10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2006

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission file number: 001-13025

AirNet Systems, Inc.

(Exact name of Registrant as specified in its charter)

Ohio	31-1458309
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
7250 Star Check Drive, Columbus, Ohio	43217
(Address of principal executive offices)	(Zip Code)

(614) 409-4900
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common Shares, $0.01 par value	American Stock Exchange LLC

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

o Yes       þ No

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

o Yes      þ No

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

þ Yes      o No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o      Accelerated filer o      Non-accelerated filer þ

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act).

o Yes       þ No

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the Registrant’s most recently completed second fiscal quarter: As of June 30, 2006, the aggregate market value of the Registrant’s common shares (the only common equity of the Registrant) held by non-affiliates of the Registrant was $38,161,370 based on the closing sale price as reported on the American Stock Exchange LLC.

Indicate the number of shares outstanding of each of the Registrant’s classes of common stock, as of the latest practicable date.

Class	Outstanding at March 19, 2007
Common Shares, $0.01 par value	10,168,562 common shares

DOCUMENT INCORPORATED BY REFERENCE

Document	Part Into Which Incorporated
Portions of the Registrant’s definitive Proxy Statement for the Annual Meeting of Shareholders to be held on June 6, 2007, which will be filed subsequent to the filing of this Annual Report on Form 10-K and not later than 120 days after December 31, 2006	Part III

INDEX

 EX-4.50

 EX-4.51

 EX-4.52

 EX-10.25

 EX-10.26

 EX-10.29

 EX-10.31

 EX-10.32

 EX-21

 EX-23

 EX-24

 EX-31.1

 EX-31.2

 EX-32

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PART I

ITEM 1 — BUSINESS

General

AirNet Systems, Inc. (“AirNet”) is a specialty air carrier for time-sensitive deliveries, operating between most major U.S. cities each working day. AirNet is the leading transporter of cancelled checks and related information for the U.S. banking industry. AirNet also provides specialized, high-priority delivery services to customers, primarily those involved in the life sciences and media and entertainment industries. During the first nine months of 2006, AirNet also provided private passenger charter services through its wholly-owned subsidiary, Jetride, Inc. (“Jetride”). As described below, the Jetride passenger charter business was sold on September 26, 2006.

In addition to regularly scheduled delivery services, AirNet offers on-demand cargo charter delivery services for both Bank Services and Express Services customers. AirNet also provides ground pick-up and delivery services throughout the nation seven days per week, primarily through a network of third-party vendors.

AirNet’s air and ground network provides highly reliable, time-critical delivery services to its customers. Later pick-up and earlier delivery times than those offered by other national carriers is one of the primary differentiating characteristics of AirNet’s time-critical delivery network. AirNet’s flight schedule is designed to provide delivery times between midnight and 8:00 a.m., providing earlier delivery times than those generally available through other national carriers. AirNet uses a number of proprietary customer service and management information systems to sort, dispatch, track and control the flow of packages throughout AirNet’s delivery system. AirNet provides customer service 24 hours per day, seven days a week to assist customers with shipment orders, inquiries, supply requests and proof of delivery documentation.

As of December 31, 2006, AirNet operated a fleet of 101 aircraft (including 30 LearJets and 14 Cessna Caravan turboprops) that depart from over 85 cities and complete more than 400 flights per night, primarily Monday through Thursday night. Approximately 15% of AirNet’s weekday flights are subcontracted to third-party aircraft operators. To supplement its air transportation network, AirNet uses commercial passenger airlines to provide additional services when its aircraft are not operating and to provide service to markets that AirNet flights do not serve.

As the banking industry continues its transition to image products and other electronic alternatives to the physical movement of cancelled checks, AirNet continues to consult with its Bank Services customers to determine their future requirements for air transportation services. As a result of these discussions, AirNet recently made significant changes to its air transportation network to meet the evolving needs of its Bank Services customers, and in many circumstances, to lower their transportation costs. These changes were effective March 26, 2007 and resulted in the elimination of 45 flights, or approximately 10%, of AirNet’s weekday flight schedule. For additional information on these flight changes, see the discussion under the caption “Bank Services Revenues” in “ITEM 7 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION” of Part II of this Annual Report on Form 10-K.

AirNet was incorporated under the laws of the State of Ohio in 1996. AirNet’s principal executive offices are located at 7250 Star Check Drive, Columbus, Ohio 43217, and can be reached by telephone at (614) 409-4900. AirNet’s common shares are listed on the American Stock Exchange LLC (“AMEX”) under the symbol “ANS.” AirNet’s Internet web site address is www.airnet.com (this uniform resource locator (URL) is an inactive textual reference only and is not intended to incorporate AirNet’s web site into this Annual Report on Form 10-K).

AirNet makes available free of charge on or through its Internet web site, its annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as soon as reasonably practicable after AirNet electronically files such material with, or furnishes it to, the Securities and Exchange Commission (the ”SEC”).

Sale of Jetride’s Passenger Charter Business

On July 26, 2006, AirNet, Jetride, and Pinnacle Air, LLC (“Pinnacle”) entered into a purchase agreement regarding the sale of Jetride’s passenger charter business to Pinnacle (the “Purchase Agreement”). The sale was completed on September 26, 2006. The purchase price was $41.0 million in cash, of which $40.0 million was consideration for the sale of nine company-owned aircraft and related engine maintenance programs and $1.0 million was consideration for the sale of all of the outstanding capital stock of a newly-created subsidiary of Jetride, also called Jetride, Inc. (“New Jetride”). Upon completion of the sale transaction, Jetride amended its articles of incorporation to change its name to 7250 STARCHECK, INC. Of the total consideration, $40.0 million was paid at closing and $1.0 million was paid into escrow to cover indemnification claims which may be made by Pinnacle for up to eighteen months after the closing. To the extent the escrow amount is not used to satisfy indemnification claims, the escrow amount is to be released to AirNet in two installments approximately six and twelve months after the closing. In March 2007, $500,000 of the escrowed amount was released to AirNet. AirNet retained the net working capital of the Jetride business, which was approximately $2.2 million as of the closing date. In connection with the closing of the sale transaction, Jetride repaid in full six term loans which had been secured by aircraft used in Jetride’s

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passenger charter business. The aggregate principal amount of the loans repaid was approximately $28.2 million plus accrued interest and early termination prepayment penalties of approximately $0.3 million through the repayment date. Following repayment of Jetride’s loans and expenses related to the transaction, AirNet used the remaining sale proceeds to further reduce debt outstanding under AirNet’s secured revolving credit facility. AirNet’s lenders under the secured revolving credit facility had consented to the sale of the Jetride passenger charter business and the various transactions necessary to complete the sale.

In connection with the transaction, AirNet agreed to provide certain transition services to Pinnacle and its subsidiaries for various specified time periods and various monthly fees, which initially aggregate to approximately $37,500 per month, primarily for aircraft maintenance management services. In addition, AirNet entered into three subleases with New Jetride, each for a one year term, under which New Jetride leases a portion of AirNet’s facilities located at Rickenbacker International Airport, Dallas Love Field and Birmingham International Airport. The aggregate lease payment under the three subleases is approximately $10,000 per month.

Pinnacle made offers of employment to all of the employees of Jetride and substantially all of the Jetride pilots and other employees accepted employment with Pinnacle. Wynn D. Peterson, who had served as AirNet’s Senior Vice President, Jetride Services, resigned as an executive officer of AirNet to become President of Pinnacle and New Jetride, which became a subsidiary of Pinnacle upon completion of the sale transaction.

In accordance with Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” AirNet has classified the assets and liabilities of Passenger Charter Services as assets and liabilities related to discontinued operations and presented this operating segment’s results of operations as discontinued operations for all periods presented. As a result of the disposition of the Jetride passenger charter business, AirNet has only one reportable segment.

Revenues from Passenger Charter Services, included in discontinued operations, were approximately $16.9 million, $29.5 million and $18.5 million for 2006, 2005 and 2004, respectively. Income from discontinued operations before income taxes for 2006, 2005 and 2004 was approximately $0.1 million, $0.8 million and $1.6 million, respectively. Included in the 2006 income from discontinued operations before income taxes is a pre-tax gain of approximately $1.0 million, which is net of approximately $1.0 million of investment banking and legal fees associated with the sale of Jetride.

Bank Services

Bank Services, primarily consisting of cancelled check delivery, generated approximately 65%, 68% and 68% of AirNet’s total net revenues for the fiscal years ended December 31, 2006, 2005 and 2004, respectively. AirNet’s time-critical cancelled check delivery service allows its banking customers to reduce their float costs and related processing fees. AirNet also transports other items, such as proof of deposit transactions and interoffice mail, for many of the same bank customers. The U.S. banking industry, including commercial banks and third-party processors, represents AirNet’s largest category of customers. AirNet’s bank customers represent many of the nation’s largest bank holding companies.

Express Services

Express Services, which focus on customers with time-critical delivery needs, generated approximately 34%, 31% and 31% of AirNet’s total net revenues for the fiscal years ended December 31, 2006, 2005 and 2004, respectively. Express Services are primarily targeted at customers involved in the life sciences, and media and entertainment industries, and other customers whose shipment needs are highly time sensitive, time-definite or highly controlled. In the life sciences industry, Express Services are offered to customers shipping packages that require specialized handling, the transportation of which is often highly regulated by various governmental authorities. Targeted markets within the life sciences industry include producers and recipients of radioactive pharmaceuticals, diagnostic specimens, blood, umbilical cord blood, human tissue and organs.

For those customers requiring time-critical delivery options not available on AirNet’s regularly scheduled routes, cargo charter services are available. Cargo charter services may be regularly scheduled or scheduled on an on-demand, as-needed basis, 24 hours per day, seven days a week.

Aviation Services

AirNet operates a fixed base operation from its Columbus, Ohio facility, offering retail aviation fuel sales and aircraft maintenance. AirNet continues to provide aircraft maintenance and Director of Maintenance management services for New Jetride after the sale of the Jetride passenger charter business in September 2006. AirNet also provides aircraft maintenance services for Pinnacle aircraft, and for other corporate aircraft and expects to increase its retail maintenance services in 2007.

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Business Strategy

AirNet plans to continue to provide transportation services to the banking industry, but expects that its Bank Services revenues will continue to decline in future periods as a result of the increasing use by Bank Services customers of image products and other electronic alternatives to the physical movement of cancelled checks. AirNet will continue to evaluate and adjust its network fleet operation and size in response to these changing business conditions and the needs of its Express Services customers. AirNet is working with individual Bank Services customers to understand their future transportation requirements and to restructure contractual relationships. AirNet is requesting that many of its more significant Bank Services customers provide AirNet with an estimate of their future air transportation requirements to assist AirNet in planning changes to its transportation network. These estimates will allow AirNet to restructure its transportation network and provide advance notice of such changes to its customers thereby providing a measure of service predictability for those customers. In addition, AirNet will review its ground operations for efficiencies and cost reductions as AirNet reduces its air transportation network. AirNet will continue to focus on maximizing cash flow. During the fiscal years ended December 31, 2006 and 2005, AirNet reduced its outstanding debt by approximately $48 million and $6 million, respectively, of which approximately $39 million in 2006 related to the sale of Jetride’s passenger charter business, as described above.

AirNet’s business strategy is focused on increasing Express Services revenues in 2007 and subsequent years. AirNet intends to increase its focus on Express Services customers in time-critical, time-definite, and high control delivery markets, including medical testing laboratories, radioactive pharmaceuticals, medical equipment, controlled sensitive media and mission critical parts. AirNet also intends to establish relationships with specialized freight forwarders operating in these markets that may benefit from the competitive advantages offered by AirNet’s air transportation network. AirNet believes its air transportation network provides certain competitive advantages over other freight forwarders that must rely primarily upon commercial passenger airlines to process their shipments. These advantages include later tendering times, better on-time performance, greater control of shipments, reliable shipment tracking systems and greater flexibility in the design of transportation solutions for customers with specific needs.

The current aircraft in AirNet’s fleet were originally designed to meet the delivery needs of AirNet’s bank customers and have relatively small cargo capacities. AirNet’s current aircraft are not readily adaptable to the transportation of many types of larger air cargo. Therefore, AirNet intends to focus on customers with smaller sized package requirements in the time-critical, time-definite and high control delivery markets. AirNet also is evaluating other types of aircraft that may be more suitable for the transportation of packages for Express Services customers. If AirNet is unable to significantly increase its Express Services revenues and contribution margins, the anticipated decline in AirNet’s Bank Services revenues will require significant changes in AirNet’s air transportation network, including further reductions in its airline route schedule, the number of aircraft it operates, and operating and administrative costs.

AirNet plans on utilizing its internal aircraft maintenance competency by providing retail maintenance services for New Jetride, other Part 135 air carriers, and other corporate owned aircraft. Additionally, AirNet expects that it will be necessary to implement cost reductions in its administration, ground support and air operations. AirNet will continue to evaluate and adjust its current fleet and aircraft types in terms of future service requirements and maintenance and operating costs and expects to make additional changes in its aircraft fleet over time. In December 2006, AirNet entered into an agreement to sell all nine of its Cessna 310 aircraft for approximately $0.4 million.

In January of 2005, AirNet engaged Brown Gibbons Lang & Company (“BGL”) to serve as AirNet’s exclusive financial advisor and investment banker to review, develop and evaluate various strategic alternatives to enhance shareholder value, including the possible sale of AirNet. AirNet received indications of interest with respect to the sale of AirNet, which culminated in the execution of a letter of intent for the sale of AirNet on October 26, 2005. On December 16, 2005, AirNet announced that it had been unable to reach a definitive merger agreement with the private equity investment firm that entered into the letter of intent and that the exclusivity period under such letter of intent had been allowed to expire.

Following the termination of the letter of intent, in December of 2005, the AirNet Board of Directors dissolved the Special Committee which had been established to oversee the marketing process and appointed a Strategy Committee to work with management on the ongoing business strategy and alternatives for AirNet to enhance shareholder value. The Strategy Committee, together with the full AirNet Board, determined that AirNet’s business strategy would include operating its businesses with an emphasis on cash flows from operations while seeking other de-leveraging opportunities. The AirNet Board elected to continue the engagement of BGL as its financial advisor on a month-to-month basis in connection with the development and evaluation of various strategies and opportunities to enhance shareholder value and de-leverage the business.

In September 2006, AirNet sold its Jetride passenger charter business and thereafter concluded its month-to-month engagement with BGL. AirNet continues to consult with BGL from time-to-time on various strategies and opportunities to enhance shareholder value. On February 27, 2007, the AirNet Board dissolved the Strategy Committee following the appointment of Mr. Bruce D. Parker as Chairman of the Board and his assumption of the position of Chief Executive Officer of AirNet on December 28, 2006.

5

Operations

Air Operations

AirNet’s air operations are headquartered in Columbus, Ohio. In June 2005, AirNet relocated its operational headquarters from Port Columbus International Airport (“Port Columbus”) to Rickenbacker International Airport (“Rickenbacker”).

AirNet utilizes an extensive screening process to evaluate potential pilots prior to hiring. New pilots must meet stringent company qualifications, as well as mandated Federal Aviation Administration (“FAA”) requirements. New pilots must satisfactorily complete a five-week training program conducted by AirNet’s flight training staff prior to assignment of pilot duties. This training program includes flight simulator training prior to any actual flight time in an AirNet aircraft, as well as intensive ground instruction. Additionally, new pilots gain operating experience in a structured setting prior to assignment in order to gain a familiarity with AirNet’s route system and the unique demands of the flight environment.

AirNet’s central dispatch system coordinates all components of the air cargo operation. Departure and arrival times are continuously updated, and weather conditions throughout the nation are monitored. AirNet dispatchers remain in contact with pilots, out-based hub managers, fuelers, maintenance technicians and ground delivery personnel to identify and minimize any potential delays in the delivery process.

Capacity management is an important factor in maintaining profitability of AirNet’s package delivery services. AirNet’s air transportation network is positioned around a flexible national route structure designed to facilitate late pick-up and early delivery times, minimize delays and simplify flight scheduling. AirNet’s flexible route structure allows it to respond to the changing volume needs of its customers. AirNet’s primary hub in Columbus, Ohio, and several mini-hubs across the nation, are located primarily in less congested regional airports. These locations, in conjunction with AirNet’s off-peak departure and arrival times, provide easy take-off and landings, convenient loading and unloading and fast refueling and maintenance. AirNet also uses commercial passenger airlines, primarily to transport shipments during the daytime and weekend hours when its aircraft are operating under a limited flight schedule.

AirNet employs approximately 80 aircraft and avionics technicians in five separate locations across the United States who perform maintenance on AirNet’s fleet of aircraft. AirNet has an in-house engine shop at its Columbus facility where some of the piston engines are overhauled on-site, thereby reducing aircraft downtime and controlling costs. AirNet also performs avionics troubleshooting and repair at its Columbus facility to provide for maximum efficiency and minimum aircraft downtime for the fleet. AirNet’s aircraft maintenance center at its Columbus hub has received ISO 9001:2000 certification and holds a repair station certificate granted by the FAA.

Shipment processing

Bank shipments are pre-sorted by bank customer personnel and packaged in AirNet-supplied bags with three letter city identifier tags to show final destination. Express shipments are packaged in either AirNet-provided packaging or the customers’ packaging. Shipments transported on AirNet’s air transportation network are typically picked up by a courier and transported to the local airport where an airbill is either scanned using bar code technology or entered manually. Information on each airbill pertaining to the shipper, receiver, airbill number and applicable deadline is captured and downloaded into AirNet’s computer system, where it is available to AirNet’s customer service representatives (“CSRs”). Upon arrival at AirNet’s Columbus hub or one of its mini-hubs, the shipment is off-loaded, sorted by destination and reloaded onto an aircraft. At the final destination city, the shipment is off-loaded and delivered by courier to the receiver. When delivered, information from the airbill is once again captured and downloaded into AirNet’s computer system. Delivery information for all shipments is then available on-line to customers and AirNet’s CSRs.

For banking customers meeting daytime banking deadlines and Express customers requiring next-flight-out timing, shipments are typically picked up by a courier and transported via commercial airlines or other integrators to destination cities where couriers recover the packages and deliver them to their final destinations.

Ground support

AirNet manages its ground delivery services primarily through a network of vendor couriers. The use of vendor couriers to perform the majority of ground delivery services, allows AirNet to better match its ground costs with its volume requirements. In limited situations, employees are used for ground delivery services on scheduled routes where volume requirements economically justify employing full-time couriers. Dispatching functions related to ground delivery services occur at AirNet’s Columbus, Ohio hub and on a regional basis in some of the major cities served.

Fast Forward Solutions

Fast Forward Solutions, LLC (“Fast Forward Solutions”), a wholly-owned subsidiary of AirNet, was formed in August 2003 to explore growth opportunities associated with existing and emerging image replacement platforms and technologies. Fast

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Forward Solutions is no longer pursuing opportunities in the image replacement market and AirNet expects to dissolve Fast Forward Solutions during the fiscal year ending December 31, 2007, without any financial impact.

Regulation

AirNet holds an air carrier operating certificate granted by the FAA pursuant to Part 135 of the Federal Aviation Regulations. AirNet also holds a repair station certificate granted by the FAA pursuant to Part 145 of the Federal Aviation Regulations. In addition, until the sale of Jetride’s passenger charter business in September 2006, Jetride held its own air carrier operating certificate granted by the FAA pursuant to Part 135. AirNet’s certificates are of unlimited duration and remain in effect so long as AirNet maintains the required standards of safety and meet the operational requirements of the Federal Aviation Regulations. The FAA’s regulatory authority relates primarily to operational aspects of air transportation, including aircraft standards and maintenance, personnel, and ground facilities.

The U. S. Department of Transportation (“DOT”) and Transportation Security Administration (“TSA”) have regulatory authority concerning operational and security concerns in transportation, including safety, insurance and hazardous materials. AirNet holds various operational certificates issued by these and other governmental agencies, including grantee status to DOT-SP 7060 Special Permit and a Transport Canada Permit for Equivalent Level of Safety, which permit AirNet to transport higher volumes of time-critical radioactive pharmaceuticals than is allowed by the DOT and Transport Canada for most carriers. AirNet’s grantee status under the DOT-SP 7060 Special Permit expires in August 2010 and its Permit for Equivalent Level of Safety expires in March 2008. These permits may be renewed at such times. AirNet is also subject to regulation by the Food and Drug Administration, which regulates the transportation of pharmaceuticals and live animals, as well as by various state and local authorities.

AirNet believes that it has all permits, approvals and licenses required to conduct its operations and that it is in compliance with applicable regulatory requirements relating to its operations, including all applicable noise level regulations.

AirNet transports packages on both its airline and on commercial airlines. The TSA requires that AirNet maintain certain security programs related to its operations, including a Twelve-Five Standard Security Program (“TFSSP”) and an Indirect Air Carrier Standard Security Program (“IACSSP”). The TFSSP governs security procedures applicable to AirNet’s airline and the IACSSP governs security procedures for tendering packages to commercial airlines. AirNet maintains a TSA approved TFSSP. AirNet Management, Inc., a wholly-owned subsidiary of AirNet (“AirNet Management”), maintains a TSA approved IACSSP. AirNet and AirNet Management believe that they are in compliance with all the requirements of the TFSSP and IACSSP programs that they maintain.

As a result of increased concerns regarding airline security, in May 2006 the TSA adopted new rules and regulations to enhance the security requirements relating to the transportation of cargo on both passenger and all-cargo aircraft. These new rules, when fully implemented, will require air carriers maintaining TFSSP and IACSSP programs to institute new or additional security measures, including enhanced training of personnel responsible for maintaining such programs or involved in the processing of air cargo, more extensive background checks of such personnel, and new rules for verifying the identity of shippers and individuals tendering packages to commercial airlines. AirNet has implemented the new TSA rules and regulations that are currently in effect and intends to implement other security measures as they become effective.

On January 9, 2007, the United States House of Representatives passed bill H.R.1 entitled “Implementing the 9/11 Commission Recommendations Act of 2007” and the bill was received in the United States Senate and referred to the Committee on Homeland Security and Governmental Affairs. On March 5, 2007, the Committee on Commerce, Science and Transportation of the United States Senate reported bill S.509 entitled “Aviation Security Improvement Act” with amendments and the bill as amended was placed on the Senate Legislative Calendar. If enacted, each of these bills would provide for significant further regulation and inspection/screening of cargo transported on commercial passenger airlines. If these bills are enacted, commercial passenger airlines may require earlier tendering times which may impact AirNet’s ability to meet current shipping timeframes for its customers.

Seasonality

See “ITEM 7 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION” under the heading “Seasonality and Variability in Quarterly Results” of this Annual Report on Form 10-K for a discussion of the seasonal aspects of AirNet’s business, which discussion is incorporated herein by reference.

Competition

The air and ground courier industry is highly competitive. AirNet’s primary competitor in the transportation of cancelled checks is the Federal Reserve’s Check Relay Network (the “CRN”). The actions of the Federal Reserve are regulated by the Monetary Control Act, which requires the Federal Reserve to price its services at actual cost plus a set percentage private sector adjustment factor. AirNet believes that the purpose of the Monetary Control Act is to curtail the possibility of predatory pricing by the Federal Reserve when it competes with the private sector. No assurance beyond the remedies of law can be given that the Federal Reserve will comply with the Monetary Control Act. On February 13, 2007, the Federal Reserve

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announced that on May 21, 2007 it would be significantly reducing the number of interdistrict flights on its CRN as a result of a significant decline in the volume of cancelled checks to be transported. The Federal Reserve also announced that it expects the CRN will be discontinued by 2010.

In the private sector, there are a large number of smaller, regional carriers that transport cancelled checks, none of which AirNet believes has a significant interstate market share. The two largest private sector national air carriers, FedEx and United Parcel Service (“UPS”), both carry cancelled checks where the required deadlines fit into their existing system. AirNet does not believe that FedEx or UPS represents a significant competitor in the time-critical cancelled check market to date. AirNet provides customized service for its customer base, often with later pick-ups and earlier deliveries than the large, national air carriers provide.

AirNet competes with commercial passenger airlines and numerous other carriers in its Express Services delivery business and estimates its market share in this industry at less than 1%. AirNet believes that its national air transportation network, proprietary information technology and historically high on-time performance level allow it to compete in this market. In recent years, additional charter aircraft competitors have received grantee status to the DOT-SP 7060 Special Permit which has increased competition for radioactive pharmaceuticals customers.

Environmental matters

In 2004, AirNet commenced construction of a new corporate and operational facility (the “Rickenbacker Facility”) on land leased from the Columbus Regional Airport Authority (the “Authority”). Construction of the Rickenbacker Facility was completed in May of 2005 and AirNet completed the relocation of its flight and administrative operations to the Rickenbacker Facility in June of 2005. Portions of the leased land on which the Rickenbacker Facility was constructed, as well as portions of the aircraft ramp used by AirNet at the Rickenbacker Facility, contain known pollution conditions. The appropriate amended post closure plan and no further action letters addressing the Rickenbacker Facility and the aircraft ramp were obtained by AirNet from the Authority prior to beginning construction. No additional pollution conditions on the leased land were noted during construction of the Rickenbacker Facility or the aircraft ramp and none have been noted through the date of this Annual Report on Form 10-K.

In June 2005, AirNet relocated its corporate and operational headquarters from 3939 International Gateway in Columbus, Ohio (the “Port Columbus Facility”) to the new Rickenbacker Facility. AirNet’s lease of its Port Columbus Facility expired on August 31, 2005. In connection with vacating its Port Columbus Facility, AirNet was required to conduct an environmental assessment of the Port Columbus Facility. The results of the environmental assessment demonstrated concentrations of petroleum hydrocarbons and vinyl chloride above the regulatory limits in samples associated with one of three oil-water separators located in the hanger portion of the Port Columbus Facility. Except for the area associated with the one oil-water separator, it was the opinion of the environmental testing firm engaged to conduct the assessment that no obviously recognized environmental conditions existed at AirNet’s Port Columbus Facility in the areas assessed, including the fuel farm which AirNet maintained at the Port Columbus Facility through August 2006.

Following completion of the environmental assessment of the Port Columbus Facility, AirNet, with the assistance of the Authority, determined what actions were necessary to remediate the identified pollution conditions. In March of 2006, AirNet completed remedial work to remove the pollution conditions, which consisted primarily of the removal and replacement of a portion of the concrete floor in the hangar area of the Port Columbus Facility, the removal and replacement of the contaminated soil, and the installation of a new oil-water separator. Environmental testing conducted upon the completion of the remedial work demonstrated no presence of petroleum hydrocarbons or vinyl chloride above the regulatory limits in the area associated with the remedial work.

AirNet also maintained certain assets at Port Columbus for dispensing aviation fuel under the terms and conditions of a separate lease agreement (the “Fuel Farm Lease”). The Fuel Farm Lease required AirNet to return the premises leased under the Fuel Farm Lease to their original condition upon the termination of the lease. In lieu of returning the premises to their original condition, the Fuel Farm Lease provided that the Authority could take title to any improvements constructed by AirNet on the leased premises. On August 17, 2006, AirNet conveyed all of its fuel farm assets to the Authority for $1 and a release of any future liabilities associated with the Fuel Farm Lease and the fuel farm assets, other than any liabilities related to environmental conditions which may be imposed by any governmental agency. The Fuel Farm Lease also was terminated on August 17, 2006. As a result of the conveyance of the fuel farm assets to the Authority and the termination of the Fuel Farm Lease, AirNet was relieved of its obligation to return the leased premises to their original condition.

AirNet believes that compliance with applicable laws and regulations governing environmental matters has not had, and is not expected to have, a material effect on AirNet’s capital expenditures, operations or competitive position.

Employees

As of December 31, 2006, AirNet employed approximately 670 persons, which included approximately 170 pilots. AirNet’s employees are not represented by any union or covered by any collective bargaining agreement. AirNet has experienced no work stoppages and believes that its relationship with employees is good.

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ITEM 1A – RISK FACTORS

The Check 21 Act and electronic methods of clearing cancelled checks have had, and will continue to have, a significant adverse effect on AirNet’s revenues derived from check delivery services.

The Check 21 Act, which became effective in October 2004, creates a new negotiable instrument called a substitute check (also known as an image replaced document or “IRD”) that becomes the legal equivalent of the original item. The Check 21 Act effectively removed the requirement of returning an original paper check to the account holder’s institution and required that all financial institutions accept an IRD in lieu of a cancelled check. The Check 21 Act and the transition in the banking industry to electronic methods of clearing cancelled checks will eventually replace the need for expedited air transportation services of original cancelled checks by most of AirNet’s banking customers. The Check 21 Act and electronic methods of clearing cancelled checks have had, and will continue to have, a significant adverse affect on AirNet’s revenues derived from check delivery services.

The use of image replacement documents and other electronic methods to clear cancelled checks is accelerating and will have a significant adverse effect on AirNet’s revenues and income.

The use of IRD’s and other electronic methods to clear cancelled checks is accelerating and AirNet is experiencing significant declines in the volume of cancelled checks it delivers. The acceleration in the use of electronic methods of clearing checks will have a significant adverse effect on AirNet’s revenues and income. AirNet’s contribution margin on the delivery of cancelled checks is significantly higher than its contribution margin from its other delivery services. The decline in revenues derived from check delivery services and the associated loss of contribution margin will require AirNet to further reduce its current route structure and the number of aircraft it operates. Such reductions in AirNet’s national airline network will result in the elimination of certain delivery services to its banking customers and will result in additional declines in AirNet’s Bank Services revenues. The high fixed costs of AirNet’s national airline structure will make it difficult to reduce costs in proportion to anticipated decreases in revenues and income.

AirNet may be unable to offset losses in its Bank Services revenues and contribution margins with Express Services revenues and contribution margins, which could adversely affect AirNet’s profitability or ability to operate its air transportation network.

Because the density of cancelled check shipments is greater than the typical Express Services shipment, contribution margins on Bank Services shipments are substantially higher than Express Services shipments after considering the cubic dimension of shipments. Also, due to the unscheduled nature of Express Services shipments, pick-up and delivery costs per shipment are higher for Express Services shipments than Bank Services shipments. Express Services contribution margins are currently insufficient to support the operation of AirNet’s airline as presently configured. As AirNet’s Bank Services revenues decline due to the decrease in cancelled check volumes, it will be necessary for AirNet to increase its Express Services revenues and contribution margins to a level sufficient to support the operating costs of AirNet’s airline. In the event AirNet is unable to sufficiently increase its Express Services revenues and contribution margins, it will be necessary to restructure AirNet’s airline by reducing routes and the number of aircraft its operates. Due to the high fixed costs of operating AirNet’s national air transportation network, there can be no assurances that AirNet’s financial performance in future periods will be profitable or sufficient to support a national air transportation network.

Reductions in AirNet’s route schedule and the number of aircraft it operates may adversely impact AirNet’s Express Services business.

AirNet’s air and ground network that provides later pick-up and earlier delivery times than those offered by other national carriers is one of the primary differentiating characteristics of AirNet’s time-critical delivery network. A significant portion of AirNet’s Express Services shipments are transported on AirNet’s airline. The anticipated decline in AirNet’s transportation of cancelled checks will require significant changes in AirNet’s air transportation network, including further reductions in its current route schedule and the number of aircraft it operates. Reductions in AirNet’s route schedule and the number of aircraft it operates will require AirNet to transport a greater portion of its Express Services shipments on commercial airlines and may adversely impact AirNet’s ability to expand or maintain its Express Services business.

Competition from other providers of express air and ground delivery services may adversely affect AirNet’s results of operations and financial condition.

AirNet’s Bank Services compete primarily against the Federal Reserve’s Check Relay Network, which has significantly greater financial and other resources than AirNet. The Federal Reserve is regulated by the Monetary Control Act of 1980, which in general requires that the Federal Reserve price its services on an actual cost basis plus a set percentage private

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sector market adjustment factor. Failure by the Federal Reserve to comply with the Monetary Control Act by pricing its services below the required rates could have an adverse competitive impact on AirNet. In addition, the Monetary Control Act may be amended, modified or repealed, or new legislation affecting AirNet’s business may be enacted. Also, the market for Express Services is highly competitive. Aggressive competition for customers with express delivery needs could have a material adverse affect on revenue and contribution margins in Express Services.

It will be difficult for AirNet to dispose of its aircraft and other operating assets in response to any reductions in its air transportation network or operations.

AirNet’s ability to dispose of its aircraft in response to any reductions in its air transportation network will be limited by the age and cargo configuration of such aircraft. AirNet’s aircraft, including its Learjets, are relatively older, higher use aircraft that are not configured for passenger use. Lower use Learjets with similar ages, lower operating hours and configured for passenger use have been averaging in excess of 18 months on the market prior to sale. AirNet’s ability to dispose of its Learjets will be restricted by such market factors and may require extended holding periods prior to sale. The cost of converting such Learjets to passenger use will also limit the market for such aircraft and the value AirNet would receive upon their sale. A significant portion of AirNet’s other aircraft are subject to similar factors that will limit their marketability. AirNet’s operating facility located at Rickenbacker International Airport is a specialty use facility which is not readily adaptable to uses other than aircraft operations. The specialty nature of AirNet’s Rickenbacker facility and the fact that it is not located at a major metropolitan airport will limit its value and could result in an extended holding period prior to disposition.

Government regulation significantly affects AirNet.

AirNet’s delivery operations are subject to various federal, state and local regulations that in many instances require permits and licenses. Failure by AirNet to maintain required permits or licenses, or to comply with the applicable regulations, could result in substantial fines or possible revocation of AirNet’s authority to conduct certain of its operations. AirNet’s flight operations are regulated by the FAA under Part 135 of the Federal Aviation Regulations. Among other things, these regulations govern permissible flight and duty time for aviation flight crews. The FAA has contemplated, from time to time, certain changes in flight and duty time guidelines which, if adopted, could increase AirNet’s operating costs. These changes, if adopted, could also require AirNet and other operators regulated by the FAA to hire additional flight crew personnel. In addition, Congress, from time to time, has considered various means, including excise taxes, to raise revenues directly from the airline industry to pay for air traffic control facilities and personnel. There can be no assurances that Congress will not change the current federal excise tax rate or enact new excise taxes, which could adversely affect AirNet’s business.

FAA grounding of AirNet’s fleet or a specific type of aircraft used in AirNet’s delivery services business may adversely affect AirNet’s business and revenues.

The FAA has the authority to ground specific types of aircraft due to safety concerns and ground a Part 135 operator’s entire fleet for alleged violations of safety requirements. The FAA has, from time to time, grounded specific types of aircraft until such aircraft can be inspected and/or can be modified to correct the safety issue. The FAA has considered airworthiness directives that could result in the grounding of certain Cessna 208 Caravans until de-icing equipment or other modifications can be installed. AirNet operates 14 Cessna 208 Caravans as part of its air transportation network. The grounding of any type of aircraft used in AirNet’s fleet, including the Cessna 208 Caravans, would adversely affect AirNet’s air transportation network and would adversely affect AirNet’s business and revenues. In addition, the cost of modifying AirNet’s aircraft to correct any safety concerns would increase the cost of operating such aircraft and AirNet’s business.

Loss of AirNet Management, Inc.’s Indirect Air Carrier Standard Security Program approval could adversely affect AirNet’s business.

A significant portion of AirNet’s shipments are transported via commercial passenger airlines. TSA regulations provide that only indirect air carriers that maintain a TSA-approved Indirect Air Carrier Standard Security Program (“IACSSP”) may tender packages to commercial passenger airlines. AirNet Management, Inc., a wholly-owned subsidiary of AirNet (“AirNet Management”), maintains a TSA-approved IACSSP under which AirNet derives its authority to tender packages to commercial passenger airlines. AirNet’s ability to transport packages on commercial passenger airlines is dependent upon AirNet Management’s continuing compliance with the rules and regulations governing Indirect Air Carrier Standard Security Programs and the TSA’s continuing approval of the AirNet Management IACSSP. The TSA has, from time to time, implemented new rules and regulations governing the tender of packages to commercial passenger airlines. In addition, the US House and Senate are considering new legislation which, if enacted, would further increase the regulation of air cargo on commercial passenger aircraft. Such new regulations and legislation could increase AirNet’s operating costs or make it more difficult to comply with the rules and regulations governing the tender of packages to commercial passenger airlines. The loss of AirNet Management’s IACSSP approval would have a significant and immediate adverse effect on AirNet’s business.

Changes in government regulations regarding the transportation of hazardous materials may increase AirNet’s costs of transporting such shipments or reduce AirNet’s ability to transport such shipments.

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The DOT implemented new regulations regarding the transportation of hazardous materials that went into effect on April 1, 2005. The new regulations required that AirNet institute new operating procedures and make arrangements with ground vendors and/or fixed based operators to assist AirNet in complying with the new regulations. Failure to comply with the new or existing regulations governing the transportation of hazardous materials would reduce or otherwise restrict AirNet’s ability to transport hazardous materials, including its ability to transport radioactive pharmaceuticals pursuant to AirNet’s grantee status under the DOT SP-7060 Special Permit. Future changes in government regulations regarding the transportation of hazardous materials may also increase AirNet’s costs of transporting such shipments or reduce AirNet’s ability to transport such shipments.

Reclassification of ground couriers as employees rather than independent contractors could subject AirNet to back taxes and other liabilities.

Prior to 2006, AirNet used the services of independent contractors as couriers to pick up and deliver a significant portion of its packages. From time to time, federal and state authorities have sought to assert that independent contractors in the transportation industry, including independent contractors providing services similar to those utilized by AirNet, are employees rather than independent contractors. AirNet previously classified its couriers providing services under an independent contractor agreement or arrangement as independent contractors rather than as employees. However, there can be no assurance that federal or state authorities will not challenge this position and attempt to reclassify such independent contractors as employees of AirNet. In the event of any such reclassification, AirNet could be required to pay back-up withholding with respect to amounts previously paid to its couriers and be required to pay penalties or subject AirNet to other liabilities as a result of the incorrect classification of such individuals, such as payment of past due workers compensation and unemployment insurance premiums.

Changes to current transportation security requirements or procedures could adversely impact AirNet’s ability to efficiently conduct AirNet’s air and ground operations to meet AirNet’s current delivery parameters or significantly increase costs to transact those operations.

Considerable focus has been placed on package security requirements and procedures at domestic and international airports since the September 11, 2001 tragedy and related incidents. The TSA, commercial airlines, fixed based operations (where AirNet transacts a significant portion of its aircraft loading and unloading operations) and airport authorities are still in the process of reviewing and improving all aspects of their security requirements. While many proposed changes are voluntary, many are being mandated by the TSA, the DOT and the FAA.

During 2002, the TSA implemented screening procedures for over-the-counter cargo tendered to commercial airlines. These screening procedures have resulted in additional tender time for packages transported on the commercial airlines in certain locations and during certain times. In addition, the TSA continues to review and consider additional package screening requirements and changes to the vendor screening procedures, which AirNet may need to perform on packages from its customers. Many commercial airlines are also adding security surcharges to shipments.

Changes at fixed base operators and by local airport authorities could potentially limit AirNet’s ramp access to its aircraft, thereby increasing tender time from customers. Changes in chain of custody requirements could also potentially cause AirNet to incur additional costs to staff additional hours at certain locations. In response to the new security-related procedures being implemented, AirNet added a security surcharge in 2002 for its Bank Services and Express Services customers. Although the surcharge is expected to help offset the increasing costs associated with security issues, AirNet’s current surcharge program may not be sufficient to cover all new costs it may incur as additional transportation safety procedures are developed and/or required.

As a company actively engaged in providing aviation services, AirNet is subject to current and future regulations with which it must comply in order to maintain its ability to provide such services. Various governmental agencies are implementing and expanding policies, procedures, and compliance measures to enhance the safety and security of both domestic and international air transportation. This increasing regulatory environment may require AirNet to change its operational processes, modify its flight schedules, and incur additional costs of compliance. The costs associated with regulatory compliance could impact AirNet’s financial results. AirNet’s inability to comply with current or future governmental regulations could limit or restrict AirNet’s ability to provide specific services, including but not limited to, the transportation of hazardous materials.

Catastrophic accidents involving AirNet’s aircraft could result in a significant reduction in AirNet’s business and increase its insurance costs.

A catastrophic accident could reduce the demand for AirNet’s services and, therefore, reduce its revenue. In the event of a catastrophic accident, AirNet may not be able to secure liability insurance for its business or secure such insurance at a reasonable cost.

Environmental concerns may arise in connection with AirNet’s operation at its Rickenbacker Facility on leased land with known pollution conditions.

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In 2005, AirNet completed construction of its Rickenbacker Facility on land leased from the Authority. Portions of the leased land, as well as portions of the aircraft ramp, on which AirNet conducts a significant portion of its operations at the Rickenbacker Facility, contain known pollution conditions. The appropriate amended post closure plan and no further action letters addressing these areas were supplied to AirNet by the Authority prior to beginning construction. Identification of additional pollution conditions on the leased land or attached ramp could increase AirNet’s costs and have an adverse affect on its ability to operate at the Rickenbacker Facility.

Failure to renew AirNet’s grantee status to the DOT-SP 7060 Special Permit or AirNet’s Transport Canada Permit for Equivalent Level of Safety would result in significant loss of Express Services revenue.

AirNet maintains grantee status to the DOT-SP 7060 Special Permit and holds a Transport Canada Permit for Equivalent Level of Safety which allows AirNet to transport higher volumes of radioactive pharmaceuticals than that permitted by most air carriers. AirNet’s grantee status under the DOT-SP 7060 Special Permit expires in August 2010 and its Permit for Equivalent Level of Safety expires on March 31, 2008. Although AirNet anticipates it will obtain a renewal of these permits at their next scheduled renewal dates, there can be no assurances that these permits will be extended. Further, there can be no assurance that AirNet can continue to comply with all current requirements related to its grantee status under the DOT-SP 7060 Special Permit or its Permit for Equivalent Level of Safety, or that such requirements will not change in the future which would negatively affect AirNet’s ability to maintain such status.

Anti-takeover provisions may delay or prevent an acquisition or change in control of AirNet by a third party.

Provisions of AirNet’s amended articles and code of regulations and of the Ohio Revised Code, together or separately, could discourage potential acquisition proposals, delay or prevent a change in control of AirNet and limit the price that certain investors might be willing to pay in the future for the common shares. Among other things, these provisions require certain supermajority votes, establish advance notice procedures for shareholder nomination of candidates for election as directors and for shareholder proposals to be considered at shareholders’ meetings, eliminate cumulative voting in the election of directors and provide that directors may only be removed from office for cause.

AirNet’s amended articles authorize the board of directors to issue up to 10,000,000 preferred shares without further shareholder approval, subject to any limitations prescribed by law and the rules and regulations of AMEX. The preferred shares could have dividend, liquidation, conversion and other rights and privileges that are superior or senior to the common shares. Issuance of preferred shares could result in the dilution of the voting power of the common shares, adversely affect holders of the common shares in the event of liquidation of AirNet or delay, defer or prevent a change in control of AirNet.

In addition, Section 1701.831 of the Ohio Revised Code contains provisions that require shareholder approval of any proposed “control share acquisition” of any Ohio corporation at any of three voting power thresholds: one-fifth, one-third and a majority. Further, Chapter 1704 of the Ohio Revised Code contains provisions that restrict specified business combinations and other transactions between an Ohio corporation and interested shareholders.

Limitations on AirNet’s ability to borrow could adversely affect AirNet’s financial condition and prevent AirNet from fulfilling its financial obligations.

AirNet has a significant revolving credit facility which is scheduled to expire on October 15, 2008. AirNet’s revolving credit facility is used to fund working capital, capital expenditures and other general corporate requirements. Any substantial indebtedness incurred under the revolving credit facility could: (1) require AirNet to dedicate a substantial portion of cash flows from operating activities to payments on AirNet’s indebtedness, which would reduce the cash flows available to fund working capital, capital expenditures and other general corporate requirements; (2) limit AirNet’s flexibility in planning for, or reacting to, changes in AirNet’s business and the industry in which AirNet operates; and (3) limit AirNet’s ability to borrow additional funds. AirNet’s liquidity and its ability to meet its current and long-term financial obligations as they become due will be dependent upon AirNet’s financial performance, its ability to meet financial covenants under the revolving credit facility and its ability to replace or extend the revolving credit facility when it becomes due. AirNet’s breach of a financial covenant or other provision of its revolving credit facility would constitute a default and would permit its lender to pursue the remedies available to it under the revolving credit facility. These remedies include terminating AirNet’s ability to make any new borrowings and accelerating the repayment of all existing borrowings under the revolving credit facility. If AirNet’s lender declared a default, there is no assurance that AirNet would have adequate resources or be able to obtain other financing to pay amounts owed under the revolving credit facility. AirNet’s failure to meet these financial covenants would have a material adverse effect on AirNet’s financial position and ability to continue operations.

AirNet may not be able to raise future capital through debt financing which could adversely affect AirNet’s ability to execute its Express Services strategy.

AirNet may be unable to raise capital for future capital expenditures through debt financing. AirNet’s inability to secure debt financing would limit its ability to purchase new aircraft and change the current mix of aircraft in its fleet. The current aircraft in AirNet’s fleet were originally designed to meet the delivery needs of AirNet’s bank customers and have relatively small

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cargo capacities. AirNet’s current aircraft are not readily adaptable to the transportation of many types of air cargo, which generally require greater aircraft capacity and lower operating costs. AirNet’s inability to secure debt financing to purchase aircraft that are more suitable to the transportation of Express Services cargo may adversely affect AirNet’s ability to execute its Express Services strategy of increasing Express Services revenues and contribution margins.

AirNet may encounter issues in documenting and testing its internal control over financial reporting for purposes of complying with Section 404 of the Sarbanes-Oxley Act of 2002.

AirNet is in the process of documenting and testing its internal control over financial reporting in order to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, which will require management to annually assess the effectiveness of AirNet’s internal control over financial reporting beginning with the fiscal year ending December 31, 2007 and a report by AirNet’s independent registered public accounting firm addressing management’s assessment and the effectiveness of the internal control over financial reporting beginning with the fiscal year ending December 31, 2008. During the course of AirNet’s testing, AirNet may identify deficiencies and weaknesses, which AirNet may not be able to remediate in time to meet the deadline imposed by the regulations promulgated under the Sarbanes-Oxley Act for compliance with the requirements for Section 404. If management is unable to conclude that AirNet’s internal control over financial reporting is effective at year-end 2007 or AirNet’s independent registered public accounting firm is unable to give a favorable report on management’s assessment beginning with the fiscal year ending December 31, 2008, the result could be a material adverse effect on AirNet’s reputation, financial condition and on the market price of AirNet’s common shares.

ITEM 1B – UNRESOLVED STAFF COMMENTS

None.

ITEM 2 — PROPERTIES

Operating facilities

On January 20, 2004, AirNet entered into a land lease with the Authority to lease approximately 8 acres located within Rickenbacker. AirNet completed construction of its new Rickenbacker Facility in May 2005 and AirNet’s relocation to the Rickenbacker Facility was completed in June 2005. AirNet’s corporate and operational functions that were previously conducted at the Port Columbus Facility and the administrative functions previously conducted at 555 Morrison Road in Gahanna, Ohio were consolidated at the new Rickenbacker Facility. Rickenbacker is located in Franklin and Pickaway Counties, Ohio, southeast of Columbus, Ohio, approximately fifteen miles from AirNet’s former Port Columbus Facility.

On January 20, 2004, in anticipation of AirNet’s move to its new Rickenbacker Facility, AirNet also entered into an agreement to sell its Port Columbus Facility to the Authority for $3.9 million. Closing of the sale of the Port Columbus Facility to the Authority took place on December 15, 2004. Concurrently with the sale, AirNet entered into a new lease agreement with the Authority (the “New Port Columbus Lease”) pursuant to which AirNet leased the real property associated with the Port Columbus Facility and the buildings and all other improvements thereon pending AirNet’s relocation to its Rickenbacker Facility. The New Port Columbus Lease expired on August 31, 2005. In connection with vacating its Port Columbus Facility, AirNet was required to return certain portions of the premises to their prior condition. The remedial work required to return the Port Columbus Facility to its prior condition, except for the environmental work discussed below, was completed by December 31, 2005.

In connection with the termination of the New Port Columbus Lease, the Authority required that AirNet conduct an environmental assessment of the Port Columbus Facility, including the underground storage tanks associated with AirNet’s fuel farm operation. The objective of the environmental assessment was to determine and quantify any environmental impact AirNet’s operations may have had at the Port Columbus Facility. The results of the environmental sampling demonstrated concentrations above the regulatory limits for petroleum hydrocarbons and vinyl chloride in samples associated with one of three oil-water separators located in the hanger portion of the Port Columbus Facility. AirNet completed certain remedial work in connection with the pollution conditions in March of 2006.

Through August 2006, AirNet also maintained certain assets at Port Columbus for dispensing aviation fuel under the terms and conditions of a separate lease agreement (the “Fuel Farm Lease”). The Fuel Farm Lease required AirNet to return the premises leased under the Fuel Farm Lease to their original condition upon the termination of the lease. In lieu of returning the premises to their original condition, the Fuel Farm Lease provided that the Authority could take title to any improvements constructed by AirNet on the leased premises. On August 17, 2006, AirNet conveyed all of its fuel farm assets to the Authority for $1 and a release of any future liabilities associated with the Fuel Farm Lease and the fuel farm assets, other than any liabilities related to environmental conditions which may be imposed by any governmental agency. The Fuel Farm Lease also was terminated on August 17, 2006. As a result of the conveyance of the fuel farm assets to the Authority and the termination of the Fuel Farm Lease, AirNet was relieved of its obligation to return the leased premises to their original condition.

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AirNet also conducts operations at approximately 30 additional locations throughout the United States. These locations, which are leased from unrelated third parties, generally include office space and/or a section of the lessor’s hangar or ramp.

Fleet

Cargo aircraft

The following table shows information about AirNet’s cargo aircraft fleet used in its Bank Services and Express Services operations as of December 31, 2006. AirNet’s cargo aircraft have been modified for cargo use and contain no passenger seats and interiors to provide maximum payload.

Aircraft Type	Owned(1)		Leased		Payload(2)		Range(3)		Speed(4)
Aircraft used in operations:
Learjet, Model 35/35A		30		—		3,800		1,700		440
Cessna Caravan		7		7		3,400		825		170
Beech Baron		40		—		1,000		800		170
Piper Navajo		17		—		1,500		800		170
Total used in operations		94		7
Aircraft held for sale:
Cessna 310		9		—		900		800		170
Total aircraft		103		7

(1)	In January 2007, a Learjet 35 was damaged and removed from AirNet’s aircraft fleet, which decreased the total number of owned Learjets to 29.
(2)	Maximum payload in pounds for a one-hour flight plus required fuel reserves.
(3)	Maximum range in nautical miles, assuming zero wind, full fuel and maximum payload.
(4)	Maximum speed in knots, assuming maximum payload.

The Learjet 35 is among the fastest and most reliable small jet aircraft available in the world and meets all Stage Three noise requirements currently required at most locations across the United States.

The Cessna Caravan Super Cargomaster aircraft is a single-engine turbo-prop aircraft.

The Piper Navajo, Beech Baron and Cessna 310 are twin-engine piston aircraft. In February 2006, AirNet decided to market for sale all nine of the Cessna 310 aircraft it owns and, in November 2006, AirNet entered into an agreement to sell all nine of the Cessna 310 aircraft for approximately $0.4 million. AirNet agreed to perform an annual inspection and to pay the cost of the inspection for each aircraft prior to delivery. AirNet delivered six aircraft in the first quarter of 2007 and expects to deliver the three remaining aircraft in April of 2007.

Vehicles

AirNet operated a fleet of approximately 50 ground transportation vehicles as of December 31, 2006. Vehicles range in size from passenger cars to full sized vans. AirNet also rents lightweight trucks for certain weekend ground routes. In 2001, AirNet entered into a leasing agreement with a third party provider and began replacing owned vehicles with leased vehicles as replacement became necessary. AirNet leased approximately 17 of the 50 ground transportation vehicles it operated as of December 31, 2006. In addition to the ground transportation vehicles it operates, AirNet owns and operates approximately 24 vehicles not licensed for road use, including fuel trucks and tugs.

ITEM 3 — LEGAL PROCEEDINGS

In July 2006, AirNet received a letter from an attorney representing an association of software publishers indicating that the association had evidence that AirNet had engaged in the unlawful installation and use of certain software products. At the request of the association’s attorney, AirNet conducted a company wide review of its use of software published by members

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of the association. The internal review did not disclose any unauthorized installation or use of such software and the results of the review were submitted to the association’s attorney. The attorney for the association subsequently requested certain supplemental information regarding AirNet’s software usage, which AirNet supplied to the attorney for the association. In March 2007, the attorney for the association notified AirNet that she was not able to verify AirNet’s possession of licenses for certain software through information provided by the manufacturers of such software. The attorney for the association offered to settle the alleged infringement issues in accordance with terms of a proposed settlement agreement and a settlement payment of approximately $26,000. The attorney for the association has confirmed that AirNet may still submit appropriate documentation reflecting its purchase of the software in question. AirNet is in the process of assembling and submitting such documentation. AirNet believes that it is in compliance with all software licensing requirements and that it has not engaged in any unlawful use of the software published by the association’s members.

AirNet uses the services of independent contractors as couriers to pick up and deliver its packages. During 2005, the California Employment Development Department (the “EDD”) concluded an employment tax audit of AirNet’s operations in California. As a result of its audit, the EDD concluded that certain independent contractors used by AirNet should be reclassified as employees. Based upon such reclassification, the EDD proposed a $53,061 assessment against AirNet under Section 1127 of the California Unemployment Insurance Code. After receipt of the proposed assessment, AirNet filed a Petition for Reassessment with the California Unemployment Insurance Appeals Board. After the filing of the Petition for Reassessment, AirNet submitted further documentation to the EDD which reduced the assessment to $31,636 based upon employment taxes paid directly to the State of California by the affected independent contractors. On February 13, 2007, AirNet withdrew its petition for reassessment. Payment of the EDD assessment will conclude this matter.

Other than the items noted above, there are no pending legal proceedings involving AirNet and its subsidiaries other than routine litigation incidental to their respective business. In the opinion of AirNet’s management, these proceedings should not, individually or in the aggregate, have a material adverse effect on AirNet’s results of operations or financial condition.

ITEM 4 — SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no matters submitted to a vote of the shareholders of AirNet during the fourth quarter of the fiscal year ended December 31, 2006.

PART II

ITEM 5 — MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

The common shares of AirNet Systems, Inc. traded on the New York Stock Exchange until January 24, 2006. On January 25, 2006, the common shares of AirNet Systems, Inc. began trading on AMEX under the symbol “ANS”. The table below sets forth the high and low sales prices of the common shares (a) as reported on the New York Stock Exchange for the period from January 1, 2005 through January 24, 2006 and (b) as reported on AMEX for the period from January 25, 2006 through December 31, 2006 (December 29, 2006 was the last trading day during the fiscal year ended December 31, 2006.)

	2006				2005
Quarter ended	High		Low		High		Low
March 31	$	3.76	$	3.17	$	4.75	$	3.31
June 30		3.60		2.82		5.19		3.71
September 30		3.84		2.80		5.44		3.91
December 31		3.92		2.91		5.36		3.22

AirNet has not paid any dividends on its common shares and has no current plans to pay any dividends in the foreseeable future. AirNet anticipates using future earnings to finance operations and reduce debt.

The payment of any future dividends on common shares will be determined by the AirNet Board of Directors in light of conditions then existing, including earnings, financial condition and capital requirements, restrictions in financing agreements, business conditions and other factors.

On March 19, 2007, there were approximately 822 record holders of AirNet’s common shares.

Neither AirNet nor any “affiliated purchaser,” as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934, as amended, purchased any common shares of AirNet during the fourth quarter of the fiscal year ended December 31, 2006. On February 18, 2000, AirNet announced a stock repurchase plan under which up to $3.0 million of AirNet common shares may be repurchased from time to time. These repurchases may be made in open market transactions or through privately negotiated transactions. As of December 31, 2006, AirNet had the authority, subject to bank approval, to repurchase approximately $0.6 million of AirNet common shares under this stock repurchase plan.

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ITEM 6 — SELECTED FINANCIAL DATA

Statement of Operations Data
(in thousands, except per share data)	Year Ended December 31,
	2006			2005			2004			2003		2002
Net Revenues, net of excise tax
Bank Services	$	112,034		$	113,748		$	106,117		$	103,399	$	102,626
Express Services		59,187			52,346			49,096			36,963		33,958
Aviation Services		1,586			865			1,243			1,261		1,044
Total net revenues		172,807			166,959			156,456			141,623		137,628
Costs and Expenses
Operating costs and expenses		158,382			155,893			152,917			136,659		130,268
Impairment charges (Notes 1, 2, and 3)		24,560			16,073			47,009			—		—
Total costs and expenses		182,942			171,966			199,926			136,659		130,268
Income (loss) from continuing operations before income taxes		(10,135	)		(5,007	)		(43,470	)		4,964		7,360
Interest expense		1,532			2,107			1,228			1,337		948
Income (loss) from continuing operations before income taxes and cumulative effect of accounting change		(11,667	)		(7,114	)		(44,698	)		3,627		6,412
Provision (benefit) for income taxes		1,654			(2,400	)		(9,566	)		1,533		2,480
Income (loss) from continuing operations before cumulative effect of accounting change		(13,321	)		(4,714	)		(35,132	)		2,094		3,932
Income (loss) from discontinued operations, net of taxes (Notes 4 and 5)		29			468			986			686		(561	)
Cumulative effect of accounting change, net of tax benefit (Note 6)		—			—			—			—		(1,868	)
Net income (loss)	$	(13,292	)	$	(4,246	)	$	(34,146	)	$	2,780	$	1,503
Income (loss) per common share — basic and diluted
Continuing operations	$	(1.31	)	$	(0.47	)	$	(3.49	)	$	0.21	$	0.38
Discontinued operations	$	0.00		$	0.05		$	0.10		$	0.07	$	(0.05	)
Cumulative effect of accounting change	$	—		$	—		$	—		$	—	$	(0.18	)
Net income (loss)	$	(1.31	)	$	(0.42	)	$	(3.39	)	$	0.28	$	0.15
Balance Sheet Data (in thousands)
Total assets	$	56,547		$	123,293		$	137,470		$	153,273	$	147,324
Total debt		7,955			56,019			62,245			37,776		41,794
Total shareholders’ equity		34,015			46,379			50,466			84,280		80,796

Note 1 Represents 2006 charge related to the impairment of AirNet’s cargo assets (See Note 2 — Impairment of Property and Equipment and Goodwill of the Notes to Consolidated Financial Statements included in “ITEM 8 — FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA” of this Annual Report on Form 10-K.)

Note 2 Represents 2005 charge related to the impairment of AirNet’s cargo assets (See Note 2 — Impairment of Property and Equipment and Goodwill of the Notes to Consolidated Financial Statements included in “ITEM 8 — FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA” of this Annual Report on Form 10-K.)

Note 3 Represents 2004 charge related to the impairment of AirNet’s cargo assets and related goodwill (See Note 2 — Impairment of Property and Equipment and Goodwill of the Notes to Consolidated Financial Statements included in “ITEM 8 — FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA” of this Annual Report on Form 10-K.)

Note 4 In August 2003, AirNet sold the assets of its Mercury Business Services unit, resulting in discontinued operations.

Note 5 In September 2006, AirNet sold the assets of its Jetride Passenger Charter Services unit, resulting in discontinued operations, including a gain on sale of $610, net of tax.

Note 6 Represents the effect of adopting Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets”.

16

ITEM 7 — MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

General

Total net revenues have increased in each of the last three years as a result of increases in Express Services revenues, higher fuel surcharge revenues and general price increases for Bank Services and Express Services. However, AirNet’s Bank Services net revenues, the largest portion of AirNet’s business, began to decline in 2006 as a result of the increasing use of image products and other electronic alternatives to the physical movement of cancelled checks. Management believes the decline in Bank Services revenues will continue in future periods due to decreasing demand for the physical transportation of cancelled checks. The decline in Bank Services check volume and revenues will require AirNet to focus on increasing its Express Services revenues and to restructure its existing transportation network to meet the changing needs of Bank Services and Express Services customers. AirNet’s transportation network was originally designed and continues to operate in a highly reliable manner to meet the demanding pick-up and delivery schedules of AirNet’s bank customers with aircraft that have relatively small cargo capacities. The present AirNet fleet is capable of accepting relatively small sized Express Services cargo; however, the aircraft are not readily adaptable to the transportation of many other types of larger air cargo, which generally require greater aircraft capacity and have lower operating costs per pound mile. AirNet continues to evaluate and review Bank Services and Express Services customer needs and AirNet’s operating structure and costs. Management anticipates that it will be necessary to substantially modify its transportation network and fleet in response to these changing business conditions, including the evaluation of different aircraft types that may be more suitable for Express Services customers.

The following management’s discussion and analysis describes the principal factors affecting the results of operations, liquidity and capital resources, as well as the critical accounting policies of AirNet. This discussion should be read in conjunction with the accompanying audited consolidated financial statements, which include additional information about AirNet’s significant accounting policies, practices and the transactions that underlie its financial results, and the risk factors described in “Item 1A – Risk Factors” of this Annual Report on Form 10-K.

Sale of Jetride’s Passenger Charter Business

On July 26, 2006, AirNet, Jetride, and Pinnacle Air, LLC (“Pinnacle”) entered into a purchase agreement regarding the sale of Jetride’s passenger charter business to Pinnacle (the “Purchase Agreement”). The sale was completed on September 26, 2006. The purchase price was $41.0 million in cash, of which $40.0 million was consideration for the sale of nine company-owned aircraft and related engine maintenance programs and $1.0 million was consideration for the sale of all of the outstanding capital stock of a newly-created subsidiary of Jetride, also called Jetride, Inc. (“New Jetride”). Upon completion of the sale transaction, Jetride amended its articles of incorporation to change its name to 7250 STARCHECK, INC. Of the total consideration, $40.0 million was paid at closing and $1.0 million was paid into escrow to cover indemnification claims which may be made by Pinnacle for up to eighteen months after the closing. To the extent the escrow amount is not used to satisfy indemnification claims, the escrow amount is to be released to AirNet in two installments approximately six and twelve months after the closing. In March 2007, $500,000 of the escrowed amount was released to AirNet. AirNet retained the net working capital of the Jetride passenger charter business, which was approximately $2.2 million as of the closing date. In connection with the closing of the sale transaction, Jetride repaid in full six term loans which had been secured by aircraft used in Jetride’s passenger charter business. The aggregate principal amount of the loans repaid was approximately $28.2 million plus accrued interest and early termination prepayment penalties of approximately $0.3 million through the repayment date. Following repayment of Jetride’s loans and expenses related to the transaction, AirNet used the remaining sale proceeds to further reduce debt outstanding under AirNet’s secured revolving credit facility. AirNet’s lenders under the secured revolving credit facility had consented to the sale of the Jetride passenger charter business and the various transactions necessary to complete the sale.

In connection with the transaction, AirNet agreed to provide certain transition services to Pinnacle and its subsidiaries for various specified time periods and various monthly fees, which initially aggregate to approximately $37,500 per month, primarily for aircraft maintenance services. In addition, AirNet’s Director of Maintenance continues to serve as the Director of Maintenance for New Jetride. AirNet entered into three subleases with New Jetride, each for a one year term, under which New Jetride leases a portion of AirNet’s facilities located at Rickenbacker International Airport, Dallas Love Field and Birmingham International Airport. The aggregate lease payment under the three subleases is approximately $10,000 per month.

Pinnacle made offers of employment to all of the employees of Jetride and substantially all of the Jetride pilots and other employees accepted employment with Pinnacle. Wynn D. Peterson, who had served as AirNet’s Senior Vice President, Jetride Services, resigned as an executive officer of AirNet to become President of Pinnacle and New Jetride, which became a subsidiary of Pinnacle upon completion of the sale transaction.

Revenues from Passenger Charter Services, included in discontinued operations, were approximately $16.9 million, $29.5 million and $18.5 million for 2006, 2005 and 2004, respectively. Income from discontinued operations before income taxes for 2006, 2005 and 2004 was approximately $0.1 million, $0.8 million and $1.6 million, respectively. Included in the 2006

17

income from discontinued operations before income taxes is a pre-tax gain of approximately $1.0 million, which is net of approximately $1.0 million of investment banking and legal fees associated with the sale of Jetride.

Results of Operations

Financial Overview

Loss from continuing operations before interest and income taxes was approximately ($10.1) million, ($5.0) million and ($43.5) million for 2006, 2005 and 2004, respectively. Included in these losses from continuing operations before interest and income taxes were non-cash asset impairment charges of approximately $24.6 million, $16.1 million and $47.0 million during 2006, 2005 and 2004, respectively.

Loss from continuing operations was approximately ($13.3) million ($1.31 loss per share) for 2006, approximately ($4.7) million ($0.47 loss per share) for 2005 and approximately ($35.1) million ($3.49 loss per share) for 2004. Non-cash asset impairment charges were approximately $24.6 million, $16.1 million ($10.0 million net of tax benefit) and $47.0 million ($31.0 million net of tax benefit) in 2006, 2005 and 2004, respectively. No tax benefit was recorded in 2006 related to the asset impairment charge (see “Note 8 – Income Taxes” of the Notes to Consolidated Financial Statements included in “ITEM 8 – FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA” of this Annual Report on Form 10-K).

