SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________
FORM 10-K/A
(Amendment No.1)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
______________
For the fiscal year ended: December 31, 1997
Commission File Number 1-5351
WORLDCORP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 94-3040585
(State of incorporation) (I.R.S. Employer Identification
Number)
13873 Park Center Road, Suite 490, Herndon, VA 22071
(Address of Principal Executive Offices)
(703) 834-9200
(Registrant's telephone number)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which
Registered
Common Stock par value New York Stock Exchange
$1.00 per share
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days. Yes X No _____
State by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K [ ].
The aggregate market value of the Common Stock held by non-affiliates
of the registrant on March 31, 1998 was approximately $11,888,015.
The number of shares of the registrant's Common Stock outstanding on
March 31, 1998 was 13,883,245.
<PAGE>
PART III
Item 10. Directors and Executive Officers
Set forth below is certain information as to persons who currently
serve as directors and executive officers of WorldCorp, Inc.
("WorldCorp" or the "Company"). The Class II directors hold office
until the Annual Meeting of Stockholders in 1998, currently scheduled
for June 8, 1998 at 9:00 a.m., and the Class I directors hold office
until the Annual Meeting of Stockholders in 1999. Thereafter,
stockholders will elect the directors of each class at the appropriate
succeeding Annual Meeting of Stockholders.
CLASS II DIRECTORS
Name and Age Past Five Years' Principal Occupation(s)
and Other Directorships
James E. Colburn, 74 Mr. Colburn served as a director of World
Airways from 1985 to 1987 and has served
as a director of the Company since 1987.
Mr. Colburn served as President of
Aviation Consulting, Inc. from October
1982 to July 1986 and is currently
retained by Aviation Consulting, Inc. as
a consultant. From 1979 to 1982 he was
Vice President--Operations and
Maintenance of Wien Air Alaska.
Gideon Argov, 41 Mr. Argov was elected President and CEO of
Kollmorgen Corporation, a diversified
technology company, in May 1991, and was
appointed a director of the Company on
August 23, 1995. Prior to joining
Kollmorgen, Mr. Argov was President and
CEO of High Voltage Engineering
Corporation. He currently serves as a
director of Kollmorgen and
Transtechnology Corporation.
CLASS I DIRECTORS
Name and Age Past Five Years' Principal Occupation(s)
and Other Directorships
T. Coleman Andrews, III, 43 Mr. T. Coleman Andrews, III was elected
Chief Executive Officer, President and a
Director of the Company in June 1987. He
has served as Chairman of the Board of
World Airways since 1986. On April 8,
1997, Walter M. Fiederowicz was appointed
President and Chief Executive Officer of
the Company, succeeding Mr. Andrews. In
November 1997, Patrick F. Graham was
appointed President and CEO of the
Company, succeeding Walter M.
Fiederowicz. Mr. Andrews was elected
Chairman of the Board of the Company,
succeeding William F. Gorog, who was
elected Chairman of the Executive
Committee of the Board. He has served as
a Director of InteliData since 1990.
From 1978 through 1986, he was affiliated
with Bain & Company, Inc. an
international strategy consulting firm.
At Bain, he was elected partner in 1982
and was a founding general partner in
1984 of the Bain Capital Fund, a private
venture capital partnership. Prior to
his experience with Bain, Mr. Andrews
served in several appointed positions in
the White House for the Ford
Administration.
William F. Gorog, 72 Mr. William F. Gorog has served as Chief
Executive Officer of InteliData (and its
predecessor, US Order) since May 1, 1990.
He was elected a director of the Company
in April 1989 and was elected Chairman of
the Company's Board of Directors in May
1993. In April 1997, Mr. Andrews
replaced Mr. Gorog as Chairman of the
Board, and Mr. Gorog was elected Chairman
of the Executive Committee of the Board.
From October 1987 until founding US Order
in May 1980, he served as Chairman of the
Board of Arbor International, an
investment management firm. From 1982 to
1987, he served as President and Chief
Executive Officer of Magazine Publishers
of America, a trade association
representing the principal consumer
publications in the United States.
During the Ford Administration, Mr. Gorog
served as Deputy Assistant to the
President for Economic Affairs and
Executive Director of the White House
Council on International Economic Policy.
Prior to that time, he founded and served
as Chief Executive Officer of Data
Corporation, which developed the LEXIS
and NEXIS information systems for legal
and media research and which was
subsequently sold to the Mead
Corporation.
Patrick F. Graham, 58 Mr. Patrick F. Graham was appointed as
President and Chief Operating Officer of
WorldCorp in November 1997. Mr. Graham
has been a director of WorldCorp since
October 1992. Prior to joining WorldCorp
Mr. Graham was a Director of Bain &
Company, Inc., a management consulting
firm based in Boston, Massachusetts. Mr.
