SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
MIDWAY AIRLINES CORPORATION (Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
MIDWAY AIRLINES CORPORATION
300 W. Morgan Street, Suite 1200
Durham, North Carolina 27701
(919) 956-4800
NEW ADDRESS AS OF MAY 1, 1999:
2801 Slater Road
Suite 200
Morrisville, North Carolina 27560
(919) 595-6000
April 23, 1999
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders
of Midway Airlines Corporation (the "Company") to be held at 11:00 a.m., Eastern
Daylight Saving Time, on Wednesday, May 19, 1999, at the Embassy Suites on
Harrison Boulevard in Cary, North Carolina.
This year, in addition to electing the Class II directors, you will be
asked to consider one proposal concerning the suspension of voting rights with
respect to, and allowing the company to redeem, certain shares of stock owned or
controlled by persons or entities that are not citizens of the United States.
These matters are explained more fully in the attached proxy statement, which
you are encouraged to read. In addition, I will be pleased to report on the
affairs of the Company and a discussion period will be provided for questions
and comments of general interest to stockholders.
The Board of Directors recommends that you approve each of the proposals
and urges you to return your signed proxy card at your earliest convenience,
whether or not you plan to attend the annual meeting.
Thank you for your cooperation.
Sincerely,
/s/ Robert R. Ferguson III
Robert R. Ferguson III
President, Chief Executive Officer and
Chairman of the Board of Directors
<PAGE>
MIDWAY AIRLINES CORPORATION
300 W. Morgan Street, Suite 1200
Durham, North Carolina 27701
(919) 956-4800
NEW ADDRESS AS OF MAY 1, 1999:
2801 Slater Road
Suite 200
Morrisville, North Carolina 27560
(919) 595-6000
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 19, 1999
Notice is hereby given that the Annual Meeting of Shareholders of Midway
Airlines Corporation, a Delaware corporation (the "Company"), will be held on
Wednesday, May 19, 1999, at 11:00 a.m., Eastern Daylight Saving Time, at the
Embassy Suites on Harrison Boulevard in Cary, North Carolina, for the following
purposes:
(l) To elect two Class II directors of the Company to hold office
until the Annual Meeting of Shareholders to be held in 2002 or until
their respective successors are duly elected and qualified; and
(2) To consider and vote upon a proposed amendment to the
Company's Amended and Restated Certificate of Incorporation which will
suspend the voting rights with respect to, and allow the Company to
redeem, common stock of the Company which is owned or controlled by
persons or entities that are not United States citizens as may be
necessary to comply with the Federal Aviation Act of 1958; and
(3) To transact such other business as may properly come before
the meeting or any adjournment thereof.
The holders of record of Common Stock at the close of business on April
9, 1999, will be entitled to vote at the meeting.
By Order of the Board of Directors,
/s/ Jonathan S. Waller
Jonathan S. Waller
Secretary
April 23, 1999
EACH SHARE OWNER IS URGED TO VOTE PROMPTLY BY SIGNING AND RETURNING THE ENCLOSED
PROXY CARD.
<PAGE>
MIDWAY AIRLINES CORPORATION
300 W. Morgan Street, Suite 1200
Durham, North Carolina 27701
(919) 956-4800
NEW ADDRESS AS OF MAY 1, 1999:
2801 Slater Road
Suite 200
Morrisville, North Carolina 27560
(919) 595-6000
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 19, 1999
This Proxy Statement is furnished to the shareholders of Midway Airlines
Corporation (the "Company"), in connection with the solicitation by the Board of
Directors of the Company of proxies to be used at the annual meeting of
shareholders to be held on Wednesday, May 19, 1999, at 11:00 a.m., Eastern
Daylight Saving Time, at the Embassy Suites on Harrison Boulevard in Cary, North
Carolina, or any adjournment thereof.
Proxies in the form enclosed, properly executed by shareholders and
received in time for the meeting, will be voted as specified therein. If a
shareholder does not specify otherwise, the shares represented by his or her
proxy will be voted by the persons named in the proxy (i) "for" the Class II
director nominees listed therein, (ii) "for" the approval of the amendment to
the Company's Amended and Restated Certificate of Incorporation, and (iii) in
the discretion of such persons, in connection with any other business that may
properly come before the meeting. The giving of a proxy does not preclude the
right to vote in person should the person giving the proxy so desire, and the
proxy may be revoked at any time before it is exercised by written notice
delivered to the Secretary of the Company at the above address at or prior to
the meeting. This Proxy Statement and accompanying form of proxy are to be
mailed on or about April 19, 1999, to shareholders of record on April 9, 1999
(the "Record Date").
At the close of business on the Record Date, there were outstanding and
entitled to vote 8,602,392 shares of Common Stock, par value $.01 per share
(the "Common Stock"). There are no other voting securities of the Company
outstanding.
The holders of record of Common Stock on the Record Date will be
entitled to one vote per share on each matter presented to such holders at the
meeting. The presence at the meeting, in person or by proxy, of the holders of a
majority of the outstanding shares of Common Stock having voting power with
respect to a subject matter (excluding shares held by the Company for its own
account) is necessary to constitute a quorum for the transaction of business
with respect to such subject matter at the meeting. Abstentions and broker
non-votes will be counted for purposes of determining the presence or absence of
a quorum. "Broker non-votes" are shares held by brokers or nominees which are
present in person or represented by proxy, but which are not voted on a
particular matter because instructions have not been received from the
beneficial owner. Under applicable Delaware law, the effect of broker non-votes
on a particular matter depends on whether the matter is one as to which the
broker or nominee has discretionary voting authority under the applicable rule
of the New York Stock Exchange. The effect of broker non-votes on the specific
items to be brought before the meeting is discussed under each item.
1
<PAGE>
PROPOSAL NO. 1
ELECTION OF CLASS II DIRECTORS
GENERAL
Two directors will be elected at the Meeting to serve as the Class II
Directors of the Company's Board of Directors until the 2002 Annual Meeting of
Shareholders or until such person's successors shall be duly elected and
qualified. The Board of Directors recommends a vote for Howard Wolf and Gregory
J. Robitaille as the Class II Directors. Each of Mr. Wolf and Mr. Robitaille are
currently directors of the Company.
Unless contrary instructions are set forth in the proxies, it is
intended that the persons executing a proxy will vote all shares represented by
such proxy for the election as director of each of Mr. Wolf and Mr. Robitaille
as a Class II director. Should Mr. Wolf or Mr. Robitaille become unable or
unwilling to accept nomination or election, it is intended that the person
acting under the proxy will vote for the election of such other person as the
Board of Directors of the Company may recommend. Management has no reason to
believe that Mr. Wolf or Mr. Robitaille will be unable or unwilling to serve if
elected.
