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<SEC-DOCUMENT>0000950153-03-002393.txt : 20031124
<SEC-HEADER>0000950153-03-002393.hdr.sgml : 20031124
<ACCEPTANCE-DATETIME>20031124081624
ACCESSION NUMBER:		0000950153-03-002393
CONFORMED SUBMISSION TYPE:	424B3
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20031124

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			MESA AIR GROUP INC
		CENTRAL INDEX KEY:			0000810332
		STANDARD INDUSTRIAL CLASSIFICATION:	AIR TRANSPORTATION, SCHEDULED [4512]
		IRS NUMBER:				850302351
		STATE OF INCORPORATION:			NV
		FISCAL YEAR END:			0930

	FILING VALUES:
		FORM TYPE:		424B3
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-108490
		FILM NUMBER:		031019480

	BUSINESS ADDRESS:	
		STREET 1:		410 NORTH 44TH STREET
		STREET 2:		SUITE 700
		CITY:			PHOENIX
		STATE:			AZ
		ZIP:			85008
		BUSINESS PHONE:		6026854000

	MAIL ADDRESS:	
		STREET 1:		410 NORTH 44TH STREET
		STREET 2:		SUITE 700
		CITY:			PHOENIX
		STATE:			AZ
		ZIP:			85008

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	MESA AIRLINES INC
		DATE OF NAME CHANGE:	19950426
</SEC-HEADER>
<DOCUMENT>
<TYPE>424B3
<SEQUENCE>1
<FILENAME>p68212b3e424b3.htm
<DESCRIPTION>424B3
<TEXT>
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<TITLE>e424b3</TITLE>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left"><FONT size="2"><B>Prospectus</B>
</FONT>

<P align="center"><FONT size="2"><B>Filed Pursuant to Rule
424(b)(3)<BR>
Registration No. 333-108490</B>
</FONT>

<P align="center"><FONT size="2"><B>MESA AIR GROUP, INC.</B>
</FONT>

<P align="center"><FONT size="2"><B>$252,000,000</B>
</FONT>

<P align="center"><FONT size="2"><B>SENIOR CONVERTIBLE NOTES DUE 2023</B>
</FONT>

<P align="center"><FONT size="2"><B>AND</B>
</FONT>

<P align="center"><FONT size="2"><B>10, 011,204 SHARES OF COMMON STOCK</B>
</FONT>

<P align="center"><FONT size="2"><B>ISSUABLE UPON CONVERSION THEREOF</B>
</FONT>

<P>


<P align="center"><FONT size="2"><B>The Notes</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We issued up to an aggregate of $252,000,000 Senior Convertible Notes due
2023. This prospectus covers resales by holders of the notes and shares of
common stock into which the notes are convertible. We will not receive any
proceeds from the resale of the notes or the underlying shares of common stock.
Interest on the notes is payable semiannually in arrears on June&nbsp;16 and
December&nbsp;16 of each year at the rate of 2.4829% per year on the principal
amount at maturity, beginning December&nbsp;16, 2003 until June&nbsp;16, 2008. After
that date, we will not pay cash interest on the notes prior to maturity.
Instead, on June&nbsp;16, 2023, the maturity date of the notes, a holder will
receive $1,000 per note. The rate of accrual of original issue discount
represents a yield to maturity of 6.25% per year, computed on a semiannual bond
equivalent basis and calculated from June&nbsp;16, 2003. The notes are senior
unsecured obligations and rank equally with our existing and future senior
unsecured indebtedness. Each of our domestic subsidiaries, including any
person that becomes a domestic subsidiary, guarantees the notes on an unsecured
senior basis for so long as the subsidiary is a guarantor of any of our other
indebtedness. In addition, our wholly-owned foreign subsidiary, MAGI
Insurance, Ltd, is a guarantor of the notes on an unsecured senior basis and we
may, in certain circumstances, add any newly formed or acquired wholly-owned
foreign subsidiaries as guarantors in the future.
</FONT>
<P align="center"><FONT size="2"><B>Convertibility of the Notes</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Holders may convert their notes into 39.727 shares of our common stock,
subject to adjustment, only if (1)&nbsp;the sale price of our common stock reaches,
or the trading price of the notes falls below, specified thresholds, (2)&nbsp;the
notes are called for redemption, or (3)&nbsp;specified corporate transactions have
occurred. Upon conversion, we will have the right to deliver, in lieu of our
</FONT>
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<P align="left"><FONT size="2">common stock, cash or a combination of cash and common stock in an amount
described herein. Our common stock currently trades on the Nasdaq National
Market under the symbol &#147;MESA.&#146;&#146; On August&nbsp;29, 2003, the last reported closing
sale price of the common stock on the Nasdaq National Market was $11.87 per
share. The shares issuable upon conversion of the notes will be approved for
quotation on Nasdaq. For a description of certain federal income tax
consequences to the holders of the notes, see &#147;Certain Federal Income Tax
Consequences.&#148;
</FONT>
<P align="center"><FONT size="2"><B>Purchase of Notes by the Company at the Option of the Holder</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Holders may require us to purchase all or a portion of their notes on June
16, 2008 at a price of $397.27 per note plus accrued cash interest, if any, on
June&nbsp;16, 2013 at a price of $540.41 per note plus accrued cash interest, if
any, and on June&nbsp;16, 2018 at a price of $735.13 per note plus accrued cash
interest, if any. We may choose to pay the purchase price of such notes in
cash or common stock or a combination of cash and common stock. In addition,
if a change of control of the Company occurs, each holder may require us to
purchase, for cash, all or a portion of such holder&#146;s notes at a price equal to
the sum of the issue price plus accrued original issue discount and accrued
cash interest, if any, to the date of purchase.
</FONT>
<P align="center"><FONT size="2"><B>Redemption of the Notes at Our Option</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We may redeem for cash all or a portion of the notes at any time on or
after June&nbsp;16, 2008, at a price equal to the sum of the issue price, plus
accrued original issue discount and accrued cash interest, if any, to the
redemption date.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The notes were originally issued by us in a private placement on June&nbsp;16,
2003 to the initial purchasers and were simultaneously sold by the initial
purchasers in transactions exempt from registration under the Securities Act,
in the United States to persons reasonably believed to be &#147;qualified
institutional buyers&#148; as defined in Rule&nbsp;144A under the Securities Act.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior to this offering, the notes have been eligible for trading on the
PORTAL Market of the Nasdaq Stock Market. The notes sold by means of this
prospectus are not expected to remain eligible for trading on the PORTAL
Market. We do not intend to list the notes for trading on any national
securities exchange or on the Nasdaq National Market.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The selling securityholders may offer the notes, the shares of common
stock issuable upon conversion of the notes, or the shares of common stock
underlying the warrants from time to time to purchasers directly or through
underwriters, dealers or agents. Such notes or the underlying common shares
may be sold at market prices prevailing at the time of sale or at negotiated
prices. Each selling securityholder will be responsible for payment of any and
all commissions to brokers, which will be negotiated on an individual basis.
</FONT>
<P align="center"><FONT size="2"><B>Common Stock Issuable Upon Exercise of Warrant</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In February 2002, in connection with an agreement we entered into with
Raytheon Aircraft Company, we issued a warrant to purchase shares of our common
stock and granted certain registration rights to Raytheon. Pursuant to
Raytheon&#146;s registration rights, Raytheon has elected to have us register the
resale of 129,935 shares of common stock that are currently vested and issuable
upon exercise of the warrant.
</FONT>
<P align="center"><FONT size="2"></FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We will pay the expenses of preparing and filing the registration
statement to which this prospectus relates and all post-effective amendments,
except Raytheon is obligated to pay its pro-rata share of the registration
expenses and reasonable maintenance cost incurred in connection with the
registration. See &#147;Plan of Distribution&#148; for a description of the
indemnification arrangements between us and the selling securityholders.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Consider carefully the risk factors beginning on page 9 of this prospectus
before investing.</B>
</FONT>
<P align="left"><FONT size="2"><B>Neither the SEC nor any state securities commission has approved or disapproved
of the securities or passed upon the accuracy or adequacy of the disclosures in
this prospectus. Any representation to the contrary is a criminal offense.</B>
</FONT>
<P align="left"><FONT size="2"><B>Neither the fact that a registration statement or an application for a license
has been filed under Chapter&nbsp;421-B of the New Hampshire Revised Statutes
Annotated, 1955, as amended (&#147;RSA&#148;) with the state of New Hampshire nor the
fact that a security is effectively registered or a person is licensed in the
state of New Hampshire constitutes a finding by the secretary of state that any
document filed under RSA 421-B is true, complete and not misleading. Neither
any such fact nor the fact that an exemption or exception is available for a
security or a transaction means that the secretary of state has passed in any
way upon the merits or qualifications of, or recommended or given approval to,
any person, security or transaction. It is unlawful to make, or cause to be
made, to any prospective purchaser, customer or client any representation
inconsistent with the provisions of this paragraph.</B>
</FONT>
<P align="center"><FONT size="2">The date of this Prospectus is
December&nbsp;20, 2003
</FONT>




<P align="center"><FONT size="2"></FONT>
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<A name="toc"><DIV align="CENTER" style="page-break-before:always"><U><B>TABLE OF CONTENTS</B></U></DIV></A>

<P><CENTER>
<TABLE border="0" width="90%" cellpadding="0" cellspacing="0">
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	<TD width="3%"></TD>
	<TD width="76%"></TD>
</TR>
<TR><TD colspan="9"><A HREF="#000">WHERE YOU CAN FIND MORE INFORMATION</A></TD></TR>
<TR><TD colspan="9"><A HREF="#001"> INCORPORATION OF CERTAIN INFORMATION BY REFERENCE</A></TD></TR>
<TR><TD colspan="9"><A HREF="#002"> PROSPECTUS SUMMARY</A></TD></TR>
<TR><TD colspan="9"><A HREF="#003"> THE NOTES</A></TD></TR>
<TR><TD colspan="9"><A HREF="#004">RISK FACTORS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#005"> RATIO OF EARNINGS TO FIXED CHARGES</A></TD></TR>
<TR><TD colspan="9"><A HREF="#006"> USE OF PROCEEDS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#007">DESCRIPTION OF CAPITAL STOCK</A></TD></TR>
<TR><TD colspan="9"><A HREF="#008">CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#009">SELLING SECURITYHOLDERS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#010"> PLAN OF DISTRIBUTION</A></TD></TR>
<TR><TD colspan="9"><A HREF="#011"> LEGAL MATTERS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#012">EXPERTS</A></TD></TR>
</TABLE>
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    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">TABLE OF ADDITIONAL REGISTRANTS UNDER REGISTRATION STATEMENT ON FORM S-3</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">
WHERE YOU CAN FIND MORE INFORMATION</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">INCORPORATION OF CERTAIN INFORMATION BY REFERENCE</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">PROSPECTUS SUMMARY</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">i</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">THE NOTES</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">RISK FACTORS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

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    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">RATIO OF EARNINGS TO FIXED CHARGES</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">USE OF PROCEEDS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">26</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">DESCRIPTION OF CAPITAL STOCK</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">46</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">48</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">SELLING SECURITYHOLDERS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">56</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
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<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">PLAN OF DISTRIBUTION</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">59</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">LEGAL MATTERS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">60</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">EXPERTS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">60</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
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<P align="center"><FONT size="2">i</FONT>
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<P align="center"><FONT size="2"><B>WHERE YOU CAN FIND MORE INFORMATION</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We file annual, quarterly and special reports, proxy statements and other
information with the SEC under the Securities Exchange Act of 1934, as amended.
You may read and copy this information at the following locations of the SEC:
</FONT>
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    <TD valign="top"><FONT size="2">Public Reference Room</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
North East Regional Office
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Midwest Regional Office</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">450 Fifth Street, N.W.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
233 Broadway
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">500 West Madison Street</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Room&nbsp;1024</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
New York, New York 10279
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Suite&nbsp;1400</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Washington, D.C. 20549</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Chicago, Illinois 60661</FONT></TD>
</TR>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You may also obtain copies of this information by mail from the Public
Reference Section of the SEC, 450 Fifth Street, N.W., Room&nbsp;1024, Washington, DC
20549, at prescribed rates.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The SEC also maintains an Internet web site that contains reports, proxy
statements and other information about issuers that file electronically with
the SEC. The address of that site is <I>www.sec.gov</I>.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This prospectus is a part of a registration statement on Form&nbsp;S-3 that we
are filing with the SEC, but the registration statement includes additional
information and also attaches exhibits that are referenced in this prospectus.
</FONT>
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<P align="center"><FONT size="2"><B>INCORPORATION OF CERTAIN INFORMATION BY REFERENCE</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are &#147;incorporating by reference&#148; into this prospectus certain
information we file with the SEC, which means that we are disclosing important
information to you by referring you to those documents. The information
incorporated by reference is deemed to be part of this prospectus, except for
any information superseded by information contained directly in this
prospectus. This prospectus incorporates by reference:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">our annual report on Form&nbsp;10-K for the fiscal
year ended September&nbsp;30, 2002, updated by financial
information included in the current report on Form&nbsp;8-K dated
June&nbsp;10, 2003;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">our quarterly reports on Form&nbsp;10-Q for the
quarterly periods ended December&nbsp;31, 2002, March&nbsp;31, 2003 and
June&nbsp;30, 2003;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">our proxy statement relating to our 2003 annual
meeting of shareholders;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2"></FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">our current reports on From 8-K dated May&nbsp;1,
2003, June&nbsp;10, 2003, October&nbsp;6, 2003, and October&nbsp;14, 2003,
each of which we previously filed with the SEC. These
documents contain important information about us and our
finances;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">                                                        </FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">                                                       </FONT></TD>
</TR>



<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">our filings made pursuant to Rule&nbsp;425 under the
Securities Act and deemed to be filed pursuant to Rules&nbsp;14a-12
and 14d-2 of the Exchange Act, dated October&nbsp;6, 2003, October
7, 2003, October&nbsp;14, 2003, October&nbsp;24, 2003, and October&nbsp;29,
2003;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">                                                        </FONT></TD>
</TR>

</TABLE>
<P align="center"><FONT size="2">1</FONT>
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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">



<TR>
    <TD><FONT size="2">                                                       </FONT></TD>
</TR>




<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">our preliminary consent statements filed with the
SEC on October&nbsp;15, 2003 and October&nbsp;23, 2003; and</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">                                                        </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the description of our common stock set forth in
our Registration Statement on Form&nbsp;8-A filed on March&nbsp;16,
1987, including any amendments or reports filed for the
purpose of updating such description.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All documents we file with the SEC pursuant to Section&nbsp;13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934 from the date of this prospectus
to the end of the offering of the notes and common stock under this document
shall also be deemed to be incorporated herein by reference and will
automatically update information in this prospectus.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You may request a copy of these filings, at no cost, by writing or calling
us at the following address or telephone number:
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="93%">
<TR valign="bottom">
    <TD width="100%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">Corporate Secretary</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Mesa Air Group, Inc.</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">410 North 44<SUP>th</SUP> Street, Suite&nbsp;700</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Phoenix, Arizona 85008</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">(602) 685-4000</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Exhibits to the filings will not be sent, however, unless those exhibits
have specifically been incorporated by reference in this document.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any statements contained in a document incorporated by reference in this
prospectus shall be deemed to be modified or superseded for purposes of this
prospectus to the extent that a statement contained in this prospectus (or in
any other subsequently filed document which also is incorporated by reference
in this prospectus) modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed to constitute a part of this
prospectus except as so modified or superseded.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Important Notice About the Information Presented In This Prospectus</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You should rely only on the information provided in this prospectus and
the information incorporated by reference. We have not authorized anyone to
provide you with different information. The selling securityholders are not
offering to sell, or seeking offers to buy, the notes or underlying shares in
any state where offers or sales are not permitted. We do not claim the accuracy
of the information in this prospectus as of any date other than the date stated
on the cover.
</FONT>
<P align="center"><FONT size="2">2</FONT>
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<!-- link1 " PROSPECTUS SUMMARY" -->
<DIV align="left"><A NAME="002"></A></DIV>
<P align="center"><FONT size="2"><B>PROSPECTUS SUMMARY</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>This summary highlights selected information from this prospectus and does
not contain all of the information that you need to consider in making your
investment decision. You should carefully read the entire prospectus,
including the risks of investing discussed under &#147;Risk Factors&#148; beginning on
page 9, the information incorporated by reference, including our financial
statements, and the notes to those statements, and the exhibits to the
registration statement of which this prospectus is a part.</I>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;References in this prospectus to &#147;Mesa Air,&#148; the &#147;Company,&#148; &#147;we,&#148; &#147;us,&#148;
and &#147;our&#148; refer to Mesa Air Group, Inc. and its subsidiaries, unless otherwise
specified.
</FONT>
<P align="center"><FONT size="2"><B>Mesa Air Group, Inc.</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mesa Air Group, Inc., together with its subsidiaries, is an independently
owned regional airline serving 162 cities in 41 states, the Bahamas, Canada and
Mexico. At June&nbsp;30, 2003, we operated a fleet of 141 aircraft and had
approximately 1,079 daily departures.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Approximately 98% of our consolidated passenger revenues for the fiscal
year ended September&nbsp;30, 2002 and the fiscal nine months ended June&nbsp;30, 2003
were derived from operations associated with code-share agreements. Our
subsidiaries have code-share agreements with America West Airlines, Inc.,
Frontier Airlines, Inc., Midwest Airlines, Inc., and US Airways, Inc. These
code-share agreements allow use of the code-share partner&#146;s reservation system
and flight designator code to identify flights and fares in computer
reservation systems, permit use of logos, service marks, aircraft paint schemes
and uniforms similar to the code-share partner&#146;s and provide coordinated
schedules and joint advertising. The financial arrangement between us and our
code-share partners involves either a revenue-guarantee or pro-rate
arrangement. Under the terms of our revenue-guarantee flying agreements, we
receive a guaranteed payment based upon a fixed minimum monthly amount plus
additional amounts related to departures and block hours flown in addition to
direct reimbursement for expenses such as fuel, landing fees and insurance.
Revenue-guarantee arrangements reduce our exposure to fluctuations in passenger
traffic and fare levels, as well as fuel prices. Under the terms of our
pro-rate agreements, we receive an allocated portion of the passengers&#146; fare
and are at risk for all of the costs of transporting the passengers. For the
2002 fiscal year and the fiscal quarter ended June&nbsp;30, 2003, 75% and 84%,
respectively, of our consolidated passenger revenues were derived from our
revenue-guarantee code-share agreements.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our airline operations are conducted by three wholly-owned regional
airline subsidiaries: Mesa Airlines, Inc., Air Midwest, Inc. and Freedom
Airlines, Inc. Mesa Airlines operates as America West Express under a
revenue-guarantee code-share agreement with America West Airlines, Inc., as US
Airways Express under a revenue-guarantee code-share agreement with US Airways,
Inc., and as Frontier JetExpress under a revenue-guarantee code-share agreement
with Frontier Airlines, Inc. On July&nbsp;6, 2003, Mesa Airlines began operating as
United Express out of Denver under a revenue-guarantee code-share agreement
with United Airlines, Inc. Air Midwest operates as US Airways Express under a
pro-rate code-share agreement with US Airways, Inc., as America West Express
under a pro-rate code-share agreement with America West Airlines, Inc. and also
operates an independent division, doing business as Mesa Airlines, Inc., from
Albuquerque,
</FONT>
<P align="center"><FONT size="2">i</FONT>
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<P align="left"><FONT size="2">New Mexico and Dallas, Texas. Air Midwest also has a pro-rate code-share
agreement with Midwest Airlines, Inc. in Kansas City on flights operated as US
Airways Express. Freedom Airlines operates as America West Express pursuant to
the Company&#146;s revenue-guarantee code-share agreement with America West.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition to carrying passengers, we carry freight and express packages
on our passenger flights and have interline small cargo freight agreements with
many other carriers. We also have contracts with the U.S. Postal Service for
carriage of mail to the cities we serve and occasionally operate charter
flights when our aircraft are not otherwise used for scheduled service.
</FONT>
<P align="center"><FONT size="2"><B>Recent Developments</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On October&nbsp;18, 2002, we reached agreement with US Airways to expand our
regional jet agreement with them by adding twenty 50-seat regional jets to our
existing US Airways Express fleet of 32 regional jet aircraft. As of July&nbsp;31,
2003, the Company has placed 17 of the twenty additional regional jets into the
US Airways Express network.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On February&nbsp;27, 2003, we signed a memorandum of understanding with United
Airlines to operate as United Express under a revenue-guarantee code-share
agreement. Under the agreement that was finalized on July&nbsp;24, 2003, the Company
will provide ten 37-passenger de Havilland Dash 8-200 aircraft to be utilized
in support of United&#146;s operations in Denver. Four of the ten aircraft have been
placed into service as of July&nbsp;31, 2003 for an initial term of five years.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On March&nbsp;1, 2003, Mesa amended its code-share agreement with Frontier
Airlines to change it from a pro-rate agreement to a revenue-guarantee
agreement through August&nbsp;31, 2003. The Company operates five CRJ-200 aircraft
under this agreement. On July&nbsp;1, 2003, the Company amended its agreement with
Frontier Airlines to extend its revenue-guarantee code-share agreement through
January&nbsp;1, 2004.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On March&nbsp;18, 2003, we reached an agreement for a new contract with the Air
Line Pilots Association (&#147;ALPA&#148;), which represents our 1,300 pilots. The new
contract, among other things, provides for participation in the US Airways
&#145;Jets for Jobs&#146; regional jet expansion program. The contract, which has a
duration of 54&nbsp;months, was subsequently ratified by the Company&#146;s pilots in
March 2003.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On June&nbsp;13, 2003, the Company entered into a letter of intent with
LogisTechs Inc. (&#147;LogisTechs&#148;), an affiliate of GE Capital Aviation Services,
for the sale, repair and management of the Company&#146;s aircraft spare parts
inventory. Under the terms of the letter of intent, LogisTechs is expected to
purchase $45.0&nbsp;million in existing spare parts inventory from the Company and
provide funding for up to $40.0&nbsp;million of additional inventory required for
the Company&#146;s planned regional jet fleet growth. LogisTechs will also provide
overall management, planning and logistics support for the Company&#146;s spare
parts requirements and Rockwell Collins Aviation Services will be responsible
for managing the spare parts repair process. The arrangement will cover all of
the Company&#146;s regional jets as well as its Dash 8-200 turboprop aircraft. The
transaction, which remains subject to final documentation, will have a term of
ten years.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On July&nbsp;1, 2003, the Company signed a memorandum of understanding with
United Airlines to operate 35 regional jets as a United Express carrier,
significantly expanding its current code-share
</FONT>
<P align="center"><FONT size="2">ii</FONT>
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<P align="left"><FONT size="2">agreement with United. The 35 regional jets include 20 larger 70-seat and
15 50-seat aircraft. United also has the option to add an additional 25
regional jets, the timing and mix to be determined at a later date. The
expanded agreement, which remains subject to final documentation, is expected
to be effective in August 2003, and unless extended, has a final expiration of
December 2013.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On July&nbsp;9, 2003, the Company signed a letter of intent with US Airways for
a minimum of 25 and a maximum of 55 CRJ-700 regional jets. Under the terms of
the letter of intent, the aircraft would be provided by US Airways from its
previously announced order from Bombardier. Under the letter of intent, the
aircraft are anticipated to be put in service no later than December&nbsp;31, 2004.
The transaction contemplated by the letter of intent is subject to reaching a
definitive agreement on terms and conditions with US Airways. The agreement, if
finalized, is expected to conform to the &#145;Jets for Jobs&#146; provisions of the US
Airways collective bargaining agreement with ALPA.
</FONT>