Net Revenues

Dollars in ‘000’s

							$ Increase			% Increase			$ Increase			% Increase
							(Decrease)			(Decrease)			(Decrease)			(Decrease)
Net Revenues	2006		2005		2004		2005 to 2006			2005 to 2006			2004 to 2005			2004 to 2005
Net Revenues
Bank Services	$	112,034	$	113,748	$	106,117	$	(1,714	)		(2	)%	$	7,631			7	%
Express Services		59,187		52,346		49,096		6,841			13	%		3,250			7	%
Aviation Services		1,586		865		1,243		721			83	%		(378	)		(30	)%
Total Net Revenues	$	172,807	$	166,959	$	156,456	$	5,848			4	%	$	10,503			7	%

Although Bank Services revenues declined in 2006 due to a decrease in cancelled check volumes, AirNet’s total net revenues have increased in each of the last three years as a result of increases in Express Services revenues, higher fuel surcharge revenues and general price increases for both Bank Services and Express Services. Bank Services revenues and Express Services revenues are presented net of federal excise tax fees which were approximately 2% for Bank Services revenues and approximately 3% for Express Services revenues in each of the periods presented.

AirNet generally assesses its Bank Services customers a fuel surcharge, which is generally based on the Oil Price Index Summary – Columbus, Ohio (OPIS) index. AirNet also assesses most of its Express Services customers a fuel surcharge based on the OPIS index, which is adjusted monthly based on changes in the OPIS index. As index rates fluctuate above a set threshold, surcharge rates will increase or decrease accordingly. The fuel surcharge rate is applied to the revenue amount billed to Bank Services and Express Services customers. AirNet assesses certain Express customers fuel surcharges based on negotiated contractual rates. The average annual fuel price on the OPIS index increased approximately 13% in 2006. Fuel surcharge revenues for Bank Services and Express Services in 2006 exceeded the comparable amounts in 2005 by approximately $5.6 million, or 30%. The average annual fuel price on the OPIS index increased approximately 43% in 2005. Fuel surcharge revenues for Bank Services and Express Services in 2005 exceeded the comparable amounts in 2004 by approximately $10.2 million, or 126%.

Management believes Bank Services fuel surcharge revenues in 2007 will decline from 2006 amounts because of declining Bank Services revenues and because it believes that it is unlikely that fuel prices in 2007 will exceed the sustained high level of fuel prices experienced in 2006.

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Bank Services Revenues

Dollars in ‘000’s

							$ Increase			% Increase			$ Increase		% Increase
							(Decrease)			(Decrease)			(Decrease)		(Decrease)
Bank Services Revenues	2006		2005		2004		2005 to 2006			2005 to 2006			2004 to 2005		2004 to 2005
Bank Services Revenues	$	96,773	$	100,963	$	100,059	$	(4,190	)		(4	)%	$	904		1	%
Fuel Surcharge		15,261		12,785		6,058		2,476			19	%		6,727		111	%
Total Net Bank Services Revenues	$	112,034	$	113,748	$	106,117	$	(1,714	)		(2	)%	$	7,631		7	%
Revenues before fuel surcharge:
Weekday Revenues Per Flying Day	$	459	$	480	$	473	$	(21	)		(4	)%	$	7		1	%
Weekend Revenues Per Weekend	$	147	$	151	$	148	$	(4	)		(3	)%	$	3		2	%

There were 199 flying days in 2006 and 2005, and 201 flying days in 2004. There were 52 weekends in 2006 and 2005, and 51 weekends in 2004.

Bank Services shipments consist primarily of cancelled checks (checks processed for settlement), proof of deposit (unprocessed checks) and interoffice mail delivery. These shipments are transported on AirNet’s transportation network and, to a lesser extent, on commercial passenger airlines and dedicated AirNet aircraft charters for specific banks. Total Net Bank Services revenues decreased in 2006 from 2005 due to, but at a lesser rate than, the decrease in total Bank Services pounds shipped per flying day. Cancelled check pounds shipped per flying day declined approximately 13% in 2006 from 2005. An increase in proof of deposit and interoffice mail deliveries partially offset this decline, resulting in a net decrease in total Bank Services pounds shipped per flying day of approximately 10% in 2006 from 2005. The 10% net decline in pounds shipped per flying day resulted in a 4% decline in Bank Services revenues. Bank Services cancelled check pounds shipped per flying day declined in each quarter of 2006 at an increasing year-over-year rate. Cancelled check pounds shipped per flying day declined in each quarter of 2006 by approximately 7%, 9%, 16% and 24% when compared to the respective quarter of 2005. AirNet expects this trend to continue in 2007.

Primarily as a result of the decline in cancelled check volumes, AirNet’s weekday revenues per flying day, excluding fuel surcharges, decreased approximately 4% in 2006 compared to 2005. In the fourth quarter of 2006, weekday revenues per flying day, excluding fuel surcharges, decreased approximately 7% compared to the fourth quarter of 2005. This decline was partially offset by a 19% increase in fuel surcharge revenues. AirNet expects Bank Services revenues will continue to decline in 2007 as a result of continued reductions in cancelled check volume and as a result of the planned significant reduction in the number of flights conducted by AirNet’s air transportation network, as described below.

The expected decline in cancelled check volumes is attributable to general decreases in shipment weights and periodic cancellations of certain dispatches or other portions of the air transportation services AirNet provides to its banking customers. During 2006, as a result of decreased demand for air transportation services, AirNet received a number of service cancellations from its banking customers. These cancellations, which took effect at various times throughout 2006, did not impact AirNet’s 2006 banking revenues on a full year basis. AirNet has also received additional service cancellations from its banking customers which become effective in the first quarter of 2007, which represented approximately $4.0 million of revenues on an annual basis in 2006, including approximately $0.5 million of fuel surcharge revenues. The 2006 and 2007 service cancellations, when combined with the reduction in AirNet’s air transportation network, as discussed below, will result in a significant further decline in AirNet’s 2007 Bank Services revenues.

As the banking industry continues its transition to image products and other electronic alternatives to the physical movement of cancelled checks, AirNet continues to consult with its banking customers to determine their future requirements for air transportation services. As a result of these discussions, AirNet made significant changes to its air transportation network to meet the evolving service needs of its Bank Services customers and, in many cases, this lowered their transportation costs. These changes were effective March 26, 2007 and resulted in the elimination of 45 flights, or approximately 10%, of AirNet’s weekday flight schedule. A substantial portion of the shipment volume previously transported on the eliminated flights has been transitioned to other AirNet flights as AirNet works closely with its Bank Services customers to adjust pick up and delivery deadlines to continue to meet their service requirements. AirNet’s Bank Services revenues are presently expected to decline by approximately $4.5 million on an annual basis, including approximately $0.5 million of fuel surcharges, as a direct result of the changes to AirNet’s air transportation network that were effective March 26, 2007. Reductions in AirNet’s variable operating costs resulting from the elimination of these 45 flights are expected to substantially offset the anticipated loss of approximately $4.5 million in revenues. AirNet did not reduce the number of aircraft in its fleet as a result of the March 26, 2007 changes in its air transportation network due to the number of aircraft needed to meet the continuing service requirements of AirNet’s Bank Services and Express Services customers.

19

In February 2006, AirNet decided to market for sale all nine of the Cessna 310 aircraft it owns and, in November 2006, AirNet entered into an agreement to sell all nine of the Cessna 310 aircraft for approximately $0.4 million. AirNet agreed to perform an annual inspection and to pay the cost of the inspection for each aircraft prior to delivery. AirNet delivered six aircraft in the first quarter of 2007 and expects to deliver the three remaining aircraft in April of 2007.

AirNet provides services to its Bank Services customers under both formal written contracts and oral agreements. Commencing in 2004, AirNet began implementing bank contracts and pricing schedules that contain fixed service elements and fixed price components. Under AirNet’s more recent written bank contracts and its informal oral agreements, AirNet has certain rights to propose periodic price increases to partially offset anticipated declines in Bank Services revenues. As Bank Services customers operating under formal and informal agreements containing fixed price components have experienced an increase in their per item transportation costs as the number of cancelled checks per shipment declines, it has become difficult for AirNet to obtain periodic or interim price increases from its Bank Services customers. During 2006, AirNet was generally unable to obtain interim price increases to offset the decline in Bank Services revenues. Price increases for AirNet’s Bank Services customers have been implemented primarily on an annual basis.

Although there were 2 fewer flying days in 2005 compared to 2004, Bank Services revenues increased during 2005 primarily due to fuel surcharge revenues resulting from the increase in 2005 in fuel prices, as indicated by the approximate 43% increase in the OPIS index during 2005. While cancelled check pounds shipped per flying day decreased by approximately 1% in 2005 from 2004, revenues increased approximately 2% in 2005 from 2004 as a result of rate increases on Bank Services.

Express Services Revenues

Dollars in ‘000’s

							$ Increase			% Increase			$ Increase			% Increase
							(Decrease)			(Decrease)			(Decrease)			(Decrease)
Express Services Revenues	2006		2005		2004		2005 to 2006			2005 to 2006			2004 to 2005			2004 to 2005
Express Revenues — Non-Charter	$	36,542	$	32,776	$	33,829	$	3,766			11	%	$	(1,053	)		(3	)%
Express Revenues — Charters		13,829		13,858		13,125		(29	)		0	%		733			6	%
Fuel Surcharge		8,816		5,712		2,142		3,104			54	%		3,570			167	%
Total Net Express Services Revenues	$	59,187	$	52,346	$	49,096	$	6,841			13	%	$	3,250			7	%

AirNet’s Express Services customers typically operate in time-critical, time-definite, and high control delivery markets, including medical testing laboratories, radioactive pharmaceuticals, medical equipment, controlled sensitive media, and mission critical parts. AirNet believes its air transportation network provides certain competitive advantages over other freight forwarders that must rely primarily upon commercial passenger airlines to process their shipments. These advantages include later tendering times, better on-time performance, greater control of shipments, reliable shipment tracking systems and greater flexibility in the design of transportation solutions for customers with specific needs.

Express Revenues – Non Charter represent revenues AirNet derives from shipments on AirNet’s airline, commercial passenger airlines and point-to-point surface (ground only) shipments. The total number of Non Charter Express shipments increased approximately 3% in 2006 from 2005 as a result of increased shipment volume on commercial passenger airlines and point-to-point surface shipments of approximately 10% and 18%, respectively. The number of Non Charter Express shipments transported on AirNet’s airline decreased approximately 3% in 2006 compared to 2005 and decreased approximately 12% in 2005 compared to 2004. Revenues per shipment before fuel surcharges increased approximately 8% in 2006 from 2005, primarily as a result of an approximate 17% increase in average weight per shipment and rate increases implemented in September 2006. The total number of Non Charter Express shipments decreased approximately 8% in 2005 from 2004 as a result of the loss of certain Express Services customers and reduced shipment volume by other Express Services customers.

Express Revenues – Charters represent revenues AirNet derives from scheduled and unscheduled cargo charters transported on AirNet’s airline and on aircraft operated by other third parties. AirNet typically provides charter solutions for customers involved in radioactive pharmaceuticals, entertainment and the life sciences industry. The increase in revenues in Express Revenues-Charter in 2005 from 2004 was primarily due to an increase in the number of charters, primarily for customers shipping radioactive pharmaceuticals.

Higher fuel prices and additional non charter Express Services revenues during 2006 resulted in significantly higher fuel surcharge revenues in 2006 compared to 2005.

Revenue yields per pound are similar for Bank Services and Express Services shipments; however, because the density of cancelled check shipments is much greater than the typical Express Services shipment, contribution margins on Bank

20

Services shipments are substantially higher than Express Services shipments after considering the cubic dimension of shipments. Furthermore, due to the unscheduled nature of most Express Services shipments, pick-up and delivery costs per shipment are higher for Express Services shipments than Bank Services shipments. AirNet believes that lower check delivery volumes due to the increased use of image products and other electronic alternatives to the physical movement of cancelled checks will contribute to a significant reduction in Bank Services revenues and contribution margin in future periods. As Bank Services revenues decline, it will be necessary to significantly reduce AirNet’s airline operating costs and significantly increase the contribution margin on Express Services shipments to a level sufficient to support the operation of AirNet’s transportation network as presently configured or, over time, a substantially reconfigured transportation network.

Aviation Services

Aviation Services revenues primarily relate to AirNet’s fixed base operation services for fuel sales and aircraft maintenance provided in Columbus, Ohio. AirNet continues to provide aircraft maintenance services for Pinnacle/Jetride after the sale of Jetride in September 2006. AirNet also provides aircraft maintenance management services and retail maintenance services for other aircraft and expects to increase revenue related to retail maintenance in 2007.

Costs and Expenses

Dollars in ‘000’s

									$ Increase			% Increase			$ Increase			% Increase
									(Decrease)			(Decrease)			(Decrease)			(Decrease)
Operating Costs and Expenses	2006			2005			2004		2005 to 2006			2005 to 2006			2004 to 2005			2004 to 2005
Aircraft fuel	$	27,909		$	27,291		$	22,889	$	618			2	%	$	4,402			19	%
Aircraft maintenance		17,998			16,901			12,969		1,097			6	%		3,932			30	%
Operating wages and benefits		19,071			19,745			21,570		(674	)		(3	)%		(1,825	)		(8	)%
Contracted air costs		16,550			14,415			13,670		2,135			15	%		745			5	%
Ground courier		35,248			31,557			30,285		3,691			12	%		1,272			4	%
Depreciation		9,700			12,127			17,626		(2,427	)		(20	)%		(5,499	)		(31	)%
Insurance, rent and landing fees		8,639			8,973			9,207		(334	)		(4	)%		(234	)		(3	)%
Travel, training and other		5,468			5,550			6,384		(82	)		(1	)%		(834	)		(13	)%
Selling, general and administrative		17,939			19,493			18,283		(1,554	)		(8	)%		1,210			7	%
Net (gain) loss on disposition of assets		(140	)		(159	)		34		19			12	%		(193	)		*
Operating costs and expenses before impairment charges		158,382			155,893			152,917		2,489			2	%		2,976			2	%
Impairment of property and equipment		24,560			16,073			42,991		8,487			*			(26,918	)		*
Impairment of goodwill		—			—			4,018		—			*			(4,018	)		*
Total Costs and Expenses	$	182,942		$	171,966		$	199,926	$	10,976			6	%	$	(27,960	)		(14	)%

* The percentage increase (decrease) is not meaningful.

							Increase			% Increase			Increase			% Increase
							(Decrease)			(Decrease)			(Decrease)			(Decrease)
Hours Flown	2006		2005		2004		2005 to 2006			2005 to 2006			2004 to 2005			2004 to 2005
AirNet Aircraft Hours Flown — Total		84,760		94,837		101,250		(10,077	)		(11	)%		(6,413	)		(6	)%

Aircraft Fuel

Aircraft fuel expense increased in 2006 from 2005 generally as a result of higher fuel prices. The 2006 average annual fuel price on the OPIS index increased approximately 13% from the 2005 annual price. A portion of the aircraft fuel expense increase was offset by reduced fuel usage attributable to changes in flight operations which decreased the hours flown by approximately 11% in 2006 compared to 2005. Because a portion of the decrease in hours flown was attributable to routes subcontracted to other carriers, a portion of the decrease in aircraft fuel expense was offset by increased contracted air costs.

The increase in aircraft fuel expense in 2005 compared to 2004 is primarily due to increased fuel prices. The 2005 average annual fuel price on the OPIS index increased approximately 43% from the 2004 average annual fuel price.

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Aircraft Maintenance

Aircraft maintenance is primarily based on pre-determined inspection intervals, determined by hours flown, cycles and the number of aircraft take-offs and landings. High use, older aircraft that are no longer in production, such as those in AirNet’s cargo fleet, incur higher maintenance costs than lower use, newer aircraft.

The increase in aircraft maintenance expense primarily reflects the following factors: expensing approximately 75% of the engine maintenance plan prepayments starting in October 2006, as further described below; higher cost of aircraft parts for out of production aircraft; increasing maintenance labor costs; and the age of AirNet’s cargo fleet, including Learjets which averaged approximately 25 years in service at the end of 2006, and the related increase in maintenance required on older aircraft.

AirNet uses manufacturer engine maintenance plans to provide maintenance for recurring inspections and major overhaul maintenance for most of the engines in its Learjet fleet. Approximately 84% of AirNet’s Learjet 35 aircraft engines are covered under manufacturer engine maintenance plans. Under the manufacturer engine maintenance plans, AirNet pays in advance for certain maintenance, repair and overhaul costs based on an amount per hour for each hour flown. In October 2006, following the write down of a substantial portion of the prepaid assets related to these engine maintenance plans in connection with the 2006 asset impairment charge, AirNet changed its estimate of the portion of these payments that should be capitalized and began expensing approximately 75% of the prepayments, which are included in aircraft maintenance expense. The effect of this change in estimate increased aircraft maintenance expense by approximately $1.2 million in 2006. Management estimates that the amount of expense related to this change will be approximately $5.2 million to $5.7 million in 2007. Management estimates that expensing payments made under manufacturer engine maintenance plans at this rate will maintain engine values at the amounts determined to be appropriate as part of the 2006 asset impairment charge. The portion of the prepayments not expensed is classified as flight equipment and totaled approximately $3.7 million and $11.2 million at December 31, 2006 and 2005, respectively.

In October 2005, following the write down of aircraft assets in connection with the 2005 asset impairment charge, management determined that none of the major maintenance expenditures incurred after September 30, 2005, with the exception of engine repairs and improvements and maintenance payments made under manufacturer engine maintenance plans, extended the useful life of the aircraft. Consequently, beginning in October 2005, such expenditures were charged to aircraft maintenance expense.

AirNet does not expect to capitalize any significant expenditures made in 2007 related to the aircraft fleet, with the exception of certain major engine repairs and improvements to engines not covered by manufacturer engine maintenance plans, and a portion of the prepayments under manufacturer engine maintenance plans related to the Learjet 35 aircraft.

Contracted Air Costs

Dollars in ‘000’s

							Increase		% Increase			Increase			% Increase
							(Decrease)		(Decrease)			(Decrease)			(Decrease)
Contracted Air Costs	2006		2005		2004		2005 to 2006		2005 to 2006			2004 to 2005			2004 to 2005
Back-up and Subcontracted Air Routes	$	9,739	$	8,543	$	7,174	$	1,196		14	%	$	1,369			19	%
Commercial freight		6,811		5,872		6,496		939		16	%		(624	)		(10	)%
Total Contracted Air Costs	$	16,550	$	14,415	$	13,670	$	2,135		15	%	$	745			5	%

Contracted air costs include expenses associated with shipments transported on commercial passenger airlines and costs to third-party aircraft operators for subcontracted air routes to support or supplement AirNet’s national air transportation network. Approximately 15% of AirNet’s cargo flights per night are subcontracted to third-party aircraft operators.

Costs related to back-up and subcontracted air routes increased approximately 14% from 2005 to 2006 primarily due to certain additional high cost air routes outsourced to third-party aircraft operators and fuel surcharges charged by third-party aircraft operators. Commercial freight costs increased approximately 16% from 2005 to 2006 primarily due to the approximate 10% increase in Express Services shipments transported on commercial passenger airlines and a significant increase in fuel surcharges charged by commercial passenger airlines on these shipments. Commercial freight costs decreased approximately 9% from 2004 to 2005 primarily due to the decrease in Express Services shipments transported on commercial passenger airlines.

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Ground Courier

Dollars in ‘000’s

										Increase			% Increase			Increase			% Increase
										(Decrease)			(Decrease)			(Decrease)			(Decrease)
Ground Courier Costs	2006			2005			2004			2005 to 2006			2005 to 2006			2004 to 2005			2004 to 2005
AirNet courier and supervision	$	3,076		$	4,478		$	6,277		$	(1,402	)		(31	)%	$	(1,799	)		(29	)%
Contracted courier:
Bank Services		14,228			12,178			10,632			2,050			17	%		1,546			15	%
Express Services		17,944			14,901			13,376			3,043			20	%		1,525			11	%
Total Ground Courier Costs	$	35,248		$	31,557		$	30,285		$	3,691			12	%	$	1,272			4	%
Bank contracted courier costs as a percentage of Bank Services revenues, including fuel surcharge revenues:		13	%		11	%		10	%
Express contracted courier costs as a percentage of Express Services revenues, including fuel surcharge revenues:		30	%		28	%		27	%

Contracted courier costs for Bank Services increased in 2006 from 2005 and in 2005 from 2004. These increases resulted from the elimination of certain AirNet employee couriers and contracting the work they previously performed to third-party couriers to reduce overall payroll costs. AirNet has experienced higher ground courier costs from its vendors as fuel prices have increased. As AirNet’s Express Services revenues have increased, the related ground courier costs have also increased. AirNet’s Express Services customers are generally more costly to serve than AirNet’s traditional Bank Services customers due to more unscheduled pickup and delivery services and more geographically dispersed locations. Additionally, ground courier costs related to Express Services have increased as a result of increases in the number of shipments on commercial airlines and point-to-point surface shipments in 2006 as compared to 2005. Point-to-point surface shipments have a significantly higher ground courier expense to revenue ratio than shipments that are transported on AirNet’s aircraft or commercial passenger airlines.

Depreciation

Dollars in ‘000’s

							$ Increase			% Increase			$ Increase			% Increase
							(Decrease)			(Decrease)			(Decrease)			(Decrease)
Depreciation Expense	2006		2005		2004		2005 to 2006			2005 to 2006			2004 to 2005			2004 to 2005
Aircraft	$	826	$	1,343	$	2,951	$	(517	)		(38	)%	$	(1,608	)		(54	)%
Aircraft improvements, engines, inspections		7,649		9,491		13,613		(1,842	)		(19	)%		(4,122	)		(30	)%
Leasehold improvements, computers, furniture, fixtures, and equipment		1,225		1,293		1,062		(68	)		(5	)%		231			22	%
Total Depreciation	$	9,700	$	12,127	$	17,626	$	(2,427	)		(20	)%	$	(5,499	)		(31	)%

Aircraft depreciation decreased in 2006 from 2005 primarily due to the reduction in AirNet’s aircraft values as a result of the impairment charges recorded in 2006 and 2005, as discussed below. Additionally, aircraft engine depreciation, which is based on engine hours operated, decreased because of the decline in flight hours in 2006 compared to 2005. Management expects 2007 depreciation expense to remain significantly below 2006 levels reflecting the effects of the 2006 asset impairment charge and planned decreases in aircraft flight hours.

Insurance, Rent and Landing Fees

Insurance, rent and landing fees decreased in 2006 from 2005 generally due to a decrease in rent expense attributable to a reduction in computer rental and aircraft lease expenses.

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Insurance, rent and landing fees decreased in 2005 from 2004 primarily as a result of the decrease in workers’ compensation insurance expense generally attributable to a reduction in the number of employees used by AirNet as ground couriers.

Selling, General and Administrative

The decrease in selling, general and administrative expense in 2006 from 2005 of approximately $1.6 million primarily reflects the reduction in outside consulting expenses associated with AirNet’s use of an investment banker in 2005 to evaluate various strategic alternatives to enhance shareholder value, the reduced use of computer programming contractors which were used more extensively for software development in 2005, and reduced legal and accounting fees. Additional expense reductions of approximately $0.8 million, primarily related to property taxes, telephone and computer expenses, were offset by approximately $0.8 million of severance expenses incurred under the separation agreement related to Mr. Biggerstaff’s resignation as President, Chief Executive Officer and Chairman of the Board of AirNet in December 2006.

Selling, general and administrative costs increased in 2005 from 2004 primarily due to approximately $1.3 million of incentive compensation expense recorded during 2005 under the 2005 Incentive Compensation Plan as a result of higher pre-tax income, excluding the non-cash impairment charges. No incentive compensation was recorded in 2004. Increases in professional fees in 2005 due to AirNet’s engagement of financial advisors and an investment banker, as described above, also contributed to the increase in selling, general and administrative costs in 2005. Offsetting these increases were decreases in commissions for Express Services as well as a decrease in advertising expense in 2005 as compared to 2004.

Impairment Charges

AirNet recognizes impairment losses on long-lived assets in accordance with Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS No. 144”). AirNet recognizes impairment losses on long-lived assets when events or changes in circumstances indicate, in management’s judgment, that AirNet’s assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying value of those assets. The carrying value of the assets not recoverable is reduced to estimated fair market value if lower than carrying value. In determining the estimated fair market value of the assets, AirNet considers information provided by third party valuation firms retained to assist AirNet in completing its analysis, published market data, recent transactions involving sales of similar assets and, at September 30, 2005, the letter of intent for the sale of AirNet that was announced on October 26, 2005.

2006 Asset Impairment Charge

AirNet’s cargo airline was originally designed, and continues to operate, primarily to meet the needs of Bank Services customers. As a result of accelerating trends in the implementation of electronic payment alternatives and electronic alternatives to the physical movement of cancelled checks, as of September 30, 2006, AirNet evaluated for impairment the long-lived assets used in its airline operations, consisting primarily of aircraft, aircraft parts and its airport hangar and office facility located at Rickenbacker International Airport (the “Rickenbacker Facility”). The undiscounted cash flows estimated to be generated by those assets including disposal values were less than the related carrying values and therefore, pursuant to the requirements of SFAS No. 144, the estimated fair values of these assets were compared to carrying value and the carrying values were reduced by a $24.6 million non-cash impairment charge. As a result of AirNet’s evaluation of the required valuation allowance for deferred tax assets, no tax benefit was recognized related to this impairment charge as described in “Note 8 – Income Taxes” of the Notes to Consolidated Financial Statements included in “ITEM 8 – FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA”.

The determination of undiscounted cash flows involves estimates of future cash flows, revenues, operating expenses and disposal values. The projections of these amounts represent management’s best estimates at the time of the review. Management’s estimates are significantly affected by the continuing uncertainty of the timing and rate of decline in Bank Services revenues that are being impacted by the implementation of electronic alternatives to the physical movement of cancelled checks and AirNet’s potential to grow other lines of cargo business as alternative sources of revenues. AirNet will continue to explore cost saving initiatives and alternative sources of revenue; however, in accordance with the provisions of SFAS No. 144, until such strategies are developed, AirNet has assigned minimal probabilities to those strategies in AirNet’s determination of future undiscounted cash flows. In the absence of additional cost saving initiatives or alternative sources of revenue, it is likely that future determinations of estimated cash flows will be less than the carrying value of AirNet’s long-lived assets. As a result, AirNet will be required to monitor the carrying value of its long-lived assets relative to estimated fair values in future periods.

The 2006 asset impairment charge was based on a range of estimated fair values provided by third party appraisal firms. The range of appraised fair values related to AirNet’s long-lived assets was approximately $49.7 million to $27.7 million reflecting different market factors, holding periods and possible asset disposition scenarios that potentially could be elected by AirNet as it evaluates its strategies in response to the current business environment. Because of the current uncertainties in the business environment, management determined that the low end of the range of fair values was the appropriate estimate of fair value at September 30, 2006 and wrote down the carrying value of AirNet’s long-lived assets to approximately $27.7 million. The determination of the adjusted carrying value is a management estimate based upon the

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third party appraisals and the subjective factors discussed above. It is possible that the future sales of assets, if any, could be greater than or less than current carrying values. Further, if management uses different assumptions or estimates in the future or if conditions exist in future periods that are different than those anticipated, additional impairment charges may be required.

2005 Asset Impairment Charge

AirNet also recorded an impairment charge as of September 30, 2005. On October 26, 2005, AirNet announced that it had entered into a letter of intent for its sale in a going private transaction at $4.55 per share. Since the price per share in the letter of intent was less than AirNet’s then net book value per share, AirNet performed the impairment tests required by SFAS No. 144 for the quarter ended September 30, 2005 and concluded that the long-lived assets used in its Bank Services and Express Services operations were impaired. Accordingly, a non-cash charge of $16.1 million ($10.0 million net of tax) was recorded as of September 30, 2005. The impairment charge was based upon the estimated fair values of the long-lived assets in AirNet’s airline operations derived from published sources, information provided by a third party valuation firm retained to assist AirNet in completing its analysis, and the discount inherent in the price per share set forth in the letter of intent.

2004 Asset Impairment Charge

AirNet’s long-lived assets used in its cargo operations, consisting primarily of aircraft and spare parts, were also determined to be impaired as of September 30, 2004. This determination was made as a result of industry trends in the adoption of electronic payment alternatives and evolving electronic alternatives to the physical movement of cancelled checks at a more rapid pace than previously anticipated by the industry. AirNet determined that its airline capacity would exceed future demand, which created an impairment of the aircraft and related assets. The impairment also reflected the overall decline in the market values of the aircraft in its cargo fleet which had not recovered as in previous economic cycles. AirNet determined that the expected future undiscounted cash flows from its assets used in its cargo operations were less than the carrying value of those assets and were impaired. Accordingly, a non-cash impairment charge of $43.0 million ($31.0 million net of tax) was recorded as of September 30, 2004, using estimated aircraft fair values. The aircraft fair values used for this purpose were based upon published market sources as of September 30, 2004, which were also used under AirNet’s Amended Credit Agreement described in “Note 4 – Notes Payable” of the Notes to Consolidated Financial Statements included in “ITEM 8 – FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA” of this Annual Report on Form 10-K.

Under SFAS No. 142, AirNet evaluates its goodwill for impairment annually, or more frequently if changes in circumstances indicate impairment may have occurred sooner. At September 30, 2004, AirNet determined that as a result of the impairment of its long-lived assets used in its Bank Services and Express Services operations, the remaining goodwill assigned to the cargo operations should be evaluated for potential impairment. AirNet evaluated the fair value of its goodwill related to its Bank Services and Express Services operations based upon a discounted future cash flow analysis. As a result of the impairment test, AirNet determined that its goodwill was impaired and, accordingly, a non-cash impairment charge of $4.0 million was recorded at September 30, 2004.

Interest Expense

Dollars in ‘000’s

										Increase			% Increase			Increase			% Increase
										(Decrease)			(Decrease)			(Decrease)			(Decrease)
	2006			2005			2004			2005 to 2006			2005 to 2006			2004 to 2005		2004 to 2005
Interest expense	$	1,532		$	2,107		$	1,228		$	(575	)		(27	)%	$	879			72	%
Average annual interest rate		7.8	%		6.2	%		5.5	%

The decrease in interest expense related to continuing operations in 2006 from 2005 primarily reflects the net impact of higher interest rates being offset by the reduction in the average debt balance outstanding, including the substantial reduction in September 2006 of the amount outstanding under AirNet’s revolving credit facility as a result of the application of the proceeds from the sale of Jetride.

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Income Taxes

Dollars in ‘000’s

										Increase			% Increase			Increase		% Increase
										(Decrease)			(Decrease)			(Decrease)		(Decrease)
	2006			2005			2004			2005 to 2006			2005 to 2006			2004 to 2005		2004 to 2005
Income (loss) from continuing operations before income taxes	$	(11,667	)	$	(7,114	)	$	(44,698	)	$	(4,552	)		(64	)%	$	37,583		84	%
Provision (benefit) for income taxes		1,654			(2,400	)		(9,566	)		(4,054	)		169	%		7,166		75	%
Effective Income Tax Rate		(14.2	)%		33.7	%		21.4	%

AirNet’s effective tax rates, excluding the effect of discontinued operations, were (14.2%) for 2006, 33.7% for 2005, and 21.4% for 2004. The effective tax rates for 2006, 2005 and 2004 deviate from statutory federal, state and local rates primarily as a result of tax expense from increases in the valuation allowance for deferred tax assets of approximately $6.2 million, $0.6 million and $5.7 million in 2006, 2005 and 2004, respectively.

In connection with the 1996 repurchase and cancellation of the Donald Wright Warrant, AirNet recognized a related tax benefit estimated to be $7.0 million based upon management’s judgment and estimation of the portion of the Donald Wright Warrant which would be deductible for income tax purposes. This tax benefit was recognized as additional paid-in capital on AirNet’s Consolidated Balance Sheet and has had no effect on AirNet’s Consolidated Statement of Operations. During the third quarter of 2003, this matter was partially resolved and in the fourth quarter of 2006, was finalized. AirNet has realized tax deductions related to this transaction in excess of management’s original estimates resulting in additional tax benefits. The additional tax benefits associated with the deductible portion of the Donald Wright Warrant have exceeded the original estimate by $1.3 million in 2003 and $0.6 million in 2006. The additional tax benefits, as was the initial estimated tax benefit associated with the Donald Wright Warrant, have been recorded as an increase to additional paid-in capital.

Accounting principles generally accepted in the United States require AirNet to record a valuation allowance against future deferred tax assets if it is “more likely than not” that AirNet will not be able to utilize such benefits in the future. At December 31, 2006 and 2005, AirNet maintained a valuation allowance of $12.5 million and $6.3 million, respectively. In 2006, the valuation allowance offset deferred tax assets in excess of deferred tax liabilities. In 2005, the valuation allowance offset AirNet’s net operating loss carry forwards and Alternative Minimum Tax credit carry forwards.

On December 31, 2006, AirNet filed for a discretionary income tax method change with the Internal Revenue Service (“IRS”). The discretionary method change requires IRS approval prior to the change being effective. As required by SFAS No. 109, “Accounting for Income Taxes” (“SFAS No. 109”) the effect of the method change will be reported in the period in which IRS approval is obtained; therefore, AirNet has not reflected the anticipated impact of the method change in the December 31, 2006 financial statements. There is no certainty as to what extent or if the IRS will ultimately approve the elected method change as requested. However, if the method change is approved, it could materially change AirNet’s current taxes payable, its deferred tax assets and the need for the associated valuation allowance, and provide a significant refund of estimated taxes previously paid.

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Net Income (Loss) and Earnings (Loss) Per Common Share

Based on the factors noted above, AirNet’s net income (loss) and earnings (loss) per share, together with the related dollar amount and percentage changes are noted below.

Dollars in ‘000’s

										Increase			% Increase			Increase			% Increase
										(Decrease)			(Decrease)			(Decrease)			(Decrease)
	2006			2005			2004			2005 to 2006			2005 to 2006			2004 to 2005			2004 to 2005
Income (loss) from continuing operations before income taxes	$	(11,667	)	$	(7,114	)	$	(44,698	)	$	(4,553	)		(64	)%	$	37,584			84	%
Provision (benefit) for income taxes		1,654			(2,400	)		(9,566	)		(4,054	)		(169	)%		7,166			75	%
Income from discontinued operations		29			468			986			(439	)		(94	)%		(518	)		(53	)%
Net Income (Loss)	$	(13,292	)	$	(4,246	)	$	(34,146	)	$	(9,046	)		(213	)%	$	29,900			88	%
Number of common shares outstanding:
Basic		10,158			10,133			10,080			25			0	%		53			1	%
Diluted		10,158			10,153			10,099			5			0	%		54			1	%
Net income (loss) per common share - basic and diluted:
Continuing operations	$	(1.31	)	$	(0.47	)	$	(3.49	)
Discontinued operations		—			0.05			0.10
Net income (loss) per common share	$	(1.31	)	$	(0.42	)	$	(3.39	)

Liquidity and Capital Resources

Cash flow from operating activities – Continuing Operations

AirNet has historically met its working capital needs with cash flows from operations and borrowings under its bank revolving credit facility. Cash flows provided by operating activities from continuing operations were approximately $15.8 million for 2006, $20.3 million for 2005, and $19.7 million for 2004. The decrease in cash flows from operating activities in 2006 from 2005 was primarily caused by increases in receivables and decreases in operating liabilities at December 31, 2006 compared to December 31, 2005.

Cash flow from operating activities – Discontinued Operations

Cash flows provided by operating activities from discontinued operations were approximately $3.0 million for 2006, $4.3 million for 2005, and $0.8 million in 2004. The decrease in cash in 2006 from 2005 was primarily caused by decreases in working capital components associated with the sale of the Jetride passenger charter business in September 2006 and subsequent winding down of related business operations. The increase in operating cash flow in 2005 from 2004 was primarily attributable to the changes in accounts receivable and other working capital components.

Financing Activities – Continuing Operations

The following table sets forth AirNet’s contractual obligations, along with the cash payments due each period (in millions):

	Payments Due by Period
			Less than		1-3		3-5		More than 5
	Total		1 year		years		years		years
Contractual Obligations:
Long-Term Debt	$	8.0	$	2.0	$	6.0	$	0.0	$	0.0
Operating Leases		2.6		0.7		0.2		0.2		1.5
Other Purchase and Payment Obligations		7.2		7.2		0.0		0.0		0.0
Total Contractual Cash Obligations	$	17.8	$	9.9	$	6.2	$	0.2	$	1.5

AirNet has certain future purchase obligations as to which it has signed contracts. Approximately 84% of AirNet’s Learjet 35 aircraft engines are covered under manufacturer engine maintenance plans, under which AirNet prepays certain repair and

27

overhaul costs based on a rate per engine hour. Based upon projected engine hours in 2007, AirNet estimates payments under the engine maintenance plans to be approximately $6.9 million to $7.6 million.

In 2004, AirNet commenced construction of a new corporate and operational facility (the “Rickenbacker Facility”) on land leased from the Columbus Regional Airport Authority (the “Authority”). Construction of the Rickenbacker Facility was completed in May of 2005 and AirNet completed the relocation of its flight and administrative operations to the Rickenbacker Facility in June of 2005. The land lease with the Authority is for an initial term of 20 years which expires in May 2025. AirNet may request two additional 10 year extensions of the land lease. In the event the Authority refuses to extend the land lease for either 10 year extension period, the land lease requires the Authority to purchase AirNet’s leasehold improvements under the Federal Relocation Act. The purchase price of the improvements cannot be less than 50% of the cost of the leasehold improvements if the Authority refuses to extend the land lease for the first 10 year extension period and cannot be less than 25% of the cost of the leasehold improvements if the Authority refuses to extend the land lease for the second 10 year extension period. Annual rental payments under the land lease are set at approximately $39,000, $62,000 and $83,000, respectively, for the first three years of the lease term. Rental payments after the third year of the lease term are subject to annual increases based upon the consumer price index.

AirNet anticipates that cash flows from operations and AirNet’s bank credit facility will provide adequate sources of liquidity and capital resources to meet AirNet’s expected needs for the operation of its business, including anticipated capital expenditures; however, AirNet may not have sufficient capital to pursue other strategic alternatives. There were no significant capital commitments at December 31, 2006 other than the manufacturer engine maintenance plan payments.

Revolving Credit Facility – 2002 through 2006

In September 2002, AirNet entered into a $35.0 million unsecured revolving credit facility and a five-year $20.0 million unsecured term loan (collectively, the “Credit Agreement”). The revolving credit facility under the Credit Agreement was originally scheduled to expire on September 30, 2005 and the secured term loan was to mature on September 30, 2007.

On May 28, 2004, AirNet and its lenders amended the terms and conditions of the Credit Agreement (the “Amended Credit Agreement”). The Amended Credit Agreement was further amended by the First, Second, Third, Fourth and Fifth Change in Terms Agreements, as described below. The Amended Credit Agreement was secured by a first lien on all of the property of AirNet and its subsidiaries, other than any interest in real estate and certain excluded fixed assets. AirNet also pledged the stock and interests of its subsidiaries to secure the loans under the Amended Credit Agreement, and each of AirNet’s subsidiaries guaranteed AirNet’s obligations under the Amended Credit Agreement. The Amended Credit Agreement also contained certain financial covenants that require AirNet to maintain a minimum consolidated tangible net worth and to not exceed certain fixed charge coverage and leverage ratios specified in the Amended Credit Agreement.

The Amended Credit Agreement initially provided for a secured revolving credit facility of up to $35.0 million and a secured term loan in the aggregate amount of $14.0 million. The amount of revolving loans available under the Amended Credit Agreement was limited to a borrowing base equal to the aggregate of 80% of eligible accounts receivable, plus 50% of eligible aircraft parts, plus 70% of the market value of certain fixed assets, reduced by the aggregate amount of AirNet’s outstanding letters of credit. The Amended Credit Agreement bore interest, at AirNet’s option, at (a) a fixed rate equal to LIBOR plus a margin determined by AirNet’s leverage ratio as defined in the Amended Credit Agreement, or (b) a floating rate based on the greater of (i) the prime rate established by The Huntington National Bank from time to time plus a margin determined by AirNet’s leverage ratio or (ii) the sum of 0.5% plus the federal funds rate in effect from time to time plus a margin determined by AirNet’s leverage ratio.

The Amended Credit Facility was amended in September 2004, March 2005, November 2005, March 2006 and September 2006. The above amendments to the Amended Credit Facility were reflected, respectively, in the “First Change in Terms Agreement”, the “Second Change in Terms Agreement” , the “Third Change in Terms Agreement”, the “Fourth Change in Terms Agreement” and the “Fifth Change in Terms Agreement”.

As a result of the impairment charges recorded by AirNet in September 2004, September 2005 and September 2006, AirNet was not in compliance with certain terms and conditions of the Amended Credit Facility, including the fixed charge coverage ratio, the leverage ratio and the minimum consolidated tangible net worth requirement. The First, Third and Fifth Change in Terms Agreements modified certain financial covenants contained in the Amended Credit Facility in such a manner that, on a going-forward basis, the impairment charges, in and of themselves, would not cause a default of these financial covenants in the future. At the same time that the First, Third and Fifth Change in Terms Agreements were entered into, AirNet and its lenders executed waivers of any defaults or potential defaults under the Amended Credit Agreement which occurred, or may have occurred, as a result of AirNet’s failure to comply with the above financial covenants due to the various impairment charges.

In addition to the amendments made to the Amended Credit Facility to bring the financial covenants into compliance after the impairment charges recorded in 2004, 2005 and 2006, the Amended Credit Facility was amended on several occasions to modify other terms and conditions of the Amended Credit Facility. The Second Change in Terms Agreement amended the Amended Credit Facility to reflect that AirNet had prepaid in full the remaining $11.0 million balance outstanding on its secured term loan. In addition, the Second Change in Terms Agreement reduced the secured revolving credit facility from $35.0 million to $30.0 million. The Second Change in Terms Agreement also extended the term of the Amended Credit Facility from September 30, 2005 to October 15, 2006. The Fourth Change in Terms Agreement further extended the term of the Amended Credit Agreement from October 15, 2006 to October 15, 2007 and modified the calculation of the borrowing base. The Fifth Change in Terms Agreement reduced the amount of the secured revolving credit facility from $25 million to $15 million.

As of December 31, 2006, there was no amount outstanding under the Amended Credit Agreement. As of December 31, 2006, AirNet had $1.0 million in letters of credit outstanding related to insurance programs, which reduced the amount available under the revolving credit facility. As of December 31, 2006, AirNet had $14.0 million available to borrow under its secured revolving credit facility under the Amended Credit Agreement.

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Revolving Credit Facility – Second Amended Credit Agreement — March 29, 2007

On March 29, 2007, AirNet and its lender (The Huntington National Bank) amended and restated the terms and conditions of the Amended and Restated Credit Agreement dated as of May 28, 2004, among The Huntington National Bank and Bank One, N.A., as lenders, and AirNet, as borrower (as amended and restated, the “Amended Credit Agreement”) by entering into a Second Amended and Restated Credit Agreement (the “Second Amended Credit Agreement”). The following description of the Second Amended Credit Agreement is qualified in its entirety by reference to the Second Amended Credit Agreement. The Second Amended Credit Agreement provides for a $15.0 million secured revolving credit facility and expires on October 15, 2008. The Second Amended Credit Agreement is secured by a first priority lien on all of the property of AirNet, other than any interest in real estate and certain excluded fixed assets. The stock and interests of AirNet’s subsidiaries continue to be pledged to secure the loans under the Second Amended Credit Agreement, and each of AirNet’s subsidiaries continues to guarantee AirNet’s obligations under the Second Amended Credit Agreement under a Consent and Agreement of Guarantors.

The amount of revolving loans available under the Second Amended Credit Agreement is limited to a borrowing base equal to the aggregate of 80% of eligible accounts receivable, plus 50% of eligible aircraft parts. The amount available under the Second Amended Credit Agreement is also reduced by any outstanding letters of credit issued under the Second Amended Credit Agreement. The Second Amended Credit Agreement bears interest, at AirNet’s option, at (a) a fixed rate equal to LIBOR plus a margin determined by AirNet’s leverage ratio as defined in the Second Amended Credit Agreement, or (b) a floating rate based on the greater of (i) the prime rate established by The Huntington National Bank from time to time plus a margin determined by AirNet’s leverage ratio or (ii) the sum of 0.5% plus the federal funds rate in effect from time to time plus a margin determined by AirNet’s leverage ratio.

The Second Amended Credit Agreement permits AirNet to maintain and incur other indebtedness in an aggregate amount of up to $10.0 million for the purpose of purchasing or refinancing aircraft and related tangible fixed assets. The Second Amended Credit Agreement contains certain financial covenants that require AirNet to maintain a minimum consolidated tangible net worth and to not exceed certain fixed charge coverage and leverage ratios specified in the Second Amended Credit Agreement. The Second Amended Credit Agreement also contains limitations on operating leases, significant corporate changes including mergers and sales of assets, investments in subsidiaries and acquisitions, liens, capital expenditures, transactions with affiliates, sales of accounts receivable, sale and leaseback transactions and other off-balance sheet liabilities, contingent obligations and hedging transactions.

Other Term Notes

On March 24, 2005, AirNet entered into a three-year term loan totaling $11.0 million with a fixed interest rate of 8.12%. This term loan is secured by seven Cessna Caravans and nine Learjet 35 aircraft from AirNet’s cargo aircraft fleet. The aircraft securing this loan were released from the collateral securing the loans under Amended Credit Agreement in accordance with the Second Change in Terms Agreement. The proceeds from this term loan were used to prepay in full AirNet’s term loan under the Amended Credit Agreement as described above. As of December 31, 2006, $8.0 million was outstanding under this term loan.

Financing Activities – Discontinued Operations

In connection with the closing of the sale of the Jetride passenger charter business on September 26, 2006, Jetride repaid in full six term loans which had been (a) secured by aircraft used in the Jetride passenger charter business, and (b) guaranteed by AirNet. In June 2004, Jetride entered into four of the term loans, each with a seven-year term and a fixed interest rate of approximately 6.7%. In July 2004, Jetride entered into the other two term loans, each with a seven-year term and a fixed interest rate of approximately 6.5%. As of September 26, 2006 and December 31, 2005, there was an aggregate principal amount of approximately $28.2 million and $29.8 million, respectively, outstanding under the six loans. In addition to the outstanding principal amount, Jetride paid approximately $0.3 million in accrued interest and early termination prepayment penalties through the repayment date. Each of the loan documents and corresponding security and guaranty agreements entered into in connection with the six term loans was terminated upon repayment of the underlying term loans at the closing.

Investing Activities – Continuing Operations

Following is a summary of AirNet’s capital expenditures (in millions) for 2004 through 2006 and expected amounts for 2007:

	2007		2006		2005		2004
Continuing Operations:
Aircraft	$	0.0	$	0.0	$	0.0	$	0.0
Aircraft improvements, engines and inspections		4.9-5.7		8.0		10.3		17.5
Rickenbacker Facility, technology and other		0.6-0.8		0.1		5.2		8.0
Total continuing operations		5.5-6.5		8.1		15.5		25.5
Discontinued operations		0.0		1.1		2.2		25.7
Total	$	5.5-6.5	$	9.2	$	17.7	$	51.2

Costs of major overhauls and engine work which are expected to extend the useful life of the related asset are capitalized as incurred and depreciated based on hours flown. The original cost of airframes less a salvage value is depreciated based on

29

the straight-line method over the estimated remaining useful life of the aircraft. Aircraft maintenance costs not meeting AirNet’s capitalization requirements are expensed as incurred. AirNet uses manufacturer engine maintenance plans to provide maintenance for recurring inspections and major overhaul maintenance for most of the engines in its Learjet fleet. Approximately 84% of AirNet’s Learjet 35 aircraft engines are covered under manufacturer engine maintenance plans. Under the manufacturer engine maintenance plans, AirNet pays in advance for certain maintenance, repair and overhaul costs based on an amount per hour for each hour flown. In October 2006, following the write down of a substantial portion of the prepaid assets related to these engine maintenance plans in connection with the 2006 asset impairment charge, AirNet changed its estimate of the portion of these payments that should be capitalized and began expensing approximately 75% of the prepayments, which are included in aircraft maintenance expense. The effect of this change in estimate increased aircraft maintenance expense by approximately $1.2 million in 2006. Management estimates that the amount of expense related to this change will be approximately $5.2 million to $5.7 million in 2007. Management estimates that expensing payments made under manufacturer engine maintenance plans at this rate will maintain engine values at the amounts determined to be appropriate as part of the 2006 asset impairment charge. The portion of the prepayments not expensed is classified as flight equipment and totaled $3.7 million and $11.2 million at December 31, 2006 and 2005, respectively.

Capital expenditures for continuing operations totaled approximately $8.1 million in 2006 compared to $15.5 million in 2005. The 2006 expenditures were primarily for major engine overhauls. The 2005 and 2004 expenditures were primarily for major engine overhauls, the construction of the Rickenbacker Facility, and periodic aircraft inspections.

In January 2002, AirNet entered into operating leases for six Cessna Caravan 208 aircraft. After certain lease extensions entered into in September 2002, five of the leases were scheduled to terminate in 2006 and one in 2007. In January of 2003, AirNet entered into an additional operating lease on a Cessna Caravan 208 aircraft that expires in 2008. In 2006, AirNet extended the term of four of the leases that were scheduled to terminate in 2006, each for an additional one-year term. The remaining lease expired in August 2006 as scheduled. In January 2006, AirNet entered into an additional operating lease on a Cessna Caravan 208 aircraft for a one-year term. In January 2007, AirNet extended this lease for an additional one-year term. As of December 31, 2006, AirNet maintained leases on seven Cessna Caravan 208 aircraft, five of which are scheduled to expire in 2007 and two of which are scheduled to expire in 2008.

In accordance with accounting principles generally accepted in the United States, AirNet does not record operating leases in its Consolidated Balance Sheet; however, the minimum lease payments related to these leases are disclosed in “Note 6 – Lease Obligations” of the Notes to Consolidated Financial Statements included in “ITEM 8 – FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA” of this Annual Report on Form 10-K.

In February 2000, AirNet announced a stock repurchase plan allowing AirNet to purchase up to $3.0 million of its common shares. During 2000, AirNet purchased $2.4 million in common shares funded by cash flows from operations. There has been no repurchase activity under this program since 2000. As such, purchases of approximately $0.6 million of AirNet’s common shares may still be made in the open market or through privately negotiated transactions.

Investing Activities – Discontinued Operations

Net cash was provided by investing activities related to discontinued operations in 2006 as a result of the sale of the Jetride passenger charter business (see “Note 3 – Discontinued Operations” of the Notes to Consolidated Financial Statements included in “ITEM 8 – FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA” of this Annual Report on Form 10-K) in September 2006. The sale proceeds were reduced by cash expenditures in 2006 and 2005, capital expenditures, primarily for aircraft engine overhauls, and, in addition, for the nine-month period ended September 30, 2005, capital expenditures for aircraft improvements. Net cash was used in investing activities in 2005 and 2004 for aircraft engine overhauls, periodic aircraft inspections, and in 2004, the acquisition of passenger aircraft.

Off-Balance Sheet Arrangements

AirNet had no “off-balance sheet arrangements” as of December 31, 2006, as that term is defined by the SEC.

Seasonality and Variability in Quarterly Results

AirNet’s operations historically have been somewhat seasonal relative to holidays observed by financial institutions. When financial institutions are closed on holidays falling on Monday through Thursday, AirNet’s revenue and net income are adversely affected. AirNet’s fiscal quarter ending December 31 is often the most impacted by bank holidays.

Operating results are also affected by the weather. Winter weather often requires additional costs for de-icing, hangar rental and other aircraft services. AirNet generally experiences higher maintenance costs during its fiscal quarter ending March 31.

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Selected Quarterly Data (unaudited)

The following is a summary of the unaudited quarterly results of operations for the quarterly periods ended (in thousands, except per share data):

	Quarter Ended
	March 31			June 30			September 30			December 31
2006
Net revenues	$	42,705		$	44,354		$	42,987		$	42,761
Income (loss) from continuing operations before income taxes		3,017			3,211			(20,741	)		2,846
Income (loss) from discontinued operations, net of tax		(209	)		(87	)		313			12
Net income (loss)	$	1,687		$	1,978		$	(18,736	)	$	1,779
Per common share — basic and diluted:
Income (loss) from continuing operations	$	0.19		$	0.20		$	(1.88	)	$	0.18
Income (loss) from discontinued operations, net of tax		(0.02	)		(0.01	)		0.03			—
Net income (loss) per common share	$	0.17		$	0.19		$	(1.85	)	$	0.18
2005
Net revenues	$	40,565		$	41,390		$	42,848		$	42,156
Income (loss) from continuing operations before income taxes		1,966			2,056			(12,438	)		1,302
Income (loss) from discontinued operations, net of tax		523			562			(158	)		(459	)
Net income (loss)	$	1,517		$	2,054		$	(7,933	)	$	116
Per common share — basic and diluted:
Income (loss) from continuing operations	$	0.10		$	0.15		$	(0.78	)	$	0.06
Income (loss) from discontinued operations, net of tax	$	0.05		$	0.05		$	—		$	(0.05	)
Net income (loss) per common share	$	0.15		$	0.20		$	(0.78	)	$	0.01

The results for the quarter ended September 30, 2006 presented above have been revised from those previously presented in AirNet’s quarterly report on Form 10-Q filed for the quarter ended September 30, 2006. AirNet determined that an error was made in recording the tax benefit associated with the Donald Wright Warrants (See “Note 8 – Income Taxes” of the Notes to Consolidated Financial Statements included in “ITEM 8 – FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA” of this Annual Report on Form 10-K) as a reduction of income tax expense rather than as an increase to additional paid-in capital. Income tax expense and net loss for the quarter ended September 30, 2006 as previously reported have been increased by $619,000 resulting in an increase in net loss from ($18.1) million as previously reported to ($18.7) million. On a basic and diluted per common share basis, the affect of this adjustment increased the net loss from continuing operations and net loss by ($.03 per share) from ($1.82) and ($1.79) as previously reported to ($1.88) and ($1.85) as presented above, respectively. AirNet is not required to and will not amend its previously filed Form 10-Q for the quarter ended September 30, 2006.

Included in the losses from continuing operations before interest and income taxes for the quarters ended September 30, 2006 and 2005 were non-cash asset impairment charges of approximately $24.6 million and $16.1 million, respectively.

Critical Accounting Policies and Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to adopt accounting policies and make significant judgments and estimates to develop amounts reflected and disclosed in the financial statements. In many cases, there are alternative policies or estimation techniques that could be used. AirNet maintains a thorough process to review the application of its accounting policies and to evaluate the appropriateness of the estimates; however, even under optimal circumstances, estimates routinely require adjustment based on changing circumstances and the receipt of new or better information.

The policies and estimates discussed below include the financial statement elements that are either the most judgmental or involve the selection or application of alternative accounting policies, and are material to AirNet’s consolidated financial statements. Management has discussed the development and selection of these critical accounting policies and estimates with the Audit Committee of its Board of Directors and with its independent registered public accounting firm.

Allowance for Uncollectible Accounts Receivable

Historically, AirNet’s credit losses from bad debts have not fluctuated materially because its credit management processes have been effective. AirNet also recognizes billing adjustments to revenue and accounts receivable for certain discounts, money back service guarantees and billing corrections.

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Estimates for credit losses and billing adjustments are regularly updated based on historical experience of bad debts, adjustments processed, current collection and aging trends, and the individual assessment of customers’ credit quality. Once AirNet considers all these factors, a determination is made as to the appropriate amount of the allowance for uncollectible accounts receivable. Allowances for these future adjustments aggregated $0.9 million at December 31, 2006 and $0.7 million at December 31, 2005. AirNet considers the sensitivity and subjectivity of these estimates to be moderate, as changes in economic conditions and pricing arrangements can significantly affect the estimates used to determine the allowances.

Major Aircraft Maintenance

Costs of major overhauls and engine work which are expected to extend the useful life of the related asset are capitalized as incurred and depreciated based on hours flown. The original costs of airframes, less an estimated salvage value, are depreciated based on the straight-line method over the estimated useful life of the aircraft. Aircraft maintenance costs not meeting AirNet’s capitalization requirements are expensed as incurred. AirNet uses manufacturer engine maintenance plans to provide maintenance for recurring inspections and major overhaul maintenance for most of the engines in its Learjet fleet. Approximately 84% of AirNet’s Learjet 35 aircraft engines are covered under manufacturer engine maintenance plans. Under the manufacturer engine maintenance plans, AirNet pays in advance for certain maintenance, repair and overhaul costs based on an amount per hour for each hour flown. In October 2006, following the write down of a substantial portion of the prepaid assets related to these engine maintenance plans in connection with the 2006 asset impairment charge, AirNet changed its estimate of the portion of these payments that should be capitalized and began expensing approximately 75% of the prepayments, which are included in aircraft maintenance expense. The effect of this change in estimate increased aircraft maintenance expense by approximately $1.2 million in 2006. Management estimates that the amount of expense related to this change will be approximately $5.2 million to $5.7 million in 2007. Management estimates that expensing payments made under manufacturer engine maintenance plans at this rate will maintain engine values at the amounts determined to be appropriate as part of the 2006 asset impairment charge. The portion of the prepayments not expensed is classified as flight equipment and totaled $3.7 million and $11.2 million at December 31, 2006 and 2005, respectively.

Property and Equipment

AirNet’s Bank Services and Express Services business are capital intensive. Over 85% of AirNet’s total assets are invested in flight equipment to serve these markets. AirNet capitalizes those costs that meet the definition of capital assets under applicable accounting standards.

The depreciation or amortization of AirNet’s capital assets over their estimated useful lives, and the determination of any salvage values, requires management to make judgments about future events. Because AirNet utilizes many of its capital assets over relatively long periods, management periodically evaluates whether adjustments to estimated lives or salvage values are necessary. The accuracy of these estimates affects the amount of depreciation expense recognized in a period and, ultimately, the gain or loss on the disposal of the asset.

Stock-Based Compensation

At December 31, 2006, AirNet had two stock-based employee and director compensation plans, the Amended and Restated 1996 Incentive Stock Plan and the 2004 Stock Incentive Plan. Through December 31, 2005, AirNet accounted for the plans under the recognition and measurement principles of APB Opinion No. 25, “Accounting for Stock Issued to Employees”, and related interpretations as permitted by Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation”. Effective January 1, 2006, AirNet adopted Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment” (“FAS 123(R)”), that addresses the accounting for share-based payment transactions in which an enterprise receives employee services in exchange for either equity instruments of the enterprise or liabilities that are based on the fair value of the enterprise’s equity instruments or that may be settled by the issuance of such equity instruments. FAS 123(R) eliminates the ability to account for share-based compensation transactions, as AirNet formerly did, using the intrinsic value method as prescribed by APB Opinion No. 25, and generally requires that such transactions be accounted for using a fair-value-based method and recognized as expenses in the consolidated statements of operations.

AirNet adopted FAS 123(R) using the modified prospective transition method which requires the application of the accounting standard as of January 1, 2006. AirNet’s consolidated statement of operations for the year ended December 31, 2006 reflects the impact of adopting FAS 123(R). In accordance with the modified prospective transition method, the consolidated statements of operations for prior periods have not been restated to reflect, and do not include, the impact of FAS 123(R).

Stock-based compensation expense recognized during 2006 is based on the value of the portion of stock-based payment awards that is ultimately expected to vest. Stock-based compensation expense recognized in the consolidated statement of operations for the year ended December 31, 2006 included compensation expense for stock-based payment awards granted prior to, but not yet vested, as of December 31, 2005 based on the grant date fair value estimated in accordance with the pro forma provisions of Statement of Financial Accounting Standards No. 148. Compensation expense for the stock-based payment awards that are granted subsequent to December 31, 2005 are based on the grant date fair value estimated in

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accordance with FAS 123(R). As stock-based compensation expense recognized in the consolidated statements of operations for the year ended December 31, 2006 is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. FAS 123(R) requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. In the pro forma information required under FAS 148 for the periods prior to 2006, AirNet accounted for forfeitures as they occurred. Stock options are further detailed in “Note 1 – Significant Accounting Policies” and “Note 5 – Incentive Stock Plans” of the Notes to Consolidated Financial Statements included in “ITEM 8 – FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA” of this Annual Report on Form 10-K.

Self-Insurance Accruals

AirNet is self-insured up to certain limits for costs associated with workers’ compensation claims and benefits paid under employee health care programs. At December 31, 2006 and 2005, AirNet had total self-insurance accruals reflected in its Consolidated Balance Sheets of approximately $0.5 million and $0.6 million, respectively.

The measurement of these costs requires the consideration of historical loss experience and judgments about the present and expected levels of costs. AirNet accounts for these costs primarily through measurement of claims outstanding and projected payments based on recent claims experience. AirNet believes its recorded obligations for these expenses are consistently measured on an appropriate basis; however, changes in health costs, loss development factors, accident frequency and severity, and other factors can materially affect the estimates for these liabilities.

Incentive Compensation Plans

AirNet maintains an incentive compensation plan with payouts tied to the achievement of company-wide earnings goals and personal/departmental goals. Incentive compensation is calculated as a percent of base pay, depending on participation levels, which vary among management tiers. Costs related to the company-wide earnings portion of the plan are accrued based on actual quarterly results. For the year ended December 31, 2006, AirNet recorded approximately $1.3 million of incentive compensation expense, none of which related to discontinued operations. For the year ended December 31, 2005, AirNet recorded approximately $1.7 million of incentive compensation expense, of which approximately $0.3 million related to discontinued operations.

Income Taxes

AirNet accounts for income taxes under the liability method pursuant to SFAS No. 109. Under the liability method, deferred tax liabilities and assets are determined based on the differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates and laws that will be in effect when the differences are expected to reverse.

Accounting principles generally accepted in the United States require AirNet to record a valuation allowance against future deferred tax assets if it is “more likely than not” that AirNet will not be able to utilize such benefits in the future. At December 31, 2006 and 2005, AirNet maintained a valuation allowance of $12.5 million and $6.3 million, respectively. In 2006, the valuation allowance offset deferred tax assets in excess of deferred tax liabilities. In 2005, the valuation allowance offset AirNet’s net operating loss carry forwards and Alternative Minimum Tax credit carry forwards.

On December 31, 2006, AirNet filed for a discretionary income tax method change with the IRS. The discretionary method change requires IRS approval prior to the change being effective. As required by SFAS No. 109, the effect of the method change will be reported in the period in which IRS approval is obtained; therefore, AirNet has not reflected the anticipated impact of the method change in the December 31, 2006 financial statements. There is no certainty as to what extent or if the IRS will ultimately approve the elected method change as requested. However, if the method change is approved, it could materially change AirNet’s current taxes payable, its deferred tax assets and the need for the associated valuation allowance, and provide a significant refund of estimated taxes previously paid.

Impairment of Assets and Goodwill

AirNet recognizes impairment losses on long-lived assets in accordance with SFAS No. 144. AirNet recognizes impairment losses on long-lived assets when events or changes in circumstances indicate, in management’s judgment, that AirNet’s assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying value of those assets. The carrying value of the assets not recoverable is reduced to estimated fair market value if lower than carrying value. In determining the estimated fair market value of the assets, AirNet considers information provided by third party valuation firms retained to assist AirNet in completing its analysis, published market data, recent transactions involving sales of similar assets and, at September 30, 2005, the letter of intent for the sale of AirNet that was announced on October 26, 2005.

2006 Asset Impairment Charge

AirNet’s cargo airline was originally designed, and continues to operate, primarily to meet the needs of Bank Services customers. As a result of accelerating trends in the implementation of electronic payment alternatives and electronic

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alternatives to the physical movement of cancelled checks, as of September 30, 2006, AirNet evaluated for impairment the long-lived assets used in its airline operations, consisting primarily of aircraft, aircraft parts and its airport hangar and office facility located at the Rickenbacker Facility. The undiscounted cash flows estimated to be generated by those assets including disposal values were less than the related carrying values and therefore, pursuant to the requirements of SFAS No. 144, the estimated fair values of these assets were compared to carrying value and the carrying values were reduced by a $24.6 million non-cash impairment charge. As a result of AirNet’s evaluation of the required valuation allowance for deferred tax assets, no tax benefit was recognized related to this impairment charge as described in “Note 8 – Income Taxes” of the Notes to Consolidated Financial Statements included in “ITEM 8 – FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA” of this Annual Report on Form 10-K.

