<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
AIR EXPRESS INTERNATIONAL CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
AIR EXPRESS INTERNATIONAL CORPORATION
120 TOKENEKE ROAD
DARIEN, CONNECTICUT 06820
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 18, 1998
----------------
To our Shareholders:
The Annual Meeting of Shareholders of Air Express International Corporation
(the "Company") will be held at the Hyatt Regency Greenwich, 1800 East Putnam
Avenue, Old Greenwich, Connecticut, on Thursday, June 18, 1998, at 11:00 a.m.,
Eastern Daylight Time, for the following purposes:
(1) To elect eight (8) directors;
(2) To approve an amendment to the Company's Certificate of Incorporation to
increase the number of shares of Common Stock, $.01 par value, which the
Company shall be authorized to issue from 40,000,000 to 100,000,000;
(3) To approve an amendment to the Company's 1996 Incentive Stock Plan to
increase the number of shares of Common Stock reserved thereunder from 750,000
to 1,350,000; and
(4) To transact such other business as properly may come before the meeting
or any adjournment thereof.
The Board of Directors has fixed the close of business on May 7, 1998, as
the record date for the determination of shareholders entitled to notice of,
and to vote at, the meeting.
By Order of the Board of Directors
Daniel J. McCauley, Secretary
May 19, 1998
Darien, Connecticut
----------------
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE,
SIGN, AND MAIL THE ACCOMPANYING FORM OF PROXY TO THE COMPANY AS PROMPTLY AS
POSSIBLE IN THE ENCLOSED STAMPED ENVELOPE.
<PAGE>
AIR EXPRESS INTERNATIONAL CORPORATION
120 TOKENEKE ROAD
DARIEN, CONNECTICUT 06820
----------------
PROXY STATEMENT
----------------
The accompanying proxy is solicited by the Board of Directors of Air Express
International Corporation (the "Company") in connection with the Annual
Meeting of Shareholders to be held on Thursday, June 18, 1998, or at any
adjournment thereof, for the purposes set forth in the accompanying notice of
the meeting. The Board of Directors has fixed the close of business on May 7,
1998, as the record date for the determination of shareholders entitled to
notice of, and to vote at, the meeting. On that date, there were outstanding
34,752,028 shares of Common Stock. Each holder of Common Stock is entitled to
one vote for each share held on all matters to come before the meeting,
including the election of directors. Shares may be voted in person or by
proxy. The accompanying proxy may be revoked by the person giving it at any
time prior to its being voted by filing a written notice of such revocation
with the Secretary of the Company or by attending the meeting and voting in
person. This proxy statement and the accompanying form of proxy are first
being sent or given to security holders on or about May 19, 1998.
A majority of the outstanding shares entitled to vote must be present in
person or represented by proxy at the meeting to constitute a quorum. The
shares represented by a proxy which is timely returned and marked "Abstain" as
to any matter as well as broker non-votes will be considered present at the
meeting and will be included in the calculation of those shares needed to
constitute a quorum. Except for Proposal 2 (the amendment of the Company's
Certificate of Incorporation), the shares represented by such proxies,
although considered present for quorum purposes, will not be considered a part
of the voting power present with respect to any proposal which is abstained
from or to which the broker non-vote relates. With respect to Proposal 2,
which requires the affirmative vote of a majority of the outstanding shares
entitled to vote, an abstention or a broker non-vote is the equivalent of a
negative vote.
PROPOSAL 1
ELECTION OF DIRECTORS
NOMINEES AND VOTE REQUIRED
Eight directors are to be elected at the Annual Meeting, each to serve until
the next Annual Meeting of Shareholders and until his successor has been duly
elected and qualifies. If no direction to the contrary is given, all proxies
received by the Board of Directors will be voted in favor of the nominees
listed below. If any nominee is unable or declines to serve, an event not now
anticipated by the Board of Directors, such proxies may be voted for the
election of a substitute designated by the Board of Directors. Each of the
nominees is currently serving as a director of the Company and was elected to
that position at the last Annual Meeting of Shareholders.
A plurality of the votes of the shares present in person or represented by
proxy at the meeting shall be needed for the election of a director.
1
<PAGE>
The following table sets forth information with respect to each nominee for
election as a director at the Annual Meeting:
<TABLE>
<CAPTION>
DIRECTOR
PRINCIPAL OCCUPATION AND OTHER CONTINUOUSLY
NAME AGE DIRECTORSHIPS SINCE
------------------------ --- ---------------------------------- ------------
<S> <C> <C> <C>
John M. Fowler.......... 49 Executive Vice President and Chief 1985
Financial Officer, MoneyGram
Payment Systems, Inc. since
October 1996. Independent business
consultant from July 1995 through
October 1996. Executive Vice
President of Travelers Group Inc.
(formerly Primerica Corporation),
New York, New York, 1991 through
June 1995. Director of
Transatlantic Holdings, Inc. and
MoneyGram Payment Systems, Inc.
Hendrik J. Hartong, 59 Chairman of the Board of the 1985
Jr. ................... Company since 1985 (Chief
Executive Officer from 1985 to
1989); General Partner since 1985
of Brynwood Management, since 1988
of Brynwood Management II and
since 1996 of Brynwood Management
III, entities that serve,
respectively, as the managing
general partner of Brynwood
Partners Limited Partnership,
Brynwood Partners II L.P. and
Brynwood Partners III, L.P.,
private investment partnerships.
Director of Hurco Companies, Inc.
Donald J. Keller........ 66 Chairman of the Board of Vlasic 1990
Foods International, Inc. since
December 1997. Chairman of the
Board of Prestone Products
Corporation from January 1995
through June 1997. Chairman of the
Board of B. Manischewitz Company
from March 1993 until May 1998
(President, Co-Chief Executive
Officer and a director from May
1992 through March 1993). Director
of Dan River Inc.
Andrew L. Lewis IV...... 41 President, KRR Partners L.P., a 1986
private investment partnership,
since July 1993. Independent
business consultant from July 1990
to March 1993. Chief Executive
Officer of Environmental
Management Services, an
environmental consulting firm,
from 1988 to 1990. Director of
Hurco Companies, Inc. and
Independence Blue Cross of
Philadelphia.
Richard T. Niner........ 58 General Partner since 1985 of 1985
Brynwood Management and since 1988
of Brynwood Management II,
entities that serve, respectively,
as the managing general partner of
Brynwood Partners Limited
Partnership and Brynwood Partners
II L.P., private investment
partnerships. Director of Arrow
International, Inc., Case Pomeroy
& Company, Inc. and Hurco
Companies, Inc.
John Radziwill.......... 50 Private investor since August 1995
1997. President of Radix
Organization Inc. from July 1976
until August 1997; President of
Radix Ventures Inc. from 1979
until its acquisition by the
Company in June 1995.
Guenter Rohrmann........ 59 President and Chief Executive 1985
Officer of the Company since 1989.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
DIRECTOR
PRINCIPAL OCCUPATION AND OTHER CONTINUOUSLY
NAME AGE DIRECTORSHIPS SINCE
------------------------ --- ------------------------------- ------------
<S> <C> <C> <C>
Noel E. Vargas.......... 70 President of Luskcom Group Inc. 1996
since 1975 (President and Chief
Executive Officer until its
acquisition by the Company in
April 1996).
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THE ELECTION OF EACH OF
THE FOREGOING NOMINEES.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has an Executive Committee, an Audit Committee, a
Compensation and Stock Option Committee and a Nominating Committee.
The Executive Committee (consisting of Messrs. Hartong, Niner and Rohrmann)
has all of the powers of the Board of Directors between meetings of the Board,
subject to Delaware law.
The Audit Committee (consisting of Messrs. Lewis, Keller, Niner and Vargas)
has the responsibility of meeting with the Company's independent public
accountants and internal auditors to review the plan, scope and results of the
audit of the Company's annual financial statements and the recommendations of
the independent accountants regarding the Company's internal accounting
systems and controls. The Audit Committee also recommends the appointment of
the independent accountants for the ensuing year.
The Compensation and Stock Option Committee (consisting of Messrs. Fowler,
Keller, Lewis and Radziwill) reviews and approves the compensation of
officers, including the Chief Executive Officer, and administers the Company's
stock option plans.
The Nominating Committee (consisting of Messrs. Fowler, Hartong, Niner and
Rohrmann) screens and selects candidates to stand for election as directors of
the Company. The Nominating Committee will consider responsible
recommendations by shareholders of candidates to be nominated as directors of
the Company, but does not intend to solicit such recommendations. All such
recommendations must be in writing to the Nominating Committee addressed to
the Secretary of the Company. By accepting a shareholder recommendation for
consideration, the Nominating Committee does not undertake to adopt or take
any other action concerning such recommendation or to give the shareholder its
reasons for any action or inaction.
During the year ended December 31, 1997, there were five meetings of the
Board of Directors, two meetings of the Executive Committee, two meetings of
the Audit Committee, three meetings of the Compensation and Stock Option
Committee, and one meeting of the Nominating Committee. Each director attended
more than 75% of the aggregate of the meetings of the Board of Directors and
of the committees thereof on which he served.
DIRECTOR COMPENSATION
During 1997, each director who is not an officer of the Company received an
annual fee of $16,000 for serving as a director and $1,000 for each day of
attendance at meetings of the Board of Directors or a committee thereof.
3
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of April 24, 1998 (except as otherwise
noted), information with respect to the beneficial ownership of the Company's
Common Stock by (i) each person known by the Company to own beneficially more
than 5% of the outstanding Common Stock of the Company, (ii) each executive
officer of the Company named in the Summary Compensation Table under
"Executive Compensation" in this Proxy Statement, (iii) each current director
and (iv) all directors and executive officers of the Company as a group.
Unless otherwise indicated in the footnotes to this table, beneficial
ownership of shares represents sole voting and investment power with respect
to those shares:
<TABLE>
<CAPTION>
PERCENTAGE OF
SHARES OWNED OUTSTANDING
BENEFICIAL OWNER BENEFICIALLY (#) SHARES (%)(1)
---------------- ---------------- -------------
<S> <C> <C>
Wellington Management Company (2)............... 3,165,659 9.1
75 State Street
Boston, Massachusetts 02109
FMR Corp. (3)................................... 1,960,656 5.6
82 Devonshire Street
Boston, Massachusetts 02109
Hendrik J. Hartong, Jr. (4)..................... 459,817 1.3
Guenter Rohrmann (5)............................ 459,845 1.3
Robert J. O'Connell (6)......................... 35,297 (13)
Dennis M. Dolan (7)............................. 99,112 (13)
Giorgio Laccona (8)............................. 46,722 (13)
Daniel J. McCauley (9).......................... 53,738 (13)
John M. Fowler.................................. 45,000 (13)
Donald J. Keller................................ 5,063 (13)
Andrew L. Lewis IV.............................. 12,607 (13)
Richard T. Niner (10)........................... 357,087 1.0
John Radziwill.................................. 408,502 1.2
Noel E. Vargas (11)............................. 468,478 1.3
All directors and executive officers as a group 2,451,268 6.8
(consisting of 13 persons) (12)................
</TABLE>
- --------
(1) Shares issuable upon the exercise of stock options owned by that person
which can be exercised within 60 days of April 24, 1998, are deemed
outstanding for the purpose of computing the number and percentage of
outstanding shares owned by that person (and any group that includes that
person) but are not deemed outstanding for the purpose of computing the
percentage of outstanding shares owned by any other person.
