Document:

Execution Copy

                          SECURITIES PURCHASE AGREEMENT

     This SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of
September 29, 2003, is made by and among Midwest Express Holdings, Inc., a
Wisconsin corporation (the "Company"), with headquarters located at 6744 South
Howell Avenue, Oak Creek, WI 53154, 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"), 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"), and the investors named on the signature pages
hereto (each of whom is hereinafter referred to as the "Investor" and all of
whom collectively are hereinafter referred to as the "Investors"). Capitalized
terms used herein and not otherwise defined have the meanings given them in
Article VIII.

                                    RECITALS:

     A. The Company, Co-Borrowers and the Investors are executing and delivering
this Agreement in accordance with and in reliance upon the exemption from
securities registration afforded by Section 4(2) of the Securities Act of 1933,
as amended (the "Securities Act"), and Rule 506 under Regulation D ("Regulation
D") as promulgated by the United States Securities and Exchange Commission (the
"SEC") under the Securities Act.

     B. The Company has authorized a new series of convertible senior secured
notes of the Company in the form attached hereto as Exhibit A (together with any
senior convertible notes issued in replacement thereof in accordance with the
terms thereof, the "Notes"), which Notes shall be convertible into shares of the
Company's common stock, par value $.01 per share (the "Common Stock") (as issued
upon conversion of the Notes, the "Conversion Shares"), in accordance with the
terms of the Notes, and which Notes shall be secured by assets of the Company
and the Co-Borrowers in accordance with the Security Agreement (as defined
herein) and the Mortgage (as defined herein).

     C. Each Investor wishes to purchase, and the Company and the Co-Borrowers
wish to sell, upon the terms and conditions stated in this Agreement, the
principal amount of Notes set forth beneath the Investor's name on the signature
pages hereof (which aggregate principal amount for all Investors together is
$25,000,000).

     D. At the First Closing (as defined herein), the parties hereto will
execute and deliver a Registration Rights Agreement under which the Company will
agree to provide to the Investors certain rights with respect to registration of
the resale of the Conversion Shares under the Securities Act and applicable
state securities laws, the Security Agreement and the Mortgage.

     E. Because the Company and the Co-Borrowers are not in a position to
deliver security for the Notes on the First Closing Date (as defined herein),
the parties are making First Closing deliveries under this Agreement to the
Escrow Agent (as defined herein) under the Escrow Agreement (as defined herein)
such that, under certain circumstances, and subject to the terms and conditions
of this Agreement and the Escrow Agreement, after the First Closing, this
Agreement may terminate as if the First Closing did not occur with respect to
some or all of the First Closing Notes (as defined herein).

                                   AGREEMENT:

     In consideration of the premises and the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Company, the Co-Borrowers and each of the Investors
hereby agree as follows:

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                                   ARTICLE I
                           PURCHASE AND SALE OF NOTES

     1.1. Purchase and Sale of Notes. At the First Closing and the Second
Closing (as defined herein), subject to the terms of this Agreement and the
satisfaction or waiver of the conditions set forth in Articles VI and VII, the
Company and the Co-Borrowers will sell to each Investor, and each Investor will
(on a several and not a joint basis) purchase from the Company and the
Co-Borrowers, the principal amount of Notes set forth beneath such Investor's
name on the signature pages hereof respecting the First Closing or the Second
Closing, as the case may be.

     1.2. Payment at First Closing. On the First Closing Date (as defined
herein), each Investor shall deliver to the Escrow Agent the aggregate purchase
price for the Notes to be purchased at the First Closing, which shall be equal
to $1.00 for each $1.00 of principal amount of Notes to be purchased by such
Investor at the First Closing (the "First Closing Purchase Price"), by wire
transfer of immediately available funds in accordance with the written wire
instructions set forth in the Escrow Agreement, and the Company will deliver to
the Escrow Agent a note for each Investor (bearing a restrictive legend as set
forth in Section 2.8) in the form of Exhibit A hereto representing the Notes so
purchased by such Investor at the First Closing against delivery of the purchase
price for such Notes to the Escrow Agent (all such Notes so delivered by the
Company for all Investors at the First Closing, collectively, the "First Closing
Notes"). The Notes and the First Closing Purchase Price shall be held by the
Escrow Agent pursuant to the terms of the Escrow Agreement.

     1.3. Payment at Second Closing. On the Second Closing Date (as defined
herein), each Investor will pay the aggregate purchase price for the Notes to be
purchased at the Second Closing, which shall be equal to $1.00 for each $1.00 of
principal amount of Notes to be purchased by such Investor at the Second
Closing, by wire transfer of immediately available funds in accordance with the
written wire instructions set forth on the signature page hereto of the Company,
and the Company will deliver to each Investor a note (bearing a restrictive
legend as set forth in Section 2.8) in the form of Exhibit A hereto representing
the Notes so purchased by such Investor at the Second Closing against delivery
of the purchase price therefor as described above.

     1.4. Closing Dates. The First Closing will take place at 10:00 a.m. Central
Time on September 29, 2003, or at another date or time agreed upon by each of
the parties to this Agreement (the "First Closing Date"). The Second Closing
will take place at 10:00 a.m. Central Time on the date (the "Second Closing
Date") three (3) Business Days (as defined herein) (a) if Section 10.12(b) does
not apply, after the latest of (i) if the Company receives the Shareholder
Approval referred to in Section 4.9 for the increase in the authorized Common
Stock to 50 million shares, the issuance of the Conversion Shares upon the
conversion of the Notes to be sold pursuant to this Agreement at the Second
Closing and the Concurrent Equity Transaction (as defined herein), the date the
Company receives such approval, (ii) release by the Escrow Agent in full of the
First Closing Notes and to the Company of the entire First Closing Purchase
Price, (iii) if Section 4.12(b) does not apply, the date on which the Concurrent
Equity Transaction closes or (iv) if Section 4.12(b) applies, the last date by
which the Second Closing Investors (as defined herein) may elect to proceed with
the Second Closing by delivering notice to the Company, or at another date or
time agreed upon by each of the parties to this Agreement, or (b) if Section
10.12(b) applies, after the last date by which the Investors may elect to
proceed with the Second Closing pursuant to Section 10.12(b), with respect to
the Investors who so elect (and if any Investor does not so elect, then the
Investors who do so elect shall have the option, exercisable at the Second
Closing, to purchase (pro rata if applicable) additional Notes up to the
aggregate principal amount of the Notes that were to be sold pursuant to this
Agreement at the Second Closing to the Investors who elected not to proceed).
The First Closing and the Second Closing will be held at the offices of the
Company or at such other place as the parties agree.

<PAGE>
     1.5. Independent Nature. The rights and obligations of each Investor under
this Agreement are several and not joint with the rights and obligations of each
other Investor, and an Investor shall not be responsible in any way for the
performance of the obligations of any other Investor under this Agreement.
Nothing contained herein, and no action taken by any Investor pursuant hereto,
shall constitute the Investors as a partnership, an association, a joint venture
or any other kind of entity, or create a presumption that the Investors are in
any way acting in concert or as a "group" (within the meaning of Section 13(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) with
respect to such obligations or the transactions contemplated hereby. Each
Investor shall be entitled to independently protect and enforce its rights,
including without limitation the rights arising out of this Agreement, and it
shall not be necessary for the other Investors to be joined as an additional
party in any proceeding for such purposes.

                                   ARTICLE II
                    INVESTOR'S REPRESENTATIONS AND WARRANTIES

     Each Investor represents and warrants to the Company and the Co-Borrowers,
severally and solely with respect to itself and its purchases hereunder and not
with respect to any other Investor, that:

     2.1. Investment Purpose. The Investor is acquiring the Securities (as
defined herein) for its own account and not with a view to the distribution
thereof; provided, however, that by making the representation herein, the
Investor reserves the right to dispose of the Securities in accordance with or
pursuant to an effective registration statement or an exemption from
registration under the Securities Act. The Investor understands that the
Investor may be required to bear the economic risk of this investment
indefinitely, unless the sale or resale of the Securities is registered pursuant
to the Securities Act and any applicable state securities or blue sky laws or an
exemption from such registration is available. The Investor further represents
that it does not have any contract, undertaking, agreement or arrangement with
any person or entity to sell, transfer or grant participation to any third
person or entity with respect to any of the Securities; provided, however, that
by making the representations herein, the Investor does not agree to hold any
Securities for any minimum or other specific term and reserves the right to
dispose of the Securities at any time in accordance with or pursuant to a
registration statement or an exemption under the Securities Act.

     2.2. Investor Status. The Investor is either: (i) a "qualified
institutional buyer" as defined in Rule 144A under the Securities Act; or (ii)
an institutional "accredited investor" as defined in Rule 501(a)(1), (2), (3) or
(7) of Regulation D (referred to herein as an "institutional accredited
investor"). The Investor is not registered as a broker or dealer under Section
15(a) of the Exchange Act or a member of the National Association of Securities
Dealers, Inc. If an Investor is subject to the Employee Retirement Income
Security Act of 1974, as amended, and is acquiring the Securities as a fiduciary
or agent for another investor's account, then the Investor will have sole
investment and voting discretion with respect to such account and will have full
power to make the acknowledgments, representations and agreements contained
herein on behalf of such account.

     2.3. Reliance on Exemptions. The Investor understands that the Securities
are being offered and sold to it in reliance upon specific exemptions from the
registration requirements of the United States federal and state securities laws
and that the Company and the Co-Borrowers are relying upon the truth and
accuracy of, and the Investor's compliance with, the representations,
warranties, agreements, acknowledgments and understandings of the Investor set
forth herein to determine the availability of such exemptions and the
eligibility of the Investor to acquire the Securities.

     2.4. Information. The Investor and its advisors, if any, have been
furnished with all materials relating to the business, finances and operations
of the Company and its subsidiaries, and materials relating to the offer and
sale of the Securities, that have been requested by the Investor or its
advisors, if any. The Investor and its advisors, if any, have been afforded
adequate opportunity to ask questions of, and

<PAGE>
receive answers from, the Company and the Co-Borrowers. The Investor
acknowledges and understands that its investment in the Securities involves a
significant degree of risk, including the risks reflected in the Company's
Confidential Information Memorandum, dated August 1, 2003, delivered to each
Investor (the "CIM"), and the SEC Documents (as defined herein). The foregoing
representations and any due diligence investigation conducted by the Investor
shall not in any way amend, limit or modify the representations and warranties
of the Company and the Co-Borrowers set forth in Article III, the Registration
Rights Agreement or the Security Agreement nor in any way affect the Investor's
right to rely on such representations and warranties.

     2.5. Experience. If the Investor made the investment decision relating to
the investment in the Securities on its own behalf, then the Investor has such
knowledge and experience in financial, business and investment matters,
including the airline industry and businesses and operations of companies that
operate in lines of business similar to the Company, that the Investor believes
it is capable of evaluating the terms and conditions, merits and risks of the
transactions described herein and the investment contemplated hereby, and the
Investor is familiar with the risks associated with such industry and businesses
and has the ability to bear the economic risks of the investment in the
Securities. If an advisor made the investment decision relating to the
investment in the Securities on behalf of the Investor, then the advisor has
such knowledge and experience in financial, business and investment matters,
including the airline industry and businesses and operations of companies that
operate in lines of business similar to the Company, that the advisor believes
it is capable of evaluating the terms and conditions, merits and risks of the
transactions described herein and the investment contemplated hereby, and the
advisor is familiar with the risks associated with such industry and businesses
and believes the Investor has the ability to bear the economic risks of the
investment in the Securities.

     2.6. Governmental Review. The Investor understands that no United States
federal or state agency or any other government or governmental agency has
passed upon or made any recommendation or endorsement of the Securities or an
investment therein.

     2.7. Transfer or Resale. The Investor understands that:

          (a) the delivery of the Securities has not been registered under the
     Securities Act or any applicable state securities laws, and consequently,
     the Investor may, subject to the Investor's rights under the Registration
     Rights Agreement, have to bear the risk of owning the Securities for an
     indefinite period of time because the Securities may not be transferred
     unless:

               (i) the resale of the Securities is registered pursuant to an
          effective registration statement under the Securities Act and such
          resale is made in accordance with said registration statement;

               (ii) the Securities are sold or transferred pursuant to Rule 144
          promulgated under the Securities Act ("Rule 144") and the Investor has
          delivered to the Company a statement certifying that the proposed sale
          or transfer meets the requirements of Rule 144 (which certification
          shall be in form and content reasonably acceptable to the Company),
          and, if reasonably requested by the Company, a statement describing
          the circumstances surrounding the proposed sale or transfer (the form
          and content of which shall be reasonably acceptable to the Company)
          and, if reasonably requested by the Company after receiving such
          statement describing circumstances, an opinion of counsel (which
          opinion shall be in form, substance and scope customary for opinions
          of counsel in comparable transactions and which counsel, including
          internal counsel of the Investor, if applicable, shall be reasonably
          satisfactory to the Company) to the effect that the proposed sale or
          transfer meets the requirements of Rule 144 (collectively, the "144
          Documentation");

<PAGE>
               (iii) the Securities are sold or transferred to an affiliate (as
          defined in Rule 144) of the Investor;

               (iv) the Securities are sold or transferred in an "offshore
          transaction" meeting the requirements of Rule 904 of Regulation S of
          the Securities Act ("Rule 904") and in compliance with applicable
          local laws and regulations, and the Investor has delivered to the
          Company a statement certifying that the proposed sale or transfer
          meets the requirements of Rule 904 and applicable local laws and
          regulations (which certification shall be in form and content
          reasonably acceptable to the Company), and, if reasonably requested by
          the Company, a statement describing the circumstances surrounding the
          proposed sale or transfer (the form and content of which shall be
          reasonably acceptable to the Company) and, if reasonably requested by
          the Company after receiving such statement describing circumstances,
          an opinion of counsel (which opinion shall be in form, substance and
          scope customary for opinions of counsel in comparable transactions and
          which counsel, including internal counsel of the Investor, if
          applicable, shall be reasonably satisfactory to the Company) to the
          effect that the proposed sale or transfer meets the requirements of
          Rule 904 and applicable local laws and regulations (collectively, the
          "904 Documentation"); or

               (v) in connection with a transfer other than in accordance with
          clause (i), (ii), (iii), or (iv) herein, a statement certifying that
          the proposed disposition may be made pursuant to an exemption from
          registration, which exemption is specified (which certification shall
          be in form and content reasonably acceptable to the Company), and, if
          reasonably requested by the Company, the Investor has delivered to the
          Company a statement describing the circumstances surrounding the
          proposed disposition (the form and content of which shall be
          reasonably acceptable to the Company), and, if reasonably requested by
          the Company after receiving such statement describing circumstances,
          an opinion of counsel (which opinion shall be in form, substance and
          scope customary for opinions of counsel in comparable transactions and
          which counsel, including internal counsel of the Investor, if
          applicable, shall be reasonably satisfactory to the Company) to the
          effect that the proposed disposition may be made pursuant to an
          exemption from registration, which exemption is specified
          (collectively, the "Other Exemption Documentation"); and

          (b) any sale of the Securities made in reliance on Rule 144 may be
     made only in accordance with the terms of Rule 144 (including the holding
     period requirement, the volume limitations and the manner of sale
     restrictions, if applicable), and if Rule 144 is not applicable, then the
     seller (or the person through whom the sale is made) might be deemed to be
     an underwriter (as that term is defined in the Securities Act) under the
     Securities Act or the rules and regulations of the SEC thereunder; and

          (c) except as set forth in the Registration Rights Agreement, neither
     the Company, nor the Co-Borrowers, nor any other person is under any
     obligation to register the Securities under the Securities Act or any state
     securities laws or to comply with the terms and conditions of any exemption
     thereunder.

     2.8. Legends. The Investor understands that the Securities will bear the
applicable restrictive legend set forth in Section 5.3 unless and until such
time as such Securities may be reissued without restrictive legend pursuant to
the applicable provisions of Section 5.3.

     2.9. Organization and Existence. To the extent indicated on the signature
pages hereto, each Investor is either (i) a limited partnership duly organized
and validly existing under the laws of its respective state of formation, (ii) a
limited liability company duly organized and validly existing under the laws of
its respective country or state of formation, (iii) a corporation duly organized
and validly existing

<PAGE>
under the laws of its respective country or state of incorporation, (iv) a
series of a registered investment company, (v) a trust fund whose trustee is a
bank or trust company or (vi) an individual. Such Investor represents that it
was not organized solely for the purpose of making an investment in the Company.

     2.10. Authorization; Enforcement. This Agreement, the Registration Rights
Agreement, the Escrow Agreement, the Security Agreement and all other
agreements, documents and instruments contemplated hereby and thereby have been
duly and validly authorized, executed and delivered on behalf of the Investor
and are valid and binding agreements of the Investor enforceable against
Investor in accordance with their respective terms, subject to the effect of any
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally and the application of general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law), and except as the enforceability of the
indemnification agreements of the Investor in the Registration Rights Agreement
may be limited by federal or state securities law or public policy relating
thereto.

     2.11. No Conflicts; No Violation.

          (a) The execution, delivery and performance of this Agreement by the
     Investor will not (i) conflict with or result in a violation of any
     provision of its charter documents or (ii) result in a violation of any
     law, rule, regulation, order, judgment or decree applicable to the Investor
     that would have material adverse effect on the Investor's ability to
     perform its obligations under this Agreement or any other agreements,
     documents or instruments contemplated by this Agreement to which the
     Investor is a party.

          (b) The Investor is not required to obtain any consent, authorization
     or order of, or make any filing or registration with, any court or
     governmental agency or any regulatory or self regulatory agency for it to
     execute, deliver or perform any of its obligations under this Agreement
     that the Investor has not obtained or filed or the failure of which to
     obtain or file would not have a material adverse effect on the Investor's
     ability to perform its obligations under this Agreement.

     2.12. Acknowledgments Regarding Placement Agent. The Investor acknowledges
that Robert W. Baird & Co. Incorporated is acting as placement agent (the
"Placement Agent") for the Securities being sold hereby and will be compensated
by the Company for acting in such capacity. The Investor further acknowledges
that the Placement Agent has acted solely as placement agent for the Company in
connection with the offering of the Securities by the Company and the
Co-Borrowers, that certain of the information and data provided to the Investor
in connection with the transactions contemplated hereby, including but not
necessarily limited to the information and data included in the CIM, have not
been subjected to independent verification by the Placement Agent, and that the
Placement Agent makes no representation or warranty with respect to the accuracy
or completeness of such information, data or other related disclosure material.
The Investor further acknowledges that the provisions of this Section 2.12 are
also for the benefit of, and may also be enforced by, the Placement Agent.

     2.13. Representation. The Investor has had an opportunity to consult with
an attorney in connection with the Investor's investment in the Company and its
subsidiaries. The Investor has not relied in any way on the investigation, due
diligence or advice of any other Investor in connection with its decision to
enter into the transactions contemplated by this Agreement. The Investor does
not beneficially own 5% or more of the outstanding shares of Common Stock as
determined in accordance with Section 13(d) of the Exchange Act and the rules
and regulations promulgated thereunder.

     2.14. Certain Trading Activities. During the thirty (30) calendar days
prior to the date of this Agreement, the Investor has not directly or
indirectly, nor has any Person (as defined herein) acting on behalf of or
pursuant to any understanding with such Investor, engaged in any trading of
Common Stock, including Short Sales (as defined below), and no open position or
Short Sale exists on the date hereof in the

<PAGE>
name or on behalf of, or in conjunction with, such Investor. "Short Sales"
include, without limitation, all types of direct and indirect stock pledges,
forward sale contracts, options, puts, calls, short sales, swaps and similar
arrangements (including on a total return basis), and sales and other
transactions through non-U.S. broker-dealers or foreign regulated brokers having
the effect of hedging the Securities purchased or investment made under this
Agreement.

                                  ARTICLE III
                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     The Company and each of the Co-Borrowers, jointly and severally, represent
and warrant to each of the Investors that:

     3.1. Organization and Qualification. The Company and each Co-Borrower is
validly existing under the laws of the jurisdiction in which it is incorporated
or organized, with full power and authority to own, lease, use and operate its
properties and to carry on its business as and where now owned, leased, used,
operated and conducted. The Company and each Co-Borrower is duly qualified to do
business and is in good standing in every jurisdiction in which the nature of
the business conducted by it makes such qualification necessary, except where
the failure to be so qualified or in good standing in each such jurisdiction
would not have a Material Adverse Effect (as defined herein).