There are currently two Class II directorships up for election. Proxies
cannot be voted for other than such directorships.
DIRECTORS
Set forth below is certain information concerning the current directors
of the Company, including the nominees for election as directors at the Meeting,
with each person's business experience for at least the past five years:
<TABLE>
<CAPTION>
PRESENT
POSITION WITH BEGAN EXPIRATION OF
NAME AGE THE COMPANY DIRECTORSHIP PRESENT TERM
---- --- ----------- ------------ ------------
<S> <C> <C> <C> <C>
Robert R. Ferguson III 50 President, Chief 1997 2001
Executive Officer,
Chairman of the
Board and Class I
Director
W. Greyson Quarles 57 Class I Director 1997 2001
Howard Wolf 64 Class II Director 1997 1999
Gregory J. Robitaille 35 Class II Director 1997 1999
Gregory Harding- 43 Class III Director 1998 2000
Brown
</TABLE>
ROBERT R. FERGUSON III has served as Chairman of the Board, President
and Chief Executive Officer of the Company since February 1997. From October
1994 to February 1997, Mr. Ferguson served as President of Belmont Aviation,
L.L.C., an aviation consulting firm. From August 1991 to October 1994, Mr.
Ferguson held various executive positions, including Chief Executive Officer at
Continental Airlines, Inc. Mr. Ferguson also serves on the Board of Directors of
Capital Cargo International Airlines, Inc., an air freight company.
2
<PAGE>
W. GREYSON QUARLES has been a director of the Company since February
1997 and has served as Chief Financial Officer of SAS Institute, Inc., a
computer software corporation, since 1982.
HOWARD WOLF has been a Senior Partner of the law firm of Fulbright &
Jaworski L.L.P. for more than the last five years and has served as a director
of the Company since February 1997. Mr. Wolf also serves on the Board of
Directors for Offshore Logistics, Inc., a company that operates helicopters
world-wide; Tuskar Resources plc, an oil and gas company; and Stewart &
Stevenson Services, Inc., an equipment manufacturing company. Mr. Wolf serves
as Chairman of the Board of Trustees of The Institute for Rehabilitation and
Research, a not-for-profit hospital.
GREGORY J. ROBITAILLE has served as a Director of the Company since
February 1997 and has been employed by Equity Group Investments, Inc., which is
an affiliate of Zell/Chilmark Fund, L.P., since October 1995. From September
1991 to September 1995, he served as a Vice President of the Corporate Finance
Department of Rauscher Pierce Refsnes, Inc., an investment banking firm.
GREGORY HARDING-BROWN has served as a director of the Company since
August 1998 and is the retired co-founder of Pegasus Aviation Group, a
commercial jet aircraft lessor with other operations in the areas of aircraft
maintenance, engine leasing and aircraft parts sales. Mr. Harding-Brown worked
with Pegasus Aviation Group from December 1990 to November 1997. Since April
1998 Mr. Harding-Brown has served as President of Discovery Investment
Corporation, a privately held investment corporation. Mr. Harding-Brown also
serves on the Board of Directors of Capital Cargo International Airlines, Inc.,
an air freight company.
BOARD OF DIRECTORS MEETINGS; COMPENSATION AND COMMITTEES OF THE BOARD OF
DIRECTORS
Board of Directors Meetings were held on six occasions in 1998. The
members of the Board of Directors attended all Board of Directors meetings in
1998 either in person or by telephone. Each non-employee member of the Board of
Directors is paid a fee of $2,000 for each meeting of the Board of Directors
attended (either in person or by telephone) by that member, and a quarterly
retainer of $2,500.
The Board of Directors has established and appointed members of the
Board of Directors to serve upon an Audit Committee and a Compensation
Committee. Each non-employee member of the Audit Committee and of the
Compensation Committee receives a $500 fee for attending a committee meeting
(either in person or by telephone). The Board of Directors has not provided for
the establishment of an executive committee or a nominating committee.
The duties of the Audit Committee are to recommend to the Board of
Directors the selection of independent public accountants to audit annually the
books and records of the Company, discuss with the independent auditors and
internal auditors the scope and results of audits, and approve and review any
non-audit services performed by the Company's independent auditing firm. The
Audit Committee is comprised of Mr. Robitaille and Mr. Quarles. The Audit
Committee did not meet in 1998.
The duties of the Compensation Committee are to provide a general review
of the Company's compensation and benefit plans to ensure that they meet the
Company's objectives. In addition, the Compensation Committee approves the Chief
Executive Officer's compensation and reviews the Chief Executive Officer's
recommendations on (i) the compensation of all other officers of the Company,
(ii) the grant of awards under the Company's then existing compensation and
benefit plans and (iii) the adoption of major Company compensation policies and
practices. The Compensation Committee reports its
3
<PAGE>
recommendations to the Board of Directors for approval and authorization. The
Compensation Committee is comprised of Mr. Wolf and Mr. Harding-Brown. The
Compensation Committee did not meet in 1998.
VOTE REQUIRED
The two nominees receiving the highest number of affirmative votes of
the shares present in person or represented by proxy and entitled to vote, a
quorum being present, shall be elected as directors. Only votes cast for a
nominee will be counted, except that the accompanying proxy will be voted for
all nominees in the absence of instruction to the contrary. Abstentions, broker
non-votes and instructions on the accompanying proxy card to withhold authority
to vote for one or more nominees will result in the respective nominees
receiving fewer votes. However, the number of votes otherwise received by the
nominee will not be reduced by such action.
4
<PAGE>
PROPOSAL NO. 2
AMENDMENT OF AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
GENERAL
The Board of Directors has unanimously recommended the adoption of an
amendment to the Company's Amended and Restated Certificate of Incorporation
which will restrict the voting rights with respect to Common Stock and allow the
Company to redeem Common Stock of the Company which is owned or controlled by
persons or entities that are not United States citizens as necessary to ensure
that such persons and entities do not own or control, in the aggregate, more
than twenty-five percent (25%) of the Company's voting stock.