The determination of undiscounted cash flows involves estimates of future cash flows, revenues, operating expenses and disposal values. The projections of these amounts represent management’s best estimates at the time of the review. Management’s estimates are significantly affected by the continuing uncertainty of the timing and rate of decline in Bank Services revenues that are being impacted by the implementation of electronic alternatives to the physical movement of cancelled checks and AirNet’s potential to grow other lines of cargo business as alternative sources of revenues. AirNet will continue to explore cost saving initiatives and alternative sources of revenue; however, in accordance with the provisions of SFAS No. 144, until such strategies are developed, AirNet has assigned minimal probabilities to those strategies in AirNet’s determination of future undiscounted cash flows. In the absence of additional cost saving initiatives or alternative sources of revenue, it is likely that future determinations of estimated cash flows will be less than the carrying value of AirNet’s long-lived assets. As a result, AirNet will be required to monitor the carrying value of its long-lived assets relative to estimated fair values in future periods.

The 2006 asset impairment charge was based on a range of estimated fair values provided by third party appraisal firms. The range of appraised fair values related to AirNet’s long-lived assets was approximately $49.7 million to $27.7 million reflecting different market factors, holding periods and possible asset disposition scenarios that potentially could be elected by AirNet as it evaluates its strategies in response to the current business environment. Because of the current uncertainties in the business environment, management determined that the low end of the range of fair values was the appropriate estimate of fair value at September 30, 2006 and wrote down the carrying value of AirNet’s long-lived assets to approximately $27.7 million. The determination of the adjusted carrying value is a management estimate based upon the third party appraisals and the subjective factors discussed above. It is possible that the future sales of assets, if any, could be greater than or less than current carrying values. Further, if management uses different assumptions or estimates in the future or if conditions exist in future periods that are different than those anticipated, additional impairment charges may be required.

2005 Asset Impairment Charge

AirNet also recorded an impairment charge as of September 30, 2005. On October 26, 2005, AirNet announced that it had entered into a letter of intent for its sale in a going private transaction at $4.55 per share. Since the price per share in the letter of intent was less than AirNet’s then net book value per share, AirNet performed the impairment tests required by SFAS No. 144 for the quarter ended September 30, 2005 and concluded that the long-lived assets used in its Bank Services and Express Services operations were impaired. Accordingly, a non-cash charge of $16.1 million ($10.0 million net of tax) was recorded as of September 30, 2005. The impairment charge was based upon the estimated fair values of the long-lived assets in AirNet’s airline operations derived from published sources, information provided by a third party valuation firm retained to assist AirNet in completing its analysis, and the discount inherent in the price per share set forth in the letter of intent.

2004 Asset Impairment Charge

AirNet’s long-lived assets used in its cargo operations, consisting primarily of aircraft and spare parts, were also determined to be impaired as of September 30, 2004. This determination was made as a result of industry trends in the adoption of electronic payment alternatives and evolving electronic alternatives to the physical movement of cancelled checks at a more rapid pace than previously anticipated by the industry. AirNet determined that its airline capacity would exceed future demand, which created an impairment of the aircraft and related assets. The impairment also reflected the overall decline in the market values of the aircraft in its cargo fleet which had not recovered as in previous economic cycles. AirNet determined that the expected future undiscounted cash flows from its assets used in its cargo operations were less than the carrying value of those assets and were impaired. Accordingly, a non-cash impairment charge of $43.0 million ($31.0 million net of tax) was recorded as of September 30, 2004, using estimated aircraft fair values. The aircraft fair values used for this purpose were based upon published market sources as of September 30, 2004, which were also used under AirNet’s Amended Credit Agreement described in “Note 4 – Notes Payable” of the Notes to Consolidated Financial Statements included in “ITEM 8 – FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA” of this Annual Report on Form 10-K.

Under SFAS No. 142, AirNet evaluates its goodwill for impairment annually, or more frequently if changes in circumstances indicate impairment may have occurred sooner. At September 30, 2004, AirNet determined that as a result of the impairment of its long-lived assets used in its Bank Services and Express Services operations, the remaining goodwill assigned to the cargo operations should be evaluated for potential impairment. AirNet evaluated the fair value of its goodwill

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related to its Bank Services and Express Services operations based upon a discounted future cash flow analysis. As a result of the impairment test, AirNet determined that its goodwill was impaired and, accordingly, a non-cash impairment charge of $4.0 million was recorded at September 30, 2004.

Recent Accounting Pronouncements

In July 2006, the FASB issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes – an Interpretation of FASB Statement No. 109” (“FIN 48”), which clarifies the accounting for uncertainty in tax positions. FIN 48 requires that AirNet recognize in its financial statements the impact of a tax position based on the technical merits of the position. FIN 48 also requires additional disclosures about unrecognized tax benefits associated with uncertain income tax positions and a reconciliation of the change in the unrecognized benefit. In addition, FIN 48 requires interest to be recognized on the full amount of deferred benefits for uncertain tax positions. FIN 48 is effective for fiscal years beginning after December 15, 2006, with the cumulative effect of the change in accounting principle recorded as an adjustment to opening retained earnings. AirNet continues to evaluate the impact of FIN 48 on AirNet’s consolidated financial statements. As of the date of this Annual Report on Form 10-K, AirNet has not fully completed its assessment upon adoption of this standard; however, AirNet does not expect the impact to be significant, if any.

In September 2006, the SEC issued Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year Misstatements When Quantifying Misstatements in Current Year Financial Statements” (“SAB 108”). SAB 108 provides guidance on how the effects of the carryover or reversal of prior year misstatements should be considered in quantifying a current year misstatement. The guidance is applicable for fiscal years ending after November 15, 2006. AirNet has evaluated the guidance provided in SAB108 and has determined that it will not have a significant impact on the determination or reporting of AirNet’s financial results.

Forward-looking statements

The information included or incorporated by reference in this Annual Report on Form 10-K contains various “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including those identified by the words “believe,” “anticipate,” “estimate,” “expect,” “intend,” “may,” “plan,” “project” and similar expressions. These forward-looking statements reflect management’s expectations and are based upon currently available data; however, actual results are subject to future events and uncertainties, which could cause actual results to differ from those projected in these statements. The following factors, in addition to those included in the disclosure under the heading “Risk Factors” in Item 1A of this Annual Report on Form 10-K, could cause actual results to differ materially from those expressed in forward-looking statements:

• an acceleration in the migration of AirNet’s Bank Services customers to electronic alternatives to the physical movement of cancelled checks;

• potential regulatory changes by the FAA, DOT and TSA, which could increase the regulation of AirNet’s business, or the Federal Reserve, which could change the competitive environment of transporting canceled checks;

• disruptions to the Internet or AirNet’s technology infrastructure, including those impacting AirNet’s computer systems and Web site;

• disruptions to operations due to adverse weather conditions, air traffic control-related constraints or aircraft accidents;

• potential further declines in the value of aircraft in AirNet’s fleet and any related asset impairment charges;

• potential changes in locally and federally mandated security requirements;

• the impact of intense competition on AirNet’s ability to maintain or increase its prices for Express Services (including fuel surcharges in response to rising fuel costs);

• increases in aviation fuel costs not fully offset by AirNet’s fuel surcharge program;

• changes in check processing and shipment patterns of bank customers;

• acts of war and terrorist activities;

• AirNet’s ability to reduce its cost structure to match declining revenues and operating expenses;

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• the impact of prolonged weakness in the United States economy on time-critical shipment volumes;

• the acceptance of AirNet’s time-critical service offerings within targeted Express markets;

• technological advances and increases in the use of electronic funds transfers;

• the availability and cost of financing required for operations;

• significant changes in the volumes of shipments transported on AirNet’s air transportation network, customer demand for AirNet’s various services or the prices it obtains for its services;

• the impact of unusual items resulting from ongoing evaluations of our business strategies;

• any substantial indebtedness that may be incurred by AirNet;

• insufficient capital for future expansion; and

• other economic, competitive and domestic and foreign governmental factors affecting AirNet’s markets, prices and other facets of its operations.

All forward-looking statements are expressly qualified in their entirety by these cautionary statements. AirNet assumes no obligation or duty to update any of the forward-looking statements included or incorporated by reference in this Annual Report on Form 10-K except to the extent required by law.

ITEM 7A — QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Inflation and Interest Rates

AirNet is exposed to certain market risks from transactions that are entered into during the normal course of business. AirNet’s primary market risk exposure relates to interest rate risk. At December 31, 2006, AirNet had no amounts outstanding under its Amended Credit Agreement (described above in the section captioned “Liquidity and Capital Resources – Financing Activities – Continuing Operations” in “ITEM 7 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION” of this Annual Report on Form 10-K). On March 29, 2007, AirNet and its lender (The Huntington National Bank) amended the terms and conditions of the Amended Credit Agreement by entering into the Second Amended Credit Agreement. The Second Amended Credit Agreement bears interest, at AirNet’s option, at (a) a fixed rate equal to LIBOR plus a margin determined by AirNet’s leverage ratio as defined in the Second Amended Credit Agreement, or (b) a floating rate based on the greater of (i) the prime rate established by The Huntington National Bank from time to time plus a margin determined by AirNet’s leverage ratio as defined in the Amended Credit Agreement and (ii) the sum of 0.5% plus the federal funds rate in effect from time to time plus a margin determined by AirNet’s leverage ration.

Following the effectiveness of the Amended Credit Agreement dated May 28, 2004, AirNet paid off three secured term loans which had been secured by aircraft. One of those loans had an interest rate swap agreement associated with it. This interest rate swap agreement with a notional amount of $3.0 million and a fixed rate of 4.25% plus a margin based on AirNet’s funded debt ratio was terminated in August 2005.

Fuel Surcharge

AirNet generally assesses its Bank Services customers a fuel surcharge, which is generally based on the Oil Price Index Summary – Columbus, Ohio (OPIS) index. AirNet also assesses most of its Express Services customers a fuel surcharge based on the OPIS index, which is adjusted monthly based on changes in the OPIS index. As index rates fluctuate above a set threshold, surcharge rates will increase or decrease accordingly. The fuel surcharge rate is applied to the revenue amount billed to Bank Services and Express Services customers. AirNet assesses certain Express customers fuel surcharges based on negotiated contractual rates.

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ITEM 8 — FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Report of Independent Registered Public Accounting Firm

Shareholders and Board of Directors
AirNet Systems, Inc.

We have audited the accompanying consolidated balance sheets of AirNet Systems, Inc. (the “Company”) as of December 31, 2006 and 2005, and the related consolidated statements of operations, cash flows and shareholders’ equity for each of the three years in the period ended December 31, 2006. Our audits also included the financial statement schedule listed in the Index at Item 15 (a) 2 of the Annual Report of AirNet Systems, Inc. on Form 10-K for the fiscal year ended December 31, 2006. These financial statements and schedule are the responsibility of the management of the Company. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company at December 31, 2006 and 2005, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2006, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

Columbus, Ohio
March 5, 2007
except for Note 4, as to which the date is
March 29, 2007

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AIRNET SYSTEMS, INC.

CONSOLIDATED BALANCE SHEETS

	December 31,
In thousands, except par value data	2006			2005
ASSETS
Current assets:
Cash and cash equivalents	$	2,244		$	1,590
Accounts receivable, less allowances		22,345			21,103
Taxes receivable		—			1,786
Deposits and prepaids		2,463			2,338
Assets related to discontinued operations		1,465			42,231
Assets held for sale		280			328
Total current assets		28,797			69,376
Net property and equipment		27,690			53,763
Deposits and other assets		60			154
Total assets	$	56,547		$	123,293
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	8,876		$	10,037
Salaries and related liabilities		4,716			4,719
Current portion of notes payable		1,944			1,781
Taxes payable		935			—
Deferred income taxes		—			124
Notes payable related to discontinued operations		—			29,780
Other liabilities related to discontinued operations		50			704
Total current liabilities		16,521			47,145
Notes payable, less current portion		6,011			24,458
Deferred income taxes		—			5,311
Shareholders’ equity:
Preferred shares, $.01 par value; 10,000 shares authorized; no shares issued and outstanding		—			—
Common shares, $.01 par value; 40,000 shares authorized; 12,763 issued at December 31, 2006 and December 31, 2005, respectively		128			128
Additional paid-in-capital		76,906			76,318
Retained deficit		(19,746	)		(6,454	)
Accumulated other comprehensive loss		(13	)		(13	)
Treasury shares, 2,598 and 2,614 common shares held at cost at December 31, 2006 and December 31, 2005, respectively		(23,260	)		(23,600	)
Total shareholders’ equity		34,015			46,379
Total liabilities and shareholders’ equity	$	56,547		$	123,293

See notes to consolidated financial statements

38

AIRNET SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

	Year Ended December 31,
In thousands, except per share data	2006			2005			2004
NET REVENUES, NET OF EXCISE TAX
Air Transportation, net of excise tax of $3,729, $4,054, $3,997 for the years ended December 31, 2006, 2005, 2004, respectively:
Bank Services	$	112,034		$	113,748		$	106,117
Express Services		59,187			52,346			49,096
Aviation Services		1,586			865			1,243
Total net revenues		172,807			166,959			156,456
COSTS AND EXPENSES
Aircraft fuel		27,909			27,291			22,889
Aircraft maintenance		17,998			16,901			12,969
Operating wages and benefits		19,071			19,745			21,570
Contracted air costs		16,550			14,415			13,670
Ground courier		35,248			31,557			30,285
Depreciation		9,700			12,127			17,626
Insurance, rent and landing fees		8,639			8,973			9,207
Travel, training and other		5,468			5,550			6,384
Selling, general and administrative		17,939			19,493			18,283
Net (gain) loss on disposition of assets		(140	)		(159	)		34
Impairment of assets		24,560			16,073			47,009
Total costs and expenses		182,942			171,966			199,926
Income (loss) from continuing operations before interest and income taxes		(10,135	)		(5,007	)		(43,470	)
Interest expense		1,532			2,107			1,228
Income (loss) from continuing operations before income taxes		(11,667	)		(7,114	)		(44,698	)
Provision (Benefit) for income taxes		1,654			(2,400	)		(9,566	)
Net income (loss) from continuing operations		(13,321	)		(4,714	)		(35,132	)
Income from discontinued operations (including 2006 gain on sale of $610, net of tax)		29			468			986
Net income (loss)	$	(13,292	)	$	(4,246	)	$	(34,146	)
Income (loss) per common share — basic and diluted:
Continuing operations	$	(1.31	)	$	(0.47	)	$	(3.49	)
Discontinued operations		0.00			0.05			0.10
Net income (loss) per common share — basic and diluted	$	(1.31	)	$	(0.42	)	$	(3.39	)

See notes to consolidated financial statements

39

AIRNET SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended December 31,
In thousands	2006			2005			2004
Operating activities:
Net loss from continuing operations	$	(13,321	)	$	(4,714	)	$	(35,132	)
Adjustments to reconcile net loss from continuing operations to net cash provided by operating activities:
Depreciation		9,700			12,127			17,626
Impairment of assets		24,560			16,073			47,009
Deferred income taxes		(5,311	)		(1,957	)		(14,826	)
Stock-based compensation expense		246			—
Other, net		(140	)		(71	)		557
Cash provided by (used in) operating assets and liabilities:
Accounts receivable		(1,242	)		(455	)		(3,907	)
Taxes receivable or payable		2,721			(652	)		5,702
Deposits and prepaids		(125	)		647			367
Accounts payable and accrued expenses		(1,161	)		(1,311	)		2,646
Salaries and related liabilities		(3	)		369			(503	)
Other, net		(124	)		208			120
Net cash provided by continuing operations		15,800			20,264			19,659
Net cash provided by discontinued operations		3,038			4,261			774
Net cash provided by operating activities		18,838			24,525			20,433
Investing activities:
Purchases of property and equipment — net		(8,060	)		(15,494	)		(25,460	)
Proceeds from sales of property and equipment — net		155			260			6,961
Net cash used in continuing operations		(7,905	)		(15,234	)		(18,499	)
Net cash provided by (used in) discontinued operations		37,103			(2,221	)		(25,754	)
Net cash provided by (used in) investing activities		29,198			(17,455	)		(44,253	)
Financing activities:
Proceeds from incentive stock plan programs		340			134			153
Net borrowings (repayments) of revolving credit facilities		(16,500	)		(3,000	)		700
Borrowings under term loans		—			11,000			835
Repayments of term loans		(1,784	)		(13,011	)		(8,730	)
Other — net		342			198			158
Net cash provided by (used in) continuing operations		(17,602	)		(4,679	)		(6,884	)
Net cash provided by (used in) discontinued operations		(29,780	)		(1,887	)		31,665
Net cash provided by (used in) financing activities		(47,382	)		(6,566	)		24,781
Net increase in cash		654			504			961
Cash and cash equivalents at beginning of period		1,590			1,086			125
Cash and cash equivalents at end of period	$	2,244		$	1,590		$	1,086

See notes to consolidated financial statements

40

AIRNET SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

											Accumulated
	Common Shares				Additional						Other
	Number				Paid-in			Retained			Comprehensive			Treasury
In thousands	of Shares		Amount		Capital			Earnings			Loss			Shares			Total
Balance December 31, 2003		12,763	$	128	$	77,759		$	31,938			($35	)	$	(25,510	)	$	84,280
Net loss				—		—			(34,146	)		—			—			(34,146	)
Gain on derivative instruments, net of $19 tax expense		—		—		—			—			22			—			22
Comprehensive loss																		(34,124	)
Issuance of treasury shares - Associate Stock Purchase Program		—		—		(411	)		—			—			566			155
Stock option exercises		—		—		(513	)		—			—			668			155
Balance December 31, 2004		12,763	$	128	$	76,835			($2,208	)		($13	)	$	(24,276	)	$	50,466
Net loss		—		—		—			(4,246	)					—			(4,246	)
Issuance of treasury shares - Associate Stock Purchase Program		—		—		(361	)		—			—			474			113
Stock option exercises		—		—		(156	)		—			—			202			46
Balance December 31, 2005		12,763	$	128	$	76,318			($6,454	)		($13	)	$	(23,600	)	$	46,379
Net loss				—		—			(13,292	)		—			—			(13,292	)
Issuance of treasury shares - Associate Stock Purchase Program		—		—		(277	)		—			—			340			63
Stock option vesting		—		—		246			—			—						246
Tax benefit from Wright warrants						619												619
Balance December 31, 2006		12,763	$	128	$	76,906			($19,746	)		($13	)	$	(23,260	)	$	34,015

See notes to consolidated financial statements

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Significant Accounting Policies

AirNet Systems, Inc. and its subsidiaries (collectively, “AirNet”) operate a national air transportation network which provides delivery service for time-critical shipments for customers in the U.S. banking industry and other industries requiring the express delivery of packages. AirNet also offers retail aviation fuel sales and aircraft maintenance and related ground services for customers at its Columbus, Ohio facility.

AirNet also provided private passenger charter services through its wholly-owned subsidiary, Jetride, Inc. (“Jetride”). The Jetride passenger charter business was sold on September 26, 2006 as described in Note 3 below.

Basis of Presentation

The accompanying consolidated financial statements include the accounts of AirNet Systems, Inc. and its subsidiaries. All significant intercompany accounts and transactions have been eliminated.

Preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Certain 2005 and 2004 balances have been reclassified to conform with the 2006 presentation.

Revenue Recognition

Revenue on Express Services and Bank Services is recognized when the packages are delivered to their destination. Revenue on fixed based operations within Aviation Services is recognized when the maintenance services are complete or fuel is delivered.

Cash and Cash Equivalents

Cash and cash equivalents consist of highly liquid investments which are unrestricted as to withdrawal or use, and which have an original maturity of three months or less. Cash equivalents are stated at cost, which approximates market value.

Accounts Receivable

AirNet performs periodic credit evaluations of its customers’ financial condition and generally does not require collateral. AirNet establishes an allowance for doubtful accounts based upon factors surrounding the credit risks of specific customers, historical trends and other information.

Property and Equipment

Acquisitions of property and equipment are stated at cost. Costs of major overhauls and engine work which are expected to extend the useful life of the related asset are capitalized as incurred and depreciated based on hours flown. The original costs of airframes, other flight equipment and other property and equipment (primarily furniture and equipment, leasehold improvements, computer related hardware and software and vehicles) are depreciated based on the straight-line method over the estimated useful lives of the assets as summarized below. Aircraft maintenance costs not meeting AirNet’s capitalization requirements are expensed as incurred.

Airframes	15 years
Leasehold improvements	20 years
Other flight equipment	2 — 5 years
Other property and equipment	3 — 10 years

AirNet evaluates the remaining salvage values and depreciable lives of its property and equipment as conditions dictate.

AirNet uses manufacturer engine maintenance plans to provide maintenance for recurring inspections and major overhaul maintenance for most of the engines in its Learjet fleet. Approximately 84% of AirNet’s Learjet 35 aircraft engines are covered under manufacturer engine maintenance plans. Under the manufacturer engine maintenance plans, AirNet pays in advance for certain maintenance, repair and overhaul costs based on an amount per hour for each hour flown. In October 2006, following the write down of a substantial portion of the prepaid assets related to these engine maintenance plans in connection with the 2006 asset impairment charge, AirNet changed its estimate of the portion of these payments that should be capitalized and began expensing approximately 75% of the prepayments, which are included in aircraft maintenance expense. The effect of this change in estimate increased aircraft maintenance expense by approximately $1.2 million in

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2006. Management estimates that the amount of expense related to this change will be approximately $5.2 million to $5.7 million in 2007. Management estimates that expensing payments made under manufacturer engine maintenance plans at this rate will maintain engine values at the amounts determined to be appropriate as part of the 2006 asset impairment charge. The portion of the prepayments not expensed is classified as flight equipment and totaled $3.7 million and $11.2 million at December 31, 2006 and 2005, respectively. Amortization on these prepaid balances does not begin until major engine overhaul services have been performed, at which time the prepaid balances are reclassified into depreciable asset categories and depreciated based on hours flown.

Property and equipment consisted of the following at December 31:

	2006		2005
Flight equipment	$	15,507,000	$	35,316,000
Other property and equipment		16,990,000		32,006,000
		32,497,000		67,322,000
Less accumulated depreciation		4,807,000		13,559,000
Net property and equipment	$	27,690,000	$	53,763,000

AirNet recognizes impairment losses on long-lived assets in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS No. 144”). AirNet recognizes impairment losses on long-lived assets when events or changes in circumstances indicate, in management’s judgment, that AirNet’s assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying value of those assets. The carrying value of the assets not recoverable is reduced to estimated fair market value if lower than carrying value. In determining the estimated fair market value of the assets, AirNet considers information provided by third party valuation firms retained to assist AirNet in completing its analysis, published market data, recent transactions involving sales of similar assets and, at September 30, 2005, the letter of intent for the sale of AirNet that was announced on October 26, 2005.

Self-Insurance Accruals

AirNet is self-insured up to certain limits for costs associated with workers’ compensation claims and benefits paid under employee health care programs. The measurement of these costs requires the consideration of historical loss experience and judgments about the present and expected levels of costs. AirNet accounts for these costs primarily through measurement of claims outstanding and projected payments based on recent claims experience.

Incentive Compensation Plans

AirNet maintains an incentive compensation plan with payouts tied to the achievement of company-wide earnings goals and personal/departmental goals. Incentive compensation is calculated as a percent of base pay, depending on participation levels, which vary among management tiers. AirNet accrues for costs related to the personal/departmental goals portion of the plan based on estimated achievement rates of set goals applied to individuals’ base pay rates.

Income Taxes

AirNet accounts for income taxes under the liability method pursuant to SFAS No. 109, “Accounting for Income Taxes.” Under the liability method, deferred tax liabilities and assets are determined based on the differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates and laws that will be in effect when the differences are expected to reverse.

Accounting principles generally accepted in the United States require AirNet to record a valuation allowance against future deferred tax assets if it is “more likely than not” that AirNet will not be able to utilize such benefits in the future. At December 31, 2006 and 2005, AirNet maintained a valuation allowance of $12.5 million and $6.3 million, respectively. In 2006, the valuation allowance offset deferred tax assets in excess of deferred tax liabilities. In 2005, the valuation allowance offset AirNet’s net operating loss carry forwards and Alternative Minimum Tax credit carry forwards.

Goodwill

SFAS No. 142, “Goodwill and Other Intangible Assets” requires that goodwill and indefinite-lived intangible assets no longer be amortized, but instead be evaluated for impairment on a “reporting unit” basis annually, or more frequently if changes in circumstances indicate impairment may have occurred sooner. A reporting unit is the operating segment unless, for businesses within that operating segment, discrete financial information is prepared and regularly reviewed by management, in which case such a component business is the reporting unit.

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The impairment test is conducted by comparing the fair value of the reporting unit, primarily determined by computing the future discounted cash flows expected to be generated by the reporting unit, with its carrying value and if the carrying value exceeds the fair value, goodwill may potentially be impaired. If there is potential impairment, the fair value of the reporting unit is allocated to its assets and liabilities in a manner similar to a purchase price allocation in order to determine the implied fair value of the reporting unit goodwill. This implied fair value is then compared with the carrying amount of the reporting unit goodwill, and if the implied fair value is less, an impairment loss is recognized.

Financial Instruments

The fair value of AirNet’s financial instruments approximated their carrying value at December 31, 2006 and 2005.

Derivatives

AirNet has been party to various interest rate swap agreements with banks as a hedge against the interest rate risk associated with borrowing at variable rates. These swap agreements are accounted for as cash flow hedges. The objective of the hedge is to eliminate the variability of cash flows in the interest rate payments on the variable rate debt.

In February 2002, AirNet entered into a five-year interest rate swap agreement with a bank relative to a $3.0 million term loan. Following the effectiveness of the Amended Credit Agreement dated May 28, 2004, and as discussed in Note 4 below, AirNet paid off three secured term loans which had been secured by aircraft. This interest rate swap agreement with a notional amount of $3.0 million and a fixed rate of 4.25% plus a margin based on AirNet’s funded debt ratio was terminated in August 2005.

AirNet accounts for its swap agreements under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities”, and its amendments, SFAS Nos. 137 and 138. These statements require AirNet to recognize all derivatives on the balance sheet at fair value. Derivatives that are not hedges are adjusted to fair value through income. If the derivative is a hedge, depending on the nature of the hedge, changes in the fair value of the derivative are either offset against the change in fair value of assets, liabilities, or firm commitments through earnings or recognized in other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of a derivative’s change in fair value is immediately recognized in earnings. In 2004, AirNet recognized comprehensive income of approximately $22,000, net of tax, related to the swaps. The ineffective portion of the change in fair value is immaterial for all years presented. There were no interest rate swap agreements in place at December 31, 2006 and 2005.

Stock-Based Compensation

At December 31, 2006, AirNet had two stock-based employee and director compensation plans, the Amended and Restated 1996 Incentive Stock Plan and the 2004 Stock Incentive Plan. Through December 31, 2005, AirNet accounted for the plans under the recognition and measurement principles of APB Opinion No. 25, “Accounting for Stock Issued to Employees”, and related interpretations as permitted by SFAS No. 123, “Accounting for Stock-Based Compensation”. Effective January 1, 2006, AirNet adopted SFAS No. 123 (revised 2004), “Share-Based Payment” (“FAS 123(R)”), that addresses the accounting for share-based payment transactions in which an enterprise receives employee services in exchange for either equity instruments of the enterprise or liabilities that are based on the fair value of the enterprise’s equity instruments or that may be settled by the issuance of such equity instruments. FAS 123(R) eliminates the ability to account for share-based compensation transactions, as AirNet formerly did, using the intrinsic value method as prescribed by APB Opinion No. 25, and generally requires that such transactions be accounted for using a fair-value-based method and recognized as expenses in the consolidated statements of operations.

AirNet adopted FAS 123(R) using the modified prospective transition method which requires the application of the accounting standard as of January 1, 2006. AirNet’s consolidated statement of operations for the year ended December 31, 2006 reflects the impact of adopting FAS 123(R). In accordance with the modified prospective transition method, the consolidated statements of operations for prior periods have not been restated to reflect, and do not include, the impact of FAS 123(R).

Stock-based compensation expense recognized during 2006 is based on the value of the portion of stock-based payment awards that is ultimately expected to vest. Stock-based compensation expense recognized in the consolidated statement of operations for the year ended December 31, 2006 included compensation expense for stock-based payment awards granted prior to, but not yet vested, as of December 31, 2005 based on the grant date fair value estimated in accordance with the pro forma provisions of SFAS No. 148. Compensation expense for the stock-based payment awards that are granted subsequent to December 31, 2005 will be based on the grant date fair value estimated in accordance with FAS 123(R). As stock-based compensation expense recognized in the consolidated statement of operations for the year ended December 31, 2006 is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. FAS 123(R) requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. In the pro forma information required under SFAS No. 148 for the periods prior to 2006, AirNet accounted for forfeitures as they occurred.

44

Impact of the Adoption of FAS 123(R)

Currently, AirNet uses the Black-Scholes option pricing model to estimate the value of stock options granted to employees and directors for purposes of computing the stock-based compensation expense and disclosures required by FAS 123(R). During 2006, AirNet recognized stock-based compensation expense of approximately $246,000 (approximately $153,000 net of tax) related to the vesting of outstanding stock options according to the provisions of FAS 123(R), using the modified prospective transition method. Basic and diluted net income (loss) per share for 2006 did not change as a result of the adoption of FAS 123(R).

The following table illustrates the effect on operating results and per share information had AirNet accounted for share-based compensation expense in accordance with FAS 123(R) for the periods indicated (in thousands, except per share data):

	2005			2004
Income (loss) from continuing operations	$	(4,715	)	$	(35,132	)
Income (loss) from discontinued operations, net of tax		468			986
Net income (loss), as reported	$	(4,247	)	$	(34,146	)
Deduct: Total stock-based employee and director compensation expense determined under fair value method for all awards, net of related tax effects		(118	)		(185	)
Pro forma net income (loss)	$	(4,365	)	$	(34,331	)
Net income (loss) per common share – basic and diluted:
Income (loss) per common share from continuing operations	$	(0.48	)	$	(3.50	)
Income (loss) per common share from discontinued operations, net of tax	$	0.05		$	0.10
Net income (loss) per common share	$	(0.43	)	$	(3.40	)

Recent Accounting Pronouncements

In July 2006, the FASB issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes – an Interpretation of FASB Statement No. 109” (“FIN 48”), which clarifies the accounting for uncertainty in tax positions. FIN 48 requires that AirNet recognize in its financial statements the impact of a tax position based on the technical merits of the position. FIN 48 also requires additional disclosures about unrecognized tax benefits associated with uncertain income tax positions and a reconciliation of the change in the unrecognized benefit. In addition, FIN 48 requires interest to be recognized on the full amount of deferred benefits for uncertain tax positions. FIN 48 is effective for fiscal years beginning after December 15, 2006, with the cumulative effect of the change in accounting principle recorded as an adjustment to opening retained earnings. AirNet continues to evaluate the impact of FIN 48 on AirNet’s consolidated financial statements. As of the date of this Annual Report on Form 10-K, AirNet has not fully competed its assessment upon adoption of this standard; however, AirNet does not expect the impact to be significant, if any.

In September 2006, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year Misstatements When Quantifying Misstatements in Current Year Financial Statements” (“SAB 108”). SAB 108 provides guidance on how the effects of the carryover or reversal of prior year misstatements should be considered in quantifying a current year misstatement. The guidance is applicable for fiscal years ending after November 15, 2006. AirNet has evaluated the guidance provided in SAB 108 and has determined that it will not have a significant impact on the determination or reporting of AirNet’s financial results.

Supplemental Cash Flow Data

Cash paid for interest was $1,636,000, $1,913,000, and $1,287,000 for the years ended December 31, 2006, 2005, and 2004, respectively. During the year ended December 31, 2005, AirNet capitalized approximately $300,000 in interest related to the construction of its new Rickenbacker office and hangar facility. AirNet paid $5,575,000, $265,000, and $208,000 and received $1,821,000, $39,000, and $62,000 for the years ended December 31, 2006, 2005, and 2004, respectively, related to income taxes.

2. Impairment of Property and Equipment and Goodwill

AirNet recognizes impairment losses on long-lived assets in accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS No. 144”). AirNet recognizes impairment losses on long-lived assets when events

45

or changes in circumstances indicate, in management’s judgment, that AirNet’s assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying value of those assets. The carrying value of the assets not recoverable is reduced to estimated fair market value if lower than carrying value. In determining the estimated fair market value of the assets, AirNet considers information provided by third party valuation firms retained to assist AirNet in completing its analysis, published market data, recent transactions involving sales of similar assets and, at September 30, 2005, the letter of intent for the sale of AirNet that was announced on October 26, 2005.

2006 Asset Impairment Charge

AirNet’s cargo airline was originally designed, and continues to operate, primarily to meet the needs of Bank Services customers. As a result of accelerating trends in the implementation of electronic payment alternatives and electronic alternatives to the physical movement of cancelled checks, as of September 30, 2006, AirNet evaluated for impairment the long-lived assets used in its airline operations, consisting primarily of aircraft, aircraft parts and its airport hangar and office facility located at Rickenbacker International Airport (the “Rickenbacker Facility”). The undiscounted cash flows estimated to be generated by those assets including disposal values were less than the related carrying values and therefore, pursuant to the requirements of SFAS No. 144, the estimated fair values of these assets were compared to carrying value and the carrying values were reduced by a $24.6 million non-cash impairment charge. As a result of AirNet’s evaluation of the required valuation allowance for deferred tax assets, no tax benefit was recognized related to this impairment charge as described in Note 8 below.

The determination of undiscounted cash flows involves estimates of future cash flows, revenues, operating expenses and disposal values. The projections of these amounts represent management’s best estimates at the time of the review. Management’s estimates are significantly affected by the continuing uncertainty of the timing and rate of decline in Bank Services revenues that are being impacted by the implementation of electronic alternatives to the physical movement of cancelled checks and AirNet’s potential to grow other lines of cargo business as alternative sources of revenues. AirNet will continue to explore cost saving initiatives and alternative sources of revenue; however, in accordance with the provisions of SFAS No. 144, until such strategies are developed, AirNet has assigned minimal probabilities to those strategies in AirNet’s determination of future undiscounted cash flows. In the absence of additional cost saving initiatives or alternative sources of revenue, it is likely that future determinations of estimated cash flows will be less than the carrying value of AirNet’s long-lived assets. As a result, AirNet will be required to monitor the carrying value of its long-lived assets relative to estimated fair values in future periods.

The 2006 asset impairment charge was based on a range of estimated fair values provided by third party appraisal firms. The range of appraised fair values related to AirNet’s long-lived assets was approximately $49.7 million to $27.7 million reflecting different market factors, holding periods and possible asset disposition scenarios that potentially could be elected by AirNet as it evaluates its strategies in response to the current business environment. Because of the current uncertainties in the business environment, management determined that the low end of the range of fair values was the appropriate estimate of fair value at September 30, 2006 and wrote down the carrying value of AirNet’s long-lived assets to approximately $27.7 million. The determination of the adjusted carrying value is a management estimate based upon the third party appraisals and the subjective factors discussed above. It is possible that the future sales of assets, if any, could be greater than or less than current carrying values. Further, if management uses different assumptions or estimates in the future or if conditions exist in future periods that are different than those anticipated, additional impairment charges may be required.

2005 Asset Impairment Charge

AirNet also recorded an impairment charge as of September 30, 2005. On October 26, 2005, AirNet announced that it had entered into a letter of intent for its sale in a going private transaction at $4.55 per share. Since the price per share in the letter of intent was less than AirNet’s then net book value per share, AirNet performed the impairment tests required by SFAS No. 144 for the quarter ended September 30, 2005 and concluded that its long-lived assets used in its Bank Services and Express Services operations were impaired. Accordingly, a non-cash charge of $16.1 million ($10.0 million net of tax) was recorded as of September 30, 2005. The impairment charge was based upon the estimated fair values of the long-lived assets in AirNet’s airline operations derived from published sources, information provided by a third party valuation firm retained to assist AirNet in completing its analysis, and the discount inherent in the price per share set forth in the letter of intent.

2004 Asset Impairment Charge

AirNet’s long-lived assets used in its cargo operations, consisting primarily of aircraft and spare parts, were also determined to be impaired as of September 30, 2004. This determination was made as a result of industry trends in the adoption of electronic payment alternatives and evolving electronic alternatives to the physical movement of cancelled checks at a more rapid pace than previously anticipated by the industry. AirNet determined that its airline capacity would exceed future demand, which created an impairment of the aircraft and related assets. The impairment also reflected the overall decline in the market values of the aircraft in its cargo fleet which had not recovered as in previous economic cycles. AirNet determined that the expected future undiscounted cash flows from its assets used in its cargo operations were less than the

46

carrying value of those assets and were impaired. Accordingly, a non-cash impairment charge of $43.0 million ($31.0 million net of tax) was recorded as of September 30, 2004, using estimated aircraft fair values. The aircraft fair values used for this purpose were based upon published market sources as of September 30, 2004, which were also used under AirNet’s Amended Credit Agreement described in Note 4 below.

Under SFAS No. 142, AirNet evaluates its goodwill for impairment annually, or more frequently if changes in circumstances indicate impairment may have occurred sooner. At September 30, 2004, AirNet determined that as a result of the impairment of its long-lived assets used in its Bank Services and Express Services operations, the remaining goodwill assigned to the cargo operations should be evaluated for potential impairment. AirNet evaluated the fair value of its goodwill related to its Bank Services and Express Services operations based upon a discounted future cash flow analysis. As a result of the impairment test, AirNet determined that its goodwill was impaired and, accordingly, a non-cash impairment charge of $4.0 million was recorded at September 30, 2004. There was no goodwill recorded at December 31, 2006 and 2005.

3. Discontinued Operations

On July 26, 2006, AirNet, Jetride, and Pinnacle Air, LLC (“Pinnacle”) entered into a purchase agreement regarding the sale of Jetride’s passenger charter business to Pinnacle (the “Purchase Agreement”). The sale was completed on September 26, 2006. The purchase price was $41.0 million in cash, of which $40.0 million was consideration for the sale of nine company-owned aircraft and related engine maintenance programs and $1.0 million was consideration for the sale of all of the outstanding capital stock of a newly-created subsidiary of Jetride, also called Jetride, Inc. (“New Jetride”). Upon completion of the sale transaction, Jetride amended its articles of incorporation to change its name to 7250 STARCHECK, INC. Of the total consideration, $40.0 million was paid at closing and $1.0 million was paid into escrow to cover indemnification claims which may be made by Pinnacle for up to eighteen months after the closing. To the extent the escrow amount is not used to satisfy indemnification claims, the escrow amount is to be released to AirNet in two installments approximately six and twelve months after the closing. In March 2007, $500,000 of the escrowed amount was released to AirNet. AirNet retained the net working capital of the Jetride passenger charter business, which was approximately $2.2 million as of the closing date. In connection with the closing of the sale transaction, Jetride repaid in full six term loans which had been secured by aircraft used in Jetride’s passenger charter business. The aggregate principal amount of the loans repaid was approximately $28.2 million plus accrued interest and early termination prepayment penalties of approximately $0.3 million through the repayment date. Following repayment of Jetride’s loans and expenses related to the transaction, AirNet used the remaining sale proceeds to further reduce debt outstanding under AirNet’s secured revolving credit facility. AirNet’s lenders under the secured revolving credit facility had consented to the sale of the Jetride passenger charter business and the various transactions necessary to complete the sale.

In accordance with SFAS No. 144, AirNet has classified the assets and liabilities of Passenger Charter Services as assets and liabilities related to discontinued operations and presented this operating segment’s results of operations as discontinued operations for all periods presented. As a result of the disposition of Passenger Charter Services, AirNet has only one reportable segment.

Revenues from Passenger Charter Services, included in discontinued operations, were approximately $16.9 million, $29.5 million and $18.5 million for 2006, 2005 and 2004, respectively. Income from discontinued operations before income taxes for 2006, 2005 and 2004 was approximately $0.1 million, $0.8 million and $1.6 million, respectively. Included in the 2006 income from discontinued operations before income taxes is a pre-tax gain of approximately $1.0 million, which is net of approximately $1.0 million of investment banking and legal fees associated with the sale of Jetride.

In February 2006, AirNet decided to market for sale all nine of the Cessna 310 Piston cargo aircraft as a result of the need to reduce its airline capacity and operating costs. At that date, AirNet determined that the plan of sale criteria of SFAS No. 144 had been met. The carrying value of the assets was determined to approximate the estimated fair value less cost to sell, based on recent aircraft appraisals. The carrying value of the aircraft approximates $0.3 million, and is classified in “Assets held for sale” in the Consolidated Balance Sheet. In November 2006, AirNet entered into an agreement to sell all nine of its Cessna 310 aircraft for approximately $0.4 million. AirNet delivered six aircraft in the first quarter of 2007 and expects to deliver the three remaining aircraft in April of 2007.

4. Notes Payable

AirNet had borrowings as follows at December 31:

	2006		2005
Term notes	$	7,955,000	$	9,739,000
Revolving credit facility		—		16,500,000
		7,955,000		26,239,000
Current portion of notes payable		1,944,000		1,781,000
Long-term portion of notes payable	$	6,011,000	$	24,458,000

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Revolving Credit Facility – 2002 through 2006

In September 2002, AirNet entered into a $35.0 million unsecured revolving credit facility and a five-year $20.0 million unsecured term loan (collectively, the “Credit Agreement”). The revolving credit facility under the Credit Agreement was originally scheduled to expire on September 30, 2005 and the secured term loan was to mature on September 30, 2007.

On May 28, 2004, AirNet and its lenders amended the terms and conditions of the Credit Agreement (the “Amended Credit Agreement”). The Amended Credit Agreement was further amended by the First, Second, Third, Fourth and Fifth Change in Terms Agreements, as described below. The Amended Credit Agreement was secured by a first lien on all of the property of AirNet and its subsidiaries, other than any interest in real estate and certain excluded fixed assets. AirNet also pledged the stock and interests of its subsidiaries to secure the loans under the Amended Credit Agreement, and each of AirNet’s subsidiaries guaranteed AirNet’s obligations under the Amended Credit Agreement. The Amended Credit Agreement also contained certain financial covenants that require AirNet to maintain a minimum consolidated tangible net worth and to not exceed certain fixed charge coverage and leverage ratios specified in the Amended Credit Agreement.

The Amended Credit Agreement initially provided for a secured revolving credit facility of up to $35.0 million and a secured term loan in the aggregate amount of $14.0 million. The amount of revolving loans available under the Amended Credit Agreement was limited to a borrowing base equal to the aggregate of 80% of eligible accounts receivable, plus 50% of eligible aircraft parts, plus 70% of the market value of certain fixed assets, reduced by the aggregate amount of AirNet’s outstanding letters of credit. The Amended Credit Agreement bore interest, at AirNet’s option, at (a) a fixed rate equal to LIBOR plus a margin determined by AirNet’s leverage ratio as defined in the Amended Credit Agreement, or (b) a floating rate based on the greater of (i) the prime rate established by The Huntington National Bank from time to time plus a margin determined by AirNet’s leverage ratio or (ii) the sum of 0.5% plus the federal funds rate in effect from time to time plus a margin determined by AirNet’s leverage ratio.

The Amended Credit Facility was amended in September 2004, March 2005, November 2005, March 2006 and September 2006. The above amendments to the Amended Credit Facility were reflected, respectively, in the “First Change in Terms Agreement”, the “Second Change in Terms Agreement” , the “Third Change in Terms Agreement”, the “Fourth Change in Terms Agreement” and the “Fifth Change in Terms Agreement”.

As a result of the impairment charges recorded by AirNet in September 2004, September 2005 and September 2006, AirNet was not in compliance with certain terms and conditions of the Amended Credit Facility, including the fixed charge coverage ratio, the leverage ratio and the minimum consolidated tangible net worth requirement. The First, Third and Fifth Change in Terms Agreements modified certain financial covenants contained in the Amended Credit Facility in such a manner that, on a going-forward basis, the impairment charges, in and of themselves, would not cause a default of these financial covenants in the future. At the same time that the First, Third and Fifth Change in Terms Agreements were entered into, AirNet and its lenders executed a waiver of any defaults or potential defaults under the Amended Credit Agreement which occurred, or may have occurred, as a result of AirNet’s failure to comply with the above financial covenants due to the various impairment charges.

In addition to the amendments made to the Amended Credit Facility to bring the financial covenants into compliance after the impairment charges recorded in 2004, 2005 and 2006, the Amended Credit Facility was amended on several occasions to modify other terms and conditions of the Amended Credit Facility. The Second Change in Terms Agreement amended the Amended Credit Facility to reflect that AirNet had prepaid in full the remaining $11.0 million balance outstanding on its secured term loan. In addition, the Second Change in Terms Agreement reduced the secured revolving credit facility from $35.0 million to $30.0 million. The Second Change in Terms Agreement also extended the term of the Amended Credit Facility from September 30, 2005 to October 15, 2006. The Fourth Change in Terms Agreement further extended the term of the Amended Credit Agreement from October 15, 2006 to October 15, 2007 and modified the calculation of the borrowing base. The Fifth Change in Terms Agreement reduced the amount of the secured revolving credit facility from $25 million to $15 million.

As of December 31, 2006, there was no amount outstanding under the Amended Credit Agreement. As of December 31, 2006, AirNet had $1.0 million in letters of credit outstanding related to insurance programs, which reduced the amount available under the revolving credit facility. As of December 31, 2006, AirNet had $14.0 million available to borrow under its secured revolving credit facility under the Amended Credit Agreement.

Revolving Credit Facility – Second Amended Credit Agreement — March 29, 2007

On March 29, 2007, AirNet and its lender (The Huntington National Bank) amended and restated the terms and conditions of the Amended and Restated Credit Agreement dated as of May 28, 2004, among The Huntington National Bank and Bank One, N.A., as lenders, and AirNet, as borrower (as amended and restated, the “Amended Credit Agreement”) by entering into a Second Amended and Restated Credit Agreement (the “Second Amended Credit Agreement”). The following description of the Second Amended Credit Agreement is qualified in its entirety by reference to the Second Amended Credit Agreement. The Second Amended Credit Agreement provides for a $15.0 million secured revolving credit facility and expires on October 15, 2008. The Second Amended Credit Agreement is secured by a first priority lien on all of the property of AirNet, other than any interest in real estate and certain excluded fixed assets. The stock and interests of AirNet’s subsidiaries continue to be pledged to secure the loans under the Second Amended Credit Agreement, and each of AirNet’s subsidiaries continues to guarantee AirNet’s obligations under the Second Amended Credit Agreement under a Consent and Agreement of Guarantors.

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The amount of revolving loans available under the Second Amended Credit Agreement is limited to a borrowing base equal to the aggregate of 80% of eligible accounts receivable, plus 50% of eligible aircraft parts. The amount available under the Second Amended Credit Agreement is also reduced by any outstanding letters of credit issued under the Second Amended Credit Agreement. The Second Amended Credit Agreement bears interest, at AirNet’s option, at (a) a fixed rate equal to LIBOR plus a margin determined by AirNet’s leverage ratio as defined in the Second Amended Credit Agreement, or (b) a floating rate based on the greater of (i) the prime rate established by The Huntington National Bank from time to time plus a margin determined by AirNet’s leverage ratio or (ii) the sum of 0.5% plus the federal funds rate in effect from time to time plus a margin determined by AirNet’s leverage ratio.

The Second Amended Credit Agreement permits AirNet to maintain and incur other indebtedness in an aggregate amount of up to $10.0 million for the purpose of purchasing or refinancing aircraft and related tangible fixed assets. The Second Amended Credit Agreement contains certain financial covenants that require AirNet to maintain a minimum consolidated tangible net worth and to not exceed certain fixed charge coverage and leverage ratios specified in the Second Amended Credit Agreement. The Second Amended Credit Agreement also contains limitations on operating leases, significant corporate changes including mergers and sales of assets, investments in subsidiaries and acquisitions, liens, capital expenditures, transactions with affiliates, sales of accounts receivable, sale and leaseback transactions and other off-balance sheet liabilities, contingent obligations and hedging transactions.

Other Term Notes

On March 24, 2005, AirNet entered into a three-year term loan totaling $11.0 million with a fixed interest rate of 8.12%. This term loan is secured by seven Cessna Caravans and nine Learjet 35 aircraft from AirNet’s cargo aircraft fleet. The aircraft securing this loan were released from the collateral securing the loans under Amended Credit Agreement in accordance with the Second Change in Terms Agreement. The proceeds from this term loan were used to prepay in full AirNet’s term loan under the Amended Credit Agreement as described above. As of December 31, 2006, $8.0 million was outstanding under this term loan.

Term Loans – Discontinued Operations

In connection with the closing of the sale of the Jetride passenger charter business on September 26, 2006, Jetride repaid in full six term loans which had been (a) secured by aircraft used in the Jetride passenger charter business, and (b) guaranteed by AirNet. In June 2004, Jetride entered into four of the term loans, each with a seven-year term and a fixed interest rate of approximately 6.7%. In July 2004, Jetride entered into the other two term loans, each with a seven-year term and a fixed interest rate of approximately 6.5%. As of September 26, 2006 and December 31, 2005, there was an aggregate principal amount of approximately $28.2 million and $29.8 million, respectively, outstanding under the six loans. In addition to the outstanding principal amount, Jetride paid approximately $0.3 million in accrued interest and early termination prepayment penalties through the repayment date. Each of the loan documents and corresponding security and guaranty agreements entered into in connection with the six term loans was terminated upon repayment of the underlying term loans at the closing.

Aggregate future maturities of long-term debt as of December 31, 2006 are as follows:

2007	$	1,944,000
2008		6,011,000
2009		—
2010		—
2011		—
Thereafter		—
	$	7,955,000

AirNet also maintains standby letters of credit totaling $950,000 with a bank related to its insurance policy agreements.

5. Incentive Stock Plans

On June 4, 2004, the shareholders of AirNet Systems, Inc. approved the AirNet 2004 Stock Incentive Plan (the “2004 Plan”), for employees of AirNet and its subsidiaries and non-employee directors of AirNet. The 2004 Plan authorizes the granting of incentive and non-qualified stock options, restricted stock, stock appreciation rights, and performance shares to be paid in common shares and performance units to be paid in cash (collectively, “2004 Plan Awards”). In addition, the 2004 Plan provides for the granting of rights to purchase common shares of AirNet Systems, Inc. at up to a 15% discount through payroll deductions by employees of AirNet and its subsidiaries (the “2004 Stock Purchase Program”). The maximum number

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of common shares available for issuance under the 2004 Plan is 1,000,000. The 2004 Plan is administered by the Compensation Committee of the Board of Directors, which determines the terms and conditions applicable to the 2004 Plan Awards, other than non-qualified stock options automatically granted to non-employee directors of AirNet Systems, Inc. in accordance with the terms of the 2004 Program. The Compensation Committee also has the authority to establish administrative rules and regulations regarding the term of each offering under the 2004 Stock Purchase Plan. In July 2005, non-qualified stock options covering 20,000 common shares were automatically granted under the terms of the 2004 Plan to each of Messrs. Hellerman and Chadwick as new Directors of AirNet. In December 2006, non-qualified stock options covering 150,000 common shares were granted to Bruce D. Parker, AirNet’s Chief Executive Officer under the terms of an employment contract. In 2006 and 2005, 16,547 and 23,414 common shares, respectively, were issued under the 2004 Stock Purchase Program to employees of AirNet and its subsidiaries. The exercise price of each option has been equal to the fair market price of a common share on the date of grant. An option’s maximum term is ten years. Option vesting periods range from vesting upon grant to vesting over four years.

In 1996, AirNet Systems, Inc. adopted the AirNet Systems, Inc. 1996 Incentive Stock Plan (as amended and restated, the “1996 Plan”). The 1996 Plan authorized the granting of incentive and non-qualified stock options, restricted stock and performance awards (collectively, “1996 Plan Awards”). In addition, the 1996 Plan provided for the granting of rights to purchase common shares of AirNet Systems, Inc. at up to a 15% discount through payroll deductions by employees of AirNet Systems, Inc. and its subsidiaries (the “1996 Stock Purchase Program”). The 1996 Plan also provided for the grant of non-qualified stock options to non-employee directors of AirNet. The maximum number of common shares available for issuance under the 1996 Plan is 1,650,000. The 1996 Plan is administered by the Compensation Committee of the Board of Directors, which determined the terms and conditions applicable to the 1996 Plan Awards, other than non-qualified stock options automatically granted to non-employee directors in accordance with the terms of the 1996 Plan. The exercise price of each option has been equal to the fair market price of a common share on the date of grant. An option’s maximum term is ten years. Option vesting periods range from vesting upon grant to vesting over four years. Since the adoption of the 2004 Plan, no additional 1996 Plan Awards have been or will be made under the 1996 Plan.

The fair value of these stock options was estimated at the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions for the years ended December 31:

	2006			2005			2004
Risk free interest rate		4.91	%		4.04	%		4.83	%
Volatility factor of expected market price of AirNet’s common shares		50.0	%		53.6	%		48.8	%
Weighted average expected life of stock options (years)		5.49			4.92			4.59

The weighted average fair value of stock options granted was $2.95, $2.14 and $2.15 in the years ended December 31, 2006, 2005 and 2004, respectively. Total unamortized stock-based compensation expense for outstanding stock options was approximately $0.2 million at December 31, 2006 and is expected to be recognized over a period of 3 years.

A summary of AirNet’s stock option activity and related information follows (in thousands, except price per share data) for the years ended December 31:

	2006					2005					2004
				Weighted					Weighted					Weighted
				Average					Average					Average
	Common			Exercise		Common			Exercise		Common			Exercise
	Shares			Price		Shares			Price		Shares			Price
Outstanding at beginning of period		886		$	7.71		1,008		$	7.99		1,014		$	8.52
Granted		150			2.95		40			4.26		206			4.11
Exercised		—			—		(12	)		3.96		(41	)		3.79
Cancelled		(208	)		9.35		(150	)		8.95		(171	)		7.56
Outstanding at end of period		828			6.43		886			7.71		1,008			7.99
Options exercisable at end of period		676		$	7.07		716		$	8.48		747		$	9.20

During 2006, 2005 and 2004, the total number of option shares vesting each year was approximately 144,000, 109,000, and 116,000, respectively, with fair values of approximately $292,000, $260,000 and $300,000, respectively.

As of December 31, 2006, 2005 and 2004, the weighted average remaining contractual terms for options outstanding were approximately 4.6 years, 4.8 years and 5.4 years, respectively, and the weighted average remaining contractual terms for options exercisable were 3.6 years, 4.1 years and 4.3 years, respectively, for the same periods.

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The following summarizes information about stock options outstanding (in thousands, except remaining contractual life and price per share data) as of December 31, 2006:

			Stock Options Outstanding				Stock Options Exercisable
			Weighted-Average		Weighted-
	Number of		Remaining		Average		Number of		Weighted-
Range of Exercise	Stock		Contractual Life		Exercise		Stock		Average
Prices	Options		(Years)		Price		Options		Exercise Price
Less than $5.00		484		6.7	$	3.78		332	$	3.86
$5.01-$10.00		263		1.8		8.49		263		8.49
$10.01-$15.00		45		0.3		14.27		45		14.27
$15.01-$20.00		35		1.6		17.50		35		17.50
$20.01-$25.00		1		1.4		22.00		1		22.00
		828		4.6	$	6.43		676	$	7.07

AirNet’s stock purchase program, which had been part of the 1996 Plan and is part of the 2004 Plan, allows eligible employees the opportunity to acquire common shares of AirNet at up to a 15% discount through payroll deductions. AirNet issued 16,547, 23,414, and 35,914 common shares respectively during 2006, 2005, and 2004 from treasury shares under the stock purchase program.

6. Lease Obligations

AirNet leases facility space and courier vehicles at various locations throughout the United States. In January 2002, AirNet entered into operating leases for six Cessna Caravan 208 aircraft, which after certain extensions entered into in September 2002, terminate in 2006 and 2007. In January of 2003 and January of 2006, AirNet entered into two additional operating leases on Cessna Caravan 208 aircraft that expire, respectively, in 2008 and 2007. In February 2006, AirNet entered into a one-year operating lease on an additional Cessna Caravan 208 aircraft.

In 2004, AirNet commenced construction of a new corporate and operational facility (the “Rickenbacker Facility”) on land leased from the Columbus Regional Airport Authority (the “Authority”). Construction of the Rickenbacker Facility was completed in May of 2005 and AirNet completed the relocation of its flight and administrative operations to the Rickenbacker Facility in June of 2005. The land lease with the Authority is for an initial term of 20 years which expires in May 2025. AirNet may request two additional 10 year extensions of the land lease. In the event the Authority refuses to extend the land lease for either 10 year extension period, the land lease requires the Authority to purchase AirNet’s leasehold improvements under the Federal Relocation Act. The purchase price of the improvements cannot be less than 50% of the cost of the leasehold improvements if the Authority refuses to extend the land lease for the first 10 year extension period and cannot be less than 25% of the cost of the leasehold improvements if the Authority refuses to extend the land lease for the second 10 year extension period. Annual rental payments under the land lease are set at approximately $39,000, $62,000 and $83,000, respectively, for the first three years of the lease term. Rental payments after the third year of the lease term are subject to annual increases based upon the consumer price index.

AirNet incurred lease expense of $2,455,000, $2,726,000, and $2,883,000 for the years ended December 31, 2006, 2005 and 2004, respectively. As of December 31, 2006, future minimum lease payments by year under non-cancelable operating leases with initial or remaining terms exceeding one year are as follows: 2007 — $681,000; 2008 — $143,000; 2009 — $83,000; 2010 — $83,000; 2011 - $83,000.

Concurrently with the sale of AirNet’s Port Columbus Facility in December 2004, AirNet entered into the New Port Columbus Lease. Pursuant to the New Port Columbus Lease, AirNet leased the real property associated with the Port Columbus Facility and the buildings and all other improvements thereon pending completion of the construction of AirNet’s new office and hangar facility at Rickenbacker. The term of the New Port Columbus Lease commenced on December 15, 2004 and terminated on August 31, 2005. The New Port Columbus Lease was rent free until May 15, 2005 and commencing May 16, 2005, the rent was scheduled to increase to $30,000 per month. The Authority waived the scheduled rent increase for the period from May 16, 2005 until the relocation of AirNet to its new Rickenbacker Facility. The New Port Columbus Lease was a net lease under which AirNet was responsible for all costs of operating the Port Columbus Facility. This transaction was a minor sale-leaseback, as the present value of the rental payments was less than 10% of the property’s fair value; therefore, AirNet recorded a gain on the sale of $0.3 million in 2004. AirNet relocated from its Port Columbus Facility to the Rickenbacker Facility in June 2005.

7. Retirement Plan

AirNet has a 401(k) retirement savings plan. All associates who have completed a minimum of one month of service may contribute up to 60% of their eligible annual earnings to the 401(k) retirement savings plan, subject to the maximum limitation imposed under the Internal Revenue Code. AirNet may elect, at its discretion, to make matching and profit-sharing contributions. AirNet’s contribution expense related to the 401(k) retirement savings plan for continuing operations totaled $376,000, $358,000, and $492,000 for the years ended December 31, 2006, 2005, and 2004, respectively.

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8. Income Taxes

Income taxes are summarized as follows for the years ended December 31:

	2006			2005			2004
Current:
Federal	$	5,865,000		$	—		$	—
State and local		625,000			175,000			195,000
		6,490,000			175,000			195,000
Deferred:
Federal		(3,481,000	)		(2,042,000	)		(8,518,000	)
State and local		(1,336,000	)		(233,000	)		(612,000	)
		(4,817,000	)		(2,275,000	)		(9,130,000	)
	$	1,673,000		$	(2,100,000	)	$	(8,935,000	)

Significant components of AirNet’s deferred tax liabilities and assets are as follows at December 31:

	2006			2005
Long-term deferred tax asset:
Alternative minimum tax credit carry forwards	$	763,000		$	2,500,000
Net operating loss carry forward		783,000			3,800,000
Other		128,000			136,000
Valuation allowance		(12,408,000	)		(6,300,000	)
Property and equipment		10,625,000			0
Long-term deferred tax liabilities:
Property and equipment		0			(4,712,000	)
Other		109,000			(735,000	)
Net long-term deferred tax liabilities	$	0		$	(5,311,000	)
Current deferred tax assets:
Workers’ compensation reserves	$	195,000		$	331,000
Allowance for bad debt reserves		351,000			283,000
Other		156,000			48,000
Total current deferred tax assets		702,000			662,000
Current deferred tax liabilities:
Prepaid expenses		(618,000	)		(762,000	)
Other		(25,000	)		(24,000	)
Valuation allowance		(59,000	)		0
Total current deferred tax liabilities		(702,000	)		(786,000	)
Net current deferred tax assets (liabilities)	$	0			($124,000	)

Differences arising between the provision (benefit) for income taxes and the amount computed by applying the statutory federal income tax rate to income (loss) before income taxes are as follows for the years ended December 31:

	2006					2005					2004
Tax expense (benefit) at federal statutory rate on pre-tax (loss) income	$	(3,950,000	)	34.0	%	$	(2,158,000	)	34.0	%	$	(14,648,000	)	34.0	%
State taxes, net of federal benefit		(492,000	)	4.2			(355,000	)	5.6			(1,733,000	)	4.0
Non-deductible permanent differences		168,000		(1.4	)		186,000		(2.9	)		1,746,000		(4.0	)
Change in valuation allowance		6,167,000		(53.1	)		600,000		(9.5	)		5,700,000		(13.0	)
Other		(221,000	)	1.9			(373,000	)	5.8			—		0.0
Total taxes (benefit)		1,672,000		(14.2	)%	$	(2,100,000	)	33.0	%	$	(8,935,000	)	21.0	%
Less — portion attributable to discontinued operations		18,000					300,000					631,000
Net attributable to continuing operations	$	1,654,000				$	(2,400,000	)			$	(9,566,000	)

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State taxes, net of federal benefit, include a benefit of $158,000 in 2005 as a result of changes in tax laws in the State of Ohio.

On December 31, 2006, AirNet filed for a discretionary income tax method change with the Internal Revenue Service (“IRS”). The discretionary method change requires IRS approval prior to the change being effective. As required by SFAS No. 109, the effect of the method change will be reported in the period in which IRS approval is obtained; therefore, AirNet has not reflected the anticipated impact of the method change in the December 31, 2006 financial statements. There is no certainty as to what extent or if the IRS will ultimately approve the elected method change as requested. However, if the method change is approved, it could materially change AirNet’s current taxes payable, its deferred tax assets and the need for the associated valuation allowance and provide a significant refund of estimated taxes previously paid.

In connection with the 1996 repurchase and cancellation of the Donald Wright Warrant, AirNet recognized a related tax benefit estimated to be $7.0 million based upon management’s judgment and estimation of the portion of the Donald Wright Warrant which would be deductible for income tax purposes. This tax benefit was recognized as additional paid-in capital on AirNet’s Consolidated Balance Sheet and has had no effect on AirNet’s Consolidated Statement of Operations. During the third quarter of 2003, this matter was partially resolved and in the fourth quarter of 2006, was finalized. AirNet has realized tax deductions related to this transaction in excess of management’s original estimates resulting in additional tax benefits. The additional tax benefits associated with the deductible portion of the Donald Wright Warrant have exceeded the original estimate by $1.3 million in 2003 and $0.6 million in 2006. The additional tax benefits, as was the initial estimated tax benefit associated with the Donald Wright Warrant, have been recorded as an increase to additional paid-in capital.

Accounting principles generally accepted in the United States require AirNet to record a valuation allowance against future deferred tax assets if it is “more likely than not” that AirNet will not be able to utilize such benefits in the future. At December 31, 2006 and 2005, AirNet maintained a valuation allowance of $12.5 million and $6.3 million, respectively. In 2006, the valuation allowance offset deferred tax assets in excess of deferred tax liabilities. In 2005, the valuation allowance offset AirNet’s net operating loss carry forwards and Alternative Minimum Tax credit carry forwards.

9. Net Income (Loss) Per Common Share

The following table sets forth the computation of basic and diluted net income (loss) per common share for the years ended December 31:

	2006			2005			2004
Numerator:
Income (loss) from continuing operations	($	13,321,000	)	$	(4,714,000	)	$	(35,132,000	)
Income (loss) from discontinued operations, net of tax		29,000			468,000			986,000
Net income (loss)	($	13,292,000	)	$	(4,246,000	)	$	(34,146,000	)
Denominator:
Basic — weighted average common shares outstanding		10,158,000			10,133,000			10,080,000
Diluted
Stock options — employees, officers and directors		—			20,000			19,000
Adjusted weighted average common shares outstanding		10,158,000			10,153,000			10,099,000
Net income (loss) per common share — basic and diluted	($	1.31	)	($	0.42	)	($	3.39	)

For the years ended December 31, 2006, 2005, and 2004, stock options covering 678,000, 553,000, and 686,000 common shares, respectively, were excluded from the diluted weighted average common shares outstanding calculation, as their exercise prices exceeded the average fair market value of the underlying common shares for the year and, therefore, were antidilutive.

10. Litigation and Contingencies

AirNet is subject to claims and lawsuits in the ordinary course of its business. In the opinion of management, the outcomes of these actions, which are not clearly determinable at the present time, are either adequately covered by insurance, or if not insured, will not, in the aggregate, have a material adverse impact upon AirNet’s financial position or the results of future operations.

