<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
AIR EXPRESS INTERNATIONAL CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------------
Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
<PAGE>
AIR EXPRESS INTERNATIONAL CORPORATION
120 Tokeneke Road
Darien, Connecticut 06820
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 17, 1999
----------------
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 17, 1999, at 11:00 a.m.,
Eastern Daylight Time, for the following purposes:
(1) To elect seven (7) directors;
(2) To approve an amendment to the Company's 1996 Incentive Stock Plan to
permit the grant of stock options and stock appreciation rights to members
of the board of directors of the Company who are not salaried employees of
the Company;
(3) 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 6, 1999, 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 20, 1999
Darien, Connecticut
----------------
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE,
SIGN, AND MAIL THE ACCOMPANYING FORM OF PROXY TO THE COMPANY AS PROMPTLY AS
POSSIBLE IN THE ENCLOSED STAMPED ENVELOPE.
<PAGE>
AIR EXPRESS INTERNATIONAL CORPORATION
120 Tokeneke Road
Darien, Connecticut 06820
----------------
PROXY STATEMENT
----------------
The accompanying proxy is solicited by the Board of Directors of Air Express
International Corporation (the "Company") in connection with the Annual
Meeting of Shareholders to be held on Thursday, June 17, 1999, 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 6,
1999, 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
33,403,494 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 20, 1999.
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
Seven directors are to be elected at the Annual Meeting, each to serve until
the next Annual Meeting of Shareholders and until his successor has been duly
elected and qualifies. If no direction to the contrary is given, all proxies
received by the Board of Directors will be voted in favor of the nominees
listed below. If any nominee is unable or declines to serve, an event not now
anticipated by the Board of Directors, such proxies may be voted for the
election of a substitute designated by the Board of Directors. Each of the
nominees is currently serving as a director of the Company and was elected to
that position at the last Annual Meeting of Shareholders. Noel E. Vargas, a
current director of the Company, will not be standing for re-election since he
has reached the mandatory retirement age specified in the Company's by-laws.
A plurality of the votes of the shares present in person or represented by
proxy at the meeting shall be needed for the election of a director.
1
<PAGE>
The following table sets forth information with respect to each nominee for
election as a director at the Annual Meeting:
<TABLE>
<CAPTION>
Director
Principal Occupation and Continuously
Name Age Other Directorships Since
---- --- ------------------------ ------------
<C> <C> <S> <C>
John M. Fowler.......... 50 Independent business consultant 1985
since August 1998. Executive Vice
President and Chief Financial
Officer, MoneyGram Payment
Systems, Inc., October 1996
through August 1998. 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...... 60 Chairman of the Board of the 1985
Company since 1985 (Chief
Executive Officer from 1985 to
1989); since 1988 General Partner
of Brynwood Partners II L.P. and
since 1996 General Partner of
Brynwood Partners III, L.P.,
private investment partnerships.
Director of Hurco Companies, Inc.
and Lincoln Snacks Company.
Donald J. Keller........ 67 Chairman of the Board of Vlasic 1990
Foods International, Inc. since
March 1998; Chairman of the Board
of Prestone Products Corporation
from January 1995 through June
1997. Chairman of the Board of B.
Manischewitz Company from March
1993 until May 1998 (President,
Co-Chief Executive Officer and a
director from May 1992 to March
1993). Director of Dan River Inc.
Andrew L. Lewis IV...... 42 President, KRR Partners L.P., a 1986
private investment partnership,
since July 1993; Director of Hurco
Companies, Inc. and Independence
Blue Cross of Philadelphia.
Richard T. Niner........ 59 General Partner since 1988 of 1985
Brynwood Partners II L.P., and
General Partner of Wind River
Associates LP., private investment
partnerships. Director of Arrow
International, Inc., Case Pomeroy
& Company, Inc. and Hurco
Companies, Inc.
John Radziwill.......... 51 Private investor since August 1995
1997. President of Radix
Organization Inc. from July 1976
until August 1997; President of
Radix Ventures Inc. from 1979
until its acquisition by the
Company in June 1995.
Guenter Rohrmann........ 60 President and Chief Executive 1985
Officer of the Company since 1989.
</TABLE>
2
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THE
ELECTION OF EACH OF THE FOREGOING NOMINEES.
Committees of the Board of Directors
The Board of Directors has an Executive Committee, an Audit Committee, a
Compensation and Stock Option Committee and a Nominating Committee.
The Executive Committee (consisting of Messrs. Hartong, Niner and Rohrmann)
has all of the powers of the Board of Directors between meetings of the Board,
subject to Delaware law.
The Audit Committee (consisting of Messrs. Lewis, Keller, Niner and Vargas)
has the responsibility of meeting with the Company's independent public
accountants and internal auditors to review the plan, scope and results of the
audit of the Company's annual financial statements and the recommendations of
the independent public accountants regarding the Company's internal accounting
systems and controls. The Audit Committee also recommends the appointment of
the independent public 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, 1998, there were seven meetings of the
Board of Directors, three meetings of the Executive Committee, two meetings of
the Audit Committee, two 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 1998, each director who is not an officer of the Company received an
annual fee of $20,000 for serving as a director and $1,250 for each day of
attendance at meetings of the Board of Directors or a committee thereof.
3
<PAGE>
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth as of April 23, 1999 (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)............... 3,187,700 9.5%
75 State Street
Boston, Massachusetts 02109
FMR Corp. (3)................................... 1,804,287 5.4
82 Devonshire Street
Boston, Massachusetts 02109
Franklin Resources Inc. (4)..................... 2,197,770 6.6
77 Mariners Boulevard
San Mateo, California 94403
Hendrik J. Hartong, Jr. (5)..................... 486,517 1.5
Guenter Rohrmann (6)............................ 480,507 1.4
Robert J. O'Connell (7)......................... 44,742 (14)
Dennis M. Dolan (8)............................. 102,938 (14)
Giorgio Laccona (9)............................. 56,097 (14)
Daniel J. McCauley (10)......................... 49,238 (14)
John M. Fowler.................................. 45,000 (14)
Donald J. Keller................................ 5,063 (14)
Andrew L. Lewis IV.............................. 12,607 (14)
Richard T. Niner (11)........................... 357,087 1.0
John Radziwill.................................. 408,502 1.2
Noel E. Vargas (12)............................. 457,290 1.4
All directors and executive officers as a group
(consisting of 13 persons) (13)................ 2,505,588 7.5
</TABLE>
- --------
(1) Shares issuable upon the exercise of stock options owned by that person
which can be exercised within 60 days of April 23, 1999, 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 1, 1999,
Wellington shared voting power with respect to 2,309,400 and shared
dispositive power with respect to of 3,187,700 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 1, 1999 filed jointly by FMR Corp. ("FMR"), Edward C. Johnson
3d ("Mr. E. Johnson"), Abigail P. Johnson ("Ms. Johnson"), FMR, Mr. E.