<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On October&nbsp;6, 2003, the Company announced that it had made an unsolicited
proposal to the board of directors Atlantic Coast Airlines Holdings, Inc. to
acquire all the outstanding stock of Atlantic Coast whereby the Company would
issue 0.9 of a share of its common stock for each Atlantic Coast share. In
connection with such proposal, the Company, on October&nbsp;15, 2003, filed with the
SEC the necessary documents to commence a shareholder consent solicitation to
replace Atlantic Coast&#146;s current board of directors with independent directors
who we believe will give fair consideration to our proposal and announced its
intention to make an exchange offer for all the outstanding shares of common
stock of Atlantic Coast subject to certain conditions. We believe that our
nominees, if elected, would take such action, to the extent that it is in the
best interest of the Atlantic Coast stockholders to (i)&nbsp;remove the impediments
to the consideration of the Company&#146;s exchange offer/merger proposal and any
alternative proposals arising pursuant to that certain
Rights Agreement, dated as of January&nbsp;27, 1999, between Atlantic Coast and
Continental Stock Transfer &#038; Trust Company, and (ii)&nbsp;exempt the Company&#146;s
exchange offer/merger proposal, or any other alternative transaction from the
restrictions of Section&nbsp;203 of the Delaware General Corporation Law. We also
intend to file with the SEC a Registration Statement on Form&nbsp;S-4 with respect
to the issuance of our common stock in connection with the offer to exchange
Mesa shares directly with Atlantic Coast shareholders.
</FONT>






<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with our proposal, several lawsuits have been filed. On
October&nbsp;28, 2003, Atlantic Coast filed a complaint against Mesa Air in the
United States District Court for the District of Columbia alleging that Mesa
Air has made materially false and misleading statements and omissions in
violation of the federal securities laws in connection with its proposed
consent solicitation and potential exchange offer. Atlantic Coast&#146;s complaint
alleges, among other things, that (i)&nbsp;Mesa Air failed to disclose United
Airlines as a participant in its consent solicitation and proposed transaction;
(ii)&nbsp;Mesa Air&#146;s bid to acquire all of Atlantic Coast&#146;s outstanding stock is
motivated by its desire to use Atlantic Coast&#146;s cash on hand to resolve Mesa
Air&#146;s difficulties in obtaining financing for additional aircraft purchases;
(iii)&nbsp;Mesa Air CEO Jonathan Ornstein and other Mesa Air insiders sold a
substantial number of Mesa shares in September 2003, shortly before Mesa Air
announced its takeover bid of Atlantic Coast; (iv)&nbsp;other stock transactions
produced short-swing profits subject to Section&nbsp;16(b) of the Securities
Exchange Act of 1934, as amended, which requires a corporate insider to
disgorge any profit from such transactions; (v)&nbsp;Mesa Air&#146;s directors, who have
determined that an acquisition of Atlantic Coast would be in Mesa Air&#146;s best
interest and are proposing a transaction in which the stockholders of Atlantic
Coast would receive shares of Mesa Air common stock, are not sufficiently
independent and have engaged in
</FONT>


<P align="center"><FONT size="2">iii</FONT>




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<P align="left"><FONT size="2">self-dealing; and (vi)&nbsp;several of Mesa Air&#146;s nominees to Atlantic Coast&#146;s
board of directors are subject to conflicts of interest that would impair their
ability to fulfill their fiduciary obligations to Atlantic Coast. Atlantic
Coast in its complaint seeks injunctive relief with respect to its allegations.
We believe the Atlantic Coast lawsuit is without merit, and we intend to
contest the allegations set forth in Atlantic Coast&#146;s complaint.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On October&nbsp;29, 2003, Mesa Air filed a lawsuit in the Court of Chancery of
the State of Delaware seeking to require the Atlantic Coast board to comply
with the proper procedures under Delaware law and the Atlantic Coast by-laws
with respect to fixing a record date for the consent solicitation and
commencing the 60-day solicitation period. The lawsuit alleges that the action
taken by the Atlantic Coast board to set a record date of October&nbsp;23, 2003
impedes Atlantic Coast&#146;s shareholders ability to exercise their voting rights
and right to receive superior value for their shares.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On November&nbsp;12, 2003, the Company reached agreement with United Airlines
on terms for regional jet service to United should the Company succeed in its
bid to acquire Atlantic Coast Airlines.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We were incorporated in Nevada in 1996, and our principal executive
offices are located at 410 North 44th Street, Suite&nbsp;700, Phoenix, Arizona
85008. Our telephone number is (602)&nbsp;685-4000. Our website address is
www.mesa-air.com. Information on our website does not constitute part of this
prospectus.
</FONT>

<P align="center"><FONT size="2">iv</FONT>
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<P align="center"><FONT size="2"><B>THE NOTES</B>
</FONT>

<CENTER>
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<TR valign="bottom">
    <TD width="34%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="61%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">Notes</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
$252,000,000 aggregate principal amount at maturity
of Senior Convertible Notes due 2023. Each note was
issued at a price of $397.27 per note and has a
principal amount at maturity of $1,000.</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Maturity</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
June&nbsp;16, 2023.</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Cash Interest</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
2.4829% per year on the principal amount at maturity,
payable semiannually in arrears in cash on June&nbsp;16
and December&nbsp;16 of each year, beginning December&nbsp;16,
2003, until June&nbsp;16, 2008. This cash interest is
taxable to holders as part of the original issue
discount for United States federal income tax
purposes and accordingly, is taxed to a holder as it
accrues regardless of the holder&#146;s method of tax
accounting. However, a holder will not recognize any
income upon the actual payment of such cash interest.
See &#147;Certain United States Federal Income Tax
Considerations.&#148;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Yield-to-Maturity of Notes</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
6.25% per year, computed on a semiannual bond
equivalent basis and calculated from June&nbsp;16, 2003.</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Original Issue Discount</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
We offered our notes at an issue price significantly
below the principal amount at maturity of the notes.
As a result, the notes are treated as issued with
original issue discount, which accrues daily at a
rate of 6.25% per year beginning on June&nbsp;16, 2008,
calculated on a semiannual bond equivalent basis
using a 360-day year comprised of twelve 30-day
months. For United States federal income tax
purposes, U.S. holders will be required to include
original issue discount in their gross income as it
accrues regardless of their method of tax accounting.
See &#147;Certain United States Federal Income Tax
Considerations.&#148;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Conversion Rights</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
For each note surrendered for conversion, if the
conditions for conversion are satisfied, a holder
will receive 39.727 shares of our common stock
subject to adjustment. In lieu of delivering shares
of our common stock upon conversion of all or any
portion of our notes, we may elect to pay holders
surrendering notes cash or a combination of cash and
shares of our common stock for the notes surrendered.
If we elect to pay holders cash for their notes, the
payment will be based on the average sale price of
our common stock for the five consecutive trading
days</FONT></TD>
</TR>
</TABLE>
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<P align="center"><FONT size="2">1</FONT>
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<CENTER>
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    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
immediately following either:</FONT></TD>
</TR>

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    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
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<TR valign="bottom">
    <TD width="34%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="56%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&#149;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
 the date of our notice of our election to deliver
cash, which we must give within two business days
after receiving a conversion notice, unless we have
earlier given notice of redemption as described in
this prospectus; or</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
   <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&#149;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
the conversion date, if we have given notice of
redemption specifying that we intend to deliver cash
upon conversion thereafter.</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="34%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="61%">&nbsp;</TD>
</TR>

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    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
The conversion rate may be adjusted for certain
reasons, but will not be adjusted for accrued
original issue discount, cash interest or interest
payable upon the occurrence of a tax event. Upon
conversion, a holder will not receive any cash
payment representing accrued original issue discount
or any accrued cash interest. Instead, accrued
original issue discount or accrued cash interest will
be deemed paid by the shares of common stock received
by the holder on conversion.</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Holders may surrender notes for conversion into our
shares of common stock in any fiscal quarter
commencing after June&nbsp;30, 2003, if, as of the last
day of the preceding fiscal quarter, the closing sale
price of our common stock for at least 20 trading
days in a period of 30 consecutive trading days
ending on the last trading day of such preceding
fiscal quarter is more than 110% of the accreted
conversion price per share of common stock on the
last day of such preceding fiscal quarter. If the
foregoing condition is satisfied, then the notes will
be convertible at any time at the option of the
holder, through maturity. The accreted conversion
price per share as of any day will equal the issue
price of a note plus accrued original issue discount
to that day, divided by the conversion rate, subject
to any adjustments to the conversion rate through
that day. The conversion rate is calculated by
dividing the original issue price by $10.00.</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
On or before June&nbsp;16, 2018, a holder also may convert
its notes into shares of our common stock at any time
after a 10 consecutive trading-day period in which
the average of the trading prices for the notes for
that 10 trading-day period was less than 103% of the
average conversion value for the notes during that
period. Conversion value is equal to the product of
the closing sale price for our shares</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">2</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="34%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="61%">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
of common stock
on a given day multiplied by the then current
conversion rate.</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Notes or portions of notes in integral multiples of
$1,000 principal amount at maturity called for
redemption may be surrendered for conversion until
the close of business on the second business day
prior to the redemption date. In addition, if we
make a distribution to our stockholders with a per
share value of more than 15% of the sale price of our
common stock on the date immediately preceding the
declaration of such distribution, or if we are a
party to certain consolidations, mergers or binding
share exchanges, in addition to any adjustment to the
conversion rate as a result of distribution,
consolidation, merger or exchange, notes may be
surrendered for conversion, as provided in
&#147;Description of the Notes &#151; Conversion Rights.&#148; The
ability to surrender notes for conversion will expire
at the close of business on June&nbsp;16, 2023.</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Ranking</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
The notes are senior unsecured obligations and will
rank equal in right of payment to all of our other
unsecured and unsubordinated indebtedness. The notes
are effectively subordinated to our secured
indebtedness to the extent of the security.</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
As of June&nbsp;30, 2003, we had $210.6&nbsp;million of senior
indebtedness outstanding, which consisted of $102.1
million of notes payable related to the Company&#146;s
fleet of Beechcraft l900D turboprop aircraft, $100.1
million related to the issuance of the senior
convertible notes, $4.1&nbsp;million related to the
settlement of past contractual claims of an aircraft
manufacturer, $1.8&nbsp;million related to the Department
of Transportation note payable, $1.0&nbsp;million related
to a mortgage note payable on one of our real estate
properties and other miscellaneous debt totaling $1.5
million. We also had $18.5&nbsp;million in letters of
credit outstanding at June&nbsp;30, 2003.</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Guarantees</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Each of our existing subsidiaries is a guarantor of
the notes and all future wholly-owned domestic
subsidiaries will be required to guarantee the notes
on a senior unsecured basis. Each of our
non-domestic subsidiaries and non-wholly-owned
domestic subsidiaries is required to guarantee the
notes only so long as such subsidiary guarantees
other indebtedness of ours, except MAGI Insurance,
Ltd, which has guaranteed the notes. Each</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">3</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="34%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="61%">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
guarantee
of a guarantor will be equal in right of payment to
all existing and future unsecured and unsubordinated
indebtedness of such guarantor. The guarantees are
effectively subordinated to secured indebtedness of
the guarantors to the extent of the security.</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
As of June&nbsp;30, 2003, the guarantors had an aggregate
of $203.2&nbsp;million of senior secured indebtedness
outstanding, which consisted of $102.1&nbsp;million of
notes payable related to the Company&#146;s fleet of
Beechcraft 1900D turboprop aircraft, $100.1&nbsp;million
related to the issuance of the senior convertible
notes and $1.0&nbsp;million related to a mortgage note
payable on one of our real estate properties. The
Company also had $18.5&nbsp;million in letters of credit
outstanding at June&nbsp;30, 2003.</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Sinking Fund</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
None.</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Redemption of Notes
at Our Option</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
We may redeem for cash all or a portion of the notes
at any time on or after June&nbsp;16, 2008, at redemption
prices equal to the sum of the issue price plus
accrued original issue discount and accrued cash
interest, if any, to the applicable redemption date.
See &#147;Description of the Notes &#151; Redemption of Notes
at Our Option.&#148;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Purchase of the Notes
by Mesa Air</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Holders may require us to purchase all or a portion
of their notes at the option of the Holder on each of
the following dates at the following prices, plus
accrued cash interest, if any, to the purchase date:</FONT></TD>
</TR>
</TABLE>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="34%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="56%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
 on June&nbsp;16, 2008 at a price of $397.27 per note;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
   <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
 on June&nbsp;16, 2013 at a price of $540.41 per note; and</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
   <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
on June&nbsp;16, 2018 at a price of $735.13 per note.</FONT></TD>
</TR>
</TABLE>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="34%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="61%">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
We may pay the purchase price in cash or shares of
our common stock or in a combination of cash and
shares of our common stock. If we elect to pay the
purchase price, in whole or in part, in shares of our
common stock, the number of shares we deliver will be
equal to the portion of the purchase price to be paid
in common stock divided by the market price of a
share of common stock.</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Change of Control</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Upon a change of control of Mesa Air, the holders may</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">4</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="34%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="61%">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
require us to purchase for cash all or a portion of
their notes at a price equal to the sum of the issue
price plus accrued original issue discount and
accrued cash interest, if any, to the date of
purchase.</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Optional Conversion to
Semiannual Coupon Notes
upon Tax Event</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
From and after the occurrence of a tax event, as
described hereinafter, at our option, interest in
lieu of future accrued original issue discount or
cash interest will accrue on each note from the
option exercise date at 6.25% per year, calculated on
a semiannual bond equivalent basis, on the restated
principal amount and will be payable semiannually.
Any such interest in lieu of original issue discount
or cash interest will be computed in the same manner
and payable at the same time as the cash interest and
will accrue from the most recent date to which cash
interest, if payable, has been paid or provided for
or, if no cash interest is payable or has been paid
or provided for, the option exercise date. In such
event, the redemption price, purchase price and
change of control purchase price will be adjusted, as
described herein. However, there will be no change
in the holder&#146;s conversion rights. See &#147;Description
of the Notes &#151;Optional Conversion to Semiannual
Coupon Notes upon Tax Event.&#148;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">DTC Eligibility</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
The notes were issued in fully registered book-entry
form and are represented by one or more permanent
global notes without coupons. Global notes have been
deposited with a custodian for and registered in the
name of a nominee of The Depository Trust Company in
New York, New York. Beneficial interests in global
notes are shown on, and transfers thereof are
effected only through, records maintained by DTC and
its direct and indirect participants, and your
interest in any global note may not be exchanged for
certificated notes, except in limited circumstances
described herein. See &#147;Description of the Notes &#151;
Book-Entry System.&#148;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Trading</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
We do not intend to list the notes on any national
securities exchange. However, the notes are eligible
for trading in PORTAL. The notes are new securities
for which there is currently no public market.</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">5</FONT>
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<P align="center"><FONT size="2"><B>THE COMMON STOCK</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This prospectus covers, and the registration statement of which it is a
part, registers the 10,011,204 shares of common stock issuable upon conversion
of the notes, plus the 129,935 shares of common stock issuable upon exercise of
the warrant we issued to Raytheon.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The shares issued upon the conversion of the notes or the exercise of the
Raytheon warrant are subject to specified anti-dilution provisions set forth in
the indenture relating to the notes and the warrant purchase agreement.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of November&nbsp;11, 2003, we had 31,719,074 shares of common stock
outstanding. Our common stock is traded on the Nasdaq National Market under
the symbol &#147;MESA.&#148;
</FONT>

<P align="center"><FONT size="2">6</FONT>




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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center"><FONT size="2"><B>Forward-Looking Statements</B>
</FONT>

<P align="left"><FONT size="2">This prospectus contains certain forward-looking statements that involve a
number of risks and uncertainties. These statements include, without
limitation, information regarding the replacement, deployment, acquisition and
financing of certain numbers and types of aircraft, and projected expenses
associated therewith; costs of compliance with Federal Aviation Administration
regulations and other rules and acts of Congress; the ability to pass taxes,
fuel costs, inflation, and various expenses to our customers; the resolution of
litigation in a favorable manner; and certain projected financial obligations.
These statements, in addition to statements made in conjunction with the words
&#147;expect,&#148; &#147;anticipate,&#148; &#147;intend,&#148; &#147;plan,&#148; &#147;believe,&#148; &#147;seek,&#148; &#147;estimate&#148; and
similar expressions, are forward-looking statements within the meaning of the
Safe Harbor provision of Section&nbsp;27A of the Securities Act of 1933, as amended,
and Section&nbsp;21E of the Securities Exchange Act of 1934, as amended. These
statements relate to future events or the future financial performance of the
Company and only reflect management&#146;s expectations and estimates. The
following is a list of factors, among others, that could cause actual results
to differ materially from the forward-looking statements:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">changing business conditions in certain market segments and industries;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">changes in our code-share relationships;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the inability of our code-share partners to pay their
respective obligations under their revenue-guarantee code-share
agreements;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">an increase in competition along the routes we operate or
plan to operate;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">material delays in completion by the manufacturer of the
ordered and yet-to-be delivered aircraft;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">our ability to profitably manage our turboprop fleet;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">adverse reaction and publicity that might result from any future incidents;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">availability and cost of funds for financing new aircraft;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">changes in general and/or regional economic conditions;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">changes in fuel price or fuel supplies;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">our relationship with employees and the terms of future
collective bargaining agreements;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the impact of current and future laws;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">additional terrorist attacks;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Congressional investigations, and governmental regulations
affecting the airline industry and our operations;</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">7</FONT>
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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">bureaucratic delays;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">amendments to existing legislation;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">consumer unwillingness to incur greater costs for flights;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">unfavorable resolution of negotiations with municipalities
for the leasing of facilities; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">risks associated with litigation outcomes.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise, after the date of this prospectus to conform them to
actual results. We do not, nor does any other person, assume responsibility
for the accuracy and completeness of those statements. All of the
forward-looking statements are qualified in their entirety by reference to the
factors discussed under the caption &#147;Risk Factors.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We caution the reader that these risk factors may not be exhaustive. We
operate in a continually changing business environment, and new risk factors
emerge from time to time. Management cannot predict such new risk factors, nor
can it assess the impact, if any, of such new risk factors on our businesses or
the extent to which any factor or combination of factors, may cause actual
results to differ materially from those projected in any forward-looking
statements. In light of these risks, uncertainties and assumptions, the
forward-looking events discussed in this prospectus might not occur.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For these statements, we claim the protection of the safe harbor for
forward-looking statements contained in Section&nbsp;21E of the Securities Act.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You should carefully read this prospectus and the documents incorporated
by reference in their entirety. They contain information that you should
consider when making your investment decision.
</FONT>
<P align="center"><FONT size="2">8</FONT>
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<!-- link1 "RISK FACTORS" -->
<DIV align="left"><A NAME="004"></A></DIV>
<P align="center"><FONT size="2"><B>RISK FACTORS</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>In addition to the other information contained in this prospectus and in
the documents incorporated herein by reference, including our consolidated
financial statements and the related notes, you should carefully consider the
following factors. If any of the following risks actually occurs, our business
could be harmed.</I>
</FONT>
<P align="center"><FONT size="2"><B>Risks Related to the Offering of the Notes</B>
</FONT>

