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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: ____________________________EXECUTION COPY

                               SECURITY AGREEMENT

     THIS SECURITY AGREEMENT, dated as of September 29, 2003 (this "Agreement"),
by Midwest Express Holdings, Inc., a Wisconsin corporation ("Holdings"), Midwest
Airlines, Inc., a Wisconsin corporation ("Midwest"), Skyway Airlines, Inc., a
Delaware corporation ("Skyway" and together with Midwest, "Carriers"), and YX
Properties, LLC, a Nebraska limited liability company ("YX") (each individually
"Debtor," and collectively "Debtors"), SF Capital Partners, Ltd. as agent (in
such capacity, "Collateral Agent") for the benefit of the parties identified on
Schedule A hereto and their respective successors and assigns (each individually
"Noteholder" and collectively, "Noteholders") and Noteholders.

                                    RECITALS
                                    --------

     A. Holdings is the direct or indirect, as applicable, 100% parent of
Carriers and YX.

     B. Debtors have issued, or intend to issue, to Noteholders those certain
6.75% Convertible Senior Secured Notes due October 1, 2008, in an aggregate
principal amount of $25,000,000 (the "Notes").

     C. As a condition to their willingness to purchase the Notes, Noteholders
have required that Debtors execute and deliver this Agreement to secure Debtors'
respective obligations under the Notes.

                                   AGREEMENTS
                                   ----------

     In consideration of the Recitals, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:

     1. Definitions.

          As used in this Agreement, the following terms shall have the
     designated meanings:

          a. The term "Act" means Title 49 of the United States Code which,
     among other things, recodified and replaced the U.S. Federal Aviation Act
     of 1958, and the regulations promulgated thereunder, or any subsequent
     legislation that amends, supplements or supersedes such provisions.

          b. The term "Aircraft" shall have the meaning ascribed to it in
     Section 1(e)(ii).

          c. The term "Appliance" means any instrument, mechanism, equipment,
     part, apparatus, appurtenance or accessory, including communications
     equipment, that is used in operating or controlling an aircraft in flight,
     is installed in or attached to the aircraft, and is not part of an Aircraft
     or Engine.

          d. The term "Business Day" means any day other than a Saturday, Sunday
     or other day on which commercial banks are authorized or required by law to
     be closed in the state of New York.

<PAGE>
          e. The term "Collateral" means all of the following property which
     Debtors own on the date hereof, wherever located:

               i. all equipment and fixtures, other than Aircraft, Engines,
          Spare Parts and Appliances;

               ii. the aircraft described on Schedule B hereto (individually and
          collectively "Aircraft"), together with (and the term "Aircraft" shall
          include) all appliances, parts, instruments, appurtenances,
          accessories and equipment (including communication and radar
          equipment) now owned by either Carrier and now or hereafter
          incorporated or installed in or attached to any of such aircraft, and
          all substitutions, replacements and renewals of any and all thereof
          now owned by either Carrier and all other property now owned by either
          Carrier which shall hereafter become physically incorporated or
          installed in or attached to such aircraft, exclusive of Engines (as
          defined below); provided, however, that if any DC9 Collateral is sold
          or otherwise disposed of, pursuant to Section 7(b) of the Notes, prior
          to the termination of the Escrow Agreement (as defined in the
          Securities Purchase Agreement), Collateral Agent hereby authorizes
          Debtors to redact Schedule B accordingly and make such conforming
          changes as are necessary to any FAA filings or related documents;

               iii. all aircraft engines described on Schedule C hereto or
          described in any Supplemental Security Agreement (as hereinafter
          defined) (individually "Engine" and collectively "Engines") together
          with (and the terms "Engine" and "Engines" shall include) all
          appliances, parts, instruments, appurtenances, accessories and
          equipment now owned by either Carrier and now or hereafter
          incorporated or installed in or attached to any of such aircraft
          engines, and all substitutions, replacements and renewals of any and
          all thereof now owned by either Carrier and all other property now
          owned by either Carrier which shall hereafter become physically
          incorporated or installed in or attached to such aircraft engines,
          exclusive of Aircraft (as defined above); provided, however, that if
          any DC9 Collateral is sold or otherwise disposed of, pursuant to
          Section 7(b) of the Notes, prior to the termination of the Escrow
          Agreement, Collateral Agent hereby authorizes Debtors to redact
          Schedule B accordingly and make such conforming changes as are
          necessary to any FAA filings or related documents;

               iv. all Spare Parts;

               v. all Appliances;

               vi. the rights and operational authority now held by any Debtor
          in and to the operating authority granted by the FAA (pursuant to
          Title 14 of the United States Code of Federal Regulations, Part 93,
          Subparts K and S, as amended from time to time, or any successor or
          recodified regulation) to conduct one Instrument Flight Rule (as
          defined under the federal aviation regulations) landing or takeoff
          operation in a specified time period at Ronald Reagan Washington
          National Airport (DCA) or La Guardia Airport (LGA) (such rights and
          operational authority are referred to in this Agreement as the
          "Slots," and are described on Schedule E hereto);

<PAGE>
               vii. all books, records and documents of any Debtor relating to
          Collateral described in clauses (i) through (vii) above, including,
          records and documents relating to such Collateral's operation,
          maintenance or repair, including manufacturer's manuals, service
          bulletins, Aircraft log books and, flight manuals and minimum
          equipment lists for the Aircraft, Engines, Spare Parts or Appliances
          (the "Collateral Records");

               viii. all proceeds of any and all of the properties described in
          paragraphs (i) through (vii) above, including rents, leases and
          profits and insurance proceeds (and Debtors' rights to receive such
          insurance proceeds) with respect to any of the foregoing Collateral
          and other proceeds of any kind resulting from any Event of Loss with
          respect to any Aircraft or Engine;

          provided, however, that the Collateral shall not include the Excluded
          Assets.

          f. The term "Collateral Records" shall have the meaning ascribed to it
     in Section 1(e)(vii).

          g. The term "DC9 Collateral" means all Aircraft of Model DC9-14 or
     DC9-32 identified on Schedule B, together with all Engines attached to any
     such Aircraft and all equipment, Spare Parts and Appliances designed to be
     installed in or attached to such Aircraft.

          h. The term "DOT" means the Department of Transportation of the United
     States of America, and any successor governmental authority.

          i. The terms "Engine" and "Engines" shall have the meanings ascribed
     to them in Section 1(e)(iii).

          j. The term "Event of Loss" means any of the following events with
     respect to any Aircraft or any Engine:

               i. The actual total loss of such Aircraft or such Engine;

               ii. Such Aircraft or such Engine shall become lost, stolen (and
          not returned within 30 days), destroyed, damaged beyond repair or
          permanently rendered unfit for use for any reason whatsoever;

               iii. Any damage to such Aircraft or such Engine that shall result
          in an insurance settlement with respect thereto on the basis of a
          total loss; or

               iv. The condemnation, confiscation or seizure of, or requisition
          of title to or use (other than use by the United States government)
          of, such Aircraft or such Engine continuing to the earlier of the
          expiration of 60 days thereafter or the receipt of insurance or other
          proceeds with respect thereto.

          k. The term "Excluded Assets" means assets subject to Permitted Liens
     described in clause (ii) and (viii) of the definition of Permitted Liens.

<PAGE>
          l. The term "Existing Bank Liens" means all liens on and security
     interests in Collateral securing obligations arising under that certain
     Senior Secured Revolving Credit Agreement, dated as of August 31, 2001, as
     amended, by and among Holdings, the Lenders party thereto and U.S. Bank
     National Association, as a Lender and as Agent.

          m. The term "FAA" means the Federal Aviation Administration of the
     United States of America, and any successor governmental authority.

          n. The term "GAAP" means generally accepted accounting principles set
     forth from time to time in the opinions and pronouncements of the
     Accounting Principles Board and the American Institute of Certified Public
     Accountants and statements and pronouncements of the Financial Accounting
     Standards Board (or agencies with similar functions of comparable stature
     and authority within the U.S. accounting profession), which are applicable
     to the circumstances as of the date of determination.

          o. The term "Obligations" means:

               i. Any and all present and future debts, obligations and
          liabilities of Debtors to Noteholders pursuant to the Notes, whether
          due or not due, absolute or contingent, liquidated or unliquidated,
          determined or undetermined, whether for principal, contract interest
          (whether before or after maturity) or other debts, obligations or
          liabilities, and whether or not any or all such debts, obligations and
          liabilities are or become barred by any statute of limitations or
          otherwise unenforceable;

               ii. All debts, obligations and liabilities of Debtors under this
          Agreement.

          p. The term "Permitted Liens" means:

               i. the liens and security interests created or contemplated by
          this Agreement;

               ii. liens and security interests securing indebtedness incurred
          in the ordinary course of business and arising out of the lease or
          purchase of goods, or the financing or refinancing of goods previously
          acquired, provided that such liens and security interests cover only
          such goods and contract rights, deposits and/or other intangible
          assets related to such goods and proceeds of any of the foregoing;

               iii. transfers of possession, exchanges and other acts permitted
          by Section 3(a)(x) of this Agreement;

               iv. liens for taxes, assessments or governmental charges or
          claims that are not yet delinquent or that are being contested in good
          faith by appropriate proceedings promptly instituted and diligently
          concluded; provided that any reserve or other appropriate provision as
          shall be required in conformity with GAAP shall have been made
          therefor;

               v. mechanics', materialmen's, carriers', warehousemen's and other
          like liens arising in the ordinary course of business in respect of
          obligations not overdue