     3.2. Authorization; Enforcement. (a) The Company has all requisite
corporate power and authority (other than the Shareholder Approval that the
Company must receive to enable it to perform its obligations at the Second
Closing) to enter into and to perform its obligations under this Agreement, the
Registration Rights Agreement, the Security Agreement, the Escrow Agreement and
all other agreements, documents and instruments contemplated hereby and thereby,
to consummate the transactions contemplated hereby and thereby and to deliver
the Securities in accordance with the terms hereof; (b) the execution, delivery
and performance of this Agreement, the Registration Rights Agreement, the
Security Agreement, the Escrow Agreement and all other agreements, documents and
instruments contemplated hereby and thereby by the Company and the consummation
by it of the transactions contemplated hereby and thereby including without
limitation the delivery of the Securities have been duly authorized by the
Company's Board of Directors, and no further consent or authorization of the
Company, its Board of Directors or its shareholders is required to authorize the
Company to perform its obligations at the Second Closing (other than the
Shareholder Approval) or the First Closing; (c) this Agreement, the Registration
Rights Agreement, the Security Agreement, the Escrow Agreement and all other
agreements, documents and instruments contemplated hereby and thereby have been
or will be duly executed by the Company; (d) each of this Agreement, the
Registration Rights Agreement, the Security Agreement, the Escrow Agreement and
all other agreements, documents and instruments contemplated hereby and thereby
constitutes or will upon execution constitute a legal, valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms, subject to the effect of any applicable bankruptcy, insolvency,
reorganization, or moratorium or similar laws affecting the rights of creditors
generally and the application of general principles of equity, and except as the
enforceability of the indemnification agreements of the Company in the
Registration Rights Agreement may be limited by federal or state securities laws
or public policy relating thereto; (e) each Co-Borrower has all requisite power
and authority to enter into and to perform its obligations under this Agreement,
the Escrow Agreement, the Security Agreement, the Mortgage and all other
agreements, documents and instruments contemplated hereby and thereby to be
executed by the Co-Borrowers, to consummate the transactions contemplated hereby
and thereby and to deliver the Securities in accordance with the terms hereof;
(f) the execution, delivery and performance of this Agreement, the Escrow
Agreement, the Security Agreement, the Mortgage and all other agreements,
documents and instruments contemplated hereby and thereby to be executed by each
Co-Borrower and the consummation by it of the transactions contemplated hereby
and thereby have been duly authorized by each Co-Borrower and no further consent
or authorization of any Co-Borrower is required; (g) this Agreement, the Escrow
Agreement, the Security Agreement, the Mortgage and all other agreements,
documents and instruments contemplated

<PAGE>
hereby and thereby have been or will be duly executed by each Co-Borrower; and
(h) each of this Agreement, the Escrow Agreement, the Security Agreement, the
Mortgage and all other agreements, documents and instruments contemplated hereby
and thereby constitutes or will upon execution constitute a legal, valid and
binding obligation of each Co-Borrower enforceable against each such Co-Borrower
in accordance with its terms, subject to the effect of any applicable
bankruptcy, insolvency, reorganization, or moratorium or similar laws affecting
the rights of creditors generally and the application of general principles of
equity.

     3.3. Issuance of Notes. The Notes are duly authorized by the Company and
the Co-Borrowers (other than the Shareholder Approval that the Company must
receive to enable it to perform its obligations at the Second Closing) and, upon
issuance in accordance with the terms hereof, shall be free from all taxes,
liens and charges with respect to the issue thereof. The Company has duly
authorized and reserved for issuance a number of shares of Common Stock equal to
the number of shares of Common Stock issuable upon conversion of the Notes to be
sold pursuant to this Agreement at the First Closing, and assuming receipt of
the Shareholder Approval, the Company has duly authorized and reserved for
issuance a number of shares of Common Stock equal to the number of shares of
Common Stock issuable upon conversion of the Notes to be sold pursuant to this
Agreement at the Second Closing.

     3.4. Equity Capitalization. As of the date hereof, the authorized capital
stock of the Company consists of (x) 25,000,000 shares of the Common Stock, of
which as of September 24, 2003, 15,517,411 shares were issued and outstanding,
and (y) 5,000,000 shares of preferred stock, without par value, none of which
are issued and outstanding. All of the outstanding shares of Common Stock are
duly authorized, validly issued, fully paid and nonassessable (except as
otherwise provided by Section 180.0622(2)(b) of the Wisconsin Business
Corporation Law). The shares of Common Stock to be issued upon conversion of the
Notes to be sold pursuant to this Agreement at the First Closing have been duly
authorized and, when issued and delivered upon conversion of the Notes in
accordance with the terms of the Notes, will be validly issued, fully paid and
nonassessable (except as otherwise provided by Section 180.0622(2)(b) of the
Wisconsin Business Corporation Law), free from all taxes, liens, claims,
encumbrances and charges with respect to the delivery thereof (other than those
imposed through acts or omissions of an Investor). Assuming receipt of the
Shareholder Approval, the shares of Common Stock to be issued upon conversion of
the Notes to be sold pursuant to this Agreement at the Second Closing have been
duly authorized and, when issued and delivered upon conversion of the Notes in
accordance with the terms of the Notes, will be validly issued, fully paid and
nonassessable (except as otherwise provided by Section 180.0622(2)(b) of the
Wisconsin Business Corporation Law), free from all taxes, liens, claims,
encumbrances and charges with respect to the delivery thereof (other than those
imposed through acts or omissions of an Investor). Each share of Common Stock to
be issued upon conversion of the Notes will be accompanied by four-ninths of a
Right (as defined herein), and such Rights will be validly issued in accordance
with the terms of the Rights Agreement (as defined herein). Other than pursuant
to this Agreement and the Rights and as contemplated by the Company's employee
equity plan being submitted for Shareholder Approval, the warrants issued by the
Company in August 2003 and employee benefit plans or director plans disclosed in
the Company's SEC Documents, and except as disclosed in the Company's SEC
Documents: (i) no shares of the Company's capital stock are subject to
preemptive rights or any other similar rights or any liens or encumbrances
suffered or permitted by the Company; (ii) there are no outstanding options,
warrants, scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into, or exercisable
or exchangeable for, any shares of capital stock of the Company, or contracts,
commitments, understandings or arrangements by which the Company is or may
become bound to issue additional shares of capital stock of the Company or
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, or
exercisable or exchangeable for, any shares of capital stock of the Company;
(iii) there are no agreements or arrangements under which the Company is
obligated to register the sale of its securities under the Securities Act
(except the Registration Rights Agreement); (iv) there are no outstanding
securities or instruments of the Company or the Co-Borrowers that contain any
redemption or similar provisions, and

<PAGE>
there are no contracts, commitments, understandings or arrangements by which the
Company or the Co-Borrowers are or may become bound to redeem a security of the
Company or the Co-Borrowers; (v) there are no securities or instruments
containing anti-dilution or similar provisions that will be triggered by the
issuance of the Notes; (vi) the Company does not have any stock appreciation
rights or "phantom stock" plans or agreements or any similar plan or agreement;
and (vii) the Company and the Co-Borrowers have no liabilities or obligations
required to be disclosed in the SEC Documents that have not been so disclosed in
the SEC Documents, other than those incurred in the ordinary course of the
Company's or the Co-Borrowers' respective businesses and which, individually or
in the aggregate, do not or would not have a Material Adverse Effect. The
Company has furnished or made available to the Investors true, correct and
complete copies of the Company's Articles of Incorporation, as amended and as in
effect on the date hereof (the "Articles of Incorporation"), and the Company's
Bylaws, as amended and as in effect on the date hereof (the "Bylaws"), and the
terms of all securities convertible into, or exercisable or exchangeable for,
Common Stock and the material rights of the holders thereof in respect thereto.

     3.5. Indebtedness and Other Contracts. Except as disclosed in the SEC
Documents or set forth in Schedule 3.5 hereto, neither the Company nor any
Co-Borrower (a) has any outstanding Indebtedness (as defined below), (b) is a
party to any contract, agreement or instrument the violation of which, or
default under which, by the other party(ies) to such contract, agreement or
instrument would result in a Material Adverse Effect, (c) is in violation of any
term of or in default under any contract, agreement or instrument relating to
any Indebtedness except where such violations and defaults would not result,
individually or in the aggregate, in a Material Adverse Effect, or (d) is a
party to any contract, agreement or instrument relating to any Indebtedness the
performance of which, in the judgment of the Company's officers, has or is
expected to have a Material Adverse Effect. Except as set forth in Schedule 3.5,
neither the Company nor any Co-Borrower has Indebtedness outstanding as of the
date hereof that ranks or will rank senior to or pari passu with the Notes. For
purposes of this Agreement: (x) "Indebtedness" of any Person means, without
duplication, (A) all indebtedness for borrowed money, (B) all obligations
issued, undertaken or assumed as the deferred purchase price of property or
services (other than trade payables entered into in the ordinary course of
business), (C) all reimbursement or payment obligations with respect to letters
of credit, surety bonds and other similar instruments, (D) all obligations
evidenced by notes, bonds, debentures or similar instruments, including
obligations so evidenced incurred in connection with the acquisition of
property, assets or businesses, (E) all indebtedness created or arising under
any conditional sale or other title retention agreement, or incurred as
financing, in either case with respect to any property or assets acquired with
the proceeds of such indebtedness (even though the rights and remedies of the
seller or bank under such agreement, in the event of default, are limited to
repossession or sale of such property), (F) all monetary obligations under any
leasing or similar arrangement which, in connection with generally accepted
accounting principles, consistently applied for the periods covered thereby, is
classified as a capital lease, (G) all indebtedness referred to in clauses (A)
through (F) above secured by (or for which the holder of such indebtedness has
an existing right, contingent or otherwise, to be secured by) any mortgage,
lien, pledge, charge, security interest or other encumbrance upon or in any
property or assets (including accounts and contract rights) owned by any Person,
even though the Person which owns such assets or property has not assumed or
become liable for the payment of such indebtedness, and (H) all Contingent
Obligations in respect of indebtedness or obligations of others of the kinds
referred to in clauses (A) through (G) above; (y) "Contingent Obligation" means,
as to any Person, any direct or indirect liability, contingent or otherwise, of
that Person with respect to any indebtedness, lease, dividend or other
obligation of another Person if the primary purpose or intent of the Person
incurring such liability, or the primary effect thereof, is to provide assurance
to the obligee of such liability that such liability will be paid or discharged,
or that any agreements relating thereto will be complied with, or that the
holders of such liability will be protected (in whole or in part) against loss
with respect thereto; and (z) "Person" means an individual, a limited liability
company, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or any department or agency
thereof.

<PAGE>
     3.6. No Conflicts; No Violation.

          (a) The execution, delivery and performance of this Agreement, the
     Registration Rights Agreement, the Security Agreement, the Escrow Agreement
     and all other agreements, documents and instruments contemplated hereby and
     thereby by the Company and the consummation by the Company of the
     transactions contemplated hereby and thereby including, without limitation,
     the delivery of the Securities will not (i) with respect to performance and
     consummation at the Second Closing (assuming receipt of the Shareholder
     Approval) or the First Closing, conflict with or result in a violation of
     any provision of the Organizational Documents (as defined herein) of the
     Company; (ii) violate or conflict with, or result in a breach of any
     provision of, or constitute a default (or an event which with notice or
     lapse of time or both could become a default) under, or give to others any
     rights of termination, amendment (including without limitation, the
     triggering of any anti-dilution provision), acceleration or cancellation
     of, any agreement, indenture, patent, patent license or instrument to which
     the Company is a party, except that partial release by the Escrow Agent to
     the Investors of the Notes delivered to the Escrow Agent at the First
     Closing and to the Company of the First Closing Purchase Price delivered to
     the Escrow Agent at the First Closing before the Company and the
     Co-Borrowers have discharged their obligations under the Senior Secured
     Revolving Credit Agreement, dated as of August 31, 2003, among the Company,
     the several lenders from time to time parties thereto and U.S. Bank
     National Association, as amended, would constitute a default under such
     credit agreement; or (iii) assuming the accuracy of the representations of
     the Investors, result in a violation of any law, rule, regulation, order,
     judgment or decree (including United States federal and state securities
     laws and regulations and regulations of any self-regulatory organizations
     to which the Company or its securities are subject) applicable to the
     Company or by which any property or asset of the Company is bound or
     affected, except in the case of clauses (ii) or (iii) for such conflicts,
     breaches, defaults, terminations, amendments, accelerations, cancellations
     and violations as would not, individually or in the aggregate, have a
     Material Adverse Effect.

          (b) The Company is not in violation of its Organizational Documents
     except for any violations as would not, individually or in the aggregate,
     have a Material Adverse Effect. The Company is not in violation of any law,
     ordinance or regulation of any governmental entity which violation,
     individually or in the aggregate, would result in a Material Adverse
     Effect. The Company is not in default (and no event has occurred which with
     notice or lapse of time or both could put the Company in default) under any
     agreement, indenture or instrument to which the Company is a party or by
     which any property or assets of the Company is bound or affected, except
     for such defaults as would not, individually or in the aggregate, have a
     Material Adverse Effect.

          (c) The execution, delivery and performance of this Agreement, the
     Security Agreement, the Escrow Agreement, the Mortgage and all other
     agreements, documents and instruments contemplated hereby and thereby by
     the Co-Borrowers and the consummation by the Co-Borrowers of the
     transactions contemplated hereby and thereby including, without limitation,
     the delivery of the Securities will not (i) conflict with or result in a
     violation of any provision of the Organizational Documents of any
     Co-Borrower or (ii) violate or conflict with, or result in a breach of any
     provision of, or constitute a default (or an event which with notice or
     lapse of time or both could become a default) under, or give to others any
     rights of termination, amendment (including without limitation, the
     triggering of any anti-dilution provision), acceleration or cancellation
     of, any agreement, indenture, patent, patent license or instrument to which
     any Co-Borrower is a party, except that partial release by the Escrow Agent
     to the Investors of the Notes delivered to the Escrow Agent at the First
     Closing and to the Company of the First Closing Purchase Price delivered to
     the Escrow Agent at the First Closing before the Company and the
     Co-Borrowers have discharged their obligations under the Senior Secured
     Revolving Credit Agreement, dated as of August 31, 2003, among the Company,
     the several lenders from time to time parties thereto and U.S. Bank
     National

<PAGE>
     Association, as amended, would constitute a default under such credit
     agreement, or (iii) assuming the accuracy of the representations of the
     Investors, result in a violation of any law, rule, regulation, order,
     judgment or decree (including United States federal and state securities
     laws and regulations and regulations of any self-regulatory organizations
     to which the Co-Borrowers or their respective securities are subject)
     applicable to any Co-Borrower or by which any property or asset of any
     Co-Borrower is bound or affected, except in the case of clauses (ii) or
     (iii) for such conflicts, breaches, defaults, terminations, amendments,
     accelerations, cancellations and violations as would not, individually or
     in the aggregate, have a Material Adverse Effect.

          (d) No Co-Borrower is in violation of its Organizational Documents,
     except for any violations as would not, individually or in the aggregate,
     have a Material Adverse Effect. No Co-Borrower is in violation of any law,
     ordinance or regulation of any governmental entity which violation,
     individually or in the aggregate, would result in a Material Adverse
     Effect. No Co-Borrower is in default (and no event has occurred which with
     notice or lapse of time or both could put any Co-Borrower in default) under
     any agreement, indenture or instrument to which any Co-Borrower is a party
     or by which any property or assets of any Co-Borrower is bound or affected,
     except for such defaults as would not, individually or in the aggregate,
     have a Material Adverse Effect.

     3.7. Approvals. Assuming the accuracy of the representations of the
Investors, except as specifically contemplated by this Agreement and as required
under the Securities Act and any applicable state securities laws and any
listing agreement with any securities exchange or automated quotation system,
neither the Company nor any Co-Borrower is required to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
governmental agency or any regulatory or self regulatory agency for it to
execute, deliver or perform any of its obligations under this Agreement, the
Registration Rights Agreement, the Escrow Agreement, the Mortgage or the
Security Agreement (other than in connection with the filings required to
perfect the interests granted under the Security Agreement), in each case in
accordance with the terms hereof or thereof, or sell the Securities at the First
Closing or the Second Closing in accordance with the terms hereof, except that
the Company must receive the Shareholder Approval to enable it to perform its
obligations at the Second Closing. All consents, authorizations, orders, filings
(other than in connection with the filings required to perfect the interests
granted under the Security Agreement) and registrations that the Company is
required to obtain pursuant to the preceding sentence have been obtained or
effected on or prior to the date hereof except those relating to the Shareholder
Approval that the Company must receive to enable it to perform its obligations
at the Second Closing.

     3.8. SEC Documents; Financial Statements. Since December 31, 2002, the
Company has timely filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the reporting
requirements of the Exchange Act (all of the foregoing filed after December 31,
2002 and prior to the date hereof and all exhibits included therein and
financial statements and schedules thereto and documents (including all exhibits
available on the SEC's EDGAR system) incorporated by reference therein being
hereinafter referred to herein as the "SEC Documents"). The Company has
delivered to each Investor, or each Investor has had access to, true and
complete copies of the SEC Documents. As of their respective dates, the SEC
Documents complied in all material respects with the requirements of the
Exchange Act and the rules and regulations of the SEC promulgated thereunder
applicable to the SEC Documents, and none of the SEC Documents, at the time they
were filed with the SEC (except as disclosed in the SEC Documents), contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the SEC
Documents have been prepared in accordance with United States generally accepted
accounting principles, consistently applied, during the periods involved (except
(i) as may be otherwise indicated in such financial statements or the notes
thereto or (ii) in the case of unaudited interim statements, to the extent they
may not include footnotes or may be condensed or summary statements) and fairly
present

<PAGE>
in all material respects the financial position of the Company as of the dates
thereof and the results of its operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments). There are no unconsolidated special-purpose entities related to
the Company that should be consolidated on the Company's financial statements
under United States generally accepted accounting principles. Except as set
forth in the financial statements included in the SEC Documents, the Company has
no liabilities, contingent or otherwise, other than (A) liabilities incurred in
the ordinary course of business subsequent to June 30, 2003 that would not,
individually or in the aggregate, have a Material Adverse Effect, (B)
liabilities of which the Company has no Knowledge so long as the Company would
not have acquired Knowledge thereof through the exercise of reasonable diligence
or (C) other liabilities that would not, individually or in the aggregate, have
a Material Adverse Effect.

     3.9. Absence of Certain Changes. Except as disclosed in the SEC Documents
or as set forth on Schedule 3.7, since December 31, 2002, there has been no
material adverse change or development in the assets, liabilities, business,
properties, operations, financial condition or results of operations of the
Company and its subsidiaries (including the Co-Borrowers), taken as a whole.

     3.10. Absence of Litigation. Except as disclosed in the SEC Documents,
there is no action, suit, claim, proceeding, inquiry or investigation before or
by any court, public board, government agency, self-regulatory organization or
body pending or, to the Knowledge of the Company, threatened against or
affecting the Company and its subsidiaries or any of its officers or directors
acting as such that is reasonably likely to, individually or in the aggregate,
have a Material Adverse Effect.

     3.11. Intellectual Property Rights. The Company and the Co-Borrowers each
own or possess the licenses or rights to use all patents, patent applications,
patent rights, inventions, know-how, trade secrets, trademarks, trademark
applications, service marks, service names, trade names and copyrights necessary
to enable each to conduct its business as now operated (the "Intellectual
Property"), except where the failure to possess such licenses or rights to use
would not have, individually or in the aggregate, a Material Adverse Effect.
There is no claim or action or proceeding pending or, to the Company's
Knowledge, threatened that challenges the right of the Company or the
Co-Borrowers with respect to any Intellectual Property.

     3.12. Tax Status. The Company and its subsidiaries have made or filed all
federal, state and foreign income and all other tax returns, reports and
declarations required by any jurisdiction to which they are subject (unless and
only to the extent that the Company and its subsidiaries have set aside on their
books provisions reasonably adequate for the payment of all unpaid and
unreported taxes) and have paid all taxes and other governmental assessments and
charges that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith.
To the Knowledge of the Company, there are no unpaid taxes in any material
amount claimed to be due by the taxing authority of any jurisdiction.

     3.13. No Integrated Offering. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales of any security or solicited any offers to
buy any security under circumstances within the prior six months that would
require registration under the Securities Act of the delivery of the Securities
to the Investors.

     3.14. No General Solicitation. Neither the Company, nor the Co-Borrowers,
nor, to the Knowledge of the Company, any person acting for the Company has
conducted any "general solicitation" (as such term is defined in Regulation D)
with respect to any of the Notes being offered hereby. The Company will not
distribute any offering material in connection with the sale of the Notes prior
to the First Closing Date, other than the CIM, this Agreement, the Registration
Rights Agreement, the Escrow Agreement, the Mortgage, the Security Agreement,
the NYSE (as defined herein) Supplemental Listing Application, and the SEC
Documents.

<PAGE>
     3.15. No Brokers. The Company will pay all brokerage commissions, finder's
fees or similar payments relating to this Agreement or the transactions
contemplated hereby where the obligation to make such payments arises under
agreements to which the Company or any of the Co-Borrowers is a party. The
Company has no reason to believe that such payments will exceed 6% of the gross
proceeds to the Company from the transactions contemplated by this Agreement.

     3.16. Insurance. The Company (including the Co-Borrowers) maintains
insurance of the types and in such amounts as management of the Company believes
to be prudent and customary in the businesses in which the Company and its
subsidiaries are engaged. The Company has no reason to believe that it will not
be able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be necessary
to continue its business at a cost that would not have a Material Adverse
Effect.

