Air Express International Corp/DE – ‘PRE 14A’ for 6/18/98

As of:  Friday, 5/8/98   ·   For:  6/18/98   ·   Accession #:  913355-98-37   ·   File #:  1-08306

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Preliminary Proxy Solicitation Material   —   Schedule 14A
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: PRE 14A     Preliminary Proxy Material                            45    171K 

Document Table of Contents

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SCHEDULE 14A INFORMATION

 Proxy Statement Pursuant to Section 14(a) of the Securities
 Exchange Act of 1934 (Amendment No. )

Filed by the Registrant [X]                                                     

Filed by a Party other than the Registrant [_]                                  

Check the appropriate box:                                                      

[X]  Preliminary Proxy Statement [_]Confidential, for Use of the Commission Only
                          (as permitted by Rule 14a-6(e)(2))

[_]  Definitive Proxy Statement                                                 

[_]  Definitive Additional Materials                                            

[_]  Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12

 AIR EXPRESS INTERNATIONAL CORPORATION
(Name of Registrant as Specified In Its Charter)

 -----------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):                              

[X]  No fee required.                                                           

[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.    

(1) Title of each class of securities to which transaction applies:   

-------------------------------------------------                     

(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:                                                   

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(4) Date Filed:                                                     

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Notes:                                                                          

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 Air Express International Corporation
 120 Tokeneke Road

 Darien, Connecticut 06820

----------

Notice of Annual Meeting of Shareholders
To Be Held June 18, 1998

----------

To our Shareholders:                                                            

     The Annual Meeting of Shareholders of Air Express International Corporation
(the  "Company") will be held at the Hyatt Regency  Greenwich,  1800 East Putnam
Avenue, Old Greenwich,  Connecticut,  on Thursday, June 18, 1998, at 11:00 a.m.,
Eastern Daylight Time, for the following purposes:                              

(1) To elect eight (8) directors;                                     

     (2) To approve an amendment to the Company's  Certificate of  Incorporation
to  increase  the number of shares of Common  Stock,  $.01 par value,  which the
Company shall be authorized to issue from 40,000,000 to 100,000,000;            

     (3) To approve an amendment to the Company's 1996  Incentive  Stock Plan to
increase the number of shares of Common Stock reserved  thereunder  from 750,000
to 1,350,000; and                                                               

     (4) To transact such other business as properly may come before the meeting
or any adjournment thereof.                                                     

     The Board of Directors  has fixed the close of business on May 7, 1998,  as
the record date for the determination of shareholders entitled to notice of, and
to vote at, the meeting.                                                        

                                              By Order of the Board of Directors

                                                  Daniel J.  McCauley, Secretary

May __, 1998                                                                    
Darien, Connecticut                                                             

----------

 WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN,
 AND MAIL THE ACCOMPANYING FORM OF PROXY TO THE COMPANY AS PROMPTLY AS
POSSIBLE IN THE ENCLOSED STAMPED ENVELOPE.

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 Air Express International Corporation
 120 Tokeneke Road

Darien, CT 06820

----------

 Proxy Statement

----------

     The  accompanying  proxy is  solicited  by the  Board of  Directors  of Air
Express International  Corporation (the "Company") in connection with the Annual
Meeting  of  Shareholders  to be held on  Thursday,  June  18,  1998,  or at any
adjournment  thereof,  for the purposes set forth in the accompanying  notice of
the meeting.  The Board of  Directors  has fixed the close of business on May 7,
1998,  as the record  date for the  determination  of  shareholders  entitled to
notice of, and to vote at, the  meeting.  On that date,  there were  outstanding
____________  shares of Common Stock. Each holder of Common Stock is entitled to
one vote  for  each  share  held on all  matters  to come  before  the  meeting,
including the election of directors.  Shares may be voted in person or by proxy.
The accompanying  proxy may be revoked by the person giving it at any time prior
to its  being  voted by  filing a written  notice  of such  revocation  with the
Secretary of the Company or by attending the meeting and voting in person.  This
proxy statement and the accompanying form of proxy are first being sent or given
to security holders on or about May 19, 1998.                                   

     A majority of the  outstanding  shares  entitled to vote must be present in
person or represented by proxy at the meeting to constitute a quorum. The shares
represented by a proxy which is timely  returned and marked  "Abstain" as to any
matter as well as broker non-votes will be considered present at the meeting and
will be included in the  calculation  of those  shares  needed to  constitute  a
quorum. The shares represented by such proxies,  although considered present for
proxy  purposes,  will not be considered a part of the voting power present with
respect to any proposal which is abstained from or to which the broker  non-vote
relates.                                                                        

PROPOSAL 1

 ELECTION OF DIRECTORS

Nominees and Vote Required                                                      

     Eight  directors  are to be elected at the  Annual  Meeting,  each to serve
until the next Annual Meeting of  Shareholders  and until his successor has been
duly  elected and  qualifies.  If no  direction  to the  contrary is given,  all
proxies  received  by the  Board  of  Directors  will be  voted  in favor of the
nominees  listed below.  If any nominee is unable or declines to serve, an event
not now anticipated by the Board of Directors, such proxies may                 

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be voted for the election of a substitute  designated by the Board of Directors.
Each of the nominees is  currently  serving as a director of the Company and was
elected to that position at the last Annual Meeting of Shareholders.            

     A plurality of the votes of the shares  present in person or represented by
proxy at the meeting shall be needed for the election of a director.            

     The following table sets forth information with respect to each nominee for
election as a director at the Annual Meeting:                                   

                                                        [Enlarge/Download Table]

                                                                                        Director     
                                     Principal Occupation and Other Directorships     Continuously   
          Name               Age                                                         Since       
--------------------------  -------  ---------------------------------------------  -----------------
                                                                                                     

 John M. Fowler             49       Executive Vice President and Chief                   1985       
                                     Financial Officer, MoneyGram Payment                            
                                     Systems, Inc. since October 1996.                               
                                     Independent business consultant from July                       
                                     1995 through October 1996. Executive Vice                       
                                     President of Travelers Group Inc.                               
                                     (formerly Primerica Corporation), New York,                     
                                     New York, 1991 through  June 1995.                              
                                     Director of Transatlantic Holdings, Inc.                        
                                     and MoneyGram Payment Systems, Inc.                             

Hendrik J. Hartong, Jr.     59       Chairman of the Board of the Company since           1985       
                                     1985 (Chief Executive Officer from 1985 to                      
                                     1989); General Partner since 1985 of                            
                                     Brynwood Management, since 1988 of Brynwood                     
                                     Management II and since 1996 of Brynwood                        
                                     Management III, entities that serve,                            
                                     respectively, as the managing general                           
                                     partner of Brynwood Partners Limited                            
                                     Partnership, Brynwood Partners II L.P. and                      
                                     Brynwood Partners III, L.P., private                            
                                     investment partnerships. Director of Hurco                      
                                     Companies, Inc.                                                 

Donald J. Keller            66       Chairman of the Board of Vlasic Foods                1990       
                                     International, Inc. since December 1997.                        
                                     Chairman of the Board of Prestone Products                      
                                     Corporation since January 1995.  Chairman                       
                                     of the Board of B. Manischewitz Company                         
                                     since March 1993 (President, Co-Chief                           
                                     Executive Officer and a director from May                       
                                     1992 to March 1993).                                            

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                                                        [Enlarge/Download Table]


                                                                                        Director     
                                     Principal Occupation and Other Directorships     Continuously   
          Name               Age                                                         Since       
--------------------------  -------  ---------------------------------------------  -----------------

                                                                                                     
Andrew L. Lewis IV          41       President, KRR Partners L.P., a private              1986       
                                     investment partnership, since July 1993.                        
                                     Independent business consultant from July                       
                                     1990 to March 1993.  Chief Executive                            
                                     Officer of Environmental Management                             
                                     Services, an environmental consulting firm,                     
                                     from 1988 to 1990. Director of Hurco                            
                                     Companies, Inc. and Independence Blue Cross                     
                                     and Blue Shield of Philadelphia.                                

Richard T. Niner            58       General Partner since 1985 of Brynwood               1985       
                                     Management and since 1988 of Brynwood                           
                                     Management II, entities that serve,                             
                                     respectively, as the managing general                           
                                     partner of Brynwood Partners Limited                            
                                     Partnership and Brynwood Partners II L.P.,                      
                                     private investment partnerships. Director                       
                                     of Arrow International, Inc., Case Pomeroy                      
                                     & Company, Inc. and Hurco Companies, Inc.                       

John Radziwill              50       President of Radix Organization Inc. since           1995       
                                     1976; President of Radix Ventures Inc. from                     
                                     1979  until  its   acquisition  by  the                         
                                     Company in June 1995.                                           

Guenter Rohrmann            59       President and Chief Executive Officer of             1985       
                                     the Company since 1989.                                         

Noel E. Vargas              70       President of Luskcom Group Inc. since 1975           1996       
                                     (President and Chief Executive Officer                          
                                     until its acquisition by the Company in                         
                                     April 1996).                                                    

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--------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THE ELECTION OF EACH OF
THE FOREGOING NOMINEES. 

--------------------------------------------------------------------------------

Committees of the Board of Directors                                            

     The Board of Directors has an Executive  Committee,  an Audit Committee,  a
Compensation and Stock Option Committee and a Nominating Committee.             

     The Executive Committee (consisting of Messrs. Hartong, Niner and Rohrmann)
has all of the powers of the Board of Directors  between  meetings of the Board,
subject to Delaware law.                                                        

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     The Audit Committee (consisting of Messrs. Lewis, Keller, Niner and Vargas)
has  the  responsibility  of  meeting  with  the  Company's  independent  public
accountants and internal  auditors to review the plan,  scope and results of the
audit of the Company's annual financial  statements and the  recommendations  of
the independent  accountants regarding the Company's internal accounting systems
and  controls.  The Audit  Committee  also  recommends  the  appointment  of the
independent accountants for the ensuing year.                                   

     The Compensation and Stock Option Committee (consisting of Messrs.  Fowler,
Keller,  Lewis and Radziwill) reviews and approves the compensation of officers,
including the Chief  Executive  Officer,  and  administers  the Company's  stock
option plans.                                                                   

     The Nominating Committee (consisting of Messrs. Fowler,  Hartong, Niner and
Rohrmann)  screens and selects  candidates to stand for election as directors of
the Company. The Nominating Committee will consider responsible  recommendations
by shareholders  of candidates to be nominated as directors of the Company,  but
does not intend to solicit such  recommendations.  All such recommendations must
be in writing to the  Nominating  Committee  addressed  to the  Secretary of the
Company.  By  accepting a  shareholder  recommendation  for  consideration,  the
Nominating  Committee  does not  undertake  to adopt  or take any  other  action
concerning  such  recommendation  or to give the shareholder its reasons for any
action or inaction.                                                             

     During the year ended  December 31, 1997,  there were five  meetings of the
Board of Directors, two meetings of the Executive Committee, two meetings of the
Audit Committee,  three meetings of the Compensation and Stock Option Committee,
and one meeting of the Nominating  Committee.  Each director  attended more than
75% of the  aggregate  of the  meetings  of the  Board of  Directors  and of the
committees thereof on which he served.                                          

Director Compensation                                                           

     During 1997, each director who is not an officer of the Company received an
annual fee of  $16,000  for  serving  as a  director  and $1,000 for each day of
attendance at meetings of the Board of Directors or a committee thereof.        

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Security Ownership of Certain Beneficial Owners and Management                  

     The  following  table sets forth as of April 24, 1998  (except as otherwise
noted),  information  with respect to the beneficial  ownership of the Company's
Common  Stock by (i) each person known by the Company to own  beneficially  more
than 5% of the  outstanding  Common  Stock of the Company,  (ii) each  executive
officer of the Company named in the Summary  Compensation Table under "Executive
Compensation" in this Proxy Statement,  (iii) each current director and (iv) all
directors and  executive  officers of the Company as a group.  Unless  otherwise
indicated  in the  footnotes  to this  table,  beneficial  ownership  of  shares
represents sole voting and investment power with respect to those shares:       

                                                        [Enlarge/Download Table]


                                                                                      Percentage of    
                                                                Shares Owned           Outstanding     
                     Beneficial Owner                         Beneficially (#)        Shares (%)(1)    
                     ----------------                      ---------------------  ---------------------
                                                                                                       

Wellington Management Company (2).........................       3,165,659                   9.1       
   75 State Street                                                                                     
   Boston, Massachusetts 02109                                                                         

FMR Corp. (3).............................................       1,960,656                   5.6       
   82 Devonshire Street                                                                                
   Boston, Massachusetts 02109                                                                         

Hendrik J. Hartong, Jr. (4)...............................         459,817                   1.3       
Guenter Rohrmann (5)......................................         459,845                   1.3       
Robert J. O'Connell (6)...................................          35,297                    (12)     
Dennis M. Dolan (7).......................................          99,112                    (12)     
Giorgio Laccona (8).......................................          46,722                    (12)     
Daniel J. McCauley(9).....................................          53,738                    (12)     
John M. Fowler............................................          45,000                    (12)     
Donald J. Keller..........................................           5,063                    (12)     
Andrew L. Lewis IV........................................          12,607                    (12)     
Richard T. Niner (10).....................................         357,087                   1.0       
John Radziwill............................................         408,502                   1.2       
Noel E. Vargas (11).......................................         468,478                   1.3       
All directors and executive officers as a group                                                        
(consisting of 13 persons)................................       2,397,530                   6.8       

(1) Shares  issuable  upon the  exercise of stock  options  owned by that person
which can be exercised within 60 days of April 24, 1998, are deemed  outstanding
for the purpose of computing  the number and  percentage of  outstanding  shares
owned by that  person  (and any group that  includes  that  person)  but are not
deemed  outstanding  for the purpose of computing the  percentage of outstanding
shares owned by any other person.                                               

(2) Based on  information  set forth in an  amendment to a Schedule 13G filed by
Wellington Management Company ("Wellington"), dated January 12, 1998, Wellington

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has shared voting power with respect to 1,904,694 and shared  dispositive  power
with  respect to of  3,165,659  shares  owned by clients  for whom it acts as an
investment advisor.                                                             

(3) Based on  information  set forth in an  amendment  to a  Schedule  13G dated
February 14, 1998 filed jointly by FMR Corp. ("FMR"), Edward C. Johnson 3d ("Mr.
Johnson")  and Abigail P. Johnson  ("Ms.  Johnson"),  FMR,  Mr.  Johnson and Ms.
Johnson owned an aggregate of 1,960,656  shares.  This amendment  indicates that
FMR, Mr. Johnson and Ms. Johnson have sole dispositive  power over all 1,960,656
shares,  that FMR has sole voting power over 590,656 shares and no shared voting
power over any shares and that neither Mr.  Johnson nor Ms.  Johnson has sole or
shared voting power with respect to any of such shares.                         