PURPOSE
To maintain its core aircraft operating licenses, the Company must
continue to comply with the Federal Aviation Act of 1958 (the "Act"), recodified
at Title 49 of the United States Code (Transportation). Under Section 40102 of
the Act, the Company must remain a United States citizen. As of the date of this
Proxy, in order to remain a United States citizen under the Act, non-United
States citizens may not own or control, in the aggregate, more than twenty-five
percent (25%) of the voting stock of the Company, among other things. Under
Section 151(b)(2) of the Delaware General Corporation Law, the stock of a
Delaware corporation which holds a license from a governmental agency to conduct
its business, which license is conditioned upon some or all of the holders of
its stock possessing prescribed qualifications, may be made subject to
redemption by the corporation to the extent necessary to prevent the loss of
such license or to reinstate such license. The proposed amendment to the
Company's Amended and Restated Certificate of Incorporation is intended to
ensure the Company's ability to avoid the violation of the restrictions on
foreign ownership and control of the Company, as they exist today, as well as in
the future. Thus, while current foreign ownership and control restrictions are
generally based on a twenty-five percent (25%) ownership level, the proposed
amendment is not limited to an ownership percentage amount, but instead will
allow the Company to take certain actions with respect to ownership of voting
stock which exceeds the ownership level from time to time imposed under the Act
or under any other United States Department of Transportation regulatory or
interpretive restrictions on foreign ownership and control of the Company (the
"Permitted Foreign Ownership").
DESCRIPTION
A complete copy of the proposed amendment to the Company's Amended and
Restated Certificate of Incorporation is attached hereto as Annex A and the
following description of the proposed amendment is qualified in its entirety by
reference to Annex A.
SUSPENSION OF VOTING RIGHTS
The proposed amendment contemplates that, if the number of shares of
stock owned or controlled by non-United States citizens exceeds the Permitted
Foreign Ownership, the voting rights of shares of stock owned or controlled by
non-United States citizens shall be automatically suspended, in reverse
chronological order of registration on the Company's records, until a sufficient
number thereof (the "Excess Shares") shall have been suspended so that the
number of shares of stock owned or controlled by non-United States citizens is
less than or equal to the Permitted Foreign Ownership. Voting rights shall be
reinstated from time to time in the reverse order in which they were suspended
until the maximum
5
<PAGE>
number of shares of stock owned or controlled by non-United States citizens, not
exceeding the Permitted Foreign Ownership, shall have voting rights.
REDEMPTION OF EXCESS SHARES
The proposed amendment contemplates that the Company may, but is not
obligated, to redeem Excess Shares at a per share redemption price equal to the
average closing sales price of the Company's shares during the ten (10) trading
days immediately prior to the date notice of redemption is given. The redemption
price may be paid in cash or by delivery of a promissory note having a maturity
of up to ten (10) years from issuance and interest at the then current coupon
rate of a 10-year treasury note. Notice of redemption must be given not less
than fifteen (15) calendar days prior to the redemption date.
VOTE REQUIRED
The affirmative vote of the holders of a majority of the issued and
outstanding shares of the Company's Common Stock on the Record Date is required
to approve the proposed amendment to the Company's Amended and Restated
Certificate of Incorporation. Abstentions and broker non-votes will have the
effect of votes against approval of the proposed amendment.
INFORMATION REGARDING EXECUTIVE OFFICERS
Set forth below is certain information concerning each executive officer
of the Company as of April 23, 1999, with each person's business experience for
at least the past five years:
<TABLE>
<CAPTION>
<S> <C> <C>
Name Age Title
Robert R. Ferguson III 50 Chairman of the Board, President and Chief Executive Officer
Mark Coleman 52 Senior Vice President - Sales and Marketing
Jonathan S. Waller 38 Senior Vice President, General Counsel and Secretary
Steven Westberg 44 Senior Vice President and Chief Financial Officer
Thomas Duffy, Jr. 43 Vice President - Maintenance
Gary Marsh 57 Vice President - Operations
Daniel P. Ryan 37 Vice President - Customer Service
Florence Shaughnessy-Cox 43 Vice President - In-Flight Services
J. Carl Zeigler 38 Chief Information Officer
</TABLE>
ROBERT R. FERGUSON III has served as Chairman of the Board, President
and Chief Executive Officer of the Company since February 1997. From October
1994 to February 1997, Mr. Ferguson served as President of Belmont Aviation,
L.L.C., an aviation consulting firm. Prior to that, he held various executive
positions at Continental Airlines, Inc., last serving as Chief Executive
Officer, President and Director from August 1991 to October 1994. Mr. Ferguson
also serves on the Board of Directors of Capital Cargo International Airlines,
Inc., an air freight company.
MARK COLEMAN has served a Senior Vice President - Sales and Marketing of
the Company since April 1998. From December 1996 to February 1998, Mr. Coleman
served as Senior Vice President of Marketing and Planning at Western Pacific
Airlines, Inc. From July 1994 to August 1996, Mr. Coleman served as Senior Vice
President of Marketing for Trans World Airlines, Inc. From September 1992 to
July 1994, Mr. Coleman served as Vice President and General Manager of Avis
Wiscom International, Ltd., an Avis subsidiary.
6
<PAGE>
JONATHAN S. WALLER has served as Senior Vice President, General Counsel
and Secretary of the Company since July 1995. From April 1989 to July 1995, Mr.
Waller was an attorney in private practice with the Chicago, Illinois law firm
of Rosenberg & Liebentritt, becoming a partner of the firm in January 1994.
STEVEN WESTBERG has served as Senior Vice President and Chief Financial
Officer of the Company since December 1995. Mr. Westberg held various positions
at Continental Airlines, Inc. from 1991 to February 1995, last serving as Vice
President of Corporate Planning. From February 1995 to December 1995, Mr.
Westberg served as Vice President of Belmont Aviation, L.L.C., an aviation
consulting firm. Mr. Westberg also serves on the Board of Directors of Capital
Cargo International Airlines, Inc.
THOMAS DUFFY, JR. has served as Vice President - Maintenance of the
Company since August 1995. Prior to that time, Mr. Duffy was Director of
Maintenance from August 1993. From May 1992 until August 1993, Mr. Duffy served
as Manager of Maintenance Sales with Triad International Maintenance Co.
GARY MARSH has served as Vice President - Operations of the Company
since July 1998. Prior to that time, Mr. Marsh served as Vice President of
Operations for USAirways Express/Allegheny Airlines from December 1993 to July
1998. From November 1978 to December 1993, Mr. Marsh served as a line pilot and
ultimately served as Vice President - Operations for Air Wisconsin.
DANIEL P. RYAN has served as Vice President - Customer Service of the
Company since April 1998. Prior to that time, Mr. Ryan served as the Company's
Director of Reservations from February 1997 to April 1998 and as the Company's
Director of Stations from August 1996 to February 1997. From 1988 to August
1996, Mr. Ryan served in various positions with AMR Corporation and its
subsidiary, Wings West Airlines.
