Exhibit 10.37
EMPLOYMENT AGREEMENT
BY AND BETWEEN
GEORGE MURNANE III
AND
MESA AIR GROUP, INC.
DATED AS OF DECEMBER 31, 2005
EMPLOYMENT AGREEMENT (this “Agreement”) made and entered into on May 4, 2006, by
and between Mesa Air Group, Inc., a Nevada corporation (the “Company”), and
George Murnane III (“Executive”), and is effective as of December 31, 2005.
RECITALS
The Company and Executive are parties to an employment agreement dated as of
December 6, 2001. The parties have agreed to enter into this Agreement, which
supersedes the existing agreement.
ARTICLE I
DUTIES AND TERM
          1.1 EMPLOYMENT. In consideration of their mutual covenants and other
good and valuable consideration, the receipt, adequacy and sufficiency of which
are acknowledged, the Company agrees to hire Executive, and Executive agrees to
remain in the employ of the Company, upon the terms provided in this Agreement.
          1.2 POSITION AND RESPONSIBILITIES.
                  (a) Executive shall serve as the Executive Vice President and
Chief Financial Officer of the Company. Executive agrees to perform services,
not inconsistent with his position, as are from time to time assigned to him by
the Chief Executive Officer, President or Board of Directors of the Company.
                  (b) During the period of his employment under this Agreement,
Executive shall devote substantially all of his business time, attention, skill
and efforts to the faithful performance of his duties under this Agreement, but
Executive shall have the right to engage in personal business and to participate
in charitable and civic activities, during normal business hours and otherwise,
as long as such business and activities do not unreasonably interfere with
Executive’s duties to the Company.
          1.3 TERM. The term of Executive’s employment under this Agreement
shall commence on December 31, 2005, and shall continue, unless sooner
terminated, through December 30, 2010 (the “Expiration Date”).
          1.4 LOCATION. During the period of his employment under this
Agreement, Executive shall not be required, except with his prior written
consent (which may be withheld in his discretion), to relocate his principal
place of employment outside Maricopa County, Arizona. Required travel on the
Company’s business shall not be deemed a relocation so long as Executive is not
required to provide his services under this Agreement outside of Maricopa
County, Arizona, for more than 50% of his working days during any consecutive
six-month period.

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ARTICLE II
COMPENSATION
For all services rendered by Executive in any capacity during his employment
under this Agreement, including, without limitation, services as a director,
officer or member of any committee of the Board of the Company or of the board
of directors of any subsidiary of the Company, the Company shall compensate
Executive as set forth in this Article IV.
          2.1 BASE SALARY. The Company shall pay to Executive an annual base
salary of not less than $250,000 during the term of this Agreement (the “Base
Salary”). Executive’s Base Salary shall be paid every other week in equal
installments. The Base Salary shall be reviewed annually by the Board or a
committee designated by the Board, and the Board or such committee may, in its
discretion, increase the Base Salary. Subject to the consent of Executive (which
consent shall not be unreasonably withheld), the Company may reduce the Base
Salary under circumstances in which the Company has suffered severe financial
losses and has imposed cuts in salary of other officers on an across the board
basis, but any such reduction may not be at a greater percentage than the
reduction imposed on any other officer (an “Across the Board Reduction”).
          2.2 BONUS PAYMENTS.
                  (a) Reserved.
                  (b) During the period of Executive’s employment under this
Agreement, Executive shall be entitled to the bonus payments specified on
Exhibit A. Any bonus payable to Executive under the plan described in Exhibit A
is referred to as an “Incentive Bonus.” Any Incentive Bonuses will be paid on a
quarterly basis, not later than 45 days after the end of each fiscal quarter (or
90 days after the end of any fiscal year), based on the Company’s financial
statements in its Form 10-Q or Form 10-K, as the case may be; payments made with
respect to any fiscal quarter other than the last fiscal quarter of a fiscal
year of the Company will be made on an estimated basis (based on annualized
results), and the parties will account to one another and make appropriate
payment adjustments promptly after the financial statements for any fiscal year
become available. The Company in its discretion may pay bonuses to Executive in
addition to the Incentive Bonuses set forth in Exhibit A.
          2.3 STOCK OPTIONS.
                  (a) As of January 1st of each year (commencing in 2006) during
the term of this Agreement (or the next business day if January 1st of any year
is not a business day), the Company shall issue options to purchase not fewer
than 60,000 shares of common stock of the Company (adjusted appropriately for
any stock dividend, stock split, spin-off, reorganization, or similar
transaction), under the 2005 Employee Stock Incentive Plan.
          2.4 RESTRICTED STOCK.
Reserved.
          2.5 ADDITIONAL BENEFITS.
                  (a) GENERAL BENEFITS. During the term of this Agreement,
Executive shall be entitled (i) to participate in all employee benefit and
welfare programs, plans and arrangements (including, without limitation,
pension, profit sharing, supplemental pension and other retirement plans,
insurance, hospitalization, medical and group disability benefits, travel or
accident insurance plans) and (ii) to receive fringe benefits, such as dues and
fees of professional organizations and associations, in each case under (i)

