1 EXHIBIT 4.8 AIR SOUTH AIRLINES, INC. WARRANT PURCHASE AGREEMENT 2 TABLE OF CONTENTS

1
EXHIBIT 4.8

AIR SOUTH AIRLINES, INC.
WARRANT PURCHASE AGREEMENT
2
TABLE OF CONTENTS

Page

Section 1. Amount and Terms of the Guarantee; Purchase and Sale of Warrant. . . . 1.
1.1 The Guarantee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.
1.2 Issuance of Warrant. . . . . . . . . . . . . . . . . . . . . . . . . . 1.
1.3 Exercise of Warrant. . . . . . . . . . . . . . . . . . . . . . . . . . 1.

Section 2. The Closings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.
2.1 Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.
2.2 Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.

Section 3. Representations and Warranties of the Company. . . . . . . . . . . . . 2.
3.1 Organization, Good Standing, Qualification . . . . . . . . . . . . . . 2.
3.2 Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.
3.3 Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . 2.
3.4 Compliance With Other Instruments. . . . . . . . . . . . . . . . . . . 2.
3.5 Governmental Consents. . . . . . . . . . . . . . . . . . . . . . . . . 3.
3.6 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.
3.7 Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.

Section 4. Representations and Warranties of the Purchaser. . . . . . . . . . . . 3.
4.1 Requisite Power and Authority. . . . . . . . . . . . . . . . . . . . . 3.
4.2 Purchase for Own Account . . . . . . . . . . . . . . . . . . . . . . . 3.
4.3 Information and Sophistication . . . . . . . . . . . . . . . . . . . . 4.
4.4 Ability to Bear Economic Risk. . . . . . . . . . . . . . . . . . . . . 4.
4.5 Further Limitations on Disposition . . . . . . . . . . . . . . . . . . 4.
4.6 Experience . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.

Section 5. Registration Rights. . . . . . . . . . . . . . . . . . . . . . . . . . 5.
5.1 Certain defined Terms. . . . . . . . . . . . . . . . . . . . . . . . . 5.
5.2 Demand Registration. . . . . . . . . . . . . . . . . . . . . . . . . . 5.
5.3 Piggyback Registrations. . . . . . . . . . . . . . . . . . . . . . . . 6.
5.4 Form S-3 Registration. . . . . . . . . . . . . . . . . . . . . . . . . 7.
5.5 Obligation of the Company. . . . . . . . . . . . . . . . . . . . . . . 8.
5.6 Furnish Information. . . . . . . . . . . . . . . . . . . . . . . . . . 9.
5.7 Delay of Registration. . . . . . . . . . . . . . . . . . . . . . . . . 10.
5.8 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.
5.9 Assignment of Registration Rights. . . . . . . . . . . . . . . . . . . 12.
5.10 "Market Stand-Off" Agreement . . . . . . . . . . . . . . . . . . . . . 12.

6. Covenants Of The Company. . . . . . . . . . . . . . . . . . . . . . . . . . 13.
6.1 Basic Financial Information and Reporting. . . . . . . . . . . . . . . 13.
6.2 Inspection Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . 14.

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TABLE OF CONTENTS
(continued)

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6.3 Confidentiality of Records. . . . . . . . . . . . 14.
6.4 Reservation of Common Stock . . . . . . . . . . . 14.

Section 7. Miscellaneous . . . . . . . . . . . . . . . . . . 14.
7.1 Amendment to Warrant. . . . . . . . . . . . . . . 14.
7.2 Binding Agreement . . . . . . . . . . . . . . . . 14.
7.3 Governing Law . . . . . . . . . . . . . . . . . . 15.
7.4 Counterparts. . . . . . . . . . . . . . . . . . . 15.
7.5 Titles and Subtitles. . . . . . . . . . . . . . . 15.
7.6 Notices . . . . . . . . . . . . . . . . . . . . . 15.
7.7 Separability. . . . . . . . . . . . . . . . . . . 15.
7.8 Modification; Waiver. . . . . . . . . . . . . . . 15.
7.9 Attorneys' Fees . . . . . . . . . . . . . . . . . 15.
7.10 Delays or Omissions . . . . . . . . . . . . . . . 15.

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AIR SOUTH AIRLINES, INC.
WARRANT PURCHASE AGREEMENT

THIS WARRANT PURCHASE AGREEMENT ("Agreement"), is entered into as of
April 26, 1996 between AIR SOUTH AIRLINES, INC., a Delaware corporation (the
"Company"), and XXXXXXXXX & XXXXX GROUP and its permitted successors and
assigns (the "Purchaser").

SECTION 1. AMOUNT AND TERMS OF THE GUARANTEE; PURCHASE AND SALE OF WARRANT

1.1 The Guarantee. Subject to the terms of this Agreement, the
Purchaser shall guarantee and promise to pay to National Bank of South Carolina
("Lender") or its order, the indebtedness of the Company to the Lender in the
amount of, and on the terms and conditions set forth in a limited unconditional
guaranty in the form attached hereto as Exhibit A (the "Guaranty").

1.2 Issuance of Warrant. In consideration of the Guaranty, the
Company will deliver to the Purchaser a warrant to purchase shares of Series A
Preferred Stock, par value $0.001 per share of the Company (the "Series A
Preferred Stock") in the form attached hereto as Exhibit B (the "Warrant"),
which Warrant will be exercisable into four hundred thousand (400,000) shares
of Series A Preferred Stock at a purchase price of $2.00 per share (the
"Exercise Price"). The number of the shares of Series A Preferred Stock (or
other capital stock) issuable upon exercise of the Warrant (collectively, the
"Warrant Shares") and Exercise Price are subject to adjustment as provided in
the Warrant.

1.3 Exercise of Warrant. The Purchaser (or any "Holder" as such
term is defined in the Warrant) may exercise the Warrant in whole or in part,
at any time or from time to time on any business day prior to the Expiration
Time (as defined in the Warrant) in accordance with the Warrant.

SECTION 2. THE CLOSINGS

2.1 Closing Date. The closing (the "Closing") of the delivery of
the Guarantee and the issuance of the Warrant shall be held on April 26, 1996
at 9:00 a.m. at the offices of Xxxxxx Godward Xxxxxx Xxxxxxxxx & Xxxxx, Five
Palo Alto Square, 0000 Xx Xxxxxx Xxxx, Xxxx Xxxx, XX 00000-0000, or at such
other time or place as the Company and the Purchaser shall agree (the "Closing
Date").

2.2 Delivery. At the Closing, the Company shall deliver to the
Purchaser the Warrant duly executed by the Company, and the Purchaser shall
deliver to the Company the Guaranty executed by the Purchaser.

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SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company hereby represents and warrants to and for the benefit of
the Purchaser as follows:

3.1 Organization, Good Standing, Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the state of Delaware. The Company has full power and authority to own
and operate its properties and assets, and to carry on its business as
currently conducted and as currently proposed to be conducted. The Company is
duly qualified and is authorized to do business and is in good standing as a
foreign corporation in all jurisdictions in which the nature of its activities
and of its properties (both owned and leased) makes such qualification
necessary, except for those jurisdictions in which failure to do so would not
have a material adverse effect on the Company or its business.

3.2 Authorization. All corporate action on the part of the
Company, its directors and its stockholders necessary for the authorization,
execution, delivery and performance of this Agreement by the Company and the
performance of the Company's obligations hereunder, including the issuance and
delivery of the Warrant has been taken or will be taken prior to the Closing.
This Agreement and the Warrant, when executed and delivered by the Company,
shall constitute valid and binding obligations of the Company enforceable in
accordance with their terms, except as rights to indemnity may be limited by
applicable laws and except as enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, arrangement, moratorium or other
similar laws affecting creditors' rights and subject to general equity
principles and to limitations on availability of equitable relief, including
specific performance. The Series A Preferred Stock issuable upon exercise of
the Warrant, and the Common Stock issuable upon the conversion of the Series A
Preferred Stock has been duly and validly reserved and, when issued in
compliance with the provisions of this Agreement, the Warrant and the
Certificate of Incorporation of the Company (as the same may hereinafter be
amended, the "Certificate of Incorporation"), will be validly issued, fully
paid and nonassessable and free of any liens or encumbrances. Upon a Public
Offering Closing (as defined in Section 7 of this Agreement), the Common Stock
then issuable upon exercise of the Warrant will be duly and validly reserved
and when issued in compliance with the provisions of this Agreement, the
Warrant and the Certificate of Incorporation, will be validly issued, fully
paid and nonassessable and free and clear of any liens or encumbrances.

3.3 Material Contracts. All material contracts, agreements and
instruments to which the Company is a party are in full force and effect in all
material respects, and are valid, binding and enforceable by the Company in
accordance with their respective terms, subject to the effect of applicable
bankruptcy and other similar laws affecting the rights of creditors generally,
and rules of law concerning equitable remedies and no event of default, and no
event which, with the passing of time or the giving of notice, or both, would
constitute an event of default has occurred or is continuing under any such
contract, agreement or instrument.

3.4 Compliance With Other Instruments. The Company is not in
violation of any term of its Certificate of Incorporation, By-Laws or any
statute, rule or regulation applicable to

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the Company. The execution, delivery and performance of this Agreement, the
creation and issuance of the Warrant and the issuance of the shares of Series
A Preferred Stock pursuant to an exercise of the Warrant (and any shares of
Common Stock upon either the conversion of the Series A Preferred Stock or an
exercise of the Warrant after a Public Offering Closing) in accordance with
the Certificate of Incorporation will not result in any such violation, or be
in conflict with or constitute a default under any such term, or result in the
creation of any mortgage, pledge, lien, encumbrance, or charge upon any of the
properties or assets of the Company or contravene any provision of, or
constitute a default under, any indenture, mortgage, contract or other
instrument to which it is a party or by which it is bound.

