Document:

Exhibit
4.46

 

 

[AirNet
Systems, Inc. Letterhead]

 

 

 

 

 

 

March
31, 2005

 

 

Securities and Exchange Commission

450 Fifth Street, N.W.

Washington, D.C.  20549

 

Re:                               AirNet Systems,
Inc. — Annual Report on Form 10-K for the fiscal year ended December
31, 2004

 

Ladies and Gentlemen:

AirNet Systems, Inc., an
Ohio corporation (“AirNet”), is today filing its Annual Report on Form 10-K
for the fiscal year ended December 31, 2004 (the “Form 10-K”).

Pursuant to the provisions
of Item 601(b)(4)(iii) of Regulation S-K, AirNet hereby agrees to
furnish to the Commission, upon request, copies of those instruments and
agreements defining the rights of holders of long-term debt of AirNet and of
holders of long-term debt of AirNet’s consolidated subsidiaries, which are not
being filed as exhibits to the Form 10-K.  Such long-term
debt does not exceed 10% of the total assets of AirNet and it subsidiaries on a
consolidated basis.

Very truly yours,

	
  AIRNET SYSTEMS, INC.

  
	
   

  
	
  /s/ Gary W. Qualmann

  	
   

  
	
   

  
	
  Gary W. Qualmann

  
	
   

  
	
  Chief Financial Officer, Treasurer and SecretaryEXHIBIT 10.26

 

SUMMARY
OF COMPENSATION

FOR
DIRECTORS OF

AIRNET
SYSTEMS, INC.

 

 

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

 

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

 

As the lead director of
AirNet, James E. Riddle received an additional quarterly fee of $6,000 for
service in that capacity in 2004 and continues to receive that quarterly fee in
2005.

 

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

 

As an officer and
employee of AirNet, Joel E. Biggerstaff receives no additional compensation for
serving as a director of AirNet.

 

Effective
May 27, 1998, AirNet established the AirNet Systems, Inc. Director Deferred
Compensation Plan (the “Director Deferred Plan”).  The Director Deferred Plan as in effect on
March 30, 2005 has previously been filed as Exhibit 10.7 to AirNet’s
Annual Report on Form 10-K for the fiscal year ended December 31,
2003.  Voluntary participation in the
Director Deferred Plan enables a Non-Employee Director of AirNet to defer all
or 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 rate
prescribed in the Director Deferred Plan, or (2) a stock account where the
funds will be converted into a common share equivalent (deter­mined by dividing
the amount to be allocated to the Non-Employee Director’s stock account by the
fair market value of AirNet’s common shares when the credit to the stock
account is made).  In his deferral
election, a Non-Employee Director will elect whether distribution of the amount
in his account(s) under the Director Deferred Plan is to be made in a single lump
sum payment or in equal annual installments payable over a period of not more
than ten years.  Distributions will
commence within 30 days of the earlier of (a) the date specified by a
Non-Employee Director at the time a deferral election is made or (b) the
date the Non-Employee Director ceases to so serve.  Cash accounts will be distributed in the form
of cash and stock accounts will be distributed in the form of common shares or
cash, as selected by AirNet.

 

Non-Employee
Directors have been automatically granted options to purchase AirNet common
shares in accordance with the terms of the AirNet Systems, Inc. Amended and
Restated 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 Report
on Form 10-K for the fiscal year ended December 31, 2003.  On March 7, 1997, each individual then
serving as a Non-Employee Director was automatically granted an immediately
exercisable option to purchase 2,000 AirNet common shares with an exercise
price equal to the fair market value of the common shares on the grant
date.  On August 19, 1998, each
individual then serving as a Non-Employee Director was automatically granted an
option to purchase 20,000 AirNet common shares with an exercise price equal to
the fair market value of the common shares on the grant date.  Each option granted on August 19, 1998 became
exercisable with respect to 20% of the common shares on each of the grant date
and the first, second, third and fourth anniversaries of the grant date.

 

Pursuant
to the 1996 Plan, each individual newly-elected or appointed as a Non-Employee
Director from August 19, 1998 until June 4, 2004 was automatically granted
an option to purchase 20,000 AirNet common shares effective on the date of his
election or appointment to the Board.  In
addition, on the first business day of each of the 2002, 2003 and 2004 fiscal
years of AirNet, each individual who was then serving as a Non-Employee
Director and had served for at least one full one-year term as a Non-Employee
Director, was automatically granted an option to purchase 4,000 AirNet common
shares.  All of these options were
granted with an exercise price per share equal to the fair market value of the
common shares on the grant date.  In
addition, all of these options have vested and are to vest and become
exercisable with respect to 20% of the common shares on each of the grant date
and the first, second, third and fourth anniversaries of the grant date.

 

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

 

Each
option granted to a Non-Employee Director under the 1996 Plan has a ten-year
term.  If a Non-Employee Director ceases
to be a member of the Board, his vested options may be exercised for a period
of three months (12 months in the case of a Non-Employee Director who becomes
disabled or dies) after the date his service ends, subject in each case to the
stated terms of the options.  However, a
Non-Employee Director who ceases to be a director after having been convicted
of, or pled guilty or nolo contendere to, a felony immediately forfeits his
options.

 

 

Following the approval of the AirNet Systems, Inc. 2004 Stock Incentive
Plan (the “2004 Plan”) by the shareholders of AirNet at the 2004 Annual Meeting
of Shareholders held on June 4, 2004, no further option grants have been
or 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 as
Exhibit 10.1 to AirNet’s Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 2004. 
Under the 2004 Plan, each
individual newly-elected or appointed as a Non-Employee Director after
June 4, 2004 is to be granted an option to purchase 20,000 AirNet common
shares effective on the date of his election or appointment to the Board.  In addition, on the first business day of
each fiscal year of AirNet, each individual who is then serving as a
Non-Employee Director and has served for at least one full one-year term as a
Non-Employee Director, is to be automatically granted an option to purchase
4,000 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 shares
which would have been automatically granted to him on that date.

 

Any
options automatically granted in the future to Non-Employee Directors under the
2004 Plan will vest and become exercisable as to 20% of the common shares on
each of the grant date and the first, second, third and fourth anniversaries of
the grant date and will have an exercise price per share equal to the fair market
value of the underlying common shares on the grant date.  Each such option will become fully
exercisable if the Non-Employee Director retires from service as an AirNet
director after having served at least one full one-year term, becomes totally
disabled or dies or if AirNet undergoes a merger or consolidation or
reclassification of the common shares or the exchange of the common shares for
the securities of another entity (other than a subsidiary of AirNet) that has
acquired AirNet’s assets or which is in control of an entity that has acquired
AirNet’s assets.

 

Each
option automatically granted in the future to a Non-Employee Director under the
2004 Plan will have a ten-year term.  If
a Non-Employee Director ceases to be a member of the Board, his vested options
may be exercised for a period of three months (24 months in the case of a
Non-Employee Director who becomes disabled, dies or retires) after the date his
service ends, subject in each case to the stated terms of the options.  However, if a Non-Employee Director’s service
as a director is terminated for cause, he will immediately forfeit his options.

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