Johnson and Ms. Johnson owned an aggregate of 1,804,287 shares. This
amendment indicates
4
<PAGE>
that FMR, Mr. E. Johnson and Ms. Johnson have sole dispositive power over
all 1,804,287 shares, that FMR has sole voting power over 152,837 shares
and no shared voting power over any shares and that neither Mr. E. Johnson
nor Ms. Johnson have sole or shared voting power with respect to any of
such shares.
(4) Based on information in a Schedule 13G dated January 22, 1999 filed
jointly by Franklin Resources Inc. ("FRI"), Charles B. Johnson ("Mr. C.
Johnson"), Rupert A. Johnson, Jr. ("Mr. R. Johnson") and Franklin
Advisers Inc. ("FAI"), FRI, Mr. C. Johnson, Mr. R. Johnson and FAI owned
an aggregate of 2,197,700 shares. This filing indicates that FAI has
sole power to vote over 2,166,300 shares, that FAI has sole dispositive
power over 2,166,300 shares and Franklin Management Inc. has sole
dispositive power over 31,470 shares, and that FRI, Mr. C. Johnson and
Mr. R. Johnson are deemed to have beneficial ownership of 2,197,300
shares, and FAI has beneficial ownership of 2,166,300 shares. None of
these persons has voting power over 31,470 shares.
(5) Includes 83,750 shares issuable upon the exercise of stock options.
(6) Includes 131,250 shares issuable upon the exercise of stock options.
(7) Includes 18,750 shares issuable upon the exercise of stock options.
(8) Includes 30,000 shares issuable upon the exercise of stock options.
(9) Includes 30,000 shares issuable upon the exercise of stock options.
(10) Includes 22,500 shares issuable upon the exercise of stock options.
(11) Includes 5,061 shares held in custodial accounts for the benefit of Mr.
Niner's children.
(12) Includes 156,632 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.
(13) Includes 316,250 shares issuable upon the exercise of stock options.
(14) 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
owning beneficially more than ten percent of the Company's Common Stock,
complied in a timely manner with all filing requirements applicable to them
with respect to transactions during the year ended December 31, 1998.
5
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth the cash compensation, as well as certain
other compensation, paid or accrued by the Company to the Chief Executive
Officer and each of the four most highly compensated executive officers of the
Company (other than the Chief Executive Officer) as of December 31, 1998, for
their services in all capacities for each of the years in the three-year
period ended December 31, 1998:
<TABLE>
<CAPTION>
Long-Term
Compensatiom
------------
Annual Compensation (1) Securities
------------------------ Underlying
Options (2) All Other
(# of Compensation
Name and Principal Position Year Salary($) Bonus($) Shares) ($) (3)
--------------------------- ---- --------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Guenter Rohrmann............ 1998 560,000 500,000 75,000 115,299
President and Chief 1997 525,000 1,200,000 0 114,549
Executive Officer 1996 480,000 800,000 0 40,497
Robert J. O'Connell......... 1998 210,000 150,000 0 58,799
Senior Vice President 1997 200,000 250,000 15,000 55,299
1996 190,000 150,000 0 14,740
Dennis M. Dolan............. 1998 200,000 150,000 0 28,975
Executive Vice President 1997 190,000 250,000 15,000 26,000
and Chief Financial Officer 1996 175,000 150,000 0 13,088
Giorgio Laccona.............
Senior Vice President, 1998 185,000 150,000 0 28,012
General Manager 1997 170,000 250,000 15,000 24,600
The Americas 1996 155,000 150,000 0 12,488
Daniel J. McCauley.......... 1998 165,000 60,000 0 60,147
Vice President, Secretary 1997 155,000 100,000 15,000 58,699
and General Counsel 1996 145,000 75,000 0 7,000
</TABLE>
- --------
(1) Salary levels for each year are fixed at the beginning of the year.
Bonuses for each year are determined following the end of the year.
(2) Adjusted to reflect stock dividend paid on July 25, 1997.
(3) Consists of contributions by the Company to its 401(k) Retirement Plan,
which covers substantially all U.S.-based employees who are not covered by
a collective bargaining agreement. The Company contributes (i) a sum equal
to 3% of the salary of each eligible employee and (ii) a further sum, not
exceeding 3% of the employee's salary, equal to the amount, if any,
contributed by the employee, subject to certain limitations imposed by the
Internal Revenue Code. Contributions under the 401(k) Retirement Plan for
1998 for Messrs. Rohrmann, O'Connell, Dolan, Laccona and McCauley were
$9,300, $9,800, $9,300, $9,300 and $7,634, 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 1998 for Messrs.
Rohrmann, O'Connell, Dolan, Laccona and McCauley were $36,000, $9,000,
$8,675, $8,212 and $5,513, respectively. A participant's interest in the
Company's contributions to the 401(k) Retirement Plan and the Deferred
Compensation Plan vests at the rate of 20% for each of the first five
years of service and is fully vested thereafter. The balance in 1998 and
1997 represents the dollar value of premiums paid by the Company with
respect to life insurance for the benefit of each of the named executive
officers.
6
<PAGE>
Stock Option Grants in 1998
The following table sets forth information with respect to the grant of
stock options during 1998 to the executive officers named in the Summary
Compensation Table.
<TABLE>
<CAPTION>
Individual Grants
------------------------------------------------
Potential
Percent of Realizable Value
Total at Assumed
Options Annual Rates of
Options Granted to Exercise Stock Price
Granted Employees in Price per Expiration Appreciation for
(# of Shs.) 1998(1) Share ($)(2) Date Option Term (3)
---------- ------------ ------------ ---------- -----------------
Name 5% 10%
---- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Guenter Rohrmann........ 75,000 47% 26.31 6/18/03 544,617 1,205,675
Robert J. O'Connell..... 0 -- -- -- -- --
Dennis M. Dolan......... 0 -- -- -- -- --
Giorgio Laccona......... 0 -- -- -- -- --
Daniel J. McCauley...... 0 -- -- -- -- --
</TABLE>
- --------
(1) Options with respect to a total of 160,000 shares were granted to
employees in 1998.
(2) All options were granted at an exercise price equal to the market value on
the date of grant.
(3) Represents the potential appreciation of the options over their stated
term of five-years, based upon assumed compounded rates of appreciation of
5% per year (equivalent to 27.6%) and 10% per year (equivalent to 61.1%).
The amounts set forth in these columns are not intended as forecasts of
future appreciation, which is dependent upon the actual increase, if any,
in the market price of the underlying shares, and there is no assurance
that the amounts of appreciation shown in the table actually will be
realized.