<PAGE>
          for a period in excess of 30 days or that are being contested in good
          faith by appropriate proceedings promptly instituted and diligently
          prosecuted; provided further that any reserve or other appropriate
          provision as shall be required in conformity with GAAP shall have been
          made therefore;

               vi. easements, rights of way, restrictions and other similar
          encumbrances incurred in the ordinary course of business which, in the
          aggregate, are not material in amount and which do not in any case
          materially detract from the value of the property subject thereto or
          materially interfere with the ordinary conduct of the business of the
          applicable Debtor;

               vii. any right of the United States government to requisition any
          Aircraft or otherwise to compel a Carrier to deliver possession of or
          provide use of any Aircraft for government purposes;

               viii. liens on and security interests in fixtures located at the
          facility at 6744 S. Howell Avenue, Oak Creek, Wisconsin 53154; and

               ix. any attachment or judgment lien not constituting an Event of
          Default under the Notes.

          q. The term "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").

          r. The term "Registration Rights Agreement" means that certain
     Registration Rights Agreement, dated as of September 29, 2003, by and among
     Holdings and the Initial Investors, as defined therein, as the same may be
     amended, restated or otherwise modified from time to time.

          s. The term "Required Noteholders" means at any time particular
     Noteholders holding at least two-thirds of the then outstanding principal
     amount of the Notes.

          t. The term "Securities Purchase Agreement" means that certain
     Securities Purchase Agreement, dated as of September 29, 2003, by and among
     Debtors and Noteholders, as the same may be amended, restated or otherwise
     modified from time to time.

          u. The term "Slots" shall have the meaning ascribed to it in Section
     1(e)(vi).

          v. The term "Spare Part" means any accessory, appurtenance or part of
     an Aircraft, Engine or Appliance, that is to be installed at a later time
     in an Aircraft, Engine or Appliance.

          w. The term "Unrestricted Cash Balance" shall have the meaning
     ascribed to it in the Notes.

     All capitalized terms used in this Agreement and not otherwise defined in
this Agreement shall have the meanings given to them in the Securities Purchase
Agreement or the Notes.

<PAGE>
     2. Security Interest.

     To secure the payment and performance of the Obligations, each Debtor
hereby mortgages to Collateral Agent, and grants to Collateral Agent a security
interest in, for the ratable benefit of Noteholders, all Collateral owned on the
date hereof, wherever located.

     3. Certain Representations, Warranties and Covenants.

          a. Each Debtor hereby represents and warrants and hereby covenants as
     follows:

               i. Debtor has delivered to Collateral Agent all: (A) UCC-1
          financing statements and FAA lien registration statements; (B) UCC
          financing statement, lien or similar search reports for all
          jurisdictions in which any portion of the Collateral is located; and
          (C) FAA title reports regarding the Aircraft and Engines, in each case
          as have been reasonably requested by Collateral Agent. The documents
          delivered pursuant to clauses (B) and (C) above do not reveal any
          mortgage, lien, security interest, charge or encumbrance on the
          Collateral, other than Existing Bank Liens (which liens will be
          released in connection with the closing of this Agreement) and
          Permitted Liens.

               ii. Debtor agrees to maintain all Collateral free and clear of
          all mortgages, deeds of trust, liens, security interests and other
          charges or encumbrances except Permitted Liens.

               iii. Upon: (1) the due filing of appropriate UCC-1 financing
          statements with: (a) the Office of the Department of Financial
          Institutions of the State of Wisconsin for Collateral owned by
          Holdings or Midwest; (b) the Office of the Secretary of State of
          Delaware for Collateral owned by Skyway; and (c) the Office of the
          Nebraska Secretary of State for Collateral owned by YX; and (2) the
          due recordation of this Agreement or any Supplemental Security
          Agreement with the FAA, Collateral Agent on behalf of Noteholders will
          have a valid and perfected security interest in the Collateral prior
          to the rights of all other Persons therein, subject to:

                    (1) Permitted Liens;

                    (2) the rights and interests of the FAA in the Slots,
               including the ability of the FAA to withdraw Slots pursuant to
               the Act; and

                    (3) the possibility of loss of a valid and perfected
               security interest in Spare Parts and Appliances when such
               Collateral is not situated at one of the locations described on
               Schedule D.

               iv. The execution, delivery and performance of this Agreement by
          such Debtor:

                    (1) have been duly authorized by all necessary corporate
               action or limited liability company action, as applicable;

<PAGE>
                    (2) do not and will not require any consent or approval of
               such Debtor's shareholders or members, as applicable;

                    (3) do not violate any provision of any law, rule,
               regulation, order, writ, judgment, injunction, decree,
               determination or award presently in effect having applicability
               to such Debtor;

                    (4) do not violate any provision of such Debtor's articles
               of incorporation, bylaws, articles of organization, operating
               agreement or other organizational documents, as applicable;

                    (5) do not result in a breach of or constitute a default
               under any indenture or loan or credit agreement or any other
               agreement, lease or instrument to which such Debtor is a party or
               by which it or its properties may be bound or affected; and

                    (6) do not require authorization, consent, approval,
               license, exemption of or filing a registration with any court or
               governmental department, commission, board, bureau, agency or
               instrumentality, domestic or foreign, other than filings to
               perfect Collateral Agent's interest in the Collateral, as
               contemplated hereby.

               v. This Agreement is the legal, valid and binding obligation of
          such Debtor enforceable against it in accordance with the terms
          hereof, subject to the effect of general principles of equity and any
          applicable bankruptcy, receivership, insolvency, reorganization,
          moratorium, fraudulent conveyance or transfer or similar laws
          affecting creditors' rights generally.

               vi. Subject to the rights and interests of the FAA in the Slots,
          including the ability of the FAA or other governmental authority to
          withdraw Slots or otherwise modify the rights or obligations of such
          Debtor with respect to the Slots, such Debtor holds the requisite
          authority to hold each of its Slots pursuant to authority granted by
          the FAA; and it has, at all times after obtaining each such Slot,
          complied in all material respects with all of the terms, conditions
          and limitations of each rule or regulation of the FAA and DOT
          regarding each such Slot and with all applicable provisions of the Act
          and there exists no violation as of the date hereof of such terms,
          conditions or limitations that gives the FAA or DOT the right to
          terminate, cancel, withdraw or modify the rights of such Debtor in any
          such Slot.

               vii. Such Debtor is utilizing its Slots in a manner consistent
          with applicable regulations and contracts in order to preserve the
          value of such Slots.

               viii. No such Debtor has received any notice from the FAA, or is
          aware of any other event or circumstance, other than the proposed 2007
          partial phase-out of Slots at La Guardia Airport, that would be
          reasonably likely to impair the Slots or their value.

<PAGE>
               ix. Except for sales or dispositions pursuant to Section 3(a)(x),
          such Debtor will take, or cause to be taken, all actions as may be
          necessary now or in the future to maintain, renew and obtain the
          rights, licenses, authorizations or certifications as are necessary to
          the continued use by such Debtor of its Slots.

               x. Such Debtor will not, without the prior written consent of
          Collateral Agent, sell, assign, lease or otherwise dispose of or
          relinquish possession of any of the Collateral, except that, unless an
          Event of Default (as defined in Section 12) shall have occurred and be
          continuing, such Debtor may:

                    (1) in the case of either Carrier, transfer possession of
               any of its Aircraft or Engines to the United States government
               pursuant to a contract or lease pursuant to which the United
               States government assumes all liability for any damage, loss,
               destruction or failure to return possession of such Aircraft or
               such Engine at the end of the term of such contract, a copy of
               which shall be furnished to Collateral Agent;

                    (2) in the case of either Carrier, transfer possession in
               the ordinary course of business of any of its Aircraft, Engines,
               Spare Parts or Appliances to the manufacturer thereof or any
               other organization for testing, repairs, servicing, maintenance,
               overhaul, alterations or modifications;

                    (3) in the case of either Carrier, exchange Engines in the
               ordinary course of business for equivalent engines, provided that
               such Carrier complies with the terms and conditions of Section 8
               for Replacement Engines; provided, however, that: (i) such
               replacement engines shall be made Collateral subject to the lien
               of this Agreement; and (ii) the representations and warranties
               made herein with respect to Engines shall be true and correct in
               all material respects as to such Replacement Engines;

                    (4) exchange Collateral other than Engines in the ordinary
               course of business for Collateral of substantially comparable
               value and utility; provided, however, that such replacement
               Collateral is made subject to the lien of this Agreement; and

                    (5) in the case of any Debtor, sell or otherwise dispose of
               Collateral as permitted under Section 7(b) of the Notes.