(2) Based on information set forth in an amendment to a Schedule 13G filed by
Wellington Management Company ("Wellington"), dated January 12, 1998,
Wellington has shared voting power with respect to 1,904,694 shares and
shared dispositive power with respect to of 3,165,659 shares owned by
clients for whom it acts as an investment advisor.
(3) Based on information set forth in an amendment to a Schedule 13G dated
February 14, 1998 filed jointly by FMR Corp. ("FMR"), Edward C. Johnson
3d ("Mr. Johnson") and Abigail P. Johnson ("Ms. Johnson"), FMR, Mr.
Johnson and Ms. Johnson owned an aggregate of 1,960,656 shares. This
amendment indicates that FMR, Mr. Johnson and Ms. Johnson have sole
dispositive power over all 1,960,656 shares, that FMR has sole voting
power over 590,656 shares and no shared voting power over any shares and
that neither Mr. Johnson nor Ms. Johnson has sole or shared voting power
with respect to any of such shares.
4
<PAGE>
(4)Includes 83,250 shares issuable upon the exercise of stock options.
(5)Includes 124,875 shares issuable upon the exercise of stock options.
(6)Includes 9,375 shares issuable upon the exercise of stock options.
(7)Includes 34,125 shares issuable upon the exercise of stock options.
(8)Includes 20,625 shares issuable upon the exercise of stock options.
(9)Includes 21,750 shares issuable upon the exercise of stock options.
(10)Includes 5,061 shares held in custodial accounts for the benefit of Mr.
Niner's children.
(11) Includes 167,820 shares held as trustee of the Vargas Family Trust for
the benefit of Mr. Vargas and certain members of his family as to which
Mr. Vargas has sole voting and dispositive power.
(12)Includes 312,938 shares issuable upon the exercise of stock options.
(13)Less than 1%.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
that the Company's directors and executive officers, and each person who
beneficially owns more than ten percent of the Company's Common Stock, file
with the Securities and Exchange Commission an initial report of beneficial
ownership and subsequent reports of changes in beneficial ownership of the
Company's Common Stock and to furnish copies of such reports to the Company.
Based solely upon a review of the copies of the forms furnished to the Company
and inquiry of the Company's directors and executive officers, the Company
believes that all of its directors and executive officers, and all persons
beneficially owning more than ten percent of the Company's Common Stock,
complied in a timely manner with all filing requirements under Section 16(a)
applicable to them with respect to transactions during the year ended December
31, 1997.
5
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the cash compensation, as well as certain
other compensation, paid or accrued by the Company to the Chief Executive
Officer and each of the four other most highly compensated executive officers
of the Company as of December 31, 1997, for their services in all capacities
for each of the years in the three-year period ended December 31, 1997:
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
SECURITIES
UNDERLYING
ANNUAL COMPENSATION (1) OPTIONS (2) ALL OTHER
NAME AND PRINCIPAL ------------------------ (# OF COMPENSATION
POSITION YEAR SALARY($) BONUS($) SHARES) ($)(3)
------------------ ---- --------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Guenter Rohrmann........... 1997 525,000 1,200,000 0 114,549
President and Chief
Executive 1996 480,000 800,000 0 40,497
Officer 1995 450,000 650,000 112,500 9,000
Robert J. O'Connell........ 1997 200,000 250,000 15,000 55,299
Senior Vice President 1996 190,000 150,000 0 14,740
1995 180,000 110,000 22,500 9,000
Dennis M. Dolan............ 1997 190,000 250,000 15,000 26,000
Vice President and Chief 1996 175,000 150,000 0 13,088
Financial Officer 1995 160,000 100,000 22,500 9,000
Giorgio Laccona............ 1997 170,000 250,000 15,000 24,600
Vice President, General
Manager 1996 155,000 150,000 0 12,488
North America 1995 140,000 75,000 22,500 9,000
Daniel J. McCauley......... 1997 155,000 100,000 15,000 58,699
Vice President, Secretary 1996 145,000 75,000 0 7,000
and General Counsel 1995 135,000 50,000 15,000 6,227
</TABLE>
- --------
(1) Salary levels for each year are fixed at the beginning of the year.
Bonuses for each year are determined following the end of the year.
(2) Adjusted to reflect stock dividend paid on July 25, 1997.
(3) Consists of contributions by the Company to its 401(k) Retirement Plan,
which covers substantially all U.S.-based employees who are not covered by
a collective bargaining agreement. The Company contributes (i) a sum equal
to 3% of the salary of each eligible employee and (ii) a further sum, not
exceeding 3% of the employee's salary, equal to the amount, if any,
contributed by the employee, subject to certain limitations imposed by the
Internal Revenue Code. Contributions under the 401(k) Retirement Plan for
1997 for Messrs, Rohrmann, O'Connell, Dolan, Laccona and McCauley were
$9,600, $9,600, $9,600, $9,300 and $7,157, respectively. In addition, the
Company makes contributions under its Deferred Compensation Plan equal to
3% of the amounts deferred thereunder by the named executive officers.
Contributions under the Deferred Compensation Plan for 1997 for Messrs.
Rohrmann, O'Connell, Dolan, Laccona and McCauley were $34,950, $5,700,
$5,400, $4,800 and $4,534, respectively. A participant's interest in the
Company's contributions to the 401(k) Retirement Plan and the Deferred
Compensation Plan vests at the rate of 20% for each of the first five
years of service and is fully vested thereafter. The balance in 1997
represents the dollar value of premiums paid by the Company with respect
to life insurance for the benefit of each of the named executive officers.
6
<PAGE>
STOCK OPTION GRANTS IN 1997
The following table sets forth information with respect to the grant of
stock options during 1997 to the executive officers named in the Summary
Compensation Table.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------
POTENTIAL
REALIZABLE
VALUE AT
ASSUMED ANNUAL
PERCENT OF RATES OF STOCK
TOTAL PRICE
OPTIONS APPRECIATION
GRANTED TO EXERCISE FOR OPTION TERM
OPTIONS EMPLOYEES PRICE PER (3)
GRANTED IN 1997 SHARE EXPIRATION ---------------
NAME (# OF SHS.) (1) ($)(2) DATE 5% 10%
- ---- ----------- ---------- --------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Guenter Rohrmann........ 0 -- -- -- -- --
Giorgio Laccona......... 15,000 1.62 24.87 6/19/02 102,672 227,292
Robert J. O'Connell..... 15,000 1.62 24.87 6/19/02 102,672 227,292
Dennis M. Dolan......... 15,000 1.62 24.87 6/19/02 102,672 227,292
Daniel J. McCauley...... 15,000 1.62 24.87 6/19/02 102,672 227,292
</TABLE>
- --------
(1) Options with respect to a total of 926,625 shares were granted to
employees in 1997.
(2) All options were granted at an exercise price equal to the market value on
the date of grant. The number of shares covered by the grants and the
exercise price have been adjusted to reflect the stock dividend paid on
July 25, 1997.
(3) Represents the potential appreciation of the options over their stated
term of five-years, based upon assumed compounded rates of appreciation of
5% per year (equivalent to 27.6%) and 10% per year (equivalent to 61.1%).
The amounts set forth in these columns are not intended as forecasts of
future appreciation, which is dependent upon the actual increase, if any,
in the market price of the underlying shares, and there is no assurance
that the amounts of appreciation shown in the table actually will be
realized.
AGGREGATED OPTION EXERCISES IN 1997 AND
OPTION VALUE AT DECEMBER 31, 1997
The following table sets forth, for each of the executive officers named in
the Summary Compensation Table, information with respect to the exercise of
stock options during 1997 and holdings of unexercised options at the end of
the year:
<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT OPTIONS AT
ACQUIRED ON VALUE FISCAL YEAR END (#) FISCAL YEAR END ($)(1)
EXERCISE REALIZED ------------------------- -------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- --------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Guenter Rohrmann........ 67,500 1,214,797 86,625 66,375 1,492,389 1,047,459
Robert J. O'Connell..... 33,750 607,399 31,500 26,250 609,913 249,499
Dennis M. Dolan......... 22,500 404,392 21,375 29,625 387,461 323,652
Giorgio Laccona......... 16,875 384,784 22,500 26,250 412,174 249,499
Daniel J. McCauley...... 11,250 202,467 12,562 24,188 221,219 231,584
</TABLE>
- --------
(1) Based on the excess of (i) the aggregate market value (closing price on
the NASDAQ National Market) of the underlying shares on December 31, 1997,
over (ii) the aggregate exercise price of the options.
7
<PAGE>
EMPLOYMENT CONTRACTS AND CHANGE-OF-CONTROL ARRANGEMENTS
The Company is party to an employment agreement with Mr. Rohrmann that
provides for an annual base salary and such annual incentive compensation
bonus as the Compensation and Stock Option Committee may determine. Mr.
Rohrmann's base salary is subject to review annually and currently is
$560,000. By its terms, the agreement will expire December 31, 2000. The
agreement provides that in event of a change of control (as defined below),
either party may terminate the executive's employment at any time, and upon
such termination, the Company would be required to pay in a lump sum the
balance of the base salary for the unexpired term of the agreement (but not
less than two times the annual base salary). A "change of control" is defined
in the agreement as (i) the acquisition by any person (which term includes any
entity or group) of shares of the Company's Common Stock representing more
than 40% of the shares outstanding or (ii) the sale or other disposition by
the Company of all or substantially all of its assets.
8
<PAGE>
PERFORMANCE GRAPH
The following Performance Graph compares the cumulative total shareholder
return on the Company's Common Stock over the five years ended December 31,
1997, with the cumulative total return for the same period of (i) the Standard
& Poor's 500 Stock Index and (ii) a peer group comprised of four publicly-held
companies: Airborne Freight Corporation, Expediters International of
Washington, Inc., Circle International Group, Inc. (formerly, The Harper
Group, Inc.), and Fritz Companies, Inc. Dividend reinvestment has been assumed
and, with respect to companies in the peer group, the returns of each company
have been weighted to reflect its stock market capitalization relative to that
of the other companies in the group.
FIVE YEAR CUMULATIVE TOTAL RETURNS
VALUE OF $100 INVESTED ON DECEMBER 31, 1992
PERFORMANCE GRAPH
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Air Express International
Corporation................... $100.00 $ 73.85 $112.73 $130.37 $184.67 $263.13
S&P 500 Stock Index............ $100.00 $110.08 $111.54 $153.45 $188.69 $251.64
Peer Group..................... $100.00 $134.04 $132.43 $188.03 $158.85 $268.80
</TABLE>
REPORT OF COMPENSATION AND STOCK OPTION COMMITTEE
The Compensation and Stock Option Committee reviews and approves the annual
compensation of the Company's executive officers, as well as the Company's
policies and practices with respect to compensation of other management
personnel.
Compensation of executive officers consists primarily of base salary and
discretionary bonus awards tied to performance and, where appropriate, the
grant of stock options. Although the percentage of total compensation
9
<PAGE>
borne by each of these components is not fixed, it is the view of the
Committee that, in the case of the most senior officers, the discretionary
bonus should represent a substantial percentage of total compensation and,
indeed, a greater percentage than is the case with officers having more
narrowly-defined responsibilities.