Graham co-founded the firm in 1973. In
addition to his primary responsibilities
with Bain clients, he has also served as
Bain's Vice Chairman and Chief Financial
Officer. Prior to the start of Bain &
Company, Mr. Graham was Group Vice
President with the Boston Consulting
Group. His previous experience also
includes positions with IBM, Ford Motor
Company, and as a captain in the U.S.
Army. Mr. Graham received an M.B.A. with
Distinction from Stanford University's
Graduate School of Business. He holds a
B.A. from Knox College, where he
graduated magna cum laude, was elected to
Phi Beta Kappa and is currently on the
Board of Trustees. Mr. Graham also
serves as a director of InteliData
Technologies Corporation.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act ("Section 16(a)") requires the
Company's directors and executive officers, and persons who own more
than 10% of its Common Stock, to file with the SEC initial reports of
ownership of the Company's equity securities and to file subsequent
reports when there are changes in such ownership. To the Company's
knowledge, based solely on review of the copies of such reports
furnished to the Company, all Section 16(a) filing requirements
applicable to its greater than 10% beneficial owners, directors and
executive officers were complied with in 1997.
Item 11. Executive Compensation
SUMMARY COMPENSATION TABLE.
The following table provides information concerning compensation paid
or accrued during the fiscal years ended December 31, 1997, 1996 and
1995 to the Company's Chief Executive Officer and each of the other
most highly paid executive officers of the Company determined at the
end of 1997 (the "Named Executive Officers").
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation
Awards
Securities
Underlying
Name and Options/ All Other
Principal Salary Bonus SARS Compensation
Position (2) (3) (4) (5)
(1) Year ($) ($) (#) ($)
<S> <C> <C> <C> <C> <C>
T. Coleman 1997 277,308 --- 125,000 433,968(7)
Andrews, III WOA(6)
Chairman 125,000
WorldCorp INTD(6)
1996 350,000 --- --- 438,000(8)
1995 350,000 225,000 --- 394,676(9)
Walter M. 1997 97,115 --- --- 480(11)
Fiederowicz
(10)
Former
President/
CEO
WorldCorp
Patrick F. 1997 33,654 --- 150,000 WOA
Graham(12) 100,000 WLDA
President/ 350,000 INTD
CEO
WorldCorp
Andrew M. 1997 180,000 --- --- 5,846(14)
Paalborg(13) 1996 180,000 --- --- 9,500
Former VP & 1995 177,923 115,000 --- 6,128
General
Counsel
WorldCorp
</TABLE>
____________________
Footnotes
1 The compensation of Messrs. Andrews and Paalborg is paid entirely
by the Company, including, where applicable, options to purchase
common stock of the Company, World Airways and InteliData. In
1997, a portion of their respective salaries, however, were
allocated to World Airways.
2 Excludes compensation deferred under the World Airways Employee
Savings and Stock Ownership Plan ESSOP (the "World Airways ESSOP")
(see footnote 5 below for a description of the World Airways
ESSOP), which is also available to employees of the Company. The
Company's contributions to the World Airways ESSOP accounts of the
Named Executive Officers is included in the column titled "All
Other Compensation." See footnote 5.
3 Bonuses are listed for the year in which the bonus was earned.
Most bonuses are paid early in the year following the year in which
the bonus was earned by the individual.
4 Includes options granted in 1997 under the Company's Amended and
Restated 1988 Stock Option Plan. No warrants or SARs were granted
to the individuals set forth herein under either of the option
plans in 1997. For purposes of this column, WorldCorp is referred
to as "WOA", World Airways is referred to as "WLDA" and InteliData
is referred to as "INTD." The shares of common stock underlying Mr.
Andrews' options to purchase, in the aggregate, 125,000 shares of
InteliData common stock and Mr. Graham's options to purchase, in
the aggregate, 350,000 shares of InteliData common stock and
100,000 shares of World Airways common stock are owned by the
Company.
5 Amount includes value of Company contributions to the World Airways
ESSOP accounts of the Named Executive Officers. The Company's
contributions to the WorldCorp Employee Savings and Stock Ownership
Plan (the "WorldCorp ESSOP") were made in Company Common Stock and
are valued using closing prices for the year in which the
contributions were made. Due to the small number of Company
employees in the WorldCorp ESSOP, effective October 1, 1996, a
World Airways ESSOP was created by the WorldCorp ESSOP trust's
exchanging Company shares held by the trust for World Airways
shares owned by the Company. The World Airways ESSOP then became
the successor plan to the WorldCorp ESSOP. Company employees are
permitted to participate in the World Airways ESSOP, but are
allocated shares of World Airways stock according to their
contributions to the plan.
6 Mr. Andrews was granted options to purchase 125,000 shares of
WorldCorp Common Stock and 125,000 shares of InteliData common
stock held by the Company in exchange for surrendering 200,000
unvested WorldCorp options.
7 Consists of (i) $9,500 of Company contributions to the World
Airways ESSOP, (ii) $4,468 of premiums paid for life insurance
under the terms of the 1994 Employment Agreement between Mr.