                    (6) in the case of any Debtor, and with the exception of
               real property, Aircraft and Engines, sell or otherwise dispose of
               any Collateral, that is no longer of any utility to such Debtor.

               xi. The Slots identified on Schedule E are all of the Slots held
          by such Debtor that such Debtor may sell or lease under the Act.

               xii. The chief executive office (as such term is used in Article
          9 of the Uniform Commercial Code) of each Debtor is accurately set
          forth beneath the signature of such Debtor below.

<PAGE>
          b. Each of the Carriers hereby represents and warrants and hereby
     covenants as follows:

               i. Schedule B and Schedule C identify, respectively, all Aircraft
          and Engines owned by such Carrier, free and clear of any mortgage,
          lien, security interest or other charge or encumbrance, except
          Existing Bank Liens and Permitted Liens.

               ii. Such Carrier has, and at all time will have, good title to
          the Aircraft and the Engines identified on Schedule B or Schedule C,
          as applicable, free and clear of all mortgages, liens, security
          interests and other charges or encumbrances except Existing Bank Liens
          and Permitted Liens, and has, and at all times will have, full power
          and authority to mortgage and grant a lien and security interest in,
          and assign rights in, the Aircraft and Engines.

               iii. Such Carrier has, and at all time will have, good title to
          the Spare Parts and Appliances owned by it, as applicable, free and
          clear of all mortgages, liens, security interests and other charges or
          encumbrances except Existing Bank Liens and Permitted Liens, and has,
          and at all times will have, full power and authority to grant a lien
          and security interest in, and assign rights in, the Spare Parts, and
          Appliances.

               iv. With the exception of the DC9 Collateral, such Carrier agrees
          to keep the Spare Parts and Appliances at one of the facilities
          identified on Schedule D, it being understood that, the Spare Parts
          and Appliances may from time to time in the ordinary course of
          business be installed on aircraft (including, but not limited to,
          Aircraft) and that during such time as such equipment is so installed
          such equipment shall not be included within the definition "Spare
          Parts" or "Appliances" and shall not, if installed on aircraft that
          are not Aircraft, be subject to this Agreement or the Collateral
          Agent's security interest hereunder.

               v. The Spare Parts and Appliances are maintained by or on behalf
          of such Carrier.

               vi. Such Carrier is, and at all times will be: (i) a "Citizen of
          the United States" as defined in Section 40l02(a)(15) of 49 U.S.C.;
          (ii) an air carrier as to which the provisions of Section 1110 of the
          United States Bankruptcy Code apply; and (iii) an air carrier
          certificated under Sections 41102(a) and 44705 of 49 U.S.C.

               vii. Each of the Aircraft is registered with the Federal Aviation
          Administration in the name of the applicable Carrier indicated on
          Schedule B and such Carrier will take all necessary action to cause
          such registration to remain in effect.

               viii. Such Carrier's Collateral Records (as defined in Section
          1(e)(vii)) are located only at the locations listed on Schedule F, or
          such Carrier's respective chief executive office, as set forth beneath
          the signature of such Carrier below.

               ix. Such Carrier shall bear all risk of loss or damage to its
          Collateral.

<PAGE>
               x. With the exception of the DC9 Collateral, such Carrier, at its
          own cost and expense, shall service, repair and maintain each of its
          Aircraft and Engines in accordance with an FAA-approved maintenance
          program and all manufacturer's aircraft maintenance manuals and
          airworthiness directives, and, subject to such Carrier's right to
          apply proceeds of insurance in accordance with Section 10(f) below,
          shall install replacement equipment and parts on each of its Aircraft
          and Engines so as to keep each such Aircraft or Engine in such
          operating condition as may be required to permit each such Aircraft
          and Engine to be utilized in commercial charter operations and
          scheduled airline service in the United States and shall maintain all
          records, logs and other materials that may be required to permit each
          such Aircraft and Engine to be so utilized.

               xi. Such Carrier will comply and will cause compliance with all
          laws, regulations or orders of any government or governmental
          authority, domestic or foreign, having jurisdiction over such Carrier
          or its Collateral, including all applicable operational and
          maintenance requirements of the Federal Aviation Administration, and
          will at all times maintain in effect appropriate United States FAA
          Certificates of Airworthiness for each of its Aircraft.

               xii. With the exception of the DC9 Collateral, such Carrier shall
          maintain its Collateral in compliance with all applicable
          manufacturer's manuals and service bulletins, and agrees that such
          Collateral will not be maintained, used or operated in violation of
          any law or any rule, regulation or order of any government or
          governmental authority, domestic or foreign, having jurisdiction over
          such Carrier, or in violation of any airworthiness certificate,
          license or registration relating to such Collateral issued by any such
          government or governmental authority, and in the event that such laws,
          rules, regulations or orders require alteration of any of such
          Collateral, such Carrier, at its own cost and expense, will conform
          thereto or obtain conformance therewith within the time period
          allotted for compliance by such government or governmental authority,
          and will maintain the same in proper operating condition under such
          laws, rules, regulations and orders; provided, however, that such
          Carrier may, in good faith, contest the validity or application of any
          such law, rule, regulation or order in any reasonable manner that does
          not materially and adversely affect the interests of Collateral Agent
          under this Agreement.

               xiii. Without the prior written consent of Collateral Agent, such
          Carrier shall not fly any of its Aircraft or Engines or suffer any
          thereof to be flown or located to, from or within:

                    (1) any area excluded from coverage by any insurance policy
               required hereunder to be maintained in effect with respect to
               each of such Aircraft or any such Engine; or

                    (2) any area of hostilities recognized or designated by the
               United States government or an insurance carrier then insuring
               aircraft in such Carrier's fleet, unless fully covered by
               war-risk hull insurance or unless such Aircraft or Engine is
               operated or used under contract or lease with the government of
               the United States of America pursuant to which the government

<PAGE>
               of the United States assumes all liability for any damage, loss,
               destruction or failure to return possession of such Aircraft or
               Engine at the end of the term of such contract.

     4. Inspection.

     Upon reasonable request, Debtors will permit any authorized representatives
of Collateral Agent to inspect the Collateral or any part thereof, and
reasonably to examine, copy or make extracts from the Collateral Records.

     5. Liens, Encumbrances and Claims.

     Debtors will not directly or indirectly create, incur, assume or suffer to
exist any lien, security interest, charge or encumbrance on or with respect to
any part or all of the Collateral, title thereto or any interest therein, except
any Permitted Liens. Each Debtor shall, at its sole expense, defend the security
interest in the Collateral that it owns against any and all claims of any party
(other than holders of Permitted Liens) adverse to any Noteholders and take such
action and execute such financing statements and other documents as Noteholders
may from time to time reasonably request to maintain the perfected status of the
security interest granted hereunder and Collateral Agent is hereby authorized to
file all such financing statements and other documents without further action on
the part of Debtors.

     6. Collateral Agent.

          a. Appointment of Collateral Agent. Subject to the terms and
     conditions of this Agreement, Noteholders hereby appoint SF Capital
     Partners, Ltd. as Collateral Agent for the benefit of Noteholders with
     respect to the liens upon, and the security interests in, the Collateral,
     and with respect to the rights and remedies granted under and pursuant to
     this Agreement, and SF Capital Partners, Ltd. hereby accepts such
     appointment and agrees to act as agent for the benefit of Noteholders. The
     appointment of Collateral Agent shall be effective with respect to all
     financing statements filed in any UCC filing office, all FAA lien
     registration statements and all other filings or recordings of Collateral
     Agent's security interest and lien pursuant to this Agreement.

          b. Duties of Collateral Agent. Each Noteholder hereby irrevocably
     authorizes Collateral Agent to take such action on its behalf under the
     provisions of this Agreement and to exercise such powers and to perform
     such duties hereunder as are specifically delegated to or required of
     Collateral Agent by the terms hereof and such other powers as are
     reasonably incidental hereto. The duties of Collateral Agent shall be
     mechanical and administrative in nature; Collateral Agent shall not have by
     reason of this Agreement a fiduciary relationship with any Noteholder.
     Noteholders hereby expressly authorize Collateral Agent on behalf of all
     Noteholders, without the necessity of any notice to, or further consent
     from, any Noteholder, from time to time, to take any action with respect to
     any Collateral that may be necessary to perfect or maintain the perfection
     of the security interest in and liens upon the Collateral granted pursuant
     to this Agreement.

