-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, b2Ld+uh99lnFIG2OZK9XvD3TJmwVp5Slbdwh/dDO/3c18qoT0t1TNPVRMxJdzuhN mJtdN04dtn+FLYSN4fm0tQ== 0000950172-95-000014.txt : 19950509 0000950172-95-000014.hdr.sgml : 19950508 ACCESSION NUMBER: 0000950172-95-000014 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 9 FILED AS OF DATE: 19950112 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: WORLDCORP INC CENTRAL INDEX KEY: 0000811664 STANDARD INDUSTRIAL CLASSIFICATION: AIR TRANSPORTATION, NONSCHEDULED [4522] IRS NUMBER: 943040585 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 033-57247 FILM NUMBER: 95501210 BUSINESS ADDRESS: STREET 1: 13873 PARK CTR RD STE 490 CITY: HERNDON STATE: VA ZIP: 22071 BUSINESS PHONE: 7038349200 MAIL ADDRESS: STREET 1: 13873 PARK CENTER ROAD CITY: HERNDON STATE: VA ZIP: 22071 S-3 1 As filed with the Securities and Exchange Commission on January 12, 1995 Registration No. 33- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM S-3 REGISTRATION STATEMENT Under THE SECURITIES ACT OF 1933 WORLDCORP, INC. (Exact name of registrant as specified in its charter) Delaware 94-3040585 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 13373 Park Center Road Suite 490 Herndon, Virginia 22071 (703) 834-9200 (Name, address, including ZIP code, and telephone number, including area code, of registrant's principal executive offices) T. Coleman Andrews, III Chief Executive Officer and President WorldCorp, Inc. 13873 Park Center Road, Suite 490 Herndon, Virginia 22071 (703) 834-9200 (Address, including ZIP code, and telephone number, including area code, of agent for service) Copies to: ANDREW M. PAALBORG Vice President and General Counsel WORLDCORP, INC. 13873 Park Center Road, Suite 490 Herndon, Virginia 22071 (703) 834-9200 Approximate date of commencement of proposed sale to public: From time to time after the effective date of this Registration Statement. If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. ( ) If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend and interest reinvestment plans, check the following box. (X) CALCULATION OF REGISTRATION FEE ______________________________________________________________________________ Proposed Maximum Title of Amount Offering Aggregate Amount of Securities to to be Price Per Offering Registration be Registered Registered Share (1) Price (1) Fee Common Stock, par value $1.00 . . . 663,679 $7.50 $4,977,593 $1,717 ______________________________________________________________________________ (1) Estimated in accordance with Rule 457 solely for the purpose of determining the registration fee. The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. WORLDCORP PROSPECTUS 663,679 Shares of Common Stock ($1.00 par value) This Prospectus relates to (i) 302,278 shares (the "Founders Shares") of common stock, par value $1.00 per share (the "Common Stock"), of WorldCorp, Inc. ("WorldCorp" and, together with its subsidiaries, the "Company"), issued to William F. Gorog and Jonathan M. Gorog (together, the "Gorogs"), Henry R. Nichols, William N. Melton and John Porter (collectively, the "US Order Founders"), the founders of US Order, Inc. ("US Order"), in connection with WorldCorp's exercise of its option, pursuant to the terms of a Stock Restriction Agreement dated as of September 14, 1990, among WorldCorp and the US Order Founders, as amended (the "Stock Restriction Agreement"), to purchase 4,757,679 shares of the common stock of US Order, par value $.001 per share, owned by the US Order Founders, and (ii) 361,401 shares (the "Pledged Shares") of Common Stock offered for the account of Scott & Stringfellow, Inc. (the "Pledge Holder"), the pledgee of the Pledged Shares under a loan to the WorldCorp Employee Savings and Stock Ownership Plan (the "ESSOP"), which shares may also be sold by a subsequent pledgee. The Founders Shares and the Pledged Shares are referred to herein collectively as the "Shares." Each of the US Order Founders and the Pledge Holder (including subsequent pledgees) are referred to herein individually as a "Selling Shareholder" and collectively as the "Selling Shareholders." Pursuant to the terms of the Stock Restriction Agreement, WorldCorp is required to register the Founders Shares once it receives a written request from William F. Gorog that WorldCorp effect a registration of the Founders Shares on Form S-3. WorldCorp received such written request from Mr. William F. Gorog on January 2, 1995. The Company will not receive any of the proceeds from the sale of the Shares by the Selling Shareholders. The ESSOP will receive any proceeds received by the Pledge Holder from the sale of the Pledged Shares offered hereby in excess of the loan amount. The Shares are being offered for sale by the Selling Shareholders, and may be offered and sold in negotiated transactions, or otherwise, at market prices prevailing at the time of sale or at negotiated prices. The Pledged Shares only become available for sale by the Pledge Holder (or a subsequent pledgee) pursuant to this registration statement upon an event of default under the margin loan agreement. See "Pledge Holder." The Company believes that if the Pledge Holder were to foreclose its security interest in the Pledged Shares, it would sell the Pledged Shares, from time to time, either through a standard underwriting arrangement, or in transactions involving broker-dealers who might act as agent and/or acquire Pledged Shares as principal. See "Selling Shareholders" and "Plan of Distribution." SEE "CERTAIN INVESTMENT CONSIDERATIONS" FOR A DISCUSSION OF CERTAIN FACTORS THAT PROSPECTIVE INVESTORS SHOULD CONSIDER. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The Common Stock is listed on the New York Stock Exchange (Symbol: WOA), on which the last reported sales price on January 11, 1995 was $7.50 per share. The date of this Prospectus is January 12, 1995. AVAILABLE INFORMATION The Company has filed with the Securities and Exchange Commission (the "Commission") a Registration Statement on Form S-3 (the "Registration Statement") under the Securities Act of 1933, as amended (the "Securities Act"), with respect to the Shares offered hereby. This Prospectus does not contain all of the information set forth in the Registration Statement and the exhibits thereto. Statements made in this Prospectus as to the contents of any contract, agreement or other document referred to are not necessarily complete. With respect to each such contract, agreement or other document filed as an exhibit to the Registration Statement, reference is made to such exhibit for a more complete description of the matters involved, and each such statement shall be deemed qualified in its entirety by such reference. For further information with respect to the Company and the Shares offered hereby, reference is made to the Registration Statement, including the exhibits thereto, which may be obtained from the Commission's principal office at 450 Fifth Street, N.W., Washington, D.C. 20549, upon payment of the fees prescribed by the Commission. The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports, proxy statements and other information with the Commission. Reports, proxy statements and other information filed by the Company and its predecessor, World Airways, can be inspected and copied at the public reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the regional offices of the Commission located at Northwestern Atrium Center, 500 West Madison Street, Chicago, Illinois 60661-2511 and at 7 World Trade Center, 13th Floor, New York, New York 10048. Copies of such material can also be obtained from the Public Reference Section of the Commission, at 450 Fifth Street, N.W., Washington, D.C. 20549 upon payment of prescribed rates. In addition, the Company's Common Stock is listed on the New York Stock Exchange, Inc. ("NYSE") and reports, proxy statements and other information concerning the Company can be inspected at the NYSE at 20 Broad Street, New York, New York 10005. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents filed by the Company with the Commission pursuant to the Exchange Act are hereby incorporated by reference into this Prospectus: (i) the Company's Annual Report on Form 10-K for the year ended December 31, 1993 (File No. 1-5351)(the "1993 Form 10-K"); (ii) the Company's Quarterly Reports on Form 10-Q for the quarters ended March 31, 1994, June 30, 1994 and September 30, 1994 (File No. 1-5351); (iii) the Company's Current Report on Form 8-K dated February 28, 1994; (iv) the Company's Proxy Statement dated April 18, 1994 in connection the Company's Annual Meeting of Shareholders held on May 20, 1994 and the Company's Proxy Statement dated July 18, 1994 in connection with the Special Meeting of Shareholders held on August 19, 1994; and (v) the description of the Company's Common Stock in the Registration Statement on Form 8-B filed June 9, 1987 under Section 12 of the Exchange Act, including any amendment or report for the purpose of updating that description (File No. 1-9591). All documents filed by the Company after the date of this Prospectus pursuant to Sections 13(a) and (c), 14 or 15(d) of the Exchange Act prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities then remaining unsold shall be deemed to be incorporated by reference into this Prospectus and to be a part hereof from the date of filing of such documents. Any statement contained in a document incorporated by reference in this Prospectus shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein (or in any other subsequently filed document which is also incorporated by reference in this Prospectus) modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. Upon written or oral request, the Company will provide without charge to each person, including any beneficial owner, to whom a copy of this Prospectus has been delivered a copy of such documents referred to above which have been incorporated by reference in this Prospectus (other than exhibits to such documents, unless such exhibits are specifically incorporated by reference into the information incorporated by reference in this Prospectus). Requests for information should be directed to Andrew M. Paalborg, Vice President and General Counsel, WorldCorp, Inc., 13873 Park Center Road, Suite 490, Herndon, Virginia 22071 (telephone (703) 834-9200). THE COMPANY WorldCorp, a Delaware corporation, was organized in March 1987 to serve as the holding company for World Airways, Inc. a Delaware corporation ("World Airways" or "World"), which was organized in March 1948 and is the predecessor to the Company. WorldCorp currently owns majority positions in companies that operate in two distinct business areas: air transportation (through World Airways) and interactive products and services (through US Order). WorldCorp's air transportation subsidiary, World Airways, is a leading worldwide provider of air transportation for commercial and government customers. US Order is an interactive products and services company that has four lines of businesses: 1) smart telephones (such as ScanFoneTM, PhonePlusTM and future generations of smart telephones); 2) smart banking services (customer service, telemarketing, distribution); 3) smart applications (interactive content for smart telephones, including: shopping, directory assistance, E-mail, sports scores, news updates, etc.); and 4) smart solutions customized for the cable and telecommunications industries. See "The Company--Interactive Products and Services." Pursuant to the Stock Purchase Agreement dated October 30, 1993, on February 28, 1994, WorldCorp sold 24.9% of its ownership in World Airways to MHS Berhad, a Malaysian aviation company ("MHS"). In December 1993, US Order completed a $12 million private equity placement. On August 1, 1994, US Order sold its electronic banking and bill payment operations to Visa International Services Association, Inc. ("Visa"). WorldCorp increased its ownership percentage of US Order to 89% on January 2, 1995 when WorldCorp exercised its option to purchase 4,757,679 shares of US Order common stock owned by the US Order Founders. The principal executive offices of WorldCorp are located at 13873 Park Center Road, Suite 490, Herndon, Virginia 22071. WorldCorp's telephone number is (703) 834-9200. AIRLINE OPERATIONS World Airways is a contract air carrier that generally charges customers based on a block hour basis rather than a per seat or per pound basis. A "block hour" is defined as the elapsed time computed from the moment the aircraft moves at its point of origin to the time it comes to rest at its destination. Fluctuations in flight revenues are not necessarily indicative of true growth because of shifts in the mix between full service contracts and basic contracts. Under the terms of full service contracts, World Airways is responsible for all costs associated with operating these contracts and receives a higher rate per hour. Under the terms of basic contracts, World Airways provides only certain services associated with the contract including aircraft, crews, insurance, and maintenance ("Basic Contracts"). World Airways typically charges a lower rate per hour for Basic Contracts since the customer is responsible for other operating costs. For this reason, it is important to measure pure growth through block hours flown rather than actual revenues earned. Typically, U.S. military contracts are full service contracts where the rate paid is set annually and consists of all flying costs, including fuel and ground handling of the aircraft and cargo. World Airways is 24.9% owned by MHS. MHS purchased its interest in World Airways in February, 1994 for $27 million. World operates in four core markets: wet lease, cargo, passenger charter and military. World plans to provide limited-frequency international scheduled service from New York, New York to Tel Aviv, Israel, sometime during the summer of 1995. In World Airways' wet lease market, World leases both its aircraft and crews, principally to foreign airlines, such as Malaysian Airline System Berhad ("MAS"), Virgin Atlantic and Cathay Pacific. In its cargo market, World leases its DC10-30 and MD-11 aircraft in both all freighter and convertible freighter configurations. A convertible freighter is an aircraft that can be rapidly converted into either freight or passenger configurations. World Airways currently flies cargo for MAS and Asiana Airlines. World Airways flies passengers on a charter basis, typically in the second and third quarters of each year. During this period, World transports pilgrims for MAS and Garuda from Southeast Asia to Saudi Arabia for the annual Hadj pilgrimage and flies vacation passengers from Europe to the United States and back. World Airways has had a contract with the Air Mobility Command ("AMC") since 1956 to fly passengers and cargo. Airline operations accounted for 100% of the Company's operating revenue and operating income in 1986 through 1991. In 1992 through 1994, revenue from other business areas represented less than 1% of the Company's total operating revenues. The principal service provided within this industry is the worldwide air transportation of passengers and cargo for individual passengers, and commercial and government customers. World Airways currently operates eight wide-body MD-11 and DC10-30 aircraft in long-range international markets. INTERACTIVE PRODUCTS AND SERVICES US ORDER'S CAPITALIZATION WorldCorp owns 89% of the outstanding voting securities of US Order. Knight-Ridder, Inc., Visa and other accredited investors are equity investors in US Order. WorldCorp also holds 4,300 shares (100%) of US Order's redeemable, nonvoting preferred stock, which earns quarterly dividends at a rate of 7.5% and is subject to mandatory redemption on March 30, 1998. VISA TRANSACTION On August 3, 1994, Visa acquired the electronic banking and bill payment operations of US Order. Using the operations acquired from US Order, Visa created a new subsidiary, Visa Interactive, Inc. ("Visa Interactive"), to enter the market for electronic banking and bill payment. Under the terms of the Visa transaction, Visa made a $15 million cash payment to US Order at closing and will make royalty payments to US Order through the year 2000 based on the number of Visa customers who use US Order's technology for electronic banking and bill payment. As of its last public announcement on September 30, 1994, Visa Interactive has signed up over 30 financial institutions for which it will provide bill pay services. Visa is the largest consumer payment system in the world, with over 19,000 member banks and more than 340 million cards issued worldwide. Visa also operates the leading global ATM network with more than 175,000 ATM's in 76 countries. Consumers, billers and their banks each derive substantial benefits from the Visa Interactive and US Order supplied services. Consumers obtain faster, more convenient, and lower cost remote banking service from their local financial institutions. Billers enjoy faster and lower cost ways both to send out bills and receive payments on those bills. Visa member banks earn new revenues from personalized and distinctive electronic service offerings, see lower costs by reducing the number of paper checks they have to process, and strengthen their relationships with their deposit and commercial customers. US Order believes that these factors, combined with Visa's technical sophistication and marketing and membership strength, should enable Visa to establish standards for electronic banking and bill payment and to build a scale business in a short period of time. This, in turn, should positively affect the size of the royalty stream to US Order from Visa. See, however, "Investment Considerations -- Interactive Products and Services". US Order's strategy is to build, deliver and manage a profitable portfolio of products and services which maximize the potential value of the Visa royalty stream and which can become a sustainable, defensible and profitable business over the longrun without the support of Visa. US Order's business is organized around four complementary product lines: smart phones (hardware such as PhonePlus and future generations of smart phones); smart services for Visa member banks (customer service, telemarketing, distribution) which services can be offered to other industries; smart applications (news updates, shopping, directory assistance, E-mail, sports scores, etc.); and smart solutions customized for the cable and telecommunications industries. CERTAIN INVESTMENT CONSIDERATIONS Prospective investors should carefully consider the following matters, together with the other information contained or incorporated by reference in this Prospectus, in evaluating the Company and its business before making an investment decision. SUBSTANTIAL FINANCIAL LEVERAGE AND COMMITMENTS; STOCKHOLDERS' DEFICIT The Company is highly leveraged primarily due to losses sustained by World Airways' scheduled operations between 1979 and 1986, the debt restructuring in 1984 and 1987 and the losses the Company incurred in 1990, 1992 and 1993. The losses are reflected in the Company's retained common stockholders' deficiency, which was $83.8 million at September 30, 1994. At September 30, 1994, the Company had total long-term indebtedness of approximately $109.8 million with current maturities of $17 million, and $3.8 million of indebtedness under a revolving line of credit. World Airways was not in compliance with its debt covenants under the revolving line of credit at the end of the third quarter but has obtained a waiver of these covenants from the financial institution. World Airways will not meet these required covenants in the fourth quarter of 1994, and will seek waivers. No assurances can be given, however, that the company will obtain the required waivers. In addition, the Company has substantial long- term lease obligations. For a discussion of such lease obligations, see the information set forth under the heading "Operating Leases" in Note 10 of the Company's Notes to Consolidated Financial Statement in the 1993 Form 10-K and under the heading "Management's Discussion and Analysis of Financial Conditions and Results of Operations -- Liquidity and Capital Resources" in the Company's Quarterly Report on 10-Q for the quarter ended September 30, 1994. At September 30, 1994, the Company's working capital (current assets less current liabilities) was a negative $18.4 million and the Company's current ratio (the ratio of current assets to current liabilities) was less than one. In October 1992 and January 1993, World Airways signed a series of agreements to lease seven new McDonnell Douglas MD-11 aircraft for initial lease terms of two to five years. World Airways has made $6.7 million of capital expenditures and cash deposits for MD-11 integration in 1994. World Airways estimates that its required capital expenditures for MD-11 integration will be approximately $9.8 million in 1995. While World Airways is seeking financing for the purchase of such additional spare parts relating to the new MD-11 aircraft, no assurances can be given that the Company will obtain the necessary financing. The Company's current financial leverage requires a substantial interest expense for each year. The Company's operating expenses (which include interest expense) have historically been satisfied from operating cash flow, secured borrowings, and other financings from banks and other lenders. All of the Company's funds are generated by the Company's subsidiaries or through periodic sales by the Company of a portion of its stock ownership in such subsidiaries. The ability of the Company and its subsidiaries to pay principal and interest on their respective short and long-term obligations is substantially dependent upon the payment to the Company of dividends, interest or other charges by its subsidiaries, upon funds generated by the operations of the subsidiaries, or from revenue from sales of stock of its subsidiaries. The degree to which the Company is leveraged could have important consequences to holders of Common Stock, including the following: (i) the Company's ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions or other purposes may be impaired; (ii) the Company's degree of leverage and related debt service obligations, as well as its obligations under operating leases for aircraft, may make it more vulnerable than some of its competitors in a prolonged economic downturn; and (iii) the Company's financial position may restrict its ability to exploit new business opportunities and limit its flexibility in responding to changing business conditions. The Company's competitive position could also be affected by the fact that it may be more highly leveraged than some of its competitors. AIRLINE INVESTMENT CONSIDERATIONS DEPENDENCE UPON MATERIAL CONTRACTS The Company's business relies heavily on World Airways' contracts with the Air Mobility Command ("AMC"), Malaysia Airlines System Berhad ("MAS") and P.T. Garuda Indonesia ("Garuda"), which provided approximately 24%, 17% and 21%, respectively, of the Company's consolidated revenues in 1993 and 19%, 16% and 16%, respectively, of total block hours. During the first nine months of 1994, the AMC, MAS and Garuda contracts provided 19%, 11%, and 31%, respectively, of consolidated revenues, and 15%, 10%, and 25%, respectively, of total block hours. The loss of any of these contracts or a substantial reduction in business from any of these sources, if not replaced, would have a material adverse effect on WorldCorp's revenues and financial condition. AMC has awarded contracts to World Airways since 1956, and World Airways has provided service to MAS since 1981, primarily transporting passengers for the annual Hadj pilgrimage (the "MAS Hadj Contract"). World Airways' current annual contract with AMC will expire in September 1995. World Airways cannot determine how any future cuts in military spending may affect future operations with AMC. The MAS Hadj Contract extends through 1996. World Airways has also transported Hadj passengers for Garuda since 1988 (the "Garuda Hadj contract"). The Garuda Hadj contract is awarded on an annual basis. In 1994, World Airways supplied six of its aircraft to Garuda for its 1994 Hadj operations. World Airways currently anticipates providing at least four aircraft to Garuda for the 1995 Hadj. It anticipates its aggregate Hadj flying for 1995 will equal 1994 levels. MHS Berhad ("MHS"), which is a substantial minority shareholder of World Airways, currently intends to acquire an equity ownership interest of up to 32% of MAS in 1995. Due to the strengthening of the MHS/MAS relationship, World Airways agreed to provide aircraft to MAS under long-term contracts. World