(4) Includes 83,250 shares issuable upon the exercise of stock options.         

(5) Includes 124,875 shares issuable upon the exercise of stock options.        

(6) Includes 9,375 shares issuable upon the exercise of stock options.          

(7) Includes 34,125 shares issuable upon the exercise of stock options.         

(8) Includes 20,625 shares issuable upon the exercise of stock options.         

(9) Includes 21,750 shares issuable upon the exercise of stock options.         

(10)  Includes  5,061 shares held in  custodial  accounts for the benefit of Mr.
Niner's children.                                                               

(11) Includes  167,820 shares held as trustee of the Vargas Family Trust for the
benefit of Mr.  Vargas and certain  members of his family as to which Mr. Vargas
has sole voting and dispositive power.                                          

(12) Less than 1%.                                                              

 SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     Section 16(a) of the Securities Exchange Act of 1934, as amended,  requires
that the  Company's  directors  and  executive  officers,  and each  person  who
beneficially owns more than ten percent of the Company's Common Stock, file with
the Securities and Exchange Commission an initial report of beneficial ownership
and  subsequent  reports of changes in  beneficial  ownership  of the  Company's
Common Stock and to furnish copies of such reports to the Company.  Based solely
upon a review of the copies of the forms furnished to the Company and inquiry of
the Company's directors and executive officers, the Company believes that all of
its directors and executive officers, and all persons                           

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beneficially  owning  more  than ten  percent  of the  Company's  Common  Stock,
complied in a timely  manner with all filing  requirements  under  Section 16(a)
applicable to them with respect to  transactions  during the year ended December
31, 1997.                                                                       

EXECUTIVE COMPENSATION

Summary Compensation Table

     The following  table sets forth the cash  compensation,  as well as certain
other  compensation,  paid or  accrued  by the  Company  to the Chief  Executive
Officer and each of the four other most highly compensated executive officers of
the Company as of December 31, 1997,  for their  services in all  capacities for
each of the years in the three-year period ended December 31, 1997:             

                                                        [Enlarge/Download Table]


                                                                             Long-Term                  
                                                                            Compensation                
                                                                            -------------               
                                                                             Securities                 
                                                                             Underlying     All Other   
      Name and Principal                 Annual Compensation (1)            Options (2)    Compensation 
                                 -----------------------------------------                              
           Position                 Year        Salary($)       Bonus($)       (# of          ($)(3)    
                                                                              Shares)                   
-------------------------------  -----------    -----------    -----------  -------------  -------------
                                                                                                        
Guenter Rohrmann                     1997         525,000       1,200,000           0        114,549    

   President and Chief               1996         480,000        800,000            0         40,497    
   Executive                                                                                            
   Officer                           1995         450,000        650,000      112,500          9,000    

Robert J. O'Connell                  1997         200,000        250,000       15,000         55,299    
   Senior Vice President             1996         190,000        150,000            0         14,740    
                                     1995         180,000        110,000       22,500          9,000    

Dennis M. Dolan                      1997         190,000        250,000       15,000         26,000    
   Vice President and Chief          1996         175,000        150,000            0         13,088    
   Financial Officer                 1995         160,000        100,000       22,500          9,000    

Giorgio Laccona                      1997         170,000        250,000       15,000         24,600    
   Vice President, General           1996         155,000        150,000            0         12,488    
   Manager                                                                                              
   North America                     1995         140,000         75,000       22,500          9,000    

Daniel J. McCauley                   1997         155,000        100,000       15,000         58,699    
   Vice President, Secretary         1996         145,000         75,000            0          7,000    
   and General Counsel               1995         135,000         50,000       15,000          6,227    

----------                                                                      
(1)  Salary  levels for each year are fixed at the  beginning  of the           
   year. Bonuses for each year are determined following the end of the year.

(2)  Adjusted to reflect stock dividend paid on July 25, 1997.                  

(3)  Consists of  contributions  by the Company to its 401(k)  Retirement  Plan,
     which covers  substantially all U.S.-based employees who are not covered by
     a collective bargaining agreement.  The Company contributes (i) a sum equal
     to 3% of the salary of each  eligible  employee and (ii) a further sum, not
     exceeding  3% of the  employee's  salary,  equal  to the  amount,  if  any,
contributed by the employee, subject to certain limitations           

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     imposed  by the  Internal  Revenue  Code.  Contributions  under the  401(k)
     Retirement Plan for 1997 for Messrs,  Rohrmann,  O'Connell,  Dolan, Laccona
     and McCauley were $9,600, $9,600, $9,600, $9,300 and $7,157,  respectively.
     In  addition,   the  Company   makes   contributions   under  its  Deferred
     Compensation  Plan equal to 3% of the amounts  deferred  thereunder  by the
     named executive  officers.  Contributions  under the Deferred  Compensation
     Plan for 1997 for Messrs. Rohrmann,  O'Connell, Dolan, Laccona and McCauley
     were  $34,950,   $5,700,  $5,400,  $4,800  and  $4,534,   respectively.   A
     participant's  interest  in  the  Company's  contributions  to  the  401(k)
     Retirement Plan and the Deferred Compensation Plan vests at the rate of 20%
     for each of the first five years of service and is fully vested thereafter.
     The balance in 1997  represents  the dollar  value of premiums  paid by the
     Company with respect to life insurance for the benefit of each of the named
executive officers.                                                   

 Stock Option Grants in 1997

     The  following  table sets forth  information  with respect to the grant of
stock  options  during  1997 to the  executive  officers  named  in the  Summary
Compensation Table.                                                             

                                                        [Enlarge/Download Table]


                            Individual Grants                                                             

--------------------------------------------------------------------------                                
                                  Percent of                                                              

                                    Total                                  Potential Realizable Value at  
                      Options      Options       Exercise                  Assumed Annual Rates of Stock  
                      Granted     Granted to    Price per     Expiration   Price Appreciation for Option  
                     (# of        Employees    Share ($)(2)      Date                 Term (3)            
       Name            Shs.)      in 1997(1)                                                              
------------------- ------------ ------------- ------------- ------------- -------------------------------
                                                                                 5%              10%      
                                                                           ---------------  --------------
                                                                                                          
Guenter Rohrmann            0          --              --            --            --              --     
Giorgio Laccona        15,000        1.62           24.87       6/19/02        102,672         227,292    
Robert J. O'Connell    15,000        1.62           24.87       6/19/02        102,672         227,292    
Dennis M. Dolan        15,000        1.62           24.87       6/19/02        102,672         227,292    
Daniel J. McCauley     15,000        1.62           24.87       6/19/02        102,672         227,292    

(1)  Options with respect to a total of 926,625 shares were granted to employees
in 1997.                                                              

(2)  All options were granted at an exercise  price equal to the market value on
     the date of grant.  The  number of shares  covered  by the  grants  and the
     exercise  price have been  adjusted to reflect the stock  dividend  paid on
July 25, 1997.                                                        

(3)  Represents the potential appreciation of the options over their stated term
     of five-years,  based upon assumed  compounded  rates of appreciation of 5%
     per year (equivalent to 27.6%) and 10% per year (equivalent to 61.1%).  The
     amounts set forth in these  columns are not intended as forecasts of future
     appreciation,  which is dependent upon the actual increase,  if any, in the
     market price of the underlying  shares,  and there is no assurance that the
amounts of appreciation shown in the table actually will be realized. 

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 Aggregated Option Exercises in 1997 and
 Option Value at December 31, 1997

     The following table sets forth, for each of the executive officers named in
the Summary  Compensation  Table,  information  with  respect to the exercise of
stock options during 1997 and holdings of unexercised  options at the end of the
year:                                                                           

                                                        [Enlarge/Download Table]


                                                 Number of Shares         Value of Unexercised   
                       Shares                 Underlying Unexercised          In-the-Money       
                     Acquired on    Value           Options at                 Options at        
           Name       Exercise    Realized        Fiscal Year End (#)      Fiscal Year End ($)(1)
                         (#)         ($)                                                         
           ----       ---------   ---------     -------------------      ----------------------  
                                             Exercisable Unexercisable  Exercisable Unexercisable
                                             ----------- -------------  ----------- -------------
                                                                                                 
Guenter Rohrmann       67,500     1,214,797    86,625       66,375      1,492,389     1,047,459  
Robert J. O'Connell    33,750      607,399     31,500       26,250       609,913       249,499   
Dennis M. Dolan        22,500      404,392     21,375       29,625       387,461       323,652   
Giorgio Laccona        16,875      384,784     22,500       26,250       412,174       249,499   
Daniel J. McCauley     11,250      202,467     12,562       24,188       221,219       231,584   

(1)  Based on the excess of (i) the aggregate market value (closing price on the
     NASDAQ  National  Market) of the  underlying  shares on December 31, 19976,
over (ii) the aggregate exercise price of the options.                

Employment Contracts and Change-of-Control Arrangements                         

     The Company is party to an  employment  agreement  with Mr.  Rohrmann  that
provides for an annual base salary and such annual incentive  compensation bonus
as the  Compensation and Stock Option  Committee may determine.  Mr.  Rohrmann's
base  salary is subject to review  annually  and  currently  is  $560,000 By its
terms, the agreement will expire December 31, 2000. The agreement  provides that
in event of a change of control (as defined  below),  either party may terminate
the executive's  employment at any time, and upon such termination,  the Company
would be  required  to pay in a lump sum the  balance of the base salary for the
unexpired  term of the  agreement  (but not less than two times the annual  base
salary).  A  "change  of  control"  is  defined  in the  agreement  as  (i)  the
acquisition by any person (which term includes any entity or group) of shares of
the Company's Common Stock  representing more than 40% of the shares outstanding
or (ii) the sale or other disposition by the Company of all or substantially all
of its assets.                                                                  

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Performance Graph                                                               

     The following  Performance  Graph compares the cumulative total shareholder
return on the  Company's  Common  Stock over the five years ended  December  31,
1997, with the cumulative total return for the same period of (i) the Standard &
Poor's 500 Stock  Index and (ii) a peer group  comprised  of four  publicly-held
companies: Airborne Freight Corporation, Expediters International of Washington,
Inc., Circle International  Group, Inc. (formerly,  The Harper Group, Inc.), and
Fritz Companies,  Inc. Dividend  reinvestment has been assumed and, with respect
to companies in the peer group,  the returns of each company have been  weighted
to  reflect  its  stock  market  capitalization  relative  to that of the  other
companies in the group.                                                         

FIVE YEAR CUMULATIVE TOTAL RETURNS
 VALUE OF $100 INVESTED ON DECEMBER 31, 1992

 [PERFORMANCE GRAPH]

                                                                [Download Table]


                            1992     1993     1994     1995     1996     1997  
                                                                               
Air Express International                                                      
Corporation                $100.00   $73.85  $112.73  $130.37  $184.67  $263.13
S&P 500 Stock Index        $100.00  $110.08  $111.54  $153.45  $188.69  $251.64
Peer Group                 $100.00  $134.04  $132.43  $188.03  $158.85  $268.80

Report of Compensation and Stock Option Committee                               

     The Compensation and Stock Option Committee reviews and approves the annual
compensation  of the  Company's  executive  officers,  as well as the  Company's
policies  and  practices  with  respect  to  compensation  of  other  management
personnel.                                                                      

     Compensation of executive  officers  consists  primarily of base salary and
discretionary bonus awards tied to performance and, where appropriate, the grant
of stock options. Although the percentage of total compensation borne by each of
these                                                                           

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components is not fixed,  it is the view of the  Committee  that, in the case of
the most senior officers, the discretionary bonus should represent a substantial
percentage of total  compensation and, indeed, a greater  percentage than is the
case with officers having more narrowly-defined responsibilities.               