     3.17. Environmental Laws. The Company and each of the Co-Borrowers (i) is
in compliance with all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) has received all permits, licenses or
other approvals required of it under applicable Environmental Laws to conduct
its business as presently conducted and (iii) is in compliance with all terms
and conditions of any such permit, license or approval, except where, in each of
the three foregoing clauses, the failure to so comply would not have,
individually or in the aggregate, a Material Adverse Effect.

     3.18. Employment Matters. The Company and its subsidiaries are in
compliance with all federal, state, local and foreign laws and regulations
respecting employment and employment practices, terms and conditions of
employment and wages and hours, except where failure to be in compliance would
not, individually or in the aggregate, have a Material Adverse Effect. To the
Knowledge of the Company, there are no pending investigations involving the
Company or any of its subsidiaries by the U.S. Department of Labor or any other
governmental agency responsible for the enforcement of such federal, state,
local or foreign laws and regulations. There is no unfair labor practice charge
or complaint against the Company or any of its subsidiaries pending before the
National Labor Relations Board or any strike, picketing, boycott, dispute,
slowdown or stoppage pending or threatened against the Company or any of its
subsidiaries. No representation question exists respecting the employees of the
Company or any of its subsidiaries, and no collective bargaining agreement or
modification thereof is currently being negotiated by the Company or any of its
subsidiaries. There are no outstanding wage claims of, or other debts owing to,
employees of the Company for services performed.

     3.19. NYSE Compliance. The Company has not, in the twenty-four (24) months
preceding the date hereof, received notice from the NYSE that the Company was or
is not in compliance with the listing or maintenance requirements of the NYSE.
The Company has been and is in compliance with all such listing and maintenance
requirements. Assuming the truth of the representations and warranties of each
Investor, with respect to the First Closing, the issuance and sale of the
Securities hereunder does not contravene the rules and regulations of the NYSE,
and with respect to the Second Closing, assuming receipt of the Shareholder
Approval, the issuance and sale of the Securities hereunder does not contravene
the rules and regulations of the NYSE.

     3.20. Licenses and Permits. The Company and its subsidiaries have 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 (collectively, the "Company Permits"), except where
the failure to have such permits would not have, individually or in the
aggregate, a Material Adverse Effect. There is no action pending or, to the
Knowledge of the Company, threatened regarding the suspension or cancellation of
any of the Company Permits the suspension or cancellation of which would have a
Material Adverse Effect. Neither the Company nor any of its subsidiaries is in
conflict with, or in default or violation

<PAGE>
of, any of the Company Permits, except where such violation would not in the
aggregate have a Material Adverse Effect.

     3.21. Investment Company Status. The Company is not and upon consummation
of the sale of the Securities will not be an "investment company," a company
controlled by an "investment company" or an "affiliated person" of, or
"promoter" or "principal underwriter" for, an "investment company" as such terms
are defined in the Investment Company Act of 1940, as amended.

     3.22. Transactions With Affiliates and Employees. Except as set forth in
the SEC Documents and except for transactions that applicable regulations do not
require to be disclosed in the SEC Documents, none of the officers or directors
of the Company or the Co-Borrowers and, to the Knowledge of the Company, none of
the employees of the Company or the Co-Borrower are presently a party to any
transaction with the Company or the Co- Borrowers (other than for services as
employees, officers and directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise requiring payments
to or from any officer, director or such employee or, to the Knowledge of the
Company, any entity in which any officer, director, or any such employee has a
substantial interest.

     3.23. Internal Accounting Controls. The Company and the Co-Borrowers
maintain a system of internal accounting controls sufficient to provide
reasonable assurance that (a) transactions are executed in accordance with
management's general or specific authorizations, (b) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
United States generally accepted accounting principles and to maintain asset
accountability, (c) access to assets is permitted only in accordance with
management's general or specific authorization, and (d) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.

     3.24. Application of Takeover Protections. The Company and its Board of
Directors have taken all necessary action, if any, that they have the corporate
power to take on or before the date of this Agreement and without the approval
of the shareholders of the Company to render inapplicable any control share
acquisition, business combination, poison pill (including any distribution under
a rights agreement) or other similar anti-takeover provision under the Articles
of Incorporation or the laws of its state of incorporation that is or could
become applicable to the Investors as a result of the Investors and the Company
fulfilling their obligations or exercising their rights under this Agreement,
the Registration Rights Agreement, the Security Agreement and the Escrow
Agreement, including without limitation the Company's issuance of the Conversion
Shares and the Investors' ownership of such Conversion Shares.

     3.25. Disclosure. All disclosure provided to the Investors regarding the
Company, its business and the transactions contemplated hereby furnished by or
on behalf of the Company does not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements made, in light of the circumstances under which they were made, not
misleading.

     3.26. Foreign Corrupt Practices. Neither the Company, nor any Co-Borrower,
nor, to the Knowledge of the Company, any director, officer, agent, employee or
other Person acting on behalf of the Company or any Co-Borrower has, in the
course of its actions for, or on behalf of, the Company (a) used any corporate
funds for any unlawful contribution, gift, entertainment or other unlawful
expenses relating to political activity; (b) made any direct or indirect
unlawful payment to any foreign or domestic government official or employee from
corporate funds; (c) violated or is in violation of any provision of the U.S.
Foreign Corrupt Practices Act of 1977, as amended; or (d) made any unlawful
bribe, rebate, payoff, influence payment, kickback or other unlawful payment to
any foreign or domestic government official or employee.

<PAGE>
                                   ARTICLE IV
                                    COVENANTS

     4.1. Best Efforts. Each party will use its best efforts to satisfy in a
timely fashion each of the conditions to be satisfied by it under Articles VI
and VII.

     4.2. Form D; Blue Sky Laws. The Company will file a Notice of Sale of
Securities on Form D with respect to the Securities issued on the First Closing
Date or the Second Closing Date, as the case may be, if required under
Regulation D, and provide a copy thereof to each Investor promptly after such
filing. The Company will take such action as it reasonably determines to be
necessary, if any, to qualify the Securities for sale to the Investors under
this Agreement under applicable securities (or "blue sky") laws of the states of
the United States (or to obtain an exemption from such qualification), and will
provide evidence of any such action so taken to the Investors on or prior to the
date of the First Closing or the Second Closing, as applicable. The Company will
file with the SEC a Current Report on Form 8-K disclosing this Agreement and the
transactions contemplated hereby within two (2) Business Days after the First
Closing Date and the Second Closing Date, as applicable, and including with such
Form 8-K full and complete copies of all agreements entered into in connection
with the transactions contemplated hereby.

     4.3. Expenses. The Company and the Co-Borrowers are liable for, and will
pay, their own expenses incurred in connection with the negotiation,
preparation, execution and delivery of this Agreement and the other agreements
to be executed in connection herewith, including, without limitation, attorneys'
and consultants' fees and expenses. Each Investor is liable for, and will pay,
its own expenses incurred in connection with the negotiation, preparation,
execution and delivery of this Agreement and the other agreements to be executed
in connection herewith, including, without limitation, attorneys' and
consultants' fees and expenses. In accordance with, and subject to, Section
3.15, the Company will pay all brokerage commissions, finder's fees or similar
payments relating to the issuance of the Notes to the Investors or the
transactions contemplated herein under agreements to which the Company or any of
the Co-Borrowers is a party.

     4.4. No Integration. The Company and the Co-Borrowers will not make any
offers or sales of any security (other than the Notes and the Common Stock to be
offered and sold pursuant to the Concurrent Equity Transaction) under
circumstances that would cause the offering of the Notes to be integrated with
any other offering of securities by the Company for purposes of any registration
requirement under the Securities Act.

     4.5. Sales by Investors. Each Investor will sell any Securities sold by it
in compliance with applicable prospectus delivery requirements, if any, or
otherwise in compliance with the requirements for an exemption from registration
under the Securities Act and the rules and regulations promulgated thereunder.
No Investor will make any sale, transfer or other disposition of the Securities
in violation of federal or state securities laws.

     4.6. Use of Proceeds. The Company will use the proceeds from the sale of
the Notes to repay indebtedness or for general corporate and working capital
purposes. The Company will not use the proceeds from the sale of the Notes for
any loan to or investment in any other corporation, partnership, enterprise or
other person (except in connection with its direct or indirect subsidiaries) or
for the repurchase, redemption or retirement of any of its capital stock.

     4.7. Press Release. In connection with the First Closing, the Company will
issue no later than September 30, 2003, a press release that discloses all of
the material terms of the transactions contemplated by this Agreement and
includes some disclosure that allows the reader to discern that the Company was
profitable in July and August excluding restructuring adjustments and includes
some disclosure regarding the performance of the Company's business in the third
quarter of 2003, in accordance

<PAGE>
with applicable law. No later than October 23, 2003, the Company will issue a
press release with an update of the financial performance of the Company's
business through September 30, 2003, in accordance with applicable law. In
connection with the Second Closing, the Company will issue within one (1)
Business Day after the Second Closing a press release that discloses all of the
material terms of the transactions contemplated by this Agreement not previously
disclosed.

     4.8. Non-Public Information. The Company and the Co-Borrowers acknowledge
that as of, and following, the First Closing Date, the Company and the
Co-Borrowers will have an obligation respecting the Investors (as with any other
person) under applicable laws, rules and regulations not to selectively disclose
any material, non-public information in violation of any such applicable law,
rule or regulation, and the Company and the Co-Borrowers shall not disclose any
material, non-public information to any Investor unless such Investor
specifically agrees to receive such information pursuant to a confidentiality
agreement dated after the date hereof.

     4.9. Proxy Statement. The Company shall provide each shareholder entitled
to vote at the next meeting of shareholders of the Company, which meeting shall
be held not later than [November 30,] 2003 (the "Shareholder Meeting Deadline"),
a proxy statement soliciting each such shareholder's affirmative vote at such
shareholder meeting for approval of (i) the increase in the authorized Common
Stock to 50 million shares, (ii) the issuance of the Conversion Shares upon the
conversion of the Notes to be sold pursuant to this Agreement at the Second
Closing, (iii) the issuance of certain options to employees and (iv) the
Concurrent Equity Transaction, in each case in accordance with the Articles of
Incorporation and Bylaws and applicable law and the rules and regulations of the
NYSE (such affirmative approval of each of the foregoing being referred to
herein as the "Shareholder Approval"), and the Company shall use its best
efforts to solicit its shareholders' approval of such matters and to cause the
Board of Directors of the Company to recommend to the shareholders that they
approve such matters. From and after the date hereof and prior to the meeting of
shareholders of the Company discussed above, the Company shall not issue any
securities (other than pursuant to contractual arrangements under which the
Company is obligated as of the date hereof or convertible or exchangeable
securities outstanding as of the date hereof, in each case in accordance with
the terms in place on the date hereof).

     4.10. Corporate Existence. So long as any Investor beneficially owns any
Notes, the Company shall maintain its corporate existence and shall not sell all
or substantially all of the Company's assets, except in the event of a merger or
consolidation or sale of all or substantially all of the Company's assets where
either (a) the consideration received by the Company or its equityholders, as
applicable, is comprised solely of cash, or (b) the surviving or successor
entity in such transaction (i) assumes the Company's obligations hereunder and
under the agreements and instruments entered into in connection herewith and
(ii) is a publicly traded corporation whose common stock is quoted on or listed
for trading on the NYSE, The Nasdaq Stock Market or the American Stock Exchange.

     4.11. Prohibition on Net Short Positions. From and including the date of
this Agreement through and including the date of the Shareholder Meeting
Deadline, each Investor agrees that such Investor shall not maintain a Net Short
Position. "Net Short Position" shall mean that the aggregate number of shares of
Common Stock held in a short position by such Investor exceeds the sum of (i)
the number of shares of Common Stock owned by such Investor, plus (ii) the
number of Conversion Shares issuable (without regard to any limitation on
conversion) to such Investor.

     4.12. Termination Fee.

          (a) If Shareholder Approval is not obtained for the issuance of the
     Conversion Shares upon the conversion of the Notes to be sold pursuant to
     this Agreement at the Second Closing, then the Company shall pay in cash to
     each of the Investors who were to participate in the Second Closing (the
     "Second Closing Investors") a termination fee equal to 2.5% of the face
     amount

<PAGE>
     of the Notes to be purchased by such Investor at the Second Closing (the
     "Company Termination Fee").

          (b) If (i) Shareholder Approval is obtained for the issuance of the
     Conversion Shares upon the conversion of the Notes to be sold pursuant to
     this Agreement at the Second Closing, but not for the Concurrent Equity
     Transaction, (ii) Shareholder Approval is obtained for the issuance of the
     Conversion Shares upon the conversion of the Notes to be sold pursuant to
     this Agreement at the Second Closing and the Concurrent Equity Transaction,
     but the Concurrent Equity Transaction terminates or (iii) Shareholder
     Approval is obtained for the issuance of the Conversion Shares upon the
     conversion of the Notes to be sold pursuant to this Agreement at the Second
     Closing and the Concurrent Equity Transaction, but the Concurrent Equity
     Transaction does not close within five (5) Business Days after the later of
     receipt of the Shareholder Approval or release by the Escrow Agent in full
     to the Investors of the First Closing Notes and to the Company of the
     entire First Closing Purchase Price, then the Company shall send notice of
     this fact to the Second Closing Investors (the "Notice of Concurrent Equity
     Termination Event"). Upon receipt of the Notice of Concurrent Equity
     Termination Event, each of the Second Closing Investors may elect to
     proceed with the Second Closing on the Second Closing Date despite the
     failure to consummate the Concurrent Equity Transaction by delivering
     notice to the Company within six (6) Business Days of receipt of the Notice
     of Concurrent Equity Termination Event ("Concurrent Equity Termination
     Event Waiver Notice"). If any Second Closing Investor does not deliver a
     Concurrent Equity Termination Event Waiver Notice, then the Second Closing
     Investors who deliver a Concurrent Equity Termination Event Waiver Notice
     shall have the option, exercisable at the Second Closing, to purchase (pro
     rata if applicable) additional Notes up to the aggregate principal amount
     of the Notes that were to be sold pursuant to this Agreement at the Second
     Closing to the terminating Second Closing Investors. If a Second Closing
     Investor does not deliver a Concurrent Equity Termination Event Waiver
     Notice, then the Company shall pay the Company Termination Fee in cash to
     such Second Closing Investor.

          (c) The Company shall pay the Company Termination Fee within three (3)
     Business Days of the date on which shareholders fail to approve the
     issuance of the Conversion Shares upon the conversion of the Notes to be
     sold pursuant to this Agreement at the Second Closing or the fourth
     Business Day after Investors received the Notice of Concurrent Equity
     Termination Event by wire transfer of immediately available funds in
     accordance with written wire instructions supplied by the Second Closing
     Investors to the Company in writing or, absent such instructions, by check
     mailed to the Investor in question. Upon any such payment, the Investor in
     question shall have no further rights or obligations under this Agreement,
     and the Company shall have no further rights or obligations under this
     Agreement in respect of the Investor in question, in each case in respect
     of matters relating to the Second Closing.

     4.13. Efforts to Secure. If at any time one or more Noteholder Waiver
Triggers have occurred under, and as defined in, the Escrow Agreement and, as a
result, Escrowed Funds (as defined in the Escrow Agreement) have been released
to the Company, but the Security Agreement and Mortgage have not been released
to the Investors, then the Company will use commercially reasonable efforts to
enable the Company and the Co-Borrowers to provide collateral security on
substantially the terms contemplated by the Security Agreement and the Mortgage
to those Investors as to which Escrowed Funds have been released to the Company.
However, in no event shall such obligation require the Company to provide cash
collateral, other collateral or other support for the letters of credit of the
Company and/or the Co-Borrowers that are outstanding at the date of this
Agreement or to violate any restrictions binding upon the Company and/or the
Co-Borrowers or their property.

<PAGE>
                                   ARTICLE V
         TRANSFER AGENT INSTRUCTIONS; TRANSFER RESTRICTIONS AND LEGENDS

     5.1. Register. The Company shall maintain at its principal executive
offices (or such other office or agency of the Company as it may designate by
notice to each holder of Notes) a register for the Notes in which the Company
shall record the name and address of the Person in whose name each Note has been
issued (including the name and address of each transferee), the principal amount
of Notes held by such Person and the number of Conversion Shares issuable upon
conversion of the Notes held by such Person. The Company shall make the register
available to each Investor or its legal representative for inspection upon
reasonable notice during regular business hours.

     5.2. Issuance of Certificates. Upon any conversion of the Notes into Common
Stock, the Company will instruct its transfer agent to issue a certificate,
registered in the name of each Investor or its nominee, for the respective
Common Stock. All such certificates will bear the restrictive legend described
in Section 5.3(b), except as otherwise specified in this Article V. In addition,
the Company will issue irrevocable Transfer Agent Instructions to the transfer
agent in the form of Exhibit B hereto at the First Closing. The Company will not
give to its transfer agent any instruction with respect to the Securities other
than as contemplated by Article V and stop transfer instructions to give effect
to Section 2.7 (prior to registration of the resale of the Conversion Shares
under the Securities Act). Nothing in this Section will affect in any way the
Investors' obligations and agreements set forth in Section 4.5 to comply with
all applicable prospectus delivery requirements, if any, upon the resale of the
Conversion Shares.

     5.3. Transfer Restrictions and Legends.

          (a) Each Note shall bear the legend set forth below. The Company will
     permit the transfer of the Note, and the Company will reissue the Note,
     without such legend, in such name(s) as specified by the Investor, if:

               (i) the Note was sold under an effective registration statement
          filed under the Securities Act and such resale was made in accordance
          with said registration statement;

               (ii) the Note can be sold under Rule 144(k);

               (iii) the Note was sold or transferred under Rule 144 and the
          Investor delivered to the Company the 144 Documentation;

               (iv) the Note was sold or transferred in a transaction that met
          the requirements of Rule 904 and complied with applicable local laws
          and regulations and the Investor delivered to the Company the 904
          Documentation; or

               (v) in connection with a transfer of the Note other than in
          accordance with clause (i), (ii), (iii) or (iv), the Investor has
          delivered to the Company the Other Exemption Documentation.

     "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

<PAGE>
     LAWS. THE HOLDER OF THIS NOTE MAY ONLY TRANSFER IT IN ACCORDANCE WITH AND
     SUBJECT TO THE TERMS OF THIS NOTE. NOTWITHSTANDING THE FOREGOING, THIS NOTE
     MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN
     OR FINANCING ARRANGEMENT SECURED BY THE NOTE."

          (b) The Conversion Shares shall bear the legend set forth below. The
     Company will permit the transfer of the Conversion Shares, and the transfer
     agent will issue one or more certificates, free from any restrictive legend
     (unless otherwise required by applicable state securities laws or the laws
     of any applicable foreign jurisdiction), in such name and in such
     denominations as specified by the Investor, if:

               (i) the Conversion Shares were sold under an effective
          registration statement filed under the Securities Act and such resale
          was made in accordance with said registration statement;

               (ii) the Conversion Shares can be sold under Rule 144(k);

               (iii) the Conversion Shares were sold or transferred under Rule
          144 and the Warrant Holder delivered to the Company the 144
          Documentation;

               (iv) the Conversion Shares were sold or transferred in a
          transaction that met the requirements of Rule 904 and complied with
          applicable local laws and regulations and the Investor delivered to
          the Company the 904 Documentation; or

               (v) in connection with a transfer of the Conversion Shares other
          than in accordance with clause (i), (ii), (iii) or (iv), the Investor
          has delivered to the Company the Other Exemption Documentation.

     "THE SECURITIES REPRESENTED BY THIS CERTIFICATE 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 CERTIFICATE MAY
     NOT TRANSFER THESE SECURITIES WITHOUT SUCH REGISTRATION OR AN EXEMPTION
     FROM SUCH REGISTRATION UNDER THE SECURITIES ACT AND ANY APPLICABLE BLUE SKY
     LAWS. 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."

     5.4. Enforcement of Provision. The Company acknowledges that a breach by it
of its obligations hereunder will cause irreparable harm to the Investor by
invalidating the intent and purpose of the transaction contemplated hereby.
Accordingly, the Company acknowledges that the remedy at law for a breach of its
obligations under this Article V will be inadequate and agrees, in the event of
a breach or threatened breach by the Company of the provisions of this Article,
that the Investor will be entitled, in addition to all other available remedies,
to an injunction restraining any breach and requiring immediate transfer,
without the necessity of showing economic loss and without any bond or other
security being required.

<PAGE>
                                   ARTICLE VI
                 CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL

     The obligations of the Company and the Co-Borrowers under Article I are
subject to the fulfillment at or before the First Closing or the Second Closing,
as the case may be, of each of the following conditions. These conditions are
for the Company's and the Co-Borrowers' benefit and may be waived by the Company
and the Co-Borrowers in whole or in part at any time in their sole discretion.
Without limitation, the Company and the Co-Borrowers may in their sole
discretion proceed with the First Closing or the Second Closing, as the case may
be, with respect to each Investor as to whom each condition has been satisfied
whether or not conditions have been satisfied as to other Investors:

     6.1. With respect to the First Closing only, the Investors have executed
the Escrow Agreement and have delivered such agreement to the Company.