Airways' dependence on its business with MAS increased beginning in Fall, 1994, with the signing of several new contracts with MAS. The loss of any of these contracts or a substantial reduction in business from MAS, if not replaced, would have a material adverse effect on WorldCorp's revenues and financial condition. The Company is subject to the risk that a customer which has contracted with the Company will cancel or default on its contract or contracts and the Company will be unable to obtain other business to cover the resulting loss of revenues. If the size of the contract or contracts is significant enough, any such default or cancellation could have a material adverse effect on the Company. EFFECTS OF SEASONALITY OF BUSINESS ON THE COMPANY The Company's air carrier business is significantly affected by seasonal factors. Typically, the Company experiences lower levels of utilization during the first quarter as demand for passenger and cargo services are lower relative to other times of the year. The Company generally experiences higher levels of utilization in the second quarter due to demand for commercial passenger service including the annual Hadj pilgrimage. Fourth quarter utilization generally depends upon the overall world economic climate and global trade patterns. For example, World Airways experienced soft market demand and weak yields in worldwide cargo and passenger markets in the first and third quarters of 1993 and 1994. See Note 19 of the Company's Notes to Consolidated Financial Statements in the 1993 Form 10-K. DEPENDENCE UPON AIR CARRIER BUSINESS World Airways operates in a very challenging business environment. The combination of a generally weak economy since 1991, reduced military spending, and the generally depressed state of the airline industry and the economy has adversely affected the Company's operating performance. World Airways has been adversely impacted by the industry-wide trend toward declining yields. Airline operations accounted for 100% of the Company's operating revenue and operating income in 1986 through 1991. In 1992 through 1994, revenue from other business areas represented less than 1% of the Company's total operating revenues. AIRLINE COMPETITION The airline industry is highly competitive and susceptible to price discounting. The Company generally competes on the basis of price, quality of service and convenience. Many of the airlines against which the Company competes possess substantially greater financial resources and more extensive facilities and equipment than those which are now, or will in the foreseeable future become, available to the Company. Many of World Airways' competitors (both scheduled and non-scheduled air carriers) compete for customers in a variety of ways, including wholesaling to tour operators, discounting seats on scheduled flights, promoting to travel agents, prepackaging tours for sale to retail customers and selling discounted, excursion airfare-only products to the public. During periods of dramatic fare cuts by World's competitors, World may be forced to respond with reduced fares, which could have a material adverse effect on World's operating results. World Airways competes directly against charter airlines, some of which are larger than it, and certain of which are affiliates of major scheduled airlines or tour operators. As a result, in addition to greater access to financial resources, these charter airlines may have greater distribution capabilities, including exclusive or preferential relationships with affiliates which are tour operators. Under bilateral air services agreements between the United States and many foreign countries, traffic rights in those countries are available to only a limited number, and in some cases only one or two, U.S. carriers and are subject to approval by the applicable foreign regulators. Consequently, World Airways' ability to provide service in some foreign markets in the future may depend in part on the willingness of the Department of Transportation (the "DOT") to allocate limited traffic rights to World Airways rather than to competing U.S. airlines, including major scheduled carriers capable of carrying greater passenger traffic, and the approval of the applicable foreign regulators. While World Airways generally has been able to obtain traffic rights where it has sought them in the past, there can be no assurance that it will be able to do so in the future. There are relatively few barriers to entry into the airline business, apart from the need for certain government licenses and the need for and availability of financing, particularly for those seeking to operate on a small scale with limited infrastructure and other support systems. As a result, World Airways may face increased competition from start-up airlines in selected markets from time to time. The commencement of service by new carriers on World's routes could negatively impact World's operating results. FUEL COSTS The cost of fuel is a major operating expense for all airlines, including World Airways. However, because World's MD-11 fleet is relatively new, the Company's aircraft tend to be more fuel efficient than older aircraft. Both the cost and availability of fuel are subject to many economic and political factors and events occurring throughout the world. World's price for fuel varies directly with market conditions, and it has no guaranteed long-term sources of supply. The Company's current fuel purchasing policy consists of the purchase of fuel within seven days in advance of all flights based on current prices set by individual airports. In addition, the Company receives certain volume discounts. The Company purchases no fuel under long-term contracts nor does the Company enter into futures or fuel swap contracts. The Company manages fuel price risk by making the Company's customers responsible in all of the Company's contracts for potential fuel price fluctuations in excess of five percent. World Airways' ability to pass on increased fuel costs through fare increases may be limited, however, by economic and competitive conditions, and the inability to pass through such increased costs could have a material adverse effect on operating results or result in a reduction in the Company's services or both. Similarly, a reduction in the availability of fuel could have a material adverse effect on the Company. Although the Company has in the past successfully hedged fuel prices, it does not regularly enter into hedging arrangements at the present. There can be no assurances that if the Company elects to hedge fuel prices in the future, through the purchase of fuel futures or options or otherwise, it will be able to do so successfully. In addition, while the Company currently passes on to the military the cost of jet fuel pursuant to its AMC charter arrangement, there can be no assurances that such arrangement will not change. GOVERNMENT REGULATION The Company is subject to government regulation and control under United States laws and the laws of the various countries which it serves. It is also governed by bilateral air services agreements between the United States and the countries to which the Company provides airlines service. The Company is subject to regulation under various provisions of the Federal Aviation Act of 1958, as amended (the "Aviation Act"), which is administered by the FAA and the DOT. The FAA and the DOT have the power to bring proceedings to enforce certain laws and regulations under the Aviation Act. The Company is subject to continuing regulation and inspection by the FAA regarding its flight operations, maintenance program and operations personnel, flight training and retraining programs, security program, ground facilities, dispatch, communications, equipment, carriage of hazardous materials and other matters affecting air safety. In addition, the FAA mandates certain recordkeeping procedures, conducts regular compliance examinations of the Company and has the authority under the Noise Control Act of 1982 to monitor and regulate aircraft engine noise. The Company is subject to continuing regulations by the DOT regarding the air transportation services provided by the Company. The DOT has jurisdiction to enforce statutory limitations on foreign control of U.S. airlines, to prevent unfair methods of competition and deceptive practices, to prohibit certain pricing practices, to inspect a carrier's properties and records, to mandate certain recordkeeping practices and conditions of carriage, to approve or disapprove certain relationships between carriers, to protect consumers and other economic regulatory matters. The Company believes that it is in compliance with all requirements necessary to maintain in good standing its air carrier Operating Certificate issued by the FAA and its operating authority granted by the DOT. A modification, suspension or revocation of any of the Company's FAA or DOT authorizations could have a material adverse effect upon the Company. In addition, the Company is subject to the jurisdiction of other governmental entities, including (i) the Federal Communications Commission (the "FCC") regarding its use of radio facilities, (ii) the Commerce Department, the Customs Service, the Immigration and Naturalization Service and the Animal and Plant Health Inspection Service of the Department of Agriculture regarding the Company's international operations, (iii) the Environmental Protection Agency regarding compliance with standards for aircraft exhaust emissions, (iv) the Department of Justice regarding certain merger and acquisition transactions and (v) the National Mediation Board concerning certain aspects of labor relations. The Company is also subject to state and local laws and regulations at locations where it operates and the regulations of various local authorities which operate the airports it serves. While the Company believes it is currently in compliance with all appropriate standards and has all required licenses and authorities, any material non-compliance by the Company therewith or the revocation or suspension of licenses or authorities could have a material adverse effect on the Company. The Company owns no aircraft maintenance facilities, and uses small amounts of materials which are regulated as hazardous under federal, state and local laws. Accordingly, the Company does not expect that the costs associated with compliance with such laws will have a material adverse effect on the Company. The Company cannot predict what laws and regulations will be adopted or what changes to international and transportation treaties will be effected, if any, or how they will affect World Airways. EMPLOYEE RELATIONS Cockpit Crewmembers. On August 15, 1994 World Airways and the International Brotherhood of Teamsters ("Teamsters") executed a four-year agreement on behalf of the World Airways' cockpit crewmembers, which was ratified on September 9, 1994. This contract becomes amendable June 30, 1998. The agreement met the Company's two objectives of (i) establishing workplace stability for a reasonably long term; and (ii) establishing wage and benefit levels which make it possible for the Company to achieve a competitive structure. Flight Attendants. On July 16, 1987, World Airways and the Teamsters executed a five-year agreement on behalf of the World Airways' flight attendants, which was ratified on August 5, 1987. This contract also became subject to renegotiation on July 1, 1992. The parties exchanged their opening proposals in 1992 and have had numerous contract negotiation sessions. In December 1994, the Company and the Teamsters jointly requested the assistance of a federal mediator to facilitate negotiations. Mediated sessions could begin as early as January 1995. Dispatchers. World Airways' aircraft dispatchers are represented by the Transport Workers Union ("TWU"). This contract became subject to renegotiation on June 30, 1993. The TWU negotiating committee presented its opening proposals in the summer of 1993, and the World Airways' negotiating committee responded with an opening proposal in the fall of 1994. As a consequence, negotiations are in their early stages. Less than a dozen World Airways employees are covered by this collective bargaining agreement. The outcome of the negotiations with flight attendants and dispatchers cannot be determined at this time and therefore there can be no assurance that the result of the negotiations will not have a material adverse effect on the Company. INTERACTIVE PRODUCTS AND SERVICES INVESTMENT CONSIDERATIONS RISKS ARISING FROM INVESTMENT IN A DEVELOPMENTAL STAGE COMPANY; COMPETITION US Order introduced its first commercial product in 1991 and, accordingly, has a limited operating history. The most smart telephone subscribers US Order has had at any one time since 1990 has been 10,500, and US Order has earned limited revenue from these customers. US Order generates revenue through the sale of its interactive products and services. Additional sources of revenue are expected to come from the Visa royalty stream. To date, US Order has generated limited revenues through the sale of its products and services and there can be no assurance as to what level of royalties US Order will receive from Visa. US Order may experience fluctuations in quarterly operating results due to the size and timing of customer orders, changes in US Order's pricing policies or those of its competitors, new product introductions or enhancements by competitors, delays in the introduction of products or product enhancements by US Order or by US Order's competitors, customer order deferrals in anticipation of upgrades and new products, market acceptance of new products, the timing and nature of sales and marketing expenses, other changes in operating expenses, personnel changes, and general economic conditions. US Order's interactive products and services are in the early stages of marketing and development and are therefore subject to the risks inherent in the marketing and development of new products. These risks include: (1) the absence of any assurances that the US Order smart telephones will be commercially successful; (2) the risk that a future competitor may develop a more effective technology for interactive transaction processing; (3) the risk that financial institutions will not require remote banking facilities management services; (4) the risk that US Order will encounter technical, engineering or design problems developing and delivering new smart telephone applications and custom transaction processing technology solutions to customers, and (5) the risk that market demand for these products and services does not emerge. The market for US Order's products and services is relatively new and is characterized by rapid technological change, evolving industry standards, changes in end-user requirements and frequent new product introductions and enhancements. The introduction of products and services embodying new technologies and the emergence of new industry standards could render US Order's existing products and services and those currently under development obsolete and unmarketable. There can be no assurance that US Order will be successful in the future in developing products or services to meet new end-user requirements or industry standards, or that such new end-user requirements or industry standards will not obviate the need for US Order's products and services. In addition, the interactive products and services industry is intensely competitive. US Order experiences direct competition from manufacturers of smart telephones and from high technology companies which develop software solutions and applications for interactive transaction processing and remote banking facilities management services. Many of these competitors and potential competitors have significantly greater financial, technical, sales and marketing name recognition and other resources than US Order, such as Phillips, Sony, Northern Telecom and AT & T. UNCERTAINTY OF THE VISA ROYALTY STREAM TO US ORDER; DEPENDENCE ON VISA US Order sold its electronic banking and bill payment division to Visa on August 1, 1994, for $15 million in cash and a 72 month royalty stream commencing January 1, 1995 and ending December 31, 2000 (the "Royalty Period"). The royalty amount is based on the number of active retail bill pay accounts that use the electronic banking and bill payment technology sold by US Order to Visa on August 1, 1994 (the "Visa Bill-Pay System") during the Royalty Period. Any royalties to US Order are calculated and paid by Visa quarterly during the Royalty Period. Because the royalties to US Order are contingent upon the number of accounts that use the Visa Bill-Pay System during the Royalty Period, the Company cannot provide any assurances of the level of royalties that will be payable by Visa to US Order. US Order's liquidity and capital requirements, as well as its ability to achieve its strategic objectives depend, in large part, on the size of the royalty stream from Visa. Therefore, any material variances between actual royalties received by US Order during the Royalty Period and internal US Order royalty projections, may have a material adverse effect upon US Order's future prospects, assets, financial condition and liquidity. In addition, under the terms of its agreement with Visa, Visa is not obligated to pay to US Order royalties for active retail bill-pay accounts that utilize electronic banking and bill payment technology independently developed by Visa. If Visa independently develops its own electronic banking and bill payment technology which does not use US Order's technology, this could have a material, adverse effect on the amount of royalties payable by Visa to US Order. As a condition of Visa's acquisition of the Visa Bill Pay System from US Order, US Order has agreed to work exclusively with Visa in certain areas and to refrain from certain activities that are in competition with Visa and its members. These covenants may increase US Order's reliance upon Visa. DEPENDENCE ON PROPRIETARY TECHNOLOGY US Order's success is heavily dependent upon proprietary technology. Having sold its sole patent to Visa, US Order has no patents, and existing copyright laws afford only limited practical protection for US Order's software. US Order sold a significant portion of its proprietary technology to Visa, and Visa licensed back certain proprietary technology to US Order. While this license agreement gives US Order a worldwide, royalty-free license (exclusive in some cases and non-exclusive in others) to use the transaction processing software sold to Visa, this license does contain certain restrictions on the usage of the licensed technology, including certain restrictions on US Order's sublicensing of such technology. No assurances can be given as to whether any of such restrictions in the licensing agreement from Visa to US Order will adversely effect the operations or business in the future of US Order. In addition, the laws of some foreign countries do not protect US Order's proprietary rights to the same extent as do the laws of the United States and Canada. Accordingly, US Order relies primarily on trade secret protection and confidentiality and proprietary information agreements to protect its intellectual property. The loss of any material trade secret, trademark, trade name or copyright could have a material adverse effect on US Order. There can be no assurance that the company's efforts to protect its intellectual property rights will be successful. Despite US Order's precautions, it may be possible for unauthorized third parties to copy certain portions of US Order's products and services or to obtain and use information that the company regards as proprietary. Although the company does not believe that its products and services infringe on the rights of third parties, there can be no assurance that third parties will not assert infringement claims against US Order in the future or that any such assertion will not result in costly litigation or require the company to obtain a license to intellectual property rights of such parties. In addition, there can be no assurance that such licenses will be available to the company on reasonable terms or at all. POSSIBLE EFFECTS OF LITIGATION AGAINST THE COMPANY On August 11, 1992, the Company, World Airways, and certain other commercial paper customers of Washington Bancorporation ("WBC") were served with a complaint by WBC as debtor-in- possession by and through the Committee of Unsecured Creditors of WBC (the "Committee"). The complaint arises from investment proceeds totaling $6.8 million received by the Company and World Airways from WBC in May 1990 in connection with the maturity of WBC commercial paper. The Committee seeks to recover this amount on the grounds that these payments constituted voidable preferences and/or fraudulent conveyances under the Federal Bankruptcy Code and under applicable state law. On June 9, 1993, the Company filed a motion to dismiss the litigation and intends to vigorously contest the claim. No assurances can be given, however, of the eventual outcome of this litigation. In August 1991, US Order received a letter from a third party bringing to US Order's attention a patent issued to such third party entitled Home Merchandise Ordering Telecommunications Terminal, which such third party subsequently claimed was infringed by US Order. In US Order's patent counsel's opinion, there is no infringement, and US Order advised such third party that US Order's technology did not infringe any claims of such patent. Nonetheless, there can be no assurance that such third party will drop its claim of infringement or that US Order would prevail in any proceeding in relation thereto. In July 1994, US Order received a letter from a third party bringing to US Order's attention a patent issued to such third party entitled Method and Apparatus for Decoding and Processing the Informational Content of Multi-Frequency Signals. No claim of infringement has been asserted. In US Order's patent counsel's opinion there is no infringement. Nonetheless, there can be no assurance that such third party will not file a claim of infringement or that US Order would prevail in any proceeding in relation thereto. The Company is involved in various other claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these other matters will not have a material adverse effect on the Company's consolidated financial position. SHARES AVAILABLE FOR FUTURE SALE; SALES BY SELLING SHAREHOLDERS As of December 31, 1994, there were 15,429,114 shares of Common Stock of the Company outstanding. As of that date, there were an additional 2,863,987 warrants and options outstanding, principally to management of the Company, exercisable for up to 2,866,903 shares (subject to antidilution adjustments) of Common Stock, of which 2,079,682 warrants and options had vested, at a weighted average exercise price of $5.70 per share. In August 1994, the Compensation Committee granted 800,000 options to T. Coleman Andrews, III, the Company's Chief Executive Officer, and 250,000 options to Mr. William F. Gorog, the Company's Chairman (these options being hereinafter referred to collectively as the "Executive Options"). The Executive Options become exercisable by Messrs. Andrews and Gorog under a schedule that is largely dependent on increases in the stock price of the Company. The Executive Options may become exercisable only so long as Messrs. Andrews and Gorog are employed as the Chief Executive Officer and the Chairman of the Board, respectively, of the Company. As of January 11, 1995, 400,000 of Mr. Andrews' options and 150,000 of Mr. William Gorog's options were vested. A total of approximately 5,877,034 shares of Common Stock would be issued if all of the outstanding 7% Convertible Debentures (as hereinafter defined) were converted. No prediction can be made as to the effect, if any, that future sales of shares of Common Stock, including sales available under this Prospectus or the availability of shares for future sale (including shares issuable upon the exercise of warrants and options), will have on the market price of Common Stock prevailing from time to time. Sales of substantial amounts of Common Stock or the perception that such sales may occur, could adversely effect prevailing market prices for the Common Stock. See "Plan of Distribution" and "Selling Shareholders." USE OF PROCEEDS The Company will not receive any proceeds resulting from the sale of the Shares by the Selling Shareholders. See "Selling Shareholders." The ESSOP will receive any proceeds received by the Pledge Holder from the sale of the Pledged Shares offered hereby in excess of the loan amount. See "Pledge Holder." SELLING SHAREHOLDERS The Selling Shareholders identified in the table below hold the following relationships with the Company. Since 1989, William F. Gorog has been a director of WorldCorp. On May 12, 1993 he was named Chairman of the Board of WorldCorp. He has been Chairman of the Board and Chief Executive Officer of US Order since its inception in May 1990. Jonathan M. Gorog was Senior Vice President of US Order from May 1990 through November, 1993, and he has been a director of US Order since May 1990. The shares registered for sale by Scott & Stringfellow, Inc. may also be sold by other pledgees, if any, who may receive a security interest in such shares of Common Stock if the loan is refinanced again. If such event occurs, this Prospectus will be supplemented prior to such sale to include the name of the subsequent pledge holder. The following table sets forth the names of the Selling Shareholders who are offering the Shares in this offering and the number of shares of Common Stock being offered in this offering by each such Selling Shareholder. Name of Selling Prior to Shares After Shareholder Offering(1)(2) Offered(3) Offering(1)(2)(3) Shares Percent Shares Percent William F. Gorog 733,223(4) 4.7% 180,822 552,401 3.5% Jonathan M. Gorog 58,987(5) * 58,987 0 * Henry R. Nichols 26,549(6) * 26,549 0 * William N. Melton 17,960(7) * 17,960 0 * John Porter 17,960(8) * 17,960 0 * Scott & 361,401(9) 2.3% 361,401 0 * Stringfellow,Inc. * Individual is the beneficial owner of less than one percent (1%) of the Company's outstanding Common Stock. 