EXECUTION COPY

                   [FORM OF CONVERTIBLE SENIOR SECURED NOTE]

THIS NOTE AND THE COMMON STOCK ISSUABLE UPON THE CONVERSION OF THIS NOTE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE SECURITIES LAWS ("BLUE SKY LAWS"). THE HOLDER OF
THIS NOTE MAY NOT TRANSFER THIS NOTE OR THE COMMON STOCK ISSUABLE UPON THE
CONVERSION OF THIS NOTE WITHOUT SUCH REGISTRATION OR AN EXEMPTION FROM SUCH
REGISTRATION UNDER THE SECURITIES ACT AND ANY APPLICABLE BLUE SKY LAWS. THE
HOLDER OF THIS NOTE MAY ONLY TRANSFER IT IN ACCORDANCE WITH AND SUBJECT TO THE
TERMS OF THIS NOTE. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED
IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
ARRANGEMENT SECURED BY THE SECURITIES. ANY TRANSFEREE OF THIS NOTE SHOULD
CAREFULLY REVIEW THE TERMS OF THIS NOTE, INCLUDING SECTIONS 3(d)(iv) AND 17(a)
HEREOF. THE PRINCIPAL AMOUNT REPRESENTED BY THIS NOTE AND THE SECURITIES
ISSUABLE UPON CONVERSION HEREOF MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE
FACE HEREOF PURSUANT TO SECTION 3(d)(iv) OF THIS NOTE.

                         CONVERTIBLE SENIOR SECURED NOTE

Issuance Date: _________, 2003                       Principal: U.S. $__________

     FOR VALUE RECEIVED, Midwest Express Holdings, Inc., a Wisconsin corporation
(the "Company"), Midwest Airlines, Inc., a Wisconsin corporation and
wholly-owned subsidiary of the Company ("Midwest"), Skyway Airlines, Inc., a
Delaware corporation and wholly-owned subsidiary of Midwest ("Skyway"), and YX
Properties, LLC, a Nebraska limited liability company and an indirect subsidiary
of the Company ("YX") (Midwest, Skyway, and YX are referred to herein as the
"Co-Borrowers"), jointly and severally, hereby promise to pay to the order of
_________________ or registered assigns ("Holder") the aggregate amount set out
above as the Principal (as reduced pursuant to the terms hereof pursuant to
redemption, conversion or otherwise, the "Principal") when due, whether upon the
Maturity Date (as defined below), acceleration, conversion, redemption or
otherwise (in each case in accordance with the terms hereof) and to pay interest
("Interest") on any outstanding Principal at the rate of 6.75% per annum,
subject to adjustment pursuant to Section 2 (the "Interest Rate"), from the date
set out above as the Issuance Date (the "Issuance Date") until the same becomes
due and payable, whether upon an Interest Date (as defined below), the Maturity
Date, acceleration, conversion, redemption or otherwise (in each case in
accordance with the terms hereof). This Convertible Senior Secured Note
(including all Convertible Senior Secured Notes issued in exchange, transfer or
replacement hereof, this "Note") is one of an issue of Convertible Senior
Secured Notes being issued pursuant to the Securities Purchase Agreement (as
defined herein) on the Issuance Date or on the Second Closing Date (as defined
in the Securities Purchase Agreement), if any are issued on the Second Closing
Date (collectively, this Note and all of the other Convertible Senior Secured
Notes issued pursuant to the Securities Purchase Agreement are the "Notes," and
all such other Convertible Senior Secured Notes are, collectively, the "Other
Notes"). The Holder and the holders of the Other Notes are collectively referred
to as the "Holders." Certain other capitalized terms are defined in Section 27.

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     (1) MATURITY. On the Maturity Date, the Holder shall surrender this Note to
the Company, and the Company and the Co-Borrowers shall pay to the Holder an
amount in cash representing all outstanding Principal, accrued and unpaid
Interest and any accrued and unpaid Late Charges, if any. The "Maturity Date"
shall be October 1, 2008, except as may be extended at the option of the Holder
(a) in the event that, and for so long as, an Event of Default (as defined in
Section 4(a)) shall have occurred and be continuing or any event shall have
occurred and be continuing which with the passage of time and the failure to
cure would result in an Event of Default and (b) through the date that is ten
(10) calendar days after the consummation of a Change of Control (as defined in
Section 5(a)) in the event that a Change of Control is publicly announced or a
Change of Control Notice (as defined in Section 5(a)) is delivered prior to the
Maturity Date.

     (2) INTEREST; INTEREST RATE. Interest on this Note shall commence accruing
on the Issuance Date and shall be computed on the basis of a 365-day year and
actual days elapsed and shall be paid to the record Holder on April 1st and
October 1st each year, beginning on April 1st, 2004 (each an "Interest Date").
Interest shall be payable on each Interest Date in cash. From and after the
occurrence of an Event of Default, the Interest Rate shall be increased to 8.75%
per annum. In the event that such Event of Default is subsequently cured, the
adjustment referred to in the preceding sentence shall cease to be effective as
of the date of such cure; provided that the Interest as calculated at such
increased rate during the continuance of such Event of Default shall continue to
apply to the extent relating to the days after the occurrence of such Event of
Default through and including the date of cure of such Event of Default.

     (3) CONVERSION OF NOTES. This Note shall be convertible into shares of the
Company's common stock, par value $.01 per share (the "Common Stock"), together
with any associated Rights (as defined in the Securities Purchase Agreement), on
the terms and conditions set forth in this Section 3.

          (a) Holder's Conversion Right. The Holder shall be entitled to convert
     any portion of the outstanding and unpaid Principal of this Note into fully
     paid and nonassessable (except as otherwise provided by Section
     180.0622(2)(b) of the Wisconsin Business Corporation Law) shares of Common
     Stock, together with any associated Rights, at any time (other than as
     expressly provided for herein) in accordance with the applicable provisions
     of Section 3(d), at the Conversion Rate (as defined below).

          (b) Company's Conversion Right. If the Conditions to Company
     Conversion (as set forth in Section 3(e)) are satisfied or waived in
     writing by the Holder, the Company shall be entitled to convert all but not
     less than all of the aggregate outstanding and unpaid Principal of the
     Notes (including this Note) into fully paid and nonassessable (except as
     otherwise provided by Section 180.0622(2)(b) of the Wisconsin Business
     Corporation Law) shares of Common Stock, together with any associated
     Rights, at any time after October 1, 2006, but only if the Closing Price
     (as defined herein) of the Common Stock has been at least 300% of the
     Conversion Price (as defined herein) for each Trading Day (as defined
     herein) in the 20 consecutive Trading Day period immediately preceding, and
     not including, the date the Company provides the Company Conversion Notice
     (as defined herein) in accordance with Section 3(d)(ii) (the

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     "Company Conversion Measuring Period"). Any such conversion shall be
     effected in accordance with the applicable provisions of Section 3(d).

          (c) Conversion Rate. The number of shares of Common Stock issuable
     upon conversion of any Conversion Amount (as defined herein) pursuant to
     Section 3(a) or Section 3(b) shall be determined by dividing (x) such
     Conversion Amount by (y) the Conversion Price (the "Conversion Rate").

               (i) "Conversion Amount" means the portion of the Principal of
          this Note to be converted.

               (ii) "Conversion Price" means, as of any Holder Conversion Date
          (as defined below) or Company Conversion Date (as defined below), as
          the case may be, or other date of determination, and subject to
          adjustment as provided herein, $5.00 per share of Common Stock.

          (d) Mechanics of Conversion. The Company shall not issue any fraction
     of a share of Common Stock upon any conversion. If the conversion would
     otherwise result in the issuance of a fraction of a share of Common Stock,
     then the Company shall round such fraction of a share of Common Stock to
     the nearest whole share of Common Stock (with 1/2 share or greater being
     rounded up, and less than 1/2 share being rounded down). The Company shall
     pay any and all taxes that may be payable with respect to the issuance and
     delivery to the Holder of Common Stock upon conversion of any Conversion
     Amount. The shares of Common Stock issued or issuable upon conversion of
     this Note are referred to as "Conversion Shares."

               (i) Optional Conversion by Holder. To convert any Conversion
          Amount into shares of Common Stock on any date (a "Holder Conversion
          Date"), the Holder shall (A) transmit by facsimile (or otherwise
          deliver), for receipt on or prior to 5:00 p.m., New York City Time, on
          such date, a copy of an executed notice of conversion in the form
          attached hereto as Exhibit I (the "Holder Conversion Notice") to the
          Company and (B) if required by Section 3(d)(iv), surrender this Note
          to a common carrier for delivery to the Company as soon as practicable
          on or following such date (or an indemnification undertaking with
          respect to this Note in the case of its loss, theft or destruction).
          On or before the first (1st) Business Day (as defined herein)
          following the date of receipt of a Holder Conversion Notice, the
          Company shall transmit by facsimile a confirmation of receipt of such
          Holder Conversion Notice to the Holder and the Transfer Agent (as
          defined herein). On or before the second (2nd) Business Day following
          the date of receipt of a Holder Conversion Notice (the "Holder Share
          Delivery Date"), the Company shall (X) issue and forward via overnight
          delivery service to the address as specified in the Holder Conversion
          Notice a certificate, registered in the name of the Holder or its
          designee, for the Conversion Shares, or (Y) provided that the Transfer
          Agent is participating in DTC Fast Automated Securities Transfer
          Program, upon the request of the Holder, credit such Conversion Shares
          to the Holder's or its designee's balance account with DTC through its
          Deposit Withdrawal Agent Commission system. If this Note is physically
          surrendered for conversion and the outstanding Principal of this Note
          is greater than the Conversion Amount, then the Company shall as soon
          as practicable and in no event later than three (3) Business Days
          after receipt of this Note

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          (the "Holder Note Delivery Date"), and at its own expense, issue and
          deliver to the Holder a new Note (in accordance with Section 17(d))
          representing the outstanding Principal not converted. The Person or
          Persons (each as defined herein) entitled to receive Conversion Shares
          shall be treated for all purposes as the record holder or holders of
          such shares of Common Stock as of the Holder Conversion Date.

               (ii) Mandatory Conversion by Company. To convert any Conversion
          Amount into shares of Common Stock on any date permitted under Section
          3(b) (a "Company Conversion Date"), the Company shall transmit by
          facsimile (or otherwise send) to the Holder not later than 5:00 p.m.,
          New York City Time, on such date a notice of such conversion (the
          "Company Conversion Notice"). If required by Section 3(d)(iv), the
          Holder shall be required to surrender this Note to the Company prior
          to receiving the Conversion Shares. On or before the second (2nd)
          Business Day following the Company's receipt of this Note, or on or
          before the second (2nd) Business Day following the Company Conversion
          Date if the Holder is not required to surrender this Note pursuant to
          Section 3(d)(iv) (either of such dates, as applicable, being the
          "Company Share Delivery Date"), the Company shall (x) issue and
          forward via overnight delivery service to the address of the Holder
          set forth in the Note Register (as defined herein) a certificate,
          registered in the name of the Holder or its designee, for the
          Conversion Shares, or (y) provided that the Transfer Agent is
          participating in DTC Fast Automated Securities Transfer Program, upon
          the request of the Holder, credit such Conversion Shares to the
          Holder's or its designee's balance account with DTC through its
          Deposit Withdrawal Agent Commission System. If this Note is physically
          surrendered for conversion and the outstanding Principal of this Note
          is greater than the Conversion Amount, then the Company shall as soon
          as practicable and in no event less than three (3) Business Days after
          receipt of this Note (the "Company Note Delivery Date"), and at its
          own expense, issue and deliver to the Holder a new Note (in accordance
          with Section 17(d)) representing the outstanding Principal not
          converted. The Person or Persons entitled to receive Conversion Shares
          shall be treated for all purposes as the record holder or holders of
          such shares of Common Stock as of the Company Conversion Date.