In reviewing the compensation of the Company's executive officers (including
the grant of stock options), the Committee considers (i) the levels of
executive compensation paid by the Company's principal competitors in the air
freight and air freight forwarding industry (including those publicly-held
companies in the peer group shown in the Performance Graph above), to the
extent reliable information with respect thereto is available, (ii) the
Company's reported earnings, earnings per share and profit margin (operating
income as a percentage of revenues), both in absolute terms as well as in
relation to budget forecasts, results for prior years and competitors' results
(where publicly available), (iii) the Company's return on equity and stock
price performance relative to those of its publicly-held competitors and the
market as a whole and (iv) the extent to which the Company has achieved or
exceeded its goal for the year. No specific weight is accorded to any single
factor and different factors may be accorded greater or lesser weight in
particular years or for particular officers. Salary levels for each year are
reviewed and fixed at the beginning of the year based primarily on the
Company's performance during the preceding year and the general trends in
executive salaries within the Company's industry. Cash bonuses are determined
and paid shortly following the end of the year based primarily on the
Company's performance, and that of its Common Stock, during the year, the
extent to which the Company's goals for the year were met or exceeded and the
success of management in addressing particular challenges that were presented
during the year.
In determining the cash bonuses to be paid for 1997 to the Company's senior
executive officers, including the Chief Executive Officer, the Committee noted
that the Company reported record revenues and earnings for the fourth year in
a row and that this strong performance was reflected in continued appreciation
in the market price of its Common Stock. In addition, the Committee observed
that management continued to integrate successfully various operations that
were acquired into the Company's logistics service and information network.
Section 162(m) of the Internal Revenue Code generally limits (to $1,000,000
per covered executive) the deductibility of the annual compensation paid to a
company's chief executive officer and each of its other four most highly
compensated executive officers. That section and proposed regulations
thereunder contain certain exclusions from the deductibility limitation,
including compensation that is determined on the basis of performance goals as
well as compensation attributable to the exercise of stock options and rights,
under the plans that meet certain criteria and are approved by shareholders.
The Company's 1996 Incentive Stock Plan has been designed to satisfy these
criteria. Compensation attributable to the exercise of outstanding options
previously granted under the Company's 1991 Incentive Stock Plan and its 1996
Incentive Stock Plan is also excludable from the deductibility limitation
pursuant to certain transition rules under the Internal Revenue Code. The
Committee is continuing to review the Company's compensation practices for
covered executives with a view to preserving the deductibility of their
compensation to the maximum extent possible, taking all relevant factors into
account, and will consider carefully the possible modification of any
compensation arrangements that might be expected to result in any material
loss of deductions.
THE COMPENSATION AND
STOCK OPTION COMMITTEE
John M. Fowler, Chairman
Donald J. Keller
Andrew L. Lewis IV
John Radziwill
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation and Stock Option Committee is an officer or
employee of the Company or any of its subsidiaries or participates in any of
the Company's management compensation plans or programs. No executive officer
of the Company is a director or member of the compensation committee of any
other entity of which any member of the Company's Compensation and Stock
Option Committee is an officer or employee.
PROPOSAL 2
AMENDMENT TO THE CERTIFICATE OF INCORPORATION TO INCREASE
THE NUMBER OF AUTHORIZED SHARES
The Company's Board of Directors has unanimously adopted, and recommends to
the Company's stockholders for approval, an amendment to the Company's
Certificate of Incorporation to increase the total number of shares of Common
Stock which the Company has authority to issue from 40,000,000 to 100,000,000.
The proposed amendment to the Company's Certificate of Incorporation must be
approved by the affirmative vote of the holders of not less than a majority of
all Common Stock outstanding on the Record Date. Further, the amendment to the
Company's Certificate of Incorporation must be filed with the Secretary of
State of the State of Delaware to become effective.
The authorized capital of the Company currently consists of 40,000,000
shares of Common Stock and 1,000,000 shares of Preferred Stock. As of December
31, 1997, the Company had 34,676,626 shares of Common Stock outstanding, and
no shares of Preferred Stock outstanding. In addition, at that date 2,349,270
shares of Common Stock were reserved for issuance upon the exercise of
outstanding options under the Company's three stock option plans, and an
additional 1,438,230 shares of Common Stock were reserved for possible
issuance upon the exercise of options that may be granted under the Company's
three stock option plans. As a result, there are 38,464,126 shares of Common
Stock either outstanding or reserved for specific purposes leaving only
1,535,874 shares of Common Stock for future issuance. The Company anticipates
that it will need to issue or reserve additional Common Stock in the future.
The Company's Board of Directors believes that it is in the best interests
of the Company to have additional authorized shares available for possible
future actions, such as financings, investments and acquisitions, stock splits
and dividends, employee benefit plans and other corporate purposes. However,
there are no present plans, understandings or agreements for the issuance of
the Common Stock proposed to be authorized pursuant to this proposal.
Authorized but unissued Common Stock may be issued at such times, for such
purposes and for such consideration as the Company's Board of Directors may
determine without further stockholder approval, except as otherwise required
by law or applicable stock exchange rules. However, the Company's Board of
Directors does not intend to issue any of the Common Stock to be authorized
under the amendment except upon terms that the Board of Directors deems to be
in the best interest of the Company. The issuance of additional Common Stock
without further stockholder approval may, among other things, have a dilutive
effect on earnings per share and on the equity of the present stockholders and
their voting rights. The Company's stockholders have no preemptive rights. The
ability of the Board of Directors to issue additional shares could make it
more difficult for a third party to acquire control of the Company. The
issuance of additional Common Stock or Preferred Stock could be used as an
anti-takeover device without further action on the part of the Company's
stockholders.
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If the proposed amendment is approved at the Annual Meeting, Article Fourth
of the Company's Certificate of Incorporation would be amended to read in its
entirety as follows:
FOURTH: The total number of shares of stock which the corporation shall
have authority to issue is One Hundred One Million (101,000,000) shares,
One Hundred Million (100,000,000) of which shall be Common Stock of the par
value of $.01 per share and One Million (1,000,000) of which shall be
Preferred Stock of the par value of $1.00 per share.
STOCKHOLDER VOTE REQUIRED; BOARD RECOMMENDATION
The affirmative vote of a majority of the shares entitled to vote at the
Annual Meeting is required to approve the amendment to the Certificate of
Incorporation to increase the number of authorized shares of Common Stock.
THE BOARD RECOMMENDS THAT YOU VOTE FOR THE AMENDMENT TO THE COMPANY'S
CERTIFICATE OF INCORPORATION TO INCREASE IN THE NUMBER OF AUTHORIZED SHARES OF
COMMON STOCK.
PROPOSAL 3
AMENDMENT OF 1996 INCENTIVE STOCK PLAN
INTRODUCTION
On April 17, 1996, the Company's Board of Directors adopted the 1996
Incentive Stock Plan (the "Plan"), which was approved by the Company's
stockholders at the 1996 Annual Meeting. The number of shares of Common Stock
originally reserved under the Plan was 500,000 (which was automatically
increased to 750,000 as a result of the stock dividend paid by the Company in
1997). The Company's Board of Directors has adopted an amendment to the Plan,
subject to stockholder approval at the Annual Meeting, increasing the number
of shares reserved for the Plan by 600,000 shares. As of May 12, 1998, the
closing price of a share of Common Stock as reported by The NASDAQ Stock
Market, Inc. was $27 1/16.
The Board of Directors believes that stock options have been, and will
continue to be, an important element in the Company's management compensation
program. In addition to assisting the Company in its efforts to attract and
retain the services of key management personnel, grants of options serve to
link more effectively executive compensation to stockholder returns through
stock price performance and provide recipients with an additional incentive
for outstanding performance. The Plan as amended will make available an
additional 600,000 shares for grants of options. The Board of Directors
believes that this increase in the total number of shares available for grants
is appropriate and will enable the Company to continue to avail itself of the
benefits of its stock option program. Except for the increase in the number of
shares reserved for the Plan, there have been no other amendments to the Plan.
The Plan also permits the grant of stock appreciation rights. Although the
Company has never granted stock appreciation rights under its option plans and
the Board of Directors does not currently expect that rights will be granted
in the foreseeable future, the Board of Directors considers it appropriate to
retain the ability to grant stock appreciation rights should the Compensation
and Stock Option Committee (the "Committee"), which is charged with
responsibility for administering the Plan, determine it to be advisable in the
future.
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SUMMARY OF PLAN AS AMENDED
The following is a summary of the material features of the Plan. The summary
does not purport to be complete and is qualified in its entirety by reference
to the full text of the Plan, as amended, a copy of which is appended to this
Proxy Statement as Annex A.
The Plan provides for the granting to eligible employees of stock options
("Options"), which may be Incentive Options (as defined) or Non-Qualified
Options (as defined). In addition, stock appreciation rights ("Rights") may be
granted alone or in conjunction with or in the alternative to Options.
Options and Rights may be granted with respect to an aggregate of up to
1,350,000 shares (the "Shares") of the Company's Common Stock (which number is
subject to adjustment in the event of stock dividends, stock splits and other
similar events) during the period from July 1, 1996 through June 30, 2006. To
the extent that an Option is not exercised within the period of exercisability
specified therein, it will expire as to the then unexercised part. If any
Option or Right terminates prior to the expiration of the Plan, the Committee
has the right to use the Shares as to which such Option or Right was not
exercised to grant one or more additional Options or Rights to any eligible
employee. The Shares may be made available from either authorized but unissued
shares, treasury shares or both. The effective date of the Plan was July 1,
1996. In the event that the amendment to the Plan to increase the number of
shares reserved therefor is not approved by shareholders at the Annual
Meeting, the number of shares reserved for the Plan would remain 750,000,
subject to adjustment as provided in the Plan.
The Committee has been delegated authority to administer the Plan. Under the
Plan, the Committee must consist of not fewer than three members of the Board
of Directors who are both (i) "disinterested persons" within the meaning of
Rule 16b-3 (or any successor rule or regulation) under the Securities Exchange
Act of 1934, as amended (the "Exchange Act") and (ii) "outside directors"
within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code"). Members of the Committee are not eligible to receive
Options or Rights under the Plan. The Committee has the authority to determine
the individuals to whom and the date on which Options and Rights are to be
granted, the number of Shares to be subject to each Option and Right, the
exercise price of Shares subject to each Option and Right and the other terms
and provisions of each Option and Right. The Company will receive no monetary
consideration for granting Options or Rights under the Plan.
Options and Rights may be granted only to salaried key employees (including
executive officers) of the Company, or of any subsidiary corporation or parent
corporation of the Company, who are not members of the Committee.
The aggregate number of Shares with respect to which Options and/or Rights
may be granted to any one employee pursuant to the Plan may not exceed 187,500
Shares (after giving effect to the stock dividend paid by the Company in
1997). In addition, no individual employee may be granted Incentive Options to
purchase Shares if the aggregate fair market value of Shares with respect to
which Incentive Options are exercisable for the first time by such employee
during any calendar year (under all stock option plans of the Company or any
subsidiary or parent corporation of the Company) exceeds $100,000. For the
purpose of the foregoing limitation, the fair market value of Shares subject
to an Incentive Option is to be determined as of the time the Option is
granted, the limitation is to be applied by taking into account Options in the
order in which they were granted and Incentive Options granted before 1987
need not be taken into account.
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The Committee may require, as a condition of granting any Option or Right,
that the grantee enter into an agreement with the Company providing that in
the event of the termination of employment of the grantee for any reason
(other than dismissal without cause) the grantee will not, for a period
determined by the Committee at the time of grant, enter into any other
employment, or participate directly or indirectly in any other business or
enterprise that is competitive with the business of the Company or enter into
any employment in which such employee will be called upon to utilize special
knowledge and information obtained through employment with the Company or any
subsidiary or parent corporation of the Company. The Committee also may
require that the grantee not sell or otherwise dispose of Shares acquired
pursuant to the exercise of an Option or a Right for a period of six months
from the date of acquisition.