FLORENCE SHAUGHNESSY-COX has served as Vice President - In-Flight since
September 1998. Prior to that time, since March 1997, Ms. Cox served as the
Company's Director of Inflight. From August 1993 until July 1995, Ms. Cox served
as the Company's Quality Assurance Coordinator for inflight services and as an
instructor of inflight services. Ms. Cox did not work from July 1995 to March
1997.
J. CARL ZEIGLER has served as Chief Information Officer of the Company
since November 1997. From January 1997 to November 1997, Mr. Zeigler served as
the Director of Engineering for DBStar, Inc., a software developer. From January
1996 to December 1996, Mr. Zeigler served as Vice President of Technology at
UNIXware Technology Group, Inc. From December 1985 to December 1995, Mr. Zeigler
served as Manager, Open Systems Research and Development for SAS Institute, Inc.
AGREEMENTS WITH NAMED EXECUTIVE OFFICERS
The Company has agreements with three of the named executive officers
(Messrs. Ferguson, Waller and Westberg) that provide that each such officer is
entitled to benefits if such officer's employment is ended by the Company other
than for reason of death or disability or for cause (as defined in the
agreements). In general, the benefits provided are: (a) a cash termination
payment equal to one year's annual compensation at the rate then in effect or
continuing salary payments of up to one year following the date of termination;
(b) payments allowing for the officer to obtain medical benefits comparable to
those received by the officer in the preceding fiscal year for up to one year
following termination; (c) outplacement services; (d) airline travel privileges
on Midway for the executive and his/her spouse for their lifetime and their
dependent children; and (e) household relocation assistance. Messrs. Ferguson,
Waller and Westberg's agreements have no certain termination date. Mr.
Ferguson's agreement does not provide him with the benefits described in clauses
(b), (c), (d) and (e) above.
7
<PAGE>
SUMMARY COMPENSATION TABLE
The following table shows all the cash compensation paid or to be paid by the
Company as well as certain other compensation paid or accrued during the fiscal
years indicated to the Chief Executive Officer of the Company and each of the
four other most highly compensated executive officers of the Company (the "Named
Executive Officers") for such period in all capacities in which they serve.
<TABLE>
<CAPTION>
Long Term
Compensation
------------
Annual Compensation Common
----------------------------------------- Stock
Other Annual Underlying All Other
Salary Bonus Compensation Options Compensation
Name and Principal Position Year ($) ($) ($) (# of shares) ($)
- --------------------------- ---- ------- --------- ------------ ------------- ------------
<S> <C> <C>
Robert R. Ferguson III (1) 1996 -- -- -- -- --
Chairman of the Board, President 1997 177,036(1) 300(2) -- 781,250 --
and Chief Executive Officer 1998 200,000 65,653(3) 118,504(4) -- 449(5)
Steven Westberg 1996 170,103 -- -- -- --
Senior Vice President and 1997 170,385 300(2) -- 111,997 247,500(6)
Chief Financial Officer 1998 175,000 16,894(3) 42,041(4) -- 427(5)
Jonathan S. Waller 1996 165,384 -- -- -- --
Senior Vice President, General 1997 164,303 300(2) -- 27,999 247,500(6)
Counsel, and Secretary 1998 167,500 16,573(3) -- -- 397(5)
Mark J. Coleman (7) 1996 -- -- -- -- --
Senior Vice President, 1997 -- -- -- -- --
Sales and Marketing 1998 116,731 1,123(3) -- -- 229(5)
Thomas Duffy, Jr 1996 90,398 -- -- -- --
Vice President, Maintenance and 1997 103,032 300(2) -- 27,999 46,000(6)
Engineering 1998 115,000 10,712(3) -- -- 257(5)
</TABLE>
(1) Mr. Ferguson became an executive officer of the Company in February
1997.
(2) Amount paid to all eligible full-time employees.
(3) Includes amount proportionate to that paid to eligible employees under
the Company's bonus plan, plus $50,000 to Mr. Ferguson, $5,000 each to
Mr. Westberg and Mr. Waller, and $3,500 to Mr. Duffy.
(4) Includes taxable and nontaxable moving expenses paid to Mr. Ferguson of
$107,004 and to Mr. Westberg of $36,041.
(5) Includes amount proportionate to that paid to all employees based on
annual base salary for term life insurance.
(6) Amount reflects bonus paid by Zell/Chilmark Fund, L.P. on behalf of the
Company as a result of negotiations in connection with the
recapitalization and change in control of the Company in February 1997.
(7) Mr. Coleman became an executive officer of the Company in April 1998.
BOARD COMPENSATION
Non-employee directors of the Company are paid a $2,000 fee for each
board meeting attended by that director and a $500 fee for each
committee meeting attended by that director, whether attended in person
or via telephone and a quarterly retainer of $2,500.
8
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
None of the people named in the Summary Compensation Table were granted
options during 1998.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
<TABLE>
<CAPTION>
Number of Value of Unexercised
Securities Underlying In-the-Money
Shares Unexercised Options Options at
Acquired on Value At December 31, 1998 At December 31, 1998 (1)
Exercise Realized ----------------------------- ---------------------------------
Name # ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert R. Ferguson III 33,660 458,081 552,278 195,312 4,407,178 1,558,590
Steven Westberg 4,440 62,749 17,959 89,598 143,313 714,992
Jonathan S. Waller -- -- 5,600 22,399 44,688 178,744
Mark J. Coleman -- -- -- -- -- --
Thomas Duffy, Jr -- -- 5,600 22,399 44,688 178,744
</TABLE>
(1) The closing price for the Common Stock as reported on December 31, 1998 was
$12.000. The value of unexercised in-the-money options is the difference
between the per share option exercise price and $12.000 multiplied by the
number of shares of Common Stock underlying in-the-money options.
COMPENSATION COMMITTEE REPORT TO STOCKHOLDERS
This report of the Compensation Committee (the "Compensation Committee")
shall not be deemed to be incorporated by reference by any general statement
which incorporates by reference this proxy statement into any filing under the
Securities Act of 1933, as amended (the "Securities Act"), or under the Exchange
Act, except to the extent that the Company specifically incorporates this
information by reference, and this report shall not otherwise be deemed filed
under such Acts.
The Compensation Committee of the Board of Directors was formed in
August, 1998 and consists of Messrs. Wolf and Harding-Brown, each of whom is an
independent non-employee director. The Compensation Committee administers the
Company's executive compensation programs, monitors corporate performance and
its relationship to compensation of executive officers, and makes appropriate
recommendations concerning matters of executive compensation.