               (iii) Company's Failure to Timely Convert. If the Company shall
          fail to issue a certificate to the Holder or credit the Holder's
          balance account with DTC for the number of shares of Common Stock to
          which the Holder is entitled upon conversion of any Conversion Amount
          or to issue a new Note (in accordance with Section 17(d)) representing
          the Principal not converted, in each case on or prior to the date
          which is three (3) Business Days after, as applicable, the Holder
          Share Delivery Date or the Company Share Delivery Date (in each case,
          a "Conversion Failure"), then (A) the Company shall pay damages ("Late
          Charges") to the Holder for each date of such Conversion Failure in an
          amount equal to 1.0% of the product of (I) the sum of the number of
          shares of Common Stock not issued to the Holder on or prior to the
          applicable Holder Share Delivery Date or Company Share Delivery Date
          and to which the Holder is entitled and, in the event the Company has
          failed to deliver a new Note to the Holder on or prior to the
          applicable Holder Note Delivery Date or Company Note Delivery Date,
          the number of shares of Common Stock issuable upon conversion of the
          Conversion Amount represented by such new Note, as of the applicable
          Holder Note Delivery Date

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          or Company Note Delivery Date, and (II) the Closing Price of the
          Common Stock on the applicable Holder Share Delivery Date or Company
          Share Delivery Date, in the case of the failure to deliver Common
          Stock, or the applicable Holder Note Delivery Date or Company Note
          Delivery Date, in the case of failure to deliver a new Note and (B) in
          connection with a Holder Conversion Notice delivered by the Holder
          pursuant to Section 3(a), the Holder, upon written notice to the
          Company, may void its Holder Conversion Notice with respect to, and
          retain or have returned, as the case may be, any portion of this Note
          that has not been converted pursuant to such Holder Conversion Notice;
          provided that the voiding of a Holder Conversion Notice shall not
          affect the Company's and the Co-Borrowers' obligations to make any
          payments that have accrued prior to the date of such notice pursuant
          to this Section 3(d)(iii) or otherwise.

               (iv) Book-Entry. Notwithstanding anything to the contrary set
          forth herein, upon conversion of any portion of this Note in
          accordance with the terms hereof, the Holder shall not be required to
          physically surrender this Note to the Company unless (A) the full
          Conversion Amount represented by this Note is being converted or (B)
          the Holder has provided the Company with prior written notice (which
          notice may be included in a Holder Conversion Notice delivered by such
          Holder) requesting physical surrender and reissue of this Note. The
          Company shall maintain records (the "Note Register") showing the name,
          address and contact information with respect to the Holder, the
          Principal, Interest and Late Charges with respect to the Note, and the
          Conversion Amounts and the dates of any conversions, or shall use such
          other method, reasonably satisfactory to the Holder and the Company,
          so as not to require physical surrender of this Note upon conversion,
          and such records or such other method, as applicable, shall be
          definitive in determining the outstanding Principal amount of this
          Note.

               (v) Payment of Accrued Interest. Not later than (A) the third
          (3rd) Business Day after the Holder Conversion Date in the event of a
          conversion pursuant to Section 3(a), and (B) the Company Conversion
          Date in the event of a conversion pursuant to Section 3(b), the
          Company and the Co-Borrowers shall pay to the Holder the amount of any
          Interest that has accrued and has not been previously paid with
          respect to the Note, or any portion thereof being converted, as
          applicable, from the last Interest Date prior to the Holder Conversion
          Date or the Company Conversion Date, as applicable, to, but not
          including, the Holder Conversion Date or the Company Conversion Date,
          as applicable.

               (vi) Disputes. In the event of a dispute as to the number of
          shares of Common Stock issuable to the Holder in connection with a
          conversion of this Note, the Company shall issue to the Holder the
          number of shares of Common Stock not in dispute and resolve such
          dispute in accordance with Section 22.

               (vii) Limitations on Conversion.

                    (A) The Company shall not effect any conversion of this
               Note, and the Holder of this Note shall not have the right to
               convert any portion of this Note pursuant to Section 3(a), to the
               extent that, after giving effect to such conversion, the Holder
               (together with the Holder's

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               affiliates) would beneficially own in excess of 4.99% of the
               number of shares of Common Stock outstanding immediately after
               giving effect to such conversion. For purposes of the foregoing
               sentence, the number of shares of Common Stock beneficially owned
               by the Holder and its affiliates shall include the number of
               shares of Common Stock issuable upon conversion of this Note with
               respect to which the determination of such sentence is being
               made, but shall exclude the number of shares of Common Stock that
               would be issuable upon (I) conversion of the remaining,
               nonconverted portion of this Note beneficially owned by the
               Holder or any of its affiliates and (II) exercise or conversion
               of the unexercised or nonconverted portion of any other
               securities of the Company (including, without limitation, any
               Other Notes) subject to a limitation on conversion or exercise
               analogous to the limitation contained herein beneficially owned
               by the Holder or any of its affiliates. Without limiting the
               preceding sentence, for purposes of this Section 3(d)(vii),
               beneficial ownership shall be calculated in accordance with
               Section 13(d) of the Securities Exchange Act of 1934, as amended.
               By written notice to the Company, the Holder may waive the
               provisions of this Section 3(d)(vii)(A), but any such waiver will
               not be effective until the sixty first (61st) calendar day after
               such notice is delivered to the Company, and any such waiver will
               apply only to the Holder and not to any holder of Other Notes.

                    (B) The Company shall not effect any conversion of this
               Note, and the Holder of this Note shall not have the right to
               convert any portion of this Note pursuant to Section 3(a), to the
               extent that, after giving effect to such conversion, the Holder
               (together with the Holder's affiliates) would beneficially own in
               excess of 9.99% of the number of shares of Common Stock
               outstanding immediately after giving effect to such conversion.
               For purposes of the foregoing sentence, the number of shares of
               Common Stock beneficially owned by the Holder and its affiliates
               shall include the number of shares of Common Stock issuable upon
               conversion of this Note with respect to which the determination
               of such sentence is being made, but shall exclude the number of
               shares of Common Stock that would be issuable upon (I) conversion
               of the remaining, nonconverted portion of this Note beneficially
               owned by the Holder or any of its affiliates and (II) exercise or
               conversion of the unexercised or nonconverted portion of any
               other securities of the Company (including, without limitation,
               any Other Notes) subject to a limitation on conversion or
               exercise analogous to the limitation contained herein
               beneficially owned by the Holder or any of its affiliates.
               Without limiting the preceding sentence, for purposes of this
               Section 3(d)(vii), beneficial ownership shall be calculated in
               accordance with Section 13(d) of the Securities Exchange Act of
               1934, as amended.

                    (C) For purposes of this Section 3(d)(vii), in determining
               the number of outstanding shares of Common Stock, the

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               parties may rely on the number of outstanding shares of Common
               Stock as reflected in (I) the Company's most recent Form 10-Q or
               Form 10-K, as the case may be, (II) a more recent public
               announcement by the Company or (III) any other notice by the
               Company setting forth the number of shares of Common Stock
               outstanding. For any reason at any time, upon the written or oral
               request of the Holder, the Company shall within one (1) Business
               Day confirm orally and in writing to the Holder the number of
               shares of Common Stock then outstanding. In any case, the number
               of outstanding shares of Common Stock shall be determined after
               giving effect to the conversion or exercise of securities of the
               Company, including this Note, by the Holder or its affiliates
               since the date as of which such number of outstanding shares of
               Common Stock was reported.

          (e) Conditions to Company Conversion. For purposes of this Section 3,
     "Conditions to Company Conversion" means the following conditions: (i) on
     each day during the Company Conversion Measuring Period and until the
     Company Conversion Date, no Grace Period as defined in the Registration
     Rights Agreement (as defined herein) shall be in effect and either (x) the
     Registration Statement required pursuant to the Registration Rights
     Agreement shall be effective and available for the sale of all of the
     Registrable Securities in accordance with the terms of the Registration
     Rights Agreement or (y) all shares of Common Stock issuable upon conversion
     of the Notes shall be eligible for sale without restriction pursuant to
     Rule 144(k) and any applicable state securities laws, (ii) the Company
     shall have no knowledge of any fact that would cause (x) the Registration
     Statement required pursuant to the Registration Rights Agreement not to be
     effective and available for the sale of at least all of the Registrable
     Securities in accordance with the terms of the Registration Rights
     Agreement or (y) any shares of Common Stock issuable upon conversion of the
     Notes not to be eligible for sale without restriction pursuant to Rule
     144(k) and any applicable state securities laws; (iii) on each day during
     the Company Conversion Measuring Period and until the Company Conversion
     Date, the Common Stock is designated for quotation on the NYSE (as defined
     herein), the Nasdaq National Market, the Nasdaq SmallCap Market or the AMEX
     (as defined herein) and shall not then be delisted or suspended from
     trading on such exchange or market nor shall delisting or suspension by
     such exchange or market then be threatened or pending either (A) in writing
     by such exchange or market or (B) by falling below the minimum listing
     maintenance requirements of such exchange or market; (iv) to the knowledge
     of the Company, there is no Change of Control pending, and to the knowledge
     of the Company, there is no outstanding offer or proposal for a merger or
     other business combination involving the Company or any of its subsidiaries
     that the Company has reason to believe is likely to lead to a Change of
     Control; and (v) during the period beginning on September 29, 2003 and
     ending on and including the date immediately preceding the Company
     Conversion Date, there shall have been no Conversion Failure other than a
     Conversion Failure that the Company has cured by delivery of the required
     number of shares of Common Stock or a new Note (in accordance with Section
     17(d)), as applicable, within five (5) Business Days after the applicable
     Holder Conversion Date or Company Conversion Date.

     (4) RIGHTS UPON EVENT OF DEFAULT.