Andrews and the Company and (iii) $420,000 paid in connection with
the modification in 1993 of Mr. Andrews' Supplemental Incentive
Compensation Agreement. Please see "Employment Agreements" below.
8 Consists of (i) $9,500 of Company contributions to the WorldCorp
ESSOP, (ii) $8,504 of premiums paid for life insurance under the
terms of the 1994 Employment Agreement between Mr. Andrews and the
Company, and (iii) $420,000 paid in connection with the
modification in 1993 of Mr. Andrews' Supplemental Incentive
Compensation Agreement. Please see "Employment Agreements" below.
9 Consists of (i) $9,240 of Company contributions to the WorldCorp
ESSOP, (ii) $5,436 of premiums paid for life insurance under the
terms of the 1994 Employment Agreement between Mr. Andrews and the
Company, and (iii) $380,000 paid in connection with the
modification in 1993 of Mr. Andrews' Supplemental Incentive
Compensation Agreement. Please see "Employment Agreements" below.
10 On April 8, 1997, Walter M. Fiederowicz was appointed President and
Chief Executive Officer by the Board. On August 25, 1997, Mr.
Fiederowicz resigned as President and Chief Executive Officer of
the Company and was replaced by Patrick F. Graham in November 1997.
11 Consists of $480 of premium for life insurance for Mr. Fiederowicz.
12 Mr. Graham was appointed President and CEO for the Company on
November 16, 1997.
13 Mr. Paalborg departed the Company on February 12, 1998.
14 Consists of (i) $842 of premium for life insurance for Mr. Paalborg
and (ii) $5,004 of flexible benefits provided to Mr. Paalborg.
OPTIONS/SAR GRANTS IN 1997.
The following table provides information concerning stock options
granted to the Named Executive Officers during 1997.
<TABLE>
<CAPTION>
Potential
Realizable
Value At
Assumed
Annual Rates of
Stock
Price
Appreciation
Individual Grants For Option Term
% of
total
Options/
SARs Exer-
Granted cise
Options/ to or
SARs Employ- Base
Granted ees in Price Expir-
(1), (2) Fiscal Per ation
Name (Shares) Year Share Date 5% 10%
<S> <C> <C> <C> <C> <C> <C>
T. Coleman 50,000 5.9 $2.00 9/30/05 $52,362.59 $121,057.60
Andrews, WOA
III 75,000 8.8 $2.00 9/30/07 101,969.64 251,219.54
WOA(3)
50,000 5.9 $3.00 9/30/05 71,618.32 171,538.32
INTD
75,000 8.8 $3.00 9/30/07 141,501.29 358,592.05
INTD(4)
Walter M. -- -- -- -- -- --
Fiederowicz
Patrick F. 50,000 5.9 $1.75 11/16/05 32,543.25 40,608.75
Graham WOA(5)
100,000 11.8 $1.75 11/07/07 89,695.38 246,483.15
WOA(6)
30,000 3.5 $7.92 11/16/05 89,287.02 110,270.16
WLDA(7)
70,000 8.2 $7.92 11/07/07 286,516.85 784,619.55
WLDA(8)
100,000 11.8 $2.98 11/16/05 20,576.33 138,301.80
INTD(9)
250,000 29.4 $2.98 11/07/07 133,076.01 653,189.29
INTD(10)
Andrew M. -- -- -- -- -- --
Paalborg
</TABLE>
Footnotes
1 No SARs were granted in 1997.
2 The shares of common stock underlying Mr. Andrews' options to
purchase, in the aggregate, 125,000 shares of InteliData common
stock and Mr. Graham's options to purchase, in the aggregate,
350,000 shares of InteliData common stock and 100,000 shares of
World Airways common stock are owned by the Company.
3 Mr. Andrews' options to purchase 75,000 shares of the Company's
Common Stock ("Common Stock") are subject to specific vesting
requirements. These options become exercisable in 15,000-share
increments on the 21st day following any twenty (20) trading-day
period during which the Company's stock traded at or above $2.50,
$3.13, $3.91,$4.88 and $6.10, respectively. However, all
unvested shares vest automatically ninety days prior to
expiration.
4 Mr. Andrews' options to purchase 75,000 shares of InteliData's
common stock are subject to specific vesting requirements. These
options become exercisable in 15,000-share increments on the 21st
day following any twenty (20) trading-day period during which the
Company's stock traded at or above $3.75, $4.69, $5.86, $7.32 and
$9.16, respectively. However, all unvested shares vest
automatically ninety days prior to expiration.
5 All of Mr. Graham's options to purchase 50,000 shares of Common
Stock vest with respect to an equal number of shares as of the
total shares as of the end of the first 24 months following
November 16, 1997.
