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:
[X] Preliminary Proxy Statement [_]Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[_] 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:
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(2) Aggregate number of securities to which transaction applies:
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(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:
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[_] 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 __, 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, CT 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
____________ 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. The shares represented by such proxies, although considered present for
proxy 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.
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
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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.
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 Directorships Continuously
Name Age 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, Jr. 59 Chairman of the Board of the Company since 1985
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 Foods 1990
International, Inc. since December 1997.
Chairman of the Board of Prestone Products
Corporation since January 1995. Chairman
of the Board of B. Manischewitz Company
since March 1993 (President, Co-Chief
Executive Officer and a director from May
1992 to March 1993).
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Director
Principal Occupation and Other Directorships Continuously
Name Age Since
- -------------------------- ------- --------------------------------------------- -----------------
<S> <C> <C> <C>
Andrew L. Lewis IV 41 President, KRR Partners L.P., a private 1986
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
and Blue Shield of Philadelphia.
Richard T. Niner 58 General Partner since 1985 of Brynwood 1985
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 President of Radix Organization Inc. since 1995
1976; President of Radix Ventures Inc. from
1979 until its acquisition by the
Company in June 1995.
Guenter Rohrmann 59 President and Chief Executive Officer of 1985
the Company since 1989.
Noel E. Vargas 70 President of Luskcom Group Inc. since 1975 1996
(President and Chief Executive Officer
until its acquisition by the Company in
April 1996).
</TABLE>
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- --------------------------------------------------------------------------------
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.
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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.
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<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 (12)
Dennis M. Dolan (7)....................................... 99,112 (12)
Giorgio Laccona (8)....................................... 46,722 (12)
Daniel J. McCauley(9)..................................... 53,738 (12)
John M. Fowler............................................ 45,000 (12)
Donald J. Keller.......................................... 5,063 (12)
Andrew L. Lewis IV........................................ 12,607 (12)
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
(consisting of 13 persons)................................ 2,397,530 6.8
</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
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<PAGE>
has shared voting power with respect to 1,904,694 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) 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) 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
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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.
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 All Other
Name and Principal Annual Compensation (1) Options (2) Compensation
-----------------------------------------
Position Year Salary($) Bonus($) (# of ($)(3)
Shares)
- ------------------------------- ----------- ----------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Guenter Rohrmann 1997 525,000 1,200,000 0 114,549
President and Chief 1996 480,000 800,000 0 40,497
Executive
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 1996 155,000 150,000 0 12,488
Manager
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
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<PAGE>
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 $4,534, respectively. A
participant's interest in the Company's contributions to the 401(k)
Retirement Plan and the Deferred Compensation Plan vests at the rate of 20%
for each of the first five years of service and is fully vested thereafter.
The balance in 1997 represents the dollar value of premiums paid by the
Company with respect to life insurance for the benefit of each of the named
executive officers.
Stock Option Grants in 1997
The following table sets forth information with respect to the grant of
stock options during 1997 to the executive officers named in the Summary
Compensation Table.
<TABLE>
<CAPTION>
Individual Grants
- --------------------------------------------------------------------------
Percent of
Total Potential Realizable Value at
Options Options Exercise Assumed Annual Rates of Stock
Granted Granted to Price per Expiration Price Appreciation for Option
(# of Employees Share ($)(2) Date Term (3)
Name Shs.) in 1997(1)
- ------------------- ------------ ------------- ------------- ------------- -------------------------------
5% 10%
--------------- --------------
<S> <C> <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.
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<PAGE>
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
Shares Underlying Unexercised In-the-Money
Acquired on Value Options at Options at
Name Exercise Realized Fiscal Year End (#) Fiscal Year End ($)(1)
(#) ($)
---- --------- --------- ------------------- ----------------------
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, 19976,
over (ii) the aggregate exercise price of the options.
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.
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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 borne by each of
these
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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
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<PAGE>
criteria. Compensation attributable to the exercise of outstanding options
previously granted under the Company's 1991 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
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
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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.
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 and 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.
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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.
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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 nuber of
shares reserved for the Plan by 600,000 shares. As of May __, 1998, the closing
price of a shares of Common Stock as reported by The NASDAQ Stock Market, Inc.
was $______.
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.
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 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.
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
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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
1,250,000 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 is 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.
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 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 125,000
Shares. 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
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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.
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
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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 hereto, the number of Shares for which the
related Option may be exercised will be reduced by the number of 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. The aggregate value of cash and Common Stock payable with
respect to each Share for which a Right is exercised shall be limited, however,
to 100% of the exercise price per Share under such Right. 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
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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 Securities
Exchange Act of 1934, as amended (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
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
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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 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.
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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 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
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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 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
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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 "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 hereunder 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 ERISA.
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.
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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 Georgeson & Company, Inc. 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 __, 1999.
By Order of the Board of Directors
Daniel J. McCauley, Secretary
May __, 1998
Darien, Connecticut
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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 __, 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.
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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 and twenty-five thousand (125,000).
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
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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
NonQualified Options and/or Rights under the terms hereinafter set forth.
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
thereunder, to amend the
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Plan and the Options and Rights granted thereunder, 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 thereunder 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.
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.
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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 so provide and to the
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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
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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.
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.
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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 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.
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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 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
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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
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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.
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.
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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.
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
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(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
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<PAGE>
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 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
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<PAGE>
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.
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 thereunder to the extent necessary to permit the Incentive
Options granted thereunder 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.
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<PAGE>
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 thereunder 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 1,250,000] 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 Stockholders 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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<PAGE>
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 directions 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)
<PAGE>
The Board of Directors recommends a vote FOR the Please mark [X]
election of each of the nominees named your votes as
below, FOR the amendment of the Company's Certificate indicated in
of Incorporation to increase the number of this example
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 indicated of Common Stock
reserved thereunder from 750,000 to 1,350,000.
1.Election of Nominees: John M. Fowler, Hendrik J. Hartong, Jr., Donald
Directors: J. Keller, Andrew L. Lewis IV, Richard T. Niner,
John Radziwill, Guenter Rohrman and Noel E. Vargas
FOR all Nominees WITHHOLD
listed (except as AUTHORITY
noted to the contrary)
[_] [_]
(INSTRUCTION: To withhold authority to vote for any individual
nominee, write that nominee's name in the space provided below)
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2. To approve an amendment to the Company's Certificate of Incorporation to
increase the number of shares of the Common Stock, $0.01 par value, which the
Company shall be authorized to issue from 40,0000 to 100,000,000.
FOR AGAINST ABSTAIN
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3. To approve an amendment to the Company;s 1996 Incentive Stock Plan to
increase the number of shares guardians, of Common Stock reserved thereunder
from 750,000 to partners and other persons acting in a 1,350,000.
FOR AGAINST ABSTAIN
|_| |_| |_|
4. In their discretion, the Proxies are authorized to transact such other
business as may properly come before meeting, or any other adjournment thereof.
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, attorneys-in-fact, general representative capacity should add
theirtitle. When the proxy is given by a corporation, it should be signed by an
authorized officer.
Dated....................................1998
.............................................
.............................................
PLEASE COMPLETE, FILL IN DATE, SIGN AND MAIL THIS PROXY
PROMPTLY USING THE ENCLOSED POST-PAID ENVELOPE.