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In September 2005, AirNet relocated its corporate and operational headquarters from 3939 International Gateway in Columbus, Ohio (the “Port Columbus Facility”) to its new facility at Rickenbacker International Airport (the “Rickenbacker Facility”). AirNet’s lease of its Port Columbus Facility expired August 31, 2005.

AirNet also maintained certain assets at Port Columbus for dispensing aviation fuel under the terms and conditions of a separate lease agreement (the “Fuel Farm Lease”). The Fuel Farm Lease required AirNet to return the premises leased under the Fuel Farm Lease to their original condition upon the termination of the lease. In lieu of returning the premises to their original condition, the Fuel Farm Lease provided that the Port Columbus Airport Authority (the “Authority”) could take title to any improvements constructed by AirNet on the leased premises. On August 17, 2006, AirNet conveyed all of its fuel farm assets to the Authority for $1 and a release of any future liabilities associated with the Fuel Farm Lease and the fuel farm assets, other than any liabilities related to environmental conditions which may be imposed by any governmental agency. The Fuel Farm Lease also was terminated on August 17, 2006. As a result of the conveyance of the fuel farm assets to the Authority and the termination of the Fuel Farm Lease, AirNet was relieved of its obligation to return the leased premises to their original condition.

Selected Quarterly Financial Information

The quarterly financial data required to be disclosed in this Item 8 is incorporated herein by reference from the table captioned “Selected Quarterly Data (Unaudited)” in “ITEM 7- MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION” of this Annual Report on Form 10-K.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None

ITEM 9A. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

With the participation of the Chairman of the Board, Chief Executive Officer and President (the principal executive officer) and the Chief Financial Officer, Treasurer and Secretary (the principal financial officer) of AirNet Systems, Inc. (“AirNet”), AirNet’s management has evaluated the effectiveness of AirNet’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of the end of the fiscal year covered by this Annual Report on Form 10-K. Based on that evaluation, AirNet’s Chairman of the Board, Chief Executive Officer and President and AirNet’s Chief Financial Officer, Treasurer and Secretary have concluded that:

• information required to be disclosed by AirNet in this Annual Report on Form 10-K and the other reports that AirNet files or submits under the Exchange Act would be accumulated and communicated to AirNet’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure;

• information required to be disclosed by AirNet in this Annual Report on Form 10-K and the other reports that AirNet files or submits under the Exchange Act would be recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms; and

• AirNet’s disclosure controls and procedures were effective as of the end of the fiscal year covered by this Annual Report on Form 10-K.

Changes in Internal Control over Financial Reporting

There were no changes in AirNet’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during AirNet’s fiscal quarter ended December 31, 2006, that have materially affected, or are reasonably likely to materially affect, AirNet’s internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

Conclusion of Brown Gibbons Lang & Company Engagement and Dissolution of Strategy Committee

As previously reported by AirNet Systems, Inc. (“AirNet”), in January 2005, AirNet engaged Brown Gibbons Lang & Company (“BGL”) to serve as AirNet’s exclusive financial advisor and investment banker to review, develop and evaluate various strategic alternatives to enhance shareholder value, including the possible sale of AirNet. AirNet received indications of

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interest with respect to the sale of AirNet, which culminated in the execution of a letter of intent for the sale of AirNet on October 26, 2005. On December 16, 2005, AirNet announced that it had been unable to reach a definitive merger agreement with the private equity investment firm that entered into the letter of intent and that the exclusivity period under such letter of intent had been allowed to expire.

Also as previously reported by AirNet, following the termination of the letter of intent, in December of 2005, the AirNet Board of Directors dissolved the Special Committee which had been established to oversee the marketing process and appointed a Strategy Committee to work with management on the ongoing business strategy and alternatives for AirNet to enhance shareholder value. The Strategy Committee, together with the full Board of Directors, determined that AirNet’s business strategy would include operating its businesses with an emphasis on cash flows from operations while seeking other de-leveraging opportunities. The Board of Directors elected to continue the engagement of BGL as its financial advisor on a month-to-month basis in connection with the development and evaluation of various strategies and opportunities to enhance shareholder value and de-leverage the business.

As previously reported by AirNet, in September 2006, AirNet sold its Jetride passenger charter business. Thereafter, AirNet concluded its month-to-month engagement with BGL. However, AirNet continues to consult with BGL from time-to-time on various strategies and opportunities to enhance shareholder value. On February 27, 2007, the Board of Directors dissolved the Strategy Committee.

Amendment of Credit Agreement with The Huntington National Bank

On March 29, 2007, AirNet and its lender (The Huntington National Bank) amended and restated the terms and conditions of the Amended and Restated Credit Agreement dated as of May 28, 2004, among The Huntington National Bank and Bank One, N.A., as lenders, and AirNet, as borrower (as amended and restated, the “Amended Credit Agreement”) by entering into a Second Amended and Restated Credit Agreement (the “Second Amended Credit Agreement”). The following description of the Second Amended Credit Agreement is qualified in its entirety by reference to the Second Amended Credit Agreement, a copy of which is filed with this Annual Report on Form 10-K as Exhibit 4.50. The Second Amended Credit Agreement provides for a $15.0 million secured revolving credit facility and expires on October 15, 2008. The Second Amended Credit Agreement is secured by a first priority lien on all of the property of AirNet, other than any interest in real estate and certain excluded fixed assets. The stock and interests of AirNet’s subsidiaries continue to be pledged to secure the loans under the Second Amended Credit Agreement, and each of AirNet’s subsidiaries continues to guarantee AirNet’s obligations under the Second Amended Credit Agreement under a Consent and Agreement of Guarantors.

The amount of revolving loans available under the Second Amended Credit Agreement is limited to a borrowing base equal to the aggregate of 80% of eligible accounts receivable, plus 50% of eligible aircraft parts. The amount available under the Second Amended Credit Agreement is also reduced by any outstanding letters of credit issued under the Second Amended Credit Agreement. The Second Amended Credit Agreement bears interest, at AirNet’s option, at (a) a fixed rate equal to LIBOR plus a margin determined by AirNet’s leverage ratio as defined in the Second Amended Credit Agreement, or (b) a floating rate based on the greater of (i) the prime rate established by The Huntington National Bank from time to time plus a margin determined by AirNet’s leverage ratio or (ii) the sum of 0.5% plus the federal funds rate in effect from time to time, plus a margin determined by AirNet’s leverage ratio.

The Second Amended Credit Agreement permits AirNet to maintain and incur other indebtedness in an aggregate amount of up to $10.0 million for the purpose of purchasing or refinancing aircraft and related tangible fixed assets. The Second Amended Credit Agreement contains certain financial covenants that require AirNet to maintain a minimum consolidated tangible net worth and to not exceed certain fixed charge coverage and leverage ratios specified in the Second Amended Credit Agreement. The Second Amended Credit Agreement also contains limitations on operating leases, significant corporate changes including mergers and sales of assets, investments in subsidiaries and acquisitions, liens, capital expenditures, transactions with affiliates, sales of accounts receivable, sale and leaseback transactions and other off-balance sheet liabilities, contingent obligations and hedging transactions.

As of March 29, 2007, there were no amounts outstanding under either the Amended Credit Agreement or under the Second Amended Credit Agreement, which replaced the Amended Credit Agreement. As of March 29, 2007, AirNet had approximately $1.0 million in letters of credit outstanding related to insurance programs, which reduced the amount available under the Second Amended Credit Agreement to approximately $14 million as of March 29, 2007.

2006 Incentive Compensation Plan

On March 24, 2006, the Board of Directors of AirNet, upon the recommendation of the Compensation Committee, adopted the 2006 Incentive Compensation Plan (the “2006 Incentive Plan”). The purpose of the 2006 Incentive Plan was to promote the following goals of AirNet for the fiscal year ended December 31, 2006 (the 2006 fiscal year”) by providing incentive compensation to certain employees of AirNet and its subsidiaries:

• Attaining designated levels of pre-tax income;

• Improving cash flow and reducing debt;

• Defining and executing plans to offset expected declines in Bank Services revenues;

• Reducing the fixed cost structure of AirNet; and

• Meeting high priority deadlines of AirNet.

Participants in the 2006 Incentive Plan included the following individuals who served as executive officers of AirNet during the 2006 fiscal year: Joel E. Biggerstaff (Chairman of the Board until December 31, 2006 and Chief Executive Officer and

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President until December 28, 2006), Gary W. Qualmann (Chief Financial Officer, Treasurer and Secretary), Larry M. Glasscock, Jr. (Senior Vice President, Express Services), Jeffery B. Harris (Senior Vice President, Bank Services), Ray L. Druseikis (Controller and Principal Accounting Officer), and Craig A. Leach (Vice President, Information Systems) — as well as certain department managers and department directors. As of the start of the 2006 fiscal year, there were 47 participants in the 2006 Incentive Plan. New employees who qualified for the 2006 Incentive Plan were eligible to participate on the first day of the calendar quarter following their date of hire. There were 46 participants who received payments under the 2006 Incentive Plan, including Mr. Biggerstaff. There were also 32 non-participants who received discretionary awards totaling approximately $75,000.

Payments under the 2006 Incentive Plan were based upon a combination of AirNet’s pre-tax income (as determined under the terms of the 2006 Incentive Plan) for the 2006 fiscal year, the operating performance of AirNet’s Delivery Services and Passenger Charter Services business segments, and the achievement of personal goals assigned to each participant. The Compensation Committee approved the personal goals for executive officers and reviewed the personal goals for other participants. The personal goals approved by the Compensation Committee for each of the executive officers related to specific business objectives related to general business operations (e.g., regulatory compliance, expense reductions, etc.) and each business segment (e.g., execution of specific contracts with customers and vendors, cost reductions, service improvements, etc.).

No incentive compensation was to be paid under the 2006 Incentive Plan unless AirNet achieved a designated threshold level of pre-tax income for the 2006 fiscal year. If the designated threshold level were achieved, incentive compensation payments would increase based upon predetermined pre-tax income levels until a maximum aggregate amount of $1.9 million in incentive compensation payments was reached. After the overall amount of incentive compensation was determined based upon AirNet’s pre-tax income for the 2006 fiscal year, incentive compensation was allocated to individual participants based upon the following four factors: (i) level of pre-tax income attained by AirNet; (ii) level of contribution margin attained by Delivery Services as compared to certain predetermined levels; (iii) levels of contribution margin attained by Passenger Charter Services as compared to certain predetermined levels; and (iv) attainment of personal goals.

Originally, a participant’s maximum incentive compensation payment was to range from 20% to 100% of the participant’s base salary, depending upon such participant’s level of responsibility for achieving AirNet’s goals for the 2006 fiscal year. Twenty percent of each participant’s incentive compensation payments was to be based upon the participant’s achievement of pre-established personal goals. The remaining 80% of each participant’s incentive compensation payment was to be based upon a combination of the other three factors discussed above, which were allocated to each participant based upon such participant’s overall responsibility for attaining the designated levels of AirNet’s pre-tax income and contribution margins for the Delivery Services and Passenger Charter Services business segments.

In the event the incentive compensation payments otherwise available for payment under the 2006 Incentive Plan based upon AirNet’s level of pre-tax income were not paid to certain participants as a result of those participants’ failure to attain their personal goals or AirNet’s failure to attain the predetermined levels of budgeted contribution margins in Delivery Services or Passenger Charter Services, such unpaid amounts could have been awarded at the discretion of the Compensation Committee to participants in the 2006 Incentive Plan or to other employees of AirNet not participating in the 2006 Incentive Plan.

Except for payments to the executive officers, payments under the 2006 Incentive Plan were paid in quarterly payments commencing with the second quarter of the 2006 fiscal year based upon AirNet’s year-to-date financial performance. Except as described below with respect to Mr. Biggerstaff, payments of incentive compensation to executive officers were made in March 2007 based upon AirNet’s performance and each executive officer’s performance for the 2006 fiscal year. Except as described below with respect to Mr. Biggerstaff, in order to receive payment, a participant must have been actively employed by AirNet at the time the payment was made.

On November 8, 2006, the AirNet Board of Directors, upon the recommendation of the Compensation Committee, adopted the following amendments to the 2006 Incentive Plan: (i) for purposes of computing the pre-tax income of AirNet for the 2006 fiscal year for purposes of the 2006 Incentive Plan, the $24.6 million non-cash impairment charge recorded by AirNet in the third quarter of the 2006 fiscal year was to be disregarded and AirNet’s pre-tax income for the 2006 fiscal year was to be computed as if no impairment charge had been incurred; (ii) the incentive compensation payable under the 2006 Incentive Plan to each of AirNet’s officers, Joel E. Biggerstaff, Gary W. Qualmann, Larry M. Glasscock, Jr., Jeffery B. Harris, Ray L. Druseikis and Craig A. Leach, was to be reduced to 60% of the amount each such officer would otherwise have been entitled to receive under the 2006 Incentive Plan; (iii) for purposes of the 2006 Incentive Plan, the gain on the sale of Jetride’s passenger charter business was to be excluded from the computation of AirNet’s pre-tax income for the 2006 fiscal year; and (iv) Jetride’s targeted pre-tax income for the fourth quarter of 2006 was to be disregarded for purposes of the 2006 Incentive Plan and the predetermined pre-tax income level at which the maximum incentive compensation payout would be reached under the 2006 Incentive Plan was to be reduced by a comparable amount.

As previously reported, under the terms of the Separation Agreement and General Release, dated as of December 28, 2006 (the “Separation Agreement”), between AirNet and Mr. Biggerstaff, the incentive compensation payable under the 2006 Incentive Plan to Mr. Biggerstaff was calculated without regard to his personal goals for the 2006 fiscal year and, with respect

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to the financial performance criteria, on an equitable basis with the other executive officers of AirNet. While AirNet exceeded the level of pre-tax income at which the maximum incentive compensation payments could be achieved, AirNet did not attain its pre-determined goal for contribution margin for Passenger Charter Services. Accordingly, Mr. Biggerstaff was not entitled to the 20% of his incentive compensation potential based upon the performance of AirNet’s Passenger Charter Services business. Mr. Biggerstaff was paid 60% of his remaining 80% incentive compensation potential, or $156,000, after applying the 60% limitation described above.

After reviewing AirNet’s pre-tax income, the operating performance of AirNet’s various business components and the level of achievement of the personal goals assigned to each executive officer, at a meeting of the Compensation Committee held on February 27, 2007, the Compensation Committee asked Mr. Parker, AirNet’s Chairman of the Board and Chief Executive Officer, to recommend additional discretionary awards to officers, other participants in the 2006 Incentive Plan, and certain other employees who were not participants in the 2006 Incentive Compensation Plan. The Compensation Committee met again on March 5, 2007 and approved discretionary awards recommended by Mr. Parker in the amount of $283,000. The amounts of such discretionary awards were based upon the contributions such officers, participants and other employees made to the operating performance of AirNet during fiscal year 2006, as determined by Mr. Parker. Because of such discretionary incentive compensation awards, the total incentive compensation payments made to certain executive officers of AirNet exceeded the amounts that otherwise would have been paid given the 60% limitation described above.

During the 2006 fiscal year and the fiscal quarter ending March 31, 2007, AirNet made payments under the terms of the 2006 Incentive Plan in the aggregate amount of approximately $1.5 million, which included $156,000 paid to Mr. Biggerstaff as described above. In March of 2007, the following executive officers of AirNet were paid the following amounts under the 2006 Incentive Plan: Jeffery B. Harris- $160,000; Gary W. Qualmann — $136,750; Larry M. Glasscock, Jr. — $125,000; Craig A. Leach — $66,464; and Ray L. Druseikis -$46,550.

Adoption of 2007 Incentive Compensation Plan

On March 28, 2007, the Board of Directors of AirNet, upon the recommendation of the Compensation Committee, adopted the 2007 Incentive Compensation Plan (the “2007 Incentive Plan”). The purpose of the 2007 Incentive Plan is to promote the following goals of AirNet for the fiscal year ending December 31, 2007 (the “2007 fiscal year”) by providing incentive compensation to certain employees of AirNet:

• attaining designated levels of pre-tax income;

• achieving designated levels of Express Services revenues and contribution margin;

• reducing AirNet’s operating costs;

• establishing AirNet as the express air carrier of choice for highly controlled and time sensitive shipments;

• leveraging AirNet’s aviation infrastructure to improve contribution margin;

• operating in all areas of AirNet’s business in an absolutely safe, highly professional, dependable, efficient and customer focused manner; and

• developing AirNet’s leadership team.

Participants in the 2007 Incentive Plan include AirNet’s executive officers — Bruce D. Parker (Chairman of the Board and Chief Executive Officer), Gary W. Qualmann (Chief Financial Officer, Treasurer and Secretary), Larry M. Glasscock, Jr. (Senior Vice President, Express Services), Jeffery B. Harris (Senior Vice President, Bank Services), Ray L. Druseikis (Controller and Principal Accounting Officer) and Craig A. Leach (Vice President, Information Systems) and certain department managers and department directors. As of the date of this Annual Report on Form 10-K, there were 37 participants in the 2007 Incentive Plan.

The targeted incentive compensation payment a participant may earn under the 2007 Incentive Plan ranges from 20% to 100% of the participant’s base salary, depending upon such participant’s level of responsibility for achieving AirNet’s goals for the 2007 fiscal year. The targeted percentage of annual base salary that each of AirNet’s executive officers may earn as incentive compensation under the 2007 Incentive Plan is as follows: Bruce D. Parker, 100%; Gary W. Qualmann, Larry M. Glasscock, Jr., and Jeffery B. Harris, 75%; Ray L. Druseikis and Craig A. Leach, 50%.

Payments under the 2007 Incentive Plan will be based on a combination of AirNet’s (i) pre-tax income for the 2007 fiscal year, (ii) Express Services revenues and contribution margins for the 2007 fiscal year, and (iii) the achievement of personal goals assigned to each participant. The Compensation Committee determines the personal goals of the Chief Executive Officer. The Chief Executive Officer determines the personal goals for the other executive officers, which are reviewed and approved by the Compensation Committee. The personal goals of other participants are approved by the Chief Executive Officer and are reviewed by the Compensation Committee. The personal goals approved by the Compensation Committee for each of the executive officers relate to specific business objectives related to general business operations (e.g., regulatory compliance, expense reductions, etc.) and each business segment (e.g., execution of specific contracts with customers and vendors, cost reductions, service improvements, etc.).

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With the exception of Bruce D. Parker, no incentive compensation will be paid under the 2007 Incentive Plan unless AirNet achieves at least 80% of its targeted pre-tax income for the 2007 fiscal year. Mr. Parker will be eligible to receive the portion of his incentive compensation potential allocated to his personal goals without regard to AirNet’s attainment of its financial objectives. Once this designated threshold level of pre-tax income is achieved, potential incentive compensation payouts will increase at predetermined levels until the maximum incentive compensation payout of approximately $1.7 million is reached at approximately 140% of AirNet’s targeted pre-tax income for the 2007 fiscal year.

Once the aggregate potential incentive compensation payout is determined based upon the level of pre-tax income achieved by AirNet during the 2007 fiscal year, each participant’s incentive compensation payment will be determined based upon the following three components of the 2007 Incentive Compensation Plan (i) pre-tax income for the 2007 fiscal year; (ii) Express Services revenues and contribution margins for the 2007 fiscal year, and (iii) the achievement of personal goals. With the exception of Mr. Parker, 20% of each participant’s incentive compensation payout is allocated to the attainment of personal goals. Forty percent of Mr. Parker’s incentive compensation payment is allocated to the attainment of personal goals. The portion of each participant’s incentive compensation potential that is not allocated to the attainment of personal goals will be allocated to the attainment of predetermined levels of pre-tax income and Express Services revenues and contribution margin based upon such participant’s responsibility for achieving such goals.

No incentive compensation will be earned with respect to the Express Services component of the 2007 Incentive Plan unless AirNet achieves at least 100% of its targeted Express Services revenues and contribution margin. Once the designated threshold levels of Express Services revenues and contribution margin are achieved, potential incentive compensation payouts under the Express Services component of the 2007 Incentive Plan will increase at predetermined levels until the maximum Express Services compensation payout level is achieved.

Mr. Parker’s incentive compensation payments under the 2007 Incentive Plan will be based upon the achievement of certain pre-determined financial objectives and personal goals for the first six months of the 2007 fiscal year and the last six months of the 2007 fiscal year. Mr. Parker will be eligible to receive up to 50% of his annual base salary in each six-month period, subject to the attainment of Mr. Parker’s predetermined financial objectives and personal goals. In each six-month incentive compensation period, Mr. Parker’s incentive compensation potential will be allocated among Mr. Parker’s financial objectives and personal goals as follows:

• 30% of Mr. Parker’s incentive compensation potential will be based upon attaining at least 100% of the targeted pre-tax income for the applicable six-month period;

• 30% of Mr. Parker’s incentive compensation potential will be based upon attaining at least 100% of the targeted Express Services revenues and contribution margin for the applicable six-month period; and

• 40% of Mr. Parker’s incentive compensation potential will be based upon the attainment of the personal goals established for Mr. Parker by the Board of Directors.

The Board of Directors established the following personal goals for Mr. Parker for the 2007 fiscal year:

• development of an AirNet operating vision, including specific objectives and strategy;

• development of a chief executive officer succession plan; and

• developing AirNet’s management into an integrated team working to achieve specific objectives.

The Board of Directors will evaluate Mr. Parker’s performance at the end of each six month incentive compensation period and determine his incentive compensation payment based upon AirNet’s financial performance and achievement of Mr. Parker’s personal goals during such period. In the event the Board of Directors approves a strategic alternative that is completed based upon Mr. Parker’s efforts, Mr. Parker will be deemed to have met all his financial objectives and personal goals for the six month incentive compensation period in which the strategic alternative is completed. In such event, Mr. Parker will be entitled to receive his maximum incentive compensation for such six month period, prorated from the first day of such six month period to the date the strategic alternative is completed.

Except for payments to Mr. Parker and AirNet’s other executive officers, payments under the 2007 Incentive Plan will be paid in quarterly payments commencing with the first quarter of the 2007 fiscal year based upon AirNet’s year to date financial performance. With the exception of Mr. Parker, payments of incentive compensation to

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AirNet’s executive officers will be made in the first quarter of the fiscal year ending December 31, 2008 based upon AirNet’s performance and each executive officer’s performance for the 2007 fiscal year. Mr. Parker’s incentive compensation payments will be made in two installments no later than July 31, 2007 and March 15, 2008. In order to receive a payment, a participant must be actively employed by AirNet at the time the payment is made. New employees who qualify for the 2007 Incentive Compensation Plan will be eligible to participate on the first day of the calendar quarter following their date of hire.

In the event the incentive compensation payments otherwise available for payment under the 2007 Incentive Plan based upon AirNet’s level of pre-tax income are not to be paid to certain participants as a result of such participants’ failure to attain their personal goals or AirNet’s failure to attain the predetermined levels of Express Services revenues or contribution margin, such unpaid amounts may be awarded at the discretion of the Compensation Committee to participants in the 2007 Incentive Plan or to other employees of AirNet not participating in the 2007 Incentive Plan. In the event such discretionary awards are made to any participant, including AirNet’s executive officers, the total incentive compensation payment to any such participant may exceed the targeted incentive compensation payment to such participant as described above.

The Compensation Committee may amend, modify or terminate the 2007 Incentive Plan at any time.

Calling of 2007 Annual Meeting of Shareholders

At a meeting held on March 28, 2007, the AirNet Board of Directors adopted resolutions calling for the 2007 Annual Meeting of Shareholders of AirNet Systems, Inc. to be held on June 6, 2007, at 10 a.m., Eastern Daylight Saving Time, at The Courtyard by Marriott Columbus Airport, 2901 Airport Drive, Columbus, Ohio 43219. The AirNet Board of Directors fixed April 27, 2007 as the record date for the determination of the shareholders of AirNet entitled to receive notice of, and to vote at, the 2007 Annual Meeting of Shareholders. AirNet shareholders seeking to bring business before the 2007 Annual Meeting of Shareholders, or to nominate candidates for election as directors at the 2007 Annual Meeting of Shareholders, must provide notice thereof in writing to AirNet, which notice must be received no later than April 7, 2007. The AirNet Code of Regulations specifies certain requirements for a shareholder’s notice to be in proper written form. In addition, shareholder proposals must be in the form specified in SEC Rule 14a-8. Shareholder proposals and notices must be addressed to the Secretary of AirNet at its executive offices located at 7250 Star Check Drive, Columbus, Ohio 43217.

PART III

ITEM 10 — DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by this Item 10, other than the information set forth below, is incorporated herein by reference from the definitive Proxy Statement of AirNet Systems, Inc. for the Annual Meeting of Shareholders to be held on June 6, 2007, which definitive Proxy Statement will be filed subsequent to the filing of this Annual Report on Form 10-K and not later than 120 days after December 31, 2006.

Corporate Governance Documents

AirNet’s Board of Directors has adopted charters for each of the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee as well as Corporate Governance Guidelines.

In addition, the AirNet Board of Directors has adopted a Code of Business Conduct and Ethics covering the directors, officers and employees (team members) of AirNet and its subsidiaries, including AirNet’s Chairman of the Board, Chief Executive Officer and President (the principal executive officer), AirNet’s Chief Financial Officer, Treasurer and Secretary (the principal financial officer) and AirNet’s Vice President of Finance, Controller and Principal Accounting Officer (the principal accounting officer). AirNet intends to disclose the following in a current report on Form 8-K within the required four business days following their occurrence: (A) the date and nature of any amendment to a provision of AirNet’s Code of Business Conduct and Ethics that (i) applies to AirNet’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, (ii) relates to any element of the code of ethics definition enumerated in Item 406(b) of SEC Regulation S-K, and (iii) is not a technical, administrative or other non-substantive amendment; and (B) a description of any waiver (including the nature of the waiver, the name of the person to whom the waiver was granted and the date of the waiver), including an implicit waiver, from a provision of the Code of Business Conduct and Ethics granted to AirNet’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions that relates to one or more of the elements of the code of ethics definition set forth in Item 406(b) of SEC Regulation S-K. In addition, AirNet will disclose any waivers from the provisions of the Code of Business Conduct and Ethics granted to a director or executive officer of AirNet in a current report on Form 8-K within four business days following their occurrence.

The text of each of the Audit Committee Charter, the Compensation Committee Charter, the Nominating and Corporate Governance Committee Charter, the Corporate Governance Guidelines and the Code of Business Conduct and Ethics is posted under the “Corporate Governance” link on the “Investor Relations” page of AirNet’s Internet website located at www.AirNet.com. Interested persons may also obtain copies of the Audit Committee Charter, the Compensation Committee Charter, the Nominating and Corporate Governance Committee Charter, the Corporate Governance Guidelines and the Code of Business Conduct and Ethics, without charge, by writing to the Chief Financial Officer, Treasurer and Secretary of AirNet at AirNet Systems, Inc., 7250 Star Check Drive, Columbus, Ohio 43217, Attention: Gary W. Qualmann. In addition, AirNet’s Code of Business Conduct and Ethics, as revised on August 2, 2006, is incorporated by reference in Exhibit 14 to this Annual Report on Form 10-K from Exhibit 14 to AirNet’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2006.

ITEM 11 — EXECUTIVE COMPENSATION

The information required by this Item 11 is incorporated herein by reference from the definitive Proxy Statement of AirNet Systems, Inc. for the Annual Meeting of Shareholders to be held on June 6, 2007, which definitive Proxy Statement will be filed subsequent to the filing of this Annual Report on Form 10-K and not later than 120 days after December 31, 2006.

ITEM 12 — SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

The information required by this Item 12 is incorporated herein by reference from the definitive Proxy Statement of AirNet Systems, Inc. for the Annual Meeting of Shareholders to be held on June 6, 2007, which definitive Proxy Statement will be filed subsequent to the filing of this Annual Report on Form 10-K and not later than 120 days after December 31, 2006.

ITEM 13 — CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this Item 13 is incorporated herein by reference from the definitive Proxy Statement of AirNet Systems, Inc. for the Annual Meeting of Shareholders to be held on June 6, 2007, which definitive Proxy Statement will be filed subsequent to the filing of this Annual Report on Form 10-K and not later than 120 days after December 31, 2006.

ITEM 14 — PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this Item 14 is incorporated herein by reference from the definitive Proxy Statement of AirNet Systems, Inc. for the Annual Meeting of Shareholders to be held on June 6, 2007, which definitive Proxy Statement will be filed subsequent to the filing of this Annual Report on Form 10-K and not later than 120 days after December 31, 2006.

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PART IV

ITEM 15 — EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Documents filed as a part of this Annual Report on Form 10-K:

1. The following consolidated financial statements (and report thereon) are included in “ITEM 8 — FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA” of this Annual Report on Form 10-K:

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets as of December 31, 2006 and 2005

Consolidated Statements of Operations for the years ended December 31, 2006, 2005 and 2004

Consolidated Statements of Cash Flows for the years ended December 31, 2006, 2005 and 2004

Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2006, 2005 and 2004

Notes to Consolidated Financial Statements

2. Schedule II — Valuation and Qualifying Accounts is included below:

COL A	COL B		COL C				COL D		COL E
			Additions
	Balance at		Charged to		Charged to				Balance at
	Start of		Costs and		Other		Deductions		End of
Description	Period		Expenses		Accounts		(1)		Period
Year ended December 31, 2006: Deducted from asset accounts; Allowance for doubtful accounts	$	724,729	$	347,529	$	227,716	$	399,974	$	900,000
Year ended December 31, 2005: Deducted from asset accounts; Allowance for doubtful accounts	$	874,444	$	88,361	$	100,000	$	338,076	$	724,729
Year ended December 31, 2004: Deducted from asset accounts; Allowance for doubtful accounts	$	515,046	$	522,570	$	0	$	163,172	$	874,444

(1) Uncollectible accounts written off, net of recoveries

Schedules not included above have been omitted because they are not required or the information required to be set forth therein is included in the consolidated financial statements or notes thereto.

3. Exhibits

The documents listed below are filed with this Annual Report on Form 10-K as exhibits or incorporated into this Annual Report on Form 10-K by reference as noted:

60

Exhibit
No.	Description	Location
2.1	Asset Purchase Agreement, dated as of July 11, 2003, by and among AirNet Systems, Inc., AirNet Management, Inc., Mercury Business Services, Inc., Andrew R. Cooke, Peter G. Salisbury and Christopher F. Valente. [Pursuant to Item 601(b)(2) of SEC Regulation S-K, certain schedules and exhibits to this Asset Purchase Agreement have not been filed with this exhibit. The schedules contain various items relating to the assets being sold and the representations and warranties of the parties to the Asset Purchase Agreement. AirNet Systems, Inc. has agreed to furnish supplementally any omitted schedule or exhibit to the SEC upon request.]	Incorporated herein by reference from Exhibit 2.1 to AirNet Systems, Inc.’s Current Report on Form 8-K, dated and filed on July 15, 2003 (File No. 001-13025)
2.2	Purchase Agreement, dated as of July 26, 2006, among Jetride, Inc., an Ohio corporation; Pinnacle Air, LLC, a Delaware limited liability company; and AirNet Systems, Inc., an Ohio corporation (the exhibits and schedules referenced in the Purchase Agreement have been omitted pursuant to Item 601(b)(2) of SEC Regulation S-K. AirNet Systems, Inc. hereby agrees to furnish supplementally a copy of any such omitted exhibit or schedule to the SEC upon request.)	Incorporated herein by reference from Exhibit 2.1 to AirNet Systems, Inc.’s Current Report on Form 8-K, dated and filed on July 28, 2006 (File No. 001-13025)
3.1	Amended Articles of AirNet Systems, Inc. as filed with the Ohio Secretary of State on April 29, 1996	Incorporated herein by reference from Exhibit 2.1 to AirNet Systems, Inc.’s Registration Statement on Form 8-A (File No. 0-28428) filed on May 3, 1996 (the “1996 Form 8-A”)
3.2	Certificate of Amendment to the Amended Articles of AirNet Systems, Inc. as filed with the Ohio Secretary of State on May 28, 1996	Incorporated herein by reference from Exhibit 4(b) to AirNet Systems, Inc.’s Registration Statement on Form S-8 (Registration No. 333-08189) filed on July 16, 1996 (the “1996 Form S-8”)
3.3	Amended Articles of AirNet Systems, Inc. (reflecting all amendments) [for SEC reporting compliance purposes only — not filed with the Ohio Secretary of State]	Incorporated herein by reference from Exhibit 4(c) to AirNet Systems, Inc.’s 1996 Form S-8
3.4	Code of Regulations of AirNet Systems, Inc.	Incorporated herein by reference from Exhibit 2.2 to AirNet Systems, Inc.’s 1996 Form 8-A
3.5	Certificate regarding adoption of amendment to Section 1.10 of the Code of Regulations of AirNet Systems, Inc. by the shareholders on May 12, 2000	Incorporated herein by reference from Exhibit 3.1 to AirNet Systems, Inc.’s Form 10-Q for the quarterly period ended June 30, 2000 (File No. 001-13025) (the “June 30, 2000 Form 10-Q”)
3.6	Code of Regulations of AirNet Systems, Inc. (reflecting all amendments) [for SEC reporting compliance purposes only]	Incorporated herein by reference from Exhibit 3.2 to AirNet Systems, Inc.’s June 30, 2000 Form 10-Q

61

Exhibit
No.	Description	Location
4.1	Amended and Restated Credit Agreement, dated as of May 28, 2004, among AirNet Systems, Inc., the lenders from time to time party thereto and The Huntington National Bank, as LC Issuer, as Swingline Lender and as Administrative Agent	Incorporated herein by reference from Exhibit 4.1 to AirNet Systems, Inc.’s Current Report on Form 8-K dated June 21, 2004 and filed on June 22, 2004 (File No. 001-13025) (the “June 2004 Form 8-K”)
4.2	Continuing Security Agreement, entered into as of May 28, 2004, by and between AirNet Systems, Inc. and The Huntington National Bank, as lender and as agent	Incorporated herein by reference from Exhibit 4.2 to AirNet Systems, Inc.’s June 2004 Form 8-K
4.3	Continuing Security Agreement, entered into as of May 28, 2004, by and between Float Control, Inc. and The Huntington National Bank, as lender and as agent	Incorporated herein by reference from Exhibit 4.3 to AirNet Systems, Inc.’s June 2004 Form 8-K
4.4	Continuing Security Agreement, entered into as of May 28, 2004, by and between AirNet Management, Inc. and The Huntington National Bank, as lender and as agent	Incorporated herein by reference from Exhibit 4.4 to AirNet Systems, Inc.’s June 2004 Form 8-K
4.5	Continuing Security Agreement, entered into as of May 28, 2004, by and between Jetride, Inc. and The Huntington National Bank, as lender and as agent [NOTE: Jetride, Inc. is now known as 7250 STARCHECK, INC.]	Incorporated herein by reference from Exhibit 4.5 to AirNet Systems, Inc.’s June 2004 Form 8-K
4.6	Continuing Security Agreement, entered into as of May 28, 2004, by and between timexpress.com, inc. and The Huntington National Bank, as lender and as agent	Incorporated herein by reference from Exhibit 4.6 to AirNet Systems, Inc.’s June 2004 Form 8-K
4.7	Continuing Security Agreement, entered into as of May 28, 2004, by and between Fast Forward Solutions, LLC and The Huntington National Bank, as lender and as agent	Incorporated herein by reference from Exhibit 4.7 to AirNet Systems, Inc.’s June 2004 Form 8-K
4.8	Stock Pledge Agreement, made as of May 28, 2004, by AirNet Systems, Inc. in favor of The Huntington National Bank, as agent	Incorporated herein by reference from Exhibit 4.8 to AirNet Systems, Inc.’s June 2004 Form 8-K
4.9	Security Agreement Pledge and Assignment of Membership Interest, made and entered into as of May 28, 2004, by and between AirNet Systems, Inc. and The Huntington National Bank, as agent	Incorporated herein by reference from Exhibit 4.9 to AirNet Systems, Inc.’s June 2004 Form 8-K
4.10	Mortgage, Security Agreement and Assignment, dated as of May 28, 2004, between AirNet Systems, Inc. and The Huntington National Bank, as agent	Incorporated herein by reference from Exhibit 4.10 to AirNet Systems, Inc.’s June 2004 Form 8-K
4.11	Replacement Subsidiary Guaranty, made as of May 28, 2004, by AirNet Management, Inc., Float Control, Inc. and Jetride, Inc. in favor of The Huntington National Bank, as agent [NOTE: Jetride, Inc. is now known as 7250 STARCHECK, INC.]	Incorporated herein by reference from Exhibit 4.11 to AirNet Systems, Inc.’s June 2004 Form 8-K
4.12	Subsidiary Guaranty, made as of May 28, 2004, by timexpress.com, inc. in favor of The Huntington National Bank, as agent	Incorporated herein by reference from Exhibit 4.12 to AirNet Systems, Inc.’s June 2004 Form 8-K
4.13	Subsidiary Guaranty, made as of May 28, 2004, by Fast Forward Solutions, LLC in favor of The Huntington National Bank, as agent	Incorporated herein by reference from Exhibit 4.13 to AirNet Systems, Inc.’s June 2004 Form 8-K

62

Exhibit
No.	Description	Location
4.14	Waiver Letter, dated November 12, 2004, executed by The Huntington National Bank, in its capacity as administrative agent for and on behalf of the lenders from time to time party to the Amended and Restated Credit Agreement dated as of May 28, 2004; acknowledged and agreed to by AirNet Systems, Inc., Jetride, Inc. (now known as 7250 STARCHECK, INC.), Float Control, Inc., AirNet Management, Inc., Fast Forward Solutions, LLC and timexpress, inc.; and consented to by Bank One, N.A. and The Huntington National Bank	Incorporated herein by reference from Exhibit 4.24 to AirNet Systems, Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2004 (File No. 001-13025) (the “September 30, 2004 Form 10-Q”)
4.15	Change in Terms Agreement, made and entered into effective as of November 12, 2004, by and between AirNet Systems, Inc. and The Huntington National Bank, in its capacity as administrative agent for and on behalf of the Lenders from time to time party to the Amended and Restated Credit Agreement dated as of May 28, 2004	Incorporated herein by reference from Exhibit 4.25 to AirNet Systems, Inc.’s September 30, 2004 Form 10-Q
4.16	Second Change in Terms Agreement, made and entered into effective as of March 24, 2005, by and between AirNet Systems, Inc. and The Huntington National Bank, in its capacity as administrative agent for and on behalf of the lenders from time to time party to the Amended and Restated Credit Agreement dated as of May 28, 2004 as amended	Incorporated herein by reference from Exhibit 4.39 to AirNet Systems, Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004 (File No. 001-13025) (the “2004 Form 10-K”)
4.17	Assignment Agreement, dated effective as of March 24, 2005, between Fifth Third Bank, as Assignor, and The Huntington National Bank, as Assignee, in respect of rights and obligations under the Amended and Restated Credit Agreement dated May 28, 2004, as amended	Incorporated herein by reference from Exhibit 4.40 to AirNet Systems, Inc.’s 2004 Form 10-K
4.18	Assignment Agreement, dated effective as of March 24, 2005, between Fifth Third Bank, as Assignor, and JPMorgan Chase Bank, N.A., as Assignee, successor by merger to Bank One, N.A., in respect of rights and obligations under the Amended and Restated Credit Agreement dated May 28, 2004, as amended	Incorporated herein by reference from Exhibit 4.41 to AirNet Systems, Inc.’s 2004 Form 10-K
4.19	Replacement Revolving Loan Note, issued on March 24, 2005, by AirNet Systems, Inc. in favor of The Huntington National Bank in the amount of $18,750,000	Incorporated herein by reference from Exhibit 4.42 to AirNet Systems, Inc.’s 2004 Form 10-K
4.20	Replacement Revolving Loan Note, issued on March 24, 2005, by AirNet Systems, Inc. in favor of Bank One, N.A. in the amount of $11,250,000	Incorporated herein by reference from Exhibit 4.43 to AirNet Systems, Inc.’s 2004 Form 10-K

63

Exhibit
No.	Description	Location
4.21	Third Change in Terms Agreement, made and entered into effective as of November 21, 2005, by and between AirNet Systems, Inc. and The Huntington National Bank, in its capacity as administrative agent for and on behalf of the lenders from time to time party to the Amended and Restated Credit Agreement dated as of May 28, 2004 as amended	Incorporated herein by reference from Exhibit 4.21 to AirNet Systems, Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 (File No. 001-13025) (the “2005 Form 10-K”)
4.22	Fourth Change in Terms Agreement, made and entered into effective as of March 28, 2006, by and between AirNet Systems, Inc. and The Huntington National Bank, in its capacity as administrative agent for and on behalf of the lenders from time to time party to the Amended and Restated Credit Agreement dated as of May 28, 2004, as amended	Incorporated herein by reference from Exhibit 4.22 to AirNet Systems, Inc.’s 2005 Form 10-K
4.23	Fifth Change in Terms Agreement, made and entered into effective as of November 10, 2006, by and between AirNet Systems, Inc. and The Huntington National Bank, in its capacity as administrative agent for and on behalf of the lenders from time to time party to the Amended and Restated Credit Agreement dated as of May 28, 2004, as amended	Incorporated herein by reference from Exhibit 4.1 to AirNet Systems, Inc.’s Current Report on Form 8-K dated and filed on November 17, 2006 (File No. 001-13025) (the “November 17, 2006 Form 8-K”)
4.24	Waiver Letter, dated November 10, 2006, executed by The Huntington National Bank, in its capacity as administrative agent for and on behalf of the lenders from time to time party to the Amended and Restated Credit Agreement dated as of May 28, 2004, as amended; acknowledged and agreed to by AirNet Systems, Inc., 7250 STARCHECK, INC. (formerly known as Jetride, Inc.), Float Control, Inc., AirNet Management, Inc., Fast Forward Solutions, LLC and timexpress, inc.; and consented to by JPMorgan Chase Bank, N.A. (successor by merger to Bank One, N.A.) and The Huntington National Bank	Incorporated herein by reference from Exhibit 4.2 to AirNet Systems, Inc.’s November 17, 2006 Form 8-K
4.25	Loan and Security Agreement (aircraft) [Loan Number: 1000119495], dated as of June 15, 2004, by and between Banc One Leasing Corporation and Jetride, Inc. [NOTE: Terminated on September 26, 2006]	Incorporated herein by reference from Exhibit 4.1 to AirNet Systems, Inc.’s September 30, 2004 Form 10-Q
4.26	Business Purpose Promissory Note (fixed rate//principal and interest) [Loan Number: 1000119495], issued on June 15, 2004, by Jetride, Inc. in favor of Banc One Leasing Corporation in the amount of $7,500,000 [NOTE: Terminated on September 26, 2006]	Incorporated herein by reference from Exhibit 4.2 to AirNet Systems, Inc.’s September 30, 2004 Form 10-Q
4.27	Corporate Guaranty [Loan Number: 1000119495], dated as of June 15, 2004, from AirNet Systems, Inc. in favor of Banc One Leasing Corporation [NOTE: Terminated on September 26, 2006]	Incorporated herein by reference from Exhibit 4.3 to AirNet Systems, Inc.’s September 30, 2004 Form 10-Q

64

Exhibit
No.	Description	Location
4.28	Loan and Security Agreement (aircraft) [Loan Number: 1000119641], dated as of June 30, 2004, by and between Banc One Leasing Corporation and Jetride, Inc. [NOTE: Terminated on September 26, 2006]	Incorporated herein by reference from Exhibit 4.4 to AirNet Systems, Inc.’s September 30, 2004 Form 10-Q
4.29	Business Purpose Promissory Note (fixed rate//principal and interest) [Loan Number: 1000119641], issued on June 30, 2004, by Jetride, Inc. in favor of Banc One Leasing Corporation in the amount of $5,000,000 [NOTE: Terminated on September 26, 2006]	Incorporated herein by reference from Exhibit 4.5 to AirNet Systems, Inc.’s September 30, 2004 Form 10-Q
4.30	Corporate Guaranty [Loan Number: 1000119641], dated as of June 30, 2004, from AirNet Systems, Inc. in favor of Banc One Leasing Corporation [NOTE: Terminated on September 26, 2006]	Incorporated herein by reference from Exhibit 4.6 to AirNet Systems, Inc.’s September 30, 2004 Form 10-Q
4.31	Acknowledgment of Borrower [Loan Number: 1000119641], dated as of June 30, 2004, by Jetride, Inc. in favor of Banc One Leasing Corporation acknowledging sale and assignment by Banc One Leasing Corporation to First Union Commercial Corporation of “Loan Documents”	Incorporated herein by reference from Exhibit 4.7 to AirNet Systems, Inc.’s September 30, 2004 Form 10-Q
4.32	Loan and Security Agreement (aircraft) [Loan Number: 1000119649], dated as of June 29, 2004, by and between Banc One Leasing Corporation and Jetride, Inc. [NOTE: Terminated on September 26, 2006]	Incorporated herein by reference from Exhibit 4.8 to AirNet Systems, Inc.’s September 30, 2004 Form 10-Q
4.33	Business Purpose Promissory Note (fixed rate//principal and interest) [Loan Number: 1000119649], issued on June 29, 2004, by Jetride, Inc. in favor of Banc One Leasing Corporation in the amount of $5,000,000 [NOTE: Terminated on September 26, 2006]	Incorporated herein by reference from Exhibit 4.9 to AirNet Systems, Inc.’s September 30, 2004 Form 10-Q
4.34	Corporate Guaranty [Loan Number: 1000119649], dated as of June 29, 2004, from AirNet Systems, Inc. in favor of Banc One Leasing Corporation [NOTE: Terminated on September 26, 2006]	Incorporated herein by reference from Exhibit 4.10 to AirNet Systems, Inc.’s September 30, 2004 Form 10-Q
4.35	Acknowledgment of Borrower [Loan Number: 1000119649], dated as of June 29, 2004, by Jetride, Inc. in favor of Banc One Leasing Corporation acknowledging sale and assignment by Banc One Leasing Corporation to PNC Leasing, LLC of “Loan Documents”	Incorporated herein by reference from Exhibit 4.11 to AirNet Systems, Inc.’s September 30, 2004 Form 10-Q
4.36	Loan and Security Agreement (aircraft) [Loan Number: 1000119650], dated as of June 30, 2004, by and between Banc One Leasing Corporation and Jetride, Inc. [NOTE: Terminated on September 26, 2006]	Incorporated herein by reference from Exhibit 4.12 to AirNet Systems, Inc.’s September 30, 2004 Form 10-Q

65

Exhibit
No.	Description	Location
4.37	Business Purpose Promissory Note (fixed rate//principal and interest) [Loan Number: 1000119650], issued on June 30, 2004, by Jetride, Inc. in favor of Banc One Leasing Corporation in the amount of $5,000,000 [NOTE: Terminated on September 26, 2006]	Incorporated herein by reference from Exhibit 4.13 to AirNet Systems, Inc.’s September 30, 2004 Form 10-Q
4.38	Corporate Guaranty [Loan Number: 1000119650], dated as of June 30, 2004, from AirNet Systems, Inc. in favor of Banc One Leasing Corporation [NOTE: Terminated on September 26, 2006]	Incorporated herein by reference from Exhibit 4.14 to AirNet Systems, Inc.’s September 30, 2004 Form 10-Q
4.39	Acknowledgment of Borrower [Loan Number: 1000119650], dated as of June 30, 2004, by Jetride, Inc. in favor of Banc One Leasing Corporation acknowledging sale and assignment by Banc One Leasing Corporation to First Union Commercial Corporation of “Loan Documents”	Incorporated herein by reference from Exhibit 4.15 to AirNet Systems, Inc.’s September 30, 2004 Form 10-Q
4.40	Loan and Security Agreement (aircraft) [Loan Number: 1000119771], dated as of July 12, 2004, by and between Banc One Leasing Corporation and Jetride, Inc. [NOTE: Terminated on September 26, 2006]	Incorporated herein by reference from Exhibit 4.16 to AirNet Systems, Inc.’s September 30, 2004 Form 10-Q
4.41	Business Purpose Promissory Note (fixed rate//principal and interest) [Loan Number: 1000119771], issued on July 12, 2004, by Jetride, Inc. in favor of Banc One Leasing Corporation in the amount of $5,000,000 [NOTE: Terminated on September 26, 2006]	Incorporated herein by reference from Exhibit 4.17 to AirNet Systems, Inc.’s September 30, 2004 Form 10-Q
4.42	Corporate Guaranty [Loan Number: 1000119771], dated as of July 12, 2004, from AirNet Systems, Inc. in favor of Banc One Leasing Corporation [NOTE: Terminated on September 26, 2006]	Incorporated herein by reference from Exhibit 4.18 to AirNet Systems, Inc.’s September 30, 2004 Form 10-Q
4.43	Acknowledgment of Borrower [Loan Number: 1000119771], dated as of July 12, 2004, by Jetride, Inc. in favor of Banc One Leasing Corporation acknowledging sale and assignment by Banc One Leasing Corporation to First Union Commercial Corporation of “Loan Documents”	Incorporated herein by reference from Exhibit 4.19 to AirNet Systems, Inc.’s September 30, 2004 Form 10-Q
4.44	Loan and Security Agreement (aircraft) [Loan Number: 1000119774], dated as of July 12, 2004, between Banc One Leasing Corporation and Jetride, Inc. [NOTE: Terminated on September 26, 2006]	Incorporated herein by reference from Exhibit 4.20 to AirNet Systems, Inc.’s September 30, 2004 Form 10-Q
4.45	Business Purpose Promissory Note (fixed rate//principal and interest) [Loan Number: 1000119774], issued on July 12, 2004, by Jetride, Inc. in favor of Banc One Leasing Corporation in the amount of $5,000,000 [NOTE: Terminated on September 26, 2006]	Incorporated herein by reference from Exhibit 4.21 to AirNet Systems, Inc.’s September 30, 2004 Form 10-Q

66

Exhibit
No.	Description	Location
4.46	Corporate Guaranty [Loan Number: 1000119774], dated as of July 12, 2004, from AirNet Systems, Inc. in favor of Banc One Leasing Corporation [NOTE: Terminated on September 26, 2006]	Incorporated herein by reference from Exhibit 4.22 to AirNet Systems, Inc.’s September 30, 2004 Form 10-Q
4.47	Acknowledgment of Borrower [Loan Number: 1000119774], dated as of July 12, 2004, by Jetride, Inc. in favor of Banc One Leasing Corporation acknowledging sale and assignment by Banc One Leasing Corporation to PNC Leasing, LLC of “Loan Documents”	Incorporated herein by reference from Exhibit 4.23 to AirNet Systems, Inc.’s September 30, 2004 Form 10-Q
4.48	Loan and Security Agreement (aircraft) [Loan Number: 1000122039], dated as of March 24, 2005, by and between Chase Equipment Leasing Inc. and AirNet Systems, Inc. [NOTE: Terminated on September 26, 2006]	Incorporated herein by reference from Exhibit 4.44 to AirNet Systems, Inc.’s 2004 Form 10-K
4.49	Business Purpose Promissory Note (fixed rate//principal and interest) [Loan Number: 1000122039], issued on March 24, 2005, by AirNet Systems, Inc. in favor of Chase Equipment Leasing Inc. in the amount of $11,000,000 [NOTE: Terminated on September 26, 2006]	Incorporated herein by reference from Exhibit 4.45 to AirNet Systems, Inc.’s 2004 Form 10-K
4.50	Second Amended and Restated Credit Agreement, dated as of March 29, 2007, among AirNet Systems, Inc. and The Huntington National Bank as Lender and as Administrative Agent; and related Consent and Agreement of Guarantors executed by 7250 STARCHECK, INC. (formerly known as Jetride, Inc.); Float Control, Inc.; AirNet Management, Inc.; Fast Forward Solutions, LLC; and timexpress.com, inc., As Guarantors	Filed herewith
4.51	Amended and Restated Note, issued on March 29, 2007, by AirNet Systems, Inc. in favor of The Huntington National Bank in the amount of $15,000,000	Filed herewith
4.52	Agreement to furnish instruments defining rights of holders of long-term debt	Filed herewith
10.1*	AirNet Systems, Inc. Amended and Restated 1996 Incentive Stock Plan (reflects all amendments)	Incorporated herein by reference from Exhibit 10.1 to AirNet Systems, Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003 (File No. 001-13025) (the “2003 Form 10-K”)
10.2	Indemnification Agreement, dated as of May 15, 1996, by and among AirNet Systems, Inc. and Eric P. Roy, Glenn M. Miller, Charles A. Renusch, Guy S. King, Lincoln L. Rutter, Kendall W. Wright and William R. Sumser	Incorporated herein by reference from Exhibit 10.11 to Amendment No. 2 to AirNet Systems Inc.’s Form S-1 Registration Statement (Registration No. 333-03092) filed on May 24, 1996 (“Amendment No. 2 to Form S-1”)
10.3	Indemnification Agreement, dated as of May 15, 1996, between Gerald G. Mercer and AirNet Systems, Inc.	Incorporated herein by reference from Exhibit 10.12 to AirNet Systems, Inc.’s Amendment No. 2 to Form S-1
10.4*	Employment Agreement, made as of January 1, 2001, between AirNet Systems, Inc. and Joel E. Biggerstaff [NOTE: Terminated on December 28, 2006] Inc.’s Annual	Incorporated herein by reference from Exhibit 10.4 to AirNet Systems Inc.’s, Annual Report on Form 10-K for the fiscal year ended December 31, 2000 (File No. 001-13025) (the “2000 Form 10-K”)
10.5*	Separation Agreement and General Release, entered into as of December 28, 2006, between AirNet Systems, Inc. and Joel E. Biggerstaff	Incorporated herein by reference from Exhibit 10.1 to AirNet Systems, Inc.’s Current Report on Form 8-K, dated and filed on January 4, 2007 (File No. 001-13025) (the “January 4, 2007 Form 8-K”)
10.6*	Employment Agreement, made as of January 1, 2001, between AirNet Systems, Inc. and Jeffrey B. Harris	Incorporated herein by reference from Exhibit 10.6 to AirNet Systems, Inc.’s 2000 Form 10-K

67

Exhibit
No.	Description	Location
10.7*	AirNet Systems, Inc. Director Deferred Compensation Plan (reflects all amendments)	Incorporated herein by reference from Exhibit 10.7 to AirNet Systems, Inc.’s 2003 Form 10-K
10.8*	AirNet Systems, Inc. Salary for Options Conversion Plan, effective February 6, 2000	Incorporated herein by reference from Exhibit 10.8 to AirNet Systems, Inc.’s 2000 Form 10-K
10.9*	Agreement, made as of July 17, 2001, between AirNet Systems, Inc. and Gerald G. Mercer	Incorporated herein by reference from Exhibit 10.9 to AirNet Systems, Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2001 (File No. 001-13025) (the “June 30, 2001 Form 10-Q”)
10.10*	Jerry Mercer Transition Agreement, effective May 26, 2001, between AirNet Systems, Inc. and Gerald G. Mercer	Incorporated herein by reference from Exhibit 10.10 to AirNet Systems, Inc.’s June 30, 2001 Form 10-Q
10.11	Land Lease at Rickenbacker International Airport, executed and entered into as of January 20, 2004, by and between Columbus Regional Airport Authority and AirNet Systems, Inc.	Incorporated herein by reference from Exhibit 10.1 to AirNet Systems, Inc.’s Current Report on Form 8-K, dated February 20, 2004 and filed on February 24, 2004 (File No. 001-13025) (the “February 2004 8-K”)
10.12	Leasehold Improvements Purchase Agreement, made January 20, 2004, by and between Columbus Regional Airport Authority and AirNet Systems, Inc.	Incorporated herein by reference from Exhibit 10.2 to AirNet Systems, Inc.’s February 2004 Form 8-K
10.13	Rickenbacker International Airport Operating Agreement, made and entered into January 20, 2004, by and between Columbus Regional Airport Authority and AirNet Systems, Inc.	Incorporated herein by reference from Exhibit 10.3 to AirNet Systems, Inc.’s February 2004 Form 8-K
10.14	Non-Exclusive License Agreement to Conduct an Aeronautical Business at Rickenbacker International Airport, entered into as of January 20, 2004, by and between Columbus Regional Airport Authority and AirNet Systems, Inc.	Incorporated herein by reference from Exhibit 10.4 to AirNet Systems, Inc.’s February 2004 Form 8-K
10.15	Rickenbacker International Airport Non-Public Self-Fueling Permit for AirNet Systems, Inc., executed by Columbus Regional Airport Authority on January 20, 2004 and by AirNet Systems, Inc. on January 15, 2004	Incorporated herein by reference from Exhibit 10.5 to AirNet Systems, Inc.’s February 2004 Form 8-K
10.16	Rickenbacker International Airport Commingling Fuel Agreement, made and entered into January 20, 2004, by and between Columbus Regional Airport Authority and AirNet Systems, Inc.	Incorporated herein by reference from Exhibit 10.6 to AirNet Systems, Inc.’s February 2004 Form 8-K
10.17	Non-Exclusive Access Easement granted by Columbus Regional Airport Authority in favor of AirNet Systems, Inc., executed on January 20, 2004	Incorporated herein by reference from Exhibit 10.7 to AirNet Systems, Inc.’s February 2004 Form 8-K
10.18	No-Build Easement granted by Columbus Regional Airport Authority in favor of AirNet Systems, Inc., executed on January 20, 2004	Incorporated herein by reference from Exhibit 10.8 to AirNet Systems, Inc.’s February 2004 Form 8-K

68

Exhibit
No.	Description	Location
10.19	Lease Termination Agreement, made and entered into to be effective as of December 15, 2004, by and between Columbus Regional Airport Authority and AirNet Systems, Inc.	Incorporated herein by reference from Exhibit 10.1 to AirNet Systems, Inc.’s Current Report on Form 8-K dated and filed on December 21, 2004 (File No. 001-13025) (the “December 21, 2004 Form 8-K”)
10.20	Lease, executed and entered into as of December 15, 2004, by Columbus Regional Airport Authority and AirNet Systems, Inc.	Incorporated herein by reference from Exhibit 10.2 to AirNet Systems, Inc.’s December 21, 2004 Form 8-K
10.21	Amendment No.1 to Land Lease, made and entered into to be effective as of April 5, 2004, by and between Columbus Regional Airport Authority and AirNet Systems, Inc.	Incorporated herein by reference from Exhibit 10.3 to AirNet Systems, Inc.’s December 21, 2004 Form 8-K
10.22	Amendment No. 2 to Land Lease, made and entered into to be effective as of October 29, 2004, by and between Columbus Regional Airport Authority and AirNet Systems, Inc.	Incorporated herein by reference from Exhibit 10.21 to AirNet Systems, Inc.’s 2005 Form 10-K
10.23*	AirNet Systems, Inc. 2004 Stock Incentive Plan (reflects all amendments)	Incorporated herein by reference from Exhibit 10.1 to AirNet Systems, Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2004 (File No. 001-13025)
10.24*	Form of Stock Option Agreement, made to be effective as of July 20, 2005 used in connection with grant of nonstatutory stock options to newly-appointed non-employee directors (“Eligible Directors”) of AirNet Systems, Inc. under the AirNet Systems, Inc. 2004 Stock Incentive Plan	Incorporated herein by reference from Exhibit 10.1 to AirNet Systems, Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2005 (File No. 001-13025)
10.25*	Form of Stock Option Agreement used and to be used in connection with the automatic annual grant of nonstatutory stock options to non-employee directors (“Eligible Directors”) of AirNet Systems, Inc. on and after January 2, 2007 under the AirNet Systems, Inc. 2004 Stock Incentive Plan	Filed herewith
10.26*	Summary of Compensation for Directors of AirNet Systems, Inc.	Filed herewith
10.27*	Employment Agreement, made as of May 3, 2005, between AirNet Systems, Inc. and Gary W. Qualmann	Incorporated herein by reference from Exhibit 10.1 to AirNet Systems, Inc.’s Current Report on Form 8-K dated and filed on May 6, 2005 (File No. 001-13025) (the “May 6, 2005 Form 8-K”)
10.28*	Employment Agreement, made as of May 3, 2005, between AirNet Systems, Inc. and Larry M. Glasscock, Jr.	Incorporated herein by reference from Exhibit 10.2 to AirNet Systems, Inc.’s May 6, 2005 Form 8-K
10.29*	Summary of AirNet Systems, Inc. 2006 Incentive Compensation Plan	Filed herewith
10.30*	Employment Agreement for Bruce D. Parker, entered into December 28, 2006, by and between AirNet Systems, Inc. and Bruce D. Parker	Incorporated herein by reference from Exhibit 10.2 to AirNet Systems, Inc.’s January 4, 2007 Form 8-K

69

Exhibit
No.	Description	Location
10.31*	Stock Option Agreement, made to be effective as of December 28, 2006, by and between AirNet Systems, Inc. and Bruce D. Parker evidencing nonstatutory stock options granted under the AirNet Systems, Inc. 2004 Stock Incentive Plan	Filed herewith
10.32*	Summary of 2007 Incentive Compensation Plan	Filed herewith
14	Code of Business Conduct and Ethics, as revised on August 2, 2006	Incorporated herein by reference from Exhibit 14 to AirNet Systems, Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2006 (File No. 001-13025)
21	Subsidiaries of AirNet Systems, Inc.	Filed herewith
23	Consent of Independent Registered Public Accounting Firm — Ernst & Young LLP	Filed herewith
24	Powers of Attorney	Filed herewith
31.1	Rule 13a-14(a)/15d-14(a) Certification (Principal Executive Officer)	Filed herewith
31.2	Rule 13a-14(a)/15d-14(a) Certification (Principal Financial Officer)	Filed herewith
32	Section 1350 Certification (Principal Executive Officer and Principal Financial Officer)	Filed herewith

* Denotes a management contract or compensatory plan or arrangement required to be filed pursuant to Item 15(b) of Form 10-K.

(b) Exhibits

The documents listed in Item 15(a)(3) are filed with this Annual Report on Form 10-K as exhibits or incorporated into this Annual Report on Form 10-K by reference.

(c) Financial Statement Schedules

The financial statement schedule included in Item 15(a)(2) is filed with this Annual Report on Form 10-K.

70

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

	AIRNET SYSTEMS, INC.
Dated: March 30, 2007	By: /s/ Bruce D. Parker Bruce D. Parker, Chairman of the Board,
	Chief Executive Officer and President

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Bruce D. Parker Bruce D. Parker	Chairman of the Board, Chief Executive Officer, President and Director (Principal Executive Officer)	March 30, 2007
/s/ Gary W. Qualmann Gary W. Qualmann	Chief Financial Officer, Treasurer and Secretary (Principal Financial Officer)	March 30, 2007
/s/ Ray L. Druseikis Ray L. Druseikis	Vice President of Finance, Controller and Principal Accounting Officer	March 30, 2007
*James M. Chadwick James M. Chadwick	Director	March 30, 2007

71

Signature	Title	Date
*Russell M. Gertmenian Russell M. Gertmenian	Director	March 30, 2007
*Gerald Hellerman Gerald Hellerman	Director	March 30, 2007
*James E. Riddle James E. Riddle	Director	March 30, 2007

The above-named directors of the Registrant sign this Annual Report on Form 10-K by Bruce D.
Parker, their attorney-in-fact, pursuant to Powers of Attorney signed by the above-named directors, which Powers of Attorney are filed with this Annual Report on Form 10-K as exhibits, in the capacities indicated and on the 30th day of March, 2007.