6 Mr. Graham's options to purchase 100,000 shares of Common Stock
are subject to acceleration as follows: the options will become
exercisable in 16,666.67 increments on the 21st day following any
twenty (20) trading-day period during which the Company's stock
traded at or above $2.18, $2.72, $3.40, $4.25, $5.31 and $6.63,
respectively. However, all unvested shares vest automatically
ninety days prior to expiration.
7 All of Mr. Graham's options to purchase 30,000 shares of World
Airways common stock vest with respect to an equal number of
shares as of the total shares as of the end of the first 24
months following November 16, 1997.
8 Mr. Graham's options to purchase 70,000 shares of World Airways'
common stock are subject to acceleration as follows: the options
will become exercisable in 11,666 increments on the 21st day
following any twenty (20) trading-day period during which the
Company's stock traded at or above $9.90, $12.37, $ 15.46, $19.32,
$24.15 and $30.18, respectively. However, all unvested shares vest
automatically ninety days prior to expiration.
9 All of Mr. Graham's options to purchase 100,000 shares of
InteliData's common stock vest with respect to an equal number of
shares as of the total shares as of the end of the first 24 months
following November 16, 1997.
10 Mr. Graham's options to purchase 250,000 shares of InteliData's
common stock are subject to acceleration as follows: the options
will become exercisable in 41,666 increments on the 21st day
following any twenty (20) trading-day period during which the
Company's stock traded at or above $3.72, $4.65, $5.81, $7.26,
$9.07 and $11.33, respectively. However, all unvested shares
vest automatically ninety days prior to expiration.
AGGREGATED OPTION EXERCISES IN 1997 AND YEAR-END OPTION VALUES.(1)
The following table lists aggregate option exercises in 1997 and year-
end values for exercisable and unexercisable options.
<TABLE>
<CAPTION>
Number of Value of
Securities Unexercised
Underlying In-The-Money
Unexercised Options at
Options at FY-End
FY-End (#) ($)
Shares
Acquired (Exercis- (Exercis-
on Value able/ able/
Exercise Realized Unexercis- Unexercis-
Name (#) ($) able) able)
<S> <C> <C> <C> <C>
T. Coleman --- WOA --- WOA 585,000/75,000 0/0 WOA
Andrews, III WOA
--- INTD --- INTD 50,000/75,000 0/0 INTD
INTD
Walter M. --- WOA --- WOA --- WOA 0/0 WOA
Fiederowicz
Patrick F. --- WOA --- WOA 37,083/147,917 0/0 WOA
Graham WOA
--- WLDA --- WLDA 1,250/98,750 0/0 WLDA
WLDA
--- INTD --- INTD 4,167/345,833 0/0 INTD
INTD
Andrew M.
Paalborg --- WOA --- WOA 152,500/0 WOA 0/0 WOA
</TABLE>
______________________
1 The information set forth in this table includes the aggregate
amount of all options granted to the Named Executive Officers by
the Company and one or more of its subsidiaries. The calculations
in this table are based upon a December 31, 1997, closing price of
$1.00 of WorldCorp's Common Stock on the New York Stock Exchange, a
closing price of $6.875 for World Airways Common Stock on the
Nasdaq National Market, and a closing price of $1.844 for
InteliData's Common Stock on the Nasdaq National Market. WOA is
the New York Stock Exchange trading symbol for WorldCorp, WLDA is
the Nasdaq trading symbol for World Airways, and INTD is the Nasdaq
trading symbol for InteliData.
DIRECTORS COMPENSATION.
Pursuant to the Amended and Restated WorldCorp, Inc. 1988 Stock Option
Plan (the "Option Plan"), each director of the Company who is not an
executive of the Company was granted options to purchase 25,000 shares
of Common Stock upon his election to the Board under the terms of the
Option Plan. The Option Plan was further amended by the Company's
stockholders at a Special Meeting on August 19, 1994, to provide that
each non-employee Director upon election to subsequent two-year terms
on the Board would receive additional grants of options for 25,000
shares of Common Stock upon each reelection. In 1995, the full Board
of Directors determined to amend the Option Plan to provide that non-
employee Directors will only be granted options under the Option Plan
to purchase 25,000 shares of Common Stock upon their initial election
or appointment to the Board of Directors, and an additional
discretionary option grant may be made of up to 25,000 options. Under
the Option Plan, these options vest in equal monthly installments over
a two year period commencing on the date of a director's election or
appointment to the Board, and the exercise price for these options is
set at the average closing price on the New York Stock Exchange for
the Common Stock for the thirty trading day period preceding the grant
date of the option. Until June 30, 1996, each director who is not an
executive of the Company received an annual fee of $25,000 (payable
quarterly in advance) for serving as a director of the Company.