3.5 Governmental Consents. All consents, approvals, orders, or
authorizations of, or registrations, qualifications, designations,
declarations, or filings with, any governmental authority, required on the part
of the Company in accordance with the valid execution and delivery of this
Agreement, the offer, sale or issuance of the Warrant and the capital stock
issuable upon exercise of the Warrant, or the consummation of any other
transaction contemplated have been obtained, except for the filing of notices
pursuant to Regulation D under the Securities Exchange Act of 1933, as amended,
(the "Securities Act"), and any filing required under applicable state
securities laws which will be effective by the time required thereby.

3.6 Litigation. There are no actions, suits, audits,
investigations or proceedings pending or to the knowledge of the Company,
threatened against or affecting the Company in any court or before any
governmental commission, board or authority which, if adversely determined,
will have a material adverse effect on business, financial condition or
prospects of the Company or the ability of the Company to perform its
obligations under this Agreement.

3.7 Offering. Assuming the accuracy of the representations and
warranties of the Purchaser contained in Section 4 hereof, the offer, issue,
and sale of the Warrant are and will be exempt from the registration and
prospectus delivery requirements of the Securities Act, and have been
registered or qualified (or are exempt from registration and qualification)
under the registration, permit, or qualification requirements of all applicable
state securities laws.

SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

4.1 Requisite Power and Authority. The Purchaser has all
necessary power and authority under all applicable provisions of law to execute
and deliver this Agreement and to carry out its provisions. All actions on the
Purchaser's part required for the lawful execution and delivery of this
Agreement has been or will be effectively taken prior to the Closing. Upon
execution and delivery of this Agreement, this Agreement will be a valid and
binding obligation of the Purchaser, enforceable in accordance with its terms,
except (i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application affecting enforcement of
creditors' rights and (ii) general principles of equity that restrict the
availability of equitable remedies.

4.2 Purchase for Own Account. The Purchaser represents that it is
acquiring the Warrant and the capital stock issuable upon exercise of the
Warrant (collectively, the

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"Securities") solely for its own account and beneficial interest for investment
and not for sale or with a view to distribution of the Securities or any part
thereof, has no present intention of selling (in connection with a distribution
or otherwise), granting any participation in, or otherwise distributing the
same, and does not currently have reason to anticipate a change in such
intention.

4.3 Information and Sophistication. The Purchaser acknowledges
having received all the information that it has requested from the Company and
considers necessary or appropriate for deciding whether to acquire the Warrant.
The Purchaser represents that it has had an opportunity to ask questions and
receive answers from the Company regarding the terms and conditions of the
offering of the Warrant and to obtain any additional information necessary to
verify the accuracy of the information given to the Purchaser. The Purchaser
further represents that it has sufficient knowledge and experience in financial
and business matters so as to be capable of evaluating the merits and risk of
this investment.

4.4 Ability to Bear Economic Risk. The Purchaser acknowledges
that investment in the Warrant involves a high degree of risk, and represents
that it is able, without material impairment of financial condition, to hold
the Securities for an indefinite period of time and to suffer a complete loss
of its investment.

4.5 Further Limitations on Disposition. Without in any way
limiting the representations set forth above, the Purchaser further agrees not
to make any disposition of all or any portion of the Securities unless and
until:

(a) There is then in effect a Registration Statement
under the Securities Act covering such proposed disposition and such
disposition is made in accordance with such Registration Statement; or

(b) (i) The Purchaser shall have notified the Company of
the proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and (ii)
if reasonably requested by the Company, the Purchaser shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company,
that such disposition will not require registration under the Securities Act.

(c) Notwithstanding the provisions of paragraphs (a) and
(b) above, no such registration statement or opinion of counsel shall be
necessary for a transfer by the Purchaser to (i) an underwriter acceptable to
the Company for immediate exercise by such underwriter in connection with a
fully underwritten public offering of the Company's Common Stock underlying
this Warrant (ii) a partner (or retired partner) or "affiliate" (as defined
under the Securities Exchange Act of 1934) of Purchaser, or (iii) transfers by
gift, will or intestate succession to any spouse or lineal descendants or
ancestors of any such partner, retired partner or affiliate, if all transferees
agree in writing to be subject to the terms hereof to the same extent as if
they were a purchaser hereunder.

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4.6 Experience. The Purchaser is an "accredited investor" as such
term is defined in Rule 501 promulgated under the Securities Act.

SECTION 5. REGISTRATION RIGHTS.

5.1 CERTAIN DEFINED TERMS. Certain terms used but not defined in
this Section 5 are defined on Exhibit C to this Agreement.

5.2 Demand Registration.

(a) Subject to the conditions of this Section 5.2, if the
Company shall receive at any time after the later of April 1, 2000 and one
hundred twenty (120) days after the closing of the IPO a written request from
the Initiating Holders that the Company file a registration statement under the
Securities Act covering the registration of at least 50% of the Registrable
Securities held by such Initiating Holders, then the Company shall, within
thirty (30) days of the receipt thereof, give written notice of such request to
all Holders, and subject to the limitations of Section 5.2(b), effect, as soon
as practicable, the registration under the Securities Act.

(b) If the Initiating Holders intend to distribute the
Registrable Securities covered by their request by means of an underwriting,
they shall so advise the Company as a part of their request made pursuant to
this Section 5.2 and the Company shall include such information in the written
notice referred to in Section 5.2(a). In such event, the right of any Holder to
include such Holder's Registrable Securities in such registration shall be
conditioned upon such Holder's participation in such underwriting and the
inclusion of such Holder's Registrable Securities in the underwriting (unless
otherwise mutually agreed by a majority in interest of the Initiating Holders
and such Holder) to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting shall enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by a majority in interest of the Initiating
Holders (which underwriter or underwriters shall be reasonably acceptable to
the Company). Notwithstanding any other provision of this Section 5.2, if the
underwriter advises the Company in writing that marketing factors require a
limitation of the number of securities to be underwritten (including
Registrable Securities) then the Company shall so advise all Holders of
Registrable Securities which would otherwise be underwritten pursuant hereto,
and the number of shares that may be included in the underwriting shall be
allocated to the Holders of such Registrable Securities on a pro rata basis
based on the number of Registrable Securities held by all such Holders
(including the Initiating Holders). Any Registrable Securities excluded or
withdrawn from such underwriting shall be withdrawn from the registration.

(d) Notwithstanding the foregoing, if the Company shall
furnish to Holders requesting a registration statement pursuant to this Section
5.2, a certificate signed by the Chairman of the Board stating that in the
good faith judgment of the Board of Directors of the

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Company, it would be seriously detrimental to the Company and its stockholders
for such registration statement to be filed and it is therefore essential to
defer the filing of such registration statement, the Company shall have the
right to defer such filing for a period of not more than thirty (30) days after
receipt of the request of the Initiating Holders; provided that such right to
delay a request shall be exercised by the Company no more than once in any one
year period.

(e) All expenses incurred in connection with a
registration pursuant to this Section 5.2 (excluding underwriters' discounts
and commissions and fees for counsel for the Holders, which shall be paid by
the selling Holders pro rata with respect to their included shares), including
without limitation all registration, filing, qualification, printers' and
accounting fees, fees and disbursements of counsel for the Company, shall be
borne by the Company; provided, however, that the Company shall not be required
to pay for any expenses of any registration proceeding begun pursuant to
Section 5.2 if the registration request is subsequently withdrawn, unless the
withdrawal of the registration request results from either (a) intentional
actions by the Company outside the normal course of business that materially
reduce the feasibility of the registration proceeding, or (b) the discovery of
information about the Company that was not known at the time of the Initiating
Holders' request made pursuant to Section 5.2(a), and such information
materially reduces the feasibility of the registration proceeding. If the
Company is required to pay the registration expenses pursuant to this Section
5.2(e), then the Holders shall not forfeit their rights pursuant to this
Section 5.2 to a demand registration.