Aggregated Option Exercises in 1998 and
Option Value at December 31, 1998
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 1998 and holdings of unexercised options at the end of
the year:
<TABLE>
<CAPTION>
Number of Shares Value of Unexercised
Underlying Unexcercised In-the-Money
Options at Options at
Fiscal Year End(#) Fiscal Year End ($)(1)
------------------------- -------------------------
Shares
Acquired on Value
Exercise Realized
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Guenter Rohrmann........ 0 0 84,375 103,125 499,247 166,416
Robert J. O'Connell..... 31,500 497,777 9,375 16,875 33,283 33,283
Dennis M. Dolan......... 0 0 20,625 16,875 99,849 33,283
Giorgio Laccona......... 11,250 224,674 20,625 16,875 99,849 33,283
Daniel J. McCauley...... 0 0 15,000 15,000 66,567 22,189
</TABLE>
7
<PAGE>
(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, 1998,
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
$585,000. By its terms, the agreement will expire December 31, 2001. The
agreement provides that in event of a change of control (as defined below),
either party may terminate the executive's employment at any time, and upon
such termination, the Company would be required to pay in a lump sum the
balance of the base salary for the unexpired term of the agreement (but not
less than two times the annual base salary). A "change of control" is defined
in the agreement as (i) the acquisition by any person (which term includes any
entity or group) of shares of the Company's Common Stock representing more
than 40% of the shares outstanding or (ii) the sale or other disposition by
the Company of all or substantially all of its assets.
8
<PAGE>
Performance Graph
The following Performance Graph compares the cumulative total shareholder
return on the Company's Common Stock over the five years ended December 31,
1998, 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, 1993
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
Base Period
Company Name/Index Dec 93 Dec 94 Dec 95 Dec 96 Dec 97 Dec 98
- --------------------------- ----------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Air Express International
Corporation............... $100 $152.67 $175.64 $250.23 $356.77 $256.81
S&P 500 Index.............. 100 101.32 139.40 171.40 228.59 293.91
Peer Group................. 100 98.93 142.28 103.11 171.47 181.77
</TABLE>
9
<PAGE>
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 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 goals 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 1998 to the Company's senior
executive officers, including the Chief Executive Officer, the Committee noted
(a) that management continued to integrate successfully various operations
which had been acquired into the Company's logistics service and information
network and (b) that, while net income for the Company was at a level which
was the second highest in Company history, it did not exceed net income for
1997 and did not meet management's goals for the year. Accordingly, the cash
bonuses for the Company's executive officers and management in general were
reduced substantially from 1997 levels. The reduction reflected the
Committee's views of responsible management and of the appropriate levels of
bonus based upon the year's financial results.
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 plans that meet certain criteria and are approved by shareholders. The
Company's 1996 Incentive Stock Plan has been designed to satisfy these
criteria. Compensation attributable to the exercise of outstanding options
previously granted under the Company's 1991 Incentive Stock Plan is also
excludable from the deductibility limitation pursuant to certain transition
rules under the Internal Revenue Code. The Committee is continuing to review
the
10
<PAGE>
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 currently 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 OF 1996 INCENTIVE STOCK PLAN
Introduction
On April 17, 1996, the Company's Board of Directors adopted the 1996
Incentive Stock Plan (as amended, the "Plan"), which was approved by the
Company's stockholders at the 1996 Annual Meeting. In 1998, the Company's
Board of Directors and stockholders approved an amendment to the Plan
increasing the number of shares of Common Stock reserved under the Plan to
1,350,000. On April 30, 1999, the Board of Directors adopted a further
amendment to the Plan to permit the grant of stock options and stock
appreciation rights under the Plan to be made to directors who are not
salaried employees of the Company. This amendment will not become effective
unless it is approved at the meeting by the Company's stockholders. As of May
14, 1999, the closing price of a share of Common Stock as reported by The
NASDAQ Stock Market, Inc. was $27 7/8.
The Board of Directors believes that an increasing number of public
companies are implementing stock-based compensation programs for their outside
directors. The Board of Directors also believes that stock options and stock
appreciation rights held by non-employee directors would align their interests
more closely to those of the Company's stockholders generally.
The Compensation and Stock Option Committee (the "Committee") is charged
with responsibility for administering the Plan. The Committee will have the
authority to determine which non-employee directors, including members of the
Committee, will receive stock options or stock appreciation rights, the number
of shares covered by such options and rights and certain other terms thereof.
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Summary of Plan as Amended
The following is a summary of the material features of the Plan (including
the amendment to be voted on at the meeting). The summary does not purport to
be complete and is qualified in its entirety by reference to the full text of
the Plan, as amended, a copy of which is appended to this Proxy Statement as
Annex A.
The Plan provides for the granting to eligible employees and directors who
are not salaried employees of the Company of stock options ("Options"), which
may be Incentive Options (as defined) or Non-Qualified Options (as defined);
provided that only eligible employees may be granted Incentive Options. In
addition, stock appreciation rights ("Rights") may be granted alone or in
conjunction with or in the alternative to Options.
Options and Rights may be granted with respect to an aggregate of up to
1,350,000 shares (the "Shares") of the Company's Common Stock (which number is
subject to adjustment in the event of stock dividends, stock splits and other
similar events) during the period from July 1, 1996 through June 30, 2006. To
the extent that an Option is not exercised within the period of exercisability
specified therein, it will expire as to the then unexercised part. If any
Option or Right terminates prior to the expiration of the Plan, the Committee
has the right to use the Shares as to which such Option or Right was not
exercised to grant one or more additional Options or Rights. The Shares may be
made available from either authorized but unissued shares, treasury shares or
both. The effective date of the Plan was July 1, 1996. In the event that the
amendment to the Plan to permit the grant of Options and Rights to directors
who are not salaried employees of the Company is not approved by shareholders
at the annual meeting, such directors would continue not to be eligible to
receive Options or Rights.
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 as in effect on the effective date of the Plan (or any successor
rule or regulation) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") and (ii) "outside directors" within the meaning of Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code"). Members
of the Committee are 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 to salaried key employees (including
executive officers) of the Company, or of any subsidiary corporation or parent
corporation of the Company, and to directors of the Company who are not
salaried employees of the Company.
The aggregate number of Shares with respect to which Options and/or Rights
may be granted to any one employee or director pursuant to the Plan may not
exceed 187,500 Shares (after giving effect to the stock dividend paid by the
Company in 1997). In addition, no individual employee may be granted Incentive
Options to purchase Shares if the aggregate fair market value of Shares with
respect to which Incentive Options are exercisable for the first time by such
employee during any calendar year (under all stock option plans of the Company
or any subsidiary or parent corporation of the Company) exceeds $100,000. For
the purpose of the foregoing limitation, the fair market value of Shares
subject to an Incentive Option is to be determined as of the time the Option
is granted, the limitation is to be applied by taking into account Options in
the order in which they were granted and Incentive Options granted before 1987
need not be taken into account. Directors who are not salaried employees of
the Company are not eligible to receive Incentive Options.