<PAGE>
          c. Collateral Agent's Release of Security Interest. Noteholders hereby
     authorize Collateral Agent, at its discretion, to release the Collateral
     from the security interest granted by this Agreement pursuant to Section 16
     of this Agreement.

          d. Liability of Collateral Agent. In the absence of gross negligence,
     willful misconduct or breach of this Agreement, Collateral Agent will not
     be liable to Noteholders for any action or failure to act or any error of
     judgment, negligence, mistake or oversight on Collateral Agent's part or on
     the part of any of its attorneys, employees or agents.

          e. Indemnification of Collateral Agent. Each Noteholder shall
     reimburse and indemnify Collateral Agent, in proportion to each
     Noteholder's respective holding of the outstanding Notes, for and against
     any and all liabilities, obligations, losses, damages, penalties, actions,
     judgments, suits, costs, expenses, attorneys' fees or disbursements which
     may be imposed on, incurred by or asserted against the Collateral Agent in
     performing its duties hereunder; provided, however, that no Noteholder
     shall be liable for any portion of such liabilities, obligations, losses,
     damages, penalties, actions, judgments, suits, costs, expenses, attorneys'
     fees or disbursements resulting from the Collateral Agent's gross
     negligence or willful misconduct.

          f. No Reliance on Collateral Agent. Neither Collateral Agent nor any
     of its attorneys, employees or agents shall be deemed to have made any
     representations or warranties, express or implied, with respect to, nor
     shall Collateral Agent or any such attorney, employee or agent be liable to
     Noteholders for:

                    (1) any recitals, representations, warranties or covenants
               made by Debtors in this Agreement;

                    (2) the due or proper execution or authorization of this
               Agreement by any party other than Collateral Agent;

                    (3) the present or future solvency or financial worth of
               Debtors; or

                    (4) the value, condition, existence or ownership of any of
               the Collateral or the sufficiency of any filing or other
               procedure taken or to be taken to attach or perfect any lien or
               security interest in the Collateral.

          g. Collateral Agent's Right to Perform for Debtors. If any Debtor
     shall fail to make any payment required hereunder or shall fail to perform
     or comply with any of such Debtor's agreements contained herein, Collateral
     Agent may, upon ten (10) days' prior written notice to such Debtor, make
     such payment or perform or comply with such agreement, and each Debtor
     shall be obligated to reimburse the Collateral Agent for such Debtor's
     ratable share of the amount of such payment.

          h. Collateral Agent as Attorney. Each Debtor hereby irrevocably and
     severally appoints Collateral Agent, effective while an Event of Default
     exists, the true and lawful attorney of such Debtor (with full power of
     substitution) in the name, place and stead of, and at the expense of, such
     Debtor in connection with the enforcement of the rights and remedies
     provided for in Sections 12 and 13:

<PAGE>
               i. to give any necessary receipts or acquittances for amounts
          collected or received thereunder;

               ii. to make all necessary transfer of all or any part of the
          Collateral in connection with any sale, lease or other disposition
          made pursuant hereto; and

               iii. to execute and deliver for value all necessary or
          appropriate bills of sale, assignments and other instruments in
          connection with any such sale, lease or other disposition.

          i. Collateral Agent's Rights as Noteholder. Collateral Agent shall
     have the same rights and powers under this Agreement as any other
     Noteholder and may exercise such rights and powers as though it were not
     Collateral Agent.

          j. Successor Collateral Agent. Collateral Agent may, upon sixty days'
     written notice to Noteholders, Holdings and Debtors, resign at any time,
     and Noteholders may, by an affirmative vote of Required Noteholders, remove
     Collateral Agent at any time. Upon any such resignation or removal,
     Noteholders shall have the right to appoint a successor Collateral Agent,
     by affirmative vote of Required Noteholders, and shall provide notice of
     appointment of such successor Collateral Agent to Holdings and Debtors. No
     resignation or removal of Collateral Agent shall become effective until a
     replacement Collateral Agent has been appointed and such successor agent
     has accepted such appointment.

     7. Early Termination.

     If: (i) Debtors maintain the Unrestricted Cash Balance as shown by the
quarterly financial statements of Holdings as filed with the SEC at no less than
$75,000,000 as of the end of any fiscal quarter for any period of six
consecutive fiscal quarters, which period begins with a fiscal quarter ending on
or after March 31, 2005; provided, however, that if the sum of the First Closing
(as defined in the Securities Purchase Agreement) proceeds released to Debtors
from escrow under the Escrow Agreement in respect of the principal amount of
Notes and the Second Closing (as defined in the Securities Purchase Agreement)
proceeds is less than $25,000,000, then the dollar amount set forth in this
clause (i) shall be reduced by an amount equal to the product of 3.0 times the
amount by which such sum is less than $25,000,000; or (ii) at any time the
aggregate balance of Notes outstanding is less than or equal to $10,000,000 and
the Unrestricted Cash Balance as shown by the financial statements of Holdings
as filed with the SEC is no less than $37,500,000 as of the most recent fiscal
quarter-end; then this Agreement and the liens and security interests granted
hereunder shall be terminated pursuant to Section 16 below.

     8. Replacement Engines.

     If an Event of Loss shall occur with respect to an Engine, the applicable
Carrier shall give Collateral Agent prompt written notice thereof and shall
either:

     (i) elect to apply and/or deposit the insurance proceeds arising from such
Event of Loss pursuant to the provisions of Section 10(f); or

<PAGE>
     (ii) within 60 days after such notice, duly convey to Collateral Agent, for
the benefit of itself and Noteholders, a lien and security interest in another
equivalent engine of the same model and manufacturer owned or acquired by such
Carrier (and not already subject to a security interest securing the
Obligations), free and clear of all security interests, liens, charges and other
encumbrances (except Permitted Liens) and having a value and utility reasonably
equivalent to, and being in as good operating condition as, and having
performance and durability characteristics reasonably equivalent to, the Engine
with respect to which such Event of Loss occurred if such Engine were in the
condition and repair as required by the terms hereof immediately prior to the
occurrence of such Event of Loss (each, a "Replacement Engine").

     In connection with any substitutions hereunder, the applicable Carrier
shall deliver to Collateral Agent the following:

          a. a Supplemental Security Agreement substantially in the form of
     Exhibit 8(a) (the "Supplemental Security Agreement") hereto duly executed
     by such Carrier describing the Replacement Engine(s) to be subjected to the
     lien and security interest of this Agreement;

          b. a certificate signed by the Treasurer or other authorized officer
     of such Carrier (an "Officer's Certificate"), dated as of the date of
     execution of such Supplemental Security Agreement, stating:

               i. that such Carrier is the owner of the Replacement Engine(s)
          described in such Supplemental Security Agreement, free and clear of
          all security interests, liens, charges and other encumbrances except
          Permitted Liens and that legal and beneficial title thereto is vested
          in such Carrier;

               ii. that such Supplemental Security Agreement has been duly
          authorized, executed and delivered by such Carrier;

          c. an opinion or opinions of counsel for such Carrier reasonably
     acceptable to Collateral Agent to be dated the date of execution of such
     Supplemental Security Agreement, stating:

                    (1) that the Replacement Engine(s) described in such
               Supplemental Security Agreement are free and clear of all
               recorded security interests, liens, charges and other
               encumbrances, except Permitted Liens;

                    (2) that such Supplemental Security Agreement:

                         (a) has been duly authorized, executed and delivered by
                    such Carrier and is enforceable against such Carrier; and

                         (b) creates a valid first security interest in and to
                    the Replacement Engine or Engines described in such
                    Supplemental Security Agreement, subject to Permitted Liens,
                    enforceable, wherever such Replacement Engine(s) are located
                    within the United States, against all third parties and
                    securing all obligations purported to be secured thereby,
                    and such security interest is fully perfected; and

<PAGE>
                    (3) that such Supplemental Security Agreement has been duly
               filed for recordation in accordance with the provisions of the
               Act;

          d. such evidence of title of such Carrier to such Replacement
     Engine(s), of the value thereof and compliance with the insurance
     provisions of Section 10 with respect thereto, as Collateral Agent may
     reasonably request; it being understood that it shall not be reasonable,
     absent an Event of Default, for Collateral Agent to request an appraisal of
     such Replacement Engine(s) if such Carrier would not ordinarily do so under
     the circumstances.

     9. Alterations; Modification and Additions.

     As applicable, either Carrier, at its own cost and expense, may from time
to time make such alterations and modifications in and additions to any Aircraft
or any Engine as such Carrier may deem desirable in the proper conduct of its
business; provided, however, that no such alteration, modification or addition
shall diminish the value, utility, condition or airworthiness of any Aircraft or
any Engine below the value, utility, condition or airworthiness thereof
immediately prior to such alteration, modification or addition. The parties
acknowledge and agree that this Section 9 shall not limit either Carrier's
discretion to modify the configuration of passenger seats on any Aircraft in any
manner consistent with the program of passenger service in which such Aircraft
is or is to be deployed.