5.3 PIGGYBACK REGISTRATIONS.

(a) The Company shall notify all Holders in writing at
least thirty (30) days prior to the filing of any registration statement under
the Securities Act for purposes of a public offering of securities of the
Company (including, but not limited to, registration statements relating to
secondary offerings of securities of the Company, but excluding registration
statements relating to the IPO, employee benefit plans and corporate
reorganizations) and will afford each such Holder who would have been unable
to sell all of such Registrable Securities on an unrestricted basis pursuant to
Rule 144 promulgated under the Securities Act, during the four-week period
immediately preceding the effective date of the registration statement, an
opportunity to include in such registration statement all or part of such
Registrable Securities held by such Holder. Each Holder desiring to include in
any such registration statement all or any part of the Registrable Securities
held by it shall, within twenty (20) days after receipt of the above-described
notice from the Company, so notify the Company in writing. Such notice shall
state the intended method of disposition of the Registrable Securities by such
Holder. If a Holder decides not to include all of its Registrable Securities
in any registration statement thereafter filed by the Company, such Holder
shall nevertheless continue to have the right to include any Registrable
Securities in any subsequent registration statement or registration statements
as may be filed by the Company with respect to offerings of its securities, all
upon the terms and conditions set forth herein. Notwithstanding anything to
the contrary, the foregoing shall not apply to any registrations occurring on
or after the fifth anniversary of the IPO

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(b) If the registration statement under which the Company
gives notice under this Section 5.3 is for an underwritten offering, the
Company shall so advise the Holders. In such event, the right of any such
Holder to be included in a registration pursuant to this Section 5.3 shall be
conditioned upon such Holder's participation in such underwriting and the
inclusion of such Holder's Registrable Securities in the underwriting to the
extent provided herein. All Holders proposing to distribute their Registrable
Securities through such underwriting shall enter into an underwriting agreement
in customary form with the underwriter or underwriters selected for such
underwriting. Notwithstanding any other provision of the Agreement, if the
underwriter determines in good faith that marketing factors require a
limitation of the number of shares to be underwritten, the number of shares
that may be included in the underwriting shall be allocated, first, to the
Company; second, to the parties to that certain Investor's Rights Agreement, by
and among the Company and Xxxxxxxxx & Xxxxx Group, L.L.C. dated as of December
19, 1995 (as such agreement may be amended from time to time); third to the
Holders on a pro rata basis based on the total number of Registrable Securities
held by the Holders; and fourth, to any stockholder of the Company (other than
a Holder) on a pro rata basis. No such reduction shall reduce the securities
being offered by the Company for its own account to be included in the
registration and underwriting, except that in no event shall the amount of
securities of the selling Holders included in the registration be reduced below
twenty percent (20%) of the total amount of securities included in such
registration, unless such offering is the IPO and such registration does not
include shares of any other selling stockholders, in which event any or all of
the Registrable Securities of the Holders may be excluded in accordance with
the immediately preceding sentence. In no event will shares of any other
selling stockholder be included in such registration which would reduce the
number of shares which may be included by Holders without the written consent
of Holders of not less than fifty percent (50%) of the Registrable Securities
proposed to be sold in the offering

(c) The Company shall bear all fees and expenses incurred
in connection with any registration under this Section 5.3 (excluding
underwriters' discounts and commissions and fees for counsel for the Holders,
which shall be paid by the selling Holders pro rata with respect to their
included shares), including without limitation all registration, filing,
qualification, printers' and accounting fees, fees and disbursements of counsel
to the Company, and the reasonable fees and disbursements of a single counsel
to the selling Holders (which counsel shall also be counsel to the Company
unless counsel to the Company has a conflict of interest with respect to the
representation of any selling Holder or the underwriters object to the selling
Holders representation by Company counsel).

5.4 FORM S-3 REGISTRATION. In case the Company shall receive from
the Holders at least ten percent (10%) of the Registrable Securities a written
request or requests that the Company effect a registration on Form S-3 and any
related qualification or compliance with respect to all or a part of the
Registrable Securities owned by such Holder or Holders, the Company will:

(a) promptly give written notice of the proposed
registration, and any related qualification or compliance, to all other Holders
of Registrable Securities, and

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(b) If the registration statement under which the Company
gives notice under this Section 5.3 is for an underwritten offering, the Company
shall so advise the Holders. In such event, the right of any such Holder to be
included in a registration pursuant to this Section 5.3 shall be conditioned
upon such Holder's participation in such underwriting and the inclusion of such
Holder's Registrable Securities in the underwriting to the extent provided
herein. All Holders proposing to distribute their Registrable Securities
through such underwriting shall enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for such
underwriting. Notwithstanding any other provision of the Agreement, if the
underwriter determines in good faith that marketing factors require a
limitation of the number of shares to be underwritten, the number of shares
that may be included in the underwriting shall be allocated, first, to the
Company; second, to the parties to that certain Investor's Rights Agreement, by
and among the Company and Xxxxxxxxx & Xxxxx Group, L.L.C. dated as of December
19, 1995 (as such agreement may be amended from time to time); third to the
Holder on a pro rata basis based on the total number of Registrable Securities
held by the Holders; and fourth, to any stockholder of the Company (other than
a Holder) on a pro rata basis. No such reduction shall reduce the securities
being offered by the Company for its own account to be included in the
registration and underwriting, except that in no event shall the amount of
securities of the selling Holders included in the registration be reduced below
twenty percent (20%) of the total amount of securities included in such
registration, unless such offering is the IPO and such registration does not
include shares of any other selling stockholders, in which event any or all of
the Registrable Securities of the Holders may be excluded in accordance with
the immediately preceding sentence. In no event will shares of any other
selling stockholder be included in such registration which would reduce the
number of shares which may be included by Holders without the written consent
of Holders of not less than fifty percent (50%) of the Registrable Securities
proposed to be sold in the offering.

(a) promptly give written notice of the proposed
registration, and any related qualification or compliance, to all other Holders
of Registrable Securities; and

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(b) as soon as practicable, effect such registration and
all such qualifications and compliances as may be so requested and as would
permit or facilitate the sale and distribution of all or such portion of such
Holder's or Holders' Registrable Securities as are specified in such request,
together with all or such portion of the Registrable Securities of any other
Holder or Holders joining in such request as are specified in a written request
given within fifteen (15) days after receipt of written notice from the Company
pursuant to Section 5.4(a); provided, however, that the Company shall not be
obligated to effect any such registration, qualification or compliance pursuant
to this Section 5.4: (i) if Form S-3 is not available under the Securities Act
or rules or regulations promulgated thereunder for such offering by the
Holders; (ii) if the Holders, together with the holders of any other securities
of the Company entitled to inclusion in such registration, propose to sell
Registrable Securities and such other securities (if any) at an aggregate price
to the public of less than $500,000; (iii) if the Company shall furnish to the
Holders a certificate signed by the Chairman of the Board of Directors of the
Company stating that in the good faith judgment of the Board of Directors of
the Company, it would be seriously detrimental to the Company and its
stockholders for such Form S-3 Registration to be effected at such time, in
which event the Company shall have the right to defer the filing of the Form
S-3 registration statement for a period of not more than thirty (30) days after
receipt of the request of the Holder or Holders under this Section 5.4,
provided that, such right to defer the filing may be exercised by the Company
no more than once in any one year period; (iv) if the Company has, within the
six (6) month period preceding the date of such request, already effected two
(2) registrations on Form S-3 for the Holders pursuant to this Section 5.4; or
(v) in any particular jurisdiction in which the Company would be required to
qualify to do business or to execute a general consent to service of process in
effecting such registration, qualification or compliance.

(c) Subject to the foregoing, the Company shall file a
Form S-3 registration statement covering the Registrable Securities and other
securities so requested to be registered as soon as practicable after receipt
of the request or requests of the Holders. All such expenses incurred in
connection with registrations requested pursuant to this Section 5.4 shall be
paid by the selling Holders (and any other selling stockholders pro rata with
respect to their included shares, including without limitation all
registration, filing, qualification, printers' and accounting fees, fees and
disbursements of counsel for the Company, and the reasonable fees and
disbursements of a single counsel for the selling Holder or Holders.

5.5 OBLIGATIONS OF THE COMPANY. Whenever required to effect the
registration of any Registrable Securities, the Company shall use its best
efforts to:

(a) Prepare and file with the SEC a registration
statement with respect to such Registrable Securities and cause such
registration statement to become effective, and, upon the request of the
Holders of a majority of the Registrable Securities registered thereunder, keep
such registration statement effective for up to one hundred eighty (180) days.

(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection with such registration statement as

8.
13

may be necessary to comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such registration
statement.

(c) Furnish to the Holders such number of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by them.

(d) Register and qualify the securities covered by such
registration statement under such other securities or state blue sky laws of
such jurisdictions as shall be reasonably requested by the Holders, provided
that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.

(e) In the event of any underwritten public offering,
enter into and perform its obligations under an underwriting agreement, in
usual and customary form, with the managing underwriter of such offering.
Each Holder participating in such underwriting shall also enter into and
perform its obligations under such an agreement.

(f) Notify each Holder of Registrable Securities covered
by such registration statement at any time when a prospectus relating thereto
is required to be delivered under the Securities Act of the happening of any
event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
then existing.

(g) Furnish, at the request of a majority of the Holders
participating in the registration, on the date that such Registrable Securities
are delivered to the underwriters for sale, if such securities are being sold
through underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statement with respect to such
securities becomes effective, (i) an opinion, dated as of such date, of the
counsel representing the Company for the purposes of such registration, in
form and substance as is customarily given to underwriters in an
underwritten public offering and reasonably satisfactory to a majority in
interest of the Holders requesting registration, addressed to the underwriters,
if any, and to the Holders requesting registration of Registrable Securities
and (ii) a letter dated as of such date, from the independent certified public
accountants of the Company, in form and substance as is customarily given by
independent certified public accountants to underwriters in an underwritten
public offering and reasonably satisfactory to a majority in interest of the
Holders requesting registration, addressed to the underwriters, if any, and to
the Holders requesting registration of Registrable Securities.

5.6 FURNISH INFORMATION. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to Sections 5.2, 5.3 or
5.4 that the selling Holders shall furnish to the Company such information
regarding themselves, the Registrable Securities held

9.
14

by them, and the intended method of disposition of such securities as shall be
required to effect the registration of their Registrable Securities.

5.7 DELAY OF REGISTRATION. No Holder shall have an right to
obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Section 5.