     In  reviewing  the  compensation  of  the  Company's   executive   officers
(including the grant of stock options),  the Committee  considers (i) the levels
of executive compensation paid by the Company's principal competitors in the air
freight and air  freight  forwarding  industry  (including  those  publicly-held
companies in the peer group shown in the Performance Graph above), to the extent
reliable  information  with respect  thereto is  available,  (ii) the  Company's
reported  earnings,  earnings per share and profit margin (operating income as a
percentage of revenues), both in absolute terms as well as in relation to budget
forecasts,  results for prior years and  competitors'  results  (where  publicly
available),  (iii) the  Company's  return on equity and stock price  performance
relative to those of its publicly-held competitors and the market as a whole and
(iv) the extent to which the Company has  achieved or exceeded  its goal for the
year. No specific weight is accorded to any single factor and different  factors
may be accorded  greater or lesser weight in particular  years or for particular
officers. Salary levels for each year are reviewed and fixed at the beginning of
the year based primarily on the Company's  performance during the preceding year
and the general trends in executive salaries within the Company's industry. Cash
bonuses are  determined  and paid  shortly  following  the end of the year based
primarily on the Company's performance, and that of its Common Stock, during the
year, the extent to which the Company's  goals for the year were met or exceeded
and the success of  management  in addressing  particular  challenges  that were
presented during the year.                                                      

     In determining the cash bonuses to be paid for 1997 to the Company's senior
executive officers,  including the Chief Executive Officer,  the Committee noted
that the Company  reported record revenues and earnings for the fourth year in a
row and that this strong performance was reflected in continued  appreciation in
the market price of its Common Stock. In addition,  the Committee  observed that
management  continued to integrate  successfully  various  operations  that were
acquired into the Company's logistics service and information network.          

     Section 162(m) of the Internal Revenue Code generally limits (to $1,000,000
per covered  executive) the  deductibility of the annual  compensation paid to a
company's  chief  executive  officer  and each of its  other  four  most  highly
compensated executive officers. That section and proposed regulations thereunder
contain  certain  exclusions  from  the  deductibility   limitation,   including
compensation  that is  determined on the basis of  performance  goals as well as
compensation attributable to the exercise of stock options and rights, under the
plans that meet certain criteria and are approved by shareholders. The Company's
1996 Incentive Stock Plan has been designed to satisfy these                    

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criteria.  Compensation  attributable  to the  exercise of  outstanding  options
previously  granted  under  the  Company's  1991  Incentive  Stock  Plan is also
excludable  from the  deductibility  limitation  pursuant to certain  transition
rules under the Internal Revenue Code. The Committee is continuing to review the
Company's   compensation  practices  for  covered  executives  with  a  view  to
preserving  the  deductibility  of  their  compensation  to the  maximum  extent
possible,  taking all relevant factors into account, and will consider carefully
the  possible  modification  of any  compensation  arrangements  that  might  be
expected to result in any material loss of deductions.                          

                              THE COMPENSATION AND
                                STOCK OPTION COMMITTEE

                                                        John M. Fowler, Chairman
                                                Donald J. Keller
                                                  Andrew L. Lewis IV
                                              John Radziwill

Compensation Committee Interlocks and Insider Participation                     

     No member of the  Compensation  and Stock Option Committee is an officer or
employee of the Company or any of its subsidiaries or participates in any of the
Company's management compensation plans or programs. No executive officer of the
Company  is a  director  or member of the  compensation  committee  of any other
entity  of which any  member  of the  Company's  Compensation  and Stock  Option
Committee is an officer or employee.                                            

PROPOSAL 2
 AMENDMENT TO THE CERTIFICATE OF INCORPORATION TO INCREASE
 THE NUMBER OF AUTHORIZED SHARES

     The Company's Board of Directors has unanimously adopted, and recommends to
the  Company's   stockholders  for  approval,  an  amendment  to  the  Company's
Certificate  of  Incorporation  to increase the total number of shares of Common
Stock which the Company has authority to issue from  40,000,000 to  100,000,000.
The proposed  amendment to the Company's  Certificate of  Incorporation  must be
approved by the  affirmative  vote of the holders of not less than a majority of
all Common Stock outstanding on the Record Date.  Further,  the amendment to the
Company's Certificate of Incorporation must be filed with the Secretary of State
of the State of Delaware to become effective.                                   

     The  authorized  capital of the Company  currently  consists of  40,000,000
shares of Common Stock and 1,000,000  shares of Preferred  Stock. As of December
31, 1997, the Company had 34,676,626 shares of Common Stock outstanding,  and no
shares of  Preferred  Stock  outstanding.  In addition,  at that date  2,349,270
shares of Common Stock                                                          

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were  reserved for issuance upon the exercise of  outstanding  options under the
Company's three stock option plans, and an additional 1,438,230 shares of Common
Stock were reserved for possible  issuance upon the exercise of options that may
be granted under the Company's three stock option plans. As a result,  there are
38,464,126  shares of Common Stock either  outstanding  or reserved for specific
purposes leaving only 1,535,874 shares of Common Stock for future issuance.  The
Company  anticipates  that it will need to issue or  reserve  additional  Common
Stock in the future.                                                            

     The Company's Board of Directors  believes that it is in the best interests
of the Company to have  additional  authorized  shares  available  for  possible
future actions, such as financings,  investments and acquisitions,  stock splits
and dividends,  employee  benefit plans and other corporate  purposes.  However,
there are no present plans, understandings or agreements for the issuance of the
Common Stock proposed to be authorized pursuant to this proposal.               

     Authorized but unissued Common Stock may be issued at such times,  for such
purposes and for such  consideration  as the  Company's  Board of Directors  may
determine without further stockholder approval,  except as otherwise required by
law or  applicable  stock  exchange  rules.  However,  the  Company's  Board  of
Directors  does not  intend to issue any of the  Common  Stock to be  authorized
under the amendment except upon terms that the Board of Directors deems to be in
the best  interest of the  Company.  The  issuance of  additional  Common  Stock
without further  stockholder  approval may, among other things,  have a dilutive
effect on earnings per share and on the equity of the present  stockholders  and
their voting rights. The Company's stockholders have no preemptive rights.      

     If the proposed amendment is approved at the Annual Meeting, Article Fourth
of the Company's  Certificate of  Incorporation  would be amended to read in its
entirety as follows:                                                            

                  FOURTH:  The  total  number  of  shares  of  stock  which  the
         corporation  shall  have  authority  to  issue is One  Hundred  and One
         Million  (101,000,000)  shares,  One Hundred Million  (100,000,000)  of
         which shall be Common  Stock of the par value of $.01 per share and One
         Million  (1,000,000) of which shall be Preferred Stock of the par value
of $1.00 per share.                                           

Stockholder Vote Required; Board Recommendation                                 

     The  affirmative  vote of a majority of the shares  entitled to vote at the
Annual  Meeting is required  to approve  the  amendment  to the  Certificate  of
Incorporation to increase the number of authorized shares of Common Stock.      

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--------------------------------------------------------------------------------
The  Board  recommends  that  you  vote  FOR  the  amendment  to  the  Company's
Certificate of Incorporation  to increase in the number of authorized  Shares of
Common Stock.                                                                   

--------------------------------------------------------------------------------

PROPOSAL 3

AMENDMENT OF 1996 INCENTIVE STOCK PLAN

Introduction                                                                    

     On April 17,  1996,  the  Company's  Board of  Directors  adopted  the 1996
Incentive  Stock  Plan  (the  "Plan"),  which  was  approved  by  the  Company's
stockholders  at the 1996 Annual  Meeting.  The number of shares of Common Stock
originally  reserved  under  the  Plan  was  500,000  (which  was  automatically
increased  to 750,000 as a result of the stock  dividend  paid by the Company in
1997).  The  Company's  Board of Directors has adopted an amendment to the Plan,
subject to stockholder  approval at the Annual Meeting,  increasing the nuber of
shares reserved for the Plan by 600,000 shares.  As of May __, 1998, the closing
price of a shares of Common Stock as reported by The NASDAQ Stock  Market,  Inc.
was $______.                                                                    

     The Board of Directors  believes  that stock  options  have been,  and will
continue to be, an important  element in the Company's  management  compensation
program.  In  addition  to  assisting  the Company in its efforts to attract and
retain the services of key management personnel, grants of options serve to link
more  effectively  executive  compensation to stockholder  returns through stock
price  performance  and provide  recipients  with an  additional  incentive  for
outstanding  performance.  The Plan as amended will make available an additional
600,000 shares for grants of options.  The Board of Directors believes that this
increase in the total number of shares  available for grants is appropriate  and
will enable the Company to continue to avail itself of the benefits of its stock
option program.                                                                 

     The Plan also permits the grant of stock appreciation rights.  Although the
Company has never granted stock  appreciation  rights under its option plans and
the Board of Directors does not currently  expect that rights will be granted in
the  foreseeable  future,  the Board of Directors  considers it  appropriate  to
retain the ability to grant  rights  should the  Compensation  and Stock  Option
Committee  (the   "Committee"),   which  is  charged  with   responsibility  for
administering the Plan, determine it to be advisable in the future.             

Summary of Plan as Amended                                                      

     The  following  is a summary  of the  material  features  of the Plan.  The
summary  does not purport to be complete  and is  qualified  in its  entirety by
reference to the                                                                

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full text of the Plan,  as  amended,  a copy of which is  appended to this Proxy
Statement as Annex A.                                                           

     The Plan  provides for the granting to eligible  employees of stock options
("Options"),  which may be  Incentive  Options  (as  defined)  or  Non-Qualified
Options (as defined).  In addition,  stock appreciation rights ("Rights") may be
granted alone or in conjunction with or in the alternative to Options.          

     Options and Rights may be granted  with  respect to an  aggregate  of up to
1,250,000  shares (the "Shares") of the Company's  Common Stock (which number is
subject to  adjustment in the event of stock  dividends,  stock splits and other
similar  events)  during the period from July 1, 1996 through June 30, 2006.  To
the extent that an Option is not exercised  within the period of  exercisability
specified therein, it will expire as to the then unexercised part. If any Option
or Right  terminates  prior to the expiration of the Plan, the Committee has the
right to use the Shares as to which such  Option or Right was not  exercised  to
grant one or more  additional  Options or Rights to any eligible  employee.  The
Shares  may be made  available  from  either  authorized  but  unissued  shares,
treasury  shares or both. The effective date of the Plan is July 1, 1996. In the
event that the  amendment to the Plan to increase the number of shares  reserved
therefor is not approved by shareholders  at the Annual  Meeting,  the number of
shares reserved for the Plan would remain 750,000.                              

     The Committee has been delegated  authority to administer  the Plan.  Under
the Plan,  the  Committee  must  consist of not fewer than three  members of the
Board of Directors who are both (i)  "disinterested  persons" within the meaning
of Rule  16b-3  under the  Securities  Exchange  Act of 1934,  as  amended  (the
"Exchange  Act") and (ii)  "outside  directors"  within  the  meaning of Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code"). Members of
the Committee are not eligible to receive  Options or Rights under the Plan. The
Committee has the authority to determine the individuals to whom and the date on
which  Options and Rights are to be granted,  the number of Shares to be subject
to each Option and Right,  the exercise  price of Shares  subject to each Option
and Right and the other  terms and  provisions  of each  Option and  Right.  The
Company will receive no monetary  consideration  for granting  Options or Rights
under the Plan.                                                                 

     Options and Rights may be granted only to salaried key employees (including
executive officers) of the Company,  or of any subsidiary  corporation or parent
corporation of the Company, who are not members of the Committee.               

     The aggregate  number of Shares with respect to which Options and/or Rights
may be granted to any one employee  pursuant to the plan may not exceed  125,000
Shares. In addition,  no individual employee may be granted Incentive Options to
purchase  Shares if the  aggregate  fair market  value of Shares with respect to
which  Incentive  Options are  exercisable  for the first time by such  employee
during any calendar year (under all                                             

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stock option plans of the Company or any subsidiary or parent corporation of the
Company) exceeds $100,000. For the purpose of the foregoing limitation, the fair
market value of Shares subject to an Incentive  Option is to be determined as of
the time the Option is granted,  the  limitation is to be applied by taking into
account  Options in the order in which they were granted and  Incentive  Options
granted before 1987 need not be taken into account.                             

     The Committee may require,  as a condition of granting any Option or Right,
that the grantee enter into an agreement with the Company  providing that in the
event of the termination of employment of the grantee for any reason (other than
dismissal  without  cause) the grantee will not, for a period  determined by the
Committee at the time of grant, enter into any other employment,  or participate
directly or indirectly in any other  business or enterprise  that is competitive
with the  business  of the  Company or enter into any  employment  in which such
employee  will be called  upon to  utilize  special  knowledge  and  information
obtained  through  employment  with the  Company  or any  subsidiary  or  parent
corporation of the Company.  The Committee also may require that the grantee not
sell or  otherwise  dispose of Shares  acquired  pursuant to the  exercise of an
Option or a Right for a period of six months from the date of acquisition.      