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and (ii) to the extent that such programs, plans, arrangements, and benefits are
from time to time available to the Company’s executive personnel (the programs
and benefits in (i) and (ii) are referred to as “General Benefits”). During the
period of his employment under this Agreement, the Company shall continue to
provide the General Benefits to Executive at a level which shall in no event be
less, in any material respect, than the General Benefits made available to
Executive by the Company as of the date of this Agreement. Subject to the
consent of Executive (which consent shall not be unreasonably withheld), the
Company may reduce the General Benefits under circumstances in which the Company
has suffered severe financial losses and has imposed reductions in coverage of
the General Benefits of other officers on an across the board basis, but any
such reduction may not be disproportionately greater than the reduction imposed
on any other officer.
                  (b) DEATH BENEFIT. The Company shall promptly (and in any
event not later than 60 days after this Agreement is executed) obtain term life
insurance on the life of Executive such that the aggregate death benefit under
existing and new policies totals $2,000,000; such insurance shall be obtained
under one or more policies from insurers reasonably acceptable to Executive. As
long as Executive is employed by the Company, (i) the Company shall pay the
premiums on the policy (or policies) and shall maintain the policy (or policies)
in full force and effect, and (ii) Executive shall have the exclusive right to
designate the beneficiary under such policy (or policies). The Company shall
assign the policy (or policies) to Executive, without any cost to Executive,
effective immediately after Executive ceases to be an employee of the Company,
regardless of the reason for Executive’s termination of employment. The Company
shall not pledge or otherwise encumber the policy (or policies) at any time.
                  (c) DISABILITY BENEFITS. The Company shall provide Executive
with the following disability benefits:
                     (i) During any period of disability, illness or incapacity
during the term of this Agreement which renders Executive at least temporarily
unable to perform the services required under this Agreement, Executive shall
receive the Base Salary payable under Section 2.1 plus any cash bonus
compensation earned pursuant to the provisions of this Agreement or any
incentive compensation plan then in effect but not yet paid, less any cash
benefits received by him under any disability insurance carried by or provided
by the Company. Upon Executive’s Total Disability (as defined below), which
Total Disability continues during the payment periods specified in this Section,
the Company shall pay to Executive, on a monthly basis, for the period specified
below, an amount (the “Disability Payment”) equal to (A) one-twelfth of the sum
of (1) Executive’s Base Salary in effect immediately prior to the time such
Total Disability occurs, plus (2) an amount equal to the greater of (x) the
Threshold Bonus or (y) one half of the sum of (i) the bonuses (whether Incentive
Bonuses or other bonuses) that have been paid to Executive with respect to the
two fiscal years immediately preceding the fiscal year in which the Total
Disability occurs, and (ii) the bonuses (whether Incentive Bonuses or other
bonuses) that have been accrued with respect to the two fiscal years immediately
preceding the fiscal year in which the Total Disability occurs but have not been
paid (or if Executive has been employed by the Company for less than two full
fiscal years at the time of such Total Disability, then an amount equal to the
sum of such paid and accrued bonuses with respect to the fiscal year immediately
preceding the fiscal year in which the Total Disability occurs), which payments
shall be due in full regardless of any compensation paid to Executive as a
result of his employment by any other person after the date that Total
Disability occurs, (B) reduced by the amount of any monthly payments under any
policy of disability income insurance paid for by the Company (including the
policy described in Section 2.5(c)(ii)) which payments are received during the
time when any Disability Payment is being made to Executive following
Executive’s Total Disability. The Company shall pay the Disability Payment to
Executive in equivalent installments, at the same time or times as would have
been the case for payment of Base Salary if Executive had not become Totally
Disabled and had remained employed by the Company, and such payments shall
continue until the later of the expiration of the term of this Agreement and
48 months, except that the Company’s obligation to make such payments shall
cease upon the death of Executive or if Executive ceases to be Totally Disabled.

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Upon Executive’s Total Disability, except as provided in this Agreement, all
rights of Executive under this Agreement shall terminate.
                     (ii) In order to provide a ready source of funds with which
to pay the benefits provided for in clause (1) above, if Executive becomes
disabled (determined in accordance with the policy described below) during the
term of this Agreement and such disability extends beyond 180 days, then
Executive shall be paid the benefits provided for under the disability insurance
policy to be issued by UNUM Life Insurance Company, which the Company agrees to
maintain in full force and effect during the term of this Agreement. The Company
promptly (and in any event not later than 60 days after this Agreement is
executed) shall cause such policy to be amended to the extent necessary to cause
Executive to be eligible for disability payments for a minimum of four years
from the date of such disability (that is, providing for 3-1/2 years of
coverage, taking into account the 180-day coverage provided by the Company
directly under Section 2.5(c)(i)), and to increase the amount payable to a
minimum of $33,333 per month. To the extent the Company is unable to cause such
policy to be so amended, then the Company shall be obligated to provide such
payments to Executive directly. Such coverage shall apply regardless of whether
such four-year period extends beyond the term of this Agreement.
                  (d) RELOCATION EXPENSES. During the term of this Agreement, if
Executive’s principal place of employment is relocated outside Maricopa County,
Arizona, in accordance with Section 1.4, the Company shall reimburse Executive
for all usual relocation expenses incurred by Executive and his household in
moving to the new location, including, without limitation, moving expenses and
rental payments for temporary living quarters in the area of relocation for a
period not to exceed six months, real estate brokerage commissions incurred by
Executive in the sale of his then existing principal residence, and loan
financing charges and closing costs incurred in connection with the acquisition
and financing of a new residence.
                  (e) REIMBURSEMENT OF BUSINESS EXPENSES. During the term of
this Agreement, the Company shall, in accordance with standard Company policies,
pay, or reimburse Executive for, all reasonable travel and other expenses
incurred by Executive in performing his obligations under this Agreement.
                  (f) VACATIONS. During the term of this Agreement, Executive
shall be entitled to vacations with pay, and to such personal and sick leave
with pay, in accordance with the policy of the Company as may be established
from time to time by the Company and as applies to other executive officers of
the Company. In no event shall Executive be entitled to fewer than four weeks’
annual vacation. Unused vacation days may be carried over from one year to the
next in the maximum amount of four weeks’ annual vacation; that is, to the
extent that vacation days to which Executive is entitled remain unused, such
unused vacation days will cumulate and be useable in any subsequent year, but no
more than four weeks’ of annual vacation in the aggregate can be carried over
from one year to the next. Any vacation days which remain unused at the end of a
fiscal year that are in excess of such four weeks’ annual vacation shall expire
and shall thereafter no longer be useable by Executive, but the Company shall
compensate Executive for any such unused vacation days in accordance with the
formula set forth in Section 4.1(b). Similarly, any unused paid holidays may be
carried over from one year to the next but not in excess of an aggregate of five
days of paid holidays may be carried over from one year to the next; to the
extent any paid holidays remain unused at the end of a fiscal year that are in
excess of such five paid holidays, such paid holidays shall expire and shall
thereafter no longer be useable by Executive, but the Company shall compensate
Executive for any such unused paid holidays in accordance with the formula set
forth in Section 4.1(b).
                  (g) DIRECTOR FEES. During the term of this Agreement,
Executive shall not be entitled to be paid any fees for attendance at meetings
of the Board of Directors or any committee of the Board of Directors (or the
board or committee of the board of any subsidiary).