1. Unless otherwise indicated, each shareholder has sole voting and investment power with respect to all such shares. 2. Any securities that are not issued and outstanding, but that can be acquired through the exercise of options, warrants or convertible securities, exercisable or convertible within 60 days, are deemed to be outstanding for the purposes of computing the percentage of outstanding securities owned by shareholders holding such options, warrants or convertible securities but are not deemed to be issued and outstanding for the purpose of computing the percentage of the class of securities held by any other person. 3. Assumes the sale of the shares of Common Stock being registered herein, which a Selling Shareholder may not have any present intention of making. 4. Includes 150,000 of the options granted August 1, 1994 to purchase 250,000 shares of Common Stock at an exercise price of $4.50 per share, 150,000 of which are immediately exercisable. Also includes: (i) 41,000 shares of Common Stock directly owned by Mr. Gorog; (ii) 180,822 shares of Common Stock issued to Mr. Gorog by the Company in partial consideration for the sale by Mr. Gorog to the Company of shares of US Order common stock owned by Mr. Gorog; and (iii) 361,401 shares of Common Stock held by the ESSOP, as to which Mr. Gorog exercises shared voting and investment power as one of the three trustees of the ESSOP. Mr. Gorog disclaims beneficial ownership of shared held by the ESSOP. 5. Includes 58,987 shares of Common Stock issued to Mr. Jonathan Gorog by the Company in partial consideration for the sale by Mr. Gorog to the Company of shares of US Order common stock owned by Mr. Gorog. 6. Includes 26,549 shares of Common Stock issued to Mr. Nichols by the Company in partial consideration for the sale by Mr. Nichols to the Company of shares of US Order common stock owned by Mr. Nichols. 7. Includes 17,960 shares of Common Stock issues to Mr. Melton by the Company in partial consideration for the sale by Mr. Melton to the Company of shares of US Order common stock owned by Mr. Melton. 8. Includes 17,960 shares of Common Stock issued to Mr. Porter by the Company in partial consideration for the sale by Mr. Porter to the Company of shares of US Order common stock owned by Mr. Porter. 9. Includes all 361,401 of the unallocated shares in the Company's ESSOP (i.e., ESSOP shares which have not yet been allocated to the accounts of ESSOP participants) as of November 30, 1994, the date of the most recent statement available from the Plan Administrator. PLEDGE HOLDER Effective February 2, 1989, the Company adopted the ESSOP for the benefit of eligible employees. Pursuant to the terms of a Loan and Pledge Agreement by and between the Company and the ESSOP, dated February 21, 1989, the ESSOP borrowed $3,600,000 (the "ESSOP Loan") from the Company and used such funds to purchase 900,000 shares of Common Stock during 1989. The ESSOP refinanced the ESSOP Loan using the proceeds of a new loan (the "Bank Loan") made to the ESSOP by American Security Bank, N.A. (the "Bank") pursuant to the terms of a Loan and Security Agreement, dated May 24, 1989, by and between the ESSOP and the Bank (the "Bank Loan Agreement"), which refinancing was further evidenced by a promissory note, dated May 24, 1989, in the amount of $3,650,000 issued to the Bank by the ESSOP. As a condition to the Bank Loan, the Company guaranteed the repayment of the Bank Loan pursuant to the terms of a Guaranty Agreement (the "Bank Guaranty"), dated May 24, 1989, by and between WorldCorp and the Bank. The Company was not in compliance with certain financial covenants set forth in the Bank Guaranty and the bank required the Company to pay in full the Bank Loan. On August 24, 1994, the Company paid to the Bank $1,740,895.02 in complete satisfaction of all obligations of the ESSOP under the Bank Loan. The ESSOP and the Company agreed that in consideration for the Company's repayment of the Bank Loan, the ESSOP will repay to the Company the amount of the Bank Loan repaid by the Company (the "Refinanced ESSOP Loan"). The ESSOP and the Company entered into a Loan and Pledge Agreement further evidenced by a promissory note (the "Refinanced ESSOP Note") dated August 24, 1994, in the amount of $1,740,895.02 issued to the Company by the ESSOP. In connection therewith, the ESSOP pledged 472,500 shares of Common Stock to the Company as collateral for the Refinanced ESSOP Loan, subject to release of shares in connection with each quarterly principal payment. The ESSOP refinanced its debt to the Company through a margin loan to the ESSOP by agreement dated January 10, 1995, from Scott & Stringfellow Investment Corp. ("S&S") (the "S&S Loan"). The S&S Loan is collateralized by the unallocated shares of Common Stock owned by the ESSOP. The S&S Loan is a non-recourse loan and as such the only assets of the ESSOP subject to the loan are the unallocated shares. Under the terms of the S&S Loan, S&S will release the Pledged Shares as they become allocated. To the extent such release of Pledged Shares violates the margin requirements of the S&S Loan, WorldCorp will provide collateral or make a contribution adequate to meet such margin requirements or cure any resulting default. The value of the Pledged Shares at any time must equal or exceed 40% of the loan amount. Failure to maintain that ratio will result in a margin call. In the event of a margin call, the ESSOP has five days to respond. Failure to respond to a margin call constitutes an event of default. Pursuant to the terms of the S&S Loan, if the Common Stock of the Company drops under $2.00 per share, the loan will be moved to a cash account and the entire margin debt must be repaid within 24 hours. WorldCorp has agreed to act as guarantor of the S&S Loan, has agreed to make loans or contributions to the ESSOP as necessary, and has agreed for the benefit of S&S to maintain the effectiveness of this and any substitute registration statement with respect to the Pledged Shares. Upon completion of this offering, the Pledge Holder will have pledged to it 361,401 shares of Common Stock, which constitutes 2.3% of the Company's outstanding Common Stock as of December 31, 1994. No other shares of Common Stock are owned by, or pledged as collateral to, the Pledge Holder. PLAN OF DISTRIBUTION This offering of Shares is being made by the Selling Shareholders. The Company will not receive any of the proceeds from the sale of the Shares by the Selling Shareholders. The Selling Shareholders have informed the Company that they may sell the Shares being offered hereby in one or more transactions effected on the NYSE or on any other national exchange upon which the Shares may be listed in the future, in the over-the-counter market, or in one or more negotiated transactions, or through a combination of such methods of sale, in each case at market prices prevailing at the time of sale, at prices relating to such prevailing market prices, or at negotiated prices. The Company intends to list the Shares on the NYSE. If any of the Shares included in this Prospectus are sold through broker-dealers, then the Selling Shareholders and any broker-dealers or other persons who participate with them in the distribution of the securities being offered hereby may be deemed to be "underwriters" within the meaning of the Securities act, and any commissions and discounts received by such broker-dealers, and any profit on the resale of the Shares by such broker-dealers, may be deemed to be underwriting discounts and commissions under the Securities Act. DESCRIPTION OF COMMON STOCK The Company is authorized to issue 60,000,000 shares of Common Stock, par value $1.00 per share. Holders of Common Stock are entitled to one vote for each share of Common Stock held. All outstanding shares of Common Stock are fully paid and nonassessable. Holders of Common Stock are entitled to received such dividends as are declared by the Board of Directors out of funds legally available therefor. The Company has never paid and does not intend to pay cash dividends in the foreseeable future on its Common Stock. In the event of liquidation, holders of the Common Stock are entitled to receive pro rata any assets distributable after payment of liabilities and the liquidation preference of any shares of any series of preferred stock then outstanding. There are no conversion, preemptive or redemption rights of the Common Stock. Under the terms of the Indenture dated as of August 1, 1987 between the Company and Norwest Bank of Minneapolis, N.A. (the "1987 Indenture"), pursuant to which 13 7/8% Subordinated Notes due 1997 (the "13 7/8% Subordinated Notes") were issued, the Company is generally restricted in its ability to pay dividends or make distributions on its capital stock if: (i) a default or an event of default exists under the 1987 Indenture and is continuing; or (ii) Adjusted Stockholders' Equity (as defined in the 1987 Indenture) is not a positive amount; or (iii) the aggregate amount expended for such purpose and certain other purposes since June 30, 1987 exceeds the sum of (A) 50% of the Company's Consolidated Net Income since June 30, 1987 (or if such aggregate is a loss, minus 100% of such loss), plus (B) the aggregate net proceeds from certain issuances of capital stock since June 30, 1987, plus (C) $10 million. As of September 30, 1994, Adjusted Stockholders' Equity was not a positive amount. In May 1992, the Company issued $65.0 million of Convertible Subordinated Debentures due 2004 (the "7% Convertible Debentures") under an Indenture dated May 15, 1992 between the Company and The First National Bank of Boston (the "1992 Indenture"). The 7% Convertible Debentures are convertible into shares of Common Stock at $11.06 per share, subject to adjustment in certain events, and bear an annual interest rate of 7%. Semiannual interest payments are due on May 15 and November 15. During the second and third quarters of 1992, the Company used $47.1 million of the proceeds from this borrowing to retire a portion of its 13 7/8% Subordinated Notes. Under the terms of the 1992 Indenture, the Company is precluded from paying dividends or making distributions on its capital stock if a default or an event of default exists under the 1992 Indenture and is continuing. The Company is not currently in default under the 1992 Indenture. The 1992 Indenture provides that distributions and dividends may in no event exceed the sum of (a) 50% of cumulative Consolidated Net Income (as defined) after December 31, 1991; (b) the aggregate net proceeds, including the fair market value of property other than cash, of certain issuances after December 31, 1991 of its capital stock; and (c) $27,800,000. The foregoing summary does not purport to be complete and is qualified in its entirety by reference to the text of the Company's Certificate of Incorporation and By-Laws, the 1987 Indenture and the 1992 Indenture, copies of each of which are exhibits to the Registration Statement and are incorporated herein by reference. LEGAL MATTERS The validity of the shares of Common Stock being offered hereby will be passed upon by Andrew M. Paalborg, Vice President and General Counsel of the Company. See "Selling Shareholders." EXPERTS The consolidated financial statements and consolidated financial statement schedules of WorldCorp and its subsidiaries as of December 31, 1993 and 1992, and for each of the years in the three-year period ended December 31, 1993, incorporated by reference herein and elsewhere in the registration statement have been incorporated by reference herein and in the registration statement in reliance upon the reports of KPMG Peat Marwick LLP, independent certified public accountants, incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing. The report of KPMG Peat Marwick LLP covering the 1993 consolidated financial statements of the Company refers to changes in the methods of accounting for postretirement benefits other than pensions and income taxes. No person is authorized to give any information or to make any representation not contained or incorporated by reference in this Prospectus, and any information or representations not contained or incorporated by reference herein must not be relied upon as having been authorized by the Company or the Selling Shareholders. This Prospectus does not constitute an offer of any securities other than the registered securities to which it relates or an offer to any person in any jurisdiction where such offer would be unlawful. Neither the delivery of this Prospectus nor any sales made hereunder shall, under any WORLDCORP, INC. circumstances, create any implication that there has been no change in the affairs of the Company 663,679 Shares since the date hereof. of Common Stock TABLE OF CONTENTS Available Information Incorporation of Certain Documents by Reference The Company Certain Investment Considerations PROSPECTUS Use of Proceeds Selling Shareholders Pledge Holder Plan of Distribution Description of Common Stock Legal Matters Experts January 12, 1995 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The following table sets forth an itemized statement of all estimated expenses in connection with the issuance and distribution of the securities being registered: Registration fees $ 1,716 Legal expenses $ 25,000 Accounting fees and expenses $ 7,500 Stock Exchange Listing fee $ 1,500 Total $ 35,716 All such expenses will be borne by the registrant. ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS. The Company, a Delaware corporation, is empowered by Section 145 of the Delaware General Corporation Law, subject to the procedures and limitations stated therein, to indemnify any person against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in the defense of any threatened, pending or completed action, suit or proceeding in which such person is made a party by reason of his or her being or having been a director or officer of the Company. The statute provides that such indemnification is not exclusive of other rights or indemnification to which a person may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors, or otherwise. The Certificate of Incorporation and Bylaws of the Company provide that the Company shall indemnify its directors and officers to the full extent permitted by the Delaware General Corporation Law. The Company is also empowered by Section 102(b) of the Delaware General Corporation Law to include a provision in its Certificate of Incorporation that limits a director's liability to the Company or its stockholders for monetary damages for breaches of his or her fiduciary duty except for (i) a breach of the director's duty of loyalty to the Company or its stockholders; (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing a violation of law; (iii) improper dividend payments, stock repurchases or redemptions; and (iv) any transaction from which the director derived an improper personal benefit. Article 10 of the Company's Certificate of Incorporation includes such a provision. Policies of insurance are maintained by the Company under which directors and officers are insured, within the limits and subject to the limitations of the policies, against certain expenses in connection with the defense of actions, suits or proceedings, and certain liabilities that might be imposed as a result of such actions, suits or proceedings, to which they are parties by reason of being or having been directors or officers of the Company. The Company has entered into indemnification agreements with its officers and directors that indemnify such officers and directors to the full extent permitted by law against all expenses, judgments, fines or settlement amounts incurred or paid by them in any action or proceeding, including any action by or in the right of the Company on account of their service as a director or officer of the Company. ITEM 16. EXHIBITS 4.1 Acquisition Agreement dated as of July 15, 1994, among Visa International Service Association, Inc., US Order, Inc. and WorldCorp, Inc. Filed as Exhibit 10.1 to WorldCorp's Quarterly Report on Form 10-Q (Commission File 1-5351) for the quarter ended June 30, 1994 and incorporated herein by reference. 4.2 Indenture dated as of August 1, 1987 between WorldCorp, Inc. and Norwest Bank of Minneapolis, N.A., as Trustee. Filed as Exhibit 4.1 to Amendment No. 2 to WorldCorp, Inc.'s Form S-2 Registration Statement (Commission File No. 33-1358276) filed August 13, 1987 and incorporated herein by reference. 4.3 First Supplemental Indenture dated as of March 1, 1988 between WorldCorp, Inc. and Norwest Bank of Minneapolis, N.A. Filed as Exhibit 4.2 to WorldCorp, Inc.'s Annual Report on Form 10-K for the fiscal year ended December 31, 1988 and incorporated herein by reference. 4.4 Indenture dated as of May 15, 1992 between WorldCorp, Inc. and The First Bank of Boston, as Trustee. Filed as Exhibit 4.2 to WorldCorp, Inc.'s Current Report on Form 8-K filed on July 15, 1992 and incorporated herein by reference. 4.5 Stock Restriction Agreement dated as of September 14, 1990 among WorldCorp, Inc., William F. Gorog, Jonathan M. Gorog, Peter M. Gorog, Henry R. Nichols, William N. Melton and John Porter, as amended by Amendment No. 1 to Stock Restriction Agreement dated as of August 29, 1991, Amendment No. 2 to Stock Restriction Agreement dated as of March 31, 1993, Amendment No. 3 to Stock Restriction Agreement dated as of September 1, 1994, and Amendment No. 4 to Stock Restriction Agreement dated as of December 1, 1994. 4.6 Scott & Stringfellow, Inc. Customer Agreement dated January 11, 1995 entered into by the WorldCorp Employee Savings and Stock Ownership Plan. 4.7 Guarantee Agreement dated as of January 11, 1995 by WorldCorp, Inc. for the benefit of Scott & Stringfellow, Inc. 4.8 Registration Rights Agreement dated January 11, 1995 by and between WorldCorp, Inc. and Scott & Stringfellow, Inc. 4.9 Letter Agreement dated January 11, 1995 by and between Scott & Stringfellow, Inc. and the WorldCorp Employee Savings and Stock Ownership Plan. 4.10 Letter dated January 11, 1995 from WorldCorp, Inc. to the WorldCorp Employee Savings and Stock Ownership Plan. 5.1 Opinion of Andrew M. Paalborg, Vice President and General Counsel of WorldCorp, Inc. 23.1 Consent of KPMG Peat Marwick LLP dated January 12, 1995. 23.2 Consent of Andrew M. Paalborg, Vice President and General Counsel of WorldCorp, Inc. (included in the Opinion of Counsel filed as Exhibit 5.1 hereto). 24.1 Power of Attorney (included on signature page in this Registration Statement). ITEM 17. UNDERTAKINGS. The undersigned registrant hereby undertakes: (1) that, insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suite or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue; (2) that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; (3) to file, during any period in which offers or sales are being made, a post effective amendment to the registration statement to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; (4) that, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be an initial bona fide offering thereof; (5) to remove from registration by means of a post- effective amendment any of the securities being registered which remain unsold at the termination of the offering. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Herndon, Virginia, on this 12th day of January, 1995. WORLDCORP, INC. /s/ T. Coleman Andrews, III ------------------------------- By: T. Coleman Andrews, III Chief Executive Officer and President POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS: That the undersigned officers and directors of WorldCorp, Inc., a Delaware corporation, do hereby constitute and appoint T. Coleman Andrews, III, and Andrew M. Paalborg, and each of them, the lawful attorneys and agents or attorney and agent, with power and authority to do any and all acts and things and to execute any and all instruments which said attorneys and agents, and any one of them, determine may be necessary or advisable or required to enable said corporation to comply with the Securities Act of 1933 as amended, and any rules or regulations or requirements of the Securities and Exchange Commission in connection with this Registration Statement. Without limiting the generality of the foregoing power and authority, the powers granted include the power an authority to sign the names of the undersigned officers and directors in the capacities indicated below to this Registration Statement, to any and all amendments, both pre-effective and post-effective, and supplements to this Registration Statement, and to any and all instruments or documents filed as part of or in conjunction with this Registration Statement or amendments or supplements thereto, and each of the undersigned hereby ratifies and confirms all that said attorneys and agents or any of them shall do or cause to be done by virtue hereof. This Power of Attorney may be signed in several counterparts. IN WITNESS WHEREOF, each of the undersigned has executed this Power of Attorney as of the date indicated opposite his name. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the date indicated. Signature Title Date /s/ T. Coleman Andrews, III Chief Executive Officer, January 12, 1995 ___________________________ President and Director T. Coleman Andrews, III (Principal Executive Officer and Principal Financial and Accounting Officer) /s/ William F. Gorog Chairman of the Board January 12, 1995 ____________________________ of Directors William F. Gorog /s/ James E. Colburn Director January 12, 1995 ___________________________ James E. Colburn /s/ Juan C. O'Callahan Director January 12, 1995 ___________________________ Juan C. O'Callahan /s/ Patrick F. Graham Director January 12, 1995 ___________________________ Patrick F. Graham /s/ Geoffrey S. Rehnert Director January 12, 1995 __________________________ Geoffrey S. Rehnert /s/ John C. Backus Director January 12, 1995 __________________________ John C. Backus EXHIBIT INDEX EXHIBIT NO. DESCRIPTION PAGE 4.5 Stock Restriction Agreement dated as of September 14, 1990 among WorldCorp, Inc., William F. Gorog, Jonathan M. Gorog, Peter M. Gorog, Henry R. Nichols, William N. Melton and John Porter, as amended by Amendment No. 1 to Stock Restriction Agreement dated as of August 29, 1991, Amendment No. 2 to Stock Restriction Agreement dated as of March 31, 1993, Amendment No. 3 to Stock Restriction Agreement dated as of September 1, 1994, and Amendment No. 4 to Stock Restriction Agreement dated as of December 1, 1994. 