<PAGE>
SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, For Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
TOWER AIR, INC.
- --------------------------------------------------------------------------------
(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)(1) AND 0-11.
(1) TITLE OF EACH CLASS OF SECURITIES TO WHICH TRANSACTION APPLIES:
(2) AGGREGATE NUMBER OF SECURITIES TO WHICH TRANSACTION APPLIES:
(3) PER UNIT PRICE OR OTHER UNDERLYING VALUE OF TRANSACTION COMPUTED
PURSUANT TO EXCHANGE ACT RULE 0-11 (SET FORTH THE AMOUNT ON WHICH THE
FILING FEE IS CALCULATED AND STATE HOW IT WAS DETERMINED):
(4) PROPOSED MAXIMUM AGGREGATE VALUE OF TRANSACTION:
(5) TOTAL FEE PAID:
[ ] FEE PAID PREVIOUSLY WITH PRELIMINARY MATERIALS.
[ ] CHECK BOX IF ANY PART OF THE FEE IS OFFSET AS PROVIDED BY EXCHANGE ACT
RULE 0-11(A)(2) AND IDENTIFY THE FILING FOR WHICH THE OFFSETTING FEE WAS
PAID PREVIOUSLY. IDENTIFY THE PREVIOUS FILING BY REGISTRATION STATEMENT
NUMBER, OR THE FORM OR SCHEDULE AND THE DATE OF ITS FILING.
(1) AMOUNT PREVIOUSLY PAID:
(2) FORM, SCHEDULE OR REGISTRATION STATEMENT NO.:
(3) FILING PARTY:
(4) DATE FILED:
<PAGE>
TOWER AIR, INC.
HANGAR NO. 17
JFK INTERNATIONAL AIRPORT
JAMAICA, NEW YORK 11430
-----------------------------
Notice of Annual Meeting of Stockholders
-----------------------------
Notice is hereby given that the Annual Meeting of Stockholders of
Tower Air, Inc. (the "Company") will be held at the Tower Air Terminal, JFK
International Airport, Jamaica, New York 11430, on Tuesday, May 19, 1998 at
11:00 a.m., for the following purposes:
1. To elect a Board of Directors of seven directors to serve for the
ensuing year and until their successors are elected and qualified.
2. To ratify the appointment of Ernst & Young LLP as auditors for the
fiscal year ending December 31, 1998.
3. To approve an amendment to the Company's 1993 Long-Term Incentive
Plan.
4. To transact such other business as may be properly brought before
the meeting or any adjournment thereof.
Holders of record of the Common Stock of the Company at the close of
business on April 30, 1998 will be entitled to vote at the meeting or any
adjournment thereof with respect to all proposals.
Stockholders are invited to attend the meeting. Whether or not you
expect to attend, WE URGE YOU TO SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED
PROXY CARD IN THE ENCLOSED POSTAGE PREPAID ENVELOPE. If you attend the meeting,
you may vote your shares in person, which will revoke any previously executed
proxy.
Regardless of how many shares you own, your vote is very important.
Please SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD TODAY.
By Order of the Board of Directors
LOGO
STEPHEN L. GELBAND
Secretary
Jamaica, New York
Dated: May 1, 1998
<PAGE>
TOWER AIR, INC.
HANGAR NO. 17
JFK INTERNATIONAL AIRPORT
JAMAICA, NEW YORK 11430
---------------
PROXY STATEMENT
---------------
This proxy statement and the accompanying proxy card are being
furnished in connection with the solicitation of proxies BY THE BOARD OF
DIRECTORS OF TOWER AIR, INC., a Delaware corporation (the "Company"), for the
Annual Meeting of Stockholders to be held on Tuesday, May 19, 1998, at 11:00
a.m., at the Tower Air Terminal, JFK International Airport, Jamaica, New York
11430 and any adjournment or postponement thereof. This proxy statement and the
accompanying proxy card are first being mailed by the Company on or about May 1,
1998 to the Company's stockholders. The cost of the solicitation of proxies will
be borne by the Company.
Whether or not you plan to attend the Annual Meeting, please sign and
return the enclosed proxy in the accompanying postage-paid and addressed
envelope. Each proxy executed and returned by a stockholder may be revoked at
any time thereafter, except as to any matter or matters upon which, prior to
such revocation, a vote will have been cast pursuant to the authority conferred
by such proxy. If you attend the meeting you may, if you wish, vote in person,
thereby cancelling any proxy previously given. Alternatively, you may revoke
your proxy by notifying the Secretary of the Company in writing prior to the
Annual Meeting or by signing a later-dated proxy.
Only holders of record of the common stock, par value $.01 per share
(the "Common Stock"), of the Company at the close of business on April 30, 1998
(the "Record Date") will be entitled to vote with respect to the proposals set
forth on the attached Notice of Annual Meeting. On March 31, 1998, the Company
had 15,346,105 shares of Common Stock outstanding. Each share of Common Stock is
entitled to one vote on each matter properly brought before the meeting. The
presence in person or by proxy of the holders of a majority in interest of the
Common Stock shall constitute a quorum for matters to be voted on by the Common
Stock. The affirmative vote of the majority of shares of Common Stock present or
represented, and entitled to vote at the meeting, is required for approval of
all matters.
The mailing address of the Company is Hangar No. 17, JFK International
Airport, Jamaica, New York 11430.
All properly executed proxies delivered pursuant to this solicitation
and not revoked will be voted at the Annual Meeting in accordance with the
directions given. Regarding the election of directors, in voting by proxy,
stockholders may vote in favor of all nominees, withhold their votes as to all
nominees or withhold their votes as to specific nominees. With respect to the
ratification of the appointment of Ernst & Young LLP ("Ernst & Young") as
independent auditors, stockholders may vote in favor of the proposal, against
the proposal or they may abstain from voting. With respect to the approval of
the amendment to the Company's 1993 Long-Term Incentive Plan, stockholders may
vote in favor of the proposal, against the proposal or they may abstain from
voting. Stockholders should specify their choices on the enclosed proxy card.
If no specific instructions are given with respect to the
<PAGE>
matters to be acted upon, the shares represented by a signed proxy will be voted
FOR the election of all nominees, FOR the proposal to ratify the appointment of
Ernst & Young as independent auditors and FOR the proposed amendment to the
Company's 1993 Long-Term Incentive Plan, and will be deemed to grant
discretionary authority to vote upon any other matters properly coming before
the meeting. If an executed proxy is returned by a broker holding shares of
Common Stock in street name which indicates that the broker does not have
discretionary authority as to certain shares to vote on one or more matters,
such shares will be considered present at the meeting for the purpose of
determining whether a quorum is present, but not for the purpose of calculating
the vote with respect to such matter.