<P align="left"><FONT size="2"><B>We have a significant amount of fixed obligations that could impair our ability
to make principal and interest payments on our debt obligations, including the
notes, and lease payments on our lease obligations.</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have, and will continue to have, a significant amount of fixed
obligations. Due to our high fixed costs, including aircraft lease obligations
and debt service, a decrease in revenues results in a disproportional greater
percentage decrease in earnings. As of June&nbsp;30, 2003, we had approximately
$2.0&nbsp;billion of future lease obligations payable over the next 16&nbsp;years and,
after giving pro forma effect to the offering and the application of our net
proceeds from the offering, we would have had approximately $210.6&nbsp;million of
indebtedness outstanding (including current maturities), comprised of $102.1
million outstanding under notes payable related to the Company&#146;s fleet of
Beechcraft 1900D turboprop aircraft, $100.1&nbsp;million outstanding related to the
issuance of the senior convertible notes, $4.1&nbsp;million related to the
settlement of past contractual claims of an aircraft manufacturer, $1.8&nbsp;million
related to Department of Transportation note payable, $1.0&nbsp;million related to a
mortgage note on one of our real estate properties and other miscellaneous debt
totaling $1.5&nbsp;million. In addition, we had $18.5&nbsp;million in letters of credit
outstanding at June&nbsp;30, 2003 under our credit facility with Fleet Capital
Corporation.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our outstanding indebtedness and lease obligations could have important
consequences to you. For example, it could:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">make it more difficult for us to satisfy our obligations with
respect to these notes;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">limit our ability to obtain additional financing for funding
the expansion of our aircraft fleet, capital expenditures,
acquisitions, working capital or other purposes;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">require us to dedicate a material portion of our operating
cash flow to fund interest payments on our indebtedness, thereby
reducing funds available for the expansion of our aircraft fleet,
capital expenditures, acquisitions, working capital and other
purposes; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">reduce our flexibility in responding to changing business and
economic conditions, including reacting to any changes in the
relationships we have with our code-share partners.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">9</FONT>
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<P align="left"><FONT size="2"><B>Your right to receive payments on the notes is effectively subordinated to the
rights of our and the guarantors&#146; existing and future secured creditors. The
notes, in certain other circumstances, may effectively be subordinated to any
existing and future liabilities of Mesa Air and its subsidiaries.</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Holders of our secured indebtedness and the secured indebtedness of the
guarantors will have claims that are senior to your claims as holders of the
notes to the extent of the value of the assets securing that other
indebtedness. Notably, we and our subsidiaries are parties to the revolving
line of credit agreement with Fleet Capital Corporation, which is secured by,
among other things, inventory, receivables and equipment of Mesa Air and our
subsidiaries. The notes are effectively subordinated to our revolving line of
credit and other secured indebtedness. In the event of any distribution or
payment of our assets in any foreclosure, dissolution, winding-up, liquidation,
reorganization, or other bankruptcy proceeding, holders of secured indebtedness
will have prior claim to those assets that constitute their collateral.
Holders of the notes will participate ratably with all holders of our unsecured
indebtedness that is deemed to be of the same class as the notes, and
potentially with all of our other general creditors, based upon the respective
amounts owed to each holder or creditor, in our remaining assets. In any of
the foregoing events, we cannot assure you that there will be sufficient assets
to pay amounts due on the notes. As a result, holders of notes may receive
less, ratably, than holders of secured indebtedness.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of June&nbsp;30, 2003, the aggregate amount of our and our subsidiaries&#146;
senior secured indebtedness was $203.2&nbsp;million, which consisted of $102.1
million outstanding under notes payable related to the Company&#146;s fleet of
Beechcraft 1900D turboprop aircraft, $100.1&nbsp;million outstanding related to
issuance of the senior convertible notes, and $1.0&nbsp;million related to a
mortgage note on one of our real estate properties. In addition, the Company
had $18.5&nbsp;million in letters of credit outstanding at June&nbsp;30, 2003. Our
revolving line of credit agreement provides for revolving credit borrowings of
up to $35&nbsp;million aggregate principal amount.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, the notes effectively are subordinated to all existing and
future liabilities, including claims with respect to trade payables, of any
subsidiary which is not a guarantor of the notes. All of our existing
wholly-owned domestic subsidiaries are guarantors of the notes and all future
wholly-owned domestic subsidiaries will be required to guarantee the notes. In
addition, our wholly-owned foreign subsidiary, MAGI Insurance, Ltd, is a
guarantor of the notes on an unsecured senior basis and we may, in certain
circumstances, add any newly formed or acquired wholly-owned foreign
subsidiaries as guarantors in the future. Each of our other non-domestic
subsidiaries and non-wholly-owned domestic subsidiaries is required to
guarantee the notes only so long as such subsidiary guarantees other
indebtedness of ours. As a result, in the future, we may have subsidiaries
that are not guarantors of the notes.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Furthermore, if we fail to deliver our common stock upon conversion of a
note and thereafter become the subject of bankruptcy proceedings, a holder&#146;s
claim for damages arising from such failure could be subordinated to all of our
and our subsidiaries&#146; existing and future obligations.
</FONT>
<P align="center"><FONT size="2">10</FONT>
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<P align="left"><FONT size="2"><B>Our financial results may be adversely impacted if we are subsequently held
liable for the obligations of our former subsidiary CCAir, Inc.</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the fourth quarter of fiscal 2002 we established a reserve related to
CCAir of $19.8&nbsp;million for restructuring and impairment charges. Of these
restructuring charges, $12.0&nbsp;million was subsequently reversed in the second
quarter of fiscal 2003, upon the Company&#146;s determination, after consultation
with counsel, that the Company is not liable for the aircraft lease obligations
and aircraft related return costs incurred solely by CCAir and not guaranteed
by the Company. In the event this determination is challenged and the Company
is subsequently determined to be liable for such CCAir obligations, our
financial results and our ability to make payments on the notes could be
adversely impacted.
</FONT>
<P align="left"><FONT size="2"><B>We are a holding company, and we may not have access to the cash flow and other
assets of the subsidiaries that may be needed to make payment on the notes.</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although substantially all of our business is conducted through our
subsidiaries, none of our subsidiaries is obligated to make funds available to
us for payment on our indebtedness, including the notes. Accordingly, our
ability to make payments on the notes is dependent on the earnings and the
distribution of funds from our subsidiaries. Furthermore, the guarantors are
permitted under the terms of our indebtedness to incur additional indebtedness
that may severely restrict or prohibit the making of distributions, the payment
of dividends or the making of loans by the guarantors to us. We cannot assure
you that the agreements governing the current and future indebtedness of the
guarantors will permit the guarantors to provide us with sufficient dividends,
distributions or loans to fund payments on these notes when due.
</FONT>
<P align="left"><FONT size="2"><B>The notes have been issued at a substantial discount from their principal
amount and, therefore, trigger certain U.S. federal income tax consequences
for the holders of the notes.</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The notes have been issued at a substantial discount from their principal
amount. Consequently, the notes are treated as issued with original issue
discount for U.S. federal income tax purposes and you will be required to
include such original issue discount in your gross income as it accrues for
U.S. federal income tax purposes in advance of receipt of any payment on the
notes to which the original issue discount is attributable. To understand how
this may affect you, you should seek advice from your own tax advisor prior to
purchasing these notes. See &#147;Certain Federal United States Income Tax
Considerations&#148; for a more detailed discussion of the U.S. federal income tax
consequences to the holders of the notes of the purchase, ownership and
disposition of the notes.
</FONT>
<P align="left"><FONT size="2"><B>Our existing debt includes restrictive and financial covenants that limit our
operating flexibility.</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our revolving line of credit agreement contains covenants that, among
other things, restrict our ability to take specific actions in certain
situations, even if we believe them to be in our best interest. These
covenants include restrictions on our ability to:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">incur additional debt, pay dividends or distributions on, or
redeem or repurchase, our capital stock, if specified borrowing
availability does not exist under the credit agreement;</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">11</FONT>
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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">create liens or negative pledges with respect to our assets;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">issue, sell or allow distributions on capital stock of our subsidiaries;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">enter into transactions with affiliates, on terms more
favorable than an arm&#146;s length transaction;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">merge, consolidate or sell our assets; or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">make capital expenditure investments in excess of specified sums.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, our revolving line of credit agreement contains financial
covenants which require us to comply with specified financial ratios and tests
relating to fixed charge coverage and total debt to equity. Our failure to
meet these financial covenants may result in the accelerated repayment of debt
or cash collateralization of our outstanding letters of credit under our
revolving line of credit agreement.
</FONT>
<P align="left"><FONT size="2"><B>We may not have the ability to purchase the notes at the option of the holders
upon certain changes in control or to raise the funds necessary to finance such
purchases.</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon the occurrence of certain specific kinds of change of control events,
we will be required to offer to purchase all outstanding notes. Such a change
of control may be a default under the terms of our revolving line of credit
agreement. In such event, the lenders under our revolving line of credit
agreement could accelerate that indebtedness, causing an event of default under
the notes. If the change of control were to cause a default under the
revolving line of credit agreement, we would be required to repay our
outstanding indebtedness and cash collateralize our outstanding letters of
credit under our revolving credit facility, in addition to being required to
repurchase notes at the option of the holders. As a result, we may not have or
be able to raise sufficient funds to make the required purchase of notes, repay
the outstanding indebtedness and cash collateralize our outstanding letters of
credit under our revolving credit facility.
</FONT>
<P align="left"><FONT size="2"><B>Federal and state statutes allow courts, under specific circumstances, to void
guarantees and require note holders to return payments received from
guarantors.</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the federal bankruptcy law and comparable provisions of state
fraudulent transfer laws, a guarantee could be voided, or claims in respect of
a guarantee could be subordinated to all other debts of that guarantor, if,
among other things, at the time it incurred the indebtedness evidenced by its
guarantee, the guarantor received less than reasonably equivalent value or fair
consideration for the incurrence of such guarantee and the guarantor
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">was insolvent or rendered insolvent by reason of such
incurrence;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">was engaged in a business or transaction for which the
guarantor&#146;s remaining assets constituted unreasonably small capital;
or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">intended to incur, or believed that it would incur, debts
beyond its ability to pay such debts as they mature.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">12</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, any payment by that guarantor pursuant to its guarantee could
be voided and required to be returned to the guarantor, or to a fund for the
benefit of the creditors of the guarantor.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The measures of insolvency for purposes of these fraudulent transfer laws
will vary depending upon the law applied in any proceeding to determine whether
a fraudulent transfer has occurred. Generally, however, a guarantor would be
considered insolvent if:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the sum of its debts, including contingent liabilities, was
greater than the fair saleable value of all of its assets;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">if the present fair saleable value of its assets was less
than the amount that would be required to pay its probable liability
on its existing debts, including contingent liabilities, as they
become absolute and mature; or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">it could not pay its debts as they become due.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On the basis of historical financial information, recent operating history
and other factors, we believe that each guarantor, after giving effect to its
guarantee of these notes, will not be insolvent, will not have unreasonably
small capital for the business in which it is engaged and will not have
incurred debts beyond its ability to pay such debts as they mature. We cannot
assure you, however, as to what standard a court would apply in making these
determinations or that a court would agree with our conclusions in this regard.
</FONT>
<P align="left"><FONT size="2"><B>An active trading market for the notes may not develop, and transfers of the
notes may be restricted.</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The notes comprise a new issue of securities for which there is currently
no public market. The notes will not be listed on any securities exchange or
included in any automated quotation system. We do not know whether an active
trading market will develop for the notes. If the notes are traded after their
initial issuance, they may trade at a discount from their initial offering
price depending on prevailing interest rates, the market for similar
securities, the price of our common stock, the performance of our common stock
in the marketplace, our performance as a company and other factors. We do not
intend to apply for listing of the notes on any securities exchange or other
stock market.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;After we have registered the notes and the shares of underlying common
stock, we will have the right, pursuant to the registration rights agreement,
to suspend the use of the shelf registration statement in certain
circumstances. In the event of such a suspension, you would not be able to
sell any notes or shares of common stock issuable upon conversion of the notes.
</FONT>
<P align="center"><FONT size="2">13</FONT>
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<P align="center"><FONT size="2"><B>Risks Related to Our Business</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>The negative impact of the September&nbsp;11, 2001 terrorist attacks and the
resulting government responses could be material to our financial condition,
results of operations and prospects.</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The terrorist attacks of September&nbsp;11, 2001 were highly publicized. The
impacts that these events will continue to have on the airline industry in
general, and on us in particular, are not known at this time, but are expected
to include a substantial impact on our operations due to:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">A reduction in the demand for travel in the near and mid-term
until public confidence in the air transportation system is
restored;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">An increase in costs due to enhanced security measures and
government directives in response to the terrorist attacks;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">An increase in the cost of aviation insurance in general, and
the cost and availability of coverage for acts of war, terrorism,
hijacking, sabotage and similar acts of peril in particular; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">An increase in airport rents and landing fees.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, we expect that the general increase in hostilities relating
to reprisals against terrorist organizations and the continued threat of
further terrorist attacks will continue to negatively impact our revenues and
costs in the near and mid-term. The extent of the impact that the terrorist
attacks and their aftermath will have on our operations, and the sufficiency of
our financial resources to absorb this impact, will depend on a number of
factors, including:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">The adverse impact that terrorist attacks, and the resulting
government responses, will have on the travel industry and the
economy in general;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">The potential increase in fuel costs and decrease in
availability of fuel if oil-producing countries are affected by the
aftermath of the terrorist attacks, including the government&#146;s
responses, and our ability to manage this risk in connection with
that part of our operations where our fuel costs are not reimbursed
by our code-share partners under the terms of our code-share
agreements;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Our ability to reduce our operating costs and conserve
financial resources, taking into account the cost increases
(including significant increases in the cost of aviation insurance)
expected to result from the aftermath of the terrorist attacks and
the government&#146;s responses;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Any resulting decline in the value of the aircraft in our
fleet;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Our ability to raise additional financing, if necessary,
taking into account our current leverage and the limitations imposed
by the terms of our existing indebtedness;</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">14</FONT>
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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">The number of crew members who may be called for duty in the
reserve forces of the armed services and the resulting impact on our
ability to operate as planned; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">The scope and nature of any future terrorist attacks.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2"><B>We are dependent on our agreements with our code-share partners.</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We depend on relationships created by our code-share agreements. We
derive a significant portion of our consolidated passenger revenues from our
revenue-guarantee code-share agreements with America West and US Airways. Our
code-share partners have certain rights to cancel the applicable code-share
agreement upon the occurrence of certain events or the giving of appropriate
notice, subject to certain conditions. Although no notice has been given to
date that any party intends to cancel these contracts, there can be no
assurance that they will not serve notice at a later date of their intention to
cancel, forcing us to stop selling those routes with the applicable partner&#146;s
code and potentially reducing our traffic and revenue. In addition, our
code-share agreement with America West allows America West, subject to certain
restrictions, to reduce the number of aircraft covered by the code-share
agreement, provided the requisite notice provisions are met. America West has
used this provision to reduce the number of aircraft covered by the code-share
agreement and there can be no assurance that they will not continue to further
reduce the number of covered aircraft.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, because a majority of our operating revenues are currently
generated under revenue-guarantee code-share agreements, if any one of them is
terminated, our operating revenues and net income could be materially adversely
affected unless we are able to enter into satisfactory substitute arrangements
or, alternatively, fly under our own flight designator code, including
obtaining the airport facilities and gates necessary to do so. In 2002 and for
the nine months ended June&nbsp;30, 2003, our America West code-share agreement
accounted for 40% and 45%, respectively, of our consolidated passenger revenues
and our US Airways code-share agreement accounted for 55% and 50%,
respectively, of our consolidated passenger revenues. Any material
modification to, or termination of, our code-share agreements with any of these
partners could have a material adverse effect on our financial condition, the
results of our operations and the price of our common stock. In addition, in
July 2003, Mesa Airlines began operating as United Express out of Denver in
July 2003 under a revenue-guarantee code-share agreement with United Airlines,
Inc. Should any of our revenue-guarantee code-share agreements be terminated,
we cannot assure you that we would be able to enter into substitute code-share
arrangements, that any such arrangements would be as favorable to us as the
current code-share agreements or that we could successfully fly under our own
flight designator code.
</FONT>
<P align="left"><FONT size="2"><B>If our code-share partners or other regional carriers experience events that
negatively impact their financial strength or operations, our operations also
may be negatively impacted.</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are directly affected by the financial and operating strength of our
code-share partners. Any events that negatively impact the financial strength
of our code-share partners or have a long-term effect on the use of our
code-share partners by airline travelers would likely have a material adverse
effect on our business, financial condition and results of operations. In the
event of a decrease in the financial or operational strength of any of our
code-share partners, such partner may seek to reduce, or be unable to make, the
payments due to us under their code-share agreement.
</FONT>
<P align="center"><FONT size="2">15</FONT>
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<P align="left"><FONT size="2">In addition, they may reduce utilization of our aircraft. Although there
are certain monthly guaranteed payment amounts, there are no minimum levels of
utilization specified in the code-share agreements. Further, it is possible
that if any of our code-share partners becomes bankrupt, our code-share
agreement with such partner may not be assumed in bankruptcy and would be
terminated. Any such event could have an adverse effect on our business,
financial condition and results of operations. In addition, any negative
events that occur to other regional carriers and that affect public perception
of such carriers generally could also have a material adverse effect on our
business, financial condition and results of operations.
</FONT>
<P align="left"><FONT size="2"><B>Our code-share partners may expand their direct operation of regional jets thus
limiting the expansion of our relationships with them.</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We depend on major airlines like US Airways and America West electing to
contract with us instead of purchasing and operating their own regional jets.
However, these major airlines possess the resources to acquire and operate
their own regional jets instead of entering into contracts with us or other
regional carriers. We have no guarantee that in the future our code-share
partners will choose to enter into contracts with us instead of purchasing
their own regional jets or entering into relationships with competing regional
airlines. A decision by US Airways, America West or any other code-share
partners to phase out our contract-based code-share relationships or to enter
into similar agreements with one or more of our competitors could have a
material adverse effect on our business, financial condition or results of
operations. As part of its bankruptcy restructuring, US Airways and Mesa
Airlines entered into an agreement to increase the number of regional jets Mesa
Airlines operates as US Airways Express from 32 to 52 regional jets. In
addition to Mesa Airlines and certain of our other wholly-owned subsidiaries,
US Airways has similar code-share agreements with Midway Airlines, TransStates
Airlines, Chautauqua Airlines and Republic Airlines. Mesa Airlines is
currently America West&#146;s only code-share partner.
</FONT>
<P align="left"><FONT size="2"><B>If we experience a lack of labor availability or strikes, it could result in a
decrease of revenues due to the cancellation of flights.</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The operation of our business is significantly dependent on the
availability of qualified employees; including, specifically, flight crews,
mechanics and avionics specialists. Historically, regional airlines have
experienced high pilot turnover from time to time as a result of major air
carriers hiring experienced commercial pilots away from regional carriers.
Further, the addition of aircraft, especially new aircraft types, can result in
pilots upgrading between aircraft types and becoming unavailable for duty
during the required extensive training periods. There can be no assurance that
we will be able to maintain an adequate supply of qualified personnel or that
labor expenses will not increase as a result of a shortage in supply of such
workers.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At June&nbsp;30, 2003, we had approximately 3,400 employees, a significant
number of whom are members of various labor unions, including the Air Line
Pilots Association and the Association of Flight Attendants. Our collective
bargaining agreement with the Air Line Pilots Association expires in August
2007 and our collective bargaining agreement with the Association of Flight
Attendants expires in June 2006. The inability to negotiate acceptable
contracts with existing unions as agreements expire or with new unions could
result in work stoppages by the affected workers, lost revenues resulting from
the cancellation of flights and increased operating costs as a result of higher
wages or benefits paid to union members. We cannot predict which, if any,
other employee groups
</FONT>