COMPENSATION PHILOSOPHY
The Company was formed in 1993 as a private company and experienced two
ownership changes and two senior management changes in the period July 1994 to
February 1997. The Company became publicly held in December 1997 and one of its
key missions was to stabilize management and to focus the management on the
Company's primary business objectives. One of the Company's strengths
contributing to its operating results since February 1997 is a strong management
team, many of whom have extensive airline experience or have been with the
Company for several years. The Committee believes that low executive turnover
has been instrumental to the Company's operating results, and that the Company's
compensation program has played a major role in limiting executive turnover. The
compensation program is designed to enable the Company to attract, retain and
reward capable employees who can contribute to the continued favorable results
of the Company, principally by linking compensation with the attainment of key
business objectives. Equity participation and a strong alignment to
stockholders' interests are key elements of the Company's compensation
philosophy. Accordingly, the Company's executive compensation program is
designed to provide competitive compensation, support the Company's strategic
business goals and reflect the Company's performance.
The compensation program reflects the following principles:
o Compensation programs should support the short- and long-term
strategic business goals and objectives of the Company.
o Compensation should be aligned with increasing stockholder value and
corporate profitability.
o Compensation programs should reflect and promote the Company's values
and reward individuals for outstanding contributions toward business
goals.
9
<PAGE>
o Compensation programs should enable the Company to attract and retain
highly qualified professionals.
PAY MIX AND MEASUREMENT
The Company's executive compensation is comprised of two components,
base salary and incentives, each of which is intended to serve the overall
compensation philosophy.
BASE SALARY
The Company's salary levels are conservative and are intended to be
consistent with competitive pay practices and level of responsibility, with
salary increases reflecting competitive trends, the overall financial
performance and resources of the Company, general economic conditions as well as
a number of factors relating to the particular individual, including the
performance of the individual executive, and level of experience, ability and
knowledge of the job. The President of the Company received no salary increases
in 1997 or 1998 and the Senior Vice Presidents of the Company received no salary
increases in 1997. The Senior Vice Presidents of the Company received salary
increases in 1998 in accordance with the merit-based system utilized for all
administrative and salaried personnel of the Company. In 1998 this merit-based
system used an average increase rate of 3%.
INCENTIVES
Incentives consist of cash awards and stock options. Cash awards are
paid to the Company's executives under the Company's Profit Sharing and Bonus
Program, which includes all eligible employees of the Company. The Profit
Sharing and Bonus Program allows the Company's Board of Directors, in its
discretion, to distribute certain amounts based on the Company's annual profits.
The Company's executives may be paid additional cash bonuses as determined by
the Board of Directors based on factors such as relative performance of the
Company during the year and the individual's contribution to the Company's
performance.
The Committee strongly believes that the overall pay program should
provide employees with an opportunity to increase their ownership and
potentially gain financially from Company stock price increases. By this
approach, the best interests of stockholders, executives and employees will be
closely aligned. Therefore, executives and other employees have previously
received or may, in the future receive stock options, giving them the right to
purchase shares of Common Stock of the Company at a specified price. The grant
of stock options is based primarily on an employee's contribution to the
Company's operating results based on the Committee's discretionary
evaluation. Stock options have been or may in the future be granted at the
prevailing market value of the Company's Common Stock and will only have value
if the Company's stock price increases. Generally, grants of stock options vest
over a period of time and the holders of these stock options must be employed by
the Company for such stock options to vest.
CHIEF EXECUTIVE OFFICER 1998 COMPENSATION
Mr. Ferguson's 1997 salary of $200,000 per year was not increased in
1998. For the 1997 fiscal year, Mr. Ferguson received a bonus of $50,000,
representing 25% of his base salary, which bonus was paid in 1998. The Board of
Directors approved the particular dollar amount of Mr. Ferguson's bonus in
recognition of Mr. Ferguson's significant contributions to the growth,
profitability and increased value of the
10
<PAGE>
Company in 1997. Mr. Ferguson received no new grant of stock options in
1998, although he continues to own options to purchase 747,590 shares of the
Company's stock.
TAX EFFECTS
Changes made in 1993 to the Internal Revenue Code of 1986, as amended
(the "Code"), impose certain limitations on the deductibility of executive
compensation paid by public companies. In general, under the limitations, the
Company will not be able to deduct annual compensation paid to certain executive
officers in excess of $1,000,000 except to the extent that such compensation
qualifies as "performance-based compensation" (or meets other exceptions not
here relevant). Non-deductibility would result in additional tax cost to the
Company. It is possible that at least some of the cash and equity-based
compensation paid or payable to the Company's executive officers will not
qualify for the "performance-based compensation" exclusion under the deduction
limitation provisions of the Code. Nevertheless, the Committee anticipates that
in making compensation decisions it will give consideration to the net cost to
the Company (including, for this purpose, the potential limitation on
deductibility of executive compensation).
SUMMARY
The Compensation Committee believes that linking executive compensation
to corporate performance results in a better alignment of compensation with
corporate business goals and stockholder value. The Committee believes its
compensation practices are appropriately tied to stockholder returns and linked
to the achievement of annual and longer-term financial and operating results of
the Company on behalf of the Company's stockholders. In view of the Company's
performance and achievement of goals and competitive conditions, the
Compensation Committee believes that compensation levels during 1998 adequately
reflected the Company's compensation goals and policies.
COMPENSATION COMMITTEE
Howard Wolf
Gregory Harding-Brown
THE COMPANY'S PERFORMANCE
The following graph compares the cumulative total return of the Common
Stock of Midway Airlines Corporation, the Total Return Index for The Nasdaq
Stock Market (US), the Total Return Index for The S&P Small Cap 600 Index and
the Total Return Index for Nasdaq Trucking & Transportation Stocks since
December 4, 1997. The Company made an initial public offering of Common Stock on
December 4, 1997 at $15.50 per share. The graph assumes $100 was invested in
each of the Common Stock, the Nasdaq Stock Market (US), the S&P Small Cap 600
and the Nasdaq Trucking & Transportation Stocks on that date. The graph does not
take into account trading commissions or taxes.
PERFORMANCE GRAPH
CUMULATIVE TOTAL RETURNS
on $100 Invested on December 4, 1997
[TABLE APPEARS HERE]
<INSERT PLOT POINTS
12/98
-----
MIDWAY AIRLINES CORPORATION $77
S & P SMALLCAP 600 $105
NASDAQ STOCK MARKET (U.S.) $139
NASDAQ TRUCKING & TRANSPORTATION $90
11
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of April 9, 1999, with
respect to (i) persons known to the Company to be beneficial holders of five
percent or more of the outstanding shares of Common Stock, (ii) named executive
officers and directors of the Company and (iii) all executive officers and
directors of the Company as a group.