The purchase price of Shares issuable upon exercise of an Incentive Option
may not be less than 100% of the fair market value of such Shares on the date
the Option is granted; provided, however, that, in the case of an Incentive
Option granted to a person who, at the time of the grant, owns shares of the
capital stock of the Company or of any subsidiary or parent corporation of the
Company representing more than 10% of the total combined voting power of the
outstanding capital stock of the Company or of such subsidiary or parent
corporation (hereafter, a "Control Person"), the purchase price may not be
less than 110% of such fair market value on the date the Option is granted.
The purchase price of Shares issuable upon exercise of a Non-Qualified Option
will be such amount as the Committee deems appropriate but may not be less
than 100% of the fair market value of such Shares on the date the Option is
granted. The purchase price must be paid in full at the time of exercise of
the Option and payment must be made in cash, except that in lieu of cash, the
holder of an Option may, if the instrument evidencing the Option so permits,
exercise such Option, in whole or in part, by delivering to the Company
outstanding shares of the Company's Common Stock owned by such holder. For
purposes of determining the portion of the exercised Option being paid for by
the delivery of Shares, such Shares shall be valued at their fair market
value. All cash proceeds received by the Company from the exercise of Options
will be used for general corporate purposes.
In general, any Incentive Option granted under the Plan may be exercised
during a period of not more than ten years from the date of grant (five years
in the case of an Incentive Option granted to a Control Person), although a
shorter period may be specified in the instrument evidencing such Incentive
Option, in such amounts as the Committee may specify at the time of grant. A
Non-Qualified Option may be exercised during the period specified by the
Committee in the instrument evidencing such Non-Qualified Option. The
Committee may fix and thereafter, may accelerate, in whole or in part, the
period within which any Option may be exercised.
In the discretion of the Committee, a Right may be granted (i) alone, (ii)
simultaneously with the grant of an Option (either Incentive or Non-Qualified)
and in conjunction therewith or in the alternative thereto or (iii) subsequent
to the grant of a Non-Qualified Option and in conjunction therewith or in the
alternative thereto.
The exercise price of a Right granted alone will be set by the Committee at
the time of grant but may not be less than 100% of the fair market value of
one Share on the date of grant of such Right. A Right granted simultaneously
with or subsequent to the grant of an Option and in conjunction therewith or
in the alternative thereto must have the same exercise price as the related
Option, may not be transferred except upon the same terms and conditions as
those applicable to the related Option and must be exercisable to the same
extent as the related Option; provided, however, that a Right, by its terms,
may not be exercised unless, at the time of exercise, the fair market value of
the Shares subject to the Right and related Option exceeds the exercise price
thereof.
Upon exercise of a Right granted simultaneously with or subsequent to an
Option, and in the alternative thereto, the number of Shares for which the
related Option may be exercised will be reduced by the number of
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Shares for which the Right has been exercised. The number of Shares for which
a Right is exercisable will be reduced upon any exercise of a related Option
by the number of Shares for which such Option has been exercised.
The holder of a Right may elect to receive cash, Shares or a combination of
cash and Shares having an aggregate value equal to the product of (i) the
excess of (x) the fair market value of one share of Common Stock on the date
the Right is exercised over (y) the exercise price specified in such Right or
its related Option, multiplied by (ii) the number of Shares with respect to
which such Right is being exercised. A Right will be deemed exercised on the
last day of its term, if not otherwise exercised by its holder, provided that
the fair market value of the Shares subject to the Right exceeds the exercise
price thereof on such date.
The election by a holder of a Right to receive cash in full or partial
settlement of a Right, and any exercise of such Right for cash, may be made
only during the period beginning on the third business day following the date
of release for publication by the Company of a quarterly or annual summary
statement of earnings and ending on the twelfth business day following such
date. The Committee, in its sole discretion, may disapprove, in whole or in
part, a holder's election to receive cash.
In the event of a Change of Control (as defined) of the Company, all then
outstanding Options and Rights will become immediately exercisable. Moreover,
the Committee may determine, in its discretion, that upon the occurrence of a
Change of Control, Options and Rights will terminate within a specified number
of days after notice to the holder thereof, and such holder shall receive,
with respect to each Share subject to such Option or Right, cash in an amount
equal to the excess of the fair market value of such Shares immediately prior
to the occurrence of such transaction over the exercise price of such Option
or Right. For purposes of the Plan, and except as noted below, a "Change of
Control" will be deemed to occur if (a) there occurs a change in control of
the direction and administration of the Company's business that would be
required to be reported in response to Item 6(e) of Schedule 14A promulgated
under the Exchange Act, or (b) any person (excluding any employee benefit
plan) becomes the beneficial owner of securities representing 50% or more of
the combined voting power of the Company's outstanding securities then
entitled to vote for the election of directors, or (c) during any consecutive
two-year period, those individuals who at the beginning of such period
constituted the Board of Directors or who would be Continuing Directors (as
defined) cease for any reason to constitute a majority of the Board of
Directors, or (d) the Board of Directors approves the sale of all or
substantially all of the Company's assets or any merger, consolidation or
similar business combination involving the Company that would result in the
occurrence of any event described in clause (b) or clause (c) above. However,
none of the foregoing events will be deemed a Change of Control if it occurs
as a result of an agreement or transaction approved by the Company's
Continuing Directors who, in granting such approval, determine that it is not
in the Company's best interest for such agreement or transaction to constitute
a "Change of Control" for purposes of the Plan. The term "Continuing
Directors" is defined in the Plan to mean and include each director of the
Company in office on July 1, 1996 and any successor to any such director and
additional director who, after that date, was nominated or selected by a
majority of the Continuing Directors then in office and who, at the time of
his nomination or selection, is not an "affiliate" or "associate" (as defined
in Regulation 12B under the Exchange Act) of a Control Person of the Company.
Options and Rights are non-transferable, except by will or the laws of
descent and distribution. Upon an employee's termination of employment, unless
otherwise specified in the instrument evidencing the Option or Right, any
Option or Right previously granted to that employee pursuant to the Plan
shall, to the extent not theretofore exercised, terminate and become null and
void, except that (a) if the employee dies (i) while in the employ of the
Company (or any subsidiary or parent thereof), or (ii) within three months
following the
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employee's termination of employment by reason of retirement or dismissal
other than for cause (as defined in the Plan), or (iii) within one year
following the employee's termination of employment by reason of disability,
such employee's legal representative (or heirs or beneficiaries, if
appropriate) may, not later than one year from the date of the employee's
death, exercise any Options or Rights which were exercisable on the date of
such employee's death; and (b) if the termination of employment is due to such
employee's retirement, disability or dismissal other than for cause (as
defined in the Plan), such employee or his legal representative shall have the
right to exercise the Options or Rights which were exercisable on the date of
termination of such employee's employment, at any time up to and including (i)
three months after the date of such termination of employment in the case of
termination by reason of retirement or dismissal other than for cause, and
(ii) one year after the date of termination of employment in the case of
termination by reason of disability. In no event, however, will any person be
entitled to exercise any Option or Right after the period of exercisability of
such Option or Right as specified therein.
In the event of any change in the outstanding shares of Common Stock of the
Company (through events such as a stock split, stock dividend,
recapitalization, spin-off, split-up, split-off, merger, consolidation or
reorganization of the Company or other like change in its capital structure),
appropriate adjustments to the Options and Rights are to be made so that such
Options and Rights become exercisable for such securities, cash or other
property as would have been received in respect of Shares had the Option or
Right been fully exercised prior to such change, and adjustments are to be
made in the number of Shares and exercise price of Options and Rights to
prevent dilution or enlargement of rights thereunder, subject to the rules of
Section 424(a) of the Code as to Incentive Options and related Rights.
The Plan may be amended from time to time by the Board of Directors, with
the concurrence of the Committee, provided that existing rights under any
Option or Right theretofore granted may not be adversely affected without the
consent of the holder thereof. In addition, the Board of Directors may not,
without the approval of the Company's shareholders, make any amendment to the
Plan that would increase the total number of shares reserved for issuance
under the Plan (other than an increase to adjust for changes in
capitalization), reduce the exercise price of an Incentive Option below 100%
of the fair market value of the underlying Shares at the time such Incentive
Option is granted, modify the provisions of the Plan relating to eligibility
or materially increase the aggregate benefits that may be provided to
participants under the Plan.
The Board of Directors may at any time suspend or terminate the Plan,
provided that rights and obligations under any Option or Right granted while
the Plan is in effect may not be altered or impaired by suspension or
termination of the Plan, except upon the consent of the holder thereof.
FEDERAL INCOME TAX CONSEQUENCES
Incentive Options
Incentive Options under the Plan are intended to meet the definitional
requirements of Section 422(b) of the Code for "incentive stock options."
Under the Code, the grantee of an Incentive Option generally is not subject
to regular income tax upon the receipt or exercise of the Incentive Option.
Special rules apply to an employee who exercises an Incentive Option by
delivering Shares previously acquired pursuant to the exercise of an Incentive
Option.
For purposes of computing any alternative minimum tax liability, an employee
who exercises an Incentive Option generally would be required to increase his
or her "alternative minimum taxable income" by an amount
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equal to the excess of the fair market value of a Share at the time the Option
is exercised over the exercise price and must compute his or her tax basis in
the acquired Share as if such Share had been acquired through the exercise of
a Non-Qualified Option (as described below). The amount of any minimum tax
liability attributable to the exercise of an Incentive Option generally will
be allowed as a credit offsetting regular tax liability in subsequent years.
If, subsequent to the exercise of an Incentive Option (whether paid for in
cash or in shares), the optionee holds the Shares received upon exercise for a
period that exceeds the longer of two years from the date of grant or one year
from the date of transfer pursuant to the exercise of such Option (the
"applicable holding period"), the difference (if any) between the amount
realized from the sale of such Shares and their tax basis to the holder will
be taxed as long-term capital gain or loss (provided that such shares were
held by the optionee as a capital asset at the time). If the holder is subject
to the alternative minimum tax in the year of disposition, his or her tax
basis in the Shares will be determined, for alternative minimum tax purposes,
as described in the preceding paragraph. If, however, an optionee does not
hold the Shares so acquired for the applicable holding period, thereby making
a "disqualifying disposition," the optionee would realize ordinary income in
the year of the disqualifying disposition on the excess of the fair market
value of the Shares at the date the Incentive Option was exercised over the
exercise price and the balance, if any, of income would be long-term capital
gain (provided the holding period for the Shares exceeded one year and the
optionee held the Shares as a capital asset at such time).
A deduction will not be allowed to the employer corporation for federal
income tax purposes with respect to the grant or exercise of an Incentive
Option or the disposition, after the applicable holding period, of Shares
acquired upon exercise of an Incentive Option. In the event of a disqualifying
disposition, a federal income tax deduction will be allowed to the employer
corporation in an amount equal to the ordinary income included by the
optionee, provided that such amount constitutes an ordinary and necessary
business expense to the employer corporation and is reasonable and the
limitations of Sections 280G and 162(m) of the Code (as described below) do
not apply.
Non-Qualified Options and Stock Appreciation Rights.
