**EXHIBIT 10.26**

 

**SUMMARYOF COMPENSATION**

**FORDIRECTORS OF**

**AIRNETSYSTEMS, INC.**

 

 

Directors of AirNetSystems, Inc. (“AirNet”) who are not officers or employees of AirNet(“Non-Employee Directors”) are paid fees for their services as members of theBoard of Directors and as members of Board committees.  The quarterly fee paid in 2004 and to be paidin 2005 for serving as a Non-Employee Director was and remains $6,000.  The fee for attending each meeting of thefull Board of Directors in person was $2,000 in 2004 and continues to be thesame amount in 2005.  The fee forattending telephonic meetings of the full Board was $2,000 in 2004.  At a meeting held on December 22, 2004, the Non-EmployeeDirectors discussed, and on March 9, 2005, the Board of Directors affirmedthat, effective for the telephonic meetings of the full Board held afterJanuary 1, 2005, the fee would be $1,000 for each meeting attended.

 

The fee for AuditCommittee members was $2,000 per meeting attended in 2004, with the Chair ofthe Audit Committee receiving an additional $1,000 per meeting attended.  The fee for Compensation Committee membersand Nominating and Corporate Governance Committee members was $1,000 permeeting attended in 2004, with the Chair of each of those Committees receiving anadditional $2,000 for each meeting of the Committee attended.  At a meeting held on December 22, 2004, the Non-EmployeeDirectors discussed, and on March 9, 2005, the Board of Directors affirmed thatthe fees for attending in person Committee meetings held after January 1, 2005would remain the same as they had been in 2004; however, the fees for attendingtelephonic meetings of each Committee held after January 1, 2005 would beone-half (50%) of the amount of the fees for attending a meeting of the particularCommittee in person.

 

As the lead director ofAirNet, James E. Riddle received an additional quarterly fee of $6,000 forservice in that capacity in 2004 and continues to receive that quarterly fee in2005.

 

The Non-EmployeeDirectors meet without management present in connection with each of the regularlyscheduled meeting of the full Board and receive no meeting fees for attendingsuch meetings.  To the extent theNon-Employee Directors determine to meet by telephone or in person other thanin connection with a regularly scheduled Board Meeting they will receive $2,000per meeting attended in person and $1,000 per telephonic meeting. AirNet’sNon-Employee Directors are reimbursed for out-of-pocket expenses incurred inconnection with their service as directors, including travel expenses.

 

As an officer andemployee of AirNet, Joel E. Biggerstaff receives no additional compensation forserving as a director of AirNet.

 

EffectiveMay 27, 1998, AirNet established the AirNet Systems, Inc. Director DeferredCompensation Plan (the “Director Deferred Plan”).  The Director Deferred Plan as in effect onMarch 30, 2005 has previously been filed as Exhibit 10.7 to AirNet’sAnnual Report on Form 10-K for the fiscal year ended December 31,2003.  Voluntary participation in theDirector Deferred Plan enables a Non-Employee Director of AirNet to defer allor a part of his director’s fees, including federal income tax thereon.  Such deferred fees may be credited to(1) a cash account where the funds will earn interest at the rateprescribed in the Director Deferred Plan, or (2) a stock account where thefunds will be converted into a common share equivalent (deter­mined by dividingthe amount to be allocated to the Non-Employee Director’s stock account by thefair market value of AirNet’s common shares when the credit to the stockaccount is made).  In his deferralelection, a Non-Employee Director will elect whether distribution of the amountin his account(s) under the Director Deferred Plan is to be made in a single lumpsum payment or in equal annual installments payable over a period of not morethan ten years.  Distributions willcommence within 30 days of the earlier of (a) the date specified by aNon-Employee Director at the time a deferral election is made or (b) thedate the Non-Employee Director ceases to so serve.  Cash accounts will be distributed in the formof cash and stock accounts will be distributed in the form of common shares orcash, as selected by AirNet.

 

Non-EmployeeDirectors have been automatically granted options to purchase AirNet commonshares in accordance with the terms of the AirNet Systems, Inc. Amended andRestated 1996 Incentive Stock Plan (the “1996 Plan”).  The 1996 Plan as in effect on March 30,2005 has previously been filed as Exhibit 10.1 to AirNet’s Annual Reporton Form 10-K for the fiscal year ended December 31, 2003.  On March 7, 1997, each individual thenserving as a Non-Employee Director was automatically granted an immediatelyexercisable option to purchase 2,000 AirNet common shares with an exerciseprice equal to the fair market value of the common shares on the grantdate.  On August 19, 1998, eachindividual then serving as a Non-Employee Director was automatically granted anoption to purchase 20,000 AirNet common shares with an exercise price equal tothe fair market value of the common shares on the grant date.  Each option granted on August 19, 1998 becameexercisable with respect to 20% of the common shares on each of the grant dateand the first, second, third and fourth anniversaries of the grant date.