          (a) Events of Default. Each of the following events shall constitute
     an "Event of Default":

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               (i) any Event of Default shall have occurred and be continuing
          under, and as defined in, the Security Agreement or the Mortgage;

               (ii) the Company's (A) failure to cure a Conversion Failure by
          delivery of the required number of shares of Common Stock or a new
          Note (in accordance with Section 17(d)), as applicable, within ten
          (10) Business Days after the applicable Holder Conversion Date or
          Company Conversion Date or (B) notice, written or oral, to any holder
          of the Notes, including by way of public announcement or through any
          of its agents, at any time, of its intention not to comply with a
          request for conversion of any Notes into shares of Common Stock that
          is tendered in accordance with the provisions of the Notes;

               (iii) the Company's and the Co-Borrowers' failure to pay to the
          Holder (A) any amount of Principal when and as due under this Note, or
          (B) any amount of Interest or Late Charges for a period of more than
          three (3) Business Days after such amount is due under this Note, or
          (C) any other amount due under this Note, the Security Agreement or
          the Mortgage for a period of more than five (5) Business Days after
          notice of such nonpayment has been received by the Company;

               (iv) any default under, redemption at the option of the holder
          prior to maturity of or acceleration prior to maturity (A) of any
          indebtedness for borrowed money of the Company or any of the
          Co-Borrowers in aggregate principal amount in excess of $1.5 million
          or (B) of any Other Notes;

               (v) the Company or any of the Co-Borrowers, pursuant to or within
          the meaning of Title 11, U.S. Code, or any similar Federal or state
          law for the relief of debtors (collectively, "Bankruptcy Law"), (A)
          commences a voluntary case, (B) consents to the entry of an order for
          relief against it in an involuntary case, (C) consents to the
          appointment of a receiver, trustee, assignee, liquidator or similar
          official (a "Custodian"), (D) makes a general assignment for the
          benefit of its creditors or (E) admits in writing that it is generally
          unable to pay its debts as they become due;

               (vi) a court of competent jurisdiction enters an order or decree
          under any Bankruptcy Law that (A) is for relief against the Company or
          any of the Co-Borrowers in an involuntary case, (B) appoints a
          Custodian of the Company or any of the Co-Borrowers or (C) orders the
          liquidation of the Company or any of the Co-Borrowers;

               (vii) a final judgment or judgments for the payment of money
          aggregating in excess of $7,500,000 are rendered against the Company
          or any of the Co-Borrowers and which judgments are not, within sixty
          (60) calendar days after the entry thereof, bonded, discharged or
          stayed pending appeal, or are not discharged within sixty (60) days
          after the expiration of such stay; provided, however, that any
          judgment which is covered by insurance or an indemnity from a
          creditworthy party shall not be included in calculating the $7,500,000
          amount set forth above so long as the Company provides the Holder a
          written statement from such insurer or indemnity provider to the
          effect that such judgment is covered by insurance or an indemnity and
          the Company or the applicable Co-

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          Borrower will receive the proceeds of such insurance or indemnity
          within thirty (30) days of the issuance of such judgment;

               (viii) any material breach by the Company or any of the
          Co-Borrowers of any representation, warranty, covenant or other term
          or condition of this Note, the Security Agreement or the Mortgage,
          except, in the case of a breach which is curable, only if such breach
          is not cured within ten (10) calendar days;

               (ix) any failure of the Company (A) after the time the First
          Closing (as defined in the Securities Purchase Agreement) proceeds are
          released to the Company from escrow under the Escrow Agreement (as
          defined herein) and ending on the Second Closing Date, if the Second
          Closing (as defined in the Securities Purchase Agreement) occurs, or
          for the period during which any portion of this Note is outstanding,
          if the Second Closing does not occur, to maintain a minimum
          Unrestricted Cash Balance (as defined herein) equal to no less than
          $25,000,000 as of each month end and equal to no less than $17,500,000
          at all times (the "First Restricted Period"), provided that if the
          First Closing proceeds released to the Company from escrow under the
          Escrow Agreement in respect of the principal amount of Notes are less
          than $15,000,000, then the dollar amounts set forth in this clause (A)
          shall be reduced by an amount equal to the product of 1.5 times the
          amount by which such proceeds are less than $15,000,000, or (B)
          beginning on the Second Closing Date, if the Second Closing occurs, to
          maintain a minimum Unrestricted Cash Balance equal to no less than
          $37,500,000 as of each month end and equal to no less than $30,000,000
          at all times (the "Second Restricted Period") for the period during
          which any portion of this Note is outstanding, provided that if the
          sum of the First Closing proceeds released to the Company from escrow
          under the Escrow Agreement in respect of the principal amount of Notes
          and the Second Closing proceeds is less than $25,000,000, then the
          dollar amounts set forth in this clause (B) shall be reduced by an
          amount equal to the product of 1.5 times the amount by which such sum
          is less than $25,000,000; "Unrestricted Cash Balance" shall mean as of
          any date of computation, the sum of the aggregate balances of cash and
          cash equivalents owned by the Company or any Co-Borrower, but
          excluding in any event any cash or cash equivalent that is subject to
          any holdback, escrow, deposit, setoff, lien, pledge, security
          interest, encumbrance, limitation or restriction in favor of or
          imposed by any Person other than any of the Holders, other than (X)
          the escrow pursuant to the Escrow Agreement and (Y) ordinary bankers'
          liens and rights of setoff in favor of the Person maintaining the
          account where such cash or cash equivalents are maintained (provided
          that the outstanding obligations secured by any such bankers' liens
          and rights of setoff are immaterial);

               (x) any failure by the Company to make regularly scheduled
          payments, in the dollar amounts contemplated by the respective
          agreements under which such payments are payable, as and when due in
          respect of (i) indebtedness and lease obligations for the acquisition
          and use of aircraft, (ii) aircraft fuel invoices, and (iii) employee
          payroll obligations, but only if such breach is not cured within ten
          (10) calendar days; provided that no such failures shall constitute
          Events of Default where the aggregate amount of such payments does not
          exceed $1,000,000 or where the Company

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          has failed to make any such payment because the Company has disputed
          in good faith the amount of the payment or the obligation to make the
          payment;

               (xi) any breach or failure in any respect to comply with Section
          14;

               (xii) any material breach of the covenants set forth in Section
          4.9 of the Purchase Agreement.

          (b) Redemption Right. Promptly after the occurrence of an Event of
     Default with respect to this Note, the Company shall deliver written notice
     thereof via facsimile and overnight courier (an "Event of Default Notice")
     to the Holder. At any time after the earlier of the Holder's receipt of an
     Event of Default Notice and the Holder becoming aware of an Event of
     Default, the Holder may require the Company and the Co-Borrowers to redeem
     all or any portion of this Note by delivering written notice thereof (the
     "Event of Default Redemption Notice") to the Company, which Event of
     Default Redemption Notice shall indicate the portion of this Note the
     Holder is electing to redeem. Each portion of this Note subject to
     redemption by the Company and the Co-Borrowers pursuant to this Section
     4(b) shall be redeemed by the Company and the Co-Borrowers at a price equal
     to the Principal amount of this Note to be redeemed plus accrued Interest
     (the "Event of Default Redemption Price"). Redemptions required by this
     Section 4(b) shall be made in accordance with the provisions of Section 11.
     This Section 4(b) shall be the Holder's sole remedy upon an Event of
     Default.

     (5) RIGHTS UPON CHANGE OF CONTROL.

          (a) Change of Control. Each of the following events shall constitute a
     "Change of Control":

               (i) the consolidation, merger or other business combination
          (including, without limitation, a reorganization or recapitalization)
          of the Company with or into another Person (other than (A) a
          consolidation, merger or other business combination (including,
          without limitation, reorganization or recapitalization) in which
          holders of the Company's voting power immediately prior to the
          transaction continue after the transaction to hold, directly or
          indirectly, the voting power of the surviving entity or entities
          necessary to elect a majority of the members of the board of directors
          (or their equivalent if other than a corporation) of such entity or
          entities, or (B) pursuant to a migratory merger effected solely for
          the purpose of changing the jurisdiction of incorporation of the
          Company);

               (ii) the sale or transfer of all or substantially all of the
          assets of the Company and the Co-Borrowers taken as a whole; or

               (iii) a purchase, tender or exchange offer made to and accepted
          by the holders of more than 50% of the outstanding shares of Common
          Stock.

          (b) Assumption. Prior to the consummation of any Change of Control,
     the Company will secure from any Person purchasing the Company's assets or
     Common Stock or any successor resulting from such Change of Control (in
     each case, an "Acquiring Entity") a written agreement to deliver to each
     holder of Notes, in exchange for such Notes, a security

                                       10
<PAGE>
     of the Acquiring Entity evidenced by a written instrument substantially
     similar in form and substance to the Notes, including, without limitation,
     having a principal amount and interest rate equal to the principal amounts
     and the interest rates of the Notes held by such holders, and satisfactory
     to the holders of Notes representing at least two-thirds of the principal
     amount of the Notes then outstanding.

          (c) Redemption Right. No sooner than fifteen (15) calendar days nor
     later than ten (10) calendar days prior to the consummation of a Change of
     Control, but not prior to the public announcement of such Change of
     Control, the Company shall deliver written notice thereof via facsimile and
     overnight courier to the Holder (a "Change of Control Notice"). At any time
     during the period beginning after the Holder's receipt of a Change of
     Control Notice and ending on the date of the consummation of such Change of
     Control (or, in the event a Change of Control Notice is not delivered at
     least ten (10) calendar days prior to a Change of Control, at any time on
     or after the date which is ten (10) calendar days prior to a Change of
     Control and ending ten (10) calendar days after the consummation of such
     Change of Control), the Holder may require the Company and the Co-Borrowers
     to redeem all or any portion of this Note by delivering written notice
     thereof ("Change of Control Redemption Notice") to the Company, which
     Change of Control Redemption Notice shall indicate the Conversion Amount
     the Holder is electing to redeem. The portion of this Note subject to
     redemption pursuant to this Section 5(c) shall be redeemed by the Company
     and the Co-Borrowers at a price equal to 110% of the Principal of this Note
     being redeemed plus accrued Interest (the "Change of Control Redemption
     Price"). Redemptions required by this Section 5(c) shall be made in
     accordance with the provisions of Section 11.

     (6) ADJUSTMENT OF CONVERSION TERMS UPON CERTAIN CORPORATE EVENTS.

          (a) Adjustments in Case of Stock Split, Distributions of Securities,
     etc. If and whenever the Company subsequent to the date hereof:

               (i) declares a dividend upon, or makes any distribution in
          respect of, any of its capital stock payable in shares of Common Stock
          or Convertible Securities (as defined herein) or Stock Purchase Rights
          (as defined herein), or

               (ii) splits or otherwise subdivides its outstanding shares of
          Common Stock into a larger number of shares of Common Stock, or

               (iii) combines its outstanding shares of Common Stock into a
          smaller number of shares of Common Stock,

          then the Conversion Price shall be adjusted to that price determined
          by multiplying the Conversion Price in effect immediately prior to
          such event by a fraction (x) the numerator of which shall be the total
          number of outstanding shares of Common Stock immediately prior to such
          event, and (y) the denominator of which shall be the total number of
          outstanding shares of Common Stock immediately after such event,
          treating as outstanding all shares of Common Stock issuable upon
          conversions or exchanges of any such Convertible Securities issued in
          such dividend or distribution and exercises of any

                                       11
<PAGE>
          such Stock Purchase Rights issued in such dividend or distribution. No
          adjustment in the Conversion Price shall be required unless the
          adjustment would require an increase or decrease of at least 1% in the
          Conversion Price then in effect; provided, however, that any
          adjustments that by reason of this sentence are not required to be
          made shall be carried forward and taken into account in any subsequent
          adjustment. All calculations under this Section (6)(a) shall be made
          to the nearest cent.

          If the terms of both this Section (6)(a) and Section 6(c) would apply
     to a transaction, then the transaction will be subject to Section 6(c) and
     not this Section (6)(a).

          (b) Adjustments in Case of Distributions of Cash or Assets. If and
     whenever the Company subsequent to the date hereof declares a dividend
     upon, or makes any distribution to all shareholders generally in respect
     of, any of its capital stock, payable in cash, evidences of indebtedness or
     assets, then the Conversion Price shall be adjusted to that price
     determined by multiplying the Conversion Price in effect immediately prior
     to such event by a fraction (x) the numerator of which shall be the Closing
     Price per share of Common Stock on the record date for the determination of
     shareholders entitled to receive the payment less the then fair market
     value (as determined in good faith on a reasonable basis by the Board of
     Directors of the Company, which determination shall be conclusive) as of
     such record date of the cash, evidences of indebtedness or assets so paid
     with respect to one share of Common Stock and (y) the denominator of which
     shall be the Closing Price per share of Common Stock as of such record
     date; provided, however, that if the then fair market value (as determined
     in good faith by the Company's Board of Directors, which determination
     shall be conclusive) so paid with respect to one share of Common Stock is
     equal to or greater than the Conversion Price per share of Common Stock on
     the record date, then in lieu of the foregoing adjustment, adequate
     provision shall be made so that the Holder shall have the right to receive
     the cash, evidences of indebtedness or assets that the Holder would have
     been entitled to receive had this Note been converted into Common Stock in
     full prior to the record date; and provided further that no adjustment
     shall be made if the Company issues or distributes to the Holder the cash,
     evidences of indebtedness or assets that the Holder would have been
     entitled to receive had this Note been converted into Common Stock in full
     prior to the record date. No adjustment in the Conversion Price shall be
     required unless the adjustment would require an increase or decrease of at
     least 1% in the Conversion Price then in effect; provided, however, that
     any adjustments that by reason of this sentence are not required to be made
     shall be carried forward and taken into account in any subsequent
     adjustment. All calculations under this Section (6)(b) shall be made to the
     nearest cent.