*By /s/ Bruce D. Parker   Bruce D. Parker, Attorney-in-Fact

72

INDEX TO EXHIBITS

Exhibit
No.	Description	Location
2.1	Asset Purchase Agreement, dated as of July 11, 2003, by and among AirNet Systems, Inc., AirNet Management, Inc., Mercury Business Services, Inc., Andrew R. Cooke, Peter G. Salisbury and Christopher F. Valente. [Pursuant to Item 601(b)(2) of SEC Regulation S-K, certain schedules and exhibits to this Asset Purchase Agreement have not been filed with this exhibit. The schedules contain various items relating to the assets being sold and the representations and warranties of the parties to the Asset Purchase Agreement. AirNet Systems, Inc. has agreed to furnish supplementally any omitted schedule or exhibit to the SEC upon request.]	Incorporated herein by reference from Exhibit 2.1 to AirNet Systems, Inc.’s Current Report on Form 8-K, dated and filed on July 15, 2003 (File No. 001-13025)
2.2	Purchase Agreement, dated as of July 26, 2006, among Jetride, Inc., an Ohio corporation; Pinnacle Air, LLC, a Delaware limited liability company; and AirNet Systems, Inc., an Ohio corporation (the exhibits and schedules referenced in the Purchase Agreement have been omitted pursuant to Item 601(b)(2) of SEC Regulation S-K. AirNet Systems, Inc. hereby agrees to furnish supplementally a copy of any such omitted exhibit or schedule to the SEC upon request.)	Incorporated herein by reference from Exhibit 2.1 to AirNet Systems, Inc.’s Current Report on Form 8-K, dated and filed on July 28, 2006 (File No. 001-13025)
3.1	Amended Articles of AirNet Systems, Inc. as filed with the Ohio Secretary of State on April 29, 1996	Incorporated herein by reference from Exhibit 2.1 to AirNet Systems, Inc.’s Registration Statement on Form 8-A (File No. 0-28428) filed on May 3, 1996 (the “1996 Form 8-A”)
3.2	Certificate of Amendment to the Amended Articles of AirNet Systems, Inc. as filed with the Ohio Secretary of State on May 28, 1996	Incorporated herein by reference from Exhibit 4(b) to AirNet Systems, Inc.’s Registration Statement on Form S-8 (Registration No. 333-08189) filed on July 16, 1996 (the “1996 Form S-8”)
3.3	Amended Articles of AirNet Systems, Inc. (reflecting all amendments) [for SEC reporting compliance purposes only — not filed with the Ohio Secretary of State]	Incorporated herein by reference from Exhibit 4(c) to AirNet Systems, Inc.’s 1996 Form S-8
3.4	Code of Regulations of AirNet Systems, Inc.	Incorporated herein by reference from Exhibit 2.2 to AirNet Systems, Inc.’s 1996 Form 8-A
3.5	Certificate regarding adoption of amendment to Section 1.10 of the Code of Regulations of AirNet Systems, Inc. by the shareholders on May 12, 2000	Incorporated herein by reference from Exhibit 3.1 to AirNet Systems, Inc.’s Form 10-Q for the quarterly period ended June 30, 2000 (File No. 001-13025) (the “June 30, 2000 Form 10-Q”)
3.6	Code of Regulations of AirNet Systems, Inc. (reflecting all amendments) [for SEC reporting compliance purposes only]	Incorporated herein by reference from Exhibit 3.2 to AirNet Systems, Inc.’s June 30, 2000 Form 10-Q

73

Exhibit
No.	Description	Location
4.1	Amended and Restated Credit Agreement, dated as of May 28, 2004, among AirNet Systems, Inc., the lenders from time to time party thereto and The Huntington National Bank, as LC Issuer, as Swingline Lender and as Administrative Agent	Incorporated herein by reference from Exhibit 4.1 to AirNet Systems, Inc.’s Current Report on Form 8-K dated June 21, 2004 and filed on June 22, 2004 (File No. 001-13025) (the “June 2004 Form 8-K”)
4.2	Continuing Security Agreement, entered into as of May 28, 2004, by and between AirNet Systems, Inc. and The Huntington National Bank, as lender and as agent	Incorporated herein by reference from Exhibit 4.2 to AirNet Systems, Inc.’s June 2004 Form 8-K
4.3	Continuing Security Agreement, entered into as of May 28, 2004, by and between Float Control, Inc. and The Huntington National Bank, as lender and as agent	Incorporated herein by reference from Exhibit 4.3 to AirNet Systems, Inc.’s June 2004 Form 8-K
4.4	Continuing Security Agreement, entered into as of May 28, 2004, by and between AirNet Management, Inc. and The Huntington National Bank, as lender and as agent	Incorporated herein by reference from Exhibit 4.4 to AirNet Systems, Inc.’s June 2004 Form 8-K
4.5	Continuing Security Agreement, entered into as of May 28, 2004, by and between Jetride, Inc. and The Huntington National Bank, as lender and as agent [NOTE: Jetride, Inc. is now known as 7250 STARCHECK, INC.]	Incorporated herein by reference from Exhibit 4.5 to AirNet Systems, Inc.’s June 2004 Form 8-K
4.6	Continuing Security Agreement, entered into as of May 28, 2004, by and between timexpress.com, inc. and The Huntington National Bank, as lender and as agent	Incorporated herein by reference from Exhibit 4.6 to AirNet Systems, Inc.’s June 2004 Form 8-K
4.7	Continuing Security Agreement, entered into as of May 28, 2004, by and between Fast Forward Solutions, LLC and The Huntington National Bank, as lender and as agent	Incorporated herein by reference from Exhibit 4.7 to AirNet Systems, Inc.’s June 2004 Form 8-K
4.8	Stock Pledge Agreement, made as of May 28, 2004, by AirNet Systems, Inc. in favor of The Huntington National Bank, as agent	Incorporated herein by reference from Exhibit 4.8 to AirNet Systems, Inc.’s June 2004 Form 8-K
4.9	Security Agreement Pledge and Assignment of Membership Interest, made and entered into as of May 28, 2004, by and between AirNet Systems, Inc. and The Huntington National Bank, as agent	Incorporated herein by reference from Exhibit 4.9 to AirNet Systems, Inc.’s June 2004 Form 8-K
4.10	Mortgage, Security Agreement and Assignment, dated as of May 28, 2004, between AirNet Systems, Inc. and The Huntington National Bank, as agent	Incorporated herein by reference from Exhibit 4.10 to AirNet Systems, Inc.’s June 2004 Form 8-K
4.11	Replacement Subsidiary Guaranty, made as of May 28, 2004, by AirNet Management, Inc., Float Control, Inc. and Jetride, Inc. in favor of The Huntington National Bank, as agent [NOTE: Jetride, Inc. is now known as 7250 STARCHECK, INC.]	Incorporated herein by reference from Exhibit 4.11 to AirNet Systems, Inc.’s June 2004 Form 8-K
4.12	Subsidiary Guaranty, made as of May 28, 2004, by timexpress.com, inc. in favor of The Huntington National Bank, as agent	Incorporated herein by reference from Exhibit 4.12 to AirNet Systems, Inc.’s June 2004 Form 8-K

74

Exhibit
No.	Description	Location
4.13	Subsidiary Guaranty, made as of May 28, 2004, by Fast Forward Solutions, LLC in favor of The Huntington National Bank, as agent	Incorporated herein by reference from Exhibit 4.13 to AirNet Systems, Inc.’s June 2004 Form 8-K
4.14	Waiver Letter, dated November 12, 2004, executed by The Huntington National Bank, in its capacity as administrative agent for and on behalf of the lenders from time to time party to the Amended and Restated Credit Agreement dated as of May 28, 2004; acknowledged and agreed to by AirNet Systems, Inc., Jetride, Inc. (now known as 7250 STARCHECK, INC.), Float Control, Inc., AirNet Management, Inc., Fast Forward Solutions, LLC and timexpress, inc.; and consented to by Bank One, N.A. and The Huntington National Bank	Incorporated herein by reference from Exhibit 4.24 to AirNet Systems, Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2004 (File No. 001-13025) (the “September 30, 2004 Form 10-Q”)
4.15	Change in Terms Agreement, made and entered into effective as of November 12, 2004, by and between AirNet Systems, Inc. and The Huntington National Bank, in its capacity as administrative agent for and on behalf of the Lenders from time to time party to the Amended and Restated Credit Agreement dated as of May 28, 2004	Incorporated herein by reference from Exhibit 4.25 to AirNet Systems, Inc.’s September 30, 2004 Form 10-Q
4.16	Second Change in Terms Agreement, made and entered into effective as of March 24, 2005, by and between AirNet Systems, Inc. and The Huntington National Bank, in its capacity as administrative agent for and on behalf of the lenders from time to time party to the Amended and Restated Credit Agreement dated as of May 28, 2004 as amended	Incorporated herein by reference from Exhibit 4.39 to AirNet Systems, Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004 (File No. 001-13025) (the “2004 Form 10-K”)
4.17	Assignment Agreement, dated effective as of March 24, 2005, between Fifth Third Bank, as Assignor, and The Huntington National Bank, as Assignee, in respect of rights and obligations under the Amended and Restated Credit Agreement dated May 28, 2004, as amended	Incorporated herein by reference from Exhibit 4.40 to AirNet Systems, Inc.’s 2004 Form 10-K
4.18	Assignment Agreement, dated effective as of March 24, 2005, between Fifth Third Bank, as Assignor, and JPMorgan Chase Bank, N.A., as Assignee, successor by merger to Bank One, N.A., in respect of rights and obligations under the Amended and Restated Credit Agreement dated May 28, 2004, as amended	Incorporated herein by reference from Exhibit 4.41 to AirNet Systems, Inc.’s 2004 Form 10-K
4.19	Replacement Revolving Loan Note, issued on March 24, 2005, by AirNet Systems, Inc. in favor of The Huntington National Bank in the amount of $18,750,000	Incorporated herein by reference from Exhibit 4.42 to AirNet Systems, Inc.’s 2004 Form 10-K
4.20	Replacement Revolving Loan Note, issued on March 24, 2005, by AirNet Systems, Inc. in favor of Bank One, N.A. in the amount of $11,250,000	Incorporated herein by reference from Exhibit 4.43 to AirNet Systems, Inc.’s 2004 Form 10-K

75

Exhibit
No.	Description	Location
4.21	Third Change in Terms Agreement, made and entered into effective as of November 21, 2005, by and between AirNet Systems, Inc. and The Huntington National Bank, in its capacity as administrative agent for and on behalf of the lenders from time to time party to the Amended and Restated Credit Agreement dated as of May 28, 2004 as amended	Incorporated herein by reference from Exhibit 4.21 to AirNet Systems, Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 (File No. 001-13025) (the “2005 Form 10-K”)
4.22	Fourth Change in Terms Agreement, made and entered into effective as of March 28, 2006, by and between AirNet Systems, Inc. and The Huntington National Bank, in its capacity as administrative agent for and on behalf of the lenders from time to time party to the Amended and Restated Credit Agreement dated as of May 28, 2004, as amended	Incorporated herein by reference from Exhibit 4.22 to AirNet Systems, Inc.’s 2005 Form 10-K
4.23	Fifth Change in Terms Agreement, made and entered into effective as of November 10, 2006, by and between AirNet Systems, Inc. and The Huntington National Bank, in its capacity as administrative agent for and on behalf of the lenders from time to time party to the Amended and Restated Credit Agreement dated as of May 28, 2004, as amended	Incorporated herein by reference from Exhibit 4.1 to AirNet Systems, Inc.’s Current Report on Form 8-K dated and filed on November 17, 2006 (File No. 001-13025) (the “November 17, 2006 Form 8-K”)
4.24	Waiver Letter, dated November 10, 2006, executed by The Huntington National Bank, in its capacity as administrative agent for and on behalf of the lenders from time to time party to the Amended and Restated Credit Agreement dated as of May 28, 2004, as amended; acknowledged and agreed to by AirNet Systems, Inc., 7250 STARCHECK, INC. (formerly known as Jetride, Inc.), Float Control, Inc., AirNet Management, Inc., Fast Forward Solutions, LLC and timexpress, inc.; and consented to by JPMorgan Chase Bank, N.A. (successor by merger to Bank One, N.A.) and The Huntington National Bank	Incorporated herein by reference from Exhibit 4.2 to AirNet Systems, Inc.’s November 17, 2006 Form 8-K
4.25	Loan and Security Agreement (aircraft) [Loan Number: 1000119495], dated as of June 15, 2004, by and between Banc One Leasing Corporation and Jetride, Inc. [NOTE: Terminated on September 26, 2006]	Incorporated herein by reference from Exhibit 4.1 to AirNet Systems, Inc.’s September 30, 2004 Form 10-Q
4.26	Business Purpose Promissory Note (fixed rate//principal and interest) [Loan Number: 1000119495], issued on June 15, 2004, by Jetride, Inc. in favor of Banc One Leasing Corporation in the amount of $7,500,000 [NOTE: Terminated on September 26, 2006]	Incorporated herein by reference from Exhibit 4.2 to AirNet Systems, Inc.’s September 30, 2004 Form 10-Q
4.27	Corporate Guaranty [Loan Number: 1000119495], dated as of June 15, 2004, from AirNet Systems, Inc. in favor of Banc One Leasing Corporation [NOTE: Terminated on September 26, 2006]	Incorporated herein by reference from Exhibit 4.3 to AirNet Systems, Inc.’s September 30, 2004 Form 10-Q

76

Exhibit
No.	Description	Location
4.28	Loan and Security Agreement (aircraft) [Loan Number: 1000119641], dated as of June 30, 2004, by and between Banc One Leasing Corporation and Jetride, Inc. [NOTE: Terminated on September 26, 2006]	Incorporated herein by reference from Exhibit 4.4 to AirNet Systems, Inc.’s September 30, 2004 Form 10-Q
4.29	Business Purpose Promissory Note (fixed rate//principal and interest) [Loan Number: 1000119641], issued on June 30, 2004, by Jetride, Inc. in favor of Banc One Leasing Corporation in the amount of $5,000,000 [NOTE: Terminated on September 26, 2006]	Incorporated herein by reference from Exhibit 4.5 to AirNet Systems, Inc.’s September 30, 2004 Form 10-Q
4.30	Corporate Guaranty [Loan Number: 1000119641], dated as of June 30, 2004, from AirNet Systems, Inc. in favor of Banc One Leasing Corporation [NOTE: Terminated on September 26, 2006]	Incorporated herein by reference from Exhibit 4.6 to AirNet Systems, Inc.’s September 30, 2004 Form 10-Q
4.31	Acknowledgment of Borrower [Loan Number: 1000119641], dated as of June 30, 2004, by Jetride, Inc. in favor of Banc One Leasing Corporation acknowledging sale and assignment by Banc One Leasing Corporation to First Union Commercial Corporation of “Loan Documents”	Incorporated herein by reference from Exhibit 4.7 to AirNet Systems, Inc.’s September 30, 2004 Form 10-Q
4.32	Loan and Security Agreement (aircraft) [Loan Number: 1000119649], dated as of June 29, 2004, by and between Banc One Leasing Corporation and Jetride, Inc. [NOTE: Terminated on September 26, 2006]	Incorporated herein by reference from Exhibit 4.8 to AirNet Systems, Inc.’s September 30, 2004 Form 10-Q
4.33	Business Purpose Promissory Note (fixed rate//principal and interest) [Loan Number: 1000119649], issued on June 29, 2004, by Jetride, Inc. in favor of Banc One Leasing Corporation in the amount of $5,000,000 [NOTE: Terminated on September 26, 2006]	Incorporated herein by reference from Exhibit 4.9 to AirNet Systems, Inc.’s September 30, 2004 Form 10-Q
4.34	Corporate Guaranty [Loan Number: 1000119649], dated as of June 29, 2004, from AirNet Systems, Inc. in favor of Banc One Leasing Corporation [NOTE: Terminated on September 26, 2006]	Incorporated herein by reference from Exhibit 4.10 to AirNet Systems, Inc.’s September 30, 2004 Form 10-Q
4.35	Acknowledgment of Borrower [Loan Number: 1000119649], dated as of June 29, 2004, by Jetride, Inc. in favor of Banc One Leasing Corporation acknowledging sale and assignment by Banc One Leasing Corporation to PNC Leasing, LLC of “Loan Documents”	Incorporated herein by reference from Exhibit 4.11 to AirNet Systems, Inc.’s September 30, 2004 Form 10-Q
4.36	Loan and Security Agreement (aircraft) [Loan Number: 1000119650], dated as of June 30, 2004, by and between Banc One Leasing Corporation and Jetride, Inc. [NOTE: Terminated on September 26, 2006]	Incorporated herein by reference from Exhibit 4.12 to AirNet Systems, Inc.’s September 30, 2004 Form 10-Q

77

Exhibit
No.	Description	Location
4.37	Business Purpose Promissory Note (fixed rate//principal and interest) [Loan Number: 1000119650], issued on June 30, 2004, by Jetride, Inc. in favor of Banc One Leasing Corporation in the amount of $5,000,000 [NOTE: Terminated on September 26, 2006]	Incorporated herein by reference from Exhibit 4.13 to AirNet Systems, Inc.’s September 30, 2004 Form 10-Q
4.38	Corporate Guaranty [Loan Number: 1000119650], dated as of June 30, 2004, from AirNet Systems, Inc. in favor of Banc One Leasing Corporation [NOTE: Terminated on September 26, 2006]	Incorporated herein by reference from Exhibit 4.14 to AirNet Systems, Inc.’s September 30, 2004 Form 10-Q
4.39	Acknowledgment of Borrower [Loan Number: 1000119650], dated as of June 30, 2004, by Jetride, Inc. in favor of Banc One Leasing Corporation acknowledging sale and assignment by Banc One Leasing Corporation to First Union Commercial Corporation of “Loan Documents”	Incorporated herein by reference from Exhibit 4.15 to AirNet Systems, Inc.’s September 30, 2004 Form 10-Q
4.40	Loan and Security Agreement (aircraft) [Loan Number: 1000119771], dated as of July 12, 2004, by and between Banc One Leasing Corporation and Jetride, Inc. [NOTE: Terminated on September 26, 2006]	Incorporated herein by reference from Exhibit 4.16 to AirNet Systems, Inc.’s September 30, 2004 Form 10-Q
4.41	Business Purpose Promissory Note (fixed rate//principal and interest) [Loan Number: 1000119771], issued on July 12, 2004, by Jetride, Inc. in favor of Banc One Leasing Corporation in the amount of $5,000,000 [NOTE: Terminated on September 26, 2006]	Incorporated herein by reference from Exhibit 4.17 to AirNet Systems, Inc.’s September 30, 2004 Form 10-Q
4.42	Corporate Guaranty [Loan Number: 1000119771], dated as of July 12, 2004, from AirNet Systems, Inc. in favor of Banc One Leasing Corporation [NOTE: Terminated on September 26, 2006]	Incorporated herein by reference from Exhibit 4.18 to AirNet Systems, Inc.’s September 30, 2004 Form 10-Q
4.43	Acknowledgment of Borrower [Loan Number: 1000119771], dated as of July 12, 2004, by Jetride, Inc. in favor of Banc One Leasing Corporation acknowledging sale and assignment by Banc One Leasing Corporation to First Union Commercial Corporation of	Incorporated herein by reference from Exhibit 4.19 to AirNet Systems, Inc.’s September 30, 2004 Form 10-Q
	“Loan Documents”
4.44	Loan and Security Agreement (aircraft) [Loan Number: 1000119774], dated as of July 12, 2004, between Banc One Leasing Corporation and Jetride, Inc. [NOTE: Terminated on September 26, 2006]	Incorporated herein by reference from Exhibit 4.20 to AirNet Systems, Inc.’s September 30, 2004 Form 10-Q
4.45	Business Purpose Promissory Note (fixed rate//principal and interest) [Loan Number: 1000119774], issued on July 12, 2004, by Jetride, Inc. in favor of Banc One Leasing Corporation in the amount of $5,000,000 [NOTE: Terminated on September 26, 2006]	Incorporated herein by reference from Exhibit 4.21 to AirNet Systems, Inc.’s September 30, 2004 Form 10-Q

78

Exhibit
No.	Description	Location
4.46	Corporate Guaranty [Loan Number: 1000119774], dated as of July 12, 2004, from AirNet Systems, Inc. in favor of Banc One Leasing Corporation [NOTE: Terminated on September 26, 2006]	Incorporated herein by reference from Exhibit 4.22 to AirNet Systems, Inc.’s September 30, 2004 Form 10-Q
4.47	Acknowledgment of Borrower [Loan Number: 1000119774], dated as of July 12, 2004, by Jetride, Inc. in favor of Banc One Leasing Corporation acknowledging sale and assignment by Banc One Leasing Corporation to PNC Leasing, LLC of “Loan Documents”	Incorporated herein by reference from Exhibit 4.23 to AirNet Systems, Inc.’s September 30, 2004 Form 10-Q
4.48	Loan and Security Agreement (aircraft) [Loan Number: 1000122039], dated as of March 24, 2005, by and between Chase Equipment Leasing Inc. and AirNet Systems, Inc. [NOTE: Terminated on September 26, 2006]	Incorporated herein by reference from Exhibit 4.44 to AirNet Systems, Inc.’s 2004 Form 10-K
4.49	Business Purpose Promissory Note (fixed rate//principal and interest) [Loan Number: 1000122039], issued on March 24, 2005, by AirNet Systems, Inc. in favor of Chase Equipment Leasing Inc. in the amount of $11,000,000 [NOTE: Terminated on September 26, 2006]	Incorporated herein by reference from Exhibit 4.45 to AirNet Systems, Inc.’s 2004 Form 10-K
4.50	Second Amended and Restated Credit Agreement, dated as of March 29, 2007, among AirNet Systems, Inc. and The Huntington National Bank as Lender and as Administrative Agent; and related Consent and Agreement of Guarantors executed by 7250 STARCHECK, INC. (formerly known as Jetride, Inc.); Float Control, Inc.; AirNet Management, Inc.; Fast Forward Solutions, LLC; and timexpress.com, inc., As Guarantors	Filed herewith
4.51	Amended and Restated Note, issued on March 29, 2007, by AirNet Systems, Inc. in favor of The Huntington National Bank in the amount of $15,000,000	Filed herewith
4.52	Agreement to furnish instruments defining rights of holders of long-term debt	Filed herewith
10.1*	AirNet Systems, Inc. Amended and Restated 1996 Incentive Stock Plan (reflects all amendments)	Incorporated herein by reference from Exhibit 10.1 to AirNet Systems, Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003 (File No. 001-13025) (the “2003 Form 10-K”)
10.2	Indemnification Agreement, dated as of May 15, 1996, by and among AirNet Systems, Inc. and Eric P. Roy, Glenn M. Miller, Charles A. Renusch, Guy S. King, Lincoln L. Rutter, Kendall W. Wright and William R. Sumser	Incorporated herein by reference from Exhibit 10.11 to Amendment No. 2 to AirNet Systems Inc.’s Form S-1 Registration Statement (Registration No. 333-03092) filed on May 24, 1996 (“Amendment No. 2 to Form S-1”)
10.3	Indemnification Agreement, dated as of May 15, 1996, between Gerald G. Mercer and AirNet Systems, Inc.	Incorporated herein by reference from Exhibit 10.12 to AirNet Systems, Inc.’s Amendment No. 2 to Form S-1
10.4*	Employment Agreement, made as of January 1, 2001, between AirNet Systems, Inc. and Joel E. Biggerstaff [NOTE: Terminated on December 28, 2006]	Incorporated herein by reference from Exhibit 10.4 to AirNet Systems, Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2000 (File No. 001-13025) (the “2000 Form 10-K”)
10.5*	Separation Agreement and General Release, entered into as of December 28, 2006, between AirNet Systems, Inc. and Joel E. Biggerstaff	Incorporated herein by reference from Exhibit 10.1 to AirNet Systems, Inc.’s Current Report on Form 8-K, dated and filed on January 4, 2007 (File No. 001-13025) (the “January 4, 2007 Form 8-K”)
10.6*	Employment Agreement, made as of January 1, 2001, between AirNet Systems, Inc. and Jeffrey B. Harris	Incorporated herein by reference from Exhibit 10.6 to AirNet Systems, Inc.’s 2000 Form 10-K

79

Exhibit
No.	Description	Location
10.7*	AirNet Systems, Inc. Director Deferred Compensation Plan (reflects all amendments)	Incorporated herein by reference from Exhibit 10.7 to AirNet Systems, Inc.’s 2003 Form 10-K
10.8*	AirNet Systems, Inc. Salary for Options Conversion Plan, effective February 6, 2000	Incorporated herein by reference from Exhibit 10.8 to AirNet Systems, Inc.’s 2000 Form 10-K
10.9*	Agreement, made as of July 17, 2001, between AirNet Systems, Inc. and Gerald G. Mercer	Incorporated herein by reference from Exhibit 10.9 to AirNet Systems, Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2001 (File No. 001-13025) (the “June 30, 2001 Form 10-Q”)
10.10*	Jerry Mercer Transition Agreement, effective May 26, 2001, between AirNet Systems, Inc. and Gerald G. Mercer	Incorporated herein by reference from Exhibit 10.10 to AirNet Systems, Inc.’s June 30, 2001 Form 10-Q
10.11	Land Lease at Rickenbacker International Airport, executed and entered into as of January 20, 2004, by and between Columbus Regional Airport Authority and AirNet Systems, Inc.	Incorporated herein by reference from Exhibit 10.1 to AirNet Systems, Inc.’s Current Report on Form 8-K, dated February 20, 2004 and filed on February 24, 2004 (File No. 001-13025) (the “February 2004 8-K”)
10.12	Leasehold Improvements Purchase Agreement, made January 20, 2004, by and between Columbus Regional Airport Authority and AirNet Systems, Inc.	Incorporated herein by reference from Exhibit 10.2 to AirNet Systems, Inc.’s February 2004 Form 8-K
10.13	Rickenbacker International Airport Operating Agreement, made and entered into January 20, 2004, by and between Columbus Regional Airport Authority and AirNet Systems, Inc.	Incorporated herein by reference from Exhibit 10.3 to AirNet Systems, Inc.’s February 2004 Form 8-K
10.14	Non-Exclusive License Agreement to Conduct an Aeronautical Business at Rickenbacker International Airport, entered into as of January 20, 2004, by and between Columbus Regional Airport Authority and AirNet Systems, Inc.	Incorporated herein by reference from Exhibit 10.4 to AirNet Systems, Inc.’s February 2004 Form 8-K
10.15	Rickenbacker International Airport Non-Public Self-Fueling Permit for AirNet Systems, Inc., executed by Columbus Regional Airport Authority on January 20, 2004 and by AirNet Systems, Inc. on January 15, 2004	Incorporated herein by reference from Exhibit 10.5 to AirNet Systems, Inc.’s February 2004 Form 8-K
10.16	Rickenbacker International Airport Commingling Fuel Agreement, made and entered into January 20, 2004, by and between Columbus Regional Airport Authority and AirNet Systems, Inc.	Incorporated herein by reference from Exhibit 10.6 to AirNet Systems, Inc.’s February 2004 Form 8-K
10.17	Non-Exclusive Access Easement granted by Columbus Regional Airport Authority in favor of AirNet Systems, Inc., executed on January 20, 2004	Incorporated herein by reference from Exhibit 10.7 to AirNet Systems, Inc.’s February 2004 Form 8-K
10.18	No-Build Easement granted by Columbus Regional Airport Authority in favor of AirNet Systems, Inc., executed on January 20, 2004	Incorporated herein by reference from Exhibit 10.8 to AirNet Systems, Inc.’s February 2004 Form 8-K

80

Exhibit
No.	Description	Location
10.19	Lease Termination Agreement, made and entered into to be effective as of December 15, 2004, by and between Columbus Regional Airport Authority and AirNet Systems, Inc.	Incorporated herein by reference from Exhibit 10.1 to AirNet Systems, Inc.’s Current Report on Form 8-K dated and filed on December 21, 2004 (File No. 001-13025) (the “December 21, 2004 Form 8-K”)
10.20	Lease, executed and entered into as of December 15, 2004, by Columbus Regional Airport Authority and AirNet Systems, Inc.	Incorporated herein by reference from Exhibit 10.2 to AirNet Systems, Inc.’s December 21, 2004 Form 8-K
10.21	Amendment No.1 to Land Lease, made and entered into to be effective as of April 5, 2004, by and between Columbus Regional Airport Authority and AirNet Systems, Inc.	Incorporated herein by reference from Exhibit 10.3 to AirNet Systems, Inc.’s December 21, 2004 Form 8-K
10.22	Amendment No. 2 to Land Lease, made and entered into to be effective as of October 29, 2004, by and between Columbus Regional Airport Authority and AirNet Systems, Inc.	Incorporated herein by reference from Exhibit 10.21 to AirNet Systems, Inc.’s 2005 Form 10-K
10.23*	AirNet Systems, Inc. 2004 Stock Incentive Plan (reflects all amendments)	Incorporated herein by reference from Exhibit 10.1 to AirNet Systems, Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2004 (File No. 001-13025)
10.24*	Form of Stock Option Agreement, made to be effective as of July 20, 2005 used in connection with grant of nonstatutory stock options to newly-appointed non-employee directors (“Eligible Directors”) of AirNet Systems, Inc. under the AirNet Systems, Inc. 2004 Stock Incentive Plan	Incorporated herein by reference from Exhibit 10.1 to AirNet Systems, Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2005 (File No. 001-13025)
10.25*	Form of Stock Option Agreement used and to be used in connection with the automatic annual grant of nonstatutory stock options to non-employee directors (“Eligible Directors”) of AirNet Systems, Inc. on and after January 2, 2007 under the AirNet Systems, Inc. 2004 Stock Incentive Plan	Filed herewith
10.26*	Summary of Compensation for Directors of AirNet Systems, Inc.	Filed herewith
10.27*	Employment Agreement, made as of May 3, 2005, between AirNet Systems, Inc. and Gary W. Qualmann	Incorporated herein by reference from Exhibit 10.1 to AirNet Systems, Inc.’s Current Report on Form 8-K dated and filed on May 6, 2005 (File No. 001-13025) (the “May 6, 2005 Form 8-K”)
10.28*	Employment Agreement, made as of May 3, 2005, between AirNet Systems, Inc. and Larry M. Glasscock, Jr.	Incorporated herein by reference from Exhibit 10.2 to AirNet Systems, Inc.’s May 6, 2005 Form 8-K
10.29*	Summary of AirNet Systems, Inc. 2006 Incentive Compensation Plan	Filed herewith

81

Exhibit
No.	Description	Location
10.30*	Employment Agreement for Bruce D. Parker, entered into December 28, 2006, by and between AirNet Systems, Inc. and Bruce D. Parker	Incorporated herein by reference from Exhibit 10.2 to AirNet Systems, Inc.’s January 4, 2007 Form 8-K
10.31*	Stock Option Agreement, made to be effective as of December 28, 2006, by and between AirNet Systems, Inc. and Bruce D. Parker evidencing nonstatutory stock options granted under the AirNet Systems, Inc. 2004 Stock Incentive Plan	Filed herewith
10.32*	Summary of 2007 Incentive Compensation Plan	Filed herewith
14	Code of Business Conduct and Ethics, as revised on August 2, 2006	Incorporated herein by reference from Exhibit 14 to AirNet Systems, Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2006 (File No. 001-13025)
21	Subsidiaries of AirNet Systems, Inc.	Filed herewith
23	Consent of Independent Registered Public Accounting Firm — Ernst & Young LLP	Filed herewith
24	Powers of Attorney	Filed herewith
31.1	Rule 13a-14(a)/15d-14(a) Certification (Principal Executive Officer)	Filed herewith
31.2	Rule 13a-14(a)/15d-14(a) Certification (Principal Financial Officer)	Filed herewith
32	Section 1350 Certification (Principal Executive Officer and Principal Financial Officer)	Filed herewith

* Denotes a management contract or compensatory plan or arrangement required to be filed pursuant to Item 15(b) of Form 10-K.

82

EX-4.50

EXHIBIT 4.50

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

     This Second Amended and Restated Credit Agreement, dated as of March 29, 2007, is among AirNet Systems, Inc., an Ohio corporation, The Huntington National Bank, a national banking association, in its capacity as Administrative Agent for the Lender hereunder, and The Huntington National Bank, a national banking association, as the Lender hereunder. The parties hereto agree as follows:

ARTICLE I

Definitions

     Section 1.1. Definitions. As used in this Agreement:

     “Account Debtor” shall have the meaning set forth in the definition of Eligible Accounts Receivable.

     “Accounts Receivable” shall mean, at any date, the total of all accounts which would be properly classified in accordance with Agreement Accounting Principles as accounts receivable on the consolidated balance sheet of the Borrower and its Subsidiaries at such date.

     “Acquisition” means any transaction, or any series of related transactions, consummated on or after the date of this Agreement, by which the Borrower or any of its Subsidiaries (i) acquires any going business or all or substantially all of the assets of any firm, corporation or limited liability company, or division thereof, whether through purchase of assets, merger or otherwise or (ii) directly or indirectly acquires (in one transaction or as the most recent transaction in a series of transactions) at least a majority (in number of votes) of the securities of a corporation which have ordinary voting power for the election of directors (other than securities having such power only by reason of the happening of a contingency) or a majority (by percentage or voting power) of the outstanding ownership interests of a partnership or limited liability company.

     “Administrative Agent” and “Agent” means The Huntington National Bank, in its capacity as contractual representative of the Lender pursuant to Article XIII, and not in its individual capacity as Lender, and any successor Administrative Agent appointed pursuant to Article XIII.

     “Advance” means a borrowing hereunder (i) made by Lender, or (ii) converted or continued by Lender, consisting, in either case, of the aggregate amount of the several Loans of the same Type and, in the case of Eurodollar Loans, for the same Interest Period.

     “Affiliate” of any Person means any other Person directly or indirectly controlling, controlled by or under common control with such Person. A Person shall be deemed to control another Person if the controlling Person owns 20% or more of any class of voting securities (or other ownership interests) of the controlled Person or possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of the controlled Person, whether through ownership of stock or other ownership interests, by contract or otherwise.

     “Agreement” means this Second Amended and Restated Credit Agreement, as it may be amended, modified, supplemented, extended, restated or replaced from time to time.

     “Agreement Accounting Principles” means generally accepted accounting principles as in effect from time to time, applied in a manner consistent with that used in preparing the financial statements referred to in Section 5.4.

     “Alternative Base Rate” means the rate of interest equal to the higher of (i) the Prime Rate, or (ii) the sum of (y) the Federal Funds Effective Rate, and (z) one half of one percent (.5%).

     “AMI” means AirNet Management, Inc., an Ohio corporation.

     “Amendment and Restatement Fee” shall be as defined in Section 2.21.

     “Applicable Fee Rate” means, at any time, the percentage rate per annum at which commitment fees and LC Fees are accruing on the unused portion of the Revolving Commitment or undrawn stated amount under the relevant Facility LC, as applicable, at such time as set forth in the Pricing Schedule.

     “Applicable Margin” means, with respect to Advances of any Type at any time, the percentage rate per annum which is applicable at such time with respect to Advances of such Type as set forth in the Pricing Schedule.

     “Article” means an article of this Agreement unless another document is specifically referenced.

     “Assignment Agreement” means that certain Assignment Agreement by and between Lender and JPM (defined below in the definition for the term “Note”), as Assignee and Assignor, respectively

     “Authorized Officer” means any of the Chief Executive Officer, Chief Financial Officer or Controller of the Borrower, acting singly.

     “Available Revolving Commitment” means, at any time, the Revolving Commitment then in effect minus the Outstanding Credit Exposure at such time.

     “Board” means the Board of Governors of the Federal Reserve System of the United States of America.

     “Book Value” means the value at which an asset is carried on the balance sheet of Borrower at any particular date.

     “Borrower” means AirNet Systems, Inc., an Ohio corporation, and its successors and assigns.

     “Borrowing Base” means, at any date, that amount which is equal to the lesser of (a) Fifteen Million Dollars ($15,000,000.00), (b) the Revolving Commitment, or (c) the aggregate of (i) 80% of the Eligible Accounts Receivable of the Borrower and its Subsidiaries on a consolidated basis as of such date, and (ii) 50% of the Eligible Inventory of the Borrower and its Subsidiaries on a consolidated basis as of such date.

     “Borrowing Base Certificate” means the certificate substantially similar in form and substance to that shown on Exhibit C, which shall contain all supporting documentation, including accounts receivable and aging schedules.

     “Borrowing Date” means a date on which an Advance is made hereunder as determined pursuant to Section 2.6.

     “Borrowing Notice” shall have the meaning set forth in Section 2.6.

     “Business Day” means (i) with respect to any borrowing, payment or rate selection of Eurodollar Advances, a day (other than a Saturday or Sunday) on which banks generally are open in Columbus, Ohio and New York, New York for the conduct of substantially all of their commercial lending activities, interbank wire transfers can be made on the Fedwire system, and dealings in United States dollars are carried on in the London interbank market, and (ii) for all other purposes, a day (other than a Saturday or Sunday) on which banks generally are open in Columbus, Ohio for the conduct of substantially all of their commercial lending activities and interbank wire transfers can be made on the Fedwire system.

     “Capital Expenditures” means, without duplication, any expenditures for any purchase or other acquisition of any asset which would be classified as a fixed or capital asset on a consolidated balance sheet of the Borrower and its Subsidiaries prepared in accordance with Agreement Accounting Principles, except (i) expenditures for the purchase of aircraft held for resale within 90 days, and (ii) expenditures of insurance proceeds for the replacement of any asset with respect to which such insurance proceeds were paid to Borrower or any Subsidiary as a result of any loss or damage to such asset.

     “Capitalized Lease” of a Person means any lease of Property by such Person as lessee which would be capitalized on a balance sheet of such Person prepared in accordance with Agreement Accounting Principles.

     “Capitalized Lease Obligations” of a Person means the amount of the obligations of such Person under Capitalized Leases which would be shown as a liability on a balance sheet of such Person prepared in accordance with Agreement Accounting Principles.

     “Charges” shall have the meaning set forth in Section 12.20.

     “Cash Equivalent Investments” means (i) short-term obligations of, or fully guaranteed by, the United States of America, (ii) commercial paper rated A-1 or better by S&P or P-1 or better by Moody’s, (iii) demand deposit accounts maintained in the ordinary course of business, (iv) certificates of deposit issued by and time deposits with any commercial banks (whether domestic or foreign) having capital and surplus in excess of $100,000,000, and (v) money market accounts; provided in each case that the same provides for payment of both principal and interest (and not principal alone or interest alone) and is not subject to any contingency regarding the payment of principal or interest. It is understood and agreed that all sums deposited by Borrower in accounts held by Lender and invested by Lender shall constitute Cash Equivalent Investments.

     “Change in Control” means, with respect to Borrower, an event or series of events by which:

     (i) any “person” or “group” (within the meaning of Section 13(d) and 14(d) of the Securities Exchange Act of 1934) has become the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a Person shall be deemed to have “beneficial ownership” of all securities that any such Person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), by way of merger, consolidation or otherwise, of 30% or more of the equity interests of Borrower on a fully-diluted basis after giving effect to the conversion and exercise of all outstanding equity equivalents (whether such equity equivalents are then currently convertible or exercisable); or

     (ii) during any period of 12 consecutive months, a majority of the members of the board of directors or other equivalent governing body of Borrower cease to be composed of individuals (A) who were members of that board or equivalent governing body on the first day of such period, (B) whose election or nomination to that board or equivalent governing body was approved by individuals referred to in clause (ii)(A) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body or (C) whose election or nomination to that board or other governing body was approved by individuals referred to in clauses (ii)(A) and (B) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body; provided that Lender determines that, for purposes of this Agreement, any such event or series of events described in this subpart (ii) shall constitute a Change in Control.

     “Closing Agenda” means the Closing Agenda prepared by Lender’s counsel setting forth the required closing documentation and other items pursuant to Section 4.1, as the same may be amended or modified from time to time.

     “Closing Date” means the date on which this Agreement is fully executed.

     “Code” means the Internal Revenue Code of 1986, as amended, reformed or otherwise modified from time to time.

     “Consolidated Capital Expenditures” means, with reference to any period, the Capital Expenditures of the Borrower and its Subsidiaries calculated on a consolidated basis for such period.

     “Consolidated Dividends” means, with reference to any period, any dividends or distributions on the membership interests, capital stock or other equity interests of Borrower or any of its Subsidiaries (other than dividends payable in its own membership interests, capital stock or other equity interests) or the redemption, repurchase or other acquisition or retirement of any of the membership interests, capital stock or other equity interests of Borrower or any of its Subsidiaries at any time outstanding, all calculated on a consolidated basis for such period, except for dividends or distributions made by any Subsidiary to the Borrower.

     “Consolidated EBITDA” means with respect to any period, Consolidated Net Income plus, to the extent deducted from revenues in determining Consolidated Net Income, (i) Consolidated Interest Expense, (ii) Consolidated Income Tax Expense, (iii) depreciation, calculated for the Borrower and its Subsidiaries on a consolidated basis, (iv) amortization, calculated for the Borrower and its Subsidiaries on a consolidated basis; (v) for the fiscal quarter ending September 30, 2006 only, an amount equal to $24,560,000.00 (which reflects the non-cash impairment charge recognized by Borrower in the fiscal quarter ending September 30, 2006), and (vi) extraordinary losses (determined in accordance with Agreement Accounting Principles) incurred other than in the ordinary course of business, calculated for the Borrower and its Subsidiaries on a consolidated basis, minus, to the extent included in Consolidated Net Income, extraordinary gains (determined in accordance with Agreement Accounting Principles) realized other than in the ordinary course of business, calculated for the Borrower and its Subsidiaries on a consolidated basis.

     “Consolidated Funded Indebtedness” means at any time (a) the aggregate dollar amount of Indebtedness of the Borrower and its Subsidiaries which has actually been funded and is outstanding, whether or not such amount is due or payable at such time, and (b) all reimbursement obligations under outstanding Letters of Credit which (i) may be presented, or (ii) have been presented and have not yet been paid; all calculated for the Borrower and its Subsidiaries on a consolidated basis as of such time.

     “Consolidated Income Tax Expense” means, for any period, the tax expense of Borrower and its Subsidiaries on a consolidated basis for said period.

     “Consolidated Indebtedness” means at any time the Indebtedness of the Borrower and its Subsidiaries calculated on a consolidated basis as of such time.

     “Consolidated Interest Expense” means, with reference to any period, the interest expense of Borrower and its Subsidiaries calculated on a consolidated basis for such period.

     “Consolidated Net Income” means, with reference to any period, the net income (or loss) of the Borrower and its Subsidiaries calculated on a consolidated basis for such period.

     “Consolidated Net Worth” means at any time the consolidated shareholders’ equity of the Borrower and its Subsidiaries calculated on a consolidated basis as of such time.

     “Consolidated Tangible Net Worth” of Borrower means, at any date, Consolidated Net Worth, less all related Intangible Assets, determined at such date. For purposes of this definition, “Intangible Assets” means the amount (to the extent reflected in determining Consolidated Net Worth) of (i) all write-ups in the book value of any asset owned by the Borrower and its Subsidiaries, (ii) all Equity Investments of Borrower in its Subsidiaries and/or Affiliates, and (iii) all unamortized debt discount and expense, unamortized deferred charges, goodwill, patents, trademarks, service marks, trade names, anticipated future benefit of tax loss carry-forwards, copyrights, organization or developmental expenses and other intangible assets of Borrower and its Subsidiaries, calculated on a consolidated basis.

     “Contingent Obligation” of a Person means any agreement, undertaking or arrangement by which such Person assumes, guarantees, endorses, contingently agrees to purchase or provide funds for the payment of, or otherwise becomes or is contingently liable upon, the obligation or liability of any other Person, or agrees to maintain the net worth or working capital or other financial condition of any other Person, or otherwise assures any creditor of such other Person against loss, including any comfort letter, operating agreement, take-or-pay contract or the obligations of any such Person as general partner of a partnership with respect to the liabilities of the partnership.

     “Conversion/Continuation Notice” is defined in Section 2.7.

     “Controlled Group” means all members of a controlled group of corporations or other business entities and all trades or businesses (whether or not incorporated) under common control which, together with the Borrower or any of its Subsidiaries, are treated as a single employer under Section 414 of the Code.

     “Credit Extension” means the making of an Advance or the issuance of a Facility LC hereunder.

     “Credit Extension Date” means the Borrowing Date for an Advance or the issuance date for a Facility LC.

     “Default” is defined in Article VII.

     “Dollar” and “Dollars” refer to U.S. currency.

     “Effective Date” means the date on which the conditions specified in Section 4.1 are satisfied.

     “Eligible Accounts Receivable” means, at any date, the portion of the Accounts Receivable arising in the ordinary course of business from the sale of goods or services by Borrower and its Subsidiaries that Lender determines in its sole good faith discretion, based on credit policies, market conditions, the business of Borrower and its Subsidiaries and other criteria, is eligible, it being understood and agreed that Lender may determine that any Accounts Receivable are not eligible based upon the criteria set forth below and any other criteria which Lender from time to time determines, in its reasonable discretion, is appropriate, including, without limitation, any criteria used from time to time by Lender in such determination in connection with credit facilities extended to any Person in a business similar or reasonably related to that of Borrower and similarly situated. An Account Receivable shall not be deemed an “Eligible Account Receivable” unless such Account Receivable is subject to a perfected first priority security interest in favor of Administrative Agent, for the benefit of Lender, and is not subject to any other lien, encumbrance, or security interest, is evidenced by an invoice or other documentary evidence satisfactory to Lender, is unconditionally due and payable in Dollars to the Borrower or a Subsidiary of Borrower from a party (the “Account Debtor”) and conforms to the warranties regarding the accounts contained in this Agreement. Without limiting the generality of the foregoing, no Account Receivable shall be an Eligible Account Receivable if:

     (a) the Account Receivable is due and unpaid more than 90 days from the original invoice date;

     (b) the Account Receivable arises from uncompleted performance on the part of the Borrower or any Subsidiary of Borrower, constitutes a progress billing or advance billing, is a “bill and hold,” or, if involving a sale of goods, all such goods have not been lawfully shipped and invoiced to the Account Debtor (or if requested by Lender, copies of all invoices, together with all shipping documents and delivery receipts evidencing such shipment have not been delivered to Lender);

     (c) the Account Receivable arises from a contract with any Government Authority;

     (d) the Account Receivable is subject to any prior assignment, claim, lien, subrogation rights or security interest, or subject to any levy or setoff;

     (e) the Account Receivable is subject to any credit, contra account, allowance, adjustment, return of goods, or discount (collectively a “Contra”), provided, however, that unless the Account Debtor has asserted a Contra, if the amount of the Account Receivable exceeds the amount of the Contra, such excess shall be considered for eligibility if such excess is not otherwise excluded from being an Eligible Account Receivable;

     (f) the Account Receivable arises from an Affiliate of Borrower or any Subsidiary of Borrower;

     (g) the Account Receivable, when added to all other Accounts Receivable of the Account Debtor, produces an aggregate indebtedness from the Account Debtor of more than 30% of the total of all the Eligible Accounts Receivable;

     (h) the Account Debtor is subject to bankruptcy, receivership or similar proceedings or is insolvent;

     (i) the Account Receivable is evidenced by any chattel paper, promissory note, payment instrument or written agreement or arises from a consumer which is a natural person;

     (j) the Account Receivable arises from an Account Debtor whose mailing address or executive office is located outside the United States;

     (k) the Account Receivable arises from an Account Debtor to whom goods are shipped on a “cash on delivery” or C.O.D. basis;

     (l) the Account Receivable arises from an Account Debtor having 25% or more of its Accounts Receivable (in Dollar value or in number of Accounts Receivable) not considered to be Eligible Accounts Receivables;

the Account Receivable arises from an Account Debtor who has more than 50% of its Accounts Receivable in Dollar value or in number of accounts with Borrower or any Subsidiary of Borrower more than 60 days past due; and/or

     (m) Lender has notified the Borrower that the Account Receivable or the Account Debtor is unsatisfactory or unacceptable (which Lender reserves the right to do in its sole discretion at any time).

     “Eligible Inventory” means, at any date, that portion of the Inventory, determined at such date, in which Lender has a first and exclusive perfected security interest and that Lender determines from time to time, based on credit policies, market conditions, the business of Borrower and the Subsidiaries and other matters, is eligible for use in calculating the Borrowing Base, it being understood and agreed that Lender may determine that any Inventory is not eligible for use in calculating the Borrowing Base based upon the criteria set forth below and any other criteria which Lender from time to time determines, in its reasonable discretion, is appropriate, including, without limitation, any criteria used from time to time by Lender in such determination in connection with credit facilities extended to any Person in a business similar or reasonably related to that of Borrower and similarly situated. For purposes of determining the Borrowing Base, Eligible Inventory shall not include:

     (a) work in process;

     (b) obsolete or discontinued Inventory;

     (c) supply items, packaging, or the freight portion of raw materials;

     (d) Inventory in the control of a third person for processing, storage, or otherwise unless a bailee’s waiver or secured party of bailee’s waiver, as applicable, is delivered to Lender or at Lender’s option to Administrative Agent for the benefit of Lender, in form satisfactory to Lender, together with the original documents or other instruments evidencing such Inventory, or such other agreements or other documents as Lender shall require in its sole and absolute discretion;

     (e) consigned Inventory;

     (f) Inventory in transit;

     (g) Inventory associated with any contract if the Borrower or any Subsidiary of the Borrower has knowledge that the same may be subject to a material adverse development;

     (h) Inventory located outside the United States; and/or

     (i) Inventory associated with any contract to the extent that progress or advance payments are received from the Account Debtor to the extent such Inventory is identified to such contract.

All Inventory shall be valued for the purposes of determining the Borrowing Base, at the lesser of cost (on a FIFO basis) or market.

     “Environmental Laws” means any and all federal, state, local and foreign statutes, laws, judicial decisions, regulations, ordinances, rules, judgments, orders, decrees, plans, injunctions, permits, concessions, grants, franchises, licenses, agreements and other governmental restrictions relating to (i) the protection of the environment, (ii) the effect of the environment on human health, (iii) emissions, discharges or releases of pollutants, contaminants, hazardous substances or wastes into surface water, ground water or land, or (iv) the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, hazardous substances or wastes or the clean-up or other remediation thereof.

     “Equity Investment” of a Person means any loan, advance (other than commission, travel and similar advances to officers and employees made in the ordinary course of business), extension of credit (other than accounts receivable arising in the ordinary course of business on terms customary in the trade) or contribution of capital by such Person, except to the extent any of the foregoing constitutes, as to the Person receiving such Equity Investment, Permitted Indebtedness.

     “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any rule or regulation issued thereunder.

     “Eurodollar Advance” means an Advance which, except as otherwise provided in Section 2.11, bears interest at the applicable Eurodollar Rate.

     “Eurodollar Base Rate” means, with respect to a Eurodollar Advance for the relevant Interest Period, an interest rate per annum (based on a 360-day year) obtained by dividing (i) the actual or estimated arithmetic mean of the per annum rates of interest at which deposits in U.S. dollars, for a period of time equal to the Interest Period in effect with respect to the relevant Loan, and in an aggregate amount comparable to the amount of the principal balance of the Loan, are being offered to U.S. banks by one or more prime banks in the London interbank market on the second Business Day prior to the first day of each Interest Period, as offered and determined by Lender in accordance with its standard practices and procedures based upon reference to information which appears on page LIBOR01 captioned “British Bankers Assoc. Interest Settlement Rates” of the Reuters America Network, a service of Reuters America, Inc. (or such other page that may replace that page on that service for the purpose of displaying London interbank offered rates), or, if such service ceases to be available or ceases to be used by Lender, such other reasonably comparable money rate service selected by Lender, for obtaining rate quotations, or any other reasonable procedure, all as determined by Lender; by (ii) a percentage equal to 100% minus the Reserve Requirement.

     “Eurodollar Loan” means a Loan which, except as otherwise provided in Section 2.11, bears interest at the applicable Eurodollar Rate.

     “Eurodollar Rate” means, with respect to a Eurodollar Advance for the relevant Interest Period, the sum of (i) the Eurodollar Base Rate applicable to such Interest Period, plus (ii) the Applicable Margin.

     “Excluded Taxes” means, with respect to Lender or any applicable Lending Installation, taxes imposed on its overall net income or net worth, and franchise taxes imposed on it, by (i) the jurisdiction under the laws of which Lender is incorporated or organized, or (ii) the jurisdiction in which Lender’s principal executive office or applicable Lending Installation is located.

     “Exhibit” refers to an exhibit to this Agreement, unless another document is specifically referenced.

     “Facility LC” is defined in Section 2.19.1.

     “Facility LC Application” is defined in Section 2.19.3. “Facility Termination Date” means October 15, 2008, or any earlier date on which the Aggregate Commitment is reduced to zero or otherwise terminated pursuant to the terms hereof.

     “Facility Termination Date” means October 15, 2008 or any earlier date on which the Commitment is reduced to zero or otherwise terminated pursuant to the terms hereof.

     “Fast Forward” means Fast Forward Solutions, LLC, an Ohio limited liability company.

     “Fast Forward Guaranty” means that certain Subsidiary Guaranty, dated May 28, 2004, executed by Fast Forward pursuant to the First Amended and Restated Credit Agreement in favor of Administrative Agent, for the benefit of the “Lenders” (as defined thereunder), which shall continue in full force and effect for the sole benefit of Lender, as the same may be amended, modified, supplemented, extended, restated and/or replaced from time to time.

     “Federal Funds Effective Rate” means, for any day, an interest rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published for such day (or, if such day is not a Business Day, for the immediately preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations at approximately 10:00 a.m. (Columbus, Ohio time) on such day on such transactions received by Lender from three Federal funds brokers of recognized standing selected by Lender in its sole discretion.

     “Final Judgment” is defined in Section 12.6(ii).

     “Financial Contract” of a Person means any exchange-traded or over-the-counter futures, forward, swap or option contract or other financial instrument with similar characteristics, to the extent any of the same are entered into for speculative (rather than risk management) purposes.

     “First Amended and Restated Credit Agreement” means that certain Amended and Restated Credit Agreement by and among Borrower, The Huntington National Bank, in its capacity as Agent and as a “Lender” thereunder, and JPMorgan Chase Bank, N.A., a national banking association formerly known as Bank One, N.A., as a “Lender” thereunder, which is amended and restated in its entirety by this Agreement.

     “Fixed Assets” means, at any date, the aircraft and related tangible fixed assets of Borrower and Guarantor which constitute Collateral under the Security Agreements and in which Lender has a perfected security interest.

     “Fixed Charge Coverage Ratio” means, as of any date of calculation, the ratio of (i) (1) Consolidated EBITDA, minus (2) the sum of (a) income taxes actually paid, net of any income tax refunds received, by Borrower and its Subsidiaries on a consolidated basis, and (b) Maintenance Capital Expenditures, divided by (ii) (1) principal and interest payments scheduled with respect to Consolidated Indebtedness, plus (2) Consolidated Dividends.

     “Float” means Float Control, Inc., a Michigan corporation.

     “Floating Rate” means, for any day, a rate per annum equal to (i) the Alternative Base Rate for such day plus (ii) the Applicable Margin, in each case changing when and as the Prime Rate or the Federal Funds Effective Rate, as applicable, changes.

     “Floating Rate Advance” means an Advance which, except as otherwise provided in Section 2.11, bears interest at the Floating Rate.

     “Floating Rate Loan” means a Loan which, except as otherwise provided in Section 2.11, bears interest at the Floating Rate.

     “Governmental Authority” means any national government, central bank or comparable agency, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.

     “Guarantor” means, separately and collectively, AMI, Float, Jetride, Timexpress and Fast Forward, each of which is a Wholly-Owned Subsidiary of Borrower.

     “Guaranty” means, separately and collectively, the Subsidiary Guaranty, the Timexpress Guaranty and the Fast Forward Guaranty.

     “Indebtedness” of a Person means such Person’s (i) obligations for borrowed money, (ii) obligations representing the deferred purchase price of Property or services (other than accounts payable and accrued expenses arising in the ordinary course of such Person’s business payable on terms customary in the trade), (iii) obligations, whether or not assumed, secured by Liens against, or payable out of the proceeds or production from, Property now or hereafter owned or acquired by such Person, (iv) obligations which are evidenced by notes, acceptances, or other instruments, (v) obligations of such Person to purchase securities or other Property arising out of or in connection with the sale of the same or substantially similar securities or Property, (vi) Capitalized Lease Obligations, (vii) Contingent Obligations, and (viii) any other obligation for borrowed money which in accordance with Agreement Accounting Principles would be shown as a liability on the consolidated balance sheet of such Person.

     “Interest Period” means, with respect to a Eurodollar Advance, a period of one, two, three or six months commencing on a Business Day selected by the Borrower pursuant to this Agreement. Such Interest Period shall end on the day which corresponds numerically to such date one, two, three or six months thereafter, provided, however, that if there is no such numerically corresponding day in such next, second, third or sixth succeeding month, such Interest Period shall end on the last Business Day of such next, second, third or sixth succeeding month. If an Interest Period would otherwise end on a day which is not a Business Day, such Interest Period shall end on the next succeeding Business Day, provided, however, that if said next succeeding Business Day falls in a new calendar month, such Interest Period shall end on the immediately preceding Business Day.

     “Inventory” shall mean at any date the total of all goods which would be properly classified in accordance with Agreement Accounting Principles as inventory on the consolidated balance sheet of the Borrower and its Subsidiaries at such date.

     “Investment” of a Person means any loan, advance (other than commission, travel and similar advances to officers and employees made in the ordinary course of business), extension of credit (other than accounts receivable arising in the ordinary course of business on terms customary in the trade) or contribution of capital by such Person; stocks, bonds, mutual funds, partnership interests, notes, debentures or other securities owned by such Person; any deposit accounts and certificates of deposit owned by such Person which do not constitute Cash Equivalents; and Financial Contracts, derivative financial instruments and other similar instruments or contracts owned by such Person.

     “Jetride” means Jetride, Inc., an Ohio corporation, now known as 7250 STARCHECK, INC.

     “LC Disbursement” means a payment made by the LC Issuer pursuant to a Facility LC.

     “LC Fee” is defined in Section 2.19.4.

     “LC Obligations” means, at any time, the sum, without duplication, of (i) the aggregate undrawn stated amount under all Facility LCs outstanding at such time plus (ii) the aggregate unpaid amount at such time for all Reimbursement Obligations.

     “LC Payment Date” is defined in Section 2.19.5.

     “Lender” means The Huntington National Bank, a national banking association, and its successors and assigns, as the sole Lender hereunder, and as the sole Lender as of the date hereof immediately prior to the effectiveness of this Agreement, under the First Amended and Restated Credit Agreement.

     “Lending Installation” means, with respect to Lender, the office, branch, subsidiary or affiliate of Lender listed on the signature pages hereof or on a Schedule or otherwise selected by Lender pursuant to Section 2.17.

     “Letter of Credit” of a Person means a letter of credit which is issued upon the application of such Person or upon which such Person is an account party or for which such Person is in any way liable.

     “Leverage Ratio” means, as of any date of calculation, the ratio of (i) Consolidated Funded Indebtedness outstanding on such date divided by (ii) Consolidated EBITDA for the Borrower’s then most-recently ended four fiscal quarters.

     “Lien” means any lien (statutory or other), mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including the interest of a vendor or lessor under any conditional sale, Capitalized Lease or other title retention agreement).

     “Loan Documents” means this Agreement, the Security Agreements, the Pledge, the Notes, the Subsidiary Guaranty, the Fast Forward Guaranty, the Timexpress Guaranty, the Facility LC Applications, and any other documents and/or instruments heretofore, now or hereafter given pursuant hereto or thereto or otherwise in connection herewith or therewith.

     “Loans” means the loans made by Lender to the Borrower pursuant to this Agreement (or any conversion or continuation thereof).

     “Maintenance Capital Expenditures” means capital expenditures which are capitalized by Borrower and which maintain or extend the useful life of aircraft, exclusive of costs associated with the purchase and installation of Required Vertical Separate Minimum modules, Global Positioning Systems and Shadin Digital Fuel Management Systems on aircraft operated by the Borrower or any Subsidiary.

     “Margin Stock” has the meaning assigned to such term in Regulation U.

     “Material Adverse Effect” means a material adverse effect on (i) the business, Property, condition (financial or otherwise) or results of operations of the Borrower and its Subsidiaries taken as a whole, (ii) the ability of the Borrower to perform its obligations under the Loan Documents to which it is a party, or (iii) the validity or enforceability of any of the Loan Documents or the rights or remedies of Lender or Administrative Agent thereunder.

     “Material Indebtedness” shall have the meaning set forth in Section 7.5.

     “Maturity Date” means October 15, 2008.

     “Maximum Rate” shall have the meaning set forth in Section 12.20.

     “Modify” and “Modification” are defined in Section 2.19.1.

     “Moody’s” means Moody’s Investors Service, Inc.

     “Multiemployer Plan” means a Plan maintained pursuant to a collective bargaining agreement or any other arrangement to which the Borrower or any member of the Controlled Group is a party to which more than one employer is obligated to make contributions.

     “Note” or “Notes” means the promissory note given by Borrower in favor of Lender, in the maximum principal amount of the Commitment, dated of even date herewith and in the form of Exhibit A, which constitutes an amendment and restatement of, and evidence of the indebtedness previously evidenced by that certain (i) Note (as amended from time to time, the “HNB Note”) dated March 24, 2005 given by Borrower in favor of Lender in the face amount of $18,750,000.00, and (ii) Note (as amended from time to time, the “JPM Note”) dated March 24, 2005 given by Borrower in favor of JPMorgan Chase Bank, a national banking association (“JPM”) formerly known as Bank One, N.A. (Columbus), in the face amount of $11,250,000.00, each executed and delivered by Borrower pursuant to the First Amended and Restated Credit Agreement, the maximum outstanding principal indebtedness available under (i) the HNB Note being, as of the date hereof, zero Dollars ($0), and (ii) the JPM Note being, as of the date hereof, zero Dollars ($0), with said JPM Note having been assigned by JPM to Lender pursuant to the Assignment Agreement dated of even date herewith by and between Lender and JPM, as Assignee and Assignor, respectively.

     “Notice of Assignment” is defined in Section 11.3.2.

     “Obligations” means all unpaid principal of and accrued and unpaid interest on the Loans, all accrued and unpaid fees, all Reimbursement Obligations, and all expenses, reimbursements, indemnities and other obligations of the Borrower to Lender, the Administrative Agent, or any indemnified party arising under the Loan Documents or to Lender, Administrative Agent, or any Affiliate of any of them in connection with any Rate Management Transactions.

     “Off-Balance Sheet Liability” of a Person means (i) any repurchase obligation or repurchase liability of such Person with respect to accounts or notes receivable sold by such Person, (ii) any liability under any Sale and Leaseback Transaction which is not a Capitalized Lease, (iii) any liability under any so-called “synthetic lease” transaction entered into by such Person, or (iv) any obligation arising with respect to any other transaction which is the functional equivalent of or takes the place of borrowing but which does not constitute a liability on the balance sheet of such Person, but excluding from this clause (iv) Operating Lease Obligations.

     “Operating Lease” of a Person means any lease of Property (other than a Capitalized Lease) by such Person as lessee which has an original term (including any required renewals and any renewals effective at the option of the lessor) of more than one year.

     “Operating Lease Obligations” means, as at any date of determination, the amount obtained by aggregating the present values, determined in the case of each particular Operating Lease by applying a discount rate (which discount rate shall equal the discount rate which would be applied under Agreement Accounting Principles if such Operating Lease were a Capitalized Lease) from the date on which each fixed lease payment is due under such Operating Lease to such date of determination, of all fixed lease payments due under all Operating Leases of the Borrower and its Subsidiaries.

     “Original Credit Agreement” is defined in the First Amended and Restated Credit Agreement.

     “Other Taxes” is defined in Section 3.5(ii).

     “Outstanding Credit Exposure” means, at any time, the aggregate principal amount of Revolving Loans outstanding at such time, plus the amount of the LC Obligations at such time.

     “Participants” is defined in Section 11.2.1.

     “Payment Date” means the last day of March, 2007 and the last day of each third month thereafter through the Maturity Date.

     “PBGC” means the Pension Benefit Guaranty Corporation, or any successor thereto.

     “Permitted Indebtedness” is defined in Section 6.11.

     “Permitted Liens” is defined in Section 6.15.

     “Person” means any natural person, corporation, firm, joint venture, partnership, limited liability company, association, enterprise, trust or other entity or organization, or any government or political subdivision or any agency, department or instrumentality thereof.

     “Plan” means an employee pension benefit plan which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code as to which the Borrower or any member of the Controlled Group may have any liability.

     “Pledge” means, separately and collectively, that certain Stock Pledge Agreement and that certain Security Agreement, Pledge and Assignment of Membership Interest, each dated May 28, 2004, given by Borrower pursuant to the First Amended and Restated Credit Agreement, in favor of Administrative Agent (as defined thereunder), for the benefit of the “Lenders” (as defined thereunder), which shall continue in full force and effect for the sole benefit of Lender, as the same may be amended, modified, supplemented, extended, restated and/or replaced from time to time.

     “Pricing Schedule” means the Schedule attached hereto identified as such.

     “Prime Rate” means the “prime rate” established by Lender from time to time based on its consideration of economic, money market, business and competitive factors, and it is not necessarily Lender’s most favored rate. In the event Lender shall abolish or abandon the practice of establishing its Prime Rate or should the same be unascertainable, Lender shall designate a comparable reference rate which shall be deemed to be the Prime Rate under this Agreement and the other Loan Documents.

     “Property” of a Person means any and all property, whether real, personal, tangible, intangible, or mixed, of such Person, or other assets owned or leased.

     “Purchasers” is defined in Section 11.3.1.

     “Rate Management Transaction” means any transaction (including an agreement with respect thereto) now existing or hereafter entered into between the Borrower and Lender or any Affiliate of Lender which is a rate swap, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, forward transaction, currency swap transaction, cross-currency rate swap transaction, currency option or any other similar transaction (including any option with respect to any of these transactions) or any combination thereof, whether linked to one or more interest rates, foreign currencies, commodity prices, equity prices or other financial measures.

     “Rate Management Obligations” of a Person means any and all obligations of such Person, whether absolute or contingent and howsoever and whenever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor), under (i) any and all Rate Management Transactions, and (ii) any and all cancellations, buy backs, reversals, terminations or assignments of any Rate Management Transactions.

     “Regulation D” means Regulation D of the Board as from time to time in effect and any successor thereto or other regulation or official interpretation of the Board relating to reserve requirements applicable to member banks of the Federal Reserve System.

     “Regulation T” means Regulation T of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

     “Regulation U” means Regulation U of the Board as from time to time in effect and any successor or other regulation or official interpretation of the Board relating to the extension of credit by banks for the purpose of purchasing or carrying margin stocks applicable to member banks of the Federal Reserve System.