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                  (h) AIRLINE PASSES. During the term of this Agreement, the
Company shall use its reasonable efforts to obtain for the benefit of Executive
and Executive’s immediate family (Executive’s spouse, Executive’s children, and
the spouse and children of any of Executive’s children), the right to fly on a
complimentary basis on the aircraft of other airlines, on a positive space
basis. Such efforts shall include negotiating in good faith with other carriers
for such rights and offering reciprocal rights to the executives (and their
immediate family members) of such other carriers. The Company shall provide to
Executive and Executive’s immediate family, during the life of each such
individual, the right to fly on a complimentary basis on any aircraft operated
by the Company or any affiliate at any time (subject only to reasonable and
customary rules regarding availability), on a positive space basis. The Company
shall use its best efforts to cause any successor or subsequent successor to the
business or assets of the Company to grant such rights as to all routes operated
by such successor (or subsequent successor) and any of its affiliates.
                  (i) Reserved.
                  (j) PROFESSIONAL SERVICES. During the term of this Agreement,
the Company shall reimburse Executive for his out-of-pocket costs incurred in
connection with the retention of professionals by Executive to provide Executive
with income tax, estate planning, and investment advisory services. The maximum
amount of reimbursable expenses for such purposes shall be $10,000 for calendar
year 2005, and $5,000 for each calendar year thereafter during the term of this
Agreement. The Company shall reimburse Executive for such costs promptly after
Executive submits an invoice to Company. In order to preserve Executive’s rights
to confidentiality, Executive may satisfy the requirement of submitting an
invoice by providing the Company with a copy of the facing page of the invoice
showing the fees and expenses for the services rendered and the general nature
of the services rendered but without any detail concerning the substance of the
services rendered.
                  (k) EXECUTIVE SECURITY. During the term of this Agreement, the
Company shall provide to Executive such security services as is reasonably
necessary for the protection of the life and property of Executive and
Executive’s immediate family members.
          2.6 PAYMENT OF EXCISE TAXES. If any payment received by Executive
under this Agreement, as a result of or following any termination of employment
under this Agreement is subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code of 1986 (as amended from time to time, the “Code”), or any
successor or similar provision of the Code (the “Excise Tax”), the Company shall
pay Executive an additional cash amount (the “Gross Up”) such that the net
after-tax amount received by Executive under this Agreement is the same as if
the Excise Tax had not applied to any payments made under this Agreement. The
Company shall pay such amounts promptly after the calculation referred to in
Section 2.7 has been made.
          2.7 CERTAIN ADJUSTMENT PAYMENTS. For purposes of determining the Gross
Up, Executive shall be deemed to pay the federal income tax at the highest
marginal rate of taxation (currently 35%) in the calendar year in which the
payment to which the Gross Up applies is to be made. The determination of
whether such Excise Tax is payable and the amount of the Excise Tax shall be
made upon the opinion of a national accounting firm selected by Executive and
reasonably acceptable to the Company. If such opinion is not finally accepted by
the Internal Revenue Service upon audit or otherwise, then appropriate
adjustments shall be computed (with interest at the rate required to be paid by
Executive under the Code and with Gross Up, if applicable) by such tax counsel
based upon the final amount of the Excise Tax so determined, and (a) any
additional amount due Executive as a result of such adjustment shall be paid to
Executive by the Company in cash in a lump sum within 30 days after such
computation, or (b) any amount due the Company as a result of such adjustment
shall be paid to the Company by Executive in cash in a lump sum within 30 days
after such computation.
          2.8 DEFERRED COMPENSATION AGREEMENT. Upon execution of this Agreement
by the parties and on December 31 of each year thereafter during the term of
this Agreement, the Company shall contribute an amount equal to $50,000 to an
account for the benefit of Executive under the Deferred Compensation Plan in the
form of the attached Exhibit C. Notwithstanding Article 3.1 of the Deferred

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Compensation Plan, Executive shall not become 100% vested under the Deferred
Compensation Plan until the earlier of (i) December 30, 2010 or (ii) such time
as the Executive’s employment is terminated either (a) for reason of his death
or Total Disability, (b) by the Executive for Good Reason, (c) by the Company
without Cause or (d) if there is a Change of Control. Executive shall make the
election, within 30 days of the execution of this Agreement, specifically the
form and timing of distribution of any Company contributions to the Deferred
Compensation Plan under this Section 2.8
ARTICLE III
TERMINATION OF EMPLOYMENT
          3.1 DEATH OR RETIREMENT OF EXECUTIVE. Executive’s employment under
this Agreement shall automatically terminate upon the death or Retirement of
Executive.
          3.2 BY EXECUTIVE. Executive shall be entitled to terminate his
employment under this Agreement by giving Notice of Termination to the Company:
                  (a) for Good Reason;
                  (b) at any time without Good Reason.
          3.3 BY COMPANY. The Company shall be entitled to terminate Executive’s
employment under this Agreement by giving Notice of Termination to Executive:
                  (a) in the event of Executive’s Total Disability;
                  (b) for Cause; and
                  (c) at any time without Cause.
ARTICLE IV
COMPENSATION UPON TERMINATION OF EMPLOYMENT
If Executive’s employment under this Agreement is terminated prior to
December 30, 2010, then except for any other rights or benefits specifically
provided for in this Agreement following his period of employment, the Company
shall be obligated to provide compensation and benefits to Executive only as
follows:
          4.1 UPON TERMINATION FOR DEATH OR TOTAL DISABILITY. If Executive’s
employment under this Agreement is terminated by reason of his death or Total
Disability, the Company shall:
                  (a) pay Executive (or his estate) any Base Salary which has
accrued but not been paid as of the termination date (the “Accrued Base
Salary”);
                  (b) pay Executive (or his estate) for unused vacation days and
paid holidays accrued as of the termination date in an amount equal to his Base
Salary multiplied by a fraction the numerator of which is the number of accrued
unused vacation days and paid holidays, and the denominator of which is 260 (the
“Accrued Vacation Payment”);
                  (c) reimburse Executive (or his estate) for expenses incurred
by him prior to the date of termination which are subject to reimbursement
pursuant to this Agreement (the “Accrued Reimbursable Expenses”);

