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<SEC-DOCUMENT>0000950124-05-000094.txt : 20050110
<SEC-HEADER>0000950124-05-000094.hdr.sgml : 20050110
<ACCEPTANCE-DATETIME>20050107191331
ACCESSION NUMBER:		0000950124-05-000094
CONFORMED SUBMISSION TYPE:	DEF 14A
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20050208
FILED AS OF DATE:		20050110
DATE AS OF CHANGE:		20050107
EFFECTIVENESS DATE:		20050110

FILER:

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

	FILING VALUES:
		FORM TYPE:		DEF 14A
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-15495
		FILM NUMBER:		05519339

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

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

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	MESA AIRLINES INC
		DATE OF NAME CHANGE:	19950426
</SEC-HEADER>
<DOCUMENT>
<TYPE>DEF 14A
<SEQUENCE>1
<FILENAME>p70046dfdef14a.htm
<DESCRIPTION>DEF 14A
<TEXT>
<HTML>
<HEAD>
<TITLE>def14a</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="center" style="font-size: 14pt"><B>UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION</B>

<DIV align="center" style="font-size: 12pt"><B>Washington, D.C. 20549</B>
</DIV>


<P align="center" style="font-size: 10pt">INFORMATION REQUIRED IN PROXY STATEMENT<BR>
SCHEDULE 14A INFORMATION<BR>
Proxy Statement Pursuant to Section&nbsp;14(a) of the<BR>
Securities Exchange Act of 1934



<P align="left" style="font-size: 10pt">Filed by the Registrant <FONT face="Wingdings">&#254;</FONT><BR>
Filed by a Party other than the Registrant <FONT face="Wingdings">&#111;</FONT>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">

<!-- Begin Table Head --><TR valign="bottom">
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="46%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="46%">&nbsp;</TD>
</TR>

<!-- End Table Head -->

<!-- Begin Table Body -->
<TR valign="bottom">
    <TD colspan="7" valign="top" align="left">Check the appropriate box:</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><FONT face="Wingdings">&#111;</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Preliminary Proxy Statement
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" rowspan="4">Confidential, for Use of the Commission Only (as permitted by Rule&nbsp;14a-6(e)(2))</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><FONT face="Wingdings">&#254;</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Definitive Proxy Statement</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><FONT face="Wingdings">&#111;</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Definitive Additional Materials</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><FONT face="Wingdings">&#111;</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Soliciting Material Pursuant to
Section&nbsp;240.14a-12</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>

<P align="center" style="font-size: 24pt"><B>MESA AIR GROUP, INC.</B>

<DIV align="center" style="font-size: 10pt"><HR size="1" noshade width="100%">
(Name of Registrant as Specified In Its Charter)</DIV>



<P align="center" style="font-size: 10pt"><HR size="1" noshade width="100%">


<DIV align="center" style="font-size: 10pt">(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)</DIV>


<P align="left" style="font-size: 10pt">Payment of Filing Fee (Check the appropriate box):


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">

<!-- Begin Table Head --><TR valign="bottom">
    <TD width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="94%">&nbsp;</TD>
</TR>

<!-- End Table Head -->

<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><FONT face="Wingdings">&#254;</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">No fee required.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><FONT face="Wingdings">&#111;</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Fee computed on table below per Exchange Act Rules&nbsp;14a-6(i)(1) and 0-11.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">1)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title of each class of securities to which transaction applies:</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><HR size="1" noshade width="100%">


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">

<!-- Begin Table Head --><TR valign="bottom">
    <TD width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="94%">&nbsp;</TD>
</TR>

<!-- End Table Head -->

<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">2)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Aggregate number of securities to which transaction applies:</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><HR size="1" noshade width="100%">


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">

<!-- Begin Table Head --><TR valign="bottom">
    <TD width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="94%">&nbsp;</TD>
</TR>

<!-- End Table Head -->

<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">3)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Per unit price or other underlying value of transaction computed pursuant to Exchange Act
Rule&nbsp;0-11 (set forth the amount on which the filing fee is calculated and state how it was
determined):</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><HR size="1" noshade width="100%">


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">

<!-- Begin Table Head --><TR valign="bottom">
    <TD width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="94%">&nbsp;</TD>
</TR>

<!-- End Table Head -->

<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Proposed maximum aggregate value of transaction:</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><HR size="1" noshade width="100%">


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">

<!-- Begin Table Head --><TR valign="bottom">
    <TD width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="94%">&nbsp;</TD>
</TR>

<!-- End Table Head -->

<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">5)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Total fee paid:</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><HR size="1" noshade width="100%">


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">

<!-- Begin Table Head --><TR valign="bottom">
    <TD width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="94%">&nbsp;</TD>
</TR>

<!-- End Table Head -->

<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><FONT face="Wingdings">&#111;</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Fee paid previously with preliminary materials:</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><HR size="1" noshade width="100%">


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">

<!-- Begin Table Head --><TR valign="bottom">
    <TD width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="94%">&nbsp;</TD>
</TR>

<!-- End Table Head -->

<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><FONT face="Wingdings">&#111;</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Check box if any part of the fee is offset as provided by Exchange Act Rule&nbsp;0-11(a)(2) and
identify the filing for which the offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the form or schedule and the date of its filing.</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><HR size="1" noshade width="100%">


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">

<!-- Begin Table Head --><TR valign="bottom">
    <TD width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="94%">&nbsp;</TD>
</TR>

<!-- End Table Head -->

<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">1)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Amount previously paid:</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">2)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Form, Schedule or Registration Statement No.:</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">3)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Filing Party:</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Date Filed:</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">
</DIV>


<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="center">
<B><FONT size="4">MESA AIR GROUP, INC.</FONT></B>

<DIV align="center">
<B><FONT size="2">410 North 44th&nbsp;Street</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">Phoenix, Arizona 85008</FONT></B>
</DIV>

<P align="center">
<B>NOTICE OF ANNUAL MEETING OF SHAREHOLDERS</B>

<DIV align="center">
<B>To Be Held on February&nbsp;8, 2005</B>
</DIV>

<P align="left">
<FONT size="2">To Our Shareholders:
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The 2005 Annual Meeting of Shareholders of MESA
AIR GROUP, INC., a Nevada corporation (the &#147;Company&#148;),
will be held at the Company&#146;s corporate offices at 3
Gateway, 410&nbsp;N.&nbsp;44th&nbsp;Street, Suite&nbsp;160,
Phoenix, Arizona, on February&nbsp;8, 2005, at 10:00&nbsp;a.m.,
Arizona time, for the following purposes:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="3%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">1.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">To elect seven (7)&nbsp;directors to serve for a
    one-year term;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">2.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">To consider and vote on a proposal to ratify and
    approve the Company&#146;s 2005 Employee Stock Incentive Plan;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">3.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">To ratify the selection of Deloitte&nbsp;&#38;
    Touche LLP as independent registered public accountants for the
    Company;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">4.&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">To transact such other business as may properly
    come before the meeting or any postponement(s) or adjournment(s)
    thereof.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Board of Directors has fixed the close of
business on December&nbsp;30, 2004, as the record date for the
determination of shareholders entitled to notice of and to vote
at the meeting or any postponement or adjournment thereof.
Shares of the Company&#146;s common stock may be voted at the
meeting only if the holder is present at the meeting in person
or by valid proxy. A copy of the Company&#146;s 2004 Annual
Report, which includes audited financial statements, was mailed
with this Notice and Proxy Statement to all shareholders of
record on the record date.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Management of the Company cordially invites you
to attend the Annual Meeting. Your attention is directed to the
attached Proxy Statement for a discussion of the foregoing
proposals and the reasons why the Board of Directors encourages
you to vote <U>for</U> approval of Proposals&nbsp;1, 2 and 3.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">By Order of the Board of Directors
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <IMG src="p70046dfp7004601.gif" alt="-S- JONATHAN G. ORNSTEIN"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">JONATHAN G. ORNSTEIN
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <I><FONT size="2">Chairman of the Board and Chief Executive
    Officer</FONT></I></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">Phoenix, Arizona
</FONT>

<DIV align="left">
<FONT size="2">January&nbsp;7, 2005
</FONT>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="92%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>
<DIV style="width: 100%; border: 1px solid black; padding: 12px;">

<DIV align="left">
<B><FONT size="2">IMPORTANT: IT IS IMPORTANT THAT YOUR STOCK BE
REPRESENTED AT THIS MEETING. PLEASE COMPLETE, DATE, SIGN AND
PROMPTLY MAIL THE ENCLOSED PROXY CARD IN THE ACCOMPANYING
ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES.</FONT></B>
</DIV>
</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="center">
<B><FONT size="4">MESA AIR GROUP, INC.</FONT></B>

<DIV align="center">
<B><FONT size="2">410 North 44th&nbsp;Street</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">Phoenix, Arizona 85008</FONT></B>
</DIV>

<P align="center">
<B>PROXY STATEMENT</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Board of Directors of MESA AIR GROUP, INC., a
Nevada corporation (the &#147;Company&#148;), is soliciting
proxies to be used at the 2005 annual meeting of shareholders of
the Company to be held on February&nbsp;8, 2005, at
10:00&nbsp;a.m., Arizona time, at the Company&#146;s corporate
offices, 3&nbsp;Gateway, 410&nbsp;North 44th&nbsp;Street,
Suite&nbsp;160, Phoenix, Arizona, and any adjournment(s) or
postponement(s) thereof (the &#147;Annual Meeting&#148;). This
proxy statement and the enclosed form of proxy will be mailed to
shareholders beginning January&nbsp;10, 2005.
</FONT>

<P align="left">
<B><FONT size="2">Who Can Vote</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Shareholders of record as of the close of
business on December&nbsp;30, 2004 (the &#147;Record
Date&#148;), may vote at the Annual Meeting and at any
adjournment or postponement of the meeting. Each shareholder has
one vote for each share of Common Stock held of record on the
Record Date. On the Record Date, 30,392,774&nbsp;shares of the
Company&#146;s common stock, no par value per share (the
&#147;Common Stock&#148;), were issued and outstanding.
</FONT>

<P align="left">
<B><FONT size="2">How You Can Vote</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All valid proxies received before the Annual
Meeting and not revoked will be exercised. All shares
represented by proxy will be voted, and where a shareholder
specifies by means of his or her proxy a choice with respect to
any matter to be acted upon, the shares will be voted in
accordance with the specifications so made. If you do not
specify on your proxy card how you want to vote your shares and
authority to vote is not specifically withheld, we will vote
your shares as follows: (i)&nbsp;&#147;for&#148; the election of
the persons named in the proxy to serve as directors;
(ii)&nbsp;&#147;for&#148; the proposal to ratify and approve the
Company&#146;s 2005 Employee Stock Incentive Plan; and
(iii)&nbsp;&#147;for&#148; the ratification of
Deloitte&nbsp;&#38; Touche LLP (&#147;Deloitte&nbsp;&#38;
Touche&#148;) as the independent registered public accountants
of the Company. Shareholders who hold their shares in
&#147;street name&#148; (i.e., in the name of a bank, broker or
other record holder) must vote their shares in the manner
prescribed by their brokers.
</FONT>

<P align="left">
<B><FONT size="2">How You Can Revoke Your Proxy</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">You can revoke your proxy at any time before it
is exercised in one of three ways:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(1)&nbsp;by delivering to the Secretary of the
    Company a written instrument of revocation bearing a date later
    than the date of the proxy.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(2)&nbsp;by duly executing and delivering to the
    Secretary of the Company a subsequent proxy relating to the same
    shares.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(3)&nbsp;by attending the meeting and voting in
    person, provided that the shareholder notifies the Secretary at
    the meeting of his or her intention to vote in person at any
    time prior to the voting of the proxy.
    </FONT></TD>
</TR>

</TABLE>

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

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A plurality of votes cast by shareholders who are
either present in person or represented by proxy at the meeting
is required to elect the seven (7)&nbsp;nominees for Director
under Proposal&nbsp;1. Approval of Proposals&nbsp;2 and 3
require the affirmative vote of a majority of the shares present
and entitled to vote on these proposals at the Annual Meeting.
The total number of votes that could be cast at the meeting is
the number of votes actually cast plus the number of
abstentions. Abstentions are counted as &#147;shares
present&#148; at the meeting for purposes of determining whether
a quorum exists and have the effect of a vote
&#147;against&#148; any matter as to which they are specified.
Proxies submitted by brokers that do not indicate a vote for
some or all of the
</FONT>

<P align="center">
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<DIV align="left">
<FONT size="2">proposals because they do not have discretionary
voting authority and have not received instructions as to how to
vote on these proposals (so-called &#147;broker non-votes&#148;)
are also considered &#147;shares present&#148; and will have the
affect a vote against the proposal for which no vote is
indicated.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">Dissenter&#146;s Rights or Appraisal</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pursuant to applicable Nevada law, there are no
dissenter&#146;s or appraisal rights relating to the matters to
be acted upon at the Annual Meeting.
</FONT>

<P align="left">
<B><FONT size="2">Other Matters to Be Acted Upon at the
Meeting</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We do not know of any matters other than the
election of directors, the proposal to ratify and approve the
2005 Employee Stock Incentive Plan, and the ratification of
independent registered public accountants that are expected to
be presented for consideration at the Annual Meeting. If any
other matters are properly presented at the meeting, the shares
represented by proxies will be voted in accordance with the
judgment of the persons voting those shares.
</FONT>

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

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The cost of soliciting proxies, including the
cost of preparing and mailing the Notice and Proxy Statement,
will be paid by the Company. Solicitation will be primarily by
mailing this Proxy Statement to all shareholders entitled to
vote at the meeting. Proxies may also be solicited by officers
and directors of the Company personally or by telephone or
facsimile, without additional compensation. The Company may
reimburse brokers, banks and others holding shares in their
names for others for the cost of forwarding proxy materials and
obtaining proxies from beneficial owners.
</FONT>

<P align="left">
<B><FONT size="2">Communications with the Board of
Directors</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Stockholders may communicate with any and all
members of the Company&#146;s Board of Directors by transmitting
correspondence by mail or facsimile addressed to one or more
directors by name or, for a communication to the entire board,
to the Chairman of the Board at the following address and fax
number: Mesa Air Group, Inc. c/o&nbsp;Corporate Secretary,
410&nbsp;North 44th&nbsp;Street, Suite&nbsp;700, Phoenix,
Arizona 85008; facsimile: (602)&nbsp;685-4350.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Communications from our stockholders to one or
more directors will be collected and organized by our Corporate
Secretary under procedures adopted by our independent directors.
The Corporate Secretary will forward all communications to the
Chairman of the Board or to the identified director(s) as soon
as practicable, although communications that are abusive, in bad
taste or that present safety or security concerns may be handled
differently. If multiple communications are received on a
similar topic, the Corporate Secretary may, in his direction,
forward only representative correspondence.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Chairman of the Board will determine whether
any communication addressed to the entire Board of Directors
should be properly addressed by the entire Board of Directors or
a committee thereof. If a communication is sent to the Board of
Directors or a committee, the Chairman of the Board or the
chairman of that committee, as the case may be, will determine
whether a response to the communication is warranted. If a
response to the communication is warranted, the content and
method of the response may be coordinated with our counsel.
</FONT>

<P align="center">
<B><FONT size="2">ELECTION OF DIRECTORS</FONT></B>

<DIV align="center">
<B><FONT size="2">(PROPOSAL&nbsp;NO. 1)</FONT></B>
</DIV>

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

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company&#146;s current directors are Jonathan
G. Ornstein, Daniel J. Altobello, Robert Beleson, General Ronald
R. Fogleman, Joseph L. Manson, Maurice A. Parker and Julie
Silcock. Their terms expire upon the election and qualification
of their successors at the Annual Meeting. The Board has
nominated each of these
</FONT>

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

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<DIV align="left">
<FONT size="2">current directors as nominees for election as
directors in the election to be held at the Annual Meeting. The
Board intends to vote its proxies for the election of its
nominees, for a term to expire at the Company&#146;s 2005 Annual
Meeting.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If unforeseen circumstances make it necessary for
the Board of Directors to substitute another person for any of
the nominees, we will vote your shares &#147;for&#148; that
other person, or, if no substitute is selected by the Board
prior to or at the Annual Meeting, for a motion to reduce the
present membership of the Board to the number of nominees
available. The information concerning the nominees and their
share holdings in the Company has been furnished by the nominees
to the Company.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The seven (7)&nbsp;nominees receiving a plurality
of votes by shares represented and entitled to vote at the
Annual Meeting, if a quorum is present, will be elected as
directors of the Company.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth the names and ages
of the directors of the Company and certain additional
information:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="67%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="23%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Name</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Age</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Position</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Jonathan G. Ornstein
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">47</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Chairman of the Board
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Daniel J. Altobello
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">64</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Director
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Robert Beleson
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">54</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Director
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Ronald R. Fogleman
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">63</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Director
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Joseph L. Manson
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">55</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Director
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Maurice A. Parker
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">59</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Director
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Julie Silcock
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">49</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Director
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

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

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Biographical information regarding the
Company&#146;s directors is set forth below.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Jonathan G. Ornstein
</FONT></I><FONT size="2">was appointed President and Chief
Executive Officer of the Company effective May&nbsp;1, 1998.
Mr.&nbsp;Ornstein became a director in January 1998.
Mr.&nbsp;Ornstein assumed the role of Chairman of the Board in
June 1999. On June&nbsp;21, 2000, Mr.&nbsp;Ornstein relinquished
his position as President of the Company. From April 1996 until
joining the Company as Chief Executive Officer,
Mr.&nbsp;Ornstein served as President and Chief Executive
Officer and Chairman of Virgin Express S.A./N.V., a European
airline. From 1995 to April 1996, Mr.&nbsp;Ornstein served as
Chief Executive Officer of Virgin Express Holdings, Inc.
Mr.&nbsp;Ornstein joined Continental Express Airlines, Inc. as
President and Chief Executive Officer in July 1994 and, in
November 1994, was named Senior Vice President, Airport Services
at Continental Airlines, Inc. Mr.&nbsp;Ornstein was previously
employed by the Company from 1988 to 1994, as Executive Vice
President and as President of the Company&#146;s subsidiary,
WestAir Holding, Inc.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Daniel J. Altobello
</FONT></I><FONT size="2">has served as a director of the
Company since January 1998. Mr.&nbsp;Altobello is the retired
Director and Chairman of Onex foodservices, the parent
corporation of Caterair International, Inc., and LSG/SKY Chefs.
From 1989 to 1995, Mr.&nbsp;Altobello served as Chairman,
President and Chief Executive Officer of Caterair International
Corporation. From 1979 to 1989, he held various managerial
positions with the food service management and in-flight
catering divisions of Marriott Corporation, including Executive
Vice President of Marriott Corporation and President of Marriott
Airport Operations Group. Mr.&nbsp;Altobello began his
management career at Georgetown University as Vice President of
Administration Services. He is a member of the board of
directors of World Airways, Inc. and Friedman, Billings and
Ramsey Group, Inc. (both public reporting companies.)
Mr.&nbsp;Altobello is also a director of several private
companies: Diamond Rock Hospitality Trust, Inc., JER Real Estate
Investment Trust, and Mercury Air Centers; and is also a trustee
of Loyola Foundation, Inc. Mr.&nbsp;Altobello obtained a
bachelor of arts in English from Georgetown University and a
master of business administration from Loyola College.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Robert Beleson </FONT></I><FONT size="2">was
elected as a director of the Company in October 2003. Since May
2002, Mr.&nbsp;Beleson has provided marketing and strategic
planning consulting services to select clients in the aviation
and wine and
</FONT>