          If the terms of both this Section (6)(b) and Section (6)(c) would
     apply to a transaction, then the transaction will be subject to Section
     (6)(c) and not this Section (6)(b).

          (c) Adjustment in Case of Consolidation, Merger or Reclassification.
     If and whenever subsequent to the date hereof the Company shall effect (i)
     any reorganization or reclassification or recapitalization of the capital
     stock of the Company, (ii) any consolidation or merger of the Company with
     or into another Person whether or not the Company is the surviving
     corporation, (iii) any share exchange to which the Company is a party or
     (iv) the sale, transfer or other disposition of all or substantially all of
     the property, assets or business of the Company (whether in one transaction
     or a series of transactions) as a result of which holders of Common

                                       12
<PAGE>
     Stock become entitled to receive any Shares (as defined herein) or other
     securities and/or other assets of the Company, any of its subsidiaries or
     any other Person (including, without limitation, cash) with respect to or
     in exchange for Common Stock, there shall thereafter be deliverable upon
     the conversion of this Note, in lieu of the Conversion Shares theretofore
     deliverable, the highest number of Shares or other securities and/or other
     assets (including, without limitation, cash) that would have been
     deliverable to the Holder had this Note been converted into Common Stock in
     full immediately prior to, and the Holder participated in, such
     reorganization, reclassification or recapitalization of capital stock,
     consolidation or merger, share exchange or sale. If the terms of either
     Section (6)(a) or (6)(b) and this Section (6)(c) would apply to a
     transaction, then the transaction will be subject to this Section (6)(c)
     and not to either Section (6)(a) or (6)(b).

          The Company shall not consummate any transaction subject to this
     Section (6)(c) unless each Person whose Shares, other securities or other
     assets will be issued, delivered or paid to the holders of the Common Stock
     (other than the Company), prior to or simultaneously with the consummation
     of the transaction, expressly assumes, by a Note Supplement or other
     document in a form substantially similar hereto, executed and delivered to
     the Holder, the obligation to deliver to the Holder such Shares, other
     securities or other assets as, in accordance with the foregoing provisions
     of this Section (6)(c), the Holder is entitled to receive upon conversion
     of this Note, and all other obligations and liabilities under this Note,
     including obligations and liabilities in respect of subsequent adjustments
     that are required under this Note.

          The above provisions of this Section (6)(c) shall similarly apply to
     successive reclassifications and changes of Conversion Shares and to
     successive consolidations, mergers, leases, sales or conveyances, with
     necessary changes being made and respective differences being taken into
     account.

          (d) Adjustment in Case of Tender Offer. If the Company consummates a
     tender or exchange offer (other than an odd lot offer) to acquire Common
     Stock at a price per share in excess of the Closing Price of a share of
     Common Stock on the day immediately following the day on which such tender
     or exchange offer expires, then the Conversion Price in effect immediately
     prior to the day on which such tender or exchange offer expires shall be
     adjusted to a price obtained by multiplying such Conversion Price by a
     fraction of which (i) the denominator shall be the Closing Price of a share
     of Common Stock on the day immediately prior to the day on which such
     tender or exchange offer expires and (ii) the numerator shall be the result
     of dividing (A) an amount equal to (1) the product of the number of shares
     of Common Stock outstanding and the Closing Price of a share of Common
     Stock, in each case immediately prior to the day on which such tender or
     exchange offer expires, minus (2) the aggregate consideration paid by the
     Company in the tender or exchange offer, by (B) the number of shares of
     Common Stock outstanding immediately after the day on which such tender or
     exchange offer expires.

          (e) Adjustment in Case of Subsequent Equity Sales.

               (i) Until August 19, 2005, if and whenever the Company subsequent
          to the Issuance Date issues or sells any of the following ("Additional
          Securities"): (A) any Common Stock (other than Common Stock issued
          pursuant to this Note or the Other

                                       13
<PAGE>
          Notes or Stock Purchase Rights in respect of which an adjustment was
          previously made under this Section 6(e)(i)) at a price per share less
          than the then applicable Conversion Price or (B) Convertible
          Securities or Stock Purchase Rights (other than in the cases referred
          to in Section 6(a)) entitling any Person to acquire shares of Common
          Stock at a price per share less than the then applicable Conversion
          Price, then the Conversion Price shall be adjusted to that price
          determined by multiplying the then applicable Conversion Price by a
          fraction, the numerator of which shall be the number of shares of
          Common Stock actually outstanding immediately prior to the issuance of
          such Additional Securities plus the number of shares of Common Stock
          that the offering price for such Additional Securities would purchase
          at the then applicable Conversion Price, and the denominator of which
          shall be the sum of the number of shares of Common Stock actually
          outstanding immediately prior to such issuance plus the number of
          shares of Common Stock so issued or issuable. For purposes of
          calculating such fraction, all shares of Common Stock that are
          issuable upon conversion, exercise or exchange of those Additional
          Securities that are Convertible Securities or Stock Purchase Rights
          shall be deemed actually outstanding immediately after the issuance of
          such Convertible Securities or Stock Purchase Rights. Subject to
          Section 6(e)(ii), such adjustment shall be made whenever such shares
          of Convertible Securities or Stock Purchase Rights are issued.
          However, if any Convertible Securities or Stock Purchase Rights the
          issuance of which resulted in an adjustment in the Conversion Price
          pursuant to clause (B) of this Section 6(e)(i) shall expire and shall
          not have been exercised in full, then, subject to Section 6(e)(ii),
          the Conversion Price shall immediately upon such expiration be
          recomputed and be increased to the price that it would have been (but
          reflecting any other adjustments in the Conversion Price made pursuant
          to the provisions of this Section 6(e)(i) after the issuance of such
          Convertible Securities or Stock Purchase Rights) had the adjustment of
          the Conversion Price made upon the issuance of such Convertible
          Securities or Stock Purchase Rights been made on the basis of offering
          for subscription or purchase only that number of shares of Common
          Stock actually purchased upon the exercise of such Convertible
          Securities or Stock Purchase Rights actually exercised.

               (ii) No adjustment in the Conversion Price shall be required
          unless the adjustment would require an increase or decrease of at
          least 1% in the then applicable Conversion Price; provided, however,
          that any adjustments that by reason of this Section 6(e)(ii) are not
          required to be made shall be carried forward and taken into account in
          any subsequent adjustment. All calculations under this Section
          6(e)(ii) shall be made to the nearest cent.

               (iii) This Section 6(e) shall not apply to: (A) the delivery of
          any of the warrants issued by the Company in August 2003 (the
          "Warrants"), the operation of the Warrants or the issuance of Common
          Stock pursuant to the Warrants; (B) the grant of options to the
          Company's employees in return for their contribution to the Company's
          restructuring efforts pursuant to the plan the Company announced July
          17, 2003 (the "Employee Options"), the operation of the Employee
          Options or the issuance of Common Stock pursuant to the Employee
          Options; (C) the grant of options or Common Stock as contemplated by
          the Company's employee benefit plans or director plans disclosed in
          the Company's SEC Documents (as defined in the Securities Purchase
          Agreement), the operation of such plans or the issuance of Common
          Stock pursuant to such plans; and (D)

                                       14
<PAGE>
          the issuance of Common Stock in connection with the Concurrent Equity
          Transaction (as defined in the Securities Purchase Agreement).

     (7) COVENANTS.

          (a) Consolidation of Co-Borrowers. No Co-Borrower may consolidate
     with, merge with or into (whether or not such Co-Borrower is the surviving
     Person) or sell or convey all or substantially all of its assets to another
     Person whether or not affiliated with such Co-Borrower unless:

               (i) subject to this Section 7(a), the Person formed by or
          surviving any such consolidation or merger (if other than a
          Co-Borrower or the Company), or the Person purchasing or acquiring all
          or substantially all of the assets of such Co-Borrower, as applicable,
          unconditionally assumes pursuant to a duly executed instrument all the
          obligations of such Co-Borrower under this Note and the Security
          Agreement (and, if applicable, the Mortgage) on the terms set forth
          herein and therein; and

               (ii) immediately after giving effect to such transaction, no
          Event of Default exists.

          In case of any such consolidation, merger, sale or conveyance and upon
     the assumption by the successor Person of this Note and the due and
     punctual performance of all of the covenants and conditions of this Note to
     be performed by the Co-Borrower in question, such successor Person shall
     succeed to and be substituted for the Co-Borrower with the same effect as
     if it had been named herein as a Co-Borrower.

          Notwithstanding clauses (i) and (ii) above, nothing contained in this
     Note shall prevent any consolidation or merger of a Co-Borrower with or
     into the Company or another Co-Borrower, or shall prevent any sale or
     conveyance of all or substantially all of the assets of a Co-Borrower to
     the Company or any other Co-Borrower.

          (b) Redemption Offer Upon and Limitations Respecting Sale of Assets.

               (i) The Company and/or any of the Co-Borrowers may, in arm's
          length transactions to non-affiliated third parties, sell or otherwise
          dispose of any of the assets of the Company and the Co-Borrowers that
          are collateral under the Security Agreement or the Mortgage in the
          ordinary course of business free and clear of the security interest or
          mortgage lien created in favor of the Holders pursuant to the Security
          Agreement or the Mortgage. However, if the Company and/or any of the
          Co-Borrowers sell or otherwise dispose of any of the assets of the
          Company and the Co-Borrowers that are collateral under the Security
          Agreement or the Mortgage, other than Excluded Sales (as defined
          below), and if the aggregate amount of the net proceeds of such asset
          dispositions in any Note Year ("Net Proceeds") exceeds $1,000,000,
          then following the end of the Note Quarter in which the Net Proceeds
          first exceed $1,000,000 by $250,000 or more (or if the Note Quarter in
          question is the last Note Quarter of the Note Year, if the Net
          Proceeds first exceed $1,000,000 by any amount in such Note Quarter),
          the Company and the Co-Borrowers shall offer to redeem a Principal
          amount of the Notes then outstanding in an aggregate amount equal to
          one half of the amount by which the