5.8 INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement under Sections 5.2, 5.3 or 5.4:

(a) To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, the partners, officers and directors
of each Holder, any underwriter (as defined in the Securities Act) for such
Holder and each person, if any, who controls such Holder or underwriter within
the meaning of the Securities Act or the 1934 Act, against any losses, claims,
damages, or liabilities (joint or several) to which they may become subject
under the Securities Act, the 1934 Act or other federal or state law, insofar
as such losses, claims, damages, or liabilities (or actions in respect thereof)
arise out of or are based upon any of the following statements, omissions or
violations (collectively a "Violation") by the Company: (i) any untrue
statement or alleged untrue statement of a material fact contained in such
registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto, (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not misleading, or
(iii) any violation or alleged violation by the Company of the Securities Act,
the 1934 Act, any state securities law or any rule or regulation promulgated
under the Securities Act, the 1934 Act or any state securities law in
connection with the offering covered by such registration statement; and the
Company will reimburse each such Holder, partner, officer or director,
underwriter or controlling person for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action; provided however, that the indemnity
agreement contained in this Section 5.8(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld), nor shall the Company be liable in any such case
for any such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished to the Company expressly for use
in connection with such registration by such Holder, partner, officer,
director, underwriter or controlling person of such Holder.

(b) To the extent permitted by law, each selling Holder
will indemnify and hold harmless the Company, each of its directors, each of
its officers, each person, if any, who controls the Company within the meaning
of the Securities Act, any underwriter and any other Holder selling securities
under such registration statement or any of such other Holder's partners,
directors or officers or any person who controls such Holder, against any
losses, claims, damages or liabilities (joint or several) to which the Company
or any such director, officer, controlling person, underwriter or other such
Holder, or partner, director, officer or controlling person of such other
Holder may become subject under the Securities Act, the 1934

10.
15

Act or other federal or state law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereto) arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished to the Company by such Holder expressly for use in connection with
such registration; and each such Holder will reimburse any legal or other
expenses reasonably incurred by the Company or any such director, officer,
controlling person, underwriter or other Holder, or partner, officer,
director or controlling person of such other Holder in connection with
investigating or defending any such loss, claim, damage, liability or action if
it is judicially determined that there was such a Violation; provided, however,
that the indemnity agreement contained in this Section 5.8(b) shall not apply
to amounts paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the consent of the Holder, which
consent shall not be unreasonably withheld; provided further, that in no event
shall any indemnity under this Section 5.8 exceed the proceeds from the
offering received by such Holder.

(c) Promptly after receipt by an indemnified party under
this Section 5.8 of notice of the commencement of any action (including any
governmental action) as to which indemnity may be sought, such indemnified
party will, if a claim in respect thereof is to be made against any
indemnifying party under this Section 5.8, deliver to the indemnifying party a
written notice of the commencement thereof and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
the defense thereof with counsel mutually satisfactory to the parties;
provided, however, that an indemnified party shall have the right to retain its
own counsel, with the fees and expenses to be paid by the indemnifying party,
if representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by
such counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if materially prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the indemnified party under
this Section 5.8, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 5.8.

(d) If the indemnification provided for in this Section
5.8 is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any losses, claims, damages or liabilities
referred to herein, the indemnifying party, in lieu of indemnifying such
indemnified party thereunder, shall to the extent permitted by applicable law
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability in such proportion as is appropriate
to reflect the relative fault of the indemnifying party on the one hand and of
the indemnified party on the other in connection with the Violation(s) that
resulted in such loss, claim, damage or liability, as well as any other
relevant equitable considerations. The relative fault of the indemnifying
party and of the indemnified party shall be determined by a court of law by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact relates
to information supplied by the indemnifying party or by the indemnified party
and the

11.
16

parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission; provided that, in no event shall
any contribution by a Holder hereunder exceed the proceeds from the offering
received by such Holder.

(e) The foregoing indemnity agreements of the Company and
Holders are subject to the condition that, insofar as they relate to any
Violation made in a preliminary prospectus but eliminated or remedied in the
amended prospectus on file with the SEC at the time the registration statement
in question becomes effective or the Final Prospectus, such indemnity agreement
shall not inure to the benefit of any person obligated under the Securities Act
to furnish to the person asserting the loss, liability, claim or damage a copy
of the Final Prospectus if a copy of the Final Prospectus was furnished to the
indemnified party and was not furnished to the person asserting the loss,
liability, claim or damage at or prior to the time such action is required by
the Securities Act.

(f) The obligations of the Company and Holders under this
Section 5.8 shall survive the completion of any offering of Registrable
Securities pursuant to a registration statement, or otherwise.

5.9 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the
Company to register Registrable Securities pursuant to this Section 5 may be
assigned by a Holder to a transferee or assignee of Registrable Securities;
provided, however, that no such transferee or assignee shall be entitled to
registration rights under Sections 5.2, 5.3 or 5.4 hereof unless such
transferee or assignee: (i) is a Holder; (ii) holds after such transfer or
assignment at least one hundred thousand (100,000) shares of Registrable
Securities (as adjusted for stock dividends, splits and combinations); or (iii)
is a Family Member or a subsidiary, parent, general partner, Affiliate, or
limited partner of a Holder. In each such case, the Company shall, within
twenty (20) days after such transfer, be furnished with written notice of the
name and address of such transferee or assignee and the securities with respect
to which such registration rights are being assigned.

5.10 "MARKET STAND-OFF" AGREEMENT. If requested by the Company and
an underwriter of Common Stock (or other securities) of the Company, each
Holder shall agree not to sell or otherwise transfer or dispose of any Common
Stock (or other securities) of the Company held by such Holder (other than
those included in the registration) for a period specified by the underwriters
not to exceed one hundred eighty (180) days following the effective date of a
registration statement of the Company filed under the Securities Act, provided
that all officers and directors of the Company and all holders of at least one
percent (1%) of the Company's voting securities enter into similar agreements.
The obligations described in this Section 5.11 shall not apply to a
registration relating solely to employee benefit plans on Form S-1 or Form S-8
or similar forms that may be promulgated in the future, or a registration
relating solely to a Commission Rule 145 transaction on Form S-4 or similar
forms that may be promulgated in the future. The Company may impose
stop-transfer instructions with respect to the shares (or securities) subject
to the foregoing restriction until the end of said one hundred eighty (180) day
period.

12.
17

6. COVENANTS OF THE COMPANY.

6.1 BASIC FINANCIAL INFORMATION AND REPORTING.

(a) The Company will maintain true books and records of
account in which full and correct entries will be made of all its business
transactions pursuant to a system of accounting established and administered
in accordance with generally accepted accounting principles consistently
applied, and will set aside on its books all such proper accruals and reserves
as shall be required under generally accepted accounting principles
consistently applied.

(b) As soon as practicable after the end of each fiscal
year of the Company, and in any event within 90 days thereafter or, after the
IPO, simultaneously with the filing of the Company's annual report on Form 10-K
with the SEC), the Company will furnish each Holder a consolidated balance
sheet of the Company, as at the end of such fiscal year, and a consolidated
statement of income and a consolidated statement of cash flows of the Company
for such year, all prepared in accordance with generally accepted accounting
principles and setting forth in each case in comparative form the figures for
the previous fiscal year, all in reasonable detail. Such financial statements
shall be accompanied by a report and opinion thereon by independent public
accountants of national standing selected by the Company's Board of Directors.

(c) As soon as practicable after the end of each fiscal
quarter of the Company, and in any event within forty five days thereafter or,
after the IPO, simultaneously with the filing of the Company's reports on Form
10-Q with the SEC), the Company will furnish each Holder a consolidated
balance sheet of the Company, as at the end of such fiscal quarter, and a
consolidated statement of income and a consolidated statement of cash flows of
the Company for such quarter, prepared and presented in a manner consistent
with the financial statements described in Section 6.1 (b). Such statement
shall be accompanied by a certificate signed by the Chairman of the Board and
Chief Financial Officer of the Company stating that the preparation and
presentation of such statements is consistent with the financial statements
described in Section 6.1(b).

(d) So long as a Holder (with its affiliates) shall own
not less than one hundred thousand (100,000) shares of Registrable Securities,
the Company will furnish such Holder a consolidated balance sheet of the
Company, as at the end of each calendar month, and a consolidated statement of
income and a consolidated statement of cash flows of the Company for such
month, prepared and presented in a manner consistent with the financial
statements described in Section 6.1(b). Such statements shall be furnished as
soon as practicable after the end of each month and in any event within ten
days thereafter and shall be accompanied by a certificate signed by the
Chairman of the Board and Chief Financial Officer of the Company stating that
the preparation and presentation of such statements is consistent with the
financial statements described in Section 6.1(b). Prior to January lst of each
year, the Company shall furnish such Holders an annual budget for the Company
for the following twelve month period, broken down by month. The Company's
obligations under this Section 6.l(d) shall terminate upon the IPO.

13.
18

6.2 INSPECTION RIGHTS. So long as a Holder (with its affiliates)
shall own not less than one hundred thousand (100,000) shares of Registrable
Securities, each such Holder shall have the right to visit and inspect any of
the properties of the Company or any of its subsidiaries, and to discuss the
affairs, finances and accounts of the Company or any of its subsidiaries with
its officers, all at such reasonable times and as often as may be reasonably
requested; provided, however, that the Company shall not be obligated under
this Section 6.2 with respect to a competitor of the Company or with respect to
information which the Board of Directors determines in good faith is
confidential and should not, therefore, be disclosed.