Effective July 1, 1996, pursuant to the terms of the Directors
Retainer Plan, each non-employee director of the Company was paid his
annual fee of $25,000 in quarterly installments (payable in advance)
of shares of Common Stock. The number of shares of Common Stock to be
received each quarter by the non-employee directors is valued at the
average closing price on the New York Stock Exchange for the Common
Stock, for the thirty trading day period preceding the first day of
the new quarter. Directors are compensated at a daily rate of $750
for participating in committee meetings in excess of four meetings per
year.
EMPLOYMENT AGREEMENTS.
The Company has entered into employment agreements with each of
Messrs. Andrews and Graham. The terms and conditions of each
agreement are more fully discussed below. The Company had entered
into an employment agreement with Mr. Paalborg, who departed as Vice
President, General Counsel and Secretary on February 12, 1998.
Following the analysis and research completed by the Compensation
Committee of the Board of Directors in concluding its agreement with
the Chief Executive Officer of the Company, the principles included in
that agreement have generally been applied to the employment
agreements of each of the other Named Executive Officers.
T. Coleman Andrews, III
The Company has entered into an employment agreement with T. Coleman
Andrews, III as of October 1, 1997, providing that Mr. Andrews will
continue to serve as Chairman of the Company until September 30, 1999,
unless further extended or sooner terminated as set forth in the
agreement. Mr. Andrews has agreed to resign from the Board in
connection with, and effective upon, termination of his employment
with the Company.
Mr. Andrews is entitled to a base salary of $200,000 per year and an
annual bonus of up to 75% of his base salary and certain regular and
fringe benefits. In addition, Mr. Andrews is entitled to participate
in all bonus and incentive compensation plans or arrangements made
available by the Company to its officers and directors.
Mr. Andrews' employment agreement terminates automatically upon his
death in which case Mr. Andrews' estate or beneficiaries are entitled
to receive Mr. Andrews' salary for a period of one month following his
date of death, any accrued portion of any bonus payable to Andrews
prior to death, certain benefits and any amounts payable under
Andrew's Supplemental Executive Retirement Plan. The Company may
terminate the agreement for "Cause" (as defined), or if Mr. Andrews
incurs a disability that continues for a period of 12 consecutive
months. Mr. Andrews may terminate the agreement for "Good Reason" (as
defined). If the Company terminates Mr. Andrews for other than
"Cause" or if Mr. Andrews terminates the agreement for "Good Reason",
the Company is obligated to pay Mr. Andrews the undiscounted remainder
of his salary and bonus and to continue to provide certain regular
benefits to Mr. Andrews. In addition, all stock options to which Mr.
Andrews is entitled shall become immediately vested and exercisable.
Pursuant to the agreement, in exchange for surrenduring 200,000
unvested Company options at an exercise price of $4.50 per share, the
Company granted Mr. Andrews options to purchase 125,000 shares of the
Company's common stock at an exercise price of $2.00 per share, 50,000
of which were immediately exercisable, and 125,000 shares of
InteliData's common stock, owned by the Company, at an exercise price
of $3.00 per share, 50,000 of which were immediately exercisable. The
unvested options to purchase 75,000 shares of the Company's common
stock become exercisable in 15,000-share increments on the 21st day
following any twenty (20) trading-day period during which the
Company's stock traded at or above $2.50, $3.13, $3.91, $4.88 and
$6.10, respectively. However, all unvested shares vest automatically
ninety days prior to expiration. The unvested options to purchase
75,000 shares of InteliData's common stock become exercisable in
15,000-share increments on the 21st day following any twenty (20)
trading-day period during which the Company's stock traded at or above
$3.75, $4.69, $5.86, $7.32 and $9.16, respectively. However, all
unvested shares vest automatically ninety days prior to expiration.
The Company and Mr. Andrews in 1989 entered into a Supplemental
Incentive Compensation Agreement (the "Incentive Agreement") in lieu
of the Company's granting additional equity to Mr. Andrews. The final
payment due to Mr. Andrews on January 2, 1998 of $655,365 was made on
that date.
In 1989, the Company loaned Mr. Andrews $1,300,000 under a full
recourse interest-bearing promissory note. The Company and Mr.
Andrews agreed, in December 1993, to cancel the earlier note and to
substitute a new, full recourse promissory note (the "1993 Note") due
in installments between January 1994 and February 1998. Mr. Andrews
reduced the principal balance of his obligation to the Company to
$667,490 as of December 31, 1997.
In October 1997, Mr. Andrews entered into a promissory note for
$890,000 (the "1997 Note"), representing the remaining amounts due to
the Company under the 1993 Note due in annual installments beginning
February 28, 1998 through February 28, 2001.
Patrick F. Graham
The Company has entered into an employment agreement with Patrick F.
Graham as of November 16, 1997, providing that Mr. Graham will
continue to serve on the Board and will serve as the Company's Chief
Executive Officer until November 15, 1999, unless further extended or
sooner terminated as set forth in the agreement. Mr. Graham has
agreed to resign from the Board in connection with, and effective
upon, termination of his employment with the Company.