     10. Insurance, Events of Loss, Etc.

          a. As applicable, Carriers, at their own cost and expense, will at all
     times carry and maintain in effect, or cause to be carried and maintained
     in effect, on the Collateral:

               i. third party and passenger liability insurance in an amount not
          less than the greater of (x) $400,000,000 per occurrence and (y) the
          amount of such insurance applicable to any other aircraft of the same
          model and manufacturer as the aircraft described on Schedule B hereto
          which is operated by the applicable Carrier either as owner or as
          original primary lessee (and not as sublessee or assignee of another
          primary lessee) on which such Carrier carries insurance;

               ii. property damage liability insurance;

               iii. aircraft hull risk insurance for each Aircraft and the
          Engines belonging to, installed in or appurtenant to each Aircraft
          (which all-risk hull insurance shall include coverage of Engines and
          Parts while temporarily removed from the Aircraft and not replaced by
          similar components) in an amount not less than the most recent
          appraised value of such Aircraft. Engines that are attached to an
          Aircraft are included in the overall agreed value of the Aircraft, and
          Engines that are detached from the Aircraft (and replaced by similar
          components) are insured on a replacement cost basis;

               iv. all-risk of physical loss or damage insurance on Engines
          while removed from the Aircraft;

               v. all-risk of physical loss or damage insurance on other
          tangible Collateral; and

<PAGE>
               vi. baggage and cargo liability insurance;

     In each case in such amounts (except where amounts are specified above) and
     in such form, including without limitation the form of the loss payable
     clause and the designation of named insureds (as applicable), and with such
     insurance companies, underwriters or funds of recognized responsibility as
     shall be reasonably satisfactory to Collateral Agent and as shall be
     declared from time to time by independent aircraft insurance brokers (who
     may be the brokers regularly employed by Carriers), appointed by Carriers
     and reasonably acceptable to Collateral Agent, to be necessary or advisable
     (in view of the insurance usually carried by corporations engaged in the
     same or a similar business as Carriers, similarly situated with Carriers
     and owning similar aircraft and engines) for the protection of the
     interests of Collateral Agent.

          b. All insurance required hereunder shall provide for payment in the
     United States in U.S. Dollars. All third party and passenger liability and
     property damage liability insurance shall insure against liability that
     Collateral Agent, Noteholders or either Carrier might incur by reason of
     the ownership or operation of any of the Aircraft in or over any area
     (including the high seas) in which any of the Aircraft is operated or
     located, shall be of the type usually carried by corporations engaged in
     the same or a similar business, similarly situated with Carriers, and
     owning similar aircraft and engines and shall cover risks of the kind
     customarily insured against by such corporations and, in the case of
     property damage liability insurance, shall be in amounts that are not less
     than property damage liability insurance applicable to the other aircraft
     in the applicable Carrier's fleet on which such Carrier carries such
     insurance.

          c. All liability policies shall name Collateral Agent as an additional
     insured as its interests may appear. All other policies required hereby
     covering loss or damage to the Collateral shall name Collateral Agent as an
     additional insured as its interests may appear and as a lender loss payee
     and shall provide that any payment thereunder for any loss or damage shall
     be paid to Collateral Agent; provided, however, if no Event of Default has
     occurred and is continuing, and the aggregate amount of all insurance
     proceeds of all losses and damage for the year are less than $2,500,000
     (the "Insurance Proceeds Floor Amount") and the applicable Carrier is
     otherwise entitled to receive a payment thereunder, proceeds under such
     policies shall be paid to the applicable Carrier for application as
     determined by such Carrier in its sole discretion. If no Event of Default
     has occurred and is continuing, but the aggregate amount of all insurance
     proceeds of all losses and damage for the year exceeds the Insurance
     Proceeds Floor Amount, and the applicable Carrier is otherwise entitled to
     receive a payment thereunder, proceeds under such policies in excess of the
     Insurance Proceeds Floor Amount that are received by Collateral Agent may
     be disbursed by Collateral Agent to such Carrier upon the written request
     of such Carrier subject to and provided that each of the following
     conditions is satisfied in form and substance satisfactory to Collateral
     Agent:

               i. all such proceeds shall be applied to repair in full any such
          loss or damage;

               ii. Collateral Agent, in consultation with the Carrier and the
          insurer, shall have determined that such repairs are feasible and
          economically prudent;

<PAGE>
               iii. there are sufficient proceeds on deposit with Collateral
          Agent to completely repair any such loss or damage, or the Carrier
          shall deposit funds with Collateral Agent in the amount of any
          deficiency;

               iv. all disbursements of such proceeds shall be paid by
          Collateral Agent from time to time as work progresses based upon
          disbursement procedures acceptable to Collateral Agent;

               v. the repairs can be completed within sixty (60) days from the
          date of such loss or damage or such other time agreed to in writing
          between the Carrier and Collateral Agent; and

               vi. the Carrier shall pay or reimburse Collateral Agent for all
          of its reasonable costs and expenses incurred in connection with the
          disbursement of such proceeds;

     provided, however, that even once the aggregate amount of insurance
     proceeds of all losses and damage for the year exceeds the Insurance
     Proceeds Floor Amount, insurance proceeds for a loss or damage of less than
     $100,000 per loss shall be paid to the applicable Carrier for application
     as determined by such Carrier in its sole discretion.

          d. All policies shall insure the interests of Collateral Agent
     regardless of any breach or violation by Carriers of warranties,
     declaration or conditions contained in such policies or any action or
     inaction of Collateral Agent or others; each such policy shall be primary
     without right of contribution from any other insurance that is carried by
     Carriers and shall expressly provide that all provisions thereof, except
     the limits of liability, shall operate in the same manner as if there were
     a separate policy covering each insured; each such policy shall waive any
     right of subrogation of the insurers against Collateral Agent; each such
     policy shall waive any right of the insurers to any set-off or counterclaim
     or any other deduction, whether by attachment or otherwise, in respect of
     any liability of Collateral Agent; and each such policy shall provide that,
     if any premium or installment is not paid when due, or if such insurance is
     canceled or terminated for any reason whatsoever, or if the scope of
     coverage or the limits of liability are reduced or any other material
     adverse change is made in or to the rights of Collateral Agent, the
     insurers will promptly notify Collateral Agent in writing and any such
     cancellation, termination or change shall not be effective as to Collateral
     Agent for 30 days after receipt of such notice, and that appropriate
     certification shall be made to Collateral Agent by each insurer with
     respect thereto.

          e. Carriers will cause such broker(s) to agree to advise Collateral
     Agent in writing promptly of any default in the payment of any premium and
     of any other act or omission on the part of either Carrier that it shall
     have knowledge that might invalidate or render unenforceable, in whole or
     in part, any such insurance. Carriers will promptly deliver to Collateral
     Agent, if requested by Collateral Agent, copies of certificates of
     insurance evidencing all such insurance.

          f. Notwithstanding any of the foregoing, upon the occurrence of an
     Event of Loss with respect to an Aircraft or Engine, the applicable Carrier
     may, by written notice to Collateral Agent at any time within sixty (60)
     days after such Event of Loss, elect, in lieu of

<PAGE>
     repairing or replacing any such Aircraft or Engine, that all insurance
     proceeds relating to such Event of Loss shall be (x) applied to optional
     redemption of the Notes, to the extent that such optional redemption shall
     then be permitted under Section 8 of the Notes, or (y) deposited in a
     deposit account or securities account reasonably acceptable to Collateral
     Agent and in which Collateral Agent holds a perfected security interest, to
     the extent that such optional redemption shall not then be permitted under
     Section 8 of the Notes, and the amounts so deposited shall be applied to
     the redemption of the Notes at such time and to such extent as such
     redemption shall become permitted. In the event that either Carrier elects
     to apply and/or deposit insurance proceeds pursuant to the preceding
     sentence, such Carrier shall have no repair or replacement obligations with
     respect to the Aircraft and/or Engine that was the subject of such Event of
     Loss.

     11. Indemnification and Expenses.

     Each Debtor does hereby assume liability for, and does hereby agree to
indemnify, protect, save and keep harmless Collateral Agent and Noteholders and
their successors, assigns, representatives, officers, directors, agents and
servants (collectively, the "Indemnitees") from and against any and all
liabilities, obligations, losses, damages, penalties, claims, actions, suits,
costs, expenses and disbursements, including legal expenses, of whatsoever kind
and nature imposed on, incurred by or asserted against any of the Indemnitees
(whether or not also indemnified against by any other Person) in any way
relating to or arising out of this Agreement or the ownership, lease, service,
control, repair, overhaul, testing, inspection, possession, management, use,
operation, condition, sale or other disposition of any Collateral; provided,
however, that Debtors shall not be required to indemnify anyone for the willful
misconduct or gross negligence of any of the Indemnitees. The indemnities
contained in this Section shall continue in full force and effect
notwithstanding the termination of this Agreement with respect to claims arising
or liabilities incurred prior to such termination.

     12. Event of Defaults; Remedies.

          a. Each of the following events shall constitute an "Event of Default"
     (whether any such event shall be voluntary or involuntary or come about or
     be effected by operation of law or pursuant to or in compliance with any
     judgment, decree or order of any court or any order, rule or regulation of
     any administrative or governmental body) and each such Event of Default
     shall be deemed to exist and continue so long as, but only as long as, it
     shall not have been remedied:

               i. Any Debtor shall fail to perform or observe any covenant or
          agreement to be performed or observed by it hereunder and such failure
          shall continue unremedied for a period of thirty (30) days after
          written notice thereof by Collateral Agent;

               ii. any material representation or warranty made by any Debtor
          herein or any document or certificate furnished by such Debtor to
          Collateral Agent in connection herewith shall at any time prove to
          have been incorrect in any material respect when made; or

<PAGE>
               iii. any Event of Default shall have occurred and be continuing
          under, and as defined in, the Notes.