A Non-Qualified Option is one that is not intended to qualify as an
incentive stock option under Section 422(b) of the Code. An individual who
receives a Non-Qualified Option will not recognize any taxable income upon the
grant of such Non-Qualified Option. In general, upon exercise of a Non-
Qualified Option an individual will be treated as having received ordinary
income in an amount equal to the excess of (i) the fair market value of the
Shares at the time of exercise over (ii) the exercise price.
An individual who receives a Right will not recognize any taxable income
upon the grant of such Right. Generally, upon the receipt of cash or the
transfer of Shares pursuant to the exercise of a Right, an individual will
recognize ordinary income in an amount equal to the sum of the cash and the
fair market value of the Shares received. In certain cases, a Right may be
deemed for federal income tax purposes to have been exercised prior to actual
exercise.
In view of Section 16(b) of the Exchange Act, the timing of income
recognition for any optionee who is an officer or director of the Company or a
beneficial owner of more than ten percent (10%) of any class of equity
securities of the Company may be deferred for a period (the "Deferral Period")
following the exercise of a Non-Qualified Option or Right. Absent a written
election (pursuant to Section 83(b) of the Code) filed with the Internal
Revenue Service within 30 days after the date of transfer of the Shares
pursuant to the exercise of the
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Option or Right to include in income, as of the transfer date, the excess (on
such date) of the fair market value of such Shares over their exercise price,
recognition of income by the individual will be deferred until the expiration
of the Deferral Period, if any.
The ordinary income recognized with respect to the transfer of Shares or
receipt of cash upon exercise of a Non-Qualified Option or a Right under the
Plan will be subject to both wage withholding and employment taxes. In
addition to the customary methods of satisfying the withholding tax
liabilities that arise upon the exercise of a Right for Shares or upon the
exercise of a Non-Qualified Option, an individual may satisfy the liability in
whole or in part by directing its employer corporation to withhold Shares from
those that would otherwise be issuable to the individual or by tendering other
shares of Common Stock of the Company owned by the individual, valued at their
fair market value as of the date that the tax withholding obligation arises. A
deduction for federal income tax purposes will be allowed to the employer
corporation in an amount equal to the ordinary income included by the
individual, provided that such amount constitutes an ordinary and necessary
business expense and is reasonable and the limitations of Section 162(m) and
280G of the Code do not apply.
Change of Control
As described above, upon a "change of control" of the Company (as defined in
the Plan), all the then outstanding Options and Rights shall immediately
become exercisable. In general, if the total amount of payments to certain
individuals in the nature of compensation that are contingent upon a "change
in control" (as defined in Section 280G of the Code) equals or exceeds three
times the recipient's "base amount" (generally, such recipient's average
annual compensation for the five years preceding the change in control), then,
subject to certain exceptions, the payments may be treated as "excess
parachute payments" under the Code, in which case a portion of such payments
would be nondeductible to the employer corporation and the recipient would be
subject to a 20% excise tax on such portion of the payments.
Section 162(m)
As discussed in the report of the Compensation and Stock Option Committee
appearing elsewhere in this Proxy Statement, Section 162(m) of the Code
generally limits to $1,000,000 per covered executive the deductibility for
Federal income tax purposes of annual compensation paid to a company's chief
executive officer and each of its other four most highly compensated executive
officers. The Plan is designed to permit Options and Rights granted thereunder
to qualify as "performance based" compensation under Section 162(m) of the
Code, thereby preserving the deductibility for federal income tax purposes of
compensation that may be attributable to the exercise of such Options and
Rights.
REGULATION
The Plan is neither qualified under the provisions of Section 401(a) of the
Code, nor subject to any of the provisions of the Employee Retirement Income
Security Act.
STOCKHOLDER VOTE REQUIRED; BOARD RECOMMENDATION
The affirmative vote of a majority of the shares present and voting at the
Annual Meeting is required to approve the amendment to the Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT TO
THE PLAN.
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OTHER MATTERS
As of the date of this Proxy Statement, the only business that the Board of
Directors intends to present or knows that others will present at the meeting
is that set forth above. If any other matter or matters are properly brought
before the meeting or any adjournment thereof, the persons named in the
accompanying form of proxy intend to vote on such matters in accordance with
their judgment.
The cost of soliciting proxies will be borne by the Company. Arrangements
will be made with brokerage firms and other custodians, nominees and
fiduciaries to forward solicitation materials to the beneficial owners of the
shares held of record by such persons, and the Company will reimburse them for
their reasonable out-of-pocket expenses. Officers and directors may also
solicit proxies but will not be specifically compensated for making such
solicitations. The Company may retain ChaseMellon L.L.C. to assist in
soliciting proxies and to send proxy materials to brokerage houses and other
custodians, nominees and fiduciaries for transmittal to their principals, at
an estimated cost of $6,500 plus out-of-pocket expenses.
The Board of Directors has selected the firm of Arthur Andersen LLP as the
Company's independent public accountants for the current fiscal year. Arthur
Andersen LLP has served as the Company's independent public accountants since
1968. Representatives of Arthur Andersen LLP are expected to be present at the
meeting and will have the opportunity to make a statement if they desire to do
so and to respond to appropriate questions.
As a matter of policy, the Company will accord confidentiality to the votes
of individual shareholders, whether submitted by proxy or ballot, except in
limited circumstances, including any contested election, or as may be
necessary to meet legal requirements. The Company will continue its long-
standing practice of retaining an independent tabulator to receive and
tabulate the proxies and ballots and independent inspectors of election to
certify the results. Any shareholder desiring to present a proposal at the
1999 Annual Meeting of Shareholders and wishing to have that proposal included
in the Proxy Statement for that meeting must submit the same in writing to the
Secretary of the Company at 120 Tokeneke Road, Darien, Connecticut 06820 in
time to be received by January 20, 1999.
By Order of the Board of Directors
Daniel J. McCauley, Secretary
May 19, 1998
Darien, Connecticut
----------------
THE COMPANY WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS ANNUAL REPORT ON
FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES THERETO, FOR THE
YEAR ENDED DECEMBER 31, 1997, TO EACH SHAREHOLDER WHO FORWARDS A WRITTEN
REQUEST TO THE SECRETARY, AIR EXPRESS INTERNATIONAL CORPORATION, 120 TOKENEKE
ROAD, DARIEN, CONNECTICUT 06820. SUCH WRITTEN REQUEST MUST INCLUDE A GOOD
FAITH REPRESENTATION THAT, AS OF MAY 7, 1998 (THE RECORD DATE), THE PERSON
MAKING THE REQUEST WAS THE BENEFICIAL OWNER OF SECURITIES ENTITLED TO VOTE AT
THE 1998 ANNUAL MEETING.
COPIES OF SUCH FORM 10-K FURNISHED WITHOUT CHARGE WILL NOT INCLUDE ALL OF
THE EXHIBITS THERETO, IF ANY, BUT WILL INCLUDE A LIST DESCRIBING ALL OF THE
EXHIBITS NOT INCLUDED, COPIES OF WHICH WILL BE AVAILABLE AT A COST OF $1.00
PER PAGE.
19
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ANNEX A
1996 INCENTIVE STOCK PLAN,
AS AMENDED
I. PURPOSES
Air Express International Corporation (the "Company") desires to afford
certain of its key employees and the key employees of any subsidiary
corporation or parent corporation of the Company now existing or hereafter
formed or acquired who are responsible for the continued growth of the Company
an opportunity to acquire a proprietary interest in the Company, and thus to
create in such key employees an increased interest in and a greater concern
for the welfare of the Company and its subsidiaries.
The Company, by means of this 1996 Incentive Stock Plan (the "Plan"), seeks
to retain the services of persons now holding key positions and to secure the
services of persons capable of filling such positions.
The stock options ("Options") and stock appreciation rights ("Rights")
offered pursuant to the Plan are a matter of separate inducement and are not
in lieu of any salary or other compensation for the services of any key
employee.
The Options granted under the Plan are intended to be either incentive stock
options ("Incentive Options") within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), or options that do not
meet the requirements for Incentive Options ("Non-Qualified Options"), but the
Company makes no warranty as to the qualification of any Option as an
Incentive Option.
II. AMOUNT OF STOCK SUBJECT TO THE PLAN
The total number of shares of common stock of the Company that may be
purchased or acquired pursuant to the exercise of Options or Rights granted
under the Plan shall not exceed, in the aggregate, one million three hundred
fifty thousand (1,350,000) shares of the authorized common stock, $.01 par
value per share, of the Company (the "Shares"). The aggregate number of Shares
with respect to which Options or Rights may be granted to any one employee
pursuant to the Plan shall not exceed one hundred eighty-seven thousand five
hundred (187,500). Shares that are the subject of Rights and related Options
shall be counted only once in determining whether the maximum number of Shares
that may be purchased or awarded under the Plan has been exceeded.
Shares acquired under the Plan may be either authorized but unissued Shares,
Shares of issued stock held in the Company's treasury, or both, at the
discretion of the Company. If and to the extent that Options or Rights granted
under the Plan expire or terminate without having been exercised, the Shares
covered by such expired or terminated Options or Rights shall again become
available for award under the Plan.
Except as provided in Articles XIX and XXII, the Company may, from time to
time during the period beginning July 1, 1996 (the "Effective Date") and
ending June 30, 2006 (the "Termination Date"), grant to certain key employees
of the Company, or of any subsidiary corporation or parent corporation of the
Company now existing or hereafter formed or acquired, Incentive Options and/or
Non-Qualified Options and/or Rights under the terms hereinafter set forth.
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Provisions of the Plan that pertain to Options or Rights granted to an
employee shall apply to Options, Rights or a combination thereof.
As used in the Plan, the term "subsidiary corporation" and "parent
corporation" shall mean, respectively, a corporation coming within the
definition of such terms contained in Sections 424(f) and 424(e) of the Code.
III. ADMINISTRATION OF THE PLAN
The board of directors of the Company (the "Board of Directors") shall
designate from among its members an option committee (the "Committee") to
administer the Plan. The Committee shall consist of no fewer than three
members of the Board of Directors, each of whom shall be (i) a "disinterested
person" within the meaning of Rule 16b-3 (or any successor rule or regulation)
promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") and (ii) an "outside director" within the meaning of Section
162(m) of the Code. A majority of the members of the Committee shall
constitute a quorum, and the act of a majority of the members of the Committee
shall be the act of the Committee. Any member of the Committee may be removed
at any time either with or without cause by resolution adopted by the Board of
Directors, and any vacancy on the Committee at any time may be filled by
resolution adopted by the Board of Directors.
Subject to the express provisions of the Plan, the Committee shall have
authority, in its discretion, to determine the employees to whom Options or
Rights shall be granted, the time when such Options or Rights shall be
granted, the number of Shares which shall be subject to each Option or Right,
the purchase price or exercise price of each Option or Right, the period(s)
during which such Options or Rights shall be exercisable (whether in whole or
in part) and the other terms and provisions thereof (which need not be
identical).
Subject to the express provisions of the Plan, the Committee also shall have
authority to construe the Plan and the Options and Rights granted hereunder,
to amend the Plan and the Options and Rights granted hereunder, to prescribe,
amend and rescind rules and regulations relating to the Plan, to determine the
terms and provisions of the Options (which need not be identical) and Rights
(which need not be identical) granted hereunder and to make all other
determinations necessary or advisable for administering the Plan. The Board of
Directors or the Committee, as the case may be, also shall have the authority
to require, in its discretion, as a condition of the granting of any such
Option or Right, that the employee agree (i) not to sell or otherwise dispose
of Shares acquired pursuant to the exercise of Options or Rights for a period
of six (6) months following the date of the grant of the exercised Rights or
Options and (ii) that in the event of termination of employment of such
employee, other than as a result of dismissal without cause, such employee
will not, for a period to be fixed at the time of the grant of the Option or
Right, enter into any other employment or participate directly or indirectly
in any other business or enterprise which is competitive with the business of
the Company or any subsidiary or parent corporation of the Company, or enter
into any employment in which such employee will be called upon to utilize
special knowledge obtained through employment with the Company or any
subsidiary or parent corporation thereof.