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The Committee may require, as a condition of granting any Option or Right,
that the grantee enter into an agreement with the Company providing that in
the event of the termination of employment or service of the grantee for any
reason (other than dismissal without cause) the grantee will not, for a period
determined by the Committee at the time of grant, enter into any other
employment, or participate directly or indirectly in any other business or
enterprise that is competitive with the business of the Company or enter into
any employment in which such employee will be called upon to utilize special
knowledge and information obtained through employment with the Company or any
subsidiary or parent corporation of the Company. The Committee also may
require that the grantee not sell or otherwise dispose of Shares acquired
pursuant to the exercise of an Option or a Right for a period of six months
from the date of acquisition.
The purchase price of Shares issuable upon exercise of an Incentive Option
may not be less than 100% of the fair market value of such Shares on the date
the Option is granted; provided, however, that, in the case of an Incentive
Option granted to a person who, at the time of the grant, owns shares of the
capital stock of the Company or of any subsidiary or parent corporation of the
Company representing more than 10% of the total combined voting power of the
outstanding capital stock of the Company or of such subsidiary or parent
corporation (hereafter, a "Control Person"), the purchase price may not be
less than 110% of such fair market value on the date the Option is granted.
The purchase price of Shares issuable upon exercise of a Non-Qualified Option
will be such amount as the Committee deems appropriate but may not be less
than 100% of the fair market value of such Shares on the date the Option is
granted. The purchase price must be paid in full at the time of exercise of
the Option and payment must be made in cash, except that in lieu of cash, the
holder of an Option may, if the instrument evidencing the Option so permits,
exercise such Option, in whole or in part, by delivering to the Company
outstanding shares of the Company's Common Stock owned by such holder. For
purposes of determining the portion of the exercised Option being paid for by
the delivery of Shares, such Shares shall be valued at their fair market
value. All cash proceeds received by the Company from the exercise of Options
will be used for general corporate purposes.
In general, any Incentive Option granted under the Plan may be exercised
during a period of not more than ten years from the date of grant (five years
in the case of an Incentive Option granted to a Control Person), although a
shorter period may be specified in the instrument evidencing such Incentive
Option, in such amounts as the Committee may specify at the time of grant. A
Non-Qualified Option may be exercised during the period specified by the
Committee in the instrument evidencing such Non-Qualified Option. The
Committee may fix and thereafter, may accelerate, in whole or in part, the
period within which any Option may be exercised.
In the discretion of the Committee, a Right may be granted (i) alone, (ii)
simultaneously with the grant of an Option (either Incentive or Non-Qualified)
and in conjunction therewith or in the alternative thereto or (iii) subsequent
to the grant of a Non-Qualified Option and in conjunction therewith or in the
alternative thereto.
The exercise price of a Right granted alone will be set by the Committee at
the time of grant but may not be less than 100% of the fair market value of
one Share on the date of grant of such Right. A Right granted simultaneously
with or subsequent to the grant of an Option and in conjunction therewith or
in the alternative thereto must have the same exercise price as the related
Option, may not be transferred except upon the same terms and conditions as
those applicable to the related Option and must be exercisable to the same
extent as the related Option; provided, however, that a Right, by its terms,
may not be exercised unless, at the time of exercise, the fair market value of
the Shares subject to the Right and related Option exceeds the exercise price
thereof.
Upon exercise of a Right granted simultaneously with or subsequent to an
Option, and in the alternative thereto, the number of Shares for which the
related Option may be exercised will be reduced by the number of
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Shares for which the Right has been exercised. The number of Shares for which
a Right is exercisable will be reduced upon any exercise of a related Option
by the number of Shares for which such Option has been exercised.
The holder of a Right may elect to receive cash, Shares or a combination of
cash and Shares having an aggregate value equal to the product of (i) the
excess of (x) the fair market value of one share of Common Stock on the date
the Right is exercised over (y) the exercise price specified in such Right or
its related Option, multiplied by (ii) the number of Shares with respect to
which such Right is being exercised. A Right will be deemed exercised on the
last day of its term, if not otherwise exercised by its holder, provided that
the fair market value of the Shares subject to the Right exceeds the exercise
price thereof on such date.
The election by a holder of a Right to receive cash in full or partial
settlement of a Right, and any exercise of such Right for cash, may be made
only during the period beginning on the third business day following the date
of release for publication by the Company of a quarterly or annual summary
statement of earnings and ending on the twelfth business day following such
date. The Committee, in its sole discretion, may disapprove, in whole or in
part, a holder's election to receive cash.
In the event of a Change of Control (as defined) of the Company, all then
outstanding Options and Rights will become immediately exercisable. Moreover,
the Committee may determine, in its discretion, that upon the occurrence of a
Change of Control, Options and Rights will terminate within a specified number
of days after notice to the holder thereof, and such holder shall receive,
with respect to each Share subject to such Option or Right, cash in an amount
equal to the excess of the fair market value of such Shares immediately prior
to the occurrence of such transaction over the exercise price of such Option
or Right. For purposes of the Plan, and except as noted below, a "Change of
Control" will be deemed to occur if (a) there occurs a change in control of
the direction and administration of the Company's business that would be
required to be reported in response to Item 6(e) of Schedule 14A promulgated
under the Exchange Act, or (b) any person (excluding any employee benefit
plan) becomes the beneficial owner of securities representing 50% or more of
the combined voting power of the Company's outstanding securities then
entitled to vote for the election of directors, or (c) during any consecutive
two-year period, those individuals who at the beginning of such period
constituted the Board of Directors or who would be Continuing Directors (as
defined) cease for any reason to constitute a majority of the Board of
Directors, or (d) the Board of Directors approves the sale of all or
substantially all of the Company's assets or any merger, consolidation or
similar business combination involving the Company that would result in the
occurrence of any event described in clause (b) or clause (c) above. However,
none of the foregoing events will be deemed a Change of Control if it occurs
as a result of an agreement or transaction approved by the Company's
Continuing Directors who, in granting such approval, determine that it is not
in the Company's best interest for such agreement or transaction to constitute
a "Change of Control" for purposes of the Plan. The term "Continuing
Directors" is defined in the Plan to mean and include each director of the
Company in office on July 1, 1996 and any successor to any such director and
additional director who, after that date, was nominated or selected by a
majority of the Continuing Directors then in office and who, at the time of
his nomination or selection, is not an "affiliate" or "associate" (as defined
in Regulation 12B under the Exchange Act) of a Control Person of the Company.
Options and Rights are non-transferable, except by will or the laws of
descent and distribution. Upon termination of employment or service by the
holder of an Option or Right, unless otherwise specified in the instrument
evidencing the Option or Right, any Option or Right previously granted to that
person pursuant to the Plan shall, to the extent not theretofore exercised,
terminate and become null and void, except that (a) if the holder of an Option
or Right dies (i) while in the service of the Company (or any subsidiary or
parent thereof),
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or (ii) within three months following the termination of service by reason of
retirement or dismissal other than for cause (as defined in the Plan), or
(iii) within one year following the holder's termination of service by reason
of disability, the representative (or heirs or beneficiaries, if appropriate)
of the holder of an Option or Right may, not later than one year from the date
of the holder's death, exercise any Options or Rights which were exercisable
on the date of such holder's death; and (b) if the termination of service is
due to such holder's retirement, disability or dismissal other than for cause
(as defined in the Plan), such holder or his legal representative shall have
the right to exercise the Options or Rights which were exercisable on the date
of termination of such holder's service, at any time up to and including (i)
three months after the date of such termination of service 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 service in the case of
termination by reason of disability. In no event, however, will any person be
entitled to exercise any Option or Right after the period of exercisability of
such Option or Right as specified therein.