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                  (d) provide to Executive (or his estate) any accrued and
vested benefits required to be provided by the terms of any Company-sponsored
benefit plans or programs (the “Accrued Benefits”), together with any benefits
required to be paid or provided in the event of Executive’s death or disability
under applicable law;
                  (e) pay Executive (or his estate) any Incentive Bonus or other
bonus with respect to a prior fiscal quarter which has accrued but has not been
paid;
                  (f) pay Executive (or his estate) any payment under the
Deferred Compensation Plan which has accrued but has not been paid to the
account provided for in such plan;
                  (g) pay Executive the amounts due under Section 2.5;
                  (h) permit Executive (or his estate) to convert any vested
Restricted Stock Units outstanding at the termination date in accordance with
the terms of the Restricted Stock Agreement described in Section 2.4 hereof; and
                  (i) permit Executive (or his estate) to exercise all vested
unexercised stock options (including stock options which by their terms become
exercisable upon death or disability) and warrants outstanding at the
termination date in accordance with the terms of the plans and agreements
pursuant to which such options or warrants were issued.
          4.2 UPON TERMINATION BY COMPANY FOR CAUSE OR BY EXECUTIVE WITHOUT GOOD
REASON. If Executive’s employment is terminated by the Company for Cause, or if
Executive terminates his employment with the Company prior to December 31, 2010,
other than (x) upon Executive’s death or Total Disability or (y) for Good
Reason, the Company shall:
                  (a) pay Executive the Accrued Base Salary;
                  (b) pay Executive the Accrued Vacation Payment;
                  (c) reimburse Executive for the Accrued Reimbursable Expenses;
                  (d) provide Executive the Accrued Benefits, together with any
benefits required to be paid or provided under applicable law;
                  (e) pay Executive any accrued Incentive Bonus or other bonus
with respect to a prior fiscal quarter which has accrued but has not been paid;
                  (f) pay Executive any payment under the Deferred Compensation
Plan which has accrued but has not been paid to the account provided for in such
plan;
                  (g) permit Executive to convert any vested Restricted Stock
Units outstanding at the termination date in accordance with the terms of the
Restricted Stock Agreement described in Section 2.4 hereof; additionally, any
unvested Restricted Stock Units shall continue to vest in accordance with such
Agreement; and
                  (h) permit Executive to exercise all vested unexercised stock
options and warrants outstanding at the termination date in accordance the terms
of the plans and agreements pursuant to which such options and warrants were
issued.

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          4.3 UPON EXPIRATION OF THIS AGREEMENT. In order to induce the
Executive to continue his employment with the Company throughout the term of
this Agreement and until the Expiration Date of this Agreement, upon the
Expiration Date, the Company shall:
                  (a) pay Executive the Accrued Base Salary;
                  (b) pay Executive the Accrued Vacation Payment;
                  (c) reimburse Executive the Accrued Reimbursable Expenses;
                  (d) provide Executive the Accrued Benefits, together with any
benefits required to be paid or provided under applicable law;
                  (e) pay Executive any Incentive Bonus or other bonus with
respect to a prior fiscal quarter which has accrued but has not been paid;
                  (f) pay Executive any payment under the Deferred Compensation
Plan which has accrued but has not been paid to the account provided for in such
plan;
                  (g) maintain in full force and effect, for Executive’s and his
eligible beneficiaries’ continued benefit, all of the General Benefits, for a
period of 36 months following the Expiration Date of this Agreement, except to
the extent that, as to any such General Benefit, Executive receives the
substantial equivalent of such General Benefit as a result of his employment
with another employer after the Expiration Date. If Executive’s continued
participation in any General Benefit is not permitted under the terms of the
plan, program or arrangement under which the General Benefit was provided to
Executive by the Company, the Company shall arrange to provide Executive with
the General Benefit substantially similar to the General Benefit which Executive
would have been entitled to receive under such plan, program or arrangement;
                  (h) permit Executive to convert any vested Restricted Stock
Units outstanding at the Expiration Date in accordance with the terms of the
Restricted Stock Agreement described in Section 2.4 hereof; and
                  (i) Executive shall have the right to exercise all vested
unexercised stock options and warrants outstanding at the Expiration Date in
accordance with the terms of the plans and agreements pursuant to which such
options and warrants were issued.
          4.4 UPON TERMINATION BY THE EXECUTIVE FOR GOOD REASON. If Executive’s
employment is terminated by the Executive for Good Reason, the Company shall:
                  (a) pay Executive the Accrued Base Salary;
                  (b) pay Executive the Accrued Vacation Payment;
                  (c) reimburse Executive the Accrued Reimbursable Expenses;
                  (d) provide Executive the Accrued Benefits, together with any
benefits required to be paid or provided under applicable law;
                  (e) pay Executive any Incentive Bonus or other bonus with
respect to a prior fiscal quarter which has accrued but has not been paid;