Mr. Graham is entitled to a base salary of $350,000 per year and an
annual bonus of up to 75% of his base salary and certain benefits. In
addition, Mr. Graham is entitled to participate in all bonus and
incentive compensation plans or arrangements made available by the
Company to its officers and directors.
Mr. Graham's employment agreement terminates automatically upon his
death in which case Mr. Graham's estate or beneficiaries are entitled
to receive Mr. Graham's salary for a period of one month following his
date of death, any accrued portion of any bonus payable to Graham
prior to death and certain benefits. The Company may terminate the
agreement for "Cause" (as defined), or if Mr. Graham incurs a
disability that continues for a period of 12 consecutive months. Mr.
Graham may terminate the agreement for "Good Reason" (as defined). If
the Company terminates Mr. Graham for other than "Cause" or if Mr.
Graham terminates the agreement for "Good Reason", the Company is
obligated to pay Mr. Graham the undiscounted remainder of his salary
and bonus and to continue to provide certain benefits to Mr. Graham.
In addition, all stock options to which Mr. Graham is entitled shall
become immediately vested and exercisable.
Pursuant to the agreement, the Company granted Mr. Graham options to
purchase 150,000 shares of the Company's common stock at an exercise
price of $1.75 per share, 350,000 shares of InteliData's common stock,
owned by the Company, at an exercise price of $2.98 per share, and
100,000 shares of World Airways' common stock, owned by the Company,
at an exercise price of $7.92 per share. 50,000 Company options,
100,000 InteliData options, and 30,000 World Airways options become
exercisable in equal increments as of the end of each of the first
twenty-four (24) calendar months beginning in December, 1997. The
remaining Company, InteliData, and World Airways options vest on
November 16, 2007, subject to acceleration. 100,000 Company options
become exercisable in 16,666.67 increments on the 21st day following
any twenty (20) trading-day period during which the Company's stock
traded at or above $2.18, $2.72, $3.40, $4.25, $5.31 and $6.63,
respectively. 250,000 InteliData options become exercisable in 41,666
increments on the 21st day following any twenty (20) trading-day
period during which the Company's stock traded at or above $3.72,
$4.65, $5.81, $7.26, $9.07 and $11.33, respectively. 70,000 World
Airways options become exercisable in 11,666 increments on the 21st
day following any twenty (20) trading-day period during which the
Company's stock traded at or above $9.90, $12.37, $15.46, $19.32,
$24.15 and $30.18, respectively.
Change in Control Agreements
The Company has issued stock options to each of the Company's current
Named Executive Officers. Certain of the options issued to executive
officers under the Company's 1988 Stock Option Plan prior to May 13,
1992, provided that upon a "Change of Control" (as defined) the
executive officer's option shall become immediately exercisable as of
the date of the "Change of Control" for up to double the number of
shares of Common Stock for which the option is otherwise exercisable
as of the date of the Change of Control (not to exceed the total
number of Option Shares, as defined). Other options issued to
executive officers under the 1988 Stock Option Plan prior to May 13,
1992, provided that in the event of termination of the executive
officer's employment by the Company without "Cause" (as defined) or by
the executive officer for "Good Reason" (as defined) within two years
after a "Change of Control" (as defined) the executive officer's stock
options shall become fully vested and exercisable. In 1992, the
Company amended and restated its 1988 Stock Option Plan. The
Company's stockholders approved the amended and restated 1988 Stock
Option Plan on May 13, 1992. Options issued to executive officers
under the 1988 Stock Option Plan as amended and restated provide that
in the event of termination of the executive officer's employment by
the Company without "Cause" or by the executive officer for "Good
Reason" within two years after a "Change of Control" the executive
officer's stock options shall become fully vested and exercisable.
Pursuant to the terms of the option agreements between the Company and
Messrs. Andrews and Graham in the event of the termination of their
employment by the Company without "Cause" (as defined) or by the
executive officer for "Good Reason" (as defined) within two years
after a "Change of Control" (as defined), the executive officer's
stock options shall become immediately exercisable.
Item 12. Security Ownership of Certain beneficial Owners and Management
PRINCIPAL STOCKHOLDERS
The following are the only persons known to the Company who are
beneficial owners of more than five percent of Common Stock as of
December 31, 1997 (except as otherwise noted). With respect to the
information set forth below, the Company has relied upon Schedule 13D or
Schedule 13G filings and information received from the persons listed.