6.3 CONFIDENTIALITY OF RECORDS. Each Holder agrees to use, and to
use its best efforts to insure that its authorized representatives use, the
same degree of care as such Holder uses to protect its own confidential
information to keep confidential any information furnished to it which the
Company identifies as being confidential or proprietary (so long as such
information is not in the public domain), except that such Holder may disclose
such proprietary or confidential information to any partner, subsidiary,
Affiliate or parent of such Holder for the purpose of evaluating its investment
in the Company as long as such partner, subsidiary or parent is advised of the
confidentiality provisions of this Section 6.3.

6.4 RESERVATION OF COMMON STOCK. The Company will at all times
reserve and keep available, solely for issuance and delivery upon the
conversion of the Series A Preferred Stock, all Common Stock issuable from time
to time upon such conversion.

SECTION 7. MISCELLANEOUS

7.1 AMENDMENT TO WARRANT. The Purchaser hereby agrees that upon
the closing of an underwritten public offering, pursuant to which the Company
sells capital stock (a "Public Offering"), the Warrant will automatically be
amended to be exercisable into the number of shares of Common Stock of the
Company equal to the number of shares of Series A Preferred Stock that the
Warrant was exercisable into immediately prior to the closing of the Public
Offering (the "Public Offering Closing"). At the Public Offering Closing the
Purchaser agrees to deliver to the Company the Warrant held by the Purchaser in
exchange for a new warrant exercisable into shares of Common Stock ("Common
Stock Warrant"), reflecting the amendment referred to in the immediately
preceding sentence. The Purchaser instructs the Company to cancel the Warrant
and issue Common Stock Warrant exercisable into the appropriate number of
shares of Common Stock. Whether or not the Purchaser surrenders its Warrant
for exchange with Common Stock Warrant, the outstanding Warrant shall
automatically be converted into a Common Stock Warrant without any further
action by the Purchaser.

7.2 BINDING AGREEMENT. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective successors and
assigns of the parties. Nothing in this Agreement, express or implied, is
intended to xxxxxx upon any third party any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.

14.
19

7.3 GOVERNING LAW. This Agreement shall be construed in
accordance with and governed by and under the laws of the State of California
as applied to contracts made and to be performed entirely within the State of
California.

7.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

7.5 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.

7.6 NOTICES. Any notice required or permitted under this
Agreement shall be given in writing and shall be deemed effectively given upon
personal delivery or upon deposit with the United States Post Office, postage
prepaid, addressed to the Company at 000 Xxxxx Xxxx Xxxxx, Xxxx Xxxxxxxx, Xxxxx
Xxxxxxxx 00000 or the Purchaser at Xxx Xxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx,
00000, Attention: Xxxxx Xxxxxx, or at such other address as such party may
designate by ten (10) days advance written notice to the other party.

7.7 SEPARABILITY. In case any provision of the Agreement shall be
invalid, illegal, or unenforceable, the validity, legality, and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.

7.8 MODIFICATION; WAIVER. Except as provided in this Agreement or
the Warrant, no modification or waiver of any provision of this Agreement or
consent to departure therefrom shall be effective unless in writing and
approved by the Company and the holders of the right to acquire not less than
fifty percent (50%) of the shares of Series A Preferred Stock or Common Stock,
as applicable, underlying the Warrant.

7.9 ATTORNEYS' FEES. If legal action is brought to enforce or
interpret this Agreement, the prevailing party shall be entitled to recover its
reasonable attorneys' fees and legal costs in connection therewith.

7.10 DELAYS OR OMISSIONS. It is agreed that no delay or omission
to exercise any right, power, or remedy accruing to any Holder, upon any
breach, default or noncompliance of the Company under this Agreement shall
impair any such right, power, or remedy, nor shall it be construed to be a
waiver of any such breach, default or noncompliance, or any acquiescence
therein, or of any similar breach, default or noncompliance thereafter
occurring. It is further agreed that any waiver, permit, consent, or approval
of any kind or character on any Holder's part of any breach, default or
noncompliance under this Agreement or any waiver on such Holder's part of any
provisions or conditions of this Agreement must be in writing and shall be
effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement, by law, or otherwise afforded to
Holders, shall be cumulative and not alternative.

15.
20

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth on the first paragraph hereof.

AIR SOUTH AIRLINES, INC. XXXXXXXXX & XXXXX GROUP, INC.

By: /s/ Xxxxxxx X. Xxxxx By:
------------------------------ -----------------------------
Xxxxxxx X. Xxxxx
Chairman of the Board Print Name:
---------------------
Title:
---------------------

21
EXHIBIT A
FORM OF GUARANTEE

17.
22

GUARANTY

San Francisco , CA
----------------- --------------
(City) (State)

April 26, 1996
-------------------------------

For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and to induce National Bank of South Carolina
(herein, with its participants, successors and assigns, called "Lender"), at
its option, at any time or from time to time to make loans or extend other
accommodations to or for the account of Air South Airlines, Inc. (herein
called "Borrower") or to engage in any other transactions with Borrower, the
Undersigned hereby absolutely and unconditionally guarantees to Lender the full
and prompt payment when due, whether at maturity or earlier by reason of
acceleration or otherwise, of the debts, liabilities and obligations described
as follows:

A. If this [x] is checked, the Undersigned guarantees to Lender the
payment and performance of the debt, liability or obligation of
Borrower to Lender evidenced by or arising out of the following:
$2,000,000.00 Note dated April ___, 1996 (hereinafter referred to
as the "Indebtedness").

B. If this [] is checked, the Undersigned guarantees to Lender the
payment and performance of each and every debt, liability and
obligation of every type and description which Borrower may now or
at any time hereafter owe to Lender (whether such debt, liability
or obligation now exists or is hereafter created or incurred, and
whether it is or may be direct or indirect, due or to become due,
absolute or contingent, primary or secondary, liquidated or
unliquidated, or joint, several, or joint and several; all such
debts, liabilities and obligations being hereinafter collectively
referred to as the "Indebtedness"). Without limitation, this
guaranty includes the following described debt(s): Acct# Note#.

The term "Indebtedness" as used in this guaranty shall not include any
obligations entered into between Borrower and Lender after the date hereof
(including any extensions, renewals or replacements of such obligations) for
which Borrower meets the Lender's standard of creditworthiness based on
Borrower's own assets and income without the addition of a guaranty, or for
which a guaranty is required but Borrower chooses someone other than the joint
Undersigned to guaranty the obligation.

The Undersigned further acknowledges and agrees with Lender that:

1. No act or thing need occur to establish the liability of the
Undersigned hereunder, and no act or thing, except full payment and discharge
of all indebtedness, shall in any way exonerate the Undersigned or modify,
reduce, limit or release the liability of the Undersigned hereunder.

2. This is an absolute, unconditional and continuing guaranty of
payment of the Indebtedness and shall continue to be in force and be binding
upon the Undersigned, whether or not all Indebtedness is paid in full, until
this guaranty is revoked by written notice actually received by the Lender, and
such revocation shall not be effective as to Indebtedness existing or committed
for at the time of actual receipt of such notice by the Lender, or as to any
renewals, extensions and refinancings thereof. If there be more than one
Undersigned, such revocation shall be effective only as to the one so revoking.
The death or incompetence of the Undersigned shall not revoke this guaranty,
except upon actual receipt of written notice thereof by Lender and then only as
to the decedent or the incompetent and only prospectively, as to future
transactions, as herein set forth.

3. If the Undersigned shall be dissolved, shall die, or shall be or
become insolvent (however defined) or revoke this guaranty, then the Lender
shall have the right to declare immediately due and payable, and the
Undersigned will forthwith pay to the Lender, the full amount of all
Indebtedness, whether due and payable or unmatured. If the Undersigned
voluntarily commences or there is commenced involuntarily against the
Undersigned a case under the United States Bankruptcy Code, the full amount of
all Indebtedness, whether due and payable or unmatured, shall be immediately
due and payable without demand or notice thereof.

4. The liability of the Undersigned hereunder shall be limited to a
principal amount of $2,000,000.00 (if unlimited or if no amount is stated, the
Undersigned shall be liable for all Indebtedness, without any limitation as to
amount), plus accrued interest thereon and all attorneys' fees, collection
costs and enforcement expenses referable thereto. Indebtedness may be created
and continued in any amount, whether or not in excess of such principal amount,
without affecting or impairing the liability of the Undersigned hereunder. The
Lender may apply any sums received by or available to Lender on account of the
Indebtedness from Borrower or any other person (except the Undersigned), from
their properties, out of any collateral security or from any other source to
payment of the excess. Such application of receipts shall not reduce, affect or
impair the liability of the Undersigned hereunder. If the liability of the
Undersigned is limited to a stated amount pursuant to this paragraph 4, any
payment made by the Undersigned under this guaranty shall be effective to
reduce or discharge such liability only if accompanied by a written transmittal
document, received by the Lender, advising the Lender that such payment is made
under this guaranty for such purpose.

5. The Undersigned will pay or reimburse Lender for all costs and
expenses (including reasonably attorneys' fees and legal expenses) incurred by
Lender in connection with the protection, defense or enforcement of this
guaranty in any litigation or bankruptcy or insolvency proceedings.

This guaranty includes the additional provisions on page 2, all of which
are made a part hereof.

This guaranty is [x] unsecured; [ ] secured by a mortgage or security
agreement dated____________ [ ] secured by ___________________________

IN WITNESS WHEREOF, this guaranty has been duly executed by the Undersigned
the day and year written.