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                  (f) pay Executive any payment under the Deferred Compensation
Plan which has accrued but has not been paid to the account provided for in such
plan and pay directly to Executive on December 30 of each year after such
termination through December 30, 2010, the amount that would have been payable
to the account established under such plan if this Agreement had not been
terminated;
                  (g) pay Executive, within thirty (30) days following the
termination date, an amount equal to three multiplied by the sum of
(1) Executive’s Base Salary in effect immediately prior to the time such
termination occurs, plus (2) an amount equal to the greater of (x) the Threshold
Bonus and (y) one half of the sum of (i) the bonuses (whether Incentive Bonuses
or other bonuses) that have been paid to Executive with respect to the two
fiscal years immediately preceding the fiscal year in which the termination
occurs, and (ii) the bonuses (whether Incentive Bonuses or other bonuses) that
have been accrued with respect to the two fiscal years immediately preceding the
fiscal year in which the termination occurs but have not been paid (or if
Executive has been employed by the Company for less than two full fiscal years
at the time of such termination, then an amount equal to the sum of such paid
and accrued bonuses with respect to the fiscal year immediately preceding the
fiscal year in which the termination occurs), which payment shall be due in full
regardless of any compensation paid to Executive as a result of his employment
by any other person after the termination date; and
                  (h) maintain in full force and effect, for Executive’s and his
eligible beneficiaries’ continued benefit, all of the General Benefits, for a
period of 36 months following the termination date of his employment under this
Agreement, except to the extent that, as to any such General Benefit, Executive
receives the substantial equivalent of such General Benefit as a result of his
employment with another employer after the termination date. If Executive’s
continued participation in any General Benefit is not permitted under the terms
of the plan, program or arrangement under which the General Benefit was provided
to Executive by the Company, the Company shall arrange to provide Executive with
the General Benefit substantially similar to the General Benefit which Executive
would have been entitled to receive under such plan, program or arrangement;
                  (i) permit Executive to convert all vested and unvested
Restricted Stock Units outstanding at the termination date in accordance with
the terms of the Restricted Stock Agreement described in Section 2.4 hereof; and
                  (j) Executive shall have the right to exercise all unexercised
(vested and unvested) stock options and warrants outstanding at the termination
date in accordance with the terms of the plans and agreements pursuant to which
such options and warrants were issued.
          4.5 UPON TERMINATION BY THE COMPANY WITHOUT CAUSE OR IF THERE IS A
CHANGE OF CONTROL. If Executive’s employment is terminated by the Company
without Cause or if there is a Change of Control, the Company shall:
                  (a) pay Executive the Accrued Base Salary;
                  (b) pay Executive the Accrued Vacation Payment;
                  (c) reimburse Executive the Accrued Reimbursable Expenses;
                  (d) provide Executive the Accrued Benefits, together with any
benefits required to be paid or provided under applicable law;
                  (e) pay Executive any Incentive Bonus or other bonus with
respect to a prior fiscal quarter which has accrued but has not been paid;
                  (f) pay Executive any payment under the Deferred Compensation
Plan which has accrued but has not been paid to the account provided for in such
plan, and pay directly to Executive on

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December 30 of each year after such termination or Change of Control through
December 30, 2009, the amount that would have been payable to the account
established under such plan if this Agreement had not been terminated or there
had not been a Change of Control;
                  (g) pay Executive, within thirty (30) days of the termination
date or Change of Control, an amount equal to six multiplied by the sum of
(1) Executive’s Base Salary in effect immediately prior to the time such
termination or Change of control occurs, plus (2) an amount equal to the greater
of (x) the Threshold Bonus and (y) one half of the sum of (i) the bonuses
(whether Incentive Bonuses or other bonuses) that have been paid to Executive
with respect to the two fiscal years immediately preceding the fiscal year in
which the termination or Change of control occurs, and (ii) the bonuses (whether
Incentive Bonuses or other bonuses) that have been accrued with respect to the
two fiscal years immediately preceding the fiscal year in which the termination
or Change of control occurs but have not been paid (or if Executive has been
employed by the Company for less than two full fiscal years at the time of such
termination or Change of control, then an amount equal to the sum of such paid
and accrued bonuses with respect to the fiscal year immediately preceding the
fiscal year in which the termination or Change of control occurs), which payment
shall be due in full regardless of any compensation paid to Executive as a
result of his employment by any other person after the termination date or
Change of control; and
                  (h) maintain in full force and effect, for Executive’s and his
eligible beneficiaries’ continued benefit, all of the General Benefits, for a
period of 36 months following the Change of control or termination date of his
employment under this Agreement, except to the extent that, as to any such
General Benefit, Executive receives the substantial equivalent of such General
Benefit as a result of his employment with another employer after the
termination date or Change of control. If Executive’s continued participation in
any General Benefit is not permitted under the terms of the plan, program or
arrangement under which the General Benefit was provided to Executive by the
Company, the Company shall arrange to provide Executive with the General Benefit
substantially similar to the General Benefit which Executive would have been
entitled to receive under such plan, program or arrangement;
                  (i) permit Executive to convert all vested and unvested
Restricted Stock Units outstanding at the termination date or Change in Control
date in accordance with the terms of the Restricted Stock Agreement described in
Section 2.4 hereof; and.
                  (j) Executive shall have the right to exercise all unexercised
(vested or unvested) stock options and warrants outstanding at the termination
or Change of Control date in accordance with the terms of the plans and
agreements pursuant to which such options and warrants were issued.
          4.6 Reserved.
          4.7 CALL.
                  (a) Upon any termination of employment under Section 4.1,
Section 4.3, Section 4.4 or Section 4.5, the Company shall have the right to
redeem any stock option, whether vested or unvested, that is held by Executive
as of the date of such termination and that is designated by the Company in a
notice to Executive (a “Call Election”), at a price equal to 100% of the
Black-Scholes Value of such stock option.
                  (b) The Black-Scholes Value for any option shall be determined
using the Black-Scholes formula but in any event shall be not less than the
Market Price for the common stock on the date the Call Election is made (the
“Calculation Date”), less the exercise price under the stock option. The
Black-Scholes Value shall be calculated by an independent major investment
banking firm selected by the Company, subject to the approval of Executive; if
Executive does not approve the firm selected by the Company, then the
Black-Scholes Value shall be the average of the amount calculated by the firm
selected by Executive and a major investment banking firm selected by the
Company. The Black-Scholes Value shall be calculated as of the Calculation Date,
and any unvested options for this purpose shall be treated as