<P align="center"><FONT size="2">16</FONT>




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<P align="left"><FONT size="2">may seek union representation or the outcome or the terms of any future
collective bargaining agreement and therefore the effect, if any, on our
financial condition and results of operations. If negotiations with unions
over collective bargaining agreements prove to be unsuccessful, following
specified &#147;cooling off&#148; periods, the unions may initiate a work action,
including a strike, which could have a material adverse effect on our business,
financial condition and results of operations.
</FONT>
<P align="left"><FONT size="2"><B>Increases in our labor costs, which constitute a substantial portion of our
total operating costs, will cause our earnings to decrease.</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Labor costs constitute a significant percentage of our total operating
costs, and we have experienced pressure to increase wages and benefits for our
employees. Under our code-share agreements, our reimbursement rates
contemplate labor costs that increase on a set schedule generally tied to an
increase in the consumer price index or the actual increase in the contract.
We are responsible for our labor costs, and we may not be entitled to receive
increased payments for our flights if our labor costs increase above the
assumed costs included in the reimbursement rates. As a result, a significant
increase in our labor costs above the levels assumed in our reimbursement rates
could result in a material reduction in our earnings.
</FONT>
<P align="left"><FONT size="2"><B>If new airline regulations are passed or are imposed upon our operations, we
may incur increased operating costs and a decrease in earnings.</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Laws and regulations, such as those described below, have been proposed
from time to time that could significantly increase the cost of our operations
by imposing additional requirements or restrictions on our operations. We
cannot predict what laws and regulations will be adopted or what changes to air
transportation agreements will be effected, if any, or how they will affect us,
and there can be no assurance that laws or regulations currently proposed or
enacted in the future will not increase our operating expenses and therefore
adversely affect our financial condition and results of operations.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As an interstate air carrier, we are subject to the economic jurisdiction,
regulation and continuing air carrier fitness requirements of the Department of
Transportation, which include required levels of financial, managerial and
regulatory fitness. The Department of Transportation is authorized to
establish consumer protection regulations to prevent unfair methods of
competition and deceptive practices, to prohibit certain pricing practices, to
inspect a carrier&#146;s books, properties and records, to mandate conditions of
carriage and to suspend an air carrier&#146;s fitness to operate. The DOT also has
the power to bring proceedings for the enforcement of air carrier economic
regulations, including the assessment of civil penalties, and to seek criminal
sanctions.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are also subject to the jurisdiction of the FAA with respect to our
aircraft maintenance and operations, including equipment, ground facilities,
dispatch, communication, training, weather observation, flight personnel and
other matters affecting air safety. To ensure compliance with its regulations,
the FAA requires airlines to obtain an operating certificate, which is subject
to suspension or revocation for cause, and provides for regular inspections.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We incur substantial costs in maintaining our current certifications and
otherwise complying with the laws, rules and regulations to which we are
subject. We cannot predict whether we will be
</FONT>
<P align="center"><FONT size="2">17</FONT>
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<P align="left"><FONT size="2">able to comply with all present and future laws, rules, regulations and
certification requirements or that the cost of continued compliance will not
significantly increase our costs of doing business.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The FAA has the authority to issue mandatory orders relating to, among
other things, the grounding of aircraft, inspection of aircraft, installation
of new safety-related items and removal and replacement of aircraft parts that
have failed or may fail in the future. A decision by the FAA to ground, or
require time-consuming inspections of, or maintenance on, all or any of our
turboprops or regional jets, for any reason, could negatively impact our
results of operations.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition to state and federal regulation, airports and municipalities
enact rules and regulations that affect our operations. From time to time,
various airports throughout the country have considered limiting the use of
smaller aircraft, such as Embraer or Canadair regional jets, at such airports.
The imposition of any limits on the use of our regional jets at any airport at
which we operate could interfere with our obligations under our code-share
agreements and severely interrupt our business operations.
</FONT>
<P align="left"><FONT size="2"><B>Fluctuations in fuel costs could adversely affect our operating expenses and
results.</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The price and supply of jet fuel is unpredictable and fluctuates based on
events outside our control, including geopolitical developments, regional
production patterns and environmental concerns. Although approximately 87% of
our fuel costs for the fiscal quarter ended June&nbsp;30, 2003 were reimbursed by
our code-share partners, price escalations or reductions in the supply of jet
fuel will increase our operating expenses and, to the extent such fuel costs
are not reimbursed by our code-share partners, could cause our operating
results and net income to decline.
</FONT>
<P align="left"><FONT size="2"><B>If additional security and safety measures regulations are adopted, we may
incur increased operating costs and a decrease in earnings.</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Congress recently adopted increased safety and security measures designed
to increase airline passenger security and protect against terrorist acts.
Such measures have resulted in additional operating costs to the airline
industry. The Aviation Safety Commission&#146;s report recommends the adoption of
further measures aimed at improving the safety and security of air travel. We
cannot forecast what additional security and safety requirements may be imposed
on our operations in the future or the costs or revenue impact that would be
associated with complying with such requirements, although such costs and
revenue impact could be significant. To the extent that the costs of complying
with any additional safety and security measures are not reimbursed by our
code-share partners, our operating results and net income could be adversely
affected.
</FONT>
<P align="left"><FONT size="2"><B>If our operating costs increase as our aircraft fleet ages and we are unable to
pass along such costs, our earnings will decrease.</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As our fleet of aircraft age, the cost of maintaining such aircraft, if
not replaced, will likely increase. There can be no assurance that costs of
maintenance, including costs to comply with aging aircraft requirements, will
not materially increase in the future. Any material increase in such costs
could have a material adverse effect on our business, financial condition and
results of operations. Because many aircraft components are required to be
replaced after specified numbers of flight hours or take-off and landing
cycles, and because new aviation technology may be required to be retrofitted,
the cost to maintain aging aircraft will generally exceed the cost to maintain
newer
</FONT>
<P align="center"><FONT size="2">18</FONT>
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<P align="left"><FONT size="2">aircraft. We believe that the cost to maintain our aircraft in the
long-term will be consistent with industry experience for these aircraft types
and ages used by comparable airlines.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe that our aircraft are mechanically reliable based on the
percentage of scheduled flights completed and currently the average age of our
regional jet fleet is 2.7&nbsp;years. However, there can be no assurance that such
aircraft will continue to be sufficiently reliable over longer periods of time.
Furthermore, any public perception that our aircraft are less than completely
reliable could have a material adverse effect on our business, financial
condition and results of operations.
</FONT>
<P align="left"><FONT size="2"><B>Our fleet expansion program will require a significant increase in our leverage
and the financing we require may not be available on favorable terms or at all.</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The airline business is very capital intensive and, as a result, many
airline companies are highly leveraged. During the fiscal years ended
September&nbsp;30, 2001 and 2002, our debt service payments totaled $25.8&nbsp;million
and $17.4&nbsp;million, respectively, and our lease payments totaled $87.4&nbsp;million
and $109.1&nbsp;million, respectively. During the nine months ended June&nbsp;30, 2002
and 2003, our debt service payments totaled $15.1&nbsp;million and $11.7&nbsp;million,
respectively, and our lease payments totaled $62.9&nbsp;million and $94.7&nbsp;million,
respectively. We have significant lease obligations with respect to our
aircraft and ground facilities, which aggregated approximately $2.0&nbsp;billion at
June&nbsp;30, 2003. As of June 2003, we have taken delivery of 15 Bombardier
CRJ-700 and CRJ-900s. Our current growth strategy involves the acquisition of
75 more Bombardier and 4 more Embraer regional jets between 2003 and 2004. We
have permanently financed 11 of the 15 Bombardier CRJ-700 and CRJ-900 aircraft
already delivered. The other four aircraft are the subject of interim
financing, and we have a commitment in place for interim financing for the next
eight Bombardier CRJ-700 and CRJ-900 deliveries. In addition, we have
commitments in place from Bombardier to provide the permanent debt financing on
leveraged leases of 20 aircraft and from Embraer to provide the permanent debt
financing on leveraged leases of four aircraft. After that, there is no
assurance that we will be able to obtain permanent financing on the interim
financed aircraft or that we will be able to obtain financing for future
aircraft deliveries. If we are able to obtain financing for these aircraft, it
will significantly increase our mandatory lease and debt service payments.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There can be no assurance that our operations will generate sufficient
cash flow to make such payments or that we will be able to obtain financing to
acquire the additional aircraft necessary for our expansion. If we default
under our loan or lease agreements, the lender/lessor has available extensive
remedies, including, without limitation, repossession of the respective
aircraft and, in the case of large creditors, the effective ability to exert
control over how we allocate a significant portion of our revenues. Even if we
are able to timely service our debt, the size of our long-term debt and lease
obligations could negatively affect our financial condition, results of
operations and the price of our common stock in many ways, including:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">increasing the cost, or limiting the availability of,
additional financing for working capital, acquisitions or other
purposes;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">limiting the ways in which we can use our cash flow, much of
which may have to be used to satisfy debt and lease obligations; and</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">19</FONT>
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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">adversely affecting our ability to respond to changing
business or economic conditions or continue our growth strategy.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we need funds and cannot raise them on acceptable terms, we may be
unable to realize our current plans or take advantage of unanticipated
opportunities and could be required to slow our growth.
</FONT>
<P align="left"><FONT size="2"><B>We depend on Bombardier to supply us with the aircraft we require to expand.</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of June&nbsp;30, 2003, we are obligated under our code-share agreements to
place an additional 58 regional jets in service over the next 15&nbsp;months. We
currently have firm orders with Bombardier for an additional 25 regional jets.
We also have options to acquire an additional 80 regional jets that are
exercisable through 2008.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are dependent on Bombardier as manufacturer of these jets and certain
factors may limit or preclude our ability to obtain these regional jets,
including:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Bombardier could refuse, or may not be financially able, to
perform its obligations under the applicable purchase agreement for
the delivery of the regional jets; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">a fire, strike or other event could occur that affects
Bombardier&#146;s ability to completely or timely fulfill its contractual
obligations.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any disruption or change in the delivery schedule of these regional jets
would affect our overall operations and our ability to fulfill our obligations
under our code-share agreements.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our operations could be materially adversely affected by the failure or
inability of Bombardier or any key component manufacturers to provide
sufficient parts or related support services on a timely basis or by an
interruption of fleet service as a result of unscheduled or unanticipated
maintenance requirements for our aircraft.
</FONT>
<P align="left"><FONT size="2"><B>Reduced utilization levels of our aircraft under the fixed-fee agreements would
adversely impact our revenues and earnings.</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Even though our revenue-guarantee agreements require a fixed amount per
month to compensate us for our fixed costs, if our aircraft are underutilized
(including taking into account the stage length and frequency of our scheduled
flights) we will lose the opportunity to receive a margin on the variable costs
of flights that would have been flown if our aircraft were more fully utilized.
</FONT>
<P align="left"><FONT size="2"><B>If we incur problems with any of our third party service providers, our
operations could be adversely affected by a resulting decline in revenue or
negative public perception about our services.</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our reliance upon others to provide essential services on behalf of our
operations may result in the relative inability to control the efficiency and
timeliness of contract services. We have entered into agreements with
contractors to provide various facilities and services required for our
operations, including aircraft maintenance, ground facilities, baggage handling
and personnel training. It is likely that similar agreements will be entered
into in any new markets we decide to
</FONT>
<P align="center"><FONT size="2">20</FONT>
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<P align="left"><FONT size="2">serve. All of these agreements are subject to termination after notice.
Any material problems with the efficiency and timeliness of contract services
could have a material adverse effect on our business, financial condition and
results of operations.
</FONT>
<P align="left"><FONT size="2"><B>If we become involved in any material litigation or any existing litigation is
concluded in a manner adverse to us, our earnings may decline.</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are, from time to time, subject to various legal proceedings and
claims, either asserted or unasserted. Any such claims, whether with or
without merit, could be time-consuming and expensive to defend and could divert
management&#146;s attention and resources. There can be no assurance regarding the
outcome of current or future litigation.
</FONT>
<P align="left"><FONT size="2"><B>We are at risk of losses and adverse publicity stemming from any accident
involving any of our aircraft.</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If one of our aircraft were to crash or be involved in an accident, we
could be exposed to significant tort liability. In this regard, in January
2003 US Airways Flight 5481, operated by our subsidiary Air Midwest, crashed
shortly after takeoff from Charlotte Douglas International Airport en route to
Greenville/Spartanburg, South Carolina. In February 2003, a small
single-engine plane operated as a training flight by our wholly-owned
subsidiary, MPD, Inc., crashed after take-off in Sedona, Arizona.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The estates of the passengers from Flight 5481, the Sedona crash or the
passengers, or their estates, of any other future aircraft accident may seek to
recover damages for death or injury. Although we believe our present insurance
coverage is sufficient to cover any claims arising from the crash of Flight
5481 and the Sedona crash, there can be no assurance that the insurance we
carry to cover damages arising from any future accidents will be adequate.
Accidents could also result in unforeseen mechanical and maintenance costs. In
addition, any accident involving an aircraft that we operate could create a
public perception that our aircraft are not safe, which could result in air
travelers being reluctant to fly on our aircraft. To the extent a decrease is
associated with our operations not covered by our code-share agreements, such a
decrease could have a material adverse affect on our business, financial
condition or results of operations.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are also subject to ongoing investigations by the FAA and the National
Transportation Safety Board with respect to the events surrounding the crash of
Flight 5481. Although Air Midwest has received no adverse notice to date from
either the FAA or NTSB with respect to the findings from their respective
investigations, the FAA has the authority to impose civil penalties against Air
Midwest should they conclude such penalties are warranted. The imposition of
substantial civil penalties, with respect to Flight 5481 or any other aircraft
accident, would have a material adverse impact our earnings.
</FONT>
<P align="left"><FONT size="2"><B>Our business would be harmed if we lose the services of our key personnel.</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our success depends to a large extent on the continued service of our
executive management team. We have employment agreements with certain
executive officers, but it is possible that members of executive management may
leave us. Departures by our executive officers could have a negative impact on
our business, as we may not be able to find suitable management personnel to
</FONT>
<P align="center"><FONT size="2">21</FONT>
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<P align="left"><FONT size="2">replace departing executives on a timely basis. We do not maintain
key-man life insurance on any of our executive officers.
</FONT>
<P align="left"><FONT size="2"><B>We may experience difficulty finding, training and retaining employees.</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our business is labor-intensive, we require large numbers of pilots,
flight attendants, maintenance technicians and other personnel and we
anticipate that our expansion plans will require us to recruit, train and
retain a significant number of new employees over the next several years.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The airline industry has from time to time experienced a shortage of
qualified personnel, specifically pilots and maintenance technicians. In
addition, as is common with most of our competitors, we have faced considerable
turnover of our employees. Although our employee turnover has decreased
significantly since September&nbsp;11, 2001, our pilots, flight attendants and
maintenance technicians often leave to work for larger airlines, which
generally offer higher salaries and better benefit programs than regional
airlines are financially able to offer. Should the turnover of employees,
particularly pilots and maintenance technicians, sharply increase, the result
will be significantly higher training costs than otherwise would be necessary.
We cannot assure you that we will be able to recruit, train and retain the
qualified employees that we need to carry out our expansion plans or replace
departing employees. If we are unable to hire and retain qualified employees
at a reasonable cost, we may be unable to complete our expansion plans, which
could have a material adverse affect our financial condition, results of
operations and the price of our common stock.
</FONT>
<P align="left"><FONT size="2"><B>Air Transportation Safety and System Stabilization Act.</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In September 2001, the Company recorded as non-operating income $14.7
million associated with amounts claimed under the Air Transportation Safety and
System Stabilization Act (the &#147;Act&#148;). In June&nbsp;30, 2003, the Company finalized
its claim with the Department of Transportation (&#147;DOT&#148;). Pursuant to the
settlement, the Company agreed to return approximately $1.8&nbsp;million of amounts
previously received under the Act. As such, included in other expense is
approximately $4.1&nbsp;million, which included approximately $2.3&nbsp;million the
Company had recorded as receiveable and the $1.8&nbsp;million the Company agreed to
return to the DOT. Amounts to be returned to the DOT are payable in six
monthly installments of $0.3&nbsp;million beginning in July 2003.
</FONT>
<P align="center"><FONT size="2"><B>Risks Related To Our Industry</B>
</FONT>

<P align="left"><FONT size="2"><B>If competition in the airline industry increases, we may experience a decline
in revenue.</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Increased competition in the airline industry as well as competitive
pressure on our code-share partners or in our markets could have a material
adverse effect on our business, financial condition and results of operation.
The airline industry is highly competitive. The earnings of many of the
airlines have historically been volatile. The airline industry is susceptible
to price discounting, which involves the offering of discount or promotional
fares to passengers. Any such fares offered by one airline are normally
matched by competing airlines, which may result in lower revenue per passenger,
i.e., lower yields, without a corresponding increase in traffic levels. Also,
in recent years several new carriers have entered the industry, typically with
low cost structures. In some cases, new entrants have initiated or triggered
price discounting. The entry of additional new major or
</FONT>
<P align="center"><FONT size="2">22</FONT>
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<P align="left"><FONT size="2">regional carriers in any of our markets, as well as increased competition
from or the introduction of new services by established carriers, could
negatively impact our financial condition and results of operations.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our reliance on our code-share agreements with our major airline partners
for the majority of our revenue means that we must rely on the ability of our
code-share partners to adequately promote their respective services and to
maintain their respective market share. Competitive pressures by low-fare
carriers and price discounting among major airlines could have a material
adverse effect on our code-share partners and therefore adversely affect our
business, financial condition and results of operations.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The result of operations in the air travel business historically fluctuate
in response to general economic conditions. The airline industry is sensitive
to changes in economic conditions that affect business and leisure travel and
is highly susceptible to unforeseen events, such as political instability,
regional hostilities, economic recession, fuel price increases, inflation,
adverse weather conditions or other adverse occurrences that result in a
decline in air travel. Any event that results in decreased travel or increased
competition among airlines could have a material adverse effect on our
business, financial condition and results of operations.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition to traditional competition among airlines, the industry faces
competition from ground and sea transportation alternatives. Video
teleconferencing and other methods of electronic communication may add a new
dimension of competition to the industry as business travelers seek lower-cost
substitutes for air travel.
</FONT>
<P align="left"><FONT size="2"><B>The airline industry is heavily regulated.</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Airlines are subject to extensive regulatory and legal compliance
requirements, both domestically and internationally, that involve significant
costs. In the last several years, the FAA has issued a number of directives
and other regulations relating to the maintenance and operation of aircraft
that have required us to make significant expenditures. FAA requirements
cover, among other things, retirement of older aircraft, security measures,
collision avoidance systems, airborne windshear avoidance systems, noise
abatement, commuter aircraft safety and increased inspection and maintenance
procedures to be conducted on older aircraft.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We incur substantial costs in maintaining our current certifications and
otherwise complying with the laws, rules and regulations to which we are
subject. We cannot predict whether we will be able to comply with all present
and future laws, rules, regulations and certification requirements or that the
cost of continued compliance will not significantly increase our costs of doing
business, to the extent such costs are not reimbursed by our code-share
partners.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The FAA has the authority to issue mandatory orders relating to, among
other things, the grounding of aircraft, inspection of aircraft, installation
of new safety-related items and removal and replacement of aircraft parts that
have failed or may fall in the future. A decision by the FAA to ground, or
require time consuming inspections of or maintenance on, all or any of our
aircraft, for any reason, could negatively impact our results of operations.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition to state and federal regulation, airports and municipalities
enact rules and regulations that affect our operations. From time to time,
various airports throughout the country
</FONT>
<P align="center"><FONT size="2">23</FONT>
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<P align="left"><FONT size="2">have considered limiting the use of smaller aircraft, at such airports.
The imposition of any limits on the use of our aircraft at any airport at which
we operate could interfere with our obligations under our code-share agreements
and severely interrupt our business operations.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Additional laws, regulations, taxes and airport rates and charges have
been proposed from time to time that could significantly increase the cost of
airline operations or reduce revenues. For instance, &#147;passenger bill of
rights&#148; legislation was introduced in Congress in 2001 which would have, among
other things, required the payment of compensation to passengers as a result of
certain delays and limited the ability of carriers to prohibit or restrict
usage of certain tickets. If adopted, these measures could have had the effect
of raising ticket prices, reducing revenue and increasing costs. Restrictions
on the ownership and transfer of airline routes and takeoff and landing slots
have also been proposed. In addition, as a result of the terrorist attacks in
New York and Washington, D.C. In September 2001, the FAA has imposed more
stringent security procedures on airlines. We cannot predict what other new
regulations may be imposed on airlines and we cannot assure you that laws or
regulations enacted in the future will not materially adversely affect our
financial condition, results of operations and the price of our common stock.
</FONT>
<P align="left"><FONT size="2"><B>The airline industry has been subject to a number of strikes which could affect
our business.</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The airline industry has been negatively impacted by a number of labor
strikes. Any new collective bargaining agreement entered into by other
regional carriers may result in higher industry wages and add increased
pressure on us to increase the wages and benefits of our employees.
Furthermore, since each of our code-share partners is a significant source of
revenue, any labor disruption or labor strike by the employees of any one of
our code-share partners could have a material adverse effect on our financial
condition, results of operations and the price of our common stock.
</FONT>
<P align="center"><FONT size="2"><B>Risks Related to Our Common Stock</B>
</FONT>

<P align="left"><FONT size="2"><B>Provisions in our charter documents might deter acquisition bids for us.</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our articles of incorporation and bylaws contain provisions that, among
other things:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">authorize our board of directors to issue preferred stock
ranking senior to our common stock without any action on the part of
the shareholders;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">establish advance notice procedures for shareholder
proposals, including nominations of directors, to be considered at
shareholders&#146; meetings;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">authorize a majority of our board of directors, in certain
circumstances, to fill vacancies on the board resulting from an
increase in the authorized number of directors or from vacancies;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">ability to implement a &#147;poison pill&#148; defense, subject to
shareholder approval;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">restrict the ability of shareholders to modify the number of
authorized directors; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">restrict the ability of stockholders to call special meetings
of shareholders.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">24</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, Section&nbsp;78.438 of the Nevada general corporation law
prohibits us from entering into some business combinations with interested
stockholders without the approval of our board of directors. These provisions
could make it more difficult for a third party to acquire us, even if doing so
would benefit our stockholders.
</FONT>
<P align="left"><FONT size="2"><B>Our stock price may continue to be volatile and could decline substantially.</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The stock market has, from time to time, experienced extreme price and
volume fluctuations. Many factors may cause the market price for our common
stock to decline following this offering, including:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
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    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">our operating results failing to meet the expectations of
securities analysts or investors in any quarter;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">downward revisions in securities analysts&#146; estimates;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">material announcements by us or our competitors;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">public sales of a substantial number of shares of our common
stock following this offering;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">governmental regulatory action; or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">adverse changes in general market conditions or economic trends.</FONT></TD>
</TR>
</TABLE>
<!-- link1 " RATIO OF EARNINGS TO FIXED CHARGES" -->
<DIV align="left"><A NAME="005"></A></DIV>
<P align="center"><FONT size="2"><B>RATIO OF EARNINGS TO FIXED CHARGES</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The ratio of earnings to fixed charges for each of the periods indicated
is as follows:
</FONT>
<CENTER>
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<TR valign="bottom">
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    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
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    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>For the</B></FONT></TD>
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    <TD nowrap align="center" colspan="3"><FONT size="1"><B>nine</B></FONT></TD>
</TR>
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    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>months</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>ended</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>June 30,</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>September 30:</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>1998</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>1999</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2000</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2001</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2002</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>2003</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Ratio of earnings
to fixed charges
(deficiency)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">($58,229,000</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">($12,815,000</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.73</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">($72,322,000</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">($14,503,000</FONT></TD>
    <TD nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.83</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">For purposes of calculating this ratio, earnings consist of earnings before
taxes, minority interest and extraordinary items plus interest expense (net of
capitalized interest) and the portion of rental expense deemed representative
of the interest expense. Fixed charges consist of interest expense, the
portion of rental expense representative of interest expense and capitalized
interest.
</FONT>
<P align="center"><FONT size="2">25</FONT>
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<!-- link1 " USE OF PROCEEDS" -->
<DIV align="left"><A NAME="006"></A></DIV>
<P align="center"><FONT size="2"><B>USE OF PROCEEDS</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We will not receive any proceeds from the sale of the notes or shares
underlying the notes or the Raytheon Warrant by the selling securityholders.
We received estimated net proceeds from the sale of the notes of approximately
$97.2&nbsp;million after deducting discounts and commissions for the initial
purchasers and estimated expenses associated with the offering payable by us.
We used, or plan to use, all of the estimated net proceeds of the offering for
working capital and general corporate purposes. We may, however, receive cash
consideration in connection with the exercise of the Raytheon warrant for cash.
If the entire warrant is fully exercised for cash, we would realize proceeds,
before expenses, in the approximate amount of $1.5&nbsp;million, subject to any
adjustment to the exercise price and number of shares due to the anti-dilution
of the warrant. Any proceeds we receive from the exercise of the warrant would
be used for general corporate purposes. However, we cannot be sure that
Raytheon will exercise the warrant, in whole or in part.
</FONT>

<P align="center"><FONT size="2">26</FONT>




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<P align="center"><FONT size="2"><B>DESCRIPTION OF THE NOTES</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We issued the notes under an indenture, dated as of June&nbsp;16, 2003, between
us, as issuer, the guarantors and U.S. Bank National Association, as trustee.
The notes constitute senior debt securities under the indenture. The following
summarizes the material provisions of the notes. The following description
does not purport to be complete and is subject to, and qualified by reference
to, all of the provisions of the indenture and the notes, which we urge you to
read because they define your rights as a notes holder. A copy of the
indenture is available upon request to us. As used in this description of the
notes, the words &#147;we,&#148; &#147;us,&#148; &#147;our,&#148; &#147;Mesa&#148; or &#147;Mesa Air&#148; refer only to Mesa Air
Group, Inc. and do not include any current or future subsidiary of Mesa Air
Group, Inc.
</FONT>