In the event of any change in the outstanding shares of Common Stock of the
Company (through events such as a stock split, stock dividend,
recapitalization, spin-off, split-up, split-off, merger, consolidation or
reorganization of the Company or other like change in its capital structure),
appropriate adjustments to the Options and Rights are to be made so that such
Options and Rights become exercisable for such securities, cash or other
property as would have been received in respect of Shares had the Option or
Right been fully exercised prior to such change, and adjustments are to be
made in the number of Shares and exercise price of Options and Rights to
prevent dilution or enlargement of rights thereunder, subject to the rules of
Section 424(a) of the Code as to Incentive Options and related Rights.
The Plan may be amended from time to time by the Board of Directors, with
the concurrence of the Committee, provided that existing rights under any
Option or Right theretofore granted may not be adversely affected without the
consent of the holder thereof. In addition, the Board of Directors may not,
without the approval of the Company's shareholders, make any amendment to the
Plan that would increase the total number of shares reserved for issuance
under the Plan (other than an increase to adjust for changes in
capitalization), reduce the exercise price of an Incentive Option below 100%
of the fair market value of the underlying Shares at the time such Incentive
Option is granted, modify the provisions of the Plan relating to eligibility
or materially increase the aggregate benefits that may be provided to
participants under the Plan.
The Board of Directors may at any time suspend or terminate the Plan,
provided that rights and obligations under any Option or Right granted while
the Plan is in effect may not be altered or impaired by suspension or
termination of the Plan, except upon the consent of the holder thereof.
Federal Income Tax Consequences
Incentive Options
Incentive Options under the Plan are intended to meet the definitional
requirements of Section 422(b) of the Code for "incentive stock options."
Under the Code, the grantee of an Incentive Option generally is not subject
to regular income tax upon the receipt or exercise of the Incentive Option.
Special rules apply to an employee who exercises an Incentive Option by
delivering Shares previously acquired pursuant to the exercise of an Incentive
Option.
For purposes of computing any alternative minimum tax liability, an employee
who exercises an Incentive Option generally would be required to increase his
or her "alternative minimum taxable income" by an amount
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equal to the excess of the fair market value of a Share at the time the Option
is exercised over the exercise price and must compute his or her tax basis in
the acquired Share as if such Share had been acquired through the exercise of
a Non-Qualified Option (as described below). The amount of any minimum tax
liability attributable to the exercise of an Incentive Option generally will
be allowed as a credit offsetting regular tax liability in subsequent years.
If, subsequent to the exercise of an Incentive Option (whether paid for in
cash or in shares), the optionee holds the Shares received upon exercise for a
period that exceeds the longer of two years from the date of grant or one year
from the date of transfer pursuant to the exercise of such Option (the
"applicable holding period"), the difference (if any) between the amount
realized from the sale of such Shares and their tax basis to the holder will
be taxed as long-term capital gain or loss (provided that such shares were
held by the optionee as a capital asset at the time). If the holder is subject
to the alternative minimum tax in the year of disposition, his or her tax
basis in the Shares will be determined, for alternative minimum tax purposes,
as described in the preceding paragraph. If, however, an optionee does not
hold the Shares so acquired for the applicable holding period, thereby making
a "disqualifying disposition," the optionee would realize ordinary income in
the year of the disqualifying disposition on the excess of the fair market
value of the Shares at the date the Incentive Option was exercised over the
exercise price and the balance, if any, of income would be long-term capital
gain (provided the holding period for the Shares exceeded one year and the
optionee held the Shares as a capital asset at such time).
A deduction will not be allowed to the employer corporation for federal
income tax purposes with respect to the grant or exercise of an Incentive
Option or the disposition, after the applicable holding period, of Shares
acquired upon exercise of an Incentive Option. In the event of a disqualifying
disposition, a federal income tax deduction will be allowed to the employer
corporation in an amount equal to the ordinary income included by the
optionee, provided that such amount constitutes an ordinary and necessary
business expense to the employer corporation and is reasonable and the
limitations of Sections 280G and 162(m) of the Code (as described below) do
not apply.
Non-Qualified Options and Stock Appreciation Rights.
A Non-Qualified Option is one that is not intended to qualify as an
incentive stock option under Section 422(b) of the Code. An individual who
receives a Non-Qualified Option will not recognize any taxable income upon the
grant of such Non-Qualified Option. In general, upon exercise of a Non-
Qualified Option an individual will be treated as having received ordinary
income in an amount equal to the excess of (i) the fair market value of the
Shares at the time of exercise over (ii) the exercise price.
An individual who receives a Right will not recognize any taxable income
upon the grant of such Right. Generally, upon the receipt of cash or the
transfer of Shares pursuant to the exercise of a Right, an individual will
recognize ordinary income in an amount equal to the sum of the cash and the
fair market value of the Shares received. In certain cases, a Right may be
deemed for federal income tax purposes to have been exercised prior to actual
exercise.
In view of Section 16(b) of the Exchange Act, the timing of income
recognition for any optionee who is an officer or director of the Company or a
beneficial owner of more than ten percent (10%) of any class of equity
securities of the Company may be deferred for a period (the "Deferral Period")
following the exercise of a Non-Qualified Option or Right. Absent a written
election (pursuant to Section 83(b) of the Code) filed with the Internal
Revenue Service within 30 days after the date of transfer of the Shares
pursuant to the exercise of the
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Option or Right to include in income, as of the transfer date, the excess (on
such date) of the fair market value of such Shares over their exercise price,
recognition of income by the individual will be deferred until the expiration
of the Deferral Period, if any.
The ordinary income recognized with respect to the transfer of Shares or
receipt of cash upon exercise of a Non-Qualified Option or a Right under the
Plan will be subject to both wage withholding and employment taxes. In
addition to the customary methods of satisfying the withholding tax
liabilities that arise upon the exercise of a Right for Shares or upon the
exercise of a Non-Qualified Option, an individual may satisfy the liability in
whole or in part by directing its employer corporation to withhold Shares from
those that would otherwise be issuable to the individual or by tendering other
shares of Common Stock of the Company owned by the individual, valued at their
fair market value as of the date that the tax withholding obligation arises. A
deduction for federal income tax purposes will be allowed to the employer
corporation in an amount equal to the ordinary income included by the
individual, provided that such amount constitutes an ordinary and necessary
business expense and is reasonable and the limitations of Section 162(m) and
280G of the Code do not apply.