<P align="center"><FONT size="2">3
</FONT>
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<DIV align="left">
<FONT size="2">spirit industries. This consulting service was
formally organized as Brookfield Marketing, LLC on
October&nbsp;1, 2003. In November 2001, he became the Chief
Executive Officer of Christiana Spirits Incorporated, of which
Mr.&nbsp;Beleson is also an equity investor. From July 2001 to
April 2002 he served as Chief Marketing Officer for Avolar, a
former Division of United Airlines. From March 1996 to December
2000 he served as President of M.&nbsp;Shanken Communications,
Inc., New York, N.Y. From May 1991 to February 1996 he served as
Chief Marketing Officer for Playboy Enterprises.
Mr.&nbsp;Beleson received a bachelor of science from Cornell
University School of Industrial and Labor Relations and a master
of business administration from Harvard Business School.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">General Ronald R. Fogleman, USAF, (Ret.)
</FONT></I><FONT size="2">has been a director of the Company
since January 1998. In September 1997, he retired in the rank of
General, having served as the Chief of Staff of the United
States Air Force from 1994 until 1997 and as Commander-in-Chief
of the United States Transportation Command from 1992 until
1994. General Fogleman is the Chairman and CEO of Durango
Aerospace, Inc., a privately held international aviation
consulting firm. He currently serves on the board of directors
of: AAR Corporation; Alliant Techsystems, Inc.; Rolls-Royce
North America; and World Airways, Inc. On May&nbsp;31, 2004,
General Fogleman became the non-executive Chairman of the Board
of World Airways, Inc. He received a bachelor of arts degree
from the United States Air Force Academy and a master&#146;s
degree in military history and political science from Duke
University.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Joseph L. Manson </FONT></I><FONT size="2">has
been a director of the Company since July 2001. Mr.&nbsp;Manson
is a partner in the Washington,&nbsp;D.C. office of the law firm
Piper Rudnick LLP (which merged with Verner Liipfert Bernhard
McPherson and Hand), where he has been employed since 1974.
Mr.&nbsp;Manson received a bachelor of science from the
University of Virginia and a doctorate in jurisprudence from
Emory University.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Maurice A. Parker
</FONT></I><FONT size="2">has been a director of the Company
since November 1998. Mr.&nbsp;Parker has served as Executive
Director of Regional Aviation Partners since April 2001. From
1978 to January 1997, Mr.&nbsp;Parker served as a Federal
Mediator for the National Mediation Board of the United States
government. From 1997 to the present, Mr.&nbsp;Parker has worked
as an independent arbitrator, mediator and consultant.
Mr.&nbsp;Parker obtained a bachelor of science in technical
education from the University of Houston and a doctorate in
jurisprudence from South Texas College of Law.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Julie Silcock </FONT></I><FONT size="2">has
served as a director of the Company since July 2001. Since
November 2000, Ms.&nbsp;Silcock has been the Managing Director
and head of Southwest Investment Banking of Citigroup Global
Market, Inc. From August 1997 to November 2000, she served as
Managing Director at Donaldson, Lufkin&nbsp;&#38; Jenrette. From
January 1984 to August 1997, she was an investment banker with
Bear, Stearns&nbsp;&#38; Co., Inc., most recently as a Senior
Managing Director. Ms.&nbsp;Silcock received a bachelor of arts
in comparative literature from Princeton University and a master
of business administration from Stanford Graduate School of
Business.
</FONT>

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

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Information concerning the three Committees
maintained by the Board of Directors is set forth below. The
Board Committees currently consist only of Directors who are not
employees of the Company and who are &#147;independent&#148;
within the meaning of the listing standards of the NASD.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Board held ten meetings during the 2004
fiscal year. No director attended less than 75% of the Board
meetings while serving as such director, or less than 75% of all
committee meetings on which he or she served as a committee
member.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company does not have a formal policy
regarding attendance by members of the Board of Directors at our
annual meeting of stockholders, but strongly encourages
directors to attend.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At various times throughout the year
non-management directors hold meetings without the presence of
management personnel. The Lead Director chairs these meetings
and is also the Chair of the Nominating/ Corporate Governance
Committee.
</FONT>

<P align="center"><FONT size="2">4
</FONT>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The audit, nominating and compensation committees
are the standing committees of the Board. The fiscal year 2004
committees were comprised as follows:
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="13%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="13%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="21%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="20%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="12%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="12%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Audit</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Nominating/Corporate Governance</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Compensation</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">Ronald R. Fogleman*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">Daniel J. Altobello*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">Daniel J. Altobello*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

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

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

</TABLE>
</CENTER>

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

<DIV>&nbsp;</DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">*
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">Chairman
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The audit committee of the Board (the &#147;Audit
Committee&#148;) held six meetings during fiscal 2004. The Audit
Committee, among other things, recommends the Company&#146;s
independent registered public accountants, reviews the
Company&#146;s financial statements, makes reports and
recommendations regarding the adequacy of internal accounting
controls made by the independent registered public accountants
and considers such other matters with respect to the accounting,
auditing and financial reporting procedures as it may deem
appropriate or as may be brought to its attention.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Audit Committee acts under a written charter
adopted and approved by the Board in May 2000. A copy of the
original Audit Committee Charter is attached as an exhibit to
the Company&#146;s 2001 Annual Meeting Proxy Statement. The
Audit Committee Charter was amended in April 2002 and July 2004.
A copy of the amended Audit Committee Charter is attached as
Exhibit&nbsp;A to this Proxy Statement. The Audit Committee is
composed of outside directors who are not officers or employees
of the Company or its subsidiaries. In the opinion of the Board
and as &#147;independent&#148; is defined under current
standards of the NASD (including the heightened independence
requirements of audit committee members), these directors are
independent of management and free of any relationship that
would interfere with their exercise of independent judgment as
member of this committee.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The nominating committee of the Board (the
&#147;Nominating Committee&#148;) met once in fiscal 2004. In
November 2003, the Nominating Committee was merged with a newly
established corporate governance committee, creating the
Nominating/ Corporate Governance Committee. A Corporate
Governance/ Nominating Committee charter was adopted in August
2004. The Nominating/ Corporate Governance Committee is
responsible for identifying and nominating individuals qualified
to serve on the Board and the Committees of the Board, as well
as reviewing the effective corporate governance policies and
procedures and recommending any applicable modifications
thereto. The Nominating/ Corporate Governance Committee will
consider, but is not required to approve, nominations for
directors by shareholders for any annual meeting of the Company,
provided a written recommendation is received by the Company no
later than the date shareholder proposals must be submitted for
consideration prior to such annual meeting.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In evaluating the suitability of potential
nominees for membership on the Board, the Nominating/ Corporate
Governance Committee will consider the Board&#146;s current
composition, including expertise, diversity, and balance of
inside, outside and independent directors, and consider the
general qualifications of the potential nominees, such as:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Unquestionable integrity and honesty;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The ability to exercise sound, mature and
    independent business judgment in the best interests of the
    shareholders as a whole;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Recognized leadership in business or professional
    activity;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">A background and experience that will complement
    the talents of the other Board members;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Willingness and capability to take the time to
    actively participate in Board and Committee meetings and related
    activities;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Ability to work professionally and effectively
    with other Board members and the Company&#146;s management;
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">5
</FONT>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">An age to enable the Director to remain on the
    Board long enough to make an effective contribution;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Lack of realistic possibilities of conflict of
    interest or legal prohibition.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Committee will also see that all necessary
and appropriate inquiries are made into the backgrounds of such
candidates. Other than the foregoing, there are no stated
minimum criteria for director nominees, although the Nominating/
Corporate Governance Committee may also consider such other
factors as it may deem to be in the best interests of the
Company and its stockholders.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In obtaining the names of possible new nominees,
the Committee may make its own inquiries and will receive
suggestions from other Directors, stockholders and other
sources. All potential nominees must first be considered by the
Committee before being contacted as possible nominees and before
having their names formally considered by the full Board.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The compensation committee of the Board (the
&#147;Compensation Committee&#148;) held five meetings during
the 2004 fiscal year. The Compensation Committee is responsible
for allocating cash compensation and stock options to senior
executive officers of the Company.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">It is expected that all current committee members
will be nominated for re-election to such committees at a Board
meeting to be held immediately following the Annual Meeting.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Board of Directors adopted a Code of Ethics
in fiscal 2003, which applies to the Company&#146;s financial
executives, as well as the financial executives of the
Company&#146;s subsidiaries.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">You can obtain copies of our current committee
charters and Code of Ethics in the &#147;Corporate
Governance&#148; section of our website (www.mesa-air.com) or by
writing to our Corporate Secretary at 410 North
44th&nbsp;Street, Suite&nbsp;700, Phoenix, Arizona 85008.
</FONT>

<P align="center">
<B><FONT size="2">COMPENSATION OF DIRECTORS</FONT></B>

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

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following fees were paid to Directors who
were not employees of the Company during fiscal 2004. Directors
who are full-time employees of the Company receive no additional
compensation for serving as directors. Board members also are
reimbursed for all expenses associated with attending Board or
Committee meetings.
</FONT>

<CENTER>
<TABLE width="60%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="87%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Annual Retainer
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Fee for each Board meeting
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Fee for each telephonic Board meeting
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Fee for each Committee meeting
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In July 2004, the Board of Directors approved
additional annual retainers for the Lead Director and certain
Committee chair positions as set forth below:
</FONT>

<CENTER>
<TABLE width="60%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="87%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Lead Director
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Compensation Committee Chairman
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Audit Committee Chairman
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

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

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under the Outside Director&#146;s Option Plan,
each non-employee director receives an annual grant of options
to purchase&nbsp;3,000&nbsp;shares of Common Stock, plus the
number of options to purchase Common Stock equivalent to a cash
value of $20,000 as calculated pursuant to the Black-Scholes
Valuation Method (collectively, the &#147;Formula Amount&#148;),
at a risk-free rate of a ten-year zero coupon bond. Each
non-employee director receives an additional Formula Amount on
April&nbsp;1st&nbsp;of each year thereafter. Upon being
appointed a
</FONT>

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

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<DIV align="left">
<FONT size="2">non-employee director after April&nbsp;1, such
director is granted a pro-rata portion of the Formula Amount and
receives options pursuant to the plan on April&nbsp;1st&nbsp;of
each succeeding year. The amount of pro rata options granted to
each new non-employee director is calculated by dividing the
number of days prior to April&nbsp;1st&nbsp;by the number of
days in the calendar year and multiplying the quotient by the
Formula Amount.
</FONT>
</DIV>

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

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each non-employee director, and certain family
members of such director, receives free travel on Mesa Air and
free or reduced-fare travel on certain air carriers at no cost
to the Company or the director. The Company believes that the
directors&#146; use of free air travel is &#147;de minimis&#148;
and did not maintain any records of non-employee directors&#146;
travel during fiscal 2004.
</FONT>

<P align="center">
<B><FONT size="2">COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During the fiscal year 2004, the Compensation
Committee consisted of Messrs.&nbsp;Altobello and Beleson and
Ms.&nbsp;Silcock. None of the members of the committee held any
executive officer position or other employment with the Company
prior to or during such service.
</FONT>

<P align="center">
<B><FONT size="2">REPORT OF AUDIT COMMITTEE OF THE BOARD OF
DIRECTORS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Audit Committee assists the Board in
fulfilling its responsibility for oversight of the internal
control, accounting, auditing and financial reporting practices
of the Company. Specific responsibilities of the Audit Committee
include:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">reviewing and discussing the audited financial
    statements with management;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">discussing with the Company&#146;s independent
    registered public accountants information relating to the
    independent registered public accountants&#146; judgments about
    the quality of the Company&#146;s accounting policies and
    financial reporting practices;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">recommending to the Board that the Company
    include the audited financials in its Annual Report on
    Form&nbsp;10-K;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">overseeing compliance with the Securities and
    Exchange Commission requirements for disclosure of registered
    public accountants&#146; services and activities.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Committee regularly meets with management to
consider the adequacy of the Company&#146;s internal controls
and the integrity of its financial reporting. The Committee
discusses these matters with the Company&#146;s independent
registered public accountants and with appropriate Company
financial personnel and internal auditors.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Committee regularly meets privately with
management, the independent registered public accountants and
the internal auditors. Each of the independent registered public
accountants has unrestricted access to the Committee.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Committee retains and, if circumstances
warrant, replaces the independent registered public accountants
and regularly reviews their performance and independence from
management. The Committee also pre-approves all audit and
permitted non-audit services and related fees.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Board of Directors has determined that none
of the Directors serving on the Committee has a relationship to
the Company that may interfere with their independence from the
Company and its management. As a result, each Director who
serves on the Committee is &#147;independent&#148; as required
by NASD listing standards.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Board of Directors has adopted a written
charter setting out the roles and responsibilities the Committee
is to perform. The Board has determined that Julie Silcock of
the Audit Committee is an &#147;audit committee financial
expert,&#148; as such term is defined in Item&nbsp;401(h) of
Regulation&nbsp;S-K.
</FONT>

<P align="center"><FONT size="2">7
</FONT>
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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Management has primary responsibility for the
Company&#146;s financial statements and the overall reporting
process, including the Company&#146;s system of internal
controls.
</FONT>

<P align="left">
<B><FONT size="2">Review of Audited Financial
Statements</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Audit Committee has reviewed the
Company&#146;s financial statements for the fiscal year ended
September&nbsp;30, 2004, as audited by Deloitte&nbsp;&#38;
Touche LLP, the Company&#146;s independent registered public
accountants, and has discussed these financial statements with
management. In addition, the Audit Committee has discussed with
Deloitte&nbsp;&#38; Touche LLP the matters required to be
discussed by Statement of Auditing Standards No.&nbsp;61 and
Rule&nbsp;2-07, as amended, regarding the codification of
statements on auditing standards. Furthermore, the Audit
Committee has received the written disclosures and the letter
from Deloitte&nbsp;&#38; Touche LLP required by the Independence
Standards Board Standard No.&nbsp;1 and has discussed with
Deloitte&nbsp;&#38; Touche LLP its independence.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In reliance on the reviews and discussions
referred to above, the Audit Committee recommended to the Board
that the audited financial statements for the fiscal year ended
September&nbsp;30, 2004 be included in the Company&#146;s Annual
Report on Form&nbsp;10-K, for filing with the Securities and
Exchange Commission.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The members of the Audit Committee are not
professionally engaged in the practice of auditing or
accounting. Members of the Audit Committee rely, without
independent verification, on the information provided to them
and on the representations made by management and the
independent registered public accountants. Accordingly, the
Audit Committee&#146;s oversight does not provide an independent
basis to determine that management has maintained procedures
designed to assure compliance with accounting standards and
applicable laws and regulations. Furthermore, the Audit
Committee&#146;s considerations and discussions referred to
above do not assure that the audit of the Company&#146;s
financial statements has been carried out in accordance with
accepted auditing standards of the Public Company Accounting
Oversight Board, that the financial statements are presented in
accordance with accounting principles generally accepted in the
United States of America and that the Company&#146;s independent
registered public accountants are in fact
&#147;independent.&#148;
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

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

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Ronald R. Fogleman
    </FONT></TD>
</TR>

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

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

</TABLE>

<P align="center">
<B><FONT size="2">DISCLOSURE OF AUDIT AND NON-AUDIT
FEES</FONT></B>

<P align="left">
<B><FONT size="2">Pre-approval Policy</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In August 2003, the Audit Committee adopted a
Pre-approval Policy (&#147;Policy&#148;) governing the approval
of all audit and non-audit services performed by the independent
registered public accountants in order to ensure that the
performance of such services does not impair the independent
registered public accountants.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">According to the Policy, the Audit Committee will
annually review and pre-approve the services and fees that may
be provided by the independent registered public accountants
during the following year. The Policy specifically describes the
services and fees related to the annual audit, other services
that are audit-related, preparation of tax returns and tax
related compliance services and all other services that have the
pre-approval of the Audit Committee. The term of any general
pre-approval is 12&nbsp;months from the date of pre-approval,
unless the Audit Committee specifically provides for a different
period.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Any service to be provided by the independent
registered public accountants that has not received general
pre-approval under the Policy is required to be submitted to the
Audit Committee for approval prior to the commencement of a
substantial portion of the engagement. Any proposed service
exceeding pre-approved cost levels is also required to be
submitted to the Audit Committee for specific approval.
</FONT>

<P align="center"><FONT size="2">8
</FONT>
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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Audit Committee will revise the list of
general pre-approved services from time to time based on
subsequent determinations. The Committee does not delegate its
responsibilities to pre-approve services performed by the
independent registered public accountant to management.
</FONT>

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

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth the aggregate fees
billed by Deloitte&nbsp;&#38; Touche LLP for fiscal 2003 and
2004:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="41%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Audit</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Audit</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Related</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Tax</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">All Other</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Year</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Fees(1)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Fees(2)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Fees(3)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Fees(4)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">2003</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">463,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">259,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">487,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,209,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">2004</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">435,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">356,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">355,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,164,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

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

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes fees for the annual audit and quarterly
    reviews.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes fees for services for miscellaneous
    compliance audits and other SEC filings.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(3)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes fees for annual federal and state income
    tax compliance services and property tax fees.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(4)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes miscellaneous tax consulting services.
    </FONT></TD>
</TR>

</TABLE>

<P align="center">
<B><FONT size="2">SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth certain
information regarding the beneficial ownership of Common Stock
as of September&nbsp;30, 2004 by (i)&nbsp;each director of the
Company, (ii)&nbsp;each of the Company&#146;s officers named in
the Summary Compensation Table (collectively, the &#147;Named
Executive Officers&#148;), (iii)&nbsp;each person who is known
by the Company to be the beneficial owner of more than five
percent of the Company&#146;s outstanding Common Stock, and
(iv)&nbsp;all directors and executive officers as a group.
Except as otherwise indicated below, each person named has sole
voting and investment power with respect to the shares indicated.
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="44%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Amount and Nature of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Beneficial Ownership</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Options/</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Name and Address of Beneficial Owner</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Shares(1)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Warrants(1)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total(1)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Percent(1)</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">State Street Research&nbsp;&#38; Management Co
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,347,600</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,347,600</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">One Financial Center, 30th Floor
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Boston, MA 02111-2690
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Putnam, LLC
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,822,793</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,822,793</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">One Post Office Square
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Boston, MA 02109
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Wells Capital Management Incorporated
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,618,874</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,618,874</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">525 Market Street, 10th Floor
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">San&nbsp;Francisco, CA 94104
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Wells Fargo&nbsp;&#38; Company
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,496,295</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,496,295</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">420 Montgomery Street
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">San&nbsp;Francisco, CA 94104
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Directors</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Jonathan G. Ornstein(2)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">137,902</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,514,846</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,652,748</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Daniel J. Altobello
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">59,325</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">65,325</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Ronald R. Fogleman(3)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,200</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">47,287</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">48,487</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Joseph L. Manson
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23,208</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">33,208</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Robert Beleson
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,170</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,170</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Maurice Parker
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25,583</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">27,583</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Julie Silcock
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26,208</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">28,208</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">9
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="47%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Amount and Nature of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Beneficial Ownership</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Options/</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Name and Address of Beneficial Owner</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Shares(1)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Warrants(1)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total(1)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Percent(1)</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Officers</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Michael J. Lotz
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">473,120</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">484,120</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">George Murnane&nbsp;III
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">133,142</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">186,642</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Michael Ferverda
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">72,066</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">72,066</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Brian S. Gillman
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">104,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">104,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">F. Carter Leake
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">121,667</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">121,667</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Edward J.Wegel
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">All directors and officers as a group
    (12&nbsp;Individuals)</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">173,602</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,657,622</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,831,224</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