     “Regulation X” means Regulation X of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

     “Reimbursement Obligations” means, at any time, the aggregate of all obligations of the Borrower then outstanding under Section 2.19 to reimburse Lender for amounts paid by Lender in respect of any one or more drawings under Facility LCs.

     “Reportable Event” means a reportable event as defined in Section 4043 of ERISA and the regulations issued under such section, with respect to a Plan, excluding, however, such events as to which the PBGC has by regulation waived the requirement of Section 4043(a) of ERISA that it be notified within 30 days of the occurrence of such event, provided, however, that a failure to meet the minimum funding standard of Section 412 of the Code and of Section 302 of ERISA shall be a Reportable Event regardless of the issuance of any such waiver of the notice requirement in accordance with either Section 4043(a) of ERISA or Section 412(d) of the Code.

     “Reports” has the meaning set forth in Section 12.6.

     “Required Property Insurance Coverage” means at any time insurance insuring all Property of the Borrower and its Subsidiaries against loss or damage by fire, lightning, vandalism and malicious mischief and all other perils covered by standard “extended coverage” or “all-risk” insurance and such other risks and losses as is consistent with sound business practices and is customarily maintained from time to time by similar businesses similarly situated and owning, leasing or operating similar properties, including, without limitation, war and terrorism coverage with respect to all jet aircraft; all in such amounts, and having such deductibles from the loss payable for any casualty, as is customary from time to time for similar businesses similarly situated and owning, leasing or operating similar properties. If any insurance policies with respect to Required Property Insurance Coverage is written on a co-insurance basis, such policy must contain an agreed amount endorsement as evidence that the coverage is in an amount sufficient to insure the full amount of such Property.

     “Required Public Liability Insurance Coverage” means comprehensive general accident and public liability insurance (including, without limitation, coverage for product liability, and elevators and escalators, if any, on property owned or leased by the Borrower and its Subsidiaries) against injury, loss and/or damage to persons and property and such other risks and losses as is consistent with sound business practices and is customarily maintained from time to time by similar businesses similarly situated and owning, leasing or operating similar properties; all in such amounts as is customary from time to time for similar businesses similarly situated and owning, leasing or operating similar properties.

     “Reserve Requirement” means, with respect to an Interest Period, the maximum aggregate reserve requirement (including all basic, supplemental, marginal and other reserves) which is imposed under Regulation D on Eurocurrency liabilities.

     “Revolving Commitment” and “Commitment” each mean the obligation of Lender to make Revolving Loans to Borrower in an aggregate amount not exceeding Fifteen Million Dollars $15,000,000.00), as such amount may be modified from time to time pursuant to the terms hereof.

     “Revolving Loan” and “Revolving Loans” means a Loan or the Loans, respectively, made pursuant to clause (b) of Section 2.1.

     “S&P” means Standard and Poor’s Ratings Services, a division of The McGraw Hill Companies, Inc.

     “Sale and Leaseback Transaction” means any sale or other transfer of Property by any Person with the intent to lease such Property as lessee.

     “Schedule” refers to a specific schedule to this Agreement, unless another document is specifically referenced.

     “Section” means a numbered section of this Agreement, unless another document is specifically referenced.

     “Security Agreements” means, separately and collectively, each of the (i) Continuing Security Agreements dated May 28, 2004, executed by Borrower and each Guarantor, pursuant to the First Amended and Restated Credit Agreement, in favor of Administrative Agent, for the benefit of the “Lenders” (as defined thereunder), which shall continue in full force and effect for the sole benefit of Lender, and (ii) Mortgage, Security Agreement and Assignment given by Borrower pursuant to the First Amended and Restated Credit Agreement in favor of Administrative Agent, for the benefit of the “Lenders” (as defined thereunder), which shall continue in full force and effect for the sole benefit of Lender; in each case as the same may be amended, modified, supplemented, extended, restated and/or replaced from time to time.

     “Security Documents” means, separately and collectively, the Security Agreements and the Pledge.

     “Single Employer Plan” means a Plan maintained by the Borrower or any member of the Controlled Group for employees of the Borrower or any member of the Controlled Group.

     “Subsidiary” of a Person means (i) any corporation more than 50% of the outstanding securities having ordinary voting power of which shall at the time be owned or controlled, directly or indirectly, by such Person or by one or more of its Subsidiaries or by such Person and one or more of its Subsidiaries, or (ii) any partnership, limited liability company, association, joint venture or similar business organization more than 50% of the ownership interests having ordinary voting power of which shall at the time be so owned or controlled. Unless otherwise expressly provided, all references herein to a “Subsidiary” means a Subsidiary of the Borrower.

     “Subsidiary Guaranty” means that certain Replacement Subsidiary Guaranty, dated May 28, 2004, executed by the AMI, Float and Jetride pursuant to the First Amended and Restated Credit Agreement in favor of Administrative Agent, for the benefit of the “Lenders” thereunder, which shall remain in full force and effect for the sole benefit of Lender, as the same may be amended, modified, supplemented, extended, restated and/or replaced from time to time.

     “Substantial Portion” means, with respect to the Property of the Borrower and its Subsidiaries, Property which (i) represents more than 10% of the consolidated assets of the Borrower and its Subsidiaries as would be shown in the consolidated financial statements of the Borrower and its Subsidiaries as at the beginning of the twelve-month period ending with the month in which such determination is made, or (ii) is responsible for more than 10% of the consolidated net sales or of the consolidated net income of the Borrower and its Subsidiaries as reflected in the financial statements referred to in clause (i) above; provided, however, that “10%”, as it appears in subparts (i) and (ii) above, shall be changed to and shall mean, for all purposes of this definition, 20% provided that the net proceeds (after payment of reasonable costs and expenses associated with any such sale, including reasonable attorneys’ fees) upon sale or other disposition by the Borrower or any Subsidiary of the consolidated assets referenced in (i) and (ii) above are within 90 days of such sale or other disposition, (a) reinvested in assets of the Borrower and its Subsidiaries which are of similar type and substantially equivalent value as such consolidated assets so sold or otherwise disposed of, and/or (b) paid to Lender or Administrative Agent for application in accordance herewith to the amounts owing under the Loans.

     “Taxes” means any and all present or future taxes, duties, levies, imposts, deductions, charges or withholdings, and any and all liabilities with respect to the foregoing, but excluding Excluded Taxes.

     “Timexpress” means timexpress.com, inc., an Ohio corporation.

     “Timexpress Guaranty” means that certain Subsidiary Guaranty, dated May 28, 2004, executed by Timexpress pursuant to the First Amended and Restated Credit Agreement in favor of Administrative Agent, for the

benefit of the “Lenders” (as defined thereunder), which shall continue in full force and effect for the sole benefit of Lender, as the same may be amended, modified, supplemented, extended, restated and/or replaced from time to time.

     “Transferee” is defined in Section 11.4.

     “Type” means, with respect to any Advance, its nature as a Floating Rate Advance or a Eurodollar Advance.

     “Unfunded Liabilities” means the amount (if any) by which the present value of all vested and unvested accrued benefits under all Single Employer Plans exceeds the fair market value of all such Plan assets allocable to such benefits, all determined as of the then most recent valuation date for such Plans using PBGC actuarial assumptions for single employer plan terminations.

     “Unmatured Default” means an event which but for the lapse of time or the giving of notice, or both, would constitute a Default.

     “U.S.” means the United States of America.

     “Wholly-Owned Subsidiary” of a Person means (i) any Subsidiary all of the outstanding voting securities of which shall at the time be owned or controlled by such Person or, (ii) any partnership, limited liability company, association, joint venture or similar business organization 100% of the ownership interests having ordinary voting power of which shall at the time be so owned or controlled.

     Section 1.2. Classification of Loans and Advances. For purposes of this Agreement, Loans may be classified and referred to by Type (e.g., a “Eurodollar Loan”).

     Section 1.3. Terms Generally. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, and (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement.

     Section 1.4. Accounting Terms. Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with Agreement Accounting Principles, as in effect from time to time, provided that, if the Borrower notifies Lender that the Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the date hereof in Agreement Accounting Principles or in the application thereof on the operation of such provision (or if Lender request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in Agreement Accounting Principles or in the application thereof, then such provision shall be interpreted on the basis of Agreement Accounting Principles as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith. Whenever under this Agreement any financial information, data and the like is calculated on a consolidated basis for the Borrower and its Subsidiaries, such financial information, data and the like of such Subsidiary shall be included only to the extent of the Borrower’s percentage of ownership of such Subsidiary. Any reference in this Agreement to the terms “extraordinary losses” and “extraordinary gains” shall mean such losses and gains, respectively, categorized by the Borrower’s external auditors as extraordinary in the financial statements of the Borrower prepared in accordance with Agreement Accounting Principles in effect at the date of such financial statements. Notwithstanding anything contained or implied herein to the contrary, no change in Agreement Accounting Principles shall require the restatement of any financial statements dated prior to such change and provided to Lender. Further, no retroactive change shall be made (as a result of any change in Agreement Accounting Principles which occurs after the date of any such financial statements) in any of the calculations made hereunder based upon the information contained in said financial statements including, without limitation, the calculation of the Applicable Margin.

ARTICLE II

The Credit

     Section 2.1 Commitment. Subject to the terms and conditions set forth herein, from and including the Effective Date and prior to the Facility Termination Date, Lender agrees to (i) make Revolving Loans to the Borrower, and (ii) issue Facility LCs upon the request of the Borrower, provided that, after giving effect to the making of each such Revolving Loan or the issuance of each such Facility LC, (i) Lender’s Outstanding Credit Exposure shall not exceed the Revolving Commitment, and (ii) the maximum amount of all Loans (including all Revolving Loans and the LC Obligations) shall at no time exceed the Borrowing Base. Subject to the terms of this Agreement, the Borrower may borrow, repay and re-borrow Revolving Loans at any time prior to the Facility Termination Date. The Revolving Commitment to extend Revolving Loans hereunder shall expire on the Facility Termination Date. Lender will issue Facility LCs hereunder on the terms and conditions set forth in Section 2.19.

     Section 2.2. Loans and Advances.

     (i) Each Loan shall be made as part of an Advance consisting of Loans of the same Type made by Lender. Advances of more than one Type may be outstanding at the same time.

     (ii) Each Advance of Revolving Loans shall be comprised entirely of Floating Rate Loans or Eurodollar Loans as the Borrower may request in accordance herewith. Lender at its option may make any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of Lender to make such Loan, provided that any exercise of such option shall not affect the obligation of the Borrower to repay such Loan in accordance with the terms of this Agreement.

     Section 2.3. Required Payments; Termination. The Revolving Commitment shall terminate, and the Outstanding Credit Exposure and all other unpaid Obligations shall be paid in full by the Borrower, on the Facility Termination Date.

     Section 2.4. Commitment Fee; Facility Fee; Increases and Reductions in Commitment. The Borrower agrees to pay to Lender a commitment fee at a per annum rate equal to the Applicable Fee Rate on the average daily Available Revolving Commitment from the date hereof to and including the Facility Termination Date, payable (in arrears) on each Payment Date hereafter and on the Facility Termination Date. The Borrower may permanently reduce the Revolving Commitment in whole, or in part, in integral multiples of $5,000,000, upon at least five Business Days written notice to Lender, which notice shall specify the amount of any such reduction, provided, however, that the amount of the Revolving Commitment may not be reduced below the Outstanding Credit Exposure. All accrued commitment fees shall be payable on the effective date of any termination of the obligations of Lender to make Credit Extensions hereunder.

     Section 2.5. Minimum Amount of Each Advance; Eurodollar Advances.

     (i) Each Eurodollar Advance shall be in the minimum amount of $500,000 (and in multiples of $100,000 if in excess thereof).

     (ii) Each Floating Rate Advance shall be in the minimum amount of $100,000 (and in multiples of $100,000 in excess thereof), provided, however, that any Floating Rate Advance may be in the lesser amount of the Available Revolving Commitment or the amount that is required to refinance the reimbursement of an LC Disbursement as contemplated by Section 2.19.6.

     (iii) There shall not at any time be more than a total of five (5) Eurodollar Revolving Advances outstanding.

     Section 2.6. Method of Selecting Types and Interest Periods for New Advances. The Borrower shall from time to time select the Type of Advance and, in the case of each Eurodollar Advance, the Interest Period applicable thereto. The Borrower shall give Lender irrevocable notice (a “Borrowing Notice”) not later than noon (Columbus, Ohio time) at least one (1) Business Day before the date on which Borrower desires that such Advance

be made (the “Borrowing Date”) of each Floating Rate Advance and three (3) Business Days before the Borrowing Date for each Eurodollar Advance, specifying:

(i)	the Borrowing Date, which shall be a Business Day, of such Advance,
(ii)	the aggregate amount of such Advance,
(iii)	the Type of Advance selected, and
(iv)	in the case of each Eurodollar Advance, the Interest Period applicable thereto.

     If no election as to Type of Advance is specified in the Borrowing Notice, the requested Advance shall be a Floating Rate Advance. If no Interest Period is specified with respect to the requested Eurodollar Advance, then the Borrower shall be deemed to have selected an Interest Period of one (1) month’s duration.

     Lender will make the each Advance available to the Borrower by 3:00 p.m. (Columbus, Ohio time) on the Borrowing Date at Lender’s aforesaid address.

     Section 2.7. Conversion and Continuation of Outstanding Advances. (i) Floating Rate Advances shall continue as Floating Rate Advances unless and until such Floating Rate Advances are converted into Eurodollar Advances pursuant to this Section 2.7 or are repaid in accordance with the terms of this Agreement. Each Eurodollar Advance shall continue as a Eurodollar Advance until the end of the then applicable Interest Period therefor, at which time such Eurodollar Advance shall be automatically converted into a Floating Rate Advance unless (x) such Eurodollar Advance is or was repaid in accordance with the terms of this Agreement or (y) the Borrower shall have given Lender a Conversion/Continuation Notice (as defined below) requesting that, at the end of such Interest Period, such Eurodollar Advance continue as a Eurodollar Advance for the same or another Interest Period. Subject to the terms of Section 2.5, the Borrower may elect from time to time to convert all or any part of a Floating Rate Advance into a Eurodollar Advance. The Borrower shall give Lender irrevocable notice (a “Conversion/Continuation Notice”) of each conversion of a Floating Rate Advance into a Eurodollar Advance or continuation of a Eurodollar Advance not later than noon (Columbus, Ohio time) at least three Business Days prior to the date of the requested conversion or continuation, specifying:

     (a) the requested date, which shall be a Business Day, of such conversion or continuation,

     (b) the aggregate amount and Type of the Advance which is to be converted or continued, and the interest rate and expiration date of the Interest Period currently in effect with respect thereto, if any, and

     (c) the amount of such Advance which is to be converted into or continued as a Eurodollar Advance and the duration of the Interest Period to be applicable thereto.

     Section 2.8. Optional Principal Payments. The Borrower may from time to time pay, without penalty or premium, all outstanding Floating Rate Advances, or, in a minimum aggregate amount of $100,000 or any integral multiple of $100,000 in excess thereof, any portion of the outstanding Floating Rate Advances upon two Business Days’ prior notice to Lender. The Borrower may from time to time pay, subject to the payment of any funding indemnification amounts required by Section 3.4 but without penalty or premium, all outstanding Eurodollar Advances, or, in a minimum aggregate amount of $500,000 or any integral multiple of $100,000 in excess thereof, any portion of the outstanding Eurodollar Advances upon three Business Days prior notice to Lender. All prepayments of principal shall be applied to the Revolving Loan (without any corresponding reduction in the Revolving Commitment unless done so in accordance with Section 2.4).

     Section 2.9. Intentionally Omitted.

     Section 2.10. Changes in Interest Rate, etc. Each Floating Rate Advance shall bear interest on the outstanding principal amount thereof, for each day from and including the date such Advance is made or is converted from a Eurodollar Advance into a Floating Rate Advance pursuant to Section 2.7, to but excluding the date it is paid or is converted into a Eurodollar Advance pursuant to Section 2.7 hereof, at a rate per annum equal to the Floating Rate for such day. Changes in the rate of interest on that portion of any Advance maintained as a Floating Rate Advance will take effect simultaneously with each change in the Prime Rate or Federal Funds Effective Rate, as applicable.

Each Eurodollar Advance shall bear interest on the outstanding principal amount thereof from and including the first day of the Interest Period applicable thereto to (but not including) the last day of such Interest Period at the interest rate determined by Lender as applicable to such Eurodollar Advance based upon the Borrower’s selections under Sections 2.6 and 2.7 and otherwise in accordance with the terms hereof. No Interest Period may end after the Facility Termination Date.

     Section 2.11. Rates Applicable After Default. Notwithstanding anything to the contrary contained in Section 2.6 or 2.7, during the continuance of a Default or Unmatured Default, no Advance may be made as or converted into a Eurodollar Advance and each existing Eurodollar Loan shall, at Lender’s option upon the expiration of the Interest Period in effect with respect to each such Eurodollar Loan, be automatically converted to a Floating Rate Loan. In addition, during the continuance of a Default (i) each Eurodollar Advance shall bear interest for the remainder of the applicable Interest Period at the rate otherwise applicable to such Interest Period plus 2% per annum, (ii) each Floating Rate Advance shall bear interest at a rate per annum equal to the Floating Rate in effect from time to time plus 2%, and (iii) the LC Fee shall be increased by 2% per annum.

     Section 2.12. Repayment of Loans; Evidence of Debt.

     (i) The Borrower hereby unconditionally promises to pay to Lender, or at Lender’s option to Administrative Agent for the benefit of Lender, the then unpaid principal amount of each Revolving Loan on the Facility Termination Date.

     (ii) All payments of the Obligations hereunder shall be made, without setoff, deduction, or counterclaim, in immediately available funds to Lender or Administrative Agent at Lender’s address specified pursuant to Section 12.14, or at any other Lending Installation specified in writing by Lender to the Borrower, by noon (Columbus, Ohio time) on the date when due. Lender is hereby authorized to charge the account of the Borrower maintained with Lender for each payment of principal and/or interest, Reimbursement Obligations and fees, as any of the same becomes due hereunder.

     (iii) Lender shall maintain accounts in which it will record (a) the amount of each Loan made hereunder, the Type thereof, and, as applicable, the Interest Period with respect thereto, (b) the amount of any principal or interest due and payable or to become due and payable from the Borrower to Lender and/or Administrative Agent hereunder, (c) the original stated amount of each Facility LC and the amount of LC Obligations outstanding at any time, and (d) the amount of any sum received by Lender hereunder from the Borrower. Lender may endorse on a schedule forming a part hereof or a Note appropriate notation to evidence the foregoing information with respect to the principal and interest then outstanding.

     (iv) The entries maintained in the accounts maintained pursuant to paragraphs (iii) above shall be prima facie evidence of the existence and amounts of the Obligations therein recorded; provided, however, that the failure of Lender to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower to repay the Obligations in accordance with the terms and provisions hereof.

     Section 2.13. Intentionally Omitted.

     Section 2.14. Telephonic Notices. The Borrower hereby authorizes Lender to extend, convert or continue Advances, effect selections of Types of Advances and to transfer funds based on telephonic notices made by any person or persons Lender in good faith believes to be acting on behalf of the Borrower, it being understood that the foregoing authorization is specifically intended to allow Borrowing Notices and Conversion/Continuation Notices to be given telephonically. The Borrower agrees to deliver promptly to Lender a written confirmation signed by an Authorized Officer if such confirmation is requested by Lender, of each telephonic notice. If the written confirmation differs in any material respect from the action taken by Lender, the records of Lender shall govern absent manifest error.

     Section 2.15. Interest Payment Dates; Interest and Fee Basis. Interest accrued on each Floating Rate Advance shall be payable on each Payment Date and at maturity. Interest accrued on each Eurodollar Advance shall be payable on the last day of its applicable Interest Period, on any date on which the Eurodollar Advance is prepaid, whether by acceleration or otherwise, and at maturity. Interest accrued on each Eurodollar Advance having an Interest Period longer than three months shall also be payable on the last day of each three-month interval during such Interest Period. Commitment fees, LC Fees and interest with respect to each Eurodollar Loan and shall be

calculated for actual days elapsed on the basis of a 360-day year. Interest with respect to each Floating Rate Loan shall be calculated for actual days elapsed on the basis of a 365-day year. Interest shall be payable for the day an Advance is made but not for the day of any payment on the amount paid if payment is received prior to noon (Columbus, Ohio time). If any payment of principal of or interest on an Advance shall become due on a day which is not a Business Day, such payment shall be made on the next succeeding Business Day and, in the case of a principal payment, such extension of time shall be included in computing interest in connection with such payment.

     Section 2.16. Intentionally Omitted.

     Section 2.17. Lending Installations. Lender may book Loans, LC Obligations and Facility LCs at any Lending Installation selected by Lender, and may change its Lending Installation from time to time. All terms of this Agreement shall apply to any such Lending Installation and the Loans and any Notes issued hereunder shall be deemed held by Lender for the benefit of any such Lending Installation. Lender may, by written notice to Borrower in accordance with Section 12.14, designate replacement or additional Lending Installations through which Loans will be made by it or Facility LCs will be issued by it and for whose account Loan payments or payments with respect to Facility LCs are to be made. Notwithstanding anything contained herein to the contrary, Lender shall not designate a non-U.S. Lending Installation unless it is determined in the reasonable discretion by Lender that the extension or continuation of any Eurodollar Loan cannot be made at a U.S. Lending Installation.

     Section 2.18. Intentionally Omitted.

     Section 2.19. Facility LCs.

     Section 2.19.1. Issuance Lender hereby agrees, on the terms and conditions set forth in this Agreement, to issue standby letters of credit (each, a “Facility LC”) and to renew, extend, increase, decrease or otherwise modify each Facility LC (“Modify,” and each such action a “Modification”), from time to time from and including the date of this Agreement and prior to the Facility Termination Date upon the request of the Borrower; provided that immediately after each such Facility LC is issued or Modified, (i) the aggregate amount of the outstanding LC Obligations shall not exceed $5,000,000, and (ii) the Outstanding Credit Exposure shall not exceed the Revolving Commitment. No Facility LC shall have an expiry date later than the earlier of (x) the fifth Business Day prior to the Facility Termination Date and (y) one year after its issuance.

     Section 2.19.2. Notice. Subject to Section 2.19.1, the Borrower shall give Lender notice prior to 10:00 a.m. (Columbus, Ohio time) at least three (3) Business Days prior to the proposed date of issuance or Modification of each Facility LC, specifying the beneficiary, the proposed date of issuance (or Modification) and the expiry date of such Facility LC, and describing the proposed terms of such Facility LC and the nature of the transactions proposed to be supported thereby. The issuance or Modification by Lender of any Facility LC shall, in addition to the conditions precedent set forth in Article IV, be subject to the conditions precedent that such Facility LC shall be satisfactory to Lender and that the Borrower shall have executed and delivered such application agreement and/or such other instruments and agreements relating to such Facility LC as Lender shall have reasonably requested (each, a “Facility LC Application”). In the event of any conflict between the terms of this Agreement and the terms of any Facility LC Application, the terms of this Agreement shall control. Further, notwithstanding any grant of collateral security under any Facility LC Application for the obligations of Borrower thereunder, Lender agrees and acknowledges that the Reimbursement Obligations and all other amounts owing by Borrower under any Facility LC Application shall at all times be unsecured.

     Section 2.19.3. LC Fees. The Borrower shall pay to Lender (i) a letter of credit fee at a per annum rate equal to the Applicable Fee Rate on the average daily undrawn stated amount of each Facility LC, such fee to be payable in arrears on each Payment Date, and (ii) a one-time letter of credit fee in an amount equal to 15 basis points of the stated amount of each Facility LC, such fee to be payable on the date of such issuance or increase (each such fee described in this sentence an “LC Fee”). The Borrower shall also pay to Lender such reasonable and customary documentary and processing charges in connection with the issuance or Modification of and draws under Facility LCs in accordance with Lender’s standard schedule for such charges as in effect from time to time.

     Section 2.19.4. Administration; Reimbursement. Upon receipt from the beneficiary of any Facility LC of any demand for payment under such Facility LC, Lender shall promptly notify the Borrower as to the amount to be paid by Lender as a result of such demand and the proposed payment date (the “LC Payment Date”). The responsibility of Lender to the Borrower shall be only to determine that the documents (including each demand for payment) delivered

under each Facility LC in connection with such presentment shall be in conformity in all material respects with such Facility LC.

     Section 2.19.5. Reimbursement by Borrower. The Borrower shall be irrevocably and unconditionally obligated to reimburse Lender on or before the applicable LC Payment Date for any amounts paid by Lender upon any drawing under any Facility LC, without presentment, demand, protest or other formalities of any kind; provided that the Borrower shall not hereby be precluded from asserting any claim for direct (but not consequential) damages suffered by the Borrower to the extent, but only to the extent, caused by (i) the willful misconduct or gross negligence of Lender in determining whether a request presented under any Facility LC issued by it complied with the terms of such Facility LC or (ii) Lender’s failure to pay under any Facility LC issued by it after the presentation to it of a request strictly complying with the terms and conditions of such Facility LC. All such amounts paid by Lender and remaining unpaid by the Borrower shall bear interest, payable on demand, for each day until paid at a rate per annum equal to (x) the rate applicable to Floating Rate Advances for such day if such day falls on or before the applicable LC Payment Date and (y) the sum of 2% plus the rate applicable to Floating Rate Advances for such day if such day falls after such LC Payment Date. Subject to the terms and conditions of this Agreement (including the submission of a Borrowing Notice in compliance with Section 2.6 and the satisfaction of the applicable conditions precedent set forth in Article IV), unless directed otherwise by the Borrower, Lender shall make a Floating Rate Revolving Advance hereunder for the purpose of satisfying any Reimbursement Obligation and, to the extent so satisfied, the Borrower’s obligation to make such payment shall be discharged and replaced by the resulting Floating Rate Revolving Advance.

     Section 2.19.6. Obligations Absolute. The Borrower’s obligations under this Section 2.19 shall be absolute and unconditional under any and all circumstances and irrespective of any setoff, counterclaim or defense to payment which the Borrower may have or have had against Lender or any beneficiary of a Facility LC. The Borrower further agrees that Lender shall not be responsible for, and the Borrower’s Reimbursement Obligation in respect of any Facility LC shall not be affected by, among other things, the validity or genuineness of documents or of any endorsements thereon, even if such documents should in fact prove to be in any or all respects invalid, fraudulent or forged, or any dispute between or among the Borrower, any of its Affiliates, the beneficiary of any Facility LC or any financing institution or other party to whom any Facility LC may be transferred or any claims or defenses whatsoever of the Borrower or of any of its Affiliates against the beneficiary of any Facility LC or any such transferee. Lender shall not be liable for any error, omission, interruption or delay in transmission, dispatch or delivery of any message or advice, however transmitted, in connection with any Facility LC, except for its gross negligence or willful misconduct. The Borrower agrees that any action taken or omitted by Lender under or in connection with each Facility LC and the related drafts and documents, if done without gross negligence or willful misconduct, shall be binding upon the Borrower and shall not put Lender under any liability to the Borrower. Nothing in this Section 2.19.6 is intended to limit the right of the Borrower to make a claim against Lender for damages as contemplated by the proviso to the first sentence of Section 2.19.5.

     Section 2.19.7. Actions of Lender. Lender shall be entitled to rely, and shall be fully protected in relying, upon any Facility LC, draft, writing, resolution, notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype message, statement, order or other document believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons, and upon advice and statements of legal counsel, independent accountants and other experts selected by Lender.

     Section 2.19.8. Indemnification. The Borrower hereby agrees to indemnify and hold harmless Lender, and its directors, officers, agents and employees from and against any and all claims and damages, losses, liabilities, costs or expenses which Lender may incur (or which may be claimed against Lender by any Person whatsoever) by reason of or in connection with the issuance, execution and delivery or transfer of or payment or failure to pay under any Facility LC or any actual or proposed use of any Facility LC, including any claims, damages, losses, liabilities, costs or expenses which Lender may incur by reason of or on account of Lender issuing any Facility LC which specifies that the term “Beneficiary” included therein includes any successor by operation of law of the named Beneficiary, but which Facility LC does not require that any drawing by any such successor Beneficiary be accompanied by a copy of a legal document, satisfactory to Lender, evidencing the appointment of such successor Beneficiary; provided that the Borrower shall not be required to indemnify Lender for any claims, damages, losses, liabilities, costs or expenses to the extent, but only to the extent, caused by (x) the willful misconduct or gross negligence of Lender in determining whether a request presented under any Facility LC complied with the terms of such Facility LC or (y) Lender’s failure to pay under any Facility LC after the presentation to it of a request strictly complying with the terms and conditions of such Facility LC. Nothing in this Section 2.19.8 is intended to limit the obligations of the Borrower under any other provision of this Agreement.

     Section 2.20. Intentionally Omitted.

     Section 2.21. Amendment and Restatement. This Agreement is entered into by the parties hereto in order to, inter alia, amend and restate the terms, provisions and agreements of that certain First Amended and Restated Credit Agreement, pursuant to which Lender is, as of the date hereof after giving effect to the Assignment Agreement, the only “Lender” (as defined thereunder). Pursuant to this Agreement, the other “Loan Documents” (as such term is used and defined in the First Amended and Restated Credit Agreement and in the Original Credit Agreement, herein, the “Original Loan Documents”) shall, only to the extent explicitly provided herein, also be amended and restated (except for any Facility LC Applications). This Agreement, together with the Original Loan Documents, as amended and restated on this date, the Pledge, the Security Agreements, the Fast Forward Guaranty, the Timexpress Guaranty, the Subsidiary Guaranty, all Facility LC Applications given under the First Amended and Restated Credit Agreement, Original Credit Agreement and/or this Agreement, and all other documents and or instruments given from time to time in connection with or pursuant to this Agreement, the First Amended and Restated Credit Agreement and the Original Credit Agreement, as each of the same may from time to time be amended, modified, supplemented, extended, restated or replaced from time to time, shall constitute the Loan Documents as such term is used and defined in this Agreement. Neither this Agreement nor any of the other Loan Documents shall constitute a satisfaction or refinance of the indebtedness made pursuant to the First Amended and Restated Credit Agreement, the Original Credit Agreement and the other Original Loan Documents as evidenced by the HNB Note and the JPM Note assigned pursuant to the Assignment Agreement to Lender or otherwise. Administrative Agent shall, notwithstanding anything contained herein or in any other Loan Document, as amended on the dated hereof, continue to act as Agent hereunder for the Lender and shall continue to hold and own, for the benefit of Lender, all right, title and interest granted, issued or made in favor of Administrative Agent, as creditor, secured party, or otherwise, under each Guaranty and all security interests, liens, mortgages and other rights, benefits and interests granted in connection with the First Amended and Restated Agreement, including without limitation under the Security Agreement, the Pledge and the Mortgage. Borrower hereby agrees, upon request by Administrative Agent or Lender, to, and to cause each Guarantor to, enter into and/or authorize such other and further agreements, documents, and instruments, including without limitation, Financing Statements, necessary to effectuate the intent of this Agreement and to continue, and/or continue the perfection of, any liens, security interests, mortgages, pledges and other collateral interests granted by any Person in connection with the First Amended and Restated Credit Agreement.

ARTICLE III

Yield Protection; Taxes

     Section 3.1. Yield Protection. If, on or after the date of this Agreement, the adoption of any law or any governmental or quasi-governmental rule, regulation, policy, guideline or directive (whether or not having the force of law), or any change in the interpretation or administration thereof by any governmental or quasi-governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by Lender, or any applicable Lending Installation, with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency:

     (i) subjects Lender, or any applicable Lending Installation, to any Taxes, or changes the basis of taxation of payments (other than with respect to Excluded Taxes) to Lender in respect of its Eurodollar Loans or Facility LCs, or

     (ii) imposes or increases or deems applicable any reserve, assessment, insurance charge, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, Lender, or any applicable Lending Installation (other than reserves and assessments taken into account in determining the interest rate applicable to Eurodollar Advances), or

     (iii) imposes any other condition the result of which is to increase the cost to Lender, or any applicable Lending Installation, of making, funding or maintaining its Eurodollar Loans, or of issuing or participating in Facility LCs, or reduces any amount receivable by Lender, or any applicable Lending Installation, in connection with its Eurodollar Loans or Facility LCs, or requires Lender, or any applicable Lending Installation, to make any payment calculated by reference to the amount of Eurodollar Loans or Facility LCs held or interest of LC Fees received by it, by an amount deemed material by Lender, as the case may be, and the result of any of the foregoing is to increase the cost to Lender, or applicable Lending Installation, as the case may be, of making or maintaining its Eurodollar Loans or of issuing in Facility LCs, or to reduce the return received by Lender, or applicable Lending Installation, as the case

may be, in connection with such Eurodollar Loans, the Commitment or Facility LCs therein, then, within 15 days of demand by Lender, the Borrower shall pay Lender such additional amount or amounts as will compensate Lender, as the case may be, for such increased cost or reduction in amount received.

     Section 3.2. Changes in Capital Adequacy Regulations. If Lender determines the amount of capital required or expected to be maintained by Lender, or any Lending Installation, or any corporation controlling Lender is increased as a result of a Change (defined below), then, within 15 days of demand by Lender, the Borrower shall pay Lender the amount necessary (without any premium or penalty thereon or otherwise with respect thereto) to compensate for any shortfall in the rate of return on the portion of such increased capital which Lender determines is attributable to this Agreement, its Outstanding Credit Exposure, its Revolving Commitment to make Revolving Loans and/or issue in Facility LCs, as the case may be (after taking into account Lender’s policies as to capital adequacy). “Change” means (i) any change after the date of this Agreement in the Risk-Based Capital Guidelines (defined below), or (ii) any adoption of or change in any other law, governmental or quasi-governmental rule, regulation, policy, guideline, interpretation, or directive (whether or not having the force of law) after the date of this Agreement which affects the amount of capital required or expected to be maintained by Lender, or any Lending Installation or any corporation controlling Lender. “Risk-Based Capital Guidelines” means (i) the risk-based capital guidelines in effect in the United States on the date of this Agreement, including transition rules, and (ii) the corresponding capital regulations promulgated by regulatory authorities outside the United States implementing the July 1988 report of the Basle Committee on Banking Regulation and Supervisory Practices Entitled “International Convergence of Capital Measurements and Capital Standards,” including transition rules, and any amendments to such regulations adopted prior to the date of this Agreement.

     Section 3.3. Availability of Types of Advances. If Lender determines that maintenance of its Eurodollar Loans at a suitable Lending Installation would violate any applicable law, rule, regulation, or directive, whether or not having the force of law, or if Lender determines that (i) deposits of a type and maturity appropriate to match fund Eurodollar Advances are not available or (ii) the interest rate applicable to Eurodollar Advances does not accurately reflect the cost of making or maintaining Eurodollar Advances, then Lender shall suspend the availability of Eurodollar Advances and require any affected Eurodollar Advances to be repaid or converted to Floating Rate Advances, subject to the payment of any funding indemnification amounts required by Section 3.4 (without any premium or penalty thereon or otherwise with respect thereto).

     Section 3.4. Funding Indemnification. If any payment of a Eurodollar Advance occurs on a date which is not the last day of the applicable Interest Period, whether because of acceleration, prepayment or otherwise, or a Eurodollar Advance is not made on the date specified by the Borrower for any reason other than default by Lender, the Borrower will indemnify Lender for any reasonable and properly documented loss or cost incurred by it and resulting therefrom, including any loss or cost in liquidating or employing deposits acquired to fund or maintain such Eurodollar Advance (without any premium or penalty thereon or otherwise with respect thereto).

     Section 3.5. Taxes.

     (i) All payments by the Borrower to or for the account of Lender hereunder or under any Note or Facility LC Application shall be made free and clear of and without deduction for any and all Taxes. If the Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder to Lender, (a) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 3.5) Lender receives an amount equal to the sum it would have received had no such deductions been made, (b) the Borrower shall make such deductions, (c) the Borrower shall pay the full amount deducted to the relevant authority in accordance with applicable law and (d) the Borrower shall furnish to Lender the original copy of a receipt evidencing payment thereof within 30 days after such payment is made.

     (ii) In addition, the Borrower hereby agrees to pay any present or future stamp or documentary taxes and any other excise or property taxes, charges or similar levies which arise from any payment made hereunder or under any Note or Facility LC Application or from the execution or delivery of, or otherwise with respect to, this Agreement or any Note or Facility LC Application (“Other Taxes”).

     (iii) The Borrower hereby agrees to indemnify Lender for the full amount of Taxes or Other Taxes (including any Taxes or Other Taxes imposed on amounts payable under this Section 3.5) paid by Lender and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto. Payments due under this indemnification shall be made within 30 days of the date Lender makes demand therefor pursuant to Section 3.6.

     Section 3.6. Lender Statements; Survival of Indemnity. To the extent reasonably possible Lender shall designate an alternate Lending Installation with respect to its Eurodollar Loans to reduce any liability of the Borrower to Lender, as applicable, under Sections 3.1, 3.2 and 3.5 or to avoid the unavailability of Eurodollar Advances under Section 3.3, so long as such designation is not, in the reasonable judgment of Lender, disadvantageous to Lender. Lender shall deliver a written statement to the Borrower as to the amount due, if any, under Section 3.1, 3.2, 3.4 or 3.5. Such written statement shall set forth in reasonable detail the calculations upon which Lender determined such amount and shall be final, conclusive and binding on the Borrower in the absence of manifest error. Determination of amounts payable under such Sections in connection with a Eurodollar Loan shall be calculated as though Lender funded each Eurodollar Loan or made any disbursement under each Facility LC, as applicable, through the purchase of a deposit of the type and maturity corresponding to the deposit used as a reference in determining the Eurodollar Rate applicable to such Loan or Facility LC, whether or not that is in fact the case, and any amounts owing by Borrower to Lender under such Sections shall not be deemed unreasonable or not properly documented as a result of whether or not Lender funded any Eurodollar Loan or whether or not Lender made any disbursement under any Facility LC in such manner. Unless otherwise provided herein, the amount specified in the written statement of Lender shall be payable on demand after receipt by the Borrower of such written statement. The obligations of the Borrower under Sections 3.1, 3.2, 3.4 and 3.5 shall survive for 180 days following the later of (i) the payment of the Obligations and termination of this Agreement, and (ii) the date that the event giving rise to the obligation occurs (provided that if the event giving rise to the obligation is retroactive, then such 180 day period shall be extended to include the period of retroactive effect).

ARTICLE IV

Conditions Precedent

     Section 4.1. Effective Date; Credit Extensions.

     (i) The obligations of Lender to make Advances after the Effective Date and to issue Facility LCs hereunder shall not become effective until the date on which each of the following conditions is satisfied:

     (a) The Borrower shall have furnished to Lender:

(1)	All documents, instruments, agreements and other items as set forth in the Closing Agenda.
(2)	Such other documents and items as Lender or its counsel may have reasonably requested.

     (b) The Borrower shall have paid to Lender and Administrative Agent all fees and other amounts owing under the Loan Documents, or as otherwise agreed from time to time.

     (c) Lender shall have received and accepted the executed legal opinion of Vorys, Sater, Seymour & Pease, legal counsel to the Borrower and Guarantor, in favor of Lender and Administrative Agent, in form and substance satisfactory to Lender.

     Section 4.2. Each Credit Extension. The obligation of Lender to make any Advance or to issue, amend, renew or extend any Facility LC, is subject to the satisfaction of the following conditions:

     (i) There exists no Default or Unmatured Default.

     (ii) The representations and warranties contained in Article V are true and correct as of such Credit Extension Date except to the extent any such representation or warranty is stated to relate solely to an earlier date, in which case such representation or warranty shall have been true and correct on and as of such earlier date.

     (iii) All legal matters incident to the making of such Credit Extension shall be satisfactory to Lender and its counsel.

     Each Borrowing Notice or request for issuance of a Facility LC with respect to each such Credit Extension shall constitute a representation and warranty by the Borrower that the conditions contained in Sections 4.2(i)-(ii) have been satisfied.

ARTICLE V

Representations And Warranties

     The Borrower represents and warrants to Lender that:

     Section 5.1. Existence and Standing. Each of the Borrower and its Subsidiaries is a corporation, or (in the case of Subsidiaries only) partnership or limited liability company, duly and properly incorporated or organized, as the case may be, validly existing and (to the extent such concept applies to such entity) in good standing under the laws of its jurisdiction of incorporation or organization and has all requisite authority to conduct its business in each jurisdiction in which its business is conducted.

     Section 5.2. Authorization and Validity. The Borrower and each Guarantor has the power and authority and legal right to execute and deliver the Loan Documents to which it is a party, and to perform its obligations thereunder. The execution and delivery by the Borrower and each Guarantor of the Loan Documents to which it is a party and the performance of its obligations thereunder have been duly authorized by proper corporate, partnership, or limited liability company, as the case may be, proceedings, and the Loan Documents constitute legal, valid and binding obligations of the Borrower and each Guarantor, as applicable, enforceable against the Borrower and each Guarantor in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally and general principles of equity.

     Section 5.3. No Conflict; Government Consent. Neither the execution and delivery by the Borrower or any Guarantor of the Loan Documents to which it is a party, nor the consummation of the transactions therein contemplated, nor compliance with the provisions thereof will violate (i) any law, rule, regulation, order, writ, judgment, injunction, decree or award binding on the Borrower, any Guarantor, or any of their respective Subsidiaries or (ii) the Borrower’s, any Guarantor’s, or any of their respective Subsidiaries’, articles or certificate of incorporation, partnership agreement, certificate of partnership, articles or certificate of organization, by-laws, or operating or other management agreement, as the case may be, or (iii) the provisions of any indenture, instrument or agreement to which the Borrower, any Guarantor, or any of their respective Subsidiaries is a party or is subject, or by which any of them, or their Property, is bound, or conflict with or constitute a default thereunder, or result in, or require, the creation or imposition of any Lien in, of or on the Property of the Borrower, any Guarantor or any of the respective Subsidiaries of any of them pursuant to the terms of any such indenture, instrument or agreement. No order, consent, adjudication, approval, license, authorization, or validation of, or filing, recording or registration with, or exemption by, or other action in respect of any governmental or public body or authority, or any subdivision thereof, which has not been obtained by the Borrower, any Guarantor, or any of their Subsidiaries, is required to be obtained in connection with the execution and delivery of the Loan Documents, the borrowings under this Agreement, the payment and performance by the Borrower of the Obligations or the legality, validity, binding effect or enforceability of any of the Loan Documents.

     Section 5.4. Financial Statements. The December 31, 2006 consolidated financial statements of the Borrower and its Subsidiaries heretofore delivered to Lender were prepared in accordance with Agreement Accounting Principles in effect on the date such statements were prepared and fairly present the consolidated financial condition and operations of the Borrower and its Subsidiaries at such date and the consolidated results of their operations for the period then ended. The financial projections provided by Borrower and/or its Subsidiaries to Lender in connection with the transactions contemplated hereby shall be certified by an Authorized Officer as being an accurate summary of the estimated expected results of operations and cash flow of the Borrower and its Subsidiaries to the best knowledge of such Authorized Officer as of the date of said financial projections based upon present circumstances; it being acknowledged and agreed by the parties hereto that the assumptions contained therein may not materialize, and unanticipated events and circumstances may occur subsequent to the date of said financial projections which may result in actual results which vary (perhaps, materially) from the financial projections.

     Section 5.5. Material Adverse Change. Since December 31, 2006 there has been no change in the business, Property, condition (financial or otherwise) or results of operations of the Borrower and its Subsidiaries which could reasonably be expected to have a Material Adverse Effect.

     Section 5.6. Taxes. The Borrower and its Subsidiaries have filed all United States federal tax returns and all other tax returns which are required to be filed and have paid all taxes due pursuant to said returns or pursuant to any assessment received by the Borrower or any of its Subsidiaries, except such taxes, if any, as are being contested in good faith and as to which adequate reserves have been provided in accordance with Agreement Accounting Principles and as to which no Lien exists. No tax liens have been filed and no claims are being asserted with respect to any such taxes. The charges, accruals and reserves on the books of the Borrower and its Subsidiaries in respect of any taxes or other governmental charges are adequate.

     Section 5.7. Litigation and Contingent Obligations. There is no litigation, arbitration, governmental investigation, proceeding or inquiry pending or, to the knowledge of any of their officers, threatened against or affecting the Borrower or any of its Subsidiaries which could reasonably be expected to have a Material Adverse Effect or which seeks to prevent, enjoin or delay the making of any Credit Extensions. Other than any liability incident to any litigation, arbitration or proceeding which could not reasonably be expected to have a Material Adverse Effect, neither the Borrower nor any of its Subsidiaries has any material Contingent Obligations not provided for or disclosed in the financial statements referred to in Section 5.4.

     Section 5.8. Subsidiaries. Schedule I contains an accurate list of all of the direct and indirect Subsidiaries of the Borrower as of the date of this Agreement, setting forth their respective jurisdictions of organization and the percentage of their respective capital stock or other ownership interests owned by the Borrower or other Subsidiaries. All of the issued and outstanding shares of capital stock or other ownership interests of such Subsidiaries have been (to the extent such concepts are relevant with respect to such ownership interests) duly authorized and issued and are fully paid and non-assessable.

     Section 5.9. ERISA. The Unfunded Liabilities of all Single Employer Plans do not in the aggregate exceed $100,000. Neither the Borrower nor any other member of the Controlled Group has incurred, or is reasonably expected to incur, any withdrawal liability to Multiemployer Plans in excess of $100,000 in the aggregate. Each Plan complies in all material respects with all applicable requirements of law and regulations, no Reportable Event has occurred with respect to any Plan, neither the Borrower nor any other member of the Controlled Group has withdrawn from any Plan or initiated steps to do so, and no steps have been taken to reorganize or terminate any Plan.

     Section 5.10. Accuracy of Information. No information, exhibit or report furnished by the Borrower or any of its Subsidiaries to Lender in connection with the negotiation of, or compliance with, the Loan Documents (i) contained any material misstatement of fact, or (ii) omitted to state any fact necessary to make the statements contained therein not materially misleading.

     Section 5.11. Federal Reserve Regulations. Neither the Borrower nor any of its Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of buying or carrying Margin Stock.

     Section 5.12. Material Agreements. Neither the Borrower nor any of its Subsidiaries is a party to any agreement or instrument or subject to any charter or other corporate or organizational restriction which could reasonably be expected to have a Material Adverse Effect. Neither the Borrower nor any of its Subsidiaries is in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any agreement (including, without limitation, any agreement or instrument evidencing or governing Indebtedness) to which it is a party, which default could reasonably be expected to have a Material Adverse Effect.

     Section 5.13. Compliance With Laws. The Borrower and its Subsidiaries have complied with all applicable statutes, rules, regulations, orders and restrictions of any domestic or foreign government or any instrumentality or agency thereof having jurisdiction over the conduct of their respective businesses or the ownership of their respective Properties except for any failure to comply with any of the foregoing which could not reasonably be expected to have a Material Adverse Effect.

     Section 5.14. Properties.

     (i) Each of the Borrower and its Subsidiaries has good title to, or valid leasehold interests in, all of the Property material to its business (including its real properties), free and clear of all Liens, except for (1) minor defects in title that do not interfere with its ability to conduct its business as currently conducted or to utilize such properties for their intended purposes, (2) and Permitted Liens.

     (ii) Each of the Borrower and its Subsidiaries has complied with all material obligations under all leases to which it is a party and that are material to the Borrower and its Subsidiaries taken as a whole and all such leases are in full force and effect. Each of the Borrower and its Subsidiaries enjoys peaceful and undisturbed possession under all such material leases under which a Borrower or any such Subsidiary is a lessee.

     (iii) Each of the Borrower and its Subsidiaries owns, or is licensed or otherwise permitted to use, all trademarks, trade names, copyrights, patents and other intellectual property material to its business, and the use thereof by the Borrower and its Subsidiaries does not infringe upon the rights of any other Person, except for any such infringements that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

     (iv) Schedule 5.14 sets forth the address of each real property that is owned or leased by the Borrower or any of its Subsidiaries as of the Effective Date.

     (v) As of the Effective Date, neither the Borrower nor any of its Subsidiaries has received notice of, or has knowledge of, any pending or contemplated condemnation proceeding affecting any of its real properties or any sale or disposition thereof, in lieu of condemnation. Neither any of the Borrower’s or its Subsidiaries’ real properties, nor any interest therein, is subject to any right of first refusal, option or other contractual right to purchase such real property or interest therein.

     Section 5.15. Plan Assets; Prohibited Transactions. Neither the Borrower nor any of its Subsidiaries is an entity deemed to hold “plan assets” within the meaning of 29 C.F.R. § 2510.3-101 of an employee benefit plan (as defined in Section 3(3) of ERISA) which is subject to Title I of ERISA or any plan (within the meaning of Section 4975 of the Code), and neither the execution of this Agreement nor the making of Credit Extensions hereunder gives rise to a prohibited transaction within the meaning of Section 406 of ERISA or Section 4975 of the Code.

     Section 5.16. Environmental Matters. In the ordinary course of its business, the officers of the Borrower consider the effect of Environmental Laws on the business of the Borrower and its Subsidiaries, in the course of which they identify and evaluate potential risks and liabilities accruing to the Borrower and its Subsidiaries due to Environmental Laws. On the basis of this consideration, the Borrower has concluded that Environmental Laws cannot reasonably be expected to have a Material Adverse Effect. Except as provided on Schedule 5.16, neither the Borrower nor any of its Subsidiaries has received any notice to the effect that its operations are not in material compliance with any of the requirements of applicable Environmental Laws or are the subject of any federal or state investigation evaluating whether any remedial action is needed to respond to a release of any toxic or hazardous waste or substance into the environment, which non-compliance or remedial action could reasonably be expected to have a Material Adverse Effect.

     Section 5.17. Investment Company Act. Neither the Borrower nor any of its Subsidiaries is an “investment company” or a company “controlled” by an “investment company”, within the meaning of the Investment Company Act of 1940, as amended.

     Section 5.18. Public Utility Holding Company Act. Neither the Borrower nor any of its Subsidiaries is a “holding company” or a “subsidiary company” of a “holding company”, or an “affiliate” of a “holding company” or of a “subsidiary company” of a “holding company”, within the meaning of the Public Utility Holding Company Act of 1935, as amended.

     Section 5.19. Insurance. The certificate (substantially in the form attached as Schedule 5.19) signed on the date hereof by the President or Chief Financial Officer of the Borrower, pursuant to which such officer attests to the existence and adequacy of, and summarizes, the property and casualty insurance program carried by the Borrower with respect to itself and its Subsidiaries and that has been furnished by the Borrower to Lender, is complete and accurate. This summary includes the insurer’s or insurers’ name(s), policy number(s), expiration date(s), amount(s) of coverage, type(s) of coverage, exclusion(s), and deductibles. This summary also includes similar information, and describes any reserves, relating to any self-insurance program that is in effect.

     Section 5.20. Solvency.

     (i) Immediately after the consummation of the transactions to occur hereunder and immediately following the making of each Loan, if any, made on the date hereof and after giving effect to the application of the proceeds of such Loans, (a) the fair value of the assets of the Borrower and its Subsidiaries on a consolidated basis,

at a fair valuation, will exceed the debts and liabilities, subordinated, contingent or otherwise, of the Borrower and its Subsidiaries on a consolidated basis; (b) the present fair saleable value of the Property of the Borrower and its Subsidiaries on a consolidated basis will be greater than the amount that will be required to pay the probable liability of the Borrower and its Subsidiaries on a consolidated basis on their debts and other liabilities, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured; (c) the Borrower and its Subsidiaries on a consolidated basis will be able to pay their debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured; and (d) the Borrower and its Subsidiaries on a consolidated basis will not have unreasonably small capital with which to conduct the businesses in which they are engaged as such businesses are now conducted and are proposed to be conducted after the date hereof.

     (ii) The Borrower does not intend to, or to permit any of its Subsidiaries to, and does not believe that it or any of its Subsidiaries will, incur debts beyond its ability to pay such debts as they mature, taking into account the timing of and amounts of cash to be received by it or any such Subsidiary and the timing of the amounts of cash to be payable on or in respect of its Indebtedness or the Indebtedness of any such Subsidiary.

     Section 5.21. Labor Matters. As of the Effective Date, there are no strikes, lockouts or slowdowns against the Borrower or any of its Subsidiaries pending or, to the knowledge of the Borrower, threatened. The hours worked by and payments made to employees of the Borrower and its Subsidiaries have not been in violation of the Fair Labor Standards Act or any other applicable Federal, state, local or foreign law dealing with such matters, except where any such violations, individually or in the aggregate, would not be reasonably likely to result in a Material Adverse Effect. All material payments due from the Borrower or any of its Subsidiaries, or for which any claim may be made against the Borrower or any such Subsidiary, on account of wages and employee health and welfare insurance and other benefits, have been paid or accrued as a liability on the books of the Borrower or such Subsidiary, as applicable. The consummation of the transactions contemplated hereby will not give rise to any right of termination or right of renegotiation on the part of any union under any collective bargaining agreement to which the Borrower or any of its Subsidiaries is bound.

ARTICLE VI

Covenants

     During the term of this Agreement, unless Lender shall otherwise consent in writing:

     Section 6.1. Financial Reporting. The Borrower will maintain, for itself and each of its Subsidiaries, a system of accounting established and administered in accordance with Agreement Accounting Principles, and furnish to Lender:

     (i) Within ninety (90) days after the close of each fiscal year of Borrower, the annual report of Borrower on form 10K for each such fiscal year-end, as filed with the Securities and Exchange Commission.

     (ii) Within forty-five (45) days after the close of the each of the first three fiscal quarters of each of Borrower’s fiscal years, the quarterly report of Borrower on form 10Q for each such fiscal quarter-end, as filed with the Securities and Exchange Commission.

     (iii) Together with the deliveries required under Section 6.1(ii), for each fiscal quarter-end, a compliance certificate in substantially the form of Exhibit B signed by an Authorized Officer showing the calculations necessary to determine compliance with this Agreement and stating that no Default or Unmatured Default exists, or if any Default or Unmatured Default exists, stating the nature and status thereof.

     (iv) On the last day of each March prior to the Maturity Date, and at any other time the same is reasonably requested by Lender, a detailed report (1) listing (by type and registration number) all aircraft in which Borrower or any Subsidiary of Borrower owns or holds any right, title or interest, (2) showing the Book Value of said aircraft.

     (v) no later than forty-five (45) days after the last day of each calendar quarter after the Closing Date hereof, and at such other times as Lender shall request, a Borrowing Base Certificate, certified by an Authorized Officer of Borrower as true and correct, setting forth the amount of Eligible Accounts Receivable and Eligible Inventory and supporting documentation, in each case as of the last Business Day of said calendar quarter;

     (vi) As soon as possible and in any event within ten (10) days after the Borrower knows that any Reportable Event has occurred with respect to any Plan, a statement, signed by an Authorized Officer of the Borrower, describing said Reportable Event and the action which the Borrower proposes to take with respect thereto.

     (vii) As soon as possible and in any event within ten (10) days after receipt by the Borrower, a copy of (a) any notice or claim to the effect that the Borrower or any of its Subsidiaries is or may be liable to any Person as a result of the release by the Borrower, any of its Subsidiaries, or any other Person of any toxic or hazardous waste or substance into the environment, and (b) any notice alleging any violation of any federal, state or local environmental, health or safety law or regulation by the Borrower or any of its Subsidiaries, which, in either case, could reasonably be expected to have a Material Adverse Effect.

     (viii) As soon as possible and in any event within ten (10) days after notice thereof, notice of all actions, suits, audits, inquiries, proceedings, notices of violations, investigations and/or other material actions before or by any governmental or public authority or body, or any subdivision thereof, including, without limitation, the Internal Revenue Service and/or the Securities Exchange Commission of the U.S., against the Borrower or any Subsidiary, which could, in the opinion of an Authorized Officer of the Borrower, if adversely determined, reasonably be expected to result in a Material Adverse Effect.

     (ix) Such other information (including non-financial information) as Lender may from time to time reasonably request.

     Section 6.2. Use of Proceeds. The Borrower will use the proceeds of the Loans for general corporate and working capital purposes. The Borrower will not, nor will it permit any of its Subsidiaries to, use any of the proceeds of the Advances or any Facility LC to purchase or carry any Margin Stock or for any purpose that entails a violation of, or that is inconsistent with, the provisions of the Regulations of the Board, including Regulation T, U or X.

     Section 6.3. Notice of Default. The Borrower will, and will cause each of its Subsidiaries to, give prompt notice in writing to Lender of the occurrence of any Default or Unmatured Default and of any other development, financial or otherwise, which could reasonably be expected to have a Material Adverse Effect, including, without limitation, any material casualty or loss.

     Section 6.4. Conduct of Business. The Borrower will, and will cause each of its Subsidiaries to, carry on and conduct its business in substantially the same manner and in substantially the same fields of enterprise as it is presently conducted and do all things necessary to remain duly incorporated or organized, validly existing and (to the extent such concept applies to such entity) in good standing as a domestic corporation, partnership or limited liability company in its jurisdiction of incorporation or organization, as the case may be, and maintain all requisite authority to conduct its business in the jurisdiction of its organization and in each other jurisdiction in which its business is conducted, unless the failure to be so authorized to conduct business in each such other jurisdiction would not reasonably be expected to have a Material Adverse Effect.

     Section 6.5. Taxes. The Borrower will, and will cause each of its Subsidiaries to, timely file complete and correct United States federal and applicable foreign, state and local tax returns required by law and pay when due all taxes, assessments and governmental charges and levies upon it or its income, profits or Property, except those which are being contested in good faith by appropriate proceedings and with respect to which adequate reserves have been set aside in accordance with Agreement Accounting Principles. At any time that the Borrower or any of its Subsidiaries is organized as a limited liability company, each such limited liability company will qualify for partnership tax treatment under United States federal tax law.

     Section 6.6. Insurance. The Borrower will, and will cause each of its Subsidiaries to, maintain with financially sound and reputable insurance companies the Required Property Insurance Coverage and Required Public Liability Insurance Coverage, and the Borrower will furnish to Lender upon request full information as to the insurance carried.

     Section 6.7. Compliance with Laws. The Borrower will, and will cause each of its Subsidiaries to, comply in all material respects with all laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject including all Environmental Laws.

     Section 6.8. Maintenance of Properties. The Borrower will, and will cause each of its Subsidiaries to, do all things necessary to maintain, preserve, protect and keep its Property in good repair, working order and

condition, and make all necessary and proper repairs, renewals and replacements so that its business carried on in connection therewith may be properly conducted at all times except to the extent the failure to do so would not reasonably be expected to result in a Material Adverse Effect.

     Section 6.9. Books and Records; Inspection. The Borrower will, and will cause each of its Subsidiaries to, (i) keep proper books of record and account in which full, true and correct entries in all respects are made for all dealings and transactions in relation to its business and activities, and (ii) permit Lender, by their respective representatives and agents, with prior notice to Borrower to inspect any of the Property, books and financial records of the Borrower and each of its Subsidiaries, to examine and make copies of the books of accounts and other financial records of the Borrower and each such Subsidiary, and to discuss the affairs, finances and accounts of the Borrower and each such Subsidiary with, and to be advised as to the same by, their respective officers at such reasonable times during Borrower’s or such Subsidiary’s normal business hours and at reasonable intervals as Lender may designate.

     Section 6.10. Operating Leases. Borrower will not, nor will it permit any of its Subsidiaries, to enter into any Operating Lease for aircraft (1) having a term greater than five (5) years and/or (ii) under which the aggregate total amount of rent and lease expense paid by or to be paid by Borrower and its Subsidiaries on an annual basis exceeds $3,000,000.00.

     Section 6.11. Indebtedness. The Borrower will not, nor will it permit any of its Subsidiaries, as applicable, to, create, incur or suffer to exist any Indebtedness, except any or all of the following (collectively “Permitted Indebtedness”):

     (i) The Loans and the Reimbursement Obligations.

     (ii) Indebtedness existing on the date hereof and described in Schedule 2.

     (iii) Indebtedness arising under Rate Management Transactions related to the Loans.

     (iv) Consolidated Indebtedness, calculated for the Borrower and/or its Subsidiaries without duplication, not exceeding $10,000,000.00 in the aggregate incurred and outstanding at any time; provided, that all of such Consolidated Indebtedness is incurred for the sole purpose of purchasing, or other financings, including time shares and capitalized leases, with respect to aircraft and related tangible fixed assets, it being understood and agreed that neither Borrower nor any of its Subsidiaries which incurred such Consolidated Indebtedness shall in any event, as a result of such Indebtedness, be subject to or bound by any financial covenants with respect to Borrower or any of its Subsidiaries, unless the bank, financial institution or other creditor to which such Consolidated Indebtedness is owing shall have entered into an Inter-Creditor Agreement with Lender and in form and substance satisfactory to Lender.

     (v) Indebtedness by and among Borrower and any Guarantor or among Guarantors.

     Section 6.12. Merger. The Borrower will not, nor will it permit any of its Subsidiaries to, merge or consolidate with or into any other Person, except that a Subsidiary may merge into the Borrower or a Wholly-Owned Subsidiary.

     Section 6.13. Sale of Assets. The Borrower will not, nor will it permit any of its Subsidiaries to, in one or any series of transactions, lease, sell or otherwise dispose of Property to any other Person (except Property (i) which is purchased or otherwise acquired by Borrower or any of its Subsidiaries ninety (90) or fewer days prior to such lease, sale or other disposition, or (ii) which is subject to a Permitted Lien in favor of a Person other than Lender and said Person has approved or permitted such sale, lease or other disposition, or (iii) which is sold by Borrower or any Subsidiary to any Guarantor, provided, however, that to the extent any such Property is subject to a Lien in favor of Lender, or in favor of Administrative Agent for the benefit of Lender, said transfer shall be made specifically subject to said Lien and the transferee-Guarantor shall assume all obligations of the transferor-Borrower or Subsidiary under any Security Agreement, Pledge or other Loan Document pursuant to which any such Lien was created) which, in the aggregate, constitutes a Substantial Portion of the Property of Borrower or any Subsidiary, or which constitutes Collateral under the Security Documents if said lease, sale or other disposition is prohibited pursuant to the Security Documents.

     Section 6.14. Investments and Acquisitions. The Borrower will not, nor will it permit any of its Subsidiaries to, make or suffer to exist any Investments (including loans and advances to, and other Investments in,

Subsidiaries, except as explicitly permitted pursuant to Section 6.11), or commitments therefor, or to create any Subsidiary or to become or remain a partner in any partnership or joint venture, or to make any Acquisition of any Person, except:

     (i) Cash Equivalent Investments.

     (ii) Existing Investments in Subsidiaries and other Investments in existence on the date hereof and described in Schedule I, including, without limitation, pursuant to the management and licensing agreements between AMI, ASI and/or Jetride, substantially on such terms and providing for management and royalty fees to AMI as described in writing to Lender.

     Section 6.15. Liens. The Borrower will not, nor will it permit any of its Subsidiaries to, create, incur, or suffer to exist (i) any Lien in, of or on the Property of the Borrower or any of its Subsidiaries, or (ii) an agreement with any Person (other than Lender) which prohibits or restricts the granting of any such Lien in favor of Lender or in favor of Administrative Agent for the benefit of Lender, except any or all of the following (collectively, “Permitted Liens”):

     (i) Liens for taxes, assessments or governmental charges or levies on its Property if the same shall not at the time be delinquent or thereafter can be paid without penalty, or are being contested in good faith and by appropriate proceedings and for which adequate reserves in accordance with Agreement Accounting Principles shall have been set aside on its books.

     (ii) Liens imposed by law, such as carriers’, warehousemen’s and mechanics’ liens, landlord’s liens, and other similar liens arising in the ordinary course of business which secure payment of obligations not more than 60 days past due or which are being contested in good faith by appropriate proceedings and for which adequate reserves shall have been set aside on its books.

     (iii) Liens arising out of pledges or deposits under worker’s compensation laws, unemployment insurance, old age pensions, or other social security or retirement benefits, or similar legislation.

     (iv) Utility easements, building restrictions and such other encumbrances or charges against real property as are of a nature generally existing with respect to properties of a similar character and which do not in any material way affect the marketability of the same or interfere with the use thereof in the business of the Borrower or its Subsidiaries.

     (v) Liens existing on the date hereof and described in Schedule II.

     (vi) Liens existing in connection with existing and future Operating Leases and Capitalized Leases.

     (vii) Liens in favor of Lender or in favor of Administrative Agent for the benefit of Lender.

     (viii) Liens to secure payment of the purchase price of any aircraft and related tangible fixed assets acquired by the Borrower or any of its Subsidiaries with the proceeds of any Permitted Indebtedness may be created or suffered to exist upon such aircraft and related tangible fixed assets provided that the aggregate principal amount of all Permitted Indebtedness secured by such Liens does not exceed the amounts set forth in Section 6.11(iv); provided that no such Lien shall encumber any other asset at any time owned by the Borrower or such Subsidiary, and, provided further, that not more than one such Lien shall encumber such fixed asset at any one time.

     (ix) Liens securing Permitted Indebtedness described in Section 6.11(v).