The Annual Report to stockholders of the Company for the fiscal year
ended December 31, 1997, including financial statements as of December 31, 1997
and for the year then ended, is being mailed herewith to each stockholder of
record. THE COMPANY HAS AGREED TO PROVIDE WITHOUT CHARGE TO STOCKHOLDERS, UPON
THEIR WRITTEN REQUEST AND UPON PAYMENT THEREFOR, COPIES OF EXHIBITS TO THE
COMPANY'S FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997, WHICH IS
INCLUDED AS PART OF THE COMPANY'S ANNUAL REPORT.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of March 31, 1998 (except with
respect to footnote 2) certain information with regard to the ownership of the
Company's outstanding Common Stock by (i) each person who is known by the
Company to beneficially own more than 5% of the Common Stock, (ii) each director
of the Company and each nominee for director of the Company, (iii) each of the
Company's executive officers named in the Summary Compensation Table below and
(iv) all of the Company's current directors and executive officers as a group.
Except as otherwise stated in the footnotes to the following table, beneficial
ownership of shares means that the beneficial owner thereof has sole voting and
investment power with respect to such shares. The Company had 15,346,105 shares
of Common Stock outstanding as of March 31, 1998.
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
BENEFICIALLY OWNED
---------------------------------
NAME OF PERCENT
BENEFICIAL OWNER NUMBER OF CLASS (*)
---------------- --------------- ------------
<S> <C> <C>
Nachtomi Family Limited Partnership.................. 11,733,006(1) 76.5
Hangar 17, JFK International Airport
Jamaica, NY 11430
Dimensional Fund Advisors Inc........................ 888,900(2) 5.8
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Morris K. Nachtomi................................... (1)
Terry V. Hallcom..................................... 403,000(3)(4) 2.6
Guy A. Nachtomi...................................... 301,432(1)(5) 1.9
Althea Limited Partnership........................... 300,000(3) 1.9
c/o Maria E. Nicolaides
4193 Las Palmas Way
Sarasota, FL 34238
VBG Capital Inc...................................... 100,000(3) *
1325 Avenue of the Americas - 7th Floor
New York, NY 10019
Henry P. Baer........................................ 25,000(6)(7) *
Stephen L. Gelband................................... 22,500(6)(7) *
Stephen A. Osborn.................................... 20,000(6) *
(table continues on following page)
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
BENEFICIALLY OWNED
---------------------------------
NAME OF PERCENT
BENEFICIAL OWNER NUMBER OF CLASS (*)
---------------- --------------- ------------
<S> <C> <C>
Leo-Arthur Kelmenson................................. 0 *
Vincent J. Vitale.................................... 0 *
Ramesh K. Punwani.................................... 0(8) *
All executive officers and directors of the Company
as a group (8 persons)............................... 12,504,938 77.6
</TABLE>
- --------------------
* Less than one percent.
(1) 11,733,006 shares of Common Stock are owned of record by the Nachtomi
Family Limited Partnership, of which Mr. Morris K. Nachtomi, the Chief
Executive Officer and Chairman of the Company, is the managing general
partner, and of which Mr. Guy A. Nachtomi, the Vice President -- Office of
the Chairman of the Company, is a limited partner.
(2) By letter dated February 6, 1998, Dimensional Fund Advisors Inc. ("DFA")
advised the Company that 888,900 shares of the Company's Common Stock were
held in portfolios of DFA Investment Dimensions Group Inc., a registered
open-end investment company, or in series of the DFA Investment Trust
Company, a Delaware business trust, or the DFA Group Trust and DFA
Participation Group Trust, investment vehicles for qualified employee
benefit plans, for all of which DFA serves as investment manager. DFA
disclaims beneficial ownership of all such shares.
(3) Amounts include currently exercisable warrants to purchase shares of
Common Stock issued in connection with the loan to the Company by
Funding Enterprises LLC. See "Certain Transactions."
(4) Amount includes currently exercisable options to purchase a total of
200,000 shares of Common Stock granted to Mr. Hallcom pursuant to his
employment agreement. See "Executive Compensation -- Employment
Agreements."
(5) Amount includes currently exercisable options to purchase 1,432 shares of
Common Stock granted pursuant to the Company's 1993 Long-Term Incentive
Plan to Mr. Guy A. Nachtomi in his capacity as an employee of the Company
and currently exercisable warrants to purchase 300,000 shares of Common
Stock assigned to him by Mr. Morris K. Nachtomi, which warrants were issued
to Mr. Morris K. Nachtomi in connection with the loan to the Company by
Funding Enterprises LLC. See "Certain Transactions."
(6) Amounts include currently exercisable options, as well as options
exercisable within 60 days of the date hereof, to purchase a total of
20,000 shares of Common Stock granted to each of Messrs. Gelband, Osborn
and Baer pursuant to the Plan.
(7) Messrs. Gelband and Baer own 2,500 and 5,000 shares of the Company's Common
Stock, respectively, jointly with their respective spouses.
(8) Options to purchase Common Stock granted to Mr. Punwani were terminated
pursuant to the Plan, upon the cessation of his employment with the
Company.
MATTERS TO BE CONSIDERED AT ANNUAL MEETING
I. ELECTION OF DIRECTORS
GENERAL
Seven directors are to be elected at the Annual Meeting. It is the
intention of the persons named in the accompanying proxy to vote each proxy
executed and returned by a stockholder FOR the election of each of the persons
listed below as a director of the Company unless authority to do so is withheld
on such proxy. All directors will serve until the next Annual Meeting of
Stockholders and until his or her successor has been elected and qualified.
Should any candidate for director become unavailable for any reason,
such proxies will be voted for the alternate candidate, if any, chosen by the
Board of Directors. All the nominees, except Messrs. Hallcom and Segal, are
currently directors of the Company. The nominees for director listed below have
consented to serve if elected and the Company has no reason to believe that any
of them will be unable to serve.