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if fully vested. The Company shall bear the cost of the firm or firms that
conduct the Black-Scholes valuation. In determining the Black-Scholes Value of
any option, the following rules will apply:
                     (i) The time to maturity of any option will be equal to the
period beginning on the Calculation Date and ending on the final expiration date
of the option (the “Option Life”), without regard to any analysis of the effect,
or likelihood of occurrence, of any event that might cause the expiration date
to occur sooner.
                     (ii) The “risk free rate” as to any option will be
determined as of the Calculation Date, by the U.S. Treasury YTM, with a maturity
approximately equal to the Option Life, as stated by the Federal Reserve.
                     (iii) The volatility factor will be based on an historical
sampling of daily stock prices over a period of not less than 24 months from the
valuation date, and not more than 120 months from the valuation date, whichever
period yields the highest value.
                     (iv) No illiquidity or other discount will be applied to
the value determined by application of the Black-Scholes formula, whether by
reason of the fact that the options are not publicly traded or otherwise.
                  (c) Unless Executive consents, the Company shall not exercise
a Call Election to the extent that the Company would be unable, without
violating the provisions of the General Corporation Law of Nevada or the
fraudulent conveyance laws of any state, to pay any amount due to Executive
under Section 4.7(a); if Executive consents to the exercise of a Call Election
by the Company under such circumstances, then, to the extent that the Company is
unable, without violating the provisions of the General Corporation Law of
Nevada, to pay any amount due Executive under Section 4.7(a), the Company’s
obligation to make such payment shall be deferred, but only until the legal
restriction lapses, at which time the payment shall be due, and in any event,
all amounts that otherwise would have been payable but for such restriction
shall bear interest at the rate provided for in Section 6.11, from the date such
payments would have been payable (but for such legal restriction) until the date
they actually are made.
                  (d) All payments due by the Company in connection with any
Call Election are payable within 10 business days after the Call Election is
made.
                  (e) Any stock option redeemed by the Company under
Section 4.7(a) shall be cancelled.
ARTICLE V
RESTRICTIVE COVENANTS
          5.1 CONFIDENTIAL INFORMATION AND MATERIALS. Executive agrees that
during the course of his employment with the Company, he has obtained and shall
likely obtain in the future “Confidential Information.” “Confidential
Information” is information concerning the Company which the Company attempts to
keep confidential, has not been publicly disclosed by the Company, is not a
matter of common knowledge in the airline industry, and was not known by
Executive prior to his employment by the Company, including, but not limited to,
certain information relating to the business plans, trade practices, finances,
accounting methods, methods of operations, trade secrets, marketing plans or
programs, forecasts, statistics relating to routes and markets, contracts,
customers, compensation arrangements, and business opportunities. Executive
agrees that the Confidential Information is proprietary to the Company.
          5.2 GENERAL KNOWLEDGE. The general skills and experience gained by
Executive during Executive’s employment or engagement by the Company, and
information publicly available without breach of any duty owed by any person to
the Company or generally known within the airline

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industry, is not considered Confidential Information. Executive is not
restricted from working with a person or entity which has independently
developed information or materials similar to the Confidential Information, but
in such a circumstance, Executive agrees not to disclose the fact that any
similarity exists between the Confidential Information and the independently
developed information and materials, and Executive understands that such
similarity does not excuse Executive from the non-disclosure and other
obligations in this Agreement.
          5.3 EXECUTIVE OBLIGATIONS AS TO CONFIDENTIAL INFORMATION AND
MATERIALS. During Executive’s employment or engagement by the Company, Executive
shall have access to the Confidential Information and shall occupy a position of
trust and confidence with respect to the Confidential Information and the
Company’s affairs and business. Executive agrees to take the following steps to
preserve the confidential and proprietary nature of the Confidential
Information:
                  (a) NON-DISCLOSURE. During Executive’s Employment or
engagement by the Company and for a period of two years after the termination of
Executive’s Employment or engagement by the Company for any reason, Executive
shall not use, disclose or otherwise permit any person or entity access to any
of the Confidential Information other than as required in the performance of
Executive’s duties with the Company and other than is required to be disclosed
by law or by any court, administrative agency, or arbitration panel.
                  (b) PREVENT DISCLOSURE. During and for a period of two years
after Executive’s Employment or engagement by the Company, except as provided in
Section 5.3(a), Executive shall take all reasonable precautions to prevent
disclosure of the Confidential Information to unauthorized persons or entities,
other than is required to be disclosed by law or by any court, administrative
agency, or arbitration panel.
                  (c) RETURN ALL MATERIALS. Upon termination of Executive’s
employment or engagement by the Company for any reason whatsoever, or earlier if
requested by the Company, Executive shall deliver to the Company all tangible
materials relating to, but not limited to, the Confidential Information and any
other information regarding the Company, including any documentation, records,
listings, notes, data, sketches, drawings, memoranda, models, accounts,
reference materials, samples, machine-readable media and equipment which in any
way relate to the Confidential Information and shall not retain any copies of
any of the above materials.
ARTICLE VI
MISCELLANEOUS
          6.1 DEFINITIONS. For purposes of this Agreement, the following terms
shall have the following meanings:
                  (a) “Across the Board Reduction” — as defined in Section 2.1;
                  (b) “Accrued Base Salary” — as defined in Section 4.1(a);
                  (c) “Accrued Benefits” — as defined in Section 4.1(d);
                  (d) “Accrued Reimbursable Expenses” — as defined in u;
                  (e) “Accrued Vacation Payment” — as defined in Section 4.1(b);
                  (f) “Base Salary” — as defined in Section 2.1;
                  (g) “Board” — shall mean the Board of Directors of the
Company;