     6.2. The Investors have executed the Registration Rights Agreement and the
Security Agreement and have delivered such agreements to the Escrow Agent under
the Escrow Agreement.

     6.3. The Investors have delivered the purchase price for the Notes to the
Escrow Agent or the Company, as the case may be, in accordance with this
Agreement.

     6.4. The representations and warranties of the Investors are true and
correct in all material respects (except for representations and warranties that
by their terms are qualified by materiality, which shall be true and correct in
all respects) as of the First Closing Date or the Second Closing Date, as the
case may be, as though made at that time (except for representations and
warranties that speak as of a specific date, which representations and
warranties must be correct as of such date), and the Investors have performed
and complied in all material respects with the covenants and conditions required
by this Agreement to be performed or complied with by the Investors at or prior
to the First Closing or the Second Closing, as the case may be.

     6.5. No litigation, statute, rule, regulation, executive order, decree,
ruling or injunction has been enacted, entered, promulgated or endorsed by or in
any court or governmental authority of competent jurisdiction or any
self-regulatory organization having authority over the matters contemplated
hereby that prohibits the consummation of any of the transactions contemplated
by this Agreement.

                                  ARTICLE VII
              CONDITIONS TO EACH INVESTOR'S OBLIGATION TO PURCHASE

     The obligation of each Investor hereunder to purchase the Securities from
the Company at the First Closing or the Second Closing Date, as the case may be,
is subject to the fulfillment at or before the First Closing or the Second
Closing Date, as the case may be, of each of the following conditions. These
conditions are for each Investor's respective benefit and may be waived by such
Investor at any time in its sole discretion:

     7.1. With respect to the First Closing only, the Company has executed the
Escrow Agreement and has delivered such agreement to the Investors.

     7.2. With respect to the First Closing only, the Company and the
Co-Borrowers have each executed the Registration Rights Agreement, the Security
Agreement and the Mortgage and have delivered such agreements to the Escrow
Agent under the Escrow Agreement.

     7.3. The Company and the Co-Borrowers have delivered to the Escrow Agent or
the Investor, as the case may be, a duly executed note for each Investor,
against payment therefor, representing

<PAGE>
the Notes in aggregate amount not less than $15,000,000 with respect to the
First Closing and, subject to reduction through the operation of Section
4.12(b), $10,000,000 with respect to the Second Closing, as specified in Section
1.1.

     7.4. The representations and warranties of the Company and the Co-Borrowers
are true and correct in all material respects (except for representations and
warranties that by their terms are qualified by materiality, which shall be true
and correct in all respects) as of the First Closing Date (except for
representations and warranties that speak as of a specific date, which
representations and warranties are correct as of such date), and the Company and
the Co-Borrowers have performed and complied in all material respects with the
covenants and conditions required by this Agreement to be performed or complied
with by the Company at or prior to the First Closing or the Second Closing, as
the case may be.

     7.5. No litigation, statute, rule, regulation, executive order, decree,
ruling or injunction has been enacted, entered, promulgated or endorsed by or in
any court or governmental authority of competent jurisdiction or any
self-regulatory organization having authority over the matters contemplated
hereby which prohibits the consummation of any of the transactions contemplated
by this Agreement.

     7.6. Such Investor has received opinions of the Company's counsel, dated as
of the First Closing Date or the Second Closing Date, as the case may be, in
form reasonably satisfactory to the Investors, addressing the matters set forth
in Exhibit C hereto; provided that the opinion to be rendered by Daughtery,
Fowler, Peregrin & Haught shall only be delivered in connection with the First
Closing and then only upon satisfaction of the Escrow Conditions (as defined
herein).

     7.7. The irrevocable Transfer Agent Instructions in substantially the form
attached hereto as Exhibit B has been delivered to the Company's transfer agent
and acknowledged in writing by such transfer agent.

     7.8. With respect to the Second Closing only, the Company has delivered
evidence reasonably satisfactory to the Investors of the receipt of Shareholder
Approval as to each proposal other than the proposal respecting the approval of
the issuance of certain options to the Company's employees and, to the extent
that the Investor has delivered a Concurrent Equity Termination Event Waiver
Notice, other than the proposal relating to the Concurrent Equity Transaction.

     7.9. At such time as the collateral under the Senior Secured Revolving
Credit Agreement, dated as of August 31, 2001, as amended, among the Company,
the several lenders from time to time parties thereto and U.S. Bank National
Association is released, the representations and warranties with respect to the
collateral contained in the Security Agreement shall be true and correct in all
material respects.

     7.10. With respect to the Second Closing only, the Company has entered into
binding agreements with respect to the Concurrent Equity Transaction except to
the extent that the Investor has delivered a Concurrent Equity Termination Event
Waiver Notice.

     7.11. The Company has delivered to the Investors such other documents and
certificates relating to the transactions contemplated by this Agreement as the
Buyers may reasonably request.

                                  ARTICLE VIII
                                   DEFINITIONS

     8.1. "Agreement" has the meaning set forth in the introduction to this
Agreement.

     8.2. "Articles of Incorporation" has the meaning set forth in Section 3.4.

                                       1
<PAGE>
     8.3. "Bylaws" has the meaning set forth in Section 3.4.

     8.4. "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.

     8.5. "CIM" has the meaning set forth in Section 2.4.

     8.6. "Claims" or "Claim" has the meaning set forth in Section 9.1.

     8.7. "Co-Borrowers" has the meaning set forth in the introduction to this
Agreement.

     8.8. "Common Stock" has the meaning set forth in the Recitals.

     8.9. "Company" has the meaning set forth in the introduction to this
Agreement.

     8.10. "Company Indemnified Person" has the meaning set forth in Section
9.2.

     8.11. "Company Permits" has the meaning set forth in Section 3.20.

     8.12. "Concurrent Equity Termination Notice" has the meaning set forth in
Section 4.12.

     8.13. "Concurrent Equity Transaction" means the Company's private placement
of Common Stock, which private placement relates to aggregate gross proceeds of
$5,000,000 or more. The Concurrent Equity Transaction is subject to receipt of
Shareholder Approval.

     8.14. "Contingent Obligation" has the meaning set forth in Section 3.5.

     8.15. "Conversion Shares" has the meaning set forth in the Recitals.

     8.16. "Environmental Laws" has the meaning set forth in Section 3.17.

     8.17. "Escrow Agreement" means the Escrow Agreement dated as of the First
Closing Date, by and among the Company, the Co-Borrowers, the Investors and the
Escrow Agent, in the form attached hereto as Exhibit D.

     8.18. "Escrow Agent" means the Escrow Agent, as defined in the Escrow
Agreement.

     8.19. "Escrow Conditions" has the meaning set forth in Section 10.12.

     8.20. "Escrow Conditions Waiver Notice" has the meaning set forth in
Section 10.12.

     8.21. "Escrowed Funds" has the meaning set forth in Section 4.13.

     8.22. "Exchange Act" has the meaning set forth in Section 1.5.

     8.23. "First Closing" means the closing of the purchase and sale of Notes
in the aggregate principal amount of $15,000,000.

     8.24. "First Closing Date" has the meaning set forth in Section 1.4.

     8.25. "First Closing Notes" has the meaning set forth in Section 1.2.

     8.26. "First Closing Purchase Price" has the meaning set fort in Section
1.2.

<PAGE>
     8.27. "Indebtedness" has the meaning set forth in Section 3.5.

     8.28. "Indemnified Person" has the meaning set forth in Section 9.3.

     8.29. "Intellectual Property" has the meaning set forth in Section 3.11.

     8.30. "Investor Indemnified Persons" or "Investor Indemnified Person" has
the meaning set forth in Section 9.1.

     8.31. "Investors" or "Investor" means the investors whose names are set
forth on the signature pages of this Agreement, and their permitted transferees.

     8.32. "Knowledge" means the actual knowledge of the executive officers of
the Company, without independent investigation.

     8.33. "Material Adverse Effect" means (a) a material adverse effect on the
assets, liabilities, financial condition or results of operations of the Company
and its subsidiaries, taken as a whole or (b) any adverse effect on the ability
of the Company to perform its obligations pursuant to the transactions
contemplated by this Agreement or under the agreements or instruments to be
entered into or filed in connection herewith.

     8.34. "Midwest" has the meaning set forth in the introduction to this
Agreement.

     8.35. "Mortgage" means the Mortgage, dated as of the Closing Date, granted
by Skyway for the benefit of the Investors, in the form attached hereto as
Exhibit F.

     8.36. "Net Short Position" has the meaning set forth in Section 4.11.

     8.37. "Noteholder Waiver Triggers" has the meaning set forth in Section
4.13.

     8.38. "Notice of Concurrent Equity Termination Event" has the meaning set
forth in Section 4.12.

     8.39. "904 Documentation" has the meaning set forth in Section 2.7.

     8.40. "Notes" has the meaning set forth in the Recitals.

     8.41. "NYSE" means the New York Stock Exchange.

     8.42. "144 Documentation" has the meaning set forth in Section 2.7.

     8.43. "Other Exemption Documentation" has the meaning set forth in Section
2.7.

     8.44. "Organizational Documents" means, with respect to a corporation, its
charter as filed with the applicable state regulatory authority, including any
amendment filed with respect thereto through the date hereof, and its by-laws,
as the same may have been amended through the date hereof, and with respect to a
limited liability company, its organizational filing made with the applicable
state regulatory authority, as the same may have been amended through the date
hereof, and its limited liability company agreement, operating agreement or
other similar agreement, as the same may be amended through the date hereof.

     8.45. "Person" has the meaning set forth in Section 3.5.

     8.46. "Placement Agent" has the meaning set forth in Section 2.12.

<PAGE>
     8.47. "Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the Closing Date, by and among the Company and the
Investors, in the form attached hereto as Exhibit E.

     8.48. "Regulation D" is defined in the Recitals.

     8.49. "Rights" means the Preferred Stock Purchase Rights issued pursuant to
the Rights Agreement.

     8.50. "Rights Agreement" means the Rights Agreement, dated February 14,
1996, as amended, between the Company and American Stock Transfer & Trust
Company.

     8.51. "Rule 144" has the meaning set forth in Section 2.7.

     8.52. "Rule 904" has the meaning set forth in Section 2.7.

     8.53. "SEC" is defined in the Recitals.

     8.54. "SEC Documents" has the meaning set forth in Section 3.8.

     8.55. "Second Closing" means the closing of the purchase and sale of Notes
in the aggregate principal amount of $10,000,000 after the First Closing.

     8.56. "Second Closing Date" has the meaning set forth in Section 1.4.

     8.57. "Second Closing Investors" has the meaning set forth in Section 4.12.

     8.58. "Securities" means, depending on the context, the Notes and/or the
shares of Common Stock (including the associated Rights) issuable upon
conversion of the Notes.

     8.59. "Securities Act" is defined in the Recitals.

     8.60. "Security Agreement" means the Security Agreement, dated as of the
Closing Date, by and among the Company, the Co-Borrowers and the Collateral
Agent (as defined in the Security Agreement)., as agent for the benefit of the
Investors, in the form attached hereto as Exhibit G.

     8.61. "Shareholder Approval" has the meaning set forth in Section 4.9.

     8.62. "Shareholder Meeting Deadline" has the meaning set forth in Section
4.9.

     8.63. "Short Sales" has the meaning set forth in Section 2.14.

     8.64. "Skyway" has the meaning set forth in the introduction to this
Agreement.

     8.65. "Transfer Agent Instructions" means the transfer agent instructions
as defined in Exhibit B.

     8.66. "YX" has the meaning set forth in the introduction to this Agreement.

<PAGE>
                                   ARTICLE IX
                                 INDEMNIFICATION

     9.1. Indemnification of the Investors. In consideration of each Investor's
execution and delivery of this Agreement and its acquisition of the Securities
hereunder, the Company and the Co-Borrowers, jointly and severally, will
indemnify and hold harmless each Investor, any directors or officers of such
Investor and any person who controls such Investor within the meaning of the
Securities Act or the Exchange Act or acts as such Investor's investment advisor
(each, an "Investor Indemnified Person" and, collectively, "Investor Indemnified
Persons") against any losses, claims, damages, expenses or liabilities (joint or
several) (collectively, and together with actions, proceedings or inquiries by
any regulatory or self-regulatory organization, whether commenced or threatened
in respect thereof, "Claims" and each a "Claim") to which any of them become
subject insofar as such Claims arise out of or are based upon (a) any breach of
any representation or warranty made by the Company or any Co-Borrower herein or
(b) any breach of any covenant, agreement or obligation of the Company or any
Co-Borrower contained herein. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 9.1 does not
apply to amounts paid in settlement of any Claim if such settlement is made
without the prior written consent of the Company and the Co-Borrowers, which
consent will not be unreasonably withheld or delayed, and the Company and the
Co-Borrowers will not be liable under this Agreement (including this Section
9.1) for any amount with respect to any Claim after the aggregate amount the
Company and the Co-Borrowers have paid pursuant to this Section 9.1 with respect
to all Claims equals an amount equal to the product of three (3) multiplied by
the original aggregate principal amount of all the Notes issued on the Closing
Date. This indemnity obligation will remain in full force and effect regardless
of any investigation made by or on behalf of the Investor Indemnified Persons.

     9.2. Indemnification of the Company. In consideration of the Company's and
the Co-Borrowers' execution and delivery of this Agreement and their sale of the
Securities hereunder, each Investor will indemnify and hold harmless, severally
and not jointly, to the same extent and in the same manner set forth in Section
9.1 above, the Company and the Co-Borrowers, each of their directors, each of
their officers and each person, if any, who controls the Company or any of the
Co-Borrowers within the meaning of the Securities Act or the Exchange Act (each
a "Company Indemnified Person") against any Claim to which any of them may
become subject insofar as such Claim arises out of or is based upon (a) any
breach of any representation or warranty made by such Investor herein or (b) any
breach of any covenant, agreement or obligation of such Investor contained
herein. Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 9.2 does not apply to
amounts paid in settlement of any Claim if such settlement is effected without
the prior written consent of such Investor, which consent will not be
unreasonably withheld, and no Investor will be liable under this Agreement
(including this Section 9.2) for the amount of any Claim that exceeds the
principal amount of the Note purchased by such Investor pursuant to this
Agreement. This indemnity will remain in full force and effect regardless of any
investigation made by or on behalf of any Company Indemnified Person.

     9.3. Notification and Other Indemnification Procedures. Promptly after
receipt by an Investor Indemnified Person or a Company Indemnified Person, as
the case may be (each an "Indemnified Person"), under this Article IX of notice
of the commencement of any action (including any governmental action) by any
person other than an Indemnified Person, such Indemnified Person will, if a
Claim in respect thereof is to be made against any indemnifying party under this
Article IX, deliver to the indemnifying party a written notice of the
commencement thereof. The indemnifying party may participate in and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly given notice, assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying parties and the Indemnified Person. In
that case, the indemnifying party will diligently pursue such defense. If, in
the reasonable opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnified Person and the indemnifying
party would be inappropriate due to actual or potential conflicts of interest
between the Indemnified Person and any other party represented by such counsel
in such proceeding

<PAGE>
or the actual or potential defendants in, or targets of, any such action
including the Indemnified Person and such Indemnified Person reasonably
determines that there may be legal defenses available to such Indemnified Person
that are different from or in addition to those available to the indemnifying
party, then the Indemnified Person is entitled to assume such defense and may
retain its own counsel, with the reasonable fees and expenses to be paid by the
indemnifying party (subject to the restrictions on settlement under Section 9.1
or 9.2, as applicable). However, if multiple counsel are retained by the
Investors pursuant to the preceding sentence, the Company will pay only a pro
rata portion of such fees and expenses of any Investor's counsel, where the pro
rata portion to be paid by the Company equals the percentage obtained by
dividing the aggregate principal amount of the Notes purchased by the Investor
in question pursuant to this Agreement by the aggregate principal amount of all
of the Notes purchased pursuant to this Agreement. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action does not relieve an indemnifying party of any
liability to an Indemnified Person under this Article IX, except to the extent
that the indemnifying party is prejudiced in its ability to defend such action.

                                   ARTICLE X
                          GOVERNING LAW; MISCELLANEOUS

     10.1. Governing Law; Venue; Waiver of Jury Trial. This Agreement, including
the validity hereof and the rights and obligations of the Company and of the
Investors and all amendments and supplements hereto and all waivers and consents
hereunder, shall be construed in accordance with and governed by the internal
laws of New York (except as it relates to corporate law involving the Company,
in which case it shall be governed by the internal laws of the state of
incorporation of the Company) without giving effect to any choice of law or
conflicts of law provision or rule that would cause the application of the
internal laws of any other jurisdiction.

     Notwithstanding anything to the contrary in this Agreement or any other
agreement between any of the parties hereto prior to the date hereof, each of
the parties hereto, 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 Agreement, the subject
matter hereof or any of the transactions contemplated hereby brought by any
party or parties hereto, or their successors or any permitted and registered
assign; (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 party 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 party 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.

     EACH OF THE PARTIES HERETO 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
AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY OR THE SUBJECT
MATTER OF ANY OF THE FOREGOING.

<PAGE>
     10.2. Counterparts; Signatures by Facsimile. This Agreement may be executed
in two or more counterparts, all of which are considered one and the same
agreement and will become effective when counterparts have been signed by each
party and delivered to the other parties. This Agreement, once executed by a
party, may be delivered to the other parties hereto by facsimile transmission of
a copy of this Agreement bearing the signature of the party so delivering this
Agreement.

     10.3. Headings. The headings of this Agreement are for convenience of
reference only, are not part of this Agreement and do not affect its
interpretation.

     10.4. Severability. If any provision of this Agreement is invalid or
unenforceable under any applicable statute or rule of law, then such provision
will be deemed modified to conform with such statute or rule of law. Any
provision hereof that may prove invalid or unenforceable under any law will not
affect the validity or enforceability of any other provision hereof.

     10.5. Entire Agreement; Amendments. This Agreement, the Security Agreement,
the Escrow Agreement and the Registration Rights Agreement (including all
schedules and exhibits thereto) constitute the entire agreement among the
parties hereto with respect to the subject matter hereof and thereof. There are
no restrictions, promises, representations, warranties or undertakings, other
than those set forth or referred to herein or therein. This Agreement supersedes
all prior agreements and understandings among the parties hereto with respect to
the subject matter hereof. No provision of this Agreement may be waived or
amended other than by an instrument in writing signed by the party to be charged
with enforcement.

     10.6. Notices. 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 (including a recognized
overnight delivery service) or by facsimile and will be effective five (5)
calendar days after being placed in the mail, if mailed by regular United States
mail, or upon receipt, if delivered personally or by facsimile, in each case
addressed to a party. Any notice sent by courier (including a recognized
overnight delivery service) will be deemed received one (1) Business Day after
being sent. The addresses for such communications are:

     If to the Company or the
     Co-Borrowers:                Midwest Express Holdings, Inc.
                                  6744 South Howell Avenue
                                  Oak Creek, WI 53154
                                  Attention:  Chief Financial Officer
                                  Facsimile:  (414) 570-9666

                                  With a copy to:

                                  Foley & Lardner
                                  777 East Wisconsin Avenue, Suite 3700
                                  Milwaukee, WI 53202
                                  Attention:  Patrick G. Quick, Esq.
                                  Facsimile:  (414) 297-4900

     If to an Investor:           To the address set forth
                                  immediately below such
                                  Investor's name on the
                                  signature pages hereto.

Each party will provide written notice to the other parties of any change in its
address.

     10.7. Successors and Assigns. This Agreement is binding upon and inures to
the benefit of the parties and their successors and permitted assigns. The
Company and the Co-Borrowers will not

<PAGE>
assign this Agreement or any rights or obligations hereunder without the prior
written consent of the Investors, which consent will not be unreasonably
withheld, and no Investor may assign this Agreement or any rights or obligations
hereunder without the prior written consent of the Company and the Co-Borrowers,
which consent will not be unreasonably withheld. Notwithstanding the foregoing,
an Investor may assign all or part of its rights and obligations hereunder to
any of its "affiliates," as that term is defined under the Securities Act,
without the consent of the Company and the Co-Borrowers so long as the affiliate
is a "qualified institutional buyer" or an "institutional accredited investor"
as defined in Section 2.2 and agrees in writing to be bound by this Agreement.
This provision does not limit the Investor's right to transfer the Securities
pursuant to the terms of this Agreement or to assign the Investor's rights
hereunder to any such affiliate transferee pursuant to the terms of this
Agreement. Notwithstanding the foregoing, any transferee who purchases the
Securities in a public sale shall not have any rights under this Agreement.