                                       15
<PAGE>
          Net Proceeds during such Note Year exceed $1,000,000. In addition, in
          any subsequent Note Quarter where Net Proceeds during that Note
          Quarter and the preceding Note Quarter(s) equal or exceed $250,000,
          excluding any aggregate Net Proceeds respecting which a redemption
          offer was made for the Note Year pursuant to this Section 7(b)(or if
          the Note Quarter in question is the last Note Quarter of the Note
          Year, if there are any such Net Proceeds), the Company and the
          Co-Borrowers shall offer to redeem a Principal amount of the Notes
          then outstanding in an aggregate amount equal to one half of the
          amount by which the Net Proceeds during such Note Quarter(s) equal or
          exceed $250,000 (or in an aggregate amount equal to one half of the
          amount of the Net Proceeds during such Note Quarter(s) if the Note
          Quarter in question is the last Note Quarter of the Note Year),
          excluding any aggregate Net Proceeds respecting which the Company made
          a redemption offer pursuant to this Section 7(b). Each of these
          redemption offers is referred to as an "Optional Asset Related
          Redemption." Within fifteen (15) calendar days after the end of any
          Note Quarter during any given Note Year as to which the Company must
          make an offer relating to an Optional Asset Related Redemption, the
          Company shall deliver written notice of the Optional Asset Related
          Redemption to the Holder via facsimile and overnight courier (each, a
          "Notice of Optional Asset Related Redemption"), which Notice of
          Optional Asset Related Redemption shall specify the aggregate
          Principal amount of this Note that is redeemable pursuant to such
          Optional Asset Related Redemption and the Holder's pro rata share of
          such amount (which pro rata share shall be determined with reference
          to the aggregate Principal amount of the Notes outstanding on the date
          the Company delivers the Notice of Optional Asset Related Redemption).
          At any time during the period beginning upon the Holder's receipt of a
          Notice of Optional Asset Related Redemption and ending thirty (30)
          calendar days after receipt thereof, the Holder may elect to
          participate in an Optional Asset Related Redemption in an amount not
          less than the Holder's pro rata share of the aggregate Principal
          amount of this Note that is redeemable pursuant to such Optional Asset
          Related Redemption by delivering written notice to the Company (an
          "Optional Asset Redemption Notice"). An Optional Asset Redemption
          Notice may specify an amount greater than the Holder's pro rata share
          of the aggregate Principal amount of this Note that is redeemable
          pursuant to such Optional Asset Related Redemption. In such event, if
          any of the holders of the Other Notes do not elect to participate in
          the Optional Asset Related Redemption, then the Holder and the holders
          of the Other Notes who have elected to participate in the Optional
          Asset Related Redemption in amounts greater than their respective pro
          rata shares shall share, to the extent of their respective pro rata
          shares, the aggregate principal amount of the Other Notes subject to
          such Optional Asset Related Redemption that was not redeemed, subject
          to the maximum amount that the Holder specified in its Optional Asset
          Redemption Notice. "Excluded Sales" shall mean (i) sales or
          dispositions of assets that are reasonably promptly replaced with
          other assets that (A) have substantially comparable value and utility
          as the assets being replaced and (B) are added to the collateral under
          the Security Agreement, provided that the applicable requirements of
          Section 3(a)(x)(3) and (4) of the Security Agreement are satisfied;
          and (ii) any sale of the Company's headquarters building and any
          related real property. "Note Year" means the one-year period beginning
          on the date hereof and ending

                                       16
<PAGE>
          on the day preceding the first anniversary of this Note and each
          subsequent one-year period ending on the day preceding the respective
          anniversary of this Note. "Note Quarter" means each three-month period
          within the Note Year in question.

               (ii) The portion of this Note subject to redemption pursuant to
          Section 7(b)(i) shall be redeemed by the Company and the Co-Borrowers
          at a price equal to the Principal amount of this Note to be redeemed
          plus accrued interest (the "Optional Asset Redemption Price").
          Redemptions pursuant to this Section 7(b) shall be made in accordance
          with the provisions of Section 11.

               (iii) At any time after the aggregate cumulative Net Proceeds
          from sales or dispositions of assets under this Section 7(b) following
          the First Closing Date (other than Excluded Sales, minus the aggregate
          principal amount of the Notes that was redeemable pursuant to any
          Optional Asset Related Redemptions (whether or not the Holders have
          elected to participate in any such Optional Asset Related Redemption),
          exceed $5,000,000, from the date of the sale or disposition that
          results in the aggregate cumulative Net Proceeds exceeding $5,000,000,
          the Company and the Co-Borrowers will not sell or dispose of any of
          the assets of the Company and the Co-Borrowers that are collateral
          under the Security Agreement or the Mortgage for sale proceeds in
          excess of $100,000 in a single transaction or series of related
          transactions without the prior express written consent of the holders
          of Notes representing not less than a majority of the aggregate
          principal amount of the then outstanding Notes.

          (c) Restricted Cash Requirements. After the First Closing Date, and
     until the Second Closing Date if such shall occur, the Company shall
     promptly notify the holders of the Notes in the event that the Unrestricted
     Cash Balance is less than $32,500,000 as of any month end and provide the
     holders of the Notes with a notice within five (5) Business Days after the
     end of each month stating the Unrestricted Cash Balance as of such month
     end until such time as the Unrestricted Cash Balance exceeds $32,500,000;
     provided that if the First Closing proceeds released to the Company from
     escrow under the Escrow Agreement in respect of the principal amount of
     Notes are less than $15,000,000, then the dollar amounts set forth in this
     sentence shall be reduced by an amount equal to the product of 1.5 times
     the amount by which such proceeds are less than $15,000,000. After the
     Second Closing Date, the Company shall promptly notify the holders of the
     Notes in the event that Unrestricted Cash Balance is less than $45,000,000
     as of any month end and provide the holders of the Notes with a notice
     within five (5) Business Days after the end of each month stating the
     Unrestricted Cash Balance as of such month end until such time as the
     Unrestricted Cash Balance exceeds $45,000,000, provided that if the sum of
     the First Closing proceeds released to the Company from escrow under the
     Escrow Agreement in respect of the principal amount of Notes and the Second
     Closing proceeds is less than $25,000,000, then the dollar amounts set
     forth in this sentence shall be reduced by an amount equal to the product
     of 1.5 times the amount by which such sum is less than $25,000,000.

          (d) Restriction on Redemption and Cash Dividends. Except as required
     under any contract, plan or arrangement identified in the SEC Documents, so
     long as any Notes are outstanding, the Company shall not, directly or
     indirectly, repurchase, redeem or declare or pay any cash dividend or
     distribution on the Common Stock without the prior express written consent

                                       17
<PAGE>
     of the Holders of Notes representing not less than two-thirds of the
     aggregate principal amount of the then outstanding Notes.

          (e) Form of Notices. The Company shall disclose the form and content
     of any Redemption Notice (as defined herein), Company Conversion Notice,
     Event of Default Notice or Change of Control Notice provided to the Holder
     and the holders of the Other Notes on a Current Report on Form 8-K within
     two (2) Business Days after delivering such notices.

          (f) Additional Covenants. So long as any Principal or interest is due
     on this Note and remains unpaid, the Company and the Co-Borrowers will,
     unless the Holder shall otherwise consent in writing:

               (i) furnish to the Holder: (A) as soon as possible and in any
          event within five (5) calendar days after the Company has delivered an
          Event of Default Notice, the written statement of the chief financial
          officer of the Company setting forth the details of such Event of
          Default and the action that the Company proposes to take with respect
          thereto and (B) provided the Holder has entered into a confidentiality
          agreement reasonably acceptable to the Company and the Co-Borrowers,
          promptly upon request, such other information concerning the condition
          or operations, financial or otherwise, of the Company or the
          Co-Borrowers as the Holder from time to time may reasonably request;
          and

               (ii) conduct the business of the Company and each Co-Borrower in
          compliance with laws, ordinances and regulations of any governmental
          entity, including, without limitation, timely paying all taxes and
          other governmental assessments and charges that are material in amount
          (other than those being contested in good faith for which the Company
          and its subsidiaries have set aside on their books provisions
          reasonably adequate for the payment of such amounts, as determined in
          accordance with United States generally accepted accounting
          principles), except for non-compliance that would not result, either
          individually or in the aggregate, in a Material Adverse Effect; and

               (iii) maintain and preserve all licenses, permits, approvals,
          authorizations and consents necessary to own, lease, and operate their
          properties and to conduct their respective businesses as currently
          being conducted, except where the failure to have such licenses,
          permits, approvals, authorizations and consents would not have,
          individually or in the aggregate, a Material Adverse Effect; and

               (iv) use their reasonable best efforts to ensure the financial
          statements of the Company and its subsidiaries filed with the
          Securities and Exchange Commission are prepared in accordance with
          United States generally accepted accounting principles and fairly
          present in all material respects the consolidated financial position
          of the Company and its subsidiaries and their results of operations
          and cash flows as of, and for the periods covered by, such financial
          statements (subject, in the case of unaudited statements, to normal
          year-end audit adjustments); and

               (v) not make any advance or loan to any person, firm or
          corporation, except for (A) intercompany loans; (B) reasonable travel
          or business expenses advanced

                                       18
<PAGE>
          to the Company's or the Co-Borrowers' employees or independent
          contractors in the ordinary course of business; and (C) any advance or
          loan that would not have, individually or in the aggregate, a Material
          Adverse Effect; and

               (vi) use its reasonable best efforts to obtain and to maintain
          the listing and trading of the Common Stock, including the Conversion
          Shares, on the NYSE or the market or trading system, if any, on which
          shares of Common Stock are then listed or traded; and

               (vii) use its best efforts to timely file all reports, schedules,
          forms, statements and other documents required to be filed by it with
          the SEC under the reporting requirements of the Exchange Act, and if
          the Exchange Act or the rules and regulations thereunder would permit
          the Company to terminate its status as an issuer required to file
          reports under the Exchange Act and the Company terminates such status,
          then the Company will nonetheless continue to use its best efforts to
          timely file all reports, schedules, forms, statements and other
          documents required to be filed by it with the SEC under the reporting
          requirements of the Exchange Act as if the Company had not terminated
          its status; and

               (viii) not prepay any indebtedness subordinate to the
          indebtedness evidenced by this Note, except for trade payables
          incurred in the ordinary course of the Company's or the Co-Borrowers'
          business.

     (8) COMPANY'S RIGHT OF OPTIONAL REDEMPTION.

          (a) Optional Redemption. At any time from and after October 1, 2006,
     if the Conditions to Company Optional Redemption (as set forth in Section
     8(d)) are satisfied or waived in writing by the Holder, the Company shall
     have the right (the "Company Optional Redemption") to require the Holder to
     submit for redemption all or any such portion of the Principal amount of
     this Note, which amount the Company shall designate in the Company Optional
     Redemption Notice (as defined herein), for an amount in cash equal to the
     Principal amount of this Note being redeemed pursuant to this Section 8
     plus accrued Interest (the "Company Optional Redemption Price" and,
     together with the Event of Default Redemption Price, Optional Asset
     Redemption Price and the Change of Control Redemption Price, the
     "Redemption Price"). Any partial redemption hereunder shall be for an
     amount of not less than $2,000,000 in the aggregate for this Note and all
     the Other Notes then outstanding. The Company may exercise its right to
     require redemption under this Section 8(a) by delivering a written notice
     thereof by facsimile and overnight courier to all, but not less than all,
     of the holders of Notes (the "Company Optional Redemption Notice" and,
     collectively with an Event of Default Redemption Notice, an Optional Asset
     Redemption Notice and a Change of Control Redemption Notice, "Redemption
     Notices" and, individually, each a "Redemption Notice"). The date the
     Company delivers a Company Optional Redemption Notice, as identified in
     such Company Optional Redemption Notice, is referred to as the "Company
     Optional Redemption Notice Date". The Company Optional Redemption Notice
     shall be irrevocable. During the ten (10) Trading Day period beginning on
     and including the Company Optional Redemption Notice Date and ending on and
     including the date which is ten (10) Trading Days after the Company
     Optional Redemption Notice Date, the Holder may exercise its conversion
     right pursuant to

                                       19
<PAGE>
     Section 3(a) and in accordance with the applicable provisions of Section
     3(d), and, if not so exercised, thereafter the Holder may not exercise its
     conversion right pursuant to Section 3(a) prior to the Company Optional
     Redemption Date.