Change of Control
As described above, upon a "change of control" of the Company (as defined in
the Plan), all the then outstanding Options and Rights shall immediately
become exercisable. In general, if the total amount of payments to certain
individuals in the nature of compensation that are contingent upon a "change
in control" (as defined in Section 280G of the Code) equals or exceeds three
times the recipient's "base amount" (generally, such recipient's average
annual compensation for the five years preceding the change in control), then,
subject to certain exceptions, the payments may be treated as "excess
parachute payments" under the Code, in which case a portion of such payments
would be nondeductible to the employer corporation and the recipient would be
subject to a 20% excise tax on such portion of the payments.
Section 162(m)
As discussed in the report of the Compensation and Stock Option Committee
appearing elsewhere in this Proxy Statement, Section 162(m) of the Code
generally limits to $1,000,000 per covered executive the deductibility for
federal income tax purposes of annual compensation paid to a company's chief
executive officer and each of its other four most highly compensated executive
officers. The Plan is designed to permit Options and Rights granted thereunder
to qualify as "performance based" compensation under Section 162(m) of the
Code, thereby preserving the deductibility for federal income tax purposes of
compensation that may be attributable to the exercise of such Options and
Rights.
Regulation
The Plan is neither qualified under the provisions of Section 401(a) of the
Code, nor subject to any of the provisions of the Employee Retirement Income
Security Act.
Stockholder Vote Required; Board Recommendation
The affirmative vote of a majority of the shares present and voting at the
Annual Meeting is required to approve the amendment to the Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT TO THE
PLAN.
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OTHER MATTERS
As of the date of this Proxy Statement, the only business that the Board of
Directors intends to present or knows that others will present at the meeting
is that set forth above. If any other matter or matters are properly brought
before the meeting or any adjournment thereof, the persons named in the
accompanying form of proxy intend to vote on such matters in accordance with
their judgment. Such discretionary authority may be exercised because the
Company did not have notice of any shareholder proposal to be presented at the
meeting by April 5, 1999.
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 has retained ChaseMellon L.L.C. to assist in
soliciting proxies and to send proxy materials to brokerage houses and other
custodians, nominees and fiduciaries for transmittal to their principals, at
an estimated cost of $6,500 plus out-of-pocket expenses.
The Board of Directors has selected the firm of Arthur Andersen LLP as the
Company's independent public accountants for the current fiscal year. Arthur
Andersen LLP has served as the Company's independent public accountants since
1968. Representatives of Arthur Andersen LLP are expected to be present at the
meeting and will have the opportunity to make a statement if they desire to do
so and to respond to appropriate questions.
As a matter of policy, the Company will accord confidentiality to the votes
of individual shareholders, whether submitted by proxy or ballot, except in
limited circumstances, including any contested election, or as may be
necessary to meet legal requirements. The Company will continue its long-
standing practice of retaining an independent tabulator to receive and
tabulate the proxies and ballots and independent inspectors of election to
certify the results.
Any shareholder desiring to present a proposal at the 2000 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 19, 2000.
If any shareholder proposes to make a proposal at the 2000 Annual Meeting,
which proposal will not be included in the Company's proxy statement for such
meeting, such proposal must be received by April 4, 2000 to be considered
timely for purposes of Rule 14a-4(c) under the Securities Exchange Act of
1934. The form of proxy distributed by the Board of Directors for such meeting
will confer discretionary authority to vote on any such proposal not received
by such date. If any such proposal is received by such date, the proxy
statement for the meeting will provide advice on the nature of the matter and
how the Company intends to exercise its discretion to vote on each such
matter.
By Order of the Board of Directors
Daniel J. McCauley,
Secretary
May 20, 1999
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, 1998, 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 6, 1999 (THE RECORD DATE), THE PERSON
MAKING THE REQUEST WAS THE BENEFICIAL OWNER OF SECURITIES ENTITLED TO VOTE AT
THE 1999 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 directors who are not salaried employees of
the Company (a "Non-Employee Director") 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 persons 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 Non-
Employee Director or 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 Non-Employee
Director or employee pursuant to the Plan shall not exceed one hundred eighty-
seven thousand five hundred (187,500). Shares that are the subject of Rights
and related Options shall be counted only once in determining whether the
maximum number of Shares that may be purchased or awarded under the Plan has
been exceeded.
Shares acquired under the Plan may be either authorized but unissued Shares,
Shares of issued stock held in the Company's treasury, or both, at the
discretion of the Company. If and to the extent that Options or Rights granted
under the Plan expire or terminate without having been exercised, the Shares
covered by such expired or terminated Options or Rights shall again become
available for award under the Plan.
Except as provided in Articles XIX and XXII, the Company may, from time to
time during the period beginning July 1, 1996 (the "Effective Date") and
ending June 30, 2006 (the "Termination Date"), grant to
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Non-Employee Directors and to certain key employees of the Company, or of any
subsidiary corporation or parent corporation of the Company now existing or
hereafter formed or acquired, Incentive Options and/or Non- Qualified Options
and/or Rights under the terms hereinafter set forth.
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 as in effect on the Effective Date
(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 Non-Employee Directors and
employees to whom Options or Rights shall be granted, the time when such
Options or Rights shall be granted, the number of Shares which shall be
subject to each Option or Right, the purchase price or exercise price of each
Option or Right, the period(s) during which such Options or Rights shall be
exercisable (whether in whole or in part) and the other terms and provisions
thereof (which need not be identical).
Subject to the express provisions of the Plan, the Committee also shall have
authority to construe the Plan and the Options and Rights granted hereunder,
to amend the Plan and the Options and Rights granted hereunder, to prescribe,
amend and rescind rules and regulations relating to the Plan, to determine the
terms and provisions of the Options (which need not be identical) and Rights
(which need not be identical) granted hereunder and to make all other
determinations necessary or advisable for administering the Plan. The Board of
Directors or the Committee, as the case may be, also shall have the authority
to require, in its discretion, as a condition of the granting of any such
Option or Right, that the Non-Employee Director or 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 service of such Non-Employee Director or employee, other than
as a result of dismissal without cause, such Non-Employee Director or 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 Non-Employee Director or employee will be
called upon to utilize special knowledge obtained through service with the
Company or any subsidiary or parent corporation thereof.
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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 Non-Employee Directors or salaried
key employees of the Company or of any subsidiary corporation or parent
corporation of the Company, except as hereinafter provided. Any person who
shall have retired from active service with 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 Non-Employee Director or employee to
participate in the Plan nor does it create a right in any Non-Employee
Director or employee to have any Options or Rights granted to him or her.
V. OPTION PRICE AND PAYMENT
The price for each Share purchasable under any Non-Qualified Option granted
hereunder shall be such amount as the Committee, in its best judgment, shall
determine to be one hundred percent (100%) of the fair market value per Share
at the date the Option is granted.