     10.8. Third Party Beneficiaries. This Agreement is intended for the benefit
of the parties hereto and their respective permitted successors and assigns, and
is not for the benefit of, nor may any provision hereof be enforced by, any
other person or entity (except as specifically contemplated in Article IX);
provided, however, that the provisions in Section 2.12 relating to
acknowledgments regarding the Placement Agent are intended for the benefit of
the Placement Agent.

     10.9. Survival. The representations and warranties of the Company and the
Co-Borrowers set forth herein will survive for two (2) years following the date
hereof except that (a) if the obligation of the Company to maintain the
effectiveness of the registration statement and keep current a prospectus
thereunder extends beyond this two-year period, then such representations and
warranties shall survive as long as such obligation exists and (b) the
representations and warranties set forth in Sections 3.1, 3.2, 3.3, 3.4, 3.6(a)
and 3.17 shall survive indefinitely. The Company and the Co-Borrowers make no
representations or warranties in any oral or written information provided to
Investors, other than the representations and warranties included herein.

     10.10. Further Assurances. Each party will do and perform, or cause to be
done and performed, all such further acts and things, and will execute and
deliver all other agreements, certificates, instruments and documents, as
another party may reasonably request to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.

     10.11. No Strict Construction. The language used in this Agreement is
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any party.

     10.12. Termination Relating to Escrow.

          (a) If the conditions required for release by the Escrow Agent in full
     of the First Closing Notes and of the entire First Closing Purchase Price
     (the "Escrow Conditions") have not been satisfied as of November 30, 2003,
     then at any time thereafter until the satisfaction of the Escrow
     Conditions, at the election of any Investor as set forth in written notice
     from such Investor to the Company and the Escrow Agent, the Investor may
     terminate this Agreement as to such Investor, in which case (i) the
     Investor shall be entitled to an immediate return of the portion of the
     First Closing Purchase Price paid by such Investor from the Escrow Agent
     together with payment from the Company in an amount equal to the interest
     that would have accrued under the Investor's First Closing Note from the
     First Closing Date to the date of payment less the earnings allocable to
     the Investor under the Escrow Agreement relating to the portion of the
     First Closing Purchase Price paid by such Investor and (ii) the remaining
     Investors who do not terminate this Agreement shall have the option to
     purchase (pro rata if applicable) additional Notes up to the aggregate
     principal amount of the First Closing Note the

<PAGE>
     terminating Investor would have received had the Escrow Conditions been
     satisfied, exercisable until the time the Escrow Conditions are satisfied,
     and the Notes the terminating Investor would otherwise have been entitled
     to purchase in respect of the Second Closing, exercisable at the Second
     Closing.

          (b) If the Escrow Conditions have not been satisfied as of December
     31, 2003, then the Company may at its option, or shall upon the written
     request of one or more of the Investors received within five (5) Business
     Days of December 31, 2003 (so long as each Investor making such request
     agrees in such written request to deliver instructions to the Escrow Agent
     under Section 3(a) of the Escrow Agreement or such instructions and an
     election to proceed with the Second Closing on the Second Closing Date
     despite the failure to satisfy the Escrow Conditions (an "Escrow Conditions
     Waiver Notice")), send a written notice to the Investors that the Company
     intends to terminate this Agreement as to any Investor who, by the later of
     December 31, 2003 or the sixth (6th) business day after receipt of such
     notice from the Company, has not delivered instructions to the Escrow Agent
     under Section 3(a) of the Escrow Agreement or such instructions and an
     Escrow Conditions Waiver Notice (and if any Investor elects not to deliver
     instructions to the Escrow Agent under Section 3(a) of the Escrow
     Agreement, then the Investors who do so elect shall have the option to
     purchase (pro rata if applicable) additional Notes up to the aggregate
     principal amount of the First Closing Notes that were not released to the
     Investors who elected not to deliver the instructions to the Escrow Agent,
     exercisable until the sixth (6th) business day after receipt of such notice
     from the Company).

          (c) Upon any termination pursuant to Section 10.12(a) or pursuant to
     Section 10.12(b) where the Investor in question has not delivered
     instructions to the Escrow Agent under Section 3(a) of the Escrow
     Agreement, the First Closing shall be deemed not to have occurred with
     respect to the Investor in question, such Investor shall have no further
     rights or obligations under this Agreement, and the Company shall have no
     further rights or obligations under this Agreement in respect of the
     Investor in question. Upon any termination pursuant to Section 10.12(b)
     where the Investor in question has delivered instructions to the Escrow
     Agent under Section 3(a) of the Escrow Agreement but has not delivered an
     Escrow Conditions Waiver Notice, the Investor in question shall have no
     further rights or obligations under this Agreement, and the Company shall
     have no further rights or obligations under this Agreement in respect of
     the Investor in question, in each case in respect of matters relating to
     the Second Closing. However, termination of this Agreement pursuant to this
     Section 10.12 shall not in any way terminate, limit or restrict the rights
     and remedies of any party hereto against any other party that has violated,
     breached or failed to satisfy any of its representations, warranties or
     covenants in this Agreement prior to termination.

                                    * * * * *

<PAGE>
     IN WITNESS WHEREOF, the undersigned Investors, the Company and the
Co-Borrowers have caused this Agreement to be duly executed as of the date first
above written.

                               COMPANY:

                               MIDWEST EXPRESS HOLDINGS, INC.

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

                               WIRE TRANSFER INSTRUCTIONS:

                               Bank Name:  U.S. Bank, N.A.

                               ABA Number:  075000022

                               Account Number:  121727847

                               Account Name:  Midwest Express Airlines, Inc.

                               CO-BORROWERS:

                               MIDWEST AIRLINES, INC.

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

                               SKYWAY AIRLINES, INC.

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

                               YX PROPERTIES, LLC

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

<PAGE>
                      [INVESTORS' SIGNATURE PAGES OMITTED]

                           OMNIBUS SIGNATURE PAGE TO
                          SECURITIES PURCHASE AGREEMENT

                  The undersigned hereby executes and delivers the Securities
Purchase Agreement to which this Signature Page is attached, which, together
with all counterparts of this Securities Purchase Agreement and Signature Pages
of the other Investors, the Company and the Co-Borrowers to said Agreement,
shall constitute one and the same document in accordance with the terms of said
Agreement.

                         [NAME OF INVESTOR]

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

                         Address:
                                     -------------------------------------

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

                         Attention:
                                     -------------------------------------
                         Telephone:
                                     -------------------------------------
                         Facsimile:
                                     -------------------------------------

                         Principal Amount of Notes at First Closing:

                         Principal Amount of Notes at Second Closing:

                         Name in Which Notes Are to Be Held (please print):

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

                         Social Security or Tax ID Number:
                                                            --------------

                         WIRE TRANSFER INSTRUCTIONS:

                         Bank Name:
                                     -------------------------------------

                         ABA Number:
                                     -------------------------------------

                         Account Number:
                                         ---------------------------------

                         Account Name:
                                        ----------------------------------

<PAGE>
                                    EXHIBIT A

                                  Form of Note

See Exhibit 4.3 to this Current Report on Form 8-K.

<PAGE>
                                    EXHIBIT B

                           TRANSFER AGENT INSTRUCTIONS

                         MIDWEST EXPRESS HOLDINGS, INC.

                               September 29, 2003

American Stock Transfer & Trust Company
59 Maiden Lane
Plaza Level
New York, NY 10038
Attn:    Herbert J. Lemmer

     Re: Private Placement of Convertible Senior Secured Notes

Ladies and Gentlemen:

     We refer you to that certain Securities Purchase Agreement, dated as of
September 29, 2003 (the "Securities Purchase Agreement"), by and among 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"), 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"), and the
investors named on the signature pages attached to the Securities Purchase
Agreement (collectively, the "Investors"), pursuant to which the Company and the
Co-Borrowers will issue to the Investors convertible senior secured notes (the
"Notes") in an aggregate principal amount of up to $25,000,000. The Notes are
convertible into shares of common stock of the Company, par value $0.01 per
share (the "Common Stock").

     The Company hereby authorizes and instructs you (provided that you are the
transfer agent of the Company at such time) upon delivery to you of a properly
completed and duly executed and acknowledged Conversion Notice, in the form
attached hereto as Exhibit I, to issue (from authorized but unissued shares),
countersign and register certificates representing the shares of Common Stock
issuable upon conversion of the Notes (the "Conversion Shares") in the name of
the Investor in question or such Investor's nominee, as specified on the
Conversion Notice. The certificates representing the Conversion Shares shall
bear the legend set forth on the next page.

<PAGE>
     "THE SECURITIES REPRESENTED BY THIS CERTIFICATE 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 CERTIFICATE MAY
     NOT TRANSFER THESE SECURITIES WITHOUT SUCH REGISTRATION OR AN EXEMPTION
     FROM SUCH REGISTRATION UNDER THE SECURITIES ACT AND ANY APPLICABLE BLUE SKY
     LAWS. 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."

     The Company further instructs you not to acknowledge or record the transfer
of any Conversion Shares in the shareholder records of the Company or to issue
certificates representing any Conversion Shares to any person or entity other
than the transferor thereof unless the requirements set forth below are
satisfied with respect to such Conversion Shares, in which case such Conversion
Shares are to be transferred free from any restrictive legend (unless otherwise
required by applicable state securities laws or the laws of any applicable
foreign jurisdiction) and registered in such name and in such denominations as
specified by the Investor in question:

     1. You receive written notice from the Company that a registration
statement covering resales of the Conversion Shares has been declared effective
by the Securities and Exchange Commission under the Securities Act of 1933, as
amended (the "Securities Act"), in the form attached hereto as Exhibit II, and
written confirmation from the Investor in question that the resale of such
Conversion Shares was made pursuant to such effective registration statement; or

     2. You receive written notice from the Company, accompanied by an opinion
of counsel, that the sale of such Conversion Shares may be effected under Rule
144(k) of the Securities Act; or

     3. You receive written notice from the Company that the Company has
received the 144 Documentation, the 904 Documentation or the Other Exemption
Documentation (each as defined in the Securities Purchase Agreement) respecting
the sale of such Conversion Shares.

     You are further instructed to notify the Secretary of the Company in
writing of any request that you receive pertaining to the proposed transfer of
any of the Conversion Shares.

     These instructions may not be rescinded or revoked other than by means of a
communication signed by the Company and the Investor in whose name the
Conversion Shares in question are registered.

<PAGE>
     Please execute this letter in the space indicated to acknowledge your
agreement to act in accordance with these instructions. Should you have any
questions concerning this matter, please contact me at (414) 570-4001 or Patrick
Quick of Foley & Lardner, our outside legal counsel, at (414) 297-5678.

                               Very truly yours,

                               MIDWEST EXPRESS HOLDINGS, INC.

                               By:  /s/ Robert S. Bahlman
                                    --------------------------------------------
                                    Robert S. Bahlman
                                    Senior Vice President and
                                    Chief Financial Officer

THE FOREGOING INSTRUCTIONS ARE
ACKNOWLEDGED AND AGREED TO

this 29th day of September, 2003

American Stock Transfer & Trust Company

By: /s/ Herbert J. Lemmer
    ----------------------------------------
    Name:  Herbert J. Lemmer
           ---------------------------------
    Title: Vice President
           ---------------------------------

Enclosures

<PAGE>
                                    EXHIBIT I

                         MIDWEST EXPRESS HOLDINGS, INC.
                                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: ____________________________

<PAGE>
                                   EXHIBIT II

                         FORM OF NOTICE OF EFFECTIVENESS
                            OF REGISTRATION STATEMENT

American Stock Transfer & Trust Company
59 Maiden Lane
Plaza Level
New York, NY 10038
Attn:    _____________________

     Re: Midwest Express Holdings, Inc.

Ladies and Gentlemen:

     We are counsel to Midwest Express Holdings, Inc., a Wisconsin corporation
(the "Company"), and have represented the Company in connection with that
certain Securities Purchase Agreement, dated as of September 29, 2003 (the
"Purchase Agreement"), entered into by and among 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"), 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"), and the buyers
named therein (collectively, the "Investors"), pursuant to which the Company and
the Co-Borrowers issued to the Holders their convertible senior secured notes
(the "Notes"), convertible into shares of the Company's Common Stock, par value
$.01 per share (the "Common Stock"). Pursuant to the Purchase Agreement, the
Company entered into a Registration Rights Agreement with the Investors, dated
as of September 29, 2003 (the "Registration Rights Agreement"), pursuant to
which the Company agreed, among other things, to register the Registrable
Securities (as defined in the Registration Rights Agreement) under the
Securities Act of 1933, as amended (the "Securities Act"). In connection with
the Company's obligations under the Registration Rights Agreement, on
___________, 2003, the Company filed a Registration Statement on Form S-1 (File
No. 333-_________) (the "Registration Statement") with the Securities and
Exchange Commission (the "SEC") relating to the Registrable Securities. The
Registration Statement names each of the Investors as a selling shareholder
thereunder.

     In connection with the Registration Statement, we advise you that a member
of the SEC's staff has advised us by telephone that the SEC has entered an order
declaring the Registration Statement effective under the Securities Act at
[ENTER TIME OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS], and we have no
knowledge, after telephonic inquiry of a member of the SEC's staff, that any
stop order suspending its effectiveness has been issued or that any proceedings
for that purpose are pending before, or threatened by, the SEC and the
Registrable Securities are available for resale under the Securities Act
pursuant to the Registration Statement.

                                          Very truly yours,

                                          [ISSUER'S COUNSEL]

                                          By:_____________________

     CC: [LIST NAMES OF INVESTORS]

<PAGE>
                                    EXHIBIT C

           Matters to be Covered in Opinions of Counsel to the Company

Matters to be covered by opinion of Foley & Lardner

1.   Based solely on certificates of the Wisconsin Department of Financial
     Institutions dated September 24, 2003, the Company and Midwest are each
     corporations validly existing under the laws of the State of Wisconsin and
     each has filed its most recent required annual report, and neither has
     filed articles of dissolution, with the Wisconsin Department of Financial
     Institutions. Based solely on a certificate of the Delaware Secretary of
     State dated September 24, 2003, Skyway is a corporation in good standing
     and having a legal corporate existence in the state of Delaware and has
     filed its most recent required annual report with the Delaware Secretary of
     State. Based solely on a certificate of the Nebraska Secretary of State
     dated September 24, 2003, YX is a limited liability company in existence
     under the laws of the state of Nebraska.

2.   The Company and the Co-Borrowers have all requisite corporate or limited
     liability company (as the case may be) power and authority to execute and
     deliver the Transaction Documents and perform their obligations thereunder
     (other than the Shareholder Approval that the Company must receive to
     enable it to perform its obligations at the Second Closing). The
     Transaction Documents have been duly authorized by all necessary corporate
     or limited liability company (as the case may be) action on the part of the
     Company and the Co-Borrowers (other than the Shareholder Approval that the
     Company must receive to enable it to perform its obligations at the Second
     Closing) and have been duly executed and delivered (into escrow, in the
     case of the Escrowed Transaction Documents) by the Company and the
     Co-Borrowers.

3.   Each of the Transaction Documents to which the Company and/or any of the
     Co-Borrowers is a party constitutes the legal, valid and binding obligation
     of the Company and/or the Co-Borrowers, as applicable, enforceable against
     the Company and/or the Co-Borrowers, as applicable, in accordance with
     their respective terms subject to, in the case of the Escrowed Transaction
     Documents, their delivery to the Investors in accordance with the terms of
     the Escrow Agreement.

4.   The Conversion Shares initially issuable to the Investors upon conversion
     of the Notes (assuming, with respect to the Conversion Shares to be issued
     upon conversion of the Second Closing Notes, Shareholder Approval is
     obtained respecting the Second Closing) have been duly authorized and, when
     issued and paid for in accordance with the terms of the Notes, will be
     validly issued, fully paid and nonassessable (except as otherwise provided
     by Section 180.0622(2)(b) of the Wisconsin Business Corporation Law).

5.   The execution and delivery of, and performance by the Company and the
     Co-Borrowers of their respective obligations under, the Transaction
     Documents do not (i) constitute a breach or violation of the organizational
     documents of the Company and the Co-Borrowers (assuming, with respect to
     the Second Closing Notes and the Conversion Shares to be issued upon
     conversion of the Second Closing Notes, Shareholder Approval is obtained
     respecting the Second Closing); (ii) to our knowledge, constitute a default
     under, or give to others any rights of termination, amendment, acceleration
     or cancellation of, any agreement, indenture or other written instrument of
     the Company or the Co-Borrowers currently in effect that is attached as an
     exhibit to the SEC Documents, provided that for purposes of this clause
     (ii) we have with your permission excluded the Senior Secured Revolving
     Credit Agreement dated August 31, 2001, as amended (the "Credit
     Agreement"), among the Company, U.S. Bank National Association, as agent,
     and certain lenders, and the guaranties, security agreements and other
     documents and agreements ancillary to the Credit Agreement; or (iii) to our
     knowledge, result in any violation of any order, judgment, injunction,

<PAGE>
     decree or other restriction of any court or governmental authority which
     order, judgment, injunction, decree or other restriction is specifically
     applicable to the Company or a Co-Borrower.

6.   The issuance and sale of the Notes under the circumstances contemplated by
     the Purchase Agreement is exempt from the registration requirements of the
     Securities Act of 1933, as amended (the "Securities Act"), pursuant Section
     4(2) of the Securities Act.

7.   The Mortgage, subject to its delivery to the Agent pursuant to the terms of
     the Escrow Agreement, creates a valid and effective mortgage lien and
     security interest on Skyway's interest in that part of the Premises (as
     defined in the Mortgage) which consists of real property (including
     fixtures attached thereto) located in Wisconsin (the "Real Property"), and
     is in a form satisfactory for recordation in the office of the register of
     deeds for the county in which the Real Property is located.

     With respect to after-acquired property that is real property, in order to
     give constructive notice of the lien of the Mortgage on such property, it
     is necessary that an amendment or supplement thereto specifically
     describing the same be recorded in the office of the register of deeds for
     the county in which such property is located.

     We note that in order to maintain the effectiveness of a lien upon real
     property created by a mortgage, Wisconsin Statutes require that every 30
     years after the initial recording thereof there appear of record in the
     applicable real estate records an instrument affording affirmative and
     express notice of the interest created by the mortgage.

8.   The Security Agreement, subject to its delivery to the Agent pursuant to
     the terms of the Escrow Agreement, creates in favor of the Agent for the
     benefit of the Investors, as security for the obligations of the Company
     and the Co-Borrowers under the Notes, a security interest in the right,
     title and interest of the Company and the Co-Borrowers in the collateral
     described therein to the extent article 9 of the Wisconsin UCC is
     applicable thereto (the "Article 9 Collateral").

9.   The Financing Statements are in proper form for filing. Upon delivery of
     the Financing Statements to the Agent pursuant to the terms of the Escrow
     Agreement and the filing of the Financing Statements with the Filing
     Offices, Agent will have a perfected security interest in that portion of
     the Article 9 Collateral in which a security interest is perfected by
     filing a financing statement in the states in which the Filing Offices are
     located (the "Filing Collateral").

Matters to be covered by opinion of Daugherty, Fowler, Peregrin & Haught

1.   Release A, Release B and the Agreement are in due form for recordation by
     and have been duly filed for recordation with the FAA pursuant to and in
     accordance with the provisions of 49 U.S.C. Section 44107;

2.   Airframe A through Airframe M, both inclusive, are duly registered in the
     name of Midwest pursuant to and in accordance with the provisions of 49
     U.S.C. Section 44103(a);

3.   Airframe N and Airframe O are duly registered in the name of Skyway
     pursuant to and in accordance with the provisions of 49 U.S.C. Section
     44103(a);

<PAGE>
4.   Title to Airframe A through Airframe M, both inclusive, is vested in
     Midwest and Airframe A through Airframe M, both inclusive, are free and
     clear of liens and encumbrances of record except as created by the
     Agreement;

5.   Title to Airframe N and Airframe O is vested in Skyway and Airframe N and
     Airframe O are free and clear of liens and encumbrances of record except as
     created by the Agreement;

6.   The Engines and the Spare Parts, as maintained by or on behalf of Midwest
     and Skyway, at the Designated Locations, are free and clear of liens and
     encumbrances of record except as created by the Agreement;

7.   The Agreement creates a duly perfected first priority security interest in
     the Aircraft and the Spare Parts, as maintained by or on behalf of Midwest
     and Skyway, at the Designated Locations, in favor of the Collateral Agent,
     it being understood that no opinion is herein expressed as to the validity,
     priority or enforceability of such security interest under local law or as
     to the recognition of the perfection of such security interest as against
     third parties in any legal proceeding outside the United States or at a
     time when the Spare Parts, or any part thereof, are not maintained by or on
     behalf of Midwest or Skyway at the Designated Locations;

8.   The Agreement is not required to be refiled with the FAA or filed or
     recorded in any other place within the United States in order to perfect,
     or maintain the perfection of, the security interest in the Aircraft and
     the Spare Parts, as maintained by or on behalf of Midwest or Skyway at the
     Designated Locations, as created thereby; and,

9.   No authorization, approval, consent, license or order of, or registration
     with, or the giving of notice to, the FAA is required for the valid
     authorization, delivery and performance of the Agreement, except for such
     filings as are referred to above.