     Section 6.16. Capital Expenditures. The Borrower will not, and will not permit any of its Subsidiaries to, make, or be committed to make, Capital Expenditures, on a non-cumulative basis in the aggregate exceeding $15,000,000 annually. Notwithstanding the foregoing provisions of this Section 6.16, the difference (up to $5,000,000) between (i) the maximum aggregate Capital Expenditures permitted in any year, and (ii) the actual aggregate Capital Expenditures made for such year, shall be permitted as a carry-over in any subsequent year and shall increase the maximum Capital Expenditures permitted for any such subsequent year (including any Capital Expenditures permitted in such subsequent year attributable to the purchase of aircraft).

     Section 6.17. Affiliates. The Borrower will not, and will not permit any of its Subsidiaries to, enter into any transaction (including the purchase or sale of any Property or service) with, or make any payment or transfer to,

any Affiliate except in the ordinary course of business and pursuant to the reasonable requirements of the Borrower’s or such Subsidiary’s business and upon fair and reasonable terms no less favorable to the Borrower or such Subsidiary than the Borrower or such Subsidiary would obtain in a comparable arms-length transaction.

     Section 6.18. Letters of Credit. The Borrower will not, nor will it permit any of its Subsidiaries to, apply for or become liable upon or in respect of any Letter of Credit other than Facility LCs.

     Section 6.19. Sale of Accounts. The Borrower will not, nor will it permit any of its Subsidiaries to, sell or otherwise dispose of, with or without recourse, any notes receivable or Accounts Receivable for a purchase price exceeding $100,000 in the aggregate in any calendar year.

     Section 6.20. Sale and Leaseback Transactions and other Off-Balance Sheet Liabilities. The Borrower will not, nor will it permit any of its Subsidiaries to, enter into or suffer to exist one or more (i) Sale and Leaseback Transactions of assets having book value in excess of (1) $10,000,000 in the aggregate during any calendar year, or (2) $25,000,000 in the aggregate during the term of this Agreement, or (ii) any other transaction pursuant to which it incurs or has incurred Off-Balance Sheet Liabilities, except to the extent permitted under (i) above.

     Section 6.21. Contingent Obligations. The Borrower will not, nor will it permit any of its Subsidiaries to, make or suffer to exist any Contingent Obligation (including any Contingent Obligation with respect to the obligations of any of Borrower’s Subsidiaries), except (i) by endorsement of instruments for deposit or collection in the ordinary course of business, (ii) the Reimbursement Obligations, and (iii) to the extent such Contingent Obligation(s) otherwise constitute Permitted Indebtedness hereunder.

     Section 6.22. Financial Contracts. The Borrower will not, nor will it permit any of its Subsidiaries to, enter into or remain liable upon any Financial Contract.

     Section 6.23. No Amendments to Certain Documents and Agreements. The Borrower will not, nor will it permit any material amendment to its Articles of Incorporation, its Code of Regulations, or any other governing documents, except as required to maintain compliance with federal, state and local laws and regulations from time to time applicable to Borrower; provided, however, that Borrower shall provide thirty (30) days prior written notice to Lender of any such amendment.

     Section 6.24 Financial Covenants.

     Section 6.24.1. Fixed Charge Coverage Ratio. The Borrower will not permit the Fixed Charge Coverage Ratio (determined as of the end of each of its fiscal quarters for the then most recently ended four fiscal quarters), to be less than 1.25 to 1.0.

     Section 6.24.2. Leverage Ratio. The Borrower will not permit the Leverage Ratio, (determined as of the end of each of its fiscal quarters for the then most-recently ended four fiscal quarters), to be greater than 3.00 to 1.0.

     Section 6.24.3. Minimum Tangible Net Worth. The Borrower will at all times maintain Consolidated Tangible Net Worth of not less than (i) as of Borrower’s fiscal year-end 2006, $33,000,000.00, and (ii) as of the last day of each of Borrower’s fiscal years thereafter, that amount which is equal to the sum of the minimum Consolidated Tangible Net Worth required to be maintained by Borrower in accordance with this Section as of the last day of Borrower’s prior fiscal year, and 50% of Consolidated Net Income for such prior fiscal year; provided that if such Consolidated Net Income is negative in any fiscal year, the amount added in the subsequent fiscal year shall be zero.

ARTICLE VII

Defaults

     The occurrence of any one or more of the following events shall constitute a Default:

     Section 7.1. Any representation or warranty made or deemed made by or on behalf of the Borrower or any of its Subsidiaries to Lender or to Administrative Agent under or in connection with this Agreement, any Credit Extension, or any certificate or information delivered in connection with this Agreement or any other Loan Document shall be false in any material respect on the date as of which made.

     Section 7.2. Nonpayment within five (5) days after the same becomes due of principal of any Loan or interest due upon any Loan, any Reimbursement Obligation or of any commitment fee, LC Fee or other obligations under any of the Loan Documents.

     Section 7.3. The breach by the Borrower of any of the terms or provisions of Article VI; provided, however, that so long as (i) no breach by Borrower of any such terms or provisions of Article VI has occurred previously in the prior twelve (12) consecutive months, and (ii) such breach is not of the terms or provisions of Sections 6.2, 6.6, 6.8, 6.9, 6.11, 6.12, 6.13, 6.14, 6.15, 6.16, 6.18, 6.19, 6.20, 6.21, 6.22, 6.23, and/or 6.24, then the same shall not constitute a Default hereunder if cured to the reasonable satisfaction of Lender within fifteen (15) days after the earlier of (i) written notice to Borrower thereof from Lender, or (ii) such time as any officer of Borrower has become aware of said breach.

     Section 7.4. The breach by the Borrower (other than a breach which constitutes a Default under another Section of this Article VII) of any of the terms or provisions of this Agreement or any other Loan Documents which is not remedied within fifteen (15) days after the earlier of (i) written notice to Borrower thereof from Lender, or (ii) such time as any officer of Borrower has become aware of said breach.

     Section 7.5. Failure of the Borrower or any of its Subsidiaries or any Affiliate of Borrower to pay when due (i) any Indebtedness or Rate Management Obligation(s) owing to Lender and unrelated to this Agreement, (ii) any Indebtedness owing by any of them in favor of any other Person which, individually or together with such other Indebtedness as to which any such failure exists, has an aggregate outstanding principal amount in excess of $1,000,000 or which is secured by a Substantial Portion of its or their Property which constitutes Collateral under the Security Agreements (“Material Indebtedness”), or the default by the Borrower or any of its Subsidiaries or Affiliates in the performance (beyond the applicable grace or cure period with respect thereto, if any) of any term, provision or condition contained in any agreement under which any such Indebtedness, Rate Management Obligation(s) or Material Indebtedness was created or is governed, including, without limitation, in any Rate Management Transaction, or any other event shall occur or condition exist, the effect of which default or event is to cause, or to permit the holder or holders of such Indebtedness, Rate Management Obligation(s) or Material Indebtedness to cause, such Indebtedness, Rate Management Obligation(s) or Material Indebtedness to become due prior to its stated maturity; or any Indebtedness, Rate Management Obligation(s) or Material Indebtedness of the Borrower or any of its Subsidiaries or Affiliates shall be declared to be due and payable or required to be prepaid or repurchased (other than by a regularly scheduled payment) prior to the stated maturity thereof; or the Borrower or any of its Subsidiaries or Affiliates shall not pay, or admit in writing its inability to pay, its debts generally as they become due.

     Section 7.6. The Borrower or any of its Subsidiaries shall (i) have an order for relief entered with respect to it under the Federal bankruptcy laws as now or hereafter in effect, (ii) make an assignment for the benefit of creditors, (iii) apply for, seek, consent to, or acquiesce in, the appointment of a receiver, custodian, trustee, examiner, liquidator or similar official for it or any Substantial Portion of its or their respective Property, (iv) institute any proceeding seeking an order for relief under the Federal bankruptcy laws as now or hereafter in effect or seeking to adjudicate it a bankrupt or insolvent, or seeking dissolution, winding up, liquidation, reorganization, arrangement, adjustment or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors or fail to file an answer or other pleading denying the material allegations of any such proceeding filed against it, (v) take any corporate or partnership action to authorize or effect any of the foregoing actions set forth in this Section 7.6 or (vi) fail to contest in good faith any appointment or proceeding described in Section 7.7.

     Section 7.7. Without the application, approval or consent of the Borrower or any of its Subsidiaries, a receiver, trustee, examiner, liquidator or similar official shall be appointed for the Borrower or any of its Subsidiaries or any Substantial Portion of its or their respective Property, or a proceeding described in Section 7.6(iv) shall be instituted against the Borrower or any of its Subsidiaries and such appointment continues undischarged or such proceeding continues undismissed or unstayed for a period of 60 consecutive days.

     Section 7.8. Any court, government or governmental agency shall condemn, seize or otherwise appropriate, or take custody or control of a Substantial Portion of the Property of Borrower and/or any of its Subsidiaries; or all or any portion of the Property of the Borrower and/or any of its Subsidiaries which, when taken together with all other Property of the Borrower and/or any of its Subsidiaries which has been so condemned, seized, appropriated, or taken into custody or under control, during the twelve-month period ending with the month in which any such action occurs, constitutes a Substantial Portion, except pursuant to the legal order of the U.S. government in time of war.

     Section 7.9. One or more (i) judgments or orders for the payment of money in an aggregate amount in excess of $2,000,000 (or the equivalent thereof in currencies other than U.S. Dollars), or (ii) nonmonetary judgments or orders which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect, are entered against Borrower or any of its Subsidiaries, which judgment(s), in any such case, is/are not (i) stayed on appeal, (ii) otherwise being appropriately contested in good faith, or (iii) paid, bonded or otherwise discharged (including, without limitation, as a result of any insurance settlement or payment) within forty-five (45) days after entry thereof.

     Section 7.10. The Unfunded Liabilities of all Single Employer Plans shall in the aggregate exceed $100,000 or any Reportable Event shall occur in connection with any Plan.

     Section 7.11. The Borrower or any other member of the Controlled Group shall have been notified by the sponsor of a Multiemployer Plan that it has incurred withdrawal liability to such Multiemployer Plan in an amount which, when aggregated with all other amounts required to be paid to Multiemployer Plans by the Borrower or any other member of the Controlled Group as withdrawal liability (determined as of the date of such notification), exceeds $100,000 or requires payments exceeding $100,000 per annum.

     Section 7.12. The Borrower or any other member of the Controlled Group shall have been notified by the sponsor of a Multiemployer Plan that such Multiemployer Plan is in reorganization or is being terminated, within the meaning of Title IV of ERISA, if as a result of such reorganization or termination the aggregate annual contributions of the Borrower and the other members of the Controlled Group (taken as a whole) to all Multiemployer Plans which are then in reorganization or being terminated have been or will be increased over the amounts contributed to such Multiemployer Plans for the respective plan years of each such Multiemployer Plan immediately preceding the plan year in which the reorganization or termination occurs by an amount exceeding $100,000.

     Section 7.13. The Borrower or any of its Subsidiaries shall violate any Environmental Law, which violation could reasonably be expected to have a Material Adverse Effect.

     Section 7.14. Any Change in Control shall occur.

     Section 7.15. The occurrence of any “default”, as defined in any Loan Document (other than this Agreement) or the breach of any of the terms or provisions of any Loan Document (other than this Agreement), which default or breach continues beyond any period of grace or cure therein provided, and which could reasonably be expected to have a Material Adverse Effect.

     Section 7.16. Any Guaranty shall fail to remain in full force or effect or any action shall be taken to discontinue or to assert the invalidity or unenforceability of any Guaranty, or any Guarantor shall fail to comply with any of the terms or provisions of any Guaranty to which it is a party, or any Guarantor shall deny that it has any further liability under any Guaranty to which it is a party, or shall give notice to such effect.

     Section 7.17. The Collateral under the Security Documents shall, for any reason, in the reasonable discretion of Lender, materially decline in value, unless, immediately upon demand, additional security reasonably satisfactory to Lender is provided.

     Section 7.18. Failure by Borrower to pay all amounts owing under or in connection with the CIT Loan as and when due, or the default by Borrower in the performance of any term, provision or condition contained in any document, instrument, security agreement or other agreement evidencing or securing the CIT Loan (defined below) or under which the CIT Loan is created or governed, or any other event shall occur or condition exist, the effect of which is to cause the holder(s) of the CIT Loan to cause the obligations of the Borrower thereunder to become due prior to its stated maturity; giving effect, in each such instance to any grace or cure period applicable under the CIT Loan; provided, however, that this Section 7.18 shall be void and of no further effect at such time as the outstanding principal balance, together with all interest and other sums owing in connection therewith, shall be equal to or less than $1,000,000.00. “CIT Loan” means the financing extended by CIT Group to Borrower in the maximum principal amount of $11,000,000.00 in March of 2005, the proceeds of which were used to repay the Term Loans made pursuant to the First Amended and Restated Credit Agreement.

ARTICLE VIII

Acceleration, Waivers And Remedies

     Section 8.1. Acceleration.

     (i) If any Default described in Section 7.6 or 7.7 occurs with respect to the Borrower, the obligations of Lender to make Loans hereunder, and the obligation and power of Lender to issue Facility LCs, shall automatically terminate and the Obligations shall immediately become due and payable and Borrower shall be and become unconditionally obligated to pay the same without any election or action on the part of Lender. If any other Default occurs, Lender may terminate or suspend all obligations to make Loans hereunder and the obligation to issue Facility LCs, or declare the Obligations to be due and payable, or both, whereupon the Obligations shall become immediately due and payable, without presentment, demand, protest or notice of any kind, all of which the Borrower hereby expressly waives.

     (ii) If, within 30 days after acceleration of the maturity of the Obligations or termination of the obligations of Lender to make Loans, and the obligation and power of Lender to issue Facility LCs, as a result of any Default (other than any Default as described in Section 7.6 or 7.7 with respect to the Borrower) and before any judgment or decree for the payment of the Obligations due shall have been obtained or entered, Lender shall, by notice to the Borrower, rescind and cancel such acceleration and/or termination.

     Section 8.2. Preservation of Rights. No delay or omission of Lender to exercise any right under the Loan Documents shall impair such right or be construed to be a waiver of any Default or an acquiescence therein, and the making of a Credit Extension notwithstanding the existence of a Default or the inability of the Borrower to satisfy the conditions precedent to such Credit Extension shall not constitute any waiver or acquiescence. Any single or partial exercise of any such right shall not preclude any other or further exercise thereof or the exercise of any other right, and no waiver, amendment or other variation of the terms, conditions or provisions of the Loan Documents whatsoever shall be valid unless in writing signed by Lender required pursuant to Section 12.13, and then only to the extent in such writing specifically set forth. All remedies contained in the Loan Documents or by law afforded shall be cumulative and all shall be available to Lender and/or Administrative Agent until the Obligations have been paid in full.

ARTICLE IX

Intentionally Omitted

Setoff; Ratable Payments

     Section 10.1. Setoff. In addition to, and without limitation of, any rights of Lender under applicable law, if the Borrower becomes insolvent, however evidenced, or any Default occurs, any and all deposits (including all account balances, whether provisional or final and whether or not collected or available) and any other Indebtedness at any time held or owing by Lender or any Affiliate of Lender to or for the credit or account of the Borrower may be offset and applied toward the payment of the Obligations owing to Lender and/or Administrative Agent for the benefit of Lender, whether or not the Obligations, or any part hereof, shall then be due.

     Section 10.2. Intentionally Omitted.

ARTICLE XI

Benefit Of Agreement; Assignments; Participations

     Section 11.1. Successors and Assigns. The terms and provisions of the Loan Documents shall be binding upon and inure to the benefit of the Borrower and Lender and their respective successors and assigns, except that (i) the Borrower shall not have the right to assign its rights or obligations under the Loan Documents and (ii) any assignment by Lender must be made in compliance with Section 11.3. The parties to this Agreement acknowledge that clause (ii) of this Section 11.1 relates only to absolute assignments and does not prohibit assignments creating security interests, including any pledge or assignment by Lender of all or any portion of its rights under this Agreement and any Note to a Federal Reserve Bank; provided, however, that no such pledge or assignment creating a security interest shall release the transferor Lender from its obligations hereunder unless and until the parties thereto

have complied with the provisions of Section 11.3. Any assignee of the rights to any Loan or any Note agrees by acceptance of such assignment to be bound by all the terms and provisions of the Loan Documents. Any request, authority or consent of any Person, who at the time of making such request or giving such authority or consent is the owner of the rights to any Loan (whether or not a Note has been issued in evidence thereof), shall be conclusive and binding on any subsequent holder or assignee of the rights to such Loan.

     Section 11.2. Participations.

     11.2.1. Permitted Participants; Effect. Lender may, in the ordinary course of its business and in accordance with applicable law, at any time sell to one or more banks or other entities (“Participants”) participating interests in any Outstanding Credit Exposure of Lender, any Note held by Lender, any Commitment of Lender or any other interest of Lender under the Loan Documents. In the event of any such sale by Lender of participating interests to a Participant, Lender’s obligations under the Loan Documents shall remain unchanged, Lender shall remain solely responsible to Borrower for the performance of such obligations, Lender shall remain the owner of its Outstanding Credit Exposure and the holder of any Note issued to it in evidence thereof for all purposes under the Loan Documents, all amounts payable by the Borrower under this Agreement shall be determined as if Lender had not sold such participating interests, and the Borrower shall continue to deal solely and directly with Lender in connection with Lender’s rights and obligations under the Loan Documents.

     11.2.2. Voting Rights. Lender shall retain the sole right to approve, without the consent of any Participant, any amendment, modification or waiver of any provision of the Loan Documents other than any amendment, modification or waiver with respect to any Credit Extension or Commitment in which such Participant has an interest which forgives principal, interest, fees, or any Reimbursement Obligation, or reduces the interest rate or fees payable with respect to any such Credit Extension or Commitment, extends the Facility Termination Date, or postpones any date fixed for any regularly-scheduled payment of principal of or interest on any Loan in which such Participant has an interest, or any regularly-scheduled payment of fees on any such Credit Extension or Commitment.

     Section 11.3. Assignments.

     Lender may, in the ordinary course of its business and in accordance with applicable law, at any time assign to one or more banks or other entities (“Purchasers”) all or any part of its rights and obligations under the Loan Documents. The consent of the Borrower shall be required prior to an assignment becoming effective with respect to a Purchaser which is not an Affiliate of Lender; provided, however, that if a Default has occurred and is continuing, the consent of the Borrower shall not be required. Such consent shall not be unreasonably withheld or delayed. Each such assignment with respect to a Purchaser which is not an Affiliate of Lender shall (unless Borrower otherwise consents) be in an amount not less than the lesser of (i) $5,000,000 or (ii) the remaining amount of Lender’s Revolving Commitment (calculated as at the date of such assignment) or Outstanding Credit Exposure (as applicable).

     Section 11.4. Dissemination of Information. The Borrower authorizes Lender to disclose to any Participant or Purchaser or any other Person acquiring an interest in the Loan Documents by operation of law (each a “Transferee”) and any prospective Transferee, provided that prior written notice of any such disclosure from Lender to Borrower is made, any and all information in Lender’s possession concerning the creditworthiness of the Borrower and its Subsidiaries, including any information contained in any Reports; provided that each Transferee and prospective Transferee agrees to be bound by Section 12.10 of this Agreement.

ARTICLE XII

General Provisions

     Section 12.1. Survival of Representations. All representations and warranties of the Borrower contained in this Agreement shall survive the making of the Credit Extensions herein contemplated.

     Section 12.2. Governmental Regulation. Anything contained in this Agreement to the contrary notwithstanding, Lender shall not be obligated to extend credit to the Borrower in violation of any limitation or prohibition provided by any applicable statute or regulation.

     Section 12.3. Headings. Section headings in the Loan Documents are for convenience of reference only, and shall not govern the interpretation of any of the provisions of the Loan Documents.

     Section 12.4. Entire Agreement. The Loan Documents embody the entire agreement and understanding between the Borrower and Lender and supersede all prior agreements and understandings between the Borrower and Lender relating to the subject matter thereof.

     Section 12.5. Several Obligations; Benefits of this Agreement. This Agreement shall not be construed so as to confer any right or benefit upon any Person other than the parties to this Agreement and their respective successors and assigns.

     Section 12.6. Expenses; Indemnification.

     (i) The Borrower shall reimburse Lender for any reasonable and properly documented costs, internal charges and out-of-pocket expenses (including reasonable attorneys’ fees and time charges of attorneys for Lender, which attorneys may be employees of Lender) paid or incurred by Lender in connection with the preparation, negotiation, execution, delivery, syndication, review, amendment, modification, and administration of the Loan Documents. The Borrower also agrees to reimburse Lender for any reasonable and properly documented costs, internal charges and out-of-pocket expenses (including reasonable attorneys’ fees and time charges of attorneys for Lender, which attorneys may be employees of Lender) paid or incurred by Lender in connection with the collection and enforcement of the Loan Documents.

     (ii) The Borrower hereby further agrees to indemnify Lender, its directors, officers, employees and agents against all losses, claims, damages, penalties, judgments, liabilities and expenses (including all expenses of litigation or preparation therefor whether or not Lender is a party thereto) which any of them may pay or incur arising out of or relating to this Agreement, the other Loan Documents, the transactions contemplated hereby or the direct or indirect application or proposed application of the proceeds of any Credit Extension hereunder except to the extent that they are determined in a Final Judgment (defined below) to have resulted from the gross negligence or willful misconduct of the party seeking indemnification. “Final Judgment” means a judgment by a court of competent jurisdiction (i) which is non-appealable or (ii) with respect to which Lender does not commence proceedings to appeal within the applicable period(s) provided for by law. The obligations of the Borrower under this Section 12.6 shall survive the termination of this Agreement.

     Section 12.7. Intentionally Omitted.

     Section 12.8. Severability of Provisions. Any provision in any Loan Document that is held to be inoperative, unenforceable, or invalid in any jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable, or invalid without affecting the remaining provisions in that jurisdiction or the operation, enforceability, or validity of that provision in any other jurisdiction, and to this end the provisions of all Loan Documents are declared to be severable.

     Section 12.9. Nonliability of Lender. The relationship between the Borrower on the one hand and Lender on the other hand shall be solely that of borrower and lender. Lender shall have no fiduciary responsibilities to the Borrower. Lender undertakes no responsibility to the Borrower to review or inform the Borrower of any matter in connection with any phase of the Borrower’s business or operations. The Borrower agrees that Lender shall have no liability to the Borrower (whether sounding in tort, contract or otherwise) for losses suffered by the Borrower in connection with, arising out of, or in any way related to, the transactions contemplated and the relationship established by the Loan Documents, or any act, omission or event occurring in connection therewith, unless it is determined in a Final Judgment that such losses resulted from the gross negligence or willful misconduct of the party from which recovery is sought.

     Section 12.10. Confidentiality. Lender agrees, on behalf of itself and its Affiliates to whom a disclosure is made, to hold any confidential information which it may receive from the Borrower pursuant to this Agreement in confidence, except for disclosure (i) to its Affiliates, (ii) to legal counsel, accountants, and other professional advisors to Lender, to Administrative Agent, or to a Transferee, (iii) to regulatory officials, (iv) to any Person as requested pursuant to or as required by law, regulation, or legal process, (v) to any Person in connection with any legal proceeding to which Lender is a party, (vi) to Lender’s direct or indirect contractual counterparties in swap agreements or to legal counsel, accountants and other professional advisors to such counterparties, and (vii) permitted by Section 11.4.

     Section 12.11. Fixed Assets. Lender and Administrative Agent hereby agree that they will take such actions as are reasonably necessary to release all or part of the Fixed Assets from the existing liens and security interests granted under the Loan Documents, if such release is requested by Borrower in connection with Borrower’s refinance (with a creditor other than Lender) of all or part of such Fixed Assets; provided, however, that (i) said creditor has required that such refinance be secured by a first position security interest in the Fixed Assets to be released, (ii) said refinancing is not prohibited by this Agreement or the other Loan Documents or is specifically permitted under Section 6.11, and (iii) no Default or Unmatured Default exists at the time of said release or thereafter as a result of said release.

     Section 12.12. Intentionally Omitted.

     Section 12.13. Intentionally Omitted.

     Section 12.14. Notices. Except as otherwise permitted by Section 2.14 with respect to Borrowing Notices, all notices, requests and other communications to any party hereunder shall be in writing (including electronic transmission, facsimile transmission or similar writing) and shall be given to such party at its address or facsimile number set forth on the signature pages hereof. Each such notice, request or other communication shall be effective (i) if given by facsimile transmission, when transmitted to the facsimile number specified in this Section and confirmation of receipt is received, (ii) if given by mail, 72 hours after such communication is deposited in the mails with first class postage prepaid, addressed as aforesaid, or (iii) if given by any other means, when delivered (or, in the case of electronic transmission, received) at the address specified in this Section; provided that notices to Lender under Article II shall not be effective until received.

     Section 12.15. Change of Address. The Borrower and Lender may each change the address for service of notice upon it by a notice in writing to the other party hereto.

     Section 12.16. Counterparts. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one agreement, and any of the parties hereto may execute this Agreement by signing any such counterpart. This Agreement shall be effective when it has been executed by the Borrower and Lender.

     Section 12.17. Choice Of Law. The Loan Documents (other than those containing a contrary express choice of law provision) shall be construed in accordance with the internal laws (but without regard to the conflict of law principles) of the State of Ohio, but giving effect to federal laws applicable to national banks.

     Section 12.18. Consent To Jurisdiction. The Borrower hereby irrevocably submits to the non-exclusive jurisdiction of any United States federal or Ohio state court sitting in Columbus, Ohio in any action or proceeding arising out of or relating to any Loan Documents and the Borrower hereby irrevocably agrees that all claims in respect of such action or proceeding may be heard and determined in any such court and irrevocably waives any objection it may now or hereafter have as to the venue of any such suit, action or proceeding brought in such a court or that such court is an inconvenient forum. Nothing herein shall limit the right of Lender to bring proceedings against the Borrower in the courts of any other jurisdiction. Any judicial proceeding by the Borrower against Lender involving, directly or indirectly, any matter in any way arising out of, related to, or connected with any Loan Document shall be brought only in a court in Columbus, Ohio.

     Section 12.19. WAIVER OF JURY TRIAL. THE BORROWER AND LENDER HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER.

     Section 12.20. Interest Rate Limitation. Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan, together with all fees, charges and other amounts that are treated as interest on such Loan under applicable law (collectively, the “Charges”), shall exceed the maximum lawful rate (the “Maximum Rate”) that may be contracted for, charged, taken, received or reserved by Lender holding such Loan in accordance with applicable law, the rate of interest payable in respect of such Loan hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Loan but were not payable as a result of the operation of this Section shall be cumulated and the interest and Charges payable to Lender, and/or to Administrative Agent for the benefit of Lender, in respect of other Loans or periods shall be increased (but not above the Maximum Rate therefor) until such

cumulated amount, together with interest thereon at the Federal Funds Effective Rate to the date of repayment, shall have been received by Lender.

     Section 12.21. Warrant of Attorney. The Borrower hereby irrevocably authorizes any attorney-at-law, including any attorney-at-law employed or retained by Lender to appear for it in any action on this Agreement or any Note at any time after the same becomes due as herein or therein provided in any court of record situated in the county where this warrant was signed (being Franklin County, Ohio), or in the county where the Borrower then resides or can be found, to waive the issuing and service of process, and confess a judgment in favor of the holder of this Agreement and any Note against the Borrower, for the amount that may then be due, with interest at the rate(s) provided for herein, together with the costs of suit, and to waive and release all errors in said proceedings and the right to appeal from the judgment rendered. The Borrower consents to the jurisdiction and venue of such court. The Borrower waives any conflict of interest that any attorney-at-law employed or retained by Lender may have in confessing judgment hereunder and consents to the payment of a legal fee to any attorney-at-law confessing judgment hereunder.

ARTICLE XIII

The Administrative Agent

     Section 13.1. Appointment; Nature of Relationship. Agent is hereby appointed by Lender as its contractual representative (herein referred to as the “Administrative Agent”) hereunder and under each other Loan Document, and Lender irrevocably authorizes the Administrative Agent to act as the contractual representative of Lender with the rights and duties expressly set forth herein and in the other Loan Documents. The Administrative Agent agrees to act as such contractual representative upon the express conditions contained in this Article XIII. Notwithstanding the use of the defined term “Administrative Agent,” it is expressly understood and agreed that the Administrative Agent shall not have any fiduciary responsibilities to Lender by reason of this Agreement or any other Loan Document and that the Administrative Agent is merely acting as the contractual representative of the Lenders with only those duties as are expressly set forth in this Agreement and the other Loan Documents. In its capacity as the Lenders’ contractual representative, the Administrative Agent (i) does not hereby assume any fiduciary duties to any of the Lender, (ii) is a “representative” of the Lender within the meaning of the Uniform Commercial Code and (iii) is acting as an independent contractor, the rights and duties of which are limited to those expressly set forth in this Agreement and the other Loan Documents. Lender hereby agrees to assert no claim against the Administrative Agent on any agency theory or any other theory of liability for breach of fiduciary duty, all of which claims Lender hereby waives.

     Section 13.2. Powers. The Administrative Agent shall have and may exercise such powers under the Loan Documents as are specifically delegated to the Administrative Agent by the terms of each thereof, together with such powers as are reasonably incidental thereto. The Administrative Agent shall have no implied duties to the Lender, or any obligation to the Lender to take any action thereunder except any action specifically provided by the Loan Documents to be taken by the Administrative Agent.

     Section 13.3. General Immunity. Neither the Administrative Agent nor any of its directors, officers, agents or employees shall be liable to the Borrower or Lender for any action taken or omitted to be taken by it or them hereunder or under any other Loan Document or in connection herewith or therewith except to the extent such action or inaction is determined in a final non-appealable judgment by a court of competent jurisdiction to have arisen from the gross negligence or willful misconduct of such Person.

     Section 13.4. No Responsibility for Loans, Recitals, etc Neither the Administrative Agent nor any of its directors, officers, agents or employees shall be responsible for or have any duty to ascertain, inquire into, or verify (a) any statement, warranty or representation made in connection with any Loan Document or any borrowing hereunder; (b) the performance or observance of any of the covenants or agreements of any obligor under any Loan Document, including any agreement by an obligor to furnish information directly to each Lender; (c) the satisfaction of any condition specified in Article IV, except receipt of items required to be delivered solely to the Administrative Agent; (d) the existence or possible existence of any Default or Unmatured Default; (e) the validity, enforceability, effectiveness, sufficiency or genuineness of any Loan Document or any other instrument or writing furnished in connection therewith; (f) the value, sufficiency, creation, perfection or priority of any Lien in any collateral security; or (g) the financial condition of the Borrower or any guarantor, if any, of any of the Obligations or of any of the Borrower’s or any such guarantor’s respective Subsidiaries. The Administrative Agent shall have no duty to disclose to the

Lender information that is not required to be furnished by the Borrower to the Administrative Agent at such time, but is voluntarily furnished by the Borrower to the Administrative Agent (either in its capacity as Administrative Agent or in its individual capacity).

     Section 13.5. Action on Instructions of Lenders. The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, hereunder and under any other Loan Document in accordance with written instructions signed by the Lender, and such instructions and any action taken or failure to act pursuant thereto shall be binding on the Lender. The Lender hereby acknowledges that the Administrative Agent shall be under no duty to take any discretionary action permitted to be taken by it pursuant to the provisions of this Agreement or any other Loan Document unless it shall be requested in writing to do so by the Lender. The Administrative Agent shall be fully justified in failing or refusing to take any action hereunder and under any other Loan Document unless it shall first be indemnified to its satisfaction by the Lender against any and all liability, cost and expense that it may incur by reason of taking or continuing to take any such action.

     Section 13.6. Employment of Agents and Counsel. The Administrative Agent may execute any of its duties as Administrative Agent hereunder and under any other Loan Document by or through employees, agents, and attorneys-in-fact and shall not be answerable to the Lenders except as to money or securities received by it or its authorized agents, for the default or misconduct of any such agents or attorneys-in-fact selected by it with reasonable care. The Administrative Agent shall be entitled to advice of counsel concerning the contractual arrangement between the Administrative Agent and the Lender and all matters pertaining to the Administrative Agent’s duties hereunder and under any other Loan Document.

     Section 13.7. Reliance on Documents; Counsel. The Administrative Agent shall be entitled to rely upon any Note, notice, consent, certificate, affidavit, letter, telegram, statement, paper or document believed by it to be genuine and correct and to have been signed or sent by the proper Person or Persons, and, in respect to legal matters, upon the opinion of counsel selected by the Administrative Agent, which counsel may be employees of the Administrative Agent.

     Section 13.8. Administrative Agent’s Reimbursement and Indemnification. The Lender agrees to reimburse and indemnify the Administrative Agent (i) for any amounts not reimbursed by the Borrower for which the Administrative Agent is entitled to reimbursement by the Borrower under the Loan Documents, (ii) for any other reasonable and properly documented expenses incurred by the Administrative Agent on behalf of the Lender, in connection with the preparation, execution, delivery, administration and enforcement of the Loan Documents (including for any reasonable and properly documented expenses incurred by the Administrative Agent in connection with any dispute between the Administrative Agent and Lender) and (iii) for any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind and nature whatsoever which may be imposed on, incurred by or asserted against the Administrative Agent in any way relating to or arising out of the Loan Documents or any other document delivered in connection therewith or the transactions contemplated thereby (including for any such amounts incurred by or asserted against the Administrative Agent in connection with any dispute between the Administrative Agent and Lender), or the enforcement of any of the terms of the Loan Documents or of any such other documents, provided that Lender shall not be liable for any of the foregoing to the extent any of the foregoing is found in a final non-appealable judgment by a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of the Administrative Agent. The obligations of the Lender under this Section 13.8 shall survive payment of the Obligations and termination of this Agreement.

     Section 13.9. Notice of Default. The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Unmatured Default hereunder unless the Administrative Agent has received written notice from Lender or the Borrower referring to this Agreement describing such Default or Unmatured Default and stating that such notice is a “notice of default”. In the event that the Administrative Agent receives such a notice, the Administrative Agent shall give prompt notice thereof to the Lender.

     Section 13.10. Rights as a Lender. In the event the Administrative Agent is a Lender, the Administrative Agent shall have the same rights and powers hereunder and under any other Loan Document with respect to its Commitment and its Loans as any Lender and may exercise the same as though it were not the Administrative Agent, and the term “Lender” or “Lenders” shall, at any time when the Administrative Agent is a Lender, unless the context otherwise indicates, include the Administrative Agent in its individual capacity. The Administrative Agent and its Affiliates may accept deposits from, lend money to, and generally engage in any kind of trust, debt, equity or other transaction, in addition to those contemplated by this Agreement or any other Loan Document, with the Borrower or

any of its Subsidiaries in which the Borrower or such Subsidiary is not restricted hereby from engaging with any other Person.

     Section 13.11. Lender Credit Decision. Lender acknowledges that it has, independently and without reliance upon the Administrative Agent, and based on the financial statements prepared by the Borrower and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement and the other Loan Documents. Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement and the other Loan Documents.

     Section 13.12. Successor Administrative Agent. The Administrative Agent may resign at any time by giving written notice thereof to the Lender and the Borrower, such resignation to be effective upon the appointment of a successor Administrative Agent or, if no successor Administrative Agent has been appointed, forty-five days after the retiring Administrative Agent gives notice of its intention to resign. The Administrative Agent may be removed at any time with or without cause by written notice received by the Administrative Agent from the Lender, such removal to be effective on the date specified by the Lender. Upon any such resignation or removal, the Lender shall have the right to appoint, on behalf of the Borrower and the Lender, a successor Administrative Agent, which appointment shall be subject to the consent of Borrower as long as no Default has occurred and is continuing at the time of such appointment. If no successor Administrative Agent shall have been so appointed by the Lender within thirty days after the resigning Administrative Agent’s giving notice of its intention to resign, then the resigning Administrative Agent may appoint, on behalf of the Borrower and the Lender, a successor Administrative Agent. Notwithstanding the previous sentence, the Administrative Agent may at any time without the consent of the Borrower or Lender, appoint any of its Affiliates which is a commercial bank as a successor Administrative Agent hereunder. If the Administrative Agent has resigned or been removed and no successor Administrative Agent has been appointed, the Lender may perform all the duties of the Administrative Agent hereunder and the Borrower shall make all payments in respect of the Obligations to the applicable Lender and for all other purposes shall deal directly with the Lender. No successor Administrative Agent shall be deemed to be appointed hereunder until such successor Administrative Agent has accepted the appointment. Any such successor Administrative Agent shall be a commercial bank having capital and retained earnings of at least $500,000,000. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent, such successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the resigning or removed Administrative Agent. Upon the effectiveness of the resignation or removal of the Administrative Agent, the resigning or removed Administrative Agent shall be discharged from its duties and obligations hereunder and under the Loan Documents. After the effectiveness of the resignation or removal of an Administrative Agent, the provisions of this Article IX shall continue in effect for the benefit of such Administrative Agent in respect of any actions taken or omitted to be taken by it while it was acting as the Administrative Agent hereunder and under the other Loan Documents. In the event that there is a successor to the Administrative Agent by merger, or the Administrative Agent assigns its duties and obligations to an Affiliate pursuant to this Section 9.12, then the term “Prime Rate” as used in this Agreement shall mean the prime rate, base rate or other analogous rate of the new Administrative Agent.

     Section 13.13. Delegation to Affiliates. The Borrower and the Lender agree that the Administrative Agent may delegate any of its duties under this Agreement to any of its Affiliates. Any such Affiliate (and such Affiliate’s directors, officers, agents and employees) which performs duties in connection with this Agreement shall be entitled to the same benefits of the indemnification, waiver and other protective provisions to which the Administrative Agent is entitled hereunder.

     IN WITNESS WHEREOF, the Borrower and Lender the have executed this Agreement as of the date first above written.

     WARNING — BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT, OR ANY OTHER CAUSE.

BORROWER: AIRNET SYSTEMS, INC. an Ohio corporation
By:	/s/ Gary W. Qualmann
	Gary W. Qualmann
Title:   Address: Telephone: FAX:		CFO 7250 Starcheck Drive Columbus, Ohio 43217 Attn: Chief Financial Officer (614) 409-4834 (614) 409-7965

LENDER: THE HUNTINGTON NATIONAL BANK, a national banking association
By:	/s/ Frederick G. Hadley
	Frederick G. Hadley
Address: Telephone: FAX:	Senior Vice President 41 South High Street Columbus, Ohio 43215 Attn: John M. Luehmann, Vice President (614) 480-4400 (614) 480-5791

[ACKNOWLEDGEMENT OF GUARANTORS ON FOLLOWING PAGES]

CONSENT AND AGREEMENT OF GUARANTORS

     Each of the undersigned Guarantors, having, pursuant to a Guaranty Agreement, guaranteed the payment and performance of Borrower’s obligations and indebtedness owed to the Lender and Administrative Agent, and having secured said obligations pursuant to a Security Agreement, joins in the execution of the foregoing Agreement and hereby consents and agrees to the terms, conditions, execution and performance of the foregoing Agreement and the Note, and the amendment and restatement of the First Amended and Restated Credit Agreement and the JPM Note and HNB Note, by Borrower, and further consents and agrees to the obligations and liabilities of Borrower owing under the Loan Documents.

     Each such Guarantor agrees that its obligations and liabilities under the Guaranty Agreement and the Security Agreement shall apply and extend with respect to all of Borrower’s obligations and liabilities under the foregoing Agreement and all Loan Documents. Each Guarantor has read and understands all terms and provisions of the foregoing Agreement and all Loan Documents and agrees that all of the terms, covenants and conditions of, and the obligations of each Guarantor under, its Guaranty, and under each Security Agreement, and other Loan Document to which each such Guarantor is a party, shall continue in full force and effect and be binding upon each such Guarantor notwithstanding the foregoing Agreement, the Note, and/or the amendment and restatement of the First Amended and Restated Credit Agreement and the JPM Note and HNB Note which is effected thereby, with respect to the Loans originally made under the First Amended and Restated Credit Agreement and continued under the foregoing Agreement. Each capitalized term used but not otherwise defined herein shall have the meaning ascribed to it in the foregoing Agreement.

     The Guarantors acknowledge and agree that the Commitment currently available to Borrower under the Agreement is in the amount of $15,000,000 and that each Guarantor has, pursuant to the Guaranty guaranteed the repayment of, and has secured, pursuant to the Security Agreements, all Loans made pursuant to the Commitment, and all other liabilities and obligations of Borrower to Lender and the Administrative Agent under the Loan Documents, with respect to the Commitment and the Loans made pursuant to the Commitment, and otherwise. Further, each Guarantor acknowledges and agrees that the Loans made under the foregoing Agreement shall not constitute a satisfaction, novation or refinance of the indebtedness previously made pursuant to the First Amended and Restated Credit Agreement.

     Each Guarantor represents and warrants that all representations and warranties contained in the Guaranty and in each Security Agreement are true, correct and complete on and as of the date hereof to the same extent as though made on and as of this date, except to the extent such representations and warranties specifically relate to an earlier date, in which case they were true, correct and complete on and as of such earlier date.

     Each mortgage, security interest, pledge, hypothecation, lien, assignment or other conveyance of any right, title or interest in any property of any kind delivered to the Lender and/or the Administrative Agent at any time by any Guarantor in connection with the Agreement, the First Amended and Restated Credit Agreement, the Loan Documents and/or the Original Loan Documents, shall remain in full force and effect with respect to, and shall continue to secure, the Commitment, the Loans made under the Commitment, and all of Borrower’s liabilities and obligations owing under the Loan Documents and otherwise in favor of Lender and/or the Administrative Agent.

     Each Guarantor hereby reaffirms its liability to the Lender and the Administrative Agent under the Guaranty and under the Security Agreement and all other agreements and instruments executed by each Guarantor for the benefit of the Lender and the Administrative Agent in connection therewith. Each Guarantor agrees that the Lender and the Administrative Agent has performed all of its obligations under the Loan Documents and the Original Loan Documents and that neither the Lender nor the Administrative Agent is in default under any obligation either has or ever did have to Borrower or any Guarantor under the Guaranty or the other Loan Documents, the Original Loan Documents, or any other agreement. As a specific inducement and consideration to the Lender and the Administrative Agent to enter into the Agreement and agree to the transactions contemplated thereby, each Guarantor hereby waives and releases the Lender, the Administrative Agent, and their respective officers, directors, employees and representatives, from any and all claims or causes of actions, if any, accruing on or before the date hereof and arising out of the past and/or present business relationship among Borrower and/or Guarantor and Lender and/or Administrative Agent which each Guarantor now has against the Lender and/or Administrative Agent, or any of their respective officers, directors, employees or representatives.

     Each Guarantor acknowledges and agrees that (i) notwithstanding the conditions to effectiveness set forth in the Agreement, each Guarantor is not required by the terms of the Guaranty, the Security Agreement, or any other Loan Document or Original Loan Document, to consent to the terms of the Agreement, and (ii) nothing in the Guaranty, the Security Agreement, the Agreement or any other Loan Document or Original Loan Document shall require, or be deemed to require, the consent of any Guarantor to any future amendments to any Loan Document.

     The undersigned Guarantors hereby acknowledge, accept and agree to each of the provisions of the foregoing Agreement and ratify and confirm that all of the provisions of the Loan Documents to which each such Guarantor is a party, including, without limitation, the Subsidiary Guaranty, the Fast Forward Guaranty, the Timexpress Guaranty, and the Security Agreements, as applicable, and all obligations and liabilities of each such Guarantor in favor of Lender and/or Administrative Agent thereunder and otherwise, and all liens, security and other interests granted thereby, shall continue and remain in full force and effect, irrespective of any provision of the foregoing Agreement, or any other or future modification of the Loan Documents or the terms of the credit extended, evidenced and secured thereby.

[signatures contained on following pages]

GUARANTORS:
7250 STARCHECK, INC.,
an Ohio corporation formerly known as Jetride, Inc.
By:	/s/ Bruce D. Parker
	Bruce D. Parker, President

WARNING – BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT, OR ANY OTHER CAUSE.

Float Control, Inc., a
Michigan corporation
By:	/s/ Bruce D. Parker
	Bruce D. Parker, President

WARNING – BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT, OR ANY OTHER CAUSE.

AirNet Management, Inc., an
Ohio corporation
By:	/s/ Bruce D. Parker
	Bruce D. Parker, President

WARNING – BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT, OR ANY OTHER CAUSE.

Fast Forward Solutions, LLC, an
Ohio limited liability company
By:	/s/ Bruce D. Parker
	Bruce D. Parker, Manager

WARNING – BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT, OR ANY OTHER CAUSE.

timexpress.com, inc. an
Ohio corporation
By:	/s/ Bruce D. Parker
	Bruce D. Parker, President

WARNING – BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT, OR ANY OTHER CAUSE.

PRICING SCHEDULE

Applicable	LEVEL I	level ii	level iii	level iv
Margin*	status	status	status	status
Eurodollar Rate	250 bps	225 bps	200 bps	175 bps
Floating Rate	50 bps	25 bps	0 bps	0 bps
Applicable Fee Rate*
Unused Commitment Fee	50 bps	37.5 bps	37.5 bps	30 bps

* In basis points

For the purposes of this Schedule, the following terms have the following meanings, subject to the final paragraph of this Schedule. “Financials” means the annual or quarterly financial statements of the Borrower delivered pursuant to Section 6.1(i) or (ii).

     “Level I Status” exists at any date if, as of the last day of the fiscal quarter of the Borrower referred to in the most recent Financials, the Leverage Ratio is greater than 2.75 to 1.00.

     “Level II Status” exists at any date if, as of the last day of the fiscal quarter of the Borrower referred to in the most recent Financials, the Leverage Ratio is equal to or greater than 2.50 to 1.0 but less than 2.75 to 1.00.

     “Level III Status” exists at any date if, as of the last day of the fiscal quarter of the Borrower referred to in the most recent Financials, the Leverage Ratio is equal to or greater than 2.25 to 1.0 but less than 2.50 to 1.00.

     “Level IV Status” exists at any date if, as of the last day of the fiscal quarter of the Borrower referred to in the most recent Financials, the Leverage Ratio is less than 2.25 to 1.0.

     “Status” means either Level I Status, Level II Status or Level III Status.

     The Applicable Margin and Applicable Fee Rate shall be determined in accordance with the foregoing table based on the Borrower’s Status as reflected in the then most recent Financials. Adjustments, if any, to the Applicable Margin or Applicable Fee Rate shall be effective five Business Days after Lender has received the applicable Financials. If the Borrower fails to deliver the Financials to Lender at the time required pursuant to Section 6.1, then the Applicable Margin and Applicable Fee Rate shall be the highest Applicable Margin and Applicable Fee Rate set forth in the foregoing table until five days after such Financials are so delivered.

EXHIBIT A

AMENDED AND RESTATED NOTE

$15,000,000.00 March 29, 2007

     AirNet Systems, Inc., an Ohio corporation (the “Borrower”), promises to pay to the order of The Huntington National Bank (the “Lender”) the aggregate unpaid principal amount of all Revolving Loans made by Lender to the Borrower pursuant to Article II of the Agreement (as hereinafter defined), in immediately available funds at the main office of Lender, together with interest thereon at the rate or rates set forth in the Agreement. The Borrower shall pay the principal of and accrued and unpaid interest on such Loans as set forth in the Agreement.

     Lender shall, and is hereby authorized to, record by entries made by Lender into its electronic data processing system and/or internal memoranda maintained by Lender, or to otherwise record in accordance with its usual practice, the date and amount of each such Loan and the date and amount of each principal and interest payment hereunder. The Borrower agrees that the sum or sums shown on such schedule, the most recent printout from Lender’s electronic data processing system and/or such memoranda shall be rebuttably presumptive evidence of the amount of the outstanding principal, interest or any other amount due under this Note; provided, however, that the failure of Lender to make any such entry(s) shall not affect the obligation of the Borrower to repay outstanding principal, interest or any other amount due under this Note in accordance with the terms hereof.

     This Note is issued pursuant to, and is entitled to the benefits of, the Second Amended and Restated Credit Agreement dated as of March 29, 2007 (which, as it may be amended, modified, supplemented, extended, restated and/or replaced from time to time, is herein called the “Agreement”), between the Borrower and Lender, which was given as an amendment and restatement to the First Amended and Restated Credit Agreement, to which Agreement reference is hereby made for a statement of the terms and conditions governing this Note, including the terms and conditions under which this Note may be prepaid or its maturity date accelerated. Capitalized terms used herein and not otherwise defined herein are used with the meanings attributed to them in the Agreement.

     This Note is given as an amendment and restatement for and as evidence of the indebtedness previously evidenced by that certain (i) Note dated May 28, 2004 given by Borrower in favor of Lender in the face amount of $18,750,000.00 (as amended from time to time, the “HNB Note”), and (ii) Note dated May 28, 2004 given by Borrower in favor of JPMorgan Chase Bank, a national banking association (“JPM”) formerly known as Bank One, N.A. (Columbus) in the face amount of $11,250,000.00 (as amended from time to time, the “JPM Note”), the outstanding principal indebtedness, as of the date hereof, of (i) the HNB Note being Zero Dollars ($0) and (ii) the JPM Note being Zero Dollars ($0); with said JPM Note having been assigned by JPM to Lender pursuant to the Assignment Agreement dated of even date herewith by and between Lender and JPM, as Assignee and Assignor, respectively. The HNB Note and the JPM Note were executed and delivered by Borrower pursuant to the First Amended and Restated Credit Agreement. The maximum principal amount available under the “Commitment” (as defined in the First Amended and Restated Credit Agreement) and under the HNB Note and the JPM Note has been reduced from time to time, and, ultimately, pursuant to that certain Fifth Change in Terms Agreement dated November 10, 2006, by and among Borrower, Lender in its capacity as Administrative Agent for the benefit of the “Lenders” (as such term is defined thereunder), and such “Lenders” (inclusive of JPM and Lender), the maximum outstanding principal indebtedness available under (i) said “Commitment” was reduced to $15,000,000.00, (ii) the HNB Note was reduced to $9,375,000.00, and (iii) the JMP Note was reduced to $5,625,000.00.

     Further, this Note does not constitute a novation of the HNB Note or the JPM Note or a refinance of the “Commitment” referenced above or the outstanding principal balance of the HNB Note or the JPM Note, and the Agreement does not constitute or represent a novation of the First Amended and Restated Credit Agreement, and this Note and the obligations and liabilities under the Agreement and all other Loan Documents shall remain secured by all mortgage liens, security interests, pledges, and other interests given, by Borrower, each Guarantor and any other Person, to secure the HNB Note and/or the JPM Note, this Note and/or the obligations under the Agreement and the other Loan Documents.

     The Borrower hereby irrevocably authorizes any attorney-at-law, including any attorney-at-law employed or retained by Lender, to appear for it in any action on this Note at any time after the same becomes due as herein provided in any court of record situated in the county where this warrant was signed (being Franklin County, Ohio), or in the county where the Borrower then resides or can be found, to waive the issuing and service of process, and confess a judgment in favor of the holder of this Note against the Borrower, for the amount that may then be due, with

interest at the rate(s) provided for herein, together with the costs of suit, and to waive and release all errors in said proceedings and the right to appeal from the judgment rendered. The Borrower consents to the jurisdiction and venue of such court. The Borrower waives any conflict of interest that any attorney-at-law employed or retained by Lender may have in confessing judgment hereunder and consents to the payment of a legal fee to any attorney-at-law confessing judgment hereunder.

AIRNET SYSTEMS, INC.

an Ohio corporation

By:

Print Name:

Title:

WARNING — BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT, OR ANY OTHER CAUSE.

EXHIBIT B

COMPLIANCE CERTIFICATE

To: The Huntington National Bank

     This Compliance Certificate is furnished pursuant to that certain Second Amended and Restated Credit Agreement dated as of March 29, 2007 (as amended, modified, renewed or extended from time to time, the “Agreement”) between AirNet Systems, Inc., an Ohio corporation (the “Borrower”) and The Huntington National Bank. Unless otherwise defined herein, capitalized terms used in this Compliance Certificate have the meanings ascribed thereto in the Agreement.

     THE UNDERSIGNED HEREBY CERTIFIES THAT:

     1. I am the duly elected                                          of the Borrower;

     2. I have reviewed the terms of the Agreement and I have made, or have caused to be made under my supervision, a detailed review of the transactions and conditions of the Borrower and its Subsidiaries during the accounting period covered by the attached financial statements;

     3. The examinations described in paragraph 2 did not disclose, and I have no knowledge of, the existence of any condition or event which constitutes a Default or Unmatured Default during or at the end of the accounting period covered by the attached financial statements or as of the date of this Certificate, except as set forth below; and

     4. Schedule I attached hereto sets forth financial data and computations evidencing the Borrower’s compliance with certain covenants of the Agreement, all of which data and computations are true, complete and correct.

     5 Schedule II hereto sets forth the determination of the applicable margin on the interest rates to be paid for Advances, the Applicable Fee Rate and the commitment fee rates commencing on the fifth day following the delivery hereof.

     6 Schedule III attached hereto sets forth the various reports and deliveries which are required at this time under the Credit Agreement and the other Loan Documents and the status of compliance.

     Described below are the exceptions, if any, to paragraph 3 (list in detail, the nature of the condition or event, the period during which it has existed and the action which the Borrower has taken, is taking, or proposes to take with respect to each such condition or event):

     The foregoing certifications, together with the computations set forth in Schedule I and Schedule II hereto and the financial statements delivered with this Certificate in support hereof, are made and delivered this                      day of,                     .

SCHEDULE I TO COMPLIANCE CERTIFICATE

Compliance as of                                         ,                      with Provisions of                      and                      of the Agreement

SCHEDULE II TO COMPLIANCE CERTIFICATE

Borrower’s Applicable Margin and Applicable Fee Rate Calculation

SCHEDULE III TO COMPLIANCE CERTIFICATE

Reports and Deliveries Currently Due

EXHIBIT C

BORROWING BASE CERTIFICATE
FOR
AIRNET SYSTEMS, INC.
AND ITS SUBSIDIARIES

We submit the following information regarding Eligible Accounts Receivable and Eligible Inventory, and the following calculations of the Borrowing Base as defined in that certain Second Amended and Restated Credit Agreement (the “Credit Agreement”) by and between AirNet Systems, Inc. (“AirNet”) and The Huntington National Bank (“Lender”) dated March 29, 2007. Capitalized terms used herein and not otherwise defined herein shall have the meaning given in the Credit Agreement.

Completed for the month ended:                                         

Total accounts receivable per the accounts receivable aging report dated as of the date shown above (a copy of which is attached hereto)		$
Less: accounts receivable over 90 days from original invoice date		$
Less: other accounts receivable not meeting the definition of Eligible
Accounts Receivable		$
Total Eligible Accounts Receivable		$
Advance Rate			X80%
Total finished goods inventory		$
Less: any inventory not meeting the definition of Eligible Inventory		$
Total Eligible Inventory		$
Advance Rate			X 50%
Total Amount Available on Eligible Inventory	(b)	$
Borrowing Base – (a) plus (b)	(c)	$
Revolving Commitment	(d)	$
Amount Available (lesser of (d) and (e))		$
Less: aggregate of Revolving Credit Loans Advanced	(e)	$
Availability Excess (Shortage)		$

If shortage, AirNet hereby authorizes Lender to debit AirNet’s account number                      for the amount of the shortage. We hereby certify that the above information and calculations are true and correct as of the date shown above and that at no time during the period then ended did (i) the aggregate outstanding amount of all Revolving Loans exceed the lesser of the amount of the Commitment or the Borrowing Base, and (ii) the Borrowing Base fall below zero.

[signatures contained on next page]

SCHEDULE 1

SUBSIDIARIES AND OTHER INVESTMENTS

(See Sections 5.8 and 6.14 (ii))

Name	State/Country	AirNet Ownership %
AirNet Management, Inc.	Ohio Corp.		100	%
7250 STARCHECK, INC.*	Ohio Corp.		100	%
Fast Forward Solutions, LLC	Ohio LLC		100	%
timexpress.com, inc.	Ohio Corp		100	%
Float Control, Inc.	Michigan Corp.		100	%
AirNet Systems Inc.	Ontario, Canada		100	%

* Formerly known as Jetride, Inc.

SCHEDULE 2

INDEBTEDNESS AND LIENS

(See Sections 6.11 and 6.15(iv))

Borrower	Lender	Security	Amount		Maturity
AirNet Systems, Inc.	GE Capital Corp.1	Aircraft 2	$	7,642,000	4/01/08

1.

On March 24, 2005, AirNet entered into a three-year term loan totaling $11.0 with Chase Equipment Leasing Inc. (f/k/a) Banc One Leasing Corporation. This term loan is secured by seven Cessna Caravan and nine Learjet 35A aircraft and the associated engines (see listing below). The loan was assigned to CIT Group/Equipment Financing, Inc. on March 24, 2005. The loan was subsequently assigned to GE Capital Corporation on or about October 31, 2005. As of March 15, 2007, approximately $7,642,000 was outstanding under this term loan.

2.

The loan is secured by the following aircraft and engines under a Loan and Security Agreement dated March 24, 2005:

Aircraft	Engines
Learjet 35A’s	Garrett TFE-731-2-2B
N900JC	P74550 & P74906
N94AA	P74422 & P74751
N64CP	P89305 & P74303
N56JA	P74236 & P74898
N25AN	P73139 & P74333
N31WR	P74974 & P74356
N39DK	P74230 & P74484
N51LC	P74426 & P74752
N122JW	P74267 & P74321
Cessna 208B Caravans	Pratt & Whitney PT6A-114A
N102AN	PCE-PC0892
N103AN	PCE-PC0928
N104AN	PCE-PC0911
N105AN	PCE-PC0968
N106AN	PCE-PC0909
N107AN	PCE-PC1006
N107AN	PCE-PC0988

SCHEDULE 5.14

ADDRESSES OF REAL PROPERTY
OWNED OR LEASED BY THE BORROWER

SCHEDULE 5.16

ENVIRONMENTAL MATTERS

AirNet is liable for remedial activities relating to releases from two Underground Storage Tanks on property at a local airport that it operated under lease from Oakland County. The releases were of jet and airplane fuel which reached and impacted groundwater. Although it has taken significant time (roughly 16 years since the original discovery), significant progress has been made and the plume of contaminants is as dilute and narrow as it has been. MDEQ, the relevant regulatory body appears content to allow AirNet to complete its relatively slow, low-tech, low cost remedial action with the necessary confirmatory testing. Each round of treatment (about one a year) costs roughly $5,000 and each round of testing (about one per year) costs roughly $4,000. More testing would be required to reach closure and so it could cost at least $17,000 — $20,000 to bring this to closure. It may cost more but for each year that it is not complete, one can add roughly $9,000 to the cost estimate to close this out.

AirNet was also sued by a neighbor whose property covers a small part of the plume emanating from the former AirNet operation. The suit was settled in April of 2003 for $65,000.00 and a commitment by AirNet to achieve an MDEQ approved closure with respect to the neighbor’s property either through the treatment regime described above or through the imposition of a deed restriction on the neighbor’s property in April 2005 and approval of same by the MDEQ as closure.

EX-4.51

EXHIBIT 4.51

AMENDED AND RESTATED NOTE

$15,000,000.00 March 29, 2007          

     AirNet Systems, Inc., an Ohio corporation (the “Borrower”), promises to pay to the order of The Huntington National Bank (the “Lender”) the aggregate unpaid principal amount of all Revolving Loans made by Lender to the Borrower pursuant to Article II of the Agreement (as hereinafter defined), in immediately available funds at the main office of Lender, together with interest thereon at the rate or rates set forth in the Agreement. The Borrower shall pay the principal of and accrued and unpaid interest on such Loans as set forth in the Agreement.

     Lender shall, and is hereby authorized to, record by entries made by Lender into its electronic data processing system and/or internal memoranda maintained by Lender, or to otherwise record in accordance with its usual practice, the date and amount of each such Loan and the date and amount of each principal and interest payment hereunder. The Borrower agrees that the sum or sums shown on such schedule, the most recent printout from Lender’s electronic data processing system and/or such memoranda shall be rebuttably presumptive evidence of the amount of the outstanding principal, interest or any other amount due under this Note; provided, however, that the failure of Lender to make any such entry(s) shall not affect the obligation of the Borrower to repay outstanding principal, interest or any other amount due under this Note in accordance with the terms hereof.

     This Note is issued pursuant to, and is entitled to the benefits of, the Second Amended and Restated Credit Agreement dated as of March 29, 2007 (which, as it may be amended, modified, supplemented, extended, restated and/or replaced from time to time, is herein called the “Agreement”), between the Borrower and Lender, which was given as an amendment and restatement to the First Amended and Restated Credit Agreement, to which Agreement reference is hereby made for a statement of the terms and conditions governing this Note, including the terms and conditions under which this Note may be prepaid or its maturity date accelerated. Capitalized terms used herein and not otherwise defined herein are used with the meanings attributed to them in the Agreement.

     This Note is given as an amendment and restatement for and as evidence of the indebtedness previously evidenced by that certain (i) Note dated May 28, 2004 given by Borrower in favor of Lender in the face amount of $18,750,000.00 (as amended from time to time, the “HNB Note”), and (ii) Note dated May 28, 2004 given by Borrower in favor of JPMorgan Chase Bank, a national banking association (“JPM”) formerly known as Bank One, N.A. (Columbus) in the face amount of $11,250,000.00 (as amended from time to time, the “JPM Note”), the outstanding principal indebtedness, as of the date hereof, of (i) the HNB Note being Zero Dollars ($0), and (ii) the JPM Note being Zero Dollars ($0); with said JPM Note having been assigned by JPM to Lender pursuant to the Assignment Agreement dated of even date herewith by and between Lender and JPM, as Assignee and Assignor, respectively. The HNB Note and the JPM Note were executed and delivered by Borrower pursuant to the First Amended and Restated Credit Agreement. The maximum principal amount available under the “Commitment” (as defined in the First Amended and Restated Credit Agreement) and under the HNB Note and the JPM Note has been reduced from time to time, and, ultimately, pursuant to that certain Fifth Change in Terms Agreement dated November 10, 2006, by and among Borrower, Lender in its capacity as Administrative Agent for the benefit of the “Lenders” (as such term is defined thereunder), and such “Lenders” (inclusive of JPM and Lender), the maximum outstanding principal indebtedness available under (i) said “Commitment” was reduced to $15,000,000.00, (ii) the HNB Note was reduced to $9,375,000.00, and (iii) the JMP Note was reduced to $5,625,000.00.

     Further, this Note does not constitute a novation of the HNB Note or the JPM Note or a refinance of the “Commitment” referenced above or the outstanding principal balance of the HNB Note or the JPM Note, and the Agreement does not constitute or represent a novation of the First Amended and Restated Credit Agreement, and this Note and the obligations and liabilities under the Agreement and all other Loan Documents shall remain secured by all mortgage liens, security interests, pledges, and other interests given, by Borrower, each Guarantor and any other Person, to secure the HNB Note and/or the JPM Note, this Note and/or the obligations under the Agreement and the other Loan Documents.

     The Borrower hereby irrevocably authorizes any attorney-at-law, including any attorney-at-law employed or retained by Lender, to appear for it in any action on this Note at any time after the same becomes due as herein provided in any court of record situated in the county where this warrant was signed (being Franklin County, Ohio), or in the county where the Borrower then resides or can be found, to waive the issuing and service of process, and confess a judgment in favor of the holder of this Note against the Borrower, for the amount that may then be due, with interest at the rate(s) provided for herein, together with the costs of suit, and to waive and release all errors in said proceedings and the right to appeal from the judgment rendered. The Borrower consents to the jurisdiction and venue of such court. The Borrower waives any conflict of interest that any attorney-at-law employed or retained by

Lender may have in confessing judgment hereunder and consents to the payment of a legal fee to any attorney-at-law confessing judgment hereunder.

AIRNET SYSTEMS, INC. an Ohio corporation
By:	/s/ Gary W. Qualmann
	Gary W. Qualmann
	Title:	CFO

WARNING — BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT, OR ANY OTHER CAUSE.

EX-4.52

EXHIBIT 4.52

[AirNet Systems, Inc. Letterhead]

March 30, 2007

Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549

Re: AirNet Systems, Inc. – Annual Report on Form 10-K for the fiscal year ended December 31, 2006

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, 2006 (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 its subsidiaries on a consolidated basis.

Very truly yours,

AIRNET SYSTEMS, INC.

/s/ Gary W. Qualmann

Gary W. Qualmann

Chief Financial Officer, Treasurer and Secretary

EX-10.25

EXHIBIT 10.25

FORM OF STOCK OPTION AGREEMENT
(Director Option — 2004 Stock Incentive Plan)

     This STOCK OPTION AGREEMENT (this “AGREEMENT”) is made to be effective as of January 2, 2007 (the “GRANT DATE”), by and between AirNet Systems, Inc., an Ohio corporation (the “COMPANY”), and ___(the “OPTIONEE”).