The price for each Share purchasable under any Incentive Option granted
hereunder shall be such amount as the Committee, in its best judgment, shall
determine to be not less than one hundred percent (100%) of the fair market
value per Share at the date the Option is granted; provided, however, that in
the case of an Incentive Option granted to a person who, at the time such
Option is granted, owns shares of the Company or any subsidiary corporation or
parent corporation of the Company which possess more than ten percent (10%) of
the total combined voting power of all classes of shares of the Company or of
any subsidiary corporation or parent corporation of the Company, the purchase
price for each share shall be such amount as the Committee, in its best
judgment, shall determine to be not less than one hundred ten percent (110%)
of the fair market value per Share at the date the Option is granted. In
determining stock ownership of an employee for any purposes under the Plan,
the rules of Section 424(d) of the Code shall be applied, and the Committee
may rely on representations of fact made to it by the employee and believed by
it to be true.
If the Shares are listed on a national securities exchange in the United
States on any date on which the fair market value per Share is to be
determined, the fair market value per Share shall be deemed to be the average
of the high and low quotations at which such Shares are sold on such national
securities exchange on the date such Option is granted. If the Shares are
listed on a national securities exchange in the United States on such date but
the Shares are not traded on such date, or such national securities exchange
is not open for business on such date, the fair market value per Share shall
be determined as of the closest preceding date on which such exchange
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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 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
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Options. For purposes of this limitation, (i) the fair market value of stock
is determined as of the time the Option is granted, (ii) the limitation will
be applied by taking into account Options in the order in which they were
granted, and (iii) Incentive Options granted before 1987 shall not be taken
into account.
Subject to the provisions of Article XVIII, the Committee shall have the
right to accelerate, in whole or in part, from time to time, conditionally or
unconditionally, rights to exercise any Option granted hereunder.
To the extent that an Option is not exercised within the period of
exercisability specified therein, it shall expire as to the then unexercised
part.
In no event shall an Option granted hereunder be exercised for a fraction of
a Share.
VIII. EXERCISE OF OPTIONS
Options granted under the Plan shall be exercised by the optionee as to all
or part of the Shares covered thereby by the giving of written notice of the
exercise thereof to the Corporate Secretary of the Company at the principal
business office of the Company, specifying the number of Shares to be
purchased and specifying a business day not more than (15) days from the date
such notice is given, for the payment of the purchase price against delivery
of the Shares being purchased. Subject to the terms of Articles XIV, XVI, and
XVII, the Company shall cause certificates for the Shares so purchased to be
delivered to the optionee at the principal business office of the Company,
against payment of the full purchase price, on the date specified in the
notice of exercise.
IX. STOCK APPRECIATION RIGHTS
In the discretion of the Board of Directors, a Right may be granted (i)
alone, (ii) simultaneously with the grant of an Option (either Incentive or
Non-Qualified) and in conjunction therewith or in the alternative thereto or
(iii) subsequent to the grant of a Non-Qualified Option and in conjunction
therewith or in the alternative thereto.
The exercise price of a Right granted alone shall be determined by the
Committee, but shall not be less than one hundred percent (100%) of the fair
market value of one Share on the date of the grant of such Right. A Right
granted simultaneously with or subsequent to the grant of an Option and in
conjunction therewith or in the alternative thereto shall have the same
exercise price as the related Option, shall be transferable only upon the same
terms and conditions as the related Option, and shall be exercisable only to
the same extent as the related Option; provided, however, that a Right, by its
terms, shall be exercisable only when the fair market value of the Shares
subject to the Right and related Option exceeds the exercise price thereof.
Upon exercise of a Right granted simultaneously with or subsequent to an
Option and in the alternative thereto, the number of Shares for which the
related Option shall be exercisable shall be reduced by the number of Shares
for which the Right shall have been exercised. The number of Shares for which
a Right shall be exercisable shall be reduced upon any exercise of a related
Option by the number of Shares for which such Option shall have been
exercised.
Any Right shall be exercisable upon such additional terms and conditions as
may from time to time be prescribed by the Committee.
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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.
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.
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XI. TERMINATION OF SERVICE
Upon termination of service with the Company and any and all subsidiary and
parent corporations of the Company by the holder of any Right or Option, an
Option or Right previously granted to the holder, 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 holder shall die while in the service 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 holder
was entitled to exercise an Option or Right as herein provided, the legal
representative of such holder, or such person who acquired such Option or
Right by bequest or inheritance or by reason of the death of the holder,
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 service of any holder to whom an Option or Right shall have
been granted shall terminate by reason of the holder's retirement (at such
age or upon such conditions as shall be specified by the Board of
Directors), disability (as described in Section 22(e)(3) of the Code) or
dismissal by the Company or the employer other than for cause (as defined
below), and while such holder is entitled to exercise such Option or Right
as herein provided, such holder 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 service 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 service 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 the holder of an Option or Right voluntarily terminates his or her
service 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 holder or former holder, or by a person who
acquired an Option or Right granted hereunder by bequest or inheritance or by
reason of the death of any holder or former holder, 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 a holder 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 a holder 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
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by a holder of an act of fraud in the performance of such holder's duties on
behalf of the Company or a subsidiary or parent corporation of the Company; or
(c) the continuing willful failure of a holder to perform the duties of such
holder to the Company or a subsidiary or parent corporation of the Company
(other than such failure resulting from the holder'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 holder by the chief executive
officer or, in the case of a holder who is a Non-Employee Director or 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
holder's part shall be considered "willful" unless done or omitted to be done
by the holder not in good faith and without reasonable belief that the
holder'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 or (ii) the
transfer of an employee from employment by a subsidiary corporation or a
parent corporation of the Company to employment by the Company or by another
subsidiary corporation or parent corporation of the Company.
In the event of the complete liquidation or dissolution of a subsidiary
corporation, or in the event that such corporation ceases to be a subsidiary
corporation, any unexercised Options or Rights theretofore granted to any
person employed by such subsidiary corporation will be deemed canceled unless
such person is employed by the Company or by any parent corporation or another
subsidiary corporation after the occurrence of such event. In the event an
Option or Right is to be canceled pursuant to the provisions of the previous
sentence, notice of such cancellation will be given to each employee holding
unexercised Options, and such holder will have the right to exercise such
Options or Rights in full (without regard to any limitation set forth or
imposed pursuant to Article VII) during the 30 day period following notice of
such cancellation.
XII. ADJUSTMENT OF SHARES; EFFECT OF CERTAIN TRANSACTIONS
In the event of any change in the outstanding Shares through merger,
consolidation, reorganization, recapitalization, stock dividend, stock split,
split-up, split-off, spin-off, combination of shares, exchange of shares, or
other like change in capital structure of the Company, an adjustment shall be
made to each outstanding Option and Right such that each such Option and Right
shall thereafter be exercisable for such securities, cash and/or other
property as would have been received in respect of the Shares subject to such
Option or Right had such Option or Right been exercised in full immediately
prior to such change, and such an adjustment shall be made successively each
time any such change shall occur. The term "Shares" after any such change
shall refer
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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 Non-Employee Director or 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
(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.
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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.