Xxxxxxxxx & Xxxxx Group

By
------------------------------

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

By
------------------------------

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

ADDITIONAL PROVISIONS

6. Whether or not any existing relationship between the Undersigned and
Borrower has been changed or ended and whether or not this guaranty has been
revoked, Lender may, but shall not be obligated to, enter into transactions
resulting in the creation or continuance of Indebtedness, without any consent or
approval by the Undersigned and without any notice to the Undersigned. The
liability of the Undersigned shall not be affected or impaired by any of the
following acts or things (which Lender is expressly authorized to do, omit or
suffer from time to time, both before and after revocation of this guaranty,
without notice to or approval by the Undersigned): (i) any acceptance of
collateral security, guarantors, accommodation parties or sureties for any or
all Indebtedness; (ii) any one or more extensions or renewals of Indebtedness
(whether or not for longer than the original period) or any modification of the
interest rates, maturities or other contractual terms applicable to any
Indebtedness; (iii) any waiver, adjustment, forbearance, compromise or
indulgence granted to Borrower, any delay or lack of diligence in the
enforcement of Indebtedness, or any failure to institute proceedings, file a
claim, give any required notices or otherwise protect any Indebtedness; (iv) any
full or partial release of, settlement with, or agreement not to xxx, Borrower
or any other guarantor or other person liable in respect of any Indebtedness;
(v) any discharge of any evidence of Indebtedness or the acceptance of any
instrument in renewal thereof or substitution therefor; (vi) any failure to
obtain collateral security (including rights of setoff) for Indebtedness, or to
see to the proper or sufficient creation and perfection thereof, or to establish
the priority thereof, or to protect, insure, or enforce any collateral security;
or any release, modification, substitution, discharge, impairment,
deterioration, waste, or loss of any collateral security; (vii) any foreclosure
or enforcement of any collateral security; (viii) any transfer of any
Indebtedness or any evidence thereof; (ix) any order of application of any
payments or credits upon Indebtedness; (x) any election by the Lender under
Section 1111 (b)(2) of the United States Bankruptcy Code.

7. The Undersigned waives any and all defenses, claims and discharges
of Borrower, or any other obligor, pertaining to Indebtedness, except the
defense of discharge by payment in full. Without limiting the generality of the
foregoing, the Undersigned will not assert, plead or enforce against Lender any
defense of waiver, release, statute of limitations, res judicata, statute of
frauds, fraud, incapacity, minority, usury, illegality or unenforceability which
may be available to Borrower or any other person liable in respect of any
Indebtedness, or any setoff available against Lender to Borrower or any such
other person, whether or not on account of a related transaction. The
Undersigned expressly agrees that the Undersigned shall be and remain liable, to
the fullest extent permitted by applicable law, for any deficiency remaining
after foreclosure of any mortgage or security interest securing Indebtedness,
whether or not the liability of Borrower or any other obligor for such
deficiency is discharged pursuant to statute or judicial decision. The
undersigned shall remain obligated, to the fullest extent permitted by law, to
pay such amounts as though the Borrower's obligations had not been discharged.

8. The Undersigned further agrees that the Undersigned shall be and
remain obligated to pay Indebtedness even though any other person obligated to
pay Indebtedness, including Borrower, has such obligation discharged in
bankruptcy or otherwise discharged by law. "Indebtedness" shall include
post-bankruptcy petition interest and attorneys' fees and any other amounts
which Borrower is discharged from paying or which do not otherwise accrue to
Indebtedness due to Borrower's discharge, and the Undersigned shall remain
obligated to pay such amounts as though Borrower's obligations had not been
discharged.

9. If any payment applied by Lender to Indebtedness is thereafter set
aside, recovered, rescinded or required to be returned for any reason
(including, without limitation, the bankruptcy, insolvency or reorganization of
Borrower or any other obligor), the Indebtedness to which such payment was
applied shall for the purposes of this guaranty be deemed to have continued in
existence, notwithstanding such application, and this guaranty shall be
enforceable as to such Indebtedness as full as if such application had never
been made.

11. The Undersigned waives presentment, demand for payment, notice of
dishonor or nonpayment, and protest of any instrument evidencing Indebtedness.
Lender shall not be required first to resort for payment of the Indebtedness to
Borrower or other persons or their properties, or first to enforce, realize upon
or exhaust any collateral security for Indebtedness, before enforcing this
guaranty.

12. The liability of the Undersigned under this guaranty is in addition
to and shall be cumulative with all other liabilities of the Undersigned to
Lender as guarantor or otherwise, without any limitation as to amount, unless
the instrument or agreement evidencing or creating such other liability
specifically provides to the contrary.

13. This guaranty shall be enforceable against each person signing this
guaranty, even if only one person signs and regardless of any failure of other
persons to sign this guaranty. If there be more than one signer, all agreements
and promises herein shall be construed to be, and are hereby declared to be,
joint and several in each of every particular and shall be fully binding upon
and enforceable against either, any or all the Undersigned. This guaranty shall
be effective upon delivery to Lender, without further act, condition or
acceptance by Lender, shall be binding upon the Undersigned and the heirs,
representatives, successors and assigns of the Undersigned and shall inure to
the benefit of Lender and its participants, successors and assigns. Any
invalidity or unenforceability of any provision or application of this guaranty
shall not affect other lawful provisions and application hereof, and to this end
the provisions of this guaranty are declared to be severable. Except as
authorized by the terms herein, this guaranty may not be waived, modified,
amended, terminated, released or otherwise changed except by a writing
signed by the Undersigned and Lender. This guaranty shall be governed by the
laws of the State of South Carolina. The Undersigned waives notice of Lender's
acceptance hereof.

(page 2 of 21)

EXHIBIT B
FORM OF WARRANT

18.
25

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF ANY STATE.
ANY TRANSFER OF SUCH SECURITIES WILL BE INVALID UNLESS A REGISTRATION STATEMENT
UNDER THE ACT AND AS REQUIRED BY BLUE SKY LAWS IS IN EFFECT AS TO SUCH TRANSFER
OR IN THE OPINION OF COUNSEL SATISFACTORY TO THE COMPANY SUCH REGISTRATION IS
UNNECESSARY IN ORDER FOR SUCH TRANSFER TO COMPLY WITH THE ACT AND BLUE SKY
LAWS.

AIR SOUTH AIRLINES, INC.

WARRANT FOR THE PURCHASE
OF SHARES OF SERIES A PREFERRED STOCK

No. PAW-1 April 26, 1996

AIR SOUTH AIRLINES, INC., a Delaware corporation (the "Company"), hereby
certifies that, for value received, XXXXXXXXX & XXXXX GROUP or any transferee
who has received this warrant (the "Warrant") in compliance with applicable law
and the terms hereof (the "Holder"), is entitled, on the terms set forth below,
to purchase from the Company, on or before the Expiration Time (as defined in
Section 18 below) four hundred thousand (400,000) shares of Series A Preferred
Stock of the Company (or such portion thereof which has been transferred in
accordance with Section 19 of this Warrant) at a price of two dollars ($2.00)
per share, subject to adjustment as provided below (the "Exercise Price").

1. WARRANT PURCHASE AGREEMENT. This Warrant is the "Warrant"
referred to in that certain Warrant Purchase Agreement dated as of April 26,
1996 between the Company and Xxxxxxxxx & Xxxxx Group (the "Warrant Purchase
Agreement"). This Warrant and any Holder is and shall be subject to all of the
obligations and restrictions and entitled to all of the rights benefits set
forth in the Warrant Purchase Agreement (subject to the limitations on
transferability contained in this Warrant and the Warrant Purchase Agreement).

2. EXERCISE OF WARRANT.

a. GENERAL. The Holder may exercise this Warrant, in
whole or in part, at any time or from time to time on any business day prior to
the Expiration Date.

The Holder may exercise any shares then exercisable by
surrendering this Warrant to the Company at its principal office, with a duty
executed Subscription Form (in substantially the form attached hereto),
together with payment of the sum obtained by multiplying the number of shares
of Series A Preferred Stock to be purchased by the Exercise Price then in
effect.

1.
26

Promptly after such exercise, the Company shall issue and deliver to or upon
the order of the Holder a certificate or certificates for the number of shares
of Series A Preferred Stock issuable upon such exercise, and the Company will
pay all issue or transfer taxes in connection with the issue thereof. To the
extent permitted by law, this Warrant shall be deemed to have been exercised
immediately prior to the close of business on the date of its surrender for
exercise as provided herein, even if the Company's stock transfer books are at
that time closed, and the Holder shall be treated for all purposes as the
holder of record of the Series A Preferred Stock to be issued upon such
exercise as of the close of business on such date. Upon any partial exercise,
the Company will issue to or upon the order of the Holder a new Warrant for the
number of shares of Series A Preferred Stock as to which this Warrant has not
been exercised.

b. NET ISSUE EXERCISE. Notwithstanding any provisions
herein to the contrary, if the fair market value of one share of the Series A
Preferred Stock subject to this Warrant is greater than the Exercise Price (at
the Date of Determination, as defined below), in lieu of exercising this
Warrant for cash, the Holder may elect to receive shares equal to the value (as
determined below) of this Warrant (or the portion thereof being canceled) by
surrender of this Warrant at the principal office of the Company together with
the properly endorsed Form of Subscription and notice of such election (the
date of such delivery being referred to herein as the "Date of Determination")
in which event the Company shall issue to the Holder a number of shares of
Series A Preferred Stock computed using the following formula:

X = Y (A-B)
-------
A

Where X = the number of shares of Series A Preferred Stock to be
issued to the Holder

Y = the number of shares of Series A Preferred Stock
purchasable under the Warrant or, if only a portion of the
Warrant is being exercised, the portion of the Warrant
being canceled (at the Date of Determination)

A = the fair market value of one share of the Series A
Preferred Stock (at the Date of Determination)

B = Exercise Price (as adjusted to the Date of Determination)

For purposes of the above calculation, fair market value of one share of Series
A Preferred Stock shall be determined by the Company's Board of Directors in
good faith as of the Date of Determination; provided, however, when there is a
public market for the Company's Common Stock, the fair market value per share
shall be the product of (i) the average of the closing prices of the Company's
Common Stock quoted on the Nasdaq National Market or on the primary securities
exchange on which the Common Stock is then listed, whichever is applicable, as
published in the Wall Street Journal for the ten (10) trading days prior to the
Date of

2.
27

Determination and (ii) the number of shares of Common Stock into which each
share of Series A Preferred Stock is convertible at the Date of Determination.