AMOUNT AND NATURE
OF BENEFICIAL OWNERSHIP(1)
NAME AND ADDRESS OF BENEFICIAL COMMON
OWNER STOCK %
- ------------------------------ ------------ -----
James H. Goodnight, Ph.D 2,745,274(2) 31.9%
SAS Campus Drive
Cary, North Carolina 27513
John P. Sall 1,333,418(2) 15.5%
SAS Campus Drive
Cary, North Carolina 27513
Robert R. Ferguson III 747,590(3) 8.0%
2801 Slater Road, Suite 200
Morrisville, North Carolina 27560
Brinson Partners, Inc. 604,700(2) 7.0%
209 South LaSalle Street
Chicago, Illinois 60604-1295
Steven Westberg 40,358(4) *
2801 Slater Road, Suite 200
Morrisville, North Carolina 27560
Jonathan S. Waller 11,400(5) *
2801 Slater Road, Suite 200
Morrisville, North Carolina 27560
Thomas Duffy, Jr 11,200(6) *
2801 Slater Road, Suite 200
Morrisville, North Carolina 27560
Mark Coleman 0 *
2801 Slater Road, Suite 200
Morrisville, North Carolina 27560
W. Greyson Quarles 1,550 *
SAS Campus Drive
Cary, North Carolina 27513
Howard Wolf 2,500 *
Fulbright & Jaworski, LLP
1301 McKinney, #5100
Houston, Texas 70010-3095
12
<PAGE>
Gregory J. Robitaille 500 *
Equity Investment Group, Inc.
Two North Riverside Plaza
Chicago, Illinois 60606
Gregory Harding-Brown 4,000 *
Discovery Investment Corporation
4090 Happy Valley Road
Lafayette, CA 94549
All Directors and Executive
Officers as a Group (13 persons) 822,098 8.7%
* Less than 1% of issued and outstanding shares of Common Stock.
(1) Each beneficial owner's ownership of Common Stock and percentage
ownership is determined by assuming that options, warrants and other
convertible securities that are held by all persons that are exercisable
or convertible within 60 days of April 9, 1999 have been exercised or
converted.
(2) The amount of Common Stock beneficially owned by Dr. Goodnight, Mr. Sall
and Brinson Partners, Inc. has been determined solely on the basis of
the Company's review of Schedule 13D and Schedule 13G filings made
pursuant to Regulation 13D of the Securities Exchange Act of 1934.
(3) Includes 747,590 shares of Common Stock issuable to Mr. Ferguson upon
exercise of an option.
(4) Includes 40,358 shares of Common Stock issuable to Mr. Westberg upon
exercise of an option.
(5) Includes 11,200 shares of Common Stock issuable to Mr. Waller upon
exercise of an option and 200 shares of Common Stock owned by Mr.
Waller's wife and mother-in-law.
(6) Includes 11,200 shares of Common Stock issuable to Mr. Duffy upon
exercise of an option.
13
<PAGE>
CERTAIN TRANSACTIONS
In 1998, the Company engaged the law firm of Fulbright & Jaworski L.L.P.
to act as its counsel in connection with its purchase and financing of certain
aircraft and in connection with its filings and registrations with the United
States Securities and Exchange Commission. The Company has engaged Fulbright &
Jaworski L.L.P. to perform similar services for the Company in 1999. Howard
Wolf, a senior partner of Fulbright & Jaworski L.L.P. is a member of the
Company's Board of Directors.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
The financial statements of the Company at December 31, 1998, 1997 and
1996 and for the years then ended, appearing in the annual report which
accompanies this proxy statement have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon appearing in such
annual report.
Ernst & Young LLP has been selected by the Board of Directors to serve
as the Company's independent accountants for the current year. Representatives
of Ernst & Young LLP are expected to be present at the annual meeting of
shareholders, will have the opportunity to make a statement if they so desire
and will be available to respond to appropriate questions.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended
("Section 16(a)"), requires the Company's officers, directors and persons who
own more than 10% of a registered class of the Company's equity securities to
file statements of ownership and changes in ownership with the Securities and
Exchange Commission on Form 3, Form 4, and Form 5. Officers, directors and
greater than 10% stockholders are required by the regulation to furnish the
Company with copies of all Section 16(a) reports which they file.
Based solely on a review of such statements and amendments thereto
furnished to the Company and written representations from the Company's
executive officers and directors, the Company believes that the reporting
requirements of Section 16(a) were complied with on a timely basis, except that
each of Robert R. Ferguson III, Steven Westberg and Gregory Harding-Brown failed
to timely report certain transactions. All such transactions have been reported.
PROPOSALS FOR NEXT ANNUAL MEETING
Stockholder proxies obtained by the Board of Directors in connection
with the annual meeting of shareholders of the Company to be held in 2000 will
confer on proxy holders discretionary authority to vote on any matters presented
at the meeting which were not included in the proxy unless notice of the matter
is provided to the Company's Corporate Secretary in accordance with the
following paragraph.
Any proposals of shareholders intended to be presented at the annual
meeting of shareholders of the Company to be held in 2000 must be received by
the Company's Corporate Secretary at the Company's principal executive offices,
not earlier than September 22, 1999 and not later than January 20, 2000 in order
to be included in the proxy statement and form of proxy relating to that
meeting.
14
<PAGE>
OTHER MATTERS
The management of the Company knows of no other matters that may come
before the meeting. However, if any matters other than those referred to above
should properly come before the meeting, it is the intention of the persons
named in the enclosed proxy to vote such proxy in accordance with their best
judgment.
The cost of solicitation of proxies in the accompanying form will be
paid by the Company. In addition to solicitation by use of the mails, certain
directors, officers or employees of the Company may solicit the return of
proxies by telephone, telegram or personal interview.