</TABLE>
</CENTER>

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

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes options and warrants exercisable on
    September&nbsp;30, 2004 or within 60&nbsp;days thereafter.
    Number of shares as reported by each company&#146;s
    Schedule&nbsp;13G. Holdings of less than 1% are indicated by
    &#147;*&#148;. Based upon 31,704,625&nbsp;shares issued and
    outstanding as of September&nbsp;30, 2004.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes 65,902&nbsp;shares held by
    Mr.&nbsp;Ornstein&#146;s children, mother and spouse.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(3)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes 1,200&nbsp;shares of common stock held
    by B Bar J Pension Fund, which is controlled by Gen. Fogleman.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Compliance with Section&nbsp;16(a) of the
Securities Exchange Act of 1934</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Section&nbsp;16(a) of the Securities Exchange Act
of 1934, as amended, requires the Company&#146;s directors and
executive officers, as well as persons beneficially owning more
than 10% of the outstanding Common Stock, to file certain
reports of ownership with the Securities and Exchange Commission
within specified time periods. Such officers, directors and
shareholders are also required by Securities and Exchange
Commission rules to furnish the Company with copies of all
Section&nbsp;16(a) forms they file.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Based solely on its review of such forms all
requirements received by it, or written representations from
certain reporting persons, the Company believes that between
October&nbsp;1, 2003 and September&nbsp;30, 2004, all
Section&nbsp;16(a) filing requirements applicable to its
officers, directors and 10% shareholders were met.
</FONT>

<P align="center"><FONT size="2">10
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

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

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth compensation for
fiscal years 2004, 2003 and 2002 of the Chief Executive Officer
and the four other most highly compensated executive officers of
the Company whose total annual salary and bonuses exceeded
$100,000 at the end of fiscal 2004 (the &#147;Named Executive
Officers&#148;).
</FONT>

<P align="center">
<B><FONT size="2">Summary Compensation Table</FONT></B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="27%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Annual Compensation</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Long-Term Awards</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Other Annual</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Restricted</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Securities</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">All Other</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Compensation</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Stock Awards</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Under-Lying</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Compensation</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Name and Principal Position</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Year</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Salary($)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Bonus($)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">($)(1)(2)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">($)(3)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Options (#)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">($)(4)</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Jonathan G. Ornstein
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2004</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">250,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">432,500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">361,296</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,964,787</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">150,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,862,076</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Chief Executive Officer
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">200,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">420,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">259,782</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">150,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,377</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">200,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">420,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">200,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">366,313</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">939</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Michael J. Lotz
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2004</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">212,500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">330,625</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">223,734</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,568,663</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,487,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">President &#38; Chief Operating
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">175,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">320,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">175,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,450</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Officer
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">175,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">320,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">175,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">239,786</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,264</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">George Murnane&nbsp;III(5)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2004</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">167,917</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">188,396</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,748</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Executive Vice President &#38; CFO
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">145,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">180,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">40,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">97,038</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">135,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">150,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Brian S. Gillman
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2004</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">117,500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">93,813</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,065</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Vice President&nbsp;&#38; General Counsel
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">110,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">67,800</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,276</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">110,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">36,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">60,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,266</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">F. Carter Leake
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2004</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">122,500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">86,042</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,025</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Senior Vice President&nbsp;&#151; East
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">120,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">49,400</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,019</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Coast Operations
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">120,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">67,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

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

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">With respect to Jonathan Ornstein, amounts
    reported for the fiscal years ended 2002, 2003, and 2004 include
    deferred compensation of $200,000, $200,000 and $263,216,
    respectively. For fiscal years 2003 and 2004,
    Mr.&nbsp;Ornstein&#146;s total also includes personal use of
    company aircraft of $38,786 and $57,189, disability and life
    insurance premium payments of $8,451 and $8,451 and a
    non-accountable expense allowance of $12,545 and $32,440,
    respectively. With respect to Michael Lotz, amounts reported for
    the fiscal years ended 2002, 2003 and 2004 include deferred
    compensation of $175,000, 175,000 and $223,734, respectively.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Except for Mr.&nbsp;Ornstein in fiscal years 2003
    and 2004, the amounts in this column do not reflect perquisites
    since the dollar value of these personal benefits in each
    reported year did not exceed the lesser of $50,000 or ten
    percent of each executive officer&#146;s salary and bonus
    amounts.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(3)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The aggregate number and value as of
    September&nbsp;30, 2004, of those Named Executive Officers&#146;
    restricted share holdings are as follows: Mr.&nbsp;Ornstein,
    238,156&nbsp;shares and $1,214,596; Mr.&nbsp;Lotz,
    190,141&nbsp;shares and $969,719. The shares of restricted
    common stock to Mr.&nbsp;Ornstein and Mr.&nbsp;Lotz will vest in
    equal one-third increments over a three-year period beginning on
    March&nbsp;31, 2005.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(4)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">These amounts include the Company&#146;s vested
    and non-vested contributions to the individual named executive
    officer&#146;s 401(k) plan account. Under the Company&#146;s
    401(k) plan, employees may contribute up to 15% of their annual
    salary and bonus up to a specified maximum. The Company
    currently makes matching contributions equal to 25% of an
    employee&#146;s contributions (including officers), with a cap
    of 10% of the employee&#146;s annual compensation. With respect
    to Jonathan Ornstein, amounts reported for fiscal year ended
    September&nbsp;30, 2004 include a retention bonus in the amount
    of $1,860,000 in consideration for entering into a new five-year
    employment agreement and waiving certain rights under the prior
    employment agreement. With respect to Mike Lotz, amounts
    reported for fiscal year ended September&nbsp;30, 2004 include a
    retention bonus in the amount of $1,485,000 in consideration for
    entering into a new five-year employment agreement and waiving
    certain rights under the prior employment agreement.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(5)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Mr.&nbsp;Murnane joined the Company on
    January&nbsp;16, 2002.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">11
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="center">
<B><FONT size="2">OPTION GRANTS IN LAST FISCAL YEAR</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth for each Named
Executive Officer information concerning individual grants of
stock options during the 2004 fiscal year.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="28%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Potential Realizable</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Value at Assumed</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Percent of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Annual Rates of Stock</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Securities</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total Options</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercise of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Price Appreciation for</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Underlying</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Granted To</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Base Price</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Option Term</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Options</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Employees in</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(2)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Expiration</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Granted(1)(#)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Fiscal Year</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">($/share)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Date</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">5%(3)($)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">10%(3)($)</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Jonathan Ornstein
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">150,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">34.8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4/1/14</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14,340</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">710,016</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Mike Lotz
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12.56</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1/02/14</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,773</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

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

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Option grants under the 2001 Key Officer Plan.
    The shares underlying option grants made pursuant to the Mesa
    Airline Stock Option Plan vest in annual 1/3 increments
    beginning one year after the date of the grant.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The exercise price was set at 100% of the closing
    price of the Common Stock on the grant date, as reported on the
    NASDAQ National Market.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(3)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Potential realizable values shown above represent
    the potential gains based upon annual compound stock price
    appreciation of 5% and 10% from October&nbsp;1, 2004 through the
    full option term. The actual value realized, if any, on stock
    option exercises will be dependent upon overall market
    conditions and the future performance of the Company and the
    Common Stock. There is no assurance that the actual value
    realized will approximate the amounts reflected in this table.
    </FONT></TD>
</TR>

</TABLE>

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

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth the number of
shares covered by both exercisable and unexercisable stock
options as of the fiscal year ended September&nbsp;30, 2004,
together with the values for in-the-money options which
represent the positive spread between the exercise price of any
such outstanding stock and the fiscal year end price of the
Common Stock.
</FONT>

<P align="center">
<B><FONT size="2">Aggregate Option Exercises In Last Fiscal Year
And Year End Option Values</FONT></B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="25%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="10%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="11%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="11%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number of Securities</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Underlying Unexercised</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Value of Unexercised</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Shares</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Options at</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">In-The-Money Options at</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Acquired on</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Value</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">September&nbsp;30, 2004&nbsp;(#)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">September&nbsp;30, 2004&nbsp;($)</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Name</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercise&nbsp;(#)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Realized&nbsp;($)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercisable/Unexercisable</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercisable/Unexercisable(1)</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Jonathan G. Ornstein
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,392,742/372,104</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">87,380/73,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Michael J. Lotz
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">393,192/246,594</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">77,334/48,666</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">George Murnane&nbsp;III
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">119,809/76,666</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,667/5,333</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Brian S. Gillman
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">84,000/30,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,960/14,600</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">F. Carter Leake
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">103,334/26,666</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">22,867/13,933</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

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

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Based on the closing price of the Common Stock on
    September&nbsp;30, 2004 of $5.10&nbsp;per share, as reported by
    the NASDAQ National Market.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Amendment or Repricing of Options</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During the 2004 fiscal year, the Company did not
amend or reprice any stock options held by executive officers of
the Company.
</FONT>

<P align="center"><FONT size="2">12
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="center">
<B><FONT size="2">EQUITY COMPENSATION PLANS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth certain
information as of September&nbsp;30, 2004, concerning
outstanding options and rights to purchase Common Stock granted
to participants in all of the Company&#146;s equity compensation
plans (including the Outside Director&#146;s Option Plan) and
the number of shares of Common Stock remaining available for
issuance under such equity compensation plans.
</FONT>

<P align="center">
<B><FONT size="2">Equity Compensation Plan Information</FONT></B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="34%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="10%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="10%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number of Securities</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number of Securities</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Remaining Available for</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">to be Issued Upon</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Weighted-Average</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Future Issuance Under</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercise of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercise Price of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Equity Compensation Plans</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Outstanding Options,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Outstanding Options,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(Excluding Securities</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Warrants and Rights</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Warrants and Rights</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Reflected in Column&nbsp;(a))</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Plan Category</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(a)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(b)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(c)</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Equity compensation plans approved by security
    holders(1)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,803,255</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.82</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">443,765</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Equity compensation plans not approved by
    security holders(2)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">750,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.23</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,250,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,553,255</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,693,765</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

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

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes the Outside Directors&#146; Option Plan,
    as amended, which was approved by the shareholders on
    February&nbsp;11, 2003.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The Board of Directors adopted the 2001 Key
    Officer Plan on July&nbsp;13, 2001. An aggregate of
    2,000,000&nbsp;shares are authorized for issuance under this
    plan. The Company&#146;s CEO and President are the only persons
    eligible to participate in the Plan. Options are granted
    pursuant to the terms of their respective employment contracts.
    </FONT></TD>
</TR>

</TABLE>

<P align="center">
<B><FONT size="2">EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Chief Executive Officer; the President and
Chief Operating Officer; the Executive Vice President and Chief
Financial Officer; the Senior Vice President&nbsp;&#151; East
Coast Operations, and the Vice President and General Counsel
have each entered into an employment agreement with the Company.
</FONT>

<P align="left">
<B><FONT size="2">CEO Employment Agreement</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Effective as of March&nbsp;31, 2004, Jonathan G.
Ornstein and the Company entered into a new employment
agreement, in which Mr.&nbsp;Ornstein agreed to serve as the
Chief Executive Officer of the Company for a term of five
(5)&nbsp;years ending March&nbsp;30, 2009. Under
Mr.&nbsp;Ornstein&#146;s agreement, he will receive an annual
base salary of $300,000 effective March&nbsp;31, 2004, which
amount shall be increased by $75,000 on the first and second
anniversary dates.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The base salary is subject to annual
discretionary increases upon review by the Board.
Mr.&nbsp;Ornstein also is entitled to an annual bonus, paid
quarterly, based on annual performance criteria as set forth in
the agreement, which may range from $52,500 to $420,000.
Additionally, the Board may approve discretionary bonuses. Upon
execution of the agreement and on March&nbsp;31st each year
thereafter during the term of the agreement, the Company is
obligated to contribute an amount equal to his base salary, as
deferred compensation, to an account for the benefit of
Mr.&nbsp;Ornstein. The Company also is obligated to provide
Mr.&nbsp;Ornstein with $5,000,000 of term life insurance, the
limited use of Company aircraft, and other customary fringe
benefits.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Mr.&nbsp;Ornstein&#146;s employment agreement
also provides for the initial grant of stock options to
purchase&nbsp;150,000&nbsp;shares of Common Stock, with the
options vesting in one-third increments over a three-year
period, and additional annual option grants of
150,000&nbsp;shares throughout the term of the agreement. The
</FONT>

<P align="center"><FONT size="2">13
</FONT>
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<DIV align="left">
<FONT size="2">exercise price for each option is determined by
the market price for the Common Stock on the date the option is
granted.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Additionally, Mr.&nbsp;Ornstein&#146;s agreement
provided for the payment of a retention bonus in the amount of
$1,860,000 on the date of the agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Mr.&nbsp;Ornstein&#146;s employment agreement
also provides for the initial grant of 238,156&nbsp;shares of
restricted Common Stock, with the stock vesting in one-third
increments over a three-year period beginning on March&nbsp;31,
2005.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The agreement provides that upon
Mr.&nbsp;Ornstein&#146;s disability, as defined in the
agreement, he will receive on a monthly basis, his base salary,
plus an annualized amount equal to his historical bonuses. The
Company will make such disability payments for as long as the
disability lasts, up to 48&nbsp;months, and payments will
continue to be made even if they extend beyond the term of the
agreement. The Company is required to fund a portion of the
payments with disability insurance.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Mr.&nbsp;Ornstein may terminate the agreement
following the occurrence of an event constituting &#147;Good
Reason.&#148; &#147;Good Reason&#148; is defined as the
occurrence of any of the following circumstances: (i)&nbsp;any
change by the Company in Mr.&nbsp;Ornstein&#146;s title, or any
significant diminishment in his function, duties or
responsibilities, (ii)&nbsp;any reduction in
Mr.&nbsp;Ornstein&#146;s salary, bonus opportunity or benefits
(other than across the board reductions), (iii)&nbsp;relocation
of Mr.&nbsp;Ornstein&#146;s principal place of employment
greater than 50&nbsp;miles from its current location, or
(iv)&nbsp;any material uncured breach of the agreement by the
Company.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If Mr.&nbsp;Ornstein&#146;s employment is
terminated by the Company without Cause (as defined in the
agreement) or there is a Change in Control (as defined in the
agreement), the Company is required to pay Mr.&nbsp;Ornstein an
amount equal to six times his combined annual salary and bonus.
Additionally, all of his non-vested stock would immediately
vest. If Mr.&nbsp;Ornstein&#146;s employment is terminated by
Mr.&nbsp;Ornstein for Good Reason, the Company is required to
pay Mr.&nbsp;Ornstein an amount equal to three times his
combined annual salary and bonus and all of his non-vested stock
would immediately vest. If Mr.&nbsp;Ornstein&#146;s employment
is terminated by him voluntarily for no Good Reason or in the
absence of a Change in Control, he will not be entitled to any
additional severance payments beyond amounts earned through the
last effective date of his employment.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, the Company has agreed to enter into
a consulting agreement with Mr.&nbsp;Ornstein, which will become
effective when he leaves the Company for any reason. The
consulting agreement will provide for Mr.&nbsp;Ornstein&#146;s
retention as a consultant for a period of 7&nbsp;years from its
effective date at the rate of $200,000&nbsp;per year.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If any payments received by Mr.&nbsp;Ornstein
under the agreement are treated as excess parachute payments and
are subjected to the excise tax imposed by Section&nbsp;4999 of
the Internal Revenue Code, Mr.&nbsp;Ornstein is entitled to
receive &#147;gross up&#148; payments sufficient to cover the
excise tax.
</FONT>

<P align="left">
<B><FONT size="2">President and Chief Operating Officer
Employment Agreement</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Effective as of March&nbsp;31, 2004, Michael J.
Lotz and the Company entered into a new employment agreement, in
which Mr.&nbsp;Lotz agreed to serve as the President and Chief
Operating Officer of the Company for a term of five
(5)&nbsp;years ending March&nbsp;30, 2009. Under
Mr.&nbsp;Lotz&#146;s agreement, he will receive an annual base
salary of $250,000 effective March&nbsp;31, 2004, which amount
shall be increased by $75,000 on the first and second
anniversary dates.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The base salary is subject to annual
discretionary increases upon review by the Board. Mr.&nbsp;Lotz
also is entitled to an annual bonus, paid quarterly based on
annual performance criteria as set forth in the agreement, which
may range from $40,000 to $320,000. Additionally, the Board may
approve discretionary bonuses. Upon execution of the agreement
and on March&nbsp;31st of each year thereafter during the term
of the agreement, the Company is obligated to contribute an
amount equal to his base salary, as deferred compensation, to an
account for the benefit of Mr.&nbsp;Lotz. The Company also is
obligated to provide Mr.&nbsp;Lotz with $2,000,000 of term life
insurance, the limited use of Company aircraft, and other
customary fringe benefits.
</FONT>

<P align="center"><FONT size="2">14
</FONT>
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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Mr.&nbsp;Lotz&#146;s employment agreement also
provides for the initial grant of stock options to
purchase&nbsp;100,000&nbsp;shares of Common Stock, with the
options vesting in one-third increments over a three-year
period, and additional annual option grants of
100,000&nbsp;shares throughout the term of the agreement. The
option exercise price for each option is determined by the
market price for the Common Stock on the date the option is
granted.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Additionally, Mr.&nbsp;Lotz&#146;s agreement
provided for the payment of a retention bonus in the amount of
$1,485,000 on the date of the agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Mr.&nbsp;Lotz&#146;s employment agreement also
provides for the initial grant of 190,141&nbsp;shares of
restricted Common Stock, with the stock vesting in one-third
increments over a three-year period beginning on March&nbsp;31,
2005.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The agreement provides that upon
Mr.&nbsp;Lotz&#146;s disability, as defined in the agreement,
Mr.&nbsp;Lotz will receive on a monthly basis, his base salary,
plus an annualized amount equal to his historical bonuses. The
Company will make such disability payments for as long as the
disability lasts, up to 48&nbsp;months, and payments will
continue to be made even if they extend beyond the term of the
agreement. The Company is required to fund a portion of the
payments with disability insurance.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Mr.&nbsp;Lotz may terminate the agreement
following the occurrence of an event constituting &#147;Good
Reason.&#148; &#147;Good Reason&#148; is defined as the
occurrence of any of the following circumstances: (i)&nbsp;any
change by the Company in Mr.&nbsp;Lotz&#146;s title, or any
significant diminishment in his function, duties or
responsibilities, (ii)&nbsp;any reduction in
Mr.&nbsp;Lotz&#146;s salary, bonus opportunity or benefits
(other than across the board reductions), (iii)&nbsp;relocation
of Mr.&nbsp;Lotz&#146;s principal place of employment greater
than 50&nbsp;miles from its current location, or (iv)&nbsp;any
material uncured breach of the agreement by the Company.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If Mr.&nbsp;Lotz&#146;s employment is terminated
by the Company without Cause (as defined in the agreement) or
there is a Change in Control (as defined in the agreement), the
Company is required to pay Mr.&nbsp;Lotz an amount equal to six
times his combined annual salary and bonus. Additionally, all of
his non-vested stock would immediately vest. If
Mr.&nbsp;Lotz&#146;s employment is terminated by Mr.&nbsp;Lotz
for Good Reason, the Company is required to pay Mr.&nbsp;Lotz an
amount equal to three times his combined annual salary and bonus
and all of his non-vested stock would immediately vest. If
Mr.&nbsp;Lotz&#146;s employment is terminated by him voluntarily
for no Good Reason or in the absence of a Change in Control, he
will not be entitled to any additional severance payments beyond
amounts earned through the last effective date of his employment.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, the Company has agreed to enter into
a consulting agreement with Mr.&nbsp;Lotz, which will become
effective when he leaves the Company for any reason. The
consulting agreement will provide for Mr.&nbsp;Lotz&#146;s
retention as a consultant for a period of 7&nbsp;years from its
effective date at the rate of $150,000&nbsp;per year.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If any payments received by Mr.&nbsp;Lotz under
the agreement are treated as excess parachute payments and are
subjected to the excise tax imposed by Section&nbsp;4999 of the
Internal Revenue Code, Mr.&nbsp;Lotz is entitled to receive
&#147;gross up&#148; payments sufficient to cover the excise tax.
</FONT>