4.6 Scott & Stringfellow, Inc. Customer Agreement dated January 11, 1995 entered into by the WorldCorp Employee Savings and Stock Ownership Plan. 4.7 Guarantee Agreement dated as of January 11, 1995 by WorldCorp, Inc. for the benefit of Scott & Stringfellow, Inc. 4.8 Registration Rights Agreement dated January 11, 1995 by and between WorldCorp, Inc. and Scott & Stringfellow, Inc. 4.9 Letter Agreement dated January 11, 1995 by and between Scott & Stringfellow, Inc. and the WorldCorp Employee Savings and Stock Ownership Plan. 4.10 Letter dated January 11, 1995 from WorldCorp, Inc. to the WorldCorp Employee Savings and Stock Ownership Plan. 5.1 Opinion of Andrew M. Paalborg, Vice President and General Counsel of WorldCorp, Inc. 23.1 Consent of KPMG Peat Marwick LLP dated January 12, 1995. EX-4 2 EXHIBIT 4.5 STOCK RESTRICTION AGREEMENT EXHIBIT 4.5 STOCK RESTRICTION AGREEMENT THIS STOCK RESTRICTION AGREEMENT, dated as of September 14, 1990 (this "Agreement") is made among WorldCorp, Inc., a Delaware corporation ("WorldCorp"), William F. Gorog, Jonathan M. Gorog, Peter M. Gorog, Henry R. Nichols, William N. Melton and John Porter (collectively, the "Founders" and each a "Founder"), and those persons who may execute this Agreement from time to time and whose names are thereupon listed on Exhibit A hereto (the "Employees"). A. U.S. Order, Incorporated, a Delaware corporation (the "Company"), has authorized 15,000,000 shares of Common Stock, par value $.001 per share ("Common Stock"), of which 5,000,000 shares are owned, directly or indirectly, by the Founders. B. WorldCorp has agreed to purchase 1,250,000 shares of Series A Preferred Stock, par value $.001 per share ("Series A Preferred Stock"), pursuant to the terms of the Series A Preferred Stock Purchase Agreement dated as of September 14, 1990 between WorldCorp and the Company (the "Stock Purchase Agreement"). C. Each of the Founders owns that number of shares of Common Stock set forth opposite his name on Exhibit B hereto. D. WorldCorp is willing to complete the purchase of Series A Preferred Stock pursuant to the Stock Purchase Agreement if the Founders execute this Agreement. E. As an inducement to WorldCorp to complete such purchase, the parties wish to make certain provisions among themselves concerning the governance of the Company and the purchase and sale of Common Stock and Series A Preferred Stock. NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements of the parties contained herein, the parties agree as follows: 1. CERTAIN DEFINITIONS. As used in this Agreement, the following terms shall have the meanings set forth below: "AFFILIATE" of a Person, shall mean any Person which, directly or indirectly, controls, is controlled by, or is under common control with, such Person. The term "control" (including, 'with correlative meaning, the terms "controlled by" and "under common control with"), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or by contract or otherwise. "COMMON STOCK" shall have the meaning set forth in Recital A. "OTHER SECURITIES" shall mean securities of the Company which are convertible into, exchangeable for or exercisable for Common Stock other than the option to purchase additional shares of Series A Preferred Stock granted to WorldCorp pursuant to Section 7.7 of the Stock Purchase Agreement. "PERSON" shall mean an individual, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department or agency thereof. "SERIES A PREFERRED STOCK" shall have the meaning set forth in Recital B. "STOCK PURCHASE AGREEMENT" shall have the meaning set forth in Recital B. "STOCKHOLDERS" shall mean any of WorldCorp and its assignees, the Founders and the Employees. "VOTING STOCK" shall mean any class or classes of the capital stock of the Company the holders of which are entitled to participate generally in the election of directors of the Company, including, but not limited to, the Common Stock and the Series A Preferred Stock. 2. EFFECTIVENESS OF AGREEMENT. This Agreement shall be effective from and after the date hereof. 3. COVENANTS REGARDING TRANSFER AND RELEASE OF SHARES. (a) Prior to March 16, 1992, WorldCorp agrees not to dispose of or otherwise encumber any of the shares of Series A Preferred Stock purchased by WorldCorp under the Stock Purchase Agreement or any shares of Common Stock into which the Series A Preferred Stock was converted (other than transfers of any of such shares to an Affiliate of WorldCorp if the parties to this Agreement shall first have received an agreement and acknowledgment in writing from such transferee that such shares remain subject to the provisions of this Agreement), or enter into any arrangements (including the granting of options or similar rights) for such purposes. Notwithstanding the foregoing, WorldCorp may transfer all or any part of such shares (i) with the prior written consent, which consent shall not be unreasonably withheld, of the holders of a majority of the outstanding Common Stock to such transfer or (ii) if prior to or concurrently with such transfer WorldCorp exercises its option to purchase additional shares of Series A Preferred Stock pursuant to Section 7.7 of the Stock Purchase Agreement in which case Sections 4 and 5 of this Agreement shall govern such a transfer. (b) Prior to September 16, 1993 and except as provided in Section 6 hereof, a Founder or Employee shall not dispose of or otherwise encumber any of the shares of Common Stock held by such Founder or Employee or enter into any arrangements (including the granting of options or similar rights) for such purposes. Notwithstanding the foregoing, the Founders and Employees may transfer all or any part of such shares with the prior written consent, which consent shall not be unreasonably withheld, of holders of a majority of the outstanding Series A Preferred Stock. Upon September 16, 1993 and thereafter, any transfer of shares of Common Stock by a Founder or Employee shall be governed by Sections 4 and 5 of this Agreement. 4. RIGHT OF FIRST OFFER. (a) Each time a Founder or an Employee (the "Offering Stockholder") proposes to offer for sale any shares of Common Stock, such Offering Stockholder shall first make an offering of such Common Stock to WorldCorp in accordance with the following provisions: (i) The Offering Stockholder shall deliver a notice (the "Offering Notice") to WorldCorp stating (i) the Offering Stockholder's bona fide intention to offer such Common Stock, (ii) the number of shares of such Common Stock to be offered for sale, and (iii) the price and terms, if any, upon which the Offering Stockholder proposes to offer such Common Stock. (ii) Within 30 days after the Offering Notice is given, WorldCorp may elect to purchase from the Offering Stockholder, at the price and on the terms specified in the Offering Notice, all of the shares of Common Stock offered in the Offering Notice. (iii) The Closing of the purchase of any shares of Common Stock by WorldCorp shall take place at the principal offices of the Company (or such other location as the parties may agree on) on the third business day after the expiration of the 30-day period following the giving of the Offering Notice. At such closing, WorldCorp shall (x) agree in writing with the Offering Stockholder not to sell or otherwise dispose of such shares in violation of the Securities Act of 1933, as amended, and (y) make payment in the appropriate amount by means of a check or by a wire transfer to the Offering Stockholder against delivery of stock certificates representing the shares so purchased, duly endorsed in blank by the Person or Persons in whose name such certificate is registered or accompanied by a duly executed stock or security assignment separate from the certificate. (b) Each time WorldCorp proposes to offer for sale any shares of Common Stock or any shares of Series A Preferred Stock, it shall first make an offering of such Common Stock or Series A Preferred Stock, as the case may be, to each other Stockholder in accordance with the following provisions: (i) WorldCorp shall deliver a notice ("WorldCorp Offering Notice") to each other Stockholder stating (i) its bona fide intention to offer such Common Stock or Series A Preferred Stock, (ii) the number of shares of such Common Stock or Series A Preferred Stock, as the case may be, to be offered for sale, and (iii) the price and terms, if any, upon which it proposes to offer such Common Stock or Series A Preferred Stock; (ii) Within 20 days after the WorldCorp Offering Notice is given, each Stockholder may elect to purchase from WorldCorp, at the price and on the terms specified in the WorldCorp Offering Notice, up to that number of shares of Common Stock or Series A Preferred Stock equal to the number of shares of Common Stock or Series A Preferred Stock, as the case may be, offered in the WorldCorp Offering Notice multiplied by the fraction obtained by dividing the number of shares of Common Stock owned by such Stockholder at such time by the aggregate number of shares of Common Stock then held by such Stockholder and the other non-offering Stockholders. If the WorldCorp Offering Notice covers both shares of Common Stock and Series A Preferred Stock, each Stockholder may at its option elect to purchase its pro rata portion of either such shares of Common Stock or Series A Preferred Stock, or both; (iii) In the event that any non-offering Stockholder determines not to purchase its pro rata portion of the shares of Common Stock or Series A Preferred Stock, as the case may be, being offered (either by permitting the 20-day notice period set forth in subsection (b)(ii) to expire or by delivering a notice of its decision not to purchase all of its pro rata portion of such shares to WorldCorp prior to the expiration of such period), WorldCorp shall promptly deliver a notice of such determination (the "Re-Offer Notice") to the other Stockholders who elected to purchase their pro rata portion of such shares. Within 10 days after the Re-Offer Notice is given, such other Stockholders may elect to purchase, at the same price and on the same terms as set forth in the original Offering Notice, all of the shares of Common Stock or Series A Preferred Stock, as the case may be, offered in the Re-Offer Notice. In the event that more than one Stockholder elects to purchase all of the shares of Common Stock or all of the Series A Preferred Stock, as the case may be, offered in the Re-Offer Notice, each such electing Stockholder shall be permitted to purchase that fraction of such shares obtained by dividing the number of shares of Common Stock owned by such Stockholder at such time by the aggregate number of shares of Common Stock then owned by the Stockholders accepting the offer set forth in the Re-Offer Notice. In no event shall the non-offering Stockholders be permitted to purchase in total less than all of the shares originally offered by WorldCorp in the WorldCorp Offering Notice. (iv) The closing of the purchase of the shares of Common Stock and Series A Preferred Stock by each non- offering Stockholder who has accepted an offer or offers pursuant to subsections (b)(ii) and (b)(iii) shall take place at the principal offices of the Company (or such other location as the parties may agree on) on the third business day after the later to expire of the 20-day period following the giving of the WorldCorp Offering Notice or the 10-day period following the giving of the Re-Offer Notice, if any, and shall be held simultaneously with the closing of all other purchases of such shares by all other non-offering Stockholders. At such closing, such non-offering Stockholder shall (x) agree in writing with WorldCorp not to sell or otherwise dispose of such shares in violation of the Securities Act of 1933, as amended, and (y) make payment in the appropriate amount by means of a check or by a wire transfer to WorldCorp against delivery of stock certificates representing the shares so purchased, duly endorsed in blank by the Person or Persons in whose name such certificate is registered or accompanied by a duly executed stock or security assignment separate from the certificate. (c) In the event that all of the shares being offered are not purchased at the closing referred to in subsection (a)(iii) or (b)(iv), the Offering Stockholder or WorldCorp, as the case may be, shall for a period of 120 days thereafter have the right to sell or otherwise dispose of the number of shares of Common Stock or Series A Preferred Stock offered in the Offering Notice or the WorldCorp Offering Notice, as the case may be, upon terms and conditions (including the price per share) no more favorable to the third party purchaser than those specified in the Offering Notice or the WorldCorp Offering Notice, as the case may be. In the event that the Offering Stockholder or WorldCorp, as the case may be, does not sell or otherwise dispose of such shares of Common Stock or Series A Preferred Stock within the specified 120-day period, the right of first offer provided for in this Section 4 shall continue to be applicable to any subsequent disposition of such shares. (d) The right of first offer provided for in this Section 4 shall not be applicable to (i) any offer, sale or other disposition of shares of Common Stock or Series A Preferred Stock by WorldCorp to any of its Affiliates; provided, however. that, prior to the consummation of such a sale or other disposition, such transferee agrees to be bound by the terms and conditions of this Agreement by executing and delivering to each party hereto its agreement to that effect; (ii) any merger or other reorganization involving the Company in which the shares of Common Stock owned by any Stockholder are in substantial part exchanged for or converted into securities of another corporation or cash or both; or (iii) any bona fide transaction not intended to avoid the provisions hereof in which any Stockholder merges or consolidates with a Person or sells all or substantially all of its assets (including the shares of Common Stock or Series A Preferred Stock owned by it at such time) to, such a Person in exchange for securities of such Person or cash or both; provided, however. that, prior to the consummation of such transactions, such Person agrees to be bound by the terms and conditions of this Agreement by executing and delivering to each party hereto its agreement to that effect. (e) In the event that the right of first offer set forth in this Section 4 is not exercised by the non-offering Stockholders with respect to sales of any shares of Common Stock or Series A Preferred Stock offered for sale by a Stockholder, the purchaser of such shares shall not be bound by the terms of this Agreement or be entitled to any benefits hereunder. 5. CO-SALE PROVISIONS. (a) In the event that any Founder or Founders (together, the "Transferring Stockholders") shall determine to sell shares of Common Stock or Other Securities owned by such Transferring Stockholder or Stockholders constituting more than 3% of the then outstanding shares of Common Stock (treating all such Other Securities as having been converted, exchange or exercised) to any person or persons (individually a "Third Party" and collectively, "Third Parties") other than WorldCorp in any one transaction or any series of related transactions, directly or indirectly, such sale or other disposition shall not be permitted unless the Transferring Stockholders shall offer (or cause the Third Party to offer) WorldCorp the right to elect to include, at the sole option of WorldCorp, in the sale or other disposition to the Third Party such number of shares of Common Stock or Series A Preferred Stock owned by WorldCorp as shall be determined in accordance with subsection (a)(i) of this Section 5 (the "Tag-Along Shares"). The Transferring Stockholders shall give notice to WorldCorp describing the transaction (the "Joint Notice") and at any time within 20 days after the giving of the Joint Notice, WorldCorp may make an election to include the Tag- Along Shares in such a sale or other disposition (the "Inclusion Election") by giving written notice of its Inclusion Election to each of the Transferring Stockholders and delivering to the designated representative of the Transferring Stockholders a stock certificate or certificates representing the Tag-Along Shares, together with a limited power-of-attorney authorizing the Transferring Stockholders to sell or otherwise dispose of such Tag-Along Shares pursuant to the terms of such Third Party's offer. (i) WorldCorp shall have the right to sell, pursuant to the Third Party's offer, that percentage of the number of shares of Common Stock or Other Securities to be sold to the Third Party equal to the ratio (expressed as a percentage) of (i) the shares of Common Stock (treating the Other Securities as having been converted into, exchanged for or exercised for Common Stock) owned by WorldCorp, as compared with (ii) the aggregate number of shares of Common Stock or Other Securities owned by the Transferring Stockholders and WorldCorp treating the Other Securities as having been converted into, exchanged for or exercised for Common Stock. (ii) The purchase from WorldCorp pursuant to this Section 5(a) shall be on the same terms and conditions, including the price per share and the date of sale or other disposition, as are received by the Transferring Stockholders and stated in the Joint Notice. (iii) Promptly (but in no event later than two business days) after the consummation of the sale or other disposition of shares of Common Stock or Other Securities of the Transferring Stockholders and WorldCorp to the Third Party pursuant to the Third Party's offer, the Transferring Stockholders shall (i) notify WorldCorp of the completion thereof, (ii) cause to be remitted to WorldCorp the total sales price attributable to the shares of Common Stock or Other Securities which WorldCorp sold or otherwise disposed of pursuant thereto, and (iii) furnish such other evidence of the completion and time of completion of such sale or other disposition and the terms thereof as may be reasonably requested by WorldCorp. (iv) If within 20 days after the Joint Notice is given, WorldCorp has not accepted the offer to make an Inclusion Election, WorldCorp will be deemed to have waived any and all of its rights with respect to the sale or other disposition of shares of Common Stock or Other Securities described in the Joint Notice. The Transferring Stockholders shall have 90 days after such 20-day period in which to sell or otherwise dispose of the shares of Common Stock or Other Securities of the Transferring Stockholders to the Third Party or any other Person at a price and on terms not more favorable to the Transferring Stockholders than were set forth in the Joint Notice. (v) If, at the end of such 90-day period, the Transferring Stockholders have not completed the sale of shares of Common Stock or Other Securities of the Transferring Stockholders in accordance with the terms of the Third Party's offer, all the restrictions on sale contained in this Agreement with respect to Common Stock or Other Securities owned by the Transferring Stockholders shall again be in effect (unless such 90-day period is extended with the consent of WorldCorp). (b) In the event that WorldCorp shall determine to sell shares of Common Stock or Other Securities owned by WorldCorp constituting more than 3% of the then outstanding shares of Common Stock (treating the Other Securities as having been converted into, exchanged for or exercised for Common Stock) to any Third Party or Third Parties other than the Founders in any one transaction or any series of related transactions, directly or indirectly, such sale or other disposition shall not be permitted unless WorldCorp shall offer (or cause the Third Party to offer) the Founders (the "NonParticipating Stockholders") the right to elect to include, at the sole option of each of the NonParticipating Stockholders, in the sale or other disposition to the Third Party such number of Tag-Along Shares owned by such Non-Participating Stockholder as shall be determined in accordance with subsection (b)(i) of this Section 5. WorldCorp shall give notice to each of the Non-Participating Stockholders describing the transaction (the "WorldCorp Notice") and at any time within 20 days after the giving of the WorldCorp Notice, each Non-Participating Stockholder may make an Inclusion Election by giving written notice of its Inclusion Election to each of WorldCorp and delivering to WorldCorp a stock certificate or certificates representing the Tag-Along Shares, together with a limited power-of-attorney authorizing WorldCorp to sell or otherwise dispose of such Tag-Along Shares pursuant to the terms of such Third Party's offer. (i) Each Non-Participating Stockholder shall have the right to sell, pursuant to the Third Party's offer, that percentage of the number of shares of Common Stock or Other Securities to be sold to the Third Party equal to the ratio (expressed as a percentage) of (i) the shares of Common Stock (treating the Other Securities as having been converted into, exchanged for or exercised for Common Stock) owned by the Non- Participating Stockholder, as compared with (ii) the aggregate number of shares of Common Stock or Other Securities owned by WorldCorp and the Non-Participating Stockholders treating the Other Securities as having been converted into, exchanged for or exercised for Common Stock. (ii) The purchase from a Non-Participating Stockholder pursuant to this Section 5(b) shall be on the same terms and conditions, including the price per share and the date of sale or other disposition, as are received by WorldCorp and stated in the WorldCorp Notice; provided, however, that if WorldCorp is selling Other Securities, the price per share for shares of Common Stock being sold by the Non-Participating Stockholders may be less than the price being received by WorldCorp for the Other Securities. (iii) Promptly (but in no event later than two business days) after the consummation of the sale or other disposition of shares of Common Stock or Other Securities of WorldCorp and Non-Participating Stockholders making an Inclusion Election to the Third Party pursuant to the Third Party's offer, WorldCorp shall (i) notify such Non-Participating Stockholders of the completion thereof, (ii) cause to be remitted to each Non-Participating Stockholder the total sales price attributable to the shares of Common Stock or Series A Preferred Stock which such Non-Participating Stockholder sold or otherwise disposed of pursuant thereto, and (iii) furnish such other evidence of the completion and time of completion of such sale or other disposition and the terms thereof as may be reasonably requested by any Non-Participating Stockholder. (iv) If within 20 days after the WorldCorp Notice is given, any NonParticipating Stockholder has not accepted the offer to make an Inclusion Election, such Non- Participating Stockholder will be deemed to have waived any and all of its rights with respect to the sale or other disposition of shares of Common Stock or Other Securities described in the WorldCorp Notice. WorldCorp shall have 90 days after such 20-day period in which to sell or otherwise dispose of the shares of Common Stock or Other Securities of WorldCorp and the Non- Participating Stockholders which have made an Inclusion Election (as calculated pursuant to subsection (b)(i)) to the Third Party or any other Person at a price and on terms not more favorable to WorldCorp than were set forth in the WorldCorp Notice. (v) If, at the end of such 90-day period, WorldCorp has not completed the sale of shares of Common Stock or Other Securities of WorldCorp and any Non-Participating Stockholders making an Inclusion Election in accordance with the terms of the Third Party's offer, WorldCorp shall return to such Non-Participating Stockholders all certificates representing shares of Common Stock or Other Securities, if any, which such Non-Participating Stockholders delivered for sale pursuant to this subsection (b), and all the restrictions on sale contained in this Agreement with respect to Common Stock or Other Securities owned by WorldCorp shall again be in effect (unless such 90-day period is extended with the consent of the Non- Participating Stockholders). (c) The rights provided in this Section 5 shall not be applicable to any transaction if Section 4(d) makes Section 4 inapplicable thereto. (d) The provisions of Section 4 shall take priority over this Section 5, and nothing in this Section 5 shall be construed to relieve WorldCorp or any Transferring Stockholder of its obligation to deliver an Offering Notice to each of the other Stockholders pursuant to the terms of Section 4 in connection with such a proposed transaction. (e) In the event that a sale of shares of Common Stock is made to a Third Party pursuant to this Section 5, such Third Party shall not be bound by the terms of this Agreement, nor shall it be entitled to any benefits hereunder. 