<PAGE>
                                    EXHIBIT D

                                Escrow Agreement

See attached Exhibit 4.5 to this Current Report on Form 8-K.

<PAGE>
                                    EXHIBIT E

                          Registration Rights Agreement

See attached Exhibit 4.2 to this Current Report on Form 8-K.

<PAGE>
                                    EXHIBIT F

                                    Mortgage

See attached Exhibit 4.6. to this Current Report on Form 8-K.

<PAGE>
                                    EXHIBIT G

                               Security Agreement

See attached Exhibit 4.4 to this Current Report on Form 8-K.

<PAGE>
                                  Schedule 3.5
                                  ------------

                       Senior and pari passu Indebtedness
                       ----------------------------------

1.   Indebtedness under the Senior Secured Revolving Credit Agreement, dated
     August 31, 2001, as amended (the "U.S. Bank Credit Agreement"), among the
     Company, as borrower, the several lenders identified on the signature pages
     to the U.S. Bank Credit Agreement and U.S. Bank National Association, as
     agent for the Lenders, which Indebtedness comprises reimbursement
     obligations for letters of credit having an approximate outstanding face
     amount of $15.5 million, which Indebtedness is a general obligation of the
     Company and its subsidiaries (as guarantors), pari passu with
     unsubordinated debt, and secured by substantially all assets of the Company
     and its subsidiaries. Security interest to be terminated prior to release
     from escrow of the Security Agreement in favor of the agent for the
     Noteholders.

2.   Indebtedness owed to Thrivent for mortgage loan secured by the Company's
     corporate headquarters, having an outstanding principal balance of
     approximately $2.5 million, which Indebtedness is a general obligation,
     pari passu with unsubordinated debt.

3.   Indebtedness owed to Kimberly-Clark, estimated to be in an amount not in
     excess of $3 million, for reimbursement of payments that K-C made under
     guaranties of leases of three DC-9 aircraft, which amount is a general
     unsecured obligation, pari passu with unsubordinated debt.

4.   Indebtedness of approximately $27 million for three aircraft financed by
     KfW (Skyway 328JETs having tail numbers N356SK, N357SK and N358SK), secured
     by such aircraft. Such Indebtedness is pari passu with unsubordinated debt
     and is general recourse except that a portion (in the aggregate amount of
     $4.5 million for the three aircraft) of the balloon payment at maturity is
     limited recourse to the aircraft.

5.   Indebtedness under reimbursement agreements and similar arrangements with
     respect to letters of credit and surety bonds issued to support
     indebtedness or other obligations of the Company or its subsidiaries in an
     amount not in excess of $2 million, including obligations with respect to
     letters of credit issued by Associated Bank (secured by a lien on deposit
     accounts) and surety bonds issued by Westchester and Safeco supported in
     part by letters of credit, all of which reimbursement obligations are
     general obligations, pari passu with unsubordinated debt.

6.   Indebtedness owed to trade creditors for the purchase of goods or services
     in the ordinary course and consistent with past practices, which
     obligations are unsecured general obligations, pari passu with
     unsubordinated debt.

7.   Indebtedness owed in respect of 717 aircraft progress payment financing
     provided by KfW in an outstanding amount of approximately $32 million,
     including reimbursement obligations with respect to the guaranty of such
     financing by Rolls Royce, which obligations are general obligations,
     secured by the purchase agreement(s) for the applicable 717 aircraft, pari
     passu with unsubordinated debt.

8.   Indebtedness owed in respect of capital leases of information technology
     products with Kronos, SBC Ameritech, Comark and Microsoft Licensing,
     undertaken in the ordinary course of business and consistent with past
     practice, which Indebtedness is a general obligation, secured by the
     covered equipment and/or software, pari passu with unsubordinated debt.

9.   Indebtedness comprising reimbursement obligations associated with programs
     of the Company or its subsidiaries for the pre-purchase of tickets or
     similar prepayment programs, which Indebtedness is a general unsecured
     obligation in an amount less than $1 million, pari passu with
     unsubordinated debt.

<PAGE>
                                  Schedule 3.7
                                  ------------

     On September 25, 2003, the Milwaukee Journal Sentinel published a news
article, titled "Midwest Airlines won't fly with Eagle: Shared ticket agreement
to lapse," reporting that Midwest's codeshare agreement with American Eagle will
terminate in February 2004. The Company plans to file a press release to
acknowledge that the codeshare agreement with American Eagle will terminate and
indicate that the Company believes this arrangement will generate revenue in
fiscal 2003 that constitutes less than 1/2 of 1% of the Company's consolidated
2002 revenue.EXECUTION COPY

                          REGISTRATION RIGHTS AGREEMENT

     This REGISTRATION RIGHTS AGREEMENT, dated as of September 29, 2003 (this
"Agreement"), is made by and among Midwest Express Holdings, Inc., a Wisconsin
corporation (the "Company"), with headquarters located at 6744 South Howell
Avenue, Oak Creek, WI 53154, and the investors named on the signature pages
hereto (each of whom is hereinafter referred to as an "Investor" and all of whom
collectively are hereinafter referred to as the "Investors").

                                    RECITALS:

     A. In connection with the Securities Purchase Agreement, dated September
29, 2003, by and among 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"), 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"), and the Investors (the "Purchase Agreement"),
the Company and the Co-Borrowers have agreed, upon the terms and subject to the
conditions of the Purchase Agreement, to issue and sell to the Investors
convertible senior secured notes (the "Notes"), which will be convertible into
shares (the "Conversion Shares," and together with any associated Rights (as
defined in the Purchase Agreement), the "Securities") of the Company's common
stock, par value $.01 per share (the "Common Stock").

     B. To induce the Investors to execute and deliver the Purchase Agreement,
the Company has agreed to provide certain registration rights under the
Securities Act of 1933, as amended (the "Securities Act"), and applicable state
securities laws with respect to the Securities.

                                   AGREEMENT:

     In consideration of the promises and the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Company and each of the Investors hereby agree as
follows:

                                    ARTICLE I
                                   DEFINITIONS

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

     1.1. "Agreement" has the meaning set forth in the introduction to this
Agreement.

     1.2. "Automatic Grace Period" has the meaning set forth in Section 3.6(b).

     1.3. "Business Day" means any day other than a Saturday, Sunday or other
day on which the SEC is authorized or required by law to remain closed.

     1.4. "Claims" has the meaning set forth in Section 6.1.

     1.5. "Co-Borrowers" has the meaning set forth in Recital A.

     1.6. "Common Stock" has the meaning set forth in Recital A.
<PAGE>
     1.7. "Company" has the meaning set forth in the introduction to this
Agreement.

     1.8. "Company Indemnified Person" has the meaning set forth in Section 6.2.

     1.9. "Company Representative" has the meaning set forth in Section 3.9.

     1.10. "Continuing Late Effective Payment" has the meaning set forth in
Section 2.4(a).

     1.11. "Conversion Shares" has the meaning set forth in Recital A.

     1.12. "Event" has the meaning set forth in Section 3.6(a).

     1.13. "Excess Suspension Payment" has the meaning set forth in Section
2.4(b).

     1.14. "Exchange Act" has the meaning set forth in Section 1.21.

     1.15. "First Closing Date" has the meaning set forth in the Purchase
Agreement.

     1.16. "Force Majeure" has the meaning set forth in Section 2.5.

     1.17. "Grace Period" means an Automatic Grace Period or an Optional Grace
Period.

     1.18. "Indemnified Person" has the meaning set forth in Section 6.3.

     1.19. "Inspectors" has the meaning set forth in Section 3.8.

     1.20. "Inspector Representative" has the meaning set forth in Section
3.8(b).

     1.21. "Investor" or "Investors" has the respective meaning set forth in the
introduction to this Agreement and includes any of their permitted transferees
or assignees who receive or acquire Registrable Securities and agree to become
bound by the provisions of this Agreement in accordance with Article IX, but
only for so long as such person holds Registrable Securities or Notes
convertible into Registrable Securities, except as otherwise provided in Article
VI; provided that no such person is registered as a broker or dealer under
Section 15(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or is a member of the National Association of Securities Dealers, Inc.

     1.22. "Investor Delay" has the meaning set forth in Section 2.4(b).

     1.23. "Investor Indemnified Person" has the meaning set forth in Section
6.1.

     1.24. "Investor Representative" has the meaning set forth in Section
3.6(a).

     1.25. "Legal Counsel" has the meaning set forth in Section 2.6.

     1.26. "Midwest" has the meaning set forth in Recital A.

     1.27. "Notes" has the meaning set forth in Recital A.

     1.28. "NYSE" means the New York Stock Exchange.

     1.29. "Optional Grace Period" has the meaning set forth in Section 3.6(c).

     1.30. "Plan of Distribution" has the meaning set forth in Section 2.1.

                                       2
<PAGE>
     1.31. "Purchase Agreement" has the meaning set forth in Recital A.

     1.32. "Records" has the meaning set forth in Section 3.8.

     1.33. The terms "register," "registered," and "registration" refer to a
registration effected by preparing and filing a Registration Statement in
compliance with the Securities Act and, in particular, pursuant to Rule 415
under the Securities Act and the declaration or ordering of effectiveness of
such Registration Statement by the United States Securities and Exchange
Commission (the "SEC").

     1.34. "Registrable Securities" means the Conversion Shares issued or
issuable upon conversion of the Notes, any shares of capital stock issued or
issuable from time to time (with any adjustments) as a dividend or distribution
on or in exchange for or replacement of or otherwise with respect to the
Conversion Shares and any associated Rights, except that any such securities
will cease to be Registrable Securities at such time as they have been sold
under a Registration Statement or pursuant to Rule 144 under the Securities Act
or otherwise or at such time as they are eligible to be sold pursuant to Rule
144(k).

     1.35. "Registration Period" has the meaning set forth in Section 3.1.

     1.36. "Registration Statement" means a Registration Statement of the
Company filed with the SEC under the Securities Act pursuant to Section 2.1,
including all amendments and supplements thereto and all documents incorporated
by reference therein.

     1.37. "Required Effective Date" has the meaning set forth in Section 2.2

     1.38. "Required Filing Date" has the meaning set forth in Section 2.1

     1.39. "Rights" has the meaning set forth in Recital A.

     1.40. "Rule 415" means Rule 415 under the Securities Act, or any successor
rule providing for offering securities on a continuous basis, and applicable
rules and regulations thereunder.

     1.41. "Rule 144" means Rule 144 under the Securities Act, or any successor
rule, and any applicable rules and regulations thereunder.

     1.42. "Securities" has the meaning set forth in Recital A.

     1.43. "Securities Act" has the meaning set forth in Recital B.

     1.44. "SEC" has the meaning set forth in Section 1.33.

     1.45. "Shareholder Vote" means the vote of the Company's shareholders at
the next meeting of shareholders of the Company, which shall not be later than
November 30, 2003.

     1.46. "Skyway" has the meaning set forth in Recital A.

     1.47. "Violations" has the meaning set forth in Section 6.1.

     1.48. "YX" has the meaning set forth in Recital A.

                                       3
<PAGE>
                                   ARTICLE II
                                  REGISTRATION

     2.1. Mandatory Registration. The Company will use its reasonable best
efforts to prepare and file, as soon as practicable but in no event later than
the fifth (5th)Business Day after the Shareholder Vote (the "Required Filing
Date"), with the SEC a Registration Statement on Form S-3, if available,
registering all of the Registrable Securities for resale in accordance with the
"Plan of Distribution" attached hereto as Exhibit A. This Registration Statement
shall register only the Registrable Securities. If Form S-3 is not available at
that time, then the Company will use its reasonable best efforts to file a
Registration Statement by the Required Filing Date on such form as is then
available to effect a registration of the Registrable Securities.

     2.2. Effectiveness of the Registration Statement. The Company will use its
reasonable best efforts to cause the Registration Statement contemplated by the
previous Section to be declared effective by the SEC within ninety (90) calendar
days after the First Closing Date and in any event no later than one hundred
twenty (120) calendar days after the First Closing Date (the "Required Effective
Date"). The Company's reasonable best efforts will include, but are not to be
limited to, promptly responding to all comments received from the staff of the
SEC.

     2.3. Ineligibility for Form S-3. The Company does not currently meet the
requirements for the use of Form S-3 for registration of the resale by the
Investors of the Registrable Securities. The Company represents, warrants and
covenants that it has filed and will use its reasonable best efforts to file all
reports required to be filed by the Company with the SEC in a timely manner so
as to obtain and then maintain eligibility for the use of Form S-3. In the event
that Form S-3 is not available for the registration of the resale of Registrable
Securities hereunder, the Company shall (i) register the resale of the
Registrable Securities on Form S-1 or on another appropriate form reasonably
acceptable to the holders of at least two-thirds of the Registrable Securities
and (ii) undertake to convert such Registration Statement on Form S-1 (or such
other appropriate form) to a Registration Statement on Form S-3 as soon as the
Company is eligible to register the resale of the Registrable Securities on Form
S-3.

     2.4. Effect of Failure to File and Obtain and Maintain Effectiveness of
Registration Statement.

          (a) If a Registration Statement has not been declared effective by the
     Required Effective Date, then the Company will make one or more payments to
     each Investor under this subsection (a) (each, a "Continuing Late Effective
     Payment"). The Continuing Late Effective Payment for each Investor for each
     calendar month after the Required Effective Date that a Registration
     Statement has not been declared effective will be an amount equal to (i)
     1.00% of the aggregate Principal of the Notes held by the Investor on the
     respective last calendar day of the period to which the Continuing Late
     Effective Payment in question relates, which Principal is convertible into
     Conversion Shares that the Company is obligated to include in such
     Registration Statement, plus (ii) 1.00% of the aggregate Conversion Price
     paid for Conversion Shares that are Registrable Securities, were issued to
     the Investor upon conversion of the Investor's Notes and are held by such
     Investor on the respective last calendar day of the period to which the
     Continuing Late Effectiveness Payment in question relates. The Continuing
     Late Effective Payment will be prorated on a daily basis for periods less
     than a calendar month. Subject to subsection (c), the Company will make the
     Continuing Late Effective Payment to each Investor by check (or by wire
     transfer if the payment exceeds $100,000 in amount and the Company has wire
     transfer instructions from the Investor) within ten (10) Business Days
     following the end of each calendar month as to which payment hereunder is
     due.

                                       4
<PAGE>
          (b) Except in connection with any delays that are attributable to
     changes to the Plan of Distribution pursuant to Section 3.12 and any delays
     that are attributable to amendments to the Registration Statement to
     include an Investor's Registrable Securities pursuant to Section 4.1 (each,
     an "Investor Delay"), if at any time during the Registration Period, on any
     day after such Registration Statement has been declared effective by the
     SEC, sales of all the Registrable Securities required to be included in
     such Registration Statement cannot be made for a period of more than thirty
     (30) Business Days in the aggregate during any 12-month period (other than
     during a Grace Period) pursuant to such Registration Statement (including,
     without limitation, because of a failure to keep such Registration
     Statement effective, to disclose such information as is necessary for sales
     to be made pursuant to such Registration Statement or to register
     sufficient shares of Common Stock), then the Company will make a payment to
     each Investor (each, an "Excess Suspension Payment"). The Excess Suspension
     Payment for each Investor for each thirty (30) Business Day period during
     which sales cannot be made in excess of such thirty (30) Business Day
     period will be an amount equal to (i) 1.00% of the aggregate Principal of
     the Notes held by the Investor on the respective last Business Day of the
     thirty (30) Business Day period in question, which Principal is convertible
     into Conversion Shares that the Company is obligated to include in such
     Registration Statement, plus (ii) 1.00% of the aggregate Conversion Price
     paid for Conversion Shares that are Registrable Securities, were issued to
     the Investor upon conversion of the Investor's Notes and are held by such
     Investor on the respective last Business Day of the thirty (30) Business
     Day period in question. The Excess Suspension Payment will be prorated on a
     daily basis for periods less than thirty (30) Business Days. Subject to
     subsection (c), the Company will make the Excess Suspension Payment to each
     Investor by check (or by wire transfer if the payment exceeds $100,000 in
     amount and the Company has wire transfer instructions from the Investor)
     within ten (10) Business Days following the end of each thirty (30)
     Business Day period as to which payment hereunder is due.

          (c) Upon the reasonable request of the Company in writing, an Investor
     shall promptly deliver to the Company in writing information regarding the
     Investor's Notes and Conversion Shares (together with reasonable supporting
     documentation) to enable the Company to calculate the amount of any payment
     due under this Section 2.4. Until the Investor has responded to such a
     reasonable request, the Company may withhold any payment due under this
     Section 2.4 until the fourth Business Day after the Investor delivers such
     information.

          (d) The Investors may make a claim for additional damages as a remedy
     for the Company's failure to comply with the timelines relating to the
     Registration Statement set forth in this Agreement, but acknowledgement of
     such right in this Agreement shall not constitute an admission by the
     Company that any such damages exist or may exist. Notwithstanding the
     foregoing, if the Company has used its reasonable best efforts to avoid
     circumstances as a result of which the Registration Statement has not been
     declared effective by the Required Effective Date or sales cannot be made
     under the Registration Statement during the Registration Period (other than
     during a Grace Period or any Investor Delay), then the damages described
     above shall be the Investors' sole and exclusive remedy for damages arising
     out of such circumstances. Nothing contained in the preceding sentence
     shall be read to limit the ability of the Investors to seek specific
     performance of this Agreement.

     2.5. Force Majeure. The Company shall not be deemed in breach of its
commitments under Article II and no payments by the Company as set forth in
Article II shall be required to the extent that the Company is unable to fulfill
its obligations hereunder in a timely fashion because the SEC and/or the NYSE
are closed or operating on a limited basis as a result of the occurrence of a
Force Majeure. As

                                       5
<PAGE>
used herein, "Force Majeure" means (i) war or armed hostilities or other
national or international calamity, or one or more acts of terrorism, or (ii) a
natural disaster or storm.

     2.6. Legal Counsel. Subject to Article V, legal counsel for each Investor,
as named on the signature page of such Investor, if any, shall have the right to
review and oversee any registration pursuant to this Article II (each, a "Legal
Counsel"). The Company and each Legal Counsel shall reasonably cooperate with
each other in performing the Company's obligations under this Agreement.

                                  ARTICLE III
                      ADDITIONAL OBLIGATIONS OF THE COMPANY

     At such time as the Company is obligated to file a Registration Statement
with the SEC pursuant to Section 2.1, the Company will use its best efforts to
effect the registration of the Registrable Securities in accordance with the
intended method of disposition thereof and, pursuant thereto, the Company shall
have the following obligations:

     3.1. Acceleration of Effectiveness. The Company shall submit to the SEC,
within three (3) Business Days after the Company learns that no review of the
Registration Statement will be made by the staff of the SEC or that the staff
has no further comments on a particular Registration Statement, as the case may
be, a request for acceleration of effectiveness of such Registration Statement
to a time and date not later than 48 hours after the submission of such request.
The Company shall keep each Registration Statement effective pursuant to Rule
415 at all times until the earlier of (i) the date as of which the Investors may
sell all of the Registrable Securities covered by such Registration Statement
without restriction pursuant to Rule 144(k) (or successor thereto) promulgated
under the Securities Act or (ii) the date on which the Investors shall have sold
all the Registrable Securities covered by such Registration Statement (the
"Registration Period"). The Company shall ensure that each Registration
Statement (including any amendments or supplements thereto and prospectuses
contained therein) shall not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein, or necessary to
make the statements therein (in the case of prospectuses, in the light of the
circumstances in which they were made) not misleading.

     3.2. Compliance with Securities Act. The Company will comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities covered by such Registration Statement until such time as
all of such Registrable Securities shall have been disposed of in accordance
with the intended methods of disposition by the seller or sellers thereof as set
forth in such Registration Statement or such securities shall cease to be
Registrable Securities.

     3.3. Pre-filing Review of Registration Statement. The Company shall (a)
permit each Legal Counsel to review and comment upon (i) a Registration
Statement by delivering a draft thereof at least five (5) Business Days prior to
its filing with the SEC and (ii) all amendments and supplements to all
Registration Statements (except for Annual Reports on Form 10-K, Quarterly
Reports on Form l0-Q and Current Reports on Form 8-K and any similar or
successor reports) by delivering drafts thereof within a reasonable number of
days prior to their filing with the SEC, and (b) not file any Registration
Statement or amendment or supplement thereto in a form to which any Legal
Counsel reasonably objects. Except as may be required under Section 3.1, the
Company shall not submit a request for acceleration of the effectiveness of a
Registration Statement or any amendment or supplement thereto without the prior
approval of each Legal Counsel, which consent shall not be unreasonably
withheld. The Company shall furnish to each Legal Counsel, without charge, (x)
copies of any correspondence from the SEC or the staff of the SEC to the Company
or its representatives relating to any Registration Statement, (y) as promptly
as possible after the same is prepared and filed with the SEC, one copy of any
Registration Statement and any amendment(s) thereto, including financial
statements and schedules, all documents incorporated therein by reference, if
requested by an Investor, and all exhibits and (z) upon the

                                       6
<PAGE>
effectiveness of any Registration Statement, one copy of the prospectus included
in such Registration Statement and all amendments and supplements thereto. The
Company shall reasonably cooperate with each Legal Counsel in performing the
Company's obligations pursuant to this Article III.