          (b) Pro Rata Redemption Requirement. If the Company elects to cause
     the redemption of this Note pursuant to Section 8(a) (or similar provisions
     under the Other Notes) with respect to less than all of the Principal
     amounts of the Notes then outstanding, then the Company shall redeem a
     Principal amount of each of the Notes equal to the product of (I) the
     principal amount of the Note in question as of the Company Optional
     Redemption Notice Date, multiplied by (II) a fraction, the numerator of
     which is the aggregate Principal amount of Notes that the Company has
     elected to redeem pursuant to Section 8(a) (or similar provisions under the
     Other Notes) and the denominator of which is the aggregate principal amount
     of the Notes held by all Holders as of the Company Optional Redemption
     Notice Date (such amount with respect to each Note is referred to as its
     "Pro Rata Redemption Amount").

          (c) The Company Optional Redemption Notice shall state (A) the Trading
     Day selected for the Company Optional Redemption in accordance with Section
     8(a), which Trading Day shall be at least eleven (11) Business Days but not
     more than twenty (20) Business Days following the Company Optional
     Redemption Notice Date (the "Company Optional Redemption Date", with the
     period beginning on and including the Company Optional Redemption Notice
     Date and ending on the Business Day immediately prior to the Company
     Optional Redemption Date being referred to as the "Company Optional
     Redemption Measuring Period"), (B) the aggregate Principal amount of the
     Notes outstanding as of the Company Optional Redemption Notice Date that
     the Company has elected to redeem pursuant to this Section 8 (and analogous
     provisions under the Other Notes), (C) the Pro Rata Redemption Amount and
     (D) the Company Optional Redemption Price to be paid to the Holder of this
     Note as of the Company Optional Redemption Date. All Conversion Amounts
     converted by the Holder after delivery of the Company Optional Redemption
     Notice Date shall reduce the Principal amount of this Note required to be
     redeemed on the Company Optional Redemption Date. Redemptions required by
     this Section 8 shall be made in accordance with the provisions of Section
     11. Notwithstanding anything to the contrary in this Section 8, from, but
     not including, the Company Optional Redemption Date until the Company
     Optional Redemption Price (together with any interest thereon) is paid in
     full, the Pro Rata Redemption Amount may be converted, in whole or in part,
     by the Holder into Common Stock pursuant to Section 3.

          (d) Conditions to Company Optional Redemption. For purposes of this
     Section 8, "Conditions to Company Optional Redemption" means the following
     conditions: (i) on each day during the Company Optional Redemption
     Measuring Period and until the Company Optional Redemption Date, no Grace
     Period as defined in the Registration Rights Agreement shall be in effect
     and either (x) the Registration Statement required pursuant to the
     Registration Rights Agreement shall be effective and available for the sale
     of all of the Registrable Securities in accordance with the terms of the
     Registration Rights Agreement or (y) all shares of Common Stock issuable
     upon conversion of the Notes shall be eligible for sale without restriction
     pursuant to Rule 144(k) and any applicable state securities laws, (ii) the
     Company shall have no knowledge of any fact that would cause (x) the
     Registration Statement required pursuant to the Registration Rights
     Agreement not to be effective and available for the sale of at least all of
     the Registrable Securities in accordance with the terms of the Registration

                                       20
<PAGE>
     Rights Agreement or (y) any shares of Common Stock issuable upon conversion
     of the Notes not to be eligible for sale without restriction pursuant to
     Rule 144(k) and any applicable state securities laws; (iii) on each day
     during the Company Optional Redemption Measuring Period and until the
     Company Optional Redemption Date, the Common Stock is designated for
     quotation on the NYSE, the Nasdaq National Market, the Nasdaq SmallCap
     Market or the AMEX and shall not then be delisted or suspended from trading
     on such exchange or market nor shall delisting or suspension by such
     exchange or market then be threatened or pending either (A) in writing by
     such exchange or market or (B) by falling below the minimum listing
     maintenance requirements of such exchange or market; (iv) the Closing Price
     of the Common Stock has been at least 200% of the Conversion Price for each
     Trading Day in the twenty (20) consecutive Trading Day period immediately
     preceding, and not including, the Company Optional Redemption Notice Date;
     (v) to the knowledge of the Company, there is no Change of Control pending,
     and to the knowledge of the Company, there is no outstanding offer or
     proposal for a merger or other business combination involving the Company
     or any of its subsidiaries that the Company has reason to believe is likely
     to lead to a Change of Control; and (vi) during the period beginning on
     September 29, 2003 and ending on and including the date immediately
     preceding the Company Optional Redemption Date, there shall have been no
     Conversion Failure other than a Conversion Failure that the Company has
     cured by delivery of the required number of shares of Common Stock or a new
     Note (in accordance with Section 17(d)), as applicable, within five (5)
     Business Days after the applicable Holder Conversion Date or Company
     Conversion Date.

     (9) NONCIRCUMVENTION. The Company and the Co-Borrowers hereby covenant and
agree that they will not, by amendment of their charter documents or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities, or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Note, and will at all
times in good faith carry out all of the provisions of this Note and take all
action as may be required to protect the rights of the Holder of this Note.

     (10) RESERVATION OF AUTHORIZED SHARES.

          (a) Reservation. The Company shall reserve out of its authorized and
     unissued Common Stock a number of shares of Common Stock in accordance with
     Section 3.3 of the Securities Purchase Agreement. At no time shall the
     number of shares of Common Stock so reserved be less than the number of
     shares required to be reserved by Section 3.3 of the Securities Purchase
     Agreement (the "Required Reserve Amount").

          (b) Insufficient Authorized Shares. If at any time while any of the
     Notes remain outstanding the Company does not have a sufficient number of
     authorized and unreserved shares of Common Stock to satisfy its obligation
     to reserve for issuance upon conversion of the Notes at least a number of
     shares of Common Stock equal to the Required Reserve Amount (an "Authorized
     Share Failure"), then the Company shall immediately take all action
     necessary to increase the authorized shares of Common Stock to an amount
     sufficient to allow the Company to reserve the Required Reserve Amount for
     the Notes then outstanding. Without limiting the generality of the
     foregoing sentence, as soon as practicable after the date of the occurrence
     of an Authorized Share Failure, the Company shall schedule a meeting of its
     shareholders for a date not more than sixty (60) calendar days after the
     occurrence of such Authorized Share Failure,

                                       21
<PAGE>
     which meeting shall be for the purpose of, among such other things as the
     Company may determine, obtaining shareholder approval of an increase in the
     number of authorized shares of Common Stock. In connection with such
     meeting, the Company shall provide each shareholder with a proxy statement
     or information statement and shall use its best efforts to solicit its
     shareholders' approval of such increase in authorized shares of Common
     Stock and to cause its board of directors to recommend to the shareholders
     that they approve such proposal.

     (11) HOLDER'S REDEMPTIONS.

          (a) Mechanics. If the Holder has sent a Redemption Notice to the
     Company pursuant to Section 4(b), Section 5(c) or Section 7(b), then the
     Holder shall promptly submit this Note to the Company. If the Company has
     delivered a Company Optional Redemption Notice to the Holder pursuant to
     Section 8 and the Holder has not exercised the Holder's conversion right
     pursuant to Section 3(a) during the ten (10) Trading Day period beginning
     on and including the Company Optional Redemption Notice Date and ending on
     and including the date which is ten (10) Trading Days after the Company
     Optional Redemption Notice Date, then immediately following this ten (10)
     Trading Day period the Holder shall promptly submit this Note to the
     Company. The Company shall deliver any applicable Event of Default
     Redemption Price to the Holder within five (5) Business Days after the
     Company's receipt of the Holder's Event of Default Redemption Notice;
     provided that the Holder has delivered such Notice and this Note to the
     Company. The Company shall deliver any applicable Optional Asset Redemption
     Price to the Holder within five (5) Business Days after the Company's
     receipt of the Optional Asset Redemption Notice, provided that the Holder
     has delivered such Notice and this Note to the Company. If the Holder has
     submitted a Change of Control Redemption Notice in accordance with Section
     5(c), then the Company shall deliver the applicable Change of Control
     Redemption Price to the Holder concurrently with the consummation of such
     Change of Control if such notice is received prior to the consummation of
     such Change of Control and within five (5) Business Days after the
     Company's receipt of such notice otherwise. The Company shall deliver the
     applicable Company Optional Redemption Price to the Holder on the Company
     Optional Redemption Date; provided that the Holder has delivered this Note
     to the Company. In the event of a redemption of less than all of the
     Principal amount of this Note, the Company shall promptly cause to be
     issued and delivered to the Holder a new Note (in accordance with Section
     17(d)) representing the outstanding Principal which has not been redeemed.
     If the Company and the Co-Borrowers do not pay the Redemption Price to the
     Holder within the time period required, then at any time thereafter and
     until the Company and the Co-Borrowers pay such unpaid Redemption Price in
     full, the Holder shall have the option to, in lieu of redemption, require
     the Company to promptly return to the Holder this Note, if the Holder
     requested redemption of this Note in whole, or, if only part of this Note
     was to be redeemed, a new Note (in accordance with Section 17(d))
     representing the Principal amount that was submitted for redemption and for
     which the applicable Redemption Price (together with any Late Charges
     thereon) has not been paid. Upon the Company's receipt of such notice, (x)
     the Redemption Notice shall be null and void with respect to such Principal
     amount, (y) the Company shall immediately return this Note, or issue a new
     Note (in accordance with Section 17(d)) to the Holder representing such
     Principal amount and (z) the Conversion Price of this Note or such new
     Notes shall be adjusted to the lesser of (A) the Conversion Price as in
     effect on the date on which the Redemption Notice is voided and (B) the
     lowest Closing Price of the Common Stock during the period beginning on and
     including the date on which the Redemption Notice is delivered to the
     Company and ending

                                       22
<PAGE>
     on and including the date on which the Redemption Notice is voided. The
     Holder's delivery of a notice voiding a Redemption Notice and exercise of
     its rights following such notice shall not affect the Company's and the
     Co-Borrowers' obligations to make any payments of Late Charges which have
     accrued prior to the date of such notice with respect to the Conversion
     Amount subject to such notice.

          (b) Redemption by Other Holders. Upon the Company's receipt of notice
     from any of the holders of the Other Notes for redemption or repayment as a
     result of an event or occurrence substantially similar to the events or
     occurrences described in Section 4 (b), Section 5(c) or Section 7(b) or the
     delivery to the holders of the Other Notes of a Company Optional Redemption
     Notice or similar notice based on events or occurrences substantially
     similar to the events or occurrences described in Section 8 (each, an
     "Other Redemption Notice"), the Company shall immediately forward to the
     Holder by facsimile a copy of such notice (other than the Company Optional
     Redemption Notice). If the Company receives or delivers, as the case may
     be, a Redemption Notice and one or more Other Redemption Notices during the
     seven (7) Business Day period beginning on and including the date which is
     three (3) Business Days prior to the Company's receipt of the Holder's
     Redemption Notice or the Company's delivery of the Company Optional
     Redemption Notice, as the case may be, and ending on and including the date
     which is three (3) Business Days after the Company's receipt of the
     Holder's Redemption Notice or the Company's delivery of the Company
     Optional Redemption Notice, as the case may be, and the Company and the
     Co-Borrowers are unable to redeem all principal, interest and other amounts
     designated in such Redemption Notice and such Other Redemption Notices
     received or delivered, as the case may be, during such seven (7) Business
     Day period, then the Company and the Co-Borrowers shall redeem a pro rata
     amount from each holder of the Notes (including the Holder) based on the
     principal amount of the Notes submitted for redemption pursuant to such
     Redemption Notice and such Other Redemption Notices received or delivered,
     as the case may be, during such seven (7) Business Day period.