WITNESSETH:

     WHEREAS, pursuant the provisions of Section 6.05[2] of the AirNet Systems, Inc. 2004 Stock Incentive Plan, as amended (the “PLAN”), each elected or appointed director of the COMPANY who is not a common law employee of the COMPANY or of one of its SUBSIDIARIES (an “ELIGIBLE DIRECTOR”) and who has served at least one full one-year term as an ELIGIBLE DIRECTOR is to automatically be granted a nonstatutory stock option to purchase 4,000 common shares, $0.01 par value (the “COMMON SHARES”), of the COMPANY, on the first business day of each fiscal year of the COMPANY; and

     WHEREAS, the first business day of the COMPANY’s fiscal year commencing on January 1, 2007 is January 2, 2007; and

     WHEREAS, the OPTIONEE qualifies as an ELIGIBLE DIRECTOR as of January 2, 2007;

     NOW, THEREFORE, in consideration of the premises, the parties hereto make the following agreement, intending to be legally bound thereby:

     1. Defined Terms. Terms which are in all capital letters and not otherwise defined in this AGREEMENT will have the same meanings as in the PLAN.

     2. Grant of OPTION. The COMPANY hereby grants to the OPTIONEE a nonstatutory stock option (the “OPTION”) to purchase 4,000 COMMON SHARES of the COMPANY. The OPTION is not intended to qualify as an incentive stock option under Section 422 of the Internal Revenue Code of 1986, as amended (the “CODE”).

     3. Terms and Conditions of the OPTION.

          (A) Exercise Price. The EXERCISE PRICE to be paid by the OPTIONEE to the COMPANY upon the exercise of the OPTION will be $2.91 per share, which was the closing price of the COMMON SHARES of the COMPANY as reported on the American Stock Exchange (“AMEX”) on the first trading date following the GRANT DATE since the GRANT DATE was not a trading day on AMEX. The OPTION may not be “repriced” (as defined under the rules adopted by the national securities exchange or other recognized market or quotation system upon or through which the COMPANY’s COMMON SHARES are then listed or traded) without the prior approval of the COMPANY’s shareholders.

          (B) Exercise of the OPTION. Except as otherwise provided in this AGREEMENT and the PLAN, the OPTION will vest and become exercisable as follows:

               (i) at any time on and after the GRANT DATE, as to 800 of the COMMON SHARES subject to the OPTION;

               (ii) at any time after the first anniversary of the GRANT DATE, as to an additional 800 of the COMMON SHARES subject to the OPTION, provided that the OPTIONEE is a director of the COMPANY on such anniversary date;

               (iii) at any time after the second anniversary of the GRANT DATE, as to an additional 800 of the COMMON SHARES subject to the OPTION, provided that the OPTIONEE is a director of the COMPANY on such anniversary date;

               (iv) at any time after the third anniversary of the GRANT DATE, as to an additional 800 of the COMMON SHARES subject to the OPTION, provided that the OPTIONEE is a director of the COMPANY on such anniversary date; and

               (v) at any time after the fourth anniversary of the GRANT DATE, as to an additional 800 of the COMMON SHARES subject to the OPTION, provided that the OPTIONEE is a director of the COMPANY on such anniversary date.

     Any exercise of the vested and exercisable portion of the OPTION may be made in whole or in part; however, no single purchase of COMMON SHARES upon exercise of the OPTION may be for fewer than the smaller of: (a) 100 COMMON SHARES or (b) the full number of COMMON SHARES as to which the OPTION is then vested and exercisable.

     Subject to the other provisions of this AGREEMENT, if the OPTION vests and becomes exercisable as to certain COMMON SHARES, the OPTION will remain vested and exercisable as to those COMMON SHARES until the date of expiration of the term of the OPTION.

     The grant of the OPTION does not confer upon the OPTIONEE any right to continue to serve as a director of the COMPANY.

          (C) OPTION Term. The OPTION will in no event be exercisable after the expiration of ten years from the GRANT DATE (i.e., after January 1, 2017).

          (D) Method of Exercise. The OPTION may be exercised by the OPTIONEE (or in the event of the OPTIONEE’s death, the OPTIONEE’s BENEFICIARY as determined pursuant to the provisions of the PLAN) giving written notice of exercise to the BOARD, in care of the Chief Financial Officer of the COMPANY, stating the number of COMMON SHARES subject to the OPTION in respect of which the OPTION is being exercised. Payment for all such COMMON SHARES must be made to the COMPANY at the time the OPTION is exercised in United States dollars in cash (including check, bank draft or money order payable to the order of the COMPANY). Payment for such COMMON SHARES may also be made (i) by tender of COMMON SHARES already owned by the OPTIONEE for at least six months (either by actual delivery of the already-owned COMMON SHARES or by attestation) and having a fair market value (based on the closing sale price of the COMMON SHARES of the COMPANY as reported on AMEX or, if the COMMON SHARES are not traded on AMEX, “fair market value” as defined in the PLAN) on the date of tender equal to the EXERCISE PRICE or (ii) by a combination of the delivery of cash and the tender of already-owned COMMON SHARES. After payment in full for the COMMON SHARES purchased under the OPTION has been made, the COMPANY will take all such actions as are necessary to deliver an appropriate share certificate evidencing the COMMON SHARES purchased upon the exercise of the OPTION as promptly thereafter as is reasonably practicable.

     4. Adjustments upon Changes in the COMMON SHARES.

          (A) If, during the term of the OPTION, there is a dividend or split in respect of the COMMON SHARES, recapitalization (including, without limitation, the payment of an extraordinary dividend), merger, consolidation, combination, spin-off, distribution of assets to shareholders, exchange of shares, or other similar corporate change affecting the COMMON SHARES, the BOARD will appropriately adjust the number of COMMON SHARES subject to the OPTION as well as the EXERCISE PRICE and any other factors, limits or terms affecting the OPTION.

          (B) Notice of any adjustment made pursuant to this Section 4 will be given by the COMPANY to the OPTIONEE.

     5. Acceleration of OPTION upon Occurrence of Certain Events. If the COMPANY undergoes a merger or consolidation of the COMPANY or reclassification of the COMMON SHARES or exchange of the COMMON SHARES for the securities of another entity (other than a SUBSIDIARY) that has acquired the COMPANY’s assets or which is in control [as defined in CODE §368(c)] of an entity that has acquired the COMPANY’s assets and the terms of that plan or agreement are binding on all holders of COMMON SHARES (except to the extent that dissenting shareholders are entitled to relief under applicable law), then the unexercised portion of the OPTION (whether or not then vested and exercisable by its terms) will become immediately vested and exercisable in full and the OPTIONEE will receive, upon payment of the

EXERCISE PRICE, securities or cash, or both, equal to those the OPTIONEE would have been entitled to receive under the PLAN and this AGREEMENT if the OPTIONEE had already exercised the unexercised portion of the OPTION.

     6. Non-Assignability of OPTION. Unless otherwise permitted by the BOARD, the OPTION will not be transferable by the OPTIONEE except by will or by the laws of descent and distribution. During the lifetime of the OPTIONEE, the OPTION may only be exercised by the OPTIONEE or the OPTIONEE’s guardian or legal representative. If the BOARD permits the transfer of the OPTION, the OPTION will be transferable only to the extent permitted in Section 14.01 of the PLAN. In the event of the death of the OPTIONEE, the person or persons entitled to exercise the unexercised portion of the OPTION will be determined in accordance with the provisions of the PLAN.

     7. Exercise After Termination of Service as a Director of the COMPANY.

          (A) Upon the termination of the OPTIONEE’s service as a director of the COMPANY for any reason other than death, DISABILITY or RETIREMENT of the OPTIONEE or for CAUSE, the OPTION may be exercised (to the extent that the OPTION was vested and exercisable at the time of such termination of service) at any time within three months after the date upon which the OPTIONEE ceases to be a director of the COMPANY, subject to the expiration of the term of the OPTION.

          (B) If the OPTIONEE’s service as a director of the COMPANY is terminated because of the DISABILITY or RETIREMENT of the OPTIONEE, the unexercised portion of the OPTION (whether or not then exercisable by its terms) will immediately become vested and exercisable in full and the right of the OPTIONEE to exercise the OPTION will terminate upon the earlier to occur of the expiration of the term of the OPTION or 24 months after the date upon which the OPTIONEE ceases to be a director of the COMPANY.

          (C) If the OPTIONEE’s service as a director of the COMPANY is terminated because of the death of the OPTIONEE, the unexercised portion of the OPTION (whether or not then exercisable by its terms) will immediately become vested and exercisable in full and the right of the OPTIONEE’s BENEFICIARY to exercise the OPTION will terminate upon the earlier to occur of the expiration of the term of the OPTION or 24 months after the date of the OPTIONEE’s death.

          (D) If the OPTIONEE’s service as a director of the COMPANY is terminated for CAUSE, the OPTION will, to the extent not previously exercised, be immediately forfeited and expire.

     8. Limits on Exercisability of the OPTION; Forfeiture of Exercised Portion of the OPTION. The OPTIONEE will forfeit the unexercised portion of the OPTION, as well as all COMMON SHARES acquired through the exercise of the OPTION on the date of termination of service as a director of the COMPANY or within six months before and 24 months after such termination of service, if the OPTIONEE:

          (A) Without the BOARD’s written consent, which may be withheld for any reason or for no reason, serves (or agrees to serve) as an officer, director, consultant or employee of any proprietorship, partnership, corporation, limited liability company, association or other entity or becomes the owner of a business or a member of a partnership, limited liability company, association or other entity that competes with any portion of the business of the COMPANY or any SUBSIDIARY with which the OPTIONEE has been involved at any time within five years before the OPTIONEE’s termination of service as a director of the COMPANY or renders any service (including, without limitation, business consulting) to entities that compete with any portion of the business of the COMPANY or any SUBSIDIARY with which the OPTIONEE has been involved anytime within five years before the OPTIONEE’s termination of service as a director of the COMPANY;

          (B) Refuses or fails to consult with, supply information to or otherwise cooperate with the COMPANY or any SUBSIDIARY after being requested to do so;

          (C) Deliberately engages in any action that the BOARD concludes has caused substantial harm to the interests of the COMPANY or any SUBSIDIARY;

          (D) Without the BOARD’s written consent, which may be withheld for any reason or for no reason, on the OPTIONEE’s own behalf or on behalf of any other person, partnership, limited liability

company, association, corporation or other entity, solicits or in any manner attempts to influence or induce any employee of the COMPANY or any SUBSIDIARY to terminate such employee’s employment, or uses or discloses to any person, partnership, limited liability company, association, corporation or other entity any information obtained while the OPTIONEE served as a director of the COMPANY concerning the names and addresses of employees of the COMPANY or any SUBSIDIARY;

          (E) Without the BOARD’s written consent, which may be withheld for any reason or for no reason, discloses any confidential or proprietary information relating to the business affairs of the COMPANY or any SUBSIDIARY;

          (F) Fails to return all property (other than personal property) produced by, received by or otherwise submitted to the OPTIONEE in the course of the OPTIONEE’s service as a director of the COMPANY; or

          (G) Engages in conduct that the BOARD reasonably concludes would have given rise to termination of the OPTIONEE’s service as a director of the COMPANY for CAUSE if it had been discovered before the OPTIONEE terminated the OPTIONEE’s service as a director of the COMPANY.

     9. Buy Out of OPTION. At any time, the BOARD, in its sole discretion and without the consent of the OPTIONEE, may cancel any portion of the OPTION by providing to the OPTIONEE written notice (a “BUY OUT NOTICE”) of the COMPANY’s intention to exercise the right reserved in this Section 9. If a BUY OUT NOTICE is given, the COMPANY will pay to the OPTIONEE, in respect of each COMMON SHARE covered by the OPTION and subject to the BUY OUT NOTICE, the difference between (i) the fair market value of the COMMON SHARES (based on the closing sale price of the COMMON SHARES as reported on AMEX or if the COMMON SHARES are not traded on AMEX, “fair market value” as defined in the PLAN) on the date of the BUY OUT NOTICE and (ii) the EXERCISE PRICE. However, no payment will be made with respect to that portion of the OPTION which is not vested and exercisable on the date of the BUY OUT NOTICE. The COMPANY will complete any buy out made under this Section 9 as soon as administratively possible after the date of the BUY OUT NOTICE. At the BOARD’s option, payment of the buy out amount may be made in cash, in whole COMMON SHARES or partly in cash and partly in whole COMMON SHARES. The number of whole COMMON SHARES, if any, included in the buy out amount will be determined by dividing the amount of the payment to be made in COMMON SHARES by the fair market value of the COMMON SHARES (based on the closing sale price of the COMMON SHARES as reported on AMEX or if the COMMON SHARES are not traded on AMEX, “fair market value” as defined in the PLAN) on the date of the BUY OUT NOTICE.

     10. Restrictions on Transfers of COMMON SHARES. Anything contained in this AGREEMENT or elsewhere to the contrary notwithstanding, the COMPANY may postpone the issuance and delivery of COMMON SHARES upon any exercise of the OPTION until completion of any stock exchange listing or registration or other qualification of such COMMON SHARES under any state or federal law, rule or regulation as the COMPANY may consider appropriate; and may require the OPTIONEE when exercising the OPTION to make such representations and furnish such information as the COMPANY may consider appropriate in connection with the issuance of the COMMON SHARES in compliance with applicable law.

     COMMON SHARES issued and delivered upon exercise of the OPTION will be subject to such restrictions on trading, including appropriate legending of share certificates to that effect, as the COMPANY, in its discretion, shall determine are necessary to satisfy applicable legal requirements.

     11. Rights of the OPTIONEE as a Shareholder. The OPTIONEE will have no rights as a shareholder of the COMPANY with respect to any COMMON SHARES of the COMPANY covered by the OPTION until the date of issuance of a share certificate to the OPTIONEE evidencing such COMMON SHARES.

     12. PLAN as Controlling. All terms and conditions of the PLAN applicable to the OPTION which are not set forth in this AGREEMENT will be deemed incorporated herein by reference. In the event that any term or condition of this AGREEMENT is inconsistent with the terms and conditions of the PLAN, the PLAN will be deemed controlling. The OPTIONEE acknowledges receipt of a copy of the PLAN and of the prospectus related to the PLAN.

     13. Governing Law. To the extent not preempted by federal law, this AGREEMENT will be governed by and construed in accordance with the laws of the State of Ohio.

     14. Rights and Remedies Cumulative. All rights and remedies of the COMPANY and of the OPTIONEE enumerated in this AGREEMENT are cumulative and, except as expressly provided otherwise in this AGREEMENT, none will exclude any other rights or remedies allowed by law or in equity, and each of said rights or remedies may be exercised and enforced concurrently.

     15. Captions. The captions contained in this AGREEMENT are included only for convenience of reference and do not define, limit, explain or modify this AGREEMENT or its interpretation, construction or meaning and are in no way to be construed as a part of this AGREEMENT.

     16. Severability. If any provision of this AGREEMENT or the application of any provision hereof to any person or any circumstance is determined to be invalid or unenforceable, then such determination will not affect any other provision of this AGREEMENT or the application of said provision to any other person or circumstance, all of which other provisions will remain in full force and effect, and it is the intention of each party to this AGREEMENT that if any provision of this AGREEMENT is susceptible of two or more constructions, one of which would render the provision enforceable and the other or others of which would render the provision unenforceable, then the provision will have the meaning which renders it enforceable.

     17. Number and Gender. When used in this AGREEMENT, the number and gender of each pronoun will be construed to be such number and gender as the context, circumstances or its antecedent may require.

     18. Entire Agreement. This AGREEMENT, including the PLAN incorporated herein by reference, constitutes the entire agreement between the COMPANY and the OPTIONEE in respect of the subject matter of this AGREEMENT, and this AGREEMENT supersedes all prior and contemporaneous agreements between the parties hereto in connection with the subject matter of this AGREEMENT. No change, termination or attempted waiver of any of the provisions of this AGREEMENT will be binding upon either party to this AGREEMENT unless contained in a writing signed by the party to be charged.

     19. Successors and Assigns of the COMPANY. This AGREEMENT will inure to the benefit of and be binding upon the successors and assigns (including successive, as well as immediate, successors and assigns) of the COMPANY.

(Remainder of page intentionally left blank;
signatures on following page.)

     IN WITNESS WHEREOF, the COMPANY has caused this AGREEMENT to be executed by its duly authorized officer, and the OPTIONEE has executed this AGREEMENT, in each case effective as of the GRANT DATE.

COMPANY:
AIRNET SYSTEMS, INC.
By:	/s/ Gary W. Qualmann
Printed Name: Gary W. Qualmann
Title: Chief Financial Officer, Treasurer and Secretary
OPTIONEE:
Printed Name of OPTIONEE
Signature of OPTIONEE
Street Address
City		State	Zip Code
Telephone Number

EX-10.26

EXHIBIT 10.26

SUMMARY OF COMPENSATION FOR DIRECTORS OF AIRNET SYSTEMS, INC.

Cash Compensation

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 of AirNet (the “Board”) and as members of Board committees. The current Non-Employee Directors of AirNet are James M. Chadwick, Russell M. Gertmenian, Gerald Hellerman, and James E. Riddle. David P. Lauer, who resigned from the Board on May 11, 2006, was also a Non-Employee Director during the fiscal year ended December 31, 2006 (the “2006 fiscal year”), serving from January 1, 2006 until May 11, 2006. Bruce D. Parker, who has served on the Board since 2002, assumed the position of Chief Executive Officer of AirNet on December 28, 2006. Mr. Parker was also a Non-Employee Director until such date. Effective December 31, 2006, Mr. Parker was elected Chairman of the Board of AirNet.

The quarterly fee paid during the 2006 fiscal year and to be paid during the fiscal year ending December 31, 2007 (the “2007 fiscal year”) for serving as a Non-Employee Director has been and remains $6,000. The fee for attending each meeting of the full Board in person was $2,000 during the 2006 fiscal year and continues to be the same amount during the 2007 fiscal year. The fee for attending telephonic meetings of the full Board was $1,000 for each meeting attended during the 2006 fiscal year and remains that amount during the 2007 fiscal year.

The Audit Committee of AirNet’s Board currently consists of Gerald Hellerman (Chair), James M. Chadwick and James E. Riddle. David P. Lauer served as a member and Chair of the Audit Committee during the 2006 fiscal year from January 1, 2006 until his resignation on May 11, 2006. Mr. Hellerman was appointed a member and Chair of the Audit Committee on May 17, 2006 and has served in those positions since that date. Bruce D. Parker served as a member of the Audit Committee during the 2006 fiscal year from January 1, 2006 until he assumed the position of Chief Executive Officer of AirNet on December 28, 2006, on which date he resigned. Messrs. Riddle and Chadwick also served on the Audit Committee throughout the 2006 fiscal year.

The Compensation Committee of AirNet’s Board currently consists of James E. Riddle (Chair), Gerald Hellerman and James M. Chadwick. Bruce D. Parker served as a member of the Compensation Committee until he assumed the position of Chief Executive Officer of AirNet on December 28, 2006, on which date he resigned. David P. Lauer served as a member of the Compensation Committee during the 2006 fiscal year from January 1, 2006 until his resignation on May 11, 2006. Mr. Chadwick was appointed to the Compensation Committee effective February 27, 2007. Mr. Riddle also served on the Compensation Committee throughout the 2006 fiscal year.

The Nominating and Corporate Governance Committee of AirNet’s Board currently consists of James M. Chadwick (Chair), James E. Riddle and Gerald Hellerman. David P. Lauer served as member of the Nominating and Corporate Governance Committee during the 2006 fiscal year from January 1, 2006 until his resignation on May 11, 2006. Bruce D. Parker served as a member and Chair of the Nominating and Corporate Governance Committee during the 2006 fiscal year from January 1, 2006 until he assumed the position of Chief Executive Officer of AirNet on December 28, 2006, on which date he resigned. Mr. Chadwick was appointed a member and Chair of the Nominating and Corporate Governance Committee on February 27, 2007. Mr. Riddle also served on the Nominating and Corporate Governance Committee throughout the 2006 fiscal year.

The fee for Audit Committee members has been and remains $2,000 per meeting attended in person during each of the 2006 fiscal year and the 2007 fiscal year, with the Chair of the Audit Committee receiving an additional $1,000 per meeting attended in person. The fee for Compensation Committee members and Nominating and Corporate Governance Committee members has been and remains $1,000 per meeting attended in person during each of the 2006 fiscal year and the 2007 fiscal year, with the Chair of each of those Committees receiving an additional $2,000 for each meeting of the Committee attended in person. The fees for attending telephonic meetings of each Committee held during each of the 2006 fiscal year and the 2007 fiscal year have been and remain one-half (50%) of the amount of the fees for attending a meeting of the particular Committee in person.

On December 16, 2005, AirNet’s Board established a Strategy Committee to work with management on the ongoing business strategy and alternatives for AirNet to enhance shareholder value. The Strategy Committee was comprised of Bruce D. Parker and James M. Chadwick. The Strategy Committee was dissolved on February 27, 2007. The fees for Strategy Committee members during of the 2006 fiscal year were $1,000 per meeting attended in person and $500 for each telephonic meeting attended. In addition, on May 11, 2006, the Board approved a $5,000 quarterly fee for Mr. Parker for service in the capacity as Chair of the Strategy Committee, retroactive to January 1, 2006. The Strategy Committee did not meet during the 2007 fiscal year and no fees were paid to Strategy Committee members during the 2007 fiscal year prior to the dissolution of the Strategy Committee.

As the lead director of AirNet, James E. Riddle received an additional quarterly fee of $6,000 for service in that capacity during the 2006 fiscal year and continues to receive that amount during the 2007 fiscal year.

The Non-Employee Directors meet without management present in connection with each of the regularly scheduled meetings 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 receive $2,000 per meeting attended in person and $1,000 per telephonic meeting.

As an officer and employee of AirNet, Joel E. Biggerstaff received no fees for serving as a director of AirNet during the 2006 fiscal year from January 1, 2006 until the date of his resignation from the Board effective December 31, 2006. Since December 28, 2006, Bruce D. Parker has not received and will not receive any fees for serving as a director of AirNet because he also serves as an officer and employee of AirNet.

The directors are reimbursed for out-of-pocket expenses incurred in connection with their service as directors, including travel expenses.

Director Deferred Compensation Plan

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, 2007 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 (i) a cash account where the funds will earn interest at the rate prescribed in the Director Deferred Plan, or (ii) 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. As of March 30, 2007, none of the Non-Employee Directors was participating in the Director Deferred Plan.

Options Granted under Amended and Restated 1996 Incentive Stock Plan

Non-Employee Directors were 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, 2007 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 vested and became exercisable with respect to 20% of the common shares covered thereby 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 respective 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, which has not expired, been cancelled or been exercised prior to the effective date of the event, will become immediately exercisable in full (i) if the Non-Employee Director retires from service as an AirNet director, becomes totally disabled or dies, (ii) if AirNet merges with another entity and AirNet is not the survivor in the merger, or (iii) 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 term of each option. 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 all of 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, no further options have been or will be granted to the Non-Employee Directors under the 1996 Plan.

Options Granted under 2004 Stock Incentive Plan

The 2004 Plan as in effect on March 30, 2007 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 has been and 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 accordance with the terms of the 2004 Plan, on July 20, 2005, each of James M. Chadwick and Gerald Hellerman was automatically granted an option to purchase 20,000 common shares with an exercise price of $4.26.

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. Each of the individuals serving as a Non-Employee Director on January 2, 2006 (the first business day of the 2006 fiscal year) who had served for at least one full one-year term on that date, thereby being eligible for the grant -- Russell M. Gertmenian, David P. Lauer, Bruce D. Parker and James E. Riddle - determined not to accept the option to purchase 4,000 AirNet common shares which would have been automatically granted to him on each such date. On January 2, 2007 (the first business day of the 2007 fiscal year), each of the individuals then serving as a Non-Employee Director who had served for at least one full one-year term on that date, thereby being eligible for the grant - James M. Chadwick, Russell M. Gertmenian, Gerald Hellerman and James E. Riddle - was automatically granted an option to purchase 4,000 AirNet common shares with an exercise price of $2.91.

Each option automatically granted under the 2004 Plan is to vest and become exercisable as to 20% of the common shares covered thereby on each of the grant date and the first, second, third and fourth anniversaries of the grant date. Each option automatically granted under the 2004 Plan is to have an exercise price per share equal to the closing price of the underlying common shares as reported on the American Stock Exchange LLC (“AMEX”) on the grant date (or, if the grant date is not a trading day on AMEX, on the first trading day following the grant date). Each such option, which has not expired, been cancelled or been exercised prior to the effective date of the event, will become fully exercisable (i) 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 (ii) 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.

Once vested and exercisable, each option automatically granted to a Non-Employee Director under the 2004 Plan will remain exercisable until the earlier to occur of (i) ten years after the grant date or (ii) three months after the Non-Employee Director ceases to be a member of the Board (24 months in the case of a Non-Employee Director who becomes disabled, dies or retires after having served at least one full one-year term), subject in each case to the stated term of each option. However, if a Non-Employee Director’s service as a director is terminated for cause, he will immediately forfeit his options.

EX-10.29

EXHIBIT 10.29

SUMMARY OF AIRNET SYSTEMS, INC. 2006 INCENTIVE COMPENSATION PLAN

On March 24, 2006, the Board of Directors of AirNet, upon the recommendation of the Compensation Committee, adopted the 2006 Incentive Compensation Plan (the “2006 Incentive Plan”). The purpose of the 2006 Incentive Plan was to promote the following goals of AirNet for the fiscal year ended December 31, 2006 (the 2006 fiscal year”) by providing incentive compensation to certain employees of AirNet and its subsidiaries:

• Attaining designated levels of pre-tax income;

• Improving cash flow and reducing debt;

• Defining and executing plans to offset expected declines in Bank Services revenues;

• Reducing the fixed cost structure of AirNet; and

• Meeting high priority deadlines of AirNet.

Participants in the 2006 Incentive Plan included the following individuals who served as executive officers of AirNet during the 2006 fiscal year: Joel E. Biggerstaff (Chairman of the Board until December 31, 2006 and Chief Executive Officer and President until December 28, 2006), Gary W. Qualmann (Chief Financial Officer, Treasurer and Secretary), Larry M. Glasscock, Jr. (Senior Vice President, Express Services), Jeffery B. Harris (Senior Vice President, Bank Services), Ray L. Druseikis (Controller and Principal Accounting Officer), and Craig A. Leach (Vice President, Information Systems) – as well as certain department managers and department directors. As of the start of the 2006 fiscal year, there were 47 participants in the 2006 Incentive Plan. New employees who qualified for the 2006 Incentive Plan were eligible to participate on the first day of the calendar quarter following their date of hire. There were 46 participants who received payments under the 2006 Incentive Plan, including Mr. Biggerstaff. There were also 32 non-participants who received discretionary awards totaling approximately $75,000.

Payments under the 2006 Incentive Plan were based upon a combination of AirNet’s pre-tax income (as determined under the terms of the 2006 Incentive Plan) for the 2006 fiscal year, the operating performance of AirNet’s Delivery Services and Passenger Charter Services business segments, and the achievement of personal goals assigned to each participant. The Compensation Committee approved the personal goals for executive officers and reviewed the personal goals for other participants. The personal goals approved by the Compensation Committee for each of the executive officers related to specific business objectives related to general business operations (e.g., regulatory compliance, expense reductions, etc.) and each business segment (e.g., execution of specific contracts with customers and vendors, cost reductions, service improvements, etc.).

No incentive compensation was to be paid under the 2006 Incentive Plan unless AirNet achieved a designated threshold level of pre-tax income for the 2006 fiscal year. If the designated threshold level were achieved, incentive compensation payments would increase based upon predetermined pre-tax income levels until a maximum aggregate amount of $1.9 million in incentive compensation payments was reached. After the overall amount of incentive compensation was determined based upon AirNet’s pre-tax income for the 2006 fiscal year, incentive compensation was allocated to individual participants based upon the following four factors: (i) level of pre-tax income attained by AirNet; (ii) level of contribution margin attained by Delivery Services as compared to certain predetermined levels; (iii) levels of contribution margin attained by Passenger Charter Services as compared to certain predetermined levels; and (iv) attainment of personal goals.

Originally, a participant’s maximum incentive compensation payment was to range from 20% to 100% of the participant’s base salary, depending upon such participant’s level of responsibility for achieving AirNet’s goals for the 2006 fiscal year. Twenty percent of each participant’s incentive compensation payments was to be based upon the participant’s achievement of pre-established personal goals. The remaining 80% of each participant’s incentive compensation payment was to be based upon a combination of the other three factors discussed above, which were allocated to each participant based upon such participant’s overall responsibility for attaining the designated levels of AirNet’s pre-tax income and contribution margins for the Delivery Services and Passenger Charter Services business segments.

In the event the incentive compensation payments otherwise available for payment under the 2006 Incentive Plan based upon AirNet’s level of pre-tax income were not paid to certain participants as a result of those participants’ failure to attain their personal goals or AirNet’s failure to attain the predetermined levels of budgeted contribution margins in Delivery Services or Passenger Charter Services, such unpaid amounts could have been awarded at the discretion of the Compensation Committee to participants in the 2006 Incentive Plan or to other employees of AirNet not participating in the 2006 Incentive Plan.

Except for payments to the executive officers, payments under the 2006 Incentive Plan were paid in quarterly payments commencing with the second quarter of the 2006 fiscal year based upon AirNet’s year-to-date financial performance. Except as described below with respect to Mr. Biggerstaff, payments of incentive compensation to executive officers were made in March 2007 based upon AirNet’s performance and each executive officer’s performance for the 2006 fiscal year. Except as described below with respect to Mr. Biggerstaff, in order to receive payment, a participant must have been actively employed by AirNet at the time the payment was made.

On November 8, 2006, the AirNet Board of Directors, upon the recommendation of the Compensation Committee, adopted the following amendments to the 2006 Incentive Plan: (i) for purposes of computing the pre-tax income of AirNet for the 2006 fiscal year for purposes of the 2006 Incentive Plan, the $24.6 million non-cash impairment charge recorded by AirNet in the third quarter of the 2006 fiscal year was to be disregarded and AirNet’s pre-tax income for the 2006 fiscal year was to be computed as if no impairment charge had been incurred; (ii) the incentive compensation payable under the 2006 Incentive Plan to each of AirNet’s officers, Joel E. Biggerstaff, Gary W. Qualmann, Larry M. Glasscock, Jr., Jeffery B. Harris, Ray L. Druseikis and Craig A. Leach, was to be reduced to 60% of the amount each such officer would otherwise have been entitled to receive under the 2006 Incentive Plan; (iii) for purposes of the 2006 Incentive Plan, the gain on the sale of Jetride’s passenger charter business was to be excluded from the computation of AirNet’s pre-tax income for the 2006 fiscal year; and (iv) Jetride’s targeted pre-tax income for the fourth quarter of 2006 was to be disregarded for purposes of the 2006 Incentive Plan and the predetermined pre-tax income level at which the maximum incentive compensation payout would be reached under the 2006 Incentive Plan was to be reduced by a comparable amount.

As previously reported, under the terms of the Separation Agreement and General Release, dated as of December 28, 2006 (the “Separation Agreement”), between AirNet and Mr. Biggerstaff, the incentive compensation payable under the 2006 Incentive Plan to Mr. Biggerstaff was calculated without regard to his personal goals for the 2006 fiscal year and, with respect to the financial performance criteria, on an equitable basis with the other executive officers of AirNet. While AirNet exceeded the level of pre-tax income at which the maximum incentive compensation payments could be achieved, AirNet did not attain its pre-determined goal for contribution margin for Passenger Charter Services. Accordingly, Mr. Biggerstaff was not entitled to the 20% of his incentive compensation potential based upon the performance of AirNet’s Passenger Charter Services business. Mr. Biggerstaff was paid 60% of his remaining 80% incentive compensation potential, or $156,000, after applying the 60% limitation described above.

After reviewing AirNet’s pre-tax income, the operating performance of AirNet’s various business components and the level of achievement of the personal goals assigned to each executive officer, at a meeting of the Compensation Committee held on February 27, 2007, the Compensation Committee asked Mr. Parker, AirNet’s Chairman of the Board and Chief Executive Officer, to recommend additional discretionary awards to officers, other participants in the 2006 Incentive Plan, and certain other employees who were not participants in the 2006 Incentive Compensation Plan. The Compensation Committee met again on March 5, 2007 and approved discretionary awards recommended by Mr. Parker in the amount of $283,000. The amounts of such discretionary awards were based upon the contributions such officers, participants and other employees made to the operating performance of AirNet during fiscal year 2006, as determined by Mr. Parker. Because of such discretionary incentive compensation awards, the total incentive compensation payments made to certain executive officers of AirNet exceeded the amounts that otherwise would have been paid given the 60% limitation described above.

During the 2006 fiscal year and the fiscal quarter ending March 31, 2007, AirNet made payments under the terms of the 2006 Incentive Plan in the aggregate amount of approximately $1.5 million, which included $156,000 paid to Mr. Biggerstaff as described above. In March of 2007, the following executive officers of AirNet were paid the following amounts under the 2006 Incentive Plan: Jeffery B. Harris- $160,000; Gary W. Qualmann — $136,750; Larry M. Glasscock, Jr. — $125,000; Craig A. Leach — $66,464; and Ray L. Druseikis -$46,550.

EX-10.31

EXHIBIT 10.31

STOCK OPTION AGREEMENT
(Nonstatutory Stock Options — 2004 Stock Incentive Plan)

     This Stock Option Agreement (this “Agreement”) is made to be effective as of December 28, 2006 (the “Grant Date”), by and between AirNet Systems, Inc., an Ohio corporation (the “Company”), and Bruce D. Parker (the “Optionee”).

WITNESSETH:

     WHEREAS, pursuant to the provisions of the AirNet Systems, Inc. 2004 Stock Incentive Plan (as amended, the “Plan”), the Compensation Committee (the “Committee”) of the Board of Directors of the Company administers the Plan; and

     WHEREAS, the Company has offered and the Optionee has accepted employment with the Company; and

     WHEREAS, in connection with the Optionee’s employment with the Company, the Company has agreed to grant nonstatutory stock options to the Optionee under the Plan; and

     WHEREAS, the Committee has determined that nonstatutory stock options to acquire an aggregate of 150,000 common shares, $0.01 par value (the “Common Shares”), of the Company should be granted to the Optionee under the terms and subject to the conditions set forth in this Agreement;

     NOW, THEREFORE, in consideration of the premises, the parties hereto make the following agreement, intending to be legally bound thereby:

     1. Grant of Options. The Company hereby grants to the Optionee nonstatutory stock options (the “Options”) to purchase an aggregate of 150,000 Common Shares of the Company. The Optionee may acquire one Common Share for each Option granted under the terms and subject to the conditions of this Agreement and the Plan. The Options are not intended to qualify as incentive stock options under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”).

     2. Terms and Conditions of the Options.

          (A) Exercise Price. The exercise price (the “Exercise Price”) to be paid by the Optionee to the Company upon the exercise of the Options will be $2.95 per share, which was the closing price of the Common Shares of the Company as reported on the American Stock Exchange (“AMEX”) on the Grant Date. The Options may not be “repriced” (as defined under the rules adopted by the national securities exchange or other recognized market or quotation system upon or through which the Company’s Common Shares are then listed or traded) without the prior approval of the Company’s shareholders.

          (B) Exercise of the Options. The Options vested and became exercisable immediately upon grant as to 75,000 of the Common Shares subject to the Options. Except as otherwise provided in Section 6 of this Agreement, on December 27, 2007, the Options will vest and become exercisable as to the remaining 75,000 Common Shares subject to the Options, provided that the Optionee remains employed by the Company or a subsidiary of the Company on December 27, 2007.

     Any exercise of the vested and exercisable portion of the Options may be made in whole or in part; however, no single purchase of Common Shares upon exercise of the Options may be for fewer than the smaller of: (a) 100 Common Shares or (b) the full number of Common Shares as to which the Options are then vested and exercisable.

     Subject to the other provisions of this Agreement, if the Options vest and become exercisable as to certain Common Shares, the Options will remain vested and exercisable as to those Common Shares until the date of expiration of the term of the Options.

     The grant of the Options does not confer upon the Optionee any right to continue as an employee of the Company or any of its subsidiaries or limit in any way the right of the Company or any of its subsidiaries to terminate

the employment of the Optionee at any time in accordance with the terms and subject to the conditions of the Employment Agreement, entered into on December 28, 2006, by the Company and the Optionee (the “Employment Agreement”), applicable law and the Company’s or the applicable subsidiary’s governing corporate documents.

          (C) Option Term. The Options will in no event be exercisable after December 27, 2016.

          (D) Method of Exercise. The Options may be exercised by giving written notice of exercise to the Company, in care of the Chief Financial Officer of the Company, stating the number of Common Shares subject to the Options in respect of which the Options are being exercised. Payment for all such Common Shares must be made to the Company at the time the Options are exercised in United States dollars in cash (including check, bank draft or money order payable to the order of the Company). Payment for such Common Shares may also be made (i) by tender of Common Shares already owned by the Optionee for at least six months (either by actual delivery of the already-owned Common Shares or by attestation) and having a fair market value (based on the closing sale price of the Common Shares of the Company as reported on AMEX or, if the Common Shares are not traded on AMEX, “fair market value” as defined in the Plan) on the date of tender equal to the Exercise Price, (ii) by a combination of the delivery of cash and the tender of already-owned Common Shares, or (iii) in such other manner as the Committee may determine to be permissible under the terms of the Plan. After payment in full for the Common Shares purchased under the Options has been made, the Company will take all such actions as are necessary to deliver appropriate share certificates evidencing the Common Shares purchased upon the exercise of the Options as promptly thereafter as is reasonably practicable.

          (E) Tax Withholding. The Company will withhold from other amounts owed to the Optionee, or require the Optionee to remit to the Company, an amount sufficient to satisfy federal, state and local withholding tax requirements in respect of the exercise of the Options. These withholding tax requirements may be satisfied in one of several ways, including:

               (i) The Company may withhold the required amount from other amounts owed to the Optionee (e.g., salary);

               (ii) The Optionee may give the Company cash (including check, bank draft or money order payable to the order of the Company) equal to the amount required to be withheld or tender Common Shares of the Company already owned by the Optionee for at least six months (either by actual delivery of the already-owned Common Shares or by attestation) and having a fair market value (based on the closing sale price of the Common Shares of the Company as reported on AMEX or, if the Common Shares are not traded on AMEX, “fair market value” as defined in the Plan) on the exercise date equal to the amount required to be withheld; or

               (iii) The Company may withhold Common Shares otherwise issuable upon exercise of the Options having a fair market value (based on the closing sale price of the Common Shares as reported on AMEX or, if the Common Shares are not traded on AMEX, “fair market value” as defined in the Plan) on the exercise date equal to the amount required to be withheld (but only to the extent of the minimum amount required to be withheld to comply with applicable state, federal and local income, wage and employment tax laws).

     3. Adjustments upon Changes in the Common Shares.

          (A) If, during the term of the Options, there is a dividend or split in respect of the Common Shares, recapitalization (including, without limitation, the payment of an extraordinary dividend), merger, consolidation, combination, spin-off, distribution of assets to shareholders, exchange of shares, or other similar corporate change affecting the Common Shares, the Committee will appropriately adjust the number of Common Shares subject to the Options as well as the Exercise Price and any other factors, limits or terms affecting the Options.

          (B) Notice of any adjustment made pursuant to this Section 3 will be given by the Company to the Optionee.

     4. Acceleration of Options upon “Change in Control”. If a “Change in Control” (as defined under Section 409A of the Code and the regulations thereunder) occurs, then the unexercised portion of the Options (whether or not then exercisable by their terms) will become immediately vested and exercisable in full and the Optionee will receive, upon payment of the Exercise Price, securities or cash, or both, equal to those the Optionee

would have been entitled to receive under the Plan or this Agreement if the Optionee had already exercised the unexercised portion of the Options.

     5. Assignability of Options. Subject to the terms and conditions of the Plan, the Optionee may transfer the Options to a revocable inter vivos trust, of which the Optionee is the settlor, or may transfer the Options to any member of the Optionee’s immediate family, any trust, whether revocable or irrevocable, established solely for the benefit of the Optionee’s immediate family, or any partnership or limited liability company whose only partners or members are members of the Optionee’s immediate family (“Permissible Transferees”). Any Options transferred to a Permissible Transferee will continue to be subject to all of the terms and conditions that applied to the Options before the transfer and to any other rules prescribed by the Committee. A Permissible Transferee may not retransfer the Options except by will or the laws of descent and distribution and then only to another Permissible Transferee.

     Except as described in the preceding paragraph, the Optionee may not transfer the Options except by will or by the laws of descent and distribution. If the Optionee dies, the person or persons entitled to exercise the unexercised portion of the Options will be determined in accordance with the provisions of the Plan.

     6. Exercise After Termination of Employment.

          (A) If the Optionee’s employment with the Company and all of the subsidiaries of the Company is terminated because of the Disability of the Optionee, the unexercised portion of the Options (whether or not then exercisable by their terms) will immediately become vested and exercisable in full and the right of the Optionee to exercise the Options will terminate upon the earlier to occur of the expiration of the term of the Options or 24 months after the date upon which the Optionee ceases to be an employee of the Company and all of the subsidiaries of the Company. For purposes of this Agreement, “Disability” has the meaning given to such term in Section 5(b) of the Employment Agreement.

          (B) If the Optionee’s employment with the Company and all of the subsidiaries of the Company is terminated because of the death of the Optionee, the unexercised portion of the Options (whether or not then exercisable by their terms) will immediately become vested and exercisable in full and the right of the Optionee’s Beneficiary to exercise the Options will terminate upon the earlier to occur of the expiration of the term of the Options or 24 months after the date of the Optionee’s death. For purposes of this Agreement, “Beneficiary” has the meaning given to such term in Section 2.06 of the Plan.

          (C) If the Optionee’s employment with the Company and all of the subsidiaries of the Company is terminated for Cause, the Options will, to the extent not previously exercised, expire immediately upon such termination of employment. For purposes of this Agreement, “Cause” has the meaning given to such term in Section 5(c) of the Employment Agreement.

          (D) If the Company terminates the employment of the Optionee with the Company and all of the subsidiaries of the Company without Cause, other than by reason of the death or Disability of the Optionee, the unexercised portion of the Options (whether or not then exercisable by their terms) will immediately become vested and exercisable in full and, for purposes of this Agreement and the Plan, such termination of the Optionee’s employment will be treated as a “Retirement” under the terms of the Plan. The right of the Optionee to exercise the Options will terminate upon the earlier to occur of the expiration of the term of the Options or 24 months after the date upon which the Optionee ceases to be an employee of the Company and all of the subsidiaries of the Company.

          (E) If the Optionee terminates his employment with the Company and all of the subsidiaries of the Company upon the voluntary transition of the chief executive officer’s responsibilities to another individual who has been selected and is reasonably acceptable to the Company’s Board of Directors as contemplated by Section 5(f) of the Employment Agreement, the unexercised portion of the Options (whether or not then exercisable by their terms) will immediately become vested and exercisable in full and, for purposes of this Agreement and the Plan, such termination of the Optionee’s employment will be treated as a “Retirement” under the terms of the Plan. The right of the Optionee to exercise the Options will terminate upon the earlier to occur of the expiration of the term of the Options or 24 months after the date upon which the Optionee ceases to be an employee of the Company and all of the subsidiaries of the Company.

          (F) If the Optionee terminates his employment with the Company and all of the subsidiaries of the Company for Good Reason (as defined in Section 5(g) of the Employment Agreement), the unexercised portion of the Options (whether or not then exercisable by their terms) will immediately become vested and exercisable in full and, for purposes of this Agreement and the Plan, such termination of the Optionee’s employment will be treated as a “Retirement” under the terms of the Plan. The right of the Optionee to exercise the Options will terminate upon the

earlier to occur of the expiration of the term of the Options or 24 months after the date upon which the Optionee ceases to be an employee of the Company and all of the subsidiaries of the Company.

          (G) If the Optionee terminates his employment with the Company and all of the subsidiaries of the Company voluntarily in accordance with Section 5(e) of the Employment Agreement, the Options may be exercised (to the extent the Options were vested and exercisable at the time of such termination of employment) at any time within three months after the date upon which the Optionee ceases to be an employee of the Company and all of the subsidiaries of the Company, subject to the expiration of the term of the Options.

          (H) If the Company fails to extend the term of the Employment Agreement in accordance with Section 5(h) of the Employment Agreement, the unexercised portion of the Options (whether or not then exercisable by their terms) will immediately become vested and exercisable in full and, for purposes of this Agreement and the Plan, the Optionee will be deemed to have “Retired” under the terms of the Plan. The right of the Optionee to exercise the Options will terminate upon the earlier to occur of the expiration of the term of the Options or 24 months after the date upon which the Optionee ceases to be an employee of the Company and all of the subsidiaries of the Company.

     7. Section 11.05 of the Plan Inapplicable. The provisions of Section 11.05 of the Plan will not apply in respect of the Options.

     8. Buy Out of Options. At any time, the Committee, in its sole discretion and without the consent of the Optionee, may cancel any portion of the Options by providing to the Optionee written notice (a “Buy Out Notice”) of the Company’s intention to exercise the right reserved in this Section 8. If a Buy Out Notice is given, the Company will pay to the Optionee, in respect of each Common Share covered by the Options and subject to the Buy Out Notice, the difference between (i) the fair market value of the Common Shares (based on the closing sale price of the Common Shares as reported on AMEX or if the Common Shares are not traded on AMEX, “fair market value” as defined in the Plan) on the date of the Buy Out Notice and (ii) the Exercise Price. In the discretion of the Committee, such payment may be made with respect to not only that portion of the Options which is vested and exercisable on the date of the Buy Out Notice but also that portion of the Options which is not vested and exercisable on the date of the Buy Out Notice. The Company will complete any buy out made under this Section 8 as soon as administratively possible after the date of the Buy Out Notice. At the Committee’s option, payment of the buy out amount may be made in cash, in whole Common Shares or partly in cash and partly in whole Common Shares. The number of whole Common Shares, if any, included in the buy out amount will be determined by dividing the amount of the payment to be made in Common Shares by the fair market value of the Common Shares (based on the closing sale price of the Common Shares as reported on AMEX or if the Common Shares are not traded on AMEX, “fair market value” as defined in the Plan) on the date of the Buy Out Notice.

     9. Restrictions on Transfers of Common Shares. Anything contained in this Agreement or elsewhere to the contrary notwithstanding, the Company may postpone the issuance and delivery of Common Shares upon any exercise of the Options until completion of any stock exchange listing or registration or other qualification of such Common Shares under any state or federal law, rule or regulation as the Company may consider appropriate; and may require the Optionee when exercising the Options to make such representations and furnish such information as the Company may consider appropriate in connection with the issuance of the Common Shares in compliance with applicable law.

     Common Shares issued and delivered upon exercise of the Options will be subject to such restrictions on trading, including appropriate legending of share certificates to that effect, as the Company, in its discretion, shall determine are necessary to satisfy applicable legal requirements.

     10. Rights of the Optionee. The Optionee will have no rights as a shareholder of the Company with respect to any Common Shares of the Company covered by the Options until the date of issuance of share certificates to the Optionee evidencing such Common Shares.

     11. Governing Law. To the extent not preempted by federal law, this Agreement will be governed by and construed in accordance with the laws of the State of Ohio.

     12. Rights and Remedies Cumulative. All rights and remedies of the Company and of the Optionee enumerated in this Agreement are cumulative and, except as expressly provided otherwise in this Agreement, none will exclude any other rights or remedies allowed by law or in equity, and each of said rights or remedies may be exercised and enforced concurrently.

     13. Captions. The captions contained in this Agreement are included only for convenience of reference and do not define, limit, explain or modify this Agreement or its interpretation, construction or meaning and are in no way to be construed as a part of this Agreement.

     14. Severability. If any provision of this Agreement or the application of any provision hereof to any person or any circumstance is determined to be invalid or unenforceable, then such determination will not affect any other provision of this Agreement or the application of said provision to any other person or circumstance, all of which other provisions will remain in full force and effect, and it is the intention of each party to this Agreement that if any provision of this Agreement is susceptible of two or more constructions, one of which would render the provision enforceable and the other or others of which would render the provision unenforceable, then the provision will have the meaning which renders it enforceable.

     15. Number and Gender. When used in this Agreement, the number and gender of each pronoun will be construed to be such number and gender as the context, circumstances or its antecedent may require.

     16. Entire Agreement. This Agreement, including the references to the Plan and the Employment Agreement herein, constitutes the entire agreement between the Company and the Optionee in respect of the subject matter of this Agreement, and this Agreement, including the references to the Plan and the Employment Agreement herein, supersedes all prior and contemporaneous agreements between the parties hereto in connection with the subject matter of this Agreement. No change, termination or attempted waiver of any of the provisions of this Agreement will be binding upon either party to this Agreement unless contained in a writing signed by the party to be charged.

     17. Successors and Assigns of the Company. This Agreement will inure to the benefit of and be binding upon the successors and assigns (including successive, as well as immediate, successors and assigns) of the Company.

(Remainder of page intentionally left blank;
signatures on following page.)

     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer, and the Optionee has executed this Agreement, in each case effective as of the Grant Date.

Company:
AIRNET SYSTEMS, INC.
By:	/s/ Gary W. Qualmann
	Gary W. Qualmann Chief Financial Officer, Treasurer and Secretary
Optionee:
/s/ Bruce D. Parker
Bruce	D. Parker
Street Address
City		State	Zip Code
Telephone Number

EX-10.32

EXHIBIT 10.32

SUMMARY OF AIRNET SYSTEMS, INC. 2007 INCENTIVE COMPENSATION PLAN

On March 28, 2007, the Board of Directors of AirNet, upon the recommendation of the Compensation Committee, adopted the 2007 Incentive Compensation Plan (the “2007 Incentive Plan”). The purpose of the 2007 Incentive Plan is to promote the following goals of AirNet for the fiscal year ending December 31, 2007 (the “2007 fiscal year”) by providing incentive compensation to certain employees of AirNet:

• attaining designated levels of pre-tax income;

• achieving designated levels of Express Services revenues and contribution margin;

• reducing AirNet’s operating costs;

• establishing AirNet as the express air carrier of choice for highly controlled and time sensitive shipments;

• leveraging AirNet’s aviation infrastructure to improve contribution margin;

• operating in all areas of AirNet’s business in an absolutely safe, highly professional, dependable, efficient and customer focused manner; and

• developing AirNet’s leadership team.

Participants in the 2007 Incentive Plan include AirNet’s executive officers – Bruce D. Parker (Chairman of the Board and Chief Executive Officer), Gary W. Qualmann (Chief Financial Officer, Treasurer and Secretary), Larry M. Glasscock, Jr. (Senior Vice President, Express Services), Jeffery B. Harris (Senior Vice President, Bank Services), Ray L. Druseikis (Controller and Principal Accounting Officer) and Craig A. Leach (Vice President, Information Systems), — and certain department managers and department directors. As of the date of this Annual Report on Form 10-K, there were 37 participants in the 2007 Incentive Plan.

The targeted incentive compensation payment a participant may earn under the 2007 Incentive Plan ranges from 20% to 100% of the participant’s base salary, depending upon such participant’s level of responsibility for achieving AirNet’s goals for the 2007 fiscal year. The targeted percentage of annual base salary that each of AirNet’s executive officers may earn as incentive compensation under the 2007 Incentive Plan is as follows: Bruce D. Parker, 100%; Gary W. Qualmann, Larry M. Glasscock, Jr., and Jeffery B. Harris, 75%; Ray L. Druseikis and Craig A. Leach, 50%.

Payments under the 2007 Incentive Plan will be based on a combination of AirNet’s (i) pre-tax income for the 2007 fiscal year, (ii) Express Services revenues and contribution margins for the 2007 fiscal year, and (iii) the achievement of personal goals assigned to each participant. The Compensation Committee determines the personal goals of the Chief Executive Officer. The Chief Executive Officer determines the personal goals for the other executive officers, which are reviewed and approved by the Compensation Committee. The personal goals of other participants are approved by the Chief Executive Officer and are reviewed by the Compensation Committee. The personal goals approved by the Compensation Committee for each of the executive officers relate to specific business objectives related to general business operations (e.g., regulatory compliance, expense reductions, etc.) and each business segment (e.g., execution of specific contracts with customers and vendors, cost reductions, service improvements, etc.).

With the exception of Bruce D. Parker, no incentive compensation will be paid under the 2007 Incentive Plan unless AirNet achieves at least 80% of its targeted pre-tax income for the 2007 fiscal year. Mr. Parker will be eligible to receive the portion of his incentive compensation potential allocated to his personal goals without regard to AirNet’s attainment of its financial objectives. Once this designated threshold level of pre-tax income is achieved, potential incentive compensation payouts will increase at predetermined levels until the maximum incentive compensation payout of approximately $1.7 million is reached at approximately 140% of AirNet’s targeted pre-tax income for the 2007 fiscal year.

Once the aggregate potential incentive compensation payout is determined based upon the level of pre-tax income achieved by AirNet during the 2007 fiscal year, each participant’s incentive compensation payment will be determined based upon the following three components of the 2007 Incentive Compensation Plan (i) pre-tax income for the 2007 fiscal year; (ii) Express Services revenues and contribution margins for the 2007 fiscal year, and (iii) the achievement of personal goals. With the exception of Mr. Parker, 20% of each participant’s incentive compensation payout is allocated to the attainment of personal goals. Forty percent of Mr. Parker’s incentive compensation payment is allocated to the attainment of personal goals. The portion of each participant’s incentive compensation potential that is not allocated to the attainment of personal goals will be allocated to the attainment of predetermined levels of pre-tax income and Express Services revenues and contribution margin based upon such participant’s responsibility for achieving such goals.

No incentive compensation will be earned with respect to the Express Services component of the 2007 Incentive Plan unless AirNet achieves at least 100% of its targeted Express Services revenues and contribution margin. Once the designated threshold levels of Express Services revenues and contribution margin are achieved, potential incentive compensation payouts under the Express Services component of the 2007 Incentive Plan will increase at predetermined levels until the maximum Express Services compensation payout level is achieved.

Mr. Parker’s incentive compensation payments under the 2007 Incentive Plan will be based upon the achievement of certain pre-determined financial objectives and personal goals for the first six months of the 2007 fiscal year and the last six months of the 2007 fiscal year. Mr. Parker will be eligible to receive up to 50% of his annual base salary in each six-month period, subject to the attainment of Mr. Parker’s predetermined financial objectives and personal goals. In each six-month incentive compensation period, Mr. Parker’s incentive compensation potential will be allocated among Mr. Parker’s financial objectives and personal goals as follows:

• 30% of Mr. Parker’s incentive compensation potential will be based upon attaining at least 100% of the targeted pre-tax income for the applicable six-month period;

• 30% of Mr. Parker’s incentive compensation potential will be based upon attaining at least 100% of the targeted Express Services revenues and contribution margin for the applicable six-month period; and

• 40% of Mr. Parker’s incentive compensation potential in will be based upon the attainment of the personal goals established for Mr. Parker by the Board of Directors.

The Board of Directors established the following personal goals for Mr. Parker for the 2007 fiscal year:

• development of an AirNet operating vision, including specific objectives and strategy;

• development of a chief executive officer succession plan; and

• developing AirNet’s management into an integrated team working to achieve specific objectives.

The Board of Directors will evaluate Mr. Parker’s performance at the end of each six month incentive compensation period and determine his incentive compensation payment based upon AirNet’s financial performance and achievement of Mr. Parker’s personal goals during such period. In the event the Board of Directors approves a strategic alternative that is completed based upon Mr. Parker’s efforts, Mr. Parker will be deemed to have met all his financial objectives and personal goals for the six month incentive compensation period in which the strategic alternative is completed. In such event, Mr. Parker will be entitled to receive his maximum incentive compensation for such six month period, prorated from the first day of such six month period to the date the strategic alternative is completed.

Except for payments to Mr. Parker and AirNet’s other executive officers, payments under the 2007 Incentive Plan will be paid in quarterly payments commencing with the first quarter of the 2007 fiscal year based upon AirNet’s year to date financial performance. With the exception of Mr. Parker, payments of incentive compensation to
AirNet’s executive officers will be made in the first quarter of the fiscal year ending December 31, 2008 based upon AirNet’s performance and each executive officer’s performance for the 2007 fiscal year. Mr. Parker’s incentive compensation payments will be made in two installments no later than July 31, 2007 and March 15, 2008. In order to receive a payment, a participant must be actively employed by AirNet at the time the payment is made. New employees who qualify for the 2007 Incentive Compensation Plan will be eligible to participate on the first day of the calendar quarter following their date of hire.

In the event the incentive compensation payments otherwise available for payment under the 2007 Incentive Plan based upon AirNet’s level of pre-tax income are not to be paid to certain participants as a result of such participants’ failure to attain their personal goals or AirNet’s failure to attain the predetermined levels of Express Services revenues or contribution margin, such unpaid amounts may be awarded at the discretion of the Compensation Committee to participants in the 2007 Incentive Plan or to other employees of AirNet not participating in the 2007 Incentive Plan. In the event such discretionary awards are made to any participant, including AirNet’s executive officers, the total incentive compensation payment to any such participant may exceed the targeted incentive compensation payment to such participant as described above.

The Compensation Committee may amend, modify or terminate the 2007 Incentive Plan at any time.

EX-21

EXHIBIT 21

SUBSIDIARIES OF AIRNET SYSTEMS, INC.

Name of Subsidiary	State or Jurisdiction of Incorporation or Formation
Float Control, Inc.	Michigan
AirNet Management, Inc.	Ohio
7250 STAR CHECK, INC.	Ohio
Fast Forward Solutions, LLC	Ohio
timexpress.com, inc.	Ohio
AirNet Systems Inc.	Ontario, Canada

EX-23

EXHIBIT 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration Statements (Forms S-8 No. 333-08189 and No. 333-62659) pertaining to the AirNet Systems, Inc. Amended and Restated 1996 Incentive Stock Plan and the Registration Statement (Form S-8 No. 333-116827) pertaining to the AirNet Systems, Inc. 2004 Stock Incentive Plan of our report dated March 3, 2007, except for Note 4 as to which the date is March 29, 2006, with respect to the consolidated financial statements and financial statement schedule of AirNet Systems, Inc. included in this Annual Report (Form 10-K) for the year ended December 31, 2006.

/s/ Ernst & Young LLP

Columbus, Ohio

March 29, 2007

EX-24

EXHIBIT 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer of AirNet Systems, Inc., an Ohio corporation, which is about to file with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, the Annual Report of AirNet Systems, Inc. on Form 10-K for the fiscal year ended December 31, 2006, hereby constitutes and appoints Bruce D. Parker as his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign both the Annual Report on Form 10-K and any and all amendments and documents related thereto, and to file the same, with any and all exhibits, financial statements and financial statement schedules related thereto, and other documents in connection therewith, with the Securities and Exchange Commission and the American Stock Exchange, and grants unto said attorney-in-fact and agent, and substitute or substitutes, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person and hereby ratifies and confirms all things that the said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of this 30^th day of March, 2007.

/s/ Gary W. Qualmann  

Gary W. Qualmann 

EXHIBIT 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer of AirNet Systems, Inc., an Ohio corporation, which is about to file with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, the Annual Report of AirNet Systems, Inc. on Form 10-K for the fiscal year ended December 31, 2006, hereby constitutes and appoints Bruce D. Parker as his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign both the Annual Report on Form 10-K and any and all amendments and documents related thereto, and to file the same, with any and all exhibits, financial statements and financial statement schedules related thereto, and other documents in connection therewith, with the Securities and Exchange Commission and the American Stock Exchange, and grants unto said attorney-in-fact and agent, and substitute or substitutes, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person and hereby ratifies and confirms all things that the said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of this 30^th day of March, 2007.

/s/ Ray L. Druseikis  

Ray L. Druseikis 

EXHIBIT 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of AirNet Systems, Inc., an Ohio corporation, which is about to file with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, the Annual Report of AirNet Systems, Inc. on Form 10-K for the fiscal year ended December 31, 2006, hereby constitutes and appoints Bruce D. Parker as his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign both the Annual Report on Form 10-K and any and all amendments and documents related thereto, and to file the same, with any and all exhibits, financial statements and financial statement schedules related thereto, and other documents in connection therewith, with the Securities and Exchange Commission and the American Stock Exchange, and grants unto said attorney-in-fact and agent, and substitute or substitutes, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person and hereby ratifies and confirms all things that the said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of this 30^th day of March, 2007.

/s/ Russell M. Gertmenian  

Russell M. Gertmenian 

EXHIBIT 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of AirNet Systems, Inc., an Ohio corporation, which is about to file with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, the Annual Report of AirNet Systems, Inc. on Form 10-K for the fiscal year ended December 31, 2006, hereby constitutes and appoints Bruce D. Parker as his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign both the Annual Report on Form 10-K and any and all amendments and documents related thereto, and to file the same, with any and all exhibits, financial statements and financial statement schedules related thereto, and other documents in connection therewith, with the Securities and Exchange Commission and the American Stock Exchange, and grants unto said attorney-in-fact and agent, and substitute or substitutes, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person and hereby ratifies and confirms all things that the said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of this 30^th day of March, 2007.

/s/ James M. Chadwick  

James M. Chadwick 

EXHIBIT 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of AirNet Systems, Inc., an Ohio corporation, which is about to file with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, the Annual Report of AirNet Systems, Inc. on Form 10-K for the fiscal year ended December 31, 2006, hereby constitutes and appoints Bruce D. Parker as his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign both the Annual Report on Form 10-K and any and all amendments and documents related thereto, and to file the same, with any and all exhibits, financial statements and financial statement schedules related thereto, and other documents in connection therewith, with the Securities and Exchange Commission and the American Stock Exchange, and grants unto said attorney-in-fact and agent, and substitute or substitutes, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person and hereby ratifies and confirms all things that the said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of this 30^th day of March, 2007.

/s/ Gerald Hellerman  

Gerald Hellerman 

EXHIBIT 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and director of AirNet Systems, Inc., an Ohio corporation, which is about to file with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, the Annual Report of AirNet Systems, Inc. on Form 10-K for the fiscal year ended December 31, 2006, hereby constitutes and appoints Gary W. Qualmann as his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign both the Annual Report on Form 10-K and any and all amendments and documents related thereto, and to file the same, with any and all exhibits, financial statements and financial statement schedules related thereto, and other documents in connection therewith, with the Securities and Exchange Commission and the American Stock Exchange, and grants unto said attorney-in-fact and agent, and substitute or substitutes, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person and hereby ratifies and confirms all things that said attorney-in-fact and agent, or substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of this 30^th day of March, 2007.

/s/ Bruce D. Parker  

Bruce D. Parker 

EXHIBIT 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of AirNet Systems, Inc., an Ohio corporation, which is about to file with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, the Annual Report of AirNet Systems, Inc. on Form 10-K for the fiscal year ended December 31, 2006, hereby constitutes and appoints Bruce D. Parker as his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign both the Annual Report on Form 10-K and any and all amendments and documents related thereto, and to file the same, with any and all exhibits, financial statements and financial statement schedules related thereto, and other documents in connection therewith, with the Securities and Exchange Commission and the American Stock Exchange, and grants unto said attorney-in-fact and agent, and substitute or substitutes, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person and hereby ratifies and confirms all things that the said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of this 30^th day of March, 2007.

/s/ James E. Riddle  

James E. Riddle 

EX-31.1

EXHIBIT 31.1

Rule 13a-14(a)/15d-14(a) Certification
(Principal Executive Officer)

I, Bruce D. Parker, certify that:

1.	I have reviewed this Annual Report on Form 10-K for the fiscal year ended December 31, 2006 of AirNet Systems, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the registrant and have:

a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.	[Reserved];
c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: March 30, 2007	By:	/s/ Bruce D. Parker Bruce D. Parker,
		Chairman of the Board, Chief Executive Officer
		and President
		(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

Rule 13a-14(a)/15d-14(a) Certification
(Principal Financial Officer)

I, Gary W. Qualmann, certify that:

1.	I have reviewed this Annual Report on Form 10-K for the fiscal year ended December 31, 2006 of AirNet Systems, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the registrant and have:

a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.	[Reserved];
c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: March 30, 2007	By:	/s/ Gary W. Qualmann Gary W. Qualmann,
		Chief Financial Officer, Treasurer and Secretary
		(Principal Financial Officer)

EX-32

EXHIBIT 32

SECTION 1350 CERTIFICATION*

     In connection with the Annual Report of AirNet Systems, Inc. (the “Corporation”) on Form 10-K for the fiscal year ended December 31, 2006, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned Bruce D. Parker, Chairman of the Board, Chief Executive Officer and President of the Corporation, and Gary W. Qualmann, Chief Financial Officer, Treasurer and Secretary of the Corporation, certify, pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of their knowledge:

(1)	The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the consolidated financial condition and results of operations of the Corporation and its subsidiaries.

/s/ Bruce D. Parker	/s/ Gary W. Qualmann
Bruce D. Parker	Gary W. Qualmann
Chairman of the Board, Chief Executive Officer and President	Chief Financial Officer, Treasurer and Secretary
Dated: March 30, 2007	Dated: March 30, 2007

* This certification is being furnished as required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Section 1350 of Chapter 63 of Title 18 of the United States Code, and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that Section. This certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent that the Corporation specifically incorporates this certification by reference.