     The purchase price of Shares issuable upon exercise of an Incentive  Option
may not be less than 100% of the fair  market  value of such  Shares on the date
the Option is granted;  provided,  however,  that,  in the case of an  Incentive
Option  granted to a person  who,  at the time of the grant,  owns shares of the
capital stock of the Company or of any  subsidiary or parent  corporation of the
Company  representing  more than 10% of the total  combined  voting power of the
outstanding  capital  stock  of the  Company  or of such  subsidiary  or  parent
corporation (hereafter,  a "Control Person"), the purchase price may not be less
than 110% of such fair  market  value on the date the  Option  is  granted.  The
purchase price of Shares issuable upon exercise of a  Non-Qualified  Option will
be such amount as the Committee deems  appropriate but may not be less than 100%
of the fair market  value of such Shares on the date the Option is granted.  The
purchase  price must be paid in full at the time of  exercise  of the Option and
payment  must be made in cash,  except  that in lieu of cash,  the  holder of an
Option may, if the instrument  evidencing  the Option so permits,  exercise such
Option, in whole or in part, by delivering to the Company  outstanding shares of
the Company's Common Stock owned by such holder. For purposes of determining the
portion of the exercised  Option being paid for by the delivery of Shares,  such
Shares shall be valued at their fair market value. All cash proceeds received by
the  Company  from the  exercise of Options  will be used for general  corporate
purposes.                                                                       

     In general,  any Incentive  Option  granted under the Plan may be exercised
during a period of not more than ten years from the date of grant (five years in
the case of an Incentive Option granted to a Control Person), although a shorter
period may be specified in the instrument  evidencing such Incentive  Option, in
such amounts as the                                                             

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Committee  may  specify  at the time of grant.  A  Non-Qualified  Option  may be
exercised  during  the  period  specified  by the  Committee  in the  instrument
evidencing such Non-Qualified Option. The Committee may fix and thereafter,  may
accelerate,  in whole or in part,  the  period  within  which any  Option may be
exercised.                                                                      

     In the discretion of the Committee,  a Right may be granted (i) alone, (ii)
simultaneously  with the grant of an Option (either  Incentive or Non-Qualified)
and in conjunction  therewith or in the alternative  thereto or (iii) subsequent
to the grant of a  Non-Qualified  Option and in conjunction  therewith or in the
alternative thereto.                                                            

     The exercise price of a Right granted alone will be set by the Committee at
the time of grant but may not be less than 100% of the fair market  value of one
Share on the date of grant of such Right. A Right granted simultaneously with or
subsequent  to the grant of an Option  and in  conjunction  therewith  or in the
alternative thereto must have the same exercise price as the related Option, may
not be transferred except upon the same terms and conditions as those applicable
to the related  Option and must be exercisable to the same extent as the related
Option;  provided,  however,  that a Right,  by its terms,  may not be exercised
unless, at the time of exercise,  the fair market value of the Shares subject to
the Right and related Option exceeds the exercise price thereof.                

     Upon  exercise of a Right granted  simultaneously  with or subsequent to an
Option,  and in the  alternative  hereto,  the  number of  Shares  for which the
related  Option  may be  exercised  will be  reduced by the number of Shares for
which the Right has been  exercised.  The  number of Shares for which a Right is
exercisable  will be reduced upon any exercise of a related Option by the number
of Shares for which such Option has been exercised.                             

     The holder of a Right may elect to receive cash, Shares or a combination of
cash and Shares having an aggregate value equal to the product of (i) the excess
of (x) the fair market  value of one share of Common Stock on the date the Right
is exercised over (y) the exercise price  specified in such Right or its related
Option, multiplied by (ii) the number of Shares with respect to which such Right
is being  exercised.  The aggregate  value of cash and Common Stock payable with
respect to each Share for which a Right is exercised shall be limited,  however,
to 100% of the exercise price per Share under such Right. A Right will be deemed
exercised on the last day of its term, if not otherwise exercised by its holder,
provided  that the fair market value of the Shares  subject to the Right exceeds
the exercise price thereof on such date.                                        

     The  election  by a holder of a Right to  receive  cash in full or  partial
settlement of a Right, and any exercise of such Right for cash, may be made only
during the period  beginning  on the third  business day  following  the date of
release  for  publication  by the  Company  of a  quarterly  or  annual  summary
statement of earnings and ending on the                                         

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twelfth business day following such date. The Committee, in its sole discretion,
may disapprove, in whole or in part, a holder's election to receive cash.       

     In the event of a Change of Control (as defined) of the  Company,  all then
outstanding  Options and Rights will become immediately  exercisable.  Moreover,
the Committee may determine,  in its  discretion,  that upon the occurrence of a
Change of Control,  Options and Rights will terminate  within a specified number
of days after notice to the holder thereof, and such holder shall receive,  with
respect to each Share  subject to such Option or Right,  cash in an amount equal
to the excess of the fair market value of such Shares  immediately  prior to the
occurrence of such  transaction over the exercise price of such Option or Right.
For purposes of the Plan,  and except as noted below, a "Change of Control" will
be deemed to occur if (a) there occurs a change in control of the  direction and
administration  of the Company's  business that would be required to be reported
in  response  to Item 6(e) of  Schedule  14A  promulgated  under the  Securities
Exchange  Act of 1934,  as  amended  (the  "Exchange  Act"),  or (b) any  person
(excluding any employee benefit plan) becomes the beneficial owner of securities
representing  50% or  more  of  the  combined  voting  power  of  the  Company's
outstanding  securities then entitled to vote for the election of directors,  or
(c)  during  any  consecutive  two-year  period,  those  individuals  who at the
beginning  of such period  constituted  the Board of  Directors  or who would be
Continuing  Directors (as defined) cease for any reason to constitute a majority
of the Board of  Directors,  or (d) the Board of Directors  approves the sale of
all or substantially all of the Company's assets or any merger, consolidation or
similar  business  combination  involving  the Company  that would result in the
occurrence  of any event  described in clause (b) or clause (c) above.  However,
none of the foregoing  events will be deemed a Change of Control if it occurs as
a result of an agreement or  transaction  approved by the  Company's  Continuing
Directors  who,  in  granting  such  approval,  determine  that it is not in the
Company's  best  interest for such  agreement  or  transaction  to  constitute a
"Change of Control" for purposes of the Plan. The term "Continuing Directors" is
defined in the Plan to mean and include  each  director of the Company in office
on July 1, 1996 and any successor to any such director and  additional  director
who,  after that date, was nominated or selected by a majority of the Continuing
Directors then in office and who, at the time of his nomination or selection, is
not an  "affiliate"  or  "associate"  (as  defined in  Regulation  12B under the
Exchange Act) of a Control Person of the Company.                               

     Options  and  Rights  are  non-transferable,  except by will or the laws of
descent and distribution.  Upon an employee's termination of employment,  unless
otherwise specified in the instrument evidencing the Option or Right, any Option
or Right previously  granted to that employee pursuant to the Plan shall, to the
extent not  theretofore  exercised,  terminate and become null and void,  except
that (a) if the  employee  dies (i) while in the employ of the  Company  (or any
subsidiary  or parent  thereof),  or (ii)  within  three  months  following  the
employee's  termination of employment by reason of retirement or dismissal other
than for cause (as defined in the Plan), or (iii) within one year following     

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the  employee's  termination  of  employment  by  reason  of  disability,   such
employee's legal representative (or heirs or beneficiaries, if appropriate) may,
not later  than one year from the date of the  employee's  death,  exercise  any
Options or Rights which were  exercisable on the date of such employee's  death;
and (b) if the termination of employment is due to such  employee's  retirement,
disability  or  dismissal  other than for cause (as  defined in the Plan),  such
employee  or his  legal  representative  shall  have the right to  exercise  the
Options or Rights  which were  exercisable  on the date of  termination  of such
employee's  employment,  at any time up to and  including (i) three months after
the date of such  termination of employment in the case of termination by reason
of  retirement  or dismissal  other than for cause,  and (ii) one year after the
date of  termination  of  employment  in the case of  termination  by  reason of
disability.                                                                     

     In the event of any change in the outstanding shares of Common Stock of the
Company (through events such as a stock split, stock dividend, recapitalization,
spin-off,  split-up,  split-off,  merger, consolidation or reorganization of the
Company or other like change in its capital structure),  appropriate adjustments
to the Options and Rights are to be made so that such Options and Rights  become
exercisable  for such  securities,  cash or other  property  as would  have been
received in respect of Shares had the Option or Right been fully exercised prior
to such  change,  and  adjustments  are to be made in the  number of Shares  and
exercise  price of Options  and Rights to prevent  dilution  or  enlargement  of
rights  thereunder,  subject  to the rules of  Section  424(a) of the Code as to
Incentive Options and related Rights.                                           

     The Plan may be amended from time to time by the Board of  Directors,  with
the concurrence of the Committee, provided that existing rights under any Option
or Right theretofore  granted may not be adversely  affected without the consent
of the holder thereof. In addition,  the Board of Directors may not, without the
approval of the  Company's  shareholders,  make any  amendment  to the Plan that
would  increase the total number of shares  reserved for issuance under the Plan
(other than an increase  to adjust for  changes in  capitalization),  reduce the
exercise price of an Incentive Option below 100% of the fair market value of the
underlying  Shares at the time such  Incentive  Option is  granted,  modify  the
provisions  of the Plan  relating to  eligibility  or  materially  increase  the
aggregate benefits that may be provided to participants under the Plan.         

     The Board of  Directors  may at any time  suspend  or  terminate  the Plan,
provided that rights and obligations under any Option or Right granted while the
Plan is in effect may not be altered or impaired by suspension or termination of
the Plan, except upon the consent of the holder thereof.                        

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Federal Income Tax Consequences                                                 

Incentive Options                                                     

     Incentive  Options  under the Plan are  intended  to meet the  definitional
requirements of Section 422(b) of the Code for "incentive stock options."       

     Under the Code, the grantee of an Incentive Option generally is not subject
to regular  income tax upon the  receipt or exercise  of the  Incentive  Option.
Special  rules  apply to an  employee  who  exercises  an  Incentive  Option  by
delivering Shares  previously  acquired pursuant to the exercise of an Incentive
Option.                                                                         

     For  purposes  of  computing  any  alternative  minimum tax  liability,  an
employee  who  exercises  an  Incentive  Option  generally  would be required to
increase his or her  "alternative  minimum taxable income" by an amount equal to
the  excess  of the fair  market  value of a Share  at the  time the  Option  is
exercised  over the exercise  price and must compute his or her tax basis in the
acquired  Share as if such Share had been  acquired  through  the  exercise of a
Non-Qualified  Option  (as  described  below).  The  amount of any  minimum  tax
liability  attributable to the exercise of an Incentive Option generally will be
allowed as a credit offsetting regular tax liability in subsequent years.       

     If,  subsequent to the exercise of an Incentive Option (whether paid for in
cash or in shares),  the optionee holds the Shares  received upon exercise for a
period  that  exceeds the longer of two years from the date of grant or one year
from  the  date  of  transfer  pursuant  to the  exercise  of such  Option  (the
"applicable  holding  period"),  the  difference  (if any)  between  the  amount
realized  from the sale of such Shares and their tax basis to the holder will be
taxed as long-term  capital gain or loss (provided that such shares were held by
the  optionee as a capital  asset at the time).  If the holder is subject to the
alternative minimum tax in the year of disposition,  his or her tax basis in the
Shares will be determined, for alternative minimum tax purposes, as described in
the preceding  paragraph.  If, however,  an optionee does not hold the Shares so
acquired for the applicable  holding  period,  thereby  making a  "disqualifying
disposition,"  the optionee  would  realize  ordinary  income in the year of the
disqualifying  disposition  on the excess of the fair market value of the Shares
at the date the Incentive  Option was exercised  over the exercise price and the
balance, if any, of income would be long-term capital gain (provided the holding
period for the Shares  exceeded one year and the  optionee  held the Shares as a
capital asset at such time).                                                    

     A deduction  will not be allowed to the  employer  corporation  for federal
income tax purposes with respect to the grant or exercise of an Incentive Option
or the disposition, after the applicable holding period, of Shares acquired upon
exercise of an Incentive Option. In the event of a disqualifying  disposition, a
federal income tax                                                              

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deduction will be allowed to the employer  corporation in an amount equal to the
ordinary income included by the optionee,  provided that such amount constitutes
an ordinary and necessary  business  expense to the employer  corporation and is
reasonable  and the  limitations  of  Sections  280G and  162(m) of the Code (as
described below) do not apply.                                                  

Non-Qualified Options and Stock Appreciation Rights.                  

     A  Non-Qualified  Option  is one  that is not  intended  to  qualify  as an
incentive  stock option under  Section  422(b) of the Code.  An  individual  who
receives a  Non-Qualified  Option will not recognize any taxable income upon the
grant of such Non-Qualified Option. In general, upon exercise of a Non-Qualified
Option an individual  will be treated as having  received  ordinary income in an
amount  equal to the  excess of (i) the fair  market  value of the Shares at the
time of exercise over (ii) the exercise price.                                  