3
<PAGE>
<TABLE>
<CAPTION>
NAME AGE DIRECTOR SINCE
- ---- --- --------------
<S> <C> <C>
Morris K. Nachtomi............ 61 1982
Terry V. Hallcom.............. 60 --
Stephen L. Gelband............ 67 1985
Stephen A. Osborn............. 48 1993
Henry P. Baer................. 62 1993
Leo-Arthur Kelmenson.......... 71 1997
Eli J. Segal.................. 55 --
</TABLE>
INFORMATION ABOUT NOMINEES
Information concerning the names, principal occupations and certain
other matters regarding the seven nominees for seats on the Board of Directors
is set forth as follows:
Mr. Nachtomi has been Chief Executive Officer and Chairman of the
Board of Directors since 1989, a director since 1982 and was President of the
Company from 1986 until January 1998. After a thirty year career at El Al Israel
Airlines, Mr. Nachtomi became Executive Vice President of Tower Travel
Corporation, and helped establish M.Z.M. Aviation Inc. and Metro International
Airways, G.S.A. Mr. Nachtomi served as President of M.Z.M. Aviation Inc. and
Metro International Airways, G.S.A. before he co-founded the Company in 1982.
Mr. Hallcom is a nominee to the Board of Directors. He has been
President and Executive Vice President -- Operations of the Company since
January 1998. Mr. Hallcom, prior to joining the Company, was President and
Chief Executive Officer of U.S. Airways Shuttle. From 1991 to April 1992, Mr.
Hallcom was President and Chief Operating Officer of the Trump Shuttle. From
1989 to 1991, Mr. Hallcom, as well as playing a senior role in creating the
Trump Shuttle certificate, served in various senior management positions
including Vice President of Operations prior to becoming the President and Chief
Operating Officer. Prior to forming the Trump Shuttle, from 1968 to 1989, Mr.
Hallcom served in various management positions in Flight Operations at Eastern
Airlines. Prior to Eastern Airlines, from 1960 to 1968, Mr. Hallcom served as a
Naval Carrier Pilot and an Engineering Test Pilot. Mr. Hallcom graduated from
Rose Polytechnic University with a B.S. degree in Mechanical Engineering.
Mr. Gelband has been a director of the Company since 1985, Secretary
since 1988, and General Counsel since 1988. Mr. Gelband is a founder and
director of the Washington Airports Task Force, a coalition of local and state
governments and private businesses promoting service to Washington National
Airport and Dulles International Airport. He is also a founder and director of
the Air and Space Heritage Council which promotes the expansion of the National
Air and Space Museum at Washington Dulles International Airport. Mr. Gelband
served as Trial Attorney at the Civil Aeronautics Board from
4
<PAGE>
1957 to 1960, and has been in private practice of law since 1960. Mr. Gelband is
a Vice President in the law firm of Hewes, Gelband, Lambert & Dann, P.C.,
Washington, D.C., and provides legal services to the Company, principally in the
areas of corporate and federal aviation law. Mr. Gelband holds degrees from Yale
College and Harvard Law School.
Mr. Osborn has been a director of the Company from September 1988
until December 1992, and from May 1993 until the present. Mr. Osborn is a
Managing Director in the Private Securities Division of CIGNA Investments, Inc.,
the investment management affiliate of CIGNA Corporation, a position he has held
for more than five years. Prior to 1990, Mr. Osborn managed the investment
activities of CIGNA Venture Capital, Inc. He holds a B.A. degree from Trinity
College and an M.B.A. degree from the Johnson School of Management at Cornell
University.
Mr. Baer has been a director of the Company since January 1993. Since
1990, Mr. Baer has been of counsel to the law firm of Skadden, Arps, Slate,
Meagher & Flom LLP. From January 1978 through June 1990, Mr. Baer was a partner
in Skadden, Arps, Slate, Meagher & Flom, where he headed the firm's labor and
employment law practice between 1982 and 1990. Mr. Baer is also a director of
Hampton Jitney, Inc. He holds a B.A. degree from Brown University and a J.D.
degree from Harvard Law School.
Mr. Kelmenson has been a director of the Company since 1997. Mr.
Kelmenson is currently the Chairman of the Board of Directors of Bozell, Jacobs,
Kenyon & Eckhardt, Inc. ("BJK&E"). Since 1968, he has served as an executive
officer of Kenyon & Eckhardt, the predecessor firm of BJK&E, first as the Chief
Executive Officer, and later as the President, Chairman and Chief Executive
Officer. He is a graduate of Columbia University, the Career Diplomat School of
the University of Geneva (Switzerland) and the University of Mexico.
Mr. Segal is a nominee to the Board of Directors. He served as
Assistant to the President of the United States from January 1993 to February
1996 and was responsible for the design and enactment of the legislation which
created AmeriCorps, President Clinton's national service initiative. In October
1993, Mr. Segal was confirmed by the United States Senate to be the first Chief
Executive Officer of the Corporation for National Service. Mr. Segal served in
that position until October 1995. Mr. Segal now serves as President and Chief
Executive Officer of the Welfare to Work Partnership. He is on the Board of
Directors of Home Shopping Network, Citizens Financial Group, the Corporation
for National Service and the National Alliance to End Homelessness and the Board
of Overseers of the Heller School of Brandeis University. In 1992, Mr. Segal
was the Chief of Staff of the Clinton-Gore campaign and the Chief Financial
Officer during the Presidential transition period. In 1996, he served as
Chairman of Business Leaders for Clinton-Gore. Prior to the 1992 campaign, Mr.
Segal served as President of several consumer product companies including
American Publishing Corporation, Vogart Crafts Corporation and Bits & Pieces,
Inc. Most recently, he was the publisher of GAMES Magazine. Mr. Segal has
served on several non-profit boards, taught courses in government and law in the
United States and abroad and been active in many political campaigns. Mr. Segal
received his Bachelor's degree from Brandeis University in 1964 and a J.D. from
the University of Michigan Law School in 1967.
5
<PAGE>
BOARD OF DIRECTORS COMMITTEES AND MEETINGS
The Board of Directors has designated from among its members an Audit
Committee which consists of Messrs. Kelmenson and Osborn. During the fiscal year
ended December 31, 1997, the Audit Committee met twice. The Audit Committee
has the duty and authority to oversee the auditing and accounting functions and
procedures of the Company, and to report and make recommendations to the Board
of Directors with respect to such matters. The Board of Directors has also
designated from among its members a Compensation Committee, which consists of
Messrs. Kelmenson and Osborn. The primary responsibility of the Compensation
Committee is to administer the Company's 1993 Long-Term Incentive Plan (as
described below). The Compensation Committee met once during the fiscal year
ended December 31, 1997 as part of a regular Board of Directors meeting, a
significant portion of which was devoted to employment compensation issues.