<P align="left">
<B><FONT size="2">Executive Vice President and CFO Employment
Agreement</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Effective December&nbsp;6, 2001, George
Murnane&nbsp;III and the Company entered into an employment
agreement, in which Mr.&nbsp;Murnane agreed to serve as
Executive Vice President of the Company for a term of four
(4)&nbsp;years ending December, 2005. In February 2003,
Mr.&nbsp;Murnane was appointed Chief Financial Officer of the
Company. Mr.&nbsp;Murnane receives a base salary of $200,000.
The base salary is subject to increases in the Consumer Price
Index, and is subject to annual discretionary increases upon
review by the Board. Mr.&nbsp;Murnane is also entitled to an
annual bonus paid quarterly based on annual performance criteria
as set forth in the agreement, which may range from $40,000 to
$180,000. The Company also is obligated to provide
Mr.&nbsp;Murnane with $2,000,000 of term life insurance and
other customary fringe benefits.
</FONT>

<P align="center"><FONT size="2">15
</FONT>
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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Mr.&nbsp;Murnane&#146;s employment agreement also
provides for the initial grant of stock options to
purchase&nbsp;150,000&nbsp;shares of Common Stock, with the
options vesting in one-third increments over a three-year
period, and additional annual option grants of not fewer than
40,000&nbsp;shares throughout the term of the agreement. The
option exercise price for each option is determined by the
market price for the Common Stock on the date the option is
granted.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The agreement provides that upon
Mr.&nbsp;Murnane&#146;s disability, as defined in the agreement,
Mr.&nbsp;Murnane will receive on a monthly basis, his base
salary, plus an annualized amount equal to his historical
bonuses. The Company will make such disability payments for as
long as the disability lasts, up to 48&nbsp;months, and payments
will continue to be made even if they extend beyond the term of
the agreement. The Company is required to fund a portion of the
payments with disability insurance.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Mr.&nbsp;Murnane may terminate the agreement
following the occurrence of an event constituting &#147;Good
Reason.&#148; &#147;Good Reason&#148; is defined as the
occurrence of any of the following circumstances: (i)&nbsp;any
change by the Company in Mr.&nbsp;Murnane&#146;s title, or any
significant diminishment in his function, duties or
responsibilities and (ii)&nbsp;any material uncured breach by
the Company or relocation of Mr.&nbsp;Murnane outside Maricopa
County without prior written consent.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If Mr.&nbsp;Murnane&#146;s employment is
terminated (a)&nbsp;by the Company without Cause (as defined in
the agreement) or (b)&nbsp;by Mr.&nbsp;Murnane for Good Reason,
the Company is required to pay all normal accrued amounts plus
pay Mr.&nbsp;Murnane the greater of (i)&nbsp;salary and bonus
payments calculated at the threshold level and (ii)&nbsp;salary
and bonus payment, calculated at the minimum level, equal to two
years of service. Upon termination by the Company or by
Mr.&nbsp;Murnane following a Change in Control (as defined in
the agreement), the Company must pay all normal accrued amounts
plus payment representing four years of salary and bonus
calculated at the minimum level, with an agreed minimum payment
of at least one million dollars.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If any payments received by Mr.&nbsp;Murnane
under the agreement are treated as &#147;golden parachute&#148;
payments and are subjected to the excise tax imposed by
Section&nbsp;4999 of the Internal Revenue Code, Mr.&nbsp;Murnane
is entitled to receive &#147;gross up&#148; payments sufficient
to cover the excise tax.
</FONT>

<P align="left">
<B><FONT size="2">Other Employment Agreements</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Upon his appointment as Vice President and
General Counsel, Mr.&nbsp;Gillman and the Company entered into
an employment agreement. Upon his appointment as Senior Vice
President&nbsp;&#151; East Coast Operations, the Company amended
its employment agreement with Mr.&nbsp;Leake to reflect his new
duties. Both of these employment agreements provide for cash and
non-cash compensation. Mr.&nbsp;Leake and Mr.&nbsp;Gillman
receive base salaries of $125,000, and are eligible to receive
quarterly bonuses of varying minimum amounts ranging from 30% to
100% of their respective base salaries. Further, these
employment agreements differ from Mr.&nbsp;Ornstein&#146;s and
Mr.&nbsp;Lotz&#146;s with respect to lump sum payments due to
each of them upon termination by the Company without Good Cause
or by either of them for Good Reason and with respect to the
retention of either of them as consultants thereafter.
</FONT>

<P align="center">
<B><FONT size="2">COMPENSATION COMMITTEE REPORT ON EXECUTIVE
COMPENSATION</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Compensation Committee consists of three
non-employee directors, Mr.&nbsp;Altobello, Mr.&nbsp;Beleson and
Ms.&nbsp;Silcock. The Compensation Committee has the
responsibility for allocation of cash compensation and stock
options to senior executive officers of the Company. The
Compensation Committee primarily administers the Company&#146;s
cash compensation plans and employee stock option plans. In
those instances in which Rule&nbsp;16b-3 of the Securities
Exchange Act of 1934 requires grants or awards of stock options
to be made by a &#147;disinterested&#148; committee, the
Compensation Committee is solely responsible for the
administration of such plans.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The entire Board regularly reviews the
Compensation Committee decisions relating to executive
compensation. The Company&#146;s executive compensation
policies, as endorsed by the Compensation Committee, have been
designed to provide a balanced compensation program that will
assist the Company in its efforts
</FONT>

<P align="center"><FONT size="2">16
</FONT>
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<DIV align="left">
<FONT size="2">to attract, motivate and retain talented
executives who the Compensation Committee and senior management
believe are important to the long-term financial success of the
Company. The employment contracts of Messrs.&nbsp;Ornstein, Lotz
and Murnane provide for bonuses. Bonuses are limited to
prescribed percentages of base salary, based upon the percentage
growth in earnings per share (&#147;EPS&#148;) of the Company.
Growth in EPS is categorized at four levels:
(1)&nbsp;Minimum&nbsp;&#151; any growth in EPS during the prior
fiscal year; (2)&nbsp;Threshold&nbsp;&#151; 5.0% to 9.9% growth
in EPS; (3)&nbsp;Target&nbsp;&#151; 10.0% to 14.9% growth in
EPS; and (4)&nbsp;Maximum&nbsp;&#151; 15.0% or greater growth in
EPS. The Board may also approve discretionary bonuses. In
addition to salaries and bonuses, an integral part of executive
compensation is the issuance of stock options on an annualized
basis to key employees under the Key Officer Stock Option Plan
and the 1996 Stock Option Plan (together, the &#147;Stock Option
Plans&#148;).
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Key Officer Stock Option Plan provides for
options to be issued to the CEO and President at set dates for
prescribed amounts. The 1996 Stock Option Plan provides for
options to be issued to officers and key employees at the
discretion of the Compensation Committee upon recommendation by
the Chief Executive Officer. The options granted under the
foregoing Stock Option Plans vest at the rate of approximately
one-third per year commencing one year after the grant date. The
options have a 10-year term and are subject to standard option
provisions, including the requirement of continued employment
and provisions to deal with termination of employment due to
retirement, death or disability. Under the Stock Option Plans,
options will be issued at the weighted average price of Common
Stock on the date of grant. The total number of options granted
under all Stock Option Plans in fiscal 2004 was 430,220. The
Compensation Committee believes that the issuance of stock
options to officers and key employees related to the
appreciation of the Common Stock provides equitable incentives
to increase the profitability of the Company.
</FONT>

<P align="left">
<B><FONT size="2">Compensation of Chief Executive
Officer</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We used the same factors and criteria described
above in making compensation decisions regarding our Chief
Executive Officer during fiscal 2004. During the 2004 fiscal
year, Mr.&nbsp;Ornstein was compensated pursuant to an
employment agreement that was effective commencing
March&nbsp;14, 2001, which agreement was replaced with a new
five-year employment that became effective March&nbsp;31, 2004.
During fiscal 2004, Mr.&nbsp;Ornstein&#146;s annual base salary
was increased from $200,000 to $300,000 under his new employment
agreement and he also earned a performance bonus of $420,000.
Mr.&nbsp;Ornstein&#146;s performance bonus was determined in
accordance with the EPS growth criteria described above. In
consideration for entering into the new five-year employment
agreement and waiving certain rights under the prior employment
agreement, Mr.&nbsp;Ornstein was paid a retention bonus of
$1,860,000 and was granted 238,156&nbsp;shares of restricted
common stock, which consideration was received upon the
effectiveness of the new five-year employment agreement. For
additional information concerning Mr.&nbsp;Ornstein&#146;s
employment agreement, see &#147;Employment and Change in Control
Arrangements,&#148; above.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In establishing the level of base salary payable
to Mr.&nbsp;Ornstein under his new employment agreement, we
consulted with an independent third party and considered other
available information. We took into account compensation levels
payable to executives in our industry and reviewed executive
compensation information with regard to comparably-sized
companies. We further considered the increasingly active market
(and correspondingly increased cash and equity compensation
levels) for executives with established track records, and
potential costs to the Company if replacement management
executives were required. We also took into account information
concerning employment opportunities with third parties available
to Mr.&nbsp;Ornstein, and the importance of retaining
Mr.&nbsp;Ornstein&#146;s services in areas such as operational
leadership and continuing interactions with stakeholders. We
continue to consider market conditions with respect to the
compensation of all of our executives.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

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

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Daniel J. Altobello
    </FONT></TD>
</TR>

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

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

</TABLE>

<P align="center"><FONT size="2">17
</FONT>

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<P align="center">
<B><FONT size="2">CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In February 1999, the Company entered into an
agreement with Barlow Capital, LLC (&#147;Barlow&#148;), whereby
Barlow would provide financial advisory services related to
aircraft leases, mergers and acquisitions, and certain other
financing arrangements. The Company paid fees totaling
$2.5&nbsp;million to Barlow in fiscal 2004 for arranging for
leasing companies to participate in the Company&#146;s various
aircraft financings under this agreement. At September&nbsp;30,
2004 Jonathan Ornstein, the Company&#146;s Chairman of the Board
and Chief Executive Officer, and George Murnane&nbsp;III, the
Company&#146;s Executive Vice President and Chief Financial
Officer were each members of Barlow and each hold a 25%
membership interest therein. Messrs.&nbsp;Ornstein and Murnane
have disposed of their membership interest. Distributions to the
members are determined by the members on a year-by-year basis
and are not based on a member&#146;s percentage interest in
Barlow. Substantially all of Barlow&#146;s revenues are derived
from its agreement with the Company.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company provides reservation services to
Europe-By-Air, Inc. The Company billed Europe-By-Air
approximately $57,000 during fiscal 2004 for these services
during the 2004 fiscal year. Mr.&nbsp;Ornstein is a major
shareholder of Europe-By-Air.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company has used the services of the law firm
of Piper Rudnick for labor related actions. The Company paid
Piper Rudnick $185,000 for legal-related services in 2004.
Mr.&nbsp;Manson, a member of the Company&#146;s Board of
Directors, is a partner with Piper Rudnick.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During fiscal 2001, the Company established
Regional Airline Partners (&#147;RAP&#148;), a political
interest group formed to pursue the interests of regional
airlines, communities served by regional airlines and
manufactures of regional airline equipment. Mr.&nbsp;Parker, a
member of the Company&#146;s Board of Directors, is the
Executive Director of RAP. During 2004 the Company paid
RAP&#146;s operating costs totaling approximately $241,000.
Included in this amount are wages and expenses of
Mr.&nbsp;Parker, which amounted to $93,000 in fiscal 2004. Since
inception, the Company has financed 100% of RAP&#146;s
operations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company will enter into future business
arrangements with related parties only where such arrangements
are approved by a majority of disinterested directors and are on
terms at least as favorable as those available from unaffiliated
third parties.
</FONT>

<P align="center"><FONT size="2">18
</FONT>
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<P align="center">
<B><FONT size="2">COMPARISON OF STOCK PERFORMANCE</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Set forth below is a graph comparing the
five-year cumulative shareholder return on the Common Stock
against the five-year cumulative total return on the CRSP Index
for NASDAQ Stock Market, U.S.&nbsp;Companies, and the American
Stock Exchange Airline Index (the &#147;Peer Group&#148;). The
graph assumes an initial investment of $100.00 and reinvestment
of dividends, if any.
</FONT>

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<P align="center">
<B><FONT size="2">COMPARISON OF STOCK PERFORMANCE</FONT></B>

<P align="center">
<IMG src="p70046dfp7004600.gif" alt="(PERFORMANCE GRAPH)">

<CENTER>
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<TR>
    <TD colspan="25" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Sep-99</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Sep-00</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Sep-01</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Sep-02</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Sep-03</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Sep-04</FONT></B></TD>
</TR>

<TR>
    <TD colspan="25"></TD>
</TR>

<TR>
    <TD colspan="25" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;Mesa Air Group
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">89</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">53</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">60</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">181</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">83</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;NASDAQ Stock Market (U.S.&nbsp;Companies)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">133</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">54</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">43</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">65</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">69</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;AMEX Airline Index (Peer Group)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">103</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">49</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">45</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">31</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left">

</DIV>

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

<DIV align="center">
<B><FONT size="2">2005 EMPLOYEE STOCK INCENTIVE PLAN</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">(PROPOSAL&nbsp;NO. 2)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At the Meeting, stockholders will be asked to
approve the Company&#146;s 2005 Employee Stock Incentive Plan
(the &#147;2005 Plan&#148;), which was adopted by the Board of
Directors, subject to approval by the Company&#146;s
stockholders. The Company&#146;s Board of Directors considers
the 2005 Plan to be important to the Company&#146;s ability to
appropriately compensate its officers and employees as the
Company continues to grow. In this respect, the 2005 Plan will
serve the objectives previously implemented under the
Company&#146;s 1996 Stock Option Plan, as amended (the
&#147;1996 Plan&#148;). Substantially all of the shares
authorized under the 1996 Plan have either been issued or are
subject to currently outstanding options or other awards under
the 1996 Plan.
</FONT>

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

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Approval of the 2005 Plan requires the
affirmative vote of a majority of the shares of Common Stock
present or represented by proxy and entitled to vote at the
Annual Meeting.
</FONT>

<P align="center"><FONT size="2">19
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="left">
<B><FONT size="2">Summary of the New Plan</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following summary of the main features of the
2005 Plan is qualified in its entirety by reference to the
complete text of the 2005 Plan, which is set forth as
Exhibit&nbsp;B to this Proxy Statement. For purposes of the
discussion contained in this Proposal&nbsp;No.&nbsp;2, a
capitalized term shall have the meaning proscribed such term in
the 2005 Plan except as otherwise provided.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The 2005 Plan authorizes the grant and issuance
of three different types of Awards:
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Options (&#147;Stock Options&#148;), which can
qualify as &#147;incentive stock options&#148; under the Tax
Code or as &#147;non-qualified stock options;&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Restricted Stock, which is stock that is
contingent on an employee satisfying conditions, including
without limitation continued employment, passage of time or
satisfaction of performance criteria;&nbsp;and
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Performance Shares, which are performance bonuses
paid in either cash or shares.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The 2005 Plan has a number of special terms and
limitations, including:
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The exercise price for Stock Options granted
under the 2005 Plan must at least equal the Shares&#146; fair
market value at the time the Stock Option is granted;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The 2005 Plan expressly states that Stock Options
granted under it can not be &#147;repriced,&#148; as defined in
the 2005 Plan;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Except for ISOs (see below),
1,500,000&nbsp;shares; plus, the number of shares subject to
awards granted under the Company&#146;s 1996 Stock Option Plan
but which are not issued as a result of the cancellation,
expiration or forfeiture of such awards (the &#147;1996 Plan
Shares&#148;) are proposed to be available for issuance under
the 2005 Plan;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">However, no more than 1,500,000&nbsp;shares
(provided that such Shares shall not include the 1996 Plan
Shares) may be issued pursuant to the exercise of ISOs granted
under this Plan;&nbsp;and
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Stockholder approval is required for certain
types of amendments to the 2005 Plan.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The 2005 Plan is designed to enable the Company
to attract, retain and motivate its officers and other key
employees, and to further align their interests with those of
the stockholders of the Company, by providing for or increasing
the proprietary interest of such persons in the Company.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The 2005 Plan has various provisions so that
Awards under it may, but need not, qualify for an exemption from
the &#147;short swing liability&#148; provisions of
Section&nbsp;16(b) of the Exchange Act pursuant to
Rule&nbsp;16b-3 and/or qualify as &#147;performance based
compensation&#148; that is exempt from the $1&nbsp;million
limitation on the deductibility of compensation under
Section&nbsp;162(m) of the Tax Code. However, stockholder
approval of the class of eligible participants, the per person
annual award limitations and the &#147;Qualifying Performance
Criteria&#148; potentially associated with Awards granted under
the 2005 Plan are required in order for awards under the 2005
Plan to qualify potentially as &#147;performance based
compensation&#148; under Tax Code Section&nbsp;162(m).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The 2005 Plan&#146;s per person award limitations
for purposes of Section&nbsp;162(m) are the following:
(1)&nbsp;the aggregate number of Shares subject to Stock Options
granted under the 2005 Plan during any calendar year to any one
participant may not exceed 150,000; and (2)&nbsp;the aggregate
number of Shares issued or issuable under all Awards other than
Stock Options granted under the 2005 Plan during any calendar
year to any one participant may not exceed 50,000. In the
future, if such limitations are not required under Code
Section&nbsp;162(m), then a change in such limitations shall not
be subject to Stockholder approval.
</FONT>

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

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Participants in the 2005 Plan can be any person
who is an employee or prospective employee of the Company or any
Subsidiary. The Compensation Committee of the Board of Directors
has not yet determined how many individuals will ultimately
participate in the 2005 Plan or the benefits or amounts that
will be
</FONT>

<P align="center"><FONT size="2">20
</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV align="left">
<FONT size="2">received by or allocated to eligible
participants. While it is generally expected that the same
categories of executives and employees who participate under the
1996 Plan will be eligible to participate under the 2005 Plan,
Awards may from time to time be granted to employees who are not
in these groups but who have otherwise distinguished themselves
for their contributions to the Company or who are expected to
make significant contributions to the Company.
</FONT>
</DIV>

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

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The 2005 Plan will be administered by the
Compensation Committee (the &#147;Committee&#148;) of the Board
of Directors, although the Board of Directors may exercise any
authority of the Committee under the 2005 Plan in lieu of the
Committee&#146;s exercise thereof. The Committee may designate
subcommittees and may delegate certain administrative functions
to others.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Subject to the express provisions of the 2005
Plan, the Committee has broad authority to administer and
interpret the 2005 Plan, including, without limitation,
authority to determine who is eligible to participate in the
2005 Plan and to which of such persons, and when, Awards are
granted under the 2005 Plan, to determine the number of shares
of Common Stock subject to Awards and the exercise or purchase
price of such shares under an Award, to establish and verify the
extent of satisfaction of any performance goals applicable to
Awards, to prescribe and amend the terms of the agreements
evidencing Awards made under the 2005 Plan, and to make all
other determinations deemed necessary or advisable for the
administration of the 2005 Plan.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Notwithstanding any language to the contrary in
this Plan, the Committee will ensure that the terms and
conditions of any Awards issued will comply with the applicable
provision of Code Section&nbsp;409A or the regulations or other
pronouncements thereunder.
</FONT>