     An individual  who receives a Right will not  recognize any taxable  income
upon the  grant  of such  Right.  Generally,  upon  the  receipt  of cash or the
transfer of Shares  pursuant  to the  exercise of a Right,  an  individual  will
recognize ordinary income in an amount equal to the sum of the cash and the fair
market value of the Shares received. In certain cases, a Right may be deemed for
federal income tax purposes to have been exercised prior to actual exercise.    

     In view of  Section  16(b)  of the  Exchange  Act,  the  timing  of  income
recognition  for any  optionee who is an officer or director of the Company or a
beneficial  owner  of more  than  ten  percent  (10%)  of any  class  of  equity
securities of the Company may be deferred for a period (the  "Deferral  Period")
following  the  exercise of a  Non-Qualified  Option or Right.  Absent a written
election (pursuant to Section 83(b) of the Code) filed with the Internal Revenue
Service within 30 days after the date of transfer of the Shares  pursuant to the
exercise of the Option or Right to include in income,  as of the transfer  date,
the excess (on such date) of the fair  market  value of such  Shares  over their
exercise  price,  recognition of income by the individual will be deferred until
the expiration of the Deferral Period, if any.                                  

     The ordinary  income  recognized  with respect to the transfer of Shares or
receipt of cash upon  exercise  of a  Non-Qualified  Option or a Right under the
Plan will be subject to both wage withholding and employment  taxes. In addition
to the customary  methods of satisfying the  withholding  tax  liabilities  that
arise  upon  the  exercise  of a Right  for  Shares  or upon the  exercise  of a
Non-Qualified  Option,  an  individual  may satisfy the liability in whole or in
part by directing its employer  corporation  to withhold  Shares from those that
would  otherwise be issuable to the  individual or by tendering  other shares of
Common Stock of the Company owned by the individual, valued at their fair market
value as of the date that the tax withholding obligation arises. A deduction for
federal  income tax purposes will be allowed to the employer  corporation  in an
amount equal to the                                                             

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ordinary  income   included  by  the  individual,   provided  that  such  amount
constitutes an ordinary and necessary business expense and is reasonable and the
limitations of Section 162(m) and 280G of the Code do not apply.                

Change of Control                                                     

     As described  above,  upon a "change of control" of the Company (as defined
in the Plan),  all the then  outstanding  Options and Rights  shall  immediately
become  exercisable.  In  general,  if the total  amount of  payments to certain
individuals in the nature of compensation  that are contingent upon a "change in
control" (as defined in Section 280G of the Code) equals or exceeds  three times
the  recipient's  "base amount"  (generally,  such  recipient's  average  annual
compensation for the five years preceding the change in control),  then, subject
to certain exceptions, the payments may be treated as "parachute payments" under
the Code, in which case a portion of such payments would be nondeductible to the
employer  corporation  and the recipient would be subject to a 20% excise tax on
such portion of the payments.                                                   

Section 162(m)                                                        

     As discussed in the report of the  Compensation  and Stock Option Committee
appearing  elsewhere  in  this  Proxy  Statement,  Section  162(m)  of the  Code
generally  limits (to $1,000,000 per covered  executive) the  deductibility  for
Federal  income tax purposes of annual  compensation  paid to a company's  chief
executive officer and each of its other four most highly  compensated  executive
officers. The Plan is designed to permit Options and Rights granted hereunder to
qualify as "performance  based"  compensation  under Section 162(m) of the Code,
thereby  preserving  the  deductibility  for  federal  income  tax  purposes  of
compensation  that may be  attributable  to the  exercise  of such  Options  and
Rights.                                                                         

Regulation                                                                      

     The Plan is neither qualified under the provisions of Section 401(a) of the
Code, nor subject to any of the provisions of ERISA.                            

Stockholder Vote Required; Board Recommendation                                 

     The affirmative  vote of a majority of the shares present and voting at the
Annual Meeting is required to approve the amendment to the Plan.                

--------------------------------------------------------------------------------

            THE  BOARD  OF  DIRECTORS  RECOMMENDS  A VOTE  FOR  APPROVAL  OF THE
AMENDMENT TO THE PLAN.                                                          

--------------------------------------------------------------------------------

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 OTHER MATTERS

     As of the date of this Proxy Statement, the only business that the Board of
Directors intends to present or knows that others will present at the meeting is
that set forth above. If any other matter or matters are properly brought before
the meeting or any adjournment  thereof,  the persons named in the  accompanying
form of proxy intend to vote on such matters in accordance with their judgment. 

     The cost of soliciting  proxies will be borne by the Company.  Arrangements
will be made with brokerage firms and other custodians, nominees and fiduciaries
to forward solicitation materials to the beneficial owners of the shares held of
record by such persons, and the Company will reimburse them for their reasonable
out-of-pocket expenses. Officers and directors may also solicit proxies but will
not be specifically  compensated for making such solicitations.  The Company may
retain  Georgeson & Company,  Inc. to assist in  soliciting  proxies and to send
proxy  materials  to  brokerage  houses  and  other  custodians,   nominees  and
fiduciaries  for  transmittal  to  their  principals,  at an  estimated  cost of
[$6,500] plus out-of-pocket expenses.                                           

     The Board of Directors has selected the firm of Arthur  Andersen LLP as the
Company's  independent  public  accountants for the current fiscal year.  Arthur
Andersen LLP has served as the Company's  independent  public  accountants since
1968.  Representatives  of Arthur Andersen LLP are expected to be present at the
meeting and will have the  opportunity  to make a statement if they desire to do
so and to respond to appropriate questions.                                     

     As a matter of policy, the Company will accord confidentiality to the votes
of  individual  shareholders,  whether  submitted by proxy or ballot,  except in
limited circumstances,  including any contested election, or as may be necessary
to meet legal requirements. The Company will continue its long-standing practice
of  retaining an  independent  tabulator to receive and tabulate the proxies and
ballots and  independent  inspectors  of election  to certify the  results.  Any
shareholder  desiring  to  present a  proposal  at the 1999  Annual  Meeting  of
Shareholders  and wishing to have that proposal  included in the Proxy Statement
for that meeting must submit the same in writing to the Secretary of the Company
at 120  Tokeneke  Road,  Darien,  Connecticut  06820 in time to be  received  by
January __, 1999.                                                               

                                  By Order of the Board of Directors
                              Daniel J.  McCauley, Secretary

May __, 1998                                                                    
Darien, Connecticut                                                             

 -----------------

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     THE COMPANY WILL FURNISH,  WITHOUT  CHARGE,  A COPY OF ITS ANNUAL REPORT ON
FORM 10-K,  INCLUDING THE FINANCIAL  STATEMENTS AND SCHEDULES  THERETO,  FOR THE
YEAR ENDED DECEMBER 31, 1997, TO EACH SHAREHOLDER WHO FORWARDS A WRITTEN REQUEST
TO THE  SECRETARY,  AIR EXPRESS  INTERNATIONAL  CORPORATION,  120 TOKENEKE ROAD,
DARIEN,  CONNECTICUT  06820.  SUCH  WRITTEN  REQUEST  MUST  INCLUDE A GOOD FAITH
REPRESENTATION THAT, AS OF MAY __, 1998 (THE RECORD DATE), THE PERSON MAKING THE
REQUEST  WAS THE  BENEFICIAL  OWNER OF  SECURITIES  ENTITLED TO VOTE AT THE 1998
ANNUAL MEETING.                                                                 

     COPIES OF SUCH FORM 10-K  FURNISHED  WITHOUT CHARGE WILL NOT INCLUDE ALL OF
THE EXHIBITS  THERETO,  IF ANY, BUT WILL  INCLUDE A LIST  DESCRIBING  ALL OF THE
EXHIBITS NOT INCLUDED,  COPIES OF WHICH WILL BE AVAILABLE AT A COST OF $1.00 PER
PAGE.                                                                           

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                                                                         Annex A

1996 INCENTIVE STOCK PLAN,
as amended

I.       PURPOSES                                                               

     Air Express  International  Corporation  (the "Company")  desires to afford
certain of its key employees and the key employees of any subsidiary corporation
or parent  corporation  of the  Company  now  existing  or  hereafter  formed or
acquired  who are  responsible  for  the  continued  growth  of the  Company  an
opportunity to acquire a proprietary interest in the Company, and thus to create
in such key  employees  an increased  interest in and a greater  concern for the
welfare of the Company and its subsidiaries.                                    

     The Company, by means of this 1996 Incentive Stock Plan (the "Plan"), seeks
to retain the  services of persons now holding key  positions  and to secure the
services of persons capable of filling such positions.                          

     The stock options  ("Options")  and stock  appreciation  rights  ("Rights")
offered pursuant to the Plan are a matter of separate  inducement and are not in
lieu of any salary or other compensation for the services of any key employee.  

     The Options  granted  under the Plan are  intended  to be either  incentive
stock  options  ("Incentive  Options")  within the meaning of Section 422 of the
Internal  Revenue Code of 1986, as amended (the "Code"),  or options that do not
meet the requirements for Incentive Options ("Non-Qualified  Options"),  but the
Company makes no warranty as to the  qualification of any Option as an Incentive
Option.                                                                         

II.      AMOUNT OF STOCK SUBJECT TO THE PLAN                                    

     The total  number of shares  of  common  stock of the  Company  that may be
purchased  or  acquired  pursuant to the  exercise of Options or Rights  granted
under the Plan shall not exceed,  in the  aggregate,  one million  three hundred
fifty thousand (1,350,000) shares of the authorized common stock, $.01 par value
per share,  of the Company (the "Shares").  The aggregate  number of Shares with
respect to which  Options or Rights may be granted to any one employee  pursuant
to the Plan shall not exceed one hundred  and  twenty-five  thousand  (125,000).
Shares that are the subject of Rights and related  Options shall be counted only
once in  determining  whether the maximum number of Shares that may be purchased
or awarded under the Plan has been exceeded.                                    

     Shares  acquired  under  the Plan may be  either  authorized  but  unissued
Shares,  Shares of issued stock held in the Company's treasury,  or both, at the
discretion of                                                                   

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the Company.  If and to the extent that Options or Rights granted under the Plan
expire or terminate  without having been  exercised,  the Shares covered by such
expired or terminated  Options or Rights shall again become  available for award
under the Plan.                                                                 

     Except as provided in Articles XIX and XXII,  the Company may, from time to
time during the period beginning July 1, 1996 (the "Effective  Date") and ending
June 30, 2006 (the  "Termination  Date"),  grant to certain key employees of the
Company,  or of any subsidiary  corporation or parent corporation of the Company
now  existing  or  hereafter  formed  or  acquired,   Incentive  Options  and/or
NonQualified Options and/or Rights under the terms hereinafter set forth.       

     Provisions  of the Plan that  pertain to  Options  or Rights  granted to an
employee shall apply to Options, Rights or a combination thereof.               

     As  used  in the  Plan,  the  term  "subsidiary  corporation"  and  "parent
corporation"  shall  mean,   respectively,   a  corporation  coming  within  the
definition of such terms contained in Sections 424(f) and 424(e) of the Code.   

III.     ADMINISTRATION OF THE PLAN                                             

     The board of  directors  of the Company  (the "Board of  Directors")  shall
designate  from  among its  members an option  committee  (the  "Committee")  to
administer the Plan. The Committee  shall consist of no fewer than three members
of the Board of Directors,  each of whom shall be (i) a  "disinterested  person"
within  the  meaning  of Rule  16b-3  (or  any  successor  rule  or  regulation)
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act") and (ii) an "outside director" within the meaning of Section 162(m) of the
Code. A majority of the members of the Committee shall constitute a quorum,  and
the act of a majority  of the members of the  Committee  shall be the act of the
Committee. Any member of the Committee may be removed at any time either with or
without cause by resolution  adopted by the Board of Directors,  and any vacancy
on the Committee at any time may be filled by resolution adopted by the Board of
Directors.                                                                      

     Subject to the express  provisions of the Plan,  the  Committee  shall have
authority,  in its  discretion,  to determine  the  employees to whom Options or
Rights shall be granted,  the time when such Options or Rights shall be granted,
the  number  of Shares  which  shall be  subject  to each  Option or Right,  the
purchase price or exercise price of each Option or Right,  the period(s)  during
which such Options or Rights shall be exercisable  (whether in whole or in part)
and the other terms and provisions thereof (which need not be identical).       

     Subject to the express  provisions of the Plan,  the  Committee  also shall
have  authority  to  construe  the  Plan  and the  Options  and  Rights  granted
thereunder, to amend the                                                        

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Plan and the Options and Rights  granted  thereunder,  to  prescribe,  amend and
rescind rules and  regulations  relating to the Plan, to determine the terms and
provisions of the Options  (which need not be identical)  and Rights (which need
not be  identical)  granted  thereunder  and to make  all  other  determinations
necessary or advisable for administering the Plan. The Board of Directors or the
Committee,  as the case may be, also shall have the authority to require, in its
discretion, as a condition of the granting of any such Option or Right, that the
employee agree (i) not to sell or otherwise  dispose of Shares acquired pursuant
to the  exercise  of Options or Rights for a period of six (6) months  following
the date of the grant of the  exercised  Rights or Options  and (ii) that in the
event of termination  of employment of such employee,  other than as a result of
dismissal without cause, such employee will not, for a period to be fixed at the
time of the grant of the  Option or Right,  enter into any other  employment  or
participate  directly or indirectly in any other business or enterprise which is
competitive  with the  business  of the  Company  or any  subsidiary  or  parent
corporation of the Company,  or enter into any employment in which such employee
will be called upon to utilize special  knowledge  obtained  through  employment
with the Company or any subsidiary or parent corporation thereof.               