During the fiscal year ended December 31, 1997, there were nine
meetings of the Board of Directors. Each director attended at least 75% of the
aggregate of all meetings of the Board of Directors. Both members of the Audit
Committee attended the meetings of the Audit Committee.
COMPENSATION OF DIRECTORS
Messrs. Osborn, Kelmenson and Baer each receive, and if elected Mr.
Segal will receive, a fee of $5,000 per meeting for serving as directors on the
Board of Directors. Mr. Osborn receives no additional compensation for serving
as chairman of the Audit Committee and the Compensation Committee. Mr.
Nachtomi, who is Chief Executive Officer of the Company, and Mr. Gelband, who is
Secretary and General Counsel of the Company, receive no additional compensation
for serving on the Board of Directors. See "Certain Transactions." If elected
to the Board of Directors, Mr. Hallcom will receive no additional compensation
for serving on the Board of Directors. Pursuant to the Company's 1993 Long-
Term Incentive Plan (the "Plan"), (i) each individual who is elected to the
Board of Directors for the first time will receive, upon such election, options
to acquire 10,000 shares of Common Stock and (ii) on the date of each of the
next five annual meetings of the Company's stockholders after such election,
each continuing director will receive an additional grant of options to acquire
5,000 shares of Common Stock. Thus, pursuant to the Plan, each of Messrs.
Gelband, Osborn and Baer (i) were granted an option to acquire 10,000 shares of
Common Stock in November or December 1993 and (ii) were granted an option to
acquire 5,000 shares of Common Stock on the dates of each of the last four
annual meetings of the Company's stockholders held on June 21, 1994, May 23,
1995, May 14, 1996 and May 20, 1997. Mr. Kelmenson was granted an option to
acquire 10,000 shares of Common Stock on the date of the last annual meeting of
the Company's stockholders held on May 20, 1997.
Stanley S. Shuman, a director of the Company since 1993, resigned in
May 1997. Mr. Shuman received a monthly fee of $10,000 for serving as a
director on the Board of Directors and as chairman of the Audit Committee and
the Compensation Committee until May 1997.
6
<PAGE>
EXECUTIVE OFFICERS
On the Record Date, the following individuals served as officers and
key employees of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Morris K. Nachtomi............... 61 Chief Executive Officer and
Chairman of the Board of Directors
Terry V. Hallcom................. 60 President and Executive Vice
President -- Operations
Stephen L. Gelband............... 67 Secretary
Guy A. Nachtomi.................. 26 Vice President -- Office of the
Chairman
Vincent J. Vitale................ 59 Vice President -- Maintenance
</TABLE>
Information concerning the principal occupations and certain other
matters regarding the executive officers and key employees of the Company (other
than Messrs. Morris K. Nachtomi, Terry V. Hallcom and Stephen L. Gelband, about
whom information is set forth above) is set forth as follows:
Mr. Guy A. Nachtomi was Vice President of Operations since he rejoined
the Company in November 1995. From 1994 to 1995, Mr. Nachtomi worked in
International Film Marketing and Distribution at Twentieth Century Fox. From
June 1993 to April 1994, he served as Vice President of the Company. Mr.
Nachtomi has a B.A. degree from Williams College. Effective January 1998, Mr.
Nachtomi relinquished the title of Vice President -- Operations and assumed the
position of Vice President -- Office of the Chairman. Mr. Nachtomi is the son of
Mr. Morris K. Nachtomi.
Mr. Vincent J. Vitale has been Vice President -- Maintenance since
February 1997. From 1968 to 1991, Mr. Vitale held positions of increasing
responsibility in aircraft and engine maintenance at PanAm. His last position
was System Director of station maintenance. Mr. Vitale was Vice President of
Maintenance for PanAm Express until 1992, Vice President of Customer Support for
Jetstream Aircraft from 1992 to 1995 and Vice President of Maintenance for
Airtran Airways from 1995 to 1996. Mr. Vitale holds an FAA Airframe and
Powerplant License. Mr. Vitale attended the State University of New York,
Farmingdale and majored in Business Administration and also graduated from the
Manhattan High School of Aviation Trades.
7
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth all compensation earned by the
Company's Chief Executive Officer and each of the Company's three other most
highly compensated executive officers during the 1997 fiscal year for services
rendered in all capacities to the Company for the years indicated. No other
executive officer is includible in such table on the basis of salary and bonus
earned for the 1997.
<TABLE>
<CAPTION>
SECURITIES
UNDERLYING
NAME AND PRINCIPAL POSITION DECEMBER 31, SALARY($) BONUS($) OPTIONS(#)
- ----------------------------- ------------ --------- ---------- -----------
<S> <C> <C> <C> <C>
Morris K. Nachtomi (1)....... 1997 1,000,000 - -
Chief Executive 1996 1,000,000 - -
Officer and Chairman 1995 1,000,000 - -
Guy A. Nachtomi.............. 1997 160,000 - 2,112
Vice President -- 1996 133,333 - 752
Office of the Chairman 1995 10,000 923 -
Vincent J. Vitale............ 1997 124,256 - -
Vice President -- 1996 - - -
Maintenance 1995 - - -
Ramesh K. Punwani (2)........ 1997 234,487 - -
Vice President and 1996 62,179 - -
Chief Financial Officer 1995 - - -
- ----------
</TABLE>
(1) Mr. Nachtomi and the Company entered into an employment agreement in
October 1993, pursuant to which he serves as President and Chief Executive
Officer of the Company at an annual salary of $1,000,000.
(2) Mr. Punwani's employment with the Company terminated on January 13, 1998.
OPTION/SAR GRANTS
During the year ended December 31, 1997, options to purchase the Company's
Common Stock were granted to the individual identified in the following table
and no stock appreciation rights ("SARs") were granted to the individuals
identified in the Summary Compensation Table above.
8
<PAGE>
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
VALUE AT
ASSUMED ANNUAL
RATES OF STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS(1) OPTION TERM
- ------------------------------------------------------------- -----------------------
PERCENTAGE
NUMBER OF OF TOTAL
SECURITIES OPTIONS/
UNDERLYING SARS EXERCISE OR
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION 5% 10%
NAME (#) FISCAL YEAR ($/SH) DATE ($) ($)
- ---------- ---------- ------------ ------------- ----------- ------ -----
<S> <C> <C> <C> <C> <C> <C>
Guy A.