     (12) SECURITY. Subject to the terms of the Securities Purchase Agreement
and the Escrow Agreement, to secure the payment and performance of the Company's
and the Co-Borrowers' debts, obligations and liabilities pursuant to this Note,
the Company and the Co-Borrowers have granted pursuant to the Security Agreement
a security interest in certain of their assets existing on September 29, 2003
and identified in the Security Agreement and Skyway has, pursuant to the
Mortgage, mortgaged the real property described therein.

     (13) VOTING RIGHTS. The Holder shall have no voting rights as the holder of
this Note, except as required by law, including but not limited to the Wisconsin
Business Corporation Law, and as expressly provided in this Note.

     (14) RANK. Payments of Principal and Interest and other payments due under
this Note (a) shall rank pari passu with all Other Notes, and (b) shall be
senior to all other existing and any future subordinated debt of the Company and
the Co-Borrowers.

     (15) VOTE TO ISSUE, OR CHANGE THE TERMS OF, NOTES. The affirmative vote, at
a meeting duly called for such purpose or the written consent without a meeting,
of the Holders of Notes representing not less than two-thirds of the aggregate
Principal

                                       23
<PAGE>
amount of the then outstanding Notes shall be required for any change or
amendment to this Note or the Other Notes. Such affirmative vote of the Holders
of Notes representing not less than two-thirds of the aggregate Principal amount
of the then outstanding Notes shall be binding on all Holders of Notes,
including the Holder of this Note, even if such Holder or Holders did not vote
affirmatively for any such change or amendment (other than with respect to any
change or amendment respecting the Interest Rate, the Maturity Date or the
Conversion Price, which provisions may not be changed or amended with respect to
any Holder without the written consent of such Holder).

     (16) TRANSFER. This Note may be offered, sold, assigned or transferred by
the Holder without the consent of the Company and the Co-Borrowers in whole.
This Note may be offered, sold, assigned or transferred by the Holder without
the consent of the Company and the Co-Borrowers in part only if the transferee
will receive a Note that has a principal amount of at least $100,000 and the
transferor will retain a Note that has a Principal amount of at least $100,000,
subject only to the provisions of Sections 2.7 and 5.3 of the Securities
Purchase Agreement and the other provisions of this Note.

     (17) REISSUANCE OF THIS NOTE.

          (a) Transfer. If this Note is to be transferred, then the Holder shall
     surrender this Note to the Company, whereupon the Company will forthwith
     issue and deliver upon the order of the Holder a new Note (in accordance
     with Section 17(d)), registered as the Holder may request, representing the
     outstanding Principal being transferred by the Holder and, if less than the
     entire outstanding Principal is being transferred, a new Note (in
     accordance with Section 17(d)) to the Holder representing the outstanding
     Principal not being transferred. The Holder and any assignee, by acceptance
     of this Note, acknowledge and agree that, by reason of the provisions of
     Section 3(d)(iv) and this Section 17(a), following conversion or redemption
     of any portion of this Note, the outstanding Principal represented by this
     Note may be less than the Principal stated on the face of this Note.

          (b) Lost, Stolen or Mutilated Note. Upon receipt by the Company of
     evidence reasonably satisfactory to the Company of the loss, theft,
     destruction or mutilation of this Note, and, in the case of loss, theft or
     destruction, of an indemnification undertaking by the Holder to the Company
     in customary form and, in the case of mutilation, upon surrender and
     cancellation of this Note, the Company shall execute and deliver to the
     Holder a new Note (in accordance with Section 17(d)) representing the
     outstanding Principal.

          (c) Note Exchangeable for Different Denominations. This Note is
     exchangeable, upon the surrender hereof by the Holder at the principal
     office of the Company, for a new Note or Notes (in accordance with Section
     17(d) and in principal amounts of at least $100,000) representing in the
     aggregate the outstanding Principal of this Note, and each such new Note
     will represent such portion of such outstanding Principal as is designated
     by the Holder at the time of such surrender.

          (d) Issuance of New Notes. Whenever the Company is required to issue a
     new Note pursuant to the terms of this Note, such new Note (i) shall be of
     like tenor with this Note, (ii) shall represent, as indicated on the face
     of such new Note, the Principal remaining

                                       24
<PAGE>
     outstanding or, in the case of a new Note being issued pursuant to Section
     17(a) or Section 17(c), the Principal designated by the Holder, which, when
     added to the principal represented by the other new Notes issued in
     connection with such issuance, does not exceed the Principal remaining
     outstanding under this Note immediately prior to such issuance of new
     Notes, (iii) shall have an issuance date, as indicated on the face of such
     new Note, that is the same as the Issuance Date of this Note, (iv) shall
     have the same rights and conditions as this Note, and (v) shall include
     accrued and unpaid Interest and Late Charges on the Principal portion of
     this Note evidenced by such new Note, from the Issuance Date of this Note.

     (18) REMEDIES, CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND
INJUNCTIVE RELIEF. The remedies provided in this Note shall be cumulative and in
addition to all other remedies available under this Note, the Securities
Purchase Agreement, the Security Agreement, the Mortgage, the Escrow Agreement
and the Registration Rights Agreement, at law or in equity (including a decree
of specific performance and/or other injunctive relief), and nothing herein
shall limit the Holder's right to pursue actual and consequential damages for
any failure by the Company or the Co-Borrowers to comply with the terms of this
Note. Amounts set forth or provided for herein with respect to payments,
conversion and the like (and the computation thereof) shall be the amounts to be
received by the Holder and shall not, except as expressly provided herein, be
subject to any other obligation of the Company or the Co-Borrowers (or the
performance thereof). The Company and the Co-Borrower acknowledge that a breach
by them of their obligations hereunder will cause irreparable harm to the Holder
and that the remedy at law for any such breach may be inadequate. The Company
and the Co-Borrowers therefore agree that, in the event of any such breach or
threatened breach, the Holder shall be entitled, in addition to all other
available remedies, to an injunction restraining any breach, without the
necessity of showing economic loss and without any bond or other security being
required.

     (19) PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS. If (a) this Note
is placed in the hands of an attorney for collection or enforcement or is
collected or enforced through any legal proceeding or the Holder otherwise takes
action to collect amounts due under this Note or to enforce the provisions of
this Note or (b) there occurs any bankruptcy, reorganization, receivership of
the Company or any of the Co-Borrowers or other proceedings affecting the rights
of the Company's or any of the Co-Borrowers' creditors and involving a claim
under this Note, then the Company and the Co-Borrowers shall pay the reasonable
costs incurred by the Holder for such collection, enforcement or action or in
connection with such bankruptcy, reorganization, receivership or other
proceeding, including, but not limited to, reasonable attorneys' fees and
disbursements.

     (20) CONSTRUCTION; HEADINGS. This Note shall be deemed to be jointly
drafted by the Company, the Co-Borrowers and all the Investors (as defined in
the Securities Purchase Agreement) and shall not be construed against any person
as the drafter hereof. The headings of this Note are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Note.

     (21) FAILURE OR INDULGENCE NOT WAIVER. No failure or delay on the part of
the Holder in the exercise of any power, right or privilege hereunder shall
operate as a

                                       25
<PAGE>
waiver thereof, nor shall any single or partial exercise of any such power,
right or privilege preclude other or further exercise thereof or of any other
right, power or privilege.

     (22) DISPUTE RESOLUTION. In the case of a dispute as to the determination
of the Redemption Price or the arithmetic calculation of the Conversion Rate or
the Redemption Price, the Company shall submit the disputed determinations or
arithmetic calculations via facsimile within two (2) Business Days of receipt of
the Holder Conversion Notice or Company Conversion Notice, as applicable, or
Redemption Notice giving rise to such dispute, as the case may be, to the
Holder. If the Holder and the Company are unable to agree upon such
determination or calculation of the Conversion Rate within five (5) Business
Days of such disputed determination or arithmetic calculation being submitted to
the Holder, then the Company shall, within three (3) Business Days, submit via
facsimile (a) the disputed determination of the Closing Price of the Common
Stock to an independent, reputable investment bank selected by the Company or
(b) the disputed arithmetic calculation of the Conversion Rate or the Redemption
Price to a reputable accounting firm selected by the Company. In each case, the
investment bank or accounting firm selected by the Company is subject to the
approval of the Holder, which approval shall not be unreasonably withheld;
provided, however, that in connection with a dispute involving or potentially
involving the Note and at least one of the Other Notes, if the Holders of Notes
representing not less than two-thirds of the aggregate outstanding Principal
amount of the then outstanding Notes whose Holders are party to such dispute
approve the selection of a particular investment bank or accounting firm, then
such selection shall be deemed approved by all the Holders subject to or
potentially subject to such dispute. The Company, at the Company's expense,
shall use reasonable efforts to cause the investment bank or the accountant, as
the case may be, to perform the determinations or calculations and notify the
Company and the Holder of the results no later than five (5) Business Days from
the time it receives the disputed determinations or calculations. Such
investment bank's or accountant's determination or calculation, as the case may
be, shall be binding upon all parties (including without limitation all the
Holders subject to or potentially subject to such dispute) absent demonstrable
error, and all costs, fees and expenses of such determinations and calculations
by such investment bank or accountants shall be borne by the Company.

     (23) NOTICES; PAYMENTS.

          (a) Notices. Whenever notice is required to be given under this Note,
     unless otherwise provided herein, such notice shall be given in accordance
     with Section 10.6 of the Securities Purchase Agreement. The Company shall
     provide the Holder with prompt written notice of all actions taken pursuant
     to this Note, including in reasonable detail a description of such action
     and the reason therefor. Without limiting the generality of the foregoing,
     the Company will give written notice to the Holder (i) within ten (10)
     Business Days upon any adjustment of the Conversion Price, setting forth in
     reasonable detail, and certifying, the calculation of such adjustment and
     (ii) at least ten (10) calendar days prior to the date on which the Company
     closes its books or sets a record date (A) with respect to any dividend or
     distribution upon the Common Stock, (B) with respect to any pro rata
     subscription offer to holders of Common Stock or (C) for determining rights
     to vote with respect to any Change of Control, dissolution or liquidation,
     provided in each case that such information shall be made known to the
     public prior to or in conjunction with such notice being provided to such
     holder.

                                       26
<PAGE>
     Notwithstanding the foregoing, Section 4.12 of the Securities Purchase
     Agreement shall apply to all notices given pursuant to this Note.

          (b) Payments. Whenever any payment of cash is to be made by the
     Company and the Co-Borrowers to any Person pursuant to this Note, such
     payment shall be made in lawful money of the United States of America by a
     check drawn on the account of the Company and sent via overnight courier
     service to such Person at such address as previously provided to the
     Company in writing (which address, in the case of each of the Investors,
     shall initially be as set forth on the Schedule of Investors, attached to
     the Securities Purchase Agreement); provided that the Holder may elect to
     receive a payment of cash via wire transfer of immediately available funds
     by providing the Company with prior written notice setting out such request
     and the Holder's wire transfer instructions. Whenever any amount expressed
     to be due by the terms of this Note is due on any day which is not a
     Business Day, the same shall instead be due on the next succeeding day
     which is a Business Day and, in the case of any Interest Date which is not
     the date on which this Note is paid in full, the extension of the due date
     thereof shall not be taken into account for purposes of determining the
     amount of Interest due on such date.

     (24) CANCELLATION. After all Principal, accrued Interest and other amounts
at any time owed on this Note has been paid in full, this Note shall
automatically be deemed canceled, shall be surrendered to the Company for
cancellation and shall not be reissued.