     The  determination  of the Committee on matters referred to in this Article
III shall be conclusive.                                                        

     The Committee may employ such legal counsel,  consultants  and agents as it
may deem  desirable  for the  administration  of the Plan and may rely  upon any
opinion or  computation  received  from any such legal  counsel,  consultant  or
agent.  Expenses  incurred by the  Committee in the  engagement of such counsel,
consultant or agent shall be paid by the Company.  No member or former member of
the Committee shall be liable for any action or determination made in good faith
with  respect to the Plan or any award of Options  or Rights  granted  under the
Plan.                                                                           

IV.      ELIGIBILITY                                                            

     Options and Rights may be granted  only to salaried  key  employees  of the
Company or of any subsidiary  corporation or parent  corporation of the Company,
except as  hereinafter  provided,  and shall not be  granted  to any  officer or
director  who is not also a  salaried  key  employee.  Any person who shall have
retired from active  employment  by the Company or a subsidiary  corporation  or
parent  corporation  thereof,  although  such person  shall have  entered into a
consulting  contract  with the  Company or a  subsidiary  corporation  or parent
corporation thereof, shall not be eligible to receive an Option or a Right.     

     The Plan does not create a right in any employee to participate in the Plan
nor does it create a right in any employee to have any Options or Rights granted
to him or her.                                                                  

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V.       OPTION PRICE AND PAYMENT                                               

     The price for each Share purchasable under any Non-Qualified Option granted
hereunder  shall be such amount as the Committee,  in its best  judgment,  shall
determine to be one hundred percent (100%) of the fair market value per Share at
the date the Option is granted.                                                 

     The price for each Share  purchasable  under any Incentive  Option  granted
hereunder  shall be such amount as the Committee,  in its best  judgment,  shall
determine  to be not less than one  hundred  percent  (100%) of the fair  market
value per Share at the date the Option is granted;  provided,  however,  that in
the case of an Incentive Option granted to a person who, at the time such Option
is granted,  owns shares of the Company or any subsidiary  corporation or parent
corporation  of the Company  which  possess  more than ten percent  (10%) of the
total  combined  voting  power of all classes of shares of the Company or of any
subsidiary  corporation or parent corporation of the Company, the purchase price
for each share  shall be such  amount as the  Committee,  in its best  judgment,
shall  determine to be not less than one hundred ten percent  (110%) of the fair
market value per Share at the date the Option is granted.  In determining  stock
ownership of an employee for any purposes  under the Plan,  the rules of Section
424(d)  of  the  Code  shall  be  applied,   and  the   Committee  may  rely  on
representations  of fact made to it by the  employee  and  believed  by it to be
true.                                                                           

     If the Shares are listed on a national  securities  exchange  in the United
States on any date on which the fair market value per Share is to be determined,
the fair  market  value per Share  shall be deemed to be the average of the high
and low  quotations  at which such Shares are sold on such  national  securities
exchange  on the date such  Option is  granted.  If the  Shares  are listed on a
national  securities  exchange in the United  States on such date but the Shares
are not traded on such date,  or such national  securities  exchange is not open
for business on such date,  the fair market value per Share shall be  determined
as of the closest preceding date on which such exchange shall have been open for
business and the Shares were  traded.  If the Shares are listed on more than one
national  securities exchange in the United States on the date on which the fair
market value per Share is to be determined,  the Committee shall determine which
national  securities  exchange shall be used for the purpose of determining  the
fair market value per Share.                                                    

     For purposes of this Plan, the  determination  by the Committee of the fair
market value of a Share shall be conclusive.                                    

     Upon the exercise of an Option granted  hereunder,  the Company shall cause
the  purchased  Shares to be issued  only when it shall have  received  the full
purchase price for the Shares in cash or by certified check; provided,  however,
that in lieu of cash,  the  holder of an Option  may,  if and to the  extent the
terms of such Option so provide and to the                                      

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extent permitted by applicable law,  exercise an Option (a) in whole or in part,
by  delivering  to the Company  shares of common stock of the Company (in proper
form for transfer and  accompanied by all requisite stock transfer tax stamps or
cash in lieu  thereof)  owned by such holder having a fair market value equal to
the exercise price  applicable to that portion of the Option being  exercised by
the  delivery of such  Shares or (b) in part,  by  delivering  to the Company an
executed  promissory  note on such terms and  conditions as the Committee  shall
determine, in its sole discretion, at the time of grant; provided, however, that
the principal amount of such note shall not exceed ninety percent (90%) (or such
lesser percentage as would be permitted by applicable margin regulations) of the
aggregate  purchase  price of the Shares  then being  purchased  pursuant to the
exercise of such Option.  The fair market value of the stock so delivered  shall
be determined as of the date immediately  preceding the date on which the Option
is exercised, or as may be required in order to comply with or to conform to the
requirements of any applicable laws or regulations.                             

VI.      USE OF PROCEEDS                                                        

     The cash  proceeds  of the sale of  Shares  pursuant  to the Plan are to be
added to the general  funds of the  Company  and used for its general  corporate
purposes.                                                                       

VII.     TERM OF OPTIONS AND LIMITATIONS ON THE RIGHT OF EXERCISE               

     Any Option shall be exercisable  at such times,  in such amounts and during
such period or periods as the Committee shall determine at the time of the grant
of such  Option;  provided,  however,  that an  Incentive  Option  shall  not be
exercisable  after the expiration of ten (10) years from the date such Option is
granted;  and provided  further that, in the case of an Incentive Option granted
to a person who,  at the time such Option is granted,  owns stock of the Company
or any subsidiary or parent  corporation of the Company possessing more than ten
percent (10%) of the total combined  voting power of all classes of stock of the
Company or of any such  subsidiary or parent  corporation  of the Company,  such
Option shall not be exercisable  after the expiration of five (5) years from the
date such Option is granted.                                                    

     Except to the extent otherwise  provided under the Code, to the extent that
the  aggregate  fair  market  value of stock for  which  Incentive  Options  are
exercisable  for the first time by an employee  during any calendar  year (under
all  stock  option  plans  of  the  Company  and of any  parent  corporation  or
subsidiary  corporation  of the Company)  exceeds one hundred  thousand  dollars
($100,000), such Options shall be treated as Non-Qualified Options. For purposes
of this  limitation,  (i) the fair market value of stock is determined as of the
time the Option is granted, (ii) the limitation will be applied by taking       

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into  account  Options  in the  order in which  they  were  granted,  and  (iii)
Incentive Options granted before 1987 shall not be taken into account.          

     Subject to the  provisions of Article XVIII,  the Committee  shall have the
right to accelerate,  in whole or in part, from time to time,  conditionally  or
unconditionally, rights to exercise any Option granted hereunder.               

     To the  extent  that an  Option  is not  exercised  within  the  period  of
exercisability  specified  therein,  it shall expire as to the then  unexercised
part.                                                                           

     In no event shall an Option  granted  hereunder be exercised for a fraction
of a Share.                                                                     

VIII.    EXERCISE OF OPTIONS                                                    

     Options granted under the Plan shall be exercised by the optionee as to all
or part of the Shares  covered  thereby  by the giving of written  notice of the
exercise  thereof to the  Corporate  Secretary  of the Company at the  principal
business office of the Company,  specifying the number of Shares to be purchased
and  specifying a business day not more than (15) days from the date such notice
is given,  for the payment of the purchase price against  delivery of the Shares
being  purchased.  Subject to the terms of  Articles  XIV,  XVI,  and XVII,  the
Company shall cause  certificates for the Shares so purchased to be delivered to
the optionee at the principal business office of the Company, against payment of
the full purchase price, on the date specified in the notice of exercise.       

IX.      STOCK APPRECIATION RIGHTS                                              

     In the  discretion  of the Board of  Directors,  a Right may be granted (i)
alone,  (ii)  simultaneously  with the grant of an Option  (either  Incentive or
Non-Qualified)  and in conjunction  therewith or in the  alternative  thereto or
(iii)  subsequent  to the grant of a  Non-Qualified  Option  and in  conjunction
therewith or in the alternative thereto.                                        

     The exercise  price of a Right  granted  alone shall be  determined  by the
Committee,  but shall not be less than one  hundred  percent  (100%) of the fair
market  value  of one  Share on the date of the  grant  of such  Right.  A Right
granted  simultaneously  with or  subsequent  to the grant of an  Option  and in
conjunction therewith or in the alternative thereto shall have the same exercise
price as the related Option,  shall be transferable only upon the same terms and
conditions  as the related  Option,  and shall be  exercisable  only to the same
extent as the related  Option;  provided,  however,  that a Right, by its terms,
shall be  exercisable  only when the fair market value of the Shares  subject to
the Right and related Option exceeds the exercise price thereof.                

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     Upon  exercise of a Right granted  simultaneously  with or subsequent to an
Option  and in the  alternative  thereto,  the  number of  Shares  for which the
related Option shall be exercisable shall be reduced by the number of Shares for
which the Right  shall  have been  exercised.  The  number of Shares for which a
Right  shall be  exercisable  shall be reduced  upon any  exercise  of a related
Option by the number of Shares for which such Option shall have been exercised. 

     Any Right shall be exercisable upon such additional terms and conditions as
may from time to time be prescribed by the Committee.                           

     A Right shall entitle the holder upon exercise  thereof to receive from the
Company,  upon a written  request filed with the Secretary of the Company at its
principal  offices  (the  "Request"),  a  number  of  Shares  (with  or  without
restrictions  as to  substantial  risk of  forfeiture  and  transferability,  as
determined by the Board of Directors in its sole discretion), an amount of cash,
or any  combination of Shares and cash, as specified in the Request (but subject
to the approval of the Committee in its sole  discretion,  at any time up to and
including the time of payment, as to the making of any cash payment),  having an
aggregate  fair market  value equal to the product of (i) the excess of the fair
market value on the day of such Request of one Share over the exercise price per
Share  specified  in such Right or its related  Option,  multiplied  by (ii) the
number of Shares for which such Right shall be exercised.                       

     Any  election  by a holder of a Right to  receive  cash in full or  partial
settlement of such Right,  and any exercise of such Right for cash,  may be made
only by a Request filed with the Corporate  Secretary of the Company  during the
period  beginning on the third  business day  following  the date of release for
publication by the Company of quarterly or annual summary statements of earnings
and ending on the twelfth  business day following such date.  Within thirty (30)
days of the  receipt by the  Company  of a Request  to  receive  cash in full or
partial  settlement of a Right or to exercise such Right for cash, the Committee
shall, in its sole discretion,  either consent to or disapprove,  in whole or in
part, such Request. A Request to receive cash in full or partial settlement of a
Right or to  exercise  a Right  for cash may  provide  that,  in the  event  the
Committee shall  disapprove such Request,  such Request shall be deemed to be an
exercise of such Right for Shares.                                              

     If the Committee  disapproves  in whole or in part any election by a holder
to receive  cash in full or partial  settlement  of a Right or to exercise  such
Right  for cash,  such  disapproval  shall not  affect  such  holder's  right to
exercise  such Right at a later  date,  to the extent  that such Right  shall be
otherwise exercisable, or to elect the form of payment at a later date, provided
that an election to receive  cash upon such later  exercise  shall be subject to
the approval of the Committee.  Additionally,  such disapproval shall not affect
such holder's  right to exercise any related  Option or Options  granted to such
holder under the Plan.                                                          

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     A holder of a Right  shall not be  entitled  to request or receive  cash in
full or partial payment of such Right, if such Right or the related Option shall
have been  exercised  during  the first six (6) months of its  respective  term;
provided,  however,  that such prohibition shall not apply if the holder of such
Right dies or becomes  disabled  (within the meaning of Section  22(e)(3) of the
Code) prior to the expiration of such six-month period, or if such holder is not
a director or officer of the Company or a beneficial owner of the Company who is
described in Section 16(a) of the Exchange Act.                                 

     A Right  shall be  deemed  exercised  on the last day of its  term,  if not
otherwise  exercised by the holder thereof,  provided that the fair market value
of the Shares  subject to the Right  exceeds the exercise  price thereof on such
date.                                                                           

     For all  purposes of this Article IX, the fair market value of Shares shall
be determined in accordance with the principles set forth in Article V.         

X.       NONTRANSFERABILITY OF OPTIONS AND STOCK APPRECIATION RIGHTS            

     Neither  an Option nor a Right  granted  hereunder  shall be  transferable,
whether  by  operation  of law or  otherwise,  other than by will or the laws of
descent and  distribution,  and any Option or Right granted  hereunder  shall be
exercisable, during the lifetime of the holder, only by such holder.            