6. OPTION TO PURCHASE FOUNDERS' AND EMPLOYEES' SHARES. Subject to the provisions of Section 6(b) hereof, each Founder and Employee hereby grants to WorldCorp option (the "Option") exercisable after September 10, 1991 but prior to the Termination Date (as defined in Section 6(e)) to purchase for the price set forth in Section 6(a) all of the outstanding shares of Common Stock held by such Founders and Employees and all vested but unexercised options to purchase Common Stock held by such Founders and Employees (the "Optioned Shares"). (a) The exercise price per share for the Optioned Shares (the "Exercise Price") shall be payable in shares of WorldCorp Common Stock and shall equal (i) 400,000 shares of Common Stock, par value $1.00, of WorldCorp as adjusted for subsequent stock splits or dividends ("WorldCorp Common Stock") plus such additional number of shares of WorldCorp Common Stock, if any, such that the aggregate value (based on the then-current market price of WorldCorp Common Stock) of all such shares equals $5,000,000, divided by (ii) the sum of (x) the number of Optioned Shares held by the Founders and (y) 49% of the number of outstanding shares of Common Stock held by Employees (treating all outstanding options to purchase Common Stock held by such persons or entities that are vested as having been exercised). With respect to vested but unexercised options to purchase Common Stock, the Exercise Price shall be reduced by the exercise price per share for such option. Upon the exercise by WorldCorp of the Option, all unexercised options which are not vested shall be cancelled. The then-current market price of WorldCorp Common Stock shall be the closing price reported on the New York Stock Exchange Composite Transaction Reporting System on the business day prior to the exercise of the Option, or if WorldCorp Common Stock is no longer listed on the New York Stock Exchange, the closing price on the primary market on which such Common Stock is traded. (b) WorldCorp may not exercise the Option until and unless WorldCorp exercises its option to purchase additional shares of Series A Preferred Stock pursuant to Section 7.7 of the Stock Purchase Agreement. WorldCorp shall exercise the Option by giving written notice to the Founders and Employees. The payment of the Exercise Price and the transfer of the Optioned Shares shall occur on the date set forth in such notice, which date shall be no later than 15 days after the date of such notice. (c) A Founder or Employee shall not dispose of or otherwise encumber any of the Optioned Shares nor shall a Founder or Employee enter into any arrangements (including the granting of options or similar rights) for such purposes, from the date of this Agreement to the termination of the rights granted under this Section 6, unless permitted by this Agreement and only if WorldCorp shall first have received an agreement and acknowledgement in writing from such transferee that such Optioned Shares remain subject to the provisions of this Section 6. (d) For purposes of this Section 6(d): (i) the term "register," "registered," and "registration" refer to a registration effected by preparing and filing a registration statement or similar document in compliance with the Act, and the declaration or ordering of effectiveness of such registration statement or document; (ii) the term "Registrable Securities" means (1) the WorldCorp Common Stock issued upon purchase of the Optioned Shares and (2) any Common Stock of WorldCorp issued as (or issuable upon the conversion or exercise of any warrant, right or other security which is issued as) a dividend or other distribution with respect to, or in exchange for or in replacement of, such WorldCorp Common Stock, excluding in all cases, however, any Registrable Securities sold by a person in a transaction in which his rights under this Section 6(d) are not assigned; (iii) the number of shares of "Registrable Securities then outstanding" shall be determined by the number of shares of WorldCorp Common Stock outstanding which are, and the number of shares of WorldCorp Common Stock issuable pursuant to then exercisable or convertible securities which are, Registrable Securities. (iv) the term "Holder" means any person owning or having the right to acquire Registrable Securities or any assignee thereof in accordance with Section 6(xiii) hereof; and (v) the term "Form S-3" means such form under the Act as in effect on the date hereof or any registration form under the Act subsequently adopted by the Securities and Exchange Commission ("SEC") which permits inclusion or incorporation of substantial information by reference to other documents filed by WorldCorp with the SEC. (vi) If WorldCorp shall receive at any time after the issuance of the WorldCorp Common Stock to the Founders a written request from William F. Gorog (or in the event of the incapacity of William F. Gorog from Jonathan M. Gorog) (the "Initiating Holder") that WorldCorp effect a registration on Form S-3 and any related qualification or compliance with respect to all or a part of the Registrable Securities owned by a Holder or Holders, WorldCorp will: a. promptly give written notice of the proposed registration, and any related qualification or compliance, to all other Holders; and b. as soon as practicable, effect such registration and all such qualifications and compliances as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of such Holder's or Holders' Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any other Holder or Holders joining in such request as are specified in a written request given within 15 days after receipt of such written notice from WorldCorp; provided, however, that WorldCorp shall not be obligated to effect any such registration, qualification or compliance, pursuant to this section 6(d) (vi): (1) if Form S-3 is not available for such offering by the Holders; (2) if the Holders, together with the holders of any other securities of WorldCorp entitled to inclusion in such registration, propose to sell Registrable Securities and such other securities (if any) at an aggregate price to the public (net of any underwriters' discounts or commissions) of less than $2,000,000; (3) if WorldCorp shall furnish to the Holders a certificate signed by the President of WorldCorp stating that in the good faith judgment of the Board of Directors of WorldCorp, it would be seriously detrimental to WorldCorp and its stockholders for such Form S-3 Registration to be effected at such time, in which event WorldCorp shall have the right to defer the filing of the Form S-3 registration statement for a period of not more than 90 days after receipt of the request of the Holder or Holders under this Section 6(d)(vi); provided, however, that WorldCorp shall not utilize this right more than once in any twelve month period; (4) in any particular jurisdiction in which WorldCorp would be required to qualify to do business or to execute a general consent to service of process in effecting such registration, qualification or compliance. Subject to the foregoing, WorldCorp shall file a registration statement covering the Registrable Securities and other securities so requested to be registered as soon as practicable after receipt of the request or requests of the Holders. If the Initiating Holder intends to distribute the Registrable Securities covered by the request by means of an underwriting, he shall so advise WorldCorp as a part of the request made pursuant to this Section 6(d)(vi) and WorldCorp shall include such information in the written notice. The underwriter will be selected by the Initiating Holder, as the case may be, and shall be reasonably acceptable to WorldCorp. In such event, the right of any Holder to include his Registrable Securities in such registration shall be conditioned upon such Holder's participation in such underwriting and the inclusion of such Holder's Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall (together with WorldCorp) enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting. Notwithstanding any other provision of this Section 6(d)(vi), if the underwriter advises Holders in writing that marketing factors require a limitation of the number of shares to be underwritten, then the number of shares of Registrable Securities that may be included in the underwriting shall be allocated among all Holders thereof in proportion (as nearly as practicable) to the amount of Registrable Securities of WorldCorp owned by each Holder; provided, however, that the number of shares of Registrable Securities to be included in such underwriting shall not be reduced below 50% if other securities are included in the underwriting. WorldCorp is obligated to effect only one (1) such registration pursuant to this Section 6(d)(vi); provided, however, that if the number of shares of Registrable Securities included in the underwriting is reduced by the underwriter to 50% because of the inclusion of other securities in the underwritten offering, WorldCorp shall be obligated to effect one addition registration pursuant to this Section 6(d)(vi). In no event shall WorldCorp be obligated to effect more than two such registrations pursuant to this Section 6(d)(vi). (vii) If (but without any obligation to do so) WorldCorp proposes to register (including for this purpose a registration effected by WorldCorp for stockholders other than the Holders) any of its stock or other securities under the Act in connection with the public offering of such securities solely for cash (other than a registration relating solely to the sale of securities to participants in a WorldCorp stock plan, or a registration on any form which does not include substantially the same information as would be required to be included in a registration statement covering the sale of the Registrable Securities), WorldCorp shall, at such time, promptly give each Holder written notice of such registration. Upon the written request of each Holder given within twenty (20) days after mailing of such notice by the Company in accordance with Section 12, WorldCorp shall, subject to the provisions of Section 6(d)(xi), cause to be registered under the Act all of the Registrable Securities that each such Holder has requested to be registered. (viii) Whenever required under this Section 6(d) to effect the registration of any Registrable Securities, WorldCorp shall, as expeditiously as reasonably possible: a. Prepare and file with the SEC a registration statement with respect to such Registrable Securities and use its best efforts to cause such registration statement to become effective, and, upon the request of the Holders of a majority of the Registrable Securities registered thereunder, keep such registration statement effective for up to one hundred twenty (120) days. b. Prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Act with respect to the disposition of all securities covered by such registration statement. c. Furnish to the Holders such numbers of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Act, and such other documents as they may reasonably request in order to facilitate the disposition of Registrable Securities owned by them. d. Use its best efforts to register and qualify the securities covered by such registration statement under such other securities or Blue Sky laws of such jurisdictions as shall be reasonably requested by the Holders, provided that WorldCorp shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions. e. In the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter of such offering. Each Holder participating in such underwriting shall also enter into and perform its obligations under such an agreement. f. Notify each Holder of Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the Act of the happening of any event as a result of which the prospectus included 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 the light of the circumstances then existing. g. Furnish, at the request of any Holder requesting registration of Registrable Securities pursuant to this Section 6(d), on the date that such Registrable Securities are delivered to the underwriters for sale in connection with a registration pursuant to this Section 6(d), if such securities are being sold through underwriters, or, if such securities are not being sold through underwriters, on the date that the registration statement with respect to such securities becomes effective, (i) an opinion, dated such date, of the counsel representing WorldCorp for the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering, addressed to the underwriters, if any, and to the Holders requesting registration of Registrable Securities and (ii) a letter dated such date, from the independent certified public accountants of WorldCorp, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the underwriters, if any, and to the Holders requesting registration of Registrable Securities. (ix) It shall be a condition precedent to the obligations of WorldCorp to take any action pursuant to this Section 6(d) with respect to the Registrable Securities of any selling Holder that such Holder shall furnish to WorldCorp such information regarding itself, the Registrable Securities held by it, and the intended method of disposition of such securities as shall be required to effect the registration of such Holder's Registrable Securities. (x) All expenses incurred in connection with a registration requested pursuant to Section 6(d)(vi) or 6(d) (vii), including (without limitation) all registration, filing, qualification, printer's and accounting fees and the reasonable fees and disbursements of counsel for the selling Holder or Holders and counsel for WorldCorp, but excluding any underwriters' discounts or commissions associated with Registrable Securities, shall be borne by WorldCorp; provided, however, that WorldCorp shall not be required to pay for any expenses of any registration proceeding begun pursuant to Section 6(d)(vi) if the registration request is subsequently withdrawn at the request of the Initiating Holder (in which case all Participating Holders shall bear such expenses), unless the Initiating Holder agrees to forfeit the right to one demand registration pursuant to Section 6(d)(vi); provided further, however, that if at the time of such withdrawal, the Holders have learned of a material adverse change in the condition, business, or prospects of WorldCorp from that known to the Holders at the time of their request and have withdrawn the request with reasonable promptness following disclosure by WorldCorp of such material adverse change, then the Holders shall not be required to pay any of such expenses and shall retain their rights pursuant to Section 6(d)(vi). (xi) In connection with any offering involving an underwriting of shares of WorldCorp's capital stock, WorldCorp shall not be required under Section 6(d)(vii) to include any of the Holders' securities in such underwriting unless they accept the terms of the underwriting as agreed upon between WorldCorp and the underwriters selected by it (or by other persons entitled to select the underwriters), and then only in such quantity as the underwriters determine in their sole discretion will not, jeopardize the success of the offering by WorldCorp. If the total amount of securities, including Registrable Securities, requested by stockholders to be included in such offering exceeds the amount of securities to be sold that the underwriters determine in their sole discretion is compatible with the success of the offering, then WorldCorp shall only be required to include in the offering that number, if any, of the Registrable Securities which the underwriters determine in their sole discretion will not jeopardize the success of the offering (the Registrable Securities so included to be apportioned pro rata among the Holders or in such other proportions as shall mutually be agreed to by the Holders). (xi) No Holder shall have any right to obtain or seek an injunction restraining or otherwise delaying any such registration as the result of any controversy that might arise with respect to the interpretation or implementation of this Section 6(d). (xii) In the event any Registrable Securities are included in a registration statement under this Section 6(d): a. To the extent permitted by law, WorldCorp will indemnify and hold harmless each Holder, any underwriter (as defined in the Act) for such Holder and each person, if any, who controls such Holder or underwriter within the meaning of the Act or the Securities Exchange Act of 1934, as amended (the "1934 Act"), against any losses, claims, damages, or liabilities (joint or several) to which they may become subject under the Act, the 1934 Act or other federal or state law, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon any of the following statements, omissions or violations (collectively a "Violation"): (i) any untrue statement or alleged untrue statement of a material fact contained in such registration statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, (ii) 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, or (iii) any violation or alleged violation by WorldCorp of the Act, the 1934 Act, any state securities law or any rule or regulation promulgated under the Act, the 1934 Act or any state securities law; and WorldCorp will pay to each such Holder, underwriter or controlling person, as incurred, 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 the indemnity agreement contained in this subsection 6(d)(xii) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability, or action if such settlement is effected without the consent of WorldCorp (which consent shall not be unreasonably withheld), nor shall WorldCorp be liable in any such case for any such loss, claim, damage, liability, or action to the extent that it arises out of or is based upon a Violation which occurs in reliance upon and in conformity with written information furnished expressly for use in connection with such registration by any such Holder, underwriter or controlling person. b. To the extent permitted by law, each selling Holder will indemnify and hold harmless WorldCorp, each of its directors, each of its officers who has signed the registration statement, each person, if any, who controls WorldCorp within the meaning of the Act, any underwriter, any other Holder selling securities in such registration statement and any controlling person of any such underwriter or other Holder, against any losses, claims, damages, or liabilities (joint or several) to which any of the foregoing persons may become subject, under the Act, the 1934 Act or other federal or state law, insofar as such losses, claims, damages, or liabilities (or actions in respect thereto) arise out of or are based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written information furnished by such Holder expressly for use in connection with such registration; and each such Holder will pay, as incurred, any legal or other expenses reasonably incurred by any person intended to be indemnified pursuant to this subsection 6(d)(xii), in connection with investigating or defending any such loss, claim, damage, liability, or action; provided, however, that the indemnity agreement contained in this subsection 6(d)(xii) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Holder, which consent shall not be unreasonably withheld; provided, that, in no event shall any indemnity under this subsection 6.10(b) exceed the gross proceeds from the offering received by such Holder. c. Promptly after receipt by an indemnified party under this Section 6(d)(xii) of notice of the commencement of any action (including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 6(d)(xii), deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party (together with all other indemnified parties which may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such proceeding. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action, if prejudicial to its ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party under this Section 6(d)(xii), but the omission so to deliver written notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 6(d)(xii). d. The obligations of WorldCorp and Holders under this Section 6(d)(xii) shall survive the completion of any offering of Registrable Securities in a registration statement under this Section 6(d), and otherwise. (xiii) The rights to cause WorldCorp to register Registrable Securities pursuant to this Section 6 may be assigned (but only with all related obligations) by a Holder to a transferee or assignee of such securities who, after such assignment or transfer, holds at least 100,000 shares of Registrable Securities (subject to appropriate adjustment for stock splits, stock dividends, combinations and other recapitalizations) provided WorldCorp is, within a reasonable time after such transfer, furnished with written notice of the name and address of such transferee or assignee and the securities with respect to which such registration rights are being assigned; and provided, further, that such assignment shall be effective only if immediately following such transfer the further disposition of such securities by the transferee or assignee is restricted under the Act. (xiv) Each Holder hereby agrees that, during the period, of duration specified by WorldCorp and an underwriter of common stock or other securities of WorldCorp, following the effective date of a registration statement of WorldCorp filed under the Act, it shall not, to the extent requested by WorldCorp and such underwriter, directly or indirectly sell, offer to sell, contract to sell (including, without limitation, any short sale), grant any option to purchase or otherwise transfer or dispose of (other than to donees who agree to be similarly bound) any securities of WorldCorp held by it at any time during such period except common stock included in such registration; provided, however, that all executive officers and directors of WorldCorp and all other persons with registration rights (whether or not pursuant to this Agreement) enter into similar agreements. In order to enforce the foregoing covenant, WorldCorp may impose stop-transfer instructions with respect to the Registrable Securities of each Holder (and the shares or securities of every other person subject to the foregoing restriction) until the end of such period. (e) The option granted under this Section 6 shall terminate if notice of exercise is not given on or prior to September 15, 1993 (the "Termination Date"). 7. AMENDMENTS TO CHARTER DOCUMENTS. Pursuant to the terms of the Stock Purchase Agreement, upon the earlier of the expiration of WorldCorp's option under Section 7.7 thereof or the exercise of such option, the Company has agreed to use its best efforts to amend its Restated Certificate of Incorporation to provide that the members of the Board of Directors shall be elected by a plurality of the holders of shares of Common Stock and of the Series A Preferred Stock, voting together as a single class. The Founders, the Employees and WorldCorp each agree to vote his, her or its shares of Common Stock in favor of such an amendment. 8. VOTING AND BOARD REPRESENTATION. (a) Until the expiration of WorldCorp's option to purchase the Employees shares of Common Stock pursuant to Section 6 hereof, each Employee shall vote the shares of Common Stock he or she holds at any regular or special meeting of stockholders of the Company or in any written consent executed in lieu of such meeting of stockholders in the same manner and proportion as the shares held by each of the Founders and WorldCorp. Each Employee agrees to vote, and hereby grants to WorldCorp an irrevocable proxy pursuant to the provisions of Section 212 of the Delaware General Corporation Law to vote, or to execute and deliver written consents or otherwise act with respect to, all shares of Common Stock now owned or hereafter acquired by the Employee as fully, to the same extent and with the same effect as the Employee might or could do under any applicable laws or regulations governing the rights and powers of stockholders of a Delaware corporation, in connection with the election of directors of the Company as provided in and in accordance with this Section 8. Each Employee hereby affirms that this proxy is given as a condition of this Agreement and the issuance of the shares of (or options to purchase shares of) Common Stock and as such is coupled with an interest and is irrevocable until expiration of WorldCorp's option to purchase the Employees' shares pursuant to Section 6 hereof. THIS PROXY IS IRREVOCABLE AND SHALL REMAIN IN-FULL FORCE AND EFFECT. (b) If WorldCorp exercises its option to purchase additional shares of Series A Preferred Stock pursuant to Section 7.7 of the Stock Purchase Agreement, WorldCorp shall vote its shares of Series A Preferred Stock (and any Common Stock resulting form a conversion thereof) at any regular or special meeting of the stockholders of the Company called for the purpose of filling positions on the Board of Directors of the Company, or in any written consent executed in lieu of such a meeting of stockholders, and shall take all actions necessary, to ensure the election to the Board of Directors of the Company of two individuals selected by the Founders. WorldCorp's obligations under this Section 8(b) shall terminate at such time that the Founders as a group own less than 5% of the outstanding shares of capital stock of the Company. 