Nachtomi 2,112 0.003 2.6875 1/1/2000 894 1,879
</TABLE>
- ----------------
(1) Options were granted under the Company's 1993 Long-Term Incentive Plan as
part of a program which automatically granted options to purchase Common
Stock to employees of the Company.
EMPLOYMENT AGREEMENTS
Mr. Nachtomi is employed by the Company under an agreement which
provides for compensation of $1,000,000 per year. Mr. Nachtomi is eligible to
participate in the Superior Performance Award portion of the Company's Bonus
Plan (as defined herein), pursuant to which he may earn, in addition to the
bonus described below (see "Report of Board of Directors Compensation Committee
as to Executive Compensation -- Executive Compensation"), an additional bonus
based upon the Company's performance with respect to a performance indicator
selected by the Compensation Committee relative to the performance of a peer
group of companies selected by the Committee. Such additional bonus for any year
may range from zero to 200% of the award earned under the Bonus Plan for such
year. The agreement has an initial term of five years, which commenced in
October 1993, and the Company and Mr. Nachtomi have agreed that the term of the
contract will be automatically extended for additional terms of one year unless,
not less than 90 days prior to such anniversary date, either party notifies the
other that the extension will not take place. In addition, if a Change of
Control (as defined in the agreement) occurs during the five year term of the
agreement, such term shall automatically be extended to include the five year
period commencing on the date on which the Change in Control occurs. The
agreement provides that (i) if, prior to a Change of Control, the Company
terminates Mr. Nachtomi's employment in breach of the agreement or if Mr.
Nachtomi terminates his employment for Good Reason (as defined in the
agreement), then the Company will pay him his base salary through the Date of
Termination and the product of (A) the sum of (1) Mr. Nachtomi's annual base
salary in effect upon the Date of Termination and (2) the average of the annual
bonuses, if any, actually paid to Mr. Nachtomi with respect to the two years of
his term immediately preceding the year of the term in which the Date of
Termination occurs and (B) the number of years (including partial years)
remaining in the term and (ii) if, subsequent to a Change in Control, the
Company terminates Mr. Nachtomi's employment in breach of the agreement or if
Mr. Nachtomi terminates his employment for Good Reason, then the Company will
pay his base salary through the Date of Termination and an amount equal to the
product of (A) 2.99 and (B) his Base Amount (as defined in Section 280(b)(3) of
the Internal Revenue Code of 1986, as
9
<PAGE>
amended. In addition, Mr. Nachtomi is eligible to participate fully in all of
the Company's health benefits, insurance programs, pension and retirement plans
and other employee benefit and compensation arrangements.
The Company has also entered into an employment agreement with Mr.
Hallcom, with an initial term of three years, which commenced on January 12,
1998. The agreement provides that the term will automatically be extended for
an additional two years unless either party gives notice of nonrenewal at least
60 days prior to the end of the initial term. The agreement provides that Mr.
Hallcom shall serve during the term of the agreement as President and Executive
Vice President -- Operations of the Company. Mr. Hallcom's salary during the
first six months of the term will be at an annual rate of $350,000, after which
time it will increase to an annual rate of $425,000. Mr. Hallcom will also be
entitled to a minimum annual bonus opportunity equal to 50% of his annual base
salary. The agreement provides for the grant of 800,000 options to purchase
shares of the Company's Common Stock, subject to stockholders' approval. The
agreement also provides that if Mr. Hallcom's employment with the Company is
terminated by the Company other than for "Cause," or by Mr. Hallcom for "Good
Reason" (as each such term is defined in the agreement), Mr. Hallcom will be
entitled to salary and bonus prorated through the date of termination, and an
additional payment equal to two times the sum of (A) Mr. Hallcom's then annual
base salary, and (B) 25% of such base salary.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee was formed in December 1993. The members of
the Compensation Committee of the Board of Directors are Messrs. Kelmenson and
Osborn. Neither of these individuals has been at any time an officer or employee
of the Company.
REPORT OF BOARD OF DIRECTORS COMPENSATION COMMITTEE
AS TO EXECUTIVE COMPENSATION
The Compensation Committee was formed in December 1993, following the
Company's initial public offering of its Common Stock in November 1993. Prior
to the formation of the Compensation Committee, decisions regarding executive
compensation were made by the Board of Directors. The primary responsibility of
the Compensation Committee is to administer the Plan.
Executive Compensation. Beginning in April 1993, the Board of
-----------------------
Directors of the Company, in conjunction with an independent compensation
consultant, conducted a review of the Company's executive compensation program
in order to attract and retain the highest quality executives, and to motivate
such executives to achieve the Company's strategic objectives. The result of the
review was the establishment of a comprehensive executive compensation program
consisting of base salary, annual incentive bonuses and long-term incentive
compensation components.
Base salary guidelines are assigned to executive positions based on
job responsibilities and salary practices for comparable positions within the
airline industry and within companies of comparable size. The Executive Annual
Incentive Plan (the "Bonus Plan") provides for the payment of annual bonuses to
selected key employees of the Company. Each Bonus Plan participant is assigned a
"target award" each year ranging from 15% of salary to 60% of salary, based upon
the participant's position with the Company. Based upon (i) the Company's actual
performance as compared to targets established annually by the Compensation
Committee with respect to performance measures selected by the Committee and
(ii) in the case of certain participants, the extent to which individual
performance objectives are achieved, participants in the Bonus Plan may earn
incentive awards ranging from 90% of
10
<PAGE>
the "target award" to 200% of the "target award." No bonuses were awarded
pursuant to the Bonus Plan during fiscal 1997.
In addition, the Plan links executive compensation to the Company's
performance over a multi-year performance period and provides incentives for
employee retention. Pursuant to the Plan, employees of the Company are eligible
to receive awards of stock options, SARs, restricted stock and other long-term
incentive awards.
The Compensation Committee intends to refine the Company's
compensation policies to enhance the profitability of the Company and to
maximize stockholder value by closely aligning the financial interests of the
Company's executive officers with those of its stockholders. In this regard, the
Compensation Committee, in recommending and approving compensation levels and
performance targets, will review the executive compensation programs maintained
by other public companies that are similarly situated with the Company.
Chief Executive Officer Compensation. Mr. Nachtomi's 1997
-------------------------------------
compensation and the terms of his employment contract, under which Mr.
Nachtomi's compensation has been established through October 1998, were
determined in 1993 (prior to the formation of the Compensation Committee), and
were based upon his unique role in achieving increased operating results for the
Company and establishing the Company as a publicly traded corporation, as well
as his substantial work in positioning the Company for sustainable future
growth.