XI.      TERMINATION OF EMPLOYMENT                                              

     Upon termination of employment of any employee with the Company and any and
all  subsidiary  and  parent  corporations  of the  Company,  an Option or Right
previously granted to the employee,  unless otherwise specified by the Committee
in the  Option  or  Right,  shall,  to the  extent  not  theretofore  exercised,
terminate and become null and void, provided that:                              

(a)  if the employee shall die while in the employ of such corporation or during
     either the three (3)-month or one (1)-year period, whichever is applicable,
     specified in clause (b) below and at a time when such employee was entitled
     to exercise an Option or Right as herein provided, the legal representative
     of such  employee,  or such  person who  acquired  such  Option or Right by
     bequest or inheritance or by reason of the death of the employee,  may, not
     later  than one (1) year from the date of death,  exercise  such  Option or
     Right, to the extent not theretofore exercised, in respect of any or all of
     such  number of Shares as  specified  by the  Committee  in such  Option or
Right; and                                                            

(b)  if the  employment  of any employee to whom such Option or Right shall have
     been granted shall  terminate by reason of the  employee's  retirement  (at
such age or upon                                                      

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     such  conditions  as  shall  be  specified  by  the  Board  of  Directors),
     disability  (as described in Section  22(e)(3) of the Code) or dismissal by
     the  employer  other  than for cause (as  defined  below),  and while  such
     employee is entitled to exercise  such Option or Right as herein  provided,
     such  employee  shall have the right to  exercise  such  Option or Right so
     granted, to the extent not theretofore exercised,  in respect of any or all
     of such number of Shares as  specified  by the  Committee in such Option or
     Right,  at any time up to and including (i) three (3) months after the date
     of such  termination  of employment in the case of termination by reason of
     retirement  or  dismissal  other than for cause and (ii) one (1) year after
     the date of  termination of employment in the case of termination by reason
of disability.                                                        

     In no event,  however,  shall any person be entitled to exercise any Option
or Right after the expiration of the period of  exercisability of such Option or
Right as specified therein.                                                     

     If  an  employee  voluntarily  terminates  his  or  her  employment  or  is
discharged  for  cause,  any Option or Right  granted  hereunder  shall,  unless
otherwise specified by the Committee in the Option or Right, forthwith terminate
with respect to any unexercised portion thereof.                                

     If an Option or Right  granted  hereunder  shall be  exercised by the legal
representative  of a deceased  employee or former  employee,  or by a person who
acquired an Option or Right granted  hereunder by bequest or  inheritance  or by
reason of the death of any employee or former  employee,  written notice of such
exercise shall be accompanied  by a certified  copy of letters  testamentary  or
equivalent  proof of the right of such legal  representative  or other person to
exercise such Option or Right.                                                  

     For the  purposes  of the Plan,  the term "for  cause"  shall mean (i) with
respect  to an  employee  who  is a  party  to a  written  agreement  with,  or,
alternatively,  participates in a compensation or benefit plan of the Company or
a  subsidiary  or parent  corporation  of the Company,  which  agreement or plan
contains a  definition  of "for cause" or "cause" (or words of like  import) for
purposes  of  termination  of  employment  thereunder  by the  Company  or  such
subsidiary  or parent  corporation  of the  Company,  "for  cause" or "cause" as
defined in the most  recent of such  agreements  or plans,  or (ii) in all other
cases, as determined by the Committee,  in its sole discretion,  (a) the willful
commission  by an  employee  of a criminal  or other act that causes or probably
will cause substantial  economic damage to the Company or a subsidiary or parent
corporation of the Company or substantial  injury to the business  reputation of
the  Company or a  subsidiary  or parent  corporation  of the  Company;  (b) the
commission  by an  employee  of an  act of  fraud  in the  performance  of  such
employee's duties on behalf of the Company or a subsidiary or parent corporation
of the Company;  or (c) the continuing willful failure of an employee to perform
the duties of such employee to the Company or a subsidiary or parent corporation

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of the Company (other than such failure resulting from the employee's incapacity
due to physical or mental illness) after written notice thereof  (specifying the
particulars  thereof in reasonable  detail) and a reasonable  opportunity  to be
heard and cure such  failure are given to the  employee  by the chief  executive
officer or, in the case of an employee who is a senior executive  officer of the
Company or a  subsidiary  or parent  corporation,  the Board of Directors of the
Company  or such  subsidiary  or  parent  corporation,  as the case may be.  For
purposes of the Plan, no act, or failure to act, on the employee's part shall be
considered  "willful"  unless done or omitted to be done by the  employee not in
good faith and without  reasonable belief that the employee's action or omission
was in the best interest of the Company or a subsidiary or parent corporation of
the Company.                                                                    

     For the purposes of the Plan, an employment relationship shall be deemed to
exist  between  an  individual  and  a  corporation  if,  at  the  time  of  the
determination, the individual was an "employee" of such corporation for purposes
of Section  422(a) of the Code. If an  individual is on military,  sick leave or
other  bona fide  leave of  absence,  such  individual  shall be  considered  an
"employee"  for  purposes  of the  exercise  of an  Option or Right and shall be
entitled  to exercise  such  Option or Right  during such leave if the period of
such leave does not exceed 90 days, or, if longer,  so long as the  individual's
right to  reemployment  with the  corporation  granting the option (or a related
corporation)  is guaranteed  either by statute or by contract.  If the period of
leave exceeds ninety (90) days, the employment  relationship  shall be deemed to
have  terminated  on the  ninety-first  (91st)  day of such  leave,  unless  the
individual's right to reemployment is guaranteed by statute or contract.        

     A termination  of employment  shall not be deemed to occur by reason of (i)
the transfer of an employee  from  employment  by the Company to employment by a
subsidiary  corporation or a parent corporation of the Company (ii) the transfer
of  an  employee  from  employment  by a  subsidiary  corporation  or  a  parent
corporation of the Company to employment by the Company or by another subsidiary
corporation or parent corporation of the Company.                               

     In the event of the complete  liquidation  or  dissolution  of a subsidiary
corporation,  or in the event that such  corporation  ceases to be a  subsidiary
corporation, any unexercised Options or Rights theretofore granted to any person
employed by such  subsidiary  corporation  will be deemed  canceled  unless such
person is  employed  by the  Company  or by any  parent  corporation  or another
subsidiary  corporation  after the  occurrence  of such  event.  In the event an
Option or Right is to be canceled  pursuant to the  provisions  of the  previous
sentence,  notice of such  cancellation  will be given to each employee  holding
unexercised  Options,  and such  holder  will  have the right to  exercise  such
Options or Rights in full (without regard to any limitation set forth or imposed
pursuant  to Article  VII)  during the 30 day  period  following  notice of such
cancellation.                                                                   

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XII.     ADJUSTMENT OF SHARES; EFFECT OF CERTAIN TRANSACTIONS                   

     In the  event of any  change  in the  outstanding  Shares  through  merger,
consolidation,  reorganization,  recapitalization,  stock dividend, stock split,
split-up,  split-off,  spin-off,  combination of shares,  exchange of shares, or
other like change in capital  structure of the Company,  an adjustment  shall be
made to each  outstanding  Option and Right such that each such Option and Right
shall thereafter be exercisable for such securities,  cash and/or other property
as would have been  received in respect of the Shares  subject to such Option or
Right had such Option or Right been exercised in full immediately  prior to such
change,  and such an adjustment  shall be made  successively  each time any such
change shall occur.  The term "Shares"  after any such change shall refer to the
securities,  cash and/or  property then receivable upon exercise of an Option or
Right.  In addition,  in the event of any such change,  the Committee shall make
any further  adjustment as may be  appropriate  to the maximum  number of Shares
which may be acquired  under the Plan  pursuant  to the  exercise of Options and
Rights,  the  maximum  number of  Shares  which  may be so  acquired  by any one
employee  and the  number of Shares and price per Share  subject to  outstanding
Options or Rights as shall be equitable to prevent  dilution or  enlargement  of
rights under such Options or Rights,  and the  determination of the Committee as
to these matters shall be conclusive.  Notwithstanding  the foregoing,  (i) each
such adjustment with respect to an Incentive  Option and any related Right shall
comply with the rules of Section  424(a) of the Code, and (ii) in no event shall
any adjustment be made which would render any Incentive Option granted hereunder
other than an "incentive stock option" for purposes of Section 422 of the Code. 

     In the event of a "change in control" of the Company,  all then outstanding
Options and Rights shall  immediately  become  exercisable.  For purposes of the
Plan, a "change in control" of the Company occurs if:                           

(a)  there occurs a change in control of the direction and administration of the
     Company's  business  of a nature  that would be  required to be reported in
     response to Item 6(e) of Schedule 14A of  Regulation  14A (or any successor
     rule or regulation)  promulgated under the Exchange Act, whether or not the
Company is then subject to such reporting requirement; or             

(b)  any  "person"  (as such term is used in Sections  13(d) and 14(d)(2) of the
     Exchange Act but excluding any employee  benefit plan of the Company) is or
     becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
     Act),  directly or  indirectly,  of securities of the Company  representing
     fifty percent  (50%) or more of the combined  voting power of the Company's
     outstanding  securities  then  entitled  ordinarily  (and apart from rights
     accruing  under  special   circumstances)  to  vote  for  the  election  of
directors; or                                                         

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(c)  during any period of two (2) consecutive  years, the individuals who at the
     beginning  of  such  period  constitute  the  Board  of  Directors  or  any
     individuals who would be "Continuing  Directors" (as  hereinafter  defined)
cease for any reason to constitute at least a majority thereof; or    

(d)  the Board of Directors shall approve a sale of all or substantially  all of
the assets of the Company; or                                         

(e)  the Board of Directors  shall  approve any merger,  consolidation,  or like
     business  combination or reorganization of the Company, the consummation of
     which would result in the  occurrence of any event  described in clause (b)
or (c) above;                                                         

provided,  however,  that none of the foregoing events shall constitute a Change
in Control  if such  event  occurs as a result of an  agreement  or  transaction
approved by the "Continuing Directors," either before or after the occurrence of
such  event,  and the  Continuing  Directors  in  approving  such  agreement  or
transaction  determine  that it is not in the best  interest  of the Company for
such  agreement or transaction to constitute a Change in Control for purposes of
the Plan.                                                                       

     For  purposes of the Plan,  "Continuing  Directors"  shall mean and include
each director of the Company in office on the  Effective  Date and any successor
to any such  director and any  additional  director who (i) after the  Effective
Date was  nominated  or selected by a majority of the  Continuing  Directors  in
office at the time of his  nomination  or selection  and (ii) at the time of his
nomination  or selection is not an  "affiliate"  or  "associate"  (as defined in
Regulation  12B under the  Exchange  Act) of any  person  who is the  beneficial
owner, directly or indirectly,  of securities  representing ten percent (10%) or
more of the combined voting power of the Company's  outstanding  securities then
entitled ordinarily to vote for the election of directors.                      

     The Committee,  in its discretion,  may determine that, upon the occurrence
of a transaction  described in the second  preceding  paragraph,  each Option or
Right  outstanding  hereunder shall terminate  within a specified number of days
after notice to the holder, and such holder shall receive,  with respect to each
Share subject to such Option or Right,  cash in an amount equal to the excess of
the fair market value of such Share  immediately prior to the occurrence of such
transaction  over the  exercise  price  per Share of such  Option or Right.  The
provisions  contained in the  preceding  sentence  shall be  inapplicable  to an
Option or Right  granted  within  six (6)  months  before  the  occurrence  of a
transaction  described above if the holder of such Option or Right is a director
or officer of the Company or a beneficial  owner of the Company who is described
in  Section  16(a) of the  Exchange  Act,  unless  such  holder  dies or becomes
disabled  (within  the  meaning of Section  22(e)(3)  of the Code)  prior to the
expiration of such six-month period.                                            

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XIII.    RIGHT TO TERMINATE EMPLOYMENT                                          

     The  Plan  shall  not  impose  any  obligation  on  the  Company  or on any
subsidiary  corporation or parent corporation thereof to continue the employment
of any holder of Options or Rights;  and it shall not impose any  obligation  on
the part of any  holder of  Options  or  Rights  to remain in the  employ of the
Company or of any subsidiary corporation or parent corporation thereof.         