 

Pursuantto the 1996 Plan, each individual newly-elected or appointed as a Non-EmployeeDirector from August 19, 1998 until June 4, 2004 was automatically grantedan option to purchase 20,000 AirNet common shares effective on the date of hiselection or appointment to the Board.  Inaddition, on the first business day of each of the 2002, 2003 and 2004 fiscalyears of AirNet, each individual who was then serving as a Non-EmployeeDirector and had served for at least one full one-year term as a Non-EmployeeDirector, was automatically granted an option to purchase 4,000 AirNet commonshares.  All of these options weregranted with an exercise price per share equal to the fair market value of thecommon shares on the grant date.  Inaddition, all of these options have vested and are to vest and becomeexercisable with respect to 20% of the common shares on each of the grant dateand the first, second, third and fourth anniversaries of the grant date.

 

Eachoption granted to a Non-Employee Director under the 1996 Plan since August 18,1999, will become fully exercisable if the Non-Employee Director retires fromservice as an AirNet director, becomes totally disabled or dies, or if AirNetmerges with another entity and AirNet is not the survivor in the merger, or ifall or substantially all of AirNet’s assets or stock is acquired by anotherentity.

 

Eachoption granted to a Non-Employee Director under the 1996 Plan has a ten-yearterm.  If a Non-Employee Director ceasesto be a member of the Board, his vested options may be exercised for a periodof three months (12 months in the case of a Non-Employee Director who becomesdisabled or dies) after the date his service ends, subject in each case to thestated terms of the options.  However, aNon-Employee Director who ceases to be a director after having been convictedof, or pled guilty or nolo contendere to, a felony immediately forfeits hisoptions.

 

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Following the approval of the AirNet Systems, Inc. 2004 Stock IncentivePlan (the “2004 Plan”) by the shareholders of AirNet at the 2004 Annual Meetingof Shareholders held on June 4, 2004, no further option grants have beenor will be made to the Non-Employee Directors under the 1996 Plan.

 

The 2004 Plan as in effect on March 30, 2005 has been filed asExhibit 10.1 to AirNet’s Quarterly Report on Form 10-Q for thequarterly period ended June 30, 2004. Under the 2004 Plan, eachindividual newly-elected or appointed as a Non-Employee Director afterJune 4, 2004 is to be granted an option to purchase 20,000 AirNet commonshares effective on the date of his election or appointment to the Board.  In addition, on the first business day ofeach fiscal year of AirNet, each individual who is then serving as aNon-Employee Director and has served for at least one full one-year term as aNon-Employee Director, is to be automatically granted an option to purchase4,000 AirNet common shares.  However,each of the individuals serving as a Non-Employee Director on January 3,2005 (the first business day of the fiscal year ending December 31, 2005),determined not to accept the option to purchase 4,000 AirNet common shareswhich would have been automatically granted to him on that date.

 

Anyoptions automatically granted in the future to Non-Employee Directors under the2004 Plan will vest and become exercisable as to 20% of the common shares oneach of the grant date and the first, second, third and fourth anniversaries ofthe grant date and will have an exercise price per share equal to the fair marketvalue of the underlying common shares on the grant date.  Each such option will become fullyexercisable if the Non-Employee Director retires from service as an AirNetdirector after having served at least one full one-year term, becomes totallydisabled or dies or if AirNet undergoes a merger or consolidation orreclassification of the common shares or the exchange of the common shares forthe securities of another entity (other than a subsidiary of AirNet) that hasacquired AirNet’s assets or which is in control of an entity that has acquiredAirNet’s assets.

 

Eachoption automatically granted in the future to a Non-Employee Director under the2004 Plan will have a ten-year term.  Ifa Non-Employee Director ceases to be a member of the Board, his vested optionsmay be exercised for a period of three months (24 months in the case of aNon-Employee Director who becomes disabled, dies or retires) after the date hisservice ends, subject in each case to the stated terms of the options.  However, if a Non-Employee Director’s serviceas a director is terminated for cause, he will immediately forfeit his options.

 

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