Historically, Mr. Nachtomi has received bonus compensation at the
discretion of the Board of Directors in recognition of the Company's
performance. Although under his employment agreement Mr. Nachtomi remains
eligible to participate in the Company's bonus plans, Mr. Nachtomi agreed not to
receive any additional bonus compensation through December 31, 1997.
Effective January 1, 1994, the Internal Revenue Service adopted new
regulations under Section 162(m) of the Internal Revenue Code of 1986, as
amended, relating to restrictions on corporate deductions for individual
executive compensation in excess of $1,000,000 per year. Although the Company
did not modify its compensation policies in 1997, the Compensation Committee
intends to periodically review the Company's compensation policies. If necessary
or desirable, and to the extent consistent with the Company's other compensation
objectives, the Committee will propose appropriate modifications to the
Company's executive compensation plans and policies in order to implement the
Company's executive compensation program in a manner that will avoid or minimize
any disallowance of the tax deductions under Section 162(m).
By: Compensation Committee of the Board of Directors:
Leo-Arthur Kelmenson Stephen A. Osborn
11
<PAGE>
CERTAIN TRANSACTIONS
In February and March 1998, the Company borrowed $6,000,000 from Funding
Enterprises, LLC, a limited liability company in which the Chairman and the
President of the Company and Althea Limited Partnership and VBG Capital Inc.,
parties unrelated to the Company, its directors and officers, are members. The
$6,000,000 is payable on July 1, 1998 with interest at 12% per annum. In
connection with the borrowing, warrants for the purchase of an aggregate of
1,200,000 shares of Common Stock with an exercise price of $5.00 were issued to
the Chairman and the President of the Company and to Althea Limited Partnership
and VBG Capital, Inc. The warrants expire in February 2008. See Exhibit 10(21)
to the Company's Form 10-K for the fiscal year ended December 31, 1997.
Hewes, Gelband, Lambert & Dann, P.C., a law firm of which Stephen L.
Gelband (the Secretary, General Counsel and a director of the Company) is a Vice
President, was paid a total of $608,325.18 in fees and expenses for services
rendered to the Company for the year ended December 31, 1997.
Skadden, Arps, Slate, Meagher & Flom LLP, a law firm to which Henry P.
Baer (a director of the Company) is of counsel, performs certain legal services
for the Company.
12
<PAGE>
PERFORMANCE GRAPH
The following graph provides a comparison of the cumulative total
stockholder return on the Company's Common Stock with those of the stated
indices between November 1993 and December 31, 1997.
COMPARE CUMULTIVE TOTAL RETURN
AMONG TOWER AIR, INC.,
NASDAQ MARKET INDEX AND S&P GROUP INDEX
<TABLE>
<CAPTION>
11/16/93 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
TOWER AIR INC. $100 $ 96.67 $ 54.28 $ 46.76 $ 19.03 $ 29.66
S&P AIRLINE 100 98.59 68.79 100.46 110.13 185.36
NASDAQ COMPOSITE 100 102.79 100.43 142.02 174.77 214.47
INDEX
</TABLE>
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and any persons who own more than ten percent
of a registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
(the "SEC") and the National Association of Securities Dealers, Inc. Officers,
directors and greater than ten percent stockholders are required by SEC
regulations to furnish copies of all Section 16(a) forms they file to the
Company. The specific due dates for these reports have been established by the
SEC, and the Company is required to report in this Proxy Statement any failure
to file by the established dates.
Based solely on its review of the copies of such forms which it has
received, the Company believes that during fiscal 1997, the following required
Section 16(a) filings by officers, directors and greater than ten percent
beneficial owners were late: each of Mr. Kelmenson, a director of the Company,
Mr. Vitale, the Company's Vice President -- Maintenance, and Mr. Ruzich, the
Company's former Vice President -- Marketing filed a late Form 3 to indicate
that he had received options to purchase Common Stock of the Company.
13
<PAGE>
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors recommends that the stockholders vote FOR the
election of each of the nominees named above.
II. SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected Ernst & Young as independent
auditors for the Company for the current fiscal year. The stockholders are
requested to signify their approval or disapproval of the selection.
Representatives of Ernst & Young are expected to be present at the
Annual Meeting, and will have the opportunity to make a statement and to respond
to appropriate questions.
As auditors of the Company, Ernst & Young provides professional
services in connection with its audit function that include the examination of
the Company's financial statements, the review of the Company's filings with the
Securities and Exchange Commission, and consultation with respect to accounting
and financial reporting matters.
The Board of Directors recommends that the stockholders vote FOR the
selection of Ernst & Young as independent auditors.
III. PROPOSED AMENDMENT TO THE COMPANY'S 1993 LONG-TERM INCENTIVE PLAN
Pursuant to the Company's 1993 Long-Term Incentive Plan (the "Plan"),
employees of the Company are eligible to receive awards of stock options, stock
appreciation rights, restricted stock and other long term incentive awards.
Options granted under the Plan may be "incentive stock options" ("ISOs"),
within the meaning of Section 422 of the IRC, or nonqualified stock options
("NQSOs"). Stock appreciation rights ("SARs") may be granted separately or
in tandem with an option. SARs granted in tandem with an option may be granted
simultaneously with the grant of the option or (in the case of NQSOs), at any
time during its term. Restricted stock and other long term incentive awards may
be granted in addition to or in lieu of any other award granted under the Plan.
The Company has authorized 1,200,000 shares of Common Stock for
issuance of awards under the Plan (subject to antidilution and similar
adjustments). The Plan provides that no individual shall receive more than an
aggregate of 30% of the shares authorized for grant under the Plan over the term
of the Plan, and contains limitations with respect to the number of ISOs granted
which are exercisable for the first time in any one calendar year. The closing
price of the Company's Common Stock as of April 27, 1998 was $4 7/8.
Nearly all the 1,200,000 shares of Common Stock authorized for
issuance under the Plan are subject to outstanding grants of stock options to
purchase shares of Common Stock. In order to support the Company's long-term
incentive compensation programs to attract and retain top quality management,
additional shares are needed. Accordingly, the Board of Directors recommends to
stockholders the reservation of an additional 1,000,000 shares of Common Stock
for issuance to officers and directors of the Company under the Plan. In
addition, the Plan will
14
<PAGE>
be amended so that additional grants under the Plan will be made only to
officers and directors of the Company.