          b. If any Event of Default shall occur and be continuing, then, in any
     such event, Collateral Agent shall have all remedies available under this
     Agreement and applicable law. Without limitation of the foregoing,
     Collateral Agent may forthwith to the extent permitted by applicable law:
     (i) apply to a court of competent jurisdiction to obtain specific
     performance or observance by any Debtor of any covenant, agreement or
     undertaking on the part of such Debtor hereunder that such Debtor shall
     have failed to observe or perform or to obtain aid in the execution of any
     power granted herein; and/or (ii) proceed to foreclose upon and against the
     lien and security interest created by this Agreement according to the laws
     of the applicable jurisdiction by doing any one or more or all of the acts
     described in paragraph (c) below and/or the following acts, as Collateral
     Agent in its sole and complete discretion may then elect:

               i. institute legal proceedings to foreclose upon and against the
          lien and security interest granted by this Agreement, to recover
          judgments for the Obligations then due and owing and secured hereby,
          and to collect the same out of any of or all the Collateral or the
          proceeds of any sale thereof;

               ii. institute legal proceedings for the sale, under the judgment
          or decree of any court of competent jurisdiction, of any of or all the
          Collateral;

               iii. without regard to the adequacy of the security for the
          Obligations by virtue of this Agreement or any other collateral or to
          the solvency of any Debtor, institute legal proceedings for the
          appointment of a receiver or receivers with respect to any of or all
          the Collateral pending foreclosure hereunder or for the sale of any of
          or all the Collateral under the order of a court of competent
          jurisdiction or under other legal process; or

               iv. Personally or by agents or attorneys, enter upon any premises
          where the Collateral or any part thereof may then be located, and take
          possession of all or any part thereof, and hold, store and keep idle,
          or lease, operate or otherwise use or permit the use of, the
          Collateral or any part thereof, for such time and upon such terms as
          Collateral Agent may in its discretion deem to be in its best
          interest, and demand, collect, and retain all rent, earnings, and
          other sums due and to become due in respect of the same from any party
          whomsoever, accounting only for net earnings, if any, arising from
          such use and charging against all receipts from the use of the same or
          from the sale thereof, by court proceedings or pursuant to paragraph
          (c) below, all other costs, expenses, charges, damages and other
          losses resulting from such use.

          At any sale pursuant to this Section 12, whether under the power of
     sale or by virtue of judicial proceedings, it shall not be necessary for
     Collateral Agent or a public officer under order of a court to have present
     physical or constructive possession of the Collateral to be sold. Upon any
     sale hereunder of any of or all the Collateral or any interest therein, the
     written receipt issued by the officer making such sale under judicial
     proceedings or of Collateral Agent shall be sufficient discharge to the
     purchaser for the purchase money, and such purchaser shall not be obligated
     to see to the application thereof. Any sale hereunder of

<PAGE>
     any of or all the Collateral or any interest therein shall, to the extent
     permitted by applicable law, be a perpetual bar against the applicable
     Debtor with respect to such Collateral or interest therein, as the case may
     be.

          c. If any Event of Default shall occur and be continuing and
     Collateral Agent shall have determined in its discretion in order to effect
     a foreclosure disposition of one or more of the Slots, or in order to
     preserve the value of the Slots pending foreclosure, that the named holder
     of the Slots should be the Collateral Agent or its designee(s), then, in
     any such event, Midwest and YX agree to execute and deliver such necessary
     deeds of conveyance, assignments and other documents or instruments,
     including any notices or applications to the DOT, FAA or any other
     governmental or regulatory authority having jurisdiction over any or all of
     the Slots, as Collateral Agent may demand in order to effect the transfer
     of the Slots in the records of any such governmental or regulatory
     authority to Collateral Agent or such designee(s).

          d. If Collateral Agent should elect to foreclose upon and against the
     lien and security interest created in and by this Agreement, each Debtor
     shall, upon demand of Collateral Agent, deliver to Collateral Agent all or
     any part of such Debtor's Collateral at such time or times and place or
     places as Collateral Agent may specify; and Collateral Agent is hereby
     authorized and empowered to the extent permitted by law, with or without
     the aid of process of law, to enter upon any premises where the Collateral
     or any part thereof may be located and take possession of and remove the
     same. Collateral Agent may thereafter sell, lease and dispose of, or cause
     to be sold, leased or disposed of, all or any part of the Collateral at one
     or more public or private sales, leasings or other dispositions, at such
     places and times and on such terms and conditions as Collateral Agent may
     deem fit. Collateral Agent agrees to give Debtors at least ten (10) days'
     written notice of the date fixed for any public sale, or the date on or
     after that will occur the execution of any contract for any private sale,
     of any of the Collateral.

     13. Application of Proceeds.

     If an Event of Default shall occur and be continuing, the proceeds of any
sale, lease or other disposition of all or any part of the Collateral under this
Agreement and all other sums realized by Collateral Agent pursuant to this
Agreement shall be applied in the following order of priority:

     First: To the payment of the costs and expenses of such sale, lease,
disposition or realization, including reasonable compensation to Collateral
Agent's counsel, and all reasonable expenses, liabilities and advances made or
incurred by Collateral Agent in connection therewith, including without
limitation, taxes upon or with respect to the sale, lease, disposition or
realization and the payment of taxes and liens, if any, prior to the lien and
security interest of this Agreement (except any taxes or liens to which the
respective sale, lease, disposition or realization shall have been subject) and
to the payment of expenses incurred and the reimbursement of payments made by
Collateral Agent pursuant to Section 6(g);

     Second: To the reimbursement (whether to Collateral Agent or Noteholders)
of any liabilities, obligations, losses, damages, penalties, costs, expenses
fees or disbursements that are the subject of indemnification obligations
pursuant to Section 6(e) or Section 11;

<PAGE>
     Third: To the payment of the remainder of the Obligations, pro rata among
Noteholders; and

     Fourth: Upon payment in full of the Obligations, the balance, if any, to
any Debtor or to such other Person(s) as may lawfully be entitled to the
remainder or as any court of competent jurisdiction may direct.

     14. Remedies Cumulative.

     No failure or delay on the part of Collateral Agent in exercising, and no
course of dealing with respect to, any rights, power or remedy under this
Agreement, and no notice or demand that may be given to or made upon any Debtor
with respect to any such right, power or remedy, shall constitute a waiver
thereof or limit or impair the rights of Collateral Agent to take any other or
similar action or to exercise any other right, power or remedy granted in this
Agreement or otherwise available to Collateral Agent; nor shall any single or
partial exercise of any rights, power or remedy granted under this Agreement
include any other or further exercise thereof or the exercise of any other
right, power or remedy granted in this Agreement or otherwise available to
Collateral Agent or prejudice its rights against any Debtor in any respect. Each
and every remedy of Collateral Agent shall be cumulative and shall not be
exclusive of any other remedies provided now or hereafter at law, in equity or
otherwise.

     15. Further Assurances.

     Debtors shall, at their own cost and expense (except as otherwise stated
below) cause this Agreement, and any and all additional instruments that shall
be executed pursuant to the terms hereof, to be kept, filed and recorded, at all
times, in such places in the United States and such places outside the United
States to which any of the Aircraft shall be operated as shall be required in
order to perfect and preserve the rights of Collateral Agent hereunder and
furnish to Collateral Agent an opinion or opinions of counsel and, without
limitation of any of the foregoing, at the request of Collateral Agent, promptly
correct any defect, error or omission that may at any time hereafter be
discovered in the contents of this Agreement or in the execution, acknowledgment
or delivery hereof, and will execute, acknowledge and deliver to Collateral
Agent such further documents and assurances and take such further action as
Collateral Agent may from time to time reasonably request in order to more
effectively carry out the intent and purpose of this Agreement and to establish
and protect the rights and remedies created or intended to be created in favor
of Collateral Agent hereunder. Without limiting anything set forth above,
Debtors shall promptly file and record such financing statements, continuation
statements and other instruments or documents with respect to the lien and
security interest created hereby as Collateral Agent may reasonably deem
necessary or appropriate fully to perfect the lien and security interest, or
fully to protect its interests, hereunder. Debtors hereby authorize Collateral
Agent to file initial financing statements, amendments and continuation
statements in any jurisdiction that Collateral Agent believes is necessary to
perfect its security interest in the Collateral.

     16. Termination of Agreement; Release of Collateral.

     This Agreement and the security interest granted under this Agreement shall
terminate at the earlier of the date determined pursuant to Section 7 above or
the date when the Obligations shall have been irrevocably paid in full (or the
Obligations shall have been reduced to zero by

<PAGE>
conversion, redemption and/or payment of the Notes). In the event that a Debtor
exchanges or sells Collateral pursuant to clause (3), (4), (5) or (6) of Section
3(a)(x) above, Collateral Agent's liens and security interests on or in such
Collateral shall automatically terminate. Upon termination of this Agreement or
termination of Collateral Agent's security interest in Collateral pursuant to
this Section 16, Collateral Agent shall execute and deliver to Debtors at
Debtors' expense, such instruments of release and termination as shall be
appropriate in order to effect such termination.

     17. Miscellaneous.

     Any provision of this Agreement which shall be prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by applicable law, Debtors hereby
waive any provision of law that renders any provision hereof prohibited or
unenforceable in any respect. No term or provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by Debtors and Collateral Agent. The captions in this Agreement
are for convenience of reference only and shall not define or limit any of the
terms or provisions hereof.