     (25) WAIVER OF NOTICE. To the extent permitted by law, the Company and the
Co-Borrowers hereby waive demand, notice, protest and all other demands and
notices in connection with the delivery, acceptance, performance, default or
enforcement of this Note and the Securities Purchase Agreement.

     (26) GOVERNING LAW; VENUE; WAIVER OF JURY TRIAL.

          (a) This Note shall be construed and enforced in accordance with, and
     all questions concerning the construction, validity, interpretation and
     performance of this Note shall be governed by, the internal laws of the
     State of New York (except as it relates to corporate law involving the
     Company or one of its subsidiaries, in which case it will be governed by
     the internal laws of the applicable state of incorporation or formation of
     the Company or such subsidiary), without giving effect to any choice of law
     or conflict of law provision or rule (whether of the State of New York or
     any other jurisdictions) that would cause the application of the laws of
     any jurisdictions other than the State of New York.

          (b) Notwithstanding anything to the contrary in this Note or any other
     agreement between any of the Company, any Co-Borrower and the Holder prior
     to the date hereof, each of the Company, each Co-Borrower and the Holder,
     to the extent it may do so under applicable law, for purposes hereof,
     hereby (i) irrevocably submits itself to the non-exclusive jurisdiction of
     the courts of the State of New York sitting in the City of New York,
     Borough of Manhattan, and to the non-exclusive jurisdiction of the U.S.
     District Court for the Southern District of New York, for the purposes of
     any suit, action or other proceeding arising out of this Note, the subject
     matter hereof or any of the transactions contemplated hereby brought by any
     of the Company, the Co-Borrowers and the Holder, or their successors or any
     permitted and registered assign; (ii) waives, and agrees not to assert, by
     way of motion, as a defense, or

                                       27
<PAGE>
     otherwise, in any such suit, action or proceeding, that the suit, action or
     proceeding is brought in an inconvenient forum, that the venue of the suit,
     action or proceeding is improper or that this Note or the subject matter
     hereof or any of the transactions contemplated hereby may not be enforced
     in or by such courts; provided that nothing in this paragraph shall be
     construed as a waiver by any of the Company, the Co-Borrowers and the
     Holder of any right to seek to remove any such suit, action or proceeding
     from a state court to a federal court or from a federal court to a state
     court; and (iii) irrevocably waives personal service of process and
     consents to process being served in any such suit, action or proceeding by
     mailing a copy thereof to such person at the address for such notices to it
     under this Note and agrees that such service shall constitute good and
     sufficient service of process and notice thereof; provided that nothing in
     this paragraph shall be deemed to limit in any way any right to serve
     process in any manner permitted by law.

          (c) EACH OF THE COMPANY, THE CO-BORROWERS AND THE HOLDER IRREVOCABLY
     AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
     LAW, THE RIGHT TO TRIAL BY JURY IN ANY LEGAL OR EQUITABLE ACTION, SUIT OR
     PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE OR ANY TRANSACTION
     CONTEMPLATED HEREBY OR THEREBY OR THE SUBJECT MATTER OF ANY OF THE
     FOREGOING.

     (27) CERTAIN DEFINITIONS. For purposes of this Note, the following terms
shall have the following meanings:

          (a) "AMEX" means the American Stock Exchange.

          (b) "Business Day" means any day other than Saturday, Sunday or other
     day on which commercial banks in The City of New York are authorized or
     required by law to remain closed.

          (c) "Closing Price" means, for any security as of any date, the
     closing price for such security on the NYSE (the "Principal Market") as
     reported by Bloomberg Financial Markets ("Bloomberg"), or, if the Principal
     Market begins to operate on an extended hours basis and does not designate
     the closing price, then the last trade price of such security prior to 4:00
     p.m., Eastern Time, as reported by Bloomberg, or, if the Principal Market
     is not the principal securities exchange or trading market for such
     security, the closing trade price of such security on the principal
     securities exchange or trading market where such security is listed or
     traded as reported by Bloomberg, or if the foregoing do not apply, the
     closing trade price of such security in the over-the-counter market on the
     electronic bulletin board for such security as reported by Bloomberg, or,
     if no closing trade price is reported for such security by Bloomberg, the
     average of the bid prices, or the ask prices, respectively, of any market
     makers for such security as reported in the "pink sheets" by Pink Sheets
     LLC (formerly, the National Quotation Bureau, Inc.). If the Closing Price
     cannot be calculated for a security on a particular date on any of the
     foregoing bases, the Closing Price of such security on such date shall be
     the fair market value as mutually determined by the Company and the Holder.
     If the Company and the Holder are unable to agree upon the fair market
     value of such security, then such dispute shall be resolved pursuant to
     Section 24. All such determinations are to be appropriately adjusted for
     any stock dividend,

                                       28
<PAGE>
     stock split, stock combination or other similar transaction during the
     applicable calculation period.

          (d) "Convertible Securities" shall mean evidences of indebtedness,
     Shares or other securities that are convertible into or exchangeable or
     exercisable for, with or without payment of additional consideration,
     shares of Common Stock, either immediately or upon the arrival of a
     specified date or the happening of a specified event (excluding the
     Company's preferred share purchase rights issued pursuant to that certain
     Rights Agreement, dated February 14, 1996, as amended, between the Company
     and American Stock Transfer & Trust Company, as successor in interest to
     U.S. Bank National Association (successor in interest to Firstar Trust
     Company) and any similar share purchase rights that the Company might
     authorize and issue in the future).

          (e) "Escrow Agreement" means that certain escrow agreement by and
     among the Company, the Co-Borrowers and the Investors entered into on
     September 29, 2003.

          (f) "Mortgage" means the Mortgage, dated September 29, 2003, by Skyway
     to the Mortgagee (as defined therein), as agent for the benefit of the
     Holders of the Notes, pursuant to which Skyway has mortgaged its
     headquarters facility as collateral for the Notes.

          (g) "NYSE" means the New York Stock Exchange.

          (h) "Person" means an individual, a limited liability company, a
     partnership, a joint venture, a corporation, a trust, an unincorporated
     organization, any other entity and a government or any department or agency
     thereof (collectively, "Persons").

          (i) "Registration Rights Agreement" means that certain registration
     rights agreement between the Company and the Investors relating to the
     registration of the resale of the shares of Common Stock issuable upon
     conversion of the Notes.

          (j) "SEC" means the United States Securities and Exchange Commission.

          (k) "Securities Purchase Agreement" means that certain securities
     purchase agreement by and among the Company, the Co-Borrowers and the
     Investors pursuant to which the Company and the Co-Borrowers issued the
     Notes.

          (l) "Security Agreement" means that certain Security Agreement between
     the Company, the Co-Borrowers and the Collateral Agent (as defined
     therein), as agent for the benefit of the Holders of the Notes, pursuant to
     which the Company and the Co-Borrowers pledged certain of their assets
     existing on September 29, 2003 and identified therein as collateral for the
     Notes.

          (m) "Shares" of any Person shall include any and all shares of capital
     stock, partnership interests, membership interests, or other shares,
     interests, participations or other equivalents (however designated and of
     any class) in the capital of, or other ownership interests in, such Person.

                                       29
<PAGE>
          (n) "Stock Purchase Rights" shall mean any warrants, options or other
     rights to subscribe for, purchase or otherwise acquire any shares of Common
     Stock or any Convertible Securities (excluding the Company's preferred
     share purchase rights issued pursuant to that certain Rights Agreement,
     dated February 14, 1996, as amended, between the Company and American Stock
     Transfer & Trust Company, as successor in interest to U.S. Bank National
     Association (successor in interest to Firstar Trust Company) and any
     similar share purchase rights that the Company might authorize and issue in
     the future), either immediately or upon the arrival of a specified date or
     the happening of a specified event.

          (o) "Trading Day" means any day on which the Common Stock is traded on
     the Principal Market or, if the Principal Market is not the principal
     trading market for the Common Stock, then on the principal securities
     exchange or securities market on which the Common Stock is then traded;
     provided that "Trading Day" shall not include any day on which the Common
     Stock is scheduled to trade on such exchange or market for less than 4.5
     hours or any day that the Common Stock is suspended from trading during the
     final hour of trading on such exchange or market (or if such exchange or
     market does not designate in advance the closing time of trading on such
     exchange or market, then during the hour ending at 4:00 p.m., New York City
     Time).

          (p) "Transfer Agent" means American Stock Transfer & Trust Company,
     the transfer agent of the Common Stock.

                                     ******


                                       30
<PAGE>
     IN WITNESS WHEREOF, the Company and the Co-Borrowers have caused this Note
to be duly executed as of the Issuance Date of this Note set out above.


                               MIDWEST EXPRESS HOLDINGS, INC.


                               By:
                                    --------------------------------------------
                                    Name:  Robert S. Bahlman
                                    Title:    Senior Vice President and
                                                 Chief Financial Officer



                               MIDWEST AIRLINES, INC.


                               By:
                                    --------------------------------------------
                                    Name:  Robert S. Bahlman
                                    Title:    Chief Financial Officer



                               SKYWAY AIRLINES, INC.


                               By:
                                    --------------------------------------------
                                    Name:  Robert S. Bahlman
                                    Title:    Chief Financial Officer



                               YX PROPERTIES, LLC


                               By:
                                    --------------------------------------------
                                    Name:  Robert S. Bahlman
                                    Title:    President


<PAGE>
                                                                       EXHIBIT I


                         MIDWEST EXPRESS HOLDINGS, INC.
                            HOLDER CONVERSION NOTICE

     Reference is made to the Convertible Senior Secured Note (the "Note")
issued to the undersigned by Midwest Express Holdings, Inc. (the "Company"),
Midwest Airlines, Inc., a Wisconsin corporation and wholly-owned subsidiary of
the Company, Skyway Airlines, Inc., a Delaware corporation and wholly-owned
subsidiary of Midwest Airlines, YX Properties, LLC, a Nebraska limited liability
company and an indirect subsidiary of the Company, pursuant to that that certain
Securities Purchase Agreement, dated as of September 29, 2003. In accordance
with and pursuant to the Note, the undersigned hereby elects to convert the
Conversion Amount (as defined in the Note) indicated below into shares of common
stock, par value $.0l per share (the "Common Stock"), of the Company, as of the
date specified below.

     Date of conversion:
                        --------------------------------------------------------

     Aggregate Conversion Amount to be converted:
                                                 -------------------------------

Please provide or confirm the following information:

     Conversion Price:
                      ----------------------------------------------------------

     Number of shares of Common Stock to be issued:
                                                   -----------------------------

     Number of shares of Common Stock beneficially owned prior
     to conversion:
                   -------------------------------------------------------------

Please issue the Common Stock into which the Note is being converted in the
following name and to the following address:

     Issue to:
              ------------------------------------------------------------------

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

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

     Facsimile Number:
                      ----------------------------------------------------------

     Authorization:
                   -------------------------------------------------------------

          By:
             -------------------------------------------------------------------

          Title:
                ----------------------------------------------------------------

Dated:
      --------------------------------------------------------------------------

     Account Number:
                    -----------------------------------
                    (if electronic book entry transfer)

     Transaction Code Number:
                              -----------------------------------
                              (if electronic book entry transfer)


<PAGE>
                                 ACKNOWLEDGMENT

     The Company hereby acknowledges this Conversion Notice and hereby directs
American Stock Transfer & Trust Company to issue the above indicated number of
shares of Common Stock in accordance with the Transfer Agent Instructions, dated
September 29, 2003, from the Company and acknowledged and agreed to by American
Stock Transfer & Trust Company.

                                MIDWEST EXPRESS HOLDINGS, INC.



                                By:__________________________________

                                Name:____________________________

                                Title: ____________________________