The determination of the Committee on matters referred to in this Article
III shall be conclusive.
The Committee may employ such legal counsel, consultants and agents as it
may deem desirable for the administration of the Plan and may rely upon any
opinion or computation received from any such legal counsel, consultant or
agent. Expenses incurred by the Committee in the engagement of such counsel,
consultant or agent shall be paid by the Company. No member or former member
of the Committee shall be liable for any action or determination made in good
faith with respect to the Plan or any award of Options or Rights granted under
the Plan.
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IV. ELIGIBILITY
Options and Rights may be granted only to salaried key employees of the
Company or of any subsidiary corporation or parent corporation of the Company,
except as hereinafter provided, and shall not be granted to any officer or
director who is not also a salaried key employee. Any person who shall have
retired from active employment by the Company or a subsidiary corporation or
parent corporation thereof, although such person shall have entered into a
consulting contract with the Company or a subsidiary corporation or parent
corporation thereof, shall not be eligible to receive an Option or a Right.
The Plan does not create a right in any employee to participate in the Plan
nor does it create a right in any employee to have any Options or Rights
granted to him or her.
V. OPTION PRICE AND PAYMENT
The price for each Share purchasable under any Non-Qualified Option granted
hereunder shall be such amount as the Committee, in its best judgment, shall
determine to be one hundred percent (100%) of the fair market value per Share
at the date the Option is granted.
The price for each Share purchasable under any Incentive Option granted
hereunder shall be such amount as the Committee, in its best judgment, shall
determine to be not less than one hundred percent (100%) of the fair market
value per Share at the date the Option is granted; provided, however, that in
the case of an Incentive Option granted to a person who, at the time such
Option is granted, owns shares of the Company or any subsidiary corporation or
parent corporation of the Company which possess more than ten percent (10%) of
the total combined voting power of all classes of shares of the Company or of
any subsidiary corporation or parent corporation of the Company, the purchase
price for each share shall be such amount as the Committee, in its best
judgment, shall determine to be not less than one hundred ten percent (110%)
of the fair market value per Share at the date the Option is granted. In
determining stock ownership of an employee for any purposes under the Plan,
the rules of Section 424(d) of the Code shall be applied, and the Committee
may rely on representations of fact made to it by the employee and believed by
it to be true.
If the Shares are listed on a national securities exchange in the United
States on any date on which the fair market value per Share is to be
determined, the fair market value per Share shall be deemed to be the average
of the high and low quotations at which such Shares are sold on such national
securities exchange on the date such Option is granted. If the Shares are
listed on a national securities exchange in the United States on such date but
the Shares are not traded on such date, or such national securities exchange
is not open for business on such date, the fair market value per Share shall
be determined as of the closest preceding date on which such exchange shall
have been open for business and the Shares were traded. If the Shares are
listed on more than one national securities exchange in the United States on
the date on which the fair market value per Share is to be determined, the
Committee shall determine which national securities exchange shall be used for
the purpose of determining the fair market value per Share.
For purposes of this Plan, the determination by the Committee of the fair
market value of a Share shall be conclusive.
Upon the exercise of an Option granted hereunder, the Company shall cause
the purchased Shares to be issued only when it shall have received the full
purchase price for the Shares in cash or by certified check; provided,
however, that in lieu of cash, the holder of an Option may, if and to the
extent the terms of such Option
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so provide and to the extent permitted by applicable law, exercise an Option
(a) in whole or in part, by delivering to the Company shares of common stock
of the Company (in proper form for transfer and accompanied by all requisite
stock transfer tax stamps or cash in lieu thereof) owned by such holder having
a fair market value equal to the exercise price applicable to that portion of
the Option being exercised by the delivery of such Shares or (b) in part, by
delivering to the Company an executed promissory note on such terms and
conditions as the Committee shall determine, in its sole discretion, at the
time of grant; provided, however, that the principal amount of such note shall
not exceed ninety percent (90%) (or such lesser percentage as would be
permitted by applicable margin regulations) of the aggregate purchase price of
the Shares then being purchased pursuant to the exercise of such Option. The
fair market value of the stock so delivered shall be determined as of the date
immediately preceding the date on which the Option is exercised, or as may be
required in order to comply with or to conform to the requirements of any
applicable laws or regulations.
VI. USE OF PROCEEDS
The cash proceeds of the sale of Shares pursuant to the Plan are to be added
to the general funds of the Company and used for its general corporate
purposes.
VII. TERM OF OPTIONS AND LIMITATIONS ON THE RIGHT OF EXERCISE
Any Option shall be exercisable at such times, in such amounts and during
such period or periods as the Committee shall determine at the time of the
grant of such Option; provided, however, that an Incentive Option shall not be
exercisable after the expiration of ten (10) years from the date such Option
is granted; and provided further that, in the case of an Incentive Option
granted to a person who, at the time such Option is granted, owns stock of the
Company or any subsidiary or parent corporation of the Company possessing more
than ten percent (10%) of the total combined voting power of all classes of
stock of the Company or of any such subsidiary or parent corporation of the
Company, such Option shall not be exercisable after the expiration of five (5)
years from the date such Option is granted.
Except to the extent otherwise provided under the Code, to the extent that
the aggregate fair market value of stock for which Incentive Options are
exercisable for the first time by an employee during any calendar year (under
all stock option plans of the Company and of any parent corporation or
subsidiary corporation of the Company) exceeds one hundred thousand dollars
($100,000), such Options shall be treated as Non-Qualified Options. For
purposes of this limitation, (i) the fair market value of stock is determined
as of the time the Option is granted, (ii) the limitation will be applied by
taking into account Options in the order in which they were granted, and (iii)
Incentive Options granted before 1987 shall not be taken into account.
Subject to the provisions of Article XVIII, the Committee shall have the
right to accelerate, in whole or in part, from time to time, conditionally or
unconditionally, rights to exercise any Option granted hereunder.
To the extent that an Option is not exercised within the period of
exercisability specified therein, it shall expire as to the then unexercised
part.
In no event shall an Option granted hereunder be exercised for a fraction of
a Share.
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VIII. EXERCISE OF OPTIONS
Options granted under the Plan shall be exercised by the optionee as to all
or part of the Shares covered thereby by the giving of written notice of the
exercise thereof to the Corporate Secretary of the Company at the principal
business office of the Company, specifying the number of Shares to be
purchased and specifying a business day not more than (15) days from the date
such notice is given, for the payment of the purchase price against delivery
of the Shares being purchased. Subject to the terms of Articles XIV, XVI, and
XVII, the Company shall cause certificates for the Shares so purchased to be
delivered to the optionee at the principal business office of the Company,
against payment of the full purchase price, on the date specified in the
notice of exercise.
IX. STOCK APPRECIATION RIGHTS
In the discretion of the Board of Directors, a Right may be granted (i)
alone, (ii) simultaneously with the grant of an Option (either Incentive or
Non-Qualified) and in conjunction therewith or in the alternative thereto or
(iii) subsequent to the grant of a Non-Qualified Option and in conjunction
therewith or in the alternative thereto.
The exercise price of a Right granted alone shall be determined by the
Committee, but shall not be less than one hundred percent (100%) of the fair
market value of one Share on the date of the grant of such Right. A Right
granted simultaneously with or subsequent to the grant of an Option and in
conjunction therewith or in the alternative thereto shall have the same
exercise price as the related Option, shall be transferable only upon the same
terms and conditions as the related Option, and shall be exercisable only to
the same extent as the related Option; provided, however, that a Right, by its
terms, shall be exercisable only when the fair market value of the Shares
subject to the Right and related Option exceeds the exercise price thereof.
Upon exercise of a Right granted simultaneously with or subsequent to an
Option and in the alternative thereto, the number of Shares for which the
related Option shall be exercisable shall be reduced by the number of Shares
for which the Right shall have been exercised. The number of Shares for which
a Right shall be exercisable shall be reduced upon any exercise of a related
Option by the number of Shares for which such Option shall have been
exercised.
Any Right shall be exercisable upon such additional terms and conditions as
may from time to time be prescribed by the Committee.
A Right shall entitle the holder upon exercise thereof to receive from the
Company, upon a written request filed with the Secretary of the Company at its
principal offices (the "Request"), a number of Shares (with or without
restrictions as to substantial risk of forfeiture and transferability, as
determined by the Board of Directors in its sole discretion), an amount of
cash, or any combination of Shares and cash, as specified in the Request (but
subject to the approval of the Committee in its sole discretion, at any time
up to and including the time of payment, as to the making of any cash
payment), having an aggregate fair market value equal to the product of (i)
the excess of the fair market value on the day of such Request of one Share
over the exercise price per Share specified in such Right or its related
Option, multiplied by (ii) the number of Shares for which such Right shall be
exercised.
Any election by a holder of a Right to receive cash in full or partial
settlement of such Right, and any exercise of such Right for cash, may be made
only by a Request filed with the Corporate Secretary of the
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Company during the period beginning on the third business day following the
date of release for publication by the Company of quarterly or annual summary
statements of earnings and ending on the twelfth business day following such
date. Within thirty (30) days of the receipt by the Company of a Request to
receive cash in full or partial settlement of a Right or to exercise such
Right for cash, the Committee shall, in its sole discretion, either consent to
or disapprove, in whole or in part, such Request. A Request to receive cash in
full or partial settlement of a Right or to exercise a Right for cash may
provide that, in the event the Committee shall disapprove such Request, such
Request shall be deemed to be an exercise of such Right for Shares.
If the Committee disapproves in whole or in part any election by a holder to
receive cash in full or partial settlement of a Right or to exercise such
Right for cash, such disapproval shall not affect such holder's right to
exercise such Right at a later date, to the extent that such Right shall be
otherwise exercisable, or to elect the form of payment at a later date,
provided that an election to receive cash upon such later exercise shall be
subject to the approval of the Committee. Additionally, such disapproval shall
not affect such holder's right to exercise any related Option or Options
granted to such holder under the Plan.
A holder of a Right shall not be entitled to request or receive cash in full
or partial payment of such Right, if such Right or the related Option shall
have been exercised during the first six (6) months of its respective term;
provided, however, that such prohibition shall not apply if the holder of such
Right dies or becomes disabled (within the meaning of Section 22(e)(3) of the
Code) prior to the expiration of such six-month period, or if such holder is
not a director or officer of the Company or a beneficial owner of the Company
who is described in Section 16(a) of the Exchange Act.
A Right shall be deemed exercised on the last day of its term, if not
otherwise exercised by the holder thereof, provided that the fair market value
of the Shares subject to the Right exceeds the exercise price thereof on such
date.
For all purposes of this Article IX, the fair market value of Shares shall
be determined in accordance with the principles set forth in Article V.
X. NONTRANSFERABILITY OF OPTIONS AND STOCK APPRECIATION RIGHTS
Neither an Option nor a Right granted hereunder shall be transferable,
whether by operation of law or otherwise, other than by will or the laws of
descent and distribution, and any Option or Right granted hereunder shall be
exercisable, during the lifetime of the holder, only by such holder.