     18. Governing Law.

     This Agreement shall be construed and enforced in accordance with, and
governed by the internal laws of the State of Wisconsin, without reference to
any principles of conflict of laws or choice of laws. All terms not otherwise
defined have the meanings assigned to them by the Act or by Articles 1 and 9 of
the Uniform Commercial Code of the State of Wisconsin, as it may be amended,
reenacted or otherwise in effect from time to time. Invalidity of any provision
of this Agreement shall not affect the validity of any other provision.

     19. Amendment.

     Any amendment or modification of this Agreement and any release of
Collateral from Collateral Agent's lien or security interest under this
Agreement (other than pursuant to Sections 7 and 16 hereof) must be made in
writing and signed by Collateral Agent, Required Noteholders and Debtors;
provided, however, that no amendment, modification or release shall, unless made
in writing and signed by Collateral Agent, all Noteholders, Holdings and
Debtors, do any of the following:

          a. Amend or modify this Section 19 or the definition of "Required
     Noteholders";

          b. Amend or modify Section 13 regarding distribution of proceeds of
     disposition of Collateral.

     20. Notice.

     Any notices required or permitted to be given under the terms of this
Agreement must be sent by certified or registered mail (return receipt
requested), or delivered personally or by courier to the respective address of
Debtors, Noteholders and Collateral Agent, each as set forth on the signature
pages hereof.

     21. Persons Bound.

<PAGE>
     This Agreement benefits Collateral Agent, Noteholders, and their respective
successors and assigns, including every holder or owner of any of the
Obligations, and binds Debtors and their permitted successors and permitted
assigns. Debtors may not assign this Agreement without the prior written consent
of Collateral Agent.

     22. Consent to Jurisdiction.

     Notwithstanding anything to the contrary in this Agreement or any other
agreement between any of Debtors, Collateral Agent and Noteholders prior to the
date hereof, each Debtor, Collateral Agent and each Noteholder, 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 Wisconsin sitting in the City of Milwaukee, County of
Milwaukee, and to the non-exclusive jurisdiction of the U.S. District Court for
the Eastern District of Wisconsin, and 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 Agreement, the subject matter hereof or any of
the transactions contemplated hereby brought by any of Debtors, Collateral Agent
and Noteholders, or their successors or assigns;

     (ii) waives, and agrees not to assert, by way of motion, as a defense, or
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 Agreement 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 Debtors, Collateral Agent or Noteholders 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
Agreement 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.

     23. WAIVER OF JURY TRIAL.

     EACH DEBTOR, COLLATERAL AGENT AND EACH NOTEHOLDER 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.

     24. Execution and Delivery.

<PAGE>
     This Agreement may be executed in any number of counterparts (to include
facsimiles), and each such counterpart shall for all purposes be deemed to be an
original, and all such counterparts shall together constitute one and the same
instrument.

     25. Acknowledgement Regarding Noteholders.

     Nothing contained herein, and no action taken by any Noteholder, shall be
deemed to constitute the Noteholders as a partnership, an association, a joint
venture or any other kind of entity, or create a presumption that the
Noteholders are in any way acting in concert or as a group with respect to the
Obligations or the transactions contemplated hereby, provided that the
Obligations or the transactions contemplated hereby may be modified, amended or
waived in accordance with the provisions hereof.

                           [Signature pages to follow]

<PAGE>
     IN WITNESS WHEREOF, the undersigned Debtors, Collateral Agent, and
Noteholders have caused this Security Agreement to be duly executed as of the
date first written above.

                                    MIDWEST EXPRESS HOLDINGS, INC.

                                    By:/s/ Robert S. Bahlman
                                       -----------------------------------------
                                    Name:  Robert S. Bahlman
                                    Title: Senior Vice President and
                                           Chief Financial Officer
                                    Address: 6744 South Howell Avenue
                                             Oak Creek, Wisconsin  53154

                                    MIDWEST AIRLINES, INC.

                                    By:/s/ Robert S. Bahlman
                                       -----------------------------------------
                                    Name:  Robert S. Bahlman
                                    Title: Chief Financial Officer
                                    Address: 6744 South Howell Avenue
                                             Oak Creek, Wisconsin  53154

                                    SKYWAY AIRLINES, INC.

                                    By:/s/ Robert S. Bahlman
                                       -----------------------------------------
                                    Name:  Robert S. Bahlman
                                    Title: Chief Financial Officer
                                    Address: 1190 West Rawson Avenue
                                             Oak Creek, Wisconsin  53154

                                    YX PROPERTIES, LLC

                                    By:/s/ Robert S. Bahlman
                                       -----------------------------------------
                                    Name:  Robert S. Bahlman
                                    Title: President
                                    Address: 6744 South Howell Avenue
                                             Oak Creek, Wisconsin  53154

<PAGE>
                                    SF CAPITAL PARTNERS, LTD.

                                    By: Staro Asset Management, LLC, its
                                        investment manager

                                        /s/ Michael A. Roth
                                        ----------------------------------------
                                        By:  Michael A. Roth
                                        Its: Managing Member

                                        Address: 3600 South Lake Drive
                                                 St. Francis, Wisconsin  53235
                                                 Attention: Brian H. Davidson

<PAGE>
                    [SIGNATURE PAGES OF NOTEHOLDERS OMITTED]

                                  NOTEHOLDERS

                                      [NAME OF NOTEHOLDER]

                                     *BY:
                                          --------------------------------------

                                      By:
                                          --------------------------------------
                                          Name:
                                          Title:

<PAGE>

                                   SCHEDULE A

                                   NOTEHOLDERS

                       [SCHEDULE OF NOTEHOLDERS OMITTED]

<PAGE>
                                   SCHEDULE B

                                    AIRCRAFT
<TABLE>
<CAPTION>

      CARRIER               MANUFACTURER              MODEL       MANUFACTURER SERIAL NUMBER     U.S. REGISTRATION
                                                                                                      NUMBER
------------------------------------------------------------------------------------------------------------------
<S>                      <C>                         <C>                    <C>                       <C>
Midwest Airlines,        McDonnell Douglas           DC-9-81                48006                     N812ME
Inc.                                                 (MD-81)

Midwest Airlines,        McDonnell Douglas           DC-9-81                48030                     N804ME
Inc.                                                 (MD-81)

Midwest Airlines,        McDonnell Douglas           DC-9-81                48032                     N806ME
Inc.                                                 (MD-81)

Midwest Airlines,        McDonnell Douglas           DC-9-81                48033                     N807ME
Inc.                                                 (MD-81)

Midwest Airlines,        McDonnell Douglas           DC-9-81                48007                     N813ME
Inc.                                                 (MD-81)

Midwest Airlines,        McDonnell Douglas           DC-9-81                48010                     N814ME
Inc.                                                 (MD-81)

Midwest Airlines,        McDonnell Douglas           DC-9-82                48072                     N810ME
Inc.                                                 (MD-82)

Midwest Airlines,        McDonnell Douglas           DC-9-82                48071                     N809ME
Inc.                                                 (MD-82)

Skyway Airlines,              Dornier                328-300                 3202                     N359SK
Inc.

Skyway Airlines,              Dornier                328-300                 3136                     N360SK
Inc.

Midwest Airlines,        McDonnell Douglas           DC9-14                 45696                     N700ME
Inc.

Midwest Airlines,        McDonnell Douglas           DC9-32                 47190                     N301ME
Inc.

Midwest Airlines,        McDonnell Douglas           DC9-32                 47102                     N302ME
Inc.

Midwest Airlines,        McDonnell Douglas           DC9-32                 47133                     N401ME
Inc.

Midwest Airlines,        McDonnell Douglas           DC9-32                 47132                     N501ME
Inc.
</TABLE>

<PAGE>
                                   SCHEDULE C

                                    ENGINES
<TABLE>
<CAPTION>

 Attached to Aircraft of Type               Manufacturer                      Model            Engine Serial Number
------------------------------------------------------------------------------------------------------------------
<S>                                        <C>                              <C>                       <C>
McDonnell Douglas                          Pratt & Whitney                  JT8D-217C                 718492
DC-9-81 (MD-81) or
DC-9-82 (MD-82)

McDonnell Douglas                          Pratt & Whitney                  JT8D-217C                 718441
DC-9-81 (MD-81) or
DC-9-82 (MD-82)

McDonnell Douglas                          Pratt & Whitney                  JT8D-217C                 725406
DC-9-81 (MD-81) or
DC-9-82 (MD-82)

McDonnell Douglas                          Pratt & Whitney                  JT8D-217C                 725624
DC-9-81 (MD-81) or
DC-9-82 (MD-82)

McDonnell Douglas                          Pratt & Whitney                  JT8D-217C                 725472
DC-9-81 (MD-81) or
DC-9-82 (MD-82)

McDonnell Douglas                          Pratt & Whitney                  JT8D-217C                 725625
DC-9-81 (MD-81) or
DC-9-82 (MD-82)

McDonnell Douglas                          Pratt & Whitney                  JT8D-217C                 725987
DC-9-81 (MD-81) or
DC-9-82 (MD-82)

McDonnell Douglas                          Pratt & Whitney                  JT8D-217C                 717871
DC-9-81 (MD-81) or
DC-9-82 (MD-82)

McDonnell Douglas                          Pratt & Whitney                  JT8D-217C                 696360
DC-9-81 (MD-81) or
DC-9-82 (MD-82)