<P align="left">
<B><FONT size="2">Stock Subject to the New Plan</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Except for ISOs (see above), the aggregate number
of Shares that can be issued under the 2005 Plan may not exceed
1,500,000, plus the 1996 Plan Shares. If the outstanding Shares
or other securities of the Company, or both, for which the Award
is then exercisable or as to which the Award is to be settled
shall at any time be changed or exchanged by declaration of a
stock dividend, stock split, combination of shares,
recapitalization, or reorganization, the Committee may
appropriately and equitably adjust the number and kind of Shares
or other securities which are subject to the Plan or subject to
any Awards theretofore granted, and the exercise or settlement
prices of such Awards, so as to maintain the proportionate
number of Shares or other securities without changing the
aggregate exercise or settlement price, provided, however, that
such adjustment shall be made so as to not affect the status of
any Award intended to qualify as an ISO or as &#147;performance
based compensation&#148; under Section&nbsp;162(m) of the Code.
For purposes of calculating the aggregate number of Shares
issued under the 2005 Plan, only the number of shares actually
issued upon exercise or settlement of an Award and not delivered
to or retained by the Company upon cancellation, expiration or
forfeiture of an Award or in payment or satisfaction of the
purchase price or exercise price of an Award shall be counted.
</FONT>

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

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The 2005 Plan authorizes the grant and issuance
of the following types of Awards: Stock Options, Restricted
Stock, and Performance Shares.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Stock Options.</FONT></I><FONT size="2">
Subject to the express provisions of the 2005 Plan and as
discussed in this paragraph, the Committee has discretion to
determine the vesting schedule of Stock Options, the events
causing a Stock Option to expire, the number of shares subject
to any Stock Option, the restrictions on transferability of a
Stock Option, and such further terms and conditions, in each
case not inconsistent with the 2005 Plan, as may be determined
from time to time by the Committee. The 2005 Plan expressly
provides that the Company can not &#147;reprice&#148; Stock
Options. The exercise price for Stock Options may not be less
than 100% of the fair market value of the Common Stock (as
determined pursuant to the 2005 Plan) at the time the Stock
Option is granted. The exercise price of an Stock Option may be
paid through various means specified by the Committee, including
in cash or check, by delivering to the Company shares of Common
Stock, by a
</FONT>

<P align="center"><FONT size="2">21
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV align="left">
<FONT size="2">reduction in the number of shares issuable
pursuant to such option, or other commitment to pay, including
such a commitment by a stock broker to pay over proceeds from
the sale of shares issuable under a Stock Option. Stock Options
granted under the 2005 Plan may be either incentive stock
options (&#147;ISOs&#148;) qualifying under Section&nbsp;422 of
the Tax Code or non-qualified stock options (&#147;NQSOs&#148;),
which are not intended to qualify as ISOs.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Restricted Stock.</FONT></I><FONT size="2">
The Committee may make awards of restricted stock to
participants, which will be subject to restrictions on
transferability and other restrictions as the Committee may
impose, including, without limitations on the right to vote
restricted stock or the right to receive dividends, if any, on
the restricted stock. These awards may be subject to forfeiture
upon any conditions or criteria established by the Committee,
including without limitation termination of employment or upon a
failure to satisfy Qualifying Performance Criteria during the
applicable restriction period. In addition, in the discretion of
the Compensation Committee, awards of restricted stock may be
issued upon participants meeting certain Qualifying Performance
Criteria.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Performance Shares.</FONT></I><FONT size="2">
Performance Shares is an award to receive a number Shares, the
payment of which is contingent upon the participant achieving
certain performance standards derived from the Qualifying
Performance Criteria, which is described below. Once the
conditions and terms for the performance Shares have been met,
the Performance Shares shall be payable either in cash or Shares
(or both) by reference to the fair market value of the Shares
enumerated in the Performance Shares at such times as indicated
in the Award. The Committee also may impose restrictions on such
Awards, including on its transferability.
</FONT>

<P align="left">
<B><FONT size="2">Qualifying Performance Criteria</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Subject to stockholder approval of the 2005 Plan,
the performance criteria for any Award that is intended to
satisfy the requirements for &#147;performance based
compensation&#148; under Code Section&nbsp;162(m) shall be any
one or more of the following performance criteria, either
individually, alternatively or in any combination, applied to
either the Company as a whole, to a business unit or subsidiary,
or based on comparisons of any of the performance measures
relative to other companies, either individually, alternatively
or in any combination, and measured either annually or
cumulatively over a period of years, on an absolute basis or
relative to a pre-established target, to previous years&#146;
results or to a designated comparison group, in each case as
specified by the Committee in the Award: (a)&nbsp;cash flow,
(b)&nbsp;earnings per share or increases of same,
(c)&nbsp;earnings before interest, taxes and amortization,
(d)&nbsp;return on equity, (e)&nbsp;total stockholder return,
(f)&nbsp;share price performance, (g)&nbsp;return on capital or
investment, (h)&nbsp;return on assets or net assets,
(i)&nbsp;revenue, (j)&nbsp;income or net income,
(k)&nbsp;operating income or net operating income,
(l)&nbsp;operating profit or net operating profit,
(m)&nbsp;operating margin or profit margin, (n)&nbsp;return on
operating revenue, (o)&nbsp;pre-tax or after-tax profit levels
expressed in either absolute dollars, (p)&nbsp;revenues or
revenue growth, (q)&nbsp;economic or cash value added,
(r)&nbsp;results of customer satisfaction surveys,
(s)&nbsp;other measures of performance, quality, safety,
productivity or process improvement, (t)&nbsp;market share,
(u)&nbsp;overhead or other expense reduction, (v)&nbsp;departure
or on-time arrival performance, and (w)&nbsp;baggage handling.
These factors may have a minimum performance standard, a target
performance standard and a maximum performance standard. The
Committee shall appropriately adjust any evaluation of
performance under a Qualifying Performance Criteria to exclude
any of the following events that occurs during a performance
period: (i)&nbsp;asset write-downs, (ii)&nbsp;litigation or
claim judgments or settlements, (iii)&nbsp;the effect of changes
in tax law, accounting principles or other such laws or
provisions affecting reported results, (iv)&nbsp;accruals for
reorganization and restructuring programs and (v)&nbsp;any
extraordinary non-recurring items as described in Accounting
Principles Board Opinion No.&nbsp;30 and/or in management&#146;s
discussion and analysis of financial condition and results of
operations appearing in the Company&#146;s annual report to
stockholders for the applicable year.
</FONT>

<P align="left">
<B><FONT size="2">Transferability of Awards and Other Provisions
Applicable to Awards</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Generally, Awards granted under the 2005 Plan may
not be sold, assigned, conveyed, gifted, pledged, hypothecated
or otherwise transferred in any manner prior to the vesting or
lapse of any and all restrictions applicable thereto.
</FONT>

<P align="center"><FONT size="2">22
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The 2005 Plan has provisions designed so that it
qualifies as an &#147;eligible plan&#148; under the margin
provisions of Regulation&nbsp;U, by expressly providing that the
Committee may, but is not required to, loan the amount necessary
to purchase shares and/or pay taxes under any award. The 2005
Plan also provides that the Committee may, but need not, provide
that the holder of an Award has a right under an Award to
receive a number of shares or cash, or a combination thereof,
the amount of which is determined by reference to the value of
the Award. Finally, the 2005 Plan does not limit the
Company&#146;s right to make other arrangements to provide stock
options and other forms of compensation arrangements as it
determines appropriate.
</FONT>

<P align="left">
<B><FONT size="2">Amendments and Termination</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Board of Directors may amend, alter or
discontinue the 2005 Plan or any agreement evidencing an Award
made under the 2005 Plan, but no such amendment shall, without
the approval of the stockholders of the Company:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;change the maximum number of shares of
    Common Stock for which Awards may be granted under the this Plan;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;reduce the price at which Options may be
    granted below the price provided for in Section&nbsp;6.2;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(c)&nbsp;reduce the exercise price of outstanding
    Options;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(d)&nbsp;extend the term of the this Plan;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(e)&nbsp;change the class of persons eligible to
    be Eligible Persons or Participants;&nbsp;or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(f)&nbsp;increase the number of shares that are
    eligible for non-Option Awards.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Board may amend, alter or discontinue the
2005 Plan or any agreement evidencing an Award made under the
2005 Plan, but no amendment or alteration shall be made which
would impair the rights of any Award holder, without such
holder&#146;s consent, under any Award theretofore granted;
provided that no such consent shall be required if the Committee
determines in its sole discretion and prior to the date of any
change in control, recapitalization, stock dividend, stock
split, reorganization, merger, consolidation or similar type
transaction that such amendment or alteration either is required
or advisable in order for the Company, the 2005 Plan, or any
Award granted, to satisfy any law or regulation or to meet the
requirements of any accounting standard.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">No Award granted under the 2005 Plan shall be
granted pursuant to the 2005 Plan more than 10&nbsp;years after
the date of the Company stockholder&#146;s adoption of the 2005
Plan.
</FONT>

<P align="left">
<B><FONT size="2">Federal Income Tax Consequences</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following discussion of the federal income
tax consequences of the 2005 Plan is intended to be a summary of
applicable federal law as currently in effect. State and local
tax consequences may differ, and tax laws may be amended or
interpreted differently during the term of the 2005 Plan or of
Awards thereunder. Because the federal income tax rules
governing Awards and related payments are complex and subject to
frequent change, and they depend on the Participant&#146;s
individual circumstances, Participants are advised to consult
their tax advisors prior to exercise of options or other Awards
or dispositions of stock acquired pursuant to Awards.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">The Stock Options</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">ISOs and NQSOs are treated differently for
federal income tax purposes. ISOs are intended to satisfy the
requirements of Section&nbsp;422 of the Code. NQSOs need not
satisfy such requirements.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">ISOs</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">No taxable income will result to a Participant
upon the grant of an ISO. Upon the exercise of an ISO, any
excess of the fair market value of the stock over the option
price is a tax preference item that may result in the imposition
of the alternative minimum tax in the year of exercise. However,
if any of such shares are disposed
</FONT>

<P align="center"><FONT size="2">23
</FONT>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV align="left">
<FONT size="2">of by the Participant in a disqualifying
disposition (see below) in the same taxable year as the
exercise, there will be no item of tax preference as to such
disposed shares, although the Participant will recognize
ordinary income as discussed below. In cases where the exercise
of the option does produce an item of tax preference, the basis
of the stock for purposes of the alternative minimum tax will
include the amount of such tax preference item.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On the subsequent sale of stock acquired by the
exercise of an ISO, gain or loss will be recognized in an amount
equal to the difference between the amount realized on the sale
and the Participant&#146;s tax basis in the stock sold. The tax
basis of stock acquired solely for cash will be equal to the
amount of cash paid. If an ISO is exercised using previously
acquired stock (or stock and cash) in payment, the
Participant&#146;s tax basis for the number of stock received
equal to the number used in payment shall be the same as the
Participant&#146;s basis in the stock used as payment. The
Participant&#146;s aggregate tax basis in any additional stock
received will be equal to the amount of cash paid (if any).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If a disposition of stock does not take place
until more than two years after grant and more than one year
after exercise of the option, any gain or loss realized will be
treated as long-term capital gain or loss. Under such
circumstances, the Company will not be entitled to a deduction
for income tax purposes in connection with the exercise of the
option. If a disposition occurs within two years after grant or
one year after exercise of the option, the difference between
the fair market value of the stock on the date of exercise and
the tax basis in the stock is taxable as compensation income to
the Participant and is deductible by the Company for federal
income tax purposes. Any additional amount realized on the
disposition will be taxed as either long-term or short-term
capital gain.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If the option price of an ISO is paid by using
stock that was acquired upon the exercise of an ISO
(&#147;Payment Shares&#148;) and the Payment Shares have not
been held for more than one year from exercise and two years
from grant, the transfer of such Payment Shares to exercise an
ISO will be treated as a &#147;disposition&#148; of such Payment
Shares. Upon such disposition, the excess of the fair market
value of the Payment Shares on the date they had originally been
acquired (or, if less, the fair market value of the Payment
Shares on the date of disposition) over the Participant&#146;s
tax basis in such Payment Shares is taxable as compensation
income to the Participant and is deductible by the Company.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">NQSO</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In general, no taxable income will be recognized
by the Participant, and no deduction will be allowed to the
Company, upon the grant of a NQSO. Upon exercise of an
unrestricted NQSO, a Participant will recognize ordinary income
(and the Company will be entitled to a corresponding tax
deduction) in an amount equal to the amount by which the fair
market value of the shares on the exercise date exceeds the
option exercise price. Any gain or loss realized by a
Participant on disposition of such shares generally is a capital
gain or loss and does not result in any tax deduction to the
Company.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Restricted Stock</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A grant of restricted stock does not result in
income to the Participant or a corresponding tax deduction for
the Company until the shares are no longer subject to
restrictions, or forfeiture, unless the Participant, elects
under Section&nbsp;83(b) of the Code to have the amount of
income to the Participant (and deduction to the Company)
determined at the date of the grant. At the time of lapse of
restrictions (or a Section&nbsp;83(b) election), the Participant
generally will recognize ordinary income equal to the fair
market value of the shares less any amount paid for them, and
the Company will be entitled to a tax deduction in the same
amount (subject to certain restrictions set forth below under
Section&nbsp;162(m) of the Code. Any dividends paid on
restricted stock will be treated as compensation for federal
income tax purposes, unless the Participant has made a
Section&nbsp;83(b) election. Any additional gain or loss that is
recognized after the restrictions have lapsed (or a
Section&nbsp;83(b) election has been made) will be treated as
capital gain. Participants receiving Restricted Stock should
consult their tax advisors regarding the ability and
advisability of making the Section&nbsp;83(b) election,
including the limitations on claiming a loss if the shares
decline in value or are forfeited after receipt.
</FONT>

<P align="center"><FONT size="2">24
</FONT>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Performance Shares</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">No taxable income generally is reportable when a
Performance Share is granted to a Participant. Upon satisfaction
of the criteria established by the Committee and upon having the
right to receive the cash and/or the Shares based on the timing
set by the Committee, the Participant will recognize
compensation income in an amount equal to the amount of cash
received and the fair market value of any Shares. Any additional
gain or loss recognized upon any later disposition of the Shares
would be capital gain or loss.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Withholding and Other Issues for
    Employees</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company generally will be entitled to
withhold any required taxes in connection with the exercise or
payment of an Award, and may require the participant to pay such
taxes as a condition to exercise of an Award. Special rules will
apply in cases where a recipient of an Award pays the exercise
or purchase price of the Award or applicable withholding tax
obligations under the 2005 Plan by delivering previously owned
shares or by reducing the number of shares otherwise issuable
pursuant to the Award. The surrender or withholding of such
shares will in certain circumstances result in the recognition
of income with respect to such shares or a carryover basis in
the shares acquired, and may constitute a disposition for
purposes of applying the ISO holding periods as discussed above.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Committee, pursuant to the terms of the
agreements or other documents pursuant to which specific Awards
are made under the 2005 Plan, may agree to reimburse
Participants for some or all of the federal, state and local
income taxes associated with the grant or exercise of an Award
or the receipt of the cash or Shares from an Award (including
any tax imposed under Code Section&nbsp;409A), or the 20% excise
tax on any &#147;excess parachute payments&#148; under Code
Sections&nbsp;280G and Code Section&nbsp;4999, and may agree to
reimburse the additional federal, state and local income tax
from the reimbursement payments made.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Tax Effect to Company</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company generally will be entitled to a tax
deduction in connection with an Award under the 2005 Plan in an
amount equal to the compensation income (ordinary income)
realized by a Participant and at the time the Participant
recognizes such income (for example, the exercise of a NQSO).
Special rules limit the deductibility of compensation paid to
certain Covered Employees of the Company (as defined by Code
Section&nbsp;162(m)(3)). Under Section&nbsp;162(m) of the
Internal Revenue Code, the annual compensation paid to any of
these Covered Employees will be deductible only to the extent
that it does not exceed $1,000,000 or if the compensation is
paid solely on account of attaining one or more pre-established,
objective performance goals. The 2005 Plan has been constructed
such that some Awards in the Committee&#146;s discretion may
qualify as &#147;performance-based compensation&#148; under
Section&nbsp;162(m) of the Code and thus would be deductible
even if the total compensation paid to the Covered Employee is
in excess of $1,000,000. However, whether an Award will qualify
under Section&nbsp;162(m) as &#147;performance-based
compensation&#148; will depend on the terms, conditions and type
of the Award issued the Covered Employee. For example, grants of
Options or Restricted Stock often vest only according to the
optionee&#146;s or Grantee&#146;s length of employment rather
than pre-established performance goals. Therefore, the
compensation derived from the Awards made to Covered Employees
may not be deductible by the Company to the extent the Covered
Employee&#146;s total compensation exceeds $1&nbsp;million.
</FONT>

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

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Approval of the 2005 Plan requires the
affirmative vote of a majority of shares of Common Stock present
at the Annual Meeting in person or by proxy. Abstentions are
considered present for this proposal, so they will have the same
effect as votes against the 2005 Plan. Broker non-votes are not
considered present for this proposal.
</FONT>

<P align="center">
<B><FONT size="2">THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT YOU</FONT></B>

<DIV align="center">
<B><FONT size="2">VOTE &#147;FOR&#148; APPROVAL OF THE
2005</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">MESA AIR GROUP, INC. EMPLOYEE STOCK INCENTIVE
PLAN.</FONT></B>
</DIV>

<P align="center"><FONT size="2">25
</FONT>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="center">
<B><FONT size="2">RATIFICATION OF SELECTION OF</FONT></B>

<DIV align="center">
<B><FONT size="2">INDEPENDENT REGISTERED PUBLIC
ACCOUNTANTS</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">(PROPOSAL&nbsp;NO. 3)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Deloitte&nbsp;&#38; Touche LLP has been selected
as the Company&#146;s independent registered public accountants
for the fiscal year ending September&nbsp;30, 2005. Shareholder
ratification of the selection of Deloitte&nbsp;&#38; Touche LLP
as the Company&#146;s independent registered public accountants
is not required by the Company&#146;s Bylaws or otherwise.
However, the Board is submitting the selection of
Deloitte&nbsp;&#38; Touche LLP for shareholder ratification as a
matter of good corporate practice. Deloitte&nbsp;&#38; Touche
LLP has audited the Company&#146;s financial statements since
2000. Notwithstanding the selection, the Board, in its
discretion, may direct appointment of a new independent
accounting firm at any time during the year if the Board feels
that such a change would be in the best interests of the Company
and its shareholders. A representative of Deloitte&nbsp;&#38;
Touche LLP is expected to be present at the Annual Meeting with
the opportunity to make a statement if he or she so desires and
to be available to respond to appropriate questions.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Ratification of the appointment of
Deloitte&nbsp;&#38; Touche LLP as the Company&#146;s independent
registered public accountants for fiscal year 2005 will require
the affirmative vote of the holders of at least a majority of
the outstanding Common Stock represented in person or by proxy
at the Annual Meeting. All of the directors and executive
officers of the Company have advised the Company that they will
vote their shares of Common Stock &#147;FOR&#148; the
ratification of the appointment of Deloitte&nbsp;&#38; Touche
LLP as the Company&#146;s independent registered public
accountants for fiscal year 2005. If the holders of at least a
majority of the outstanding Common Stock fail to ratify the
appointment of Deloitte&nbsp;&#38; Touche LLP as the
Company&#146;s independent registered public accountants, the
Audit Committee will consider such failure at a subsequent
meeting of the Audit Committee and determine, in its discretion,
what actions it should take, if any.
</FONT>

<P align="center">
<B><FONT size="2">THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT YOU</FONT></B>

<DIV align="center">
<B><FONT size="2">VOTE &#147;FOR&#148; RATIFICATION OF THE
APPOINTMENT OF</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">DELOITTE&nbsp;&#38; TOUCHE LLP AS THE
COMPANY&#146;S INDEPENDENT</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">REGISTERED PUBLIC ACCOUNTANTS FOR FISCAL YEAR
2005.</FONT></B>
</DIV>