The Plan is administered by the Compensation Committee appointed by
the Board of Directors. Subject to the provisions of the Plan, the Compensation
Committee determines the type of award, when and to whom awards are granted, the
number of shares covered by each award and the terms, provisions and kind of
consideration payable, if any, with respect to awards. The Compensation
Committee may interpret the Plan and may at any time adopt such rules and
regulations for the Plan as it deems advisable.
An option may be granted on such terms and conditions as the
Compensation Committee may approve, and may be exercised, for a period of up to
10 years and one day from the date of grant (five years in the case of an ISO
granted to an individual who owns at least 10% of the voting power of the
Company's outstanding voting securities ("10% Stockholder")). Options will be
granted with an exercise price not less than the "Fair Market Value" (as
defined in the Plan) on the date of grant (110% of the value on the date of
grant in the case of an ISO granted to a 10% Stockholder). In the case of ISOs,
the aggregate Fair Market Value of option shares which can become exercisable
for the first time during any one calendar year shall not exceed $100,000, and
certain additional limitations will apply to ISOs granted to any 10%
Stockholder. The Compensation Committee may provide for the payment of the
option price in cash, by delivery of other unrestricted Common Stock having a
Fair Market Value equal to such option price, by a combination thereof or by any
other method. Options granted under the Plan will become exercisable at such
times and under such conditions as the Compensation Committee shall determine,
subject to acceleration of the exercisability of options in the event of, among
other things, a "Change in Control" or "Potential Change of Control" (each
as defined in the Plan).
The Plan also permits the Compensation Committee to grant SARs with
respect to all or any portion of the shares of Common Stock covered by options
or unrelated to such options. Generally, SARs may be exercised only at such time
as the related option is exercisable. SARs unrelated to any option may be
exercised at such time as the Compensation Committee shall provide.
Upon exercise of an SAR, a grantee will receive for each share for
which an SAR is exercised, an amount in cash or Common Stock, as determined by
the Compensation Committee, equal to the excess, if any, of (1) the Fair Market
Value of a share of Common Stock on the date the SAR is exercised over (2) the
exercise price per share of the SAR.
In the event of a Change in Control or Potential Change of Control,
each SAR outstanding for at least six months is automatically exercised and the
grantee receives, in respect thereof, an amount in cash equal to the excess, if
any, of (1) the "Change in Control Price" (as defined in the Plan) over (2)
the exercise price of the SAR.
When an SAR is exercised, the option to which it relates, if any, will
cease to be exercisable to the extent of the number of shares of Common Stock
with respect to which the SAR is exercised, but will be deemed to have been
exercised for purposes of determining the number of shares of Common Stock
available for the future grant of awards under the Plan.
The Plan further provides for the granting to officers and key
employees of restricted stock awards, which are awards of Common Stock which may
not be disposed of,
15
<PAGE>
except by will or the laws of descent and distribution, for such period as the
Compensation Committee determines (the "restricted period"). The Compensation
Committee may also impose such other conditions and restrictions, if any, on the
shares as it deems appropriate. All restrictions affecting the awarded shares
lapse in the event of a Change in Control or Potential Change of Control of the
Company.
During the restricted period, the grantee will be entitled to receive
dividends with respect to, and to vote the shares awarded to him. If, during the
restricted period, the grantee's service with the Company terminates for any
reason, any shares remaining subject to restrictions will be forfeited. The
Compensation Committee has the authority to cancel any or all outstanding
restrictions prior to the end of the restricted period.
The Plan also provides for the automatic grant of options to each non-
employee director of the Company. Upon the initial public offering of the
Company's Common Stock in November 1993, each non-employee director received
options to acquire 10,000 shares of Common Stock. According to the Plan, each
individual who is subsequently elected to the Board of Directors for the first
time also receives, upon such election, an option to acquire 10,000 shares of
Common Stock. On the date of each of the next five annual meetings of the
Company's stockholders after such election, each continuing director receives
an additional grant of options to acquire 5,000 shares of Common Stock. All
such options are granted with an exercise price equal to the Fair Market Value
of the Common Stock on the date of grant and will become exercisable in three
equal annual installments beginning on the second anniversary of the date of
grant.
The Plan currently provides that directors are automatically granted
10,000 shares of Common Stock upon election to the Board of Directors and an
additional grant of 5,000 shares of Common Stock on each of the five subsequent
annual stockholders' meetings. The Board of Directors recommends to
stockholders to extend the annual automatic grant of 5,000 shares of Common
Stock for five additional years.
The Board of Directors may at any time and from time to time suspend,
amend, modify or terminate the Plan; provided, however, that, to the extent
required by Rule 16b-3 ("Rule 16b-3") promulgated under the Exchange Act or
any other law, regulation or stock exchange rule, no such change shall be
effective without the requisite approval of the Company's stockholders. In
addition, no such change may adversely affect any award previously granted,
except with the written consent of the grantee.
No awards may be granted under the Plan after September 30, 2003. The
Board of Directors recommends to stockholders to extend the time period under
which awards may be granted under the Plan for ten years from the date of the
May 19, 1998 Annual Meeting of Stockholders.
NONSTATUTORY STOCK OPTIONS
An optionee generally will not be taxed upon the grant of an NQSO.
Rather, at the time of exercise of such NQSO (and in the case of an untimely
exercise of an ISO), the optionee will recognize ordinary income for federal
income tax purposes in an amount equal to the excess of the fair market value of
the shares purchased over the option price. The Company will generally be
entitled to a tax deduction at such time and, in the same amount that the
optionee recognizes ordinary income.
16
<PAGE>
If shares acquired upon exercise of an NQSO (or upon untimely exercise
of an ISO) are later sold or exchanged, then the difference between the sales
price and the fair market value of such shares on the date that ordinary income
was recognized with respect thereto will generally be taxable as long-term or
short-term capital gain or loss (if the shares are a capital asset of the
optionee).
INCENTIVE STOCK OPTIONS
An optionee will not be in receipt of taxable income upon the grant of
an ISO. Exercise of an ISO will be timely if made during its term and if the
optionee remains an employee of the Company or a subsidiary at all times during
the period beginning on the date of grant of the ISO and ending on the date
three months before the date of exercise (or one year before the date of
exercise in the case of a disabled optionee). Exercise of an ISO will also be
timely if made by the legal representative of an optionee who dies (i) while in
the employ of the Company or a subsidiary or (ii) within three months after
termination of employment. The tax conse quences of an untimely exercise of an
ISO will be determined in accordance with the rules applicable to NQSOs.