9. GOVERNING LAW; JURISDICTION. This Agreement shall be governed by and construed under the laws of the State of Delaware as applied to agreements made and to be performed in the State of Delaware without regard to the conflict of laws principles thereof. Each of the Stockholders hereby consents to personal jurisdiction in respect of any action arising under or in connection with this Agreement instituted in the United States District Court for the District of Delaware or the Delaware Court of Chancery or other state court of Delaware, and to service of process upon it in the manner set forth in Section 12. 10. COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 11. TITLES AND SUBTITLES. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement. 12. NOTICES. Any notice, request, instruction or other document to be given hereunder by any party hereto to another party hereto shall be in writing, shall be deemed to have been duly given or delivered when delivered personally or telecopied (receipt confirmed, with a copy sent by certified or registered mail as set forth herein) or sent by certified or registered mail, postage prepaid, return receipt requested, or by Federal Express or other overnight delivery service, to the address of the party set forth below such person's signature on this Agreement or to such address as the party to whom notice is to be given may provide in a written notice to each of the other parties to this Agreement, a copy of which written notice shall be on file with the Secretary of the Company. 13. LEGEND. (a) Each certificate representing shares of Common Stock or Series A Preferred Stock subject to this Agreement shall be endorsed with the following legend: "THE SALE, PLEDGE HYPOTHECATION OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN STOCK RESTRICTION AGREEMENT BY AND AMONG THE STOCKHOLDER AND CERTAIN HOLDERS OF STOCK OF THE CORPORATION. COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY OF THE CORPORATION." (b) Each party to this Agreement agrees that the Company may instruct the transfer agent to impose transfer restrictions on the shares represented by certificates bearing the legend referred to in Section 13(a) above to enforce the provisions of this Agreement. The legend shall be removed upon termination of this Agreement. 14. AMENDMENTS AND WAIVERS. 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 and either retroactively or prospectively) only with the written consent of each of the Stockholders; provided, however, that no consent shall be required from any Stockholder if at the time of such amendment or waiver such Stockholder owns less than 5% of the then outstanding shares of Common Stock (treating the Series A Preferred Stock as having been converted). 15. SEVERABILITY. If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision shall be excluded from this Agreement and the balance of the Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms to the fullest extent permitted by law. 16. FURTHER ASSURANCES. Each of the parties shall, without further consideration, use reasonable efforts to execute and deliver such additional documents and take such other action, as the other parties, or any of them may reasonably request to carry out the intent of this Agreement and the transactions contemplated hereby. 17. ENTIRE AGREEMENT. This Agreement, together with the Stock Purchase Agreement, embodies the entire agreement and understanding of the parties hereto in respect of the actions and transactions contemplated by this Agreement. There are no restrictions, promises, inducements, representations, warranties, covenants or undertakings, other than those expressly set forth or referred to herein. 18. SPECIFIC PERFORMANCE. Each of the Stockholders acknowledges and agrees that in the event of any breach of this Agreement, the non-breaching party or parties would be irreparably harmed and could not be made whole by monetary damages. It is accordingly agreed that the Stockholders will waive the defense in any action for specific performance that a remedy at law would be adequate and that the Stockholders, in addition to any other remedy to which they may be entitled at law or in equity, shall be entitled to compel specific performance of this Agreement in any action instituted in the Delaware Court of Chancery or the United States District Court for the District of Delaware or, in the event said Courts would not have jurisdiction for such action, in any court of the United States or any state thereof having jurisdiction for such action. 19. TERMINATION. This Agreement shall terminate the earlier of (i) 10 years from the date hereof, (ii) upon a firmly underwritten public offering of the Common Stock unless it shall be extended prior to such date by the mutual consent of each of the parties hereto or (iii) with respect to a Stockholder, at such time that such Stockholder no longer holds any securities of the Company. Notwithstanding the foregoing, the rights pursuant to Section 5 hereof shall terminate (i) with respect to any sale of capital stock of the Company by WorldCorp, on March 15, 1992 and (ii) with respect to any sale of capital stock of the Company by a Founder or Founders, five years from the date hereof. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective duly authorized officers as of the date first above written. WORLDCORP, INC. /s/ Andrew M. Paalborg By: Andrew M. Paalborg Title: Secretary Address: 13873 Park Center Road Suite 490 Herndon, VA 22071 WILLIAM F. GOROG /s/ William F. Gorog William F. Gorog Address: 1307 Daviswood Drive McLean, VA 22102 JONATHAN M. GOROG /s/ Jonathan M. Gorog Jonathan M. Gorog Address: 6846 McLean Province Circle Falls Church, VA 22043 PETER M. GOROG /s/ Peter M. Gorog Peter M. Gorog Address: 1283 Auburn Grove Lane Reston, VA 22094 HENRY R. NICHOLS /s/ Henry R. Nichols Henry R. Nichols Address: 8456 Holly Leaf Drive McLean, VA 22102 WILLIAM N. MELTON /s/ William N. Melton William N. Melton Address: JOHN PORTER /s/ John Porter John Porter Address: EXHIBIT A EMPLOYEES The undersigned hereby adopts and agrees to be bound by the Stock Restriction Agreement dated as of September 14, 1990 by and among WorldCorp, Inc., William F. Gorog, Jonathan M. Gorog, Peter M. Gorog, Henry R. Nichols, William N. Melton and John Porter. EMPLOYEE Name of Employee: Signature(s): Address: EXHIBIT B FOUNDERS Number of Shares Founder of Common Stock William F. Gorog 1,900,000 Jonathan M. Gorog 1,900,000 Peter M. Gorog 575,000 Henry R. Nichols 375,000 William N. Melton 125,000 John Porter 125,000 AMENDMENT NO. 1 TO STOCK RESTRICTION AGREEMENT AMENDMENT NO. 1 dated as of August 29, 1991 to Stock Restriction Agreement dated as of September 14, 1990 (the "Stock Restriction Agreement") among WorldCorp, Inc. ("WorldCorp"), William F. Gorog, Jonathan M. Gorog, Peter M. Gorog, Henry R. Nichols, William N. Melton and John Porter. WITNESSETH: WHEREAS, U.S. Order, Inc. (the "Company") is developing employee compensation plans to enhance its ability to recruit, motivate and retain employees: WHEREAS, certain terms and conditions contained in the Stock Restriction Agreement may be incompatible with the objectives of the compensation plans; WHEREAS, the parties wish to amend certain provisions of the Stock Restriction Agreement NOW, THEREFORE, in consideration of the mutual covenants contained herein and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree to amend the Stock Restriction Agreement as follows: 1. The following sentence is hereby added at the end of Section 3(b) of the Stock Restriction Agreement: "This Section 3(b) shall not apply to shares of Common Stock that are issued by the Company pursuant to the exercise of stock options granted under the U.S Order, Inc. 1991 Stock Option Plan." 2. The following sentence is hereby added to the end of Section 4(a) of the Stock Restriction Agreement: "This Section 4(a) shall not apply to any shares of Common stock that are issued by the Company pursuant to the exercise of stock options granted under the U.S. Order, Inc. 1991 Stock Option Plan." 3. The title and first sentence of Section 6 of the Stock Restriction Agreement is hereby amended to read as follows: "OPTION TO PURCHASE FOUNDERS' SHARES. Subject to the provisions of Section 6(b) hereof, each Founder hereby grants to WorldCorp an option (the "Option") exercisable after September 10, 1991 but prior to the Termination Date (as defined in Section 6(e)) to purchase for the price set forth in Section 6(a) all of the outstanding shares of Common Stock held by such Founders (the "Optioned Shares"). 4. The following sentence is hereby added at the end of the first sentence of Section 6 of the Stock Restriction Agreement: "This Section 6 shall not apply to any shares of Common Stock that are issued by the Company pursuant to the exercise of stock options granted under the U.S. Order, Inc. 1991 Stock Option Plan." 5. The first sentence of Section 6(a) is hereby amended to read as follows: "The exercise price for the Optioned Shares (the "Exercise Price") shall be payable in shares of WorldCorp Common Stock and shall equal (i) 400,000 shares of Common Stock, par value $1.00, of WorldCorp as adjusted for subsequent stock splits or dividends ("WorldCorp Common Stock") plus such additional number of shares of WorldCorp Common Stock, if any, such that the aggregate value (based on the then current market price of WorldCorp Common Stock) of all such shares equals $5,000,000. 6. Section 6(a) of the Stock Restriction Agreement is hereby amended by deleting the second and third sentences thereof. 7. Subsections (b) and (c) of Section 6 of the Stock Purchase Agreement are hereby amended to delete the words "and Employees" from the second sentence of Subsection (b) and the words "or Employee" in the first and second line of Subsection (c). 8. Section 8(a) of the Stock Restriction Agreement is hereby amended by deleting "Until the expiration of WorldCorp's option to purchase the Employees' shares of Common Stock pursuant to Section 6 hereof" and by inserting "Until the Termination Date" in lieu thereof. 9. WorldCorp's interim partial exercises of the option described in Section 7 of the Series A Stock Purchase Agreement dated as of September 14, 1990, between U.S. Order, Inc. and WorldCorp, Inc., as amended, will not be deemed to be exercises for purposes of Section 3(a)(ii) of the Stock Restriction Agreement. IN WITNESS WHEREOF, the undersigned have executed this Amendment No. 1 as of the day and year first written above. WORLDCORP, INC. By:/s/ T. Coleman Andrews, III Name: _______________________ Title: ______________________ /s/ William F. Gorog William F. Gorog /s/ Jonathan M. Gorog Jonathan M. Gorog /s/ Peter M. Gorog Peter M. Gorog /s/ Henry R. Nichols Henry R. Nichols /s/ William N. Melton William N. Melton /s/ John Porter John Porter AMENDMENT NO. 2 TO STOCK RESTRICTION AGREEMENT AMENDMENT NO. 2, dated as of March 31, 1993 (this "Amendment"), to the Stock Restriction Agreement, dated as of September 14, 1990, as amended by Amendment No. 1 thereto dated as of August 29, 1991 (the "Stock Restriction Agreement"), by and among WorldCorp, Inc. a Delaware corporation ("Worldcorp"), William F. Gorog, Jonathan M. Gorog, Peter M. Gorog, Henry R. Nichols, William N. Melton and John Porter. WHEREAS, the parties to the Stock Restriction Agreement desire to amend certain provisions thereof. NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. DEFINED TERMS. Capitalized terms used but not defined in this Amendment shall have the meanings assigned to such terms in the Stock Restriction Agreement. 2. AMENDMENTS. (i) Section 6(a) of the Stock Restriction Agreement is hereby amended to read in its entirety as follows: (a) The exercise price for the Optioned Shares (the "Exercise Price") shall consist of 400,000 shares of Common Stock, par value $1.00 per share, of Worldcorp ("Worldcorp Common Stock"), plus such additional consideration, if any, such that the aggregate value of such 400,000 shares of WorldCorp Common Stock plus such additional consideration equals $5,000,000. Any such additional consideration shall be payable in cash, shares of WorldCorp Common Stock or, following a US Order IPO (as hereinafter defined), shares of Series A Preferred Stock, or any combination of the foregoing. For purposes hereof, WorldCorp Common Stock shall be valued based on its closing price reported on the New York Stock Exchange Composite Transaction Reporting System on the business day prior to the exercise of the Option, or if WorldCorp Common Stock is no longer listed on the New York Stock Exchange, the closing price on the primary market on which WorldCorp Common Stock is traded. For purposes hereof, Series A Preferred Stock shall be valued by reference to the value of the shares of Common Stock into which such Series A Preferred Stock is convertible on the business day prior to the exercise of the Option, and Common Stock shall be valued based on its closing price on such date on the primary market on which the Common Stock is traded. As used herein, "US Order IPO" shall mean an underwritten initial public offering of Common Stock pursuant to an effective registration statement under the Securities Act of 1933, as amended. (ii) Section 6(e) of the Stock Restriction Agreement is hereby amended to read in its entirety as follows: (e) The Option granted under this Section 6 shall terminate if notice of exercise is not given on or prior to December 15, 1994; provided, that in the event a US Order IPO is consummated prior to September 15, 1993, then such Option shall terminate if notice of exercise is not given on or prior to September 15, 1993; and provided, further, that in the event a US Order IPO is consummated on or after September 15, 1993 but on or prior to December 15, 1994, then such Option shall terminate upon the earlier of (i) the thirtieth business day following the consummation of such US Order IPO and (ii) December 15, 1994, if notice of exercise is not given on or prior to such earlier date. (iii) A new Section 6(f) is hereby added to the Stock Restriction Agreement, which Section 6(f) shall read in its entirety as follows: (f) Notwithstanding anything in this Agreement to the contrary, in the event that on or prior to June 30, 1993, US Order shall not have retained a nationally recognized investment banking firm in connection with a US Order IPO, then the number of shares of Common Stock held by the Founders which shall constitute Option Shares for purposes of this Agreement shall be reduced by 2% (such reduction to be made pro rata among such Founders according to their respective holdings of Common Stock). 3. EFFECT OF AMENDMENT. The Stock Restriction Agreement shall remain in full force and effect as modified by this Amendment. 4. HEADINGS. The headings contained in this Amendment are for reference purposes only, shall not be deemed a part of this Amendment and shall not affect in any way the meaning or interpretation of this Agreement. 5. COUNTERPARTS. This Amendment maybe executed simultaneously in counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument. IN WITNESS WHEREOF, this Amendment has been duly executed and delivered by the parties hereto as of the date first above written. WORLDCORP, INC. By: /s/ Scott Andrews Name: Scott Andrews Title: Chief Financial Officer WILLIAM F. GOROG /s/ William F. Gorog JONATHAN M. GOROG /s/ Jonathan M. Gorog PETER M. GOROG /s/ Peter M. Gorog HENRY R. NICHOLS /s/ Henry R. Nichols WILLIAM N. MELTON /s/ William N. Melton JOHN PORTER /s/ John Porter AMENDMENT NO. 3 TO STOCK RESTRICTION AGREEMENT AMENDMENT NO. 3, dated as of September 1, 1994 (this "Amendment"), to the Stock Restriction Agreement, dated as of September 14, 1990, as amended by Amendment No. 1 thereto dated as of August 29, 1991 and Amendment No. 2 thereto dated as of March 31, 1993 (the "Stock Restriction Agreement"), by and among WorldCorp, Inc., a Delaware corporation ("WorldCorp"), William F. Gorog, Jonathan M. Gorog, Peter M. Gorog, Henry R. Nichols, William N. Melton and John Porter. WHEREAS, the parties to the Stock Restriction Agreement desire to amend certain provisions thereof. NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. DEFINED TERMS. Capitalized terms used but not defined in this Amendment shall have the meanings assigned to such terms in the Stock Restriction Agreement. 2. AMENDMENTS. (i) The first paragraph of Section 6 of the Stock Restriction Agreement is hereby amended to read in its entirety as follows: "6. OPTION TO PURCHASE FOUNDERS' SHARES. Subject to the provisions of Section 6(b) hereof, the Founders hereby grant to WorldCorp the option (the "Option"), exercisable after September 10, 1991, to purchase 4,757,679 of the outstanding shares of Common Stock held by such Founders (the "Optioned Shares")." (ii) Section 6(a) of the Stock Restriction Agreement is hereby amended to read in its entirety as follows: "(a) The exercise price of the Optioned Shares (the "Exercise Price") shall be $3,885,249 payable as follows: October 14, 1994 $ 400,000 Cash 171,261 WOA Shares January 2, 1995 $1,394,500 Cash $ 922,875 Worth of WA shares (see below for Valuation) For purposes hereof, WorldCorp Common Stock will be valued as follows: (1) any WorldCorp Common Stock to be issued on October 14, 1994 shall be valued based on the average closing price reported on the New York Stock Exchange ("NYSE") for the 30 day period from August 3, 1994 through September 2, 1994; and (2) any WorldCorp Common Stock issued on January 2, 1995 shall be valued based on the average closing price reported on the NYSE for the 30 day period from December 2, 1994 through January 2, 1995." (iii) Section 6(e) of the Stock Restriction Agreement is hereby amended to read in its entirety as follows: "(e) WorldCorp's option to purchase the Optioned Shares, granted under this Section 6, shall be exercised at the times, and in the manner, specified in Section 6(a) hereof." 3. EFFECT OF AMENDMENT. The Stock Restriction Agreement shall remain in full force and effect as modified by this Amendment. 4. HEADINGS. The headings contained in this Amendment are for reference purposes only, shall not be deemed a part of this Amendment and shall not affect in any way the meaning or interpretation of this Agreement. 5. COUNTERPARTS. This Amendment may be executed simultaneously in counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument. IN WITNESS WHEREOF, this Amendment has been duly executed and delivered by the parties hereto as of the date first above written. WORLDCORP, INC. By:/s/ T. Coleman Andrews, III Name: T. Coleman Andrews, III President and Chief Executive Officer WILLIAM F. GOROG /s/ William F. Gorog JONATHAN M. GOROG /s/ Jonathan M. Gorog PETER M. GOROG /s/ Peter M. Gorog HENRY R. NICHOLS /s/ Henry R. Nichols WILLIAM N. MELTON /s/ William N. Melton JOHN PORTER /s/ John Porter AMENDMENT NO. 4 TO STOCK RESTRICTION AGREEMENT AMENDMENT NO. 4, dated as of December 1, 1994 (this "Amendment"), to the Stock Restriction Agreement, dated as of September 14, 1990, as amended by Amendment No. 1 thereto dated as of August 2'9, 1991, Amendment No. 2 thereto dated as of March 31, 1993, and Amendment No. 3 dated September 1, 1994 (the "Stock Restriction Agreement"), by and among WorldCorp, Inc., a Delaware corporation ("WorldCorp"), William F. Gorog, Jonathan M. Gorog, Peter M. Gorog, Henry R. Nichols, William N. Melton and John Porter. WHEREAS, the parties to the Stock Restriction Agreement desire to amend certain provisions thereof. NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. DEFINED TERMS. Capitalized terms used but not defined in this Amendment shall have the meanings assigned to such terms in the Stock Restriction Agreement. 2. AMENDMENTS. (i) The first paragraph of Section 6 of the Stock Restriction Agreement is hereby amended to read in its entirety as follows: "6. OPTION TO PURCHASE FOUNDERS' SHARES. Subject to the provisions of Section 6(b) hereof, the Founders hereby grant to WorldCorp the option (the "Option"), exercisable after September 10, 1991, to purchase 4,757,679 of the outstanding shares of Common Stock held by such Founders (the "Optioned Shares")." (ii) Section 6(a) of the Stock Restriction Agreement is hereby amended to read in its entirety as follows: "(a) The exercise price of the Optioned Shares (the "Exercise Price") shall be $3,885,249 payable as follows: October 14, 1994 $ 400,000 Cash 171,261WOA Shares (see below for Valuation and issue dates) February 2, 1995 $1,394,500 Cash $ 922,875 Worth of WOA shares (see below for Valuation and issue dates) For purposes hereof, WorldCorp Common Stock will be valued as follows: (1) any WorldCorp Common Stock to be issued based on the October 14, 1994 exercise shall be valued based on the average closing price reported on the New York Stock Exchange ("NYSE") for the 30 day period from August 3, 1994 through September 2, 1994, and shall be issued when the Company has filed with the Securities and Exchange Commission ("SEC") an effective Registration Statement on Form S-1, S-2 or S-3 covering the optioned shares; and (2) any WorldCorp Common Stock to be issued based on the February 2, 1995 exercise shall be valued based on the average closing price reported on the NYSE for the 30 day period from December 2, 1994 through January 2, 1995, and shall be issued when the Company has filed with the SEC an effective Registration Statement on Form S-1, S-2 or S-3 covering the optioned shares. (iii) Section 6(e) of the Stock Restriction Agreement is hereby amended to read in its entirety as follows: "(e) WorldCorp's option to purchase the Optioned Shares, granted under this Section 6, shall be exercised at the times, and in the manner, specified in Section 6(a) hereof." 3. EFFECT OF AMENDMENT. The Stock Restriction Agreement shall remain in full force and effect as modified by this Amendment. 4. HEADINGS. The headings contained in this Amendment are for reference purposes only, shall not be deemed a part of this Amendment and shall not affect in any way the meaning or interpretation of this Agreement. 5. COUNTERPARTS. This Amendment may be executed simultaneously in counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument. IN WITNESS WHEREOF, this Amendment has been duly executed and delivered by the parties hereto as of the date first above written. WORLDCORP, INC. By:/s/ T. Coleman Andrews, III Name: T. Coleman Andrews, III President and Chief Executive Officer WILLIAM F. GOROG /s/ William F. Gorog JONATHAN M. GOROG /s/ Jonathan M. Gorog PETER M. GOROG /s/ Peter M. Gorog HENRY R. NICHOLS /s/ Henry R. Nichols WILLIAM N. MELTON /s/ William N. Melton JOHN PORTER /s/ John Porter EX-4 3 EXHIBIT 4.6 CUSTOMER AGREEMENT EXHIBIT 4.6 SCOTT & STRINGFELLOW, INC. CUSTOMER AGREEMENT In consideration for you (the "Broker") opening or maintaining one or more accounts (the "Account") for the undersigned (the "Customer"), the Customer agrees to the terms and conditions contained in this Agreement. The heading of each provision of this Agreement is for descriptive purposes only and shall not be deemed to modify or qualify any of the rights or obligations set forth in each such provision. For purposes of this Agreement, "securities and other property" means, but is not limited to, money, securities, financial instruments and commodities of every kind and nature and related contacts and options, except that the provisions of paragraph 21 herein (the arbitration clause) shall not apply to commodities accounts. This definition includes securities or other property currently or hereafter held carried or maintained by you or any of your affiliates, in your possession or control, or in the possession or control of any such affiliate, for any purpose, in and for any of my accounts now or hereafter opened, including any account in which I may have an interest. 1. APPLICABLE RULES AND REGULATIONS. All transactions in the Customer's Account shall be subject to the constitution, rules, regulations, customs and usages of the exchange or market, and its clearing house, if any, where the transactions are executed by the Broker or its agents, including its subsidiaries and affiliates. Also, where applicable, the transactions shall be subject (a) to the provisions of (1) the Securities Exchange Act of 1934, as amended, and (2) the Commodities Exchange Act, as amended; and (b) to the rules and regulations of (1) the Securities Exchange Commission, (2) the Board of Governors of the Federal Reserve System and (3) the Commodities Futures Trading Commission. 