15
<PAGE>
ANNEX A
-------
CERTIFICATE OF AMENDMENT
OF
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
MIDWAY AIRLINES CORPORATION
Midway Airlines Corporation, a corporation organized and existing under,
and by virtue of the General Corporation Law of the State of Delaware (the
"Corporation");
DOES HEREBY CERTIFY:
FIRST: That by unanimous written consent of the Board of Directors of
the Corporation, resolutions were duly adopted setting forth a proposed
amendment to the Amended and Restated Certificate of Incorporation of the
Corporation, declaring said amendment to be advisable and directing that the
amendment be considered at the annual meeting of the stockholders of the
Corporation to be held on May 19, 1999. The resolutions setting forth the
proposed amendment are as follows:
RESOLVED, that the Amended and Restated Certificate of
Incorporation of this Corporation be amended by adding thereto Article 8
thereof that shall be and read as follows:
ARTICLE 8
FEDERAL AVIATION ACT COMPLIANCE
Section 1. DEFINITIONS. The following definitions shall apply
for purposes of this Article 8:
(a) "Act" shall mean the Federal Aviation Act of 1958,
recodified at Title 49 United States Code
(Transportation), as amended from time to time.
(b) "Excess Shares" shall have the meaning set forth in
Section 4 of this Article 8.
(c) "Foreign Stock" shall mean the Voting Stock registered in
the Foreign Stock Record.
(d) "Foreign Stock Record" shall have the meaning set forth in
Section 3 of this Article 8.
(e) "Non-Citizen" shall mean any person or entity that is not
a "citizen of the United States" as defined in 49 U.S.C.
ss. 40102(a)(15), as amended, or in any successor
provision, including any agent, trustee or representative
of a non-citizen.
(f) "Own or Control" or "Owned or Controlled", when used in
reference to Voting Stock, shall mean (i) ownership of
record, (ii) beneficial ownership,
1
<PAGE>
or (iii) the power to direct, by agreement, agency or in
any other manner, the voting of Voting Stock. Any
determination by the Board of Directors as to whether
Voting Stock is Owned or Controlled by a Non-Citizen
shall be final.
(g) "Permitted Foreign Ownership" shall mean the number of
shares of Voting Stock in the aggregate that may be owned
or controlled by Non-Citizens pursuant to the Act or
pursuant to any United States statutory or United States
Department of Transportation regulatory or interpretive
restrictions on foreign ownership and control of the
Corporation, such that the Corporation and any of its
subsidiaries may or still be deemed "a citizen of the
United States" as defined in 49 U.S.C. ss. 40102(a)(15),
as amended, or in any successor provision.
(h) "Redemption Price" shall have the meaning set forth in
Section 5 of this Article 8.
(i) "Voting Stock" shall mean the outstanding shares of
capital stock of the Corporation entitled to vote,
including any such shares that would be entitled to vote
but for the operation of this Article 8.
Section 2. POLICY. It is the policy of the Corporation that, consistent
with the requirements of the Act or of any other United States statutory
or United States Department of Transportation regulatory or interpretive
restrictions on foreign ownership and control of the Corporation,
Non-Citizens shall not Own or Control more than the Permitted Foreign
Ownership and, if Non-Citizens nonetheless at any time Own or Control
more than the Permitted Foreign Ownership, the voting rights of the
shares of Foreign Stock in excess of the Permitted Foreign Ownership
shall be suspended in accordance with Section 4 below.
Section 3. FOREIGN STOCK RECORD.
(a) Description. The Corporation or any transfer agent
designated by it shall maintain a separate stock record
(the "Foreign Stock Record") for purposes of registering
Voting Stock Owned or Controlled by Non-Citizens. The
Foreign Stock Record shall include (a) the name and
nationality of each such Non-Citizen, (b) the number of
Voting Stock Owned or Controlled by such Non-Citizen, and
(c) the date of registration of such shares in the Foreign
Stock Record.
(b) Registration. The Corporation shall register in the
Foreign Stock Record shares of Voting Stock
that the Corporation determines are Owned or Controlled
by one or more Non-Citizens. Such shares shall be
registered in the Foreign Stock Record in chronological
order based on the date and time of such determination by
the Corporation. The Corporation may rely on such
certifications or other evidence it deems appropriate in
determining the citizenship status of any person and, by
way of illustration but not limitation, the Corporation
may presume that Voting Stock is Owned or Controlled by a
Non-Citizen and may register such Voting Stock in the
Foreign Stock Record if the registered holder thereof has
an address located outside the United States.
(c) Confirmation of Citizenship. The Corporation from time
to time may require the holder of record of any Voting
Stock to confirm the citizenship status of the person
<PAGE>
or persons who Own or Control that Voting Stock by
executing such certificates and providing such other
evidence that the Corporation determines is reasonably
necessary for that purpose. If the holder of record of
shares of Voting Stock fails to confirm or provide
evidence to the satisfaction of the Corporation that such
shares are not Owned or Controlled by one or more
Non-Citizens, the Corporation shall be entitled, but not
obligated, to register those shares in the Foreign Stock
Record.
Section 4. SUSPENSION OF VOTING RIGHTS.
(a) Suspension. If at any time the number of shares of
Foreign Stock exceeds the Permitted Foreign Ownership, the
voting rights of shares of Foreign Stock shall
2
<PAGE>
automatically be suspended, in the reverse chronological
order of the dates and times of registry of such shares in
the Foreign Stock Record, until the voting rights of a
sufficient number thereof shall have been suspended so
that the number of shares of Foreign Stock that continues
to have voting rights equals the greatest whole number
that is less than or equal to the Permitted Foreign
Ownership. The particular shares of Foreign Stock that
shall have their voting rights suspended are referred to
collectively as the "Excess Shares".
(b) Reinstatement. If, while the voting rights of any
shares of Foreign Stock are suspended, the Corporation
determines that the number of shares of Foreign Stock that
have voting rights is less than the Permitted Foreign
Ownership, voting rights shall automatically be reinstated
for shares of Foreign Stock as to which voting rights have
been suspended, in the reverse order in which the voting
rights thereof were suspended under Section 4(a) above,
until the maximum number of shares of Foreign Stock, not
exceeding the Permitted Foreign Ownership, shall have
voting rights. Voting rights also shall automatically be
reinstated for any shares of Foreign Stock that have
suspended voting rights if such shares are transferred to
a person or entity that is not a Non-Citizen.
Section 5. REDEMPTION OF EXCESS SHARES. To the extent necessary for the
Corporation to comply with any present or future registration, licensing
or other provisions of the Act, or regulations promulgated thereunder,
or of any United States statutory or United States Department of
Transportation regulatory or interpretive restrictions on foreign
ownership and control of the Corporation, the Corporation shall have the
power, but not the obligation, to redeem Excess Shares out of funds
legally available therefor, subject to the following terms and
conditions:
(a) The per share redemption price (the "Redemption
Price") to be paid for the Excess Shares to be redeemed
shall be the average closing sales price of such shares on
the NASDAQ National Market System Composite Tape during
the 10 trading days immediately prior to the date the
notice of redemption is given; or if such shares are not
then traded on the NASDAQ National Market System, then the
closing sales prices of such shares on any other national
securities exchange on which such shares are then listed;
or if such shares are not then listed on any national
securities exchange, then the closing sales prices as
quoted in the NASDAQ National Market System; or if such
shares are not then so quoted, then the mean between the
representative bid and ask prices as quoted by NASDAQ or
another generally recognized reporting system, on each of
such 10 trading days.