     3.4. Copies of Registration Statement and Prospectus. The Company shall
furnish to each Investor whose Registrable Securities are included in any
Registration Statement, without charge, (i) promptly after the same is prepared
and filed with the SEC, at least one copy of such Registration Statement and any
amendment(s) thereto, including financial statements and schedules, all
documents incorporated therein by reference, if requested by an Investor, all
exhibits and each preliminary prospectus, (ii) upon the effectiveness of any
Registration Statement, ten (10) copies of the prospectus included in such
Registration Statement and all amendments and supplements thereto (or such other
number of copies as such Investor may reasonably request) and (iii) such other
documents, including copies of any preliminary or final prospectus, as such
Investor may reasonably request from time to time to facilitate the disposition
of the Registrable Securities owned by such Investor.

     3.5. Blue Sky Laws. The Company shall use its best efforts to (i) register
and qualify, unless an exemption from registration and qualification applies,
the resale by Investors of the Registrable Securities covered by a Registration
Statement under such other securities or "blue sky" laws of all applicable
jurisdictions in the United States, (ii) prepare and file in those jurisdictions
such amendments (including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take such other
actions as may be necessary to maintain such registrations and qualifications in
effect at all times during the Registration Period, and (iv) take all other
actions reasonably necessary or advisable to qualify the Registrable Securities
for sale in such jurisdictions; provided, however, that the Company shall not be
required in connection therewith or as a condition thereto to (x) qualify to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this Section 3.5, (y) subject itself to general taxation in any such
jurisdiction or (z) file a general consent to service of process in any such
jurisdiction. The Company shall promptly notify each Legal Counsel and each
Investor who holds Registrable Securities of the receipt by the Company of any
notification with respect to the suspension of the registration or qualification
of any of the Registrable Securities for sale under the securities or "blue sky"
laws of any jurisdiction in the United States or its receipt of actual notice of
the initiation or threatening of any proceeding for such purpose.

     3.6. Suspension of Sale and Resale Rights.

          (a) During the Registration Period, the Company will notify by
     facsimile each Legal Counsel and each Investor who holds Registrable
     Securities being sold pursuant to a Registration Statement of the happening
     of any event (except as provided in Section 3.6(c)), as promptly as
     practicable after becoming aware of such event, as a result of which the
     prospectus included in a Registration Statement, as then in effect,
     includes an untrue statement of a material fact or omission to state a
     material fact required to be stated therein or necessary to make the
     statements therein, in light of the circumstances under which they were
     made, not misleading (each an "Event"). Such notice shall not contain any
     material, nonpublic information, and in no event will the Company disclose
     to any Investor any of the facts or circumstances regarding any Event. Each
     Investor will hold in confidence and will not make any disclosure of any
     Event and any related information disclosed by the Company unless (i) the
     release of such information is ordered pursuant to a final, non-appealable
     subpoena or other final, non-appealable order from a court or government
     body of competent jurisdiction, (ii) the information has been made
     generally available to the public other than by disclosure in violation of
     this or any other agreement (to the knowledge of the relevant Investor),
     (iii) the information was developed independently by an Investor without
     breach of this Agreement, (iv) the information was known to the Investor
     before receipt of such

                                       7
<PAGE>
     information from the Company or (v) the information was disclosed to the
     Investor by a third party not under an obligation of confidentiality.
     However, an Investor may make disclosure of an Event and/or any related
     information disclosed by the Company to any attorney, adviser or other
     third party retained by it that needs to know the information, as
     determined in good faith by the Investor ("Investor Representative"), if
     the Investor advises the Investor Representative of the confidentiality
     provisions of this Section 3.6(a), but the Investor will be liable for any
     act or omission of any of its Investor Representatives relative to such
     information as if the act or omission was that of the Investor. Unless
     legally prohibited from so doing, each Investor will, upon learning that
     disclosure of such confidential information is sought in or by a court or
     governmental body of competent jurisdiction or through other means, give
     prompt notice to the Company and allow the Company, at the Company's
     expense, to undertake appropriate action to prevent disclosure of, or to
     obtain a protective order for, such confidential information.

          (b) If a Registration Statement ceases to be effective or the
     prospectus related thereto ceases to be usable at any time during the
     Registration Period, including as a result of the occurrence of an Event
     under Section 3.6(a), as a result of a request to change the Plan of
     Distribution pursuant to Section 3.12 or as a result of a request to amend
     the Registration Statement to include an Investor's Registrable Securities
     pursuant to Section 4.1, then the Company will promptly prepare and file
     with the SEC a supplement or amendment to such Registration Statement to
     correct such untrue statement or omission or to otherwise update and modify
     the Registration Statement and the prospectus as required by applicable law
     or this Agreement and use its reasonable best efforts to cause any
     post-effective amendment to the Registration Statement to be declared
     effective by the SEC as soon as reasonably practicable following the filing
     thereof. In any event, the Company shall file any such post-effective
     amendment within seven (7) Business Days and any such supplement within
     four (4) Business Days, in each case after the Company becomes aware of the
     related circumstances. Sales and resales of Registrable Securities pursuant
     to the Registration Statement shall be suspended until the Company has
     filed such post-effective amendment or supplement to the Registration
     Statement or prospectus that cures such failure to be effective or useable
     and that is itself, in the case of a post-effective amendment, declared
     effective, and the Company will promptly notify each Legal Counsel and each
     Investor of such suspension in writing. As used herein, "Automatic Grace
     Period" shall mean any of the following: (i) the seven (7) Business Day
     period referred to above for the filing of an amendment or the four (4)
     Business Day period referred to above for the filing of a supplement (but
     not including any such period related to the filing of any amendment or
     supplement in connection with a request pursuant to Section 3.12 or Section
     4.1); and (ii) the time from and including the filing of any such
     post-effective amendment referred to in subsection (i) and such
     post-effective amendment being declared effective, provided that in no
     event shall the period under this clause (ii) exceed ten (10) Business Days
     if such post-effective amendment receives no review by the SEC or twenty
     (20) business days if such post-effective amendment is reviewed by the SEC.
     The Company will also promptly notify each Legal Counsel and each Investor
     in writing (A) when a prospectus or any prospectus supplement or
     post-effective amendment has been filed, and when a Registration Statement
     or any post-effective amendment has become effective (notification of such
     effectiveness shall be delivered to each Legal Counsel and each Investor by
     facsimile on the same day of such effectiveness and by overnight mail), (B)
     of any request by the SEC for amendments or supplements to a Registration
     Statement or related prospectus or related information, and (C) of the
     Company's reasonable determination that a post-effective amendment to a
     Registration Statement would be appropriate.

                                       8
<PAGE>
          (c) Notwithstanding anything to the contrary herein, at any time after
     the Registration Statement has been declared effective by the SEC, the
     Company may delay the disclosure of material non-public information
     concerning the Company the disclosure of which at the time is not, in the
     good faith opinion of the Company following consultation with legal
     counsel, in the best interest of the Company and otherwise required (an
     "Optional Grace Period"), provided that the Company shall promptly (i)
     notify the Investors in writing of the existence of material non-public
     information giving rise to an Optional Grace Period (such notice shall not
     contain any material, nonpublic information, and in no event will the
     Company disclose to any Investor any of the related facts or circumstances)
     and the date on which the Optional Grace Period will begin and (ii) notify
     the Investors in writing of the date on which the Optional Grace Period
     ends; and, provided further, that no Optional Grace Period shall exceed
     thirty (30) consecutive calendar days and during any three hundred
     sixty-five (365) day period such Optional Grace Periods shall not exceed an
     aggregate of sixty (60) calendar days and the first day of any Optional
     Grace Period must be at least five (5) Business Days after the last day of
     any prior Optional Grace Period. For purposes of determining the length of
     an Optional Grace Period, the Optional Grace Period shall begin on and
     include the date the Investors receive the notice referred to in clause (i)
     and shall end on and include the later of the date the Investors receive
     the notice referred to in clause (ii) and the date referred to in such
     notice. Section 3.6(a) shall not be applicable during the period of any
     Optional Grace Period. Upon expiration of an Optional Grace Period, the
     Company shall again be bound by Section 3.6(a) with respect to any Event
     giving rise to material non-public information concerning the Company
     unless disclosing any such Event is no longer applicable. Notwithstanding
     anything to the contrary in this Agreement, the Company shall cause its
     transfer agent to deliver unlegended shares of Common Stock to a transferee
     of an Investor in accordance with the terms of the Securities Purchase
     Agreement in connection with any sale of Registrable Securities with
     respect to which an Investor has entered into a contract for sale, and
     delivered a copy of the prospectus included as part of the applicable
     Registration Statement, prior to the Investor's receipt of the notice of an
     Optional Grace Period and for which the Investor has not yet settled.

     3.7. Stop Orders and Suspensions of Effectiveness. Subject to the Company's
rights under Section 3.6, the Company shall use its reasonable best efforts to
prevent the issuance of any stop order or other suspension of effectiveness of a
Registration Statement, or the suspension of the qualification of any of the
Registrable Securities for sale in any jurisdiction and, if such an order or
suspension is issued, to obtain the withdrawal of such order or suspension at
the earliest possible moment and to notify each Legal Counsel and each Investor
of the issuance of such order and the resolution thereof or its receipt of
actual notice of the initiation or threat of any proceeding for such purpose.

     3.8. Inspection of Records; Confidentiality.

          (a) During the Registration Period, the Company shall make available
     for inspection during normal business hours and upon two (2) Business Days
     prior notice by (i) any Investor, (ii) any Legal Counsel and (iii) one (1)
     firm of accountants or other agents reasonably acceptable to the Company
     and retained by the Investors (collectively, the "Inspectors") all
     pertinent financial and other records, and pertinent corporate documents
     and properties of the Company (collectively, the "Records") as shall be
     reasonably deemed necessary by each Inspector to enable each Inspector to
     exercise its due diligence responsibility in connection with or related to
     the contemplated offering. The Company will cause the Company's officers,
     directors and employees to supply all information that any Inspector may
     reasonably request for purposes of performing such due diligence.

                                       9
<PAGE>
          (b) Each Inspector will hold in strict confidence, use only in
     connection with the contemplated offering and not make any disclosure
     (except to an Investor) of any Records or other information that the
     Company determines in good faith to be confidential, and of which
     determination the Inspectors are so notified, unless (i) the disclosure of
     such Records is necessary to avoid or correct a misstatement or omission in
     any Registration Statement or is otherwise required under the Securities
     Act, (ii) the release of such Records is ordered pursuant to a final,
     non-appealable subpoena or other final, non-appealable order from a court
     or government body of competent jurisdiction, (iii) the information in such
     Records has been made generally available to the public other than by
     disclosure in violation of this or any other agreement (to the knowledge of
     the relevant Inspector), (iv) the Records or other information was
     developed independently by an Inspector without breach of this Agreement,
     (v) the information was known to the Inspector before receipt of such
     information from the Company, or (vi) the information was disclosed to the
     Inspector by a third party not under an obligation of confidentiality.
     However, an Inspector may make disclosure of such Records and other
     information to any attorney, adviser or other third party retained by it
     that needs to know the information, as determined in good faith by the
     Inspector ("Inspector Representative"), if the Inspector advises the
     Inspector Representative of the confidentiality provisions of this Section
     3.8(b), but the Inspector will be liable for any act or omission of any of
     its Inspector Representatives relative to such information as if the act or
     omission was that of the Inspector. Unless legally prohibited from so
     doing, each Investor will, upon learning that disclosure of Records
     containing confidential information is sought in or by a court or
     governmental body of competent jurisdiction or through other means, give
     prompt written notice to the Company and allow the Company, at the
     Company's expense, to undertake appropriate action to prevent disclosure
     of, or to obtain a protective order for, the Records deemed confidential.
     Nothing herein (or in any other confidentiality agreement between the
     Company and any Investor) shall be deemed to limit the Investors' ability
     to sell Registrable Securities in a manner that is otherwise consistent
     with applicable laws and regulations.

     3.9. Disclosure of Investors' Information. The Company will hold in
confidence, and will not make any disclosure of, information concerning an
Investor provided to the Company under this Agreement unless (i) the Company
reasonably determines disclosure of such information is necessary to comply with
federal or state securities laws, or any exchange listing or similar rules and
regulations, (ii) the disclosure of such information is necessary to avoid or
correct a misstatement or omission in any Registration Statement, (iii) the
release of such information is ordered pursuant to a final, non-appealable
subpoena or other final, non-appealable order from a court or governmental body
of competent jurisdiction, (iv) such information has been made generally
available to the public other than by disclosure in violation of this Agreement
or any other agreement, (v) the information was disclosed to the Company by a
third party not under an obligation of confidentiality or (vi) such Investor
consents to the form and content of any such disclosure. However, the Company
may make disclosure of such information to any attorney, adviser or other third
party retained by it that needs to know the information, as determined in good
faith by the Company ("Company Representative"), if the Company advises the
Company Representative of the confidentiality provisions of this Section 3.9,
but the Company will be liable for any act or omission of any Company
Representatives relative to such information as if the act or omission was that
of the Company. If the Company learns that disclosure of such information
concerning an Investor is sought in or by a court or governmental body of
competent jurisdiction or through other means, the Company will (unless legally
prohibited from so doing) give prompt written notice to such Investor prior to
making such disclosure and allow such Investor, at the Investor's expense, to
undertake appropriate action to prevent disclosure of, or to obtain a protective
order for, such information.

     3.10. Listing of Registrable Securities. During the Registration Period,
the Company shall use its reasonable best efforts to maintain the listing of all
of the Registrable Securities on the

                                       10
<PAGE>
principal securities exchange or market or trading system, if any, on which the
Common Stock is then listed or traded.

     3.11. Delivery of Certificates. The Company shall cooperate with the
Investors and, to the extent applicable, facilitate the timely preparation and
delivery of certificates (not bearing any restrictive legend) representing the
Registrable Securities to be offered pursuant to a Registration Statement and
enable such certificates to be in such denominations or amounts, as the case may
be, as the Investors may reasonably request and registered in such names as the
Investors may reasonably request.

     3.12. Updates to Plan of Distribution. At the request of the Investors
holding a majority in interest of the Registrable Securities registered pursuant
to a Registration Statement under Section 2.1, the Company will promptly prepare
and file with the SEC such amendments (including post-effective amendments) and
supplements to the Registration Statement, and the prospectus used in connection
with the Registration Statement, as may be necessary to change the Plan of
Distribution set forth in such Registration Statement.

     3.13. Other Governmental Approvals. The Company shall use reasonable
efforts to cause the Registrable Securities covered by a Registration Statement
to be registered with or approved by such other governmental agencies or
authorities as may be necessary to consummate the disposition of such
Registrable Securities.

     3.14. Best Efforts of Company. The Company shall use its best efforts to
comply with all applicable rules and regulations of the SEC in connection with
any registration hereunder.

     3.15. Confirmation Upon Effectiveness. Within two (2) Business Days after a
Registration Statement that covers Registrable Securities is ordered effective
by the SEC, the Company shall deliver, and shall cause legal counsel for the
Company to deliver to the transfer agent for such Registrable Securities (with
copies to the Investors whose Registrable Securities are included in such
Registration Statement) confirmation that such Registration Statement has been
declared effective by the SEC in the form attached hereto as Exhibit B.

                                   ARTICLE IV
                          OBLIGATIONS OF THE INVESTORS

     4.1. Investor Information. As a condition to the obligations of the Company
to complete any registration pursuant to this Agreement with respect to the
Registrable Securities of each Investor, such Investor will furnish to the
Company such information regarding itself, the Registrable Securities held by it
and the intended methods of disposition of the Registrable Securities held by it
as is reasonably required by the Company to effect the registration of the
Registrable Securities. At least five (5) Business Days prior to the first
anticipated filing date of a Registration Statement for any registration under
this Agreement, the Company will notify each Investor of the information the
Company requires from that Investor whether or not such Investor has elected to
have any of its Registrable Securities included in the Registration Statement.
If the Company has not received the requested information from an Investor by
the Business Day prior to the anticipated filing date, then the Company may file
the Registration Statement without including Registrable Securities of that
Investor. In such event, the Company shall, upon written request of the
Investor, promptly file an amendment (including a post-effective amendment) to
include such Investor's Registrable Securities in the Registration Statement and
the Investor shall reimburse the Company for all of the filing fees and legal
expenses related to such amendment promptly following the Company's delivery of
a statement therefor.

     4.2. Further Assurances. Each Investor will cooperate with the Company, as
reasonably requested by the Company, in connection with the preparation and
filing of any Registration

                                       11
<PAGE>
Statement hereunder, unless such Investor has notified the Company in writing of
such Investor's irrevocable election to exclude all of such Investor's
Registrable Securities from such Registration Statement.

     4.3. Suspension of Sales. Upon receipt of any notice from the Company under
Section 3.6, each Investor will immediately discontinue disposition of
Registrable Securities pursuant to the Registration Statement covering such
Registrable Securities until (i) it receives copies of a supplemented or amended
prospectus contemplated by Section 3.6 or (ii) the Company advises the Investor
that a suspension of sales under Section 3.6 has terminated. If so directed by
the Company, each Investor will deliver to the Company (at the expense of the
Company) or destroy all copies in the Investor's possession (other than a
limited number of file copies) of the prospectus covering such Registrable
Securities that is current at the time of receipt of such notice.

                                   ARTICLE V
                            EXPENSES OF REGISTRATION

     During the Registration Period, in connection with registrations, filings
or qualifications pursuant to Article II and Article III, the Company will bear
(i) all reasonable expenses (other than underwriting discounts and commissions,
and transfer taxes, if any) incurred in connection with registrations, filings
or qualifications pursuant to Article II and Article III of this Agreement,
including, without limitation, all registration, listing and qualifications
fees, printers and accounting fees; (ii) the fees and disbursements of legal
counsel for the Company; and (iii) the reasonable fees and disbursements of each
Legal Counsel (not to exceed in the aggregate for all such Legal Counsel
collectively $10,000), with the Company's reimbursement obligation to be paid
pro rata based on the Investor's Registrable Securities registered on the
Registration Statement.

                                   ARTICLE VI
                                 INDEMNIFICATION

     In the event that any Registrable Securities are included in a Registration
Statement under this Agreement:

     6.1. Indemnification of the Investors. To the extent permitted by law, the
Company will indemnify and hold harmless each Investor (including for purposes
of this Article VI any person who was an Investor), any underwriter (as defined
in the Securities Act) for the Investors, any directors or officers of such
Investor and any person who controls such Investor within the meaning of the
Securities Act or the Exchange Act or acts as such Investor's investment advisor
(each, an "Investor Indemnified Person") against any losses, claims, damages,
expenses or liabilities (joint or several) (collectively, and together with
actions, proceedings or inquiries by any regulatory or self-regulatory
organization, whether commenced or threatened in respect thereof, "Claims") to
which any of them become subject under the Securities Act, the Exchange Act or
otherwise, insofar as such Claims arise out of or are based upon any of the
following statements, omissions or violations in a Registration Statement filed
pursuant to this Agreement, any post-effective amendment thereof or any
prospectus included therein: (a) any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or any
post-effective amendment thereof or any final prospectus (as amended or
supplemented, if the Company files any amendment or supplement thereto with the
SEC) included therein or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading or (b) any violation or alleged violation by the Company of the
Securities Act, the Exchange Act or any other law related to the Registration
Statement, including without limitation any state securities law or any rule or
regulation thereunder (the matters in the foregoing clauses (a) and (b) being,
collectively, "Violations"). Subject to

                                       12
<PAGE>
the restrictions set forth in Section 6.3 with respect to the number of legal
counsel, the Company will reimburse the Investors and each such underwriter or
controlling person and each such other Investor Indemnified Person, promptly as
such expenses are incurred and are due and payable, for any reasonable legal
fees or other reasonable expenses incurred by them in connection with
investigating or defending any Claim. Notwithstanding anything to the contrary
contained herein, the indemnification agreement contained in this Section 6.1:
(i) does not apply to Claims arising out of or based upon a Violation that
occurs in reliance upon and in conformity with information furnished in writing
to the Company by or on behalf of an Investor or Investor Indemnified Persons
expressly for use in connection with the preparation of the Registration
Statement or any such amendment thereof or supplement thereto, if such
prospectus was timely made available by the Company pursuant to Section 3.3;
(ii) does not apply to a Claim arising out of or based on any failure by an
Investor or Investor Indemnified Persons to comply with prospectus delivery
requirements (or the Securities Act, the Exchange Act or any other law or legal
requirement applicable to them) or any covenant or agreement respecting sales
under the Registration Statement contained in this Agreement, the Purchase
Agreement or the Note; (iii) does not apply to a Claim arising from an offer or
sale of Registrable Securities occurring during a period in which sales are
suspended in accordance with Section 4.3; and (iv) does not apply to amounts
paid in settlement of any Claim if such settlement is made without the prior
written consent of the Company, which consent will not be unreasonably withheld
or delayed. This indemnity obligation will remain in full force and effect
regardless of any investigation made by or on behalf of the Investor Indemnified
Persons and will survive the transfer of the Registrable Securities by the
Investors under Article IX.