<P align="left"><FONT size="2"><B>General</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The notes are limited to $252,000,000 aggregate principal amount at
maturity. The notes will mature on June&nbsp;16, 2023. The principal amount at
maturity of each note will be $1,000. The notes are payable at the principal
corporate trust office of the paying agent, which initially will be an office
or agency of the trustee, or an office or agency maintained by us for such
purpose, in the Borough of Manhattan, The City of New York.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The notes bear cash interest at the rate of 2.4829% per year on the
principal amount at maturity from the issue date, or from the most recent date
to which interest has been paid or provided for, until June&nbsp;16, 2008. During
such period, cash interest is payable semiannually in arrears on June&nbsp;16 and
December&nbsp;16 of each year, commencing on December&nbsp;16, 2003, to holders of record
at the close of business on June 1 or December 1 immediately preceding such
interest payment date. Each payment of cash interest on the notes includes
interest accrued through the day before the applicable interest payment date
(or purchase, redemption or, in certain circumstances, conversion date, as the
case may be). Any payment required to be made on any day that is not a
business day will be made on the next succeeding business day.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The notes were offered at a substantial discount from their $1,000
principal amount at maturity. The notes were issued at an issue price of
$397.27 per note. Beginning June&nbsp;16, 2008, the notes will accrue original
issue discount while they remain outstanding at a rate of 6.25% per year.
Original issue discount is the difference between the issue price and the
principal amount (or stated redemption price for federal income tax purposes)
at maturity of a note. The calculation of the accrual of original issue
discount will be on a semiannual bond equivalent basis, using a 360-day year
composed of twelve 30-day months. For United States federal income tax
purposes, the stated redemption price at maturity of the notes will include the
semiannual cash interest payments payable through June&nbsp;16, 2008 and original
issue discount will accrue at a constant rate of 6.25% per year, calculated on
a semiannual bond equivalent basis throughout the term of the notes from June
16, 2008. Thus, holders will be required to accrue the cash interest as
original issue discount regardless of their method of tax accounting but will
not recognize any income when such interest is actually paid. See &#147;Certain
United States Federal Income Tax Considerations &#151; U.S. Holders &#151; Original
Issue Discount.&#148;
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Original issue discount or cash interest, as the case may be, will cease
to accrue on a note upon its maturity, conversion, purchase by us at the option
of a holder or redemption. We may not
</FONT>


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<P align="left"><FONT size="2">reissue a note that has matured or been
converted, purchased by us at your option, redeemed or otherwise cancelled,
except for registration of transfer, exchange or replacement of such note.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notes may be presented for conversion at the office of the conversion
agent and for exchange or registration of transfer at the office of the
registrar. The conversion agent and the registrar shall initially be the
trustee. No service charge will be made for any registration of transfer or
exchange of notes. However, we may require the holder to pay any tax,
assessment or other governmental charge payable as a result of such transfer or
exchange.
</FONT>

<P align="left"><FONT size="2"><B>Ranking of the Notes</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The notes are senior unsecured obligations and rank equal in right of
payment to all of our other senior unsecured and unsubordinated indebtedness.
The notes are effectively subordinated to our secured indebtedness to the
extent of the security. At June&nbsp;30, 2003, Mesa Air Group, Inc. had $110.5
million of senior indebtedness outstanding (other than the notes).
</FONT>

<P align="left"><FONT size="2"><B>Guarantees</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have caused each of our wholly-owned domestic subsidiaries, including
any person that becomes a wholly-owned domestic subsidiary after the date of
the indenture, and MAGI Insurance, Ltd. to be a guarantor under the indenture.
Any other non-domestic subsidiary and any non-wholly-owned domestic subsidiary
is required to guarantee the notes only so long as such subsidiary guarantees
other indebtedness of ours. As of the date hereof, all of our wholly-owned
domestic subsidiaries are guarantors of the notes.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The guarantors jointly and severally guarantee our obligations under the
notes on an unsecured senior basis. Each guarantee of a guarantor will be
equal in right of payment to all existing and future unsecured and
unsubordinated indebtedness of such guarantor. The guarantees are effectively
subordinated to the guarantors&#146; secured indebtedness to the extent of the
security. As of June&nbsp;30, 2003, the guarantors had an aggregate of $103.1
million of senior secured indebtedness outstanding (other than the notes),
which consisted of $102.1&nbsp;million of notes payable related to the Company&#146;s
fleet of Beechcraft 1900D turboprop aircraft and $1.0&nbsp;million related to a
mortgage note payable on one of our real estate properties. The Company also
had $18.5&nbsp;million in letters of credit outstanding at June&nbsp;30, 2003. The
obligation of each guarantor under its guarantee will be limited to the
greatest amount that would not render its obligations under the guarantee
subject to avoidance as fraudulent conveyance or fraudulent transfer under
applicable law.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each guarantor that makes payment or distribution of more than its
proportionate share under a guarantee shall be entitled to contribution from
each other such guarantor that has not paid its proportionate share of such
payment or distribution.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The indenture provides that so long as no default exists or would exist,
the guarantee issued by any guarantor shall be automatically and
unconditionally released and discharged upon any sale to any person that is not
affiliated with us of all of the capital stock of such guarantor owned,
directly or indirectly, by us which transaction is otherwise in compliance with
the indenture. The indenture also provides that any non-domestic subsidiaries
and non-wholly-owned domestic subsidiaries will only be required to guarantee
the notes until such time as such subsidiary no longer guarantees any of our
indebtedness (other than the notes), at which time such guarantee by such
subsidiary will be
</FONT>


<P align="center"><FONT size="2">28</FONT>
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<P align="left"><FONT size="2">released and discharged. If, however, such subsidiary
subsequently guarantees any of our indebtedness (other than the notes), the
guarantee by such subsidiary will be reinstated. In addition, our wholly-owned
foreign subsidiary, MAGI Insurance, Ltd, is a guarantor of the notes on an
unsecured senior basis and we may, in certain circumstances, add any newly
formed or acquired wholly-owned foreign subsidiaries as guarantors in the
future.
</FONT>
<P align="left"><FONT size="2"><B>Conversion Rights</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A holder may convert a note, in multiples of $1,000 principal amount at
maturity, into common stock only if at least one of the conditions described
below is satisfied, in addition, a holder may convert a note only until the
close of business on the second business day prior to the redemption date if we
call a note for redemption. A note for which a holder has delivered a purchase
notice or a change of control purchase notice requiring us to purchase the note
may be surrendered for conversion only if such notice is withdrawn in
accordance with the indenture.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The initial conversion rate is 39.727 shares of common stock per note,
subject to adjustment upon the occurrence of certain events described below. A
holder of a note otherwise entitled to a fractional share will receive cash
equal to the applicable portion of the then current sale price of our common
stock on the trading day immediately preceding the conversion date. Upon a
conversion, we will have the option to deliver cash or a combination of cash
and shares of our common stock as described below. The ability to surrender
notes for conversion will expire at the close of business on June&nbsp;16, 2023.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To convert a note into shares of common stock, a holder must:
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">complete and manually sign a conversion notice, a form of which
is on the back of the note, and deliver the conversion notice to the
conversion agent;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">surrender the note to the conversion agent;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">if required by the conversion agent, furnish appropriate
endorsements and transfer documents; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">if required, pay all transfer or similar taxes.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On conversion of a note, a holder will not receive any cash payment of
interest representing accrued original issue discount or, except as described
below, accrued cash interest. Delivery to the holder of the full number of
shares of common stock into which the note is convertible, together with any
cash payment of such holder&#146;s fractional shares, will be deemed:
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">to satisfy our obligation to pay the principal amount at
maturity of the note; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">to satisfy our obligation to pay accrued original issue
discount or accrued cash interest attributable to the period from the
issue date through the conversion date.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a result, accrued original issue discount or accrued cash interest is
deemed paid in full rather than cancelled, extinguished or forfeited.
Notwithstanding the foregoing, accrued cash interest, if any, will be payable
upon any conversion of notes at the option of the holder made
</FONT>


<P align="center"><FONT size="2">29</FONT>
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<P align="left"><FONT size="2">concurrently with
or after acceleration of the notes following an event of default described
under &#147;&#151; Events of Default and Acceleration&#148; below. Holders of notes
surrendered for conversion during the period from the close of business on any
regular record date next preceding any interest payment date to the opening of
business of such interest payment date will receive the semiannual interest
payable on such notes on the corresponding interest payment date
notwithstanding the conversion and such notes (except notes called for
redemption) upon surrender must be accompanied by funds equal to the amount of
semiannual interest payable on the principal amount at maturity of notes so
converted.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The conversion rate will not be adjusted for accrued original issue
discount or accrued cash interest. A certificate for the number of full shares
of common stock into which any note is converted, together with any cash
payment for fractional shares, will be delivered through the conversion agent
as soon as practicable following the conversion date. For a discussion of the
tax treatment of a holder receiving shares of our common stock upon
surrendering notes for conversion, see &#147;Certain United States Federal Income
Tax Considerations &#151; U.S. Holders &#151; Conversion of Notes into Common Stock.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In lieu of delivery of shares of our common stock upon notice of
conversion of any notes (for all or any portion of the notes), we may elect to
pay holders surrendering notes an amount in cash per note (or a portion of a
note) equal to the average sale price of our common stock for the five
consecutive trading days immediately following either (a)&nbsp;the date of our
notice of our election to deliver cash as described below, if we have not given
notice of redemption, or (b)&nbsp;the conversion date, in the case of conversion
following our notice of redemption specifying that we intend to deliver cash
upon conversion, in either case multiplied by the conversion rate in effect on
that date. We will inform the holders through the trustee no later than two
business days following the conversion date of our election to deliver shares
of our common stock or to pay cash in lieu of delivery of the shares, unless we
have already informed holders of our election in connection with our optional
redemption of the notes as described under &#147;&#151; Redemption of Notes at Our
Option.&#148; If we elect to deliver all of such payment in shares of our common
stock, the shares will be delivered through the conversion agent no later than
the fifth business day following the conversion date. If we elect to pay all
or a portion of such payment in cash, the payment, including any delivery of
our common stock, will be made to holders surrendering notes no later than the
tenth business day following the applicable conversion date. If an event of
default, as described under &#147;&#151; Events of Default and Acceleration&#148; below (other
than a default in a cash payment upon conversion of the notes), has occurred
and is continuing, we may not pay cash upon conversion of any notes or portion
of a note (other than cash for fractional shares).
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We will adjust the conversion rate for:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)&nbsp;dividends or distributions on our common stock payable in our
common stock or other capital stock of Mesa Air;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)&nbsp;subdivisions, combinations or certain reclassifications of our
common stock;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3)&nbsp;distributions to all holders of our common stock of certain
rights to purchase our common stock for a period expiring within 60&nbsp;days
of issuance at less than the then current sale price; and</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">30</FONT>
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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4)&nbsp;distributions to the holders of our common stock of a portion of
our assets (including shares of capital stock of a subsidiary) or debt
securities issued by us or certain rights to purchase our securities
(excluding cash dividends or other cash distributions from current or
retained earnings unless the annualized amount thereof per share exceeds
5% of the sale price of our common stock on the day preceding the date of
declaration of such dividend or other distribution).</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">However, no adjustment to the conversion rate need be made if holders of the
notes may participate in the transaction without conversion or in certain other
cases.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the event that we elect to make a distribution to all holders of shares
of our common stock pursuant to clause (3)&nbsp;or clause (4)&nbsp;of the preceding
paragraph, which, in the case of clause (4), has a per share value equal to
more than 15% of the sale price of our shares of common stock on the day
preceding the declaration date for such distribution, we will be required to
give notice to the holders of notes at least 20&nbsp;days prior to the date for such
distribution and, upon the giving of such notice, the notes may be surrendered
for conversion at any time until the close of business on the business day
prior to the date of distribution or until we announce that such distribution
will not take place.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, the indenture provides that upon conversion of the notes, the
holders of such notes will receive, in addition to the shares of common stock
issuable upon such conversion, the rights related to such common stock pursuant
to any future shareholder rights plan, whether or not such rights have
separated from the common stock at the time of such conversion. However, there
shall not be any adjustment to the conversion privilege or conversion rate as a
result of:
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the issuance of the rights;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the distribution of separate certificates representing the rights;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the exercise or redemption of such rights in accordance with
any rights agreement; or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the termination or invalidation of the rights.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">The indenture permits us to increase the conversion rate from time to time.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Holders of the notes may, in certain circumstances, be deemed to have
received a distribution subject to United States federal income tax as a
dividend upon:
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">a taxable distribution to holders of common stock which results
in an adjustment of the conversion rate;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">an increase in the conversion rate at our discretion; or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">failure to adjust the conversion rate in some instances.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;See &#147;Certain United States Federal Income Tax Considerations &#151; U.S.
Holders &#151; Constructive Dividend.&#148;
</FONT>


<P align="center"><FONT size="2">31</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we are a party to a consolidation, merger or binding share exchange or
a transfer of all or substantially all of our assets, the right to convert a
note into common stock may be changed into a right to convert it into the kind
and amount of securities, cash or other assets of Mesa Air or another person
which the holder would have received if the holder had converted the holder&#146;s
note immediately prior to the transaction.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The conversion agent will, on our behalf, determine if the notes are
convertible and notify the trustee and us accordingly. If one or more of the
conditions to the conversion of the notes has been satisfied, we will promptly
notify the holders of the notes thereof and use our reasonable best efforts to
post this information on our website or otherwise publicly disclose this
information.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Conversion Based on Common Stock Price. </I>Holders may surrender notes for
conversion into our shares of common stock in any fiscal quarter commencing
after June&nbsp;30, 2003 if, as of the last day of the preceding fiscal quarter, the
sale price of our common stock for at least 20 trading days in a period of 30
consecutive trading days ending on the last trading day of such preceding
fiscal quarter is more than 110% of the accreted conversion price per share of
common stock on the last day of such preceding fiscal quarter. If the
foregoing condition is satisfied, then the notes will be convertible at any
time at the option of the holder, through maturity. Upon a conversion, we will
have the right to deliver cash or a combination of cash and common stock, as
described below.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The accreted conversion price per share as of any day will equal the issue
price of a note plus the accrued original issue discount to that day, divided
by the number of shares of common stock issuable upon conversion of a note on
that day. The sale price of our common stock on any trading day means the
closing per share sale price (or if no closing sale price is reported, the
average of the bid and ask prices or, if more than one in either case, the
average of the average bid and the average ask prices) on such date on the
principal national securities exchange on which the common stock is listed or,
if our common stock is not listed on a national securities exchange, as
reported by the Nasdaq National Market or otherwise as provided in the
indenture.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The conversion trigger price per share of our common stock in respect of
each of the first 20 fiscal quarters following issuance of the notes is $11.00.
This conversion trigger price reflects the accreted conversion price per share
of common stock multiplied by 110%. Thereafter, the accreted conversion price
per share of common stock increases each fiscal quarter by the accreted
original issue discount for the quarter. The conversion trigger price per
share for the fiscal quarter beginning April&nbsp;1, 2023 is $27.34. The foregoing
conversion trigger prices assume that no events have occurred that would
require an adjustment to the conversion rate.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Conversion Based on Trading Price of the Notes. </I>On or before June&nbsp;16,
2018, a holder also may convert its notes into shares of our common stock at
any time after a 10 consecutive trading-day period in which the average of the
trading prices for the notes for that 10 trading-day period was less than 103%
of the average conversion value for the notes during that period.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The conversion value of a note is equal to the product of the closing sale
price for shares of our common stock on a given day multiplied by the then
current conversion rate, which is the number of shares of common stock into
which each note is then convertible. The trading price of the notes on any
date of determination is the average of the secondary market bid quotations per
note obtained by us or the calculation agent for $2,500,000 principal amount of
notes at approximately
</FONT>


<P align="center"><FONT size="2">32</FONT>
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<P align="left"><FONT size="2">3:30 p.m., New York City time, on such determination
date from two independent nationally recognized securities dealers we select,
provided that if at least two such bids cannot reasonably be obtained by us or
the calculation agent, but one such bid is obtained, then this one bid shall be
used.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Conversion Based on Redemption. </I>A holder may surrender for conversion a
note called for redemption at any time prior to the close of business on the
second business day immediately preceding the redemption date, even if it is
not otherwise convertible at such time. A note for which a holder has
delivered a purchase notice or a change of control purchase notice, as
described below, requiring us to purchase such note may be surrendered for
conversion only if such notice is withdrawn in accordance with the indenture.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A &#147;business day&#148; is any weekday that is not a day on which banking
institutions in The City of New York are authorized or obligated to close. A
&#147;trading day&#148; is any day on which the NYSE is open for trading or, if the
applicable security is quoted on the Nasdaq National Market, a day on which
trades may be made on such market or, if the applicable security is not so
listed, admitted for trading or quoted, any business day.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Conversion upon Occurrence of Certain Corporate Transactions. </I>If we are
party to a consolidation, merger or binding share exchange or a transfer of all
or substantially all of our assets, a note may be surrendered for conversion at
any time from and after the date which is 15&nbsp;days prior to the anticipated
effective date of the transaction until 15&nbsp;days after the actual effective date
of such transaction, and at the effective date, the right to convert a note
into common stock will be changed into a right to convert it into the kind and
amount of securities, cash or other assets of Mesa Air or another person which
the holder would have received if the holder had converted the holder&#146;s notes
immediately prior to the transaction. If such transaction also constitutes a
change of control of Mesa Air, the holder will be able to require us to
purchase all or a portion of such holder&#146;s notes as described under &#147;&#151; Change
of control Permits Purchase of Notes by Mesa Air at the Option of the Holder.&#148;
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The notes are also convertible upon the occurrence of certain
distributions resulting in an adjustment to the conversion price as described
above.
</FONT>

<P align="left"><FONT size="2"><B>Redemption of Notes at Our Option</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No sinking fund is provided for the notes. Prior to June&nbsp;16, 2008, we
cannot redeem the notes at our option. Beginning on June&nbsp;16, 2008, we may
redeem the notes for cash, as a whole at any time or from time to time in part.
We will give not less than 30&nbsp;days&#146; or more than 60&nbsp;days&#146; notice of redemption
by mail to holders of notes.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If redeemed at our option, the notes will be redeemed at a price equal to
the sum of the issue price plus accrued original issue discount and accrued
cash interest, if any, on such notes to the applicable redemption date. The
table below shows the redemption prices of a note on June&nbsp;16, 2008, on each
June&nbsp;16 thereafter prior to maturity and at maturity on June&nbsp;16, 2023. In
addition, the redemption price of a note that is redeemed between the dates
listed below would include an additional amount reflecting the additional
accrued original issue discount that has accrued on such note since the
immediately preceding date in the table below.
</FONT>


<P align="center"><FONT size="2">33</FONT>
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<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="65%">
<TR valign="bottom">
    <TD width="41%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="center" colspan="3"><FONT size="1"><B>(2)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Accrued</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(1)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Original</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(3)</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Note Issue</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Issue</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Redemption</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Redemption Date</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Price</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Discount</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Price (1) &#043; (2)</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2008</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">397.27</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">0.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">397.27</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2009</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">397.27</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">25.22</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">422.49</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2010</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">397.27</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">52.04</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">449.31</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2011</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">397.27</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">80.56</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">477.83</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2012</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">397.27</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">110.89</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">508.16</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2013</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">397.27</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">143.14</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">540.41</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2014</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">397.27</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">177.45</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">574.72</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2015</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">397.27</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">213.93</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">611.20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2016</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">397.27</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">252.72</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">649.99</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2017</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">397.27</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">293.98</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">691.25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2018</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">397.27</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">337.86</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">735.13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2019</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">397.27</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">384.86</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">781.80</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2020</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">397.27</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">434.15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">831.42</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2021</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">397.27</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">486.93</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">884.20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">2022</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">397.27</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">543.05</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">940.32</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">At stated maturity</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">397.27</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">602.73</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,000.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we convert the notes to semiannual coupon notes following the
occurrence of a tax event, the notes will be redeemable at the restated
principal amount plus accrued and unpaid interest from the date of the
conversion through the redemption date. However, in no event may the notes be
redeemed prior to June&nbsp;16, 2008. For more information on this optional
conversion, see &#147;Optional Conversion to Semiannual Coupon Notes upon Tax
Event.&#148;
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If less than all of the outstanding notes are to be redeemed, the trustee
will select the notes to be redeemed in principal amounts at maturity of $1,000
or integral multiples of $1,000. In this case, the trustee may select the
notes by lot, pro rata or by any other method the trustee considers fair and
appropriate. If a portion of a holder&#146;s notes is selected for partial
redemption and the holder converts a portion of the notes, the converted
portion will be deemed to be the portion selected for redemption.
</FONT>

<P align="left"><FONT size="2"><B>Purchase of Notes at the Option of the Holder</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On the purchase dates of June&nbsp;16, 2008, June&nbsp;16, 2013 and June&nbsp;16, 2018,
we may, at the option of the holder, be required to purchase, at the purchase
price set forth below plus accrued cash interest, if any, to the purchase date,
any outstanding note for which a written purchase notice has been properly
delivered by the holder and not withdrawn, subject to certain additional
conditions. Holders may submit their written purchase notice to the paying
agent at any time from the opening of business on the date that is 20 business
days prior to such purchase date until the close of business on the business
day immediately preceding such purchase date.
</FONT>
<P align="center"><FONT size="2">34</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The purchase price of a note will be:
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">$397.27 per note on June&nbsp;16, 2008;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">$540.41 per note on June&nbsp;16, 2013; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">$735.13 per note on June&nbsp;16, 2018.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The above purchase prices reflect a price equal to the sum of the issue
price and accrued original issue discount, if any, on such notes as of the
applicable purchase date.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We may, at our option, elect to pay the purchase price in cash or shares
of common stock, or any combination thereof. For a discussion of the tax
treatment of a holder receiving cash, common stock or any combination thereof,
see &#147;Certain United States Federal Income Tax Considerations &#151; U.S. Holders &#151;
Sale, Exchange, Redemption and Other Disposition of Notes&#148; and &#147;&#151; Conversion of
Notes into Common Stock.&#148;
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If prior to a purchase date the notes have been converted to semiannual
coupon notes following the occurrence of a tax event, the purchase price will
be equal to the restated principal amount plus accrued and unpaid cash interest
from the date of the conversion to the purchase date. For more information on
this optional conversion, see &#147;&#151; Optional Conversion to Semiannual Coupon Notes
upon Tax Event.&#148;
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We will be required to give notice on a date not less than 20 business
days prior to each purchase date to all holders at their addresses shown in the
register of the registrar, and to beneficial owners as required by applicable
law, stating among other things:
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the amount of the purchase price;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">whether we will pay the purchase price of the notes in cash
or common stock or any combination thereof, specifying the
percentages of each;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">if we elect to pay in common stock, the calculation of the
market price of the common stock; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the procedures that holders must follow to require us to
purchase their notes.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The purchase notice given by each holder electing to require us to
purchase notes shall state:
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the certificate numbers of the holder&#146;s notes to be delivered
for purchase;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the portion of the principal amount at maturity of notes to
be purchased, which must be $1,000 or an integral multiple of
$1,000;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">that the notes are to be purchased by us pursuant to the
applicable provisions of the notes; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">in the event we elect, pursuant to the notice that we are
required to give, to pay the purchase price in common stock, in
whole or in part, but the purchase price is</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">35</FONT>
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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">ultimately to be paid to
the holder entirely in cash because any of the conditions to payment
of the purchase price or portion of the purchase price in common
stock is not satisfied prior to the close of business on the
purchase date, as described below, whether the holder elects:</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">to withdraw the purchase notice as to some or all of the
notes to which it relates; or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">to receive cash in respect of the entire purchase price for
all notes or portions of notes subject to such purchase notice.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If the purchase price for the notes subject to the purchase notice is
ultimately to be paid to a holder entirely in cash because we have not
satisfied one or more of the conditions to payment of the purchase price in
common stock prior to the close of business on the purchase date, a holder
shall be deemed to have elected to receive cash in respect of the entire
purchase price for all such notes unless such holder has properly notified us
of its election to withdraw the purchase notice. For a discussion of the tax
treatment of a holder receiving cash instead of common stock, see &#147;Certain
United States Federal Income Tax Considerations &#151; U.S. Holders &#151; Sale,
Exchange, Redemption and Other Disposition of Notes.&#148;
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any purchase notice may be withdrawn by the holder by a written notice of
withdrawal delivered to the paying agent prior to the close of business on the
business day prior to the purchase date.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The notice of withdrawal shall state:
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the principal amount at maturity being withdrawn;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the certificate numbers of the notes being withdrawn; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the principal amount at maturity, if any, of the notes that
remain subject to the purchase notice.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we elect to pay the purchase price, in whole or in part, in shares of
our common stock, the number of such shares we deliver shall be equal to the
portion of the purchase price to be paid in common stock divided by the market
price of a share of common stock.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We will pay cash based on the market price for all fractional shares of
common stock in the event we elect to deliver common stock in payment, in whole
or in part, of the purchase price. See &#147;Certain United States Federal Income
Tax Considerations &#151; U.S. Holders &#151; Sale, Exchange, Redemption and Other
Disposition of Notes.&#148;
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The market price of our common stock shall be an amount equal to the
average of the sale prices of our common stock for the five-trading-day period
ending on the third business day prior to the applicable purchase date, or, if
such business day is not a trading day, then on the last trading day prior to
such business day, appropriately adjusted to take into account any occurrence
that would result in an adjustment of the conversion rate with respect to the
common stock. See &#147;Conversion Rights&#148; for a description of the manner in which
the sale price of our common stock is determined.
</FONT>