XI. TERMINATION OF EMPLOYMENT
Upon termination of employment of any employee with the Company and any and
all subsidiary and parent corporations of the Company, an Option or Right
previously granted to the employee, unless otherwise specified by the
Committee in the Option or Right, shall, to the extent not theretofore
exercised, terminate and become null and void, provided that:
(a) if the employee shall die while in the employ of such corporation or
during either the three (3)-month or one (1)-year period, whichever is
applicable, specified in clause (b) below and at a time when such employee
was entitled to exercise an Option or Right as herein provided, the legal
representative of such employee, or such person who acquired such Option or
Right by bequest or inheritance or by reason
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of the death of the employee, may, not later than one (1) year from the
date of death, exercise such Option or Right, to the extent not theretofore
exercised, in respect of any or all of such number of Shares as specified
by the Committee in such Option or Right; and
(b) if the employment of any employee to whom such Option or Right shall
have been granted shall terminate by reason of the employee's retirement
(at such age or upon such conditions as shall be specified by the Board of
Directors), disability (as described in Section 22(e)(3) of the Code) or
dismissal by the employer other than for cause (as defined below), and
while such employee is entitled to exercise such Option or Right as herein
provided, such employee shall have the right to exercise such Option or
Right so granted, to the extent not theretofore exercised, in respect of
any or all of such number of Shares as specified by the Committee in such
Option or Right, at any time up to and including (i) three (3) months after
the date of such termination of employment in the case of termination by
reason of retirement or dismissal other than for cause and (ii) one (1)
year after the date of termination of employment in the case of termination
by reason of disability.
In no event, however, shall any person be entitled to exercise any Option or
Right after the expiration of the period of exercisability of such Option or
Right as specified therein.
If an employee voluntarily terminates his or her employment or is discharged
for cause, any Option or Right granted hereunder shall, unless otherwise
specified by the Committee in the Option or Right, forthwith terminate with
respect to any unexercised portion thereof.
If an Option or Right granted hereunder shall be exercised by the legal
representative of a deceased employee or former employee, or by a person who
acquired an Option or Right granted hereunder by bequest or inheritance or by
reason of the death of any employee or former employee, written notice of such
exercise shall be accompanied by a certified copy of letters testamentary or
equivalent proof of the right of such legal representative or other person to
exercise such Option or Right.
For the purposes of the Plan, the term "for cause" shall mean (i) with
respect to an employee who is a party to a written agreement with, or,
alternatively, participates in a compensation or benefit plan of the Company
or a subsidiary or parent corporation of the Company, which agreement or plan
contains a definition of "for cause" or "cause" (or words of like import) for
purposes of termination of employment thereunder by the Company or such
subsidiary or parent corporation of the Company, "for cause" or "cause" as
defined in the most recent of such agreements or plans, or (ii) in all other
cases, as determined by the Committee, in its sole discretion, (a) the willful
commission by an employee of a criminal or other act that causes or probably
will cause substantial economic damage to the Company or a subsidiary or
parent corporation of the Company or substantial injury to the business
reputation of the Company or a subsidiary or parent corporation of the
Company; (b) the commission by an employee of an act of fraud in the
performance of such employee's duties on behalf of the Company or a subsidiary
or parent corporation of the Company; or (c) the continuing willful failure of
an employee to perform the duties of such employee to the Company or a
subsidiary or parent corporation of the Company (other than such failure
resulting from the employee's incapacity due to physical or mental illness)
after written notice thereof (specifying the particulars thereof in reasonable
detail) and a reasonable opportunity to be heard and cure such failure are
given to the employee by the chief executive officer or, in the case of an
employee who is a senior executive officer of the Company or a subsidiary or
parent corporation, the Board of Directors of the Company or such subsidiary
or parent corporation, as the case may be. For purposes of the Plan, no act,
or failure to act, on the employee's part shall be considered "willful" unless
done or omitted to be done by the employee not in good faith and without
reasonable belief that the employee's action or omission was in the best
interest of the Company or a subsidiary or parent corporation of the Company.
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For the purposes of the Plan, an employment relationship shall be deemed to
exist between an individual and a corporation if, at the time of the
determination, the individual was an "employee" of such corporation for
purposes of Section 422(a) of the Code. If an individual is on military, sick
leave or other bona fide leave of absence, such individual shall be considered
an "employee" for purposes of the exercise of an Option or Right and shall be
entitled to exercise such Option or Right during such leave if the period of
such leave does not exceed 90 days, or, if longer, so long as the individual's
right to reemployment with the corporation granting the option (or a related
corporation) is guaranteed either by statute or by contract. If the period of
leave exceeds ninety (90) days, the employment relationship shall be deemed to
have terminated on the ninety-first (91st) day of such leave, unless the
individual's right to reemployment is guaranteed by statute or contract.
A termination of employment shall not be deemed to occur by reason of (i)
the transfer of an employee from employment by the Company to employment by a
subsidiary corporation or a parent corporation of the Company (ii) the
transfer of an employee from employment by a subsidiary corporation or a
parent corporation of the Company to employment by the Company or by another
subsidiary corporation or parent corporation of the Company.
In the event of the complete liquidation or dissolution of a subsidiary
corporation, or in the event that such corporation ceases to be a subsidiary
corporation, any unexercised Options or Rights theretofore granted to any
person employed by such subsidiary corporation will be deemed canceled unless
such person is employed by the Company or by any parent corporation or another
subsidiary corporation after the occurrence of such event. In the event an
Option or Right is to be canceled pursuant to the provisions of the previous
sentence, notice of such cancellation will be given to each employee holding
unexercised Options, and such holder will have the right to exercise such
Options or Rights in full (without regard to any limitation set forth or
imposed pursuant to Article VII) during the 30 day period following notice of
such cancellation.
XII. ADJUSTMENT OF SHARES; EFFECT OF CERTAIN TRANSACTIONS
In the event of any change in the outstanding Shares through merger,
consolidation, reorganization, recapitalization, stock dividend, stock split,
split-up, split-off, spin-off, combination of shares, exchange of shares, or
other like change in capital structure of the Company, an adjustment shall be
made to each outstanding Option and Right such that each such Option and Right
shall thereafter be exercisable for such securities, cash and/or other
property as would have been received in respect of the Shares subject to such
Option or Right had such Option or Right been exercised in full immediately
prior to such change, and such an adjustment shall be made successively each
time any such change shall occur. The term "Shares" after any such change
shall refer to the securities, cash and/or property then receivable upon
exercise of an Option or Right. In addition, in the event of any such change,
the Committee shall make any further adjustment as may be appropriate to the
maximum number of Shares which may be acquired under the Plan pursuant to the
exercise of Options and Rights, the maximum number of Shares which may be so
acquired by any one employee and the number of Shares and price per Share
subject to outstanding Options or Rights as shall be equitable to prevent
dilution or enlargement of rights under such Options or Rights, and the
determination of the Committee as to these matters shall be conclusive.
Notwithstanding the foregoing, (i) each such adjustment with respect to an
Incentive Option and any related Right shall comply with the rules of Section
424(a) of the Code, and (ii) in no event shall any adjustment be made which
would render any Incentive Option granted hereunder other than an "incentive
stock option" for purposes of Section 422 of the Code.
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In the event of a "change in control" of the Company, all then outstanding
Options and Rights shall immediately become exercisable. For purposes of the
Plan, a "change in control" of the Company occurs if:
(a) there occurs a change in control of the direction and administration
of the Company's business of a nature that would be required to be reported
in response to Item 6(e) of Schedule 14A of Regulation 14A (or any
successor rule or regulation) promulgated under the Exchange Act, whether
or not the Company is then subject to such reporting requirement; or
(b) any "person" (as such term is used in Sections 13(d) and 14(d)(2) of
the Exchange Act but excluding any employee benefit plan of the Company) is
or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company
representing fifty percent (50%) or more of the combined voting power of
the Company's outstanding securities then entitled ordinarily (and apart
from rights accruing under special circumstances) to vote for the election
of directors; or
(c) during any period of two (2) consecutive years, the individuals who
at the beginning of such period constitute the Board of Directors or any
individuals who would be "Continuing Directors" (as hereinafter defined)
cease for any reason to constitute at least a majority thereof; or
(d) the Board of Directors shall approve a sale of all or substantially
all of the assets of the Company; or
(e) the Board of Directors shall approve any merger, consolidation, or
like business combination or reorganization of the Company, the
consummation of which would result in the occurrence of any event described
in clause (b) or (c) above;
provided, however, that none of the foregoing events shall constitute a Change
in Control if such event occurs as a result of an agreement or transaction
approved by the "Continuing Directors," either before or after the occurrence
of such event, and the Continuing Directors in approving such agreement or
transaction determine that it is not in the best interest of the Company for
such agreement or transaction to constitute a Change in Control for purposes
of the Plan.
For purposes of the Plan, "Continuing Directors" shall mean and include each
director of the Company in office on the Effective Date and any successor to
any such director and any additional director who (i) after the Effective Date
was nominated or selected by a majority of the Continuing Directors in office
at the time of his nomination or selection and (ii) at the time of his
nomination or selection is not an "affiliate" or "associate" (as defined in
Regulation 12B under the Exchange Act) of any person who is the beneficial
owner, directly or indirectly, of securities representing ten percent (10%) or
more of the combined voting power of the Company's outstanding securities then
entitled ordinarily to vote for the election of directors.
The Committee, in its discretion, may determine that, upon the occurrence of
a transaction described in the second preceding paragraph, each Option or
Right outstanding hereunder shall terminate within a specified number of days
after notice to the holder, and such holder shall receive, with respect to
each Share subject to such Option or Right, cash in an amount equal to the
excess of the fair market value of such Share immediately prior to the
occurrence of such transaction over the exercise price per Share of such
Option or Right. The provisions contained in the preceding sentence shall be
inapplicable to an Option or Right granted within six (6) months before the
occurrence of a transaction described above if the holder of such Option or
Right is a director or officer of the Company or a beneficial owner of the
Company who is described in Section 16(a) of the Exchange Act, unless such
holder dies or becomes disabled (within the meaning of Section 22(e)(3) of the
Code) prior to the expiration of such six-month period.
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XIII. RIGHT TO TERMINATE EMPLOYMENT
The Plan shall not impose any obligation on the Company or on any subsidiary
corporation or parent corporation thereof to continue the employment of any
holder of Options or Rights; and it shall not impose any obligation on the
part of any holder of Options or Rights to remain in the employ of the Company
or of any subsidiary corporation or parent corporation thereof.
XIV. PURCHASE FOR INVESTMENT
Except as hereinafter provided, the Board of Directors may require an
employee, as a condition upon exercise of any Option or Right granted
hereunder, to execute and deliver to the Company (a) stock powers with respect
to Shares underlying a particular Option or Right and required to be held by a
custodian, and (b) a written statement, in form satisfactory to the Committee,
in which the employee represents and warrants that Shares are being acquired
for such person's own account for investment only and not with a view to the
resale or distribution thereof. The employee shall, at the request of the
Committee, be required to represent and warrant in writing that any subsequent
resale or distribution of Shares by the employee shall be made only pursuant
to either (i) a Registration Statement on an appropriate form under the
Securities Act of 1933, as amended (the "Securities Act"), which Registration
Statement has become effective and is current with regard to the Shares being
sold, or (ii) a specific exemption from the registration requirements of the
Securities Act, but in claiming such exemption the employee shall, prior to
any offer of sale or sale of such Shares, obtain a prior favorable written
opinion of counsel, in form and substance satisfactory to counsel for the
Company, as to the application of such exemption thereto. The foregoing
restriction shall not apply to (i) issuances by the Company so long as the
Shares being issued are registered under the Securities Act and a prospectus
in respect thereof is current or (ii) reofferings of Shares by affiliates of
the Company (as defined in Rule 405 or any successor rule or regulation
promulgated under the Securities Act) if the Shares being reoffered are
registered under the Securities Act and a prospectus in respect thereof is
current.