3. Adjustment of Exercise Price and Number of Warrant Shares.
The Exercise Price and the number of shares of Series A Preferred Stock subject
to this Warrant shall be subject to adjustment from time to time as follows:

a. ADJUSTMENT FOR CHANGE IN CAPITAL STOCK. If at any
time the Company:

i. pays a dividend or makes a distribution on
its Series A Preferred Stock in shares of its
Series A Preferred Stock;

ii. subdivides its outstanding shares of Series A
Preferred Stock into a greater number of
shares;

iii. combines its outstanding shares of Series A
Preferred Stock into a smaller number of
shares;

iv. makes a distribution on its Series A
Preferred Stock in shares of its capital
stock other than Series A Preferred Stock; or

v. issues by reclassification of its Series A
Preferred Stock any shares of its capital
stock;

then the Exercise Price in effect immediately prior to such action shall be
adjusted so that the Holder may receive upon exercise of the Warrant and
payment of the same aggregate consideration the number of shares of capital
stock of the Company which the Holder would have owned immediately following
such action if the Holder had exercised the Warrant immediately prior to such
action.

The adjustment shall become effective immediately after the record date
in the case of a dividend or distribution and immediately after the effective
date in the case of a subdivision, combination or reclassification.

b. Reorganization, Consolidation or Merger. In the event of any
consolidation or merger of the Company with or into another corporation (other
than a merger in which merger the Company is the continuing corporation and
that does not result in any reclassification, capital reorganization or other
change of outstanding shares of Series A Preferred Stock issuable upon exercise
of this Warrant) or in the event of any sale, lease, transfer or conveyance to
another corporation of the property and assets of the Company as an entirety or
substantially as an entirety, the Company shall cause effective provisions to
be made so that the Holder shall have the right thereafter, by exercising this
Warrant, to purchase the kind and amount of shares of stock and other
securities and property (including cash) receivable upon such capital
reorganization and other change, consolidation, merger, sale, lease, transfer
or conveyance by a holder of the number of shares of Series A Preferred Stock
that might have been received upon

3.
28

exercise of this Warrant immediately prior to such capital reorganization,
change, consolidation, merger, sale, lease, transfer or conveyance. Any such
provision shall include provisions for adjustments in respect of such shares of
stock and other securities and property that shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Warrant. The
foregoing provisions of this Section 3(b) shall similarly apply to successive
capital reorganizations and changes of shares of Series A Preferred Stock and
to successive consolidations, mergers, sales, leases, transfers or conveyances.
In the event that in connection with any such capital reorganization, or
change, consolidation, merger, sale, lease, transfer or conveyance, additional
shares of Series A Preferred Stock shall be issued in exchange, conversion,
substitution or payment, in whole or in part, for, or of, a security of the
Company other than Series A Preferred Stock, any such issue shall be treated
as an issue of Series A Preferred Stock covered by the provisions of Section
3(a).

c. MINIMAL ADJUSTMENTS. No adjustment in the Exercise
Price and/or the number of shares of Common Stock subject to this Warrant need
be made if such adjustment would result in a change in the Exercise Price of
less than five cents ($0.05) (the "Adjustment Threshold Amount") or a change in
the number of subject shares of less than one (1) share. Any adjustment which
is less than the Adjustment Threshold Amount and not made shall be carried
forward and shall be made, together with any subsequent adjustments, at the
time when (a) the aggregate amount of all such adjustments is equal to at least
the Adjustment Threshold Amount or (b) the Warrant is exercised.

d. DEFERRAL OF ISSUANCE OR PAYMENT. In any case in
which an event covered by this Section 3 shall require that an adjustment in
the Exercise Price be made effective as of a record date, the Company may elect
to defer until the occurrence of such event (i) issuing to the Holder, if this
Warrant is exercised after such record date, the shares of Common Stock and
other capital stock of the Company, if any, issuable upon such exercise over
and above the shares of Common Stock or other capital stock of the Company, if
any, issuable upon such exercise on the basis of the Exercise Price in effect
prior to such adjustment, and (ii) paying to the Holder by check any amount in
lieu of the issuance of fractional shares pursuant to Section 7.

e. WHEN NO ADJUSTMENT REQUIRED. No adjustment need be
made for a change in the par value or no par value of the Series A Preferred
Stock. To the extent the Warrants become exercisable into cash, no adjustment
need be made thereafter as to the cash, and interest will not accrue on the
cash.

f. CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence
of each adjustment or readjustment of the Exercise Price pursuant to this
Section 3, the Company, at its expense, shall promptly compute such adjustment
or readjustment in accordance with the terms hereof and prepare and furnish to
the Holder a certificate setting forth such adjustment or readjustment and
showing the facts upon which such adjustment or readjustment is based. The
Company shall, upon written request at any time of the Holder, furnish or cause
to be furnished to the Holder a like certificate setting forth (a) such
adjustments and readjustments, (b) the then effective Exercise Price and number
of shares of Series A Preferred Stock subject to the Warrant, and

4.
29

(c) the then effective amount of securities (other than Series A Preferred
Stock) and other property, if any, which would be received upon exercise of the
Warrant.

4. REGISTRATION RIGHTS. Subject to the restrictions on the
transferability of registration rights set forth in Section 5 of the Warrant
Purchase Agreement, shares of Series A Preferred Stock underlying this Warrant
and any of the Company's Common Stock issued or issuable pursuant to the
conversion of such Series A Preferred Stock shall be deemed to be "Registrable
Securities" for purposes of Section 5 of the Warrant Purchase Agreement.
Certain permitted transferee (as set forth in Section 5.9 of the Warrant
Purchase Agreement) shall have all of the rights and benefits, subject to all
of the obligations and restrictions, of a holder of Registrable Securities
pursuant to said Section 5, and shall be treated for all purposes as a holder
of Registrable Securities under and subject to the terms of said Section 5.

5. RIGHTS OF THE HOLDER. The Holder shall not, by virtue hereof,
be entitled to any rights of a stockholder in the Company, either at law or
equity, and the rights of the Holder are entitled to those expressed in this
Warrant and the Warrant Purchase Agreement. Nothing contained in this Warrant
shall be construed as conferring upon the Holder hereof the right to vote or to
consent or to receive notice as a stockholder of the Company on any matters or
with respect to any rights whatsoever as a stockholder of the Company. No
dividends or interest shall be payable or accrued in respect of this Warrant or
the interest represented hereby or the shares of Series A Preferred Stock
purchasable hereunder until, and only to the extent that, this Warrant shall
have been exercised in accordance with its terms.

6. NO IMPAIRMENT. The Company will not, by any voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of
this Warrant, but will at all times in good faith assist in the carrying out of
all such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Holder against dilution or
other impairment.

7. NO FRACTIONAL SHARES. No fractional share shall be issued
upon exercise of this Warrant. The Company shall, in lieu of issuing any
fractional share, pay the Holder entitled to such fraction a sum in cash equal
to the fair market value of such fraction on the date of exercise (as
determined in good faith by the Board of Directors of the Company). The fair
market value of a fraction of a share is determined by multiplying the fair
market price of a full share by the fraction of a share, rounded to the nearest
cent.

8. RESERVATION OF STOCK ISSUABLE ON EXERCISE OF WARRANT. The
Company will at all times reserve and keep available, solely for issuance and
delivery upon the exercise of this Warrant, all such shares of Series A
Preferred Stock or other shares of capital stock, from time to time issuable
upon the exercise of this Warrant and shares of Common Stock issuable upon
conversion of the Series A Preferred Stock. If at any time the number of
authorized but unissued shares of Series A Preferred Stock shall not be
sufficient to effect the exercise of this Warrant, the Company will use its
best efforts to take such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of Series
A Preferred Stock to such number of shares as shall be sufficient for such
purposes. All shares

5.
30

that may be issued upon exercise of the rights represented by this Warrant and
payment of the Exercise Price, all as set forth herein, will be free from all
taxes, liens and chances in respect of the issue of such shares (other than
taxes in respect of any transfer occurring contemporaneously with such exercise
and payment or otherwise specified herein). All such shares shall be duly
authorized and when issued, sold and delivered in accordance with the terms of
the Warrant for the consideration expressed herein, will be duly and validly
issued, fully paid and nonassessable, and will be free of restrictions on
transfer other than restrictions on transfer set forth in this Warrant, the
Warrant Purchase Agreement and applicable state and federal securities laws.