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

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The 2004 Annual Report, which was mailed to
shareholders with this proxy statement, contains financial and
other information about our activities, but is not incorporated
into this proxy statement and is not to be considered a part of
these proxy soliciting materials. The information contained in
the &#147;Compensation Committee Report on Executive
Compensation,&#148; &#147;Report of the Audit Committee of the
Board of Directors,&#148; and &#147;Comparison of Stock
Performance&#148; in this proxy statement shall not be deemed
&#147;filed&#148; with the Securities and of Section&nbsp;18 of
the Securities Act of 1934, and shall not be deemed to be
incorporated by reference into any filing under the Securities
Act of 1933, as amended, or the Securities Exchange Act of 1934,
as amended.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company will provide upon written request,
without charge to each shareholder of record as of the Record
Date, a copy of the Company&#146;s annual report on
Form&nbsp;10-K for the fiscal year ended September&nbsp;30,
2004, as filed with the Securities and Exchange Commission. Any
Exhibits listed in the Form&nbsp;10-K also will be furnished
upon request at the Company&#146;s expense. Any such request
should be directed to the Company&#146;s Corporate Secretary at
the Company&#146;s executive offices at 410&nbsp;North
44th&nbsp;Street, Suite&nbsp;700, Phoenix, Arizona 85008.
</FONT>

<P align="left">
<B><FONT size="2">Voting by Proxy</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In order to ensure that your shares will be
represented at the Annual Meeting, please sign and return the
enclosed Proxy in the envelope provided for that purpose,
whether or not you expect to attend. Any shareholder may,
without affecting any vote previously taken, revoke a written
proxy by giving notice of revocation to the Company in writing
or by executing and delivering to the Company a later dated
proxy.
</FONT>

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

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<P align="left">
<B><FONT size="2">Shareholder Proposals for Action at the
Company&#146;s Next Annual Meeting</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A shareholder proposal for shareholder action at
the next Annual Meeting of Shareholders to be held in 2006, must
be received by the Company&#146;s Secretary at the
Company&#146;s offices no later than October&nbsp;10, 2005, in
order to be included in the Company&#146;s proxy statement and
form of proxy for that meeting. Such proposals should be
addressed to the Corporate Secretary, Mesa Air Group, Inc.,
410&nbsp;North 44th&nbsp;Street, Suite&nbsp;700, Phoenix,
Arizona 85008. If a shareholder proposal is introduced at the
2006 Annual Meeting of Shareholders without any discussion of
the proposal in the Company&#146;s proxy statement, and the
shareholder does not notify the Company on or before
November&nbsp;29, 2005, as required by the Securities and
Exchange Commission&#146;s Rule&nbsp;14(a)-4(c)(1), of the
shareholder&#146;s intent to raise such proposal at the Annual
Meeting of Shareholders, then proxies received by the Company
for the 2006 Annual Meeting will be voted by the persons named
as such proxies in their discretion with respect to such
proposal. Notice of such proposal is to be sent to the above
address.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">By Order of the Board of Directors
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <IMG src="p70046dfp7004601.gif" alt="-S- JONATHAN G. ORNSTEIN"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Jonathan G. Ornstein,
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <I><FONT size="2">Chairman of the Board and</FONT></I></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <I><FONT size="2">Chief Executive Officer</FONT></I></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">27
</FONT>
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<P align="center">
<B><FONT size="2">EXHIBIT A</FONT></B>

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

<DIV align="center">
<B><FONT size="2">AUDIT COMMITTEE CHARTER</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The role and responsibilities of the Audit
Committee of the Board of Directors (the &#147;Committee&#148;)
of Mesa Air Group, Inc. (the &#147;Company&#148;) are as follows:
</FONT>

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

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Committee&#146;s role is to act on behalf of
the Company&#146;s Board of Directors (the &#147;Board&#148;)
and oversee all aspects of the Company&#146;s control, reporting
and audit functions, except those specifically related to the
responsibilities of another standing committee of the Board. The
Committee&#146;s role includes a particular focus on the
qualitative aspects of financial reporting to shareholders and
on Company processes for the management of business/financial
risk and for compliance with significant applicable legal,
ethical and regulatory requirements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The role also includes coordination with other
Board committees and maintenance of strong, positive working
relationships with management, external and internal auditors,
counsel, and other Committee advisors.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Although the Committee has the responsibilities
set forth in this Charter, management is responsible for
preparing the Company&#146;s financial statements and the
independent registered public accountant is responsible for
auditing those financial statements. It is not the duty of the
Committee to plan or conduct the audit or to determine that the
Company&#146;s financial statements are complete and accurate or
are in accordance with generally accepted accounting principles.
Nothing in this Charter changes, or is intended to change, the
responsibilities of management or the independent registered
public accountant. Moreover, nothing in this Charter is intended
to increase the liability of the members of the Committee beyond
that which existed before this Charter or amendments thereto
were approved by the Board.
</FONT>

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

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Committee membership shall consist of at least
three Board members who qualify as independent within the
meaning of the Company&#146;s Corporate Governance Guidelines
and satisfy the experience and, as affirmatively determined by
the Board, the independence requirements of the National
Association of Securities Dealers, Inc. (&#147;NASD&#148;)
applicable to audit committee members (including, with respect
to the chairperson of the Committee, any special requirements
applicable to chairpersons of audit committees), as in effect
from time to time when and as required by the NASD.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Committee members shall have: (1)&nbsp;knowledge
of the primary industries in which the Company operates,
(2)&nbsp;the ability to read and understand fundamental
financial statements, including a balance sheet, income
statement, statement of cash flow and key performance
indicators; and (3)&nbsp;the ability to understand key business
and financial controls. One member, preferably the chairperson,
should have the knowledge of financial reporting including
applicable regulatory requirements, and accounting or related
financial management expertise. The Committee shall have access
to its own counsel and other advisors at the Committee&#146;s
sole discretion.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Committee members shall be nominated and approved
annually by the full Board. The Committee members shall elect
the Committee chairperson.
</FONT>

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

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Committee shall fulfill its responsibilities
within the context of the following activities:
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">I.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Continuous Activities&nbsp;&#151;
    General</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">1.&nbsp;Provide an open avenue of communication
between the independent registered public accountants, members
of senior management, Internal Audit and the Board of Directors.
</FONT>

<P align="center"><FONT size="2">A-1
</FONT>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">2.&nbsp;The Committee shall, on an annual basis,
review, assess and report to the Board on the independence of
the independent registered public accountants, taking into
account the opinions of members of management and the
Company&#146;s internal audit function and including an analysis
of all non-audit services provided by the independent registered
public accountants and the effect, if any, on such independence.
In this connection, the Committee shall seek to obtain a written
statement from the independent registered public accountant
delineating all relationships between the independent registered
public accountant and the Company consistent with Independence
Standards Board Statement No.&nbsp;98-1, &#147;Independence
Discussions with Audit Committees.&#148; Additionally, the
Committee should seek to maintain an active dialogue with the
independent registered public accountant with respect to
disclosed relationships or services that may impact auditor
objectivity or independence and should take, or recommend to the
full Board, appropriate action to ensure the independence of the
independent registered public accountant. The Committee will
also establish clear hiring policies for employees or former
employees of the independent registered public accountants.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">3.&nbsp;The internal audit function shall be
responsible to senior management, but have a direct reporting
responsibility and an effective line of communication to the
Board through the Committee.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.&nbsp;Inquire of management, the independent
registered public accountant and the Director of Internal Audit
about significant risks or exposures and ensure that the yearly
audit plan addresses such risk.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">5.&nbsp;Review with the independent registered
public accountants and the Director of Internal Audit the
coordination of the audit efforts to assure completeness of
coverage, reduction of redundant efforts, and the effective use
of audit resources.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">6.&nbsp;Consider and review with the Director of
Internal Audit, and the independent registered public accountant:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="4%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(a)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The adequacy of internal controls, including
    computerized system controls and security.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(b)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Findings and recommendations of the independent
    registered public accountant and Internal Audit and the related
    management responses.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(c)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Significant findings during the year, including
    the status of Previous Audit recommendations.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(d)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Any difficulties encountered in the course of
    audit work including any restrictions on the scope of activities
    or access to required information.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(e)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Any changes required in the planned scope of the
    Internal Audit plan.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="2%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(f)</FONT></TD>
    <TD align="left">
    <FONT size="2">&nbsp;The Internal Audit Department charter,
    budget and staffing.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">7.&nbsp;Meet four times per year or more
frequently as circumstances require, either in person or
telephonically. The Committee may ask members of management or
others to attend meetings and provide pertinent information as
necessary.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">8.&nbsp;Meet at least annually with the
independent registered public accountant, the Director of
Internal Audit and management, including the Chief Financial
Officer, in separate executive sessions to discuss any matters
that the Committee or these groups believe should be discussed
privately with the Audit Committee.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">9.&nbsp;The Committee shall review with
management and the outside registered public accountants the
audited financial statements to be included in the
Company&#146;s Annual Report on Form&nbsp;10-K (or the Annual
Report to Shareholders if distributed prior to the filing of
Form&nbsp;10-K) and review and consider with the outside
registered public accountants the matters required to be
discussed by Statement of Auditing Standards (&#147;SAS&#148;)
No.&nbsp;61 and Rule&nbsp;2-07 of Regulation&nbsp;S-X.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">10.&nbsp;As a whole, or through the Committee
Chair, the Committee shall review with the independent
registered public accountants the Company&#146;s quarterly
reports to be filed with the Securities and Exchange Commission
and the matters required to be discussed by SAS No.&nbsp;61 and
Rule&nbsp;2-07; this review will occur prior to the
Company&#146;s filing of the Form&nbsp;10-Q.
</FONT>

<P align="center"><FONT size="2">A-2
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">11.&nbsp;The Committee shall review and discuss
earnings press releases, as well as financial information and
earnings guidance provided to analysts and rating agencies.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">12.&nbsp;Report periodically to the Board of
Directors on significant results of the foregoing activities.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">II.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Continuous Activities&nbsp;&#151; Re:
    Reporting Specific Policies</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">1.&nbsp;Advise financial management and the
independent registered public accountants that they are expected
to provide a timely analysis of significant current financial
reporting issues and practices and other supporting
documentation requested by the Committee, for its meetings and
deliberations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">2.&nbsp;Require that financial management and the
independent registered public accountants discuss with the audit
committee their qualitative judgments about the appropriateness,
not just the acceptability, of accounting principles and
financial disclosures used or proposed to be adopted by the
Company and, particularly about the degree of aggressiveness or
conservatism of its accounting principles and underlying
estimates.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">3.&nbsp;Inquire as to the registered public
accountants&#146; independent qualitative judgments about
appropriateness, not just the acceptability, of accounting
principles and the clarity of the financial disclosure practices
used or proposed to be adopted by the Company.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.&nbsp;Inquire as to the registered public
accountants&#146; views about whether management&#146;s choice
of accounting principles are conservative, moderate or
aggressive from the perspective of income, asset, and liability
recognition, and whether those principles are common practice in
the industry.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">5.&nbsp;Discuss with the registered public
accountants the reasonableness and appropriateness of changes in
accounting principles and disclosure practices.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">6.&nbsp;The Committee shall obtain from the
independent registered public accountant assurance that
Section&nbsp;10A of the Securities Exchange Act of 1934 has not
been implicated.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">III.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Scheduled Activities</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">1.&nbsp;The Committee shall, on an annual basis,
review, assess and report to the Board on the performance and
qualifications of the independent registered public accountant
and the audit partner. In this respect, the Committee shall seek
to obtain a report by the independent registered public
accountant describing the firm&#146;s internal quality control
procedures and any material issues raised by the most recent
internal quality control review, or peer review, of the firm or
by any inquiry or investigation by any governmental or
professional authorities, within the preceding five years,
respecting one or more independent audits carried out by the
firm, and any steps taken to deal with any such issues.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">2.&nbsp;The Committee shall recommend the
selection of the independent registered public accountants for
approval by the Board, approve compensation for the independent
registered public accountants, and review and approve the
discharge of the independent registered public accountant.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">3.&nbsp;Review and approve, in consultation with
the independent registered public accountants, the audit scope
and plan of the internal audit scope and plan.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.&nbsp;Review and approve, in consultation with
the independent registered public accountants, the audit scope
and plan of the independent audit scope and plan.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">5.&nbsp;Review with management and the
independent registered public accountants the results of annual
audits and related comments:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="4%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(a)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Any significant changes required in the
    independent registered public accountants&#146; audit plans.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(b)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Any difficulties or disputes with management
    encountered during the course of the audit.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(c)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Other matters related to the conduct of the audit
    which are to be communicated to the Audit Committee under
    Auditing Standards Generally Accepted in the United States of
    America.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">A-3
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">6.&nbsp;Review the results of the annual audits
of member reimbursements, director and officers&#146; expense
accounts and management perquisites prepared by Internal Audit
and the independent registered public accountants respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">7.&nbsp;Arrange for the independent registered
public accountants to be available to the full Board at least
annually to help provide a basis for the board to recommend the
appointment of the independent registered public accountants.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">8.&nbsp;Discuss with the registered public
accountants the reasonableness of significant estimates made by
management.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">9.&nbsp;Review and update the Committee&#146;s
Charter annually and recommend any proposed changes for approval
by the full Board.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">10.&nbsp;The Committee shall prepare such reports
regarding matters within the scope of the Committee&#146;s role
and responsibilities as maybe required to be included in the
Company&#146;s annual proxy statement or other public filings
under applicable rules and regulations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">11.&nbsp;The Committee shall review and assess,
on an annual basis, the Company&#146;s code of ethical conduct
and significant conflicts of interest and related-party
transactions.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">12.&nbsp;The Committee shall establish and
maintain procedures for the receipt, retention and treatment of
complaints received by the Company regarding accounting,
internal accounting controls, or auditing matters. The Committee
shall also establish and maintain procedures for the
confidential, anonymous submission by employees of the Company
of concerns regarding questionable accounting or auditing
matters.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">13.&nbsp;The Committee shall review, discuss and
assess at least annually its own performance as well as the role
and responsibilities of the Committee, seeking input from senior
management, the full Board and others. Changes in the role
and/or responsibilities of the Committee as outlined in this
Charter, if any, shall be recommended to the full Board for
approval.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">IV.</FONT></B></TD>
    <TD>
    <B><FONT size="2">When Necessary Activities</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">1.&nbsp;Review and concur in the appointment,
replacement, reassignment or dismissal of the Director of
Internal Audit.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">2.&nbsp;Review and approve requests for any
management consulting engagement to be performed by the
Company&#146;s independent registered public accountants and be
advised of any other study undertaken at the request of
management that is beyond the scope of the audit engagement
letter.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">3.&nbsp;The Committee shall review and assess SEC
inquiries and the results of examinations by other financial
regulatory authorities in terms of important finding,
recommendations and management&#146;s response.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.&nbsp;Conduct or authorize investigations into
any matters within the scope of the Committee&#146;s
responsibilities. The Committee shall be empowered to retain
independent counsel and other professionals to assist in the
conduct of any investigations.
</FONT>

<P align="center"><FONT size="2">A-4
</FONT>

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

<P align="center">
<B><FONT size="2">2005 EMPLOYEE STOCK INCENTIVE PLAN</FONT></B>

<DIV align="center">
<B><FONT size="2">OF</FONT></B>
</DIV>

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

<P align="left">
<B><FONT size="2">Section&nbsp;1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purpose
of Plan</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The purpose of this 2005 Employee Stock Incentive
Plan (this &#147;Plan&#148;) of Mesa Air Group, Inc., a Nevada
corporation (the &#147;Company&#148;), is to enable the Company
and any subsidiary corporation (as the term is defined in Code
Section&nbsp;424(f), hereinafter each a &#147;Subsidiary&#148;
or the plural &#147;Subsidiaries&#148;) to attract, retain and
motivate their officers and other key employees, and to further
align the interests of such persons with those of the
stockholders of the Company by providing for or increasing the
proprietary interest of such persons in the Company.
</FONT>

<P align="left">
<B><FONT size="2">Section&nbsp;2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Administration
of Plan</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">2.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Composition
of Committee.</I> This Plan shall be administered by the
Compensation Committee of the Board of Directors (the
&#147;Committee&#148;), as appointed from time to time by the
Board of Directors. The Board of Directors shall fill vacancies
on, and from time to time may remove or add members to, the
Committee. The Committee shall act pursuant to a majority vote
or unanimous written consent. The Board of Directors, in its
sole discretion, may exercise any authority of the Committee
under this Plan in lieu of the Committee&#146;s exercise
thereof. Notwithstanding the foregoing, with respect to any
Award that is not intended to satisfy the conditions of
Rule&nbsp;16b-3 under the Securities Exchange Act of 1934, as
amended (the &#147;Exchange Act&#148;) or
Section&nbsp;162(m)(4)(C) of the Internal Revenue Code of 1986,
as amended (the &#147;Code&#148;), the Committee may appoint one
or more separate committees (any such committee, a
&#147;Subcommittee&#148;) composed of one or more directors of
the Company (who may but need not be members of the Committee)
and may delegate to any such Subcommittee(s) the authority to
grant Awards, as defined in Section&nbsp;5.1 hereof, under the
Plan to Eligible Persons, to determine all terms of such Awards,
and/or to administer the Plan or any aspect of it. Any action by
any such Subcommittee within the scope of such delegation shall
be deemed for all purposes to have been taken by the Committee.
The Committee may designate the Secretary of the Company or
other Company employees to assist the Committee in the
administration of the Plan, and may grant authority to such
persons to execute agreements or other documents evidencing
Awards made under this Plan or other documents entered into
under this Plan on behalf of the Committee or the Company.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">2.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Powers of the
Committee.</I> Subject to the express provisions of this Plan,
the Committee shall be authorized and empowered to do all things
necessary or desirable, in its sole discretion, in connection
with the administration of this Plan, including, without
limitation, the following:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;to prescribe, amend and rescind rules
    and regulations relating to this Plan and to define terms not
    otherwise defined herein; provided that, unless the Committee
    shall specify otherwise, for purposes of this Plan (i)&nbsp;the
    term &#147;fair market value&#148; shall mean, as of any date,
    the closing price for a Share (as defined in Section&nbsp;3.1)
    reported for the last trading day prior to such date by the
    Nasdaq Stock Market (or such other stock exchange or quotation
    system on which Shares are then listed or quoted) or, if no
    Shares are traded on the Nasdaq Stock Market (or such other
    stock exchange or quotation system) on the date in question,
    then for the next preceding date for which Shares traded on the
    Nasdaq Stock Market (or such other stock exchange or quotation
    system); and (ii)&nbsp;the term &#147;Company&#148; shall mean
    the Company and its Subsidiaries, unless the context otherwise
    requires;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;to determine which persons are Eligible
    Persons (as defined in Section&nbsp;4), to which of such
    Eligible Persons, if any, Awards shall be granted hereunder and
    the timing of any such Awards, and to grant Awards;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(c)&nbsp;to grant Awards to Eligible Persons and
    determine the terms and conditions thereof, including the number
    of Shares subject to Awards and the exercise or purchase price
    of such Shares and the
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">B-1
</FONT>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">circumstances under which Awards become
    exercisable or vested or are forfeited or expire, which terms
    may but need not be conditioned upon the passage of time,
    continued employment, the satisfaction of performance criteria,
    the occurrence of certain events (including events which the
    Board or the Committee determine constitute a change of
    control), whether such Award complies with Code
    Section&nbsp;409A and Notice&nbsp;2005-1 or other factors;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(d)&nbsp;to establish, verify the extent of
    satisfaction of, adjust, reduce or waive any performance goals
    or other conditions applicable to the grant, issuance,
    exercisability, vesting and/or ability to retain any Award;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(e)&nbsp;to prescribe and amend the terms of the
    agreements or other documents evidencing Awards made under this
    Plan (which need not be identical);
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(f)&nbsp;to determine whether, and the extent to
    which, adjustments are required pursuant to Section&nbsp;10;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(g)&nbsp;to interpret and construe this Plan, any
    rules and regulations under this Plan and the terms and
    conditions of any Award granted hereunder, and to make
    exceptions to any such provisions in good faith and for the
    benefit of the Company;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(h)&nbsp;to make all other determinations deemed
    necessary or advisable for the administration of this Plan.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">2.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Determinations
of the Committee.</I> All decisions, determinations and
interpretations by the Committee regarding this Plan shall be
final and binding on all Eligible Persons and Participants. The
Committee shall consider such factors as it deems relevant to
making such decisions, determinations and interpretations
including, without limitation, the recommendations or advice of
any director, officer or employee of the Company and such
attorneys, consultants and accountants as it may select.
</FONT>

