH LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL
DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES.
WORLDCORP AGREES THAT THIS SECTION 12(b) IS A SPECIFIC AND MATERIAL
ASPECT OF THIS AGREEMENT AND ACKNOWLEDGES THAT THE GRANTEE WOULD NOT
ENTER THIS AGREEMENT OR THE TRANSACTIONS OF WHICH THIS AGREEMENT IS A
PART IF THIS SECTION 12(b) WERE NOT PART OF THIS AGREEMENT.
(ii) WorldCorp hereby irrevocably consents to the
exclusive jurisdiction of any State or Federal Court located within the
County of Palm Beach, State of Florida, in connection with any action
or proceeding arising out of or relating to this Agreement or any
document or instrument delivered pursuant to this Agreement or
otherwise. In any such litigation, WorldCorp waives, to the fullest
extent it may effectively do so, personal service of any summons,
complaint or other process and agrees that the service thereof may be
made by certified or registered mail directed to WorldCorp at its
address for notice determined in accordance with Section 13(e) hereof.
WorldCorp hereby waives, to the fullest extent it may effectively do
so, the defenses of forum non conveniens and improper venue.
(c) Expenses. WorldCorp agrees to pay or reimburse, promptly
upon receipt of demand therefor by the Grantee, any and all out-of-pocket costs
and expenses incurred by the Grantee, whether directly or indirectly, in
connection with the enforcement and adjudication of this Agreement, the Warrant
or rights created under any documents executed in connection herewith. The
Grantee shall endeavor to provide reasonable documentation in connection with
any demand for payment under this Section.
(d) Admissibility of the Agreement. WorldCorp agrees that any
copy of this Agreement signed by WorldCorp and transmitted by telecopier for
delivery to the Grantee shall be admissible in evidence as the original itself
in any judicial or administrative proceeding, whether or not the original is in
existence.
-7-
<PAGE>
(e) Address for Notices. Any notice or other communication
under the provisions of this Agreement shall be given in writing and delivered
in person, by reputable overnight courier or delivery service, by facsimile
machine (receipt confirmed) or by registered or certified mail, return receipt
requested, directed to its addresses set forth below (or to any new address of
which either party hereto shall have informed the other by the giving of notice
in the manner provided herein):
In the case of the Grantee, to it at:
Sun Paper Limited Partnership
777 South Flagler Drive
West Tower, 8th Floor
West Palm Beach, Florida 33401
Attention: Messrs. Marc J. Leder and Rodger R. Krouse
Telecopier: (561) 835-1314
In the case of WorldCorp, to it at:
WorldCorp, Inc.
13873 Park Center Road
Herndon, Virginia 20171
Attention: Mr. T. Coleman Andrews, III
Telecopier: (703) 834-9211
with a copy to:
Hunton & Williams
951 East Byrd Street
Richmond, Virginia 23219
Attention: David M. Carter, Esq.
Telecopier: (804) 788-8218
(f) Amendments and Modification. No provision hereof shall be
modified, altered, waived or limited except by written instrument expressly
referring to this Agreement and to such provision, and executed by the parties
hereto.
(g) Counterparts. This Agreement may be executed by the
parties hereto individually or in any combination, in one or more counterparts,
each of which shall be an original and all of which shall together constitute
one and the same agreement.
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<PAGE>
(h) Captions. The captions of the various sections and
paragraphs of this Agreement have been inserted only for the purposes of
convenience; such captions are not a part of this Agreement and shall not be
deemed in any manner to modify, explain, enlarge or restrict any of the
provisions of this Agreement.
(i) Severability. In the event that any term or provision of
this Agreement shall be finally determined to be superseded, invalid, illegal or
otherwise unenforceable pursuant to applicable law by an authority having
jurisdiction and venue, that determination shall not impair or otherwise affect
the validity, legality or enforceability (i) by or before that authority of the
remaining terms and provisions of this Agreement, which shall be enforced as if
the unenforceable term or provision were deleted, or (ii) by or before any other
authority of any of the terms and provisions of this Agreement.
(j) Entire Agreement. This Agreement contains the entire
agreement of the parties and supersedes all other agreements and understandings,
oral or written, with respect to the matters contained herein.
(k) Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the respective heirs, representatives,
successors and assigns of the parties hereto, provided that this Agreement may
not be assigned by WorldCorp without the prior written consent of the other
party hereto and may be assigned by the Grantee to an affiliate of the Grantee
without the consent of WorldCorp.
[THE REST OF THIS PAGE INTENTIONALLY BLANK]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement effective as of the day and year first above written.
FRYE ACQUISITION PARTNERS
a California limited partnership
By: Leach McMicking & Company
a California limited partnership
By: Leach McMicking & Company
a California corporation
By:
------------------------
Howard H. Leach
President
WORLDCORP, INC.
By:
-------------------------
Name:
Title:
-10-