If shares acquired pursuant to the timely exercise of an ISO are later
disposed of, the optionee will, except as noted below, recognize long-term
capital gain or loss (if the shares are a capital asset of the optionee) equal
to the difference between the amount realized upon such sale and the option's
exercise price. The Company, under these circumstances, will not be entitled to
any federal income tax deduction in connection with either the exercise of the
ISO or the sale of such shares by the optionee.
If, however, shares acquired pursuant to the exercise of an ISO are
disposed of by the optionee prior to the expiration of two years from the date
of grant of the ISO or within one year from the date such shares are transferred
to him upon exercise (a "disqualifying disposition"), any gain realized by the
optionee generally will be taxable at the time of such disqualifying disposition
as follows: (i) at ordinary income rates to the extent of the difference between
the option price and the lesser of the fair market value of the shares on the
date the ISO is exercised or the amount realized on such disqualifying
disposition and (ii) if the shares are a capital asset of the optionee, as
short-term or long-term capital gain to the extent of any excess of the amount
realized on such disqualifying disposition over the fair market value of the
shares on the date which governs the determination of his ordinary income. In
such case, the Company may claim a federal income tax deduction at the time of
such disqualifying disposition for the amount taxable to the optionee as
ordinary income.
The amount by which the fair market value of the shares on the
exercise date of an ISO exceeds the option's exercise price will be an item of
adjustment for purposes of the "alternative minimum tax" imposed by Section 55
of the Internal Revenue Code.
STOCK APPRECIATION RIGHTS
A grant of stock appreciation rights has no federal income tax
consequences at the time of such grant. Upon the exercise of rights, the amount
of any cash and the fair market value as of the date of exercise of any shares
of Common Stock received is taxable to the employee as ordinary income, and the
Company will be entitled to a corresponding deduction. Upon the sale of the
Common Stock acquired by the exercise of rights, employees will recognize
capital gain or loss (assuming such shares were held as a capital asset) in an
amount equal to the
17
<PAGE>
difference between the amount realized upon such sale and the fair market value
of the shares on the date that governs the determination of his ordinary income.
RESTRICTED STOCK AWARDS
An employee generally will not be taxed upon the grant of a restricted
stock award, but rather will recognize ordinary income in an amount equal to the
fair market value of the Common Stock at the time the shares are no longer
subject to a substantial risk of forfeiture (as defined in the Internal Revenue
Code). The Company will be entitled to a deduction at the time when, and in the
amount that, the employee recognizes ordinary income. However, an employee may
elect (not later than 30 days after acquiring such shares) to recognize ordinary
income at the time the restricted shares are awarded in an amount equal to the
fair market value of such shares at that time, notwithstanding the fact that
such shares are subject to restrictions and a substantial risk of forfeiture.
If such an election is made, no additional taxable income will be recognized by
such employee at the time the restrictions lapse. The Company will be entitled
to a tax deduction at the time when, and to the extent that, income is
recognized by such employee. However, if shares in respect of which such
election was made are later forfeited, no tax deduction is allowable to the
employee for the forfeited shares, and the Company will be deemed to recognize
ordinary income equal to the amount of the deduction allowed to the Company at
the time of the election in respect of such forfeited shares.
The Board of Directors recommends that the stockholders vote FOR the
proposed amendment to the Plan.
IV. OTHER MATTERS
Management does not intend to bring any business before the Annual
Meeting other than as set forth above, nor does it know of any business that
will be presented by others for action by stockholders at the meeting. However,
if any other business shall properly come before the Annual Meeting, it is the
intention of the persons named in the enclosed proxy to vote said proxy in
accordance with their judgment on such matters.
STOCKHOLDER PROPOSALS
Any stockholder proposal intended to be presented at the 1999 Annual
Meeting should be sent to the Secretary of the Company at Tower Air, Hangar 17,
JFK International Airport, Jamaica, New York 11430, and must be received on or
before January 1, 1999 to be eligible for inclusion in the Company's proxy
statement and form of proxy relating to that meeting. Due to the complexity of
the respective rights of the stockholder and the Company in this area, any
stockholder desiring to propose such an action is advised to consult with his or
her legal counsel with respect to such rights.
The above notice and proxy statement are being sent by order of the
Board of Directors.
LOGO
STEPHEN L. GELBAND
Secretary
Jamaica, New York
Dated: May 1, 1998
18
<PAGE>
[X]
PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE
FOR WITHHELD
1. ELECTION OF
DIRECTORS (SEE
REVERSE) [ ] [ ]
FOR, EXCEPT VOTE WITHHELD FROM THE FOLLOWING NOMINEE(S):
- -------------------------------------------
FOR AGAINST ABSTAIN
2. Ratification of Ernst & Young
LLP as independent auditors
for the year 1998. [ ] [ ] [ ]
FOR AGAINST ABSTAIN
3. Approval of an amendment to
the Company's 1993 Long-Term
Incentive Plan. [ ] [ ] [ ]
YES NO
DO YOU PLAN TO ATTEND THE ANNUAL MEETING? [ ] [ ]
THIS PROXY, WHEN PROPERLY SIGNED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ALL OF THE BOARD OF
DIRECTORS' NOMINEES AND FOR PROPOSALS 2 AND 3.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3.
SIGNATURE(S) _________________________________ DATE________________
NOTE: PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. JOINT OWNERS SHOULD EACH
SIGN. WHEN SIGNING AS AN ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR
GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH.
<PAGE>
PROXY
TOWER AIR, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF TOWER AIR, INC.
ANNUAL MEETING OF STOCKHOLDERS - MAY 19, 1998
The undersigned hereby appoints Morris K. Nachtomi and Stephen L. Gelband,
or either of them, proxies of the undersigned, each with full power of
substitution, to vote the shares of the undersigned at the Annual Meeting of
Stockholders of TOWER AIR, INC. upon all matters as may properly come before the
meeting. Without otherwise limiting the foregoing general authorization, the
proxies are instructed to vote as indicated herein.
ELECTION OF DIRECTORS
Nominees: Morris K. Nachtomi, Terry V. Hallcom, Stephen L. Gelband,
Stephen A. Osborn, Henry P. Baer, Leo-Arthur Kelmenson and Eli J. Segal.
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS
AS MAY PROPERLY COME BEFORE THE MEETING.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES ON
THE REVERSE SIDE. YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE
WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE PROXIES CANNOT VOTE YOUR
SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
SEE REVERSE SIDE