<P align="center"><FONT size="2">36</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Because the market price of our common stock is determined prior to the
applicable purchase date, holders of notes bear the market risk with respect to
the value of the common stock to be received from the date such market price is
determined to such purchase date. We may pay the purchase price or any portion
of the purchase price in common stock only if the information necessary to
calculate the market price is published in a daily newspaper of national
circulation.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon determination of the actual number of shares of common stock in
accordance with the foregoing provisions, we will promptly issue a press
release and publish such information on our website.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our right to purchase notes, in whole or in part, with common stock is
subject to our satisfying various conditions, including:
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">listing the common stock on the Nasdaq National Market or
listing on a national securities exchange;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the registration of the common stock under the Securities Act
and the Exchange Act, if required; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">any necessary qualification or registration under applicable
state securities law or the availability of an exemption from such
qualification and registration.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If such conditions are not satisfied with respect to a holder prior to the
close of business on the purchase date, we will pay the purchase price of the
notes of the holder entirely in cash. See &#147;Certain United States Federal
Income Tax Considerations &#151; U.S. Holders &#151; Sale, Exchange, Redemption and Other
Disposition of Notes.&#148; We may not change the form or components or percentages
of components of consideration to be paid for the notes once we have given the
notice that we are required to give to holders of notes, except as described in
the first sentence of this paragraph.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with any purchase offer, we will:
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">comply with the provisions of Rule l3e-4, Rule&nbsp;14e-l and any
other tender offer rules under the Exchange Act which may then be
applicable; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">file Schedule&nbsp;TO or any other required schedule under the
Exchange Act.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payment of the purchase price for a note for which a purchase notice has
been delivered and not validly withdrawn is conditioned upon delivery of the
note, together with necessary endorsements, to the paying agent at any time
after delivery of the purchase notice. Payment of the purchase price for the
note will be made as soon as practicable following the later of the purchase
date or the time of delivery of the note.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If the paying agent holds money or securities sufficient to pay the
purchase price of the note on the business day following the purchase date in
accordance with the terms of the indenture, then, immediately after the
purchase date, the note will cease to be outstanding and cash interest or
original issue discount on such note will cease to accrue, whether or not the
note is delivered to the
</FONT>


<P align="center"><FONT size="2">37</FONT>




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<P align="left"><FONT size="2">paying agent. Thereafter, all other rights of the holder shall terminate,
other than the right to receive the purchase price upon delivery of the note.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No notes may be purchased for cash at the option of holders if there has
occurred and is continuing an event of default with respect to the notes, other
than a default in the payment of the purchase price with respect to such notes.
</FONT>

<P align="left"><FONT size="2"><B>Change of Control Permits Purchase of Notes by Mesa Air at the Option of the
Holder</B>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the event of a change of control, each holder will have the right, at
the holder&#146;s option, subject to the terms and conditions of the indenture, to
require us to purchase for cash all or any portion of the holder&#146;s notes.
However, the principal amount at maturity submitted for purchase by a holder
must be $1,000 or an integral multiple of $1,000.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We will be required to purchase the notes as of a date no later than 30
business days after the occurrence of such change of control at a cash price
equal to the sum of the issue price plus accrued original issue discount or
accrued cash interest, if any, on such note to such date of purchase.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If prior to such date of purchase upon a change of control the notes have
been converted to semiannual coupon notes following the occurrence of a tax
event, we will be required to purchase the notes at a cash price equal to the
restated principal amount plus accrued and unpaid interest from the date of the
conversion to such date of purchase.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Within 15&nbsp;days after the occurrence of a change of control, we are
obligated to mail to the trustee and to all holders of notes at their addresses
shown in the register of the registrar and to beneficial owners as required by
applicable law a notice regarding the change of control, which notice shall
state, among other things:
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the events causing a change of control;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the date of such change of control;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the last date on which the purchase right may be exercised;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the change of control purchase price;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the change of control purchase date;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the name and address of the paying agent and the conversion agent;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the conversion rate and any adjustments to the conversion rate
resulting from such change of control;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">that notes with respect to which a change of control purchase
notice is given by the holder may be converted only if the change of
control purchase notice has been withdrawn in accordance with the
terms of the indenture; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the procedures that holders must follow to exercise these
rights.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">38</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To exercise this right, the holder must deliver a written notice to the
paying agent prior to the close of business on the business day prior to the
change of control purchase date. The required purchase notice upon a change of
control shall state:
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the certificate numbers of the notes to be delivered by the
holder,</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the portion of the principal amount at maturity of notes to be
purchased, which portion must be $1,000 or an integral multiple of
$1,000; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">that we are to purchase such notes pursuant to the applicable
provisions of the notes.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any such change of control purchase notice may be withdrawn by the holder
by a written notice of withdrawal delivered to the paying agent prior to the
close of business on the business day prior to the change of control purchase
date.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The notice of withdrawal shall state:
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the principal amount at maturity being withdrawn;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the certificate numbers of the notes being withdrawn; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the principal amount at maturity, if any, of the notes that
remain subject to a change of control purchase notice.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payment of the change of control purchase price for a note for which a
change of control purchase notice has been delivered and not validly withdrawn
is conditioned upon delivery of the note, together with necessary endorsements,
to the paying agent at any time after the delivery of such change of control
purchase notice. Payment of this change of control purchase price for such
note will be made promptly following the later of the change of control
purchase date or the time of delivery of such note.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If the paying agent holds money sufficient to pay the change of control
purchase price of the note on the business day following the change of control
purchase date in accordance with the terms of the indenture, then immediately
after the change of control purchase date, cash interest or original issue
discount on the note will cease to accrue, whether or not the note is delivered
to the paying agent. Thereafter, all other rights of the holder shall
terminate, other than the right to receive the change of control purchase price
upon delivery of the note.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the indenture, a &#147;change of control&#148; of Mesa Air is deemed to have
occurred upon the occurrence of any of the following:
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the sale, lease, transfer, conveyance or other disposition
(other than by way of merger or consolidation), in one or a series of
related transactions, of all or substantially all of our and our
subsidiaries&#146; assets, taken as a whole, to any person or group; or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the adoption of a plan relating to our liquidation or
dissolution; or</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">39</FONT>
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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of which is that
any person or group becomes the beneficial owner, directly or
indirectly, of more than 35% of the voting power of our outstanding
voting stock; or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the first day on which more than a majority of the members of
our board of directors are not continuing directors.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Continuing directors&#148; means any member of our board of directors who:
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">was a member of our board of directors on the date of original
issuance of the notes; or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">was nominated for election to our board of directors with the
approval of, or whose election to our board of directors was ratified
by, at least a majority of the continuing directors who were members
of our board of directors at the time of such nomination or election.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with any purchase offer in the event of a change of control,
we will:
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">comply with the provisions of Rule l3e-4, Rule&nbsp;14e-l and any
other tender offer rules under the Exchange Act which may then be
applicable; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">file Schedule&nbsp;TO or any other required schedule under the
Exchange Act.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The change of control purchase feature of the notes may, in certain
circumstances, make more difficult or discourage a takeover of Mesa Air. The
change of control purchase feature, however, is not the result of our knowledge
of any specific effort:
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">to accumulate shares of common stock;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">to obtain control of us by means of a merger, tender offer,
solicitation or otherwise; or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">part of a plan by management to adopt a series of anti-takeover
provisions.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Instead, the change of control purchase feature is a standard term
contained in other offerings of securities similar to the notes that have been
marketed by the Initial Purchasers. The terms of the change of control
purchase feature resulted from negotiations between the Initial Purchasers and
us.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We could, in the future, enter into certain transactions, including
certain recapitalizations, that would not constitute a change of control with
respect to the change of control purchase feature of the notes but that would
increase the amount of our or our subsidiaries&#146; outstanding indebtedness.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No notes may be purchased at the option of holders upon a change of
control if there has occurred and is continuing an event of default with
respect to the notes, other than a default in the payment of the change of
control purchase price with respect to the notes.
</FONT>


<P align="center"><FONT size="2">40</FONT>
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<P align="left"><FONT size="2"><B>Events of Default and Acceleration</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following are events of default under the indenture:
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">default in the payment of any principal amount (including
accrued original issue discount and, if the notes have been converted
to semiannual coupon notes following a tax event, the restated
principal amount) at maturity, redemption price, purchase price, or
change of control purchase price due with respect to the notes, when
the same become due and payable;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">default in payment of any interest under the notes, which
default continues for 30&nbsp;days;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">our failure or any guarantor&#146;s failure to comply with any of
our or such guarantor&#146;s other agreements in the notes or the
indenture upon our receipt of notice of such default from the trustee
or from holders of not less than 25% in aggregate principal amount at
maturity of the notes, and our failure or such guarantor&#146;s failure to
cure (or obtain a waiver of) such default within 60&nbsp;days after we
receive such notice;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">default in the payment of principal when due or resulting in
acceleration of other indebtedness of ours or of any guarantor for
borrowed money where the aggregate principal amount with respect to
which the default or acceleration has occurred exceeds $10&nbsp;million,
and such acceleration has not been rescinded or annulled within a
period of 10&nbsp;days after written notice to us by the trustee or to us
and the trustee by the holders of at least 25% in principal amount at
maturity of the notes; or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">any guarantee ceases to be in full force and effect or is
declared null and void or any guarantor denies that it has any
further liability under any guarantee, or gives notice to such effect
(other than by reason of the termination of the indenture or the
release of any such guarantee in accordance with the indenture), and
such condition shall have continued for a period of 30&nbsp;days after
written notice of such failure requiring the guarantor or us to
remedy the same shall have been given to us by the trustee or to us
and the trustee by the holders of 25% in aggregate principal amount
at maturity of the notes outstanding; or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">certain events of bankruptcy, insolvency or reorganization
affecting the guarantors or us.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">If an event of default shall have happened and be continuing, either the
trustee or the holders of not less than 25% in aggregate principal amount at
maturity of the notes then outstanding may declare the issue price of the notes
plus the original issue discount on the notes accrued through the date of such
declaration, and any accrued and unpaid cash interest (or, if the notes have
been converted to semiannual coupon notes following a tax event, the restated
principal amount, plus accrued interest) through the date of such declaration,
to be immediately due and payable. In the case of certain events of bankruptcy
or insolvency, the issue price of the notes plus the original issue discount
accrued thereon, together with any accrued cash interest (or, if the notes have
been converted to semiannual coupon notes following a tax event, the restated
principal amount, plus accrued interest)
</FONT>
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<P align="left"><FONT size="2">through the occurrence of such event shall automatically become and be
immediately due and payable.
</FONT>
<P align="left"><FONT size="2"><B>Mergers and Sales of Assets</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The indenture provides that we may not consolidate with or merge into any
person or convey, transfer or lease our properties and assets substantially as
an entity to another person unless:
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the resulting, surviving or transferee person is a
corporation organized and existing under the laws of the United
States, any state thereof or the District of Columbia, and such
corporation (if other than us) assumes all our obligations under the
notes and the indenture;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">after giving effect to the transaction no event of default,
and no event that, after notice or passage of time, would become an
event of default, has occurred and is continuing; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">other conditions described in the indenture are met.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon the assumption of our obligations by such corporation in such
circumstances, subject to certain exceptions, we shall be discharged from all
obligations under the notes and the indenture. Although such transactions are
permitted under the indenture, certain of the foregoing transactions occurring
could constitute a change of control of Mesa Air, permitting each holder to
require us to purchase the notes of such holder as described above.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The indenture also provides that a guarantor may not consolidate with or
merge into any person or convey, transfer or lease its properties and assets
substantially as an entity to another person unless the surviving person
assumes the obligations of such guarantor and the surviving person is a
corporation organized and existing under the laws of the United States, any
state thereof or the District of Columbia, except if all of the assets or all
of the common stock of such guarantor is sold to a non-affiliate of Mesa Air,
in which case the guarantee is released.
</FONT>

<P align="left"><FONT size="2"><B>Optional Conversion to Semiannual Coupon Notes upon Tax Event</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;From and after the date of the occurrence of a tax event, we shall have
the option to elect to have interest in lieu of future accrued original issue
discount or cash interest accrue at 6.25% per year on a principal amount per
note equal to the sum of the issue price and accrued original issue discount on
such note on the date of the tax event or the date on which we exercise such
option, whichever is later.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Such interest shall accrue from the option exercise date, and shall be
payable semiannually on the interest payment dates of June&nbsp;16 and December&nbsp;16
of each year to holders of record at the close of business on June 1 or
December 1 immediately preceding the interest payment date. Interest will be
computed on the basis of a 360-day year comprised of twelve 30-day months.
Interest will accrue from the most recent date to which interest, if
applicable, has been paid or provided for or, if no interest is payable or has
been paid or provided for, from the option exercise date. In the event that we
exercise our option to pay interest in lieu of accrued original issue discount
</FONT>




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<P align="left"><FONT size="2">or cash interest, the redemption price, purchase price and change of
control purchase price on the notes will be adjusted. However, there will be
no change in the holder&#146;s conversion rights.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A &#147;tax event&#148; means that we shall have received an opinion from
independent tax counsel experienced in such matters to the effect that, on or
after the date of this prospectus, as a result of:
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">any amendment to, or change (including any announced
prospective change) in, the laws (or any regulations thereunder) of
the United States or any political subdivision or taxing authority
thereof or therein; or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">any amendment to, or change in, an interpretation or
application of such laws or regulations by any legislative body,
court, governmental agency or regulatory authority,</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">in each case which amendment or change is enacted, promulgated, issued or
announced or which interpretation is issued or announced or which action is
taken, on or after the date of this Prospectus, there is more than an
insubstantial risk that accrued original issue discount payable on the notes
either:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">would not be deductible on a current accrual basis; or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">would not be deductible under any other method,</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">in either case in whole or in part, by us (by reason of deferral, disallowance,
or otherwise) for United States federal income tax purposes.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Clinton administration previously proposed to change the tax law to
defer the deduction of original issue discount on convertible debt instruments
until the issuer pays the interest. Congress did not enact those proposed
changes. It is not certain what the views of the Bush administration are on
this issue and we cannot assure you that the same or a similar proposal will
not be proposed and enacted.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If a similar proposal were ever enacted and made applicable to the notes
in a manner that would limit our ability to either
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">deduct the interest, including the accrued original issue
discount, payable on the notes on a current accrual basis; or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">deduct the interest, including accrued original issue discount,
payable on the notes under any other method for United States federal
income tax purposes,</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">such enactment would result in a tax event and the terms of the notes would be
subject to modification at our option as described above.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The modification of the terms of notes by us upon a tax event as described
above could possibly alter the timing of income recognition by holders of the
notes with respect to the semiannual payments of interest due on the notes
after the date on which we exercise our option to pay interest in lieu of
accrued original issue discount or accrued interest, if any, on the notes.
</FONT>


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<P align="left"><FONT size="2"><B>Modification</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The trustee and we may modify or amend the indenture or the notes with the
consent of the holders of not less than a majority in aggregate principal
amount at maturity of the notes then outstanding. However, the consent of the
holders of each outstanding note would be required to:
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">alter the manner of calculation or rate of accrual of original
issue discount or interest on any note or change the time of payment;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">make any note payable in money or securities other than that stated in the note;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">change the stated maturity of any note;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">reduce the principal amount at maturity, restated principal
amount, issue price, accrued original issue discount, redemption
price, purchase price or change of control purchase price with
respect to any note;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">make any change that adversely affects the rights of a holder to convert any note;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">make any change that adversely affects the right to require us to purchase a note;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">impair the right to institute suit for the enforcement of any
payment with respect to the notes, or any guarantees, or with respect
to conversion of the notes;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">change the provisions in the indenture that relate to modifying
or amending the indenture; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">release any guarantor from any of its obligations under its
guarantee other than in accordance with the terms of the indenture.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Without the consent of any holder of notes, the trustee and we may enter
into supplemental indentures for any of the following purposes:
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">to evidence a successor to us and the assumption by that
successor of our obligations under the indenture and the notes;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">to add to our covenants for the benefit of the holders of the
notes or to surrender any right or power conferred upon us;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">to secure our obligations in respect of the notes;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">to cure any ambiguity or inconsistency in the indenture; or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">to make any change that does not adversely affect the rights of
any holder of the notes.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The holders of a majority in principal amount at maturity of the
outstanding notes may, on behalf of all the holders of all notes:
</FONT>



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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">waive compliance by us with restrictive provisions of the
indenture, as detailed in the indenture; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">waive any past default under the indenture and its
consequences, except a default in the payment of the principal amount
at maturity, issue price, accrued and unpaid interest, accrued
original issue discount, redemption price, purchase price or change
of control purchase price or obligation to deliver common stock upon
conversion with respect to any note or in respect of any provision
which under the indenture cannot be modified or amended without the
consent of the holder of each outstanding note affected.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2"><B>Discharge of the Indenture</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We may satisfy and discharge our obligations under the indenture by
delivering to the trustee for cancellation all outstanding notes or by
depositing with the trustee, the paying agent or the conversion agent, if
applicable, after the notes have become due and payable, whether at stated
maturity or any redemption date, or any purchase date, or a change of control
purchase date, or upon conversion or otherwise, cash or shares of common stock
(as applicable under the terms of the indenture) sufficient to pay all of the
outstanding notes and paying all other sums payable under the indenture.
</FONT>

<P align="left"><FONT size="2"><B>Calculations in Respect of Notes</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are responsible for making all calculations called for under the notes.
These calculations include, but are not limited to, determination of the
market prices of our common stock. We are required to make all these
calculations in good faith and, absent manifest error, our calculations are
final and binding on holders of notes. We are required to provide a schedule
of our calculations to the trustee, and the trustee is entitled to rely upon
the accuracy of our calculations without independent verification.
</FONT>

<P align="left"><FONT size="2"><B>Limitations of Claims in Bankruptcy</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If a bankruptcy proceeding is commenced in respect of Mesa Air or any
guarantor, the claim of a holder of a note is, under Title II of the United
States Code, limited to the issue price of the note plus that portion of the
original issue discount, together with any cash interest, that has accrued from
the date of issue to the commencement of the proceeding.
</FONT>

<P align="left"><FONT size="2"><B>Governing Law</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The indenture and the notes and guarantees are governed by, and construed
in accordance with, the law of the State of New York.
</FONT>

<P align="left"><FONT size="2"><B>Information Concerning the Trustee</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;U.S. Bank National Association is the trustee, registrar, paying agent and
conversion agent under the indenture for the notes.
</FONT>


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<P align="left"><FONT size="2"><B>Book-Entry System</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The notes are only issued in the form of global securities held in
book-entry form. DTC or its nominee is the sole registered holder of the notes
for all purposes under the indenture. Owners of beneficial interests in the
notes represented by the global securities hold their interests pursuant to the
procedures and practices of DTC. As a result, beneficial interests in any such
securities are shown on, and may only be transferred through, records
maintained by DTC and its direct and indirect participants and any such
interest may not be exchanged for certificated securities, except in limited
circumstances. Owners of beneficial interests must exercise any rights in
respect of their interests, including any right to convert or require purchase
of their interests in the notes, in accordance with the procedures and
practices of DTC. Beneficial owners are not be holders and will not be
entitled to any rights under the global securities or the indenture. Mesa Air
and the trustee, and any of their respective agents, may treat DTC as the sole
holder and registered owner of the global securities.
</FONT>

<P align="left"><FONT size="2"><B>Exchange of Global Securities</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notes represented by a global security are exchangeable for certificated
securities with the same terms only if:
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">DTC is unwilling or unable to continue as depositary or if DTC
ceases to be a clearing agency registered under the Exchange Act and
a successor depositary is not appointed by us within 90&nbsp;days;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">we decide to discontinue use of the system of book-entry
transfer through DTC (or any successor depositary); or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">a default under the indenture occurs and is continuing.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;DTC has advised us as follows: DTC is a limited-purpose trust company
organized under the New York Banking Law, a &#147;banking organization&#148; within the
meaning of the New York Uniform Commercial Code, and a &#147;clearing agency&#148;
registered pursuant to the provisions of Section&nbsp;17A of the Exchange Act. DTC
facilitates the settlement of transactions among its participants through
electronic computerized book-entry changes in participants&#146; accounts,
eliminating the need for physical movement of securities certificates. DTC&#146;s
participants include securities brokers and dealers, including the
underwriters, banks, trust companies, clearing corporations and other
organizations, some of whom and/or their representatives, own DTC. Access to
DTC&#146;s book-entry system is also available to others, such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly.
</FONT>