XIII. RIGHT TO TERMINATE SERVICE
The Plan shall not impose any obligation on the Company or on any subsidiary
corporation or parent corporation thereof to continue the service 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 service 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 the
holder of an Option or Right, 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 holder 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 holder
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 holder
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 holder 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.
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The Company may endorse such legend or legends upon the certificates for
Shares issued pursuant to the Plan and may issue such "stop transfer"
instructions to its transfer agent in respect of such Shares as, in its
discretion, it determines to be necessary or appropriate to (i) prevent a
violation of, or to perfect an exemption from, the registration requirements
of the Securities Act, (ii) implement the provisions of the Plan and any
agreement between the Company and the optionee or grantee with respect to such
Shares, or (iii) permit the Company to determine the occurrence of a
disqualifying disposition, as described in Section 421(b) of the Code, of
Shares transferred upon exercise of an Incentive Option granted under the
Plan.
The Company shall pay all issue or transfer taxes with respect to the
issuance or transfer of Shares, as well as all fees and expenses necessarily
incurred by the Company in connection with such issuance or transfer, except
fees and expenses which may be necessitated by the filing or amending of a
Registration Statement under the Securities Act, which fees and expenses shall
be borne by the recipient of the Shares unless such Registration 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 a holder of a Right or Non-Qualified Option
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 for whom such holder provides service 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 for whom such holder provides service 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 holder upon such terms and
conditions as the Board of Directors of such corporation shall prescribe. The
corporation for whom such holder provides service may, in its discretion, hold
the stock certificate to which such holder is entitled upon the exercise of an
Option as security for the payment of such withholding tax liability, until
cash sufficient to pay that liability has been accumulated. In addition, at
any time that the Company becomes subject to a withholding obligation under
applicable law with respect to the exercise of a Right or Non-Qualified Option
(the "Tax Date"), except as set forth below, a holder of a Right or Non-
Qualified Option may elect to satisfy, in whole or in part, the holder's
related personal tax liabilities (an "Election") by (i) directing the Company
to withhold from Shares issuable in the related exercise either a specified
number of Shares or Shares having a specified value (in each case not in
excess of the related personal tax liabilities), (ii) tendering Shares
previously issued pursuant to the exercise of an Option or Right or other
shares of the Company's common stock owned by the holder or (iii) combining
any or all of the foregoing options in any fashion. An Election shall be
irrevocable. The withheld Shares and other shares tendered in payment should
be valued at their fair market value (determined in accordance with the
principles set forth in Article V of the Plan) on the Tax Date. The Committee
may disapprove of any Election, suspend or terminate the right to make
Elections or provide that the right to make Elections shall not apply to
particular Shares or exercises. If a holder is a person subject to Section 16
of the Exchange Act then (1) any Election by such holder must be made (i) at
least six months prior to the relevant Tax Date or (ii) on or prior to the
relevant Tax Date and during a period that begins on the third business day
following the date of release of publication of the Company's quarterly or
annual summary statements of sales
A-11
<PAGE>
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 hereunder to the extent necessary to
permit the Incentive Options granted hereunder to qualify as incentive stock
options within the meaning of Section 422 of the Code. The rights and
obligations under any Option or Right granted before amendment of the Plan or
any unexercised portion of such Option or Right shall not be adversely
affected by amendment of the Plan, Option or Right without the consent of the
holder of such Option or Right.
XIX. TERMINATION OR SUSPENSION OF THE PLAN
The Board of Directors may at any time suspend or terminate the Plan. The
Plan, unless sooner terminated under Article XXII or by action of the Board of
Directors, shall terminate at the close of business on the Termination Date.
Options and Rights may not be granted while the Plan is suspended or after it
is terminated. Rights and obligations under any Option or Right granted while
the Plan is in effect shall not be altered or impaired by suspension or
termination of the Plan, except upon the consent of the person to whom the
Option or Right was granted. The power of the Committee to construe and
administer any Options or Rights granted prior to the termination or
suspension of the Plan under Article III nevertheless shall continue after
such termination or during such suspension.
XX. GOVERNING LAW
The Plan, such Options and Rights as may be granted hereunder and all
related matters shall be governed by, and construed and enforced in accordance
with, the laws of the State of Delaware from time to time obtaining.
A-12
<PAGE>
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 permit the grant of Options and Rights to Non-Employee Directors] is
not approved by a vote of the shareholders of the Company at an annual meeting
or any special meeting or by unanimous written consent on or prior to December
31, 1996 [or, with respect to the amendment, the Annual Meeting of
Shareholders of the Company to be held in 1999], it will be of no effect and
any Options or Rights previously granted under the Plan will be void.
A-13
<PAGE>
AIR EXPRESS INTERNATIONAL CORPORATION
Proxy Solicited on Behalf of the Board of Directors
for
Annual Meeting of Shareholders
June 17, 1999
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 17, 1999, at the Hyatt
Regency Greenwich, 1800 East Putnam Avenue, Old Greenwich, Connecticut 06870, at
11:00 a.m., Eastern Daylight Time, and at any adjournment thereof.
Unless a contrary direction is indicated, this Proxy will be voted FOR the
election as directors of all nominees listed in the accompanying Proxy
Statement, and FOR the amendment to the Company's 1996 Incentive Stock Plan to
permit the grant of stock options and stock appreciation rights to members of
the board of directors of the company who are not salaried employees of the
company 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, and FOR
the amendment to the Company's 1996 Incentive Stock Plan.
(continued, and to be signed on reverse side)
<PAGE>
Please mark [X]
your votes as
indicated in
this example
1. Election of Directors:
Nominees: John M. Fowler, Hendrik J. Hartong, Jr., Donald J. Keller, Andrew
L. Lewis IV, Richard T. Niner, John Radziwill, and Guenter Rohrmann.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below)
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FOR all Nominees WITHHOLD
listed (except as noted AUTHORITY
to the contrary)
[_] [_]
2. To approve an amendment to the Company's 1996 Incentive Stock Plan to permit
the grant of stock options and stock appreciation rights to members of the
board of directors of the company who are not salaried employees of the
company.
FOR AGAINST ABSTAIN
[_] [_] [_]
3. In their discretion, the Proxies are authorized to transact such other
business as may properly come before the meeting, or any other adjournment
thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE
NOMINEES NAMED ABOVE, AND FOR THE AMENDMENT TO THE COMPANY'S 1996 INCENTIVE
STOCK PLAN.
I PLAN TO ATTEND MEETING [_]
Please sign exactly as name appears hereon. If the shares are registered in
the names of two or more persons, each should sign. Executors,
administrators, trustees, guardians, attorneys-in-fact, general partners and
other persons acting in a representative capacity should add their title.
When the proxy is given by a corporation, it should be signed by an
authorized officer.
Dated 1999
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PLEASE COMPLETE, FILL IN DATE, SIGN AND MAIL
THIS PROXY PROMPTLY USING THE ENCLOSED POST-
PAID ENVELOPE.