XV. ISSUE OF CERTIFICATES; LEGENDS, PAYMENT OF EXPENSES
Upon any exercise of an Option or Right which may be granted hereunder and,
in the case of an Option, payment of the purchase price, a certificate or
certificates for the Shares shall be issued by the Company in the name of the
person exercising the Option or Right and shall be delivered to or upon the
order of such person.
The Company may endorse such legend or legends upon the certificates for
Shares issued pursuant to the Plan and may issue such "stop transfer"
instructions to its transfer agent in respect of such Shares as, in its
discretion, it determines to be necessary or appropriate to (i) prevent a
violation of, or to perfect an exemption from, the registration requirements
of the Securities Act, (ii) implement the provisions of the Plan and any
agreement between the Company and the optionee or grantee with respect to such
Shares, or (iii) permit the Company to determine the occurrence of a
disqualifying disposition, as described in Section 421(b) of the Code, of
Shares transferred upon exercise of an Incentive Option granted under the
Plan.
The Company shall pay all issue or transfer taxes with respect to the
issuance or transfer of Shares, as well as all fees and expenses necessarily
incurred by the Company in connection with such issuance or transfer, except
fees and expenses which may be necessitated by the filing or amending of a
Registration Statement under the Securities Act, which fees and expenses shall
be borne by the recipient of the Shares unless such Registration
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Statement has been filed by the Company for its own corporate purposes (and
the Company so states) in which event the recipient of the Shares shall bear
only such fees and expenses as are attributable solely to the inclusion of the
Shares he or she receives in the Registration Statement.
All Shares issued as provided herein shall be fully paid and nonassessable
to the extent permitted by law.
XVI. WITHHOLDING TAXES
The Company may require an employee exercising a Right or a Non-Qualified
Option granted hereunder, or disposing of Shares acquired pursuant to the
exercise of an Incentive Option in a disqualifying disposition (within the
meaning of Section 421(b) of the Code), to reimburse the corporation that
employs such employee for any taxes required by any government to be withheld
or otherwise deducted and paid by such corporation in respect of the issuance
or disposition of such Shares. In lieu thereof, the corporation that employs
such employee shall have the right to withhold the amount of such taxes from
any other sums due or to become due from such corporation to the employee upon
such terms and conditions as the Board of Directors of such corporation shall
prescribe. The corporation that employs such employee may, in its discretion,
hold the stock certificate to which such employee is entitled upon the
exercise of an Option as security for the payment of such withholding tax
liability, until cash sufficient to pay that liability has been accumulated.
In addition, at any time that the Company becomes subject to a withholding
obligation under applicable law with respect to the exercise of a Right or
Non-Qualified Option (the "Tax Date"), except as set forth below, a holder of
a Right or Non-Qualified Option may elect to satisfy, in whole or in part, the
holder's related personal tax liabilities (an "Election") by (i) directing the
Company to withhold from Shares issuable in the related exercise either a
specified number of Shares or Shares having a specified value (in each case
not in excess of the related personal tax liabilities), (ii) tendering Shares
previously issued pursuant to the exercise of an Option or Right or other
shares of the Company's common stock owned by the holder or (iii) combining
any or all of the foregoing options in any fashion. An Election shall be
irrevocable. The withheld Shares and other shares tendered in payment should
be valued at their fair market value (determined in accordance with the
principles set forth in Article V of the Plan) on the Tax Date. The Committee
may disapprove of any Election, suspend or terminate the right to make
Elections or provide that the right to make Elections shall not apply to
particular Shares or exercises. If a holder is a person subject to Section 16
of the Exchange Act then (1) any Election by such holder must be made (i) at
least six months prior to the relevant Tax Date or (ii) on or prior to the
relevant Tax Date and during a period that begins on the third business day
following the date of release of publication of the Company's quarterly or
annual summary statements of sales and earnings and that ends on the twelfth
business day following such date and (2) the Election may not be made with
respect to an exercise, or the withholding obligation arising thereon, if the
relevant Right or Non-Qualified Option was granted six months or less prior to
the date of Election. The Committee may impose any other conditions or
restrictions on the right to make an Election as it shall deem appropriate.
XVII. LISTING OF SHARES AND RELATED MATTERS
The Committee may delay any award, issuance or delivery of Shares if it
determines that listing, registration or qualification of Shares or the
consent or approval of any governmental regulatory body is necessary or
desirable as a condition of, or in connection with, the sale or purchase of
Shares under the Plan, until such listing, registration, qualification,
consent or approval shall have been effected or obtained, or otherwise
provided for, free of any conditions not acceptable to the Committee.
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XVIII. AMENDMENT OF THE PLAN
The Board of Directors, with the concurrence of the Committee, may, from
time to time, amend the Plan, provided that, without the approval of the
shareholders of the Company, no amendment shall be made that will (i) increase
the total number of Shares reserved for Options under the Plan (other than an
increase resulting from an adjustment provided for in Article XII), (ii)
reduce the exercise price of any Incentive Option granted hereunder below the
price required by Article V, (iii) modify the provisions of the Plan relating
to eligibility, or (iv) materially increase the benefits accruing to
participants under the Plan. The Board of Directors shall be authorized to
amend the Plan and the Options granted hereunder to the extent necessary to
permit the Incentive Options granted hereunder to qualify as incentive stock
options within the meaning of Section 422 of the Code. The rights and
obligations under any Option or Right granted before amendment of the Plan or
any unexercised portion of such Option or Right shall not be adversely
affected by amendment of the Plan, Option or Right without the consent of the
holder of such Option or Right.
XIX. TERMINATION OR SUSPENSION OF THE PLAN
The Board of Directors may at any time suspend or terminate the Plan. The
Plan, unless sooner terminated under Article XXII or by action of the Board of
Directors, shall terminate at the close of business on the Termination Date.
Options and Rights may not be granted while the Plan is suspended or after it
is terminated. Rights and obligations under any Option or Right granted while
the Plan is in effect shall not be altered or impaired by suspension or
termination of the Plan, except upon the consent of the person to whom the
Option or Right was granted. The power of the Committee to construe and
administer any Options or Rights granted prior to the termination or
suspension of the Plan under Article III nevertheless shall continue after
such termination or during such suspension.
XX. GOVERNING LAW
The Plan, such Options and Rights as may be granted hereunder and all
related matters shall be governed by, and construed and enforced in accordance
with, the laws of the State of Delaware from time to time obtaining.
XXI. PARTIAL INVALIDITY
The invalidity or illegality of any provision herein shall not be deemed to
affect the validity of any other provision.
XXII. EFFECTIVE DATE
The Plan shall become effective at 9:00 A.M., New York City time, on the
Effective Date; provided, however, that if the Plan [or the amendment to the
Plan to increase the number of shares reserved hereunder to 1,350,000] is not
approved by a vote of the shareholders of the Company at an annual meeting or
any special meeting or by unanimous written consent on or prior to December
31, 1996 [or, with respect to the amendment, the Annual Meeting of
Shareholders of the Company to be held in 1998], it will be of no effect and
any Options or Rights previously granted under the Plan will be void.
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AIR EXPRESS INTERNATIONAL CORPORATION
Proxy Solicited on Behalf of the Board of Directors
FOR
ANNUAL MEETING OF SHAREHOLDERS
JUNE 18, 1998
The undersigned, revoking any proxy heretofore given, hereby appoints
HENDRIK J. HARTONG, JR., GUENTER ROHRMANN and DANIEL J. McCAULEY, or each
or any of them, the attorney and proxy of the undersigned, with full power
of substitution, to vote on behalf of the undersigned all shares that the
undersigned, if personally present, would be entitled to vote at the Annual
Meeting of Shareholders of Air Express International Corporation to be held
on June 18, 1998, at the Hyatt Regency Greenwich, 1800 East Putnam Avenue,
Old Greenwich, Connecticut 06870, at 11:00 a.m., Eastern Daylight Time, and
at any adjournment thereof.
UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR THE
ELECTION AS DIRECTORS OF ALL NOMINEES LISTED IN THE ACCOMPANYING PROXY
STATEMENT, FOR THE AMENDMENT OF THE COMPANY'S CERTIFICATE OF INCORPORATION
TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK, PAR VALUE $0.01, FROM
40,000,000 TO 100,000,000 AND FOR THE AMENDMENT TO THE COMPANY'S 1996
INCENTIVE STOCK PLAN TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK
RESERVED THEREUNDER FROM 750,000 TO 1,350,000, ALL AS MORE FULLY DESCRIBED
IN THE PROXY STATEMENT; if specific instructions are indicated, this Proxy
will be voted in accordance therewith. The Board of Directors recommends a
vote FOR all of the listed nominees, FOR the amendment to the Company's
Certificate of Incorporation and FOR the amendment to the Company's 1996
Incentive Stock Plan.
(continued, and to be signed on reverse side)
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE Please mark your [X]
NOMINEES NAMED BELOW, FOR THE AMENDMENT OF THE COMPANY'S CERTIFICATE OF votes as
INCORPORATION TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK, PAR VALUE indicated in
$0.01, FROM 40,000,000 TO 100,000,000 AND FOR THE AMENDMENT TO THE COMPANY'S this example
1996 INCENTIVE STOCK PLAN TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK
RESERVED THEREUNDER FROM 750,000 TO 1,350,000.
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<S> <C> <C>
1. Election of Directors: Nominees: John M. Fowler, Hendrik J. Hartong, Jr., Donald J. Keller,
Andrew L. Lewis IV, Richard T. Niner, John Radziwill, Guenter Rohrmann
and Noel E. Vargas
FOR all Nominees WITHHOLD
listed (except as noted AUTHORITY (INSTRUCTION: To withhold authority to vote for any individual nominee,
to the contrary) write that nominee's name in the space provided below)
[ ] [ ]
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<S> <C>
2. To approve an amendment to the Company's Certificate of 4. In their discretion, the Proxies are authorized to
Incorporation to increase the number of shares of Common Stock, $0.01 transact such other business as may properly come
par value, which the Company shall be authorized to issue from 40,000 before the meeting, or any other adjournment thereof.
to 100,000,000.
FOR AGAINST ABSTAIN Please sign exactly as name appears hereon. If the
[ ] [ ] [ ] shares are registered in the names of two or more
persons, each should sign. Executors,
administrators, trustees, guardians, attorneys-
in-fact, general partners and other persons acting
3. To approve an amendment to the Company's 1996 Incentive Stock in a representative capacity should add their
Plan to increase the number of shares of Common Stock reserved title. When the proxy is given by a corporation,
thereunder from 750,000 to 1,350,000. it should be signed by an authorized officer.
FOR AGAINST ABSTAIN Dated _______________________________________ 1998
[ ] [ ] [ ] __________________________________________________
__________________________________________________
PLEASE COMPLETE, FILL IN THE DATE, SIGN AND MAIL
THIS PROXY PROMPTLY USING THE ENCLOSED POST-PAID
ENVELOPE.
</TABLE>