<!-- link1 "DESCRIPTION OF CAPITAL STOCK" -->
<DIV align="left"><A NAME="007"></A></DIV>
<P align="center"><FONT size="2"><B>DESCRIPTION OF CAPITAL STOCK</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our authorized capital stock consists of 75,000,000 shares of common
stock, no par value per share, and 2,000,000 shares of preferred stock, no par
value per share.
</FONT>


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<P align="left"><FONT size="2"><B>Common Stock</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of November&nbsp;11, 2003, there were 31,719,074 shares of common stock
outstanding and held of record by 1,247 stockholders. The holders of common
stock are entitled to one vote for each share held of record on all matters
submitted to a vote of the stockholders. Cumulative voting for the election of
directors is not permitted subject to preferences that may be applicable to any
outstanding shares of preferred stock, the holders of common stock are entitled
to receive ratably those dividends as may be declared by the board of directors
out of funds legally available therefor. In the event of a liquidation, our
dissolution or winding up, holders of the common stock are entitled to share
ratably in all assets remaining after payment of liabilities and the
liquidation preferences of any outstanding shares of preferred stock. Holders
of common stock have no preemptive rights and no right to convert their common
stock into any other securities. There are no redemption or sinking fund
provisions applicable to the common stock. All outstanding shares of common
stock are, and all shares of common stock to be outstanding upon completion of
the offering will be, fully-paid and nonassessable. Our common stock is listed
on the Nasdaq National Market under the symbol &#147;MESA.&#148;
</FONT>

<P align="left"><FONT size="2"><B>Preferred Stock</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There are, and upon completion of the offering, there will be, no shares
of preferred stock outstanding. The board of directors has the authority,
without further action by the stockholders, to issue up to 2,000,000 shares of
preferred stock, no par value per share, in one or more series and to fix the
powers, preferences, privileges, rights and qualifications, limitations or
restrictions thereof, including dividend rights, conversion rights, voting
rights, terms of redemption, liquidation preferences, sinking fund terms and
the number of shares constituting any series or the designation of the series,
without any further vote or action by stockholders. We believe that the board
of directors&#146; authority to set the terms of, and our ability to issue,
preferred stock will provide flexibility in connection with possible financing
transactions in the future. The issuance of preferred stock, however, could
adversely affect the voting power of holders of common stock, and the
likelihood that the holders will receive dividend payments and payments upon
liquidation and could have the effect of delaying, deferring or preventing a
change of control in us. We have no present plan to issue any shares of
preferred stock.
</FONT>

<P align="left"><FONT size="2"><B>Anti-Takeover Provisions of Nevada Law</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are subject to the provisions of the Nevada private corporation law,
which are anti-takeover provisions. In general, the provisions of Sections
78.411-444 prohibits a publicly held Nevada corporation from engaging in a
&#147;business combination&#148; with an &#147;interested stockholder&#148; for a period of three
years following the date the person became an interested stockholder, unless
(with certain exceptions) the &#147;business combination&#148; or the transaction in
which the person became an interested stockholder is approved in a prescribed
manner. Generally, a &#147;business combination&#148; includes a merger, asset or stock
sale, or other transaction resulting in a financial benefit to the interested
stockholder. Generally, an &#147;interested stockholder&#148; is a person who, together
with affiliates and associates, owns or within three years prior to the
determination of interested stockholder status, did own, 10% or more of a
corporation&#146;s voting stock. The existence of this provision may have an
anti-takeover effect with respect to transactions not approved in advance by
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<P align="left"><FONT size="2">the board of directors, including discouraging attempts that might result
in a premium over the market price for the shares of common stock held by
stockholders.
</FONT>
<P align="left"><FONT size="2"><B>Registration Rights</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In February 2002, we reached an agreement with Raytheon to reduce the
operating costs of our Beechcraft 1900D fleet. In consideration for Raytheon&#146;s
financial accommodations under that agreement, we granted Raytheon an option to
purchase up to 233,068 warrants over a three-year period pursuant to a warrant
purchase agreement. Each warrant entitles the holder to purchase one share of
common stock. Pursuant to the warrant purchase agreement, Raytheon has the
right to cause us to register shares of common stock under the Securities Act.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the terms of the warrant purchase agreement, Raytheon has the right
so long as it holds any warrants or warrant shares, to require us to file a
registration statement under the Securities Act covering all of the warrant
shares held by them and to request that such registration remain effective
until October&nbsp;15, 2006. In addition, the warrant purchase agreement provides
for &#147;piggyback&#148; registration rights with respect to the warrant shares whenever
we file a registration statement on a registration form that can be used to
register the warrant shares held by Raytheon. Raytheon must pay its pro rata
share of the registration expenses and reasonable maintenance cost incurred in
connection with these registrations.
</FONT>

<P align="left"><FONT size="2"><B>Limitations on Liability and Indemnification of Officers and Directors</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our articles of incorporation provide that, to the fullest extent
permitted by Nevada law, none of our directors will be personally liable to us
or to our stockholders for monetary damages for breach of fiduciary duties.
The provision effectively eliminates our rights and the rights of our
stockholders to recover monetary damages against a director for breach of
fiduciary duty as a director, including breaches from grossly negligent
conduct. This provision does not, however, exonerate directors from liability
under federal securities laws or for (1)&nbsp;breach of a director&#146;s duty of loyalty
to us or to our stockholders, (2)&nbsp;acts or omissions not in good faith or that
involve intentional misconduct or knowing violation of law, (3)&nbsp;specified
willful or negligent acts relating to the payment of dividends or the
repurchase or redemption of securities or (4)&nbsp;any transaction from which a
director has derived an improper personal benefit. Our bylaws provide for
indemnification of our officers and directors to the fullest extent permitted
by applicable law. We also have entered into separate indemnification
agreements with each of our directors and executive officers that impose
contractual indemnification obligations on the Company with respect to
specified claims made against such officers or directors.
</FONT>

<P align="left"><FONT size="2"><B>Transfer Agent and Registrar</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ComputerShare Trust, Inc. is the transfer agent and registrar for our
common stock.
</FONT>

<!-- link1 "CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS" -->
<DIV align="left"><A NAME="008"></A></DIV>
<P align="center"><FONT size="2"><B>CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following summary discusses certain material U.S. federal income tax
(and in the case of non-U.S. holders, as defined below, certain U.S. federal
estate tax) consequences relating to the purchase, ownership and disposition of
the notes and the shares of common stock into which the notes may be converted.
Except where noted, this summary deals only with notes and shares of
</FONT>



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<P align="left"><FONT size="2">common stock held as capital assets and is applicable only to initial
individual purchasers of notes who purchased the notes for an amount of cash
equal to the initial offering price of such notes. Additionally, this summary
does not deal with special situations, such as:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">tax consequences to holders who may be subject to special tax
treatment, such as dealers in securities or currencies, banks,
financial institutions, insurance companies, tax-exempt entities and
traders in securities that elect to use a mark-to-market method of
accounting for their securities holdings;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">tax consequences to persons holding notes or common stock as
part of a hedging, integrated, constructive sale or conversion
transaction or a straddle;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">tax consequences to U.S. holders (as defined below) whose
&#147;functional currency&#148; is not the U.S. dollar;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">alternative minimum tax consequences, if any; or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">any state, local or foreign tax consequences.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The discussion below is based upon the provisions of the Internal Revenue
Code of 1986, as amended (the &#147;Code&#148;), and Treasury regulations, rulings and
judicial decisions as of the date hereof. Those authorities may be changed,
perhaps retroactively, so as to result in U.S. federal income tax consequences
different from those discussed below. There can be no assurance that the
Internal Revenue Service (the &#147;IRS&#148;) will not challenge one or more of the tax
consequences discussed herein. If a partnership holds our notes or common
stock, the tax treatment of a partner in the partnership will generally depend
upon the status of the partner and the activities of the partnership. If you
are a partner of a partnership holding our notes or common stock, you should
consult your tax adviser. Whether a note is treated as debt (and not equity)
for U.S. federal income tax purposes is an inherently factual question and no
single factor is determinative. We are treating the notes as indebtedness for
U.S. federal income tax purposes and the following discussion assumes that such
treatment will be respected.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>IF YOU ARE CONSIDERING THE PURCHASE OF NOTES, YOU SHOULD CONSULT YOUR OWN
TAX ADVISERS CONCERNING THE U.S. FEDERAL INCOME TAX CONSEQUENCES TO YOU AND ANY
CONSEQUENCES ARISING UNDER THE LAWS OF ANY OTHER TAXING JURISDICTION.</B>
</FONT>

<P align="left"><FONT size="2"><B>U.S. Holders</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following is a summary of certain material U.S. federal income tax
consequences that will apply to you if you are a U.S. holder. A &#147;U.S. holder&#148;
means a beneficial owner of a note or common stock that is:
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">a citizen or resident alien individual of the United States;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">a corporation (or any entity treated as a corporation for U.S.
federal income tax purposes) created or organized in or under the
laws of the United States or any political subdivision of the United
States;</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">49</FONT>
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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">an estate the income of which is subject to U.S. federal income
taxation regardless of its source; or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">a trust if it (1)&nbsp;is subject to the primary supervision of a
court within the United States and one or more U.S. persons have the
authority to control all substantial decisions of the trust or (2)
has a valid election in effect under applicable U.S. Treasury
regulations to be treated as a U.S. person.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2"><B>Original Issue Discount</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The notes have original issue discount (&#147;OID&#148;) for U.S. federal income tax
purposes, and accordingly, U.S. holders are subject to special rules relating
to the accrual of income for such purposes. U.S. holders generally must
include OID in gross income for U.S. federal income tax purposes on an annual
basis under a constant yield accrual method regardless of their regular method
of tax accounting. As a result, U.S. holders may be required to include OID in
income in advance of the receipt of cash attributable to such income.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The notes are treated as issued with OID equal to the excess of a note&#146;s
&#147;stated redemption price at maturity&#148; over its &#147;issue price.&#148; The stated
redemption price at maturity of a note will include all payments of principal
and stated interest on the note. The notes provide for payment of interest in
cash through June&nbsp;16, 2008. Such interest will be included in the stated
redemption price at maturity and taxed as part of OID and will not be again
included separately in gross income of U.S. holders when accrued or paid. The
issue price is the first price at which a substantial amount of notes are sold
for money (excluding sales to bond houses, brokers or similar persons or
organizations acting as underwriters, placement agents or wholesalers). The
amount of OID includible in income by an initial U.S. holder is the sum of the
&#147;daily portions&#148; of OID with respect to the note for each day during the
taxable year or portion thereof in which such U.S. holder holds such note
(&#147;accrued OID&#148;). A daily portion is determined by allocating to each day in
any &#147;accrual period&#148; a pro rata portion of the OID that accrued in such period.
The &#147;accrual period&#148; of a note may be of any length and may vary in length
over the term of the note, provided that each accrual period is no longer than
one year and each scheduled payment of principal or interest occurs either on
the first or last day of an accrual period. The amount of OID that accrues
with respect to any accrual period is the product of the note&#146;s adjusted issue
price at the beginning of such accrual period and its yield to maturity,
determined on the basis of compounding at the close of each accrual period and
properly adjusted for the length of such period. The &#147;adjusted issue price&#148; of
a note at the start of any accrual period is equal to its issue price,
increased by the accrued OID for each prior accrual period and reduced by any
payments of interest and principal made on such note.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We may be required to make payments of liquidated damages if we do not
file or cause to be declared effective a registration statement, as described
under &#147;&#151; Description of the Notes &#151; Registration Rights.&#148; We intend to take
the position for U.S. federal income tax purposes that any payments of
liquidated damages should be taxable to you as additional ordinary income when
received or accrued, in accordance with your method of tax accounting. This
position is based in part on the assumption that as of the date of issuance of
the notes, the possibility that liquidated damages will have to be paid is a
&#147;remote&#148; or &#147;incidental&#148; contingency within the meaning of applicable U.S.
Treasury regulations. Our determination that such possibility is a remote or
incidental contingency is binding on you, unless you explicitly disclose that
you are taking a
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<P align="left"><FONT size="2">different position to the IRS on your tax return for the year during which
you acquire the note. However, the IRS may take a contrary position from that
described above, which could affect the timing and character of both your
income from the notes and our deduction with respect to the payments of
liquidated damages.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>If we do fail to file or cause to be declared effective a registration
statement, you should consult your tax advisers concerning the appropriate tax
treatment of the payment of liquidated damages with respect to the notes.</B>
</FONT>

<P align="left"><FONT size="2"><B>Constructive Dividend</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The conversion price of the notes will be adjusted in certain
circumstances. Under section 305(c) of the Code, adjustments (or failures to
make adjustments) that have the effect of increasing your proportionate
interest in our assets or earnings may in some circumstances result in a deemed
distribution to you. Any deemed distributions will be taxable as a dividend,
return of capital, or capital gain in accordance with the earnings and profits
rules under the Code.
</FONT>

<P align="left"><FONT size="2"><B>Sale, Exchange, Redemption and other Disposition of Notes</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except as provided below under &#147;&#151; Conversion of Notes into Common Stock,&#148;
you will generally recognize gain or loss upon the sale, exchange, redemption
or other disposition of a note equal to the difference between the amount
realized upon the sale, exchange, redemption or other disposition and your
adjusted tax basis in the note, which will be equal to the amount paid for the
note, increased by the amount of OID previously included in income (including
in the tax year of disposition) and decreased by the amount of payments of
interest and principal. Any gain or loss recognized on a disposition of the
note will be capital gain or loss. If you are an individual and have held the
note for more than one year, such capital gain will be subject to tax at a
maximum rate of 15% (through December&nbsp;31, 2008, after which time it reverts to
a maximum rate of 20%). Your ability to deduct capital losses may be limited.
</FONT>

<P align="left"><FONT size="2"><B>Conversion of Notes into Common Stock</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You will not recognize any income, gain or loss on the conversion of your
notes into common stock except to the extent of cash received in lieu of a
fractional share of common stock. You will be required to include in gross
income daily portions of the OID not previously included in gross income with
respect to the notes, up to the date of conversion. Cash received in lieu of a
fractional share of common stock generally should be treated as a payment in
exchange for such fractional share. The amount of gain or loss on the deemed
sale of such fractional share will be equal to the difference between the
amount of cash you receive in respect of such fractional share, and the portion
of your adjusted tax basis in the note that is allocable to the fractional
share. The tax basis of the common stock received upon a conversion will equal
the allocable portion of the adjusted tax basis of the note that was converted
into common stock. Your holding period for common stock will include the
period during which you held the notes. To the extent any common stock issued
upon a conversion is allocable to accrued OID, the holding period for such
common stock may commence on the day following the date of delivery of common
stock, although there is no authority precisely on point.
</FONT>


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<P align="left"><FONT size="2"><B>Dividends on Common Stock</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If, after you convert a note into common stock, we make a distribution of
cash or other property (other than certain pro rata distributions of our common
stock) in respect of that stock, the distribution will be treated as a
dividend, taxable to you at a maximum rate of 15% (through December&nbsp;31, 2008
after which time it reverts to being taxable at ordinary income rates), to the
extent it is paid from our current or accumulated earnings and profits. If the
distribution exceeds our current or accumulated earnings and profits, the
excess will be treated first as a tax-free return of your investment, up to
your basis in such common stock. Any remaining excess will be treated as
capital gain. If you are a corporation, you may be able to claim a deduction
for a portion of any distribution received that is considered a dividend.
</FONT>

<P align="left"><FONT size="2"><B>Sale or Other Disposition of Common Stock</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You will generally recognize capital gain or loss on a sale or other
disposition of common stock. Your gain or loss will equal the difference
between the proceeds you received and your adjusted tax basis in the stock.
The proceeds received will include the amount of any cash and the fair market
value of any other property received for the stock. If you are an individual
and have held the note for more than one year, such capital gain will be
subject to tax at a maximum rate of 15% (through December&nbsp;31, 2008, after which
time it reverts to a maximum rate of 20%). Your ability to deduct capital
losses may be limited.
</FONT>

<P align="left"><FONT size="2"><B>Exercise of the Optional Redemption or Repurchase Right</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If a U.S. holder requires us to repurchase a note on a repurchase date and
we issue shares of our common stock in full satisfaction of the repurchase
price, the exchange of a note for shares of our common stock should be treated
in the same manner as a conversion.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If a U.S. holder requires us to repurchase a note on a repurchase date and
if we deliver a combination of cash and shares of our common stock in payment
of the repurchase price, then, in general:
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">a U.S. holder should recognize gain (but not loss) to the
extent that the cash and the value of the shares exceed its adjusted
tax basis in the note, but in no event should the amount of
recognized gain exceed the amount of cash received;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">a U.S. holder will be required to include in gross income daily
portions of the OID up to the date of conversion;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">a U.S. holder&#146;s basis in the shares received should be the same
as its basis in the note repurchased by us (exclusive of any basis
allocable to a fractional share), decreased by the amount of cash
received (other than cash received in lieu of a fractional share),
and increased by the amount of gain, if any, recognized by such
holder (other than gain with respect to a fractional share); and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the holding period of the shares received in the exchange
should include the holding period for the note that was repurchased,
except that the holding period of shares</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">52</FONT>
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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">attributable to accrued OID may commence on the day following the
date of delivery of common stock, although there is no authority
precisely on point.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we elect to exercise our option to purchase a note or if a U.S. holder
requires us to repurchase a note on a repurchase date and if, in either event,
we deliver to a holder cash in full satisfaction of the repurchase price, the
repurchase will be treated the same as a sale of the note, as described above
under &#147;&#151; Sale, Exchange, Redemption and other Disposition of the Notes.&#148;
</FONT>

<P align="left"><FONT size="2"><B>Non-U.S. Holders</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following is a summary of certain material U.S. federal tax
consequences that will apply to you if you are a non-U.S. holder. The term
&#147;non-U.S. holder&#148; means a beneficial owner of a note or common stock that is
not a U.S. holder. Special rules may apply to certain non-U.S. holders such as
&#147;controlled foreign corporations&#148;, &#147;passive foreign investment companies&#148;,
&#147;foreign personal holding companies&#148;, persons eligible for benefits under
income tax conventions to which the United States is a party and certain U.S.
expatriates. Non-U.S. holders should consult their own tax advisers to
determine the U.S. federal, state, local and other tax consequences that may be
relevant to them.
</FONT>

<P align="left"><FONT size="2"><B>Payment of Interest</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The 30% U.S. federal withholding tax will not apply to any payment to you
of interest on a note provided that:
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">you do not actually or constructively own 10% or more of the
total combined voting power of all classes of our stock that are
entitled to vote within the meaning of session 871(h)(3) of the
Code;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">you are not a &#147;controlled foreign corporation&#148; that is
related to us within the meaning of section 864(d)(4) of the Code;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">you are not a bank whose receipt of interest on a note is
described in section 881(c)(3)(A) of the Code; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">(a)&nbsp;you provide your name and address, and certify, under
penalties of perjury, that you are not a U.S. person (which
certification may be made on an IRS Form&nbsp;W-8BEN (or successor form))
or (b)&nbsp;you hold your notes through certain foreign intermediaries,
and you and the foreign intermediary satisfy the certification
requirements of applicable U.S. Treasury regulations.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Special certification rules apply to non-U.S. holders that are
pass-through entities rather than corporations or individuals.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If you cannot satisfy the requirements described above, payments of
interest will be subject to the 30% U.S. federal withholding tax, unless you
provide us with a properly executed (1)&nbsp;IRS Form&nbsp;W-8BEN (or successor form)
claiming an exemption from or reduction in withholding under the benefit of an
applicable tax treaty or (2)&nbsp;IRS Form&nbsp;W-8ECI (or successor form) stating that
interest paid on the note is not subject to withholding tax because it is
effectively connected with your conduct of a trade or business in the United
States. If you are engaged in a trade or business in
</FONT>



<P align="center"><FONT size="2">53</FONT>
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<P align="left"><FONT size="2">the United States and interest on a note is effectively connected with the
conduct of that trade or business, you will be subject to U.S. federal income
tax on that interest on a net income basis (although you will be exempt from
the 30% withholding tax, provided you satisfy the certification requirements
described above) in the same manner as if you were a U.S. person as defined
under the Code. In addition, if you are a foreign corporation, you may be
subject to a branch profits tax equal to 30% (or lower applicable treaty rate)
of your earnings and profits for the taxable year, subject to adjustments, that
are effectively connected with your conduct of a trade or business in the
United States.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Absent further relevant guidance from the IRS, we intend to treat payments
of liquidated damages made to non-U.S. holders as subject to U.S. withholding
tax. Therefore, we intend to withhold on such payments at a rate of 30% unless
we receive an IRS Form&nbsp;W-8BEN or an IRS Form&nbsp;W-8ECI from the non-U.S. holder
claiming, respectively, that such payments are subject to reduction or
elimination of withholding under an applicable treaty or that such payments are
effectively connected with the conduct of a U.S. trade or business. A non-U.S.
holder that is subject to the withholding tax should consult its own tax
advisers as to whether it can obtain a refund for all or a portion of the
withholding tax on the grounds that the liquidated damages qualify for the
exemption applicable to interests (described above) within the meaning of the
Code or some other grounds.
</FONT>
<P align="left"><FONT size="2"><B>Conversion of the Notes</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A non-U.S. holder generally will not recognize any income, gain or loss on
converting a note into common stock. Any gain recognized as a result of the
holder&#146;s receipt of cash in lieu of a fractional share of stock would also
generally not be subject to U.S. federal income tax. See &#147;&#151; Sale, Exchange or
Redemption of Notes or Common Stock,&#148; below.
</FONT>