McDonnell Douglas                          Pratt & Whitney                  JT8D-217C                 725623
DC-9-81 (MD-81) or
DC-9-82 (MD-82)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

 Attached to Aircraft of Type               Manufacturer                      Model            Engine Serial Number
------------------------------------------------------------------------------------------------------------------
<S>                                        <C>                              <C>                       <C>
McDonnell Douglas                          Pratt & Whitney                  JT8D-217C                 725756
DC-9-81 (MD-81) or
DC-9-82 (MD-82)

McDonnell Douglas                          Pratt & Whitney                  JT8D-217C                 726864
DC-9-81 (MD-81) or
DC-9-82 (MD-82)

McDonnell Douglas                          Pratt & Whitney                  JT8D-217C                 716739
DC-9-81 (MD-81) or
DC-9-82 (MD-82)

McDonnell Douglas                          Pratt & Whitney                  JT8D-217C                 696405
DC-9-81 (MD-81) or
DC-9-82 (MD-82)

McDonnell Douglas                          Pratt & Whitney                  JT8D-217C                 718443
DC-9-81 (MD-81) or
DC-9-82 (MD-82)

McDonnell Douglas                          Pratt & Whitney                  JT8D-217C                 725351
DC-9-81 (MD-81) or
DC-9-82 (MD-82)

Dornier 328-300                            Pratt & Whitney                     306B                 PCE-CD0225

Dornier 328-300                            Pratt & Whitney                     306B                 PCE-CD0228

Dornier 328-300                            Pratt & Whitney                     306B                 PCE-CD0226

Dornier 328-300                            Pratt & Whitney                     306B                 PCE-CD0235

McDonnell Douglas                          Pratt & Whitney                   JT8D-7B                  649644
DC9-14, DC9-15 or
DC9-32

McDonnell Douglas                          Pratt & Whitney                   JT8D-7B                  655098
DC9-14, DC9-15 or
DC9-32

McDonnell Douglas                          Pratt & Whitney                   JT8D-7B                  654427
DC9-14, DC9-15 or
DC9-32
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

 Attached to Aircraft of Type               Manufacturer                      Model            Engine Serial Number
------------------------------------------------------------------------------------------------------------------
<S>                                        <C>                              <C>                       <C>
McDonnell Douglas                          Pratt & Whitney                   JT8D-7B                  657106
DC9-14, DC9-15 or
DC9-32

McDonnell Douglas                          Pratt & Whitney                   JT8D-7B                  649373
DC9-14, DC9-15 or
DC9-32

McDonnell Douglas                          Pratt & Whitney                   JT8D-7B                  666283
DC9-14, DC9-15 or
DC9-32

McDonnell Douglas                          Pratt & Whitney                   JT8D-7B                  657218
DC9-14, DC9-15 or
DC9-32

McDonnell Douglas                          Pratt & Whitney                   JT8D-7B                  648927
DC9-14, DC9-15 or
DC9-32

McDonnell Douglas                          Pratt & Whitney                   JT8D-7B                  654619
DC9-14, DC9-15 or
DC9-32

McDonnell Douglas                          Pratt & Whitney                   JT8D-7B                  654157
DC9-14, DC9-15 or
DC9-32

McDonnell Douglas                          Pratt & Whitney                   JT8D-7B                  649302
DC9-14, DC9-15 or
DC9-32

McDonnell Douglas                          Pratt & Whitney                   JT8D-7B                  649674
DC9-14, DC9-15 or
DC9-32

McDonnell Douglas                          Pratt & Whitney                   JT8D-7B                  657758
DC9-14, DC9-15 or
DC9-32

McDonnell Douglas                          Pratt & Whitney                   JT8D-7B                  654159
DC9-14, DC9-15 or
DC9-32
</TABLE>

<PAGE>
                                   SCHEDULE D
                     LOCATION OF SPARE PARTS AND APPLIANCES

1.   Omaha, Nebraska:

     Eppley Airfield
     4501 Abbott Drive
     Omaha, NE 68110

2.   Kansas City, Missouri:

     Kansas City International Airport
     P.O. Box 20062
     Kansas City, MO 64195

3.   Milwaukee, Wisconsin:

     General Mitchell International Airport
     5300 South Howell Avenue
     Milwaukee, WI 53207

     Midwest Airlines Hangar
     555 West Cargo Way
     Milwaukee, WI 53207

     Skyway Airlines Hangar
     401 East Layton Avenue
     Milwaukee, WI 53207

     The Tracer Corporation
     4344 W. Capitol Drive
     Milwaukee, WI  53216

     The Tracer Corporation
     1600 W. Chambers Street
     Milwaukee, WI  53045

4.   Washington, D.C.

     Washington National Airport
     Terminal C
     Washington, DC 20001

<PAGE>
                                   SCHEDULE E

                                     SLOTS
<TABLE>
<CAPTION>

     Grantor          Start Time          Slot Type             Slot ID #                       Airport
----------------------------------------------------------------------------------------------------------------------
<S>                      <C>                                       <C>             <C>
       YX                0700                                      1146            Ronald Reagan Washington National
                                                                                         Airport ("National")

       YX                1000                                      1230                        National

       YX                1000                                      1010                        National

       YX                1100                                      1037                        National

       YX                1200                                      1613                        National

       YX                1800                                      1066                        National

       YX                1900                                      1098                        National

       YX                2100                                      1001                        National

       YX                2100                                      1544                        National

       YX                2100                                      1588                        National

       YX                0630             Departure                3664(1)                La Guardia Airport

       YX                1030              Arrival                 3234                   La Guardia Airport

       YX                1130             Departure                3260                   La Guardia Airport

       YX                1530              Arrival                 3232                   La Guardia Airport

       YX                1800              Arrival                 3009                   La Guardia Airport

       YX                1900             Departure                3591                   La Guardia Airport

       YX                2100              Arrival                 3191                   La Guardia Airport

       YX                2200              Arrival                 3584(1)                La Guardia Airport
</TABLE>
-------------------------------
     (1) Debtor intends to cease to operate the flights that use this Slot
effective October 26, 2003. Debtor will surrender this Slot to the FAA effective
at that time, although Debtor believes that it could reacquire rights to this
Slot if operational needs so required.

<PAGE>
                                  EXHIBIT 8(a)

                      FORM SUPPLEMENTAL SECURITY AGREEMENT

                     SUPPLEMENTAL SECURITY AGREEMENT NO. ___

     THIS SUPPLEMENTAL SECURITY AGREEMENT executed as of _____________, 20__,
(this "Supplemental Security Agreement"), by _____________________ ("Debtor"), a
__________________________ having its chief place of business at 6744 South
Howell Avenue, Oak Creek, Wisconsin 53154, in favor of Collateral Agent for the
benefit of Noteholders under that certain Security Agreement, dated as of
September 29, 2003 (the "Agreement"), by Midwest Express Holdings, Inc., a
Wisconsin corporation, Midwest Airlines, Inc., a Wisconsin corporation; Skyway
Airlines, Inc., a Delaware corporation; YX Properties, LLC, a Nebraska limited
liability company; _________________ as agent for the benefit of the parties
identified on Schedule A thereto (the "Noteholders"); and Noteholders.
Capitalized terms used herein and not otherwise defined herein shall have the
meanings given to them in the Agreement.

     WHEREAS, Debtor has heretofore executed and delivered to Collateral Agent
the Agreement covering the property of Debtor therein described, to secure the
due and punctual payment and performance of the Obligations;

     WHEREAS, the Agreement was duly recorded with the Federal Aviation
Administration in Oklahoma City, Oklahoma, on _____________, 2003, as Conveyance
No. ___, pursuant to the Act;

     WHEREAS, Debtor is the legal and beneficial owner of each of the Engines
(defined below), free and clear of all liens and encumbrances except Permitted
Liens, and desires to execute and deliver this Supplemental Security Agreement
for the purpose of specifically subjecting said Engines to the lien of the
Agreement;

     WHEREAS, Debtor is an air carrier certificated under Section 401 of the
Act, and holds air carrier operating certificates; and

     WHEREAS, all things necessary to make this Supplemental Security Agreement
valid, binding and legal obligation of Debtor, including all proper corporate
action on the part of the Debtor, have been done and performed and have
happened.

     NOW, THEREFORE, to secure the payment and performance of the Obligations,
Debtor hereby mortgages to Collateral Agent a security interest in, for the
ratable benefit of Noteholders, the following engine(s) (the "Engines"):

      Manufacturer     Model             Manufacturer's
                                          Serial Number
--------------------------------------------------------------------

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

--------------------------------------------------------------------
<PAGE>

     This Supplemental Security Agreement shall be construed and enforced in
accordance with, and governed by the internal laws of the State of New York,
without reference to any principles of conflict of laws or choice of laws.

     This Supplemental Security Agreement shall be construed as supplemental to
the Agreement and shall form a part thereof, and the Agreement is hereby
incorporated by reference herein and is hereby ratified, approved and confirmed.

     IN WITNESS WHEREOF, the undersigned has caused this Supplemental Security
Agreement to be duly executed, as of the day and year first above written.

                               [CARRIER]

                               -------------------------------------------------
                               By:
                               Its:

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