2. AGREEMENT CONTAINS ENTIRE UNDERSTANDING/ASSIGNMENT. This Agreement contains the entire understanding between the Customer and the Broker concerning the subject matter of this Agreement. Customer may not assign the rights and obligations hereunder without first obtaining the prior written consent of the Broker. 3. SEVERABILITY. If any provision of this Agreement is to be held invalid, void or unenforceable by reason of any law, rule, administrative order or judicial decision, that determination shall not affect the validity of the remaining provisions of this Agreement. 4. WAIVER. Except as specifically permitted in this Agreement, no provision of this Agreement can be, nor be deemed to be, waived, altered, modified or amended unless such is agreed to in a writing signed by the Broker. 5. DELIVERY OF SECURITIES. Without abrogating any of the Broker's rights under any other portion of this Agreement and subject to any indebtedness of the Customer to the Broker, the Customer is entitled, upon appropriate demand, to receive physical delivery of fully paid securities in the Customer's Account. 6. LIENS. All securities and other property of the Customer in any account in which the Customer has an interest shall be subject to a lien for the discharge of any and all indebtedness or any other obligation of the Customer to the Broker. All securities and other property of the Customer shall be held by the Broker as security for the payment of any such obligations or indebtedness to the Broker in any Account that the Customer may have an interest, and the Broker subject to applicable law may, at any time and without prior notice to the Customer, use and/or transfer any or all securities and other property interchangeably in any Account(s) in which the Customer has an interest (except regulated commodity Accounts). 7. PLEDGE OF SECURITIES AND OTHER PROPERTY. Within the limitations imposed by applicable laws, rules and regulations, all securities and other property of the Customer may be pledged and repledged and hypothecated and rehypothecated by the Broker from time to time, without notice to the Customer, either separately or in common with such other securities and other property of other bona fide customers of the Broker, for any amount due to the Broker in the Customer's Account(s). The Broker may do so without retaining in its possession or under its control for delivery a like amount of similar securities or other property. 8. INTEREST. Debit balances of the Account(s) of the Customer shall be charged with interest in accordance with the Broker's established custom, as disclosed to the Customer pursuant to the provisions of Rule 10b-16 of the Securities Exchange Act of 1934. I HAVE READ AND UNDERSTAND THE STATEMENT OF CREDIT PRACTICES DESCRIBING INTEREST CHARGES PRINTED ON THE REVERSE SIDE. 9. DISCLOSURES REGARDING LIQUIDATIONS AND COVERING POSITIONS. The Customer should clearly understand that, notwithstanding a general policy of giving customers notice of a margin deficiency, the Broker is not obligated to request additional margin from the Customer in the event the Customer's account falls below minimum maintenance requirements. More importantly, there may/will be circumstances where the Broker will liquidate securities and/or other property in the account without notice to the Customer to ensure that minimum maintenance requirements are satisfied. 10. LIQUIDATIONS AND COVERING POSITIONS. The Broker shall have the right in accordance with its general policies regarding margin maintenance requirements to require additional collateral on the liquidation of any securities and other property whenever Broker's discretion considers it necessary for its protection including in the event of, but not limited to: the failure of the Customer to promptly meet any call for additional collateral; the filing of a petition in bankruptcy by or against the Customer; the appointment of a receiver is filed by or against the Customer; an attachment is levied against any account of the Customer or in which the Customer has an interest or; the Customer's death. In such event, the Broker is authorized to sell any and all securities and other property in any account of the Customer whether carried individually or jointly with others, to buy all securities or other property which may be short in such account(s), to cancel any open orders and to close any or all outstanding contracts, all without demand for margin or additional margin, other notice of sale or purchase, or other notice or advertisement each of which is expressly waived by the Customer. Any such sales or purchases may be made at Broker's discretion on any exchange or other market where such business is usually transacted or at public auction or private sale, and Broker may be the purchaser for Broker's own account. It is understood a prior demand, or call, or prior notice of the time and place of such sale or purchase shall not be considered a waiver of Broker's right to sell or buy without demand or notice as herein provided. 11. MARGIN. The Customer agrees to maintain in all accounts with the Broker such positions and margins as required by all applicable statutes, rules, regulations, procedures and custom, or as the Broker deems necessary or advisable. The Customer agrees to promptly satisfy all margin and maintenance calls. 12. SATISFACTION OF INDEBTEDNESS. The Customer agrees to satisfy, upon demand, any indebtedness, and to pay any debit balance remaining when the Customer's Account is closed, either partially or totally. Customer Account(s) may not be closed without Broker first receiving all securities and other property for which the Account is short and all funds to pay in full for all securities and other property in which the Account(s) are long. 13. TRANSACTIONS AND SETTLEMENTS. All orders for the purchase or sale of securities and other property will be authorized by the Customer and executed with the understanding that an actual purchase or sale is intended and that it is the Customer's intention and obligation in every case to deliver certificates or commodities to cover any and all sales or to pay for any purchase upon the Broker's demand. If the Broker makes a short sale of any securities and other property at the Customer's direction or if the Customer fails to deliver to the Broker any securities and other property that the Broker has sold at the Customer's direction, the Broker is authorized to borrow the securities and other property necessary to enable the Broker to make delivery and the Customer agrees to be responsible for any cost or loss the Broker may incur, or the cost of obtaining the securities and other property if the Broker is unable to borrow it. The Broker is the Customer's agent to complete all such transactions and is authorized to make advances and expend monies as are required. 14. SALES BY CUSTOMER. The Customer understands and agrees any order to sell "short" will be designated as such by the Customer, and that the Broker will mark the order as "short." All other sell orders will be for securities owned ("long"), at that time, by the Customer. By placing the order the Customer affirms that he will deliver the securities on or before the settlement date. 15. BROKER AS AGENT. The Customer understands that the Broker is acting as the Customer's agent, unless the Broker notifies the Customer, in writing before the settlement date for the transaction, that the Broker is acting as a dealer for its own account or as agent for some other person. 16. CONFIRMATIONS AND STATEMENTS. Confirmations of transactions and statements for the Customer's Account(s) shall be binding upon the Customer if the Customer does not object, in writing, within ten days after receipt by the Customer. Notice or other communications, including margin and maintenance calls delivered or mailed to the address given below shall, until the Broker has received notice in writing of a different address, be deemed to have been personally delivered to the Customer whether actually received or not. 17. SUCCESSORS. Customer hereby agrees that this Agreement and all the terms thereof shall be binding upon Customer's heirs, executors, administrators, personal representatives, and assigns. This Agreement shall inure to the benefit of the Broker's present organization, and any successor organization, irrespective of any change or changes at any time in the personnel thereof, for any cause whatsoever. 18. CHOICE OF LAWS. THIS AGREEMENT SHALL BE DEEMED TO HAVE BEEN MADE IN THE STATE OF VIRGINIA AND SHALL BE CONSTRUED, AND THE RIGHTS AND LIABILITIES OF THE PARTIES DETERMINED, IN ACCORDANCE WITH THE LAWS OF THE STATE OF VIRGINIA. 19. CAPACITY TO CONTRACT, CUSTOMER AFFILIATION. By signing below, the Customer represents that he/she is of legal age, and that he/she is not an employee of any exchange, or of any corporation of which any exchange owns a majority of the capital stock, or of a member of any exchange, or of a member firm or member corporation registered on any exchange, or of a bank, trust company, insurance company or of any corporation, firm or individual engaged in the business of dealing, either as broker or as principal, in securities, bills of exchange, acceptances or other forms of commercial paper, and that the Customer will promptly notify the Broker in writing if the Customer is now or becomes so employed. The Customer also represents that no one except the Customer has an interest in the account or accounts of the Customer with you. 20. DISCLOSURES TO ISSUERS. Under Rule 14b- 1(c) of the Securities Exchange Act of 1934, we are required to disclose to an issuer the name, address and securities position of our customers who are beneficial owners of that issuer's securities unless the customer objects. Therefore, please check one of the boxes below: ( ) Yes. I do object to the disclosure of such information. (X) No. I do not object to the disclosure of such information. 21. LOAN OR PLEDGE OF SECURITIES. THE CUSTOMER HEREBY AUTHORIZES THE BROKER TO LEND EITHER TO ITSELF OR TO OTHERS ANY SECURITIES HELD BY THE BROKER IN THE CUSTOMER'S MARGIN ACCOUNT AND TO CARRY SUCH PROPERTY IN ITS GENERAL LOANS. SUCH PROPERTY MAY BE PLEDGED, REPLEDGED, HYPOTHECATED OR REHYPOTHECATED EITHER SEPARATELY OR IN COMMON WITH OTHER SUCH PROPERTY FOR ANY AMOUNTS DUE TO THE BROKER THEREON OR FOR A GREATER SUM AND THE BROKER SHALL HAVE NO OBLIGATION TO RETAIN A LIKE AMOUNT OF SIMILAR PROPERTY IN ITS POSSESSION AND CONTROL. 22. Upon the effectiveness of an S-3 registration statement filed by Customer with respect to the pledged collateral, and receipt of opinion letters satisfactory to Scott & Stringfellow, Broker will lend funds pursuant to the terms of this Customer Agreement. 23. This Customer Agreement has been modified by and is subject to the provisions of the letter agreement from Scott & Stringfellow to the WorldCorp ESOP of even date herewith, and the Registration Rights Agreement between Scott & Stringfellow and WorldCorp and WorldCorp's Guarantee Agreement, all of even date herewith. /s/ William F. Gorog WorldCorp Employee Savings and Stock Ownership Trust William F. Gorog, Trustee 13873 Park Center Road Herndon, VA 22071 METHOD OF COMPUTING INTEREST ON YOUR ACCOUNT INTEREST CHARGE An interest charge will be imposed for any statement period during which your average daily debit balance is greater than zero. The normal statement period will end on the last Friday in each month, but will end on the last business day of December. The statement period may be for some fraction of a normal statement period on opening or closing your account. Interest will ordinarily be calculated through the last Friday of the normal statement period and will ordinarily be charged to the account on the last Friday of the normal statement period. In December, interest will ordinarily be calculated through the last business day of December and will ordinarily be charged to the account on the last business day of December. DETERMINATION OF INTEREST RATE The annual rate of interest to be applied each time interest is charged to your account will depend upon and will vary with the size of your average daily debit balance for the period and with the average call money rate in effect during the interest period, in accordance with the following schedule: If Your Average Daily Debit The Annual Interest Rate Balance for the Period is: Applied Will Be: $0 to $24,999 1 3/4 above the average call money rate for the period $25,000 and above 1 1/2 above the average call money rate for the period The call money rate is based on published rates for call money lent brokers on stock exchange collateral or call money rates quoted by commercial banks, as determined by Scott & Stringfellow Investment Corp. Under no circumstance will the call money rate used to determine the interest rate exceed the cost of borrowing money. "Cost of borrowing money" shall be the higher of (a) the interest rate charged Scott & Stringfellow Investment Corp. by a bank doing business in Virginia on loans collateralized by securities; or (b) the interest rate charged Scott & Stringfellow Investment Corp. by a bank doing business in Virginia on loans for business purposes. Your average daily debit balance for each interest period will be computed by adding each daily debit balance in your account and dividing that sum by the number of days in that period. You will be given at least 30 days prior written notice of any changes in the terms and conditions under which interest is charged other than changes which are explained herein, are required by law or result in lower interest charges. CALCULATION OF INTEREST CHARGES To compute the interest charge to be made to your account for any period of time, multiply the average daily debit balance for such period by the applicable interest rate and by the number of days in the period and divide that product by 360. Any credit or debit balance in the cash account will be combined with the balance in the margin account for the purpose of computing interest. A credit balance in any short account will not reduce the average daily debit balance in your margin account because such credit balances are normally used to collateralize the borrowing of stock to make delivery against the short sale. However, short sale positions will be marked to the market weekly and such changes resulting therefrom will affect the debit balance in your margin account. Therefore, if such change results in a credit, such credit will be transferred to your margin account as a credit; and conversely, if such change results in a debit, such debit will be transferred as a debit to your margin account. COLLATERAL By virtue of the Customer's Agreement which you have executed, or will execute upon opening a margin account with us, we have or will have a general lien on all monies, securities or other properties we may at any time be carrying for you or which may be in our possession for any purpose, including safekeeping, to secure the discharge of all your obligations to us. Notwithstanding you may have deposited monies, securities or other properties with us sufficient to satisfy the margin requirements of any law, rule or regulation enacted or promulgated by any government regulatory body or authority, we expressly reserve the right to require you at any time, and from time to time, to deliver to us such additional collateral as we, in our sole discretion, may deem necessary to adequately secure us in the discharge of all your obligations to us. This notice is written to conform with Securities and Exchange Commission Rule 10b-16. Should you have any questions, please let us suggest that you talk to your Investment Broker. SCOTT & STRINGFELLOW, INC. P.O. BOX 1575 RICHMOND, VA 23213 (804) 643-1811 (800) 552-7757 EX-4 4 EXHIBIT 4.7 GUARANTEE AGREEMENT EXHIBIT 4.7 GUARANTEE AGREEMENT THIS GUARANTEE AGREEMENT (the "Agreement") is made this 11th day of January, 1995, by Worldcorp, Inc., a corporation organized under the laws of the State of Delaware (the "Guarantor") for the benefit of Scott & Stringfellow, Inc. (the "Lender"). WHEREAS, the WorldCorp Employee Savings and Stock Ownership Trust (the "Borrower") has applied to the Lender for a margin loan (the "Loan") which is to be advanced pursuant to the terms of a Customer Agreement of even date herewith (the Customer Agreement, together with any and all amendments and modifications thereto, renewals and extensions thereof and substitutes therefor are herein collectively referred to as the "Loan Agreement"); and WHEREAS, the Guarantor has requested the Lender to enter into the Loan Agreement with the Borrower and to make the Loan to the Borrower pursuant thereto; and WHEREAS, the Lender has required, as a condition of making the Loan, the execution of this Agreement by the Guarantor. NOW, THEREFORE, in order to induce the Lender to make the Loan to Borrower, the Guarantor covenants and agrees with the Lender as follows: I. The Guaranty. 1. The Guarantor hereby unconditionally and irrevocably guarantees to the Lender: A. the payment in full (and not merely the collectibility) of the principal of the Loan and the interest thereon, and the full amount of any margin call, in each case when due and payable according to the terms of the Loan Agreement; B. the payment in full of all other sums and charges which at any time may be due and payable in accordance with the Loan Agreement; and C. the due and punctual performance of all of the other terms, covenants and conditions contained in the Loan Agreement. This Guarantee is not limited by the non-recourse nature of the Loan Agreement. In this regard, the amount of the principal, interest, margin calls and other sums payable under the Loan Agreement shall be determined without regard to the non-recourse nature of the Loan Agreement, and the obligations of the Borrower shall not be deemed to be limited by the non-recourse nature of the Loan Agreement. 2. The obligations and liabilities of the Guarantor under this Agreement shall be absolute, unconditional, irrespective of the genuineness, validity, priority, regularity or enforceability of the Loan Agreement or any other circumstance which might otherwise constitute a legal or equitable discharge of a surety or guarantor. The Guarantor expressly agrees that the Lender may, in its sole and absolute discretion, without notice to or further assent of the Guarantor and without in any way releasing, affecting or in any way impairing the obligation and liabilities of the Guarantor hereunder: A. waive compliance with, or any defaults under, or grant any other indulgences under or with respect to the Loan Agreement; B. grant extensions or renewals of or with respect to the Loan Agreement; C. effect any release, subordination, compromise or settlement in connection with the Loan Agreement; and D. make advances for the purpose of performing any term, provision or covenant contained in the Loan Agreement with respect to which the Borrower shall then be in default. 3. The obligations and liabilities of the Guarantor under this Agreement shall be primary, direct and immediate, shall not be subject to any counterclaim, recoupment, set off, reduction or defense based upon any claim that the Guarantor may have against the Borrower and/or the Lender and shall not be conditional or contingent upon pursuit or enforcement by the Lender of any remedies it may have against the Borrower with respect to the Loan Agreement, whether pursuant to the terms thereof or by operation of law. Without limiting the generality of the foregoing, the Lender shall not be required to make any demand upon the Borrower, or to sell the Collateral or otherwise pursue, enforce or exhaust its remedies against the Borrower or the Collateral either before, concurrently with or after pursuing or enforcing its rights and remedies hereunder. Any one or more successive or concurrent actions or proceedings may be brought against the Guarantor under this Agreement, either in the same action, if any, brought against the Borrower or in separate actions or proceedings, as often as the Lender may deem expedient or advisable. Without limiting the forgoing, it is specifically understood that any modification, limitation or discharge of any of the liabilities or obligations of the Borrower, the Guarantor or any obligor under the Loan Agreement, arising out of, or by virtue of, any bankruptcy, arrangement, reorganization or similar proceeding for relief of debtors under federal or state law initiated by or against the Borrower or the Guarantor or any obligor under the Loan Agreement shall not modify, limit, lessen, reduce, impair, discharge, or otherwise affect the liability of the Guarantor hereunder in any manner whatsoever, and this Agreement shall remain and continue in full force and effect. It is the intent and purpose of this Agreement that the Guarantor shall and does hereby waive all rights and benefits which might accrue to the Guarantor by reason of any such proceeding, and the Guarantor agrees that it shall be liable for the full amount of the obligations and liabilities under this Agreement, regardless of, and irrespective to, any modification, limitation or discharge of the liability of the Borrower, the Guarantor or any obligor under the Loan Agreement, that may result from such proceedings. 4. The Guarantor hereby unconditionally, irrevocably and expressly waives: A. presentment and demand for payment of the principal or of the interest under the Loan and protest of non-payment; B. notice of acceptance of this Agreement and of presentment, demand and protest thereof; C. notice of any default hereunder or under the Loan Agreement and notice of all indulgences except such notices as are specifically provided for in this Agreement; D. demand for observance, performance or enforcement of any of the terms or provisions of this Agreement or the Loan Agreement; E. any right or claim of right to cause a marshalling of the assets of the Borrower; and F. all other notices and demands otherwise required by law which the Guarantor may lawfully waive. 5. In the event the Lender shall commence any action or proceeding for the enforcement of this Agreement, then the Guarantor will reimburse the Lender, promptly upon demand, for any and all expenses incurred by the Lender in connection with such action or proceeding including, without limitation, reasonable attorney's fees together with interest thereon. II. Representation and Warranties 1. The Guarantor: A. is duly organized, validly existing and in good standing under the laws of the State of its organization; B. has the power and authority to own its properties and to carry on its business as now being conducted; C. is qualified to do business in every jurisdiction in which the nature of its business or its properties makes such qualification necessary; and D. is in material compliance with all laws, regulations, ordinances and orders of public authorities applicable to it. 2. The execution, delivery and performance by the Guarantor of this Agreement (a) is within the powers of the Guarantor; (b) has been duly authorized by all requisite action of the Guarantor; (c) has received all necessary governmental and other approvals; and (d) will not violate any provision of law, any order of court or other agency of government, the articles of incorporation or by-laws of the Guarantor or any indenture, agreement or other instrument to which the Guarantor is a party or by which the Guarantor or any of its property is bound or be in conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any such indenture, agreement, or other instrument or result in the creation or imposition of any lien, charge or encumbrance of any nature whatsoever upon any of their property or assets except as contemplated in this Agreement. III. Affirmative Covenants 1. The Guarantor will do any and all things necessary to preserve and keep in full force and effect its existence, franchises, rights, privileges and trade names as a corporation under the laws of the State of its incorporation and in every jurisdiction in which the nature of its business or its properties makes qualification to do business necessary. 2. The Guarantor will make, execute, acknowledge and deliver all and every such further acts and assurances as the Lender shall from time to time require for confirming or carrying out the intentions or facilitating the performance of the terms of this Agreement. IV. Miscellaneous 1. In the event any provision of this Agreement (or any part of any provision) is held by a court of competent jurisdiction to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision (or remaining part of the affected provision) of this Agreement; but this Agreement shall be construed as if such invalid, illegal, or unenforceable provision (or part thereof) had not been contained in this Agreement, but only to the extent it is invalid, illegal, or unenforceable. 