     6.2. Indemnification of the Company and Certain Shareholders. In connection
with any Registration Statement in which an Investor is participating, each such
Investor will indemnify and hold harmless, severally and not jointly, to the
same extent and in the same manner set forth in Section 6.1 above, the Company,
each of its directors, each of its officers who signs the Registration
Statement, each person, if any, who controls the Company within the meaning of
the Securities Act or the Exchange Act, and any other shareholder selling
securities pursuant to the Registration Statement and any of its directors and
officers and any person who controls such shareholder within the meaning of the
Securities Act or the Exchange Act (each a "Company Indemnified Person") against
any Claim to which any of them may become subject under the Securities Act, the
Exchange Act or otherwise, insofar as such Claim arises out of or is based upon
any of the following: (a) any matter of the type referred to in clause (a) in
Section 6.1 above in each case to the extent (and only to the extent) that such
violation occurs in reliance upon and in conformity with written information
furnished to the Company by or on behalf of an Investor or Investor Indemnified
Persons expressly for use in connection with the preparation of the Registration
Statement or any such amendment thereof or supplement thereto, if such
prospectus was timely made available by the Company pursuant to Section 3.3; (b)
any failure by such Investor or Investor Indemnified Person to comply with
prospectus delivery requirements (or the Securities Act, the Exchange Act or any
other law or legal requirement applicable to sales under the Registration
Statement) or any covenant or agreement respecting sales under the Registration
Statement contained in this Agreement, the Purchase Agreement or the Note; or
(c) any offer or sale of Registrable Securities occurring during a period in
which sales are suspended in accordance with Section 4.3. Subject to the
restrictions set forth in Section 6.3, such Investor will promptly reimburse any
legal or other expenses, promptly as such expenses are incurred and due and
payable, reasonably incurred by them in connection with investigating or
defending any such Claim. However, the indemnity agreement contained in this
Section 6.2 does not apply to amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of such Investor, which
consent will not be unreasonably withheld, and no Investor will be liable under
this Agreement (including this Section 6.2 and Article VII) for the amount of
any Claim that exceeds the net proceeds actually received by such Investor as a
result of the sale of such Investor's Registrable Securities. This indemnity
will remain in full force and effect regardless of any investigation made by or
on behalf of the Company Indemnified Persons and will survive the transfer of
the Registrable Securities by the Investors under Article IX.

                                       13
<PAGE>
6.3. Notification and Other Indemnification Procedures. Promptly after receipt
by an Investor Indemnified Person or a Company Indemnified Person, as the case
may be (an "Indemnified Person"), under this Article VI of notice of the
commencement of any action (including any governmental action), such Indemnified
Person will, if a Claim in respect thereof is to be made against any
indemnifying party under this Article VI, deliver to the indemnifying party a
written notice of the commencement thereof. The indemnifying party may
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly given notice, assume control of the
defense thereof with counsel mutually and reasonably satisfactory to the
indemnifying parties and the Indemnified Person. If the indemnifying party
assumes the defense by notice given to the Indemnified Person, then the
indemnifying party shall not be responsible for any legal or other expenses
subsequently incurred by the Indemnified Person in connection with the defense
thereof, except as expressly provided herein, and the indemnifying party will
diligently pursue such defense. If, in the reasonable opinion of counsel
retained by the indemnifying party, the representation by such counsel of the
Indemnified Person and the indemnifying party would be inappropriate due to
actual or potential conflicts of interest between the Indemnified Person and any
other party represented by such counsel in such proceeding or the actual or
potential defendants in, or targets of, any such action including the
Indemnified Person and such Indemnified Person reasonably determines that there
may be legal defenses available to such Indemnified Person that are different
from or in addition to those available to the indemnifying party, then the
Indemnified Person is entitled to assume such defense and may retain its own
counsel, with the reasonable fees and expenses to be paid by the indemnifying
party (subject to the restrictions on settlement under Section 6.1 or 6.2, as
applicable). However, the Company will pay for only one separate legal counsel
for the Investors collectively, and such legal counsel will be selected by the
Investors holding a majority in interest of Registrable Securities as of the
date of this Agreement. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action does not relieve an indemnifying party of any liability to an Indemnified
Person under this Article VI, except to the extent that the indemnifying party
is prejudiced in its ability to defend such action. The indemnification required
by this Article VI will be made by periodic payments of the amount thereof
during the course of the investigation or defense, as such expense, loss, damage
or liability is incurred and is due and payable.

                                   ARTICLE VII
                                  CONTRIBUTION

     To the extent that any indemnification provided for herein is prohibited or
limited by law, the indemnifying party will contribute the amount paid or
payable by the Indemnified Party as a result of such Claim in such proportion as
is appropriate to reflect not only the relative benefits received by the
Indemnified Party and the indemnifying party, but also the relative fault of the
Indemnified Party and the indemnifying party, as well as any other relevant
equitable considerations. However, (a) no contribution will be made under
circumstances where the maker would not have been liable for indemnification
under the fault standards set forth in Article VI, (b) no seller of Registrable
Securities guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) will be entitled to contribution from any person of
Registrable Securities who was not guilty of such fraudulent misrepresentation
and (c) no Investor will be liable under this Agreement (including this Article
VII) for the amount of any Claim that exceeds the net proceeds actually received
by such Investor as a result of the sale of such Investor's Registrable
Securities.

                                       14
<PAGE>
                                  ARTICLE VIII
                             EXCHANGE ACT REPORTING

     To make available to the Investors the benefits of Rule 144 or any similar
rule or regulation of the SEC that may at any time permit the Investors to sell
securities of the Company to the public without registration, the Company will,
until the end of the Registration Period:

     (a) Use its best efforts to file with the SEC in a timely manner, and make
and keep available, all reports and other documents required of the Company
under the Securities Act and the Exchange Act so long as the Company remains
subject to such requirements (it being understood that nothing herein limits the
Company's obligations under Section 4.3 of the Purchase Agreement) and the
filing and availability of such reports and other documents is required for the
applicable provisions of Rule 144; and

     (b) Furnish to each Investor promptly upon request, (i) a written statement
by the Company that it has complied with the reporting requirements of the
Securities Act and the Exchange Act, (ii) if not available on the SEC's EDGAR
system, a copy of the most recent annual or quarterly report of the Company and
such other reports and documents filed by the Company with the SEC and (iii)
such other information as may be reasonably requested to permit the Investors to
sell such securities pursuant to Rule 144 without registration.

                                   ARTICLE IX
                        ASSIGNMENT OF REGISTRATION RIGHTS

     The rights of the Investors hereunder, including the right to have the
Company register Registrable Securities pursuant to this Agreement, shall be
assignable (in whole or in part) by each Investor to any permitted transferee or
assignee of the Registrable Securities if (a) the Investor agrees in writing
with the transferee or assignee to assign such rights, and a copy of such
agreement is furnished to the Company within a reasonable time after such
assignment, (b) the Company is, within a reasonable time after such transfer or
assignment, furnished with written notice of the name and address of such
transferee or assignee and the securities with respect to which such
registration rights are being transferred or assigned, (c) such transfer or
assignment was not made under the Registration Statement or Rule 144, (d) at or
before the time the Company received the written notice contemplated by clause
(b) of this sentence, the transferee or assignee agrees in writing with the
Company to be bound by all of the provisions contained herein and (e) such
transfer is made in accordance with the applicable requirements of the Purchase
Agreement. Any transferee or assignee of an Investor under Article IX shall be
deemed an "Investor" for all purposes of this Agreement and shall be entitled to
all rights of, and subject to all obligations (including indemnification
obligations) of, an Investor hereunder.

                                   ARTICLE X
                        AMENDMENT OF REGISTRATION RIGHTS

     This Agreement may be amended and the obligations hereunder may be waived
(either generally or in a particular instance, and either retroactively or
prospectively) only with the written consent of the Company and of the Investors
who then hold at least two-thirds in interest of the Registrable Securities (but
not including any Investor who is not affected by such amendment or waiver). For
purposes of such calculation, Common Stock issuable upon the conversion of any
Note shall be treated as issued and outstanding and held by the holder of such
Note. Any amendment or waiver effected in accordance with this Article X is
binding upon each Investor and the Company. Notwithstanding the foregoing, no
amendment or waiver will retroactively affect any Investor without its consent,
or will

                                       15
<PAGE>
prospectively adversely affect any Investor who no longer owns any Registrable
Securities without its consent.

                                   ARTICLE XI
                                  MISCELLANEOUS

     11.1. Conflicting Instructions. A person or entity is deemed to be a holder
of Registrable Securities whenever such person or entity owns of record such
Registrable Securities. If the Company receives conflicting instructions,
notices or elections from two or more persons or entities with respect to the
same Registrable Securities, the Company will act upon the basis of
instructions, notice or election received from the registered owner of such
Registrable Securities.

     11.2. Notices. Except as set forth herein, any notices required or
permitted to be given under the terms of this Agreement will be given and deemed
received as set forth in the Purchase Agreement.

     11.3. Waiver. Failure of any party to exercise any right or remedy under
this Agreement or otherwise, or delay by a party in exercising such right or
remedy, does not operate as a waiver thereof.

     11.4. Governing Law; Venue; Waiver of Jury Trial. This Agreement, including
the validity hereof and the rights and obligations of the Company and of the
Investors and all amendments and supplements hereto and all waivers and consents
hereunder, shall be construed in accordance with and governed by the internal
laws of New York (except as it relates to corporate law involving the Company,
in which case it shall be governed by the internal laws of the state of
incorporation of the Company) without giving effect to any choice of law or
conflicts of law provision or rule that would cause the application of the
internal laws of any other jurisdiction.

          Notwithstanding anything to the contrary in this Agreement or any
     other agreement between any of the parties hereto prior to the date hereof,
     each of the parties hereto, 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 Agreement, the subject matter hereof or any of the transactions
     contemplated hereby brought by any party or parties hereto, or their
     successors or any permitted and registered assign; (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 party 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 party 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.

     EACH OF THE PARTIES HERETO 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
AGREEMENT OR ANY

                                       16
<PAGE>
TRANSACTION CONTEMPLATED HEREBY OR THEREBY OR THE SUBJECT MATTER OF ANY OF THE
FOREGOING.

     11.5. Severability. If any provision of this Agreement is invalid or
unenforceable under any applicable statute or rule of law, then such provision
will be deemed modified in order to conform with such statute or rule of law.
Any provision hereof that may prove invalid or unenforceable under any law will
not affect the validity or enforceability of any other provision hereof.

     11.6. Entire Agreement. This Agreement and the Purchase Agreement
(including all schedules and exhibits thereto) constitute the entire agreement
among the parties hereto with respect to the subject matter hereof and thereof.
There are no restrictions, promises, warranties or undertakings, other than
those set forth or referred to herein or therein. This Agreement supersedes all
prior agreements and understandings among the parties hereto with respect to the
subject matter hereof.

     11.7. Successors and Assigns. Subject to the requirements of Article IX,
this Agreement inures to the benefit of and is binding upon the successors and
assigns of each of the parties hereto. Notwithstanding anything to the contrary
herein, including, without limitation, Article IX, the rights of an Investor
hereunder are assignable to and exercisable by a bona fide pledgee of the
Registrable Securities in connection with an Investor's margin or brokerage
accounts.

     11.8. Use of Pronouns. All pronouns refer to the masculine, feminine or
neuter, singular or plural, as the context may require.

     11.9. Headings. The headings of this Agreement are for convenience of
reference only, are not part of this Agreement and do not affect its
interpretation.

     11.10. Counterparts. This Agreement may be executed in two or more
counterparts, each of which is deemed an original but all of which constitute
one and the same agreement. This Agreement, once executed by a party, may be
delivered to the other party hereto by facsimile transmission, and facsimile
signatures are binding on the parties hereto.

     11.11. Further Assurances. Each party will do and perform, or cause to be
done and performed, all such further acts and things, and will execute and
deliver all other agreements, certificates, instruments and documents, as
another party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

     11.12. Consents. All consents and other determinations to be made by the
Investors pursuant to this Agreement will be made by the Investors or the
Investors holding a majority in interest of the Registrable Securities.

     11.13. No Strict Construction. The language used in this Agreement is
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any party.

                                     * * * *

                                       17
<PAGE>
     IN WITNESS WHEREOF, the undersigned Investors and the Company have caused
this Agreement to be duly executed as of the date first above written.

                                    COMPANY:

                                    MIDWEST EXPRESS HOLDINGS, INC.

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

                  [SIGNATURES CONTINUE ON THE FOLLOWING PAGES]

<PAGE>
                      [INVESTORS' SIGNATURE PAGES OMITTED]

                                    INVESTOR:

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

                                    Legal Counsel for Investor:

                                    Print Name:
                                                --------------------------------

                                    Address:
                                                --------------------------------

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

                                    Telephone:
                                                --------------------------------

                                    Facsimile:
                                                --------------------------------

<PAGE>
                                                                       EXHIBIT A

                              PLAN OF DISTRIBUTION

     We are registering the shares of common stock issuable upon conversion of
the convertible notes to permit the resale of these shares of common stock by
the holders of the convertible notes from time to time after the date of this
prospectus. We will not receive any of the proceeds from the sale by any selling
shareholder of the shares of common stock. We will bear all fees and expenses
incident to our obligation to register the shares of common stock, except that a
selling shareholder will pay all applicable underwriting discounts and selling
commissions, if any.

     Any selling shareholder may sell all or a portion of the common stock
beneficially owned by it and offered hereby from time to time directly or
through one or more underwriters, broker-dealers or agents. If the common stock
is sold through underwriters or broker-dealers, then the selling shareholder
will be responsible for underwriting discounts or commissions or agent's
commissions. The common stock may be sold in one or more transactions at fixed
prices, at prevailing market prices at the time of the sale, at varying prices
determined at the time of sale, or at negotiated prices. These sales may be
effected in transactions, which may involve crosses or block transactions,

     (1) on any national securities exchange or quotation service on which the
securities may be listed or quoted at the time of sale,

     (2) in the over-the-counter market,

     (3) in transactions otherwise than on these exchanges or systems or in the
over-the-counter market,

     (4) through the writing of options, whether the options are listed on an
options exchange or otherwise,

     (5) through the settlement of short sales;

     (6) through a combination of such methods of sale; or

     (7) through any other method permitted pursuant to applicable law.

     If a selling shareholder effects such transactions by selling shares of
common stock to or through underwriters, broker-dealers or agents, such
underwriters, broker-dealers or agents may receive commissions in the form of
discounts, concessions or commissions from the selling shareholder or
commissions from purchasers of the shares of common stock for whom they may act
as agent or to whom they may sell as principal (which discounts, concessions or
commissions as to particular underwriters, broker-dealers or agents may be in
excess of those customary in the types of transactions involved). In connection
with sales of the common stock or otherwise, a selling shareholder may enter
into hedging transactions with broker-dealers, which may in turn engage in short
sales of the common stock in the course of hedging in positions they assume. A
selling shareholder may also sell shares of common stock short and deliver
shares of common stock covered by this prospectus to close out short positions.
Each selling shareholder may also loan or pledge shares of common stock to
broker-dealers that in turn may sell such shares.

     Each selling shareholder may pledge or grant a security interest in some or
all of the convertible notes, warrants or shares of common stock owned by it
and, if it defaults in the performance

<PAGE>
of its secured obligations, the pledgees or secured parties may offer and sell
the shares of common stock from time to time pursuant to this prospectus or any
amendment to this prospectus under Rule 424(b) (3) or other applicable provision
of the Securities Act of 1933, as amended, amending, if necessary, the list of
selling shareholders to include the pledgee, transferee or other
successors-in-interest as selling shareholders under this prospectus. Each
selling shareholder also may transfer and donate the shares of common stock in
other circumstances in which case the transferees, donees, pledgees or other
successors-in-interest will be the selling beneficial owners for purposes of
this prospectus.

     Each selling shareholder and any broker-dealer participating in the
distribution of the shares of common stock may be deemed to be "underwriters"
within the meaning of the Securities Act, and any commission paid, or any
discounts or concessions allowed, to any such broker-dealer may be deemed to be
underwriting commissions or discounts under the Securities Act. At the time a
particular offering of the shares of common stock is made, a prospectus
supplement, if required, will be distributed that will set forth the aggregate
amount of shares of common stock being offered and the terms of the offering,
including the name or names of any broker-dealers or agents, any discounts,
commissions and other terms constituting compensation from each selling
shareholder and any discounts, commissions or concessions allowed or reallowed
or paid to broker-dealers.

     Under the securities laws of some states, the shares of common stock may be
sold in such states only through registered or licensed brokers or dealers. In
addition, in some states the shares of common stock may not be sold unless the
shares have been registered or qualified for sale in the state or an exemption
from registration or qualification is available and is complied with.

     There can be no assurance that any selling shareholder will sell any or all
of the shares of common stock registered pursuant to the shelf registration
statement of which this prospectus forms a part.

     Each selling shareholder and any other person participating in such
distribution will be subject to applicable provisions of the Securities Exchange
Act of 1934, as amended, and the rules and regulations thereunder, including,
without limitation, Regulation M of the Exchange Act, which may limit the timing
of purchases and sales of any of the shares of common stock by the selling
shareholders and any other participating person. Regulation M may also restrict
the ability of any person engaged in the distribution of the shares of common
stock to engage in market-making activities with respect to the shares of common
stock. All of the foregoing may affect the marketability of the shares of common
stock and the ability of any person or entity to engage in market-making
activities with respect to the shares of common stock.

     We will pay all expenses of the registration of the shares of common stock
pursuant to the registration rights agreement, estimated to be $[ ] in total,
including, without limitation, Securities and Exchange Commission filing fees
and expenses of compliance with state securities or "blue sky" laws; provided,
however, that a selling shareholder will pay all applicable underwriting
discounts and selling commissions, if any. We will indemnify the selling
shareholders against liabilities, including some liabilities under the
Securities Act, in accordance with the registration rights agreement, or the
selling shareholders will be entitled to contribution. We may be indemnified by
a selling shareholder against civil liabilities, including liabilities under the
Securities Act, that may arise from any written information furnished to us by
the selling shareholder specifically for use in this prospectus, in accordance
with the registration rights agreement, or we may be entitled to contribution.

     Once sold under the shelf registration statement, of which this prospectus
forms a part, the shares of common stock will be freely tradable in the hands of
persons other than our affiliates.

<PAGE>
                                                                       EXHIBIT B

                         FORM OF NOTICE OF EFFECTIVENESS
                            OF REGISTRATION STATEMENT

American Stock Transfer & Trust Company
59 Maiden Lane
Plaza Level
New York, NY 10038
Attn:
     -------------------------

Re: Midwest Express Holdings, Inc.

Ladies and Gentlemen:

     We are counsel to Midwest Express Holdings, Inc., a Wisconsin corporation
(the "Company"), and have represented the Company in connection with that
certain Securities Purchase Agreement, dated as of September 29, 2003 (the
"Purchase Agreement"), entered into by and among 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"), 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"), and the buyers
named therein (collectively, the "Investors"), pursuant to which the Company and
the Co-Borrowers issued to the Holders their convertible senior secured notes
(the "Notes"), convertible into shares of the Company's Common Stock, par value
$.01 per share (the "Common Stock"). Pursuant to the Purchase Agreement, the
Company entered into a Registration Rights Agreement with the Investors, dated
as of September 29, 2003 (the "Registration Rights Agreement"), pursuant to
which the Company agreed, among other things, to register the Registrable
Securities (as defined in the Registration Rights Agreement) under the
Securities Act of 1933, as amended (the "Securities Act"). In connection with
the Company's obligations under the Registration Rights Agreement, on
___________, 2003, the Company filed a Registration Statement on Form S-1 (File
No. 333-_________) (the "Registration Statement") with the Securities and
Exchange Commission (the "SEC") relating to the Registrable Securities. The
Registration Statement names each of the Investors as a selling shareholder
thereunder.

     In connection with the Registration Statement, we advise you that a member
of the SEC's staff has advised us by telephone that the SEC has entered an order
declaring the Registration Statement effective under the Securities Act at
[ENTER TIME OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS], and we have no
knowledge, after telephonic inquiry of a member of the SEC's staff, that any
stop order suspending its effectiveness has been issued or that any proceedings
for that purpose are pending before, or threatened by, the SEC and the
Registrable Securities are available for resale under the Securities Act
pursuant to the Registration Statement.

                                    Very truly yours,

                                    [COMPANY'S COUNSEL]

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

          CC: [LIST NAMES OF INVESTORS]

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