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                  (h) “Cause” shall mean the occurrence of any of the following:
                     (i) Executive’s willful misconduct with respect to the
Company’s business which results in a material detriment to the Company;
                     (ii) Executive is convicted of, or enters a plea of nolo
contendere with respect to, a felony offense; or
                     (iii) the continued failure or refusal by Executive, other
than by reason of Executive’s disability, to perform the duties required of him
by this Agreement, which failure or refusal is material and is not cured within
45 days following receipt by Executive of written notice from the Board
specifying the factors or events constituting such failure or refusal, except
that, as to any failure or refusal that is curable but cannot reasonably be
cured within such 45-day period, no Cause shall be deemed to have occurred
unless Executive fails to take reasonable steps to cure such failure or refusal
within such 45-day period, and furthermore, no failure of Executive to satisfy
any goals, forecasts, or other financial or business criteria established by the
Company, standing alone, shall constitute Cause.
                  (i) “Change of Control” shall mean and shall be deemed to have
occurred if:
                     (i) After the date of this Agreement, any “person” (as such
term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of
1934, as amended (the “Exchange Act”), or any successor provision), or any other
persons who the Board of Directors determines in good faith is acting as a
group, becomes the beneficial owner (within the meaning of Rule 13d-3 under the
Exchange Act or any successor provision) directly or indirectly of securities of
the Company representing 30% or more of the combined voting power of the
Company’s then outstanding securities ordinarily having the right to vote at an
election of directors;
                     (ii) Individuals who, as of the date of this Agreement,
constitute the Board (the “Incumbent Board”) cease for any reason to constitute
at least 60% of the members of the Board, except that any person who becomes a
member of the Board subsequent to the date of this Agreement whose election, or
nomination for election by the Company’s stockholders was approved by a vote of
at least 60% of the members then comprising the Incumbent Board (other than an
election or nomination of an individual whose initial assumption of office is in
connection with an actual or threatened election contest relating to the
election of directors of the Company) shall be, for purposes of this Agreement,
considered as though such person were a member of the Incumbent Board; or
                     (iii) Consummation of

  (A)   a reorganization, merger, consolidation, or sale or other disposition of
all or substantially all of the assets of the Company, in each case, with or to
a corporation or other person or entity

  (1)   of which persons who were the holders of each class of the Company’s
capital stock immediately prior to such transaction do not receive voting
securities, as a result of their ownership of such capital stock immediately
prior to such transaction, that constitute both

  (x)   more than 51% of each class of capital stock and

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  (y)   more than 51% of the combined voting power of the outstanding voting
securities entitled to vote generally in the election of directors of the
reorganized, merged, consolidated or purchasing corporation (or in the case of a
non-corporate person or entity, functionally equivalent voting power), or

  (2)   80% of the members of the Board of which corporation (or functional
equivalent in the case of a non-corporate person or entity) were not members of
the Incumbent Board at the time of the execution of the initial agreement
providing for such reorganization, merger, consolidation or sale;

  (B)   the sale or other disposition of any material route system operated by
the Company or any subsidiary (regardless of how such sale or disposition is
effected); for this purpose a route system is “material” if the gross revenues
attributable to such route system exceed or would exceed 50% of the Company’s
gross revenues on a consolidated basis or if the gross profits reasonably
attributable to such route system exceed or would exceed 50% of the gross
profits of the Company on a consolidated basis, either

     (x) for the fiscal year of the Company immediately prior to the sale or
disposition or
     (y) based on reasonable projections, for the fiscal year in which the sale
or disposition occurs; or

  (C)   a liquidation or dissolution of the Company.

                  (j) “Confidential Information” — as defined in Section 5.1;
                  (k) “Continued Benefits” — as defined in Section 4.3(g);
                  (l) “Expiration Date” — as defined in Section 1.3;
                  (m) “Good Reason” shall mean the occurrence of any of the
following:
                     (i) Any change by the Company in Executive’s title, or any
significant diminishment in Executive’s function, duties or responsibilities
from those associated with his functions, duties or responsibilities as of
December 31, 2005;
                     (ii) Any material breach of this Agreement or any other
agreement between the Company and Executive (and for purposes of this Agreement,
any default by the Company to make any payment or to provide any fringe benefit
shall be considered material) which remains uncured for a period of 10 days
after Executive gives the Company notice of such breach specifying in reasonable
detail the event(s) constituting such breach;
                     (iii) Except with Executive’s prior written consent,
relocation of Executive’s principal place of employment to a location greater
than 50 miles from Phoenix, Arizona, or requiring Executive to travel on the
Company’s business more than is required by Section 1.4; or

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                     (iv) Other than an Across the Board Reduction, any
reduction by the Company in Executive’s Base Salary, bonus opportunity or
benefits to which Executive is entitled under this Agreement.
                  (n) “Incentive Bonus” — as defined in Section 2.2;
                  (o) “Market Price” means the officially quoted closing price
of the common stock of the Company, as reported by the principal exchange on
which the common stock of the Company is traded for the date in question. If
there are no transactions on such date, the Market Price shall be determined as
of the immediately preceding date on which there were transactions. If no such
prices are reported on such exchange, then Market Price shall mean the average
of the high and low sale prices for the common stock of the Company (or if no
sales prices are reported, the average of the high and low bid prices) as
reported by a quotation system of general circulation to brokers and dealers. If
the common stock of the Company is not traded on any exchange or in the
over-the-counter market, the Market Price of the common stock of the Company on
any date shall be determined in good faith by the parties.
                  (p) “Notice of Termination” shall mean a notice which shall
indicate the specific termination provision of this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Executive’s employment under the provision so
indicated. Each Notice of Termination shall be delivered at least 30 days prior
to the effective date of termination;
                  (q) “Prime Rate” means the prime rate announced by The Wall
Street Journal from time to time.
                  (r) “Retirement” shall mean normal retirement at age 65;
                  (s) “Threshold Bonus” shall mean a cash bonus equal to $80,000
(which is based on the “Threshold” level of bonus under “Bonus Level Fiscal
2006” as set forth in Exhibit A).
                  (t) “Total Disability” or “Totally Disabled” shall mean
Executive’s failure substantially to perform his duties under this Agreement on
a full-time basis for a period exceeding 180 consecutive days or for periods
aggregating more than 180 days during any twelve-month period as a result of
incapacity due to physical or mental illness, or the occurrence or existence of
a condition that would permanently render Executive unable to substantially
perform his duties under this Agreement on a full-time basis. If there is a
dispute as to whether Executive is or was physically or mentally unable to
perform his duties under this Agreement, such dispute shall be submitted for
resolution to a licensed physician selected by Executive but subject to the
reasonable approval of the Company. If such a dispute arises, Executive shall
submit to such examinations and shall provide such information as such physician
may request, and the determination of the physician as to Executive’s physical
or mental condition shall be binding and conclusive.
          6.2 KEY MAN INSURANCE. In addition to the insurance policy described
in Section 2.5(c), the Company shall have the right, in its sole discretion, to
purchase “key man” insurance on the life of Executive. The Company shall be the
owner and beneficiary of any such policy. If the Company elects to purchase such
a policy, Executive shall take such physical examinations and supply such
information as may be reasonably requested by the insurer.
          6.3 SUCCESSORS, BINDING AGREEMENT. This Agreement shall be binding
upon and run to the benefit of the Company, its successors and assigns, and
shall inure to the benefit of and be enforceable by Executive’s personal or
legal representatives, beneficiaries, designees, executors, administrators,
heirs, distributees, devisees and legatees.