XIV.     PURCHASE FOR INVESTMENT                                                

     Except as  hereinafter  provided,  the Board of  Directors  may  require an
employee, as a condition upon exercise of any Option or Right granted hereunder,
to execute and deliver to the  Company (a) stock  powers with  respect to Shares
underlying a particular  Option or Right and required to be held by a custodian,
and (b) a written statement, in form satisfactory to the Committee, in which the
employee  represents  and  warrants  that  Shares  are being  acquired  for such
person's  own account for  investment  only and not with a view to the resale or
distribution  thereof.  The employee shall, at the request of the Committee,  be
required to  represent  and  warrant in writing  that any  subsequent  resale or
distribution of Shares by the employee shall be made only pursuant to either (i)
a  Registration  Statement on an  appropriate  form under the  Securities Act of
1933, as amended (the "Securities Act"), which Registration Statement has become
effective  and is  current  with  regard to the  Shares  being  sold,  or (ii) a
specific exemption from the registration requirements of the Securities Act, but
in claiming  such  exemption the employee  shall,  prior to any offer of sale or
sale of such Shares,  obtain a prior favorable  written  opinion of counsel,  in
form  and  substance  satisfactory  to  counsel  for  the  Company,  as  to  the
application of such exemption thereto. The foregoing restriction shall not apply
to (i)  issuances  by the  Company  so  long  as the  Shares  being  issued  are
registered  under the  Securities  Act and a  prospectus  in respect  thereof is
current or (ii)  reofferings  of Shares by affiliates of the Company (as defined
in Rule 405 or any successor rule or regulation promulgated under the Securities
Act) if the Shares being reoffered are registered under the Securities Act and a
prospectus in respect thereof is current.                                       

XV.      ISSUE OF CERTIFICATES; LEGENDS, PAYMENT OF EXPENSES                    

     Upon any exercise of an Option or Right which may be granted hereunder and,
in the case of an Option,  payment  of the  purchase  price,  a  certificate  or
certificates  for the Shares  shall be issued by the  Company in the name of the
person  exercising  the  Option or Right and shall be  delivered  to or upon the
order of such person.                                                           

     The Company may endorse  such legend or legends upon the  certificates  for
Shares  issued  pursuant  to  the  Plan  and  may  issue  such  "stop  transfer"
instructions  to its  transfer  agent  in  respect  of such  Shares  as,  in its
discretion, it determines to be necessary or                                    

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appropriate to (i) prevent a violation of, or to perfect an exemption  from, the
registration  requirements  of the Securities Act, (ii) implement the provisions
of the Plan and any  agreement  between the Company and the  optionee or grantee
with  respect to such  Shares,  or (iii)  permit the  Company to  determine  the
occurrence of a disqualifying disposition, as described in Section 421(b) of the
Code, of Shares  transferred  upon exercise of an Incentive Option granted under
the Plan.                                                                       

     The  Company  shall pay all issue or  transfer  taxes  with  respect to the
issuance  or transfer of Shares,  as well as all fees and  expenses  necessarily
incurred by the Company in  connection  with such  issuance or transfer,  except
fees and  expenses  which may be  necessitated  by the filing or  amending  of a
Registration  Statement  under the Securities Act, which fees and expenses shall
be borne by the recipient of the Shares unless such  Registration  Statement has
been filed by the Company  for its own  corporate  purposes  (and the Company so
states) in which event the recipient of the Shares shall bear only such fees and
expenses as are  attributable  solely to the  inclusion  of the Shares he or she
receives in the Registration Statement.                                         

     All Shares issued as provided herein shall be fully paid and  nonassessable
to the extent permitted by law.                                                 

XVI.     WITHHOLDING TAXES                                                      

     The Company may require an employee  exercising a Right or a  Non-Qualified
Option  granted  hereunder,  or  disposing  of Shares  acquired  pursuant to the
exercise  of an  Incentive  Option in a  disqualifying  disposition  (within the
meaning of Section  421(b) of the  Code),  to  reimburse  the  corporation  that
employs such employee for any taxes required by any government to be withheld or
otherwise  deducted and paid by such  corporation  in respect of the issuance or
disposition of such Shares.  In lieu thereof,  the corporation that employs such
employee  shall  have the right to  withhold  the  amount of such taxes from any
other sums due or to become due from such  corporation to the employee upon such
terms  and  conditions  as the  Board of  Directors  of such  corporation  shall
prescribe.  The  corporation  that employs such employee may, in its discretion,
hold the stock  certificate to which such employee is entitled upon the exercise
of an Option as security  for the  payment of such  withholding  tax  liability,
until cash sufficient to pay that liability has been  accumulated.  In addition,
at any time that the Company becomes subject to a withholding  obligation  under
applicable law with respect to the exercise of a Right or  Non-Qualified  Option
(the  "Tax  Date"),  except  as set  forth  below,  a holder  of a Right or Non-
Qualified Option may elect to satisfy, in whole or in part, the holder's related
personal  tax  liabilities  (an  "Election")  by (i)  directing  the  Company to
withhold from Shares issuable in the related  exercise either a specified number
of Shares or Shares having a specified  value (in each case not in excess of the
related  personal tax  liabilities),  (ii) tendering  Shares  previously  issued
pursuant to the exercise of an Option or Right or other                         

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shares of the Company's  common stock owned by the holder or (iii) combining any
or  all  of  the  foregoing  options  in  any  fashion.  An  Election  shall  be
irrevocable.  The withheld Shares and other shares tendered in payment should be
valued at their fair market value  (determined in accordance with the principles
set  forth  in  Article  V of the  Plan)  on the Tax  Date.  The  Committee  may
disapprove of any Election,  suspend or terminate the right to make Elections or
provide that the right to make Elections shall not apply to particular Shares or
exercises.  If a holder is a person  subject to Section 16 of the  Exchange  Act
then (1) any  Election by such holder must be made (i) at least six months prior
to the relevant Tax Date or (ii) on or prior to the relevant Tax Date and during
a period that begins on the third  business day following the date of release of
publication of the Company's quarterly or annual summary statements of sales and
earnings and that ends on the twelfth  business day following  such date and (2)
the Election may not be made with  respect to an  exercise,  or the  withholding
obligation  arising thereon,  if the relevant Right or Non-Qualified  Option was
granted  six months or less prior to the date of  Election.  The  Committee  may
impose any other  conditions or restrictions on the right to make an Election as
it shall deem appropriate.                                                      

XVII.    LISTING OF SHARES AND RELATED MATTERS                                  

     The  Committee  may delay any award,  issuance  or delivery of Shares if it
determines that listing,  registration or qualification of Shares or the consent
or approval of any  governmental  regulatory body is necessary or desirable as a
condition  of, or in connection  with,  the sale or purchase of Shares under the
Plan, until such listing, registration, qualification, consent or approval shall
have  been  effected  or  obtained,  or  otherwise  provided  for,  free  of any
conditions not acceptable to the Committee.                                     

XVIII.            AMENDMENT OF THE PLAN                                         

     The Board of Directors,  with the  concurrence of the Committee,  may, from
time to time,  amend  the Plan,  provided  that,  without  the  approval  of the
shareholders  of the Company,  no amendment shall be made that will (i) increase
the total number of Shares  reserved  for Options  under the Plan (other than an
increase resulting from an adjustment  provided for in Article XII), (ii) reduce
the exercise  price of any Incentive  Option granted  hereunder  below the price
required  by Article V, (iii)  modify the  provisions  of the Plan  relating  to
eligibility,  or (iv) materially  increase the benefits accruing to participants
under the Plan. The Board of Directors shall be authorized to amend the Plan and
the Options granted  thereunder to the extent  necessary to permit the Incentive
Options  granted  thereunder to qualify as incentive  stock  options  within the
meaning of Section 422 of the Code. The rights and obligations  under any Option
or Right granted before amendment of the Plan or any unexercised portion of such
Option or Right shall not be adversely affected by amendment of the Plan, Option
or Right without the consent of the holder of such Option or Right.             

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XIX.     TERMINATION OR SUSPENSION OF THE PLAN                                  

     The Board of Directors may at any time suspend or terminate  the Plan.  The
Plan,  unless sooner  terminated under Article XXII or by action of the Board of
Directors,  shall  terminate at the close of business on the  Termination  Date.
Options and Rights may not be granted while the Plan is suspended or after it is
terminated.  Rights and obligations  under any Option or Right granted while the
Plan is in effect shall not be altered or impaired by suspension or  termination
of the Plan,  except  upon the consent of the person to whom the Option or Right
was granted.  The power of the Committee to construe and  administer any Options
or Rights  granted  prior to the  termination  or  suspension  of the Plan under
Article III  nevertheless  shall continue after such  termination or during such
suspension.                                                                     

XX.      GOVERNING LAW                                                          

     The Plan,  such  Options  and Rights as may be granted  thereunder  and all
related  matters  shall be governed by, and construed and enforced in accordance
with, the laws of the State of Delaware from time to time obtaining.            

XXI.     PARTIAL INVALIDITY                                                     

     The invalidity or illegality of any provision herein shall not be deemed to
affect the validity of any other provision.                                     

XXII.    EFFECTIVE DATE                                                         

     The Plan shall become  effective at 9:00 A.M.,  New York City time,  on the
Effective  Date;  provided,  however,  that if the Plan [or the amendment to the
Plan to increase the number of shares  reserved  hereunder to  1,250,000] is not
approved by a vote of the  shareholders  of the Company at an annual  meeting or
any special meeting or by unanimous  written consent on or prior to December 31,
1996 [or, with respect to the amendment,  the Annual Meeting of  Stockholders of
the  Company  to be held in 1998],  it will be of no effect  and any  Options or
Rights previously granted under the Plan will be void.                          

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 AIR EXPRESS INTERNATIONAL CORPORATION

 Proxy Solicited on Behalf of the Board of Directors
 for

Annual Meeting of Shareholders
 June 18, 1998

         The undersigned,  revoking any proxy heretofore given,  hereby appoints
         HENDRIK J. HARTONG,  JR., GUENTER  ROHRMANN and DANIEL J. McCAULEY,  or
         each or any of them,  the attorney and proxy of the  undersigned,  with
         full power of  substitution,  to vote on behalf of the  undersigned all
         shares that the undersigned,  if personally present,  would be entitled
         to  vote  at  the  Annual  Meeting  of   Shareholders  of  Air  Express
         International  Corporation  to be held on June 18,  1998,  at the Hyatt
         Regency Greenwich, 1800 East Putnam Avenue, Old Greenwich,  Connecticut
         06870,  at 11:00 a.m.,  Eastern  Daylight Time, and at any  adjournment
thereof.                                                      

         Unless a contrary direction is indicated,  this Proxy will be voted FOR
         the election as directions of all nominees  listed in the  accompanying
         Proxy  Statement,  FOR the  amendment of the Company's  Certificate  of
         Incorporation  to increase  the number of shares of Common  Stock,  par
         value $0.01,  from  40,000,000 to 100,000,000  and FOR the amendment to
         the  Company's  1996  Incentive  Stock Plan to  increase  the number of
         shares of Common Stock reserved  thereunder  from 750,000 to 1,350,000,
         all as  more  fully  described  in the  Proxy  Statement;  if  specific
         instructions  are  indicated,  this Proxy  will be voted in  accordance
         therewith.  The  Board of  Directors  recommends  a vote FOR all of the
         listed  nominees,  FOR the  amendment to the Company's  Certificate  of
         Incorporation  and FOR the  amendment to the Company's  1996  Incentive
Stock Plan.                                                   

                                   (continued, and to be signed on reverse side)

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The  Board  of  Directors  recommends  a vote  FOR  the     Please mark    [X]  
election  of  each of the  nominees  named                  your votes as       
below,  FOR the amendment of the Company's  Certificate     indicated in        
of  Incorporation  to increase  the number of               this example        
shares  of  Common   Stock,   par  value  $0.01,   from                         
40,000,000  to   100,000,000   and  FOR  the                                    
amendment to the Company's 1996 Incentive Stock Plan to                         
increase the number of shares indicated of Common Stock                         
reserved thereunder from 750,000 to 1,350,000.                                  

1.Election of    Nominees: John M. Fowler,  Hendrik J.  Hartong,  Jr.,  Donald  
Directors:                 J. Keller, Andrew L. Lewis IV, Richard T. Niner,     
                          John Radziwill,  Guenter  Rohrman and Noel E. Vargas

FOR all Nominees        WITHHOLD                                            
listed (except as        AUTHORITY                                            
noted to the contrary)                                                          

[_]                      [_]                                          

               (INSTRUCTION:  To withhold  authority to vote for any  individual
             nominee, write that nominee's name in the space provided below)

               -----------------------------------------------------------------

2. To approve an amendment to the  Company's  Certificate  of  Incorporation  to
increase the number of shares of the Common  Stock,  $0.01 par value,  which the
Company shall be authorized to issue from 40,0000 to 100,000,000.               

FOR    AGAINST  ABSTAIN                                       
|_|      |_|      |_|                                         

3. To  approve  an  amendment  to the  Company;s  1996  Incentive  Stock Plan to
increase the number of shares  guardians,  of Common Stock  reserved  thereunder
from 750,000 to partners and other persons acting in a 1,350,000.               

FOR    AGAINST  ABSTAIN                                       
|_|      |_|      |_|                                         

4. In their  discretion,  the Proxies  are  authorized  to  transact  such other
business as may properly come before meeting, or any other adjournment thereof. 

Please sign exactly as name appears hereon.  If the shares are registered in the
names of two or more  persons,  each  should  sign.  Executors,  administrators,
trustees,   attorneys-in-fact,   general  representative   capacity  should  add
theirtitle.  When the proxy is given by a corporation, it should be signed by an
authorized officer.                                                             

                                   Dated....................................1998

                                   .............................................

                                   .............................................

                    PLEASE  COMPLETE,  FILL IN DATE,  SIGN AND MAIL  THIS  PROXY
       PROMPTLY USING THE ENCLOSED POST-PAID ENVELOPE.

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘PRE 14A’ Filing		Date		First		Last			Other Filings
		6/30/06		18		29
		12/31/00		12
For Period End:		6/18/98		2		44
		5/19/98		3					DEF 14A
Filed on:		5/8/98
		5/7/98		2		3
		4/24/98		8
		2/14/98		9
		1/12/98		8
		12/31/97		7		27			10-K,  10-K/A
		7/25/97		10		11
		12/31/96		43					10-K,  10-K405/A
		7/1/96		18		29
		4/17/96		17
		12/31/92		13
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