Related Party Transactions and Outside Related Director Information


1/20/2006 Proxy Information

During the fiscal year ended September 30, 2005, the Company leased three (3) airplanes from limited liability companies wholly-owned by Mr. Thompson. Under these lease agreements, the Company made rental payments aggregating $3,240,000 during the fiscal year ended September 30, 2005. Mr. Thompson has access to the aircraft for occasional personal use and any such use of the aircraft by Mr. Thompson is shown as additional compensation to him in the Summary Compensation Table based on the incremental cost to the Company for such use. For the fiscal year ended September 30, 2005, the additional compensation to Mr. Thompson for such use was $189,161 (See “Executive Compensation and Other Information”).

The Company’s current lease payments aggregate $270,000 per month. The lease terms are month-to-month. The terms of the lease agreements were based on comparable information on lease rates received from independent aircraft leasing dealers and finance entities for similar aircraft. The Company also leases hangar space from a limited liability company wholly-owned by Mr. Thompson with a monthly rental of $4,100. The Company believes that these lease agreements are on terms no less favorable to the Company than could have been obtained from an unaffiliated party.

During the fiscal year ended September 30, 2005, the Company acted as a sales representative to Starview Technology, Inc., a provider of manufacturing software for the semiconductor industry in which Mr. Thompson and his son-in-law, Thomas Sulzbacher, are majority shareholders. The Company earned sales commissions in the amount of $165,000 for fiscal year 2005.

The Company has retained Mr. Donald P. Baumann, a director nominee, to provide sales and marketing consulting services in the San Francisco bay area. He is paid $1,000 per day for up to five days per month, plus certain out-of-pocket expenses. He is also paid a retainer of $3,000 per month. Consulting fees paid to Mr. Baumann in fiscal year 2005 totaled $75,633.