<TABLE>
<CAPTION>
Name of Beneficial Address of Amount and Nature of Percent
Owner Beneficial Owner Beneficial Ownership(1) of Class(1)
<S> <C> <C> <C>
Morgan Stanley, Dean 1585 Broadway
Witter, Discover & Co. New York, NY 10036 1,853,460(2) 13.35%
Travelers Company One Tower Square 1,330,136(3) 9.5%
Group, Inc. Hartford, CT 06183
Zesiger Capital Group 320 Park Avenue 1,120,976(4) 8.1%
30th Floor
New York, NY 10022
T. Rowe Price 100 East Pratt Street 890,000(5) 6.4%
Associates, Inc. Baltimore, MD 21202
Capital Technology, 8314 Pineville-Matthews 814,600(6) 5.9%
Inc. Road, Suite 295
Charlotte, NC 28226
</TABLE>
_____________________
Footnotes
1 Beneficial ownership as reported in the table has been determined
in accordance with Securities and Exchange Commission ("SEC")
regulations and includes shares of Common Stock which may be
acquired within 60 days of December 31, 1997, upon the exercise of
outstanding stock options and warrants and the conversion of the
Company's 7% Convertible Subordinated Debentures due May 15, 2004
(the "Debentures"). In accordance with Rule 13d-3 of the
Securities Exchange Act of 1934 (the "Exchange Act"), shares of
Common Stock issuable upon the exercise of such options and
warrants and upon conversion of such Debentures are deemed
outstanding for purposes of computing the percentage of Common
Stock owned by the beneficial owner thereof listed in the table,
but are not deemed outstanding for purposes of computing the
percentage of outstanding Common Stock owned by any other
stockholder. Except as otherwise stated below, the named persons
have sole voting and investment power with regard to the shares
shown as owned by such person. Calculation of the Percent of Class
is based on 13,883,245 shares of Common Stock outstanding as of
December 31, 1997.
2 As reported in Amendment No. 3 and No. 4 to Schedule 13G dated
February 12, 1998 filed jointly by Morgan Stanley, Dean Witter,
Discover & Co., Morgan Stanley Asset Management Limited and Morgan
Stanley SICAV Global Equity Fund.
3 As reported in Amendment No. 1 to Schedule 13G filed jointly by The
Travelers Insurance Group, Inc., the Travelers Insurance Company,
PFS Services, Inc., Associated Madison Companies, Inc., and
Travelers Group Inc. on January 30, 1998. The 1,330,136 figure
reported in the Amendment No. 1 to Schedule 13G includes certain
convertible Debentures of the Company held by Travelers Group Inc.
4 As reported in Amendment No. 1 to Schedule 13G filed by Zesiger
Capital Group, LLC on February 10, 1998. Zesiger Capital Group
disclaims beneficial ownership of all 1,120,976 shares of the
Company's Common Stock. Such securities are held in discretionary
accounts which Zesiger Capital Group manages.
5 As reported in Amendment No. 2 to Schedule 13G dated February 13,
1998 filed, jointly by T. Rowe Price Associates, Inc. and T. Rowe
Price New Horizons Fund, Inc. These securities are owned by
various individual and institutional investors including the T.
Rowe Price New Horizons Fund, Inc., as to which T. Rowe Price
Associates, Inc. ("Price Associates") serves as investment adviser
with power to direct investments and/or sole power to vote the
securities. For purposes of the reporting requirements of the
Exchange Act, Price Associates is deemed to be a beneficial owner
of such securities; however, Price Associates, expressly disclaims
that it is, in fact, the beneficial owner of such securities.
6 As reported in a Schedule 13G filed by Capital Technology, Inc.,
on February 6, 1998.
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information concerning the beneficial
ownership of WorldCorp's Common Stock ("WC C.S.") and World Airways'
common stock ("WA C.S.") as of March 31, 1998, for (a) each director
and nominee for director; (b) each named executive officer; and (c)
directors and named executive officers as a group.
<TABLE>
<CAPTION>
Amount and Nature of Title of Percent of
Name of Beneficial Owner Beneficial Ownership(1) Class Class(1)
<S> <C> <C> <C>
T. Coleman Andrews, III 611,544(2) WC C.S. 4.4%
61,181(3) WA C.S. *
Patrick F. Graham 84,384(4) WC C.S. *
Walter M. Fiederowicz 0 WC C.S. *
Andrew M. Paalborg 163,363(5) WC C.S. 1.2%
Gideon Argov 33,773(6) WC C.S. *
James E. Colburn 71,898(7) WC C.S. *
3,000(8) WA C.S. *
William F. Gorog 268,855(9) WC C.S. 1.9%
Directors and Executive
Officers as a Group
(5 persons) 1,070,455 WC C.S. 7.7%
64,181 WA C.S. *
</TABLE>
* Individual is the beneficial owner of less than one percent (1%)
of outstanding common stock.
___________________
Footnotes
1 Beneficial ownership as reported in the table has been determined
in accordance with SEC regulations and includes shares of Common
Stock and World Airways common stock which may be acquired within
60 days of March 31, 1998, upon the exercise of outstanding stock
options and warrants. In accordance with Rule 13d-3 of the
Exchange Act, shares of common stock issuable upon the exercise of
such options and warrants are deemed outstanding for purposes of
computing the percentage of common stock owned by the beneficial
owner thereof listed in the table, but are not deemed outstanding
for purposes of computing the percentage of outstanding common
stock owned by any other stockholder. Except as otherwise stated
below, the named persons have sole voting and dispositive power
with regard to the shares shown as owned by such person. The
latest information available for the WorldCorp ESSOP is as of the
end of the plan year, December 31, 1997. The WorldCorp ESSOP was
converted into the World Airways ESSOP effective October 1, 1996.