<P align="left"><FONT size="2"><B>Dividends</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any dividends paid to you with respect to our common stock (and any deemed
dividends resulting from certain adjustments, or failure to make adjustments,
to the number of shares of common stock to be issued on conversion, see &#147;&#151; U.S.
Holders &#151; Constructive Dividend&#148; above) will be subject to withholding tax at a
30% rate or such lower rate as may be specified by an applicable income tax
treaty. However, dividends that are effectively connected with the conduct of
a trade or business within the United States are not subject to the withholding
tax, but instead are subject to U.S. federal income tax on a net income basis
at applicable graduated individual or corporate rates. Certain certification
and disclosure requirements must be complied with in order for effectively
connected income to be exempt from withholding. Any such effectively connected
dividends received by a foreign corporation may, under certain circumstances,
be subject to an additional branch profits tax at a 30% rate or such lower rate
as may be specified by an applicable income tax treaty. A non-U.S. holder of
common stock who wishes to claim the benefit of an applicable treaty rate is
required to satisfy applicable certification and other requirements. If you
are eligible for a reduced rate of U.S. withholding tax pursuant to an income
tax treaty, you may obtain a refund of any excess amounts withheld by filing an
appropriate claim for refund with the IRS.
</FONT>


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<P align="left"><FONT size="2"><B>Sale, Exchange or Redemption of Notes or Common Stock</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any gain realized upon the sale, exchange, redemption or other disposition
of a note or share of common stock generally will not be subject to U.S.
federal income tax unless:
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">that gain is effectively connected with the conduct of a trade
or business in the United States by you,</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">you are an individual who is present in the United States for
183&nbsp;days or more in the taxable year of that disposition, and certain
other conditions are met, or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">we are or have been a &#147;U.S. real property holding corporation&#148;
for U.S. federal income tax purposes.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A non-U.S. holder whose gain is described in the first bullet point above
will be subject to U.S. federal income tax on the net gain derived from the
sale at the applicable graduated rate(s). A corporate non-U.S. holder whose
gain is described in the first bullet point above may also be subject to a
branch profits tax at a 30% rate or a lower rate if an income tax treaty
applies. An individual non-U.S. holder described in the second bullet point
above will be subject to a flat 30% U.S. federal income tax on the gain derived
from the sale, which may be offset by U.S. source capital losses, even though
the holder is not considered a resident of the United States.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe we are not and do not anticipate becoming a U.S. real property
holding corporation for U.S. federal income tax purposes. However, there can
be no assurances that we will not become a U.S. real property holding
corporation in the future.
</FONT>

<P align="left"><FONT size="2"><B>U.S. Federal Estate Tax</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The U.S. federal estate tax will not apply to notes owned by you at the
time of your death, provided that (1)&nbsp;you do not own 10% or more of the total
combined voting power of all classes of our voting stock (within the meaning of
the Code and the Treasury regulations) and (2)&nbsp;interest on the note would not
have been, if received at the time of your death, effectively connected with
your conduct of a trade or business in the United States. However, common
stock held by you at the time of your death will be included in your gross
estate for U.S. federal estate tax purposes unless an applicable estate tax
treaty provides otherwise. Noteholders that are individuals should be aware
that there have been recent amendments to the U.S. federal estate tax rules,
and such persons should consult with their tax advisers before considering an
investment in the notes.
</FONT>

<P align="left"><FONT size="2"><B>Information Reporting and Backup Withholding</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If you are a U.S. holder, in general, information reporting requirements
will apply to certain payments of principal and interest on the notes,
dividends paid on the common stock, and the proceeds of sale of a note or share
of common stock unless you are an exempt recipient (such as a corporation).
Backup withholding tax will apply to such payments if you fail to provide your
taxpayer identification number or certification of exempt status or fail to
report in full dividend and interest income. The backup withholding rate for
2003 is 28%.
</FONT>



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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If you are a non-U.S. holder, in general, you will not be subject to
backup withholding and information reporting with respect to payments that we
make to you provided that we do not have actual knowledge or reason to know
that you are a U.S. person and you have given us the statement described above
under &#147;&#151; Non-U.S. Holders &#151; Payment of Interest.&#148; In addition, you will not be
subject to backup withholding or information reporting with respect to the
proceeds of the sale of a note or share of common stock within the United
States or conducted through certain U.S.-related financial intermediaries, if
the payor receives the statement described above and does not have actual
knowledge or reason to know that you are a U.S. person, as defined under the
Code, or you otherwise establish an exemption. However, we may be required to
report annually to the IRS and to you the amount of, and the tax withheld, if
any, with respect to, any interest or dividends paid to you, regardless of
whether any tax was actually withheld. Copies of these information returns may
also be made available under the provisions of a specific treaty or agreement
to the tax authorities of the country in which the non-U.S. holder resides.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any amounts withheld under the backup withholding rules will be allowed as
a refund or a credit against your U.S. federal income tax liability provided
the required information is furnished timely to the IRS.
</FONT>

<!-- link1 "SELLING SECURITYHOLDERS" -->
<DIV align="left"><A NAME="009"></A></DIV>
<P align="center"><FONT size="2"><B>SELLING SECURITYHOLDERS</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The notes were originally issued by us in a private placement to Merrill
Lynch Pierce, Fenner &#038; Smith Incorporated and Raymond James &#038; Associates, Inc.
and were simultaneously resold by the initial purchasers, in transactions
exempt from the registration requirements of the Securities Act, to persons
reasonably believed by such initial purchasers to be &#147;qualified institutional
buyers&#148; (as defined in Rule&nbsp;144A under the Securities Act). Each institution
that purchased the notes from the initial purchasers and who has provided us
with a questionnaire setting forth the information specified below. In
addition, we are registering 129,935 shares of common stock for resale by the
selling securityholder, Raytheon, upon the exercise of the warrant we issued to
Raytheon. The selling securityholders, including their transferees, pledgees,
donees and successors (collectively, a &#147;selling securityholder&#148;), may from time
to time offer and sell pursuant to this prospectus or a supplement hereto any
or all of the notes held by that selling securityholder and common stock
underlying the notes or the Raytheon warrant.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth information as of September&nbsp;2, 2003, with
respect to the selling securityholders and the principal amounts of notes
beneficially owned by each selling securityholder that may be offered under
this prospectus. This information is based on information provided by or on
behalf of the selling securityholder pursuant to the questionnaires referred to
above. No holder of the notes may sell the notes or shares without furnishing
to us a questionnaire setting forth the information specified below. However,
as of the date of this prospectus, not every holder has provided to us a
questionnaire. Therefore, the heading &#147;Other&#148; in the &#147;Name&#148; column below
represents the notes and shares held by holders who have not yet returned to us
their questionnaire. In addition, with respect to Raytheon, the table sets
forth the number of shares of common stock held by it that may from time to
time be offered for resale by it under this prospectus.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The selling securityholder may offer all, some or none of the notes or
common stock underlying the notes or the Raytheon warrant. In addition, the
selling securityholder may have sold, transferred or otherwise disposed of all
or a portion of their notes since the date on which they
</FONT>


<P align="center"><FONT size="2">56</FONT>




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<P align="left"><FONT size="2">provided the information regarding their notes in transactions exempt form the
registration requirements of the Securities Act. Based upon information
provided by the selling securityholders, no selling securityholder beneficially
owns one percent or more of our common stock assuming conversion of the selling
securityholder&#146;s notes, except as otherwise indicated in the table below.
Based upon information provided by the selling securityholder, none of the
selling security holders nor any of their affiliates, officers, directors or
principal equity holders, has held any position or office or has had any
material relationship with us within the past three years.
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Information concerning the selling securityholder may change from time to
time and any changed information will be set forth in post-effective amendments
to the registration statement of which this prospectus is apart. In addition,
the conversion rate and, therefore, the number of shares of common stock
issuable upon conversion of the notes, is subject to adjustment under certain
circumstances. The information is based on information provided by or on
behalf of the selling securityholders.
</FONT>




<DIV align="left"></DIV>
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    <TD width="7%">&nbsp;</TD>
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    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
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    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
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    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
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    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
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</TR>
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    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
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</TR>
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    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
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    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Shares of Common</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Principal Amount of</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Stock Beneficially</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Notes Beneficially</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Percentage of Notes</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Owned Before the</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Common Stock</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Name</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Offered</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Outstanding</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Offering<SUP>(1)</SUP></B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Offered<SUP>(2)</SUP></B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">AIG
DKR SouthShore Oasis Holdings Fund Ltd.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">3,000,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.19</FONT></TD>
    <TD><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">75,515</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Akela
Capital Master Fund, Ltd.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2"></FONT></TD>
    <TD align="right"><FONT size="2">21,000,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8.33</FONT></TD>
    <TD><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">528,607</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Amaranth LLC</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2"></FONT></TD>
    <TD align="right"><FONT size="2">34,118,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">13.54</FONT></TD>
    <TD><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">858,811</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Badays Global Investors
Diversified Alpha Plus
Funds</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">125,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,146</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">CNH CA Master Account,
L.P.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,000,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">50,343</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">DBAG London</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">57,500,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">22.82</FONT></TD>
    <TD><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,447,378</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">D.E. Shaw Investment
Group, L.P.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">300,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7,551</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">D.E. Shaw Valence
Portfolios, L.P.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,200,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">30,206</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Forest Fulcrum Fund LP</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">150,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,775</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Forest Global
Convertible Fund, Ltd.,
Class&nbsp;A-5</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">700,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">17,620</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Forest Multi-Strategy
Master Fund SPC, on
behalf of its
Multi-Strategy Segregated
Portfolio</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">400,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">10,068</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">LLT Limited</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,517</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Lyxor/Forest Fund Ltd.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">350,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">8,810</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>

<BR clear="all">
<P align="right"><FONT size="2">&#091;Additional columns below&#093;</FONT>
<P align="left"><FONT size="2">&#091;Continued from above table, first column(s) repeated&#093;</FONT>


<TABLE cellspacing="0" border="0" cellpadding="0" width="65%">
<TR valign="bottom">
    <TD width="41%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Common Stock Owned After</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Completion of
Offering<SUP>(3)</SUP></B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Exercise Shares</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Name</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Offered</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Number of Shares</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Percentage</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>








<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">AIG
DKR SouthShore Oasis Holdings Fund Ltd.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2"></FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
   <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
   <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2"></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Akela
Capital Master Fund, Ltd.</FONT></DIV></TD>
 <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>







<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Amaranth LLC</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Badays Global Investors
Diversified Alpha Plus
Funds</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">CNH CA Master Account,
L.P.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">DBAG London</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">D.E. Shaw Investment
Group, L.P.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">D.E. Shaw Valence
Portfolios, L.P.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Forest Fulcrum Fund LP</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Forest Global
Convertible Fund, Ltd.,
Class&nbsp;A-5</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Forest Multi-Strategy
Master Fund SPC, on
behalf of its
Multi-Strategy Segregated
Portfolio</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">LLT Limited</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Lyxor/Forest Fund Ltd.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>

<P align="center"><FONT size="2">57</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>


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    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Shares of Common</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
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    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Principal Amount of</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Stock Beneficially</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Notes Beneficially</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Percentage of Notes</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Owned Before the</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Common Stock</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Name</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Offered</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Outstanding</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Offering<SUP>(1)</SUP></B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Offered<SUP>(2)</SUP></B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Morgan Stanley
Convertible Securities
Trust</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,500,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">62,929</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Polaris Vega Fund L.P.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,500,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">62,929</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Raytheon
Aircraft Credit Company (4)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">129,935</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">129,935</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">RBC Alternative Assets LP</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">75,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,887</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Relay 11 Holdings Co.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">75,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,887</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Southern
Farm Bureau Life Insurance</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,000,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">50,343</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Sphinx Convertible
Arbitrage SPC</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">75,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,887</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Sunrise Partners Limited
Partnership</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9,482,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3.76</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">238,678</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Univest Convertible
Arbitrage Fund Ltd.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,517</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Value Line Aggressive
Income Trust</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">500,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12,585</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Value Line Income and
Growth Fund, Inc.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,000,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">25,171</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Value Line Convertible
Fund, Inc.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">500,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12,585</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Vanguard Convertible
Securities Fund, Inc.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,550,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.60</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">164,875</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Xavex Convertible
Arbitrage 4 Fund</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,517</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Zurich Instructional
Benchmarks Master Fund
Ltd.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">250,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">6,292</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other
</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">105,350,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">41.81</FONT></TD>
    <TD align="left"><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,651,848</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>

<BR clear="all">
<P align="right"><FONT size="2">&#091;Additional columns below&#093;</FONT>
<P align="left"><FONT size="2">&#091;Continued from above table, first column(s) repeated&#093;</FONT>

<TABLE cellspacing="0" border="0" cellpadding="0" width="95%">
<TR valign="bottom">

<TD width="82%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Common Stock Owned After</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Completion of Offering<SUP>(3)</SUP></B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Exercise Shares</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Name</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Offered</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Number of Shares</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Percentage</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Morgan Stanley
Convertible Securities
Trust</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Polaris Vega Fund L.P.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>



<TR valign="bottom">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Raytheon
Aircraft Credit Company (4)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2"></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>





<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">RBC Alternative Assets LP</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Relay 11 Holdings Co.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>



<TR valign="bottom" bgcolor="#eeeeee">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Southern
Farm Bureau Life Insurance</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>


<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Sphinx Convertible
Arbitrage SPC</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Sunrise Partners Limited
Partnership</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Univest Convertible
Arbitrage Fund Ltd.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Value Line Aggressive
Income Trust</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Value Line Income and
Growth Fund, Inc.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Value Line Convertible
Fund, Inc.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Vanguard Convertible
Securities Fund, Inc.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Xavex Convertible
Arbitrage 4 Fund</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Zurich Instructional
Benchmarks Master Fund
Ltd.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Other</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>

<P>
<HR size="1" width="18%" align="left" noshade>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">*</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Less than 1%</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">                                                       </FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><SUP>(1)</SUP></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Figures in this column do not include the shares of common stock issuable
upon conversion of the notes listed in the column to the right.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">                                                        </FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">                                                       </FONT></TD>
</TR>


<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><SUP>(2)</SUP></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Represents shares of common stock issuable upon conversion of the notes
that are beneficially owned and offered by the selling securityholder.
The number of shares issuable upon conversion is subject to adjustment
under certain circumstances.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">                                                        </FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">                                                       </FONT></TD>
</TR>

<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><SUP>(3)</SUP></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Assumes that all of the notes and/or all of the common stock into which
the notes are convertible are sold.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">                                                        </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">                                                       </FONT></TD>
</TR>

<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2"><SUP>(4)</SUP></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Represents shares underlying
warrants previously issued to Raytheon Aircraft &#38; Credit Company.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">                                                        </FONT></TD>
</TR>

</TABLE>


<P align="center"><FONT size="2">58</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>




<!-- link1 " PLAN OF DISTRIBUTION" -->
<DIV align="left"><A NAME="010"></A></DIV>
<P align="center"><FONT size="2"><B>PLAN OF DISTRIBUTION</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The notes and the common stock are being registered to permit resale of
theses securities by the selling securityholders from time to time after the
date of this prospectus. We have agreed, among other things, to bear the
expenses (other than underwriting discounts and selling commissions) incurred
in connection with the registration and sale of the notes and the common stock
covered by this prospectus, except Raytheon&#146;s pro-rata portion, which Raytheon
has agreed to pay. We will not receive any of the proceeds from the offering
of the notes or the common stock by the selling securityholders.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The selling securityholders and their successors, including their
transferees, pledgees or donees or their successors, may sell the notes and the
common stock into which the notes are convertible directly to purchasers or
through underwriters, broker-dealers or agents, who may receive compensation in
the form of discounts, concessions or commissions from the selling
securityholders or the purchasers. These discounts, concessions or commissions
as to any particular underwriter, broker-dealer or agent may be in excess of
those customary in the types of transactions involved.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The notes and the common stock into which the notes are convertible may be
sold in one or more transactions at fixed prices, at prevailing market prices,
at varying prices determined at the time of sale, or at negotiated prices.
These sales may be effected in cross, block or other types of transactions:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">on any national securities exchange or U.S. inter-dealer
system of a registered national securities association on which the
notes or the common stock may be listed or quoted at the time of
sale;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">in the over-the-counter market;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">in transactions otherwise than on these exchanges or in the
over-the-counter market;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">through the writing of options, whether the options are
listed on an options exchange or otherwise;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">through the settlement of short sales; or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">through any other legally available means.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our common stock is listed for trading on the Nasdaq National Market under
the symbol &#147;Mesa.&#148;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with the sale of the notes and the common stock underlying
the notes or the Raytheon warrant, the selling securityholders may enter into
hedging transactions with broker-dealers or other financial institutions, which
may in turn engage in short sales of the notes or the underlying common stock
in the course of hedging the positions they assume. The selling
securityholders may also sell the notes or the underlying common stock short
and deliver these securities to close out their short positions, or loan or
pledge the notes or the underlying common stock to broker-dealers that in turn
may sell those securities.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The aggregate proceeds to the selling securityholders from the sale of the
notes or underlying common stock offered by them will be the purchase price of
the notes or common stock less
</FONT>
<P align="center"><FONT size="2">59</FONT>
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<P align="left"><FONT size="2">discounts and commissions, if any. Each of the selling securityholders
reserves the right to accept and, together with their agents from time to time,
to reject, in whole or in part, any proposed purchase of notes or underlying
common stock to be made directly or through agents.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In order to comply with the securities laws of some states, if applicable,
the notes and underlying common stock may be sold in these jurisdictions only
through registered or licensed brokers or dealers. In addition, in some states
the notes and underlying common stock may not be sold unless they have been
registered or qualified for sale or an exemption from registration or
qualification requirements is available and is complied with.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The selling securityholders and any underwriters, broker-dealers or agents
that participate in the sale of the notes and underlying common stock may be
&#147;underwriters&#148; within the meaning of Section&nbsp;2(11) of the Securities Act. Any
discounts, commissions, concessions or profit they earn on any resale of the
shares may be underwriting discounts and commissions under the Securities Act.
Selling securityholders who are &#147;underwriters&#148; within the meaning of Section
2(11) of the Securities Act will be subject to the prospectus delivery
requirements of the Securities Act. The selling securityholders have
acknowledged that they understand their obligations to comply with the
provisions of the Exchange Act and the rules thereunder relating to stock
manipulation, particularly Regulation&nbsp;M.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, any securities covered by this prospectus that qualify for
sale pursuant to Rule&nbsp;144 or Rule&nbsp;144A of the Securities Act may be sold under
Rule&nbsp;144 or Rule&nbsp;144A rather than pursuant to this prospectus.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To the extent required, the specific notes or common stock to be sold, the
names of the selling securityholders, the respective purchase prices and public
offering prices, the names of any agent, dealer or underwriter, and any
applicable commissions or discounts with respect to a particular offer will be
set forth in an accompanying prospectus supplement or, if appropriate, a
post-effective amendment to the registration statement of which this prospectus
is a part.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We entered into a registration rights agreement for the benefit of holders
of the notes to register their notes and common stock under applicable federal
and state securities laws under specific circumstances and at specific times.
The registration rights agreement provides for cross-indemnification of the
selling securityholders and us and their and our respective directors, officers
and controlling persons against specified liabilities in connection with the
offer and sale of the notes and the common stock, including liabilities under
the Securities Act. Similar indemnification obligations exist in our agreement
with Raytheon.
</FONT>
<!-- link1 " LEGAL MATTERS" -->
<DIV align="left"><A NAME="011"></A></DIV>
<P align="center"><FONT size="2"><B>LEGAL MATTERS</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The validity of the notes and shares of common stock issuable upon
conversion of the notes will be passed upon for us by Squire, Sanders &#038; Dempsey
L.L.P., 40 North Central Avenue, Suite&nbsp;2700, Phoenix, Arizona 85004.
</FONT>
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<DIV align="left"><A NAME="012"></A></DIV>
<P align="center"><FONT size="2"><B>EXPERTS</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
financial statements incorporated in this prospectus by reference from
the Company&#146;s Current Report on Form&nbsp;8-K filed on June&nbsp;10, 2003 with the
Securities and Exchange Commission have been audited by Deloitte &#038; Touche LLP, independent auditors, as
stated in their report, which is incorporated herein by reference, and have
been so incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
</FONT>

<P align="center"><FONT size="2">60</FONT>
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<P>
<DIV ALIGN="LEFT"><FONT SIZE="2"><B>WE HAVE NOT AUTHORIZED ANY PERSON
TO MAKE A STATEMENT THAT DIFFERS FROM WHAT IS IN THIS PROSPECTUS. IF
ANY PERSON DOES MAKE A STATEMENT THAT DIFFERS FROM WHAT IS IN THIS
PROSPECTUS, YOU SHOULD NOT RELY ON IT. THIS PROSPECTUS IS NOT AN
OFFER TO SELL, NOR IS IT SEEKING AN OFFER TO BUY, THESE SECURITIES IN ANY STATE IN WHICH THE OFFER OR
SALE IS NOT PERMITTED. THE INFORMATION IN THIS PROSPECTUS IS COMPLETE
AND ACCURATE AS OF ITS DATE, BUT THE INFORMATION MAY CHANGE AFTER
THAT DATE.</B></FONT></DIV>

<P align="center"><FONT size="2"><B>$252,000,000</B>
</FONT>

<P align="center"><FONT size="2"><B>&#091;MESA AIR GROUP LOGO&#093;</B>
</FONT>

<P align="center"><FONT size="2"><B>SENIOR CONVERTIBLE<BR>
NOTES<BR>
DUE 2023</B>
</FONT>

<P align="center"><FONT size="2"><B>AND</B>
</FONT>

<P align="center"><FONT size="2"><B>10,011,204 SHARES OF COMMON STOCK<BR>
ISSUABLE UPON CONVERSION THEREOF<BR>
____________________</B>
</FONT>

<P align="center"><FONT size="2"><B>PROSPECTUS<BR>
____________________</B>
</FONT>


<br>
<br>
<br>
<br>
<br>
<font size="2"><b>Table of Contents</b>
</font>

<p>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="92%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">TABLE OF ADDITIONAL REGISTRANTS UNDER REGISTRATION STATEMENT ON FORM S-3</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">
WHERE YOU CAN FIND MORE INFORMATION</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">INCORPORATION OF CERTAIN INFORMATION BY REFERENCE</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">PROSPECTUS SUMMARY</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">i</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">THE NOTES</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">RISK FACTORS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">RATIO OF EARNINGS TO FIXED CHARGES</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">USE OF PROCEEDS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">26</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">DESCRIPTION OF CAPITAL STOCK</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">46</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">48</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">SELLING SECURITYHOLDERS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">56</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">PLAN OF DISTRIBUTION</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">59</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">LEGAL MATTERS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">60</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">EXPERTS</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">60</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>


<P align="center"><FONT size="2">December&nbsp;20, 2003</FONT>
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