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          6.4 MODIFICATION; NO WAIVER. This Agreement may not be modified or
amended except by an instrument in writing signed by the parties to this
Agreement. No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be any estoppel against the enforcement of any provision
of this Agreement, except by written instrument by the party charged with such
waiver or estoppel. No such written waiver shall be deemed a continuing waiver
unless specifically stated in such waiver, and each such waiver shall operate
only as to the specific term or condition waived and shall not constitute a
waiver of such term or condition for the future or as to any other term or
condition.
          6.5 SEVERABILITY. The covenants and agreements contained in this
Agreement are separate and severable and the invalidity or unenforceability of
any one or more of such covenants or agreements, if not material to the
employment arrangement that is the basis for this Agreement, shall not affect
the validity or enforceability of any other covenant or agreement contained in
this Agreement. If, in any judicial proceeding, a court shall refuse to enforce
one or more of the covenants or agreements contained in this Agreement because
the duration thereof is too long, or the scope thereof is too broad, it is
expressly agreed between the parties to this Agreement that such duration or
scope shall be deemed reduced to the extent necessary to permit the enforcement
of such covenants or agreements.
          6.6 NOTICES. All the notices and other communications required or
permitted under this Agreement shall be in writing and shall be delivered
personally or sent by registered or certified mail, return receipt requested, to
the parties to this Agreement at the following addresses:
If to the Company, to it at:
Mesa Air Group, Inc.
410 North 44th Street, Suite 700
Phoenix, AZ 85008
Attn: Chair of Board of Directors
If Executive, to him at:
5909 East Sanna Street
Paradise Valley, AZ 85253
Notices shall be deemed to have been given and received upon personal delivery
or three business days after having been deposited, if sent by registered or
certified mail.
          6.7 ASSIGNMENT. This Agreement and any rights under this Agreement
shall not be assignable by either party without the prior written consent of the
other party except as otherwise specifically provided for in this Agreement.
          6.8 ENTIRE UNDERSTANDING. This Agreement (together with the Exhibits
incorporated as a part of this Agreement) constitutes the entire understanding
between the parties to this Agreement and no agreement, representation, warranty
or covenant has been made by either party except as expressly set forth in this
Agreement.
          6.9 EXECUTIVE’S REPRESENTATIONS. Executive represents and warrants
that neither the execution and delivery of this Agreement nor the performance of
his duties under this Agreement violates the provisions of any other agreement
to which he is a party or by which he is bound.
          6.10 INTEREST ON PAST DUE AMOUNTS; ATTORNEYS FEES. All amounts under
this Agreement that are not paid when due shall bear interest at the rate of 4%
per annum above the Prime Rate, from the date such payments were due until paid.
In addition, any party who breaches this Agreement shall be obligated to pay the
reasonable attorneys fees and costs incurred by the other party in seeking to
enforce the terms of this Agreement.

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          6.11 GOVERNING LAW. This Agreement shall be construed in accordance
with and governed for all purposes by the laws of the State of Arizona
applicable to contracts executed and wholly performed within such state.
[SIGNATURE PAGES FOLLOW]

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     This Employment Agreement is entered into as of the date written above.

                              MESA AIR GROUP, INC. (Company)    
 
                       
 
  By:     /s/ Michael Lotz                
 
  Name:   MICHAEL LOTZ            
 
  Title:   President            
 
                                            /s/ George Murnane                  
George Murnane III (Executive)    

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EXHIBIT A
MINIMUM INCENTIVE BONUS
INCENTIVE BONUS

                            BONUS LEVEL     % CHANGE   QUARTERLY   ANNUAL FISCAL
2006(1)     IN EPS (2)   AMOUNT (3)   AMOUNT (4)
MINIMUM
  POSITIVE   $ 10,000     $ 40,000  
THRESHOLD
    5 %   $ 20,000     $ 80,000  
TARGET
    10 %   $ 30,000     $ 120,000  
MAXIMUM
    15 %   $ 45,000     $ 180,000  

 
NOTE 1 — FOR EACH FISCAL YEAR ONLY THE % CHANGE IN EPS WILL BE REVIEWED. THE %
CHANGE IN EPS WILL NOT BE GREATER THAN THE INITIAL YEAR.
NOTE 2 — EPS IS DEFINED AS GROSS PROFIT/LOSS BEFORE TAXES AND ONE-TIME
NON-RECURRING ITEMS DIVIDED BY BASIC OUTSTANDING SHARES. THESE PERCENTAGES WILL
CHANGE ANNUALLY BUT NOT BE GREATER THAN THE INITIAL YEAR.
NOTE 3 — THE QUARTERLY AMOUNT WILL BE PAID FOR EACH OF THE FIRST THREE FISCAL
QUARTERS BASED ON THE 10Q FINANCIAL REPORTS FILED WITH THE SEC. THE ANNUAL
AMOUNT WILL BE PAID FOR THE FOURTH QUARTER LESS ANY AMOUNTS PAID FOR THE FIRST
THREE QUARTERS BASED ON THE 10K FINANCIAL REPORTS FILED WITH THE SEC. THESE
AMOUNTS WILL NOT BE DECREASED OVER THE TERM OF THE AGREEMENT.
NOTE 4 — THESE AMOUNTS WILL NOT BE DECREASED OVER THE TERM OF THE AGREEMENT.

i

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