<P align="left">
<B><FONT size="2">Section&nbsp;3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock
Subject to Plan</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">3.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Aggregate
Limits.</I> The aggregate number of shares of the Company&#146;s
Common Stock, no par value (&#147;Shares&#148;), issued pursuant
to all Awards granted under this Plan shall not exceed
1,500,000; plus, the number of shares equal to the number of
shares subject to awards granted under the Company&#146;s 1996
Stock Option Plan but ultimately which are not issued under such
plan as a result of the cancellation, expiration or forfeiture
of such awards (such Shares being known as the &#147;1996 Plan
Shares&#148;). The aggregate number of Shares available for
issuance under this Plan and the number of Shares subject to
outstanding Options or other Awards shall be subject to
adjustment as provided in Section&nbsp;10. The Shares issued
pursuant to this Plan may be Shares that either were reacquired
by the Company, including Shares purchased in the open market,
or authorized but unissued Shares.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">3.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Additional
Limits.</I> The aggregate number of Shares subject to Options
granted under this Plan during any calendar year to any one
Eligible Person shall not exceed 150,000 (taking into account
the number of shares associated with an Option granted and then
cancelled during such calendar year). The aggregate number of
Shares issued or issuable under all Awards granted under this
Plan, other than Options, during any calendar year to any one
Eligible Person shall not exceed 50,000 (taking into account the
number of shares associated with the Awards other than Options
granted and then cancelled during such calendar year). The
foregoing limitations of this Section&nbsp;3.2 shall not apply
to the extent that they are no longer required in order for
compensation in connection with grants of Awards under this Plan
to be treated as &#147;performance-based compensation&#148;
under Code Section&nbsp;162(m) and, if no longer required, a
change in such limitation shall not be subject to stockholder
approval as required under Section&nbsp;13 hereof. The aggregate
number of Shares that may be issued pursuant to the exercise of
ISOs granted under this Plan shall not exceed 1,500,000
(provided that such Shares shall not include the 1996 Plan
Shares), which number shall be calculated and adjusted pursuant
to Section&nbsp;3.3 and Section&nbsp;10 only to the extent that
such calculation or adjustment will not affect the status of any
Option intended to qualify as an ISO under Code
Section&nbsp;422, or whether this Plan meets the requirements
under Code Section&nbsp;422(b)(1). For the avoidance of all
doubt, the 1996 Plan Shares may not be issued pursuant to the
exercise of ISOs granted under the Plan.
</FONT>

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

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">3.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Issuance of
Shares.</I> For purposes of Section&nbsp;3.1, the aggregate
number of Shares issued under this Plan at any time shall equal
only the number of Shares actually issued upon exercise or
settlement of an Award and shall not include Shares subject to
Awards that have been canceled, expired or forfeited or Shares
subject to Awards that have been delivered (either actually or
constructively by attestation) to or retained by the Company in
payment or satisfaction of the purchase price or exercise price
of an Award.
</FONT>

<P align="left">
<B><FONT size="2">Section&nbsp;4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Persons
Eligible Under Plan</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Any person who is an employee or prospective
employee of the Company or any of its Subsidiaries shall be
eligible to be considered for the grant of Awards hereunder;
provided that the Award to such prospective employee is
conditioned on the prospective employee&#146;s commencement of
employment (an &#147;Eligible Person&#148;). The status of the
chairman of the Board of Directors as an &#147;employee&#148;
shall be determined by the Committee.
</FONT>

<P align="left">
<B><FONT size="2">Section&nbsp;5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Plan
Awards</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">5.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Award
Types.</I> The Committee, on behalf of the Company, is
authorized under this Plan to enter into certain types of
arrangements with Eligible Persons and to confer certain
benefits on them. The following arrangements or benefits are
authorized under this Plan if their terms and conditions are not
inconsistent with the provisions of this Plan: Options,
Performance Shares and Restricted Stock. Such arrangements and
benefits are sometimes referred to herein as &#147;Awards.&#148;
The authorized types of arrangements and benefits for which
Awards may be granted are defined as follows:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;Options: An Option is a right granted
    under Section&nbsp;6 to purchase a number of Shares at such
    exercise price, at such times, and on such other terms and
    conditions as are specified in the agreement or terms and
    conditions or other document evidencing the Award (the
    &#147;Option Document&#148;). Options intended to qualify as
    Incentive Stock Options (&#147;ISOs&#148;) pursuant to Code
    Section&nbsp;422 and Options not intended to qualify as ISOs
    (&#147;Nonqualified Options&#148;) may be granted under
    Section&nbsp;6.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;Performance Shares. Performance Shares
    is an award made under Section&nbsp;8, to receive a number of
    Shares, the payment of which is contingent upon achieving
    certain Committee established performance standards derived from
    the Qualifying Performance Criteria described in
    Section&nbsp;9.2 hereof. Once the conditions for the Performance
    Shares are met, the Performance Shares shall be payable either
    in cash or Shares (or both) by reference to the fair market
    value of the Shares enumerated in the Performance Shares at such
    time as determined by the Committee in the Award.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(c)&nbsp;Restricted Stock: A Restricted Stock is
    an award or issuance of Shares under Section&nbsp;7, subject to
    certain restrictions and the risk of forfeiture and terms as are
    expressed in the agreement or other document evidencing the
    Award.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">5.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Grants of
Awards.</I> An Award may consist of one such arrangement or
benefit or two or more of them in tandem, and the terms as
established by the Committee for all Awards granted hereunder
may include performance standards derived from the Qualifying
Performance Criteria, and the receipt of any Award may be
contingent on performance standards derived from the Qualifying
Performance Criteria.
</FONT>

<P align="left">
<B><FONT size="2">Section&nbsp;6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Options</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Committee may grant an Option or provide for
the grant of an Option, either from time to time in the
discretion of the Committee or automatically upon the occurrence
of specified events, including, without limitation, the
achievement of performance goals, the satisfaction of an event
or condition within the control of the recipient of the Award or
within the control of others.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">6.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Option
Document.</I> Each Option Document shall contain provisions
regarding (a)&nbsp;the number of Shares that may be issued upon
exercise of the Option, (b)&nbsp;the purchase price of the
Shares and the means of payment for the Shares, (c)&nbsp;the
term of the Option, (d)&nbsp;such terms and conditions on the
vesting and/or exercisability of an Option as may be determined
from time to time by the Committee, (e)&nbsp;restrictions on the
transfer of the Option and forfeiture provisions and
(f)&nbsp;such further terms and conditions, in each case not
</FONT>

<P align="center"><FONT size="2">B-3
</FONT>

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<DIV align="left">
<FONT size="2">inconsistent with this Plan as may be determined
from time to time by the Committee. Option Documents evidencing
ISOs shall contain such terms and conditions as may be necessary
to qualify, to the extent determined desirable by the Committee,
with the applicable provisions of Section&nbsp;422 of the Code.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">6.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Option
Price.</I> The purchase price per share of the Shares subject to
each Option granted under this Plan shall equal or exceed 100%
of the fair market value of a Share on the date the Option is
granted.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">6.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Option
Term.</I> The &#147;Term&#148; of each Option granted under this
Plan, including any ISOs, shall be 10&nbsp;years from the date
of its grant, unless the Committee provides for a lesser term.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">6.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Option
Vesting.</I> Options granted under this Plan shall be
exercisable at such time and in such installments during the
period prior to the expiration of the Option&#146;s Term as
determined by the Committee. The Committee shall have the right
to make the timing of the ability to exercise any Option granted
under this Plan subject to continued employment, the passage of
time and/or such performance requirements as deemed appropriate
by the Committee.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">6.5&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Termination
of Employment other than as a Result of Death or Disability.</I>
An ISO of any Participant who shall cease to be an Employee
other than as a result of his death or disability shall be
exercisable only to the extent exercisable on the date of
termination of employment (i.e., to the extent vested) and must
be exercised on or before the option expiration date specified
in the Option Agreement but is no event later than the date that
is three (3)&nbsp;months following the date of termination of
employment. To the extent any ISO is not exercisable on the date
of termination of employment (i.e., to the extent not vested)
such ISO shall terminate on the date of termination of
employment. To the extent any ISO is not exercised within the
time period provided, such ISO shall terminate as of the date of
expiration of such time period. Nothing in the Plan shall be
construed as imposing any obligation on the Company to continue
the employment of any Participant or shall interfere or restrict
in any way the rights of the Company to discharge any Employee
at any time for any reason whatsoever, with or without cause.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">6.6&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Payment of
Exercise Price.</I> The exercise price of an Option shall be
paid in the form of one of more of the following, as the
Committee shall specify, either through the terms of the Option
Document or at the time of exercise of an Option: (a)&nbsp;cash
or certified or cashiers&#146; check, (b)&nbsp;shares of capital
stock of the Company that have been held by the Participant for
such period of time as the Committee may specify, (c)&nbsp;other
property deemed acceptable by the Committee, (d)&nbsp;a
reduction in the number of Shares or other property otherwise
issuable pursuant to such Option, (e)&nbsp;payment under an
arrangement with a broker selected or approved by the Company
where payment is made pursuant to an irrevocable commitment by
the broker to deliver to the Company proceeds from the sale of
the Shares issuable upon exercise of the Option, or (f)&nbsp;any
combination of (a)&nbsp;through (d).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">6.7&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>No Option
Repricing.</I> Without the approval of stockholders, the Company
shall not reprice any Options. For purposes of this Plan, the
term &#147;reprice&#148; shall mean lowering the exercise price
of previously awarded Options within the meaning of
Item&nbsp;402(i) under Securities and Exchange Commission
Regulation&nbsp;S-K (including canceling previously awarded
Options and regranting them with a lower exercise price).
</FONT>

<P align="left">
<B><FONT size="2">Section&nbsp;7.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Restricted
Stock Awards</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Committee is authorized to make Awards of
Restricted Stock to Participants in such amounts and subject to
such terms and conditions as may be determined by the Committee.
All Awards of Restricted Stock shall be evidenced by a
Restricted Stock Award Agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">7.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Issuance and
Restrictions.</I> Restricted Stock shall be subject to such
restrictions on transferability and other restrictions as the
Committee may impose (including, without limitation, limitations
on the right to vote Restricted Stock or the right to receive
dividends on the Restricted Stock). These restrictions may lapse
separately or in combination of such times, under such
circumstances, in such installments, upon the satisfaction of
continued employment, standards derived from the Qualifying
Performance Criteria, lapse of time, certain acceleration events
like death or disability or otherwise, as the Committee
determines at the time of the grant of the Award or thereafter.
</FONT>

<P align="center"><FONT size="2">B-4
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">7.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Forfeiture.</I>
Except as otherwise determined by the Committee at the time of
the grant of the Award or thereafter, upon termination of
employment during the applicable restriction period or upon
failure to satisfy a standard derived from the Qualifying
Performance Criteria during the applicable restriction period,
Restricted Stock that is at that time subject to restrictions
shall be forfeited and re-acquired by the Company; provided,
however, that the Committee may provide in any Award Agreement
that restrictions or forfeiture conditions relating to
Restricted Stock will be waived in whole or in part in the event
of terminations resulting from specified causes, and the
Committee may in other cases waive in whole or in part
restrictions or forfeiture conditions relating to Restricted
Stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">7.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Certificates
for Restricted Stock.</I> Restricted Stock granted under the
Plan may be evidenced in such manner as the Committee shall
determine. If certificates representing shares of Restricted
Stock are registered in the name of the Participant,
certificates must bear an appropriate legend referring to the
terms, conditions, and restrictions applicable to such
Restricted Stock.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="10%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">Section&nbsp;8.</FONT></B></TD>
    <TD>
    <B><FONT size="2">Performance Shares</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Committee is authorized to grant Performance
Shares to Participants on such terms and conditions as may be
determined by the Committee. The Committee shall have the
complete discretion to determine the number of Performance
Shares granted to each Participant. All Awards of Performance
Shares shall be evidenced by an Award Agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">8.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Right to
Payment.</I> A grant of Performance Shares gives the Participant
the right to a number of Shares, contingent upon certain
performance standards established by the Committee and derived
from the Qualifying Performance Criteria, and certain other
terms and conditions as may be established by the Committee.
Once the conditions and terms for the performance Shares have
been met, the Performance Shares shall be payable by the Company
either in cash or Shares (or both) by reference to the fair
market value of the Shares enumerated in the Performance Shares
and the timing of such payment of cash or Shares shall be set
forth in the Award for the Performance Shares by the Committee.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">8.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Other
Terms.</I> The time period for the measurement of any
performance standard or criteria shall be any time period
established by the Committee, but under no circumstance shall a
Performance Shares be granted after the expiration of the Plan,
and the applicable performance associated with such Performance
Share must begin before the expiration of this Plan. The cash or
Shares paid with respect to Performance Shares may be paid in a
lump sum or in installments following the close of the
performance period or, in accordance with procedures established
by the Committee, on a deferred basis.
</FONT>

<P align="left">
<B><FONT size="2">Section&nbsp;9.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other
Provisions Applicable to Awards</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">9.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Transferability.</I>
Unless the agreement or other document evidencing an Award (or
an amendment thereto authorized by the Committee) expressly
states that the Award is transferable as provided hereunder, no
Award granted under this Plan, nor any interest in such Award,
may be sold, assigned, conveyed, gifted, pledged, hypothecated
or otherwise transferred in any manner prior to the vesting or
lapse of any and all restrictions applicable thereto.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">9.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Qualifying
Performance Criteria.</I> For purposes of this Plan, the term
&#147;Qualifying Performance Criteria&#148; shall mean any one
or more of the following performance criteria, either
individually, alternatively or in any combination, applied to
either the Company as a whole, to a business unit or subsidiary,
or based on comparisons of any of the performance measures
relative to other companies, either individually, alternatively
or in any combination, and measured either annually or
cumulatively over a period of years, on an absolute basis or
relative to a pre-established target, to previous years&#146;
results or to a designated comparison group, in each case as
specified by the Committee in the Award: (a)&nbsp;cash flow,
(b)&nbsp;earnings per share or increases of same,
(c)&nbsp;earnings before interest, taxes and amortization,
(d)&nbsp;return on equity, (e)&nbsp;total stockholder return,
(f)&nbsp;share price performance, (g)&nbsp;return on capital or
investment, (h)&nbsp;return on assets or net assets,
(i)&nbsp;revenue, (j)&nbsp;income or net income,
(k)&nbsp;operating income or net operating income,
(l)&nbsp;operating profit or net operating profit,
(m)&nbsp;operating margin or profit margin, (n)&nbsp;return on
operating revenue, (o)&nbsp;pre-tax or after-tax profit levels
expressed in either absolute dollars, (p)&nbsp;revenues or
revenue growth, (q)&nbsp;economic or
</FONT>

<P align="center"><FONT size="2">B-5
</FONT>

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<DIV align="left">
<FONT size="2">cash value added, (r)&nbsp;results of customer
satisfaction surveys, (s)&nbsp;other measures of performance,
quality, safety, productivity or process improvement,
(t)&nbsp;market share, (u)&nbsp;overhead or other expense
reduction, (v)&nbsp;departure or on-time arrival performance,
and (w)&nbsp;baggage handling. These factors may have a minimum
performance standard, a target performance standard and a
maximum performance standard. The Committee shall appropriately
adjust any evaluation of performance under a Qualifying
Performance Criteria to exclude any of the following events that
occurs during a performance period: (i)&nbsp;asset write-downs,
(ii)&nbsp;litigation or claim judgments or settlements,
(iii)&nbsp;the effect of changes in tax law, accounting
principles or other such laws or provisions affecting reported
results, (iv)&nbsp;accruals for reorganization and restructuring
programs and (v)&nbsp;any extraordinary non-recurring items as
described in Accounting Principles Board Opinion No.&nbsp;30
and/or in management&#146;s discussion and analysis of financial
condition and results of operations appearing in the
Company&#146;s annual report to stockholders for the applicable
year.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">9.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Dividends.</I>
Unless otherwise provided by the Committee, no adjustment shall
be made in Shares issuable under Awards on account of cash
dividends that may be paid or other rights that may be issued to
the holders of Shares prior to their issuance under any Award.
The Committee shall specify whether dividends or dividend
equivalent amounts shall be paid to any Participant with respect
to the Shares subject to any Award that have not vested or been
issued or that are subject to any restrictions or conditions on
the record date for dividends.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">9.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Documents
Evidencing Awards.</I> Except for ISOs prior to the effective
date of the Plan as set forth in Section&nbsp;17, the Committee
shall, subject to applicable law, determine the date an Award is
deemed to be granted, which for purposes of this Plan shall not
be affected by the fact that an Award is contingent on
subsequent stockholder approval of this Plan. The Committee or,
except to the extent prohibited under applicable law, its
delegate(s) may establish the terms of agreements or other
documents evidencing Awards under this Plan and may, but need
not, require as a condition to any such agreement&#146;s or
document&#146;s effectiveness that such agreement or document be
executed by the Participant and that such Participant agree to
such further terms and conditions as specified in such agreement
or document. The grant of an Award under this Plan shall not
confer any rights upon the Participant holding such Award other
than such terms, and subject to such conditions, as are
specified in this Plan as being applicable to such type of Award
(or to all Awards) or as are expressly set forth in the
agreement or other document evidencing such Award.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">9.5&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Tandem Stock
or Cash Rights.</I> At the time an Award is granted or by
subsequent action, the Committee may, but need not, provide that
an Award shall contain as a term thereof, a right, either in
tandem with the other rights under the Award or as an
alternative thereto, of the Participant to receive, without
payment to the Company, a number of Shares, cash or a
combination thereof, the amount of which is determined by
reference to the value of the Award.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">9.6&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Financing.</I>
The Committee may in its discretion provide financing to a
Participant in a principal amount sufficient to pay the purchase
price of any Award and/or to pay the amount of taxes required by
law to be withheld with respect to any Award. Any such loan
shall be subject to all applicable legal requirements and
restrictions pertinent thereto, including Regulation&nbsp;U
promulgated by the Federal Reserve Board. The grant of an Award
shall in no way obligate the Company or the Committee to provide
any financing whatsoever in connection therewith.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">9.7&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Compliance
with Code Section&nbsp;409A.</I> Notwithstanding any language to
the contrary in this Plan, the Committee will ensure that the
terms and conditions of any Awards issued will comply with the
applicable provision of Code Section&nbsp;409A or the
regulations or other pronouncements thereunder.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">9.8&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Additional
Restrictions on Awards.</I> Either at the time an Award is
granted or by subsequent action, the Committee may, but need
not, impose such restrictions, conditions or limitations as it
determines appropriate as to the timing and manner of any
resales by a Participant or other subsequent transfers by a
Participant of any Shares issued under an Award, including
without limitation (a)&nbsp;restrictions under an insider
trading policy, (b)&nbsp;restrictions designed to delay and/or
coordinate the timing and manner of sales by Participants, and
(c)&nbsp;restrictions as to the use of a specified brokerage
firm for such resales or other transfers.
</FONT>