(b) The Redemption Price may be paid in cash or by delivery of
a promissory note of the Corporation, at the election of
the Corporation. Any such promissory note shall
3
<PAGE>
have a maturity of not more than ten years from the date
of issuance and shall bear interest at the rate equal to
the then current coupon rate of a 10-year treasury note as
such rate is published in the Wall Street Journal or
comparable publication.
(c) A notice of redemption shall be given by first class
mail, postage prepaid, mailed not less than 15 calendar
days prior to the redemption date to each holder of record
of the shares to be redeemed, at such holder's address as
the same appears on the stock register of the Corporation.
Each such notice shall state (i) the redemption date, (ii)
the number of shares of Voting Stock to be redeemed from
such holder, (iii) the Redemption Price and the manner of
payment thereof, (iv) the place where certificates for
such shares are to be surrendered for payment of the
Redemption Price, and (v) that dividends on the shares to
be redeemed will cease to accrue on such redemption date.
(d) From and after the redemption date, dividends, if any,
on the shares of Voting Stock called for redemption shall
cease to accrue and such shares shall no longer be deemed
to be outstanding and all rights of the holders thereof as
stockholders of the Corporation (except the right to
receive from the Corporation the Redemption Price) shall
cease. Upon surrender of the certificates for any shares
so redeemed in accordance with the requirements of the
notice of redemption (properly endorsed or assigned for
transfer if the Board of Directors shall so require and
the notice shall so state), such shares shall be redeemed
by the Corporation at the Redemption Price. In case fewer
than all the shares represented by any such certificate
are redeemed, a new certificate shall be issued
representing the shares not redeemed without cost to the
holder thereof.
Section 6. ADMINISTRATIVE MATTERS AND EFFECTIVENESS.
(a) By-Laws. The Amended and Restated By-Laws of the
Corporation may be amended by majority vote of the Board
of Directors to include appropriate provisions to
effectuate the requirements of this Article 8.
(b) Quorum. Except as otherwise provided or required by
law, the presence, in person or by proxy, of the holders
of record of shares of Voting Stock entitling the holders
thereof to cast a majority of the voting power of all
shares of Voting Stock (after giving effect to the
reduction of voting rights prescribed in Section 4 of this
Article 8) shall constitute a quorum at all meetings of
shareholders of the Corporation, and any quorum
requirement or any requirement for shareholder approval
shall be determined after giving effect to the reduction
in voting rights prescribed in Section 4 of this Article
8.
(c) Severability. If any section or lesser provision of this
Article 8 is determined to be invalid, void, illegal or
unenforceable, then the remaining sections and provisions
of this Article 8 shall continue to be valid and
enforceable and in no way be affected, impaired or
invalidated.
(d) Effectiveness. The limitations on the rights of the
holders of shares of Voting Stock and the other
limitations and rights of the Corporation provided for in
this Article
4
<PAGE>
8 shall be effective notwithstanding any other provision
of this Amended and Restated Certificate of Incorporation
but only for so long as the Corporation or any subsidiary
(i) is subject to any restriction on the ownership of
Voting Stock by Non-Citizens or (ii) if not then subject
to any restriction on the ownership of Voting Stock by
Non-Citizens, intends to reinstate any license, franchise
or operating certificate or authority lost as a result of
a restriction on the ownership of Voting Stock by
Non-Citizens within a reasonable time after ceasing to
hold the same.
FURTHER RESOLVED, that the Board of Directors of the Corporation
declare said amendment to be advisable and direct that the amendment be
considered at the annual meeting of the stockholders of the Corporation
to be held on May 19, 1999.
SECOND: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, Midway Airlines Corporation has caused this
Certificate to be signed by Robert R. Ferguson III, its President and Jonathan
S. Waller, its Secretary, this _____ day of __________, 1999.
MIDWAY AIRLINES CORPORATION
By:
---------------------------------
Robert R. Ferguson III, President
ATTEST:
-----------------------------
Jonathan S. Waller, Secretary
5
<PAGE>
MIDWAY AIRLINES CORPORATION
300 West Morgan Street, Suite 1200
Durham, NC 27701
New Address as of May 1, 1999
2801 Slater Road, Suite 200
Morrisville, NC 27560
PROXY SOLICITED BY BOARD OF DIRECTORS
The undersigned hereby appoints Robert R. Ferguson III, W. Greyson Quarles,
Howard Wolf, Gregory J. Robitaille and Gregory Harding -- Brown, or any of them,
attorneys and proxies, with power of substitution, to vote all outstanding stock
of the undersigned at the Annual Meeting of Shareholders of Midway Airlines
Corporation to be held at 11:00 a.m. on Wednesday, May 19, 1999, at Embassy
Suites, Cary, NC, or any adjournment thereof, on the matters listed below:
1. To elect two (2) Class II Directors to a term of three (3) years. The Board
intends that the following persons shall be nominated to office for a period of
three (3) years: Howard Wolf, Gregory J. Robitaille.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. To consider and vote upon a proposed amendment to the Company's Amended and
Restated Certificate of Incorporation which will suspend the voting rights with
respect to, and allow the Company to redeem, common stock of the Company which
is owned or controlled by persons or entities that are not United States
citizens as may be necessary to comply with the Federal Aviation Act of 1958.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To consider and transact such other business as may properly come before the
meeting or any adjournment thereof.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(Continued and to be signed on the reverse side)
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. WHETHER OR NOT YOU
PLAN TO ATTEND THE MEETING, PLEASE SIGN AND RETURN THIS PROXY CARD IN THE
ENCLOSED ENVELOPE.
THIS PROXY WILL BE VOTED AS DIRECTED
OR, IF NO DIRECTION IS INDICATED
WILL BE VOTED "FOR" THE STATED
PROPOSAL.
------------------------------------
Signature of Stockholder
------------------------------------
Signature if held jointly
IMPORTANT: If shares are jointly
owned, both owners should sign. If
signing as attorney, executor,
administrator, trustee, guardian or
other person signing in a
representative capacity, please give
your full title as such. If a
corporation, please sign in
<PAGE>
full corporate name by President or
other authorized officer. If a
partnership, please sign in
partnership name by authorized
person.