2. All of the grants, covenants, terms, provisions and conditions of this Agreement shall inure to the benefit of, and be enforceable by, the Lender and its successors and assigns, and shall be binding upon, and enforceable against, the Guarantor and its successors and assigns. 3. No modification or waiver of any provision of this Agreement shall in any event be effective unless the same shall be in writing, and then such waiver or consent shall be effective only in the specific instance and for the purposes for which given. None of the terms or provisions of this Agreement shall be deemed to have been abrogated or waived by reason of any failure or failures to enforce the same or by any course of conduct by the Lender. 4. The captions and headings contained in this Agreement are included herein for convenience of reference only and shall not be considered a part hereof and are not in any way intended to define, limit or enlarge the terms hereof. 5. This Agreement may be executed in any number of counterparts, each of which shall be considered an original for all purposes; provided, however, that all such counterparts shall together constitute one and the same instrument. 6. This Agreement shall be governed by the laws of the Commonwealth of Virginia. 7. All notices, demands, requests and other communications required pursuant to the provisions of this Agreement shall be in writing and shall be deemed to have been properly given or served for all purposes when delivered by hand, or sent by overnight courier or by certified mail, postage prepaid, return receipt requested, to the respective addresses as follows: (a) If to Lender: Scott & Stringfellow, Inc. 909 East Main Street Richmond, VA 23219 Attention: Steven DeLaney (b) If to Guarantor: WorldCorp, Inc. 13873 Park Center Road Herndon, VA 22071 Attention: General Counsel Any of the parties hereto may designate a change of address by notice in writing to the other parties. Whenever in this Agreement the giving of notice by mail or otherwise is required, the giving of such notice may be waived in writing by the person or persons entitled to receive such notice. 8. This Agreement shall be a continuing one and shall be binding upon the Guarantor regardless of how long before or after the date hereof any of the obligations and liabilities were or are incurred. This Agreement shall end on the date when, after termination of the Loan in accordance with the provisions thereof, there shall be no obligations or liabilities under this Agreement outstanding. WITNESS the signature and seal of an authorized officer of the Guarantor as of the day and year first above written. WITNESS (OR ATTEST): WORLDCORP, INC. /s/ Andrew M. Paalborg _________________________ /s/ T. Coleman Andrews By:__________________________ T. Coleman Andrews Chief Executive Officer and President STATE/COMMONWEALTH OF VIRGINIA COUNTY/CITY OF FAIRFAX, TO WIT: I HEREBY CERTIFY, that on this 11th day of January, 1995, before me, a Notary Public of said State/Commonwealth, personally appeared T. Coleman Andrews, III, who acknowledged himself to be the Chief Executive Officer and President of WorldCorp, Inc., a Delaware corporation, known to me to be the person whose name is subscribed to the foregoing instrument and acknowledged that he executed the same for the purposes therein contained as the fully authorized Chief Executive Officer and President of said corporation by signing the name of the corporation by himself as Chief Executive Officer and President. WITNESS my hand and Notarial Seal. /s/ Carol Bengston _____________________________ Notary Public My commission expires: EX-4 5 EXHIBIT 4.8 REGISTRATION RIGHTS AGREEMENT EXHIBIT 4.8 WORLDCORP, INC. REGISTRATION RIGHTS AGREEMENT JANUARY 11, 1995 REGISTRATION RIGHTS AGREEMENT This REGISTRATION RIGHTS AGREEMENT, dated as of January 11, 1995, by and between WORLDCORP, INC., a Delaware corporation (the "Company"), and SCOTT & STRINGFELLOW, INC. (the "Lender"). WHEREAS, the Lender has made a term loan in the amount of approximately $1,350,000 (the "Loan") to WORLDCORP EMPLOYEE SAVINGS AND STOCK OWNERSHIP TRUST (the "Borrower"), which Loan is (i) secured by a pledge by the Borrower to the Lender of an aggregate of 361,401 shares of Common Stock of the Company owned of record by the Borrower (the "Pledged Shares") and (ii) guaranteed by the Company; and WHEREAS, as a condition to the making of the Loan by the Lender to the Borrower, the Company has agreed to file a registration statement on Form S-3 (the "Registration Statement") with the Securities and Exchange Commission (the "SEC") pursuant to the Securities Act of 1933, as amended (the "Act"); and WHEREAS, the parties hereto wish to set forth certain agreements and understandings regarding the Registration Statement and the registration rights that have been granted to the Lender; NOW, THEREFORE, the parties hereto agree as follows: 1. Definition. For purposes of this Agreement, the term "Registrable Securities" means (i) the Pledged Shares, and (ii) any securities issued or issuable as a dividend or other distribution with respect to any of the Pledged Shares; provided, however, that as to any particular security or securities that are contained in the Registrable Securities, such securities shall cease to be Registrable Securities when (i) they are released from the pledge in favor of the Lender, (ii) they have been sold in accordance with the Registration Statement or (iii) they have been sold to the public pursuant to Rule 144 (or any successor provision) under the Act. 2. Obligations of the Company. The Company agrees: 2.1. To keep the Registration Statement effective for so long as there remain any Registrable Securities. 2.2. To promptly prepare and file with the SEC such amendments to the Registration Statement and such supplements to any prospectus or preliminary prospectus included in the Registration Statement as may be necessary to comply with the provisions of the Act with respect to the disposition of any or all of the Registrable Securities, and to use its best efforts to have any such amendment declared effective by the SEC. 2.3. To furnish to the Lender such numbers of copies of any prospectus or preliminary prospectus included in the Registration Statement and such other documents as the Lender may reasonably request in order to facilitate the disposition of the Registrable Securities. 2.4. To use its best efforts to register and qualify the Registrable Securities under the securities or "Blue Sky" laws of such jurisdictions as shall be reasonably requested by the Lender; provided, however, that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such jurisdiction. 3. Obligations of the Lender. The Lender agrees: 3.1. That the information furnished by it to the Company regarding itself, the number of Registrable Securities pledged to or held by it, and the intended method of disposition of the Registrable Securities was and is true and correct and will be updated by the Lender to the Company as necessary in order to enable the Company to maintain the effectiveness of the Registration Statement. 3.2. Not to make any sale of the Registrable Securities without causing its prospectus delivery requirements under the Act to be satisfied. 3.3. To notify the Company promptly (and in any event a reasonable time in advance of any sale) in the event the Lender enters into any material arrangement with any broker-dealer or other underwriter with respect to the Registrable Securities or otherwise plans to offer or sell any of the Registrable Securities in a manner that would require the prospectus included in the Registration Statement to be supplemented or the Registration Statement to be amended. 3.4. That there may occasionally be periods (each, a "black-out period") when the Company must suspend the use of the prospectus included in the Registration Statement until such time as an amendment to the Registration Statement has been filed by the Company and declared effective by the SEC or until such time as a supplement to such prospectus has been prepared and filed with the SEC, or until such time as the Company has filed an appropriate report with the SEC pursuant to the Securities Exchange Act of 1934, as amended (the "1934 Act"). The Company will use its best efforts to prevent any black-out period from exceeding 10 days. The Lender hereby covenants that it will not sell any Registrable Securities pursuant to said prospectus during any black- out period. A black-out period shall be deemed to commence at the time the Company gives the Lender notice of the suspension of the use of such prospectus and to end at the time the Company gives the Lender notice that the Lender may thereafter effect sales pursuant to such prospectus. 4. Registration Expenses. All expenses, other than underwriting discounts and commissions, incurred in connection with the registration of the Registrable Securities, including, without limitation, all registration, filing and qualification fees, accounting fees, fees and disbursements of counsel for the Company, and the reasonable fees and disbursements of one counsel for the Lender shall be borne by the Company. 5. Indemnification. 5.1. The Company agrees to indemnify and hold harmless the Lender and its officers and directors, any underwriter (as defined in the Act) of the Registrable Securities and each person, if any, who controls the Lender or such underwriter within the meaning of the Act or the 1934 Act (each, an "Indemnitee"), against any losses, claims, damages or liabilities (or actions in respect thereof) to which they may become subject under the Act, the 1934 Act, any state securities law or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any of the following statements, omissions or violations (collectively, a "Violation"): (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, any preliminary prospectus or prospectus contained therein or any amendments or supplements thereto, (ii) 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, or (iii) any violation or alleged violation by the Company of the Act, the 1934 Act, any state securities law or any rule or regulation promulgated under the Act or the 1934 Act or any state securities law; and the Company will pay to each such Indemnitee, as incurred, 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 the indemnity agreement contained in this Section 5.1 shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Company, which consent shall not be unreasonably withheld, nor shall the Company be liable in any such case for any such loss, claim, damage, liability or action to the extent that it arises out of or is based upon a Violation which occurs in reliance upon and in conformity with written information furnished expressly for use in connection with such registration by any such Indemnitee. 5.2. The Lender agrees to indemnify and hold harmless the Company, each of its directors, each of its officers who has signed the Registration Statement, each person, if any, who controls the Company within the meaning of the Act or the 1934 Act, any underwriter, and any controlling person of any underwriter against any losses, claims, damages or liabilities (joint or several) (or actions in respect thereof) to which any of the foregoing persons may become subject under the Act, the 1934 Act, any state securities law or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereto) arise out of or are based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written information furnished by the Lender expressly for use in connection with the Registration Statement; and the Lender will pay, as incurred, any legal or other expenses reasonably incurred by any person intended to be indemnified pursuant to this Section 5.2 in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the indemnity agreement contained in this Section 5.2 shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Lender, which consent shall not be unreasonably withheld; provided, further, however, that, in no event shall any indemnity under this Section 5.2 exceed the gross proceeds from such registration received by the Lender. 5.3. Promptly after receipt by an indemnified party under this Section of notice of the commencement of any action (including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section, deliver to the indemnifying party a written notice of the commencement thereof, and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties, provided, however, that an indemnified party (together with all other indemnified parties that may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such proceeding. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action, if prejudicial to its ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party under this Section to the extent of such prejudice, but the omission so to deliver written notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section. 5.4. The obligations of the Company and the Lender under this Section shall survive the completion of any offering of Registrable Securities under this Agreement. 6. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but both of which together shall constitute one and the same instrument. 7. Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement. 8. Notices. Unless otherwise provided, any notice required or permitted under this Agreement shall be given in writing and shall be deemed effectively given upon personal delivery to the party to be notified or upon deposit with a reputable overnight courier or with the United States Post Office, by registered or certified mail, postage prepaid and addressed to the party to be notified at the principal executive office of such party, or at such other address as such party may designate by ten (10) days' advance written notice to the party to be notified. 9. Governing Law. This Agreement shall be governed by and construed under the laws of the State of New York without regard to conflicts of law principles. 10. Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provisions shall be excluded from this Agreement and the balance of this Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. WORLDCORP, INC. By: /s/ T. Andrews Coleman, III Name: T. Andrews Coleman, III Title: Chief Executive Officer and President SCOTT & STRINGFELLOW, INC. By: /s/ Steven C. DeLaney Name: Steven C. DeLaney Title: First Vice President and Chief Financial Officer EX-4 6 EXHIBIT 4.9 LETTER AGREEMENT EXHIBIT 4.9 January 11, 1995 Mr. William F. Gorog, Trustee WorldCorp Employee Savings and Stock Ownership Plan 13873 Park Center Road Herndon, Virginia 22071 Re: Supplemental Terms and Provisions to Customer Agreement Dated January 11, 1995 Dear Mr. Gorog: This letter agreement sets forth certain terms and provisions which are supplemental to the terms of a Customer Agreement dated January 11, 1995, for a margin loan to the WorldCorp ESSOP. The following terms and provisions shall apply to this account: 1) The maintenance equity requirement for this margin account will be 40% as required by NYSE rules for margin accounts of Rule 144 affiliates. In the event that the stock price closes at $4.00 or lower for 5 consecutive trading days, the maintenance equity requirement will increase to 50%, and it will increase to 60% if the stock closes at $3.00 per share for 5 consecutive trading days. The initial debit may not exceed 50% of the market value of the collateral shares. 2) Margin calls must be met within five (5) business days from the date of issuance. 3) If the price of WorldCorp common stock should close at $2.00 or lower, the shares will be moved to a cash account and the outstanding margin loan shall be repaid in full within 24 hours. Thereafter, the shares may not be transferred back to the margin account until the stock returns to the $5.00 level. 4) Scott & Stringfellow will not lend or deliver the collateral shares at any time to another broker-dealer and the shares will at all times remain in the possession and control of Scott & Stringfellow. 5) The arbitration clauses contained in paragraphs 20 and 21 of the Customer Agreement shall have been eliminated due to ERISA considerations. 6) The interest rate which shall apply to this margin loan will be based on the broker call rate as quoted in the Wall Street Journal plus 100 basis points. 7) It is our understanding that the WorldCorp ESSOP expects that the margin debit will be reduced by approximately $90,000 per calendar quarter. Scott & Stringfellow agrees upon each such payment of principal to release the number of shares determined pursuant to the release provisions in section 6(d)(1) of the ESSOP. To the extent such release of shares violates the margin requirements of the Loan Agreement, WorldCorp will provide collateral or make a contribution adequate to meet such margin requirement or cure any resulting default. 8) This loan is a non-recourse obligation of the ESSOP. With respect to recourse against the ESSOP, Scott & Stringfellow will look only to the collateral held by it for satisfaction of any amounts due. Notwithstanding the foregoing, Scott & Stringfellow may look to WorldCorp pursuant to the Guarantee Agreement for full payment of all amounts owed under the loan (such amounts to be determined without regard to the non-recourse nature of the loan). Payments made by the ESSOP of principal and interest on the loan shall not exceed the sum of all contributions (excluding any contributions of stock of the Company) that are made to the ESSOP by the Company to enable the ESSOP to meet its obligations under the Loan Agreement, any earnings on such Company contributions, and any cash dividends on the shares of the Company stock purchased with the proceeds of the prior loan refinanced by this Loan (whether or not such shares have been released from pledge hereunder). Notwithstanding the foregoing provisions, the Trustees of the ESSOP may apply the proceeds from the sale of any shares remaining subject to pledge hereunder to pay principal and accrued interest due on the loan in the event of the sale of the Company or the termination of the ESSOP or if the ESSOP ceases to be an employee stock ownership plan under section 4975(e)(7) of the Internal Revenue Code. 9) The loan is due and payable May 23, 1996, unless earlier repaid or unless earlier payment in part or full is required pursuant to the terms of the Loan Agreement. 10) Upon the occurrence of an event of default as defined below, all principal and accrued interest under the loan shall be immediately due and payable, and, without limiting any other rights it may have, Scott & Stringfellow may take any action described in Section 10 of the Customer Agreement. An event of default shall include (i) any breach by the ESSOP of any of its obligations under the Customer Agreement or this letter agreement, (ii) the occurrence of any of the circumstances described in Section 10 of the Customer Agreement which would give Scott & Stringfellow the right to take any of the actions specified therein, (iii) a lapse in the effectiveness of the registration statement filed pursuant to the Registration Rights Agreement between Scott & Stringfellow and WorldCorp or any breach by WorldCorp of any obligation under the Registration Rights Agreement, or (iv) any black-out period pursuant to the Registration Rights Agreement exceeds 20 days. Please indicate your knowledge and acceptance of these supplemental terms and provisions by signing where indicated below. Thank you. Sincerely, SCOTT & STRINGFELLOW, INC. /s/ Steven C. DeLaney ______________________________________ Steven C. DeLaney First Vice President and Chief Financial Officer SCD ACCEPTED. WORLDCORP EMPLOYEE SAVINGS AND STOCK OWNERSHIP PLAN /s/ William F. Gorog By:____________________________________ William F. Gorog, Trustee EX-4 7 EXHIBIT 4.10 LETTER EXHIBIT 4.10 January 11, 1995 Mr. William F. Gorog, Trustee WorldCorp Employee Savings and Stock Ownership Trust 13873 Park Center Road Herndon, VA 22071 Re: Commitment to Make Contributions Dear Mr. Gorog: This letter sets forth WorldCorp, Inc.'s commitment to make contributions to the WorldCorp Employee Savings and Stock Ownership Plan (the "ESSOP"), for the duration of the Scott & Stringfellow loan to the ESSOP, under the following circumstances and to the following extent: 1. To the extent there is, or the ESSOP anticipates, an event of default pursuant to the terms of the Loan Agreement with Scott & Stringfellow, WorldCorp agrees to make a loan or a contribution, in its discretion, adequate to avoid or cure an event of default; 2. To the extent the margin requirements of the Loan Agreement with Scott & Stringfellow would be or are violated by the release of shares for participants' accounts as required by section 6(d)(1) of the ESSOP, WorldCorp agrees to make contributions to the extent necessary to satisfy the margin requirements. WorldCorp reserves the right, in the event the entire loan becomes due and payable in the event of default, to seek a substitute lender for the ESSOP or become such substitute lender. WORLDCORP, INC. By: /s/ T. Coleman Andrews, III T. Coleman Andrews, III Chief Executive Officer and President EX-5 8 EXHIBIT 5.1 OPINION EXHIBIT 5.1 January 12, 1995 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 Re: Registration Statement on Form S-3 Dear Ladies and Gentlemen: I am Vice President and General Counsel of WorldCorp, Inc., a Delaware corporation (the "Company"). The Company has filed a Registration Statement on Form S-3 (the "Registration Statement") with the Securities and Exchange Commission relating to the sale of 302,278 shares (the "Founders Shares") of common stock, par value $1.00 per share (the "Common Stock"), of WorldCorp, Inc. ("WorldCorp" and, together with its subsidiaries, the "Company") issued to William F. Gorog and Jonathan M. Gorog (together, the "Gorogs"), Henry R. Nichols, William N. Melton and John Porter (collectively, the "US Order Founders"), the founders of US Order, Inc. ("US Order") and 361,401 shares (the "Pledged Shares") of Common Stock offered for the account of Scott & Stringfellow, Inc. (the "Pledge Holder"), the pledgee of the Pledged Shares under a loan to the WorldCorp Employee Savings and Stock Ownership Plan (the "ESSOP"). This opinion is delivered in accordance with the requirements of Item 601(b)(5) of Regulation S-K under the Securities Act of 1933, as amended (the "Act"). In connection with this opinion, I have reviewed such documents as I have deemed necessary or appropriate as a basis for the opinion set forth below. In my examination, I have assumed the genuineness of all signatures, the legal capacity of all natural persons, the authenticity of all documents submitted to me as originals, the conformity to original documents of all documents submitted to me as certified or photostatic copies, and the authenticity of the originals of such copies. As to any facts material to this opinion that I did not independently establish or verify, I have relied upon representations or certificates of the officers and directors of the Company. I am a member of the District of Columbia Bar, Virginia Bar and New York Bar and I express no opinion as to the laws of any other jurisdiction except the General Corporation Law of the State of Delaware. Based upon the foregoing, and subject to the qualifications set forth herein, I am of the opinion that the Founders Shares and the Pledged Shares have been duly and validly issued, fully paid and nonassessable. I hereby consent to the filing of this opinion as Exhibit 5.1 to the Registration Statement and to the use of my name in the Prospectus that is a part of the Registration Statement. Very truly yours, /s/ Andrew M. Peaalborg Andrew M. Paalborg Vice President and General Counsel EX-23 9 EXHIBIT 23.1 CONSENT EXHIBIT 23.1 CONSENT OF INDEPENDENT AUDITORS The Board of Directors WorldCorp, Inc.: We consent to the use of our reports included or incorporated by reference in WorldCorp's Annual Report on Form 10-K for the year ended December 31, 1993, incorporated herein by reference and to the reference to our firm under the heading "Experts" in the prospectus. Our report on the consolidated financial statements refers to changes in the methods of accounting for postretirement benefits other than pensions and income taxes. KPMG PEAT MARWICK LLP Washington, D.C. January 12, 1995 -----END PRIVACY-ENHANCED MESSAGE-----