9. AMENDMENTS TO SERIES A PREFERRED STOCK; ETC.

a. AMENDMENTS; ETC. Notwithstanding Section 6 hereof,
while this Warrant, or any portion thereof, remains outstanding, the Company
shall not, without the prior written approval of the Holder, amend or repeal or
waive any provision of the Company's Certificate of Incorporation ("the
Certificate") relating to the rights preferences and privileges of the Series A
Preferred Stock.

b. ADJUSTMENTS TO CONVERSION PRICE. The Holder shall
have the benefit of any adjustments to the Series A Conversion Price pursuant
to the Certificate.

10. NOTICES OF RECORD DATE. Upon (a) any taking by the Company of
a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend or
other distribution or (b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company, any
merger or consolidation of the Company with or into any other corporation, or
any transfer of all or substantially all the assets of the Company to any other
person, or any voluntary or involuntary dissolution, liquidation or winding up
of the Company, the Company shall mail to each Holder at least twenty (20)
days, or such longer period as is required by law, prior to the record date, a
notice specifying (i) the date on which any such record is to be taken for the
purpose of such dividend or distribution and a description of such dividend or
distribution, (ii) the date on which any such reorganization, reclassification,
transfer, consolidation, merger, dissolution, liquidation or winding up is
expected to become effective, and (iii) the date, if any, that is to be fixed
as to when the holders of record of Series A Preferred Stock (or other capital
stock at that time receivable upon exercise of the Warrant) shall be entitled
to exchange their shares of Series A Preferred Stock (or such other stock or
securities) for securities or other property deliverable upon such
reorganization, reclassification, transfer, consolidation, merger, dissolution,
liquidation or winding up.

11. EXCHANGES OF WARRANT. Upon surrender for exchange of this
Warrant (in negotiable form, if not surrendered by the Holder named on the face
hereof) to the Company at its principal office, the Company, at its expense,
will issue and deliver a new Warrant or Warrants calling in the aggregate for
the same number of shares of Series A Preferred Stock, in the denomination or
denominations requested, to or on the order of such Holder upon

6.
31

payment by such Holder of any applicable transfer taxes; provided that any
transfer of the Warrant shall be subject to the conditions on transfer set
forth herein.

12. REPLACEMENT OF WARRANT. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant, and (in the case of loss, theft or destruction) upon delivery of
an indemnity agreement in such reasonable amount as the Company may determine,
or (in the case of mutilation) upon surrender and cancellation hereof, the
Company, at its expense, shall issue a replacement.

13. NOTICES. Any notice required or permitted under this
Agreement shall be given in writing and shall be deemed effectively given upon
personal delivery or upon deposit with the United States Post Office, postage
prepaid, addressed to the Company at 000 Xxxxx Xxxx Xxxxx, Xxxx Xxxxxxxx, Xxxxx
Xxxxxxxx 00000 or to the Holder at Xxx Xxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx
00000, Attention: Xxxxx Xxxxxx, or at such other address as the Company or any
Holder may designate by ten (10) days advance written notice to the other
party.

14. Amendment to Warrant. Upon the closing of an underwritten
public offering, pursuant to which the Company sells capital stock (a "Public
Offering"), this Warrant will automatically be amended to be exercisable into
the number of shares of Common Stock of the Company equal to the number of
shares of Series A Preferred Stock that the Warrant was exercisable into
immediately prior to the closing of the Public Offering (the "Public Offering
Closing"). At the Public Offering Closing the Holder shall deliver to the
Company the Warrant held by the Holder in exchange for a new warrant
exercisable into shares of Common Stock ("Common Stock Warrant"), reflecting
the amendment referred to in the immediately preceding sentence. The Company
shall cancel this Warrant and issue Common Stock Warrant exercisable into the
appropriate number of shares of Common Stock. Whether or not the Holder
surrenders its Warrant for exchange with Common Stock Warrant, this Warrant
shall automatically be converted into a Common Stock Warrant without any
further action by the Holder.

15. MODIFICATION; WAIVER. Except as provided in this Warrant or
the Warrant Purchase Agreement, no modification or waiver of any provision of
this Warrant or consent to departure therefrom shall be effective unless in
writing and approved by the Company and the holders of the right to acquire not
less than fifty percent (50%) of the shares of Series A Preferred Stock or
Common Stock, as applicable, pursuant to this Warrant.

16. TITLES AND SUBTITLES. The titles and subtitles used in this
Warrant are used for convenience only and are not to be considered in
construing or interpreting this Warrant.

17. GOVERNING LAW. This Warrant shall be construed in accordance
with and governed by and under the laws of the State of California as applied
to contracts made and to be performed entirely within the State of California.

18. EXPIRATION TIME. This Warrant will be wholly void and of no
effect after 5:00 p.m. (San Francisco time) April 26, 2006 (the "Expiration
Time").

7.
32

furnished the Company with an opinion of counsel, reasonably satisfactory to
the Company, that such disposition will not require registration under the
Securities Act.

iii. Notwithstanding the provisions of paragraphs (i) and
(ii) above, no such registration statement or opinion of counsel shall be
necessary for a transfer by the Holder to (i) an underwriter acceptable to the
Company for immediate exercise by such underwriter in connection with a fully
underwritten public offering of the Company's Common Stock underlying this
Warrant (ii) a partner (or retired partner) or "affiliate" (as defined under
the Securities Exchange Act of 1934) of Xxxxxxxxx & Xxxxx Group or (iii)
transfers by gift, will or intestate succession to any spouse or lineal
descendants or ancestors of any such partner, retired partner or affiliate, if
all transferee agree in writing to be subject to the terms hereof to the same
extent as if they were a purchaser hereunder.

9.
33

IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed and delivered on the date first set forth above.

AIR SOUTH AIRLINES, INC.

By: /s/ Xxxxxxx X. Xxxxx
----------------------------
Xxxxxxx X. Xxxxx
Chairman of the Board

WARRANT
34

SUBSCRIPTION FORM
-----------------

[To be executed if holder desires to exercise the Warrant]

The undersigned, holder of this Warrant, (1) hereby irrevocably elects
to exercise the right of purchase represented by this Warrant for, and to
purchase thereunder, ____________ full shares of the Series A Preferred Stock
of South Air, Inc. provided for therein, (2) makes payment in full (as
permitted in Section 2 of the Warrant) of the purchase price of such shares,
(3) requests that certificates for such shares be issued in the name of

---------------------------------------------------------------
(Please print name and address)

---------------------------------------------------------------
(Please insert social security or other identifying number)

and (4) if said number of shares shall not be all the shares purchasable
thereunder, requests that a new Warrant for the unexercised portion of this
Warrant be issued in the name of and delivered to:

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

---------------------------------------------------------------
(Please print name and address)

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

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

-------------------------------
Title
35

EXHIBIT C
CERTAIN DEFINED TERMS

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

"1934 Act" means the Securities Exchange Act of 1934, as amended.

"Equity Securities" means (i) any stock or similar security of the
Company, (ii) any security convertible, with or without consideration, into any
stock or similar security (including any option to purchase such a convertible
security), (iii) any security carrying any warrant or right to subscribe to or
purchase any stock or similar security or (iv) any such warrant or right.

"Family Member" means a Holder's spouse, children, stepchildren and
grandchildren.

"Final Prospectus" means an amended prospectus filed with the SEC
pursuant to SEC Rule 424(b) of the Securities Act.

"Holder" means any person with the right to acquire pursuant to the
Warrant or owning of record Registrable Securities.

"Initiating Holders" means the Holder or Holders of at least fifty
percent (50%) of the Registrable Securities then outstanding.

"IPO" means the first underwritten public offering of the Company's
securities.

"Register," "registered," and "registration" refer to a registration
effected by preparing and filing a registration statement in compliance with
the Securities Act, and the declaration or ordering of effectiveness by the
SEC of such registration statement or document.

"Registrable Securities" means (i) the Shares; (ii) Common Stock of the
Company issued or issuable upon conversion of the Shares; and (iii) any Shares
or Common Stock of the Company issuable upon the conversion or exercise of any
warrant, right or other security which is issued as a dividend or other
distribution with respect to, or in exchange for or in replacement of, such
above-described securities. Notwithstanding the foregoing, Registrable
Securities shall not include any securities sold by a person to the public
either pursuant to a registration statement or Rule 144 or sold in a private
transaction in which the transferror's rights under Section 5 of this Agreement
are not assigned. Outstanding Shares and warrants, rights and other securities
issued as a dividend or other distribution with respect to outstanding Shares,
or in exchange or replacement of outstanding Shares, shall be deemed to
represent a number of shares of Registrable Securities equal to the number of
shares of Common Stock into which such Shares, warrants, rights or other
securities are convertible as of the time such determination is made.

19.
36

"Securities Act" shall mean the Securities Act of 1933, as amended.

"Shares" shall mean the Company's Series A Preferred Stock issuable
upon conversion of the Warrant.

"Form S-3" means such form under the Securities Act as in effect on the
date hereof or any successor registration form under the Securities Act
subsequently adopted by the SEC which permits inclusion or incorporation of
substantial information by reference to other documents filed by the Company
with the SEC.

"SEC" or "Commission" means the Securities and Exchange Commission.

20.

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1 EXHIBIT 4.8 AIR SOUTH AIRLINES, INC. WARRANT PURCHASE AGREEMENT 2 TABLE OF CONTENTS

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