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

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<P align="left">
<B><FONT size="2">Section&nbsp;10.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Changes
in Capital Structure</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">10.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Corporate
Actions Unimpaired.</I> The existence of outstanding Awards
(including any Options) shall not affect in any way the right or
power of the Company or its stockholders to make or authorize
any or all adjustments, recapitalizations, reorganizations,
exchanges, or other changes in the Company&#146;s capital
structure or its business, or any merger or consolidation of the
Company, or any issuance of Shares or other securities or
subscription rights thereto, or any issuance of bonds,
debentures, preferred or prior preference stock ahead of or
affecting the Shares or other securities of the Company or the
rights thereof, or the dissolution or liquidation of the
Company, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise. Further, except as
expressly provided herein or by the Committee, (a)&nbsp;the
issuance by the Company of shares of stock of any class of
securities convertible into shares of stock of any class, for
cash, property, labor or services, upon direct sale, upon the
exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible
into such shares or other securities, (b)&nbsp;the payment of a
dividend in property other than Shares, or (c)&nbsp;the
occurrence of any similar transaction, and in any case whether
or not for fair value, shall not affect, and no adjustment by
reason thereof shall be made with respect to, the number of
Shares subject to Options or other Awards theretofore granted or
the purchase price per Share, unless the Committee shall
determine in its sole discretion that an adjustment is necessary
to provide equitable treatment to a Participant.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">10.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Adjustments
Upon Certain Events.</I> If the outstanding Shares or other
securities of the Company, or both, for which the Award is then
exercisable or as to which the Award is to be settled shall at
any time be changed or exchanged by declaration of a stock
dividend, stock split, combination of shares, recapitalization,
or reorganization, the Committee may appropriately and equitably
adjust the number and kind of Shares or other securities which
are subject to the Plan or subject to any Awards theretofore
granted, and the exercise or settlement prices of such Awards,
so as to maintain the proportionate number of Shares or other
securities without changing the aggregate exercise or settlement
price, provided, however, that such adjustment shall be made so
as to not affect the status of any Award intended to qualify as
an ISO or as &#147;performance based compensation&#148; under
Section&nbsp;162(m) of the Code.
</FONT>

<P align="left">
<B><FONT size="2">Section&nbsp;11.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mergers
and Liquidation</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Except as limited by the provisions of Code
Section&nbsp;422 of the Code and the terms of any individual
Award, if the company is the surviving corporation in any merger
or consolidation, all Awards shall remain in force, and any:
(1)&nbsp;Option granted under the Plan shall remain outstanding
pursuant to the terms of the Plan and the Award; and
(2)&nbsp;Restricted Stock granted under the Plan shall continue
to be outstanding pursuant to the terms of the Award and this
Plan. Except to the extent otherwise provided in an Award
document, by the Board, or as limited by Code Section&nbsp;422,
dissolution or liquidation of the Company shall cause every
unvested Option, Restricted Stock or other Award for which there
remains contingencies, conditions and unmet performance
standards to terminate. Except as limited by Code
Section&nbsp;422, a merger or consolidation in which the Company
is not the surviving corporation shall also cause every unvested
Option, Restricted Stock or other Award for which there remains
contingencies, conditions and unmet performance standards to
terminate unless specifically provided otherwise in an Award
document or by the Board.
</FONT>

<P align="left">
<B><FONT size="2">Section&nbsp;12.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Taxes</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">12.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Withholding
Requirements.</I> The Committee may make such provisions or
impose such conditions as it may deem appropriate for the
withholding or payment by a Participant of any taxes that the
Committee determines are required in connection with any Award
granted under this Plan, and a Participant&#146;s rights in any
Award are subject to satisfaction of such conditions.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">12.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Payment of
Withholding Taxes.</I> Notwithstanding the terms of
Section&nbsp;12.1, the Committee may provide in the agreement or
other document evidencing an Award or otherwise that all or any
portion of the taxes required to be withheld by the Company or,
if permitted by the Committee, desired to be paid by the
Participant, in connection with the exercise, vesting,
settlement or transfer of any other Award shall be paid or, at
the election of the Participant, may be paid by the Company by
withholding shares of the Company&#146;s
</FONT>

<P align="center"><FONT size="2">B-7
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV align="left">
<FONT size="2">capital stock otherwise issuable or subject to
such Award, or by the Participant delivering previously owned
shares of the Company&#146;s capital stock, in each case having
a fair market value equal to the amount required or elected to
be withheld or paid, or by a broker selected or approved by the
Company paying such amount pursuant to an irrevocable commitment
by the broker to deliver to the Company proceeds from the sale
of the Shares issuable under the Award. Any such election is
subject to such conditions or procedures as may be established
by the Committee and may be subject to approval by the Committee.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">Section&nbsp;13.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amendments
or Termination</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Board may amend, alter or discontinue this
Plan or any agreement or other document evidencing an Award made
under this Plan but, except as provided pursuant to the
anti-dilution adjustment provisions of Section&nbsp;10.2, no
such amendment shall, without the approval of the stockholders
of the Company:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;change the maximum number of shares of
    Common Stock for which Awards may be granted under this Plan;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;reduce the price at which Options may be
    granted below the price provided for in Section&nbsp;6.2;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(c)&nbsp;reduce the exercise price of outstanding
    Options;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(d)&nbsp;extend the term of this Plan;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(e)&nbsp;change the class of persons eligible to
    be Eligible Persons or Participants;&nbsp;or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(f)&nbsp;increase the number of shares that are
    eligible for non-Option Awards.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Board may amend, alter or discontinue the
Plan or any agreement evidencing an Award made under the Plan,
but no amendment or alteration shall be made which would impair
the rights of any Award holder, without such holder&#146;s
consent, under any Award theretofore granted; provided that no
such consent shall be required if the Committee determines in
its sole discretion and prior to the date of any change in
control, recapitalization, stock dividend, stock split,
reorganization, merger, consolidation or similar type
transaction that such amendment or alteration either is required
or advisable in order for the Company, the Plan, or any Award
granted, to satisfy any law or regulation or to meet the
requirements of any accounting standard.
</FONT>

<P align="left">
<B><FONT size="2">Section&nbsp;14.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Compliance
with Other Laws and Regulations.</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This Plan, the grant and exercise of Awards
thereunder, and the obligation of the Company to sell, issue or
deliver Shares under such Awards, shall be subject to all
applicable federal, state and foreign laws, rules and
regulations and to such approvals by any governmental or
regulatory agency as may be required. The Company shall not be
required to register in a Participant&#146;s name or deliver any
Shares prior to the completion of any registration or
qualification of such Shares under any federal, state or foreign
law or any ruling or regulation of any government body which the
Committee shall determine to be necessary or advisable. This
Plan is intended to constitute an unfunded arrangement for the
Eligible Persons.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">No Option shall be exercisable unless a
registration statement with respect to the Option is effective
or the Company has determined that such registration is
unnecessary. Unless the Awards and Shares covered by this Plan
have been registered under the Securities Act of 1933, as
amended, or the Company has determined that such registration is
unnecessary, each person receiving an Award and/or Shares
pursuant to any Award may be required by the Company to give a
representation in writing that such person is acquiring such
Shares for his or her own account for investment and not with a
view to, or for sale in connection with, the distribution of any
part thereof.
</FONT>

<P align="left">
<B><FONT size="2">Section&nbsp;15.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No
Right to Company Employment</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Nothing in this Plan or as a result of any Award
granted pursuant to this Plan shall confer on any individual any
right to continue in the employ of the Company or interfere in
any way with the right of the Company to terminate an
individual&#146;s employment at any time. The agreements or
other documents
</FONT>

<P align="center"><FONT size="2">B-8
</FONT>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV align="left">
<FONT size="2">evidencing Awards may contain such provisions as
the Committee may approve with reference to the effect of
approved leaves of absence.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">Section&nbsp;16.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Liability
of Company</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company and any Affiliate which is in
existence or hereafter comes into existence shall not be liable
to a Participant, an Eligible Person or other persons as to:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;The Non-Issuance of Shares. The
    non-issuance or sale of shares as to which the Company has been
    unable to obtain from any regulatory body having jurisdiction
    the authority deemed by the Company&#146;s counsel to be
    necessary to the lawful issuance and sale of any shares
    hereunder;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;Tax Consequences. Any tax consequence
    expected, but not realized, by any Participant, Eligible Person
    or other person due to the receipt, exercise or settlement of
    any Option or other Award granted hereunder.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Section&nbsp;17.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Effectiveness
and Expiration of Plan</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This Plan shall be effective on the date the
Company&#146;s stockholders adopt this Plan, and no ISOs shall
be granted prior to the Company&#146;s stockholders adoption of
this Plan. All Awards granted under this Plan are subject to,
and may not be exercised before the approval of this Plan by the
stockholders. Stockholder approval of the Plan shall be by the
affirmative vote of the holders of a majority of the outstanding
shares of the Company present, or represented by proxy, and
entitled to vote, at a meeting of the Company&#146;s
stockholders or by written consent in accordance with the laws
of the State of Delaware; provided that if such approval by the
stockholders of the Company is not forthcoming, all Awards
previously granted under this Plan shall be void. No Awards
shall be granted pursuant to this Plan more than 10&nbsp;years
after the effective date of this Plan.
</FONT>

<P align="left">
<B><FONT size="2">Section&nbsp;18.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Incentive
Stock Options</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Notwithstanding anything in the Plan to the
contrary, it is the intention of the Company and the Committee
that all terms and provisions relating to Incentive Stock
Options of this Plan shall be consistent with the requirements
of Code Section&nbsp;422 and the applicable regulations
thereunder, as of the effective date of this plan, and to the
extent any term or provision of this Plan relating to Incentive
Stock Options is inconsistent with Code Section&nbsp;422 and the
applicable regulations thereunder at that date, the term or
provision shall be read, interpreted or substituted so as to be
consistent with the applicable provision of Code
Section&nbsp;422 or the regulations thereunder.
</FONT>

<P align="left">
<B><FONT size="2">Section&nbsp;19.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-Exclusivity
of Plan</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Neither the adoption of this Plan by the Board
nor the submission of this Plan to the stockholders of the
Company for approval shall be construed as creating any
limitations on the power of the Board or the Committee to adopt
such other incentive arrangements as either may deem desirable,
including without limitation, the granting of restricted stock
or stock options otherwise than under this Plan, and such
arrangements may be either generally applicable or applicable
only in specific cases.
</FONT>

<P align="left">
<B><FONT size="2">Section&nbsp;20.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Governing
Law</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This Plan and any agreements or other documents
hereunder shall be interpreted and construed in accordance with
the laws of the State of Nevada and applicable federal law. The
Committee may provide that any dispute as to any Award shall be
presented and determined in such forum as the Committee may
specify, including through binding arbitration. Any reference in
this Plan or in the agreement or other document evidencing any
Award to a provision of law or to a rule or regulation shall be
deemed to include any successor law, rule or regulation of
similar effect or applicability.
</FONT>

<P align="center"><FONT size="2">B-9
</FONT>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="left">
<B><FONT size="2">Section&nbsp;21.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Miscellaneous
Matters</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">21.1 <I>Annulment of Awards.</I> The grant of any
Award under the Plan payable in cash is provisional until cash
is paid in settlement thereof. The grant of any Award payable in
Shares is provisional until the Participant becomes entitled to
the certificates in settlement thereof. In the event the
employment of a Participant is terminated for cause (as defined
below), any Award which is provisional shall be annulled as of
the date of such termination for cause. For the purpose of this
Section&nbsp;21.1, the term &#147;terminated for cause&#148;
means any discharge for violation of the policies and procedures
of the Company or any Subsidiary or for other job performance or
conduct which is detrimental to the best interests of the
Company or a Subsidiary.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">21.2 <I>Securities Law Restrictions.</I> No
Shares shall be issued under the Plan unless counsel for the
Company shall be satisfied that such issuance will be in
compliance with applicable Federal and state securities laws.
Certificates for Shares delivered under the Plan may be subject
to such stock-transfer orders and other restrictions as the
Committee may deem advisable under the rules, regulations, and
other requirements of the Securities and Exchange Commission,
any stock exchange upon which the Shares is then listed, and any
applicable Federal or state securities law. The Committee may
cause a legend or legends to be put on any such certificates to
refer to those restrictions. Further, without limiting the
foregoing, each person exercising an Option or Performance
Shares or receiving Restricted Stock may be required by the
Company to give a representation in writing that he or she is
acquiring Shares for his or her own account for investment and
not with a view to, or for sale in connection with, the
distribution of any part thereof (regardless of whether such
option and Shares covered by the Plan are registered under the
Securities Act of 1933, as amended). As a condition of transfer
of the certificate evidencing Shares, the Committee may obtain
such other agreements or undertakings, if any, that it may deem
necessary or appropriate to assume compliance with any
provisions of the Plan or any law or regulation. Certificates
for Shares delivered under the Plan may be subject to such stock
transfer orders and other restrictions as the Board may deem
advisable under the rules, regulations, and other requirements
of the Securities and Exchange Commission, any stock exchange
upon which the Shares are then listed, and any applicable
Federal or state securities laws. The Board may cause a legend
or legends to be put on any such certificate to refer to those
restrictions.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">21.3 <I>Award Agreement.</I> Each Participant
receiving an Award under the Plan shall enter into an, Award
Agreement with the Company in a form specified by the Committee
agreeing to the terms and conditions of the Award and such
related matters as the Committee, in its sole discretion, shall
determine.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">21.4 <I>Costs of Plan.</I> The costs and expenses
of administering the Plan shall be borne by the Company.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">21.5 <I>Tax Reimbursement Payments to
Participants.</I> The Committee, pursuant to the terms of the
agreements or other documents pursuant to which specific Awards
are made under the 2005 Plan, may agree to reimburse
Participants for some or all of the federal, state and local
income taxes associated with the grant or exercise of an Award
or the receipt of the cash or Shares from an Award (including
any additional tax imposed due to Code Section&nbsp;409A), or
the 20% excise tax on any &#147;excess parachute payments&#148;
under Code Sections&nbsp;280G and Code Section&nbsp;4999, and
may agree to reimburse such Participants for some or all the
additional federal, state and local income tax associated with
the payments made under this Section&nbsp;21.5.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">21.6 <I>Government Regulations.</I> The Plan and
the granting and exercise of Options and Performance Shares
hereunder, and the obligations of the Company to sell and
deliver Shares under such Options and Performance Shares, shall
be subject to all applicable laws, rules and regulations, and to
such approvals by any governmental agencies or national
securities exchanges as may be required.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">21.7 <I>Interpretation.</I> If any provision of
the Plan is held invalid for any reason, such holding shall not
affect the remaining provisions of the Plan, but instead the
Plan shall be construed and enforced as if such provisions had
never been included in the Plan. Headings contained in the Plan
are for convenience only and shall in no manner be construed as
part of this Plan. Any reference to the masculine, feminine or
neuter gender shall be a reference to such other gender as is
appropriate.
</FONT>

<P align="center"><FONT size="2">B-10
</FONT>
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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="center" style="font-size: 10pt"><B>MESA AIR GROUP, INC.</B>


<P align="left" style="font-size: 10pt"><B>THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF MESA AIR GROUP, INC. FOR THE ANNUAL
MEETING OF SHAREHOLDERS</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The undersigned shareholder of Mesa Air Group, Inc., a Nevada corporation (the &#147;Company&#148;),
hereby acknowledges receipt of the Notice of Annual Meeting of Shareholders, dated January&nbsp;7, 2005,
and hereby appoints Jonathan G. Ornstein or Brian S. Gillman and each of them, proxies and
attorneys-in-fact, with full power of substitution, on behalf and in the name of the undersigned,
to represent the undersigned at the Annual Meeting of Shareholders of MESA AIR GROUP, INC. to be
held at the Company&#146;s corporate offices at 3 Gateway, 410 N. 44<SUP>th</SUP> Street, Suite&nbsp;160,
Phoenix, Arizona, on February&nbsp;8, 2005, at 10:00&nbsp;a.m., Arizona time, and at any adjournment(s) or
postponement(s) thereof, and to vote all shares of Common Stock that the undersigned would be
entitled to vote if then and there personally present, on the matters set forth below.


<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>ELECTION OF DIRECTORS</TD>
</TR>

</TABLE>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">

<!-- Begin Table Head --><TR valign="bottom">
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="94%">&nbsp;</TD>
</TR>

<!-- End Table Head -->

<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">FOR all nominees listed below (except as marked to the contrary below):</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Jonathan G. Ornstein, Daniel J. Altobello, Robert Beleson, Ronald R. Fogleman,
Joseph L. Manson, Maurice A. Parker, Julie Silcock</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">WITHHOLD AUTHORITY to vote for all nominees listed above</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>

<P align="left" style="font-size: 10pt">INSTRUCTIONS: To withhold authority to vote for any individual nominee, write that nominee&#146;s name
in the space provided below:



<P align="center" style="font-size: 10pt"><HR size="1" noshade width="100%">



<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>PROPOSAL TO RATIFY THE COMPANY&#146;S 2005 EMPLOYEE STOCK INCENTIVE PLAN</TD>
</TR>

</TABLE>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">

<!-- Begin Table Head --><TR valign="bottom">
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="26%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="25%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="26%">&nbsp;</TD>
</TR>

<!-- End Table Head -->

<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">FOR
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">AGAINST
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">ABSTAIN</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>


<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>RATIFICATION OF DELOITTE &#038; TOUCHE LLP AS THE COMPANY&#146;S INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM</TD>
</TR>

</TABLE>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">

<!-- Begin Table Head --><TR valign="bottom">
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="26%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="25%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="26%">&nbsp;</TD>
</TR>

<!-- End Table Head -->

<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">FOR
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">AGAINST
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">ABSTAIN</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>

<P align="left" style="font-size: 10pt">THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED
SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED &#147;FOR&#148; THE ELECTION OF THE NOMINEES
NAMED ABOVE, &#147;FOR&#148; THE PROPOSAL TO ADOPT THE COMPANY&#146;S 2005 EMPLOYEE STOCK INCENTIVE PLAN, &#147;FOR&#148;
THE PROPOSAL TO RATIFY THE SELECTION OF DELOITTE &#038; TOUCHE LLP AS THE COMPANY&#146;S INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM, AND AS SAID PROXIES DEEM ADVISABLE ON SUCH MATTERS AS MAY COME
BEFORE THE MEETING.



<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<P><DIV style="position: relative; float: left; margin-right: 1%; width: 35%">

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

</DIV>

<DIV style="position: relative; float: right; margin-left: 1%; width: 60%">
<P align="left" style="font-size: 10pt">Dated: <U>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;</U><U>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;</U>, 2005


<P align="left" style="font-size: 10pt">Please sign exactly as your name appears on the front of this Proxy
Card. When shares are held in common or in joint tenancy, both
should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a
corporation, sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership
name by an authorized person.


<P align="left" style="font-size: 10pt">SIGNATURES:


<P align="left" style="font-size: 10pt"><HR size="1" noshade width="80%" align="left">


<P align="left" style="font-size: 10pt"><HR size="1" noshade width="80%" align="left">


<P align="left" style="font-size: 10pt"><HR size="1" noshade width="80%" align="left">


<P align="left" style="font-size: 10pt">&nbsp;


<P align="left" style="font-size: 10pt">Please return in the enclosed, postage-paid envelope.


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">

<!-- Begin Table Head --><TR valign="bottom">
    <TD width="30%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="66%">&nbsp;</TD>
</TR>

<!-- End Table Head -->

<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">I Will <U>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;</U>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Will not <U>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;</U> attend the Meeting.</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>

</DIV>
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<P align="center" style="font-size: 10pt">&nbsp;
</DIV>


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`
end

</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