The World Airways ESSOP is the successor to the WorldCorp ESSOP.
Under the terms of the World Airways ESSOP, WorldCorp employees
are entitled to participate in the World Airways ESSOP.
Calculation of the Percent of Class of Common Stock is based on
13,883,245 shares of Common Stock outstanding as of March 31,
1998; and calculation of the Percent of Class of World Airways
common stock is based on 7,230,064 shares of World Airways common
stock outstanding as of March 31, 1998.
2 Consists of (i) 585,000 shares of Common Stock issuable to Mr.
Andrews upon the exercise of stock options granted to Mr. Andrews
under the 1988 Stock Option Plan, (ii) 4,139 shares of Common Stock
owned directly by Mr. Andrews, and (iii) 22,405 shares of Common
Stock allocated to Mr. Andrews' account under the World Airways
ESSOP.
3 Consists of 6,800 shares of World Airways common stock owned
directly by Mr. Andrews, (ii) 50,000 shares of common stock
issuable to Mr. Andrews upon the exercise of options granted by
World Airways and (iii) 4,381 shares allocated to Mr. Andrews under
the World Airways ESSOP.
4 Consists of 37,083 shares of Common Stock issuable to Mr. Graham
upon the exercise of stock options granted to Mr. Graham under the
1988 Stock Option Plan and (ii) 47,301 shares of Common Stock paid
to Mr. Graham as compensation for his services as a Board member
through March 31, 1998, pursuant to the Company's 1996 Non-Employee
Directors Stock Retainer Plan ( the "Directors Retainer Plan").
5 Consists of (i) 152,500 shares of Common Stock issuable to Mr.
Paalborg upon the exercise of stock options granted to him under
the 1988 Stock Option Plan and (ii) 10,863 shares of Common Stock
allocated to Mr. Paalborg's account under the World Airways ESSOP.
6 Consists of (i) 21,875 shares of Common Stock issuable to Mr. Argov
upon the exercise of stock options granted to Mr. Argov under the
1988 Stock Option Plan and (ii) 11,898 shares of Common Stock paid
to Mr. Argov as compensation for his services as a Board member
through March 31, 1998, pursuant to the Directors Retainer Plan.
7 Consists of (i) 50,000 shares of Common Stock issuable to Mr.
Colburn upon the exercise of stock options granted to Mr. Colburn
under the 1988 Stock Option Plan; (ii) 10,000 shares of Common
Stock held directly by Mr. Colburn; and (iii) 11,898 shares of
Common Stock paid to Mr. Colburn as compensation for his services
as a Board member through March 31, 1998, pursuant to the
"Directors Retainer Plan."
8 Consists of 3,000 shares of World Airways common stock owned
directly by Mr. Colburn.
9 Consists of (i) 200,000 shares of Common Stock issuable upon the
exercise of stock options granted to Mr. Gorog under the 1988 Stock
Option Plan and (ii) 68,855 shares of Common Stock held directly
by Mr. Gorog.
Item 13. Certain Relationships and Related Transactions
Subsequent to year-end, World Airways loaned the Company $2.0 million,
which was used by WorldCorp to pay debt obligations, and is
collateralized by 1.0 million shares of World Airways' shares owned by
WorldCorp.
Pursuant to an August 20, 1997 agreement, on September 18, 1997, the
Company consummated the sale of 3,227,000 shares (the "Shares") of
Common Stock of World Airways to World Airways. The Shares were
purchased by World Airways for total consideration of $24.7 million
or $7.65 per Share. The sale reduced the Company's ownership
percentage of World Airways below 50%. The agreement to purchase
the Shares of Common Stock of World Airways triggered certain
"co-sale" rights under a shareholders agreement among MHS Berhad ("MHS"),
the Company and World Airways that would permit MHS to sell 773,000
shares of World Airways Common Stock. On January 22, 1998, MHS sold the
remaining 773,000 shares of World Airways common stock to World Airways.
The sale increased the Company's ownership percentage of the Company to
51.2% and reduced MHS's ownership percentage of the Company to 16.8%.
The Company and World Airways historically have utilized a single
corporate staff for administrative services, thus permitting World
Airways to utilize the Company's management personnel as needed.
Effective January 1, 1995, substantially all of the Company's management
personnel became employees of World Airways and since such date, World
Airways has provided certain administrative services to the Company. The
Company and World Airways have entered into a services agreement pursuant
to which World Airways and the Company will continue to provide services
to each other at negotiated rates, which the Company believes are
comparable to those that could be obtained on an arms-length basis.
